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UFPI posts record net earnings, net sales; retail and construction markets lead sales gains

Profits up 28.6 percent over previous year

GRAND RAPIDS, Mich., July 20, 2016 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today reported net earnings attributable to controlling interest of $33.4 million for the second quarter of 2016, up 28.6 percent over net earnings attributable to controlling interest of $26.0 million for the same period of 2015. Second-quarter 2016 diluted earnings per share were $1.64, compared to diluted earnings per share of $1.28 for the second quarter of 2015. Net sales of $872.1 million in the second quarter of 2016 represent an increase of 4.0 percent over net sales of $838.2 for the same period of 2015. The net earnings and net sales numbers are the best of any quarter in the Company’s history.

The Company’s results were driven by strong sales gains in the retail and construction markets, which grew 7.5 and 6.5 percent, respectively, over the same period of last year.

“The employees of the companies of Universal delivered another outstanding quarter,” said CEO Matthew J. Missad. “The results confirm that our growth and improvement strategies, coupled with our balanced business model, are working.  When we break records, we simply are setting the bar for the next record. We look forward to the challenge of trying to stay ahead of 2015’s record performance in the second half of the year. Fortunately, we have talented and hard-working employees who can make that happen.”

Missad noted that new product sales grew 9.2 percent over the second quarter of 2015, and that the Company’s product mix continues to drive improvements in gross margins. Lower industrial production in the U.S. and a strong U.S. dollar adversely affected the Company’s industrial business during the second quarter.

Recently announced acquisitions – Idaho Western in Nampa, Idaho, and Tampa, Fla.-based Robbins Manufacturing Co. – are expected to add $100 million in annual gross sales.

By market, the Company posted the following gross sales results:

Retail: $406.7 million, up 7.5 percent over the second quarter of 2015

The Company’s performance in this market benefited from growth with independent and big box retailers, the latter of which saw healthy increases in comparable store sales in their most recently reported quarters. The Company also gained market share with certain customers and grew sales of new products to these customers. The Company anticipates healthy demand through the building season, barring adverse weather conditions and other unforeseen events.

Industrial: $231.4 million, down 2.9 percent over the second quarter of 2015

In this market, the Company sells packaging and material handling and related products for industrial and agricultural customers. Sales in this market have been adversely affected by a decrease in U.S. industrial production, which fell 0.7 percent year-over-year in the most recently reported month, and
a strong U.S. dollar, which has adversely impacted the export sales of industrial customers. The Company also is being more selective by pursuing greater value-added business, which has contributed to improved gross profit margins in this market. It remains committed to growing industrial sales organically, through acquisitions, and by increasing its share of the market.

Construction: $249.3 million, up 6.5 percent over the same period of 2015

The Company saw unit sales increases of 10 percent in its residential construction business and 4 percent in commercial construction. The Company has benefited from rising U.S. housing starts in both site-built and factory-built housing, and a strong increase in commercial construction spending.

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 21, 2016. 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 (888) 685-5759 and internationally at (503) 343-6031. Use conference ID 48931902. 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 20, 2016, at any of the following numbers: (855) 859-2056 or (404) 537-3406 or (800) 585-8367.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company that provides capital, management and administrative resources to subsidiaries in three robust markets: retail, construction and industrial. Founded in 1955, the Company is headquartered in Grand Rapids, Mich., with affiliates throughout North America 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.

 

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2016/2015
    Quarter Period       Year to Date    
(In thousands, except per share data)     2016           2015           2016           2015      
                                 
                                 
                                 
NET SALES   $ 872,093       100 %   $ 838,171       100 %   $ 1,554,244       100 %   $ 1,471,195       100.0 %
                                 
COST OF GOODS SOLD      740,606       84.9       725,728       86.6       1,320,018       84.9       1,279,170       86.9  
                                 
GROSS PROFIT     131,487       15.1       112,443       13.4       234,226       15.1       192,025       13.1  
                                 
SELLING,  GENERAL  AND                                 
  ADMINISTRATIVE  EXPENSES     77,762       8.9       68,431       8.2       148,601       9.6       130,136       8.8  
NET (GAIN) LOSS ON DISPOSITION AND                                
  IMPAIRMENT OF ASSETS     60       -       (176 )     -       50       -       (162 )     -  
                                 
EARNINGS FROM OPERATIONS     53,665       6.2       44,188       5.3       85,575       5.5       62,051       4.2  
                                 
OTHER EXPENSE, NET     785       0.1       1,238       0.1       1,675       0.1       2,193       0.1  
                                 
EARNINGS BEFORE INCOME TAXES     52,880       6.1       42,950       5.1       83,900       5.4       59,858       4.1  
                                 
INCOME TAXES     18,643       2.1       16,066       1.9       29,407       1.9       22,170       1.5  
                                 
NET EARNINGS     34,237       3.9       26,884       3.2       54,493       3.5       37,688       2.6  
                                 
LESS NET EARNINGS ATTRIBUTABLE TO                                
  NONCONTROLLING INTEREST      (839 )     (0.1 )     (908 )     (0.1 )     (1,882 )     (0.1 )     (1,550 )     (0.1 )
                                 
NET EARNINGS ATTRIBUTABLE TO                                
  CONTROLLING INTEREST   $ 33,398       3.8     $ 25,976       3.1     $ 52,611       3.4     $ 36,138       2.5  
                                 
