PLEASANTON, Calif., July 28 /PRNewswire-FirstCall/ -- Simpson Manufacturing Co., Inc. (the "Company") announced today that its second quarter 2009 net sales decreased 24.3% to $165.9 million compared to net sales of $219.3 million for the second quarter of 2008. The Company had net income of $10.7 million for the second quarter of 2009 compared to net income of $20.4 million for the second quarter of 2008. Diluted net income per common share was $0.22 for the second quarter of 2009 compared to diluted net income per common share of $0.42 for the second quarter of 2008. In the first half of 2009, net sales decreased 26.3% to $285.2 million as compared to net sales of $386.9 million for the first half of 2008. Net income was $2.3 million for the first half of 2009 as compared to net income of $28.7 million for the first half of 2008. Diluted net income per common share was $0.05 for the first half of 2009 as compared to $0.59 for the first half of 2008.
In the second quarter of 2009, sales declined throughout the United States. California and the western and southeastern regions had the largest decreases in sales. 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 flat, primarily due to the acquisition of Agence Internationale Commerciale et Industrielle, S.A.S. ("Aginco") in April 2009. Sales in Asia, although relatively small, have increased as Simpson Strong-Tie has recently expanded its presence in the region. Simpson Strong-Tie's second quarter sales decreased 26.0% from the same quarter last year, while Simpson Dura-Vent's sales increased 1.3%. Simpson Strong-Tie's sales to dealer distributors and contractor distributors decreased significantly as homebuilding activity, and general economic conditions, remain weak. Sales to home centers decreased slightly. 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 product lines decreased, but the decrease was offset by increases in sales of chimney and pellet vent products, as well as an increase in sales of special gas vent and relining products resulting from the acquisition of ProTech Systems, Inc. ("ProTech") in June 2008.
Income from operations decreased 41.6% from $32.4 million in the second quarter of 2008 to $18.9 million in the second quarter of 2009. Gross margins decreased from 38.2% in the second quarter of 2008 to 36.9% in the second 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. The Company expects steel prices to increase as demand returns to the market. Through the first half of 2009, the Company had focused on reducing inventories, which came down by 24.5%.
Research and development expense decreased 8.0% from $5.6 million in the second quarter of 2008 to $5.2 million in the second quarter of 2009. This decrease was primarily due to a $0.3 million decrease in personnel related expenses. Selling expense decreased 23.9% from $22.1 million in the second quarter of 2008 to $16.9 million in the second quarter of 2009. The decrease resulted primarily from a $3.1 million decrease in expenses associated with sales and marketing personnel, most of which was related to cost cutting measures, and a $1.8 million decrease in promotional expenditures. General and administrative expense decreased 14.5% from $23.8 million in the second quarter of 2008 to $20.3 million in the second quarter of 2009. The decrease was the result of several factors, including a decrease in cash profit sharing of $3.0 million, lower administrative personnel expenses of $0.8 million, related in part to cost cutting measures, and decreased legal and professional service expenses of $0.7 million. These decreases were partly offset by higher amortization of intangible assets of $0.9 million, primarily related to the businesses acquired since June 2008. The Company had interest expense in excess of interest income, primarily related to maintenance fees on its line of credit, in the second quarter of 2009, as compared to interest income in the second quarter of 2008. Interest income decreased primarily due to lower interest rates. The effective tax rate was 43.3% in the second quarter of 2009, up from 38.0% in the second quarter 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.
In the first half 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 throughout Europe and the United Kingdom as well as in Canada. Simpson Strong-Tie's first half sales decreased 27.4% from the same period last year, while Simpson Dura-Vent's sales decreased 11.6%. Simpson Strong-Tie's sales to dealer distributors and contractor distributors decreased significantly as a result of the weakness in the U.S. housing market. Sales to home centers decreased slightly. 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 product lines decreased, but the decrease was partly offset by an increase in sales of pellet vent products, as well as an increase in sales of special gas vent and relining products resulting from the acquisition of ProTech in June 2008.
