QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation | (I.R.S. Employer | |
or organization) | Identification No.) |
Securities registered pursuant to Section 12(b) of the Act: | ||
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered |
ý | Accelerated filer | ☐ | ||||
Non-accelerated filer | ☐ | Smaller reporting company | ||||
Emerging growth company |
Item 1 - Financial Statements | ||
Page No. | ||
Part II - Other Information | ||
March 31, | December 31, | ||||||||||
2020 | 2019 | 2019 | |||||||||
ASSETS | |||||||||||
Current assets | |||||||||||
Cash and cash equivalents | $ | $ | $ | ||||||||
Trade accounts receivable, net | |||||||||||
Inventories | |||||||||||
Assets held-for-sale | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Equity investment | |||||||||||
Intangible assets, net | |||||||||||
Other noncurrent assets | |||||||||||
Total assets | $ | $ | $ | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
Current liabilities | |||||||||||
Trade accounts payable | $ | $ | $ | ||||||||
Accrued liabilities and other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Operating lease liabilities | |||||||||||
Long term debt, net of current portion | |||||||||||
Deferred income tax and other long-term liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (see Note 12) | |||||||||||
Stockholders’ equity | |||||||||||
Common stock, at par value | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Treasury stock | ( | ) | ( | ) | ( | ) | |||||
Accumulated other comprehensive loss | ( | ) | ( | ) | ( | ) | |||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ | $ |
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Net sales | $ | $ | |||||
Cost of sales | |||||||
Gross profit | |||||||
Operating expenses: | |||||||
Research and development and other engineering | |||||||
Selling | |||||||
General and administrative | |||||||
Total operating expenses | |||||||
Net loss (gain) on disposal of assets | ( | ) | |||||
Income from operations | |||||||
Interest expense, net and other | ( | ) | ( | ) | |||
Income before taxes | |||||||
Provision for income taxes | |||||||
Net income | $ | $ | |||||
Other comprehensive income | |||||||
Translation adjustment | ( | ) | ( | ) | |||
Unamortized pension adjustments | |||||||
Comprehensive net income | $ | $ | |||||
Net income per common share: | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ | |||||
Number of shares outstanding | |||||||
Basic | |||||||
Diluted | |||||||
Cash dividends declared per common share | $ | $ |
Additional | Accumulated Other | |||||||||||||||||||
Common Stock | Paid-in | Retained | Comprehensive | Treasury | ||||||||||||||||
Shares | Par Value | Capital | Earnings | Income (Loss) | Stock | Total | ||||||||||||||
Balance at January 1, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||
Net income | — | — | — | — | — | |||||||||||||||
Translation adjustment, net of tax | — | — | — | — | ( | ) | — | ( | ) | |||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||
Shares issued from release of Restricted Stock Units | ( | ) | — | — | — | ( | ) | |||||||||||||
Repurchase of common stock | ( | ) | — | — | — | ( | ) | ( | ) | |||||||||||
Cash dividends declared on common stock, $0.22 per share | — | — | ( | ) | — | — | ( | ) | ||||||||||||
Common stock issued at $54.31 per share for stock bonus | — | — | — | — | ||||||||||||||||
Balance, at March 31, 2019 | ( | ) | ( | ) | ||||||||||||||||
Net income | — | — | — | — | ||||||||||||||||
Translation adjustment, net of tax | — | — | — | — | — | |||||||||||||||
Pension adjustment, net of tax | — | — | — | — | ( | ) | — | ( | ) | |||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||
Shares issued from release of Restricted Stock Units | ( | ) | — | — | — | ( | ) | |||||||||||||
Repurchase of common stock | ( | ) | — | — | — | ( | ) | ( | ) | |||||||||||
Retirement of common stock | — | ( | ) | — | ( | ) | — | |||||||||||||
Cash dividends declared on common stock, $0.69 per share | — | — | — | ( | ) | — | — | ( | ) | |||||||||||
Balance, at December 31, 2019 | ( | ) | ( | ) | ||||||||||||||||
Net income | — | — | — | — | — | |||||||||||||||
Translation adjustment, net of tax | — | — | — | — | ( | ) | — | ( | ) | |||||||||||
Pension adjustment, net of tax | — | — | — | — | — | |||||||||||||||
Stock-based compensation | — | — | — | — | — | |||||||||||||||
Shares issued from release of Restricted Stock Units | ( | ) | — | — | — | ( | ) | |||||||||||||
Repurchase of common stock | ( | ) | — | — | — | ( | ) | ( | ) | |||||||||||
Cash dividends declared on common stock, $0.23 per share | — | — | — | ( | ) | — | — | ( | ) | |||||||||||
Common stock issued at $80.38 per share for stock bonus | — | — | — | — | ||||||||||||||||
Balance at March 31, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ |
Three Months Ended | |||||||
March 31, | |||||||
2020 | 2019 | ||||||
Cash flows from operating activities | |||||||
Net income | $ | $ | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
(Gain)/loss on sale of assets and other | ( | ) | |||||
Depreciation and amortization | |||||||
Noncash lease expense | |||||||
Deferred income taxes | |||||||
Noncash compensation related to stock plans | |||||||
Provision (benefit) of doubtful accounts | ( | ) | |||||
Changes in operating assets and liabilities: | |||||||
Trade accounts receivable | ( | ) | ( | ) | |||
Inventories | ( | ) | |||||
