Attached files
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| 8-K - UNIVERSAL FOREST PRODUCTS, INC 8-K 10-15-2014 - UFP INDUSTRIES INC | form8k.htm |
Exhibit 99(a)
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News release
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---------------AT THE COMPANY---------------
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Lynn Afendoulis
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Director, Corporate Communications
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(616) 365-1502
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FOR IMMEDIATE RELEASE
WEDNESDAY, October 15, 2014
UFPI Q3 2014 earnings up 36.5 percent, sales up 9.5 percent; reports EPS of $0.96
--Increased sales in all markets, margin improvements drive results --
–Company increases annual dividend by more than 90 percent–
GRAND RAPIDS, Mich., Oct. 15, 2014 – Universal Forest Products, Inc. (Nasdaq: UFPI) today announced third-quarter 2014 results, including net earnings attributable to controlling interests of $19.2 million, up 36.5 percent over $14.1 million in the third quarter of 2013. Earnings per diluted share were $0.96 in the third quarter of 2014, up from $0.71 for the same period last year. Net sales grew in all three markets to total $713.5 million in the third quarter of 2014, up 9.5 percent over $651.8 million in the third quarter of 2013. Earnings attributable to controlling interests for the third quarter of 2014 included a net gain of $700,000 on the sale of certain assets.
“We experienced solid sales growth in each of our markets, and we continued to improve operational efficiencies and maintain our focus on profitability. The third quarter saw profitable growth and progress toward many of our longer-term goals,” said CEO Matthew J. Missad. “Our teams are executing their plans, and their excellent performance clearly shows in the financial results. I am proud of their efforts to create value in this economy.”
Missad noted that the Company’s Board of Directors approved an increase to the Company’s dividend at its October 15, 2014 meeting.
--more--
UFPI Page 2
“Due to the strength of our earnings, our solid balance sheet and our optimism, we have decided to return capital to our shareholders while still pursuing our growth goals,” Missad said. “Our board approved an increase in the December 2014 dividend payment, from $0.21 per share to $0.40 per share.”
Missad noted that the Company can support the new dividend rate while retaining ample capital for organic growth and acquisitions. He stated that, in many instances, recent acquisition multiples have been at levels that challenge the ability to create value for shareholders. He added that the Company continues to actively pursue acquisitions as well as reinvest in plants as part of its organic growth goals.
Lumber prices affect the Company’s selling prices, and in the third quarter of 2014, the composite lumber price was up 10.7 percent over the previous year, offset partially by an 18 percent decline in OSB prices in the third quarter of 2014. The Company estimates that higher overall lumber prices raised its selling prices and sales by six percent.
By market, the Company posted the following third-quarter 2014 gross sales results:
Retail: $272.5 million, an increase of 10 percent over the third quarter of 2013. Universal saw increased sales to big box and independent customers alike. Unit sales were up five percent, which was in line with expectations. The Company attributes the increased sales to a better repair-and-remodel market demand and slight increases in housing starts. Big box retailers saw increases in same-store sales during the period. Universal realized margin improvements in this market, due to better operational efficiencies and enhanced product mix with new product sales in the quarter.
Industrial: $211.3 million, an increase of 13 percent over the same period of 2013. Sales to this market continued a path of sustainable growth, with increased sales to existing customers. This remains a healthy market with solid growth opportunities for the Company with both existing and new customers.
Construction, $239.8 million, up six percent over the third quarter of 2013. Results in this market reflect the Company’s focus on sustainable business and more selective pricing strategies. Sales to this market continued to be negatively impacted by the vertical integration of one of the Company’s largest manufactured housing customers and by a drop in prices of OSB during the third quarter. The diversification of markets within UFP continues to improve as the Company becomes less dependent on housing starts for sales growth. In fact, the percent of residential construction sales to total sales has declined from its peak in 2006 of 31.6 percent to the current 12.8 percent.
--more--
UFPI Page 3
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 Thurs., Oct. 16, 2014. 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 (877) 415-3179 and internationally at (857) 244-7322. Use conference pass code 20099464. 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 Nov. 15, 2014, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code 83042564.
UNIVERSAL FOREST PRODUCTS, INC.
Universal Forest Products, Inc. is a holding company that provides capital, management and administrative resources to subsidiaries that 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. 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.
