Universal Forest Products®, Inc. Reports 3rd Quarter Earnings Of $0.40 Per Share
GRAND RAPIDS, Mich., Oct. 17 /PRNewswire/ -- Universal Forest Products® (Nasdaq: UFPI) today announced results for the 3rd quarter of 2000, including net earnings of $0.40 per share (diluted) compared to $0.45 per share (diluted) for the 3rd quarter of 1999. Net sales for the quarter were $371.0 million, down 4.5% compared to $388.4 million for the same quarter a year ago.
For the first nine months of 2000, net earnings were $1.32 per share (diluted) compared to $1.30 per share (diluted) last year. Net sales for the first nine months of 2000 were $1.107 billion compared to $1.135 billion, a decrease of 2.5% from the same period a year ago.
"Our strategy to diversify sales across four market segments and geographically across the United States cushioned the effect of external factors affecting our business, such as higher interest rates and a deflated lumber market," said William G. Currie, UFPI's chief executive officer. "Our sales to the D-I-Y market were up slightly for the quarter as significant unit sales increases offset the negative sales effect of a 31% lower lumber market. Site-built construction sales were also up in spite of a depressed lumber market and lower sales in the Mid Atlantic region. Industrial/agricultural sales were down 5% for the quarter, but remain 6% ahead on a year-to-date basis. Our manufactured housing sales performance reflects both lower unit sales and a lower lumber market, although we have increased market share."
The company pointed to several factors that affected performance during the quarter:
1. The manufactured housing industry continues to struggle with excessive retail inventories and repossessions, coupled with tightened availability of consumer credit. The most recent industry statistics show shipments of manufactured homes down 24.6% on a year-to-date basis through August 2000.
2. The lumber market continued its downward trend during the quarter, approaching seven-year lows. For the third quarter of 2000, weekly averages of the "Random Lengths Lumber Composite" were down 31% compared to the third quarter of 1999. The company stated that recent acquisitions and significant unit sales increases in several markets were not enough to offset the overall lumber market decline. Profits were less affected due to the company's managed inventory programs and forward pricing practices.
3. The company's Mid Atlantic truss operations serving the site-built market contributed lower than expected sales and profits as a result of fewer housing starts in the region. Interest rate increases over the last 15 months were a factor in the housing start decline.
4. Slower than expected progress with several new start-up operations and missed target dates for the consolidation and relocation of one regional manufacturing facility caused increased expenses and missed profit opportunities.
"We have instituted the appropriate action steps to meet each of these challenges," continued Currie. "We will continue to aggressively pursue our strategic plan and believe that our unique business model will drive future profitability. The company is committed to leading its diverse markets and is positioned for continued growth as economic conditions improve."
OUTLOOK
The company feels that the factors mentioned above will cause earnings to fall below its previous expectations in the fourth quarter. The company has set the following targets for fourth quarter financial performance: total revenue in the range of $270 million to $290 million and net earnings in the range of $0.12 to $0.15 per diluted share. The company fully expects to regain its upward sales and earnings momentum next year and has every intention of achieving its "Performance 2002" objectives.
UFPI D-I-Y sales to Home Depot are expected to remain strong, as evidenced by quarterly and year-to-date sales increases of 17% and 19%, respectively. The company continues to expand its relationship with Home Depot and believes in the continued growth of the D-I-Y sector.
The company's sales and profit targets mentioned above are not predictions of future performance. It is entirely possible that the company's performance will deviate from the targets set in the beginning of the quarter. Accordingly, during the quarter the company is not obligated to update these targets, report on its progress, or comment on them to analysts or investors until after it has closed the books on the quarter. In addition, the company will not comment on statements made by persons outside the company on the progress of the quarter, and any such statements should be assessed independently by investors. The company intends to comply with the requirements contained in the S.E.C. rule, Regulation Fair Disclosure.
Interested parties are invited to the company's webcast of its third quarter conference call. The conference call will be held on Tuesday, October 17, 2000 at 3 p.m. EST, and can be accessed from the company's Investor Relations website at www.ufpi.com .
