Universal Forest Products Exceeds Targets for 2003
GRAND RAPIDS, Mich., Feb 2, 2004 /PRNewswire-FirstCall via COMTEX/ -- Universal Forest Products, Inc. (Nasdaq: UFPI) today announced results for the fourth quarter and year ended December 27, 2003 that exceeded its internal targets for sales and earnings growth. For the year, diluted earnings per share totaled $2.18, up 10.7% over reported results for 2002. Diluted earnings per share for the fourth quarter totaled $0.34, a 36.0% increase over reported results for the fourth quarter of 2002.
Net sales for the year were $1.90 billion compared to 2002 net sales of $1.64 billion, a 15.8% increase. Net sales for the fourth quarter were $454.5 million, an increase of 33.5% over net sales of $340.3 million in the fourth quarter of 2002.
Changes in lumber prices had little impact on the Company's sales growth for the year but were responsible for almost half of its sales growth for the fourth quarter of 2003.
"Our sales and earnings growth reflect the successful efforts of a focused management team, a hard-working and well-trained workforce, and best practices that we've implemented in operations throughout the organization," said William G. Currie, Universal's chief executive officer and vice chairman. "We're pleased with our performance in 2003 and look forward to 2004 with optimism."
Currie added: "2003 was the first year of our new five-year growth strategy, Building it Forward, and we delivered on our key performance targets. Many of those targets were difficult -- especially given the depressed (but improving) manufactured housing industry, tough weather in the first quarter, and an economy that remained uncertain for much of the year. But, once again, the people of Universal delivered."
Performance was strong across all markets as Universal posted the following year-over-year sales increases:
* D-I-Y retail increased 18.5% over 2002 and was up 34.0% for the fourth quarter 2003;
* Site-built construction was up 22.4% for the year and increased 36.0% for the quarter;
* In spite of a 23% and a 19% decline in manufactured housing industry production for the year and fourth quarter, respectively, Universal posted a slight decrease of 2.7% in annual sales and a 20.2% increase in sales for the quarter; and
* Industrial/other increased 20.4% for the year and 43.5% for the fourth quarter.
OUTLOOK
The Company anticipates continued growth in its business in 2004. Key assumptions with respect to the Company's 2004 outlook include:
* Stable commodity lumber prices and interest rates;
* A D-I-Y/retail market that shows moderate growth;
* A site-built construction market that will continue to benefit from low interest rates; and
* A manufactured housing market that will continue its slow recovery.
"We're experiencing powerful market-share growth in each of our business segments and we've made moves that will enhance our business with our largest customers while enabling us to expand our customer base," Currie added.
With these factors in mind, the Company is targeting both sales and diluted earnings per share growth of 10% to 14% for 2004.
These targets factor in a number of new operations, a plant closing and a divestiture that will take place in the first quarter of 2004. During the quarter, the Company plans to be operating five new facilities, one each in Berlin, NJ; Dallas, TX; Indianapolis, IN; Houston, TX and Tecate, Mexico. In addition, the Company has closed its Modesto, CA plant and will sell its 60% ownership in Nascor, a Calgary, Alberta-based manufacturer of engineered building products and licensor of I-joist manufacturing technology, for $6 million (Canadian).
"Five years ago, when we acquired an interest in Nascor, part of our strategy was to manufacture I-joists in order to supply a full-line of value- added components to builders," Currie explained. "Since then, the I-joist has become a commodity, so we shifted our strategy. While we'll continue to manufacture our I-joists in our Burlington, NC plant to serve our customers who prefer them, we've chosen to concentrate our marketing and manufacturing expertise on our Open Joist 2000 product, which offers Universal great competitive advantages. This transaction allows us to put our resources to better use."
The Company expects to record an after-tax accounting loss from the sale of its Nascor shares ranging from $400,000 to $600,000 in the first quarter of 2004. Nascor had annual sales in 2003 totaling $37 million (Canadian).
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 3, 2004. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (888) 243-0818 or internationally at (703) 925-2402. Use conference call ID #374478. 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 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 and installation services for the site-built and retail markets. In conjunction with its customers, Universal uses its engineering and manufacturing expertise, coupled with highly skilled employees, to design and construct buildings and decks. 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.
