Back to top

Analyst Blog

Universal Forest Products Inc. (UFPI - Analyst Report) reported one of the finest first quarter results on Apr 17, 2013. The company rode high on the back of strong sales performance in its five market segments with a net income surging 25.7% over the year-ago earnings.

On a per share basis, earnings were at 26 cents, reflecting an increase of 24% over 21 cents reported in the year-ago quarter and way above the Zacks Consensus Estimate of one cent.

Revenue

Net sales in the first quarter were $554.5 million, up 21.3% year over year as Universal Forest benefitted from healthy growth in the lumber market that went up 42.9% year over year. Revenue results in all the end-markets were strong. Revenue detail of each market is discussed below:

Retail Building Materials revenue (37% of first quarter total gross sales) was up 4.9% year over year to $205.7 million. Residential Construction sales (13%) improved 43.4% to $74.3 million. Commercial Construction and Concrete Forming sales (5%) were $30.4 million, up 54.0% year over year. Industrial packaging/components sales (29%) were $160.5 million, up 2.5% year over year. Manufactured Housing sales (16%) were up 42.6% year over year to $89.9 million.

Margins

Cost of goods sold for Universal Forest represented 89.7% of total revenue in the first quarter 2013, up 140 basis points year over year while gross margin decreased by the same magnitude to settle at 10.3%. Selling, general and administrative expenses were roughly $48.2 million and accounted for 8.7% of total revenue.
 
Balance Sheet

During the first quarter 2013, cash position of Universal Forest weakened and after finally exiting the quarter, the company reported a cash overdraft balance of $7.7 million as against a positive cash balance of $14.5 million at the end of the previous quarter.
 
As far as the debt position was concerned, there was no respite as the long-term debt balance grew roughly 62% sequentially to $155.2 million.

Cash Flow

Net cash position from operating activities in the first quarter 2013 remained in a negative zone for Universal Forest. Cash outflow in the quarter amounted to roughly $64.6 million versus $44.8 million in the year-ago quarter.

Capital spending, on the other hand, reflected a slight year-over-year improvement of 2.9% and came in at $8.1 million.
 
Going forward, management of Universal Forest 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). Companies, other than Universal Forest, that are worth a mention in the industry are Louisiana-Pacific Corp. (LPX - Snapshot Report), Plum Creek Timber Co. Inc. (PCL - Analyst Report) and Potlatch Corporation (PCH - Snapshot Report), each holding a Zacks Rank #1 (Strong 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
UNITED THER… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%