UFPI posts record first-quarter earnings and sales

April 18, 2017

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

Universal Forest Products, Inc.

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UFPI posts record first-quarter earnings and sales