Simpson Q1 2020 Earnings Report
Key Takeaways
Simpson Manufacturing reported a strong first quarter with a 9.4% increase in net sales to $283.7 million and a significant improvement in gross margin to 45.7%. Operating profit rose by 64.4% to $49.4 million, and diluted earnings per share increased by 66.0% to $0.83. However, due to the uncertainty surrounding COVID-19, the company withdrew its previously issued annual 2020 outlook and financial targets.
Net sales increased by 9.4% year-over-year to $283.7 million, driven by stronger sales volumes.
Gross margin improved to 45.7%, a 320 basis point increase year-over-year, due to sales mix and lower material costs.
Operating profit rose by 64.4% year-over-year to $49.4 million.
Diluted earnings per share increased by 66.0% year-over-year to $0.83.
Simpson
Simpson
Simpson Revenue by Geographic Location
Forward Guidance
Due to the significant level of uncertainty regarding future market conditions surrounding COVID-19, the company has chosen to withdraw its previously issued annual 2020 outlook as well as the financial targets associated with its “2020 Plan.”
Positive Outlook
- Strong balance sheet
- Investments in adjacent products and markets to diversify the business
- Recent cost rationalization efforts
- Nearly $306 million in cash on hand
- Proactive measures to ensure a strong financial position
Challenges Ahead
- Significant level of uncertainty regarding future market conditions surrounding COVID-19
- Withdrawal of previously issued annual 2020 outlook
- Withdrawal of financial targets associated with the “2020 Plan”
- Dependence on housing starts
- Sales declined in April compared to March levels
Revenue & Expenses
Visualization of income flow from segment revenue to net income