Grand Rapids, Michigan, USA, 15 July 2009 – Universal Forest Products, Inc. (Nasdaq: UFPI) today announced second-quarter 2009 results, including net earnings of USD 16.1 million, which compares to net earnings of USD 11.7 million for the same period last year. Diluted earnings per share for the second quarter were USD 0.83, up from USD 0.61 for the same period last year. Net sales for the second quarter were USD 514.9 million, down from USD 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 USD 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 USD 55.5 million and available cash of USD 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 Michael B. Glenn, CEO. “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:
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.
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.
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.
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, and 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.”
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.
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, Michigan, with facilities throughout North America. For more about Universal Forest Products, go to www.ufpi.com.