Yahoo Finance Simpson Manufacturing Co Inc (SSD) Q1 2024 Earnings Call Transcript Highlights: Navigating ...
Consolidated Net Sales: $530.6 million, a decrease of 0.7% year-over-year.
North American Net Sales: $406.7 million, an increase of 0.1% year-over-year.
European Net Sales: $119.9 million, a decrease of 3.4% year-over-year.
Consolidated Gross Margin: 46.1%, down from 47.3% the previous year.
Operating Margin: 18.1%, a decrease from 22.1% year-over-year.
Adjusted EBITDA: $117.3 million, down 14% year-over-year.
Net Income: $75.4 million, down from $88 million year-over-year.
Earnings Per Share (EPS): $1.77, down from $2.05 year-over-year.
Cash from Operations: $8.6 million, compared to $3 million in the prior year.
Capital Expenditures: $28.5 million for the quarter.
Quarterly Cash Dividends: $11.4 million paid.
Release Date: April 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Can you provide more detail on the timing of when volume discount estimates were applied and its impact this quarter? How much of a headwind do you expect from pricing in Q2 and the rest of the year? A: (Brian Magstadt, CFO) The timing issues related to rebates impacted net sales compared to last year's Q1. Despite these challenges, the company maintains its operating margin projection for 2024 at 20% to 21.5%. The variability in housing starts and the shift towards larger builders increased the complexity in estimating rebates, which are based on actual submissions by builders and often finalized post-year-end. Going forward, increased rebates and pricing impacts are expected due to new customer revenues and higher tier rebates from existing customers.
Q: How would you describe Q1 results relative to your internal expectations, and has your view changed regarding the likelihood of achieving the lower or higher end of the margin range? A: (Michael Olosky, CEO) The company aims to achieve above-market growth and top quartile profitability and ROIC among peers. The Q1 operating margin aligns with the annual guidance, and early Q2 data supports maintaining the current margin outlook. (Brian Magstadt, CFO) Early Q2 volumes in North America are above last year, reinforcing confidence in the annual guidance.
Q: Is there an expectation to accelerate performance relative to North American housing starts beyond the historical 250-basis-point range? A: (Michael Olosky, CEO) The company aims to expand its performance relative to U.S. housing starts, building on recent trends of 800 basis points above market. Investments are being made to enhance service levels in anticipation of a housing market recovery, which is expected to drive growth above the historical average.
Q: Can you quantify the deviation from expected rebates this quarter and discuss any underlying structural changes in the pricing environment? A: (Brian Magstadt, CFO) The deviation was $6 million. There are no fundamental changes in the pricing environment; variations are primarily due to contractual elements with new business and the tiered nature of rebates.
Q: How should we expect the margin cadence to track through the year to meet the guided range? A: (Michael Olosky, CEO) Typical seasonality suggests higher margins in the middle quarters, slightly lower than last year but higher than Q1. The company expects each quarter to align with the guided operating margin, reflecting a slight decrease from 2023.
Q: Can you discuss the impact of new warehouse facilities on gross margins and the expected timeline for seeing benefits from these investments? A: (Michael Olosky, CEO and Brian Magstadt, CFO) New warehouses enable direct service to customers, improving sales but also increasing costs. Most setup costs were incurred in 2023, with future benefits expected from increased product pull-through. Adjusted EBITDA metrics are now used to better represent operational performance amidst these investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
