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Simpson Manufacturing's (SSD) Capital Allocation Strategy News

ByZacks Investment Research
Published 08/24/2016, 09:30 PM
Updated 07/09/2023, 06:31 AM
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Simpson Manufacturing Co., Inc. (NYSE:SSD) announced an update to its capital allocation strategy following an ongoing review and feedback on it from a significant number of its shareholders.

As per the company’s previous capital allocation strategy announced on Sep 23, 2015, it will pursue profitable business opportunities in the building products range, given its expertise in engineering, testing, manufacturing and distribution. Moreover, the company focuses on returning capital to shareholders.

Based on shareholder response and the initial findings from an extensive review of the capital allocation strategy, Simpson Manufacturing has set a target to return to its shareholders 50% of cash flows from operations through both dividends and share repurchases. In sync with this, its board of directors replaced its previous $50 million share repurchase authorization that was scheduled to expire on Dec 31, 2016, with a $125 million share repurchase authorization. The new share repurchase authorization has an expiry date of Dec 31, 2017.

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The board also authorized the company to execute one or more accelerated share repurchase programs at any time or times before Dec 31, 2017. The company currently plans to execute a $50 million accelerated share repurchase program by the end of 2016.

During the Jan 1, 2015 to Jul 2016 timeframe, Simpson Manufacturing invested over $52 million in capital expenditures and another $4 million in acquisitions by using its internally-generated cash flow. During this period, the company also returned approximately $104 million to its shareholders through the payment of quarterly dividends and repurchase of shares. This includes approximately $3.5 million of share repurchases so far in 2016.

Simpson Manufacturing currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the sector are Gibraltar Industries, Inc. (NASDAQ:ROCK) , Trex Co. Inc. (NYSE:TREX) and NCI Building Systems, Inc. (NYSE:NCS) . While Gibraltar Industries and Trex Co. sport a Zacks Rank #1 (Strong Buy), NCI Building holds a Zacks Rank #2 (Buy).



NCI BLDG SYSTEM (NCS): Free Stock Analysis Report

TREX COMPANY (TREX): Free Stock Analysis Report

SIMPSON MFG INC (SSD): Free Stock Analysis Report

GIBRALTAR INDUS (ROCK): Free Stock Analysis Report

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