UFPI Net Sales Increased 24% in 2nd Quarter; Net Earnings Reported at $13.7 Million

http://www.businesswire.com/news/home/20100714006564/en

- Company posts sales increases in all four markets -

- Volatile lumber market impacts profits -
GRAND RAPIDS, Mich.--(Business Wire)--
Universal Forest Products, Inc. (Nasdaq: UFPI) today reported second-quarter
2010 results, including a 24% increase in net sales to $638.6 million over
$514.9 million for the same period last year. Net earnings for the quarter were
$13.7 million, or $0.70 per diluted share, compared to net earnings of $16.1
million, or $0.83 per diluted share, for the same period of 2009. The results
reflect sales increases in all four of the Company`s markets as well as a
volatile lumber market that dropped precipitously during the quarter, negatively
affecting profits, particularly in the month of June.

"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. Our people helped us turn in solid results in the face of some
extreme challenges," said CEO Michael B. Glenn. "It`s testimony to the strength
of our balanced business model, which allows us to seek opportunity in more than
one market."

"These are tough times, but we`re in an enviable position in the industry: We`re
focused on growth and armed with the resources we need to take advantage of
opportunities that arise," Glenn added.

Among the Company`s goals for the year are to grow top-line sales, manage
inventory and receivables in a tenuous economy, and continuously improve
operations to reduce costs.

The lumber market was approximately 52% higher, on average, in the second
quarter of 2010 compared to the same period of 2009, and was unusually volatile
during the quarter. This volatility had a significant adverse impact on gross
profits, particularly in the month of June. Lumber prices increased to a peak of
$367 at the end of April and then fell quickly-to $247 by late June. Since the
end of June, lumber prices have stabilized.

By market, Universal posted the following gross sales results for the second
quarter:

Do-It-Yourself/retail: $315.8 million, an increase of 8.4% over the same period
of 2009. Unit sales to this market declined an estimated 3% due to soft demand.
According to Harvard`s Joint Center for Housing Studies, the industry saw a 9.7%
annualized decline in demand in the second quarter of 2010. Retailers didn`t
anticipate the weak demand and many held significant inventories in the quarter,
which typically is a busy selling season. Most experts, including Harvard, are
calling for an increase in home improvement expenditures by the end of 2010 (the
first annual increase since 2006) driven by predicted improvements in the
economy and stabilization in employment and home prices. Universal continues to
add to the products it offers to retailers, with items such as new lines of
decking products and accessories.

Industrial packaging/components: $179.2 million, an increase of 36.0% over the
second quarter of 2009. Unit sales increased by more than 20% during the
quarter, primarily due to market share gains that resulted from adding
approximately 225 new customers. This continues to be an area of opportunity for
Universal. The Company is focused on adding customers and products, as well as
on expanding its reach into concrete forming and non-wood packaging materials.

Site-built construction: $72.2 million, which is 19.1% higher than same period
of 2009. Unit sales increased by approximately 11% during the quarter; national
single-family and multifamily housing starts increased approximately 31% and
decreased approximately 6%, respectively, in April and May of 2010, compared to
the same periods of 2009. We have taken several recent plant closure actions in
order to achieve profitability and cash flow objectives, which may temporarily
result in a loss of market share. Universal sees home building as a challenged
industry for years to come and will continue to focus on commercial, government
and turnkey projects.

Manufactured housing: $81.6 million, an increase of 82.5% over 2009. Unit sales
to this market increased 41%, a result of increased demand in some areas of the
country, notably the Southwest. Performance in this market also reflects the
growing list of products the Company supplies through new manufacturing
opportunities and through its expanded distribution business, in which it offers
everything from adhesives to plumbing supplies.

OUTLOOK

The Company expects the current challenging conditions to prevail through 2010,
limiting its ability to provide meaningful guidance for ranges of likely
financial performance; therefore, the Company will not provide guidance for the
foreseeable future. However, the Company remains optimistic about its
performance in 2010, given its strong financial position, solid business model
and diverse business opportunities that position it better than most to endure
challenging times.

CONFERENCE CALL

Universal Forest Products will conduct a conference call to discuss information
included in this news release and related matters at 8 a.m. ET on Thursday, July
15, 2010. The call will be hosted by CEO Michael B. Glenn and CFO Michael Cole,
and will be available for analysts and institutional investors domestically at
(866) 804-6923 or internationally at (857) 350-1669. Use conference pass code
18827881. The conference call will be available simultaneously and in its
entirety to all interested investors and news media through a webcast at
http://www.ufpi.com. A replay of the call will be available through Monday, Aug.
16, 2010, domestically at (888) 286-8010 and internationally at (617) 801-6888.
Use replay pass code 50546407.

