Greetings. Welcome to Simpson Manufacturing Company Incorporated's second quarter 2021 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. Please note this conference is being recorded. I will now turn the conference over to Kim Orlando with ADDO Investor Relations. Thank you. You may begin. Good afternoon, ladies and gentlemen, and welcome to Simpson Manufacturing Company's second quarter 2021 earnings conference call. Any statements made on this call that are not based on 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 statement. 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 Colonias, Simpson's President and Chief Executive Officer. Thanks, Kim, and good afternoon, everyone. And thank you for joining us today. I'll begin with a summary of our key second quarter performance drivers and initiatives. Brian will then walk you through our financials and updated full year 2021 business outlook in greater detail. We experienced strong business momentum in the second quarter, generating net sales of $410.3 million, which grew 18% over the prior quarter and 25.8% over the prior year period. Sales growth was primarily driven by the implementation of two product price increases during the quarter, along with marginal increases in sales volume. Throughout the quarter, we were very pleased to be able to continue meeting the needs of our customers by providing them with our trusted product solutions, typically within 48 hours or less. This is despite the current environment marked by the increasing prevalence of global supply chain constraints, limited steel availability, and a tight labor market. The recent price increases we implemented drove significantly higher gross margins for the second quarter, which increased to 47.9% from 46.7% in the prior quarter and 45.9% in the year-ago period. As a result, our income from operations improved to $101.7 million and led to strong earnings per diluted share of $1.66. Looking at our sales results in more detail, the majority of the increase we experienced, both sequentially and over the prior year period, was a result of two price increases that became effective during the second quarter. These price increases were in direct response to rising material costs. Effective April 5th, we implemented price increases ranging from 5% to 12%, depending on the product mix, for certain of our wood connectors, fasteners, and concrete products in the U.S. On June 16th, a second price increase ranging from 6% to 12%, primarily on our wood connector products in the U.S., also went into effect. As the price of steel continued to rise throughout the second quarter, we announced a third price increase in June in the range of 7% to 15% across a variety of our product lines in the U.S., which will become effective for most customers in mid-August. Consistent with our historical business practice, our customers received at least a 60-day advance notification for price increases, along with a clause that reduces significant pre-buying. This enables us to manage our inventory levels in this challenging market. Importantly, while we expect these price increases will support our gross margin levels throughout the remainder of fiscal 2021, our gross margins in the first half of 2021 reflect an average cost of steel sourced prior to or earlier into the surging steel market, together with steel purchased more recently at significantly higher prices. These higher prices are in the range of more than double those earlier costs. We are continuing to acquire higher-priced raw materials, which we currently anticipate will result in gross margin compression beginning in late fiscal 2021 and into fiscal 2022. Brian will discuss this impact in more detail during his remarks. Turning back to our sales performance, we experienced mixed trends in the various forms of distribution channel we serve, including our home center channel and other distribution channels to contractors and lumberyards. While our momentum with home centers continued, our sales reflected a high-teens percentage decline in this channel year-over-year, given a challenging comparison with lapping the return of Lowe's as a home center customer in the second quarter of 2020. As a reminder, the home center channel includes both our home centers as well as co-op customers and is where we see much of our repair and remodel and DIY business. Last year, we experienced elevated volume levels as we began our load-in and shipped our connector products into Lowe's stores. We expect to experience a similar trend next quarter as we lap the elevated volumes from our mechanical anchor and fastener load-ins at Lowe's in the third quarter of 2020. Offsetting the decline in the home center channel was double-digit growth in our other distribution channels during the quarter. This was due to the aforementioned sales price increases and ongoing strength in demand for our products, which benefited from upward trends in U.S. housing starts. As we generally experience a multi-month lag in demand from the time of housing starts, the second quarter reflected strength in the housing starts during the first quarter of 2021, which grew by nearly 9% year-over-year. Finally, in Europe, our second quarter sales improved over the prior year on a local currency basis, given strengthening demand compared to the prior year where we