Universal Forest Products

Universal Reports Continued Earnings Growth; Posts a 19% Increase for 1999

GRAND RAPIDS, Mich., Jan. 25 /PRNewswire/ -- Universal Forest Products(R) (NASDAQ: UFPI), today announced results for the fourth quarter and year ending December 25, 1999, including record annual net sales of $1.44 billion, up 15.8 percent compared with 1998 sales of $1.24 billion. Net income for the year increased to $31.4 million or $1.48 per share (diluted) compared with $26.4 million or $1.28 per share (diluted) in 1998, a 19.0 percent improvement.

For the fourth quarter, sales increased 10.6 percent to $299.7 million compared to $271.0 million for the same quarter of 1998. Net earnings for the quarter increased 17.4 percent to $3.8 million from $3.2 million for the comparable 1998 quarter.

Financial Highlights
Period Ended Dec. 25/26 Three Months
In thousands, except per share data
1999
1998
%Change
Net Sales
$299,722
$270,962
+10.6
Gross Profit
38,374
35,527
+8.0
Net Earnings
3,782
3,221
+17.4
Earnings Per Share (Diluted)
$0.18
$0.15
+20.0
Weighted Average Shares Outstanding with Common
Stock Equivalents
20,774
21,417
  
Period Ended Dec. 25/26 Twelve Months
1999
1998
%Change
Net Sales
$1,435,055
$1,238,907
+15.8
Gross Profit
182,471
149,214
+22.3
Net Earnings
31,448
26,419
+19.0
Earnings Per Share (Diluted)
$1.48
$1.28
+15.6
Weighted Average Shares Outstanding with Common
Stock Equivalents
21,186
20,613

"1999 was an exciting year for Universal Forest Products," said William G. Currie, UFP's chief executive officer. "In this, the second year of our 'Performance 2002' initiative, we continued to drive the company toward our long-term goals. In 1999, we executed a series of actions that both increased our manufacturing capacity and level of value-added product mix in our key markets, positioning Universal as a clear national leader in every segment of our business."

1999 Key Corporate Developments:

Acquisitions

- Acquired Westminster, Maryland facility from Ryland Group to increase manufacturing capacity of roof trusses, floor trusses and wall panels in the Mid-Atlantic market.

- Acquired facilities in New Waverly, Silsbee, and Schertz, Texas to expand the company's pressure treated lumber manufacturing capacity.

- Acquired a new facility in Riverside, Calif., which allows the company to consolidate existing Southern California operations for increased efficiency, and expand future production capacity.

Expansion of Current Facilities and New Facility Openings

- Opened a new facility in Grandview, Texas to manufacture and distribute the company's OPENJOIST 2000(TM) product line, and provide increased production capacity for engineered wood components.

- Increased manufacturing capacity of roof trusses, floor trusses, and wall panels, in the Mid-Atlantic market with the opening of new facilities in Hohenwald, Tenn. and Liberty, N.C.

- Added new roof truss and floor truss manufacturing lines to existing company manufacturing facilities in Belchertown, Mass. and Woodburn, Ore.

- Opened a new, larger manufacturing and engineering support facility in Grand Rapids, Mich.

- Opened a new manufacturing facility in Jackson, Miss., to better service our existing customers and expand our customer base in Alabama, Mississippi, and Louisiana.

National Distribution Agreement

- Entered into a national marketing and distribution agreement with Trus Joist MacMillan enabling the company to offer engineered lumber systems to customers in the manufactured housing market.

The company continued to show increased sales in three of its four key markets. Year-over-year sales to the do-it-yourself (DIY) market increased 16 percent, while sales to the site-built construction and industrial markets rose 67 percent and 18 percent, respectively. Sales to manufactured housing customers were down less than 1 percent, reflecting an overall slowdown in manufactured housing production as a result of an over supply of finished homes at the retail level.

"In the near term, we expect continued sales increases in the DIY, site-built construction, and industrial markets," explained Currie. Even through continued increases in interest rates will likely dampen housing demand, we firmly believe that increased sales from the growing demand of engineered wood components, will offset a decline in sales caused by the decline in the number of new housing starts. Sales to manufactured housing customers will be significantly impacted as the industry curtails production to correct their oversupply situation at the retail level. However, the diversification of our markets has enabled UFP to show consistent top and bottom line growth in spite of temporary disruptions in any one particular market segment. Diversification is a key element in our long-term strategy.

"We will continue to grow our company through internal expansion and external acquisitions. To date, our acquisitions not only have been accretive, but also expanded our industry expertise and strengthened our management team. We will to seek new acquisitions that fit our strategic plan, while meeting our stringent criteria," added Currie. To finance future growth, in 1999, UFP obtained long-term acquisition financing through a private placement of $100 million of unsecured notes and a five-year $175 million revolving credit line.

