Delaware | 1-13429 | 94-3196943 | ||
(State or other jurisdiction of incorporation) | (Commission file number) | (I.R.S. Employer Identification No.) |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-2) | |
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c)) |
Simpson Manufacturing Co., Inc. | |||
(Registrant) | |||
DATE: July 24, 2014 | By | /s/ Brian J. Magstadt | |
Brian J. Magstadt | |||
Chief Financial Officer |
• | Segment net sales: |
◦ | North America – Net sales increased 5.5% in the second quarter of 2014 compared to the second quarter of 2013, primarily due to increased sales volumes, partly offset by slightly lower average selling prices and the effects of foreign currency translations. |
◦ | Europe – Net sales increased 9.1% in the second quarter of 2014 compared to the second quarter of 2013, mostly due to increased sales volumes and the effects of foreign currency translations, partly offset by lower average selling prices. |
• | Consolidated net sales channels and product groups: |
◦ | Net sales to contractor distributors, dealer distributors and lumber dealers increased in the second quarter of 2014, compared to the second quarter of 2013, while home center sales decreased compared to the same period in 2013. |
◦ | Wood construction product sales, including connectors, truss plates, fastening systems, fasteners and shearwalls, represented 85% of total Company sales in the second quarter of each of 2014 and 2013. |
◦ | Concrete construction product sales, including adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15% of total Company sales in the second quarter of each of 2014 and 2013. |
• | North America – Gross profit margin increased to 47.9% in the second quarter of 2014 from 47.6% in the second quarter of 2013, as a result of decreases as a percentage of sales in material and labor costs. The decreases were partly offset by increases as a percentage of sales in factory overhead, primarily due to an atypical $2.9 million charge that resulted from the Company's withdrawal from a multi-employer union-based defined-benefit pension plan. |
• | Europe – Gross profit margin increased to 40.5% in the second quarter of 2014 from 39.2% in the second quarter of 2013, as a result of decreases as a percentage of sales in factory overhead on increased volumes and in shipping costs, partly offset by increases as a percentage of sales in material and labor costs. |
• | Product mix – The gross profit margin differential between wood construction products and concrete construction products, which have lower gross profit margins, was 13% and 9% in the second quarter of 2014 and the second quarter of 2013, respectively. This negatively affected gross margin in North America, with concrete construction products at 13% of North America net sales in the second quarter of each of 2014 and 2013, and in Europe, with concrete construction products at 19% and 20% of Europe net sales in the second quarters of 2014 and 2013, respectively. |
• | North America – Research and development and engineering expense increased $0.6 million, primarily due to increases of $0.2 million in cash profit sharing and $0.1 million in each of stock-based compensation and professional fees. |
• | North America – Selling expense increased $2.2 million, primarily due to increases of $0.9 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2014, $0.9 million in professional fees, $0.6 million in promotional costs and $0.2 million in stock-based compensation, partially offset by a decrease of $0.3 million in cash profit sharing and commissions. |
• | North America – General and administrative expense increased $1.4 million, primarily due to increases of $0.4 million in cash profit sharing, $0.3 million in personnel costs related to the addition of administrative and information technology staff and pay rate increases instituted in January 2014, $0.3 million in professional fees, $0.3 million in depreciation and $0.2 million in phone and computer expense, partly offset by a $0.6 million decrease in amortization expense. |
• | Europe – General and administrative expense decreased by $0.2 million, primarily due to decreases of $0.3 million in stock-based compensation and $0.1 million in professional fees, partly offset by an increase of $0.5 million in cash profit sharing. |
• | Administrative and all other – General and administrative expense decreased by $0.4 million, primarily due to decreases of $0.2 million in cash profit sharing and $0.1 million in professional fees. |
• | Segment net sales: |
◦ | North America – Net sales increased 6.3% in the first half of 2014, compared to the first half of 2013, primarily due to increased sale volumes, partly offset by slightly lower average selling prices and the effects of foreign currency translations. |
