PLEASANTON, Calif.,
Oct. 23, 2014 /PRNewswire/
-- Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD)
today announced its third quarter 2014 results.
Results of Operations for the Three Months Ended
September 30, 2014, Compared with the Three Months Ended
September 30, 2013
Overview
Net sales increased 7.0% to $209.3
million for the third quarter of 2014 from $195.6 million for the third quarter of 2013. The
Company had net income of $20.6
million for the third quarter of 2014 compared to
$20.0 million for the third quarter
of 2013. Diluted net income per common share was $0.42 for the third quarter of 2014 compared to
$0.41 per common share for the third
quarter of 2013.
Net sales
In the third quarter of 2014, the Company's net sales increased
in the North America segment and
were up slightly in the Europe
segment. North America net sales
benefited from an improvement in economic activity in the
region.
- Segment net sales:
- North America – Net sales
increased 8.8% in the third quarter of 2014 compared to the third
quarter of 2013, primarily due to increased sales volumes, partly
offset by the effects of foreign currency translation.
- Europe – Net sales increased
2.2% in the third quarter of 2014 compared to the third quarter of
2013, mostly due to the effects of foreign currency translations
and increased sales volumes, partly offset by slightly lower
average selling prices. Net sales in some regions of the segment
are trending down from prior quarters due to weakening economic
conditions in the region.
- Consolidated net sales channels and product groups:
- Net sales to contractor distributors, dealer distributors, home
centers and lumber dealers increased in the third quarter of 2014,
compared to the third quarter of 2013 due to increased home
construction activity.
- Wood construction product net sales, including connectors,
truss plates, fastening systems, fasteners and shearwalls,
represented 84% of total Company net sales in the third quarter of
both 2014 and 2013.
- Concrete construction product sales, including adhesives,
chemicals, mechanical anchors, powder actuated tools and
reinforcing fiber materials, represented 16% of total Company net
sales in the third quarter of both 2014 and 2013.
Gross profit
Gross profit increased to $95.6
million in the third quarter of 2014 from $89.9 million in the third quarter of 2013. Gross
profit as a percentage of net sales decreased from 46.0% in the
third quarter of 2013 to 45.6% in the third quarter of 2014.
- North America – Gross profit
margin decreased from 47.9% in the third quarter of 2013 to 47.3%
in the third quarter of 2014, primarily as a result of increases in
factory overhead as a percentage of sales caused by increased costs
on flat production volumes.
- Europe – Gross profit margin
decreased from 40.6% in the third quarter of 2013 to 39.7% in the
third quarter of 2014, as a result of increases in warehousing
costs, factory overhead, on decreased production volumes, and in
labor costs each as a percentage of sales.
- Product mix – The gross profit margin differential between wood
construction products and concrete construction products, which
have lower gross profit margins, was 12% and 13% in the third
quarter of 2014 and 2013, respectively.
Research and development and engineering expense
Research and development and engineering expense increased
5.3% to $9.7 million in the third
quarter of 2014 from $9.2 million in
the third quarter of 2013, primarily due to increases of
$1.1 million in personnel costs and
$0.2 million in cash profit sharing,
partly offset by decreases of $0.8
million in professional fees and $0.2
million in depreciation expense.
- North America – Research and
development and engineering expense increased $0.6 million, primarily due to increases of
$1.3 million in personnel costs,
which was mostly due to a reduction of capitalized personnel costs
related to software development, and $0.2
million in cash profit sharing, partly offset by decreases
of $0.8 million in professional fees
and $0.3 million in depreciation
expense.
Selling expense
Selling expense increased 14.4% to $23.6 million in the third quarter of 2014 from
$20.6 million in the third quarter of
2013, primarily due to increases of $1.0
million in personnel costs, $0.7
million in professional fees, $0.6
million in cash profit sharing and commissions and
$0.6 million in advertising and
promotional costs.
- North America – Selling
expense increased $2.9 million,
primarily due to increases of $0.9
million in personnel costs related to the addition of staff
and pay rate increases instituted in January
2014, $0.7 million in
professional fees, $0.6 million in
cash profit sharing and commissions and $0.6
million in advertising and promotions.
