UFPI posts record second-quarter earnings and sales
Second quarter marks three years of consecutive quarterly records
GRAND RAPIDS, Mich., July 18, 2018 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq:UFPI) today reported record financial results for the second quarter ended June 30, 2018, the twelfth consecutive quarter in which the company has reported records in both net sales and net earnings.
“The employees of Universal continue to work hard to set records, and I am privileged to announce the results,” stated CEO Matt Missad. The company’s second-quarter results benefited from unit sales growth and a rising lumber market but were adversely impacted by rising costs for transportation and labor.
“Our focus remains on growing unit sales organically and through acquisitions, while enhancing our sales mix of new and value-added products,” Matt added. “Our recently completed acquisition of North American Container Corp. (NACC) will enhance our goal of being the packaging solutions provider and adds non-wood packaging alternatives to our product offering. Additionally, our increased resource allocation to new products and services is paying dividends, as new product sales year-to-date have increased to $262 million from $211 million in 2017. We’ll also continue to focus on margin improvement and improving productivity through automation, including the expanded use of specialized material processing equipment and robotics.”
Recent Acquisition Activity
In early June, Universal closed on its acquisition of North American Container Corp. (NACC), an industrial packaging manufacturer based in Georgia with sales of approximately $71 million in 2017.
Second Quarter 2018 Highlights (comparisons on a year-over-year basis):
- Diluted earnings per share were $0.71, up from $0.55
- Net earnings attributable to controlling interest were $44.0 million, up 31 percent
- EBITDA was $77.0 million, up 14 percent
- Gross sales increased 21 percent, with gains of 19 percent in the Retail and Industrial markets and 26 percent in the Construction market
- Unit sales contributed 8 percent of gross sales growth; higher prices due to the lumber market contributed 13 percent
- Organic sales contributed 7 percent to unit growth while acquisitions added 1 percent
- New product sales were $153.1 million, up 25 percent
By market, the company reported the following second-quarter 2018 gross sales results:
Retail
- $546 million, up 19 percent over the same period of 2017, as unit sales contributed 6 percent and price increases accounted for 13 percent
- Organic sales accounted for all of the unit sales growth
- Sales to big box customers increased 16 percent, while sales to independent customers grew 25 percent
Construction
- $371 million, up 26 percent over the same period of 2017, as unit sales contributed 10 percent and price increases accounted for 16 percent
- Organic sales accounted for 9 percent of the unit sales growth, while acquisitions accounted for 1 percent
- The company saw double-digits sales increases to customers in commercial construction (32 percent), manufactured housing (28 percent) and residential construction (22 percent)
Industrial
- $404 million, up 19 percent over the same period of 2017, as unit sales accounted for 8 percent and price increases accounted for 11 percent
- Organic sales accounted for 5 percent of the unit sales growth, while acquisitions contributed 3 percent
- The company sees favorable growth opportunities in the non-wood packing market and is adding resources to better serve this market
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, July 19, 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 9596393. 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 19, 2018, at 855-859-2056, 404-537-3406 or 800-585-8367.
UNIVERSAL FOREST PRODUCTS, INC.
Universal Forest Products, Inc. is a holding company whose subsidiaries supply wood, wood composite and other products to three robust markets: retail, construction and industrial. Founded in 1955, the Company is headquartered in Grand Rapids, Mich., with affiliates throughout North America, Europe, Asia and Australia. For more about Universal Forest Products, go to www.ufpi.com.
This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are 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 from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission.
Non-GAAP Financial Information
