x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Michigan
|
38-1465835
|
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification Number)
|
2801 East Beltline NE, Grand Rapids, Michigan
|
49525
|
|
(Address of principal executive offices)
|
(Zip Code)
|
NONE |
Large Accelerated Filer ¨ | Accelerated Filer x | Non-Accelerated Filer ¨ | Smaller reporting company ¨ |
Class
|
Outstanding as of June 30, 2012
|
|||
Common stock, no par value
|
19,735,289
|
Page No.
|
||
PART I.
|
FINANCIAL INFORMATION.
|
|
Item 1.
|
Financial Statements.
|
|
3 | ||
4 | ||
5 | ||
6 | ||
7 | ||
Item 2.
|
16 | |
Item 3.
|
29 | |
Item 4.
|
29 | |
PART II.
|
OTHER INFORMATION.
|
|
Item 1.
|
Legal Proceedings – NONE.
|
|
Item 1A.
|
Risk Factors – NONE.
|
|
Item 2.
|
30 | |
Item 3.
|
Defaults upon Senior Securities – NONE.
|
|
Item 4.
|
Mine Safety Disclosures – NONE.
|
|
Item 5.
|
30 | |
Item 6.
|
31 |
(in thousands, except share data)
|
||||||||||||
June 30,
|
December 31,
|
June 25,
|
||||||||||
2012
|
2011
|
2011
|
||||||||||
ASSETS
|
||||||||||||
CURRENT ASSETS:
|
||||||||||||
Cash and cash equivalents
|
$ | 5,317 | $ | 11,305 | $ | - | ||||||
Accounts receivable, net
|
212,038 | 127,316 | 200,181 | |||||||||
Inventories:
|
||||||||||||
Raw materials
|
116,895 | 111,526 | 126,196 | |||||||||
Finished goods
|
90,661 | 83,171 | 78,394 | |||||||||
207,556 | 194,697 | 204,590 | ||||||||||
Assets held for sale
|
- | - | 5,082 | |||||||||
Refundable income taxes
|
- | 3,482 | 3,587 | |||||||||
Other current assets
|
24,105 | 21,394 | 22,258 | |||||||||
TOTAL CURRENT ASSETS
|
449,016 | 358,194 | 435,698 | |||||||||
OTHER ASSETS
|
16,176 | 15,380 | 11,453 | |||||||||
GOODWILL
|
157,836 | 154,702 | 154,702 | |||||||||
INDEFINITE-LIVED INTANGIBLE ASSETS
|
2,340 | 2,340 | 2,340 | |||||||||
OTHER INTANGIBLE ASSETS, net
|
9,491 | 10,924 | 13,136 | |||||||||
PROPERTY, PLANT AND EQUIPMENT:
|
||||||||||||
Property, plant and equipment
|
537,273 | 537,208 | 525,197 | |||||||||
Accumulated depreciation and amortization
|
(319,495 | ) | (314,741 | ) | (308,200 | ) | ||||||
PROPERTY, PLANT AND EQUIPMENT, NET
|
217,778 | 222,467 | 216,997 | |||||||||
TOTAL ASSETS
|
$ | 852,637 | $ | 764,007 | $ | 834,326 | ||||||
LIABILITIES AND EQUITY
|
||||||||||||
CURRENT LIABILITIES:
|
||||||||||||
Cash overdraft
|
$ | - | $ | - | $ | 8,671 | ||||||
Accounts payable
|
81,117 | 49,433 | 76,521 | |||||||||
Accrued liabilities:
|
||||||||||||
Compensation and benefits
|
35,592 | 30,920 | 39,741 | |||||||||
Income taxes
|
5,401 | |||||||||||
Other
|
16,911 | 12,172 | 15,573 | |||||||||
Current portion of long-term debt and capital lease obligations
|
40,000 | 40,270 | 23,772 | |||||||||
TOTAL CURRENT LIABILITIES
|
179,021 | 132,795 | 164,278 | |||||||||
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS, less current portion
|
32,854 | 12,200 | 52,200 | |||||||||
DEFERRED INCOME TAXES
|
20,034 | 19,049 | 20,478 | |||||||||
OTHER LIABILITIES
|
16,654 | 17,364 | 16,513 | |||||||||
TOTAL LIABILITIES
|
248,563 | 181,408 | 253,469 | |||||||||
EQUITY:
|
||||||||||||
Controlling interest shareholders' equity:
|
||||||||||||
Preferred stock, no par value; shares authorized 1,000,000; issued and outstanding, none
|
||||||||||||
Common stock, no par value; shares authorized 40,000,000; issued and outstanding 19,735,289, 19,623,803 and 19,525,590
|
$ | 19,735 | $ | 19,624 | $ | 19,526 | ||||||
Additional paid-in capital
|
147,260 | 143,988 | 140,636 | |||||||||
Retained earnings
|
428,573 | 410,848 | 410,814 | |||||||||
Accumulated other comprehensive earnings
|
3,439 | 3,600 | 4,839 | |||||||||
Employee stock notes receivable
|
(1,016 | ) | (1,255 | ) | (1,493 | ) | ||||||
597,991 | 576,805 | 574,322 | ||||||||||
Noncontrolling interest
|
6,083 | 5,794 | 6,535 | |||||||||
TOTAL EQUITY
|
604,074 | 582,599 | 580,857 | |||||||||
TOTAL LIABILITIES AND EQUITY
|
$ | 852,637 | $ | 764,007 | $ | 834,326 |
(in thousands, except per share data)
|
||||||||||||||||
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
|
June 25,
