Universal Forest Products, Inc. posts modest first-quarter sales increase
harsh winter contributes to decrease in net earnings
GRAND RAPIDS, MI., April 14, 2003 – Universal Forest Products (NASDAQ: UFPI) today announced net sales of $356 million for the first quarter of 2003, a 4% increase over net sales of $342 million reported for the same period last year. Universal posted these results even in the face of an 11% decrease in the lumber market.
However, an unusually harsh winter contributed to a decrease in net earnings. Diluted earnings per share for the quarter were $0.25, a 22% decrease over diluted earnings per share of $0.32 for the same period last year.
“Although inclement winter weather hit us hard and made February one of the weakest months in Universal's history, the outlook for the year is positive,” said CEO William G. Currie. “March was an excellent month – sales and profits outpaced last year's strong March performance – and we believe it's an indication of what lies ahead. For this reason, we're continuing to target annual sales and diluted earnings per share growth of 7% to 12% for 2003.”
In addition to the obvious pressures on business today – the weak economy, a soft lumber market, and the war in Iraq, for example – weather weighed heavily on Universal's first-quarter results. In fact, weather resulted in 154 lost production days for Universal plants across the nation, compared to 11 lost production days during last year's first quarter. As a result, sales were impacted by soft demand and Universal incurred significant weather-related cost inefficiencies.
“We controlled what we could and had stronger results than might be expected given the weather and economic conditions,” Currie added.
By market, Universal posted first quarter sales of:
* $157 million D-I-Y/retail, up 7% over last year;
* $77 million in site-built construction, an increase of 12% over
last year;
* $65 million in industrial/other, up 10% over last year, and
* $57 million in manufactured housing, a 15% decrease over last
year, which was significantly less than the most recently reported
market decline of approximately 28%.
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, April 15, 2003. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (800) 521-5469 or internationally at (303) 486-1489.
Use conference call ID #3322220. The conference call will be available simultaneously, and in its entirety, to all interested investors and news media through a web cast 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. In the recent “Fortune 1000” list of America's largest corporations, Universal jumped 73 places to number 769. The company was rated highly against the other eleven companies included in its industry group. For example, it posted the largest percent gain in profits from 2001, and was #1 in profits as a percent of assets and of stockholders' equity, and in total return to investors in 2002.
For information about Universal Forest Products on the Internet, please contact the Company's 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.
Financial highlights to follow
Consolidated Statements of Earnings
(unaudited)
For the Three Months Ended
March 2003/2002
| (In thousands, except per share data) |
Quarter Period | |||
|---|---|---|---|---|
| 2003 | 2002 | |||
| Net Sales |
$355,619
|
100% |
$341,656
|
100% |
| Cost of Goods Sold |
303,815
|
85.43 |
290,379
|
84.99 |
| Gross Profit |
51,804
|
14.57 |
51,277
|
15.01 |
| Selling, General and Administrative Expenses |
40,188
|
11.30 |
37,798
|
11.06 |
| Earnings From Operations |
11.616
|
3.27 |
13,479
|
3.95 |
| Interest Expense |
3,787
|
1.06 |
2,908
|
0.85 |
| Interest Revenue |
(47)
|
-0.01 |
(113)
|
-0.03 |
|
3,740
|
1.05 |
2,795
|
0.82 | |
| Earnings Before Income Taxes, and Minority Interest |
7,876
|
2.21 |
10,684
|
3.13 |
| Income Taxes |
2,791
|
0.78 |
3,973
|
1.16 |
| Earnings Before Minority Interest |
5,085
|
1.43 |
6,711
|
1.96 |
| Minority Interest |
(585)
|
-0.16 |
(629)
|
-0.18 |
| Net Earnings |
$4,500
|
1.27 |
$6,082
|
1.78 |
| Earnings per Share-Basic |
$0.25
|
$0.33
|
||
| Earnings per Share-Diluted |
$0.25
|
$0.32
|
||
| Weighted Average Shares Outstanding |
17,729
|
18,210
|
||
| Weighted Average Shares Outstanding with Common Stock Equivalents |
18,252
|
19,024
|
||
Supplemental Sales Data
| Quarter Period | ||||
|---|---|---|---|---|
| Market Classification | 2003 | 2002 | ||
| Do-It-Yourself |
$156,968
|
44% |
$146,757
|
43% |
| Site-Built Construction |
76,724
|
22% |
68,591
|
20% |
| Manufactured Housing |
