simpson manufacturing co., inc (ssd)

SIMPSON MANUFACTURING CO., INC (SSD)Jiazi CuiYing JiangPresented: April 24, 2014

Agenda Company Overview Relevant Macroeconomic Trends Industry Structure Analysis Financial Analysis Projections/Assumptions Valuation Recommendation

Company Overview Info: Incorporated in Delaware in 1956 2,295 employees Market Cap : 1.63 billion Business: Through Simpson Strong-Tie

Company Inc. Leading manufacturer of wood

construction products and concrete construction products.

Markets: residential construction, light industrial

and commercial construction, DIY. Channel: Dealer, builder, home centers, and

internet. Goal: Help people build safer and stronger

homes and buildings. Acquisition & expansion Testing labs.

Source: SSD 10-K report & FOURTH QUARTER AND FULL YEAR 2013 report

By Products

By Segments

Sales Distribution

Products

Source: SSD website.

Simpson Strong-Tie Locations

Management Information

Name Position Age Start from

Karen W Colonias President/CEO 56 1984

Brian Magstadt CFO 46 2004

Jeffrey Eric Mackenzie Vice President 52 2000

Source: Bloomberg

Source: Forecasting the numbers of people affected annually by natural disasters up to 2015 By Shamanthy Ganeshan, Oxfam GB, Research Intern (Economist)

& Wayne Diamond, Oxfam GB, Global Research Methods Adviser , EM-DAT

Industry Overview

Building Construction

Construction Product demand picks upProfit improves with the demands

Industry Performance

Industry revenue is expected to keep increase due to an uptick in residential and commercial construction activity.

Source: Bloomberg

Industry Overview

Increase in investor confidence will boost demand for this industry's services. In 2014, global investor confidence is expected to increase.

Measures private spending on home improvements, upgrades and repairs

• 2012 increase 2.9%• 2013 increase 4.3%• 2014 increase 5.1%

Source: Bloomberg

Industry Overview

Global Steel Price IndexGlobal Steel Price declined Recovery since 2015

Source: Bloomberg

Industry Overview

Porter’s Five forces Rivalry

CompetitionMED-High

• Competition ranges from subsidiaries of large national or international firms to small regional manufactures.

Supplier’s bargaining

powerMED

• Mainly dependent on Steel.• Purchase raw materials from a variety of commercial sources.

Buyer’s bargaining

powerMED

• Buyers have several choices.• Provide products to diversified customers.

SubstitutesLOW

• Required by the building.• Supported by building code.• Increasing amount of natural disaster.

Threat of new entrants

LOW

• Needs significant R&D input.• Needs large quantity, high capital requirement.• Regulations.

• Wide Geographic Presence• Extensive Distribution Channels• Broad Range of Offerings• World’s largest lab test

Strengths

• High Inventory• Dependence on a few customersWeaknesses

• Green and Sustainable Construction Market• Growth in Building Construction Industry• Production Innovation

Opportunities

• Stringent Regulations• Intensive CompetitionsThreats

SWOT

Source: Yahoo Finance

Stock Performance

Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg

• Revenue Growth Rate keep growing• FY 2012 R&D expense increase rapidly

Financial Analysis

Financial Analysis

Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg

Financial Analysis

Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg

Financial Analysis

Comparable Companies

Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg

Comparable Companies

Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg

Revenue Forecast

Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg

Cost of Capital

Source: SSD 2013 10-K, SSD 2010 10-K, Bloomberg

Valuation-DCF

Valuation-DCF

Valuation-DCF

Implied Share Price

Current Stock Price: $33.84

26

Recommendation

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