SIMPSON MANUFACTURING CO., INC. Each of the terms the "Company," "we," "our," "us" and similar terms used herein refer collectively toSimpson Manufacturing Co., Inc. , aDelaware corporation and its wholly-owned subsidiaries, includingSimpson Strong-Tie Company Inc. , unless otherwise stated. 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 the Company. "Strong-Tie" and our other trademarks appearing in this report are our property. This report contains additional trade names and trademarks of other companies. We do not intend our use or display of other companies' trade names or trademarks to imply an endorsement or sponsorship of us by such companies, or any relationship with any of these companies. CAUTIONARY NOTE ABOUT FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q 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"). 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 that concern our strategy, plans, expectations or intentions. Forward-looking statements include, but are not limited to, statements about future financial and operating results, our plans, objectives, business outlook, priorities, expectations and intentions, expectations for sales growth, comparable sales, earnings and performance, stockholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for services, share repurchases, our strategic initiatives, including the impact of these initiatives on our strategic and operational 19 -------------------------------------------------------------------------------- plans and financial results, and any statement of an assumption underlying any of the foregoing and other statements that are not historical facts. Although we believe that the expectations, opinions, projections and comments reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties and we can give no assurance that such statements will prove to be correct. Actual results may differ materially from those expressed or implied in such statements. Forward-looking statements are subject to inherent uncertainties, risk and other factors that are difficult to predict and could cause our actual results to vary in material respects from what we have expressed or implied by these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those expressed in our forward looking statements include, among others, those discussed under the Item 1A. Risk Factors and Item7. Management's Discussion and Analysis of Financial Condition and Results of Operations in the 2019 Form 10-K and Item2. Management's Discussion and Analysis of Financial Condition and Results of Operations and Part II Item 1A Risk Factors in this Form 10-Q. Additional risks include: the cyclicality and impact of general economic conditions? changing conditions in global markets including the impact of sanctions and tariffs, quotas and other trade actions and import restrictions? the impact of pandemics, epidemics or other public health emergencies, such as the recent outbreak of coronavirus disease 2019 (COVID-19)? volatile supply and demand conditions affecting prices and volumes in the markets for both our products and raw materials we purchase? the impact of foreign currency fluctuations? potential limitations on our ability to access capital resources and existing credit facilities? restrictions on our business and financial covenants under our bank credit agreement? and reliance on employees subject to collective bargaining agreements. We caution that you should not place undue reliance on these forward-looking statements, which speak only as of the date of this report. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise. Readers are urged to carefully review and consider the various disclosures made by us in this report and in our other reports filed with theSEC that advise of the risks and factors that may affect our business.
Overview
We design, manufacture and sell building construction products that are of high
quality and performance, easy to use and cost-effective for customers. We
operate in three business segments determined by geographic region:
Our strategic plan for growth includes increasing our market share and profitability inEurope ; growing our market share in the concrete space; and continuing to develop our software to support our core wood products offering while leveraging our strengths in engineering, sales and distribution, and our strong brand name. We believe these initiatives and objectives are crucial to not only offer a more complete solution to our customers and bolster our sales of core wood connector products, but also to mitigate the effect of the cyclicality of theU.S. housing market. OnOctober 30, 2017 , we announced the 2020 Plan to provide additional transparency into the execution of our strategic plan and financial objectives. Under the 2020 Plan, we initially assumed (i) housing starts growing as a percentage in the mid-single digit, (ii) increasing our market share and profitability inEurope , and (iii) gaining market share in both our truss and concrete product offerings. At the time of the announcement, our 2020 Plan was centered on the following three key operational objectives. • Achieve a net sales compounded annual growth rate of approximately 8% (from$860.7 million reported in fiscal 2016) through fiscal 2020.
• Rationalize our cost structure to improve company-wide profitability by
reducing total operating expenses as a percentage of net sales from 31.8%
in fiscal 2016 to a range of 26.0% to 27.0% by fiscal 2020.
• Improve our working capital management and overall balance sheet
discipline primarily through the reduction of inventory levels in
connection with the implementation of Lean principles in many of our
factories.
Through execution on the 2020 Plan, we targeted a return on invested capital (1) within the range of 15% to 16% by the end of fiscal 2020.
