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TheStreet Open House

UFPI Q2 Sales, Profits Decline; Weak Market Conditions Impact Results

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 Thurs., July 14, 2011. The call will be hosted by outgoing CEO Michael B. Glenn and CFO Michael Cole, and will be available for analysts and institutional investors domestically at 866-202-0886 or internationally at 617-213-8841. Use conference pass code 11302414. 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 14, 2011, domestically at 888-286-8010 or internationally at 617-801-6888. Use replay pass code 57548930.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company that provides capital, management and administrative resources to subsidiaries that design, manufacture and market wood and wood-alternative products for DIY/retail home centers and other retailers, structural lumber products for the manufactured housing industry, engineered wood components for residential and commercial construction, specialty wood packaging and components for various industries, and forming products for concrete construction. The Company's consumer products subsidiary offers a large portfolio of outdoor living products, including wood composite decking, decorative balusters, post caps and plastic lattice. Its lawn and garden group offers an array of products, such as trellises and arches, to retailers nationwide. Universal’s subsidiaries also provide framing services for the site-built construction market. Founded in 1955, Universal Forest Products is headquartered in Grand Rapids, Mich., with operations throughout North America. For more about Universal Forest Products, go to www.ufpi.com.

Please be aware that: Any statements included in this press release that are not historical facts are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on the beliefs of the Company's management as well as on assumptions made by, and information currently available to, the Company at the time such statements were made. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events 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: adverse lumber market trends, competitive activity, negative economic trends, government regulations and weather. Certain of these 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 STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 2011/2010
               
      Quarter Period         Year to Date    
(In thousands, except per share data)     2011         2010         2011         2010    
       
 
 
NET SALES $ 544,139 100 % $ 638,635 100 % $ 931,372 100 % $ 1,031,593 100 %
 
COST OF GOODS SOLD   487,552   89.6   560,749   87.8   833,371   89.5   902,073   87.4
 
GROSS PROFIT 56,587 10.4 77,886 12.2 98,001 10.5 129,520 12.6
 
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 45,328 8.3 54,041 8.5 91,816 9.9 102,530 9.9
NET LOSS ON DISPOSITION OF ASSETS,
EARLY RETIREMENT, AND
OTHER IMPAIRMENT AND EXIT CHARGES   3,482   0.6   212   -   3,489   0.4   384   -
 
EARNINGS FROM OPERATIONS 7,777 1.4 23,633 3.7 2,696 0.3 26,606 2.6
 
INTEREST, NET   797   0.1   833   0.1   1,432   0.2   1,599   0.2
 
EARNINGS BEFORE INCOME TAXES 6,980 1.3 22,800 3.6 1,264 0.1 25,007 2.4
 
INCOME TAXES   2,502   0.5   8,332   1.3   215   -   8,819   0.9
 
NET EARNINGS 4,478 0.8 14,468 2.3 1,049 0.1 16,188 1.6
 
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST   (201 ) -   (752 ) (0.1 )   (442 ) -   (1,485 ) (0.1 )
 
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST $ 4,277   $ 13,716   $ 607   $ 14,703  
 
 
EARNINGS PER SHARE - BASIC $ 0.22 $ 0.71 $ 0.03 $ 0.76
 
EARNINGS PER SHARE - DILUTED $ 0.22 $ 0.70 $ 0.03 $ 0.75
 
WEIGHTED AVERAGE SHARES OUTSTANDING 19,413 19,259 19,360 19,258
 
WEIGHTED AVERAGE SHARES OUTSTANDING
WITH COMMON STOCK EQUIVALENTS 19,546 19,531 19,513 19,524
 
 

