PR Newswire
PLEASANTON, Calif., Feb. 4, 2019
PLEASANTON, Calif., Feb. 4, 2019 /PRNewswire/ --
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 2018. 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).
2018 Fourth 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 fourth quarter of 2018 with the fourth quarter of 2017. In the fourth quarter of 2018, the Company recorded an out-of-period adjustment for the fourth quarter of 2017, which increased cost of sales and decreased general and administrative expenses by $0.8 million. Such adjustment only applied to the North America segment, which resulted from recording certain depreciation expense on company-owned real estate as general and administrative expense rather than cost of goods sold. Income from operations and net income for the fourth quarter of 2017 as presented below were not affected by the adjustment. In the fourth quarter of 2018, the Company changed the presentation of its consolidated statement of operations to display foreign exchange gain (loss), net, as a separate item below income from operations. Foreign exchange gain (loss), net, was previously included in general and administrative expenses and in income from operations. Income before tax and net income for the fourth quarter of 2017 presented below were not affected by the change in presentation.
2018 Full-Year 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 year ended December 31, 2018 with the year ended December 31, 2017. In 2018, the Company recorded an out-of-period adjustment for the year ended December 31, 2017, which increased cost of sales and decreased general and administrative expenses by $2.9 million for the year ended December 31, 2017. Such adjustment only applied to the North America segment, which resulted from recording certain depreciation expense on company-owned real estate as general and administrative expense rather than cost of goods sold. Income from operations and net income for the year ended December 31, 2017 as presented below were not affected by the adjustment. In the fourth quarter of 2018, the Company changed its presentation of its consolidated statement of operations to display foreign exchange gain (loss), net, as a separate item below income from operations. Foreign exchange gain (loss), net, was previously included in general and administrative expenses and in income from operations. Income before tax and net income for the year ended December 31, 2017 presented below were not affected by the change in presentation.
Management Commentary
"2018 was a year of positive operational execution at Simpson, as we achieved full year net sales of approximately $1.1 billion, an increase of 10% year-over-year, due to increases in both sales volume and average unit prices," commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. "Our full year gross profit margin of 44.5% was solid, though lower than our projection of between 45.5% to 46.0%, due to an unexpected sharp decline in revenues during December, which resulted in an increase of factory, material and labor costs as a percentage of net sales in our fourth quarter. Looking ahead, we expect demand to remain relatively stable as demand in January was strong, indicating the December buying patterns may have been postponed due to short term uncertainty."
Mrs. Colonias continued, "Our strong sales for the year, combined with our focus on cost containment initiatives, resulted in a 2018 operating income of $176.2 million, an increase of 28% compared to the prior year period. Net income increased by 40% to $129.5 million, and we produced strong earnings of $2.78 per diluted share, an increase of 43% year-over-year. These results represent meaningful progress towards our key financial targets under the 2020 Plan, which we announced in the third quarter of 2017 with a goal of maximizing operating efficiencies and driving long-term shareholder value. Our team has worked hard to execute against these goals, and we thank them for their dedication and commitment. Today we remain focused on achieving our 2020 financial targets. Our 2018 share repurchases of $111.1 million of our common stock, a record for Simpson, reflect our continued confidence in the strength and outlook for our business."
