Universal Forest Products Inc. (UFPI) reported today that sales of its products to the site-built construction market dropped 42.8% in the third quarter to hit $68.3 million, the worst decline of any of its four customer segments. Company-wide, net sales dropped by a quarter to $457.8 million.
Net earnings swung to $10.1 million in the third quarter from a $2.0 million loss last year. That occurred despite the sales drop largely because UFPI incurred $5.3 million in losses last year from asset dispositions and other impairment and exit charges but suffered only a $606,000 loss in that category this year.
"The improved earnings reflect the company's focus on cost containment and sizing the company for demand in the markets it serves," Grand Rapids, Mich.-based UFPI said in a press statement. "Sales continue to be adversely impacted by a soft lumber market and a weak economy." It noted, for instance, that the composite lumber price was 13% lower in the third quarter of 2009 than in the year-earlier quarter. "The company believes weak demand will keep lumber prices depressed through the fourth quarter," it said.
UFPI also cited the slump in total housing starts from last year as on reason why its site-built construction market segment recorded just $68.3 million in sales from July through September. In contrast, UFPI's sales in the Do-It-Yourself/retail market slid 15.2% to $214.7 million, sales to the manufactured housing market shrank 36.8% to $53.8 million, and sales to the industrial packaging/compnents market declined 19.6% to $132.7 million.
"We're managing our business in a fragile environment and focusing on basic business principles--managing inventory and receivables, improving efficiencies, eliminating waste, and growing our value to our customers--that allow us to achieve solid cash flow, resulting in a strong balance sheet," chief executive officer Michael B. Glenn said.