PLEASANTON, Calif., —
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 2017. Unless otherwise stated, the Company’s results below, when referencing “recently acquired businesses” or “acquired net sales” refer to Gbo Fastening Systems AB (“Gbo”, acquired January 2017) and CG Visions, Inc. (acquired January 2017), or net sales of such acquired businesses, respectively. 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).
2017 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 2017 with the fourth quarter of 2016.
2017 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, 2017 with the year ended December 31, 2016.
Management Commentary
“2017 was a highly productive year for Simpson as we laid the foundation to position our Company for long-term, sustainable and increasingly profitable growth,” commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. “Through execution on our 2020 Plan objectives, we believe we can achieve our aggressive 2020 financial targets to substantially enhance our return on invested capital and generate additional capital to return to shareholders. We made positive strides toward our financial targets during the fourth quarter by reducing estimated total annual operating expenses by $2.0 million in Europe and by $3.0 million in the concrete space. We feel we are well positioned to achieve an 8% compound annual growth rate in net sales through 2020 supported by anticipated mid-single digit growth in U.S. housing starts, the $30 million opportunity for our mechanical anchor product line in The Home Depot stores, our increased market share and profitability in Europe and our market share gains in both truss and concrete product offerings.”
Mrs. Colonias concluded, “We are confident our execution on the 2020 Plan will drive improved operational performance in our business, and as a result, we committed $70 million for the repurchase of our common stock in 2017. During the fourth quarter, we received 677,500 shares of our common stock pursuant to a new $50.0 millionaccelerated share repurchase program, with the remaining 20% to be delivered in the first quarter of 2018. We look forward to a successful year ahead and demonstrating the increased earnings power that we believe exists in 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 2017 fourth quarter and full-year financial results conference call on Monday, February 5, 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 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 future execution and effects of the Company’s 2020 Plan, the Company’s prospective profitability, earnings power, market shares, software and concrete offerings, relationship with Home Depot, cost reduction measures, operating expenses and inventory, the Company’s anticipated or estimated gross profit margin, effective tax rate, and impact of the Tax Cuts and Jobs Act as well as projected housing starts and steel prices. Forward-looking statements generally can be identified by words such as “believe,” “anticipate,” “estimate,” “expect,” “look forward,” “to be,” “plan,” “target,” “opportunity,” “change,” “future,” “will,” “can,” “may” or similar expressions. Forward-looking statements are necessarily speculative in nature. Although the Company believes that these forward-looking statements are reasonable, as some or all of the assumptions of the forward-looking statements may not materialize, the Company 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 business, operations and financial condition. 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 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; (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; (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.” The Company’s actual results therefore may differ substantially from the 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 future changes. 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; audited financial statements will be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, when filed.
Simpson Manufacturing Co., Inc. and Subsidiaries |
|||||||||||||||
Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||||||||||
2017 |
2016 |
2017 |
2016 |
||||||||||||
Net sales |
$ |
231,681 |
$ |
200,192 |
$ |
977,025 |
$ |
860,661 |
|||||||
Cost of sales |
128,983 |
105,226 |
530,761 |
448,211 |
|||||||||||
Gross profit |
102,698 |
94,966 |
446,264 |
412,450 |
|||||||||||
Gross profit margin |
44% |
47% |
46% |
48% |
|||||||||||
Research and development and engineering expense |
12,565 |
12,441 |
47,616 |
46,248 |
|||||||||||
Selling expense |
28,753 |
24,030 |
114,903 |
98,343 |
|||||||||||
General and administrative expense |
36,688 |
32,376 |
144,738 |
129,162 |
|||||||||||
Gain on disposal of assets |
(13) |
(17) |
(160) |
(780) |
|||||||||||
Income from operations |
24,705 |
26,136 |
139,167 |
139,477 |
|||||||||||
Operating profit margin |
11% |
13% |
14% |
16% |
|||||||||||
