Universal Forest Products Announces Second Quarter Earnings Of $12.9 Million Per Share Increase of 5%
GRAND RAPIDS, Mich., July 18 /PRNewswire/ -- Universal Forest Products®, Inc. (NASDAQ: UFPI) today announced record results for the second quarter of 2000 including quarterly earnings of $12.9 million or $0.63 per share (diluted) compared to $12.7 million or $0.60 per share (diluted) for the second quarter of 1999. Net sales for the quarter were $431.6 million, down 3.4% compared to $446.8 million for the same quarter a year ago, in spite of a 19% decrease in the overall lumber market.
For the first six months of 2000, net earnings were $19.0 million or $0.93 per share (diluted) compared to $18.1 million or $0.85 per share (diluted) for the first six months of 1999, a 4.9% increase in net earnings and a 9.4% increase in earnings per share. Net sales were $735.7 million versus $746.9 million, a decrease of 1.5% compared to the same period a year ago.
"Our business strategy of maintaining leadership in four related, but distinct markets, served by our plants throughout North America, helped to offset the short-term impact of certain macro economic events in the quarter," said William G. Currie, UFP's vice-chairman and chief executive officer. "Despite the current environment, we recognized record earnings this quarter and remain confident we will reach the growth targets in our 'Performance 2002' strategy. While we continue to have year-over-year gains in unit sales, earnings were impacted by rising interest rates, a decline in lumber prices of 19% from a year ago, and a weak manufactured housing market. For the balance of the year, we expect unit sales to increase, revenues to remain flat, and earnings to remain flat or increase modestly. This assumes that interest rates do not increase significantly from present levels and the manufactured housing industry does not deteriorate further."
Outlook by market segment:
While some regions are forecasting a slowing of site-built construction activity, business in certain high-volume regions is expected to remain strong. UFP forecasts strong continued growth for its site-built construction segment, as increased demand for these value added products and increased market share will offset downward pressure on sales caused by interest rate increases.
UFP continues to make strategic acquisitions of leading regional companies as part of its plan to develop a nation-wide network of roof truss, floor truss, I-joist, and wall panel manufacturers to better serve this market. The company announced three acquisitions in this market segment; Gang-Nail Components, Inc.; Banks Corporation's Open Joist 2000 facility; and 50% of Thorndale Roof and Edcor Floor Systems.
The company believes that manufactured housing will continue to struggle for the remainder of this year, which will negatively impact sales to this sector. Shipments in the first quarter were off 20% and the most recently available figures show a 32% reduction in April. An improving trend is anticipated in the second quarter of 2001. In the meantime, the company will continue its efforts to shift sales focus and production capacity to the industrial and agricultural markets, which were up 8% for the second quarter and 12.6% for the year-to-date. UFP sees this as an opportunity to greatly increase its market share to industrial and agricultural customers.
Sales to D-I-Y customers were off 3% for the quarter and up 2% for the year-to-date. This softening of sales is due primarily to the deflation of commodity lumber prices. After trending down all year the current market hovers around a three-year historical low. Historically, the D-I-Y retail market has been counter cyclical to the housing market and we expect this trend to continue. Unit sales to this market segment are expected to continue to be strong.
The company continues to increase its D-I-Y market penetration through a strategic acquisition program. During the quarter the company closed on the acquisition of two lumber treating facilities purchased from Walker-Williams Lumber Company. These two facilities are located in Westville, Indiana and Blanchester, Ohio. The company anticipates closing on a third facility in Youngstown, Ohio following additional due diligence. When fully operational, these three facilities will add 200 million board feet to Universal's treating capacity enabling it to better serve its D-I-Y customers in the Midwest.
About Universal Forest Products (R), Inc.
Universal Forest Products® markets, manufactures, and engineers 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. For information about Universal Forest Products® on the Internet, please contact the company's investor relations web site at 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.
