UFP Industries Reports Record Profits for Fourth Quarter and Year
GRAND RAPIDS, Mich., Feb. 19, 2020 (GLOBE NEWSWIRE) -- Universal Forest Products, Inc. (n/k/a UFP Industries) (Nasdaq: UFPI), today announced record net sales and profits for the fourth quarter of 2019, as well as record EPS of $2.91 per diluted share for fiscal 2019 compared to $2.40 for fiscal 2018, a 21 percent increase.
“The hard-working employees of UFP Industries marked our 65th year in business by producing the best fourth quarter and year in our history,” stated CEO Matthew J. Missad. “Our record profitability is the result of increased unit sales, our ability to leverage fixed costs, and increased sales of our higher-margin, value-added products, which continue to comprise a greater portion of our product mix. We also generated record operating cash flow, allowing us to fund our strategic growth initiatives, further strengthen our balance sheet and return even more capital to our shareholders.”
Fourth Quarter 2019 Highlights (comparisons on a year-over-year basis):
- Earnings from operations of $51.8 million were up 14 percent and net earnings attributable to controlling interest of $37.7 million were up 24 percent
- EBITDA of $70.9 million increased by 12 percent
- Net sales of $998 million represent a 1 percent increase; lower lumber prices reduced gross sales by 5 percent
Fiscal 2019 Highlights (comparisons on a year-over-year basis):
- Earnings from operations of $244.9 million were up 18 percent, and net earnings attributable to controlling interest of $179.7 million were up 21 percent
- EBITDA of $317.3 million was up 19 percent, exceeding the company’s unit sales increase of 6 percent
- New product sales were $540 million, up 13 percent. For 2020, the company has removed $126 million of 2019 sales from its new products classification, although it will continue to sell those products.
- Net sales of $4.42 billion were down 2 percent; lower lumber prices reduced gross sales by 8 percent
- Net cash flow from operating activities of $349.3 million was up 199%
By market, the Company reported the following 2019 results:
Retail
- Fourth Quarter: $323.3 million in gross sales, up 7 percent over the fourth quarter of 2018. Retail unit sales increased 10 percent due to new product growth and market share gains. Lower selling prices reduced gross sales by 3 percent.
- Full Year: $1.64 billion in gross sales, down 1 percent from 2018, due to a 7 percent increase in unit sales and an 8 percent decrease in selling prices.
Industrial
- Fourth Quarter: $309.7 million in gross sales, down 4 percent from the fourth quarter of 2018; unit sales increased 2 percent, while lower lumber prices reduced gross sales by 6 percent. Acquisitions accounted for all the unit sales growth.
- Full Year: $1.33 billion in gross sales, up 2 percent over the previous year. Unit sales increased 7 percent; 5 percent came from acquisitions and 2 percent from organic growth.
Construction
- Fourth Quarter: $379.0 million in gross sales, up 1 percent over the fourth quarter of 2018, due to a 5 percent increase in unit sales and a 4 percent decrease in selling prices. Unit sales to commercial, manufactured housing and residential customers rose 9, 4, and 3 percent, respectively.
- Full Year: $1.52 billion in gross sales, down 5 percent from the previous year due to a 10 percent decrease in lumber prices and a 5 percent increase in unit sales. Unit sales to commercial and residential customers rose 11 and 5 percent, respectively. Manufactured housing sales were flat for the year.
On January 1, 2020, the company began doing business as UFP Industries to better reflect its growing diversity of products and markets. (The company will seek shareholder approval for the change to its corporate name at its annual meeting of shareholders in April.) The company also realigned its organizational structure, creating three market-focused segments: UFP Construction, UFP Industrial and UFP Retail.
“Although our results indicate we are performing well, we believe we can continue to improve and have made changes to do so,” added Missad. “Our new structure is intended to bring even greater alignment with our customers and allow for quicker introduction of new, value-added products. It also will help us more effectively allocate capital to grow and improve our business. We are truly excited about the future of UFP Industries.”