General and administrative expense
General and administrative expense increased 3.6% to
$29.6 million in the third quarter of
2014 from $28.5 million in the third
quarter of 2013, primarily due to increases of $1.1 million in unrealized foreign currency
losses, $0.6 million in amortization
expense, $0.3 million in depreciation
expense and $0.2 million in personnel
costs, partly offset by decreases of $0.7
million in professional fees and $0.4
million in bad debt expense as well as a $0.4 million gain resulting from a reduction of a
contingent liability related to the Bierbach acquisition in
2013.
- North America – General and
administrative expense increased $0.8
million, primarily due to increases of $0.6 million in amortization expense,
$0.3 million in depreciation expense
and $0.3 million in personnel
expense, partly offset by decreases of $0.5
million in professional fees and $0.2
million in bad debt expense.
- Europe – General and
administrative expense increased by $0.5 million, primarily due to increases of
$1.3 million in unrealized foreign
currency losses, partly offset by a $0.4
million gain resulting from a reduction of a contingent
liability related to the Bierbach acquisition in 2013, as well as
decreases of $0.3 million in
professional fees and $0.2 million in
bad debt expense.
Impairment of goodwill
In the third quarter of 2014, the Company recorded a
$0.5 million impairment associated
with Bierbach goodwill acquired in Germany in November
2013, and as a result, the goodwill of the Germany reporting unit was fully impaired. The
impairment resulted from a reduction in expected future sales from
former Bierbach customers.
Income taxes
The effective income tax rate in the third quarter of 2014 was
36.0% as compared to 35.2% in the third quarter of 2013.
Results of Operations for the Nine Months Ended
September 30, 2014, Compared with the Nine Months Ended
September 30, 2013
Overview
Net sales increased 7.4% to $585.5
million in the first nine months of 2014 from $545.2 million in the first nine months of 2013.
The Company had net income of $53.2
million in the first nine months of 2014 compared to
$43.3 million in the first nine
months of 2013. Diluted net income per common share was
$1.08 in the first nine months of
2014 compared to $0.89 per common
share in the first nine months of 2013.
Net sales
In the first nine months of 2014, the Company's net sales
increased in the North America,
Europe and Asia/Pacific segments, with North America reporting the largest increase
in dollars, primarily due to increased sales volumes as a result of
an improvement in economic activity in the region.
- Segment net sales:
- North America – Net sales
increased 7.1% in the first nine months of 2014, compared to the
first nine months of 2013, primarily due to increased sales
volumes, partly offset by slightly lower average selling prices and
the effects of foreign currency translation.
- Europe – Net sales increased
8.3% in the first nine months of 2014 compared to the first nine
months of 2013, mostly due to increased sales volumes and the
effects of foreign currency translations, partly offset by slightly
lower average selling prices. However, sales growth has trended
lower in the most recent two quarters of 2014, consistent with
declining economic activity in the region.
- Consolidated net sales channels and product groups:
- Net sales to contractor distributors, dealer distributors and
lumber dealers increased in the first nine months of 2014, compared
to the first nine months of 2013.
- Wood construction product net sales represented 85% of total
Company net sales in the first nine months of both 2014 and
2013.
- Concrete construction product net sales represented 15% of
total Company net sales in the first nine months of both 2014 and
2013.
Gross profit
Gross profit increased 10.4% in the first nine months of 2014 to
$269.2 million from $243.8 million in the first nine months of 2013.
Gross profit as a percentage of net sales increased to 46.0% in the
first nine months of 2014 from 44.7% in the first nine months of
2013. Based on current information, the Company estimates that its
full year 2014 gross profit margin will be between 45% and 46%.
- North America – Gross profit
margin increased to 48.0% in the first nine months of 2014 from
46.9% in the first nine months of 2013, as a result of decreases as
a percentage of sales in all elements of costs, with the largest
decreases as a percentage of sales in material and in factory
overhead elements (caused by increased volumes). In the first nine
months of 2014, the gross profit margin was affected by an atypical
non-recurring $3.0 million pension
charge that resulted from the Company's withdrawal from a
multi-employer union-based defined-benefit pension plan, partly
offset by an atypical non-recurring $2.5
million correction to workers' compensation expense in
states where the Company is not self-insured.
- Europe – Gross profit margin
increased to 38.8% in the first nine months of 2014 from 37.4% in
the first nine months of 2013, as a result of decreases as a
percentage of sales in factory overhead (caused by increased
volumes), shipping and warehouse costs and material costs.