OnJanuary 30, 2020 , the WHO announced a global health emergency because of COVID-19 and the risks to the international community as the virus spreads globally beyond its point of origin inWuhan, China . InMarch 2020 , the WHO categorized COVID-19 as a pandemic based on the rapid increase in exposure globally, and the President ofthe United States declared the COVID-19 outbreak a national emergency. COVID-19 continues to spread throughoutthe United States and other countries across the world, and the duration and severity of its effects are currently unknown. Additionally, government authorities in the countries and states where we operate have issued various and differing shelter in place, stay at home, social distancing guidelines and other measures in response to the COVID-19 pandemic. In many of those locations our products and services are classified as an essential business and all of ourNorth America manufacturing and distribution facilities continue to operate in accordance with those orders. 20 -------------------------------------------------------------------------------- However in late March, two of our larger European manufacturing facilities in theUnited Kingdom andFrance were ordered to cease nearly all operations, forcing us to temporarily furlough many of those affected employees. Our supply chain partners have been very supportive and continue to do their part to ensure that service levels to our customers remain strong and, to date, we have not experienced any supply-chain disruptions related to COVID-19 and have been able to meet our customers' needs. A significant portion of the Company's total product sales is dependent on US housing starts and its business, financial condition and results of operations depends significantly on the level of housing and residential construction activity, which is expected to be negatively affected by the COVID-19 outbreak and pandemic. The Company anticipates a downturn in economic conditions and a slowdown in single-family housing starts. In the month of April sales declined compared to March levels due to lower demand from the anticipated slowdown in housing starts and general construction activity. Declines in housing and residential construction, such as housing starts and home improvement projects, which generally occur during economic downturns, have in the past significantly reduced, and in the future can be expected to reduce, the demand for, and net sales, of the Company's products. During the first quarter of 2020, the execution of our 2020 Plan continued to deliver financial and operational efficiencies. However, we anticipate that the effects of responses to COVID-19 will have a negative effect on ourNorth America andEurope operations in the short term. The magnitude and duration of the outbreak, including its impact on our operations, supply chain partners and general economic conditions, is uncertain and we continue to monitor the impact of the pandemic on our operations and financial condition, which was not significantly adversely impacted in the first quarter of 2020. We are uncertain of the long-term effects on theNorth America segment andEurope segment at this time The Company has proactively taken measures to maintain and preserve its strong financial position and flexibility, including drawing down on the Credit Facility, temporarily suspending our stock repurchase program, implementing a hiring freeze and adjusting employee hours based on lower production levels in the near term. The Company will also remain conservative in our capital allocation approach with a focus on cash preservation. The rapidly developing COVID-19 pandemic has generated significant uncertainty in the economy and the full impact of the outbreak continues to evolve. As such, it is uncertain as to the full magnitude that the pandemic will have on the Company's financial condition, liquidity, and future results of operations. Management is actively monitoring the impact of the global situation on its financial condition, liquidity, operations, suppliers, industry, and workforce. Given the daily evolution of the COVID-19 outbreak and the global responses to curb its spread, the Company is not able to estimate the effects of the COVID-19 outbreak on its results of operations, financial condition, or liquidity for fiscal year 2020. Given the uncertainties surrounding the impact of COVID-19 on our business, which may include the economic impact on our operations, consumers, suppliers and vendors, we are withdrawing our prior full year 2020 guidance, as well as the financial targets from our 2020 Plan and, at this time, we are unable to provide updated full year 2020 guidance.
