| |
| |
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10‑Q10-Q
For the quarterly period ended September 30, 201725, 2021
OR
Commission File Number 0‑226840-22684
UNIVERSAL FOREST PRODUCTS,UFP INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
| | | | |
| Michigan |
|
| |
| (State or other jurisdiction of incorporation or | | (I.R.S. Employer Identification Number) | |
| organization) | | | |
| | | | |
| 2801 East Beltline NE, Grand Rapids, Michigan | | 49525 | |
| (Address of principal executive offices) | | (Zip Code) | |
Registrant’s telephone number, including area code (616) 364‑6161364-6161
| | | ||
| NONE | | ||
| (Former name or former address, if changed since last report.) | | ||
| | | ||
| | |
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒⌧ No ☐◻
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒⌧ No ☐◻
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b‑212b-2 of the Exchange Act.
| | | |
Large Accelerated Filer | Accelerated Filer | Non-Accelerated Filer | Smaller |
| | | Emerging Growth Company ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with ana new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.☐
Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b‑212b-2 of the Exchange Act). Yes ☐ No ☒⌧
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
| | | | |
| Class |
| Outstanding as of September | |
| Common stock, $1 par value | |
| |
UNIVERSAL FOREST PRODUCTS, INC.
|
|
| |||
Title of Each Class | Trading Symbol | Name of Each Exchange On Which Registered | |||
Common Stock, no par value | UFPI | The Nasdaq Stock Market, LLC |
| |
| |
TABLE OF CONTENTS
PART I. | | FINANCIAL INFORMATION. | Page No. |
| | | |
| Item 1. | Financial Statements | |
| | | |
| | 3 | |
| | | |
| | 4 | |
| | | |
| | 5 | |
| | | |
| | ||
7 | |||
| | | |
| | Notes to Unaudited Condensed Consolidated | |
8 | |||
| | | |
| Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||
18 | |||
| | | |
| |||
34 | |||
| | | |
| |||
34 | |||
| |
| |
PART II. | | OTHER INFORMATION | |
| | | |
| Item 1. | Legal Proceedings – NONE | |
| | | |
| |||
35 | |||
| | | |
| |||
35 | |||
| | | |
| Item 3. | Defaults upon Senior Securities – NONE | |
| | | |
| Item 4. | Mine Safety Disclosures – NONE | |
| | | |
| |||
35 | |||
| | | |
| 35 |
2
CONDENSED CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except share data) |
|
|
|
|
|
|
| |||
|
| September 30, |
| December 31, |
| September 24, |
| |||
|
| 2017 |
| 2016 |
| 2016 |
| |||
ASSETS |
|
|
|
|
|
|
|
|
|
|
CURRENT ASSETS: |
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 22,044 |
| $ | 34,091 |
| $ | 36,683 |
|
Restricted cash |
|
| 905 |
|
| 398 |
|
| 909 |
|
Investments |
|
| 10,781 |
|
| 10,348 |
|
| 10,453 |
|
Accounts receivable, net |
|
| 419,183 |
|
| 282,253 |
|
| 343,771 |
|
Inventories: |
|
|
|
|
|
|
|
|
|
|
Raw materials |
|
| 203,930 |
|
| 198,954 |
|
| 180,740 |
|
Finished goods |
|
| 208,556 |
|
| 198,273 |
|
| 189,188 |
|
Total inventories |
|
| 412,486 |
|
| 397,227 |
|
| 369,928 |
|
Refundable income taxes |
|
| 763 |
|
| 11,459 |
|
| 7,407 |
|
Other current assets |
|
| 22,438 |
|
| 20,662 |
|
| 21,636 |
|
TOTAL CURRENT ASSETS |
|
| 888,600 |
|
| 756,438 |
|
| 790,787 |
|
DEFERRED INCOME TAXES |
|
| 1,899 |
|
| 1,546 |
|
| 2,416 |
|
RESTRICTED INVESTMENTS |
|
| 7,982 |
|
| — |
|
| — |
|
OTHER ASSETS |
|
| 7,634 |
|
| 8,617 |
|
| 8,757 |
|
GOODWILL |
|
| 212,029 |
|
| 198,535 |
|
| 207,832 |
|
INDEFINITE-LIVED INTANGIBLE ASSETS |
|
| 7,580 |
|
| 2,340 |
|
| 2,340 |
|
OTHER INTANGIBLE ASSETS, NET |
|
| 36,093 |
|
| 26,731 |
|
| 14,014 |
|
PROPERTY, PLANT AND EQUIPMENT: |
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
| 754,175 |
|
| 699,462 |
|
| 717,287 |
|
Less accumulated depreciation and amortization |
|
| (429,066) |
|
| (401,611) |
|
| (432,796) |
|
PROPERTY, PLANT AND EQUIPMENT, NET |
|
| 325,109 |
|
| 297,851 |
|
| 284,491 |
|
TOTAL ASSETS |
|
| 1,486,926 |
|
| 1,292,058 |
|
| 1,310,637 |
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
CURRENT LIABILITIES: |
|
|
|
|
|
|
|
|
|
|
Cash overdraft |
| $ | 26,617 |
| $ | 19,761 |
| $ | 13,940 |
|
Accounts payable |
|
| 171,774 |
|
| 124,660 |
|
| 137,979 |
|
Accrued liabilities: |
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
| 88,185 |
|
| 92,441 |
|
| 99,549 |
|
Other |
|
| 50,179 |
|
| 32,281 |
|
| 57,104 |
|
Current portion of long-term debt |
|
| 2,197 |
|
| 2,634 |
|
| 1,584 |
|
TOTAL CURRENT LIABILITIES |
|
| 338,952 |
|
| 271,777 |
|
| 310,156 |
|
LONG-TERM DEBT |
|
| 145,884 |
|
| 109,059 |
|
| 110,362 |
|
DEFERRED INCOME TAXES |
|
| 22,806 |
|
| 20,817 |
|
| 14,066 |
|
OTHER LIABILITIES |
|
| 29,204 |
|
| 29,939 |
|
| 28,963 |
|
TOTAL LIABILITIES |
|
| 536,846 |
|
| 431,592 |
|
| 463,547 |
|
SHAREHOLDERS’ EQUITY: |
|
|
|
|
|
|
|
|
|
|
Controlling interest shareholders’ equity: |
|
|
|
|
|
|
|
|
|
|
Preferred stock, no par value; shares authorized 1,000,000; issued and outstanding, none |
| $ | — |
| $ | — |
| $ | — |
|
Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding, 20,391,399, 20,342,069 and 20,330,939 |
|
| 20,391 |
|
| 20,342 |
|
| 20,331 |
|
Additional paid-in capital |
|
| 200,778 |
|
| 185,333 |
|
| 183,962 |
|
Retained earnings |
|
| 715,497 |
|
| 649,135 |
|
| 637,536 |
|
Accumulated other comprehensive income |
|
| (871) |
|
| (5,630) |
|
| (4,854) |
|
Total controlling interest shareholders’ equity |
|
| 935,795 |
|
| 849,180 |
|
| 836,975 |
|
Noncontrolling interest |
|
| 14,285 |
|
| 11,286 |
|
| 10,115 |
|
TOTAL SHAREHOLDERS’ EQUITY |
|
| 950,080 |
|
| 860,466 |
|
| 847,090 |
|
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
| $ | 1,486,926 |
| $ | 1,292,058 |
| $ | 1,310,637 |
|
| | | | | | | | | | |
(in thousands, except share data) | | | | | | | | |||
| | September 25, | | December 26, | | September 26, | | |||
|
| 2021 |
| 2020 |
| 2020 | | |||
ASSETS | | | |
| | |
| | | |
CURRENT ASSETS: | | | |
| | |
| | | |
Cash and cash equivalents | | $ | 138,637 |
| $ | 436,507 |
| $ | 346,154 | |
Restricted cash | |
| 17,592 | |
| 101 |
|
| 724 | |
Investments | |
| 33,723 | |
| 24,308 |
|
| 20,530 | |
Accounts receivable, net | |
| 783,959 | |
| 470,504 |
|
| 583,079 | |
Inventories: | | | |
| | |
| | | |
Raw materials | |
| 368,185 | |
| 316,481 |
|
| 286,418 | |
Finished goods | |
| 532,480 | |
| 250,813 |
|
| 242,316 | |
Total inventories | |
| 900,665 | |
| 567,294 |
|
| 528,734 | |
Refundable income taxes | |
| 14,134 | |
| 5,836 |
|
| — | |
Other current assets | |
| 34,040 | |
| 33,812 |
|
| 32,888 | |
TOTAL CURRENT ASSETS | |
| 1,922,750 | |
| 1,538,362 | |
| 1,512,109 | |
DEFERRED INCOME TAXES | |
| 2,330 | |
| 2,413 |
|
| 2,070 | |
RESTRICTED INVESTMENTS | | | 18,925 | |
| 17,565 |
|
| 17,327 | |
RIGHT OF USE ASSETS | | | 94,481 | | | 77,245 | | | 77,412 | |
OTHER ASSETS | |
| 29,168 | |
| 20,298 |
|
| 24,216 | |
GOODWILL | |
| 292,318 | |
| 252,193 |
|
| 245,925 | |
INDEFINITE-LIVED INTANGIBLE ASSETS | |
| 7,380 | |
| 7,401 |
|
| 7,361 | |
OTHER INTANGIBLE ASSETS, NET | |
| 93,984 | |
| 72,252 |
|
| 58,205 | |
PROPERTY, PLANT AND EQUIPMENT: | | | |
| | |
| | | |
Property, plant and equipment | | | 1,156,070 | | | 974,497 | | | 935,639 | |
Less accumulated depreciation and amortization | |
| (603,159) | |
| (557,335) |
|
| (529,644) | |
PROPERTY, PLANT AND EQUIPMENT, NET | | | 552,911 | | | 417,162 | | | 405,995 | |
TOTAL ASSETS | | | 3,014,247 | | | 2,404,891 | | | 2,350,620 | |
LIABILITIES AND SHAREHOLDERS’ EQUITY | | | |
| | |
| | | |
CURRENT LIABILITIES: | | | |
| | |
| | | |
Cash overdraft | | $ | 10,812 | | $ | — |
| $ | — | |
Accounts payable | | | 292,933 | | | 211,518 |
| | 231,111 | |
Accrued liabilities: | | | |
| | |
| | | |
Compensation and benefits | |
| 249,242 | |
| 166,478 |
|
| 171,472 | |
Income taxes | | | — | | | — | | | 3,024 | |
Other | |
| 90,348 | |
| 69,104 |
|
| 69,888 | |
Current portion of lease liability | | | 22,242 | | | 16,549 | | | 15,349 | |
Current portion of long-term debt | |
| 93 | |
| 100 |
|
| 2,760 | |
TOTAL CURRENT LIABILITIES | |
| 665,670 | |
| 463,749 |
|
| 493,604 | |
LONG-TERM DEBT | |
| 310,119 | |
| 311,607 |
|
| 311,267 | |
LEASE LIABILITY | | | 75,548 | | | 61,509 | | | 62,100 | |
DEFERRED INCOME TAXES | |
| 39,198 | |
| 25,266 |
|
| 22,478 | |
OTHER LIABILITIES | |
| 46,238 | |
| 59,608 |
|
| 47,367 | |
TOTAL LIABILITIES | |
| 1,136,773 | |
| 921,739 |
|
| 936,816 | |
SHAREHOLDERS’ EQUITY: | | | |
| | |
| | | |
Controlling interest shareholders’ equity: | | | |
| | |
| | | |
Preferred stock, 0 par value; shares authorized 1,000,000; issued and outstanding, NaN | | $ | — | | $ | — |
| $ | — | |
Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding, 61,887,770, 61,205,780 and 61,186,636 | |
| 61,888 | |
| 61,206 |
|
| 61,187 | |
Additional paid-in capital | |
| 239,563 | |
| 218,224 |
|
| 216,002 | |
Retained earnings | |
| 1,552,593 | |
| 1,182,680 |
|
| 1,127,375 | |
Accumulated other comprehensive loss | |
| (3,278) | |
| (1,794) |
|
| (6,974) | |
Total controlling interest shareholders’ equity | |
| 1,850,766 | |
| 1,460,316 |
|
| 1,397,590 | |
Noncontrolling interest | |
| 26,708 | |
| 22,836 |
|
| 16,214 | |
TOTAL SHAREHOLDERS’ EQUITY | |
| 1,877,474 | |
| 1,483,152 |
|
| 1,413,804 | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | | $ | 3,014,247 | | $ | 2,404,891 |
| $ | 2,350,620 | |
See notes to consolidated condensed financial statements.statements.
3
CONDENSED CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except per share data) |
|
|
|
|
|
|
|
|
| ||||
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| September 30, |
| September 24, |
| September 30, |
| September 24, |
| ||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 |
| ||||
NET SALES |
| $ | 1,056,586 |
| $ | 826,665 |
| $ | 2,975,091 |
| $ | 2,380,909 |
|
COST OF GOODS SOLD |
|
| 911,899 |
|
| 708,611 |
|
| 2,561,424 |
|
| 2,028,629 |
|
GROSS PROFIT |
|
| 144,687 |
|
| 118,054 |
|
| 413,667 |
|
| 352,280 |
|
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES |
|
| 92,416 |
|
| 74,502 |
|
| 273,676 |
|
| 223,153 |
|
EARNINGS FROM OPERATIONS |
|
| 52,271 |
|
| 43,552 |
|
| 139,991 |
|
| 129,127 |
|
INTEREST EXPENSE |
|
| 1,481 |
|
| 1,096 |
|
| 4,825 |
|
| 3,274 |
|
INTEREST INCOME |
|
| (130) |
|
| (119) |
|
| (541) |
|
| (431) |
|
EQUITY IN EARNINGS OF INVESTEE |
|
| 1 |
|
| (50) |
|
| (25) |
|
| (241) |
|
|
|
| 1,352 |
|
| 927 |
|
| 4,259 |
|
| 2,602 |
|
EARNINGS BEFORE INCOME TAXES |
|
| 50,919 |
|
| 42,625 |
|
| 135,732 |
|
| 126,525 |
|
INCOME TAXES |
|
| 16,250 |
|
| 13,861 |
|
| 44,855 |
|
| 43,268 |
|
NET EARNINGS |
|
| 34,669 |
|
| 28,764 |
|
| 90,877 |
|
| 83,257 |
|
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST |
|
| (976) |
|
| (945) |
|
| (2,480) |
|
| (2,828) |
|
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST |
| $ | 33,693 |
| $ | 27,819 |
| $ | 88,397 |
| $ | 80,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EARNINGS PER SHARE - BASIC |
| $ | 1.65 |
| $ | 1.36 |
| $ | 4.32 |
| $ | 3.95 |
|
EARNINGS PER SHARE - DILUTED |
| $ | 1.64 |
| $ | 1.36 |
| $ | 4.31 |
| $ | 3.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER COMPREHENSIVE INCOME: |
|
|
|
|
|
|
|
|
|
|
|
|
|
NET EARNINGS |
|
| 34,669 |
|
| 28,764 |
|
| 90,877 |
|
| 83,257 |
|
OTHER COMPREHENSIVE GAIN (LOSS) |
|
| 1,719 |
|
| (1,156) |
|
| 6,141 |
|
| (1,521) |
|
COMPREHENSIVE INCOME |
|
| 36,388 |
|
| 27,608 |
|
| 97,018 |
|
| 81,736 |
|
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST |
|
| (975) |
|
| (495) |
|
| (3,862) |
|
| (1,576) |
|
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST |
| $ | 35,413 |
| $ | 27,113 |
| $ | 93,156 |
| $ | 80,160 |
|
| | | | | | | | | | | | | |
(in thousands, except per share data) | | | | | | | | | | ||||
| | Three Months Ended | | Nine Months Ended | | ||||||||
| | September 25, | | September 26, | | September 25, | | September 26, | | ||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 |
| ||||
NET SALES | | $ | 2,093,784 |
| $ | 1,486,227 |
| $ | 6,619,329 |
| $ | 3,760,290 |
|
COST OF GOODS SOLD | |
| 1,766,229 | |
| 1,245,153 |
|
| 5,583,926 | |
| 3,147,049 | |
GROSS PROFIT | |
| 327,555 | |
| 241,074 |
|
| 1,035,403 | |
| 613,241 | |
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | |
| 169,467 | |
| 134,649 |
|
| 504,104 | |
| 357,770 | |
OTHER GAINS, NET | | | (10,037) | | | (176) | | | (11,248) | | | (2,120) | |
EARNINGS FROM OPERATIONS | |
| 168,125 | |
| 106,601 |
|
| 542,547 | |
| 257,591 | |
INTEREST EXPENSE | |
| 3,433 | |
| 2,486 |
|
| 10,483 | |
| 6,291 | |
INTEREST AND INVESTMENT LOSS (INCOME) | |
| 371 | |
| (1,565) |
|
| (3,614) | |
| (1,623) | |
EQUITY IN EARNINGS OF INVESTEE | | | 946 | | | — | | | 2,411 | | | — | |
| |
| 4,750 | |
| 921 |
|
| 9,280 | |
| 4,668 | |
EARNINGS BEFORE INCOME TAXES | |
| 163,375 | |
| 105,680 |
|
| 533,267 | |
| 252,923 | |
INCOME TAXES | |
| 37,628 | |
| 26,819 |
|
| 127,909 | |
| 63,798 | |
NET EARNINGS | |
| 125,747 | |
| 78,861 |
|
| 405,358 | |
| 189,125 | |
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST | |
| (4,706) | |
| (1,657) |
|
| (7,624) | |
| (5,299) | |
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST | | $ | 121,041 | | $ | 77,204 |
| $ | 397,734 | | $ | 183,826 | |
| | | | | | | | | | | | | |
EARNINGS PER SHARE – BASIC | | $ | 1.94 | | $ | 1.25 |
| $ | 6.40 | | $ | 2.98 | |
EARNINGS PER SHARE – DILUTED | | $ | 1.94 | | $ | 1.25 |
| $ | 6.38 | | $ | 2.98 | |
| | | | | | | | | | | | | |
OTHER COMPREHENSIVE INCOME: | | | | | | | | | | | | | |
NET EARNINGS | |
| 125,747 | |
| 78,861 |
|
| 405,358 | |
| 189,125 | |
OTHER COMPREHENSIVE GAIN (LOSS) | |
| (2,024) | |
| 1,687 |
|
| (1,500) | |
| (4,030) | |
COMPREHENSIVE INCOME | |
| 123,723 | |
| 80,548 |
|
| 403,858 | |
| 185,095 | |
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | |
| (4,496) | |
| (1,922) |
|
| (7,608) | |
| (3,354) | |
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST | | $ | 119,227 | | $ | 78,626 |
| $ | 396,250 | | $ | 181,741 | |
See notes to consolidated condensed financial statements.
