Universal Forest Products, Inc.

Page 1

 

 

Exhibit 99(a)

 

Image - Image1.jpeg

News release

 

---------------AT THE COMPANY---------------

Lynn Afendoulis

Director, Corporate Communications

(616) 365-1502

 

FOR IMMEDIATE RELEASE

Tuesday, October 16, 2018

 

 

 

UFPI posts record third-quarter earnings and sales
-  Sales up 15 percent, net earnings up 22 percent over previous year  -

 

GRAND RAPIDS, Mich., Tuesday, October 16, 2018 – Universal Forest Products, Inc. (Nasdaq: UFPI) today reported record financial results for the third quarter ended September 29, 2018, the thirteenth consecutive quarter in which the company has reported records in both net sales and net earnings.

“I want to thank the hard-working employees of Universal for once again producing record results, driven by strong unit sales growth of 7 percent and overall sales growth of 15 percent,” stated CEO Matt Missad. “We achieved these results despite the headwinds we experienced from a quickly changing lumber market, rising labor, benefit and transportation costs, and the short-term effects of Hurricane Florence.

“While we are pleased to report a record quarter, we know we can do better. We are improving our mix of value-added new products, investing in automation to address rising costs and improving performance at underperforming operations.”

Third Quarter 2018 Highlights (comparisons on a year-over-year basis):

-

Diluted earnings per share were $0.66, up from $0.55

-

Net earnings attributable to controlling interest were $41.2 million, up 22 percent

-

Net sales were $1.2 billion, up 15 percent

-

EBITDA was $72.9 million, up 9 percent

-

Gross sales increased 17 percent in the Construction market, 15 percent in the Industrial market and 13 percent in the Retail market

-

Unit sales contributed 7 percent of gross sales growth; higher prices due to the lumber market contributed 8 percent

 

 

-more-


 

Universal Forest Products, Inc.

Page 2

 

 

-

Organic sales contributed 5 percent to unit growth while acquisitions added 2 percent

-

New product sales were $138 million, up 22 percent; year-to date new product sales are $407 million, up 25 percent

By market, the company reported the following third-quarter 2018 gross sales results:

Retail

·

$443 million, up 13 percent over the same period of 2017, as unit sales contributed 4 percent and price increases accounted for 9 percent

·

Organic sales accounted for all of the unit sales growth

·

Sales to big box customers increased 11 percent, while sales to independent customers grew 17 percent

Construction

·

$361 million, up 17 percent over the same period of 2017, as unit sales contributed 9 percent and  price increases accounted for 8 percent

·

Organic sales accounted for 8 percent of the unit sales growth, while acquisitions accounted for 1 percent

·

The company saw double-digit sales increases to customers in commercial construction (30 percent), residential construction (19 percent) and manufactured housing (10 percent)

Industrial

·

$429 million, up 15 percent over the same period of 2017, as unit sales accounted for 8 percent and price increases accounted for 7 percent

·

Organic sales accounted for 3 percent of the unit sales growth, while acquisitions contributed 5 percent

·

The company sees favorable growth opportunities in the non-wood packaging market and has been adding resources to better serve this market

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 Wednesday, October 17, 2018. 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 866-518-4547, and internationally at 213-660-0879. Use conference pass code 1793238. 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 November 17, 2018, at 855-859-2056, 404-537-3406 or 800-585-8367. 

-more-

 

 

 


 

Universal Forest Products, Inc.

Page 3

 

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company whose subsidiaries supply wood, wood composite and other products to three robust markets: retail, construction and industrial.  Founded in 1955, the Company is headquartered in Grand Rapids, Mich., with affiliates throughout North America, Europe, Asia and Australia. 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 economic 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.

Non-GAAP Financial Information

This release includes certain financial information not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies.  Management considers EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.

 

 

 

 

 

# # #

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Universal Forest Products, Inc.

Page 4

 

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 2018/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Period

Year to Date

(In thousands, except per share data)

    

2018

2017

2018

2017

NET SALES

 

$

1,212,702

  

100

$

1,056,586

  

100

$

3,500,999

  

100

$

2,975,091

  

100

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COST OF GOODS SOLD 

 

 

1,054,029

 

86.9

 

 

911,899

 

86.3

 

 

3,045,748

 

87.0

 

 

2,561,424

 

86.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GROSS PROFIT

 

 

158,673

 

13.1

 

 

144,687

 

13.7

 

 

455,251

 

13.0

 

 

413,667

 

13.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SELLING,   GENERAL  AND ADMINISTRATIVE  EXPENSES

 

 

102,292

 

8.4

 

 

92,389

 

8.7

 

 

300,292

 

8.6

 

 

272,956

 

9.2

 

FOREIGN CURRENCY EXCHANGE LOSS

 

 

412

 

 

 

 

301

 

 

 

 

213

 

 

 

