Good morning, ladies and gentlemen, and welcome to the Fourth Quarter 2016 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 statements 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. Please proceed.

Thanks, everyone. Good morning, and welcome to the Simpson Manufacturing Co., Inc.'s Fourth Quarter 2016 Earnings Call. Our earnings press release was issued yesterday. It 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 for today's call are Karen Colonias, Simpson's CEO; Brian Magstadt, Simpson's CFO. I will start, followed by Karen and Brian, and then we will be delighted to take your questions. North America had a good sales quarter, up 9% compared to last year based on an increase in housing starts and construction activity in most of the region. Price increase in the U.S. also contributed to the growth. Our European sales were up 1.4% compared to last Q4, net of a negative foreign exchange effect of approximately 4%. North America operating profits are up $4.1 million due to increased gross profits that were partially offset by increased operating expenses. Europe was down $1.8 million against last year due primarily to professional fees associated with acquisitions. However, Asia Pac improved $1.2 million due to improved gross profits as well as costs recorded last year related to the wind down of the Asia sales offices, which did not reoccur this year. We continue to have a very strong financial position, which gives us flexibility and the capability to continue investing in our long-term strategy and returning capital to shareholders. Before I turn the call over to Karen, I also wanted to mention that our Board of Directors has declared a quarterly dividend of $0.18 per share payable in April. We also have a board-authorized share repurchase program with a balance of about $70 million, which expires at the end of 2017. We did not repurchase any additional shares in the fourth quarter, but in 2016, we returned $86 million to shareholders through dividends and share repurchases. This significantly exceeds our stated target of 50% of cash flows from operations. Our cash flows from operations was approximately $95 million in 2016. Karen?

Thanks, Tom. I'd like to begin by starting and congratulating Tom on his fantastic career at Simpson. Tom joined the company in 1978 and was instrumental in shaping and growing our business, including taking the company public in 1994. He also greatly influenced our company culture, what we formerly call our secret sauce. Barc often credited Tom for much of the company's success and was quick to point out his many contributions and leadership. Tom served as President for a number of years, and in 1994, became CEO. Since 2002 -- excuse me, 2012, Tom has served on the Board of Directors as Chairman and, most recently, as Vice Chairman. Thanks, Tom. We certainly appreciate all your no-equal [ph] service to Simpson's strong tie. In January, we acquired CG Visions, an established Indiana-based company providing BIM technology, services and consultation to the U.S. residential building industry. BIM stands for building information modeling. This acquisition enables Simpson's strong tie to build closer partnerships with builders by offering software and services to help them control their costs and increase efficiencies at all stages of the homebuilding process including design, estimation, selling and construction. CG Visions provides to a number of the 100 -- of the top 100 U.S. mid-sized to large production builders. They provide services and consultation using open industry BIM platforms such as AutoCAD, Revit and Vertex BD. They have also developed multiple software tools that simplify and enhance these platforms. Additionally, we will look for opportunities to incorporate our products into these BIM packages and apply CG Visions' expertise to our existing and future software initiatives. We also acquired Gbo Fasteners AB, one of Europe's leading manufacturing -- manufacturers of fastening solutions, headquartered in Gunnebo, Sweden. Founded in 1764, Gbo Fastening Systems has specialized in design and manufacturing unique and innovative fastening solutions for structural applications and corrosive environments. Gbo Fastening Systems provides Simpson strong tie with a complete line of European-approved, CE-marked structural fasteners, unique fastening dimensioning software for wood applications and Gbo team's in-depth expertise in product development and testing, as well as proficiency in fastener manufacturing, surface treatment and painting. The geographic footprint of Gbo and its great brand recognition enables us to develop and extend distribution in other Nordic countries. We are continuing work on our manufacturing efficiency program and our SAP rollout, and we'll get updates on these projects as the year progresses. Truss sales, although small, were up 16% over 2015. Our truss specialists continue to represent and -- or truss design and manufacturing software and are working on converting additional customers in 2017. As a reminder, our current feature set allow us to approach about 1/3 of the U.S. market. And now I'd like to turn the call over to Brian, who shares some additional financial information.

