UFP INDUSTRIES INC - FORM 8-K - EX-99.(A) - EXHIBIT 99(A) - July 17, 2013

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8-K - UNIVERSAL FOREST PRODUCTS, INC 8-K 7-17-2013 - UFP INDUSTRIES INCform8k.htm
Exhibit 99(a)
 
 
news release
 
---------------AT THE COMPANY---------------
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502

FOR IMMEDIATE RELEASE
WEDNESDAY, July 17, 2013

UFPI Q2 2013 net sales up 24.4 percent, including double-digit increases in all markets
 
—Excluding gain on sale of real estate in Q2 2012, earnings increased 19% in Q2 2013—

GRAND RAPIDS, Mich., July 17, 2013 – Universal Forest Products, Inc. (Nasdaq: UFPI) today reported 2013 second-quarter net sales of $738.4 million, a 24.4 percent increase over 2012 second-quarter net sales of $593.7 million. The Company saw significant double-digit gains in each of its five markets. Second-quarter 2013 earnings were $15.8 million or $0.79 per diluted share, compared to net earnings of $17.5 million, or $0.88 per diluted share for the second quarter of 2012. Second-quarter earnings in 2012 were enhanced by gains on the sale of real estate totaling approximately $6.9 million ($4.3 million after taxes, or $0.21 per diluted share). The Company’s adjusted net earnings in the second quarter of 2012, excluding these nonrecurring gains, would have been $13.2 million.

After rising for months, lumber prices dropped 28 percent during the second quarter. “We are working hard to manage through these changes effectively, and I’m pleased with the results our people were able to achieve in the second quarter,” said CEO Matthew J. Missad. “A drop in lumber prices of this magnitude, especially during the second quarter, typically has an adverse impact on the Company’s gross margins and profitability. Through the second quarter, we were able to reduce the impact with strong unit sales in many markets, particularly those tied to new housing and construction.” Despite the second-quarter decline, lumber prices remained 15 percent higher than the same period of 2012.

“These results reinforce the strength of our balanced business model,” Missad added. “We are not dependent on a single market, which provides us with a competitive advantage over those companies that do not have the benefit of a diverse customer base or that do not serve multiple industries.”

—more—
Universal Forest Products, Inc.
Page 2

For the second quarter of 2013, the Company reported the following gross sales results:

Retail building materials: $315.0 million, up 12.9 percent over the second quarter of 2012.  Forecasts call for moderate growth in home improvement projects through the end of the year, including decking and railing projects. The Company’s ProWood brand of premium lumber for decking, including Dura Color, was launched with success and is contributing to sales growth. Universal continues to broaden and deepen the mix of products it offers and to grow its business with big box and independent retailers, alike.

Industrial packaging/components: $193.4 million, up 20.6 percent over the second quarter of 2012. U.S. industrial production was flat in May 2013 after having decreased 0.4 percent in April 2013; year-over-year industrial production was up 1.6 percent in May 2013, the most recent statistics available. Universal’s unit sales were up five percent over the same period of 2012. In this market, Universal remains focused on adding customers and products, including non-wood packaging materials, and on growing with existing customers.

Manufactured housing: $109.5 million, an increase of 35.7 percent over the same period of 2012. During the quarter, Universal’s unit sales to this market were 14 percent higher than the same period of 2012. Industry production of HUD-code homes in April and May 2013 was up 11 percent over the same period of 2012; modular home production also improved.

Residential construction: $94.3 million, up 57.3 percent over the same period of 2012. Total housing starts for March to May 2013 were up 27.8 percent over the same period of 2012, including increases in single-family and multifamily starts of 21.5 percent and 43.3 percent, respectively. Universal’s unit sales reflect a 27 percent increase over 2012.

Commercial construction and concrete forming: $37.5 million, up 56.2 percent over the second quarter
of 2012. In this fragmented market, Universal manufactures and supplies forms and other materials for concrete construction projects, from bridges and roads to manufacturing facilities and hospitals. The Company’s sales increase reflects success in its efforts to expand its sales reach and market penetration and to leverage its design and manufacturing capabilities and nationwide presence.

