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UFPI posts record second-quarter earnings and sales

Second quarter marks three years of consecutive quarterly records

/EIN News/ -- GRAND RAPIDS, Mich., July 18, 2018 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today reported record financial results for the second quarter ended June 30, 2018, the twelfth consecutive quarter in which the company has reported records in both net sales and net earnings.

“The employees of Universal continue to work hard to set records, and I am privileged to announce the results,” stated CEO Matt Missad. The company’s second-quarter results benefited from unit sales growth and a rising lumber market but were adversely impacted by rising costs for transportation and labor.

“Our focus remains on growing unit sales organically and through acquisitions, while enhancing our sales mix of new and value-added products,” Matt added. “Our recently completed acquisition of North American Container Corp. (NACC) will enhance our goal of being the packaging solutions provider and adds non-wood packaging alternatives to our product offering. Additionally, our increased resource allocation to new products and services is paying dividends, as new product sales year-to-date have increased to $262 million from $211 million in 2017. We’ll also continue to focus on margin improvement and improving productivity through automation, including the expanded use of specialized material processing equipment and robotics.”

Recent Acquisition Activity
In early June, Universal closed on its acquisition of North American Container Corp. (NACC), an industrial packaging manufacturer based in Georgia with sales of approximately $71 million in 2017.

Second Quarter 2018 Highlights (comparisons on a year-over-year basis):

  • Diluted earnings per share were $0.71, up from $0.55
  • Net earnings attributable to controlling interest were $44.0 million, up 31 percent
  • EBITDA was $77.0 million, up 14 percent
  • Gross sales increased 21 percent, with gains of 19 percent in the Retail and Industrial markets and 26 percent in the Construction market
  • Unit sales contributed 8 percent of gross sales growth; higher prices due to the lumber market contributed 13 percent
  • Organic sales contributed 7 percent to unit growth while acquisitions added 1 percent
  • New product sales were $153.1 million, up 25 percent

By market, the company reported the following second-quarter 2018 gross sales results:

Retail

  • $546 million, up 19 percent over the same period of 2017, as unit sales contributed 6 percent and price increases accounted for 13 percent
  • Organic sales accounted for all of the unit sales growth
  • Sales to big box customers increased 16 percent, while sales to independent customers grew 25 percent

Construction

  • $371 million, up 26 percent over the same period of 2017, as unit sales contributed 10 percent and  price increases accounted for 16 percent
  • Organic sales accounted for 9 percent of the unit sales growth, while acquisitions accounted for 1 percent
  • The company saw double-digits sales increases to customers in commercial construction (32 percent), manufactured housing (28 percent) and residential construction (22 percent)

Industrial

  • $404 million, up 19 percent over the same period of 2017, as unit sales accounted for 8 percent and price increases accounted for 11 percent
  • Organic sales accounted for 5 percent of the unit sales growth, while acquisitions contributed 3 percent
  • The company sees favorable growth opportunities in the non-wood packing market and is adding resources to better serve this market

CONFERENCE CALL

Universal Forest Products will conduct a conference call to discuss information included in this news release and related matters at 8:30 a.m. ET on Thursday, July 19, 2018. The call will be hosted by CEO Matthew J. Missad and CFO Michael Cole, and will be available for analysts and institutional investors domestically at 866-518-4547, and internationally at 213-660-0879. Use conference pass code 9596393. 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. A replay of the call will be available through August 19, 2018, at 855-859-2056, 404-537-3406 or 800-585-8367.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company whose subsidiaries supply wood, wood composite and other products to three robust markets: retail, construction and industrial.  Founded in 1955, the Company is headquartered in Grand Rapids, Mich., with affiliates throughout North America, Europe, Asia and Australia. For more about Universal Forest Products, go to www.ufpi.com.

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 Securities and Exchange Commission.

Non-GAAP Financial Information

This release includes certain financial information not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies.  Management considers EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.

