PLEASANTON, Calif., Oct. 29 /PRNewswire-FirstCall/ -- Simpson Manufacturing Co., Inc. (the "Company") announced today that its third quarter 2009 net sales decreased 23.9% to $167.2 million compared to net sales of $219.8 million for the third quarter of 2008. The Company had net income of $12.8 million for the third quarter of 2009 compared to net income of $23.4 million for the third quarter of 2008. Diluted net income per common share was $0.26 for the third quarter of 2009 compared to diluted net income per common share of $0.48 for the third quarter of 2008. In the first nine months of 2009, net sales decreased 25.4% to $452.4 million as compared to net sales of $606.7 million for the first nine months of 2008. Net income was $15.0 million for the first nine months of 2009 as compared to net income of $52.1 million for the first nine months of 2008. Diluted net income per common share was $0.31 for the first nine months of 2009 as compared to $1.06 for the first nine months of 2008.
In the third quarter of 2009, sales declined throughout the United States. Sales during the quarter also decreased throughout Europe, with the exception of France, and decreased in the United Kingdom and Canada. Sales in France were up primarily due to the acquisition of Agence Internationale Commerciale et Industrielle, S.A.S. ("Aginco") in April 2009. Simpson Strong-Tie''s third quarter sales decreased 22.0% from the same quarter last year, while Simpson Dura-Vent''s sales decreased 37.5%. Simpson Strong-Tie''s sales to contractor distributors and dealer distributors decreased significantly as home-building activity, and general economic conditions, remained weak. Sales to home centers also decreased. Sales decreased across all of Simpson Strong-Tie''s major product lines, particularly those used in new home construction. Simpson Dura-Vent''s sales decreased across most of its product lines, with the exception of special gas vent products which were up slightly.
Income from operations decreased 43.5% from $37.2 million in the third quarter of 2008 to $21.0 million in the third quarter of 2009. Gross margins decreased from 40.8% in the third quarter of 2008 to 36.4% in the third quarter of 2009. The decrease in gross margins was primarily due to reduced absorption of fixed overhead, as a result of lower production volumes, as well as higher manufacturing costs, including higher costs of material and labor. The decline in steel prices slowed in the second quarter of 2009 and prices again started to rise in the third quarter of 2009. The Company expects steel prices to continue to increase as demand returns to the market. Through the first nine months of 2009, inventories decreased 29.2% from $251.9 million at December 31, 2008, to $178.2 million at September 30, 2009.
Research and development expense decreased 12.2% from $5.7 million in the third quarter of 2008 to $5.0 million in the third quarter of 2009, primarily due to a $0.4 million decrease in personnel expenses. Selling expense decreased 27.0% from $21.3 million in the third quarter of 2008 to $15.6 million in the third quarter of 2009, which resulted primarily from a $3.6 million decrease in expenses associated with sales and marketing personnel, most of which was related to cost-cutting measures, a $1.1 million decrease in promotional expenditures and a $0.6 million decrease in commissions paid to selling agents. General and administrative expense decreased 24.2% from $25.5 million in the third quarter of 2008 to $19.4 million in the third quarter of 2009. This decrease resulted from several factors, including a $1.8 million decrease in administrative personnel expenses, related in part to cost-cutting measures, a $1.7 million decrease in cash profit sharing, a $1.6 million decrease in legal and professional service expenses and a $0.9 million decrease in the provision for bad debt, partly offset by a $0.5 million increase in amortization of intangible assets, primarily related to the acquisition of Aginco. Interest income decreased primarily due to lower interest rates. The effective tax rate was 39.3% in the third quarter of 2009, up from 38.1% in the third quarter of 2008.
In the first nine months of 2009, sales declined throughout the United States. California and the western and southeastern regions had the largest decreases in sales. Sales during the period also decreased in Europe, the United Kingdom and Canada. Simpson Strong-Tie''s sales for the first nine months of the year decreased 25.5% from the same period last year, while Simpson Dura-Vent''s sales decreased 24.6%. Simpson Strong-Tie''s sales to contractor distributors and dealer distributors decreased as a result of the weakness in the U.S. housing market. Sales to home centers also decreased. Sales decreased across all of Simpson Strong-Tie''s major product lines, particularly those used in new home construction. Sales of Simpson Dura-Vent''s Direct-Vent and gas vent, hearth and pellet vent product lines decreased, while sales of special gas vent and relining products increased, primarily as a result of the acquisition of ProTech in June 2008.
Income from operations decreased 64.4% from $83.0 million in the first nine months of 2008 to $29.6 million in the first nine months of 2009. Gross margins decreased from 37.9% in the first nine months of 2008 to 33.8% in the first nine months of 2009. The decrease in gross margins was primarily due to reduced absorption of fixed overhead, as a result of lower production volumes, as well as higher manufacturing costs, including higher costs of material and labor.
