PR Newswire
PLEASANTON, Calif., Oct. 29, 2018
PLEASANTON, Calif., Oct. 29, 2018 /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 third quarter 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).
In the third quarter of 2017, the Company reclassified its year-to-date expenses associated with a recent acquisition. The 2017 first and second quarter financial results were revised to reflect these changes with $2.6 million of costs being reclassified from research and development and engineering expense to general and administrative expense ($2.3 million) and selling expense ($0.3 million). The 2017 third quarter financial results were revised to reflect these changes made to the 2017 first and second quarter results. No reclassifications were made with respect to the 2017 year-to-date (9-month) financial results.
2018 Third 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 September 30, 2018 with the quarter ended September 30, 2017. In the third quarter of 2018, the Company recorded an out-of-period adjustment for the third quarter of 2017, which increased cost of sales by $0.7 million and decreased general and administrative expenses by $0.7 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 third quarter of 2017 as presented below were not affected by the adjustment.
Year-to-Date (9-month) 2018 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 nine months ended September 30, 2018 with the nine months ended September 30, 2017. In the third quarter of 2018, the Company recorded an out-of-period adjustment for the nine months ended September 30, 2018 and for the nine months ended September 30, 2017, which increased cost of sales and decreased general and administrative expenses both by $1.8 million for the nine months ended September 30, 2018 and increased cost of sales and decreased general and administrative expenses both by $2.1 million for the nine months ended September 30, 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 nine months ended September 30, 2018 and 2017 as presented below were not affected by the adjustment.
Management Commentary
"We had a solid third quarter with our net sales increasing 8% year–over–year to $284.2 million, driven by growth in sales volume throughout almost all areas of our company," commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. "Net sales were positively impacted by increases in our average selling prices and were further supported by U.S. housing starts. While U.S. housing starts slightly moderated in the third quarter compared to the second quarter, demand so far in the current quarter remains steady, subject to typical fourth quarter seasonality. As a result of our positive third quarter net sales and strong gross profit margin of 47%, we produced strong third quarter earnings of $0.95 per diluted share, an increase of 61% year-over-year."
Mrs. Colonias continued, "Today marks one year since we announced our 2020 Plan to provide more clarity into our longer-term strategy and financial objectives. I am pleased to confirm we remain on track to reach our key financial targets under the 2020 Plan. We have made solid headway over the past twelve months thanks to the hard work and commitment of our employees. Notably, year-to-date, our operating expenses as a percent of sales were approximately 27%, an improvement of 300 basis points as compared to the first nine months of 2017. We believe this is a direct result of our strong company culture and the responsibility our employees feel to the success of Simpson. We applaud them for their hard work."
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 third quarter 2018 financial results conference call on Monday, October 29, 2018, 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=131404 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, November 12, 2018, by dialing (844) 512–2921 (U.S. and Canada) or (412) 317–6671 (International) and entering the conference ID: 13683405. 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 the achievement and the effects of the Company's 2020 Plan and other operating initiatives (including strategies, objectives and targets thereunder); the impact of the Company's price increases and its efforts to offset rising material costs; the future demand for the Company's products and services; the Company's 2018 full-year gross profit margin 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 and actions by activist shareholders; (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 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 September 30, 2018, when filed.
Simpson Manufacturing Co., Inc. and Subsidiaries | |||||||||||||||
UNAUDITED Consolidated Statements of Operations | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
(Amounts in thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | |||||||||||
Net sales | $ | 284,178 | $ | 262,476 | $ | 836,964 | $ | 745,345 | |||||||
Cost of sales | 150,282 | 143,338 | 454,881 | 403,866 | |||||||||||
Gross profit | 133,896 | 119,138 | 382,083 | 341,479 | |||||||||||
Research and development and engineering expense | 10,441 | 11,265 | 32,840 | 35,051 | |||||||||||
Selling expense | 26,879 | 27,867 | 83,653 | 86,150 | |||||||||||
General and administrative expense | 36,114 | 33,457 | 112,897 | 105,962 | |||||||||||
Gain on disposal of assets | (460) | (147) | (1,769) | (147) | |||||||||||
Income from operations | 60,922 | 46,696 | 154,462 | 114,463 | |||||||||||
Loss in equity method investment, before tax | (30) | (13) | (52) | (53) | |||||||||||
