(Source: Business Wire)
Universal Forest Products, Inc. (Nasdaq: UFPI) today announced second-quarter 2009 results, including net earnings of $16.1 million, which compares to net earnings of $11.7 million for the same period last year. Diluted earnings per share for the second quarter were $0.83, up from $0.61 for the same period last year. Net sales for the second quarter were $514.9 million, down from $708.5 million for the same period of 2008, reflecting a continued weak economy and a soft lumber market.
The Company's balance sheet reflects a significant improvement in its debt. At the end of June 2008, the Company had debt and amounts outstanding under its sale of receivables agreement totaling $228 million. Strong cash flow, resulting from its efforts to manage its inventory and receivables and to continuously improve operations and reduce costs, allowed the Company to report total debt of $55.5 million and available cash of $32.6 million at the end of June 2009. Improved purchasing practices, lower fuel costs, and improved labor and overhead costs as a result of earlier decisions to consolidate and right-size operations are among the factors that helped to enhance profitability.
"We are pleased that our strategies coupled with the often-difficult decisions we made in recent years to size our operations to our business are paying off," said CEO Michael B. Glenn. "We believe that our shareholders will be pleased with the state of our balance sheet and our ability to generate strong cash flow that allowed us to nearly erase our debt. The fundamentals of our company remain strong and we are well-positioned to take advantage of opportunities that arise in the marketplace."
The Company's sales in all four markets continue to be negatively affected by weak demand, as well as depressed lumber prices. The year-to-date composite lumber price was 22% lower for the second quarter 2009 than the same period last year. By market, Universal posted the following gross sales results for the second quarter:
Do-It-Yourself/retail: $291.5 million, a decrease of 13.5% from the same period of 2008. The Company picked up market share by adding new products and gaining additional customer locations. While this market is expected to remain weak through 2009, the long-term outlook is favorable and forecasts call for growth beginning in 2010. The Company remains a strong and critical supplier of lumber products to big-box and independent retailers. It is confident that significant opportunities exist for growth and profitability for its consumer products, including lawn and garden products and wood-alternative decking and railing products.
Industrial packaging/components: $131.3 million, a decrease of 23.8% from 2008. These results reflect a continued decline in demand for packaging, due to the weak economy. The Company believes the opportunity remains strong as it continues to consolidate this fragmented market, add new customers and products, and grow its reach in concrete forming. The industrial market provides opportunities for Universal to leverage its engineering, production and logistics capabilities and its national footprint to become the supplier of choice for industrial packaging and concrete forming products.
Site-built construction: $60.8 million, a decrease of 54.0% from the same period of 2008. Total housing starts declined 50% for the first five months of 2009 compared to the first five months of 2008. April 2009 starts were down 54% from April 2008; May 2009 housing starts were down 44% from May 2008, the most recent statistics available. Price pressure continues to be an impediment to significant market share gains. The Company remains focused on growing its status as a preferred supplier, given its strong financial position in an arena where many suppliers are facing financial difficulties, and on providing best-of-class products and service to its customers.
Manufactured housing: $44.7 million, a decrease of 46.9% from 2008. These results reflect a nearly 46% decrease in HUD-code shipments for the first five months of 2009 compared to the first five months of 2008, as well as a decrease in shipments of more than 46% in April 2009 from April 2008, and a 45% decrease in May 2009 from May 2008, the most recent statistics available. Universal believes improved financing opportunities and a recovering housing market will lead to improved sales results in this market.
"Our people worked hard to allow us to be profitable in the worst recession and market conditions in our history," Glenn added. "I'm proud of our accomplishments. While we still have a rough road ahead of us, I look forward to the eventual return of the economy, which will allow us to unleash the full power of our company, people and strategies."
OUTLOOK
The Company expects the current challenging conditions to prevail through 2009; however, its strong financial position, solid business model and diverse business opportunities position it better than most to endure challenging times. The Company believes that current economic conditions and uncertainties limit its ability to provide meaningful guidance for ranges of likely financial performance and has chosen to cease the practice of providing guidance for the foreseeable future.
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 16, 2009. The call will be hosted by Executive Chairman William G. Currie, CEO Michael B. Glenn and CFO Michael Cole, and will be available for analysts and institutional investors domestically at (800) 561-2693 or internationally at (617) 614-3523. Use conference pass code 52787605. 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 Saturday, Aug. 15, 2009, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code 36010173.