- Product mix – The gross profit margin differential between wood
construction products and concrete construction products, which
have lower gross profit margins, was 13% and 12% in the first nine
months of 2014 and 2013, respectively. This negatively affected
gross margins in North America,
with concrete construction products representing 13% of
North America net sales in the
first nine months of both 2014 and 2013, and in Europe, with concrete construction products at
20% and 19% of Europe net sales in
the first nine months of 2014 and 2013, respectively.
- Steel prices – The Company expects the market price for steel
to remain flat for the remainder of 2014.
Research and development and engineering expense
Research and development and engineering expense increased
9.2% to $29.5 million in the first
nine months of 2014 from $27.0
million in the first nine months of 2013, primarily due to
increases of $1.1 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, $0.9 million in cash profit sharing and
$0.4 million in professional fees.
Software development costs of $1.8
million were capitalized in the first nine months of 2014
compared to $1.6 million in software
development costs capitalized in the first nine months of 2013.
- North America – Research and
development and engineering expense increased $2.1 million, primarily due to increases of
$1.1 million in personnel costs and
$0.8 million in cash profit
sharing.
- Europe – Research and
development and engineering expense increased $0.3 million, primarily due to an increase in
professional fees.
Selling expense
Selling expense increased 9.4% to $69.6 million in the first nine months of 2014
from $63.7 million in the first nine
months of 2013, primarily due to increases of $2.3 million in personnel costs, $2.0 million in professional fees, $1.1 million in cash profit sharing and
commissions and $0.6 million in
advertising and promotional costs.
- North America – Selling
expense increased $5.2 million,
primarily due to increases of $1.9
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,
$1.8 million in professional fees,
$0.7 million in advertising and
promotional costs and $0.7 million in
cash profit sharing and commissions.
- Europe – Selling expense
increased $0.6 million, primarily due
to increases of $0.4 million in
personnel costs and $0.2 million in
cash profit sharing and commissions.
General and administrative expense
General and administrative expense increased 3.7% to
$86.0 million in the first nine
months of 2014 from $82.9 million in
the first nine months of 2013, primarily due to increases of
$2.5 million in cash profit sharing,
$1.5 million in personnel costs,
$0.7 million in depreciation expense,
$0.4 million in unrealized foreign
currency losses and $0.3 million in
amortization expense, partly offset by a $1.0 million impairment of fixed assets in the
first nine months of 2013 (compared to no impairment of fixed
assets in the first nine months of 2014), a $0.4 million gain resulting from a reduction in a
contingent liability related to the Bierbach acquisition (compared
to no gain recorded in the first nine months in 2013), and
decreases of $0.4 million in bad debt
expense and $0.3 million in
professional fees.
- North America – General and
administrative expense increased $4.5
million, primarily due to increases of $1.6 million in cash profit sharing, $1.1 million in personnel costs related to the
addition of administrative and information technology staff and pay
rate increases instituted in January
2014, $0.9 million in
depreciation expense and $0.3 million
in unrealized foreign currency losses.
- Europe – General and
administrative expense decreased by $1.1 million, primarily due to $1.0 million in impairment of fixed assets in
2013, a $0.4 million gain resulting
from a reduction of a contingent liability related to the Bierbach
acquisition and a decrease of $0.6
million in professional fees, partly offset by increases of
$0.7 million in unrealized foreign
currency losses and $0.4 million in
personnel costs.
Income taxes
The effective income tax rate for the first nine months of 2014
was 36.7% as compared to 37.8% for the first nine months of 2013.
The decrease in the effective income tax rate was primarily due to
reduced operating losses in the first nine months of 2014 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 October 20,
2014, the Company's Board of Directors declared a cash
dividend of $0.14 per share. The
record date for the dividend will be January
8, 2015, and it will be paid on January 29, 2015. The Board of Directors also
scheduled the Company's 2015 annual meeting of stockholders for
Tuesday, April 21, 2015.
During the third quarter, the Company purchased 95,000 shares of
its Common Stock, at an average price of $31.37 per share. The total spent was
approximately $3.0 million and was
part of the $50.0 million that the
Company's Board of Directors authorized in February 2014 for repurchases of Common
Stock.
