PLEASANTON, Calif.,
April 23, 2015 /PRNewswire/
-- Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD)
today announced its first quarter 2015 results.
Results of Operations for the Three Months Ended March 31, 2015, Compared with the Three Months
Ended March 31, 2014.
Overview
Net sales increased 4.9% to $176.5
million in the first quarter of 2015 from $168.3 million in the first quarter of 2014. The
Company had net income of $10.1
million in the first quarter of 2015 compared to
$12.1 million in the first quarter of
2014. Diluted net income per common share was $0.20 for the first quarter of 2015 compared to
$0.25 per common share for the first
quarter of 2014. An out of period adjustment recorded in the first
quarter of 2014 relating to a non-reoccurring correction had the
effect of increasing that period's net income by $1.3 million or the equivalent of $0.026 per share (see "Gross profit" below).
Net sales
The Company's net sales increased in the North America segment and decreased in the
Europe and Asia/Pacific segments in the first quarter of
2015 compared to the first quarter of 2014.
- Segment net sales:
- North America – Net sales
increased 9.8% in the first quarter of 2015 compared to the first
quarter of 2014 due to increased unit sales volumes in the United States on improved economic
activity. Canada net sales
decreased mostly due to the effects of foreign currency
translations as well as lower unit sales volumes. The Company
calculated that Canada's first
quarter 2015 net sales were negatively affected by approximately
$1.0 million due to the Canadian
dollar weakening against the United
States dollar.
- Europe – Net sales decreased
17.6% in the first quarter of 2015 compared to the first quarter of
2014, mostly due to the effects of foreign currency translations,
partly offset by a slight increase in average sales prices. The
Company calculated that Europe's
first quarter 2015 net sales were negatively affected by
approximately $4.0 million due to
European currencies weakening against the
United States dollar. In local currencies, Europe's overall net sales were down
slightly.
- 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
2015 compared to the first quarter of 2014, due to increased home
construction activity.
- Wood construction product net sales, including connectors,
truss plates, fastening systems, fasteners and shearwalls,
represented 86% of total Company net sales in the first quarters of
both 2015 and 2014.
- Concrete construction product sales, including adhesives,
chemicals, mechanical anchors, powder actuated tools and
reinforcing fiber materials, represented 14% of total Company net
sales in the first quarters of both 2015 and 2014.
Gross profit
Gross profit decreased slightly to $77.5
million in the first quarter of 2015 from $77.8 million in the first quarter of 2014. Gross
profit as a percentage of net sales decreased to 43.9% in the first
quarter of 2015 from 46.2% in the first quarter of 2014, primarily
due to a non-reoccurring $2.3 million
correction to workers' compensation expense in the North America segment that increased the
Company's first quarter of 2014 gross profit by 1.4% of net sales.
Based on current information and subject to future events and
circumstances, the Company estimates that its 2015 full year gross
margin will be between 44% and 46%
- North America – Gross profit
margin decreased to 45.7% in the first quarter of 2015 from 49.2%
in the first quarter of 2014, primarily as a result of increases in
factory overhead, material and warehousing costs, each as a
percentage of net sales. The increase in factory overhead cost as a
percentage of net sales was primarily due to a non-reoccurring
$2.3 million correction to workers'
compensation expense that increased the first quarter of 2014 gross
profit by 1.7% of net sales.
- Europe – Gross profit margin
increased to 38.2% in the first quarter of 2015 from 35.3% in the
first quarter of 2014, as a result of decreases in material costs,
factory overhead, on increased production volumes, warehousing
costs and labor costs, each as a percentage of sales, partly offset
by an increase in the costs of shipping.
- Product mix – The gross profit margin differential between wood
construction products and concrete construction products, which
have lower gross profit margins, was 17% and 15% in the first
quarters of 2015 and 2014, respectively. The increased gross profit
differential between the two product groups coupled with increased
concrete construction product sales in 2015, also negatively
affected the gross profit margin.
- Steel prices - The market price for steel decreased during the
first quarter of 2015. There is a high degree of uncertainly
regarding the market price of steel in the second quarter of
2015.
Research and development and engineering expense
Research and development and engineering expense increased
5.1% to $10.2 million in the first
quarter of 2015 from $9.7 million in
the first quarter of 2014, primarily due to an increase of
$0.8 million in personnel costs
related to the addition of staff and pay rate increases instituted
in January 2015, partly offset by a
decrease of $0.4 million in
professional fees related to software development costs in
North America.
Selling expense
Selling expense increased 3.6% to $22.6 million in the first quarter of 2015 from
$21.8 million in the first quarter of
2014, primarily due to an increase of $0.3
million in personnel costs, $0.3
million in professional fees, $0.2
million in advertising and promotional costs and
$0.2 million in stock-based
compensation, partly offset by a decrease in commissions and cash
profit sharing expense of $0.5
million.
- North America – Selling
expense increased $1.1 million,
primarily due to an increase of $0.4
million in personnel costs related to the addition of staff
and pay rate increases instituted in January
2015, $0.3 million in
professional fees, $0.3 million in
advertising and promotional costs for new product catalogues and
$0.1 million in stock-based
compensation, partly offset by a decrease of $0.2 million in commissions and cash profit
sharing expense.