Factors Affecting Our Results of Operations
Unlike lumber or other products that have a more direct correlation toU.S. housing starts, our products are used to a greater extent in areas that are subject to natural forces, such as seismic or wind events. Our products are generally used in a sequential process that follows the construction process. Residential and commercial construction begins with the foundation, followed by the wall and the roof systems, and then the installation of our products, which flow into a project or a house according to these schedules. Our sales also tend to be seasonal, with operating results varying from quarter to quarter. With some exceptions, our sales and income have historically been lower in the first and fourth quarters than in the second and third quarters of a fiscal year, as our customers tend to purchase construction materials in the late spring and summer months for the construction season. Weather conditions, such as extended cold or wet weather, which affect and sometimes delay installation of some of our products, could negatively affect our results of operations. Political, economic events such as tariffs and the possibility of additional tariffs on imported raw materials or finished goods or such as labor disputes can also have an effect on our gross and operating profits as well as the amount of inventory on-hand. Our operations expose us to risks associated with pandemics, epidemics or other public health emergencies, such as the recent outbreak of COVID-19 which has spread fromChina to many other countries includingthe United States . The outbreak has resulted in governments around the world implementing increasingly stringent measures to help control the spread of the virus, including quarantines, social distancing guidelines, "shelter in place" and "stay at home" orders, travel restrictions, business curtailments, school closures, and other measures. In addition, governments and central banks in several parts of the world have enacted fiscal and monetary stimulus measures to counteract the impacts of COVID-19. 21 -------------------------------------------------------------------------------- Notwithstanding our continued operations and first quarter performance, COVID-19 may have negative impacts on our operations, supply chain, transportation networks and customers, which may compress our margins, including as a result of preventative and precautionary measures that we, other businesses and governments are taking. The COVID-19 outbreak is a widespread public health crisis that is adversely affecting the economies and financial markets of many countries. Any resulting economic downturn could adversely affect demand for our products and contribute to volatile supply and demand conditions affecting prices and volumes in the markets for our products, services and raw materials. The progression of this matter could also negatively impact our business or results of operations through the temporary closure of our operating locations or those of our customers or suppliers, among others. In addition, the ability of our employees and our suppliers' and customers' employees to work may be significantly impacted by individuals contracting or being exposed to COVID-19, or as a result of the control measures noted above, which may significantly hamper our production throughout the supply chain and constrict sales channels. The extent to which COVID-19 may adversely impact our business depends on future developments, which are highly uncertain and unpredictable, including new information concerning the severity of the outbreak and the effectiveness of actions globally to contain or mitigate its effects. The current level of uncertainty over the economic and operational impacts of COVID-19 means the related financial impact cannot be reasonably estimated at this time. Our consolidated financial statements and discussion and analysis of financial condition and results of operations reflect estimates and assumptions made by management as ofMarch 31, 2020 . Events and changes in circumstances arising afterMarch 31, 2020 , including those resulting from the impacts of COVID-19, will be reflected in management's estimates for future periods. For further discussion of this matter, refer "Item 1A. Risk Factors" in Part II of this Form 10-Q. ERP Integration InJuly 2016 , our Board of Directors (the "Board") approved a plan to replace our current in-house enterprise resource planning ("ERP") and externally sourced accounting platforms with a fully integrated ERP platform fromSAP America, Inc. ("SAP") in multiple phases by location at all facilities plus our headquarters, with a focus on configuring, instead of customizing, the standard SAP modules. We went live with our first wave of the SAP implementation project in February of 2018, and we implemented SAP at three additional locations in 2019 and 2020. We are tracking toward rolling out SAP technology in our remainingNorth America branches by late 2020, and companywide completion of the SAP roll-out is currently targeted for the end of 2021. Meeting the 2021 goal is highly dependent on the lifting of current travel restrictions, which are the result of COVID-19. While we believe the SAP implementation will be beneficial to the Company over time, annual operating expenses have and are expected to continue to increase through 2024 as a result of the SAP implementation, primarily due to increases in training costs and the depreciation of previously capitalized costs. As ofMarch 31, 2020 , we have capitalized$19.4 million and expensed$29.3 million of the costs, including depreciation of capitalized costs associated with the ERP project.
Business Segment Information
Historically ourNorth America segment has generated more revenues from wood construction products compared to concrete construction products. During most of the first quarter of 2020, favorable economic conditions and weather resulted in higher than projected single-family housing starts and increased wood construction product sales volumes over the same time period of 2019, which had extremely wet weather and lower single family housing starts. Our wood construction product net sales increased 14.5% for the quarter endedMarch 31, 2020 compared toMarch 31, 2019 , primarily due to increased sales volumes. Our concrete construction product net sales increased 1.4% for the quarter endedMarch 31, 2020 compared toMarch 31, 2019 due to lower volumes higher average prices. Operating profits increased due to higher sales, lower cost of goods sold, mostly due to lower material and factory and overhead costs, and flat operating expenses. In operating expenses, a reduction in stock-based compensation expense was partly offset by an increase in cash profit sharing expense. OurEurope segment also generates more revenues from wood construction products than concrete construction products.Europe net sales decreased primarily due to the effects of COVID-19, which was primarily due to a number of countries issuing home and shelter orders ahead ofthe United States and also due to a decreased number concrete jobs in the first quarter of 2020 compared to the first quarter of 2019. Wood construction product sales decreased 6.8% for the quarter endedMarch 31, 2020 compared toMarch 31, 2019 . Concrete construction product sales are mostly project based, and net sales decreased 17.8% for the quarter endedMarch 31, 2020 compared toMarch 31, 2019 .Europe net sales were negatively affected by approximately$1.0 million in foreign currency translations due toEurope currencies weakening againstthe United States dollar. Gross margins improved slightly, mostly due to lower material costs while operating expenses increased$0.4 million for the quarter endedMarch 31, 2020 compared toMarch 31, 2019 , which was partly due to increased severance and intangible amortization expense. 22 --------------------------------------------------------------------------------
Our
As of the date of issuance of the financial statements,
Results of Operations for the Three Months Ended
Unless otherwise stated, the below results, when providing comparisons (which are generally indicated by words such as "increased," "decreased," "unchanged" or "compared to"), compare the results of operations for the three months endedMarch 31, 2020 , against the results of operations for the three months endedMarch 31, 2019 . Unless otherwise stated, the results announced below, when referencing "both quarters," refer to the three months endedMarch 31, 2019 and the three months endedMarch 31, 2020 .
