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UFPI Closes Custom Caseworks Acq.

UFPI LPX

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With the onset of year 2013, Universal Forest Products, Inc. (UFPI - Analyst Report) announced to have successfully completed the acquisition of all the assets of Custom Caseworks, Inc. The deal was initially announced in December, 2012.

Custom Caseworks specializes in the manufacturing of point-of-purchase and commercial store fixtures, commercial casework and office furniture, laminated and painted wood panels, and OEM-manufactured and private label products. The addition of Custom’s assets will strengthen Universal Forest Products’ industrial business through new product offerings.

Though the financial terms of the acquisition is not known for certain, the company in its previous press release did announce that it will use the proceeds raised from issuance of $75 million worth of notes to fund the acquisition.

Prior to Custom Caseworks, Universal forest purchased assets of Nepa Pallet and Container Co. Both these acquisitions were in accordance with the company’s expansionary policy which entails development of industrial business, entry into market without adding capacities and constant spreading out through acquisitions.

Universal Forest Products Inc. manufactures, treats, distributes, and installs lumber, composite wood, plastic and other building products. The current Zacks Consensus Estimate for the fourth quarter 2012 is 2 cents while that for 2012 and 2013 are $1.20 and $1.81, respectively, reflecting year-over-year growth of 273.4% for 2012 and 51.5% for 2013.

We currently have an Underperform recommendation on Universal Forest while the stock also bears a Zacks #4 Rank, implying a short-term Sell rating. The company competes with other major players in the industry, Bluelinx Holdings Inc. and Louisiana-Pacific Corp. (LPX - Snapshot Report), among others.

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