EXHIBIT 99(a)
NEWS RELEASE
- ------AT THE COMPANY------ -------FLEISHMAN HILLARD--------
Lynn Afendoulis Jeremy Skule
Director of Public Affairs Vice President
616/364-6161 212/453-2245
FOR IMMEDIATE RELEASE
MONDAY, JULY 12, 2004
UNIVERSAL POSTS STRONG GROWTH IN THE SECOND QUARTER OF 2004;
NET EARNINGS INCREASE 15%
GRAND RAPIDS, MI., July 12, 2004 -- Universal Forest Products (Nasdaq: UFPI)
today announced strong second quarter results with a 34.4% increase in net sales
to $742.6 million, up from $552.5 million reported for the same period last
year. Net sales for the first six months of 2004 were $1.2 billion, a 33.1%
increase over net sales of $908.1 million for the same period of 2003.
Net earnings for the quarter were $19.8 million, a 15.1% increase over net
earnings of $17.2 million for the same period in 2003. Net earnings for the year
to date were $25.3 million, a 16.9% increase over 2003 year-to-date net earnings
of $21.7 million.
By market, Universal posted second quarter net sales of:
o $344.6 million in D-I-Y/retail, up 14.0% over the same quarter last
year;
o $170.3 million in site-built construction, an increase of 68.2% over
last year;
o $124.3 million in industrial, up 56.2% over last year, and
o $103.4 million in manufactured housing, a 48.9% increase over last
year.
"I'm continually proud of our performance and of the hard work of our people,"
said CEO William G. Currie. "We controlled what we could and delivered very
strong results, especially in our site-built and industrial markets."
A few significant factors contributed to the company's performance. Total unit
sales increased more than 11% for the quarter thanks to strong unit sales to the
site-built, industrial and manufactured housing markets. A decline in units sold
to the Do-It-Yourself retail market is attributed to record precipitation in
many areas of the country -- notably the Midwest, Texas, and portions of the
East -- that forced homeowners to delay home improvement projects. "This
showcases the power of our balanced business model and geographic diversity,
which allow us to thrive even when one of our markets faces a challenge," Currie
explained.
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UNIVERSAL FOREST PRODUCTS, INC.
PAGE 2
The remaining 23% of the company's 34.4% increase in net sales is attributable
to the lumber market, which was higher during the second quarter of 2004. Gross
profit increased 17.9% for the quarter, exceeding the Company's unit sales
increase due, in part, to the impact of the rising lumber market in April and
May on products whose selling prices are tied to the lumber market. Other
factors affecting the quarter's results included:
o A fire in April that destroyed a truss plant in Thorndale, Ontario at
the start of the building season. Although Universal maintained its
service to customers by moving the work to other plants in the U.S.,
transportation costs and operating inefficiencies resulted in greater
costs to the company. Management currently estimates that the insured
value of the property destroyed will exceed its net book value.
o The opening of several new plants this year. As anticipated, the plants
were in a start-up phase and were not profitable during their first
months of operation.
o The company continues to bring its multi-family framing operations in
the West up to Universal's management standards and profitability
targets. "This is a new area of business for us and, as we stated
previously, we've experienced some challenges. We believe the changes
we've made eventually will lead us to improved profitability," Currie
said.
OUTLOOK
The Company currently anticipates continued growth in its business in 2004 and
reaffirms its targets for both unit sales and diluted earnings per share growth
of 10% to 14% for the year.
Universal Forest Products will conduct a conference call to discuss information
included in this news release and related matters at 11:00 a.m. EDT on Tuesday,
July 13, 2004. The conference call will be hosted by William G. Currie and will
be available for analysts and institutional investors domestically at (888)
792-1079 or internationally at (703) 871-3092. Use conference call ID #507398.
The conference call will be available simultaneously, and in its entirety, to
all interested investors and news media through a webcast at www.ufpi.com.
Universal Forest Products markets, manufactures, and engineers wood and
wood-alternative products for D-I-Y retail home centers, structural lumber
products for the manufactured housing industry, engineered wood components for
the site-built construction market and specialty wood packaging for various
industries. Among the company's newest and fastest-growing ventures are framing
and installation services for the site-built and retail sectors. In conjunction
with its customers, Universal uses its engineering and manufacturing expertise,
coupled with highly skilled employees, to design and construct buildings and
decks. For information about Universal Forest Products on the Internet, please
visit the Company's web site at www.ufpi.com, or call 888-Buy-UFPI.
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UNIVERSAL FOREST PRODUCTS, INC.
PAGE 3
Included in this report are certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements are based on the beliefs of the Company's management as well as on
assumptions made by and information currently available to the Company at the
time such statements were 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 are the following: Adverse
lumber market trends, competitive activity, negative economic trends, government
regulations, and weather. These risk factors and additional information are
included in the company's reports on Form 10K and 10Q on file with the
Securities and Exchange Commission.
