PLEASANTON, Calif.,
April 24, 2014 /PRNewswire/
-- Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD)
today announced its first quarter 2014 results.
Results of Operations for the Three Months Ended March 31, 2014, Compared with the Three Months
Ended March 31, 2013
Overview
Net sales increased 9.1% to $168.3
million for the first quarter of 2014 from $154.3 million for the first quarter of 2013. The
Company had net income of $12.1
million for the first quarter of 2014 compared to
$4.8 million for the first quarter of
2013. Diluted net income per common share was $0.25 for the first quarter of 2014 compared to
$0.10 per common share for the first
quarter of 2013.
Net sales
The increase in the Company's first quarter 2014 net sales
comprised increased sales in the North
America, Europe and
Asia/Pacific segments, with
North America reporting the
largest increase in dollars. North
America and Europe sales
benefited from improved economic activity, while Europe and parts of the United States benefited from a mild
winter.
- Segment net sales:
- North America – Net sales
increased 7.2% in the first quarter of 2014, compared to the first
quarter of 2013. Net sales in the United
States increased over the same period in 2013, primarily due
to increased sale volumes, partly offset by slightly lower average
selling prices. Canada net sales
increased slightly over the same period in 2013 due to increased
sales volumes, partly offset by the effects of foreign currency
translations and lower average selling prices.
- Europe – Net sales increased
15.7% in the first quarter of 2014 compared to the first quarter of
2013, mostly due to increased sales volumes and the effects of
foreign currency translations, partly offset by lower selling
prices.
- Consolidated net sales channels and product groups:
- Net sales to contractor distributors, dealer distributors,
lumber dealers and home centers increased in the first quarter of
2014, compared to the first quarter of 2013, with above-average
sales increases to contractor distributors and lumber dealers.
- Wood construction product sales, including connectors, truss
plates, fastening systems, fasteners and shearwalls, represented
86% of total Company sales in the first quarter of each of 2014 and
2013.
- Concrete construction product sales, including adhesives,
chemicals, mechanical anchors, powder actuated tools and
reinforcing fiber materials, represented 14% of total Company sales
in the first quarter of each of 2014 and 2013.
Gross profit
Gross profit increased to $77.8
million in the first quarter of 2014 from $64.7 million in the first quarter of 2013. Gross
profit as a percentage of net sales increased to 46.2% in the first
quarter of 2014 from 41.9% in the first quarter of 2013. Based on
current information, the Company estimates that its full year 2014
gross profit margin will be between 44% and 45%.
- North America – Gross profit
margin increased to 49.2% in the first quarter of 2014 from 44.7%
in the first quarter of 2013, as a result of decreases in all
elements of costs as a percentage of sales, with the largest
decreases as a percentage of sales in factory overhead elements on
increased volumes and in material. The gross profit margin also
benefited from a one-time $2.5
million correction to worker compensation expense in states
where the Company is not self-insured. Concrete construction
product sales, which have a lower gross profit margin than wood
construction product sales, were 13% of North America sales in the first quarter of
each of 2014 and 2013.
- Europe – Gross profit margin
increased to 35.3% in the first quarter of 2014 from 30.5% in the
first quarter of 2013, as a result of decreases in all elements of
costs as a percentage of sales, with the largest decrease as a
percentage of sales in factory overhead on increased volumes and in
material. Concrete construction product net sales, which have a
lower gross profit margin than wood construction product sales,
were 13% and 12% of Europe net
sales in the first quarter of 2014 and the first quarter of 2013,
respectively.
- Product mix – The gross profit margin differential between wood
construction products and concrete construction products was 15% in
the first quarter of each of 2014 and 2013.
- Steel prices – Steel prices have decreased slightly from
December 2013. Based on current
estimates, the Company expects the market price for steel to
increase during the second quarter of 2014.
Research and development and engineering expense
Research and development and engineering expense increased 16.8%
to $9.7 million in the first quarter
of 2014 from $8.3 million in the
first quarter of 2013, primarily due to increases of $1.1 million in professional fees, $0.4 million in cash profit sharing and
$0.4 million in personnel costs,
partly offset by a decrease of $0.5
million due to capitalized software development costs.
- North America –
- Research and development and engineering expense increased
$0.9 million, primarily due to
increases of $0.7 million in
professional fees related to software development, $0.4 million in cash profit sharing, and
$0.4 million in personnel costs
related to the addition of staff in support of product and software
development and pay rate increases instituted in January 2014.
- In late 2013, the Company began capitalizing software
development costs, which resulted in a decrease of $0.5 million in software development expense in
the first quarter of 2014 compared to the first quarter of
2013.
