Back to top

Analyst Blog

Universal Forest Products Inc’s (UFPI - Analyst Report) fourth quarter 2012 financial results were disappointing as the company reported a net loss of 10 cents per share compared with a loss of 9 cents reported in the year-ago quarter. The results were far below the Zacks Consensus Estimate of 2 cents per share earnings.

For 2012, the company reported net earnings of $1.21 per share, up from 23 cents in 2011 and the Zacks Consensus Estimate of $1.20.

Revenue

Net sales in the fourth quarter were $470.8 million, up 11.5% year over year due to a healthy growth witnessed in the lumber market, which helped overcome a 2% decline in unit sales. Revenue results in end-markets were strong, except for a 3.5% decline experienced in the Retail Building Materials market. Revenue detail of each market is discussed below:

Retail Building Materials revenue (33% of fourth quarter total gross sales) was down 3.5% year over year to $159.5 million. Residential Construction sales (16%) improved     60.5% to $74.6 million. Commercial Construction and Concrete Forming sales (5%) were $22.1 million, up 4.6% year over year.

Industrial packaging/components sales (29%) were $139.2 million, up 8.3% year over year. Manufactured Housing sales (17%) were up 20.9% year over year to $81.3 million.

For 2012, revenue came in at $2,054.9 million, up 12.8% year over year.

Margins

In the fourth quarter, Universal Forest’s cost of goods sold represented 90.6% of total revenue, up 180 basis points year over year while gross margin decreased by the same magnitude to settle at 9.4%. Selling, general and administrative expenses were roughly $44.8 million and accounted for 9.5% of total revenue.
 
Balance Sheet

Universal Forest’s cash and cash equivalents roughly tripled sequentially to $14.5 million exiting the fourth quarter of 2012 as against $4.9 million in the previous quarter. Long-term debt balance came in at $95.8 million versus $16.7 million reported in the sequential quarter as debt borrowings far exceeded repayments during the quarter.

Cash Flow

In 2012, cash flow from operating activities entered a negative zone and stood at ($5.7) million versus $11.5 million in 2011. Capital spending also slipped, though by 7.9% year over year, to $30.3 million.
 
Going forward, management anticipates improving its top-line growth through additions of new customers and products to its portfolio. Also, operating margin enhancement remains a prime area of focus for the company.

Universal Forest Products Inc. manufactures, treats, distributes, and installs lumber, composite wood, plastic and other building products.

The stock currently has a Zacks Rank #3 (Hold). Other stocks to watch out for in the industry are Louisiana-Pacific Corp. (LPX - Snapshot Report) with a Zacks Rank #1 (Strong Buy) while Builders FirstSource, Inc. (BLDR - Snapshot Report) and Lowe's Companies Inc. (LOW - Analyst Report), each has a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%