PLEASANTON, Calif.,
July 23, 2015 /PRNewswire/
-- Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD)
today announced its second quarter 2015 results.
Results of Operations for the Three Months Ended June 30, 2015, Compared with the Three
Months Ended June 30, 2014
Overview
Net sales increased 4.2% to $216.7
million in the second quarter of 2015 from $207.9 million in the second quarter of 2014. The
Company had net income of $21.5
million in the second quarter of 2015 compared to
$20.5 million in the second quarter
of 2014. Diluted net income per common share was $0.43 for the second quarter of 2015 compared to
$0.42 for the second quarter of
2014.
Net sales
The Company's net sales increased in the North America segment and decreased in the
Europe segment in the second
quarter of 2015 compared to the second quarter of 2014.
- Segment net sales:
- North America – Net sales
increased 8.8% in the second quarter of 2015 compared to the second
quarter of 2014 due to increased unit sales volumes in the United States on improved economic
activity. Canadian net sales decreased mostly due to the effects of
foreign currency translations, partly offset by increased unit
sales volumes. The Company calculated that Canada's second quarter 2015 net sales were
negatively affected by approximately $1.5
million due to the Canadian dollar weakening against
the United States dollar. In
Canadian dollars, Canada's overall
net sales increased in the second quarter of 2015 compared to the
second quarter 2014.
- Europe – Net sales decreased
12.6% in the second quarter of 2015 compared to the second quarter
of 2014, mostly due to the effects of foreign currency
translations. Net sales were also affected by an increase in unit
sales volume and a slight decrease in average sales prices. The
Company calculated that Europe's
second quarter 2015 net sales were negatively affected by
approximately $6.0 million due to
European currencies weakening against the
United States dollar. In local currencies, Europe's overall net sales increased in the
second quarter of 2015 compared to the second quarter 2014.
- Consolidated net sales channels and product groups:
- Net sales to contractor distributors, lumber dealers, dealer
distributors and home centers increased in the second quarter of
2015 compared to the second quarter of 2014, due to increased home
construction activity.
- Wood construction product net sales, including connectors,
truss plates, fastening systems, fasteners and shearwalls,
represented 85% of total Company net sales in the second quarters
of both 2015 and 2014.
- Concrete construction product sales, including adhesives,
chemicals, mechanical anchors, powder actuated tools and
reinforcing fiber materials, represented 15% of total Company net
sales in the second quarters of both 2015 and 2014.
Gross profit
Gross profit increased to $98.3
million in the second quarter of 2015 from $95.9 million in the second quarter of
2014. Gross profit as a percentage of net sales decreased to 45.4%
in the second quarter of 2015 from 46.1% in the second quarter of
2014.
- North America – Gross profit
margin decreased slightly to 47.3% in the second quarter of 2015
from 47.9% in the second quarter of 2014, primarily as a result of
increases in material, labor and warehousing costs, each as a
percentage of net sales, partly offset by a decrease in factory
overhead, as a percentage of net sales.
- Europe – Gross profit margin
decreased to 39.1% in the second quarter of 2015 from 40.5% in the
second quarter of 2014, as a result of increases in material costs
and labor, each as a percentage of sales, partly offset by a
decrease in factory overhead, on increased production volumes, 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 15% and 13% in the second
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.
Research and development and engineering expense
Research and development and engineering expense increased
4.2% to $10.5 million in the second
quarter of 2015 from $10.1 million in
the second quarter of 2014, primarily due to an increase of
$0.3 million in personnel costs
related to the addition of staff and pay rate increases instituted
in January 2015 and $0.3 million in professional fees, partly offset
by a decrease of $0.2 million in
stock-based compensation, all of which occurred in the North America segment.
Selling expense
Selling expense decreased 5.0% to $23.0 million in the second quarter of 2015 from
$24.2 million in the second quarter
of 2014, primarily due to decreases of $0.8
million in professional fees, $0.4
million in personnel costs and $0.4
million in advertising and promotional costs, partly offset
by an increase of $0.4 million in
commissions and cash profit sharing expense.
