GRAND RAPIDS, Mich. -- Universal Forest Products, Inc. (Nasdaq:UFPI) 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 CEO Matthew J. 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.”
By market, the Universal Forest Products reported the following 2017 results:
Retail: Fourth Quarter: $330.6 million in gross sales, up 20 percent over the fourth quarter of 2016. Unit sales contributed 13 percent of the growth; price increases accounted for 7 percent. Acquisitions accounted for 10 percent of the increase.
Full Year: $1.49 billion in gross sales, up 15 percent over 2016, led by a 10 percent increase in unit sales and a 5 percent increase in selling prices. Acquisitions contributed 7 percent of the sales growth. Sales to this market were affected by a record hurricane season, which resulted in a temporary increase in sales of low-margin commodity products.
Construction: Fourth Quarter: $305.8 million in gross sales, up 10 percent over the fourth quarter of 2016, mostly due to price increases as a result of the lumber market. Unit sales to manufactured housing customers grew 4 percent during the period, while sales to residential and commercial construction customers fell 2 percent and 3 percent, respectively. Residential construction sales were likely affected by project delays associated with higher lumber prices.
Full Year: $1.18 billion in gross sales, up 16 percent over the previous year, driven by a 7 percent increase in unit sales and a 9 percent increase in prices. Residential construction unit sales grew 7 percent, and unit sales to manufactured housing customers rose 9 percent over 2016.
Fourth Quarter: $345.1 million in gross sales, up 9 percent over the fourth quarter of 2016; price increases accounted for 7 percent of the growth while unit increases accounted for 2 percent.
Full Year: $1.33 billion in gross sales, up 35 percent over the previous year. Unit sales increased 29 percent, primarily due to the Company’s acquisition of idX Corporation in September of 2016.
For more about Universal Forest Products, go to www.ufpi.com.
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