4
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(Unaudited)
| | | | | | | | | | | | | | | | | | |
(in thousands, except share and per share data) | | | | | | | | | | | | | | | | | | |
| | Controlling Interest Shareholders’ Equity | ||||||||||||||||
| | | | | | | | | | | Accumulated | | | | | | | |
| | | | | Additional | | | | | Other | | | | | | | ||
| | Common | | Paid-In | | Retained | | Comprehensive | | Noncontrolling | | | | |||||
|
| Stock |
| Capital |
| Earnings |
| Earnings |
| Interest |
| Total | ||||||
Balance on December 26, 2020 | | $ | 61,206 | | $ | 218,224 | | $ | 1,182,680 | | $ | (1,794) | | $ | 22,836 |
| $ | 1,483,152 |
Net earnings | | | |
| | |
|
| 103,311 | |
|
| |
| 940 |
|
| 104,251 |
Foreign currency translation adjustment | | | |
| | |
| | |
|
| (374) | |
| (526) |
|
| (900) |
Unrealized loss on debt securities | | | |
| | |
| | |
|
| (1,296) | |
|
| |
| (1,296) |
Distributions to noncontrolling interest | | | |
| | |
| | |
| | |
|
| (2,914) | |
| (2,914) |
Cash dividends - $0.15 per share - quarterly | | | | | | | | | (9,274) | |
|
| |
|
| |
| (9,274) |
Issuance of 5,816 shares under employee stock purchase plan | |
| 6 | | | 357 | | | |
| | |
| | |
|
| 363 |
Net issuance of 536,970 shares under stock grant programs | |
| 537 | | | 3,888 | | | 5 |
| | |
| | |
|
| 4,430 |
Issuance of 89,690 shares under deferred compensation plans | |
| 89 | | | (89) | | | |
| | |
| | |
|
| — |
Expense associated with share-based compensation arrangements | | | | | | 2,936 | | | | |
|
| |
|
| |
| 2,936 |
Accrued expense under deferred compensation plans | | | | | | 5,795 | | | | |
|
| |
|
| |
| 5,795 |
Balance on March 27, 2021 | | $ | 61,838 | | $ | 231,111 |
| $ | 1,276,722 | | $ | (3,464) |
| $ | 20,336 |
| $ | 1,586,543 |
Net earnings | | | | | | | | | 173,382 | | | | | | 1,978 | |
| 175,360 |
Foreign currency translation adjustment | | | | | | | | | | | | 1,759 | | | 720 | |
| 2,479 |
Unrealized gain on debt securities | | | | | | | | | | | | 241 | | | | |
| 241 |
Cash dividends - $0.15 per share - quarterly | | | | | | | | | (9,276) | | | | | | | |
| (9,276) |
Issuance of 9,282 shares under employee stock plans | |
| 9 | | | 564 | | | | | | | | | | |
| 573 |
Net forfeitures of 5,718 shares under stock grant programs | |
| (6) | | | (224) | | | 5 | | | | | | | |
| (225) |
Issuance of 8,913 shares under deferred compensation plans | |
| 10 | | | (10) | | | | | | | | | | |
| — |
Expense associated with share-based compensation arrangements | | | | | | 2,728 | | | | | | | | | | |
| 2,728 |
Accrued expense under deferred compensation plans | | | | | | 1,140 | | | | | | | | | | |
| 1,140 |
Balance on June 26, 2021 | | $ | 61,851 | | $ | 235,309 |
| $ | 1,440,833 | | $ | (1,464) |
| $ | 23,034 |
| $ | 1,759,563 |
Net earnings | | | | | | | | | 121,041 | | | | | | 4,706 | | | 125,747 |
Foreign currency translation adjustment | | | | | | | | | | | | (1,897) | | | (210) | | | (2,107) |
Unrealized gain on debt securities | | | | | | | | | | | | 83 | | | | | | 83 |
Distributions to noncontrolling interest | | | | | | | | | | | | | | | | | | — |
Additional purchase and adjustment of noncontrolling interest | | | | | | | | | | | | | | | (822) | | | (822) |
Cash dividends - $0.15 per share - quarterly | | | | | | | | | (9,281) | | | | | | | | | (9,281) |
Issuance of 10,008 shares under employee stock plans | | | 10 | | | 573 | | | | | | | | | | | | 583 |
Net issuance of 17,165 shares under stock grant programs | | | 17 | | | (115) | | | | | | | | | | | | (98) |
Issuance of 9,864 shares under deferred compensation plans | | | 10 | | | (10) | | | | | | | | | | | | — |
Expense associated with share-based compensation arrangements | | | | | | 2,657 | | | | | | | | | | | | 2,657 |
Accrued expense under deferred compensation plans | | | | | | 1,149 | | | | | | | | | | | | 1,149 |
Balance on September 25, 2021 | | $ | 61,888 | | $ | 239,563 | | $ | 1,552,593 | | $ | (3,278) | | $ | 26,708 | | $ | 1,877,474 |
5
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY, CONTINUED
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except share and per share data) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| Controlling Interest Shareholders’ Equity | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| Accumulated |
|
|
|
|
|
| |
|
|
|
|
| Additional |
|
|
|
| Other |
|
|
|
|
|
| ||
|
| Common |
| Paid-In |
| Retained |
| Comprehensive |
| Noncontrolling |
|
|
| |||||
|
| Stock |
| Capital |
| Earnings |
| Earnings |
| Interest |
| Total | ||||||
Balance at December 26, 2015 |
| $ | 20,142 |
| $ | 171,562 |
| $ | 565,636 |
| $ | (4,585) |
| $ | 13,654 |
| $ | 766,409 |
Net earnings |
|
|
|
|
|
|
|
| 80,429 |
|
|
|
|
| 2,828 |
|
| 83,257 |
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
| (620) |
|
| (1,252) |
|
| (1,872) |
Unrealized gain (loss) on investment & foreign currency |
|
|
|
|
|
|
|
|
|
|
| 351 |
|
|
|
|
| 351 |
Distributions to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,160) |
|
| (3,160) |
Purchases of noncontrolling interest |
|
|
|
|
| 855 |
|
|
|
|
|
|
|
| (1,955) |
|
| (1,100) |
Cash dividends $0.420 per share |
|
|
|
|
|
|
|
| (8,529) |
|
|
|
|
|
|
|
| (8,529) |
Issuance of 5,195 shares under employee stock plans |
|
| 5 |
|
| 390 |
|
|
|
|
|
|
|
|
|
|
| 395 |
Issuance of 133,293 shares under stock grant programs |
|
| 133 |
|
| 5,143 |
|
|
|
|
|
|
|
|
|
|
| 5,276 |
Issuance of 50,742 shares under deferred compensation plans |
|
| 51 |
|
| (51) |
|
|
|
|
|
|
|
|
|
|
| — |
Expense associated with share-based compensation arrangements |
|
|
|
|
| 1,568 |
|
|
|
|
|
|
|
|
|
|
| 1,568 |
Accrued expense under deferred compensation plans |
|
|
|
|
| 4,495 |
|
|
|
|
|
|
|
|
|
|
| 4,495 |
Balance at September 24, 2016 |
| $ | 20,331 |
| $ | 183,962 |
| $ | 637,536 |
| $ | (4,854) |
| $ | 10,115 |
| $ | 847,090 |
Balance at December 31, 2016 |
|
| 20,342 |
|
| 185,333 |
|
| 649,135 |
|
| (5,630) |
|
| 11,286 |
|
| 860,466 |
Net earnings |
|
|
|
|
|
|
|
| 88,397 |
|
|
|
|
| 2,480 |
|
| 90,877 |
Foreign currency translation adjustment |
|
|
|
|
|
|
|
|
|
|
| 4,325 |
|
| 1,382 |
|
| 5,707 |
Unrealized gain (loss) on investment & foreign currency |
|
|
|
|
|
|
|
|
|
|
| 434 |
|
|
|
|
| 434 |
Distributions to noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
| (3,272) |
|
| (3,272) |
Additional purchases of noncontrolling interest |
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2,409 |
|
| 2,409 |
Cash dividends - $0.450 per share |
|
|
|
|
|
|
|
| (9,208) |
|
|
|
|
|
|
|
| (9,208) |
Issuance of 5,975 shares under employee stock plans |
|
| 6 |
|
| 470 |
|
|
|
|
|
|
|
|
|
|
| 476 |
Issuance of 142,775 shares under stock grant programs |
|
| 143 |
|
| 7,037 |
|
|
|
|
|
|
|
|
|
|
| 7,180 |
Issuance of 49,160 shares under deferred compensation plans |
|
| 49 |
|
| (49) |
|
|
|
|
|
|
|
|
|
|
| — |
Repurchase of 148,580 shares |
|
| (149) |
|
|
|
|
| (12,827) |
|
|
|
|
|
|
|
| (12,976) |
Expense associated with share-based compensation arrangements |
|
|
|
|
| 1,978 |
|
|
|
|
|
|
|
|
|
|
| 1,978 |
Accrued expense under deferred compensation plans |
|
|
|
|
| 6,009 |
|
|
|
|
|
|
|
|
|
|
| 6,009 |
Balance at September 30, 2017 |
| $ | 20,391 |
| $ | 200,778 |
| $ | 715,497 |
| $ | (871) |
| $ | 14,285 |
| $ | 950,080 |
| | | | | | | | | | | | | | | | | | |
(in thousands, except share and per share data) | | | | | | | | | | | | | | | | | | |
| | Controlling Interest Shareholders’ Equity | ||||||||||||||||
| | | | | | | | | | | Accumulated | | | | | | | |
| | | | | Additional | | | | | Other | | | | | | | ||
| | Common | | Paid-In | | Retained | | Comprehensive | | Noncontrolling | | | | |||||
|
| Stock |
| Capital |
| Earnings |
| Earnings |
| Interest |
| Total | ||||||
Balance on December 28, 2019 | | $ | 61,409 | | $ | 192,173 |
| $ | 995,022 | | $ | (4,889) |
| $ | 14,018 |
| $ | 1,257,733 |
Net earnings | | | |
| | |
|
| 40,159 | |
|
| |
| 411 |
|
| 40,570 |
Foreign currency translation adjustment | | | |
| | |
| | |
|
| (5,951) | |
| (2,335) |
|
| (8,286) |
Unrealized loss on debt securities | | | |
| | |
| | |
|
| (270) | |
|
| |
| (270) |
Distributions to noncontrolling interest | | | |
| | |
| | |
| | |
|
| (299) | |
| (299) |
Additional purchase of noncontrolling interest | | | | | | 130 | | | | | | | | | (225) | |
| (95) |
Cash dividends - $0.125 per share - quarterly | |
| |
| | |
|
| (7,730) | |
|
| |
|
|
|
| (7,730) |
Issuance of 10,549 shares under employee stock purchase plan | |
| 10 | |
| 309 |
| | |
| | |
| | |
|
| 319 |
Net issuance of 350,124 shares under stock grant programs | |
| 350 | |
| 12,454 |
| | 1 |
| | |
| | |
|
| 12,805 |
Issuance of 89,616 shares under deferred compensation plans | | | 89 | |
| (89) |
| | |
| | |
| | | | | — |
Repurchase of 756,397 shares | | | (756) | |
| | |
| (28,456) |
| | |
|
|
| |
| (29,212) |
Expense associated with share-based compensation arrangements | | | |
|
| 1,404 | |
|
| |
|
| |
|
| | | 1,404 |
Accrued expense under deferred compensation plans | | | |
|
| 5,343 | |
|
| |
|
| |
|
| |
| 5,343 |
Balance on March 28, 2020 | | $ | 61,102 | | $ | 211,724 |
| $ | 998,996 | | $ | (11,110) |
| $ | 11,570 |
| $ | 1,272,282 |
Net earnings | | | | | | | | | 66,463 | | | | | | 3,231 |
|
| 69,694 |
Foreign currency translation adjustment | | | | | | | | | | | | 2,026 | | | 125 |
|
| 2,151 |
Unrealized gain on debt securities | | | | | | | | | | | | 688 | | | | |
| 688 |
Cash dividends - $0.125 per share - quarterly | | | | | | | | | (7,644) | | | | | | | |
| (7,644) |
Issuance of 9,714 shares under employee stock plans | | | 10 | | | 367 | | | | | | | | | | |
| 377 |
Net issuance of 42,880 shares under stock grant programs | |
| 43 | | | (174) | | | 2 | | | | | | |
|
| (129) |
Issuance of 14,106 shares under deferred compensation plans | |
| 14 | | | (14) | | | | | | | | | |
|
| — |
Expense associated with share-based compensation arrangements | |
| | | | 824 | | | | | | | | | |
|
| 824 |
Accrued expense under deferred compensation plans | | | | | | 1,082 | | | | | | | | | | |
| 1,082 |
Balance on June 27, 2020 | | $ | 61,169 | | $ | 213,809 |
| $ | 1,057,817 | | $ | (8,396) |
| $ | 14,926 |
| $ | 1,339,325 |
Net earnings | | | | | | | | | 77,204 | | | | | | 1,657 | | | 78,861 |
Foreign currency translation adjustment | | | | | | | | | | | | 1,319 | | | 265 | | | 1,584 |
Unrealized loss on debt securities | | | | | | | | | | | | 103 | | | | | | 103 |
Distributions to noncontrolling interest | | | | | | | | | | | | | | | (634) | | | (634) |
Cash dividends - $0.125 per share - quarterly | | | | | | | | | (7,646) | | | | | | | | | (7,646) |
Issuance of 7,511 shares under employee stock plans | | | 7 | | | 338 | | | | | | | | | | | | 345 |
Net forfeiture of 1,382 shares under stock grant programs | | | (1) | | | (56) | | | | | | | | | | | | (57) |
Issuance of 11,326 shares under deferred compensation plans | | | 12 | | | (12) | | | | | | | | | | | | — |
Expense associated with share-based compensation arrangements | | | | | | 826 | | | | | | | | | | | | 826 |
Accrued expense under deferred compensation plans | | | | | | 1,097 | | | | | | | | | | | | 1,097 |
Balance on September 26, 2020 | | $ | 61,187 | | $ | 216,002 |
| $ | 1,127,375 | | $ | (6,974) |
| $ | 16,214 |
| $ | 1,413,804 |
See notes to consolidated condensed financial statements.
56
CONDENSED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| | | | | | | |
(in thousands) | | Nine Months Ended | | ||||
| | September 25, | | September 26, | | ||
|
| 2021 |
| 2020 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: | | | |
| | | |
Net earnings | | $ | 405,358 |
| $ | 189,125 | |
Adjustments to reconcile net earnings to net cash from operating activities: | | | |
| | | |
Depreciation | |
| 61,741 | | | 47,226 | |
Amortization of intangibles | |
| 9,369 | | | 5,863 | |
Expense associated with share-based and grant compensation arrangements | |
| 8,444 | | | 3,152 | |
Deferred income taxes | |
| (594) | | | 110 | |
Unrealized gain on investments and other | |
| (1,756) | | | (81) | |
Equity in earnings of investee | | | 2,411 | | | — | |
Net gain on sale and disposition of assets | |
| (10,482) | | | (662) | |
Changes in: | | | | | | | |
Accounts receivable | |
| (141,088) | | | (211,238) | |
Inventories | |
| (204,144) | | | (39,167) | |
Accounts payable and cash overdraft | |
| 53,437 | | | 85,354 | |
Accrued liabilities and other | |
| 99,067 | | | 105,401 | |
NET CASH PROVIDED BY OPERATING ACTIVITIES | |
| 281,763 | |
| 185,083 | |
CASH FLOWS FROM INVESTING ACTIVITIES: | | | |
| | | |
Purchases of property, plant and equipment | |
| (110,092) | | | (67,024) | |
Proceeds from sale of property, plant and equipment | |
| 26,597 | | | 2,588 | |
Acquisitions and purchases of non-controlling interest, net of cash received | |
| (433,275) | | | (34,820) | |
Purchases of investments | |
| (17,866) | | | (24,266) | |
Proceeds from sale of investments | |
| 9,857 | | | 22,281 | |
Other | |
| (3,478) | | | 314 | |
NET CASH USED IN INVESTING ACTIVITIES | |
| (528,257) | |
| (100,927) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | | | |
| | | |
Borrowings under revolving credit facilities | |
| 886,966 | | | 6,862 | |
Repayments under revolving credit facilities | |
| (888,335) | | | (6,498) | |
Contingent consideration payments and other | | | (2,664) | | | (3,087) | |
Issuance of long-term debt | | | — | | | 150,000 | |
Proceeds from issuance of common stock | |
| 1,519 | | | 1,042 | |
Dividends paid to shareholders | |
| (27,831) | | | (23,020) | |
Distributions to noncontrolling interest | | | (2,914) | | | (932) | |
Repurchase of common stock | |
| — | | | (29,212) | |
Other | |
| (334) | | | 23 | |
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | |
| (33,593) | |
| 95,178 | |
Effect of exchange rate changes on cash | |
| (292) | |
| (1,122) | |
NET CHANGE IN CASH AND CASH EQUIVALENTS | |
| (280,379) | |
| 178,212 | |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR | |
| 436,608 | |
| 168,666 | |
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD | | $ | 156,229 | | $ | 346,878 | |
| | | | | | | |
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: | | | | | | | |
Cash and cash equivalents, beginning of period | | $ | 436,507 | | $ | 168,336 | |
Restricted cash, beginning of period | | | 101 | | | 330 | |
Cash, cash equivalents, and restricted cash, beginning of period | | $ | 436,608 | | $ | 168,666 | |
| | | | | | | |
Cash and cash equivalents, end of period | | $ | 138,637 | | $ | 346,154 | |
Restricted cash, end of period | | | 17,592 | | | 724 | |
Cash, cash equivalents, and restricted cash, end of period | | $ | 156,229 | | $ | 346,878 | |
| | | | | | | |
SUPPLEMENTAL INFORMATION: | | | |
| | | |
Interest paid | | $ | 10,360 | | $ | 4,112 | |
Income taxes paid | |
| 136,893 | |
| 47,301 | |
NON-CASH INVESTING ACTIVITIES | | | |
| | | |
Capital expenditures included in accounts payable | |
| 2,366 | |
| — | |
NON-CASH FINANCING ACTIVITIES: | | | | | | | |
Common stock issued under deferred compensation plans | |
| 6,778 | |
| 6,195 | |
(Unaudited)
|
|
|
|
|
|
|
|
(in thousands) |
| Nine Months Ended |
| ||||
|
| September 30, |
| September 24, |
| ||
|
| 2017 |
| 2016 |
| ||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net earnings |
| $ | 90,877 |
| $ | 83,257 |
|
Adjustments to reconcile net earnings to net cash from operating activities: |
|
|
|
|
|
|
|
Depreciation |
|
| 36,010 |
|
| 29,014 |
|
Amortization of intangibles |
|
| 3,549 |
|
| 1,868 |
|
Expense associated with share-based compensation arrangements |
|
| 1,978 |
|
| 1,568 |
|
Expense associated with stock grant plans |
|
| 144 |
|
| 105 |
|
Deferred income taxes (credits) |
|
| 117 |
|
| (53) |
|
Equity in earnings of investee |
|
| (25) |
|
| (241) |
|
Net (gain) loss on disposition and impairment of assets |
|
| (437) |
|
| 94 |
|
Changes in: |
|
|
|
|
|
|
|
Accounts receivable |
|
| (121,688) |
|
| (69,357) |
|
Inventories |
|
| (820) |
|
| 21,683 |
|
Accounts payable and cash overdraft |
|
| 53,424 |
|
| 35,026 |
|
Accrued liabilities and other |
|
| 34,221 |
|
| 33,413 |
|
NET CASH FROM OPERATING ACTIVITIES |
|
| 97,350 |
|
| 136,377 |
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
Purchases of property, plant and equipment |
|
| (57,189) |
|
| (35,723) |
|
Proceeds from sale of property, plant and equipment |
|
| 2,121 |
|
| 516 |
|
Acquisitions, net of cash received |
|
| (59,859) |
|
| (66,615) |
|
Repayments of debt of acquiree |
|
| — |
|
| (92,830) |
|
Purchase of remaining noncontrolling interest, net of cash received |
|
| — |
|
| (1,100) |
|
Cash contributed from noncontrolling interest |
|
| 464 |
|
| — |
|
Advances of notes receivable |
|
| (234) |
|
| (5,400) |
|
Collections on notes receivable |
|
| 1,334 |
|
| 5,819 |
|
Purchases of investments |
|
| (12,155) |
|
| (4,468) |
|
Proceeds from sale of investments |
|
| 4,227 |
|
| 1,395 |
|
Other |
|
| (84) |
|
| (1,733) |
|
NET CASH USED IN INVESTING ACTIVITIES |
|
| (121,375) |
|
| (200,139) |
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Borrowings under revolving credit facilities |
|
| 610,038 |
|
| 52,479 |
|
Repayments under revolving credit facilities |
|
| (573,829) |
|
| (27,177) |
|
Proceeds from issuance of common stock |
|
| 476 |
|
| 396 |
|
Dividends paid to shareholders |
|
| (9,207) |
|
| (8,529) |
|
Distributions to noncontrolling interest |
|
| (3,272) |
|
| (3,160) |
|
Repurchase of common stock |
|
| (12,976) |
|
| — |
|
Other |
|
| — |
|
| (28) |
|
NET CASH FROM (USED IN) FINANCING ACTIVITIES |
|
| 11,230 |
|
| 13,981 |
|
Effect of exchange rate changes on cash |
|
| 1,255 |
|
| (969) |
|
NET CHANGE IN CASH AND CASH EQUIVALENTS |
|
| (11,540) |
|
| (50,750) |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR |
|
| 34,489 |
|
| 88,342 |
|
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD |
| $ | 22,949 |
| $ | 37,592 |
|
|
|
|
|
|
|
|
|
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH: |
|
|
|
|
|
|
|
Cash and cash equivalents, beginning of period |
| $ | 34,091 |
| $ | 87,756 |
|
Restricted cash, beginning of period |
|
| 398 |
|
| 586 |
|
Cash, cash equivalents, and restricted cash, beginning of period |
| $ | 34,489 |
| $ | 88,342 |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents, end of period |
| $ | 22,044 |
| $ | 36,683 |
|
Restricted cash, end of period |
|
| 905 |
|
| 909 |
|
Cash, cash equivalents, and restricted cash, end of period |
| $ | 22,949 |
| $ | 37,592 |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL INFORMATION: |
|
|
|
|
|
|
|
Interest paid |
| $ | 3,910 |
| $ | 2,587 |
|
Income taxes paid |
|
| 34,108 |
|
| 43,384 |
|
NON-CASH FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
Common stock issued under deferred compensation plans |
|
| 4,673 |
|
| 3,657 |
|
See notes to consolidated condensed financial statements.
