UFP Reports Record Fourth Quarter and Annual Results

Q4 Earnings up 9.8 percent; Annual Earnings up 25.5 percent

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| Source: Universal Forest Products, Inc.

GRAND RAPIDS, Mich., Feb. 22, 2017 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today announced record results in 2016, including record fourth-quarter net earnings attributable to controlling interest of $20.8 million, or $1.02 per diluted share, 9.8 percent higher than the fourth quarter of 2015. The Company also posted record annual net earnings attributable to controlling interest of $101.2 million, or $4.96 per diluted share, representing a 25.5 percent increase over 2015 annual net earnings attributable to controlling interest of $80.6 million, or $3.99 per diluted share. Fourth-quarter 2016 net sales of $859.6 million were up 31.5 percent over net sales for the same period of 2015. Annual net sales of $3.24 billion surpassed 2015 annual net sales of $2.89 billion by 12.2 percent and is a new record for the Company. Although acquisitions contributed to the records, most of the Company’s annual growth came from existing operations.

“The people who work for the companies of Universal are the best in the business, and they continue to prove it with record-breaking results,” said CEO Matthew J. Missad. “They continuously look for ways to create efficiencies, reduce manufacturing costs and grow sales by building and deepening customer relationships. They also have been bringing a number of exciting new, value-added products to the market. I couldn’t be more proud of them.”

New product sales grew 28.9 percent to $354.3 million in 2016, compared to $274.9 million in 2015.

Higher lumber prices contributed about 4 percent and 1 percent to the Company’s fourth-quarter and annual sales growth, respectively.

“Our results reflect the dedication of our employees and trust of our shareholders, and I want to thank them for their commitment to the Company,” added Missad. “We intend to continue to build on their trust with wise investments that will continue to grow our business in the future.”

By market, the Company posted the following 2016 gross sales results:

Retail

  • Fourth quarter: $275.7 million, up 19.4 percent over the fourth quarter of 2015
  • Year: $1.3 billion, up 13.7 percent over the previous year

The Company benefited from an 11 percent increase in fourth-quarter unit sales to the Retail market, led by a 25 percent increase in sales to big box customers. The increase in total unit sales is attributable to market share gains, new products and improved consumer demand. The Company continues to add new products, develop relationships with new customers, and increase share with existing customers.

Construction

  • Fourth quarter: $275.6 million, up 24.7 percent over the fourth quarter of 2015
  • Year: $1 billion, up 12.5 percent over the previous year

Overall, unit sales to the Construction market rose almost 20 percent in the fourth quarter, led by a strong gain of 30 percent to residential construction customers. According to the U.S. Census Bureau, housing starts during the period of September through November 2016 rose less than 1 percent over the same period last year. The Company remains focused on growing business selectively in areas where housing markets are the most stable.  

Industrial

  • Fourth quarter: $318.6 million, up 52.2 percent over the fourth quarter of 2015 
  • Year: $988.0 million, up 10.6 percent over the previous year

The Company’s growth in this market is primarily due to its acquisition of idX Corporation, which closed in September of 2016. Excluding acquisitions, the Company grew unit sales in this market by 11 percent in the fourth quarter by adding new customers and increasing share with existing customers. The Company plans to continue its efforts to focus on value-added products.

CONFERENCE CALL

Universal Forest Products will conduct a conference call to discuss information included in this news release and related matters at 8:30 a.m. ET on Thursday, February 23, 2017. The call will be hosted by CEO Matthew J. Missad and CFO Michael Cole, and will be available for analysts and institutional investors domestically at 888-685-5759, and internationally at 503-343-6031. Use conference pass code 40666839. The conference call will be available simultaneously and in its entirety to all interested investors and news media through a webcast at http://www.ufpi.com. A replay of the call will be available through March 23, 2017, at 855-859-2056, 404-537-3406 or 800-585-5367.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company that provides capital, management and administrative resources to subsidiaries that supply wood, wood composite and other products to three robust markets: retail, construction and industrial.  Founded in 1955, the Company is headquartered in Grand Rapids, Mich., with affiliates throughout North America, Europe, Asia and Australia. For more about Universal Forest Products, go to www.ufpi.com

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission.

 

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED) 
FOR THE TWELVE MONTHS ENDED 
DECEMBER 2016/2015 
  Quarter Period   Year to Date   
(In thousands, except per share data)  2016     2015     2016     2015    
                  
                  
                  
NET SALES $  859,584  100% $  653,600  100% $  3,240,493  100% $  2,887,071  100.0% 
                  
COST OF GOODS SOLD     737,274    85.8     556,427    85.1     2,765,903    85.4     2,487,167    86.1  
                  
GROSS PROFIT    122,310    14.2     97,173    14.9     474,590    14.6     399,904    13.9  
                  
SELLING,  GENERAL  AND                  
  ADMINISTRATIVE  EXPENSES    87,000    10.1     66,282    10.1     310,152    9.6     264,437    9.2  
                  
EARNINGS FROM OPERATIONS    35,310    4.1     30,891    4.7     164,438    5.1     135,467    4.7  
                  
OTHER EXPENSE, NET    1,164    0.1     1,348    0.2     3,767    0.1     4,465    0.2  
                  
EARNINGS BEFORE INCOME TAXES    34,146    4.0     29,543    4.5     160,671    5.0     131,002    4.5  
                  
INCOME TAXES    11,905    1.4     8,982    1.4     55,174    1.7     45,870    1.6  
                  
NET EARNINGS    22,241    2.6     20,561    3.1     105,497    3.3     85,132    2.9  
                  
LESS NET EARNINGS ATTRIBUTABLE TO                 
  NONCONTROLLING INTEREST     (1,491)   (0.2)    (1,660)   (0.3)    (4,318)   (0.1)    (4,537)   (0.2) 
                  
