Simpson Manufacturing Co., Inc. Announces 2024 Third Quarter Financial Results
-
Net sales of
$587.2 million , increased 1.2% year-over-year
-
Income from operations of
$124.9 million , resulting in operating income margin of 21.3%
-
Net income per diluted share of
$2.21
- Revising full year 2024 outlook based on reduced housing start expectations
Consolidated 2024 Third Quarter Highlights
|
Three Months Ended, |
|
Year-Over- |
||
|
|
|
Year |
||
|
2024 |
|
2023 |
|
Change |
|
(In thousands, except per share data and percentages) |
||||
Net sales |
$ 587,153 |
|
$ 580,084 |
|
1.2 % |
Gross profit |
275,057 |
|
282,917 |
|
(2.8) % |
Gross profit margin |
46.8 % |
|
48.8 % |
|
|
Total operating expenses |
148,872 |
|
141,935 |
|
4.9 % |
Income from operations |
124,854 |
|
140,213 |
|
(11.0) % |
Operating income margin |
21.3 % |
|
24.2 % |
|
|
Net income |
$ 93,519 |
|
$ 104,021 |
|
(10.1) % |
Net income per diluted common share |
$ 2.21 |
|
$ 2.43 |
|
(9.1) % |
Adjusted EBITDA1 |
$ 148,278 |
|
$ 158,792 |
|
(6.6) % |
|
|
|
|||
|
Trailing Twelve Months Ended |
|
Year-Over- |
||
|
|
|
Year |
||
|
2024 |
|
2023 |
|
Change |
|
(In thousands, except percentages) |
||||
|
1,384 |
|
1,407 |
|
(1.6) % |
__________________ |
1 Adjusted EBITDA is a non-GAAP financial measure and it is defined in the Non-GAAP Financial Measures section of the press release. For a reconciliation of Adjusted EBITDA to |
2 Source: |
Management Commentary
"Our third quarter net sales of
North America Segment 2024 Third Quarter Financial Highlights
- Net sales of
$461.4 million increased 1.0% from$456.8 million due to slightly higher average sales prices resulting from a favorable sales mix on relatively flat sales volumes, in addition to incremental sales from the Company's 2024 acquisitions. - Gross margin decreased to 49.5% from 51.8%, primarily due to higher factory and overhead and warehouse costs, as a percentage of net sales, partly offset by efficiency gains.
- Income from operations of
$123.3 million decreased 9.1% from$135.6 million . The decrease was primarily due to a decrease in gross profit, as well as increases in operating expenses of$4.1 million from 22.1% of net sales to 22.7%. Increased operating expenses include personnel costs (including engineering support services) and advertising and tradeshow costs, which were partly offset by a decrease in variable incentive compensation.
Europe Segment 2024 Third Quarter Financial Highlights
- Net sales of
$121.2 million increased 1.8% from$119.0 million , due to increased sales volumes, partly offset by price decreases in some regions. Net sales benefited from the positive effect of approximately$1.5 million in foreign currency translation. - Gross margin decreased to 36.6% from 37.9%, primarily due to higher labor, factory and overhead, and warehouse and freight costs as a percentage of net sales, partly offset by lower material costs.
- Income from operations of
$12.6 million decreased 18.2% from$15.5 million . The decrease was primarily due to increases in operating expenses of$2.4 million from 24.3% of net sales to 25.8% as well as a decrease in gross profit. Increased operating expenses included higher personnel and depreciation costs, which were partly offset by a decrease in variable incentive compensation.
Refer to the "Segment and Product Group Information" table below for additional segment information (including information about the Company's
Corporate Developments
During the third quarter, the Company completed the acquisition of all of the operating assets and assumed liabilities of
During the third quarter, the Company completed the acquisition of
Balance Sheet & 2024 Third Quarter Cash Flow Highlights
- As of
September 30, 2024 , cash and cash equivalents totaled$339.4 million with total debt outstanding of$465.4 million , of which$75.0 million remained outstanding under its$450.0 million revolving credit facility. - Cash flow provided by operating activities of
$102.5 million decreased from$200.9 million , primarily due to increases in working capital. - Cash flow used in investing activities of
$106.6 million increased from$18.5 million due to increases of$61.5 million in acquisitions and$25.6 million in capital expenditures.
