Good morning, ladies and gentlemen. And welcome to Simpson Manufacturing Company Second Quarter 2017 Earnings Conference Call. On this 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 may differ materially from these statements. Some of these factors and cautionary statements are discussed in the company’s public filings and reports, which are available on the SEC’s or the company’s corporate website. Please note that the company's earnings press was issued yesterday at approximately 5 O'clock PM Eastern Time. It is available on the company' website at www.simpsonmfg.com .Today’s call is being webcast and a replay will be available on the company's website. Now, I would like to turn the conference over to Karen Colonias, Simpson's President and Chief Executive Officer.

Thanks Kim, and good morning, everyone. I'll begin by walking you through some highlights from the second quarter of 2017. And then I'll turn it over to our CFO, Brian Magstadt to walk you through the financials and our future outlook in greater detail. Second quarter consolidated net sales were up 14% year-over-year to $263 million, primarily due to our recent acquisitions, driving growth in Europe, as well as increased sales volumes and average net sold unit prices in North America. The US housing and remodeling markets are continuing on path to a slow but steady recovery. And we believe US housing starts which were a leading indicator for roughly 60% of our business, should continue to improve at a high single digit rate on an annual basis over the next few years. Our consolidated gross profit margin was 47% reflecting 150 basis points decline over the prior year, due primarily to our recent acquisitions in Europe which have a lower gross margin than our consolidated business, as well as increased fixed factory and tooling overhead cost in our legacy businesses. Our ability to achieve industry leading margins from both a gross profit margin and operating income margin standpoint is due to the high level of value added services that we provide to our customers. These differentiators includes strong brand recognition, extensively tested solutions that are state of the art test lab, deep 40 year relationship with engineers who get our product specified on the blueprint and pull through to the job site. Product availability with delivery in usually 24 hours or less, active involvement with code officials to improve building codes and construction practices, and strong customer support through education for engineers, builders and contractors to demonstrate ease of use and efficiency of our product. As most of you…

Thank you, Karen. And good morning, everyone. I am pleased to discuss our financial results with you today. Our first quarter consolidated net sales for the second quarter of 2017 were $263 million, up 14% compared to $230 million in the second quarter of 2016. Net sales in the second quarter included $15 million from our recent acquisitions of Gbo, CG Visions and MS Dêcoupe and were further driven by strong sales to contractor distributors, dealer distributors, home centers and lumber dealer, primarily due to increased home construction activity in average unit sale prices. Within the North America segment, net sales increased 9% year-over-year primarily due to increased sales volume on improved economic activity, as well as increases in average net sales unit prices. In Europe, net sales increased 47% largely as a result of the recent European acquisition of MS Dêcoupe and Gbo, though were partially offset by the negative effect of foreign currency translation. As a percentage of net sales, wood construction products including connectors, truss plate, fastening systems, fasteners and shearwalls, represented 85% in the second quarter compared to 86% in the prior year quarter. Concrete construction products including adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials represented 15% of total net sales in the second quarter of 2017 compared to 14% in the prior year quarter. Our consolidated gross profit increased 11% to $123.5 million from $111.5 million in the second quarter of 2016, resulting in a consolidated gross profit margin of 47%, down 150 basis points from the prior year period. As Karen mentioned, despite this year-over-year decline due both to the impact of our recent acquisitions and increased fixed overhead cost in the remainder of business, our ability to achieve an industry leading gross profit margin is directly attributed to our…

[Operator Instructions] Our first question today is coming from Tim Lange from Robert W Baird. Please proceed with your question.

Good morning, everybody. So first question I had Brian maybe just on the gross margin of 45% to 46%. It was a little unclear in the press release just with the commentary around what you thought steel prices might do in the third quarter. So is there a way to think about how we should benchmark steel -- if we kind of snap the line today and assume that, that steel remains where it is, is that what you've included in the 45% to 46% gross margin guidance?

Correct, yes.

So if it fluctuates then guidance will change.

Correct. And there is some potential volatility with trade issues on steel in that market. So we anticipate that there could be vitality but modeling somewhat flat market is where we are coming out on that gross margin.

Okay, okay, that's helpful. And then you guys gave gross margin and a couple of below the line items, any commentary on what you might think sales growth could be in 2017?

Hi, Tim. Karen, yes, I think we are seeing pretty similar when we look at the housing start sort of -- they are tracking mid to high single digits and as we pointed out we sort of track 60% of our business in parallel with this housing start. We are seeing a little bit better revenue standpoint from the Europe entities. And so I think that's again sort of that close tracking to where we are with housing start with the reasonable approach.

Okay, okay. And then I know you guys don't want to give any numbers specifics today on some of the longer-term targets or metric but is there way that maybe you could give us a preview of what you actually may give us in terms of -- if it's going to be longer term margin targets or EPS targets or just added color on the initiatives I think that would be helpful for everybody.

