Universal Posts Strong Growth in the Second Quarter of 2004; Net
Earnings Increase 15%
GRAND RAPIDS, Mich., July 12 /PRNewswire-FirstCall/ -- Universal Forest
Products (NASDAQ:UFPI) today announced strong second quarter results with a
34.4% increase in net sales to $742.6 million, up from $552.5 million reported
for the same period last year. Net sales for the first six months of 2004 were
$1.2 billion, a 33.1% increase over net sales of $908.1 million for the same
period of 2003.
Net earnings for the quarter were $19.8 million, a 15.1% increase over net
earnings of $17.2 million for the same period in 2003. Net earnings for the
year to date were $25.3 million, a 16.9% increase over 2003 year-to-date net
earnings of $21.7 million.
By market, Universal posted second quarter net sales of: * $344.6 million in D-I-Y/retail, up 14.0% over the same quarter last year; * $170.3 million in site-built construction, an increase of 68.2% over last
year; * $124.3 million in industrial, up 56.2% over last year, and * $103.4 million in manufactured housing, a 48.9% increase over last year.
"I'm continually proud of our performance and of the hard work of our people,"
said CEO William G. Currie. "We controlled what we could and delivered very
strong results, especially in our site-built and industrial markets." A few significant factors contributed to the company's performance. Total unit
sales increased more than 11% for the quarter thanks to strong unit sales to
the site-built, industrial and manufactured housing markets. A decline in
units sold to the Do-It-Yourself retail market is attributed to record
precipitation in many areas of the country -- notably the Midwest, Texas, and
portions of the East -- that forced homeowners to delay home improvement
projects. "This showcases the power of our balanced business model and
geographic diversity, which allow us to thrive even when one of our markets
faces a challenge," Currie explained.
The remaining 23% of the company's 34.4% increase in net sales is attributable
to the lumber market, which was higher during the second quarter of 2004.
Gross profit increased 17.9% for the quarter, exceeding the Company's unit
sales increase due, in part, to the impact of the rising lumber market in April
and May on products whose selling prices are tied to the lumber market. Other
factors affecting the quarter's results included: * A fire in April that destroyed a truss plant in Thorndale, Ontario at the
start of the building season. Although Universal maintained its service to
customers by moving the work to other plants in the U.S., transportation costs
and operating inefficiencies resulted in greater costs to the company. Management currently estimates that the insured value of the property destroyed
will exceed its net book value.
* The opening of several new plants this year. As anticipated, the plants
were in a start-up phase and were not profitable during their first months of
operation.
* The company continues to bring its multi-family framing operations in the
West up to Universal's management standards and profitability targets. "This is
a new area of business for us and, as we stated previously, we've experienced
some challenges. We believe the changes we've made eventually will lead us to
improved profitability," Currie said.
OUTLOOK The Company currently anticipates continued growth in its business in 2004 and
reaffirms its targets for both unit sales and diluted earnings per share growth
of 10% to 14% for the year.
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,
July 13, 2004. The conference call will be hosted by William G. Currie and
will be available for analysts and institutional investors domestically at
(888) 792-1079 or internationally at (703) 871-3092. Use conference call ID
#507398. 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/ .
Universal Forest Products markets, manufactures, and engineers wood and
wood-alternative 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. Among the company's newest and fastest-growing ventures are
framing and installation services for the site-built and retail sectors. In
conjunction with its customers, Universal uses its engineering and
manufacturing expertise, coupled with highly skilled employees, to design and
construct buildings and decks. For information about Universal Forest Products
on the Internet, please visit the Company's web site at http://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.