This release includes certain financial information not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Management considers EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.
| CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED) | ||||||||||||||||||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED | ||||||||||||||||||||||||||||
| JUNE 2018/2017 | ||||||||||||||||||||||||||||
| Quarter Period | Year to Date | |||||||||||||||||||||||||||
| (In thousands, except per share data) | 2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
| NET SALES | $ | 1,294,440 | 100 | % | $ | 1,072,375 | 100 | % | $ | 2,288,297 | 100 | % | $ | 1,918,505 | 100.0 | % | ||||||||||||
| COST OF GOODS SOLD | 1,128,751 | 87.2 | 924,135 | 86.2 | 1,991,719 | 87.0 | 1,649,526 | 86.0 | ||||||||||||||||||||
| GROSS PROFIT | 165,689 | 12.8 | 148,240 | 13.8 | 296,578 | 13.0 | 268,979 | 14.0 | ||||||||||||||||||||
| SELLING, GENERAL AND | ||||||||||||||||||||||||||||
| ADMINISTRATIVE EXPENSES | 104,595 | 8.1 | 94,605 | 8.8 | 197,800 | 8.6 | 181,587 | 9.5 | ||||||||||||||||||||
| NET (LOSS) GAIN ON DISPOSITION AND IMPAIRMENT OF ASSETS | 477 | - | (264 | ) | - | (6,057 | ) | (0.3 | ) | (328 | ) | - | ||||||||||||||||
| EARNINGS FROM OPERATIONS | 60,617 | 4.7 | 53,899 | 5.0 | 104,835 | 4.6 | 87,720 | 4.6 | ||||||||||||||||||||
| OTHER EXPENSE, NET | 2,067 | 0.2 | 1,490 | 0.1 | 3,127 | 0.1 | 2,906 | 0.2 | ||||||||||||||||||||
| EARNINGS BEFORE INCOME TAXES | 58,550 | 4.5 | 52,409 | 4.9 | 101,708 | 4.4 | 84,814 | 4.4 | ||||||||||||||||||||
| INCOME TAXES | 13,420 | 1.0 | 17,835 | 1.7 | 22,994 | 1.0 | 28,605 | 1.5 | ||||||||||||||||||||
| NET EARNINGS | 45,130 | 3.5 | 34,574 | 3.2 | 78,714 | 3.4 | 56,209 | 2.9 | ||||||||||||||||||||
| LESS NET EARNINGS ATTRIBUTABLE TO | ||||||||||||||||||||||||||||
| NONCONTROLLING INTEREST | (1,086 | ) | (0.1 | ) | (932 | ) | (0.1 | ) | (1,836 | ) | (0.1 | ) | (1,505 | ) | (0.1 | ) | ||||||||||||
| NET EARNINGS ATTRIBUTABLE TO | ||||||||||||||||||||||||||||
| CONTROLLING INTEREST | $ | 44,044 | 3.4 | $ | 33,642 | 3.1 | $ | 76,878 | 3.4 | $ | 54,704 | 2.9 | ||||||||||||||||
| EARNINGS PER SHARE - BASIC | $ | 0.71 | $ | 0.55 | $ | 1.24 | $ | 0.89 | ||||||||||||||||||||
| EARNINGS PER SHARE - DILUTED | $ | 0.71 | $ | 0.55 | $ | 1.24 | $ | 0.89 | ||||||||||||||||||||
| COMPREHENSIVE INCOME | 41,225 | 35,961 | 74,370 | 60,631 | ||||||||||||||||||||||||
| LESS COMPREHENSIVE INCOME ATTRIBUTABLE | ||||||||||||||||||||||||||||
| TO NONCONTROLLING INTEREST | (119 | ) | (1,460 | ) | (1,713 | ) | (2,887 | ) | ||||||||||||||||||||
| COMPREHENSIVE INCOME | ||||||||||||||||||||||||||||
| ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 41,106 | $ | 34,501 | $ | 72,657 | $ | 57,744 | ||||||||||||||||||||
| SUPPLEMENTAL SALES DATA | ||||||||||||||||||||||||||||
| Quarter Period | Year to Date | |||||||||||||||||||||||||||
| Market Classification | 2018 | 2017 | % | 2018 | 2017 | % | ||||||||||||||||||||||
| Retail | $ | 545,492 | $ | 458,267 | 19 | % | $ | 916,453 | $ | 770,619 | 19 | % | ||||||||||||||||
| Industrial | 404,090 | 340,463 | 19 | % | 737,056 | 621,062 | 19 | % | ||||||||||||||||||||
| Construction | 370,786 | 293,465 | 26 | % | 678,526 | 559,371 | 21 | % | ||||||||||||||||||||
| Total Gross Sales | 1,320,368 | 1,092,195 | 21 | % | 2,332,035 | 1,951,052 | 20 | % | ||||||||||||||||||||
| Sales Allowances | (25,928 | ) | (19,820 | ) | -31 | % | (43,738 | ) | (32,547 | ) | -34 | % | ||||||||||||||||
| Total Net Sales | $ | 1,294,440 | $ | 1,072,375 | 21 | % | $ | 2,288,297 | $ | 1,918,505 | 19 | % | ||||||||||||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) | ||||||||||||||||||
| JUNE 2018/2017 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| ASSETS | 2018 | 2017 | LIABILITIES AND EQUITY | 2018 | 2017 | |||||||||||||
| CURRENT ASSETS | CURRENT LIABILITIES | |||||||||||||||||
| Cash and cash equivalents | $ | 27,501 | $ | 24,625 | Cash overdraft | $ | 33,608 | $ | 22,769 | |||||||||
| Restricted cash | 16,758 | 905 | Accounts payable | 197,408 | 160,250 | |||||||||||||
| Investments | 14,493 | 10,401 | Accrued liabilities | 138,809 | 126,210 | |||||||||||||
| Accounts receivable | 489,145 | 398,529 | Current portion of debt | 542 | 2,378 | |||||||||||||
| Inventories | 531,874 | 438,435 | ||||||||||||||||
| Other current assets | 32,860 | 21,970 | ||||||||||||||||
| TOTAL CURRENT ASSETS | 1,112,631 | 894,865 | TOTAL CURRENT LIABILITIES | 370,367 | 311,607 | |||||||||||||
| OTHER ASSETS | 20,266 | 17,734 | LONG-TERM DEBT AND | |||||||||||||||