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 contact the company's investor relations 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.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2000/1999
Quarter Period Year to Date
(In thousands, 2000 1999 2000 1999
except per
share data)
NET SALES $371,030 100% $388,402 100% $1,106,680 100% $1,135,333 100%
COST OF
GOODS SOLD 322,103 86.81 342,319 88.14 960,044 86.75 995,433 87.68
GROSS PROFIT 48,927 13.19 46,083 11.86 146,636 13.25 139,900 12.32
SELLING,
GENERAL AND
ADMINI-
STRATIVE
EXPENSES 31,885 8.59 27,922 7.19 91,248 8.25 86,269 7.60
EARNINGS FROM
OPERATIONS 17,042 4.59 18,161 4.68 55,388 5.00 53,631 4.72
INTEREST
EXPENSE 3,648 0.98 2,993 0.77 10,423 0.94 9,230 0.81
INTEREST
REVENUE (135) -0.04 (182)-0.05 (381)-0.03 (486)-0.04
3,513 0.95 2,811 0.72 10,042 0.91 8,744 0.78
EARNINGS BEFORE
INCOME TAXES,
MINORITY
INTEREST
AND EQUITY
IN EARNINGS
(LOSS) OF
INVESTEE 13,529 3.65 15,350 3.94 45,346 4.10 44,887 3.95
INCOME TAXES 5,177 1.40 6,004 1.55 17,693 1.60 17,818 1.57
EARNINGS BEFORE
MINORITY
INTEREST AND
EQUITY IN
EARNINGS
(LOSS)
OF
INVESTEE 8,352 2.25 9,346 2.41 27,653 2.50 27,069 2.38
MINORITY
INTEREST (144) -0.05 (144)-0.04 (474)-0.04 (278) -0.02
EQUITY IN
EARNINGS
(LOSS)
OF INVESTEE (60) -0.02 355 0.09 (33) 0.00 875 0.08
NET
EARNINGS $8,148 2.20 $9,557 2.46 $27,146 2.45 $27,666 2.44
EARNINGS PER
SHARE -
BASIC $0.40 $0.46 $1.35 $1.33
EARNINGS PER
SHARE -
DILUTED $0.40 $0.45 $1.32 $1.30
WEIGHTED
AVERAGE
SHARES
OUTSTAND-
ING 20,123 20,746 20,134 20,734
WEIGHTED
AVERAGE
SHARES
OUTSTANDING
WITH COMMON
STOCK
EQUIVA-
LENTS 20,481 21,265 20,502 21,324
SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2000 % 1999 %
Do-It-Yourself $ 179,701 49% $ 177,892 46%
Manufactured Housing 76,909 21% 103,990 27%
Site-Built Construction 68,372 18% 58,062 15%
Industrial and Other 46,048 12% 48,458 12%
Total $ 371,030 100% $ 388,402 100%
Year to Date
Market Classification 2000 % 1999 %
Do-It-Yourself $ 543,690 49% $ 534,850 47%
Manufactured Housing 243,024 22% 309,222 27%
Site-Built Construction 180,006 16% 159,412 14%
Industrial and Other 139,960 13% 131,849 12%
Total $ 1,106,680 100% $1,135,333 100%
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2000/1999
(In thousands)
ASSETS 2000 1999
CURRENT ASSETS
Cash and cash equivalents $7,780 $9,727
Accounts receivable 100,430 95,338
Inventories 114,139 116,228
Other current assets 7,046 6,647
TOTAL CURRENT ASSETS 229,395 227,940
OTHER ASSETS 11,446 10,715
GOODWILL AND NON-COMPETE 106,547 93,569
PROPERTY, PLANT
AND EQUIPMENT, NET 168,276 146,214
TOTAL ASSETS $515,664 $478,438
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $2,860 $1,392
Accounts payable and
accrued liabilities 95,643 89,601
Current portion of long-term
debt and capital leases 7,291 7,928
TOTAL CURRENT LIABILITIES 105,794 98,921
LONG-TERM DEBT AND CAPITAL
LEASES, less current portion 130,836 135,580
REVOLVING CREDIT FACILITY 23,000 12,000
OTHER LIABILITIES 18,030 15,075
SHAREHOLDERS' EQUITY 238,004 216,862
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $515,664 $478,438
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2000/1999
(In thousands) 2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $27,146 $27,666
Adjustments to reconcile net earnings to net cash
from operating activities:
Depreciation 12,361 11,301
Amortization of non-compete agreements
and goodwill 2,673 2,423
(Gain) loss on sale of property, plant
and equipment 72 (513)
Changes in:
Accounts receivable (21,470) (32,491)
Inventories 22,053 (7,829)
Accounts payable 6,822 16,638
Accrued liabilities and other 7,901 5,514
NET CASH FROM OPERATING ACTIVITIES 57,558 22,709
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (23,677) (27,508)
Business acquisitions, net of cash received (32,561) -
Proceeds from sale of property, plant
and equipment 642 2,491
Other (816) 1,915
NET CASH FROM INVESTING ACTIVITIES (56,412) (23,102)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (7,535) (9,919)
Proceeds from issuance of long-term debt 2,118 27,742
Net borrowings (repayments) under
revolving credit facility and notes payable 11,950 (4,984)
Dividends paid to shareholders (807) (728)
Proceeds from issuance of common stock 431 864
Repurchase of common stock (3,629) (3,775)
NET CASH FROM FINANCING ACTIVITIES 2,528 9,200
NET CHANGE IN CASH AND CASH EQUIVALENTS 3,674 8,807
CASH AND CASH EQUIVALENTS, BEGINNING
OF YEAR 4,106 920
CASH AND CASH EQUIVALENTS, END OF PERIOD $7,780 $9,727
SOURCE Universal Forest Products®, Inc.
CONTACT: Charles R. Felix, Sr. V.P. Development and Investor Relations, or Michael R. Cole, Chief Financial Officer, 616-364-6161, of Universal Forest Products®, Inc.; or Matthew Della Croce, Vice President, 212-453-2316, or Pat McCoy, Managing Supervisor, 212-453-2272, both of Fleishman Hillard, for Universal Forest Products®, Inc.