PR Newswire
PLEASANTON, Calif., Feb. 4, 2016
PLEASANTON, Calif., Feb. 4, 2016 /PRNewswire/ -- Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD) today announced its fourth quarter 2015 results.
Results of Operations for the Three Months Ended December 31, 2015, Compared with the Three Months Ended December 31, 2014
Overview
Net sales increased 10.9% to $184.8 million for the fourth quarter of 2015 from $166.6 million for the fourth quarter of 2014. The Company had net income of $14.7 million for the fourth quarter of 2015 compared to $10.4 million for the fourth quarter of 2014. Diluted net income per common share was $0.30 for the fourth quarter of 2015 compared to $0.21 per common share for the fourth quarter of 2014.
Net sales
The Company's net sales increased in the North America segment and decreased in the Europe and Asia/Pacific segments in the fourth quarter of 2015 compared to the fourth quarter of 2014.
Gross profit
Gross profit increased to $82.8 million in the fourth quarter of 2015 from $72.8 million in the fourth quarter of 2014. Gross profit as a percentage of net sales (gross profit margin) increased to 44.8% in the fourth quarter of 2015 from 43.7% in the fourth quarter of 2014.
Research and development and engineering expense
Research and development and engineering expense increased 21.4% to $11.5 million in the fourth quarter of 2015 from $9.5 million in the fourth quarter of 2014, primarily due to a $1.8 million write-off of software development projects, which occurred in the North America segment in 2015, as well as increases of $0.4 million in cash profit sharing expense on increased operating profits and $0.3 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015, partly offset by a $0.2 million decrease in stock-based compensation, most of which occurred in the North America segment.
Selling expense
Selling expense increased slightly to $22.5 million in the fourth quarter of 2015 from $22.4 million in the fourth quarter of 2014, primarily due to increases of $0.7 million in cash profit sharing expense on increased profits and $0.5 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015, partly offset by decreases of $0.4 million in stock-based compensation, $0.3 million in advertising costs and $0.2 million in professional fees.
General and administrative expense
General and administrative expense increased 4.1% to $26.6 million in the fourth quarter of 2015 from $25.5 million in the fourth quarter of 2014, primarily due to increases of $1.1 million in cash profit sharing expense on increased profits, $0.7 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015 and $0.3 million in legal fees, partly offset by a net increase of $0.7 million in foreign currency gains, as well as a decrease of $0.3 million in stock-based compensation.
Income taxes
The effective income tax rate in the fourth quarter of 2015 was 34.3% as compared to 32.3% in the fourth quarter of 2014. The 2015 effective income tax rate was higher primarily due to a release of an uncertain tax position as a result of the expiration of the applicable statute of limitations in the fourth quarter of 2014. A similar release did not occur in 2015.
Results of Operations for the Year Ended December 31, 2015, Compared with the Year Ended December 31, 2014
Overview
Net sales increased 5.6% to $794.1 million in 2015 from $752.1 million in 2014. The Company had net income of $67.9 million in 2015 compared to $63.5 million in 2014. Diluted net income per common share was $1.38 in 2015 compared to $1.29 in 2014. An out of period adjustment recorded during 2014 relating to a non-reoccurring correction had the effect of increasing net income by $1.3 million, or the equivalent of $0.026 per share.
Net sales
The Company's net sales increased in the North America segment and decreased in the Europe and Asia/Pacific segments in 2015 compared to 2014.
Gross profit
Gross profit increased to $358.9 million in 2015 from $342.0 million in 2014. Gross profit as a percentage of net sales decreased to 45.2% in 2015 from 45.5% in 2014, partly due to a non-reoccurring $2.5 million correction to workers' compensation expense in the North America segment that increased the Company's 2014 gross profit by 0.4% of net sales and increases in material costs. Based on current information and subject to future events and circumstances, the Company estimates that its 2016 gross profit margin will be between 44.5% and 46.0%.
Research and development and engineering expense
Research and development and engineering expense increased 18.4% to $46.2 million in 2015 from $39.0 million in 2014, primarily due to $5.9 million in write-offs of software development projects, as well as increases of $2.0 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015 and $0.6 million in cash profit sharing expense on increased operating profits, partly offset by a decrease of $0.7 million in stock-based compensation costs, most of which occurred in the North America segment.
Selling expense
Selling expense decreased 1.5% to $90.7 million in 2015 from $92.0 million in 2014, primarily due to decreases of $0.9 million in professional fees, $0.7 million in stock-based compensation and $0.6 million in advertising costs, partly offset by increases of $0.5 million in cash profit sharing and commission expense, $0.3 million in agent commission expense and $0.2 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015.
General and administrative expense
General and administrative expense increased 1.7% to $113.4 million in 2015 from $111.5 million in 2014, primarily due to increases of $2.2 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015, $0.6 million in stock-based compensation expense, $0.4 million in bad debt expense and $0.1 million in cash profit sharing, partly offset by a decrease of $1.1 million in amortization expense.
