PLEASANTON, Calif.,
April 29, 2019 /PRNewswire/ --
- 2019 first quarter net sales increased 5.9% year-over-year
to $259.2 million
- Repurchased $30.0 million of
the Company's common stock during the first quarter
- Declared a $0.23 cash
dividend, a 4.5% increase from the 2019 first quarter
dividend
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 2019. 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).
The Company changed its presentation of its consolidated
statement of operations to display non–operating activities,
including foreign exchange gain (loss), net, and expense, and
certain other income or expenses as a separate item below income
from operations. Foreign exchange gain (loss), net, and other was
previously included in general and administrative expenses and in
income from operations. Income before tax and net income for the
quarter ended March 31, 2018
presented below were not affected by the change in
presentation.
2019 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, 2019 with the quarter ended March 31, 2018.
- Consolidated net sales of $259.2
million increased 5.9% from $244.8
million.
-
- North America net sales of
$221.4 million increased 7.4% from
$206.2 million, primarily due to
increases in average product prices and sales volume. Canada's net sales were negatively affected by
foreign currency translation.
- Europe net sales of
$35.8 million decreased 1.4% from
$36.3 million, primarily due to
approximately $2.9 million of
negative foreign currency translations resulting from Europe currencies weakening against
the United States dollar. In local
currency, Europe net sales
increased primarily due to increases in sales volume and average
product prices.
- Consolidated gross profit of $110.3
million increased 2.4% from $107.6
million. Gross profit margin decreased to 42.5% from
44.0%.
-
- North America gross profit
margin decreased to 44.4% from 46.9%, primarily due to an increase
in material costs as a percentage of net sales.
- Europe gross profit margin
increased slightly to 32.3% from 31.9%.
- Consolidated income from operations of $30.0 million decreased 8.1% from $32.7 million. Income from operations for the
first quarter of 2018 included a $1.0
million gain on the exercise of an eminent domain claim.
Consolidated operating profit margin decreased to 11.6% from
13.4%.
-
- North America income from
operations of $32.8 million decreased
10.0% from $36.5 million, primarily
due to the reduction in gross profit margin.
- Europe loss from operations
improved to $0.4 million from a loss
of $1.6 million, primarily due to
lower operating expenses such as personnel and advertising
costs.
- The Company's effective income tax rate increased to 22.5% from
22.2%.
- Consolidated net income was $22.7
million, or $0.50 per diluted
share of the Company's common stock, compared to net income of
$25.4 million, or $0.54 per diluted share of the Company's common
stock.
- Cash flow provided by operating activities decreased
approximately $7.2 million to
$9.9 million from $17.1 million.
- Cash flow used in investing activities increased approximately
$1.1 million to $10.8 million from $9.7
million. Capital expenditures were approximately
$7.4 million compared to $10.9 million.
Management Commentary
"We had a solid start to the year with our first quarter of 2019
net sales increasing 6% year–over–year to $259.2 million, primarily due to higher average
selling prices," commented Karen
Colonias, President and Chief Executive Officer of Simpson
Manufacturing Co., Inc. "Our overall sales volume was relatively
steady with the fourth quarter of 2018. On a year-over-year basis,
sales volume for our concrete products was up nicely due to the
roll–out of our mechanical anchor products into The Home Depot
stores. However, sales volume for our connector products was down
year–over–year due to unusually wet and cold weather conditions
across the U.S., which impacted housing permits and starts. Looking
ahead to the second quarter, we expect demand to improve with the
month of April already off to a strong start on better weather
conditions."
Mrs. Colonias continued, "Our first quarter gross profit margin
of 42.5% was pressured by increased material and labor costs plus
unabsorbed factory costs attributable to lower volumes. Despite
these headwinds, we remain focused on the elements in our business
we can control such as our ongoing emphasis on Lean initiatives to
help drive improved inventory turnover. Importantly, we were
pleased to reduce our total operating expenses as a percentage of
sales by nearly 30 basis points compared to the year–ago period.
For the remainder of 2019, we remain cautiously optimistic U.S.
housing starts will pick–up and enable healthier demand levels.
Lastly, we are committed to operational excellence through
execution on our 2020 Plan goals to drive long–term shareholder
value."
Corporate Developments
- On April 26, 2019, the Company's
Board of Directors (the "Board") declared a quarterly cash dividend
of $0.23 per share, which represents
an increase of 4.5% from the 2019 first quarter dividend. The
dividend will be payable on July 25,
2019 to the Company's stockholders of record as of
July 3, 2019.
