UFPI posts record first-quarter earnings and sales

GRAND RAPIDS, Mich., April 18, 2018 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today reported record financial results for the first quarter ended March 31, 2018, the eleventh consecutive quarter in which the company has reported records in both net sales and net earnings.

“The dedicated employees of Universal continued to produce record results despite some weather-related shutdowns. Their performance reflects the strength of our balanced business model and focused approach to growth,” said CEO Matt Missad. “Due to the elevated level of the lumber market, we are focused on unit sales growth, and are pleased that half of our sales growth came from increases in unit sales, including new products. We are excited about the diverse range of products that we have launched during the past several years and are seeing significant growth with a number of them. Individually, most new products don’t have a notable sales impact; however, as a whole, they have a positive impact.

“We remain focused on improving our bottom-line performance through production efficiency improvements from automation and through new, value-added products and services. We also will continue to implement cost-saving initiatives as we integrate our recent acquisitions.”

Recent Acquisition Activity
In January, Universal acquired Naches, Washington-based Spinner Wood Products, a manufacturer of agricultural bins and industrial products, and Great Northern Lumber, a manufacturer of industrial and concrete forming products in the Chicago area. In early April, the company acquired Expert Packaging, an Australian industrial packaging manufacturer, and Fontana Wood Products, an industrial lumber-processing facility in Fontana, California. These recently completed acquisitions are expected to contribute annual sales of approximately $50 million. Universal also recently announced an agreement to acquire certain assets of North American Container Corp. (NACC), an industrial packaging manufacturer based in Georgia with sales of approximately $71 million in 2017.

First Quarter 2018 Highlights (comparisons on a year-over-year basis):

• Diluted earnings per share were $0.53, up from $0.34. The sale of assets, including real property in Medley, Fla., contributed a net gain of $0.08 to diluted earnings per share.
• Net earnings attributable to controlling interest were $32.8 million, up 56 percent
• EBITDA, which excludes the net gain on the sale of assets, was $53.4 million, up 14 percent
• Gross sales increased 18 percent, with gains of 19 percent in the Retail and Industrial markets and 16 percent in the Construction market
• Unit sales contributed 9 percent of gross sales growth; higher prices due to the lumber market contributed 9 percent
• Organic sales contributed 5 percent to unit growth while acquisitions added 4 percent
• New product sales were $103.9 million, up from $86.2 million

By market, the Company reported the following first-quarter 2018 gross sales results.

Retail

• $371 million, up 19 percent over the same period of 2017, as unit sales contributed 10 percent and price increases accounted for 9 percent
• Organic sales contributed 3 percent to unit growth and acquisitions added 7 percent
• Sales to big box customers increased 15 percent, while sales to independent customers grew 24 percent

Construction

• $308 million, up 16 percent over the same period of 2017, as unit sales contributed 6 percent and  price increases accounted for 10 percent
• Organic sales contributed 6 percent to unit growth and there was no impact from acquisitions
• Sales to manufactured housing customers grew 24 percent, while sales to commercial and residential construction customers grew 18 and 7 percent, respectively

Industrial

• $333 million, up 19 percent over the same period of 2017, as unit sales accounted for 11 percent and price increases accounted for 8 percent
• Organic sales contributed 7 percent to unit growth and acquisitions added 4 percent
• The company sees favorable growth opportunities in the Industrial market and plans to continue to expand its presence organically and through acquisitions  

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, April 19, 2018. 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 866-518-4547, and internationally at 213-660-0879. Use conference pass code 8896458. 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 May 19, 2018, at 855-859-2056, 404-537-3406 or 800-585-5367.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company whose subsidiaries supply wood, wood composite and other products to three robust markets: retail, construction and industrial.  Founded in 1955, the Company is headquartered in Grand Rapids, Mich., with affiliates throughout North America, Europe, Asia and Australia. For more about Universal Forest Products, 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.

Non-GAAP Financial Information

This release includes certain financial information not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies.  Management considers EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 2018/2017
		Quarter Period														Year to Date
(In thousands, except per share data)			2018							2017							2018							2017
NET SALES		$	993,857			100	%		$	846,130			100	%		$	993,857			100	%		$	846,130			100.0	%
COST OF GOODS SOLD			862,968			86.8				725,390			85.7				862,968			86.8				725,390			85.7
GROSS PROFIT			130,889			13.2				120,740			14.3				130,889			13.2				120,740			14.3
SELLING,  GENERAL  AND
ADMINISTRATIVE  EXPENSES			93,206			9.4				87,085			10.3				93,206			9.4				87,085			10.3
NET GAIN ON DISPOSITION OF ASSETS			(6,534	)		(0.7	)			(166	)		-				(6,534	)		(0.7	)			(166	)		-
EARNINGS FROM OPERATIONS			44,217			4.4				33,821			4.0				44,217			4.4				33,821			4.0
OTHER EXPENSE, NET			1,061			0.1				1,417			0.2				1,061			0.1				1,417			0.2
EARNINGS BEFORE INCOME TAXES			43,156			4.3				32,404			3.8				43,156			4.3				32,404			3.8
INCOME TAXES			9,574			1.0				10,770			1.3				9,574			1.0				10,770			1.3
NET EARNINGS			33,582			3.4				21,634			2.6				33,582			3.4				21,634			2.6
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST			(749	)		(0.1	)			(572	)		(0.1	)			(749	)		(0.1	)			(572	)		(0.1	)
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST		$	32,833			3.3			$	21,062			2.5			$	32,833			3.3			$	21,062			2.5
EARNINGS PER SHARE - BASIC		$	0.53						$	0.34						$	0.53						$	0.34
EARNINGS PER SHARE - DILUTED		$	0.53						$	0.34						$	0.53						$	0.34
COMPREHENSIVE INCOME			33,143							24,669							33,143							24,669
LESS COMPREHENSIVE INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST			(1,594	)						(1,427	)						(1,594	)						(1,427	)
COMPREHENSIVE INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST		$	31,549						$	23,242						$	31,549						$	23,242
SUPPLEMENTAL SALES DATA
		Quarter Period														Year to Date
Market Classification			2018							2017			%				2018							2017			%
Retail		$	370,961						$	312,352			19	%		$	370,961						$	312,352			19	%
Industrial			332,966							280,599			19	%			332,966							280,599			19	%
Construction			307,740							265,906			16	%			307,740							265,906			16	%
Total Gross Sales			1,011,667							858,857			18	%			1,011,667							858,857			18	%
Sales Allowances			(17,810	)						(12,727	)		-40	%			(17,810	)						(12,727	)		-40	%
Total Net Sales		$	993,857						$	846,130			17	%		$	993,857						$	846,130			17	%

