Universal Forest Products Posts 20% Increase in 2nd Quarter Net Earnings
Year-to-Date Earnings up 35%
GRAND RAPIDS, Mich., July 17, 2006 – Universal Forest Products (NASDAQ: UFPI) today announced a strong second quarter marked by net earnings of $27.3 million, an increase of 19.9% over the same period last year. Year-to-date net earnings were $43.2 million, a 34.9% increase over the first six months of 2005.
Net sales for the quarter were $826.8 million, up 6.1% over net sales of $779.6 million for the second quarter of 2005. Net sales for the first six months of 2006 were $1.49 billion, up 13.3% over net sales of $1.32 billion for the same period in 2005.
“Our strengths for the quarter included continued market share gains in the site-built construction and industrial markets where we again saw double-digit unit growth,” said CEO Michael B. Glenn.
Sales were adversely impacted by the lumber market, with prices down approximately 14% from the prior year quarter. The increase in earnings was driven by a combination of increased sales of value-added products and a continued focus on innovations and cost reductions. Value-added products made up 56% of total sales for the quarter, up from 50% for the same period last year.
“We’re continuing our strategy of focusing on sales of value-added products by growing our market share in site-built construction and industrial, as well as introducing products through our new division, Universal Consumer Products,” Glenn said.
By market, Universal posted second-quarter sales of:
- $349.5 million in D-I-Y/retail, up 1.4% compared to the same quarter last year;
- $227.8 million in site-built construction, an increase of 22.1% over the same quarter last year;
- $149.4 million in industrial, up 6.4% over the second quarter 2005; and
- $100.1 million in manufactured housing, a 7.2% decrease from the second quarter of 2005, which reflected a significant decline in lumber prices in 2006 of species relevant to this market.
OUTLOOK
The Company reaffirms its annual target for net earnings growth of 15% to 20% and its unit sales target of 10% to 15% growth in 2006 based upon the following assumptions:
- Stable housing markets where we have a strong site-built presence and continued opportunities for market share gains.
- Stability in our D-I-Y/retail and manufacturing housing markets, as well as in lumber prices.
- Favorable weather conditions for building and home improvement activities, particularly in the fourth quarter.
- Continuing to gain market share and realize strong unit sales growth in the industrial market.
- The completion of strategic business acquisitions.
Universal Forest Products will conduct a conference call to discuss information included in this news release and related matters at 11:00 a.m. EDT on Tuesday, July 18, 2006. The conference call will be hosted by CEO Michael B. Glenn and Executive Chairman William G. Currie and will be available for analysts and institutional investors domestically at (866) 383-8008 or internationally at (617) 597-5341. Use conference call ID #73805629.
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 Wednesday, August 16, 2006 domestically at (888) 286-8010 or internationally at (617) 801-6888. Use replay ID # 22096875.
Universal Forest Products markets, manufactures and engineers wood and wood-alternative 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. The Company also provides framing services for the site-built sector. The Company reported sales of nearly $2.7 billion in 2005. Universal has approximately 10,000 employees who work out of more than 100 locations. For information about Universal Forest Products, please visit the Company's Web site at http://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.
Click here to view 2nd quarter 2006 financial highlights (pdf – 170 KB)