Investors, analysts and other interested parties are invited to
join the Company's conference call on Friday, October 24, 2014, at 6:00 am Pacific Time. To participate, callers may
dial 866-952-1906. 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 the full
year 2014 gross profit margin, the 2014 effective tax rate and the
net sales trends in the Europe
segment. 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
and nine months ended September 30, 2014 and 2013, were as
follows:
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(Amounts in
thousands, except per share data)
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
Net sales
|
$
|
209,320
|
|
|
$
|
195,619
|
|
|
$
|
585,518
|
|
|
$
|
545,248
|
|
Cost of
sales
|
113,767
|
|
|
105,724
|
|
|
316,285
|
|
|
301,461
|
|
Gross
profit
|
95,553
|
|
|
89,895
|
|
|
269,233
|
|
|
243,787
|
|
Research and
development and engineering expenses
|
9,711
|
|
|
9,226
|
|
|
29,505
|
|
|
27,018
|
|
Selling
expenses
|
23,592
|
|
|
20,630
|
|
|
69,623
|
|
|
63,654
|
|
General and
administrative expenses
|
29,557
|
|
|
28,523
|
|
|
85,993
|
|
|
82,906
|
|
Impairment of
goodwill
|
492
|
|
|
—
|
|
|
492
|
|
|
—
|
|
Loss (gain) on
disposal of assets
|
(17)
|
|
|
631
|
|
|
(336)
|
|
|
634
|
|
Income from
operations
|
32,218
|
|
|
30,885
|
|
|
83,956
|
|
|
69,575
|
|
Interest (expense)
income, net
|
(27)
|
|
|
(9)
|
|
|
44
|
|
|
32
|
|
Income before
taxes
|
32,191
|
|
|
30,876
|
|
|
84,000
|
|
|
69,607
|
|
Provision for income
taxes
|
11,577
|
|
|
10,870
|
|
|
30,849
|
|
|
26,304
|
|
Net income
|
$
|
20,614
|
|
|
$
|
20,006
|
|
|
$
|
53,151
|
|
|
$
|
43,303
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.42
|
|
|
$
|
0.41
|
|
|
$
|
1.09
|
|
|
$
|
0.89
|
|
Diluted
|
$
|
0.42
|
|
|
$
|
0.41
|
|
|
$
|
1.08
|
|
|
$
|
0.89
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
49,010
|
|
|
48,377
|
|
|
48,972
|
|
|
48,482
|
|
Diluted
|
49,227
|
|
|
48,551
|
|
|
49,172
|
|
|
48,603
|
|
Other
data:
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
7,320
|
|
|
$
|
6,853
|
|
|
$
|
22,105
|
|
|
$
|
21,631
|
|
Pre-tax
impairments
|
492
|
|
|
—
|
|
|
492
|
|
|
1,025
|
|
Pre-tax equity-based
compensation expense
|
3,306
|
|
|
3,105
|
|
|
9,508
|
|
|
9,106
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividend
declared per common share
|
$
|
0.140
|
|
|
$
|
0.125
|
|
|
$
|
0.405
|
|
|
$
|
0.250
|
|
The Company's financial position (unaudited) as of
September 30, 2014 and 2013, and December 31, 2013, was as follows:
|
|
September
30,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2014
|
|
|
2013
|
|
|
2013
|
|
Cash and short-term
investments
|
|
$
|
258,238
|
|
|
$
|
215,764
|
|
|
$
|
251,208
|
|
Trade accounts
receivable, net
|
|
127,495
|
|
|
118,895
|
|
|
90,017
|
|
Inventories
|
|
198,420
|
|
|
187,255
|
|
|
197,728
|
|
Other current
assets
|
|
26,126
|
|
|
24,849
|
|
|
29,153
|
|
Total current
assets
|
|
610,279
|
|
|
546,763
|
|
|
568,106
|
|
Property, plant and
equipment, net
|
|
206,134
|
|
|
209,641
|
|
|
209,533
|
|
