News Releases

UFP Industries Reports Record Profits for Fourth Quarter and Year

February 19, 2020 at 4:05 PM EST
- 2019 diluted EPS up 21 percent; unit sales up 6 percent –

GRAND RAPIDS, Mich., Feb. 19, 2020 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (n/k/a UFP Industries)   (Nasdaq: UFPI), today announced record net sales and profits for the fourth quarter of 2019, as well as record EPS of $2.91 per diluted share for fiscal 2019 compared to $2.40 for fiscal 2018, a 21 percent increase.

“The hard-working employees of UFP Industries marked our 65th year in business by producing the best fourth quarter and year in our history,” stated CEO Matthew J. Missad.  “Our record profitability is the result of increased unit sales, our ability to leverage fixed costs, and increased sales of our higher-margin, value-added products, which continue to comprise a greater portion of our product mix. We also generated record operating cash flow, allowing us to fund our strategic growth initiatives, further strengthen our balance sheet and return even more capital to our shareholders.”

Fourth Quarter 2019 Highlights (comparisons on a year-over-year basis):

  • Earnings from operations of $51.8 million were up 14 percent and net earnings attributable to controlling interest of $37.7 million were up 24 percent
  • EBITDA of $70.9 million increased by 12 percent
  • Net sales of $998 million represent a 1 percent increase; lower lumber prices reduced gross sales by 5 percent

Fiscal 2019 Highlights (comparisons on a year-over-year basis):

  • Earnings from operations of $244.9 million were up 18 percent, and net earnings attributable to controlling interest of $179.7 million were up 21 percent
  • EBITDA of $317.3 million was up 19 percent, exceeding the company’s unit sales increase of 6 percent
  • New product sales were $540 million, up 13 percent. For 2020, the company has removed $126 million of 2019 sales from its new products classification, although it will continue to sell those products.
  • Net sales of $4.42 billion were down 2 percent; lower lumber prices reduced gross sales by 8 percent
  • Net cash flow from operating activities of $349.3 million was up 199% 

By market, the Company reported the following 2019 results:

Retail

  • Fourth Quarter: $323.3 million in gross sales, up 7 percent over the fourth quarter of 2018. Retail unit sales increased 10 percent due to new product growth and market share gains. Lower selling prices reduced gross sales by 3 percent.
  • Full Year: $1.64 billion in gross sales, down 1 percent from 2018, due to a 7 percent increase in unit sales and an 8 percent decrease in selling prices.

Industrial

  • Fourth Quarter: $309.7 million in gross sales, down 4 percent from the fourth quarter of 2018; unit sales increased 2 percent, while lower lumber prices reduced gross sales by 6 percent.  Acquisitions accounted for all the unit sales growth.
  • Full Year: $1.33 billion in gross sales, up 2 percent over the previous year. Unit sales increased 7 percent; 5 percent came from acquisitions and 2 percent from organic growth.

Construction

  • Fourth Quarter: $379.0 million in gross sales, up 1 percent over the fourth quarter of 2018, due to a 5 percent increase in unit sales and a 4 percent decrease in selling prices. Unit sales to commercial, manufactured housing and residential customers rose 9, 4, and 3 percent, respectively.
  • Full Year: $1.52 billion in gross sales, down 5 percent from the previous year due to a 10 percent decrease in lumber prices and a 5 percent increase in unit sales. Unit sales to commercial and residential customers rose 11 and 5 percent, respectively. Manufactured housing sales were flat for the year.

On January 1, 2020, the company began doing business as UFP Industries to better reflect its growing diversity of products and markets. (The company will seek shareholder approval for the change to its corporate name at its annual meeting of shareholders in April.) The company also realigned its organizational structure, creating three market-focused segments: UFP Construction, UFP Industrial and UFP Retail.

“Although our results indicate we are performing well, we believe we can continue to improve and have made changes to do so,” added Missad. “Our new structure is intended to bring even greater alignment with our customers and allow for quicker introduction of new, value-added products. It also will help us more effectively allocate capital to grow and improve our business. We are truly excited about the future of UFP Industries.”