                                 
EARNINGS PER SHARE - BASIC    $ 1.64         $ 1.29         $ 2.59         $ 1.79      
                                 
EARNINGS PER SHARE - DILUTED   $ 1.64         $ 1.28         $ 2.58         $ 1.79      
                                 
COMPREHENSIVE INCOME     33,430           26,358           54,128           36,159      
                                 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                                
  TO NONCONTROLLING INTEREST     (235 )         (636 )         (1,081 )         (1,133 )    
                                 
COMPREHENSIVE INCOME                                
  ATTRIBUTABLE TO CONTROLLING INTEREST   $ 33,195         $ 25,722         $ 53,047         $ 35,026      
                                 
SUPPLEMENTAL SALES DATA                                
    Quarter Period   Year to Date
Market Classification     2016           2015     %     2016           2015     %
Retail   $ 406,738         $ 378,357       8 %   $ 677,481         $ 609,804       11 %
Industrial     231,388           238,372       -3 %     435,632           448,388       -3 %
Construction     249,261           234,112       6 %     468,138           434,418       8 %
Total Gross Sales     887,387           850,841       4 %     1,581,251           1,492,610       6 %
Sales Allowances     (15,294 )         (12,670 )         (27,007 )         (21,415 )    
Total Net Sales   $ 872,093         $ 838,171         $ 1,554,244         $ 1,471,195      
                                 
                                 

/EIN News/ --

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
JUNE 2016/2015
                             
(In thousands)                        
ASSETS     2016       2015     LIABILITIES AND EQUITY     2016       2015  
                             
CURRENT ASSETS           CURRENT LIABILITIES        
  Cash and cash equivalents   $ 87,517     $ 24,756       Cash overdraft   $ -     $ 21,933  
  Restricted cash     909       710       Accounts payable     126,095       114,354  
  Investments     9,740       -       Accrued liabilities     111,995       97,069  
  Accounts receivable     318,505       302,538       Current portion of debt     1,093       893  
  Inventories     297,796       330,235                  
  Other current assets     15,238       21,205                  
                             
TOTAL CURRENT ASSETS     729,705       679,444     TOTAL CURRENT LIABILITIES     239,183       234,249  
                             
OTHER ASSETS     10,011       9,986     LONG-TERM DEBT AND        
INTANGIBLE ASSETS, NET     197,891       192,505       CAPITAL LEASE OBLIGATIONS     84,530       122,303  
PROPERTY, PLANT           OTHER LIABILITIES     51,158       50,302  
  AND EQUIPMENT,  NET     256,899       257,731     EQUITY     819,635       732,812  
                             
                             
TOTAL ASSETS   $ 1,194,506     $ 1,139,666     TOTAL LIABILITIES AND EQUITY   $ 1,194,506     $ 1,139,666  
                             
                             

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2016/2015
(In thousands)         2016           2015  
CASH FLOWS FROM OPERATING ACTIVITIES:            
Net earnings       $ 54,493         $ 37,688  
Adjustments to reconcile net earnings to net cash from operating activities:            
                   
Depreciation         19,178           18,406  
Amortization of intangibles       1,285           1,888  
Expense associated with share-based compensation arrangements     977           874  
Excess tax benefits from share-based compensation arrangements     -           (33 )
Expense associated with stock grant plans       70           53  
Deferred income tax       55           3  
Equity in earnings of investee       (192 )         (195 )
Net loss (gain) on disposition and impairment of assets     50           (162 )
Changes in:                
Accounts receivable       (95,198 )         (104,929 )
Inventories         7,564           9,806  
Accounts payable and cash overdraft       31,320           45,798  
Accrued liabilities and other       20,439           27,625  
  NET CASH FROM OPERATING ACTIVITIES     40,041           36,822  
                   
CASH FLOWS FROM INVESTING ACTIVITIES:            
Purchases of property, plant, and equipment       (24,269 )         (27,756 )
Proceeds from sale of property, plant and equipment     309           1,085  
Acquisitions, net of cash received       (1,682 )         (2,584 )
Purchases of noncontrolling interest       (1,100 )         (1,256 )
Advances of notes receivable       (2,946 )         (3,083 )
Collections of notes receivable and related interest     3,731           7,059  
Purchases of investments       (3,571 )         -  
Proceeds from sale of investments       901           -  
Cash restricted as to use       (323 )         (305 )
Other, net           (736 )         (58 )
  NET CASH USED IN INVESTING ACTIVITIES     (29,686 )         (26,898 )
                   
CASH FLOWS FROM FINANCING ACTIVITIES:            
Borrowings under revolving credit facilities       3,162           259,734  
Repayments under revolving credit facilities       (3,210 )         (235,993 )
Proceeds from issuance of common stock       290           724  
Distributions to noncontrolling interest       (1,731 )         (1,250 )
Dividends paid to shareholders       (8,529 )         (8,050 )
Repurchase of common stock       -           (77 )
Other, net           (15 )         24  
  NET CASH (USED IN) FROM FINANCING ACTIVITIES     (10,033 )         15,112  
                   
Effect of exchange rate changes on cash       (561 )         (280 )
NET CHANGE IN CASH AND CASH EQUIVALENTS     (239 )         24,756  
                   
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     87,756           -  
                   
CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 87,517         $ 24,756  
                   
                   
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502

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