NET EARNINGS ATTRIBUTABLE TO                 
  CONTROLLING INTEREST $  20,750    2.4  $  18,901    2.9  $  101,179    3.1  $  80,595    2.8  
                  
                  
EARNINGS PER SHARE - BASIC  $  1.02    $  0.94    $  4.97    $  3.99    
                  
EARNINGS PER SHARE - DILUTED $  1.02    $  0.93    $  4.96    $  3.99    
                  
COMPREHENSIVE INCOME    21,058       17,510       102,794       77,875    
                  
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                 
  TO NONCONTROLLING INTEREST    (1,084)      (5,362)      (2,660)      (3,213)   
                  
COMPREHENSIVE INCOME                 
  ATTRIBUTABLE TO CONTROLLING INTEREST $  19,974    $  12,148    $  100,134    $  74,662    
                  
SUPPLEMENTAL SALES DATA                 
  Quarter Period Year to Date 
Market Classification  2016     2015  %  2016     2015  % 
Retail $  275,669    $  230,817  19% $  1,292,892    $  1,136,643  14% 
Industrial    318,649       209,386  52%    988,040       893,149  11% 
Construction    275,617       221,072  25%    1,009,317       897,301  12% 
Total Gross Sales    869,935       661,275  32%    3,290,249       2,927,093  12% 
Sales Allowances    (10,351)      (7,675)      (49,756)      (40,022)   
Total Net Sales $  859,584    $  653,600    $  3,240,493    $  2,887,071    
                  
                  

 

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) 
DECEMBER 2016/2015 
                
(In thousands)             
ASSETS  2016  2015 LIABILITIES AND EQUITY  2016  2015 
                
CURRENT ASSETS     CURRENT LIABILITIES     
 Cash and cash equivalents $  34,091 $  87,756  Cash overdraft $  19,761 $  -  
 Restricted cash    398    586  Accounts payable    124,660    95,041 
 Investments    10,348    6,743  Accrued liabilities    124,722    107,989 
 Accounts receivable    282,253    222,964  Current portion of debt    2,634    1,145 
 Inventories    397,227    304,918         
 Other current assets    32,121    25,265         
                
TOTAL CURRENT ASSETS    756,438    648,232 TOTAL CURRENT LIABILITIES    271,777    204,175 
                
OTHER ASSETS    10,163    9,610 LONG-TERM DEBT AND     
INTANGIBLE ASSETS, NET    227,606    198,687  CAPITAL LEASE OBLIGATIONS    109,059    84,750 
PROPERTY, PLANT     OTHER LIABILITIES    50,756    52,345 
 AND EQUIPMENT,  NET    297,851    251,150 EQUITY    860,466    766,409 
                
                
TOTAL ASSETS $  1,292,058 $  1,107,679 TOTAL LIABILITIES AND EQUITY $  1,292,058 $  1,107,679 
                
                
                

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) 
FOR THE TWELVE MONTHS ENDED 
DECEMBER 2016/2015 
(In thousands)    2016   2015  
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net earnings   $  105,497  $  85,132  
Adjustments to reconcile net earnings to net cash from operating activities:     
         
  Depreciation      40,823     37,710  
  Amortization of intangibles     2,795     3,531  
  Expense associated with share-based compensation arrangements    2,208     1,846  
  Excess tax benefits from share-based compensation arrangements    -     (33) 
  Expense associated with stock grant plans     127     109  
  Deferred income tax (credit)     2,464     (1,369) 
  Equity in earnings of investee     (267)    (374) 
  Net loss on disposition and impairment of assets    -     172  
  Changes in:       
  Accounts receivable     (5,119)    (26,007) 
  Inventories      (3,245)    34,139  
  Accounts payable and cash overdraft     11,259     4,798  
  Accrued liabilities and other     15,978     29,142  
  NET CASH FROM OPERATING ACTIVITIES    172,520     168,796  
         
CASH FLOWS FROM INVESTING ACTIVITIES:     
Purchases of property, plant, and equipment     (53,762)    (43,522) 
Proceeds from sale of property, plant and equipment    3,126     2,843  
Acquisitions, net of cash received     (80,077)    (2,505) 
Repayments of debt of acquiree     (92,830)    -  
Purchases and dissolution of remaining noncontrolling interest in subsidiary    (892)    (1,256) 
Advances of notes receivable     (6,012)    (6,994) 
Collections of notes receivable     7,899     11,446  
Purchases of investments     (5,666)    (7,858) 
Proceeds from sale of investments     2,568     1,115  
Cash restricted as to use     188     (181) 
Other       (2,011)    95  
  NET CASH USED IN INVESTING ACTIVITIES    (227,469)    (46,817) 
         
CASH FLOWS FROM FINANCING ACTIVITIES:     
Borrowings under revolving credit facilities     131,002     297,711  
Repayments under revolving credit facilities     (107,294)    (311,271) 
Proceeds from issuance of common stock     536     1,074  
Distributions to noncontrolling interest     (3,280)    (3,188) 
Dividends paid to shareholders     (17,680)    (16,507) 
Repurchase of common stock     -     (800) 
Other       (73)    (21) 
  NET CASH FROM (USED IN) FINANCING ACTIVITIES    3,211     (33,002) 
         
Effect of exchange rate changes on cash     (1,927)    (1,221) 
NET CHANGE IN CASH AND CASH EQUIVALENTS    (53,665)    87,756  
         
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    87,756     -  
         
CASH AND CASH EQUIVALENTS, END OF PERIOD $  34,091  $  87,756  
         
         
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502