UNIVERSAL FOREST PRODUCTS, INC.

Universal Forest Products, Inc. is a holding company that provides capital,
management and administrative resources to subsidiaries that design, manufacture
and market wood and wood-alternative products for DIY/retail home centers and
other retailers, structural lumber and other products for the manufactured
housing industry, engineered wood components for the site-built construction
market, and specialty wood packaging and components and packing materials for
various industries. Universal`s subsidiaries also provide framing services for
the site-built market, and forming products for concrete construction. The
Company's consumer products subsidiary offers a large portfolio of outdoor
living products, including wood composite decking, decorative balusters, post
caps and plastic lattice. Its lawn and garden group offers an array of products,
such as trellises and arches, to retailers nationwide. Founded in 1955,
Universal Forest Products is headquartered in Grand Rapids, Mich., with
operations throughout North America. For more about Universal Forest Products,
go to www.ufpi.com.

This press release contains forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act, as amended, that are based on
management`s beliefs, assumptions, current expectations, estimates, and
projections about the markets we serve, the economy and the company itself.
Words like "anticipates," "believes," "confident," "estimates," "expects,"
"forecasts," likely," "plans," "projects," "should," variations of such words,
and similar expressions identify such forward-looking statements. These
statements do not guarantee future performance and involve certain risks,
uncertainties, and assumptions that are difficult to predict with regard to
timing, extent, likelihood, and degree of occurrence. The Company does not
undertake to update forward-looking statements to reflect facts, circumstances,
assumptions or events that occur after the date the forward-looking statements
are made. Actual results could differ materially from those included in such
forward-looking statements. Investors are cautioned that all forward-looking
statements involve risks and uncertainty. Among the factors that could cause
actual results to differ materially from forward-looking statements are the
following: fluctuations in the price of lumber; adverse or unusual weather
conditions; adverse conditions in the markets we serve; government regulations,
particularly involving environmental and safety regulations; and our ability to
make successful business acquisitions.Certain of these risk factors as well as
other risk factors and additional information are included in the Company's
reports on Form 10-K and 10-Q on file with the Securities and Exchange
Commission.

CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 2010/2009
Quarter Period Year to Date
(In thousands, except per share data) 2010 2009 2010 2009

NET SALES $ 638,635 100 % $ 514,945 100 % $ 1,031,593 100 % $ 876,667 100 %

COST OF GOODS SOLD 560,749 87.8 432,460 84.0 902,073 87.4 747,361 85.3

GROSS PROFIT 77,886 12.2 82,485 16.0 129,520 12.6 129,306 14.7

SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 54,041 8.5 56,020 10.9 102,530 9.9 105,112 12.0
NET LOSS (GAIN) ON DISPOSITION OF ASSETS
AND OTHER IMPAIRMENT AND EXIT CHARGES 212 - (716 ) (0.1 ) 384 - (1,852 ) (0.2 )

EARNINGS FROM OPERATIONS 23,633 3.7 27,181 5.3 26,606 2.6 26,046 3.0

INTEREST EXPENSE 903 0.1 1,429 0.3 1,789 0.2 2,503 0.3
INTEREST INCOME (70 ) - (96 ) - (190 ) - (179 ) -
833 0.1 1,333 0.3 1,599 0.2 2,324 0.3

EARNINGS BEFORE INCOME TAXES 22,800 3.6 25,848 5.0 25,007 2.4 23,722 2.7

INCOME TAXES 8,332 1.3 9,393 1.8 8,819 0.9 8,430 1.0

NET EARNINGS 14,468 2.3 16,455 3.2 16,188 1.6 15,292 1.7

LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST (752 ) (0.1 ) (367 ) (0.1 ) (1,485 ) (0.1 ) (411 ) -

NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST $ 13,716 2.2 $ 16,088 3.1 $ 14,703 1.4 $ 14,881 1.7

