PLEASANTON, Calif., Oct. 24,
2022 /PRNewswire/ --
- Net sales of $553.7 million
increased 39.6% year-over-year
- Income from operations of $122.8
million increased 22.1% year-over-year
- Diluted earnings per share of $2.06 increased 20.8% year-over-year
- Repurchased $28.3 million of
the Company's common stock during the quarter
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 2022. 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).
Beginning in 2022, the Company changed its presentation for both
the North America and the
Administrative and all other segment's statement of operations to
display allocated expenses and management fees as a separate item
below income from operations. During 2021, allocated expenses and
management fees between the two segments were previously included
in operating expenses and in income from operations and have been
adjusted herein to conform to the 2022 presentation. Consolidated
income from operations, income before tax and net income for all
periods presented below are not affected by the change in
presentation.
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, 2022, with the quarter ended September 30,
2021 and include the results of the acquisition of FIXCO Invest
S.A.S ("ETANCO") on April 1,
2022.
2022 Third Quarter Financial Highlights
- Consolidated net sales of $553.7
million increased 39.6% from $396.7
million.
-
- North America net sales of
$437.8 million increased 29.3% from
$338.6 million, mostly due to product
price increases throughout 2021 in an effort to offset rising raw
material costs, as well as higher sales volume.
- Europe net sales of
$111.9 million increased 104.1% from
$54.8 million, primarily due to the
acquisition of ETANCO, which contributed $67.5 million in net sales, along with product
price increases, mostly offset by lower volumes and the negative
effect of approximately $7.9 million
in foreign currency translation.
- Consolidated gross profit of $244.5
million increased 23.5% from $198.0
million. Gross margin decreased to 44.2% from 49.9%.
-
- North America gross margin
decreased to 47.5% from 52.1%, primarily from higher raw material
costs, factory and overhead and labor, as a percentage of net
sales, partly offset by product price increases throughout
2021.
- Europe gross margin decreased
to 31.5% from 37.7%. Europe gross
profit of $35.2 million included
$19.4 million from the acquisition of
ETANCO, which is net of a non-recurring $2.9
million in fair-value adjustments for inventory costs as a
result of purchase accounting.
- Consolidated income from operations of $122.8 million increased 22.1% from $100.6 million. The increase was primarily due to
the increase in consolidated gross profit, partly offset by higher
operating expenses, including $15.7
million attributable to ETANCO, and $1.9 million for integration costs also related
to ETANCO. Consolidated operating margin decreased to 22.2% from
25.4%.
-
- North America income from
operations of $127.3 million
increased $27.1 million from
$100.2 million. The increase was
primarily due to higher gross profit with operating expenses nearly
flat.
- Europe income from operations
of $6.1 million decreased
$1.4 million from $7.5 million. This includes ETANCO's operating
income of $1.8 million which is net
of $2.9 million in inventory
adjustments as noted above, $4.2
million of amortization expense on acquired intangible
assets and $1.9 million for
integration costs for a total of $9.0
million. The Company continues to work on integrating ETANCO
into its operations. Plans have been developed to realize the
Company's previously identified synergies in the years ahead which
will result in additional costs in 2022 and 2023. The Company
remains well positioned to capture meaningful benefits from the
synergies, subject to changing macroeconomic circumstances, which
will delay some of the synergy opportunities.
- Net income was $88.2 million, or
$2.06 per diluted share of the
Company's common stock, compared to net income of $73.8 million, or $1.70 per diluted share. Net income for the
quarter ended September 30, 2022,
includes $3.0 million of net interest
expense primarily on the Company's borrowings for its acquisition
of ETANCO.
- Cash flow provided by operating activities increased
approximately $79.5 million from
$40.5 million to $120.0 million, primarily from increases in net
income and a decrease in working capital.
- Cash flow used in investing activities decreased
approximately $4.1 million from
$15.0 million to $10.9 million. Capital expenditures were
approximately $10.0 million compared
to $12.0 million.
Management Commentary
"Solid operational execution against our strategic plan during
the third quarter led to continued strong financial results despite
the challenging macroeconomic backdrop," commented Karen Colonias, Chief Executive Officer of
Simpson Manufacturing Co., Inc. "Positive trends for both volume
and pricing led to increased net sales in North America over the prior year quarter,
which had lower volume. In Europe,
sales benefitted primarily from the contribution from ETANCO, which
we have continued to successfully integrate on-track with our
internal plan. In addition, we made solid traction during the
quarter by advancing our key growth initiatives forward and
continuing to educate building industry professionals on the
benefits of Simpson's solutions which resulted in key wins for mass
timber and building technology."
