PLEASANTON, Calif.,
Oct. 27, 2016 /PRNewswire/
-- Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD)
today announced its third quarter 2016 results.
Results of Operations for the Three Months Ended
September 30, 2016, Compared with the Three Months Ended
September 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
September 30, 2016, against the results of operations for the
three months ended September 30, 2015.
To avoid fractional percentages, all percentages presented below
were rounded to the nearest whole number.
Overview
Net sales increased 7% to $231.0
million from $216.1 million.
The Company had net income of $29.8
million compared to $21.6
million. Diluted net income per common share was
$0.62 compared to $0.44.
Net sales
The Company's net sales increased in all segments.
- Segment net sales:
- North America – Net sales
increased 7%, mostly due to increased unit sales volumes in
the United States on improved
economic activity as well as a slight increase in average net sales
unit prices. Canada's net sales
were not significantly affected by effects of foreign currency
translation.
- Europe – Net sales increased
6%, mostly due to increased unit sales volumes, partly offset by a
decrease in average net sales unit prices. Europe's net sales were negatively affected by
approximately $1.0 million due to the
weakening of the British pound against the United States dollar.
- Consolidated net sales channels and product groups:
- Net sales to dealer distributors, contractor distributors and
home centers increased, primarily due to increased home
construction activity, while net sales to lumber dealers
decreased.
- Wood construction product net sales, including sales of
connectors, truss plates, fastening systems, fasteners and
shearwalls, represented 84% and 85% of the Company's total net
sales in the third 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 16% and 15% of the
Company's total net sales in the third quarters of 2016 and 2015,
respectively.
Gross profit
Gross profit increased to $113.5
million from $100.3 million.
Gross profit as a percentage of net sales increased to 49% from
46%.
- North America – Gross profit
margin increased to 50% from 48%, primarily due to decreases in
material and labor costs as well as a slight increase in average
net sales unit price, partly offset by increases in factory
overhead, shipping and warehouse costs, each as a percentage of
sales.
- Europe – Gross profit margin
increased to 43% from 42%, as a result of decreases in factory
overhead and material costs, partly offset by increases in shipping
costs and warehouse costs, each as a percentage of net sales.
- Product mix – The gross profit margin differential between wood
construction products and concrete construction products, with
concrete construction products having lower gross profit margins,
increased to 16% from 15%, mostly due to the increase in gross
profit margins for wood construction products exceeding the
increase in gross profit margins for concrete construction
products.
- Steel prices – The market prices for steel have increased since
the beginning of 2016. The Company currently anticipates that,
subject to changing economic conditions, it is possible that steel
prices will remain relatively stable during the fourth 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 47% and 48%.
Research and development and engineering expense
Research and development and engineering expense decreased
22% to $10.9 million from
$13.9 million, primarily due to a
non-recurring $4.1 million write-off
of a software development project in the third quarter of 2015,
partly offset by an increase of $0.8
million in cash profit sharing expense on increased profits,
all of which occurred in the North
America segment.
Selling expense
Selling expense increased 8% to $24.3 million from $22.5
million, primarily due to increases of $1.2 million in personnel costs and $0.9 million in cash profit sharing and sales
commission expenses on higher operating profits and net sales,
partly offset by a decrease of $0.5
million in professional fees.
- North America – Selling
expense increased $1.3 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 $0.8
million in cash profit sharing and sales commission
expenses, partly offset by a decrease of $0.4 million in professional fees.
- Europe – Selling expense
increased $0.3 million, primarily due
to an increase of $0.2 million in
personnel costs mostly related to the addition of staff.
General and administrative expense
General and administrative expense increased 14% to
$32.5 million from $28.6 million, primarily due to increases of
$1.8 million in cash profit sharing
expense on increased profits, $0.9
million in software subscription and licensing fees,
$0.8 million in personnel costs,
mostly related to the addition of staff and pay rate increases
instituted on January 1, 2016,
$0.5 million in professional and
legal fees primarily related to strategic initiatives and
$0.4 million in stock-based
compensation expenses, partly offset by a net decrease of
$0.7 million in foreign currency
losses.
- North America – General and
administrative expense increased $4.7
million, primarily due to increases of $1.7 million in cash profit sharing expense,
$1.4 million in personnel costs,
$0.9 million in software subscription
and licensing fees, $0.2 million in
professional and legal fees and $0.2
million in stock-based compensation.
- Europe – General and
administrative expense increased $0.5
million, primarily due to an increase of $0.2 million in cash profit sharing expense.
