Simpson Manufacturing Co., Inc.
) gained as much as around 3.5% in the trading session after it
reported upbeat first-quarter 2014 earnings. Its earnings per
share surged to 25 cents from 10 cents in the year-earlier
quarter and were well ahead of the Zacks Consensus Estimate of 16
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Simpson Manufacturing's shares eventually closed at $33.31 on Apr
25, gaining around 2%.
Total revenue increased 9.1% to $168 million from $154 million in
the year-ago quarter, surpassing the Zacks Consensus Estimate of
$139 million. The rise was primarily attributable to increased
sales in North America, Europe and Asia/Pacific segments, with
North America reporting the largest increase. North America and
Europe sales benefited from improved economic activity while
Europe and parts of the U.S. gained from a less severe winter.
Cost of sales inched up 1% year over year to $90.5 million. Gross
profit was $77.8 million, up 20% from $64.7 million in the
year-ago quarter. Gross margin improved 430 basis points (bps) to
46.2% from the prior-year quarter.
Research and development and engineering expenses increased 16.8%
year over year to $9.7 million. Selling expenses increased
marginally to $21.8 million from $21.4 million in the prior-year
quarter. General and administrative expenses rose 3.4% year over
year to $26.9 million. Income from operations improved to $19.6
million from $9 million in the prior-year quarter.
Revenues in the North American segment rose 7% to $136.9 million
from $127.7 million in the year-ago quarter. The growth was led
by increased sales in the U.S. Net sales in Canada also increased
marginally over the same period in 2013 due to increased sales
volumes. Segment profit surged 48% year over year to $22.6
Total revenue for the European segment increased 16% year over
year to $27.6 million, primarily attributable to higher sales
volumes and the effects of foreign currency translations, partly
offset by lower selling prices. The segment reported a loss of $1
million, narrower than the year-ago quarter loss of $4.2 million.
Asia/Pacific segment's total revenue increased 42% to $3.8
million from $2.6 million in the year-ago quarter. The segment
reported a loss of $.15 million compared with $1.18 million in
the first quarter of 2013.
As of Mar 31, 2014, Simpson Manufacturing's cash and cash
equivalents were $212 million versus $142 million as of Mar 31,
2013. Simpson Manufacturing's board of directors declared a cash
dividend of 14 cents per share, up 12% from the previous
dividend. The dividend will be paid on Jul 24, 2014.
For 2014, Simpson Manufacturing reiterated its gross margin
projection of 44%-45%. Effective tax rate will be between 37% and
39% for 2014.
Simpson Manufacturing will benefit from its strategic
initiatives, which include a wider offering of concrete
construction products, specialty chemicals and wood construction
products, particularly truss plate and software offerings. The
company's continued focus on strategic acquisitions to increase
product offering and strengthen its position in different
geographic regions also bode well. To support these initiatives,
the company expects to hire more personnel and provide additional
resources in 2014.
Pleasanton, CA-based Simpson Manufacturing is a leading
manufacturer of wood construction products, which include
connectors, truss plates, fastening systems, fasteners and shear
walls. The company, through its subsidiary, Simpson Strong-Tie
Company Inc., designs and engineers concrete construction
products comprising adhesives, specialty chemicals, mechanical
anchors and powder actuated tools.
At present, Simpson Manufacturing carries a Zacks Rank #1 (Strong
Other stocks in the sector worth considering include
United Rentals, Inc.
). While MasTec sports a Zacks Rank #1, United Rentals and Fluor
Corporation have a Zacks Rank #2 (Buy).