UFPI posts record second quarter results

Sales up 23 percent over previous year

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| Source: Universal Forest Products, Inc.

GRAND RAPIDS, Mich., July 18, 2017 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today reported financial results for the second quarter ended July 1, 2017.

The Company’s net sales rose 23 percent over the same quarter of 2016, led by double-digit gains in each of its markets.  Net earnings were up slightly over 2016.  Both results are records for the company.

“Many companies would be satisfied with our second-quarter performance. Not us,” said CEO Matt Missad. “We are excited about our sales growth, yet disappointed that we only had a modest growth in profits. We won’t make excuses and will aggressively pursue our goal to convert more of our sales revenue to earnings growth. I am confident that the great people of Universal will overcome challenges such as the lumber market volatility that occurred in the second quarter and continue to improve.”

“We are excited about the second half of 2017 and look forward to returning to more normal lumber market conditions as the details of the next Canadian softwood lumber agreement become known,” Matt added. “We expect to see the benefits of our investments in acquisitions, new product development and our international division. We also expect to see the benefits of our efforts to manage costs, as acquisitions such as idX Corp. continue to implement cost-saving synergies ahead of schedule.”

Second Quarter 2017 Highlights (comparisons on a year-over-year basis):

  • Net earnings attributable to controlling interest were $33.6 million, up 1 percent
  • Diluted earnings per share were $1.64
  • Net sales of $1,072.4 million represent a 23 percent increase
  • Unit sales accounted for 16 percent of the Company’s gross sales growth; higher lumber prices accounted for 7 percent
  • New product sales were $115.9 million, up from $97.8 million. The Company has introduced 23 new products in 2017 to date, including 11 during the second quarter.

By market, the Company posted the following second-quarter 2017 gross sales results:

Retail

$459.1 million, up 13 percent over the same period of 2016

Sales to the Retail market grew 13 percent, led by acquisitions, which contributed 8 percent of unit sales growth, while price increases accounted for 5 percent of sales growth.

The Company has benefited from new product sales and growth with independent and big box retailers, the latter of which have reported increases in comparable sales in their most recently reported quarters.

Construction

$295.2 million, up 17 percent over the same period of 2016

The 17 percent increase in Construction sales was led by sales to manufactured housing builders, which grew 24 percent, and residential builders, which grew 14 percent. Sales to commercial builders rose 10 percent. Overall, unit sales grew 9 percent, while prices increased 8 percent.

The Company has benefited from the increase in manufactured home production, which is up 18.5 percent for the year through April 2017, and from rising U.S. housing starts. The Company remains focused on growing business selectively in areas where housing markets are the most stable.

Industrial

$335.9 million, up 47 percent over the same period of 2016

The Company’s growth in this market is primarily due to its September 2016 acquisition of idX Corp. Excluding acquisitions, the Company grew unit sales in this market by 8 percent in the second quarter through market share gains and by adding new customers.

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 Wednesday, July 19, 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 ID 84420896. 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 August 18, 2017, at any of the following numbers: (855) 859-2056, (404) 537-3406 or (800) 585-8367.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company whose subsidiaries 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 SIX MONTHS ENDED 
JUNE 2017/2016 
  Quarter Period   Year to Date   
(In thousands, except per share data)  2017     2016     2017     2016    
                  
                  
                  
NET SALES $  1,072,375  100% $  872,093  100% $  1,918,505  100% $  1,554,244  100.0% 
                  
COST OF GOODS SOLD     924,135    86.2     740,606    84.9     1,649,526    86.0     1,320,018    84.9  
                  
GROSS PROFIT    148,240    13.8     131,487    15.1     268,979    14.0     234,226    15.1  
                  
SELLING,  GENERAL  AND                  
  ADMINISTRATIVE  EXPENSES    94,341    8.8     77,822    8.9     181,259    9.4     148,651    9.6  
                  
EARNINGS FROM OPERATIONS    53,899    5.0     53,665    6.2     87,720    4.6     85,575    5.5  
                  
OTHER EXPENSE, NET    1,490    0.1     785    0.1     2,906    0.2     1,675    0.1  
                  
EARNINGS BEFORE INCOME TAXES    52,409    4.9     52,880    6.1     84,814    4.4     83,900    5.4  
                  
INCOME TAXES    17,835    1.7     18,643    2.1     28,605    1.5     29,407    1.9  
                  
NET EARNINGS    34,574    3.2     34,237    3.9     56,209    2.9     54,493    3.5  
                  
LESS NET EARNINGS ATTRIBUTABLE TO                 
  NONCONTROLLING INTEREST     (932)   (0.1)    (839)   (0.1)    (1,505)   (0.1)    (1,882)   (0.1) 
                  
NET EARNINGS ATTRIBUTABLE TO                 
  CONTROLLING INTEREST $  33,642    3.1  $  33,398    3.8  $  54,704    2.9  $  52,611    3.4  
                  
                  
EARNINGS PER SHARE - BASIC  $  1.64    $  1.64    $  2.67    $  2.59    
                  
EARNINGS PER SHARE - DILUTED $  1.64    $  1.64    $  2.66    $  2.58    
                  
COMPREHENSIVE INCOME    35,961       33,430       60,631       54,128    
                  
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                 
  TO NONCONTROLLING INTEREST    (1,460)      (235)      (2,887)      (1,081)   
                  
