Simpson(US:SSD)2023-05-07 16:00Sales Performance - The Company reported a 9.9% decrease in wood construction product sales for Q1 2023 compared to Q1 2022, while concrete construction product sales increased by 6.3% during the same period[110]. - Europe sales increased by 141.4% for Q1 2023 compared to Q1 2022, primarily due to the acquisition of ETANCO, contributing $80.0 million in net sales[112]. - Net sales increased by 8.3% to $534.4 million from $493.6 million, primarily due to ETANCO contributing $80.0 million in net sales[116]. - North America net sales decreased by 7.4%, while Europe net sales increased by 141.4%[123]. Financial Projections - The Company anticipates operating margin for fiscal 2023 to be in the range of 19% to 21%[115]. - The effective tax rate is estimated to be in the range of 25% to 26% for fiscal 2023[115]. - The Company expects to incur additional costs in 2023 related to the integration of ETANCO, which were planned since the acquisition announcement[115]. - The Company aims to achieve above-market growth relative to U.S. housing starts in fiscal 2023 and beyond[106]. Capital Expenditures - Capital expenditures for fiscal 2023 are estimated to be between $90.0 million and $95.0 million, including $22.0 million to $25.0 million for the Columbus facility expansion[115]. - Total approved capital spending for 2023 is projected to be between $90.0 million and $95.0 million, including $22.0 million to $25.0 million for the Columbus, Ohio facility expansion[136]. - Capital spending for the same period was $18.8 million in 2023 compared to $17.8 million in 2022, mainly for machinery, equipment purchases, and software development[136]. Profitability and Expenses - Gross profit rose by 6.8% to $252.9 million, resulting in a consolidated gross margin of 47.3%, down from 48.0% last year[117]. - Research and development expenses increased by 30.8% to $20.7 million, driven by higher personnel costs and professional services[118]. - Selling expenses increased by 32.1% to $48.7 million, primarily due to higher personnel costs and commissions[119]. - General and administrative expenses rose by 18.5% to $63.7 million, mainly due to increased depreciation and personnel costs[120]. - Net income decreased to $88.0 million from $94.6 million, with diluted earnings per share at $2.05 compared to $2.18[122]. Cash Flow and Financing - Cash and cash equivalents as of March 31, 2023, were $252.5 million, down from $984.4 million a year earlier[134]. - Operating activities provided $2.96 million in cash, significantly lower than $44.68 million in the same period last year[135]. - Cash used in investing activities was $27.0 million for the three months ended March 31, 2023, primarily for capital expenditures and acquisition-related activities[136]. - Cash used in financing activities was $23.8 million, which included $11.1 million for dividends, $7.4 million for employee tax payments, and $5.6 million for debt repayment[137]. - The company has returned $417.0 million to stockholders since 2019, representing 55.5% of free cash flow, including the repurchase of over 3.1 million shares[139]. Debt and Risk Management - As of March 31, 2023, the outstanding debt under the Amended and Restated Credit Agreement was $577.5 million, exposing the company to interest rate fluctuations[144]. - The company has entered into an interest rate swap agreement to convert variable interest rates to fixed rates to manage cash flow variability[145]. - The company is exposed to commodity price risk, particularly with steel, which has seen price increases due to global shortages[146]. - Higher steel prices not mitigated by price increases may lead to declines in operating margins for 2023 compared to 2022[146]. - The company has no off-balance sheet arrangements as of March 31, 2023[140]. Integration and Strategic Initiatives - The Company has integrated ETANCO into its operations, contributing $9.4 million to operating income for Q1 2023, net of amortization and integration costs[112]. - The Company plans to continue expanding its wood product line and investing in venture capital funds focused on the home building industry[107]. - The company has passed four price increases to customers in 2021 to offset higher material costs, but has begun to reduce some prices in response to lower raw material costs in early 2023[107].