Universal Forest Products, Inc. : UFPI Reports an 11.4 Percent Increase in Fourth Quarter 2011 Net Sales
02/15/2012| 04:20pm US/Eastern
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0
--Sales grow in four of five markets; by double-digits in three--
--Excluding noncash adjustments, earnings improve by $1.8 million--
Universal Forest Products, Inc. (Nasdaq: UFPI) today announced 2011
fourth-quarter results that included net sales of $422.0 million, up
11.4 percent over fourth-quarter 2010 net sales of $378.7 million. For
the fourth quarter of 2011, the Company saw a loss of $1.7 million, or
($.09) per diluted share, compared to 2010 fourth-quarter earnings of
$124,000, or $0.01 per diluted share.
Fourth-quarter earnings for 2011 were negatively impacted by $2.7
million and for 2010 by $0.5 million in noncash impairment charges for
closed facilities. In addition, fourth-quarter 2010 results benefited
from a $2.3 million noncash tax benefit associated with removing a
valuation allowance against a deferred tax asset. Excluding the
after-tax impact of these noncash adjustments in both periods, the
Company had a profit of $26,000 in the fourth quarter of 2011 and a net
loss of $1.8 million in the fourth quarter of 2010. (See table,
"Reconciliation of Reported Net Earnings to Pro Forma Net Earnings,"
page 3.)
Annual net sales for 2011 were $1.82 billion, down 3.6 percent from 2010
annual net sales of $1.89 billion. Annual net earnings for 2011 were
$0.23 per diluted share compared with annual net earnings of $0.89 per
diluted share for 2010.
"We are encouraged by the sales growth in the fourth quarter as well as
the impact of our cost reductions on our bottom line," said CEO Matthew
J. Missad. "I'm very proud of the way our people climbed out of the hole
we were in after the first six months of the year. The results from our
continuing operations trended much better in the fourth quarter."
"Our balance sheet remains very strong," Missad added. "We have the
business model we need for growth and a strong capital structure to fund
our growth. Most importantly, our people are energized and eager to
achieve our goals."
The Company's results also were impacted by an additional week in the
reporting period and the year (a 14-week fourth quarter and 53-week year
in 2011, compared to a 13-week fourth quarter and 52-week year in 2010).
This additional week saw $16 million in sales (which, due to seasonal
factors and three holiday non-work days in the week is less than half
the average weekly sales volume for the year), and an estimated net loss
of $1.5 million, due to the low sales volume from the shortened work
week.
By market, the Company posted the following 2011 fourth-quarter gross
sales results:
Retail building materials: $165.3 million, an increase of 7.7 percent
over the same period of 2010. Universal continued to execute on
strategies to diversify by adding more independent retail customers, to
provide a broader mix of products to big box and independent retailers
alike, and to focus on profitable business opportunities.
Industrial packaging/components: $128.6 million, up 22.4 percent over
the fourth quarter of 2010. The Company grew sales at a time when
industrial production in the United States rose at an annual rate of 3.1
percent (fourth quarter 2011 over fourth quarter 2010). The Company
continues to focus on adding customers and products, on expanding its
reach into non-wood packaging materials and on providing complete
packaging solutions.
Manufactured housing: $67.3 million, an increase of 35.1 percent over
the same period of 2010. Unit sales to this market increased due to
a rise in industry production of HUD-code homes related to orders from
FEMA and strong demand for temporary housing in some areas of the
country related to shale oil and gas development. In addition,
Universal's distribution business continued to add product lines and
expand share. Shipments of HUD-code homes in October 2011 and November
2011 were up 41.5 percent and 53.1 percent, respectively, compared to
the same months of 2010.
Residential construction: $46.6 million, down 19.2 percent from the
same period of 2010. The Company saw a unit sales decline of
approximately 21 percent in the fourth quarter of 2011 from the same
period of 2010, due primarily to plant closures and to the Company's
focus on doing its best to accept only business that will enhance its
results and bottom line. Total housing starts were up 17.9 percent
September to November 2011 compared to the same period of 2010,
including a 2.1 percent decrease in single-family starts and an increase
of 88.3 percent in multifamily starts.
