Good morning, ladies and gentlemen, and welcome to the Fourth Quarter 2013 Simpson Manufacturing Co., Inc. Earnings Conference Call. In this conference call, the company may discuss forward-looking statements such as future plans and events. Forward-looking statements like any prediction of future events are subject to factors, which may vary, and actual results might differ materially from these statements. Some of such factors and cautionary statement are discussed in the company's public filings and reports. Those reports are available on the SEC's or the company's website. Please note today's call may be recorded. Now, I would like to turn the conference over to Tom Fitzmyers, the company's Chairman. Please proceed.

Thanks, everyone. Good morning, and welcome to Simpson Manufacturing Co., Inc.'s Fourth Quarter 2013 Earnings Call. Our press release was issued yesterday and is available on our website at simpsonmfg.com. Today's call is also being webcast, and a replay of that webcast will be available on our website. As usual, joining me in Pleasanton for today's call are Karen Colonias, Simpson's CEO; and Brian Magstadt, Simpson's CFO. I will start, followed by Karen and Brian, and then we will be delighted to take your questions. Housing starts are up compared to last year, and we are continuing to benefit from that increase. But unlike lumber or other products that have a more direct correlation at starts, our products are used to a greater extent in code-based areas subject to national forces, such as seismic or wind events, and are subject to sequential construction processes, like the foundation first, then the floors, the walls and the risk systems. We speculate that only 55% to 65% of our total company with product sales are dependent on starts. Sales were up 13% in North America for the quarter due to increased home building activity. In Q4, the home centers were down 2% for the quarter, but Home Depot was flat. Revenues in Europe were up 5.2%, excluding the heavy-duty mechanical anchors, which contributed approximately $1.8 million in sales last Q4. North America operating profits were up $6.3 million due to higher gross profits, primarily from increased sales volumes, offset by slightly lower prices and by increases in operating expenses. Also included in the North American operating profit was a gain on the sale of CarbonWrap assets. Europe's operating loss of $484,000 in Q4. 2013 was a significant reduction from last year's loss of nearly $9 million due to increased gross profits, reduced operating expenses and goodwill impairment that occurred in 2012. The majority of that increase was a result of not having the heavy-duty anchor business this year. The Asia Pac operating loss narrowed as a result of higher gross profits and reduced operating expenses there. We continue to have a very strong financial position with over $250 million in cash at the end of the year. We have very little debt and a $300 million unused line of credit, which gives us lots of flexibility and the capability of continuing to invest in our long-run strategic plan. I'll turn the call over to Karen now.

Thank you, Tom. We are benefiting from increased housing starts in North America, and at the same time, we are also continuing to invest in current initiatives to strengthen our market positions in both the wood products and concrete products portions of our business. We continue to see a substantial opportunity in our truss business, and we've accelerated our software development efforts to meet our customer needs, integrate software enhancements for the wood products segment. Europe nearly broke even this quarter, and we're positioning ourselves in the region for additional improvement. Our Asia market segment is seeing increased revenue with recent introduction of our repair and strengthening products used in the concrete construction. We continue to work for strategic acquisitions, whether to expand our product offering or to strengthen our position in different geographic regions. At the same time, we're looking to invest in our operations in order to grow our business both here at home and abroad. Our people are our most important assets, and we need to ensure they have the tools and resources necessary to support our customers. We will continue to monitor our operations around the world to strive for long-run returns, that are satisfactory to us and our shareholders. As we've mentioned, we manage our business from a geographic segment perspective, and you've seen this in our 10-Qs and 10-Ks. Within those regions, we have 2 broad product categories with construction products and concrete construction products. As always, we are dedicated to our entire product line, and we work very hard everyday to ensure that we continue to meet our customers' needs for service, support and product availability. I'd now like to turn the call over to Brian, who'll share some additional financial information.

