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UFPI posts record first-quarter earnings and sales

April 18, 2018

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

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Source: Universal Forest Products, Inc.