UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 16, 2008
Universal Forest Products, Inc.
(Exact name of registrant as specified in its charter)
Michigan | 0-22684 | 38-1465835 | ||
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2801 East Beltline, NE Grand Rapids, Michigan |
49525 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrants telephone number, including area code: (616) 364-6161
None |
(Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 | Results of Operations and Financial Condition |
On July 16, 2008, the Registrant issued a press release announcing its financial results for the quarter ended June 28, 2008. A copy of the Registrants press release is attached as Exhibit 99(a) to this Current Report.
Item 9.01 | Financial Statements, Pro Forma Financial Information, and Exhibits |
(c) | Exhibits |
99(a) | Press Release dated July 16, 2008. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
UNIVERSAL FOREST PRODUCTS, INC.
(Registrant)
Dated: July 16, 2008
By: /s/ Michael R. Cole
Michael R. Cole, Chief Financial Officer
and Treasurer
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EXHIBIT INDEX
Exhibit Number | Document | |
99(a)
|
Press Release dated July 16, 2008. |
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Exhibit 99(a)
news release
AT THE COMPANY
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502
FOR IMMEDIATE RELEASE
WEDNESDAY, July 16, 2008
Universal Forest Products, Inc. reports EPS of $0.61; posts net earnings of $11.7 million
Results impacted by high fuel cost and weak economy
GRAND RAPIDS, Mich., July 16, 2008 Universal Forest Products, Inc. (Nasdaq: UFPI) today announced its results for the second quarter of 2008. Net earnings in the quarter were $11.7 million, which compared to net earnings of $16.8 million for the same period last year. Diluted earnings per share for the second quarter were $0.61, down from $0.86 for the same period last year. Second-quarter net sales were $708.5 million, down from $773.1 million for the second quarter of 2007, and were impacted by a weak economy and a soft lumber market. Margins were impacted by higher fuel and other transportation costs and ongoing price pressure, particularly in the site-built construction market.
Despite the current market environment, were profitable, were gaining share in some key markets, and were concentrating on making sure were well-positioned for growth when the economy regains strength, said President and CEO Michael B. Glenn. The fundamentals of our company remain solid and were pleased with our achievements in the face of extraordinary challenges.
Glenn added that the Company remains focused on increasing diversification, containing costs through continuous improvement, growing market share and ensuring the organization is sized appropriately to its business opportunities. The Company is working to mitigate the impact of rising fuel costs by passing them along.
In addition to rising fuel costs, weak consumer spending and ongoing price pressure, the quarter saw depressed lumber prices, which impact the Companys selling prices. The year-to-date composite lumber price was 8.5% lower for the second quarter than the same period last year.
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Universal Forest Products, Inc.
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By market, Universal posted the following gross sales results for the second quarter:
Do-It-Yourself/retail: $334.7 million, a decrease of 7.1% from the same period of 2007. The Company picked up market share by leveraging its competitive advantages and adding to its vast portfolio of lumber and outdoor living products. Sales, however, were impacted by weak consumer spending, reflected in a Consumer Confidence Index that plunged to near-record lows in the quarter and lower same-store sales at two big box retailers. Most experts call for continued decline in home improvement spending through 2008, and for moderate growth in 2009 and beyond.
Industrial packaging/components: $174.0 million, an increase of 6.4% over 2007. The industrial market remains a strong opportunity, even though in the short term it is being affected by a challenged economy. Universal continues to add customers and to be encouraged by opportunities for market share gains in this arena. The concrete forming business is having a positive impact. Most of the markets served by concrete forming saw solid year-to-date growth through May 2008. These markets include nonresidential construction in health care, public safety, lodging, power, office buildings and other areas.
Site-built construction: $132.8 million, a decrease of 17.7% from the same period of 2007. These results are in spite of declines in single-family housing starts of 43.9% and 41.8%, respectively, in April 2008 and May 2008 over the same months in 2007. The Company believes the housing market wont begin a recovery until 2010, and believes tighter credit conditions will have a negative impact on multi-family and light construction, which performed well in 2007. However, the Company believes it can continue to take share and is focused on diversification by growing its custom builder, light-commercial and multifamily business, on cutting costs and on enhancing efficiency through continuous improvement.
