UFPI reports record net earnings
GRAND RAPIDS, Mich., July 24, 2019 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (Nasdaq: UFPI) today announced net sales of $1.24 billion and net earnings attributable to controlling interests of $54.5 million, or 88 cents per diluted share, for the quarter ended June 29, 2019. Net earnings were the highest recorded at any time in the company’s history.
“The employees of Universal continue to do a great job growing unit sales, improving our company’s gross profit per unit, and generating robust cash flow despite pressures from rising labor costs and significant fluctuations in the lumber market,” said CEO Matthew J. Missad. “Our strong results are evidence that we are pursuing the right strategies to make our business more efficient and grow through new, value-added products.”
The company’s mix of value-added sales relative to commodity sales improved from 60 percent in the second quarter of 2018 to 67 percent in the second quarter of 2019, and new product sales grew 18 percent over the same period of 2018. Although significantly lower lumber pricing affected the company’s second-quarter net sales, unit sales increased 5 percent over the same period of last year, driven mostly by organic sales growth.
“I am pleased we experienced such strong growth with new products in our retail and industrial markets,” added Missad. “We will continue to closely manage our SG&A expenses, including those needed to grow our value-added products, so that we can better leverage these expenses as we grow revenue.”
Second Quarter 2019 Highlights (comparisons on a year-over-year basis):
- Operating profit of $74.2 million was up 22 percent and net earnings of $54.5 million was up 24 percent
- EBITDA of $90.8 million was up 18 percent
- Net sales of $1.24 billion represented a 4 percent decrease; lower lumber prices contributed significantly to the gross sales reduction as selling prices were down by 9 percent.
- Unit sales grew 5 percent; organic sales accounted for 4 percent of the growth while acquisitions added 1 percent.
- New product sales were $175.3 million, up 18 percent
- Core SG&A as a percentage of gross profit fell from 54.4 percent in the second quarter of 2018 to 50.7 percent during the same period in 2019.
By market, the Company reported the following second-quarter results.
Retail
- $521 million in gross sales, down 4 percent compared to the second quarter of 2018. A unit sales increase of 6 percent was offset by selling prices that were 10 percent lower. Organic growth was responsible for all of the unit sales increase and was largely driven by sales of Deckorators decking and deck accessories.
Industrial
- $357.3 million in gross sales, up 3 percent over the second quarter of 2018. A unit sales increase of 7 percent was offset by lower selling prices of 4 percent. Acquisitions contributed 6 percent of the unit sales increase; organic growth was responsible for 1 percent.
Construction
- $386.2 million in gross sales, down 10 percent compared to the second quarter of 2018, due to a 14 percent decrease in selling prices and a 4 percent increase in overall unit sales. Unit sales growth was entirely organic, with commercial and residential housing customers each growing at 5 percent and manufactured housing customers growing at 1 percent.
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 25, 2019. 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. Analysts and institutional investors should use conference pass code 1794208. The conference call will be available simultaneously and in its entirety to all interested investors, news media and Universal employees through a webcast at http://www.ufpi.com. A replay of the call will be available through August 25, 2019, at 855-859-2056, 404-537-3406 or 800-585-5367.
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.
