Universal Forest Products Announces Second Quarter Earnings Of $12.9 Million Per Share Increase of 5%
GRAND RAPIDS, Mich., July 18 /PRNewswire/ -- Universal Forest Products®, Inc. (Nasdaq: UFPI) today announced record results for the second quarter of 2000 including quarterly earnings of $12.9 million or $0.63 per share (diluted) compared to $12.7 million or $0.60 per share (diluted) for the second quarter of 1999. Net sales for the quarter were $431.6 million, down 3.4% compared to $446.8 million for the same quarter a year ago, in spite of a 19% decrease in the overall lumber market.
For the first six months of 2000, net earnings were $19.0 million or $0.93 per share (diluted) compared to $18.1 million or $0.85 per share (diluted) for the first six months of 1999, a 4.9% increase in net earnings and a 9.4% increase in earnings per share. Net sales were $735.7 million versus $746.9 million, a decrease of 1.5% compared to the same period a year ago.
"Our business strategy of maintaining leadership in four related, but distinct markets, served by our plants throughout North America, helped to offset the short-term impact of certain macro economic events in the quarter," said William G. Currie, UFPI's vice-chairman and chief executive officer. "Despite the current environment, we recognized record earnings this quarter and remain confident we will reach the growth targets in our 'Performance 2002' strategy. While we continue to have year-over-year gains in unit sales, earnings were impacted by rising interest rates, a decline in lumber prices of 19% from a year ago, and a weak manufactured housing market. For the balance of the year, we expect unit sales to increase, revenues to remain flat, and earnings to remain flat or increase modestly. This assumes that interest rates do not increase significantly from present levels and the manufactured housing industry does not deteriorate further."
Outlook by market segment:
While some regions are forecasting a slowing of site-built construction activity, business in certain high-volume regions is expected to remain strong. UFPI forecasts strong continued growth for its site-built construction segment, as increased demand for these value added products and increased market share will offset downward pressure on sales caused by interest rate increases.
UFPI continues to make strategic acquisitions of leading regional companies as part of its plan to develop a nation-wide network of roof truss, floor truss, I-joist, and wall panel manufacturers to better serve this market. The company announced three acquisitions in this market segment; Gang-Nail Components, Inc.; Banks Corporation's OPEN JOIST 2000 facility; and 50% of Thorndale Roof and Edcor Floor Systems.
The company believes that manufactured housing will continue to struggle for the remainder of this year, which will negatively impact sales to this sector. Shipments in the first quarter were off 20% and the most recently available figures show a 32% reduction in April. An improving trend is anticipated in the second quarter of 2001. In the meantime, the company will continue its efforts to shift sales focus and production capacity to the industrial and agricultural markets, which were up 8% for the second quarter and 12.6% for the year-to-date. UFPI sees this as an opportunity to greatly increase its market share to industrial and agricultural customers.
Sales to D-I-Y customers were off 3% for the quarter and up 2% for the year-to-date. This softening of sales is due primarily to the deflation of commodity lumber prices. After trending down all year the current market hovers around a three-year historical low. Historically, the D-I-Y retail market has been counter cyclical to the housing market and we expect this trend to continue. Unit sales to this market segment are expected to continue to be strong.
The company continues to increase its D-I-Y market penetration through a strategic acquisition program. During the quarter the company closed on the acquisition of two lumber treating facilities purchased from Walker-Williams Lumber Company. These two facilities are located in Westville, Indiana and Blanchester, Ohio. The company anticipates closing on a third facility in Youngstown, Ohio following additional due diligence. When fully operational, these three facilities will add 200 million board feet to Universal's treating capacity enabling it to better serve its D-I-Y customers in the Midwest.
About Universal Forest Products (R), Inc.
Universal Forest Products' markets include pressure treated and manufactured products for D-I-Y retail home centers, structural lumber products for the manufactured housing industry, engineered wood products for the site-built construction market, and specialty wood packaging for various industries. For information about Universal Forest Products® on the Internet, please contact the company's investor relations 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. 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.
