Universal Forest Products Posts Another Strong Quarter; Reports 20% Increase in Net Earnings
GRAND RAPIDS, Mich., Oct. 11 /PRNewswire-FirstCall/ -- Universal Forest Products, Inc. (Nasdaq: UFPI) today announced record results for the third quarter, including a 20% increase in net earnings. Net earnings for the third quarter 2004 were $14.6 million, compared to net earnings of $12.2 million for the same period in 2003. For the year-to-date 2004, net earnings were $39.9 million, an increase of 18% over year-to-date net earnings of $33.9 million in 2003.
Universal reported net sales for the quarter of $709.3 million, a 32.3% increase over net sales of $536.3 million in the third quarter of 2003. Net sales for the first nine months of 2004 were $1.92 billion, a 32.8% increase over net sales of $1.44 billion for the same period in 2003. The higher lumber market accounted for 21% of the net sales increase for the third quarter 2004 and for 22% of the 2004 year-to-date net sales increase.
"We continue to successfully execute our growth strategy, thanks to the determination of the people of Universal, who are focused on the Company's goals," said CEO and Vice Chairman William G. Currie.
"These numbers are the result of hard work and determination -- the very qualities that have spurred Universal's success for nearly 50 years," he added.
The Company produced significant year-over-year sales increases of 74% and 52% in its site-built construction and industrial markets, respectively. Both are markets in which Universal sees strong opportunity for continuing growth. "Although we enjoy leadership positions in these arenas, we believe there's a tremendous opportunity to expand market share and we'll continue to leverage our strengths to grow in these fragmented markets," he said.
In addition, Currie expressed optimism for the growing modular housing segment of the manufactured housing market. "We have some exciting new products that are allowing manufacturers to enhance and customize their homes, and that means opportunity for Universal," Currie said.
He noted that D-I-Y sales remain soft due to increases in lumber costs, which may be prompting homeowners to delay improvement projects; the hurricanes that effectively put a halt to improvement projects during the quarter in Florida and the Southeastern United States; and the higher cost of treated wood due to industry changes in the treating compounds, which may be affecting consumers' purchasing decisions.
Following are Universal's third-quarter 2004 sales by market:
* $280.7 million in D-I-Y/retail, an increase of 7.2% from the same period last year;
* $194.6 million in site-built construction, an increase of 73.8% over last year;
* $127.4 million in industrial/other, a 51.5% increase over last year; and
* $106.5 million in manufactured housing, a 35.9% increase over last year.
Based on the strength of its year-to-date results, the Company raised its targeted range for earnings per share growth to between 12% and 15% (previously it was between 10% and 14%). The Company also reaffirmed its unit sales growth targeted range of between 10% and 14% for the year.
Universal Forest Products will conduct a conference call to discuss information included in this news release and related matters at 11:00 a.m. EDT on Tuesday, Oct. 12, 2004. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (866) 814-1933 or internationally at (703) 639-1365. Use conference call ID #570112. 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 .
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, wood and composite components 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 http://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.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2004/2003
Quarter Period
(In thousands, except per share data) 2004 2003
NET SALES $709,294 100% $536,278 100%
COST OF GOODS SOLD 625,502 88.19 463,715 86.47
GROSS PROFIT 83,792 11.81 72,563 13.53
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 54,604 7.70 48,424 9.03
EARNINGS FROM OPERATIONS 29,188 4.12 24,139 4.50
OTHER EXPENSE (INCOME)
Interest expense 3,641 0.51 3,526 0.66
Interest income (39) -0.01 (2) 0.00
Net gain on sale of real estate
and interest in subsidiary - 0.00 - 0.00
3,602 0.51 3,524 0.66
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 25,586 3.61 20,615 3.84
INCOME TAXES 9,261 1.31 7,715 1.44
EARNINGS BEFORE MINORITY INTEREST 16,325 2.30 12,900 2.41
MINORITY INTEREST (1,699) -0.24 (695) -0.13