Selling expense
Selling expense increased slightly to $21.8 million in the first quarter of 2014 from
$21.4 million in the first quarter of
2013, primarily due to increases of $0.7
million in cash profit sharing and sales commissions and
$0.3 million in professional fees,
partly offset by decreases of $0.4
million in promotional expense and $0.3 million in stock-based compensation.
- North America – Selling
expense increased slightly, due to increases of $0.3 million in cash profit sharing and sales
commissions and $0.3 million in
professional fees, partly offset by a decrease of $0.4 million in promotional expense.
General and administrative expense
General and administrative expense increased 3.4% to
$26.9 million in the first quarter of
2014 from $26.0 million in the first
quarter of 2013, primarily due to increases of $1.8 million in cash profit sharing, $0.7 million in personnel costs and $0.3 million in professional fees, partly offset
by a $1.0 million impairment of fixed
assets that occurred in the first quarter of 2013 and a net gain of
$0.2 million in foreign currency in
the first quarter of 2014 compared to a net loss of $0.6 million in foreign currency in the first
quarter of 2013.
- North America – General and
administrative expense increased $2.3
million, primarily due to increases of $1.0 million in cash profit sharing, $0.4 million in personnel costs related to the
addition of administrative and information technology staff and pay
rate increases instituted in January
2014, $0.3 million in
depreciation expense and $0.1 million
in professional fees.
- Europe – General and
administrative expense decreased by $1.5
million, primarily due to decreases of $1.0 million in impairment of fixed assets,
$0.6 million in net foreign currency
loss and $0.2 million in professional
fees, partly offset by increases of $0.3
million in personnel costs and $0.3
million in cash profit sharing.
- Administrative and all other – General and administrative
expense increased due to increases of $0.5
million in cash profit sharing and $0.3 million in professional fees, partly offset
by a net increase of $0.3 million in
foreign currency gain. The Company has adjusted rent revenue and
expense mostly associated with its property in Vacaville, California, to general and
administrative expense. Rent revenue in the first quarter of each
of 2014 and 2013 was $0.3
million.
Income taxes
The effective income tax rate in the first quarter of 2014 was
38.6% compared to 47.0% in the first quarter of 2013. The effective
income tax rate was lower due to reduced first quarter 2014
operating losses in the Europe and
Asia/Pacific segments for which no
tax benefit was recorded. Based on current information and subject
to future events and circumstances, the Company estimates that its
2014 effective tax rate will be between 37% and 39%.
Additional information
At its meeting on April 22, 2014,
the Company's Board of Directors declared a cash dividend of
$0.14 per share, an increase of 12%
over the previous dividend declaration. The record date for the
dividend will be July 3, 2014, and it
will be paid on July 24, 2014.
Investors, analysts and other interested parties are invited to
join the Company's conference call on Friday, April 25, 2014, at 6:00 am Pacific Time. To participate, callers may
dial 866-952-1907. 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, such
as statements above regarding steel prices and estimating full year
2014 gross profit margin and the 2014 effective tax rate. 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 document. 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 (unaudited) for the three
months ended March 31, 2014 and 2013, were as follows:
|
|
Three Months
Ended
March 31,
|
(Amounts in
thousands, except per share data)
|
|
2014
|
|
|
2013
|
|
Net sales
|
|
$
|
168,288
|
|
|
$
|
154,281
|
|
Cost of
sales
|
|
90,526
|
|
|
89,561
|
|
Gross
profit
|
|
77,762
|
|
|
64,720
|
|
Research and
development and engineering expenses