experienced government-mandated COVID-19-related closures, which resulted in lower sales volumes. Sales in Europe were also supported by our ability to continue meeting our customer needs due to our solid inventory management practices amid broader supply chain shortages. I'll now turn to a high-level discussion on our key growth initiatives, which we first introduced earlier this year during our Virtual Analyst Investor Day event on March 23rd. Our growth initiatives focus on the following five markets, which I'll name in no particular order of priority: OEM, which is original equipment manufacturers; repair, remodel, and do-it-yourself; mass timber; concrete; and structural steel. Importantly, we currently have existing products, test results, distribution, and manufacturing capabilities in place for all five of our growth initiatives. In these markets, we are focused on organic growth opportunities through expansion into new markets within our core competencies of wood and concrete products, as well as inorganic growth opportunities through licensing, purchased IP, and traditional M&A. In order to appropriately grow in the first three markets, that would be the OEM, DIY, R&R, and mass timber, we aspire to be a leader in the engineered load-rated construction fastening solutions, given each of these markets has a broader product opportunity within fastening solutions. In addition, we're striving to be a stronger leader in building technology by continuing to provide innovative tools and solutions that both help our customers with design and options management while simultaneously enabling them to select and specify the right Simpson solution for the job. We expect technology advancements will drive enhanced growth in all of our key growth initiatives, as well as across all of Simpson in general. Today, each of our growth initiatives is in a different stage of development. We are confident in our ability to execute them based on our strong business model, which emphasizes engineering expertise, deep-rooted relationships with our top builders, engineers, contractors, code officials, and our distributors, along with our ongoing commitment to testing, research, and innovation. We believe these initiatives will continue to position Simpson for above-market growth and will keep you apprised of any significant updates as they arise. Finally, I'd like to take a brief moment to touch on our capital allocation strategy. As our business continues to generate strong cash flow, we remain focused on appropriately balancing our growth and stockholder return priorities. We will prioritize investing in our growth initiatives in areas such as engineering, talented market and sales personnel, and testing capabilities. M&A also remains a high key area of focus in order to expand our product lines and develop complete solutions for the markets in which we operate, as well as potential M&A opportunities in areas of direct alignment or support on our key growth initiatives. To assist with these efforts, we're looking to other avenues such as venture capital expertise to help identify potential strategic acquisitions or investments, including innovative technologies of interest in the building space. In regard to stockholder returns, during the quarter, our board of directors approved a change to our capital return thresholds to 50% of Simpson's free cash flow, as compared to our previous threshold of 50% of our cash flow from operations. This change was made to better align our capital return thresholds with our growth initiative strategies and investments. We remain committed to returning value to our stockholders in the form of opportunistic share repurchases and dividends moving forward. In summary, we are very pleased with our strong second quarter financial and operational performance. Looking ahead to the second half of the year, we expect to build on the continuing momentum we are experiencing, including strong housing starts. We look forward to continuing to provide our customers with Simpson's industry-leading solutions, supported by our longstanding relationships, technical and field support, strong inventory position, and consistent product availability. Thank you for your time and attention. Now, I'd like to turn the call over to Brian who'll discuss our second quarter financial results and 2021 outlook in greater detail. 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 2021, and all comparisons will be year-over-year comparisons versus the second quarter of 2020. Now, turning to our results. As Karen highlighted, our consolidated net sales increased 25.8% to $410.3 million. Within the North America segment, net sales increased 22.2% to $350.6 million, primarily due to product price increases that took effect in April and June of 2021 in an effort to offset rising material costs, along with marginally higher sales volumes. We also continued to benefit from solid trends in our distributor channel, which reflected increased demand from ongoing strength in U.S. housing starts. In Europe, net sales increased 51% to $56.4 million, primarily due to higher sales volumes compared to last year's COVID-19-related slowdown. Europe sales also benefited by approximately $5.3 million of positive foreign currency translations resulting from some European currencies strengthening against the United States