COMPREHENSIVE INCOME                 
  ATTRIBUTABLE TO CONTROLLING INTEREST $  34,501    $  33,195    $  57,744    $  53,047    
                  
SUPPLEMENTAL SALES DATA                 
  Quarter Period Year to Date 
Market Classification  2017     2016  %  2017     2016  % 
Retail $  459,140    $  407,670  13% $  770,891    $  678,928  14% 
Industrial    335,928       228,052  47%    613,170       429,701  43% 
Construction    295,153       251,665  17%    562,969       472,622  19% 
Total Gross Sales    1,090,221       887,387  23%    1,947,030       1,581,251  23% 
Sales Allowances    (17,846)      (15,294) -17%    (28,525)      (27,007) -6% 
Total Net Sales $  1,072,375    $  872,093  23% $  1,918,505    $  1,554,244  23% 
                  
                  
                  

 

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) 
JUNE 2017/2016 
                
(In thousands)             
ASSETS  2017  2016 LIABILITIES AND EQUITY  2017  2016 
                
CURRENT ASSETS     CURRENT LIABILITIES     
 Cash and cash equivalents $  24,625 $  87,517  Cash overdraft $  22,769 $  -  
 Restricted cash & cash equivalents    905    909  Accounts payable    160,250    126,095 
 Investments    10,401    9,740  Accrued liabilities    126,210    111,995 
 Accounts receivable    398,529    318,505  Current portion of debt    2,378    1,093 
 Inventories    438,435    297,796         
 Other current assets    21,970    15,238         
                
TOTAL CURRENT ASSETS    894,865    729,705 TOTAL CURRENT LIABILITIES    311,607    239,183 
                
OTHER ASSETS    17,734    10,011 LONG-TERM DEBT AND     
INTANGIBLE ASSETS, NET    253,484    197,891  CAPITAL LEASE OBLIGATIONS    204,752    84,530 
PROPERTY, PLANT     OTHER LIABILITIES    49,319    51,158 
 AND EQUIPMENT,  NET    315,956    256,899 EQUITY    916,361    819,635 
                
                
TOTAL ASSETS $  1,482,039 $  1,194,506 TOTAL LIABILITIES AND EQUITY $  1,482,039 $  1,194,506 
                
                
                
                

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) 
FOR THE SIX MONTHS ENDED 
JUNE 2017/2016 
(In thousands)    2017     2016  
CASH FLOWS FROM OPERATING ACTIVITIES:       
Net earnings   $  56,209    $  54,493  
Adjustments to reconcile net earnings to net cash from operating activities:         
           
  Depreciation      23,248       19,178  
  Amortization of intangibles     2,377       1,285  
  Expense associated with share-based compensation arrangements    1,282       977  
  Expense associated with stock grant plans     99       70  
  Deferred income taxes      355       55  
  Equity in earnings of investee     (26)      (192) 
  Net gain on disposition and impairment of assets    (328)      50  
  Changes in:         
    Accounts receivable     (101,239)      (95,198) 
    Inventories      (26,979)      7,564  
    Accounts payable and cash overdraft     38,146       31,320  
    Accrued liabilities and other     22,067       20,439  
     NET CASH FROM OPERATING ACTIVITIES    15,211       40,041  
           
CASH FLOWS FROM INVESTING ACTIVITIES:       
Purchases of property, plant, and equipment     (34,549)      (24,269) 
Proceeds from sale of property, plant and equipment    1,039       309  
Acquisitions and purchase of noncontrolling interest, net of cash received    (59,658)      (1,682) 
Purchase of remaining noncontrolling interest of subsidiary    -       (1,100) 
Cash contributed from noncontrolling interest     464       -  
Advances of notes receivable     (228)      (2,946) 
Collections of notes receivable and related interest    1,041       3,731  
Purchases of investments     (15,118)      (3,571) 
Proceeds from sale of investments     7,247       901  
Other       (125)      (736) 
     NET CASH USED IN INVESTING ACTIVITIES    (99,887)      (29,363) 
           
CASH FLOWS FROM FINANCING ACTIVITIES:       
Borrowings under revolving credit facilities     444,601       3,162  
Repayments under revolving credit facilities     (349,311)      (3,210) 
Proceeds from issuance of common stock     331       290  
Distributions to noncontrolling interest     (1,953)      (8,529) 
Dividends paid to shareholders     (9,207)      (1,731) 
Repurchase of common stock     (9,934)      -  
Other       (6)      (15) 
     NET CASH FROM (USED IN) FINANCING ACTIVITIES    74,521       (10,033) 
           
Effect of exchange rate changes on cash     1,196       (561) 
NET CHANGE IN CASH AND CASH EQUIVALENTS    (8,959)      84  
           
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    34,489       88,342  
           
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $  25,530    $  88,426  
           
Reconciliation of cash and cash equivalents and restricted cash:       
Cash and cash equivalents, beginning of period  $  34,091    $  87,756  
Restricted cash, beginning of period     398       586  
All cash and cash equivalents, beginning of period $  34,489    $  88,342  
           
Cash and cash equivalents, end of period  $  24,625    $  87,517  
Restricted cash, end of period     905       909  
All cash and cash equivalents, end of period  $  25,530    $  88,426  
           
           
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502