Release Details

Universal Forest Products Reports Record Third-Quarter Results; Net Earnings for the Third Quarter Increase 31%; The Company Raises Annual Target for Net Earnings Growth to 22%-27%

October 10, 2005

GRAND RAPIDS, Mich.--(BUSINESS WIRE)--Oct. 10, 2005--Universal Forest Products (Nasdaq:UFPI) today announced record third-quarter results with net earnings of $19.2 million, an increase of 31.1% over net earnings for the same period in 2004. Diluted earnings per share were $1.00, an increase of 28.2% over the same period last year.

Year-to-date net earnings were $51.2 million, an increase of 28.1% over year-to-date net earnings for 2004. Year-to-date diluted earnings per share were $2.69, a 26.3% increase over the first nine months of 2004.

Net sales for the quarter were $721.5 million, up 1.7% over net sales of $709.3 million for the third quarter of 2004. Net sales for the first nine months of 2005 were $2.04 billion, up 6.3% over net sales of $1.92 billion for the same period in 2004.

"These results underscore the power of focusing on doing things well and on improving the operations of both our new and our under-performing plants," said Universal CEO and Vice Chairman William G. Currie. "We've grown a culture of continuous improvement that drives our performance and ensures we execute to the highest standards."

Currie noted that COO Michael B. Glenn instituted a program early in the year to focus on and reward innovation that is creating cost savings and revenue enhancements throughout the Company.

In addition, Currie said operations that were added to the company in 2004 have become profitable and are having a positive impact on earnings as are the Company's product mix and its sales of value-added products.

By market, Universal posted third-quarter sales of:

  • $279.6 million in D-I-Y/retail, down 1.0% over the same period last year. This market saw unit sales decline by 8% over the same period last year, due, in part, to the Company's strategies to walk away from business that doesn't meet profitability expectations and to better balance its business by growing its other markets faster than the DIY/retail market.
  • $205.0 million in site-built construction, an increase of 4.8% over last year. This market saw an increase in unit sales of 7% over the third quarter 2004.
  • $133.2 million in industrial, up 5.7% over the third quarter 2004. Unit sales to this market were up 12% over the same period last year.
  • $103.6 million in manufactured housing, a decrease of 1.5% from last year. Unit sales to this market, however, were up 4% over the same period in 2004.

OUTLOOK

Based on anticipated growth in its business for the balance of 2005 and on current market and economic conditions, the Company raised its annual target range for net earnings growth to 22%-27% (from a range of 15%-20%) for 2005. In addition, while the Company is meeting its organic growth goals, it has closed on fewer acquisitions than anticipated; therefore, the Company revised its annual target range for unit sales growth to 4%-7% (from 7%-12%). The Company continues to pursue attractive acquisition opportunities and believes that acquisitions will, as they have in the past, play an important role in the Company's long-term growth strategy.

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, October 11, 2005. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (866) 814-8483 or internationally at (703) 639-1373. Use conference call ID #785085. The conference call will be available simultaneously, and in its entirety, to all interested investors and news media through a webcast at www.ufpi.com.

Celebrating 50 years of business, Universal Forest Products is headquartered in Grand Rapids, MI. The Company 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 and wood-alternative packaging for various industries. The Company also provides framing services for site-built construction customers. The Company has approximately 9,500 employees who work in nearly 100 facilities in North America. Universal had 2004 sales of $2.45 billion. 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 (UNAUDITED)
                      FOR THE NINE MONTHS ENDED
                         SEPTEMBER 2005/2004



                                            Quarter Period
                                 -------------------------------------
(In thousands, except per share
 data)                                  2005               2004
                                 ------------------ ------------------


NET SALES                          $721,497    100%   $709,294    100%

COST OF GOODS SOLD                  622,435  86.27     625,502  88.19
                                 -----------        -----------

GROSS PROFIT                         99,062  13.73      83,792  11.81


SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES             63,877   8.85      54,518   7.69
                                 -----------        -----------

