UFPI posts record third quarter results

GRAND RAPIDS, Mich., Oct. 17, 2017 (GLOBE NEWSWIRE) — Universal Forest Products, Inc. (Nasdaq:UFPI) today reported record financial results for the third quarter ended September 30, 2017.

The Company’s net sales rose 28 percent over the same quarter of 2016, led by double-digit gains in each of its markets.  Net earnings rose 21 percent over 2016.  Both results beat the records set in the third quarter of 2016.

“These results underscore the strength of our balanced business model, which allows us to withstand adversity in one market or region and still grow sales and profitability,” said CEO Matt Missad. “Hurricanes Harvey, Irma and Maria created difficult conditions for some of our employees and operations in Texas, Florida and Puerto Rico and contributed to more lumber market volatility in September, impacting margins. Despite these challenges, our business performed exceptionally well, and I want to thank the hard working employees of the companies of Universal for their efforts.  We feel confident in our ability to continue to execute our strategic initiatives and deliver strong results.”

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

  • Net earnings attributable to controlling interest were $33.7 million, up 21 percent
  • Diluted earnings per share were $1.64, an increase of 21 percent
  • Net sales of $1,056.6 million represent a 28 percent increase
  • Unit sales accounted for 22 percent of the Company’s gross sales growth (this includes 15 percent from acquired businesses); price increases, primarily due to the commodity lumber market, accounted for 6 percent
  • New product sales of $107.7 million increased by 21.7 percent and represented 10.2 percent of total Company net sales. The Company has introduced 35 new products in 2017 to date, including 12 during the third quarter.

By market, the Company reported the following third-quarter 2017 gross sales results:

Retail

$391.9 million, up 16 percent over the same period of 2016

The 16 percent increase in sales to the Retail market is the result of a 7 percent increase from acquisitions, a 5 percent increase from organic growth and a 4 percent increase in prices.

The Company benefited from a sales increase of 20 percent and 13 percent to independent and big box retailers, respectively, in the third quarter when compared to the same period of 2016.

Construction

$310.0 million, up 16 percent over the same period of 2016

The 16 percent increase in Construction sales was due to an 8 percent increase in unit sales and an 8 percent increase in prices. The increase in unit sales was led by a 12 percent increase to manufactured housing builders and an 8 percent increase to residential builders.

Industrial

$369.5 million, up 59 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 sales in this market by 16 percent in the third quarter: 11 percent through organic growth and 5 percent through price increases. The organic growth was primarily the result of new customer acquisitions and share gains with existing 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, October 18, 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 (866) 518-4547 and internationally at (213) 660-0879. Use conference ID 81854743. 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 17, 2017, at the following numbers: (855) 859-2056 or (404) 537-3406.

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 NINE MONTHS ENDED  
SEPTEMBER 2017/2016  
    Quarter Period       Year to Date      
(In thousands, except per share data)     2017           2016           2017           2016        
                                   
                                   
                                   
NET SALES   $   1,056,586     100 %   $   826,665     100 %   $   2,975,091     100 %   $   2,380,909     100.0 %  
                                   
COST OF GOODS SOLD        911,899       86.3         708,611       85.7         2,561,424       86.1         2,028,629       85.2    
                                   
GROSS PROFIT       144,687       13.7         118,054       14.3         413,667       13.9         352,280       14.8    
                                   
SELLING,  GENERAL  AND                                   
  ADMINISTRATIVE  EXPENSES       92,416       8.7         74,502       9.0         273,676       9.2         223,153       9.4    
                                   
EARNINGS FROM OPERATIONS       52,271       4.9         43,552       5.3         139,991       4.7         129,127       5.4    
                                   
OTHER EXPENSE, NET       1,352       0.1         927       0.1         4,259       0.1         2,602       0.1    
                                   
EARNINGS BEFORE INCOME TAXES       50,919       4.8         42,625       5.2         135,732       4.6         126,525       5.3    
                                   
INCOME TAXES       16,250       1.5         13,861       1.7         44,855       1.5         43,268       1.8    
                                   
NET EARNINGS       34,669       3.3         28,764       3.5         90,877       3.1         83,257       3.5    
                                   
LESS NET EARNINGS ATTRIBUTABLE TO                                  
   NONCONTROLLING INTEREST        (976 )   (0.1 )      (945 )   (0.1 )     (2,480 )   (0.1 )       (2,828 )     (0.1 )  
                                   
NET EARNINGS ATTRIBUTABLE TO                                  
  CONTROLLING INTEREST   $   33,693       3.2     $   27,819       3.4     $   88,397       3.0     $   80,429       3.4    
                                   
                                   
EARNINGS PER SHARE – BASIC    $   1.65         $   1.36         $   4.32         $   3.95        
                                   
EARNINGS PER SHARE – DILUTED   $   1.64         $   1.36         $   4.31         $   3.94        
                                   
COMPREHENSIVE INCOME       36,388             27,608             97,018             81,736        
                                   
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                                  
  TO NONCONTROLLING INTEREST       (975 )           (495 )           (3,862 )           (1,576 )      
                                   
