Universal Forest Products Posts 15.4% Increase in 2nd Quarter Net Earnings; Raises Target for Annual Net Earnings Growth to 15% - 20%
GRAND RAPIDS, Mich., July 11, 2005 /PRNewswire-FirstCall via COMTEX/ -- Universal Forest Products (Nasdaq: UFPI) today announced a strong second quarter marked by net earnings of $22.8 million, or $1.20 per diluted share, representing an increase of 15.4% over the same period last year. Year-to-date net earnings were $32.0 million, or $1.69 per diluted share, representing a 26.4% increase over the first six months of 2004.
Net sales for the quarter were $779.6 million, up 5.0% over net sales of $742.6 million for the second quarter of 2004. Net sales for the first six months of 2005 were $1.32 billion, up 9.0% over net sales of $1.21 billion for the same period in 2004.
"We had another strong quarter of earnings growth and return on investment, which were made possible through the hard work and determination of the people of Universal," said Company Vice Chairman and CEO William G. Currie.
Profits were driven primarily by organic growth in unit sales, greater sales of value-added products, and improved results of a framing operation in the West. The lumber market had little impact on selling prices and overall sales levels for the quarter.
By market, Universal posted second-quarter sales of:
* $346.0 million in D-I-Y/retail, substantially flat compared to the same quarter last year;
* $187.2 million in site-built construction, an increase of 10.3% over last year;
* $138.7 million in industrial, up 11.7% over the second quarter 2004; and
* $107.6 million in manufactured housing, a 6.3% increase over last year, resulting from an estimated 10% unit sales increase, offset by a slight decline in selling prices.
"We're pleased with the results in each of our markets, which, with the exception of D-I-Y/retail, saw double-digit unit sales increases," Currie added. While D-I-Y/retail remains Universal's largest market, Currie noted that the Company's strategy is to emphasize greater sales growth to the other three markets in order to create better balance and diversification in its customer base.
He noted the third-quarter acquisition of another 25% membership interest in Shawnlee Construction, LLC, a Massachusetts framing company in which Universal already had a 50% membership interest. In addition, Shawnlee agreed to the purchase of certain assets and the assumption of certain liabilities of Shepardville Construction, Inc. and AW Construction, LLC, which install interior products -- such as base boards, crown moldings, window sills and casing, doors, and cabinets -- for commercial and multi-family construction projects. These acquisitions strengthen Universal's position in the growing framing business, enhance its ability to provide turnkey construction packages and add interior trim products to the list of items Universal installs and distributes.
"At the same time, we continue to look for niche products to enhance our offerings to the D-I-Y/retail market," Currie added. He noted the Company's June 2005 purchase of certain assets of Maine Ornamental Woodworkers, Inc., a manufacturer, importer and distributor of an array of decorative caps used on fencing and decking posts. "Maine Ornamental's product line complements Universal's existing products and enhances our offering to retailers nationwide," Currie said. "The acquisition is in line with our strategic direction and five-year growth plan. We're excited about the opportunity that Maine Ornamental holds for Universal."
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 15% to 20% (from 10% to 15%) for 2005 and re- affirmed its annual target range for unit sales growth of 7% to 12%.
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, July 12, 2005. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (866) 814-8485 or internationally at (703) 639-1375. Use conference call ID #732437. 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 .
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 9,000 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 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.
FINANCIAL HIGHLIGHTS TO FOLLOW
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2005/2004
Quarter Period
(In thousands, except per share data) 2005 2004
NET SALES $779,552 100% $742,568 100%
COST OF GOODS SOLD 678,310 87.01 649,747 87.50
GROSS PROFIT 101,242 12.99 92,821 12.50
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 59,505 7.63 55,996 7.54
EARNINGS FROM OPERATIONS 41,737 5.35 36,825 4.96
OTHER EXPENSE (INCOME)
Interest expense 4,266 0.55 3,955 0.53
Interest income (270) -0.03 (102) -0.01
Net (gain) loss on sale of real