Thanks, Karen. The gross margin on wood increased to 48%, up from 45% last Q4, and the concrete products increased to 32%, up from 29% last Q4, both on increased sales. The wood product gross margin also benefited from the price increase I mentioned earlier. Those factors led to a Q4 2016 consolidated gross margin of 47%, up from Q4 last year of 45%. As noted in the press release, we believe the estimated consolidated gross margin will be in the 46.5% to 47.5% range for 2017. Total operating expenses of R&D, engineering, selling and admin, as a percent of sales, were up about 160 basis points in the quarter compared to last year as the company had increased legal and professional fees as the company works to deliver on its long-term strategic initiatives as well as the other items noted in the press release. Also, cash profit sharing on higher operating income and other personnel costs contributed. Regarding taxes, the tax rate of 33% for this Q4 is down from 34% last Q4, primarily related to lower foreign losses and a tax law change in the U.S. related to foreign currency translation of foreign branches. Those were offset by the R&D tax credit, which was made permanent at the end of 2015, but was recognized throughout the quarters of 2016. We believe the annual effective tax rate for 2017 will be between 36% and 37% based on current information. Q4 2016 CapEx was about $12.1 million, primarily for improvements from the new chemical facility that we announced last year as well as our Texas facility expansion. We've also invested in manufacturing equipment and software development. Total 2016 CapEx is approximately $42 million. For 2017, depreciation and amortization expense is expected to be between $30 million and $32 million. Depreciation is at $25 million to $27 million. 2017 CapEx is expected to be in the range of $50 million to $55 million and includes finishing the 2 facilities noted earlier and assumes all projects are completed by the end of the year 2017. 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 go first to the line of Daniel Moore from CJS Securities.

I just want to say, Tom, thank you, obviously, for all of your help over the years. Greatly appreciate it.

Thanks.

Wanted to focus a little on G&A. For the full year, up about 14%. If I look at the $129 million of spend this year, how much of the -- how much of that, if any, would you consider nonrecurring and maybe just the key puts and takes that are likely to drive G&A expense either higher or lower next year?

Dan, it's Brian. The -- as we've noted, we had spent some professional fees in relation to the acquisitions, so due diligence and attorneys and other advisers. And those are deal-specific, but as we've noted, we've got a strategic initiative to grow in certain areas. So although I can't predict if and when those will repeat, I would expect that as we continue to look for those opportunities, that we would have some of those. As we noted, we had some software project write-offs in the year. I wouldn't expect those to repeat. And we've done some work around shareholder engagement and some of the efforts that resulted from that. So working with advisers on compensation programs, governance. And I don't know how much of that would repeat, but hard to predict.

And can you quantify the software write-offs, if it's in there, and I missed that, I apologize, in the shareholder engagement in ballpark terms for this year?

Yes, on the -- let's see. $4.2 million on the write-offs, decreases of $4.2 million. And I don't have a precise number on the shareholder engagement numbers.

Okay. And then just want to focus on the acquisitions for a moment. You mentioned Gbo likely to be dilutive for the next year or 2. What is the magnitude of the integration expense you expect to incur in 2017? And maybe just talk about the revenue and/or cost synergies that you hope to generate over time.

Why don't you take the revenue.