Highlights to follow:
Consolidated Statements of Earnings (unaudited)
For the Six Months Ended
June 2000/1999
| (In thousands,except per share data) | Quarter Period | |||
|---|---|---|---|---|
| 2000 | 1999 | |||
| Net Sales | $431,578 | 100% | $446,751 | 100% |
| Cost of Goods Sold | 374,280 | 86.72 | 392,691 | 87.90 |
| Gross Profit | 57,298 | 13.28 | 54,060 | 12.10 |
| Selling, General and Administrative Expenses | 32,045 | 7.43 | 29,962 | 6.71 |
| Earnings From Operations | 25,253 | 5.85 | 24, 098 | 5.39 |
| Interest Expense | 3,607 | 0.84 | 3,318 | 0.74 |
| Interest Revenue | (160) | -0.04 | (155) | -0.03 |
| 3,447 | 0.80 | 3,163 | 0.71 | |
| Earnings Before Income Taxes, Minority Interest and Equity in Earnings (loss) of Investee | 21,806 | 5.05 | 20,935 | 4.68 |
| Income Taxes | 8,563 | 1.98 | 8,459 | 1.89 |
| Earnings Before Minority Interest and Equity in Earnings (loss) of Investee | 13,243 | 3.07 | 12,476 | 2.79 |
| Minority Interest | (307) | -0.08 | (53) | -0.01 |
| Equity in Earnings (loss) of Investee | (19) | 0.00 | 325 | 0.07 |
| Net Earnings | $12,917 | 2.99 | $12,748 | 2.85 |
| Earnings per Share-Basic | $0.64 | $0.61 | ||
| Earnings per Share-Diluted | $0.63 | $0.60 | ||
| Weighted Average Shares Outstanding | 20,144 | 20,745 | ||
| Weighted Average Shares Outstanding with Common Stock Equivalents | 20,501 | 20,291 | ||
Consolidated Statements of Earnings (unaudited)
For the Six Months Ended
June 2000/1999
| (In thousands, except per share data) |
Year to Date | |||
|---|---|---|---|---|
| 2000 | 1999 | |||
| Net Sales | $735,650 | 100% | $746,931 | 100% |
| Cost of Goods Sold | 673,941 | 86.72 | 653,114 | 87.44 |
| Gross Profit | 97,709 | 13.28 | 93,817 | 12.56 |
| Selling, General and Administrative Expenses | 59,363 | 8.07 | 58,347 | 7.81 |
| Earnings From Operations | 38,346 | 5.21 | 35,470 | 4.75 |
| Interest Expense | 6,775 | 0.92 | 6,237 | 0.84 |
| Interest Revenue | (246) | -0.03 | (304) | -0.04 |
| 6,529 | 0.89 | 5,933 | 0.80 | |
| Earnings Before Income Taxes, Minority Interest and Equity in Earnings (loss) of Investee | 31,817 | 4.32 | 29,537 | 3.95 |
| Income Taxes | 12,516 | 1.70 | 11,814 | 1.58 |
| Earnings Before Minority Interest and Equity in Earnings (loss) of Investee | 19,301 | 2.62 | 17,723 | 2.37 |
| Minority Interest | (330) | -0.04 | (134) | -0.02 |
| Equity in Earnings (loss) of Investee | 27 | 0.00 | 520 | 0.07 |
| Net Earnings | $18,998 | 2.58 | $18,109 | 2.42 |
| Earnings per Share-Basic | $0.94 | $0.87 | ||
| Earnings per Share-Diluted | $0.93 | $0.85 | ||
| Weighted Average Shares Outstanding | 20,140 | 20,727 | ||
| Weighted Average Shares Outstanding with Common Stock Equivalents | 20,513 | 21,353 | ||
Supplemental Sales Data
| Quarter Period | ||||
|---|---|---|---|---|
| Market Classification | 2000 | 1999 | ||
| Do-It-Yourself/Retail | $229,711 | 53% | $236,912 | 53% |
| Manufactured Housing | 87,939 | 20% | 108,811 | 24% |
| Site-Built Construction | 63,008 | 15% | 53,858 | 12% |
| Industrial and Other | 50,920 | 12% | 47,170 | 11% |
| Total | $431,578 | 100% | $446,751 | 100% |
| Year to Date | ||||
|---|---|---|---|---|
| Market Classification | 2000 | 1999 | ||
| Do-It-Yourself/Retail | $363,991 | 49% | $357,068 | 48% |
