Apr 19, 2018 • 08:30 am ET

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Presentation
Operator
Operator

Welcome to the Universal Forest Products Incorporated First Quarter 2018 Conference Call. Hosting the call today are CEO, Matt Missad; and CFO, Mike Cole. Matt and Mike will offer prepared remarks and then the call will be opened up for questions.

This conference call is available simultaneously and in its entirety to all interested investors and news media through our webcast at www.ufpi.com. A replay will be also available at the website through May 19, 2018.

(Forward-Looking Cautionary Statements)

At this time, I would like to turn the call over to Matt Missad.

Executive
Matt J. Missad

Thank you, Ayla, and good morning, everyone. Welcome to our first quarter 2018 conference call, where we say, good golly, Miss Molly, what a great quarter. We like to think that it can't rain on our parade, but this morning we woke up in Michigan to a blanket of snow. But even a mid-April snow won't dampen our enthusiasm. It's just another hurdle, we will overcome to reach our 2018 goal to be greater than before. Simply put, we need to produce our best year in UFP's 63-year (ph) history in 2018, and we are off to an excellent start.

I'm very proud of our UFP family members, who were able to post new first quarter records for sales and profits. We had some tailwinds like the gain on sale of our Medley, Florida property and a lower federal income tax rate, yet we also had some headwinds like higher transportation and labor costs. Even without the tailwind items, we produced record results from operations. Let's do a quick review of the quarter.

Sales were a record $993.9 million for the quarter versus sales of $856.8 million (ph) in 2017. If only we had an extra $6 million in sales because $1 billion has a much nicer ring to it. We also were encouraged with our overall 9% unit sales growth in the quarter. Earnings were a record $0.53 per share for the quarter versus $0.34 per share in 2017. Our earnings include both the headwinds and the tailwinds I mentioned and Mike will give you more details in his report.

Gross margins were down 110 basis points from 2017. The bulk of the difference is related to the higher average lumber market pricing. Gross profit dollars were up $10 million and were in line with our unit sales increases.

New product sales were $103.9 million, up from $86.2 million a year ago. We are slightly behind our target year-to-date, as sales in the north and parts of the west are behind schedule, primarily due to weather conditions. We still believe that we will be able to achieve our annual target of $450 million in new product sales.

A quick review of the lumber market shows that pricing in early Q2, it still is trading at the higher levels we saw in Q1. Q1 of 2018 saw the composite lumber market as much as 20% to 25% above 2017, while the Southern Yellow Pine market was generally up