PLEASANTON, Calif., Feb. 5, 2018 /PRNewswire/ --
- 2017 net sales of $977.0
million increased 14% year–over–year
- Reiterating aggressive 2020 financial targets under the
Company's "2020 Plan"
- Committed $70 million in
accelerated share repurchases in 2017
- Declared quarterly cash dividend of $0.21 per share
Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD), an
industry leader in engineered structural connectors and building
solutions, today announced its financial results for the fourth
quarter and full-year of 2017. Unless otherwise stated, the
Company's results below, when referencing "recently acquired
businesses" or "acquired net sales" refer to Gbo Fastening Systems
AB ("Gbo", acquired January 2017) and
CG Visions, Inc. (acquired January
2017), or net sales of such acquired businesses,
respectively. Refer to the "Segment and Product Group Information"
table below for additional segment information (including
information about the Company's Asia/Pacific segment and Administrative and
All Other segment).
2017 Fourth Quarter Financial Highlights
All comparisons below (which are generally indicated by words
such as "increased," "decreased," "remained," or "compared to"),
unless otherwise noted, are comparing the fourth quarter of 2017
with the fourth quarter of 2016.
- Consolidated net sales of $231.7
million increased 16% compared to $200.2 million. Recently acquired businesses as a
whole accounted for $8.3 million
(26%) of the increased net sales.
-
- North America net sales of
$190.9 million increased 10% compared
to $172.8 million, primarily due to
increases in average net sales unit prices and sales volumes.
Canada's net sales increased
primarily due to increased sales volumes and were not significantly
affected by foreign currency translation.
- Europe net sales of
$38.4 million increased 52% compared
to $25.3 million, primarily due to
acquired net sales of $7.0 million,
which accounted for 53% of the increased net sales, and increases
in average net sales unit prices and sales volumes. Europe net sales were positively affected by
approximately $2.4 million in foreign
currency translations primarily related to the strengthening of the
Euro, British pound, Polish zloty and Danish kroner against
the United States dollar.
- Consolidated gross profit of $102.7
million increased 8% compared to $95.0 million. Gross profit as a percentage of
net sales ("gross profit margin") decreased to 44% from 47%.
Recently acquired businesses had an average gross profit margin of
30% in the fourth quarter of 2017.
-
- North America gross profit
margin decreased to 47% from 49%, primarily due to increased
material costs, partly offset by lower factory and overhead
costs.
- Europe gross profit margin
decreased to 34% from 37%, primarily due to the recently acquired
Gbo business.
- Consolidated income from operations of $24.7 million decreased 5% compared to
$26.1 million. As a percentage of net
sales, consolidated income from operations ("operating profit
margin") decreased to 11% from 13%. Recently acquired businesses as
a whole recorded $3.0 million in
operating losses, in the fourth quarter of 2017, including purchase
accounting adjustments such as recognizing intangible amortization
expense.
-
- North America income from
operations of $22.1 million decreased
9% compared to $24.4 million.
- Europe loss from operations
was $3.0 million compared to a loss
of $3.3 million. The loss from
operations in the fourth quarter included $2.0 million of severance costs.
- The enactment of the Tax Cuts and Jobs Act in December 2017 resulted in a provisional net
charge of $2.2 million in the fourth
quarter of 2017, or an impact of $0.04 per fully diluted share. The charge
encompasses several elements, including a federal tax on
accumulated overseas profits, changes to tax credits and valuation
allowances, and the revaluation of deferred tax assets and
liabilities. As a result, the Company's effective tax rate was 45%
for the fourth quarter of 2017, compared to 33%. The provisional
net charge accounted for approximately 900 basis points of the 45%
effective tax rate.
- Consolidated net income was $13.1
million, or $0.27 per diluted
share of the Company's common stock, compared to net income of
$17.4 million, or $0.36 per diluted share of the Company's common
stock. Recently acquired businesses as a whole recorded a net loss
of $3.4 million, in the fourth
quarter of 2017.
2017 Full-Year Financial Highlights
All comparisons below (which are generally indicated by words
such as "increased," "decreased," "remained," or "compared to"),
unless otherwise noted, are comparing the year ended
December 31, 2017 with the year ended December 31,
2016.
- Consolidated net sales of $977.0
million increased 14% compared to $860.7 million. Recently acquired businesses as a
whole accounted for $47.9 million
(41%) of the increased net sales.
-
- North America net sales of
$803.7 million increased 8% compared
to $742.0 million, primarily due to
increases in both sales volumes and average net sales unit prices.
