UFPI Reports 2009 Net Earnings of $24.3 Million Compared to $4.3
Million in 2008
Million in 2008
"The people of this company demonstrated their collective spirit by working hard to create profitability despite a drop in sales, and to create success under trying conditions," said CEO Michael B. Glenn. "We continue to eliminate waste and to focus on critical basics like inventory and receivables--which have proven to be the right strategies for fragile times.
"We will maintain a keen eye on those strategies in 2010, and will add an intense focus on sales growth during the year," he added. "Although we expect 2010 to be challenging, we've laid the groundwork to achieve new and sustainable growth in the future, and we're already seeing results."
Glenn noted that the Company's balanced business model "allowed us to discover new paths to success" within its four markets, and that he also expects steady growth in the Company's traditional business.
A contributing factor to the Company's 25 percent decline in annual net sales in 2009 was the 12 percent drop in the average composite lumber price from 2008. By market, Universal posted the following gross sales results for 2009:
Do-It-Yourself/retail: $130.7 million for the fourth quarter, a decrease of 14.8 percent from the same period of 2008. Annual gross DIY sales of $805.0 million in 2009 reflect a decrease of 12.4 percent from 2008. Sales throughout the year were negatively affected by extended high unemployment, a fragile economy, and weak consumer confidence. However, the Company remains a leading supplier to big-box and independent retailers, and is looking for growth with new customers and new products in 2010 and beyond. In addition, in 2009, the Company instituted initiatives and practices intended to increase its value to customers.
Industrial packaging/components: $111.6 million for the fourth quarter, a decrease of 8.5 percent from the fourth quarter of 2008. For the year, gross sales of $479.3 million reflect a decrease of 20.0 percent from 2008. Although 2009 sales in this market struggled along with U.S. manufacturing, Universal expects sustainable growth moving forward. In addition to its traditional industrial business--engineering and producing packaging and components for manufacturing and agricultural customers--the Company is enhancing its focus on related packaging products and accessories, and on its concrete forming business. The Company continues to be a leading supplier to these fragmented markets, but still has only a small fraction of the available business.
Site-built construction: Fourth-quarter sales of $54.2 million reflect a decrease of 42.4 percent from the same period of 2008. For the year, sales of $244.1 million were down 46.0 percent from 2008. According to the most recent statistics available, total housing starts were down 38.8 percent year-to-date in December 2009 from the same period of 2008. Universal continues to focus on making sure it remains a preferred supplier to builders, on balancing its business within the site-built market, and on adding new opportunities for sustainable business moving forward as the housing sector recovers slowly in the coming years.
Manufactured housing: $48.9 million in sales for the fourth quarter reflect a drop of 15.2 percent from the fourth quarter of 2008. Annual sales of $183.9 million were down 39.4 percent from 2008. According to the most recent statistics available, the industry saw a decline of 39 percent in actual shipments of HUD-code homes in 2009 from 2008. Additionally, the National Modular Housing Council estimates a decrease of 44 percent in modular home shipments in 2009 from 2008. Because Universal maintains a dominant share of the HUD-code and modular markets, its performance essentially will track with the industry. Universal continues to seek new opportunities to generate increased revenue by expanding its product offering to its customers.
CONFERENCE CALL
Universal Forest Products will conduct a conference call to discuss information included in this news release and related matters at 4:30 p.m. ET on Monday, February 8, 2010. The call will be hosted by CEO Michael B. Glenn and CFO Michael Cole, and will be available for analysts and institutional investors domestically at (866) 383-7998 or internationally at (617) 597-5329. Use conference pass code number 53774194. 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 March 4, 2010, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code number 38021227.
UNIVERSAL FOREST PRODUCTS, INC.