- Asia/Pacific – General and
administrative expense decreased $1.1
million, primarily due to a decrease of $0.4 million in personnel costs related to the
sales office closures in 2015 and a net decrease of $0.2 million in foreign currency losses.
Income taxes
The Company's effective income tax rate decreased to 35% from
38%, primarily due to reduced operating losses in the Asia/Pacific segment, for which no income tax
benefit was recorded. 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 36% and 37%.
Results of Operations for the Nine Months Ended
September 30, 2016, Compared with the Nine Months Ended
September 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 nine months ended
September 30, 2016, against the results of operations for the
nine months ended September 30, 2015.
To avoid fractional percentages, all percentages presented below
were rounded to the nearest whole number.
Overview
Net sales increased 8% to $660.5
million from $609.3 million.
The Company had net income of $72.3
million compared to $53.2
million. Diluted net income per common share was
$1.49 compared to $1.08.
Net sales
The Company's net sales increased in both North America and Europe segments.
- Segment net sales:
- North America – Net sales
increased 10%, mostly 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
were negatively affected by the Canadian dollar weakening against
the United States dollar. In the
local currency, Canada's net sales
increased.
- Europe – Net sales increased
3%, 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 34%, 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 an approximately $4.0
million decrease in consolidated net sales.
- Consolidated net sales channels and product groups:
- Net sales to dealer distributors, lumber dealers, contractor
distributors and home centers 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 85% of the Company's total net sales in the
first nine months of both 2016 and 2015.
- Concrete construction product net sales, including sales of
adhesives, chemicals, mechanical anchors, powder actuated tools and
reinforcing fiber materials, represented 15% of the Company's total
net sales in the first nine months of both 2016 and 2015.
Gross profit
Gross profit increased to $317.5
million from $276.2 million.
Gross profit as a percentage of net sales increased to 48% from
45%.
- North America – Gross profit
margin increased to 49% from 47%, primarily as a result of
decreases in material costs, factory overhead (on increased
production volumes) and labor, partly offset by an increase in
warehouse costs, each as a percentage of sales.
- Europe – Gross profit margin
remained at 40%. Decreased material costs and factory overhead (on
increased production costs) were offset by increased shipping labor
costs, each as a percentage of sales.
- Product mix – The gross profit margin differential between wood
construction products and concrete construction products, with
concrete construction products having lower gross profit margins,
decreased to 14% from 16%.
Research and development and engineering expense
Research and development and engineering expense decreased
2% to $33.8 million from $34.6 million, primarily due to a non-recurring
$4.1 million write-off of a software
development project in the third quarter of 2015, partly offset by
increases of $1.9 million in cash
profit sharing expense on increased profits, $0.5 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 9% to $74.3 million from $68.2
million, primarily due to increases of $4.1 million in personnel costs and $2.3 million in cash profit sharing expense on
increased profits, partly offset by decreases of $0.2 million in professional fees and
$0.2 million in stock-based
compensation.
- North America – Selling
expense increased $5.2 million,
primarily due to increases of $3.7
million in personnel costs, mostly related to the addition
of staff and pay rate increases instituted on January 1, 2016, and $2.2
million in cash profit sharing expense, partly offset by
decreases of $0.4 million in
professional fees and $0.2 million in
stock-based compensation.
- Europe – Selling expense
increased $1.7 million, primarily due
to increases of $1.1 million in
personnel costs mostly related to the addition of staff and
$0.1 million in cash profit sharing
expense.
- Asia/Pacific - Selling expense
decreased $0.7 million, primarily due
to a decrease of $0.7 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 11% to
$96.8 million from $86.9 million, primarily due to increases of
$4.7 million in cash profit sharing
expense, $2.4 million in legal and
professional fees primarily related to strategic initiatives,
acquisition opportunities and shareholder engagement activities,
$1.2 million in computer and
information technology expense, $1.1
million in personnel costs and $0.7
million in stock-based compensation, partly offset by a
decrease of $0.4 million in facility
rent and maintenance expenses.
- North America – General and
administrative expense increased $10.3
million, primarily due to increases of $4.2 million in cash profit sharing expense,
$2.5 million in personnel costs,
$1.8 million in legal and
professional fees, $1.3 million in
computer and information technology expense and $0.3 million in stock-based compensation.
- Europe – General and
administrative expense increased $1.1
million, primarily due to increases of $0.6 million in legal and professional fees and
$0.5 million in personnel costs.
- Asia/Pacific – General and
administrative expense decreased $2.2
million primarily due to decreases of $1.4 million in personnel costs and $0.3 million in facility rent and maintenance
expense due to the sales office closures.
