SIMPSON MANUFACTURING CO., INC. ANNOUNCES 2023 FOURTH QUARTER AND FULL-YEAR FINANCIAL RESULTS
-
Fourth quarter net sales of
$501.7 million increased 5.5% year-over-year -
2023 net sales of
$2.2 billion increased 4.6% year-over-year -
2023 net income per diluted share of
$8.26 increased 6.5% year-over-year -
Declared a
$0.27 per share dividend -
Repurchased
$50.0 million in common stock in 2023
All comparisons below (which are generally indicated by words such as "increased," "decreased," "remained," or "compared to"), unless otherwise noted, are comparing the quarter ended
2023 Fourth Quarter Financial Highlights
- Consolidated net sales of
$501.7 million increased 5.5% from$475.6 million .North America net sales of$387.8 million increased 5.3% from$368.1 million , primarily due to higher sales volumes, partly offset by price decreases implemented during the first quarter of 2023.Europe net sales of$109.7 million increased 5.8% from$103.7 million , primarily due to the positive effect of approximately$5.1 million in foreign currency translation.
- Consolidated gross profit of
$220.5 million increased 9.9% compared to$200.7 million . Consolidated gross margin increased to 43.9% from 42.2%.North America gross margin increased to 47.0% from 45.0%, primarily due to lower raw material and labor costs, as a percentage of net sales.Europe gross margin increased to 34.2% from 32.7%, primarily due to lower raw material costs as a percentage of net sales. Cost of sales in the prior year period included a$1.4 million inventory fair-value adjustment as a result of purchase accounting with respect to the acquisition of ETANCO.
- Consolidated income from operations of
$71.6 million decreased 9.1% compared to$78.7 million . The decrease was primarily due to higher operating expenses, including increased personnel costs resulting from more employees supporting production, engineering and sales activities; elevated professional fees; and variable compensation, which was partly offset by higher gross profits. Consolidated operating margin decreased to 14.3% from 16.6%.North America income from operations of$79.8 million decreased 6.8% compared to$85.6 million . The decrease was primarily due to higher operating expenses including personnel costs, professional fees and variable compensation, partly offset by higher gross profit.Europe income from operations increased from$0.8 million to$3.1 million , primarily due to higher gross profit (partly due to the prior year$1.4 million inventory fair-value adjustment as noted above) and lower acquisition and integration costs.
- The Company's effective income tax rate was 26.3%, consistent with the prior period quarter.
- Net income was
$54.8 million , or$1.28 per diluted share, compared to net income of$57.6 million , or$1.35 per diluted share. - Cash provided by operating activities was approximately
$31.7 million , a decrease of$104.7 million from$136.4 million primarily from increases in working capital. - Cash used in investing activities was approximately
$39.1 million , an increase of$14.4 million from$24.7 million primarily due to increased capital expenditures of$31.3 million compared to$20.8 million .
2023 Full-Year Financial Highlights
- Consolidated net sales of
$2.2 billion increased 4.6% from$2.1 billion , primarily due to the acquisition of ETANCO as well as the positive effect of$12.7 million in foreign currency translation related mostly toEurope's currencies strengthening againstthe United States dollar. - Consolidated gross profit of
$1.0 billion increased 10.9% compared to$941.3 million , primarily due to the acquisition of ETANCO. Consolidated gross margin increased to 47.1% from 44.5%, primarily due to lower raw material costs. Cost of sales in the prior year period included a$13.6 million inventory fair-value adjustment as a result of purchase accounting with respect to the acquisition of ETANCO. - Consolidated income from operations of
$475.1 million increased 3.5% compared to$459.1 million , primarily due to the acquisition of ETANCO. Consolidated operating margin decreased to 21.5% from 21.7%. - The Company's effective income tax rate increased to 25.7% from 25.5%.
- Net income was
$354.0 million , or$8.26 per diluted share, compared to net income of$334.0 million , or$7.76 per diluted share. - Cash provided by operating activities was approximately
$429.9 million , an increase of$30.1 million from$399.8 million primarily from increases in net income plus non-cash expense, partly offset by increases in working capital. - Cash used in investing activities was approximately
$105.7 million , a decrease of$764.5 million from$870.2 million . The decrease was primarily due to the Company's purchase of ETANCO for$805.4 million in 2022. Capital expenditures increased to$88.8 million from$62.4 million . - Cash used in financing activities was approximately
$199.4 million , compared to cash provided of$465.5 million . The decrease in cash provided by financing activities was mainly from$700.0 million in loan proceeds to fund the acquisition of ETANCO in 2022 partly offset by principal repayments on the Company's Revolving and Term Credit Facility and repurchases of the Company's common stock during 2023.
Management Commentary
"We achieved above market growth and strong profitability in 2023 with
Corporate Developments
- During the fourth quarter of 2023, the Company repurchased 360,746 shares of common stock in the open market at an average price of
$138.60 per share, for a total of$50.0 million under its$100 million share repurchase authorization which expired at the end of 2023. - On
October 19, 2023 , the Company's Board of Directors (the "Board") authorized the Company to repurchase up to$100.0 million of the Company's common stock, effectiveJanuary 1, 2024 throughDecember 31, 2024 . - On
January 19, 2024 , the Board declared a quarterly cash dividend of$0.27 per share, estimated to be$11.5 million . The dividend will be payable onApril 25, 2024 , to the Company's stockholders of record onApril 4, 2024 .
