UFP INDUSTRIES INC - FORM 8-K - EX-99.A - EXHIBIT 99.A - February 18, 2015

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8-K - UNIVERSAL FOREST PRODUCTS, INC 8-K 2-18-2015 - UFP INDUSTRIES INCform8k.htm
Exhibit 99(a)
 

 
News release
 
---------------AT THE COMPANY---------------
 
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502

FOR IMMEDIATE RELEASE
Wednesday, February 18, 2015
 
Universal Forest Products, Inc. (UFPI) Reports 4th Quarter 2014 Results
Q4 Earnings up 16.5%; Net Sales up nearly 18% over 2013
2014 Annual Earnings up 33.6%, Net Sales up 7.7% over 2013
GRAND RAPIDS, Mich., Wed., Feb. 18, 2015 – Universal Forest Products, Inc. (Nasdaq: UFPI) today announced 2014 results, including fourth-quarter net sales of $620.1 million, up 17.9 percent over results for the fourth quarter of 2013. Net earnings attributable to controlling interests in the fourth quarter of 2014 were $9.3 million, or $0.46 per diluted share, up 16.5 percent over the same period of 2013. The Company reported 2014 annual net sales of nearly $2.7 billion, a 7.7 percent increase over the previous year, and 2014 annual net earnings attributable to controlling interests of $57.6 million or $2.86 per diluted share, up 33.6 percent over 2013.
 
For the fourth quarter of 2014, the Company saw double-digit sales increases in each of its markets. The results reflect an increase in overall unit sales of 14 percent and an increase in commodity prices that impacted selling prices by four percent. Acquisitions made during the quarter contributed to sales growth, particularly to the industrial market.
 
“Our people continue to impress with their results.  Although 2014 started slow, we were able to finish strong with double-digit growth in both sales and profits,” said CEO Matthew J. Missad. “We are seeing growth both with existing customers and with new customers as we continue to build our new product pipeline. We were able to achieve our 2014 goals, and look to hitting even loftier goals in 2015.
 
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Universal Forest Products, Inc.
Page 2
 
“I’m pleased that our focus on bringing new products to market resulted in approximately $150 million in new product sales in 2014. In addition, we closed on five acquisitions in 2014, including two in the industrial market in the fourth quarter, which contributed positively to our results. We are committed to executing our growth strategies to drive more value for our shareholders,”
 
Missad added.Missad said the Company continues to work on improving profits, noting that it was able to post strong results in Q4 in spite of the unusually early and harsh winter weather, which hampered productivity.
 
By market, the Company posted the following 2014 gross sales results:
Retail
 
· Fourth quarter:               $204.9 million, up 22 percent over the fourth quarter of 2013
 
· Year:                                 $1.0 billion, up 10 percent over 2013
 
The Company saw healthy sales growth to big box and independent retailers, reflecting improved consumer spending, healthy comparable store sales increases for the big box customers in recent quarters, and share and sales gains with big box and independent retailers alike. The Company continues to focus on diversifying its product offering, creating new products and improving upon existing products, as well as enhancing service to customers to grow business in this market.
Construction
 
· Fourth quarter:               $224.4 million, up 10 percent over the fourth quarter of 2013
 
· Year:                                 $885.3 million, up 2 percent over 2013
 
This market includes residential and manufactured housing, commercial construction and concrete forming.  Manufactured housing and site built construction (including multifamily and single-family) each saw modest gains in their most recently reported results. The Company’s concrete forming sales continue to be strong and provide a promising opportunity for growth and profitability for the foreseeable future. Through focused sales, innovation and diversification efforts and by growing business selectively, the Company expects to continue on a long-term path of growth and ever-improving profitability in this market.
Industrial
 
· Fourth quarter:               $198.6 million, up 24.0 percent over the fourth quarter of 2013
 
· Year:                                 $783.8 million, up 12.0 percent over 2013
 
This market includes packaging, material handling and related products and applications for industrial customers. Industrial production in the United States was up 4.9 percent in December 2014 over a year earlier.  Manufacturing output rose 0.3 percent in December of 2014, its fourth consecutive monthly gain. The Company continues its successful focus on adding customers and products, expanding its offering of products and services, and adding capacity. The Company also continues to expand its reach into non-wood packaging materials and seeks to offer complete packaging solutions to industrial customers.

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Universal Forest Products, Inc.
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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, February 19, 2015. 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 89137708. 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 March 15, 2015, domestically at (888) 286-8010 and internationally at (617) 801-6888. Use replay pass code 43745004.