|
June 30,
|
June 25,
|
|||||||||||||
2012
|
2011
|
2012
|
2011
|
|||||||||||||
NET SALES
|
$ | 593,693 | $ | 544,139 | $ | 1,050,804 | $ | 931,372 | ||||||||
COST OF GOODS SOLD
|
521,946 | 487,552 | 925,391 | 833,371 | ||||||||||||
GROSS PROFIT
|
71,747 | 56,587 | 125,413 | 98,001 | ||||||||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
49,106 | 45,328 | 94,884 | 91,816 | ||||||||||||
NET (GAIN) LOSS ON DISPOSITION OF ASSETS, EARLY RETIREMENT, AND OTHER IMPAIRMENT AND EXIT CHARGES
|
(6,878 | ) | 3,482 | (6,783 | ) | 3,489 | ||||||||||
EARNINGS FROM OPERATIONS
|
29,519 | 7,777 | 37,312 | 2,696 | ||||||||||||
INTEREST EXPENSE
|
1,240 | 929 | 2,251 | 1,812 | ||||||||||||
INTEREST INCOME
|
(321 | ) | (132 | ) | (562 | ) | (380 | ) | ||||||||
EQUITY IN LOSS (EARNINGS) OF INVESTEE
|
52 | (18 | ) | (10 | ) | (35 | ) | |||||||||
971 | 779 | 1,679 | 1,397 | |||||||||||||
EARNINGS BEFORE INCOME TAXES
|
28,548 | 6,998 | 35,633 | 1,299 | ||||||||||||
INCOME TAXES
|
10,538 | 2,502 | 13,237 | 215 | ||||||||||||
NET EARNINGS
|
18,010 | 4,496 | 22,396 | 1,084 | ||||||||||||
|
||||||||||||||||
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
(501 | ) | (219 | ) | (732 | ) | (477 | ) | ||||||||
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST
|
$ | 17,509 | $ | 4,277 | $ | 21,664 | $ | 607 | ||||||||
EARNINGS PER SHARE - BASIC
|
$ | 0.88 | $ | 0.22 | $ | 1.10 | $ | 0.03 | ||||||||
EARNINGS PER SHARE - DILUTED
|
$ | 0.88 | $ | 0.22 | $ | 1.10 | $ | 0.03 | ||||||||
COMPREHENSIVE INCOME
|
$ | 16,777 | $ | 4,706 | $ | 22,221 | $ | 2,004 | ||||||||
|
||||||||||||||||
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
(63 | ) | (294 | ) | (718 | ) | (723 | ) | ||||||||
|
||||||||||||||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST
|
$ | 16,714 | $ | 4,412 | $ | 21,503 | $ | 1,281 |
(in thousands, except share and per share data)
|
||||||||||||||||||||||||||||
Controlling Interest Shareholders' Equity
|
||||||||||||||||||||||||||||
Common Stock
|
Additional Paid-
In Capital
|
Retained
Earnings
|
Accumulated
Other
Comprehensive
Earnings
|
Employees
Stock Notes
Receivable
|
Noncontrolling
Interest
|
Total
|
||||||||||||||||||||||
Balance at December 25, 2010
|
$ | 19,333 | $ | 138,573 | $ | 414,108 | $ | 4,165 | $ | (1,670 | ) | $ | 6,667 | $ | 581,176 | |||||||||||||
Net earnings
|
607 | 477 | 1,084 | |||||||||||||||||||||||||
Foreign currency translation adjustment
|
674 | 246 | 920 | |||||||||||||||||||||||||
Purchase of additional noncontrolling interest
|
(100 | ) | (100 | ) | ||||||||||||||||||||||||
Capital contribution from noncontrolling interest
|
80 | 80 | ||||||||||||||||||||||||||
Distributions to noncontrolling interest
|
(835 | ) | (835 | ) | ||||||||||||||||||||||||
Cash dividends - $0.200 per share
|
(3,905 | ) | (3,905 | ) | ||||||||||||||||||||||||
Issuance of 30,108 shares under employee stock plans
|
30 | 545 | 575 | |||||||||||||||||||||||||
Issuance of 158,436 shares under stock grant programs
|
159 | (13 | ) | 4 | 150 | |||||||||||||||||||||||
Issuance of 4,245 shares under deferred compensation plans
|
4 | (4 | ) | - | ||||||||||||||||||||||||
Tax benefits from non-qualified stock options exercised
|
154 | 154 | ||||||||||||||||||||||||||
Expense associated with share-based compensation arrangements
|
1,013 | 1,013 | ||||||||||||||||||||||||||
Accrued expense under deferred compensation plans
|
380 | 380 | ||||||||||||||||||||||||||
Notes receivable adjustment
|
(12 | ) | 12 | - | ||||||||||||||||||||||||
Payments received on employee stock notes receivable
|
165 | 165 | ||||||||||||||||||||||||||
Balance at June 25, 2011
|
$ | 19,526 | $ | 140,636 | $ | 410,814 | $ | 4,839 | $ | (1,493 | ) | $ | 6,535 | $ | 580,857 | |||||||||||||
Balance at December 31, 2011
|
$ | 19,624 | $ | 143,988 | $ | 410,848 | $ | 3,600 | $ | (1,255 | ) | $ | 5,794 | $ | 582,599 | |||||||||||||
Net earnings
|
21,664 | 732 | 22,396 | |||||||||||||||||||||||||
Foreign currency translation adjustment
|
(161 | ) | (14 | ) | (175 | ) | ||||||||||||||||||||||