Commercial construction and concrete forming: $20.9 million, an
increase of 16.8 percent over 2010. The Company has expanded its
sales reach and market penetration and has had new success with designed
component offerings. Universal continues to see opportunities in the
concrete forming business, in which it manufactures and/or supplies
forms and other materials for concrete construction projects. This
highly fragmented market capitalizes on Universal's engineering and
manufacturing capabilities and nationwide presence.
RECONCILIATION OF REPORTED NET EARNINGS TO PRO FORMA NET EARNINGS
Quarter Period
(In thousands)
2011
2010
Net earnings (loss) attributable to controlling interest
$
(1,674
)
$
124
Noncash adjustments:
Impairment charges, net of tax benefit
1,700
350
Change in deferred tax asset valuation allowance
(2,300
)
Pro forma net earnings (loss) attributable to controlling interest
$
26
$
(1,826
)
OUTLOOK
The Company believes continued challenging economic conditions and
uncertainties in the housing market limit its ability to provide
meaningful guidance for ranges of likely financial performance;
therefore, the Company will not resume the practice of providing
guidance in 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, February 16, 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 800.299.8538 or
internationally at 617.786.2902. Use conference pass code 25728380. The
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, March 16, 2012,
domestically at 888-286-8010 or internationally at 617-801-6888. Use
replay pass code 45278892.
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 (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED
DECEMBER 2011/2010
Quarter Period
Year to Date
(In thousands, except per share data)
2011
2010
2011
2010
NET SALES
$
422,023
100
%
$
378,685
100
%
$
1,822,336
100
%
$
1,890,851
100
%
COST OF GOODS SOLD
374,655
88.8
332,664
87.8
1,622,609
89.0
1,660,896
87.8
GROSS PROFIT
47,368
11.2
46,021
12.2
199,727
11.0
229,955
12.2
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES
45,534
10.8
47,802
12.6
181,363
10.0
197,617
10.5
NET LOSS ON DISPOSITION OF ASSETS,
EARLY RETIREMENT, AND
OTHER IMPAIRMENT AND EXIT CHARGES
2,657
0.6
528
0.1
6,353
0.3
2,049
0.1
EARNINGS (LOSS) FROM OPERATIONS
(823
)
(0.2
)
(2,309
)
(0.6
)
12,011
0.7
30,289
1.6
INTEREST, NET
877
0.2
872
0.2
3,166
0.2
3,248
0.2
EARNINGS (LOSS) BEFORE INCOME TAXES
(1,700
)
(0.4
)
(3,181
)
(0.8
)
8,845
0.5
27,041
1.4
INCOME TAXES (BENEFIT)
(634
)
(0.2
)
(3,636
)
(1.0
)
2,874
0.2
7,200
0.4
NET EARNINGS (LOSS)
(1,066
)
(0.3
)
455
0.1
5,971
0.3
19,841
1.0
LESS NET (EARNINGS) LOSS ATTRIBUTABLE TO
NONCONTROLLING INTEREST
(608
)
(0.1
)
(331
)
(0.1
)
(1,422
)
(0.1
)
(2,430
)
(0.1
)
NET EARNINGS (LOSS) ATTRIBUTABLE TO
CONTROLLING INTEREST
$
(1,674
)
(0.4
)
$
124
-
$
4,549
0.2
$
17,411
0.9
EARNINGS (LOSS) PER SHARE - BASIC
$
(0.09
)
$
0.01
$
0.23
$
0.91
EARNINGS (LOSS) PER SHARE - DILUTED
$
(0.09
)
$
0.01
$
0.23
$
0.89
WEIGHTED AVERAGE SHARES OUTSTANDING
FOR BASIC EARNINGS (LOSS)
19,472
19,210
19,409
19,232
WEIGHTED AVERAGE SHARES OUTSTANDING
FOR DILUTED EARNINGS (LOSS)
19,472
19,443
19,535
19,476
SUPPLEMENTAL SALES DATA
Quarter Period
Year to Date
Market Classification
2011
%
2010
%
2011
%
2010
%
Retail Building Materials
$
165,300
38
%
$
153,540
40
%
$
838,994
45
%
$
916,469
47
%