Ms. Colonias concluded, "I believe the Company is
well-positioned to grow and thrive in the years ahead given the
strength of our people, culture and values, as well as our
diversified portfolio of solutions for our customers. To drive
longer-term growth, we are focused on facility upgrades and
expansions to ensure we have ample capacity to meet our customers'
needs locally as well as to improve our service, production
efficiencies and safety in the workplace. I am confident we can
continue our above market growth relative to U.S. housing starts in
fiscal 2022 and that we can achieve our 2025 Company Ambitions,
even when considering softer housing market forecasts."
Corporate Developments
- On September 8, 2022, the Company
announced that Karen Colonias will
step down from her position as Chief Executive Officer as part of
Simpson's planned leadership succession, effective December 31, 2022. Simpson's Board of Directors
unanimously elected Michael Olosky,
54, current President and Chief Operating Officer, to succeed Ms.
Colonias as Chief Executive Officer, effective January 1, 2023. In connection with his
promotion, Mr. Olosky will also join the Company's board of
directors on January 1, 2023. Ms.
Colonias will remain employed as an Executive Advisor to assist
with a smooth and orderly transition until her retirement on
June 30, 2023. Ms. Colonias will
continue to serve as a member of Simpson's board of directors until
the 2023 annual meeting of stockholders.
- During the third quarter of 2022, the Company repurchased
308,500 shares of common stock in the open market at an average
price of $91.67 per share, for a
total of $28.3 million. As of
September 30, 2022, approximately
$25.4 million remained available for
repurchase under the Company's previously announced $100.0 million share repurchase authorization
(which expires at the end of 2022).
- On October 21, 2022, the
Company's Board of Directors (the "Board") declared a quarterly
cash dividend of $0.26 per share,
estimated to be $11.1 million in
total. The dividend will be payable on January 26, 2023, to the Company's stockholders
of record on January 5, 2023.
Business Outlook
The Company has updated its 2022 financial outlook based on
three quarters of financial information, which includes the
acquisition of ETANCO, to reflect its latest expectations regarding
demand trends, raw material costs and operating expenses. Based on
business trends and conditions as of today, October 24, 2022, the Company's outlook for the
full fiscal year ending December 31,
2022 is as follows:
- Operating margin is expected to be in the range of 20.0% to
21.0%, in-line with its more recent historical average as the
Company has better visibility on raw material costs and expected
results from its acquisition of ETANCO. The revised outlook
includes $16.0 to $18.0 million in expected integration and
transaction costs for the acquisition.
- Interest expense on the outstanding $250.0 million Revolving Credit Facility and Term
Loans, which had initial borrowings of $450.0 million, is expected to be approximately
$9.8 million, including the benefit
from interest rate and cross currency swaps mitigating
substantially all of the volatility from changes in interest
rates.
- The effective tax rate is expected to be in the range of 25.0%
to 26.0%.
- Capital expenditures are expected to be in the range of
$55.0 million to $65.0 million.
Conference Call Details
Investors, analysts and other interested parties are invited to
join the Company's third quarter of 2022 financial results
conference call on Monday, October 24, 2022, 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
https://viavid.webcasts.com/starthere.jsp?ei=1573952&tp_key=bb5a74da29
or a link on the Company's website at ir.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, November 7, 2022, by dialing (844) 512–2921 (U.S.
and Canada) or (412) 317–6671
(International) and entering the conference ID: 1373330. The
webcast will remain posted on the Investor Relations section of
Simpson's website at ir.simpsonmfg.com 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 ir.simpsonmfg.com.
About Simpson Manufacturing Co., Inc.
Simpson Manufacturing Co., Inc., headquartered in Pleasanton, California, through its
subsidiaries, including Simpson Strong-Tie Company Inc., designs,
engineers and is a leading manufacturer of wood construction
products, including connectors, truss plates, fastening systems,
fasteners and shear walls, and concrete construction products,
including adhesives, specialty chemicals, mechanical anchors,
powder actuated tools and reinforcing fiber materials. The Company
primarily supplies its building product solutions to both the
residential and commercial markets in North America and Europe. 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 at ir.simpsonmfg.com.
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 2IE 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," "outlook," "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 are all statements other than those of historical fact
and 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 and market growth, comparable sales, earnings and
performance, stockholder value, capital expenditures, cash flows,
the housing market, the home improvement industry, demand for
services, share repurchases, the integration of the acquisition
of ETANCO, 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. 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, risks 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
prolonged impact of the COVID-19 pandemic on our operations and
supply chain, the operations of our customers, suppliers and
business partners, and the successful integration of ETANCO, as
well as those discussed in the "Risk Factors" and " Management's
Discussion and Analysis of Financial Condition and Results of
Operations" sections of our most recent Annual Report on Form 10-K,
subsequent Quarterly Reports on Form 10-Q and other reports we file
with the SEC.
