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Source: Universal Forest Products, Inc.

UFPI posts record third quarter results

Sales up 28 percent, net earnings up 21 percent over previous year

GRAND RAPIDS, Mich., Oct. 17, 2017 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today reported record financial results for the third quarter ended September 30, 2017.

The Company’s net sales rose 28 percent over the same quarter of 2016, led by double-digit gains in each of its markets.  Net earnings rose 21 percent over 2016.  Both results beat the records set in the third quarter of 2016.

“These results underscore the strength of our balanced business model, which allows us to withstand adversity in one market or region and still grow sales and profitability,” said CEO Matt Missad. “Hurricanes Harvey, Irma and Maria created difficult conditions for some of our employees and operations in Texas, Florida and Puerto Rico and contributed to more lumber market volatility in September, impacting margins. Despite these challenges, our business performed exceptionally well, and I want to thank the hard working employees of the companies of Universal for their efforts.  We feel confident in our ability to continue to execute our strategic initiatives and deliver strong results.”

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

  • Net earnings attributable to controlling interest were $33.7 million, up 21 percent
  • Diluted earnings per share were $1.64, an increase of 21 percent
  • Net sales of $1,056.6 million represent a 28 percent increase
  • Unit sales accounted for 22 percent of the Company’s gross sales growth (this includes 15 percent from acquired businesses); price increases, primarily due to the commodity lumber market, accounted for 6 percent
  • New product sales of $107.7 million increased by 21.7 percent and represented 10.2 percent of total Company net sales. The Company has introduced 35 new products in 2017 to date, including 12 during the third quarter.

By market, the Company reported the following third-quarter 2017 gross sales results:

Retail

$391.9 million, up 16 percent over the same period of 2016

The 16 percent increase in sales to the Retail market is the result of a 7 percent increase from acquisitions, a 5 percent increase from organic growth and a 4 percent increase in prices.

The Company benefited from a sales increase of 20 percent and 13 percent to independent and big box retailers, respectively, in the third quarter when compared to the same period of 2016.

Construction

$310.0 million, up 16 percent over the same period of 2016

The 16 percent increase in Construction sales was due to an 8 percent increase in unit sales and an 8 percent increase in prices. The increase in unit sales was led by a 12 percent increase to manufactured housing builders and an 8 percent increase to residential builders.

Industrial

$369.5 million, up 59 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 sales in this market by 16 percent in the third quarter: 11 percent through organic growth and 5 percent through price increases. The organic growth was primarily the result of new customer acquisitions and share gains with existing 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, October 18, 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 (866) 518-4547 and internationally at (213) 660-0879. Use conference ID 81854743. 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 November 17, 2017, at the following numbers: (855) 859-2056 or (404) 537-3406.

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 NINE MONTHS ENDED 
SEPTEMBER 2017/2016 
  Quarter Period   Year to Date   
(In thousands, except per share data)  2017     2016     2017     2016    
                  
                  
                  
NET SALES $  1,056,586  100% $  826,665  100% $  2,975,091  100% $  2,380,909  100.0% 
                  
COST OF GOODS SOLD     911,899    86.3     708,611    85.7     2,561,424    86.1     2,028,629    85.2  
                  
GROSS PROFIT    144,687    13.7     118,054    14.3     413,667    13.9     352,280    14.8  
                  
SELLING,  GENERAL  AND                  
  ADMINISTRATIVE  EXPENSES    92,416    8.7     74,502    9.0     273,676    9.2     223,153    9.4  
                  
EARNINGS FROM OPERATIONS    52,271    4.9     43,552    5.3     139,991    4.7     129,127    5.4  
                  
OTHER EXPENSE, NET    1,352    0.1     927    0.1     4,259    0.1     2,602    0.1  
                  
EARNINGS BEFORE INCOME TAXES    50,919    4.8     42,625    5.2     135,732    4.6     126,525    5.3  
                  
INCOME TAXES    16,250    1.5     13,861    1.7     44,855    1.5     43,268    1.8  
                  
NET EARNINGS    34,669    3.3     28,764    3.5     90,877    3.1     83,257    3.5  
                  
LESS NET EARNINGS ATTRIBUTABLE TO                 
   NONCONTROLLING INTEREST     (976) (0.1)   (945) (0.1)  (2,480) (0.1)    (2,828)   (0.1) 
                  
NET EARNINGS ATTRIBUTABLE TO                 
  CONTROLLING INTEREST $  33,693    3.2  $  27,819    3.4  $  88,397    3.0  $  80,429    3.4  
                  
                  
EARNINGS PER SHARE - BASIC  $  1.65    $  1.36    $  4.32    $  3.95    
                  
EARNINGS PER SHARE - DILUTED $  1.64    $  1.36    $  4.31    $  3.94    
                  
COMPREHENSIVE INCOME    36,388       27,608       97,018       81,736    
                  
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                 
  TO NONCONTROLLING INTEREST    (975)      (495)      (3,862)      (1,576)   
                  