On February 3, 2020, UFP Industries announced it changed the frequency of its dividend payments from semi-annual to quarterly. The company also announced a 25 percent pro-rated increase in its dividend payment.

CONFERENCE CALL

UFP Industries 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 20, 2020. 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 pass code 8194375. 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 21, 2020, at 855-859-2056, 404-537-3406 or 800-585-5367.

Universal Forest Products, Inc. (d/b/a UFP Industries)

UFP Industries 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 UFP Industries, 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.

Non-GAAP Financial Information

This release includes certain financial information not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies.  Management considers EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED
DECEMBER 2019/2018
    Quarter Period       Year to Date    
(In thousands, except per share data)     2019         2018         2019         2018    
                         
                         
                         
NET SALES   $ 998,041     100 %   $ 988,181     100 %   $ 4,416,009     100 %   $ 4,489,180     100.0 %
                                 
COST OF GOODS SOLD     840,786     84.2       850,538     86.1       3,730,491     84.5       3,896,286     86.8  
                                 
GROSS PROFIT     157,255     15.8       137,643     13.9       685,518     15.5       592,894     13.2  
                                 
SELLING, GENERAL AND                                
  ADMINISTRATIVE EXPENSES     104,154     10.4       92,387     9.3       438,320     9.9       392,679     8.7  
FOREIGN CURRENCY EXCHANGE LOSS     610     0.1       (657 )   (0.1 )     727     -       (444 )   -  
NET LOSS (GAIN) ON DISPOSITION AND IMPAIRMENT OF ASSETS     735     0.1       475     -       1,565     -       (6,604 )   (0.1 )
                                 
EARNINGS FROM OPERATIONS     51,756     5.2       45,438     4.6       244,906     5.5       207,263     4.6  
                                 
OTHER EXPENSE, NET     150     -       4,548     0.5       4,232     0.1       9,410     0.2  
                                 
EARNINGS BEFORE INCOME TAXES     51,606     5.2       40,890     4.1       240,674     5.5       197,853     4.4  
                                 
INCOME TAXES     12,930     1.3       9,258     0.9       58,270     1.3       45,441     1.0  
                                 
NET EARNINGS     38,676     3.9       31,632     3.2       182,404     4.1       152,412     3.4  
                                 
LESS NET EARNINGS ATTRIBUTABLE TO                                
  NONCONTROLLING INTEREST     (940 )   (0.1 )     (1,130 )   (0.1 )     (2,754 )   (0.1 )     (3,814 )   (0.1 )
                                 
NET EARNINGS ATTRIBUTABLE TO                                
  CONTROLLING INTEREST   $ 37,736     3.8     $ 30,502     3.1     $ 179,650     4.1     $ 148,598     3.3  
                                 
                                 
EARNINGS PER SHARE - BASIC   $ 0.61         $ 0.50         $ 2.91         $ 2.41      
                                 
EARNINGS PER SHARE - DILUTED   $ 0.61         $ 0.50         $ 2.91         $ 2.40      
                                 
COMPREHENSIVE INCOME     39,545           29,726           183,917           147,336      
                                 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                                
  TO NONCONTROLLING INTEREST     (1,383 )         (577 )         (3,218 )         (3,873 )    
                                 
COMPREHENSIVE INCOME                                
  ATTRIBUTABLE TO CONTROLLING INTEREST   $ 38,162         $ 29,149         $ 180,699         $ 143,463      
                                 
SUPPLEMENTAL SALES DATA                                
    Quarter Period   Year to Date
Market Classification     2019           2018     %     2019           2018     %
Retail   $ 323,342         $ 302,414     7 %   $ 1,638,885         $ 1,659,503     -1 %
Industrial     309,709           321,101     -4 %     1,329,245           1,307,350     2 %
Construction     378,990           376,508     1 %     1,524,053           1,598,896     -5 %
Total Gross Sales     1,012,041           1,000,023     1 %     4,492,183           4,565,749     -2 %
Sales Allowances     (14,000 )         (11,842 )   -18 %     (76,174 )         (76,569 )   1 %
Total Net Sales   $ 998,041         $ 988,181     1 %   $ 4,416,009         $ 4,489,180     -2 %
                                 
