x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o |
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
|
(Former name or former address, if changed since last report.)
|
Large Accelerated Filer x
|
Accelerated Filer o
|
Non-Accelerated Filer o
|
Smaller reporting company o
|
Class
|
Outstanding as of March 30, 2013
|
|||
Common stock, no par value
|
19,868,615
|
Page No.
|
||
PART I.
|
FINANCIAL INFORMATION.
|
|
Item 1.
|
Financial Statements.
|
|
3 | ||
4 | ||
5 | ||
6 | ||
7 | ||
Item 2.
|
15 | |
Item 3.
|
28 | |
Item 4.
|
28 | |
PART II.
|
OTHER INFORMATION.
|
|
Item 1.
|
Legal Proceedings – NONE.
|
|
Item 1A.
|
29 | |
Item 2.
|
29 | |
Item 3.
|
Defaults upon Senior Securities – NONE.
|
|
Item 4.
|
Mine Safety Disclosures – NONE.
|
|
Item 5.
|
29 | |
Item 6.
|
30 |
March 30,
|
December 29,
|
March 31,
|
||||||||||
2013
|
2012
|
2012
|
||||||||||
ASSETS
|
||||||||||||
CURRENT ASSETS:
|
||||||||||||
Cash and cash equivalents
|
$ | - | $ | 7,647 | $ | - | ||||||
Restricted cash
|
653 | 6,831 | 653 | |||||||||
Accounts receivable, net
|
232,954 | 163,225 | 192,427 | |||||||||
Inventories:
|
||||||||||||
Raw materials
|
158,742 | 136,201 | 121,595 | |||||||||
Finished goods
|
132,010 | 106,979 | 96,958 | |||||||||
Total inventories
|
290,752 | 243,180 | 218,553 | |||||||||
Refundable income taxes
|
7,521 | 2,091 | ||||||||||
Deferred income taxes
|
9,222 | 9,212 | 9,694 | |||||||||
Other current assets
|
16,494 | 15,557 | 11,967 | |||||||||
TOTAL CURRENT ASSETS
|
550,075 | 453,173 | 435,385 | |||||||||
DEFERRED INCOME TAXES
|
1,721 | 1,759 | - | |||||||||
OTHER ASSETS
|
15,868 | 14,583 | 15,712 | |||||||||
GOODWILL
|
161,266 | 159,316 | 154,702 | |||||||||
INDEFINITE-LIVED INTANGIBLE ASSETS
|
2,340 | 2,340 | 2,340 | |||||||||
OTHER INTANGIBLE ASSETS, NET
|
7,597 | 8,101 | 10,200 | |||||||||
PROPERTY, PLANT AND EQUIPMENT:
|
||||||||||||
Property, plant and equipment
|
556,559 | 543,595 | 540,223 | |||||||||
Less accumulated depreciation and amortization
|
(328,476 | ) | (322,327 | ) | (318,519 | ) | ||||||
PROPERTY, PLANT AND EQUIPMENT, NET
|
228,083 | 221,268 | 221,704 | |||||||||
TOTAL ASSETS
|
$ | 966,950 | $ | 860,540 | $ | 840,043 | ||||||
LIABILITIES AND SHAREHOLDERS' EQUITY
|
||||||||||||
CURRENT LIABILITIES:
|
||||||||||||
Cash overdraft
|
$ | 7,665 | $ | - | $ | 4,935 | ||||||
Accounts payable
|
93,597 | 66,054 | 75,347 | |||||||||
Accrued liabilities:
|
||||||||||||
Compensation and benefits
|
32,819 | 34,728 | 32,666 | |||||||||
Income taxes
|
930 | - | - | |||||||||
Other
|
18,817 | 14,002 | 15,075 | |||||||||
Current portion of long-term debt
|
- | - | 42,774 | |||||||||
TOTAL CURRENT LIABILITIES
|
153,828 | 114,784 | 170,797 | |||||||||
LONG-TERM DEBT, less current portion
|
155,181 | 95,790 | 43,668 | |||||||||
DEFERRED INCOME TAXES
|
25,004 | 24,930 | 19,008 | |||||||||
OTHER LIABILITIES
|
17,280 | 17,511 | 16,104 | |||||||||
TOTAL LIABILITIES
|
351,293 | 253,015 | 249,577 | |||||||||
SHAREHOLDERS' 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, 19,868,615, 19,799,606, and 19,715,647
|
$ | 19,869 | $ | 19,800 | $ | 19,716 | ||||||
Additional paid-in capital
|
151,889 | 149,805 | 146,523 | |||||||||
Retained earnings
|
432,116 | 426,887 | 415,003 | |||||||||
Accumulated other comprehensive earnings
|
4,377 | 4,258 | 4,234 | |||||||||
Employee stock notes receivable
|
(849 | ) | (982 | ) | (1,080 | ) | ||||||
Total controlling interest shareholders' equity
|