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 18, 2013. 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) 706-7745 and internationally at (617) 614-3472. Use conference pass code 26392559. 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 Friday, August 16, 2013, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code 86964216.

—more—
Universal Forest Products, Inc.
Page 3

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
This release contains an Adjusted Net Earnings measure, which is a Non-GAAP financial measure. Adjusted Net Earnings is calculated by excluding from Net Earnings items that we believe are not indicative of our ongoing operating performance. For the periods covered by this release, such items consist of a net gain on the sale of real estate in fiscal 2012. We present Adjusted Net Earnings because we consider it to be important supplemental measures of our performance and believe it to be useful to show ongoing results from operations. Adjusted Net Earnings is not a measurement of our financial performance under GAAP and should not be considered an alternative to Net Earnings under GAAP. Adjusted Net Earnings has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. In addition, in evaluating Adjusted Net Earnings, you should be aware that in the future we may incur gains or losses similar to the adjustments in this presentation. Our presentation of Adjusted Net Earnings should not be construed as an inference that our future results will be unaffected by unusual or infrequent items. We compensate for these limitations by providing equal prominence of our GAAP results and using Adjusted Net Earnings only as a supplement.

The following table reconciles Net Earnings to Adjusted Net Earnings:
 
 
(in thousands)
Three Months Ended
 
  
June 30,
2012
    
June 29,
 2013
  
Net Earnings
  
$
17,509
    
$
15,772
  
Less: Net gain on disposition of assets, early retirement and other impairment and exit charges (net of tax effect of $2,615 in 2012 and $1 in 2013)
    
(4,263
)
    
(2
)
Adjusted Net Earnings
  
$
13,246
    
$
15,770
  

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 building materials retailers and wholesalers, structural lumber and other products for the manufactured housing and residential construction markets, and specialty wood packaging and components and packing materials for various industries. It has subsidiaries that provide framing services for the residential construction market in some parts of the country; that manufacture and market products used for concrete construction; and that offer lawn and garden products, such as trellises and arches, to retailers nationwide. Its consumer products operations offer a large portfolio of outdoor living products, including wood composite decking, decorative balusters, post caps and plastic lattice. Founded in 1955, Universal Forest Products is headquartered in Grand Rapids, Mich. Its subsidiaries operate facilities throughout North America. For more about Universal, go to www.ufpi.com.
 
—more—
Universal Forest Products, Inc.
Page 4

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.

# # #
Universal Forest Products, Inc.
Page 5

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2013/2012

                             
 
   
  Quarter Period
    
Year to Date
  
(In thousands, except per share data)
   
2013
      
2012
    
2013
      
2012
  
 
  
   
   
   
   
   
   
   
 
 
  
   
   
   
   
   
   
   
 
 
  
   
   
   
   
   
   
   
 
NET SALES
  
$
738,436
      
100
%
  
$
593,693
      
100
%
  
$
1,292,930
      
100
%
  
$
1,050,804
      
100
%
 
                                                                
COST OF GOODS SOLD
    
658,220
      
89.1
      
521,618
      
87.9
      
1,155,535
      
89.4
      
925,063
      
88.0
  
 
                                                                
GROSS PROFIT
    
80,216
      
10.9
      
72,075
      
12.1
      
137,395
      
10.6
      
125,741
      
12.0
  
 
                                                                
SELLING, GENERAL AND ADMINISTRATIVE  EXPENSES
    
53,102
      
7.2
      
49,434
      
8.3
      
101,329
      
7.8
      
95,212
      
9.1
  
NET LOSS ON DISPOSITION OF ASSETS, EARLY RETIREMENT, AND OTHER IMPAIRMENT AND EXIT CHARGES
    
(3
)
    
-
      
(6,878
)
    
(1.2
)
    
(109
)
    
-
      
(6,783
)
    
(0.6
)
 
                                                                
EARNINGS FROM OPERATIONS
    
27,117
      
3.7
      
29,519
      
5.0
      
36,175
      
2.8
      
37,312
      
3.6
  
 
                                                                
