Universal Forest Products

Universal Forest Products, Inc. supports confidence with record results in second quarter.

Net sales rise 9.4% to $552.5 million
Diluted earnings per share jump 14.6% to $0.94

GRAND RAPIDS, MI., July 14, 2003 – Universal Forest Products (NASDAQ: UFPI) today announced record net sales and record earnings per share for the second quarter of 2003.

Net sales totaled $552.5 million for the second quarter of 2003, a 9.4% increase over net sales of $504.9 million reported for the same period last year. Net sales for the first six months of 2003 were $908.1 million, a 7.3% increase over sales of $846.6 million for the same period of 2002.

Diluted earnings per share for the quarter were $0.94, a 14.6% increase over diluted earnings per share of $0.82 for the same period last year. Diluted earnings per share for the year-to-date were $1.19, a 4.4% increase over 2002 year-to-date diluted earnings per share of $1.14.

“In March, we expressed optimism for the quarters ahead and we delivered,” said CEO William G. Currie. “We demonstrated the strength of our strategies and systems and the power of having the best, most innovative employees in the workplace. They are the reason for our success.”

Inclement weather continued to be a factor in the site-built and DIY industries with portions of the Southeast posting their wettest springs ever and record rainfall elsewhere in the Northeast. However, that was partially mitigated by the positive effects low interest rates have had on the construction and home improvement markets.

“Our performance largely is a result of our focus on new five-year goals that call for us to substantially grow our sales and profitability,” Currie said. “We pride ourselves on doing what we say we're going to do and hitting our goals. And our people are just getting started on this aggressive new initiative.”

By market, Universal posted second quarter sales of:
· $302.6 million D-I-Y/retail, up 14.3% over the same quarter last year;
· $101.4 million in site-built construction, an increase of 14.7% over last year;
· $78.2 million in industrial/other, up 10.4% over last year; and
· $70.2 million in manufactured housing, a 13.4% decrease over last year
(despite a decrease in industry production of approximately 27%).

Outlook
While the company beat its expectations for the second quarter of 2003 and remains optimistic about the rest of the year, it is adjusting the top end of its targets from 12% to 10% for both annual sales growth and diluted earnings per share to reflect the effects of weather on the first quarter. The company now estimates it will achieve annual sales growth of 7% to 10% and diluted earnings per share growth of 7% to 10% for 2003.

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 15, 2003. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (800) 960-1012 or internationally at (952) 556-2834. Use conference call ID #186603. 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.

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 Six Months Ended
June 2003/2002

(In thousands,
except per share data)		 Quarter Period
  2003 2002
Net Sales
$552,463
 100%
$504,944
 100%
Cost of Goods Sold
473,721
 85.75
436,321
 86.41
Gross Profit
78,742
 14.25
68,623
 13.59
Selling, General and Administrative Expenses
46,697
 8.45
41,345
 8.19
Earnings From Operations
32,045
 5.80
27,278
 5.40
Interest Expense
3,958
 0.72
3.047
 0.60
Interest Revenue
(84)
 -0.02
(52)
 -0.01
Gain on Sale of Assets
-
 0.00
(1,082)
 -0.21
 
3,874
 0.70
1,913
 0.38
Earnings Before Income Taxes, and Minority Interest
28,171
 5.10
25,365
 5.02
Income Taxes
10,458
 1.89
9,400
 1.86
Earnings Before Minority Interest
17,713
 3.21
15,965
 3.16
Minority Interest
(551)
 -0.10
(611)
 -0.12
Net Earnings
$17,762
 3.11
15,354
 3.04
Earnings per Share-Basic
$0.97
  
$0.86
  
Earnings per Share-Diluted
$0.94
  
$0.82
  
Weighted Average Shares Outstanding
17,741
  
17,884
  
Weighted Average Shares Outstanding with Common Stock Equivalents
18,193
  
18,705
  

Consolidated Statements of Earnings (unaudited)
For the Six Months Ended
June 2003/2002

(In thousands,
except per share data)		 Year to Date
  2003 2002
Net Sales
$908,082
 100%
$846,600
 100%
Cost of Goods Sold
777,536
 85.62
726,700
 85.84
Gross Profit
130,546
 14.38
119,900
 14.16
Selling, General and Administrative Expenses
86,885
 9.57
79,143
 9.35
Earnings From Operations
43,661
 4.81
40,757
 4.81
Interest Expense
7,745
 0.85
5,955
 0.70
Interest Revenue
(131)
 -0.01
(165)
 -0.02
Gain on Sale of Assets
-
 0.00
(1,082)
 -0.13
 