COMPREHENSIVE INCOME                                  
  ATTRIBUTABLE TO CONTROLLING INTEREST   $   35,413         $   27,113         $   93,156         $   80,160        
                                   
SUPPLEMENTAL SALES DATA                                  
    Quarter Period   Year to Date  
Market Classification     2017           2016     %     2017           2016     %  
Retail   $   391,895         $   339,275     16 %   $   1,162,785         $   1,018,203     14 %  
Industrial       369,506             232,017     59 %       982,675             661,718     49 %  
Construction       310,026             267,772     16 %       872,997             740,393     18 %  
Total Gross Sales       1,071,427             839,064     28 %       3,018,457             2,420,314     25 %  
Sales Allowances       (14,841 )           (12,399 )   -20 %       (43,366 )           (39,405 )   -10 %  
Total Net Sales   $   1,056,586         $   826,665     28 %   $   2,975,091         $   2,380,909     25 %  
                                   
                                   

 

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)  
SEPTEMBER 2017/2016  
                               
(In thousands)                          
ASSETS     2017     2016   LIABILITIES AND EQUITY     2017     2016  
                               
CURRENT ASSETS           CURRENT LIABILITIES          
  Cash and cash equivalents   $   22,044   $   36,683     Cash overdraft   $   26,617   $   13,940  
  Restricted cash       905       909     Accounts payable       171,774       137,979  
  Investments       10,781       10,453     Accrued liabilities       138,364       156,653  
  Accounts receivable       419,183       343,771     Current portion of debt       2,197       1,584  
  Inventories       412,486       369,928                  
  Other current assets       23,201       29,043                  
                               
TOTAL CURRENT ASSETS       888,600       790,787   TOTAL CURRENT LIABILITIES       338,952       310,156  
                               
OTHER ASSETS       17,515       11,173   LONG-TERM DEBT AND          
INTANGIBLE ASSETS, NET       255,330       224,186     CAPITAL LEASE OBLIGATIONS       145,884       110,362  
PROPERTY, PLANT           OTHER LIABILITIES       51,638       43,029  
  AND EQUIPMENT,  NET       325,109       284,491   EQUITY       950,080       847,090  
                               
                               
TOTAL ASSETS   $   1,486,554   $   1,310,637   TOTAL LIABILITIES AND EQUITY   $   1,486,554   $   1,310,637  
                               
                               

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)  
FOR THE NINE MONTHS ENDED  
SEPTEMBER 2017/2016  
(In thousands)         2017       2016    
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net earnings       $   90,877     $   83,257    
Adjustments to reconcile net earnings to net cash from operating activities:          
                 
  Depreciation           36,010         29,014    
  Amortization of intangibles         3,549         1,868    
  Expense associated with share-based compensation arrangements       1,978         1,568    
  Expense associated with stock grant plans         144         105    
  Deferred income taxes (credit)         117         (53 )  
  Equity in earnings of investee         (25 )       (241 )  
  Net gain on disposition and impairment of assets       (437 )       94    
  Changes in:              
    Accounts receivable         (121,688 )       (69,357 )  
    Inventories           (820 )       21,683    
    Accounts payable and cash overdraft         53,424         35,026    
    Accrued liabilities and other         34,221         33,413    
     NET CASH FROM OPERATING ACTIVITIES       97,350         136,377    
                 
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchases of property, plant, and equipment         (57,189 )       (35,723 )  
Proceeds from sale of property, plant and equipment       2,121         516    
Acquisitions and purchase of noncontrolling interest, net of cash received       (59,859 )       (66,615 )  
Repayments of debt of acquiree         –         (92,830 )  
Purchase of remaining noncontrolling interest of subsidiary       –         (1,100 )  
Cash contributed from noncontrolling interest         464         –    
Advances of notes receivable         (234 )       (5,400 )  
Collections of notes receivable and related interest       1,334         5,819    
Purchases of investments         (15,928 )       (4,468 )  
Proceeds from sale of investments         8,000         1,395    
Other             (84 )       (1,733 )  
     NET CASH USED IN INVESTING ACTIVITIES       (121,375 )       (200,139 )  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:          
Borrowings under revolving credit facilities         610,038         52,479    
Repayments under revolving credit facilities         (573,829 )       (27,177 )  
Proceeds from issuance of common stock         476         396    
Distributions to noncontrolling interest         (3,272 )       (3,160 )  
Dividends paid to shareholders         (9,207 )       (8,529 )  
Repurchase of common stock         (12,976 )       –    
Other             –         (28 )  
   NET CASH FROM (USED IN) FINANCING ACTIVITIES       11,230         13,981    
                 
Effect of exchange rate changes on cash         1,255         (969 )  
NET CHANGE IN CASH AND CASH EQUIVALENTS       (11,540 )       (50,750 )  
                 
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD       34,489         88,342    
                 
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD   $   22,949     $   37,592    
                 
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     $   22,044     $   36,683    
Restricted cash, end of period         905         909    
All cash and cash equivalents, end of period     $   22,949     $   37,592    
                 
                 

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