Corporate Developments
Business Outlook
Subject to changing economic conditions, future events and circumstances:
Conference Call Details
Investors, analysts and other interested parties are invited to join the Company's 2018 fourth quarter and full-year financial results conference call on Monday, February 4, 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/player/index.php?id=132732 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 18, 2019, by dialing (844) 512–2921 (U.S. and Canada) or (412) 317–6671 (International) and entering the conference ID: 13686314. 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, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements relating to events or results that may occur in the future are forward-looking statements, including but not limited to, statements or estimates regarding our plans, sales, sales trends, sales growth rates, revenues, profits, costs, working capital, balance sheet, inventories, products (including truss and concrete products as well as software offerings), relationships with contractors and partners (including our collaboration with The Home Depot, Inc.), market strategies, market share, expenses (including operating expenses and research, development and engineering investments), inventory turn rates, cost savings or reduction measures, repatriation of funds, results of operations, tax liabilities, losses, capital spending, housing starts, price changes (including product and raw material prices, such as steel prices), profitability, profit margins, operating income, operating income margin (referring to consolidated income from operations as a percentage of net sales), operating expenses as a percentage of net sales, effective tax rates, depreciation or amortization expenses, amortization periods, capital return (also called return on invested capital), stock repurchases, dividends, compensation arrangements, prospective adoption of new accounting standards, effects of changes in accounting standards, effects and expenses of (including eventual gains or losses related to) mergers and acquisitions and related integrations, effects and expenses of equity investments, effects of changes in foreign exchange rates or interest rates, effects and costs of SAP and other software program implementations (including related expenses, such as capital expenditures, and savings), effects and costs of credit facilities and capital lease obligations, headcount, engagement of consultants, the Company's 2020 Plan and other operating initiatives, the Company's efforts and costs to implement the 2020 Plan and initiatives, the targets and assumptions under the 2020 Plan and such other initiatives (including targets associated with organic compound annual growth rate in consolidated net sales, operating income, operating income margin, operating expenses as a percentage of net sales, cost structure rationalization, improved working capital management, return on invested capital, stock repurchases, and overall balance sheet discipline) and the projected effects and impact of any of the foregoing on our business, financial condition and results of operations. 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. Forward-looking statements are necessarily speculative in nature, are based on numerous assumptions, and involve known and unknown risks, uncertainties and other factors (some of which are beyond our control) that could significantly affect our operations and may cause our actual actions, results, financial condition, performance or achievements to be substantially different from any future actions, results, financial condition, performance or achievements expressed or implied by any such forward-looking statements. Those factors include, but are not limited to: (i) the impact, execution and effectiveness of the Company's current strategic plan, the 2020 Plan, and initiatives the realization of the assumptions made under the plan and the efforts and costs to implement the plan and initiatives; (ii) general economic cycles and construction business conditions including changes in U.S. housing starts; (iii) customer acceptance of our products; (iv) product liability claims, contractual liability, engineering and design liability and similar