Universal Forest Products Inc. (UFPI - Free Report) reported its financial results for the second quarter 2012 on July 19. Earnings per share in the quarter were 88 cents, a remarkable improvement from earnings of 22 cents reported in the year-ago quarter. Results also surpassed the Zacks Consensus Estimate of 71 cents per share earnings.
The results were driven by higher sales and increased operating efficiencies as well as cost control initiatives adopted by management.
Net sales in the quarter grew 9.1% year over year to $593.7 million. Demands were strong in most of the markets, chiefly supported by favorable weather conditions. Revenue detail of each market is discussed below:
Retail Building Materials revenue (46.5% of second quarter total gross sales) was down 2.3% year over year to $280.8 million. Residential Construction sales (10%) improved 6.3% to $60.2 million. Commercial Construction and Concrete Forming sales (4%) were $24.2 million, up 14.4% year over year.
Industrial sales (26%) were $158.3 million, up 25.3% year over year. Manufactured Housing sales (13%) were up 24.9% year over year to $80.7 million.
In the second quarter, Universal Forest’s cost of goods sold represented 87.9% of total revenue, down 170 basis points year over year while gross margin increased by the same magnitude to settle at 12.1%. Selling, general and administrative expenses were roughly $49.1 million and represented 8.3% of total revenue.
Exiting the second quarter, Universal Forest’s cash and cash equivalents were roughly $5.3 million as compared with an overdraft balance of approximately $4.3 million in the previous quarter. Long-term debt plummeted 25% to reach approximately $3.9 million in the quarter.
Cash flow from operating activities in the quarter was $24.9 million versus ($44.6) million versus $51.6 million in the second quarter of 2011. Capital spending hiked slightly to $7.9 million as compared with $5.9 million in the year-ago quarter.
Although Universal Forest is optimistic about a healthy financial performance in the quarter ahead; it remains concerned about the weak economic fundamentals prevailing in the United States.
Universal Forest Products Inc. manufacturers, treats, distributes, and installs lumber, composite wood, plastic and other building products. The company faces stiff competition from its peers like Bluelinx Holdings Inc. , Builders FirstSource Inc. (BLDR - Free Report) , and Louisiana-Pacific Corp. (LPX - Free Report) .