Universal Forest Products Posts Record Second Quarter Results
Net sales for the quarter were $504.9 million, an increase of 4.1% over sales of $485.2 million in the second quarter of 2001, despite a steep decline in lumber prices that were down as much as 29% compared to last year. Net sales for the first six months of 2002 were $846.6 million, a 10.0% increase compared to sales of $769.2 million for the same period of 2001.
"We were able to absorb one of the worst declines in the lumber market I've seen in my 31 years at Universal -- at a time when our operations are at maximum inventory levels for the spring selling season -- and still stay on pace to meet our targets," said UFPI's vice chairman and CEO William G. Currie. "Our ability to show record sales and earnings for the second quarter and the first six months of 2002 is a powerful statement about the strength of Universal's business processes and the spirit of our people."
Universal posted the following second quarter sales by market:
-- $265.4 million in D-I-Y/retail, down 2% from last year;
-- $88.9 million in site-built construction, an increase of 9% over lasty ear;
-- $80.9 million in manufactured housing, an 8% increase compared to last year; and
-- $69.8 million in industrial/agricultural, a 22% increase over last year.
The Company increased unit sales in each of its four markets. However, these increases were partially offset by a steep decline in lumber prices beginning in April of 2002, which adversely impacted the Company's second quarter selling prices compared to the same period last year.
The Company continues to target annual sales growth of 6% to 10% and diluted earnings per share growth of 18% to 22%, which includes the effect of discontinuing goodwill amortization in 2002.
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, July 16, 2002. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at 800-521-5414 or internationally at 303-224-6997. Use conference call ID #2041483. 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 contact 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 (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2002/2001
Quarter Period
(In thousands, except per share data) 2002 2001
NET SALES $504,944 100% $485,153 100%
COST OF GOODS SOLD 436,321 86.41 418,756 86.31
GROSS PROFIT 68,623 13.59 66,397 13.69
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 41,345 8.19 38,869 8.01
EARNINGS FROM OPERATIONS 27,278 5.40 27,528 5.67
INTEREST EXPENSE 3,047 0.60 3,539 0.73
INTEREST REVENUE (52) -0.01 (245) -0.05
GAIN ON SALE OF ASSETS (1,082) -0.21 - 0.00
1,913 0.38 3,294 0.68
EARNINGS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY
IN EARNINGS (LOSS) OF INVESTEE 25,365 5.02 24,234 5.00
INCOME TAXES 9,400 1.86 9,179 1.89
EARNINGS BEFORE MINORITY
INTEREST AND EQUITY IN
EARNINGS (LOSS) OF INVESTEE 15,965 3.16 15,055 3.10
MINORITY INTEREST (611) -0.12 (794) -0.16
EQUITY IN EARNINGS (LOSS)
OF INVESTEE - 0.00 (23) 0.00
REPORTED NET EARNINGS $15,354 3.04 $14,238 2.93
ADD: GOODWILL AMORTIZATION, net of tax 761 0.16
ADJUSTED NET EARNINGS $15,354 3.04 $14,999 3.09
REPORTED EARNINGS PER SHARE - BASIC $0.86 $0.72
ADD: GOODWILL AMORTIZATION, net of tax 0.04
ADJUSTED EARNINGS PER SHARE - BASIC $0.86 $0.76
REPORTED EARNINGS PER SHARE - DILUTED $0.82 $0.70
ADD: GOODWILL AMORTIZATION, net of tax 0.04
ADJUSTED EARNINGS PER SHARE - DILUTED $0.82 $0.74
WEIGHTED AVERAGE SHARES
OUTSTANDING 17,884 19,792
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,705 20,388
Year to Date
(In thousands, except per share data) 2002 2001
NET SALES $846,600 100% $769,222 100%
COST OF GOODS SOLD 726,700 85.84 659,706 85.76
GROSS PROFIT 119,900 14.16 109,516 14.24
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 79,143 9.35 71,142 9.25
EARNINGS FROM OPERATIONS 40,757 4.81 38,374 4.99
INTEREST EXPENSE 5,955 0.70 6,738 0.88
INTEREST REVENUE (165) -0.02 (317) -0.04
GAIN ON SALE OF ASSETS (1,082) -0.13 - 0.00
4,708 0.56 6,421 0.83
EARNINGS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY
IN EARNINGS (LOSS) OF INVESTEE 36,049 4.26 31,953 4.15
INCOME TAXES 13,373 1.58 12,035 1.56
EARNINGS BEFORE MINORITY
INTEREST AND EQUITY IN
EARNINGS (LOSS) OF INVESTEE 22,676 2.68 19,918 2.59
MINORITY INTEREST (1,240) -0.15 (861) -0.11
EQUITY IN EARNINGS (LOSS)
OF INVESTEE - 0.00 158 0.02
REPORTED NET EARNINGS $21,436 2.53 $19,215 2.50
ADD: GOODWILL AMORTIZATION, net of tax 1,457 0.19
ADJUSTED NET EARNINGS $21,436 2.53 $20,672 2.69
REPORTED EARNINGS PER SHARE - BASIC $1.19 $0.97
ADD: GOODWILL AMORTIZATION, net of tax 0.07
ADJUSTED EARNINGS PER SHARE - BASIC $1.19 $1.05
REPORTED EARNINGS PER SHARE - DILUTED $1.14 $0.95
ADD: GOODWILL AMORTIZATION, net of tax 0.07
ADJUSTED EARNINGS PER SHARE - DILUTED $1.14 $1.02
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,047 19,753
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,865 20,315
SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2002 % 2001 %
Do-It-Yourself $265,359 52% $271,305 56%
Site-Built Construction 88,901 18% 81,773 17%
Manufactured Housing 80,850 16% 74,618 15%
Industrial and Other 69,834 14% 57,457 12%
Total $504,944 100% $485,153 100%
Year to Date
Market Classification 2002 % 2001 %
Do-It-Yourself $412,590 49% $398,998 52%
Site-Built Construction 157,385 19% 143,500 19%
Manufactured Housing 148,047 17% 124,104 16%
Industrial and Other 128,578 15% 102,620 13%
Total $846,600 100% $769,222 100%
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2002/2001
(In thousands)
ASSETS 2002 2001 LIABILITIES AND
SHAREHOLDERS'
EQUITY 2002 2001
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash
equivalents $18,020 $8,490 Notes payable $2,001 $1,020
Restricted cash
equivalents - 723 Accounts payable and
Accounts accrued
receivable 178,017 140,698 liabilities 140,699 119,875
Inventories 137,999 148,069 Current portion of long-term
debt and
Other current capital
assets 3,425 8,210 leases 19,025 21,360
TOTAL CURRENT TOTAL CURRENT
ASSETS 337,461 306,190 LIABILITIES 161,725 142,255
OTHER ASSETS 6,334 11,698 LONG-TERM DEBT AND CAPITAL
GOODWILL AND NON- LEASES, less current
COMPETE 125,583 114,903 portion 219,675 197,197
OTHER
LIABILITIES 25,180 18,862
PROPERTY, PLANT
AND EQUIPMENT, SHAREHOLDERS'
NET 188,677 179,581 EQUITY 251,475 254,058
TOTAL LIABILITIES AND
SHAREHOLDERS'
TOTAL ASSETS $658,055 $612,372 EQUITY $658,055 $612,372
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2002/2001
(In thousands) 2002 2001
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings $21,436 $19,215
Adjustments to reconcile net
earnings to net cash
from operating activities:
Depreciation 11,322 9,498
Amortization of intangibles 587 2,180
(Gain)/Loss on sale or
impairment of property, plant
and equipment (949) 38
Changes in:
Accounts receivable (89,290) (68,218)
Inventories (15,194) (21,951)
Accounts payable 43,027 36,701
Accrued liabilities and other 9,347 9,909
NET CASH FROM OPERATING
ACTIVITIES (19,714) (12,628)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchases of property, plant, and
equipment (13,481) (17,924)
Purchases of licensing agreements (2,000) -
Acquisitions, net of cash received (359) (21,559)
Proceeds from sale of property,
plant and equipment 2,545 399
Other 1,094 512
NET CASH FROM INVESTING
ACTIVITIES (12,201) (38,572)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net borrowings under revolving
credit facilities and notes payable 71,827 67,600
Repayment of long-term debt (7,557) (9,038)
Proceeds from issuance of common
stock 716 783
Distributions to minority
shareholder (585) -
Dividends paid to shareholders (806) (792)
Repurchase of common stock (36,547) (1,255)
NET CASH FROM FINANCING
ACTIVITIES 27,048 57,298
NET CHANGE IN CASH AND CASH
EQUIVALENTS (4,867) 6,098
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 22,887 2,392
CASH AND CASH EQUIVALENTS, END OF
PERIOD $18,020 $8,490
SOURCE Universal Forest Products
CONTACT: Michael R. Cole, Chief Financial Officer of Universal Forest
Products, +1-616-364-6161; or Jim Ankner, Vice President of Fleishman Hillard,
+1-212-453-2198, for Universal Forest Products