As noted in the earnings release, Q4 2013 gross margin was nearly 44% compared to 38% in Q4 of last year. Sales of concrete products, as a percent of the total, is slightly down from last year, but the margin on those products were up, benefiting the total company gross margin. The concrete products relative to the total was 16% this quarter versus last Q4 of 17%, while the wood products was 84% of the total versus 83% last Q4. The margin differential of wood to concrete products is nearly 16% this quarter compared to 22% last Q4. Of course, the shutdown of the heavy-duty mechanical anchor business in Europe contributed to the large spread last year. The gross margin for 2013 ended at 44.5%, just above the top end of the range we provided last quarter, which was 43% to 44%. As noted in the press release, we believe the estimated gross margin will be in the 44% to 45% range for 2014. Operating expenses as a percent of sales was down in the quarter compared to last year, although certain compensation expenses that are based on performance, such as commissions, cash profit sharing and stock compensation increased $2.8 million in the quarter or 1.8% of net revenues. As noted in the press release, under the disposal of assets section, we had a $2.8 million charge, which moved that from the cumulative translation adjustment in our balance sheet to the P&L. That was a noncash charge, and which was a reclass from the equity section primarily -- or not primarily, on the liquidation of the Irish operation. That was recorded in the admin and all other segment. Taxes. We had better foreign operations this quarter, and that beneficially affected the tax rate. The annual effective tax rate of 37.5% came in just under the range we had been estimating for 2013, which was -- we have been estimating 38% to 40%. 2013 CapEx was about $17 million compared to our last estimate for the year of around $22 million to $24 million. So there were some capital projects that will roll over to 2014. Q4 2013 CapEx spending was $3.9 million, primarily from manufacturing equipment in the U.S. We are estimating total 2014 CapEx to be in the $22 million to $25 million range. For 2014, depreciation and amortization expense is expected to be $29 million to $30 million, of which $23 million is depreciation. Intangible amortization in Q4 decreased by $0.3 million compared to the prior year, all in admin expense due primarily to the purchase price adjustments of recent acquisition. Before we turn it over to questions, I'd like to remind you that if you'd like further information, please contact Tom at the phone number listed on the press release. Also, look for our annual report on Form 10-K to be filed at the end of February. We'd like to now open it up to your questions.

[Operator Instructions] And we'll take our first question from Arnie Ursaner from CJS Securities.

Brian, I want to try to go back on the item you mentioned in the disposal of assets. If I'm understanding this piece right, you had $2.8 million of a loss that would have been included in administrative and all other expense, and yet, that line item is only $1.4 million?

Well, that line item is -- let's see, it's $1.4 million because we took a gain on the sale of the CarbonWrap assets.

So the net of these is $1.4 million negative?

Correct.

Okay, and that's that $1.408 million?

$1,404,000.

4-0-4. But again, when you also have normal run -- course of business administrative and other expenses, that would be in that line?

Well, maybe we're not talking about the right -- the $1.404 million is the net loss on disposable of assets on the P&L. The $1.408 million, that is the income from operations on the admin and all other in the segment disclosure. So that is net -- that $1.408 million is net of the $2.8 million, which would make it fairly comparable to the Q4 '12 number that you see at $3.9 million.

Okay. I think my other question relates to the gross margin guidance or outlook you have for the upcoming year of 44 to 45. You were at that level of this year. To the extent, volume improves and some of the price issues that impacted you in 2013, normalized, wouldn't that -- wouldn't you be able to get some operating leverage and higher gross margin? What would offset that?

Well, we would certainly expect some improved overhead absorption with increased volumes over and above what we're expecting. Oh, Karen, do you have any other thoughts on...

Well, we've also, Arnie, as our volumes increase, we would have to -- we'd have an increase in the labor factor that's in that gross margin. And so as Brian mentioned, we would assume we did some increased absorption, however, that would be probably offset by the increased labor component.

Okay. One more quick one. Can you just update us on the performance of S&P Clever?

They made money in 2013, and the comparable number to 20 -- I think -- I don't have their 2012 number in front of me, but I believe they were up a little bit over 2012.

And we'll take our next question from Robert Kelly from Sidoti. Robert J. Kelly - Sidoti & Company, LLC: A question on the price competition. In your most recent releases, you made many references to price declines and intensive volume competition, less references to that headwind in this release. Are we starting to see pricing stabilize a little bit? Are you just lapping the price declines from a year ago? Can you just talk about the outlook for the competitive pricing?

Yes, this is Karen. I think we are starting to see a little bit less focus on the pricing of the stabilization there, and more focused on product availability and delivery of not only standard products, but customer specials. Robert J. Kelly - Sidoti & Company, LLC: Okay. That's good to hear. One question I had with Europe. In the release, you noted many of the reasons had above-average sales increases in the region. When -- the reference point for above average, was that the 5% gain x Liebig or was that the minus 1%, all-in, for Europe?