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, except as may be required by law.
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,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net sales
|
$
553,662
|
|
$
396,738
|
|
$
1,640,464
|
|
$ 1,154,661
|
Cost of
sales
|
309,139
|
|
198,706
|
|
899,828
|
|
597,901
|
Gross
profit
|
244,523
|
|
198,032
|
|
740,636
|
|
556,760
|
Research and
development and engineering expense
|
17,084
|
|
14,562
|
|
49,892
|
|
43,321
|
Selling
expense
|
42,539
|
|
35,063
|
|
124,449
|
|
99,053
|
General and
administrative expense
|
60,319
|
|
47,792
|
|
172,511
|
|
143,767
|
Total operating
expenses
|
119,942
|
|
97,417
|
|
346,852
|
|
286,141
|
Acquisition and
integration related costs
|
1,866
|
|
—
|
|
14,681
|
|
—
|
Gain on disposal of
assets
|
(100)
|
|
(4)
|
|
(1,227)
|
|
(112)
|
Income from
operations
|
122,815
|
|
100,619
|
|
380,330
|
|
270,731
|
Interest expense, net
and other
|
(2,983)
|
|
(314)
|
|
(6,568)
|
|
(1,079)
|
Other & foreign
exchange loss, net
|
(1,707)
|
|
(532)
|
|
(3,814)
|
|
(4,180)
|
Income before
taxes
|
118,125
|
|
99,773
|
|
369,948
|
|
265,472
|
Provision for income
taxes
|
29,882
|
|
25,995
|
|
93,559
|
|
68,822
|
Net income
|
$
88,243
|
|
$
73,778
|
|
$
276,389
|
|
$
196,650
|
Earnings per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
2.06
|
|
$
1.70
|
|
$
6.42
|
|
$
4.54
|
Diluted
|
$
2.06
|
|
$
1.70
|
|
$
6.40
|
|
$
4.51
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
Basic
|
42,813
|
|
43,276
|
|
43,044
|
|
43,362
|
Diluted
|
42,916
|
|
43,485
|
|
43,173
|
|
43,575
|
Cash dividend declared
per common share
|
$
0.26
|
|
$
0.25
|
|
$
0.77
|
|
$
0.73
|
Other data:
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
$
16,197
|
|
$
10,439
|
|
$
44,521
|
|
$
33,192
|
Pre-tax equity-based
compensation expense
|
$
3,546
|
|
$
3,146
|
|
$
12,986
|
|
$
13,391
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
UNAUDITED
Consolidated Condensed Balance Sheets
(In
thousands)
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2022
|
|
2021
|
|
2021
|
Cash and cash
equivalents
|
|
$
309,262
|
|
$
294,180
|
|
$
301,155
|
Trade accounts
receivable, net
|
|
334,449
|
|
236,535
|
|
231,021
|
Inventories
|
|
540,020
|
|
385,512
|
|
443,756
|
Other current
assets
|
|
48,416
|
|
33,427
|
|
22,903
|
Total current
assets
|
|
1,232,147
|
|
949,654
|
|
998,835
|
Property, plant and
equipment, net
|
|
341,233
|
|
255,547
|
|
259,869
|
Operating lease
right-of-use assets
|
|
48,196
|
|
41,513
|
|
45,438
|
Goodwill
|
|
467,990
|
|
133,495
|
|
134,022
|
Intangible assets,
net
|
|
330,533
|
|
22,077
|
|
26,269
|
Other noncurrent
assets
|
|
84,159
|
|
19,783
|
|
19,692
|
Total assets
|
|
$
2,504,258
|
|
$
1,422,069
|
|
$
1,484,125
|
Trade accounts
payable
|
|
$
98,646
|
|
$
62,405
|
|
$
57,215
|
Long-term debt, current
portion
|
|
22,500
|
|
—
|
|
—
|
Accrued liabilities and
other current liabilities
|
|
225,020
|
|
183,072
|
|
187,387
|
Total current
liabilities
|
|
346,166
|
|
245,477
|
|
244,602
|
Operating lease
liabilities, net of current portion
|
|
38,650
|
|
33,063
|
|
37,091
|
Long-term debt, net of
current portion
|
|