Brandon FroyslandDirector of Finance(616) 365-1589
| CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) | ||||||||||||||||
| JUNE 2019/2018 | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| ASSETS | 2019 | 2018 | LIABILITIES AND EQUITY | 2019 | 2018 | |||||||||||
| CURRENT ASSETS | CURRENT LIABILITIES | |||||||||||||||
| Cash and cash equivalents | $ | 20,497 | $ | 27,501 | Cash overdraft | $ | 24,972 | $ | 33,608 | |||||||
| Restricted cash | 1,024 | 14,493 | Accounts payable | 189,649 | 197,408 | |||||||||||
| Investments | 16,776 | 16,758 | Accrued liabilities | 164,812 | 138,809 | |||||||||||
| Accounts receivable | 483,263 | 489,145 | Current portion of debt | 173 | 542 | |||||||||||
| Inventories | 528,680 | 531,874 | ||||||||||||||
| Other current assets | 46,868 | 32,860 | ||||||||||||||
| TOTAL CURRENT ASSETS | 1,097,108 | 1,112,631 | TOTAL CURRENT LIABILITIES | 379,606 | 370,367 | |||||||||||
| OTHER ASSETS | 111,175 | 20,266 | LONG-TERM DEBT AND | |||||||||||||
| INTANGIBLE ASSETS, NET | 273,804 | 263,024 | CAPITAL LEASE OBLIGATIONS | 187,471 | 276,274 | |||||||||||
| PROPERTY, PLANT | OTHER LIABILITIES | 100,349 | 42,255 | |||||||||||||
| AND EQUIPMENT, NET | 368,572 | 340,698 | EQUITY | 1,183,233 | 1,047,723 | |||||||||||
| TOTAL ASSETS | $ | 1,850,659 | $ | 1,736,619 | TOTAL LIABILITIES AND EQUITY | $ | 1,850,659 | $ | 1,736,619 | |||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) | ||||||||
| FOR THE SIX MONTHS ENDED | ||||||||
| JUNE 2019/2018 | ||||||||
| (In thousands) | 2019 | 2018 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net earnings | $ | 91,147 | $ | 78,714 | ||||
| Adjustments to reconcile net earnings to net cash from operating activities: | ||||||||
| Depreciation | 29,200 | 26,144 | ||||||
| Amortization of intangibles | 2,946 | 2,702 | ||||||
| Expense associated with share-based and grant compensation arrangements | 2,209 | 1,924 | ||||||
| Deferred income taxes credit | (536 | ) | (565 | ) | ||||
| Unrealized gain on investment | (1,518 | ) | - | |||||
| Net gain on disposition of assets | (321 | ) | (6,057 | ) | ||||
| Changes in: | ||||||||
| Accounts receivable | (139,468 | ) | (155,666 | ) | ||||
| Inventories | 28,008 | (61,828 | ) | |||||
| Accounts payable and cash overdraft | 49,947 | 62,665 | ||||||
| Accrued liabilities and other | 9,334 | 15,895 | ||||||
| NET CASH FROM (USED IN) OPERATING ACTIVITIES | 70,948 | (36,072 | ) | |||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchases of property, plant, and equipment | (42,477 | ) | (54,313 | ) | ||||
| Proceeds from sale of property, plant and equipment | 977 | 36,724 | ||||||
| Acquisitions and purchase of noncontrolling interest, net of cash received | (5,034 | ) | (37,960 | ) | ||||
| Purchases of investments | (4,859 | ) | (9,348 | ) | ||||
| Proceeds from sale of investments | 3,667 | 3,180 | ||||||
| Other | (10 | ) | (1,352 | ) | ||||
| NET CASH USED IN INVESTING ACTIVITIES | (47,736 | ) | (63,069 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Borrowings under revolving credit facilities | 393,434 | 488,853 | ||||||
| Repayments under revolving credit facilities | (408,027 | ) | (431,657 | ) | ||||
| Borrowings of debt | - | 1,639 | ||||||
| Repayments of debt | (3,061 | ) | (5,437 | ) | ||||
| Issuance of long-term debt | - | 75,000 | ||||||
| Proceeds from issuance of common stock | 542 | 500 | ||||||
| Distributions to noncontrolling interest | (900 | ) | (1,078 | ) | ||||
| Dividends paid to shareholders | (12,271 | ) | (11,090 | ) | ||||
