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UFPI posts record first-quarter earnings and sales

GRAND RAPIDS, Mich., April 18, 2017 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today reported financial results for the first quarter ended April 1, 2017.

“The employees of Universal delivered record first-quarter sales and profits, underscoring the success of our balanced business model and targeted approach to growing our business,” said CEO Matthew J. Missad. “Those records are even more impressive if you consider we did not have the same purchasing and weather advantages we enjoyed during the first quarter of 2016.”

The Company’s retail and construction markets had net sales increases of 15 and 21 percent, respectively. The industrial market grew 37 percent, largely because of the September 2016 acquisition of idX Corp.

“While we are pleased with these results, we see opportunities to do much more. We’re focused on a number of opportunities to grow sales and create efficiencies among our recent acquisitions that we expect will benefit us in 2017 and beyond.”

First Quarter 2017 Highlights (comparisons on a year-over-year basis):

  • Net earnings attributable to controlling interest were $21.1 million, up 10 percent
  • Diluted earnings per share were $1.03, up from $0.95
  • Net sales of $846.1 million represent a 24 percent increase over net sales of $682.2 million
  • Unit sales contributed to 17 percent of gross sales growth; higher lumber prices contributed 6 percent
  • New product sales were $74.6 million, up from $64.7 million

The Company’s earnings growth fell short of its unit sales growth in the first quarter of 2017 due to a number of common business factors that impacted several operations. They include the loss in 2017 of inventory cost advantages that the Company realized the previous year in the industrial market, inclement weather in many areas of the country and the cost of start-up operations.

By market, the Company posted the following first quarter 2017 gross sales results:

Retail

$311.8 million, up 15 percent over the same period of 2016

Sales to the retail market grew 15 percent due to a 6 percent increase in selling prices and a 9 percent increase in unit sales, led by a 19 percent increase in sales to big box customers. Net of acquisitions, unit sales grew 2 percent.

Construction

$267.8 million, up 21 percent over the same period of 2016

Unit sales to the construction market rose 13 percent in the first quarter, led by gains of 16 percent to residential construction customers and 14 percent to manufactured housing customers. The Company remains focused on growing business selectively in areas where housing markets are the most stable.

Industrial

$277.2 million, up 37 percent over the same period of 2016

The Company’s growth in this market is primarily due to its acquisition of idX Corp., which closed in September of 2016. Excluding acquisitions, the Company grew unit sales in this market by 4 percent in the first quarter over the first quarter of 2016. The growth was generated both by adding new customers and by increasing the number of affiliates that serve large customers.

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, April 19, 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 ID 83487335. 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 May 19, 2017, at any of the following numbers: (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.

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 2017/2016
Quarter Period Year to Date
(In thousands, except per share data) 2017 2016 2017 2016
NET SALES $846,130 100% $682,151 100% $846,130 100% $682,151 100.0%
COST OF GOODS SOLD 725,390 85.7 579,412 84.9 725,390 85.7 579,412 84.9
GROSS PROFIT 120,740 14.3 102,739 15.1 120,740 14.3 102,739 15.1
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 86,919 10.3 70,828 10.4 86,919 10.3 70,828 10.4
EARNINGS FROM OPERATIONS 33,821 4.0 31,911 4.7 33,821 4.0 31,911 4.7
OTHER EXPENSE, NET 1,417 0.2 891 0.1 1,417 0.2 891 0.1
EARNINGS BEFORE INCOME TAXES 32,404 3.8 31,020 4.5 32,404 3.8 31,020 4.5
INCOME TAXES 10,770 1.3 10,765 1.6 10,770 1.3 10,765 1.6
NET EARNINGS 21,634 2.6 20,255 3.0 21,634 2.6 20,255 3.0
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST (572) (0.1) (1,043) (0.2) (572) (0.1) (1,043) (0.2)
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST $21,062 2.5 $19,212 2.8 $21,062 2.5 $19,212 2.8
EARNINGS PER SHARE - BASIC $1.03 $0.95 $1.03 $0.95
EARNINGS PER SHARE - DILUTED $1.03 $0.95 $1.03 $0.95
COMPREHENSIVE INCOME 24,669 20,697 24,669 20,697
LESS COMPREHENSIVE INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST (1,427) (846) (1,427) (846)
COMPREHENSIVE INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST $23,242 $19,851 $23,242 $19,851
SUPPLEMENTAL SALES DATA
Quarter Period Year to Date
Market Classification 2017 2016 % 2017 2016 %
Retail $311,750 $271,258 15% $311,750 $271,258 15%
Industrial 277,242 201,649 37% 277,242 201,649 37%
Construction 267,817 220,957 21% 267,817 220,957 21%
Total Gross Sales 856,809 693,864 23% 856,809 693,864 23%
Sales Allowances (10,679) (11,713) 9% (10,679) (11,713) 9%
Total Net Sales $846,130 $682,151 24% $846,130 $682,151 24%

