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 23, 2015 | By | /s/ Brian J. Magstadt | |
Brian J. Magstadt | ||||
Chief Financial Officer |
• | Segment net sales: |
◦ | North America – Net sales increased 8.8% in the second quarter of 2015 compared to the second quarter of 2014 due to increased unit sales volumes in the United States on improved economic activity. Canadian net sales decreased mostly due to the effects of foreign currency translations, partly offset by increased unit sales volumes. The Company calculated that Canada's second quarter 2015 net sales were negatively affected by approximately $1.5 million due to the Canadian dollar weakening against the United States dollar. In Canadian dollars, Canada's overall net sales increased in the second quarter of 2015 compared to the second quarter 2014. |
◦ | Europe – Net sales decreased 12.6% in the second quarter of 2015 compared to the second quarter of 2014, mostly due to the effects of foreign currency translations. Net sales were also affected by an increase in unit sales volume and a slight decrease in average sales prices. The Company calculated that Europe's second quarter 2015 net sales were negatively affected by approximately $6.0 million due to European currencies weakening against the United States dollar. In local currencies, Europe's overall net sales increased in the second quarter of 2015 compared to the second quarter 2014. |
• | Consolidated net sales channels and product groups: |
◦ | Net sales to contractor distributors, lumber dealers, dealer distributors and home centers increased in the second quarter of 2015 compared to the second quarter of 2014, due to increased home construction activity. |
◦ | Wood construction product net sales, including connectors, truss plates, fastening systems, fasteners and shearwalls, represented 85% of total Company net sales in the second quarters of both 2015 and 2014. |
◦ | Concrete construction product sales, including adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15% of total Company net sales in the second quarters of both 2015 and 2014. |
• | North America – Gross profit margin decreased slightly to 47.3% in the second quarter of 2015 from 47.9% in the second quarter of 2014, primarily as a result of increases in material, labor and warehousing costs, each as a percentage of net sales, partly offset by a decrease in factory overhead, as a percentage of net sales. |
• | Europe – Gross profit margin decreased to 39.1% in the second quarter of 2015 from 40.5% in the second quarter of 2014, as a result of increases in material costs and labor, each as a percentage of sales, partly offset by a decrease in factory overhead, on increased production volumes, as a percentage of sales. |
• | Product mix – The gross profit margin differential between wood construction products and concrete construction products, which have lower gross profit margins, was 15% and 13% in the second quarters of 2015 and 2014, respectively. The increased gross profit differential between the two product groups, coupled with increased concrete construction product sales in 2015, also negatively affected the gross profit margin. |
• | North America – Selling expense decreased $0.3 million, primarily due to a decrease of $0.8 million in professional fees and $0.3 million in advertising and promotional costs for new product catalogues, partly offset by increases of $0.6 million in commissions and cash profit sharing expense and $0.3 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015. |
• | Europe – Selling expense decreased $0.4 million, primarily due to a decrease of $0.5 million in personnel costs related to the effects of foreign currency translations. |
• | Asia/Pacific - Selling expense decreased $0.5 million, primarily due to decreases of $0.2 million in personnel costs and $0.2 million in commissions and cash profit sharing expense, both related to the closing of three sales offices and downsizing one sales office. |
• | North America – General and administrative expense increased $0.5 million, primarily due to increases of $0.3 million in facility maintenance expense and $0.2 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015, partly offset by a net increase of $0.2 million in foreign currency gains. |
• | Europe – General and administrative expense decreased by $1.2 million, primarily due to the translation of local currencies into the United States dollar. The decreases in general and administrative expenses were partly offset by net increase of $0.5 million in foreign currency gains. |