UNIVERSAL FOREST PRODUCTS, INC.
Universal Forest Products, Inc. is a holding company with subsidiaries throughout North America and in Australia that supply wood, wood composite and other products to three robust markets: retail, construction and industrial. The Company is headquartered in Grand Rapids, Mich., and is celebrating its 60th year. For more information about Universal Forest Products, Inc., or its affiliated operations, 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.
 
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Universal Forest Products, Inc.
Page 4
 
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2014/2013

   
Quarter Period
        
Year to Date
      
(In thousands, except per share data)
  
2014
        
2013
        
2014
        
2013
      
       
       
       
       
 
NET SALES
  
$
620,090
      
100
%
  
$
525,738
      
100
%
  
$
2,660,329
      
100
%
  
$
2,470,448
      
100.0
%
                                                                 
COST OF GOODS SOLD
    
547,335
      
88.3
      
461,509
      
87.8
      
2,334,987
      
87.8
      
2,189,896
      
88.6
  
                                                                 
GROSS PROFIT
    
72,755
      
11.7
      
64,229
      
12.2
      
325,342
      
12.2
      
280,552
      
11.4
  
                                                                 
SELLING,   GENERAL  AND ADMINISTRATIVE  EXPENSES
    
56,940
      
9.2
      
50,042
      
9.5
      
229,775
      
8.6
      
204,390
      
8.3
  
ANTI-DUMPING DUTY ASSESSMENTS
    
-
      
-
      
-
      
-
      
1,600
      
0.1
      
1,526
      
0.1
  
NET (GAIN) LOSS ON DISPOSITION AND
                                                                
IMPAIRMENT OF ASSETS 1
    
18
      
-
      
621
      
0.1
      
(3,400
)
    
(0.1
)
    
368
      
-
  
                                                                 
EARNINGS FROM OPERATIONS
    
15,797
      
2.5
      
13,566
      
2.6
      
97,367
      
3.7
      
74,268
      
3.0
  
                                                                 
OTHER EXPENSE, NET
    
(309
)
    
-
      
1,041
      
0.2
      
1,654
      
0.1
      
4,010
      
0.2
  
                                                                 
EARNINGS BEFORE INCOME TAXES
    
16,106
      
2.6
      
12,525
      
2.4
      
95,713
      
3.6
      
70,258
      
2.8
  
                                                                 
INCOME TAXES 1
    
5,149
      
0.8
      
3,865
      
0.7
      
34,149
      
1.3
      
24,454
      
1.0
  
                                                                 
NET EARNINGS
    
10,957
      
1.8
      
8,660
      
1.6
      
61,564
      
2.3
      
45,804
      
1.9
  
                                                                 
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST 1
    
(1,644
)
    
(0.3
)
    
(665
)
    
(0.1
)
    
(4,013
)
    
(0.2
)
    
(2,722
)
    
(0.1
)
                                                                 
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST
  
$
9,313
      
1.5
    
$
7,995
      
1.5
    
$
57,551
      
2.2
    
$
43,082
      
1.7
  
                                                                 
EARNINGS PER SHARE - BASIC
  
$
0.46
            
$
0.40
            
$
2.87
            
$
2.16
          
                                                                 
EARNINGS PER SHARE - DILUTED
  
$
0.46
            
$
0.40
            
$
2.86
            
$
2.15
          
                                                                 
COMPREHENSIVE INCOME
    
9,685
              
8,191
              
59,407
              
45,020
          
                                                                 
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
    
(1,791
)
            
(631
)
            
(3,974
)
            
(2,730
)
        
                                                                 
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST
  
$
7,894
            
$
7,560
            
$
55,433
            
$
42,290
          
 
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.
 
SUPPLEMENTAL SALES DATA

   
Quarter Period
    
Year to Date
  
Market Classification
  
2014
    
2013
    
%
    
2014
    
2013
    
%
  
Retail
  
$
204,922
    
$
167,958
      
22
%
  
$
1,028,783
    
$
936,141
      
10
%
Industrial
    
198,594
      
160,475
      
24
%
    
783,805
      
699,688
      
12
%
Construction
    
224,387
      
204,297
      
10
%
    
885,348
      
868,083
      
2
%
Total Gross Sales
    
627,903
      
532,730
      
18
%
    
2,697,936
      
2,503,912
      
8
%
Sales Allowances
    
(7,813
)
    
(6,992
)
            
(37,607
)
    
(33,464
)
        
Total Net Sales
  
$
620,090
    
$
525,738
            
$
2,660,329
    
$
2,470,448
          
 
Universal Forest Products, Inc.
Page 5
 
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
DECEMBER 2014/2013

(In thousands)
ASSETS
  
2014
    
2013
  
LIABILITIES AND EQUITY
  
2014
    
2013
  
 
  
