PLEASANTON, Calif.,
July 28, 2016 /PRNewswire/
-- Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD)
today announced its second quarter 2016 results.
Results of Operations for the Three Months Ended
June 30, 2016, Compared with the Three Months Ended
June 30, 2015.
Unless otherwise stated, the results announced below, when
providing comparisons (which are generally indicated by words such
as "increased," "decreased," "remained" or "compared to"), compare
the results of operations for the three months ended June 30,
2016, against the results of operations for the three months ended
June 30, 2015.
To avoid fractional percentages, all percentages presented below
were rounded to the nearest whole number except for the estimate of
full-year 2016 gross profit margin below.
Overview
Net sales increased 6% to $230.0
million from $216.7 million.
The Company had net income of $26.2
million compared to $21.5
million. Diluted net income per common share was
$0.54 compared to $0.43.
Net sales
The Company's net sales increased in both the North America and Europe segments.
- Segment net sales:
- North America – Net sales
increased 8% due to increased unit sales volumes in the United States on improved economic
activity, partly offset by a slight decrease in average sales
prices. Canada's net sales
increased 6%, despite being negatively affected by the Canadian
dollar weakening against the United
States dollar.
- Europe – Net sales increased
1%, mostly due to increased unit sales volumes, partly offset by a
decrease in average sales prices. Effects of foreign currency
translation were not significant.
- Asia/Pacific -Net sales
decreased 30%, primarily due to the continuing effects of closing
of sales offices in China,
Thailand and Dubai late in the first quarter of 2015, which
accounted for approximately a $1.5
million decrease in consolidated net sales, partly offset by
increased net sales in other countries in the segment.
- Consolidated net sales channels and product groups:
- Net sales to dealer distributors, lumber dealers and contractor
distributors increased, primarily due to increased home
construction activity, while net sales to home centers
decreased.
- Wood construction product net sales, including sales of
connectors, truss plates, fastening systems, fasteners and
shearwalls, represented 86% and 85% of total Company net sales in
the second quarters of 2016 and 2015, respectively.
- Concrete construction product net sales, including sales of
adhesives, chemicals, mechanical anchors, powder actuated tools and
reinforcing fiber materials, represented 14% and 15% of total
Company net sales in the second quarters of 2016 and 2015,
respectively.
Gross profit
Gross profit increased to $111.5
million from $98.3 million.
Gross profit as a percentage of net sales increased to 48% from
45%.
- North America – Gross profit
margin increased to 50% from 47%, primarily as a result of
decreases in material and labor costs, both as a percentage of net
sales.
- Europe – Gross profit margin
increased to 41% from 39%, as a result of a decrease in material
costs, partly offset by an increase in shipping costs, both as a
percentage of net sales.
- Product mix – The gross profit margin differential between wood
construction products and concrete construction products, with the
latter having lower gross profit margins, decreased to 13% from
15%.
- Steel prices – The market prices for steel increased
significantly during the second quarter of 2016. The Company
currently anticipates that, subject to changing economic
conditions, it is possible that steel prices will continue to rise
during the third quarter of 2016.
Based on current information and subject to future events and
circumstances, the Company estimates that its full-year 2016 gross
profit margin will be between approximately 46% and 47.5%.
Research and development and engineering expense
Research and development and engineering expense increased
9% to $11.5 million from $10.5 million, primarily due to increases of
$0.5 million in cash profit sharing
expense on increased profits and $0.2
million in personnel costs, all of which occurred in the
North America segment.
Selling expense
Selling expense increased 8% to $24.8 million from $23.0
million, primarily due to increases of $1.2 million in personnel costs and $0.3 million in cash profit sharing and sales
commission expenses.
- North America – Selling
expense increased $1.4 million,
primarily due to increases of $0.8
million in personnel costs, mostly related to the addition
of staff and pay rate increases instituted on January 1, 2016, and $0.3
million in cash profit sharing and sales commission
expenses.
- Europe – Selling expense
increased $0.4 million, primarily due
to increases of $0.4 million in
personnel costs mostly related to the addition of staff.
