U.S. Markets closed

Simpson Manufacturing Co., Inc. Announces 2019 First Quarter Financial Results

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") (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.
  • Consolidated gross profit of $110.3 million increased 2.4% from $107.6 million. Gross profit margin decreased to 42.5% from 44.0%.
  • 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%.
  • 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

Simpson Manufacturing Co., Inc. Logo (PRNewsfoto/Simpson Manufacturing Co., Inc.)

 

Cision

View original content to download multimedia:http://www.prnewswire.com/news-releases/simpson-manufacturing-co-inc-announces-2019-first-quarter-financial-results-300840039.html