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spk08: Greetings and welcome to Simpson Manufacturing Company Inc. first quarter 2022 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kim Orlando with Addo Investor Relations. Please go ahead.
spk00: Good afternoon, ladies and gentlemen, and welcome to Simpson Manufacturing Company's first quarter 2022 earnings conference call. Any statements made on this call that are not statements of historical facts are forward-looking statements. Such statements are based on certain estimates and expectations and are subject to a number of risks and uncertainties. Actual future results may vary materially from those expressed or implied by the forward-looking statements. We encourage you to read the risks described in the company's public filings and reports, which are available on the SEC's or the company's corporate website. Except to the extent required by applicable securities laws, we undertake no obligation to update or publicly revise any of the forward-looking statements that we make here today, whether as a result of new information, future events, or otherwise. Please note that the company's earnings press release was issued today at approximately 4.15 p.m. Eastern Time. The earnings press release is available on the Investor Relations page of the company's website at ir.simpsonmfg.com. Today's call is being webcast, and a replay will also be available on the Investor Relations page of the company's website. Now, I would like to turn the conference over to Karen Colonius, Simpson's Chief Executive Officer.
spk02: Thanks, Kim, and good afternoon, everyone, and thank you for joining us today. I'll begin with an overview of our first quarter financial results and performance drivers before turning to an update on our key growth initiatives and capital allocation priorities. Brian will walk you through our financials and updated fiscal 2020-22 business outlook in greater detail. We delivered strong financial and operational performance in the first quarter. Net sales of $493.6 million increased 42% over the prior year period. Sales growth was primarily driven by the four product price increases we implemented in April, June, August, and October of 2021 to offset rising raw material costs. The price increases ranged from mid-single digits to mid-teens, depending on the product mix of our wood connectors, fasteners, and concrete products in the United States. While our sales benefited from higher volumes in our home center channel, which includes both our home center and co-op customers and is where we see much of our repair and remodel and DIY business, this was offset by softer volumes through our other distribution channels. As such, volume was flat year over year. Our consolidated net sales in Europe for the first quarter grew 16.2% year over year, also due primarily to product price increases in response to rising material costs through 2021. Our consolidated gross margin, supported by our product price increases, grew 130 basis points to 48% compared to 46.7% in the year-ago period. As a result, we grew our income from operations to $124.4 million and generated strong earnings per diluted share of $2.18. Brian will elaborate further on our margin expectations for the remainder of the year. I'd like to thank our entire Simpson StrongTie team for their solid operational execution. We appreciate your dedication to serving our customers and remaining on track with our company ambitions. Those ambitions being to strengthen our values-based culture, be the partner of choice, be the innovation leader in the markets we operate, continue our above market growth relative to U.S. housing starts, expand our operating income margin to remain within the top quartile of our proxy peers, and expand our return on invested capital to remain within the top quartile of our proxy peers. Overall, we are confident that we remain on track to achieve our company ambitions. Now more specifically, I'd like to discuss our progress regarding ambition number four, continuing our track record of above-market growth relative to U.S. housing starts. To achieve this, we're focused on growing in the OEM, R&R DIY space, and mass timber markets, where we are striving to be a leader in engineered, load-rated construction fastening solutions, given that each of these markets have a broader product opportunity for fastening solutions. We are also focused on building our presence in concrete construction, as well as solutions for structural steel construction, a new market for Simpson. And finally, we're working to become a leader in building technology space, which supports all of our key growth initiatives. We made significant progress over the past year to support these different end users and distribution channels. Included in our efforts was a realignment of our sales teams to more specifically focus on the five end-use markets, residential, commercial, OEM, national