Trade accounts payable | |||||||
Other current assets | ( | ) | |||||
Accrued liabilities and other current liabilities | ( | ) | ( | ) | |||
Other noncurrent assets and liabilities | ( | ) | |||||
Net cash provided by operating activities | |||||||
Cash flows from investing activities | |||||||
Capital expenditures | ( | ) | ( | ) | |||
Asset acquisitions, net of cash acquired | ( | ) | |||||
Proceeds from sale of property and equipment | |||||||
Net cash used in investing activities | ( | ) | ( | ) | |||
Cash flows from financing activities | |||||||
Repurchase of common stock | ( | ) | ( | ) | |||
Proceeds from line of credit | |||||||
Repayments of line of credit and capital leases | ( | ) | ( | ) | |||
Dividends paid | ( | ) | ( | ) | |||
Cash paid on behalf of employees for shares withheld | ( | ) | ( | ) | |||
Net cash provided by (used) in financing activities | ( | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | |||
Net increase (decrease) in cash and cash equivalents | ( | ) | |||||
Cash and cash equivalents at beginning of period | |||||||
Cash and cash equivalents at end of period | $ | $ | |||||
Noncash activity during the period | |||||||
Noncash capital expenditures | $ | $ | |||||
Dividends declared but not paid | |||||||
Contingent consideration for acquisition | |||||||
Issuance of Company’s common stock for compensation | |||||||
Three Months Ended March 31, | |||||||
(in thousands, except per share amounts) | 2020 | 2019 | |||||
Net income available to common stockholders | $ | $ | |||||
Basic weighted-average shares outstanding | |||||||
Dilutive effect of potential common stock equivalents — restricted stock units | |||||||
Diluted weighted-average shares outstanding | |||||||
Net income per common share: | |||||||
Basic | $ | $ | |||||
Diluted | $ | $ |
At March 31, | At December 31, | ||||||||||
(in thousands) | 2020 | 2019 | 2019 | ||||||||
Trade accounts receivable | $ | $ | $ | ||||||||
Allowance for doubtful accounts | ( | ) | ( | ) | ( | ) | |||||
Allowance for sales discounts and returns | ( | ) | ( | ) | ( | ) | |||||
$ | $ | $ |
At March 31, | At December 31, | ||||||||||
(in thousands) | 2020 | 2019 | 2019 | ||||||||
Raw materials | $ | $ | $ | ||||||||
In-process products | |||||||||||
Finished products | |||||||||||
$ | $ | $ |
At March 31, | At December 31, | ||||||||||
(in thousands) | 2020 | 2019 | 2019 | ||||||||
Land | $ | $ | $ | ||||||||
Buildings and site improvements | |||||||||||
Leasehold improvements | |||||||||||
Machinery, equipment, and software | |||||||||||
Less accumulated depreciation and amortization | ( | ) | ( | ) | ( | ) | |||||
Capital projects in progress | |||||||||||
$ | $ | $ |
At March 31, | At December 31, | ||||||||||
(in thousands) | 2020 | 2019 | 2019 | ||||||||
North America | $ | $ | $ | ||||||||
Europe | |||||||||||
Asia/Pacific | |||||||||||
Total | $ | $ | $ |
At March 31, 2020 | |||||||||||
Gross | Net | ||||||||||
Carrying | Accumulated | Carrying | |||||||||
(in thousands) | Amount | Amortization | Amount | ||||||||
North America | $ | $ | ( | ) | $ | ||||||
Europe | ( | ) | |||||||||
Total | $ | $ | ( | ) | $ |
At March 31, 2019 | |||||||||||
Gross | Net | ||||||||||
(in thousands) | Carrying Amount | Accumulated Amortization | Carrying Amount | ||||||||
North America | $ | $ | ( | ) | $ | ||||||
Europe | ( | ) | |||||||||
Total | $ | $ | ( | ) | $ |
At December 31, 2019 | |||||||||||
Gross | Net | ||||||||||
(in thousands) | Carrying Amount | Accumulated Amortization | Carrying Amount | ||||||||
North America | $ | $ | ( | ) | $ | ||||||
Europe | ( | ) | |||||||||
Total | $ | $ | ( | ) | $ |
(in thousands) | |||
Remaining nine months of 2020 | $ | ||
2021 | |||
2022 | |||
2023 | |||
2024 | |||
2025 | |||
Thereafter | |||
$ |
Intangible | |||||||
(in thousands) | Goodwill | Assets | |||||
Balance at December 31, 2019 | $ | $ | |||||
Amortization | — | ( | ) | ||||
Foreign exchange | ( | ) | ( | ) | |||
Balance at March 31, 2020 | $ | $ |
Condensed Consolidated Balance Sheets Line Item | March 31, | ||||||
(in thousands) | 2020 | 2019 | |||||
Operating leases | |||||||
Assets | |||||||
Operating leases | Operating lease right-of-use assets | $ | |||||
Liabilities | |||||||
Operating - current | Accrued expenses and other current liabilities | $ | |||||
Operating - noncurrent | Operating lease liabilities | ||||||
Total operating lease liabilities | $ | ||||||
— | |||||||
Finance leases | |||||||
Assets | |||||||
Property and equipment, gross | Property, plant and equipment, net | $ | |||||
Accumulated amortization | Property, plant and equipment, net | ( | ) | ( | ) | ||
Property and equipment, net | Property, plant and equipment, net | $ | |||||
Liabilities | |||||||
Other current liabilities | Accrued expenses and other current liabilities | $ | |||||
Other long-term liabilities | Deferred income tax and other long-term liabilities | ||||||
Total finance lease liabilities | $ |
Condensed Consolidated Statements of Operations Line Item | Three Months Ended March 31, | |||||||
(in thousands) | 2020 | 2019 | ||||||
Operating lease cost | General administrative expenses and cost of sales | $ | $ | |||||
Finance lease cost: | ||||||||
Amortization of right-of-use assets | General administrative expenses | $ | $ | |||||
Interest on lease liabilities | Interest expense, net | |||||||
Total finance lease | $ | $ |
Three Months Ended March 31, | |||||||
