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UFP Reports Record Fourth Quarter and Annual Results

GRAND RAPIDS, Mich., Feb. 22, 2017 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today announced record results in 2016, including record fourth-quarter net earnings attributable to controlling interest of $20.8 million, or $1.02 per diluted share, 9.8 percent higher than the fourth quarter of 2015. The Company also posted record annual net earnings attributable to controlling interest of $101.2 million, or $4.96 per diluted share, representing a 25.5 percent increase over 2015 annual net earnings attributable to controlling interest of $80.6 million, or $3.99 per diluted share. Fourth-quarter 2016 net sales of $859.6 million were up 31.5 percent over net sales for the same period of 2015. Annual net sales of $3.24 billion surpassed 2015 annual net sales of $2.89 billion by 12.2 percent and is a new record for the Company. Although acquisitions contributed to the records, most of the Company’s annual growth came from existing operations.

“The people who work for the companies of Universal are the best in the business, and they continue to prove it with record-breaking results,” said CEO Matthew J. Missad. “They continuously look for ways to create efficiencies, reduce manufacturing costs and grow sales by building and deepening customer relationships. They also have been bringing a number of exciting new, value-added products to the market. I couldn’t be more proud of them.”

New product sales grew 28.9 percent to $354.3 million in 2016, compared to $274.9 million in 2015.

Higher lumber prices contributed about 4 percent and 1 percent to the Company’s fourth-quarter and annual sales growth, respectively.

“Our results reflect the dedication of our employees and trust of our shareholders, and I want to thank them for their commitment to the Company,” added Missad. “We intend to continue to build on their trust with wise investments that will continue to grow our business in the future.”

By market, the Company posted the following 2016 gross sales results:

Retail

  • Fourth quarter: $275.7 million, up 19.4 percent over the fourth quarter of 2015
  • Year: $1.3 billion, up 13.7 percent over the previous year

The Company benefited from an 11 percent increase in fourth-quarter unit sales to the Retail market, led by a 25 percent increase in sales to big box customers. The increase in total unit sales is attributable to market share gains, new products and improved consumer demand. The Company continues to add new products, develop relationships with new customers, and increase share with existing customers.

Construction

  • Fourth quarter: $275.6 million, up 24.7 percent over the fourth quarter of 2015
  • Year: $1 billion, up 12.5 percent over the previous year

Overall, unit sales to the Construction market rose almost 20 percent in the fourth quarter, led by a strong gain of 30 percent to residential construction customers. According to the U.S. Census Bureau, housing starts during the period of September through November 2016 rose less than 1 percent over the same period last year. The Company remains focused on growing business selectively in areas where housing markets are the most stable.

Industrial

  • Fourth quarter: $318.6 million, up 52.2 percent over the fourth quarter of 2015
  • Year: $988.0 million, up 10.6 percent over the previous year

The Company’s growth in this market is primarily due to its acquisition of idX Corporation, which closed in September of 2016. Excluding acquisitions, the Company grew unit sales in this market by 11 percent in the fourth quarter by adding new customers and increasing share with existing customers. The Company plans to continue its efforts to focus on value-added products.

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 23, 2017. 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 pass code 40666839. 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 23, 2017, at 855-859-2056, 404-537-3406 or 800-585-5367.

UNIVERSAL FOREST PRODUCTS, INC.

