PLEASANTON, Calif.,
July 27, 2020 /PRNewswire/
--
- Net sales of $326.1 million
increased 7.0% year-over-year
- Strong gross margin of 45.9% improved 1.9%
year-over-year
- Income from operations of $72.2
million increased 34.6% year-over-year, operating margin of
22.1% increased 4.5% year-over-year
- Diluted earnings per share of $1.22 increased 38.6% year-over-year
- Providing full year 2020 financial guidance on improved
demand outlook
- Declared a $0.23 per share
cash 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 second
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
June 30, 2020 with the quarter ended June 30, 2019.
2020 Second Quarter Financial Highlights
- Consolidated net sales of $326.1
million increased 7.0% from $304.9
million.
-
- North America net sales of
$286.8 million increased 10.7% from
$259.1 million, primarily due to
higher sales volumes from the return of a home center customer.
Canada's net sales were adversely
impacted by negative foreign currency translation. In local
currency, Canada sales increased
primarily due to higher sales volumes.
- Europe net sales of
$37.4 million decreased 14.4% from
$43.6 million, primarily due to lower
sales volumes related to COVID-19 plant closures. Europe sales were impacted by approximately
$1.2 million of negative foreign
currency translations resulting from some Europe currencies weakening against
the United States dollar. In local
currency, Europe net sales
decreased primarily due to lower sales volume.
- Consolidated gross profit of $149.8
million increased 11.6% from $134.2
million. Gross margin increased to 45.9% from 44.0%.
-
- North America gross margin
increased to 47.4% from 45.1%, primarily due to decreases in
material cost, partly offset by higher labor, warehouse and
shipping costs, each as a percentage of net sales.
- Europe gross margin decreased
to 35.1% from 37.0%, primarily due to increased costs as a
percentage of sales, which resulted from lower production
volume.
- Consolidated income from operations of $72.2 million increased 34.6% from $53.7 million. The increase was primarily due to
the increase in gross profit and lower operating expenses.
Consolidated operating margin increased to 22.1% from 17.6%.
-
- North America income from
operations of $72.2 million increased
from $49.8 million, primarily due to
the increase in gross profit and lower operating expenses.
- Europe income from operations
of $2.7 million decreased from
$4.6 million, primarily due to lower
net sales and slightly higher operating expenses.
- The Company's effective income tax rate decreased to 25.8% from
26.4%.
- Net income was $53.5 million, or
$1.22 per diluted share of the
Company's common stock, compared to net income of $39.6 million, or $0.88 per diluted share.
- Cash flow provided by operating activities decreased
approximately $10.8 million to
$42.8 million from $53.6 million.
- Cash flow used in investing activities decreased approximately
$2.8 million to $13.4 million from $16.3
million. Capital expenditures were approximately
$14.1 million compared to
$15.3 million. Given current
circumstances, the Company is maintaining its focus on tightly
managing all expenses and planned capital expenditures.
Management Commentary
"We executed a strong second quarter with sales of $326.1 million improving 7% year-over-year and
15% quarter-over-quarter on higher volume despite the significant
level of macroeconomic challenges resulting from COVID-19,"
commented Karen Colonias, the
Company's President and Chief Executive Officer. "Our sales volume
improved primarily due to the addition of Lowe's, a returning home
center customer, which resulted in considerably higher demand
associated with the initial product rollout into stores. We also
experienced improved sales in the repair and remodel market as a
result of a shift in consumer behavior toward home renovations
which we believe stemmed from the COVID-19 pandemic and ongoing
shelter-in-place orders. Partially offsetting this strength were
volume declines specific to Europe
following government ordered shutdowns in the United Kingdom and France. As a result, we produced a strong
gross margin of 45.9% due to a combination of sales mix and lower
material costs on improved overhead absorption. This, when coupled
with our effective expense management, resulted in a 35%
year-over-year increase in our income from operations to
$72.2 million and strong earnings of
$1.22 per diluted share."