7,614
 0.84
4,708
 0.56
Earnings Before Income Taxes, and Minority Interest
36,047
 3.97
36,049
 4.26
Income Taxes
13,249
 1.46
13,373
 1.58
Earnings Before Minority Interest
22,798
 2.51
22,676
 2.68
Minority Interest
(1,136)
 -0.13
(1,240)
 -0.15
Net Earnings
$21,662
 2.39
$21,436
 2.53
Earnings per Share-Basic
$1.22
  
$1.19
  
Earnings per Share-Diluted
$1.19
  
$1.14
  
Weighted Average Shares Outstanding
17,735
  
18,047
  
Weighted Average Shares Outstanding with Common Stock Equivalents
18,222
  
18,865
  

Supplemental Sales Data

  Quarter Period
Market Classification 2003 2002
Do-It-Yourself/Retail
$302,613
 55%
$264,656
 52%
Site-Built Construction
101,433
 18%
88,398
 18%
Manufactured Housing
70,208
 13%
81,040
 16%
Industrial and Other
78,209
 14%
70,850
 14%
Total
$552,463
 100%
$504,944
 100%

  Year to Date
Market Classification 2003 2002
Do-It-Yourself/Retail
$459,646
 50%
$411,420
 48%
Site-Built Construction
178,137
 20%
156,987
 19%
Manufactured Housing
127,569
 14%
148,401
 18%
Industrial and Other
142,730
 16%
129,792
 15%
Total
$908,082
 100%
$846,600
 100%

Consolidated Balance Sheets (unaudited)
June 2003/2002

(in thousands)
Assets Liabilities and Shareholders' Equity
  2003 2002   2003 2002
Current Assets
  Current Liabilities
 
Cash and cash equivalents
$16,139
 $18,020 Notes payable
$1,679
 $2,001
Accounts receivable
200,033
 178,017 Accounts payable and accrued liabilities
157,801
 140,699
Inventories
166,742
 137,999 Current portion of long-term debt and capital leases
6,271
 19,025
Other current assets
4,944
 3,425  
 
Total Current Assets
387,858
 337,461 Total Current Liabilities
165,751
 161,725
Other Assets
6,401
 6,334 Long-Term Debt and Capital Leases, less current portion
255,975
 219,675
Intangible Assets
131,858
 125,583 Other Liabilities
29,819
 23,679
Property, Plant and Equipment, Net
211,277
 188,677 Shareholders' Equity
286,849
 252,976
Total Assets
$737,394
 658,055 Total Liabilities and Shareholders' Equity
$737,394
 658.055

Consolidated Statements of Cash Flows (unaudited)
For the Six Months Ended
June 2003/2002

(In thousands) 2003 2002
Cash Flows From Operating Activities:    
Net earnings $21,662 $21,436
Adjustments to reconcile net earnings to net cash from operating activities:    
Depreciation 12,202 11,322
Amortization of intangibles 1,033 587
Deferred income taxes (1,438) (251)
Loss on sale or impairment of property, plant and equipment 640 (949)
Changes in:    
Accounts receivable (94,237) (89,290)
Inventories (736) (15,194)
Accounts payable 52,039 43,027
Accrued liabilities and other 11,755 9,598
Net Cash From Operating Activities 2,920 (19,714)
     
Cash Flows From Investing Activities:    
Purchases of property, plant and equipment (20,689) (13,481)
Purchases of licensing agreements (150) (2,000)
Aquisitions, net of cash received (187) (359)
Proceeds from sale of property, plant and equipment 1,147 2,545
Other 1,961 1,094
Net Cash From Investing Activities (17,918) (12,201)
     
Cash Flows From Financing Activities:    
Net borrowings under revolving credit facilities and notes payable 26,437 71,827
Repayment of long-term debt (6,167) (7,557)
Proceeds from issuance of common stock 873 716
Distributions to minority shareholder (633) (585)
Dividends paid to share holders (798) (806)
Repurchase of common stock (2,029) (36,547)
Net Cash From Financing Activities 17,683 27,048
Net Change in Cash and Cash Equivalents 2,685 (4,867)
Cash and Cash Equivalents, Beginning of Period 13,454 22,887
Cash and Cash Equivalents, End of Period $16,139 $18,020

 

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