General and administrative expense
General and administrative expense increased 17% to
$34.9 million from $29.8 million, primarily due to increases of
$2.3 million in professional and
legal fees primarily related to strategic initiatives, acquisition
opportunities and shareholder engagement activities, $1.0 million in cash profit sharing expense,
$0.4 million in personnel costs,
mostly related to the addition of staff and pay rate increases
instituted on January 1, 2016, and
$0.3 million in share-based
compensation as well as a net increase of $1.1 million in unrealized foreign currency
losses, partly offset by a decrease of $0.4
million in rent and facility maintenance expense.
- North America – General and
administrative expense increased $4.5
million, primarily due to increases of $1.5 million in professional and legal fees,
$1.0 million in cash profit sharing
expense, $0.5 million in personnel
costs and $0.2 million in share-based
compensation, partly offset by a $0.2
million decrease in facility maintenance expense.
- Europe – General and
administrative expense increased by $1.6
million, primarily due to an increase of $0.6 million in professional fees as well as a
net increase of $1.1 million in
unrealized foreign currency losses, primarily due to the British
pound weakening against all currencies at the end of the second
quarter.
- Asia/Pacific – General and
administrative expense decreased by $0.9
million, primarily due to decreases of $0.4 million in personnel costs and $0.2 million in rent expense due to the sales
office closures in 2015.
Income taxes
The Company's effective income tax rate decreased to 36% from
38% primarily due to reduced operating losses in the Asia/Pacific segment. Based on current
information and subject to future events and circumstances, the
Company estimates that its full-year 2016 effective tax rate will
be between 37% and 39%.
Results of Operations for the Six Months Ended
June 30, 2016, Compared with the Six Months Ended
June 30, 2015.
Unless otherwise stated, the results announced below, when
providing comparisons (which are generally indicated by words such
as "increased," "decreased," "remained" or "compared to"), compare
the results of operations for the six months ended June 30,
2016, against the results of operations for the six months ended
June 30, 2015.
To avoid fractional percentages, all percentages presented below
were rounded to the nearest whole number.
Overview
Net sales increased 9% to $429.5
million from $393.2 million.
The Company had net income of $42.5
million compared to $31.6
million. Diluted net income per common share was
$0.88 compared to $0.64.
Net sales
The Company's net sales increased in both the North America and Europe segments.
- Segment net sales:
- North America – Net sales
increased 11% due to increased unit sales volumes in the United States on improved economic
activity, partly offset by a decrease in average sales prices.
Canada's net sales were negatively
affected by the Canadian dollar weakening against the United States dollar. In local currency,
Canada's net sales decreased
slightly.
- Europe – Net sales increased
2%, mostly due to increased unit sales volumes, partly offset by a
decrease in average sales prices. Europe's net sales were negatively affected by
the European currencies weakening against the United States dollar.
- Asia/Pacific – Net sales
decreased 46%, primarily due to the continued effects of the
closing of sales offices in China,
Thailand and Dubai late in the first quarter of 2015, which
accounted for approximately a $3.6
million decrease in consolidated net sales.
- Consolidated net sales channels and product groups:
- Net sales to lumber dealers, dealer distributors, home centers
and contractor distributors increased, primarily due to increased
home construction activity.
- Wood construction product net sales, including sales of
connectors, truss plates, fastening systems, fasteners and
shearwalls, represented 86% and 85% of total Company net sales in
the first half of 2016 and 2015, respectively.
- Concrete construction product net sales, including sales of
adhesives, chemicals, mechanical anchors, powder actuated tools and
reinforcing fiber materials, represented 14% and 15% of total
Company net sales in the first half of 2016 and 2015,
respectively.
Gross profit
Gross profit increased to $204.0
million from $175.8 million.
Gross profit as a percentage of net sales increased to 47% from
45%.
- North America – Gross profit
margin increased to 49% from 47% , primarily as a result of a
decrease in material costs and factory overhead (on increased
production volumes), both as a percentage of net sales.
- Europe – Gross profit margin
remained 39%. Decreased material costs were offset by increased
shipping, factory overhead (on increased production costs) and
labor costs, each as a percentage of sales.
- Product mix – The gross profit margin differential between wood
construction products and concrete construction products, with the
latter having lower gross profit margins, decreased to 14% from
16%.
Research and development and engineering expense
Research and development and engineering expense increased
10% to $22.9 million from
$20.7 million, primarily due to
increases of $1.1 million in cash
profit sharing expense on increased profits, $0.4 million in personnel costs and $0.3 million in computer costs, all of which
occurred in the North America
segment.