- North America – Selling
expense decreased $0.3 million,
primarily due to a decrease of $0.8
million in professional fees and $0.3
million in advertising and promotional costs for new product
catalogues, partly offset by increases of $0.6 million in commissions and cash profit
sharing expense and $0.3 million in
personnel costs related to the addition of staff and pay rate
increases instituted in January
2015.
- Europe – Selling expense
decreased $0.4 million, primarily due
to a decrease of $0.5 million in
personnel costs related to the effects of foreign currency
translations.
- Asia/Pacific - Selling expense
decreased $0.5 million, primarily due
to decreases of $0.2 million in
personnel costs and $0.2 million in
commissions and cash profit sharing expense, both related to the
closing of three sales offices and downsizing one sales
office.
General and administrative expense
General and administrative expense increased 1.0% to
$29.8 million in the second quarter
of 2015 from $29.5 million in the
second quarter of 2014, primarily due to increases of $0.6 million in stock-based compensation expense,
$0.2 million in facility maintenance
expense and $0.2 million in personnel
costs, partly offset by a net increase of $0.7 million in foreign currency gains.
- North America – General and
administrative expense increased $0.5
million, primarily due to increases of $0.3 million in facility maintenance expense and
$0.2 million in personnel costs
related to the addition of staff and pay rate increases instituted
in January 2015, partly offset by a
net increase of $0.2 million in
foreign currency gains.
- Europe – General and
administrative expense decreased by $1.2
million, primarily due to the translation of local
currencies into the United States
dollar. The decreases in general and administrative expenses were
partly offset by net increase of $0.5
million in foreign currency gains.
- Administrative and Other – General and administrative expense
increased by $0.7 million, primarily
due to a net increase of $0.4 million
in stock-based compensation expense.
Income taxes
The effective income tax rate for the second quarter of 2015 was
38.5% as compared to 36.3% for the second quarter of 2014. The
effective income tax rate was higher due to increased second
quarter 2015 operating losses in the Asia/Pacific segments for which no tax benefit
was recorded.
Results of Operations for the Six Months Ended June 30, 2015, Compared with the Six Months
Ended June 30, 2014
Overview
Net sales increased 4.5% to $393.2
million in the first half of 2015 from $376.2 million in the first half of 2014. The
Company had net income of $31.6
million in the first half of 2015 compared to $32.5 million in the first half of 2014. Diluted
net income per common share was $0.64
for the first half of 2015 compared to $0.66 for the first half of 2014. An out of
period adjustment recorded in the first half 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.
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 half of
2015 compared to the first half of 2014.
- Segment net sales:
- North America – Net sales
increased 9.2% in the first half of 2015 compared to the first half
of 2014 due to increased unit sales volumes in the United States on improved economic
activity. Canadian net sales decreased mostly due to the effects of
foreign currency translations, partly offset by an increase in unit
sales volumes. The Company calculated that Canada's first half 2015 net sales were
negatively affected by approximately $2.5
million due to the Canadian dollar weakening against
the United States dollar. In
Canadian dollars, Canada's overall
net sales increased slightly in the first half of 2015 compared to
the first half of 2014.
- Europe – Net sales decreased
14.8% in the first half of 2015 compared to the first half of 2014,
mostly due to the effects of foreign currency translations. The
Company calculated that Europe's
first half 2015 net sales were negatively affected by approximately
$10.0 million due to European
currencies weakening against the United
States dollar. In local currencies, Europe's overall net sales increased in the
first half of 2015 compared to the first half of 2014 due to an
increase in unit sales volume.
- Consolidated net sales channels and product groups:
- Net sales to contractor distributors, dealer distributors,
lumber dealers and home centers increased in the first half
of 2015 compared to the first half of 2014, due to increased home
construction activity.
- Wood construction product net sales, including connectors,
truss plates, fastening systems, fasteners and shearwalls,
represented 85% of total Company net sales in the first half of
both 2015 and 2014.
- Concrete construction product sales, including adhesives,
chemicals, mechanical anchors, powder actuated tools and
reinforcing fiber materials, represented 15% of total Company net
sales in the first half of both 2015 and 2014.
