PLEASANTON, Calif.,
Oct. 26, 2020 /PRNewswire/ --
- Net sales of $364.3 million
increased 17.5% year-over-year
- Strong gross margin of 47.6% improved 3.2%
year-over-year
- Income from operations of $91.3
million increased 49.8% year-over-year, operating margin of
25.1% increased 5.4% year-over-year
- Diluted earnings per share of $1.54 increased 58.8% year-over-year
- Updating 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 third
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
September 30, 2020 with the quarter ended September 30,
2019.
2020 Third Quarter Financial Highlights
- Consolidated net sales of $364.3
million increased 17.5% from $309.9
million.
-
- North America net sales of
$316.9 million increased 19.4% from
$265.5 million due to higher sales
volumes to the home center channel, primarily due to the return of
a home center customer and increased repair and remodel activity,
as well as from other sales distributor channels, which experienced
increased new housing starts and repair and remodel activity.
Canada's net sales increased,
primarily due to higher sales volumes. Canada's net sales were adversely impacted by
negative foreign currency translation. In local currency,
Canada sales increased.
- Europe net sales of
$44.8 million increased 6.0% from
$42.2 million, primarily due to
slightly higher sales volumes along with the positive impact of
foreign currency translation of approximately $2.1 million from some Europe currencies strengthening against
the United States dollar. In local
currency, Europe net sales
increased due to higher sales volumes.
- Consolidated gross profit of $173.2
million increased 25.9% from $137.6
million. Gross margin increased to 47.6% from 44.4%.
-
- North America gross margin
increased to 48.9% from 45.6%, primarily due to decreases in
material and labor costs, partly offset by higher warehouse and
shipping costs, each as a percentage of net sales.
- Europe gross margin decreased
to 37.9% from 38.4%, primarily due to increased labor, warehouse
and shipping costs, partly offset by lower material and factory and
overhead costs.
- Consolidated income from operations of $91.3 million increased 49.8% from $61.0 million. The increase was primarily due to
the increase in gross profit, partly offset by higher operating
expenses including cash profit sharing and stock-based compensation
expense. Consolidated operating margin increased to 25.1% from
19.7%.
-
- North America income from
operations of $87.4 million increased
from $56.8 million, primarily due to
the increase in gross profit, partly offset by higher operating
expenses.
- Europe income from operations
of $6.1 million increased from
$5.4 million, primarily due to
increased gross profit.
- The Company's effective income tax rate was 26.2% for both
quarters.
- Net income was $67.1 million, or
$1.54 per diluted share of the
Company's common stock, compared to net income of $43.7 million, or $0.97 per diluted share.
- Cash flow provided by operating activities decreased
approximately $8.9 million to
$86.8 million from $95.7 million.
- Cash flow used in investing activities decreased approximately
$1.2 million to $8.1 million from $9.3
million. Capital expenditures were approximately
$6.8 million compared to $9.2 million.
Management Commentary
"We delivered strong third quarter results with our sales
increasing 17.5% year-over-year and 11.7% quarter-over-quarter to
$364.3 million on significantly
higher volume," commented Karen
Colonias, the Company's President and Chief Executive
Officer. "Our sales volume improved primarily due to ongoing
momentum in our home center and co-op customers as we have
continued to benefit from the shift in consumer behavior toward
home renovations as a result of the COVID-19 pandemic. Sales
volumes were supported by the return of Lowe's as a home center
customer in the second quarter of 2020. By the end of October, we
expect nearly all 1,737 Lowe's stores will be set with our
industry-leading connectors, mechanical anchor and fastener product
solutions. Our sales were further supported by improving U.S.
housing starts and the recovery in Europe following government shutdowns in the
United Kingdom and France due to COVID-19 in late March. In
addition, we achieved a considerable improvement in our gross
margin to 47.6% in the third quarter of 2020 from 44.4% in the
third quarter of 2019. The strength in our gross margin, combined
with our effective expense management, helped drive a 49.8%
year-over-year increase in our income from operations to
$91.3 million and strong earnings of
$1.54 per diluted share."
