PLEASANTON, Calif.,
April 30, 2018 /PRNewswire/ --
- 2018 first quarter net sales of $244.8 million increased 11%
year–over–year
- Repurchased $25.0 million of
the Company's common stock
- Declared a $0.22 cash dividend
(5% increase from the 2018 first quarter dividend)
- Reiterating financial targets and assumptions under the
Company's "2020 Plan"
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 first
quarter of 2018. 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).
2018 First 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 quarter ended
March 31, 2018 with the quarter ended March 31, 2017. In
the third quarter of 2017, the Company reclassified year to date
expenses associated with a recent acquisition from engineering and
research and development to general and administrative and sales
and marketing. The 2017 first quarter financial results have been
revised for these changes with $1.3
million of costs reclassified from research and development
and engineering expense to general and administrative expense
($1.1 million) and selling expense
($0.2 million).
- Consolidated net sales of $244.8
million increased 11% compared to $219.9 million.
-
- North America net sales of
$206.2 million increased 12% compared
to $183.8 million, primarily due to
increases in sales volume. Canada's net sales were positively affected by
foreign currency translation.
- Europe net sales of
$36.3 million increased 6% compared
to $34.4 million, primarily due to
approximately $4.2 million of
positive foreign currency translations resulting from Europe currencies strengthening against
the United States dollar, as well
as increases in average net sales unit prices. Net sales were
partly offset by reduced sales volume due to the 2017 sale of Gbo
Fastening Systems' Poland and
Romania subsidiaries (acquired
January 2017), which contributed
$3.0 million in net sales for the
first quarter of 2017.
- Consolidated gross profit of $108.5
million increased 8% compared to $100.2 million. Gross profit margin decreased to
44.3% from 45.6% mostly due to increased material costs.
-
- North America gross profit
margin decreased to 47% from 48%.
- Europe gross profit margin of
32% was in line with the first quarter of 2017.
- Consolidated income from operations of $32.8 million increased from $22.6 million, in spite of increased SAP related
expenses of $3.0 million in the first
quarter of 2018 compared to the first quarter of 2017, partly
offset by $1.0 million gain due to
the resolution of an eminent domain claim. Consolidated operating
profit margin increased to 13% from 10%.
-
- North America income from
operations of $36.0 million increased
34% compared to $26.8 million.
- Europe loss from operations of
$1.6 million decreased from
$1.8 million. Included in
Europe's loss from operations were
ERP–related costs of approximately $0.7
million compared to $0.1
million in the first quarter of 2017.
- Consolidated net income was $25.4
million, or $0.54 per diluted
share of the Company's common stock, compared to net income of
$23.1 million, or $0.48 per diluted share of the Company's common
stock. The $23.1 million consolidated
net income for the first quarter of 2017 included an $8.4 million gain on a bargain purchase of a
business, which increased diluted earnings per share for that
quarter by $0.18.
- Cash flow provided by operating activities increased
approximately $23.8 million to
$16.3 million compared to cash flow
used in operating activities of $7.5
million.
- Cash flow used in investing activities decreased approximately
$32.3 million to $9.7 million from $42.0
million. Capital expenditures were $10.9 compared to $15.8
million. Asset acquisitions, net of cash received, were zero
compared to $26.3 million.
Management Commentary
"The first quarter marked a strong start to the year as we
continued to perform against our strategic plan to ensure long–term
sustainable growth and operational excellence," commented
Karen Colonias, President and Chief
Executive Officer of Simpson Manufacturing Co., Inc. "We continue
to believe we can achieve an 8% organic compound annual growth rate
in consolidated net sales through 2020 from our 2016 net sales and
are reiterating all of our 2020 Plan targets and assumptions
associated with expense rationalization, and improved working
capital management and overall balance sheet discipline, given
current market conditions. Subsequent to the quarter-end, we
announced an average 11.5% price increase on our wood connector
products sold in the United States
in an effort to offset rising raw materials costs and protect our
gross profit margin, which we anticipate will go into effect in
mid-June."
Mrs. Colonias concluded, "We believe as we continue to progress
towards our 2020 Plan objectives, we will substantially enhance our
return on invested capital as well as continue returning capital to
shareholders. During the first quarter, we repurchased $25 million worth of shares of our common stock,
and over the past three years, we have returned over 80% of our
cash flow from operations to our valued shareholders. While our
2020 Plan financial targets are aggressive, we are currently
confident in our ability to execute against these stated goals and
look forward to updating you on our progress in the coming
quarters."
Corporate Developments
- During the first quarter of 2018, the Company received and
repurchased 619,671 shares of the Company's common stock. The
Company received 182,171 shares of its common stock as the final
delivery of a $50.0 million
accelerated share repurchase program initiated in December 2017. During the first quarter of 2018,
the Company also repurchased in the open market 437,500 shares of
its common stock at an average price of $57.14 per share, for a total of $25.0 million (see quarter highlights above). As
a result, as of March 31, 2018,
approximately $126.5 million remained
available for share repurchase through December 31, 2018 under the Company's previously
announced $275.0 million share
repurchase authorization.