• | Administrative and Other – General and administrative expense increased by $0.7 million, primarily due to a net increase of $0.4 million in stock-based compensation expense. |
• | Segment net sales: |
◦ | North America – Net sales increased 9.2% in the first half of 2015 compared to the first half of 2014 due to increased unit sales volumes in the United States on improved economic activity. Canadian net sales decreased mostly due to the effects of foreign currency translations, partly offset by an increase in unit sales volumes. The Company calculated that Canada's first half 2015 net sales were negatively affected by approximately $2.5 million due to the Canadian dollar weakening against the United States dollar. In Canadian dollars, Canada's overall net sales increased slightly in the first half of 2015 compared to the first half of 2014. |
◦ | Europe – Net sales decreased 14.8% in the first half of 2015 compared to the first half of 2014, mostly due to the effects of foreign currency translations. The Company calculated that Europe's first half 2015 net sales were negatively affected by approximately $10.0 million due to European currencies weakening against the United States dollar. In local currencies, Europe's overall net sales increased in the first half of 2015 compared to the first half of 2014 due to an increase in unit sales volume. |
• | Consolidated net sales channels and product groups: |
◦ | Net sales to contractor distributors, dealer distributors, lumber dealers and home centers increased in the first half of 2015 compared to the first half of 2014, due to increased home construction activity. |
◦ | Wood construction product net sales, including connectors, truss plates, fastening systems, fasteners and shearwalls, represented 85% of total Company net sales in the first half of both 2015 and 2014. |
◦ | Concrete construction product sales, including adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 15% of total Company net sales in the first half of both 2015 and 2014. |
• | North America – Gross profit margin decreased to 46.6% in the first half of 2015 from 48.4% in the first half of 2014, primarily as a result of increases in all costs, each as a percentage of net sales. The increase in factory overhead cost as a percentage of net sales was primarily due to a non-reoccurring $2.3 million correction to workers' compensation expense that increased the first half of 2014 gross profit margin by 0.8%. |
• | Europe – Gross profit margin increased slightly to 38.7% in the first half of 2015 from 38.2% in the first half of 2014, as a result of decreases in factory overhead, on increased production volumes, material costs, and warehousing costs, each as a percentage of sales, partly offset by increases in the costs of labor and shipping, as a percentage of sales. |
• | Product mix – The gross profit margin differential between wood construction products and concrete construction products, which have lower gross profit margins, was 16% and 14% in the first half of 2015 and 2014, respectively. The increased gross profit differential between the two product groups, coupled with increased concrete construction product sales in 2015, also negatively affected the gross profit margin. |
• | Steel prices - Given current conditions, including anti-dumping and countervailing duty trade cases filed by United States steel producers, steel prices are expected to increase during the third quarter of 2015 but there remains a great deal of uncertainty. |
• | North America – General and administrative expense increased $2.1 million, primarily due to increases of $1.2 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015, $0.5 million in professional fees and $0.2 million in stock-based compensation costs, partly offset by a decrease of $0.4 million in amortization expense. |
• | Europe – General and administrative expense decreased by $1.0 million, primarily due to the translation of local currencies into the United States dollar, which resulted in decreased expenses compared to prior years. The decreases in general and administrative expenses were partly offset by net increase of $0.5 million in foreign currency losses. |
• | Administrative and Other – General and administrative expense increased by $1.2 million primarily due to increases of $0.5 million in stock-based compensation expense and $0.4 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015 and a net increase of $0.4 million in foreign currency losses, partly offset by a decrease of $0.9 million in professional fees. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
(Amounts in thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Net sales | $ | 216,665 | $ | 207,910 | $ | 393,156 | $ | 376,198 | |||||||
