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).