Simpson Manufacturing Co., Inc. (NYSE:SSD) Q2 2022 Earnings Conference Call July 25, 2022 5:00 PM ET
Company Participants
Kim Orlando – ADDO Investor Relations
Karen Colonias – CEO
Brian Magstadt – CFO
Conference Call Participants
Daniel Moore – CJS Securities
Timothy Wojs – Robert W. Baird
Julio Romero – Sidoti & Co.
Kurt Yinger – D.A. Davidson
Operator
Greetings. Welcome to Simpson Manufacturing Co. Inc. Second 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. [Operator instructions] Please note, this conference is being recorded.
I will now turn the conference over to your host, Kim Orlando with ADDO Investor Relations. Please go ahead.
Kim Orlando
Good afternoon, ladies and gentlemen, and welcome to Simpson Manufacturing Co.’s second quarter 2022 earnings conference call. Any statements made on this call that are not statements of historical fact 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 may 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 Colonias, Simpson’s Chief Executive Officer.
Karen Colonias
Thanks Kim and good afternoon, everyone. Thank you for joining us today. I’ll begin with an overview of our second quarter financial results and performance drivers before turning to an update on our key growth initiatives and capital allocation priorities. Brian will then walk you through our financials and fiscal 2022 business outlook in greater detail.
As many of you already know we completed our acquisition of ETANCO, a leader in fixings and fastening solutions, primarily for commercial building construction market throughout Europe on April 1st.
Since we announced the transaction back in late December, planning for and initiating the integration of ETANCO has been our primary focus, and it has been progressing according to plan.
We pulled together a project management office that includes a leading, globally recognized external advisory consulting group, together with a multidisciplinary team of key management from both Simpson and ETANCO.
Because of our complementary cultures and values, our combined team has been working extremely well together as we develop detailed plans for each of our specific integration tracks. Our approach has continued a high employee retention rate throughout the transition.
After several months of hard work, we were very pleased to have found no material adjustments to our previously identified synergy opportunities. Although the realization of the full amount is subject to change based on current environment in Europe. With the groundwork we’ve laid so far, we believe we are still well-positioned to capture meaningful benefits from those synergies in the coming years.
We delivered strong financial and operational performance in the second quarter Net sales of $593.2 million, increased 44.6% year-over-year. Our sales growth was primarily attributed to our acquisition of ETANCO, which contributed $80.3 million in sales. Our sales further benefited from product price increases we implemented throughout 2021 to offset rising raw material costs.
Volume in North America was relatively flat and was mixed across all of our distribution channels. Notably, volume in our home center channel, which includes both our home center and co-op customers, and is where we see much of our repair, remodel, and DIY business was up slightly during the quarter. Softer volumes from our contractor distributor customers offset this increase.
Our consolidated net sales in Europe for the second quarter were $133.2 million, an increase of 136.1% year-over-year year, due primarily to the contribution from ETANCO as well as product price increases in response to rise in material cost, which were offset by significantly lower volume overall and the negative effect from a strengthening U.S. dollar.
Our second quarter consolidated gross margin was 43.7% compared to 47.9% in the year ago period. ETANCO contributed $19.2 million to our gross profit on its $80.3 million of sales, net of $9.2 million in purchase accounting adjustments, which reduced our second quarter gross margin by just under 160 basis points
Compared to the prior year and before considering the addition of ETANCO, our gross margin declined as expected as our average raw material costs began to catch up with some of our price increases. Brian will elaborate on the key drivers of our performance as well as our margin expectations for the remainder of the year.
I’d now like to turn the discussion on our five key growth initiatives. As previously discussed earlier this year, we realigned our sales team to more specifically concentrate on five end use markets; residential, commercial, OEM, national retail, and building technology. This narrowed focus has enabled various new customer and project wins within each of our five growth initiatives.
Here’s just a couple of examples of what happened in the second quarter of 2022. In the OEM market, we were recently awarded the opportunity to supply our complete wood solutions, including specialty fasteners and other products for the construction of custom wood base crates. Since the crates will be utilized for shipping high value technology products, the structural integrity of the crates is highly important and is in direct alignment with our value proposition.