67
CONDENSED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all of the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. All intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation.
In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10‑K10-K for the fiscal year ended December 31, 2016.26, 2020.
Seasonality has a significant impact on our working capital from March to August, which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the September 24, 201626, 2020 balances in the accompanying unaudited condensed consolidated condensed balance sheets.
8
B. FAIR VALUE
We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value. Assets measured at fair value are as follows:follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| September 30, 2017 |
| September 24, 2016 | ||||||||||||||
|
| Quoted |
| Prices with |
|
|
|
| Quoted |
| Prices with |
|
|
| ||||
|
| Prices in |
| Other |
|
|
|
| Prices in |
| Other |
|
|
| ||||
|
| Active |
| Observable |
|
|
|
| Active |
| Observable |
|
|
| ||||
|
| Markets |
| Inputs |
|
|
|
| Markets |
| Inputs |
|
|
| ||||
(in thousands) |
| (Level 1) |
| (Level 2) |
| Total |
| (Level 1) |
| (Level 2) |
| Total | ||||||
Money market funds |
| $ | 64 |
| $ | 413 |
| $ | 477 |
| $ | 64 |
| $ | 132 |
| $ | 196 |
Fixed income funds |
|
| 1,299 |
|
| 6,905 |
|
| 8,204 |
|
| 2,049 |
|
| 2,335 |
|
| 4,384 |
Equity securities |
|
| 10,194 |
|
| — |
|
| 10,194 |
|
| 5,592 |
|
| — |
|
| 5,592 |
Mutual funds: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domestic stock funds |
|
| 335 |
|
| — |
|
| 335 |
|
| 760 |
|
| — |
|
| 760 |
International stock funds |
|
| 87 |
|
| — |
|
| 87 |
|
| 70 |
|
| — |
|
| 70 |
Target funds |
|
| 260 |
|
| — |
|
| 260 |
|
| 234 |
|
| — |
|
| 234 |
Bond funds |
|
| 208 |
|
| — |
|
| 208 |
|
| 203 |
|
| — |
|
| 203 |
Total mutual funds |
|
| 890 |
|
| — |
|
| 890 |
|
| 1,267 |
|
| — |
|
| 1,267 |
Total |
| $ | 12,447 |
| $ | 7,318 |
| $ | 19,765 |
| $ | 8,972 |
| $ | 2,467 |
| $ | 11,439 |
Assets at fair value |
| $ | 12,447 |
| $ | 7,318 |
| $ | 19,765 |
| $ | 8,972 |
| $ | 2,467 |
| $ | 11,439 |
| | | | | | | | | | | | | | | | | | | | | | | | |
| | September 25, 2021 | | September 26, 2020 | ||||||||||||||||||||
| | Quoted | | Prices with | | | | | | | | Quoted | | Prices with | | | | | | | ||||
| | Prices in | | Other | | | Prices with | | | | | Prices in | | Other | | | Prices with | | | | ||||
| | Active | | Observable | | | Unobservable | | | | | Active | | Observable | | | Unobservable | | | | ||||
| | Markets | | Inputs | | | Inputs | | | | | Markets | | Inputs | | | Inputs | | | | ||||
|
| (Level 1) |
| (Level 2) |
| | (Level 3) | | Total |
| (Level 1) |
| (Level 2) |
| | (Level 3) |
| Total | ||||||
Money market funds | | $ | 19 |
| $ | 2,631 | | $ | — |
| $ | 2,650 |
| $ | 64 |
| $ | 3,133 | | $ | — |
| $ | 3,197 |
Fixed income funds | |
| 962 | |
| 17,021 | | | — |
|
| 17,983 | |
| 248 | |
| 16,522 | | | — |
|
| 16,770 |
Treasury securities | | | 310 | | | — | | | — | | | 310 | | | — | | | — | | | — | | | — |
Equity securities | |
| 18,543 | |
| — | | | — |
|
| 18,543 | |
| 10,524 | |
| — | | | — |
|
| 10,524 |
Alternative investments | | | — | | | — | | | 3,536 | | | 3,536 | | | — | | | — | | | 1,926 | | | 1,926 |
Mutual funds: | | | |
| | | | | |
| | |
| | |
| | | | | |
| | |
Domestic stock funds | |
| 9,968 | |
| — | | | — |
|
| 9,968 | |
| 6,826 | |
| — | | | — |
|
| 6,826 |
International stock funds | |
| 1,675 | |
| — | | | — |
|
| 1,675 | |
| 1,243 | |
| — | | | — |
|
| 1,243 |
Target funds | |
| 23 | |
| — | | | — |
|
| 23 | |
| 260 | |
| — | | | — |
|
| 260 |
Bond funds | |
| 146 | |
| — | | | — |
|
| 146 | |
| 208 | |
| — | | | — |
|
| 208 |
Alternative funds | | | 497 | | | — | | | — | | | 497 | | | 433 | | | — | | | — | | | 433 |
Total mutual funds | |
| 12,309 | |
| — | | | — |
|
| 12,309 | |
| 8,970 | |
| — | | | — |
|
| 8,970 |
Total | | $ | 32,143 | | $ | 19,652 | | $ | 3,536 | | $ | 55,331 | | $ | 19,806 | | $ | 19,655 | | $ | 1,926 | | $ | 41,387 |
Assets at fair value | | $ | 32,143 | | $ | 19,652 | | $ | 3,536 |
| $ | 55,331 | | $ | 19,806 | | $ | 19,655 | | $ | 1,926 |
| $ | 41,387 |
From the assets measured at fair value as of September 25, 2021, listed in the table above, $33.6 million of mutual funds, equity securities, and alternative investments are held in Investments, $0.1 million of money market funds are held in Cash and Cash Equivalents, $0.7 million of money market and mutual funds are held in Other Assets for our deferred compensation plan, and $18.3 million of fixed income funds and $2.6 million of money markets funds are held in Restricted Investments.
We maintain money market, mutual funds, bonds, and/or stocksequity securities in our non-qualified deferred compensation plan, and our wholly owned licensed captive insurance company.company, and assets held in financial institutions. These funds are valued at prices quoted in an active
7
UNIVERSAL FOREST PRODUCTS, INC.
exchange market and are included in “Cash and Cash Equivalents”, “Investments”, “Restricted Cash”“Other Assets”, and “Restricted Investments”. We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.
We did not maintain any Level 3 assets or liabilities at September 30, 2017 or September 24, 2016.
In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-18, “Statement of Cash Flows (Topic 230)” (ASU 2016-18). Under ASU 2016-18, an entity will be required to explain changes in the statement of cash flows during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update should be applied using retrospective transition method to each period presented. Companies are required to adopt the new standard for fiscal years beginning after December 15, 2017. Early adoption of ASU 2016-18 is permitted, including adoption in an interim period. The Company has early adopted this standard during the first quarter of 2017.
In the first nine months of 2017, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”) transferred $4.1 million in fixed income securities from its Investment Account and purchased an additional $3.8 million in fixed income securities which are held in a newly formed collateral trust account in line with regulatory requirements in the State of Michigan to allow Ardellis to act as an admitted carrier in the State. These funds are intended to safeguard the insureds of the Michigan Branch of Ardellis. The funds are classified as “Restricted Investments”.
In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling $18.4$52.0 million as of September 30, 2017, consisting25, 2021, which has been included in the aforementioned table of total investments. This portfolio consists of domestic and international stocks,equity securities, alternative investments, and fixed income bonds.
9
Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following:following (in thousands):
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||
|
|
|
|
| Unrealized |
|
|
| |||||||||||||||||||
|
| Cost |
| Gain/(Loss) |
| Fair Value | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | |||||||||
| | September 25, 2021 | | September 26, 2020 | |||||||||||||||||||||||
| | | | | Unrealized | | | | | | | | Unrealized | | | | |||||||||||
|
| Cost |
| Gain |
| Fair Value |
| Cost |
| Gain |
| Fair Value | |||||||||||||||
Fixed Income |
| $ | 8,170 |
| $ | 34 |
| $ | 8,204 | | $ | 17,293 |
| $ | 690 |
| $ | 17,983 | | $ | 15,750 |
| $ | 1,020 |
| $ | 16,770 |
Treasury Securities | | | 310 | | | — | | | 310 | | | — | | | — | | | — | |||||||||
Equity |
|
| 9,123 |
|
| 1,071 |
|
| 10,194 | |
| 14,392 | |
| 4,151 |
|
| 18,543 | |
| 9,121 | |
| 1,403 |
|
| 10,524 |
Mutual Funds | | | 9,210 | | | 2,435 |
| | 11,645 | | | 7,228 | | | 852 |
| | 8,080 | |||||||||
Alternative Investments | | | 3,370 | | | 166 |
| | 3,536 | | | 1,881 | | | 45 |
| | 1,926 | |||||||||
Total |
| $ | 17,293 |
| $ | 1,105 |
| $ | 18,398 | | $ | 44,575 | | $ | 7,442 |
| $ | 52,017 | | $ | 33,980 | | $ | 3,320 |
| $ | 37,300 |
Our Fixed Incomefixed income investments consist of short, intermediate, and long term bonds, as well as fixeda blend bonds. Within the fixed income investments, we maintain a specific mixture of US treasury notes, US agency mortgage backed securities, private label mortgage backed securities,Government and variousAgency bonds and investment grade corporate securities.bonds with varying maturities. Our equity investments consist of small, mid, and large cap growth and value funds, as well as international equity. Our mutual fund investments consist of domestic and international stock. Our alternative investments consist of a private real estate income trust which is valued as a Level 3 asset. The net pre-tax effected unrealized gain of the portfolio was $1.1$7.4 million. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of September 30, 2017. During the first nine months of 2017, Ardellis investments reported a net realized gain of $185 thousand, which was recorded in interest income on the statement of earnings.
8
UNIVERSAL FOREST PRODUCTS, INC.
25, 2021 and September 26, 2020.
C. REVENUE RECOGNITION
RevenueWithin the 3 primary segments (Retail, Industrial, and Construction) that the Company operates, there are a variety of written agreements governing the sale of our products and services. The transaction price is stated at the purchase order level, which includes shipping and/or freight costs and any applicable governmental authority taxes. The majority of our contracts have a single performance obligation concentrated around the delivery of goods to the carrier, Free On Board (FOB) shipping point. Therefore, revenue is recognized at the time the productwhen this performance obligation is shipped to the customer.satisfied. Generally, title and control passes at the time of shipment. In certain circumstances, the customer takes title when the shipment arrives at the destination. However, our shipping process is typically completed the same day.
On May 28, 2014,Certain customer products that we provide require installation by the FASB issued ASU No. 2014-09 (Accounting Standard Codification 606), Revenue from Contracts with Customers, whichCompany or a 3rd party. Installation revenue is recognized upon completion. If the Company uses a 3rd party for installation, the party will replace most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is thatact as an entity should recognize revenue for the transfer of goods or services equalagent to the amount that it expects to be entitled to receive for those goods or services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The Company plans to adopt the guidance in the first quarter of fiscal 2018 and apply the modified retrospective method. The Company is in the process of finalizing contract reviews and theuntil completion of the new standard’s impactinstallation. Installation revenue represents an immaterial share of the Company’s total sales.
The Company utilizes rebates, credits, discounts and/or cash-based incentives with certain customers which are accounted for as variable consideration. We estimate these amounts based on its Consolidated Financial Statements.the expected amount to be provided to customers and reduce revenues recognized. We believe that there will not be significant changes to our estimates of variable consideration. The allocation of these costs are applied at the invoice level and recognized in conjunction with revenue. Additionally, returns and refunds are estimated on a historical and expected basis which is a reduction of revenue recognized.
Earnings on construction contracts are reflected in operations using percentage-of-completionover time accounting, under either cost to cost or units of delivery methods, depending on the nature of the business at individual operations.operations, which is in accordance with ASC 606 as revenue is recognized when certain performance obligations are performed. Under percentage-of-completionover time accounting using the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships of actual costs incurred relatedrelative to the total estimated costs. Under percentage-of-completionover time accounting using the units of delivery method, revenues and related earnings on construction contracts are measured by the relationships of actual units produced relatedrelative to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent. Construction contract revenue increased to approximately $36.6 million, during the third quarter
10
Our construction contracts are generally entered into with a fixed price, and completion of the projects can range from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates and commodity costs. During the year, we update our estimated costs to complete our projects using current labor and commodity costs and recognize losses to the extent that they exist.
The following table presents our net sales disaggregated by revenue source (in thousands):
| | | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||||||
|
| September 25, |
| September 26, |
| | | September 25, |
| September 26, |
| | ||||
| | 2021 | | 2020 | | % Change | | 2021 | | 2020 | | % Change | ||||
FOB Shipping Point Revenue | | $ | 2,063,647 | | $ | 1,454,220 |
| 41.9% | | $ | 6,530,204 | | $ | 3,663,140 |
| 78.3% |
Construction Contract Revenue | |
| 30,137 | | | 32,007 |
| (5.8)% | |
| 89,125 | | | 97,150 |
| (8.3)% |
Total Net Sales | |
| 2,093,784 | | | 1,486,227 |
| 40.9% | | $ | 6,619,329 | | $ | 3,760,290 |
| 76.0% |
The Construction segment comprises the construction contract revenue shown above. Construction contract revenue is primarily made up of site-built and framing customers.
The following table presents the balances of percentage-of-completionover time accounting accounts which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in thousands):
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
| September 30, |
| December 31, |
| September 24, |
| |||||||||||||
|
| 2017 |
| 2016 |
| 2016 |
| |||||||||||||
| | | | | | | | | | | ||||||||||
| | September 25, | | December 26, | | September 26, | | |||||||||||||
|
| 2021 |
| 2020 |
| 2020 |
| |||||||||||||
Cost and Earnings in Excess of Billings |
| $ | 2,594 |
| $ | 2,573 |
| $ | 2,788 |
| | $ | 3,776 |
| $ | 4,169 |
| $ | 4,130 |
|
Billings in Excess of Cost and Earnings |
|
| 4,802 |
|
| 4,748 |
|
| 6,222 |
| |
| 10,373 | |
| 11,530 |
|
| 11,264 | |
9
UNIVERSAL FOREST PRODUCTS, INC.
D. EARNINGS PER SHARE
The computation of earnings per share (“EPS”) is as follows (in thousands):
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
|
| Three Months Ended |
| Nine Months Ended |
| |||||||||||||||||||||
|
| September 30, |
| September 24, |
| September 30, |
| September 24, |
| |||||||||||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 |
| |||||||||||||||||
| | | | | | | | | | | | | | |||||||||||||
| | Three Months Ended | | Nine Months Ended | | |||||||||||||||||||||
|
| September 25, |
| September 26, |
| September 25, |
| September 26, |
| |||||||||||||||||
| | 2021 | | 2020 | | 2021 | | 2020 | | |||||||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
|
Net earnings attributable to controlling interest |
| $ | 33,693 |
| $ | 27,819 |
| $ | 88,397 |
| $ | 80,429 |
| | $ | 121,041 | | $ | 77,204 | | $ | 397,734 | | $ | 183,826 | |
Adjustment for earnings allocated to non-vested restricted common stock |
|
| (656) |
|
| (463) |
|
| (1,633) |
|
| (1,281) |
| |
| (3,952) | |
| (2,195) | |
| (12,800) | |
| (5,110) | |
Net earnings for calculating EPS |
| $ | 33,037 |
| $ | 27,356 |
| $ | 86,764 |
| $ | 79,148 |
| | $ | 117,089 | | $ | 75,009 | | $ | 384,934 | | $ | 178,716 | |
Denominator: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
Weighted average shares outstanding |
|
| 20,474 |
|
| 20,402 |
|
| 20,481 |
|
| 20,360 |
| |
| 62,266 | |
| 61,548 | |
| 62,162 | |
| 61,642 | |
Adjustment for non-vested restricted common stock |
|
| (399) |
|
| (340) |
|
| (378) |
|
| (324) |
| |
| (2,033) | |
| (1,750) | |
| (2,001) | |
| (1,713) | |
Shares for calculating basic EPS |
|
| 20,075 |
|
| 20,062 |
|
| 20,103 |
|
| 20,036 |
| |
| 60,233 | |
| 59,798 | |
| 60,161 | |
| 59,929 | |
Effect of dilutive stock options |
|
| 41 |
|
| 33 |
|
| 37 |
|
| 32 |
| |||||||||||||
Effect of dilutive restricted common stock | |
| 168 | |
| 20 | |
| 137 | |
| 19 | | |||||||||||||
Shares for calculating diluted EPS |
|
| 20,116 |
|
| 20,095 |
|
| 20,140 |
|
| 20,068 |
| |
| 60,401 | |
| 59,818 | |
| 60,298 | |
| 59,948 | |
Net earnings per share: |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
| |
|
| |
|
| |
|
| |
Basic |
| $ | 1.65 |
| $ | 1.36 |
| $ | 4.32 |
| $ | 3.95 |
| | $ | 1.94 | | $ | 1.25 | | $ | 6.40 | | $ | 2.98 | |
Diluted |
| $ | 1.64 |
| $ | 1.36 |
| $ | 4.31 |
| $ | 3.94 |
| | $ | 1.94 | | $ | 1.25 | | $ | 6.38 | | $ | 2.98 | |
No options were excluded from the computation
11
Table of diluted EPS for the quarters ended September 30, 2017 or September 24, 2016.Contents
On October 17, 2017, our Board of Directors declared a three-for-one stock split effected in the form of a stock dividend. The record date of the stock split will be October 31, 2017, and the eventual stock distribution to shareholders will occur November 14, 2017. All references made to share or earnings per share amounts in the accompanying unaudited consolidated financial statements and applicable disclosures are presented on a pre-split basis. As a result of the stock split, all historical per share data and number of shares outstanding presented in future financial statements will be retroactively adjusted.UFP INDUSTRIES, INC.
The following table provides pro forma earnings per share, giving retroactive effect to the stock split:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| September 30, |
| September 24, |
| September 30, |
| September 24, |
| ||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 |
| ||||
Shares for calculating basic EPS - Post stock split basis |
|
| 60,225 |
|
| 60,186 |
|
| 60,309 |
|
| 60,108 |
|
Shares for calculating diluted EPS - Post stock split basis |
|
| 60,348 |
|
| 60,285 |
|
| 60,420 |
|
| 60,204 |
|
Net earnings per share (post stock split): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
| $ | 0.55 |
| $ | 0.45 |
| $ | 1.44 |
| $ | 1.32 |
|
Diluted |
| $ | 0.55 |
| $ | 0.45 |
| $ | 1.44 |
| $ | 1.31 |
|
E. COMMITMENTS, CONTINGENCIES, AND GUARANTEES
We are self-insured for environmental impairment liability, including certain liabilities which are insured through a wholly owned subsidiary, Ardellis Insurance Ltd., a licensed captive insurance company.
