Barclay Simpson – Chairman and CEO Mike Herbert – CFO

Arny Ursaner – CJS Securities Robert Kelly – Sidoti Barry Vogel – Barry Vogel and Associates Steve Chercover – D.A. Davidson & Co.

Scott Mackey - AAB Capital Derrick Schmar – Longbow Research Alan Robinson – RBC Keith Johnson – Morgan Keegan

Good morning everybody. Thanks for joining Mike Herbert and myself.

About all we can say about the results of the first quarter is that they were lousy. And the rest of this year does not look good in terms of profits.

As far as the future, it's looking better all the time. Our contractor distributor sales, though in the quarter were off 43% and practically all of the drop is due to new construction in the U.S.

And to expect that to change this year is not realistic, especially with the soaring price of our basic material, steel. It's up roughly 40% over last year and another 20% rise is expected.

So, we are putting in a price increase as of June the 1st and may have to put in another one. And that despite the fact that our competitor's costs have to go up as much, at least as much as ours, we're not covering all of the increase.

With their business way off and the resulting heavy losses, contractors are looking for ways to reduce not raise costs. So we're going to work harder than ever on other ways to reduce our costs other than steel.

A disappointment was home center business, off 25% despite the probability that we have more of their businesses than ever before. And except for the sales figure only down 1.4% it was a bad quarter at Dura-Vent which lowered company profits by $2.8 million.

Are we concerned? Yes.

Are our people working on correcting the loss? Yes.

Am I going to go into more detail now? No, because we need to get the Vicksburg plant closed in order to find out how good was our research.

On the positive side we're making real progress in becoming less dependent on U.S. housing and more of an international company.

Sales outside of the U.S. went up in the first quarter from 18% of our total sales last year to 23.2% this year.

And we're just getting started in Asia. The major part so far of that increase was Europe where sales went from 12.4 to 15.5% of total sales.

And Canada also was up over 20%. The way that the economies are growing in the two most populous countries in the world, China and India, especially China, makes us believe that Asia, starting with China must be an important part of the future of Simpson Company.

As most of you know, we are spending a lot to get firmly established there. A sales office in Beijing of 15 people, one in Hong Kong with six people, plus 175,000 square foot plant which should be in production next year, are a sure way to lower short term earnings but to build long term sales and earnings.

We feel really good about the acquisition last month of the German and Irish company Liebig. Their metric, mechanical anchors with their code approvals are the basis for our anchor systems division getting started in the European market where they build with concrete and masonry.

Also, until we get to manufacturing in China we'll ship Liebig's metric products to that market. A German-owned company, Liebig was started in 1946.

Perhaps they had a little help from the Marshall plan. At any rate, our anchor systems people are excited about their products and how they open up new markets.

As I think most of you know, I invested my company's pension plan for 42 years so I do understand how easy it is to get concern about short term results. All I can do is assure you that our people and our balance sheet are dedicated to the future, but it may take a year or two to see earnings go back to going up.

We're not going to stop spending on the future. Questions?

Good morning, Arny.

Hi Barc, how are you?

Okay. Okay.

First of all I want to thank you on behalf of your investors for the analyst [inaudible]. It was a very productive use of the day.

It gave us a chance to meet your team. One of the questions I have is, can you give us a sense on your inventory levels and on your customer's inventory levels?

And specifically given the dramatic rise in the price of steel it would seem both you and your customers should almost be hoarding or inventorying steel relative to the cost of capital or debt to hold these inventories?

Well, our customers have been pushing hard to get inventories down. That’s with business the way it is, why that of course you can understand why and we ourselves as far as our inventories go, where are we, Mike?

Regarding steel per pound in the U.S. and North America we are — we're flat.

But in terms of units?

Pounds of steel.

And again, given the rapid rise you expect would you anticipate building these inventories?

Say that again.

Given the expectation you have of dramatically higher cost of steel, would you be trying to expand your inventories?

Well of course.

Okay. And can you comment at all on final inventories?

Again, I know you try to keep anywhere from two to four months of inventory of essentially all your products to make sure that your customer can get their deliveries. So you see that number expanding?

Is that expanding sort of out of your control in the short run?

No it is not. We are keeping our inventory level, both at raw materials and at finished good at the same historical level they have been at.

Final question, Barc, you mentioned you anticipate taking some actions to reduce your costs beyond steel. Could you give us some sense of what these actions may be and how you might attempt to quantify them if at all?

Well, our — we have asked all the branches to come up with ways that they can reduce costs. And it was, excuse me, it was surprising how many different ways they had.