607,402 | 599,768 | 584,396 | |||||||||
Noncontrolling interest
|
8,255 | 7,757 | 6,070 | |||||||||
TOTAL SHAREHOLDERS' EQUITY
|
615,657 | 607,525 | 590,466 | |||||||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
|
$ | 966,950 | $ | 860,540 | $ | 840,043 |
Three Months Ended
|
||||||||
March 30,
|
March 31,
|
|||||||
2013
|
2012
|
|||||||
NET SALES
|
$ | 554,494 | $ | 457,111 | ||||
COST OF GOODS SOLD
|
497,315 | 403,445 | ||||||
GROSS PROFIT
|
57,179 | 53,666 | ||||||
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
|
48,228 | 45,778 | ||||||
NET (GAIN) LOSS ON DISPOSITION OF ASSETS,EARLY RETIREMENT AND OTHER IMPAIRMENT AND EXIT CHARGES
|
(106 | ) | 95 | |||||
EARNINGS FROM OPERATIONS
|
9,057 | 7,793 | ||||||
INTEREST EXPENSE
|
1,245 | 1,011 | ||||||
INTEREST INCOME
|
(147 | ) | (241 | ) | ||||
EQUITY IN EARNINGS OF INVESTEE
|
(42 | ) | (62 | ) | ||||
1,056 | 708 | |||||||
EARNINGS BEFORE INCOME TAXES
|
8,001 | 7,085 | ||||||
INCOME TAXES
|
2,245 | 2,699 | ||||||
NET EARNINGS
|
5,756 | 4,386 | ||||||
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
(532 | ) | (231 | ) | ||||
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST
|
$ | 5,224 | $ | 4,155 | ||||
EARNINGS PER SHARE - BASIC
|
$ | 0.26 | $ | 0.21 | ||||
EARNINGS PER SHARE - DILUTED
|
$ | 0.26 | $ | 0.21 | ||||
COMPREHENSIVE INCOME
|
6,171 | 5,444 | ||||||
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
|
(828 | ) | (655 | ) | ||||
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTERST
|
$ | 5,343 | $ | 4,789 |
Controlling Interest Shareholders' Equity
|
||||||||||||||||||||||||||||
Common
Stock
|
Additional
Paid-In
Capital
|
Retained Earnings
|
Accumulat-
ed Other Comprehen-
sive
Earnings
|
Employees
Stock
Notes Receivable
|
Noncontrolling Interest
|
Total
|
||||||||||||||||||||||
Balance at December 31, 2011
|
$ | 19,624 | $ | 143,988 | $ | 410,848 | $ | 3,600 | $ | (1,255 | ) | $ | 5,794 | $ | 582,599 | |||||||||||||
Net earnings
|
4,155 | 231 | 4,386 | |||||||||||||||||||||||||
Foreign currency translation adjustment
|
634 | 424 | 1,058 | |||||||||||||||||||||||||
Distributions to noncontrolling interest
|
(379 | ) | (379 | ) | ||||||||||||||||||||||||
Issuance of 42,287 shares under employee stock plans
|
42 | 994 | 1,036 | |||||||||||||||||||||||||
Issuance of 24,335 shares under stock grant programs
|
25 | 28 | 53 | |||||||||||||||||||||||||
Issuance of 25,222 shares under deferred compensation plans
|
25 | (25 | ) | - | ||||||||||||||||||||||||
Tax benefits from non-qualified stock options exercised
|
103 | 103 | ||||||||||||||||||||||||||
Expense associated with share-based compensation arrangements
|
451 | 451 | ||||||||||||||||||||||||||
Accrued expense under deferred compensation plans
|
984 | 984 | ||||||||||||||||||||||||||
Payments received on employee stock notes receivable
|
175 | 175 | ||||||||||||||||||||||||||
Balance at March 31, 2012
|
$ | 19,716 | $ | 146,523 | $ | 415,003 | $ | 4,234 | $ | (1,080 | ) | $ | 6,070 | $ | 590,466 | |||||||||||||
Balance at December 29, 2012
|
$ | 19,800 | $ | 149,805 | $ | 426,887 | $ | 4,258 | $ | (982 | ) | $ | 7,757 | $ | 607,525 | |||||||||||||
Net earnings
|
5,224 | 532 | 5,756 | |||||||||||||||||||||||||
Foreign currency translation adjustment
|
119 | 296 | 415 | |||||||||||||||||||||||||
Capital contribution from noncontrolling interest
|
- | |||||||||||||||||||||||||||
Distributions to noncontrolling interest
|
(330 | ) | (330 | ) | ||||||||||||||||||||||||