      2019     % of
Sales
    2018     % of
Sales
    2019     % of
Sales
    2018     % of
Sales
SG&A, Excluding Bonus Expense   $ 88,592     8.9     $ 82,495     8.3     $ 369,491     8.4     $ 344,877     7.7  
Bonus Expense     15,562     1.6       9,892     1.0       68,829     1.6       47,802     1.1  
Total SG&A   $ 104,154     10.4     $ 92,387     9.3     $ 438,320     9.9     $ 392,679     8.7  
                                 
SG&A, Excluding Bonus Expense, as a Percentage of Gross Profit     56.3 %         59.9 %         53.9 %         58.2 %    
                                                 


CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
DECEMBER 2019/2018
 
(In thousands)                      
ASSETS     2019     2018   LIABILITIES AND EQUITY     2019     2018
                       
CURRENT ASSETS             CURRENT LIABILITIES        
Cash and cash equivalents   $ 168,336   $ 27,316   Cash overdraft   $ -   $ 27,367
Restricted cash     330     882   Accounts payable     142,479     136,901
Investments     18,527     14,755   Accrued liabilities     208,747     145,754
Accounts receivable     364,027     343,450   Current portion of debt     2,816     148
Inventories     486,874     556,220            
Other current assets     54,978     52,655            
                       
TOTAL CURRENT ASSETS     1,093,072     995,278   TOTAL CURRENT LIABILITIES     354,042     310,170
                       
OTHER ASSETS     124,028     24,597   LONG-TERM DEBT AND        
INTANGIBLE ASSETS, NET     285,203     272,963   CAPITAL LEASE OBLIGATIONS     160,867     202,130
PROPERTY, PLANT             OTHER LIABILITIES     116,835     46,564
AND EQUIPMENT, NET     387,174     354,710   EQUITY     1,257,733     1,088,684
                       
                       
TOTAL ASSETS   $ 1,889,477   $ 1,647,548   TOTAL LIABILITIES AND EQUITY   $ 1,889,477   $ 1,647,548
                             


CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2019/2018
(In thousands)         2019       2018  
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net earnings       $ 182,404     $ 152,412  
Adjustments to reconcile net earnings to net cash from operating activities:        
               
Depreciation         60,494       54,949  
Amortization of intangibles       6,325       6,393  
Expense associated with share-based and grant compensation arrangements     4,007       3,574  
Deferred income taxes       7,176       857  
Unrealized loss (gain) on investments and other       (2,523 )     1,888  
Net loss (gain) on disposition and impairment of assets     1,565       (6,604 )
Changes in:            
Accounts receivable       (16,872 )     (8,512 )
Inventories         73,120       (84,304 )
Accounts payable and cash overdraft       (24,132 )     (5,213 )
Accrued liabilities and other       57,727       1,245  
NET CASH FROM OPERATING ACTIVITIES     349,291       116,685  
               
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property, plant, and equipment       (84,933 )     (95,862 )
Proceeds from sale of property, plant and equipment       1,777       38,373  
Acquisitions and purchase of noncontrolling interest, net of cash received     (39,122 )     (54,017 )
Investment in life insurance contracts       (15,253 )     -  
Purchases of investments       (13,352 )     (13,338 )
Proceeds from sale of investments       9,828       3,678  
Other           (982 )     (66 )
NET CASH USED IN INVESTING ACTIVITIES     (142,037 )     (121,232 )
               
CASH FLOWS FROM FINANCING ACTIVITIES:        
Borrowings under revolving credit facilities       422,057       732,370  
Repayments under revolving credit facilities       (460,537 )     (748,496 )
Borrowings of debt         -       927  
Repayments of debt         (3,136 )     (5,540 )
Issuance of long-term debt       -       75,000  
Proceeds from issuance of common stock       1,093       1,026  
Distributions to noncontrolling interest       (2,216 )     (3,139 )
Dividends paid to shareholders       (24,549 )     (22,072 )
Repurchase of common stock       -       (24,629 )
Other           20       (1,054 )
NET CASH FROM (USED IN) FINANCING ACTIVITIES     (67,268 )     4,393  
               