Distributions to noncontrolling interest
|
(429 | ) | (429 | ) | ||||||||||||||||||||||||
Cash dividends - $0.200 per share
|
(3,946 | ) | (3,946 | ) | ||||||||||||||||||||||||
Issuance of 49,811 shares under employee stock plans
|
50 | 1,184 | 1,234 | |||||||||||||||||||||||||
Issuance of 33,063 shares under stock grant programs
|
33 | 35 | 7 | 75 | ||||||||||||||||||||||||
Issuance of 29,356 shares under deferred compensation plans
|
29 | (29 | ) | - | ||||||||||||||||||||||||
Tax benefits from non-qualified stock options exercised
|
129 | 129 | ||||||||||||||||||||||||||
Expense associated with share-based compensation arrangements
|
666 | 666 | ||||||||||||||||||||||||||
Accrued expense under deferred compensation plans
|
1,311 | 1,311 | ||||||||||||||||||||||||||
Notes receivable written-off
|
(1 | ) | (24 | ) | 25 | - | ||||||||||||||||||||||
Payments received on employee stock notes receivable
|
214 | 214 | ||||||||||||||||||||||||||
Balance at June 30, 2012
|
$ | 19,735 | $ | 147,260 | $ | 428,573 | $ | 3,439 | $ | (1,016 | ) | $ | 6,083 | $ | 604,074 |
(in thousands)
|
||||||||
Six Months Ended
|
||||||||
June 30,
|
June 25,
|
|||||||
2012
|
2011
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net earnings attributable to controlling interest
|
$ | 21,664 | $ | 607 | ||||
Adjustments to reconcile net earnings attributable to controlling interest to net cash from operating activities:
|
||||||||
Depreciation
|
14,430 | 14,452 | ||||||
Amortization of intangibles
|
1,506 | 2,873 | ||||||
Expense associated with share-based compensation arrangements
|
741 | 1,163 | ||||||
Excess tax benefits from share-based compensation arrangements
|
(26 | ) | (120 | ) | ||||
Deferred income tax credit
|
(1,133 | ) | (87 | ) | ||||
Net earnings attributable to noncontrolling interest
|
732 | 477 | ||||||
Equity in earnings of investee
|
(10 | ) | (35 | ) | ||||
Net (gain) loss on sale or impairment of property, plant and equipment
|
(6,932 | ) | 21 | |||||
Changes in:
|
||||||||
Accounts receivable
|
(84,649 | ) | (77,166 | ) | ||||
Inventories
|
(12,166 | ) | (13,865 | ) | ||||
Accounts payable
|
31,447 | 16,927 | ||||||
Accrued liabilities and other
|
14,684 | (3,158 | ) | |||||
NET CASH FROM OPERATING ACTIVITIES
|
(19,712 | ) | (57,911 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of property, plant and equipment
|
(15,760 | ) | (12,159 | ) | ||||
Proceeds from sale of property, plant and equipment
|
14,635 | 1,197 | ||||||
Acquisitions, net of cash received
|
(2,149 | ) | - | |||||
Purchase of patents
|
(48 | ) | (77 | ) | ||||
Collections of notes receivable
|
755 | 294 | ||||||
Advances of notes receivable
|
(706 | ) | - | |||||
Other, net
|
(187 | ) | 19 | |||||
NET CASH FROM INVESTING ACTIVITIES
|
(3,460 | ) | (10,726 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net borrowings under revolving credit facilities
|
23,154 | 20,931 | ||||||
Repayment of long-term debt
|
(2,774 | ) | (272 | ) | ||||
Debt issuance costs
|
(85 | ) | - | |||||
Proceeds from issuance of common stock
|
1,234 | 575 | ||||||
Purchase of additional noncontrolling interest
|
- | (100 | ) | |||||
Distributions to noncontrolling interest
|
(429 | ) | (835 | ) | ||||
Capital contribution from noncontrolling interest
|
- | 80 | ||||||
Dividends paid to shareholders
|
(3,946 | ) | (3,905 | ) | ||||
Excess tax benefits from share-based compensation arrangements
|
26 | 120 | ||||||
Other, net
|
4 | 9 | ||||||
NET CASH FROM FINANCING ACTIVITIES
|
17,184 | 16,603 | ||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(5,988 | ) | (52,034 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
11,305 | 43,363 | ||||||
CASH AND CASH EQUIVALENTS (OVERDRAFT), END OF PERIOD
|
$ | 5,317 | $ | (8,671 | ) | |||
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
|
||||||||
Interest paid
|
$ | 2,079 | $ | 1,820 | ||||
Income taxes paid
|
6,289 | 2,964 | ||||||
NON-CASH FINANCING ACTIVITIES:
|
||||||||
Common stock issued under deferred compensation plans
|
$ | 1,008 | $ | 142 |
A.