On February 3, 2020, UFP Industries announced it changed the frequency of its dividend payments from semi-annual to quarterly. The company also announced a 25 percent pro-rated increase in its dividend payment.
CONFERENCE CALL
UFP Industries will conduct a conference call to discuss information included in this news release and related matters at 8:30 a.m. ET on Thursday, February 20, 2020. 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 8194375. 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 March 21, 2020, at 855-859-2056, 404-537-3406 or 800-585-5367.
Universal Forest Products, Inc. (d/b/a UFP Industries)
UFP Industries 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 UFP Industries, 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 TWELVE MONTHS ENDED | ||||||||||||||||||||||||||||
| DECEMBER 2019/2018 | ||||||||||||||||||||||||||||
| Quarter Period | Year to Date | |||||||||||||||||||||||||||
| (In thousands, except per share data) | 2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
| NET SALES | $ | 998,041 | 100 | % | $ | 988,181 | 100 | % | $ | 4,416,009 | 100 | % | $ | 4,489,180 | 100.0 | % | ||||||||||||
| COST OF GOODS SOLD | 840,786 | 84.2 | 850,538 | 86.1 | 3,730,491 | 84.5 | 3,896,286 | 86.8 | ||||||||||||||||||||
| GROSS PROFIT | 157,255 | 15.8 | 137,643 | 13.9 | 685,518 | 15.5 | 592,894 | 13.2 | ||||||||||||||||||||
| SELLING, GENERAL AND | ||||||||||||||||||||||||||||
| ADMINISTRATIVE EXPENSES | 104,154 | 10.4 | 92,387 | 9.3 | 438,320 | 9.9 | 392,679 | 8.7 | ||||||||||||||||||||
| FOREIGN CURRENCY EXCHANGE LOSS | 610 | 0.1 | (657 | ) | (0.1 | ) | 727 | - | (444 | ) | - | |||||||||||||||||
| NET LOSS (GAIN) ON DISPOSITION AND IMPAIRMENT OF ASSETS | 735 | 0.1 | 475 | - | 1,565 | - | (6,604 | ) | (0.1 | ) | ||||||||||||||||||
| EARNINGS FROM OPERATIONS | 51,756 | 5.2 | 45,438 | 4.6 | 244,906 | 5.5 | 207,263 | 4.6 | ||||||||||||||||||||
| OTHER EXPENSE, NET | 150 | - | 4,548 | 0.5 | 4,232 | 0.1 | 9,410 | 0.2 | ||||||||||||||||||||
| EARNINGS BEFORE INCOME TAXES | 51,606 | 5.2 | 40,890 | 4.1 | 240,674 | 5.5 | 197,853 | 4.4 | ||||||||||||||||||||
| INCOME TAXES | 12,930 | 1.3 | 9,258 | 0.9 | 58,270 | 1.3 | 45,441 | 1.0 | ||||||||||||||||||||
| NET EARNINGS | 38,676 | 3.9 | 31,632 | 3.2 | 182,404 | 4.1 | 152,412 | 3.4 | ||||||||||||||||||||
| LESS NET EARNINGS ATTRIBUTABLE TO | ||||||||||||||||||||||||||||
| NONCONTROLLING INTEREST | (940 | ) | (0.1 | ) | (1,130 | ) | (0.1 | ) | (2,754 | ) | (0.1 | ) | (3,814 | ) | (0.1 | ) | ||||||||||||
| NET EARNINGS ATTRIBUTABLE TO | ||||||||||||||||||||||||||||
| CONTROLLING INTEREST | $ | 37,736 | 3.8 | $ | 30,502 | 3.1 | $ | 179,650 | 4.1 | $ | 148,598 | 3.3 | ||||||||||||||||
| EARNINGS PER SHARE - BASIC | $ | 0.61 | $ | 0.50 | $ | 2.91 | $ | 2.41 | ||||||||||||||||||||
| EARNINGS PER SHARE - DILUTED | $ | 0.61 | $ | 0.50 | $ | 2.91 | $ | 2.40 | ||||||||||||||||||||