Issuance of 3,409 shares under employee stock plans
|
3 | 77 | 80 | |||||||||||||||||||||||||
Issuance of 32,810 shares under stock grant programs
|
33 | (19 | ) | 5 | 19 | |||||||||||||||||||||||
Issuance of 33,005 shares under deferred compensation plans
|
33 | (33 | ) | - | ||||||||||||||||||||||||
Tax benefits from non-qualified stock options exercised
|
7 | 7 | ||||||||||||||||||||||||||
Expense associated with share-based compensation arrangements
|
642 | 642 | ||||||||||||||||||||||||||
Accrued expense under deferred compensation plans
|
1,410 | 1,410 | ||||||||||||||||||||||||||
Payments received on employee stock notes receivable
|
133 | 133 | ||||||||||||||||||||||||||
Balance at March 30, 2013
|
$ | 19,869 | $ | 151,889 | $ | 432,116 | $ | 4,377 | $ | (849 | ) | $ | 8,255 | $ | 615,657 |
Three Months Ended
|
||||||||
March 30,
|
March 31,
|
|||||||
2013
|
2012
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net earnings
|
$ | 5,756 | $ | 4,386 | ||||
Adjustments to reconcile net earnings to net cash from operating activities:
|
||||||||
Depreciation
|
7,140 | 7,178 | ||||||
Amortization of intangibles
|
604 | 745 | ||||||
Expense associated with share-based compensation arrangements
|
642 | 451 | ||||||
Excess tax benefits from share-based compensation arrangements
|
- | (12 | ) | |||||
Expense associated with stock grant plans
|
19 | 53 | ||||||
Deferred income taxes (credit)
|
36 | (50 | ) | |||||
Equity in earnings of investee
|
(42 | ) | (62 | ) | ||||
Net gain on sale or impairment of property, plant and equipment
|
(127 | ) | (25 | ) | ||||
Changes in:
|
||||||||
Accounts receivable
|
(70,715 | ) | (65,005 | ) | ||||
Inventories
|
(47,305 | ) | (23,392 | ) | ||||
Accounts payable
|
27,417 | 25,585 | ||||||
Accrued liabilities and other
|
12,001 | 5,327 | ||||||
NET CASH FROM OPERATING ACTIVITIES
|
(64,574 | ) | (44,821 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchases of property, plant and equipment
|
(8,085 | ) | (7,860 | ) | ||||
Proceeds from sale of property, plant and equipment
|
251 | 2,035 | ||||||
Acquisitions, net of cash received
|
(8,600 | ) | - | |||||
Purchase of patents & product technology
|
- | (21 | ) | |||||
Advances on notes receivable
|
(383 | ) | - | |||||
Collections on notes receivable
|
543 | 647 | ||||||
Cash restricted as to use
|
6,178 | - | ||||||
Other, net
|
6 | (302 | ) | |||||
NET CASH FROM INVESTING ACTIVITIES
|
(10,090 | ) | (5,501 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Net borrowings under revolving credit facilities
|
59,391 | 33,968 | ||||||
Debt issuance costs
|
(6 | ) | (81 | ) | ||||
Proceeds from issuance of common stock
|
80 | 1,036 | ||||||
Distributions to noncontrolling interest
|
(330 | ) | (379 | ) | ||||
Excess tax benefits from share-based compensation arrangements
|
- | 12 | ||||||
Other, net
|
- | 3 | ||||||
NET CASH FROM FINANCING ACTIVITIES
|
59,135 | 34,559 | ||||||
Effect of exchange rate changes on cash
|
217 | 176 | ||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
(15,312 | ) | (15,587 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
7,647 | 10,652 | ||||||
CASH OVERDRAFT, END OF PERIOD
|
$ | (7,665 | ) | $ | (4,935 | ) | ||
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
|
||||||||
Interest paid
|
$ | 417 | $ | 261 | ||||
Income taxes (refunded) paid
|
(6,199 | ) | 3,400 | |||||
NON-CASH FINANCING ACTIVITIES:
|
||||||||
Common stock issued under deferred compensation plans
|
1,329 | 851 |
A.
