Release Details

Universal Forest Products Announces Record Third Quarter 2003 Results

October 13, 2003
  • Third quarter sales rose 18.4 percent; EPS increased 13.8 percent to $0.66 per diluted share
  • Company increases annual sales target and reaffirms year-end EPS target

GRAND RAPIDS, Mich., Oct. 13 /PRNewswire-FirstCall/-- Citing the strengths of the markets it serves, Universal Forest Products, Inc. (Nasdaq: UFPI) today announced record results for the third quarter and the first nine months of the year. The company also reaffirmed its EPS target and increased its sales target for the year.

Net sales for the quarter were $536.3 million, an increase of 18.4% over net sales of $453.0 million in the third quarter of 2002. Net sales for the first nine months of 2003 were $1.44 billion, an 11.1% increase over net sales of $1.30 billion for the same period of 2002.

Diluted earnings per share for the quarter totaled $0.66; representing a 13.8% increase over reported results for the third quarter of 2002. Year-to- date diluted earnings per share were $1.85, an 8.2% increase over reported results for the same period of 2002.

"It was a strong quarter with solid performance from our whole team," said Universal CEO and Vice Chairman William G. Currie. "We are growing our share in all of our four markets, strengthening our balance sheet, meeting customer expectations, and adding shareholder value."

Following are Universal's third-quarter 2003 sales by market:

* $262.0 million in D-I-Y/retail, up 21.9% from the same period last year;

* $111.5 million in site-built construction, an increase of 25.7% over last year;

* $79.3 million in manufactured housing, a 0.4% decrease compared to last year - despite a 21% drop in industry shipments for the quarter; and

* $83.4 million in industrial/other, a 19.7% increase over the same period last year.

The company reaffirmed its diluted earnings per share growth target of 7% to 10% for the year. However, due primarily to upward momentum in the lumber market in the third quarter, the company increased its target for annual sales growth to 10% to 12% (up from the previous target of 7% to 10%).

Universal Forest Products will conduct a conference call to discuss information included in this news release and additional matters at 11:00 a.m. EDT on Tuesday, October 14, 2002. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (877) 679-9049, internationally at (952) 556-2803. Use conference call ID #286962. The conference call will be available simultaneously, and in its entirety, to all interested investors and news media through a web cast at www.ufpi.com . Click on Investor Relations.

Universal Forest Products markets, manufactures, and engineers wood and wood-alternative products for D-I-Y retail home centers, structural lumber products for the manufactured housing industry, engineered wood components for the site-built construction market and specialty wood packaging for various industries. Among the company's newest and fastest-growing ventures are framing and installation services for the site-built and retail sectors. In conjunction with its customers, Universal uses its engineering and manufacturing expertise, coupled with highly skilled employees, to design and construct buildings and decks. For information about Universal Forest Products on the Internet, please visit the Company's web site at www.ufpi.com , or call 888-Buy-UFPI.

Included in this report are certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and 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. 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 are the following: Adverse lumber market trends, competitive activity, negative economic trends, government regulations, and weather. These risk factors and additional information are included in the Company's reports on Form 10K and 10Q on file with the Securities and Exchange Commission.

                             HIGHLIGHTS TO FOLLOW


                 CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
                            FOR THE NINE MONTHS ENDED
                               SEPTEMBER 2003/2002

                                                   Quarter Period
    (In thousands, except per share data)       2003             2002


    NET SALES                             $536,278    100% $452,959    100%

    COST OF GOODS SOLD                     463,715  86.47   391,294  86.39

    GROSS PROFIT                            72,563  13.53    61,665  13.61

    SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                48,424   9.03    41,148   9.08

    EARNINGS FROM OPERATIONS                24,139   4.50    20,517   4.53

    INTEREST EXPENSE                         3,526   0.66     2,542   0.56
    INTEREST REVENUE                            (2)  0.00       (31) -0.01
    GAIN ON SALE OF ASSETS                       -   0.00         -   0.00
                                             3,524   0.66     2,511   0.55
    EARNINGS BEFORE INCOME TAXES
      AND MINORITY INTEREST                 20,615   3.84    18,006   3.98

    INCOME TAXES                             7,715   1.44     6,678   1.47


    EARNINGS BEFORE MINORITY INTEREST       12,900   2.41    11,328   2.50

    MINORITY INTEREST                         (695) -0.13      (684) -0.15

    NET EARNINGS                           $12,205   2.28   $10,644   2.35



    EARNINGS PER SHARE - BASIC               $0.69            $0.60

    EARNINGS PER SHARE - DILUTED             $0.66            $0.58



    WEIGHTED AVERAGE SHARES
      OUTSTANDING                           17,765           17,845

    WEIGHTED AVERAGE SHARES
      OUTSTANDING WITH COMMON
      STOCK EQUIVALENTS                     18,425           18,427


                 CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
                            FOR THE NINE MONTHS ENDED
                               SEPTEMBER 2003/2002

                                                     Year to Date
    (In thousands, except per share
     data)                                      2003               2002


    NET SALES                            $1,444,360    100% $1,299,559    100%

    COST OF GOODS SOLD                    1,241,251  85.94   1,117,994  86.03

    GROSS PROFIT                            203,109  14.06     181,565  13.97

    SELLING, GENERAL AND
     ADMINISTRATIVE EXPENSES                135,309   9.37     120,291   9.26

    EARNINGS FROM OPERATIONS                 67,800   4.69      61,274   4.71

    INTEREST EXPENSE                         11,271   0.78       8,497   0.65
    INTEREST REVENUE                           (133) -0.01        (196) -0.02
    GAIN ON SALE OF ASSETS                        -   0.00      (1,082) -0.08
                                             11,138   0.77       7,219   0.56
    EARNINGS BEFORE INCOME TAXES
      AND MINORITY INTEREST                  56,662   3.92      54,055   4.16

