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Actionable news in SSD: SIMPSON MANUFACTURING CO. Inc,

Simpson Manufacturing Co., Inc. Announces First Quarter Results

PLEASANTON, Calif., April 21, 2016 /PRNewswire/ -- Simpson Manufacturing Co., Inc. (the "Company") SSD, +0.85% today announced its first quarter 2016 results.

Results of Operations for the Three Months Ended March 31, 2016, Compared with the Three Months Ended March 31, 2015.

Unless otherwise stated, the results announced below, when providing comparisons (which are generally indicated by words such as "increased," "decreased" "remained" or "compared to"), compare the results of operations for the three months ended March 31, 2016, against the results of operations for the three months ended March 31, 2015.

Overview

Net sales increased 13% to $199.5 million from $176.5 million. The Company had net income of $16.3 million compared to $10.1 million. Diluted net income per common share was $0.34 compared to $0.20.

Net sales

The Company's net sales increased in both the North America and Europe segments.

  • Segment net sales:
    • North America – Net sales increased 16% due to increased unit sales volumes in the United States on improved economic activity, partly offset by a slight decrease in average sales prices. Canada's net sales were negatively affected by the Canadian dollar weakening against the United States dollar.
    • Europe – Net sales increased 4%, mostly due to increased unit sales volumes, partly offset by a decrease in average sales prices. Europe's net sales were negatively affected by the European currencies weakening against the United States dollar.
    • Asia/Pacific -Net sales decreased 59%, primarily due to the closing of sales offices in China, Thailand and Dubai late in the first quarter of 2015, which accounted for approximately a $2.2 million decrease in consolidated net sales.
  • Consolidated net sales channels and product groups:
    • Net sales to dealer distributors, lumber dealers, contractor distributors and home centers increased, primarily due to increased home construction activity.
    • Wood construction product net sales, including sales of connectors, truss plates, fastening systems, fasteners and shearwalls, represented 86% of total Company net sales in the first quarters of both 2016 and 2015.
    • Concrete construction product net sales, including sales of adhesives, chemicals, mechanical anchors, powder actuated tools and reinforcing fiber materials, represented 14% of total Company net sales in the first quarters of both 2016 and 2015.

Gross profit

Gross profit increased to $92.5 million from $77.5 million. Gross profit as a percentage of net sales increased to 46% from 44%. Based on current information and subject to future events and circumstances, the Company estimates that its full-year 2016 gross profit margin will be between approximately 46% and 47%.

  • North America – Gross profit margin increased to 48% from 46%, primarily as a result of a decrease in factory overhead (on increased production volumes) and a small reduction in material costs, both as a percentage of net sales.
  • Europe – Gross profit margin decreased to 36% from 38%, as a result of increases in material, labor and shipping costs, all as a percentage of sales, partly offset by decrease in factory costs (on increased production volumes), as a percentage of sales.
  • Product mix – The gross profit margin differential between wood construction products and concrete construction products, which have lower gross profit margins, decreased to 15% from 17%.
  • Steel prices – The market prices for steel increased during the first quarter of 2016. The Company currently anticipates that, subject to changing economic conditions, it is likely that steel prices will rise during the second quarter of 2016.

Research and development and engineering expense

Research and development and engineering expense increased 12% to $11.4 million from $10.2 million, primarily due to increases of $0.6 million in cash profit sharing expense on increased profits, $0.2 million in personnel costs and $0.2 million in computer costs, all of which occurred in the North America segment.

Selling expense

Selling expense increased 11% to $25.2 million from $22.6 million, primarily due to increases of $1.7 million in personnel costs and $1.1 million in cash profit sharing and sales commission expenses, partly offset by a decrease of $0.2 million in donation expense.

  • North America – Selling expense increased $2.6 million, primarily due to increases of $1.9 million in personnel costs, mostly related to the addition of staff and pay rate increases...

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