GRAND RAPIDS, Mich. – Universal Forest Products, Inc. (Nasdaq: UFPI) today announced 2011 fourth-quarter results that included net sales of $422.0 million, up 11.4 percent over fourth-quarter 2010 net sales of $378.7 million. For the fourth quarter of 2011, the Company saw a loss of $1.7 million, or ($.09) per diluted share, compared to 2010 fourth-quarter earnings of $124,000, or $0.01 per diluted share.

Fourth-quarter earnings for 2011 were negatively impacted by $2.7 million and for 2010 by $0.5 million in noncash impairment charges for closed facilities. In addition, fourth-quarter 2010 results benefited from a $2.3 million noncash tax benefit associated with removing a valuation allowance against a deferred tax asset. Excluding the after-tax impact of these noncash adjustments in both periods, the Company had a profit of $26,000 in the fourth quarter of 2011 and a net loss of $1.8 million in the fourth quarter of 2010. (See table, “Reconciliation of Reported Net Earnings to Pro Forma Net Earnings”.)

Annual net sales for 2011 were $1.82 billion, down 3.6 percent from 2010 annual net sales of $1.89 billion. Annual net earnings for 2011 were $0.23 per diluted share compared with annual net earnings of $0.89 per diluted share for 2010.

“We are encouraged by the sales growth in the fourth quarter as well as the impact of our cost reductions on our bottom line,” said CEO Matthew J. Missad. “I’m very proud of the way our people climbed out of the hole we were in after the first six months of the year. The results from our continuing operations trended much better in the fourth quarter.”

“Our balance sheet remains very strong,” Missad added. “We have the business model we need for growth and a strong capital structure to fund our growth. Most importantly, our people are energized and eager to achieve our goals.”

The Company’s results also were impacted by an additional week in the reporting period and the year (a 14-week fourth quarter and 53-week year in 2011, compared to a 13-week fourth quarter and 52-week year in 2010). This additional week saw $16 million in sales (which, due to seasonal factors and three holiday non-work days in the week is less than half the average weekly sales volume for the year), and an estimated net loss of $1.5 million, due to the low sales volume from the shortened work week.

By market, the Company posted the following 2011 fourth-quarter gross sales results:

Retail building materials: $165.3 million, an increase of 7.7 percent over the same period of 2010.

Universal continued to execute on strategies to diversify by adding more independent retail customers, to provide a broader mix of products to big box and independent retailers alike, and to focus on profitable business opportunities.

Industrial packaging/components: $128.6 million, up 22.4 percent over the fourth quarter of 2010.

The Company grew sales at a time when industrial production in the United States rose at an annual rate of 3.1 percent (fourth quarter 2011 over fourth quarter 2010). The Company continues to focus on adding customers and products, on expanding its reach into non-wood packaging materials and on providing complete packaging solutions.

Manufactured housing: $67.3 million, an increase of 35.1 percent over the same period of 2010.

Unit sales to this market increased due to a rise in industry production of HUD-code homes related to orders from FEMA and strong demand for temporary housing in some areas of the country related to shale oil and gas development. In addition, Universal’s distribution business continued to add product lines and expand share. Shipments of HUD-code homes in October 2011 and November 2011 were up 41.5 percent and 53.1 percent, respectively, compared to the same months of 2010.

Residential construction: $46.6 million, down 19.2 percent from the same period of 2010.

The Company saw a unit sales decline of approximately 21 percent in the fourth quarter of 2011 from the same period of 2010, due primarily to plant closures and to the Company’s focus on doing its best to accept only business that will enhance its results and bottom line. Total housing starts were up 17.9 percent September to November 2011 compared to the same period of 2010, including a 2.1 percent decrease in single-family starts and an increase of 88.3 percent in multifamily starts.

Commercial construction and concrete forming: $20.9 million, an increase of 16.8 percent over 2010.

The Company has expanded its sales reach and market penetration and has had new success with designed component offerings. Universal continues to see opportunities in the concrete forming business, in which it manufactures and/or supplies forms and other materials for concrete construction projects. This highly fragmented market capitalizes on Universal’s engineering and manufacturing capabilities and nationwide presence.

RECONCILIATION OF REPORTED NET EARNINGS TO PRO FORMA NET EARNINGS

 

 

Quarter Period

(In thousands)

 

2011

 

2010

Net earnings (loss) attributable to controlling interest

 

$(1,674)

$124

 

Noncash adjustments:
Impairment charges, net of tax benefit

 

1,700

350

Change in deferred tax asset valuation allowance

 

(2,300)

 

Pro forma net earnings (loss) attributable to controlling interest

 

$26

$(1,826)

OUTLOOK

The Company believes continued challenging economic conditions and uncertainties in the housing market limit its ability to provide meaningful guidance for ranges of likely financial performance; therefore, the Company will not resume the practice of providing guidance in the foreseeable future.

Source: Universal Forest Products Inc.

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