|
BASIS OF PRESENTATION
|
B.
|
FAIR VALUE
|
March 30, 2013
|
March 31, 2012
|
|||||||
(in thousands)
|
Quoted Prices
in Active
Markets
(Level 1)
|
Quoted Prices
in Active
Markets
(Level 1)
|
||||||
Recurring:
|
||||||||
Money market funds
|
$ | 62 | $ | 99 | ||||
Mutual funds:
|
||||||||
Domestic stock funds
|
653 | 592 | ||||||
International stock funds
|
537 | 494 | ||||||
Target funds
|
151 | 139 | ||||||
Bond funds
|
140 | 110 | ||||||
Total mutual funds
|
1,481 | 1,335 | ||||||
$ | 1,543 | $ | 1,434 |
C.
|
REVENUE RECOGNITION
|
|
March 30,
2013
|
December 29,
2012
|
March 31,
2012
|
|||||||||
Cost and Earnings in Excess of Billings
|
$ | 6,660 | $ | 4,981 | $ | 2,752 | ||||||
Billings in Excess of Cost and Earnings
|
4,189 | 2,020 | 1,235 |
D.
|
EARNINGS PER SHARE
|
Three Months Ended
|
||||||||
March 30,
2013
|
March 31,
2012
|
|||||||
Numerator:
|
||||||||
Net earnings attributable to controlling interest
|
$ | 5,224 | $ | 4,155 | ||||
Adjustment for earnings allocated to non-vested restricted common stock
|
(48 | ) | (33 | ) | ||||
Net earnings for calculating EPS
|
$ | 5,176 | $ | 4,122 | ||||
Denominator:
|
||||||||
Weighted average shares outstanding
|
19,886 | 20,033 | ||||||
Adjustment for non-vested restricted common stock
|
(184 | ) | (464 | ) | ||||
Shares for calculating basic EPS
|
19,702 | 19,569 | ||||||
Effect of dilutive stock options
|
34 | 131 | ||||||
Shares for calculating diluted EPS
|
19,736 | 19,700 | ||||||
Net earnings per share:
|
||||||||
Basic
|
$ | 0.26 | $ | 0.21 | ||||
Diluted
|
$ | 0.26 | $ | 0.21 |
E.
|
NET (GAIN) LOSS ON DISPOSITION OF ASSETS, EARLY RETIREMENT AND OTHER IMPAIRMENT AND EXIT CHARGES
|
F.
|
COMMITMENTS, CONTINGENCIES, AND GUARANTEES
|
G.
|
BUSINESS COMBINATION
|
Company
Name
|
Acquisition
Date
|
Purchase
Price
|
Intangible
Assets
|
Net
Tangible
Assets
|
Operating
Segment
|
Business Description
|
||||||
Millry Mill Company, Inc. (“Millry”)
|
February 28, 2013
|
$2.3 (asset purchase)
|
$ | 0.1 | $ | 2.2 |
Eastern Division
|
A highly specialized export mill that produces rough dimension boards and lumber. Facility is located in Millry, AL.
