UFPI Posts Record Sales

October 25, 2002
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GRAND RAPIDS — Universal Forest Products Inc. posted record sales and operating profits for the third quarter, as well as record results for the first nine months of the year.

Net sales for the quarter were $453 million, or 5 percent higher than 2001 third quarter sales.

Net sales for the first nine months were $1.3 billion, or 8 percent higher than for the same period last year.

Earnings per share for the quarter increased more than 21 percent to 58 cents, compared with the same quarter a year ago.

Year to date, earnings per share total $1.71, a 20 percent increase over earnings per share for 2001’s first three quarters.

Chairman and CEO William Currie said declining lumber prices continue to affect sales. Lumber prices in the third quarter were approximately 10 percent lower than in 2001’s third quarter.

He pointed out that the decline in the lumber market has been going on since 1997, and over that five-year period there has been a decrease in the lumber market of 25 percent to 30 percent.

“It’s been difficult to make sales comparisons to previous years when the sequential decline in the lumber market actually causes margin pressure on some of our largest product lines, especially the treated lumber.”

Universal posted strong unit sales in each of its markets, with the exception of its manufactured housing market, he said. By market, third quarter sales were:

  • $215.7 million in Do-It-Yourself (D-I-Y) retail, up nearly 7 percent from last year.
  • $88.5 million in site-built construction, a decrease of nearly 2 percent compared to last year.
  • $79.4 million in manufactured housing, a nearly 6 percent decrease compared to last year.
  • $69.2 million in industrial/agricultural, a 25 percent increase over last year.

The current state of the lumber market is the result of oversupply stemming from overproduction in U.S. and Canadian lumber markets and increased European imports to the United States due to cheap freight prices, Currie said.

As for the outlook, suppliers are increasing production, which will put more pressure on the market, he added.

At this time last year, the company was dealing with all new management and all new strategies at The Home Depot and was having a rough time of it, Currie recalled.

The Home Depot comprised 32.8 percent of the company’s total sales and nearly 68 percent of its D-I-Y retail sales in 2001.

“I’m happy to report that we are completely expanding our business with the Home Depot with completely new initiatives and proposals. We’ve been chosen as their install partner in several large markets and have been awarded many other markets for specialty manufactured products.”

Currie said the company continues to improve its manufacturing processes of core products and has acquired technology and equipment to expand product offerings to include some “exciting” new wood alternatives.

“This is the juice we have going into next year. We’ve got a couple of great new product lines and a lot of anticipation for sales and growth and we’re quite pleased with those moves that we’ve made.”

Universal previously targeted annual sales growth ranging from 6 percent to 10 percent, but due to falling lumber prices since April, has revised its sales growth target downward to 5 percent to 8 percent for the year.

However, the company is still targeting earnings per share growth of 18 percent to 22 percent for the year.           

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