|
BASIS OF PRESENTATION
|
B.
|
FAIR VALUE
|
June 30, 2012
|
June 25, 2011
|
|||||||||||||||
(in thousands)
|
Quoted
Prices in
Active
Markets
(Level 1)
|
Quoted
Prices in
Active
Markets
(Level 2)
|
Total
|
Quoted
Prices in
Active
Markets
(Level 1)
|
||||||||||||
Recurring:
|
||||||||||||||||
Money market funds
|
$ | 99 | $ | 99 | $ | 84 | ||||||||||
Mutual funds:
|
||||||||||||||||
Domestic stock funds
|
568 | 568 | 570 | |||||||||||||
International stock funds
|
442 | 442 | 539 | |||||||||||||
Target funds
|
132 | 132 | 153 | |||||||||||||
Bond funds
|
113 | 113 | 105 | |||||||||||||
Total mutual funds
|
1,255 | 1,255 | 1,367 | |||||||||||||
Non-Recurring
|
||||||||||||||||
Property, plant and equipment
|
$ |
600
|
600 | |||||||||||||
$ | 1,354 | $ |
$600
|
$ | 1,954 | $ | 1,451 |
C.
|
REVENUE RECOGNITION
|
June 30,
2012
|
December 31,
2011
|
June 25,
2011
|
||||||||||
Cost and Earnings in Excess of Billings
|
$ | 4,799 | $ | 3,670 | $ | 5,716 | ||||||
Billings in Excess of Cost and Earnings
|
3,227 | 2,668 | 1,751 |
D.
|
EARNINGS PER SHARE
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30,
2012
|
June 25,
2011
|
June 30,
2012
|
June 25,
2011
|
|||||||||||||
Numerator:
|
||||||||||||||||
Net earnings attributable to controlling interest
|
$ | 17,509 | $ | 4,277 | $ | 21,664 | $ | 607 | ||||||||
Adjustment for earnings allocated to non-vested restricted common stock
|
(148 | ) | (45 | ) | (184 | ) | (7 | ) | ||||||||
Net earnings for calculating EPS
|
$ | 17,361 | $ | 4,232 | $ | 21,480 | $ | 600 | ||||||||
Denominator:
|
||||||||||||||||
Weighted average shares outstanding
|
19,787 | 19,576 | 19,761 | 19,527 | ||||||||||||
Adjustment for non-vested restricted common stock
|
(173 | ) | (163 | ) | (169 | ) | (167 | ) | ||||||||
Shares for calculating basic EPS
|
19,614 | 19,413 | 19,592 | 19,360 | ||||||||||||
Effect of dilutive stock options
|
29 | 56 | 24 | 77 | ||||||||||||
Shares for calculating diluted EPS
|
19,643 | 19,469 | 19,616 | 19,437 | ||||||||||||
Net earnings per share:
|
||||||||||||||||
Basic
|
$ | 0.88 | $ | 0.22 | $ | 1.10 | $ | 0.03 | ||||||||
Diluted
|
$ | 0.88 | $ | 0.22 | $ | 1.10 | $ | 0.03 |
E.