|
||||
Custom Caseworks, Inc. (“Custom Caseworks”)
|
December 31, 2012
|
$6.3 (asset purchase)
|
$ | 2.0 | $ | 4.3 |
Western Division
|
A high-precision business-to-business manufacturer of engineered wood products in many commercial markets. Facility is located in Sauk Rapids, MN. Custom Caseworks has annual sales of $7 million.
|
||||
Nepa Pallet and Container Co., Inc. (“Nepa”)
|
November 5, 2012
|
$16.2
(asset purchase)
|
$ | 1.4 | $ | 14.8 |
Western Division
|
Manufactures pallets, containers and bins for agricultural and industrial customers. Facilities are located in Snohomish, Yakima and Wenatchee, WA. Nepa had trailing twelve month sales through September 2012 of $25 million.
|
||||
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 March 30, 2013
|
||||||||||||||||||||
Eastern and
Western
|
Site-Built
|
All Other
|
Corporate
|
Total
|
||||||||||||||||
Net sales to outside customers
|
$ | 445,524 | $ | 58,150 | $ | 50,820 | $ | - | $ | 554,494 | ||||||||||
Intersegment net sales
|
18,792 | 4,293 | 2,612 | - | 25,697 | |||||||||||||||
Segment operating profit (loss)
|
14,074 | (4,055 | ) | (346 | ) | (616 | ) | 9,057 |
Three Months Ended March 31, 2012
|
||||||||||||||||||||
Eastern and
Western
|
Site-Built
|
All Other
|
Corporate
|
Total
|
||||||||||||||||
Net sales to outside customers
|
$ | 366,837 | $ | 47,543 | $ | 42,731 | $ | - | $ | 457,111 | ||||||||||
Intersegment net sales
|
18,141 | 3,823 | 4,353 | - | 26,317 | |||||||||||||||
Segment operating profit (loss)
|
12,513 | (593 | ) | (1,475 | ) | (2,652 | ) | 7,793 |
I.
|
INCOME TAXES
|
J.
|
SUBSEQUENT EVENT
|
·
|
National housing starts increased approximately 33% in the period of December 2012 through February 2013 (our sales trail housing starts by about a month), compared to the same period of 2012, while our unit sales increased 22% in the residential construction market. Since the downturn in housing began, suppliers servicing this market have been challenged with significant excess capacity. Consequently, pricing pressure has been intense resulting in several years of operating losses for many industry participants. We have maintained our focus on profitability and cash flow by being selective in the business we take. Consequently, our sales may trail the market from time to time.
|
·
|
Shipments of HUD code manufactured homes were up 3% in January and February 2013, compared to the same period of 2012, which helped drive our 8% increase in unit sales to this market. We also believe modular market activity has improved. We have maintained our share of the manufactured housing market in the core product lines we offer.
|
·
|
The acquisition of two new operations since the first quarter of 2012 contributed a 6% increase in sales to our industrial customers.
|
·
|
Our operating profit percentage decreased to 1.6% from 1.7% comparing 2013 to 2012 primarily due to the higher level of lumber prices in the first quarter of 2013. We generally price our products to earn a fixed profit per unit such that lumber costs are passed through to the customer. Therefore, in periods of higher lumber prices our operating profit as a percentage of sales may decrease. See “Historical Lumber Prices”.
|
·
|
In the first quarter of 2013, we recognized a tax benefit for research and development and certain other tax credits totaling approximately $700,000 relating to 2012. These tax credits were enacted in the first quarter of 2013, retroactive to the beginning of 2012.
|
·
|
Higher lumber prices have resulted in a substantial year over year increase in our working capital and debt levels.
|
Random Lengths Composite
|
||||||||
Average $/MBF
|
||||||||
2013
|
2012
|
|||||||
January
|
$ | 393 | $ | 281 | ||||
February
|
409 | 286 | ||||||
March
|
436 | 300 | ||||||
First quarter average
|
$ | 413 | $ | 289 | ||||
First quarter percentage change
|
42.9 | % |
Random Lengths SYP
|
||||||||
Average $/MBF
|
||||||||
2013
|
2012
|
|||||||
January
|
$ | 397 | $ | 269 | ||||
February
|
426 | 278 | ||||||
March
|
445 | 300 | ||||||
First quarter average
|
$ | 423 | $ | 282 | ||||
First quarter percentage change
|
50.0 | % |
Ÿ
|
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.