10
UNIVERSAL FOREST PRODUCTS, INC.
We own and operate a number of facilities throughout the United States that chemically treat lumber products. In connection with the ownership and operation of these and other real properties, and the disposal or treatment of hazardous or toxic substances, we may, under various federal, state, and local environmental laws, ordinances, and regulations, be potentially liable for removal and remediation costs, as well as other potential costs, damages, and expenses. Environmental reserves, calculated with no discount rate, have been established to cover remediation activities at wood preservation facilities in Stockertown, PA; Elizabeth City, NC; Auburndale, FL; and Medley, FL. In addition, a reserve was established for our facility in Thornton, CA to remove certain lead containing materials which existed on the property at the time of purchase.
On a consolidated basis, we have reserved approximately $3.6 million and $3.4 million on September 30, 2017, and September 24, 2016, respectively, representing the estimated costs to complete future remediation efforts. These amounts have not been reduced by an insurance receivable.
Many of our wood treating operations utilize “Subpart W” drip pads, defined as hazardous waste management units by the Environmental Protection Agency. The rules regulating drip pads require that a pad be “closed” at the point that it is no longer intended to be used for wood treating operations or to manage hazardous waste. Closure involves identification and disposal of contaminants which are required to be removed from the facility. The cost of closure is dependent upon a number of factors including, but not limited to, identification and removal of contaminants, cleanup standards that vary from state to state, and the time period over which the cleanup would be completed. Based on our present knowledge of existing circumstances, it is considered probable that these costs will approximate $0.2 million. As a result, this amount is recorded in other long-term liabilities on September 30, 2017.
In February 2014, one of our operations was served with a federal grand jury subpoena from the Southern District of New York. The subpoena was issued in connection with an investigation being conducted by the US Attorney’s Office for the Southern District of New York. The subpoena requested documents relating to a developer and construction projects for which our operation had provided materials and labor. Following receipt of the subpoena, the Audit Committee of the Company’s Board of Directors retained outside counsel to conduct an internal investigation and respond to the subpoena. The Company cooperated in all respects with the US Attorney’s Office, complied with this subpoena and voluntarily provided additional information. As a result of the internal investigation, in 2014, two Company employees were terminated for violating the Company’s Code of Business Conduct and Ethics. In May 2015, those ex-employees were indicted by the grand jury. In April 2016, one of the two former employees pled guilty to four of the charges included in the indictment. In May 2016, the other former employee was found guilty by a jury on four of the charges included in the indictment. The Company has not been named as a target and continues to cooperate with the US Attorney’s Office in this matter. Based upon prior communications with the US Attorney’s Office, we do not believe that the resolution of this matter will have a material adverse impact on our financial condition or the results of our operations.
In addition, on September 30, 2017,25, 2021, we were parties either as plaintiff or defendant to a number of lawsuits and claims arising through the normal course of our business. In the opinion of management, our consolidated financial statements will not be materially affected by the outcome of these contingencies and claims.
On September 30, 2017,25, 2021, we had outstanding purchase commitments on commenced capital projects of approximately $26.1$44.1 million.
We provide a variety of warranties for products we manufacture. Historically, warranty claims have not been material. We also distribute products manufactured by other companies, some of which are no longer in business. While we do not warrant these products, we have received claims as a distributor of these products when the manufacturer no longer exists or has the ability to pay. Historically, these costs have not had a material effect on our consolidated financial statements.
11
UNIVERSAL FOREST PRODUCTS, INC.
As part of our operations, we supply building materials and labor to site-built construction projects or we jointly bid on contracts with framing companies for such projects. In some instances, we are required to post payment and performance bonds to insure the project owner thatensure the products and installation services are completed in accordance with our contractual obligations. We have agreed to indemnify the surety for claims properly made against thethese bonds. As of September 30, 201725, 2021, we had approximately $8.8$39.6 million outstanding payment and performance bonds for open projects. We had approximately $1.7$2.1 million in payment and performance bonds outstanding for completed projects which are still under warranty.
On September 30, 2017,25, 2021, we had outstanding letters of credit totaling $26.5$52.6 million, primarily related to certain insurance contracts and industrial development revenue bonds described further below.
In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers to guarantee our performance under certain insurance contracts. We currentlyAs of September 25, 2021, we have irrevocable letters of credit outstanding totaling approximately $16.7$45.5 million for these types of insurance arrangements. We have reserves recorded on our balance sheet, in accrued liabilities, that reflect our expected future liabilities under these insurance arrangements.
We are required to provide irrevocable letters of credit in favor of the bond trustees for all industrial development revenue bonds that have been issued. These letters of credit guarantee principal and interest payments to the bondholders. We currently have irrevocable letters of credit outstanding totaling approximately $9.8$7.1 million related to our outstanding industrial development revenue bonds. These letters of credit have varying terms but may be renewed at the option of the issuing banks.
Certain wholly owned domestic subsidiaries have guaranteed the indebtedness of Universal Forest Products,UFP Industries, Inc. in certain debt agreements, including the Series 2012, 2018 and 2020 Senior Notes and our revolving credit facility. The maximum exposure of these guarantees is limited to the indebtedness outstanding under these debt arrangements and this exposure will expire concurrent with the expiration of the debt agreements.
We did not enter into any new guarantee arrangements during the third quarter of 20172021 which would require us to recognize a liability on our balance sheet.
12
F. BUSINESS COMBINATIONS
We completed the following acquisitions in nine months ended 20172021 and 2016since the end of September 2020, which were accounted for using the purchase method in thousands unless otherwise noted:
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| |||||||
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|
| Net |
| ||||||||
| | | | | | | | |||||||
| | | | | Net | | ||||||||
Company | Acquisition |
| Intangible | Tangible | Operating | Acquisition | | Intangible | Tangible | Operating | ||||
Name | Date | Purchase Price | Assets | Assets | Segment | Date | Purchase Price | Assets | Assets | Segment | ||||
| May 26, 2017 | $5,042 | $ | 4,880 | $ | 162 | South | |||||||
Go Boy Pallets, LLC ("Go Boy") | A manufacturer and distributor of industrial pallets and packaging in Georgia and North Carolina. Go Boy has annual sales of approximately $8 million. The acquisition of Go Boy enabled us to expand our industrial packaging product offering and lumber sourcing in this region. | |||||||||||||
| March 6, 2017 | $31,818 | $ | 7,533 | $ | 24,285 | South | |||||||
Robbins Manufacturing Co. ("Robbins") | A manufacturer of treated wood products with facilities in Florida, Georgia, and North Carolina. Robbins has annual sales of approximately $86 million. The acquisition of Robbins allowed us to expand our presence in this region and serve customers more cost effectively. | |||||||||||||
| March 6, 2017 | $22,789 | $ | 14,266 | $ | 8,523 | North | |||||||
| April 29, 2021 | $10,108 | $ | 7,099 | $ | 3,009 | Construction | |||||||
Endurable Building Products, LLC (Endurable) | Based near Minneapolis, Minnesota, Endurable is a leading manufacturer of customized structural aluminum systems and products for exterior purposes, such as deck framing, balconies, sunshades, railings and stairs. The company’s trademarked alumiLAST aluminum deck and balcony systems are known for their low-maintenance design and ease of installation. Endurable serves general contractors in the multifamily market throughout the U.S. and had sales of approximately $15 million in 2020. | |||||||||||||
| April 19, 2021 | $8,549 | $ | 1,526 | $ | 7,023 | Retail | |||||||
Walnut Hollow Farm, Inc. | Walnut Hollow Farm, located in Wisconsin, is engaged in the business of designing, manufacturing, selling, and distributing wood products, tools, and accessories for the craft and hobby, outdoor sportsman art, personalized home décor, and hardware categories, with sales of approximately $11.6 million in 2020. | |||||||||||||
| April 12, 2021 | $153,462 | $ | — | $ | 153,462 | Retail | |||||||
Spartanburg Forest Products, Inc. | Headquartered in Greer, South Carolina, Spartanburg Forest Products and its affiliates are a premier wood treating operation in the U.S., with approximately 150 employees and operations in 5 states. Its affiliates include Appalachian Forest Products, Innovative Design Industries, Blue Ridge Wood Preserving, Blue Ridge Wood Products, and Tidewater Wood Products and had combined sales of approximately $543.0 million in 2020. | |||||||||||||
| March 1, 2021 | $4,724 | $ | 4,264 | $ | 460 | Other | |||||||
J.C. Gilmore Pty Ltd (Gilmores) | Founded in 1988 and operating from its distribution facility in Port Melbourne, Australia, Gilmores is a leading distributor in the industrial and construction industries of packaging tapes, stretch films, packaging equipment, strapping, construction protection products and other items, with 2020 sales of $15 million AUD ($10 million USD). | |||||||||||||
| December 28, 2020 | $259,011 | $ | 66,899 | $ | 192,112 | Retail/Industrial | |||||||
PalletOne, Inc. (PalletOne) | Based in Bartow, Florida, PalletOne is a leading manufacturer of new pallets in the U.S., with 17 pallet manufacturing facilities in the southern and eastern regions of the country. The company also supplies other specialized industrial packaging, including custom bins and crates, and its Sunbelt Forest Products (Sunbelt) subsidiary operates 5 pressure-treating facilities in the Southeastern U.S. PalletOne and its affiliates had 2019 and 2020 sales of $525 million and $698 million, respectively. |
1213
Quality Hardwood Sales, LLC ("Quality") | A manufacturer and supplier of hardwood products, including components of cabinets used in homes and recreational vehicles. Quality has annual sales of approximately $30 million. The acquisition of Quality enabled us to expand our product offering to include hardwood-based products. | ||||||
| November 29, 2016 | $9,455 | $ | 7,314 | $ | 2,141 | All Other |
The UBEECO Group Pty. Ltd. ("Ubeeco") | A manufacturer and distributor of a variety of wood packaging and alternative material products, including boxes, crates, pallets, skids, protective packaging, packaging accessories and loose lumber. Ubeeco has annual sales of approximately $20 million. The acquisition of Ubeeco allows us to make progress on our goal of becoming a global provider of packaging solutions. | ||||||
| September 16, 2016 | $66,691 | $ | 17,455 | $ | 49,236 | All Other |
idX Holdings, Inc. ("idX") | A designer, producer, and installer of customized interior fixtures and related products used in a variety of commercial structures. idX has annual sales of $300 million. The acquisition of idX enables us to enhance our design, product and service offering to become a tier 1 supplier of interior fixtures to retail customers, and continue to use idX's capabilities to continue to develop new markets for growth. Our goal is to achieve long-term synergies, including: | ||||||
| a. | Eliminating redundant administrative support costs. | |||||
| b. | Using the scale advantage of the Company to reduce material costs of common raw materials. | |||||
| c. | Utilizing manufacturing capacity of certain existing locations to supply idX. | |||||
| d. | Utilizing idX’s international footprint to identify sourcing opportunities for certain products. | |||||
| e. | Cross selling one another’s products and services with our respective customers. | |||||
| f. | Collaborating on new product development. | |||||
| July 29, 2016 | $1,246 | $ | 405 | $ | 841 | North |
Seven D Truss, L.P. | A manufacturer and distributor of roof and floor trusses. 7D had annual sales of approximately $4.0 million. The acquisition of 7D gave us the opportunity to consolidate operations with our Gordon, Pennsylvania location. |
| | | | | | | |
| | | | | Net | | |
Company | Acquisition | | Intangible | Tangible | Operating | ||
Name | Date | Purchase Price | Assets | Assets | Segment | ||
| November 10, 2020 | $21,268 | $ | 11,923 | $ | 9,345 | Construction |
Atlantic Prefab, Inc.; Exterior Designs, LLC; and Patriot Building Systems, LLC | Based in Wilton, New Hampshire, Atlantic Prefab produces prefabricated steel wall panels and light gauge metal trusses. The company’s steel component and prefinished wall panel lines are new, value-added product additions for UFP Construction that help shorten project timelines. Exterior Designs is a leading installer of siding and exterior cladding such as fiber cement, ACM (aluminum composite material) panels, phenolic panels, and EIFS (exterior insulation and finish systems). The company is based in Londonderry, New Hampshire, and serves commercial and multi-family clients throughout the Northeast. Also based in Londonderry, Patriot Building Systems provides commercial and multi-family framing services in the Northeast and will focus on markets not currently served by companies of UFP Industries. The companies had combined annual sales of approximately $28 million. | ||||||
| October 1, 2020 | $5,936 | $ | 5,222 | $ | 714 | Retail |
Fire Retardant Chemical Technologies, LLC (FRCT) | Founded in 2014 and based in Matthews, North Carolina, FRCT’s business includes a research and development laboratory specializing in developing and testing a wide range of high-performance chemicals, including fire retardants and water repellants. The company had annual sales of approximately $6.4 million. | ||||||
| September 30, 2020 | $3,475 | $ | 7,267 | $ | (1,369) | Other |
Enwrap Logistic & Packaging S.r.l. (Enwrap) | Enwrap is a newly formed company dedicated to the logistics and packaging business of its predecessor, Job Service S.p.A. Headquartered in Milan, Italy, Enwrap provides high-value, mixed material industrial packaging and logistics services through 8 locations in Italy. These locations generated annual sales of approximately $14 million. |
The intangible assets for each acquisition werethe above acquisitions have not been finalized and allocated to their respective identifiable intangible asset and goodwill accounts during 2017, excluding Go Boy.accounts. In aggregate, acquisitions completed since the end of September of 20162020 and not consolidated with other operations contributed approximately $292.1$903.0 million in revenuenet sales and $5.3$26.0 million in operating profitprofits during 2017.the first nine months of 2021.
G. SEGMENT REPORTING
ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.
13
UNIVERSAL FOREST PRODUCTS, INC.
The Company operates manufacturing, treating and distribution facilities throughout North America,internationally, but primarily in the United States. The business segments align with the following markets: UFP Retail Solutions, UFP Construction and UFP Industrial. The Company manages the operations of its individual locations primarily through a geographicmarket-centered reporting structure under which each location is included in a regionbusiness unit and regionsbusiness units are included in our North, South,Retail, Industrial, and West divisions.Construction segments. In the case of locations which serve multiple segments, results are allocated and accounted for by segment. The exceptionsexception to this geographicmarket-centered reporting and management structure are (a)is the Company’s Alternative Materials Division,International segment, which offers a portfoliocomprises our Mexico, Canada, and Australia operations and sales and buying offices in other parts of non-wood products and distributes those products nation-wide (b) the Company’s distribution unit (referred to as UFPD) which distributes a variety of products to the manufactured housing industry nation-wide and is accounted for as a reporting unit within the Northworld.
Our International segment and (c) the idX division, which designs, produces, and installs customized in-store environments, for customers world-wide.
With respect to the facilities in the north, south, and west segments, these facilities generally supply the three markets the Company serves nationally - Retail, Industrial, and Construction. Also, substantially all of our facilities support customers in the immediate geographical region surrounding the facility.
Our Alternative Materials, International and idX divisionArdellis (our insurance captive) have been included in the “All Other” column of the table below.
14
The “Corporate” column includes purchasing, transportation and administrative functions that serve our operating segments. Operating results of Corporate primarily consists of over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns and leases transportation equipment, are also included in the Corporate column. An inter-company lease charge is assessed to our operating segments for the use of these assets at fair market value rates. Total assets of the Corporate column include unallocated administrative costscash and cash equivalents, certain incentive compensation expense.
|
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|
|
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|
|
| Three Months Ended September 30, 2017 | |||||||||||||||||
|
| North |
| South |
| West |
| All Other |
| Corporate |
| Total |
| ||||||
Net sales to outside customers |
| $ | 310,384 |
| $ | 206,050 |
| $ | 378,714 |
| $ | 161,438 |
| $ | — |
| $ | 1,056,586 |
|
Intersegment net sales |
|
| 18,897 |
|
| 18,817 |
|
| 21,384 |
|
| 47,539 |
|
| — |
|
| 106,637 |
|
Segment operating profit |
|
| 16,697 |
|
| 10,234 |
|
| 22,538 |
|
| 6,882 |
|
| (4,080) |
|
| 52,271 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended September 24, 2016 | |||||||||||||||||
|
| North |
| South |
| West |
| All Other |
| Corporate |
| Total |
| ||||||
Net sales to outside customers |
| $ | 267,156 |
| $ | 173,715 |
| $ | 335,981 |
| $ | 49,813 |
| $ | — |
| $ | 826,665 |
|
Intersegment net sales |
|
| 14,318 |
|
| 9,642 |
|
| 22,054 |
|
| 4,574 |
|
| — |
|
| 50,588 |
|
Segment operating profit |
|
| 14,630 |
|
| 9,900 |
|
| 19,962 |
|
| 2,959 |
|
| (3,899) |
|
| 43,552 |
|
prepaid assets, certain property, equipment and other assets pertaining to the centralized activities of Corporate, UFP Real Estate, Inc., and UFP Transportation Ltd. The tables below are presented in thousands:
|
|
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|
|
|
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|
|
|
|
|
|
|
|
| ||||||||||||||||||
|
| Nine Months Ended September 30, 2017 | ||||||||||||||||||||||||||||||||||
|
| North |
| South |
| West |
| All Other |
| Corporate |
| Total | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| | Three Months Ended September 25, 2021 | ||||||||||||||||||||||||||||||||||
|
| Retail |
| Industrial |
| Construction |
| All Other |
| Corporate |
| Total | ||||||||||||||||||||||||
Net sales to outside customers |
| $ | 857,858 |
| $ | 616,376 |
| $ | 1,088,744 |
| $ | 412,113 |
| $ | — |
| $ | 2,975,091 | | $ | 696,201 |
| $ | 573,234 | | $ | 722,872 | | $ | 98,689 | | $ | 2,788 | | $ | 2,093,784 |
Intersegment net sales |
|
| 51,859 |
|
| 55,472 |
|
| 65,466 |
|
| 116,743 |
|
| — |
|
| 289,540 | |
| 50,546 | | | 23,148 | | | 27,574 | | | 122,470 | | | (223,738) | |
| — |
Segment operating profit (loss) |
|
| 42,921 |
|
| 31,152 |
|
| 65,547 |
|
| 13,285 |
|
| (12,914) |
|
| 139,991 | ||||||||||||||||||
Segment operating profit | | | (26,153) | | | 70,408 | | | 84,205 | | | 20,283 | | | 19,382 | | | 168,125 | ||||||||||||||||||
| | | | | | | | | | | | | | | | | | |
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| ||||||||||||||||||
|
| Nine Months Ended September 24, 2016 | ||||||||||||||||||||||||||||||||||
|
| North |
| South |
| West |
| All Other |
| Corporate |
| Total | ||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | ||||||||||||||||||
| | Three Months Ended September 26, 2020 | ||||||||||||||||||||||||||||||||||
|
| Retail |
| Industrial |
| Construction |
| All Other |
| Corporate |
| Total | ||||||||||||||||||||||||
Net sales to outside customers |
| $ | 758,066 |
| $ | 533,239 |
| $ | 940,188 |
| $ | 149,416 |
| $ | — |
| $ | 2,380,909 | | $ | 700,522 |
| $ | 282,124 | | $ | 447,103 | | $ | 56,700 | | $ | (222) | | $ | 1,486,227 |
Intersegment net sales |
|
| 42,071 |
|
| 28,693 |
|
| 65,325 |
|
| 16,559 |
|
| — |
|
| 152,648 | |
| 45,416 | | | 11,773 | | | 17,909 | | | 76,029 | | | (151,127) | |
| — |
Segment operating profit |
|
| 43,054 |
|
| 35,830 |
|
| 58,434 |
|
| 11,542 |
|
| (19,733) |
|
| 129,127 | | | 62,181 | | | 22,037 | | | 16,513 | | | 7,449 | | | (1,579) | | | 106,601 |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 25, 2021 | ||||||||||||||||
|
| Retail |
| Industrial |
| Construction |
| All Other |
| Corporate |
| Total | ||||||
Net sales to outside customers | | $ | 2,714,440 |
| $ | 1,633,289 | | $ | 2,021,106 | | $ | 243,736 | | $ | 6,758 | | $ | 6,619,329 |
Intersegment net sales | |
| 163,279 | | | 66,039 | | | 62,069 | | | 345,920 | | | (637,307) | |
| — |
Segment operating profit | | | 89,443 | | | 190,344 | | | 184,330 | | | 44,565 | | | 33,865 | | | 542,547 |
| | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 26, 2020 | ||||||||||||||||
|
| Retail |
| Industrial |
| Construction |
| All Other |
| Corporate |
| Total | ||||||
Net sales to outside customers | | $ | 1,661,873 |
| $ | 763,046 | | $ | 1,187,429 | | $ | 148,503 | | $ | (561) | | $ | 3,760,290 |
Intersegment net sales | |
| 109,378 | | | 32,788 | | | 49,685 | | | 196,908 | | | (388,759) | |
| — |
Segment operating profit | | | 122,082 | | | 53,837 | | | 50,544 | | | 20,573 | | | 10,555 | | | 257,591 |
The following table presents goodwill by segment as of September 25, 2021, and December 26, 2020 (in thousands):
| | | | | | | | | | | | | | | | | | |
|
| Retail |
| Industrial |
| Construction |
| All Other |
| Corporate |
| Total | ||||||
Balance as of December 26, 2020 |
| $ | 61,943 |
| $ | 87,827 |
| $ | 90,729 |
| $ | 11,694 | | $ | — |
| $ | 252,193 |
2021 Acquisitions |
| | 18,441 | | | 43,844 | | | 2,427 | | | 4,176 | | | — |
| | 68,888 |
2021 Purchase Accounting Adjustments | | | (1,682) | | | (17,937) | | | (6,227) | | | (2,575) | | | — | | | (28,421) |
Foreign Exchange, Net |
| | — | | | — | | | 101 | | | (443) | | | — |
| | (342) |
Balance as of September 25, 2021 | | $ | 78,702 |
| $ | 113,734 | | $ | 87,030 | | $ | 12,852 | | $ | — | | $ | 292,318 |
15
The following table presents total assets by segment as of September 25, 2021, and December 26, 2020 (in thousands).