You know, simple things like the lighting and whether you're going to have free coffee and all kinds of things. You guys — it would take me a half hour to go into all of them.

Thank you very much.

Good morning, Bob.

Morning, thanks for taking my question, just a question on the decline to contractors, pretty steep relative to what you guys have done in the recent past here. As these guys kind of push down their inventories, historically how long does is that taking for — it sounds like a temporary issue.

Historically, how long does that take to really rebound? It sounds like a short term channel issue?

Well, I think any prediction that we make isn't nearly as good probably as all you people listening to this call can make because you're on it all the time. And we don't waste time worrying about the market or housing starts or that kind of thing.

We spend our time figuring out what we're going to do and not worrying about things over which we have absolutely no control. So, I'm not a good guy to ask a question like that, Bob.

I'm sorry.

Did your maybe separately, did your customers, do you get the impression they pulled forward orders ahead of price increases into the back half of 2007?

Not yet.

I'm just trying to figure out just based on what you guys did in '07 why you had such a steep drop off in 1Q here.

Well, they haven't as yet.

Okay. And then just sequentially, at least in strong tie, you had basically flat level of sales, yet the gross margin if we pull out all the charges and stuff from 4Q, you know, compressed significantly here.

Is that all the raw material increase and pricing pressure? Or is there something else going on there?

We saw increases in material and we also had actual overhead absorption issues as we slowed down.

Okay.

We had things like shipping costs.

So the back half of the quarter maybe not as strong as you had originally thought? Is that what is going on in 1Q ’08?

Actually we had softness in January and February and started to improve in March.

Okay. Great, thanks guys.

Hello Barry.

Good morning gentlemen.

Thank you for the gentlemen.

You are a gentleman. First of all for you Barc usually you give us some breakdowns of the sales of anchor systems in Europe and you gave us 15.5% of total sales was Europe by dividing that I got 25.9 million in revenues from Europe.

Could you give us the revenues for sheer wall and anchor systems and could you give us some color on the operating margins or profits for all three of them? That is the first question?

Well, let's so. I got to go through things here.

Anchor systems was down 17%.

Okay.

And I do not expect that to continue because with the new sales forces in Asia, anchor systems products are the things that we are starting to sell there. That is the way we got started there.

Now we are going to be selling other things by the time we get that plant built. And we can make them there but anchor systems products, right now, are the ones that I think are going to go up substantially in Europe.

And, excuse me, both in Europe and in Asia.

Okay and do you have some kind of an operating profit or margin or something in anchor systems?

I do not have a number on that yet. There are too many things that are in process.

And how about sheer wall revenues?

Sheer wall revenues they depend on new US housing. They were down 46% and in spite of the fact that I get word from our people that we have a larger share of the market.

Okay. Going to the different regions of the country could you give us a percentage change in revenues for the West excluding California, California, South Southeast, Midwest and Northeast?

Right. Okay.

In the quarter – well it starts with California 19.5%; the West was 16.5% -

These are declines I presume.

Beg your pardon.

These are declines?

No these are the percentage of the total sales.

I do not want that. I want the percentage change in sales.

Oh, okay. California was down 37%; the West down 23%; the Midwest down 10%; the South Southeast down 18%; and the Northeast up 11%.

Can you just give us some idea about taxes in Florida?

Well, Florida was in the tank, Texas not so bad, pretty good as a matter of fact in relation to the rest of the country.

Okay. Mike I have a few questions for you.

Can you give us your estimate of the tax rates for the full year?

39.5%.

And can you give us your best guess of capital expenditures in D&A this year.

Capital 21.2 million, D&A 30 million.

And where are you on the sale of the Oakland [ph] property?

We sold the Texas property earlier this week.

Texas?

Yes.

And what were the proceeds from that?

$1.8 million.

And how about the Oakland?

That is – we are still doing the remediation and that will go back on the market later this year.

Okay. And Mike, was there any start-up expenses in China in the first quarter?

There are all kinds of expenses there. All kinds of them, you hire all those people and they do not product to start.

You have got to train them.

Are you still using $0.04 to $0.08 cents as what you considered start-up expenses for what you are doing in China?

That as good as guess any.

All right. I will get back in queue.

Thank you.

Okay.

Good morning.

Good morning. Thank you.

I guess first question, how do you rationalize putting through a price increase that does not even cover your immediate increases in costs?

Well, the reason that all of us have jobs is our customers. And we are highly conscious of the huge problem that builders have in this country right now.

And we think that probably, not taking the entire increase and charging it to them may end up with them not having to make so much effort to reduce costs including trying to figure out how they can use less of anything, anything. We are doing that because we are very conscious of what is going on with our customers.

