- Sales up 15 percent, net earnings up 22 percent over previous year -

GRAND RAPIDS, Mich., Oct. 16, 2018 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq: UFPI) today reported record financial results for the third quarter ended September 29, 2018, the thirteenth consecutive quarter in which the company has reported records in both net sales and net earnings.

“I want to thank the hard-working employees of Universal for once again producing record results, driven by strong unit sales growth of 7 percent and overall sales growth of 15 percent,” stated CEO Matt Missad. “We achieved these results despite the headwinds we experienced from a quickly changing lumber market, rising labor, benefit and transportation costs, and the short-term effects of Hurricane Florence.

“While we are pleased to report a record quarter, we know we can do better. We are improving our mix of value-added new products, investing in automation to address rising costs and improving performance at underperforming operations.”

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

  • Diluted earnings per share were $0.66, up from $0.55

  • Net earnings attributable to controlling interest were $41.2 million, up 22 percent

  • Net sales were $1.2 billion, up 15 percent

  • EBITDA was $72.9 million, up 9 percent

  • Gross sales increased 17 percent in the Construction market, 15 percent in the Industrial market and 13 percent in the Retail market

  • Unit sales contributed 7 percent of gross sales growth; higher prices due to the lumber market contributed 8 percent

  • Organic sales contributed 5 percent to unit growth while acquisitions added 2 percent

  • New product sales were $138 million, up 22 percent; year-to date new product sales are $407 million, up  25 percent

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

Retail

  • $443 million, up 13 percent over the same period of 2017, as unit sales contributed 4 percent and price increases accounted for 9 percent

  • Organic sales accounted for all of the unit sales growth

  • Sales to big box customers increased 11 percent, while sales to independent customers grew 17 percent

Construction

  • $361 million, up 17 percent over the same period of 2017, as unit sales contributed 9 percent and  price increases accounted for 8 percent

  • Organic sales accounted for 8 percent of the unit sales growth, while acquisitions accounted for 1 percent

  • The company saw double-digit sales increases to customers in commercial construction (30 percent), residential construction (19 percent) and manufactured housing (10 percent)

Industrial

  • $429 million, up 15 percent over the same period of 2017, as unit sales accounted for 8 percent and price increases accounted for 7 percent

  • Organic sales accounted for 3 percent of the unit sales growth, while acquisitions contributed 5 percent

  • The company sees favorable growth opportunities in the non-wood packaging market and has been 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 Wednesday, October 17, 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 1793238. 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, 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 NINE MONTHS ENDED
SEPTEMBER 2018/2017
  Quarter Period   Year to Date  
(In thousands, except per share data) 2018   2017   2018   2017  
                 
                 
                 
NET SALES $  1,212,702 100% $  1,056,586 100% $  3,500,999 100% $  2,975,091 100.0%
                 
COST OF GOODS SOLD    1,054,029   86.9   911,899   86.3   3,045,748   87.0   2,561,424   86.1
                 
GROSS PROFIT   158,673   13.1   144,687   13.7   455,251   13.0   413,667   13.9
                 
SELLING,  GENERAL  AND                 
ADMINISTRATIVE  EXPENSES   102,292   8.4   92,389   8.7   300,292   8.6   272,956   9.2
FOREIGN CURRENCY EXCHANGE LOSS    412     301     213     1,157  
NET GAIN ON DISPOSITION AND IMPAIRMENT OF ASSETS   (1,022)   (0.1)   (274)   -    (7,079)   (0.2)   (437)   - 
                 
EARNINGS FROM OPERATIONS   56,991   4.7   52,271   4.9   161,825   4.6   139,991   4.7
                 
OTHER EXPENSE, NET   1,734   0.1   1,352   0.1   4,862   0.1   4,259   0.1
                 
EARNINGS BEFORE INCOME TAXES   55,257   4.6   50,919   4.8   156,963   4.5   135,732   4.6
                 
INCOME TAXES   13,189   1.1   16,250   1.5   36,183   1.0   44,855   1.5
                 
NET EARNINGS   42,068   3.5   34,669   3.3   120,780   3.4   90,877   3.1
                 
LESS NET EARNINGS ATTRIBUTABLE TO                
NONCONTROLLING INTEREST    (849)   (0.1)   (976)   (0.1)   (2,684)   (0.1)   (2,480)   (0.1)
                 
NET EARNINGS ATTRIBUTABLE TO                
CONTROLLING INTEREST $  41,219   3.4 $  33,693   3.2 $  118,096   3.4 $  88,397   3.0
                 
                 
EARNINGS PER SHARE - BASIC  $  0.67   $  0.55   $  1.91   $  1.44  
                 
EARNINGS PER SHARE - DILUTED $  0.66   $  0.55   $  1.91   $  1.44  
                 
COMPREHENSIVE INCOME   43,242     36,388     117,610     97,018  
                 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                
TO NONCONTROLLING INTEREST   (1,583)     (975)     (3,296)     (3,862)  
                 