| | | | | | | | |
| Total Assets by Segment | |||||||
| September 25, |
| December 26, |
| | | ||
Segment Classification | 2021 | | 2020 | | % Change | |||
Retail | $ | 829,745 | | $ | 510,464 |
| 62.5 | % |
Industrial |
| 740,206 | |
| 416,487 |
| 77.7 | |
Construction |
| 725,419 | |
| 510,972 |
| 42.0 | |
All Other | | 284,626 | | | 196,856 | | 44.6 | |
Corporate | | 434,251 | | | 770,112 | | (43.6) | |
Total Assets | $ | 3,014,247 | | $ | 2,404,891 |
| 25.3 | % |
H. INCOME TAXES
Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for foreign, state and local income taxes and permanent tax differences. Our effective tax rate was 31.9%23.0% in the third quarter of 20172021 compared to 32.5%25.4% for same period in 2016. Our effective tax rate 2020 and was 33.0%24.0% in the first nine months of 20172021 compared to 34.2%25.2% for the same period in 2016, 2020.The decrease was primarily due to recording a decrease in permanent tax deductiondifferences in 2021 compared to the prior year, none of which are individually significant.
I. COMMON STOCK
Below is a summary of common stock issuances for certain share-based compensationthe first nine months of 2021 and fees at fair market value.2020 (in thousands, except average share price):
| | | | | |
|
| September 25, 2021 | |||
Share Issuance Activity |
| Common Stock | | | Average Share Price |
Shares issued under the employee stock purchase plan | | 25 | | $ | 71.18 |
| | | | | |
Shares issued under the employee stock gift program | | 2 | | | 76.80 |
Shares issued under the director retainer stock program | | 4 | | | 69.80 |
Shares issued under the bonus plan | | 487 | | | 57.06 |
Shares issued under the executive stock match grants plan | | 77 | | | 60.24 |
Forfeitures | | (21) | | | |
Total shares issued under stock grant programs | | 549 | | $ | 57.64 |
| | | | | |
Shares issued under the deferred compensation plans | | 108 | | $ | 62.48 |
1416
| | | | | |
|
| September 26, 2020 | |||
Share Issuance Activity |
| Common Stock | | | Average Share Price |
Shares issued under the employee stock purchase plan | | 28 | | $ | 44.14 |
| | | | | |
Shares issued under the employee stock gift program | | 2 | | | 45.93 |
Shares issued under the director retainer stock program | | 46 | | | 24.80 |
Shares issued under the bonus plan | | 271 | | | 47.51 |
Shares issued under the executive stock match grants plan | | 79 | | | 47.60 |
Forfeitures | | (7) | | | |
Total shares issued under stock grant programs | | 391 | | $ | 44.92 |
| | | | | |
Shares issued under the deferred compensation plans | | 115 | | $ | 53.85 |
During the first nine months of 2021, we did not repurchase any of our shares of common stock.
During the first nine months of 2020, we repurchased approximately 756,000 shares of our common stock at an average share price of $38.62.
J. INVENTORIES
Inventories are stated at the lower of cost or net realizable value. The cost of inventories includes raw materials, direct labor, and manufacturing overhead. Cost is determined on a weighted average FIFO basis. Raw materials consist primarily of unfinished wood products and other materials expected to be manufactured or treated prior to sale, while finished goods represent various manufactured and treated wood products ready for sale.
The Company writes down the value of inventory, the impact of which is reflected in cost of goods sold in the Condensed Consolidated Statement of Earnings and Comprehensive Income, if the cost of specific inventory items on hand exceeds the amount the Company expects to realize from the ultimate sale or disposal of the inventory. These estimates are based on management's judgment regarding future demand and market conditions and analysis of historical experience. The lower of cost or net realizable value adjustment to inventory as of September 25, 2021 and September 26, 2020 was $1.3 million and $0, respectively.
K. SUBSEQUENT EVENTS
On September 27, 2027, we acquired the equity of Shelter Products, Inc., for $6.5 million. Based in Haleyville, Alabama, Shelter Products provides distribution and logistics support to factory-built manufacturers through 9 warehouses across the U.S.
On October 29, 2021, we acquired the assets of The Box Pack Trust, operating as Boxpack Packaging (Boxpack) for $5.2 million. Based near Melbourne, Australia, Boxpack specializes in flexographic and lithographic cardboard packaging, using the latest CAD design and finishing techniques.
17
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Universal Forest Products,UFP Industries, Inc. is a holding company with subsidiaries throughout North America, Europe, Asia, and in Australia that supply wood, wood composite and other products to three robust markets: retail, industrial, and construction. The Company isWe are headquartered in Grand Rapids, Mich.Michigan. For more information about Universal Forest Products,UFP Industries, Inc., or itsour affiliated operations, go to www.ufpi.com.www.ufpi.com.
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations;regulations, government imposed “stay at home” orders and directives to cease or curtail operations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission. We are pleased to present this overview of 2017.the third quarter of 2021.
OVERVIEW
Our results for the third quarter of 2017 were impacted by2021 include the following:following highlights:
| Our |
| Our operating profits increased |
1518
● | Our cash flows provided by operations for the first nine months of 2021 was $282 million compared to $185 million during the first nine months of 2020 in spite of an increase in our net working capital, which increased $133 million compared to the prior year. The increase in our net working capital during 2021 is due to a combination of unusually high lumber prices and strong market demand in our industrial and construction segments. In addition, our investment in net working capital at the end of the third quarter of 2020 was unusually low due to unexpectedly strong demand in our retail segment and difficulty maintaining an adequate supply of inventory due to supply chain constraints. As lumber prices and demand in the retail segment began to normalize in the second and third quarters of 2021, our investment in net working capital has decreased, and we now have a cash surplus of $139 million. We anticipate our net working capital will continue to decrease for the balance of the year, assuming lumber prices remain at current levels, as the fourth quarter typically represents a seasonally slower quarter for most of our business units. |
● | Our net debt (debt and cash overdraft less cash) at the end of September 2021 was $182 million compared to net cash of $32 million at the end of September 2020. Our unused borrowing capacity under revolving credit facilities and cash surplus resulted in total liquidity of approximately $668 million at the end of the third quarter of 2021. |
HISTORICAL LUMBER PRICES
We experience significant fluctuations in the cost of commodity lumber products from primary producers (“Lumber Market”). The following table presents the Random Lengths framing lumber composite price:
| | | | | | | |
| | Random Lengths Composite | | ||||
| | Average $/MBF | | ||||
|
| 2021 |
| 2020 |
| ||
January | | $ | 890 | | $ | 377 | |
February | |
| 954 | |
| 402 | |
March | |
| 1,035 | |
| 420 | |
April | |
| 1,080 | |
| 358 | |
May | |
| 1,428 | |
| 394 | |
June | |
| 1,344 | |
| 455 | |
July | |
| 690 | |
| 530 | |
August | |
| 443 | |
| 716 | |
September | |
| 412 | |
| 934 | |
| | | | | | | |
Third quarter average | | $ | 515 | | $ | 727 | |
Year-to-date average | | $ | 920 | | $ | 510 | |
| | | | | | | |
Third quarter percentage change | |
| (29.2) | % |
| | |
Year-to-date percentage change | |
| 80.4 | % |
| | |
|
|
|
|
|
|
|
|
|
| Random Lengths Composite |
| ||||
|
| Average $/MBF |
| ||||
|
| 2017 |
| 2016 |
| ||
January |
| $ | 356 |
| $ | 316 |
|
February |
|
| 393 |
|
| 310 |
|
March |
|
| 401 |
|
| 321 |
|
April |
|
| 424 |
|
| 345 |
|
May |
|
| 416 |
|
| 356 |
|
June |
|
| 399 |
|
| 353 |
|
July |
|
| 411 |
|
| 351 |
|
August |
|
| 417 |
|
| 367 |
|
September |
|
| 416 |
|
| 354 |
|
|
|
|
|
|
|
|
|
Third quarter average |
| $ | 415 |
| $ | 357 |
|
Year-to-date average |
| $ | 404 |
| $ | 341 |
|
|
|
|
|
|
|
|
|
Third quarter percentage change |
|
| 16.2 | % |
|
|
|
Year-to-date percentage change |
|
| 18.5 | % |
|
|
|
19
In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprised approximately 44% and 42%comprise almost two-thirds of our total lumber purchases throughpurchases.
| | | | | | | |
| | Random Lengths SYP | | ||||
| | Average $/MBF | | ||||
|
| 2021 |
| 2020 |
| ||
January | | $ | 858 | | $ | 346 | |
February | |
| 903 | |
| 345 | |
March | |
| 938 | |
| 360 | |
April | |
| 922 | |
| 333 | |
May | |
| 1,150 | |
| 412 | |
June | |
| 1,052 | |
| 494 | |
July | |
| 564 | |
| 552 | |
August | |
| 448 | |
| 729 | |
September | |
| 438 | |
| 886 | |
| | | | | | | |
Third quarter average | | $ | 483 | | $ | 722 | |
Year-to-date average | | $ | 808 | | $ | 495 | |
| | | | | | | |
Third quarter percentage change | | | (33.1) | % | | | |
Year-to-date percentage change | | | 63.2 | % | | | |
The sequential increase in overall lumber prices for the first nine monthshalf of 2017the year was primarily due to strong market demand as well as certain constraints in the supply chain of lumber. Prices began to fall in June 2021 as pandemic related restrictions were lifted, the economy re-opened, and 2016, respectively.
|
|
|
|
|
|
|
|
|
| Random Lengths SYP |
| ||||
|
| Average $/MBF |
| ||||
|
| 2017 |
| 2016 |
| ||
January |
| $ | 397 |
| $ | 358 |
|
February |
|
| 420 |
|
| 357 |
|
March |
|
| 433 |
|
| 366 |
|
April |
|
| 438 |
|
| 389 |
|
May |
|
| 416 |
|
| 397 |
|
June |
|
| 399 |
|
| 382 |
|
July |
|
| 381 |
|
| 380 |
|
August |
|
| 383 |
|
| 391 |
|
September |
|
| 387 |
|
| 375 |
|
|
|
|
|
|
|
|
|
Third quarter average |
| $ | 384 |
| $ | 382 |
|
Year-to-date average |
| $ | 406 |
| $ | 377 |
|
|
|
|
|
|
|
|
|
Third quarter percentage change |
|
| 0.5 | % |
|
|
|
Year-to-date percentage change |
|
| 7.7 | % |
|
|
|
16
UNIVERSAL FOREST PRODUCTS, INC.
2021 reflect normalized levels. A decline in lumber prices impacts our profitability of products sold with fixed and variable prices, as discussed below.
IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS
We generally price our products to pass lumber costs through to our customers so that our profitability is based on the value-added manufacturing, distribution, engineering, and other services we provide. As a result, our sales levels (and working capital requirements) are impacted by the lumber costs of our products. Lumber costs were 48.2%58.0% and 48.4%48.7% of our sales in the first nine months of 20172021 and 2016,2020, respectively. The increase from the prior year ratio reflects the impact of higher lumber prices and the results of PalletOne’s subsidiaries, Sunbelt and Spartanburg Forest Products.
Our gross margins are impacted by (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower from comparative periods), and (2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing or decreasing within a period or from period to period). Moreover, as explained below, our products are priced differently. Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported Lumber Market with a fixed dollar adder to cover conversion costs and profits. Consequently, the level and trend of the Lumber Market impact our products differently.
Below is a general description of the primary ways in which our products are priced.
| Products with fixed selling prices. These products include value-added products, such as |
20
| Products with selling prices indexed to the reported Lumber Market with a fixed dollar “adder” to cover conversion costs and |
For each of the product pricing categories above, our margins are exposed to changes in the trend of lumber prices.
The greatest risk associated with changes in the trend of lumber prices is on the following products:products:
| Products with significant inventory levels with low turnover rates, whose selling prices are indexed to the Lumber Market. In other words, the longer the period of time these products remain in inventory, the greater the exposure to changes in the price of lumber. This would include treated lumber, which |
| Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-family construction projects. We attempt to mitigate this risk through our purchasing practices |
During the first nine months of 2017, volatility in the lumber market has impacted our gross profits on products sold under each of the general pricing methods described above. For example, the dramatic rise in lumber prices, which peaked in April, resulted in a decline in gross profit per unit on products sold with fixed prices primarily in the second
17
UNIVERSAL FOREST PRODUCTS, INC.
quarter. Additionally, the subsequent decline in lumber prices in May, June, and July resulted in a decline in gross profit per unit on products sold with a variable price indexed to the lumber market. We anticipate these trends may continue to impact our results into the fourth quarter until we reach a point of re-pricing products sold via a fixed price with our customers and selling through higher cost material sold on a variable price which is mitigated to some degree by stability of the SYP market.
Finally, hurricane Harvey and Irma as well as recent wildfires in British Columbia have resulted in sharp increases in lumber prices in the third quarter of 2017.
In addition to the impact of the Lumber Market trends on gross margins, changes in the level of the market cause fluctuations in gross margins when comparing operating results from period to period. This is explained in the following example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend within each period.
|
|
|
|
|
|
|
| |||||||
|
| Period 1 |
| Period 2 |
| |||||||||
| | | | | | | | |||||||
|
| Period 1 | | Period 2 |
| |||||||||
Lumber cost |
| $ | 300 |
| $ | 400 |
| | $ | 300 | | $ | 400 | |
Conversion cost |
|
| 50 |
|
| 50 |
| |
| 50 | |
| 50 | |
= Product cost |
|
| 350 |
|
| 450 |
| |
| 350 | |
| 450 | |
Adder |
|
| 50 |
|
| 50 |
| |
| 50 | |
| 50 | |
= Sell price |
| $ | 400 |
| $ | 500 |
| | $ | 400 | | $ | 500 | |
Gross margin |
|
| 12.5 | % |
| 10.0 | % | |
| 12.5 | % |
| 10.0 | % |
As is apparent from the preceding example, the level of lumber prices does not impact our overall profits but does impact our margins. Gross margins and operating margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low. In order to more effectively evaluate our profitability in such periods, we believe it is useful to compare our change in units shipped with our changes in costs and profits.
21
BUSINESS COMBINATIONS
We completed threefive business acquisitions during the first nine months of 2017fiscal 2021 and sixfive during all of 2016.fiscal 2020. The annual historical sales attributable to acquisitions completed in 2017 and 2016 wasthe first nine months of fiscal 2021 is approximately $124 million and $324 million, respectively.$1.3 billion, while acquisitions completed during the last quarter of 2020 have annual sales of approximately $48 million. These business combinations were not significant to our quarterly or year-to-date operating results individually or in aggregate and thus pro forma results for 2017 or 20162021 and 2020 are not presented.
See Notes to the Unaudited Condensed Consolidated Financial Statements, Note F, “Business Combinations” for additional information.
18
UNIVERSAL FOREST PRODUCTS, INC.
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the components of our Unaudited Condensed Consolidated Statements of Earnings as a percentage of net sales.
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
| Three Months Ended |
| Nine Months Ended |
|
| |||||||||||||
|
| September 30, |
| September 24, |
| September 30, |
| September 24, |
|
| |||||||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 |
|
| |||||||||
| | | | | | | | | | ||||||||||
| Three Months Ended | | Nine Months Ended | ||||||||||||||||
| September 25, |
| September 26, |
| | September 25, |
| September 26, |
| ||||||||||
| 2021 |
| 2020 |
| | 2021 |
| 2020 |
| ||||||||||
Net sales |
| 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % |
| 100.0 | % | 100.0 | % | | 100.0 | % | 100.0 | % |
Cost of goods sold |
| 86.3 |
| 85.7 |
| 86.1 |
| 85.2 |
|
| 84.4 |
| 83.8 |
| | 84.4 |
| 83.7 |
|
Gross profit |
| 13.7 |
| 14.3 |
| 13.9 |
| 14.8 |
|
| 15.6 |
| 16.2 |
| | 15.6 |
| 16.3 |
|
Selling, general, and administrative expenses |
| 8.8 |
| 9.1 |
| 9.2 |
| 9.3 |
|
| 8.1 |
| 9.1 |
| | 7.6 |
| 9.5 |
|
Other gains, net | (0.5) |
| — |
| | (0.2) |
| (0.1) |
| ||||||||||
Earnings from operations |
| 4.9 |
| 5.3 |
| 4.7 |
| 5.4 |
|
| 8.0 |
| 7.2 |
| | 8.2 |
| 6.9 |
|
Other expense (income), net |
| 0.1 |
| 0.1 |
| 0.1 |
| 0.1 |
|
| |||||||||
Other expense, net | 0.2 |
| 0.1 |
| | 0.1 |
| 0.1 |
| ||||||||||
Earnings before income taxes |
| 4.8 |
| 5.2 |
| 4.6 |
| 5.3 |
|
| 7.8 |
| 7.1 |
| | 8.1 |
| 6.7 |
|
Income taxes |
| 1.5 |
| 1.7 |
| 1.5 |
| 1.8 |
|
| 1.8 |
| 1.8 |
| | 1.9 |
| 1.7 |
|
Net earnings |
| 3.3 |
| 3.5 |
| 3.1 |
| 3.5 |
|
| 6.0 |
| 5.3 |
| | 6.1 |
| 5.0 |
|
Less net earnings attributable to noncontrolling interest |
| (0.1) |
| (0.1) |
| (0.1) |
| (0.1) |
|
| (0.2) |
| (0.1) |
| | (0.1) |
| (0.1) |
|
Net earnings attributable to controlling interest |
| 3.2 | % | 3.4 | % | 3.0 | % | 3.4 | % |
| 5.8 | % | 5.2 | % | | 6.0 | % | 4.9 | % |
Note: Actual percentages are calculated and may not sum to total due to rounding.
