Universal Forest Products Reports Strong 4th Quarter and Annual Results for 2004
GRAND RAPIDS, Mich., Jan 31, 2005 /PRNewswire-FirstCall via COMTEX/ -- Universal Forest Products, Inc. (Nasdaq: UFPI) today announced results for the fourth quarter and year ended December 25, 2004 that exceeded its internal targets for sales and earnings growth.
Net sales for the quarter were $535.8 million, an increase of 17.9% over net sales of $454.5 million in the fourth quarter of 2003. Net sales for the year were $2.45 billion compared to 2003 net sales of $1.90 billion, a 29.2% increase. The company estimates that higher lumber and chemical prices contributed approximately 18% to annual net sales growth but only 6% to the growth in the fourth quarter.
Diluted earnings per share for the fourth quarter totaled $0.46, a 35.3% increase over reported results for the same period of 2003. This includes a gain from an insurance settlement and related income taxes associated with a fire at its London, Ontario plant. For the year, diluted earnings per share totaled $2.59, up 18.8% over reported results for 2003.
"We experienced strong unit sales growth, especially in our site-built and industrial market segments, where we're focusing many of our efforts," said William G. Currie, Universal's chief executive officer and vice chairman. "We're also seeing a continued rebound in the manufactured housing market, led by modular home construction, and we had a powerful increase in unit sales to those customers.
"Results like these are possible when you have a sound business model, a great management team, and skilled employees committed to best practices," he added. "We're seeing growth and strong results because we're working hard, making good decisions, and creating opportunity and enthusiasm for the future. It's a great way to begin celebrating our 50th year as a company."
Unit sales were down only in the company's Do-It-Yourself retail market. Currie attributed that primarily to higher lumber and chemical prices, which appear to be having an impact on demand.
Universal posted the following year-over-year sales results:
* For the year, D-I-Y retail sales increased 9.0% over 2003 to $981.6 million. Fourth quarter sales to this market were down 1.3% from 2003;
* Site-built construction sales for 2004 of $631.7 million, up 56.7% over annual sales for 2003; fourth quarter sales increased 34.3% over 2003;
* Industrial sales for the year totaled $454.7 million, an increase of 45.1% over 2003. Fourth quarter 2004 sales were up 28.0% over the same period last year; and
* Manufactured housing sales for 2004 were $385.3 million, up 36.6% for the year. Fourth quarter sales to this market were up 27.3% over 2003.
The Company achieved those results in spite of financial challenges relating to a disappointing framing venture in the West, which saw significant losses during the year.
"We're putting the problems of that venture behind us," Currie said. "We also are pleased that our plant in London, Ontario, which was destroyed by a fire last April, is back in operation. That fire had a significant negative impact on our results and on the operations of a number of other Universal plants that took on production to meet our customer needs."
OUTLOOK
The Company anticipates continued growth in its business in 2005. Key assumptions with respect to the Company's 2005 outlook include:
* Modest increases in interest rates are mitigated by favorable demographic trends and economic conditions resulting in a strong site-built construction market.
* The continued recovery of the manufactured housing market as many customers switch production to modular housing.
* A stable D-I-Y retail market.
* Continued opportunities for market share gains in both the site-built construction and industrial business.
* Improved results from our framing operations in the West.
* The completion of strategic business acquisitions.
* A stable lumber market.
With these factors in mind, the Company is targeting unit sales growth of 7% to 12% and net earnings growth of 10% to 15% in 2005 over results for 2004, adjusted to exclude the gain from the insurance settlement and related income taxes. In addition, these targets do not include the impact of adopting FASB statement 123R which requires the Company to expense the effect of unvested stock options previously granted and any future grants beginning the third quarter of 2005.
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, February 1, 2005. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (866) 814-1921 or internationally at (703) 639-1364. Use conference call ID #634528. The conference call will be available simultaneously and in its entirety to all interested investors and news media through a web cast at http://www.ufpi.com (click on Investor Relations).
