Universal Forest Products Posts Record Earnings and EPS for 2002
GRAND RAPIDS, Mich., Jan. 27 /PRNewswire-FirstCall/ -- Universal Forest Products (Nasdaq: UFPI) today announced results for the fourth quarter and year ended December 28, 2002, closing out a year of solid performance and growth. For the year, diluted earnings per share totaled $1.97, representing an 11.3% increase over pro forma results and a 20.9% increase over reported results for 2001. Diluted earnings per share for the quarter totaled $0.25, a 4.2% increase over pro forma results and a 25.0% increase over reported results for the fourth quarter of 2001.
At the beginning of 2002, the Company adopted a new accounting standard, which discontinued the amortization of goodwill. Under the required new standard, pro forma diluted earnings per share for the fourth quarter and year ended December 29, 2001 would have been $0.24 and $1.77, respectively.
Net sales for the year were $1.64 billion compared to sales of $1.53 billion in 2001, a 7.2% increase. Net sales for the quarter were $340.3 million, an increase of 3.4% over sales of $329.3 million in the fourth quarter of 2001.
"2002 was a strong year for Universal Forest Products," said William G. Currie, UFPI's vice chairman and CEO. "We faced several challenges -- including a troubled economy, a depressed lumber market and difficult winter weather -- and still achieved the results we targeted. Whether it's for our shareholders or customers, UFPI is committed to achieving what we promise.
"I'm very proud of the 7,000 people who work for UFPI. From production through management -- everyone contributes to make Universal a strong, profitable company and a great place to work," continued Currie. "It is through their combined efforts that we continue to be recognized by publications like Forbes Magazine, joining many of our customers as a top- performing company."
Universal posted the following annual sales by market:
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$761.7 million in D-I-Y/retail, up 3.2% from last year;
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$326.7 million in site-built construction, an increase of 5.8% over last year;
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$292.4 million in manufactured housing, a 4.3% increase compared to last year despite a 13% decline in industry production; and
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$259.2 million in industrial/agricultural, a 27.6% increase over last year.
OUTLOOK
The Company anticipates continued growth in its business in 2003. Key assumptions with respect to the Company's 2003 outlook include:
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Stable commodity lumber prices and interest rates;
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A D-I-Y/retail market that shows slow to moderate growth;
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A site-built construction market that softens slightly in the Company's major regions;
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A manufactured housing market that begins a minor recovery; and
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Strong industrial/agricultural market share growth.
With the factors expressed above in mind, the Company has targeted a 7% to 12% increase in sales and diluted EPS for 2003.
Universal Forest Products will conduct a conference call to discuss information included in this news release and related matters at 11:00 a.m. EST on Tuesday, January 28, 2003. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at 800-521-5461 or internationally at 303-804-1806. Use conference call ID #2874194. 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 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. 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.
Financial Highlights to Follow
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE YEAR ENDED
DECEMBER 2002/2001
(Unaudited)
Quarter Period
(In thousands, except per share data) 2002 2001
NET SALES $340,340 100% $329,270 100%
COST OF GOODS SOLD 291,495 85.65 283,489 86.10
GROSS PROFIT 48,845 14.35 45,781 13.90
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 38,008 11.17 37,055 11.25
EARNINGS FROM OPERATIONS 10,837 3.18 8,726 2.65
INTEREST EXPENSE 2,878 0.85 2,357 0.72
INTEREST REVENUE (101) -0.03 (118) -0.04
GAIN ON SALE OF ASSETS - 0.00 - 0.00
2,777 0.82 2,239 0.68
EARNINGS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY
IN EARNINGS OF INVESTEE 8,060 2.37 6,487 1.97
INCOME TAXES 2,932 0.86 2,058 0.63
EARNINGS BEFORE MINORITY
INTEREST AND EQUITY IN
EARNINGS OF INVESTEE 5,128 1.51 4,429 1.35
MINORITY INTEREST (571) -0.17 (313) -0.10
EQUITY IN EARNINGS OF INVESTEE - 0.00 3 0.00
REPORTED NET EARNINGS $4,557 1.34 $4,119 1.25
ADD: GOODWILL AMORTIZATION, net of tax 766 0.23
PRO FORMA NET EARNINGS $4,557 1.34 $4,885 1.48
REPORTED EARNINGS PER SHARE - BASIC $0.26 $0.21
ADD: GOODWILL AMORTIZATION, net of tax 0.04