- During the first quarter of 2019, the Company repurchased
505,448 shares of the Company's common stock in the open market at
an average price of $59.35 per share,
for a total of $30.0 million. As of
March 31, 2019, approximately
$70.0 million remained available for
repurchase under the previously announced $100.0 million share repurchase authorization
(which expires at the end of 2019).
Business Outlook
Subject to changing economic conditions, future events and
circumstances:
- The market price for steel dropped from its highs in 2018. The
Company currently believes the market price for steel could be flat
or decrease slightly during the second quarter of 2019.
- The Company estimates that its 2019 full-year gross profit
margin will be between approximately 44.5% to 45.5%.
- The Company estimates that its 2019 full-year operating
expenses, as a percentage of net sales, will be between
approximately 27.5% and 28.5%.
- The Company estimates that its 2019 full-year effective tax
rate will be between approximately 25% 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 2019
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. The Company will continue
to assess the expected impact 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 2019 financial results conference
call on Monday, April 29, 2019, 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
http://public.viavid.com/index.php?id=133870 or a link on the
Company's website at www.simpsonmfg.com/financials/events.html. 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 13, 2019, by dialing (844)
512–2921 (U.S. and Canada) or
(412) 317–6671 (International) and entering the conference ID:
13689371. The webcast will remain posted on the Investor Relations
section of 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 U.S. housing starts and the
future demand for the Company's products and services, including in
the second quarter of 2019; the Company's 2019 full-year gross
profit margin, operating expenses, as a percentage of net sales,
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 (including strategies, objectives and targets thereunder), 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 and services as well
as their prices; (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; (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, agreements and treaties; (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 advised
to carefully read the Company's securities filings in connection
with the important disclaimers set forth above and 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, 2019, when filed. In addition, the
Company regularly uses its website to post information regarding
its business and governance. The Company encourages investors to
use http://www.simpsonmfg.com/ as a source of information about
Simpson.
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)
|
2019
|
|
2018
|
Net sales
|
$
|
259,244
|
|
|
$
|
244,779
|
|
Cost of
sales
|
148,990
|
|
|
137,157
|
|
Gross
profit
|
110,254
|
|
|
107,622
|
|
Research and
development and engineering expense
|
12,260
|
|
|
11,150
|
|
Selling
expense
|
28,112
|
|
|
27,573
|
|
General and
administrative expense
|
39,549
|
|
|
37,399
|
|
Total operating
expenses
|
79,921
|
|
|
76,122
|
|
Loss (gain) on
disposal of assets
|
310
|
|
|
(1,184)
|
|
Income from
operations
|
30,023
|
|
|
32,684
|
|
Gain (loss) in equity
method investment, before tax
|
24
|
|
|
(24)
|
|
Interest expense,
net
|
(196)
|
|
|
(90)
|
|
Other & foreign
exchange gain (loss), net
|
(591)
|
|
|
112
|
|
Income before
taxes
|
29,260
|
|
|
32,682
|
|
Provision for income
taxes
|
6,598
|
|
|
7,253
|
|
Net income
|
$
|
22,662
|
|
|
$
|
25,429
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.51
|
|
|
$
|
0.55
|
|
Diluted
|
$
|
0.50
|
|
|
$
|
0.54
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
44,874
|
|
|
46,615
|
|
Diluted
|
45,213
|
|
|
47,009
|
|
Cash dividend
declared per common share
|
$
|
0.22
|
|
|
$
|
0.21
|
|
Other
data:
|
|
|
|
Depreciation and
amortization
|
$
|
9,758
|
|
|
$
|