Gross profit
Gross profit increased to $175.8
million in the first half of 2015 from $173.7 million in the first half of 2014. Gross
profit as a percentage of net sales decreased to 44.7% in the first
half of 2015 from 46.2% in the first half of 2014, partly due to a
non-reoccurring $2.3 million
correction to workers' compensation expense in the North America segment that increased the
Company's first half of 2014 gross profit by 0.6% of net sales and
increases in material costs. 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 46.6% in the first half of 2015 from 48.4% in
the first half of 2014, primarily as a result of increases in all
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 half of 2014 gross profit margin by 0.8%.
- Europe – Gross profit margin
increased slightly to 38.7% in the first half of 2015 from 38.2% in
the first half of 2014, as a result of decreases in factory
overhead, on increased production volumes, material costs, and
warehousing costs, each as a percentage of sales, partly offset by
increases in the costs of labor and shipping, 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 16% and 14% in the first half
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 - Given current conditions, including anti-dumping
and countervailing duty trade cases filed by United States steel producers, steel prices
are expected to increase during the third quarter of 2015 but there
remains a great deal of uncertainty.
Research and development and engineering expense
Research and development and engineering expense increased
4.6% to $20.7 million in the
first half of 2015 from $19.8
million in the first half of 2014, primarily due to an
increase of $1.1 million in personnel
costs related to the addition of staff and pay rate increases
instituted in January 2015 in the
North America segment, partly
offset by a decrease of $0.3 million
in stock-based compensation costs, mostly in the North America segment.
Selling expense
Selling expense decreased 0.9% to $45.6 million in the first half of 2015
from $46.0 million in the first
half of 2014, primarily due to a decrease of $0.5 million in professional fees, mostly in the
North America segment.
General and administrative expense
General and administrative expense increased 3.2% to
$58.2 million in the first half
of 2015 from $56.4 million in the
first half of 2014, primarily due to increases of
$1.3 million in personnel costs and
$0.9 million in stock-based
compensation expense, a net increase of $0.6
million in foreign currency losses, and partly offset by
decreases of $0.6 million in
amortization expense and $0.3 million
in professional fees.
- North America – General and
administrative expense increased $2.1
million, primarily due to increases of $1.2 million in personnel costs related to the
addition of staff and pay rate increases instituted in January 2015, $0.5
million in professional fees and $0.2
million in stock-based compensation costs, partly offset by
a decrease of $0.4 million in
amortization expense.
- Europe – General and
administrative expense decreased by $1.0
million, primarily due to the translation of local
currencies into the United States
dollar, which resulted in decreased expenses compared to prior
years. The decreases in general and administrative expenses were
partly offset by net increase of $0.5
million in foreign currency losses.
- Administrative and Other – General and administrative expense
increased by $1.2 million primarily
due to increases of $0.5 million in
stock-based compensation expense and $0.4
million in personnel costs related to the addition of staff
and pay rate increases instituted in January
2015 and a net increase of $0.4
million in foreign currency losses, partly offset by a
decrease of $0.9 million in
professional fees.
Income taxes
The effective income tax rate for the first half of 2015 was
38.4% as compared to 37.2% for the first half of 2014. The
effective income tax rate was higher due to increased operating
losses in the first half of 2015 in the 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 2015
effective tax rate will be between 37% and 39%.
Additional information
At its meeting on July 14, 2015, the Company's Board of
Directors declared a cash dividend of $0.16 per share. The record date for the dividend
will be October 1, 2015, and it will be paid on
October 22, 2015.
During the second quarter, the Company purchased 254,619 shares
of its Common Stock, at an average price of $33.24 per share. The total spent was
approximately $8.5 million, which was
part of the $50.0 million that the
Company's Board of Directors authorized in February 2015 for repurchases of Common
Stock.
Investors, analysts and other interested parties are invited to
join the Company's conference call on Friday, July 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; reviewed data will be included in the Company's
Quarterly Report on Form 10-Q for the period ended June 30,
2015, when filed.
