GRAND RAPIDS — Universal Forest Products Inc. exceeded its internal targets for sales and earnings growth for both the fourth quarter and year ended Dec. 25.
The company reported net sales of $535.8 million for the fourth quarter, an increase of nearly 18 percent over net sales of $454.5 million in 2003’s fourth quarter. Diluted earnings per share for the quarter totaled 46 cents, an increase of more that 35 percent over the year ago quarter.
According to Universal, higher lumber and chemical prices contributed approximately 18 percent to annual net sales growth but only 6 percent to growth in the fourth quarter.
Net sales were up 29 percent to $2.45 billion for the year, compared with net sales of $1.9 billion in fiscal 2003. Diluted earnings per share for the year totaled $2.59, or 18.8 percent higher than the year before.
“Our operating profits exceeded expectations, our return on capital jumped over half a percent and our stock responded nicely to it, with a very nice movement up for our shareholders,” said CEO and Vice Chairman William Currie
By market, Universal posted the following year-over-year and fourth quarter sales:
- Do-it-yourself retail sales increased 9 percent over fiscal 2003 to $981.6 million. Fourth quarter D-I-Y unit sales were down 1.3 percent from 2003.
- Site-built construction sales were $631.7 million, up 56.7 percent over 2003 year-end sales. Fourth quarter sales increased 34.3 percent over 2003.
- Industrial sales totaled $454.7 million, an increase of 45.1 percent over 2003. Fourth quarter 2004 sales were up 28 percent over the same period last year.
- Manufactured housing sales were $385.3 million, up 36.6 percent for the year. Fourth quarter sales were up 27.3 percent over 2003.
Currie attributed the drop in unit sales in the D-I-Y market to the impact that higher lumber and chemical prices had on consumer demand.
“Last year was a very volatile lumber market and more wood fiber was consumed in the U.S. than ever before,” he said. “We had record highs and we also had record lows toward the fourth quarter. This year we expect the market to be more stable. We expect it to be higher priced than average but nothing we can’t manage.”
Industrial sales represented “very profitable” organic growth spread over several regions, said CFO Michael Cole. He said that due to strong growth in Universal’s manufactured housing market, the company’s sales to Home Depot comprised less than 25 percent of total sales in 2004, compared with 30 percent last year.
“Our improved profitability was primarily driven by a more favorable product mix as our value-added sales ratio increased to 55 percent from 52 percent last year, driven by increased sales in the site built and industrial markets,” Cole added.
The company experienced significant losses during 2004 related to problems with a framing venture in the West, problems Currie said the company is putting behind it.
The company is targeting unit sales growth of 7 percent to 12 percent and net earnings growth of 10 percent to 15 percent in 2005 over 2004, Currie said.
Universal marks its 50th year in business on Feb. 10. The company will celebrate that milestone at an open house at its headquarters in July that will coincide with a board meeting, said Lynn Afendoulis, director of public affairs. Celebrations also will be held at facilities throughout the United States, Canada and Mexico.
Over the past 50 years, Universal has grown from a single sales office serving the manufactured housing industry to a multi-billion dollar corporation.
With 9,000 employees and 96 facilities in 84 North American communities, Universal is now the nation’s largest manufacturer of roof trusses and the largest customer of the nation’s largest lumber mills, as well as the world’s largest manufacturer of treated wood.
The company has had only three CEOs in its history: founder William Grant Sr., Peter Secchia, who took the company public in 1993, and current CEO and Vice Chairman Currie. Secchia retired from the company in 2002 and has since maintained the position of chairman of the board.
“Ours is a story of hard work and determination and of a shared passion for success, for strong relationships and for integrity in all we do. That’s the story of our company, our people and our success,” Currie remarked.