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Simpson Manufacturing Co., Inc. Announces 2020 Fourth Quarter and Full-Year Financial Results

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PLEASANTON, Calif., Feb. 8, 2021 /PRNewswire/ --

  • Fourth quarter net sales of $293.9 million increased 12.0% year-over-year

  • Fourth quarter net income per diluted common share of $0.68 increased 7.9% year-over-year

  • Declared a $0.23 per share cash dividend

  • 2020 net sales of $1.27 billion increased 11.6% year-over-year

  • 2020 net income per diluted common share of $4.27 increased 43.3% year-over-year

  • Returned $116.2 million to stockholders in 2020 through repurchases of the Company's common stock and dividends

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 fourth quarter and full-year 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 December 31, 2020 with the quarter ended December 31, 2019 or the fiscal year ended December 31, 2020 with the fiscal year ended December 31, 2019.

2020 Fourth Quarter Financial Highlights

  • Consolidated net sales of $293.9 million increased 12.0% from $262.5 million.

  • Consolidated gross profit of $123.7 million increased 12.4% compared to $110.1 million. Consolidated gross profit as a percentage of consolidated net sales increased to 42.1% from 41.9%.

  • Consolidated income from operations of $39.5 million increased 7.8% compared to $36.6 million. The increase was primarily due to the increase in consolidated gross profit, partly offset by higher operating expenses including cash profit sharing and stock-based compensation expense resulting from favorable operating performance in the fourth quarter. Additionally, consolidated income from operations for 2019 included a $5.6 million gain on the sale of a selling and distribution facility, which contributed to the consolidated operating margins decreasing to 13.4% from 13.9%.

  • The Company's effective income tax rate increased to 25.6% from 22.3% due to the release of foreign valuation allowances in 2019.

  • Net income was $29.6 million, or $0.68 per diluted share of the Company's common stock, compared to net income of $28.1 million, or $0.63 per diluted share.

  • Cash flow provided by operating activities increased approximately $21.1 million to $77.5 million from $56.4 million.

  • Cash flow used in investing activities increased approximately $15.8 million to $18.3 million from $2.5 million primarily due to higher proceeds on sale of property and equipment in 2019 including sale of a selling and distribution facility. Capital expenditures were $17.0 million compared to $8.2 million.

2020 Full-Year Financial Highlights

  • Consolidated net sales of $1.27 billion increased 11.6% from $1.14 billion, primarily due to higher sales volumes and were positively affected by approximately $1.5 million in foreign currency translation related mostly to Europe's currencies strengthening against the United States dollar.

  • Consolidated gross profit of $576.4 million increased 17.1% compared to $492.1 million. Consolidated gross profit as a percentage of consolidated net sales increased to 45.5% from 43.3%, primarily due to lower material costs.

  • Consolidated income from operations of $252.4 million increased 39.2% compared to $181.3 million. The increase was primarily due to higher gross profit, partly offset by higher operating expenses including cash profit sharing and stock-based compensation, primarily for favorable operating performance.

  • The Company's effective income tax rate increased to 25.1% from 24.9%.

  • Net income was $187.0 million, or $4.27 per diluted share of the Company's common stock, compared to net income of $134.0 million, or $2.98 per diluted share.

  • Cash flow provided by operating activities increased almost $1.5 million to $207.1 million from $205.7 million.

  • Cash flow used in investing activities increased approximately $11.9 million to $39.9 million from $28.0 million. Capital expenditures decreased slightly to $32.6 million from $32.7 million.

Management Commentary

"I'm extremely pleased with our strong financial and operational performance in 2020, which we delivered in a highly challenging operating environment amidst the COVID-19 pandemic," commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. "Our net sales improved 11.6% over 2019 to $1.27 billion, the highest in our Company's history, driven by strong sales volume. As a result, we generated record earnings of $4.27 per diluted share, up 43.3% over 2019. These results would not have been possible without the hard work and dedication of our employees. Their diligence, including strict adherence to protocols to help minimize the spread of COVID-19, has enabled us to continue operating our business with minimal disruptions from the pandemic."