First Quarter 2020 Consolidated Financial Highlights
The following table illustrates the differences in our operating results for the three months endedMarch 31, 2020 , from the three months endedMarch 31, 2019 , and the increases or decreases for each category by segment: Three Months Three Months Ended Increase (Decrease) in Operating Segment Ended March 31, North Asia/ Admin & March 31, (in thousands) 2019 America Europe Pacific All Other 2020 Net sales$ 259,244 $ 27,619 $ (3,048 ) $ (147 ) $ -$ 283,668 Cost of sales 148,990 7,221 (2,194 ) 5 (20 ) 154,002 Gross profit 110,254 20,398 (854 ) (152 ) 20 129,666 Research and development and other engineering expense 12,260 1,153 7 (27 ) (11 ) 13,382 Selling expense 28,112 449 93 (102 ) (25 ) 28,527 General and administrative expense 39,549 (1,590 ) 344 41 127 38,471 Total operating expenses 79,921 12 444 (88 ) 91 80,380 Net loss (gain) on disposal of assets 310 (361 ) (12 ) (1 ) - (64 ) Income from operations 30,023 20,747 (1,286 ) (63 ) (71 ) 49,350 Interest expense, net and other (763 ) (733 ) (1,390 ) 180 173 (2,533 ) Income before income taxes 29,260 20,014 (2,676 ) 117 102 46,817 Provision for income taxes 6,598 3,809 (486 ) 53 17 9,991 Net income$ 22,662 $ 16,205 $ (2,190 ) $ 64 $ 85 $ 36,826 Net sales increased 9.4% to$283.7 million from$259.2 million . Net sales to home centers, dealer distributors, lumber dealers and contract distributors increased primarily due to increases in sales volumes. Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 86% and 84% of the Company's total net sales in the first quarters of 2020 and 2019, respectively. Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 14% and 16% of the Company's total net sales in the first quarters of 2020 and 2019, respectively. 23 -------------------------------------------------------------------------------- Gross profit increased 17.6% to$129.7 million from$110.3 million . Gross margins increased to 45.7% from 42.5%, primarily due to lower material and factory and overhead expense (on higher production), partly offset by higher warehouse, labor and shipping expense each as a percentage of net sales. Gross margins, including some inter-segment expenses, which were eliminated in consolidation, and excluding other expenses that are allocated according to product group, increased to 47.5% from 44.7% for wood construction products and increased to 45.3% from 39.4% for concrete construction products, respectively. Research and development and engineering expense increased 9.2% to$13.4 million from$12.3 million , primarily due to increases of$0.6 million in cash profit sharing expense and$0.4 million in personnel costs. Selling expense increased 1.5% to$28.5 million from$28.1 million , primarily due to increases of$1.7 million in cash profit sharing and sales commission expense,$0.7 million in personnel costs, partly offset by decreases of$0.3 million in advertising and promotion expense and$0.2 million in professional fees. General and administrative expense decreased 2.7% to$38.5 million from$39.5 million , primarily due to decreases of$2.4 million in stock-based compensation expense and$2.0 million in professional fees, including consulting fees, partly offset by increases of$1.5 million in personnel expense,$1.4 million in cash profit sharing expense and$0.7 million in bad debt expense. Included in general and administrative expense are SAP implementation and support costs of$3.4 million , which increased$1.0 million from the prior quarter. Our effective income tax rate decreased to 21.3% from 22.5%, primarily due to a windfall tax credit on the vesting of restricted stock units during the first quarter of 2020.