COMPREHENSIVE INCOME                
ATTRIBUTABLE TO CONTROLLING INTEREST $  41,659   $  35,413   $  114,314   $  93,156  
                 
SUPPLEMENTAL SALES DATA                
  Quarter Period Year to Date
Market Classification 2018   2017 % 2018   2017 %
Retail $  443,044   $  391,043 13% $  1,359,498   $  1,161,662 17%
Industrial   429,467     374,018 15%   1,166,523     995,078 17%
Construction   361,179     308,585 17%   1,039,705     867,958 20%
Total Gross Sales   1,233,690     1,073,646 15%   3,565,726     3,024,698 18%
Sales Allowances   (20,988)     (17,060) -23%   (64,727)     (49,607) -30%
Total Net Sales $  1,212,702   $  1,056,586 15% $  3,500,999   $  2,975,091 18%
                 


 
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2018/2017
              
(In thousands)            
ASSETS 2018 2017 LIABILITIES AND EQUITY 2018 2017
              
CURRENT ASSETS     CURRENT LIABILITIES    
 Cash and cash equivalents $  26,327 $  22,044  Cash overdraft $  31,115 $  26,617
 Restricted cash   1,024   905  Accounts payable   175,912   171,774
 Investments   15,809   10,781  Accrued liabilities   151,102   138,364
 Accounts receivable   454,935   419,183  Current portion of debt   149   2,197
 Inventories   510,057   412,486        
 Other current assets   38,699   23,201        
              
TOTAL CURRENT ASSETS   1,046,851   888,600 TOTAL CURRENT LIABILITIES   358,278   338,952
              
OTHER ASSETS   22,345   17,515 LONG-TERM DEBT AND    
INTANGIBLE ASSETS, NET   261,666   255,330  CAPITAL LEASE OBLIGATIONS   186,539   145,884
PROPERTY, PLANT     OTHER LIABILITIES   40,630   51,638
 AND EQUIPMENT,  NET   346,309   325,109 EQUITY   1,091,724   950,080
              
              
TOTAL ASSETS $  1,677,171 $  1,486,554 TOTAL LIABILITIES AND EQUITY $  1,677,171 $  1,486,554
              


 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2018/2017
(In thousands) 2018 2017
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net earnings $  120,780 $  90,877
Adjustments to reconcile net earnings to net cash from operating activities:    
     
Depreciation   40,490   36,010
Amortization of intangibles   4,274   3,549
Expense associated with share-based and grant compensation arrangements   2,762   2,122
Deferred income taxes (credit)   (583)   117
Equity in earnings of investee   -   (25)
Net gain on disposition and impairment of assets   (7,079)   (437)
Changes in:    
Accounts receivable   (121,067)   (121,688)
Inventories   (39,448)   (820)
Accounts payable and cash overdraft   38,611   53,424
Accrued liabilities and other   21,361   34,221
NET CASH FROM OPERATING ACTIVITIES   60,101   97,350
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property, plant, and equipment   (74,541)   (57,189)
Proceeds from sale of property, plant and equipment   37,612   2,121
Acquisitions and purchase of noncontrolling interest, net of cash received   (38,963)   (59,859)
Purchases of investments   (12,401)   (12,155)
Proceeds from sale of investments   3,298   4,227
Other   (620)   1,480
NET CASH USED IN INVESTING ACTIVITIES   (85,615)   (121,375)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Borrowings under revolving credit facilities   636,798   610,038
Repayments under revolving credit facilities   (668,941)   (573,829)
Borrowings of debt   927   -
Repayments of debt   (5,511)   -
Issuance of long-term debt   75,000   -
Proceeds from issuance of common stock   756   476
Distributions to noncontrolling interest   (2,239)   (3,272)
Dividends paid to shareholders   (11,090)   (9,207)
Repurchase of common stock   (1,843)   (12,976)
Other   (55)   -
NET CASH FROM (USED IN) FINANCING ACTIVITIES   23,802   11,230
     
Effect of exchange rate changes on cash   247   1,255
NET CHANGE IN CASH AND CASH EQUIVALENTS   (1,465)   (11,540)
     
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   28,816   34,489
     
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $  27,351 $  22,949
     
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 $  26,327 $  22,044
Restricted cash, end of period   1,024   905
All cash and cash equivalents, end of period $  27,351 $  22,949
     


 
EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 2018/2017
  Quarter PeriodYear to Date
(In thousands) 2018 2017 2018 2017 
Net Earnings   42,068   34,669   120,780   90,877 
Interest  Expense   1,945   1,481   5,971   4,825 
Taxes   13,189   16,250   36,183   44,855 
Expense associated with Share-Based Compensation Arrangements   838   740   2,762   2,121 
Net Gain on Disposition and Impairment of Assets   (1,022)   (274)   (7,079)   (437) 
Depreciation Expense   14,346   12,762   40,490   36,010 
Amortization of Intangibles   1,572   1,172   4,274   3,549 
EBITDA   72,936   66,800   203,381   181,800 

AT THE COMPANY

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