UFPs Earnings Fall

April 23, 2007
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GRAND RAPIDS — Snow, ice, rain, tornados and other major weather events in January and February hit Universal Forest Product’s earnings hard.

The company reported first-quarter net sales of $549 million and net earnings of $3.9 million, down from net sales of $665.6 million and net earnings of $15.9 million for the same period in 2006. Sales were down in each of the company’s four market segments.

Once the weather turned around in March, sales improved dramatically, said Chairman William G. Currie, and Universal started to see some results from its earlier efforts to gain market share and grow the business. 

President and CEO Michael B. Glenn said the first two months of this year were the weakest months the company has ever seen, with more than 100 days of lost production time as a result of storms and almost as many days of limited production.

By market, Universal posted the following gross sales for the first quarter, with corresponding percentage decreases from the first quarter of 2006:

  • $196.1 million in do-it-yourself/retail, 9.4 percent decrease.
  • $138.8 million in site-built construction, 34.9 percent decrease.
  • $88.3 million in manufactured/modular housing, 17.3 percent decrease.
  • $133.5 million in industrial, 4.7 percent decrease.

The industrial market remains the bright spot, Glenn said. In the last four months the company has opened nine new factories to handle its industrial business. In the last six months Universal has picked up more than 500 new customers in that market.

During the just-passed quarter, Universal acquired Boston Cedar, the largest supplier for composite decking in the Northeast, and Aljoma Lumber, the only manufacturer of pressure-treated lumber in southern Florida. Glenn said the Aljoma purchase gives Universal a huge presence in southern Florida and opens up the Caribbean market for Universal, as well.

Earlier this year, the company bought Banks Lumber, which was the only national player remaining in the manufactured housing market that was a Universal competitor. Glenn said with that purchase, Universal now owns 80 to 90 percent of that market.

“With some of the acquisitions we’ve made and some of the strategic moves we’ve made, we’ve positioned ourselves (as) ‘the supplier’ for those four business segments for years to come,” Glenn said.

The company also started doing business with big-box retailers this year and picked up significant business in markets that Universal has never been in before. Glenn added that the company’s annual sales to big-box retailers is probably greater than most of Universal’s competitors. It was a “very strong and effective move” by the company, he said.

Last August, Universal introduced a new product called ProWood Micro, a product Glenn said has gained tremendous acceptance in the marketplace. The product won the “2006 Editor’s Choice Award” from ProSales trade publication. Due to demand for the product, Universal has more than 20 of its pressure-treating facilities producing ProWood Micro.

Glenn noted that Universal has engaged in a continuous improvement initiative throughout the corporation.

“We’re taking out waste in every one of our plants. We’re creating space for new opportunities for us within the plants,” he said. “There are a lot of positive things we’re doing that you’re going to see come to fruition in the second, third and fourth quarters.”     

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