UFPI Q2 2014 Net Earnings up over 38 Percent over Previous Year
—Focus on profitability creates success in all markets—
“We focused on profitability and made great strides,” said Universal CEO
The Company’s earnings were reduced by
The Company benefited from a more stable lumber market in the second quarter of 2014 relative to the second quarter of 2013, when the lumber market fell for several weeks, adversely impacting the Company’s profitability on certain products.
“We had strong sales gains to our retail market, as well as gains in sales to our industrial market. Our construction market saw strong sales to commercial construction; however, those gains were offset by declines in our framing operations, due to our decision to accept only business that meets certain profitability criteria, and to a drop in sales to manufactured housing customers,” Missad explained.
The decline in manufactured housing sales was the result of the vertical
integration of one of the Company’s key customers and of a 37 percent
drop in the OSB market. That drop in the OSB market caused declines in
sales of
Missad said the Company is on track to achieve its goals of
By market, the Company posted the following second-quarter 2014 gross sales results:
Retail:
As pent-up demand from a harsh and prolonged winter gave way to better weather in the second quarter, the Company saw strong sales to its retail customers, big box and independent, alike. The Company’s efforts to improve service and introduce new products are yielding results. It remains optimistic about this market due to the success of new product opportunities, forecasts for continued growth in home improvement activities, and healthy comparable sales guidance by big box retailers.
Industrial:
Industrial production in
Construction:
While the Company experienced strong sales to commercial construction, the drop in sales to this market relative to the second quarter of last year reflects the Company’s more selective pricing strategies. In addition, as anticipated, the vertical integration of one of the Company’s largest manufactured housing customers negatively impacted sales in the second quarter of 2014, as did the previously noted decrease in the price of OSB. Housing-related markets saw healthy growth in the second quarter of 2014 over the previous year, including manufactured housing and site-built residential, and are expected to see continued growth in 2014, according to industry forecasts. The Company remains focused on creating steady, long-term growth by maintaining a diversified business and customer base in the construction market.
CONFERENCE CALL
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
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED) | |||||||||||||||||||||||||||||||
FOR THE SIX MONTHS ENDED | |||||||||||||||||||||||||||||||
JUNE 2014/2013 | |||||||||||||||||||||||||||||||
Quarter Period | Year to Date | ||||||||||||||||||||||||||||||
(In thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | |||||||||||||||||||||||||||
NET SALES | $ | 772,752 | 100 | % | $ | 738,436 | 100 | % | $ | 1,326,751 | 100 | % | $ | 1,292,930 | 100.0 | % | |||||||||||||||
COST OF GOODS SOLD | 675,764 | 87.4 | 658,220 | 89.1 | 1,163,750 | 87.7 | 1,154,896 | 89.3 | |||||||||||||||||||||||
GROSS PROFIT | 96,988 | 12.6 | 80,216 | 10.9 | 163,001 | 12.3 | 138,034 | 10.7 | |||||||||||||||||||||||