- Europe – Selling expense
decreased $0.5 million, primarily due
to a decrease of $0.4 million in
personnel costs related to the effects of foreign currency
translations.
- Asia/Pacific - Selling expense
increased $0.2 million, primarily due
to an increase of $0.4 million
related to severance costs due to the closing of three sales
offices and downsizing one sales office, partly offset by a
decrease in commissions of $0.3
million.
General and administrative expense
General and administrative expense increased 5.6% to
$28.4 million in the first quarter of
2015 from $26.9 million in the first
quarter of 2014, primarily due to a net increase of $1.4 million in foreign currency losses and
increases of $1.1 million in
personnel costs and $0.3 million in
stock-based compensation expense, partly offset by decreases of
$0.6 million in amortization expense,
$0.3 million in professional fees and
$0.3 million in cash profit sharing
expense, as well as a net $0.2
million benefit related to contingent liability fair value
changes in the Europe segment.
- North America – General and
administrative expense increased $1.0
million, primarily due to increases of $1.0 million in personnel costs related to the
addition of staff and pay rate increases instituted in January 2015 and $0.2
million in professional fees, partly offset by a decrease of
$0.5 million in amortization
expense.
- Europe – General and
administrative expense increased by $0.3 million, primarily due to a net increase of
$1.1 million in foreign currency
losses and a $0.2 million increase in
stock-based compensation expense, partly offset by decreases of
$0.5 million in personnel costs
related to the effects of foreign currency translations and
$0.1 million in cash profit sharing
expense, as well as a net $0.2
million benefit resulting from changes in the fair values of
contingent liabilities related to recent acquisitions.
- Administrative and Other – General and
administrative expense increased by $0.5 million primarily due to a net increase of
$0.4 million in foreign currency
losses and increases of $0.3 million
in personnel costs related to the addition of staff and pay rate
increases instituted in January 2015
and $0.1 million in stock-based
compensation, partly offset by a decrease of $0.5 million in professional fees.
Sales office closing
In March 2015, the Company
committed to a plan to close its sales offices located in
China, Thailand and Dubai as well as to reduce its selling
activities in Hong Kong. The
closures may be completed as early as December 2015. As a result, the Company recorded
employee severance obligation expenses of $0.8 million in March
2015 with nearly all to be paid in April 2015. Most of the severance obligation
expense was charged to operating expenses, with less than
$0.1 million recorded to cost of
sales. Estimated additional severance expense, retention bonuses
and professional fees of $1.9 million
will be recorded as commitment requirements are met or services are
received until the closings are finalized in 2016. All of the
physical locations are leased, with remaining future minimum lease
obligations of $1.3 million, and will
continue to be occupied while the Company considers options for
early termination of the leases. If the Company terminates a lease
early with no sub-lease or concessions received from the landlord
and the location is no longer in use, the remaining obligation will
be determined and expensed. Long-lived assets of $0.2 million consisting mostly of office
equipment and vehicles will either be sold or depreciated on an
accelerated basis to their salvage value and are expected to be
disposed by December 31, 2015.
Accelerated depreciation expense of $0.1
million was recorded in the first quarter of 2015, nearly
all as operating expenses.
Income taxes
The effective income tax rate for the first quarter of 2015 was
38.1% as compared to 38.6% for the first quarter of 2014. Based on
current information and subject to future events and circumstances,
the Company estimates that its 2015 effective tax rate will be
between 36% and 38%.
Additional information
At its meeting on April 21, 2015,
the Company's Board of Directors declared a cash dividend of
$0.16 per share. This is an increase
of $0.02 per share, or 14.3%, over
the amount of the dividend declared in February 2015. The record date for the dividend
will be July 2, 2015, and it will be paid on July 23,
2015.
Investors, analysts and other interested parties are invited to
join the Company's conference call on Friday, April 24, 2015, 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, estimating the 2015
gross profit margin and the 2015 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 including most recently the Company's Annual Report on
Form 10-K under the heading "Item 1A - Risk Factors.". 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 financial
information set forth herein is presented on a preliminary
unreviewed basis; data will be included in the Company's Quarterly
Report on Form 10-Q for the period ended March 31, 2015, when filed.