| COMPREHENSIVE INCOME | 39,545 | 29,726 | 183,917 | 147,336 | ||||||||||||||||||||||||
| LESS COMPREHENSIVE INCOME ATTRIBUTABLE | ||||||||||||||||||||||||||||
| TO NONCONTROLLING INTEREST | (1,383 | ) | (577 | ) | (3,218 | ) | (3,873 | ) | ||||||||||||||||||||
| COMPREHENSIVE INCOME | ||||||||||||||||||||||||||||
| ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 38,162 | $ | 29,149 | $ | 180,699 | $ | 143,463 | ||||||||||||||||||||
| SUPPLEMENTAL SALES DATA | ||||||||||||||||||||||||||||
| Quarter Period | Year to Date | |||||||||||||||||||||||||||
| Market Classification | 2019 | 2018 | % | 2019 | 2018 | % | ||||||||||||||||||||||
| Retail | $ | 323,342 | $ | 302,414 | 7 | % | $ | 1,638,885 | $ | 1,659,503 | -1 | % | ||||||||||||||||
| Industrial | 309,709 | 321,101 | -4 | % | 1,329,245 | 1,307,350 | 2 | % | ||||||||||||||||||||
| Construction | 378,990 | 376,508 | 1 | % | 1,524,053 | 1,598,896 | -5 | % | ||||||||||||||||||||
| Total Gross Sales | 1,012,041 | 1,000,023 | 1 | % | 4,492,183 | 4,565,749 | -2 | % | ||||||||||||||||||||
| Sales Allowances | (14,000 | ) | (11,842 | ) | -18 | % | (76,174 | ) | (76,569 | ) | 1 | % | ||||||||||||||||
| Total Net Sales | $ | 998,041 | $ | 988,181 | 1 | % | $ | 4,416,009 | $ | 4,489,180 | -2 | % | ||||||||||||||||
| 2019 | % of Sales | 2018 | % of Sales | 2019 | % of Sales | 2018 | % of Sales | |||||||||||||||||||||
| SG&A, Excluding Bonus Expense | $ | 88,592 | 8.9 | $ | 82,495 | 8.3 | $ | 369,491 | 8.4 | $ | 344,877 | 7.7 | ||||||||||||||||
| Bonus Expense | 15,562 | 1.6 | 9,892 | 1.0 | 68,829 | 1.6 | 47,802 | 1.1 | ||||||||||||||||||||
| Total SG&A | $ | 104,154 | 10.4 | $ | 92,387 | 9.3 | $ | 438,320 | 9.9 | $ | 392,679 | 8.7 | ||||||||||||||||
| SG&A, Excluding Bonus Expense, as a Percentage of Gross Profit | 56.3 | % | 59.9 | % | 53.9 | % | 58.2 | % | ||||||||||||||||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) | ||||||||||||||||
| DECEMBER 2019/2018 | ||||||||||||||||
| (In thousands) | ||||||||||||||||
| ASSETS | 2019 | 2018 | LIABILITIES AND EQUITY | 2019 | 2018 | |||||||||||
| CURRENT ASSETS | CURRENT LIABILITIES | |||||||||||||||
| Cash and cash equivalents | $ | 168,336 | $ | 27,316 | Cash overdraft | $ | - | $ | 27,367 | |||||||
| Restricted cash | 330 | 882 | Accounts payable | 142,479 | 136,901 | |||||||||||
| Investments | 18,527 | 14,755 | Accrued liabilities | 208,747 | 145,754 | |||||||||||
| Accounts receivable | 364,027 | 343,450 | Current portion of debt | 2,816 | 148 | |||||||||||
| Inventories | 486,874 | 556,220 | ||||||||||||||
| Other current assets | 54,978 | 52,655 | ||||||||||||||
| TOTAL CURRENT ASSETS | 1,093,072 | 995,278 | TOTAL CURRENT LIABILITIES | 354,042 | 310,170 | |||||||||||
| OTHER ASSETS | 124,028 | 24,597 | LONG-TERM DEBT AND | |||||||||||||
| INTANGIBLE ASSETS, NET | 285,203 | 272,963 | CAPITAL LEASE OBLIGATIONS | 160,867 | 202,130 | |||||||||||
| PROPERTY, PLANT | OTHER LIABILITIES | 116,835 | 46,564 | |||||||||||||
