Universal Forest Products increases sales by 5% in 3Q 2010

Oct 14, 2010. /Lesprom Network/. Universal Forest Products announced 3Q of 2010 net sales of $480.6 million, compared to net sales of $457.8 million for the same period of 2009. Net earnings for the 3Q of 2010 were $2.6 million compared to net earnings of $10.1 million for the same period last year. The company grew sales in three of its four markets. Sales to industrial and manufactured housing customers increased 19.3% and 18.2%, respectively, during the quarter, while sales to site-built construction customers rose 1.6%. Only Do-It-Yourself/retail saw a sales decrease, of 7.7%, due to weak demand that resulted in slow retail sales. Net earnings were impeded by the spike in lumber costs, which occurred in the spring. While lumber prices stabilized during the 3Q of 2010, inventories were built earlier in the year - when lumber prices were up as much as 52% over the previous year - in preparation for a solid selling season, which didn’t materialize. At the end of June, the company’s inventory consisted primarily of higher-cost lumber, which adversely affected profits in the 3Q. The company has sold through this product, and by the end of the 3Q its inventories comprised lumber purchased at a much lower cost. “This was the most challenging lumber market I’ve seen in my 36 years with the company, and I’m proud of the way our people managed through it,” said CEO Michael B. Glenn. “Frankly, this type of market has the potential to wipe out an entire year’s profits for most companies that operate in our industries. Fortunately, our agility and diverse business model have allowed us to generate more than $17 million in net earnings for the year so far. With more than $58 million in cash and only $53 million in debt, we have the resources to take advantage of opportunities that arise. We remain in an enviable position in our markets.” The company expects the current challenging conditions to prevail through 2010, limiting its ability to provide meaningful guidance for ranges of likely financial performance; therefore, the company will not provide guidance for the foreseeable future. However, given the significant adverse impact of the lumber market mentioned earlier in this release, the company does not expect to achieve growth in net earnings in 2010, although it is optimistic about its performance in 2011 and beyond as the economy improves, given its strong financial position, solid business model and diverse business opportunities. Universal Forest Products, Inc. is a holding company that provides capital, management and administrative resources to subsidiaries that design, manufacture and market wood and wood-alternative products for DIY/retail home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for the site-built construction market, and specialty wood packaging and components and packing materials for various industries.