That was the all-in number. Robert J. Kelly - Sidoti & Company, LLC: So when you say that Europe -- the rest of the region had gains above average, they did better than minus 1%?

Well, yes, they were up -- I don't have the specifics on each country relative to the 5% though. Robert J. Kelly - Sidoti & Company, LLC: Oh, you say -- you're referencing the 5%? Okay, got it. And then just as far as like the outlook on Europe, you had a tough go there. You made the right steps with your cost structure to bring the unit back to profitability in 2013? Any reason that we -- even if volumes don't increase materiality, why that segment wouldn't stay in the black in 2013 and beyond?

Yes, this is Karen again. I think we've done -- the Director there in Europe has done a great job of really looking at what's going on from the economic conditions in Europe and doing a little bit of restructuring from our cost standpoint, and you're certainly seeing that. We have a very aggressive sales force that's certainly looking at every opportunity possible, and I think we'll see Europe perform in 2014 just as well as they did in 2013.

[Operator Instructions] We'll go next to Josh Chan from Baird. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: I'm just wondering, what was the rationale behind the sale of CarbonWrap considering it was acquired just not too long ago?

Yes. So we are still heavily invested in the FRP business. CarbonWrap was an acquisition that we made in the fiber reinforced polymer business. We are still very, very active in that business, and we've got some products that we'll be introducing this year. The elements that -- or the assets that came with CarbonWrap just wasn't really something that was fitting in our model on how we wanted to go to the market. And so that's why we divested at that. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay. Can you, I guess, update us on sort of the strategic direction then with respect to looking at different acquisitions and where those initiatives are heading?

Sure. We are looking certainly in Europe very actively for acquisitions that can increase our footprint there, mainly in both the connectors and the fastener side. On the wood products side, we're very specifically looking in those areas. From the U.S. standpoint, we would really like to be able to grow a little faster in our concrete area. So we are actively looking for anything that we can add from the standpoint of being able to increase our market footprint on the concrete products. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay, that makes sense. And my last question, you have an substantial amount of cash on the balance sheet, and I guess, historically, acquisitions made by Simpson have not been above $50 million, at least, from what I can remember. So is it reasonable to think that you may be considering something larger by keeping that amount of cash in the balance sheet? Or how should we think about the size of potential acquisitions?

This is Tom. We look at all sizes of acquisitions, and of course, the bigger the acquisition, the greater our concern would be to make sure that we do it right. And we probably have a threshold in the $100 million range where we would be a little less comfortable beyond that. But if it was the right acquisition and everything fit together for us, then we would definitely look at it. As you can tell from our cash position and our unused line of credit, we have a lot of capacity. Most of the things they we're looking at though were less than $100 million, not necessarily by design, but just because of the way they fit together with what our objectives are.

[Operator Instructions] We'll go next to Evan Wingren from D.A. Davidson. Evan Wingren - D.A. Davidson & Co., Research Division: I was wondering if you could just update us on many -- any potential impacts of the weather that we've been seeing kind of across the U.S. here is having on your, either your demand for your wood connectors or on any of your input costs?

So the weather, at least, on the Western states, has been extremely mild in the first few months here, and certainly, winter has raised its head as we look at the East Coast. Basically, anytime we've got snow on the ground, it pretty well stops most construction that's going on. So we have seen some above-average sales in our Western areas, and that's really, for this time of the year, that's really just a function of that weather, where we're seeing more normalized sales as we get through the East, where they've got some snow conditions. In Europe, they're also having a light winter in many parts. So we're seeing a little bit better revenue from that standpoint of just being able to get to those job sites. Evan Wingren - D.A. Davidson & Co., Research Division: Okay. And then on the input cost side, I mean, anything?

No, nothing really affected there. Evan Wingren - D.A. Davidson & Co., Research Division: Okay. Can you just talk a little bit maybe about what you're hearing from your home center buyers?

Sure. Evan Wingren - D.A. Davidson & Co., Research Division: In terms of their demand and what not?