Income taxes
The effective income tax rate in 2015 was 37.5% as compared to 36.0% in 2014. The 2015 effective income tax rate was higher primarily due to the 2014 release of an uncertain tax position as well as a solar tax credit for installing solar panels at one of the Company's facilities, which were non-reoccurring. Based on current information and subject to future events and circumstances, the Company estimates that its 2016 effective tax rate will be between 37% and 39%.
Additional information
At its meeting on February 1, 2016, the Company's Board of Directors declared a cash dividend of $0.16 per share. The record date for the dividend will be April 7, 2016, and it will be paid on April 28, 2016. At the same meeting, the Board also authorized the Company to repurchase up to $50.0 million of the Company's common stock. This authorization will remain in effect through the end of 2016.
In the fourth quarter of 2015, the Company repurchased 190,484 shares of the Company's shares pursuant to the Company's $25.0 million accelerated share repurchase program with Wells Fargo Bank, National Association. The total spent on the 190,484 shares during the fourth quarter of 2015 was approximately $6.9 million, at an average price of $36.27 per share. For the year 2015, the Company repurchased 1,338,894 shares of the Company's shares for $47.1 million, at an average price of $35.21 per share. The repurchases were part of the $50.0 million that the Company's Board of Directors authorized for 2015 for repurchases of common stock.
Investors, analysts and other interested parties are invited to join the Company's conference call on Friday, February 5, 2016, at 6:00 am Pacific Time. To participate, callers may dial 877-876-9177 (international callers may dial 785-424-1666). The call will be webcast simultaneously as well as being available for one month through a link on the Company's website at www.simpsonmfg.com.
This document contains forward-looking statements, based on numerous assumptions and subject to risks and uncertainties, such as statements above regarding steel prices, estimating the 2016 gross profit margin, and estimating the 2016 effective tax rate. Although the Company believes that the forward-looking statements are reasonable, it does not and cannot give any assurance that its beliefs and expectations will prove to be correct. 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 economic and construction business conditions; (ii) customer acceptance of the Company's products; (iii) relationships with key customers; (iv) materials and manufacturing costs; (v) the financial condition of customers, competitors and suppliers; (vi) technological developments; (vii) increased competition; (viii) changes in capital and credit market conditions; (ix) governmental and business conditions in countries where the Company's products are manufactured and sold; (x) changes in trade regulations; (xi) the effect of acquisition activity; (xii) changes in the Company's plans, strategies, objectives, expectations or intentions; and (xiii) other risks and uncertainties indicated from time to time in the Company's filings with the U.S. Securities and Exchange Commission including most recently the Company's Annual Report on Form 10-K for the period ended December 31, 2014, under the heading "Item 1A - Risk Factors." Actual results might differ materially from results suggested by any forward-looking statements in this document. The Company does not have an obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise. The financial information set forth herein is presented on a preliminary unaudited basis; audited data will be included in the Company's Annual Report on Form 10-K for the period ended December 31, 2015, when filed.
The Company's results of operations (unaudited) for the three and twelve months ended December 31, 2015 and 2014, were as follows:
Three Months Ended December 31, |
Twelve Months Ended December 31, | ||||||||||||||
(Amounts in thousands, except per share data) |
2015 |
2014 |
2015 |
2014 | |||||||||||
Net sales |
$ |
184,764 |
$ |
166,630 |
$ |
794,059 |
$ |
752,148 |
|||||||
Cost of sales |
102,002 |
93,833 |
435,140 |
410,118 |
|||||||||||
Gross profit |
82,762 |
72,797 |
358,919 |
342,030 |
|||||||||||
Research and development and engineering expenses |
11,548 |
9,513 |
46,196 |
39,018 |
|||||||||||
Selling expenses |
22,508 |
22,407 |
90,663 |
92,031 |
|||||||||||
General and administrative expenses |
26,553 |
25,508 |
113,428 |
111,500 |
|||||||||||
Impairment of goodwill |
— |
38 |
— |
530 |
|||||||||||
Loss (gain) on disposal of assets |
(332) |
11 |
(389) |
(325) |
|||||||||||
Income from operations |
22,485 |
15,320 |
109,021 |
99,276 |
|||||||||||
Interest income (expense), net |
(77) |
2 |
(342) |
46 |
|||||||||||
Income before taxes |
22,408 |
15,322 |
108,679 |
99,322 |
|||||||||||
Provision for income taxes |
7,675 |
4,942 |
40,791 |
35,791 |
|||||||||||
Net income |
$ |
14,733 |
$ |
10,380 |
$ |
67,888 |
$ |
63,531 |
|||||||
Earnings per common share: |
|||||||||||||||
Basic |
$ |
0.30 |
$ |
0.21 |
$ |
1.39 |
$ |
1.30 |
|||||||
Diluted |
$ |
0.30 |
$ |
0.21 |
$ |
1.38 |
$ |
1.29 |
|||||||
Weighted average shares outstanding: |
|||||||||||||||
Basic |
48,337 |
48,993 |
48,952 |
48,977 |
|||||||||||
Diluted |
48,594 |
49,262 |
49,181 |
49,194 |
|||||||||||
Other data: |
|||||||||||||||
Depreciation and amortization |
$ |
5,157 |
$ |
5,813 |
$ |
26,821 |
$ |
27,918 |
|||||||
Pre-tax impairments |
— |
38 |
— |
530 |
|||||||||||
Pre-tax equity-based compensation expense |
2,430 |
3,682 |
11,958 |
13,190 |
|||||||||||
Cash dividend declared per common share |
$ |
0.160 |
$ |
0.140 |
$ |
0.620 |
$ |
0.545 |
The Company's financial position (unaudited) as of December 31, 2015 and 2014, were as follows:
December 31, |
|||||||||
(Amounts in thousands) |
2015 |
2014 |
|||||||
Cash and short-term investments |
$ |
258,825 |
$ |
260,307 |
|||||
Trade accounts receivable, net |
106,011 |
92,015 |
|||||||
Inventories |
195,757 |
216,545 |
|||||||
Other current assets |
28,679 |
35,451 |
|||||||
Total current assets |
589,272 |
604,318 |
|||||||
Property, plant and equipment, net |
213,716 |
207,027 |
|||||||
Goodwill |
123,950 |
123,881 |
|||||||
Other noncurrent assets |
34,371 |
37,839 |
|||||||
Total assets |
$ |
961,309 |
$ |
973,065 |
|||||
Trade accounts payable |
$ |
21,309 |
$ |
22,860 |
|||||
Notes payable and lines of credit |
— |
18 |
|||||||
Other current liabilities |
73,655 |
71,602 |
|||||||
Total current liabilities |
94,964 |
94,480 |
|||||||
Other long-term liabilities |
16,521 |
15,120 |
|||||||
Stockholders' equity |
849,824 |
863,465 |
|||||||
Total liabilities and stockholders' equity |
$ |
961,309 |
$ |
973,065 |
Additional financial data of the Company (unaudited) for the three and twelve months ended December 31, 2015 and 2014, were as follows:
Three Months Ended |
Twelve Months Ended |
||||||||||||||||||||
December 31, |
% |
December 31, |
% | ||||||||||||||||||
(Amounts in thousands) |
2015 |
2014 |
change |
2015 |
2014 |
change | |||||||||||||||
Net Sales by Reporting Segment |
|||||||||||||||||||||
North America |
$ |
158,397 |
$ |
137,297 |
15% |
$ |
676,618 |
$ |
613,843 |
10% | |||||||||||
Europe |
24,925 |
25,880 |
(4)% |
108,068 |
123,177 |
(12)% | |||||||||||||||
Asia/Pacific |
1,442 |
3,453 |
(58)% |
9,373 |
15,128 |
(38)% | |||||||||||||||
Total |
$ |
184,764 |
$ |
166,630 |
11% |
$ |
794,059 |
$ |
752,148 |
6% | |||||||||||
Net Sales by Product Group* |
|||||||||||||||||||||
Wood Construction |
$ |
155,894 |
$ |
139,439 |
12% |
$ |
674,274 |
$ |
636,003 |
6% | |||||||||||
Concrete Construction |
28,866 |
27,186 |
6% |
119,481 |
115,921 |
3% | |||||||||||||||
Other |
4 |
5 |
N/M |
304 |
224 |
N/M | |||||||||||||||
Total |
$ |
184,764 |
$ |
166,630 |
11% |
$ |
794,059 |
$ |
752,148 |
6% | |||||||||||
Gross Profit by Reporting Segment |
|||||||||||||||||||||
North America |
$ |
74,303 |
$ |
62,221 |
19% |
$ |
317,628 |
$ |
291,116 |
9% | |||||||||||
Europe |
8,485 |
9,236 |
(8)% |
41,512 |
46,965 |
(12)% | |||||||||||||||
Asia/Pacific |
(131) |
1,115 |
N/M |
251 |
3,652 |
(93)% | |||||||||||||||
Administrative and all other |
105 |
225 |
N/M |
(472) |
297 |
N/M | |||||||||||||||
Total |
$ |
82,762 |
$ |
72,797 |
14% |
$ |
358,919 |
$ |
342,030 |
5% | |||||||||||
Income (Loss) from Operations |
|||||||||||||||||||||
North America |
$ |
20,298 |
$ |
12,289 |
65% |
$ |
109,446 |
$ |
94,888 |
15% | |||||||||||
Europe |
(1,464) |
(1,278) |
(15)% |
3,795 |
5,005 |
(24)% | |||||||||||||||
Asia/Pacific |
(326) |
217 |
N/M |
(3,445) |
(1,566) |
(120)% | |||||||||||||||
Administrative and all other |
3,977 |
4,092 |
N/M |
(775) |
949 |
N/M | |||||||||||||||
Total |
$ |
22,485 |
$ |
15,320 |
47% |
$ |
109,021 |
$ |
99,276 |
10% |
* |
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. |
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."
For further information, contact Tom Fitzmyers at (925) 560-9030.
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/simpson-manufacturing-co-inc-announces-fourth-quarter-results-300215586.html
SOURCE Simpson Manufacturing Co., Inc.
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