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l 2018 first quarter net sales of $244.8 million increased 11% year–over–year | |
l Repurchased $25.0 million of the Company's common stock | |
l Declared a $0.22 cash dividend (5% increase from the 2018 first quarter dividend) | |
l Reiterating financial targets and assumptions under the Company's "2020 Plan" |
• | Consolidated net sales of $244.8 million increased 11% compared to $219.9 million. |
◦ | North America net sales of $206.2 million increased 12% compared to $183.8 million, primarily due to increases in sales volume. Canada's net sales were positively affected by foreign currency translation. |
◦ | Europe net sales of $36.3 million increased 6% compared to $34.4 million, primarily due to approximately $4.2 million of positive foreign currency translations resulting from Europe currencies strengthening against the United States dollar, as well as increases in average net sales unit prices. Net sales were partly offset by reduced sales volume due to the 2017 sale of Gbo Fastening Systems' Poland and Romania subsidiaries (acquired January 2017), which contributed $3.0 million in net sales for the first quarter of 2017. |
• | Consolidated gross profit of $108.5 million increased 8% compared to $100.2 million. Gross profit margin decreased to 44.3% from 45.6% mostly due to increased material costs. |
◦ | North America gross profit margin decreased to 47% from 48%. |
◦ | Europe gross profit margin of 32% was in line with the first quarter of 2017. |
• | Consolidated income from operations of $32.8 million increased from $22.6 million, in spite of increased SAP related expenses of $3.0 million in the first quarter of 2018 compared to the first quarter of 2017, partly offset by $1.0 million gain due to the resolution of an eminent domain claim. Consolidated operating profit margin increased to 13% from 10%. |
◦ | North America income from operations of $36.0 million increased 34% compared to $26.8 million. |
◦ | Europe loss from operations of $1.6 million decreased from $1.8 million. Included in Europe’s loss from operations were ERP–related costs of approximately $0.7 million compared to $0.1 million in the first quarter of 2017. |
• | Consolidated net income was $25.4 million, or $0.54 per diluted share of the Company's common stock, compared to net income of $23.1 million, or $0.48 per diluted share of the Company's common stock. The $23.1 million consolidated net income for the first quarter of 2017 included an $8.4 million gain on a bargain purchase of a business, which increased diluted earnings per share for that quarter by $0.18. |
• | Cash flow provided by operating activities increased approximately $23.8 million to $16.3 million compared to cash flow used in operating activities of $7.5 million. |
• | Cash flow used in investing activities decreased approximately $32.3 million to $9.7 million from $42.0 million. Capital expenditures were $10.9 compared to $15.8 million. Asset acquisitions, net of cash received, were zero compared to $26.3 million. |
• | During the first quarter of 2018, the Company received and repurchased 619,671 shares of the Company's common stock. The Company received 182,171 shares of its common stock as the final delivery of a $50.0 million accelerated share repurchase program initiated in December 2017. During the first quarter of 2018, the Company also repurchased in the open market 437,500 shares of its common stock at an average price of $57.14 per share, for a total of $25.0 million (see quarter highlights above). As a result, as of March 31, 2018, approximately $126.5 million remained available for share repurchase through December 31, 2018 under the Company's previously announced $275.0 million share repurchase authorization. |
• | On April 24, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per share, an increase of 5% from the 2018 first quarter dividend. The dividend will be payable on July 26, 2018 to the Company shareholders of record as of July 5, 2018. |
• | On April 14, 2018, the Company announced an average 11.5% product price increase on its wood connector products sold in the United States, expected to become effective in mid–June, in an effort to offset rising raw materials costs. |
• | On March 20, 2018, the Company announced a strategic partnership and software collaboration with Hyphen Solutions, a leading cloud-based construction management software company, to offer integrated information exchange between Hyphen's software and CG Visions' cloud-based take-off platform for project estimation and management allowing home builders to increase productivity along the supply chain. CG Visions is a Simpson Strong–Tie company and a leading provider of Building Information Modeling technology, services and consultation. |
• | On March 29, 2018, the Company announced the purchase from LotSpec a suite of software application assets designed to optimize efficiency and productivity for production homebuilders' needs around construction document and option management solutions. When coupled with the 2017 acquisition of CG Visions, this strategic asset purchase is expected to continue to deepen the Company's partnership with top builders, architects and engineers by offering scalable software solutions. |
• | The Company currently believes, due to uncertainty related to steel tariffs, the market price for steel will likely continue to increase during the second quarter of 2018. |