HIGHLIGHTS TO FOLLOW
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2004/2003 Quarter Period
(In thousands, except per share data) 2004 2003
NET SALES $742,568 100% $552,463 100% COST OF GOODS SOLD 649,747 87.50 473,721 85.75 GROSS PROFIT 92,821 12.50 78,742 14.25
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 56,082 7.55 46,697 8.45 EARNINGS FROM OPERATIONS 36,739 4.95 32,045 5.80 OTHER EXPENSE (INCOME)
Interest expense 3,869 0.52 3,958 0.72
Interest revenue (102) -0.01 (84) -0.02
Gain on sale of real estate and
interest in subsidiary (575) -0.08 - 0.00
3,192 0.43 3,874 0.70
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 33,547 4.52 28,171 5.10 INCOME TAXES 12,645 1.70 10,458 1.89
EARNINGS BEFORE MINORITY INTEREST 20,902 2.81 17,713 3.21 MINORITY INTEREST (1,146) -0.15 (551) -0.10 NET EARNINGS $19,756 2.66 $17,162 3.11 EARNINGS PER SHARE - BASIC $1.09 $0.97 EARNINGS PER SHARE - DILUTED $1.06 $0.94 WEIGHTED AVERAGE SHARES
OUTSTANDING 18,050 17,741 WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,702 18,193 SUPPLEMENTAL SALES DATA
Quarter Period
Market Classification 2004 % 2003 %
Do-It-Yourself/Retail $344,582 46% $302,224 55%
Site-Built Construction 170,325 23% 101,242 18%
Manufactured Housing 103,403 14% 69,453 13%
Industrial and Other 124,258 17% 79,544 14%
Total $742,568 100% $552,463 100% Year to Date
(In thousands, except per share data) 2004 2003
NET SALES $1,208,233 100% $908,082 100% COST OF GOODS SOLD 1,059,051 87.65 777,536 85.62 GROSS PROFIT 149,182 12.35 130,546 14.38
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 100,011 8.28 86,885 9.57 EARNINGS FROM OPERATIONS 49,171 4.07 43,661 4.81 OTHER EXPENSE (INCOME)
Interest expense 7,411 0.61 7,745 0.85
Interest revenue (185) -0.02 (131) -0.01
Gain on sale of real estate and
interest in subsidiary (944) -0.08 - 0.00
6,282 0.52 7,614 0.84
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 42,889 3.55 36,047 3.97 INCOME TAXES(1) 16,289 1.35 13,249 1.46
EARNINGS BEFORE MINORITY INTEREST 26,600 2.20 22,798 2.51 MINORITY INTEREST (1,277) -0.11 (1,136) -0.13 NET EARNINGS $25,323 2.10 $21,662 2.39 EARNINGS PER SHARE - BASIC $1.41 $1.22 EARNINGS PER SHARE - DILUTED $1.35 $1.19 WEIGHTED AVERAGE SHARES
OUTSTANDING 17,994 17,735 WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,694 18,222 SUPPLEMENTAL SALES DATA
Year to Date
Market Classification 2004 % 2003 %
Do-It-Yourself/Retail $523,491 43% $458,510 50%
Site-Built Construction 285,163 24% 178,237 20%
Manufactured Housing 180,370 15% 126,465 14%
Industrial and Other 219,209 18% 144,870 16%
Total $1,208,233 100% $908,082 100%
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2004/2003 (In thousands) ASSETS 2004 2003 LIABILITIES AND
SHAREHOLDERS' EQUITY 2004 2003 CURRENT ASSETS CURRENT LIABILITIES
Cash and cash Notes payable $- $1,679
equivalents $25,080 $20,574
Accounts
receivable 246,850 200,033 Accounts payable and
Inventories 227,455 166,742 accrued liabilities 206,156 162,402
Other current
assets 11,809 5,424 Current portion of
long-term debt
and capital
leases 498 6,271
TOTAL CURRENT
ASSETS 511,194 392,773
TOTAL CURRENT
LIABILITIES 206,654 170,352
OTHER ASSETS 6,974 6,401
INTANGIBLE
ASSETS, NET 132,748 131,858 LONG-TERM DEBT AND
CAPITAL LEASES,
less current
portion 287,387 255,975
PROPERTY, PLANT OTHER
AND EQUIPMENT, LIABILITIES 33,317 29,819
NET 208,142 211,277
SHAREHOLDERS'
EQUITY 331,700 286,163 TOTAL LIABILITIES
TOTAL ASSETS $859,058 $742,309 AND SHAREHOLDERS'
EQUITY $859,058 $742,309 CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2004/2003 (In thousands) 2004 2003 CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $25,323 $21,662
Adjustments to reconcile net earnings
to net cash from operating activities:
Depreciation 13,408 12,202
Amortization of intangibles 940 1,033
Deferred income taxes 366 (1,438)
Minority interest 1,277 1,136
Loss on sale of interest in subsidiary 193 -
(Gain) Loss on sale or impairment of
property, plant and equipment (730) 640
Changes in:
Accounts receivable (112,052) (94,237)
Inventories (56,963) (736)
Accounts payable 54,711 52,039
Accrued liabilities and other 20,714 10,974
NET CASH FROM OPERATING ACTIVITIES (52,813) 3,275 CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (16,607) (20,689)
Purchase of licensing agreements - (150)
Acquisitions, net of cash received (10,075) (187)
Sale of interest in subsidiary 4,679 -
Proceeds from sale of property, plant
and equipment 3,287 1,147
Other 1,678 1,961
NET CASH FROM INVESTING ACTIVITIES (17,038) (17,918) CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under
revolving credit facilities and
notes payable 83,062 26,437
Repayment of long-term debt (6,117) (6,167)
Proceeds from issuance of common stock 1,828 873
Distributions to minority shareholder (125) (633)
Dividends paid to shareholders (897) (798)
Repurchase of common stock (129) (2,029)
Other (121) -
NET CASH FROM FINANCING ACTIVITIES 77,501 17,683
NET CHANGE IN CASH AND CASH EQUIVALENTS 7,650 3,040 CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 17,430 17,534 CASH AND CASH EQUIVALENTS, END OF PERIOD $25,080 $20,574
DATASOURCE: Universal Forest Products, Inc.
CONTACT: Lynn Afendoulis, Director of Public Affairs of Universal Forest Products, Inc., +1-616-364-6161; or Jeremy Skule, Vice President of Fleishman Hillard, +1-212-453-2245 Web site: http://www.ufpi.com/ Company News On-Call: http://www.prnewswire.com/comp/916064.html
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