PLEASANTON, Calif.,
April 27, 2020 /PRNewswire/ --
- Net sales of $283.7 million
increased 9.4% year-over-year on stronger sales volumes
- Strong gross margin of 45.7% improved 320 basis points
year-over-year
- Operating profit of $49.4
million increased 64.4% year-over-year
- Diluted earnings per share of $0.83 increased 66.0% year-over-year
- Repurchased $62.7 million of
the Company's common stock during the quarter
- Declared a $0.23 per share
cash dividend
- Withdrawing 2020 Plan targets and financial outlook due to
COVID-19
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 2020. 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).
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, 2020 with the quarter ended March 31, 2019.
2020 First Quarter Financial Highlights
- Consolidated net sales of $283.7
million increased 9.4% from $259.2
million.
-
- North America net sales of
$249.1 million increased 12.5% from
$221.4 million, primarily due to
higher sales volume. Canada's net
sales were negatively impacted by foreign currency
translation.
- Europe net sales of
$32.7 million decreased 8.5% from
$35.8 million primarily due to lower
sales volumes. Net sales were impacted by approximately
$1.0 million of negative foreign
currency translations resulting from some Europe currencies weakening against
the United States dollar. In local
currency, Europe net sales
decreased.
- Consolidated gross profit of $129.7
million increased 17.6% from $110.3
million. Gross margin increased to 45.7% from 42.5%.
-
- North America gross margin
increased to 47.7% from 44.4%, primarily due to decreases in
material costs and factory and overhead costs (on higher
production), partly offset by higher warehouse and shipping costs,
each as a percentage of net sales.
- Europe gross margin increased
to 32.7% from 32.3%, primarily due to decreases in material costs,
partly offset by higher labor, factory and overhead costs, shipping
and warehouse costs, each as a percentage of net sales.
- Consolidated income from operations of $49.4 million increased 64.4% from $30.0 million. The increase was primarily due to
the increase in gross profit. Consolidated operating margin
increased to 17.4% from 11.6%.
-
- North America income from
operations of $53.6 million increased
from $32.8 million, primarily due to
the increase in gross profit and slightly lower operating
expenses.
- Europe loss from operations
was $1.7 million compared to a loss
of $0.4 million, primarily due to
lower net sales and increased cash profit sharing, severance and
amortization expenses.
- The Company's effective income tax rate decreased to 21.3% from
22.5%.
- Consolidated net income was $36.8
million, or $0.83 per diluted
share of the Company's common stock, compared to net income of
$22.7 million, or $0.50 per diluted share.
- Cash flow provided by operating activities increased
approximately $7.1 million to
$16.8 million from $9.6 million.
- Cash flow used in investing activities decreased approximately
$4.6 million to $6.2 million from $10.8
million. Capital expenditures were approximately
$6.8 million compared to $7.4 million. Given current circumstances, the
Company is heightening its focus on tightly managing all expenses
and planned capital expenditures.
Management Commentary
"We delivered a solid first quarter both operationally and
financially with sales of $283.7
million improving 9.4% year-over-year on higher sales volume
in North America," commented
Karen Colonias, President and Chief
Executive Officer of Simpson Manufacturing Co., Inc. "Our gross
margin was strong at 45.7%, an improvement of 320 basis points
year-over-year largely due to sales mix and lower material costs.
Our gross margin, coupled with relatively flat operating expenses,
helped generate operating income of $49.4
million, up 64.4% year–over–year, and strong earnings of
$0.83 per diluted share, up 66.0%
year–over–year. We also completed the final phase of the SAP
implementation in our major U.S.–based sales organizations during
the quarter with the successful on–boarding of our Stockton manufacturing facility."
Mrs. Colonias continued, "Our thoughts go out to all of those
who have been impacted by the COVID-19 pandemic. The health, safety
and wellbeing of our employees, their families, our customers and
our communities remains our top priority. We took immediate action
at the onset of this crisis, implementing preparedness plans to
keep our employees and customers healthy and safe, as well as to
ensure continued operations and business continuity across our
global network. While government authorities in the countries and
states where we operate have issued various and differing shelter
in place and other similar governmental orders, in many of those
locations our products and services are classified as an essential
business and all of our North
America manufacturing and distribution facilities continue
to operate in accordance with those orders. However in late March,
two of our larger European manufacturing facilities in the
United Kingdom and France were ordered to cease nearly all
operations, forcing us to temporarily furlough many of those
affected employees. We have every intention of being able to bring
those employees back to work when the timing is right. Our supply
chain partners have been very supportive and continue to do their
part to ensure that service levels to our customers remain
strong. To date, we have not experienced any supply-chain
disruptions related to COVID-19 and have been able to meet our
customers' needs."