estate and interest in subsidiary 32 0.00 (575) -0.08
4,028 0.52 3,278 0.44
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 37,709 4.84 33,547 4.52
INCOME TAXES 14,237 1.83 12,645 1.70
EARNINGS BEFORE MINORITY INTEREST 23,472 3.01 20,902 2.81
MINORITY INTEREST (682) -0.09 (1,146) -0.15
NET EARNINGS $22,790 2.92 $19,756 2.66
EARNINGS PER SHARE - BASIC $1.24 $1.09
EARNINGS PER SHARE - DILUTED $1.20 $1.06
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,323 18,050
WEIGHTED AVERAGE SHARES OUTSTANDING
WITH COMMON STOCK EQUIVALENTS 18,984 18,702
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2005/2004
Year to Date
(In thousands, except per share data) 2005 2004
NET SALES $1,316,712 100% $1,208,233 100%
COST OF GOODS SOLD 1,148,241 87.21 1,059,051 87.65
GROSS PROFIT 168,471 12.79 149,182 12.35
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 109,356 8.31 99,836 8.26
EARNINGS FROM OPERATIONS 59,115 4.49 49,346 4.08
OTHER EXPENSE (INCOME)
Interest expense 8,041 0.61 7,586 0.63
Interest income (419) -0.03 (185) -0.02
Net (gain) loss on sale of real
estate and interest in subsidiary (1,240) -0.09 (944) -0.08
6,382 0.48 6,457 0.53
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 52,733 4.00 42,889 3.55
INCOME TAXES 19,996 1.52 16,289 1.35
EARNINGS BEFORE MINORITY INTEREST 32,737 2.49 26,600 2.20
MINORITY INTEREST (718) -0.05 (1,277) -0.11
NET EARNINGS $32,019 2.43 $25,323 2.10
EARNINGS PER SHARE - BASIC $1.75 $1.41
EARNINGS PER SHARE - DILUTED $1.69 $1.35
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,255 17,994
WEIGHTED AVERAGE SHARES OUTSTANDING
WITH COMMON STOCK EQUIVALENTS 18,978 18,694
SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2005 % 2004 %
Do-It-Yourself/Retail $345,977 44% $347,381 46%
Site-Built Construction 187,236 24% 169,697 23%
Manufactured Housing 107,617 14% 101,245 14%
Industrial 138,722 18% 124,245 17%
Total $779,552 100% $742,568 100%
SUPPLEMENTAL SALES DATA
Year to Date
Market Classification 2005 % 2004 %
Do-It-Yourself/Retail $525,026 40% $527,678 43%
Site-Built Construction 338,290 26% 284,274 24%
Manufactured Housing 202,898 15% 176,973 15%
Industrial 250,498 19% 219,308 18%
Total $1,316,712 100% $1,208,233 100%
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2005/2004
(In thousands)
ASSETS 2005 2004 LIABILITIES AND
SHAREHOLDERS'
EQUITY 2005 2004
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash
equivalents $27,586 $25,080 Accounts payable
Accounts and accrued
receivable 232,600 246,850 liabilities $229,835 $206,156
Inventories 247,829 227,455 Current portion
Other current of long-term
assets 13,114 11,532 debt and capital
leases 21,937 498
TOTAL CURRENT TOTAL CURRENT
ASSETS 521,129 510,917 LIABILITIES 251,772 206,654
OTHER ASSETS 8,056 7,251 LONG-TERM DEBT AND
CAPITAL LEASES,
INTANGIBLE less current
ASSETS, NET 134,373 132,748 portion 206,000 287,387
OTHER
LIABILITIES 36,717 33,317
PROPERTY, PLANT
AND EQUIPMENT, SHAREHOLDERS'
NET 222,304 208,142 EQUITY 391,373 331,700
TOTAL LIABILITIES
TOTAL ASSETS $885,862 $859,058 AND SHAREHOLDERS'
EQUITY $885,862 $859,058
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2005/2004
(In thousands) 2005 2004
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $32,019 $25,323
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation 15,200 13,408
Amortization of intangibles 1,190 817
Deferred income taxes (516) 366
Minority interest 718 1,277
Loss on sale of interest in subsidiary - 193
Gain on sale of property, plant
and equipment (1,133) (730)
Changes in:
Accounts receivable (80,206) (110,873)
Inventories (31,838) (56,963)
Accounts payable 50,881 53,135
Accrued liabilities and other 18,826 21,234
NET CASH FROM OPERATING
ACTIVITIES 5,141 (52,813)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and
equipment (21,985) (16,607)
Acquisitions, net of cash received (7,500) (10,075)
Sale of interest in subsidiary - 4,679
Proceeds from sale of property, plant
and equipment 2,318 3,287
Insurance proceeds 3,013 -
Other, net 458 1,678
NET CASH FROM INVESTING
ACTIVITIES (23,696) (17,038)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit
facilities 21,140 83,062
Repayment of long-term debt (454) (6,117)
Proceeds from issuance of common stock 1,303 1,828
Distributions to minority shareholders (369) (125)
Dividends paid to shareholders (910) (897)
Repurchase of common stock - (129)
Other, net 157 (121)
NET CASH FROM FINANCING
ACTIVITIES 20,867 77,501
NET CHANGE IN CASH AND CASH EQUIVALENTS 2,312 7,650
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 25,274 17,430
CASH AND CASH EQUIVALENTS, END OF
PERIOD $27,586 $25,080
SOURCE Universal Forest Products, Inc.
Lynn Afendoulis, Director, Corporate Communications of Universal Forest Products, Inc., +1-616-365-1502