- On April 24, 2018, the Company's
Board of Directors declared a quarterly cash dividend of
$0.22 per share, an increase of 5%
from the 2018 first quarter dividend. The dividend will be payable
on July 26, 2018 to the Company
shareholders of record as of July 5,
2018.
- On April 14, 2018, the Company
announced an average 11.5% product price increase on its wood
connector products sold in the United
States, expected to become effective in mid–June, in an
effort to offset rising raw materials costs.
- On March 20, 2018, the Company
announced a strategic partnership and software collaboration with
Hyphen Solutions, a leading cloud-based construction management
software company, to offer integrated information exchange between
Hyphen's software and CG Visions' cloud-based take-off platform for
project estimation and management allowing home builders to
increase productivity along the supply chain. CG Visions is a
Simpson Strong–Tie company and a leading provider of Building
Information Modeling technology, services and consultation.
- On March 29, 2018, the Company
announced the purchase from LotSpec a suite of software application
assets designed to optimize efficiency and productivity for
production homebuilders' needs around construction document and
option management solutions. When coupled with the 2017 acquisition
of CG Visions, this strategic asset purchase is expected to
continue to deepen the Company's partnership with top builders,
architects and engineers by offering scalable software
solutions.
Business Outlook
Subject to changing economic conditions, future events and
circumstances:
- The Company currently believes, due to uncertainty related to
steel tariffs, the market price for steel will likely continue to
increase during the second quarter of 2018.
- The Company estimates that its 2018 full-year 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%, including both
federal and state income tax rates. The ultimate impact of the Tax
Cuts and Jobs Act signed into law in 2017 and the Company's 2018
effective tax rate 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, if any. 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 first quarter 2018 financial results conference
call on Monday, April 30, 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. For those unable to
participate during the live broadcast, a replay of the call will
also be available beginning that same day at 8:00 p.m. Eastern Time until 11:59 p.m. Eastern Time on
Monday, May 14, 2018, by dialing (844) 512–2921 (U.S. and
Canada) or (412) 317–6671
(International) and entering the conference ID: 13678510. The
webcast will remain posted on the Company's website for 90
days.
A copy of this earnings release will be available prior to the
call, accessible through the Investor Relations section of the
Company's website at www.simpsonmfg.com.
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 regarding the achievement and the
effects of the Company's 2020 Plan (including targets associated
with organic compound annual growth rate in consolidated net sales,
expense rationalization, improved working capital management and
overall balance sheet discipline); the Company's anticipated price
increases; the Company's 2018 full-year gross profit margin and
effective tax rate; the Company's potential cash repatriation to
the United States; as well as
future steel prices. 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 the Company
furnishes 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) 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."
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. The information in this document speaks
as of the date hereof and is subject to change. 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. The Company further does 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; and the reviewed and unaudited data
will be included in the Company's Quarterly Report on Form 10-Q for
the period ended March 31, 2018, when filed.
Simpson
Manufacturing Co., Inc. and Subsidiaries
|
UNAUDITED
Consolidated Statements of Operations
|
(In thousands,
except per share data)
|
|
|
Three Months
Ended
March 31,
|
(Amounts in
thousands, except per share data)
|
2018
|
|
2017
|
Net sales
|
$
|
244,779
|
|
|
$
|
219,867
|
|
Cost of
sales
|
136,253
|
|
|
119,711
|