Mrs. Colonias concluded, "Due to the significant level of
uncertainty regarding future market conditions surrounding
COVID-19, we have chosen to withdraw our previously issued annual
2020 outlook as well as the financial targets associated with our
"2020 Plan." While this situation is highly unique, we believe our
strong balance sheet, combined with the investments we have made in
adjacent products and markets to diversify our business, and our
recent cost rationalization efforts have positioned us to emerge on
the other side of this crisis from a position of strength. We ended
the quarter with nearly $306 million
in cash on hand after drawing down $150
million on our $300 million
revolving credit facility as a precautionary measure to preserve
financial flexibility. We have proactively taken measures to ensure
we maintain our strong financial position, including implementing a
hiring freeze and adjusting employee hours based on lower
production levels in the near term. We will also remain
conservative in our capital allocation approach with a focus on
cash preservation."
Corporate Developments
- As previously announced, in March
2020, the Company borrowed $150
million from its $300 million
revolving credit facility and has approximately $150 million of remaining borrowing capacity
under its revolving credit facility.
- During the first quarter of 2020, the Company repurchased
902,340 shares of the Company's common stock in the open market at
an average price of $69.46 per share,
for a total of $62.7 million. As of
March 31, 2020, approximately
$37.3 million remained available for
repurchase under the previously announced $100.0 million share repurchase authorization
(which expires at the end of 2020). Given current circumstances,
the Company has temporarily suspended its share repurchase
program.
- On April 23, 2020, the Company's Board of Directors
declared a quarterly cash dividend of $0.23 per share. The dividend will be payable on
July 23, 2020 to the Company's stockholders of record as of
July 2, 2020.
Business Outlook
During the first quarter of 2020, the execution of the Company's
2020 Plan continued to deliver financial and operational
efficiencies. The rapidly developing COVID-19 pandemic has
generated significant uncertainty in the economy and for the
Company's outlook for the full year of 2020. While the
magnitude and duration of the outbreak, including its impact on its
operations, supply chain partners and general economic conditions,
is uncertain, the Company is continuing to monitor the impact of
the pandemic on its operations and financial condition, which was
not significantly adversely impacted in the first quarter of
2020. Given the uncertainties surrounding the impact of
COVID-19 on its business, which may include the economic impact on
the Company's operations, consumers, suppliers and vendors, Simpson
is withdrawing its prior full year 2020 guidance issued on
February 3, 2020, as well as the
financial targets associated with its "2020 Plan." The Company is
unable to provide updated full year 2020 guidance at this time.
A significant portion of the Company's total product sales is
dependent on housing starts and its business, financial condition
and results of operations depends significantly on the level of
housing and residential construction activity, which is expected to
be negatively affected by the COVID-19 outbreak and pandemic. In
the month of April, sales declined compared to March levels due to
lower demand from the anticipated slowdown in housing starts and
general construction activity. Declines in housing and residential
construction, such as housing starts and home improvement projects,
which generally occur during economic downturns, have in the past
significantly reduced, and in the future can be expected to reduce,
the demand for, and net sales, of the Company's products.
Conference Call Details
Investors, analysts and other interested parties are invited to
join the Company's first quarter 2020 financial results conference
call on Monday, April 27, 2020, 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=138725 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 11, 2020, by dialing (844)
512–2921 (U.S. and Canada) or
(412) 317–6671 (International) and entering the conference ID:
13700860. 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."