|
ASSETS HELD FOR SALE AND NET (GAIN) LOSS ON DISPOSITION OF ASSETS, EARLY RETIREMENT AND OTHER IMPAIRMENTS AND EXIT CHARGES
|
|
Included in “Assets held for sale” on our Consolidated Condensed Balance Sheets are certain property, plant and equipment totaling $5.1 million on June 25, 2011. The assets held for sale consist of certain vacant land and facilities we previously closed to better align manufacturing capacity with the current business environment. The fair values were determined based on appraisals or recent offers to acquire assets. These and other idle assets were evaluated based on the requirements of ASC 360, which resulted in impairment and other exit charges included in “Net (gain) loss on disposition of assets, early retirement and other impairment and exit charges” for the periods presented below. These amounts include the following, separated by reporting segment (in thousands):
|
Three Months Ended June 30, 2012
|
Three Months Ended June 25, 2011
|
|||||||||||||||||||||||||||||||
Eastern
and
Western
|
Site-
Built
|
All
Other
|
Total
|
Eastern
and
Western
|
Site-
Built
|
All
Other
|
Total
|
|||||||||||||||||||||||||
Severances and early retirement
|
$ | 26 | $ | - | $ | 2 | $ | 28 | $ | 10 | $ | - | $ | 3,309 | $ | 3,319 | ||||||||||||||||
Property, plant and equipment
|
(59 | ) | (68 | ) | 129 | 2 | (78 | ) | (18 | ) | 190 | 94 | ||||||||||||||||||||
(Gain) loss on impairment or sale of real estate
|
(6,908 | ) | (6,908 | ) | 69 | 69 | ||||||||||||||||||||||||||
Total
|
$ | (6,941 | ) | $ | (68 | ) | $ | 131 | $ | (6,878 | ) | $ | 1 | $ | (18 | ) | $ | 3,499 | $ | 3,482 |
Six Months Ended June 30, 2012
|
Six Months Ended June 25, 2011
|
|||||||||||||||||||||||||||||||
Eastern
and
Western
|
Site-
Built
|
All
Other
|
Total
|
Eastern
and
Western
|
Site-
Built
|
All
Other
|
Total
|
|||||||||||||||||||||||||
Severances and early retirement
|
$ | 111 | $ | 1 | $ | 36 | $ | 148 | $ | 125 | $ | 9 | $ | 3,334 | $ | 3,468 | ||||||||||||||||
Property, plant and equipment
|
(95 | ) | (96 | ) | 170 | (21 | ) | (185 | ) | (23 | ) | 160 | (48 | ) | ||||||||||||||||||
(Gain) loss on impairment or sale of real estate
|
(6,910 | ) | (6,910 | ) | 69 | 69 | ||||||||||||||||||||||||||
Total
|
$ | (6,894 | ) | $ | (95 | ) | $ | 206 | $ | (6,783 | ) | $ | 9 | $ | (14 | ) | $ | 3,494 | $ | 3,489 |
|
The changes in assets held for sale are as follows (in thousands):
|
Description
|
Net Book Value
|
Date of Sale
|
Net Sales Price
|
|||
Assets held for sale as of December 25, 2010
|
$ | 2,446 | ||||
Additions
|
5,082 | |||||
Transfers to held for use
|
(1,619 | ) | ||||
Sale of certain real estate in Indianapolis, Indiana
|
(827 | ) |
May 17, 2011
|
$0.7 million
|
||
Assets held for sale as of June 25, 2011
|
$ | 5,082 |
F.
|
COMMITMENTS, CONTINGENCIES, AND GUARANTEES
|
G.
|
BUSINESS COMBINATIONS
|
Company
Name
|
Acquisition
Date
|
Purchase
Price
|
Intangible
Assets
|
Net
Tangible
Assets
|
Operating
Segment
|
Business Description
|
||||||
MSR Forest Products, LLC
(“MSR”)
|
May 16, 2012
|
$3.2 (asset purchase)
|
$ | 1.1 | $ | 2.1 |
Distribution Division
|
Supplies roof trusses and cut-to-size lumber to manufactured housing customers. Facilities are located in Haleyville, AL and Waycross, GA. In 2011, MSR had annual sales of $10 million.
|
H.
|
SEGMENT REPORTING
|
Three Months Ended June 30, 2012
|
||||||||||||||||||||
Eastern and
Western
|
Site-Built
|
All Other
|
Corporate
|
Total
|
||||||||||||||||
Net sales to outside customers
|
$ | 476,065 | $ | 53,388 | $ | 64,240 | $ | - | $ | 593,693 | ||||||||||
Intersegment net sales
|
17,792 | 5,053 | 4,256 | - | 27,101 | |||||||||||||||
Segment operating profit (loss)
|
26,733 | 1,057 | 199 | 1,530 | 29,519 |
Three Months Ended June 25, 2011
|
||||||||||||||||||||
Eastern and
Western
|
Site-Built
|
All Other
|
Corporate
|
Total
|
||||||||||||||||
Net sales to outside customers
|
$ | 451,952 | $ | 47,313 | $ | 44,874 | $ | - | 544,139 | |||||||||||
Intersegment net sales
|
22,735 | 7,106 | 12,310 | - | 42,151 | |||||||||||||||
Segment operating profit (loss)
|
9,663 | (2,951 | ) | (583 | ) | 1,648 | 7,777 |
Six Months Ended June 30, 2012
|
||||||||||||||||||||
Eastern and
Western
|
Site-Built
|
All Other
|
Corporate
|
Total
|
||||||||||||||||
Net sales to outside customers
|
$ | 842,903 | $ | 100,931 | $ | 106,970 | $ | - | $ | 1,050,804 | ||||||||||
Intersegment net sales
|
35,933 | 8,876 | 8,609 | - | 53,418 | |||||||||||||||
Segment operating profit (loss)
|
39,245 | 464 | (1,275 | ) | (1,122 | ) | 37,312 |
Six Months Ended June 25, 2011
|
||||||||||||||||||||
Eastern and
Western
|
Site-Built
|
All Other
|
Corporate
|
Total
|
||||||||||||||||
Net sales to outside customers
|
$ | 771,900 | $ | 84,193 | $ | 75,279 | $ | - | $ | 931,372 | ||||||||||
Intersegment net sales
|
43,344 | 12,947 | 20,847 | - | 77,138 | |||||||||||||||
Segment operating profit (loss)
|
8,935 | (5,799 | ) | (2,075 | ) | 1,635 | 2,696 |
I.
