Universal Forest Products Inc. (NASDAQ:UFPI) Q4 2015 Earnings Conference Call - Final Transcript

Feb 18, 2016 • 08:30 am ET

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Universal Forest Products Inc. (NASDAQ:UFPI) Q4 2015 Earnings Conference Call - Final Transcript

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Executive
Matthew J. Missad

$80.6 million, a 40% increase over 2014. EBITDA for the quarter totaled $42.2 million and for the year was $179.5 million. Gross margins were up significantly over 2014 due in part to a lower lumber market as well as good strategic buying decisions. We also benefited from better than expected weather in most of the country throughout the quarter and our customers continued their strong performance which helped to keep our facilities busy and boosted our operating leverage. As we look at our inventories at year-end, we feel very good about the level and position of our inventory. Since year-end, the market has been relatively stable, although the market is down 10% from January 2015 levels.

With announced curtailments in production management programs in place by some mills, we anticipate a more balanced market in the near-term as supply is brought in line with actual demand. OSB was slightly higher than a year-ago, it's still hanging near historical lows. For accounts receivable we're 87.9% current, which unfortunately is more typical for year-end, but still well below our target. We continue to look for ways to improve the percent current, while also maximizing sales and profitability. As great as 2015 was our whole team recognizes that seven weeks after year-end, 2015 is no longer current or meaningful and our focus is solely on 2016 and beyond. We are still comfortable with our long-term growth targets of sales growth of 4 percentage points to 6 percentage points greater than positive GDP growth and EBITDA percentage in the 5% to 6% range. One of our biggest challenges is to continue to add new products and services to our mix of sales. We've increased our investments in new products and our results continue to improve.

Our new product sales for 2015 were $260.1 million, which exceeded our 2017 goal of $250 million. Going forward, our long-term goal is to have new product sales comprise at least 10% of our total sales. We were not at that level in 2015 and we expect total sales to keep growing, so we've some work to do to get that level. A few notable products are the ProWood Dura Color treated lumber products. The LCi-SS insulated panel products for new construction and remodeling applications, our high-end decorators -- decking product where we will be adding capacity in 2016, and our increased growth in flat engineered panels for a wide variety of applications in each of our markets.

In addition to normal projected organic growth, we continue to look at acquisition opportunities. As we've mentioned for quite sometime valuations have been challenged, although we now believe the valuation multiples for most companies in our markets have peaked. We expect to complete acquisitions which compliment our existing products and services, as well as pursuing new opportunities that get us into additional new products, new expertise to enhance our existing offerings or additional geographies. We still maintain a philosophy to pursue targets which will provide us with a reasonable return on