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: | February 5, 2015 | By | /s/ Brian J. Magstadt | |
Brian J. Magstadt | ||||
Chief Financial Officer |
• | Segment net sales: |
◦ | North America – Net sales increased 7.2% in the fourth quarter of 2014 compared to the fourth quarter of 2013, primarily due to increased unit sales volumes. |
◦ | Europe – Net sales decreased 7.2% in the fourth quarter of 2014 compared to the fourth quarter of 2013, mostly due to the effects of foreign currency translations and slightly lower average selling prices, partly offset by increased unit sales volumes. Net sales in some regions of the segment have trended down from prior quarters due to weakening economic conditions in the region, as well as European currencies weakening against the United States Dollar. |
• | Consolidated net sales channels and product groups: |
◦ | Net sales to contractor distributors and lumber dealers increased in the fourth quarter of 2014 compared to the fourth quarter of 2013, due to increased home construction activity, while home center sales decreased slightly in the fourth quarter of 2014 compared to the same period in 2013. |
◦ | Wood construction product net sales, including connectors, truss plates, fastening systems, fasteners and shearwalls, represented 84% of total Company net sales in the fourth quarters of both 2014 and 2013. |
◦ | Concrete construction product sales, including adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 16% of total Company net sales in the fourth quarters of both 2014 and 2013. |
• | North America – Gross profit margin decreased to 45.3% in the fourth quarter of 2014 from 46.1% in the fourth quarter of 2013, primarily as a result of increases in factory overhead as a percentage of sales caused by increased costs on flat production volumes and warehousing and shipping costs, partly offset by decreases in material and labor costs. |
• | Europe – Gross profit margin decreased to 35.7% in the fourth quarter of 2014 from 35.9% in the fourth quarter of 2013, as a result of increases in warehousing costs, factory overhead, on decreased production volumes, and labor costs each as a percentage of sales, partly offset by a decrease in the costs of materials. |
• | Product mix – The gross profit margin differential between wood construction products and concrete construction products, which have lower gross profit margins, was 9% and 16% in the fourth quarters of 2014 and 2013, respectively, due to increased gross profit margins on concrete construction products. |
• | North America – Selling expense increased $1.3 million, primarily due to an increase of $0.6 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2014. |
• | North America – General and administrative expense decreased $0.3 million, primarily due to decreases of $0.2 million in depreciation expense, $0.2 million in amortization expense and $0.1 million in professional fees, partly offset by increase of $0.4 million in bad debt expense. |
• | Europe – General and administrative expense increased by $0.2 million, primarily due to increases of $0.8 million in unrealized foreign currency losses, partly offset by a decrease of $0.2 million in professional fees. |
• | Segment net sales: |
◦ | North America – Net sales increased 7.2% in 2014 compared to 2013, primarily due to increased unit sales volumes. |
◦ | Europe – Net sales increased 4.6% in 2014 compared to 2013, mostly due to increased unit sales volumes and the effects of foreign currency translations, partly offset by slightly lower average selling prices. However, sales growth has trended lower in the most recent two quarters of 2014, consistent with declining economic activity in the region, and European currencies have weakened against the United States Dollar. Based on current information |
• | Consolidated net sales channels and product groups: |
◦ | Net sales to lumber dealers, contractor distributors, dealer distributors and home centers increased in 2014 compared to 2013, due to increased building activity. |