# # #
FOR THE NINE MONTHS ENDED
SEPTEMBER 2014/2013
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Quarter Period
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Year to Date
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|||||||||||||||||||||||||||||
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(In thousands, except per share data)
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2014
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2013
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2014
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2013
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||||||||||||||||||||||||||
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NET SALES
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$
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713,489
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100
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%
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$
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651,780
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100
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%
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$
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2,040,239
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100
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%
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$
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1,944,711
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100.0
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%
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||||||||||||||
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COST OF GOODS SOLD
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623,903
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87.4
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573,491
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88.0
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1,787,652
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87.6
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1,729,027
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88.9
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||||||||||||||||||||||
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GROSS PROFIT
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89,586
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12.6
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78,289
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12.0
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252,587
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12.4
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215,684
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11.1
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||||||||||||||||||||||
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
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59,936
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8.4
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53,020
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8.1
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172,835
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8.5
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154,348
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7.9
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ANTI-DUMPING DUTY ASSESSMENTS
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-
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-
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887
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0.1
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1,600
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0.1
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887
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-
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||||||||||||||||||||||
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NET GAIN ON DISPOSITION AND IMPAIRMENT OF ASSETS 1
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(2,570
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)
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(0.4
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)
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(145
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)
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-
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(3,418
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)
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(0.2
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)
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(253
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)
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-
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||||||||||||||||
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EARNINGS FROM OPERATIONS
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32,220
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4.5
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24,527
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3.8
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81,570
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4.0
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60,702
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3.1
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||||||||||||||||||||||
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OTHER EXPENSE, NET
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552
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0.1
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982
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0.2
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1,963
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0.1
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2,969
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0.2
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||||||||||||||||||||||
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EARNINGS BEFORE INCOME TAXES
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31,668
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4.4
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23,545
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3.6
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79,607
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3.9
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57,733
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3.0
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||||||||||||||||||||||
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INCOME TAXES 1
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11,176
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1.6
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8,530
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1.3
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29,000
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1.4
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20,589
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1.1
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||||||||||||||||||||||
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NET EARNINGS
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20,492
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2.9
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15,015
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2.3
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50,607
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2.5
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37,144
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1.9
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LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST 1
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(1,258
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)
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(0.2
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)
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(924
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)
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(0.1
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)
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(2,369
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)
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(0.1
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)
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(2,057
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)
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(0.1
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)
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NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST
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$
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19,234
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2.7
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$
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14,091
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2.2
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$
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48,238
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2.4
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$
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35,087
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1.8
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EARNINGS PER SHARE - BASIC
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$
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0.96
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$
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0.71
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$
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2.40
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$
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1.76
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EARNINGS PER SHARE - DILUTED
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$
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0.96
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$
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0.71
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$
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2.40
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$
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1.76
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COMPREHENSIVE INCOME
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20,001
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15,767
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49,869
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36,828
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LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
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(1,317
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)
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(1,106
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)
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(2,330
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)
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(2,098
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)
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COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST
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$
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18,684
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$
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14,661
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$
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47,539
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$
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34,730
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1 Included within net gain on disposition and impairment of assets for the third quarter of 2014 was a gain on the sale of certain property totaling $2.7 million completed by a 50% owned subsidiary of the Company. After considering the $1.35 million noncontrolling interest of this gain and income taxes, net earnings attributable to controlling interest was approximately $700,000 higher as a result of these transactions.
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SUPPLEMENTAL SALES DATA
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Quarter Period
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Year to Date
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Market Classification
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2014
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2013
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%
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2014
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2013
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%
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Retail
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$
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272,469
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$
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247,182