Effect of exchange rate changes on cash       482       (464 )
NET CHANGE IN CASH AND CASH EQUIVALENTS     140,468       (618 )
               
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     28,198       28,816  
               
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 168,666     $ 28,198  
               
Reconciliation of cash and cash equivalents and restricted cash:        
Cash and cash equivalents, beginning of period     $ 27,316     $ 28,339  
Restricted cash, beginning of period       882       477  
All cash and cash equivalents, beginning of period     $ 28,198     $ 28,816  
               
Cash and cash equivalents, end of period     $ 168,336     $ 27,316  
Restricted cash, end of period       330       882  
All cash and cash equivalents, end of period     $ 168,666     $ 28,198  
               
               


EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED
DECEMBER 2019/2018
    Quarter Period Year to Date
(In thousands)   2019 2018 2019 2018
Net earnings   38,676     31,632     182,404     152,412    
Interest expense   1,933     2,921     8,700     8,893    
Interest and investment income   (871 )   (262 )   (1,945 )   (1,371 )  
Income taxes   12,930     9,258     58,270     45,441    
Expense associated with share-based compensation arrangements   902     813     4,007     3,574    
Net loss (gain) on disposition and impairment of assets   735     475     1,565     (6,604 )  
Unrealized loss (gain) on investments   (912 )   1,888     (2,523 )   1,888    
Depreciation expense   15,842     14,459     60,494     54,949    
Amortization of intangibles   1,635     2,119     6,325     6,393    
EBITDA   70,870     63,303     317,297     265,575    
                   


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AS A PERCENTAGE OF SALES
CURRENT YEAR'S SALES STATED AT LAST YEAR'S SELLING PRICES (UNAUDITED)
FOR THE THREE MONTHS ENDED - DECEMBER 2019/2018
  Quarter Period
  Actual Sales Adjusted to
Last Year's
Selling Price
Actual
  2019
2019
2018
                   
NET SALES   100.0   %   100.0   %   100.0   %
COST OF GOODS SOLD   84.2       85.0       86.1    
GROSS PROFIT   15.8       15.0       13.9    
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES   10.5       9.9       9.3    
NET LOSS ON DISPOSITION AND IMPAIRMENT OF ASSETS   0.1       0.1       -    
EARNINGS FROM OPERATIONS   5.2       4.9       4.6    
OTHER EXPENSE, NET   -       -       0.5    
EARNINGS BEFORE INCOME TAXES   5.2       4.9       4.1    
INCOME TAXES   1.3       1.2       0.9    
NET EARNINGS   3.9       3.7       3.2    
LESS NET EARNINGS ATTRIBUTABLE TO                  
NONCONTROLLING INTEREST   (0.1 )     (0.1 )     (0.1 )  
NET EARNINGS ATTRIBUTABLE TO                  
CONTROLLING INTEREST   3.8   %   3.6   %   3.1   %
                   
Note: Actual percentages are calculated and may not sum to total due to rounding.                  
                   
                   
2018 NET SALES $ 988,181                
2019 SELL PRICE DECLINE   5.00   %            
DECREASE IN 2019 NET SALES DUE TO SELL PRICE DECLINE $ 49,409                
ACTUAL 2019 NET SALES   998,041                
ADJUSTED 2019 NET SALES $ 1,047,450                
                   
ACTUAL 2019 COST OF GOODS SOLD $ 840,786                
PLUS DIFFERENCE IN NET SALES (ABOVE)   49,409                
ADJUSTED 2019 COST OF GOODS SOLD $ 890,195                
                   

---------------AT THE COMPANY---------------

Dick Gauthier
VP, Business Outreach
(616) 365-1555

UFPI.jpg

Source: UFP Industries