- 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 Period | Year 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