UFPI Q3 2014 earnings up 36.5 percent, sales up 9.5 percent; reports EPS of $0.96
--Increased sales in all markets, margin improvements drive results --
–Company increases annual dividend by more than 90 percent–
“We experienced solid sales growth in each of our markets, and we
continued to improve operational efficiencies and maintain our focus on
profitability. The third quarter saw profitable growth and progress
toward many of our longer-term goals,” said CEO
Missad noted that the Company’s Board of Directors approved an increase
to the Company’s dividend at its
“Due to the strength of our earnings, our solid balance sheet and our
optimism, we have decided to return capital to our shareholders while
still pursuing our growth goals,” Missad said. “Our board approved an
increase in the
Missad noted that the Company can support the new dividend rate while retaining ample capital for organic growth and acquisitions. He stated that, in many instances, recent acquisition multiples have been at levels that challenge the ability to create value for shareholders. He added that the Company continues to actively pursue acquisitions as well as reinvest in plants as part of its organic growth goals.
Lumber prices affect the Company’s selling prices, and in the third quarter of 2014, the composite lumber price was up 10.7 percent over the previous year, offset partially by an 18 percent decline in OSB prices in the third quarter of 2014. The Company estimates that higher overall lumber prices raised its selling prices and sales by six percent.
By market, the Company posted the following third-quarter 2014 gross sales results:
Retail:
Industrial:
Construction,
CONFERENCE CALL
This press release contains forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act, as amended, that
are based on management’s beliefs, assumptions, current expectations,
estimates and projections about the markets we serve, the economy and
the Company itself. Words like “anticipates,” “believes,” “confident,”
“estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,”
“should,” variations of such words, and similar expressions identify
such forward-looking statements. These statements do not guarantee
future performance and involve certain risks, uncertainties and
assumptions that are difficult to predict with regard to timing, extent,
likelihood and degree of occurrence. The Company does not undertake to
update forward-looking statements to reflect facts, circumstances,
events, or assumptions 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: fluctuations in the price
of lumber; adverse or unusual weather conditions; adverse economic
conditions in the markets we serve; government regulations, particularly
involving environmental and safety regulations; and our ability to make
successful business acquisitions. Certain of these risk factors as well
as other risk factors and additional information are included in the
Company's reports on Form 10-K and 10-Q on file with the
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED) | ||||||||||||||||||||||||||||||
FOR THE NINE MONTHS ENDED | ||||||||||||||||||||||||||||||
SEPTEMBER 2014/2013 | ||||||||||||||||||||||||||||||
Quarter Period | Year to Date | |||||||||||||||||||||||||||||
(In thousands, except per share data) | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||||||||
NET SALES | $ | 713,489 | 100 | % | $ | 651,780 | 100 | % | $ | 2,040,239 | 100 | % | $ | 1,944,711 | 100.0 | % | ||||||||||||||
COST OF GOODS SOLD | 623,903 | 87.4 | 573,491 | 88.0 | 1,787,652 | 87.6 | 1,729,027 | 88.9 | ||||||||||||||||||||||
GROSS PROFIT | 89,586 | 12.6 | 78,289 | 12.0 | 252,587 | 12.4 | 215,684 | 11.1 | ||||||||||||||||||||||