liabilities or claims, (v) relationships with partners, suppliers and customers and their financial condition; (vi) materials and manufacturing costs; (vii) technological developments, including system updates and conversions; (viii) increased competition; (ix) changes in laws or industry practices; (x) litigation risks and actions by activist shareholders; (xi) changes in market conditions; (xii) governmental and business conditions in countries where our products are manufactured and sold; (xiii) natural disasters and other factors that are beyond the Company's reasonable control; (xiv) changes in trade regulations, treaties or agreements or in U.S. and international taxes, tariffs and duties including those imposed on the Company's income, imports, exports and repatriation of funds; (xv) effects of merger or acquisition activities; (xvi) actual or potential takeover or other change-of-control threats; (xvii) changes in our plans, strategies, objectives, expectations or intentions; and (xviii) other risks and uncertainties indicated from time to time in our filings with the U.S. Securities and Exchange Commission, including the Company's most recent Annual Report on Form 10-K and the Company's most recent Quarterly Report on Form 10-Q under the heading "Item 1A - Risk Factors." 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 any forward-looking statements in reaching any conclusions or making any investment decisions about us or our securities. Except as required by law, we do not intend and undertake no obligation to update, revise or publicly release any updates or revisions to any forward-looking statements hereunder, whether as a result of the receipt of new information, the occurrence of future events, the change of circumstances or otherwise. We further do not accept any responsibility for any projections or reports published by analysts, investors or other third parties. Each of the terms the "Company," "we," "our," "us" and similar terms used herein refer collectively to Simpson Manufacturing Co., Inc., a Delaware corporation and its wholly-owned subsidiaries, including Simpson Strong-Tie Company Inc., unless otherwise stated. The financial information set forth herein is presented on a preliminary unreviewed and unaudited basis; audited financial statements will be included in the Company's Annual Report on Form 10-K for the year ended December 31, 2018, 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 | Twelve Months Ended | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net sales | $ | 241,845 | $ | 231,681 | $ | 1,078,809 | $ | 977,025 | |||||||
Cost of sales | 143,409 | 129,777 | 598,290 | 533,644 | |||||||||||
Gross profit | 98,436 | 101,904 | 480,519 | 443,381 | |||||||||||
Operating expenses: | |||||||||||||||
Research and development and engineering expense | 10,216 | 12,565 | 43,056 | 47,616 | |||||||||||
Selling expense | 26,278 | 28,753 | 109,931 | 114,903 | |||||||||||
General and administrative expense | 41,325 | 36,236 | 155,223 | 143,107 | |||||||||||
Total operating expenses | 77,819 | 77,554 | 308,210 | 305,626 | |||||||||||
Net gain on disposal of assets | (8,810) | (13) | (10,579) | (160) | |||||||||||
Impairment of goodwill | 6,686 | — | 6,686 | — | |||||||||||
Income from operations | 22,741 | 24,363 | 176,202 | 137,915 | |||||||||||
Loss in equity investment, before tax | (11) | (33) | (63) | (86) | |||||||||||
Foreign exchange gain (loss), net | (571) | 342 | 430 | 1,252 | |||||||||||
Interest expense, net | (239) | (104) | (571) | (788) | |||||||||||
Gain on bargain purchase of a business (adjustment) | — | — | — | 6,336 | |||||||||||
Loss on disposal of a business | — | (654) | — | (211) | |||||||||||
Income before taxes | 21,920 | 23,914 | 175,998 | 144,418 | |||||||||||
Provision for income taxes | 6,288 | 10,829 | 46,490 | 51,801 | |||||||||||
Net income | $ | 15,632 | $ | 13,085 | $ | 129,508 | $ | 92,617 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.34 | $ | 0.28 | $ | 2.81 | $ | 1.95 | |||||||
Diluted | $ | 0.34 | $ | 0.27 | $ | 2.78 | $ | 1.94 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 45,357 | 47,307 | 46,132 | 47,486 | |||||||||||
Diluted | 45,774 | 47,594 | 46,527 | 47,774 | |||||||||||
Other data: | |||||||||||||||
