UFPI Springs Into 2006

April 24, 2006
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GRAND RAPIDS — As long as Americans keep building their houses out of wood products, it looks like Universal Forest Products Inc. will have a good thing going. Coming off a record-setting 2005, the Grand Rapids-based building materials company has just announced an impressive start to 2006.

Quarterly sales increased by more than $100 million, up 24 percent to $666 million. The company, already showing strong profitability, maintained many of its costs in proportion with its growth in sales. Selling, general and administrative costs were up 29 percent. But cost of goods sold was up just 22 percent to $571 million. In other words, with sales up 24 percent and cost of goods up just 22 percent, the per-unit cost of sales was down. That resulted in net income growth of 72 percent compared to the first quarter of 2005.

"We delivered these powerful results by staying true to our business strategy, focusing on exceeding customer expectations and driving costs out of our operations," CEO William G. Currie said in a statement released with the quarterly report. "I'm proud of a team that continually meets and exceeds its goals."

UFPI could also credit Mother Nature for some of its recent success. With the clean-up and rebuilding efforts taking place in the GulfCoast region, it didn't come as a surprise that UFPI had a strong start this year. Shortly after the hurricanes swept through that area last August, the company had already seen demand for its products start to creep up. The fourth quarter of 2005 was particularly strong as the rebuilding began. At that time, Currie said that the hurricanes' positive impact on UFPI sales would really begin to manifest itself in this quarter. Obviously he was right.

The strong sales boiled down to 82 cents per-share earnings, compared to 49 cents for 2005's first quarter. Shareholder equity grew by 23 percent in the last year.

The company's stock jumped in value by nearly 15 percent the day after the quarterly performance announcement.    

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