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Universal Forest Products Inc.$36.90($.76)(2.02%)

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 UFPI posts record third quarter results
   Tuesday, October 17, 2017 4:05:22 PM ET

Universal Forest Products, Inc. (UFPI ) today reported record financial results for the third quarter ended September 30, 2017.

The Company’s net sales rose 28 percent over the same quarter of 2016, led by double-digit gains in each of its markets. Net earnings rose 21 percent over 2016. Both results beat the records set in the third quarter of 2016.

"These results underscore the strength of our balanced business model, which allows us to withstand adversity in one market or region and still grow sales and profitability," said CEO Matt Missad. "Hurricanes Harvey, Irma and Maria created difficult conditions for some of our employees and operations in Texas, Florida and Puerto Rico and contributed to more lumber market volatility in September, impacting margins. Despite these challenges, our business performed exceptionally well, and I want to thank the hard working employees of the companies of Universal for their efforts. We feel confident in our ability to continue to execute our strategic initiatives and deliver strong results."

Third Quarter 2017 Highlights (comparisons on a year-over-year basis):

-- Net earnings attributable to controlling interest were $33.7 million, up 21 percent

-- Diluted earnings per share were $1.64, an increase of 21 percent

-- Net sales of $1,056.6 million represent a 28 percent increase

-- Unit sales accounted for 22 percent of the Company’s gross sales growth (this includes 15 percent from acquired businesses); price increases, primarily due to the commodity lumber market, accounted for 6 percent

-- New product sales of $107.7 million increased by 21.7 percent and represented 10.2 percent of total Company net sales. The Company has introduced 35 new products in 2017 to date, including 12 during the third quarter.

By market, the Company reported the following third-quarter 2017 gross sales results:

Retail

$391.9 million, up 16 percent over the same period of 2016

The 16 percent increase in sales to the Retail market is the result of a 7 percent increase from acquisitions, a 5 percent increase from organic growth and a 4 percent increase in prices.

The Company benefited from a sales increase of 20 percent and 13 percent to independent and big box retailers, respectively, in the third quarter when compared to the same period of 2016.

Construction

$310.0 million, up 16 percent over the same period of 2016

The 16 percent increase in Construction sales was due to an 8 percent increase in unit sales and an 8 percent increase in prices. The increase in unit sales was led by a 12 percent increase to manufactured housing builders and an 8 percent increase to residential builders.

Industrial

$369.5 million, up 59 percent over the same period of 2016

The Company’s growth in this market is primarily due to its September 2016 acquisition of idX Corp. Excluding acquisitions, the Company grew sales in this market by 16 percent in the third quarter: 11 percent through organic growth and 5 percent through price increases. The organic growth was primarily the result of new customer acquisitions and share gains with existing customers.

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 Wednesday, October 18, 2017. 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 ID 81854743. 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 November 17, 2017, at the following numbers: (855) 859-2056 or (404) 537-3406.

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.