Business Outlook
The Company has updated its 2024 financial outlook based on three quarters of financial information to reflect its latest expectations regarding demand trends, cost of sales, and operating expenses. Based on business trends and conditions as of today,
- Based on current expectations that
U.S. housing starts will be down from the prior year, operating margin is estimated to be in the range of 19.0% to 19.5%. - The effective tax rate is estimated to be in the range of 25.3% to 25.8%, including both federal and state income tax rates as well as international income tax rates, and assuming no tax law changes are enacted.
- Capital expenditures are estimated to be in the range of
$175.0 million to$185.0 million , which includes$90.0 million to$100.0 million for theColumbus, Ohio facility expansion and the newGallatin, Tennessee fastener facility construction with the remaining spend carrying over into 2025.
Conference Call Details
Investors, analysts and other interested parties are invited to join the Company's third quarter 2024 financial results conference call on
About
Copies of
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally can be identified by words such as "anticipate," "believe," "estimate," "expect," "intend," "plan," "outlook," "target," "continue," "predict," "project," "change," "result," "future," "will," "could," "can," "may," "likely," "potentially," or similar expressions. Forward-looking statements are all statements other than those of historical fact and include, but are not limited to, statements about future financial and operating results, our plans, objectives, business outlook, priorities, expectations and intentions, expectations for sales and market growth, comparable sales, earnings and performance, stockholder value, capital expenditures, cash flows, the housing market, the home improvement industry, demand for services, share repurchases, our ongoing integration of ETANCO and recently acquired companies, our strategic initiatives, including the impact of these initiatives on our strategic and operational plans and financial results, and any statement of an assumption underlying any of the foregoing.
Forward-looking statements are subject to inherent uncertainties, risks and other factors that are difficult to predict and could cause our actual results to vary in material respects from what we have expressed or implied by these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those expressed in or implied by our forward-looking statements include the effect of global pandemics such as the COVID-19 pandemic or other widespread public health crisis and their effects on the global economy, the effects of inflation and labor and supply shortages, on our operations, and the operations of our customers, suppliers and business partners, and our ongoing integration of ETANCO, as well as those discussed in the "Risk Factors" and " Management's Discussion and Analysis of Financial Condition and Results of Operations" sections of our most recent Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and other reports we file with the
We caution that you should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law. Readers are urged to carefully review and consider the various disclosures made in our reports filed with the
Non-GAAP Financial Measures
This press release includes certain financial information not prepared in accordance with Generally Accepted Accounting Principles in
