GRAND RAPIDS, Mich., July 18, 2018 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today reported record financial results for the second quarter ended June 30, 2018, the twelfth consecutive quarter in which the company has reported records in both net sales and net earnings.

“The employees of Universal continue to work hard to set records, and I am privileged to announce the results,” stated CEO Matt Missad. The company’s second-quarter results benefited from unit sales growth and a rising lumber market but were adversely impacted by rising costs for transportation and labor.

“Our focus remains on growing unit sales organically and through acquisitions, while enhancing our sales mix of new and value-added products,” Matt added. “Our recently completed acquisition of North American Container Corp. (NACC) will enhance our goal of being the packaging solutions provider and adds non-wood packaging alternatives to our product offering. Additionally, our increased resource allocation to new products and services is paying dividends, as new product sales year-to-date have increased to $262 million from $211 million in 2017. We’ll also continue to focus on margin improvement and improving productivity through automation, including the expanded use of specialized material processing equipment and robotics.”

Recent Acquisition Activity
In early June, Universal closed on its acquisition of North American Container Corp. (NACC), an industrial packaging manufacturer based in Georgia with sales of approximately $71 million in 2017.

Second Quarter 2018 Highlights (comparisons on a year-over-year basis):

  • Diluted earnings per share were $0.71, up from $0.55
  • Net earnings attributable to controlling interest were $44.0 million, up 31 percent
  • EBITDA was $77.0 million, up 14 percent
  • Gross sales increased 21 percent, with gains of 19 percent in the Retail and Industrial markets and 26 percent in the Construction market
  • Unit sales contributed 8 percent of gross sales growth; higher prices due to the lumber market contributed 13 percent
  • Organic sales contributed 7 percent to unit growth while acquisitions added 1 percent
  • New product sales were $153.1 million, up 25 percent

By market, the company reported the following second-quarter 2018 gross sales results:

Retail

  • $546 million, up 19 percent over the same period of 2017, as unit sales contributed 6 percent and price increases accounted for 13 percent
  • Organic sales accounted for all of the unit sales growth
  • Sales to big box customers increased 16 percent, while sales to independent customers grew 25 percent

Construction

  • $371 million, up 26 percent over the same period of 2017, as unit sales contributed 10 percent and  price increases accounted for 16 percent
  • Organic sales accounted for 9 percent of the unit sales growth, while acquisitions accounted for 1 percent
  • The company saw double-digits sales increases to customers in commercial construction (32 percent), manufactured housing (28 percent) and residential construction (22 percent)

Industrial

  • $404 million, up 19 percent over the same period of 2017, as unit sales accounted for 8 percent and price increases accounted for 11 percent
  • Organic sales accounted for 5 percent of the unit sales growth, while acquisitions contributed 3 percent
  • The company sees favorable growth opportunities in the non-wood packing market and is adding resources to better serve this market

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, July 19, 2018. 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 pass code 9596393. 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 19, 2018, at 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.

Non-GAAP Financial Information

This release includes certain financial information not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies.  Management considers EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.

 
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 2018/2017
  Quarter Period   Year to Date  
(In thousands, except per share data) 2018   2017   2018   2017  
                 
                 
                 
NET SALES $1,294,440  100% $1,072,375  100% $2,288,297  100% $1,918,505  100.0%
                 
COST OF GOODS SOLD   1,128,751  87.2   924,135  86.2   1,991,719  87.0   1,649,526  86.0 
                 
GROSS PROFIT  165,689  12.8   148,240  13.8   296,578  13.0   268,979  14.0 
                 
SELLING,  GENERAL  AND                 
ADMINISTRATIVE  EXPENSES  104,595  8.1   94,605  8.8   197,800  8.6   181,587  9.5 
NET (LOSS) GAIN ON DISPOSITION AND IMPAIRMENT OF ASSETS  477  -   (264) -   (6,057) (0.3)  (328) - 
                 
EARNINGS FROM OPERATIONS  60,617  4.7   53,899  5.0   104,835  4.6   87,720  4.6 
                 
OTHER EXPENSE, NET  2,067  0.2   1,490  0.1   3,127  0.1   2,906  0.2 
                 
EARNINGS BEFORE INCOME TAXES  58,550  4.5   52,409  4.9   101,708  4.4   84,814  4.4 
                 
INCOME TAXES  13,420  1.0   17,835  1.7   22,994  1.0   28,605  1.5 
                 
NET EARNINGS  45,130  3.5   34,574  3.2   78,714  3.4   56,209  2.9 
                 
LESS NET EARNINGS ATTRIBUTABLE TO                
NONCONTROLLING INTEREST   (1,086) (0.1)  (932) (0.1)  (1,836) (0.1)  (1,505) (0.1)
                 
NET EARNINGS ATTRIBUTABLE TO                
CONTROLLING INTEREST $44,044  3.4  $33,642  3.1  $76,878  3.4  $54,704  2.9 
                 
                 
EARNINGS PER SHARE - BASIC  $0.71    $0.55    $1.24    $0.89   
                 
EARNINGS PER SHARE - DILUTED $0.71    $0.55    $1.24    $0.89   
                 
COMPREHENSIVE INCOME  41,225     35,961     74,370     60,631   
                 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                
TO NONCONTROLLING INTEREST  (119)    (1,460)    (1,713)    (2,887)  
                 