HIGHLIGHTS TO FOLLOW
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2004/2003
QUARTER PERIOD YEAR TO DATE
-------------------------------------- -----------------------------------------------
(In thousands, except per share data) 2004 2003 2004 2003
-------- ------- -------- --------
NET SALES $ 742,568 100% $552,463 100% $ 1,208,233 100% $ 908,082 100%
COST OF GOODS SOLD 649,747 87.50 473,721 85.75 1,059,051 87.65 777,536 85.62
-------- ------- -------- --------
GROSS PROFIT 92,821 12.50 78,742 14.25 149,182 12.35 130,546 14.38
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 56,082 7.55 46,697 8.45 100,011 8.28 86,885 9.57
-------- ------- -------- --------
EARNINGS FROM OPERATIONS 36,739 4.95 32,045 5.80 49,171 4.07 43,661 4.81
OTHER EXPENSE (INCOME)
INTEREST EXPENSE 3,869 0.52 3,958 0.72 7,411 0.61 7,745 0.85
INTEREST REVENUE (102) -0.01 (84) -0.02 (185) -0.02 (131) -0.01
GAIN ON SALE OF REAL ESTATE AND
INTEREST IN SUBSIDIARY (575) -0.08 -- 0.00 (944) -0.08 -- 0.00
-------- ------- -------- --------
3,192 0.43 3,874 0.70 6,282 0.52 7,614 0.84
-------- ------- -------- --------
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 33,547 4.52 28,171 5.10 42,889 3.55 36,047 3.97
INCOME TAXES(1) 12,645 1.70 10,458 1.89 16,289 1.35 13,249 1.46
-------- ------- -------- --------
EARNINGS BEFORE MINORITY INTEREST 20,902 2.81 17,713 3.21 26,600 2.20 22,798 2.51
MINORITY INTEREST (1,146) -0.15 (551) -0.10 (1,277) -0.11 (1,136) -0.13
-------- ------- -------- --------
NET EARNINGS $ 19,756 2.66 $ 17,162 3.11 $ 25,323 2.10 $ 21,662 2.39
======== ======= ======== ========
EARNINGS PER SHARE - BASIC $ 1.09 $ 0.97 $ 1.41 $ 1.22
EARNINGS PER SHARE - DILUTED $ 1.06 $ 0.94 $ 1.35 $ 1.19
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,050 17,741 17,994 17,735
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,702 18,193 18,694 18,222
SUPPLEMENTAL SALES DATA
- -----------------------
QUARTER PERIOD YEAR TO DATE
-------------------------------------- -----------------------------------------------
MARKET CLASSIFICATION 2004 % 2003 % 2004 % 2003 %
- --------------------- ----- - ----- - ----- - ----- -
DO-IT-YOURSELF/RETAIL $ 344,582 46% $302,224 55% $ 523,491 43% $ 458,510 50%
SITE-BUILT CONSTRUCTION 170,325 23% 101,242 18% 285,163 24% 178,237 20%
MANUFACTURED HOUSING 103,403 14% 69,453 13% 180,370 15% 126,465 14%
INDUSTRIAL AND OTHER 124,258 17% 79,544 14% 219,209 18% 144,870 16%
--------- --- -------- --- ----------- --- --------- ---
TOTAL $ 742,568 100% $552,463 100% $ 1,208,233 100% $ 908,082 100%
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2004/2003
(IN THOUSANDS)
- ------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND
ASSETS 2004 2003 SHAREHOLDERS'EQUITY 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $ 25,080 $ 20,574 Notes payable $ -- $ 1,679
Accounts receivable 246,850 200,033 Accounts payable and
Inventories 227,455 166,742 accrued liabilities 206,156 162,402
Other current assets 11,809 5,424 Current portion of long-term
debt and capital leases 498 6,271
--------------- ----------
TOTAL CURRENT ASSETS 511,194 392,773
-------------- ----------
TOTAL CURRENT LIABILITIES 206,654 170,352
OTHER ASSETS 6,974 6,401
INTANGIBLE ASSETS, NET 132,748 131,858 LONG-TERM DEBT AND CAPITAL
LEASES, LESS CURRENT PORTION 287,387 255,975
PROPERTY, PLANT OTHER LIABILITIES 33,317 29,819
AND EQUIPMENT, NET 208,142 211,277
--------------- ----------
SHAREHOLDERS' EQUITY 331,700 286,163
-------------- ----------
TOTAL LIABILITIES AND
TOTAL ASSETS $ 859,058 $ 742,309 SHAREHOLDERS' EQUITY $ 859,058 $ 742,309
=============== ========== =============== ==========
UNIVERSAL FOREST PRODUCTS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2004/2003
- ------------------------------------------------------------------------------------------------------------------------------------
(IN THOUSANDS) 2004 2003
- ------------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 25,323 $ 21,662
Adjustments to reconcile net earnings to net cash
from operating activities:
Depreciation 13,408 12,202
Amortization of intangibles 940 1,033
Deferred income taxes 366 (1,438)
Minority interest 1,277 1,136
Loss on sale of interest in subsidiary 193 --
(Gain) Loss on sale or impairment of property, plant and equipment (730) 640
Changes in:
Accounts receivable (112,052) (94,237)
Inventories (56,963) (736)
Accounts payable 54,711 52,039
Accrued liabilities and other 20,714 10,974
--------- ---------
NET CASH FROM OPERATING ACTIVITIES (52,813) 3,275
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (16,607) (20,689)
Purchase of licensing agreements -- (150)
Acquisitions, net of cash received (10,075) (187)
Sale of interest in subsidiary 4,679 --
Proceeds from sale of property, plant and equipment 3,287 1,147
Other 1,678 1,961
--------- ---------
NET CASH FROM INVESTING ACTIVITIES (17,038) (17,918)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (repayments) borrowings under revolving credit facilities and notes payable 83,062 26,437
Repayment of long-term debt (6,117) (6,167)
Proceeds from issuance of common stock 1,828 873
Distributions to minority shareholder (125) (633)
Dividends paid to shareholders (897) (798)
Repurchase of common stock (129) (2,029)
Other (121) --
--------- ---------
NET CASH FROM FINANCING ACTIVITIES 77,501 17,683
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 7,650 3,040
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 17,430 17,534
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 25,080 $ 20,574
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