|
INCOME TAXES
|
·
|
Our sales increased 9% primarily due to an increase in lumber prices. Our unit sales increased to all of our markets, except retail building materials We experienced our strongest sales increases to the manufactured housing and industrial markets.
|
·
|
The retail building materials market, which has been adversely impacted by a decline in consumer demand in prior years, experienced a trend up early in the year due in part to favorable weather. More recently, consumer spending and confidence appears to have softened. Our unit sales decrease was due to the fact we lost some market share with a major retail customer this year, primarily in product lines with lower gross margins. This decrease was offset to some extent by gaining share with other customers in a variety of other product lines.
|
·
|
National housing starts increased approximately 26% in the period of March through May of 2012 (our sales trail housing starts by about a month), compared to the same period of 2011. Our unit sales increased slightly to this market. We have lost share of the residential construction market due to our focus on profitability and cash flow and the significant excess capacity of suppliers servicing the market.
|
·
|
We experienced a strong sales increase in sales to our industrial customers due to share gains with existing customers and by adding new customers.
|
·
|
Shipments of HUD code manufactured homes were up 17% in April and May 2012, compared to the same period of 2011. We have maintained our share of the manufactured housing market in the product lines we offer and our sales increase reflects greater market activity.
|
·
|
Our gross profit percentage increased to 12.1% from 10.4% comparing 2012 to 2011. In addition, our gross profit dollars increased by 27%, which compares favorably to our 1% increase in unit sales. Our higher gross profit percentage in 2012 reflects the benefit of selling into a rising lumber market this year contrasted with selling into a falling market in 2011, as well as our focus on sales of product lines with higher gross margins, combined with improvements in productivity.
|
·
|
We sold certain real estate in Fontana, CA for approximately $12.1 million and recognized a pre-tax gain of approximately $7.2 million, or $0.22 per diluted share.
|
Random Lengths Composite
|
||||||||
Average $/MBF
|
||||||||
2012
|
2011
|
|||||||
January
|
$ | 281 | $ | 301 | ||||
February
|
286 | 296 | ||||||
March
|
300 | 294 | ||||||
April
|
308 | 275 | ||||||
May
|
342 | 259 | ||||||
June
|
330 | 262 | ||||||
Second quarter average
|
$ | 327 | $ | 265 | ||||
Year-to-date average
|
308 | 281 | ||||||
Second quarter percentage change
|
23.4
|
% | ||||||
Year-to-date percentage change
|
9.6
|
% |
Random Lengths SYP
|
||||||||
Average $/MBF
|
||||||||
2012
|
2011
|
|||||||
January
|
$ | 269 | $ | 282 | ||||
February
|
278 | 289 | ||||||
March
|
300 | 290 | ||||||
April
|
314 | 266 | ||||||
May
|
341 | 254 | ||||||
June
|
314 | 246 | ||||||
Second quarter average
|
$ | 323 | $ | 255 | ||||
Year-to-date average
|
303 | 271 | ||||||
Second quarter percentage change
|
26.7 | % | ||||||
Year-to-date percentage change
|
11.8 | % |
·
|
Products with fixed selling prices. These products include value-added products such as decking and fencing sold to retail building materials customers, as well as trusses, wall panels and other components sold to the residential construction market, and most industrial packaging products. Prices for these products are generally fixed at the time of the sales quotation for a specified period of time or are based upon a specific quantity. In order to maintain margins and reduce any exposure to adverse trends in the price of component lumber products, we attempt to lock in costs with our suppliers for these sales commitments. Also, the time period and quantity limitations generally allow us to re-price our products for changes in lumber costs from our suppliers.
|
·
|
Products with selling prices indexed to the reported Lumber Market with a fixed dollar "adder" to cover conversion costs and profits. These products primarily include treated lumber, remanufactured lumber, and trusses sold to the manufactured housing industry. For these products, we estimate the customers' needs and we carry anticipated levels of inventory. Because lumber costs are incurred in advance of final sale prices, subsequent increases or decreases in the market price of lumber impact our gross margins. For these products, our margins are exposed to changes in the trend of lumber prices. As a result of the decline in the housing market and our sales to residential and commercial builders, a greater percentage of our sales fall into this general pricing category. Consequently, we believe our profitability may be impacted to a much greater extent to changes in the trend of lumber prices.