Canada's net sales increased,
primarily due to increased volumes and were not significantly
affected by foreign currency translation.
- Europe net sales of
$165.2 million increased 48% compared
to $111.3 million, primarily due to
acquired net sales of $42.1 million,
which accounted for 78% of the increased net sales, and increases
in average net sales unit prices and sales volumes. Net sales were
positively affected by approximately $1.4
million in foreign currency translations, primarily related
to the strengthening of the Euro, Polish zloty and Danish Kroner
against the United States
dollar.
- Consolidated gross profit of $446.3
million increased 8% compared to $412.5 million. Gross profit margin decreased to
46% from 48%. Recently acquired businesses had an average gross
profit margin of 30% for the year ended December 31, 2017.
-
- North America gross profit
margin decreased to 48% from 49%.
- Europe gross profit margin
decreased to 36% from 40%, primarily due to the recently acquired
Gbo business.
- Consolidated income from operations of $139.2 million decreased slightly from
$139.5 million. Consolidated
operating profit margin decreased to 14% from 16%. Recently
acquired businesses as a whole recognized $4.2 million in operating losses for the year
ended December 31, 2017, including
purchase accounting adjustments such as recognizing intangible
amortization expense.
-
- North America income from
operations of $132.9 million
decreased 3% compared to $137.3
million.
- Europe income from operations
of $4.4 million increased from
$0.9 million.
- Consolidated net income was $92.6
million, or $1.94 per diluted
share of the Company's common stock, compared to net income of
$89.7 million, or $1.86 per diluted share of the Company's common
stock. Recently acquired businesses as a whole contributed net
income of $1.8 million, in the year
ended December 31, 2017, mostly as a
result of a $6.3 million gain on a
bargain purchase.
Management Commentary
"2017 was a highly productive year for Simpson as we laid the
foundation to position our Company for long-term, sustainable and
increasingly profitable growth," commented Karen Colonias, President and Chief Executive
Officer of Simpson Manufacturing Co., Inc. "Through execution on
our 2020 Plan objectives, we believe we can achieve our aggressive
2020 financial targets to substantially enhance our return on
invested capital and generate additional capital to return to
shareholders. We made positive strides toward our financial targets
during the fourth quarter by reducing estimated total annual
operating expenses by $2.0 million in
Europe and by $3.0 million in the concrete space. We feel we
are well positioned to achieve an 8% compound annual growth rate in
net sales through 2020 supported by anticipated mid-single digit
growth in U.S. housing starts, the $30
million opportunity for our mechanical anchor product line
in The Home Depot stores, our increased market share and
profitability in Europe and our
market share gains in both truss and concrete product
offerings."
Mrs. Colonias concluded, "We are confident our execution on the
2020 Plan will drive improved operational performance in our
business, and as a result, we committed $70
million for the repurchase of our common stock in 2017.
During the fourth quarter, we received 677,500 shares of our common
stock pursuant to a new $50.0 million
accelerated share repurchase program, with the remaining 20% to be
delivered in the first quarter of 2018. We look forward to a
successful year ahead and demonstrating the increased earnings
power that we believe exists in our business."
Corporate Developments
- On January 29, 2018, the
Company's Board of Directors declared a quarterly cash dividend of
$0.21 per share. The dividend will be
payable on April 26, 2018 to
shareholders of record as of April 5,
2018.
- During the fourth quarter of 2017, the Company received 677,500
shares of the Company's common stock pursuant to a $50.0 million accelerated share repurchase
program initiated in December 2017,
at an average price of $59.04 per
share, for a total of $40.0 million,
which program will be completed in the first quarter of 2018. As of
December 31, 2017, approximately
$151.5 million remained available for
share repurchase through December 31,
2018 under the Company's previously announced $275.0 million share repurchase
authorization.
Business Outlook
Subject to changing economic conditions, future events and
circumstances:
- The Company currently believes the market price for steel will
increase during the first quarter of 2018.
- The Company estimates that its full-year 2018 gross profit
margin will be between approximately 45% to 46%.
- The Company estimates that its 2018 full-year effective tax
rate will be between approximately 26% to 27%. The ultimate impact
of the Tax Cuts and Jobs Act may differ materially from the
Company's estimates due to changes in the interpretations and
assumptions made by the Company as well as additional regulatory
guidance that may be issued and actions the Company may take as a
result of the Tax Cuts and Jobs Act, such as cash repatriation to
the United States. The Company
will continue to assess the expected impacts of the new tax law and
provide additional disclosures at appropriate times.