57,382
|
16% |
67,368
|
20% |
| Industrial and Other |
64,545
|
18% |
58,940
|
17% |
| Total |
$355,619
|
100% |
$341,656
|
100% |
| Year to Date | ||||
|---|---|---|---|---|
| Market Classification | 2003 | 2002 | ||
| Do-It-Yourself |
$156,968
|
44% |
$146,757
|
43% |
| Site-Built Construction |
76,724
|
22% |
68,591
|
20% |
| Manufactured Housing |
57,382
|
16% |
67,368
|
20% |
| Industrial and Other |
64,545
|
18% |
58,940
|
17% |
| Total |
$355,619
|
100% |
$341,656
|
100% |
Consolidated Balance Sheets (unaudited)
March 2003/2002
(in thousands)
| Assets | Liabilities and Shareholders' Equity | ||||
|---|---|---|---|---|---|
| 2003 | 2002 | 2003 | 2002 | ||
| Current Assets | Current Liabilities | ||||
| Cash and cash equivalents |
$7,295
|
$12,503 | Notes payable |
$1,701
|
$2,025 |
| Restricted cash equivalents |
1,383
|
- | Accounts payable and accrued liabilities |
106,805
|
111,567 |
| Accounts receivable |
149,327
|
135,218 | Current portion of long-term debt and capital leases |
6,611
|
20,512 |
| Inventories |
196,228
|
167,661 | |||
| Other current assets |
7,851
|
3,472 | |||
| Total Current Assets |
362,084
|
318,854 | Total Current Liabilities |
115,117
|
134,104 |
| Other Assets |
6,608
|
6,548 | Long-Term Debt and Capital Leases, less current portion |
297,020
|
240,174 |
| Intangable Assets |
131,742
|
123,523 | Other Liabilities |
26,752
|
23,458 |
| Property, Plant and Equipment, Net |
207,121
|
187,531 | Shareholders' Equity |
268,666
|
238,720 |
| Total Assets |
$707,555
|
$636,456 | Total Liabilities and Shareholders' Equity |
$707,555
|
$636,456 |
Consolidated Statements of Earnings
(unaudited)
For the Three Months Ended
March 2003/2002
| (In thousands, except per share data) |
Quarter Period | |||
|---|---|---|---|---|
| 2003 | 2002 | |||
| Net Sales |
$355,619
|
100% |
$341,656
|
100% |
| Cost of Goods Sold |
303,815
|
85.43 |
290,379
|
84.99 |
| Gross Profit |
51,804
|
14.57 |
51,277
|
15.01 |
| Selling, General and Administrative Expenses |
40,188
|
11.30 |
37,798
|
11.06 |
| Earnings From Operations |
11.616
|
3.27 |
13,479
|
3.95 |
| Interest Expense |
3,787
|
1.06 |
2,908
|
0.85 |
| Interest Revenue |
(47)
|
-0.01 |
(113)
|
-0.03 |
|
3,740
|
1.05 |
2,795
|
0.82 | |
| Earnings Before Income Taxes, Minority Interest and Equity in Earnings (Loss) of Investee |
7,876
|
2.21 |
10,684
|
3.13 |
| Income Taxes |
2,791
|
0.78 |
3,973
|
1.16 |
| Earnings Before Minority Interest |
5,085
|
1.43 |
6,711
|
1.96 |
| Minority Interest |
(585)
|
-0.16 |
(629)
|
-0.18 |
| Net Earnings |
$4,500
|
1.27 |
$6,082
|
1.78 |
| Earnings per Share-Basic |
$0.25
|
$0.33
|
||
| Earnings per Share-Diluted |
$0.25
|
$0.32
|
||
| Weighted Average Shares Outstanding |
17,729
|
18,210
|
||
| Weighted Average Shares Outstanding with Common Stock Equivalents |
18,252
|
19,024
|
||
Consolidated Statements of Cash
Flows (unaudited)
For the Three Months Ended
March 2003/2002
| (In thousands) | 2003 | 2002 |
|---|---|---|
| Cash Flows From Operating Activities: | ||
| Net earnings | $4,500 | $6,082 |
| Adjustments to reconcile net earnings to net cash from operating activities: | ||
| Depreciation | 5,949 | 5,611 |
| Amortization of intangibles | 322 | 301 |
| Deferred income taxes | (405) | (153) |
| Loss on sale or impairment of property, plant and equipment | 86 | 66 |
| Changes in: | ||
| Accounts receivable | (44,110) | (46,490) |
| Inventories | (30,222) | (44,856) |
| Accounts payable | 14,497 | 22,111 |
| Accrued liabilities and other | (7,715) | 1,068 |
| Net Cash From Operating Activities | (57,098) | (56,260) |
| Cash Flows From Investing Activities: | ||
| Purchases of property, plant and equipment | (9,809) | (5,255) |
| Aquisitions, net of cash received | - | (359) |
| Proceeds from sale of property, plant and equipment | 144 | 161 |
| Other | 44 | 1,222 |
| Net Cash From Investing Activities | (9,621) | (4,231) |
| Cash Flows From Financing Activities: | ||
| Net borrowings under revolving credit facilities and notes payable | 61,752 | 86,453 |
| Repayment of long-term debt | (22) | (158) |
| Proceeds from issuance of common stock | 730 | 62 |
| Distributions to minority shareholder | (273) | (250) |
| Repurchase of common stock | (1,627) | (36,000) |
| Net Cash From Financing Activities | 60,560 | 50,107 |
| Net Change in Cash and Cash Equivalents | (6,159) | (10,384) |
| Cash and Cash Equivalents, Beginning of Period | 13,454 | 22,887 |
| Cash and Cash Equivalents, End of Period | $7,295 | $12,503 |
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 |