GRAND RAPIDS, Mich. - Multi-billion dollar wood product giant Universal Forest Products (UFP) has acquired four companies since January of this year. Total annual sales of the combined firms are around $50 million.
The acquisitions, announced by UFP CEO Matthew Missad in a first-quarter earnings call with shareholders, are of various lumber and wood product firms. The primary goals for the acquisitions are to boost unit sales growth and enhance the bottom line, which Missad says have been negatively affected by weather-related shutdowns and a rising price of lumber.
Terms of all four deals were not disclosed.
Great Northern Lumber, an Illinois-based manufacturer of lumber and panel products; Spinner Wood Products, a Washington-based manufacturer of wood bins and pallets; Deer Park, an Australia-based industrial packaging manufacturer; and Fontana Wood Products, a California-based component maker for the housing industry, represent the acquired firms.
Each acquisition is geared to boost UFP's presence in each respective region: those being Chicago, Washington, California, and Australia.
The $4 billion Universal Forest Products is a public company that employs over 11,000 workers across 130 facilities throughout Asia, Australia, Europe, and North America.
The company announced record net earnings and net sales for the fourth quarter and full year 2017, even though the latest quarter and year that had one less operational week compared to 2016. (In 2016, that extra week accounted for over $60 million in net sales and over $2 million in operating profit.)
Net earnings attributable to controlling interest were $31.1 million, up 50 percent; changes to the corporate tax rate contributed $6.4 million while unit sales accounted for 5 percent of the growth, largely due to the acquisition of retail store interiors giant idX. Price increases accounted for almost 8 percent, as lumber prices rose. In 2017, average prices for framing lumber and southern yellow pine rose 20 percent and 7 percent, respectively, over 2016. But the timing of the rise didn't work in Universal Forest Products favor, says Missad, as prices fell during the peak selling times, reducing margins on certain products.
“The employees of Universal did a great job managing our business through a challenging lumber market that pressured margins for our products at different periods throughout the year,” said Missad.
“We experienced terrific growth with new products in 2017, making significant inroads in the retail market with new products such as our UFP-Edge profile lines and several product introductions in our Deckorators line,” Missad said.
For the year, new product sales grew 23.5 percent to $418.4 million, compared to $338.6 million in 2016. “Despite the challenges that remain in the lumber market, we are optimistic about our strategic initiatives for 2018 and beyond. To support those initiatives, we are investing a portion of the income we will save from the tax reform bill in capital expenditures.”
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