UFP Industries, Inc. (Universal Forest Products, Inc.) — FY2013 Form 10-K
Reporting period: Fiscal year ended December 28, 2013. The filing’s financial statements and MD&A are incorporated by reference from the 2013 Annual Report, which is not included in the supplied text.
Business context
The company designs, manufactures and markets wood and wood-alternative products across retail building materials, residential and commercial construction, manufactured housing, and industrial packaging markets. Its operations span the United States, Canada and Mexico. Reportable segments are Eastern and Western combined, Site-Built, and “All Other.” It had approximately 5,500 employees and approximately 80 facilities, including about 14 closed facilities listed for sale or lease.
Financial performance and liquidity
- Revenue, profit, cash flow and margins: The supplied filing text does not provide clear values. These financial statements and the related MD&A are incorporated by reference but are not reproduced in the supplied text.
- Debt: Estimated fair value of long-term debt, including the current portion, was $79.9 million at December 28, 2013. The debt cash-flow table lists $75.0 million of fixed-rate debt and $9.7 million of variable-rate debt, both due thereafter; the stated average rates were 3.94% and 0.26%, respectively. Notes payable and revolving-credit-facility fair values approximated carrying values.
- Liquidity: The filing excerpt does not provide clear cash, working-capital, or credit-facility availability figures. Variable-rate debt includes a revolving credit facility and industrial development revenue bonds. The company reported no use of interest-rate derivatives to manage this exposure.
- Site-Built backlog: Estimated at $54.7 million at year-end 2013, down from $81.3 million at year-end 2012. Most was expected to be filled during fiscal 2014, although orders could be canceled.
Changes, outlook and risks
- Home Depot represented approximately 17% of 2013 sales, compared with 18% in 2012 and 23% in 2011, leaving meaningful customer concentration despite the decline.
- Management identifies lumber-price volatility, housing and manufactured-housing demand, weather and seasonality, transportation and energy costs, supplier excess capacity, customer credit, and economic conditions as risks to sales, margins and profitability.
- Other cited risks include dependence on successful acquisitions, customer or supplier vertical integration, environmental and safety regulation, potential restrictions on CCA-treated lumber, health-care legislation costs, and foreign-exchange exposure on global purchases.
- Treated-lumber and outdoor-product sales are seasonal, generally peaking from April through August. Adverse weather can affect sales, productivity and costs, particularly in the first and fourth quarters.
- No quantified earnings or revenue guidance is provided in the supplied text. The company says it seeks growth through acquisitions and competes through product breadth, customer relationships, purchasing and manufacturing capabilities, and service.
Other notable disclosures
- No shares were reported purchased during the three fiscal-month periods shown for the fourth quarter. Approximately 3.0 million shares remained available under the repurchase program.
- Management concluded disclosure controls were effective as of year-end; no fourth-quarter changes in internal control over financial reporting were reported that materially affected, or were reasonably likely to materially affect, those controls.
- The filing reports no disagreements with accountants on accounting or financial disclosure.
Investor verification priorities
- Review the incorporated 2013 Annual Report for complete revenue, earnings, cash-flow, margin, balance-sheet, segment and liquidity figures, and compare them with 2012.
- Confirm debt balances, maturities, covenants, revolving-credit availability and the basis for the debt figures summarized above.
- Assess the extent to which the Site-Built backlog is firm and the risk of cancellations or delayed fulfillment.
- Monitor Home Depot concentration and trends in housing demand, lumber prices, seasonal inventory needs and weather exposure.
- Review the referenced financial-statement notes for environmental matters, legal proceedings, contingencies and any unusual items; these details are not provided clearly in the supplied text.