SELLING, GENERAL AND | ||||||||||||||||||||||||||||||
ADMINISTRATIVE EXPENSES | 59,936 | 8.4 | 53,020 | 8.1 | 172,835 | 8.5 | 154,348 | 7.9 | ||||||||||||||||||||||
ANTI-DUMPING DUTY ASSESSMENTS | - | - | 887 | 0.1 | 1,600 | 0.1 | 887 | - | ||||||||||||||||||||||
NET GAIN ON DISPOSITION AND | ||||||||||||||||||||||||||||||
IMPAIRMENT OF ASSETS 1 | (2,570 | ) | (0.4 | ) | (145 | ) | - | (3,418 | ) | (0.2 | ) | (253 | ) | - | ||||||||||||||||
EARNINGS FROM OPERATIONS | 32,220 | 4.5 | 24,527 | 3.8 | 81,570 | 4.0 | 60,702 | 3.1 | ||||||||||||||||||||||
OTHER EXPENSE, NET | 552 | 0.1 | 982 | 0.2 | 1,963 | 0.1 | 2,969 | 0.2 | ||||||||||||||||||||||
EARNINGS BEFORE INCOME TAXES | 31,668 | 4.4 | 23,545 | 3.6 | 79,607 | 3.9 | 57,733 | 3.0 | ||||||||||||||||||||||
INCOME TAXES 1 | 11,176 | 1.6 | 8,530 | 1.3 | 29,000 | 1.4 | 20,589 | 1.1 | ||||||||||||||||||||||
NET EARNINGS | 20,492 | 2.9 | 15,015 | 2.3 | 50,607 | 2.5 | 37,144 | 1.9 | ||||||||||||||||||||||
LESS NET EARNINGS ATTRIBUTABLE TO | ||||||||||||||||||||||||||||||
NONCONTROLLING INTEREST 1 | (1,258 | ) | (0.2 | ) | (924 | ) | (0.1 | ) | (2,369 | ) | (0.1 | ) | (2,057 | ) | (0.1 | ) | ||||||||||||||
NET EARNINGS ATTRIBUTABLE TO | ||||||||||||||||||||||||||||||
CONTROLLING INTEREST | $ | 19,234 | 2.7 | $ | 14,091 | 2.2 | $ | 48,238 | 2.4 | $ | 35,087 | 1.8 | ||||||||||||||||||
EARNINGS PER SHARE - BASIC | $ | 0.96 | $ | 0.71 | $ | 2.40 | $ | 1.76 | ||||||||||||||||||||||
EARNINGS PER SHARE - DILUTED | $ | 0.96 | $ | 0.71 | $ | 2.40 | $ | 1.76 | ||||||||||||||||||||||
COMPREHENSIVE INCOME | 20,001 | 15,767 | 49,869 | 36,828 | ||||||||||||||||||||||||||
LESS COMPREHENSIVE INCOME ATTRIBUTABLE | ||||||||||||||||||||||||||||||
TO NONCONTROLLING INTEREST | (1,317 | ) | (1,106 | ) | (2,330 | ) | (2,098 | ) | ||||||||||||||||||||||
COMPREHENSIVE INCOME | ||||||||||||||||||||||||||||||
ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 18,684 | $ | 14,661 | $ | 47,539 | $ | 34,730 | ||||||||||||||||||||||
1 Included within net gain on disposition and impairment of assets for the third quarter of 2014 was a gain on the sale of certain property totaling $2.7 million completed by a 50% owned subsidiary of the Company. After considering the $1.35 million noncontrolling interest of this gain and income taxes, net earnings attributable to controlling interest was approximately $700,000 higher as a result of these transactions. | ||||||||||||||||||||||||||||||
SUPPLEMENTAL SALES DATA |
||||||||||||||||||||||||||||||
Quarter Period | Year to Date | |||||||||||||||||||||||||||||
Market Classification |
2014 | 2013 | % | 2014 | 2013 | % | ||||||||||||||||||||||||
Retail | $ | 272,469 | $ | 247,182 | 10 | % | $ | 823,861 | $ | 768,174 | 7 | % | ||||||||||||||||||
Industrial | 211,344 | 186,385 | 13 | % | 585,211 | 539,213 | 9 | % | ||||||||||||||||||||||
Construction | 239,812 | 227,093 | 6 | % | 660,962 | 663,795 | 0 | % | ||||||||||||||||||||||
Total Gross Sales | 723,625 | 660,660 | 10 | % | 2,070,034 | 1,971,182 | 5 | % | ||||||||||||||||||||||
Sales Allowances | (10,136 | ) | (8,880 | ) | (29,795 | ) | (26,471 | ) | ||||||||||||||||||||||
Total Net Sales | $ | 713,489 | $ | 651,780 | $ | 2,040,239 | $ | 1,944,711 |
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) | |||||||||||||||||||
SEPTEMBER 2014/2013 | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
ASSETS | 2014 | 2013 | LIABILITIES AND EQUITY | 2014 | 2013 | ||||||||||||||
CURRENT ASSETS | CURRENT LIABILITIES | ||||||||||||||||||
Cash and cash equivalents | $ | 26,184 | $ | 5,151 | Accounts payable | 99,008 | 85,520 | ||||||||||||
Restricted cash | 720 | 720 | Accrued liabilities | 93,933 | 78,820 | ||||||||||||||
Accounts receivable | 257,235 | 241,990 | |||||||||||||||||