SELLING, GENERAL AND | |||||||||||||||||||||||||||||||
ADMINISTRATIVE EXPENSES | 58,989 | 7.6 | 53,102 | 7.2 | 112,899 | 8.5 | 101,329 | 7.8 | |||||||||||||||||||||||
ANTI-DUMPING DUTY ASSESSMENTS | 1,600 | 0.2 | - | - | 1,600 | 0.1 | 639 | - | |||||||||||||||||||||||
NET GAIN ON DISPOSITION OF ASSETS | (324 | ) | - | (3 | ) | - | (848 | ) | (0.1 | ) | (109 | ) | - | ||||||||||||||||||
EARNINGS FROM OPERATIONS | 36,723 | 4.8 | 27,117 | 3.7 | 49,350 | 3.7 | 36,175 | 2.8 | |||||||||||||||||||||||
OTHER EXPENSE, NET | 686 | 0.1 | 931 | 0.1 | 1,411 | 0.1 | 1,987 | 0.2 | |||||||||||||||||||||||
EARNINGS BEFORE INCOME TAXES | 36,037 | 4.7 | 26,186 | 3.5 | 47,939 | 3.6 | 34,188 | 2.6 | |||||||||||||||||||||||
INCOME TAXES | 13,588 | 1.8 | 9,813 | 1.3 | 17,824 | 1.3 | 12,058 | 0.9 | |||||||||||||||||||||||
NET EARNINGS | 22,449 | 2.9 | 16,373 | 2.2 | 30,115 | 2.3 | 22,130 | 1.7 | |||||||||||||||||||||||
LESS NET EARNINGS ATTRIBUTABLE TO | |||||||||||||||||||||||||||||||
NONCONTROLLING INTEREST | (660 | ) | (0.1 | ) | (601 | ) | (0.1 | ) | (1,111 | ) | (0.1 | ) | (1,133 | ) | (0.1 | ) | |||||||||||||||
NET EARNINGS ATTRIBUTABLE TO | |||||||||||||||||||||||||||||||
CONTROLLING INTEREST | $ | 21,789 | 2.8 | $ | 15,772 | 2.1 | $ | 29,004 | 2.2 | $ | 20,997 | 1.6 | |||||||||||||||||||
EARNINGS PER SHARE - BASIC | $ | 1.08 | $ | 0.79 | $ | 1.44 | $ | 1.05 | |||||||||||||||||||||||
EARNINGS PER SHARE - DILUTED | $ | 1.08 | $ | 0.79 | $ | 1.44 | $ | 1.05 | |||||||||||||||||||||||
COMPREHENSIVE INCOME | 22,960 | 14,889 | 29,928 | 21,062 | |||||||||||||||||||||||||||
LESS COMPREHENSIVE INCOME ATTRIBUTABLE | |||||||||||||||||||||||||||||||
TO NONCONTROLLING INTEREST | (719 | ) | (164 | ) | (1,072 | ) | (992 | ) | |||||||||||||||||||||||
COMPREHENSIVE INCOME | |||||||||||||||||||||||||||||||
ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 22,241 | $ | 14,725 | $ | 28,856 | $ | 20,070 | |||||||||||||||||||||||
SUPPLEMENTAL SALES DATA |
|||||||||||||||||||||||||||||||
Quarter Period | Year to Date | ||||||||||||||||||||||||||||||
Market Classification |
2014 | 2013 |
% |
2014 | 2013 |
% |
|||||||||||||||||||||||||
Retail | $ | 349,134 | $ | 314,948 | 11 | % | $ | 551,393 | $ | 521,010 | 6 | % | |||||||||||||||||||
Industrial | 203,464 | 193,133 | 5 | % | 373,866 | 352,808 | 6 | % | |||||||||||||||||||||||
Construction | 231,614 | 241,738 | -4 | % | 421,150 | 436,704 | -4 | % | |||||||||||||||||||||||
Total Gross Sales | 784,212 | 749,819 | 5 | % | 1,346,409 | 1,310,522 | 3 | % | |||||||||||||||||||||||
Sales Allowances | (11,460 | ) | (11,383 | ) | (19,658 | ) | (17,592 | ) | |||||||||||||||||||||||
Total Net Sales | $ | 772,752 | $ | 738,436 | $ | 1,326,751 | $ | 1,292,930 |
CONSOLIDATED BALANCE SHEETS (UNAUDITED) | |||||||||||||||||||
JUNE 2014/2013 | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
ASSETS | 2014 | 2013 | LIABILITIES AND EQUITY | 2014 | 2013 | ||||||||||||||
CURRENT ASSETS | CURRENT LIABILITIES | ||||||||||||||||||
Restricted cash | 720 | 753 | Cash overdraft | $ | 13,659 | $ | 3,407 | ||||||||||||
Accounts receivable | 286,422 | 270,949 | Accounts payable | 110,953 | 95,594 | ||||||||||||||
Inventories | 277,789 | 253,554 | Accrued liabilities | 79,786 | 65,746 | ||||||||||||||
Other current assets | 26,469 | 29,490 | |||||||||||||||||
TOTAL CURRENT ASSETS | 591,400 | 554,746 | TOTAL CURRENT LIABILITIES | 204,398 | 164,747 | ||||||||||||||
OTHER ASSETS | 13,669 | 18,023 | LONG-TERM DEBT AND | ||||||||||||||||