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

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2016/2015
Quarter Period Year to Date
(In thousands, except per share data) 2016 2015 2016 2015
NET SALES $ 859,584 100% $ 653,600 100% $ 3,240,493 100% $ 2,887,071 100.0%
COST OF GOODS SOLD 737,274 85.8 556,427 85.1 2,765,903 85.4 2,487,167 86.1
GROSS PROFIT 122,310 14.2 97,173 14.9 474,590 14.6 399,904 13.9
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 87,000 10.1 66,282 10.1 310,152 9.6 264,437 9.2
EARNINGS FROM OPERATIONS 35,310 4.1 30,891 4.7 164,438 5.1 135,467 4.7
OTHER EXPENSE, NET 1,164 0.1 1,348 0.2 3,767 0.1 4,465 0.2
EARNINGS BEFORE INCOME TAXES 34,146 4.0 29,543 4.5 160,671 5.0 131,002 4.5
INCOME TAXES 11,905 1.4 8,982 1.4 55,174 1.7 45,870 1.6
NET EARNINGS 22,241 2.6 20,561 3.1 105,497 3.3 85,132 2.9
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST (1,491) (0.2) (1,660) (0.3) (4,318) (0.1) (4,537) (0.2)
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST $ 20,750 2.4 $ 18,901 2.9 $ 101,179 3.1 $ 80,595 2.8
EARNINGS PER SHARE - BASIC $ 1.02 $ 0.94 $ 4.97 $ 3.99
EARNINGS PER SHARE - DILUTED $ 1.02 $ 0.93 $ 4.96 $ 3.99
COMPREHENSIVE INCOME 21,058 17,510 102,794 77,875
LESS COMPREHENSIVE INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST (1,084) (5,362) (2,660) (3,213)
COMPREHENSIVE INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST $ 19,974 $ 12,148 $ 100,134 $ 74,662
SUPPLEMENTAL SALES DATA
Quarter Period Year to Date
Market Classification 2016 2015 % 2016 2015 %
Retail $ 275,669 $ 230,817 19% $ 1,292,892 $ 1,136,643 14%
Industrial 318,649 209,386 52% 988,040 893,149 11%
Construction 275,617 221,072 25% 1,009,317 897,301 12%
Total Gross Sales 869,935 661,275 32% 3,290,249 2,927,093 12%
Sales Allowances (10,351) (7,675) (49,756) (40,022)
Total Net Sales $ 859,584 $ 653,600 $ 3,240,493 $ 2,887,071

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
DECEMBER 2016/2015
(In thousands)
ASSETS 2016 2015 LIABILITIES AND EQUITY 2016 2015
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $ 34,091 $ 87,756 Cash overdraft $ 19,761 $ -
Restricted cash 398 586 Accounts payable 124,660 95,041
Investments 10,348 6,743 Accrued liabilities 124,722 107,989
Accounts receivable 282,253 222,964 Current portion of debt 2,634 1,145
Inventories 397,227 304,918
Other current assets 32,121 25,265
TOTAL CURRENT ASSETS 756,438 648,232 TOTAL CURRENT LIABILITIES 271,777 204,175
OTHER ASSETS 10,163 9,610 LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET 227,606 198,687 CAPITAL LEASE OBLIGATIONS 109,059 84,750
PROPERTY, PLANT OTHER LIABILITIES 50,756 52,345
AND EQUIPMENT, NET 297,851 251,150 EQUITY 860,466 766,409
TOTAL ASSETS $ 1,292,058 $ 1,107,679 TOTAL LIABILITIES AND EQUITY $ 1,292,058 $ 1,107,679

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2016/2015
(In thousands) 2016 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 105,497 $ 85,132
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation 40,823 37,710
Amortization of intangibles 2,795 3,531
Expense associated with share-based compensation arrangements 2,208 1,846
Excess tax benefits from share-based compensation arrangements - (33)
Expense associated with stock grant plans 127 109
Deferred income tax (credit) 2,464 (1,369)
Equity in earnings of investee (267) (374)
Net loss on disposition and impairment of assets - 172
Changes in:
Accounts receivable (5,119) (26,007)
Inventories (3,245) 34,139
Accounts payable and cash overdraft 11,259 4,798
Accrued liabilities and other 15,978 29,142
NET CASH FROM OPERATING ACTIVITIES 172,520 168,796
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (53,762) (43,522)
Proceeds from sale of property, plant and equipment 3,126 2,843
Acquisitions, net of cash received (80,077) (2,505)
Repayments of debt of acquiree (92,830) -
Purchases and dissolution of remaining noncontrolling interest in subsidiary (892) (1,256)
Advances of notes receivable (6,012) (6,994)
Collections of notes receivable 7,899 11,446
Purchases of investments (5,666) (7,858)
Proceeds from sale of investments 2,568 1,115
Cash restricted as to use 188 (181)
Other (2,011) 95
NET CASH USED IN INVESTING ACTIVITIES (227,469) (46,817)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities 131,002 297,711
Repayments under revolving credit facilities (107,294) (311,271)
Proceeds from issuance of common stock 536 1,074
Distributions to noncontrolling interest (3,280) (3,188)
Dividends paid to shareholders (17,680) (16,507)
Repurchase of common stock - (800)
Other (73) (21)
NET CASH FROM (USED IN) FINANCING ACTIVITIES 3,211 (33,002)
Effect of exchange rate changes on cash (1,927) (1,221)
NET CHANGE IN CASH AND CASH EQUIVALENTS (53,665) 87,756
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 87,756 -
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 34,091 $ 87,756

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

Source:Universal Forest Products, Inc.