ufpi_Current_Folio_10Q

Table of Contents

 

 

 

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2018

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0‑22684

UNIVERSAL FOREST PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

 

 

 

Michigan

    

38‑1465835

 

 

(State or other jurisdiction of incorporation or

 

(I.R.S. Employer Identification Number)

 

 

organization)

 

 

 

 

 

 

 

 

 

2801 East Beltline NE, Grand Rapids, Michigan

 

49525

 

 

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code (616) 364‑6161

 

 

 

 

NONE

 

 

(Former name or former address, if changed since last report.)

 

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  No

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

 

 

 

 

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller reporting company  

 

 

 

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with an new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b‑2 of the Exchange Act). Yes    No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

 

 

 

 

 

 

Class

    

Outstanding as of June 30, 2018

 

 

Common stock, $1 par value

 

61,632,401

 

 

 

 

 

 

 


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

TABLE OF CONTENTS

PART I.

 

FINANCIAL INFORMATION.

Page No.

 

 

 

 

 

Item 1.

Financial Statements

 

 

 

 

 

 

 

Consolidated Condensed Balance Sheets at June 30, 2018, December 30, 2017 and July 1, 2017

3

 

 

 

 

 

 

Consolidated Condensed Statements of Earnings and Comprehensive Income for the Three Months Ended and Six Months Ended June 30, 2018 and July 1, 2017

4

 

 

 

 

 

 

Consolidated Condensed Statements of Shareholders’ Equity for the Three Months Ended and Six Months Ended June 30, 2018 and July 1, 2017

5

 

 

 

 

 

 

Consolidated Condensed Statements of Cash Flows for the Six Months Ended June 30, 2018 and July 1, 2017

6

 

 

 

 

 

 

Notes to Unaudited Consolidated Condensed Financial Statements

7

 

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

17

 

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

29

 

 

 

 

 

Item 4.

Controls and Procedures

30

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

Item 1.

Legal Proceedings – NONE

 

 

 

 

 

 

Item 1A.

Risk Factors 

31

 

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

31

 

 

 

 

 

Item 3.

Defaults upon Senior Securities – NONE

 

 

 

 

 

 

Item 4.

Mine Safety Disclosures – NONE

 

 

 

 

 

 

Item 5.

Other Information – NONE

31

 

 

 

 

 

Item 6.

Exhibits

32

 

 

 

2


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share data)

 

 

 

 

 

 

 

 

 

June 30,

 

December 30,

 

July 1,

 

 

    

2018

    

2017

    

2017

 

ASSETS

 

 

 

  

 

 

  

 

 

 

CURRENT ASSETS:

 

 

 

  

 

 

  

 

 

 

Cash and cash equivalents

 

$

27,501

    

$

28,339

  

$

24,625

 

Restricted cash

 

 

16,758

 

 

477

  

 

905

 

Investments

 

 

14,493

 

 

11,269

  

 

10,401

 

Accounts receivable, net

 

 

489,145

 

 

327,751

  

 

398,529

 

Inventories:

 

 

 

  

 

 

  

 

 

 

Raw materials

 

 

272,765

 

 

234,354

  

 

218,356

 

Finished goods

 

 

259,109

 

 

225,954

  

 

220,079

 

Total inventories

 

 

531,874

 

 

460,308

  

 

438,435

 

Refundable income taxes

 

 

2,396

 

 

7,228

  

 

 —

 

Other current assets

 

 

30,464

 

 

28,115

  

 

21,970

 

TOTAL CURRENT ASSETS

 

 

1,112,631

 

 

863,487

 

 

894,865

 

DEFERRED INCOME TAXES

 

 

2,235

 

 

1,865

  

 

1,981

 

RESTRICTED INVESTMENTS

 

 

10,950

 

 

8,359

  

 

7,911

 

OTHER ASSETS

 

 

7,081

 

 

7,368

  

 

7,842

 

GOODWILL

 

 

219,595

 

 

212,644

  

 

213,597

 

INDEFINITE-LIVED INTANGIBLE ASSETS

 

 

7,384

 

 

7,415

  

 

2,340

 

OTHER INTANGIBLE ASSETS, NET

 

 

36,045

 

 

34,910

  

 

37,547

 

PROPERTY, PLANT AND EQUIPMENT:

 

 

 

  

 

 

  

 

 

 

  Property, plant and equipment

 

 

791,348

 

 

763,101

 

 

735,474

 

Less accumulated depreciation and amortization

 

 

(450,650)

 

 

(434,472)

  

 

(419,518)

 

       PROPERTY, PLANT AND EQUIPMENT, NET

 

 

340,698

 

 

328,629

 

 

315,956

 

TOTAL ASSETS

 

 

1,736,619

 

 

1,464,677

 

 

1,482,039

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

  

 

 

  

 

 

 

CURRENT LIABILITIES:

 

 

 

  

 

 

  

 

 

 

Cash overdraft

 

$

33,608

 

$

25,851

  

$

22,769

 

Accounts payable

 

 

197,408

 

 

140,106

  

 

160,250

 

Accrued liabilities:

 

 

 

  

 

 

  

 

 

 

Compensation and benefits

 

 

88,771

 

 

97,556

  

 

77,187

 

Income taxes

 

 

 —

 

 

 —

 

 

960

 

Other

 

 

50,038

 

 

38,404

  

 

48,063

 

Current portion of long-term debt

 

 

542

 

 

1,329

  

 

2,378

 

TOTAL CURRENT LIABILITIES

 

 

370,367

 

 

303,246

  

 

311,607

 

LONG-TERM DEBT

 

 

276,274

 

 

144,674

  

 

204,752

 

DEFERRED INCOME TAXES

 

 

13,856

 

 

14,079

  

 

20,360

 

OTHER LIABILITIES

 

 

28,399

 

 

28,655

  

 

28,959

 

TOTAL LIABILITIES

 

 

688,896

 

 

490,654

  

 

565,678

 

SHAREHOLDERS’ EQUITY:

 

 

 

  

 

 

  

 

 

 

Controlling interest shareholders’ equity:

 

 

 

  

 

 

  

 

 

 

Preferred stock, no par value; shares authorized 1,000,000; issued and outstanding, none

 

$

 —

 

$

 —

  

$

 —

 

Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding, 61,632,401, 61,191,888 and 61,265,325

 

 

61,632

 

 

61,192

  

 

61,266

 

Additional paid-in capital

 

 

174,749

 

 

161,928

  

 

158,248

 

Retained earnings

 

 

800,237

 

 

736,212

  

 

684,808

 

Accumulated other comprehensive income

 

 

(4,077)

 

 

144

  

 

(2,590)

 

Total controlling interest shareholders’ equity

 

 

1,032,541

 

 

959,476

  

 

901,732

 

Noncontrolling interest

 

 

15,182

 

 

14,547

  

 

14,629

 

TOTAL SHAREHOLDERS’ EQUITY

 

 

1,047,723

 

 

974,023

  

 

916,361

 

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

$

1,736,619

 

$

1,464,677

  

$

1,482,039

 

 

See notes to consolidated condensed financial statements.

3


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

AND COMPREHENSIVE INCOME

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

July 1,

 

June 30,

 

July 1,

 

 

    

2018

    

2017

    

2018

    

2017

    

NET SALES

 

$

1,294,440

    

$

1,072,375

  

$

2,288,297

    

$

1,918,505

    

COST OF GOODS SOLD

 

 

1,128,751

 

 

924,135

  

 

1,991,719

 

 

1,649,526

 

GROSS PROFIT

 

 

165,689

 

 

148,240

  

 

296,578

 

 

268,979

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

 

104,595

 

 

94,605

  

 

197,800

 

 

181,587

 

NET LOSS (GAIN) ON DISPOSITION OF ASSETS AND IMPAIRMENT OF ASSETS

 

 

477

 

 

(264)

 

 

(6,057)

 

 

(328)

 

EARNINGS FROM OPERATIONS

 

 

60,617

 

 

53,899

  

 

104,835

 

 

87,720

 

INTEREST EXPENSE

 

 

2,248

 

 

1,840

  

 

4,025

 

 

3,343

 

INTEREST AND INVESTMENT INCOME

 

 

(181)

 

 

(329)

  

 

(898)

 

 

(411)

 

EQUITY IN EARNINGS OF INVESTEE

 

 

 —

 

 

(21)

  

 

 —

 

 

(26)

 

 

 

 

2,067

 

 

1,490

  

 

3,127

 

 

2,906

 

EARNINGS BEFORE INCOME TAXES

 

 

58,550

 

 

52,409

  

 

101,708

 

 

84,814

 

INCOME TAXES

 

 

13,420

 

 

17,835

  

 

22,994

 

 

28,605

 

NET EARNINGS

 

 

45,130

 

 

34,574

  

 

78,714

 

 

56,209

 

LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

 

(1,086)

 

 

(932)

  

 

(1,836)

 

 

(1,505)

 

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST

 

$

44,044

 

$

33,642

  

$

76,878

 

$

54,704

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EARNINGS PER SHARE - BASIC

 

$

0.71

 

$

0.55

  

$

1.24

 

$

0.89

 

EARNINGS PER SHARE - DILUTED

 

$

0.71

 

$

0.55

  

$

1.24

 

$

0.89

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME:

 

 

 

 

 

 

 

 

 

 

 

 

 

NET EARNINGS

 

 

45,130

 

 

34,574

  

 

78,714

 

 

56,209

 

OTHER COMPREHENSIVE GAIN (LOSS)

 

 

(3,905)

 

 

1,387

  

 

(4,344)

 

 

4,422

 

COMPREHENSIVE INCOME

 

 

41,225

 

 

35,961

  

 

74,370

 

 

60,631

 

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

 

(119)

 

 

(1,460)

  

 

(1,713)

 

 

(2,887)

 

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

 

$

41,106

 

$

34,501

  

$

72,657

 

$

57,744

 

 

See notes to consolidated condensed financial statements.