(in thousands) | 2020 | 2019 | |||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||
Operating cash flows for operating leases | $ | $ | |||||
Finance cash flows for finance leases | |||||||
Operating right-of-use assets obtained in exchange for lease obligations during the current period |
(in thousands) | Operating Leases | Finance Leases | |||||
Remaining nine months of 2020 | $ | $ | |||||
2021 | |||||||
2022 | |||||||
2023 | |||||||
2024 | |||||||
Thereafter | |||||||
Total lease payments | |||||||
Less: Present value discount | ( | ) | ( | ) | |||
Total lease liabilities | $ | $ |
Weighted-average remaining lease terms (in years): | 2020 | 2019 | |||
Operating leases | |||||
Finance leases | |||||
Weighted-average discount rate: | |||||
Operating leases | % | % | |||
Finance leases | % | % |
Three Months Ended March 31, | ||||||
(in thousands) | 2020 | 2019 | ||||
Net Sales | ||||||
North America | $ | $ | ||||
Europe | ||||||
Asia/Pacific | ||||||
Total | $ | $ | ||||
Sales to Other Segments* | ||||||
North America | $ | $ | ||||
Europe | ||||||
Asia/Pacific | ||||||
Total | $ | $ | ||||
Income (Loss) from Operations | ||||||
North America | $ | $ | ||||
Europe | ( | ) | ( | ) | ||
Asia/Pacific | ( | ) | ( | ) | ||
Administrative and all other | ( | ) | ( | ) | ||
Total | $ | $ |
At | |||||||||
At March 31, | December 31, | ||||||||
(in thousands) | 2020 | 2019 | 2019 | ||||||
Total Assets | |||||||||
North America | $ | $ | $ | ||||||
Europe | |||||||||
Asia/Pacific | |||||||||
Administrative and all other | ( | ) | ( | ) | ( | ) | |||
Total | $ | $ | $ |
Three Months Ended March 31, | |||||||
(in thousands) | 2020 | 2019 | |||||
Wood construction products | $ | $ | |||||
Concrete construction products | |||||||
Other | |||||||
Total | $ | $ |
• | Achieve a net sales compounded annual growth rate of approximately 8% (from $860.7 million reported in fiscal 2016) through fiscal 2020. |
• | Rationalize our cost structure to improve company-wide profitability by reducing total operating expenses as a percentage of net sales from 31.8% in fiscal 2016 to a range of 26.0% to 27.0% by fiscal 2020. |
• | Improve our working capital management and overall balance sheet discipline primarily through the reduction of inventory levels in connection with the implementation of Lean principles in many of our factories. |
Three Months Ended | Three Months Ended | |||||||||||||||||
Increase (Decrease) in Operating Segment | ||||||||||||||||||
March 31, | North | Asia/ | Admin & | March 31, | ||||||||||||||
(in thousands) | 2019 | America | Europe | Pacific | All Other | 2020 | ||||||||||||
Net sales | $ | 259,244 | $ | 27,619 | $ | (3,048 | ) | $ | (147 | ) | $ | — | $ | 283,668 | ||||
Cost of sales | 148,990 | 7,221 | (2,194 | ) | 5 | (20 | ) | 154,002 | ||||||||||
Gross profit | 110,254 | 20,398 | (854 | ) | (152 | ) | 20 | 129,666 | ||||||||||
Research and development and other engineering expense | 12,260 | 1,153 | 7 | (27 | ) | (11 | ) | 13,382 | ||||||||||
Selling expense | 28,112 | 449 | 93 | (102 | ) | (25 | ) | 28,527 | ||||||||||
General and administrative expense | 39,549 | (1,590 | ) | 344 | 41 | 127 | 38,471 | |||||||||||
Total operating expenses | 79,921 | 12 | 444 | (88 | ) | 91 | 80,380 | |||||||||||
Net loss (gain) on disposal of assets | 310 | (361 | ) | (12 | ) | (1 | ) | — | (64 | ) | ||||||||
Income from operations | 30,023 | 20,747 | (1,286 | ) | (63 | ) | (71 | ) | 49,350 | |||||||||
Interest expense, net and other | (763 | ) | (733 | ) | (1,390 | ) | 180 | 173 | (2,533 | ) | ||||||||
Income before income taxes | 29,260 | 20,014 | (2,676 | ) | 117 | 102 | 46,817 | |||||||||||
Provision for income taxes | 6,598 | 3,809 | (486 | ) | 53 | 17 | 9,991 | |||||||||||
Net income | $ | 22,662 | $ | 16,205 | $ | (2,190 | ) | $ | 64 | $ | 85 | $ | 36,826 |
North | Asia/ | ||||||||||||||
(in thousands) | America | Europe | Pacific | Total | |||||||||||
Three months ended | |||||||||||||||
March 31, 2019 | $ | 221,431 | $ | 35,780 | $ | 2,033 | $ | 259,244 | |||||||
March 31, 2020 | 249,050 | 32,732 | 1,886 | 283,668 | |||||||||||
Increase (decrease) | $ | 27,619 | $ | (3,048 | ) | $ | (147 | ) | $ | 24,424 | |||||
Percentage Increase (decrease) | 12.5 | % | (8.5 | )% | (7.2 | )% | 9.4 | % |
North America | Europe | Asia/ Pacific | Total | ||||||||
Percentage of total 2019 net sales | 85 | % | 14 | % | 1 | % | 100 | % | |||
Percentage of total 2020 net sales | 88 | % | 12 | % | — | % | 100 | % |
North | Asia/ | Admin & | |||||||||||||||||
(in thousands) | America | Europe | Pacific | All Other | Total | ||||||||||||||
Three months ended | |||||||||||||||||||
March 31, 2019 | $ | 98,397 | $ | 11,555 | $ | 319 | $ | (17 | ) | $ | 110,254 | ||||||||
March 31, 2020 | 118,795 | 10,701 | 167 | 3 | 129,666 | ||||||||||||||
Increase (decrease) | $ | 20,398 | $ | (854 | ) | $ | (152 | ) | $ | 20 | $ | 19,412 | |||||||
Percentage Increase (decrease) | 20.7 | % | (7.4 | )% | * | * | 17.6 | % |
North America | Europe | Asia/ Pacific | Admin & All Other | Total | |||||||||
2019 gross profit percentage | 44.4 | % | 32.3 | % | 15.7 | % | * | 42.5 | % | ||||
2020 gross profit percentage | 47.7 | % | 32.7 | % | 8.9 | % | * | 45.7 | % |
• | Net sales increased 12.5%, primarily due to increases in sales volumes. Canada's net sales were negatively affected by foreign currency translation. |