dollar. Wood construction products represented 87% of total sales compared to 86%, and concrete construction products represented 13% of total sales compared to 14%. Consolidated gross profit increased by 31.1% to $196.4 million, which resulted in a stronger Q2 gross profit margin of 47.9% compared to last year. Gross margin increased by 200 basis points, primarily due to the price increases Karen discussed earlier, which were partially offset by higher material costs. On a segment basis, our gross margin in North America increased to 49.9% compared to 47.4%, while in Europe, our gross margin increased to 36% compared to 35.1%. From a product perspective, our second quarter gross margin on wood products was 47.4% compared to 46.2% in the prior year quarter, and it was 47.5% for concrete products compared to 40.7% in the prior year quarter. Now, turning to our second quarter costs and operating expenses. As a reminder, last year, we curtailed expenses in light of the COVID-19 pandemic. As a result, total operating expenses were $94.7 million and increased to $17.1 million, or approximately 22%. As a percentage of net sales, total operating expenses were 23.1% compared to 23.8%. Research and development and engineering expenses increased 16.2% to $14.2 million, primarily due to increased personnel costs, cash profit sharing, and professional fees. Selling expenses increased 23.6% to $33.2 million due to increased personnel costs, sales commissions, travel and entertainment expenses, and professional fees. On a segment basis, selling expenses in North America were up 20.3%, and in Europe, they were up 36%. General and administrative expenses increased 22.7% to $47.4 million, primarily due to personnel costs, cash profit sharing, and professional and legal fees offset by a lower stock-based compensation. Our solid top-line performance, combined with our stronger Q2 gross margin, helped drive a 40.9% increase in consolidated income from operations to $101.7 million compared to $72.2 million. In North America, income from operations increased 31.8% to $95.1 million, primarily due to increased gross profit, partly offset by higher operating expenses. In Europe, income from operations increased 117.8% to $5.9 million, primarily due to increased sales volumes and gross profit. On a consolidated basis, our operating income margin of 24.8% increased by approximately 270 basis points from 22.1%. Our effective tax rate increased to 26.9% from 25.8%. Accordingly, net income totaled $72.5 million, or $1.66 per fully diluted share, compared to $53.5 million, or $1.22 per fully diluted share. Now, turning to our balance sheet and cash flow. Our balance sheet remained healthy with ample liquidity to operate our day-to-day operations. On June 30th, cash and cash equivalents totaled $305.8 million, a decrease of $9.7 million compared to June 30th, 2020. As of June 30, 2021, the full $300 million on our primary credit line was available for borrowing, and we remained debt-free, mostly unchanged from year-end. Subsequent to the end of the quarter, we entered into a Fourth Amendment to our credit facility, which extended the terms of the agreement from July 23, 2022, to July 12, 2026, and modified certain covenants to provide us with additional flexibility. Our inventory position of $310.3 million at June 30th increased by $13.6 million from our balance at March 31st, primarily due to the increases we saw in steel prices over the first half of the year, partially offset by a reduction in pounds on hand. We continue to carefully manage raw material inventory purchases in the environment of rising costs and limited supplies, all while striving to maintain our high levels of customer service and on-time delivery standards. As a result of our improved profitability and effective working capital management, we generated strong cash flow from operations of $63.8 million for the second quarter of 2021, an increase of $38.9 million, or 156%. We used approximately $8.8 million for capital expenditures during the quarter and paid $10 million in dividends to our stockholders. Additionally, I'm pleased to announce that on July 14, 2021, our board of directors declared a quarterly cash dividend of $0.25 per share. The dividend will be payable on October 28, 2021, to stockholders of record as of October 7, 2021. As a reminder, in early May, our board of directors approved a $0.02, or 8.7%, increase in our dividend per share. We are pleased to have increased our quarterly dividend, reflecting our strong financial performance and continued commitment to returning capital to stockholders. Prior to this, we had last raised our quarterly dividend by $0.01, or 4.5%, per share in April 2019. We did not increase our dividend in 2020 as a result of our focus on cash preservation at the onset of the COVID-19 pandemic. As of June 30, 2021, we had the full amount of our $100 million share repurchase authorization available, which remained in effect through the end of 2021. Given our confidence in our business and our expectation that our strategic initiatives will continue to drive improved operational performance and a higher return on invested capital, we expect we'll remain both active and opportunistic as it relates to share repurchase activity. Before we turn the call over to questions, I'd like to discuss our 2021 financial