EXHIBIT 99(a)
NEWS RELEASE
- ------AT THE COMPANY-------
Lynn Afendoulis
Director, Public Affairs
616/364-6161
FOR IMMEDIATE RELEASE
MONDAY, JANUARY 31, 2005
UNIVERSAL FOREST PRODUCTS REPORTS STRONG 4TH QUARTER AND ANNUAL RESULTS FOR 2004
Net sales up 18% for the 4th quarter and 29% for the year
Diluted EPS increased 35% for the 4th quarter and 19% for the year
GRAND RAPIDS, Mich., January 31, 2005 - Universal Forest Products, Inc. (Nasdaq:
UFPI) today announced results for the fourth quarter and year ended December 25,
2004 that exceeded its internal targets for sales and earnings growth.
Net sales for the quarter were $535.8 million, an increase of 17.9% over net
sales of $454.5 million in the fourth quarter of 2003. Net sales for the year
were $2.45 billion compared to 2003 net sales of $1.90 billion, a 29.2%
increase. The company estimates that higher lumber and chemical prices
contributed approximately 18% to annual net sales growth but only 6% to the
growth in the fourth quarter.
Diluted earnings per share for the fourth quarter totaled $0.46, a 35.3%
increase over reported results for the same period of 2003. This includes a gain
from an insurance settlement and related income taxes associated with a fire at
its London, Ontario plant. For the year, diluted earnings per share totaled
$2.59, up 18.8% over reported results for 2003.
"We experienced strong unit sales growth, especially in our site-built and
industrial market segments, where we're focusing many of our efforts," said
William G. Currie, Universal's chief executive officer and vice chairman. "We're
also seeing a continued rebound in the manufactured housing market, led by
modular home construction, and we had a powerful increase in unit sales to those
customers."
MORE...
UNIVERSAL FOREST PRODUCTS, INC.
PAGE 2
"Results like these are possible when you have a sound business model, a great
management team, and skilled employees committed to best practices," he added.
"We're seeing growth and strong results because we're working hard, making good
decisions, and creating opportunity and enthusiasm for the future. It's a great
way to begin celebrating our 50th year as a company."
Unit sales were down only in the company's Do-It-Yourself retail market. Currie
attributed that primarily to higher lumber and chemical prices, which appear to
be having an impact on demand.
Universal posted the following year-over-year sales results:
- For the year, D-I-Y retail sales increased 9.0% over 2003 to $981.6
million. Fourth quarter sales to this market were down 1.3% from
2003;
- Site-built construction sales for 2004 of $631.7 million, up 56.7%
over annual sales for 2003; fourth quarter sales increased 34.3%
over 2003;
- Industrial sales for the year totaled $454.7 million, an increase of
45.1% over 2003. Fourth quarter 2004 sales were up 28.0% over the
same period last year; and
- Manufactured housing sales for 2004 were $385.3 million, up 36.6%
for the year. Fourth quarter sales to this market were up 27.3% over
2003.
The Company achieved those results in spite of financial challenges relating to
a disappointing framing venture in the West, which saw significant losses during
the year.
"We're putting the problems of that venture behind us," Currie said. "We also
are pleased that our plant in London, Ontario, which was destroyed by a fire
last April, is back in operation. That fire had a significant negative impact on
our results and on the operations of a number of other Universal plants that
took on production to meet our customer needs."
MORE...
UNIVERSAL FOREST PRODUCTS, INC.
PAGE 3
OUTLOOK
The Company anticipates continued growth in its business in 2005. Key
assumptions with respect to the Company's 2005 outlook include:
- Modest increases in interest rates are mitigated by favorable
demographic trends and economic conditions resulting in a strong
site-built construction market.
- The continued recovery of the manufactured housing market as many
customers switch production to modular housing.
- A stable D-I-Y retail market.
- Continued opportunities for market share gains in both the
site-built construction and industrial business.
- Improved results from our framing operations in the West.
- The completion of strategic business acquisitions.
- A stable lumber market.