- Administrative and All Other – General and administrative
expense increased $0.8 million,
primarily due to increases of $0.4
million in cash profit sharing expense and $0.6 million in stock-based compensation, partly
offset by a decrease of $0.4 million
in personnel costs.
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, for which no tax benefit
was recorded.
Additional information
At its meeting in October 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 January 5, 2017, and it will be paid
on January 26, 2017. The Board of Directors also scheduled the
Company's 2017 annual meeting of stockholders for Monday, April 24, 2017.
During the third quarter of 2016, the Company received the
initial delivery of 983,500 shares of its common stock at an
average price of $44.23 per share
under the Company's $50.0 million
accelerated share repurchase program with Wells Fargo Bank,
National Association, which is part of the $125 million authorized by the Company's Board of
Directors for common stock repurchases through December 31, 2017.
Investors, analysts and other interested parties are invited to
join the Company's conference call on Friday, October 28, 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
September 30, 2016, when filed.
The Company's results of operations (unaudited) for the three
months and nine months ended September 30, 2016 and 2015,
respectively, were as follows:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(Amounts in
thousands, except per share data)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Net sales
|
$
|
230,974
|
|
|
$
|
216,139
|
|
|
$
|
660,470
|
|
|
$
|
609,295
|
|
Cost of
sales
|
117,499
|
|
|
115,798
|
|
|
342,985
|
|
|
333,138
|
|
Gross
profit
|
113,475
|
|
|
100,341
|
|
|
317,485
|
|
|
276,157
|
|
Research and
development and engineering expense
|
10,932
|
|
|
13,935
|
|
|
33,807
|
|
|
34,648
|
|
Selling
expense
|
24,304
|
|
|
22,535
|
|
|
74,313
|
|
|
68,156
|
|
General and
administrative expense
|
32,543
|
|
|
28,648
|
|
|
96,786
|
|
|
86,875
|
|
Gain on disposal of
assets
|
(81)
|
|
|
(26)
|
|
|
(763)
|
|
|
(57)
|
|
Income from
operations
|
45,777
|
|
|
35,249
|
|
|
113,342
|
|
|
86,535
|
|
Interest expense,
net
|
(82)
|
|
|
(175)
|
|
|
(400)
|
|
|
(264)
|
|
Income before
taxes
|
45,695
|
|
|
35,074
|
|
|
112,942
|
|
|
86,271
|
|
Provision for income
taxes
|
15,898
|
|
|
13,479
|
|
|
40,601
|
|
|
33,115
|
|
Net income
|
$
|
29,797
|
|
|
$
|
21,595
|
|
|
$
|
72,341
|
|
|
$
|
53,156
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.62
|
|
|
$
|
0.44
|
|
|
$
|
1.50
|
|
|
$
|
1.08
|
|
Diluted
|
$
|
0.62
|
|
|
$
|
0.44
|
|
|
$
|
1.49
|
|
|
$
|
1.08
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
48,119
|
|
|
48,998
|
|
|
48,231
|
|
|
49,157
|
|
Diluted
|
48,352
|
|
|
49,239
|
|
|
48,429
|
|
|
49,377
|
|
Other
data:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
6,607
|
|
|
$
|
6,948
|
|
|
$
|
21,485
|
|
|
$
|
21,664
|
|
Pre-tax equity-based
compensation expense
|
3,383
|
|
|
2,941
|
|
|
9,707
|
|
|
9,528
|
|
|
|
|
|
|
|
|
|
Cash dividend
declared per common share
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
$
|
0.52
|
|
|
$
|
0.46
|
|
The Company's financial position (unaudited) as of
September 30, 2016 and 2015, and December 31, 2015,
respectively, were as follows:
|
|
September
30,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2016
