Simpson(US:SSD)2022-11-07 16:00Acquisition and Integration - The Company completed the acquisition of ETANCO for $805.4 million, enhancing its market presence in Europe and expanding its product portfolio[113]. - The Company expects to achieve annual operating income synergies of approximately $30.0 million post-integration of ETANCO[114]. - The Company believes net sales will likely increase during the remainder of fiscal year 2022, even if demand decreases, due to the addition of ETANCO[122]. - Europe sales increased 104.1% to $111.9 million for the quarter ended September 30, 2022, primarily due to the acquisition of ETANCO, which contributed $67.5 million in net sales[128]. - The Company expects to incur additional costs in 2022 as it continues to integrate ETANCO into its European operations[148]. Financial Performance - Net sales increased by 42.1% to $1,640.5 million from $1,154.7 million, driven by the acquisition of ETANCO contributing $147.8 million in net sales[148]. - Consolidated net income was $88.2 million, including a $1.8 million loss from ETANCO, compared to $73.8 million in the previous year[139]. - Net income rose to $276.4 million compared to $196.7 million, with diluted earnings per share increasing to $6.40 from $4.52[154]. - Income from operations increased by $27.1 million, primarily due to higher gross profit, despite increased operating expenses[148]. - Income from operations increased by $125.9 million, driven by higher sales and gross profit[161]. Sales and Revenue Growth - Wood construction product sales increased by 32.1% for the quarter ended September 30, 2022, while concrete construction product sales rose by 11.4% compared to the same period in 2021[126]. - North America net sales increased 29.3% to $437.8 million, driven by product price increases and higher sales volumes[143]. - Full phased-in product price increases for 2022 could result in an additional $300.0 million in net sales compared to 2021[126]. - Net sales surged by 90.7% due to the acquisition of ETANCO, contributing $147.8 million[161]. - Net sales increased by 34.7%, primarily due to product price increases and slightly higher sales volumes[161]. Cost and Margin Analysis - The Company anticipates gross margin and operating margin compression for the remainder of fiscal year 2022 due to rising raw material costs[126]. - Gross profit increased 23.5% to $244.5 million, while gross margins decreased to 44.2% from 49.9% due to the lower margin profile of ETANCO and higher raw material costs[135]. - The Company expects operating margin to be in the range of 20.0% to 21.0%, with integration and transaction costs for ETANCO estimated at $16.0 to $18.0 million[133]. - Gross profit increased by 33.0% to $740.6 million from $556.8 million, while gross margins decreased to 45.1% from 48.2% due to the lower margin profile of ETANCO[149]. - Gross margin decreased to 48.4% from 50.2%, attributed to higher raw material costs[161]. Operating Expenses - Research and development expenses increased 17.3% to $17.1 million, primarily due to personnel costs and professional services[136]. - Selling expenses rose 21.3% to $42.5 million, mainly due to increases in personnel, travel, and professional fees[137]. - General and administrative expenses increased 26.2% to $60.3 million, driven by higher depreciation, professional fees, and personnel costs[138]. - Research and development expenses rose by 15.2% to $49.9 million from $43.3 million, primarily due to increases in personnel costs and professional fees[150]. - Selling expenses increased to $124.4 million from $99.1 million, largely due to the ETANCO acquisition adding $12.7 million in selling expenses[151]. - General and administrative expenses increased to $172.5 million from $143.8 million, with the ETANCO acquisition contributing an additional $17.0 million[152]. Cash Flow and Financial Position - Cash and cash equivalents as of September 30, 2022, totaled $309.3 million, up from $301.2 million at December 31, 2021[164]. - Cash provided by operating activities was $263.4 million for the nine months ended September 30, 2022[165]. - Cash used in investing activities was $845.5 million, mainly for the acquisition of ETANCO[166]. - Financing activities provided $586.4 million, primarily from loan proceeds for the ETANCO acquisition[167]. - The company returned $390.8 million to stockholders since 2019, representing 59.1% of free cash flow[169]. Taxation - The effective income tax rate decreased to 25.3% from 26.1%[139]. - The effective income tax rate decreased to 25.3% from 25.9%[153].