Simpson Manufacturing Co., Inc. Announces Third Quarter Results
PLEASANTON, Calif.,
Oct. 25, 2012 /PRNewswire/ -- Simpson
Manufacturing Co., Inc. (the "Company") (NYSE: SSD) today announced
its third quarter 2012 results.
For the third quarter of 2012, net sales increased 6.0% to
$172.1 million compared to net sales
of $162.4 million for the third
quarter of 2011. The Company had net income of $13.0 million for the third quarter of 2012
compared to net income of $19.4
million for the third quarter of 2011, which included a
$4.5 million gain on the sale of the
Keymark equity investment. Diluted net income per common share was
$0.27 for the third quarter of 2012
compared to diluted net income of $0.40 per common share for the third quarter of
2011.
The increase in the Company's third quarter 2012 sales was
primarily due to $8.8 million in
sales from businesses acquired since December 2011 with the remainder primarily due to
increased volume. In the third quarter 2012, sales increased in
North America, with an
above-average increase in the United
States, due in part to recent acquisitions. Sales in
Europe were flat, primarily due to
sales from the recent European acquisition offset by decreases
throughout the rest of the Company's European operations. Effects
due to foreign currency translation were not significant. Sales to
contractor distributors and lumber dealers increased in the third
quarter of 2012, compared to the third quarter of 2011, while sales
to dealer distributors and to home centers decreased over the same
period. Wood construction product sales, including connectors,
truss plates, fastening systems, fasteners and shearwalls,
represented 85% of total Company sales in the third quarter of
2012, down from 89% in the third quarter of 2011. Concrete
construction product sales, including adhesives, chemicals,
mechanical anchors, powder actuated tools and reinforcing fiber
materials, as a percentage of total sales increased to 15% in the
third quarter of 2012, from 11% in the third quarter of 2011. The
majority of sales from recent acquisitions were attributed to the
European acquisition, and mostly in concrete construction
products.
Gross profit increased slightly to $75.7
million in the third quarter of 2012 from $75.4 million in the third quarter of 2011. As a
percentage of net sales, gross profit decreased from 46.5% in the
third quarter of 2011 to 44.0% in the third quarter of 2012.
The North American gross profit margin decreased from 50.2% in the
third quarter of 2011 to 47.5% in the third quarter of 2012, as a
result of higher material and labor costs as a percentage of sales,
increased concrete construction product sales, which have a lower
gross margin than wood construction product sales, and competitive
price pressure. These were partly offset by lower factory
overhead costs as a percentage of sales, which resulted from higher
sales volume. The European gross profit margin decreased from 34.4%
in the third quarter of 2011 to 31.3% in the third quarter of 2012,
primarily due to higher material, labor and warehouse costs. Steel
prices decreased slightly in the third quarter. Due to a
number of factors that could affect supply, the Company is
uncertain of steel pricing through the last quarter of 2012 but
steel prices are expected to increase in 2013.
Unless otherwise noted, changes in operating expenses were
mostly attributable to the North American segment. Research and
development and engineering expense increased 31.0% from
$6.8 million in the third quarter of
2011 to $8.9 million in the third
quarter of 2012, including increases in professional fees of
$1.5 million primarily for truss
software development costs and personnel costs of $0.9 million resulting from additional employees,
partly due to the recent North American acquisitions, and an annual
pay rate increase instituted in January
2012 which also applied to personnel in other departments.
Selling expense increased 12.4% from $18.6
million in the third quarter of 2011 to $20.9 million in the third quarter of 2012,
primarily due to increases in personnel costs of $1.1 million, mostly from the recent North
American acquisitions, additional employees and increased pay
rates, promotional costs of $0.9
million and professional and legal fees of $0.4 million. These increases were partly offset
by a reduction in cash profit sharing of $0.8 million due to lower operating income.