Mrs. Colonias concluded, "The health, safety and wellbeing of
our employees is our top priority, and we have been extremely
diligent in our efforts to ensure Simpson remains a safe place to
work by enacting rigorous safety protocols in all of our
facilities. These actions, in addition to being deemed an essential
business, have enabled us to continue operating our business and
serve our customers with minimal disruptions in a highly difficult
environment. Looking ahead, we believe the solid demand trends we
experienced in the second quarter of 2020 from the addition of
Lowe's and improved repair and remodel market will continue,
offsetting the expected weakness in the housing market. As a
result, we expect our full year net sales and gross margin will
improve year-over-year in 2020 subject to circumstances outside of
our control related to the COVID-19 pandemic. We will continue to
execute our model with an emphasis on enhancing our operating
efficiencies and cost savings which will serve us well through this
pandemic and longer-term. Our industry leadership position,
geographic reach and diverse product offerings, combined with our
strong balance sheet and liquidity position gives us confidence in
our ability to support current and improving future demand
trends."
Corporate Developments
- On July 14, 2020, the Company's
Board of Directors declared a quarterly cash dividend of
$0.23 per share. The dividend will be
payable on October 22, 2020 to the
Company's stockholders of record as of October 1, 2020.
Business Outlook
On April 27, 2020, the Company
withdrew its 2020 full-year outlook originally provided on
February 3, 2020. At the time, the
Company was unable to forecast its full-year outlook with
reasonable accuracy given the uncertainty surrounding the COVID-19
pandemic and the related impact on the Company's business. The
Company believes that it is now in a better position to provide
full year outlook, primarily reflecting an additional quarter of
actual results, as well as improved visibility on the progression
of pandemic-related restrictions and the impact of those
restrictions on the Company's operations. Based on business trends
and conditions as of today, July 27,
the Company's outlook for the full fiscal year ending December 31, 2020 is as follows:
- Net sales are estimated to increase in the range of 1.5% to
4.0% compared to the full year ended December 31, 2019.
- Gross margin is estimated to be in the range of 43.0% to
45.0%.
- Operating expenses, as a percentage of net sales, are estimated
to be in the range of 27.0% to 29.0%.
- The effective tax rate is estimated to be in the range of 24.0%
to 26.0%, including both federal and state income tax rates.
While the magnitude and duration of the COVID-19 pandemic and
its impact on general economic conditions remains uncertain, the
Company is continuing to monitor the impact of the outbreak on its
operations and financial condition, which was not significantly
adversely impacted in the second quarter of 2020. Please note that
ongoing uncertainties surrounding the impact of COVID-19 on
Simpson's business, which may include the economic impact on its
operations, raw material costs, consumers, suppliers, vendors, and
other factors outside of its control, may have a material adverse
impact on the Company's financial outlook.
Conference Call Details