| INTANGIBLE ASSETS, NET | 263,024 | 253,484 | CAPITAL LEASE OBLIGATIONS | 276,274 | 204,752 | |||||||||||||
| PROPERTY, PLANT | OTHER LIABILITIES | 42,255 | 49,319 | |||||||||||||||
| AND EQUIPMENT, NET | 340,698 | 315,956 | EQUITY | 1,047,723 | 916,361 | |||||||||||||
| TOTAL ASSETS | $ | 1,736,619 | $ | 1,482,039 | TOTAL LIABILITIES AND EQUITY | $ | 1,736,619 | $ | 1,482,039 | |||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||
| FOR THE SIX MONTHS ENDED | |||||||||||
| JUNE 2018/2017 | |||||||||||
| (In thousands) | 2018 | 2017 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net earnings | $ | 78,714 | $ | 56,209 | |||||||
| Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||
| Depreciation | 26,144 | 23,248 | |||||||||
| Amortization of intangibles | 2,702 | 2,377 | |||||||||
| Expense associated with share-based and grant compensation arrangements | 1,924 | 1,381 | |||||||||
| Deferred income taxes (credit) | (565 | ) | 355 | ||||||||
| Equity in earnings of investee | - | (26 | ) | ||||||||
| Net (gain) on disposition and impairment of assets | (6,057 | ) | (328 | ) | |||||||
| Changes in: | |||||||||||
| Accounts receivable | (155,666 | ) | (101,239 | ) | |||||||
| Inventories | (61,828 | ) | (26,979 | ) | |||||||
| Accounts payable and cash overdraft | 62,665 | 38,146 | |||||||||
| Accrued liabilities and other | 15,895 | 22,067 | |||||||||
| NET CASH FROM OPERATING ACTIVITIES | (36,072 | ) | 15,211 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of property, plant, and equipment | (54,313 | ) | (34,549 | ) | |||||||
| Proceeds from sale of property, plant and equipment | 36,724 | 1,039 | |||||||||
| Acquisitions and purchase of noncontrolling interest, net of cash received | (37,960 | ) | (59,658 | ) | |||||||
| Purchases of investments | (9,348 | ) | (15,118 | ) | |||||||
| Proceeds from sale of investments | 3,180 | 7,247 | |||||||||
| Other | (1,352 | ) | 1,152 | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (63,069 | ) | (99,887 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Borrowings under revolving credit facilities | 488,853 | 444,601 | |||||||||
| Repayments under revolving credit facilities | (431,657 | ) | (349,311 | ) | |||||||
| Borrowings of debt | 1,639 | - | |||||||||
| Repayments of debt | (5,437 | ) | - | ||||||||
| Issuance of long-term debt | 75,000 | - | |||||||||
| Proceeds from issuance of common stock | 500 | 331 | |||||||||
| Distributions to noncontrolling interest | (1,078 | ) | (1,953 | ) | |||||||
| Dividends paid to shareholders | (11,090 | ) | (9,207 | ) | |||||||
| Repurchase of common stock | (1,819 | ) | (9,934 | ) | |||||||
| Other | (71 | ) | (6 | ) | |||||||
| NET CASH FROM (USED IN) FINANCING ACTIVITIES | 114,840 | 74,521 | |||||||||
| Effect of exchange rate changes on cash | (256 | ) | 1,196 | ||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 15,443 | (8,959 | ) | ||||||||
| ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 28,816 | 34,489 | |||||||||
| ALL CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 44,259 | $ | 25,530 | |||||||
| Reconciliation of cash and cash equivalents and restricted cash: | |||||||||||
| Cash and cash equivalents, beginning of period | $ | 28,339 | $ | 34,091 | |||||||
| Restricted cash, beginning of period | 477 | 398 | |||||||||
| All cash and cash equivalents, beginning of period | $ | 28,816 | $ | 34,489 | |||||||
| Cash and cash equivalents, end of period | $ | 27,501 | $ | 24,625 | |||||||
| Restricted cash, end of period | 16,758 | 905 | |||||||||
| All cash and cash equivalents, end of period | $ | 44,259 | $ | 25,530 | |||||||
| EBITDA RECONCILIATION (UNAUDITED) | ||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED | ||||||||||||
| JUNE 2018/2017 | ||||||||||||
| Quarter Period | Year to Date | |||||||||||
| (In thousands) | 2018 | 2017 | 2018 | 2017 | ||||||||
| Net Earnings | 45,132 | 34,575 | 78,714 | 56,209 | ||||||||
| Interest Expense | 2,247 | 1,839 | 4,025 | 3,343 | ||||||||
| Taxes | 13,420 | 17,835 | 22,994 | 28,605 | ||||||||
| Expense associated with Share-Based Compensation Arrangements | 830 | 765 | 1,924 | 1,382 | ||||||||
| Net Gain on Disposition of Asset | 477 | (264 | ) | (6,057 | ) | (328 | ) | |||||
| Depreciation Expense | 13,432 | 11,763 | 26,144 | 23,155 | ||||||||
| Amortization of Intangibles | 1,474 | 1,259 | 2,702 | 2,378 | ||||||||
| EBITDA | 77,012 | 67,772 | 130,446 | 114,744 | ||||||||
AT THE COMPANY
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502
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