outlook. Based on business trends and conditions as of today, July 26, we are updating certain elements of our guidance for the full year ending December 31, 2021, as follows. We are tightening our operating margin outlook to now be in the range of 19.5%-21% compared to our previous estimate of 19.5% to 22%. The current outlook reflects two quarters of actual results, the impact of our recent price increase announcements, rising raw material input costs, and the stronger-than-anticipated demand trends that we've been experiencing in 2021. In addition, we continue to expect our effective tax rate to be in the range of 25% to 26%, including both federal and state income tax rates. And finally, we are updating our capital expenditure outlook. For 2021, we have authorized CapEx in the range of $55 million to $60 million, including approximately $15 million to $20 million that will be used for safety and maintenance CapEx. At this time, only a small amount of our CapEx spend is related to pursuing our growth initiatives Karen outlined earlier in the call. I'd also like to provide some additional commentary regarding our margin expectations for the remainder of fiscal 2021 and fiscal 2022. Based on our current expectations, we are anticipating continued raw material cost pressure in late 2021 and into 2022. As Karen noted, our gross margins in the first half of 2021 reflect an average cost of steel sourced prior to or early into the rising steel market, together with steel purchased more recently at much higher prices. As we work through our on-hand inventory and continue to buy raw material at these much higher prices, our anticipated cost of goods sold are expected to increase significantly in the back half of fiscal 2021 and into 2022, even if prices for raw material begin to decline, which will adversely affect our margins as the impact from averaging raw material costs typically lags our price increases. As a result, we currently expect a roughly 300 to 400 basis points decline in operating margins for the full year 2022 when compared to 2021. Despite near-term pressures, we continue to focus on the long-range view, a key company value put in place by our founder, Barclay Simpson. As discussed during our analyst and investor day, we continue to believe we can maintain an industry-leading operating margin in the high teens range annually in the long term, a key goal in our five-year company ambitions. In summary, we're very pleased with our solid second quarter financial results and operating performance. We remain confident in our ability to execute against our strategic, operational, and financial initiatives, along with being able to support current and future demand trends. We look forward to updating you on our progress in the coming quarters. With that, I'd like to turn the call back to Karen for some closing remarks. Thank you, Brian. As Brian mentioned in summary, we are very pleased with our second quarter results. We continue to manage the key areas of our business that we can control while navigating the current macroeconomic environment, which is characterized by our ongoing rising steel prices. While these factors will result in a notable compression to our margins in fiscal 2022, we remain confident in our ability to achieve our five-year company ambitions that we unveiled at our analyst investor day in March. Our first ambition is we want to strengthen our values-based culture. Our Simpson Strong-Tie employees are our most important asset, and we will continue to engage with them to ensure relentless customer focus, that they're involved in leadership programs, and instill a safety-first culture. Second, we want to be a partner of choice in all aspects of our business. Third, we strive to be an innovative leader in our product categories. Fourth, we aim to continue our above-market growth relative to U.S. Housing starts. Fifth, we will continue to target an operating income margin that remains within the top quartile of our proxy peers. While we expect increases in our operating expenses in the near term to support our growth initiatives, our goal over the long term is to expand our operating income margin from historical averages supported by enhanced revenue from our growth initiatives. And finally, we'll continue targeting a return on invested capital that remains in the top quartile of our proxy peers. In closing, I'd like to sincerely thank all our Simpson employees for their commitment as we begin to execute against our five-year ambitions. We commend you for your dedication to safety and for working hard every day to achieve our mission of providing solutions to help people build and design safer, stronger structures. And with that, I'd like to open the call up for questions. Operator? Thank you. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. And for participants using speaker equipment, it may be necessary to pick up your handset before pressing your star key. Our first question is from Daniel Moore with CJS Securities. Please proceed. Good afternoon, Karen. Good afternoon, Brian. Thanks for taking the questions. Good afternoon. Start with volume. Press release mentioned marginally higher sales volumes. I assume that means low single digits. Is that correct in terms of ballpark terms? And what are your expectations for organic volume growth for Q3 and the remainder of the year, including that tough comp with Lowe's through the next quarter? Yeah. We certainly saw volumes increase in Europe relative to Q2 of last year. Looking at North America, I think you've indicated it nicely. You have a low single-digit volume expectation relative to what we're seeing or what we're hearing in the marketplace with respect to starts and, in general, EOY R&R elements. Helpful. And then appreciate the color. I'm trying to understand exactly what factors have changed over the past couple of months that caused the delta or the lowering of the top end of the fiscal 2021 margin range. I understand the puts and takes as you describe them. Just wondering if any one of those has changed relative to kind of maybe two months ago that would necessarily take down that top end. For sure, steel prices continue to increase pretty dramatically from where we were the end of last year and even the expectations where we were three months ago. Although we have announced multiple price increases this year, it just there is a bit of that. Also, there may be a little bit of softening in some of the end markets due to other elements. For example, housing starts could be impacted by some supply chain issues with regard to things like appliances and the like. Just a number of various factors that we're modeling in now with another three months under our belt. Got it. Similarly for fiscal 2022, appreciate the initial commentary as everybody's always trying to sort of jump on next year. This year, we started out with margin expectation that was arguably conservative and quickly ramped higher. So, are there factors in your mind that could cause that margin compression next year to be maybe a little bit lighter than what you've described? I think, Dan, as we see steel pricing continuing to increase, it seems like potential new availability coming online has been pushed back a little bit from fourth quarter into first quarter. So we're still seeing tight market and high prices continuing for some time to come. And Dan, as you know, we've talked in the past on these calls where as we buy new steel, it takes a while for our average price of steel used in our operations to reflect current market conditions. So it's just that element. We started the year with a relatively lower price per pound in steel, and it's gone up pretty dramatically. And we'll see the full impact of that in fiscal 2022. Oh, very good. Appreciate the color. I will circle back with any follow-ups. Thank you. Thank you. Our next question is from Tim Wojs with Baird. Please proceed. Hey, everybody. Good afternoon. Good afternoon. So maybe just to try to level set a little bit on a couple of base questions. If I'm doing my math correctly, which probably isn't correct, but did you get in North America, did you have over $50 million of price contribution in the quarter? Let's see. That sounds too much. Yeah, that's too much. That's too much. Okay. What was the price contribution? Well, it would be, let's see, about $40-ish million. Okay. And that's really only one price increase, right? Because you really only had two weeks of the second, and there's still a third coming, right? Correct. Okay. So could price be on a run rate basis, $75, $80, $90 million a quarter? Give me just a second. I'm doing a little bit of math here. 80? At least. About $80 million. Okay. And so that would be kind of the annualized run rate going forward. So even though we're talking about a little higher, I guess, margin compression next year, it's off of a much higher revenue base than before, correct? Correct. Okay. Perfect. And then when we think about the volume growth, it sounds like the low single digits. Did that include the lapping of lows this quarter? Yes. And if you take that out, what would volumes have grown? Well, we had lows in last quarter or last year, Q2. So from a comparability perspective, we're pulling out pretty large numbers out of both quarters. Our home center total combined home center business was down Q2 of this year compared to Q2 of last year due to that load in. Was POS positive? We had the load in last year. There was a bit of POS. I believe so. I believe so. Okay. Okay. Great. Okay. Great. And then just on a dollar-for-dollar basis, as you kind of normalize both input costs and the pricing increases, will you have effectively offset higher costs with price? And really, numerically, it's just margin dilutive because of the mix? Yeah. Margin dilutive. I would expect that to be corr ect. Yeah. Okay. Okay. Great. That's what I had. Thank you, guys. Appreciate it. Thanks. Thanks, Tim. Our next question is from Kurt Yinger with D.A. Davidson. Please proceed. Great. Hi, Kurt. Hey. Hey, Brian. Hey. I guess just starting off, recognizing you're not kind of alone in this boat, I'm just curious how you think about the ability to continue to push price onto customers at the same time that it seems demand is moderating a bit. Just kind of the moving pieces within that and what type of responses you're hearing. Yeah. Let me take a shot at that. Kurt, it is never easy to push price increases through, but since it's such a highly publicized information about what's going on with the steel industry, and of course, it's not only Simpson who's pushing pricing through. It's pretty much anybody who's got steel as a raw