OTHER EXPENSE (INCOME), NET
    
931
      
0.1
      
971
      
0.2
      
1,987
      
0.2
      
1,679
      
0.2
  
 
                                                                
EARNINGS BEFORE INCOME TAXES
    
26,186
      
3.5
      
28,548
      
4.8
      
34,188
      
2.6
      
35,633
      
3.4
  
 
                                                                
INCOME TAXES
    
9,813
      
1.3
      
10,538
      
1.8
      
12,058
      
0.9
      
13,237
      
1.3
  
 
                                                                
NET EARNINGS
    
16,373
      
2.2
      
18,010
      
3.0
      
22,130
      
1.7
      
22,396
      
2.1
  
 
                                                                
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST
    
(601
)
    
(0.1
)
    
(501
)
    
(0.1
)
    
(1,133
)
    
(0.1
)
    
(732
)
    
(0.1
)
 
                                                                
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST
  
$
15,772
      
2.1
    
$
17,509
      
2.9
    
$
20,997
      
1.6
    
$
21,664
      
2.1
  
 
                                                                
 
                                                                
EARNINGS PER SHARE - BASIC
  
$
0.79
            
$
0.88
            
$
1.05
            
$
1.10
          
 
                                                                
EARNINGS PER SHARE - DILUTED
  
$
0.79
            
$
0.88
            
$
1.05
            
$
1.10
          
 
                                                                
                    
COMPREHENSIVE INCOME
    
14,889
              
16,777
                 
21,062
              
22,221
          
 
                                                                
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
    
(164
)
            
(63
)
            
(992
)
            
(718
)
        
 
                                                                
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST
  
$
14,725
            
$
16,714
            
$
20,070
            
$
21,503
          

SUPPLEMENTAL SALES DATA
 
 
  
Quarter Period
    
Year to Date
  
Market Classification
  
2013
    
%
    
2012
    
%
    
2013
    
%
    
2012
    
%
  
Retail Building Materials
  
$
315,093
      
41
%
  
$
279,187
      
46
%
  
$
520,810
      
40
%
  
$
475,304
      
45
%
Residential Construction
    
94,328
      
13
%
    
59,948
      
10
%
    
168,635
      
13
%
    
111,755
      
10
%
Commercial Construction and Concrete Forming
    
37,534
      
5
%
    
24,036
      
4
%
    
67,889
      
5
%
    
43,751
      
4
%
Industrial
    
193,369
      
26
%
    
160,277
      
27
%
    
353,826
      
27
%
    
293,947
      
28
%
Manufactured Housing
    
109,495
      
15
%
    
80,663
      
13
%
    
199,362
      
15
%
    
143,703
      
13
%
Total Gross Sales
    
749,819
      
100
%
    
604,111
      
100
%
    
1,310,522
      
100
%
    
1,068,460
      
100
%
Sales Allowances
    
(11,383
)
            
(10,418
)
            
(17,592
)
            
(17,656
)
        
Total Net Sales
  
$
738,436
            
$
593,693
            
$
1,292,930
            
$
1,050,804
          

Universal Forest Products, Inc.
Page 6

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2013/2012
 
(In thousands)
  
   
 
 
  
   
 
ASSETS
  
2013
    
2012
  
LIABILITIES AND EQUITY
  
2013
    
2012
  
 
  
   
 
 
  
   
 
CURRENT ASSETS
  
   
 
CURRENT LIABILITIES
  
   
 
Cash and cash equivalents
  
$
-
    
$
4,764
  
Cash overdraft
  
$
3,407
    
$
-
  
Restricted cash
    
753
      
553
  
Accounts payable
    
95,594
      
81,117
  
Accounts receivable
    
270,949
      
212,038
  
Accrued liabilities
    
65,746
      
57,904
  
Inventories
    
253,554
      
207,556
  
Current portion of long-term
                
Other current assets
    
29,490
      
24,105
  
debt and capital leases
    
-
      
40,000
  
 
                