GROSSAs a result of the impact of the level of lumber prices on the percentages displayed in the table above (see Impact of the Lumber Market on Our Operating Results), we believe it is useful to compare our change in units sold with our change in gross profits, selling, general, and administrative expenses, and operating profits as presented in the following table. The percentages displayed below represent the percentage change from the prior year comparable period.
| | | | | | | | | | | | |
| | Percentage Change | ||||||||||
| | Three Months Ended | | Nine Months Ended | ||||||||
|
| September 25, | | September 26, | | September 25, | | September 26, | ||||
|
| 2021 |
| 2020 |
| 2021 |
| 2020 | ||||
Units sold |
| 13.0 | % | | 8.0 | % | | 30.0 | % | | 3.0 | % |
Gross profit | | 35.9 | | | 28.7 | | | 68.8 | | | 16.1 | |
Selling, general, and administrative expenses | | 25.9 | | | 16.1 | | | 40.9 | | | 7.1 | |
Earnings from operations | | 57.7 | | | 51.3 | | | 110.6 | | | 33.4 | |
22
The following table presents, for the periods indicated, our selling, general, and administrative (SG&A) costs as a percentage of gross profit. Given our strategies to enhance our capabilities and improve our value-added product offering, and recognizing the higher relative level of SG&A costs these strategies require, we believe this ratio provides an enhanced view of our effectiveness in managing these costs and mitigates the impact of changing lumber prices.
| | | | | | | | | | | |
| | | | | | | | | |||
| Three Months Ended | | Nine Months Ended | ||||||||
|
| September 25, | |
| September 26, | |
| September 25, | |
| September 26, |
|
| 2021 | |
| 2020 | |
| 2021 | |
| 2020 |
Gross profit | $ | 327,555 | | $ | 241,074 | | $ | 1,035,403 | | $ | 613,241 |
Selling, general, and administrative expenses | $ | 169,467 | | $ | 134,649 | | $ | 504,104 | | $ | 357,770 |
SG&A as percentage of gross profit |
| 51.7% | |
| 55.9% | |
| 48.7% | |
| 58.3% |
Operating Results by Segment:
Our business segments align with the following markets: UFP Retail Solutions, UFP Construction and UFP Industrial. The Company manages the operations of its individual locations primarily through a market-centered reporting structure under which each location is included in a business unit and business units are included in our retail, industrial, and construction segments. In the case of locations which serve multiple segments, results are allocated and accounted for by segment. The exception to this market-centered reporting and management structure is the Company’s International segment, which comprises our Mexico, Canada, Australia, and Italy operations and sales and purchasing offices in other parts of the world. Our International segment and Ardellis (our insurance captive) have been included in the “All Other” column of the table below. The “Corporate” column includes purchasing, transportation and administrative functions that serve our operating segments. Operating results of corporate primarily consists of over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns and leases transportation equipment, are also included in the corporate column. An inter-company lease charge is assessed to our operating segments for the use of these assets at fair market value rates.
The following tables present our operating results, for the periods indicated, by segment (in thousands).
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 25, 2021 | ||||||||||||||||
|
| |
| |
| | | | | | |
| | |||||
| | Retail | | Industrial | | Construction | | All Other | | Corporate | | Total | ||||||
Net sales | | $ | 696,201 |
| $ | 573,234 | | $ | 722,872 | | $ | 98,689 | | $ | 2,788 | | $ | 2,093,784 |
Cost of goods sold | |
| 685,369 | |
| 446,822 | |
| 568,809 | |
| 63,082 | | | 2,147 | | | 1,766,229 |
Gross profit | | | 10,832 | | | 126,412 | | | 154,063 | | | 35,607 | | | 641 | | | 327,555 |
Selling, general, administrative expenses | | | 36,899 | | | 55,723 | | | 70,663 | | | 15,996 | | | (9,814) | | | 169,467 |
Other | |
| 86 | |
| 281 | |
| (805) | | | (672) | | | (8,927) | | | (10,037) |
Earnings from operations | | $ | (26,153) | | $ | 70,408 | | $ | 84,205 | | $ | 20,283 | | $ | 19,382 | | $ | 168,125 |
23
| | | | | | | | | | | | | | | | | | |
| | Three Months Ended September 26, 2020 | ||||||||||||||||
|
| |
| |
| | | | | | | |
| | ||||
| | Retail | | Industrial | | Construction | | All Other | | Corporate | | Total | ||||||
Net sales | | $ | 700,522 | | $ | 282,124 | | $ | 447,103 | | $ | 56,700 | | $ | (222) | | $ | 1,486,227 |
Cost of goods sold | |
| 594,896 | |
| 233,971 | |
| 385,028 | | | 38,543 | | | (7,285) | | | 1,245,153 |
Gross profit | | | 105,626 | | | 48,153 | | | 62,075 | | | 18,157 | | | 7,063 | | | 241,074 |
Selling, general, administrative expenses | | | 43,515 | | | 26,080 | | | 45,411 | | | 10,499 | | | 9,144 | | | 134,649 |
Other | |
| (70) | |
| 36 | |
| 151 | | | 209 | | | (502) | | | (176) |
Earnings from operations | | $ | 62,181 | | $ | 22,037 | | $ | 16,513 | | $ | 7,449 | | $ | (1,579) | | $ | 106,601 |
| | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 25, 2021 | ||||||||||||||||
| | | | | | | | | | | | | | |||||
| | Retail | | Industrial | | Construction | | All Other | | Corporate | | Total | ||||||
Net sales | | $ | 2,714,440 | | $ | 1,633,289 | | $ | 2,021,106 | | $ | 243,736 | | $ | 6,758 | | $ | 6,619,329 |
Cost of goods sold | |
| 2,480,804 | |
| 1,292,102 | |
| 1,644,069 | | | 160,853 | | | 6,098 | | | 5,583,926 |
Gross profit | | | 233,636 | | | 341,187 | | | 377,037 | | | 82,883 | | | 660 | | | 1,035,403 |
Selling, general, administrative expenses | | | 144,375 | | | 150,739 | | | 193,144 | | | 40,021 | | | (24,175) | | | 504,104 |
Other | | | (182) | | | 104 | | | (437) | | | (1,703) | | | (9,030) | | | (11,248) |
Earnings from operations | | $ | 89,443 | | $ | 190,344 | | $ | 184,330 | | $ | 44,565 | | $ | 33,865 | | $ | 542,547 |
| | | | | | | | | | | | | | | | | | |
| | Nine Months Ended September 26, 2020 | ||||||||||||||||
| | | | | | | | | | | | | | |||||
| | Retail | | Industrial | | Construction | | All Other | | Corporate | | Total | ||||||
Net sales | | $ | 1,661,873 | | $ | 763,046 | | $ | 1,187,429 | | $ | 148,503 | | $ | (561) | | $ | 3,760,290 |
Cost of goods sold | |
| 1,429,229 | |
| 635,424 | |
| 1,002,932 | | | 101,240 | | | (21,776) | | | 3,147,049 |
Gross profit | | | 232,644 | | | 127,622 | | | 184,497 | | | 47,263 | | | 21,215 | | | 613,241 |
Selling, general, administrative expenses | | | 110,596 | | | 73,662 | | | 134,098 | | | 28,228 | | | 11,186 | | | 357,770 |
Other | | | (34) | | | 123 | | | (145) | | | (1,538) | | | (526) | | | (2,120) |
Earnings from operations | | $ | 122,082 | | $ | 53,837 | | $ | 50,544 | | $ | 20,573 | | $ | 10,555 | | $ | 257,591 |
The following tables present the components of our operating results, for the periods indicated, as a percentage of net sales by segment.
| | | | | | | | | | | | | |
| | Three Months Ended September 25, 2021 | | ||||||||||
|
| |
| |
| | | | | | | |
|
| | Retail | | Industrial | | Construction | | All Other | | Corporate | | Total | |
Net sales | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | N/A | | 100.0 | % |
Cost of goods sold | | 98.4 | | 77.9 | | 78.7 | | 63.9 | | — | | 84.4 | |
Gross profit | | 1.6 | | 22.1 | | 21.3 | | 36.1 | | — | | 15.6 | |
Selling, general, administrative expenses | | 5.3 | | 9.7 | | 9.8 | | 16.2 | | — | | 8.1 | |
Other | | — | | — | | (0.1) | | (0.7) | | — | | (0.5) | |
Earnings from operations | | (3.8) | % | 12.3 | % | 11.6 | % | 20.6 | % | — | | 8.0 | % |
Note: Actual percentages are calculated and may not sum to total due to rounding.
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Net sales | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | N/A | | 100.0 | % |
Cost of goods sold | | 84.9 | | 82.9 | | 86.1 | | 68.0 | | — | | 83.8 | |
Gross profit | | 15.1 | | 17.1 | | 13.9 | | 32.0 | | — | | 16.2 | |
Selling, general, administrative expenses | | 6.2 | | 9.2 | | 10.2 | | 18.5 | | — | | 9.1 | |
Other | | — | | — | | — | | 0.4 | | — | | — | |
Earnings from operations | | 8.9 | % | 7.8 | % | 3.7 | % | 13.1 | % | — | | 7.2 | % |
Note: Actual percentages are calculated and may not sum to total due to rounding.
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| | Nine Months Ended September 25, 2021 | | ||||||||||
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| | Retail | | Industrial | | Construction | | All Other | | Corporate | | Total | |
Net sales | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | N/A | | 100.0 | % |
Cost of goods sold | | 91.4 | | 79.1 | | 81.3 | | 66.0 | | — | | 84.4 | |
Gross profit | | 8.6 | | 20.9 | | 18.7 | | 34.0 | | — | | 15.6 | |
Selling, general, administrative expenses | | 5.3 | | 9.2 | | 9.6 | | 16.4 | | — | | 7.6 | |
Other | | — | | — | | — | | (0.7) | | — | | (0.2) | |
Earnings from operations | | 3.3 | % | 11.7 | % | 9.1 | % | 18.3 | % | — | | 8.2 | % |
Note: Actual percentages are calculated and may not sum to total due to rounding.
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| | Retail | | Industrial | | Construction | | All Other | | Corporate | | Total | |
Net sales | | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | N/A | | 100.0 | % |
Cost of goods sold | | 86.0 | | 83.3 | | 84.5 | | 68.2 | | — | | 83.7 | |
Gross profit | | 14.0 | | 16.7 | | 15.5 | | 31.8 | | — | | 16.3 | |
Selling, general, administrative expenses | | 6.7 | | 9.7 | | 11.3 | | 19.0 | | — | | 9.5 | |
Other | | — | | — | | — | | (1.0) | | — | | (0.1) | |
Earnings from operations | | 7.3 | % | 7.1 | % | 4.3 | % | 13.9 | % | — | | 6.9 | % |
Note: Actual percentages are calculated and may not sum to total due to rounding.
25
NET SALES
We design, manufacture and market wood and wood-alternative products, primarily used to enhance outdoor living environments, for national home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for residential and commercial construction, specialty wood packaging, components and packing materials for various industries, and customized interior fixtures used in a variety of retail stores, commercial, and other structures.structures, and specialty wood packaging, components and packing materials for various industries. Our strategic long-term sales objectives include:
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| | % Change | |||||||||
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| in Sales |
| in Selling |
| in Units |
| Acquisition Unit Change |
| Organic Unit Change |
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Third quarter 2021 versus Third quarter 2020 | | 40.9 | % | 27.9 | % | 13.0 | % | 16.0 | % | (3.0) | % |
Year-to-date 2021 versus Year-to-date 2020 | | 76.0 | % | 46.0 | % | 30.0 | % | 25.0 | % | 5.0 | % |
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● | Diversifying our end market sales mix by increasing sales of specialty wood and protective packaging to industrial users, increasing our penetration of the concrete forming market, increasing our sales of engineered wood components for custom home, multi-family, military and light commercial construction, increasing our market share with independent retailers, and increasing our sales of customized interior fixtures, casework and millwork used in a variety of commercial markets. |
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| Expanding geographically in our core businesses, domestically and internationally. |
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| Increasing our sales of "value-added" products |
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| | Three Months Ended September 25, 2021 | | Three Months Ended September 26, 2020 | | ||||||||
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| Value-Added |
| Commodity-Based | | Value-Added |
| Commodity-Based | | ||||
Retail |
| 48.6 | % | | 51.4 | % | | 49.7 | % | | 50.3 | % | |
Industrial | | 69.2 | % | | 30.8 | % | | 63.7 | % | | 36.3 | % | |
Construction | | 74.5 | % | | 25.5 | % | | 74.3 | % | | 25.7 | % | |
All Other and Corporate | | 70.7 | % | | 29.3 | % | | 74.1 | % | | 25.9 | % | |
Total Sales | | 64.1 | % | | 35.9 | % | | 60.5 | % | | 39.5 | % | |
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| | Nine Months Ended September 25, 2021 | | Nine Months Ended September 26, 2020 | | ||||||||
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| Value-Added |
| Commodity-Based | | Value-Added |
| Commodity-Based |
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Retail |
| 43.3 | % | | 56.7 | % | | 54.4 | % | | 45.6 | % | |
Industrial | | 66.6 | % | | 33.4 | % | | 65.5 | % | | 34.5 | % | |
Construction | | 70.5 | % | | 29.5 | % | | 77.4 | % | | 22.6 | % | |
All Other and Corporate | | 71.6 | % | | 28.4 | % | | 75.0 | % | | 25.0 | % | |
Total Sales | | 58.2 | % | | 41.8 | % | | 64.6 | % | | 35.4 | % | |
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Note: Certain prior year product reclassifications and the change in designation of certain products as "value-added" resulted in a change in prior year's sales. |
The increase in our ratio of commodity-based sales to total sales during the first nine months of 2021 reflected in the table above is primarily due to the impact of dramatically higher lumber prices in the first half of 2021, which have normalized during the third quarter. This is due to the fact that the selling prices of these products are generally indexed to the current Lumber Market at the time they are shipped and lumber costs comprise a much higher percentage of the selling price than they do for value-added products. The acquisition of Sunbelt and Spartanburg also contributed to the increase in commodity-based sales of treated lumber in our retail segment, while PalletOne contributed to the increase in value-added sales in the industrial segment. Our unit sales of value-added products increased approximately 17% in the third quarter of 2021 compared to 2020, including a 15% contribution from acquisitions and 2% organic growth. Our unit sales of commodity-based products increased approximately 7%, including a 19% contribution from acquisitions and an organic unit decline of 12%.
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| Developing new products. We define new products as those that will generate sales of at least a $1 million per year within 4 years of launch and |
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| | New Product Sales by Segment | | | New Product Sales by Segment | |||||||||||||
| | Three Months Ended | | | Nine Months Ended | |||||||||||||
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| September 26, |
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| September 25, |
| September 26, |
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| | 2021 | | 2020 | | Change | | 2021 | | 2020 | | Change | ||||||
Retail | | $ | 111,795 | | | 118,731 |
| (5.8) | % | | $ | 375,798 | | $ | 301,602 | | 24.6 | % |
Industrial | |
| 41,436 | | | 21,468 |
| 93.0 | % | |
| 115,542 | |
| 51,582 | | 124.0 | % |
Construction | | | 37,524 | | | 16,229 | | 131.2 | % | | | 95,414 | | | 42,038 | | 127.0 | % |
All Other and Corporate | |
| 5,998 | | | 2,495 |
| 140.4 | % | |
| 13,419 | |
| 8,082 | | 66.0 | % |
Total New Product Sales | |
| 196,753 | | | 158,923 |
| 23.8 | % | |
| 600,173 | |
| 403,304 | | 48.8 | % |
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Note: Certain prior year product reclassifications and the change in designation of certain products as "new" resulted in a change in prior year's sales. |
19
Table of ContentsRetail Segment
UNIVERSAL FOREST PRODUCTS, INC.
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| September 24, |
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Market Classification |
| 2017 |
| 2016 |
| % Change |
| 2017 |
| 2016 |
| % Change | ||||
Retail |
| $ | 65,383 |
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| 53,252 |
| 22.78% |
| $ | 192,194 |
| $ | 153,966 |
| 24.83% |
Industrial |
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| 26,738 |
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| 23,374 |
| 14.39% |
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| 76,125 |
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| 65,642 |
| 15.97% |
Construction |
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| 15,577 |
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| 11,911 |
| 30.78% |
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| 45,321 |
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| 35,717 |
| 26.89% |
Total New Product Sales |
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| 107,698 |
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| 88,537 |
| 21.64% |
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| 313,640 |
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| 255,325 |
| 22.84% |
Note: Certain prior year product reclassifications and the change in designation of certain products as “new” resulted in a change in prior year’s sales.
The following table presents, for the periods indicated, our gross sales and percentage change in gross sales by market classification.
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Market Classification |
| 2017 |
| 2016 |
| % Change |
| 2017 |
| 2016 |
| % Change | ||||||
Retail |
| $ | 391,895 |
| $ | 339,275 |
| 15.5 | % |
| $ | 1,162,785 |
| $ | 1,018,203 |
| 14.2 | % |
Industrial |
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| 369,506 |
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| 232,017 |
| 59.3 | % |
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| 982,675 |
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| 661,718 |
| 48.5 | % |
Construction |
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| 310,026 |
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| 267,772 |
| 15.8 | % |
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| 872,997 |
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| 740,393 |
| 17.9 | % |
Total Gross Sales |
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| 1,071,427 |
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| 839,064 |
| 27.7 | % |
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| 3,018,457 |
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| 2,420,314 |
| 24.7 | % |
Sales Allowances |
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| (14,841) |
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| (12,399) |
| 19.7 | % |
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| (43,366) |
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| (39,405) |
| 10.1 | % |
Total Net Sales |
| $ | 1,056,586 |
| $ | 826,665 |
| 27.8 | % |
| $ | 2,975,091 |
| $ | 2,380,909 |
| 25.0 | % |
Note: During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.
GrossNet sales in the third quarter of 2017 increased 28%2021 decreased by 1% compared to the same period of 2016,2020, due to acquisition unit growth of 18%, which was offset by an organic unit decline of 19%. The price variance for this period was flat as the impact of lower prices on commodity-based products was offset by higher prices on value-added products which are generally sold at a fixed price. Organic unit decreases of 29% in our Handprint Home & Décor products, 28% in our ProWood pressure-treated products, 14% in our Deckorators composite decking and railing products, and 8% in our Outdoor Essentials Fence, Lawn & Garden products were offset by organic unit growth of 12% in our UFP Edge siding, pattern, and trim products. The decline in our unit sales is primarily due to a 22%shift in consumer spending as a result of the end of pandemic-related restrictions on certain activities. The increase in unit sales and a 6% increase in selling prices primarilyof UFP Edge was largely due to investments made to increase our capacity to produce these products as well as market share gains. Lastly, approximately $13 million of sales to customers that distribute products for concrete forming were transferred from the Lumber Market. Acquired operations contributed 15% to our unit sales growth, and our organic unit sales growth was 7%.
Changes in our gross sales by market are discussed below.
Retail:
Gross salesconstruction segment to the retail marketsegment. Sales to big box customers were down 8%, while sales to independent retailers increased almost 16%14%.
Gross profits decreased by $94.8 million, or 89.7% to $10.8 million for the third quarter of 2021 compared to the same period last year. Our decrease in gross profit was attributable to the following:
● | The gross profits of our ProWood business unit decreased by $68.7 million, primarily due to the impact that declining lumber prices had on ProWood’s pressure treated products that are sold at a variable price. Decreased unit sales also contributed to the reduction in gross profit. |
● | Acquired operations reported a loss in gross profits and contributed $7.2 million to the decrease due to the drop in lumber prices. |
● | Unit sales decreases contributed $13.2 million to the decline in gross profit for our Deckorators, Retail Building Products, Handprint, and Outdoor Essentials Fence, Lawn & Garden business units. UFP Edge experienced organic unit growth of 12% due to an increase in capacity, but had a reduction in gross profit of $5.7 million due to the fluctuation of lumber prices. |
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Selling, general and administrative (“SG&A”) expenses decreased by approximately $6.6 million, or 15.2%, in the third quarter of 20172021 compared to the same period of 2016, due2020. The SG&A of recently acquired businesses contributed $4.8 million to a 12% increasethe change in unit salesSG&A. This was offset by accrued bonus expense, which varies with our overall profitability and a 4% increase in selling prices. Within this market, sales to our big box customers increased almost 13%,return on investment, which decreased by $12.0 million and sales to other independent retailers increased over 20%. Businesses we acquired contributed 7% to our growth in unit sales, primarily to independent retail customers. Our organic unit growth was 5%totaled approximately $3.0 million for the quarter. By comparison, “big box” same store sales growth during the third quarter has been reported at approximately 6.3%.
