Universal Forest Products Posts Record Third Quarter EPS
At the beginning of 2002, the Company adopted a new accounting standard which discontinued the amortization of goodwill. Under the new standard, pro forma diluted earnings per share for the third quarter and nine months ending September 29, 2001 would have been $0.52 and $1.54, respectively.
Net sales for the quarter were $453.0 million, an increase of 5% over sales of $431.9 million in the third quarter of 2001. Net sales for the first nine months of 2002 were $1.30 billion, an 8% increase compared to sales of $1.20 billion for the same period of 2001.
"Our ability to show record results for the quarter was due in large part to strong unit sales to retail and industrial markets, the diversity of our business, and the work ethic of our people," said UFPI's Vice Chairman and CEO William G. Currie. "Even with a depressed lumber market we produced record sales and operating profits. This is a strong statement about Universal's ability to stay focused on its targets and do what it takes operationally to meet or beat them." Declining lumber prices continue to impact the Company's sales dollars. Lumber prices in the third quarter of 2002 were approximately 10% lower than the third quarter of 2001.
Universal posted the following third quarter sales by market:
* $215.7 million in D-I-Y/retail, up 6.9% from last year;
* $88.6 million in site-built construction, a decrease of 1.9% over last year;
* $79.4 million in manufactured housing, a 5.9% decrease compared to last year; and
* $69.2 million in industrial/agricultural, a 25.0% increase over last year.
The Company increased unit sales to each of its markets, except for manufactured housing. Unit sales to the manufactured housing market decreased as a result of a substantial decline in industry production in the third quarter of 2002 compared to the same period of 2001.
The Company previously targeted annual sales growth ranging from 6% to 10%. As a result of falling lumber prices since April 2002, the Company has revised that sales growth target to 5% to 8% for the year. The Company continues to target diluted earnings per share growth of 18% to 22% for this year, 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, October 15, 2002. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (800) 521-5469 or internationally at (303) 267-1001. Use conference call ID #2457256. 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 (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2002/2001
Quarter Period
(In thousands, except per share data) 2002 2001
NET SALES $452,959 100% $431,861 100%
COST OF GOODS SOLD 391,294 86.39 375,679 86.99
GROSS PROFIT 61,665 13.61 56,182 13.01
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 41,148 9.08 37,525 8.69
EARNINGS FROM OPERATIONS 20,517 4.53 18,657 4.32
INTEREST EXPENSE 2,542 0.56 2,948 0.68
INTEREST REVENUE (31) -0.01 (151) -0.03
GAIN ON SALE OF ASSETS - 0.00 - 0.00
2,511 0.55 2,797 0.65
EARNINGS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY
IN EARNINGS OF INVESTEE 18,006 3.98 15,860 3.67
INCOME TAXES 6,678 1.47 5,519 1.28
EARNINGS BEFORE MINORITY
INTEREST AND EQUITY IN
EARNINGS OF INVESTEE 11,328 2.50 10,341 2.39
MINORITY INTEREST (684) -0.15 (618) -0.14
EQUITY IN EARNINGS
OF INVESTEE - 0.00 85 0.02
REPORTED NET EARNINGS $10,644 2.35 $9,808 2.27
ADD: GOODWILL AMORTIZATION, net of
tax 774 0.18
ADJUSTED NET EARNINGS $10,644 2.35 $10,582 2.45
REPORTED EARNINGS PER SHARE - BASIC $0.60 $0.50
ADD: GOODWILL AMORTIZATION, net of
tax 0.04
ADJUSTED EARNINGS PER SHARE - BASIC $0.60 $0.53
REPORTED EARNINGS PER SHARE - DILUTED $0.58 $0.48
ADD: GOODWILL AMORTIZATION, net of
tax 0.04
ADJUSTED EARNINGS PER SHARE - DILUTED $0.58 $0.52
WEIGHTED AVERAGE SHARES
OUTSTANDING 17,845 19,803
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,427 20,450
Year to Date
(In thousands, except per share
data) 2002 2001
NET SALES $1,299,559 100% $1,201,083 100%
COST OF GOODS SOLD 1,117,994 86.03 1,035,385 86.20
GROSS PROFIT 181,565 13.97 165,698 13.80
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 120,291 9.26 108,667 9.05
