News Releases

UFPI posts record third-quarter earnings and sales

October 16, 2018 at 4:05 PM EDT

- Sales up 15 percent, net earnings up 22 percent over previous year -

GRAND RAPIDS, Mich., Oct. 16, 2018 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq: UFPI) today reported record financial results for the third quarter ended September 29, 2018, the thirteenth consecutive quarter in which the company has reported records in both net sales and net earnings.

“I want to thank the hard-working employees of Universal for once again producing record results, driven by strong unit sales growth of 7 percent and overall sales growth of 15 percent,” stated CEO Matt Missad. “We achieved these results despite the headwinds we experienced from a quickly changing lumber market, rising labor, benefit and transportation costs, and the short-term effects of Hurricane Florence.

“While we are pleased to report a record quarter, we know we can do better. We are improving our mix of value-added new products, investing in automation to address rising costs and improving performance at underperforming operations.”

Third Quarter 2018 Highlights (comparisons on a year-over-year basis):

  • Diluted earnings per share were $0.66, up from $0.55

  • Net earnings attributable to controlling interest were $41.2 million, up 22 percent

  • Net sales were $1.2 billion, up 15 percent

  • EBITDA was $72.9 million, up 9 percent

  • Gross sales increased 17 percent in the Construction market, 15 percent in the Industrial market and 13 percent in the Retail market

  • Unit sales contributed 7 percent of gross sales growth; higher prices due to the lumber market contributed 8 percent

  • Organic sales contributed 5 percent to unit growth while acquisitions added 2 percent

  • New product sales were $138 million, up 22 percent; year-to date new product sales are $407 million, up  25 percent

By market, the company reported the following third-quarter 2018 gross sales results:

Retail

  • $443 million, up 13 percent over the same period of 2017, as unit sales contributed 4 percent and price increases accounted for 9 percent

  • Organic sales accounted for all of the unit sales growth

  • Sales to big box customers increased 11 percent, while sales to independent customers grew 17 percent

Construction

  • $361 million, up 17 percent over the same period of 2017, as unit sales contributed 9 percent and  price increases accounted for 8 percent

  • Organic sales accounted for 8 percent of the unit sales growth, while acquisitions accounted for 1 percent

  • The company saw double-digit sales increases to customers in commercial construction (30 percent), residential construction (19 percent) and manufactured housing (10 percent)

Industrial

  • $429 million, up 15 percent over the same period of 2017, as unit sales accounted for 8 percent and price increases accounted for 7 percent

  • Organic sales accounted for 3 percent of the unit sales growth, while acquisitions contributed 5 percent

  • The company sees favorable growth opportunities in the non-wood packaging market and has been adding resources to better serve this market

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 17, 2018. 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 1793238. 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, 2018, at 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.

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 NINE MONTHS ENDED
SEPTEMBER 2018/2017
    Quarter Period       Year to Date    
(In thousands, except per share data)   2018       2017       2018       2017    
                                 
                                 
                                 
NET SALES   $   1,212,702   100%   $   1,056,586   100%   $   3,500,999   100%   $   2,975,091   100.0%
                                 
COST OF GOODS SOLD      1,054,029     86.9     911,899     86.3     3,045,748     87.0     2,561,424     86.1
                                 
GROSS PROFIT     158,673     13.1     144,687     13.7     455,251     13.0     413,667     13.9
                                 
SELLING,  GENERAL  AND                                 
ADMINISTRATIVE  EXPENSES     102,292     8.4     92,389     8.7     300,292     8.6     272,956     9.2
FOREIGN CURRENCY EXCHANGE LOSS      412         301         213         1,157    
NET GAIN ON DISPOSITION AND IMPAIRMENT OF ASSETS     (1,022)     (0.1)     (274)     -      (7,079)     (0.2)     (437)     - 
                                 
EARNINGS FROM OPERATIONS     56,991     4.7     52,271     4.9     161,825     4.6     139,991     4.7
                                 
OTHER EXPENSE, NET     1,734     0.1     1,352     0.1     4,862     0.1     4,259     0.1
                                 
EARNINGS BEFORE INCOME TAXES     55,257     4.6     50,919     4.8     156,963     4.5     135,732     4.6
                                 
INCOME TAXES     13,189     1.1     16,250     1.5     36,183     1.0     44,855     1.5
                                 
NET EARNINGS     42,068     3.5     34,669     3.3     120,780     3.4     90,877     3.1
                                 
LESS NET EARNINGS ATTRIBUTABLE TO                                
NONCONTROLLING INTEREST      (849)     (0.1)     (976)     (0.1)     (2,684)     (0.1)     (2,480)     (0.1)
                                 
NET EARNINGS ATTRIBUTABLE TO                                
CONTROLLING INTEREST   $   41,219     3.4   $   33,693     3.2   $   118,096     3.4   $   88,397     3.0
                                 
                                 
EARNINGS PER SHARE - BASIC    $   0.67       $   0.55       $   1.91       $   1.44    
                                 
EARNINGS PER SHARE - DILUTED   $   0.66       $   0.55       $   1.91       $   1.44    
                                 
COMPREHENSIVE INCOME     43,242         36,388         117,610         97,018    
                                 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                                
TO NONCONTROLLING INTEREST     (1,583)         (975)         (3,296)         (3,862)    
                                 
