Filed by Bowne Pure Compliance
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): July 16, 2008

Universal Forest Products, Inc.
(Exact name of registrant as specified in its charter)

         
Michigan   0-22684   38-1465835
(State or other Jurisdiction of Incorporation)   (Commission File Number)   (IRS Employer Identification No.)
     
2801 East Beltline, NE
Grand Rapids, Michigan
  49525
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (616) 364-6161

 
None
(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 

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Item 2.02  
Results of Operations and Financial Condition

On July 16, 2008, the Registrant issued a press release announcing its financial results for the quarter ended June 28, 2008. A copy of the Registrant’s press release is attached as Exhibit 99(a) to this Current Report.

Item 9.01  
Financial Statements, Pro Forma Financial Information, and Exhibits

  (c)  
Exhibits

  99(a)  
Press Release dated July 16, 2008.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

UNIVERSAL FOREST PRODUCTS, INC.
(Registrant)

Dated: July 16, 2008

By: /s/ Michael R. Cole                 
Michael R. Cole, Chief Financial Officer
and Treasurer

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EXHIBIT INDEX

     
Exhibit Number   Document
 
   
99(a)
  Press Release dated July 16, 2008.

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Filed by Bowne Pure Compliance

Exhibit 99(a)

news release

—AT THE COMPANY—
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502

FOR IMMEDIATE RELEASE
WEDNESDAY, July 16, 2008

Universal Forest Products, Inc. reports EPS of $0.61; posts net earnings of $11.7 million
Results impacted by high fuel cost and weak economy

GRAND RAPIDS, Mich., July 16, 2008 – Universal Forest Products, Inc. (Nasdaq: UFPI) today announced its results for the second quarter of 2008. Net earnings in the quarter were $11.7 million, which compared to net earnings of $16.8 million for the same period last year. Diluted earnings per share for the second quarter were $0.61, down from $0.86 for the same period last year. Second-quarter net sales were $708.5 million, down from $773.1 million for the second quarter of 2007, and were impacted by a weak economy and a soft lumber market. Margins were impacted by higher fuel and other transportation costs and ongoing price pressure, particularly in the site-built construction market.

“Despite the current market environment, we’re profitable, we’re gaining share in some key markets, and we’re concentrating on making sure we’re well-positioned for growth when the economy regains strength,” said President and CEO Michael B. Glenn. “The fundamentals of our company remain solid and we’re pleased with our achievements in the face of extraordinary challenges.”

Glenn added that the Company remains focused on increasing diversification, containing costs through continuous improvement, growing market share and ensuring the organization is sized appropriately to its business opportunities. The Company is working to mitigate the impact of rising fuel costs by passing them along.

In addition to rising fuel costs, weak consumer spending and ongoing price pressure, the quarter saw depressed lumber prices, which impact the Company’s selling prices. The year-to-date composite lumber price was 8.5% lower for the second quarter than the same period last year.

—more—

 

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Universal Forest Products, Inc.
Page 2

By market, Universal posted the following gross sales results for the second quarter:

Do-It-Yourself/retail: $334.7 million, a decrease of 7.1% from the same period of 2007. The Company picked up market share by leveraging its competitive advantages and adding to its vast portfolio of lumber and outdoor living products. Sales, however, were impacted by weak consumer spending, reflected in a Consumer Confidence Index that plunged to near-record lows in the quarter and lower same-store sales at two big box retailers. Most experts call for continued decline in home improvement spending through 2008, and for moderate growth in 2009 and beyond.

Industrial packaging/components: $174.0 million, an increase of 6.4% over 2007. The industrial market remains a strong opportunity, even though in the short term it is being affected by a challenged economy. Universal continues to add customers and to be encouraged by opportunities for market share gains in this arena. The concrete forming business is having a positive impact. Most of the markets served by concrete forming saw solid year-to-date growth through May 2008. These markets include nonresidential construction in health care, public safety, lodging, power, office buildings and other areas.

