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UFPI 2nd Quarter 2012 Earnings Climb

Stocks in this article: UFPI

“Despite these concerns, we will continue our pursuit of market share gains, of growth through acquisition and new products, and of opportunities in new markets, both domestic and foreign,” Missad said.

For the second quarter of 2012, the Company saw the following gross sales results:

Retail building materials: $280.8 million, down 2.3 percent from the same period of 2011. Universal continues to focus on growing its independent retail customer base, on providing a broader mix of products to big box and independent retailers alike, and on profitable business opportunities. Second-quarter results reflect the Company’s decision to cull sales that did not meet profit goals. While this hurt the top line, it enhanced profitability. “We will remain competitive in the marketplace and a strong supplier to our valued customers, but we won’t do so at a cost to our shareholders,” Missad said.

Industrial packaging/components: $158.3 million, up 25.3 percent over the second quarter of 2011. Though up year-over-year, industrial production in the United States began to edge down in the second quarter of 2011; even so, Universal posted this strong sales increase thanks to opportunities in this market, to a strong and coordinated sales approach and to design and manufacturing capabilities that far outweigh offerings by the competition. Universal’s focus remains on adding customers and products, including non-wood packaging materials, and on providing complete packaging solutions.

Manufactured housing: $80.7 million, an increase of 24.9 percent over the same period of 2011. Industry shipments of HUD-code homes in April and May 2012 were up 17.6 percent and 16.1 percent, respectively, compared to the same months of 2011. Additionally, approximately one-third of the Company’s sales to this market are for modular homes, for which shipments were up 18.7 percent in the first quarter of 2012 compared to the same quarter of 2011, the most recent statistics available. Demand for manufactured homes remained healthy in a number of regions, including areas of the United States and Canada where there’s ongoing need for temporary housing related to shale oil and gas development.

Residential construction: $60.2 million, up 6.3 percent over the same period of 2011. Total housing starts for March to May 2012 were up 26.2 percent over the same period of 2011, including increases in single-family and multifamily starts of 19.5 percent and 46.3 percent, respectively. Universal remains focused on profitable business opportunities in this market, where excess capacity continues to have an impact on sales and margins. The Company continues to see the impact of selective business practices, under which it gave up business that didn’t meet profit goals, resulting in a decline in market share.

Commercial construction and concrete forming: $24.2 million, up 14.4 percent over the second quarter of 2011. In this highly fragmented market, Universal manufactures and supplies forms and other materials for concrete construction projects, from bridges and roads to manufacturing facilities and hospitals. The Company continues to expand its sales reach and market penetration and to leverage its design and manufacturing capabilities, as well as its nationwide presence, to offer designed components to customers, large and small.

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 Friday, July 20, 2012. 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 (800) 215-2410 and internationally at (617) 597-5410. Use conference pass code 82113643. 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 Friday, August 17, 2012, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code 17875903.

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.

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 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 STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2012/2011
    Quarter Period   Year to Date
(In thousands, except per share data)   2012       2011       2012       2011    
               
 
NET SALES $ 593,693 100 % $ 544,139 100 % $ 1,050,804 100 % $ 931,372 100 %
 
COST OF GOODS SOLD   521,946   87.9   487,552   89.6   925,391   88.1   833,371   89.5
 
GROSS PROFIT 71,747 12.1 56,587 10.4 125,413 11.9 98,001 10.5
 
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 49,106 8.3 45,328 8.3 94,884 9.0 91,816 9.9
NET LOSS ON DISPOSITION OF ASSETS,
EARLY RETIREMENT, AND
OTHER IMPAIRMENT AND EXIT CHARGES   (6,878 ) (1.2 )   3,482   0.6   (6,783 ) (0.6 )   3,489   0.4
 
EARNINGS FROM OPERATIONS 29,519 5.0 7,777 1.4 37,312 3.6 2,696 0.3
 
OTHER EXPENSE (INCOME), NET   971   0.2   779   0.1   1,679   0.2   1,397   0.1
 
EARNINGS BEFORE INCOME TAXES 28,548 4.8 6,998 1.3 35,633 3.4 1,299 0.1
 
INCOME TAXES   10,538   1.8   2,502   0.5   13,237   1.3   215   -
 
NET EARNINGS 18,010 3.0 4,496 0.8 22,396 2.1 1,084 0.1
 
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST   (501 ) (0.1 )   (219 ) -   (732 ) (0.1 )   (477 ) (0.1 )
 
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST $ 17,509   2.9 $ 4,277   0.8 $ 21,664   2.1 $ 607   0.1
 
 
EARNINGS PER SHARE - BASIC $ 0.88 $ 0.22 $ 1.10 $ 0.03
 
EARNINGS PER SHARE - DILUTED $ 0.88 $ 0.22 $ 1.10 $ 0.03
 
                                 
 