   
     
   
 
CURRENT ASSETS
  
   
 
CURRENT LIABILITIES
  
   
 
Restricted cash
    
405
      
720
  
Cash Overdraft
    
621
      
1,079
  
Accounts receivable
    
195,912
      
180,452
  
Accounts payable
    
89,105
      
72,918
  
Inventories
    
340,048
      
287,305
  
Accrued liabilities
    
85,734
      
65,102
  
Other current assets
    
36,641
      
27,921
  
 
                
 
                                  
TOTAL CURRENT ASSETS
    
573,006
      
496,398
  
TOTAL CURRENT LIABILITIES
    
175,460
      
139,099
  
 
                                  
OTHER ASSETS
    
10,644
      
13,452
                  
INTANGIBLE ASSETS, NET
    
191,881
      
169,727
  
LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS
    
98,645
      
84,700
  
               
OTHER LIABILITIES
    
50,135
      
43,454
  
PROPERTY, PLANT AND EQUIPMENT,  NET
    
248,269
      
237,410
  
EQUITY
    
699,560
      
649,734
  
 
                                  
TOTAL ASSETS
  
$
1,023,800
    
$
916,987
  
TOTAL LIABILITIES AND EQUITY
  
$
1,023,800
    
$
916,987
  
 
Universal Forest Products, Inc.
Page 6
 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2014/2013
 
(In thousands)
  
2014
    
2013
  
CASH FLOWS FROM OPERATING ACTIVITIES:
  
   
 
Net earnings
  
$
61,564
    
$
45,804
  
Adjustments to reconcile net earnings attributable to controlling interest to net cash from operating activities:
                
Depreciation
    
33,913
      
31,091
  
Amortization of intangibles
    
2,410
      
2,473
  
Expense associated with share-based compensation arrangements
    
1,919
      
1,874
  
Excess tax benefits from share-based compensation arrangements
    
(14
)
    
(112
)
Expense associated with stock grant plans
    
94
      
58
  
Loss reserve for notes receivable
    
-
      
15
  
Deferred income taxes (credit)
    
4,926
      
4,453
  
Equity in earnings of investee
    
(378
)
    
(201
)
Net (gain) or loss on sale of property, plant and equipment
    
(3,400
)
    
297
  
Changes in:
                
Accounts receivable
    
(9,710
)
    
(17,886
)
Inventories
    
(49,575
)
    
(42,287
)
Accounts payable and cash overdraft
    
15,390
      
7,835
  
Accrued liabilities and other
    
15,981
      
21,026
  
NET CASH FROM OPERATING ACTIVITIES
    
73,120
      
54,440
  
                 
CASH FLOWS FROM INVESTING ACTIVITIES:
                
Purchases of property, plant, and equipment
    
(45,305
)
    
(40,023
)
Proceeds from sale of property, plant and equipment
    
9,005
      
1,778
  
Acquisitions, net of cash received
    
(34,641
)
    
(11,478
)
Purchase of patents & product technology
    
-
      
(143
)
Advances of notes receivable
    
(6,201
)
    
(2,673
)
Collections of notes receivable and related interest
    
9,926
      
2,814
  
Cash restricted as to use
    
315
      
6,111
  
Other, net
    
(162
)
    
11
  
NET CASH FROM INVESTING ACTIVITIES
    
(67,063
)
    
(43,603
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES:
                
Borrowings under revolving credit facilities
    
211,770
      
251,801
  
Repayments under revolving credit facilities
    
(197,825
)
    
(262,891
)
Debt issuance costs
    
(724
)
    
(46
)
Proceeds from issuance of common stock
    
541
      
2,144
  
Distributions to noncontrolling interest
    
(1,910
)
    
(1,460
)
Capital contribution from noncontrolling interest
    
-
      
84
  
Dividends paid to shareholders
    
(12,205
)
    
(8,166
)
Repurchase of common stock
    
(4,866
)
    
-
  
Excess tax benefits from share-based compensation arrangements
    
14
      
112
  
NET CASH FROM FINANCING ACTIVITIES
    
(5,205
)
    
(18,422
)
                 
Effect of exchange rate changes on cash
    
(852
)
    
(62
)
NET CHANGE IN CASH AND CASH EQUIVALENTS
    
-
      
(7,647
)
                 
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
-
      
7,647
  
                 
CASH AND CASH EQUIVALENTS, END OF PERIOD
  
$
-
    
$
-
  
                 
SUPPLEMENTAL INFORMATION:
                
Interest paid
  
$
4,334
    
$
4,883
  
Income taxes paid
    
38,475
      
14,427
  
 
 

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