    INCOME TAXES                             20,964   1.45      20,051   1.54


    EARNINGS BEFORE MINORITY INTEREST        35,698   2.47      34,004   2.62

    MINORITY INTEREST                        (1,831) -0.13      (1,924) -0.15

    NET EARNINGS                            $33,867   2.34     $32,080   2.47



    EARNINGS PER SHARE - BASIC                $1.91              $1.78

    EARNINGS PER SHARE - DILUTED              $1.85              $1.71



    WEIGHTED AVERAGE SHARES
      OUTSTANDING                            17,745             17,980

    WEIGHTED AVERAGE SHARES
      OUTSTANDING WITH COMMON
      STOCK EQUIVALENTS                      18,290             18,719



    SUPPLEMENTAL SALES DATA
                                                   Quarter Period
    Market Classification                      2003    %         2002    %
    Do-It-Yourself/Retail                  $262,025    48%   $214,975    47%
    Site-Built Construction                 111,541    21%     88,731    20%
    Manufactured Housing                     79,306    15%     79,588    18%
    Industrial and Other                     83,406    16%     69,665    15%
    Total                                  $536,278   100%   $452,959   100%


    SUPPLEMENTAL SALES DATA
                                                      Year to Date
    Market Classification                        2003   %          2002   %
    Do-It-Yourself/Retail                    $721,659   50%    $626,394   48%
    Site-Built Construction                   289,686   20%     245,717   19%
    Manufactured Housing                      206,880   14%     227,990   18%
    Industrial and Other                      226,135   16%     199,458   15%
    Total                                  $1,444,360  100%  $1,299,559  100%



                   CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                             SEPTEMBER 2003/2002

    (In thousands)

    ASSETS             2003     2002  LIABILITIES AND
                                      SHAREHOLDERS'
                                      EQUITY            2003      2002



    CURRENT ASSETS                   CURRENT LIABILITIES
      Cash and cash                    Notes
       equivalents  $10,747  $12,800   payable          $645    $1,494
      Accounts
       receivable   157,768  149,962   Accounts payable
      Inventories   160,955  128,841    and accrued
                                         liabilities 154,140   126,902
      Other
       current assets 5,847    3,279   Current portion of
                                        long-term debt and
                                         capital
                                          leases       6,263    18,645
    TOTAL CURRENT
     ASSETS         335,317  294,882
                                     TOTAL CURRENT
                                     LIABILITIES     161,048   147,041
    OTHER ASSETS      5,679    6,311
    INTANGIBLE
     ASSETS         131,545  125,097 LONG-TERM DEBT AND CAPITAL
                                     LEASES, less current
                                      portion        195,833   185,091
    PROPERTY,                        OTHER
    PLANT AND                        LIABILITIES      31,123    24,092
     EQUIPMENT, NET 214,337  191,349
                                     SHAREHOLDERS'
                                     EQUITY          298,874   261,415



                                     TOTAL LIABILITIES AND
    TOTAL ASSETS   $686,878  617,639  SHAREHOLDERS'
                                       EQUITY       $686,878  $617,639



                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                            FOR THE NINE MONTHS ENDED
                               SEPTEMBER 2003/2002

    (In thousands)                                   2003              2002

    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net earnings                                   $33,867           $32,080
    Adjustments to reconcile net earnings
     to net cash from operating activities:
          Depreciation                              18,702            17,235
          Amortization of intangibles                1,519               851
          Deferred income taxes                     (1,301)             (246)
          (Gain) Loss on sale or
           impairment of property, plant
            and equipment                              918              (152)
          Changes in:
            Accounts receivable                    (78,688)          (61,235)
            Inventories                              5,051            (6,020)
            Accounts payable                        37,717            28,076
            Accrued liabilities and other           24,463            11,353
              NET CASH FROM OPERATING
               ACTIVITIES                           42,248            21,942

    CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchases of property, plant, and
     equipment                                     (33,349)          (21,136)
    Purchases of licensing agreements                 (150)           (2,000)
    Acquisitions, net of cash received                (787)           (2,519)
    Proceeds from sale of property, plant
     and equipment                                   6,104             3,310
    Other                                            3,059               430
              NET CASH FROM INVESTING
               ACTIVITIES                          (25,123)          (21,915)

    CASH FLOWS FROM FINANCING ACTIVITIES:
    Net (repayments) borrowings under
     revolving credit facilities and
     notes payable                                 (36,884)           37,004
    Repayment of long-term debt                     (6,150)           (8,205)
    Proceeds from issuance of common
     stock                                           1,719               769
    Proceeds from sale and servicing of
     accounts receivable                            25,143                 -
    Distributions to minority shareholder             (833)             (660)
    Dividends paid to shareholders                    (798)             (806)
    Repurchase of common stock                      (2,029)          (38,216)
              NET CASH FROM FINANCING
               ACTIVITIES                          (19,832)          (10,114)


    NET CHANGE IN CASH AND CASH
     EQUIVALENTS                                    (2,707)          (10,087)

    CASH AND CASH EQUIVALENTS, BEGINNING
      OF PERIOD                                     13,454            22,887

    CASH AND CASH EQUIVALENTS, END OF
     PERIOD                                        $10,747           $12,800

SOURCE Universal Forest Products, Inc.

CONTACT: Lynn Afendoulis, Director, Public Affairs of Universal Forest Products, Inc., +1-616-364-6161