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Universal Forest's Q2 Earnings Lag Estimates, Improve Y/Y - Analyst Blog

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.

Universal Forest Products, Inc - Quarterly EPS (BNRI) | FindTheBest

Revenue

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.

Margins

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.

Balance Sheet

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.

Cash Flow

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


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

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