Mrs. Colonias continued, "While our focus over the past seven
months has been on cash preservation to ensure our working capital
needs could be met in the near-term due to uncertainty related to
COVID-19, we have been grateful to be able to operate as a supplier
to other essential businesses with minimal disruptions. As such, we
are continuing to support our growth strategy in identifying
M&A opportunities that would complement our existing product
offering and manufacturing footprint or strengthen our software
capabilities. In-line with this initiative, we recently made two
strategic asset purchases including the acquisition of a small
connector manufacturer in the United
Kingdom that we expect to improve our market share in
Europe and a small software
application that we believe will strengthen our value proposition
for builders."
Mrs. Colonias concluded, "At Simpson, we value our employees'
health, safety and wellbeing as our top priority and strive for
continuous improvement to ensure our Company remains a safe and
rewarding place to work. Our diligence, including strict adherence
to protocols to help minimize the spread of COVID-19, has enabled
us to continue operating our business, while executing against our
strategic, operational and financial initiatives in order to
maximize shareholder value."
Corporate Developments
- During the quarter, the Company paid down $75 million of the $150
million borrowed from its $300
million revolving credit facility.
- On October 13, 2020, the Company
announced Michael Olosky as its
Chief Operating Officer, effective November
30, 2020. Mr. Olosky will primarily be responsible for
overseeing Simpson's sales and operations globally, and will report
directly to the Company's President and Chief Executive Officer,
Karen Colonias. Mr. Olosky succeeds
Simpson's former Chief Operating Officer Ricardo Arevalo, who retired in February 2020 after 20 years of service to the
Company.
- On October 23, 2020, the
Company's Board of Directors declared a quarterly cash dividend of
$0.23 per share. The dividend will be
payable on January 28, 2021 to the
Company's stockholders of record as of January 7, 2021.
Business Outlook
On July 27, 2020, the Company
reinstated its 2020 full-year outlook originally provided on
February 3, 2020. The Company is
updating its full year outlook, primarily reflecting three quarters
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, October
26, 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 9.0% to
10.0% compared to the full year ended December 31, 2019.
- Gross margin is estimated to be in the range of 45.0% to
46.0%.
- Operating expenses, as a percentage of net sales, are estimated
to be in the range of 25.0% to 26.5%.
- The effective tax rate is estimated to be in the range of 24.5%
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 or third quarter of 2020.
Please note that ongoing uncertainties surrounding the impact of
COVID-19 on the Company'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 third quarter 2020 financial results conference
call on Monday, October 26, 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=141698 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, November 9, 2020, by dialing (844)
512–2921 (U.S. and Canada) or
(412) 317–6671 (International) and entering the conference ID:
13711219. 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 Part I – 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, Part II –
Other Information – Item 1.A. Risk Factors in our Form 10-Qs for
the quarters ended March 31, 2020 and
June 30, 2020 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
September
30,
|
|
Nine Months Ended
September
30,
|
(Amounts in
thousands, except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
Net sales
|
$
|
364,304
|
|
|
$
|
309,932
|
|
|
$
|
974,048
|
|
|
$
|
874,029
|
|
Cost of
sales
|
191,061
|
|
|
172,288
|
|
|
521,339
|
|
|
491,952
|
|
Gross
profit
|
173,243
|
|
|
137,644
|
|
|
452,709
|
|
|
382,077
|
|
Research and
development and engineering expense
|
12,287
|
|
|
11,972
|
|
|
37,860
|
|
|
35,287
|
|
Selling
expense
|
29,396
|
|
|
27,672
|
|
|
84,757
|
|
|
84,471
|
|
General and
administrative expense
|
40,289
|
|
|
37,047
|
|
|
117,396
|
|
|
117,941
|
|
Total operating
expenses
|
81,972
|
|
|
76,691
|
|
|
240,013
|
|
|
237,699
|
|
Gain on disposal of
assets
|
(72)
|
|
|
(14)
|
|
|
(209)
|
|
|
(265)
|
|
Income from
operations
|
91,343
|
|
|
60,967
|
|
|
212,905
|
|
|
144,643
|
|
Interest expense, net
and other
|
(518)
|
|
|
(1,778)
|
|
|
(3,202)
|
|
|
(2,394)
|
|
Income before
taxes
|
90,825
|
|
|
59,189
|
|
|
209,703
|
|
|
142,249
|
|
Provision for income
taxes
|
23,768
|
|
|
15,503
|
|
|
52,341
|
|
|
36,324
|
|
Net income
|
$
|
67,057
|
|
|
$
|
43,686
|
|
|
$
|
157,362
|
|
|
$
|
105,925
|
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
|
1.54
|
|
|
$
|
0.98
|
|
|
$
|
3.60
|
|
|
$
|
2.37
|
|
Diluted
|
$
|
1.54
|
|
|
$
|
0.97
|
|
|
$
|
3.59
|
|
|
$
|
2.35
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
43,474
|
|
|
44,477
|
|
|
43,683
|
|
|
44,673
|
|
Diluted
|
43,683
|
|
|
44,814
|
|
|
43,873
|
|
|
44,995
|
|
Cash dividend
declared per common share
|
$
|
0.23
|
|
|
$
|
0.23
|
|
|
$
|
0.68
|
|
|
$
|
0.68
|
|
Other
data:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
|
10,349
|
|
|
$
|
9,529
|
|
|
$
|
30,088
|
|
|
$
|
29,044
|
|
Pre-tax equity-based
compensation expense
|
$
|
4,031
|
|
|
$
|
2,099
|
|
|
$
|
9,459
|
|
|
$
|
8,699
|
|
|
|
|
|
|
|
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
UNAUDITED
Consolidated Condensed Balance Sheets
(In
thousands)
|
|
|
|
September
30,
|
|
December
31,
|
(Amounts in
thousands)
|
|
2020
|
|
2019
|
|
2019
|
Cash and cash
equivalents
|
|
$
|
311,465
|
|
|
$
|
194,061
|
|
|
$
|
230,210
|
|
Trade accounts
receivable, net
|
|
226,447
|
|
|
180,898
|
|
|
139,364
|
|
Inventories
|
|
260,054
|
|
|
242,730
|
|
|
251,907
|
|
Other current
assets
|
|
22,439
|
|
|
17,565
|
|
|
19,426
|
|
Total current
assets
|
|
820,405
|
|
|
635,254
|
|
|
640,907
|
|
Property, plant and
equipment, net
|
|
246,472
|
|
|
250,950
|
|
|
249,012
|
|
Operating lease
right-of-use assets
|
|
41,453
|
|
|
34,463
|
|
|
35,436
|
|
Goodwill
|
|
133,734
|
|
|
131,191
|
|
|
131,879
|
|
Other noncurrent
assets
|
|
35,801
|
|
|
34,450
|
|
|
38,132
|
|
Total
assets
|
|
$
|
1,277,865
|
|
|
$
|
1,086,308
|
|
|
$
|
1,095,366
|
|
Trade accounts
payable
|
|
$
|
42,271
|
|
|
$
|
40,861
|
|
|
$
|
33,351
|
|
Accrued liabilities
and other current liabilities
|
|
148,890
|
|
|
125,006
|
|
|
125,556
|
|
Total current
liabilities
|
|
191,161
|
|
|
165,867
|
|
|
158,907
|
|
Operating lease
liabilities, net of current portion
|
|
33,354
|
|
|
27,256
|
|
|
27,930
|
|
Long-term debt, net
of current portion