4


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except share and per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Controlling Interest Shareholders’ Equity

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

 

 

 

Additional

 

 

 

 

Other

 

 

 

 

 

 

 

 

Common

 

Paid-In

 

Retained

 

Comprehensive

 

Noncontrolling

 

 

 

 

    

Stock

    

Capital

    

Earnings

    

Earnings

    

Interest

    

Total

Balance at December 31, 2016

 

$

61,026

 

$

144,649

  

$

649,135

 

$

(5,630)

  

$

11,286

  

$

860,466

Net earnings

 

 

 

  

 

 

  

 

54,704

 

 

  

 

 

1,505

  

 

56,209

Foreign currency translation adjustment

 

 

 

  

 

 

  

 

 

  

 

2,817

 

 

1,382

  

 

4,199

Unrealized gain (loss) on investment & foreign currency

 

 

 

  

 

 

  

 

 

  

 

223

 

 

  

 

 

223

Distributions to noncontrolling interest

 

 

 

  

 

 

  

 

 

  

 

 

  

 

(1,953)

 

 

(1,953)

Additional purchases of noncontrolling interest

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2,409

 

 

2,409

Cash dividends - $0.150 per share

 

 

 

 

 

 

 

 

(9,208)

 

 

 

 

 

 

 

 

(9,208)

Issuance of 12,699 shares under employee stock plans

 

 

13

 

 

319

  

 

 

  

 

 

  

 

 

  

 

332

Issuance of 426,435 shares under stock grant programs

 

 

426

 

 

6,784

  

 

 

  

 

 

  

 

 

  

 

7,210

Issuance of 132,624 shares under deferred compensation plans

 

 

133

 

 

(133)

  

 

 

  

 

 

  

 

 

  

 

 —

Repurchase of 332,640 shares

 

 

(332)

 

 

221

 

 

(9,823)

  

 

 

  

 

  

 

 

(9,934)

Tax benefits from non-qualified stock options exercised

 

 

 

  

 

 —

 

 

  

 

 

  

 

 

  

 

 

 —

Expense associated with share-based compensation arrangements

 

 

 

  

 

1,282

 

 

  

 

 

  

 

 

  

 

 

1,282

Accrued expense under deferred compensation plans

 

 

 

  

 

5,126

 

  

  

 

  

  

 

  

  

 

  

5,126

Balance at July 1, 2017

 

$

61,266

 

$

158,248

  

$

684,808

 

$

(2,590)

  

$

14,629

  

$

916,361

Balance at December 30, 2017

 

 

61,192

 

 

161,928

 

 

736,212

 

 

144

 

 

14,547

 

 

974,023

Net earnings

 

 

 

  

 

 

  

 

76,878

 

 

  

 

 

1,836

  

 

78,714

Foreign currency translation adjustment

 

 

 

  

 

 

  

 

 

  

 

(3,669)

 

 

(123)

  

 

(3,792)

Unrealized gain (loss) on investment & foreign currency

 

 

 

  

 

 

  

 

 

  

 

(552)

 

 

  

 

 

(552)

Distributions to noncontrolling interest

 

 

 

  

 

 

  

 

 

  

 

 

  

 

(1,078)

 

 

(1,078)

Cash dividends - $0.180 per share

 

 

 

  

 

 

  

 

(11,090)

 

 

  

 

 

  

 

 

(11,090)

Issuance of 16,917 shares under employee stock plans

 

 

17

 

 

483

  

 

 

  

 

 

  

 

 

  

 

500

Issuance of 346,777 shares under stock grant programs

 

 

347

 

 

4,990

  

 

 

  

 

 

  

 

 

  

 

5,337

Issuance of 132,603 shares under deferred compensation plans

 

 

132

 

 

(132)

  

 

 

  

 

 

  

 

 

  

 

 —

Repurchase of 55,784 shares

 

 

(56)

 

 

 

 

 

(1,763)

 

 

 

 

 

 

 

 

(1,819)

Expense associated with share-based compensation arrangements

 

 

 

  

 

1,817

 

 

  

 

 

  

 

 

  

 

 

1,817

Accrued expense under deferred compensation plans

 

 

 

  

 

5,663

 

 

  

 

 

  

 

 

  

 

 

5,663

Balance at June 30, 2018

 

$

61,632

 

$

174,749

  

$

800,237

 

$

(4,077)

  

$

15,182

  

$

1,047,723

 

See notes to consolidated condensed financial statements.

5


 

Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

 

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

 

 

 

 

 

 

(in thousands)

 

Six Months Ended

 

 

 

June 30,

 

July 1,

 

 

    

2018

    

2017

    

CASH FLOWS FROM OPERATING ACTIVITIES:

 

 

 

  

 

 

 

Net earnings

 

$

78,714

    

$

56,209

 

Adjustments to reconcile net earnings to net cash from operating activities:

 

 

 

  

 

 

 

Depreciation

 

 

26,144

 

 

23,248

 

Amortization of intangibles

 

 

2,702

 

 

2,377

 

Expense associated with share-based and grant compensation arrangements

 

 

1,924

 

 

1,381

 

Deferred income taxes (credits)

 

 

(565)

 

 

355

 

Equity in earnings of investee

 

 

 —

 

 

(26)

 

Net gain on disposition of assets

 

 

(6,057)

 

 

(328)

 

Changes in:

 

 

 

  

 

 

 

Accounts receivable

 

 

(155,666)

 

 

(101,239)

 

Inventories

 

 

(61,828)

 

 

(26,979)

 

Accounts payable and cash overdraft

 

 

62,665

 

 

38,146

 

Accrued liabilities and other

 

 

15,895

 

 

22,067

 

NET CASH USED IN OPERATING ACTIVITIES

 

 

(36,072)

 

 

15,211

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

  

 

 

 

Purchases of property, plant and equipment

 

 

(54,313)

 

 

(34,549)

 

Proceeds from sale of property, plant and equipment

 

 

36,724

 

 

1,039

 

Acquisitions, net of cash received

 

 

(37,960)

 

 

(59,658)

 

Purchases of investments

 

 

(9,348)

 

 

(15,118)

 

Proceeds from sale of investments

 

 

3,180

 

 

7,247

 

Other

 

 

(1,352)

 

 

1,152

 

NET CASH FROM (USED IN) INVESTING ACTIVITIES

 

 

(63,069)

 

 

(99,887)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

  

 

 

 

Borrowings under revolving credit facilities

 

 

488,853

 

 

444,601

 

Repayments under revolving credit facilities

 

 

(431,657)

 

 

(349,311)

 

Borrowings of debt

 

 

1,639

 

 

 —

 

Repayment of debt

 

 

(5,437)

 

 

 —

 

Issuance of long-term debt

 

 

75,000

 

 

 —

 

Proceeds from issuance of common stock

 

 

500

 

 

331

 

Dividends paid to shareholders

 

 

(11,090)

 

 

(9,207)

 

Distributions to noncontrolling interest

 

 

(1,078)

 

 

(1,953)

 

Repurchase of common stock

 

 

(1,819)

 

 

(9,934)

 

Other

 

 

(71)

 

 

(6)

 

NET CASH FROM FINANCING ACTIVITIES

 

 

114,840

 

 

74,521

 

Effect of exchange rate changes on cash

 

 

(256)

 

 

1,196

 

NET CHANGE IN CASH AND CASH EQUIVALENTS

 

 

15,443

 

 

(8,959)

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR

 

 

28,816

 

 

34,489

 

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD

 

$

44,259

 

$

25,530

 

 

 

 

 

 

 

 

 

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:

 

 

 

 

 

 

 

Cash and cash equivalents, beginning of period

 

$

28,339

 

$

34,091

 

Restricted cash, beginning of period

 

 

477

 

 

398

 

Cash, cash equivalents, and restricted cash, beginning of period

 

$

28,816

 

$

34,489

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

27,501

 

$

24,625

 

Restricted cash, end of period

 

 

16,758

 

 

905

 

Cash, cash equivalents, and restricted cash, end of period

 

$

44,259

 

$

25,530

 

 

 

 

 

 

 

 

 

SUPPLEMENTAL INFORMATION:

 

 

 

  

 

 

 

Interest paid

 

$

3,889

 

$

3,049

 

Income taxes paid

 

 

18,745

 

 

15,895

 

NON-CASH FINANCING ACTIVITIES:

 

 

 

 

 

 

 

Common stock issued under deferred compensation plans

 

 

4,779

 

 

4,231

 

See notes to consolidated condensed financial statements.

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UNIVERSAL FOREST PRODUCTS, INC.

 

 

NOTES TO UNAUDITED

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

A.       BASIS OF PRESENTATION

The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all of the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. All intercompany transactions and balances have been eliminated.

In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10‑K for the fiscal year ended December 30, 2017.

Seasonality has a significant impact on our working capital from March to August which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the July 1, 2017 balances in the accompanying unaudited consolidated condensed balance sheets.

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UNIVERSAL FOREST PRODUCTS, INC.

 

 

B.       FAIR VALUE

We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value. Assets measured at fair value are as follows:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30, 2018

 

July 1, 2017

 

 

Quoted

 

Prices with

 

 

 

 

 

 

Quoted

 

Prices with

 

 

 

 

 

Prices in

 

Other

 

Prices with

 

 

 

 

Prices in

 

Other

 

 

 

 

 

Active

 

Observable

 

Unobservable

 

 

 

 

Active

 

Observable

 

 

 

 

 

Markets

 

Inputs

 

Inputs

 

 

 

 

Markets

 

Inputs

 

 

 

(in thousands)

    

(Level 1)

    

(Level 2)

 

(Level 3)

    

Total

    

(Level 1)

    

(Level 2)

    

Total

Money market funds

 

$

56

    

$

1,513

 

$

 —

    

$

1,569

    

$

64

    

$

891

    

$

955

Fixed income funds

 

 

2,879

 

 

7,968

 

 

 —

 

 

10,847

 

 

1,495

 

 

6,451

 

 

7,946

Equity securities

 

 

7,892

 

 

 —

 

 

 —

 

 

7,892

 

 

9,822

 

 

 —

 

 

9,822

Hedge funds

 

 

 —

 

 

 —

 

 

1,689

 

 

1,689

 

 

 

 

 

 

 

 

 

Mutual funds:

 

 

 

  

 

 

 

 

 

 

 

 

  

 

 

 

 

 

  

 

 

Domestic stock funds

 

 

413

 

 

 —

 

 

 —

 

 

413

 

 

330

 

 

 —

 

 

330

International stock funds

 

 

3,951

 

 

 —

 

 

 —

 

 

3,951

 

 

84

 

 

 —

 

 

84

Target funds

 

 

249

 

 

 —

 

 

 —

 

 

249

 

 

254

 

 

 —

 

 

254

Bond funds

 

 

725

 

 

 —

 

 

 —

 

 

725

 

 

206

 

 

 —

 

 

206

Total mutual funds

 

 

5,338

 

 

 —

 

 

 —

 

 

5,338

 

 

874

 

 

 —

 

 

874

Total

 

$

16,165

 

$

9,481

 

$

1,689

 

$

27,335

 

$

12,255

 

$

7,342

 

$

19,597

Assets at fair value

 

$

16,165

 

$

9,481

 

$

1,689

 

$

27,335

 

$

12,255

 

$

7,342

 

$

19,597

 

We maintain money market, mutual funds, bonds, and/or stocks in our non-qualified deferred compensation plan and our wholly owned licensed captive insurance company. These funds are valued at prices quoted in an active exchange market and are included in “Cash and Cash Equivalents”, “Investments”, “Restricted Cash”, and “Restricted Investments”. We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.

During the second quarter of 2018, we purchased a private real estate income trust which will be valued as a Level 3 asset.  We did not maintain any Level 3 assets or liabilities at July 1, 2017.