Goodwill
|
|
125,228
|
|
|
130,270
|
|
|
129,218
|
|
Other noncurrent
assets
|
|
40,202
|
|
|
47,502
|
|
|
46,756
|
|
Total
assets
|
|
$
|
981,843
|
|
|
$
|
934,176
|
|
|
$
|
953,613
|
|
Trade accounts
payable
|
|
$
|
24,729
|
|
|
$
|
33,450
|
|
|
$
|
34,933
|
|
Notes payable and
lines of credit
|
|
38
|
|
|
956
|
|
|
103
|
|
Other current
liabilities
|
|
79,729
|
|
|
69,507
|
|
|
68,169
|
|
Total current
liabilities
|
|
104,496
|
|
|
103,913
|
|
|
103,205
|
|
Other long-term
liabilities
|
|
13,224
|
|
|
7,803
|
|
|
9,129
|
|
Stockholders'
equity
|
|
864,123
|
|
|
822,460
|
|
|
841,279
|
|
Total liabilities and
stockholders' equity
|
|
$
|
981,843
|
|
|
$
|
934,176
|
|
|
$
|
953,613
|
|
Additional financial data of the Company (unaudited) for the
three and nine months ended September 30, 2014 and 2013, were
as follows:
|
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
September
30,
|
|
%
|
|
September
30,
|
|
%
|
(Amounts in
thousands)
|
2014
|
|
|
2013
|
|
|
change
|
|
2014
|
|
|
2013
|
|
|
change
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
171,064
|
|
|
$
|
157,278
|
|
|
9%
|
|
$
|
476,546
|
|
|
$
|
444,772
|
|
|
7%
|
|
Europe
|
34,609
|
|
|
33,866
|
|
|
2%
|
|
97,297
|
|
|
89,855
|
|
|
8%
|
|
Asia/Pacific
|
3,647
|
|
|
4,475
|
|
|
(19)%
|
|
11,675
|
|
|
10,621
|
|
|
10%
|
|
|
Total
|
$
|
209,320
|
|
|
$
|
195,619
|
|
|
7%
|
|
$
|
585,518
|
|
|
$
|
545,248
|
|
|
7%
|
Net Sales by
Product Group*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood
Construction
|
$
|
175,522
|
|
|
$
|
164,091
|
|
|
7%
|
|
$
|
496,564
|
|
|
$
|
462,751
|
|
|
7%
|
|
Concrete
Construction
|
33,704
|
|
|
31,488
|
|
|
7%
|
|
88,735
|
|
|
82,323
|
|
|
8%
|
|
Other
|
94
|
|
|
40
|
|
|
N/M
|
|
219
|
|
|
174
|
|
|
N/M
|
|
|
Total
|
$
|
209,320
|
|
|
$
|
195,619
|
|
|
7%
|
|
$
|
585,518
|
|
|
$
|
545,248
|
|
|
7%
|
Gross Profit by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
80,906
|
|
|
$
|
75,369
|
|
|
7%
|
|
$
|
228,895
|
|
|
$
|
208,497
|
|
|
10%
|
|
Europe
|
13,757
|
|
|
13,733
|
|
|
—%
|
|
37,729
|
|
|
33,591
|
|
|
12%
|
|
Asia/Pacific
|
931
|
|
|
863
|
|
|
8%
|
|
2,537
|
|
|
2,190
|
|
|
16%
|
|
Administrative and
all other
|
(41)
|
|
|
(70)
|
|
|
N/M
|
|
72
|
|
|
(491)
|
|
|
N/M
|
|
|
Total
|
$
|
95,553
|
|
|
$
|
89,895
|
|
|
6%
|
|
$
|
269,233
|
|
|
$
|
243,787
|
|
|
10%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
29,914
|
|
|
$
|
28,659
|
|
|
4%
|
|
$
|
82,598
|
|
|
$
|
73,582
|
|
|
12%
|
|
Europe
|
3,447
|
|
|
3,682
|
|
|
(6)%
|
|
6,283
|
|
|
1,742
|
|
|
N/M
|
|
Asia/Pacific
|
(148)
|
|
|
(649)
|
|
|
77%
|
|
(1,783)
|
|
|
(1,878)
|
|
|
5%
|
|
Administrative and
all other
|
(995)
|
|
|
(807)
|
|
|
N/M
|
|
(3,142)
|
|
|
(3,871)
|
|
|
N/M
|
|
|
Total
|
$
|
32,218
|
|
|
$
|
30,885
|
|
|
4%
|
|
$
|
83,956
|
|
|
$
|
69,575
|
|
|
21%
|
|
|
|
|
*
|
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.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/simpson-manufacturing-co-inc-announces-third-quarter-results-318044129.html
SOURCE Simpson Manufacturing Co., Inc.