Research and development expense decreased 8.4% from $16.4 million in the first nine months of 2008 to $15.0 million in the first nine months of 2009, primarily due to a $0.7 million decrease in professional service fees and a $0.6 million decrease in personnel expenses. Selling expense decreased 23.4% from $63.3 million in the first nine months of 2008 to $48.4 million in the first nine months of 2009. This decrease resulted primarily from an $8.6 million decrease in expenses associated with sales and marketing personnel, most of which was related to cost-cutting measures, a $4.0 million decrease in promotional expenditures and a $1.0 million decrease in commissions paid to selling agents. General and administrative expense decreased 10.9% from $67.2 million in the first nine months of 2008 to $59.8 million in the first nine months of 2009. This decrease resulted primarily from a $6.1 million decrease in cash profit sharing, a $1.7 million decrease in administrative personnel expenses, related in part to cost-cutting measures, and a $1.5 million decrease in legal and professional service expenses, partly offset by a $1.3 million increase in bad debt charges, most of which was recorded in the first quarter of 2009, and a $1.5 million increase in amortization of intangible assets, primarily related to the businesses acquired since June 2008. Interest income decreased from $2.2 million in the first nine months of 2008 to $64 thousand in the first nine months of 2009, primarily due to lower interest rates. The effective tax rate was 48.9% in the first nine months of 2009, up from 38.9% in the first nine months of 2008. The effective tax rate is higher than the statutory rate primarily due to the valuation allowances taken on foreign losses and a reduced benefit from the reduction or loss of enterprise zone tax credits at two of the Company''s facilities in California.
At its meeting on October 21, 2009, the Company''s Board of Directors declared a cash dividend of $0.10 per share. The record date for the dividend will be January 7, 2010, and it will be paid on January 28, 2010.
Investors, analysts and other interested parties are invited to join the Company''s conference call on Friday, October 30, 2009, at 6:00 am Pacific Time. To participate, callers may dial 800-894-5910. The call will be webcast simultaneously and will be available for one month through a link on the Company''s website at http://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 nine months ended September 30, 2009 and 2008 (unaudited), are as follows: Three Months Nine Months Ended September 30, Ended September 30, ------------------- ------------------- (Amounts in thousands, except per share data) 2009 2008 2009 2008 ---- ---- ---- ---- Net sales $167,200 $219,823 $452,446 $606,742 Cost of sales 106,299 130,143 299,594 376,939 ------- ------- ------- ------- Gross profit 60,901 89,680 152,852 229,803 ------ ------ ------- ------- Research and development and engineering expenses 4,971 5,662 14,997 16,375 Selling expenses 15,563 21,323 48,440 63,264 General and administrative expenses 19,351 25,514 59,828 67,155 ------ ------ ------ ------ Income from operations 21,016 37,181 29,587 83,009 Loss in equity method investment, before tax - - (214) - Interest income, net - 579 64 2,213 --- --- -- ----- Income before taxes 21,016 37,760 29,437 85,222 Provision for income taxes 8,258 14,398 14,405 33,126 ----- ------ ------ ------ Net income $12,758 $23,362 $15,032 $52,096 ====== ====== ====== ====== Net income per share: Basic $0.26 $0.48 $0.31 $1.07 Diluted 0.26 0.48 0.31 1.06 Cash dividend declared per common share $0.10 $0.10 $0.30 $0.30 Weighted average shares outstanding: Basic 49,195 48,612 49,066 48,593 Diluted 49,355 48,946 49,185 48,939 Other data: Depreciation and amortization $7,493 $7,627 $22,093 $22,634 Pre-tax stock compensation expense 511 859 1,554 2,715 The Company''s financial position as of September 30, 2009 and 2008, and December 31, 2008 (unaudited), is as follows: September 30, December 31, ------------- ------------ (Amounts in thousands) 2009 2008 2008 ---- ---- ---- Cash and short-term investments $220,139 $163,857 $170,750 Trade accounts receivable, net 108,005 125,875 76,005 Inventories 178,237 251,647 251,878 Assets held for sale 7,887 8,429 8,387 Other current assets 24,787 18,936 20,577 ------ ------ ------ Total current assets 539,055 568,744 527,597 Property, plant and equipment, net 191,326 195,062 193,318 Goodwill 81,289 75,799 68,619 Other noncurrent assets 45,499 39,096 40,666 ------ ------ ------ Total assets $857,169 $878,701 $830,200 ======= ======= ======= Trade accounts payable $29,638 $46,113 $21,675 Line of credit and current portion of long-term debt 29 629 26 Other current liabilities 48,175 65,460 50,193 ------ ------ ------ Total current liabilities 77,842 112,202 71,894 Long-term liabilities 9,019 10,607 9,280 Stockholders'' equity 770,308 755,892 749,026 ------- ------- ------- Total liabilities and stockholders'' equity $857,169 $878,701 $830,200 ======= ======= =======
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 other subsidiary, Simpson Dura-Vent Company, Inc., designs, engineers and manufactures venting systems for gas and wood burning appliances. 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.
Simpson Manufacturing Co., Inc.
CONTACT: Barclay Simpson of Simpson Manufacturing Co., Inc.,
+1-925-560-9032
Web Site: http://www.simpsonmfg.com/