 
                
 
                
 
                
 
                
 
                
TOTAL CURRENT ASSETS
    
554,746
      
449,016
  
TOTAL CURRENT LIABILITIES
    
164,747
      
179,021
  
 
                
 
                
OTHER ASSETS
    
18,023
      
16,176
  
LONG-TERM DEBT AND
                
INTANGIBLE ASSETS, NET
    
170,770
      
169,667
  
CAPITAL LEASE OBLIGATIONS,
                
PROPERTY, PLANT
                
less current portion
    
142,473
      
32,854
  
AND EQUIPMENT,  NET
    
233,773
      
217,778
  
OTHER LIABILITIES
    
42,200
      
36,688
  
                  EQUITY     627,892       604,074  
 
                
 
                
TOTAL ASSETS
  
$
977,312
    
$
852,637
  
TOTAL LIABILITIES AND EQUITY
  
$
977,312
    
$
852,637
  

Universal Forest Products, Inc.
Page 7

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2013/2012

(In thousands)
  
2013
    
2012
  
CASH FLOWS FROM OPERATING ACTIVITIES:
  
   
 
Net earnings
  
$
22,130
    
$
22,396
  
Adjustments to reconcile net earnings attributable to controlling interest to net cash from operating activities:
                
Depreciation
    
14,459
      
14,430
  
Amortization of intangibles
    
1,324
      
1,506
  
Expense associated with share-based compensation arrangements
    
1,073
      
666
  
Excess tax benefits from share-based compensation arrangements
    
(6
)
    
(26
)
Expense associated with stock grant plans
    
36
      
75
  
Deferred income taxes (credit)
    
(79
)
    
(1,133
)
Equity in earnings of investee
    
(134
)
    
(10
)
Net gain on sale or impairment of property, plant and equipment
    
(141
)
    
(6,932
)
Changes in:
                
Accounts receivable
    
(108,893
)
    
(84,649
)
Inventories
    
(10,223
)
    
(12,166
)
Accounts payable
    
29,473
      
31,447
  
Accrued liabilities and other
    
22,064
      
14,684
  
NET CASH FROM OPERATING ACTIVITIES
    
(28,917
)
    
(19,712
)
 
                
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of property, plant, and equipment
    
(21,532
)
    
(15,760
)
Proceeds from sale of property, plant and equipment
    
453
      
14,635
  
Acquisitions, net of cash received
    
(9,296
)
    
(2,149
)
Purchase of patents & product technology
    
-
      
(48
)
Advances of notes receivable
    
(1,358
)
    
(706
)
Collections of notes receivable and related interest
    
749
      
755
  
Cash restricted as to use
    
6,078
      
(553
)
Other, net
    
(37
)
    
(187
)
NET CASH FROM INVESTING ACTIVITIES
    
(24,943
)
    
(4,013
)
 
                
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Net borrowings under revolving credit facilities
    
46,683
      
23,154
  
Repayment of long-term debt
    
-
      
(2,774
)
Debt issuance costs
    
(11
)
    
(85
)
Proceeds from issuance of common stock
    
694
      
1,234
  
Distributions to noncontrolling interest
    
(490
)
    
(429
)
Dividends paid to shareholders
    
(3,977
)
    
(3,946
)
Excess tax benefits from share-based compensation arrangements
    
6
      
26
  
Other, net
    
-
      
4
  
NET CASH FROM FINANCING ACTIVITIES
    
42,905
      
17,184
  
 
                
Effect of exchange rate changes on cash
    
(99
)
    
-
  
NET CHANGE IN CASH AND CASH EQUIVALENTS
    
(11,054
)
    
(6,541
)
 
                
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
7,647
      
11,305
  
 
                
CASH (CASH OVERDRAFT), END OF PERIOD
  
$
(3,407
)
  
$
4,764
  
 
                
SUPPLEMENTAL INFORMATION:
                
Interest paid
  
$
2,434
    
$
2,079
  
Income taxes paid
    
(910
)
    
6,289
  
 
 

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