With these factors in mind, the Company is targeting unit sales growth of 7% to
12% and net earnings growth of 10% to 15% in 2005 over results for 2004,
adjusted to exclude the gain from the insurance settlement and related income
taxes. In addition, these targets do not include the impact of adopting FASB
statement 123R which requires the Company to expense the effect of unvested
stock options previously granted and any future grants beginning the third
quarter of 2005.
Universal Forest Products will conduct a conference call to discuss information
included in this news release and related matters at 11:00 a.m. EST on Tuesday,
February 1, 2005. The conference call will be hosted by William G. Currie and
will be available for analysts and institutional investors domestically at (866)
814-1921 or internationally at (703) 639-1364. Use conference call ID #634528.
The conference call will be available simultaneously and in its entirety to all
interested investors and news media through a web cast at www.ufpi.com (click on
Investor Relations).
Celebrating its 50th anniversary, 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 services for the site-built sector. In
conjunction with its customers, Universal uses its engineering and manufacturing
expertise, coupled with highly skilled employees, to design and construct
buildings and housing. 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.
MORE...
UNIVERSAL FOREST PRODUCTS, INC.
PAGE 4
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.
PAGE 5
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2004/2003
QUARTER PERIOD YEAR TO DATE
--------------------------------------- ---------------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 2004 2003 2004 2003
------------------------------------- ----------------- ------------------ -------------------- -------------------
NET SALES $ 535,754 100% $ 454,470 100% $ 2,453,281 100% $ 1,898,830 100%
COST OF GOODS SOLD 472,475 88.19 399,593 87.93 2,157,028 87.92 1,640,844 86.41
--------- --------- ----------- -----------
GROSS PROFIT 63,279 11.81 54,877 12.07 296,253 12.08 257,986 13.59
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 46,981 8.77 42,591 9.37 201,335 8.21 177,824 9.36
GAIN ON INSURANCE SETTLEMENT(1) (1,391) -0.26 - 0.00 (1,391) -0.06 - 0.00
--------- --------- ----------- -----------
EARNINGS FROM OPERATIONS 17,689 3.30 12,286 2.70 96,309 3.93 80,162 4.22
OTHER EXPENSE (INCOME)
INTEREST EXPENSE 3,591 0.67 3,242 0.71 14,904 0.61 14,589 0.77
INTEREST INCOME (60) -0.01 (86) -0.02 (284) -0.01 (219) -0.01
NET GAIN ON SALE OF REAL ESTATE AND
INTEREST IN SUBSIDIARY (426) -0.08 - 0.00 (1,370) -0.06 - 0.00
--------- --------- ----------- -----------
3,105 0.58 3,156 0.69 13,250 0.54 14,370 0.76
--------- --------- ----------- -----------
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 14,584 2.72 9,130 2.01 83,059 3.39 65,792 3.46
INCOME TAXES (1) 5,912 1.10 3,361 0.74 31,462 1.28 24,325 1.28
--------- --------- ----------- -----------
EARNINGS BEFORE MINORITY INTEREST 8,672 1.62 5,769 1.27 51,597 2.10 41,467 2.18
MINORITY INTEREST (18) 0.00 483 0.11 (2,994) -0.12 (1,348) -0.07
--------- --------- ----------- -----------
NET EARNINGS $ 8,654 1.62 $ 6,252 1.38 $ 48,603 1.98 $ 40,119 2.11
========= ========= =========== ===========
EARNINGS PER SHARE - BASIC $ 0.48 $ 0.35 $ 2.70 $ 2.26
EARNINGS PER SHARE - DILUTED $ 0.46 $ 0.34 $ 2.59 $ 2.18
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,112 17,808 18,032 17,761
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 18,964 18,647 18,771 18,379
SUPPLEMENTAL SALES DATA
QUARTER PERIOD YEAR TO DATE
----------------------------------- ----------------------------------------
MARKET CLASSIFICATION 2004 % 2003 % 2004 % 2003 %
- --------------------- ---- --- ---- --- ---- --- ---- ----
DO-IT-YOURSELF/RETAIL $ 177,395 34% $ 179,685 39% $ 981,576 39% $ 900,150 47%
SITE-BUILT CONSTRUCTION 151,871 28% 113,047 25% 631,676 26% 403,201 21%
MANUFACTURED HOUSING 98,398 18% 77,318 17% 385,326 16% 282,139 15%
INDUSTRIAL AND OTHER 108,090 20% 84,420 19% 454,703 19% 313,340 17%
--------- --- --------- --- ----------- --- ---------- ---
TOTAL $ 535,754 100% $ 454,470 100% $ 2,453,281 100% $1,898,830 100%
--------- --- --------- --- ----------- --- ---------- ---
(1) "INCOME TAXES" INCLUDES APPROXIMATELY $451,000 ASSOCIATED WITH THE "GAIN ON
INSURANCE SETTLEMENT".