General and administrative expense decreased 5.3% from $25.2 million in the third quarter of 2011 to
$23.8 million in the third quarter of
2012. Professional and legal fees decreased $2.4 million, which was primarily due to a
$1.1 million legal contingency
recorded in 2011, and the balance due to acquisitions that were
completed in 2011 and the first quarter of 2012, and cash profit
sharing decreased $1.1 million due to
lower operating income. These decreases were partly offset by
increases in depreciation expense of $0.8
million and amortization expense of $0.7 million primarily due to recent acquisitions
in both North America and
Europe and to increased personnel
costs of $0.5 million primarily due
to the recent European acquisition, additional employees and
increased pay rates.
In September 2012, the Company
committed to a plan to close its heavy-duty anchor production
facility in Ireland and will
attempt to sell the assets. The closure may be completed as early
as December 2012. As a result of this
decision, the Company recorded an employee severance obligation of
$1.0 million in September 2012, representing the estimated
minimum statutory amount due to employees that will be
involuntarily terminated. It is likely that additional severance
expense will be accrued after negotiations with employees or trade
unions have concluded, although amounts are unknown at this time
and other closing costs may be accrued as additional information
becomes available.
The effective tax rate increased from 34.2% in the third quarter
of 2011 to 41.1% in the third quarter of 2012, primarily due to
valuation allowances taken on third quarter 2012 foreign losses,
while in 2011 release of valuation allowances led to the lower
effective tax rate.
In the first nine months of 2012, net sales increased 8.4% to
$512.5 million compared to net sales
of $472.7 million for the first nine
months of 2011 due in part to recent acquisitions. The Company had
net income of $36.0 million for the
first nine months of 2012 compared to net income of $46.0 million for the first nine months of 2011.
Diluted net income per common share was $0.74 for the first nine months of 2012 compared
to diluted net income of $0.93 per
common share for the first nine months of 2011.
Sales in North America for the
first nine months of 2012 increased, with an above-average increase
in the United States, primarily
due to increases in volume and recent acquisitions. Sales in the
first nine months of 2012 in Europe increased slightly due to the recent
European acquisition, partly offset by decreases throughout the
rest of the Company's European operations. Foreign currency
translation effects were not significant. Sales to contractor
distributors and lumber dealers had above-average increases in the
first nine months of 2012 as compared to the same period in 2011,
while sales to home centers decreased over the same period.
Wood construction product sales represented 86% of total
Company sales in the first nine months of 2012, down from 89% in
the first nine months of 2011. Concrete product sales represented
14% of total sales in the first nine months of 2012, up from 11% in
the first nine months of 2011, with increases in all geographic
segments. Acquisitions since December
2011 contributed $23.5 million
to sales in the first nine months of 2012, with the majority
attributed to the European acquisition, and mostly in concrete
construction products.
Gross profit increased to $228.3
million in the first nine months of 2012 from $215.9 million in the first nine months of 2011.
As a percentage of net sales, gross profit decreased from 45.7% in
the first nine months of 2011 to 44.5% in the first nine months of
2012. The North American segment gross profit margin
decreased from 49.6% in the first nine months of 2011 to 47.5% in
the first nine months of 2012, primarily due to higher material and
labor costs as a percentage of sales, increased concrete
construction product sales, which have a lower gross margin than
wood construction product sales, and competitive price
pressure. These increases were partly offset by lower factory
overhead costs as a percentage of sales, which resulted from higher
sales volume. The gross profit margin for the European segment
increased to 33.8% in in the first nine months of 2012 from 32.8%
in the first nine months of 2011, primarily due to lower material
costs, partly offset by higher labor and factory overhead
costs.
Unless otherwise noted, changes in operating expenses were
mostly attributable to the North American segment. Research and
development and engineering expense increased 37.5% from
$19.7 million in the first nine
months of 2011 to $27.2 million in
the first nine months of 2012, including increases in professional
fees of $5.2 million, primarily due
to truss software development costs, and personnel costs of
$1.8 million resulting from
additional employees and a pay rate increase. These increases were
partly offset by a reduction in cash profit sharing of $0.7 million due to lower operating income.