Selling expense
Selling expense increased 10% to $50.0 million from $45.6
million, primarily due to increases of $2.9 million in personnel costs, $1.5 million in cash profit sharing and sales
commission expenses and $0.2 million
in professional fees, partly offset by a decrease of $0.2 million in promotional expenses.
- North America – Selling
expense increased $3.9 million,
primarily due to increases of $2.8
million in personnel costs, mostly related to the addition
of staff and pay rate increases instituted on January 1, 2016, and $1.5
million in cash profit sharing and sales commission expense,
partly offset by a decrease of $0.3
million in promotional expenses.
- Europe – Selling expense
increased $1.3 million, primarily due
to increases of $0.8 million in
personnel costs mostly related to the addition of staff,
$0.2 million in professional fees and
$0.1 million increase in promotional
expenses.
- Asia/Pacific - Selling expense
decreased $0.8 million, primarily due
to a decrease of $0.8 million in
personnel costs, related to closing three sales offices and
downsizing one sales office in 2015.
General and administrative expense
General and administrative expense increased 10% to
$64.2 million from $58.2 million, primarily due to increases of
$2.8 million in cash profit sharing
expense, $1.9 million in legal and
professional fees, $0.3 million in
computer and information technology expense, $0.3 million in share-based compensation and
$0.3 million in personnel costs as
well as a net $0.5 million increase
in unrealized foreign currency losses, partly offset by a decrease
of $0.6 million in facility rent and
maintenance expenses.
- North America – General and
administrative expense increased $5.6
million, primarily due to increases of $2.5 million in cash profit sharing expense,
$1.4 million in professional and
legal fees, $1.1 million in personnel
costs, $0.4 million in computer and
information technology expense and $0.2
million in share-based compensation, partly offset by a
decrease of $0.3 million in facility
maintenance expense.
- Europe – General and
administrative expense increased by $0.6
million, primarily due to increases of $0.5 million in professional and legal fees and
$0.3 million in personnel costs,
partly offset by a decrease of $0.2
million in share-based compensation.
- Asia/Pacific – General and
administrative expense decreased by $1.1
million primarily due to decreases of $1.0 million in personnel costs and $0.3 million in facility rent expense due to the
sales office closures.
- Administrative and All Other – General and administrative
expense increased by $0.8 million,
primarily due to increases of $0.5
million in cash profit sharing expense and $0.4 million in share-based compensation, as well
as a net increase in foreign currency losses of $0.3 million.
Income taxes
The Company's effective income tax rate decreased to 37% from
38% primarily due to reduced operating losses in the Asia/Pacific segment.
Additional information
At its meeting in July 2016, the
Company's Board of Directors declared a cash dividend of
$0.18 per share. The record date for
the dividend will be on October 6,
2016, and it will be paid on October
27, 2016.
Investors, analysts and other interested parties are invited to
join the Company's conference call on Friday, July 29, 2016, at 6:00 am Pacific Time. To participate, callers may
dial 877-876-9177 (international callers may dial
785-424-1666). 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 within the
meaning of the Private Securities Litigation Reform Act of 1995,
based on numerous assumptions and subject to risks and
uncertainties (some of which are beyond our control), such as
statements above regarding anticipated or estimated steel prices,
gross profit margin, and effective tax rate. Forward-looking
statements are necessarily speculative in nature, and it can be
expected that some or all of the assumptions of the forward-looking
statements we furnish will not materialize or will vary
significantly from actual results. Although the Company believes
that these forward-looking statements are reasonable, it does not
and cannot give any assurance that its beliefs and expectations
will prove to be correct, and our actual results might differ
materially from results suggested by any forward-looking statement
in this document. 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 business cycles and
construction business conditions; (ii) customer acceptance of the
Company's products; (iii) product liability claims, contractual
liability, engineering and design liability and similar liabilities
or claims, (iv) relationships with key customers; (v) materials and
manufacturing costs; (vi) the financial condition of customers,
competitors and suppliers; (vii) technological developments
including software development; (viii) increased competition; (ix)
changes in industry practices or regulations; (x) litigation risks,
(xi) changes in capital and credit market conditions; (xii)
governmental and business conditions in countries where the
Company's products are manufactured and sold; (xiii) changes in
trade regulations; (xiv) the effect of acquisition activity; (xv)
changes in the Company's plans, strategies, objectives,
expectations or intentions; and (xvi) other risks and uncertainties
indicated from time to time in the Company's filings with the U.S.