In 2017, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”) transferred $4.1 million in fixed income securities from its Investment Account and purchased an additional $3.8 million in fixed income securities which are held in a newly formed collateral trust account in line with regulatory requirements in the State of Michigan to allow Ardellis to act as an admitted carrier in the State.  These funds are intended to safeguard the insureds of the Michigan Branch of Ardellis.  The funds are classified as “Restricted Investments”.

In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling $24.8 million as of June 30, 2018, consisting of domestic and international stocks, hedge funds, and fixed income bonds. 

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Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

June 30,2018

 

 

 

 

 

Unrealized

 

 

 

 

    

Cost

    

Gain/(Loss)

    

Fair Value

Fixed Income

 

$

11,068

    

$

(221)

  

$

10,847

Equity

 

 

7,013

 

 

879

  

 

7,892

Mutual Funds

 

 

4,508

 

 

(123)

  

 

4,385

Hedge Funds

 

 

1,679

 

 

10

 

 

1,689

Total

 

$

24,268

 

$

545

  

$

24,813

 

Our fixed income investments consist of a blend of US Government and Agency bonds and investment grade corporate bonds with varying maturities.  Our equity investments consist of small, mid, and large cap growth and value funds, as well as international equity. Our hedge funds consist of the private real estate income trust which is valued as a Level 3 asset.  The net pre-tax effected unrealized gain was $0.5 million. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of June 30, 2018. During the first six months of 2018, Ardellis’ investments reported a net realized gain of $514 thousand, which was recorded in interest income on the statement of earnings.

 

 

 

 

C.       REVENUE RECOGNITION

On May 28, 2014, the FASB issued ASU No. 2014-09 (Accounting Standard Codification 606), Revenue from Contracts with Customers.  Topic 606 supersedes the revenue recognition requirements in Accounting Standards Codification Topic 605, Revenue Recognition, and requires the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the considerations to which the entity expects to be entitled to in exchange for those goods or services.  The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The Company has adopted the requirements of the new standard as of January 1, 2018, and utilized the modified retrospective method of transition which was applied to all contracts.

The Company completed the new revenue recognition standard assessment and determined that there was no material impact to our consolidated financial statements, aside from additional required disclosures, thus no needed adjustment to the opening retained earnings for the annual reporting period.

Within the three markets (retail, industrial, and construction) that the Company operates, there are a variety of written and oral contracts that are utilized to generate revenue from the sale of wood, wood composite and other products.  The transaction price is stated at the purchase order level, which includes shipping and/or freight costs and any applicable governmental authority taxes.  The majority of our contracts have a single performance obligation concentrated around the delivery of goods to the carrier, Free On Board (FOB) shipping point.  Therefore, revenue is recognized when this performance obligation is satisfied.  Generally, title and control passes at the time of shipment. In certain circumstances, the customer takes title when the shipment arrives at the destination. However, our shipping process is typically completed the same day.

Certain customer products that we provide require installation by the Company or a 3rd party.  Installation revenue is recognized upon completion, which is typically 2-3 days after receipt.  If it is determined to utilize a 3rd party for installation, the party will act as an agent to the Company until completion of the installation.  Installation revenue represents an immaterial share of the Company’s total sales.

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The Company utilizes rebates, credits, discounts and/or cash-based incentives with certain customers which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We believe that there will not be significant changes to our estimates of variable consideration.  The allocation of these costs are applied at the invoice level and recognized in conjunction with revenue.  Additionally, the volume returns and refunds are estimated on a historical and expected basis which is a reduction of revenue recognized.

Earnings on construction contracts are reflected in operations using over time accounting, under either cost to cost or units of delivery methods, depending on the nature of the business at individual operations, which is in accordance with ASC 606 as revenue is recognized when certain performance obligations are performed. Under over time accounting using the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships of actual costs incurred related to the total estimated costs. Under over time accounting using the units of delivery method, revenues and related earnings on construction contracts are measured by the relationships of actual units produced related to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent. 

Our construction contracts are generally entered into with a fixed price and completion of the projects can range from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates and commodity costs. During the year, we update our estimated costs to complete our projects using current labor and commodity costs and recognize losses to the extent that they exist.

The following table presents our gross revenues disaggregated by revenue source:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

(in thousands)

    

June 30,

    

July 1,

    

 

 

June 30,

    

July 1,

    

 

Market Classification

 

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

FOB Shipping Point Revenue

 

$

1,281,557

 

$

1,058,777

 

21.04%

 

$

2,263,248

 

$

1,885,652

 

20.02%

Construction Contract Revenue

 

 

38,811

 

 

33,418

 

16.14%

 

 

68,787

 

 

65,400

 

5.18%

Total Sales

 

 

1,320,368

 

 

1,092,195

 

20.89%

 

 

2,332,035

 

 

1,951,052

 

19.53%

 

In the first six months of 2018, the North and West segments comprise the construction contract revenue above, $47.3 million and $21.5 million, respectively.  Construction contract revenue is primarily made up of site-built and framing customers.

The following table presents the balances of over time accounting accounts which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,

 

December 30,

 

July 1,

 

 

    

2018

    

2017

    

2017

    

Cost and Earnings in Excess of Billings

 

$

5,501

    

$

5,005

    

$

3,521

    

Billings in Excess of Cost and Earnings

 

 

4,616

 

 

4,435

 

 

3,725

 

 

 

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UNIVERSAL FOREST PRODUCTS, INC.

 

D.       EARNINGS PER SHARE

The computation of earnings per share (“EPS”) is as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

    

June 30,

    

July 1,

    

June 30,

    

July 1,

    

 

 

2018

 

2017

 

2018

 

2017

 

Numerator:

 

 

  

 

 

  

 

 

  

 

 

  

 

Net earnings attributable to controlling interest

 

$

44,044

 

$

33,642

 

$

76,878

 

$

54,704

 

Adjustment for earnings allocated to non-vested restricted common stock

 

 

(1,018)

 

 

(663)

 

 

(1,728)

 

 

(994)

 

Net earnings for calculating EPS

 

$

43,026

 

$

32,979

 

$

75,150

 

$

53,710

 

Denominator:

 

 

  

 

 

  

 

 

  

 

 

  

 

Weighted average shares outstanding

 

 

61,895

 

 

61,632

 

 

61,770

 

 

61,482

 

Adjustment for non-vested restricted common stock

 

 

(1,431)

 

 

(1,215)

 

 

(1,389)

 

 

(1,119)

 

Shares for calculating basic EPS

 

 

60,464

 

 

60,417

 

 

60,381

 

 

60,363

 

Effect of dilutive restricted common stock

 

 

85

 

 

93

 

 

80

 

 

111

 

Shares for calculating diluted EPS

 

 

60,549

 

 

60,510

 

 

60,461

 

 

60,474

 

Net earnings per share:

 

 

  

 

 

  

 

 

  

 

 

  

 

Basic

 

$

0.71

 

$

0.55

 

$

1.24

 

$

0.89

 

Diluted

 

$

0.71

 

$

0.55

 

$

1.24

 

$

0.89

 

 

No options were excluded from the computation of diluted EPS for the quarters ended June 30, 2018, or July 1, 2017.

On October 17, 2017, our Board of Directors declared a three-for-one stock split effected in the form of a stock dividend.  The record date of the stock split was on October 31, 2017, and the eventual stock distribution to shareholders occurred on November 14, 2017.  As a result of the stock split, all historical per share data and number of shares outstanding presented in future financial statements are retroactively adjusted.

E.       COMMITMENTS, CONTINGENCIES, AND GUARANTEES

We are self-insured for environmental impairment liability, including certain liabilities which are insured through a wholly owned subsidiary, Ardellis Insurance Ltd., a licensed captive insurance company.

We own and operate a number of facilities throughout the United States that chemically treat lumber products. In connection with the ownership and operation of these and other real properties, and the disposal or treatment of hazardous or toxic substances, we may, under various federal, state, and local environmental laws, ordinances, and regulations, be potentially liable for removal and remediation costs, as well as other potential costs, damages, and expenses. Environmental reserves, calculated with no discount rate, have been established to cover remediation activities at wood preservation facilities in Stockertown, PA; Elizabeth City, NC; and Auburndale, FL. In addition, a reserve was established for our facility in Thornton, CA to remove certain lead containing materials which existed on the property at the time of purchase.

On a consolidated basis, we have reserved approximately $2.5 million and $3.6 million on June 30, 2018, and July 1, 2017, respectively, representing the estimated costs to complete future remediation efforts. These amounts have not been reduced by an insurance receivable.

Many of our wood treating operations utilize “Subpart W” drip pads, defined as hazardous waste management units by the Environmental Protection Agency. The rules regulating drip pads require that a pad be “closed” at the point that it is no longer intended to be used for wood treating operations or to manage hazardous waste. Closure

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involves identification and disposal of contaminants which are required to be removed from the facility. The cost of closure is dependent upon a number of factors including, but not limited to, identification and removal of contaminants, cleanup standards that vary from state to state, and the time period over which the cleanup would be completed. Based on our present knowledge of existing circumstances, it is considered probable that these costs will approximate $0.2 million. As a result, this amount is recorded in other long-term liabilities on June 30, 2018.

In February 2014, one of our operations was served with a federal grand jury subpoena from the Southern District of New York. The subpoena was issued in connection with an investigation being conducted by the US Attorney’s Office for the Southern District of New York. The subpoena requested documents relating to a developer and construction projects for which our operation had provided materials and labor. Following receipt of the subpoena, the Audit Committee of the Company’s Board of Directors retained outside counsel to conduct an internal investigation and respond to the subpoena. The Company cooperated in all respects with the US Attorney’s Office, complied with this subpoena and voluntarily provided additional information. As a result of the internal investigation, in 2014, two Company employees were terminated for violating the Company’s Code of Business Conduct and Ethics. In May 2015, those ex-employees were indicted by the grand jury. In April 2016, one of the two former employees pled guilty to four of the charges included in the indictment. In May 2016, the other former employee was found guilty by a jury on four of the charges included in the indictment. The Company has not been named as a target and continues to cooperate with the US Attorney’s Office in this matter.  Based upon prior communications with the US Attorney’s Office, we do not believe that the resolution of this matter will have a material adverse impact on our financial condition or the results of our operations.

In addition, on June 30, 2018, we were parties either as plaintiff or defendant to a number of lawsuits and claims arising through the normal course of our business. In the opinion of management, our consolidated financial statements will not be materially affected by the outcome of these contingencies and claims.

On June 30, 2018, we had outstanding purchase commitments on commenced capital projects of approximately $23.4 million.

We provide a variety of warranties for products we manufacture. Historically, warranty claims have not been material. We distribute products manufactured by other companies, some of which are no longer in business. While we do not warrant these products, we have received claims as a distributor of these products when the manufacturer no longer exists or has the ability to pay. Historically, these costs have not had a material effect on our consolidated financial statements.