retail, and building technology, which has led to new customer and project wins within each of our five key growth initiatives. I'd like to provide just a few examples of these developments during the first quarter of 2022. Within national retail markets, Our focus on growing in the R&R and DIY space, combined with our ongoing efforts to continually improve execution with our retail customers, drove the reset of certain of our fastener sets with one of our key customers. The new fastener sets will include products such as our quick drive auto feed driving system and our outdoor accents, promoting further visibility of the breadth of line of Simpson products. Within the commercial market, we're continuing to expand our offerings, including the expansion of our structural steel product line. We had some notable wins and progress pertaining to structural steel. Our structural steel solutions are being used in the construction of 10 recreational and amusement locations in the United States, two of which have already been delivered. Additionally, our structural steel solutions are being used in the construction of 50 electric vehicle charging stations throughout the United States. I'd like to reiterate that these are just a few select examples of our progress on our growth initiatives in Q1 within our five end use markets. We believe advancements in these end markets and growth initiatives will contribute to our above market growth in fiscal 2022 and beyond. Our future growth and diversification efforts were further supported by the acquisition of the Etanko Group, a leader in fixing and fastening solutions, primarily for commercial building construction market throughout Europe, which closed on April 1st of 2022. We are very pleased to officially welcome the Etanko employees to the Simpson family. Over the past few months, our team has been working closely with many of the Etanko's managers and leaders as they engage in pre-closing activities, including integration and planning for synergies and detailed initiatives. Our cultures, both built on high-quality products and customer service, have fostered strong teamwork and collaboration. We believe Etanco's extensive and complementary product offering will strengthen our overall product portfolio in Europe, enabling us to deliver even more value to our customers. Importantly, the acquisition further diversifies our business away from U.S. housing starts. While we continue to benefit from solid ongoing demand for U.S. housing, we now believe approximately 50% of our business is reliant on U.S. housing starts compared to approximately 60% pre-acquisition, which helps further balance and diversify our business to be more resilient throughout industry cycles. One important item to note is that we have suspended all business activity within Russia and Belarus by halting all product sales and shipments. We estimate the revenue impact will be less than $5 million. Additionally, we have donated $100,000 to the International Rescue Committee, which is currently in Poland supporting displaced children and families. Our thoughts are with the people of the Ukraine and everyone affected by the war. Now turning to capital allocation. Our priorities in 2022 are centered on organic growth, returning value to our stockholders in the form of quarterly dividends and selectively repurchasing of our shares, while focusing on repaying the debt we incurred to finance the acquisition of Etanco. In regard to growth, we remain dual focused on both organic growth and M&A opportunities. We are investing in areas such as engineering, marketing, sales personnel, and testing capabilities across many areas of our business. We also plan to invest in facility expansions to support our growth. While we are primarily concentrated on the integration of Etanco, we may also consider opportunities that would promote product line expansion in order to develop complete solutions for the markets in which we operate, as well as opportunities in areas that support our key growth initiatives. In summary, we are extremely pleased with our first quarter solid results. And while we continue to experience headwinds from continued increases in raw material costs, as well as impacts to our customers from tightening labor and supply chain conditions, we believe the underlying demand in our key markets and regions should remain strong throughout 2022. I would like to once again thank and acknowledge all the Simpson StrongTie employees for their commitment to health and safety and outstanding customer service as we work toward our mission of providing the highest quality solution sets to build safer, stronger structures. I would also like to thank our customers, suppliers, and stockholders for your continued support of Simpson. Now I'll turn the call over to Brian, who will discuss our first quarter financial results and our 2022 outlook in a greater detail.