Consolidated net income was
Net sales
The following table represents net sales by segment for the three-month periods
ended
North Asia/
(in thousands) America Europe Pacific Total
Three months ended
March 31, 2019 $ 221,431 $ 35,780 $ 2,033 $ 259,244
March 31, 2020 249,050 32,732 1,886 283,668
Increase (decrease) $ 27,619 $ (3,048 ) $ (147 ) $ 24,424 Percentage Increase (decrease) 12.5 % (8.5 )% (7.2 )%
9.4 %
The following table represents segment net sales as percentages of total net
sales for the three-month periods ended
North Asia/
America Europe Pacific Total
Percentage of total 2019 net sales 85 % 14 % 1 % 100 % Percentage of total 2020 net sales 88 % 12 % - % 100 %
24
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Gross profit
The following table represents gross profit by segment for the three-month
periods ended
North Asia/ Admin &
(in thousands) America Europe Pacific All Other Total
Three months ended
March 31, 2019 $ 98,397 $ 11,555 $ 319 $ (17 ) $ 110,254
March 31, 2020 118,795 10,701 167 3 129,666
Increase (decrease) $ 20,398 $ (854 ) $ (152 ) $ 20 $ 19,412
Percentage Increase (decrease) 20.7 % (7.4 )% * * 17.6 %
* The statistic is not meaningful or material.
The following table represents gross profit as a percentage of sales by segment
for the three months ended
North Asia/ Admin &
America Europe Pacific All Other Total
2019 gross profit percentage 44.4 % 32.3 % 15.7 % * 42.5 %
2020 gross profit percentage 47.7 % 32.7 % 8.9 % * 45.7 %
* The statistic is not meaningful or material.
• Net sales increased 12.5%, primarily due to increases in sales volumes.
• Gross profit as a percentage of net sales increased to 47.7% from 44.4%
primarily due to lower material costs and factory and overhead costs (on
higher production), partly offset by higher warehouse, labor and shipping
expense, each as a percentage of net sales.
• Research and development and engineering expense increased
primarily due to an increases of
and $0.4 million in personnel costs.
• Selling expense increased
million in cash profit sharing and sales commission expense and
in personnel costs, partly offset by decreases of $1.1 million in
stock-based compensation, $0.4 million in advertising and promotional
expenses and $0.2 million in professional fees.
• General and administrative expense decreased
decreases of
professional fees, partly offset by increases of
expense mostly from increased SAP implementation expenses,
bad debt expense and
in general and administrative expense are SAP related costs of
which increased $0.7 million from the prior quarter.
• Income from operations increased by $20.7 million , primarily due to
increased gross profit.
• Net sales decreased 8.5%, primarily due to lower sales volumes, which was
partly related to the COVID-19 pandemic. Net sales were impacted by
approximately
resulting from some
dollar. In local currency, Europe net sales decreased.
25
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• Gross profit as a percentage of net sales increased to 32.7% from 32.3%,
primarily due to decreases in material costs, partly offset by higher labor,
factory and overhead costs, shipping and warehouse costs, each as a
percentage of net sales.
• General and administrative expense increased
increases of
severance expense, partly offset by an increase of
amortization expense on intangibles acquired in fiscal year 2019. Included
in general and administrative expense are SAP related costs of
which increased $0.4 million from the prior quarter.
• Loss from operations was
primarily due to lower net sales and increased operating expenses.
• For information about the Company's
the tables above setting forth changes in our operating results for the
three months ended March 31, 2020 and 2019, respectively.
Effect of New Accounting Standards
See "Note 1 Basis of Presentation - Recently Adopted Accounting Standards" to the accompanying unaudited interim condensed consolidated financial statements.
Liquidity and Sources of Capital
The Company is a borrower, and certain of its domestic subsidiaries are guarantors under a revolving credit agreement withWells Fargo Bank, N.A . as administrative agent, and certain other lenders, which provides the Company with a$300.0 million revolving line of credit (the "Credit Facility"), and an irrevocable standby letter of credit in support of various insurance deductibles. As previously disclosed, as a proactive measure, the Company elected to draw down$150.0 million from the Credit Facility to increase its cash position and preserve financial flexibility in light of current uncertainty resulting from the COVID-19 outbreak. The proceeds from the borrowings are available to be used for working capital, general corporate or other purposes permitted by the Credit Facility. Total available credit as ofMarch 31, 2020 , was$153.6 million , including the Credit Facility and other revolving credit lines. Given current circumstances, the Company has temporarily suspended until further notice its capital allocation strategy first announced inAugust 2015 and updated inAugust 2016 , which included growing our business by internal improvements and repurchasing our common stock. Our current principal use of liquidity are the costs and expenses associated with our operations. As ofMarch 31, 2020 , our cash and cash equivalents consisted of deposits and money market funds held with established national financial institutions. Cash and cash equivalents of$53.1 million are held in the local currencies of our foreign operations and could be subject to additional taxation if repatriated tothe United States . The Company is maintaining a permanent reinvestment assertion on its foreign earnings relative to remaining cash held outsidethe United States .