660,164
|
|
—
|
|
—
|
Deferred income tax and
other long-term liabilities
|
|
121,723
|
|
20,526
|
|
18,434
|
Stockholders'
equity
|
|
1,337,555
|
|
1,123,003
|
|
1,183,998
|
Total liabilities and
stockholders' equity
|
|
$
2,504,258
|
|
$
1,422,069
|
|
$
1,484,125
|
Simpson
Manufacturing Co., Inc. and Subsidiaries
UNAUDITED Segment
and Product Group Information
(In
thousands)
|
|
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
|
|
|
|
September
30,
|
|
%
|
|
September
30,
|
|
%
|
|
2022
|
|
2021
|
|
change*
|
|
2022
|
|
2021
|
|
change*
|
Net Sales by
Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
437,770
|
|
$ 338,591
|
|
29.3 %
|
|
$ 1,332,911
|
|
$
989,711
|
|
34.7 %
|
|
Percentage of total
net sales
|
79.1 %
|
|
85.3 %
|
|
|
|
81.3 %
|
|
85.7 %
|
|
|
|
Europe
|
111,903
|
|
54,832
|
|
104.1 %
|
|
296,592
|
|
155,567
|
|
90.7 %
|
|
Percentage of total
net sales
|
20.2 %
|
|
13.8 %
|
|
|
|
18.1 %
|
|
13.5 %
|
|
|
|
Asia/Pacific
|
3,989
|
|
3,315
|
|
20.3 %
|
|
10,961
|
|
9,383
|
|
16.8 %
|
|
|
$
553,662
|
|
$ 396,738
|
|
39.6 %
|
|
$ 1,640,464
|
|
$
1,154,661
|
|
42.1 %
|
Net Sales by Product
Group**
|
|
|
|
|
|
|
|
|
|
|
|
|
Wood
Construction
|
$
478,554
|
|
$ 338,896
|
|
41.2 %
|
|
$ 1,428,745
|
|
$
996,261
|
|
43.4 %
|
|
Percentage of total
net sales
|
86.4 %
|
|
85.4 %
|
|
|
|
87.1 %
|
|
86.3 %
|
|
|
|
Concrete
Construction
|
74,933
|
|
57,589
|
|
30.1 %
|
|
211,119
|
|
157,417
|
|
34.1 %
|
|
Percentage of total
net sales
|
13.5 %
|
|
14.5 %
|
|
|
|
12.9 %
|
|
13.6 %
|
|
|
|
Other
|
175
|
|
253
|
|
N/M
|
|
600
|
|
983
|
|
N/M
|
|
|
$
553,662
|
|
$ 396,738
|
|
39.6 %
|
|
$ 1,640,464
|
|
$
1,154,661
|
|
42.1 %
|
Gross Profit (Loss)
by Reporting Segment
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
207,948
|
|
$ 176,256
|
|
18.0 %
|
|
$
645,166
|
|
$
497,070
|
|
29.8 %
|
|
North America
gross margin
|
47.5 %
|
|
52.1 %
|
|
|
|
48.4 %
|
|
50.2 %
|
|
|
|
Europe
|
35,215
|
|
20,680
|
|
70.3 %
|
|
91,692
|
|
56,228
|
|
63.1 %
|
|
Europe gross
margin
|
31.5 %
|
|
37.7 %
|
|
|
|
30.9 %
|
|
36.1 %
|
|
|
|
Asia/Pacific
|
1,402
|
|
1,139
|
|
N/M
|
|
3,948
|
|
3,590
|
|
N/M
|
|
Administrative and all
other
|
(42)
|
|
(43)
|
|
N/M
|
|
(170)
|
|
(128)
|
|
N/M
|
|
|
$
244,523
|
|
$
198,032
|
|
23.5 %
|
|
$
740,636
|
|
$
556,760
|
|
33.0 %
|
Income (Loss) from
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
North
America
|
$
127,318
|
|
$ 100,229
|
|
27.0 %
|
|
$
400,336
|
|
$
274,444
|
|
45.9 %
|
|
North America
operating margin
|
29.1 %
|
|
29.6 %
|
|
|
|
30.0 %
|
|
27.7 %
|
|
|
|
Europe
|
6,149
|
|
7,517
|
|
(18.2) %
|
|
10,339
|
|
15,681
|
|
(34.1) %
|
|
Europe operating
margin
|
5.5 %
|
|
13.7 %
|
|
|
|
3.5 %
|
|
10.1 %
|
|
|
|
Asia/Pacific
|
234
|
|
313
|
|
N/M
|
|
898
|
|
941
|
|
N/M
|
|
Administrative and all
other
|
(10,886)
|
|
(7,440)
|
|
N/M
|
|
(31,243)
|
|
(20,335)
|
|
N/M
|
|
|
$
122,815
|
|
$
100,619
|
|
22.1 %
|
|
$
380,330
|
|
$
270,731
|
|
40.5 %
|
|
|
|
|
*
|
Unfavorable percentage
changes are presented in parentheses, if any.
|
|
**
|
The Company manages its
business by geographic segment but presents 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.