 

1,157

 

 

 

NET GAIN ON DISPOSITION AND IMPAIRMENT OF ASSETS

 

 

(1,022)

 

(0.1)

 

 

(274)

 

 —

 

 

(7,079)

 

(0.2)

 

 

(437)

 

 —

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS FROM OPERATIONS

 

 

56,991

 

4.7

 

 

52,271

 

4.9

 

 

161,825

 

4.6

 

 

139,991

 

4.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER EXPENSE, NET

 

 

1,734

 

0.1

 

 

1,352

 

0.1

 

 

4,862

 

0.1

 

 

4,259

 

0.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS BEFORE INCOME TAXES

 

 

55,257

 

4.6

 

 

50,919

 

4.8

 

 

156,963

 

4.5

 

 

135,732

 

4.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

INCOME TAXES

 

 

13,189

 

1.1

 

 

16,250

 

1.5

 

 

36,183

 

1.0

 

 

44,855

 

1.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET EARNINGS

 

 

42,068

 

3.5

 

 

34,669

 

3.3

 

 

120,780

 

3.4

 

 

90,877

 

3.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

 

(849)

 

(0.1)

 

 

(976)

 

(0.1)

 

 

(2,684)

 

(0.1)

 

 

(2,480)

 

(0.1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST

 

$

41,219

 

3.4

 

$

33,693

 

3.2

 

$

118,096

 

3.4

 

$

88,397

 

3.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE - BASIC

 

$

0.67

 

 

 

$

0.55

 

 

 

$

1.91

 

 

 

$

1.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE - DILUTED

 

$

0.66

 

 

 

$

0.55

 

 

 

$

1.91

 

 

 

$

1.44

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME

 

 

43,242

 

 

 

 

36,388

 

 

 

 

117,610

 

 

 

 

97,018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

 

(1,583)

 

 

 

 

(975)

 

 

 

 

(3,296)

 

 

 

 

(3,862)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

 

$

41,659

 

 

 

$

35,413

 

 

 

$

114,314

 

 

 

$

93,156

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL SALES DATA

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Period

 

Year to Date

Market Classification

    

2018

    

2017

 

%

    

2018

    

2017

 

%

Retail

 

$

443,044

 

$

391,043

 

13%

 

$

1,359,498

 

$

1,161,662

 

17%

Industrial

 

 

429,467

 

 

374,018

 

15%

 

 

1,166,523

 

 

995,078

 

17%

Construction

 

 

361,179

 

 

308,585

 

17%

 

 

1,039,705

 

 

867,958

 

20%

Total Gross Sales

 

 

1,233,690

 

 

1,073,646

 

15%

 

 

3,565,726

 

 

3,024,698

 

18%

Sales Allowances

 

 

(20,988)

 

 

(17,060)

 

-23%

 

 

(64,727)

 

 

(49,607)

 

-30%

Total Net Sales

 

$

1,212,702

 

$

1,056,586

 

15%

 

$

3,500,999

 

$

2,975,091

 

18%


 

Universal Forest Products, Inc.

Page 5

 

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

SEPTEMBER 2018/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(In thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ASSETS

    

 

2018

    

 

2017

    

LIABILITIES AND EQUITY

    

 

2018

    

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT ASSETS

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

26,327

 

$

22,044

 

Cash overdraft

 

$

31,115

 

$

26,617

 

Restricted cash

 

 

1,024

 

 

905

 

Accounts payable

 

 

175,912

 

 

171,774

 

Investments

 

 

15,809

 

 

10,781

 

Accrued liabilities

 

 

151,102

 

 

138,364

 

Accounts receivable

 

 

454,935

 

 

419,183

 

Current portion of debt

 

 

149

 

 

2,197

 

Inventories

 

 

510,057

 

 

412,486

 

 

 

 

 

 

 

 

 

Other current assets

 

 

38,699

 

 

23,201

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL CURRENT ASSETS

 

 

1,046,851

 

 

888,600

 

TOTAL CURRENT LIABILITIES

 

 

358,278

 

 

338,952

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER ASSETS

 

 

22,345

 

 

17,515

 

 

 

 

 

 

 

 

 

INTANGIBLE ASSETS, NET

 

 

261,666

 

 

255,330

 

LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS

 

 

186,539

 

 

145,884

 

 

 

 

 

 

 

 

 

OTHER LIABILITIES

 

 

40,630

 

 

51,638

 

PROPERTY, PLANT AND EQUIPMENT,  NET

 

 

346,309

 

 

325,109

 

EQUITY

 

 

1,091,724

 

 

950,080

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL ASSETS

 

$

1,677,171

 

$

1,486,554

 

TOTAL LIABILITIES AND EQUITY

 

$

1,677,171

 

$

1,486,554

 

 


 

Universal Forest Products, Inc.