Mrs. Colonias continued, "Our record 2020 results were further supported by our commitment to position Simpson for long-term sustainable and increasingly profitable growth. In October of 2017, we unveiled a three year 2020 Plan with aggressive targets to maximize our operating efficiencies and drive long term stockholder value. While we elected to withdraw these financial targets in April 2020 due to the significant level of uncertainty surrounding the impact of COVID-19, we continued to execute based on the same underlying principles, focusing on operating efficiencies and cost savings to guide us through the COVID-19 pandemic. At the same time, we also experienced certain tailwinds in our business as a result of COVID-19 related macro-economic conditions; namely, favorable steel prices, temporary reductions in travel and related operating expenses and an increase in repair and remodel activity. Due to the culmination of these factors we were able to meet or exceed nearly all of our ambitious 2020 Plan objectives. We are very proud of this achievement."

Mrs. Colonias concluded, "Our success in executing the 2020 Plan has created a strong foundation for Simpson. We have achieved solid organic growth, rationalized our cost structure to improve company-wide profitability and improved our working capital management and balance sheet position, in turn, creating value for all key Simpson stakeholders."

Corporate Developments

  • During the quarter, the Company repaid the remaining $75 million borrowed from its $300 million revolving credit facility.

  • On January 22, 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.23 per share. The dividend will be payable on April 22, 2021 to the stockholders of record as of April 1, 2021.

  • On December 16, 2020, the Company's Board of Directors authorized the Company to repurchase up to $100.0 million of the Company's common stock effective January 1, 2021 through December 31, 2021.

  • During the quarter, the Company repurchased 150,974 shares of the Company's common stock in the open market at an average price of $89.49 per share, for a total of $13.5 million. For the fiscal year ended December 31, 2020, an aggregate of 1,053,314 shares of the Company's common stock were repurchased on the open market at an average price of $72.33 per share, for a total of $76.2 million of the 2020 share repurchase authorization of $100 million.

Business Outlook

Based on business trends and conditions as of today, February 8, 2021, the Company's outlook for the full fiscal year ending December 31, 2021 is as follows:

  • Operating margin is estimated to be in the range of 16.5% to 18.5%.

  • The effective tax rate is estimated to be in the range of 25.0% to 26.0%, including both federal and state income tax rates.

  • Capital expenditures are estimated to be in the range of $50 million to $55 million.

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 fiscal 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 fourth quarter 2020 financial results conference call on Monday, February 8, 2021, 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/player/index.php?id=143082 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, February 22, 2021, by dialing (844) 512–2921 (U.S. and Canada) or (412) 317–6671 (International) and entering the conference ID: 13715193. 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, June 30, 2020, and September 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
December 31,


Twelve Months Ended
December 31,


2020


2019


2020


2019

Net sales

$

293,897



$

262,510



$

1,267,945



$

1,136,539


Cost of sales

170,222



152,457



691,561



644,409


Gross profit

123,675



110,053



576,384



492,130


Operating expenses:








Research and development and engineering expense

12,947



11,771



50,807



47,058


Selling expense

27,760



28,097



112,517



112,568


General and administrative expense

43,633



39,333



161,029



157,274


Total operating expenses

84,340



79,201



324,353



316,900


Gain on disposal of assets

(123)



(5,759)



(332)



(6,024)


Income from operations

39,458



36,611



252,363



181,254


Interest income (expense), net and other

403



(503)



(2,799)



(2,897)


Income before taxes

39,861



36,108



249,564



178,357


Provision for income taxes

10,223



8,051



62,564



44,375


Net income

$

29,638



$

28,057



$

187,000



$

133,982


Earnings per common share:








Basic

$

0.68



$

0.63



$

4.28



$

3.00


Diluted

$

0.68



$

0.63



$

4.27



$

2.98


Weighted average shares outstanding:








Basic

43,501



44,466



43,709



44,735


Diluted

43,647



44,684



43,841



44,921


Other data:








Depreciation and amortization

$

8,679



$

9,358



$

38,767



$

38,402


Pre-tax equity-based compensation expense

4,047



1,735



13,506



10,434


















Simpson Manufacturing Co., Inc. and Subsidiaries
UNAUDITED Consolidated Condensed Balance Sheets
(In thousands)




December 31,




2020


2019


Cash and short-term investments


$

274,639



$

230,210



Trade accounts receivable, net


165,128



139,364



Inventories


283,742



251,907



Other current assets


29,630



19,426



Total current assets


753,139



640,907



Property, plant and equipment, net


255,184



249,012



Operating lease right-of-use assets


45,792



35,436



Goodwill


135,844



131,879



Other noncurrent assets


42,610



38,132



Total assets


$

1,232,569



$

1,095,366



Trade accounts payable


$

48,271



$

33,351



Other current liabilities


145,790



125,556



Total current liabilities


194,061



158,907



Operating lease liabilities, net of current portion


37,199



27,930



Deferred income tax and other long-term liabilities


20,366



16,572



Stockholders' equity


980,943



891,957



Total liabilities and stockholders' equity


$

1,232,569



$

1,095,366



Simpson Manufacturing Co., Inc. and Subsidiaries
UNAUDITED Segment and Product Group Information
(In thousands)





Three Months Ended




Twelve Months Ended






December 31,


%


December 31,


%


2020


2019


change *


2020


2019


change *

Net Sales by Reporting Segment













North America

$

249,131



$

226,840



9.8%


$

1,101,891



$

972,849



13.3%


Percentage of total net sales

84.8

%


86.4

%




86.9

%


85.6

%




Europe

41,836



33,497



24.9%


156,713



155,144



1.0%


Percentage of total net sales

14.2

%


12.8

%




12.4

%


13.7

%




Asia/Pacific

2,930



2,173



34.8%


9,341



8,546



9.3%


Percentage of total net sales

1.0

%


0.8

%




0.7

%


0.8

%





Total

$

293,897



$

262,510



12.0%


$

1,267,945



$

1,136,539



11.6%

Net Sales by Product Group**













Wood Construction

$

248,365



$

216,870



15%


$

1,082,577



$

948,768



14%


Percentage of total net sales

85

%


83

%




85

%


84

%




Concrete Construction

45,332



45,578



(1)%


184,631



187,462



(2)%


Percentage of total net sales

15

%


17

%




15

%


16

%




Other

199



62



N/M


437



309



N/M



Total

$

293,897



$

262,510



12%


$

1,267,945



$

1,136,539



12%

Gross Profit by Reporting Segment













North America

$

107,517



$

99,487



8.1%


$

517,380



$

435,738



18.7%


North America gross profit margin

43.2

%


43.9

%




47.0

%


44.8

%




Europe

14,754



10,006



47.5%


55,541



53,906



3.0%


Europe gross profit margin

35.3

%


29.9

%




35.4

%


35.3

%




Asia/Pacific

1,450



768



N/M


3,477



2,692



N/M


Administrative and all other

(46)



(208)



N/M


(14)



(206)



N/M



Total

$

123,675



$

110,053



12.4%


$

576,384



$

492,130



17.1%

Income (Loss) from Operations













North America

$

36,117



$

36,783



(1.8)%


$

249,252



$

176,329



41.4%


North America operating profit margin

14.5

%


16.2

%




22.6

%


18.1

%




Europe

1,296



(2,827)



145.8%


8,396



6,817



23.2%


Europe operating profit (loss) margin

3.1

%


(8.4)

%




5.4

%


4.4

%




Asia/Pacific

468



105



N/M


308



(731)



N/M


Administrative and all other

1,577



2,550



N/M


(5,593)



(1,161)



N/M



Total

$

39,458



$

36,611



7.8%


$

252,363



$

181,254



39.2%





*

Unfavorable percentage changes are presented in parentheses.


**

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

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