We accomplish some key project winds within the mass timber space. Our solutions are now being specified to construct mock-up structures from coast-to-coast to serve as mass timber training course for union carpenters.
In addition, our mass timber solutions are being utilized in the construction of a new home office for large U.S. based company. Similar to the prior example, we were able to showcase our unique testing capabilities through our state-of-the-art Test Lab to demonstrate to the engineers that our products were suitable for their structural designs.
We’re also continuing to expand our offering in the commercial space. Our concrete solutions are being used in the construction of new graduate housing in Utah, as well as for hotel in Florida.
Our Simpson and ETANCO teams also work together to sell products into a currently under construction venue related to the upcoming Olympic Games in Paris. Within the national retail market, we made strides in our R&R and DIY initiative as it pertains to the outdoor access. We now have several stores equipped with pergola displays with support from both the Home Depot and Lowe’s.
In addition, based on point of sale activity, we’ve been pleased to see our customers continue to add inventory on our top 25, R&R and DIY products. As we continue to make progress on our growth initiatives, we are confident we can continue our above-market growth relative to us housing starts in fiscal 2022 and beyond.
These select key examples further emulate our founder, Barclay Simpson’s nine principles of doing business, and more specifically, the focus and obsession on customers and users. It’s through these principles that Bart’s legacy continues to live throughout our company each and every day.
I’ll now turn to capital allocation. Our priorities will continue to focus on both stream our organic growth and returning value to our stockholders through quarterly dividends and selective opportunistic repurchases of our shares.
As recently announced, we updated our capital return target to 35% of free cash flow versus 50%. Historically, as we focus on repayment of the debt we incurred to finance the acquisition of ETANCO.
Key areas of reinvestment into the business, we’ll be supporting facility expansion to meet our growth targets, as well as in areas of engineering, marketing, sales, personnel and testing capabilities across the company
Throughout 2022, we have been reviewing the footprint for our U.S. operations with assistance from another globally recognized third-party in conjunction with the integration ETANCO in Europe.
As a result, we identified facility expansions in the U.S. that will improve our overall service, production efficiencies and safety in the workplace, as well as reduce our reliance on certain outsourced finished goods and component products, and continue to ensure we have ample capacity to meet our customer needs.
These investments reinforce our core business model differentiators to remain the partner of choice as we continue to produce products locally and ensure superior levels of customer service. Investments in these expansions have already started this year and will continue into 2024. Brian will elaborate on our capital expenditure forecast shortly.
Lastly, while the integration of ETANCO remains paramount, we are always evaluating potential M&A opportunities that would enable us to better provide complete solutions for the markets in which we operate through complementary products, especially in the areas that support our key growth initiatives.
Before I conclude, I wanted to reiterate that all business activity in Russia and Belarus was suspended by halting all product sales and shipments to the region, we continue to estimate the revenue impact will be less than $5 million.
The current energy situation in Europe adds a layer of uncertainty. At this point in time, we believe we will be able to secure access to the energy we need to run our operations. Our thoughts remain with all of those that have been affected by this war.
In summary, we’re very pleased with the significant progress we made integrating the ETANCO as well as advancing our key growth initiatives. Our excellent operational execution produced strong financial results, while the rapidly changing macroeconomic environment, including rising interest rates, inflation and other factors continue to impact the industry at large. We believe Simpson is uniquely positioned to perform given our diversification strategy and strong brand reputation that we’ve cultivated over the past 66 years.
We are optimistic we will achieve our company ambitions as outlined in our March 2021 Analyst Investor Day by 2025. Thank you to all of our employees for your dedication and commitment to superior levels of customer service and most importantly to working safely every day.
Now, I’d like to turn the call over to Brian, who will discuss our second quarter financial results and our 2022 outlook in greater detail.