Business Outlook
Based on business trends and conditions as of today,
- Operating margin is estimated to be in the range of 20.0% to 21.5%.
- Interest expense on the outstanding Revolving Credit Facility and Term Loans, which had borrowings of
$75.0 million and$410.6 million as ofDecember 31, 2023 , respectively, is expected to be approximately$7.9 million , including the benefit from interest rate and cross currency swaps mitigating substantially all of the volatility from changes in interest rates. - The effective tax rate is estimated to be in the range of 25.0% to 26.0%, 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 approximately
$200.0 million , which includes$120.0 million for the Columbus facility expansion and the new Gallatin fastener facility construction.
Conference Call Details
Investors, analysts and other interested parties are invited to join the Company's fourth quarter and full-year 2023 financial results conference call on
A copy of this earnings release will be available prior to the call, accessible through the Investor Relations section of the Company's website at www.simpsonmfg.com.
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, 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 and other widespread public health crisis and their effects on the global economy, the effects of inflation and labor and supply shortages, on our operations, 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
UNAUDITED Consolidated Statements of Operations (In thousands, except per share data) |
|||||||
|
|||||||
|
Three Months Ended |
|
Twelve Months Ended |
||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Net sales |
$ 501,710 |
|
$ 475,622 |
|
$ 2,213,803 |
|
$ 2,116,087 |
Cost of sales |
281,212 |
|
274,967 |
|
1,170,048 |
|
1,174,794 |
Gross profit |
220,498 |
|
200,655 |
|
1,043,755 |
|
941,293 |
Operating expenses: |
|
|
|
|
|
|
|
Research and development and engineering expense |
25,131 |
|
18,461 |
|
92,167 |
|
68,354 |
Selling expense |
52,483 |
|
44,929 |
|
203,980 |
|
169,378 |
General and administrative expense |
70,836 |
|
55,956 |
|
268,103 |
|
228,468 |
Total operating expenses |
148,450 |
|
119,346 |
|
564,250 |
|
466,200 |
Acquisition and integration related costs |
546 |
|
2,662 |
|
4,632 |
|
17,343 |
Gain on disposal of assets |
(53) |
|
(90) |
|
(276) |
|
(1,317) |
Income from operations |
71,555 |
|
78,737 |
|
475,149 |
|
459,067 |
Interest income (expense), net and other financing costs |
3,373 |
|
(1,027) |
|
3,391 |
|
(7,594) |
Other & foreign exchange gain (loss), net |
(523) |
|
406 |
|
(1,993) |
|
(3,408) |
Income before taxes |
74,405 |
|
78,116 |
|
476,547 |
|
448,065 |
Provision for income taxes |
19,602 |
|
20,511 |
|
122,560 |
|
114,070 |
Net income |
$ 54,803 |
|
$ 57,605 |
|
$ 353,987 |
|
$ 333,995 |
Earnings per common share: |
|
|
|
|
|
|
|
Basic |
$ 1.29 |
|
$ 1.35 |
|
$ 8.31 |
|
$ 7.78 |
Diluted |
$ 1.28 |
|
$ 1.35 |
|
$ 8.26 |
|
$ 7.76 |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
Basic |
42,440 |
|
42,572 |
|
42,598 |
|
42,925 |
Diluted |
42,668 |
|
42,680 |
|
42,837 |
|
43,047 |
Other data: |
|
|
|
|
|
|
|
Depreciation and amortization |
$ 20,483 |
|
$ 16,369 |
|
$ 74,707 |
|
$ 60,890 |
Pre-tax equity-based compensation expense |
6,070 |
|
1,994 |
|
23,859 |
|
14,980 |
UNAUDITED Consolidated Condensed Balance Sheets (In thousands) |
|
||||
|
|
||||
|
|
|
|
||
|
|
2023 |
|
2022 |
|
Cash and cash equivalents |
|
$ 429,822 |
|
$ 300,742 |
|
Trade accounts receivable, net |
|
283,975 |
|
269,124 |
|
Inventories |
|
551,575 |
|
556,801 |
|
Other current assets |
|
47,069 |
|
52,583 |
|
Total current assets |
|
1,312,441 |
|