◦ | Europe – Net sales increased 12.0% in the first half of 2014 compared to the first half of 2013, mostly due to increased sales volumes and the effects of foreign currency translations, partly offset by lower average selling prices. |
• | Consolidated net sales channels and product groups: |
◦ | Net sales to contractor distributors, dealer distributors and lumber dealers increased in the first half of 2014, compared to the first half of 2013, while home center sales decreased compared to the same period in 2013. |
◦ | Wood construction product sales, including connectors, truss plates, fastening systems, fasteners and shearwalls, represented 85% of total Company sales in the first half of each of 2014 and 2013. |
◦ | Concrete construction product sales, including adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15% of total Company sales in the first half of each of 2014 and 2013. |
• | North America – Gross profit margin increased to 48.4% in the first half of 2014 from 46.3% in the first half of 2013, as a result of decreases as a percentage of sales in all elements of costs, with the largest decreases as a percentage of sales in materials and in factory overhead elements on increased volumes. In the first half of 2014, the gross profit margin was affected by an atypical $2.9 million pension charge that resulted from the Company's withdrawal from a multi-employer union-based defined-benefit pension plan, partly offset by an atypical $2.5 million correction to workers' compensation expense in states where the Company is not self-insured. |
• | Europe – Gross profit margin increased to 38.2% in the first half of 2014 from 35.5% in the first half of 2013, as a result of decreases as a percentage of sales in factory overhead on increased volumes, shipping and warehouse costs, as well as material costs. |
• | Product mix – The gross profit margin differential between wood construction products and concrete construction products, which have lower gross profit margins, was 14% and 11% in the first half of 2014 and in the first half of 2013, respectively. This negatively affected gross margins in North America, with concrete construction products representing 13% of North America net sales in the first half of each of 2014 and 2013, and in Europe, with concrete construction products at 16% and 17% of Europe net sales in the first half of 2014 and first half of 2013, respectively. |
• | Steel prices – Steel prices have increased slightly from March 2014. Based on current estimates, the Company expects the market price for steel to increase during the second half of 2014. |
• | North America – Research and development and engineering expense increased $1.5 million, primarily due to increases of $0.8 million in professional fees, mostly for patent development and product testing, and $0.6 million in cash profit sharing. |
• | Europe – Research and development and engineering expense increased $0.4 million, primarily due to an increase in professional fees. |
• | North America – Selling expense increased $2.3 million, primarily due to increases of $1.2 million in professional fees and $1.0 million in personnel costs related to the addition of staff in support of product and software development and pay rate increases instituted in January 2014. |
• | Europe – Selling expense increased $0.5 million, primarily due to increases of $0.4 million in personnel costs and $0.1 million in professional fees. |
• | North America – General and administrative expense increased $3.7 million, primarily due to increases of $1.4 million in cash profit sharing, $0.7 million in personnel costs related to the addition of administrative and information technology staff and pay rate increases instituted in January 2014, $0.6 million in depreciation expense, $0.4 million in professional fees and $0.3 million in foreign currency losses, partly offset by a $0.6 million decrease in amortization expense. |
• | Europe – General and administrative expense decreased by $1.6 million, primarily due to $1.0 million in impairment of fixed assets and decreases of $0.5 million in stock-based compensation, $0.3 million in professional fees and $0.2 million in depreciation expenses, as well as a $0.7 million decrease in foreign currency losses, partly offset by increases of $0.7 million in cash profit sharing and $0.4 million in personnel costs. |
• | Administrative and all other – General and administrative expense decreased slightly, primarily due to an decrease of $0.3 million in foreign currency losses, partly offset by an increase of $0.3 million in cash profit sharing. Effective 2014, the Company reports rent revenue, mostly associated with its property in Vacaville, California, in general and administrative expense. Rent revenue in the first half of each of 2014 and 2013 was $0.5 million. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(Amounts in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Net sales | $ | 207,893 | $ | 195,348 | $ | 376,198 | $ | 349,628 | |||||||