Gross sales to the retail market increased over 14% in the first nine months of 2017 compared to the same period of 2016,The remaining change was primarily due to a 9% increaseincreases in unitsalaries and wages and travel related expenses, offset by decreases in sales incentive compensation and a 5% increase in selling prices. Within this market, sales to our big box customers increased almost 15%, and sales to other independent retailers increased almost 14%. Businesses we acquired contributed 6% to our growth in unit sales, primarily to independent retail customers. Our organic unit growth was 3% inbad debt expense.
Earnings from operations for the first nine months of 2017. By comparison, “big box” same store sales growth in the first nine months of 2017 has been reported at approximately 6.0%.
Industrial:
Gross sales to the industrial market increased over 59%Retail reportable segment decreased in the third quarter of 20172021 compared to 2020 by $88.3 million, or 142%, as a result of the same period of 2016, resulting from a 54% increase in unit sales and a 5% increase in selling prices. Businesses we acquired contributed
20
UNIVERSAL FOREST PRODUCTS, INC.
43% to our growth in unit sales. Our organic growth in unit sales of 11% was primarily due to new operations, adding 578 new customers, and share gains with several existing customers.
Gross sales to the industrial market increased almost 49% in the first nine months of 2017 compared to the same period of 2016, resulting from a 43% increase in unit sales and a 6% increase in selling prices. Businesses we acquired contributed 34% to our growth in unit sales. Our organic growth in unit sales of 9% was primarily due to same factors discussedmentioned above.
Construction:
Gross sales to the construction market increased almost 16% in the third quarter of 2017 compared to 2016. The increase was due to an 8% increase in unit sales and an 8% increase in our selling prices. Our increase in unit sales was driven by a 12% increase to manufactured housing customers, and an 8% increase to residential construction customers, offset by a 5% decrease to commercial construction customers.
By comparison (and based upon various industry publications):
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Gross sales to the construction market increased almost 18% in the first nine months of 2017 compared to 2016. The increase was due to a 9% increase in unit sales and a 9% increase in our selling prices. Our increase in unit sales was driven by an 11% increase to manufactured housing customers, an 11% increase to residential construction customers, and a 1% increase to commercial construction customers due to the same factors discussed above.
Value-Added and Commodity-Based Sales:
The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total sales. Value-added products generally carry higher gross margins than our commodity-based products.
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| 2016 |
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| 2016 | ||||
Value-Added |
| 63.9 | % |
| 61.1 | % |
| 62.9 | % |
| 61.5 | % |
Commodity-Based |
| 36.1 | % |
| 38.9 | % |
| 37.1 | % |
| 38.5 | % |
COST OF GOODS SOLD AND GROSS PROFIT
Our gross margin decreased to 13.7% from 14.3% comparing the third quarter of 2017 to the same period of 2016 due to the higher level of lumber prices. Our 22.6% increase in gross profit dollars compares favorably with our 22% increase in unit sales during the same period. Acquired operations contributed $19.9 million of gross profit in the third quarter of 2017. Excluding acquisitions, our gross profits increased by $6.7 million, or 5.7%, over the same period last year as follows:
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UNIVERSAL FOREST PRODUCTS, INC.
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Our gross margin decreased to 13.9% from 14.8% comparing the first nine months of 2017 to the same period of 2016. Our 17.4% increase in gross profit dollars compares unfavorably with our 19% increase in unitNet sales in the first nine months of 20172021 increased 63% compared to the same period last year. Theof 2020, due to a 33% increase in our gross profit dollars was primarily due toselling prices and a 36% increase in unit sales from acquired operations, whichoffset by a 6% decrease in organic unit sales. Organic unit increases of 21% of UFP Edge, 13% of Deckorators, and 7% of Outdoor Essentials, were offset by organic unit declines of 19% of ProWood and 11% of Handprint. The transfer of approximately $29 million in sales to the retail segment from the construction segment discussed above contributed $45.6to unit growth in the retail segment. Sales to big box customers were up 55% (12% organic), while sales to independent retailers decreased 5% (6% organic).
Gross profits increased 0.4% to $233.6 million of gross profit in the first nine months of 2017. Excluding acquisitions, our gross profits increased by $15.8 million over2021 compared to the same period last year as follows:of 2020. Our change in gross profit was attributable to the following:
| Our Retail Building Materials business unit contributed $26.3 million to the increase. This increase is primarily due to unit sales growth and rising lumber and panel prices combined with effective inventory positioning. |
● | Our Deckorators, Outdoor Essentials, Handprint, E-Commerce, and UFP Edge business units contributed $0.2 million of additional gross profit. |
● | Acquisitions contributed $6.7 million to the increase. |
● | The gross profit |
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SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative (“SG&A”) expenses increased by approximately $17.9$33.8 million, or 24.0%30.5%, in the third quarterfirst nine months of 20172021 compared to the same period of 2016, while we reported a 22% increase in unit sales.2020. The SG&A of recently acquired businesses contributed approximately $12.7 million to this increase. Accrued bonus expense, which varies with our overall profitability and return on investment, increased approximately $11.0 million and totaled $12.4 million inapproximately $37.9 for the third quarterfirst nine months of 2017 compared to $12.0 million in 2016. Acquired operations contributed approximately $15 million to our year over year increase.2021. The remaining increase was primarily due to anincreases in salaries and wages, sales incentive compensation, and travel related expenses.
Earnings from operations for the Retail reportable segment decreased in the first nine months of 2021 compared to 2020 by $32.6 million, or 26.7% as a result of the factors mentioned above.
Industrial Segment
Net sales in the third quarter of 2021 increased 103% compared to the same period of 2020, due to a 34% increase in compensationunit sales from recent acquisitions and benefita 69% increase in selling prices attributable to favorable sales mix changes as well as the Lumber Market.
Gross profits increased by $78.3 million, or 162.5%, for the third quarter of 2021 compared to the same period last year. Acquisitions contributed $21.5 million to the increase in gross profit. The remaining increase was primarily due to favorable changes in sales mix and the decline in lumber costs. We estimate that value-added and commodity-based products contributed $36.5 million and $20.2 million, respectively, to the increase in gross profit.
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Selling, general and administrative (“SG&A”) expenses increased by approximately $50.5$29.6 million, or 22.6%113.7%, in the third quarter of 2021 compared to the same period of 2020. Acquired operations since the third quarter of 2020 contributed approximately $7.4 million to our increase in costs. Accrued bonus expense, which varies with our overall profitability and return on investment, increased approximately $12.6 million, and totaled $18.7 million for the quarter. The remaining increase was primarily due to increases in salaries and wages, sales incentive compensation, and travel related expenses.
Earnings from operations for the Industrial reportable segment increased in the third quarter of 2021 compared to 2020 by $48.4 million, or 219.5%, due to the factors discussed above.
Net sales in the first nine months of 2021 increased 114% compared to the same period of 2020, due to a 67% increase in selling prices attributable to the Lumber Market and favorable sales mix changes, a 10% increase in organic unit sales, and a 37% increase in unit sales from recent acquisitions.
Gross profits in the first nine months of 2021 increased 167.3% to $213.6 million compared to the same period of 2020. Acquisitions contributed $57.9 million to the increase in gross profit. The remaining increase was primarily due to organic unit sales growth and leveraging fixed costs as well as favorable changes in sales mix. In addition, in the first six months of the year we were able to maintain our profit per unit by more effectively passing on commodity lumber and other cost increases in our selling prices.
Selling, general and administrative (“SG&A”) expenses increased by approximately $77.1 million, or 104.6%, in the first nine months of 20172021 compared to the same period of 2016, while we reported a 19% increase in unit sales.2020. Acquired operations since the third quarter of 2020 contributed approximately $21.3 million to total SG&A expenses. Accrued bonus expense increased approximately $37.9 million compared to the same period of 2020 and totaled $32.6 million inapproximately $50.4 for the first nine months of 2017 compared to $33.9 million in 2016. Acquired operations contributed approximately $41 million to our year over year increase.2021. The remaining increase was primarily due to an increaseincreases in compensationsalaries and benefit costswages and foreign currency exchange losses. sales incentive compensation.
INTEREST, NET
Earnings from operations for the Industrial reportable segment increased in the first nine months of 2021 compared to 2020 by $136.5 million, or 253.6%, due to the factors mentioned above.
Construction Segment
Net interest costs were highersales in the third quarter of 20172021 increased 62% compared to the same period of 20162020, due to carrying a higher amount of debt and a slight43% increase in short-term borrowing rates.selling prices attributable to the Lumber Market and unit sales growth of 19%, including 3% from recent acquisitions. Organic unit changes within this segment consisted of increases of 26% in commercial construction, 23% in site-built construction, and 17% in factory-built housing, offset by a 37% decrease in concrete forming. The transfer of approximately $13 million in sales to the retail segment from the construction segment discussed above contributed to the unit decline in the concrete forming business unit.
Gross profits increased by $92.0 million, or 148.2%, for the third quarter of 2021 compared to the same period of 2020. The increase in our gross profit was comprised of the following factors:
● | Gross profits in our factory-built housing business unit increased $20.6 million as a result of increased unit sales and leveraging fixed costs. |
● | Gross profits in our site-built construction business unit increased by $63.2 million due to unit sales growth and leveraging fixed costs and as a result of a decrease in lumber costs. |
● | The gross profit of our commercial construction business unit increased $7.1 million as a result of increased unit sales, better productivity, and other operational improvements. |
● | The gross profit of our concrete forming business unit decreased by $0.3 million. |
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● | Acquired businesses contributed $1.3 million. |
Selling, general and administrative (“SG&A”) expenses increased by approximately $25.2 million, or 55.6%, in the third quarter of 2021 compared to the same period of 2020. Acquired operations since the third quarter of 2020 contributed approximately $1.1 million to total SG&A expenses for the quarter. Accrued bonus expense, which varies with our overall profitability and return on investment, increased approximately $14.8 million, and totaled $19.5 million for the quarter. The remaining increase was primarily due to increases in salaries and wages, sales incentive compensation, medical expenses, and travel related expenses.
Earnings from operations for the Construction reportable segment increased in the third quarter of 2021 compared to 2020 by $67.7 million, or 409.9%, due to the factors mentioned above.
Net sales in the first nine months of 2021 increased 70% compared to the same period of 2020, due to a 52% increase in selling prices primarily due to the Lumber Market and unit sales growth of 18%, including 3% from acquisitions. Organic unit changes within this segment consisted of increases of 27% in factory-built housing, 21% in site-built construction, and 8% in commercial construction. These increases were offset by a unit decline of 37% in concrete forming. The transfer of approximately $29 million in sales to the retail segment from the construction segment discussed above contributed to the unit decline in the concrete forming business unit.
Gross profits increased by $192.5 million, or 104.4% for the first nine months of 2021 compared to the same period of 2020. The increase in our gross profits was comprised of the following factors:
● | Gross profits in our factory-built housing business unit increased by $68.8 million as a result of increased unit sales and leveraging fixed costs. |
● | Gross profits in our site-built construction business unit increased by $105.6 million due to unit sales growth and leveraging fixed costs. In addition, we were able to maintain our profit per unit by more effectively passing on commodity lumber and other cost increases in our selling prices in the first six months of the year. |
● | The gross profit of our commercial construction business unit increased $8.2 million as a result of increased unit sales, better productivity, and other operational improvements. |
● | The gross profit of our concrete forming business unit increased $5.0 million due to the factors discussed above. |
● | Acquired businesses contributed $5.0 million. |
Selling, general and administrative (“SG&A”) expenses increased by approximately $59.0 million, or 44.0%, in the first nine months of 2021 compared to the same period of 2020. Acquired operations since the third quarter of 2020 contributed approximately $3.8 million to total SG&A expenses. Accrued bonus expense increased approximately $34.8 million compared to the same period of 2020 and totaled approximately $46.2 million for the first nine months of 2021. The remaining increase was primarily due to increases in salaries and wages, sales incentive compensation, medical expenses, and professional design fees.
Earnings from operations for the Construction reportable segment increased in the first nine months of 2021 compared to 2020 by $133.8 million, or 264.7%, due to the factors mentioned above.
All Other Segment
Our All Other reportable segment consists of our International and Ardellis (our insurance captive) segments that are not significant.
31
Corporate
The corporate segment consists of over (under) allocated costs that are not significant and gains on the sale of certain real estate.
INCOME TAXES
Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for foreign, state and local income taxes and permanent tax differences. Our effective tax rate was 31.9%23.0% in the third quarter of 20172021 compared to 32.5%25.4% for same period in 2016. Our effective tax rate 2020 and was 33.0%24.0% in the first nine months of 20172021 compared to 34.2%25.2% for the same period in 2016. 2020.The decrease in our effective tax rate is was primarily due to recording a tax deduction for certain share-based compensation at fair market value.
22
UNIVERSAL FOREST PRODUCTS, INC.
SEGMENT REPORTING
The following table presents, for the periods indicated, our net sales and earnings from operations by reportable segment.
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| Net Sales |
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| Earnings from Operations | ||||||||||||||||||||
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| Three Months Ended |
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| Three Months Ended | ||||||||||||||||||||
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| September 30, |
| September 24, |
| $ |
| % |
|
| September 30, |
| September 24, |
| $ |
| % | ||||||||
(in thousands) |
| 2017 |
| 2016 |
| Change |
| Change |
|
| 2017 |
| 2016 |
| Change |
| Change | ||||||||
North |
| $ | 310,384 |
| $ | 267,156 |
| $ | 43,228 |
| 16.2 | % |
|
| $ | 16,697 |
| $ | 14,630 |
| $ | 2,067 |
| 14.1 | % |
South |
|
| 206,050 |
|
| 173,715 |
|
| 32,335 |
| 18.6 | % |
|
|
| 10,234 |
|
| 9,900 |
|
| 334 |
| 3.4 | % |
West |
|
| 378,714 |
|
| 335,981 |
|
| 42,733 |
| 12.7 | % |
|
|
| 22,538 |
|
| 19,962 |
|
| 2,576 |
| 12.9 | % |
All Other |
|
| 161,438 |
|
| 49,813 |
|
| 111,625 |
| 224.1 | % |
|
|
| 6,882 |
|
| 2,959 |
|
| 3,923 |
| 132.6 | % |
Corporate |
|
| — |
|
| — |
|
| — |
| — |
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|
|
| (4,080) |
|
| (3,899) |
|
| (181) |
| 4.6 | % |
Total |
| $ | 1,056,586 |
| $ | 826,665 |
| $ | 229,921 |
| 27.8 | % |
|
| $ | 52,271 |
| $ | 43,552 |
| $ | 8,719 |
| 20.0 | % |
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| Net Sales |
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| Earnings from Operations | ||||||||||||||||||||
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| Nine Months Ended |
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| Nine Months Ended | ||||||||||||||||||||
|
| September 30, |
| September 24, |
| $ |
| % |
|
| September 30, |
| September 24, |
| $ |
| % |
| |||||||
(in thousands) |
| 2017 |
| 2016 |
| Change |
| Change |
|
| 2017 |
| 2016 |
| Change |
| Change | ||||||||
North |
| $ | 857,858 |
| $ | 758,066 |
| $ | 99,792 |
| 13.2 | % |
|
| $ | 42,921 |
| $ | 43,054 |
| $ | (133) |
| (0.3) | % |
South |
|
| 616,376 |
|
| 533,239 |
|
| 83,137 |
| 15.6 | % |
|
|
| 31,152 |
|
| 35,830 |
|
| (4,678) |
| (13.1) | % |
West |
|
| 1,088,744 |
|
| 940,188 |
|
| 148,556 |
| 15.8 | % |
|
|
| 65,547 |
|
| 58,434 |
|
| 7,113 |
| 12.2 | % |
All Other |
|
| 412,113 |
|
| 149,416 |
|
| 262,697 |
| 175.8 | % |
|
|
| 13,285 |
|
| 11,542 |
|
| 1,743 |
| 15.1 | % |
Corporate |
|
| — |
|
| — |
|
| — |
| — |
|
|
|
| (12,914) |
|
| (19,733) |
|
| 6,819 |
| 34.6 | % |
Total |
| $ | 2,975,091 |
| $ | 2,380,909 |
| $ | 594,182 |
| 25.0 | % |
|
| $ | 139,991 |
| $ | 129,127 |
| $ | 10,864 |
| 8.4 | % |
|
|
North
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| Net Sales |
| Net Sales | ||||||||||||||
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| North Segment by Market |
| North Segment by Market | ||||||||||||||
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| Three Months Ended |
| Nine Months Ended | ||||||||||||||
(in thousands) |
| September 30, |
| September 24, |
|
|
|
| September 30, |
| September 24, |
|
|
| ||||
Market Classification |
| 2017 |
| 2016 |
| % Change |
| 2017 |
| 2016 |
| % Change | ||||||
Retail |
| $ | 139,284 |
| $ | 131,333 |
| 6.1 | % |
| $ | 387,925 |
| $ | 369,699 |
| 4.9 | % |
Industrial |
|
| 40,192 |
|
| 27,524 |
| 46.0 | % |
|
| 114,533 |
|
| 87,287 |
| 31.2 | % |
Construction |
|
| 137,616 |
|
| 113,897 |
| 20.8 | % |
|
| 373,838 |
|
| 316,204 |
| 18.2 | % |
Total Gross Sales |
|
| 317,092 |
|
| 272,754 |
| 16.3 | % |
|
| 876,296 |
|
| 773,190 |
| 13.3 | % |
Sales Allowances |
|
| (6,708) |
|
| (5,598) |
| 19.8 | % |
|
| (18,438) |
|
| (15,124) |
| 21.9 | % |
Total Net Sales |
| $ | 310,384 |
| $ | 267,156 |
| 16.2 | % |
| $ | 857,858 |
| $ | 758,066 |
| 13.2 | % |
Note: During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.
Net sales attributable to the North reportable segment increased in the third quarter of 2017 compared to 2016 as a result of increased sales to each of our markets primarily due to the same factors previously discussed. Acquired operations contributed $8.7 million to our industrial sales increase.
Earnings from operations for the North reportable segment increased in the third quarter of 2017 by $2.1 million, or 14.1%, due to an increase in gross profit of $2.7 million, offset by a $0.6 million increase in SG&A expenses compared to last year. Acquired operations contributed $0.4 million to our operating profits in the third quarter.
23
UNIVERSAL FOREST PRODUCTS, INC.
Net sales attributable to the North reportable segment increased in the first nine months of 2017 compared to 2016 due to an increase in sales to each of our markets primarily due to the same factors previously discussed. Acquired operations contributed $21.0 million to our industrial sales increase.
Earnings from operations for the North reportable segment decreased in the first nine months of 2017 by $0.1 million, or 0.3%, due to an increase in gross profit of $4.5 million offset by a $4.6 million increase in SG&A expenses compared to last year. Acquired operations contributed $1.4 million to our operating profits in the first nine months of 2017.
South
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| Net Sales |
| Net Sales | ||||||||||||||
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| South Segment by Market |
| South Segment by Market | ||||||||||||||
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| Three Months Ended |
| Nine Months Ended | ||||||||||||||
(in thousands) |
| September 30, |
| September 24, |
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|
|
| September 30, |
| September 24, |
|
|
| ||||
Market Classification |
| 2017 |
| 2016 |
| % Change |
| 2017 |
| 2016 |
| % Change | ||||||
Retail |
| $ | 92,146 |
| $ | 75,130 |
| 22.6 | % |
| $ | 282,809 |
| $ | 240,175 |
| 17.8 | % |
Industrial |
|
| 69,390 |
|
| 61,749 |
| 12.4 | % |
|
| 201,928 |
|
| 185,529 |
| 8.8 | % |
Construction |
|
| 49,054 |
|
| 40,385 |
| 21.5 | % |
|
| 145,387 |
|
| 118,223 |
| 23.0 | % |
Total Gross Sales |
|
| 210,590 |
|
| 177,264 |
| 18.8 | % |
|
| 630,124 |
|
| 543,927 |
| 15.8 | % |
Sales Allowances |
|
| (4,540) |
|
| (3,549) |
| 27.9 | % |
|
| (13,748) |
|
| (10,688) |
| 28.6 | % |
Total Net Sales |
| $ | 206,050 |
| $ | 173,715 |
| 18.6 | % |
| $ | 616,376 |
| $ | 533,239 |
| 15.6 | % |
Note: During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.
