Universal Forest Products Posts Record Third Quarter EPS
GRAND RAPIDS, Mich., Oct 14, 2002 /PRNewswire-FirstCall via COMTEX/ -- Universal Forest Products (NASDAQ: UFPI) today announced record results for the third quarter and first nine months of 2002. Diluted earnings per share for the quarter totaled $0.58, representing a 12% increase over pro forma results and a 21% increase over reported results for the third quarter of 2001. Year-to-date diluted earnings per share were $1.71, an 11% increase over pro forma results and a 20% increase over reported results for the same period of 2001.
At the beginning of 2002, the Company adopted a new accounting standard which discontinued the amortization of goodwill. Under the new standard, pro forma diluted earnings per share for the third quarter and nine months ending September 29, 2001 would have been $0.52 and $1.54, respectively.
Net sales for the quarter were $453.0 million, an increase of 5% over sales of $431.9 million in the third quarter of 2001. Net sales for the first nine months of 2002 were $1.30 billion, an 8% increase compared to sales of $1.20 billion for the same period of 2001.
"Our ability to show record results for the quarter was due in large part to strong unit sales to retail and industrial markets, the diversity of our business, and the work ethic of our people," said UFP's Vice Chairman and CEO William G. Currie. "Even with a depressed lumber market we produced record sales and operating profits. This is a strong statement about Universal's ability to stay focused on its targets and do what it takes operationally to meet or beat them." Declining lumber prices continue to impact the Company's sales dollars. Lumber prices in the third quarter of 2002 were approximately 10% lower than the third quarter of 2001. Universal posted the following third quarter sales by market:
* $215.7 million in D-I-Y/retail, up 6.9% from last
year;
* $88.6 million in site-built construction, a decrease of 1.9%
over last year;
* $79.4 million in manufactured housing, a 5.9% decrease compared
to last year; and
* $69.2 million in industrial/agricultural, a 25.0% increase over
last year.
The Company increased unit sales to each of its markets, except for manufactured housing. Unit sales to the manufactured housing market decreased as a result of a substantial decline in industry production in the third quarter of 2002 compared to the same period of 2001.
The Company previously targeted annual sales growth ranging from 6% to 10%. As a result of falling lumber prices since April 2002, the Company has revised that sales growth target to 5% to 8% for the year. The Company continues to target diluted earnings per share growth of 18% to 22% for this year, which includes the effect of discontinuing goodwill amortization in 2002.
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, October 15, 2002. 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) 267-1001. Use conference call ID #2457256. 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 , click on Investor Relations.
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 visit 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 Nine Months Ended
September 2002/2001
| (In thousands, except per share data) |
Quarter Period | |||
|---|---|---|---|---|
| 2002 | 2001 | |||
| Net Sales |
$452,959
|
100% |
$431,861
|
100% |
| Cost of Goods Sold |
391,294
|
86.39 |