Copies of Simpson Manufacturing's Annual Report to Stockholders
and its proxy statements and other SEC filings, including Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, are made available free of charge on the
company's Web site on the same day they are filed with the SEC. To
view these filings, visit the Investor Relations section of the
Company's Web site.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, Section 27A of the Securities Act of 1933, as amended, and
Section 2 IE of the Securities Exchange Act of 1934, as
amended. Forward-looking statements generally can be
identified by words such as "anticipate," "believe,"
"estimate," "expect," "intend," "plan," "target," "continue,"
"predict," "project," "change," "result," "future," "will,"
"could," "can," "may," "likely," "potentially," or similar
expressions that concern our strategy, plans, expectations or
intentions. Forward-looking statements include, but are not limited
to, statements about future financial and operating results, our
plans, objectives, business outlook, priorities, expectations and
intentions, expectations for sales growth, comparable sales,
earnings and performance, stockholder value, capital expenditures,
cash flows, the housing market, the home improvement industry,
demand for services, share repurchases, our strategic initiatives,
including the impact of these initiatives on our strategic and
operational plans and financial results, and any statement of an
assumption underlying any of the foregoing and other statements
that are not historical facts. Although we believe that the
expectations, opinions, projections and comments reflected in these
forward-looking statements are reasonable, such statements involve
risks and uncertainties and we can give no assurance that such
statements will prove to be correct. Actual results may
differ materially from those expressed or implied in such
statements.
Forward-looking statements are subject to inherent
uncertainties, risk and other factors that are difficult to predict
and could cause our actual results to vary in material respects
from what we have expressed or implied by these forward-looking
statements. Important factors that could cause our actual
results and financial condition to differ materially from those
expressed in our forward-looking statements include the impact of
COVID-19 on our operations and supply chain, and the
operations of our customers, suppliers and business partners
and those discussed under Item 1A. Risk Factors and Item 7
Management's Discussion and Analysis of Financial Condition and
Results of Operations in our most recent Annual Report on Form 10-K
and subsequent filings with the SEC. To the extent that
COVID-19 adversely affects our business and financial results, it
may also have the effect of heightening many of such risk and other
factors.
We caution that you should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. We undertake no obligation to publicly update
any forward-looking statement, whether as a result of new
information, future developments or otherwise. Readers are
urged to carefully review and consider the various disclosures made
in our reports filed with the SEC that advise of the risks and
factors that may affect our business, results of operations and
financial condition.
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)
|
2020
|
|
2019
|
Net sales
|
$
|
283,668
|
|
|
$
|
259,244
|
|
Cost of
sales
|
154,002
|
|
|
148,990
|
|
Gross
profit
|
129,666
|
|
|
110,254
|
|
Research and
development and engineering expense
|
13,382
|
|
|
12,260
|
|
Selling
expense
|
28,527
|
|
|
28,112
|
|
General and
administrative expense
|
38,471
|
|
|
39,549
|
|
Total operating
expenses
|
80,380
|
|
|
79,921
|
|
Loss (gain) on
disposal of assets
|
(64)
|
|
|
310
|
|
Income from
operations
|
49,350
|
|
|
30,023
|
|
Interest expense, net
and other
|
(2,533)
|
|
|
(763)
|
|
Income before
taxes
|
46,817
|
|
|
29,260
|
|
Provision for income
taxes
|
9,991
|
|
|
6,598
|
|
