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UFPI posts record second quarter results

Sales up 23 percent over previous year

/EIN News/ -- GRAND RAPIDS, Mich., July 18, 2017 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today reported financial results for the second quarter ended July 1, 2017.

The Company’s net sales rose 23 percent over the same quarter of 2016, led by double-digit gains in each of its markets.  Net earnings were up slightly over 2016.  Both results are records for the company.

“Many companies would be satisfied with our second-quarter performance. Not us,” said CEO Matt Missad. “We are excited about our sales growth, yet disappointed that we only had a modest growth in profits. We won’t make excuses and will aggressively pursue our goal to convert more of our sales revenue to earnings growth. I am confident that the great people of Universal will overcome challenges such as the lumber market volatility that occurred in the second quarter and continue to improve.”

“We are excited about the second half of 2017 and look forward to returning to more normal lumber market conditions as the details of the next Canadian softwood lumber agreement become known,” Matt added. “We expect to see the benefits of our investments in acquisitions, new product development and our international division. We also expect to see the benefits of our efforts to manage costs, as acquisitions such as idX Corp. continue to implement cost-saving synergies ahead of schedule.”

Second Quarter 2017 Highlights (comparisons on a year-over-year basis):

  • Net earnings attributable to controlling interest were $33.6 million, up 1 percent
  • Diluted earnings per share were $1.64
  • Net sales of $1,072.4 million represent a 23 percent increase
  • Unit sales accounted for 16 percent of the Company’s gross sales growth; higher lumber prices accounted for 7 percent
  • New product sales were $115.9 million, up from $97.8 million. The Company has introduced 23 new products in 2017 to date, including 11 during the second quarter.

By market, the Company posted the following second-quarter 2017 gross sales results:

Retail

$459.1 million, up 13 percent over the same period of 2016

Sales to the Retail market grew 13 percent, led by acquisitions, which contributed 8 percent of unit sales growth, while price increases accounted for 5 percent of sales growth.

The Company has benefited from new product sales and growth with independent and big box retailers, the latter of which have reported increases in comparable sales in their most recently reported quarters.

Construction

$295.2 million, up 17 percent over the same period of 2016

The 17 percent increase in Construction sales was led by sales to manufactured housing builders, which grew 24 percent, and residential builders, which grew 14 percent. Sales to commercial builders rose 10 percent. Overall, unit sales grew 9 percent, while prices increased 8 percent.

The Company has benefited from the increase in manufactured home production, which is up 18.5 percent for the year through April 2017, and from rising U.S. housing starts. The Company remains focused on growing business selectively in areas where housing markets are the most stable.

Industrial

$335.9 million, up 47 percent over the same period of 2016

The Company’s growth in this market is primarily due to its September 2016 acquisition of idX Corp. Excluding acquisitions, the Company grew unit sales in this market by 8 percent in the second quarter through market share gains and by adding new customers.

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 Wednesday, July 19, 2017. 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 84420896. 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 18, 2017, at any of the following numbers: (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.


 

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)  
FOR THE SIX MONTHS ENDED  
JUNE 2017/2016  
    Quarter Period       Year to Date      
(In thousands, except per share data)     2017           2016           2017           2016        
                                   
                                   
                                   
NET SALES   $   1,072,375     100 %   $   872,093     100 %   $   1,918,505     100 %   $   1,554,244     100.0 %  
                                   
COST OF GOODS SOLD        924,135       86.2         740,606       84.9         1,649,526       86.0         1,320,018       84.9    
                                   
GROSS PROFIT       148,240       13.8         131,487       15.1         268,979       14.0         234,226       15.1    
                                   
SELLING,  GENERAL  AND                                   
  ADMINISTRATIVE  EXPENSES       94,341       8.8         77,822       8.9         181,259       9.4         148,651       9.6    
                                   
EARNINGS FROM OPERATIONS       53,899       5.0         53,665       6.2         87,720       4.6         85,575       5.5    
                                   
OTHER EXPENSE, NET       1,490       0.1         785       0.1         2,906       0.2         1,675       0.1    
                                   
EARNINGS BEFORE INCOME TAXES       52,409       4.9         52,880       6.1         84,814       4.4         83,900       5.4    
                                   
INCOME TAXES       17,835       1.7         18,643       2.1         28,605       1.5         29,407       1.9    
                                   
NET EARNINGS       34,574       3.2         34,237       3.9         56,209       2.9         54,493       3.5    
                                   
LESS NET EARNINGS ATTRIBUTABLE TO                                  
  NONCONTROLLING INTEREST        (932 )     (0.1 )       (839 )     (0.1 )       (1,505 )     (0.1 )       (1,882 )     (0.1 )  
                                   
NET EARNINGS ATTRIBUTABLE TO                                  
  CONTROLLING INTEREST   $   33,642       3.1     $   33,398       3.8     $   54,704       2.9     $   52,611       3.4    
                                   
                                   
EARNINGS PER SHARE - BASIC    $   1.64         $   1.64         $   2.67         $   2.59        
                                   
EARNINGS PER SHARE - DILUTED   $   1.64         $   1.64         $   2.66         $   2.58        
                                   
COMPREHENSIVE INCOME       35,961             33,430             60,631             54,128        
                                   
LESS COMPREHENSIVE INCOME ATTRIBUTABLE                                  
  TO NONCONTROLLING INTEREST       (1,460 )           (235 )           (2,887 )           (1,081 )      
                                   