• | Gross profit as a percentage of net sales increased to 47.7% from 44.4% primarily due to lower material costs and factory and overhead costs (on higher production), partly offset by higher warehouse, labor and shipping expense, each as a percentage of net sales. |
• | Research and development and engineering expense increased $1.2 million, primarily due to an increases of $0.7 million in cash profit sharing expense and $0.4 million in personnel costs. |
• | Selling expense increased $0.4 million, primarily due to increases of $1.9 million in cash profit sharing and sales commission expense and $0.6 million in personnel costs, partly offset by decreases of $1.1 million in stock-based compensation, $0.4 million in advertising and promotional expenses and $0.2 million in professional fees. |
• | General and administrative expense decreased $1.6 million, primarily due to decreases of $2.4 million in stock-based compensation and $2.0 million in professional fees, partly offset by increases of $1.6 million in personnel expense mostly from increased SAP implementation expenses, $0.7 million in bad debt expense and $0.7 million in cash profit sharing expense. Included in general and administrative expense are SAP related costs of $2.7 million, which increased $0.7 million from the prior quarter. |
• | Income from operations increased by $20.7 million, primarily due to increased gross profit. |
• | Net sales decreased 8.5%, primarily due to lower sales volumes, which was partly related to the COVID-19 pandemic. Net sales were impacted by approximately $1.0 million of negative foreign currency translations resulting from some Europe currencies weakening against the United States dollar. In local currency, Europe net sales decreased. |
• | Gross profit as a percentage of net sales increased to 32.7% from 32.3%, primarily due to decreases in material costs, partly offset by higher labor, factory and overhead costs, shipping and warehouse costs, each as a percentage of net sales. |
• | General and administrative expense increased $0.3 million, primarily due to increases of $0.2 million cash profit sharing expense and $0.2 million in severance expense, partly offset by an increase of $0.1 million in amortization expense on intangibles acquired in fiscal year 2019. Included in general and administrative expense are SAP related costs of $0.6 million, which increased $0.4 million from the prior quarter. |
• | Loss from operations was $1.7 million compared to a loss of $0.4 million, primarily due to lower net sales and increased operating expenses. |
• | For information about the Company's Asia/Pacific segment, please refer to the tables above setting forth changes in our operating results for the three months ended March 31, 2020 and 2019, respectively. |
At March 31, | At December 31, | At March 31, | ||||||||||
(in thousands) | 2020 | 2019 | 2019 | |||||||||
Cash and cash equivalents | $ | 301,741 | $ | 230,210 | $ | 113,407 | ||||||
Property, plant and equipment, net | 246,941 | 249,012 | 251,398 | |||||||||
Goodwill, intangible assets and equity investment | 157,527 | 159,430 | 158,371 | |||||||||
Working capital | 589,132 | 482,000 | 425,160 |
Three Months Ended March 31, | ||||||||
(in thousands) | 2020 | 2019 | ||||||
Net cash provided by (used in): | ||||||||
Operating activities | $ | 12,725 | $ | 9,648 | ||||
Investing activities | (6,234 | ) | (10,806 | ) | ||||
Financing activities | 68,567 | (45,466 | ) |
(in thousands) | Number of Shares Repurchased | Cash Paid for Share Repurchases | Cash paid for Dividends | Total | ||||||||||
January 1 - April 30, 2020 | 902 | $ | 62,679 | $ | 20,400 | $ | 83,079 | |||||||
January 1 - December 31, 2019 | 972 | 60,816 | 40,258 | 101,074 | ||||||||||
January 1 - December 31, 2018 | 1,955 | 110,540 | 39,891 | 150,431 | ||||||||||
January 1 - December 31, 2017 | 1,138 | 70,000 | 36,981 | 106,981 | ||||||||||
January 1 - December 31, 2016 | 1,244 | 53,502 | 32,711 | 86,213 | ||||||||||
January 1 - December 31, 2015 | 1,339 | 47,144 | 29,352 | 76,496 | ||||||||||
Total | 7,550 | $ | 404,681 | $ | 199,593 | $ | 604,274 |
(a) | (b) | (c) | (d) | |||||||||
Period | Total Number of Shares Purchased [1][2] | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs [2] | Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs [2] | ||||||||
January 1 - January 31, 2020 | 750 | $ | 81.81 | 500 | $100.0 million | |||||||
February 1 - February 29, 2020 | 199,670 | $ | 81.82 | 109,457 | $91.3 million | |||||||
March 1 - March 31, 2020 | 792,472 | 68.14 | 792,383 | $37.3 million | ||||||||
Total | 992,892 |
EXHIBIT INDEX | ||
3.1 | ||
3.2 | ||
31.1 | ||
31.2 | ||
32 | ||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |
101.SCH | Inline XBRL Taxonomy Schema Linkbase Document | |
101.CAL | Inline XBRL Taxonomy Calculation Linkbase Document | |
101.DEF | Inline XBRL Taxonomy Definition Linkbase Document | |
101.LAB | Inline XBRL Taxonomy Labels Linkbase Document | |
101.PRE | Inline XBRL Taxonomy Presentation Linkbase Document | |
104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
Simpson Manufacturing Co., Inc. | ||||
(Registrant) | ||||
DATE: | May 7, 2020 | By /s/Brian J. Magstadt | ||
Brian J. Magstadt | ||||
Chief Financial Officer | ||||
(principal accounting and financial officer) | ||||
1. | I have reviewed this quarterly report on Form 10-Q of Simpson Manufacturing Co., Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
DATE: | May 7, 2020 | By /s/Karen Colonias | ||
Karen Colonias | ||||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Simpson Manufacturing Co., Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
DATE: | May 7, 2020 | By /s/Brian J. Magstadt | ||
Brian J. Magstadt | ||||
Chief Financial Officer |
DATE: | May 7, 2020 | By /s/Karen Colonias | ||
Karen Colonias | ||||
Chief Executive Officer | ||||
By /s/Brian J. Magstadt | ||||
Brian J. Magstadt | ||||
Chief Financial Officer | ||||
Trade Accounts Receivable, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of trade accounts receivable, net | Trade accounts receivable at the dates indicated consisted of the following:
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Leases (Tables) |
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease, Cost [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balance Sheet Information | The following table provides a summary of leases included on the condensed consolidated balance sheets, condensed consolidated statements of earnings, and condensed consolidated statements of cash flows as of March 31, 2020 and 2019:
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Lease, Cost | The following table summarizes the Company's lease terms and discount rates as of March 31, 2020 and 2019:
The components of lease expense were as follows:
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Operating Lease, Liability, Maturity | The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2020:
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Finance Lease, Liability, Maturity | The following is a schedule, by years, of maturities of lease liabilities as of March 31, 2020:
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Leases - Components of Lease Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Leases [Abstract] | ||
Operating lease cost | $ 2,492 | $ 2,191 |
Amortization of right-of-use assets | 218 | 218 |
Interest on lease liabilities | 11 | 20 |
Total finance lease | $ 229 | $ 238 |
Goodwill and Intangible Assets, Net, Estimated Future Amortization (Details) $ in Thousands |
3 Months Ended |
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Mar. 31, 2020
USD ($)
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Goodwill and Intangible Assets Disclosure [Abstract] | |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years 8 months 12 days |
Remaining nine months of 2020 | $ 4,441 |
2019 | 5,370 |
2020 | 3,437 |
2021 | 2,611 |
2022 | 1,660 |
2023 | 1,315 |
Thereafter | 4,004 |
Total | $ 22,838 |
Segment Information (Details 2) - USD ($) $ in Thousands |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Net sales and long-lived assets by geographical area | ||
Net sales | $ 283,668 | $ 259,244 |
Wood construction products | ||
Net sales and long-lived assets by geographical area | ||
Net sales | 242,520 | 217,613 |
Concrete construction products | ||
Net sales and long-lived assets by geographical area | ||
Net sales | 41,012 | 41,577 |
Other | ||
Net sales and long-lived assets by geographical area | ||
Net sales | 136 | 54 |
North America | ||
Net sales and long-lived assets by geographical area | ||
Net sales | $ 249,050 | $ 221,431 |
Trade Accounts Receivable, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
Mar. 31, 2019 |
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Receivables [Abstract] | |||
Trade accounts receivable | $ 174,853 | $ 144,729 | $ 176,896 |
Allowance for doubtful accounts | (2,761) | (1,935) | (1,195) |
Allowance for sales discounts and returns | (3,356) | (3,430) | (2,561) |
Trade accounts receivable, net | $ 168,736 | $ 139,364 | $ 173,140 |
Revenue from Contract with Customer (Details) - ASC 606 |
3 Months Ended | |
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Mar. 31, 2020 |
Mar. 31, 2019 |
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Wood construction products | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of net sales | 86.00% | 84.00% |
Concrete construction products | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of net sales | 14.00% | 16.00% |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Percentage of net sales | 1.00% |
Segment Information |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information | Segment Information The Company is organized into three reportable segments, which are defined by the regions where the Company’s products are manufactured, marketed and distributed to the Company’s customers. The three regional segments are the North America segment, comprising primarily the United States and Canada; the Europe segment, comprising continental Europe and the United Kingdom; and the Asia/Pacific segment, comprising the Company’s operations in China, Hong Kong, the South Pacific and the Middle East. The Company's China and Hong Kong operations are manufacturing and administrative support locations, respectively. These three reportable segments are similar in several ways, including the types of materials used in production, production processes, distribution channels and product applications. The Company’s measure of profit or loss for its reportable segments is income (loss) from operations. The following tables illustrate certain measurements used by management to assess the performance of its reportable segments as of or for the following periods:
* Sales to other segments are eliminated in consolidation.
Cash collected by the Company’s United States subsidiaries is routinely transferred into the Company’s cash management accounts and, therefore, has been included in the total assets of “Administrative and all other.” Cash and cash equivalent balances in the “Administrative and all other” segment were $248.7 million, $76.0 million, and $161.4 million, as of March 31, 2020 and 2019, and December 31, 2019, respectively. Total "Administrative and all other" assets are net of inter-segment due to and from accounts eliminated in consolidation. While the Company manages its business by geographic segment, the following table illustrates the distribution of the Company’s net sales by product group as additional information for the following periods:
Wood construction products include connectors, truss plates, fastening systems, fasteners and pre-fabricated shearwalls, and are used for connecting and strengthening wood-based construction primarily in the residential construction market. Concrete construction products include adhesives, chemicals, mechanical anchors, carbide drill bits, powder actuated tools and fiber reinforcing materials, and are used for restoration, protection or strengthening concrete, masonry and steel construction in residential, industrial, commercial and infrastructure construction. No customer accounted for as much as 10% of net sales for the three months ended March 31, 2020. The Company’s largest customer for three months ended March 31, 2019 accounted for 10.6% of net sales, which was attributable mostly to the North America segment.
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Stock-Based Compensation Stock-Based Compensation |
3 Months Ended |
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Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company allocates stock-based compensation expense related to equity plans for employees and non-employee directors among the cost of sales, research and development and other engineering expense, selling expense, or general and administrative expense based on the job functions performed by the employees to whom the stock-based compensation is awarded. The Company recognized stock-based compensation expense related to its equity plans for employees of $0.3 million and $4.1 million for the three months ended March 31, 2020 and 2019, respectively. The $3.8 million decrease in stock-based compensation expense was due to the reevaluation of the expected performance conditions and updated expected vesting during the first quarter of 2020. During the three months ended March 31, 2020, the Company granted 157,712 restricted stock units ("RSUs") to the Company's employees, including officers at an estimated weighted average fair value of $75.86 per share based on the closing price (adjusted for the present value of dividends) of the Company's common stock on the grant date. The RSUs granted to the Company's employees may be time-based and performance-based. Certain of the performance-based RSUs are granted to officers and key employees, where the number of performance-based awards to be issued is based on the achievement of certain Company performance criteria established in the RSU agreement over a cumulative three-year period. These awards cliff vest after three years. In addition, these same officers and key employees also receive time-based RSUs, which vest pursuant to a three-year graded vesting schedule. Time-based RSUs that are granted to the Company's employees excluding officers and certain key employees, vest ratably over the four year vesting-term of the award. The Company’s seven non-employee directors are entitled to receive approximately $690 thousand in equity compensation annually. The number of shares ultimately granted are based on the average closing share price for the Company over the 60 day period prior to approval of the award in April of each year. In April 2020, the Company granted 9,239 shares of common stock to the Company's non-employee directors, based on the average closing price of $74.66 per share. The Company recognized expense on these shares at an estimated fair value of $58.72 per share based on the closing price of the Company's common stock on the grant date, for a total expense of $543 thousand. |
Goodwill and Intangible Assets, Net |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets, Net | Goodwill and Intangible Assets, Net Goodwill at the dates indicated was as follows:
Intangible assets, net, at the dates indicated were as follows:
Intangible assets consist of definite-lived and indefinite-lived assets. Definite-lived intangible assets include customer relationships, patents, unpatented technology, and non-compete agreements. Amortization expense of definite-lived intangible assets was $1.5 million and $1.3 million for each of the three-month periods ended March 31, 2020 and 2019, respectively. The weighted-average amortization period for all amortizable intangibles on a combined basis is 5.7 years. The only indefinite-lived intangible asset, consisting of a trade name, totaled $0.6 million at March 31, 2020. At March 31, 2020, the estimated future amortization of definite-lived intangible assets was as follows:
The changes in the carrying amount of goodwill and intangible assets for the three months ended March 31, 2020, were as follows:
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Basis of Presentation |
3 Months Ended |
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Mar. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of Simpson Manufacturing Co., Inc. and its subsidiaries (collectively, the “Company”). Investments in 50% or less owned entities are accounted for using either cost or the equity method. All significant intercompany transactions have been eliminated. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes that these consolidated financial statements include all normal and recurring adjustments necessary for a fair presentation under GAAP. Uncertainty created by the COVID-19 pandemic will likely impact our operations, customers, and various areas of risk. We assessed certain accounting matters that require the use of estimates and assumptions in context with the known and projected future impacts of COVID-19. The Company's actual results could differ materially from those estimates. Interim Reporting Period The accompanying unaudited quarterly condensed consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-Q. Accordingly, certain information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted. These interim statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Form 10-K”). The unaudited quarterly condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in the opinion of management, contain all adjustments (consisting of only normal recurring adjustments) necessary to state fairly the financial information set forth therein in accordance with GAAP. Certain prior period amounts in the condensed consolidated financial statements and the accompanying notes have been reclassified to conform to the current period’s presentation. The year-end condensed consolidated balance sheet data provided herein were derived from audited financial statements included in the 2019 Form 10-K, but do not include all disclosures required by GAAP. The Company’s quarterly results fluctuate. As a result, the Company believes the results of operations for this interim period presented are not indicative of the results to be expected for any future periods. Revenue Recognition Generally, the Company’s revenue contract with a customer exists when goods are shipped, and services (if any) are rendered; and its related invoice is generated. The duration of the contract does not extend beyond the promised goods or services already transferred. The transaction price of each distinct promised product or service specified in the invoice is based on its relative standalone selling price. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer at a point in time. The Company’s shipping terms provide the primary indicator of the transfer of control. The Company’s general shipping terms are F.O.B. shipping point, where title and risk and rewards of ownership transfer at the point when the products leave the Company’s warehouse. The Company recognizes revenue based on the consideration specified in the invoice with a customer, less any sales incentives, discounts, and amounts collected on behalf of third parties (i.e., governmental tax authorities). Based on historical experience with the customer, the customer's purchasing pattern and its significant experience selling products, the Company concluded that a significant reversal in the cumulative amount of revenue recognized will not occur when the uncertainty (if any) is resolved (that is, when the total amount of purchases is known). Refer to Note 2 for additional information. Net Income Per Common Share The Company calculates net income per common share based on the weighted-average number of the Company's common stock outstanding during the period. Potentially dilutive securities are included in the diluted per-share calculations using the treasury stock method for all periods when the effect is dilutive. Accounting for Leases The Company has operating and finance leases for certain facilities, equipment, autos and data centers. As an accounting policy for short-term leases, the Company elected to not recognize the right-of-use asset and liability, if, at the commencement date, the lease (1) has a term of 12 months or less and (2) does not include renewal and purchase options that the Company is reasonably certain to exercise. Monthly payments on short-term leases are recognized on the straight-line basis over the full lease term. Accounting for Stock-Based Compensation The Company recognizes stock-based expense related to restricted stock unit awards on a straight-line basis, net of estimated forfeitures, over the requisite service period of the awards, which is generally a vesting term of four years. Stock-based expense related to performance share grants are measured based on the grant date fair value and expensed on a graded basis over the service periods of the awards, which is generally a performance period of three years. The performance conditions are based on the Company's achievement of revenue growth and return on invested capital over the performance period, and are evaluated for the probability of vesting at each reporting period end with changes in expected results recognized as an adjustment to expense. The assumptions used to calculate the fair value of options or restricted stock units are evaluated and revised, as necessary, to reflect market conditions and the Company's expectations. Fair Value of Financial Instruments Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that is determined based on assumptions that market participants would use in pricing an asset or a liability. Assets and liabilities recorded at fair value are measured and classified under a three-tier fair valuation hierarchy based on the observability of the inputs available in the market: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. The fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. As of March 31, 2020 and 2019, the Company’s investments included in cash equivalents consisted of only money market funds, which are the Company’s primary financial instruments and carried at cost, approximating fair value, based on Level 1 inputs. The balance of the Company’s primary financial instruments as of March 31, 2020 and 2019 was $0.1 million and $0.2 million, respectively. The carrying amounts of trade accounts receivable, accounts payable, accrued liabilities and long-term debt approximate fair value due to the short-term nature of these instruments. The fair value of the Company’s contingent consideration related to acquisitions and equity investment are classified as Level 3 within the fair value hierarchy as it is based on unobserved inputs such as management estimates and entity-specific assumptions and is evaluated on an ongoing basis. Income Taxes The Company uses an estimated annual tax rate to measure the tax benefit or tax expense recognized in each interim period. Accounting Standards - Recently Adopted In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 amendments provide guidance on accounting for current expected credit losses on financial instruments that are not accounted for at fair value through net income, including loans held for investment, held-to-maturity debt securities, trade and other receivables, net investment in leases and other commitments to extend credit held by a reporting entity at each reporting date. The required measurement methodology is based on expected loss model that includes historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 eliminates the probable incurred loss recognition in current GAAP. The Company adopted ASU 2016-13 prospectively on January 1, 2020. Historically, the Company's actual credit losses have not been material. The Company's financial assets in the scope of ASU 2016-13 mainly consist of short-term trade receivables. In estimating expected credit loss, we are using the aging method, such as pooling receivable based on the levels of delinquency and applying historical loss rates, adjusted for current conditions and reasonable and supportable forecasts, to each pool. The Company will regularly reassess the customer group by using its best judgment when considering changes in customers' credit ratings, customers' historical payments and loss experience, current market and economic conditions, and the Company's expectations of future market and economic conditions. Adoption of ASU 2016-13 had no material effect on the Company's consolidated financial statements and footnote disclosures. |
Inventories (Details) - USD ($) $ in Thousands |
Mar. 31, 2020 |
Dec. 31, 2019 |
Mar. 31, 2019 |
---|---|---|---|
Inventory Disclosure [Abstract] | |||
Raw materials | $ 89,903 | $ 95,575 | $ 91,850 |
In-process products | 19,464 | 23,672 | 24,690 |
Finished products | 146,353 | 132,660 | 155,919 |
Total inventories | $ 255,720 | $ 251,907 | $ 272,459 |
Net income Per Share - Reconciliation of EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands |
3 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
Dec. 31, 2019 |
|
Reconciliation of basic earnings per share ("EPS") to diluted EPS | |||
Net income available to common stockholders | $ 36,826 | $ 22,662 | $ 111,320 |
Basic weighted-average shares outstanding | 44,099 | 44,874 | |
Dilutive effect of potential common stock equivalents — restricted stock units | 187 | 339 | |
Diluted weighted-average shares outstanding | 44,286 | 45,213 | |
Earnings per common share: | |||
Basic | $ 0.84 | $ 0.51 | |
Diluted | $ 0.83 | $ 0.50 |
Stockholders' Equity Stockholders' Equity |
3 Months Ended |
---|---|
Mar. 31, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | 4. Stockholders' Equity Share Repurchases During the first quarter of 2020, the Company repurchased 902,340 shares of the Company's common stock in the open market at an average price of $69.46 per share, for a total of $62.7 million. As of March 31, 2020, approximately $37.3 million remains available for repurchase under the previously announced $100.0 million share repurchase authorization (which expires at the end of 2020).
