Universal Forest Products Posts 15.4% Increase in 2nd Quarter Net Earnings; Raises Target for Annual Net Earnings Growth to 15% - 20%
GRAND RAPIDS, Mich., July 11, 2005 – Universal Forest Products (NASDAQ: UFPI) today announced a strong second quarter marked by net earnings of $22.8 million, or $1.20 per diluted share, representing an increase of 15.4% over the same period last year. Year-to-date net earnings were $32.0 million, or $1.69 per diluted share, representing a 26.4% increase over the first six months of 2004.
Net sales for the quarter were $779.6 million, up 5.0% over net sales of $742.6 million for the second quarter of 2004. Net sales for the first six months of 2005 were $1.32 billion, up 9.0% over net sales of $1.21 billion for the same period in 2004.
“We had another strong quarter of earnings growth and return on investment, which were made possible through the hard work and determination of the people of Universal,” said Company Vice Chairman and CEO William G. Currie.
Profits were driven primarily by organic growth in unit sales, greater sales of value-added products, and improved results of a framing operation in the West. The lumber market had little impact on selling prices and overall sales levels for the quarter.
By market, Universal posted second-quarter sales of:
-
$346.0 million in D-I-Y/retail, substantially
flat compared to the same quarter last year;
-
$187.2 million in site-built construction, an
increase of 10.3% over last year;
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$138.7 million in industrial, up 11.7% over
the second quarter 2004; and
- $107.6 million in manufactured housing, a 6.3% increase over last year, resulting from an estimated 10% unit sales increase, offset by a slight decline in selling prices.
“We're pleased with the results in each of our markets, which, with the exception of D-I-Y/retail, saw double-digit unit sales increases,” Currie added. While D-I-Y/retail remains Universal's largest market, Currie noted that the Company's strategy is to emphasize greater sales growth to the other three markets in order to create better balance and diversification in its customer base.
He noted the third-quarter acquisition of another 25% membership interest in Shawnlee Construction, LLC, a Massachusetts framing company in which Universal already had a 50% membership interest. In addition, Shawnlee agreed to the purchase of certain assets and the assumption of certain liabilities of Shepardville Construction, Inc. and AW Construction, LLC, which install interior products – such as base boards, crown moldings, window sills and casing, doors, and cabinets – for commercial and multi-family construction projects. These acquisitions strengthen Universal's position in the growing framing business, enhance its ability to provide turnkey construction packages and add interior trim products to the list of items Universal installs and distributes.
“At the same time, we continue to look for niche products to enhance our offerings to the D-I-Y/retail market,” Currie added. He noted the Company's June 2005 purchase of certain assets of Maine Ornamental Woodworkers, Inc., a manufacturer, importer and distributor of an array of decorative caps used on fencing and decking posts. “Maine Ornamental's product line complements Universal's existing products and enhances our offering to retailers nationwide,” Currie said. “The acquisition is in line with our strategic direction and five-year growth plan. We're excited about the opportunity that Maine Ornamental holds for Universal.”
OUTLOOK
Based on anticipated growth in its business for the balance of 2005 and on current market and economic conditions, the Company raised its annual target range for net earnings growth to 15% to 20% (from 10% to 15%) for 2005 and re-affirmed its annual target range for unit sales growth of 7% to 12%.
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 12, 2005. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at (866) 814-8485 or internationally at (703) 639-1375. Use conference call ID #732437. The conference call will be available simultaneously, and in its entirety, to all interested investors and news media through a webcast at www.ufpi.com.
Celebrating 50 years of business, Universal Forest Products is headquartered in Grand Rapids, MI. The Company markets, manufactures and engineers wood and wood-alternative 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 and wood-alternative packaging for various industries. The Company also provides framing services for site-built construction customers. The Company has approximately 9,000 employees who work in nearly 100 facilities in North America. Universal had 2004 sales of $2.45 billion. 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.
Click here to view 2nd quarter 2005 financial highlights (pdf – 167 KB)