Yes. So we have a couple of people who work very closely with all of our home center customers. We work on putting new products in those sets, and ensuring that they've got products that are going to sell in their market space. We've put in a new line of purchase in many of our home centers so that the customers are really comfortable, and looking at the products that they want to purchase, and the applications of those products. And we also work very closely with the home centers on their inventory levels so that they don't lose that opportunity for a sale. It's something we do every single day, and we continue that, and the person who heads up that group is very active with those major home centers in ensuring that we've got our products in the shelves. And certainly, a great point-of-purchase so the customers can really be comfortable with the products they're purchasing. So again, those are conversations, nothing unusual. Those are conversations, and work that we do every single day. Evan Wingren - D.A. Davidson & Co., Research Division: Do you have a sense about where you think their inventories are now? I mean, is there anything that would be, I guess, different this time of the year than last year?

No, I think it's a normal time for home centers, where we looked to be sure that they have inventory when they start their -- when spring hits. And it's, again, something we work with them just to -- on a daily basis, looking where the inventory levels are at various regions. So a similar process that we do every single year with them. Evan Wingren - D.A. Davidson & Co., Research Division: And then on Asia-Pacific. Sales were up about 45%. Across what product lines are you seeing the growth there?

So in Asia Pac, that's really a concrete type of market, and most of that growth in that area has been that they are selling our repair and strengthening products. So some of our CarbonWrap material, as well as some of the material from the acquisition that we made in Baltimore. So really, a concrete products market. Evan Wingren - D.A. Davidson & Co., Research Division: So with the sale of that, we should expect that to trend down then, sales of CarbonWrap, I'm you're referring to?

No. Again, so we still sell carbons fiber material and give the S&P acquisition in Europe, they have a carbon cloth material, as well as a carbon laminate material. We supply most of Asia Pac out of the S&P in Europe. So we still have production of those carbon fiber material -- excuse me, carbon fiber materials. Evan Wingren - D.A. Davidson & Co., Research Division: Okay. And then just a couple of housekeeping. Do you have any outlook on tax rate? And then I guess, maybe, how SG&A might look a little bit next year?

Evan, it's Brian. On tax rate, as we noted in the press release, we're -- 2014 effective rate for the year, we're estimating 37% to 39%. And operating expenses, as Karen noted in her comments, and we also noted in the release, that we are looking to ensure that our folks have the resources they need and such. So as a percent of sales, I don't think it would change much. It may be up a little bit as a percent of sales.

And we'll take a follow-up question from Arnie Ursaner from CJS Securities.

When you take a step back, clearly, the acquisitions you made, you've made sizable investments in them in the course of 2013, severely harming your earnings per share. As we look to 2014, maybe, first, you could sum up what you believe the total of the expenses were for investments last year, and maybe give us a sense of how we ought to expect the outlook for this year for those same type of expenses.

Arnie, it's Brian. I don't have the specific breakdown for the investments in each. I would say that since we've got a comparable year under our belt with our increased software development efforts, as Karen noted earlier for specifically for the truss. That run rate ought to continue in a similar fashion.

Well, for example, your R&D jumped sharply in Q4, should we expect it to be maintained at that level? Or were there some accelerations that caused that to jump?

Well, our R&D could have -- it was up a little bit due to some of the incentive-based compensation. If you take that -- the annual run rate on that, I think it's a pretty good indicator of where we're looking as a percent of sales.

Okay, and maybe, I'm hopping on your -- the leverage you should get from volume improvement, but what -- broadly, where are we in plant utilization at this point?

So that -- we are probably right around 65% -- 65%, 70% on plant utilization.

Okay. And what do you believe is your optimal level?

That's a tough -- obviously, not 100%, but I think, probably, we would be very efficient still at being somewhere around between 85% and 90% of utilization.

Okay. And when you take a step back, obviously, no one expects housing starts back to $1.5 million, and you've reduced some of your exposure to housing through some of the acquisitions you've made, but when you look out over 2, 3 years, where do you see your margin trends shifting to over the next, let's call it, 2 years?

I would say -- Arnie, this is Brian again. The -- as we continue to look at increasing our concrete product sales relative to the total, as we add in additional, I think, higher margin concrete sales that we've seen from the likes of S&P and some of our specialty chemicals, I think we'll -- we should see some improvement there if we're successful on implementing our strategy of adding more there. Of course, wood products margins are already higher than concrete product margins. And as starts increase or as other building occurs in the wood product area, the additional volume there over the 2 to 3 year period, ought to also help too.

[Operator Instructions] And there appears to be no more questions.

Good.

Okay, thank you very much.

Thank you, everybody.

And this does conclude today's conference call. You may now disconnect, and have a wonderful day.