Universal Forest Products Inc. (UFPI) reported today its net earnings for the second quarter slipped 15% from the year-earlier quarter to $13.7 million but net sales jumped 24% to $638.6 million. All four of the company's markets saw sales gains, but the slump in lumber prices hurt profits, the company said.
"While these numbers aren't where we'd like them to be, they aren't a disappointment given the most unstable lumber market I've seen in my 36 years with the company," company CEO Michael B. Glenn declared.
Sales in UFPI's Do-It-Yourself/Retail market, a category that includes both big boxes and independent LBM dealers, climbed 8.4% to $315.8 million, but unit sales shrank 3%. Site-Built Construction, the other market most applicable to residential construction, posted a 19.1% jump in sales to $72.2 million as unit sales increased about 11%.
On the other hand, the volatility in lumber prices--peaking at $367 at the end of April and hitting $247 by late June--"had a significant adverse impact on gross profits, particularly in the month of June," the company said. One result was that the company's cost of goods sold shot up 29.7% in the second quarter from the year before, to $560.7 million, far above the 24% increase in sales. (See financial statement.)
Grand Rapids, Mich.-based UFPI describes itself as "America's leading buyer of solid-sawn lumber and the largest customer of North America's largest mills" as well as the nation's biggest producer of both pressure-treated wood and engineered roof systems for manufactured housing and site-built construction.
UFPI said it expects the "current challenging conditions" to last through this year. It said it is continuing to add products, such as decking, to the mix it offers retailers. It said the home-building market will be "a challenged industry for years to come" and thus is focusing on commercial, government and turnkey projects. It also is expanding its distribution business in the manufactured housing sector, offering "everything from adhesives to plumbing supplies."