Cost of sales | 118,347 | 111,993 | 217,340 | 202,518 | |||||||||||
Gross profit | 98,318 | 95,917 | 175,816 | 173,680 | |||||||||||
Research and development and engineering expenses | 10,517 | 10,094 | 20,713 | 19,794 | |||||||||||
Selling expenses | 23,013 | 24,213 | 45,620 | 46,032 | |||||||||||
General and administrative expenses | 29,794 | 29,511 | 58,227 | 56,435 | |||||||||||
Gain on disposal of assets | (15 | ) | (34 | ) | (30 | ) | (319 | ) | |||||||
Income from operations | 35,009 | 32,133 | 51,286 | 51,738 | |||||||||||
Interest income (expense), net | (54 | ) | (15 | ) | (89 | ) | 71 | ||||||||
Income before taxes | 34,955 | 32,118 | 51,197 | 51,809 | |||||||||||
Provision for income taxes | 13,446 | 11,667 | 19,637 | 19,271 | |||||||||||
Net income | $ | 21,509 | $ | 20,451 | $ | 31,560 | $ | 32,538 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.44 | $ | 0.42 | $ | 0.64 | $ | 0.66 | |||||||
Diluted | $ | 0.43 | $ | 0.42 | $ | 0.64 | $ | 0.66 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 49,254 | 49,011 | 49,236 | 48,955 | |||||||||||
Diluted | 49,473 | 49,227 | 49,445 | 49,146 | |||||||||||
Other data: | |||||||||||||||
Depreciation and amortization | $ | 7,297 | $ | 7,102 | $ | 14,716 | $ | 14,785 | |||||||
Pre-tax equity-based compensation expense | 3,293 | 3,544 | 6,588 | 6,201 | |||||||||||
Cash dividend declared per common share | $ | 0.16 | $ | 0.14 | $ | 0.30 | $ | 0.265 |
June 30, | December 31, | |||||||||||
(Amounts in thousands) | 2015 | 2014 | 2014 | |||||||||
Cash and cash equivalents | $ | 248,612 | $ | 221,196 | $ | 260,307 | ||||||
Trade accounts receivable, net | 140,945 | 137,803 | 92,015 | |||||||||
Inventories | 212,293 | 219,036 | 216,545 | |||||||||
Other current assets | 27,188 | 26,128 | 35,451 | |||||||||
Total current assets | 629,038 | 604,163 | 604,318 | |||||||||
Property, plant and equipment, net | 206,837 | 206,563 | 207,027 | |||||||||
Goodwill | 124,827 | 129,231 | 123,881 | |||||||||
Other noncurrent assets | 35,155 | 43,377 | 37,839 | |||||||||
Total assets | $ | 995,857 | $ | 983,334 | $ | 973,065 | ||||||
Trade accounts payable | $ | 26,915 | $ | 27,119 | $ | 22,860 | ||||||
Notes payable and lines of credit | — | 62 | 18 | |||||||||
Other current liabilities | 80,829 | 78,274 | 71,602 | |||||||||
Total current liabilities | 107,744 | 105,455 | 94,480 | |||||||||
Other long-term liabilities | 16,773 | 12,603 | 15,120 | |||||||||
Stockholders' equity | 871,340 | 865,276 | 863,465 | |||||||||
Total liabilities and stockholders' equity | $ | 995,857 | $ | 983,334 | $ | 973,065 |
Three Months Ended | Six Months Ended | ||||||||||||||||||||
June 30, | % | June 30, | % | ||||||||||||||||||
(Amounts in thousands) | 2015 | 2014 | change* | 2015 | 2014 | change* | |||||||||||||||
Net Sales by Reporting Segment | |||||||||||||||||||||
North America | $ | 183,381 | $ | 168,600 | 9% | $ | 333,705 | $ | 305,482 | 9% | |||||||||||
Europe | 30,627 | 35,041 | (13)% | 53,414 | 62,688 | (15)% | |||||||||||||||
Asia/Pacific | 2,657 | 4,269 | (38)% | 6,037 | 8,028 | (25)% | |||||||||||||||
Total | $ | 216,665 | $ | 207,910 | 4% | $ | 393,156 | $ | 376,198 | 5% | |||||||||||
Net Sales by Product Group** | |||||||||||||||||||||
Wood Construction | $ | 184,133 | $ | 176,363 | 4% | $ | 335,512 | $ | 321,042 | 5% | |||||||||||
Concrete Construction | 32,375 | 31,493 | 3% | 57,385 | 55,031 | 4% | |||||||||||||||
Other | 157 | 54 | N/M | 259 | 125 | N/M | |||||||||||||||
Total | $ | 216,665 | $ | 207,910 | 4% | $ | 393,156 | $ | 376,198 | 5% | |||||||||||
Gross Profit by Reporting Segment | |||||||||||||||||||||
North America | $ | 86,744 | $ | 80,698 | 7% | $ | 155,452 | $ | 147,990 | 5.0% | |||||||||||
Europe | 11,984 | 14,207 | (16)% | 20,681 | 23,971 | (14)% | |||||||||||||||
Asia/Pacific | (306 | ) | 850 | (136)% | 203 | 1,606 | (87)% | ||||||||||||||
Administrative and all other | (104 | ) | 162 | N/M | (520 | ) | 113 | N/M | |||||||||||||
Total | $ | 98,318 | $ | 95,917 | 3% | $ | 175,816 | $ | 173,680 | 1.2% | |||||||||||
Income (Loss) from Operations | |||||||||||||||||||||
North America | $ | 35,249 | $ | 30,123 | 17% | $ | 55,715 | $ | 52,685 | 6% | |||||||||||
Europe | 3,328 | 3,755 | (11)% | 1,696 | 2,836 | (40)% | |||||||||||||||
Asia/Pacific | (1,371 | ) | (484 | ) | (183)% | (2,174 | ) | (1,636 | ) | (33)% | |||||||||||
Administrative and all other | (2,197 | ) | (1,261 | ) | N/M | (3,951 | ) | (2,147 | ) | N/M | |||||||||||
Total | $ | 35,009 | $ | 32,133 | 9% | $ | 51,286 | $ | 51,738 | (1)% |
* | Unfavorable percentage changes are presented in parenthesis. | |
** | 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. |