The Company's results of operations (unaudited) for the three
and six months ended June 30, 2015 and 2014, were as
follows:
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(Amounts in
thousands, except per share data)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Net sales
|
$
|
216,665
|
|
|
$
|
207,910
|
|
|
$
|
393,156
|
|
|
$
|
376,198
|
|
Cost of
sales
|
118,347
|
|
|
111,993
|
|
|
217,340
|
|
|
202,518
|
|
Gross
profit
|
98,318
|
|
|
95,917
|
|
|
175,816
|
|
|
173,680
|
|
Research and
development and engineering expenses
|
10,517
|
|
|
10,094
|
|
|
20,713
|
|
|
19,794
|
|
Selling
expenses
|
23,013
|
|
|
24,213
|
|
|
45,620
|
|
|
46,032
|
|
General and
administrative expenses
|
29,794
|
|
|
29,511
|
|
|
58,227
|
|
|
56,435
|
|
Gain on disposal of
assets
|
(15)
|
|
|
(34)
|
|
|
(30)
|
|
|
(319)
|
|
Income from
operations
|
35,009
|
|
|
32,133
|
|
|
51,286
|
|
|
51,738
|
|
Interest income
(expense), net
|
(54)
|
|
|
(15)
|
|
|
(89)
|
|
|
71
|
|
Income before
taxes
|
34,955
|
|
|
32,118
|
|
|
51,197
|
|
|
51,809
|
|
Provision for income
taxes
|
13,446
|
|
|
11,667
|
|
|
19,637
|
|
|
19,271
|
|
Net income
|
$
|
21,509
|
|
|
$
|
20,451
|
|
|
$
|
31,560
|
|
|
$
|
32,538
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.44
|
|
|
$
|
0.42
|
|
|
$
|
0.64
|
|
|
$
|
0.66
|
|
Diluted
|
$
|
0.43
|
|
|
$
|
0.42
|
|
|
$
|
0.64
|
|
|
$
|
0.66
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
49,254
|
|
|
49,011
|
|
|
49,236
|
|
|
48,955
|
|
Diluted
|
49,473
|
|
|
49,227
|
|
|
49,445
|
|
|
49,146
|
|
Other
data:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
7,297
|
|
|
$
|
7,102
|
|
|
$
|
14,716
|
|
|
$
|
14,785
|
|
Pre-tax equity-based
compensation expense
|
3,293
|
|
|
3,544
|
|
|
6,588
|
|
|
6,201
|
|
|
|
|
|
|
|
|
|
Cash dividend
declared per common share
|
$
|
0.16
|
|
|
$
|
0.14
|
|
|
$
|
0.30
|
|
|
$
|
0.265
|
|
The Company's financial position (unaudited) as of June 30,
2015 and 2014, and December 31, 2014 were as follows:
|
|
June
30,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2015
|
|
2014
|
|
2014
|
Cash and cash
equivalents
|
|
$
|
248,612
|
|
|
$
|
221,196
|
|
|
$
|
260,307
|
|
Trade accounts
receivable, net
|
|
140,945
|
|
|
137,803
|
|
|
92,015
|
|
Inventories
|
|
212,293
|
|
|
219,036
|
|
|
216,545
|
|
Other current
assets
|
|
27,188
|
|
|
26,128
|
|
|
35,451
|
|
Total current
assets
|
|
629,038
|
|
|
604,163
|
|
|
604,318
|
|
Property, plant and
equipment, net
|
|
206,837
|
|
|
206,563
|
|
|
207,027
|
|
Goodwill
|
|
124,827
|
|
|
129,231
|
|
|
123,881
|
|
Other noncurrent
assets
|
|
35,155
|
|
|
43,377
|
|
|
37,839
|
|
Total
assets
|
|
$
|
995,857
|
|
|
$
|
983,334
|
|
|
$
|
973,065
|
|
Trade accounts
payable
|
|
$
|
26,915
|
|
|
$
|
27,119
|
|
|
$
|
22,860
|
|
