Universal Forest Products Inc. (UFPI) credited cost-cutting and a more stable lumber market today when it reported net earnings jumped 117% in the third quarter to $5.6 million from the year-earlier period even though net sales slipped 2.4% to $468.9 million.
Gains in its commercial constructoin and concrete forming, industrial, and manufacturing housing markets all grew, while the residential construction and retail building markets "continue to be soft," the Grand Rapids, Mich.-based company said.
Sales in the residential construction market fell 17% in the July-September period from a year before to hit $52.2 million. UFPI noted it had closed plants in Texas and California since 3Q10. "The company remains focused on multifamily projects, where it sees stronger opportunity for growth than in single-family construction," UFPI's earnings announcement said.
Meanwhile, sales of retail building materials dropped 5.4% on a dollar basis to $210.9 million and dipped 2% in unit sales. "The Home Improvement Research Institute states that acceleration in the growth of home improvement products will be held back by continuing weakness in the housing market, and calls for growth of home improvement product sales averaging 3.7% over 2012-2013," the company said. "Universal is aggressively focusing on providing new products for this market, and remains persistent in its efforts to be the low-cost producer."
"Our cost-cutting efforts and a more stable lumber market helped us generate a stronger profit in the quarter," CEO Matthew J. Missad stated.. Selling, general, and admiinistrative expenses dropped to $44 million, or 9.4% of net sales, from $47.3 million, or 9.8% of sales a year earlier.
"Our sales suffered from a stagnant economy, which is likely to remain weak for the near term," he said. "Since we can't rely on an improved economy to grow our business, we are pursuing other avenues of growth.
"If current forecasts are accurate, we believe significant overcapacity exists in the markets we serve," Missad added. "We expect that many companies will struggle to make it through the winter, and we remain poised for opportunities to consolidate our markets and improve our value to our customers and our shareholders."
UFPI bills itself as one of the nation's largest buyers of wood, which it uses to create a wealth of wood and wood-alternative products sold to LBM dealers and retail home centers. Its product mix includes engineered wood components, structural lumber products for the manufactured housing industry outdoor living products, including wood composite decking, decorative balusters, post caps and plastic lattice, trellises, and arches.