|
Gross
profit
|
108,526
|
|
|
100,156
|
|
Research and
development and engineering expense
|
11,150
|
|
|
11,819
|
|
Selling
expense
|
27,573
|
|
|
29,637
|
|
General and
administrative expense
|
38,191
|
|
|
36,121
|
|
Gain on disposal of
assets
|
(1,184)
|
|
|
(51)
|
|
Income from
operations
|
32,796
|
|
|
22,630
|
|
Loss in equity method
investment, before tax
|
(24)
|
|
|
(28)
|
|
Interest expense,
net
|
(90)
|
|
|
(189)
|
|
Gain on bargain
purchase of a business
|
—
|
|
|
8,388
|
|
Income before
taxes
|
32,682
|
|
|
30,801
|
|
Provision for income
taxes
|
7,253
|
|
|
7,680
|
|
Net income
|
$
|
25,429
|
|
|
$
|
23,121
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.55
|
|
|
$
|
0.49
|
|
Diluted
|
$
|
0.54
|
|
|
$
|
0.48
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
46,615
|
|
|
47,616
|
|
Diluted
|
47,009
|
|
|
47,906
|
|
Cash dividend
declared per common share
|
$
|
0.21
|
|
|
$
|
0.18
|
|
Other
data:
|
|
|
|
Depreciation and
amortization
|
$
|
9,688
|
|
|
$
|
8,363
|
|
Pre-tax equity-based
compensation expense
|
$
|
3,116
|
|
|
$
|
7,976
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
|
UNAUDITED
Consolidated Condensed Balance Sheets
|
(In
thousands)
|
|
|
March
31,
|
|
December
31,
|
(Amounts in
thousands)
|
2018
|
|
2017
|
|
2017
|
Cash and cash
equivalents
|
$
|
137,413
|
|
|
$
|
167,059
|
|
|
$
|
168,514
|
|
Trade accounts
receivable, net
|
167,146
|
|
|
148,506
|
|
|
135,958
|
|
Inventories
|
256,552
|
|
|
256,271
|
|
|
252,996
|
|
Other current
assets
|
22,423
|
|
|
13,744
|
|
|
26,473
|
|
Total current
assets
|
583,534
|
|
|
585,580
|
|
|
583,941
|
|
Property, plant and
equipment, net
|
276,114
|
|
|
250,465
|
|
|
273,020
|
|
Goodwill
|
138,026
|
|
|
135,113
|
|
|
137,140
|
|
Other noncurrent
assets
|
42,668
|
|
|
47,042
|
|
|
43,422
|
|
Total
assets
|
$
|
1,040,342
|
|
|
$
|
1,018,200
|
|
|
$
|
1,037,523
|
|
Trade accounts
payable
|
$
|
42,098
|
|
|
$
|
38,219
|
|
|
$
|
31,536
|
|
Capital lease
obligation - current portion
|
1,064
|
|
|
521
|
|
|
1,055
|
|
Other current
liabilities
|
100,066
|
|
|
84,821
|
|
|
103,900
|
|
Total current
liabilities
|
143,228
|
|
|
123,561
|
|
|
136,491
|
|
Capital lease
obligations - net of current portion
|
2,425
|
|
|
1,610
|
|
|
2,607
|
|
Deferred income tax
and other long-term liabilities
|
15,627
|
|
|
6,076
|
|
|
13,647
|
|
Stockholders'
equity
|
879,062
|
|
|
886,953
|
|
|
884,778
|
|
Total liabilities and
stockholders' equity
|
$
|
1,040,342
|
|
|
$
|
1,018,200
|
|
|
$
|
1,037,523
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
|
UNAUDITED Segment
and Product Group Information
|
(In
thousands)
|
|
|
Three Months
Ended
|
|
|
|
March
31,
|
|
%
|
(Amounts in
thousands)
|
2018
|
|
2017
|
|
change*
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
North
America
|
$206,212
|
|
$183,772
|
|
12%
|
|
Percentage of
total net sales
|
84%
|
|
84%
|
|
|
|
Europe
|
36,293
|
|
34,381
|
|
6%
|
|
Percentage of
total net sales
|
15%
|
|
16%
|
|
|
|
Asia/Pacific
|
2,274
|
|
1,714
|
|
33%
|
|
Administrative and
all other
|
1%
|
|
—%
|
|
|
|
Total
|
$244,779
|
|
$219,867
|
|
11%
|
Net Sales by
Product Group**
|
|
|
|
|
|
|
Wood
Construction
|
$212,547
|
|
$190,877
|
|
11%
|
|
Percentage of
total net sales
|
87%
|
|
87%
|
|
|
|
Concrete
Construction
|
32,156
|
|
28,817
|
|
12%
|
|
Percentage of
total net sales
|
13%
|
|
13%
|
|
|
|
Other
|
76
|
|
173
|
|
N/M
|
|
Total
|
$244,779
|
|
$219,867
|
|
11%
|
Gross Profit
(Loss) by Reporting Segment
|
|
|
|
|
|
|
North
America
|
$96,738
|
|
$88,990
|
|
9%
|
|
North
America gross profit margin
|
47%
|
|
48%
|
|
|
|
Europe
|
11,568
|
|
11,056
|
|
5%
|
|
Europe gross
profit margin
|
32%
|
|
32%
|
|
|
|
Asia/Pacific
|
187
|
|
129
|
|
45%
|
|
Administrative and
all other
|
33
|
|
(19)
|
|
N/M
|
|
|
Total
|
$108,526
|
|
$100,156
|
|
8%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
North
America
|
$35,968
|
|
$26,767
|
|
34%
|
|
North
America operating profit margin
|
17%
|
|
15%
|
|
|
|
Europe
|
(1,647)
|
|
(1,835)
|
|
10%
|
|
Europe operating
profit margin
|
(5)%
|
|
(5)%
|
|
|
|
Asia/Pacific
|
151
|
|
(195)
|
|
177%
|
|
Administrative and
all other
|
(1,676)
|
|
(2,107)
|
|
N/M
|
|
|
Total
|
$32,796
|
|
$22,630
|
|
45%
|
|
|
*
|
Unfavorable
percentage changes are presented in parentheses, if any.
|
**
|
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.