UFPI Reports Q3 Record Results: Net Earnings of $27.8 Million; Net Sales of $826.7 Million

GRAND RAPIDS, Mich., Oct. 18, 2016 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today announced recording-breaking 2016 third-quarter results, including net earnings attributable to controlling interests of $27.8 million, an increase of 8.9 percent over the same period of 2015. Year-to-date net earnings attributable to controlling interests were $80.4 million, up 30 percent over 2015. Earnings per diluted share were $1.36 in the third quarter of 2016, up from $1.26 in the third quarter of 2015. Net sales of $826.7 million – also a record for the third quarter – were up 8.4 percent over the same period of 2015.

“The employees of Universal are working hard to top the records they achieved during the last half of 2015, and we are pleased once again to report record results and growth,” said CEO Matthew J. Missad. “We grew sales significantly in two key markets and continue to increase our sales of new products.” Year-to-date new product sales were $247.9 million, a 16 percent increase over the $213.3 million reported for the same period of last year.

“We are continuing to make investments in our business and people to promote and enhance our continued success,” Missad noted. “We have added staff and are investing in their training to support our growth. We also are investing in several significant initiatives, including new international and e-commerce groups, and a research and design center, all of which we believe will contribute to our success in 2017 and beyond.”

Missad added that the Company continues to look for strategic acquisitions. Its purchase of idX Corp. closed near the end of the third quarter. idX is an international provider of highly customized merchandising solutions. Based in St. Louis, Mo., it has a network of more than 20 facilities across North America, Europe and Asia. Its sales in 2015 were approximately $303 million.

By market, the Company posted the following net sales results:

Retail: $339.7 million, up 15 percent over the third quarter of 2015

The Company benefited from a 9 percent increase in unit sales as well as rising lumber prices. Year-to-date retail unit sales are up 10 percent. During the third quarter, sales to big-box retailers increased 20 percent and sales to other retailers increased 8 percent, in part because of market-share gains and increasing sales of new products. Our retail customers have benefited from improving U.S. consumer demand, as evidenced by the healthy gains in same-store sales they reported in their most recent quarters.

Construction: $265.6 million, up 10 percent over the same period of 2015

Overall, unit sales in the construction market were up 6 percent over the same period of 2015, led by strong unit sales gains of 9 percent in residential construction. According to the U.S. Census Bureau, housing starts increased approximately 2.4 percent from June through August 2016 compared to the same period of 2015. The Company continues to focus its residential construction efforts in geographic areas of anticipated stable growth and recently added capacity in these markets.

Industrial: $233.8 million, down 1 percent from the third quarter of 2015

The Company has maintained its share of the industrial market but experienced a modest decrease in sales because of the softening U.S. economy, a decrease in U.S. exports, and its efforts to be more selective by focusing on higher-margin, value-added business.

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 19, 2016. 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 (888) 685-5759 and internationally at (503) 343-6031. Use conference ID 68009457. 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 19, 2016, at any of the following numbers: (855) 859-2056 or (404) 537-3406 or (800) 585-8367.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company that provides capital, management and administrative resources to subsidiaries in 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.