Conference Call Details
Investors, analysts and other interested parties are invited to
join the Company's 2017 fourth quarter and full-year financial
results conference call on Monday, February 5, 2018, at
5:00 pm Eastern Time (2:00 pm Pacific Time). To participate, callers
may dial (877) 407-0792 (U.S. and Canada) or (201) 689-8263 (International)
approximately 10 minutes prior to the start time. The call
will be webcast simultaneously and can be accessed through a link
on the Company's website at www.simpsonmfg.com. The webcast will
remain posted on the Company's website for 90 days.
About Simpson Manufacturing Co., Inc.
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."
Forward-Looking Statements
This document contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, based on numerous assumptions and
subject to risks and uncertainties (some of which are beyond our
control), such as statements above regarding future execution and
effects of the Company's 2020 Plan, the Company's prospective
profitability, earnings power, market shares, software and concrete
offerings, relationship with Home Depot, cost reduction measures,
operating expenses and inventory, the Company's anticipated or
estimated gross profit margin, effective tax rate, and impact of
the Tax Cuts and Jobs Act as well as projected housing starts and
steel prices. Forward-looking statements generally can be
identified by words such as "believe," "anticipate," "estimate,"
"expect," "look forward," "to be," "plan," "target," "opportunity,"
"change," "future," "will," "can," "may" or similar expressions.
Forward-looking statements are necessarily speculative in nature.
Although the Company believes that these forward-looking statements
are reasonable, as some or all of the assumptions of the
forward-looking statements may not materialize, the Company 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 business, operations and financial condition. Those
factors include, but are not limited to: (i) the impact, execution
and effectiveness of the Company's current strategic plan, the 2020
Plan, and the Company's efforts and costs to implement the plan,
(ii) general business cycles and construction business conditions;
(iii) customer acceptance of the Company's products; (iv) product
liability claims, contractual liability, engineering and design
liability and similar liabilities or claims, (v) relationships with
key customers; (vi) materials and manufacturing costs; (vii) the
financial condition of customers, competitors and suppliers; (viii)
technological developments including software development; (ix)
increased competition; (x) changes in industry practices or
regulations; (xi) litigation risks and actions by activist
shareholders, (xii) changes in capital and credit market
conditions; (xiii) governmental and business conditions in
countries where the Company's products are manufactured and sold;
(xiv) changes in trade regulations; (xv) the effects of acquisition
activities of the Company or the lack thereof; (xvi) changes in the
Company's plans, strategies, objectives, assumptions, expectations
or intentions; (xvii) natural disasters and other factors that are
beyond the Company's reasonable control; (xviii) changes in U.S.
and international taxes, tariffs and duties including those imposed
on the Company's income, imports, exports and repatriation of
funds; and (xix) 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." The
Company's actual results therefore may differ substantially from
the 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. The
information in this document speaks as of the date hereof and is
subject to future changes. Any distribution of this document after
the date hereof is not intended and should not be construed as
updating or confirming such information. 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 and unaudited basis; audited financial
statements will be included in the Company's Annual Report on Form
10-K for the year ended December 31, 2017, when filed.