Site-built construction: $132.8 million, a decrease of 17.7% from the same period of 2007. These results are in spite of declines in single-family housing starts of 43.9% and 41.8%, respectively, in April 2008 and May 2008 over the same months in 2007. The Company believes the housing market won’t begin a recovery until 2010, and believes tighter credit conditions will have a negative impact on multi-family and light construction, which performed well in 2007. However, the Company believes it can continue to take share and is focused on diversification by growing its custom builder, light-commercial and multifamily business, on cutting costs and on enhancing efficiency through continuous improvement.

Manufactured housing: $84.2 million, a decrease of 20.2% from 2007. The 1.4% uptick in shipments of HUD-code homes in April 2008 over April 2007 didn’t hold for the balance of the quarter. Shipments in May 2008 were approximately 15% lower than May 2007. May 2008 year-to-date shipments declined 5.1% from May 2007. The Manufactured Housing Institute recently revised its forecast downward by 3%, calling for annual shipments of 96,000 homes. Shipments of modular homes were down 27% in the first quarter of 2008 from the same period of 2007, the most recent statistics available. With its commanding market share, Universal’s performance will essentially track with the market. The Company expects conditions to remain soft until the oversupply of site-built homes is absorbed and credit conditions improve, and believes passage of a lending reform package is critical to any near-term pickup in this market.

—more—

 

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Universal Forest Products, Inc.
Page 3

OUTLOOK
In February, the Company announced 2008 targets based on assumptions about markets, economic conditions and other relevant factors; however, some of those assumptions have not held: Diminished consumer spending impacted DIY/retail more than anticipated; the over-supply of affordable site-built homes and the lack of conventional financing options have both hampered manufactured housing; and the industrial market slowed with the weakening economy and will be negatively impacted by any ongoing economic downturn. In addition, rising fuel prices are significantly impacting transportation costs in all of its markets.

Based on these factors, the Company has adjusted its annual targets for 2008 as follows: net sales of between $2.3 billion and $2.35 billion (from the previous target of $2.45 billion to $2.55 billion), and net earnings of between $12 million and $15 million (from $22 million to $27 million). These targets are based on the following additional key assumptions:

    The Company will maintain strong market share in each of its markets, and will grow market share in DIY/retail, industrial and site-built construction.

    Margins will continue to be negatively impacted by price pressure and by rising fuel costs.

    Lumber mill closures may better align supply and demand, but weak demand overall will keep the lumber market depressed for the balance of the year, affecting the Company’s selling prices.

    Any asset impairment, severance or other charges incurred as the result of plant closures, consolidations or the downsizing of a Company operation are not reflected in the Company’s sales or earnings targets. If the Company takes such actions, its ability to meet the stated targets will be diminished.

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. EDT on Thursday, July 17, 2008. The call will be hosted by Executive Chairman William G. Currie, President and CEO Michael B. Glenn, and Chief Financial Officer Michael Cole, and will be available for analysts and institutional investors domestically at (866) 271-6130 or internationally at (617) 213-8894. Use conference pass code number 74868685. 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 Monday, August 18, 2008, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code number 74131382.

— more —

 

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Universal Forest Products, Inc.
Page 4

UNIVERSAL FOREST PRODUCTS
Headquartered in Grand Rapids, MI, with approximately 100 facilities throughout North America, Universal Forest Products engineers, manufactures and markets wood and wood-alternative products for DIY retail home centers, structural lumber products for the manufactured housing industry, engineered wood components for the site-built construction market, and specialty wood packaging and components for various industries. The Company also provides framing services for the site-built market, and forms for concrete construction. For 2007, the Company reported sales of more than $2.5 billion. For information about Universal Forest Products, visit www.ufpi.com.

Please be aware that: Any statements included in this press release that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on the beliefs of the Company’s management as well as on assumptions made by, and information currently available to,
the Company at the time such statements were made. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events 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: Adverse lumber market trends, competitive activity, negative economic trends, government regulations and weather. Certain of these 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.

