UFPI Buys Nepa Pallet Assets


As communicated in mid October 2012, one of Universal Forest Products, Inc’s (UFPI) operating companies, UFP Washington, LLC, completed the acquisition of the operating assets of Nepa Pallet and Container Co., Inc.

The acquisition was in accordance with the company’s expansionary policy — development of industrial business, entry into market without adding capacities and to grow through acquisitions. The acquired assets will broaden Universal Forest’s portfolio and help the company strengthen its foothold in the Northwest United States.

Nepa Pallet, with facilities in Snohomish, Yakima and Wenatchee, is a well known manufacturer of pallets, containers and bins for agricultural and industrial customers. Sales in the trailing twelve months were approximately $25 million.

This acquisition is Universal Forest’s second purchase in year 2012. Earlier, a subsidiary of the company had acquired some assets of Haleyville, Ala.-based MSR Forest Products, LLC. MSR Forest is a supplier of roof trusses and cut-to-size lumber to the region’s manufactured housing producers.

Recently, the company came out with its third quarter 2012 financial results. Earnings per share plummeted to 21 cents as compared with 29 cents reported a year-ago. Results also failed to surpass the Zacks Consensus Estimate of 38 cents per share. Revenue performance was strong with 13.7% year over year increase reported on the back of double-digit increases in four of five end markets.

The current Zacks Consensus Estimate for the fourth quarter 2012 is 3 cents while that for 2012 and 2013 are $1.22 and $1.83, respectively, reflecting year-over-year growth of 279.7% for 2012 and 50.3% for 2013.

Universal Forest Products Inc. manufactures, treats, distributes, and installs lumber, composite wood, plastic and other building products. We currently have an Underperform recommendation on Universal Forest while the stock also bears a Zacks #5 Rank, implying a short-term Strong Sell rating.

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