Inventories | 273,665 | 232,209 | |||||||||||||||||
Other current assets | 27,591 | 29,483 | |||||||||||||||||
TOTAL CURRENT ASSETS | 585,395 | 509,553 | TOTAL CURRENT LIABILITIES | 192,941 | 164,340 | ||||||||||||||
OTHER ASSETS | 16,227 | 14,312 | LONG-TERM DEBT AND | ||||||||||||||||
INTANGIBLE ASSETS, NET | 168,825 | 170,301 | CAPITAL LEASE OBLIGATIONS | 84,700 | 84,700 | ||||||||||||||
PROPERTY, PLANT | OTHER LIABILITIES | 42,758 | 41,072 | ||||||||||||||||
AND EQUIPMENT, NET | 245,036 | 239,347 | EQUITY | 695,084 | 643,401 | ||||||||||||||
TOTAL ASSETS | $ | 1,015,483 | $ | 933,513 | TOTAL LIABILITIES AND EQUITY | $ | 1,015,483 | $ | 933,513 |
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||||
FOR THE NINE MONTHS ENDED | ||||||||||
SEPTEMBER 2014/2013 | ||||||||||
(In thousands) | 2014 | 2013 | ||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
Net earnings | $ | 50,607 | $ | 37,144 | ||||||
Adjustments to reconcile net earnings attributable to controlling interest | ||||||||||
to net cash from operating activities: | ||||||||||
Depreciation | 24,241 | 22,333 | ||||||||
Amortization of intangibles | 1,743 | 1,880 | ||||||||
Expense associated with share-based compensation arrangements | 1,445 | 1,442 | ||||||||
Excess tax benefits from share-based compensation arrangements | (2 | ) | (8 | ) | ||||||
Expense associated with stock grant plans | 81 | 49 | ||||||||
Deferred income taxes (credit) | 127 | (83 | ) | |||||||
Equity in earnings of investee | (246 | ) | (152 | ) | ||||||
Net gain on sale of property, plant and equipment | (3,418 | ) | (253 | ) | ||||||
Changes in: | ||||||||||
Accounts receivable | (76,642 | ) | (79,849 | ) | ||||||
Inventories | 14,754 | 11,261 | ||||||||
Accounts payable and cash overdraft | 25,078 | 19,336 | ||||||||
Accrued liabilities and other | 32,760 | 34,580 | ||||||||
NET CASH FROM OPERATING ACTIVITIES | 70,528 | 47,680 | ||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
Purchases of property, plant, and equipment | (31,676 | ) | (32,108 | ) | ||||||
Proceeds from sale of property, plant and equipment | 6,463 | 1,319 | ||||||||
Acquisitions, net of cash received | (7,135 | ) | (9,296 | ) | ||||||
Advances of notes receivable | (2,229 | ) | (1,990 | ) | ||||||
Collections of notes receivable and related interest | 983 | 1,441 | ||||||||
Cash restricted as to use | - | 6,111 | ||||||||
Other, net | (95 | ) | 28 | |||||||
NET CASH FROM INVESTING ACTIVITIES | (33,689 | ) | (34,495 | ) | ||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
Borrowings under revolving credit facilities | 192,475 | 251,801 | ||||||||
Repayments under revolving credit facilities | (192,475 | ) | (262,891 | ) | ||||||
Debt issuance costs | (11 | ) | (15 | ) | ||||||
Proceeds from issuance of common stock | 297 | 839 | ||||||||
Distributions to noncontrolling interest | (1,710 | ) | (1,460 | ) | ||||||
Dividends paid to shareholders | (4,214 | ) | (3,977 | ) | ||||||
Repurchase of common stock | (4,772 | ) | - | |||||||
Excess tax benefits from share-based compensation arrangements | 2 | 8 | ||||||||
NET CASH FROM FINANCING ACTIVITIES | (10,408 | ) | (15,695 | ) | ||||||
Effect of exchange rate changes on cash | (247 | ) | 14 | |||||||
NET CHANGE IN CASH AND CASH EQUIVALENTS | 26,184 | (2,496 | ) | |||||||
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | - | 7,647 | ||||||||
CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 26,184 | $ | 5,151 | ||||||
SUPPLEMENTAL INFORMATION: | ||||||||||
Interest paid | $ | 2,475 | $ | 2,850 | ||||||
Income taxes paid | 26,605 | 6,780 | ||||||||
Source:
Universal Forest Products, Inc.
Lynn Afendoulis, (616) 365-1502
Director,
Corporate Communications