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UFPI posts record second quarter results

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

The Company’s net sales rose 23 percent over the same quarter of 2016, led by double-digit gains in each of its markets. Net earnings were up slightly over 2016. Both results are records for the company.

“Many companies would be satisfied with our second-quarter performance. Not us,” said CEO Matt Missad. “We are excited about our sales growth, yet disappointed that we only had a modest growth in profits. We won’t make excuses and will aggressively pursue our goal to convert more of our sales revenue to earnings growth. I am confident that the great people of Universal will overcome challenges such as the lumber market volatility that occurred in the second quarter and continue to improve.”

“We are excited about the second half of 2017 and look forward to returning to more normal lumber market conditions as the details of the next Canadian softwood lumber agreement become known,” Matt added. “We expect to see the benefits of our investments in acquisitions, new product development and our international division. We also expect to see the benefits of our efforts to manage costs, as acquisitions such as idX Corp. continue to implement cost-saving synergies ahead of schedule.”

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

  • Net earnings attributable to controlling interest were $33.6 million, up 1 percent
  • Diluted earnings per share were $1.64
  • Net sales of $1,072.4 million represent a 23 percent increase
  • Unit sales accounted for 16 percent of the Company’s gross sales growth; higher lumber prices accounted for 7 percent
  • New product sales were $115.9 million, up from $97.8 million. The Company has introduced 23 new products in 2017 to date, including 11 during the second quarter.

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

Retail

$459.1 million, up 13 percent over the same period of 2016

Sales to the Retail market grew 13 percent, led by acquisitions, which contributed 8 percent of unit sales growth, while price increases accounted for 5 percent of sales growth.

The Company has benefited from new product sales and growth with independent and big box retailers, the latter of which have reported increases in comparable sales in their most recently reported quarters.

Construction

$295.2 million, up 17 percent over the same period of 2016

The 17 percent increase in Construction sales was led by sales to manufactured housing builders, which grew 24 percent, and residential builders, which grew 14 percent. Sales to commercial builders rose 10 percent. Overall, unit sales grew 9 percent, while prices increased 8 percent.

The Company has benefited from the increase in manufactured home production, which is up 18.5 percent for the year through April 2017, and from rising U.S. housing starts. The Company remains focused on growing business selectively in areas where housing markets are the most stable.

Industrial

$335.9 million, up 47 percent over the same period of 2016

The Company’s growth in this market is primarily due to its September 2016 acquisition of idX Corp. Excluding acquisitions, the Company grew unit sales in this market by 8 percent in the second quarter through market share gains and by adding new 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, July 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 84420896. 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 August 18, 2017, at any of the following numbers: (855) 859-2056, (404) 537-3406 or (800) 585-8367.

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 SIX MONTHS ENDED
JUNE 2017/2016
Quarter Period Year to Date
(In thousands, except per share data) 2017 2016 2017 2016
NET SALES $ 1,072,375 100% $ 872,093 100% $ 1,918,505 100% $ 1,554,244 100.0%
COST OF GOODS SOLD 924,135 86.2 740,606 84.9 1,649,526 86.0 1,320,018 84.9
GROSS PROFIT 148,240 13.8 131,487 15.1 268,979 14.0 234,226 15.1
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 94,341 8.8 77,822 8.9 181,259 9.4 148,651 9.6
EARNINGS FROM OPERATIONS 53,899 5.0 53,665 6.2 87,720 4.6 85,575 5.5
OTHER EXPENSE, NET 1,490 0.1 785 0.1 2,906 0.2 1,675 0.1
EARNINGS BEFORE INCOME TAXES 52,409 4.9 52,880 6.1 84,814 4.4 83,900 5.4
INCOME TAXES 17,835 1.7 18,643 2.1 28,605 1.5 29,407 1.9
NET EARNINGS 34,574 3.2 34,237 3.9 56,209 2.9 54,493 3.5
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST (932) (0.1) (839) (0.1) (1,505) (0.1) (1,882) (0.1)
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST $ 33,642 3.1 $ 33,398 3.8 $ 54,704 2.9 $ 52,611 3.4
EARNINGS PER SHARE - BASIC $ 1.64 $ 1.64 $ 2.67 $ 2.59
EARNINGS PER SHARE - DILUTED $ 1.64 $ 1.64 $ 2.66 $ 2.58
COMPREHENSIVE INCOME 35,961 33,430 60,631 54,128
LESS COMPREHENSIVE INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST (1,460) (235) (2,887) (1,081)
COMPREHENSIVE INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST $ 34,501 $ 33,195 $ 57,744 $ 53,047
SUPPLEMENTAL SALES DATA
Quarter Period Year to Date
Market Classification 2017 2016 % 2017 2016 %
Retail $ 459,140 $ 407,670 13% $ 770,891 $ 678,928 14%
Industrial 335,928 228,052 47% 613,170 429,701 43%
Construction 295,153 251,665 17% 562,969 472,622 19%
Total Gross Sales 1,090,221 887,387 23% 1,947,030 1,581,251 23%
Sales Allowances (17,846) (15,294) -17% (28,525) (27,007) -6%
Total Net Sales $ 1,072,375 $ 872,093 23% $ 1,918,505 $ 1,554,244 23%