Universal Forest Products, Inc. is a holding company that provides capital, management and administrative resources to subsidiaries that design, manufacture and market wood and wood-alternative products for DIY/retail home centers and other retailers, 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's consumer products subsidiary offers a large portfolio of outdoor living products, including wood composite decking, decorative balusters, post caps and plastic lattice. Its lawn and garden group offers an array of products, such as trellises and arches, to retailers nationwide. Universal's subsidiaries also provide framing services for the site-built market and forming products for concrete construction. Founded in 1955, Universal Forest Products is headquartered in Grand Rapids, Mich., with operations throughout North America. For more about Universal Forest Products, go to 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.
| CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) | ||||||||||||||||||||||||||||
| FOR THE THREE AND TWELVE MONTHS ENDED | ||||||||||||||||||||||||||||
| DECEMBER 2009/2008 | ||||||||||||||||||||||||||||
| Quarter Period | Year to Date | |||||||||||||||||||||||||||
| (In thousands, except per share data) | 2009 | 2008 | 2009 | 2008 | ||||||||||||||||||||||||
| NET SALES | $ 338,565 | 100 | % | $ 423,653 | 100 | % | $ 1,673,000 | 100 | % | $ 2,232,394 | 100 | % | ||||||||||||||||
| COST OF GOODS SOLD | 294,383 | 87.0 | 373,800 | 88.2 | 1,430,249 | 85.5 | 1,978,193 | 88.6 | ||||||||||||||||||||
| GROSS PROFIT | 44,182 | 13.0 | 49,853 | 11.8 | 242,751 | 14.5 | 254,201 | 11.4 | ||||||||||||||||||||
| SELLING, GENERAL AND | ||||||||||||||||||||||||||||
| ADMINISTRATIVE EXPENSES | 43,716 | 12.9 | 50,255 | 11.9 | 200,026 | 12.0 | 228,557 | 10.2 | ||||||||||||||||||||
| NET (GAIN) LOSS ON DISPOSITION OF ASSETS | ||||||||||||||||||||||||||||
| AND OTHER IMPAIRMENT AND EXIT CHARGES | 1,154 | 0.3 | 685 | 0.2 | (92 | ) | - | 7,239 | 0.3 | |||||||||||||||||||
| EARNINGS (LOSS) FROM OPERATIONS | (688 | ) | (0.2 | ) | (1,087 | ) | (0.3 | ) | 42,817 | 2.6 | 18,405 | 0.8 | ||||||||||||||||
| Interest expense | 1,208 | 0.4 | 2,499 | 0.6 | 4,611 | 0.3 | 12,088 | 0.5 | ||||||||||||||||||||
| Interest income | (133 | ) | - | (66 | ) | - | (391 | ) | - | (829 | ) | - | ||||||||||||||||
| 1,075 | 0.3 | 2,433 | 0.6 | 4,220 | 0.3 | 11,259 | 0.5 | |||||||||||||||||||||
| EARNINGS (LOSS) BEFORE INCOME TAXES | (1,763 | ) | (0.5 | ) | (3,520 | ) | (0.8 | ) | 38,597 | 2.3 | 7,146 | 0.3 | ||||||||||||||||
| INCOME TAXES (BENEFIT) | (956 | ) | (0.3 | ) | (2,969 | ) | (0.7 | ) | 13,852 | 0.8 | 1,686 | 0.1 | ||||||||||||||||
| NET EARNINGS (LOSS) | (807 | ) | (0.2 | ) | (551 | ) | (0.1 | ) | 24,745 | 1.5 | 5,460 | 0.2 | ||||||||||||||||
| LESS NET (EARNINGS) LOSS ATTRIBUTABLE TO | ||||||||||||||||||||||||||||
| NONCONTROLLING INTEREST | 144 | - | (242 | ) | (0.1 | ) | (473 | ) | - | (1,117 | ) | (0.1 | ) | |||||||||||||||
| NET EARNINGS (LOSS) ATTRIBUTABLE TO | ||||||||||||||||||||||||||||
| CONTROLLING INTEREST | $ (663 | ) | (0.2 | ) | $ (793 | ) | (0.2 | ) | $ 24,272 | 1.5 | $ 4,343 | 0.2 | ||||||||||||||||
| EARNINGS (LOSS) PER SHARE - BASIC | $ (0.03 | ) | $ (0.04 | ) | $ 1.26 | $ 0.23 | ||||||||||||||||||||||
| EARNINGS (LOSS) PER SHARE - DILUTED | $ (0.03 | ) | $ (0.04 | ) | $ 1.25 | $ 0.23 | ||||||||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||||||||||||||
| FOR BASIC EARNINGS (LOSS) | 19,292 | 19,161 | 19,256 | 19,074 | ||||||||||||||||||||||||
| WEIGHTED AVERAGE SHARES OUTSTANDING | ||||||||||||||||||||||||||||
| FOR DILUTED EARNINGS (LOSS) | 19,292 | 19,161 | 19,468 | 19,225 | ||||||||||||||||||||||||
| SUPPLEMENTAL SALES DATA | ||||||||||||||||||||||||||||
| Quarter Period | Year to Date | |||||||||||||||||||||||||||
| Market Classification | 2009 | % | 2008 | % | 2009 | % | 2008 | % | ||||||||||||||||||||
| Do-It-Yourself/Retail | $ 130,658 | 38 | % | $ 153,332 | 35 | % | $ 805,052 | 47 | % | $ 919,200 | 41 | % | ||||||||||||||||
| Site-Built Construction | 54,234 | 16 | % | 94,123 | 22 | % | 244,117 | 14 | % | 452,689 | 20 | % | ||||||||||||||||
| Industrial | 111,627 | 32 | % | 122,040 | 29 | % | 479,284 | 28 | % | 598,915 | 26 | % | ||||||||||||||||
| Manufactured Housing | 48,928 | 14 | % | 57,708 | 14 | % | 183,912 | 11 | % | 303,387 | 13 | % | ||||||||||||||||
| Total Gross Sales | 345,447 | 100 | % | 427,203 | 100 | % | 1,712,365 | 100 | % | 2,274,191 | 100 | % | ||||||||||||||||
| Sales Allowances | (6,882 | ) | (3,550 | ) | (39,365 | ) | (41,797 | ) | ||||||||||||||||||||
| Total Net Sales | $ 338,565 | $ 423,653 | $ 1,673,000 | $ 2,232,394 | ||||||||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||||||||||||
| DECEMBER 2009/2008 | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| ASSETS | 2009 | 2008 | LIABILITIES AND EQUITY | 2009 | 2008 | ||||||||||||
| CURRENT ASSETS | CURRENT LIABILITIES | ||||||||||||||||
| Cash and cash equivalents | $ 82,219 | $ 13,337 | Accounts payable | $ 64,473 | $ 63,184 | ||||||||||||
| Accounts receivable | 107,383 | 138,043 | Accrued liabilities | 70,038 | 71,926 | ||||||||||||
| Inventories | 162,148 | 193,496 | Current portion of long-term | ||||||||||||||
| Assets held for sale | - | 8,296 | debt and capital leases | 673 | 15,490 | ||||||||||||
| Other current assets | 31,599 | 27,736 | |||||||||||||||
| TOTAL CURRENT ASSETS | 383,349 | 380,908 | TOTAL CURRENT LIABILITIES | 135,184 | 150,600 | ||||||||||||
| OTHER ASSETS | 4,478 | 5,927 | LONG-TERM DEBT AND | ||||||||||||||
| INTANGIBLE ASSETS, NET | 173,751 | 182,014 | CAPITAL LEASE OBLIGATIONS, | ||||||||||||||
| PROPERTY, PLANT | less current portion | 53,181 | 85,684 | ||||||||||||||
| AND EQUIPMENT, NET | 230,099 | 247,170 | OTHER LIABILITIES | 34,366 | 31,509 | ||||||||||||
| EQUITY | 568,946 | 548,226 | |||||||||||||||
| TOTAL ASSETS | $ 791,677 | $ 816,019 | TOTAL LIABILITIES AND EQUITY | $ 791,677 | $ 816,019 | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||
| FOR THE TWELVE MONTHS ENDED | |||||||||||
| DECEMBER 2009/2008 | |||||||||||
| (In thousands) | 2009 | 2008 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net earnings attributable to controlling interest | $ 24,272 | $ 4,343 | |||||||||
| Adjustments to reconcile net earnings to net cash | |||||||||||
| from operating activities: | |||||||||||
| Depreciation | 32,917 | 37,570 | |||||||||
| Amortization of intangibles | 8,308 | 9,797 | |||||||||
| Expense associated with share-based compensation arrangements | 1,597 | 1,136 | |||||||||
| Excess tax benefits from share-based compensation arrangements | (603 | ) | (171 | ) | |||||||
| Expense associated with stock grant plans | 109 | 104 | |||||||||
| Deferred income taxes (credit) | 4,744 | (7,747 | ) | ||||||||
| Net earnings attributable to noncontrolling interest | 473 | 1,117 | |||||||||
| Gain on insurance settlement | (598 | ) | |||||||||
| Net (gain) loss on sale or impairment of assets | (773 | ) | 7,062 | ||||||||
| Changes in: | |||||||||||
| Accounts receivable | 31,071 | 4,287 | |||||||||
| Inventories | 31,522 | 42,922 | |||||||||
| Accounts payable | 610 | (20,153 | ) | ||||||||
| Accrued liabilities and other | (5,901 | ) | 8,882 | ||||||||
| NET CASH FROM OPERATING ACTIVITIES | 128,346 | 88,551 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchase of property, plant, and equipment | (15,604 | ) | (18,944 | ) | |||||||
| Purchase of joint venture | (659 | ) | - | ||||||||
| Acquisitions, net of cash received | - | (23,338 | ) | ||||||||
| Proceeds from sale of property, plant and equipment | 11,724 | 30,367 | |||||||||
| Advances of notes receivable | (14 | ) | (997 | ) | |||||||
| Collection of notes receivable | 171 | 556 | |||||||||
| Insurance proceeds | 1,023 | 800 | |||||||||
| Other, net | 30 | 189 | |||||||||
| NET CASH FROM INVESTING ACTIVITIES | (3,329 | ) | (11,367 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Net repayments under revolving credit facilities | (30,257 | ) | (24,148 | ) | |||||||
| Repayment of long-term debt | (19,207 | ) | (80,824 | ) | |||||||
| Borrowings of long-term debt | 800 | - | |||||||||
| Proceeds from issuance of common stock | 2,420 | 2,957 | |||||||||
|
Purchase of additional noncontrolling interest |
(1,770 | ) | - | ||||||||
| Distributions to noncontrolling interest | (270 | ) | (3,654 | ) | |||||||
| Investment received from minority shareholder | 14 | 419 | |||||||||
| Dividends paid to shareholders | (5,017 | ) | (2,284 | ) | |||||||
| Repurchase of common stock | (3,379 | ) | - | ||||||||
| Excess tax benefits from share-based compensation arrangements | 603 | 171 | |||||||||
| Other, net | (72 | ) | (89 | ) | |||||||
| NET CASH FROM FINANCING ACTIVITIES | (56,135 | ) | (107,452 | ) | |||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 68,882 | (30,268 | ) | ||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 13,337 | 43,605 | |||||||||
| CASH AND CASH EQUIVALENTS, END OF PERIOD | $ 82,219 | $ 13,337 | |||||||||
| SUPPLEMENTAL INFORMATION: | |||||||||||
| Interest | 4,905 | 12,418 | |||||||||
| Income taxes | 12,346 | (8 | ) | ||||||||
SOURCE: Universal Forest Products
Universal Forest Products, Inc.
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502