Loss in equity method investment, before tax |
(33) |
— |
(86) |
— |
|||||||||||
Interest expense, net |
(104) |
(177) |
(788) |
(577) |
|||||||||||
Gain on bargain purchase of a business (adjustment) |
— |
— |
6,336 |
— |
|||||||||||
Loss on disposal of a business |
(654) |
— |
(211) |
— |
|||||||||||
Income before taxes |
23,914 |
25,959 |
144,418 |
138,900 |
|||||||||||
Effective tax rate |
45% |
33% |
36% |
35% |
|||||||||||
Provision for income taxes |
10,829 |
8,565 |
51,801 |
49,166 |
|||||||||||
Net income |
$ |
13,085 |
$ |
17,394 |
$ |
92,617 |
$ |
89,734 |
|||||||
Earnings per common share: |
|||||||||||||||
Basic |
$ |
0.28 |
$ |
0.37 |
$ |
1.95 |
$ |
1.87 |
|||||||
Diluted |
$ |
0.27 |
$ |
0.36 |
$ |
1.94 |
$ |
1.86 |
|||||||
Weighted average shares outstanding: |
|||||||||||||||
Basic |
47,307 |
47,505 |
47,486 |
48,084 |
|||||||||||
Diluted |
47,594 |
47,754 |
47,774 |
48,295 |
|||||||||||
Other data: |
|||||||||||||||
Depreciation and amortization |
$ |
6,844 |
$ |
6,442 |
$ |
33,724 |
$ |
27,927 |
|||||||
Pre-tax equity-based compensation expense |
2,092 |
4,239 |
13,908 |
13,946 |
|||||||||||
Cash dividend declared per common share |
$ |
— |
$ |
0.18 |
$ |
0.81 |
$ |
0.70 |
Simpson Manufacturing Co., Inc. and Subsidiaries |
|||||||||
December 31, |
|||||||||
2017 |
2016 |
||||||||
Cash and short-term investments |
$ |
168,514 |
$ |
226,537 |
|||||
Trade accounts receivable, net |
135,958 |
112,423 |
|||||||
Inventories |
251,584 |
232,274 |
|||||||
Other current assets |
25,751 |
14,013 |
|||||||
Total current assets |
581,807 |
585,247 |
|||||||
Property, plant and equipment, net |
273,020 |
232,810 |
|||||||
Goodwill |
137,140 |
124,479 |
|||||||
Other noncurrent assets |
43,422 |
37,438 |
|||||||
Total assets |
$ |
1,035,389 |
$ |
979,974 |
|||||
Trade accounts payable |
$ |
30,936 |
$ |
27,674 |
|||||
Capital lease obligation – current portion |
1,055 |
— |
|||||||
Other current liabilities |
102,366 |
81,122 |
|||||||
Total current liabilities |
134,357 |
108,796 |
|||||||
Other long-term liabilities – net of current portion |
16,254 |
5,336 |
|||||||
Stockholders’ equity |
884,778 |
865,842 |
|||||||
Total liabilities and stockholders’ equity |
$ |
1,035,389 |
$ |
979,974 |
Simpson Manufacturing Co., Inc. and Subsidiaries |
|||||||||||||||||||||
Three Months Ended |
Twelve Months Ended |
||||||||||||||||||||
December 31, |
% |
December 31, |
% |
||||||||||||||||||
2017 |
2016 |
change * |
2017 |
2016 |
change * |
||||||||||||||||
Net Sales by Reporting Segment |
|||||||||||||||||||||
North America |
$ |
190,932 |
$ |
172,824 |
10% |
$ |
803,697 |
$ |
742,021 |
8% |
|||||||||||
Percentage of total net sales |
82% |
86% |
82% |
86% |
|||||||||||||||||
Europe |
38,404 |
25,271 |
52% |
165,155 |
111,274 |
48% |
|||||||||||||||
Percentage of total net sales |
17% |
13% |
17% |
13% |
|||||||||||||||||
Asia/Pacific |
2,345 |
2,097 |
12% |
8,173 |
7,366% |
11% |
|||||||||||||||
Percentage of total net sales |
1% |
1% |
1% |
1% |
|||||||||||||||||
Total |
$ |
231,681 |
$ |
200,192 |
16% |
$ |
977,025 |
$ |
860,661 |
14% |
|||||||||||
Net Sales by Product Group** |
|||||||||||||||||||||
Wood Construction |
$ |
193,993 |
$ |
170,389 |
14% |
$ |
833,200 |
$ |
732,414 |
14% |
|||||||||||
Percentage of total net sales |
84% |
85% |
85% |
85% |
|||||||||||||||||
Concrete Construction |
37,317 |
29,803 |
25% |
143,102 |
128,247 |
12% |
|||||||||||||||
Percentage of total net sales |
16% |
15% |
15% |
15% |
|||||||||||||||||
Other |
371 |
— |
N/M |
— |
— |
N/M |
|||||||||||||||
Total |
$ |
231,681 |
$ |
200,192 |
16% |
$ |
977,025 |
$ |
860,661 |
14% |
|||||||||||
Gross Profit by Reporting Segment |
|||||||||||||||||||||
North America |
$ |
89,086 |
$ |
84,818 |
5% |
$ |
386,189 |
$ |
365,758 |
6% |
|||||||||||
North America gross profit margin |
47% |
49% |
48% |
49% |
|||||||||||||||||
Europe |
13,041 |
9,293 |
40% |
58,973 |
44,038 |
34% |
|||||||||||||||
Europe gross profit margin |
34% |
37% |
36% |
40% |
|||||||||||||||||
Asia/Pacific |
307 |
552 |
N/M |
971 |
2,419 |
(60)% |
|||||||||||||||
Administrative and all other |
264 |
303 |
N/M |
131 |
235 |
N/M |
|||||||||||||||
Total |
$ |
102,698 |
$ |
94,966 |
8% |
$ |
446,264 |
$ |
412,450 |
8% |
|||||||||||
Income (Loss) from Operations |
|||||||||||||||||||||
North America |
$ |
22,141 |
$ |
24,387 |
(9)% |
$ |
132,889 |
$ |
137,311 |
(3)% |
|||||||||||
North America operating profit margin |
12% |
14% |
17% |
19% |
|||||||||||||||||
Europe |
(3,022) |
(3,284) |
8% |
4,421 |
895 |
N/M |
|||||||||||||||
Europe operating profit margin |
(8)% |
(13)% |
3% |
1% |
|||||||||||||||||
Asia/Pacific |
1,520 |
883 |
72% |
1,179 |
2,140 |
45% |
|||||||||||||||
Administrative and all other |
4,066 |
4,150 |
N/M |
678 |
(869) |
N/M |
|||||||||||||||
Total |
$ |
24,705 |
$ |
26,136 |
(5)% |
$ |
139,167 |
$ |
139,477 |
—% |
* |
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
SOURCE Simpson Manufacturing Co., Inc.