Universal Forest Products Inc. UFPI reported better-than-expected results for first-quarter 2015. This marked the company’s third consecutive quarter of positive results. Following this news, the company’s shares gained 2.6% in after trading hours.
Earnings came in at 51 cents per share, above the Zacks Consensus Estimate of 43 cents. Also, the bottom line grew 41.7% from the year-ago tally of 36 cents per share. The year-over-year improvement was driven by healthy performance in all end-markets as well as a 14% increase in unit sales.
Revenue: Universal Forest Products generated revenues of $633 million in the quarter, increasing 14.3% year over year. Moreover, the top line surpassed the Zacks Consensus Estimate of $622 million.
Total gross sales (net sales including sales allowances) were $641.8 million, increasing 14.2% year over year.
Universal Forest Products classifies its revenue results under three end market-based segments, namely, Retail Building Materials, Industrial, and Housing and Construction. A brief snapshot of end-market sales has been provided below:
Retail Building Materials revenues (35.8% of first-quarter total gross sales) were up 14% year over year to $229.9 million. Industrial sales (32.9%) were recorded at $211.2 million, rising 23% year over year. Sales in the Housing and Construction end-market (31.3%) were $200.7 million, up 6% year over year.
Margins: Universal Forest Products’ cost of goods sold represented 87.4% of net sales in first-quarter 2015, down 70 basis points year over year; while gross margin increased by the same magnitude to 12.6%. Selling, general and administrative expenses stood at roughly $61.7 million, accounting for 9.7% of revenues.
Balance Sheet: Exiting first-quarter 2015, Universal Forest Products had cash and cash equivalents of $22.9 million as against a cash overdraft balance of $621 million. Long-term debt increased 89.7% sequentially to $187 million.
Cash Flow: Universal Forest Products used approximately $50.5 million of cash for its operating activities, an increase from $43.7 million utilized in the year-ago quarter. Capital spent on purchase of property, plant and equipment totaled $15.1 million, jumping 67.8% from the year-ago tally.
During the period, the company repurchased shares worth $78 million.
Outlook: For 2015, Universal Forest Products expects an improvement in the top line, backed by addition of new customers and products to its portfolio. Also, enhancement of operating margin remains a prime area of focus.
With a market capitalization of $1.1 billion, Universal Forest Products carries a Zacks Rank #2 (Buy). Other stocks worth considering in the sector include Comfort Systems USA Inc. FIX, Watsco Inc. WSO and Tile Shop Holdings, Inc. TTS. While Comfort Systems sports a Zacks Rank #1 (Strong Buy), Watsco and Tile Shop Holdings carry the same Zacks Rank as Universal Forest Products.
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