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2016/2015
Quarter Period Year to Date
(In thousands, except per share data) 2016 2015 2016 2015
NET SALES $826,665 100% $762,275 100% $2,380,909 100% $2,233,470 100.0%
COST OF GOODS SOLD 708,611 85.7 651,569 85.5 2,028,629 85.2 1,930,739 86.4
GROSS PROFIT 118,054 14.3 110,706 14.5 352,280 14.8 302,731 13.6
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 74,457 9.0 67,951 8.9 223,059 9.4 198,087 8.9
NET (GAIN) LOSS ON DISPOSITION AND
IMPAIRMENT OF ASSETS 45 - 230 - 94 - 68 -
EARNINGS FROM OPERATIONS 43,552 5.3 42,525 5.6 129,127 5.4 104,576 4.7
OTHER EXPENSE, NET 927 0.1 924 0.1 2,602 0.1 3,118 0.1
EARNINGS BEFORE INCOME TAXES 42,625 5.2 41,601 5.5 126,525 5.3 101,458 4.5
INCOME TAXES 13,861 1.7 14,718 1.9 43,268 1.8 36,887 1.7
NET EARNINGS 28,764 3.5 26,883 3.5 83,257 3.5 64,571 2.9
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST (945) (0.1) (1,327) (0.2) (2,828) (0.1) (2,876) (0.1)
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST $27,819 3.4 $25,556 3.4 $80,429 3.4 $61,695 2.8
EARNINGS PER SHARE - BASIC $1.36 $1.26 $3.95 $3.06
EARNINGS PER SHARE - DILUTED $1.36 $1.26 $3.94 $3.06
COMPREHENSIVE INCOME 27,608 24,305 81,736 60,365
LESS COMPREHENSIVE INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST (495) (445) (1,576) (1,578)
COMPREHENSIVE INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST $27,113 $23,860 $80,160 $58,787
SUPPLEMENTAL SALES DATA
Quarter Period Year to Date
Market Classification 2016
2015
% 2016
2015
%
Retail $339,744 $296,022 15% $1,017,225 $905,826 12%
Industrial 233,757 235,376 -1% 669,389 683,763 -2%
Construction 265,563 241,810 10% 733,700 676,228 8%
Total Gross Sales 839,064 773,208 9% 2,420,314 2,265,817 7%
Sales Allowances (12,399) (10,933) (39,405) (32,347)
Total Net Sales $826,665 $762,275 $2,380,909 $2,233,470

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2016/2015
(In thousands)
ASSETS
2016

2015
LIABILITIES AND EQUITY
2016

2015
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $36,683 $55,373 Cash overdraft $13,940 $-
Restricted cash 909 1,139 Accounts payable 137,979 101,117
Investments 10,453 5,955 Accrued liabilities 156,653 112,350
Accounts receivable 343,771 273,737 Current portion of debt 1,584 834
Inventories 369,928 288,209
Other current assets 29,043 23,112
TOTAL CURRENT ASSETS 790,787 647,525 TOTAL CURRENT LIABILITIES 310,156 214,301
OTHER ASSETS 11,173 8,934 LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET 224,186 200,929 CAPITAL LEASE OBLIGATIONS 110,362 84,722
PROPERTY, PLANT OTHER LIABILITIES 43,029 56,757
AND EQUIPMENT, NET 284,491 254,530 EQUITY 847,090 756,138
TOTAL ASSETS $1,310,637 $1,111,918 TOTAL LIABILITIES AND EQUITY $1,310,637 $1,111,918

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2016/2015
(In thousands)
2016

2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $83,257 $64,571
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation 29,014 28,013
Amortization of intangibles 1,868 2,730
Expense associated with share-based compensation arrangements 1,568 1,351
Excess tax benefits from share-based compensation arrangements - (33)
Expense associated with stock grant plans 105 85
Deferred income tax (53) (269)
Equity in earnings of investee (241) (283)
Net loss on disposition and impairment of assets 94 68
Changes in:
Accounts receivable (69,357) (76,723)
Inventories 21,683 51,068
Accounts payable and cash overdraft 35,026 10,864
Accrued liabilities and other 33,413 39,967
NET CASH FROM OPERATING ACTIVITIES 136,377 121,409
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (35,723) (36,520)
Proceeds from sale of property, plant and equipment 516 2,382
Acquisitions, net of cash received (66,615) (2,584)
Repayments of debt of acquiree (92,830) -
Purchases of noncontrolling interest (1,100) (1,256)
Advances of notes receivable (5,400) (4,403)
Collections of notes receivable and related interest 5,819 8,784
Purchases of investments (4,468) (5,955)
Proceeds from sale of investments 1,395 -
Cash restricted as to use (323) (734)
Other, net (1,733) 180
NET CASH USED IN INVESTING ACTIVITIES (200,462) (40,106)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities 52,479 297,354
Repayments under revolving credit facilities (27,177) (311,253)
Proceeds from issuance of common stock 396 960
Distributions to noncontrolling interest (3,160) (3,159)
Dividends paid to shareholders (8,529) (8,050)
Repurchase of common stock - (800)
Other, net (28) 22
NET CASH FROM (USED IN) FINANCING ACTIVITIES 13,981 (24,926)
Effect of exchange rate changes on cash (969) (1,004)
NET CHANGE IN CASH AND CASH EQUIVALENTS (51,073) 55,373
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 87,756 -
CASH AND CASH EQUIVALENTS, END OF PERIOD $36,683 $55,373

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

Source:Universal Forest Products, Inc.