◦ | Wood construction product net sales represented 85% of total Company net sales in both 2014 and 2013. |
◦ | Concrete construction product net sales represented 15% of total Company net sales in both 2014 and 2013. |
• | North America – Gross profit margin increased to 47.4% in 2014 from 46.7% in 2013, as a result of decreases as a percentage of sales in material, labor and warehousing costs. In 2014, the gross profit margin was also affected by an atypical non-recurring $3.3 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 non-recurring $2.5 million correction to workers' compensation expense in states where the Company is not self-insured. |
• | Europe – Gross profit margin increased to 38.1% in 2014 from 37.0% in 2013, as a result of decreases as a percentage of sales in factory overhead (caused by increased unit sales volumes) and material costs, partly offset by increases in shipping and warehouse 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 12% and 13% in 2014 and 2013, respectively. The lower gross profit margins on concrete construction products negatively affected gross margins in North America, with concrete construction products representing 13% of North America net sales in 2014 and 2013, respectively, and in Europe, with concrete construction products at 20% and 19% of Europe net sales in 2014 and 2013, respectively. |
• | Steel prices – The market price for steel decreased in December 2014. The Company expects the market price for steel to remain relatively stable during the first quarter of 2015. |
• | North America – Research and development and engineering expense increased $1.9 million, primarily due to increases of $2.1 million in personnel costs and $0.8 million in cash profit sharing, partly offset by a decrease in software development costs of $1.1 million. |
• | North America – Selling expense increased $6.5 million, primarily due to an increase of $2.5 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, and increases of $2.0 million in professional fees, $1.1 million in advertising and promotional costs and $0.7 million in cash profit sharing and commissions. |
• | Europe – Selling expense increased $0.3 million, primarily due to increases of $0.4 million in personnel costs and $0.2 million in cash profit sharing and commissions, partly offset by a decrease of $0.3 million in advertising and promotional costs. |
• | North America – General and administrative expense increased $4.3 million, primarily due to increases of $1.7 million in cash profit sharing, $1.2 million in personnel costs related to the addition of administrative and information technology staff and pay rate increases instituted in January 2014, $0.7 million in depreciation expense, $0.4 million in facility maintenance expense and $0.2 million in stock-based compensation. |
• | Europe – General and administrative expense decreased by $0.9 million, primarily due to a $1.0 million impairment charge related to an impairment of fixed assets in 2013, decreases of $0.8 million in professional fees, $0.5 million in stock-based compensation, $0.2 million in depreciation expense and $0.2 million in facility maintenance expense as well as a $0.5 million gain resulting from a reduction of a contingent liability related to the Bierbach acquisition, partly offset by increases of $1.4 million in unrealized foreign currency losses, $0.5 million in cash profit sharing and $0.3 million in personnel costs. |
Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||
(Amounts in thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | |||||||||||
Net sales | $ | 166,630 | $ | 160,074 | $ | 752,148 | $ | 705,322 | |||||||
Cost of sales | 93,833 | 90,330 | 410,118 | 391,791 | |||||||||||
Gross profit | 72,797 | 69,744 | 342,030 | 313,531 | |||||||||||
Research and development and engineering expenses | 9,513 | 9,825 | 39,018 | 36,843 | |||||||||||
Selling expenses | 22,407 | 21,448 | 92,031 | 85,102 | |||||||||||
General and administrative expenses | 25,508 | 25,164 | 111,500 | 108,070 | |||||||||||