COMPREHENSIVE INCOME                 
  ATTRIBUTABLE TO CONTROLLING INTEREST $  35,413    $  27,113    $  93,156    $  80,160    
                  
SUPPLEMENTAL SALES DATA                 
  Quarter Period Year to Date 
Market Classification  2017     2016  %  2017     2016  % 
Retail $  391,895    $  339,275  16% $  1,162,785    $  1,018,203  14% 
Industrial    369,506       232,017  59%    982,675       661,718  49% 
Construction    310,026       267,772  16%    872,997       740,393  18% 
Total Gross Sales    1,071,427       839,064  28%    3,018,457       2,420,314  25% 
Sales Allowances    (14,841)      (12,399) -20%    (43,366)      (39,405) -10% 
Total Net Sales $  1,056,586    $  826,665  28% $  2,975,091    $  2,380,909  25% 
                  
                  

 

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) 
SEPTEMBER 2017/2016 
                
(In thousands)             
ASSETS  2017  2016 LIABILITIES AND EQUITY  2017  2016 
                
CURRENT ASSETS     CURRENT LIABILITIES     
 Cash and cash equivalents $  22,044 $  36,683  Cash overdraft $  26,617 $  13,940 
 Restricted cash    905    909  Accounts payable    171,774    137,979 
 Investments    10,781    10,453  Accrued liabilities    138,364    156,653 
 Accounts receivable    419,183    343,771  Current portion of debt    2,197    1,584 
 Inventories    412,486    369,928         
 Other current assets    23,201    29,043         
                
TOTAL CURRENT ASSETS    888,600    790,787 TOTAL CURRENT LIABILITIES    338,952    310,156 
                
OTHER ASSETS    17,515    11,173 LONG-TERM DEBT AND     
INTANGIBLE ASSETS, NET    255,330    224,186  CAPITAL LEASE OBLIGATIONS    145,884    110,362 
PROPERTY, PLANT     OTHER LIABILITIES    51,638    43,029 
 AND EQUIPMENT,  NET    325,109    284,491 EQUITY    950,080    847,090 
                
                
TOTAL ASSETS $  1,486,554 $  1,310,637 TOTAL LIABILITIES AND EQUITY $  1,486,554 $  1,310,637 
                
                

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) 
FOR THE NINE MONTHS ENDED 
SEPTEMBER 2017/2016 
(In thousands)    2017   2016  
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net earnings   $  90,877  $  83,257  
Adjustments to reconcile net earnings to net cash from operating activities:     
         
  Depreciation      36,010     29,014  
  Amortization of intangibles     3,549     1,868  
  Expense associated with share-based compensation arrangements    1,978     1,568  
  Expense associated with stock grant plans     144     105  
  Deferred income taxes (credit)     117     (53) 
  Equity in earnings of investee     (25)    (241) 
  Net gain on disposition and impairment of assets    (437)    94  
  Changes in:       
    Accounts receivable     (121,688)    (69,357) 
    Inventories      (820)    21,683  
    Accounts payable and cash overdraft     53,424     35,026  
    Accrued liabilities and other     34,221     33,413  
     NET CASH FROM OPERATING ACTIVITIES    97,350     136,377  
         
CASH FLOWS FROM INVESTING ACTIVITIES:     
Purchases of property, plant, and equipment     (57,189)    (35,723) 
Proceeds from sale of property, plant and equipment    2,121     516  
Acquisitions and purchase of noncontrolling interest, net of cash received    (59,859)    (66,615) 
Repayments of debt of acquiree     -     (92,830) 
Purchase of remaining noncontrolling interest of subsidiary    -     (1,100) 
Cash contributed from noncontrolling interest     464     -  
Advances of notes receivable     (234)    (5,400) 
Collections of notes receivable and related interest    1,334     5,819  
Purchases of investments     (15,928)    (4,468) 
Proceeds from sale of investments     8,000     1,395  
Other       (84)    (1,733) 
     NET CASH USED IN INVESTING ACTIVITIES    (121,375)    (200,139) 
         
CASH FLOWS FROM FINANCING ACTIVITIES:     
Borrowings under revolving credit facilities     610,038     52,479  
Repayments under revolving credit facilities     (573,829)    (27,177) 
Proceeds from issuance of common stock     476     396  
Distributions to noncontrolling interest     (3,272)    (3,160) 
Dividends paid to shareholders     (9,207)    (8,529) 
Repurchase of common stock     (12,976)    -  
Other       -     (28) 
   NET CASH FROM (USED IN) FINANCING ACTIVITIES    11,230     13,981  
         
Effect of exchange rate changes on cash     1,255     (969) 
NET CHANGE IN CASH AND CASH EQUIVALENTS    (11,540)    (50,750) 
         
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    34,489     88,342  
         
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $  22,949  $  37,592  
         
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  $  22,044  $  36,683  
Restricted cash, end of period     905     909  
All cash and cash equivalents, end of period  $  22,949  $  37,592  
         
         

Lynn Afendoulis 
Director, Corporate Communications  
(616) 365-1502