|
·
|
Products with significant inventory levels with low turnover rates, whose selling prices are indexed to the Lumber Market. In other words, the longer the period of time these products remain in inventory, the greater the exposure to changes in the price of lumber. This would include treated lumber, which comprises approximately 17% of our total sales. This exposure is less significant with remanufactured lumber, trusses sold to the manufactured housing market, and other similar products, due to the higher rate of inventory turnover. We attempt to mitigate the risk associated with treated lumber through vendor consignment inventory programs. (Please refer to the “Risk Factors” section of our annual report on form 10-K, filed with the United States Securities and Exchange Commission.)
|
·
|
Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-family construction projects. We attempt to mitigate this risk through our purchasing practices by locking in costs.
|
Period 1
|
Period 2
|
|||||||
Lumber cost
|
$ | 300 | $ | 400 | ||||
Conversion cost
|
50 | 50 | ||||||
= Product cost
|
350 | 450 | ||||||
Adder
|
50 | 50 | ||||||
= Sell price
|
$ | 400 | $ | 500 | ||||
Gross margin
|
12.5 | % | 10.0 | % |
Three Months Ended
|
Six months Ended
|
|||||||||||||||
June 30, 2012
|
June 25, 2011
|
June 30, 2012
|
June 25, 2011
|
|||||||||||||
Net sales
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
Cost of goods sold
|
87.9 | 89.6 | 88.1 | 89.5 | ||||||||||||
Gross profit
|
12.1 | 10.4 | 11.9 | 10.5 | ||||||||||||
Selling, general, and administrative expenses
|
8.3 | 8.3 | 9.0 | 9.9 | ||||||||||||
Net (gain) loss on disposition of assets, early retirement, and other impairment and exit charges
|
(1.2 | ) | 0.6 | (0.6 | ) | 0.4 | ||||||||||
Earnings from operations
|
5.0 | 1.4 | 3.6 | 0.3 | ||||||||||||
Other expense (income), net
|
0.2 | 0.2 | 0.2 | 0.2 | ||||||||||||
Earnings before income taxes
|
4.8 | 1.3 | 3.4 | 0.1 | ||||||||||||
Income taxes
|
1.8 | 0.5 | 1.3 | 0.0 | ||||||||||||
Net earnings
|
3.0 | 0.8 | 2.1 | 0.1 | ||||||||||||
Less net earnings attributable to noncontrolling interest
|
(0.1 | ) | (0.0 | ) | (0.1 | ) | (0.0 | ) | ||||||||
Net earnings attributable to controlling interest
|
2.9 | % | 0.8 | % | 2.1 | % | 0.1 | % |
·
|
Diversifying our end market sales mix by increasing sales of specialty wood packaging to industrial users, increasing our penetration of the concrete forming market, increasing our sales of engineered wood components for custom home, multi-family, military and light commercial construction, and increasing our market share with independent retailers.
|
·
|
Expanding geographically in our core businesses, domestically and internationally.
|
·
|
Increasing sales of value-added products, which primarily consist of fencing, decking, lattice, and other specialty products sold to the retail building materials market, specialty wood packaging, engineered wood components, and wood alternative products. Wood alternative products consist primarily of composite wood and plastics. Engineered wood components include roof trusses, wall panels, and floor systems. Although we consider the treatment of dimensional lumber with certain chemical preservatives a value-added process, treated lumber is not presently included in the value-added sales totals.
|
·
|
Developing new products and expanding our product offering for existing customers.
|
·
|
Maximizing unit sales growth while achieving return on investment goals.
