Universal Forest Products, Inc. Reports 3rd Quarter Earnings Of $0.40 Per Share
GRAND RAPIDS, Mich., Oct. 17 /PRNewswire/ -- Universal Forest Products® (NASDAQ: UFPI) today announced results for the 3rd quarter of 2000, including net earnings of $0.40 per share (diluted) compared to $0.45 per share (diluted) for the 3rd quarter of 1999. Net sales for the quarter were $371.0 million, down 4.5% compared to $388.4 million for the same quarter a year ago.
For the first nine months of 2000, net earnings were $1.32 per share (diluted) compared to $1.30 per share (diluted) last year. Net sales for the first nine months of 2000 were $1.107 billion compared to $1.135 billion, a decrease of 2.5% from the same period a year ago.
"Our strategy to diversify sales across four market segments and geographically across the United States cushioned the effect of external factors affecting our business, such as higher interest rates and a deflated lumber market," said William G. Currie, UFP's chief executive officer. "Our sales to the D-I-Y market were up slightly for the quarter as significant unit sales increases offset the negative sales effect of a 31% lower lumber market. Site-built construction sales were also up in spite of a depressed lumber market and lower sales in the Mid Atlantic region. Industrial/agricultural sales were down 5% for the quarter, but remain 6% ahead on a year-to-date basis. Our manufactured housing sales performance reflects both lower unit sales and a lower lumber market, although we have increased market share."
The company pointed to several factors that affected performance during the quarter:
1. The manufactured housing industry continues to struggle with excessive retail inventories and repossessions, coupled with tightened availability of consumer credit. The most recent industry statistics show shipments of manufactured homes down 24.6% on a year-to-date basis through August 2000.
2. The lumber market continued its downward trend during the quarter, approaching seven-year lows. For the third quarter of 2000, weekly averages of the "Random Lengths Lumber Composite" were down 31% compared to the third quarter of 1999. The company stated that recent acquisitions and significant unit sales increases in several markets were not enough to offset the overall lumber market decline. Profits were less affected due to the company's managed inventory programs and forward pricing practices.
3. The company's Mid Atlantic truss operations serving the site-built market contributed lower than expected sales and profits as a result of fewer housing starts in the region. Interest rate increases over the last 15 months were a factor in the housing start decline.
4. Slower than expected progress with several new start-up operations and missed target dates for the consolidation and relocation of one regional manufacturing facility caused increased expenses and missed profit opportunities.
"We have instituted the appropriate action steps to meet each of these challenges," continued Currie. "We will continue to aggressively pursue our strategic plan and believe that our unique business model will drive future profitability. The company is committed to leading its diverse markets and is positioned for continued growth as economic conditions improve."
OUTLOOK
The company feels that the factors mentioned above will cause earnings to fall below its previous expectations in the fourth quarter. The company has set the following targets for fourth quarter financial performance: total revenue in the range of $270 million to $290 million and net earnings in the range of $0.12 to $0.15 per diluted share. The company fully expects to regain its upward sales and earnings momentum next year and has every intention of achieving its "Performance 2002" objectives.
UFP D-I-Y sales to Home Depot are expected to remain strong, as evidenced by quarterly and year-to-date sales increases of 17% and 19%, respectively. The company continues to expand its relationship with Home Depot and believes in the continued growth of the D-I-Y sector.
The company's sales and profit targets mentioned above are not predictions of future performance. It is entirely possible that the company's performance will deviate from the targets set in the beginning of the quarter. Accordingly, during the quarter the company is not obligated to update these targets, report on its progress, or comment on them to analysts or investors until after it has closed the books on the quarter. In addition, the company will not comment on statements made by persons outside the company on the progress of the quarter, and any such statements should be assessed independently by investors. The company intends to comply with the requirements contained in the S.E.C. rule, Regulation Fair Disclosure.
Interested parties are invited to the company's webcast of its third quarter conference call. The conference call will be held on Tuesday, October 17, 2000 at 3 p.m. EST, and can be accessed from the company's Investor Relations website at www.ufpi.com .