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
JUNE 2017/2016
(In thousands)
ASSETS 2017 2016 LIABILITIES AND EQUITY 2017 2016
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $ 24,625 $ 87,517 Cash overdraft $ 22,769 $ -
Restricted cash & cash equivalents 905 909 Accounts payable 160,250 126,095
Investments 10,401 9,740 Accrued liabilities 126,210 111,995
Accounts receivable 398,529 318,505 Current portion of debt 2,378 1,093
Inventories 438,435 297,796
Other current assets 21,970 15,238
TOTAL CURRENT ASSETS 894,865 729,705 TOTAL CURRENT LIABILITIES 311,607 239,183
OTHER ASSETS 17,734 10,011 LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET 253,484 197,891 CAPITAL LEASE OBLIGATIONS 204,752 84,530
PROPERTY, PLANT OTHER LIABILITIES 49,319 51,158
AND EQUIPMENT, NET 315,956 256,899 EQUITY 916,361 819,635
TOTAL ASSETS $ 1,482,039 $ 1,194,506 TOTAL LIABILITIES AND EQUITY $ 1,482,039 $ 1,194,506

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2017/2016
(In thousands) 2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 56,209 $ 54,493
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation 23,248 19,178
Amortization of intangibles 2,377 1,285
Expense associated with share-based compensation arrangements 1,282 977
Expense associated with stock grant plans 99 70
Deferred income taxes 355 55
Equity in earnings of investee (26) (192)
Net gain on disposition and impairment of assets (328) 50
Changes in:
Accounts receivable (101,239) (95,198)
Inventories (26,979) 7,564
Accounts payable and cash overdraft 38,146 31,320
Accrued liabilities and other 22,067 20,439
NET CASH FROM OPERATING ACTIVITIES 15,211 40,041
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (34,549) (24,269)
Proceeds from sale of property, plant and equipment 1,039 309
Acquisitions and purchase of noncontrolling interest, net of cash received (59,658) (1,682)
Purchase of remaining noncontrolling interest of subsidiary - (1,100)
Cash contributed from noncontrolling interest 464 -
Advances of notes receivable (228) (2,946)
Collections of notes receivable and related interest 1,041 3,731
Purchases of investments (15,118) (3,571)
Proceeds from sale of investments 7,247 901
Other (125) (736)
NET CASH USED IN INVESTING ACTIVITIES (99,887) (29,363)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities 444,601 3,162
Repayments under revolving credit facilities (349,311) (3,210)
Proceeds from issuance of common stock 331 290
Distributions to noncontrolling interest (1,953) (8,529)
Dividends paid to shareholders (9,207) (1,731)
Repurchase of common stock (9,934) -
Other (6) (15)
NET CASH FROM (USED IN) FINANCING ACTIVITIES 74,521 (10,033)
Effect of exchange rate changes on cash 1,196 (561)
NET CHANGE IN CASH AND CASH EQUIVALENTS (8,959) 84
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 34,489 88,342
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $ 25,530 $ 88,426
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 $ 24,625 $ 87,517
Restricted cash, end of period 905 909
All cash and cash equivalents, end of period $ 25,530 $ 88,426

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

Source:Universal Forest Products, Inc.