Investors, analysts and other interested parties are invited to
join the Company's second quarter 2020 financial results conference
call on Monday, July 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=140353 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, August 10, 2020, by dialing (844)
512–2921 (U.S. and Canada) or
(412) 317–6671 (International) and entering the conference ID:
13705693. 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
June 30,
|
|
Six Months Ended
June 30,
|
(Amounts in
thousands, except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
|
326,076
|
|
|
$
|
304,853
|
|
|
$
|
609,744
|
|
|
$
|
564,097
|
|
Cost of
sales
|
176,276
|
|
|
170,674
|
|
|
330,278
|
|
|
319,664
|
|
Gross
profit
|
149,800
|
|
|
134,179
|
|
|
279,466
|
|
|
244,433
|
|
Research and
development and engineering expense
|
12,191
|
|
|
11,055
|
|
|
25,573
|
|
|
23,316
|
|
Selling
expense
|
26,834
|
|
|
28,687
|
|
|
55,361
|
|
|
56,799
|
|
General and
administrative expense
|
38,636
|
|
|
41,345
|
|
|
77,107
|
|
|
80,893
|
|
Total operating
expenses
|
77,661
|
|
|
81,087
|
|
|
158,041
|
|
|
161,008
|
|
Gain on disposal of
assets
|
(73)
|
|
|
(561)
|
|
|
(137)
|
|
|
(251)
|
|
Income from
operations
|
72,212
|
|
|
53,653
|
|
|
121,562
|
|
|
83,676
|
|
Interest expense, net
and other
|
(151)
|
|
|
147
|
|
|
(2,684)
|
|
|
(616)
|
|
Income before
taxes
|
72,061
|
|
|
53,800
|
|
|
118,878
|
|
|
83,060
|
|
Provision for income
taxes
|
18,582
|
|
|
14,223
|
|
|
28,573
|
|
|
20,821
|
|
Net income
|
$
|
53,479
|
|
|
$
|
39,577
|
|
|
$
|
90,305
|
|
|
$
|
62,239
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.23
|
|
|
$
|
0.89
|
|
|
$
|
2.06
|
|
|
$
|
1.39
|
|
Diluted
|
$
|
1.22
|
|
|
$
|
0.88
|
|
|
$
|
2.05
|
|
|
$
|
1.38
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
43,471
|
|
|
44,671
|
|
|
43,787
|
|
|
44,772
|
|
Diluted
|
43,663
|
|
|
44,972
|
|
|
43,980
|
|
|
45,089
|
|
Cash dividend
declared per common share
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.46
|
|
|
$
|
0.45
|
|
Other
data:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
10,006
|
|
|
$
|
9,757
|
|
|
$
|
19,739
|
|
|
$
|
19,515
|
|
Pre-tax equity-based
compensation expense
|
$
|
5,151
|
|
|
$
|
2,494
|
|
|
$
|
5,428
|
|
|
$
|
6,600
|
|
|
|
|
|
|
|
|
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
UNAUDITED
Consolidated Condensed Balance Sheets
(In
thousands)
|
|
|
June
30,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2020
|
|
2019
|
|
2019
|
Cash and cash
equivalents
|
|
$
|
315,448
|
|
|
$
|
141,731
|
|
|
$
|
230,210
|
|
Trade accounts
receivable, net
|
|
233,867
|
|
|
191,282
|
|
|
139,364
|
|
Inventories
|
|
265,365
|
|
|
266,142
|
|
|
251,907
|
|
Other current
assets
|
|
20,222
|
|
|
14,795
|
|
|
19,426
|
|
Total current
assets
|
|
834,902
|
|
|
613,950
|
|
|
640,907
|
|
Property, plant and
equipment, net
|
|
247,119
|
|
|
252,710
|
|
|
249,012
|
|
Operating lease
right-of-use assets
|
|
36,930
|
|
|
35,111
|
|
|
35,436
|
|
Goodwill
|
|
132,335
|
|
|
132,312
|
|
|
131,879
|
|
Other noncurrent
assets
|
|
33,217
|
|
|
35,835
|
|
|
38,132
|
|
Total
assets
|
|
$
|
1,284,503
|
|
|
$
|
1,069,918
|
|
|
$
|
1,095,366
|
|
Trade accounts
payable
|
|
$
|
49,149
|
|
|
$
|
39,241
|
|
|
$
|
33,351
|
|
Accrued liabilities
and other current liabilities
|
|
144,265
|
|
|
118,000
|
|
|
125,556
|
|
Total current