Net income
|
$
|
36,826
|
|
|
$
|
22,662
|
|
Earnings per common
share:
|
|
|
|
Basic
|
$
|
0.84
|
|
|
$
|
0.51
|
|
Diluted
|
$
|
0.83
|
|
|
$
|
0.50
|
|
Weighted average
shares outstanding:
|
|
|
|
Basic
|
44,099
|
|
|
44,874
|
|
Diluted
|
44,286
|
|
|
45,213
|
|
Cash dividend
declared per common share
|
$
|
0.23
|
|
|
$
|
0.22
|
|
Other
data:
|
|
|
|
Depreciation and
amortization
|
$
|
9,734
|
|
|
$
|
9,758
|
|
Pre-tax equity-based
compensation expense
|
$
|
277
|
|
|
$
|
4,105
|
|
|
|
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
UNAUDITED
Consolidated Condensed Balance Sheets
(In
thousands)
|
|
|
|
March
31,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2020
|
|
2019
|
|
2019
|
Cash and cash
equivalents
|
|
$
|
305,791
|
|
|
$
|
113,407
|
|
|
$
|
230,210
|
|
Trade accounts
receivable, net
|
|
168,736
|
|
|
173,140
|
|
|
139,364
|
|
Inventories
|
|
255,720
|
|
|
272,459
|
|
|
251,907
|
|
Assets held for
sale
|
|
—
|
|
|
2,546
|
|
|
—
|
|
Other current
assets
|
|
21,736
|
|
|
14,186
|
|
|
19,426
|
|
Total current
assets
|
|
751,983
|
|
|
575,738
|
|
|
640,907
|
|
Property, plant and
equipment, net
|
|
246,941
|
|
|
251,398
|
|
|
249,012
|
|
Operating lease
right-of-use assets
|
|
33,725
|
|
|
34,324
|
|
|
35,436
|
|
Goodwill
|
|
131,599
|
|
|
131,712
|
|
|
131,879
|
|
Other noncurrent
assets
|
|
34,000
|
|
|
37,180
|
|
|
38,132
|
|
Total
assets
|
|
$
|
1,198,248
|
|
|
$
|
1,030,352
|
|
|
$
|
1,095,366
|
|
Trade accounts
payable
|
|
$
|
44,505
|
|
|
$
|
35,549
|
|
|
$
|
33,351
|
|
Accrued liabilities
and other current liabilities
|
|
118,346
|
|
|
115,029
|
|
|
125,556
|
|
Total current
liabilities
|
|
162,851
|
|
|
150,578
|
|
|
158,907
|
|
Operating lease
liabilities, net of current portion
|
|
26,084
|
|
|
28,878
|
|
|
27,930
|
|
Long-term debt, net
of current portion
|
|
150,000
|
|
|
—
|
|
|
—
|
|
Deferred income tax
and other long-term liabilities
|
|
17,719
|
|
|
15,422
|
|
|
16,572
|
|
Stockholders'
equity
|
|
841,594
|
|
|
835,474
|
|
|
891,957
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,198,248
|
|
|
$
|
1,030,352
|
|
|
$
|
1,095,366
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
UNAUDITED Segment
and Product Group Information
(In
thousands)
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31,
|
|
%
|
(Amounts in
thousands)
|
2020
|
|
2019
|
|
change*
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
North
America
|
$
|
249,050
|
|
|
$
|
221,431
|
|
|
12.5%
|
|
Percentage of
total net sales
|
87.8
|
%
|
|
85.4
|
%
|
|
|
|
Europe
|
32,732
|
|
|
35,780
|
|
|
(8.5)%
|
|
Percentage of
total net sales
|
11.5
|
%
|
|
13.8
|
%
|
|
|
|
Asia/Pacific
|
1,886
|
|
|
2,033
|
|
|
(7.2)%
|
|
|
$
|
283,668
|
|
|
$
|
259,244
|
|
|
9.4%
|
Net Sales by
Product Group**
|
|
|
|
|
|
|
Wood
Construction
|
$
|
242,520
|
|
|
$
|
217,613
|
|
|
11.4%
|
|
Percentage of
total net sales
|
86
|
%
|
|
84
|
%
|
|
|
|
Concrete
Construction
|
41,012
|
|
|
41,577
|
|
|
(1.4)%
|
|
Percentage of
total net sales
|
14
|
%
|
|
16
|
%
|
|
|
|
Other
|
136
|
|
|
54
|
|
|
N/M
|
|
|
$
|
283,668
|
|
|
$
|
259,244
|
|
|
9.4%
|
Gross Profit
(Loss) by Reporting Segment
|
|
|
|
|
|
|
North
America
|
$
|
118,795
|
|
|
$
|
98,397
|
|
|
20.7%
|
|
North
America gross margin
|
47.7
|
%
|
|
44.4
|
%
|
|
|
|
Europe
|
10,701
|
|
|
11,555
|
|
|
(7.4)%
|
|
Europe gross
margin
|
32.7
|
%
|
|
32.3
|
%
|
|
|
|
Asia/Pacific
|
167
|
|
|
319
|
|
|
(47.6)%
|
|
Administrative and
all other
|
3
|
|
|
(17)
|
|
|
N/M
|
|
|
$
|
129,666
|
|
|
$
|
110,254
|
|
|
17.6%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
North
America
|
$
|
53,561
|
|
|
$
|
32,814
|
|
|
63.2%
|
|
North
America operating margin
|
21.5
|
%
|
|
14.8
|
%
|
|
|
|
Europe
|
(1,670)
|
|
|
(384)
|
|
|
N/M
|
|
Europe operating
margin
|
(5.1)
|
%
|
|
(1.1)
|
%
|
|
|
|
Asia/Pacific
|
(604)
|
|
|
(542)
|
|
|
(11)%
|
|
Administrative and
all other
|
(1,937)
|
|
|
(1,865)
|
|
|
N/M
|
|
|
$
|
49,350
|
|
|
$
|
30,023
|
|
|
64.4%
|
|
|
|
|
*
|
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.