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10
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%
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$
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823,861
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$
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768,174
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7
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%
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||||||||||||
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Industrial
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211,344
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186,385
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13
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%
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585,211
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539,213
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9
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%
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||||||||||||||||
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Construction
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239,812
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227,093
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6
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%
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660,962
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663,795
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0
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%
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||||||||||||||||
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Total Gross Sales
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723,625
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660,660
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10
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%
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2,070,034
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1,971,182
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5
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%
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||||||||||||||||
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Sales Allowances
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(10,136
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)
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(8,880
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)
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(29,795
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)
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(26,471
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)
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||||||||||||||||
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Total Net Sales
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$
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713,489
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$
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651,780
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$
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2,040,239
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$
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1,944,711
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||||||||||||||||
UFPI Page 5
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2014/2013
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(In thousands)
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|||||||||||||||||
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ASSETS
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2014
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2013
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LIABILITIES AND EQUITY
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2014
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2013
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||||||||||||
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CURRENT ASSETS
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CURRENT LIABILITIES
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||||||||||||||||
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Cash and cash equivalents
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$
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26,184
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$
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5,151
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Accounts payable
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99,008
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85,520
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||||||||||
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Restricted cash
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720
|
720
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Accrued liabilities
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93,933
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78,820
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||||||||||||
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Accounts receivable
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257,235
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241,990
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|||||||||||||||
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Inventories
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273,665
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232,209
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|||||||||||||||
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Other current assets
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27,591
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29,483
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|||||||||||||||
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TOTAL CURRENT ASSETS
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585,395
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509,553
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TOTAL CURRENT LIABILITIES
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192,941
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164,340
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||||||||||||
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OTHER ASSETS
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16,227
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14,312
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|||||||||||||||
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INTANGIBLE ASSETS, NET
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168,825
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170,301
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LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
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84,700
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84,700
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||||||||||||
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OTHER LIABILITIES
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42,758
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41,072
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|||||||||||||||
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PROPERTY, PLANTAND EQUIPMENT, NET
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245,036
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239,347
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EQUITY
|
695,084
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643,401
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||||||||||||
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|||||||||||||||||
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|
|||||||||||||||||
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TOTAL ASSETS
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$
|
1,015,483
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$
|
933,513
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TOTAL LIABILITIES AND EQUITY
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$
|
1,015,483
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$
|
933,513
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||||||||
FOR THE NINE MONTHS ENDED
SEPTEMBER 2014/2013
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(In thousands)
|
2014
|
2013
|
||||||
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CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
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Net earnings
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$
|
50,607
|
$
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37,144
|
||||
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Adjustments to reconcile net earnings attributable to controlling interest to net cash from operating activities:
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||||||||
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Depreciation
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24,241
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22,333
|
||||||
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Amortization of intangibles
|
1,743
|
1,880
|
||||||
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Expense associated with share-based compensation arrangements
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1,445
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1,442
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||||||
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Excess tax benefits from share-based compensation arrangements
|
(2
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)
|
(8
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)
|
||||
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Expense associated with stock grant plans
|
81
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49
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||||||
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Deferred income taxes (credit)
|
127
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(83
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)
|
|||||
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Equity in earnings of investee
|
(246
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)
|
(152
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)
|
||||
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Net gain on sale of property, plant and equipment
|
(3,418
|
)
|
(253
|
)
|
||||
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Changes in:
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||||||||
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Accounts receivable
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(76,642
|
)
|
(79,849
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)
|
||||
|
Inventories
|
14,754
|
11,261
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||||||
|
Accounts payable and cash overdraft
|
25,078
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19,336
|
||||||
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Accrued liabilities and other
|
32,760
|
34,580
|
||||||
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NET CASH FROM OPERATING ACTIVITIES
|
70,528
|
47,680
|
||||||
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CASH FLOWS FROM INVESTING ACTIVITIES:
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||||||||
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Purchases of property, plant, and equipment
|
(31,676
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)
|
(32,108
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)
|
||||
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Proceeds from sale of property, plant and equipment
|
6,463
|
1,319
|
||||||
|
Acquisitions, net of cash received
|
(7,135
|
)
|
(9,296
|
)
|
||||
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Advances of notes receivable
|
(2,229
|
)
|
(1,990
|
)
|
||||
|
Collections of notes receivable and related interest
|
983
|
1,441
|
||||||
|
Cash restricted as to use
|
-
|
6,111
|
||||||
|
Other, net
|
(95
|
)
|
28
|
|||||
|
NET CASH FROM INVESTING ACTIVITIES
|
(33,689
|
)
|
(34,495
|
)
|
||||
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CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
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Borrowings under revolving credit facilities
|
192,475
|
251,801
|
||||||
|
Repayments under revolving credit facilities
|
(192,475
|
)
|
(262,891
|
)
|
||||
|
Debt issuance costs
|
(11
|
)
|
(15
|
)
|
||||
|
Proceeds from issuance of common stock
|
297
|
839
|
||||||
|
Distributions to noncontrolling interest
|
(1,710
|
)
|
(1,460
|
)
|
||||
|
Dividends paid to shareholders
|
(4,214
|
)
|
(3,977
|
)
|
||||
|
Repurchase of common stock
|
(4,772
|
)
|
-
|
|||||
|
Excess tax benefits from share-based compensation arrangements
|
2
|
8
|
||||||
|
NET CASH FROM FINANCING ACTIVITIES
|
(10,408
|
)
|
(15,695
|
)
|
||||
|
Effect of exchange rate changes on cash
|
(247
|
)
|
14
|
|||||
|
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
26,184
|
(2,496
|
)
|
|||||
|
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
-
|
7,647
|
||||||
|
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
26,184
|
$
|
5,151
|
||||
|
|
||||||||
|
SUPPLEMENTAL INFORMATION:
|
||||||||
|
Interest paid
|
$
|
2,475
|
$
|
2,850
|
||||
|
Income taxes paid
|
26,605
|
6,780
|
||||||