Net earnings at Universal Forest Products, Inc. (UFPI) fell 69%, compared with the same period a year ago, during the second quarter to finish at $4.3 million, the company reported on Wednesday. Net sales also fell 15% to $544.1 million during the quarter.
Weak consumer spending, especially on big-ticket items such as decking and fencing, was cited as the culprit for the quarter's poor performance. The company said profits for the quarter were negatively affected by severance and early retirement charges, which totaled $3.5 million for the quarter.
Last month the company announced the resignation of CEO Michael Glenn, who cited health concerns as the reason for his departure. On Wednesday, the company named Matthew Missad, its former executive vice president and general counsel, as CEO.
The company also announced plans late last month to undergo a realignment to match costs with its current business. UFPI said it plans to cut annual costs at $10 million, not including severance charges. The announcement came after the company posted a 9.5% drop in sales over the first five months of 2011.
"These are challenging times, but we are positioning the company for better results," said Glenn. "We have cut costs and implemented plans intended to maintain our strengths and capitalize on our opportunities moving forward."
In going along with the downward trend, the company reported a 67% drop, compared with second quarter 2010, in earnings from operations to finish at $7.8 million.
UFPI's retail building materials segment, which includes both do-it-yourselfers and pro-dealers, posted sales of $287.5 million for the quarter, an almost 19% drop compared with a year ago. The company said selling prices for lumber, which fell 11%, were the main cause of the decrease. The company also said that the dip in housing prices, coupled with homeowners struggling to financially maintain their homes, has caused many homeowners to delay bigger ticket projects such as building decks and fences.
The company's residential construction segment, including builders of single and multifamily homes, reported a 15% decrease in sales to finish at $56.7 million for the quarter. UFPI said unit sales were down 7% for the quarter, while selling prices fell 8%, compared with the same period last year.
The downward spiral did not affect all of UFPI's segments, as the commercial construction and concrete forming segment boasted a 23.2% increase in sales, over second quarter 2010's results, to finish at $20.8 million.