EX-99.1 2 v072792_ex99-1.htm
Exhibit 99.1

SIMPSON MANUFACTURING CO., INC.
ANNOUNCES FIRST QUARTER EARNINGS

Pleasanton, CA - Simpson Manufacturing Co., Inc. (the “Company”) announced today that its first quarter 2007 net sales decreased 10.4% to $193.2 million as compared to net sales of $215.7 million for the first quarter of 2006. Net income decreased 31.3% to $17.3 million for the first quarter of 2007 as compared to net income of $25.2 million for the first quarter of 2006. Diluted net income per common share was $0.35 for the first quarter of 2007 as compared to $0.51 for the first quarter of 2006.

In the first quarter of 2007, sales declined throughout all regions of the United States except for California, which was up slightly. Sales in continental Europe and the United Kingdom increased significantly during the quarter. Simpson Strong-Tie’s first quarter sales decreased 8.3% from the same quarter last year, while Simpson Dura-Vent’s sales decreased 31.2%. Sales to dealer and contractor distributors had the largest percentage rate decreases reflecting slower homebuilding activity while sales to homecenters increased. Sales decreased across all of Simpson Strong-Tie’s major product lines, particularly those used in new home construction, except for the Strong-Wall product line which increased slightly. Sales of all of Simpson Dura-Vent’s product lines decreased as a result of several factors, including the decline in new home construction.

Income from operations decreased 34.0% from $40.3 million in the first quarter of 2006 to $26.6 million in the first quarter of 2007, while gross margins decreased from 39.8% in the first quarter of 2006 to 37.1% in the first quarter of 2007. The decrease in gross margins was primarily due to a higher proportion of fixed overhead costs resulting primarily from the lower sales volume. The steel market continues to be dynamic with a high degree of uncertainty, and steel prices have continued to increase. Since December 31, 2006, total inventories have declined 4.0%. If steel prices increase and the Company is not able to increase its prices sufficiently, the Company’s margins could further deteriorate.

Selling expenses increased 4.0% from $17.5 million in the first quarter of 2006 to $18.2 million in the first quarter of 2007. The increase was driven primarily by a $1.0 million increase in expenses associated with sales and marketing personnel. General and administrative expenses decreased 6.4% from $23.1 million in the first quarter of 2006 to $21.6 million in the first quarter of 2007. The decrease was primarily due to a reduction in cash profit sharing included in administrative expenses totaling $3.2 million, partially offset by an increase in professional services fees and other personnel costs totaling to $0.9 million. The effective tax rate was 38.1% in the first quarter of 2007, down from 38.5% in the first quarter of 2006.

In April 2007, the Company’s Board of Directors declared a cash dividend of $0.10 per share. The record date for the cash dividend is July 6, 2007, and it will be paid on July 26, 2007. In February 2007, the Company completed the purchase of 122,500 shares of its Common Stock for a weighted average price of $34.22 per share. The total cost of the transaction was $4.2 million and was part of the $50 million that the Company’s Board of Directors authorized in February 2007. The number of shares repurchased was the same as the number of shares that were subject to stock options granted in 2007.

Investors, analysts and other interested parties are invited to join the Company’s conference call on Friday, April 27, 2007, at 6:00am Pacific Time. To participate, callers may dial 800-896-8445. The call will be webcast simultaneously as well as being available for one month through a link on the Company’s website at www.simpsonmfg.com.

This document contains forward-looking statements, based on numerous assumptions and subject to risks and uncertainties. Although the Company believes that the forward-looking statements are reasonable, it does not and cannot give any assurance that its beliefs and expectations will prove to be correct. Many factors could significantly affect the Company’s operations and cause the Company’s actual results to differ substantially from the Company’s expectations. Those factors include, but are not limited to: (i) general economic and construction business conditions; (ii) customer acceptance of the Company’s products; (iii) relationships with key customers; (iv) materials and manufacturing costs; (v) the financial condition of customers, competitors and suppliers; (vi) technological developments; (vii) increased competition; (viii) changes in capital market conditions; (ix) governmental and business conditions in countries where the Company’s products are manufactured and sold; (x) changes in trade regulations; (xi) the effect of acquisition activity; (xii) changes in the Company’s plans, strategies, objectives, expectations or intentions; and (xiii) other risks and uncertainties indicated from time to time in the Company’s filings with the U.S. Securities and Exchange Commission. Actual results might differ materially from results suggested by any forward-looking statements in this report. The Company does not have an obligation to publicly update any forward-looking statements, whether as a result of the receipt of new information, the occurrence of future events or otherwise.

 
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The Company’s results of operations for the three months ended March 31, 2007 and 2006 (unaudited), are as follows:

   
Three Months
  
   
Ended March 31,
  
(Amounts in thousands, except per share data)
  
2007
  
2006
  
Net sales
  
$
193,155
  
$
215,658
  
Cost of sales
    
121,533
    
129,740
  
Gross profit
    
71,622
    
85,918
  
               
Research and development and engineering expenses
    
5,260
    
5,058
  
Selling expenses
    
18,154
    
17,458
  
General and administrative expenses
    
21,638
    
23,114
  
               
Income from operations
    
26,570
    
40,288
  
               
Loss in equity method investment
    
(33
)
  
(143
)
Interest income, net
    
1,374
    
887
  
Income before taxes
    
27,911
    
41,032
  
               
Provision for income taxes
    
10,621
    
15,788
  
Minority interest
    
–
    
91
  
Net income
  
$
17,290
  
$
25,153
  
               
Net income per share:
              
Basic
  
$
0.36
  
$
0.52
  
Diluted
    
0.35
    
0.51
  
               
Cash dividend declared per common share
  
$
0.10
  
$
0.08
  
               
Weighted average shares outstanding:
              
Basic
    
48,414
    
48,378
  
Diluted
    
48,886
    
49,134
  
               
Other data:
              
Depreciation and amortization
  
$
7,077
  
$
6,495
  
Pre-tax stock compensation expense
    
1,677
    
1,840
  

 
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The Company’s financial position as of March 31, 2007 and 2006, and December 31, 2006 (unaudited), is as follows:

   
March 31,
  
December 31,
  
(Amounts in thousands)
  
2007
  
2006
  
2006
  
Cash and short-term investments
  
$
149,310
  
$
129,575
  
$
148,299
  
Trade accounts receivable, net
    
126,577
    
125,041
    
95,991
  
Inventories
    
208,797
    
192,741
    
217,608
  
Other current assets
    
19,045
    
17,775
    
17,440
  
Total current assets
    
503,729
    
465,132
    
479,338
  
                     
Property, plant and equipment, net
    
206,442
    
174,039
    
197,180
  
Goodwill
    
44,617
    
42,919
    
44,337
  
Other noncurrent assets
    
21,568
    
15,942
    
14,479
  
Total assets
  
$
776,356
  
$
698,032
  
$
735,334
  
                     
Trade accounts payable
  
$
35,863
  
$
40,167
  
$
22,909
  
Current portion of long-term debt
    
2,691
    
2,966
    
327
  
Other current liabilities
    
62,599
    
65,666
    
57,019
  
Total current liabilities
    
101,153
    
108,799
    
80,255
  
                     
Long-term debt
    
337
    
643
    
338
  
Other long-term liabilities
    
8,775
    
1,422
    
1,866
  
Minority interest in consolidated variable interest entities
    
–
    
2,128
    
–
  
Stockholders’ equity
    
666,091
    
585,040
    
652,875
  
Total liabilities and stockholders’ equity
  
$
776,356
  
$
698,032
  
$
735,334
  

Simpson Manufacturing Co., Inc., headquartered in Pleasanton, California, through its subsidiary, Simpson Strong-Tie Company Inc., designs, engineers and is a leading manufacturer of wood-to-wood, wood-to-concrete and wood-to-masonry connectors and fastening systems and pre-fabricated shearwalls. Simpson Strong-Tie also offers a full line of adhesives, mechanical anchors and powder actuated tools for concrete, masonry and steel. The Company’s other subsidiary, Simpson Dura-Vent Company, Inc., designs, engineers and manufactures venting systems for gas and wood burning appliances. The Company’s common stock trades on the New York Stock Exchange under the symbol “SSD.”

For further information, contact Barclay Simpson at (925) 560-9032.

 
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