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Property, Plant and Equipment, Net |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment, Net | Property, Plant and Equipment, Net Property, plant and equipment, net, at the dates indicated consisted of the following:
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Commitments and Contingencies |
3 Months Ended |
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Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Environmental The Company’s policy with regard to environmental liabilities is to accrue for future environmental assessments and remediation costs when information becomes available that indicates that it is probable that the Company is liable for any related claims and assessments and the amount of the liability is reasonably estimable. The Company does not believe that any such matters will have a material adverse effect on the Company’s financial condition, cash flows or results of operations. Litigation and Potential Claims From time to time, the Company is involved in various legal proceedings and other matters arising in the normal course of business. Corrosion, hydrogen embrittlement, cracking, material hardness, wood pressure-treating chemicals, misinstallations, misuse, design and assembly flaws, manufacturing defects, labeling defects, product formula defects, inaccurate chemical mixes, adulteration, environmental conditions, or other factors can contribute to failure of fasteners, connectors, anchors, adhesives, specialty chemicals, such as fiber reinforced polymers, and tool products. In addition, inaccuracies may occur in product information, descriptions and instructions found in catalogs, packaging, data sheets, and the Company’s website. The resolution of any claim or litigation is subject to inherent uncertainty and could have a material adverse effect on the Company’s financial condition, cash flows or results of operations. Gentry Homes, Ltd. v. Simpson Strong-Tie Company Inc., et al., Case No. 17-cv-00566, was filed in a federal district court in Hawaii against Simpson Strong-Tie Company Inc. and the Company on November 20, 2017. The Gentry case is a product of a previous state court class action, Nishimura v. Gentry Homes, Ltd., et al., Civil No. 11-1-1522-07, which is now closed. The Nishimura case concerned alleged corrosion of the Company’s galvanized “hurricane straps” and mudsill anchor products used in a residential project in Ewa by Gentry, Honolulu, Hawaii. In the Nishimura case, the plaintiff homeowners and the developer, Gentry Homes, Ltd. (“Gentry”), arbitrated their dispute and agreed on a settlement in the amount of approximately $90 million. In the subsequent Gentry case, Gentry alleges breach of warranty and negligent misrepresentation by the Company related to its “hurricane strap” and mudsill anchor products, and demands general, special, and consequential damages from the Company in an amount to be proven at trial. Gentry also seeks pre-judgment and post-judgment interest, attorneys’ fees and costs, and other relief. The Company admits no liability and will vigorously defend the claims brought against it. At this time, the Company cannot reasonably ascertain the likelihood that it will be found responsible for substantial damages to Gentry. Based on the facts currently known, and subject to future events and circumstances, the Company believes that all or part of the claims brought against it in the Gentry case may be covered by its insurance policies. Given the nature and the complexities involved in the Gentry proceeding, the Company is unable to estimate reasonably the likelihood of possible loss or a range of possible loss until the Company knows, among other factors, (i) the specific claims brought against the Company and the legal theories on which they are based; (ii) what claims, if any, might be dismissed without trial; (iii) how the discovery process will affect the litigation; (iv) the settlement posture of the other parties to the litigation; (v) the damages to be proven at trial, particularly if the damages are not specified or are indeterminate; (vi) the extent to which the Company’s insurance policies will cover the claims or any part thereof, if at all; and (vii) any other factors that may have a material effect on the proceeding.
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Net income Per Share (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following table reconciles basic net income per share of the Company's common stock to diluted net income per share for the three months ended March 31, 2020 and 2019, respectively:
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Goodwill and Intangible Assets, Net (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of goodwill, by segment | Goodwill at the dates indicated was as follows:
|
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Schedule of net intangible assets, by segment | Intangible assets, net, at the dates indicated were as follows:
|
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Schedule of estimated future amortization of intangible assets | At March 31, 2020, the estimated future amortization of definite-lived intangible assets was as follows:
|
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Changes in the carrying amount of goodwill and intangible assets | The changes in the carrying amount of goodwill and intangible assets for the three months ended March 31, 2020, were as follows:
|
Leases - Cash Flow Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Lease, Cost [Abstract] | ||
Operating cash flows for operating leases | $ 2,418 | $ 2,087 |
Finance cash flows for finance leases | 290 | 270 |
Operating right-of-use assets obtained in exchange for lease obligations during the current period | $ 2,068 | $ 407 |
Goodwill and Intangible Assets, Net, Carrying Amount of Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands |
3 Months Ended | |
---|---|---|
Mar. 31, 2020 |
Mar. 31, 2019 |
|
Goodwill | ||
Balance at the beginning of the period | $ 131,879 | |
Foreign exchange | (280) | |
Balance at the end of the period | 131,599 | $ 131,712 |
Intangible Assets | ||
Balance at the beginning of the period | 25,071 | |
Amortization | (1,526) | (1,300) |
Foreign exchange | (91) | |
Balance at the end of the period | $ 23,454 | $ 24,148 |
Debt (Details) - USD ($) |
Mar. 31, 2020 |
Dec. 31, 2019 |
Mar. 31, 2019 |
---|---|---|---|
Line of Credit | |||
Debt | |||
Credit facility, total available credit | $ 304,000,000.0 | ||
Revolving Credit Facility | |||
Debt | |||
Line of credit and notes payable | 200,000 | $ 700,000 | $ 1,500,000 |
Revolving Credit Facility | Credit Facility | |||
Debt | |||
Credit facility, total available credit | 150,000,000.0 | ||
Maximum borrowing capacity | $ 300,000,000.0 | ||
Remaining borrowing capacity | $ 153,800,000 |
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