As part of our operations, we supply building materials and labor to site-built construction projects or we jointly bid on contracts with framing companies for such projects. In some instances, we are required to post payment and performance bonds to insure the project owner that the products and installation services are completed in accordance with our contractual obligations. We have agreed to indemnify the surety for claims made against the bonds. As of June 30, 2018, we had approximately $15.8 million outstanding payment and performance bonds for open projects. We had approximately $1.7 million in payment and performance bonds outstanding for completed projects which are still under warranty.

On June 30, 2018, we had outstanding letters of credit totaling $30.4 million, primarily related to certain insurance contracts and industrial development revenue bonds described further below.

In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers to guarantee our performance under certain insurance contracts. We currently have irrevocable letters of credit outstanding totaling approximately $20.6 million for these types of insurance arrangements. We have reserves recorded on our balance sheet, in accrued liabilities, that reflect our expected future liabilities under these insurance arrangements.

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We are required to provide irrevocable letters of credit in favor of the bond trustees for all industrial development revenue bonds that have been issued. These letters of credit guarantee principal and interest payments to the bondholders. We currently have irrevocable letters of credit outstanding totaling approximately $9.8 million related to our outstanding industrial development revenue bonds. These letters of credit have varying terms but may be renewed at the option of the issuing banks.

Certain wholly owned domestic subsidiaries have guaranteed the indebtedness of Universal Forest Products, Inc. in certain debt agreements, including the Series 2012 Senior Notes and our revolving credit facility. The maximum exposure of these guarantees is limited to the indebtedness outstanding under these debt arrangements and this exposure will expire concurrent with the expiration of the debt agreements.

We did not enter into any new guarantee arrangements during the second quarter of 2018 which would require us to recognize a liability on our balance sheet.

F.       BUSINESS COMBINATIONS

We completed the following acquisitions in six months ended 2018 and 2017 which were accounted for using the purchase method in thousands unless otherwise noted:

 

 

 

 

 

 

 

 

 

 

 

 

 

Net 

 

Company

Acquisition 

 

Intangible 

Tangible 

Operating

Name

Date

Purchase Price

Assets

Assets

Segment

 

June 1, 2018

$23,893
cash paid for 100% asset purchase

$

7,123

$

16,770

South

North American Container Corporation ("NACC")

A manufacturer of structural packaging products, including steel, corrugated and hardwood packaging.  NACC had annual sales of approximately $71 million.  The acquisition of NACC allowed us to expand our presence in this region, expand our product offering, and serve customers more cost effectively.

 

April 9, 2018

$3,890
cash paid for 100% asset purchase

$

2,235

$

1,655

West

Fontana Wood Products ("Fontana")

A manufacturer and distributor lumber and trusses in the Southern California region.  Fontana had annual sales of approximately $12 million.  The acquisition of Fontana allows us to expand our manufactured housing business and creates operating leverage by consolidating with another regional operation.

 

April 3, 2018

$1,404
cash paid for 100% asset purchase

$

1,344

$

60

All Other

Expert Packaging ("Expert")

A manufacturer and distributor of total packaging solutions in timber, crates, pallets, and skids.  Expert had annual sales of approximately $3.6 million.  The acquisition of Expert allows us to make progress on our goal of becoming a global provider of packaging solutions.

 

January 23, 2018

$2,942
cash paid for 100% asset purchase

$

850

$

2,092

West

Spinner Wood Products, LLC ("Spinner")

A manufacturer and distributor of agricultural bin and various industrial packaging.  Spinner had annual sales of approximately $8 million.  The acquisition of Spinner allows us to expand our industrial packaging product offering and creates operating leverage by consolidating with other regional operations.

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UNIVERSAL FOREST PRODUCTS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net 

 

Company

Acquisition 

 

Intangible 

Tangible 

Operating

Name

Date

Purchase Price

Assets

Assets

Segment

 

January 15, 2018

$5,845
cash paid for 100% asset purchase

$

50

$

5,795

North

Great Northern Lumber, LLC

A manufacturer of industrial products as well as serving the concrete forming market in the Chicago area.  Great Northern Lumber had annual sales of approximately $25 million.  The acquisition of Great Northern Lumber enables us to expand our concrete forming product offering and regional coverage.

 

October 16, 2017

$931
cash paid for 100% asset purchase

$

909

$

22

All Other

Silverwater Box

A manufacturer and distributor of total packaging solutions in timber, plastic, steel, fiberglass, and cardboard.  Silverwater Box had annual sales of approximately $2.8 million.  The acquisition of Silverwater Box allows us to make progress on our goal of becoming a global provider of packaging solutions.

 

May 26, 2017

$5,042
cash paid for 100% asset purchase

$

4,880

$

162

South

Go Boy Pallets, LLC ("Go Boy")

A manufacturer and distributor of industrial pallets and packaging in Georgia and North Carolina.  Go Boy had annual sales of approximately $8 million.  The acquisition of Go Boy enabled us to expand our industrial packaging product offering and lumber sourcing in this region.

 

March 6, 2017

$31,818
cash paid for 100% asset purchase

$

7,653

$

24,165

South

Robbins Manufacturing Co. ("Robbins")

A manufacturer of treated wood products with facilities in Florida, Georgia, and North Carolina.  Robbins had annual sales of approximately $86 million.  The acquisition of Robbins allowed us to expand our presence in this region and serve customers more cost effectively. 

 

March 6, 2017

$22,789
cash paid for 100% asset purchase

$

14,341

$

8,448

North

Quality Hardwood Sales, LLC ("Quality")

A manufacturer and supplier of hardwood products, including components of cabinets used in homes and recreational vehicles.  Quality had annual sales of approximately $30 million.  The acquisition of Quality enabled us to expand our product offering to include hardwood-based products.

The intangible assets for each acquisition were finalized and allocated to their respective identifiable intangible asset and goodwill accounts during 2018, excluding the NACC aquisition.  In aggregate, acquisitions completed since the end of June 2017 contributed approximately $14.2 million in revenue and $0.7 million in operating profit during the second quarter of 2018.

G.       SEGMENT REPORTING

ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

The Company operates manufacturing, treating and distribution facilities throughout North America, but primarily in the United States. The Company manages the operations of its individual locations primarily through a geographic reporting structure under which each location is included in a region and regions are included in our North, South, West, and International divisions. The exceptions to this geographic reporting and management structure are (a) the Company’s Alternative Materials Division, which offers a portfolio of non-wood products

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and distributes those products nation-wide (b) the Company’s distribution unit (referred to as UFPD) which distributes a variety of products to the manufactured housing industry nation-wide and is accounted for as a reporting unit within the North segment, and (c) the idX division, which designs, produces, and installs customized in-store environments, for customers world-wide.

With respect to the facilities in the north, south, and west segments, these facilities generally supply the three markets the Company serves nationally - Retail, Industrial, and Construction. Also, substantially all of our facilities support customers in the immediate geographical region surrounding the facility.

Our Alternative Materials, International and idX division have been included in the “All Other” column of the table below. The “Corporate” column includes unallocated administrative costs and certain incentive compensation expense.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2018

 

    

      North      

    

      South      

    

      West      

    

  All Other  

    

  Corporate  

    

      Total      

    

Net sales to outside customers

 

$

390,821

 

$

291,320

 

$

456,825

 

$

155,474

 

$

 —

 

$

1,294,440

 

Intersegment net sales

 

 

18,558

 

 

20,675

 

 

14,464

 

 

61,957

 

 

 —

 

 

115,654

 

Segment operating profit

 

 

19,822

 

 

14,902

 

 

29,698

 

 

4,319

 

 

(8,124)

 

 

60,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended July 1, 2017

 

    

      North      

    

      South      

    

      West      

    

  All Other  

    

  Corporate  

    

      Total      

    

Net sales to outside customers

 

$

319,554

 

$

221,583

 

$

390,868

 

$

140,370

 

$

 —

 

$

1,072,375

 

Intersegment net sales

 

 

16,790

 

 

19,378

 

 

22,249

 

 

49,197

 

 

 —

 

 

107,614

 

Segment operating profit

 

 

16,246

 

 

10,229

 

 

24,704

 

 

5,798

 

 

(3,078)

 

 

53,899

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2018

 

    

      North      

    

      South      

    

      West      

    

  All Other  

    

  Corporate  

    

      Total      

Net sales to outside customers

 

$

661,007

 

$

533,340

 

$

819,293

 

$

274,657

 

$

 —

 

$

2,288,297

Intersegment net sales

 

 

30,583

 

 

39,323

 

 

30,063

 

 

124,677

 

 

 —

 

 

224,646

Segment operating profit (loss)

 

 

28,517

 

 

34,447

 

 

50,780

 

 

1,219

 

 

(10,128)

 

 

104,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended July 1, 2017

 

    

      North      

    

      South      

    

      West      

    

  All Other  

    

  Corporate  

    

      Total      

Net sales to outside customers

 

$

547,475

 

$

410,326

 

$

710,030

 

$

250,674

 

$

 —

 

$

1,918,505

Intersegment net sales

 

 

32,962

 

 

36,656

 

 

44,082

 

 

68,127

 

 

 —

 

 

181,827

Segment operating profit

 

 

26,224

 

 

20,918

 

 

43,008

 

 

6,404

 

 

(8,834)

 

 

87,720

 

 

 

H.       INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income taxes and permanent tax differences.  Our effective tax rate was 22.9% in the second quarter of 2018 compared to 34.0% for same period in 2017.  Our effective tax rate was 22.6% in the first six months of 2018 compared to 33.7% for the same period in 2017.  This decrease was due primarily to changes resulting from the Tax Act, which reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent effective January 1, 2018, along with eliminating the domestic manufacturing deduction.  Pursuant to SAB 118, the accounting for the Tax Act was incomplete at December 30, 2017 and is still incomplete as of June 30, 2018.  As noted at year-end, however, we were able to reasonably estimate certain effects and, therefore, recorded provisional adjustments associated with the deemed repatriation transition tax, a provisional decrease for certain of our Deferred Tax Assets (DTAs) and Deferred Tax Liabilities (DTLs) related to the reduced corporate tax rate, and a provisional benefit related to our intent to fully expense all qualifying expenditures under the new cost recovery rules.

 

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UNIVERSAL FOREST PRODUCTS, INC.

 

We have not made any additional measurement-period adjustments related to these items during the quarter.  However, we are continuing to gather additional information to complete our accounting for these items and expect to complete our accounting within the prescribed measurement period.

 

As noted at year-end, we were not yet able to reasonably estimate the effects for Global Intangible Low-Taxed Income (GILTI).  Therefore, no provisional adjustment was recorded.

