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UFPI Reports Record Fourth Quarter Sales and Operating Profits

Wednesday, February 20, 2019

UFPI Reports Record Fourth Quarter Sales and Operating Profits
- annual sales and profits also a record -

GRAND RAPIDS, Mich., Wednesday, Feb. 20, 2019 – Universal Forest Products, Inc. (Nasdaq: UFPI) today announced record net sales for the fourth quarter of 2018, and record net sales and net earnings for fiscal 2018.  EBITDA for the fourth quarter and full year were also records, up more than 11 percent and 12 percent, respectively, over the previous year.

“I’m pleased that the people of Universal were able to manage through significant fluctuations in the lumber market in 2018 and still post these outstanding results,” stated CEO Matt Missad. “The results attest to the strength of the diverse markets we serve, which mitigates our lumber market risk. Our improved operating margins, while partly helped by declining lumber prices during the fourth quarter, reflect our improved product mix and operational efficiencies.”

“We’ll continue to work to increase shareholder value by reinvesting capital in acquisitions, automation and new product development,” added Matt. “We’ll also buy back shares when market conditions warrant it, as they did during the fourth quarter.”

The company purchased 804,185 shares during the fourth quarter at an average price of $28.30.

The company’s comparison of year-over-year, fourth-quarter net earnings were impacted by two atypical factors. A $1.9 million pre-tax unrealized loss ($0.02 per share after tax) was recorded in the fourth quarter of 2018 on the company’s investments in equity securities. This represents a change in accounting from previous years when unrealized gains and losses of this nature were recorded directly to equity. In addition, a $6.4 million tax benefit was recorded in the fourth quarter of 2017 to reduce the company’s net deferred tax liability due to the change in tax law. The benefit improved fourth-quarter 2017 earnings by $0.10 a share.

Fourth Quarter 2018 Highlights (comparisons on a year-over-year basis):

  • Operating profit was $45.4 million, up 9.5 percent
  • EBITDA of $63.6 million, up more than 11 percent
  • Net sales of $988.2 million represent a 2 percent increase
  • Unit sales accounted for 4 percent of the Company’s gross sales growth; acquisitions contributed 3 percent to unit growth while organic sales added 1 percent. Falling lumber prices reduced gross sales by 3 percent
  • New product sales were $103 million, up 13 percent

    Fiscal 2018 Highlights (comparisons on a year-over-year basis):

  • Operating profit was $207.3 million, up 14.2 percent
  • EBITDA of $267 million, up 12 percent
  • Net sales of $4.49 billion, up 14 percent
  • Unit sales accounted for 7 percent of the Company’s gross sales growth (this includes 3 percent from acquired businesses); price increases accounted for 7 percent
  • Year-to-date new product sales were $513 million, up 21 percent

By market, the Company reported the following 2018 results.

Retail

  • Fourth Quarter: $303.4 million in gross sales, down 8 percent over the fourth quarter of 2017. Lower unit sales and lower selling prices each accounted for 4 percent of the decrease. Retail sales during this quarter did not have the same benefit from post-hurricane sales that the Company experienced in 2017 when total gross sales increased 20 percent.
  • Full Year: $1.66 billion in gross sales, up 11 percent over 2017, led by a 7 percent increase in selling prices and a 4 percent increase in unit sales. Acquisitions and organic growth each contributed 2 percent of the sales growth.

Industrial

  • Fourth Quarter: $390.5 million in gross sales, up 11 percent over the fourth quarter of 2017; unit sales growth accounted for 12 percent of gross sales, while falling prices reduced gross sales by 1 percent.
  • Full Year: $1.56 billion in gross sales, up 16 percent over the previous year. Unit sales increased 10 percent, of which 5 percent came from acquisitions and 5 percent from organic growth.

Construction

  • Fourth Quarter: $306.1 million in gross sales, up 1 percent over the fourth quarter of 2017, due to a 5 percent increase in unit sales and a 4 percent decrease in selling prices. Unit sales to commercial customers and residential customers rose 18 and 7 percent, respectively, while unit sales to manufactured housing customers fell 3 percent during the quarter. The decrease in manufactured housing sales is attributable to the high number of manufactured housing shipments recorded in 2017 due to hurricane damage in several Gulf Coast states.
  • Full Year: $1.35 billion in gross sales, up 15 percent over the previous year, driven by a 7 percent increase in unit sales and an 8 percent increase in prices.Residential unit sales grew 7 percent, commercial unit sales grew 14 percent and manufactured housing unit sales grew 4 percent. Acquisitions contributed 1 percent to overall growth.

CONFERENCE CALL

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 Thursday, February 21, 2019. 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 866-518-4547, and internationally at 213-660-0879. Use conference pass code 8194375. 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 March 21, 2019 at 855-859-2056, 404-537-3406 or 800-585-5367.