375,679
|
86.99 |
| Gross Profit |
61,665
|
13.61 |
56,182
|
13.01 |
| Selling, General and Administrative Expenses |
41,148
|
9.08 |
37,525
|
8.69 |
| Earnings From Operations |
20,517
|
4.53 |
18,657
|
4.32 |
| Interest Expense |
2,542
|
0.56 |
2,948
|
0.68 |
| Interest Revenue |
(31)
|
-0.01 |
(151)
|
-0.03 |
| Gain on Sale of Assets |
-
|
0.00 |
-
|
0.00 |
|
2,511
|
0.55 |
2,797
|
0.65 | |
| Earnings Before Income Taxes, Minority Interest and Equity in Earnings of Investee |
18,006
|
3.98 |
15,860
|
3.67 |
| Income Taxes |
6,678
|
1.47 |
5,519
|
1.28 |
| Earnings Before Minority Interest and Equity in Earnings of Investee |
11,328
|
2.50 |
10,341
|
2.39 |
| Minority Interest |
(684)
|
-0.15 |
(618)
|
-0.14 |
| Equity in Earnings of Investee |
-
|
0.00 |
85
|
0.02 |
| Reported Net Earnings |
$10,644
|
2.35 |
$9,808
|
2.27 |
| Add: Goodwill Amortization,
net of tax |
774
|
0.18 | ||
| Adjusted Net Earnings |
$10,644
|
2.35 |
$10,582
|
2.45 |
| Reported Earnings per Share-Basic |
$0.60
|
$0.50
|
||
| Add: Goodwill Amortization,
net of tax |
0.04
|
|||
| Adjusted Earnings per Share-Basic |
$0.60
|
$0.53
|
||
| Reported Earnings per Share-Diluted |
$0.58
|
$0.48
|
||
| Add: Goodwill Amortization,
net of tax |
0.04
|
|||
| Adjusted Earnings per Share-Diluted |
$0.58
|
$0.52
|
||
| Weighted Average Shares Outstanding |
17,845
|
19,803
|
||
| Weighted Average Shares Outstanding with Common Stock Equivalents |
18,427
|
20,450
|
||
| (In thousands, except per share data) |
Year to Date | |||
|---|---|---|---|---|
| 2002 | 2001 | |||
| Net Sales |
$1,299,559
|
100% |
$1,201,083
|
100% |
| Cost of Goods Sold |
1,117,994
|
86.03 |
1,035,385
|
86.20 |
| Gross Profit |
181,565
|
13.97 |
165,698
|
13.80 |
| Selling, General and Administrative Expenses |
120,291
|
9.26 |
108,667
|
9.05 |
| Earnings From Operations |
61,274
|
4.71 |
57,031
|
4.75 |
| Interest Expense |
8,497
|
0.65 |
9,686
|
0.81 |
| Interest Revenue |
(196)
|
-0.02 |
(468)
|
-0.04 |
| Gain on Sale of Assets |
(1,082)
|
-0.08 |
-
|
0.00 |
|
7,219
|
0.56 |
9,218
|
0.77 | |
| Earnings Before Income Taxes, Minority Interest and Equity in Earnings of Investee |
54,055
|
4.16 |
47,813
|
3.98 |
| Income Taxes |
20,051
|
1.54 |
17,554
|
1.46 |
| Earnings Before Minority Interest and Equity in Earnings of Investee |
34,004
|
2.62 |
30,259
|
2.52 |
| Minority Interest |
(1,924)
|
-0.15 |
(1,479)
|
-0.12 |
| Equity in Earnings of Investee |
-
|
0.00 |
243
|
0.02 |
| Reported Net Earnings |
$32,080
|
2.47 |
$29,023
|
2.42 |
| Add: Goodwill Amortization,
net of tax |
2,231
|
0.19 | ||
| Adjusted Net Earnings |
$32,080
|
2.47 |
$31,254
|
2.60 |
| Reported Earnings per Share-Basic |
$1.78
|
$1.47
|
||
| Add: Goodwill Amortization,
net of tax |
0.11
|
|||
| Adjusted Earnings per Share-Basic |
$1.78
|
$1.58
|
||
| Reported Earnings per Share-Diluted |
$1.71
|
$1.43
|
||
| Add: Goodwill Amortization,
net of tax |
0.11
|
|||
| Adjusted Earnings per Share-Diluted |
$1.71
|
$1.54
|
||
| Weighted Average Shares Outstanding |
17,980
|
19,769
|
||
| Weighted Average Shares Outstanding with Common Stock Equivalents |
18,719
|
20,360
|
||
Supplemental Sales Data
| Quarter Period | ||||
|---|---|---|---|---|
| Market Classification | 2002 | 2001 | ||
| Do-It-Yourself |
$215,689
|
47% |
$201,786
|
46% |
| Site-Built Construction |
88,635
|
20% |
90,316
|
21% |
| Manufactured Housing |
79,449
|
18% |
84,410
|
20% |
| Industrial and Other |
