Universal Forest Products (NASDAQ: UFPI) reported Q4 EPS of $1.02, $0.29 better than the analyst estimate of $0.73. Revenue for the quarter came in at $1.39 billion versus the consensus estimate of $1.2 billion.

Fourth Quarter 2020 Highlights (comparisons on a year-over-year basis):

• Net sales of $1.39 billion increased 40 percent due to a 15 percent increase in unit sales and 25 percent increase in lumber prices
• Earnings from operations of $88.2 million increased 70 percent despite $12 million in asset impairment charges and other costs taken during the quarter (detailed in the Business Segment section below). The company’s use of share grants as part of its annual incentive program resulted in a $20 million decrease in bonus expense in the fourth quarter of 2020 compared to 2019. Excluding impairment charges and the decrease in bonus expense, earnings from operations increased 55 percent.
• New product sales of $131.8 million increased 46 percent

“Despite the disruptions that marked 2020, our reorganized structure allowed our employees to remain focused on bringing new value-added products to market faster and using capital more efficiently, while supporting more rapid growth at a lower incremental cost,” said CEO Matthew J. Missad. “I am most impressed by the perseverance of our hourly production employees who safely served our customers. Their commitment to our company enabled us to reward our hourly employees with more than $25 million in bonuses and additional benefits for 2020. I want to express my deepest gratitude for their dedication.”

New product sales for the fourth quarter increased 46 percent over the same period of 2019, led by the company’s new Deckorators Voyage decking line and Dimensions project panels business. These improvements in sales mix contributed to an increase in the company’s gross profit per unit, as gross profit increased by 19 percent, exceeding the company’s 15 percent increase in unit sales growth. Additionally, the company’s SG&A expense as a percentage of gross profit improved to 46 percent compared to 67 percent in 2019, due to its continued efforts to focus on leveraging fixed costs and creating efficiencies as it grows organically and through acquisitions. Certain expenses, such as travel, decreased due to the impact of the pandemic and the company’s increased use of equity awards as part of its annual incentive compensation program.

“I’m pleased to see our strategies and execution are continuing to drive improvements in profit per unit, especially in a quarter like this when lumber market volatility was a formidable challenge,” said Missad. “As usual, our people were up to the challenge.”

“Our Commercial Construction business unit was one of the hardest hit by the lockdowns related to the pandemic,” said Missad. “While this unit reacted quickly to provide a variety of protective structures and signage for COVID-related needs, many core commercial construction markets, such as hospitality, financial services, and branded retail markets, slowed dramatically. Market conditions necessitated that we take significant actions to align capacity with current demand, and as a result of our actions, we believe the business unit will return to profitability in 2021.”

For earnings history and earnings-related data on Universal Forest Products (UFPI) click here.