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2017/2016
                                        Quarter Period                                    Year to Date
(In thousands, except per share data)      2017                      2016                    2017                      2016
NET SALES                               $  1,056,586     100  %   $  826,665     100  %   $  2,975,091     100  %   $  2,380,909     100.0 %
COST OF GOODS SOLD                         911,899       86.3        708,611     85.7        2,561,424     86.1        2,028,629     85.2
GROSS PROFIT                               144,687       13.7        118,054     14.3        413,667       13.9        352,280       14.8
SELLING,  GENERAL  AND
ADMINISTRATIVE  EXPENSES                   92,416        8.7         74,502      9.0         273,676       9.2         223,153       9.4
EARNINGS FROM OPERATIONS                   52,271        4.9         43,552      5.3         139,991       4.7         129,127       5.4
OTHER EXPENSE, NET                         1,352         0.1         927         0.1         4,259         0.1         2,602         0.1
EARNINGS BEFORE INCOME TAXES               50,919        4.8         42,625      5.2         135,732       4.6         126,525       5.3
INCOME TAXES                               16,250        1.5         13,861      1.7         44,855        1.5         43,268        1.8
NET EARNINGS                               34,669        3.3         28,764      3.5         90,877        3.1         83,257        3.5
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST                    (976      )   (0.1 )      (945    )   (0.1 )      (2,480    )   (0.1 )      (2,828    )   (0.1  )
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST                    $  33,693        3.2      $  27,819      3.4      $  88,397        3.0      $  80,429        3.4
EARNINGS PER SHARE - BASIC              $  1.65                   $  1.36                 $  4.32                   $  3.95
EARNINGS PER SHARE - DILUTED            $  1.64                   $  1.36                 $  4.31                   $  3.94
COMPREHENSIVE INCOME                       36,388                    27,608                  97,018                    81,736
LESS COMPREHENSIVE INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST                 (975      )               (495    )               (3,862    )               (1,576    )
COMPREHENSIVE INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST    $  35,413                 $  27,113               $  93,156                 $  80,160
SUPPLEMENTAL SALES DATA
                                        Quarter Period                                    Year to Date
Market Classification                      2017                      2016        %           2017                      2016          %
Retail                                  $  391,895                $  339,275     16   %   $  1,162,785              $  1,018,203     14    %
Industrial                                 369,506                   232,017     59   %      982,675                   661,718       49    %
Construction                               310,026                   267,772     16   %      872,997                   740,393       18    %
Total Gross Sales                          1,071,427                 839,064     28   %      3,018,457                 2,420,314     25    %
Sales Allowances                           (14,841   )               (12,399 )   -20  %      (43,366   )               (39,405   )   -10   %
Total Net Sales                         $  1,056,586              $  826,665     28   %   $  2,975,091              $  2,380,909     25    %
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2017/2016
(In thousands)
ASSETS                                2017          2016       LIABILITIES AND EQUITY                  2017          2016
CURRENT ASSETS                                                 CURRENT LIABILITIES
        Cash and cash equivalents  $  22,044     $  36,683               Cash overdraft             $  26,617     $  13,940
        Restricted cash               905           909                  Accounts payable              171,774       137,979
        Investments                   10,781        10,453               Accrued liabilities           138,364       156,653
        Accounts receivable           419,183       343,771              Current portion of debt       2,197         1,584
        Inventories                   412,486       369,928
        Other current assets          23,201        29,043
TOTAL CURRENT ASSETS                  888,600       790,787    TOTAL CURRENT LIABILITIES               338,952       310,156
OTHER ASSETS                          17,515        11,173     LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET                255,330       224,186              CAPITAL LEASE OBLIGATIONS     145,884       110,362
PROPERTY, PLANT                                                OTHER LIABILITIES                       51,638        43,029
        AND EQUIPMENT,  NET           325,109       284,491    EQUITY                                  950,080       847,090
TOTAL ASSETS                       $  1,486,554  $  1,310,637  TOTAL LIABILITIES AND EQUITY         $  1,486,554  $  1,310,637
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2017/2016
(In thousands)                                                                                             2017                2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings                                                                                          $    90,877         $    83,257
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation                                                                                               36,010              29,014
Amortization of intangibles                                                                                3,549               1,868
Expense associated with share-based compensation arrangements                                              1,978               1,568
Expense associated with stock grant plans                                                                  144                 105
Deferred income taxes (credit)                                                                             117                 (53      )
Equity in earnings of investee                                                                             (25      )          (241     )
Net gain on disposition and impairment of assets                                                           (437     )          94
Changes in:
Accounts receivable                                                                                        (121,688 )          (69,357  )
Inventories                                                                                                (820     )          21,683
Accounts payable and cash overdraft                                                                        53,424              35,026
Accrued liabilities and other                                                                              34,221              33,413
NET CASH FROM OPERATING ACTIVITIES                                                                         97,350              136,377
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment                                                                (57,189  )          (35,723  )
Proceeds from sale of property, plant and equipment                                                        2,121               516
Acquisitions and purchase of noncontrolling interest, net of cash received                                 (59,859  )          (66,615  )
Repayments of debt of acquiree                                                                             -                   (92,830  )
Purchase of remaining noncontrolling interest of subsidiary                                                -                   (1,100   )
Cash contributed from noncontrolling interest                                                              464                 -
Advances of notes receivable                                                                               (234     )          (5,400   )
Collections of notes receivable and related interest                                                       1,334               5,819
Purchases of investments                                                                                   (15,928  )          (4,468   )
Proceeds from sale of investments                                                                          8,000               1,395
Other                                                                                                      (84      )          (1,733   )
NET CASH USED IN INVESTING ACTIVITIES                                                                      (121,375 )          (200,139 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities                                                               610,038             52,479
Repayments under revolving credit facilities                                                               (573,829 )          (27,177  )
Proceeds from issuance of common stock                                                                     476                 396
Distributions to noncontrolling interest                                                                   (3,272   )          (3,160   )
Dividends paid to shareholders                                                                             (9,207   )          (8,529   )
Repurchase of common stock                                                                                 (12,976  )          -
Other                                                                                                      -                   (28      )
NET CASH FROM (USED IN) FINANCING ACTIVITIES                                                               11,230              13,981
Effect of exchange rate changes on cash                                                                    1,255               (969     )
NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                    (11,540  )          (50,750  )
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                                         34,489              88,342
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD                                                          $    22,949         $    37,592
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period                                                        $    34,091         $    87,756
Restricted cash, beginning of period                                                                       398                 586
All cash and cash equivalents, beginning of period                                                    $    34,489         $    88,342
Cash and cash equivalents, end of period                                                              $    22,044         $    36,683
Restricted cash, end of period                                                                             905                 909
All cash and cash equivalents, end of period                                                          $    22,949         $    37,592

Lynn Afendoulis

Director, Corporate Communications

(616) 365-1502

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