NET EARNINGS $14,626 2.06 $12,205 2.28
EARNINGS PER SHARE - BASIC $0.81 $0.69
EARNINGS PER SHARE - DILUTED $0.78 $0.66
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,083 17,765
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,784 18,425
Year to Date
(In thousands, except per share data) 2004 2003
NET SALES $1,917,527 100% $1,444,360 100%
COST OF GOODS SOLD 1,684,553 87.85 1,241,251 85.94
GROSS PROFIT 232,974 12.15 203,109 14.06
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 154,615 8.06 135,309 9.37
EARNINGS FROM OPERATIONS 78,359 4.09 67,800 4.69
OTHER EXPENSE (INCOME)
Interest expense 11,052 0.58 11,271 0.78
Interest income (224) -0.01 (133) -0.01
Net gain on sale of real estate
and interest in subsidiary (944) -0.05 - 0.00
9,884 0.52 11,138 0.77
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 68,475 3.57 56,662 3.92
INCOME TAXES 25,550 1.33 20,964 1.45
EARNINGS BEFORE MINORITY INTEREST 42,925 2.24 35,698 2.47
MINORITY INTEREST (2,976) -0.16 (1,831) -0.13
NET EARNINGS $39,949 2.08 $33,867 2.34
EARNINGS PER SHARE - BASIC $2.22 $1.91
EARNINGS PER SHARE - DILUTED $2.13 $1.85
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,015 17,745
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,716 18,290
SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2004 % 2003 %
Do-It-Yourself/Retail $280,700 40% $261,812 49%
Site-Built Construction 194,643 27% 111,980 21%
Manufactured Housing 106,555 15% 78,394 14%
Industrial and Other 127,396 18% 84,092 16%
Total $709,294 100% $536,278 100%
Year to Date
Market Classification 2004 % 2003 %
Do-It-Yourself/Retail $804,188 42% $720,311 50%
Site-Built Construction 479,808 25% 290,225 20%
Manufactured Housing 286,925 15% 204,863 14%
Industrial and Other 346,606 18% 228,961 16%
Total $1,917,527 100% $1,444,360 100%
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2004/2003
(In thousands)
ASSETS 2004 2003 LIABILITIES
AND
SHAREHOLDERS'
EQUITY 2004 2003
CURRENT ASSETS CURRENT LIABILITIES
Cash and
cash Notes
equivalents $19,285 $15,340 payable $ - $645
Accounts
receivable 251,045 157,768 Accounts payable and
Inventories 206,644 160,955 accrued
liabilities 205,221 160,344
Other
current
assets 10,036 7,795 Current portion of long-term
debt and
capital leases 527 6,263
TOTAL CURRENT
ASSETS 487,010 341,858
TOTAL CURRENT
LIABILITIES 205,748 167,252
OTHER ASSETS 6,906 5,679
INTANGIBLE
ASSETS, NET 132,285 131,545 LONG-TERM DEBT AND CAPITAL
LEASES, less
current
portion 247,978 195,833
PROPERTY, OTHER
PLANT LIABILITIES 34,303 31,123
AND
EQUIPMENT,
NET 209,240 214,337
SHAREHOLDERS'
EQUITY 347,412 299,211
TOTAL LIABILITIES AND
TOTAL ASSETS $835,441 $693,419 SHAREHOLDERS'
EQUITY $835,441 $693,419
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2004/2003
(In thousands) 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $39,949 $33,867
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation 20,418 18,702
Amortization of intangibles 1,760 1,519
Deferred income taxes (90) (1,301)
Minority interest 2,976 1,831
Loss on sale of interest in
subsidiary 193 -
(Gain) Loss on sale or
impairment of property, plant
and equipment (432) 918
Changes in:
Accounts receivable (111,925) (53,545)
Inventories (36,152) 5,051
Accounts payable 39,225 37,717
Accrued liabilities and other 30,877 23,145
NET CASH FROM OPERATING
ACTIVITIES (13,201) 67,904
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and
equipment (25,062) (33,349)
Acquisitions, net of cash received (10,075) (787)
Sale of interest in subsidiary 4,679 -
Proceeds from sale of property, plant
and equipment 3,469 6,104
Insurance proceeds 2,000 -
Other, net 1,567 2,909
NET CASH FROM INVESTING
ACTIVITIES (23,422) (25,123)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under
revolving credit facilities and
notes payable 43,152 (36,884)
Repayment of long-term debt (6,352) (6,150)
Proceeds from issuance of common
stock 2,194 1,719
Distributions to minority shareholder (125) (833)
Dividends paid to shareholders (897) (798)
Repurchase of common stock (129) (2,029)
Other, net 635 -
NET CASH FROM FINANCING
ACTIVITIES 38,478 (44,975)
NET CHANGE IN CASH AND CASH
EQUIVALENTS 1,855 (2,194)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 17,430 17,534
CASH AND CASH EQUIVALENTS, END OF
PERIOD $19,285 $15,340
SOURCE Universal Forest Products, Inc.
CONTACT: AT THE COMPANY: Lynn Afendoulis, Director of Public Affairs of Universal Forest Products, Inc., +1-616-364-6161; or FLEISHMAN HILLARD: Jeremy Skule, Vice President of Fleishman Hillard, +1-212-453-2245