COMPREHENSIVE INCOME                                  
  ATTRIBUTABLE TO CONTROLLING INTEREST   $   34,501         $   33,195         $   57,744         $   53,047        
                                   
SUPPLEMENTAL SALES DATA                                  
    Quarter Period   Year to Date  
Market Classification     2017           2016     %     2017           2016     %  
Retail   $   459,140         $   407,670     13 %   $   770,891         $   678,928     14 %  
Industrial       335,928             228,052     47 %       613,170             429,701     43 %  
Construction       295,153             251,665     17 %       562,969             472,622     19 %  
Total Gross Sales       1,090,221             887,387     23 %       1,947,030             1,581,251     23 %  
Sales Allowances       (17,846 )           (15,294 )   -17 %       (28,525 )           (27,007 )   -6 %  
Total Net Sales   $   1,072,375         $   872,093     23 %   $   1,918,505         $   1,554,244     23 %  
                                   
                                   
                                   

 

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)  
JUNE 2017/2016  
                               
(In thousands)                          
ASSETS     2017     2016   LIABILITIES AND EQUITY     2017     2016  
                               
CURRENT ASSETS           CURRENT LIABILITIES          
  Cash and cash equivalents   $   24,625   $   87,517     Cash overdraft   $   22,769   $   -   
  Restricted cash & cash equivalents       905       909     Accounts payable       160,250       126,095  
  Investments       10,401       9,740     Accrued liabilities       126,210       111,995  
  Accounts receivable       398,529       318,505     Current portion of debt       2,378       1,093  
  Inventories       438,435       297,796                  
  Other current assets       21,970       15,238                  
                               
TOTAL CURRENT ASSETS       894,865       729,705   TOTAL CURRENT LIABILITIES       311,607       239,183  
                               
OTHER ASSETS       17,734       10,011   LONG-TERM DEBT AND          
INTANGIBLE ASSETS, NET       253,484       197,891     CAPITAL LEASE OBLIGATIONS       204,752       84,530  
PROPERTY, PLANT           OTHER LIABILITIES       49,319       51,158  
  AND EQUIPMENT,  NET       315,956       256,899   EQUITY       916,361       819,635  
                               
                               
TOTAL ASSETS   $   1,482,039   $   1,194,506   TOTAL LIABILITIES AND EQUITY   $   1,482,039   $   1,194,506  
                               
                               
                               
                               

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)  
FOR THE SIX MONTHS ENDED  
JUNE 2017/2016  
(In thousands)         2017           2016    
CASH FLOWS FROM OPERATING ACTIVITIES:              
Net earnings       $   56,209         $   54,493    
Adjustments to reconcile net earnings to net cash from operating activities:                
                     
  Depreciation           23,248             19,178    
  Amortization of intangibles         2,377             1,285    
  Expense associated with share-based compensation arrangements       1,282             977    
  Expense associated with stock grant plans         99             70    
  Deferred income taxes          355             55    
  Equity in earnings of investee         (26 )           (192 )  
  Net gain on disposition and impairment of assets       (328 )           50    
  Changes in:                  
    Accounts receivable         (101,239 )           (95,198 )  
    Inventories           (26,979 )           7,564    
    Accounts payable and cash overdraft         38,146             31,320    
    Accrued liabilities and other         22,067             20,439    
     NET CASH FROM OPERATING ACTIVITIES       15,211             40,041    
                     
CASH FLOWS FROM INVESTING ACTIVITIES:              
Purchases of property, plant, and equipment         (34,549 )           (24,269 )  
Proceeds from sale of property, plant and equipment       1,039             309    
Acquisitions and purchase of noncontrolling interest, net of cash received       (59,658 )           (1,682 )  
Purchase of remaining noncontrolling interest of subsidiary       -             (1,100 )  
Cash contributed from noncontrolling interest         464             -    
Advances of notes receivable         (228 )           (2,946 )  
Collections of notes receivable and related interest       1,041             3,731    
Purchases of investments         (15,118 )           (3,571 )  
Proceeds from sale of investments         7,247             901    
Other             (125 )           (736 )  
     NET CASH USED IN INVESTING ACTIVITIES       (99,887 )           (29,363 )  
                     
CASH FLOWS FROM FINANCING ACTIVITIES:              
Borrowings under revolving credit facilities         444,601             3,162    
Repayments under revolving credit facilities         (349,311 )           (3,210 )  
Proceeds from issuance of common stock         331             290    
Distributions to noncontrolling interest         (1,953 )           (8,529 )  
Dividends paid to shareholders         (9,207 )           (1,731 )  
Repurchase of common stock         (9,934 )           -    
Other             (6 )           (15 )  
     NET CASH FROM (USED IN) FINANCING ACTIVITIES       74,521             (10,033 )  
                     
Effect of exchange rate changes on cash         1,196             (561 )  
NET CHANGE IN CASH AND CASH EQUIVALENTS       (8,959 )           84    
                     
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD       34,489             88,342    
                     
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD   $   25,530         $   88,426    
                     
Reconciliation of cash and cash equivalents and restricted cash:              
Cash and cash equivalents, beginning of period     $   34,091         $   87,756    
Restricted cash, beginning of period         398             586    
All cash and cash equivalents, beginning of period   $   34,489         $   88,342    
                     
Cash and cash equivalents, end of period     $   24,625         $   87,517    
Restricted cash, end of period         905             909    
All cash and cash equivalents, end of period     $   25,530         $   88,426    
                     
                     
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502

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