Simpson Manufacturing Co., Inc. (NYSE:SSD) Q4 2017 Earnings Conference Call - Final Transcript
Feb 05, 2018 • 05:00 pm ET
Thank you. At this time we will be conducting a question-and-answer session. (Operator Instructions) Our first question comes from Daniel Moore of CJS Securities. Please proceed with your question.
Thank you. Good afternoon, Karen. Good afternoon, Brian. So let's start with maybe gross margin, talk a little bit about obviously some of its acquisition, but on North America more specifically rising input costs, do -- would you expect to start the year perhaps in Q1 a little below that 45%, 46% guide and improve as the year goes on, just talk about the kind of how you see margins playing out over the year and I have a quick follow-up?
Sure. Hi Dan, good afternoon. I would say in a similar fashion to -- in prior years Q1 and Q4 typically are going to be the lower gross margin quarters compared to Q2 and Q3. But as it relates to the full year the raw material input costs as you noted is what's driving where we are projecting to be in 2018. So similar seasonality trend and but on an annual basis looking at that 45% to 46% range for the full year.
I guess that in other way do you have price increases going on in Q1 or at some point in the near future?
Yes. Hi Dan, this is Karen. So as we have mentioned in the past that certainly there is a lot of volatility right now with the steel industry and what we are seeing on steel prices, currently, there seems to be uptrend in those steel prices. And as we have said in the past, this does become something that we potentially have to pass on to our customers we certainly will take that action when necessary, but keeping in mind that it takes about some of our customers have a 60 to 90 day lead time on any price changes. So today, we do not have a price increase in place, but we certainly are monitoring what's going on with the steel prices.
Got it. Very helpful. To give a lot of good color as it relates to guide for 2018, can you talk a little bit about SG&A, I think if I heard some of those comments correctly, it sounds like SAP related expense will go up particularly with amortization by several million, but just overall directionally, how should we think about SG&A for full year '18?
Yes, we have done a -- we have worked very hard with our groups across all our business segments and certainly all of our business areas to really take a look at our costs. And then as we stated, we have positioned our SG&A absolute dollars to be less than they were in 2017 even after taking into account the increased in the SAP cost.
We are really looking at all projects that we are working on to be sure that they are returning profitable investments to the company. And we believe that those SG&A reductions that