spk05: Thank you, Karen, and good afternoon, everyone. I'm pleased to discuss our first quarter financial results with you today. Before I begin, I'd like to mention that unless otherwise stated, all financial measures discussed in my prepared remarks today refer to the first quarter of 2022, and all comparisons will be year-over-year comparisons versus the first quarter of 2021. Now, turning to our first quarter results. As Karen highlighted, our consolidated net sales increased 42% to $493.6 million. Within the North America segment, net sales increased 46% to $438.7 million, primarily due to the four price increases we implemented in 2021 to offset rising raw material costs. In Canada, our net sales also increased due to product price increases and were partially offset by lower sales volumes. In Europe, net sales increased 16.2% to $51.5 million, primarily due to product price increases, which were partially offset by the negative effect of $3.7 million in foreign currency translation related to Europe's currencies weakening against the United States dollar. Wood construction products represented 88% of total sales compared to 87%, and concrete construction products represented 12% of total sales compared to 13%. Consolidated gross profit increased by 45.9% to $236.8 million, which resulted in another strong gross margin quarter at 48%. When compared to the first and fourth quarters of 2021, our gross margin expanded by 130 basis points and 60 basis points, respectively. On a segment basis, our gross margin in North America increased to 49.7% compared to 48.5%, primarily due to the continued benefit of the aforementioned price increases, which contributed to lower overhead and labor costs as a percent of sales, partially offset by higher raw material costs. as a percent of sales. However, in Europe, our gross margin declined slightly to 33.9% from 34.4%, primarily due to higher factory and tooling costs. While our inventory levels at March 31st were relatively flat in terms of pounds on hand compared to March 31st last year, the dollar value of our inventory is approximately 50% higher which will be reflected in our cost of goods sold in the coming quarters. From a product perspective, our first quarter gross margin on wood products was 48.1% compared to 46.6% in the prior year quarter and was 46.9% for concrete products compared to 42.5% in the prior year quarter. Now, turning to our first quarter costs and operating expenses. Total operating expenses were $106.5 million, an increase of $12.5 million, or approximately 13.3%. As a percentage of net sales, total operating expenses were 21.6%, an improvement of approximately 540 basis points compared to 27%, primarily due to the increased spend relative to the price increased revenues. Our first quarter research and development and engineering expenses increased 8.7% to $15.9 million, primarily due to personnel and compensation-related costs, including investments related to our growth initiatives. Selling expenses increased 19.5% to $36.8 million due to expenses associated with personnel, compensation, travel, and trade shows. On a segment basis, selling expenses in North America were up 22.5%, and in Europe, they were up 5.1%. General and administrative expenses increased 10.7% to $53.8 million, primarily due to personnel, legal, and professional fees not associated with the acquisition of a Tonko. Ongoing strength in our top line and gross margin fueled an 86.2% increase in consolidated income from operations to $124.4 million from $68.4 million. In North America, income from operations increased 85.9% to $135.7 million, primarily due to higher gross profit, which was partially offset by higher operating expenses and cash profit sharing mainly for favorable operating performance. Europe reported a loss from operations of $1.4 million compared to income from operations of $2.3 million, primarily due to professional fees of $7 million associated with the Etanco transaction, offset by a $1.1 million gain on the sale of a property. On a consolidated basis, our operating income margin of 25.2%, increased by approximately 550 basis points from 19.7%. I will discuss our operating margin outlook for the remainder of fiscal 2022 shortly. Our effective tax rate decreased to 23.7% from 24.3%, primarily due to a higher windfall tax benefit on the vesting of restricted stock units during the first quarter of 2022 compared to 2021. Accordingly, net income totaled $94.6 million, or $2.18 per fully diluted share, compared to $50.4 million, or $1.16 per fully diluted share. Now turning to our balance sheet and cash flow. Our balance sheet remained healthy. At March 31, 2022, cash and cash equivalents totaled $984.4 million. The significant increase in cash was a result of our amended and restated credit agreement with our bank group for approximately $700 million in borrowings to finance a significant portion of the purchase price of the Etanco acquisition. The amended and restated credit agreement provides for $250 million in borrowings from our revolving credit facility and $450 million from our term loan. And as of March 31st, 2022, 200 million on our primary credit line was available for borrowing. For the fiscal year