The Company's results of operations (unaudited) for the three
months ended March 31, 2015 and 2014, were as follows:
|
Three Months
Ended
March 31,
|
(Amounts in
thousands, except per share data)
|
2015
|
|
2014
|
Net sales
|
$
|
176,491
|
|
$
|
168,288
|
|
Cost of
sales
|
98,993
|
|
90,526
|
|
Gross
profit
|
77,498
|
|
77,762
|
|
Research and
development and engineering expenses
|
10,197
|
|
9,700
|
|
Selling
expenses
|
22,607
|
|
21,819
|
|
General and
administrative expenses
|
28,433
|
|
26,922
|
|
Gain on disposal of
assets
|
(16)
|
|
(285)
|
|
Income from
operations
|
16,277
|
|
19,606
|
|
Interest income
(expense), net
|
(35)
|
|
85
|
|
Income before
taxes
|
16,242
|
|
19,691
|
|
Provision for income
taxes
|
6,191
|
|
7,604
|
|
Net income
|
$
|
10,051
|
|
$
|
12,087
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.20
|
|
$
|
0.25
|
|
Diluted
|
$
|
0.20
|
|
$
|
0.25
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
49,208
|
|
48,899
|
|
Diluted
|
49,408
|
|
49,065
|
|
Other
data:
|
|
|
|
Depreciation and
amortization
|
$
|
7,418
|
|
$
|
7,684
|
|
Pre-tax equity-based
compensation expense
|
3,295
|
|
2,657
|
|
|
|
|
|
Cash dividend
declared per common share
|
$
|
0.140
|
|
$
|
0.125
|
|
The Company's financial position (unaudited) as of
March 31, 2015 and 2014, and December 31, 2014 were as
follows:
|
|
March
31,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2015
|
|
2014
|
|
2014
|
Cash and short-term
investments
|
|
$
|
233,587
|
|
|
$
|
211,988
|
|
|
$
|
260,307
|
|
Trade accounts
receivable, net
|
|
117,316
|
|
|
114,159
|
|
|
92,015
|
|
Inventories
|
|
205,312
|
|
|
216,529
|
|
|
216,545
|
|
Other current
assets
|
|
32,231
|
|
|
29,071
|
|
|
35,451
|
|
Total current
assets
|
|
588,446
|
|
|
571,747
|
|
|
604,318
|
|
Property, plant and
equipment, net
|
|
205,009
|
|
|
207,457
|
|
|
207,027
|
|
Goodwill
|
|
122,923
|
|
|
129,433
|
|
|
123,881
|
|
Other noncurrent
assets
|
|
36,281
|
|
|
44,532
|
|
|
37,839
|
|
Total
assets
|
|
$
|
952,659
|
|
|
$
|
953,169
|
|
|
$
|
973,065
|
|
Trade accounts
payable
|
|
$
|
21,456
|
|
|
$
|
31,291
|
|
|
$
|
22,860
|
|
Notes payable and
lines of credit
|
|
—
|
|
|
83
|
|
|
18
|
|
Other current
liabilities
|
|
59,831
|
|
|
64,175
|
|
|
71,602
|
|
Total current
liabilities
|
|
81,287
|
|
|
95,549
|
|
|
94,480
|
|
Other long-term
liabilities
|
|
16,082
|
|
|
10,111
|
|
|
15,120
|
|
Stockholders'
equity
|
|
855,290
|
|
|
847,509
|
|
|
863,465
|
|
Total liabilities and
stockholders' equity
|
|
$
|
952,659
|
|
|
$
|
953,169
|
|
|
$
|
973,065
|
|
Additional financial data of the Company (unaudited) for the
three months ended March 31, 2015 and 2014, were as
follows:
|
Three Months
Ended
|
|
|
March
31
|
|
%
|
(Amounts in
thousands)
|
2015
|
|
2014
|
|
change
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
North
America
|
$
|
150,324
|
|
|
$
|
136,882
|
|
|
10%
|
|
Europe
|
22,788
|
|
|
27,647
|
|
|
(18)%
|
|
Asia/Pacific
|
3,379
|
|
|
3,759
|
|
|
(10)%
|
|
|
Total
|
$
|
176,491
|
|
|
$
|
168,288
|
|
|
5%
|
Net Sales by
Product Group*
|
|
|
|
|
|
|
Wood
Construction
|
$
|
151,379
|
|
|
$
|
144,676
|
|
|
5%
|
|
Concrete
Construction
|
25,010
|
|
|
23,524
|
|
|
6%
|
|
Other
|
102
|
|
|
88
|
|
|
N/M
|
|
|
Total
|
$
|
176,491
|
|
|
$
|
168,288
|
|
|
5%
|
Gross Profit by
Reporting Segment
|
|
|
|
|
|
|
North
America
|
$
|
68,707
|
|
|
$
|
67,290
|
|
|
2%
|
|
Europe
|
8,697
|
|
|
9,764
|
|
|
(11)%
|
|
Asia/Pacific
|
510
|
|
|
756
|
|
|
(33)%
|
|
Administrative and
all other
|
(416)
|
|
|
(48)
|
|
|
N/M
|
|
|
Total
|
$
|
77,498
|
|
|
$
|
77,762
|
|
|
—%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
North
America
|
$
|
20,466
|
|
|
$
|
22,561
|
|
|
(9)%
|
|
Europe
|
(1,632)
|
|
|
(919)
|
|
|
N/M
|
|
Asia/Pacific
|
(803)
|
|
|
(1,151)
|
|
|
N/M
|
|
Administrative and
all other
|
(1,754)
|
|
|
(885)
|
|
|
N/M
|
|
|
Total
|
$
|
16,277
|
|
|
$
|
19,606
|
|
|
(17)%
|
|
*
|
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-first-quarter-results-300071376.html
SOURCE Simpson Manufacturing Co., Inc.