Simpson Manufacturing (SSD) Tops Q2 EPS by 67c, Revenues Beat

Simpson Manufacturing (NYSE: SSD) reported Q2 EPS of $1.22, $0.67 better than the analyst estimate of $0.55. Revenue for the quarter came in at $326.1 million versus the consensus estimate of $251.94 million.

• Net sales of $326.1 million increased 7.0% year-over-year
• Strong gross margin of 45.9% improved 1.9% year-over-year
• Income from operations of $72.2 million increased 34.6% year-over-year, operating margin of 22.1% increased 4.5% year-over-year
• Diluted earnings per share of $1.22 increased 38.6% year-over-year
• Providing full year 2020 financial guidance on improved demand outlook
• Declared a $0.23 per share cash dividend

Management Commentary

"We executed a strong second quarter with sales of $326.1 million improving 7% year-over-year and 15% quarter-over-quarter on higher volume despite the significant level of macroeconomic challenges resulting from COVID-19," commented Karen Colonias, the Company's President and Chief Executive Officer. "Our sales volume improved primarily due to the addition of Lowe's, a returning home center customer, which resulted in considerably higher demand associated with the initial product rollout into stores. We also experienced improved sales in the repair and remodel market as a result of a shift in consumer behavior toward home renovations which we believe stemmed from the COVID-19 pandemic and ongoing shelter-in-place orders. Partially offsetting this strength were volume declines specific to Europe following government ordered shutdowns in the United Kingdom and France. As a result, we produced a strong gross margin of 45.9% due to a combination of sales mix and lower material costs on improved overhead absorption. This, when coupled with our effective expense management, resulted in a 35% year-over-year increase in our income from operations to $72.2 million and strong earnings of $1.22 per diluted share."

Mrs. Colonias concluded, "The health, safety and wellbeing of our employees is our top priority, and we have been extremely diligent in our efforts to ensure Simpson remains a safe place to work by enacting rigorous safety protocols in all of our facilities. These actions, in addition to being deemed an essential business, have enabled us to continue operating our business and serve our customers with minimal disruptions in a highly difficult environment. Looking ahead, we believe the solid demand trends we experienced in the second quarter of 2020 from the addition of Lowe's and improved repair and remodel market will continue, offsetting the expected weakness in the housing market. As a result, we expect our full year net sales and gross margin will improve year-over-year in 2020 subject to circumstances outside of our control related to the COVID-19 pandemic. We will continue to execute our model with an emphasis on enhancing our operating efficiencies and cost savings which will serve us well through this pandemic and longer-term. Our industry leadership position, geographic reach and diverse product offerings, combined with our strong balance sheet and liquidity position gives us confidence in our ability to support current and improving future demand trends."

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

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