-FINANCIAL HIGHLIGHTS TO FOLLOW-
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2000/1999
Quarter Period
(In thousands,
except per share data) 2000 1999
NET SALES $431,578 100% $446,751 100%
COST OF GOODS SOLD 374,280 86.72 392,691 87.90
GROSS PROFIT 57,298 13.28 54,060 12.10
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 32,045 7.43 29,962 6.71
EARNINGS FROM OPERATIONS 25,253 5.85 24,098 5.39
INTEREST EXPENSE 3,607 0.84 3,318 0.74
INTEREST REVENUE (160) -0.04 (155) -0.03
3,447 0.80 3,163 0.71
EARNINGS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY
IN EARNINGS (LOSS) OF INVESTEE 21,806 5.05 20,935 4.68
INCOME TAXES 8,563 1.98 8,459 1.89
EARNINGS BEFORE MINORITY
INTEREST AND EQUITY IN
EARNINGS (LOSS) OF INVESTEE 13,243 3.07 12,476 2.79
MINORITY INTEREST (307) -0.08 (53) -0.01
EQUITY IN EARNINGS (LOSS)
OF INVESTEE (19) 0.00 325 0.07
NET EARNINGS $12,917 2.99 $12,748 2.85
EARNINGS PER SHARE -- BASIC $0.64 $0.61
EARNINGS PER SHARE -- DILUTED $0.63 $0.60
WEIGHTED AVERAGE SHARES
OUTSTANDING 20,144 20,745
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 20,501 21,291
SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2000 % 1999 %
Do-It-Yourself $229,711 53% $236,912 53%
Manufactured Housing 87,939 20% 108,811 24%
Site-Built Construction 63,008 15% 53,858 12%
Industrial and Other 50,920 12% 47,170 11%
Total $431,578 100% $446,751 100%
Year to Date
(In thousands,
except per share data) 2000 1999
NET SALES $735,650 100% $746,931 100%
COST OF GOODS SOLD 637,941 86.72 653,114 87.44
GROSS PROFIT 97,709 13.28 93,817 12.56
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 59,363 8.07 58,347 7.81
EARNINGS FROM OPERATIONS 38,346 5.21 35,470 4.75
INTEREST EXPENSE 6,775 0.92 6,237 0.84
INTEREST REVENUE (246) -0.03 (304) -0.04
6,529 0.89 5,933 0.80
EARNINGS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY
IN EARNINGS (LOSS) OF INVESTEE 31,817 4.32 29,537 3.95
INCOME TAXES 12,516 1.70 11,814 1.58
EARNINGS BEFORE MINORITY
INTEREST AND EQUITY IN
EARNINGS (LOSS) OF INVESTEE 19,301 2.62 17,723 2.37
MINORITY INTEREST (330) -0.04 (134) -0.02
EQUITY IN EARNINGS (LOSS)
OF INVESTEE 27 0.00 520 0.07
NET EARNINGS $18,998 2.58 $18,109 2.42
EARNINGS PER SHARE -- BASIC $0.94 $0.87
EARNINGS PER SHARE -- DILUTED $0.93 $0.85
WEIGHTED AVERAGE SHARES
OUTSTANDING 20,140 20,727
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 20,513 21,353
SUPPLEMENTAL SALES DATA
Year to Date
Market Classification 2000 % 1999 %
Do-It-Yourself $363,991 49% $357,068 48%
Manufactured Housing 166,121 23% 205,079 27%
Site-Built Construction 111,623 15% 101,374 14%
Industrial and Other 93,915 13% 83,410 11%
Total $735,650 100% $746,931 100%
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2000/1999
(In thousands)
ASSETS 2000 1999
CURRENT ASSETS
Cash and cash equivalents $2,748 $1,441
Accounts receivable 119,044 112,341
Inventories 145,768 136,259
Other current assets 7,005 6,966
TOTAL CURRENT ASSETS 274,565 257,007
OTHER ASSETS 11,304 10,432
GOODWILL AND NON-COMPETE 107,372 94,351
PROPERTY, PLANT
AND EQUIPMENT, NET 164,990 144,060
TOTAL ASSETS $558,231 $505,850
LIABILITIES AND
SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $2,278 $2,208
Accounts payable and
accrued liabilities 107,811 99,523
Current portion of long-term
debt and capital leases 7,058 8,566
TOTAL CURRENT LIABILITIES 117,147 110,297
LONG-TERM DEBT AND CAPITAL
LEASES, less current portion 131,219 129,504
REVOLVING CREDIT FACILITY 60,400 42,300
OTHER LIABILITIES 18,072 15,047
SHAREHOLDERS' EQUITY 231,393 208,702
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $558,231 $505,850
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2000/1999
(In thousands) 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $18,998 $18,109
Adjustments to reconcile net earnings to net cash
from operating activities:
Depreciation 7,862 7,535
Amortization of non-compete agreements
and goodwill 1,639 1,592
(Gain) loss on sale of property,
plant and equipment 5 (89)
Changes in:
Accounts receivable (40,083) (49,494)
Inventories (9,577) (27,861)
Accounts payable 23,647 26,462
Accrued liabilities and other 3,209 5,690
NET CASH FROM OPERATING ACTIVITIES 5,700 (18,056)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (15,623) (21,153)
Business acquisitions, net of cash received (32,386) -
Proceeds from sale of property, plant
and equipment 440 1,633
Other (520) 1,405
NET CASH FROM INVESTING ACTIVITIES (48,089) (18,115)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (7,181) (7,736)
Proceeds from issuance of long-term debt 1,937 20,306
Net borrowings (repayments) under
revolving credit facility and notes payable 48,774 26,131
Dividends paid to shareholders (807) (728)
Proceeds from issuance of common stock 379 785
Repurchase of common stock (2,071) (2,066)
NET CASH FROM FINANCING ACTIVITIES 41,031 36,692
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,358) 521
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 4,106 920
CASH AND CASH EQUIVALENTS, END OF PERIOD $2,748 $1,441
SOURCE Universal Forest Products®, Inc.
CONTACT: Charles R. Felix, Sr. V.P. Development, or Michael Cole, V.P. of Finance, of Universal Forest Products, Inc., 616-364-6161; or Matthew Della Croce, Vice President, 212-453-2316, or Pat McCoy, Managing Supervisor, 212-453-2272, both of Fleishman Hillard