UFPI Posts Record 3Q Results


    GRAND RAPIDS — Universal Forest Products Inc. reported a 20 percent increase in net earnings of $14.6 million for the third quarter vs. net earnings of $12.2 million for the year ago quarter.

    Net sales for the quarter were $709.3 million, an increase of 32.3 percent over 2003’s third quarter. The higher lumber market increased sales prices by approximately 21 percent for the quarter, CFO Michael Cole estimated. 

    Sales increased nearly 74 percent to $194.6 million in Universal’s site built construction market, increased nearly 36 percent to $106.5 million in its manufactured housing market, and increased 51.5 percent to $127.4 million in its industrial market. Unit sales growth in the industrial market was approximately 29 percent.

    “This represented very profitable organic growth spread over all our regions as we continue to take market share,” Cole said.

    Overall, unit sales were up 11 percent for the quarter. Cole credited the increase to a combination of acquisitions and organic growth of several existing plants, particularly in southern California and Colorado. Organic growth accounted for about 5 percent of unit sales, he said.  

    The only market that suffered in unit sales was the Do-It-Yourself (D-I-Y) market.

    Sales to Home Depot in the quarter comprised 24 percent of total sales, compared to 30 percent last year, which Cole said was due to a decline in units shipped combined with strong growth in the company’s other three markets. 

    Despite those factors, D-I-Y sales were $280.7 million, or 7.2 percent higher than 2003’s third quarter

    Currie said the company’s goal is to bring Home Depot sales down to 20 percent of total sales.

    “We love the customer and we love the business we do with them, but we want to maintain the balance that we do with everything else, and we want to keep moving that down to 20 percent by growing our other businesses faster. And that’s what we were able to do this year — grow our other businesses faster.”

    D-I-Y unit sales declined 10 percent in the quarter, which Cole said was likely due to a softening of demand resulting from higher lumber and preservative costs that were passed along to consumers. In addition, the hurricanes that swept Florida and the Southeastern United States during the quarter effectively halted home improvement projects, according to Universal.

    “Everybody says hurricanes are good for business,” said Vice Chairman and CEO William Currie. “Well, long term they are, but short term they shut down all the building permits, and all the insurance companies have to come in and determine what the losses are. Basically, it really puts a stop on most phases of construction going on down there. It’s a slow rebuild process, so it will take some time to add value to us.”

    Year-to-date net earnings were $39.9 million, up 18 percent over year-to-date net earnings of $33.9 million in 2003. Net sales for the first nine months were $1.92 billion, up 32.8 percent over net sales of $1.44 billion for the same period the year before.

    Currie pointed out that sales for the first nine months of this year were equal to total sales for fiscal 2003.

    Based on year-to-date results, Universal raised its targeted range for earnings per share growth to between 12 percent and 15 percent, up from the previously targeted range of between 10 percent and 14 percent. The company anticipates unit sales growth ranging between 10 percent and 14 percent for the year.

    “It’s all about hard work and it’s all about execution,” Currie remarked. “With our first-rate sales and production teams, our management team and our focus on our systems, we again delivered strong revenues and earnings, and you’ve got to be proud of something like that.” 

    The lumber market was volatile in the just passed quarter, but Currie said the market has seen its high for the year. He anticipates a downward trend for the rest of the year, with demand staying about equal.

    “For the fourth quarter we’re not going to have much help or hindrance from the lumber market,” he added.    

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