material in their finished goods. So it's very highly publicized as to what's going on with the steel industry. A lot of price increases going in all aspects of the construction industry. And so, of course, our customers are very happy that we have product to provide them. And as we've mentioned, we're certainly not a just-in-time shop. And that means that we bring steel in. We have finished goods. We have raw materials in our inventory. And that's really to meet those customer needs and to be able to still have that 48-hour turnaround time. So although steel pricing or any price increase is hard to push through, I think the service levels that we provide is something that the customers appreciate. And again, they're certainly aware of all the changes that are going on in the industry. Okay. All right. That makes sense. And I guess sticking along those same lines, we've heard some comments around shortages of truss plates. I'm just curious whether you feel you've benefited in North America from some of your competitors perhaps being more strained from a service proposition or supply chain perspective? Yeah. We certainly have heard in our European market that we have benefited from some of our competitors being unable to supply building materials. And we've been able to pick up some customers in that European market. I think on a much smaller scale in the North America market, we've probably benefited from that also. But as we've mentioned, again, we want to be sure from an availability standpoint that we can definitely meet our customer needs. So we don't want to bring on a customer and then not be able to support another customer. So we're very careful on how we do that. But again, I think our team has done an excellent job of working with our customer base. The production team has done a great job of being sure we've got the right product and the right price and really making sure that we're not holding up any jobs, that's for sure. Okay. That makes sense. And I guess on the 2022 margin outlook, obviously, you talked about the drivers of the gross margin compression. I'm just curious whether, with the assumptions you've made, whether you expect to get nice leverage on the operating expense line, or should we expect that some of the investments you're making behind some of those targeted growth markets will start to ramp up and you won't necessarily see that leverage despite the fact that you're benefiting from a lot of price? I would say from an OpEx perspective, we've got our plans on how we allocate SG&A dollars from supporting not only just our growth initiatives, but our current operations and the like. And as price increases push through, we'll look at the investments needed within SG&A to support our business. And so I would expect there to be some offsetting leverage on the SG&A side relative to the gross margin resulting in that 2022 direction we gave. Does that make sense? Yes. Yes. No, that's great. And then just one on technology. Could you just talk about what you've seen in terms of software usage and adoption among your customers? Talk a little bit about what metrics you watch to determine success there and whether you think that's something that can become a leading indicator in terms of product demand as you look out over the next couple of years. So I think each customer is a little bit different on the elements of software that they choose to make their business more efficient. And that's really why our platform is based on applications that can help a component manufacturer, say, a truss yard versus a different application that would be used at a lumber yard where potentially they would be doing a full bill of materials takeoff. So we first start by trying to figure out the needs of that customer. And do we have a software application that could make them more efficient and more effective in their particular part of the building chain? We are seeing, for example, lumber yards using our takeoff tool because it's making them more efficient on being able to quote more jobs. We have a target to convert and to offer this product to a significant amount of lumber yards this year. We're seeing component manufacturers, again, use our software to design trusses and floor systems. We still have a small market share there, maybe 4% to 5% of that total market share in that application. We're seeing our home centers use our deck solutions and our fencing products to help bring customers into their locations as well as support not only our products that are used in those applications, but of course, a lot of lumber is also sold as you're looking at a deck or a fencing. So there's no one answer. It's across the board. The metrics that we use are as we look at releasing new deck products, do we see an increase in our products specifically that are used for decking applications or fencing applications? We can get those metrics. We also know from the component manufacturing side, the metrics that we use is pounds of plate that we sell to those component manufacturers. So each application, a little bit different metric used. But I think the key is that can we as Simpson provide a building technology solution that can make our customer, and that could be a designer, the takeoff person, the component manufacturer, the homeowner building a deck, make them more efficient in that role, and