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UFPI Posts Earnings Hike
GRAND RAPIDS — Universal Forest Products Inc. reported first quarter 2005 net sales of $537.2 million, up nearly 15.5 percent over net sales in the first quarter of 2004.
Another first quarter highlight was a marked increase in diluted earnings per share to 49 cents, up 63.3 percent over diluted earnings per share of 30 cents in the year-ago period.
CFO Michael Cole said the 15.4 percent increase in sales in the just-passed quarter reflects a 9 percent increase in unit sales and a 6.4 percent increase attributed to higher lumber prices.
By market, first quarter sales were:
- $177.6 million in Do-It-Yourself (D-I-Y) retail, down 7 percent from last year.
- $151.9 million in site-built construction, up 32.3 percent over 2004.
- $111.3 million in the industrial market, up 17.2 percent of the year before.
- $96.3 million in manufactured housing, up 25.2 percent over the prior year.
Universal sales to the D-I-Y market decreased 1 percent, driven by a 6 percent decline in unit sales as a result of the company’s efforts to diversify its customer base, Cole said. A prolonged winter season in the Northeast and Midwest also contributed to the decline.
CEO and Vice Chairman William G. Currie pointed out that the 1 percent decrease in D-I-Y sales was planned. Due to strong growth in its site-built, industrial and manufactured housing markets, sales to Home Depot comprised less than 19 percent of Universal’s total sales in 2005’s first quarter, compared with 23 percent for the same quarter last year.
“This was the first time we’ve been able to get below 20 percent, which is where we’ve been trying to get,” Currie said. “We’re pretty pleased in the growth in our other markets and how it has balanced our business.”
Cole said the 32.3 percent increase in the site-built construction stemmed from the acquisition of new plants and organic growth out of existing plants, particularly those in the company’s Carolina, Florida and Texas regions.
The more than 17 percent jump in industrial sales, Cole said, was driven by “very profitable” organic growth spread over several regions.
“The industrial side of the business continues to even amaze us sometimes,” Currie added. “It’s a very profitable business for Universal and we expect continued growth. We simply have a lot to offer this market that others don’t. We’ve got package engineering, production engineering, a great sales force, leverage in our purchasing, and leverage in just about every area where we’re into this business, and we’re very bullish on our industrial growth.”
Manufactured housing sales rose primarily due to higher lumber prices and a change in the sales mix toward more complex trusses that are more costly to engineer and higher priced, he said.
“Manufactured housing is the one that’s really sneaking up on us,” Currie remarked. “As you know, we’ve made some recent investments in proprietary products for the modular market. More and more builders are getting heated up about these products. The modular segment is particularly healthy and this is becoming the product of choice in the Northeast, Midwest and Mid-Atlantic.”
After a volatile 2004, the lumber market has become more stable and predictable over the winter months, Currie observed. He said Universal expects to see prices on the high side, but nothing that the company can’t manage.
Currie reaffirmed Universal’s annual targets of a 7 percent increase in unit sales and a 10 percent to 15 percent increase in net earnings over 2004.
He believes the housing market will level off a bit but all indications are that it will remain strong for 2005. Long range, he said, the company sees a strong housing market three to five years out.