Simpson Manufacturing (SSD) Misses Q1 EPS by 4c, Revenues Beat; Provides Business Outlook

Simpson Manufacturing (NYSE: SSD) reported Q1 EPS of $0.50, $0.04 worse than the analyst estimate of $0.54. Revenue for the quarter came in at $259.2 million versus the consensus estimate of $255.8 million.

"We had a solid start to the year with our first quarter of 2019 net sales increasing 6% year–over–year to $259.2 million, primarily due to higher average selling prices," commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. "Our overall sales volume was relatively steady with the fourth quarter of 2018. On a year-over-year basis, sales volume for our concrete products was up nicely due to the roll–out of our mechanical anchor products into The Home Depot stores. However, sales volume for our connector products was down year–over–year due to unusually wet and cold weather conditions across the U.S., which impacted housing permits and starts. Looking ahead to the second quarter, we expect demand to improve with the month of April already off to a strong start on better weather conditions."

Mrs. Colonias continued, "Our first quarter gross profit margin of 42.5% was pressured by increased material and labor costs plus unabsorbed factory costs attributable to lower volumes. Despite these headwinds, we remain focused on the elements in our business we can control such as our ongoing emphasis on Lean initiatives to help drive improved inventory turnover. Importantly, we were pleased to reduce our total operating expenses as a percentage of sales by nearly 30 basis points compared to the year–ago period. For the remainder of 2019, we remain cautiously optimistic U.S. housing starts will pick–up and enable healthier demand levels. Lastly, we are committed to operational excellence through execution on our 2020 Plan goals to drive long–term shareholder value."

Business Outlook

Subject to changing economic conditions, future events and circumstances:

• The market price for steel dropped from its highs in 2018. The Company currently believes the market price for steel could be flat or decrease slightly during the second quarter of 2019.
• The Company estimates that its 2019 full-year gross profit margin will be between approximately 44.5% to 45.5%.
• The Company estimates that its 2019 full-year operating expenses, as a percentage of net sales, will be between approximately 27.5% and 28.5%.
• The Company estimates that its 2019 full-year effective tax rate will be between approximately 25% to 27%, including both federal and state income tax rates. The ultimate impact of the Tax Cuts and Jobs Act signed into law in 2017 and the Company's 2019 effective tax rate may differ materially from the Company's estimates due to changes in the interpretations and assumptions made by the Company as well as additional regulatory guidance that may be issued and actions the Company may take as a result of the Tax Cuts and Jobs Act, such as cash repatriation to the United States. The Company will continue to assess the expected impact of the new tax law and provide additional disclosures at appropriate times.

For earnings history and earnings-related data on Simpson Manufacturing (SSD) click here.

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