UNIVERSAL FOREST PRODUCTS, INC.
PAGE 6
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 2004/2003
(IN THOUSANDS)
ASSETS 2004 2003 LIABILITIES AND SHAREHOLDERS' EQUITY 2004 2003
- ------ ---- ---- ------------------------------------- ---- ----
CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $ 25,274 $ 17,430 Notes payable $ - $ 1,726
Accounts receivable 151,811 137,660 Accounts payable and
Inventories 212,921 169,561 accrued liabilities 161,832 135,560
Other current assets 16,477 9,446 Current portion of long-term
debt and capital leases 22,033 6,411
--------- ----------
TOTAL CURRENT ASSETS 406,483 334,097
---------- ---------
TOTAL CURRENT LIABILITIES 183,865 143,697
OTHER ASSETS 7,952 6,811
INTANGIBLE ASSETS, NET 131,652 131,819 LONG-TERM DEBT AND CAPITAL
LEASES, LESS CURRENT PORTION 185,109 205,049
PROPERTY, PLANT OTHER LIABILITIES 36,617 33,081
AND EQUIPMENT, NET 216,273 214,204
--------- ----------
SHAREHOLDERS' EQUITY 356,769 305,104
---------- ---------
TOTAL LIABILITIES AND
TOTAL ASSETS $ 762,360 $ 686,931 SHAREHOLDERS' EQUITY $ 762,360 $ 686,931
========= ========== ========== =========
UNIVERSAL FOREST PRODUCTS, INC.
PAGE 7
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2004/2003
(IN THOUSANDS) 2004 2003
- -------------- ---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 48,603 40,119
Adjustments to reconcile net earnings to net cash
from operating activities:
Depreciation 28,453 25,638
Amortization of intangibles 2,752 1,909
Deferred income taxes 790 1,746
Minority interest 2,994 1,348
Loss on sale of interest in subsidiary 193
Gain on insurance settlement (1,391)
(Gain) Loss on sale or impairment of property, plant and equipment (710) 1,050
Changes in:
Accounts receivable (16,107) (32,074)
Inventories (42,817) (3,555)
Accounts payable 7,371 23,476
Accrued liabilities and other 20,103 10,718
--------- ---------
NET CASH FROM OPERATING ACTIVITIES 50,234 70,375
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (40,935) (40,578)
Purchase of licensing agreement - (150)
Acquisitions, net of cash received (10,075) (787)
Sale of interest in subsidiary 4,679 -
Proceeds from sale of property, plant and equipment 5,226 6,221
Insurance proceeds 2,000 -
Other, net 1,636 3,882
--------- ---------
NET CASH FROM INVESTING ACTIVITIES (37,469) (31,412)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving credit facilities and notes payable 547 (29,657)
Repayment of long-term debt (6,392) (6,140)
Proceeds from issuance of common stock 2,861 1,281
Distributions to minority shareholder (1,123) (833)
Dividends paid to shareholders (1,796) (1,689)
Repurchase of common stock (129) (2,029)
Other, net 1,111 -
--------- ---------
NET CASH FROM FINANCING ACTIVITIES (4,921) (39,067)
--------- ---------
NET CHANGE IN CASH AND CASH EQUIVALENTS 7,844 (104)
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 17,430 17,534
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 25,274 $ 17,430
========= =========