Brian Magstadt
Thank you, Karen and good afternoon, everyone. I’m pleased to discuss our second 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 second quarter of 2022. And all comparisons will be year-over-year comparisons versus the second quarter of 2021.
Now, turning to our second quarter results. As Karen highlighted, our consolidated net sales increased 44.6% to $593.2 million. Within the North America segment, net sales increased 30.2% on relatively flat volumes to $456.4 million, primarily due to the price increases we implemented in 2021 to offset rising raw material costs, which was partly offset by foreign currency translations.
In Europe, net sales increased 136.1% to $133.2 million, primarily from ETANCO, which contributed $80.3 million in net sales, and to a lesser extent price increases, intended to offset higher material costs abroad.
As Karen shared earlier, Europe’s volumes without a taco were down compared to the prior year quarter. Europe sales were negatively affected by $6.9 million in foreign currency translation related to Europe’s currencies weakening against the United States dollar.
Wood construction products remain consistent at 87% of total sales and concrete construction products also remain consistent at 13% of total sales. Consolidated gross profit increased by 32% to $259.3 million, which resulted in a gross margin of 43.7% compared to 47.9%.
On a segment basis, our gross margin in North America decreased to 48% compared to 49.9%, primarily due to higher material costs as a percentage of net sales, which were partially offset by the product price increases we enacted throughout 2021.
Our gross profit dollars in Europe totaled $39 million and included $19.2 million from ETANCO, which is net of $9.2 million in fair value adjustments for acquired finished goods as a result of purchase accounting. This adjustment is the primary factor as to why gross margins declined in Europe to 29.3% from 36%.
The non-cash purchase accounting adjustment is effectively non-recurring for the balance of 2022, with only a nominal amount more expected in the third quarter, resulting in a total charge of $10.5 million based on our preliminary purchase accounting, which is subject to change.
From a product perspective, our second quarter gross margin on wood products was 43.7% compared to 47.4% in the prior year quarter and was 43.2% for concrete products compared to 47.5% in the prior year quarter.
Now, turning to our second quarter costs and operating expenses. Total operating expenses were $120.4 million, an increase of $25.7 million, or approximately 27.1%. Operating expenses included $14.9 million attributable to ETANCO and reflect $4.2 million of non-cash recurring amortization expense.
On the estimated fair value of acquired intangible assets, which is also subject to change as we finalize our purchase accounting over the course of the year. As a percentage of net sales, total operating expenses were 20.3%, an improvement of approximately 280 basis points compared to 23.1%.
The second quarter research and development and engineering expenses increased 19.6% to $16.9 million, primarily due to ETANCO.
Selling expenses increased 35.9% to $45.1 million due to ETANCO as well as personnel and travel related expenses. On a segment basis, selling expenses in North America were up 10.6%. and in Europe, they were up approximately 119%.
General and administrative expenses increased 23.2% to $58.4 million, primarily due to ETANCO including amortization and personal and professional fees for the company overall.
As a result, our consolidated income from operations totaled $133.1 million, an increase of 30.8% from $101.7 million due to higher consolidated gross profit, partly offset by higher operating expenses, and an additional $5.9 million spent on acquisitions, specific integration costs for ETANCO.
In North America, income from operations increased 35.8% to $137.4 million, primarily due to higher gross profit, which was partially offset by higher operating expenses, including travel and entertainment and personnel costs.
In Europe, income from operations decreased 5.3% to $5.6 million and is net of a $1.6 million loss from operations for ETANCO. ETANCO’s operating results included $9.2 million for the fair value adjustment of acquired finished goods, $4.2 million of amortization expense on acquired intangible assets, and $5.9 million for integration costs for a total of $19.3 million.
Please note that the purchase accounting adjustments are preliminary and subject to change as we finalize our purchase accounting in — during 2022. As we continue to integrate ETANCO into our European operations, we expect to incur additional costs over the second half of 2022.
On a consolidated basis, our operating income margin was 22.4%, a decrease of approximately 240 basis points from 24.8%.
