EXHIBIT 99(a)
NEWS RELEASE
- -----AT THE COMPANY-----
Lynn Afendoulis
Director, Corporate Communications
616/365-1502
FOR IMMEDIATE RELEASE
MONDAY, FEBRUARY 6, 2006
UNIVERSAL FOREST PRODUCTS REPORTS POWERFUL 2005
NET EARNINGS INCREASE 87% FOR THE 4TH QUARTER; UP 39% FOR THE YEAR
Net sales up 22% for the 4th quarter and 10% for the year
Company reaches five-year targets in three years
GRAND RAPIDS, Mich., February 6, 2006 - Universal Forest Products, Inc. (Nasdaq:
UFPI) today announced a powerful fourth quarter that contributed to strong 2005
results and pushed the company to reach its five-year internal targets two years
early.
Fourth quarter net earnings were $16.2 million, an 87.0% increase over reported
results for the same period of 2004. Net earnings for the year were $67.4
million, up 38.6% over reported results for 2004.
Net sales for the quarter were $653.3 million, an increase of 21.9% over net
sales of $535.8 million for the fourth quarter of 2004. Net sales for the year
were $2.69 billion compared to 2004 net sales of $2.45 billion, a 9.7% increase.
The company attributed the strong results to a combination of factors, including
a continued strong housing market, demand for manufactured housing in the wake
of the year's devastating hurricanes, and increased market share. In addition,
the company realized operating cost efficiencies as a result of strong unit
sales volume.
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UNIVERSAL FOREST PRODUCTS, INC.
PAGE 2
"We don't often experience a fourth quarter as powerful as we just had, but a
number of things aligned to make that happen in 2005. It was an unusually strong
end to an already strong year," said William G. Currie, Universal's chief
executive officer and vice chairman. "Because of the healthy housing market and
our gains in the industrial market, we increased our earnings. We also managed
our costs through a focus on the basics - on doing what we do better - and on
the Innovation Program established by Universal President Mike Glenn. All of
that helped us deliver."
President and COO Mike Glenn also noted that the 2005 focus on under-performing
plants paid off with many posting strong results for the year.
"We hit on all cylinders last year," Glenn added. "Our people delivered and
served more and more customers, and our markets were strong. Our performance
continues to prove the strength of our business model and of our management
team. Our fourth-quarter market conditions in 2005 were unusually strong, and we
don't expect the same for 2006. We certainly don't want a repeat of the natural
disasters that contributed to the demand for manufactured housing last year."
Universal posted the following year-over-year sales results:
- For the year, D-I-Y retail sales increased 1.3% over 2004 to $1.0
billion. Fourth quarter sales to this market were up 11.2% from 2004;
- Site-built construction sales for 2005 of $744.1 million, up 17.9%
over annual sales for 2004. Fourth quarter sales increased 32.2% over
2004;
- Industrial sales for the year of $514.4 million, an increase of 13.3%
over 2004. Fourth quarter 2005 sales were up 20.7% over the same
period last year; and
- Manufactured housing sales for 2005 of $431.4 million, up 13.6% for
the year. Fourth quarter sales to this market were up 27.1% over 2004.
Universal's internal five-year sales goal was to hit $2.65 billion by 2007 (the
goal, set in 2002 when sales were $1.65 billion, was to add $1 billion in sales
in five years). The company also achieved its goal for improving its return on
invested capital.
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UNIVERSAL FOREST PRODUCTS, INC.
PAGE 3
OUTLOOK
The company anticipates continued growth in its business in 2006. Key
assumptions with respect to the company's 2006 outlook include:
- Modest increases in interest rates are mitigated by favorable
demographic trends and economic conditions resulting in a continued
strong site-built construction market, although not as strong as 2005.
- The continued need for manufactured and modular housing as the South
recovers from 2005's hurricanes and the growing trend among
manufactured housing producers to switch to modular housing.
- A stable D-I-Y retail market with opportunities for growth with
existing customers and increased opportunities for new products,
customers and market share through the Company's new Consumer Products
Division, which was announced in October 2005.
- Continued opportunities for market share gains in both the site-built
construction and industrial business.
- The completion of strategic business acquisitions.
- A stable lumber market.
With these factors in mind, the Company is targeting unit sales and net earnings
growth of 10% to 15 % each in 2006.
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 7, 2006. The conference call will be hosted by CEO William G. Currie
and will be available for analysts and institutional investors domestically at
(866) 700-6067 or internationally at (617) 213-8834. Use conference passcode
#80106148. The conference call will be available simultaneously and in its
entirety to all interested investors and news media through a web cast at
http://www.ufpi.com (click on Investor Relations).
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. The company also provides 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. The company has approximately 9,500 employees
who work in more than 100 locations. For information about Universal Forest
Products on the Internet, please visit the Company's web site at
http://www.ufpi.com, or call 888-Buy-UFPI.
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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.
FINANCIAL HIGHLIGHTS TO FOLLOW
UNIVERSAL FOREST PRODUCTS, INC.