|
|
9,700
|
|
|
8,308
|
|
Selling
expenses
|
|
21,819
|
|
|
21,371
|
|
General and
administrative expenses
|
|
26,922
|
|
|
26,036
|
|
Net gain on disposal
of assets
|
|
(285)
|
|
|
(8)
|
|
Income from
operations
|
|
19,606
|
|
|
9,013
|
|
Interest income,
net
|
|
85
|
|
|
38
|
|
Income before
taxes
|
|
19,691
|
|
|
9,051
|
|
Provision for income
taxes
|
|
7,604
|
|
|
4,256
|
|
Net income
|
|
$
|
12,087
|
|
|
$
|
4,795
|
|
Earnings per common
share:
|
|
|
|
|
|
|
Basic
|
|
$
|
0.25
|
|
|
$
|
0.10
|
|
Diluted
|
|
0.25
|
|
|
0.10
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
48,899
|
|
|
48,536
|
|
Diluted
|
|
49,065
|
|
|
48,626
|
|
Other
data:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
$
|
7,684
|
|
|
$
|
7,487
|
|
Pre-tax impairment of
assets
|
|
—
|
|
|
1,025
|
|
Pre-tax equity-based
compensation expense
|
|
2,657
|
|
|
2,977
|
|
|
|
|
|
|
|
|
Cash dividend
declared per common share
|
|
$
|
0.125
|
|
|
$
|
—
|
|
The Company's financial position (unaudited) as of
March 31, 2014 and 2013, and December
31, 2013, was as follows:
|
|
March
31,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2014
|
|
|
2013
|
|
|
2013
|
|
Cash and short-term
investments
|
|
$
|
211,988
|
|
|
$
|
141,965
|
|
|
$
|
251,208
|
|
Trade accounts
receivable, net
|
|
114,159
|
|
|
102,813
|
|
|
90,017
|
|
Inventories
|
|
216,529
|
|
|
202,341
|
|
|
197,728
|
|
Assets held for
sale
|
|
—
|
|
|
577
|
|
|
—
|
|
Other current
assets
|
|
29,071
|
|
|
32,796
|
|
|
29,153
|
|
Total current
assets
|
|
571,747
|
|
|
480,492
|
|
|
568,106
|
|
Property, plant and
equipment, net
|
|
207,457
|
|
|
211,010
|
|
|
209,533
|
|
Goodwill
|
|
129,433
|
|
|
122,582
|
|
|
129,218
|
|
Other noncurrent
assets
|
|
44,532
|
|
|
57,463
|
|
|
46,756
|
|
Total
assets
|
|
$
|
953,169
|
|
|
$
|
871,547
|
|
|
$
|
953,613
|
|
Trade accounts
payable
|
|
$
|
31,291
|
|
|
$
|
30,958
|
|
|
$
|
34,933
|
|
Notes payable and
lines of credit
|
|
83
|
|
|
1,214
|
|
|
103
|
|
Other current
liabilities
|
|
64,175
|
|
|
42,519
|
|
|
68,169
|
|
Total current
liabilities
|
|
95,549
|
|
|
74,691
|
|
|
103,205
|
|
Other long-term
liabilities
|
|
10,111
|
|
|
8,435
|
|
|
9,129
|
|
Stockholders'
equity
|
|
847,509
|
|
|
788,421
|
|
|
841,279
|
|
Total liabilities and
stockholders' equity
|
|
$
|
953,169
|
|
|
$
|
871,547
|
|
|
$
|
953,613
|
|
Additional financial data of the Company (unaudited) for the
three months ended March 31, 2014 and 2013, were as
follows:
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
March
31,
|
|
%
|
(Amounts in
thousands)
|
|
2014
|
|
|
2013
|
|
|
change
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
136,882
|
|
|
$
|
127,737
|
|
|
7%
|
|
Europe
|
|
27,647
|
|
|
23,900
|
|
|
16%
|
|
Asia/Pacific
|
|
3,759
|
|
|
2,644
|
|
|
42%
|
|
Administrative and
all other
|
|
—
|
|
|
—
|
|
|
N/M
|
|
|
Total
|
|
$
|
168,288
|
|
|
$
|
154,281
|
|
|
9%
|
Net Sales by
Product Group*
|
|
|
|
|
|
|
|
|
|
Wood
Construction
|
|
$
|
144,676
|
|
|
$
|
132,795
|
|
|
9%
|
|
Concrete
Construction
|
|
23,524
|
|
|
21,421
|
|
|
10%
|
|
Other
|
|
88
|
|
|
65
|
|
|
N/M
|
|
|
Total
|
|
$
|
168,288
|
|
|
$
|
154,281
|
|
|
9%
|
Gross Profit by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
67,290
|
|
|
$
|
57,091
|
|
|
18%
|
|
Europe
|
|
9,764
|
|
|
7,283
|
|
|
34%
|
|
Asia/Pacific
|
|
756
|
|
|
446
|
|
|
70%
|
|
Administrative and
all other
|
|
(48)
|
|
|
(100)
|
|
|
N/M
|
|
|
Total
|
|
$
|
77,762
|
|
|
$
|
64,720
|
|
|
20%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
22,561
|
|
|
$
|
15,260
|
|
|
48%
|
|
Europe
|
|
(919)
|
|
|
(4,180)
|
|
|
78%
|
|
Asia/Pacific
|
|
(1,151)
|
|
|
(1,184)
|
|
|
3%
|
|
Administrative and
all other
|
|
(885)
|
|
|
(883)
|
|
|
N/M
|
|
|
Total
|
|
$
|
19,606
|
|
|
$
|
9,013
|
|
|
118%
|
|
|
|
|
*
|
The Company manages
its business by geographic segment but is presenting sales by
product group as additional information.
|
|
N/M
|
Statistic is not
material or not meaningful.
|
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.