Universal Forest Products Posts Record Earnings and EPS for 2002
GRAND RAPIDS, MI – January 27, 2003 – Universal Forest Products (NASDAQ: UFPI) today announced results for the fourth quarter and year ended December 28, 2002, closing out a year of solid performance and growth. For the year, diluted earnings per share totaled $1.97, representing an 11.3% increase over pro forma results and a 20.9% increase over reported results for 2001. Diluted earnings per share for the quarter totaled $0.25, a 4.2% increase over pro forma results and a 25.0% increase over reported results for the fourth quarter of 2001.
At the beginning of 2002, the Company adopted a new accounting standard, which discontinued the amortization of goodwill. Under the required new standard, pro forma diluted earnings per share for the fourth quarter and year ended December 29, 2001 would have been $0.24 and $1.77, respectively.
Net sales for the year were $1.64 billion compared to sales of $1.53 billion in 2001, a 7.2% increase. Net sales for the quarter were $340.3 million, an increase of 3.4% over sales of $329.3 million in the fourth quarter of 2001.
“2002 was a strong year for Universal Forest Products,” said William G. Currie, UFP's vice chairman and CEO. “We faced several challenges – including a troubled economy, a depressed lumber market and difficult winter weather – and still achieved the results we targeted. Whether it's for our shareholders or customers, UFP is committed to achieving what we promise.
“I'm very proud of the 7,000 people who work for UFP. From production through management – everyone contributes to make Universal a strong, profitable company and a great place to work,” continued Currie. “It is through their combined efforts that we continue to be recognized by publications like Forbes Magazine, joining many of our customers as a top-performing company.”
Universal posted the following annual sales by market:
* $761.7 million in D-I-Y/retail, up 3.2% from last
year;
* $326.6 million in site-built construction, an increase of 5.8%
over last year;
* $292.4 million in manufactured housing, a 4.3% increase compared
to last year despite a 13% decline in industry production; and
* $259.2 million in industrial/agricultural, a 27.6% increase
over last year.
Outlook
The Company anticipates continued growth in its business in 2003.
Key assumptions with respect to the Company's 2003 outlook
include:
* Stable commodity lumber prices and interest rates;
* A D-I-Y/retail market that shows slow to moderate growth;
* A site-built construction market that softens slightly in the Company's major regions;
* A manufactured housing market that begins a minor recovery; and
* Strong industrial/agricultural market share growth.
With the factors expressed above in mind, the Company has targeted a 7% to 12% increase in sales and diluted EPS 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, January 28, 2003. The conference call will be hosted by William G. Currie and will be available for analysts and institutional investors domestically at 800-521-5461 or internationally at 303-804-1806. Use conference call ID #2874194. 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
For the Year Ended
December 2002/2001
| (In thousands, except per share data) |
(Unaudited) Quarter Period |
|||
|---|---|---|---|---|
| 2002 | 2001 | |||
| Net Sales |
$340,340
|
100% |
$329,270
|
100% |
| Cost of Goods Sold |
291,495
|
85.65 |
283,489
|
86.10 |