And we think in the long run that that is a plus.

Certainly being consciousness of your customers is great. By the same token, do you think they are actually cutting corners to the extent that it would compromise integrity of a home?

Well, I do not think so, no. No, but there is – the majority of our products are not sold just because of codes.

They are sold because you put the structure together faster and better with the use of our products. Now, as the price to the product goes up you have got to look at it.

And say is it going to enable me to build this house faster and better?

So to the extent that, maybe the urgency, of building home fast has diminished. That is also part of the equation.

Well, putting it that way yes. I would presume it is but we are going to do everything we can, as we have in the past, to reduce other costs and generally, we have been pretty successful.

We do not have to always, in order to keep things balanced; we do not have to increase our prices as much as our basic material increases because constantly, we are automating more products. We are getting more efficient.

We are getting better technically and handling production. All those things so we will make every effort to balance it whether we will make it or not all the way I do not know.

Okay. Sticking with the theme of balance we know what you are doing in Europe and Asia.

Any other initiatives domestically to branch out beyond residential construction into more commercial applications?

Oh yes. We are – our sales force and merchandising we are pushing hard in all kinds of other areas.

And of course, every year we are not reducing our efforts to develop new products both internally and by acquisition. And every year we come up with 10 or 15 new products and we are working on that all the time and harder than ever.

Great, final question. Can you maybe elaborate how the Liebig acquisition is going to kick start your whole metric initiative and how quickly do you think that is going to pay off?

Well, any guess as to how quickly, at this point, really does not mean much. We just acquired the product line but it is extremely important in getting started in Europe.

We do not sell - our anchor systems products do not sell at all in Europe. We have not made an effort to go in there because we needed some basic things and this is one of them.

Will it be branded Simpson Liebig or still at Liebig?

Well it is a good question and it is a little early to answer that. Liebig has been around for 60 years and we will find out just how important that name is and we may keep it.

True. Thanks Barc.

Good morning Scott.

Good morning gentlemen. How are you?

Okay.

I just want to hone in and understand the comment earlier about overhead absorption and the impact that steel costs. If I look at the year over year decline in gross margin, is that more attributable to steel at this point or is that a lack of overhead absorption?

What do you think Mike?

The lack of overhead absorption.

Okay and then I probably ask this just about every call but you could remind me or refresh my memory just in terms of steel as a percentage of cost of sales for you guys?

We do not discuss that.

I think that is the answer I get every call as well but I am going to keep trying.

Yeah, you have not missed anything.

Okay, fair enough.

I know you can understand why we do not discuss it.

I certainly do. And then just with respect to the product line and the pace of sales, residential versus non-residential the talk of the home centers, the distribution channels.

Is talking about anchor systems the product line, is that a proxy for talking about a product more designed or that is going into the non-residential market relative to the residential market? I am just curious what your read is in terms of how the products are doing that are going into that non-residential market versus the residential right now.

Oh yes. Anchor systems is – the majority is non-residential and that is why we push hard on that particular – on developing the products and why we are excited about the new metric anchors that we just acquired.

And that, it is a little hard if you are not familiar with the construction in this various areas but anchor systems products, for instance, go into roads and bridges. We sold a whole bunch of our epoxy 4,500 tubes as a matter of fact for about a year ago and we have been selling it ever since for a bridge and a road outside of Beijing.

And we also sold a whole bunch of our epoxy for repairs to the bridges in the San Francisco Bay area. So it gets us in the markets where we were not at all.

And that is exciting and also the fact that Liebig makes things metrically. That is extremely important.

You cannot sell in those countries because they do not go with feet and inches. They go metrically and now we will be shipping to China, we will be shipping those products, those mechanical anchors to China until we can get to manufacturing there ourselves.

Not only does it get us started in Europe.

Okay guys. I appreciate the time this morning.

All right.

Thanks.

You are welcome.

Good morning, Derrick.

Good morning. Thanks for taking my call.

I am just wondering and I might have missed it. Can you go over the currency impact during the quarter?

As far as impact on revenue it was up $4.4 million, had no impact on net income or income from operations.

Okay. And the strength in Canada was that largely due to currency or is there something else going on there?

Just doing a better job of merchandising and selling.

Okay. And I have question with respect to inventory management and the rising steel price environment.

Do you put – liquidate some of the raw material inventory to take advantage of rising steel prices? Is that something that you look to do?

No.

Okay. Is that something that you would look to do in the future?

Or is that something that you just do not do as a practice?

We do not do that.

Okay, very good. Thank you very much.

You are welcome.

Morning Alan.

Good morning. Just one quick question, given the general decline we see in the construction vertical are you finding more attractive evaluations with potential acquisitions now?