Securities and Exchange Commission including in the Company's most
recent 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.
Except as required by law, the Company undertakes no obligation to
publicly release any update or revision to these forward-looking
statements, whether as a result of the receipt of new information,
the occurrence of future events or otherwise. In light of the
foregoing, investors are urged not to rely on our forward-looking
statements in making an investment decision about our securities.
We further do not accept any responsibility for any projections or
reports published by analysts, investors or other third parties.
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, 2016, when filed.
The Company's results of operations (unaudited) for the three
months and six months ended June 30, 2016 and 2015,
respectively, were as follows:
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
(Amounts in
thousands, except per share data)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net sales
|
$
|
229,973
|
|
|
$
|
216,665
|
|
|
$
|
429,496
|
|
|
$
|
393,156
|
|
Cost of
sales
|
118,486
|
|
|
118,347
|
|
|
225,486
|
|
|
217,340
|
|
Gross
profit
|
111,487
|
|
|
98,318
|
|
|
204,010
|
|
|
175,816
|
|
Research and
development and engineering expenses
|
11,452
|
|
|
10,517
|
|
|
22,875
|
|
|
20,713
|
|
Selling
expenses
|
24,822
|
|
|
23,013
|
|
|
50,009
|
|
|
45,620
|
|
General and
administrative expenses
|
34,945
|
|
|
29,794
|
|
|
64,243
|
|
|
58,227
|
|
Gain on disposal of
assets
|
(656)
|
|
|
(15)
|
|
|
(682)
|
|
|
(30)
|
|
Income from
operations
|
40,924
|
|
|
35,009
|
|
|
67,565
|
|
|
51,286
|
|
Interest expense,
net
|
(83)
|
|
|
(54)
|
|
|
(318)
|
|
|
(89)
|
|
Income before
taxes
|
40,841
|
|
|
34,955
|
|
|
67,247
|
|
|
51,197
|
|
Provision for income
taxes
|
14,640
|
|
|
13,446
|
|
|
24,703
|
|
|
19,637
|
|
Net income
|
$
|
26,201
|
|
|
$
|
21,509
|
|
|
$
|
42,544
|
|
|
$
|
31,560
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.54
|
|
|
$
|
0.44
|
|
|
$
|
0.88
|
|
|
$
|
0.64
|
|
Diluted
|
$
|
0.54
|
|
|
$
|
0.43
|
|
|
$
|
0.88
|
|
|
$
|
0.64
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
48,399
|
|
|
49,254
|
|
|
48,353
|
|
|
49,236
|
|
Diluted
|
48,605
|
|
|
49,473
|
|
|
48,533
|
|
|
49,445
|
|
Other
data:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
7,442
|
|
|
$
|
7,297
|
|
|
$
|
14,878
|
|
|
$
|
14,716
|
|
Pre-tax equity-based
compensation expense
|
3,573
|
|
|
3,293
|
|
|
6,323
|
|
|
6,588
|
|
|
|
|
|
|
|
|
|
Cash dividend
declared per common share
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
$
|
0.34
|
|
|
$
|
0.30
|
|
The Company's financial position (unaudited) as of June 30,
2016 and 2015, and December 31, 2015, respectively, were as
follows:
|
|
June
30,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2016
|
|
2015
|
|
2015
|
Cash and cash
equivalents
|
|
$
|
246,337
|
|
|
$
|
248,612
|
|
|
$
|
258,825
|
|
Trade accounts
receivable, net
|
|
144,916
|
|
|
140,945
|
|
|
106,011
|
|
Inventories
|
|
218,164
|
|
|
212,293
|
|
|
195,757
|
|