EARNINGS  FROM  OPERATIONS           35,185   4.88      29,274   4.13

OTHER EXPENSE (INCOME)
  Interest expense                    3,714   0.51       3,727   0.53
  Interest income                      (227) -0.03         (39) -0.01
  Net (gain) loss on sale of real
   estate and interest in
   subsidiary                             -   0.00           -   0.00
                                 -----------        -----------
                                      3,487   0.48       3,688   0.52
                                 -----------        -----------

EARNINGS BEFORE INCOME TAXES AND
 MINORITY INTEREST                   31,698   4.39      25,586   3.61

INCOME TAXES                         12,009   1.66       9,261   1.31
                                 -----------        -----------


EARNINGS BEFORE MINORITY INTEREST    19,689   2.73      16,325   2.30

MINORITY INTEREST                      (518) -0.07      (1,699) -0.24
                                 -----------        -----------

NET EARNINGS                        $19,171   2.66     $14,626   2.06
                                 ===========        ===========


EARNINGS PER SHARE - BASIC            $1.04              $0.81

EARNINGS PER SHARE - DILUTED          $1.00              $0.78

WEIGHTED AVERAGE SHARES
 OUTSTANDING                         18,465             18,083

WEIGHTED AVERAGE SHARES
 OUTSTANDING WITH COMMON STOCK
 EQUIVALENTS                         19,193             18,784





SUPPLEMENTAL SALES DATA
-----------------------
                                            Quarter Period
                                 -------------------------------------
Market Classification               2005       %       2004       %
---------------------               ----      ---      ----      ---
Do-It-Yourself/Retail              $279,639     40%   $282,445     39%
Site-Built Construction             204,990     28%    195,538     28%
Manufactured Housing                103,619     14%    105,207     15%
Industrial                          133,249     18%    126,104     18%
                                 ----------- ------ ----------- ------
Total                              $721,497    100%   $709,294    100%



                                             Year to Date
                                 -------------------------------------
(In thousands, except per share
 data)                                 2005               2004
                                 ------------------ ------------------


NET SALES                        $2,038,209    100% $1,917,527    100%

COST OF GOODS SOLD                1,770,676  86.87   1,684,553  87.85
                                 -----------        -----------

GROSS PROFIT                        267,533  13.13     232,974  12.15


SELLING, GENERAL AND
 ADMINISTRATIVE EXPENSES            173,233   8.50     154,354   8.05
                                 -----------        -----------

EARNINGS  FROM  OPERATIONS           94,300   4.63      78,620   4.10

OTHER EXPENSE (INCOME)
  Interest expense                   11,755   0.58      11,313   0.59
  Interest income                      (646) -0.03        (224) -0.01
  Net (gain) loss on sale of real
   estate and interest in
   subsidiary                        (1,240) -0.06        (944) -0.05
                                 -----------        -----------
                                      9,869   0.48      10,145   0.53
                                 -----------        -----------

EARNINGS BEFORE INCOME TAXES AND
 MINORITY INTEREST                   84,431   4.14      68,475   3.57

INCOME TAXES                         32,005   1.57      25,550   1.33
                                 -----------        -----------


EARNINGS BEFORE MINORITY INTEREST    52,426   2.57      42,925   2.24

MINORITY INTEREST                    (1,236) -0.06      (2,976) -0.16
                                 -----------        -----------

NET EARNINGS                        $51,190   2.51     $39,949   2.08
                                 ===========        ===========


EARNINGS PER SHARE - BASIC            $2.79              $2.22

EARNINGS PER SHARE - DILUTED          $2.69              $2.13

WEIGHTED AVERAGE SHARES
 OUTSTANDING                         18,325             18,015

WEIGHTED AVERAGE SHARES
 OUTSTANDING WITH COMMON STOCK
 EQUIVALENTS                         19,050             18,716





SUPPLEMENTAL SALES DATA
-----------------------
                                             Year to Date
                                 -------------------------------------
Market Classification               2005       %       2004       %
---------------------               ----      ---      ----      ---
Do-It-Yourself/Retail              $804,670     39%   $810,119     42%
Site-Built Construction             543,264     27%    479,815     25%
Manufactured Housing                306,524     15%    282,181     15%
Industrial                          383,751     19%    345,412     18%
                                 ----------- ------ ----------- ------
Total                            $2,038,209    100% $1,917,527    100%