Manufactured housing: $84.2 million, a decrease of 20.2% from 2007. The 1.4% uptick in shipments of HUD-code homes in April 2008 over April 2007 didnt hold for the balance of the quarter. Shipments in May 2008 were approximately 15% lower than May 2007. May 2008 year-to-date shipments declined 5.1% from May 2007. The Manufactured Housing Institute recently revised its forecast downward by 3%, calling for annual shipments of 96,000 homes. Shipments of modular homes were down 27% in the first quarter of 2008 from the same period of 2007, the most recent statistics available. With its commanding market share, Universals performance will essentially track with the market. The Company expects conditions to remain soft until the oversupply of site-built homes is absorbed and credit conditions improve, and believes passage of a lending reform package is critical to any near-term pickup in this market.
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Universal Forest Products, Inc.
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OUTLOOK
In February, the Company announced 2008 targets based on assumptions about markets, economic conditions and other
relevant factors; however, some of those assumptions have not held: Diminished consumer spending impacted DIY/retail
more than anticipated; the over-supply of affordable site-built homes and the lack of conventional financing options
have both hampered manufactured housing; and the industrial market slowed with the weakening economy and will be
negatively impacted by any ongoing economic downturn. In addition, rising fuel prices are significantly impacting
transportation costs in all of its markets.
Based on these factors, the Company has adjusted its annual targets for 2008 as follows: net sales of between $2.3 billion and $2.35 billion (from the previous target of $2.45 billion to $2.55 billion), and net earnings of between $12 million and $15 million (from $22 million to $27 million). These targets are based on the following additional key assumptions:
| The Company will maintain strong market share in each of its markets, and will grow market share in DIY/retail, industrial and site-built construction. |
| Margins will continue to be negatively impacted by price pressure and by rising fuel costs. |
| Lumber mill closures may better align supply and demand, but weak demand overall will keep the lumber market depressed for the balance of the year, affecting the Companys selling prices. |
| Any asset impairment, severance or other charges incurred as the result of plant closures, consolidations or the downsizing of a Company operation are not reflected in the Companys sales or earnings targets. If the Company takes such actions, its ability to meet the stated targets will be diminished. |
CONFERENCE CALL
Universal Forest Products will conduct a conference call to discuss information included in this news release and
related matters at 8:30 a.m. EDT on Thursday, July 17, 2008. The call will be hosted by Executive Chairman William G.
Currie, President and CEO Michael B. Glenn, and Chief Financial Officer Michael Cole, and will be available for
analysts and institutional investors domestically at (866) 271-6130 or internationally at (617) 213-8894. Use
conference pass code number 74868685. 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. A replay of the call will be
available through Monday, August 18, 2008, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use
replay pass code number 74131382.
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Universal Forest Products, Inc.
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UNIVERSAL FOREST PRODUCTS
Headquartered in Grand Rapids, MI, with approximately 100 facilities throughout North America, Universal Forest
Products engineers, manufactures and markets wood and wood-alternative products for DIY retail home centers, structural
lumber products for the manufactured housing industry, engineered wood components for the site-built construction
market, and specialty wood packaging and components for various industries. The Company also provides framing services
for the site-built market, and forms for concrete construction. For 2007, the Company reported sales of more than $2.5
billion. For information about Universal Forest Products, visit www.ufpi.com.
Please be aware that: Any statements included in this press release that are not historical facts are forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements are based on the beliefs of the Companys management as well as on assumptions made by, and information
currently available to,
the Company at the time such statements were made. The Company does not undertake to update forward-looking statements
to reflect facts, circumstances, assumptions or events that occur after the date the forward-looking statements are
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 from forward-looking statements are the following: Adverse lumber market trends,
competitive activity, negative economic trends, government regulations and weather. Certain of these risk factors and
additional information are included in the Companys reports on Form 10-K and 10-Q on file with the Securities and
Exchange Commission.