 

Because of the complexity of the new GILTI tax rules, we are continuing to evaluate this provision of the Act and the application of ASC 740.  Under U.S. GAAP, we are allowed to make an accounting policy choice of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current-period expense when incurred (the “period cost method”) or (2) factoring such amounts into a company’s measurement of its deferred taxes (the “deferred method”).  Our selection of an accounting policy related to the new GILTI tax rules will depend, in part, on analyzing our global income to determine whether we expect to have future U.S. inclusions in taxable income related to GILTI and, if so, what the impact is expected to be.  Because whether we expect to have future U.S. inclusions in taxable income related to GILTI depends on a number of different aspects or our estimated future results of global operations, we are not yet able to reasonably estimate the long-term effects of this provision of the Act.  Therefore, we have not recorded any potential deferred tax effects related to GILTI in our financial statements and have not made a policy decision regarding whether to record deferred taxes on GILTI or use the period cost method.  We have however, included an estimate of the estimated 2018 current GILTI impact in our Annual Effective Tax Rate (AETR) for 2018.  We expect to complete our accounting within the prescribed measurement period.

 

I.       PROPERTY SALE

The Company completed a sale of a property in Medley, Florida, during the first quarter of 2018. The sale price for the property was approximately $36 million and created a $7 million pre-tax gain.  The transaction is part of a strategy to create efficiencies and advantages not possible with the current facility by optimizing the capacity of its other three Florida operations, including two it acquired from Robbins Manufacturing in 2017, and adding a state-of-the-art facility in South Florida.  The Company will lease back the Medley, Florida, facility for two years as it executes its long-term plan for Florida and the Southeast region.  Since only a minor portion of the property sold was leased back the entire gain is included in income.

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UNIVERSAL FOREST PRODUCTS, INC.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Universal Forest Products, Inc. is a holding company with subsidiaries throughout North America, Europe, Asia, and in Australia that supply wood, wood composite and other products to three robust markets: retail, industrial, and construction. The Company is headquartered in Grand Rapids, Mich. For more information about Universal Forest Products, Inc., or its affiliated operations, go to www.ufpi.com.

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission. We are pleased to present this overview of 2018.

OVERVIEW

Our results for the second quarter of 2018 were impacted by the following:

·

Our gross sales increased by 21% compared to the second quarter of 2017, which was comprised of an 8% increase in unit sales and a 13% increase in selling prices primarily due to the commodity lumber market (see Historical Lumber Prices below).  Organic growth contributed 7% of our unit sales increase, while acquisitions contributed 1%.    We experienced favorable organic growth to each of the markets we serve.

·

Our operating profits increased by 12.5% compared to the second quarter of 2017, which compares favorably with our 8% increase in unit sales.  The improvement in our profit per unit was primarily due to rising lumber prices for most of the quarter which favorably impacted the gross profit of products we sell with variable selling prices.  Conversely, lumber prices fell for most of the second quarter of 2017. 

·

Our effective tax rate was approximately 23% due to the change in tax law.  We currently anticipate an overall rate of 23.5% for the year.

·

Cash flow used in operating activities was $36 million due to peak lumber prices and seasonal working capital requirements totaling approximately $139 million since year end.  We currently anticipate that this seasonal investment and the amount outstanding on the revolving credit facility will be reduced accordingly by October.

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UNIVERSAL FOREST PRODUCTS, INC.

 

HISTORICAL LUMBER PRICES

We experience significant fluctuations in the cost of commodity lumber products from primary producers (“Lumber Market”). The following table presents the Random Lengths framing lumber composite price:

 

 

 

 

 

 

 

 

 

 

Random Lengths Composite

 

 

 

Average $/MBF

 

 

    

2018

    

2017

    

January

 

$

449

 

$

356

 

February

 

 

496

 

 

393

 

March

 

 

505

 

 

401

 

April

 

 

496

 

 

424

 

May

 

 

554

 

 

416

 

June

 

 

572

 

 

399

 

 

 

 

 

 

 

 

 

Second quarter average

 

$

541

 

$

413

 

Year-to-date average

 

$

512

 

$

398

 

 

 

 

 

 

 

 

 

Second quarter percentage change

 

 

31.0

%  

 

 

 

Year-to-date percentage change

 

 

28.6

%  

 

 

 

 

In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprised approximately 45% and 46% of total lumber purchases through the first six months of 2018 and 2017, respectively.

 

 

 

 

 

 

 

 

 

 

Random Lengths SYP

 

 

 

Average $/MBF

 

 

    

2018

    

2017

    

January

 

$

418

 

$

397

 

February

 

 

459

 

 

420

 

March

 

 

480

 

 

433

 

April

 

 

483

 

 

438

 

May

 

 

535

 

 

416

 

June

 

 

562

 

 

399

 

 

 

 

 

 

 

 

 

Second quarter average

 

$

527

 

$

418

 

Year-to-date average

 

$

490

 

$

417

 

 

 

 

 

 

 

 

 

Second quarter percentage change

 

 

26.1

%

 

 

 

Year-to-date percentage change

 

 

17.5

%

 

 

 

 

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UNIVERSAL FOREST PRODUCTS, INC.

 

IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS

We generally price our products to pass lumber costs through to our customers so that our profitability is based on the value-added manufacturing, distribution, engineering, and other services we provide. As a result, our sales levels (and working capital requirements) are impacted by the lumber costs of our products.  Lumber costs were 52.8% and 49.3% of our sales in the first six months of 2018 and 2017, respectively. 

Our gross margins are impacted by (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower from comparative periods), and (2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing or decreasing within a period or from period to period). Moreover, as explained below, our products are priced differently. Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported Lumber Market with a fixed dollar adder to cover conversion costs and profits. Consequently, the level and trend of the Lumber Market impact our products differently.

Below is a general description of the primary ways in which our products are priced.

·

Products with fixed selling prices. These products include value-added products such as deck components and fencing sold to retail customers, as well as trusses, wall panels and other components sold to the construction market, and most industrial packaging products. Prices for these products are generally fixed at the time of the sales quotation for a specified period of time or are based upon a specific quantity. In order to maintain margins and reduce any exposure to adverse trends in the price of component lumber products, we attempt to lock in costs with our suppliers for these sales commitments. Also, the time period and quantity limitations eventually allow us to re-price our products for changes in lumber costs from our suppliers.  We believe our sales of these products are at their highest relative level in our third and fourth quarter.

·

Products with selling prices indexed to the reported Lumber Market with a fixed dollar “adder” to cover conversion costs and profits. These products primarily include treated lumber, remanufactured lumber, and trusses sold to the manufactured housing industry. For these products, we estimate the customers’ needs and we carry anticipated levels of inventory. Because lumber costs are incurred in advance of final sale prices, subsequent increases or decreases in the market price of lumber impact our gross margins.  We believe our sales of these products are at their highest relative level in our second quarter, primarily due to treated lumber sold to the retail market.

For each of the product pricing categories above, our margins are exposed to changes in the trend of lumber prices.

The greatest risk associated with changes in the trend of lumber prices is on the following products:

·

Products with significant inventory levels with low turnover rates, whose selling prices are indexed to the Lumber Market. In other words, the longer the period of time these products remain in inventory, the greater the exposure to changes in the price of lumber. This would include treated lumber, which comprises approximately 19% of our total sales. This exposure is less significant with remanufactured lumber, trusses sold to the manufactured housing market, and other similar products, due to the higher rate of inventory turnover. We attempt to mitigate the risk associated with treated lumber through vendor consignment inventory programs. (Please refer to the “Risk Factors” section of our annual report on form 10‑K, filed with the United States Securities and Exchange Commission.)

·

Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-family construction projects. We attempt to mitigate this risk through our purchasing practices by locking in costs.

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In addition to the impact of the Lumber Market trends on gross margins, changes in the level of the market cause fluctuations in gross margins when comparing operating results from period to period. This is explained in the following example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend within each period.

 

 

 

 

 

 

 

 

 

    

Period 1

    

Period 2

 

Lumber cost

 

$

300

 

$

400

 

Conversion cost

 

 

50

 

 

50

 

= Product cost

 

 

350

 

 

450

 

Adder

 

 

50

 

 

50

 

= Sell price

 

$

400

 

$

500

 

Gross margin

 

 

12.5

%  

 

10.0

%

 

As is apparent from the preceding example, the level of lumber prices does not impact our overall profits, but does impact our margins. Gross margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low.  In order to more effectively evaluate our profitability in such periods, we believe it is useful to compare our change in units shipped with our changes in costs and profits.

BUSINESS COMBINATIONS

We completed five business acquisitions during the first six months of 2018 and four during all of 2017. The annual historical sales attributable to acquisitions completed in the first six months 2018 and all of 2017 were approximately $120 million and $127 million, respectively.  These business combinations were not significant to our quarterly or year-to-date operating results individually or in aggregate and thus pro forma results for 2018 or 2017 are not presented.

See Notes to the Unaudited Condensed Consolidated Financial Statements, Note F, “Business Combinations” for additional information.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, the components of our Unaudited Condensed Consolidated Statements of Earnings as a percentage of net sales.

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

    

June 30,

    

July 1,

    

June 30,

    

July 1,

 

 

 

2018

 

2017

 

2018

 

2017

 

Net sales

 

100.0

%  

100.0

%  

100.0

%  

100.0

%

Cost of goods sold

 

87.2

 

86.2

 

87.0

 

86.0

 

Gross profit

 

12.8

 

13.8

 

13.0

 

14.0

 

Selling, general, and administrative expenses

 

8.1

 

8.8

 

8.7

 

9.4

 

Net loss (gain) on disposition and impairment of assets

 

 —

 

 —

 

(0.3)

 

 —

 

Earnings from operations

 

4.7

 

5.0

 

4.6

 

4.6

 

Other expense, net

 

0.2

 

0.1

 

0.1

 

0.2

 

Earnings before income taxes

 

4.5

 

4.9

 

4.4

 

4.4

 

Income taxes

 

1.0

 

1.7

 

1.0

 

1.5

 

Net earnings

 

3.5

 

3.2

 

3.4

 

2.9

 

Less net earnings attributable to noncontrolling interest

 

(0.1)

 

(0.1)

 

(0.1)

 

(0.1)

 

Net earnings attributable to controlling interest

 

3.4

%  

3.1

%  

3.4

%  

2.9

%

Note: Actual percentages are calculated and may not sum to total due to rounding.

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UNIVERSAL FOREST PRODUCTS, INC.

 

GROSS SALES

We design, manufacture and market wood and wood-alternative products for national home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for residential and commercial construction, specialty wood packaging, components and packing materials for various industries, and customized interior fixtures used in a variety of retail stores, commercial and other structures.  Our strategic long-term sales objectives include:

·

Diversifying our end market sales mix by increasing sales of specialty wood and non-wood packaging to industrial users, increasing our penetration of the concrete forming market, increasing our sales of engineered wood components for custom home, multi-family, military and light commercial construction, increasing our market share with independent retailers, and increasing our sales of customized interior fixtures used in a variety of markets.

·

Expanding geographically in our core businesses, domestically and internationally.