|
|
75,000
|
|
|
—
|
|
|
—
|
|
Deferred income tax
and other long-term liabilities
|
|
17,550
|
|
|
16,238
|
|
|
16,572
|
|
Stockholders'
equity
|
|
960,800
|
|
|
876,947
|
|
|
891,957
|
|
Total liabilities and
stockholders' equity
|
|
$
|
1,277,865
|
|
|
$
|
1,086,308
|
|
|
$
|
1,095,366
|
|
Simpson
Manufacturing Co., Inc. and Subsidiaries UNAUDITED
Segment and Product Group Information (In
thousands)
|
|
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
%
|
|
September
30,
|
|
%
|
(Amounts in
thousands)
|
2020
|
|
2019
|
|
change*
|
|
2020
|
|
2019
|
|
change*
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
316,902
|
|
|
$
|
265,505
|
|
|
19.4%
|
|
$
|
852,759
|
|
|
$
|
746,009
|
|
|
14.3%
|
|
Percentage of total
net sales
|
87.0
|
%
|
|
85.7
|
%
|
|
|
|
87.5
|
%
|
|
85.4
|
%
|
|
|
|
Europe
|
44,766
|
|
|
42,219
|
|
|
6.0%
|
|
114,877
|
|
|
121,647
|
|
|
(5.6)%
|
|
Percentage of total
net sales
|
12.3
|
%
|
|
13.6
|
%
|
|
|
|
11.8
|
%
|
|
13.9
|
%
|
|
|
|
Asia/Pacific
|
2,636
|
|
|
2,208
|
|
|
19.4%
|
|
6,412
|
|
|
6,373
|
|
|
0.6%
|
|
|
$
|
364,304
|
|
|
$
|
309,932
|
|
|
17.5%
|
|
$
|
974,048
|
|
|
$
|
874,029
|
|
|
11.4%
|
Net Sales by
Product Group**
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood
Construction
|
$
|
311,167
|
|
|
$
|
255,869
|
|
|
21.6%
|
|
$
|
834,411
|
|
|
$
|
731,898
|
|
|
14.0%
|
|
Percentage of total
net sales
|
85
|
%
|
|
84
|
%
|
|
|
|
86
|
%
|
|
84
|
%
|
|
|
|
Concrete
Construction
|
52,983
|
|
|
53,947
|
|
|
(1.8)%
|
|
139,299
|
|
|
141,883
|
|
|
(1.8)%
|
|
Percentage of total
net sales
|
15
|
%
|
|
16
|
%
|
|
|
|
14
|
%
|
|
16
|
%
|
|
|
|
Other
|
154
|
|
|
116
|
|
|
N/M
|
|
338
|
|
|
248
|
|
|
N/M
|
|
|
$
|
364,304
|
|
|
$
|
309,932
|
|
|
17.5%
|
|
$
|
974,048
|
|
|
$
|
874,029
|
|
|
11.4%
|
Gross Profit
(Loss) by Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
155,045
|
|
|
$
|
120,974
|
|
|
28.2%
|
|
$
|
409,864
|
|
|
$
|
336,251
|
|
|
21.9%
|
|
North America
gross margin
|
48.9
|
%
|
|
45.6
|
%
|
|
|
|
48.1
|
%
|
|
45.1
|
%
|
|
|
|
Europe
|
16,980
|
|
|
16,214
|
|
|
4.7%
|
|
40,787
|
|
|
43,900
|
|
|
(7.1)%
|
|
Europe gross
margin
|
37.9
|
%
|
|
38.4
|
%
|
|
|
|
35.5
|
%
|
|
36.1
|
%
|
|
|
|
Asia/Pacific
|
1,376
|
|
|
455
|
|
|
N/M
|
|
2,026
|
|
|
1,924
|
|
|
5.3%
|
|
Administrative and
all other
|
(158)
|
|
|
1
|
|
|
N/M
|
|
32
|
|
|
2
|
|
|
N/M
|
|
|
$
|
173,243
|
|
|
$
|
137,644
|
|
|
25.9%
|
|
$
|
452,709
|
|
|
$
|
382,077
|
|
|
18.5%
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
|
87,378
|
|
|
$
|
56,844
|
|
|
53.7%
|
|
$
|
213,135
|
|
|
$
|
139,489
|
|
|
52.8%
|
|
North America
operating margin
|
27.6
|
%
|
|
21.4
|
%
|
|
|
|
25.0
|
%
|
|
18.7
|
%
|
|
|
|
Europe
|
6,074
|
|
|
5,386
|
|
|
12.8%
|
|
7,100
|
|
|
9,645
|
|
|
(26.4)%
|
|
Europe operating
margin
|
13.6
|
%
|
|
12.8
|
%
|
|
|
|
6.2
|
%
|
|
7.9
|
%
|
|
|
|
Asia/Pacific
|
519
|
|
|
(481)
|
|
|
N/M
|
|
(160)
|
|
|
(837)
|
|
|
N/M
|
|
Administrative and
all other
|
(2,628)
|
|
|
(782)
|
|
|
N/M
|
|
(7,170)
|
|
|
(3,654)
|
|
|
N/M
|
|
|
$
|
91,343
|
|
|
$
|
60,967
|
|
|
49.8%
|
|
$
|
212,905
|
|
|
$
|
144,643
|
|
|
47.2%
|
|
*
|
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
View original content to download
multimedia:http://www.prnewswire.com/news-releases/simpson-manufacturing-co-inc-announces-2020-third-quarter-financial-results-301159863.html
SOURCE Simpson Manufacturing Co., Inc.