Universal Forest Beats Q3 Earnings Estimates - Analyst Blog

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Universal Forest Products Inc. ( UFPI ) reported impressive financial results for the third quarter 2013. The company posted earnings per share of 71 cents, more than triple the earnings of 21 cents per share reported in the year-ago quarter. Compared with the Zacks Consensus Estimate of 54 cents, earnings per share in the quarter grew 31.5%.

The company rode high on the back of double-digit revenue growth in its five market segments.

Revenue

Total gross sales of Universal Forest increased 22% year over year and came in at $660.7 million while sales, net of sales allowances, grew 22.2% to $651.8 million. Healthy performances at the company's five market segments were the result of this stellar top-line.

Universal Forest's end-market revenue has been briefed below:

Retail Building Materials revenues (37% of third quarter total gross sales) were up 21.6% year over year to $247.0 million. Residential Construction sales (14%) improved 29.3% to $89.7 million. Commercial Construction and Concrete Forming sales (6%) were $36.7 million, up 51.7% year over year. Industrial packaging/components sales (28%) were $187.3 million, up 20.8% year over year. Manufactured Housing sales (15%) were up 12.3% year over year to $100.0 million.

Margins

Universal Forest's cost of goods sold represented 88.0% of net sales in the third quarter 2013, down 160 basis points year over year while gross margin increased by the same magnitude to settle at 12.0%. Selling, general and administrative expenses were roughly $53.0 million and accounted for 8.1% of total revenue.

Balance Sheet

Cash position of Universal Forest was stronger than the previous quarter as the company reported cash and cash equivalents balance of $5.2 million at the end of the third quarter 2013 as compared with cash overdraft balance of $3.4 million in the previous quarter.

As far as the debt position was concerned, Universal Forest's long-term debt balance decreased 40.6% sequentially to $84.7 million.

Cash Flow

Net cash position from operating activities in the third quarter 2013 improved to $76.7 million as compared with $22.2 million in the year-ago comparable quarter. Universal Forest's capital spending in the quarter was $10.6 million, up compared with $6.4 million spend in the year-ago quarter.

Going forward, management of Universal Forest anticipates improving its top-line growth through addition of new customers and products to its portfolio. Also, operating margin enhancement remains a prime area of focus for the company.

Universal Forest Products Inc. manufactures, treats, distributes, and installs lumber, composite wood, plastic and other building products. The company currently has a market capitalization of $846 million.

The stock has a Zacks Rank #3 (Hold). Other stocks to watch out for in the industry are Boise Cascade Company ( BCC ) with a Zacks Rank #1 (Strong Buy), while Rayonier Inc. ( RYN ) and Armstrong World Industries, Inc. ( AWI ) each hold a Zacks Rank #2 (Buy).



ARMSTRONG WORLD (AWI): Free Stock Analysis Report

BOISE CASCADE (BCC): Free Stock Analysis Report

RAYONIER INC (RYN): Free Stock Analysis Report

UNIVL FST PRODS (UFPI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: AWI , BCC , RYN , UFPI

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