Simpson Manufacturing Up on Strong Q1 Earnings - Analyst Blog
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
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 million.
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 Buy).
Other stocks in the sector worth considering include MasTec, Inc. ( MTZ ), United Rentals, Inc. ( URI ) and Fluor Corporation ( FLR ). While MasTec sports a Zacks Rank #1, United Rentals and Fluor Corporation have a Zacks Rank #2 (Buy).
FLUOR CORP-NEW (FLR): Free Stock Analysis Report
MASTEC INC (MTZ): Free Stock Analysis Report
SIMPSON MFG INC (SSD): Free Stock Analysis Report
UTD RENTALS INC (URI): Free Stock Analysis Report
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