The Company defines Adjusted EBITDA as net income (loss) before income taxes, adjusted to exclude depreciation and amortization, integration, acquisition and restructuring costs, goodwill impairment, gain on bargain purchase, net loss or gain on disposal of assets, interest income or expense, and foreign exchange and other expense (income).
UNAUDITED Condensed Consolidated Statements of Operations (In thousands, except per share data)
|
|||||||
|
Three Months Ended |
|
Nine Months Ended |
||||
|
2024 |
|
2023 |
|
2024 |
|
2023 |
Net sales |
$ 587,153 |
|
$ 580,084 |
|
$ 1,714,710 |
|
$ 1,712,093 |
Cost of sales |
312,096 |
|
297,167 |
|
916,562 |
|
888,835 |
Gross profit |
275,057 |
|
282,917 |
|
798,148 |
|
823,258 |
Research and development and engineering expense |
23,678 |
|
24,751 |
|
68,303 |
|
67,035 |
Selling expense |
54,590 |
|
52,391 |
|
165,007 |
|
151,497 |
General and administrative expense |
70,604 |
|
64,793 |
|
207,181 |
|
197,267 |
Total operating expenses |
148,872 |
|
141,935 |
|
440,491 |
|
415,799 |
Acquisition and integration related costs |
1,356 |
|
785 |
|
4,992 |
|
4,086 |
Gain on disposal of assets |
(25) |
|
(16) |
|
(460) |
|
(223) |
Income from operations |
124,854 |
|
140,213 |
|
353,125 |
|
403,596 |
Interest income and other, net |
1,668 |
|
1,292 |
|
4,111 |
|
18 |
Other & foreign exchange gain (loss), net |
(29) |
|
(1,429) |
|
352 |
|
(1,471) |
Income before taxes |
126,493 |
|
140,076 |
|
357,588 |
|
402,143 |
Provision for income taxes |
32,974 |
|
36,055 |
|
90,821 |
|
102,958 |
Net income |
$ 93,519 |
|
$ 104,021 |
|
$ 266,767 |
|
$ 299,185 |
Earnings per common share: |
|
|
|
|
|
|
|
Basic |
$ 2.22 |
|
$ 2.44 |
|
$ 6.31 |
|
$ 7.01 |
Diluted |
$ 2.21 |
|
$ 2.43 |
|
$ 6.28 |
|
$ 6.98 |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
Basic |
42,151 |
|
42,673 |
|
42,254 |
|
42,651 |
Diluted |
42,335 |
|
42,882 |
|
42,464 |
|
42,893 |
Cash dividend declared per common share |
$ 0.28 |
|
$ 0.27 |
|
$ 0.83 |
|
$ 0.80 |
Other data: |
|
|
|
|
|
|
|
Depreciation and amortization |
$ 21,276 |
|
$ 18,180 |
|
$ 59,835 |
|
$ 54,224 |
Pre-tax equity-based compensation expense |
$ 4,662 |
|
$ 6,625 |
|
$ 15,089 |
|
$ 17,789 |
UNAUDITED Condensed Consolidated Balance Sheets (In thousands) |
||||||
|
||||||
|
|
|
|
|
||
|
|
2024 |
|
2023 |
|
2023 |
Cash and cash equivalents |
|
$ 339,427 |
|
$ 571,006 |
|
$ 429,822 |
Trade accounts receivable, net |
|
360,350 |
|
351,164 |
|
283,975 |
Inventories |
|
583,380 |
|
504,446 |
|
551,575 |
Other current assets |
|
51,609 |
|
51,583 |
|
47,069 |
Total current assets |
|
1,334,766 |
|
1,478,199 |
|
1,312,441 |
Property, plant and equipment, net |
|
495,822 |
|
382,508 |
|
418,612 |
Operating lease right-of-use assets |
|
87,097 |
|
66,144 |
|
68,792 |
|
|
550,946 |
|
483,413 |
|
502,550 |
Intangible assets, net |
|
395,517 |
|
356,450 |
|
365,339 |
Other noncurrent assets |
|
33,311 |
|
48,773 |
|
36,990 |
Total assets |
|
$ 2,897,459 |
|
$ 2,815,487 |
|
$ 2,704,724 |
Trade accounts payable |
|
$ 110,321 |
|
$ 95,267 |
|
$ 107,524 |
Long-term debt, current portion |
|
22,500 |
|
22,500 |
|
22,500 |
Accrued liabilities and other current liabilities |
|
245,129 |
|
309,802 |
|
231,233 |
Total current liabilities |
|
377,950 |
|
427,569 |
|
361,257 |
Operating lease liabilities, net of current portion |
|
70,496 |
|
53,808 |
|
55,324 |
Long-term debt, net of current portion and issuance costs |
|
442,886 |
|
539,073 |
|
458,791 |
Deferred income tax |
|
89,226 |
|
97,298 |
|
98,170 |
Other long-term liabilities |
|
53,680 |
|
28,248 |
|
51,436 |
Stockholders' equity |
|
1,863,221 |
|
1,669,491 |
|
1,679,746 |