Yes, let me give you a -- while Brian's looking up the integration. So the interesting thing about Gbo, I think if you looked at them, they've got the same product line that we currently have at Simpson. They are a manufacturer of nails and screws. Currently, they buy their connector line from one of our competitors in Sweden. Sweden and Norway are interesting because they build with wood a residential house very similar to how we build here in the U.S. So it's a great market for more use of our connectors and our fasteners. And the Gbo name obviously is very well known in the Swedish and Norway market. So we are looking to be able to take their expertise in fasteners and bring that fasteners into France and Germany, U.K. and our other European locations while taking our connector line and really expanding that connector business in Sweden and Norway. Certainly, there's some work to do on the integration. We have not only our European Director, but also our lead person in fasteners helping out on this integration. And we think within a couple of years, 2 to 3 years, that we'll see some pretty positive results from that acquisition, again, expanding our connector line in Sweden, Norway, which we have a very small percentage of today, and also expanding that fastener line to our sets through the rest of Europe.

And Dan, this is Brian. On the integration costs, I would say for '17 plus or minus -- it'd be about $1 million, $2 million.

Got it. And then lastly on CG Visions, including amortization and purchase accounting, do you expect that to be dilutive to '17? And if so, maybe by how much in rough terms?

Right, we don't have those yet. As you saw on the press release, we had some management-supplied reports, so some operating income. But with the purchase accounting and the amortization of intangibles or the like, too early to tell at this point. There will be some expenses associated with purchase accounting, acquired intangible assets, but we don't have those yet before.

Okay. And lastly on that one, any incremental investment that you anticipate making to enhance that product?

No. On CG Visions, it's really their technical expertise with our relationships that we currently have with all those builders, both large and midsized builders. So it's really working on that introduction and, of course, getting our products into some of those BIM models, but we don't see a lot of additional costs associated with that.

[Operator Instructions] And we'll go next to the line of Josh Chan with Baird.

Congratulations, Tom. Just a question on demand in North America. Just interested to hear how you think the quarter trended versus your expectations in Q4. And then rolling into Q1, there is a tough comparison versus the warm winter last year. So any thoughts on whether you can kind of continue sales growth in Q1?

Well, I think a couple of interesting points. Q4, we did have a price increase that went into effect December 1 and that tends to accelerate a little bit of the purchases as some our customers try and sort of beat that price increase. As we look at first quarter, we certainly had a very dry first quarter. And as it's pouring down rain here currently, certainly, I think January was one of the wettest months, at least, in the California history in quite a long time. So I think it was going to be difficult. As you mentioned, last year was a fairly mild winter. The grounds are fairly saturated here, at least on the West Coast and unless you've got your foundations and you would have a very difficult time right now even trying to dig for a foundation. So I think your point is very accurate, that it's going to be a pretty tough comparison in Q1 versus last year's Q1.

And that's definitely understandable. And so on the price increase, what is the magnitude of that? And do you think that, that would be enough to offset the steel headwinds that you might potentially see in 2017?

Yes, the impact in Q4 was $2 million on the price increase. We always try to put the price increase, obviously, to help us offset the impact of the increased steel. But as you can imagine, it's kind of a staggered process on how those increases are accepted. So we'll get a little bit better feel on how that filters out here probably in Q1. And I think as you'd see in the reports, we still have steel, I would say, kind of unstable as we look at what's going on in the steel industry. So we watch it very carefully. But we do put in what we think will cover the steel increase. And again, it's a staggered way those price increases are accepted.

And then on the operating expenses, do you have a view on whether -- how that growth might compare to your sales growth in '17? Kind of namely, do you expect to leverage operating expenses next year? [Audio Gap] Last question for me, just in terms of the software write-off, wonder if you have any more color on that. And would that be expected to kind of continue in future quarters?

Josh, it's Brian. So no, I wouldn't expect that to continue in future quarters. We had a couple of projects that we have been working on over the last couple of years and decided to basically discontinue those projects and write off the capitalized portion of the software development, the internal software development or external software development costs. So I wouldn't expect those 2 to reoccur.

[Operator Instructions] At this time, it appears we have no further questions. I'd like to turn it over to the board for any closing remarks.

Thanks, everybody. Appreciate your time.

Thanks.

Thank you.

We'd like to thank everybody for their participation on today's conference call. Please feel free to disconnect your line at any time.