- Q4 Earnings Up 50 percent; Tax Rate Reduction Adds to Earnings -
GRAND RAPIDS, Mich., Thursday, Feb. 22, 2018 – Universal Forest Products, Inc. (Nasdaq: UFPI) today announced record net earnings and net sales for the fourth quarter and full year 2017. The Company posted these results in a quarter and year that had one less operational week compared to 2016. In 2016, the extra week accounted for over $60 million in net sales and over $2 million in operating profit.
Fourth Quarter 2017 Highlights (comparisons on a year-over-year basis, 13 weeks over 14 weeks):
- Diluted earnings per share were $0.51, an increase of 50 percent
- Net earnings attributable to controlling interest were $31.1 million, up 50 percent; changes to the corporate tax rate contributed $6.4 million or 10 cents per diluted share. Even excluding the tax benefit, net earnings for the quarter and year were records.
- EBITDA of $57 million, up 16 percent
- Net sales of $966.1 million represent a 12 percent increase
- Unit sales accounted for 5 percent of the Company’s gross sales growth due to acquired businesses; price increases accounted for almost 8 percent
Fiscal 2017 Highlights (comparisons on a year-over-year basis, 52 weeks over 53 weeks):
- Diluted earnings per share were $1.94, an increase of 18 percent
- Net earnings attributable to controlling interest were $119.5 million, up 18 percent
- EBITDA of $238 million, up 13 percent
- Net sales of $3.94 billion, up 22 percent
- Unit sales accounted for 15 percent of the Company’s gross sales growth (this includes 11 percent from acquired businesses); price increases accounted for 6 percent
- Generated cash from operating activities of almost $137 million
“The employees of Universal did a great job managing our business through a challenging lumber market that pressured margins for our products at different periods throughout the year,” said CEO Matthew J. Missad. In 2017, average prices for framing lumber and southern yellow pine rose 20 percent and 7 percent, respectively, over 2016, but fell during the Company’s peak selling times, reducing margins on certain products.
“We experienced terrific growth with new products in 2017, making significant inroads in the Retail market with new products such as our UFP-Edge profile lines and several product introductions in our Deckorators line,” Matt added. For the year, new product sales grew 23.5 percent to $418.4 million, compared to $338.6 million in 2016. “Despite the challenges that remain in the lumber market, we are optimistic about our strategic initiatives for 2018 and beyond. To support those initiatives, we are investing a portion of the income we will save from the tax reform bill in capital expenditures.”
By market, the Company posted the following 2017 results:
- Fourth quarter: $330.6 million in gross sales, up 20 percent over the fourth quarter of 2016. Unit sales contributed 13 percent of the growth; price increases accounted for 7 percent. Acquisitions accounted for 10 percent of the increase.
- Full Year: $1.49 billion in gross sales, up 15 percent over 2016, led by a 10 percent increase in unit sales and a 5 percent increase in selling prices. Acquisitions contributed 7 percent of the sales growth. Sales to this market were affected by a record hurricane season, which resulted in a temporary increase in sales of low-margin commodity products.
- Fourth quarter: $305.8 million in gross sales, up 10 percent over the fourth quarter of 2016, mostly due to price increases as a result of the lumber market. Unit sales to manufactured housing customers grew 4 percent during the period, while sales to residential and commercial construction customers fell 2 percent and 3 percent, respectively. Residential construction sales were likely affected by project delays associated with higher lumber prices.
- Full Year: $1.18 billion in gross sales, up 16 percent over the previous year, driven by a 7 percent increase in unit sales and a 9 percent increase in prices. Residential construction unit sales grew 7 percent, and unit sales to manufactured housing customers rose 9 percent over 2016.
- Fourth quarter: $345.1 million in gross sales, up 9 percent over the fourth quarter of 2016; price increases accounted for 7 percent of the growth while unit increases accounted for 2 percent.
- Full Year: $1.33 billion in gross sales, up 35 percent over the previous year. Unit sales increased 29 percent, primarily due to the Company’s acquisition of idX Corporation in September of 2016. Excluding acquisitions, the Company’s organic unit sales grew 4 percent over 2016.
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 Friday, February 23, 2018. 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 4866126. 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 25, 2018, at 855-859-2056, 404-537-3406 or 800-585-5367.