 
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 2018/2017
    Quarter Period       Year to Date    
(In thousands, except per share data)   2018       2017       2018       2017    
                                 
                                 
                                 
NET SALES   $ 1,294,440     100 %   $ 1,072,375     100 %   $ 2,288,297     100 %   $ 1,918,505     100.0 %
                                 
COST OF GOODS SOLD      1,128,751     87.2       924,135     86.2       1,991,719     87.0       1,649,526     86.0  
                                 
GROSS PROFIT     165,689     12.8       148,240     13.8       296,578     13.0       268,979     14.0  
                                 
SELLING,  GENERAL  AND                                 
ADMINISTRATIVE  EXPENSES     104,595     8.1       94,605     8.8       197,800     8.6       181,587     9.5  
NET (LOSS) GAIN ON DISPOSITION AND IMPAIRMENT OF ASSETS     477     -       (264 )   -       (6,057 )   (0.3 )     (328 )   -  
                                 
EARNINGS FROM OPERATIONS     60,617     4.7       53,899     5.0       104,835     4.6       87,720     4.6  
                                 
OTHER EXPENSE, NET     2,067     0.2       1,490     0.1       3,127     0.1       2,906     0.2  
                                 
EARNINGS BEFORE INCOME TAXES     58,550     4.5       52,409     4.9       101,708     4.4       84,814     4.4  
                                 
INCOME TAXES     13,420     1.0       17,835     1.7       22,994     1.0       28,605     1.5  
                                 
NET EARNINGS     45,130     3.5       34,574     3.2       78,714     3.4       56,209     2.9  
                                 
LESS NET EARNINGS ATTRIBUTABLE TO                                
NONCONTROLLING INTEREST      (1,086 )   (0.1 )     (932 )   (0.1 )     (1,836 )   (0.1 )     (1,505 )   (0.1 )
                                 
NET EARNINGS ATTRIBUTABLE TO                                
CONTROLLING INTEREST   $ 44,044     3.4     $ 33,642     3.1     $ 76,878     3.4     $ 54,704     2.9  
                                 
                                 
EARNINGS PER SHARE - BASIC    $ 0.71         $ 0.55         $ 1.24         $ 0.89      
                                 
EARNINGS PER SHARE - DILUTED   $ 0.71         $ 0.55         $ 1.24         $ 0.89      
                                 
COMPREHENSIVE INCOME     41,225           35,961           74,370           60,631      
                                 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                                
TO NONCONTROLLING INTEREST     (119 )         (1,460 )         (1,713 )         (2,887 )    
                                 
COMPREHENSIVE INCOME                                
ATTRIBUTABLE TO CONTROLLING INTEREST   $ 41,106         $ 34,501         $ 72,657         $ 57,744      
                                 
SUPPLEMENTAL SALES DATA                                
    Quarter Period   Year to Date
Market Classification   2018       2017   %   2018       2017   %
Retail   $ 545,492         $ 458,267     19 %   $ 916,453         $ 770,619     19 %
Industrial     404,090           340,463     19 %     737,056           621,062     19 %
Construction     370,786           293,465     26 %     678,526           559,371     21 %
Total Gross Sales     1,320,368           1,092,195     21 %     2,332,035           1,951,052     20 %
Sales Allowances     (25,928 )         (19,820 )   -31 %     (43,738 )         (32,547 )   -34 %
Total Net Sales   $ 1,294,440         $ 1,072,375     21 %   $ 2,288,297         $ 1,918,505     19 %
                                 
                                 


 
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
JUNE 2018/2017
                             
(In thousands)                        
ASSETS   2018   2017   LIABILITIES AND EQUITY   2018   2017
                             
CURRENT ASSETS           CURRENT LIABILITIES        
  Cash and cash equivalents   $ 27,501   $ 24,625     Cash overdraft   $ 33,608   $ 22,769
  Restricted cash     16,758     905     Accounts payable     197,408     160,250
  Investments     14,493     10,401     Accrued liabilities     138,809     126,210
  Accounts receivable     489,145     398,529     Current portion of debt     542     2,378
  Inventories     531,874     438,435                
  Other current assets     32,860     21,970                
                             
