Simpson Manufacturing Co., Inc. Announces Second Quarter 2017 Financial Results
PLEASANTON, Calif., July 27, 2017 /PRNewswire/ --
Second quarter highlights
-- Consolidated net sales of $263.0 million increased 14% year-over-year
-- Diluted earnings per share of $0.59 per share increased 9%
year-over-year
-- Declared quarterly cash dividend of $0.21 per share
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 2017. Unless otherwise stated, the Company's results below, when referencing "recently acquired businesses" or "acquired net sales" refer to Multi Services Dêcoupe S.A. (acquired August 2016), Gbo Fastening Systems AB (acquired January 2017), and CG Visions, Inc. (acquired January 2017), or net sales of such acquired businesses, respectively. Refer to the "Segment Reporting" table below for additional segment information (including information about the Company's Asia/Pacific segment and Administrative and All Other segment).
Second Quarter 2017 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 second quarter of 2017 with the second quarter of 2016.
-- Consolidated net sales of $263.0 million increased 14% compared to
$230.0 million. Recently acquired businesses as a whole accounted for
$15.0 million (45%) of the increased net sales.
-- North America net sales of $215.7 million increased 9% compared to
$197.3 million, primarily due to increases in sales volumes as well
as in average net sales unit prices. Canada's net sales were flat
for the quarter, primarily due to the negative effect of foreign
currency translations from the weakening Canadian dollar against the
United States dollar. In local currency, Canada net sales increased,
primarily due to increases in sales volumes.
-- Europe net sales of $45.2 million increased 47% compared to $30.8
million, primarily due to acquired net sales of $13.5 million, which
accounted for 94% of the increased net sales in Europe. Net sales
were negatively affected by approximately $1.1 million in foreign
currency translations primarily related to the weakening of the
British pound against the United States dollar. In local currency,
Europe net sales increased due to increases in sales volumes as well
as in average net sales unit prices.
-- Consolidated gross profit of $123.5 million increased 11% compared to
$111.5 million. Gross profit as a percentage of net sales decreased to
47% from 48%. Recently acquired businesses had an average gross profit
margin of 32% in the second quarter of 2017.
-- North America gross profit as a percentage of net sales decreased to
49% from 50%.
-- Europe gross profit as a percentage of net sales decreased to 37%
from 41%, primarily due to the recently acquired businesses.
-- Consolidated income from operations of $45.1 million increased 10%
compared to $40.9 million. As a percentage of net sales, consolidated
income from operations decreased to 17% from 18%. Recently acquired
businesses as a whole recorded $0.1 million in operating losses in the
second quarter of 2017, primarily due to purchase accounting adjustments
such as intangible amortization expense.
-- North America income from operations of $42.0 million increased 5%
compared to $40.1 million.
-- Europe income from operations of $4.1 million increased 118%
compared to $1.9 million.
-- Consolidated net income was $28.2 million, or $0.59 per diluted share of
the Company's common stock, compared to net income of $26.2 million, or
$0.54 per diluted share of the Company's common stock. Recently acquired
businesses as a whole recorded a net loss of $0.3 million in the second
quarter of 2017.
Year-to-Date (6-month) 2017 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 six months ended June 30, 2017 with the six months ended June 30, 2016.
-- Consolidated net sales of $482.9 million increased 12% compared to
$429.5 million. Recently acquired businesses as a whole accounted for
$27.6 million (52%) of the increased net sales.
-- North America net sales of $399.5 million increased 7% compared to
$371.7 million, primarily due to increases in sales volumes, as well
as average net sales unit prices. Canada's net sales increased,
primarily due to increased volumes.
-- Europe net sales of $79.6 million increased 46% compared to $54.5
million, primarily due to acquired net sales of $24.6 million, which
accounted for 98% of the increased net sales. Net sales were
negatively affected by approximately $2.3 million in foreign
currency translations, primarily related to the weakening of the
British pound against the United States dollar. In local currency,
Europe net sales increased due to increases in sales volumes as well
as in average net sales unit prices.
-- Consolidated gross profit of $223.7 million increased 10% compared to
$204.0 million. Gross profit as a percentage of net sales decreased to
46% from 47%. Recently acquired businesses had an average gross profit
margin of 31% in the six months ended June 30, 2017.
-- North America gross profit as a percentage of net sales remained
49%.
-- Europe gross profit as a percentage of net sales decreased to 35%
from 39%, primarily due to the recently acquired businesses.
-- Consolidated income from operations of $67.8 million increased slightly
compared to $67.6 million. As a percentage of net sales, consolidated
income from operations decreased to 14% from 16%. Recently acquired
businesses as a whole recorded $0.2 million in operating losses in the
six months ended June 30, 2017, primarily due to purchase accounting
adjustments such as intangible amortization expense.