·

Increasing sales of "value-added" products, which primarily consist of fencing, decking, lattice, and other specialty products sold to the retail  market, specialty wood packaging, engineered wood components, customized interior fixtures, and "wood alternative" products. Engineered wood components include roof trusses, wall panels, and floor systems.  Wood alternative products consist primarily of composite wood and plastics. Although we consider the treatment of dimensional lumber with certain chemical preservatives a value-added process, treated lumber is not presently included in the value-added sales totals.

·

Maximizing unit sales growth while achieving return on investment goals.

·

Developing new products and expanding our product offering for existing customers. New product sales were $153.1 million in the second quarter of 2018 compared to $122.8 million during the second quarter of 2017.  New products sales year-to-date for 2018 and 2017 were $262.2 million and $211.1 million, respectively. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Product Sales by Market

 

New Product Sales by Market

 

 

Three Months Ended

 

Six Months Ended

(in thousands)

    

June 30,

    

July 1,

    

 

    

June 30,

    

July 1,

    

 

Market Classification

 

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

Retail

 

$

95,409

 

 

77,227

 

23.5

 

$

153,514

 

$

126,275

 

21.6

Industrial

 

 

36,127

 

 

29,048

 

24.4

 

 

67,135

 

 

53,705

 

25.0

Construction

 

 

21,533

 

 

16,556

 

30.1

 

 

41,509

 

 

31,164

 

33.2

Total New Product Sales

 

 

153,069

 

 

122,831

 

24.6

 

$

262,158

 

$

211,144

 

24.2

Note:  Certain prior year product reclassifications and the change in designation of certain products as “new” resulted in a change in prior year’s sales.

Value-Added and Commodity-Based Sales:

The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total sales. Value-added products generally carry higher gross margins than our commodity-based products.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

    

June 30,

 

July 1,

 

June 30,

 

July 1,

 

 

2018

 

2017

 

2018

 

2017

Value-Added

 

60.1

%  

 

62.0

%  

 

60.8

%  

 

62.3

%

Commodity-Based

 

39.9

%  

 

38.0

%  

 

39.2

%  

 

37.7

%

 

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UNIVERSAL FOREST PRODUCTS, INC.

 

The following table presents, for the periods indicated, our gross sales and percentage change in gross sales by market classification.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

(in thousands)

    

June 30,

    

July 1,

    

 

 

 

June 30,

    

July 1,

    

 

    

 

Market Classification

 

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

 

Retail

 

$

545,492

 

$

458,267

 

19.0

%

 

$

916,453

 

$

770,619

 

18.9

%

 

Industrial

 

 

404,090

 

 

340,463

 

18.7

%

 

 

737,056

 

 

621,062

 

18.7

%

 

Construction

 

 

370,786

 

 

293,465

 

26.3

%

 

 

678,526

 

 

559,371

 

21.3

%

 

Total Gross Sales

 

 

1,320,368

 

 

1,092,195

 

20.9

%

 

 

2,332,035

 

 

1,951,052

 

19.5

%

 

Sales Allowances

 

 

(25,928)

 

 

(19,820)

 

30.8

%

 

 

(43,738)

 

 

(32,547)

 

34.4

%

 

Total Net Sales

 

$

1,294,440

 

$

1,072,375

 

20.7

%

 

$

2,288,297

 

$

1,918,505

 

19.3

%

 

Note:  During 2018, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.

Gross sales in the second quarter of 2018 increased 21% compared to the same period of 2017, due to an 8% increase in unit sales and a 13% increase in selling prices primarily due to the Lumber Market.  Acquired operations contributed 1% to our unit sales growth, and our organic unit sales growth was 7%.

Gross sales in the first six months of 2018 increased 20% compared to the same period of 2017, due to an 8% increase in unit sales and a 12% increase in selling prices primarily due to the Lumber Market.  Acquired operations contributed 3% to our unit sales growth, and our organic unit sales growth was 5%.

Changes in our gross sales by market are discussed below.

Retail:

Gross sales to the retail market increased 19% in the second quarter of 2018 compared to the same period of 2017, due to a 6% increase in unit sales and a 13% increase in selling prices. Within this market, sales to our big box customers increased almost 16%, and sales to other independent retailers increased almost 25%.  Our organic unit growth was 6% for the quarter primarily due to increased sales to our independent retail customers, as demand improved following inclement weather in the first quarter.

Gross sales to the retail market increased almost 19% in the first six months of 2018 compared to the same period of 2017, due to an 8% increase in unit sales and a 11% increase in selling prices. Within this market, sales to our big box customers increased over 15%, while sales to other independent retailers increased over 24%.  Businesses we acquired contributed 3% to our growth in unit sales, primarily to independent retail customers, while organic unit sales growth increased 5% in the first six months of 2018.    

Industrial:

Gross sales to the industrial market increased almost 19% in the second quarter of 2018 compared to the same period of 2017, resulting from an 8% increase in unit sales and an 11% increase in selling prices. Businesses we acquired contributed 3% to our growth in unit sales.  Our organic growth in unit sales of 5% was due to adding over 400 new customers, 122 new locations of existing customers, and $7 million of new sales growth as our efforts to improve market share continue to gain traction.

Gross sales to the industrial market increased almost 19% in the first six months of 2018 compared to the same period of 2017, resulting from a 9% increase in unit sales and a 10% increase in selling prices. Businesses we acquired contributed 4% to our growth in unit sales.  Our organic growth in unit sales of 5% was primarily due to the same factors discussed above.

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Construction:

Gross sales to the construction market increased over 26% in the second quarter of 2018 compared to 2017. The increase was due to a 10% increase in unit sales and a 16% increase in our selling prices. Our increase in unit sales was driven by a 9% increase to manufactured housing customers, a 10% increase to residential construction customers, and a 13% increase to commercial construction customers.  Acquired businesses contributed 1% to our growth in unit sales to the overall construction market and 4% to the commercial market.

By comparison (and based upon various industry publications):

·

Production of HUD-code manufactured homes in April and May 2018, the most recent period reported, was up 6.5% compared to the same period of 2017.

·

Non-residential construction activity in April and May increased approximately 6.0% compared to the same period of 2017.

·

National housing starts increased approximately 13.4% in the period from March through May 2018 (our sales trail housing starts by about a month) compared to the same period of 2017. 

Gross sales to the construction market increased over 21% in the first six months of 2018 compared to 2017. The increase was due to an 8% increase in unit sales and a 13% increase in our selling prices. Our increase in unit sales was driven by a 9% increase to manufactured housing customers, a 10% increase to concrete forming and commercial construction customers, and a 6% increase to residential construction customers due to the same factors discussed above.

COST OF GOODS SOLD AND GROSS PROFIT

Our gross margin decreased to 12.8% from 13.8% comparing the second quarter of 2018 to the same period of 2017 due to the higher level of lumber prices (See “Impact of the Lumber Market on Our Operating Results”).  More importantly, our 11.8% increase in gross profit dollars compares favorably to our 8% increase in unit sales during the same period.  Acquired operations contributed $1.9 million of gross profit in the second quarter of 2018.  Excluding acquisitions, our gross profits increased by $15.6 million, or 10.5%, over the same period last year due to the following:

·

Our gross profit on sales to the retail market increased by approximately $8 million, primarily due to the favorable impact of the rising lumber market on products we sell with variable selling prices as well as new product sales growth.

·

Our gross profit on sales to the industrial market increased by approximately $4 million, due to a combination of growth and more effectively passing on lumber cost increases in our selling prices.

·

Our gross profit on sales to the construction market increased by approximately $4 million, primarily due to organic growth.

Our gross margin decreased to 13.0% from 14.0% comparing the first six months of 2018 to the same period of 2017 due to the higher level of lumber prices (See “Impact of the Lumber Market on Our Operating Results”).  Our 10.3% increase in gross profit dollars compares favorably to our 8% increase in unit sales during the same period.  Acquired operations contributed $5.4 million of gross profit in the first six months of 2018.  Excluding acquisitions, our gross profits increased by $22.2 million, or 8.3%, over the same period last year due to the following:

·

Our gross profit on sales to the retail market increased by approximately $8.5 million.

·

Our gross profit on sales to the industrial market increased by approximately $8.9 million.

·

Our gross profit on sales to the construction market increased by over $6.4 million.

·

Gross profit on sales to each of our markets improved due to the same factors discussed above.

 

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UNIVERSAL FOREST PRODUCTS, INC.

 

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative (“SG&A”) expenses increased by approximately $10.0 million, or 10.6%, in the second quarter of 2018 compared to the same period of 2017, while we reported an 8% increase in unit sales. Accrued bonus expense, which varies with our overall profitability and return on investment, totaled $14.5 million in the second quarter of 2018 compared to $12.1 million in 2017.  Acquired operations contributed approximately $1.0 million to our year over year increase.  The remaining increase was primarily due to an increase in base wages and benefits ($2.7 million), sales incentive expenses ($2.5 million), idX’s lease termination ($1.5 million), and employee benefits including healthcare ($1.5 million), which were offset by decreases in other areas. 

Selling, general and administrative (“SG&A”) expenses increased by approximately $16.2 million, or 8.9%, in the first six months of 2018 compared to the same period of 2017, while we reported an 8% increase in unit sales. Accrued bonus expense, which varies with our overall profitability and return on investment, totaled $23.6 million in the first six months of 2018 compared to $20.2 million in 2017.  Acquired operations contributed approximately $3.2 million to our year over year increase.  The remaining increase was primarily due to an increase in base wages and benefits ($5.8 million), sales incentive expenses ($4.3 million), employee benefits ($1.9 million), and idX’s lease termination ($1.5 million). 

INTEREST, NET

Net interest costs were higher in the second quarter of 2018 compared to the same period of 2017 primarily due to an increase in working capital resulting from growth and peak lumber prices as well as increases in short-term borrowing rates. 

INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income taxes and permanent tax differences.  Our effective tax rate was 22.9% in the second quarter of 2018 compared to 34.0% for same period in 2017.  Our effective tax rate was 22.6% in the first six months of 2018 compared to 33.7% for the same period in 2017.  This decrease was due to changes resulting from the Tax Act, which reduced the U.S. federal corporate income tax rate from 35 percent to 21 percent effective January 1, 2018, along with eliminating the domestic manufacturing deduction.  We currently anticipate an overall tax rate of 23.5% for the year.