| Gross Profit |
48,845
|
14.35 |
45,781
|
13.90 |
| Selling, General and Administrative Expenses |
38,008
|
11.17 |
37,055
|
11.25 |
| Earnings From Operations |
10,837
|
3.18 |
8,726
|
2.65 |
| Interest Expense |
2,878
|
0.85 |
2,357
|
0.72 |
| Interest Revenue |
(101)
|
-0.03 |
(118)
|
-0.04 |
| Gain on Sale of Assets |
-
|
0,00 |
-
|
0.00 |
|
2,777
|
0.82 |
2,239
|
0.68 | |
| Earnings Before Income Taxes, Minority Interest and Equity in Earnings of Investee |
8,060
|
2.37 |
6,487
|
1.97 |
| Income Taxes |
2,932
|
0.86 |
2,058
|
0.63 |
| Earnings Before Minority Interest and Equity in Earnings of Investee |
5,128
|
1.51 |
4,429
|
1.35 |
| Minority Interest |
(517)
|
-0.17 |
(313)
|
-0.10 |
| Equity in Earnings of Investee |
-
|
0.00 |
3
|
0.00 |
| Reported Net Earnings |
$4,557
|
1.34 |
$4,119
|
1.25 |
| Add: Goodwill Amortization, net of tax |
766
|
0.23 | ||
| Pro Forma Net Earnings |
$4,557
|
1.34 |
$4,885
|
1.48 |
| Reported Earnings per Share-Basic |
$0.26
|
$0.21
|
||
| Add: Goodwill Amortization, net of tax |
0.04
|
|||
| Pro Forma Earnings per Share-Basic |
$0.26
|
$0.25
|
||
| Reported Earnings per Share-Diluted |
$0.25
|
$0.20
|
||
| Add: Goodwill Amortization, net of tax |
0.04
|
|||
| Pro Forma Earnings per Share-Diluted |
$0.25
|
$0.24
|
||
| Weighted Average Shares Outstanding |
17,749
|
19,788
|
||
| Weighted Average Shares Outstanding with Common Stock Equivalents |
18,318
|
20,428
|
||
| (In thousands, except per share data) |
Year | |||
|---|---|---|---|---|
| 2002 | 2001 | |||
| Net Sales |
$1,639,899
|
100% |
$1,530,353
|
100% |
| Cost of Goods Sold |
1,409,489
|
85.95 |
1,318,874
|
86.18 |
| Gross Profit |
230,410
|
14.05 |
211,479
|
13.82 |
| Selling, General and Administrative Expenses |
158,299
|
9.65 |
145,722
|
9.52 |
| Earnings From Operations |
72,111
|
4.40 |
65,757
|
4.30 |
| Interest Expense |
11,375
|
0.69 |
12,043
|
0.79 |
| Interest Revenue |
(297)
|
-0.02 |
(586)
|
-0.04 |
| Gain on Sale of Assets |
(1,082)
|
-0.07 |
-
|
0.00 |
|
9,996
|
0.61 |
11,457
|
0.75 | |
| Earnings Before Income Taxes, Minority Interest and Equity in Earnings of Investee |
62,115
|
3.79 |
54,300
|
3.55 |
| Income Taxes |
22,983
|
1.40 |
19,612
|
1.28 |
| Earnings Before Minority Interest and Equity in Earnings of Investee |
39,132
|
2.39 |
34,688
|
2.27 |
| Minority Interest |
(2,495)
|
-0.15 |
(1,792)
|
-0.12 |
| Equity in Earnings of Investee |
-
|
0.00 |
246
|
0.02 |
| Reported Net Earnings |
$36,637
|
2.23 |
$33,142
|
2.17 |
| Add: Goodwill Amortization, net of tax |
2,997
|
0.20 | ||
| Pro Forma Net Earnings |
$36,637
|
2.23 |
$36,139
|
2.36 |
| Reported Earnings per Share-Basic |
$2.04
|
$1.68
|
||
| Add: Goodwill Amortization, net of tax |
$0.15
|
|||
| Pro Forma Earnings per Share-Basic |
$2.04
|
$1.83
|
||
| Reported Earnings per Share-Diluted |
$1.97
|
$1.63
|
||
| Add: Goodwill Amortization, net of tax |
0.15
|
|||
| Pro Forma Earnings per Share-Diluted |
$1.97
|
$1.77
|
||
| Weighted Average Shares Outstanding |
17,922
|
19,774
|
||
| Weighted Average Shares Outstanding with Common Stock Equivalents |
18,619
|
20,377
|
||
Supplemental Sales Data
| Quarter Period | ||||
|---|---|---|---|---|
| Market Classification | 2002 | 2001 | ||
| Do-It-Yourself |
$133,416
|
39% |
$137,489
|
41% |
| Site-Built Construction |
80,630
|
24% |
74,988
|
23% |
| Manufactured Housing |
64,895
|
19% |
71,665
|
22% |
| Industrial and Other |
61,399
|
18% |
45,128
|
14% |
| Total |
$340,340
|
100% |