also specify our products on that final construction project that they're working on. Some of the other metrics that we would utilize would be opportunities with customers. So we'll track them in our CRM tool, looking at various opportunities across the customer-facing technology opportunities. Okay. All right. That makes sense. All right. Great. Well, appreciate all the color and good luck here in the back half of the year. Thanks, Kurt. Thanks, Kurt. Our next question is from Julio Romero with Sidoti & Company. Please proceed. Hey. Good afternoon, Karen and Brian. Hi, Julio. Hi, Julio. So your commentary on your expected margin compression beginning in late 2021 and through early 2022, can you maybe just talk about some of the assumptions there? Does that 300 to 400 basis point decrease in expected operating margin assume steel stops rising and remains at the current elevated levels, or does that 300 to 400 basis point decrease assume steel prices decrease? Yeah. That's a good question. We would expect, as I mentioned earlier, it takes a while for the average price of new purchases in our inventory to catch up. So I would expect things to continue to increase before things level out. Got it. The reason I'm asking yep. I was going to say today we're well north of two times the cost of new purchases versus what we held in inventory at the end of last year. There may be a little bit of a ramp down once we get to a peak in costs of new purchases coming in, but it'll take a while for those to as it's taken a while to go up, it'll take a while to come back down as well. Got it. But that slight ramp downward in price that could happen given the dramatic jump up in steel price, somewhat of a ramp downward is factored into your 2022 assumption. Would that be fair, or? Yep. It would. It's just a lot of assumptions there, how much it will be and when. A lot of questions right now in those models. Yep. No, understood. Just asking because of the dramatic jump up that steel prices have done and just trying to think about that dynamic. I guess the steel prices rising, I think about some other inputs for some of your customers, such as lumber prices for maybe truss manufacturers. Lumber prices have gone down. Steel prices have gone up. Does that dynamic, if you will, change anything for your customers in terms of the appetite for them to absorb your price increases? I think if you look at that from just the standpoint of building the house, right, I mean, the majority of the product that's in the residential home would be lumber. So a lumber price increase has got a pretty significant impact compared to steel prices. As we've mentioned and said in the past, that we're probably well under 0.5% of the total cost of a house. And so even though our price increase is of concern, and as we said, it's not an easy thing to relate to our customers, it's a much smaller impact from the overall construction on the house. I'm not sure that that answers your question, but just again, from the overall construction industry, the wood pricing, which has been decreasing for about the past three weeks, is a pretty significant impact from a housing affordability point. Thank you. No, that is helpful. Just thinking about that from a broader perspective. I guess shifting gears to some of your capital allocation commentary, I'm fascinated by the investment in the venture capital fund. Can you maybe walk through how that's helping you think about growth initiatives in the long term? Sure. So where we're really excited about that is the opportunity to engage with a firm that's looking at very cutting-edge technologies within the building space. Gets us access to their deal flow. We let them know what we're looking for. Gets on their radar screen. We have periodic conversations to look at those opportunities. There are just new technologies that are at the forefront that we may not have had cross our desk that we can potentially take a look at. So advanced scouting, if you will. And it may not be something that we look to acquire, but we may partner with. We may do strategic a relationship in some form or fashion with these new technologies, but just gives us access to more of that that we've not had in the past. Understood. Just last one for me is the $5 million increase in CapEx for this year. Can you maybe give us a quick reminder of the implied growth CapEx? I guess it's $40 million this year. Just give us a quick reminder of what's currently being worked on in this calendar year? We're working on a number of opportunities to insource products more. So we've talked in the past where we'll buy out a number of our products from vendors to the extent we can make more of that ourselves. We like to do that. We've got some opportunities to invest in machinery or capital equipment because volumes have been up pretty significantly over the last few years. So we want to make sure our operations are reflecting that type of environment. And to the extent we can be more efficient, more cost-effective with our products and solutions, we'll do that. And investing in CapEx is one of those methods. Excellent. Thanks for taking the questions and best of luck in the back half of the year. Thanks, Julio. Thank you. This does conclude today's conference. You may disconnect your lines at this time and thank you for your participation.