- annual sales and profits also a record -

GRAND RAPIDS, Mich., Feb. 20, 2019 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq: UFPI) today announced record net sales for the fourth quarter of 2018, and record net sales and net earnings for fiscal 2018.  EBITDA for the fourth quarter and full year were also records, up more than 11 percent and 12 percent, respectively, over the previous year.

“I’m pleased that the people of Universal were able to manage through significant fluctuations in the lumber market in 2018 and still post these outstanding results,” stated CEO Matt Missad. “The results attest to the strength of the diverse markets we serve, which mitigates our lumber market risk. Our improved operating margins, while partly helped by declining lumber prices during the fourth quarter, reflect our improved product mix and operational efficiencies.”

“We’ll continue to work to increase shareholder value by reinvesting capital in acquisitions, automation and new product development,” added Matt. “We’ll also buy back shares when market conditions warrant it, as they did during the fourth quarter.”

The company purchased 804,185 shares during the fourth quarter at an average price of $28.30.

The company’s comparison of year-over-year, fourth-quarter net earnings were impacted by two atypical factors. A $1.9 million pre-tax unrealized loss ($0.02 per share after tax) was recorded in the fourth quarter of 2018 on the company’s investments in equity securities. This represents a change in accounting from previous years when unrealized gains and losses of this nature were recorded directly to equity. In addition, a $6.4 million tax benefit was recorded in the fourth quarter of 2017 to reduce the company’s net deferred tax liability due to the change in tax law. The benefit improved fourth-quarter 2017 earnings by $0.10 a share.

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

  • Operating profit was $45.4 million, up 9.5 percent
  • EBITDA of $63.6 million, up more than 11 percent
  • Net sales of $988.2 million represent a 2 percent increase
  • Unit sales accounted for 4 percent of the Company’s gross sales growth; acquisitions contributed 3 percent to unit growth while organic sales added 1 percent.  Falling lumber prices reduced gross sales by 3 percent
  • New product sales were $103 million, up 13 percent

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

  • Operating profit was $207.3 million, up 14.2 percent
  • EBITDA of $267 million, up 12 percent
  • Net sales of $4.49 billion, up 14 percent
  • Unit sales accounted for 7 percent of the Company’s gross sales growth (this includes 3 percent from acquired businesses); price increases accounted for 7 percent
  • Year-to-date new product sales were $513 million, up 21 percent

By market, the Company reported the following 2018 results.

Retail

  • Fourth Quarter: $303.4 million in gross sales, down 8 percent over the fourth quarter of 2017. Lower unit sales and lower selling prices each accounted for 4 percent of the decrease. Retail sales during this quarter did not have the same benefit from post-hurricane sales that the Company experienced in 2017 when total gross sales increased 20 percent.

  • Full Year: $1.66 billion in gross sales, up 11 percent over 2017, led by a 7 percent increase in selling prices and a 4 percent increase in unit sales. Acquisitions and organic growth each contributed 2 percent of the sales growth.

Industrial

  • Fourth Quarter: $390.5 million in gross sales, up 11 percent over the fourth quarter of 2017; unit sales growth accounted for 12 percent of gross sales, while falling prices reduced gross sales by 1 percent.

  • Full Year: $1.56 billion in gross sales, up 16 percent over the previous year. Unit sales increased 10 percent, of which 5 percent came from acquisitions and 5 percent from organic growth.

Construction

  • Fourth Quarter: $306.1 million in gross sales, up 1 percent over the fourth quarter of 2017, due to a 5 percent increase in unit sales and a 4 percent decrease in selling prices. Unit sales to commercial customers and residential customers rose 18 and 7 percent, respectively, while unit sales to manufactured housing customers fell 3 percent during the quarter. The decrease in manufactured housing sales is attributable to the high number of manufactured housing shipments recorded in 2017 due to hurricane damage in several Gulf Coast states.

  • Full Year: $1.35 billion in gross sales, up 15 percent over the previous year, driven by a 7 percent increase in unit sales and an 8 percent increase in prices. Residential unit sales grew 7 percent, commercial unit sales grew 14 percent and manufactured housing unit sales grew 4 percent. Acquisitions contributed 1 percent to overall growth.