|
Three Months Ended
|
Six Months Ended
|
|||||||||||||||||||||||
Market Classification
|
June 30, 2012
|
June 25, 2011
|
% Change
|
June 30, 2012
|
June 25, 2011
|
% Change
|
||||||||||||||||||
Retail Building Materials
|
$ | 280,775 | $ | 287,475 | (2.3 | ) | $ | 477,646 | $ | 462,741 | 3.2 | |||||||||||||
Residential Construction
|
60,176 | 56,611 | 6.3 | 112,103 | 104,442 | 7.3 | ||||||||||||||||||
Commercial Construction and Concrete Forming
|
24,180 | 21,139 | 14.4 | 44,386 | 35,791 | 24.0 | ||||||||||||||||||
Industrial
|
158,287 | 126,330 | 25.3 | 290,594 | 235,756 | 23.3 | ||||||||||||||||||
Manufactured Housing
|
80,693 | 64,607 | 24.9 | 143,732 | 111,654 | 28.7 | ||||||||||||||||||
Total Gross Sales
|
604,111 | 556,162 | 8.6 | 1,068,461 | 950,384 | 12.4 | ||||||||||||||||||
Sales Allowances
|
(10,418 | ) | (12,023 | ) | (17,657 | ) | (19,012 | ) | ||||||||||||||||
Total Net Sales
|
$ | 593,693 | $ | 544,139 | 9.1 | $ | 1,050,804 | $ | 931,372 | 12.8 |
Three Months Ended
|
Six Months Ended
|
|||||||||||||||
June 30, 2012
|
June 25, 2011
|
June 30, 2012
|
June 25, 2011
|
|||||||||||||
Value-Added
|
59.4 | % | 59.9 | % | 59.2 | % | 59.0 | % | ||||||||
Commodity-Based
|
40.6 | % | 40.1 | % | 40.8 | % | 41.0 | % |
·
|
Current and projected earnings, cash flow and return on investment
|
·
|
Current and projected market demand
|
·
|
Market share
|
·
|
Competitive factors
|
·
|
Future growth opportunities
|
·
|
Personnel and management
|
Six Months Ended
|
||||||||
June 30, 2012
|
June 25, 2011
|
|||||||
Cash from operating activities
|
$ | (19,712 | ) | $ | (57,911 | ) | ||
Cash from investing activities
|
(3,460 | ) | (10,726 | ) | ||||
Cash from financing activities
|
17,184 | 16,603 | ||||||
Net change in cash and cash equivalents
|
(5,988 | ) | (52,034 | ) | ||||
Cash and cash equivalents, beginning of period
|
11,305 | 43,363 | ||||||
Cash overdraft, end of period
|
$ | 5,317 | $ | (8,671 | ) |
(a)
|
Evaluation of Disclosure Controls and Procedures. With the participation of management, our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15e and 15d – 15e) as of the quarter ended June 30, 2012 (the “Evaluation Date”), have concluded that, as of such date, our disclosure controls and procedures were effective.
|
(b)
|
Changes in Internal Controls. During the quarter ended June 30, 2012, there were no changes in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
|
Fiscal Month
|
(a)
|
(b)
|
(c)
|
(d)
|
||||||||||||
April 1 – May 5, 2012(1)
|
2,988,229 | |||||||||||||||
May 6 – June 2, 2012
|
2,988,229 | |||||||||||||||
June 3 – June 30, 2012
|
2,988,229 |
(a)
|
Total number of shares purchased.
|
|
(b)
|
Average price paid per share.
|
|
(c)
|
Total number of shares purchased as part of publicly announced plans or programs.
|
|
(d)
|
Maximum number of shares that may yet be purchased under the plans or programs.
|
(1)
|
On November 14, 2001, the Board of Directors approved a share repurchase program (which succeeded a previous program) allowing us to repurchase up to 2.5 million shares of our common stock. On October 14, 2011, our Board authorized an additional 2 million shares to be repurchased under our share repurchase program. The total number of shares that may be repurchased under the program is almost 3 million shares.
|
31
|
Certifications.
|
|
(a)
|
Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
|
(b)
|
Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
32
|
Certifications.
|
|
(a)
|
Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
|
(b)
|
Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
101
|
Interactive Data File.
|
|
(INS)
|
XBRL Instance Document.
|
|
(SCH)
|
XBRL Schema Document.
|
|
(CAL)
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
(LAB)
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
(PRE)
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
(DEF)
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
UNIVERSAL FOREST PRODUCTS, INC. | ||
Date: August 8, 2012
|
By: |
/s/ Matthew J. Missad
|
|
Matthew J. Missad,
|
|
Chief Executive Officer and Principal Executive Officer
|
||
Date: August 8, 2012
|
By: |
/s/ Michael R. Cole
|
|
Michael R. Cole, | |
|
Chief Financial Officer | |
Principal Financial Officer and | ||
Principal Accounting Officer |
Exhibit No.
|
Description
|
31
|
Certifications.
|
|
Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
|
Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
32
|
Certifications.
|
|
Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
|
Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
|
101
|
Interactive Data File.
|
|
(INS)
|
XBRL Instance Document.
|
|
(SCH)
|
XBRL Schema Document.
|
|
(CAL)
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
(LAB)
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
(PRE)
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
(DEF)
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
1.
|
I have reviewed this report on Form 10-Q of Universal Forest Products, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 8, 2012
|
/s/ Matthew J. Missad
|
|
Matthew J. Missad,
|
||
Chief Executive Officer and Principal Executive Officer
|
1.
|
I have reviewed this report on Form 10-Q of Universal Forest Products, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report, based on such evaluation; and
|
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
|
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and
|
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date: August 8, 2012
|
/s/ Michael R. Cole
|
|
Michael R. Cole,
|
||
Chief Financial Officer,
|
||
Principal Financial Officer and
|
||
Principal Accounting Officer
|
UNIVERSAL FOREST PRODUCTS, INC. | ||
Date: August 8, 2012
|
By: |
/s/ Matthew J. Missad
|
Matthew J. Missad, | ||
Chief Executive Officer and Principal Executive Officer |
UNIVERSAL FOREST PRODUCTS, INC.
|
||
Date: August 8, 2012
|
By: |
/s/ Michael R. Cole
|
Michael R. Cole, | ||
Chief Financial Officer, | ||
Principal Financial Officer and | ||
Principal Accounting Officer |