Celebrating its 50th anniversary, 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 for various industries. Among the company's newest and fastest-growing ventures are framing services for the site-built sector. In conjunction with its customers, Universal uses its engineering and manufacturing expertise, coupled with highly skilled employees, to design and construct buildings and housing. 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 TWELVE MONTHS ENDED
DECEMBER 2004/2003
(In thousands, Quarter Period
except per share data) 2004 2003
NET SALES $535,754 100% $454,470 100%
COST OF GOODS SOLD 472,475 88.19 399,593 87.93
GROSS PROFIT 63,279 11.81 54,877 12.07
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 46,981 8.77 42,591 9.37
GAIN ON INSURANCE SETTLEMENT(1) (1,391) -0.26 - 0.00
EARNINGS FROM OPERATIONS 17,689 3.30 12,286 2.70
OTHER EXPENSE (INCOME)
Interest expense 3,591 0.67 3,242 0.71
Interest income (60) -0.01 (86) -0.02
Net gain on sale of real estate
and interest in subsidiary (426) -0.08 - 0.00
3,105 0.58 3,156 0.69
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 14,584 2.72 9,130 2.01
INCOME TAXES(1) 5,912 1.10 3,361 0.74
EARNINGS BEFORE MINORITY INTEREST 8,672 1.62 5,769 1.27
MINORITY INTEREST (18) 0.00 483 0.11
NET EARNINGS $8,654 1.62 $6,252 1.38
EARNINGS PER SHARE - BASIC $0.48 $0.35
EARNINGS PER SHARE - DILUTED $0.46 $0.34
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,112 17,808
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,964 18,647
(In thousands, Year to Date
except per share data) 2004 2003
NET SALES $2,453,281 100% $1,898,830 100%
COST OF GOODS SOLD 2,157,028 87.92 1,640,844 86.41
GROSS PROFIT 296,253 12.08 257,986 13.59
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 201,335 8.21 177,824 9.36
GAIN ON INSURANCE SETTLEMENT(1) (1,391) -0.06 - 0.00
EARNINGS FROM OPERATIONS 96,309 3.93 80,162 4.22
OTHER EXPENSE (INCOME)
Interest expense 14,904 0.61 14,589 0.77
Interest income (284) -0.01 (219) -0.01
Net gain on sale of real estate
and interest in subsidiary (1,370) -0.06 - 0.00
13,250 0.54 14,370 0.76
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 83,059 3.39 65,792 3.46
INCOME TAXES(1) 31,462 1.28 24,325 1.28
EARNINGS BEFORE MINORITY INTEREST 51,597 2.10 41,467 2.18
MINORITY INTEREST (2,994) -0.12 (1,348) -0.07
NET EARNINGS $48,603 1.98 $40,119 2.11
EARNINGS PER SHARE - BASIC $2.70 $2.26
EARNINGS PER SHARE - DILUTED $2.59 $2.18
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,032 17,761
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,771 18,379
SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2004 % 2003 %
Do-It-Yourself/Retail $177,395 34% $179,685 39%
Site-Built Construction 151,871 28% 113,047 25%
Manufactured Housing 98,398 18% 77,318 17%
Industrial and Other 108,090 20% 84,420 19%
Total $535,754 100% $454,470 100%
SUPPLEMENTAL SALES DATA
Year to Date
Market Classification 2004 % 2003 %
Do-It-Yourself/Retail $981,576 39% $900,150 47%
Site-Built Construction 631,676 26% 403,201 21%
Manufactured Housing 385,326 16% 282,139 15%
Industrial and Other 454,703 19% 313,340 17%
Total $2,453,281 100% $1,898,830 100%
(1) "Income Taxes" includes approximately $451,000 associated with the
"Gain on Insurance Settlement".
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 2004/2003
(In thousands)
LIABILITIES AND
ASSETS 2004 2003 SHAREHOLDERS' EQUITY 2004 2003
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash
equivalents $25,274 $17,430 Notes payable $- $1,726
Accounts
receivable 151,811 137,660 Accounts payable and
Inventories 212,921 169,561 accrued liabilities 161,832 135,560
Other Current portion of
current long-term debt and
assets 16,477 9,446 capital leases 22,033 6,411
TOTAL CURRENT
ASSETS 406,483 334,097 TOTAL CURRENT
LIABILITIES 183,865 143,697
OTHER ASSETS 7,952 6,811 LONG-TERM DEBT AND
INTANGIBLE CAPITAL LEASES, less
ASSETS, NET 131,652 131,819 current portion 185,109 205,049
OTHER LIABILITIES 36,617 33,081
PROPERTY, PLANT
AND EQUIPMENT, SHAREHOLDERS'
NET 216,273 214,204 EQUITY 356,769 305,104
TOTAL LIABILITIES AND
SHAREHOLDERS'
TOTAL ASSETS $762,360 $686,931 EQUITY $762,360 $686,931
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2004/2003
(In thousands) 2004 2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $48,603 $40,119
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation 28,453 25,638
Amortization of intangibles 2,752 1,909
Deferred income taxes 790 1,746
Minority interest 2,994 1,348
Loss on sale of interest in subsidiary 193
Gain on insurance settlement (1,391)
(Gain) Loss on sale or
impairment of property, plant
and equipment (710) 1,050
Changes in:
Accounts receivable (16,107) (32,074)
Inventories (42,817) (3,555)
Accounts payable 7,371 23,476
Accrued liabilities and other 20,103 10,718
NET CASH FROM OPERATING
ACTIVITIES 50,234 70,375
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and
equipment (40,935) (40,578)
Purchase of licensing agreement - (150)
Acquisitions, net of cash received (10,075) (787)
Sale of interest in subsidiary 4,679 -
Proceeds from sale of property, plant
and equipment 5,226 6,221
Insurance proceeds 2,000 -
Other, net 1,636 3,882
NET CASH FROM INVESTING
ACTIVITIES (37,469) (31,412)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under
revolving credit facilities and
notes payable 547 (29,657)
Repayment of long-term debt (6,392) (6,140)
Proceeds from issuance of common stock 2,861 1,281
Distributions to minority shareholder (1,123) (833)
Dividends paid to shareholders (1,796) (1,689)
Repurchase of common stock (129) (2,029)
Other, net 1,111 -
NET CASH FROM FINANCING
ACTIVITIES (4,921) (39,067)
NET CHANGE IN CASH AND CASH EQUIVALENTS 7,844 (104)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 17,430 17,534
CASH AND CASH EQUIVALENTS, END OF PERIOD $25,274 $17,430
SOURCE Universal Forest Products, Inc.
Lynn Afendoulis, Director, Public Affairs of Universal Forest Products, Inc., +1-616-364-6161