Now, we’ll discuss our updated operating margin outlook for the remainder of fiscal 2022 shortly. Our effective tax rate decreased slightly from 26.9% to 26.8%. Accordingly, net income totaled $93.6 million or $2.16 per fully diluted share compared to $72.5 million or $1.66 per fully diluted share.
Now, turning to our balance sheet and cash flow. Our balance sheet remained healthy, at June 30th, 2022, cash and cash equivalents totaled $246.1 million. As of June 30th, 2022, total debt was $694 million, and just under $200 million remain available for borrowing on our primary line of credit.
Our inventory position at June 30th was $539.8 million, which was an increase of $96.4 million compared to our balance at March 31, 2022, primarily attributable to ETANCO.
As always, we will remain diligent in managing our inventory purchases through careful purchasing practices as we continue to ensure strong levels of customer service and on time delivery standards.
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 second quarter, we invested $12.5 million for capital expenditures and paid $806.6 million for the acquisition of ETANCO. We also paid $10.8 million in dividends to our stockholders during the quarter.
Additionally, we repurchased approximately 260,000 shares of our common stock at an average price of $96.05 per share for a total of nearly $25 million.
As of June 30th, 2022, we had approximately $53.7 million available under our $100 million share repurchase authorization, which remains in effect through the end of 2022.
Next, I’d like to discuss our 2022 financial outlook, which includes the acquisition of ETANCO, two quarters of 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, July 25th, we are slightly 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 21%. compared to our previous estimate of 19% to 20%, which included projected results for ETANCO.
Our revised guidance is attributable to better visibility on material costs and expected results from ETANCO along with approximately $20 million to $25 million in integration in transaction costs for the acquisition.
Further, we continue to estimate the cumulative topline impact from the product price increases we implemented throughout 2021 will be approximately $300 million in 2022 versus 2021. We also expect our total cost of goods sold will continue to increase as a percentage of net sales as we work through our on hand inventory through the balance of 2022.
Next, we expect interest expense on the outstanding $250 million revolving credit facility and term loans, which had initial borrowings of $450 million to be approximately $10.4 million, including the benefit from interest rate and cross currency swaps, mitigating substantially all of the volatility from changes in interest rates.
We are reiterating our 2022 effective tax estimate, which includes ETANCO of 25.5% to 26.5%, including both federal and state income tax rates and assuming no tax law changes are enacted.
And now we expect capital expenditures spend will be in the range of $80 million to $90 million compared to our previous estimate of $65 million to $70 million, primarily due to the addition of ETANCO, which has an annual run rate of approximately $10 million, as well as the facility expansions Karen highlighted earlier.
We are evaluating specific facility expansions, and as of now, are moving forward with the expansion of our Ohio manufacturing and distribution facility, with spend estimated at $10 million in 2022 and $50 million estimated in 2023.
In summary, we’re very pleased with our second quarter financial results and the ongoing integration efforts of ETANCO. We look forward to continuing to execute against our strategic, operational, and financial initiatives in the coming quarters.
With that, I’d like to turn the call over to the operator to begin the Q&A session.
Actually, before I do that, just one clarification. Earlier I mentioned selling expenses — so on a segment basis, I said selling expenses in North America were up 10.6%, I need to correct that, they were up 18.8% and I mentioned Europe was up 119%, that that is unchanged.
Now, I’d like to turn it over to the operator for Q&A.
Question-and-Answer Session
Operator
At this time, we will be conducting a question-and-answer session. [Operator Instructions]
Our first question is from Daniel Moore with CJS Securities. Please proceed with your question.
Daniel Moore
Thank you. Good afternoon Karen and Brian. Start with North America, you continue to generate really exceptional growth given pricing actions above our expectations. Give us an updated view on your updated view and overall housing growth, what that implies for volume growth as well as kind of overall revenue growth as we think about the remainder of fiscal 2022 compared to the back half of 2021?
Karen Colonias
Yes, that’s a great question, Dan and I’m sure you’ve seen that the housing start numbers are coming down a bit. I think that builders are not quite as optimistic as they were in the first quarter and so we’re starting to see a little bit of those numbers come down also.
