Last spring, after a pandemic hit the market like a tsunami, I wrote a series of articles “Rebuilding the Portfolio.” This highlighted quality companies that I believed would survive and begin to thrive when other companies struggle and would provide a foundation to rebuild my own portfolio. The second article of the series was Simpson Manufacturing (NYSE:SSD).
Source: Company presentation
I wrote that the company is “probably not the first company many would pick for a core part of a portfolio. It is not necessarily my first pick either.” Despite my lack of enthusiasm for this rather mundane company, I liked the fundamentals enough to buy it. This proved to be a good decision; the initial position bought in April 2020 went up 61%. Additions to the position between November 2020 and a few days ago have each increased approximately 4%.
Simpson’s Product Offering
Simpson Manufacturing produces and markets products in two segments: wood and concrete construction products.
Some 10,000 wood construction products include truss plates, fastening systems, and fasteners. These are used to strengthen, support, and connect wood items. Connectors are metal products that tie wood products together. An example is truss connector plates.
Source: Company presentation
The company also produces and markets more than 1,000 concrete construction products, including powder-actuated tools, adhesives, chemicals, fiberglass jackets, and carbon fiber.
Source: Company presentation
Key end markets identified are: light-framed construction, retrofit, wastewater treatment plants, direct OEM, commercial cold-formed steel, and bridge and marine.
Products are sold in 19 countries in North America, Europe, the Pacific, and Asia.
Record Sales and Earnings
During the question and answer period of the earnings call, CEO Karen Colonias announced that net sales improved 11.6% over 2019 to $1.28 billion. This generated record earnings of $4.27 per share, 43% over 2019.
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