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: | October 22, 2015 | By | /s/ Brian J. Magstadt | |
Brian J. Magstadt | ||||
Chief Financial Officer |
• | Segment net sales: |
◦ | North America – Net sales increased 7.9% in the third quarter of 2015 compared to the third quarter of 2014 due to increased unit sales volumes in the United States on improved economic activity, partly offset by a slight decrease in average sales prices. Canadian net sales decreased mostly due to the effects of foreign currency translations and by a slight decrease in unit sales volumes. The Company calculated that Canada's third quarter 2015 net sales were negatively affected by approximately $1.9 million due to the Canadian dollar weakening against the United States dollar. |
◦ | Europe – Net sales decreased 14.1% in the third quarter of 2015 compared to the third quarter of 2014, mostly due to the effects of foreign currency translations. The Company calculated that Europe's third quarter 2015 net sales were negatively affected by approximately $4.7 million due to European currencies weakening against the United States dollar. Net sales were also affected by a slight decrease in average sales prices. In local currencies, Europe's overall net sales were relatively flat in the third quarter of 2015 compared to the third quarter 2014. |
• | Consolidated net sales channels and product groups: |
◦ | Net sales to contractor distributors, lumber dealers, dealer distributors and home centers increased in the third quarter of 2015 compared to the third quarter of 2014, primarily 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 third quarter of 2015 and 84% in the third quarter of 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 third quarter of 2015 and 16% in the third quarter of 2014. |
• | North America – Gross profit margin increased to 47.6% in the third quarter of 2015 from 47.3% in the third quarter of 2014, primarily as a result of a decrease in factory overhead and shipping costs, both as a percentage of net sales, partly offset by increases in material costs as a percentage of net sales. Factory overhead, as a percentage of net sales, for the third quarter of 2015 was affected by a non-reoccurring settlement of a union-based defined-benefit pension withdrawal liability that increased the third quarter of 2015 gross profit margin by 0.5%. |
• | Europe – Gross profit margin increased to 41.5% in the third quarter of 2015 from 39.7% in the third quarter of 2014, as a result of decreases in material costs and factory overhead, on increased production volumes, both as a percentage of sales, partly offset by increases in labor and shipping costs, 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 12% in the third quarters of 2015 and 2014, respectively. |
• | North America – Selling expense decreased $0.2 million, primarily due to a decrease of $0.2 million in professional fees. |
• | Europe – Selling expense decreased $0.3 million, primarily due to decreases of $0.2 million in personnel costs and $0.1 million in professional fees, both related to the effects of foreign currency translations. |
• | Asia/Pacific - Selling expense decreased $0.5 million, primarily due to a decrease of $0.4 million in personnel costs, related to the closing of three sales offices and downsizing one sales office earlier this year. |
• | North America – General and administrative expense decreased $0.9 million, primarily due to decreases of $0.6 million in cash profit sharing expense and $0.2 million in intangible amortization expense. |
• | Europe – General and administrative expense decreased by $0.6 million, primarily due to a net decrease of $0.6 million in unrealized foreign currency losses and a $0.1 million decrease in intangible amortization expense, partly offset by a $0.4 million decrease in miscellaneous gains recorded in the third quarter 2014. |
• | Administrative and Other – General and administrative expense decreased by $0.1 million, primarily due to a decrease of $0.2 million in cash profit sharing expense. |
• | Segment net sales: |
◦ | North America – Net sales increased 8.7% in the first nine months of 2015 compared to the first nine months of 2014 due to increased unit sales volumes in the United States on improved economic activity, partly offset by a slight decrease in average sales prices. 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 nine months 2015 net sales were negatively affected by approximately $4.4 million due to the Canadian dollar weakening |