One of the things I would just keep in mind when you look at the housing start numbers, is the residential starts are down, which is what we’re seeing, but the multifamily starts up. So, I would just reiterate to put a lot of content pretty much in anything built out of wood. So, we certainly will have content in those multifamily.
And the other thing I would just mention is as we look at our much more balanced portfolio than we had in sort of the last choppiness of the residential housing starts, again, much more balanced when we look at about 50% of our revenue being tied to U.S. housing starts where about three years ago, we would have said 60% of our revenue would have been tied to US housing starts, but certainly seen with the rise in interest rates, the builders are seeing it’s definitely a little less optimistic about the back half of 2022.
Daniel Moore
Very helpful. Maybe trying to break that down a little bit more pricing, I think previously said about a $300 million benefit in fiscal 2022, is that still the right kind of overall level of benefit? Has that increased at all with continued rising raw material missionary pressures?
Brian Magstadt
No, we’re still comfortable with that approximate $300 million incremental impact of pricing in this year versus last year.
Daniel Moore
Very helpful. Maybe switching gears, sounds like that the ETANCO integration is going great, but timing, obviously, a little bit dependent on what’s going on with the macro, which is uncertain. Can you elaborate or quantify — elaborate at all or quantify what you’re seeing in terms of maybe the shifts and timing of realizations of some of the synergy targets at ETANCO? Thanks.
Karen Colonias
Yes, so remember the $30 million of synergies that we had listed, excuse me, about half of those were defensive synergies and half were offensive synergies. So, we certainly think that the economic conditions we’re seeing in Europe might push our offensive synergies out a bit. But we believe we remain on track as far as our timing at the end of 2025 for those defensive synergies.
Daniel Moore
Got it, that’s very helpful. And then maybe lastly just the — elaborate on the facility expansions. You talked about the Ohio project, maybe what that entails, you gave us the CapEx numbers not to go through those again, but what kind of incremental capacity do you expect to be able to generate once that’s all said and done? And that’s it for me. Thanks,
Brian Magstadt
Yes, it certainly adds additional footprint there for expanding our warehouse. What that also allows us to do is to be — to rearrange and make our manufacturing operations in that facility, very optimal from an efficiency perspective. So, as we look at additional capacity, as you can imagine over time, the — we just have to add additional square footage in facilities we’ve done in other locations over the years.
And this one is just a facility that we’ve evaluated the metrics and the growth plans that we’ve got. So, being able to able to continue to serve our customers, produce product close to our customers, and by adding on to the warehouse, again, makes overall operation there that much more efficient as we grow into our current plans.
Daniel Moore
Very helpful. Thank you.
Operator
Our next question is from Tim Wojs with Robert W. Baird. Please proceed with your question.
Timothy Wojs
Hey, everybody. Good afternoon. Maybe just on the back half of 2022, any kind of thoughts or, kind of, modeling considerations around volume in the second half? I mean, I think within North America, I think the last two quarters, we’ve seen kind of flattish volume to kind of start the year. So, at this point, would you kind of have us model volumes down in the back half of the year or do you think that’s too onerous at this point?
Brian Magstadt
Flattish to maybe down just a little bit.
Timothy Wojs
Okay. How do you feel about the inventory levels at some of your customers at this point? I’m just, I guess I’m trying to understand if you guys have any kind of destocking — if you’ve seen any of the stocking? If there’s a risk around destocking, it starts start to decline more meaningfully?
Karen Colonias
Yes, that’s a really great question. And, obviously, we have a lot of salespeople that are out with our customers every day, and we’re not seeing any concerns about customers having a destocking situation, their inventory.
As we mentioned, we’re seeing a little bit of increase from a home center standpoint on some of those key things that they’ve brought in, obviously for their big selling season. But we haven’t seen anything with our other distributors from a destocking standpoint on their inventory.
Timothy Wojs
Okay. Okay, good. And then I guess just from a margin perspective, Brian, I mean, in the back half, I mean, they caught you know, year to date, you’re doing like, just over almost 23.5%, 24% operating margins and you’re counting to 19% to 21%.