Total liabilities and stockholders' equity |
|
$ 2,897,459 |
|
$ 2,815,487 |
|
$ 2,704,724 |
UNAUDITED Segment and Product Group Information (In thousands) |
||||||||||||
|
||||||||||||
|
|
Three Months Ended |
|
|
|
Nine Months Ended |
|
|
||||
|
|
|
|
% |
|
|
|
% |
||||
|
2024 |
|
2023 |
|
change* |
|
2024 |
|
2023 |
|
change* |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 461,356 |
|
$ 456,820 |
|
1.0 % |
|
|
|
$ 1,328,615 |
|
0.2 % |
|
Percentage of total net sales |
78.6 % |
|
78.8 % |
|
|
|
77.6 % |
|
77.6 % |
|
|
|
|
121,170 |
|
119,043 |
|
1.8 % |
|
370,985 |
|
371,074 |
|
N/M |
|
Percentage of total net sales |
20.6 % |
|
20.5 % |
|
|
|
21.6 % |
|
21.7 % |
|
|
|
|
4,627 |
|
4,221 |
|
9.6 % |
|
12,599 |
|
12,404 |
|
1.6 % |
|
|
$ 587,153 |
|
$ 580,084 |
|
1.2 % |
|
|
|
$ 1,712,093 |
|
0.2 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 494,379 |
|
$ 491,308 |
|
0.6 % |
|
|
|
$ 1,461,442 |
|
(0.7) % |
|
Percentage of total net sales |
84.2 % |
|
84.7 % |
|
|
|
84.6 % |
|
85.4 % |
|
|
|
Concrete Construction |
86,715 |
|
84,141 |
|
3.1 % |
|
251,893 |
|
242,133 |
|
4.0 % |
|
Percentage of total net sales |
14.8 % |
|
14.5 % |
|
|
|
14.7 % |
|
14.1 % |
|
|
|
Other |
6,059 |
|
4,635 |
|
N/M |
|
11,845 |
|
8,518 |
|
39.1 % |
|
|
$ 587,153 |
|
$ 580,084 |
|
1.2 % |
|
|
|
$ 1,712,093 |
|
0.2 % |
Gross Profit (Loss) by Reporting Segment |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 228,169 |
|
$ 236,451 |
|
(3.5) % |
|
$ 660,287 |
|
$ 680,218 |
|
(2.9) % |
|
North America gross margin |
49.5 % |
|
51.8 % |
|
|
|
49.6 % |
|
51.2 % |
|
|
|
|
44,327 |
|
45,115 |
|
(1.7) % |
|
134,088 |
|
139,538 |
|
(3.9) % |
|
|
36.6 % |
|
37.9 % |
|
|
|
36.1 % |
|
37.6 % |
|
|
|
|
1,619 |
|
1,771 |
|
N/M |
|
3,781 |
|
4,515 |
|
N/M |
|
Administrative and all other |
942 |
|
(420) |
|
N/M |
|
(8) |
|
(1,013) |
|
N/M |
|
|
$ 275,057 |
|
$ 282,917 |
|
(2.8) % |
|
$ 798,148 |
|
$ 823,258 |
|
(3.1) % |
Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 123,253 |
|
$ 135,633 |
|
(9.1) % |
|
$ 354,212 |
|
$ 393,456 |
|
(10.0) % |
|
North America operating margin |
26.7 % |
|
29.7 % |
|
|
|
26.6 % |
|
29.6 % |
|
|
|
|
12,635 |
|
15,450 |
|
(18.2) % |
|
33,037 |
|
42,894 |
|
(23.0) % |
|
|
10.4 % |
|
13.0 % |
|
|
|
8.9 % |
|
11.6 % |
|
|
|
|
260 |
|
477 |
|
N/M |
|
(617) |
|
718 |
|
N/M |
|
Administrative and all other |
(11,294) |
|
(11,347) |
|
N/M |
|
(33,507) |
|
(33,472) |
|
N/M |
|
|
$ 124,854 |
|
$ 140,213 |
|
(11.0) % |
|
$ 353,125 |
|
$ 403,596 |
|
(12.5) % |
*Unfavorable percentage changes are presented in parentheses, if any. |
||
**The Company manages its business by geographic segment but presents sales by product group as additional information. |
||
N/M Statistic is not material or not meaningful. |
Reconciliation of Non-GAAP Financial Measures (In thousands) (Unaudited) A reconciliation of Adjusted EBITDA to net income, the most directly comparable GAAP measure, is set forth below.
|
|||
|
Three Months Ended |
||
|
2024 |
|
2023 |
Net Income |
$ 93,519 |
|
$ 104,021 |
|
|
|
|
Provision for income taxes |
32,974 |
|
36,055 |
Interest (income) expense, net and other financing costs |
(1,668) |
|
(1,292) |
Depreciation and amortization |
21,276 |
|
18,180 |
Other* |
2,177 |
|
1,828 |
Adjusted EBITDA |
$ 148,278 |
|
$ 158,792 |
*Other: Includes acquisition, integration, and restructuring related expenses, other & foreign exchange loss net, and net loss or gain on disposal of assets. |
CONTACT:
Addo Investor Relations
investor.relations@strongtie.com
(310) 829-5400
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