| AND EQUIPMENT, NET | 387,174 | 354,710 | EQUITY | 1,257,733 | 1,088,684 | |||||||||||
| TOTAL ASSETS | $ | 1,889,477 | $ | 1,647,548 | TOTAL LIABILITIES AND EQUITY | $ | 1,889,477 | $ | 1,647,548 | |||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||||
| FOR THE TWELVE MONTHS ENDED | |||||||||||
| DECEMBER 2019/2018 | |||||||||||
| (In thousands) | 2019 | 2018 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||
| Net earnings | $ | 182,404 | $ | 152,412 | |||||||
| Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||||
| Depreciation | 60,494 | 54,949 | |||||||||
| Amortization of intangibles | 6,325 | 6,393 | |||||||||
| Expense associated with share-based and grant compensation arrangements | 4,007 | 3,574 | |||||||||
| Deferred income taxes | 7,176 | 857 | |||||||||
| Unrealized loss (gain) on investments and other | (2,523 | ) | 1,888 | ||||||||
| Net loss (gain) on disposition and impairment of assets | 1,565 | (6,604 | ) | ||||||||
| Changes in: | |||||||||||
| Accounts receivable | (16,872 | ) | (8,512 | ) | |||||||
| Inventories | 73,120 | (84,304 | ) | ||||||||
| Accounts payable and cash overdraft | (24,132 | ) | (5,213 | ) | |||||||
| Accrued liabilities and other | 57,727 | 1,245 | |||||||||
| NET CASH FROM OPERATING ACTIVITIES | 349,291 | 116,685 | |||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||
| Purchases of property, plant, and equipment | (84,933 | ) | (95,862 | ) | |||||||
| Proceeds from sale of property, plant and equipment | 1,777 | 38,373 | |||||||||
| Acquisitions and purchase of noncontrolling interest, net of cash received | (39,122 | ) | (54,017 | ) | |||||||
| Investment in life insurance contracts | (15,253 | ) | - | ||||||||
| Purchases of investments | (13,352 | ) | (13,338 | ) | |||||||
| Proceeds from sale of investments | 9,828 | 3,678 | |||||||||
| Other | (982 | ) | (66 | ) | |||||||
| NET CASH USED IN INVESTING ACTIVITIES | (142,037 | ) | (121,232 | ) | |||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||
| Borrowings under revolving credit facilities | 422,057 | 732,370 | |||||||||
| Repayments under revolving credit facilities | (460,537 | ) | (748,496 | ) | |||||||
| Borrowings of debt | - | 927 | |||||||||
| Repayments of debt | (3,136 | ) | (5,540 | ) | |||||||
| Issuance of long-term debt | - | 75,000 | |||||||||
| Proceeds from issuance of common stock | 1,093 | 1,026 | |||||||||
| Distributions to noncontrolling interest | (2,216 | ) | (3,139 | ) | |||||||
| Dividends paid to shareholders | (24,549 | ) | (22,072 | ) | |||||||
| Repurchase of common stock | - | (24,629 | ) | ||||||||
| Other | 20 | (1,054 | ) | ||||||||
| NET CASH FROM (USED IN) FINANCING ACTIVITIES | (67,268 | ) | 4,393 | ||||||||
| Effect of exchange rate changes on cash | 482 | (464 | ) | ||||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 140,468 | (618 | ) | ||||||||
| ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 28,198 | 28,816 | |||||||||
| ALL CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 168,666 | $ | 28,198 | |||||||
| 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 | $ | 168,336 | $ | 27,316 | |||||||
| Restricted cash, end of period | 330 | 882 | |||||||||
| All cash and cash equivalents, end of period | $ | 168,666 | $ | 28,198 | |||||||
| EBITDA RECONCILIATION (UNAUDITED) | |||||||||||||
| FOR THE THREE AND TWELVE MONTHS ENDED | |||||||||||||
| DECEMBER 2019/2018 | |||||||||||||
| Quarter Period | Year to Date | ||||||||||||
| (In thousands) | 2019 | 2018 | 2019 | 2018 | |||||||||
| Net earnings | 38,676 | 31,632 | 182,404 | 152,412 | |||||||||
| Interest expense | 1,933 | 2,921 | 8,700 | 8,893 | |||||||||
| Interest and investment income | (871 | ) | (262 | ) | (1,945 | ) | (1,371 | ) | |||||
| Income taxes | 12,930 | 9,258 | 58,270 | 45,441 | |||||||||
| Expense associated with share-based compensation arrangements | 902 | 813 | 4,007 | 3,574 | |||||||||
| Net loss (gain) on disposition and impairment of assets | 735 | 475 | 1,565 | (6,604 | ) | ||||||||
| Unrealized loss (gain) on investments | (912 | ) | 1,888 | (2,523 | ) | 1,888 | |||||||
| Depreciation expense | 15,842 | 14,459 | 60,494 | 54,949 | |||||||||
| Amortization of intangibles | 1,635 | 2,119 | 6,325 | 6,393 | |||||||||
| EBITDA | 70,870 | 63,303 | 317,297 | 265,575 | |||||||||
| 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 - DECEMBER 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 | 84.2 | 85.0 | 86.1 | |||||||||
| GROSS PROFIT | 15.8 | 15.0 | 13.9 | |||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 10.5 | 9.9 | 9.3 | |||||||||
| NET LOSS ON DISPOSITION AND IMPAIRMENT OF ASSETS | 0.1 | 0.1 | - | |||||||||
| EARNINGS FROM OPERATIONS | 5.2 | 4.9 | 4.6 | |||||||||
| OTHER EXPENSE, NET | - | - | 0.5 | |||||||||
| EARNINGS BEFORE INCOME TAXES | 5.2 | 4.9 | 4.1 | |||||||||
| INCOME TAXES | 1.3 | 1.2 | 0.9 | |||||||||
| NET EARNINGS | 3.9 | 3.7 | 3.2 | |||||||||
| LESS NET EARNINGS ATTRIBUTABLE TO | ||||||||||||
| NONCONTROLLING INTEREST | (0.1 | ) | (0.1 | ) | (0.1 | ) | ||||||
| NET EARNINGS ATTRIBUTABLE TO | ||||||||||||
| CONTROLLING INTEREST | 3.8 | % | 3.6 | % | 3.1 | % | ||||||
| Note: Actual percentages are calculated and may not sum to total due to rounding. | ||||||||||||
| 2018 NET SALES | $ | 988,181 | ||||||||||
| 2019 SELL PRICE DECLINE | 5.00 | % | ||||||||||
| DECREASE IN 2019 NET SALES DUE TO SELL PRICE DECLINE | $ | 49,409 | ||||||||||
| ACTUAL 2019 NET SALES | 998,041 | |||||||||||
| ADJUSTED 2019 NET SALES | $ | 1,047,450 | ||||||||||
| ACTUAL 2019 COST OF GOODS SOLD | $ | 840,786 | ||||||||||
| PLUS DIFFERENCE IN NET SALES (ABOVE) | 49,409 | |||||||||||
| ADJUSTED 2019 COST OF GOODS SOLD | $ | 890,195 | ||||||||||
---------------AT THE COMPANY---------------
Dick GauthierVP, Business Outreach(616) 365-1555