 

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 2018/2017
(In thousands)
ASSETS					2018			2017		LIABILITIES AND EQUITY					2018			2017
CURRENT ASSETS										CURRENT LIABILITIES
	Cash and cash equivalents			$	25,326		$	31,020			Cash overdraft			$	30,026		$	21,566
	Restricted cash				32,425			909			Accounts payable				176,469			156,030
	Investments				10,701			5,928			Accrued liabilities				106,209			97,964
	Accounts receivable				430,251			365,620			Current portion of debt				425			2,280
	Inventories				521,706			472,016
	Other current assets				23,304			23,820
TOTAL CURRENT ASSETS					1,043,713			899,313		TOTAL CURRENT LIABILITIES					313,129			277,840
OTHER ASSETS					19,634			18,333		LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET					254,546			250,160			CAPITAL LEASE OBLIGATIONS				261,327			252,904
PROPERTY, PLANT										OTHER LIABILITIES					40,086			49,562
	AND EQUIPMENT,  NET				313,571			309,853		EQUITY					1,016,922			897,353
TOTAL ASSETS				$	1,631,464		$	1,477,659		TOTAL LIABILITIES AND EQUITY				$	1,631,464		$	1,477,659

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 2018/2017
(In thousands)						2018				2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings					$	33,582			$	21,634
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation						12,712				11,392
Amortization of intangibles						1,228				1,119
Expense associated with share-based and grant compensation arrangements						1,094				617
Deferred income taxes (credit)						(519	)			224
Equity in earnings of investee						-				(5	)
Net gain on disposition of assets						(6,534	)			(166	)
Changes in:
Accounts receivable						(99,765	)			(67,766	)
Inventories						(57,403	)			(60,984	)
Accounts payable and cash overdraft						39,935				32,769
Accrued liabilities and other						(8,502	)			(9,676	)
NET CASH FROM OPERATING ACTIVITIES						(84,172	)			(70,842	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment						(24,362	)			(16,531	)
Proceeds from sale of property, plant and equipment						36,250				455
Acquisitions and purchase of noncontrolling interest, net of cash received						(8,787	)			(55,441	)
Advances of notes receivable						(12	)			(228	)
Collections of notes receivable and related interest						482				721
Purchases of investments						(6,718	)			(819	)
Proceeds from sale of investments						5,045				1,204
Other						(594	)			142
NET CASH USED IN INVESTING ACTIVITIES						1,304				(70,497	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities						296,342				281,090
Repayments under revolving credit facilities						(179,429	)			(137,767	)
Borrowings of debt						1,376				-
Repayments of debt						(5,232	)			-
Proceeds from issuance of common stock						206				146
Distributions to noncontrolling interest						(775	)			(1,673	)
Repurchase of common stock						(848	)			(83	)
Other						(70	)			(16	)
NET CASH FROM (USED IN) FINANCING ACTIVITIES						111,570				141,697
Effect of exchange rate changes on cash						233				882
NET CHANGE IN CASH AND CASH EQUIVALENTS						28,935				1,240
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD						28,816				34,489
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD					$	57,751			$	35,729
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period					$	28,339			$	34,091
Restricted cash, beginning of period						477				398
All cash and cash equivalents, beginning of period					$	28,816			$	34,489
Cash and cash equivalents, end of period					$	25,326			$	31,020
Restricted cash, end of period						32,425				4,709
All cash and cash equivalents, end of period					$	57,751			$	35,729

 

EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 2018/2017
		Quarter Period						Year to Date
(In thousands)		2018			2017			2018			2017
Net Earnings		33,582			21,634			33,582			21,634
Interest  Expense		1,778			1,504			1,778			1,504
Taxes		9,574			10,770			9,574			10,770
Expense associated with Share-Based Compensation Arrangements		1,094			617			1,094			617
Net Gain on Disposition of Asset		(6,534	)		(166	)		(6,534	)		(166	)
Depreciation Expense		12,712			11,392			12,712			11,392
Amortization of Intangibles		1,228			1,119			1,228			1,119
EBITDA		53,434			46,870			53,434			46,870

AT THE COMPANY

Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502

Source: Universal Forest Products, Inc.