Simpson Manufacturing
Co., Inc. and Subsidiaries
UNAUDITED Consolidated Statements of Operations
(In thousands, except per share data)
|
|
|
Three Months
Ended
December
31,
|
|
Twelve Months
Ended
December
31,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net sales
|
$
|
231,681
|
|
|
$
|
200,192
|
|
|
$
|
977,025
|
|
|
$
|
860,661
|
|
Cost of
sales
|
128,983
|
|
|
105,226
|
|
|
530,761
|
|
|
448,211
|
|
Gross
profit
|
102,698
|
|
|
94,966
|
|
|
446,264
|
|
|
412,450
|
|
Gross profit
margin
|
44%
|
|
|
47%
|
|
|
46%
|
|
|
48%
|
|
Research and
development and engineering expense
|
12,565
|
|
|
12,441
|
|
|
47,616
|
|
|
46,248
|
|
Selling
expense
|
28,753
|
|
|
24,030
|
|
|
114,903
|
|
|
98,343
|
|
General and
administrative expense
|
36,688
|
|
|
32,376
|
|
|
144,738
|
|
|
129,162
|
|
Gain on disposal of
assets
|
(13)
|
|
|
(17)
|
|
|
(160)
|
|
|
(780)
|
|
Income from
operations
|
24,705
|
|
|
26,136
|
|
|
139,167
|
|
|
139,477
|
|
Operating profit
margin
|
11%
|
|
|
13%
|
|
|
14%
|
|
|
16%
|
|
Loss in equity method
investment, before tax
|
(33)
|
|
|
—
|
|
|
(86)
|
|
|
—
|
|
Interest expense,
net
|
(104)
|
|
|
(177)
|
|
|
(788)
|
|
|
(577)
|
|
Gain on bargain
purchase of a business (adjustment)
|
—
|
|
|
—
|
|
|
6,336
|
|
|
—
|
|
Loss on disposal of a
business
|
(654)
|
|
|
—
|
|
|
(211)
|
|
|
—
|
|
Income before
taxes
|
23,914
|
|
|
25,959
|
|
|
144,418
|
|
|
138,900
|
|
Effective tax
rate
|
45%
|
|
|
33%
|
|
|
36%
|
|
|
35%
|
|
Provision for income
taxes
|
10,829
|
|
|
8,565
|
|
|
51,801
|
|
|
49,166
|
|
Net income
|
$
|
13,085
|
|
|
$
|
17,394
|
|
|
$
|
92,617
|
|
|
$
|
89,734
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.28
|
|
|
$
|
0.37
|
|
|
$
|
1.95
|
|
|
$
|
1.87
|
|
Diluted
|
$
|
0.27
|
|
|
$
|
0.36
|
|
|
$
|
1.94
|
|
|
$
|
1.86
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
47,307
|
|
|
47,505
|
|
|
47,486
|
|
|
48,084
|
|
Diluted
|
47,594
|
|
|
47,754
|
|
|
47,774
|
|
|
48,295
|
|
Other
data:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
6,844
|
|
|
$
|
6,442
|
|
|
$
|
33,724
|
|
|
$
|
27,927
|
|
Pre-tax equity-based
compensation expense
|
2,092
|
|
|
4,239
|
|
|
13,908
|
|
|
13,946
|
|
|
|
|
|
|
|
|
|
Cash dividend
declared per common share
|
$
|
—
|
|
|
$
|
0.18
|
|
|
$
|
0.81
|
|
|
$
|
0.70
|
|
Simpson Manufacturing
Co., Inc. and Subsidiaries
UNAUDITED Consolidated Condensed Balance Sheets
(In thousands)
|
|
|
|
December
31,
|
|
|
|
2017
|
|
2016
|
|
Cash and short-term
investments
|
|
$
|
168,514
|
|
|
$
|
226,537
|
|
|
Trade accounts
receivable, net
|
|
135,958
|
|
|
112,423
|
|
|
Inventories
|
|
251,584
|
|
|
232,274
|
|
|
Other current
assets
|
|
25,751
|
|
|
14,013
|
|
|
Total current
assets
|
|
581,807
|
|
|
585,247
|
|
|
Property, plant and
equipment, net
|
|
273,020
|
|
|
232,810
|
|
|
Goodwill
|
|
137,140
|
|
|
124,479
|
|
|
Other noncurrent
assets
|
|
43,422
|
|
|
37,438
|
|
|
Total
assets
|
|
$
|
1,035,389
|
|
|
$
|
979,974
|
|
|
Trade accounts
payable
|
|
$
|
30,936
|
|
|
$
|
27,674
|
|
|
Capital lease
obligation - current portion
|
|
1,055
|
|
|
—
|
|
|
Other current
liabilities
|
|
102,366
|
|
|
81,122
|
|
|
Total current
liabilities
|
|
134,357
|
|
|
108,796
|
|
|
Other long-term
liabilities - net of current portion
|
|
16,254
|
|