| Repurchase of common stock | - | (1,819 | ) | |||||
| Other | 28 | (71 | ) | |||||
| NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (30,255 | ) | 114,840 | |||||
| Effect of exchange rate changes on cash | 366 | (256 | ) | |||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (6,677 | ) | 15,443 | |||||
| ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 28,198 | 28,816 | ||||||
| ALL CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 21,521 | $ | 44,259 | ||||
| Reconciliation of cash and cash equivalents and restricted cash: | ||||||||
| Cash and cash equivalents, beginning of period | $ | 27,316 | $ | 28,339 | ||||
| Restricted cash, beginning of period | 882 | 477 | ||||||
| All cash and cash equivalents, beginning of period | $ | 28,198 | $ | 28,816 | ||||
| Cash and cash equivalents, end of period | $ | 20,497 | $ | 27,501 | ||||
| Restricted cash, end of period | 1,024 | 16,758 | ||||||
| All cash and cash equivalents, end of period | $ | 21,521 | $ | 44,259 | ||||
| EBITDA RECONCILIATION (UNAUDITED) | |||||||||
| FOR THE THREE AND SIX MONTHS ENDED | |||||||||
| JUNE 2019/2018 | |||||||||
| Quarter Period | Year to Date | ||||||||
| (In thousands) | 2019 | 2018 | 2019 | 2018 | |||||
| Net earnings | 55,145 | 45,130 | 91,147 | 78,714 | |||||
| Interest expense | 2,407 | 2,248 | 4,867 | 4,025 | |||||
| Interest and investment income | (682) | (181) | (2,275) | (898) | |||||
| Net gain on disposition of assets | (199) | 477 | (321) | (6,057) | |||||
| Income taxes | 17,367 | 13,420 | 28,944 | 22,994 | |||||
| Expense associated with share-based compensation arrangements | 922 | 831 | 2,209 | 1,924 | |||||
| Depreciation expense | 14,725 | 13,432 | 29,200 | 26,144 | |||||
| Amortization of intangibles | 1,094 | 1,474 | 2,946 | 2,702 | |||||
| EBITDA | 90,779 | 76,831 | 156,717 | 129,548 | |||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AS A PERCENTAGE OF SALES | |||||||||
| CURRENT YEAR'S SALES STATED AT LAST YEAR'S SELLING PRICES (UNAUDITED) | |||||||||
| FOR THE THREE MONTHS ENDED - JUNE 2019/2018 | |||||||||
| Quarter Period | |||||||||
| Actual | Sales Adjusted to Last Year's Selling Price | Actual | |||||||
| 2019 | 2019 | 2018 | |||||||
| NET SALES | 100.0 | % | 100.0 | % | 100.0 | % | |||
| COST OF GOODS SOLD | 84.9 | 86.2 | 87.2 | ||||||
| GROSS PROFIT | 15.1 | 13.8 | 12.8 | ||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 9.1 | 8.3 | 8.1 | ||||||
| NET GAIN ON DISPOSITION OF ASSETS | - | - | - | ||||||
| EARNINGS FROM OPERATIONS | 6.0 | 5.5 | 4.7 | ||||||
| OTHER EXPENSE, NET | 0.1 | 0.1 | 0.2 | ||||||
| EARNINGS BEFORE INCOME TAXES | 5.8 | 5.3 | 4.5 | ||||||
| INCOME TAXES | 1.4 | 1.3 | 1.0 | ||||||
| NET EARNINGS | 4.4 | 4.1 | 3.5 | ||||||
| LESS NET EARNINGS ATTRIBUTABLE TO | |||||||||
| NONCONTROLLING INTEREST | (0.1) | - | (0.1) | ||||||
| NET EARNINGS ATTRIBUTABLE TO | |||||||||
| CONTROLLING INTEREST | 4.4 | % | 4.0 | % | 3.4 | % | |||
| Note: Actual percentages are calculated and may not sum to total due to rounding. | |||||||||
| 2018 NET SALES | $ | 1,294,440 | |||||||
| 2019 SELL PRICE DECLINE | 9.00 | % | |||||||
| DECREASE IN 2019 NET SALES DUE TO SELL PRICE DECLINE | $ | 116,500 | |||||||
| ACTUAL 2019 NET SALES | 1,239,817 | ||||||||
| ADJUSTED 2019 NET SALES | $ | 1,356,317 | |||||||
| ACTUAL 2019 COST OF GOODS SOLD | $ | 1,053,091 | |||||||
| PLUS DIFFERENCE IN NET SALES (ABOVE) | 116,500 | ||||||||
| ADJUSTED 2019 COST OF GOODS SOLD | $ | 1,169,591 | |||||||
