Simpson Manufacturing (SSD) Tops Q2 EPS by 21c, Revenues Beat

Simpson Manufacturing (NYSE: SSD) reported Q2 EPS of $0.94, $0.21 better than the analyst estimate of $0.73. Revenue for the quarter came in at $308 million versus the consensus estimate of $282.03 million.

• 2018 second quarter net sales of $308.0 million increased 17.1% year–over–year
• 2018 second quarter earnings of $0.94 per diluted share increased 59.3% year-over-year

Management Commentary

"We had an excellent second quarter with our net sales up 17% year-over-year to $308.0 million," commented Karen Colonias, President and Chief Executive Officer of Simpson Manufacturing Co., Inc. "Positive demand trends, supported by strong North American housing starts, resulted in high growth in sales volume throughout almost all areas of our company. We do not believe our growth in second quarter sales volume was a result of significant pre-buying activity in advance of the 11.5% average price increase for a majority of our U.S. wood connector products which became effective on July 1, 2018. So far in the third quarter, demand remains strong."

Mrs. Colonias continued, "During the quarter, we continued to execute against our key operating initiatives, many of which stem from the 2020 Plan we unveiled three quarters ago to provide more clarity into our longer-term strategy and financial objectives. I am pleased to reiterate our 2020 financial targets as part of this plan today. In addition, we made important headway in the second quarter with our third-party consultants in regard to identifying improvements to our cost structure and working capital and these improvements are expected to be realized in the future. We also continued to concentrate on growing our market share and improving our technologies and systems to provide best-in-class service to our customers, an important part of our longstanding, trusted reputation, and what sets the Simpson Strong-Tie brand apart. We remain confident in our ability to execute based on current market conditions and believe our key objectives will provide additional runway to continue returning capital to shareholders."

Business Outlook

Subject to changing economic conditions, future events and circumstances:

• The Company currently believes the market price for steel will continue to be volatile during the third quarter of 2018, due to uncertainty related to steel tariffs.
• The Company estimates that its 2018 full-year gross profit margin will be between approximately 45% to 46%.
• The Company estimates that its 2018 full-year effective tax rate will be between approximately 26% 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 2018 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, if any. 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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