Other current
assets
|
|
11,482
|
|
|
27,188
|
|
|
28,679
|
|
Total current
assets
|
|
620,899
|
|
|
629,038
|
|
|
589,272
|
|
Property, plant and
equipment, net
|
|
219,391
|
|
|
206,837
|
|
|
213,716
|
|
Goodwill
|
|
124,993
|
|
|
124,827
|
|
|
123,950
|
|
Other noncurrent
assets
|
|
34,256
|
|
|
35,155
|
|
|
34,371
|
|
Total
assets
|
|
$
|
999,539
|
|
|
$
|
995,857
|
|
|
$
|
961,309
|
|
Trade accounts
payable
|
|
$
|
27,069
|
|
|
$
|
26,915
|
|
|
$
|
21,309
|
|
Other current
liabilities
|
|
85,274
|
|
|
80,829
|
|
|
73,655
|
|
Total current
liabilities
|
|
112,343
|
|
|
107,744
|
|
|
94,964
|
|
Other long-term
liabilities
|
|
4,920
|
|
|
16,773
|
|
|
16,521
|
|
Stockholders'
equity
|
|
882,276
|
|
|
871,340
|
|
|
849,824
|
|
Total liabilities and
stockholders' equity
|
|
$
|
999,539
|
|
|
$
|
995,857
|
|
|
$
|
961,309
|
|
Additional financial data of the Company (unaudited) for the
three months and six months ended June 30, 2016 and 2015,
respectively, were as follows:
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
|
|
June
30,
|
|
%
|
|
June
30,
|
|
%
|
(Amounts in
thousands)
|
2016
|
|
2015
|
|
change*
|
|
2016
|
|
2015
|
|
change*
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
197,284
|
|
|
$
|
183,381
|
|
|
8%
|
|
$
|
371,738
|
|
|
$
|
333,705
|
|
|
11%
|
|
Europe
|
30,820
|
|
|
30,627
|
|
|
1%
|
|
54,518
|
|
|
53,414
|
|
|
2%
|
|
Asia/Pacific
|
1,869
|
|
|
2,657
|
|
|
(30)%
|
|
3,240
|
|
|
6,037
|
|
|
(46)%
|
|
|
Total
|
$
|
229,973
|
|
|
$
|
216,665
|
|
|
6%
|
|
$
|
429,496
|
|
|
$
|
393,156
|
|
|
9%
|
Net Sales by
Product Group**
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood
Construction
|
$
|
196,734
|
|
|
$
|
184,133
|
|
|
7%
|
|
$
|
368,512
|
|
|
$
|
335,512
|
|
|
10%
|
|
Concrete
Construction
|
33,239
|
|
|
32,375
|
|
|
3%
|
|
60,983
|
|
|
57,385
|
|
|
6%
|
|
Other
|
—
|
|
|
157
|
|
|
N/M
|
|
1
|
|
|
259
|
|
|
N/M
|
|
|
Total
|
$
|
229,973
|
|
|
$
|
216,665
|
|
|
6%
|
|
$
|
429,496
|
|
|
$
|
393,156
|
|
|
9%
|
Gross Profit
(Loss) by Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
97,703
|
|
|
86,744
|
|
|
13%
|
|
$
|
181,416
|
|
|
$
|
155,452
|
|
|
17%
|
|
Europe
|
12,684
|
|
|
11,984
|
|
|
6%
|
|
21,246
|
|
|
20,681
|
|
|
3%
|
|
Asia/Pacific
|
1,050
|
|
|
(306)
|
|
|
N/M
|
|
1,356
|
|
|
203
|
|
|
N/M
|
|
Administrative and
all other
|
50
|
|
|
(104)
|
|
|
N/M
|
|
(8)
|
|
|
(520)
|
|
|
N/M
|
|
|
Total
|
$
|
111,487
|
|
|
$
|
98,318
|
|
|
13%
|
|
$
|
204,010
|
|
|
$
|
175,816
|
|
|
16%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
40,116
|
|
|
$
|
35,249
|
|
|
14%
|
|
$
|
70,568
|
|
|
$
|
55,715
|
|
|
27%
|
|
Europe
|
1,899
|
|
|
3,328
|
|
|
(43)%
|
|
281
|
|
|
1,696
|
|
|
(83)%
|
|
Asia/Pacific
|
852
|
|
|
(1,371)
|
|
|
162%
|
|
1,007
|
|
|
(2,174)
|
|
|
146%
|
|
Administrative and
all other
|
(1,943)
|
|
|
(2,197)
|
|
|
N/M
|
|
(4,291)
|
|
|
(3,951)
|
|
|
N/M
|
|
|
Total
|
$
|
40,924
|
|
|
$
|
35,009
|
|
|
17%
|
|
$
|
67,565
|
|
|
$
|
51,286
|
|
|
32%
|
|
*
|
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-300305773.html
SOURCE Simpson Manufacturing Co., Inc.