GRAND RAPIDS, Mich., July 24, 2019 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq: UFPI) today announced net sales of $1.24 billion and net earnings attributable to controlling interests of $54.5 million, or 88 cents per diluted share, for the quarter ended June 29, 2019. Net earnings were the highest recorded at any time in the company’s history.

“The employees of Universal continue to do a great job growing unit sales, improving our company’s gross profit per unit, and generating robust cash flow despite pressures from rising labor costs and significant fluctuations in the lumber market,” said CEO Matthew J. Missad. “Our strong results are evidence that we are pursuing the right strategies to make our business more efficient and grow through new, value-added products.”

The company’s mix of value-added sales relative to commodity sales improved from 60 percent in the second quarter of 2018 to 67 percent in the second quarter of 2019, and new product sales grew 18 percent over the same period of 2018. Although significantly lower lumber pricing affected the company’s second-quarter net sales, unit sales increased 5 percent over the same period of last year, driven mostly by organic sales growth.

“I am pleased we experienced such strong growth with new products in our retail and industrial markets,” added Missad. “We will continue to closely manage our SG&A expenses, including those needed to grow our value-added products, so that we can better leverage these expenses as we grow revenue.”

Second Quarter 2019 Highlights (comparisons on a year-over-year basis):

  • Operating profit of $74.2 million was up 22 percent and net earnings of $54.5 million was up 24 percent
  • EBITDA of $90.8 million was up 18 percent
  • Net sales of $1.24 billion represented a 4 percent decrease; lower lumber prices contributed significantly to the gross sales reduction as selling prices were down by 9 percent.
  • Unit sales grew 5 percent; organic sales accounted for 4 percent of the growth while acquisitions added 1 percent.  
  • New product sales were $175.3 million, up 18 percent
  • Core SG&A as a percentage of gross profit fell from 54.4 percent in the second quarter of 2018 to 50.7 percent during the same period in 2019.

By market, the Company reported the following second-quarter results.

Retail

  • $521 million in gross sales, down 4 percent compared to the second quarter of 2018. A unit sales increase of 6 percent was offset by selling prices that were 10 percent lower. Organic growth was responsible for all of the unit sales increase and was largely driven by sales of Deckorators decking and deck accessories.

Industrial

  • $357.3 million in gross sales, up 3 percent over the second quarter of 2018. A unit sales increase of 7 percent was offset by lower selling prices of 4 percent. Acquisitions contributed 6 percent of the unit sales increase; organic growth was responsible for 1 percent.

Construction

  • $386.2 million in gross sales, down 10 percent compared to the second quarter of 2018, due to a 14 percent decrease in selling prices and a 4 percent increase in overall unit sales. Unit sales growth was entirely organic, with commercial and residential housing customers each growing at 5 percent and manufactured housing customers growing at 1 percent.

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 25, 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. Analysts and institutional investors should use conference pass code 1794208. The conference call will be available simultaneously and in its entirety to all interested investors, news media and Universal employees through a webcast at http://www.ufpi.com. A replay of the call will be available through August 25, 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.

Brandon Froysland
Director of Finance
(616) 365-1589


 
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2019/2018
             
(In thousands)           
ASSETS 2019 2018 LIABILITIES AND EQUITY 2019 2018
             
CURRENT ASSETS     CURRENT LIABILITIES    
 Cash and cash equivalents $  20,497 $  27,501  Cash overdraft $  24,972 $  33,608
 Restricted cash   1,024   14,493  Accounts payable   189,649   197,408
 Investments   16,776   16,758  Accrued liabilities   164,812   138,809
 Accounts receivable   483,263   489,145  Current portion of debt   173   542
 Inventories   528,680   531,874       
 Other current assets   46,868   32,860       
             
TOTAL CURRENT ASSETS   1,097,108   1,112,631 TOTAL CURRENT LIABILITIES   379,606   370,367
             
OTHER ASSETS   111,175   20,266 LONG-TERM DEBT AND    
INTANGIBLE ASSETS, NET   273,804   263,024  CAPITAL LEASE OBLIGATIONS   187,471   276,274
PROPERTY, PLANT     OTHER LIABILITIES   100,349   42,255
 AND EQUIPMENT,  NET   368,572   340,698 EQUITY   1,183,233   1,047,723
             
             
TOTAL ASSETS $  1,850,659 $  1,736,619 TOTAL LIABILITIES AND EQUITY $  1,850,659 $  1,736,619
             

 

 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2019/2018
(In thousands) 2019  2018
CASH FLOWS FROM OPERATING ACTIVITIES:     
Net earnings $  91,147  $  78,714 
Adjustments to reconcile net earnings to net cash from operating activities:     
      