# # #
Quarter Period | Year to Date | |||||||||||||||||||||||||||||||
(In thousands, except per share data) | 2008 | 2007 | 2008 | 2007 | ||||||||||||||||||||||||||||
NET SALES |
$ | 708,485 | 100 | % | $ | 773,105 | 100 | % | $ | 1,197,997 | 100 | % | $ | 1,322,143 | 100 | % | ||||||||||||||||
COST OF GOODS SOLD |
623,607 | 88.0 | 671,400 | 86.8 | 1,058,299 | 88.3 | 1,146,918 | 86.7 | ||||||||||||||||||||||||
GROSS PROFIT |
84,878 | 12.0 | 101,705 | 13.2 | 139,698 | 11.7 | 175,225 | 13.3 | ||||||||||||||||||||||||
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES |
62,120 | 8.8 | 70,049 | 9.1 | 121,471 | 10.1 | 133,507 | 10.1 | ||||||||||||||||||||||||
EARNINGS FROM OPERATIONS |
22,758 | 3.2 | 31,656 | 4.1 | 18,227 | 1.5 | 41,718 | 3.2 | ||||||||||||||||||||||||
Interest expense |
3,290 | 0.5 | 4,766 | 0.6 | 6,884 | 0.6 | 9,090 | 0.7 | ||||||||||||||||||||||||
Interest income |
(179 | ) | | (558 | ) | (0.1 | ) | (552 | ) | | (1,140 | ) | (0.1 | ) | ||||||||||||||||||
3,111 | 0.4 | 4,208 | 0.5 | 6,332 | 0.5 | 7,950 | 0.6 | |||||||||||||||||||||||||
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST |
19,647 | 2.8 | 27,448 | 3.6 | 11,895 | 1.0 | 33,768 | 2.6 | ||||||||||||||||||||||||
INCOME TAXES |
7,470 | 1.1 | 10,182 | 1.3 | 4,120 | 0.3 | 12,250 | 0.9 | ||||||||||||||||||||||||
EARNINGS BEFORE MINORITY INTEREST |
12,177 | 1.7 | 17,266 | 2.2 | 7,775 | 0.6 | 21,518 | 1.6 | ||||||||||||||||||||||||
MINORITY INTEREST |
(514 | ) | (0.1 | ) | (466 | ) | (0.1 | ) | (688 | ) | (0.1 | ) | (832 | ) | (0.1 | ) | ||||||||||||||||
NET EARNINGS |
$ | 11,663 | 1.6 | $ | 16,800 | 2.2 | $ | 7,087 | 0.6 | $ | 20,686 | 1.6 | ||||||||||||||||||||
EARNINGS PER SHARE BASIC |
$ | 0.61 | $ | 0.88 | $ | 0.37 | $ | 1.09 | ||||||||||||||||||||||||
EARNINGS PER SHARE DILUTED |
$ | 0.61 | $ | 0.86 | $ | 0.37 | $ | 1.06 | ||||||||||||||||||||||||
WEIGHTED AVERAGE SHARES
OUTSTANDING |
19,048 | 19,127 | 19,022 | 19,056 | ||||||||||||||||||||||||||||
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON STOCK
EQUIVALENTS |
19,267 | 19,487 | 19,224 | 19,448 | ||||||||||||||||||||||||||||
SUPPLEMENTAL SALES DATA |
||||||||||||||||||||||||||||||||
Quarter Period | Year to Date | |||||||||||||||||||||||||||||||
Market Classification | 2008 | % | 2007 | % | 2008 | % | 2007 | % | ||||||||||||||||||||||||
Do-It-Yourself/Retail |
$ | 334,694 | 46 | % | $ | 360,281 | 46 | % | $ | 507,339 | 41 | % | $ | 555,883 | 41 | % | ||||||||||||||||
Site-Built Construction |
132,758 | 18 | % | 161,209 | 20 | % | 241,657 | 20 | % | 299,628 | 23 | % | ||||||||||||||||||||
Industrial |
173,962 | 24 | % | 163,503 | 21 | % | 314,620 | 26 | % | 297,293 | 22 | % | ||||||||||||||||||||
Manufactured Housing |
84,184 | 12 | % | 105,522 | 13 | % | 160,499 | 13 | % | 194,419 | 14 | % | ||||||||||||||||||||
Total Gross Sales |
725,598 | 100 | % | 790,515 | 100 | % | 1,224,115 | 100 | % | 1,347,223 | 100 | % | ||||||||||||||||||||
Sales Allowances |
(17,113 | ) | (17,410 | ) | (26,118 | ) | (25,080 | ) | ||||||||||||||||||||||||
Total Net Sales |
$ | 708,485 | $ | 773,105 | $ | 1,197,997 | $ | 1,322,143 | ||||||||||||||||||||||||
(In thousands) | ||||||||
ASSETS | 2008 | 2007 | ||||||
CURRENT ASSETS |
||||||||
Cash and cash equivalents |
$ | 32,483 | $ | 42,697 | ||||
Accounts receivable |
227,963 | 233,067 | ||||||
Inventories |
222,937 | 274,395 | ||||||
Assets held for sale |
10,334 | 17,115 | ||||||
Other current assets |