Residential Construction
46,619
11
%
57,718
15
%
203,217
11
%
241,314
13
%
Commercial Construction and Concrete Forming
20,874
5
%
17,878
5
%
77,503
4
%
68,183
4
%
Industrial
128,646
30
%
105,130
27
%
493,038
27
%
450,407
23
%
Manufactured Housing
67,301
16
%
49,828
13
%
244,662
13
%
245,769
13
%
Total Gross Sales
428,740
100
%
384,094
100
%
1,857,414
100
%
1,922,142
100
%
Sales Allowances
(6,717
)
(5,409
)
(35,078
)
(31,291
)
Total Net Sales
$
422,023
$
378,685
$
1,822,336
$
1,890,851
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 2011/2010
(In thousands)
ASSETS
2011
2010
LIABILITIES AND EQUITY
2011
2010
CURRENT ASSETS
CURRENT LIABILITIES
Cash and cash equivalents
$
11,305
$
43,363
Accounts payable
$
49,433
$
59,481
Accounts receivable
131,292
126,780
Accrued liabilities
43,092
59,044
Inventories
194,697
190,390
Current portion of long-term
Assets held for sale
-
2,446
debt and capital leases
40,270
712
Other current assets
20,899
19,836
TOTAL CURRENT ASSETS
358,193
382,815
TOTAL CURRENT LIABILITIES
132,795
119,237
OTHER ASSETS
15,380
11,455
LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET
167,966
172,975
CAPITAL LEASE OBLIGATIONS,
PROPERTY, PLANT
less current portion
12,200
54,579
AND EQUIPMENT, NET
222,468
222,151
OTHER LIABILITIES
36,413
34,404
EQUITY
582,599
581,176
TOTAL ASSETS
$
764,007
$
789,396
TOTAL LIABILITIES AND EQUITY
$
764,007
$
789,396
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2011/2010
(In thousands)
2011
2010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings attributable to controlling interest
$
4,549
$
17,411
Adjustments to reconcile net earnings attributable to controlling
interest to net cash from operating activities:
Depreciation
30,804
30,429
Amortization of intangibles
5,183
6,919
Expense associated with share-based compensation arrangements
1,361
2,418
Excess tax benefits from share-based compensation arrangements
(36
)
(430
)
Expense associated with stock grant plans
167
214
Deferred income tax (credit)
(1,939
)
(2,708
)
Net earnings attributable to noncontrolling interest
1,422
2,430
Net (gain) loss on sale or impairment of assets
2,490
1,239
Changes in:
Accounts receivable
(7,043
)
(18,428
)
Inventories
(4,496
)
(24,946
)
Accounts payable
(9,964
)
9,646
Accrued liabilities and other
(11,242
)
5,143
NET CASH FROM OPERATING ACTIVITIES
11,256
29,337
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant, and equipment
(32,932
)
(26,950
)
Acquisitions, net of cash received
-
(6,529
)
Proceeds from sale of property, plant and equipment
1,814
835
Purchase of patents
(175
)
(4,589
)
Advances of notes receivable
(2,468
)
(5,780
)
Collections of notes receivable
472
227
Other, net
289
13
NET CASH FROM INVESTING ACTIVITIES
(33,000
)
(42,773
)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under revolving credit facilities
(2,109
)
2,109
Repayment of long-term debt
(745
)
(744
)
Debt issuance costs
(946
)
-
Proceeds from issuance of common stock
2,971
2,333
Purchase of additional noncontrolling interest
(402
)
(1,227
)
Distributions to noncontrolling interest
(1,413
)
(1,244
)
Capital contribution from noncontrolling interest
80
450
Dividends paid to shareholders
(7,818
)
(7,727
)
Repurchase of common stock
-
(4,999
)
Excess tax benefits from share-based compensation arrangements
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