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 | ||||||||||