COMPREHENSIVE INCOME 16,777 4,706 22,221 2,004
 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE
TO NONCONTROLLING INTEREST   (63 )   (294 )   (718 )   (723 )
 
COMPREHENSIVE INCOME
ATTRIBUTABLE TO CONTROLLING INTEREST $ 16,714   $ 4,412   $ 21,503   $ 1,281  
                                 
 

SUPPLEMENTAL SALES DATA

Quarter Period Year to Date

Market Classification

2012 % 2011 % 2012 % 2011 %
Retail Building Materials $ 280,775 47 % $ 287,475 51 % $ 477,646 46 % $ 462,741 48 %
Residential Construction 60,176 10 % 56,611 10 % 112,103 10 % 104,442 11 %
Commercial Construction and Concrete Forming 24,180 4 % 21,139 4 % 44,386 4 % 35,791 4 %
Industrial 158,287 26 % 126,330 23 % 290,594 27 % 235,756 25 %
Manufactured Housing   80,693   13 %   64,607   12 %   143,732   13 %   111,654   12 %
Total Gross Sales 604,111 100 % 556,162 100 % 1,068,461 100 % 950,384 100 %
Sales Allowances   (10,418 )   (12,023 )   (17,657 )   (19,012 )
Total Net Sales $ 593,693   $ 544,139   $ 1,050,804   $ 931,372  
                                                 
                       
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2012/2011
                               
(In thousands)                
ASSETS   2012   2011     LIABILITIES AND EQUITY   2012   2011
   
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $ 5,317 $ - Cash overdraft $ - $ 8,671
Accounts receivable 212,038 200,181 Accounts payable 81,117 76,521
Inventories 207,556 204,590 Accrued liabilities 57,904 55,314
Assets held for sale 5,082 Current portion of long-term
Other current assets 24,105 25,845 debt and capital leases   40,000   23,772
   
 
TOTAL CURRENT ASSETS 449,016 435,698 TOTAL CURRENT LIABILITIES 179,021 164,278
 
OTHER ASSETS 16,176 11,453 LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET 169,667 170,178 CAPITAL LEASE OBLIGATIONS,
PROPERTY, PLANT less current portion 32,854 52,200
AND EQUIPMENT, NET 217,778 216,997 OTHER LIABILITIES 36,688 36,991
    EQUITY   604,074   580,857
 
TOTAL ASSETS $ 852,637 $ 834,326 TOTAL LIABILITIES AND EQUITY $ 852,637 $ 834,326
                               
             
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2012/2011
(In thousands)       2012       2011
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net earnings attributable to controlling interest $ 21,664 $ 607
Adjustments to reconcile net earnings attributable to controlling interest
to net cash from operating activities:
Depreciation 14,430 14,452
Amortization of intangibles 1,506 2,873
Expense associated with share-based compensation arrangements 666 1,013
Excess tax benefits from share-based compensation arrangements (26 ) (120 )
Expense associated with stock grant plans 75 150
Deferred income taxes (1,133 ) (87 )
Net earnings attributable to noncontrolling interest 732 477
Equity in earnings of investee (11 ) (35 )
Net (gain) loss on sale or impairment of property, plant and equipment (6,932 ) 21
Changes in: -
Accounts receivable (84,649 ) (77,166 )
Inventories (12,166 ) (13,865 )
Accounts payable 31,447 16,927
Accrued liabilities and other   14,685     (3,158 )
NET CASH FROM OPERATING ACTIVITIES (19,712 ) (57,911 )
   
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant, and equipment (15,760 ) (12,159 )
Proceeds from sale of property, plant and equipment 14,635 1,197

Acquisitions, net of cash received

(2,149 ) -
Purchase of patents (48 ) (77 )
Collections of notes receivable 755 294

Advances of notes receivable

(706 ) -
Other, net   (187 )   19  
NET CASH FROM INVESTING ACTIVITIES (3,460 ) (10,726 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facilities 23,154 20,931
Repayment of long-term debt (2,774 ) (272 )
Debt issuance costs (85 ) -
Proceeds from issuance of common stock 1,234 575
Purchase of additional noncontrolling interest - (100 )
Distributions to noncontrolling interest (429 ) (835 )
Capital contribution from noncontrolling interest - 80
Dividends paid to shareholders (3,946 ) (3,905 )
Excess tax benefits from share-based compensation arrangements 26 120
Other, net   4     9  
NET CASH FROM FINANCING ACTIVITIES   17,184     16,603  
 
NET CHANGE IN CASH AND CASH EQUIVALENTS (5,988 ) (52,034 )
 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD   11,305     43,363  
 
CASH AND CASH EQUIVALENTS (OVERDRAFT), END OF PERIOD $ 5,317   $ (8,671 )
 
SUPPLEMENTAL INFORMATION:
Cash paid during the period for:
Interest $ 2,079 $ 1,820
Income taxes 6,289 2,964
                     




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