Simpson Manufacturing Co., Inc. Announces Second Quarter Results

Jul 28, 2011, 17:00 ET from Simpson Manufacturing Co., Inc.

PLEASANTON, Calif., July 28, 2011 /PRNewswire/ -- Simpson Manufacturing Co., Inc. (NYSE: SSD) (the "Company") today announced its second quarter 2011 results. The following discussion refers only to continuing operations unless otherwise indicated.

For the second quarter of 2011, net sales increased 7.4% to $177.8 million compared to net sales of $165.6 million for the second quarter of 2010. The Company had income, net of tax, of $19.5 million for the second quarter of 2011 compared to income, net of tax, of $21.1 million for the second quarter of 2010. Diluted income, net of tax, per common share was $0.39 for the second quarter of 2011 compared to diluted income, net of tax, of $0.42 per common share for the second quarter of 2010.

In the second quarter of 2011, sales increased throughout most of North America and increased significantly in Europe. Sales increased in the United States with increases in California and the western, midwestern and southeastern regions, as compared to the second quarter of 2010. Sales in the northeastern region decreased slightly. Sales in Canada decreased compared to the second quarter of 2010. Sales in Asia and Australia, although relatively small, increased as compared to the second quarter of 2010. Sales to contractor distributors, lumber dealers and home centers increased, although economic conditions remain challenging, and sales to dealer distributors were flat. The sales increase was broad-based across most of the Company's major product lines as compared to the second quarter of 2010. Sales of anchor products increased over the same period in the prior year while sales of shearwalls decreased.

Gross margins increased slightly from 46.4% in the second quarter of 2010 to 47.0% in the second quarter of 2011, primarily due to slightly lower manufacturing costs, including lower costs of material and labor, partly offset by increased factory overhead costs. Steel prices increased from their levels in mid-2010, as steel mills have been raising prices as demand returns to global steel markets. The Company expects steel prices to remain at current levels or to increase for the remainder of 2011. The Company's inventories increased 9.6% from $152.3 million at December 31, 2010, to $166.9 million at June 30, 2011.

Research and development and engineering expense increased 21.8% from $5.7 million in the second quarter of 2010 to $6.9 million in the second quarter of 2011, including increases in cash profit sharing of $0.6 million and personnel costs of $0.4 million. Selling expense increased 19.3% from $16.6 million in the second quarter of 2010 to $19.8 million in the second quarter of 2011, including increases in personnel costs of $1.2 million, cash profit sharing and commissions of $1.1 million, and promotional costs of $0.6 million. General and administrative expense increased 24.0% from $20.5 million in the second quarter of 2010 to $25.5 million in the second quarter of 2011, including increases in cash profit sharing of $1.2 million, professional fees of $1.1 million, impairment of available for sale assets of $1.1 million, personnel costs of $0.8 million and stock option expense of $0.3 million. The Company concluded, in the second quarter of 2011, that its San Leandro facility is expected to be sold below carrying value, and therefore recorded an impairment charge of $1.1 million, equal to the amount by which carrying value exceeds the estimated net realizable value. The effective tax rate was 37.6% in the second quarter of 2011, as compared to 37.8% in the second quarter of 2010.

For the first half of 2011, net sales increased 7.2% to $310.3 million compared to net sales of $289.4 million for the first half of 2010. The Company had income, net of tax, of $26.6 million for the first half of 2011 compared to income, net of tax, of $30.9 million for the first half of 2010. Diluted income, net of tax, per common share was $0.53 for the first half of 2011 compared to diluted income, net of tax, of $0.62 per common share for the first half of 2010.

In the first half of 2011, sales increased throughout most of North America and increased significantly in Europe. Sales increased in California and the midwestern, southeastern and northeastern regions as compared to the first half of 2010. Sales in Canada decreased compared to the first half of 2010. Sales in Asia and Australia, although relatively small, increased as compared to the first half of 2010. Sales to contractor distributors, dealer distributors, lumber dealers and home centers increased. The sales increase was broad-based across most of the Company's major product lines as compared to the first half of 2010. Sales of anchor products increased over the same period in the prior year while sales of shearwalls decreased.

Gross margins increased slightly from 45.2% in the first half of 2010 to 45.3% in the first half of 2011, primarily due to slightly lower manufacturing costs, including lower costs of material and labor, partly offset by increased factory overhead costs.