◦ | Europe – Net sales decreased 14.5% in the first nine months of 2015 compared to the first nine months of 2014, mostly due to the effects of foreign currency translations. The Company calculated that Europe's first nine months 2015 net sales were negatively affected by approximately $14.7 million due to European currencies weakening against the United States dollar. In local currencies, Europe's overall net sales were relatively flat in the first nine months of 2015 compared to the first nine months of 2014. |
• | Consolidated net sales channels and product groups: |
◦ | Net sales to contractor distributors, dealer distributors, lumber dealers and home centers increased in the first nine months of 2015 compared to the first nine months of 2014, primarily 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 nine months 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 nine months of both 2015 and 2014. |
• | North America – Gross profit margin decreased to 47.0% in the first nine months of 2015 from 48.4% in the first nine months of 2014, primarily as a result of increases in material costs, as a percentage of net sales. Factory overhead cost, as a percentage of net sales, for the first nine months of 2014 was affected by a non-reoccurring $2.5 million correction to workers' compensation expense that increased the first nine months of 2014 gross profit margin by 0.5%. Factory overhead, as a percentage of net sales, for the first nine months of 2015 was affected by a non-reoccurring settlement of a union-based defined-benefit pension withdrawal liability that increased the first nine months of 2015 gross profit margin by 0.2%. |
• | Europe – Gross profit margin increased to 39.7% in the first nine months of 2015 from 38.8% in the first nine months of 2014, as a result of decreases in material costs and factory overhead, on increased production volumes, 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 13% in the first nine months 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 overall gross profit margin. |
• | Steel prices - Given current conditions, including low demand, labor union contract negotiations, anti-dumping and countervailing duty trade cases filed by United States steel producers, the high degree of uncertainty regarding steel prices will continue until early 2016. |
• | North America – Selling expense increased $0.6 million, primarily due to increases of $0.7 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015, and $0.5 million in cash profit sharing and commissions expense, partly offset by a decrease of $0.5 million in professional fees. |
• | Europe – Selling expense decreased by $1.2 million, primarily due to a $1.2 million decrease in personnel costs as a result of differences in exchange rates used for translating local currencies into the United States dollar. |
• | Asia/Pacific - Selling expense decreased $0.9 million, primarily due to decreases of $0.6 million in sales commissions and $0.2 million in personnel costs, both related to the closing of three sales offices and downsizing one sales office. |
• |
• | North America – General and administrative expense increased $1.2 million, primarily due to increases of $1.5 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015, $0.8 million in professional fees and $0.4 million in stock-based compensation costs, partly offset by decreases of $0.6 million in amortization expense, $0.5 million in cash profit sharing expense and $0.3 million in telephone and computer expenses and a net decrease of $0.3 million in foreign currency losses. |
• | Europe – General and administrative expense decreased by $1.6 million, primarily due to decreases of $0.9 million in personnel costs, $0.4 million in cash profit sharing expense, $0.3 million in intangible amortization expense, primarily attributable to differences in exchange rates used for translating local currencies into the United States dollar. |
• | Asia/Pacific - General and administrative expenses increased by $0.3 million, primarily due to increases of $0.4 million in personnel costs and $0.3 million in depreciation expense. |
• | Administrative and Other – General and administrative expense increased by $0.9 million primarily due to an increase of $1.0 million in foreign currency losses and increases of $0.4 million in personnel costs related to the addition of staff and pay rate increases instituted in January 2015 and $0.4 million in stock-based compensation expense, partly offset by a decrease of $1.2 million in professional fees. |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
(Amounts in thousands, except per share data) | 2015 | 2014 | 2015 | 2014 | |||||||||||
Net sales | $ | 216,139 | $ | 209,320 | $ | 609,295 | $ | 585,518 | |||||||
Cost of sales | 115,798 | 113,767 | 333,138 | 316,285 | |||||||||||