34,828 | 22,339 | ||||||
TOTAL CURRENT ASSETS |
528,545 | 589,613 | ||||||
OTHER ASSETS |
7,657 | 7,691 | ||||||
INTANGIBLE ASSETS, NET |
186,664 | 185,302 | ||||||
PROPERTY, PLANT
AND EQUIPMENT, NET |
263,635 | 286,438 | ||||||
TOTAL ASSETS |
$ | 986,501 | $ | 1,069,044 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | 2008 | 2007 | ||||||
CURRENT LIABILITIES |
||||||||
Accounts payable |
$ | 122,345 | $ | 147,614 | ||||
Accrued liabilities |
89,093 | 82,432 | ||||||
Current portion of long-term
debt and capital leases |
945 | 3,611 | ||||||
TOTAL CURRENT LIABILITIES |
212,383 | 233,657 | ||||||
LONG-TERM DEBT AND
CAPITAL LEASE OBLIGATIONS,
less current portion |
177,063 | 243,833 | ||||||
OTHER LIABILITIES |
52,761 | 50,209 | ||||||
SHAREHOLDERS EQUITY |
544,294 | 541,345 | ||||||
TOTAL LIABILITIES AND
SHAREHOLDERS EQUITY |
$ | 986,501 | $ | 1,069,044 | ||||
(In thousands) | 2008 | 2007 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
||||||||
Net earnings |
$ | 7,087 | $ | 20,686 | ||||
Adjustments to reconcile net earnings to net cash
from operating activities: |
||||||||
Depreciation |
19,331 | 19,013 | ||||||
Amortization of intangibles |
4,778 | 4,633 | ||||||
Expense associated with share-based compensation arrangements |
564 | 258 | ||||||
Expense associated with stock grant plans |
85 | 146 | ||||||
Deferred income taxes |
(212 | ) | (89 | ) | ||||
Minority interest |
687 | 832 | ||||||
Gain on sale of interest in subsidiary |
| (140 | ) | |||||
Net loss (gain) on sale or impairment of property, plant and equipment |
573 | (131 | ) | |||||
Changes in: |
||||||||
Accounts receivable |
(83,169 | ) | (72,549 | ) | ||||
Inventories |
16,043 | (11,354 | ) | |||||
Accounts payable |
37,659 | 54,581 | ||||||
Accrued liabilities and other |
22,171 | (158 | ) | |||||
Excess tax benefits from share-based compensation arrangements |
(42 | ) | (679 | ) | ||||
NET CASH FROM OPERATING ACTIVITIES |
25,555 | 15,049 | ||||||
CASH FLOWS FROM INVESTING ACTIVITIES: |
||||||||
Purchase of property, plant, and equipment |
(10,469 | ) | (18,653 | ) | ||||
Acquisitions, net of cash received |
(23,338 | ) | (56,209 | ) | ||||
Proceeds from sale of interest in subsidiary |
| 400 | ||||||
Proceeds from sale of property, plant and equipment |
26,827 | 2,686 | ||||||
Advances on notes receivable |
(997 | ) | | |||||
Collection of notes receivable |
448 | 137 | ||||||
Other, net |
(97 | ) | (16 | ) | ||||
NET CASH FROM INVESTING ACTIVITIES |
(7,626 | ) | (71,655 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES: |
||||||||
Net (repayments) borrowings under revolving credit facilities |
(28,295 | ) | 74,318 | |||||
Repayment of long-term debt |
(492 | ) | (25,417 | ) | ||||
Proceeds from issuance of common stock |
805 | 2,862 | ||||||
Distributions to minority shareholder |
(378 | ) | (825 | ) | ||||
Investment received from minority shareholder |
419 | | ||||||
Dividends paid to shareholders |
(1,139 | ) | (1,047 | ) | ||||
Repurchase of common stock |
| (2,106 | ) | |||||
Excess tax benefits from share-based compensation arrangements |
42 | 679 | ||||||
Other, net |
(13 | ) | (269 | ) | ||||
NET CASH FROM FINANCING ACTIVITIES |
(29,051 | ) | 48,195 | |||||
NET CHANGE IN CASH AND CASH EQUIVALENTS |
(11,122 | ) | (8,411 | ) | ||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
43,605 | 51,108 | ||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 32,483 | $ | 42,697 | ||||