9,688
|
|
Pre-tax equity-based
compensation expense
|
$
|
4,105
|
|
|
$
|
3,116
|
|
|
|
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
|
UNAUDITED
Consolidated Condensed Balance Sheets
|
(In
thousands)
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2019
|
|
2018
|
|
2018
|
Cash and cash
equivalents
|
|
$
|
113,407
|
|
|
$
|
137,413
|
|
|
$
|
160,180
|
|
Trade accounts
receivable, net
|
|
173,140
|
|
|
167,146
|
|
|
146,052
|
|
Inventories
|
|
272,459
|
|
|
256,552
|
|
|
276,088
|
|
Assets held for
sale
|
|
2,546
|
|
|
—
|
|
|
627
|
|
Other current
assets
|
|
14,186
|
|
|
22,423
|
|
|
16,582
|
|
Total current
assets
|
|
575,738
|
|
|
583,534
|
|
|
599,529
|
|
Property, plant and
equipment, net
|
|
251,398
|
|
|
276,114
|
|
|
254,597
|
|
Operating lease
right-of-use assets
|
|
34,324
|
|
|
—
|
|
|
—
|
|
Goodwill
|
|
131,712
|
|
|
138,026
|
|
|
130,250
|
|
Other noncurrent
assets
|
|
37,180
|
|
|
42,668
|
|
|
37,287
|
|
Total
assets
|
|
$
|
1,030,352
|
|
|
$
|
1,040,342
|
|
|
$
|
1,021,663
|
|
Trade accounts
payable
|
|
$
|
35,549
|
|
|
$
|
42,098
|
|
|
$
|
34,361
|
|
Other current
liabilities
|
|
115,029
|
|
|
101,130
|
|
|
117,219
|
|
Total current
liabilities
|
|
150,578
|
|
|
143,228
|
|
|
151,580
|
|
Operating lease
liabilities
|
|
28,878
|
|
|
—
|
|
|
—
|
|
Deferred income tax
and other long-term liabilities
|
|
15,422
|
|
|
18,052
|
|
|
14,569
|
|
Stockholders'
equity
|
|
835,474
|
|
|
879,062
|
|
|
855,514
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,030,352
|
|
|
$
|
1,040,342
|
|
|
$
|
1,021,663
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
|
|
UNAUDITED Segment
and Product Group Information
|
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
March
31,
|
|
%
|
|
(Amounts in
thousands)
|
|
2019
|
|
2018
|
|
change
*
|
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
221,431
|
|
|
$
|
206,212
|
|
|
7.4
|
%
|
|
Percentage of
total net sales
|
|
85.4
|
%
|
|
84.2
|
%
|
|
|
|
|
Europe
|
|
35,780
|
|
|
36,293
|
|
|
(1.4)
|
%
|
|
Percentage of
total net sales
|
|
13.8
|
%
|
|
14.8
|
%
|
|
|
|
|
Asia/Pacific
|
|
2,033
|
|
|
2,274
|
|
|
(10.6)
|
%
|
|
|
Total
|
|
$
|
259,244
|
|
|
$
|
244,779
|
|
|
5.9
|
%
|
Net Sales by
Product Group**
|
|
|
|
|
|
|
|
|
Wood
Construction
|
|
$
|
217,613
|
|
|
$
|
212,547
|
|
|
2.4
|
%
|
|
Percentage of
total net sales
|
|
84
|
%
|
|
87
|
%
|
|
|
|
|
Concrete
Construction
|
|
41,577
|
|
|
32,156
|
|
|
29.3
|
%
|
|
Percentage of
total net sales
|
|
16
|
%
|
|
13
|
%
|
|
|
|
|
Other
|
|
54
|
|
|
76
|
|
|
N/M
|
|
|
|
Total
|
|
$
|
259,244
|
|
|
$
|
244,779
|
|
|
5.9
|
%
|
Gross Profit
(Loss) by Reporting Segment
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
98,397
|
|
|
$
|
96,738
|
|
|
1.7
|
%
|
|
North
America gross profit margin
|
|
44.4
|
%
|
|
46.9
|
%
|
|
|
|
|
Europe
|
|
11,555
|
|
|
11,568
|
|
|
(0.1)
|
%
|
|
Europe gross
profit margin
|
|
32.3
|
%
|
|
31.9
|
%
|
|
|
|
|
Asia/Pacific
|
|
319
|
|
|
187
|
|
|
70.6
|
%
|
|
Administrative and
all other
|
|
(17)
|
|
|
(871)
|
|
|
—
|
%
|
|
|
Total
|
|
$
|
110,254
|
|
|
$
|
107,622
|
|
|
2.4
|
%
|
Income (Loss) from
Operations***
|
|
|
|
|
|
|
|
|
North
America
|
|
$
|
32,814
|
|
|
$
|
36,455
|
|
|
(10.0)
|
%
|
|
North
America operating profit margin
|
|
14.8
|
%
|
|
17.7
|
%
|
|
|
|
|
Europe
|
|
(384)
|
|
|
(1,589)
|
|
|
75.8
|
%
|
|
Europe operating
profit margin
|
|
(1.1)
|
%
|
|
(4.4)
|
%
|
|
|
|
|
Asia/Pacific
|
|
(542)
|
|
|
(991)
|
|
|
N/M
|
|
|
Administrative and
all other
|
|
(1,865)
|
|
|
(1,191)
|
|
|
N/M
|
|
|
|
Total
|
|
$
|
30,023
|
|
|
$
|
32,684
|
|
|
(8.1)
|
%
|
|
|
|
|
|
*
|
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.
|
|
|
|
|
***
|
Beginning in the first quarter
of 2019, income from inter-segment sales, previously included in
income from operations for segment reporting, is now presented
below income from operations. Income from inter-segment sales
eliminates in consolidation but was an expense in the North America
and Europe segment and income in the Asia/Pacific
segment.
|
|
|
|
|
|
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.