Depreciation   29,200     26,144 
Amortization of intangibles   2,946     2,702 
Expense associated with share-based and grant compensation arrangements   2,209     1,924 
Deferred income taxes credit    (536)    (565)
Unrealized gain on investment    (1,518)    - 
Net gain on disposition of assets    (321)    (6,057)
Changes in:     
Accounts receivable    (139,468)    (155,666)
Inventories   28,008     (61,828)
Accounts payable and cash overdraft   49,947     62,665 
Accrued liabilities and other   9,334     15,895 
NET CASH FROM (USED IN) OPERATING ACTIVITIES   70,948     (36,072)
      
CASH FLOWS FROM INVESTING ACTIVITIES:     
Purchases of property, plant, and equipment    (42,477)    (54,313)
Proceeds from sale of property, plant and equipment   977     36,724 
Acquisitions and purchase of noncontrolling interest, net of cash received    (5,034)    (37,960)
Purchases of investments    (4,859)    (9,348)
Proceeds from sale of investments   3,667     3,180 
Other    (10)    (1,352)
NET CASH USED IN INVESTING ACTIVITIES    (47,736)    (63,069)
      
CASH FLOWS FROM FINANCING ACTIVITIES:     
Borrowings under revolving credit facilities   393,434     488,853 
Repayments under revolving credit facilities    (408,027)    (431,657)
Borrowings of debt   -     1,639 
Repayments of debt    (3,061)    (5,437)
Issuance of long-term debt   -     75,000 
Proceeds from issuance of common stock   542     500 
Distributions to noncontrolling interest    (900)    (1,078)
Dividends paid to shareholders    (12,271)    (11,090)
Repurchase of common stock   -     (1,819)
Other   28     (71)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES    (30,255)    114,840 
      
Effect of exchange rate changes on cash   366     (256)
NET CHANGE IN CASH AND CASH EQUIVALENTS    (6,677)    15,443 
      
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   28,198     28,816 
      
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $  21,521  $  44,259 
      
Reconciliation of cash and cash equivalents and restricted cash:     
Cash and cash equivalents, beginning of period $  27,316  $  28,339 
Restricted cash, beginning of period   882     477 
All cash and cash equivalents, beginning of period $  28,198  $  28,816 
      
Cash and cash equivalents, end of period $  20,497  $  27,501 
Restricted cash, end of period   1,024     16,758 
All cash and cash equivalents, end of period $  21,521  $  44,259 
      


 
EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 2019/2018
  Quarter PeriodYear to Date
(In thousands) 2019201820192018
Net earnings   55,145   45,130   91,147   78,714 
Interest  expense   2,407   2,248   4,867   4,025 
Interest and investment income   (682)   (181)   (2,275)   (898) 
Net gain on disposition of assets   (199)   477   (321)   (6,057) 
Income taxes   17,367   13,420   28,944   22,994 
Expense associated with share-based compensation arrangements   922   831   2,209   1,924 
Depreciation expense   14,725   13,432   29,200   26,144 
Amortization of intangibles   1,094   1,474   2,946   2,702 
EBITDA   90,779   76,831   156,717   129,548 
          


 
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AS A PERCENTAGE OF SALES 
CURRENT YEAR'S SALES STATED AT LAST YEAR'S SELLING PRICES (UNAUDITED)
FOR THE THREE MONTHS ENDED - JUNE 2019/2018
 Quarter Period
 ActualSales Adjusted to Last Year's Selling PriceActual
  2019  2019  2018 
          
NET SALES   100.0 %    100.0 %    100.0%
COST OF GOODS SOLD    84.9    86.2    87.2 
GROSS PROFIT   15.1    13.8    12.8 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   9.1    8.3    8.1 
NET GAIN ON DISPOSITION OF ASSETS   -     -     -  
EARNINGS FROM OPERATIONS   6.0    5.5    4.7 
OTHER EXPENSE, NET   0.1    0.1    0.2 
EARNINGS BEFORE INCOME TAXES   5.8    5.3    4.5 
INCOME TAXES   1.4    1.3    1.0 
NET EARNINGS   4.4    4.1    3.5 
LESS NET EARNINGS ATTRIBUTABLE TO         
NONCONTROLLING INTEREST    (0.1)    -     (0.1) 
NET EARNINGS ATTRIBUTABLE TO         
CONTROLLING INTEREST   4.4 %    4.0 %    3.4 % 
          
Note: Actual percentages are calculated and may not sum to total due to rounding.         
          
          
2018 NET SALES $   1,294,440       
2019 SELL PRICE DECLINE   9.00 %       
DECREASE IN 2019 NET SALES DUE TO SELL PRICE DECLINE $   116,500       
ACTUAL 2019 NET SALES   1,239,817       
ADJUSTED 2019 NET SALES $   1,356,317       
          
ACTUAL 2019 COST OF GOODS SOLD $   1,053,091       
PLUS DIFFERENCE IN NET SALES (ABOVE)   116,500       
ADJUSTED 2019 COST OF GOODS SOLD $   1,169,591