$329,270
|
100% |
Supplemental Sales Data
| Year to Date | ||||
|---|---|---|---|---|
| Market Classification | 2002 | 2001 | ||
| Do-It-Yourself |
$761,688
|
46% |
$738,218
|
49% |
| Site-Built Construction |
326,651
|
20% |
308,826
|
20% |
| Manufactured Housing |
292,394
|
18% |
280,208
|
18% |
| Industrial and Other |
259,166
|
16% |
203,101
|
13% |
| Total |
$1,639,899
|
100% |
$1,530,353
|
100% |
Consolidated Balance Sheets
December 2002/2001
(in thousands)
| Assets | Liabilities and Shareholders' Equity | ||||
|---|---|---|---|---|---|
| 2002 | 2001 | 2002 | 2001 | ||
| Current Assets | Current Liabilities | ||||
| Cash and cash equivalents |
$13,454
|
$22,887 | Notes payable |
$1,758
|
$1,402 |
| Restricted cash equivalents |
1,383
|
- | Accounts payable and accrued liabilities |
100,588
|
89,078 |
| Accounts receivable |
105,217
|
86,256 | Current portion of long-term debt and capital leases |
6,495
|
20,415 |
| Inventories |
166,006
|
120,769 | |||
| Other current capital assets |
8,037
|
5,054 | |||
| Total Current Assets |
294,079
|
234,966 | Total Current Liabilities |
108,841
|
110,895 |
| Other Assets |
6,738
|
11,585 | Long-Term Debt and Capital Leases, less current portion |
235,319
|
154,370 |
| Intangible Assets |
130,815
|
122,996 | Other Liabilities |
27,634
|
19,082 |
| Property, Plant and Equipment, Net |
203,144
|
181,662 | Temporary Shareholders' Equity |
-
|
36,000 |
| Shareholders' Equity |
263,000
|
230,862 | |||
| Total Assets |
$634,794
|
$551,209 | Total Liabilities and Shareholders' Equity |
$634,794
|
$551,209 |
Consolidated Statements of Cash Flows
For the Year Ended
December 2002/2001
| (In thousands) | 2002 | 2001 |
|---|---|---|
| Cash Flows From Operating Activities: | ||
| Net earnings | $36,637 | $33,142 |
| Adjustments to reconcile net earnings to net cash from operating activities: | ||
| Depreciation | 23,474 | 20,101 |
| Amortization of intangibles | 1,165 | 4,375 |
| Deferred income taxes | 3,102 | 4,587 |
| Loss on sale or impairment of property, plant and equipment | 702 | 1,445 |
| Changes in: | ||
| Accounts receivable | (16,489) | (11,753) |
| Inventories | (40,780) | 10,051 |
| Accounts payable | 9,638 | 9,891 |
| Accrued liabilities and other | (899) | 6,217 |
| Net Cash From Operating Activities | 16,550 | 78,056 |
| Cash Flows From Investing Activities: | ||
| Purchases of property, plant and equipment | (31,351) | (22,748) |
| Purchases of licensing agreements | (2,000) | - |
| Aquisitions, net of cash received | (17,540) | (49,534) |
| Proceeds from sale of property, plant and equipment | 2,862 | 2,497 |
| Other | (743) | 1,291 |
| Net Cash From Investing Activities | (48,772) | (68,494) |
| Cash Flows From Financing Activities: | ||
| Net borrowings under revolving credit facilities and notes payable | 14,286 | 23,129 |
| Proceeds from issuance of long-term debt | 58,700 | 2,500 |
| Repayment of long-term debt | (8,481) | (10,697) |
| Proceeds from issuance of common stock | 922 | 870 |
| Distributions to minority shareholder | (1,345) | (1,650) |
| Dividends paid to shareholders | (1,605) | (1,683) |
| Repurchase of common stock | (39,688) | (1,536) |
| Net Cash From Financing Activities | 22,789 | 10,933 |
| Net Change in Cash and Cash Equivalents | (9,433) | 20,495 |
| Cash and Cash Equivalents, Beginning of Year | 22,887 | 2,392 |
| Cash and Cash Equivalents, End of Year | $13,454 | $22,887 |
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 |