PAGE 5
CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2005/2004
QUARTER PERIOD YEAR TO DATE
----------------------------------- ---------------------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) 2005 2004 2005 2004
---------------- ---------------- ------------------ ------------------
NET SALES $653,313 100% $535,754 100% $2,691,522 100% $2,453,281 100%
COST OF GOODS SOLD 561,590 85.96 472,475 88.19 2,332,266 86.65 2,157,028 87.92
-------- -------- ---------- ----------
GROSS PROFIT 91,723 14.04 63,279 11.81 359,256 13.35 296,253 12.08
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 62,418 9.55 46,981 8.77 235,651 8.76 201,335 8.21
GAIN ON INSURANCE SETTLEMENT -- 0.00 (1,391) -0.26 -- 0.00 (1,391) -0.06
-------- -------- ---------- ----------
EARNINGS FROM OPERATIONS 29,305 4.49 17,689 3.30 123,605 4.59 96,309 3.93
OTHER EXPENSE (INCOME)
INTEREST EXPENSE 3,416 0.52 3,591 0.67 15,171 0.56 14,904 0.61
INTEREST INCOME (452) -0.07 (60) -0.01 (1,098) -0.04 (284) -0.01
NET (GAIN) LOSS ON SALE OF REAL ESTATE AND
INTEREST IN SUBSIDIARY -- 0.00 (426) -0.08 (1,240) -0.05 (1,370) -0.06
-------- -------- ---------- ----------
2,964 0.45 3,105 0.58 12,833 0.48 13,250 0.54
-------- -------- ---------- ----------
EARNINGS BEFORE INCOME TAXES
AND MINORITY INTEREST 26,341 4.03 14,584 2.72 110,772 4.12 83,059 3.39
INCOME TAXES 9,045 1.38 5,912 1.10 41,050 1.53 31,462 1.28
-------- -------- ---------- ----------
EARNINGS BEFORE MINORITY INTEREST 17,296 2.65 8,672 1.62 69,722 2.59 51,597 2.10
MINORITY INTEREST (1,113) -0.17 (18) 0.00 (2,349) -0.09 (2,994) -0.12
-------- -------- ---------- ----------
NET EARNINGS $ 16,183 2.48 $ 8,654 1.62 $ 67,373 2.50 $ 48,603 1.98
======== ======== ========== ==========
EARNINGS PER SHARE - BASIC $ 0.87 $ 0.48 $ 3.67 $ 2.70
EARNINGS PER SHARE - DILUTED $ 0.84 $ 0.46 $ 3.53 $ 2.59
WEIGHTED AVERAGE SHARES
OUTSTANDING 18,510 18,112 18,374 18,032
WEIGHTED AVERAGE SHARES
OUTSTANDING WITH COMMON
STOCK EQUIVALENTS 19,267 18,964 19,106 18,771
SUPPLEMENTAL SALES DATA
QUARTER PERIOD YEAR TO DATE
------------------------------- -----------------------------------
MARKET CLASSIFICATION 2005 % 2004 % 2005 % 2004 %
- --------------------- ------- --- -------- --- ---------- --- ---------- ---
DO-IT-YOURSELF/RETAIL $198,382 30% $178,367 34% $1,001,620 37% $ 988,463 40%
SITE-BUILT CONSTRUCTION 199,987 31% 151,313 28% 744,113 28% 631,136 26%
MANUFACTURED HOUSING 123,802 19% 97,382 18% 431,382 16% 379,572 15%
INDUSTRIAL 131,142 20% 108,692 20% 514,407 19% 454,110 19%
-------- --- -------- --- ---------- --- ---------- ---
TOTAL $653,313 100% $535,754 100% $2,691,522 100% $2,453,281 100%
UNIVERSAL FOREST PRODUCTS, INC.
PAGE 6
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
DECEMBER 2005/2004
(IN THOUSANDS) 2005 2004
-------- --------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 46,215 $ 25,274
Accounts receivable 185,080 151,811
Inventories 253,769 212,921
Other current assets 17,114 16,477
-------- --------
TOTAL CURRENT ASSETS 502,178 406,483
OTHER ASSETS 7,887 7,952
INTANGIBLE ASSETS, NET 142,522 131,652
PROPERTY, PLANT AND EQUIPMENT, NET 224,333 216,273
-------- --------
TOTAL ASSETS $876,920 $762,360
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LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $203,693 $161,832
Current portion of long-term debt and
capital leases 458 22,033
-------- --------
TOTAL CURRENT LIABILITIES 204,151 183,865
LONG-TERM DEBT AND CAPITAL
LEASES, LESS CURRENT PORTION 209,039 185,109
OTHER LIABILITIES 31,878 36,617
SHAREHOLDERS' EQUITY 431,852 356,769
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $876,920 $762,360
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UNIVERSAL FOREST PRODUCTS, INC.
PAGE 7
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2005/2004
(IN THOUSANDS) 2005 2004
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 67,373 $ 48,603
Adjustments to reconcile net earnings to net cash
from operating activities:
Depreciation 31,311 28,453
Amortization of intangibles 3,485 2,383
Notes receivable written off to expense 816 --
Deferred income taxes (7,377) 790
Minority interest 2,349 2,994
Loss on sale of interest in subsidiary -- 193
Gain on insurance settlement -- (1,391)
Gain on sale of property, plant and equipment (553) (710)
Changes in:
Accounts receivable (28,742) (16,107)
Inventories (36,501) (42,817)
Accounts payable 16,998 7,371
Accrued liabilities and other 24,973 20,472
-------- --------
NET CASH FROM OPERATING ACTIVITIES 74,132 50,234
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment (40,233) (40,722)
Acquisitions, net of cash received (20,747) (10,075)
Sale of interest in subsidiary -- 4,679
Proceeds from sale of property, plant and equipment 2,712 5,226
Insurance proceeds 3,057 2,000
Other, net (198) 1,636
-------- --------
NET CASH FROM INVESTING ACTIVITIES (55,409) (37,256)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under revolving credit facilities 23,827 1,223
Repayment of long-term debt (23,407) (6,392)
Proceeds from issuance of common stock 4,487 2,860
Distributions to minority shareholders (1,217) (1,123)
Investment received from minority shareholder 500 --
Dividends paid to shareholders (1,922) (1,796)
Repurchase of common stock -- (129)
Other, net (50) 223
-------- --------
NET CASH FROM FINANCING ACTIVITIES 2,218 (5,134)
-------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 20,941 7,844
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 25,274 17,430
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 46,215 $ 25,274
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