Interest expense, net | (58) | (296) | (332) | (685) | |||||||||||
Gain (adjustment) on bargain purchase of a business | — | (2,052) | — | 6,336 | |||||||||||
Gain on disposal of a business | — | 443 | — | 443 | |||||||||||
Income before taxes | 60,834 | 44,778 | 154,078 | 120,504 | |||||||||||
Provision for income taxes | 16,473 | 16,581 | 40,202 | 40,972 | |||||||||||
Net income | $ | 44,361 | $ | 28,197 | $ | 113,876 | $ | 79,532 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.96 | $ | 0.60 | $ | 2.46 | $ | 1.67 | |||||||
Diluted | $ | 0.95 | $ | 0.59 | $ | 2.43 | $ | 1.66 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 46,192 | 47,367 | 46,375 | 47,544 | |||||||||||
Diluted | 46,622 | 47,686 | 46,770 | 47,843 | |||||||||||
Cash dividend declared per common share | $ | 0.22 | $ | 0.42 | $ | 0.65 | $ | 0.81 | |||||||
Other data: | |||||||||||||||
Depreciation and amortization | $ | 9,416 | $ | 9,945 | $ | 29,049 | $ | 26,881 | |||||||
Pre-tax equity-based compensation expense | $ | 2,753 | $ | 631 | $ | 8,773 | $ | 11,816 | |||||||
Simpson Manufacturing Co., Inc. and Subsidiaries | ||||||||||||
UNAUDITED Consolidated Condensed Balance Sheets | ||||||||||||
(In thousands) | ||||||||||||
September 30, | December 31, | |||||||||||
(Amounts in thousands) | 2018 | 2017 | 2017 | |||||||||
Cash and cash equivalents | $ | 166,961 | $ | 204,171 | $ | 168,514 | ||||||
Trade accounts receivable, net | 192,981 | 159,571 | 135,958 | |||||||||
Inventories | 279,503 | 244,476 | 252,996 | |||||||||
Assets held for sale | 9,251 | — | — | |||||||||
Other current assets | 12,220 | 13,276 | 26,473 | |||||||||
Total current assets | 660,916 | 621,494 | 583,941 | |||||||||
Property, plant and equipment, net | 257,679 | 265,178 | 273,020 | |||||||||
Goodwill | 136,459 | 137,313 | 137,140 | |||||||||
Other noncurrent assets | 39,559 | 44,398 | 43,422 | |||||||||
Total assets | $ | 1,094,613 | $ | 1,068,383 | $ | 1,037,523 | ||||||
Trade accounts payable | $ | 42,734 | $ | 30,857 | $ | 31,536 | ||||||
Capital lease obligation - current portion | 1,081 | 1,047 | 1,055 | |||||||||
Other current liabilities | 123,636 | 110,629 | 103,900 | |||||||||
Total current liabilities | 167,451 | 142,533 | 136,491 | |||||||||
Other long-term liabilities - net of current portion | 13,743 | 9,808 | 16,254 | |||||||||
Stockholders' equity | 913,419 | 916,042 | 884,778 | |||||||||
Total liabilities and stockholders' equity | $ | 1,094,613 | $ | 1,068,383 | $ | 1,037,523 |
Simpson Manufacturing Co., Inc. and Subsidiaries | |||||||||||||||||||||
UNAUDITED Segment and Product Group Information | |||||||||||||||||||||
(In thousands) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | % | September 30, | % | ||||||||||||||||||
(Amounts in thousands) | 2018 | 2017 | change* | 2018 | 2017 | change* | |||||||||||||||
Net Sales by Reporting Segment | |||||||||||||||||||||
North America | $ | 239,898 | $ | 213,254 | 12.5% | $ | 705,932 | $ | 612,765 | 15.2% | |||||||||||
Percentage of total net sales | 84.4 | % | 81.2 | % | 84.3 | % | 82.2 | % | |||||||||||||
Europe | 42,020 | 47,137 | (10.9)% | 124,096 | 126,752 | (2.1)% | |||||||||||||||
Percentage of total net sales | 14.8 | % | 18.0 | % | 14.8 | % | 17.0 | % | |||||||||||||
Asia/Pacific | 2,260 | 2,085 | 8.4% | 6,936 | 5,828 | 19.0% | |||||||||||||||
Total | $ | 284,178 | $ | 262,476 | 8.3% | $ | 836,964 | $ | 745,345 | 12.3% | |||||||||||
Net Sales by Product Group** | |||||||||||||||||||||
Wood Construction | $ | 238,230 | $ | 224,317 | 6.2% | $ | 710,880 | $ | 639,207 | 11.2% | |||||||||||
Percentage of total net sales | 83.8 | % | 85.5 | % | 84.9 | % | 85.8 | % | |||||||||||||
Concrete Construction | 45,832 | 38,051 | 20.4% | 125,847 | 105,785 | 19.0% | |||||||||||||||
Percentage of total net sales | 16.2 | % | 14.5 | % | 15.0 | % | 14.2 | % | |||||||||||||
Other | 116 | 108 | N/M | 237 | 353 | N/M | |||||||||||||||
Total | $ | 284,178 | $ | 262,476 | 8.3% | $ | 836,964 | $ | 745,345 | 12.3% | |||||||||||
Gross Profit (Loss) by Reporting Segment | |||||||||||||||||||||
North America | $ | 116,968 | $ | 100,861 | 16.0% | $ | 335,497 | $ | 294,955 | 13.7% | |||||||||||
North America gross profit margin | 48.8 | % | 47.3 | % | 47.5 | % | 48.1 | % | |||||||||||||
Europe | 16,034 | 18,068 | (11.3)% | 45,082 | 45,933 | (1.9)% | |||||||||||||||
Europe gross profit margin | 38.2 | % | 38.3 | % | 36.3 | % | 36.2 | % | |||||||||||||
Asia/Pacific | 894 | 209 | N/M | 1,424 | 664 | N/M | |||||||||||||||
Administrative and all other | — | — | N/M | 80 | (73) | N/M | |||||||||||||||
Total | $ | 133,896 | $ | 119,138 | 12.4% | $ | 382,083 | $ | 341,479 | 11.9% | |||||||||||
Income (Loss) from Operations | |||||||||||||||||||||
North America | $ | 56,873 | $ | 41,775 | 36.1% | $ | 151,323 | $ | 110,521 | 36.9% | |||||||||||
North America operating profit margin | 23.7 | % | 19.6 | % | 21.4 | % | 18.0 | % | |||||||||||||
Europe | 3,584 | 5,139 | (30.3)% | 4,783 | 7,443 | (35.7)% | |||||||||||||||
Europe operating profit margin | 8.5 | % | 10.9 | % | 3.9 | % | 5.9 | % | |||||||||||||
Asia/Pacific | 1,132 | (218) | N/M | 1,826 | (341) | N/M | |||||||||||||||
Administrative and all other | (667) | — | N/M | (3,470) | (3,160) | N/M | |||||||||||||||
Total | $ | 60,922 | $ | 46,696 | 30.5% | $ | 154,462 | $ | 114,463 | 34.9% |
* | 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. | |
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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