COMPREHENSIVE INCOME                                
ATTRIBUTABLE TO CONTROLLING INTEREST   $   41,659       $   35,413       $   114,314       $   93,156    
                                 
SUPPLEMENTAL SALES DATA                                
    Quarter Period   Year to Date
Market Classification   2018       2017   %   2018       2017   %
Retail   $   443,044       $   391,043   13%   $   1,359,498       $   1,161,662   17%
Industrial     429,467         374,018   15%     1,166,523         995,078   17%
Construction     361,179         308,585   17%     1,039,705         867,958   20%
Total Gross Sales     1,233,690         1,073,646   15%     3,565,726         3,024,698   18%
Sales Allowances     (20,988)         (17,060)   -23%     (64,727)         (49,607)   -30%
Total Net Sales   $   1,212,702       $   1,056,586   15%   $   3,500,999       $   2,975,091   18%
                                 


 
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2018/2017
                           
(In thousands)                        
ASSETS   2018   2017   LIABILITIES AND EQUITY   2018   2017
                           
CURRENT ASSETS           CURRENT LIABILITIES        
  Cash and cash equivalents   $   26,327   $   22,044     Cash overdraft   $   31,115   $   26,617
  Restricted cash     1,024     905     Accounts payable     175,912     171,774
  Investments     15,809     10,781     Accrued liabilities     151,102     138,364
  Accounts receivable     454,935     419,183     Current portion of debt     149     2,197
  Inventories     510,057     412,486                
  Other current assets     38,699     23,201                
                           
TOTAL CURRENT ASSETS     1,046,851     888,600   TOTAL CURRENT LIABILITIES     358,278     338,952
                           
OTHER ASSETS     22,345     17,515   LONG-TERM DEBT AND        
INTANGIBLE ASSETS, NET     261,666     255,330     CAPITAL LEASE OBLIGATIONS     186,539     145,884
PROPERTY, PLANT           OTHER LIABILITIES     40,630     51,638
  AND EQUIPMENT,  NET     346,309     325,109   EQUITY     1,091,724     950,080
                           
                           
TOTAL ASSETS   $   1,677,171   $   1,486,554   TOTAL LIABILITIES AND EQUITY   $   1,677,171   $   1,486,554
                           


 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2018/2017
(In thousands)   2018   2017
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net earnings   $   120,780   $   90,877
Adjustments to reconcile net earnings to net cash from operating activities:        
         
Depreciation     40,490     36,010
Amortization of intangibles     4,274     3,549
Expense associated with share-based and grant compensation arrangements     2,762     2,122
Deferred income taxes (credit)     (583)     117
Equity in earnings of investee     -     (25)
Net gain on disposition and impairment of assets     (7,079)     (437)
Changes in:        
Accounts receivable     (121,067)     (121,688)
Inventories     (39,448)     (820)
Accounts payable and cash overdraft     38,611     53,424
Accrued liabilities and other     21,361     34,221
NET CASH FROM OPERATING ACTIVITIES     60,101     97,350
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property, plant, and equipment     (74,541)     (57,189)
Proceeds from sale of property, plant and equipment     37,612     2,121
Acquisitions and purchase of noncontrolling interest, net of cash received     (38,963)     (59,859)
Purchases of investments     (12,401)     (12,155)
Proceeds from sale of investments     3,298     4,227
Other     (620)     1,480
NET CASH USED IN INVESTING ACTIVITIES     (85,615)     (121,375)
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
Borrowings under revolving credit facilities     636,798     610,038
Repayments under revolving credit facilities     (668,941)     (573,829)
Borrowings of debt     927     -
Repayments of debt     (5,511)     -
Issuance of long-term debt     75,000     -
Proceeds from issuance of common stock     756     476
Distributions to noncontrolling interest     (2,239)     (3,272)
Dividends paid to shareholders     (11,090)     (9,207)
Repurchase of common stock     (1,843)     (12,976)
Other     (55)     -
NET CASH FROM (USED IN) FINANCING ACTIVITIES     23,802     11,230
         
Effect of exchange rate changes on cash     247     1,255
NET CHANGE IN CASH AND CASH EQUIVALENTS     (1,465)     (11,540)
         
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     28,816     34,489
         
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD   $   27,351   $   22,949
         
Reconciliation of cash and cash equivalents and restricted cash:        
Cash and cash equivalents, beginning of period   $   28,339   $   34,091
Restricted cash, beginning of period     477     398
All cash and cash equivalents, beginning of period   $   28,816   $   34,489
         
Cash and cash equivalents, end of period   $   26,327   $   22,044
Restricted cash, end of period     1,024     905
All cash and cash equivalents, end of period   $   27,351   $   22,949
         


 
EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 2018/2017
    Quarter Period Year to Date
(In thousands)   2018   2017   2018   2017  
Net Earnings     42,068     34,669     120,780     90,877  
Interest  Expense     1,945     1,481     5,971     4,825  
Taxes     13,189     16,250     36,183     44,855  
Expense associated with Share-Based Compensation Arrangements     838     740     2,762     2,121  
Net Gain on Disposition and Impairment of Assets     (1,022)     (274)     (7,079)     (437)  
Depreciation Expense     14,346     12,762     40,490     36,010  
Amortization of Intangibles     1,572     1,172     4,274     3,549  
EBITDA     72,936     66,800     203,381     181,800  

AT THE COMPANY

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

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Source: Universal Forest Products, Inc.