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 Nine Months Ended
September 2000/1999
| (In thousands, except per share data) |
Quarter Period | |||
|---|---|---|---|---|
| 2000 | 1999 | |||
| Net Sales | $371,030 | 100% | $388,402 | 100% |
| Cost of Goods Sold | 322,103 | 86.81 | 342,319 | 88.14 |
| Gross Profit | 48,927 | 13.19 | 46,083 | 11.86 |
| Selling, General and Administrative Expenses | 31,885 | 8.59 | 27,922 | 7.19 |
| Earnings From Operations | 17,042 | 4.59 | 18,161 | 4.68 |
| Interest Expense | 3,648 | 0.98 | 2,993 | 0.77 |
| Interest Revenue | (135) | -0.04 | (182) | -0.05 |
| 3,513 | 0.95 | 2,811 | 0.72 | |
| Earnings Before Income Taxes, Minority Interest and Equity in Earnings (loss) of Investee | 13, 529 | 3.65 | 15,350 | 3.94 |
| Income Taxes | 5,177 | 1.40 | 6,004 | 1.55 |
| Earnings Before Minority Interest and Equity in Earnings (loss) of Investee | 8,352 | 2.25 | 9,346 | 2.41 |
| Minority Interest | (144) | -0.05 | (144) | -0.04 |
| Equity in Earnings (loss) of Investee | (60) | -0.02 | 355 | 0.09 |
| Net Earnings | $8,148 | 2.20 | $9,557 | 2.46 |
| Earnings per Share-Basic | $0.40 | $0.46 | ||
| Earnings per Share-Diluted | $0.40 | $0.45 | ||
| Weighted Average Shares Outstanding | 20,123 | 20,746 | ||
| Weighted Average Shares Outstanding with Common Stock Equivalents | 20,481 | 21,265 | ||
Consolidated Statements of Earnings
(unaudited)
For the Nine Months Ended
September 2000/1999
| (In thousands, except per share data) |
Year to Date | |||
|---|---|---|---|---|
| 2000 | 1999 | |||
| Net Sales | $1,106,680 | 100% | $1,135,333 | 100% |
| Cost of Goods Sold | 960,044 | 86.75 | 995,433 | 87.68 |
| Gross Profit | 146,636 | 13.25 | 139,900 | 12.32 |
| Selling, General and Administrative Expenses | 91,248 | 8.25 | 86,269 | 7.60 |
| Earnings From Operations | 55,388 | 5.00 | 53,631 | 4.72 |
| Interest Expense | 10,423 | 0.94 | 9,230 | 0.81 |
| Interest Revenue | (381) | -0.03 | (486) | -0.04 |
| 10,042 | 0.91 | 8,744 | 0.78 | |
| Earnings Before Income Taxes, Minority Interest and Equity in Earnings (loss) of Investee | 45,346 | 4.10 | 44,887 | 3.95 |
| Income Taxes | 17,693 | 1.60 | 17,818 | 1.57 |
| Earnings Before Minority Interest and Equity in Earnings (loss) of Investee | 27,653 | 2.50 | 27,069 | 2.38 |
| Minority Interest | (474) | -0.04 | (278) | -0.02 |
| Equity in Earnings (loss) of Investee | (33) | 0.00 | 875 | 0.08 |
| Net Earnings | $27,146 | 2.45 | $27,666 | 2.44 |
| Earnings per Share-Basic | $1.35 | $1.33 | ||
| Earnings per Share-Diluted | $1.32 | $1.30 | ||
| Weighted Average Shares Outstanding | 20,134 | 20,734 | ||
| Weighted Average Shares Outstanding with Common Stock Equivalents | 20,502 | 21,324 | ||
Supplemental Sales Data
| Quarter Period | ||||
|---|---|---|---|---|
| Market Classification | 2000 | 1999 | ||
| Do-It-Yourself/Retail | $179,701 | 49% | $177,892 | 46% |
| Manufactured Housing | 76,909 | 21% | 103,990 | 27% |
| Site-Built Construction | 68,372 | 18% | 58,062 | 15% |
| Industrial and Other | 46,048 | 12% | 48,458 | 12% |
| Total | $371,030 | 100% | $388,402 | 100% |
| Year to Date | ||||
|---|---|---|---|---|
| Market Classification | 2000 | 1999 | ||
