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OFFON

SIMPSON MANUFACTURING CO., INC.

(SSD)
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Simpson Manufacturing Co., Inc. : Announces 2021 First Quarter Financial Results

04/26/2021 | 04:16pm EDT

PLEASANTON, Calif., April 26, 2021 /PRNewswire/ -- 

  • Net sales of $347.6 million increased 22.6% year-over-year
  • Gross margin of 46.7% increased from 45.7% in the prior year period
  • Income from operations of $68.4 million increased 38.6% year-over-year, operating margin of 19.7% increased from 17.4% in the prior year period
  • Diluted earnings per share of $1.16 increased 39.8% year-over-year
  • Updating full year 2021 financial guidance on improved revenue expectations

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 first quarter of 2021. 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).

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 March 31, 2021 with the quarter ended March 31, 2020.

2021 First Quarter Financial Highlights

  • Consolidated net sales of $347.6 million increased 22.6% from $283.7 million.
    • North America net sales of $300.6 million increased 20.7% from $249.1 million due to higher sales volumes to the home center distribution channel, primarily due to the return of Lowe's in the second quarter of 2020 and increased repair and remodel activity, as well as from other distribution channels, which experienced an increase in new housing starts and repair and remodel activity. Canada's net sales also increased primarily due to higher sales volumes and were positively impacted by approximately $0.8 million in foreign currency translation.
    • Europe net sales of $44.3 million increased 35.3% from $32.7 million, primarily due to higher sales volumes and were positively affected by approximately $3.6 million in foreign currency translation related to Europe's currencies strengthening against the United States dollar.
  • Consolidated gross profit of $162.3 million increased 25.2% from $129.7 million. Gross margin increased to 46.7% from 45.7%.
    • North America gross margin increased to 48.5% from 47.7%, primarily due to lower labor, factory, warehouse and freight costs, each as a percentage of net sales, partly offset by higher material costs as a percentage of net sales.
    • Europe gross margin increased to 34.4% from 32.7%, primarily due to lower factory, warehouse and shipping costs, partly offset by higher material costs, each as a percentage of net sales.
  • Consolidated income from operations of $68.4 million increased 38.6% from $49.4 million. The increase was primarily due to the increase in consolidated gross profit, partly offset by higher operating expenses, including stock-based compensation expense resulting from favorable operating performance in the first quarter. Consolidated operating margin increased to 19.7% from 17.4%.
    • North America income from operations of $69.4 million increased from $53.6 million, primarily due to the increase in gross profit, partly offset by higher operating expenses, including stock-based compensation and depreciation expense.
    • Europe income from operations of $2.3 million increased from a $1.7 million loss from operations, primarily due to increased gross profit.
  • The Company's effective income tax rate increased to 24.3% from 21.3%, primarily due to lower windfall tax credits on the vesting of restricted stock units during the first quarter of 2021 compared to 2020.
  • Net income was $50.4 million, or $1.16 per diluted share of the Company's common stock, compared to net income of $36.8 million, or $0.83 per diluted share.
  • Cash flow provided by operating activities increased approximately $5.8 million to $18.5 million from $12.7 million.
  • Cash flow used in investing activities increased approximately $9.5 million to $15.7 million from $6.2 million. Capital expenditures were approximately $10.5 million compared to $6.8 million and the Company invested $5.3 million in a venture capital fund.

Management Commentary

"I am thrilled with our strong first quarter performance despite global macroeconomic turbulence stemming from the pandemic," commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. "Our net sales grew 22.6% year-over-year to $347.6 million on significantly higher sales volume driven by ongoing momentum in the home center distribution channel where sales increased over 60% year-over-year due to higher activity in the repair and remodel space along with the return of Lowe's as a home center customer in the second quarter of 2020. Our sales further benefited from solid U.S. housing starts and strong demand trends in Europe as we continued to meet our customers' needs due to our solid inventory management practices amid broader supply chain shortages. Our gross margin expanded to 46.7% from 45.7% in the prior year quarter, which, when combined with our diligent expense management and reduced costs due to COVID-19, helped drive significant year-over-year increases in our income from operations to $68.4 million and our earnings per diluted share to $1.16."