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 the site-built construction market, and specialty wood packaging and components for various industries. 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, and its 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 market and forming products for concrete construction. The 54-year-old company is headquartered in Grand Rapids, Mich., with facilities 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 SIX MONTHS ENDED JUNE 2009/2008 Quarter Period Year to Date (In thousands, except per share data) 2009 2008 2009 2008 NET SALES $ 514,945 100 % $ 708,485 100 % $ 876,667 100 % $ 1,197,997 100 % COST OF GOODS SOLD 432,460 84.0 623,607 88.0 747,361 85.3 1,058,299 88.3 GROSS PROFIT 82,485 16.0 84,878 12.0 129,306 14.7 139,698 11.7 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 56,020 10.9 61,712 8.7 105,112 12.0 120,256 10.0 NET (GAIN) LOSS ON DISPOSITION OF ASSETS AND OTHER IMPAIRMENT AND EXIT CHARGES (716 ) (0.1 ) 408 0.1 (1,852 ) (0.2 ) 1,215 0.1 EARNINGS FROM OPERATIONS 27,181 5.3 22,758 3.2 26,046 3.0 18,227 1.5 Interest expense 1,429 0.3 3,290 0.5 2,503 0.3 6,884 0.6 Interest income (96 ) - (179 ) - (179 ) - (552 ) - 1,333 0.3 3,111 0.4 2,324 0.3 6,332 0.5 EARNINGS BEFORE INCOME TAXES 25,848 5.0 19,647 2.8 23,722 2.7 11,895 1.0 INCOME TAXES 9,393 1.8 7,470 1.1 8,430 1.0 4,120 0.3 NET EARNINGS 16,455 3.2 12,177 1.7 15,292 1.7 7,775 0.6 LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST (367 ) (0.1 ) (514 ) (0.1 ) (411 ) - (688 ) (0.1 ) NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST $ 16,088 3.1 $ 11,663 1.6 $ 14,881 1.7 $ 7,087 0.6 EARNINGS PER SHARE - BASIC $ 0.84 $ 0.61 $ 0.77 $ 0.37 EARNINGS PER SHARE - DILUTED $ 0.83 $ 0.61 $ 0.77 $ 0.37 WEIGHTED AVERAGE SHARES OUTSTANDING 19,241 19,048 19,213 19,022 WEIGHTED AVERAGE SHARES OUTSTANDING WITH COMMON STOCK EQUIVALENTS 19,459 19,267 19,370 19,224 SUPPLEMENTAL SALES DATA Quarter Period Year to Date Market Classification 2009 % 2008 % 2009 % 2008 % Do-It-Yourself/Retail $ 291,540 55 % $ 337,061 46 % $ 459,674 51 % $ 512,520 42 % Site-Built Construction 60,830 12 % 132,085 18 % 121,595 14 % 239,093 20 % Industrial 131,281 25 % 172,285 24 % 234,940 26 % 311,893 25 % Manufactured Housing 44,668 8 % 84,167 12 % 81,218 9 % 160,609 13 % Total Gross Sales 528,319 100 % 725,598 100 % 897,427 100 % 1,224,115 100 % Sales Allowances (13,374 ) (17,113 ) (20,760 ) (26,118 ) Total Net Sales $ 514,945 $ 708,485 $ 876,667 $ 1,197,997 -------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED) JUNE 2009/2008 (In thousands) ASSETS 2009 2008 LIABILITIES AND EQUITY 2009 2008 CURRENT ASSETS CURRENT LIABILITIES Cash and cash equivalents $ 32,633 $ 32,483 Accounts payable $ 98,805 $ 122,345 Accounts receivable 197,901 227,963 Accrued liabilities 85,459 89,093 Inventories 165,490 222,937 Current portion of long-term Assets held for sale 3,057 10,334 debt and capital leases 396 945 Other current assets 19,728 34,828 TOTAL CURRENT ASSETS 418,809 528,545 TOTAL CURRENT LIABILITIES 184,660 212,383 OTHER ASSETS 3,456 7,657 LONG-TERM DEBT AND INTANGIBLE ASSETS, NET 177,703 186,664 CAPITAL LEASE OBLIGATIONS, PROPERTY, PLANT less current portion 55,108 177,063 AND EQUIPMENT, NET 235,509 263,635 OTHER LIABILITIES 32,512 42,237 EQUITY 563,197 554,818 TOTAL ASSETS $ 835,477 $ 986,501 TOTAL LIABILITIES AND EQUITY $ 835,477 $ 986,501 -------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 2009/2008 (In thousands) 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings attributable to controlling interest $ 14,881 $ 7,087 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation 16,510 19,331 Amortization of intangibles 4,520 4,778 Expense associated with share-based compensation arrangements 1,089 564 Expense associated with stock grant plans 89 85 Deferred income taxes 195 (212 ) Net earnings attributable to noncontrolling interest 411 687 Net (gain) loss on sale or impairment of property, plant and equipment (2,457 ) 573 Changes in: Accounts receivable (59,701 ) (83,169 ) Inventories 27,980 16,043 Accounts payable 35,576 37,659 Accrued liabilities and other 23,798 22,171 Excess tax benefits from share-based compensation arrangements (211 ) (42 ) NET CASH FROM OPERATING ACTIVITIES 62,680 25,555 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property, plant, and equipment (7,279 ) (10,469 ) Acquisitions, net of cash received - (23,338 ) Proceeds from sale of property, plant and equipment 10,241 26,827 Collection of notes receivable 68 448 Advances of notes receivable (14 ) (997 ) Insurance proceeds 1,023 - Other, net 11 (97 ) NET CASH FROM INVESTING ACTIVITIES 4,050 (7,626 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net repayments under revolving credit facilities (30,257 ) (28,295 ) Repayment of long-term debt (16,213 ) (492 ) Borrowings of long-term debt 800 - Proceeds from issuance of common stock 1,178 805 Additional 5% purchase of Shawnlee (1,770 ) - Distributions to noncontrolling interest (170 ) (378 ) Investment received from minority shareholder - 419 Dividends paid to shareholders (1,158 ) (1,139 ) Excess tax benefits from share-based compensation arrangements 211 42 Other, net (55 ) (13 ) NET CASH FROM FINANCING ACTIVITIES (47,434 ) (29,051 ) NET CHANGE IN CASH AND CASH EQUIVALENTS 19,296 (11,122 ) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 13,337 43,605 CASH AND CASH EQUIVALENTS, END OF PERIOD $ 32,633 $ 32,483 SUPPLEMENTAL INFORMATION: Interest paid 2,790 6,977 Income taxes refunded (6,050 ) (10,330 ) -------------------------------------------------------------------------------
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