— Increased sales in all markets, margin improvements drive results —
— Company increases annual dividend by more than 90 percent —
GRAND RAPIDS, Mich., Oct. 15, 2014 – Universal Forest Products, Inc. (Nasdaq: UFPI) today announced third-quarter 2014 results, including net earnings attributable to controlling interests of $19.2 million, up 36.5 percent over $14.1 million in the third quarter of 2013. Earnings per diluted share were $0.96 in the third quarter of 2014, up from $0.71 for the same period last year. Net sales grew in all three markets to total $713.5 million in the third quarter of 2014, up 9.5 percent over $651.8 million in the third quarter of 2013. Earnings attributable to controlling interests for the third quarter of 2014 included a net gain of $700,000 on the sale of certain assets.
"We experienced solid sales growth in each of our markets, and we continued to improve operational efficiencies and maintain our focus on profitability. The third quarter saw profitable growth and progress toward many of our longer-term goals," said CEO Matthew J. Missad. "Our teams are executing their plans, and their excellent performance clearly shows in the financial results. I am proud of their efforts to create value in this economy."
Missad noted that the Company's Board of Directors approved an increase to the Company's dividend at its October 15, 2014 meeting.
"Due to the strength of our earnings, our solid balance sheet and our optimism, we have decided to return capital to our shareholders while still pursuing our growth goals," Missad said. "Our board approved an increase in the December 2014 dividend payment, from $0.21 per share to $0.40 per share."
Missad noted that the Company can support the new dividend rate while retaining ample capital for organic growth and acquisitions. He stated that, in many instances, recent acquisition multiples have been at levels that challenge the ability to create value for shareholders. He added that the Company continues to actively pursue acquisitions as well as reinvest in plants as part of its organic growth goals.
Lumber prices affect the Company's selling prices, and in the third quarter of 2014, the composite lumber price was up 10.7 percent over the previous year, offset partially by an 18 percent decline in OSB prices in the third quarter of 2014. The Company estimates that higher overall lumber prices raised its selling prices and sales by six percent.
By market, the Company posted the following third-quarter 2014 gross sales results:
Retail: $272.5 million, an increase of 10 percent over the third quarter of 2013.
Universal saw increased sales to big box and independent customers alike. Unit sales were up five percent, which was in line with expectations. The Company attributes the increased sales to a better repair-and-remodel market demand and slight increases in housing starts. Big box retailers saw increases in same-store sales during the period. Universal realized margin improvements in this market, due to better operational efficiencies and enhanced product mix with new product sales in the quarter.
Industrial: $211.3 million, an increase of 13 percent over the same period of 2013.
Sales to this market continued a path of sustainable growth, with increased sales to existing customers. This remains a healthy market with solid growth opportunities for the Company with both existing and new customers.
Construction, $239.8 million, up six percent over the third quarter of 2013.
Results in this market reflect the Company's focus on sustainable business and more selective pricing strategies. Sales to this market continued to be negatively impacted by the vertical integration of one of the Company's largest manufactured housing customers and by a drop in prices of OSB during the third quarter. The diversification of markets within UFP continues to improve as the Company becomes less dependent on housing starts for sales growth. In fact, the percent of residential construction sales to total sales has declined from its peak in 2006 of 31.6 percent to the current 12.8 percent.
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., Oct. 16, 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 (877) 415-3179 and internationally at (857) 244-7322. Use conference pass code 20099464. 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 Nov. 15, 2014, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code 83042564.