Is it kind of glide down in terms of the cadence? I mean, is Q3 better than Q4? Or how would you kind of think of the cadence of the margins in the back half of the year and into next year? I guess when you see kind of the best picture from raw material normalization?
Brian Magstadt
Yes, so glide down is a term that we would use as well through for the second half of the year. Having the — it’s interesting this year, it seems like volumes, so volumes impact overhead absorption, and of course, overhead absorption in traditional Simpson Q2, Q3 this year, we would absorb more — have a better margin profile, it seems that’s less of an impact just because that seasonality has been less of a function, but still part of the business, but to a lesser degree. But that being said, Q3 margins better than Q4 margins gliding down.
And then as we look at 2023, as we all evaluate the general operating margin getting back into middle higher part of the current range, not yet to call the 2023 guide yet, but certainly seeing Q3 gliding down to Q4 as we wrap up the year.
Timothy Wojs
Okay. Okay. So, it’s fair that Q4 might be kind of the peak kind of normalization for margins, kind of the peak impact?
Brian Magstadt
Right, based on our current estimates.
Timothy Wojs
Okay, good. And then the integration and transaction costs, so I think you took the guidance up by $5 million to $8 million there from what it was last quarter. I guess what exactly is going up on the integration costs?
Brian Magstadt
Well, right now we — through the first half of the year, are in Q2, continue to work with consultants and our teams to formalize many, many tracks within our integration plans to capture those synergies looking at if there were any one time costs associated with any kind of severance or things like that, that would be potentially part of — that would be the bulk of that.
Timothy Wojs
Okay. Is that $20 million to $25 million go away Next year?
Brian Magstadt
For the most part, yes.
Timothy Wojs
And it — and the $20 million to $25 million, is that inclusive of the inventory step-up or not?
Brian Magstadt
Not. That inventory stuff up all up in that — in that cost of sale line. This is just — totally separate. So, as we tried to call out the various elements associated with the inventory, step up or the intangible amortization, the integration costs are separate and distinct from those other two.
Timothy Wojs
Got you. Okay. Okay, good. That’s what I had. So, thanks for the time and good luck on the back half of the year, everybody.
Karen Colonias
Thanks Tim.
Brian Magstadt
Thanks Tim.
Operator
Our next question is from Julio Romero with Sidoti & Co. Please proceed with your question.
Julio Romero
Hey, good afternoon Karen and Brian.
Karen Colonias
Hi Julio.
Brian Magstadt
Hey Julio.
Julio Romero
So, I kind of wanted to start on pricing a little bit. Give you all my — by my math, about $60 million of price remaining. On the topline in 2022 versus 2021, can you just maybe talk about how we should think about the — maybe the cadence of the impact being felt in 3Q versus 4Q? Should we expect anything at all in 4Q in terms of topline price?
Brian Magstadt
Mostly, all of that Q3 Julio.
Julio Romero
Got it. Okay. And then maybe thinking about ETANCO, the margins look pretty impressive at first glance, 35% op margin — gross margins and 22% op margin after adjusting for kind of transaction cost and all that. And that’s better than the historical margin that you purchased it at, if I recall. So, was this in line with your expectations? And how do you see those margins trending as we progress throughout the year?
Brian Magstadt
Generally in line, and obviously, we’re monitoring those very closely with the operating environment in Europe and it’s very challenging. Now, we are working very closely with that — not only the integration team, but their management team, we’re getting out doing sales ridealongs and just learning as much as we can about the business now that now that we’re there.
But it’s really the volume — that topline volume story and paying very, very close attention and helping them. They do a really good job managing their pricing, their gross margins, but those are things that are very much front and center with us.
Julio Romero
Okay, understood. And then just your prepared remarks sounded like on the investment side, there might be more to come beyond the Ohio expansion. Just what are the considerations and key objectives in play as you weigh additional expansion?