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
For the Twelve Months Ended
December 1999/1998

(In thousands,
except per share data)
Quarter Period
 
1999
1998
Net Sales
$299,722
100%
$270,962
100%
Cost of Goods Sold
261,348
87.20
235,435
86.89
Gross Profit
38,374
12.80
35,527
13.11
Selling, General and Administrative Expenses
29,232
9.75
28,149
10.39
Earnings From Operations
9,142
3.05
7,378
2.72
Interest Expense
2,623
0.88
2,205
0.81
Interest Revenue
(107)
-0.04
(143)
-0.05
2,516
0.84
2,062
0.76
Earnings Before Income Taxes, Minority Interest and Equity in Earnings (loss) of Investee
6,626
2.21
5,316
1.96
Income Taxes
2,038
0.68
2,095
0.77
Earnings Before Minority Interest and Equity in Earnings (loss) of Investee
4,588
1.53
3,221
1.19
Minority Interest
(498)
-0.17
-
0.00
Equity in Earnings (loss) of Investee
(308)
-0.10
-
0.00
Net Earnings
$3,782
1.26
$3,221
1.19
Earnings per Share-Basic
$0.19
$0.16
Earnings per Share-Diluted
$0.18
$0.15
Weighted Average Shares Outstanding
20,345
20,710
Weighted Average Shares Outstanding with Common Stock Equivalents
20,774
21,417

Consolidated Statements of Earnings
For the Twelve Months Ended
December 1999/1998

(In thousands,
except per share data)
Year to Date
 
1999
1998
Net Sales
$1,435,055
100%
$1,238,907
100%
Cost of Goods Sold
1,252,584
87.28
1,089,693
87.96
Gross Profit
182,471
12.72
149,214
12.04
Selling, General and Administrative Expenses
119,673
8.34
97,065
7.83
Earnings From Operations
62,798
4.38
52,149
4.21
Interest Expense
11,853
0.83
9,506
0.77
Interest Revenue
(592)
-0.04
(391)
-0.03
11,261
0.78
9,115
0.74
Earnings Before Income Taxes, Minority Interest and Equity in Earnings (loss) of Investee
51,537
3.59
43,034
3.47
Income Taxes
19,955
1.39

16,615
1.34
Earnings Before Minority Interest and Equity in Earnings (loss) of Investee
31,582
2.20
26,419
2.13
Minority Interest
(701)
-0.05
-
0.00
Equity in Earnings (loss) of Investee
567
0.04
-
0.00
Net Earnings
$31,448
2.19
$26,419
2.13
Earnings per Share-Basic
$1.52
$1.33
Earnings per Share-Diluted
$1.48
$1.28
Weighted Average Shares Outstanding
20,637
19,917
Weighted Average Shares Outstanding with Common Stock Equivalents
21,186
20,613

Supplemental Sales Data

 
Quarter Period
Market Classification
1999
1998
Do-It-Yourself/Retail
$116,046
38%
$99,045
37%
Manufactured Housing
89,005
30%
98,419
36%
Site-Built Construction
53,050
18%

41,613

15%
Industrial and Other
41,621
14%
31,885
12%
Total
$299,722
100%
$270,962
100%
 
Year to Date
Market Classification
1999
1998
Do-It-Yourself/Retail
$650,859
45%
$562,625
46%
Manufactured Housing
398,237
28%
401,678
32%
Site-Built Construction
212,479
15%
127,549
10%
Industrial and Other
173,480
12%
147,055
12%
Total
$1,435,055
100%
$1,238,907
100%

Consolidated Balance Sheets
December 1999/1998

(in thousands)
Assets Liabilities and Shareholders' Equity
1999
 1998
1999
 1998
Current Assets
Current Liabilities
Cash and cash equivalents
$4,106
$920
Notes payable
$1,520
$1,997
Accounts receivable
70,012
62,711
Accounts payable and accrued liabilities
82,260
70,261
Inventories
131,535
108,399
Current portion of long-term debt and capital leases
7,402
9,760
Other current assets
11,044
9,547
Total Current Liabilities
91,182
82,018
Total Current Assets
216,697
181,577
Long-Term Debt and Capital Leases, less current portion
135,096
115,740
Other Assets
10,836
10,922
Revolving Credit Facility
11,800
16,380
Goodwill and Non-Compete
93,183
95,980
Other Liabilities
17,189
14,074
Property, Plant and Equipment, Net
149,113
131,316
Shareholders' Equity
214,562
191,583
Total Assets
$469,829
$419,795
Total Liabilities and Shareholders' Equity
$469,829
$419,795

Consolidated Statements of Cash Flows
For the Twelve Months Ended
December 1999/1998

(In thousands) 1999 1998
Cash Flows From Operating Activities:
Net earnings
$31,448
$26,419
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation
14,885
12,584
Amortization of non-compete agreements and goodwill
3,270
2,464
Deferred income taxes
(774)
1,292
Loss on sale of property, plant and equipment
489
422
Stock Gift Program and Directors Grant Program expense 40 27
Changes in:
Accounts receivable
(7,300)
(5,698)
Inventories
(23,136)
20,093
Other
1,607
186
Accounts payable
8,141
(1,504)
Accrued liabilities
4,129
10,294
Net Cash From Operating Activities
32,799
66,579
Cash Flows From Investing Activities:
Collection of Notes Receivable
3,431
377
Advances on notes receivable
(139)
(3,200)
Purchases of property, plant and equipment
(35,418)
(28,433)
Acquisitions, net of cash received
-
(98,167)
Proceeds from sale of property, plant and equipment
2,247
1,688
Other
(87)
(370)
Net Cash From Investing Activities
(29,966)
(128,105)
Cash Flows From Financing Activities:
Repayment of long-term debt
(10,744)
(31,952)
Proceeds from issuance of long-term debt
27,502
80,304
Net borrowings (repayments) under revolving credit facility and notes payable
(5,327)
11,880
Dividends payed to shareholders (1,539) (1,451)
Proceeds from issuance of common stock
942
508
Repurchase of common stock
(10,481)
-
Net Cash From Financing Activities
353
59,289
Net Change in Cash and Cash Equivalents
3,186
(2,237)
Cash and Cash Equivalents, Beginning of Year
920
3,157
Cash and Cash Equivalents, End of Period
$4,106
$920

 

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