ending December 31st, 2022, we anticipate our interest expense on the outstanding loans will be approximately $11 million after giving effect to interest hedges and amortization of bank fees. Our inventory position at March 31st was $443.4 million, which was relatively flat compared to our balance at December 31st, 2021, as the effect of higher priced inventory was offset by reduced inventory pounds on hand, primarily in North America. We continue to be diligent in regard to our inventory purchases through careful management and purchasing practices. while striving to maintain high levels of customer service and on-time delivery standards, which are key tenants of our value proposition. We generated strong cash flow from operations of $44.7 million for the first quarter of 2022, compared to $17.8 million. As Karen highlighted, we remain dedicated to supporting the growth of our business, as well as providing strong capital returns to our stockholders through both dividends and share repurchases, while focusing on repaying the debt we incurred to finance the acquisition of Etanco. During the first quarter, we invested $17.8 million for capital expenditures and paid $10.8 million in dividends. Additionally, we repurchased 194,745 shares of our common stock at an average price of $109.28 per share, for a total of $21.3 million. As of March 31, 2022, we had approximately $78.7 million available under our $100 million share repurchase authorization, which remains in effect through the end of 2022. Next, I'd like to discuss some updates to our 2022 financial outlook. Our latest outlook reflects the acquisition of Etanco, which closed on April 1, 2022, one quarter of our actual results, and our latest expectations regarding demand trends, raw material input costs, and operating expenses. Based on business trends and conditions as of today, April 25th, we are revising our guidance for the full year ending December 31, 2022. We now expect our operating margin to be in the range of 19 to 20%. compared to our previous estimate of 17.5% to 19%, which did not include the acquisition of Etanco. Our revised guidance is mostly attributable to an improved outlook for the overall market and Simpson. In addition, our guidance includes projected results for Etanco, including approximately $15 million to $17 million in integration and transaction costs. We are reiterating our 2022 effective tax rate estimate to now include a TANCO of 25.5% to 26.5%, including both federal and state income tax rates and assuming no tax law changes are enacted. And we continue to expect capital expenditures to be in the range of $65 million to $70 million. With integration activities well underway, we're in the process of assessing a TANCO's CapEx needs in support of its operations and will provide additional detail in the coming quarters. We continue to estimate roughly 20% of our CapEx will be dedicated to maintenance, with the remainder focused on growth to maximize efficiencies, expand our manufacturing footprint, and invest in our key growth initiatives. Before we conclude, I'd like to provide some additional color on our increased 2022 operating margin outlook. Raw material prices have continued to rise even following the pullback we saw towards the end of last year. As discussed earlier, we implemented four product price increases in 2021 in an effort to offset these costs. And as a result, we estimate the cumulative top line impact from these price increases will be approximately $300 million in 2022. As a reminder, the impact from averaging raw material costs typically lags our price increases. While we continue to expect our cost of goods sold will increase significantly as we work through our on-hand inventory and buy raw material at prices higher than our historical averages, we believe this impact will become much more apparent in the second half of 2022. In addition, as mentioned earlier, we anticipate we'll incur approximately $15 to $17 million in integration and transaction costs related to the Etanco acquisition, of which 8 to 10 million are incremental expenses. In summary, we were very pleased to start 2022 off strong with solid first quarter financial results and a successful acquisition of Etanco earlier this month. We remain very excited about our expanded product breadth and service offerings and the associated prospects for incremental growth. Our industry-leading position geographic reach, and diverse product offerings, combined with our strong balance sheet, gives us confidence in our ability to maintain operational excellence. With that, I'd like to turn the call over to the operator to begin the Q&A session. Operator?
spk08: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
spk07: One moment, please, while we poll for questions. Our first question comes from Daniel Moore with CJS Securities.
spk08: Please proceed with your question.
spk04: Thank you. Good afternoon, Karen and Brian. Thanks for taking questions and congrats on obviously exceptional results. First is on the guide, the revised 22 operating income margin guide. If we excluded the Tonko, would it still be generally in that 19 to 20% range, higher or lower?
spk05: Yes, Dan, it would be in that same ballpark range.