|
5,336
|
|
|
Stockholders'
equity
|
|
884,778
|
|
|
865,842
|
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,035,389
|
|
|
$
|
979,974
|
|
|
Simpson Manufacturing
Co., Inc. and Subsidiaries
UNAUDITED Segment and Product Group Information
(In thousands)
|
|
|
|
|
Three Months
Ended
|
|
|
|
Twelve Months
Ended
|
|
|
|
|
|
December
31,
|
|
%
|
|
December
31,
|
|
%
|
|
2017
|
|
2016
|
|
change
*
|
|
2017
|
|
2016
|
|
change
*
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
190,932
|
|
|
$
|
172,824
|
|
|
10%
|
|
$
|
803,697
|
|
|
$
|
742,021
|
|
|
8%
|
|
Percentage of
total net sales
|
82%
|
|
|
86%
|
|
|
|
|
82%
|
|
|
86%
|
|
|
|
|
Europe
|
38,404
|
|
|
25,271
|
|
|
52%
|
|
165,155
|
|
|
111,274
|
|
|
48%
|
|
Percentage of
total net sales
|
17%
|
|
|
13%
|
|
|
|
|
17%
|
|
|
13%
|
|
|
|
|
Asia/Pacific
|
2,345
|
|
|
2,097
|
|
|
12%
|
|
8,173
|
|
|
7,366%
|
|
|
11%
|
|
Percentage of
total net sales
|
1%
|
|
|
1%
|
|
|
|
|
1%
|
|
|
1%
|
|
|
|
|
|
Total
|
$
|
231,681
|
|
|
$
|
200,192
|
|
|
16%
|
|
$
|
977,025
|
|
|
$
|
860,661
|
|
|
14%
|
Net Sales by
Product Group**
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood
Construction
|
$
|
193,993
|
|
|
$
|
170,389
|
|
|
14%
|
|
$
|
833,200
|
|
|
$
|
732,414
|
|
|
14%
|
|
Percentage of
total net sales
|
84%
|
|
|
85%
|
|
|
|
|
85%
|
|
|
85%
|
|
|
|
|
Concrete
Construction
|
37,317
|
|
|
29,803
|
|
|
25%
|
|
143,102
|
|
|
128,247
|
|
|
12%
|
|
Percentage of
total net sales
|
16%
|
|
|
15%
|
|
|
|
|
15%
|
|
|
15%
|
|
|
|
|
Other
|
371
|
|
|
—
|
|
|
N/M
|
|
—
|
|
|
—
|
|
|
N/M
|
|
|
Total
|
$
|
231,681
|
|
|
$
|
200,192
|
|
|
16%
|
|
$
|
977,025
|
|
|
$
|
860,661
|
|
|
14%
|
Gross Profit by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
89,086
|
|
|
$
|
84,818
|
|
|
5%
|
|
$
|
386,189
|
|
|
$
|
365,758
|
|
|
6%
|
|
North America
gross profit margin
|
47%
|
|
|
49%
|
|
|
|
|
48%
|
|
|
49%
|
|
|
|
|
Europe
|
13,041
|
|
|
9,293
|
|
|
40%
|
|
58,973
|
|
|
44,038
|
|
|
34%
|
|
Europe gross
profit margin
|
34%
|
|
|
37%
|
|
|
|
|
36%
|
|
|
40%
|
|
|
|
|
Asia/Pacific
|
307
|
|
|
552
|
|
|
N/M
|
|
971
|
|
|
2,419
|
|
|
(60)%
|
|
Administrative and
all other
|
264
|
|
|
303
|
|
|
N/M
|
|
131
|
|
|
235
|
|
|
N/M
|
|
|
Total
|
$
|
102,698
|
|
|
$
|
94,966
|
|
|
8%
|
|
$
|
446,264
|
|
|
$
|
412,450
|
|
|
8%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
22,141
|
|
|
$
|
24,387
|
|
|
(9)%
|
|
$
|
132,889
|
|
|
$
|
137,311
|
|
|
(3)%
|
|
North America
operating profit margin
|
12%
|
|
|
14%
|
|
|
|
|
17%
|
|
|
19%
|
|
|
|
|
Europe
|
(3,022)
|
|
|
(3,284)
|
|
|
8%
|
|
4,421
|
|
|
895
|
|
|
N/M
|
|
Europe operating
profit margin
|
(8)%
|
|
|
(13)%
|
|
|
|
|
3%
|
|
|
1%
|
|
|
|
|
Asia/Pacific
|
1,520
|
|
|
883
|
|
|
72%
|
|
1,179
|
|
|
2,140
|
|
|
45%
|
|
Administrative and
all other
|
4,066
|
|
|
4,150
|
|
|
N/M
|
|
678
|
|
|
(869)
|
|
|
N/M
|
|
|
Total
|
$
|
24,705
|
|
|
$
|
26,136
|
|
|
(5)%
|
|
$
|
139,167
|
|
|
$
|
139,477
|
|
|
—%
|
|
*
|
Unfavorable
percentage changes are presented in parentheses.
|
|
**
|
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.
|
CONTACT:
Addo Investor Relations
investor.relations@strongtie.com
(310) 829-5400
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SOURCE Simpson Manufacturing Co., Inc.