Grand Rapids, Michigan, USA, 14 April 2010 – Universal Forest Products, Inc. (Nasdaq: UFPI) today announced first-quarter 2010 net earnings of nearly USD 1 million, or USD 0.05 per diluted share, compared to a net loss of USD 1.2 million or (USD 0.06) per diluted share for the first quarter of 2009. The company reported first-quarter net sales of USD 393.0 million, which compares favorably to 2009 first-quarter net sales of USD 361.7 million.
"While we’re proud to deliver another quarter of improved profitability, we aren’t satisfied with the rate of our sales increase and we continue to focus on strategies to grow our revenue," said Michael B. Glenn, CEO. "We rarely talk about weather as a contributing factor to our results, but it clearly had an impact on our performance in the quarter."
From record cold temperatures in the Southeast to hurricane-force winds in California in January, and from record-breaking snowstorms in the Atlantic and Northeast regions to extreme precipitation in 20 states, the weather in the first quarter of 2010 in many parts of the country was not conducive to outdoor building projects, negatively affecting the company’s sales to do-it-yourself (DIY)/retail and site-built customers.
"That said, we are pleased to be showing traction in our site-built business and healthy increases in both our industrial and manufactured housing markets," Glenn added. "These results underscore the strength of our growth strategies, including diversification into new markets and products, and they give us momentum and optimism for our future."
After years of steady decline and record low prices, the composite lumber price (which affects the company’s costs and, ultimately, its selling prices) was up nearly 50% in the quarter over 2009, due to production curtailments and plant closures by mills. However, the company expects the market to fluctuate throughout the year; consequently, it is focused on managing its purchasing and sales practices to mitigate the effect of volatile lumber prices on its gross margins, and on using its remanufacturing capabilities to ensure it has adequate supply for customers.
By market, Universal posted the following gross sales results for the first quarter of 2010:
DIY/retail: USD 164.4 million, a decrease of 1.9% from the same period of 2009
This mirrors the recent experience of big-box retailers, who in February reported flat sales, and same-store U.S. sales that were flat to slightly down in early 2010. Additionally, sales of products needed for larger DIY projects, like lumber, continued to be slow as wary consumers delayed larger expenditures. The Home Improvement Research Institute (HIRI) anticipates growth of 1.7% in this market in 2010, followed by 5% and 7% growth in 2011 and 2012, respectively. Universal agrees that 2010 will be another tough year, and is relying on the strength of its diverse portfolio of products and its customer relationships for steady performance in 2010, and for growing sales in 2011 and beyond.
Industrial packaging/components: USD 126.0 million, an increase of 20.4% over 2009
Strong performance in this market is attributable to a number of factors, including increased resources devoted to the market, the company’s dedicated efforts in concrete forming products and its strong foray into other packaging materials and supplies. This continues to be a market of great opportunity for Universal.
Site-built construction: USD 60.9 million, an increase of 0.9% over 2009
This follows a fourth-quarter decrease of more than 42%, reflecting, in part, the company’s focus on specific areas of promise, including commercial and military projects, and on remaining a preferred supplier to the country’s more successful builders. Year-to-date housing starts in February were up nearly 9% over last year, including an increase of over 37% in single-family housing. The company continues to believe that 2010 will be marked by a modest improvement in the market, and is focused on areas of opportunity in commercial and governmental projects.
Manufactured housing: USD 48.4 million, an increase of 32.2% over 2009
The company attributes its performance in part to improved market activity, as well as to new products offered as part of its goal to expand the number of products it supplies for each manufactured home and recreational vehicle built.
The company expects volatile economic and market conditions to prevail through 2010, limiting its ability to provide meaningful guidance for ranges of likely financial performance; therefore, the company will not provide guidance for the foreseeable future. However, the company remains optimistic about its performance in 2010, given its strong financial position, solid business model and diverse business opportunities that position it better than most to endure challenging times.
A replay of a conference call discussing these results and related matters will be available through 14 May 2010, domestically at 888-286-8010 and internationally at 617-801-6888. Use replay pass code 59696565.
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 and other products for the manufactured housing industry, engineered wood components for the site-built construction market, and specialty wood packaging and components and packing materials for various industries. Universal’s subsidiaries also provide framing services for the site-built market, 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. Founded in 1955, Universal Forest Products is headquartered in Grand Rapids, Michigan, with operations throughout North America. For more about Universal Forest Products, go to www.ufpi.com.