PRO FORMA EARNINGS PER SHARE - BASIC $0.26 $0.25
REPORTED EARNINGS PER SHARE - DILUTED $0.25 $0.20
ADD: GOODWILL AMORTIZATION, net of tax 0.04
PRO FORMA EARNINGS PER SHARE - DILUTED $0.25 $0.24
WEIGHTED AVERAGE SHARES OUTSTANDING 17,749 19,788
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,318 20,428
Year
(In thousands, except per share data) 2002 2001
NET SALES $1,639,899 100% $1,530,353 100%
COST OF GOODS SOLD 1,409,489 85.95 1,318,874 86.18
GROSS PROFIT 230,410 14.05 211,479 13.82
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 158,299 9.65 145,722 9.52
EARNINGS FROM OPERATIONS 72,111 4.40 65,757 4.30
INTEREST EXPENSE 11,375 0.69 12,043 0.79
INTEREST REVENUE (297) -0.02 (586) -0.04
GAIN ON SALE OF ASSETS (1,082) -0.07 - 0.00
9,996 0.61 11,457 0.75
EARNINGS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY
IN EARNINGS OF INVESTEE 62,115 3.79 54,300 3.55
INCOME TAXES 22,983 1.40 19,612 1.28
EARNINGS BEFORE MINORITY
INTEREST AND EQUITY IN
EARNINGS OF INVESTEE 39,132 2.39 34,688 2.27
MINORITY INTEREST (2,495) -0.15 (1,792) -0.12
EQUITY IN EARNINGS OF INVESTEE - 0.00 246 0.02
REPORTED NET EARNINGS $36,637 2.23 $33,142 2.17
ADD: GOODWILL AMORTIZATION, net of tax 2,997 0.20
PRO FORMA NET EARNINGS $36,637 2.23 $36,139 2.36
REPORTED EARNINGS PER SHARE - BASIC $2.04 $1.68
ADD: GOODWILL AMORTIZATION, net of tax 0.15
PRO FORMA EARNINGS PER SHARE - BASIC $2.04 $1.83
REPORTED EARNINGS PER SHARE - DILUTED $1.97 $1.63
ADD: GOODWILL AMORTIZATION, net of tax 0.15
PRO FORMA EARNINGS PER SHARE - DILUTED $1.97 $1.77
WEIGHTED AVERAGE SHARES OUTSTANDING 17,922 19,774
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,619 20,377
SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2002 % 2001 %
Do-It-Yourself $133,416 39% $137,489 41%
Site-Built Construction 80,630 24% 74,988 23%
Manufactured Housing 64,895 19% 71,665 22%
Industrial and Other 61,399 18% 45,128 14%
Total $340,340 100% $329,270 100%
SUPPLEMENTAL SALES DATA
Year to Date
Market Classification 2002 % 2001 %
Do-It-Yourself $761,688 46% $738,218 49%
Site-Built Construction 326,651 20% 308,826 20%
Manufactured Housing 292,394 18% 280,208 18%
Industrial and Other 259,166 16% 203,101 13%
Total $1,639,899 100% $1,530,353 100%
CONSOLIDATED BALANCE SHEETS
DECEMBER 2002/2001
(In thousands)
ASSETS 2002 2001 LIABILITIES AND SHAREHOLDERS'
EQUITY 2002 2001
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash
equiva-
lents $13,454 $22,887 Notes payable $1,758 $1,402
Restricted
cash
equivalents 1,383 - Accounts payable and
Accounts accrued
receivable 105,217 86,256 liabilities 100,588 89,078
Inventories 166,006 120,769 Current portion
Other current of long-term
capital debt and
assets 8,037 5,054 leases 6,495 20,415
TOTAL CURRENT TOTAL CURRENT
ASSETS 294,097 234,966 LIABILITIES 108,841 110,895
OTHER ASSETS 6,738 11,585 LONG-TERM DEBT AND CAPITAL
LEASES, less
INTANGIBLE current
ASSETS 130,815 122,996 portion 235,319 154,370
OTHER
LIABILITIES 27,634 19,082
PROPERTY, PLANT
AND EQUIPMENT,
NET 203,144 181,662 TEMPORARY SHAREHOLDERS'
EQUITY - 36,000
SHAREHOLDERS'
EQUITY 263,000 230,862
TOTAL LIABILITIES AND
TOTAL ASSETS $634,794 $551,209 SHAREHOLDERS'
EQUITY $634,794 $551,209
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED
DECEMBER 2002/2001
(In thousands) 2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $36,637 $33,142
Adjustments to reconcile net
earnings to net cash
from operating activities:
Depreciation 23,474 20,101
Amortization of intangibles 1,165 4,375
Deferred income taxes 3,102 4,587
Loss on sale or impairment of
property, plant and equipment 702 1,445
Changes in:
Accounts receivable (16,489) (11,753)
Inventories (40,780) 10,051
Accounts payable 9,638 9,891
Accrued liabilities and other (899) 6,217
NET CASH FROM OPERATING ACTIVITIES 16,550 78,056
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (31,351) (22,748)
Purchases of licensing agreements (2,000) -
Acquisitions, net of cash received (17,540) (49,534)
Proceeds from sale of property,
plant and equipment 2,862 2,497
Other (743) 1,291
NET CASH FROM INVESTING ACTIVITIES (48,772) (68,494)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving
credit facilities and notes payable 14,286 23,129
Proceeds from issuance of long-term debt 58,700 2,500
Repayment of long-term debt (8,481) (10,697)
Proceeds from issuance of common stock 922 870
Distributions to minority shareholder (1,345) (1,650)
Dividends paid to shareholders (1,605) (1,683)
Repurchase of common stock (39,688) (1,536)
NET CASH FROM FINANCING ACTIVITIES 22,789 10,933
NET CHANGE IN CASH AND CASH EQUIVALENTS (9,433) 20,495
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 22,887 2,392
CASH AND CASH EQUIVALENTS, END OF YEAR $13,454 $22,887
SOURCE Universal Forest Products
CONTACT: AT THE COMPANY: Michael R. Cole, Chief Financial Officer of Universal Forest Products, +1-616-364-6161; or FLEISHMAN HILLARD: Jim Ankner, Vice President of Fleishman Hillard, +1-212-453-2198