-- North America income from operations of $68.8 million decreased 3%
compared to $70.6 million.
-- Europe income from operations of $2.3 million increased 720%
compared to $0.3 million.
-- Consolidated net income was $51.3 million, or $1.07 per diluted share of
the Company's common stock, compared to net income of $42.5 million, or
$0.88 per diluted share of the Company's common stock. Recently acquired
businesses as a whole contributed net income of $7.8 million in the six
months ended June 30, 2017, as a result of an $8.4 million gain on a
bargain purchase recorded in the first quarter of 2017.
Management Commentary
"Our second quarter financial results, while fundamentally strong, reflect the various investments we have been making in our business, including the development of our truss software offering, growing our market share in Europe with the associated recent acquisitions and working to deepen our foothold in the concrete repair and protection space," commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. "Beyond these initiatives, with an industry-leading position in the U.S. connector market, the wood construction products are core to our operations and we remain dedicated to continuing to grow our offering in the single and multi-family residential and commercial space. Further, we are intently focused on reducing our total selling, general and administrative expenses as a percentage of net sales which were under 30% for the quarter and down 118 basis points from the prior year quarter. While we do not expect SG&A as a percentage of net sales to be reduced to the 22% level we achieved in 2006, we are focusing on ways to be able to better leverage our expenses as we begin to monetize our various strategic initiatives."
Mrs. Colonias concluded, "We continue to have a strong financial position which affords us the flexibility and capability to continue investing in our long-term strategy to increase shareholder value and to return capital to our valued shareholders. Despite maintaining an industry-leading gross profit margin and operating income margin, the investments we have been making in our strategic initiatives have yet to fully materialize and reflect the operating leverage and earnings power that Simpson Manufacturing strives to achieve. Over the coming quarters, we plan to provide additional metrics and targets to help our investors to better measure our success and progress on these initiatives."
Corporate Developments
-- On July 13, 2017, the Company's Board of Directors (the "Board")
declared a cash dividend of $0.21 per share. The dividend will be
payable on October 26, 2017 to shareholders of record as of October 5,
2017.
-- During the second quarter of 2017, the Company repurchased 425,000
shares of the Company's common stock pursuant to an accelerated stock
repurchase program, at an average price of $41.28 per share, for a total
of $17.5 million. At June 30, 2017, approximately $54.0 million remained
available for repurchase under the August 2016 Board authorization for
repurchasing shares of the Company's common stock having an aggregate
value of up to $125.0 million through December 31, 2017.
-- At the Company's annual meeting on May 16, 2017, Mr. Michael Bless was
elected as an independent director to the Board. On the same day, Mr.
Bless was appointed by the Board to both the Audit and Acquisitions and
Strategy Committees. Mr. Bless has extensive board and operational
experience and currently serves as President and Chief Executive Officer
of Century Aluminum Co., a company in a related industry which
complements Simpson's existing Board membership. The Board believes he
will provide valuable perspectives and insights to enhance the execution
of the Company's growth strategies.
Business Outlook
The Company is currently uncertain whether the market price for steel will remain stable during the third quarter of 2017.
Subject to changing economic conditions, future events and circumstances, the Company is reiterating its outlook for gross profit margin to be in the range of 45% to 46% for the full year ending December 31, 2017.
Conference Call Details
Investors, analysts and other interested parties are invited to join the Company's second quarter 2017 financial results conference call on Friday, July 28, 2017 at 9:00 am Eastern Time (6:00 am 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 a link on the Company's website at www.simpsonmfg.com. The webcast will remain posted on the Company's website for 90 days.
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 above regarding steel prices and the Company's gross profit margin outlook. 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 we furnish 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) general business cycles and construction business conditions; (ii) customer acceptance of the Company's products; (iii) product liability claims, contractual liability, engineering and design liability and similar liabilities or claims, (iv) relationships with key customers; (v) materials and manufacturing costs; (vi) the financial condition of customers, competitors and suppliers; (vii) technological developments including software development; (viii) increased competition; (ix) changes in industry practices or regulations; (x) litigation risks and actions by activist shareholders, (xi) changes in capital and credit market conditions; (xii) governmental and business conditions in countries where the Company's products are manufactured and sold; (xiii) changes in trade regulations; (xiv) the effect of acquisition activity; (xv) changes in the Company's plans, strategies, objectives, expectations or intentions; and (xvi) 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 urged not to rely on our forward-looking statements in making an investment decision about our securities. We further do 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; reviewed and unaudited data will be included in the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2017, when filed.