INTANGIBLE ASSETS, NET | 169,357 | 170,770 | CAPITAL LEASE OBLIGATIONS | 95,094 | 142,473 | ||||||||||||||
PROPERTY, PLANT | OTHER LIABILITIES | 42,652 | 42,200 | ||||||||||||||||
AND EQUIPMENT, NET | 247,453 | 233,773 | EQUITY | 679,735 | 627,892 | ||||||||||||||
TOTAL ASSETS | $ | 1,021,879 | $ | 977,312 | TOTAL LIABILITIES AND EQUITY | $ | 1,021,879 | $ | 977,312 |
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||||
FOR THE SIX MONTHS ENDED | |||||||||||||
JUNE 2014/2013 | |||||||||||||
(In thousands) | 2014 | 2013 | |||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||
Net earnings | $ | 30,115 | $ | 22,130 | |||||||||
Adjustments to reconcile net earnings attributable to controlling interest | |||||||||||||
to net cash from operating activities: | |||||||||||||
Depreciation | 15,644 | 14,459 | |||||||||||
Amortization of intangibles | 1,194 | 1,324 | |||||||||||
Expense associated with share-based compensation arrangements | 932 | 1,073 | |||||||||||
Excess tax benefits from share-based compensation arrangements | - | (6 | ) | ||||||||||
Expense associated with stock grant plans | 58 | 36 | |||||||||||
Deferred income taxes (credit) | 46 | (79 | ) | ||||||||||
Equity in earnings of investee | (104 | ) | (134 | ) | |||||||||
Net gain on sale of property, plant and equipment | (931 | ) | (141 | ) | |||||||||
Changes in: | |||||||||||||
Accounts receivable | (105,695 | ) | (108,893 | ) | |||||||||
Inventories | 10,776 | (10,223 | ) | ||||||||||
Accounts payable | 38,062 | 29,473 | |||||||||||
Accrued liabilities and other | 20,151 | 22,064 | |||||||||||
NET CASH FROM OPERATING ACTIVITIES | 10,248 | (28,917 | ) | ||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||
Purchases of property, plant, and equipment | (20,100 | ) | (21,532 | ) | |||||||||
Proceeds from sale of property, plant and equipment | 1,754 | 453 | |||||||||||
Acquisitions, net of cash received | (7,135 | ) | (9,296 | ) | |||||||||
Advances of notes receivable | (3,287 | ) | (1,358 | ) | |||||||||
Collections of notes receivable and related interest | 888 | 749 | |||||||||||
Cash restricted as to use | - | 6,078 | |||||||||||
Other, net | (159 | ) | (37 | ) | |||||||||
NET CASH FROM INVESTING ACTIVITIES | (28,039 | ) | (24,943 | ) | |||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||
Net borrowings under revolving credit facilities | 10,394 | 46,683 | |||||||||||
Debt issuance costs | (9 | ) | (11 | ) | |||||||||
Proceeds from issuance of common stock | 201 | 694 | |||||||||||
Distributions to noncontrolling interest | (1,101 | ) | (490 | ) | |||||||||
Dividends paid to shareholders | (4,214 | ) | (3,977 | ) | |||||||||
Excess tax benefits from share-based compensation arrangements | - | 6 | |||||||||||
NET CASH FROM FINANCING ACTIVITIES | 5,271 | 42,905 | |||||||||||
Effect of exchange rate changes on cash | (60 | ) | (99 | ) | |||||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | (12,580 | ) | (11,054 | ) | |||||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | (1,079 | ) | 7,647 | ||||||||||
CASH (CASH OVERDRAFT), END OF PERIOD | $ | (13,659 | ) | $ | (3,407 | ) | |||||||
SUPPLEMENTAL INFORMATION: | |||||||||||||
Interest paid | $ | 2,155 | $ | 2,434 | |||||||||
Income taxes paid (refunded) | 6,532 | (910 | ) | ||||||||||
Source:
Universal Forest Products, Inc.
Lynn Afendoulis
Director,
Corporate Communications
(616) 365-1502