|
Ÿ
|
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.
|
Ÿ
|
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 15% 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.)
|
Ÿ
|
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
|
||||||||
March 30,
2013
|
March 31,
2012
|
|||||||
Net sales
|
100.0 | % | 100.0 | % | ||||
Cost of goods sold
|
89.7 | 88.3 | ||||||
Gross profit
|
10.3 | 11.7 | ||||||
Selling, general, and administrative expenses
|
8.7 | 10.0 | ||||||
Net (gain) loss on disposition of assets, early retirement, and other impairment and exit charges
|
(0.0 | ) | 0.0 | |||||
Earnings from operations
|
1.6 | 1.7 | ||||||
Other expense (income), net
|
0.2 | 0.2 | ||||||
Earnings before income taxes
|
1.4 | 1.6 | ||||||
Income taxes
|
0.4 | 0.6 | ||||||
Net earnings
|
1.0 | 1.0 | ||||||
Less net earnings attributable to noncontrolling interest
|
(0.1 | ) | (0.1 | ) | ||||
Net earnings attributable to controlling interest
|
0.9 | % | 0.9 | % |
Ÿ
|
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.
|
Ÿ
|
Expanding geographically in our core businesses, domestically and internationally.
|
Ÿ
|
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. Engineered wood components include roof trusses, wall panels, and floor systems. Wood alternative products consist primarily of composite wood and plastics. 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.
|
Ÿ
|
Developing new products and expanding our product offering for existing customers.
|
Ÿ
|
Maximizing unit sales growth while achieving return on investment goals.
|
(in thousands)
|
Three Months Ended
|
|||||||||||
Market Classification
|
March 30,
2013
|
March 31,
2012
|
% Change
|
|||||||||
Retail Building Materials
|
$ | 205,716 | $ | 196,117 | 4.9 | |||||||
Industrial
|
160,457 | 133,670 | 20.0 | |||||||||
Manufactured Housing
|
89,867 | 63,040 | 42.6 | |||||||||
Residential Construction
|
74,307 | 51,807 | 43.4 | |||||||||
Commercial Construction and Concrete Forming
|
30,355 | 19,715 | 54.0 | |||||||||
Total Gross Sales
|
560,702 | 464,349 | 20.8 | |||||||||
Sales Allowances
|
(6,208 | ) | (7,238 | ) | ||||||||
Total Net Sales
|
$ | 554,494 | $ | 457,111 | 21.3 |
Three Months Ended
|
||||||||
March 30,
2013
|
March 31,
2012
|
|||||||
Value-Added
|
57.1 | % | 58.9 | % | ||||
Commodity-Based
|
42.9 | % | 41.1 | % |
·
|
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
|
Net Sales
|
Segment Operating Profit
|
|||||||||||||||||||||||
(in thousands)
|
Three Months Ended
|
Three Months Ended
|
||||||||||||||||||||||
March 30,
2013
|
March 31,
2012
|
% Change
|
March 30,
2013
|
March 31,
2012
|
$ Change
|
|||||||||||||||||||
Eastern and Western
|
$ | 445,524 | $ | 366,837 | 21.5 | $ | 14,074 | $ | 12,513 | 1,561 | ||||||||||||||
Site-Built
|
58,150 | 47,543 | 22.3 | (4,055 | ) | (593 | ) | (3,462 | ) | |||||||||||||||
All Other
|
50,820 | 42,731 | 18.9 | (346 | ) | (1,475 | ) | 1,129 | ||||||||||||||||
Corporate1
|
(616 | ) | (2,652 | ) | 2,036 | |||||||||||||||||||
Total
|
$ | 554,494 | $ | 457,111 | 21.3 | $ | 9,057 | $ | 7,793 | $ | 1,264 |
|
·
|
An increase in sales to the residential construction market due to an increase in housing starts.
|
|
·
|
An increase in commercial construction and concrete forming sales primarily due to market share gains.
