Simpson Manufacturing reports Q1 net income of US$7.2M, up from US$7.1M a year earlier, on net sales up 19.8% to US$158.7M; sales to all distribution channels increased
Allison Oesterle
PLEASANTON, California
,
April 27, 2012
(press release)
–
Simpson Manufacturing Co., Inc. (the "Company") (NYSE: SSD) today announced its first quarter 2012 results.
Three Months Ended March 31, (Amounts in thousands, except per share data) 2012 2011 Net sales $158,734 $132,536 Cost of sales 89,329 75,588 Gross profit 69,405 56,948 Research and development and engineering expenses 9,198 5,994 Selling expenses 20,432 17,075 General and administrative expenses 26,244 21,621 Loss (gain) on sale of assets 23 (25) Income from operations 13,508 12,283 Loss on equity method investment, before tax – (14) Interest income, net 65 72 Income before taxes 13,573 12,341 Provision for income taxes 6,372 5,263 Net income $7,201 $7,078 Earnings per common share: Basic $0.15 $0.14 Diluted 0.15 0.14 Weighted average shares outstanding: Basic 48,273 50,107 Diluted 48,337 50,165 Other data: Depreciation and amortization $6,721 $4,972 Pre-tax impairment of assets 461 – Pre-tax stock compensation expense 3,184 1,521 Cash dividend declared per common share $0.125 $0.125 March 31, December 31, (Amounts in thousands) 2012 2011 2011 Cash and short-term investments $160,092 $301,231 $213,817 Trade accounts receivable, net 107,257 91,076 76,420 Inventories 184,068 166,966 180,129 Assets held for sale – 9,148 6,793 Other current assets 26,234 22,287 24,905 Total current assets 477,651 590,708 502,064 Property, plant and equipment, net 209,460 184,606 195,716 Goodwill 130,556 71,338 99,849 Other noncurrent assets 49,344 36,518 38,458 Total assets $867,011 $883,170 $836,087 Trade accounts payable $35,109 $29,822 $22,033 Notes payable and current portion of long-term debt 3,556 – – Other current liabilities 50,705 48,450 49,554 Total current liabilities 89,370 78,272 71,587 Long-term debt 240 – – Other long-term liabilities 6,300 7,833 6,137 Stockholders' equity 771,101 797,065 758,363 Total liabilities and stockholders' equity $867,011 $883,170 $836,087
For the first quarter of 2012, net sales increased 19.8% to $158.7 million compared to net sales of $132.5 million for the first quarter of 2011. The Company had income, net of tax, of $7.2 million for the first quarter of 2012 compared to income, net of tax, of $7.1 million for the first quarter of 2011. Diluted income, net of tax, per common share was $0.15 for the first quarter of 2012 compared to diluted income, net of tax, of $0.14 per common share for the first quarter of 2011.
In the first quarter of 2012, sales increased throughout North America due in part to a mild winter and, in Europe, as a result of the recent European acquisition. Sales increases were above average in all regions of the United States, except California, as compared to the first quarter of 2011. Sales to all distribution channels increased, with above-average increases in sales to contractor distributors and lumber dealers as compared to first quarter 2011. The sales increase was broad-based across most of the Company's major product lines as compared to the first quarter of 2011.
Gross margins increased slightly from 43.0% in the first quarter of 2011 to 43.7% in the first quarter of 2012, primarily because of lower warehouse and shipping costs as a percentage of sales. Material and labor costs increased as a percentage of sales but were offset by a lower proportion of fixed overhead costs to total costs, resulting primarily from the increased sales volume. Steel prices increased in the first quarter due to increased steel market demand. The Company expects steel prices to remain generally at current levels at least through the first half of 2012.
Operating expenses increased due to integration and incremental expenses associated with recently acquired businesses. Research and development and engineering expense increased 53.5% from $6.0 million in the first quarter of 2011 to $9.2 million in the first quarter of 2012, due primarily to an increase in professional fees of $2.4 million and personnel costs of $0.3 million. Selling expense increased 19.7% from $17.1 million in the first quarter of 2011 to $20.4 million in the first quarter of 2012, primarily due to increases in personnel costs of $1.5 million, promotional costs of $0.6 million, stock based compensation of $0.5 million and cash profit sharing of $0.4 million. General and administrative expense increased 21.4% from $21.6 million in the first quarter of 2011 to $26.2 million in the first quarter of 2012, including increases in personnel costs of $1.2 million, depreciation of $0.8 million, intangible amortization expense of $0.8 million, stock based compensation of $0.5 million, professional and legal fees of $0.5 million and an impairment of $0.5 million associated with completing the sale of the Company's San Leandro facility.
The effective tax rate increased from 42.6% in the first quarter of 2011 to 46.9% in the first quarter of 2012. The increase in the effective tax rate was primarily due to $2.2 million in non-deductible acquisition costs.
In March 2012, the Company purchased substantially all of the assets of CarbonWrap Solutions, L.L.C., for $5.5 million. CarbonWrap Solutions distributes fiber-reinforced polymer products primarily for infrastructure and transportation projects. The Company expects that this acquisition will help expand its product offerings in the infrastructure, commercial and industrial construction markets.
At its meeting on April 25, 2012, the Company's Board of Directors declared a cash dividend of $0.125 per share. The record date for the dividend will be July 5, 2012, and it will be paid on July 26, 2012.
Investors, analysts and other interested parties are invited to join the Company's conference call on Friday, April 27, 2012, at 6:00 am Pacific Time. To participate, callers may dial 800-895-0198. 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. 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. Actual results might differ materially from results suggested by any forward-looking statements in this report. 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 Company's results of operations for the three months ended March 31, 2012 and 2011 (unaudited), were as follows:
The Company's financial position (unaudited) as of
March 31, 2012 and 2011 and
December 31, 2011, was as follows:
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, chemicals, 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."
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