Mrs. Colonias continued, "We believe our business model will support our ability to successfully execute on our recently announced key growth initiatives which focus on expansion into the OEM, repair & remodel / do-it-yourself ("R&R/DIY"), mass timber, concrete and structural steel markets. We aspire to be a leader in engineered load-rated construction fastening solutions and believe that there is a broad product opportunity within the OEM, R&R/DIY and mass timber markets. In addition, we are working to be a stronger leader in customer-facing technology to help our customers run their businesses more efficiently. We currently have existing products, testing results, distribution and manufacturing capabilities for all of our growth initiatives which are currently in different stages of development."

Mrs. Colonias concluded, "I'd like to thank all of our employees for their dedication to operational excellence, health and safety which has enabled our business to continue to operate during the pandemic from a position of strength. Our employees have been thoughtfully engaged with our leadership team as it pertains to our Company ambitions and growth initiatives to ensure a collaborative environment and to assist in the execution of our strategy. We are pleased to create opportunities to provide our customers with even more Simpson Strong-Tie structural solutions and technology as we execute against these initiatives and we look forward to capitalizing on our growth opportunities by leveraging our business model built on engineering, testing and innovation."

Corporate Developments

  • On March 19, 2021, the Company launched an upgraded Investor Relations website to enhance the user experience for all stakeholders.
  • On March 22, 2021, the Company published an addendum to its inaugural Sustainability, Environmental and Social Responsibility Report from March 2020 as part of its ongoing commitment to sustainable business practices and environmental and social responsibility to its employees and stakeholders.

Business Outlook

On February 8, 2021, the Company provided a full-year outlook. The Company is updating its full year outlook, primarily reflecting one quarter of actual results, as well as improved visibility on the progression of pandemic-related restrictions and the impact of those restrictions on the Company's operations. Based on business trends and conditions as of today, April 26, the Company's outlook for the full fiscal year ending December 31, 2021 is as follows:

  • Operating margin is estimated to be in the range of 19.5% to 22.0%.
  • The effective tax rate is estimated to be in the range of 25.0% to 26.0%, including both federal and state income tax rates.
  • Capital expenditures are estimated to be in the range of $50 million to $55 million.

Conference Call Details

Investors, analysts and other interested parties are invited to join the Company's first quarter of 2021 financial results conference call on Monday, April 26, 2021, 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=144376 or a link on the Company's website at ir.simpsonmfg.com. 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, May 10, 2021, by dialing (844) 512–2921 (U.S. and Canada) or (412) 317–6671 (International) and entering the conference ID: 13718741. 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 ir.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."

Copies of Simpson Manufacturing's Annual Report to Stockholders and its proxy statements and other SEC filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, are made available free of charge on the company's Web site on the same day they are filed with the SEC. To view these filings, visit the Investor Relations section of the Company's Web site.

Cautionary Note Regarding Forward-Looking Statements

This press release 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 2 IE of the Securities Exchange Act of 1934, as amended. 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 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 the impact of COVID-19 on our operations and supply chain, and the operations of our customers, suppliers and business partners and those discussed under Part I – Item 1A. Risk Factors and Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report on Form 10-K, Part II – Other Information – Item 1.A and subsequent filings with the SEC. To the extent that COVID-19 adversely affects our business and financial results, it may also have the effect of heightening many of such risk and other factors.

We caution that you should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. 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 in our reports filed with the SEC that advise of the risks and factors that may affect our business, results of operations and financial condition.

