Simpson Manufacturing's Q1 2011 net earnings narrow to US$7.1M from US$9.2M a year ago as sales increased 7% to US$132.5M
April 28, 2011
– Simpson Manufacturing Co., Inc. (NYSE: SSD) (the "Company") today announced its first quarter 2011 results. The Company's results of operations reflect the reclassification of its venting operation to discontinued operations for the first quarter of 2010. The following discussion refers only to continuing operations unless otherwise indicated.
For the first quarter of 2011, net sales increased 7.0% to $132.5 million compared to net sales of $123.8 million for the first quarter of 2010. The Company had income, net of tax, of $7.1 million for the first quarter of 2011 compared to income, net of tax, of $9.8 million for the first quarter of 2010. Diluted income, net of tax, per common share was $0.14 for the first quarter of 2011 compared to diluted income, net of tax, of $0.20 per common share for the first quarter of 2010.
In the first quarter of 2011, sales increased throughout most of North America and increased significantly in Europe. Sales increased in the United States with increases in California, the midwestern, southeastern and northeastern regions as compared to the first quarter of 2010, partly offset by decreases in the western region excluding California. Sales in Canada decreased compared to the first quarter of 2010. Sales in Asia and Australia, although relatively small, decreased as compared to the first quarter of 2010. Sales to contractor distributors, dealer distributors, lumber dealers and home centers increased, although economic conditions remain challenging. The sales increase was broad-based across most of the Company's major product lines as compared to the first quarter of 2010. Sales of anchor products and shearwalls also increased over the same period.
Gross margins decreased slightly from 43.6% in the first quarter of 2010 to 43.0% in the first quarter of 2011, primarily due to higher factory overhead costs. Steel prices increased from their levels in mid-2010, as steel mills have been raising prices as demand returns to global steel markets. The Company expects steel prices to remain at current levels or to increase throughout 2011. The Company's inventories increased 9.6% from $152.3 million at December 31, 2010, to $167.0 million at March 31, 2011.
Research and development and engineering expense increased 26.4% from $4.7 million in the first quarter of 2010 to $6.0 million in the first quarter of 2011, including increases in personnel costs of $0.8 million, professional services of $0.3 million and cash profit sharing of $0.2 million. Selling expense increased 14.8% from $14.9 million in the first quarter of 2010 to $17.1 million in the first quarter of 2011, including increases in personnel costs of $1.3 million, cash profit sharing and commissions of $0.5 million, and promotional costs of $0.2 million. General and administrative expense increased 27.7% from $16.9 million in the first quarter of 2010 to $21.6 million in the first quarter of 2011, including increases in cash profit sharing of $1.1 million, stock option expense of $0.8 million, personnel costs of $0.8 million, professional fees of $0.7 million, provision for bad debt of $0.5 million and various other items. The effective tax rate was 42.6% in the first quarter of 2011, as compared to 42.0% in the first quarter of 2010.
At its meeting on April 26, 2011, the Company's Board of Directors declared a cash dividend of $0.125 per share. The record date for the dividend will be July 7, 2011, and it will be paid on July 28, 2011.
Investors, analysts and other interested parties are invited to join the Company's conference call on Friday, April 29, 2011, at 6:00 am Pacific Time. To participate, callers may dial 800-862-9098. 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.
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-to-wood, wood-to-concrete and wood-to-masonry connectors and fastening systems, stainless steel fasteners and pre-fabricated shearwalls. Simpson Strong-Tie also offers a full line of adhesives, mechanical anchors and powder actuated tools for concrete, masonry and steel. The Company's common stock trades on the New York Stock Exchange under the symbol "SSD."
Industry Intelligence Editor’s Note: In an omitted table, the company reported Q1 net earnings of US$7.1 million. For the same period a year ago, the company reported net earnings of US$9.2 million.
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