EARNINGS FROM OPERATIONS 61,274 4.71 57,031 4.75
INTEREST EXPENSE 8,497 0.65 9,686 0.81
INTEREST REVENUE (196) -0.02 (468) -0.04
GAIN ON SALE OF ASSETS (1,082) -0.08 - 0.00
7,219 0.56 9,218 0.77
EARNINGS BEFORE INCOME TAXES,
MINORITY INTEREST AND EQUITY
IN EARNINGS OF INVESTEE 54,055 4.16 47,813 3.98
INCOME TAXES 20,051 1.54 17,554 1.46
EARNINGS BEFORE MINORITY
INTEREST AND EQUITY IN
EARNINGS OF INVESTEE 34,004 2.62 30,259 2.52
MINORITY INTEREST (1,924) -0.15 (1,479) -0.12
EQUITY IN EARNINGS
OF INVESTEE - 0.00 243 0.02
REPORTED NET EARNINGS $32,080 2.47 $29,023 2.42
ADD: GOODWILL AMORTIZATION, net of
tax 2,231 0.19
ADJUSTED NET EARNINGS $32,080 2.47 $31,254 2.60
REPORTED EARNINGS PER SHARE - BASIC $1.78 $1.47
ADD: GOODWILL AMORTIZATION, net of
tax 0.11
ADJUSTED EARNINGS PER SHARE - BASIC $1.78 $1.58
REPORTED EARNINGS PER SHARE - DILUTED $1.71 $1.43
ADD: GOODWILL AMORTIZATION, net of
tax 0.11
ADJUSTED EARNINGS PER SHARE -
DILUTED $1.71 $1.54
WEIGHTED AVERAGE SHARES
OUTSTANDING 17,980 19,769
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,719 20,360
SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2002 % 2001 %
Do-It-Yourself $215,689 47% $201,786 46%
Site-Built Construction 88,635 20% 90,316 21%
Manufactured Housing 79,449 18% 84,410 20%
Industrial and Other 69,186 15% 55,349 13%
Total $452,959 100% $431,861 100%
Year to Date
Market Classification 2002 % 2001 %
Do-It-Yourself $628,279 48% $600,777 50%
Site-Built Construction 245,408 19% 233,819 20%
Manufactured Housing 227,496 18% 208,519 17%
Industrial and Other 198,376 15% 157,968 13%
Total $1,299,559 100% $1,201,083 100%
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2002/2001
(In thousands)
LIABILITIES AND
ASSETS 2002 2001 SHAREHOLDERS' EQUITY 2002 2001
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash Notes payable $1,494 $669
equivalents $12,800 $6,310 Accounts payable and
Restricted accrued liabilities 126,902 108,023
cash equivalents - 411 Current portion of
Accounts long-term debt and
receivable 149,962 125,150 capital leases 18,645 20,952
Inventories 128,841 122,228
Other current
assets 3,279 7,410
TOTAL CURRENT TOTAL CURRENT
ASSETS 294,882 261,509 LIABILITIES 147,041 129,644
OTHER ASSETS 6,311 11,572 LONG-TERM DEBT AND
GOODWILL AND CAPITAL LEASES, less
NON-COMPETE 125,097 113,652 current portion 185,091 152,807
OTHER LIABILITIES 25,593 18,728
PROPERTY, PLANT
AND EQUIPMENT, SHAREHOLDERS' EQUITY 259,914 263,498
NET 191,349 177,944
TOTAL LIABILITIES AND
TOTAL ASSETS $617,639 564,677 SHAREHOLDERS'
EQUITY $617,639 $564,677
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2002/2001
(In thousands) 2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $32,080 $29,023
Adjustments to reconcile net earnings to net
cash from operating activities:
Depreciation 17,235 14,586
Amortization of intangibles 851 3,348
Deferred income taxes (246) 13
(Gain)/Loss on sale or impairment of property,
plant and equipment (152) 588
Changes in:
Accounts receivable (61,235) (52,660)
Inventories (6,020) 3,891
Accounts payable 28,076 20,786
Accrued liabilities and other 11,353 15,083
NET CASH FROM OPERATING ACTIVITIES 21,942 34,658
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (21,136) (22,166)
Purchases of licensing agreements (2,000) -
Acquisitions, net of cash received (2,519) (21,559)
Proceeds from sale of property, plant and
equipment 3,310 886
Other 430 1,608
NET CASH FROM INVESTING ACTIVITIES (21,915) (41,231)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit
facilities and notes payable 37,004 23,106
Repayment of long-term debt (8,205) (9,838)
Proceeds from issuance of common stock 769 827
Distributions to minority shareholder (660) (1,275)
Dividends paid to shareholders (806) (792)
Repurchase of common stock (38,216) (1,537)
NET CASH FROM FINANCING ACTIVITIES (10,114) 10,491
NET CHANGE IN CASH AND CASH EQUIVALENTS (10,087) 3,918
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 22,887 2,392
CASH AND CASH EQUIVALENTS, END OF PERIOD $12,800 $6,310
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