# # #

 

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UNIVERSAL FOREST PRODUCTS, INC.
PAGE 5
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2008/2007
                                                                 
    Quarter Period     Year to Date  
(In thousands, except per share data)   2008     2007     2008     2007  
 
                                                               
NET SALES
  $ 708,485       100 %   $ 773,105       100 %   $ 1,197,997       100 %   $ 1,322,143       100 %
 
                                                               
COST OF GOODS SOLD
    623,607       88.0       671,400       86.8       1,058,299       88.3       1,146,918       86.7  
 
                                                       
 
                                                               
GROSS PROFIT
    84,878       12.0       101,705       13.2       139,698       11.7       175,225       13.3  
 
                                                               
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    62,120       8.8       70,049       9.1       121,471       10.1       133,507       10.1  
 
                                                       
 
                                                               
EARNINGS FROM OPERATIONS
    22,758       3.2       31,656       4.1       18,227       1.5       41,718       3.2  
 
                                                               
Interest expense
    3,290       0.5       4,766       0.6       6,884       0.6       9,090       0.7  
Interest income
    (179 )           (558 )     (0.1 )     (552 )           (1,140 )     (0.1 )
 
                                                       
 
    3,111       0.4       4,208       0.5       6,332       0.5       7,950       0.6  
 
                                                       
 
                                                               
EARNINGS BEFORE INCOME TAXES AND MINORITY INTEREST
    19,647       2.8       27,448       3.6       11,895       1.0       33,768       2.6  
 
                                                               
INCOME TAXES
    7,470       1.1       10,182       1.3       4,120       0.3       12,250       0.9  
 
                                                       
 
                                                               
EARNINGS BEFORE MINORITY INTEREST
    12,177       1.7       17,266       2.2       7,775       0.6       21,518       1.6  
 
                                                               
MINORITY INTEREST
    (514 )     (0.1 )     (466 )     (0.1 )     (688 )     (0.1 )     (832 )     (0.1 )
 
                                                       
 
                                                               
NET EARNINGS
  $ 11,663       1.6     $ 16,800       2.2     $ 7,087       0.6     $ 20,686       1.6  
 
                                                       
 
                                                               
EARNINGS PER SHARE — BASIC
  $ 0.61             $ 0.88             $ 0.37             $ 1.09          
 
                                                               
EARNINGS PER SHARE — DILUTED
  $ 0.61             $ 0.86             $ 0.37             $ 1.06          
 
                                                               
WEIGHTED AVERAGE SHARES OUTSTANDING
    19,048               19,127               19,022               19,056          
 
                                                               
WEIGHTED AVERAGE SHARES OUTSTANDING WITH COMMON STOCK EQUIVALENTS
    19,267               19,487               19,224               19,448          
 
                                                               
SUPPLEMENTAL SALES DATA
                                                               
                                                                 
    Quarter Period     Year to Date  
Market Classification   2008     %     2007     %     2008     %     2007     %  
Do-It-Yourself/Retail
  $ 334,694       46 %   $ 360,281       46 %   $ 507,339       41 %   $ 555,883       41 %
Site-Built Construction
    132,758       18 %     161,209       20 %     241,657       20 %     299,628       23 %
Industrial
    173,962       24 %     163,503       21 %     314,620       26 %     297,293       22 %
Manufactured Housing
    84,184       12 %     105,522       13 %     160,499       13 %     194,419       14 %
 
                                                       
Total Gross Sales
    725,598       100 %     790,515       100 %     1,224,115       100 %     1,347,223       100 %
Sales Allowances
    (17,113 )             (17,410 )             (26,118 )             (25,080 )        
 
                                                       
Total Net Sales
  $ 708,485             $ 773,105             $ 1,197,997             $ 1,322,143          
 
                                                       

 

 


 

UNIVERSAL FOREST PRODUCTS, INC.
PAGE 6
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2008/2007
                 