Page 6

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED

SEPTEMBER 2018/2017

 

 

 

 

 

 

 

 

 

 

(In thousands)

    

 

2018

 

    

 

2017

 

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net earnings

 

$

120,780

 

 

$

90,877

 

Adjustments to reconcile net earnings to net cash from operating activities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation

 

 

40,490

 

 

 

36,010

 

Amortization of intangibles

 

 

4,274

 

 

 

3,549

 

Expense associated with share-based and grant compensation arrangements

 

 

2,762

 

 

 

2,122

 

Deferred income taxes (credit)

 

 

(583)

 

 

 

117

 

Equity in earnings of investee

 

 

 —

 

 

 

(25)

 

Net gain on disposition and impairment of assets

 

 

(7,079)

 

 

 

(437)

 

Changes in:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

(121,067)

 

 

 

(121,688)

 

Inventories

 

 

(39,448)

 

 

 

(820)

 

Accounts payable and cash overdraft

 

 

38,611

 

 

 

53,424

 

Accrued liabilities and other

 

 

21,361

 

 

 

34,221

 

NET CASH FROM OPERATING ACTIVITIES

 

 

60,101

 

 

 

97,350

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Purchases of property, plant, and equipment

 

 

(74,541)

 

 

 

(57,189)

 

Proceeds from sale of property, plant and equipment

 

 

37,612

 

 

 

2,121

 

Acquisitions and purchase of noncontrolling interest, net of cash received

 

 

(38,963)

 

 

 

(59,859)

 

Purchases of investments

 

 

(12,401)

 

 

 

(12,155)

 

Proceeds from sale of investments

 

 

3,298

 

 

 

4,227

 

Other

 

 

(620)

 

 

 

1,480

 

NET CASH USED IN INVESTING ACTIVITIES

 

 

(85,615)

 

 

 

(121,375)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Borrowings under revolving credit facilities

 

 

636,798

 

 

 

610,038

 

Repayments under revolving credit facilities

 

 

(668,941)

 

 

 

(573,829)

 

Borrowings of debt

 

 

927

 

 

 

 —

 

Repayments of debt

 

 

(5,511)

 

 

 

 —

 

Issuance of long-term debt

 

 

75,000

 

 

 

 —

 

Proceeds from issuance of common stock

 

 

756

 

 

 

476

 

Distributions to noncontrolling interest

 

 

(2,239)

 

 

 

(3,272)

 

Dividends paid to shareholders

 

 

(11,090)

 

 

 

(9,207)

 

Repurchase of common stock

 

 

(1,843)

 

 

 

(12,976)

 

Other

 

 

(55)

 

 

 

 —

 

NET CASH FROM (USED IN) FINANCING ACTIVITIES

 

 

23,802

 

 

 

11,230

 

 

 

 

 

 

 

 

 

 

Effect of exchange rate changes on cash

 

 

247

 

 

 

1,255

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(1,465)

 

 

 

(11,540)

 

 

 

 

 

 

 

 

 

 

ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

 

 

28,816

 

 

 

34,489

 

 

 

 

 

 

 

 

 

 

ALL CASH AND CASH EQUIVALENTS, END OF PERIOD

 

$

27,351

 

 

$

22,949

 

 

 

 

 

 

 

 

 

 

Reconciliation of cash and cash equivalents and restricted cash:

 

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

$

28,339

 

 

$

34,091

 

Restricted cash, beginning of period

 

 

477

 

 

 

398

 

All cash and cash equivalents, beginning of period

 

$

28,816

 

 

$

34,489

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

26,327

 

 

$

22,044

 

Restricted cash, end of period

 

 

1,024

 

 

 

905

 

All cash and cash equivalents, end of period

 

$

27,351

 

 

$

22,949

 

 

 

 

 

 

 

 

 

 

 

 

 


 

Universal Forest Products, Inc.

Page 7

 

 

EBITDA RECONCILIATION TO NET EARNINGS (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 2018/2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Period

Year to Date

(In thousands)

 

2018

 

2017

2018

2017

Net Earnings

 

$

42,068

 

$

34,669

$

120,780

 

$

90,877

Interest  Expense

 

 

1,945

 

 

1,481

 

5,971

 

 

4,825

Taxes

 

 

13,189

 

 

16,250

 

36,183

 

 

44,855

Expense associated with Share-Based Compensation Arrangements

 

 

838

 

 

740

 

2,762

 

 

2,121

Net Gain on Disposition and Impairment of Assets

 

 

(1,022)

 

 

(274)

 

(7,079)

 

 

(437)

Depreciation Expense

 

 

14,346

 

 

12,762

 

40,490

 

 

36,010

Amortization of Intangibles

 

 

1,572

 

 

1,172

 

4,274

 

 

3,549

EBITDA

 

$

72,936

 

$

66,800

$

203,381

 

$

181,800

 


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