Universal Forest Products (UFP) reported 2013 second-quarter net sales of $738.4 million, a 24.4% increase over 2012 second-quarter net sales of $593.7 million.
The company saw significant double-digit gains in each of its five markets, but net earnings declined 10.8% to $15.8 million in the quarter.
Second-quarter 2013 earnings were $15.8 million compared with net earnings of $17.5 million, or $0.88 per diluted share for the second quarter of 2012. Second-quarter earnings in 2012 were enhanced by gains on the sale of real estate totaling approximately $6.9 million ($4.3 million after taxes, or $0.21 per diluted share). The company’s adjusted net earnings in the second quarter of 2012, excluding these nonrecurring gains, would have been $13.2 million.
After rising for months, lumber prices dropped 28% during the second quarter -- and UFP had to work through the math, according to CEO Matthew J. Missad.
“A drop in lumber prices of this magnitude, especially during the second quarter, typically has an adverse impact on the company’s gross margins and profitability," he said. "Through the second quarter, we were able to reduce the impact with strong unit sales in many markets, particularly those tied to new housing and construction.”
Despite the second-quarter decline, lumber prices remained 15% higher than the same period of 2012.
Missad pointed to what he believes is UFP's competitive advantage: “We are not dependent on a single market, which provides us with a competitive advantage over those companies that do not have the benefit of a diverse customer base or that do not serve multiple industries.”
Retail building material sales were $315.0 million, up 12.9% over the second quarter of 2012. Forecasts call for moderate growth in home improvement projects through the end of the year, including decking and railing projects, and the company sees potential for its ProWood brand of premium lumber for decking, including Dura Color.
UFP said it continues to broaden and deepen the mix of products it offers and to grow its business with big-box and independent retailers, alike.
UFP's residential construction sales were $94.3 million, up 57.3% over the same period of 2012. Total housing starts for March to May 2013 were up 27.8% over the same period of 2012. Commercial construction and concrete sales were up 56.2% to $37.5 million.