 

Simpson Manufacturing Co., Inc. and Subsidiaries

UNAUDITED Consolidated Statements of Operations

(In thousands, except per share data)



Three Months Ended

March 31,


(Amounts in thousands, except per share data)

2021


2020


Net sales

$

347,642



$

283,668



Cost of sales

185,360



154,002



Gross profit

162,282



129,666



Research and development and engineering expense

14,591



13,382



Selling expense

30,823



28,527



General and administrative expense

48,565



38,471



Total operating expenses

93,979



80,380



Gain on disposal of assets

(80)



(64)



Income from operations

68,383



49,350



Interest expense, net and other

(1,778)



(2,533)



Income before taxes

66,605



46,817



Provision for income taxes

16,218



9,991



Net income

$

50,387



$

36,826



Earnings per common share:





Basic

$

1.16



$

0.84



Diluted

$

1.16



$

0.83



Weighted average shares outstanding:





Basic

43,379



44,099



Diluted

43,612



44,286



Cash dividend declared per common share

$

0.23



$

0.23



Other data:





Depreciation and amortization

$

11,225



$

9,734



Pre-tax equity-based compensation expense

$

6,542



$

277








 

Simpson Manufacturing Co., Inc. and Subsidiaries

UNAUDITED Consolidated Condensed Balance Sheets

(In thousands)




March 31,


December 31,

(Amounts in thousands)


2021


2020


2020

Cash and cash equivalents


$

257,428



$

301,741



$

274,639


Trade accounts receivable, net


227,201



168,736



165,128


Inventories


296,640



255,720



283,742


Other current assets


37,732



25,786



29,630


Total current assets


819,001



751,983



753,139


Property, plant and equipment, net


255,684



246,941



255,184


Operating lease right-of-use assets


44,236



33,725



45,792


Goodwill


133,477



131,599



135,844


Other noncurrent assets


42,329



34,000



42,610


Total assets


$

1,294,727



$

1,198,248



$

1,232,569


Trade accounts payable


$

66,236



$

44,505



$

48,271


Accrued liabilities and other current liabilities


158,578



118,346



145,790


Total current liabilities


224,814



162,851



194,061


Operating lease liabilities, net of current portion


35,810



26,084



37,199


Long-term debt, net of current portion




150,000




Deferred income tax and other long-term liabilities


19,594



17,719



20,366


Stockholders' equity


1,014,509



841,594



980,943


Total liabilities and stockholders' equity


$

1,294,727



$

1,198,248



$

1,232,569


 

Simpson Manufacturing Co., Inc. and Subsidiaries

UNAUDITED Segment and Product Group Information

(In thousands)




Three Months Ended






March 31,


%


(Amounts in thousands)

2021


2020


change*


Net Sales by Reporting Segment








North America

$

300,564



$

249,050



20.7%



Percentage of total net sales

86.5

%


87.8

%





Europe

44,296



32,732



35.3%



Percentage of total net sales

12.7

%


11.5

%





Asia/Pacific

2,782



1,886



47.5%




$

347,642



$

283,668



22.6%


Net Sales by Product Group**








Wood Construction

$

301,578



$

242,520



24.4%



Percentage of total net sales

86.7

%


85.5

%





Concrete Construction

45,523



41,012



11.0%



Percentage of total net sales

13.1

%


14.5

%





Other

541



136



N/M




$

347,642



$

283,668



100.0%


Gross Profit (Loss) by Reporting Segment








North America

$

145,830



$

118,795



22.8%



 North America gross margin

48.5

%


47.7

%





Europe

15,250



10,701



42.5%



Europe gross margin

34.4

%


32.7

%





Asia/Pacific

1,244



167



N/M



Administrative and all other

(42)



3



N/M




$

162,282



$

129,666



25.2%


Income (Loss) from Operations








North America

$

69,410



$

53,561



29.6%



 North America operating margin

23.1

%


21.5

%





Europe

2,291



(1,670)



(237.2)%



Europe operating margin

5.2

%


(5.1)

%





Asia/Pacific

425



(604)



N/M



Administrative and all other

(3,743)



(1,937)



N/M




$

68,383



$

49,350



38.6%






*

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
investor.relations@strongtie.com 
(310) 829-5400

Simpson Manufacturing Co., Inc. Logo (PRNewsfoto/Simpson Manufacturing Co., Inc.)

 

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SOURCE Simpson Manufacturing Co., Inc.


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