Notes payable and
lines of credit
|
|
—
|
|
|
62
|
|
|
18
|
|
Other current
liabilities
|
|
80,829
|
|
|
78,274
|
|
|
71,602
|
|
Total current
liabilities
|
|
107,744
|
|
|
105,455
|
|
|
94,480
|
|
Other long-term
liabilities
|
|
16,773
|
|
|
12,603
|
|
|
15,120
|
|
Stockholders'
equity
|
|
871,340
|
|
|
865,276
|
|
|
863,465
|
|
Total liabilities and
stockholders' equity
|
|
$
|
995,857
|
|
|
$
|
983,334
|
|
|
$
|
973,065
|
|
Additional financial data of the Company (unaudited) for the
three and six months ended June 30, 2015 and 2014, were as
follows:
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
June
30,
|
|
%
|
|
June
30,
|
|
%
|
(Amounts in
thousands)
|
2015
|
|
2014
|
|
change*
|
|
2015
|
|
2014
|
|
change*
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
183,381
|
|
|
$
|
168,600
|
|
|
9%
|
|
$
|
333,705
|
|
|
$
|
305,482
|
|
|
9%
|
|
Europe
|
30,627
|
|
|
35,041
|
|
|
(13)%
|
|
53,414
|
|
|
62,688
|
|
|
(15)%
|
|
Asia/Pacific
|
2,657
|
|
|
4,269
|
|
|
(38)%
|
|
6,037
|
|
|
8,028
|
|
|
(25)%
|
|
|
Total
|
$
|
216,665
|
|
|
$
|
207,910
|
|
|
4%
|
|
$
|
393,156
|
|
|
$
|
376,198
|
|
|
5%
|
Net Sales by
Product Group**
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood
Construction
|
$
|
184,133
|
|
|
$
|
176,363
|
|
|
4%
|
|
$
|
335,512
|
|
|
$
|
321,042
|
|
|
5%
|
|
Concrete
Construction
|
32,375
|
|
|
31,493
|
|
|
3%
|
|
57,385
|
|
|
55,031
|
|
|
4%
|
|
Other
|
157
|
|
|
54
|
|
|
N/M
|
|
259
|
|
|
125
|
|
|
N/M
|
|
|
Total
|
$
|
216,665
|
|
|
$
|
207,910
|
|
|
4%
|
|
$
|
393,156
|
|
|
$
|
376,198
|
|
|
5%
|
Gross Profit by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
86,744
|
|
|
$
|
80,698
|
|
|
7%
|
|
$
|
155,452
|
|
|
$
|
147,990
|
|
|
5.0%
|
|
Europe
|
11,984
|
|
|
14,207
|
|
|
(16)%
|
|
20,681
|
|
|
23,971
|
|
|
(14)%
|
|
Asia/Pacific
|
(306)
|
|
|
850
|
|
|
(136)%
|
|
203
|
|
|
1,606
|
|
|
(87)%
|
|
Administrative and
all other
|
(104)
|
|
|
162
|
|
|
N/M
|
|
(520)
|
|
|
113
|
|
|
N/M
|
|
|
Total
|
$
|
98,318
|
|
|
$
|
95,917
|
|
|
3%
|
|
$
|
175,816
|
|
|
$
|
173,680
|
|
|
1.2%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
35,249
|
|
|
$
|
30,123
|
|
|
17%
|
|
$
|
55,715
|
|
|
$
|
52,685
|
|
|
6%
|
|
Europe
|
3,328
|
|
|
3,755
|
|
|
(11)%
|
|
1,696
|
|
|
2,836
|
|
|
(40)%
|
|
Asia/Pacific
|
(1,371)
|
|
|
(484)
|
|
|
(183)%
|
|
(2,174)
|
|
|
(1,636)
|
|
|
(33)%
|
|
Administrative and
all other
|
(2,197)
|
|
|
(1,261)
|
|
|
N/M
|
|
(3,951)
|
|
|
(2,147)
|
|
|
N/M
|
|
|
Total
|
$
|
35,009
|
|
|
$
|
32,133
|
|
|
9%
|
|
$
|
51,286
|
|
|
$
|
51,738
|
|
|
(1)%
|
|
|
|
|
|
|
|
*
|
Unfavorable
percentage changes are presented in parenthesis.
|
|
**
|
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-second-quarter-results-300117964.html
SOURCE Simpson Manufacturing Co., Inc.