TOTAL CURRENT ASSETS     1,112,631     894,865   TOTAL CURRENT LIABILITIES     370,367     311,607
                             
OTHER ASSETS     20,266     17,734   LONG-TERM DEBT AND        
INTANGIBLE ASSETS, NET     263,024     253,484     CAPITAL LEASE OBLIGATIONS     276,274     204,752
PROPERTY, PLANT           OTHER LIABILITIES     42,255     49,319
  AND EQUIPMENT,  NET     340,698     315,956   EQUITY     1,047,723     916,361
                             
                             
TOTAL ASSETS   $ 1,736,619   $ 1,482,039   TOTAL LIABILITIES AND EQUITY   $ 1,736,619   $ 1,482,039
                             
                             
                             


 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2018/2017
(In thousands)     2018  2017
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net earnings       $ 78,714     $ 56,209  
Adjustments to reconcile net earnings to net cash from operating activities:        
               
Depreciation         26,144       23,248  
Amortization of intangibles       2,702       2,377  
Expense associated with share-based and grant compensation arrangements     1,924       1,381  
Deferred income taxes (credit)       (565 )     355  
Equity in earnings of investee       -       (26 )
Net (gain) on disposition and impairment of assets     (6,057 )     (328 )
Changes in:            
Accounts receivable       (155,666 )     (101,239 )
Inventories         (61,828 )     (26,979 )
Accounts payable and cash overdraft       62,665       38,146  
Accrued liabilities and other       15,895       22,067  
NET CASH FROM OPERATING ACTIVITIES     (36,072 )     15,211  
               
CASH FLOWS FROM INVESTING ACTIVITIES:        
Purchases of property, plant, and equipment       (54,313 )     (34,549 )
Proceeds from sale of property, plant and equipment     36,724       1,039  
Acquisitions and purchase of noncontrolling interest, net of cash received     (37,960 )     (59,658 )
Purchases of investments       (9,348 )     (15,118 )
Proceeds from sale of investments       3,180       7,247  
Other           (1,352 )     1,152  
NET CASH USED IN INVESTING ACTIVITIES     (63,069 )     (99,887 )
               
CASH FLOWS FROM FINANCING ACTIVITIES:        
Borrowings under revolving credit facilities       488,853       444,601  
Repayments under revolving credit facilities       (431,657 )     (349,311 )
Borrowings of debt         1,639       -  
Repayments of debt         (5,437 )     -  
Issuance of long-term debt       75,000       -  
Proceeds from issuance of common stock       500       331  
Distributions to noncontrolling interest       (1,078 )     (1,953 )
Dividends paid to shareholders       (11,090 )     (9,207 )
Repurchase of common stock       (1,819 )     (9,934 )
Other           (71 )     (6 )
NET CASH FROM (USED IN) FINANCING ACTIVITIES     114,840       74,521  
               
Effect of exchange rate changes on cash       (256 )     1,196  
NET CHANGE IN CASH AND CASH EQUIVALENTS     15,443       (8,959 )
               
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     28,816       34,489  
               
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 44,259     $ 25,530  
               
Reconciliation of cash and cash equivalents and restricted cash:        
Cash and cash equivalents, beginning of period     $ 28,339     $ 34,091  
Restricted cash, beginning of period       477       398  
All cash and cash equivalents, beginning of period   $ 28,816     $ 34,489  
               
Cash and cash equivalents, end of period     $ 27,501     $ 24,625  
Restricted cash, end of period       16,758       905  
All cash and cash equivalents, end of period     $ 44,259     $ 25,530  
               
               


 
EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 2018/2017
    Quarter Period Year to Date
(In thousands)   2018 2017 2018 2017
Net Earnings   45,132   34,575     78,714     56,209    
Interest  Expense   2,247   1,839     4,025     3,343    
Taxes   13,420   17,835     22,994     28,605    
Expense associated with Share-Based Compensation Arrangements   830   765     1,924     1,382    
Net Gain on Disposition of Asset   477   (264 )   (6,057 )   (328 )  
Depreciation Expense   13,432   11,763     26,144     23,155    
Amortization of Intangibles   1,474   1,259     2,702     2,378    
EBITDA     77,012     67,772       130,446       114,744    
                   

AT THE COMPANY

Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502

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