Universal Forest Products Inc. (UFPI) reported its financial results for the first quarter 2012 on April 18. Earnings per share in the quarter were 21 cents, a remarkable improvement from a loss of 19 cents reported in the year-ago comparable quarter. Results fared well compared with the Zacks Consensus Estimate of 3 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 18% year over year to $457.1 million. Demands were strong in all end markets, especially supported by favorable weather conditions. Each market reported high revenue growth in the quarter as discussed below:
Retail Building Materials revenue (43% of first quarter total gross sales) increased 12.3% year over year to $196.9 million. Residential Construction sales (11%) improved 8.6% to $51.9 million. Commercial Construction and Concrete Forming sales (4%) were $20.2 million, up 37.9% year over year.
Industrial sales (28%) were $132.3 million, up 20.9% year over year. Manufactured Housing and Recreation Vehicles sales (14%) were up 34.0% year over year to $63.0 million.
In the first quarter, Universal Forest’s cost of goods sold represented 88.3% of total revenue, down 100 basis points year over year while gross margin increased by the same magnitude to settle at 11.7%. Selling, general and administrative expenses were roughly $45.8 million and represented 10.0% of total revenue, a decrease of 200 basis points year over year.
Exiting the first quarter, Universal Forest’s cash and cash equivalents showed an overdraft balance of approximately $4.3 million compared with a positive balance of $11.3 million in the previous quarter. Long-term debt reached approximately $43.7 million versus $12.2 million at the end of the previous quarter.
Cash flow from operating activities in the quarter was ($44.6) million versus ($109.5) million in the first quarter of 2011. Capital spending hiked slightly to $7.9 million as compared with $6.3 million in the year-ago quarter.
Universal Forest, inspired by the first quarter results, is highly optimistic about seeing good demand growth in the second quarter of fiscal 2012.
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. (BXC), Builders FirstSource Inc. (BLDR), and Louisiana-Pacific Corp. (LPX).
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