Cost of sales | 111,993 | 106,176 | 202,518 | 195,736 | |||||||||||
Gross profit | 95,900 | 89,172 | 173,680 | 153,892 | |||||||||||
Research and development and engineering expenses | 10,094 | 9,484 | 19,794 | 17,792 | |||||||||||
Selling expenses | 24,213 | 21,652 | 46,032 | 43,024 | |||||||||||
General and administrative expenses | 29,494 | 28,347 | 56,435 | 54,382 | |||||||||||
Loss (gain) on disposal of assets | (34 | ) | 11 | (319 | ) | 3 | |||||||||
Income from operations | 32,133 | 29,678 | 51,738 | 38,691 | |||||||||||
Interest (expense) income, net | (15 | ) | 1 | 71 | 40 | ||||||||||
Income before taxes | 32,118 | 29,679 | 51,809 | 38,731 | |||||||||||
Provision for income taxes | 11,667 | 11,177 | 19,271 | 15,434 | |||||||||||
Net income | $ | 20,451 | $ | 18,502 | $ | 32,538 | $ | 23,297 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.42 | $ | 0.38 | $ | 0.66 | $ | 0.48 | |||||||
Diluted | 0.42 | 0.38 | 0.66 | 0.48 | |||||||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 49,011 | 48,529 | 48,955 | 48,532 | |||||||||||
Diluted | 49,227 | 48,628 | 49,146 | 48,627 | |||||||||||
Other data: | |||||||||||||||
Depreciation and amortization | $ | 7,102 | $ | 7,290 | $ | 14,785 | $ | 14,777 | |||||||
Pre-tax impairment of assets | — | — | — | 1,025 | |||||||||||
Pre-tax equity-based compensation expense | 3,544 | 3,023 | 6,201 | 6,001 | |||||||||||
Cash dividend declared per common share | $ | 0.140 | $ | 0.125 | $ | 0.265 | $ | 0.125 |
June 30, | December 31, | |||||||||||
(Amounts in thousands) | 2014 | 2013 | 2013 | |||||||||
Cash and short-term investments | $ | 221,196 | $ | 165,275 | $ | 251,208 | ||||||
Trade accounts receivable, net | 137,803 | 126,888 | 90,017 | |||||||||
Inventories | 219,036 | 196,247 | 197,728 | |||||||||
Assets held for sale | — | 586 | — | |||||||||
Other current assets | 26,128 | 21,339 | 29,153 | |||||||||
Total current assets | 604,163 | 510,335 | 568,106 | |||||||||
Property, plant and equipment, net | 206,563 | 209,544 | 209,533 | |||||||||
Goodwill | 129,231 | 122,678 | 129,218 | |||||||||
Other noncurrent assets | 43,377 | 54,428 | 46,756 | |||||||||
Total assets | $ | 983,334 | $ | 896,985 | $ | 953,613 | ||||||
Trade accounts payable | $ | 27,119 | $ | 29,579 | $ | 34,933 | ||||||
Notes payable and lines of credit | 62 | 1,201 | 103 | |||||||||
Other current liabilities | 78,274 | 64,953 | 68,169 | |||||||||
Total current liabilities | 105,455 | 95,733 | 103,205 | |||||||||
Other long-term liabilities | 12,603 | 8,221 | 9,129 | |||||||||
Stockholders' equity | 865,276 | 793,031 | 841,279 | |||||||||
Total liabilities and stockholders' equity | $ | 983,334 | $ | 896,985 | $ | 953,613 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | % | June 30, | % | ||||||||||||||||||
(Amounts in thousands) | 2014 | 2013 | change | 2014 | 2013 | change | |||||||||||||||
Net Sales by Reporting Segment | |||||||||||||||||||||
North America | $ | 168,600 | $ | 159,757 | 6% | $ | 305,482 | $ | 287,493 | 6% | |||||||||||
Europe | 35,024 | 32,088 | 9% | 62,688 | 55,988 | 12% | |||||||||||||||
Asia/Pacific | 4,269 | 3,503 | 22% | 8,028 | 6,147 | 31% | |||||||||||||||
Total | $ | 207,893 | $ | 195,348 | 6% | $ | 376,198 | $ | 349,628 | 8% | |||||||||||
Net Sales by Product Group* | |||||||||||||||||||||
Wood Construction | $ | 176,363 | $ | 165,865 | 6% | $ | 321,042 | $ | 298,660 | 7% | |||||||||||
Concrete Construction | 31,493 | 29,414 | 7% | 55,031 | 50,834 | 8% | |||||||||||||||
Other | 37 | 69 | N/M | 125 | 134 | N/M | |||||||||||||||
Total | $ | 207,893 | $ | 195,348 | 6% | $ | 376,198 | $ | 349,628 | 8% | |||||||||||
Gross Profit by Reporting Segment | |||||||||||||||||||||
North America | $ | 80,698 | $ | 76,036 | 6% | $ | 147,990 | $ | 133,128 | 11% | |||||||||||
Europe | 14,190 | 12,574 | 13% | 23,971 | 19,858 | 21% | |||||||||||||||
Asia/Pacific | 850 | 881 | (4)% | 1,606 | 1,327 | 21% | |||||||||||||||
Administrative and all other | 162 | (319 | ) | N/M | 113 | (421 | ) | N/M | |||||||||||||
Total | $ | 95,900 | $ | 89,172 | 8% | $ | 173,680 | $ | 153,892 | 13% | |||||||||||
Income (Loss) from Operations | |||||||||||||||||||||
North America | $ | 30,123 | $ | 29,665 | 2% | $ | 52,685 | $ | 44,924 | 17% | |||||||||||
Europe | 3,755 | 2,241 | 68% | 2,836 | (1,939 | ) | N/M | ||||||||||||||
Asia/Pacific | (484 | ) | (46 | ) | N/M | (1,636 | ) | (1,229 | ) | (33)% | |||||||||||
Administrative and all other | (1,261 | ) | (2,182 | ) | N/M | (2,147 | ) | (3,065 | ) | N/M | |||||||||||
Total | $ | 32,133 | $ | 29,678 | 8% | $ | 51,738 | $ | 38,691 | 34% |
* | 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. |