(In thousands)            
ASSETS   2008     2007  
 
               
CURRENT ASSETS
               
Cash and cash equivalents
  $ 32,483     $ 42,697  
Accounts receivable
    227,963       233,067  
Inventories
    222,937       274,395  
Assets held for sale
    10,334       17,115  
Other current assets
    34,828       22,339  
 
           
 
               
TOTAL CURRENT ASSETS
    528,545       589,613  
 
               
OTHER ASSETS
    7,657       7,691  
INTANGIBLE ASSETS, NET
    186,664       185,302  
PROPERTY, PLANT AND EQUIPMENT, NET
    263,635       286,438  
 
           
 
               
TOTAL ASSETS
  $ 986,501     $ 1,069,044  
 
           
                 
LIABILITIES AND SHAREHOLDERS' EQUITY   2008     2007  
 
               
CURRENT LIABILITIES
               
Accounts payable
  $ 122,345     $ 147,614  
Accrued liabilities
    89,093       82,432  
Current portion of long-term debt and capital leases
    945       3,611  
 
           
 
               
TOTAL CURRENT LIABILITIES
    212,383       233,657  
 
               
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion
    177,063       243,833  
OTHER LIABILITIES
    52,761       50,209  
SHAREHOLDERS’ EQUITY
    544,294       541,345  
 
           
 
               
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
  $ 986,501     $ 1,069,044  
 
           

 

 


 

UNIVERSAL FOREST PRODUCTS, INC.
PAGE 7
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2008/2007
                 
(In thousands)   2008     2007  
CASH FLOWS FROM OPERATING ACTIVITIES:
               
Net earnings
  $ 7,087     $ 20,686  
Adjustments to reconcile net earnings to net cash from operating activities:
               
Depreciation
    19,331       19,013  
Amortization of intangibles
    4,778       4,633  
Expense associated with share-based compensation arrangements
    564       258  
Expense associated with stock grant plans
    85       146  
Deferred income taxes
    (212 )     (89 )
Minority interest
    687       832  
Gain on sale of interest in subsidiary
          (140 )
Net loss (gain) on sale or impairment of property, plant and equipment
    573       (131 )
Changes in:
               
Accounts receivable
    (83,169 )     (72,549 )
Inventories
    16,043       (11,354 )
Accounts payable
    37,659       54,581  
Accrued liabilities and other
    22,171       (158 )
Excess tax benefits from share-based compensation arrangements
    (42 )     (679 )
 
           
NET CASH FROM OPERATING ACTIVITIES
    25,555       15,049  
 
               
CASH FLOWS FROM INVESTING ACTIVITIES:
               
Purchase of property, plant, and equipment
    (10,469 )     (18,653 )
Acquisitions, net of cash received
    (23,338 )     (56,209 )
Proceeds from sale of interest in subsidiary
          400  
Proceeds from sale of property, plant and equipment
    26,827       2,686  
Advances on notes receivable
    (997 )      
Collection of notes receivable
    448       137  
Other, net
    (97 )     (16 )
 
           
NET CASH FROM INVESTING ACTIVITIES
    (7,626 )     (71,655 )
 
               
CASH FLOWS FROM FINANCING ACTIVITIES:
               
Net (repayments) borrowings under revolving credit facilities
    (28,295 )     74,318  
Repayment of long-term debt
    (492 )     (25,417 )
Proceeds from issuance of common stock
    805       2,862  
Distributions to minority shareholder
    (378 )     (825 )
Investment received from minority shareholder
    419        
Dividends paid to shareholders
    (1,139 )     (1,047 )
Repurchase of common stock
          (2,106 )
Excess tax benefits from share-based compensation arrangements
    42       679  
Other, net
    (13 )     (269 )
 
           
NET CASH FROM FINANCING ACTIVITIES
    (29,051 )     48,195  
 
               
NET CHANGE IN CASH AND CASH EQUIVALENTS
    (11,122 )     (8,411 )
 
               
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    43,605       51,108  
 
           
 
               
CASH AND CASH EQUIVALENTS, END OF PERIOD
  $ 32,483     $ 42,697