Selling expense increased 10.3% from $55.5
million in the first nine months of 2011 to $61.3 million in the first nine months of 2012,
primarily due to increases in personnel costs of $3.3 million, resulting from the recent North
American acquisitions, additional employees and increased pay
rates, increased equity-based compensation of $1.1 million and increased promotional costs of
$1.0 million. General and
administrative expense increased 6.8% from $72.3 million in the first nine months of 2011 to
$77.2 million in the first nine
months of 2012. Personnel costs increased $2.7 million primarily due to the recent European
acquisition, additional employees and an increase in pay
rates. Depreciation expense increased $2.2 million and amortization expense increased
$2.2 million primarily due to recent
acquisitions in both North America
and Europe. The remaining
increases in general and administrative expenses included
$1.3 million in equity-based
compensation, $0.5 million in
computer hardware, software and support and $0.4 million reduction in foreign currency gains.
These increases were partly offset by a reduction in cash profit
sharing of $2.1 million due to lower
operating income and a net decrease in professional and legal fees
of $2.1 million although professional
and legal fees increased by $0.7
million in Europe due to
first quarter 2012 acquisition related activities.
The effective tax rate increased from 37.1% in the first nine
months of 2011 to 42.6% in the first nine months of 2012, primarily
due to 2012 non-deductible acquisition costs and valuation
allowances taken on foreign losses, while in 2011 release of
valuation allowances led to the lower effective tax rate.
At its meeting on October 18,
2012, the Company's Board of Directors declared a cash
dividend of $0.125 per share. The
record date for the dividend will be January
3, 2013, and it will be paid on January 24, 2013. The Board of Directors also
scheduled the Company's 2013 annual meeting of stockholders for
Tuesday, April 23, 2013.
Investors, analysts and other interested parties are invited to
join the Company's conference call on Friday, October 26, 2012, at 6:00 am Pacific Time. To participate, callers may
dial 800-895-0198. The call will be webcast simultaneously as well
as being available for one month through a link on the Company's
website at www.simpsonmfg.com.
This document contains forward-looking statements, based on
numerous assumptions and subject to risks and uncertainties.
Although the Company believes that the forward-looking statements
are reasonable, it does not and cannot give any assurance that its
beliefs and expectations will prove to be correct. Many factors
could significantly affect the Company's operations and cause the
Company's actual results to differ substantially from the Company's
expectations. Those factors include, but are not limited to: (i)
general economic and construction business conditions; (ii)
customer acceptance of the Company's products; (iii) relationships
with key customers; (iv) materials and manufacturing costs; (v) the
financial condition of customers, competitors and suppliers; (vi)
technological developments; (vii) increased competition; (viii)
changes in capital and credit market conditions; (ix) governmental
and business conditions in countries where the Company's products
are manufactured and sold; (x) changes in trade regulations; (xi)
the effect of acquisition activity; (xii) changes in the Company's
plans, strategies, objectives, expectations or intentions; and
(xiii) other risks and uncertainties indicated from time to time in
the Company's filings with the U.S. Securities and Exchange
Commission. Actual results might differ materially from
results suggested by any forward-looking statements in this report.
The Company does not have an obligation to publicly update any
forward-looking statements, whether as a result of the receipt of
new information, the occurrence of future events or
otherwise.