spk04: Got it. You tried to give some color, and it's appreciated. I'm just trying to understand the difference between the view now and kind of two months ago or so. What's different in the macro environment or the environment for Simpson, or is it more just a function of kind of initial conservatism?
spk05: Well, I think a couple of things. One was obviously a little more line of sight into the year and seeing – the demand trends that came through in Q1, and then our continued work on our forecasting and modeling within our business, but largely due to the forecast that we're seeing based on talking with customers and vendors throughout the year. Q1 was a little better than planned.
spk04: as well okay um and maybe one or two more i'll shift gears to a tonko um how would you describe the environment you know in europe and specifically italy france their their core markets today compared to maybe last summer when you announced the deal or demand levels higher lower um you know just any changes in the operating environment there to speak of yeah i'll take that one
spk02: You know, we are still seeing some pretty nice demand in Europe, obviously a little bit of choppiness based on what's going on with Russia and the Ukraine, but we still, based on the forecasting information that we get from industry in the European market, it's still looking like there's some strong demand in our residential and also some pretty good demand in the commercial market, which is where Tonko is.
spk04: Got it. And lastly, again, related to Etanco, if not sort of a volume growth projection, you've given us good color on pricing here in North America. How do we think about the pricing that's gone through in their business, either the back half of 22 or back half of 21 into 22? You know, what type of uplift should we expect from Etanco year over year from price?
spk07: Thanks again.
spk02: So from a pricing perspective, they tend to put any price increases in place. In Europe, I think you're aware you can only do it a couple times a year. And certainly as we've looked and worked with them, last year those prices were put in place to cover their rising material costs also. So they would continue or we would continue that process now as we see any material fluctuations. Pretty limited in the European market to two times a year to being able to put any pricing increase in place.
spk05: Yeah, and some of the countries do allow a little more frequent there, but they've got a very complex skew mix, a different pricing approach. They do a lot of quoting for particular commercial jobs and applications to contractors that they sell to. But they definitely try to capture rising material costs into their selling prices as well.
spk07: Okay, that's helpful. I'll circle back with any follow-ups. Thank you. Thanks, Dan.
spk08: Your next question comes from Tim Weiss with Baird. Please proceed with your question.
spk06: Hey, good afternoon, everyone. Hey, Tim.
spk07: Hi, Tim.
spk06: Hello. Maybe just maybe starting on just kind of price cost. I just want to make sure I understand. Is there an underlying improvement kind of baked into your outlook? Or is there some sort of kind of shift that maybe some of the timing impacts from normalization actually kind of fall in 23? I just want to make sure, you know, just kind of clarify that.
spk05: Well, as mentioned a moment ago, Q1 was a little better than from a volume perspective than what we had thought heading coming out of last year one of the interesting things that we're seeing is due to various factors influencing construction such as lack of labor the continued supply chain efforts it seems like seasonality is less impactful than it had been to our business in prior years. One, our dependence on housing, as we've noted, has been decreasing, but also just builders being very fully booked. Maybe that's not the right way to say it, but they're often commenting to us that they're sold through their 2022 releases and they're just building them. So it feels like there's a little less seasonality built into that. And as we think about our business going forward, again, that's a little better than Q1 versus last year. And then just the continued complexity in our business around our SKUs, the steel that we use, Some products were turning a lot faster than others, so it creates that dynamic of trying to pinpoint when that gross margin cost of sales impact would be. So just a little better view now versus four or five months ago, or a few months ago, coupled with just that I guess a little less seasonality in our business, which helps overhead absorption in the factories.
spk06: Definitely. Okay, good. No, that's really helpful. And I guess if volume growth is better in the first quarter than maybe you thought, I mean, what's kind of baked in now, you know, to your outlook for volume growth for 22? It's still...
spk05: amid little mid to high single digits from a volume perspective we are seeing though April this is a little softer than than what we thought but as we look at the the balance of the year and remember last year we had some interesting volume running through due to buying patterns of some of our customers the comparative will be a little more interesting. But just from a fiscal year 2022, you know, that mid to low, mid to high single digits is where we're expecting.
