INDUSTRY NEWS

Universal Forest Products Reports Stronger Sales, $13.7 Million Profit in Second Quarter

07/14/2010

GRAND RAPIDS, MI -- Universal Forest Products, Inc.this week reported a 24% increase in net sales totaling $638.6 million in the second quarter of 2010. 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. The company earned $13.7 million during the quarter, down slightly from the $16.1 million it earned during the same period of 2009.

"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.

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.