| Manufactured Housing | 166,121 | 23% | 205,079 | 27% |
| Site-Built Construction | 111,623 | 15% | 101,374 | 14% |
| Industrial and Other | 93,915 | 13% | 83,410 | 11% |
| Total | $735,650 | 100% | $746,931 | 100% |
Consolidated Balance Sheets (unaudited)
June 2000/1999
| Assets | Liabilities and Shareholders' Equity | ||||
|---|---|---|---|---|---|
| 2000 | 1999 | 2000 | 1999 | ||
| Current Assets | Current Liabilities | ||||
| Cash and cash equivalents | $2,748 | $1,441 | Notes payable | $2,278 | $2,208 |
| Accounts receivable | 119,044 | 112,341 | Accounts payable and accrued liabilities | 107,811 | 99,523 |
| Inventories | 145,768 | 136,259 | Current portion of long-term debt and capital leases | 7,058 | 8,566 |
| Other current assets | 7,005 | 6,966 | Total Current Liabilities | 117,147 | 110,297 |
| Total Current Assets | 274,565 | 257,007 | Long-Term Debt and Capital Leases, less current portion | 131,219 | 129,504 |
| Other Assets | 11,304 | 10,432 | Revolving Credit Facility | 60,400 | 42,300 |
| Goodwill and Non-Compete | 107,372 | 94,351 | Other Liabilities | 18,072 | 15,047 |
| Property, Plant and Equipment, Net | 164,990 | 144,060 | Shareholders' Equity | 231,393 | 208,702 |
| Total Assets | $558,231 | $505,850 | Total Liabilities and Shareholders' Equity | $558,231 | $505,850 |
Consolidated Statements of Cash
Flows (unaudited)
For the Six Months Ended
June 2000/1999
| (In thousands) | 2000 | 1999 |
|---|---|---|
| Cash Flows From Operating Activities: | ||
| Net earnings | $18,998 | $18,109 |
| Adjustments to reconcile net earnings to net cash from operating activities: | ||
| Depreciation | 7,862 | 7,535 |
| Amortization of non-compete agreements and goodwill | 1,639 | 1,592 |
| (Gain) loss on sale of property, plant and equipment | 5 | (89) |
| Changes in: | ||
| Accounts receivable | (40,083) | (49,494) |
| Inventories | (9,577) | (27,861) |
| Accounts payable | 23,647 | 26,462 |
| Accrued liabilities and other | 3,209 | 5,690 |
| Net Cash From Operating Activities | 5,700 | (18,056) |
| Cash Flows From Investing Activities: | ||
| Purchases of property, plant and equipment | (15,623) | (21,153) |
| Business acquisitions, net of cash received | (32,386) | - |
| Proceeds from sale of property, plant and equipment | 440 | 1,633 |
| Other | (520) | 1,405 |
| Net Cash From Investing Activities | (48,089) | (18,115) |
| Cash Flows From Financing Activities: | ||
| Repayment of long-term debt | (7,181) | (7,736) |
| Proceeds from issuance of long-term debt | 1,937 | 20,306 |
| Net borrowings (repayments) under revolving credit facilities and notes payable | 48,774 | 26,131 |
| Dividends paid to share holders | (807) | (728) |
| Proceeds from issuance of common stock | 379 | 785 |
| Repurchase of common stock | (2,071) | (2,066) |
| Net Cash From Financing Activities | 41,031 | 36,692 |
| Net Change in Cash and Cash Equivalents | (1,358) | 521 |
| Cash and Cash Equivalents, Beginning of Year | 4,106 | 920 |
| Cash and Cash Equivalents, End of Period | $2,748 | $1,141 |
Contact
| At the Company: | Michael R. Cole, Chief Financial Officer of Universal Forest Products, +1-616-364-6161 |
| At Fleishman Hillard: | Jim Ankner, Vice President of Fleishman Hillard, +1-212-453-2198 |