 

SEGMENT REPORTING

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

 

Earnings from Operations

 

 

Three Months Ended

 

 

Three Months Ended

 

    

June 30,

    

July 1,

    

$

    

%

    

  

June 30,

    

July 1,

    

$

    

%

(in thousands)

 

2018

 

2017

 

    Change    

 

Change

 

 

2018

 

2017

 

    Change    

 

Change

North

 

$

390,821

 

$

319,554

 

$

71,267

 

22.3

%  

 

 

$

19,822

 

$

16,246

 

$

3,576

 

22.0

%

South

 

 

291,320

 

 

221,583

 

 

69,737

 

31.5

%  

 

 

 

14,902

 

 

10,229

 

 

4,673

 

45.7

%

West

 

 

456,825

 

 

390,868

 

 

65,957

 

16.9

%  

 

 

 

29,698

 

 

24,704

 

 

4,994

 

20.2

%

All Other

 

 

155,474

 

 

140,370

 

 

15,104

 

10.8

%  

 

 

 

4,319

 

 

5,798

 

 

(1,479)

 

(25.5)

%

Corporate

 

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 

 

(8,124)

 

 

(3,078)

 

 

(5,046)

 

163.9

%

Total

 

$

1,294,440

 

$

1,072,375

 

$

222,065

 

20.7

%  

 

 

$

60,617

 

$

53,899

 

$

6,718

 

12.5

%

 

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UNIVERSAL FOREST PRODUCTS, INC.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

 

Earnings from Operations

 

 

Six Months Ended

 

 

Six Months Ended

 

    

June 30,

    

July 1,

    

$

    

%

    

  

June 30,

    

July 1,

    

$

    

%

 

(in thousands)

 

2018

 

2017

 

    Change    

 

Change

 

 

2018

 

2017

 

    Change    

 

Change

North

 

$

661,007

 

$

547,475

 

$

113,532

 

20.7

%  

 

 

$

28,517

 

$

26,224

 

$

2,293

 

8.7

%

South

 

 

533,340

 

 

410,326

 

 

123,014

 

30.0

%  

 

 

 

34,447

 

 

20,918

 

 

13,529

 

64.7

%

West

 

 

 819,293

 

 

710,030

 

 

109,263

 

15.4

%  

 

 

 

50,780

 

 

43,008

 

 

7,772

 

18.1

%

All Other

 

 

274,657

 

 

250,674

 

 

23,983

 

9.6

%  

 

 

 

1,219

 

 

6,404

 

 

(5,185)

 

(81.0)

%

Corporate

 

 

 —

 

 

 —

 

 

 —

 

 —

 

 

 

 

(10,128)

 

 

(8,834)

 

 

(1,294)

 

(14.6)

%

Total

 

$

2,288,297

 

$

1,918,505

 

$

369,792

 

19.3

%  

 

 

$

104,835

 

$

87,720

 

$

17,115

 

19.5

%


(1)

Corporate primarily represents over (under) allocated administrative costs and accrued bonus expense.

North

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

Net Sales

 

 

North Segment by Market

 

North Segment by Market

 

 

Three Months Ended

 

Six Months Ended

(in thousands)

    

June 30,

    

July 1,

    

 

 

    

June 30,

    

July 1,

    

 

 

Market Classification

 

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

Retail

 

$

191,391

 

$

161,640

 

18.4

%

 

$

287,200

 

$

249,085

 

15.3

%

Industrial

 

 

55,822

 

 

42,048

 

32.8

%

 

 

107,442

 

 

74,537

 

44.1

%

Construction

 

 

152,615

 

 

123,391

 

23.7

%

 

 

280,064

 

 

235,581

 

18.9

%

Total Gross Sales

 

 

399,828

 

 

327,079

 

22.2

%

 

 

674,706

 

 

559,203

 

20.7

%

Sales Allowances

 

 

(9,007)

 

 

(7,525)

 

19.7

%

 

 

(13,699)

 

 

(11,728)

 

16.8

%

Total Net Sales

 

$

390,821

 

$

319,554

 

22.3

%

 

$

661,007

 

$

547,475

 

20.7

%

Note:  During 2018, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.

Net sales attributable to the North reportable segment increased in the second quarter of 2018 compared to 2017 as a result of increased sales to each of our markets, primarily due to the same factors previously discussed.  Acquired operations contributed $6.2 million to our industrial sales increase.

Earnings from operations for the North reportable segment increased in the second quarter of 2018 by $3.6 million, or 22.0%, due to an increase in gross profit of $4.5 million, offset by a $0.9 million increase in SG&A expenses compared to last year due to the same factors previously discussed.  Acquired operations contributed $0.5 million to our operating profits in the second quarter. 

Net sales attributable to the North reportable segment increased in the first six months of 2018 compared to 2017 as a result of increased sales to each of our markets, primarily due to the same factors previously discussed.  Acquired operations contributed $20.1 million to our industrial sales increase in the first six months of 2018.

Earnings from operations for the North reportable segment increased in the first six months of 2018 by $2.3 million, or 8.7%, due to an increase in gross profit of $4.3 million offset by a $1.7 million increase in SG&A expenses compared to last year.  Acquired operations contributed $1.1 million to our operating profits in the first six months. 

 

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UNIVERSAL FOREST PRODUCTS, INC.

 

South

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

Net Sales

 

 

South Segment by Market

 

South Segment by Market

 

 

Three Months Ended

 

Six Months Ended

(in thousands)

    

June 30,

    

July 1,

    

 

    

 

June 30,

    

July 1,

    

 

 

Market Classification

 

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

Retail

 

$

130,930

 

$

106,294

 

23.2

%  

 

$

246,128

 

$

190,554

 

29.2

%

Industrial

 

 

103,384

 

 

72,678

 

42.2

%  

 

 

184,392

 

 

135,388

 

36.2

%

Construction

 

 

62,872

 

 

47,736

 

31.7

%  

 

 

113,942

 

 

93,592

 

21.7

%

Total Gross Sales

 

 

297,186

 

 

226,708

 

31.1

%  

 

 

544,462

 

 

419,534

 

29.8

%

Sales Allowances

 

 

(5,866)

 

 

(5,125)

 

14.5

%  

 

 

(11,122)

 

 

(9,208)

 

20.8

%

Total Net Sales

 

$

 291,320

 

$

221,583

 

31.5

%  

 

$

533,340

 

$

410,326

 

30.0

%

Note:  During 2018, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.

Net sales attributable to the South reportable segment increased in the second quarter of 2018 compared to 2017 due to increased sales to all markets, primarily due to the same factors previously discussed.  Acquired operations contributed $7.3 million to our growth in sales to the industrial market. 

Earnings from operations for the South reportable segment increased in the second quarter of 2018 by $4.7 million, or 45.7%, due to an increase in gross profit dollars of $7.2 million, offset by an increase in SG&A expenses of $2.5 million compared to the same period of 2017, due to the same factors previously discussed.  Acquired operations contributed $0.1 million to operating profits in the second quarter. 

Net sales attributable to the South reportable segment increased in the first six months of 2018 compared to 2017 due to increased sales to all markets, primarily due to the same factors previously discussed.  Acquired operations contributed $41.7 million to our growth in sales primarily to the retail market. 

Earnings from operations for the South reportable segment increased in the first six months of 2018 by $13.5 million, or 64.7%, compared to the same period in 2017.  Excluding the impact of our Medley plant sale, earnings from operations increased during the first six months of 2018 by $6.4 million due to an increase in gross profit dollars of $11.1 million, offset by an increase in SG&A expenses of $4.7 million compared to the same period of 2017.  Acquired operations contributed $3.1 million to gross profits, $2.0 million to SG&A, and $1.1 million to operating profits in the first six months of the year. 

West

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

Net Sales

 

 

 

West Segment by Market

 

West Segment by Market

 

 

 

Three Months Ended

 

Six Months Ended

 

(in thousands)

    

June 30,

    

July 1,

    

 

 

    

June 30,

    

July 1,

    

 

 

 

Market Classification

 

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

 

Retail

 

$

156,228

 

$

132,583

 

17.8

%  

 

$

267,252

 

$

231,594

 

15.4

%  

 

Industrial

 

 

152,591

 

 

141,273

 

8.0

%  

 

 

280,180

 

 

257,542

 

8.8

%  

 

Construction

 

 

154,959

 

 

122,251

 

26.8

%  

 

 

284,129

 

 

229,995

 

23.5

%  

 

Total Gross Sales

 

 

463,778

 

 

396,107

 

17.1

%  

 

 

831,561

 

 

719,131

 

15.6

%  

 

Sales Allowances

 

 

(6,953)

 

 

(5,239)

 

32.7

%  

 

 

(12,268)

 

 

(9,101)

 

34.8

%  

 

Total Net Sales

 

$

456,825

 

$

390,868

 

16.9

%  

 

$

819,293

 

$

710,030

 

15.4

%  

 

Note:  During 2018, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.

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UNIVERSAL FOREST PRODUCTS, INC.

 

Net sales attributable to the West reportable segment increased in the second quarter of 2018 compared to 2017 due to increases in sales to all markets primarily due to factors previously discussed. 

Earnings from operations for the West reportable segment increased in the second quarter of 2018 by $5.0 million, or 20.2%, compared to the same period in 2017 due to a $8.2 million increase in gross profit, offset by a $3.2 million increase in SG&A expenses due to the same factors previously discussed. 

Net sales attributable to the West reportable segment increased in the first six months of 2018 compared to 2017 due to increases in sales to all markets primarily due to factors previously discussed. 

Earnings from operations for the West reportable segment increased in the first six months of 2018 by $7.8 million, or 18.1%, compared to the same period in 2017 due to a $12.3 million increase in gross profit, offset by a $4.5 million increase in SG&A expenses due to the same factors previously discussed. 

 

All Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Sales

 

Net Sales

 

 

 

 

All Other Segment by Market

 

All Other Segment by Market

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

(in thousands)

    

June 30,

    

July 1,

    

 

 

    

June 30,

    

July 1,

    

 

 

 

    

Market Classification

 

2018

 

2017

 

% Change

 

2018

 

2017

 

% Change

 

 

Retail

 

$

66,943

 

$

57,750

 

15.9

%

 

$

115,874

 

$

99,386

 

16.6

%

 

 

Industrial

 

 

92,293

 

 

84,464

 

9.3

%

 

 

165,042

 

 

153,595

 

7.5

%

 

 

Construction

 

 

340

 

 

70

 

385.7

%

 

 

390

 

 

202

 

93.1

%

 

 

Total Gross Sales

 

 

159,576

 

 

142,284

 

12.2

%

 

 

281,306

 

 

253,183

 

11.1

%

 

 

Sales Allowances & Other

 

 

(4,102)

 

 

(1,914)

 

114.3

%

 

 

(6,649)

 

 

(2,509)

 

165.0

%

 

 

Total Net Sales

 

$

155,474

 

$

140,370

 

10.8

%

 

$

274,657

 

$

250,674

 

9.6

%

 

 

Note:  During 2018, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.

Our All Other reportable segment consists of our Alternative Materials, International, idX, and certain other segments which are not significant.

Net sales attributable to All Other reportable segments increased in the second quarter of 2018 compared to 2017 due to increases in sales to the retail and industrial markets.  Our increase in sales to the retail market was primarily due to a $10.2 million and $3.3 million increase in sales within our International and Alternative Products segments, respectively.

Earnings from operations for All Other reportable segments decreased during the second quarter of 2018 by $1.5 million primarily due to the idX segment.

Net sales attributable to All Other reportable segments increased in the first six months of 2018 compared to 2017 due to increases in sales to the retail and industrial markets.  Our increase in sales to the retail market was primarily due to a $21.1 million and $3.9 million increase in sales within our International and Alternative Products segments, respectively.