Income from operations decreased 81.3% from $45.8 million in the first half of 2008 to $8.6 million in the first half of 2009. Gross margins decreased from 36.2% in the first half of 2008 to 32.2% in the first half 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 6.4% from $10.7 million in the first half of 2008 to $10.0 million in the first half of 2009. This decrease was primarily due to decrease in professional service fees of $0.4 million and a $0.1 million decrease in personnel related expenses. Selling expense decreased 21.6% from $41.9 million in the first half of 2008 to $32.9 million in the first half of 2009. The decrease resulted primarily from a $5.1 million decrease in expenses associated with sales and marketing personnel, most of which was related to cost cutting measures, and a $2.8 million decrease in promotional expenditures. General and administrative expense decreased 2.8% from $41.6 million in the first half of 2008 to $40.5 million in the first half of 2009. The decrease resulted from a decrease in cash profit sharing of $4.5 million partly offset by increased bad debt charges, taken in the first quarter of 2009, of $2.2 million and higher amortization of intangible assets of $1.0 million, primarily related to the businesses acquired since June 2008. Interest income decreased 96.1% from $1.6 million in the first half of 2008 to $0.1 million in the first half of 2009, primarily due to lower interest rates. The effective tax rate was 73.0% in the first half of 2009, up from 39.5% in the first half 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.
Investors, analysts and other interested parties are invited to join the Company's conference call on Wednesday, July 29, 2009, at 6:00 am Pacific Time. To participate, callers may dial 800-894-5910. The call will be webcast simultaneously as well as being 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 six months ended June 30, 2009 and 2008 (unaudited), are as follows: Three Months Six Months Ended June 30, Ended June 30, -------------- -------------- (Amounts in thousands, except 2009 2008 2009 2008 per share data) ---- ---- ---- ---- Net sales $165,923 $219,263 $285,246 $386,919 Cost of sales 104,686 135,398 193,295 246,796 ------- ------- ------- ------- Gross profit 61,237 83,865 91,951 140,123 ------ ------ ------ ------- Research and development and engineering expenses 5,161 5,610 10,025 10,713 Selling expenses 16,852 22,134 32,877 41,942 General and administrative expenses 20,315 23,767 40,478 41,641 ------ ------ ------ ------ Income from operations 18,909 32,354 8,571 45,827 Loss in equity method investment, before tax (21) - (214) - Interest income (expense), net (38) 505 64 1,634 ---- --- --- ----- Income before taxes 18,850 32,859 8,421 47,461 Provision for income taxes 8,167 12,478 6,147 18,728 ----- ------ ----- ------ Net income $10,683 $20,381 $2,274 $28,733 ====== ====== ===== ====== Net income per share: Basic $0.22 $0.42 $0.05 $0.59 Diluted 0.22 0.42 0.05 0.59 Cash dividend declared per common share $0.10 $0.10 $0.20 $0.20 Weighted average shares outstanding: Basic 49,016 48,593 49,001 48,584 Diluted 49,114 48,936 49,099 48,933 Other data: Depreciation and amortization $7,751 $7,587 $14,599 $15,007 Pre-tax stock compensation expense 486 920 1,043 1,856 The Company's financial position as of June 30, 2009 and 2008, and December 31, 2008 (unaudited), is as follows: June 30, December 31, -------- ------------ (Amounts in thousands) 2009 2008 2008 ---- ---- ---- Cash and short-term investments $169,132 $162,098 $170,750 Trade accounts receivable, net 118,646 139,162 76,005 Inventories 190,153 232,575 251,878 Assets held for sale 7,887 7,887 8,387 Other current assets 22,839 17,597 20,577 ------ ------ ------ Total current assets 508,657 559,319 527,597 Property, plant and equipment, net 193,958 199,055 193,318 Goodwill 79,858 69,500 68,619 Other noncurrent assets 47,424 42,209 40,666 ------ ------ ------ Total assets $829,897 $870,083 $830,200 ======= ======= ======= Trade accounts payable $22,574 $46,362 $21,675 Line of credit and current portion of long-term debt 27 3,177 26 Other current liabilities 47,658 61,111 50,193 ------ ------ ------ Total current liabilities 70,259 110,650 71,894 Other long-term liabilities 9,659 12,076 9,280 Stockholders' equity 749,979 747,357 749,026 ------- ------- ------- Total liabilities and stockholders' equity $829,897 $870,083 $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/