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 2017/2016
(In thousands)
ASSETS 2017 2016 LIABILITIES AND EQUITY 2017 2016
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $31,020 $43,065 Cash overdraft $21,566 $-
Restricted cash & cash equivalents 4,709 1,139 Accounts payable 156,030 116,525
Investments 5,928 6,737 Accrued liabilities 97,965 97,910
Accounts receivable 365,620 287,374 Current portion of debt 2,280 886
Inventories 472,016 327,177
Other current assets 23,820 16,889
TOTAL CURRENT ASSETS 903,113 682,381 TOTAL CURRENT LIABILITIES 277,841 215,321
OTHER ASSETS 14,533 10,424 LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET 250,160 198,338 CAPITAL LEASE OBLIGATIONS 252,904 84,525
PROPERTY, PLANT OTHER LIABILITIES 49,561 51,003
AND EQUIPMENT, NET 309,853 254,634 EQUITY 897,353 794,928
TOTAL ASSETS $1,477,659 $1,145,777 TOTAL LIABILITIES AND EQUITY $1,477,659 $1,145,777

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 2017/2016
(In thousands) 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $21,634 $20,255
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation 11,392 9,492
Amortization of intangibles 1,119 693
Expense associated with share-based compensation arrangements 571 432
Expense associated with stock grant plans 46 37
Deferred income taxes (credit) 224 (156)
Equity in earnings of investee (5) (81)
Net gain on disposition and impairment of assets (64) (10)
Changes in:
Accounts receivable (67,766) (64,276)
Inventories (60,984) (22,159)
Accounts payable and cash overdraft 32,769 21,498
Accrued liabilities and other (9,676) 4,318
NET CASH FROM OPERATING ACTIVITIES (70,740) (29,957)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (16,531) (12,941)
Proceeds from sale of property, plant and equipment 353 132
Acquisitions and purchase of noncontrolling interest, net of cash received (55,441) -
Cash contributed from noncontrolling interest 464 -
Advances of notes receivable (228) (1,259)
Collections of notes receivable and related interest 721 1,408
Purchases of investments (819) -
Proceeds from sale of investments 1,204 -
Other (322) (173)
NET CASH USED IN INVESTING ACTIVITIES (70,599) (12,833)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities 281,090 1,235
Repayments under revolving credit facilities (137,767) (1,495)
Proceeds from issuance of common stock 146 130
Distributions to noncontrolling interest (1,673) (1,170)
Repurchase of common stock (83) -
Other (16) (5)
NET CASH FROM (USED IN) FINANCING ACTIVITIES 141,697 (1,305)
Effect of exchange rate changes on cash 882 (43)
NET CHANGE IN CASH AND CASH EQUIVALENTS 1,240 (44,138)
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 34,489 88,342
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $35,729 $44,204
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period $34,091 $87,756
Restricted cash, beginning of period 398 586
All cash and cash equivalents, beginning of period $34,489 $88,342
Cash and cash equivalents, end of period $31,020 $43,065
Restricted cash, end of period 4,709 1,139
All cash and cash equivalents, end of period $35,729 $44,204


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

Source:Universal Forest Products, Inc.