Universal Forest Products enjoys successful third quarter
Industry’s rebound is cause for optimism, but lumber prices may be a concern.
Universal Forest Products Inc. had a good third quarter — it’s as simple as that.
The Grand Rapids-based holding company that provides capital, management and administrative resources to wood-product subsidiaries recently announced its third-quarter earnings results for 2014.
The company, which was founded in 1955 and is headquartered at 2801 East Beltline Ave. NE, Grand Rapids, saw an increase in sales for all three of its markets: retail, construction and industrial.
UFPI reported net earnings attributable to controlling interests of $19.2 million, which was about 36.5 percent more than the $14.1 million the company reported for last year’s third quarter. Universal’s earnings per diluted share for this year’s third quarter were 96 cents, up from the 71 cents it saw last year.
Net sales also grew for the retail, construction and industrial markets, totaling $713.5 million for this quarter, which was 9.5 percent more than the $651.8 million Universal saw in last year’s third quarter.
In addition, earnings attributable to controlling interests saw a net gain of $700,000 on the sale of certain assets.
In gross sales, UFPI reported that retail, construction and industrial sales all increased from last year’s numbers. In the retail category, gross sales were $272.5 million, which was 10 percent more than last year’s third quarter results. In the industrial category, gross sales were $211.3 million, which was 13 percent more than last year’s. And in the construction category, gross sales were $239.8 million, which is up 6 percent from last year’s third quarter.
“We experienced solid sales growth in each of our markets, and we continued to improve operational efficiencies and maintain our focus on profitability. The third quarter saw profitable growth and progress toward many of our longer-term goals,” said Matthew Missad, the company’s CEO.
“Our teams are executing their plans, and their excellent performance clearly shows in the financial results. I am proud of their efforts to create value in this economy.”
Missad said Universal plans to continue pursuing acquisitions and reinvest in ways to grow organically.
One thing that may have impacted this year’s revenue stream was the price for composite lumber, which was up 10.7 percent over 2013 — “offset partially by an 18 percent decline in OSB (oriented strand board) prices in the third quarter of 2014,” according to a release, raising selling prices and sales by about 6 percent.
The cost of lumber will continue to fluctuate, but it won’t have a massive impact on the profitability of the company as a whole, said Mike Cole, chief financial officer at UFPI.
“Last year, the composite lumber price was $380 to $390, depending on the month. At the end of September 2014, it was $398 per thousand of board feet,” he said.
“Overall at this point, if the current trend stays flat in lumber prices, it’s actually a very comparable level with Q4 of last year. … Lumber prices shouldn’t have as much of an impact on our sales.”