Simpson Manufacturing Co., Inc. and Subsidiaries
UNAUDITED Consolidated Statements of Operations
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
(Amounts in thousands,
except per share
data) 2017 2016 2017 2016
---- ---- ---- ----
Net sales $263,002 $229,973 $482,869 $429,496
Cost of sales 139,477 118,486 259,188 225,486
------- ------- -------
Gross profit 123,525 111,487 223,681 204,010
------- ------- ------- -------
Research and
development and
engineering expense 13,264 11,452 26,371 22,875
Selling expense 28,511 24,822 57,994 50,009
General and
administrative
expense 36,563 34,945 71,549 64,243
Loss (gain) on
disposal of assets 50 (656) (1) (682)
--- ---- --- ----
Income from operations 45,137 40,924 67,768 67,565
Loss in equity method
investment, before
tax (12) - (41) -
Interest expense, net (199) (83) (388) (318)
Gain on bargain
purchase of a
business - - 8,388 -
--- --- ----- ---
Income before taxes 44,926 40,841 75,727 67,247
Provision for income
taxes 16,712 14,640 24,392 24,703
------ ------ ------ ------
Net income $28,214 $26,201 $51,335 $42,544
======= ======= ======= =======
Earnings per common
share:
Basic $0.59 $0.54 $1.08 $0.88
Diluted $0.59 $0.54 $1.07 $0.88
Weighted average
shares outstanding:
Basic 47,634 48,399 47,634 48,353
Diluted 47,920 48,605 47,922 48,533
Cash dividend declared
per common share $0.21 $0.18 $0.39 $0.34
Other data:
Depreciation and
amortization $8,572 $7,442 $16,935 $14,878
Pre-tax equity-based
compensation expense $3,209 $3,573 $11,185 $6,323
Simpson Manufacturing Co., Inc. and Subsidiaries
UNAUDITED Consolidated Condensed Balance Sheets
(In thousands)
June 30, December 31,
------------
(Amounts in thousands) 2017 2016 2016
---- ---- ----
Cash and cash equivalents $140,950 $246,337 $226,537
Trade accounts receivable, net 172,331 144,916 112,423
Inventories 265,293 218,164 232,274
Assets held for sale 308 - -
Other current assets 17,457 11,482 14,013
------ ------ ------
Total current assets 596,339 620,899 585,247
Property, plant and equipment,
net 261,362 219,391 232,810
Goodwill 137,160 124,993 124,479
Other noncurrent assets 46,616 34,256 37,438
------
Total assets $1,041,477 $999,539 $979,974
========== ======== ========
Trade accounts payable $37,742 $27,069 $27,674
Capital lease obligation -
current portion 525 - -
Other current liabilities 95,989 85,274 81,122
------ ------ ------
Total current liabilities 134,256 112,343 108,796
Other long-term liabilities -
net of current portion 7,810 4,920 5,336
Stockholders' equity 899,411 882,276 865,842
------- -------
Total liabilities and
stockholders' equity $1,041,477 $999,539 $979,974
========== ======== ========
Simpson Manufacturing Co., Inc. and Subsidiaries
UNAUDITED Segment and Product Group Sales Information
(In thousands)
Three Months Ended Six Months Ended
June 30, % June 30, %
(Amounts in thousands) 2017 2016 change 2017 2016 change
* *
--- ---
Net Sales by Reporting Segment
North America $215,739 $197,284 9% $399,510 $371,738 7%
Europe 45,234 30,820 47% 79,615 54,518 46%
Asia/Pacific 2,029 1,869 9% 3,744 3,240 16%
Total $263,002 $229,973 14% $482,869 $429,496 12%
======== ======== ======== ========
Net Sales by Product Group**
Wood
Construction $224,013 $196,734 14% $414,890 $368,512 13%
Concrete
Construction 38,917 33,239 17% 67,734 60,983 11%
Other 72 - N/M 245 1 N/M
---
Total $263,002 $229,973 14% $482,869 $429,496 12%
======== ======== ======== ========
Gross Profit (Loss) by Reporting
Segment
North America $106,484 $97,703 9% $195,474 $181,416 8%
Europe 16,809 12,684 33% 27,865 21,246 31%
Asia/Pacific 326 1,050 (69)% 455 1,356 (66)%
Administrative
and all other (94) 50 N/M (113) (8) N/M
----
Total $123,525 $111,487 11% $223,681 $204,010 10%
======== ======== ======== ========
Income (Loss) from Operations
North America $42,011 $40,116 5% $68,778 $70,568 (3)%
Europe 4,138 1,899 118% 2,304 281 720%
Asia/Pacific 71 852 (92)% (124) 1,007 (112)%
Administrative
and all other (1,083) (1,943) N/M (3,190) (4,291) N/M
-------
Total $45,137 $40,924 10% $67,768 $67,565 -%
======= ======= ======= =======
* 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
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SOURCE Simpson Manufacturing Co., Inc.