liabilities
|
|
193,414
|
|
|
157,241
|
|
|
158,907
|
|
Operating lease
liabilities, net of current portion
|
|
28,893
|
|
|
28,164
|
|
|
27,930
|
|
Long-term debt, net
of current portion
|
|
150,000
|
|
|
—
|
|
|
—
|
|
Deferred income tax
and other long-term liabilities
|
|
17,984
|
|
|
16,092
|
|
|
16,572
|
|
Stockholders'
equity
|
|
894,212
|
|
|
868,421
|
|
|
891,957
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,284,503
|
|
|
$
|
1,069,918
|
|
|
$
|
1,095,366
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
UNAUDITED Segment
and Product Group Information
(In
thousands)
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
Six Months
Ended
|
|
|
|
|
June
30,
|
|
%
|
|
June
30,
|
|
%
|
(Amounts in
thousands)
|
2020
|
|
2019
|
|
change*
|
|
2020
|
|
2019
|
|
change*
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
286,807
|
|
|
$
|
259,073
|
|
|
10.7%
|
|
$
|
535,857
|
|
|
$
|
480,504
|
|
|
11.5%
|
|
Percentage of
total net sales
|
88.0%
|
|
|
85.0%
|
|
|
|
|
87.9%
|
|
|
85.2%
|
|
|
|
|
Europe
|
37,379
|
|
|
43,648
|
|
|
(14.4)%
|
|
70,111
|
|
|
79,428
|
|
|
(11.7)%
|
|
Percentage of
total net sales
|
11.5%
|
|
|
14.3%
|
|
|
|
|
11.5%
|
|
|
14.1%
|
|
|
|
|
Asia/Pacific
|
1,890
|
|
|
2,132
|
|
|
(11.4)%
|
|
3,776
|
|
|
4,165
|
|
|
(9.3)%
|
|
|
$
|
326,076
|
|
|
$
|
304,853
|
|
|
7.0%
|
|
$
|
609,744
|
|
|
$
|
564,097
|
|
|
8.1%
|
Net Sales by
Product Group**
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood
Construction
|
$
|
280,724
|
|
|
$
|
258,416
|
|
|
8.6%
|
|
$
|
523,244
|
|
|
$
|
476,029
|
|
|
9.9%
|
|
Percentage of
total net sales
|
86%
|
|
|
84%
|
|
|
|
|
86%
|
|
|
84%
|
|
|
|
|
Concrete
Construction
|
45,304
|
|
|
46,360
|
|
|
(2.3)%
|
|
86,316
|
|
|
87,936
|
|
|
(1.8)%
|
|
Percentage of
total net sales
|
14%
|
|
|
16%
|
|
|
|
|
14%
|
|
|
16%
|
|
|
|
|
Other
|
48
|
|
|
77
|
|
|
N/M
|
|
184
|
|
|
132
|
|
|
N/M
|
|
|
$
|
326,076
|
|
|
$
|
304,853
|
|
|
7.0%
|
|
$
|
609,744
|
|
|
$
|
564,097
|
|
|
8.1%
|
Gross Profit
(Loss) by Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
136,024
|
|
|
$
|
116,880
|
|
|
16.4%
|
|
$
|
254,819
|
|
|
$
|
215,277
|
|
|
18.4%
|
|
North
America gross margin
|
47.4%
|
|
|
45.1%
|
|
|
|
|
47.6%
|
|
|
44.8%
|
|
|
|
|
Europe
|
13,106
|
|
|
16,132
|
|
|
(18.8)%
|
|
23,807
|
|
|
27,686
|
|
|
(14.0)%
|
|
Europe gross
margin
|
35.1%
|
|
|
37.0%
|
|
|
|
|
34.0%
|
|
|
34.9%
|
|
|
|
|
Asia/Pacific
|
484
|
|
|
1,149
|
|
|
(57.9)%
|
|
651
|
|
|
1,469
|
|
|
(55.7)%
|
|
Administrative and
all other
|
186
|
|
|
18
|
|
|
N/M
|
|
189
|
|
|
1
|
|
|
N/M
|
|
|
$
|
149,800
|
|
|
$
|
134,179
|
|
|
11.6%
|
|
$
|
279,466
|
|
|
$
|
244,433
|
|
|
14.3%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
72,196
|
|
|
$
|
49,838
|
|
|
44.9%
|
|
$
|
125,757
|
|
|
$
|
82,652
|
|
|
52.2%
|
|
North
America operating margin
|
25.2%
|
|
|
19.2%
|
|
|
|
|
23.5%
|
|
|
17.2%
|
|
|
|
|
Europe
|
2,696
|
|
|
4,643
|
|
|
(41.9)%
|
|
1,026
|
|
|
4,259
|
|
|
(75.9)%
|
|
Europe operating
margin
|
7.2%
|
|
|
10.6%
|
|
|
|
|
1.5%
|
|
|
5.4%
|
|
|
|
|
Asia/Pacific
|
(75)
|
|
|
186
|
|
|
N/M
|
|
(679)
|
|
|
(355)
|
|
|
N/M
|
|
Administrative and
all other
|
(2,605)
|
|
|
(1,014)
|
|
|
N/M
|
|
(4,542)
|
|
|
(2,880)
|
|
|
N/M
|
|
|
$
|
72,212
|
|
|
$
|
53,653
|
|
|
34.6%
|
|
$
|
121,562
|
|
|
$
|
83,676
|
|
|
45.3%
|
|
*
|
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.