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, February 21, 2019. 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 8194375. 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 March 21, 2019 at 855-859-2056, 404-537-3406 or 800-585-5367.

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 TWELVE MONTHS ENDED 
DECEMBER 2018/2017 
  Quarter Period   Year to Date   
(In thousands, except per share data) 2018   2017   2018   2017   
                  
                  
                  
NET SALES $   988,179 100%   966,091 100%   4,489,180 100%   3,941,182 100.0% 
                  
COST OF GOODS SOLD    850,536   86.1   836,932   86.6   3,896,286   86.8   3,398,356   86.2 
                  
GROSS PROFIT   137,643   13.9   129,159   13.4   592,894   13.2   542,826   13.8 
                  
SELLING,  GENERAL  AND                  
  ADMINISTRATIVE  EXPENSES   92,386   9.3   87,565   9.1   392,679   8.7   361,213   9.2 
FOREIGN CURRENCY EXCHANGE LOSS    (657)   (0.1)   (150)   -    (444)   -    1,007   -  
NET LOSS (GAIN) ON DISPOSITION AND IMPAIRMENT OF ASSETS   475   -    266   -    (6,604)   (0.1)   (863)   -  
                  
EARNINGS FROM OPERATIONS   45,439   4.6   41,478   4.3   207,263   4.6   181,469   4.6 
                  
OTHER EXPENSE, NET   4,548   0.5   1,203   0.1   9,410   0.2   5,462   0.1 
                  
EARNINGS BEFORE INCOME TAXES   40,891   4.1   40,275   4.2   197,853   4.4   176,007   4.5 
                  
INCOME TAXES   9,258   0.9   7,113   0.7   45,441   1.0   51,967   1.3 
                  
NET EARNINGS   31,633   3.2   33,162   3.4   152,412   3.4   124,040   3.1 
                  
LESS NET EARNINGS ATTRIBUTABLE TO                 
  NONCONTROLLING INTEREST    (1,131)   (0.1)   (2,047)   (0.2)   (3,814)   (0.1)   (4,528)   (0.1) 
                  
NET EARNINGS ATTRIBUTABLE TO                 
  CONTROLLING INTEREST $   30,502   3.1   31,115   3.2   148,598   3.3   119,512   3.0 
                  
                  
EARNINGS PER SHARE - BASIC  $   0.50     0.51     2.41     1.95   
                  
EARNINGS PER SHARE - DILUTED $   0.50     0.51     2.40     1.94   
                  
COMPREHENSIVE INCOME   29,726     33,152     147,336     130,170   
                  
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                 
  TO NONCONTROLLING INTEREST   (577)     (1,022)     (3,873)     (4,884)   
                  
COMPREHENSIVE INCOME                 
  ATTRIBUTABLE TO CONTROLLING INTEREST $   29,149     32,130     143,463     125,286   
                  
SUPPLEMENTAL SALES DATA                 
  Quarter Period Year to Date 
Market Classification 2018   2017 % 2018   2017 % 
Retail $   303,398     330,857 -8%   1,662,895     1,492,552 11% 
Industrial   390,488     352,489 11%   1,557,011     1,341,319 16% 
Construction   306,137     304,400 1%   1,345,843     1,172,332 15% 
Total Gross Sales   1,000,023     987,746 1%   4,565,749     4,006,203 14% 
Sales Allowances   (11,844)     (21,655) 45%   (76,569)     (65,021) -18% 
Total Net Sales $   988,179     966,091 2%   4,489,180     3,941,182 14% 
                  
                  

 

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) 
DECEMBER 2018/2017 
                
(In thousands)             
ASSETS 2018 2017 LIABILITIES AND EQUITY 2018 2017 
                
CURRENT ASSETS     CURRENT LIABILITIES     
 Cash and cash equivalents $   27,316 $   28,339  Cash overdraft $   27,367 $   25,851 
 Restricted cash   882   477  Accounts payable   136,901   140,106 
 Investments   14,755   11,269  Accrued liabilities   145,754   135,960 
 Accounts receivable   343,450   327,751  Current portion of debt   148   1,329 
 Inventories   556,220   460,308         
 Other current assets   52,655   35,343         
                