Yes. So we plan to give some firm metrics in some areas in some time -- timeframe associated to meet those metrics. And probably some more color on some of our other initiatives. And as we mentioned in the release, we'll have those put together and out to the shareholders and investing community here before the year is out. Still working through lot of the details obviously with our operational people.

Thank you. Our next question today is coming from Steve Chercover from DA Davidson. Please proceed with your question.

Thanks. Good morning, everyone. Few questions. So first of all, truss has been and remains as exciting opportunity and obviously there is a huge amount of growth. So, a, what is your target market share of that $500 million to $600 million market? And secondly beyond Mitek, can you identify a few of the competitor so we can track the space?

Sure. So competitors in the truss space, we believe Mitek would have the largest share of that market space and we would estimate that to be around 70% maybe little bit higher than that. The next largest competitor would be ITW. And then there is small competitor called Eagle and then we have our product lines. So really a pretty small group with couple of those having very large market share. When we come out with some of those financial details and that color will have you a better idea of what we are proposing we believe our market share opportunities are in that space.

Okay. Thanks for that, Karen. And then with respect to acquisitions, how quickly do you rebrand the product lines in the Simpson name? Does Simpson have the same brand equity in Europe it has here in North America?

Yes, that's a great question, Steve. Depending on what the product is really a function of how quickly we may rebrand it? So we don't have a set particular method. In Europe for example, we acquired S&P Clever which is our concrete business and we acquired that about six years ago. So that is not rebranded, that is S&P Simpson company because the S&P had a very good brand name in that space. And so we want to take advantage of that outset. We had purchased, obviously when we acquired that company. If we look at some other companies, other activities in the US, most of the companies we've acquired in the US, we've rebranded Simpson. When we think of CG Visions, we have again branded that as CG Visions of Simpson Strong-Tie Company because again they have a great name in the software area for builders. So we don't really have a sort of set process. It just depends on what the acquisition is and where the product is.

Okay. That makes sense. So if you don't rebrand because they already have their brand so to speak you might put your logo on it so that you also get a little bit of tie end.

Correct. Correct. So if the company we've acquired or the product we acquired has good brand recognition, if it is a trade brand we might just keep that as the product name. But if it's for example S&P, I already said as example, again that's the company name and it's much more known in the concrete space so we'll just put it as a Simpson Strong-Tie Company when we put our marketing literature out.

Got you. Okay, two more. Good to see you are getting handle on SG&A again 22% isn't the target but is there a target?

Yes, and see that's another thing we'll be looking at it when we come out for some specific metrics where we believe that targeted SG&A can get to. As we mentioned, we have put the foundational things in place needed for the truss initiative as well as our concrete initiative. And so we are starting to see some improvement in the revenue and that's helping offset and sort of reduce that SG&A as a percent of sales and we expect to continue to see that trend.

Great. Final question. And not to be too neat picky but I guess I am the old timer around here so back in 2006 as I recall you had what was Dura-Vent, I think Brian said you are a one segment company. So I am wondering do you say that because it was kind of metal bending geared towards housing as opposed to concrete. Why was-- I thought that was a separate segment.

No, good question. And I should clarify and thank you for bringing that up. Thinking about once we decided to sell after event we recasted the financials under our continuing operations model. So thinking about Strong-Tie only. So, yes, you are correct in that. Simpson Manufacturing previously had the venting business and the connector business. I was referring only to the Strong-Tie business.

Thank you. Our next question today is coming from Dan Moore from CJS Securities. Please proceed with your question.

Hey, good morning. It's actually Chris Moore for Dan. Yes, maybe just talk about the SAP invitation a bit more, I know you said $34 million over the next three years. Has spending peaked at this point in time and are there some key milestones that we should be looking for over the next three years?

Hi, Chris. It's Brian. So as we are looking at that project it is on track and on plan. And as we have projected out those cash flows, certain cash flows get capitalized earlier in the project. And then as we move more into training and go-live we'll have expenses running through the P&L. So today we are more in the capitalization phase. As our first location -- we looked at bring our first couple locations on live in early 2018. The expenses will move more into or the spending will move into more into expense. For example, training is an expense item versus a capitalization item so today I'd say we are more in the capitalization of spending phase versus the expense.

Got you. Got you. And maybe can you just update us a little bit on the M&A pipeline?

Hi, Chris. This is Karen. As we stated before we are looking for things that fit within our strategic initiative really expanding in our fastener line. Some things in a concrete space and certainly in Europe we like to be able to increase that market share by acquiring some more connector companies. Today, we still have outside advisors looking for businesses for us, as well as we have a group of people here at Simpson that work in M&A. Pipeline seems to be a little bit slower than normal. I think a lot of people are kind of interested in what's going on from tax initiatives and things at the government. So still very active and looking I'd say things have slowdown a little bit as far as companies that are fitting the model that we are interested in.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time. And have a wonderful day. We thank you for your participation today.