COMPREHENSIVE INCOME                
ATTRIBUTABLE TO CONTROLLING INTEREST $41,106    $34,501    $72,657    $57,744   
                 
SUPPLEMENTAL SALES DATA                
  Quarter Period Year to Date
Market Classification 2018   2017 % 2018   2017 %
Retail $545,492    $458,267  19% $916,453    $770,619  19%
Industrial  404,090     340,463  19%  737,056     621,062  19%
Construction  370,786     293,465  26%  678,526     559,371  21%
Total Gross Sales  1,320,368     1,092,195  21%  2,332,035     1,951,052  20%
Sales Allowances  (25,928)    (19,820) -31%  (43,738)    (32,547) -34%
Total Net Sales $1,294,440    $1,072,375  21% $2,288,297    $1,918,505  19%
                 
                 


 
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
JUNE 2018/2017
               
(In thousands)            
ASSETS 2018 2017 LIABILITIES AND EQUITY 2018 2017
               
CURRENT ASSETS     CURRENT LIABILITIES    
 Cash and cash equivalents $27,501 $24,625  Cash overdraft $33,608 $22,769
 Restricted cash  16,758  905  Accounts payable  197,408  160,250
 Investments  14,493  10,401  Accrued liabilities  138,809  126,210
 Accounts receivable  489,145  398,529  Current portion of debt  542  2,378
 Inventories  531,874  438,435        
 Other current assets  32,860  21,970        
               
TOTAL CURRENT ASSETS  1,112,631  894,865 TOTAL CURRENT LIABILITIES  370,367  311,607
               
OTHER ASSETS  20,266  17,734 LONG-TERM DEBT AND    
INTANGIBLE ASSETS, NET  263,024  253,484  CAPITAL LEASE OBLIGATIONS  276,274  204,752
PROPERTY, PLANT     OTHER LIABILITIES  42,255  49,319
 AND EQUIPMENT,  NET  340,698  315,956 EQUITY  1,047,723  916,361
               
               
TOTAL ASSETS $1,736,619 $1,482,039 TOTAL LIABILITIES AND EQUITY $1,736,619 $1,482,039
               
               
               


 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2018/2017
(In thousands)  2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net earnings   $78,714  $56,209 
Adjustments to reconcile net earnings to net cash from operating activities:    
        
Depreciation    26,144   23,248 
Amortization of intangibles   2,702   2,377 
Expense associated with share-based and grant compensation arrangements  1,924   1,381 
Deferred income taxes (credit)   (565)  355 
Equity in earnings of investee   -   (26)
Net (gain) on disposition and impairment of assets  (6,057)  (328)
Changes in:      
Accounts receivable   (155,666)  (101,239)
Inventories    (61,828)  (26,979)
Accounts payable and cash overdraft   62,665   38,146 
Accrued liabilities and other   15,895   22,067 
NET CASH FROM OPERATING ACTIVITIES  (36,072)  15,211 
        
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property, plant, and equipment   (54,313)  (34,549)
Proceeds from sale of property, plant and equipment  36,724   1,039 
Acquisitions and purchase of noncontrolling interest, net of cash received  (37,960)  (59,658)
Purchases of investments   (9,348)  (15,118)
Proceeds from sale of investments   3,180   7,247 
Other     (1,352)  1,152 
NET CASH USED IN INVESTING ACTIVITIES  (63,069)  (99,887)
        
CASH FLOWS FROM FINANCING ACTIVITIES:    
Borrowings under revolving credit facilities   488,853   444,601 
Repayments under revolving credit facilities   (431,657)  (349,311)
Borrowings of debt    1,639   - 
Repayments of debt    (5,437)  - 
Issuance of long-term debt   75,000   - 
Proceeds from issuance of common stock   500   331 
Distributions to noncontrolling interest   (1,078)  (1,953)
Dividends paid to shareholders   (11,090)  (9,207)
Repurchase of common stock   (1,819)  (9,934)
Other     (71)  (6)
NET CASH FROM (USED IN) FINANCING ACTIVITIES  114,840   74,521 
        
Effect of exchange rate changes on cash   (256)  1,196 
NET CHANGE IN CASH AND CASH EQUIVALENTS  15,443   (8,959)
        
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD  28,816   34,489 
        
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $44,259  $25,530 
        
Reconciliation of cash and cash equivalents and restricted cash:    
Cash and cash equivalents, beginning of period  $28,339  $34,091 
Restricted cash, beginning of period   477   398 
All cash and cash equivalents, beginning of period $28,816  $34,489 
        
Cash and cash equivalents, end of period  $27,501  $24,625 
Restricted cash, end of period   16,758   905 
All cash and cash equivalents, end of period  $44,259  $25,530 
        
        


 
EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 2018/2017
  Quarter PeriodYear to Date
(In thousands) 2018201720182017
Net Earnings 45,132 34,575  78,714  56,209  
Interest  Expense 2,247 1,839  4,025  3,343  
Taxes 13,420 17,835  22,994  28,605  
Expense associated with Share-Based Compensation Arrangements 830 765  1,924  1,382  
Net Gain on Disposition of Asset 477 (264) (6,057) (328) 
Depreciation Expense 13,432 11,763  26,144  23,155  
Amortization of Intangibles 1,474 1,259  2,702  2,378  
EBITDA   77,012    67,772     130,446     114,744   
          

AT THE COMPANY

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