|
|
2015
|
|
2015
|
Cash and cash
equivalents
|
|
$
|
218,720
|
|
|
$
|
242,795
|
|
|
$
|
258,825
|
|
Trade accounts
receivable, net
|
|
141,716
|
|
|
132,727
|
|
|
106,011
|
|
Inventories
|
|
220,207
|
|
|
200,282
|
|
|
195,757
|
|
Other current
assets
|
|
12,321
|
|
|
25,084
|
|
|
28,679
|
|
Total current
assets
|
|
592,964
|
|
|
600,888
|
|
|
589,272
|
|
Property, plant and
equipment, net
|
|
229,670
|
|
|
202,885
|
|
|
213,716
|
|
Goodwill
|
|
126,845
|
|
|
123,277
|
|
|
123,950
|
|
Other noncurrent
assets
|
|
34,824
|
|
|
32,996
|
|
|
34,371
|
|
Total
assets
|
|
$
|
984,303
|
|
|
$
|
960,046
|
|
|
$
|
961,309
|
|
Trade accounts
payable
|
|
$
|
24,777
|
|
|
$
|
24,934
|
|
|
$
|
21,309
|
|
Other current
liabilities
|
|
92,605
|
|
|
76,316
|
|
|
73,655
|
|
Total current
liabilities
|
|
117,382
|
|
|
101,250
|
|
|
94,964
|
|
Other long-term
liabilities
|
|
5,817
|
|
|
14,415
|
|
|
16,521
|
|
Stockholders'
equity
|
|
861,104
|
|
|
844,381
|
|
|
849,824
|
|
Total liabilities and
stockholders' equity
|
|
$
|
984,303
|
|
|
$
|
960,046
|
|
|
$
|
961,309
|
|
Additional financial data of the Company (unaudited) for the
three months and nine months ended September 30, 2016 and
2015, respectively, were as follows:
|
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
September
30,
|
|
%
|
|
September
30,
|
|
%
|
(Amounts in
thousands)
|
2016
|
|
2015
|
|
change*
|
|
2016
|
|
2015
|
|
change*
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
197,459
|
|
|
$
|
184,515
|
|
|
7%
|
|
$
|
569,198
|
|
|
$
|
518,221
|
|
|
10%
|
|
Europe
|
31,485
|
|
|
29,728
|
|
|
6%
|
|
86,003
|
|
|
83,143
|
|
|
3%
|
|
Asia/Pacific
|
2,030
|
|
|
1,896
|
|
|
7%
|
|
5,269
|
|
|
7,931
|
|
|
(34)%
|
|
|
Total
|
$
|
230,974
|
|
|
$
|
216,139
|
|
|
7%
|
|
$
|
660,470
|
|
|
$
|
609,295
|
|
|
8%
|
Net Sales by
Product Group**
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood
Construction
|
$
|
193,513
|
|
|
$
|
182,869
|
|
|
6%
|
|
$
|
562,025
|
|
|
$
|
518,381
|
|
|
8%
|
|
Concrete
Construction
|
37,461
|
|
|
33,229
|
|
|
13%
|
|
98,445
|
|
|
90,614
|
|
|
9%
|
|
Other
|
—
|
|
|
41
|
|
|
N/M
|
|
—
|
|
|
300
|
|
|
N/M
|
|
|
Total
|
$
|
230,974
|
|
|
$
|
216,139
|
|
|
7%
|
|
$
|
660,470
|
|
|
$
|
609,295
|
|
|
8%
|
Gross Profit
(Loss) by Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
99,524
|
|
|
$
|
87,873
|
|
|
13%
|
|
$
|
280,940
|
|
|
$
|
243,325
|
|
|
15%
|
|
Europe
|
13,500
|
|
|
12,346
|
|
|
9%
|
|
34,746
|
|
|
33,026
|
|
|
5%
|
|
Asia/Pacific
|
511
|
|
|
178
|
|
|
N/M
|
|
1,867
|
|
|
381
|
|
|
N/M
|
|
Administrative and
all other
|
(60)
|
|
|
(56)
|
|
|
N/M
|
|
(68)
|
|
|
(575)
|
|
|
N/M
|
|
|
Total
|
$
|
113,475
|
|
|
$
|
100,341
|
|
|
13%
|
|
$
|
317,485
|
|
|
$
|
276,157
|
|
|
15%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
42,356
|
|
|
$
|
33,432
|
|
|
27%
|
|
$
|
112,924
|
|
|
$
|
89,148
|
|
|
27%
|
|
Europe
|
3,899
|
|
|
3,563
|
|
|
9%
|
|
4,180
|
|
|
5,259
|
|
|
(21)%
|
|
Asia/Pacific
|
250
|
|
|
(945)
|
|
|
126%
|
|
1,257
|
|
|
(3,119)
|
|
|
140%
|
|
Administrative and
all other
|
(728)
|
|
|
(801)
|
|
|
N/M
|
|
(5,019)
|
|
|
(4,753)
|
|
|
N/M
|
|
|
Total
|
$
|
45,777
|
|
|
$
|
35,249
|
|
|
30%
|
|
$
|
113,342
|
|
|
$
|
86,535
|
|
|
31%
|
|
|
|
|
*
|
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-third-quarter-results-300352930.html
SOURCE Simpson Manufacturing Co., Inc.