Brian Magstadt
We like to, again, make sure our facilities support our growth initiatives, our R&D testing initiatives, the service that we deliver to the customers is one of our value propositions and we want to make sure that is a continued focus for us. How can we be more efficient, with more volumes running through the facilities and at some point that that fixed footprint we’ve got to just expand them at a certain tipping point, that’s where we are with Ohio.
So, to the extent that we can’t manufacture more product closer to our customers, we’re always looking to be able to do that. Don’t have a lot of other details to share at this point, but it’s really trying to highlight — or trying to focus on those areas where we can really add value to our customers and making sure we’re doing — we’re supporting our manufacturing, our warehousing and other operations with efficiency, safety, and ultimately, how do we continue to translate that into really good customer service.
Julio Romero
Got it. Now, that’s good color there. Thanks for taking the questions.
Brian Magstadt
You’re welcome.
Karen Colonias
Thanks Julio.
Operator
Our next question is from Kurt Yinger with D.A. Davidson. Please proceed with your question.
Kurt Yinger
Great. Thank you and good afternoon, everyone.
Brian Magstadt
Hey Kurt.
Kurt Yinger
Yes, hey, just back on ETANCO, I mean, can you just talk about what you’re seeing there in terms of commercial, kind of, construction activity in France and Italy and — I mean, how you’re just feeling about the revenue outlook for that business? I think the last quarter, you talked about maybe $220 million of sales this year. Do you think that’s still achievable based on the book of business? Or maybe a little bit weaker than that?
Karen Colonias
Yes, I think Kurt certainly, if you think about in the Paris area they have in the Olympics in 2024, so a lot of construction going on. We mentioned a project that we worked on together with the Simpson team and the ETANCO team to put some of our products on those — some of those particular projects that are going on for the Olympics. So, a lot of commercial business going on there.
I would say in in general in Europe, though, because of the uncertainty that’s going on with the war, things are starting to slow down a bit, both on the residential and the commercial side. But we still do estimate the $220 million approximate of revenue from the ETANCO team
Brian Magstadt
Of course, with their certain parts of Europe, very much focused on, excuse me, energy efficiency, the products that ETANCO brings to market from helping put up new facades and cladding and the like very, very much in line with some of the — what we think are some of the tailwinds are in Europe. But of course with the uncertainty — the great amount of uncertainty in Europe, in the region that seems to be just a bit of a headwind there as well.
Kurt Yinger
Okay. All right, that makes sense. And you talked about the home center business, kind of, outperforming expectations a bit, again, this quarter and some softness on the traditional distribution side. Was that pretty consistent from start to finish of the quarter? Or I guess, any thoughts around how that dynamic may have shifted here early in Q3, if at all?
Brian Magstadt
One of the things about — so let me talked about Q3 or July, in particular, we’re certainly seeing volumes are up a little bit compared to last year. But just a reminder to what we saw in July-August of Q3 2021, home center is doing some inventory destocking.
So, it may be a bit of a easier comp, so to speak, from that perspective, just a lot of lumpiness within that particular part of the business, when it goes to inventories that are being brought in and when those orders are being placed. So, the comparable is favorable now, but it would be off of a pretty soft comp from last year.
Kurt Yinger
Okay.
Brian Magstadt
In general.
Kurt Yinger
Yes. No, that’s a good reminder. And then just my last one, I know you kind of reconfirmed the $300 million of sales from price this year. And I didn’t hear you talk about it, but have you guys taken additional pricing, I guess, actions on non-connector business in North America at all?
Karen Colonias
We’ve done a little bit of pricing in North America, mainly on some of our fasteners and some of our specialty products. In Europe, they’ve done some pricing on the breadth of line of products, whether that be connectors, fasteners, or anchors, but in North America, really more of the faster market.
Kurt Yinger
Okay. Well, appreciate all the color and good luck here in Q3.
Karen Colonias
Thanks Kurt.
Operator
We have reached the end of the question-and-answer session. This does conclude today’s conference and you may disconnect your lines at this time. Thank you for your participation.
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