Depreciation and amortization | $ | 10,345 | $ | 6,844 | $ | 39,393 | $ | 33,724 | |||||||
Pre-tax equity-based compensation expense | 2,402 | 2,092 | 11,176 | 13,908 | |||||||||||
Simpson Manufacturing Co., Inc. and Subsidiaries | |||||||||
UNAUDITED Consolidated Condensed Balance Sheets | |||||||||
(In thousands) | |||||||||
December 31, | |||||||||
2018 | 2017 | ||||||||
Cash and short-term investments | $ | 160,180 | $ | 168,514 | |||||
Trade accounts receivable, net | 146,052 | 135,958 | |||||||
Inventories | 276,088 | 252,996 | |||||||
Other current assets | 17,198 | 26,473 | |||||||
Total current assets | 599,518 | 583,941 | |||||||
Property, plant and equipment, net | 254,597 | 273,020 | |||||||
Goodwill | 130,250 | 137,140 | |||||||
Other noncurrent assets | 37,287 | 43,422 | |||||||
Total assets | $ | 1,021,652 | $ | 1,037,523 | |||||
Trade accounts payable | $ | 34,361 | $ | 31,536 | |||||
Capital lease obligation - current portion | 1,874 | 1,055 | |||||||
Other current liabilities | 111,475 | 103,900 | |||||||
Total current liabilities | 147,710 | 136,491 | |||||||
Other long-term liabilities - net of current portion | 15,553 | 16,254 | |||||||
Stockholders' equity | 858,389 | 884,778 | |||||||
Total liabilities and stockholders' equity | $ | 1,021,652 | $ | 1,037,523 |
Simpson Manufacturing Co., Inc. and Subsidiaries | |||||||||||||||||||||
UNAUDITED Segment and Product Group Information | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
December 31, | % | December 31, | % | ||||||||||||||||||
2018 | 2017 | change * | 2018 | 2017 | change * | ||||||||||||||||
Net Sales by Reporting Segment | |||||||||||||||||||||
North America | $ | 204,656 | $ | 190,932 | 7% | $ | 910,587 | $ | 803,697 | 13% | |||||||||||
Percentage of total net sales | 85 | % | 82 | % | 84 | % | 82 | % | |||||||||||||
Europe | 34,931 | 38,404 | (9)% | 159,027 | 165,155 | (4)% | |||||||||||||||
Percentage of total net sales | 14 | % | 17 | % | 15 | % | 17 | % | |||||||||||||
Asia/Pacific | 2,258 | 2,345 | (4)% | 9,195 | 8,173 | 13% | |||||||||||||||
Percentage of total net sales | 1 | % | 1 | % | 1 | % | 1 | % | |||||||||||||
Total | $ | 241,845 | $ | 231,681 | 4% | $ | 1,078,809 | $ | 977,025 | 10% | |||||||||||
Net Sales by Product Group** | |||||||||||||||||||||
Wood Construction | $ | 202,323 | $ | 193,993 | 4% | $ | 913,202 | $ | 833,200 | 10% | |||||||||||
Percentage of total net sales | 84 | % | 84 | % | 85 | % | 85 | % | |||||||||||||
Concrete Construction | 39,470 | 37,317 | 6% | 165,317 | 143,102 | 16% | |||||||||||||||
Percentage of total net sales | 16 | % | 16 | % | 15 | % | 15 | % | |||||||||||||
Other | 52 | 371 | N/M | 290 | 723 | N/M | |||||||||||||||
Total | $ | 241,845 | $ | 231,681 | 4% | $ | 1,078,809 | $ | 977,025 | 10% | |||||||||||
Gross Profit by Reporting Segment | |||||||||||||||||||||
North America | $ | 86,556 | $ | 88,292 | (2)% | $ | 422,053 | $ | 383,282 | 10% | |||||||||||
North America gross profit margin | 42 | % | 46 | % | 46 | % | 48 | % | |||||||||||||
Europe | 11,070 | 13,041 | (15)% | 56,152 | 58,973 | (5)% | |||||||||||||||
Europe gross profit margin | 32 | % | 34 | % | 35 | % | 36 | % | |||||||||||||
Asia/Pacific | 661 | 307 | N/M | 2,085 | 971 | N/M | |||||||||||||||
Administrative and all other | 149 | 263 | N/M | 229 | 155 | N/M | |||||||||||||||
Total | $ | 98,436 | $ | 101,903 | (3)% | $ | 480,519 | $ | 443,381 | 8% | |||||||||||
Income (Loss) from Operations | |||||||||||||||||||||
North America | $ | 18,907 | $ | 21,995 | (14)% | $ | 168,323 | $ | 132,995 | 27% | |||||||||||
North America operating profit margin | 9 | % | 12 | % | 18 | % | 17 | % | |||||||||||||
Europe | (8,779) | (3,298) | (166)% | (3,026) | 2,724 | N/M | |||||||||||||||
Europe operating profit margin | (25) | % | (9) | % | (2) | % | 2 | % | |||||||||||||
Asia/Pacific | 313 | 1,600 | N/M | 2,040 | 1,296 | N/M | |||||||||||||||
Administrative and all other | 12,300 | 4,066 | N/M | 8,865 | 901 | N/M | |||||||||||||||
Total | $ | 22,741 | $ | 24,363 | (7)% | $ | 176,202 | $ | 137,916 | 28% |
* | 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
[email protected]
(310) 829-5400
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SOURCE Simpson Manufacturing Co., Inc.
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