1,179,250 |
|
Property, plant and equipment, net |
|
418,612 |
|
361,555 |
|
Operating lease right-of-use assets |
|
68,792 |
|
57,652 |
|
|
|
502,550 |
|
495,672 |
|
Intangible assets, net |
|
365,339 |
|
362,917 |
|
Other noncurrent assets |
|
36,990 |
|
46,925 |
|
Total assets |
|
$ 2,704,724 |
|
$ 2,503,971 |
|
Trade accounts payable |
|
$ 107,524 |
|
$ 97,841 |
|
Long-term debt, current portion |
|
22,500 |
|
22,500 |
|
Accrued liabilities and other current liabilities |
|
231,233 |
|
228,222 |
|
Total current liabilities |
|
361,257 |
|
348,563 |
|
Operating lease liabilities, net of current portion |
|
55,324 |
|
46,882 |
|
Long-term debt, net of current portion and issuance costs |
|
458,791 |
|
554,539 |
|
Deferred income tax and other long-term liabilities |
|
149,606 |
|
140,608 |
|
Stockholders' equity |
|
1,679,746 |
|
1,413,379 |
|
Total liabilities and stockholders' equity |
|
$ 2,704,724 |
|
$ 2,503,971 |
|
UNAUDITED Segment and Product Group Information (In thousands) |
|||||||||||||
|
|||||||||||||
|
|
|
Three Months Ended |
|
|
|
Twelve Months Ended |
|
|
||||
|
|
|
|
|
% |
|
|
|
% |
||||
|
2023 |
|
2022 |
|
change |
|
2023 |
|
2022 |
|
change |
||
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
$ 387,805 |
|
$ 368,129 |
|
5.3 % |
|
|
|
|
|
0.9 % |
|
|
Percentage of total net sales |
77.3 % |
|
77.4 % |
|
|
|
77.5 % |
|
80.4 % |
|
|
|
|
|
109,682 |
|
103,712 |
|
5.8 % |
|
480,756 |
|
400,303 |
|
20.1 % |
|
|
Percentage of total net sales |
21.9 % |
|
21.8 % |
|
|
|
21.7 % |
|
18.9 % |
|
|
|
|
|
4,223 |
|
3,781 |
|
11.7 % |
|
16,625 |
|
14,743 |
|
12.8 % |
|
|
Percentage of total net sales |
0.8 % |
|
0.8 % |
|
|
|
0.8 % |
|
0.7 % |
|
|
|
|
|
Total |
$ 501,710 |
|
$ 475,622 |
|
5.5 % |
|
|
|
|
|
4.6 % |
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
$ 420,228 |
|
$ 403,527 |
|
4.1 % |
|
|
|
|
|
2.7 % |
|
|
Percentage of total net sales |
83.8 % |
|
84.8 % |
|
|
|
85.0 % |
|
86.6 % |
|
|
|
|
Concrete Construction |
78,369 |
|
71,087 |
|
10.2 % |
|
320,500 |
|
282,205 |
|
13.6 % |
|
|
Percentage of total net sales |
15.6 % |
|
14.9 % |
|
|
|
14.5 % |
|
13.3 % |
|
|
|
|
Other |
3,113 |
|
1,008 |
|
N/M |
|
11,603 |
|
2,302 |
|
N/M |
|
|
|
Total |
$ 501,710 |
|
$ 475,622 |
|
5.5 % |
|
|
|
|
|
4.6 % |
Gross Profit (Loss) by Reporting Segment |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
$ 182,339 |
|
$ 165,564 |
|
10.1 % |
|
$ 862,557 |
|
$ 810,730 |
|
6.4 % |
|
|
|
47.0 % |
|
45.0 % |
|
|
|
50.3 % |
|
47.7 % |
|
|
|
|
|
37,511 |
|
33,925 |
|
10.6 % |
|
177,048 |
|
125,616 |
|
40.9 % |
|
|
|
34.2 % |
|
32.7 % |
|
|
|
36.8 % |
|
31.4 % |
|
|
|
|
|
1,164 |
|
961 |
|
N/M |
|
5,679 |
|
4,910 |
|
N/M |
|
|
Administrative and all other |
(516) |
|
205 |
|
N/M |
|
(1,529) |
|
37 |
|
N/M |
|
|
|
Total |
$ 220,498 |
|
$ 200,655 |
|
9.9 % |
|
|
|
$ 941,293 |
|
10.9 % |
Income (Loss) from Operations |
|
|
|
|
|
|
|
|
|
|
|
||
|
|
$ 79,773 |
|
$ 85,564 |
|
(6.8) % |
|
$ 473,229 |
|
$ 485,899 |
|
(2.6) % |
|
|
|
20.6 % |
|
23.2 % |
|
|
|
27.6 % |
|
28.6 % |
|
|
|
|
|
3,103 |
|
783 |
|
N/M |
|
45,998 |
|
11,121 |
|
N/M |
|
|
|
2.8 % |
|
0.8 % |
|
|
|
9.6 % |
|
2.8 % |
|
|
|
|
|
(183) |
|
(175) |
|
N/M |
|
535 |
|
723 |
|
N/M |
|
|
Administrative and all other |
(11,138) |
|
(7,435) |
|
N/M |
|
(44,613) |
|
(38,676) |
|
N/M |
|
|
|
Total |
$ 71,555 |
|
$ 78,737 |
|
(9.1) % |
|
$ 475,149 |
|
$ 459,067 |
|
3.5 % |
|
|
|
|
* |
Unfavorable percentage changes are presented in parentheses. |
|
** |
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. |
CONTACT:
Addo Investor Relations
investor.relations@strongtie.com
(310) 829-5400
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