— Focus on profitability creates success in all markets —
GRAND RAPIDS, Mich., July 16, 2014 – Universal Forest Products, Inc. (Nasdaq: UFPI) today reported second-quarter 2014 net earnings of $21.8 million, up 38.1 percent over net earnings of $15.8 million for the second quarter of 2013. Second-quarter 2014 diluted earnings per share were $1.08, compared to diluted earnings per share of $0.79 for the same period of 2013. Net sales of $773 million in the second quarter of 2014 represented an increase of 4.6 percent over net sales of $738 million in the second quarter of 2013.
"We focused on profitability and made great strides," said Universal CEO Matthew J. Missad. "The people of this company did the right things to drive sales and increase profitability to meet our strategic goals: they created a better product mix of value-added sales and enhanced operational efficiencies, driving success in the second quarter."
The Company's earnings were reduced by $1.6 million for expected retroactive increases in U.S. duties assessed against a Chinese supplier of nails the Company imported prior to March 2013.
The Company benefited from a more stable lumber market in the second quarter of 2014 relative to the second quarter of 2013, when the lumber market fell for several weeks, adversely impacting the Company's profitability on certain products.
"We had strong sales gains to our retail market, as well as gains in sales to our industrial market. Our construction market saw strong sales to commercial construction; however, those gains were offset by declines in our framing operations, due to our decision to accept only business that meets certain profitability criteria, and to a drop in sales to manufactured housing customers," Missad explained.
The decline in manufactured housing sales was the result of the vertical integration of one of the Company's key customers and of a 37 percent drop in the OSB market. That drop in the OSB market caused declines in sales of $9 million and $6 million, respectively, to the Company's construction and retail markets in the second quarter of 2014 compared to the same period of 2013.
Missad said the Company is on track to achieve its goals of $3 billion in sales and operating margins at normal historical levels by 2017.
By market, the Company posted the following second-quarter 2014 gross sales results:
Retail: $349.1 million, up 11 percent over the same period of 2013.
As pent-up demand from a harsh and prolonged winter gave way to better weather in the second quarter, the Company saw strong sales to its retail customers, big box and independent, alike. The Company's efforts to improve service and introduce new products are yielding results. It remains optimistic about this market due to the success of new product opportunities, forecasts for continued growth in home improvement activities, and healthy comparable sales guidance by big box retailers.
Industrial: $203.5 million, up five percent over the second quarter of 2013.
Industrial production in the United States increased 0.6 percent in May 2014 after having declined 0.3 percent the previous month, and was 4.3 percent higher than the previous year, according to the most recent statistics available. Sales to existing customers grew at a healthy pace combined with a modest increase in sales to new customers. The Company continues to focus on growing with existing customers, on adding new customers and products and on expanding its reach into alternative packaging materials to provide complete packaging solutions.
Construction: $231.6, down four percent from the same period of 2013.
While the Company experienced strong sales to commercial construction, the drop in sales to this market relative to the second quarter of last year reflects the Company's more selective pricing strategies. In addition, as anticipated, the vertical integration of one of the Company's largest manufactured housing customers negatively impacted sales in the second quarter of 2014, as did the previously noted decrease in the price of OSB. Housing-related markets saw healthy growth in the second quarter of 2014 over the previous year, including manufactured housing and site-built residential, and are expected to see continued growth in 2014, according to industry forecasts. The Company remains focused on creating steady, long-term growth by maintaining a diversified business and customer base in the construction market.
Universal Forest Products will conduct a conference call to discuss information included in this news release and related matters at 8:30 a.m. ET on Thurs., July 17, 2014. The call will be hosted by CEO Matthew J. Missad and CFO Michael Cole, and will be available for analysts and institutional investors domestically at (866) 318-8617 and internationally at (617) 399-5136. Use conference pass code 16427132. The conference call will be available simultaneously and in its entirety to all interested investors and news media through a webcast at http://www.ufpi.com. A replay of the call will be available through August 16, 2014, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code 50247535.