Universal Forest's Q4 Earnings Beat Ests - Analyst Blog
Universal Forest Products Inc 's ( UFPI ) results for fourth-quarter 2013 were impressive as the company reported earnings per share of 40 cents, a remarkable improvement over loss of 10 cents recorded in the year-ago quarter. The bottom-line result also surpassed the Zacks Consensus Estimate of 18 cents. Results were driven by improvement in the housing and construction markets, benefits from new product introduction and strong industrial activities.
For 2013, Universal Forest Products reported earnings per share of $2.15, up 77.7% from $1.21 earned in 2012 and also above the Zacks Consensus Estimate of $1.95.
Universal Forest Products recorded total gross sales of $532.7 million in the fourth quarter of 2013, an increase of 12% over the year-ago quarter. Excluding sales allowances, net sales in the quarter were $525.7 million, up 11.7% year-over-year due primarily to healthy performances at the company's five market segments. Unit sales increased 5% while selling prices were up by 7%.
However, the top-line result was below the Zacks Consensus Estimate of $532 million.
Starting fourth-quarter 2013, Universal Forest Products has slightly changed its end-market sales representation. A brief snapshot of the end-market sales has been provided below.
Retail Building Materials revenues (31.7% of fourth-quarter total gross sales) were up 7% year over year to $168.8 million. Industrial sales (30.1%) were $160.6 million, up 14.0% year over year.
Universal Forest Products now groups its Residential Construction, Commercial Construction and Concrete Forming and Manufactured Housing sales under a broader head of Housing and Construction. Gross sales in the Housing and Construction end market (38.2%) was $203.3 million, up 14.5% year over year. Sales details of individual end markets are provided below:
Residential Construction sales (15.4%) improved 10% to $82.0 million. Commercial Construction and Concrete Forming sales (6.0%) were $32.0 million, up 47.0% year over year. Manufactured Housing sales (16.8%) were up 10.0% year over year to $89.4 million.
In 2013, net sales were $2,470.4 million, up 20.2% year over year but below the Zacks Consensus Estimate of $2,477 million. New product sales in 2013 were $85 million.
Universal Forest's cost of goods sold represented 87.8% of net sales in fourth-quarter 2013, down 280 basis points year over year while gross margin increased by the same magnitude to settle at 12.2%. Selling, general and administrative expenses were roughly $50.0 million and accounted for 9.5% of revenue.
Exiting fourth-quarter 2013, Universal Forest Products had a cash overdraft balance of $1.1 million, compared with cash and cash equivalents balance of $5.2 million at the end of the previous quarter. Long-term debt position of the company remained stable sequentially at $84.7 million.
Universal Forest Products generated net cash flow of $53.4 million in 2013 compared with cash used for operating activities of $5.7 million. Capital spending increased by 31.9% year over year to $40.0 million.
Going forward, management of Universal Forest Products anticipates improvement in its top-line growth through addition of new customers and products to its portfolio. By 2017, the company targets to achieve $3 billion in sales. Also, operating margin enhancement remains a prime area of focus.
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 $991.4 million and carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Potlatch Corporation ( PCH ), Weyerhaeuser Co. ( WY ) and USG Corporation ( USG ), all of which hold a Zacks Rank #2 (Buy).