UFPI Posts Record Quarter, Sales

October 24, 2003
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GRAND RAPIDS — Universal Forest Products Inc. reported record third quarter net sales of $536.3 million, an 18 percent jump in sales over last year’s third quarter.

Diluted earnings per share for the quarter were up nearly 14 percent to 66 cents.

Net sales for the first nine months also set a record for the company, increasing 11 percent to $1.4 billion over the first nine months of 2002.

Year-to-date earnings per share were $1.85, or 8 percent higher than the year-ago period.

CFO Michael Cole said the lumber market was higher in the just passed quarter, which contributed to the company’s sales increase.

“We estimate that higher lumber prices had the effect of increasing our sales prices by approximately 5 percent,” he said. “Overall unit sales were up 13 percent. In addition, we’ve estimated that acquisitions drove 9 percent of our unit sales increase and that our organic sales growth was 4 percent.”

By market, sales to the do-it-yourself (D-I-Y) market increased nearly 22 percent to $262 million during the quarter, which Cole attributed to three factors: higher lumber prices, organic sales growth and a substantial increase in unit shipments.

He said unit shipments increased due to the purchase of a Quality Wood manufacturing plant, as well as a treat-and-services agreement struck last fall with Quality Wood.

During the just passed quarter, Universal took the relationship a step further and acquired two more of the Quality Wood plants that have been providing it with lumber treatment and services.

About 13 percent of the 22 percent increase in D-I-Y sales were to Home Depot, noted CEO and Vice Chairman William Curie.

Home Depot sales went from 68 percent of Universal’s total D-I-Y sales down to 63 percent. Currie said that’s “good news” because it shows that the company is moving more products to independent distributors and is further diversifying its customer base.

He said D-I-Y market sales are expected to continue strong through the end of the year.

“I think a lot of projects that didn’t get started earlier in the year will give us a little longer selling season.”

Sales to the site-built construction market increased nearly 26 percent over 2003’s third quarter to $111.5 million.

Sales to the industrial market were $83.4 million, reflecting a nearly 20 percent increase over the year-ago quarter. Cole said the increase was primarily due to organic sales growth spread over several plants.

Sales to the manufactured housing market decreased about a half percent to $79.3 million.

Currie said Universal is picking up market share in all four markets it serves and that industry conditions continue to be favorable.

“The lumber market has moved back down to more historical type levels and that’s where we see it for the next several quarters,” he remarked. “We see a soft market again for the first quarter. The demand won’t be any more than it would last year and we’ll have very soft lumber prices.”

Universal continues to see growing demand for its new composite lumber products and some major opportunities with some “big customers” look to be on the horizon, Currie noted.

The company reaffirmed it diluted earnings per share growth target of 7 percent to 10 percent for the year and increased its target for annual sales growth to 10 percent to 12 percent, up from the previous target of 7 percent to 10 percent.    

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