spk06: Okay. Okay, good. And then I guess on the Tonko, just kind of two clarification questions. So is the Tonko being reported on a gap basis? And if it is, what's the intangible amortization number that we should think about being included in the operating margin?
spk05: So the only numbers right now that we, so obviously at Tonko, there's zero, other than the transaction fees that we called out separate on the operating expense line, there's no Tonko impact in the P&L. revenue expenses because the acquisition was April 1st. On a go-forward basis, the operating margin guidance assumes right now a very high-level estimate for intangible amortization that we are spending the next couple of quarters fine-tuning the fair value of purchase price allocation valuation to really fine-tune that. So right now we just have some high-level estimates baked into that operating margin guide that we provided.
spk07: Okay.
spk05: So I can tell you an estimate, but it's going to change. It's in the tens of millions for intangible amortization. We just There's a lot of assets of value, whether it be purchased intangibles, step-up in fair value, and other assets that would roll through. So it's a very high-level estimate at this point.
spk06: Okay. Okay. No, that's fine. I mean, but the 19% to 20% includes the charges. It includes the intangible amortization, you know, for a tonneau, at least what you're estimating to be. Okay. Gotcha. And then what would you think that the revenue contribution for a taco should be per quarter?
spk05: Per quarter, we're still dialing that in. But for the balance of 2022, it should be a little north of $220 million for the balance for the second quarter. third, fourth quarters of the year.
spk06: Okay, good. Great. Well, thanks for the time, guys. Good luck on everything. Thanks, Tim.
spk07: Thanks, Tim.
spk08: Our next question comes from Kurt Einger with D.A. Davidson. Please proceed with your question.
spk01: Great. Thanks, and good afternoon, everyone. Hi, Kurt. Hi, Kurt. Hi. I just wanted to unpack the comments, I guess, on the volume side first and hoping you could maybe provide a bit more color on the demand trends between distribution and kind of the dealer channel as well as the home center customers. And Karen, if I heard you right, I thought you said that volumes were kind of flat year over year and relative to expectations, it sounded like that was better. So I just wanted to understand whether that was kind of a specific trend comp issue related to some home center strength in Q1 of last year, or kind of what to make of that flat volume?
spk02: Yeah, Curt, I think it has to do quite a bit with what was happening this time last year, right? We had announced a April price increase, so I think we had some pre-buying that went in, a little bit of pre-buying to help offset that price increase in 2021. We also had quite a bit of concerns about supply chains, and I think a lot of customers were just basically making sure they had product available. So it's pretty choppy for us based on, again, the price increases and all the things that were going on with supply chain to get a really nice quarter-over-year-over-year view. We did see a little bit of increase in our home center volume, but as we had said in the third quarter of last year that volume had decreased so we see home centers kind of trying to do a little bit of an increase in their volume before any spring or summer business that comes in and Basically a little bit down in our other distribution channels Okay, and then
spk01: Brian, you had kind of touched on maybe a bit softer than expected. April, I mean, was that primarily on the home center side, maybe with a little bit of a delay in spring in certain geographies, or was that on some of those channels that would serve the new construction market as well?
spk05: Kurt, that was just total not broken down by channels. in that regard. So we look at our daily sales trends in total, and that was where that comment came from. So not specific to any particular channel at this point.
spk01: Okay. Got it. And then just last one. I know it's still early on, but relative to the 500 basis points of European kind of operating expansion, you kind of expect with Etanco Any sense of kind of what the baseline to build that off of is?
spk05: So when we were commenting on that late last year, it was around a high single-digit Simpson European business through, I believe it was we were analyzing those forecasts during the fourth quarter last year. Kind of that high single digit was the base that we were looking at there.