HIGHLIGHTS TO FOLLOW
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE TWELVE MONTHS ENDED
DECEMBER 2003/2002
UNAUDITED
Quarter Period
(In thousands, except per share data) 2003 2002
NET SALES $454,470 100% $340,340 100%
COST OF GOODS SOLD 399,593 87.93 291,495 85.65
GROSS PROFIT 54,877 12.07 48,845 14.35
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 42,661 9.39 38,008 11.17
EARNINGS FROM OPERATIONS 12,216 2.69 10,837 3.18
INTEREST EXPENSE 3,172 0.70 2,878 0.85
INTEREST REVENUE (86) -0.02 (101) -0.03
GAIN ON SALE OF ASSETS - 0.00 - 0.00
3,086 0.68 2,777 0.82
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 9,130 2.01 8,060 2.37
INCOME TAXES 3,361 0.74 2,932 0.86
EARNINGS BEFORE MINORITY INTEREST 5,769 1.27 5,128 1.51
MINORITY INTEREST 483 0.11 (571) -0.17
NET EARNINGS $6,252 1.38 $4,557 1.34
EARNINGS PER SHARE - BASIC $0.35 $0.26
EARNINGS PER SHARE - DILUTED $0.34 $0.25
WEIGHTED AVERAGE SHARES
OUTSTANDING 17,808 17,749
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,647 18,318
Year to Date
(In thousands, except per share data) 2003 2002
NET SALES $1,898,830 100% $1,639,899 100%
COST OF GOODS SOLD 1,640,844 86.41 1,409,489 85.95
GROSS PROFIT 257,986 13.59 230,410 14.05
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 177,970 9.37 158,299 9.65
EARNINGS FROM OPERATIONS 80,016 4.21 72,111 4.40
INTEREST EXPENSE 14,443 0.76 11,375 0.69
INTEREST REVENUE (219) -0.01 (297) -0.02
GAIN ON SALE OF ASSETS - 0.00 (1,082) -0.07
14,224 0.75 9,996 0.61
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 65,792 3.46 62,115 3.79
INCOME TAXES 24,325 1.28 22,983 1.40
EARNINGS BEFORE MINORITY INTEREST 41,467 2.18 39,132 2.39
MINORITY INTEREST (1,348) -0.07 (2,495) -0.15
NET EARNINGS $40,119 2.11 $36,637 2.23
EARNINGS PER SHARE - BASIC $2.26 $2.04
EARNINGS PER SHARE - DILUTED $2.18 $1.97
WEIGHTED AVERAGE SHARES
OUTSTANDING 17,761 17,922
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,379 18,619
SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2003 % 2002 %
Do-It-Yourself/Retail $178,369 40% $133,125 39%
Site-Built Construction 110,433 24% 81,202 24%
Manufactured Housing 78,203 17% 65,066 19%
Industrial and Other 87,465 19% 60,947 18%
Total $454,470 100% $340,340 100%
Year to Date
Market Classification 2003 % 2002 %
Do-It-Yourself/Retail $900,188 47% $759,439 46%
Site-Built Construction 400,055 21% 326,962 20%
Manufactured Housing 285,040 15% 293,070 18%
Industrial and Other 313,547 17% 260,428 16%
Total $1,898,830 100% $1,639,899 100%
CONSOLIDATED BALANCE SHEETS
DECEMBER 2003/2002
(In thousands)
ASSETS 2003 2002 LIABILITIES AND
SHAREHOLDERS'
EQUITY 2003 2002
CURRENT ASSETS CURRENT LIABILITIES
Cash and
cash Notes
equivalents $17,430 $17,534 payable $1,746 $1,758
Restricted
cash
equivalents 1,383 Accounts payable and
Accounts accrued
receivable 137,660 105,217 liabilities 133,721 104,668
Inventories 169,561 166,006 Current portion of long-term
Other debt and
current capital
assets 7,662 8,037 leases 6,411 6,495
TOTAL CURRENT TOTAL CURRENT
ASSETS 332,313 298,177 LIABILITIES 141,878 112,921
OTHER ASSETS 6,421 6,738 LONG-TERM DEBT AND CAPITAL
LEASES, less
INTANGIBLE current
ASSETS 131,819 130,815 portion 205,049 235,319
OTHER
LIABILITIES 33,081 26,200
PROPERTY,
PLANT
AND EQUIPMENT, SHAREHOLDERS'
NET 214,204 203,144 EQUITY 304,749 264,434
TOTAL LIABILITIES AND
TOTAL ASSETS $684,757 $638,874 SHAREHOLDERS'
EQUITY $684,757 $638,874
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE TWELVE MONTHS ENDED
DECEMBER 2003/2002
(In thousands) 2003 2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $40,119 $36,637
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation 25,638 23,474
Amortization of intangibles 1,980 1,165
Deferred income taxes 1,746 3,102
Loss on sale or impairment of
property, plant and equipment 1,050 702
Changes in:
Accounts receivable (41,233) (16,489)
Accounts receivable under
sale and servicing agreement 9,159 -
Inventories (3,555) (40,780)
Accounts payable 23,476 9,638
Accrued liabilities and other 10,097 3,260
NET CASH FROM OPERATING
ACTIVITIES 68,477 20,709
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and
equipment (40,578) (31,351)
Purchases of licensing agreements (150) (2,000)
Acquisitions, net of cash received (787) (17,540)
Proceeds from sale of property, plant
and equipment 6,221 2,862
Other 2,285 (743)
NET CASH FROM INVESTING
ACTIVITIES (33,009) (48,772)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under
revolving credit facilities and
notes payable (27,070) 14,286
Proceeds from issuance of long-term
debt - 58,700
Repayment of long-term debt (6,140) (8,482)
Proceeds from issuance of common
stock 2,189 843
Distributions to minority shareholder (833) (1,345)
Dividends paid to shareholders (1,689) (1,605)
Repurchase of common stock (2,029) (39,687)
NET CASH FROM FINANCING
ACTIVITIES (35,572) 22,710
NET CHANGE IN CASH AND CASH
EQUIVALENTS (104) (5,353)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 17,534 22,887
CASH AND CASH EQUIVALENTS, END OF
PERIOD $17,430 $17,534
SOURCE Universal Forest Products, Inc.
AT THE COMPANY: Lynn Afendoulis, Director of Public Affairs of Universal Forest Products, Inc., +1-616-364-6161; FLEISHMAN HILLARD: Tom Smith, Vice President, +1-212-453-2240