The Company's results of operations for the three and nine
months ended September 30, 2012 and
2011 (unaudited), were as follows:
|
|
Three
Months
|
|
Nine
Months
|
|
|
Ended
September 30,
|
|
Ended
September 30,
|
(Amounts in thousands, except per share
data)
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
172,113
|
|
$
162,366
|
|
$
512,550
|
|
$
472,713
|
Cost of sales
|
|
96,390
|
|
86,919
|
|
284,276
|
|
256,819
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
75,723
|
|
75,447
|
|
228,274
|
|
215,894
|
|
|
|
|
|
|
|
|
|
Research and development and
engineering expenses
|
|
8,916
|
|
6,804
|
|
27,156
|
|
19,743
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
20,941
|
|
18,633
|
|
61,255
|
|
55,527
|
|
|
|
|
|
|
|
|
|
General and administrative
expenses
|
|
23,843
|
|
25,174
|
|
77,174
|
|
72,250
|
Loss (gain) on sale of
assets
|
|
|
|
|
|
|
|
|
|
33
|
|
(46)
|
|
42
|
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
21,990
|
|
24,882
|
|
62,647
|
|
68,373
|
|
|
|
|
|
|
|
|
|
Gain on equity method
investment, before tax
|
|
–
|
|
4,471
|
|
–
|
|
4,389
|
Interest income,
net
|
|
55
|
|
79
|
|
177
|
|
258
|
Income before taxes
|
|
22,045
|
|
29,432
|
|
62,824
|
|
73,020
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes
|
|
9,069
|
|
10,052
|
|
26,788
|
|
27,069
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
12,976
|
|
$
19,380
|
|
$
36,036
|
|
$
45,951
|
|
|
|
|
|
|
|
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
0.27
|
|
$
0.40
|
|
$
0.75
|
|
$
0.93
|
Diluted
|
|
0.27
|
|
0.40
|
|
0.74
|
|
0.93
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
|
48,346
|
|
48,253
|
|
48,322
|
|
49,247
|
Diluted
|
|
48,390
|
|
48,288
|
|
48,385
|
|
49,296
|
|
|
|
|
|
|
|
|
|
Other data:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
6,860
|
|
$
4,933
|
|
$
20,673
|
|
$
14,988
|
Pre-tax impairment of assets
|
|
–
|
|
–
|
|
461
|
|
1,094
|
Pre-tax stock compensation expense
|
|
2,064
|
|
1,435
|
|
7,364
|
|
3,812
|
|
|
|
|
|
|
|
|
|
Cash dividend declared per
common share
|
|
$
0.125
|
|
$
0.125
|
|
$
0.375
|
|
$
0.375
|
The Company's financial position (unaudited) as of September 30, 2012 and 2011 and December 31, 2011, was as follows:
|
|
September 30,
|
|
December 31,
|
(Amounts in thousands)
|
|
2012
|
|
2011
|
|
2011
|
Cash and
short-term investments
|
|
$
187,471
|
|
$
265,162
|
|
$
213,817
|
Trade accounts
receivable, net
|
|
108,425
|
|
98,032
|
|
76,420
|
Inventories
|
|
172,021
|
|
172,142
|
|
180,129
|
Assets held for
sale
|
|
–
|
|
6,792
|
|
6,793
|
Other current
assets
|
|
24,192
|
|
21,715
|
|
24,905
|
Total current assets
|
|
492,109
|
|
563,843
|
|
502,064
|
|
|
|
|
|
|
|
Property, plant
and equipment, net
|
|
211,132
|
|
191,016
|
|
195,716
|
Goodwill
|
|
128,812
|
|
69,688
|
|
99,849
|
Other noncurrent
assets
|
|
46,943
|
|
30,922
|
|
38,458
|
Total assets
|
|
$
878,996
|
|
$
855,469
|
|
$
836,087
|
|
|
|
|
|
|
|
Trade accounts
payable
|
|
$
24,225
|
|
$
27,739
|
|
$
22,033
|
Notes payable
and lines of credit
|
|
193
|
|
–
|
|
–
|
Other current
liabilities
|
|
63,608
|
|
58,447
|
|
49,554
|
Total current liabilities
|
|
88,026
|
|
86,186
|
|
71,587
|
|
|
|
|
|
|
|
Other long-term
liabilities
|
|
4,810
|
|
7,001
|
|
6,137
|
Stockholders'
equity
|
|
786,160
|
|
762,282
|
|
758,363
|
Total liabilities and stockholders' equity
|
|
$
878,996
|
|
$
855,469
|
|
$
836,087
|
Simpson Manufacturing Co., Inc., headquartered in Pleasanton, California, through its
subsidiary, Simpson Strong-Tie Company Inc., designs, engineers and
is a leading manufacturer of wood construction products, including
connectors, truss plates, fastening systems, fasteners and
shearwalls, and concrete construction products, including
adhesives, specialty chemicals, mechanical anchors, powder actuated
tools and reinforcing fiber materials. The Company's common stock
trades on the New York Stock Exchange under the symbol "SSD."
For further information, contact Tom
Fitzmyers at (925) 560-9030.
SOURCE Simpson Manufacturing Co., Inc.