• | The Company estimates that its 2018 full-year gross profit margin will be between approximately 45% to 46%. |
• | The Company estimates that its 2018 full-year effective tax rate will be between approximately 26% to 27%, including both federal and state income tax rates. The ultimate impact of the Tax Cuts and Jobs Act signed into law in 2017 and the Company's 2018 effective tax rate may differ materially from the Company’s estimates due to changes in the interpretations and assumptions made by the Company as well as additional regulatory guidance that may be issued and actions the Company may take as a result of the Tax Cuts and Jobs Act, such as cash repatriation to the United States, if any. The Company will continue to assess the expected impacts of the new tax law and provide additional disclosures at appropriate times. |
Three Months Ended March 31, | |||||||
(Amounts in thousands, except per share data) | 2018 | 2017 | |||||
Net sales | $ | 244,779 | $ | 219,867 | |||
Cost of sales | 136,253 | 119,711 | |||||
Gross profit | 108,526 | 100,156 | |||||
Research and development and engineering expense | 11,150 | 11,819 | |||||
Selling expense | 27,573 | 29,637 | |||||
General and administrative expense | 38,191 | 36,121 | |||||
Gain on disposal of assets | (1,184 | ) | (51 | ) | |||
Income from operations | 32,796 | 22,630 | |||||
Loss in equity method investment, before tax | (24 | ) | (28 | ) | |||
Interest expense, net | (90 | ) | (189 | ) | |||
Gain on bargain purchase of a business | — | 8,388 | |||||
Income before taxes | 32,682 | 30,801 | |||||
Provision for income taxes | 7,253 | 7,680 | |||||
Net income | $ | 25,429 | $ | 23,121 | |||
Earnings per common share: | |||||||
Basic | $ | 0.55 | $ | 0.49 | |||
Diluted | $ | 0.54 | $ | 0.48 | |||
Weighted average shares outstanding: | |||||||
Basic | 46,615 | 47,616 | |||||
Diluted | 47,009 | 47,906 | |||||
Cash dividend declared per common share | $ | 0.21 | $ | 0.18 | |||
Other data: | |||||||
Depreciation and amortization | $ | 9,688 | $ | 8,363 | |||
Pre-tax equity-based compensation expense | $ | 3,116 | $ | 7,976 | |||
March 31, | December 31, | |||||||||||
(Amounts in thousands) | 2018 | 2017 | 2017 | |||||||||
Cash and cash equivalents | $ | 137,413 | $ | 167,059 | $ | 168,514 | ||||||
Trade accounts receivable, net | 167,146 | 148,506 | 135,958 | |||||||||
Inventories | 256,552 | 256,271 | 252,996 | |||||||||
Other current assets | 22,423 | 13,744 | 26,473 | |||||||||
Total current assets | 583,534 | 585,580 | 583,941 | |||||||||
Property, plant and equipment, net | 276,114 | 250,465 | 273,020 | |||||||||
Goodwill | 138,026 | 135,113 | 137,140 | |||||||||
Other noncurrent assets | 42,668 | 47,042 | 43,422 | |||||||||
Total assets | $ | 1,040,342 | $ | 1,018,200 | $ | 1,037,523 | ||||||
Trade accounts payable | $ | 42,098 | $ | 38,219 | $ | 31,536 | ||||||
Capital lease obligation - current portion | 1,064 | 521 | 1,055 | |||||||||
Other current liabilities | 100,066 | 84,821 | 103,900 | |||||||||
Total current liabilities | 143,228 | 123,561 | 136,491 | |||||||||
Capital lease obligations - net of current portion | 2,425 | 1,610 | 2,607 | |||||||||
Deferred income tax and other long-term liabilities | 15,627 | 6,076 | 13,647 | |||||||||
Stockholders' equity | 879,062 | 886,953 | 884,778 | |||||||||
Total liabilities and stockholders' equity | $ | 1,040,342 | $ | 1,018,200 | $ | 1,037,523 |
Three Months Ended | |||||||
March 31, | % | ||||||
(Amounts in thousands) | 2018 | 2017 | change* | ||||
Net Sales by Reporting Segment | |||||||
North America | $206,212 | $183,772 | 12% | ||||
Percentage of total net sales | 84% | 84% | |||||
Europe | 36,293 | 34,381 | 6% | ||||
Percentage of total net sales | 15% | 16% | |||||
Asia/Pacific | 2,274 | 1,714 | 33% | ||||
Administrative and all other | 1% | —% | |||||
Total | $244,779 | $219,867 | 11% | ||||
Net Sales by Product Group** | |||||||
Wood Construction | $212,547 | $190,877 | 11% | ||||
Percentage of total net sales | 87% | 87% | |||||
Concrete Construction | 32,156 | 28,817 | 12% | ||||
Percentage of total net sales | 13% | 13% | |||||
Other | 76 | 173 | N/M | ||||
Total | $244,779 | $219,867 | 11% | ||||
Gross Profit (Loss) by Reporting Segment | |||||||
North America | $96,738 | $88,990 | 9% | ||||
North America gross profit margin | 47% | 48% | |||||
Europe | 11,568 | 11,056 | 5% | ||||
Europe gross profit margin | 32% | 32% | |||||
Asia/Pacific | 187 | 129 | 45% | ||||
Administrative and all other | 33 | (19) | N/M | ||||
Total | $108,526 | $100,156 | 8% | ||||
Income (Loss) from Operations | |||||||
North America | $35,968 | $26,767 | 34% | ||||
North America operating profit margin | 17% | 15% | |||||
Europe | (1,647) | (1,835) | 10% | ||||
Europe operating profit margin | (5)% | (5)% | |||||
Asia/Pacific | 151 | (195) | 177% | ||||
Administrative and all other | (1,676) | (2,107) | N/M | ||||
Total | $32,796 | $22,630 | 45% |
* | Unfavorable percentage changes are presented in parentheses, if any. | |
** | 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. |
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Ticker: SSDEvents:
CIK: 920371
Form Type: 8-K Corporate News
Accession Number: 0000920371-18-000104
Submitted to the SEC: Mon Apr 30 2018 3:47:54 PM EST
Accepted by the SEC: Mon Apr 30 2018
Period: Monday, April 30, 2018
Industry: Cutlery Handtools And General Hardware