69,186
|
15% |
55,349
|
13% |
| Total |
$452,959
|
100% |
$431,861
|
100% |
| Year to Date | ||||
|---|---|---|---|---|
| Market Classification | 2002 | 2001 | ||
| Do-It-Yourself |
$628,279
|
48% |
$600,777
|
50% |
| Site-Built Construction |
245,408
|
19% |
233,819
|
20% |
| Manufactured Housing |
227,496
|
18% |
208,519
|
17% |
| Industrial and Other |
198,376
|
15% |
157,968
|
13% |
| Total |
$1,299,559
|
100% |
$1,201,083
|
100% |
Consolidated Balance Sheets (unaudited)
September 2002/2001
| Assets | Liabilities and Shareholders' Equity | ||||
|---|---|---|---|---|---|
| 2002 | 2001 | 2002 | 2001 | ||
| Current Assets | Current Liabilities | ||||
| Cash and cash equivalents |
$12,800
|
$6,310 | Notes payable |
$1,494
|
$669 |
| Restricted cash equivalents |
-
|
411 | Accounts payable and accrued liabilities |
126,902
|
108,023 |
| Accounts receivable |
149,962
|
125,150 | Current portion of long-term debt and capital leases |
18,645
|
20,952 |
| Inventories |
128,841
|
122,228 | |||
| Other current assets |
3,279
|
7,410 | |||
| Total Current Assets |
294,882
|
261,509 | Total Current Liabilities |
147,041
|
129,644 |
| Other Assets |
6,311
|
11,572 | Long-Term Debt and Capital Leases, less current portion |
185,091
|
152,807 |
| Goodwill and Non-Compete |
125,097
|
113,652 | Other Liabilities |
25,593
|
18,728 |
| Property, Plant and Equipment, Net |
191,349
|
177,944 | Shareholders' Equity |
259,914
|
263,498 |
| Total Assets |
$617,639
|
$564,677 | Total Liabilities and Shareholders' Equity |
$617,639
|
$564,677 |
Consolidated Statements of Cash
Flows (unaudited)
For the Nine Months Ended
September 2002/2001
| (In thousands) | 2002 | 2001 |
|---|---|---|
| Cash Flows From Operating Activities: | ||
| Net earnings | $32,080 | $29,023 |
| Adjustments to reconcile net earnings to net cash from operating activities: | ||
| Depreciation | 17,235 | 14,586 |
| Amortization of intangibles | 851 | 3,348 |
| Deferred income taxes | (246) | 13 |
| (Gain) / Loss on sale or impairment of property, plant and equipment | (152) | 588 |
| Changes in: | ||
| Accounts receivable | (61,235) | (52,660) |
| Inventories | (6,020) | 3,891 |
| Accounts payable | 28,076 | 20,786 |
| Accrued liabilities and other | 11,353 | 15,083 |
| Net Cash From Operating Activities | 21,942 | 34,658 |
| Cash Flows From Investing Activities: | ||
| Purchases of property, plant and equipment | (21,136) | (22,166) |
| Purchases of licensing agreements | (2,000) | - |
| Aquisitions, net of cash received | (2,519) | (21,559) |
| Proceeds from sale of property, plant and equipment | 3,310 | 886 |
| Other | 430 | 1,608 |
| Net Cash From Investing Activities | (21,915) | (41,231) |
| Cash Flows From Financing Activities: | ||
| Net borrowings under revolving credit facilities and notes payable | 37,004 | 23,106 |
| Repayment of long-term debt | (8,205) | (9,838) |
| Proceeds from issuance of common stock | 769 | 827 |
| Distributions to minority shareholder | (660) | (1,275) |
| Dividends paid to shareholders | (806) | (792) |
| Repurchase of common stock | (38,216) | (1,537) |
| Net Cash From Financing Activities | (10,114) | 10,491 |
| Net Change in Cash and Cash Equivalents | (10,087) | 3,918 |
| Cash and Cash Equivalents, Beginning of Period | 22,887 | 2,392 |
| Cash and Cash Equivalents, End of Period | $12,800 | $6,310 |
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 |