Net sales attributable to the South reportable segment increased in the third quarter of 2017 compared to 2016 due to increased sales to all markets primarily due to the same factors previously discussed. Acquired operations contributed $24.4 million and $1.8 million to our growth in sales to the retail and industrial market, respectively.
Earnings from operations for the South reportable segment increased in the third quarter of 2017 by $0.3 million, or 3.4%, due to a increase in gross profit of $0.7 million offset by a $0.4 million increase in SG&A expenses. Acquired operations contributed $0.6 million to our operating profits in the third quarter.
Net sales attributable to the South reportable segment increased in the first nine months of 2017 compared to 2016 due to increased sales to all markets primarily due to the factors previously discussed. Acquired operations contributed $59.9 million of sales growth to our retail market.
Earnings from operations for the South reportable segment decreased in the first nine months of 2017 by $4.7 million, or 13.1%, due to a decrease in gross profit of $3.1 million and an increase of $1.6 millionpermanent tax differences in SG&A expenses. The decrease in gross profit was primarily due to the impact of the volatility in lumber prices. Acquired operations contributed $2.0 million to our operating profits in the first nine months of 2017.
24
UNIVERSAL FOREST PRODUCTS, INC.
West
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| Net Sales |
| Net Sales |
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| West Segment by Market |
| West Segment by Market |
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| Three Months Ended |
| Nine Months Ended |
| ||||||||||||||
(in thousands) |
| September 30, |
| September 24, |
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| September 30, |
| September 24, |
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| ||||
Market Classification |
| 2017 |
| 2016 |
| % Change |
| 2017 |
| 2016 |
| % Change |
| ||||||
Retail |
| $ | 115,069 |
| $ | 99,762 |
| 15.3 | % |
| $ | 347,270 |
| $ | 298,723 |
| 16.3 | % |
|
Industrial |
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| 145,132 |
|
| 126,836 |
| 14.4 | % |
|
| 401,850 |
|
| 347,902 |
| 15.5 | % |
|
Construction |
|
| 123,026 |
|
| 113,488 |
| 8.4 | % |
|
| 353,238 |
|
| 305,962 |
| 15.5 | % |
|
Total Gross Sales |
|
| 383,227 |
|
| 340,086 |
| 12.7 | % |
|
| 1,102,358 |
|
| 952,587 |
| 15.7 | % |
|
Sales Allowances |
|
| (4,513) |
|
| (4,105) |
| 9.9 | % |
|
| (13,614) |
|
| (12,399) |
| 9.8 | % |
|
Total Net Sales |
| $ | 378,714 |
| $ | 335,981 |
| 12.7 | % |
| $ | 1,088,744 |
| $ | 940,188 |
| 15.8 | % |
|
Note: During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.
Net sales attributable to the West reportable segment increased in the third quarter of 2017 compared to 2016 due to increases in sales to all markets primarily due to factors previously discussed.
Earnings from operations for the West reportable segment increased in the third quarter of 2017 by $2.6 million, or 12.9%,2021 compared to the same period in 2016 due to a $2.5 million increase in gross profit combined with a $0.1 million decrease in SG&A expenses.
Net sales attributable to the West reportable segment increased in the first nine monthsprior year, none of 2017 compared to 2016 due to an increase in sales to all markets due to the same factors previously discussed.
Earnings from operations for the West reportable segment increased in the first nine months of 2017 by $7.1 million, or 12.2%, compared to the same period in 2016 due to a $10.8 million increase in gross profit, offset by a $3.7 million increase in SG&A expenses.
All Other
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| Net Sales |
| Net Sales |
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| ||||||||||||||
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| All Other Segment by Market |
| All Other Segment by Market |
|
| ||||||||||||||
|
| Three Months Ended |
| Nine Months Ended |
|
| ||||||||||||||
(in thousands) |
| September 30, |
| September 24, |
|
|
|
| September 30, |
| September 24, |
|
|
|
|
| ||||
Market Classification |
| 2017 |
| 2016 |
| % Change |
| 2017 |
| 2016 |
| % Change |
|
| ||||||
Retail |
| $ | 45,396 |
| $ | 33,049 |
| 37.4 | % |
| $ | 144,782 |
| $ | 109,606 |
| 32.1 | % |
|
|
Industrial |
|
| 114,792 |
|
| 15,907 |
| 621.6 | % |
|
| 264,364 |
|
| 41,000 |
| 544.8 | % |
|
|
Construction |
|
| 331 |
|
| 4 |
| 8,175.0 | % |
|
| 533 |
|
| 4 |
| 13,225.0 | % |
|
|
Total Gross Sales |
|
| 160,519 |
|
| 48,960 |
| 227.9 | % |
|
| 409,679 |
|
| 150,610 |
| 172.0 | % |
|
|
Sales Allowances & Other |
|
| 919 |
|
| 853 |
| 7.7 | % |
|
| 2,434 |
|
| (1,194) |
| (303.9) | % |
|
|
Total Net Sales |
| $ | 161,438 |
| $ | 49,813 |
| 224.1 | % |
| $ | 412,113 |
| $ | 149,416 |
| 175.8 | % |
|
|
Our All Other reportable segment consists of our Alternative Materials, International, idX, and certain other segments which are notindividually significant.
Net sales attributable to All Other reportable segments increased in the third quarter of 2017 compared to 2016 due to increases in sales to the retail and industrial markets. Our increase in sales to the industrial market was primarily due to an $89.3 million increase from businesses we acquired since September of 2016.
25
UNIVERSAL FOREST PRODUCTS, INC.
Earnings from operations for All Other reportable segments increased during the third quarter of 2017 by $3.9 million, or 132.6%, compared to the same period of 2016. During the third quarter of 2017, gross profit dollars increased $20.6 million, offset by an increase in SG&A expenses of $16.1 million compared to the same period of 2016. Businesses we acquired contributed $3.7 million to our earnings from operations during the third quarter of 2017.
Net sales attributable to All Other reportable segments increased in the first nine months of 2017 compared to 2016 due to increases in sales to the retail and industrial markets. Our increase in sales to the industrial market was primarily due to a $203.1 million increase from businesses we acquired since September of 2016.
Earnings from operations for All Other reportable segments increased during the first nine months of 2017 by $1.7 million, or 15.1%, compared to the same period of 2016. During the first nine months of 2017, gross profit dollars increased $48.4 million, offset by an increase in SG&A expenses of $46.7 million compared to the same period of 2016. Businesses we acquired since September of 2016 contributed $1.1 million to the earnings from operations increase in the first nine months of 2017.
OFF-BALANCE SHEET TRANSACTIONS
We have no significant off-balance sheet transactions other than operating leases.transactions.
LIQUIDITY AND CAPITAL RESOURCES
The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):
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| Nine Months Ended | ||||||||||
|
| September 30, |
| September 24, | ||||||||
|
| 2017 |
| 2016 | ||||||||
| | | | | | | ||||||
| | Nine Months Ended | ||||||||||
|
| September 25, |
| September 26, | ||||||||
| | 2021 | | 2020 | ||||||||
Cash from operating activities |
| $ | 97,350 |
| $ | 136,377 | | $ | 281,763 | | $ | 185,083 |
Cash used in investing activities |
|
| (121,375) |
|
| (200,139) | |
| (528,257) | |
| (100,927) |
Cash from (used in) financing activities |
|
| 11,230 |
|
| 13,981 | ||||||
Cash (used in) from financing activities | |
| (33,593) | |
| 95,178 | ||||||
Effect of exchange rate changes on cash |
|
| 1,255 |
|
| (969) | |
| (292) | |
| (1,122) |
Net change in all cash and cash equivalents |
|
| (11,540) |
|
| (50,750) | |
| (280,379) | |
| 178,212 |
Cash, cash equivalents, and restricted cash, beginning of period |
|
| 34,489 |
|
| 88,342 | |
| 436,608 | |
| 168,666 |
Cash, cash equivalents, and restricted cash, end of period |
| $ | 22,949 |
| $ | 37,592 | | $ | 156,229 | | $ | 346,878 |
In general, we fundedfund our growth in the past through a combination of operating cash flows, our revolving credit facility, industrial development bonds (when circumstances permit), and issuance of long-term notes payable at times when interest rates are favorable. We have not issued equity to finance growth except in the case of a large acquisition. We manage our capital structure by attempting to maintain a targeted ratio of debt to equity and debt to earnings before interest, taxes, depreciation and amortization. We believe this is one of many important factors to maintaining a strong credit profile, which in turn helps ensure timely access to capital when needed.
Seasonality has a significant impact on our working capital due to our primary selling season which occurs during the period from March to August.September. Consequently, our working capital increases during our first and second quarters resultingwhich typically results in negative or modest cash flows from operations during those periods. Conversely, we typically experience a substantial decrease in working capital once we move beyond our peak selling season which typically results in significant cash flows from operations in our third and fourth quarters. As explained in more detail below, the unusually large increase in lumber prices this year, as well as the significant increase in sales, resulted in a more significant increase in net working capital this year relative to prior years.
32
Due to the seasonality of our business and the effects of the Lumber Market, we believe our cash cycle (days of sales outstanding plus days supply of inventory less days payables outstanding) is a good indicator of our working capital management. As indicated in the table below, our cash cycle increased to 4957 days from 4443 days during the third quarter and increased to 52 days from 4749 days during the first nine months of 2021 compared to the respective prior periods.
| | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended | ||||||||
| | September 25, | | September 26, | | September 25, | | September 26, | ||||
| | 2021 | | 2020 | | 2021 | | 2020 | ||||
Days of sales outstanding |
| | 35 |
| | 31 |
| | 34 |
| | 32 |
Days supply of inventory | |
| 43 | |
| 31 | |
| 38 | |
| 37 |
Days payables outstanding | |
| (21) | |
| (19) | |
| (20) | |
| (20) |
Days in cash cycle | |
| 57 | |
| 43 | |
| 52 | |
| 49 |
The increase in our days supply of inventory in the first nine months of 20172021 compared to the prior periods,same period of 2020 was primarily due to the impact of
26
UNIVERSAL FOREST PRODUCTS, INC.
acquired operations which carry comparatively higher investments in inventorylower retail demand than our other operations. Excluding acquired operationscustomers anticipated for our cashinventory planning. The four day increase in our receivables cycle was 44 days in the third quarter of 2017 and 47 days in the first nine months of 2017.primarily due to longer payment terms for new customers attributable to recent acquisitions.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Nine Months Ended |
| ||||||||
|
| September 30, |
| September 24, |
| September 30, |
| September 24, |
| ||||
|
| 2017 |
| 2016 |
| 2017 |
| 2016 |
| ||||
Days of sales outstanding |
|
| 31 |
|
| 31 |
|
| 31 |
|
| 31 |
|
Days supply of inventory |
|
| 38 |
|
| 34 |
|
| 41 |
|
| 37 |
|
Days payables outstanding |
|
| (20) |
|
| (21) |
|
| (20) |
|
| (21) |
|
Days in cash cycle |
|
| 49 |
|
| 44 |
|
| 52 |
|
| 47 |
|
In the first nine months of 2017,2021, our cash fromprovided by operating activities was $97.3$281.8 million, which was comprised of net earnings of $90.9$405.4 million and $41.3$69.1 million of non-cash expenses, offset by a $34.9$192.7 million increase in cash invested in working capital since the end of December 2016 due to the strong sales growth and higher lumber prices. Comparatively, cash from2020. Our operating activities was $136.4cash flow this year increased by $96.7 million in the first nine months of 2016, which was comprised of net earnings of $83.3 million and $32.3 million of non-cash expenses, offset by a $20.8 million seasonal decrease in working capital since the end of 2015. The increase in working capital compared to the same period of last year was primarily due to significant increasesan increase in inventoryour net earnings and accounts receivablenon-cash expenses of $229.8 million, offset by increasesan increase in accounts payable which can be attributedour investment in net working capital of $133.1 million compared to sales growththe prior year period. This increase was due to unusually high lumber prices and higher lumber prices.increased demand in our industrial and construction segments. PalletOne and other acquisitions also contributed to the increase in our seasonal investment in net working capital.
Acquisitions and purchases of property, plant, and equipment comprised most of our cash used in investing activities during the first nine months of 20172021 and totaled $59.9$433.3 million and $57.2$110.1 million, respectively. Total proceeds from the sales of property, plant, and equipment were $26.6 million. Outstanding purchase commitments on existing capital projects totaled approximately $26.1$44.1 million on September 30, 2017. We currently plan25, 2021. Capital spending primarily consists of several projects to spend $70 million for the yearexpand capacity to manufacture new and value-added products, achieve efficiencies through automation, make improvements to a number of facilities, and increase our transportation capacity (tractors, trailers) in 2017 on capital expenditures.order to meet higher volumes and replace old rolling stock. We intend to fund capital expenditures and purchase commitments through our operating cash flows for the balance of the year. Comparatively,We currently plan to spend approximately $147 million on capital expenditures were $35.7 million duringprojects for the first nine monthsyear. Notable areas of 2016. Thecapital spending include projects to increase in our capital expenditures in 2017 is primarily due to the additional requirementscapacity and efficiency of our recently acquired operationsplants that produce our Deckorators mineral-based composite and an increase inwood-plastic composite decking and our “expansionaryUFP Edge siding, pattern and efficiency” capital expenditures tied to initiatives including newtrim products, value-added productexpand our machine-built pallet capacity, expansion, and automation. The sale and purchasetake advantage of investments totaling $12.2 million and $4.2 million, respectively, are due to investment activity in our captive insurance subsidiary.automation opportunities.
Cash flows from financing activities primarily consisted of net borrowings under our revolving credit facilityrepayments of debt of approximately $36.2$1.4 million, primarilythe payment of quarterly dividends totaling $27.8 million ($0.15 per share), and distributions to finance the $59.9 millionnoncontrolling interests of acquisitions we completed$2.9 million. On October 20, 2021, our board of directors approved an increase in the first nine monthsour fourth quarter dividend to $0.20 per share, payable on December 15, 2021, to shareholders of 2017. Additionally, we had $9.2 million in dividend payments and $13.0 million in payments for stock repurchases.record on December 1, 2021.
On September 30, 2017,25, 2021, we had $70.8$3.2 million outstanding on our $295$550 million revolving credit facility. The outstanding revolving credit facility, also includes letters of credit totalingand we had approximately $9.8 million on September 30, 2017; as a result, we have approximately $224.2$539.7 million in remaining availability on our revolver after considering $7.1 million in outstanding letters of credit. Additionally, we have $150 million in availability under a “shelf agreement” for long term debt with a current lender. Financial covenants on the unsecured revolving credit facility and unsecured notes include minimum interest tests and a maximum leverage ratio. The agreements also restrict the amount of additional indebtedness we may incur and the amount of assets which may be sold. We were in compliance with all our covenant requirements on September 30, 2017.25, 2021.
At the end of the third quarter of 2021, we have approximately $667.5 million in total liquidity, consisting of our net cash surplus and remaining availability under our revolving credit facility. We anticipate our liquidity will continue to increase in the last three months of 2021 as lumber prices and demand continue to normalize and we convert our seasonal increase in net working capital to cash.
33
ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS
See Notes to Unaudited Consolidated Condensed Financial Statements, Note E, “Commitments, Contingencies, and Guarantees.”
CRITICAL ACCOUNTING POLICIES
In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States. These principles require us to make certain estimates and apply judgments that affect our financial position and
27
UNIVERSAL FOREST PRODUCTS, INC.
results of operations. We continually review our accounting policies and financial information disclosures. There have been no material changes in our policies or estimates since December 31, 2016.26, 2020.
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are exposed to market risks related to fluctuations in interest rates on our variable rate debt, which consists of a revolving credit facility and industrial development revenue bonds. We do not currently use interest rate swaps, futures contracts or options on futures, or other types of derivative financial instruments to mitigate this risk.
For fixed rate debt, changes in interest rates generally affect the fair market value, but not earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not influence fair market value, but do affect future earnings and cash flows. We do not have an obligation to prepay fixed rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we would be required to refinance it.
We are subject to fluctuations in the price of lumber. We experience significant fluctuations in the cost of commodity lumber products from primary producers (the “Lumber Market”). A variety of factors over which we have no control, including government regulations, transportation, environmental regulations, weather conditions, economic conditions, and natural disasters, impact the cost of lumber products and our selling prices. While we attempt to minimize our risk from severe price fluctuations, substantial, prolonged trends in lumber prices can affect our sales volume, our gross margins, and our profitability. We anticipate that these fluctuations will continue in the future. (See “Impact of the Lumber Market on Our Operating Results.”)
Our international operations have exposure to foreign currency rate risks, primarily due to fluctuations in their local currency, which is their functional currency, compared to the U.S. dollar.Dollar. Additionally, certain of our operations enter into transactions that will be settled in a currency other than the U.S. Dollar. We have enteredmay enter into forward foreign exchange rate contracts in 2017 and may enter into further forward contracts in the future associated with mitigating theto mitigate foreign currency exchange risk. Historically, our hedge contracts are deemed immaterial to the financial statements, however any material hedge contract in the future will be disclosed.
Item 4. Controls and Procedures.
(a) | Evaluation of Disclosure Controls and Procedures. With the participation of management, our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15e and 15d – 15e) as of the quarter ended September |
(b) | Changes in Internal Controls. During the quarter ended September |
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PART II. OTHER INFORMATION
Item 1A. Risk Factors.
None
None.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
(a) | None. |
(b) | None. |
(c) | Issuer purchases of equity securities. |
| | | | | | | | |
Fiscal Month | (a) | (b) | (c) | (d) | ||||
June 27 – July 31, 2021 | — | — | — | 1,103,957 | ||||
August 1 – 28, 2021 | — | | — | — | 1,103,957 | |||
August 29 – September 25, 2021 | — | | — | — | 1,103,957 |
|
|
|
|
|
|
|
|
|
Fiscal Month |
| (a) |
| (b) |
| (c) |
| (d) |
July 2 - August 5, 2017 |
| 2,800 |
| 84.01 |
| — |
| 2,755,923 |
August 6 - September 2, 2017 |
| 34,900 |
| 80.40 |
| — |
| 2,721,023 |
September 3 - September 30, 2017 |
| — |
| — |
| — |
| 2,721,023 |
(a) |
| Total number of shares purchased. |
(b) |
| Average price paid per share. |
(c) |
| Total number of shares purchased as part of publicly announced plans or programs. |
(d) |
| Maximum number of shares that may yet be purchased under the plans or programs. |
On November 14, 2001, the Board of Directors approved a share repurchase program (which succeeded a previous program) allowing us to repurchase up to 2.5 million shares of our common stock. On October 14, 2011,2010, our Board authorized an additional 2 million shares to be repurchased under our share repurchase program. The total number of remaining shares that may be repurchased under the program is approximately 2.81.1 million.
None.
29
UNIVERSAL FOREST PRODUCTS, INC.
PART II. OTHER INFORMATION
The following exhibits (listed by number corresponding to the Exhibit Table as Item 601 in Regulation S-K) are filed with this report:
| | |
31 | Certifications. | |
| | |
| (a) | |
| | |
| (b) | |
| | |
32 | Certifications. | |
| | |
35
| (a) | |
| | |
| (b) | |
| | |
101 | Interactive Data | |
| | |
| (INS) |
|
| | |
��� | (SCH) |
|
| | |
| (CAL) |
|
| | |
| (LAB) |
|
| | |
| (PRE) |
|
| | |
| (DEF) |
|
| | |
104 | Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document). |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
| |
| | |
Date: November | By: | /s/ Matthew J. Missad |
| Matthew J. Missad, | |
| Chief Executive Officer and Principal Executive Officer | |
| | |
| | |
Date: November | By: | /s/ Michael R. Cole |
| Michael R. Cole, | |
| Chief Financial Officer, | |
| Principal Financial Officer and | |
| Principal Accounting Officer |
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