The following table presents selected financial information as of
At March 31, At December 31, At March 31,
(in thousands) 2020 2019 2019
Cash and cash equivalents $ 301,741 $ 230,210 $ 113,407
Property, plant and equipment, net 246,941 249,012 251,398
Goodwill , intangible assets and equity
investment 157,527 159,430 158,371
Working capital 589,132 482,000 425,160
26
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The following table provides cash flow indicators for the three-month periods
ended
Three Months Ended March 31,
(in thousands) 2020 2019
Net cash provided by (used in):
Operating activities$ 12,725 $ 9,648 Investing activities (6,234 ) (10,806 ) Financing activities 68,567 (45,466 ) Cash flows from operating activities result primarily from our earnings, and are also affected by changes in operating assets and liabilities which consist primarily of working capital balances. As a significant portion of our revenues are derived from manufacturing building construction materials, our operating cash flows are subject to seasonality and are cyclically associated with the volume and timing of construction project starts. For example, trade accounts receivable is generally at its lowest at the end of the fourth quarter and increases during the first, second and third quarters. During the three months endedMarch 31, 2020 , operating activities provided$12.7 million in cash and cash equivalents, as a result of$36.8 million from net income and$14.1 million from non-cash adjustments to net income, which included depreciation and amortization expense. The increase in net cash provided by operating activities was partly offset by a decrease of$38.2 million in the net change in operating assets and liabilities, including an increase of$32.2 million in trade accounts receivable. Cash used in investing activities of$6.2 million during the three months endedMarch 31, 2020 consisted primarily of$6.8 million for property, plant and equipment expenditures. Cash provided by financing activities of$68.6 million during the three months endedMarch 31, 2020 consisted primarily of$150.0 million provided by a draw on our credit facility, partly offset by$62.7 million used for share repurchases and$10.2 million used to pay cash dividends. Cash flow used for investing activities result primarily from the capital expenditures. Our capital spending in 2018, 2019 and the three months endedMarch 31, 2020 was$29.3 million ,$32.7 million and$6.8 million , respectively, which was primarily used for machinery and equipment purchases and software in development. Based on current information and subject to future events and circumstances, we postponed new capital spending for fiscal year 2020 except primarily for safety and equipment replacement projects. Cash flow provided by financing activities was primarily due to the Company borrowing$150.0 million on its credit facility. During the first quarter of 2020, we used$62.7 million to purchase 902,340 shares of the Company's common stock on the open market at an average price of$69.46 per share and we used$10.2 million to pay dividends to our stockholders. OnApril 23, 2020 , the Board declared a quarterly cash dividend of$0.23 per share, estimated to be$10.2 million in total. The dividend will be payable onJuly 23, 2020 , to the Company's stockholders of record onJuly 2, 2020 . As illustrated in the table below, since 2014, the Company has repurchased over seven-and-a-half million shares of the Company's common stock, which represents approximately 15.4% of our shares of common stock outstanding at the beginning of 2015. Including dividends, we have returned cash of$604.3 million , which represents 84.6% of our total cash flow from operations during the same period. Number of Shares Cash Paid for Cash paid for (in thousands) Repurchased Share Repurchases Dividends Total January 1 - April 30, 2020 902$ 62,679 $ 20,400 $ 83,079 January 1 - December 31, 2019 972 60,816 40,258 101,074 January 1 - December 31, 2018 1,955 110,540 39,891 150,431 January 1 - December 31, 2017 1,138 70,000 36,981 106,981 January 1 - December 31, 2016 1,244 53,502 32,711 86,213 January 1 - December 31, 2015 1,339 47,144 29,352 76,496 Total 7,550$ 404,681 $ 199,593 $ 604,274 27
-------------------------------------------------------------------------------- Given current circumstances, the Company has temporarily suspended its share repurchase program as ofMarch 31, 2020 . As ofMarch 31, 2020 , approximately$37.3 million remained available under the$100.0 million repurchase authorization, which expiresDecember 31, 2020 .
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of
Inflation and Raw Materials
We believe that the effect of inflation has not been material in recent years, as general inflation rates have remained relatively low. Our main raw material is steel. As such, increases in steel prices may adversely affect our gross profit margin if we cannot recover the higher costs through price increases.
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