Gross profit | 100,341 | 95,553 | 276,157 | 269,233 | |||||||||||
Research and development and engineering expenses | 13,935 | 9,711 | 34,648 | 29,505 | |||||||||||
Selling expenses | 22,535 | 23,592 | 68,156 | 69,623 | |||||||||||
General and administrative expenses | 28,648 | 29,557 | 86,875 | 85,993 | |||||||||||
Impairment of goodwill | — | 492 | — | 492 | |||||||||||
Gain on disposal of assets | (26 | ) | (17 | ) | (57 | ) | (336 | ) | |||||||
Income from operations | 35,249 | 32,218 | 86,535 | 83,956 | |||||||||||
Interest income (expense), net | (175 | ) | (27 | ) | (264 | ) | 44 | ||||||||
Income before taxes | 35,074 | 32,191 | 86,271 | 84,000 | |||||||||||
Provision for income taxes | 13,479 | 11,577 | 33,115 | 30,849 | |||||||||||
Net income | $ | 21,595 | $ | 20,614 | $ | 53,156 | $ | 53,151 | |||||||
Earnings per common share: | |||||||||||||||
Basic | $ | 0.44 | $ | 0.42 | $ | 1.08 | $ | 1.09 | |||||||
Diluted | $ | 0.44 | $ | 0.42 | $ | 1.08 | $ | 1.08 | |||||||
Weighted average shares outstanding: | |||||||||||||||
Basic | 48,998 | 49,010 | 49,157 | 48,972 | |||||||||||
Diluted | 49,239 | 49,227 | 49,377 | 49,172 | |||||||||||
Other data: | |||||||||||||||
Depreciation and amortization | $ | 6,948 | $ | 7,320 | $ | 21,664 | $ | 22,105 | |||||||
Pre-tax impairments | — | 492 | — | 492 | |||||||||||
Pre-tax equity-based compensation expense | 2,941 | 3,306 | 9,528 | 9,508 | |||||||||||
Cash dividend declared per common share | $ | 0.16 | $ | 0.14 | $ | 0.46 | $ | 0.405 |
September 30, | December 31, | |||||||||||
(Amounts in thousands) | 2015 | 2014 | 2014 | |||||||||
Cash and cash equivalents | $ | 242,795 | $ | 258,238 | $ | 260,307 | ||||||
Trade accounts receivable, net | 132,727 | 127,495 | 92,015 | |||||||||
Inventories | 200,282 | 198,420 | 216,545 | |||||||||
Other current assets | 25,084 | 26,126 | 35,451 | |||||||||
Total current assets | 600,888 | 610,279 | 604,318 | |||||||||
Property, plant and equipment, net | 202,885 | 206,134 | 207,027 | |||||||||
Goodwill | 123,277 | 125,228 | 123,881 | |||||||||
Other noncurrent assets | 32,996 | 40,202 | 37,839 | |||||||||
Total assets | $ | 960,046 | $ | 981,843 | $ | 973,065 | ||||||
Trade accounts payable | $ | 24,934 | $ | 24,729 | $ | 22,860 | ||||||
Notes payable and lines of credit | — | 38 | 18 | |||||||||
Other current liabilities | 76,316 | 79,729 | 71,602 | |||||||||
Total current liabilities | 101,250 | 104,496 | 94,480 | |||||||||
Other long-term liabilities | 14,415 | 13,224 | 15,120 | |||||||||
Stockholders' equity | 844,381 | 864,123 | 863,465 | |||||||||
Total liabilities and stockholders' equity | $ | 960,046 | $ | 981,843 | $ | 973,065 |
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 30, | % | September 30, | % | ||||||||||||||||||
(Amounts in thousands) | 2015 | 2014 | change* | 2015 | 2014 | change* | |||||||||||||||
Net Sales by Reporting Segment | |||||||||||||||||||||
North America | $ | 184,515 | $ | 171,064 | 8% | $ | 518,221 | $ | 476,546 | 9% | |||||||||||
Europe | 29,728 | 34,609 | (14)% | 83,143 | 97,297 | (15)% | |||||||||||||||
Asia/Pacific | 1,896 | 3,647 | (48)% | 7,931 | 11,675 | (32)% | |||||||||||||||
Total | $ | 216,139 | $ | 209,320 | 3% | $ | 609,295 | $ | 585,518 | 4% | |||||||||||
Net Sales by Product Group** | |||||||||||||||||||||
Wood Construction | $ | 182,869 | $ | 175,522 | 4% | $ | 518,381 | $ | 496,564 | 4% | |||||||||||
Concrete Construction | 33,229 | 33,704 | (1)% | 90,614 | 88,735 | 2% | |||||||||||||||
Other | 41 | 94 | N/M | 300 | 219 | N/M | |||||||||||||||
Total | $ | 216,139 | $ | 209,320 | 3% | $ | 609,295 | $ | 585,518 | 4% | |||||||||||
Gross Profit by Reporting Segment | |||||||||||||||||||||
North America | $ | 87,873 | $ | 80,906 | 9% | $ | 243,325 | $ | 228,895 | 6% | |||||||||||
Europe | 12,346 | 13,757 | (10)% | 33,026 | 37,729 | (12)% | |||||||||||||||
Asia/Pacific | 178 | 931 | (81)% | 381 | 2,537 | (85)% | |||||||||||||||
Administrative and all other | (56 | ) | (41 | ) | N/M | (575 | ) | 72 | N/M | ||||||||||||
Total | $ | 100,341 | $ | 95,553 | 5% | $ | 276,157 | $ | 269,233 | 3% | |||||||||||
Income (Loss) from Operations | |||||||||||||||||||||
North America | $ | 33,432 | $ | 29,914 | 12% | $ | 89,148 | $ | 82,598 | 8% | |||||||||||
Europe | 3,563 | 3,447 | 3% | 5,259 | 6,283 | (16)% | |||||||||||||||
Asia/Pacific | (945 | ) | (148 | ) | (539)% | (3,119 | ) | (1,783 | ) | (75)% | |||||||||||
Administrative and all other | (801 | ) | (995 | ) | N/M | (4,753 | ) | (3,142 | ) | N/M | |||||||||||
Total | $ | 35,249 | $ | 32,218 | 9% | $ | 86,535 | $ | 83,956 | 3% |
* | 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. |