And perhaps could you discuss more generally how you view your acquisition strategy over the next year or so?

Right, well we are looking to become more and more international company. So more than we ever have in the past we are looking overseas for acquisitions.

At any particular time, we usually have about a half dozen that we either are starting to look at or we are further into them. It takes a while.

It takes quite awhile because we have been quite successful with our acquisitions. We have made, I think it is, 13 of them since we went public in 1994.

And all except one have worked out okay and that – I do not think that is too high an average. I think that has got some logic behind it but anyway we are very careful.

We go through them very carefully particularly now we are looking at a large acquisition that we are going to have to spend quite a little time there because if it is a big one we better make sure that we know everything possible about it. About their numbers, about what the markets are, about what kind of management skills they have or that we are going to have to provide.

So acquisitions are extremely important to us now and we are spending a lot of time and money looking at all kinds of them.

So you really totally focused on the overseas acquisitions and even with some of the bad evaluations arguably here –

Well we are not totally focused overseas. We are still looking here but it is, for the long range future of this company we have to get more and more international.

So that we are not subject to, as we are now, to dependent on one particular area and one particular type of construction.

Okay. Thank you.

You are welcome.

I only have two questions. First of all Barc, your largest customer, what were their sales down for the quarter versus last year?

Our largest customer, that would have been Home Depot and they were, what were they, I have not seen those numbers yet. We are just putting them together.

But we have not got them yet, Barry. Have to – we will have those within a week.

Within a week. Okay.

You cannot change the past.

I am not trying to change the past.

We are more interested in spending money for the future.

I know all about that. I know all about that.

Barc, could you us some idea about the accretion from Swan, if any?

Well, Swan’s sales are strong. They are very strong and what did they add, about –

$0.01 cent per share.

$0.01 cent and would you expect that to grow as the year progresses, as you do things with them to get them into your system?

Yes. Yes, and they are difficult to integrate because of a very good reason.

They have a very good sales force themselves. So it is not just an automatic as it often is when you take a company and the reason they are for sale is their sales are not good.

Not so with Swan.

All right. That was a good acquisition.

Thanks very much.

You are welcome.

Hello.

Good morning.

Hello again.

A couple of quick questions. Could you talk a little bit about the business trends in Europe?

I think if I remember correctly sales up just slightly in Europe in a year over year basis for the quarter?

Yes, let’s see. Let me take a look here.

Our sales in Europe were up 5.5% -

Okay.

for the quarter which, of course, that made them because our overall sales were down. It took them of course, as I said, from 12.4% to 15.5% of our total sales.

What kind - are you –

It looks pretty good there right now. They are up – this quarter is starting out well there.

Okay. And what about the April trends in the US markets?

Did it improve also what you were seeing in March or did it slow back down?

No better.

Okay. So I guess, make sure I heard correctly.

January and February were pretty slow in the US. Then March got better.

And then April is kind of flat with where we saw March.

That is about right. Yes it is not the market because we let ourselves get too dependent on US housing.

That is not getting better. It is not.

We are doing everything possible to lessen that dependency but it takes times. We are looking for products that as in anchor systems and what we just bought at Liebig, products that do not depend on housing and particularly do not depend on US housing.

So we are looking hard for such things.

I guess that is true. And I guess like you just explained longer term that will definitely be a positive.

As you came across from the December quarter ’07 into the March quarter did you guys have to lower your operating rates even further to deal with the market conditions?

No.

So operating rates kind of sequentially, fourth quarter to the first quarter, kind of in line I guess.

Similar.

That is correct. We did, we are taking the Vicksburg plan offline and moving that equipment to California so that also impacted our overhead.

And did that – was that a factor in the, which I think you said that 2.8 million loss at Dura-Vent?

Yes that is correct.

Okay. How much was attributed to the Vicksburg decision in that Dura-Vent operating loss.

I do not have a number but substantial amount. And the projections that we have made, pretty careful research, looks like it is going to make a real difference when we finally get it closed and the costs out of the way.

There will be some costs that continue for awhile but we are expecting that it will have a substantial, make a substantial difference in profits.

Okay. Well, all right.

I appreciate it.

Right.

On the subject of Vicksburg it lost 2.8 million in the quarter, what is your best guess when you complete the move and can you give us some color on how that is going to help you in the balance of the year in terms of your losses at venting products?

Well, probably it is going to continue to cost us. You cannot – it will take most of the year to get that plant closed.

Really so are you expecting venting products to lose money this year all end?

Yes.

Okay. Thank you.

Okay. Thank you very much.

So that is it.