EARNINGS PER SHARE - BASIC $ 0.71 $ 0.84 $ 0.76 $ 0.77

EARNINGS PER SHARE - DILUTED $ 0.70 $ 0.83 $ 0.75 $ 0.77

WEIGHTED AVERAGE SHARES OUTSTANDING 19,259 19,241 19,258 19,213

WEIGHTED AVERAGE SHARES OUTSTANDING
WITH COMMON STOCK EQUIVALENTS 19,531 19,459 19,524 19,370

SUPPLEMENTAL SALES DATA
Quarter Period Year to Date
Market Classification 2010 % 2009 % 2010 % 2009 %
Do-It-Yourself/Retail $ 315,833 48 % $ 291,184 56 % $ 480,240 46 % $ 458,764 52 %
Site-Built Construction 72,223 11 % 60,642 11 % 133,112 13 % 120,963 13 %
Industrial 179,240 28 % 131,783 25 % 305,228 29 % 236,419 26 %
Manufactured Housing 81,616 13 % 44,710 8 % 129,978 12 % 81,281 9 %
Total Gross Sales 648,912 100 % 528,319 100 % 1,048,558 100 % 897,427 100 %
Sales Allowances (10,277 ) (13,374 ) (16,965 ) (20,760 )
Total Net Sales $ 638,635 $ 514,945 $ 1,031,593 $ 876,667

CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JUNE 2010/2009

(In thousands)
ASSETS 2010 2009 LIABILITIES AND EQUITY 2010 2009

CURRENT ASSETS CURRENT LIABILITIES
Cash and cash equivalents $ 21,246 $ 32,633 Accounts payable $ 103,992 $ 98,805
Accounts receivable 229,199 197,901 Accrued liabilities 77,983 85,459
Inventories 191,569 165,490 Current portion of long-term
Assets held for sale - 3,057 debt and capital leases 692 396
Other current assets 18,110 19,728

TOTAL CURRENT ASSETS 460,124 418,809 TOTAL CURRENT LIABILITIES 182,667 184,660

OTHER ASSETS 5,300 3,456 LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET 172,065 177,703 CAPITAL LEASE OBLIGATIONS,
PROPERTY, PLANT less current portion 67,932 55,108
AND EQUIPMENT, NET 226,426 235,509 OTHER LIABILITIES 33,468 32,512
EQUITY 579,848 563,197

TOTAL ASSETS $ 863,915 $ 835,477 TOTAL LIABILITIES AND EQUITY $ 863,915 $ 835,477

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2010/2009
(In thousands) 2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings attributable to controlling interest $ 14,703 $ 14,881
Adjustments to reconcile net earnings attributable to controlling interest
to net cash from operating activities:
Depreciation 15,199 16,510
Amortization of intangibles 3,590 4,520
Expense associated with share-based compensation arrangements 1,078 1,089
Excess tax benefits from share-based compensation arrangements (265 ) (211 )
Expense associated with stock grant plans 117 89
Deferred income taxes (credit) (195 ) 195
Net earnings attributable to noncontrolling interest 1,485 411
Net loss (gain) on sale or impairment of assets 118 (2,457 )
Changes in:
Accounts receivable (120,961 ) (59,701 )
Inventories (26,175 ) 27,980
Accounts payable 39,466 35,576
Accrued liabilities and other 21,609 23,798
NET CASH FROM OPERATING ACTIVITIES (50,231 ) 62,680

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant, and equipment (11,551 ) (7,279 )
Acquisitions, net of cash received (5,834 ) -
Proceeds from sale of property, plant and equipment 382 10,241
Advances of notes receivable (1,000 ) (14 )
Collections of notes receivable 103 68
Insurance proceeds - 1,023
Other, net 21 11
NET CASH FROM INVESTING ACTIVITIES (17,879 ) 4,050

CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under revolving credit facilities 15,000 (30,257 )
Repayment of long-term debt (255 ) (16,213 )
Borrowings of long-term debt - 800
Proceeds from issuance of common stock 1,331 1,177
Purchase of additional noncontrolling interest (1,227 ) (1,770 )
Distributions to noncontrolling interest (472 ) (170 )
Dividends paid to shareholders (3,871 ) (1,158 )
Repurchase of common stock (3,648 ) -
Excess tax benefits from share-based compensation arrangements 265 211
Other, net 14 (54 )
NET CASH FROM FINANCING ACTIVITIES 7,137 (47,434 )

NET CHANGE IN CASH AND CASH EQUIVALENTS (60,973 ) 19,296

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 82,219 13,337

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 21,246 $ 32,633

SUPPLEMENTAL INFORMATION:
Cash paid (refunded) during the period for:
Interest $ 1,777 $ 2,790
Income taxes (8,470 ) (6,050 )

Universal Forest Products, Inc.
Lynn Afendoulis
Director, Corporate Communications
(616) 365-1502

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