|
|
·
|
An increase in manufactured housing sales due to an increase in industry production of HUD code homes.
|
|
·
|
Recently acquired businesses that serve the industrial market.
|
|
·
|
An increase in sales to the manufactured housing market by our UFP Distribution operations, primarily due to an increase in industry production of HUD code homes and market share gains from adding new product lines.
|
|
·
|
An increase in sales to the industrial market by our Universal Pinelli partnership, which manufactures moulding and millwork products out of its plant in Durango, Durango Mexico.
|
Three Months Ended
|
||||||||
March 30, 2013
|
March 31, 2012
|
|||||||
Cash from operating activities
|
$ | (64,574 | ) | $ | (44,821 | ) | ||
Cash from investing activities
|
(10,090 | ) | (5,501 | ) | ||||
Cash from financing activities
|
59,135 | 34,559 | ||||||
Effect of exchange rate changes on cash
|
217 | 176 | ||||||
Net change in cash and cash equivalents
|
(15,312 | ) | (15,587 | ) | ||||
Cash and cash equivalents, beginning of period
|
7,647 | 10,652 | ||||||
Cash overdraft, end of period
|
$ | ( 7,665 | ) | $ | (4,935 | ) |
(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 March 30, 2013 (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 March 30, 2013, 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.
|
(a)
|
None.
|
(b)
|
None.
|
(c)
|
Issuer purchases of equity securities.
|
Fiscal Month
|
(a)
|
(b)
|
(c)
|
(d)
|
||||||||||||
December 30 – February 2, 2013(1)
|
2,988,229 | |||||||||||||||
February 3 – March 2, 2013
|
2,988,229 | |||||||||||||||
March 3 – 30, 2013
|
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 approximately 3 million shares.
|
14
|
Form of Code of Ethics for Senior Financial Officers.
|
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.
|
*
|
Indicates a compensatory arrangement.
|
UNIVERSAL FOREST PRODUCTS, INC.
|
|
Date: April 30, 2013
|
By: /s/ Matthew J. Missad
|
|
Matthew J. Missad,
|
Chief Executive Officer and Principal Executive Officer
|
Date: April 30, 2013
|
By: /s/ Michael R. Cole
|
|
Michael R. Cole,
|
Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer
|
Exhibit No.
|
Description
|
Form of Code of Ethics for Senior Financial Officers.
|
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.
|
*
|
Indicates a compensatory arrangement.
|
1.
|
I act with honesty and integrity, avoiding actual or apparent conflicts of interest in personal and professional relationships.
|
2.
|
I provide constituents with information that is accurate, complete, objective, relevant, timely, and understandable.
|
3.
|
I comply with rules and regulations of federal, state, and local governments, and other appropriate private and public regulatory agencies.
|
4.
|
I act in good faith, responsibly, with due care, competence, and diligence, without misrepresenting material facts or allowing my independent judgment to be subordinated or otherwise compromised.
|
5.
|
I respect the confidentiality of information acquired in the course of my work except when authorized or otherwise legally obligated to disclose. Confidential information acquired in the course of my work is not used for my personal advantage.
|
6.
|
I share knowledge and maintain skills important and relevant to my constituents’ needs.
|
7.
|
I proactively promote ethical behavior among my professional peers.
|
8.
|
I comply with and adhere to each and all of the Company’s policies and practices, including those policies governing accounting and financial reporting practices and procedures.
|
|
|
|
|
|
|
|
|
|
|
(signature)
|
|
|
Dated
|
|
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: April 30, 2013
|
/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: April 30, 2013
|
/s/ Michael R. Cole
|
Michael R. Cole,
|
|
Chief Financial Officer,
|
|
Principal Financial Officer and Principal Accounting Officer
|
UNIVERSAL FOREST PRODUCTS, INC. | ||
Date: April 30, 2013
|
By: |
/s/ Matthew J. Missad
|
Matthew J. Missad, | ||
Chief Executive Officer and Principal Executive Officer |
UNIVERSAL FOREST PRODUCTS, INC. | ||
Date: April 30, 2013
|
By: |
/s/ Michael R. Cole
|
Michael R. Cole, | ||
Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer |