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UFPI posts record fourth-quarter and annual results

February 17, 2016

Q4 earnings: $18.9 million, or $.93 per diluted share, up 103% on strong unit sales growth

GRAND RAPIDS, Mich.--(BUSINESS WIRE)--Feb. 17, 2016-- Universal Forest Products, Inc. (Nasdaq: UFPI) today announced record results in 2015, including record fourth-quarter net earnings attributable to controlling interest of $18.9 million, or $.93 per diluted share—more than double the net earnings of $9.3 million, or $0.46 per share, for the fourth quarter of 2014. The Company also posted record annual net earnings attributable to controlling interest of $80.6 million, or $3.99 per diluted share, representing a 40 percent increase over 2014 annual net earnings attributable to controlling interest of $57.6 million, or $2.86 per diluted share. Fourth-quarter 2015 net sales of $653.6 million were up 5.4 percent over net sales for the same period of 2014. Annual net sales of $2.9 billion surpassed 2014 annual net sales by 8.5 percent, representing a new record for the Company.

“I am exceedingly proud of the people of the companies of Universal, who created record results through their hard work, innovation and determination. This exceptional performance is a testament to the strength of our people and their execution of our growth strategies,” said CEO Matthew J. Missad.

“It would be natural to expect our team to bask in their accomplishments, but they are doing exactly the opposite—they are energized and more motivated to break records again in 2016,” Missad added. “It is a privilege to work with such an extraordinary group, which I think is the best in the industry. We intend to capitalize on our successes and use them as a springboard to even better performance next year.”

These results come at a time when the lumber composite price was down 15.5 percent compared to the fourth quarter of last year, and down 13.6 percent for the year, reducing the Company’s selling prices.

By market, the Company posted the following 2015 gross sales results:

Retail

  • Fourth quarter: $230.7 million, up 13.6 percent over 2014
  • Year: $1.1 billion, up 10.8 percent over the previous year

The Company continues to see healthy sales to both big box and independent retailers, a result of improved consumer demand, a strong product mix and market share gains, thanks, in part, to its product development and introduction activities. The Company continues to focus on diversifying its product offering, opening new markets and enhancing service to customers.

Construction

  • Fourth quarter: $221.2 million, down 1.6 percent from 2014
  • Year: $898.3 million, up 1.4 percent over last year

In this market, the Company continues to see healthy growth in its commercial construction business and is devoting more resources to growing this area of its business. With forecasts for growth in residential construction markets, the Company remains focused on growing business selectively in areas where housing markets are the most stable.

Industrial

  • Fourth quarter: $209.3 million, up 4.7 percent over the fourth quarter of 2014
  • Year: $896.6 million, up 13.5 percent over 2014

The Company’s fourth-quarter growth in this market came at a time when total industrial production in the U.S. declined. The Company is focused on growing with existing customers, adding new customers and expanding its line of products and service offerings. The Company remains optimistic about opportunities for strong, sustainable growth in this market.

CONFERENCE CALL

Universal Forest Products will conduct a conference call to discuss information included in this news release and related matters at 8:30 a.m. ET on Thursday, February 18, 2016. The call will be hosted by CEO Matthew J. Missad and CFO Michael Cole, and will be available for analysts and institutional investors domestically at 877-703-6110, and internationally at 857-244-7309. Use conference pass code 29466058. 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 19, 2016, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code 14945306.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company with subsidiaries throughout North America and in Australia that supply three robust markets: retail, construction and industrial. Founded in 1955, the Company is headquartered in Grand Rapids, Mich. For more information about Universal Forest Products, Inc., or its affiliated operations, go to www.ufpi.com.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission.

 
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2015/2014
    Quarter Period     Year to Date
(In thousands, except per share data)     2015       2014         2015       2014    
           
 
 
NET SALES $ 653,600 100 % $ 620,090 100 % $ 2,887,071 100 % $ 2,660,329 100.0 %
 
COST OF GOODS SOLD   556,427   85.1   547,335   88.3   2,487,167   86.1   2,334,987   87.8
 
GROSS PROFIT 97,173 14.9 72,755 11.7 399,904 13.9 325,342 12.2
 
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 66,178 10.1 56,940 9.2 264,265 9.2 229,775 8.6
ANTI-DUMPING DUTY ASSESSMENTS - - - - - - 1,600 0.1
NET (GAIN) LOSS ON DISPOSITION AND
IMPAIRMENT OF ASSETS   104   -   18   -   172   -   (3,400 ) (0.1 )
 
EARNINGS FROM OPERATIONS 30,891 4.7 15,797 2.5 135,467 4.7 97,367 3.7
 
OTHER EXPENSE, NET   1,348   0.2   (309 ) -   4,465   0.2   1,654   0.1
 
EARNINGS BEFORE INCOME TAXES 29,543 4.5 16,106 2.6 131,002 4.5 95,713 3.6
 
INCOME TAXES   8,982   1.4   5,149   0.8   45,870   1.6   34,149   1.3
 
NET EARNINGS 20,561 3.1 10,957 1.8 85,132 2.9 61,564 2.3
 
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST   (1,660 ) (0.3 )   (1,644 ) (0.3 )   (4,537 ) (0.2 )   (4,013 ) (0.2 )
 
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST $ 18,901   2.9 $ 9,313   1.5 $ 80,595   2.8 $ 57,551   2.2
 
 
EARNINGS PER SHARE - BASIC $ 0.94 $ 0.46 $ 3.99 $ 2.87
 
EARNINGS PER SHARE - DILUTED $ 0.93 $ 0.46 $ 3.99 $ 2.86
 
COMPREHENSIVE INCOME 17,510 8,726 77,875 58,448
 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST   (5,362 )   (832 )   (6,940 )   (3,015 )
 
COMPREHENSIVE INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST $ 12,148   $ 7,894   $ 70,935   $ 55,433  
 

SUPPLEMENTAL SALES DATA

Quarter Period Year to Date

Market Classification

2015 2014 % 2015 2014 %
Retail $ 230,724 $ 203,164 14 % $ 1,132,178 $ 1,022,037 11 %
Industrial 209,336 199,909 5 % 896,587 789,798 14 %
Construction   221,215     224,830   -2 %   898,328     886,101   1 %
Total Gross Sales 661,275 627,903 5 % 2,927,093 2,697,936 8 %
Sales Allowances   (7,675 )   (7,813 )   (40,022 )   (37,607 )
Total Net Sales $ 653,600   $ 620,090   $ 2,887,071   $ 2,660,329  
 
 
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
DECEMBER 2015/2014
 
               
(In thousands)
ASSETS     2015   2014     LIABILITIES AND EQUITY     2015   2014
 
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $ 87,756 $ - Cash overdraft $ - $ 621
Investments 6,743 - Accounts payable 95,041 89,105
Restricted cash 586 405 Accrued liabilities   109,134   85,734
Accounts receivable 222,964 195,912
Inventories 304,918 340,048
Other current assets   25,265   36,641
 
TOTAL CURRENT ASSETS 648,232 573,006 TOTAL CURRENT LIABILITIES 204,175 175,460
 
OTHER ASSETS 9,610 10,644 LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET 198,687 191,881 CAPITAL LEASE OBLIGATIONS 84,750 98,645
PROPERTY, PLANT OTHER LIABILITIES 52,345 50,135
AND EQUIPMENT, NET   251,150   248,269 EQUITY   766,409   699,560
 
 
TOTAL ASSETS $ 1,107,679 $ 1,023,800 TOTAL LIABILITIES AND EQUITY $ 1,107,679 $ 1,023,800
 
 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2015/2014
(In thousands)     2015       2014
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net earnings $ 85,132 $ 61,564
Adjustments to reconcile net earnings to net cash from operating activities:

 

 
Depreciation 37,710 33,913
Amortization of intangibles 3,531 2,410
Expense associated with share-based compensation arrangements 1,846 1,919
Excess tax benefits from share-based compensation arrangements (33 ) (14 )
Expense associated with stock grant plans 109 94
Deferred income taxes (credit) (1,369 ) 4,926
Equity in earnings of investee (374 ) (378 )
Net (gain) or loss on sale of property, plant and equipment 172 (3,400 )
Changes in:
Accounts receivable (26,007 ) (9,710 )
Inventories 34,139 (49,575 )
Accounts payable and cash overdraft 4,798 15,390
Accrued liabilities and other   29,142     15,981  
NET CASH FROM OPERATING ACTIVITIES 168,796 73,120
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (43,522 ) (45,305 )
Proceeds from sale of property, plant and equipment 2,843 9,005
Acquisitions, net of cash received (2,505 ) (34,641 )
Purchase of remaining noncontrolling interest in subsidiary (1,256 ) -
Advances of notes receivable (6,994 ) (6,201 )
Collections of notes receivable and related interest 11,446 9,926
Purchases of investments (7,891 ) -
Proceeds from sale of investments 1,148 -
Cash restricted as to use (181 ) 315
Other, net   95     (162 )
NET CASH FROM INVESTING ACTIVITIES (46,817 ) (67,063 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities 297,711 211,770
Repayments under revolving credit facilities (311,271 ) (197,825 )
Debt issuance costs (54 ) (724 )
Proceeds from issuance of common stock 1,074 541
Dividends paid to shareholders (16,507 ) (12,205 )
Distributions to noncontrolling interest (3,188 ) (1,910 )
Repurchase of common stock (800 ) (4,866 )
Excess tax benefits from share-based compensation arrangements   33     14  
NET CASH FROM FINANCING ACTIVITIES (33,002 ) (5,205 )
 
Effect of exchange rate changes on cash   (1,221 )   (852 )
NET CHANGE IN CASH AND CASH EQUIVALENTS 87,756 -
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   -     -  
 
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 87,756   $ -  
 

Source: Universal Forest Products

Universal Forest Products, Inc.
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502