Research and development and engineering expense increased 23.9% from $10.4 million in the first half of 2010 to $12.9 million in the first half of 2011, including increases in personnel costs of $1.1 million, cash profit sharing of $0.8 million and professional services of $0.6 million.  Selling expense increased 17.2% from $31.5 million in the first half of 2010 to $36.9 million in the first half of 2011, including increases in personnel costs of $2.5 million, cash profit sharing and commissions of $1.6 million, and promotional costs of $0.8 million. General and administrative expense increased 25.7% from $37.5 million in the first half of 2010 to $47.1 million in the first half of 2011, including increases in cash profit sharing of $2.3 million, professional fees of $1.8 million, personnel costs of $1.6 million, stock option expense of $1.1 million, impairment of available for sale assets of $1.1 million and provision for bad debt of $0.5 million. The effective tax rate was 39.0% in the first half of 2011, as compared to 39.2% in the first half of 2010.

In the second quarter of 2011, the Company repurchased 1.8 million shares of its common stock, at a total cost of $50.1 million, as part of the Company's $100.0 million share repurchase authorization for 2011.

At its meeting on July 19, 2011, the Company's Board of Directors declared a cash dividend of $0.125 per share. The record date for the dividend will be October 6, 2011, and it will be paid on October 27, 2011.

Investors, analysts and other interested parties are invited to join the Company's conference call on Friday, July 29, 2011, at 6:00 am Pacific Time. To participate, callers may dial 800-895-0198. 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 and credit 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.

The Company's results of operations for the three and six months ended June 30, 2011 and 2010 (unaudited), are as follows:

Three Months

Six Months

Ended June 30,

Ended June 30,

(Amounts in thousands, except per share data)

2011

2010

2011

2010

  Net sales

$

177,812

$

165,614

$

310,348

$

289,434

  Cost of sales

94,313

88,828

169,900

158,620

     Gross profit

83,499

76,786

140,448

130,814

  Research and development and engineering expenses

6,945

5,700

12,939

10,441

  Selling expenses

19,819

16,610

36,895

31,483

  General and administrative expenses

25,454

20,524

47,076

37,456

  Loss on sale of assets

73

15

48

404

     Income from operations

31,208

33,937

43,490

51,030

  Loss in equity method investment, before tax

(69)

(131)

(82)

(275)

  Interest income, net

108

26

179

37

     Income from continuing operations before taxes

31,247

33,832

43,587

50,792

  Provision for income taxes from continuing operations

11,754

12,773

17,016

19,903

     Income from continuing operations, net of tax

19,493

21,059

26,571

30,889

Discontinued operations:

  Loss from discontinued operations, net of tax

(14,356)

(14,986)

Net income

$

19,493

$

6,703

$

26,571

$

15,903

  Earnings (loss) per common share:

     Basic

        Continuing operations

$

0.39

$

0.43

$

0.53

$

0.63

        Discontinued operations

(0.29)

(0.30)

        Net income

0.39

0.14

0.53

0.32

  Diluted

     Continuing operations

$

0.39

$

0.42

$

0.53

$

0.62

     Discontinued operations

(0.29)

(0.30)

     Net income

0.39

0.14

0.53

0.32

  Weighted average shares outstanding:

     Basic

49,404

49,417

49,753

49,403

     Diluted

49,456

49,598

49,809

49,559

  Other data:

     Continuing operations

        Depreciation and amortization  

$

5,084

$

5,370

$

10,055

$

10,791

        Pre-tax impairment of assets

1,094

1,094

        Pre-tax stock compensation expense

855

286

2,377

755

     Discontinued operations

        Pre-tax impairment of assets

21,350

21,350

  Cash dividend declared per common share

$

0.125

$

0.10

$

0.25

$

0.20

The Company's financial position (unaudited) as of June 30, 2011 and 2010, and December 31, 2010, is as follows:

June 30,

December 31,

(Amounts in thousands)

2011

2010

2010

  Cash and short-term investments

$

262,013

$

219,763

$

335,049

  Trade accounts receivable, net

117,975

104,284

68,256

  Inventories

166,934

150,786

152,297

  Assets held for sale

6,792

40,457

10,787

  Other current assets

19,697

29,481

24,867

     Total current assets

573,411

544,771

591,256

  Property, plant and equipment, net

183,698

184,949

177,072

  Goodwill

72,111

72,163

70,069

  Other noncurrent assets

35,355

40,634

36,312

     Total assets

$

864,575

$

842,517

$

874,709

  Trade accounts payable

$

32,060

$

27,906

$

35,164

  Liabilities held for sale

2,739

  Other current liabilities

60,817

49,142

44,452

     Total current liabilities

92,877

79,787

79,616

  Other long-term liabilities

7,246

9,263

7,300

  Stockholders' equity

764,452

753,467

787,793

     Total liabilities and stockholders' equity

$

864,575

$

842,517

$

874,709

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, stainless steel fasteners 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 common stock trades on the New York Stock Exchange under the symbol "SSD."

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

SOURCE Simpson Manufacturing Co., Inc.



RELATED LINKS

http://www.simpsonmfg.com