spk07: Okay. All right. Great. Well, appreciate all the color, and I'll turn it over. Thank you. Thanks, Kurt. Our next question comes from Julio Romero with Sedoti. Please proceed with your question. Hey, good afternoon, Cameron Bryan. Hi, Julio. Hi, Julio.
spk03: So you had mentioned raw materials continue to rise in the quarter. Are you considering or expecting any additional price increases? And if so, what's your sense of how willing the market is going to be able to absorb additional price increases?
spk02: Yeah, that's a great, great question. We certainly saw steel start to come down a little bit at the end of the fourth quarter and maybe even slightly early into January. And then as things kind of changed in Russia and Ukraine, we've actually seen it pick back up again. But as we've always stated, we need to ensure that whatever those price changes are, are sustainable before we go to the effort of making significant changes in our price structure and certainly creating a lot of that work for our customers. At this point, we're obviously watching it, but we do not at this point have any thoughts of price increases going in place, unless, of course, it really changes dramatically. But currently, it looks like we'll stay status quo is where we are right now.
spk05: Yeah, there could be a little bit of pricing in Europe.
spk02: Yeah.
spk05: Markets are a little bit different there. So, Karen, I think you're mostly talking about North America?
spk07: Correct. Okay, I appreciate that.
spk05: Yeah, Julio, sorry, one last thing on that. There may be small slices of our business, a particular product category that we might need a little bit of price increase on, but nothing significant in the U.S.
spk07: Okay, no, I appreciate the call there, and it makes sense that you guys are being thoughtful about everything there.
spk03: Can you maybe speak to what you're hearing from your customers and just the sentiment in regards to the outlook for new single-family versus multifamily construction?
spk02: Yeah, I think, you know, as Brian mentioned, many of our customers have already sold out their releases for the year, so there's still the demand. You know, there's the same... elements that everyone is concerned about, increasing interest rates, certainly what's going on in the overall economics. But our customers are clearly saying they still have demand. And I think their sentiment is that they feel pretty good about both multifamily and single family as we go through the rest of 2022. As you know, Julio, for us, we put our products in both single-family and multi-family. So when we look at housing starts, even though we break it out by geography, because we've talked about the content we put in, multi-family starts are good for us also because we'll put quite a bit of content in those starts.
spk03: Yep, understood. And just over on Etanco, can you expand on your commentary with regards to the integration costs that you expect and the $8 to $10 million of incremental expenses. I wasn't quite sure what are they incremental to. Are they incremental to your initial expectations? Just any clarification there.
spk05: Good point. So the $7 million that we booked in Q1, it's incremental on that. Gets you to the $15 to $17 million total for the year. So before I go into more detail, that one makes sense on that one? Yep. Okay. working with consultants so part of that is the the amount that we paid to our investment banker to on on close of the deal or when when the deal was closing there the lot of efforts around integration consulting there there may be costs associated with some of the activities in the integration and then as well as all the other costs that come with the added financial reporting requirements, additional audits, valuation work, some integration of systems to be able to provide each provide their locations buying demands or what have you with their counterpart locations. So just general activities associated with pulling the two organizations more closely together.
spk03: Got it. That's really helpful. And one last one for me is, Aaron, you spoke earlier about how the first quarter of last year you had seen some pre-buying in advance of a price increase. Just remind us if what you had seen in the second quarter of last year, just as we come up on the quarterly comp, if you saw any pre-buying or abnormal volume activity as well in the prior year quarter.
spk02: Yeah, I mean, as we've always talked about, we need to give our customers somewhere between a 30- to 60-day notification of a price increase. We always try and put things in place to stop pre-buying, but of course that's almost impossible to stop 100%. And we did have a price increase that we implemented in June, so we would have had a little bit of pre-buying that also happened in second quarter.
spk07: Very helpful. Thanks very much for taking the questions.
spk02: Yeah, thanks.
spk08: Ladies and gentlemen, we have reached the end of the question and answer session, and this concludes today's conference. You may disconnect your lines at this time. Thank you all for your participation.
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