GREENWICH, Conn., April 28, 2017 /PRNewswire/ -- This morning Simpson Manufacturing Co, Inc. (the "Company") held a conference call to review first quarter results. Management took questions from a variety of sell-side analysts and shareholders. However, the Iron Compass request to ask questions on the call was not acknowledged. We find it curious that the Company or its call operator would exclude one particular shareholder and censor the free flow of questions and answers. Below are the questions we were planning to ask on the call. We believe that we and all shareholders deserve answers:
1. Karen, one year ago in April 2016 you said the following on your first quarter conference call: "We are making positive steps in reducing our R&D, engineering, selling and admin expenses as a percent of sales." Here we are one year later and SG&A (including R&D and engineering) as a percent of sales in the quarter was 35.3% compared to 33% in the comparable period a year ago, a 230 basis point increase. In fact, for each of the four quarters since you made that statement SG&A (including R&D and engineering) as a percent of revenue has increased materially year over year. Given those facts, should shareholders conclude that you no longer are seeking to bring down your SG&A costs?
2. When you provided prior guidance for gross margins, you had already closed on your acquisitions for Gbo and CG Visions and revenue from both deals was included in the Q1 results. Given that and given the input cost trajectory, volume growth, and price increases, we are highly skeptical of the new lowered gross margin guidance, which puts the Company's gross margins in 2017 back at 2014 levels. In each of the last four years, Q1 is the lowest gross margin quarter, but your guidance suggests declines for the rest of the year. Can you walk through the specific math to get to your numbers?
3. Your gross margin guidance is confusing. What is your purpose in giving gross margin guidance? The guidance does not allow anyone to effectively project operating profits, because you do not provide SG&A guidance, which should be the most controllable and predictable element of your business.
4. We believe that there could be significant interest from third party acquirers in owning this business. The stock and operating profit growth has underperformed over a long duration. Given that, how does the management and the Board justify not pursuing a full review of strategic alternatives?
About Iron Compass
Iron Compass endeavors to be a long term owner of 'classically great' businesses. These are companies we believe have a distinct competitive advantage that allows them to generate high returns on invested capital, stable cash flow, and growth over the long term. The greatest businesses seek to outperform contemporaneously in both operations and capital management. www.ironcompassinvestors.com.
The materials in this press release shall not constitute a solicitation of proxies or the solicitation or recommendation of any vote or approval in any jurisdiction pursuant to or in connection with any meeting of stockholders of Simpson Manufacturing Co., Inc.
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SOURCE Iron Compass LLC