TOTAL CURRENT ASSETS   995,278   863,487 TOTAL CURRENT LIABILITIES   310,170   303,246 
                
OTHER ASSETS   24,597   17,592 LONG-TERM DEBT AND     
INTANGIBLE ASSETS, NET   272,963   254,969  CAPITAL LEASE OBLIGATIONS   202,130   144,674 
PROPERTY, PLANT     OTHER LIABILITIES   46,564   42,734 
 AND EQUIPMENT,  NET   354,710   328,629 EQUITY   1,088,684   974,023 
                
                
TOTAL ASSETS $   1,647,548 $   1,464,677 TOTAL LIABILITIES AND EQUITY $   1,647,548 $   1,464,677 
                
                

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) 
FOR THE TWELVE MONTHS ENDED 
DECEMBER 2018/2017 
(In thousands)   2018 2017 
CASH FLOWS FROM OPERATING ACTIVITIES:      
Net earnings   $   152,412 $   124,040 
Adjustments to reconcile net earnings to net cash from operating activities:     
         
   Depreciation     54,949   48,536 
   Amortization of intangibles    6,393   4,860 
   Expense associated with share-based and grant compensation arrangements   3,574   3,805 
   Deferred income taxes (credit)    857   (8,629) 
   Unrealized loss on investments and other    1,888   (25) 
   Net (gain) on disposition and impairment of assets    (6,604)   (863) 
   Changes in:       
     Accounts receivable    (8,512)   (30,787) 
     Inventories     (84,304)   (49,262) 
     Accounts payable and cash overdraft    (5,213)   21,159 
     Accrued liabilities and other    1,245   23,749 
       NET CASH FROM OPERATING ACTIVITIES    116,685   136,583 
         
CASH FLOWS FROM INVESTING ACTIVITIES:      
Purchases of property, plant, and equipment    (95,862)   (71,116) 
Proceeds from sale of property, plant and equipment    38,373   2,919 
Acquisitions and purchase of noncontrolling interest, net of cash received   (54,017)   (60,587) 
Purchases of investments    (13,338)   (13,518) 
Proceeds from sale of investments    3,678   5,103 
Other      (66)   (460) 
       NET CASH USED IN INVESTING ACTIVITIES    (121,232)   (137,659) 
         
CASH FLOWS FROM FINANCING ACTIVITIES:      
Borrowings under revolving credit facilities    732,370   758,287 
Repayments under revolving credit facilities    (748,496)   (722,725) 
Borrowings of debt     927   8,525 
Repayments of debt     (5,540)   (13,347) 
Issuance of long-term debt    75,000   - 
Proceeds from issuance of common stock    1,026   660 
Distributions to noncontrolling interest    (3,139)   (4,032) 
Dividends paid to shareholders    (22,072)   (19,607) 
Repurchase of common stock    (24,629)   (12,977) 
Other      (1,054)   (31) 
       NET CASH FROM (USED IN) FINANCING ACTIVITIES   4,393   (5,247) 
         
Effect of exchange rate changes on cash    (464)   650 
NET CHANGE IN CASH AND CASH EQUIVALENTS    (618)   (5,673) 
         
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   28,816   34,489 
         
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $   28,198 $   28,816 
         
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  $   27,316 $   28,339 
Restricted cash, end of period    882   477 
All cash and cash equivalents, end of period  $   28,198 $   28,816 
         
         

 

EBITDA RECONCILIATION (UNAUDITED) 
FOR THE THREE AND TWELVE MONTHS ENDED 
DECEMBER 2018/2017 
  Quarter PeriodYear to Date 
(In thousands) 2018201720182017 
Net earnings   31,633   33,162   152,412   124,040  
Interest  expense   2,921   1,393   8,893   6,218  
Taxes   9,258   7,113   45,441   51,967  
Expense associated with share-based compensation arrangements   813   1,497   3,574   3,618  
Net loss (gain) on disposition and impairment of assets   475   (70)   (6,604)   (863)  
Unrealized loss on investments   1,888   -   1,888   -  
Depreciation expense   14,459   12,881   54,949   48,536  
Amortization of intangibles   2,119   1,311   6,393   4,860  
EBITDA   63,566    57,287    266,946    238,376   
           

 

---------------AT THE COMPANY---------------

Brandon Froysland
Director of Finance
(616) 365-1589