| Do-It-Yourself/Retail | $543,690 | 49% | $534,850 | 47% |
| Manufactured Housing | 243,024 | 22% | 309,222 | 27% |
| Site-Built Construction | 180,006 | 16% | 159,412 | 14% |
| Industrial and Other | 139,960 | 13% | 131,849 | 12% |
| Total | $1,106,680 | 100% | $1,135.333 | 100% |
Consolidated Balance Sheets (unaudited)
September 2000/1999
| Assets | Liabilities and Shareholders' Equity | ||||
|---|---|---|---|---|---|
| 2000 | 1999 | 2000 | 1999 | ||
| Current Assets | Current Liabilities | ||||
| Cash and cash equivalents | $7,780 | $9,727 | Notes payable | $2,860 | $1,392 |
| Accounts receivable | 100,430 | 95,338 | Accounts payable and accrued liabilities | 95,643 | 89,601 |
| Inventories | 114,139 | 116,228 | Current portion of long-term debt and capital leases | 7,291 | 7,928 |
| Other current assets | 7,046 | 6,647 | |||
| Total Current Assets | 229,395 | 227,940 | Total Current Liabilities | 105,794 | 98,921 |
| Other Assets | 11,446 | 10,715 | Long-Term Debt and Capital Leases, less current portion | 130,836 | 135,580 |
| Revolving Credit Facility | 23,000 | 12,000 | |||
| Goodwill and Non-Compete | 106,547 | 93,569 | Other Liabilities | 18,030 | 15,075 |
| Property, Plant and Equipment, Net | 168,276 | 146,214 | Shareholders' Equity | 238,004 | 216,862 |
| Total Assets | $515,664 | $478,438 | Total Liabilities and Shareholders' Equity | $515,664 | $478,438 |
Consolidated Statements of Cash Flows (unaudited)
For the Nine Months Ended
September 2000/1999
| (In thousands) | 2000 | 1999 |
|---|---|---|
| Cash Flows From Operating Activities: | ||
| Net earnings | $27,146 | $27,666 |
| Adjustments to reconcile net earnings to net cash from operating activities: | ||
| Depreciation | 12,361 | 11,301 |
| Amortization of non-compete agreements and goodwill | 2,673 | 2,423 |
| (Gain) loss on sale of property, plant and equipment | 72 | (513) |
| Changes in: | ||
| Accounts receivable | (21,470) | (32,491) |
| Inventories | 22,053 | (7,829) |
| Accounts payable | 6,822 | 16,638 |
| Accrued liabilities and other | 7,901 | 5,514 |
| Net Cash From Operating Activities | 57,558 | 22,709 |
| Cash Flows From Investing Activities: | ||
| Purchases of property, plant and equipment | (23,677) | (27,508) |
| Business aquisitions, net of cash received | (32,561) | - |
| Proceeds from sale of property, plant and equipment | 642 | 2,491 |
| Other | (816) | (1,915) |
| Net Cash From Investing Activities | (56,412) | (23,102) |
| Cash Flows From Financing Activities: | ||
| Repayment of long-term debt | (7,535) | (9,919) |
| Proceeds from issuance of long-term debt | 2,118 | 27,742 |
| Net borrowings (repayments) under revolving credit facilities and notes payable | 11,950 | (4,984) |
| Dividends paid to shareholders | (807) | (728) |
| Proceeds from issuance of common stock | 431 | 864 |
| Repurchase of common stock | (3,629) | (3,775) |
| Net Cash From Financing Activities | 2,528 | 9,200 |
| Net Change in Cash and Cash Equivalents | 3,674 | (8,807) |
| Cash and Cash Equivalents, Beginning of Year | 4,106 | 920 |
| Cash and Cash Equivalents, End of Period | $7,780 | $9,727 |
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 |