               CONSOLIDATED BALANCE SHEETS (UNAUDITED)
                         SEPTEMBER 2005/2004

(In thousands)

ASSETS                                              2005       2004
                                                  ---------  ---------

CURRENT ASSETS
  Cash and cash equivalents                        $30,767    $19,285
  Accounts receivable                              230,762    251,045
  Inventories                                      226,737    206,644
  Other current assets                              13,191     10,036

                                                  ---------  ---------
TOTAL CURRENT ASSETS                               501,457    487,010

OTHER ASSETS                                         8,414      6,906
INTANGIBLE ASSETS, NET                             137,348    132,285

PROPERTY, PLANT AND EQUIPMENT, NET                 223,107    209,240
                                                  ---------  ---------





TOTAL ASSETS                                      $870,326   $835,441
                                                  =========  =========



LIABILITIES AND SHAREHOLDERS' EQUITY                2005       2004
                                                  ---------  ---------



CURRENT LIABILITIES
  Accounts payable and accrued liabilities        $228,292   $205,221
  Current portion of long-term debt and capital
   leases                                           22,091        527

                                                  ---------  ---------
TOTAL CURRENT LIABILITIES                          250,383    205,748

LONG-TERM DEBT AND CAPITAL LEASES, less current
 portion                                           168,602    247,978
OTHER LIABILITIES                                   35,427     34,303

SHAREHOLDERS' EQUITY                               415,914    347,412
                                                  ---------  ---------




TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY        $870,326   $835,441
                                                  =========  =========



          CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                      FOR THE NINE MONTHS ENDED
                         SEPTEMBER 2005/2004

(In thousands)                                       2005      2004
                                                   --------  ---------

CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings                                       $51,190    $39,949
Adjustments to reconcile net earnings to net cash
 from operating activities:
   Depreciation                                     23,391     20,418
   Amortization of intangibles                       1,809      1,580
   Deferred income taxes                              (886)       (90)
   Minority interest                                 1,236      2,976
   Loss on sale of interest in subsidiary                -        193
   Gain on sale of property, plant and equipment      (561)      (432)
   Changes in:
     Accounts receivable                           (75,061)  (111,925)
     Inventories                                   (10,712)   (36,152)
     Accounts payable                               43,103     38,890
     Accrued liabilities and other                  26,651     31,392
                                                   --------  ---------
       NET CASH FROM OPERATING ACTIVITIES           60,160    (13,201)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment        (31,293)   (25,062)
Acquisitions, net of cash received                 (13,883)   (10,075)
Sale of interest in subsidiary                           -      4,679
Proceeds from sale of property, plant and equipment  1,898      3,469
Insurance proceeds                                   3,013      2,000
Other, net                                             322      1,567
                                                   --------  ---------
       NET CASH FROM INVESTING ACTIVITIES          (39,943)   (23,422)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facilities   (16,201)    43,152
Repayment of long-term debt                         (1,674)    (6,352)
Proceeds from issuance of common stock               4,074      2,194
Distributions to minority shareholders                (749)      (125)
Investment received from minority shareholder          500          -
Dividends paid to shareholders                        (910)      (897)
Repurchase of common stock                               -       (129)
Other, net                                             236        635
                                                   --------  ---------
       NET CASH FROM FINANCING ACTIVITIES          (14,724)    38,478
                                                   --------  ---------


NET CHANGE IN CASH AND CASH EQUIVALENTS              5,493      1,855

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD      25,274     17,430
                                                   --------  ---------

CASH AND CASH EQUIVALENTS, END OF PERIOD           $30,767    $19,285
                                                   ========  =========

CONTACT: Universal Forest Products, Inc., Grand Rapids
Lynn Afendoulis, 616-365-1502

SOURCE: Universal Forest Products, Inc.