Impairment of goodwill | 38 | — | 530 | — | |||||||||||
Loss (gain) on disposal of assets | 11 | 1,404 | (325 | ) | 2,038 | ||||||||||
Income from operations | 15,320 | 11,903 | 99,276 | 81,478 | |||||||||||
Interest income, net | 2 | 54 | 46 | 86 | |||||||||||
Income before taxes | 15,322 | 11,957 | 99,322 | 81,564 | |||||||||||
Provision for income taxes | 4,942 | 4,289 | 35,791 | 30,593 | |||||||||||
Net income | $ | 10,380 | $ | 7,668 | $ | 63,531 | $ | 50,971 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.21 | $ | 0.16 | $ | 1.30 | $ | 1.05 | |||||||
Diluted | $ | 0.21 | $ | 0.16 | $ | 1.29 | $ | 1.05 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 48,993 | 48,639 | 48,977 | 48,521 | |||||||||||
Diluted | 49,262 | 48,883 | 49,194 | 48,673 | |||||||||||
Other data: | |||||||||||||||
Depreciation and amortization | $ | 5,813 | $ | 5,887 | $ | 27,918 | $ | 27,518 | |||||||
Pre-tax impairments | 38 | — | 530 | 1,025 | |||||||||||
Pre-tax equity-based compensation expense | 3,682 | 3,641 | 13,190 | 12,747 | |||||||||||
Cash dividend declared per common share | $ | 0.140 | $ | 0.125 | $ | 0.545 | $ | 0.375 |
December 31, | |||||||||
(Amounts in thousands) | 2014 | 2013 | |||||||
Cash and short-term investments | $ | 260,307 | $ | 251,208 | |||||
Trade accounts receivable, net | 92,015 | 90,017 | |||||||
Inventories | 216,545 | 197,728 | |||||||
Other current assets | 35,451 | 32,065 | |||||||
Total current assets | 604,318 | 571,018 | |||||||
Property, plant and equipment, net | 207,027 | 209,533 | |||||||
Goodwill | 123,881 | 129,218 | |||||||
Other noncurrent assets | 37,839 | 46,756 | |||||||
Total assets | $ | 973,065 | $ | 956,525 | |||||
Trade accounts payable | $ | 22,860 | $ | 34,933 | |||||
Notes payable and lines of credit | 18 | 103 | |||||||
Other current liabilities | 71,602 | 68,169 | |||||||
Total current liabilities | 94,480 | 103,205 | |||||||
Other long-term liabilities | 15,120 | 12,041 | |||||||
Stockholders' equity | 863,465 | 841,279 | |||||||
Total liabilities and stockholders' equity | $ | 973,065 | $ | 956,525 |
Three Months Ended | Twelve Months Ended | ||||||||||||||||||||
December 31, | % | December 31, | % | ||||||||||||||||||
(Amounts in thousands) | 2014 | 2013 | change | 2014 | 2013 | change | |||||||||||||||
Net Sales by Reporting Segment | |||||||||||||||||||||
North America | $ | 137,297 | $ | 128,017 | 7% | $ | 613,843 | $ | 572,789 | 7% | |||||||||||
Europe | 25,880 | 27,885 | (7)% | 123,177 | 117,740 | 5% | |||||||||||||||
Asia/Pacific | 3,453 | 4,172 | (17)% | 15,128 | 14,793 | 2% | |||||||||||||||
Total | $ | 166,630 | $ | 160,074 | 4% | $ | 752,148 | $ | 705,322 | 7% | |||||||||||
Net Sales by Product Group* | |||||||||||||||||||||
Wood Construction | $ | 139,439 | $ | 134,086 | 4% | $ | 636,003 | $ | 596,837 | 7% | |||||||||||
Concrete Construction | 27,186 | 25,972 | 5% | 115,921 | 108,295 | 7% | |||||||||||||||
Other | 5 | 16 | N/M | 224 | 190 | N/M | |||||||||||||||
Total | $ | 166,630 | $ | 160,074 | 4% | $ | 752,148 | $ | 705,322 | 7% | |||||||||||
Gross Profit by Reporting Segment | |||||||||||||||||||||
North America | $ | 62,221 | $ | 58,981 | 5% | $ | 291,116 | $ | 267,478 | 9% | |||||||||||
Europe | 9,236 | 10,012 | (8)% | 46,965 | 43,603 | 8% | |||||||||||||||
Asia/Pacific | 1,115 | 531 | N/M | 3,652 | 2,720 | 34% | |||||||||||||||
Administrative and all other | 225 | 220 | N/M | 297 | (270 | ) | N/M | ||||||||||||||
Total | $ | 72,797 | $ | 69,744 | 4% | $ | 342,030 | $ | 313,531 | 9% | |||||||||||
Income (Loss) from Operations | |||||||||||||||||||||
North America | $ | 12,289 | $ | 11,303 | 9% | $ | 94,888 | $ | 84,885 | 12% | |||||||||||
Europe | (1,278 | ) | (484 | ) | N/M | 5,005 | 1,258 | N/M | |||||||||||||
Asia/Pacific | 217 | (324 | ) | N/M | (1,566 | ) | (2,202 | ) | 29% | ||||||||||||
Administrative and all other | 4,092 | 1,408 | N/M | 949 | (2,463 | ) | N/M | ||||||||||||||
Total | $ | 15,320 | $ | 11,903 | 29% | $ | 99,276 | $ | 81,478 | 22% |
* | 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. |