Earnings from operations for All Other reportable segments decreased during the first six months of 2018 by $5.2 million due to the idX segment.

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UNIVERSAL FOREST PRODUCTS, INC.

 

OFF-BALANCE SHEET TRANSACTIONS

We have no significant off-balance sheet transactions other than operating leases.

LIQUIDITY AND CAPITAL RESOURCES

The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):

 

 

 

 

 

 

 

 

 

Six Months Ended

 

    

June 30,

    

July 1,

 

 

2018

 

2017

Cash (used in) from operating activities

 

$

(36,072)

 

$

15,211

Cash used in investing activities

 

 

(63,069)

 

 

(99,887)

Cash from financing activities

 

 

114,840

 

 

74,521

Effect of exchange rate changes on cash

 

 

(256)

 

 

1,196

Net change in all cash and cash equivalents

 

 

15,443

 

 

(8,959)

Cash, cash equivalents, and restricted cash, beginning of period

 

 

28,816

 

 

34,489

Cash, cash equivalents, and restricted cash, end of period

 

$

44,259

 

$

25,530

In general, we funded our growth in the past through a combination of operating cash flows, our revolving credit facility, industrial development bonds (when circumstances permit), and issuance of long-term notes payable at times when interest rates are favorable. We have not issued equity to finance growth except in the case of a large acquisition. We manage our capital structure by attempting to maintain a targeted ratio of debt to equity and debt to earnings before interest, taxes, depreciation and amortization. We believe this is one of many important factors to maintaining a strong credit profile, which in turn helps ensure timely access to capital when needed.

Seasonality has a significant impact on our working capital due to our primary selling season which occurs during the period from March to September. Consequently, our working capital increases during our first and second quarters resulting in negative or modest cash flows from operations during those periods. Conversely, we experience a substantial decrease in working capital once we move beyond our peak selling season which typically results in significant cash flows from operations in our third and fourth quarters.

Due to the seasonality of our business and the effects of the Lumber Market, we believe our cash cycle (days of sales outstanding plus days supply of inventory less days payables outstanding) is a good indicator of our working capital management. As indicated in the table below, our cash cycle decreased to 49 days from 50 days during the second quarter of 2018 compared to the prior periods.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

July 1,

 

June 30,

 

July 1,

 

 

 

2018

 

2017

 

2018

 

2017

 

Days of sales outstanding

    

 

31

    

 

31

    

 

32

    

 

31

    

Days supply of inventory

 

 

38

 

 

39

 

 

42

 

 

43

 

Days payables outstanding

 

 

(20)

 

 

(20)

 

 

(21)

 

 

(20)

 

Days in cash cycle

 

 

49

 

 

50

 

 

53

 

 

54

 

In the first six months of 2018, our cash used in operating activities was $36.1 million, which was comprised of net earnings of $78.7 million and $24.1 million of non-cash expenses, offset by a $138.9 million seasonal increase in working capital since the end of December 2017.  Comparatively in the first six months of 2017, our cash provided by operating activities was $15.2 million, which was comprised of net earnings of $56.2 million, and $27.0 million of non-cash expenses, offset by a $68.0 million seasonal increase in working capital since the end of December 2016.  The

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UNIVERSAL FOREST PRODUCTS, INC.

 

increase in working capital compared to the same period last year was primarily due to growth in our business and higher lumber prices.

Acquisitions and purchases of property, plant, and equipment comprised most of our cash used in investing activities during the first six months of 2018 and totaled $38.0 million and $54.3 million, respectively. Proceeds from the sale of our Medley, FL, plant provided approximately $36 million in net cash proceeds.  Outstanding purchase commitments on existing capital projects totaled approximately $23.4 million on June 30, 2018. We currently plan to spend up to $100 million for the year on capital expenditures.  We intend to fund capital expenditures and purchase commitments through our operating cash flows for the balance of the year.  Comparatively, capital expenditures were $34.5 million during the first six months of 2017.  The increase in our capital expenditures in 2018 is primarily due to the additional requirements of recently acquired operations and certain real estate purchases as we continue to grow our business and utilize the proceeds for the sale of our Medley plant to achieve a favorable tax treatment.  The sale and purchase of investments totaling $9.3 million and $3.2 million, respectively, are due to investment activity in our captive insurance subsidiary.

Cash flows from financing activities primarily consisted of net borrowings under our revolving credit facility of approximately $57.2 million and $75 million in Senior Notes issued under our shelf facility.  Additionally, we paid a semi-annual dividend totaling $11.1 million or $0.18 per share.

On June 30, 2018, we had $116.2 million outstanding on our $295 million revolving credit facility. The outstanding revolving credit facility also includes letters of credit totaling approximately $9.8 million on June 30, 2018; as a result, we have approximately $168.9 million in remaining availability on our revolver after considering letters of credit. Additionally, we have $150 million in availability under an amended “shelf agreement” for long term debt with a current lender after considering the second quarter issuance of long-term Senior Notes. Financial covenants on the unsecured revolving credit facility and unsecured notes include minimum interest tests and a maximum leverage ratio. The agreements also restrict the amount of additional indebtedness we may incur and the amount of assets which may be sold. We were in compliance with all our covenant requirements on June 30, 2018.

ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS

See Notes to Unaudited Consolidated Condensed Financial Statements, Note E, “Commitments, Contingencies, and Guarantees.”

CRITICAL ACCOUNTING POLICIES

In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States. These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations. We continually review our accounting policies and financial information disclosures. There have been no material changes in our policies or estimates since December 30, 2017.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to market risks related to fluctuations in interest rates on our variable rate debt, which consists of a revolving credit facility and industrial development revenue bonds. We do not currently use interest rate swaps, futures contracts or options on futures, or other types of derivative financial instruments to mitigate this risk.

For fixed rate debt, changes in interest rates generally affect the fair market value, but not earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not influence fair market value, but do affect future earnings and cash flows. We do not have an obligation to prepay fixed rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we would be required to refinance it.

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UNIVERSAL FOREST PRODUCTS, INC.

 

We are subject to fluctuations in the price of lumber. We experience significant fluctuations in the cost of commodity lumber products from primary producers (the “Lumber Market”). A variety of factors over which we have no control, including government regulations, transportation, environmental regulations, weather conditions, economic conditions, and natural disasters, impact the cost of lumber products and our selling prices. While we attempt to minimize our risk from severe price fluctuations, substantial, prolonged trends in lumber prices can affect our sales volume, our gross margins, and our profitability. We anticipate that these fluctuations will continue in the future. (See “Impact of the Lumber Market on Our Operating Results.”)

Our international operations have exposure to foreign currency rate risks, primarily due to fluctuations in their local currency, which is their functional currency, compared to the U.S. dollar. Additionally, certain of our operations enter into transactions that will be settled in a currency other than the U.S. Dollar. We entered into forward foreign exchange rate contracts in 2017 and may enter into further forward contracts in the future associated with mitigating the foreign currency exchange risk. Historically, our hedge contracts are deemed immaterial to the financial statements, however any material hedge contract in the future will be disclosed.

Item 4. Controls and Procedures.

(a)

Evaluation of Disclosure Controls and Procedures. With the participation of management, our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15e and 15d – 15e) as of the quarter ended June 30, 2018 (the “Evaluation Date”), have concluded that, as of such date, our disclosure controls and procedures were effective.

(b)

Changes in Internal Controls. During the quarter ended June 30, 2018, there were no changes in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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UNIVERSAL FOREST PRODUCTS, INC.

 

PART II. OTHER INFORMATION

Item 1A. Risk Factors.

We may be impacted by new tariffs and duties on U.S. imports and foreign export sales.  Instability of established free trade agreements may lead to raw material and finished goods price volatility.  An increase in foreign tariffs on U.S. goods could curtail our export sales to other countries which was approximately $110.8 million in 2017.  Increased tariffs and duties on U.S. imports will increase pricing by adding duty cost, where the duty is sustainable in light of overall unit price, or otherwise constrain supply by eliminating historical production sources by country or commodity type with unsustainable duties.  UFP’s consolidated U.S. imports were approximately $132.6 million in 2017.  In addition, there is a risk that U.S. tariffs on imports and countering tariffs on U.S. exports could trigger broader international trade conflicts that could adversely impact our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

None.

(b)

None.

(c)

Issuer purchases of equity securities.

 

 

 

 

 

 

 

 

 

Fiscal Month

    

(a)

    

(b)

    

(c)

    

(d)

April 1 - May 5, 2018

 

23,172

 

$ 32.38

 

 —

 

2,672,039

May 6 - June 2, 2018

 

6,800

 

$ 32.33

 

 —

 

2,665,239

June 3 - June 30, 2018

 

 —

 

 —

 

 —

 

2,665,239


(a)

Total number of shares purchased.

(b)

Average price paid per share.

(c)

Total number of shares purchased as part of publicly announced plans or programs.

(d)

Maximum number of shares that may yet be purchased under the plans or programs.

On November 14, 2001, the Board of Directors approved a share repurchase program (which succeeded a previous program) allowing us to repurchase up to 2.5 million shares of our common stock. On October 14, 2011, our Board authorized an additional 2 million shares to be repurchased under our share repurchase program. The total number of remaining shares that may be repurchased under the program is approximately 2.7 million.

Item 5. Other Information.

None.

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UNIVERSAL FOREST PRODUCTS, INC.

 

PART II. OTHER INFORMATION

Item 6. Exhibits.

The following exhibits (listed by number corresponding to the Exhibit Table as Item 601 in Regulation S-K) are filed with this report:

 

 

 

31

Certifications.

 

 

 

 

(a)

Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 

 

 

 

(b)

Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 

 

 

32

Certifications.

 

 

 

 

(a)

Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 

 

 

 

(b)

Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

 

 

 

101

Interactive Data File.

 

 

 

 

(INS)

XBRL Instance Document.

 

 

 

 

(SCH)

XBRL Schema Document.

 

 

 

 

(CAL)

XBRL Taxonomy Extension Calculation Linkbase Document.

 

 

 

 

(LAB)

XBRL Taxonomy Extension Label Linkbase Document.

 

 

 

 

(PRE)

XBRL Taxonomy Extension Presentation Linkbase Document.

 

 

 

 

(DEF)

XBRL Taxonomy Extension Definition Linkbase Document.


 

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UNIVERSAL FOREST PRODUCTS, INC.

 

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

UNIVERSAL FOREST PRODUCTS, INC.

 

 

 

Date: August 1, 2018

By:

/s/ Matthew J. Missad

 

Matthew J. Missad,

 

Chief Executive Officer and Principal Executive Officer

 

 

 

 

 

 

Date: August 1, 2018

By:

/s/ Michael R. Cole

 

Michael R. Cole,

 

Chief Financial Officer,

 

Principal Financial Officer and

 

Principal Accounting Officer

 

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