SUPPLEMENTAL SALES DATA

Quarter Period Year to Date

Market Classification

2011 % 2010 % 2011 % 2010 %
Retail Building Materials $ 287,528 51 % $ 353,060 54 % $ 462,809 48 % $ 540,086 51 %
Residential Construction 56,655 10 % 67,035 10 % 104,486 11 % 120,739 12 %
Commercial Construction and Concrete Forming 20,841 4 % 16,914 3 % 35,270 4 % 31,302 3 %
Industrial 126,541 23 % 129,073 20 % 236,186 25 % 224,665 21 %
Manufactured Housing and Recreation Vehicles   64,597   12 %   82,831   13 %   111,633   12 %   131,766   13 %
Total Gross Sales 556,162 100 % 648,913 100 % 950,384 100 % 1,048,558 100 %
Sales Allowances   (12,023 )   (10,278 )   (19,012 )   (16,965 )
Total Net Sales $ 544,139   $ 638,635   $ 931,372   $ 1,031,593  
 
 
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2011/2010
                       
(In thousands)
ASSETS     2011   2010       LIABILITIES AND EQUITY     2011   2010
 
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $ - $ 695 Cash overdraft $ 8,671 $ -
Accounts receivable 204,220 229,199 Accounts payable 76,521 83,467
Inventories 204,590 191,569 Accrued liabilities 55,314 77,957
Assets held for sale 5,082 - Current portion of long-term
Other current assets   20,333   18,110 debt and capital leases 23,772 692
   
TOTAL CURRENT ASSETS 434,225 439,573
TOTAL CURRENT LIABILITIES 164,278 162,116
OTHER ASSETS 11,453 5,300
INTANGIBLE ASSETS, NET 170,178 172,065 LONG-TERM DEBT AND
PROPERTY, PLANT CAPITAL LEASE OBLIGATIONS,
AND EQUIPMENT, NET 216,997 226,426 less current portion 52,200 67,932
    OTHER LIABILITIES 35,518 33,468
EQUITY   580,857   579,848
 
TOTAL ASSETS $ 832,853 $ 843,364 TOTAL LIABILITIES AND EQUITY $ 832,853 $ 843,364
 
 
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2011/2010
(In thousands)     2011       2010
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net earnings attributable to controlling interest $ 607 $ 14,703
Adjustments to reconcile net earnings attributable to controlling interest
to net cash from operating activities:
Depreciation 14,452 15,199
Amortization of intangibles 2,873 3,590
Expense associated with share-based compensation arrangements 1,013 1,078
Excess tax benefits from share-based compensation arrangements (120 ) (265 )
Expense associated with stock grant plans 150 117
Deferred income tax credit (87 ) (195 )
Net earnings attributable to noncontrolling interest 442 1,485
Net loss on sale or impairment of assets 21 118
Changes in:
Accounts receivable (77,166 ) (120,961 )
Inventories (13,865 ) (26,175 )
Accounts payable 16,927 33,706
Accrued liabilities and other   (3,158 )   21,627  
NET CASH FROM OPERATING ACTIVITIES (57,911 ) (55,973 )
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant, and equipment (12,159 ) (11,551 )
Acquisitions, net of cash received - (5,834 )
Proceeds from sale of property, plant and equipment 1,197 382
Purchase of product technology (77 ) -
Advances of notes receivable - (1,000 )
Collections of notes receivable 294 103
Other, net   19     21  
NET CASH FROM INVESTING ACTIVITIES (10,726 ) (17,879 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facilities 20,931 15,000
Repayment of long-term debt (272 ) (255 )
Proceeds from issuance of common stock 575 1,331
Purchase of additional noncontrolling interest (100 ) (1,227 )
Distributions to noncontrolling interest (835 ) (472 )
Capital contribution from noncontrolling interest 80 -
Dividends paid to shareholders (3,905 ) (3,871 )
Repurchase of common stock - (3,648 )
Excess tax benefits from share-based compensation arrangements 120 265
Other, net   9     14  
NET CASH FROM FINANCING ACTIVITIES   16,603     7,137  
 
NET CHANGE IN CASH AND CASH EQUIVALENTS (52,034 ) (66,715 )
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   43,363     67,410  
 
CASH (OVERDRAFT) AND CASH EQUIVALENTS, END OF PERIOD $ (8,671 ) $ 695  
 
SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Interest $ 1,820 $ 1,777
Income taxes 2,964 (8,470 )




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