Universal Forest Products Inc. ( UFPI ) reported impressive results for second-quarter 2014, with earnings of $1.08 per share, up 36.7% year over year. The year-over-year improvement was driven by healthy performances in the industrial and retail businesses.
However, the results were negatively impacted by $1.6 million (or 5 cents per share) of anti-dumping duty assessment charges. Excluding the charge, adjusted earnings came in at $1.13 per share, lagging the Zacks Consensus Estimate of $1.32.
Total gross sales were $784.2 million, up 5% year over year. Excluding sales allowances, Universal Forest Products generated net sales of $772.8 million, up 4.6% year over year. Nevertheless, the top-line result fell short off the Zacks Consensus Estimate of $863 million.
Universal Forest Products classifies its revenue results under three end market-based segments, namely Retail Building Materials, Industrial, and Housing and Construction. A brief snapshot of end-market sales has been provided below.
Retail Building Materials revenues (44.5% of second-quarter total gross sales) were up 11% year over year to $349.1 million. Industrial sales (25.9%) were recorded at $203.5 million, up 5% year over year. Sales in the Housing and Construction end market (29.6%) were $231.6 million, down 4% year over year.
Universal Forest's cost of goods sold represented 87.4% of net sales in the second quarter, down 170 basis points (bps) year over year, while gross margin increased by the same magnitude to 12.6%. Selling, general and administrative expenses were roughly $59.0 million, accounting for 7.6% of revenues.
Exiting the quarter, Universal Forest Products had a cash overdraft balance of $13.7 million versus $12.2 million in the preceding quarter. Long-term debt decreased 33.7% sequentially to $95.1 million.
Universal Forest Products generated cash flow of $10.2 million from its operating activities, an improvement over $28.9 million used in the year-ago quarter. Capital spending was down 6.7% year over year to $20.1 million.
The company disbursed $4.2 million as dividends to its shareholders.
Going forward, Universal Forest Products anticipates improvement in top-line growth through addition of new customers and products to its portfolio. Also, operating margin enhancement remains a prime area of focus.
With a market capitalization of $921.2 million, Universal Forest Products carries a Zacks Rank #3 (Hold). Stocks to watch out for in the sector are Simpson Manufacturing Co., Inc. ( SSD ), Quanex Building Products Corp. ( NX ) and Martin Marietta Materials Inc. ( MLM ). While Simpson Manufacturing sports a Zacks Rank #1 (Strong Buy), Quanex Building Products and Martin Marietta Materials hold a Zacks Rank #2 (Buy).
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