UFPI 10-Q Quarterly Report Sept. 30, 2017 | Alphaminr

UFPI 10-Q Quarter ended Sept. 30, 2017

UFP INDUSTRIES INC
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10-Q 1 ufpi-20170930x10q.htm 10-Q ufpi_Current_Folio_10Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10‑Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2017

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0‑22684

UNIVERSAL FOREST PRODUCTS, INC.

(Exact name of registrant as specified in its charter)

Michigan

38‑1465835

(State or other jurisdiction of incorporation or

(I.R.S. Employer Identification Number)

organization)

2801 East Beltline NE, Grand Rapids, Michigan

49525

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (616) 364‑6161

NONE

(Former name or former address, if changed since last report.)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller reporting company

Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with an new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b‑2 of the Exchange Act). Yes No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class

Outstanding as of September 30, 2017

Common stock, $1 par value

20,391,399


Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

TABLE OF CONTENTS

PART I.

FINANCIAL INFORMATION.

Page No.

Item 1.

Financial Statements

Consolidated Condensed Balance Sheets at September 30, 2017, December 31, 2016 and September 24, 2016

3

Consolidated Condensed Statements of Earnings and Comprehensive Income for the Three Months Ended and Nine Months Ended September 30, 2017 and September 24, 2016

4

Consolidated Condensed Statements of Shareholders’ Equity for the Nine Months Ended September 30, 2017 and September 24, 2016

5

Consolidated Condensed Statements of Cash Flows for the Nine Months Ended September 30, 2017 and September 24, 2016

6

Notes to Unaudited Consolidated Condensed Financial Statements

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

15

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

28

Item 4.

Controls and Procedures

28

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings – NONE

Item 1A.

Risk Factors – NONE

29

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

29

Item 3.

Defaults upon Senior Securities – NONE

Item 4.

Mine Safety Disclosures – NONE

Item 5.

Other Information – NONE

29

Item 6.

Exhibits

30

2


Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)

September 30,

December 31,

September 24,

2017

2016

2016

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

22,044

$

34,091

$

36,683

Restricted cash

905

398

909

Investments

10,781

10,348

10,453

Accounts receivable, net

419,183

282,253

343,771

Inventories:

Raw materials

203,930

198,954

180,740

Finished goods

208,556

198,273

189,188

Total inventories

412,486

397,227

369,928

Refundable income taxes

763

11,459

7,407

Other current assets

22,438

20,662

21,636

TOTAL CURRENT ASSETS

888,600

756,438

790,787

DEFERRED INCOME TAXES

1,899

1,546

2,416

RESTRICTED INVESTMENTS

7,982

OTHER ASSETS

7,634

8,617

8,757

GOODWILL

212,029

198,535

207,832

INDEFINITE-LIVED INTANGIBLE ASSETS

7,580

2,340

2,340

OTHER INTANGIBLE ASSETS, NET

36,093

26,731

14,014

PROPERTY, PLANT AND EQUIPMENT:

Property, plant and equipment

754,175

699,462

717,287

Less accumulated depreciation and amortization

(429,066)

(401,611)

(432,796)

PROPERTY, PLANT AND EQUIPMENT, NET

325,109

297,851

284,491

TOTAL ASSETS

1,486,926

1,292,058

1,310,637

LIABILITIES AND SHAREHOLDERS’ EQUITY

CURRENT LIABILITIES:

Cash overdraft

$

26,617

$

19,761

$

13,940

Accounts payable

171,774

124,660

137,979

Accrued liabilities:

Compensation and benefits

88,185

92,441

99,549

Other

50,179

32,281

57,104

Current portion of long-term debt

2,197

2,634

1,584

TOTAL CURRENT LIABILITIES

338,952

271,777

310,156

LONG-TERM DEBT

145,884

109,059

110,362

DEFERRED INCOME TAXES

22,806

20,817

14,066

OTHER LIABILITIES

29,204

29,939

28,963

TOTAL LIABILITIES

536,846

431,592

463,547

SHAREHOLDERS’ EQUITY:

Controlling interest shareholders’ equity:

Preferred stock, no par value; shares authorized 1,000,000; issued and outstanding, none

$

$

$

Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding, 20,391,399, 20,342,069 and 20,330,939

20,391

20,342

20,331

Additional paid-in capital

200,778

185,333

183,962

Retained earnings

715,497

649,135

637,536

Accumulated other comprehensive income

(871)

(5,630)

(4,854)

Total controlling interest shareholders’ equity

935,795

849,180

836,975

Noncontrolling interest

14,285

11,286

10,115

TOTAL SHAREHOLDERS’ EQUITY

950,080

860,466

847,090

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

1,486,926

$

1,292,058

$

1,310,637

See notes to consolidated condensed financial statements.

3


Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS

AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2017

2016

2017

2016

NET SALES

$

1,056,586

$

826,665

$

2,975,091

$

2,380,909

COST OF GOODS SOLD

911,899

708,611

2,561,424

2,028,629

GROSS PROFIT

144,687

118,054

413,667

352,280

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

92,416

74,502

273,676

223,153

EARNINGS FROM OPERATIONS

52,271

43,552

139,991

129,127

INTEREST EXPENSE

1,481

1,096

4,825

3,274

INTEREST INCOME

(130)

(119)

(541)

(431)

EQUITY IN EARNINGS OF INVESTEE

1

(50)

(25)

(241)

1,352

927

4,259

2,602

EARNINGS BEFORE INCOME TAXES

50,919

42,625

135,732

126,525

INCOME TAXES

16,250

13,861

44,855

43,268

NET EARNINGS

34,669

28,764

90,877

83,257

LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST

(976)

(945)

(2,480)

(2,828)

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST

$

33,693

$

27,819

$

88,397

$

80,429

EARNINGS PER SHARE - BASIC

$

1.65

$

1.36

$

4.32

$

3.95

EARNINGS PER SHARE - DILUTED

$

1.64

$

1.36

$

4.31

$

3.94

OTHER COMPREHENSIVE INCOME:

NET EARNINGS

34,669

28,764

90,877

83,257

OTHER COMPREHENSIVE GAIN (LOSS)

1,719

(1,156)

6,141

(1,521)

COMPREHENSIVE INCOME

36,388

27,608

97,018

81,736

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

(975)

(495)

(3,862)

(1,576)

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

$

35,413

$

27,113

$

93,156

$

80,160

See notes to consolidated condensed financial statements.

4


Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share and per share data)

Controlling Interest Shareholders’ Equity

Accumulated

Additional

Other

Common

Paid-In

Retained

Comprehensive

Noncontrolling

Stock

Capital

Earnings

Earnings

Interest

Total

Balance at December 26, 2015

$

20,142

$

171,562

$

565,636

$

(4,585)

$

13,654

$

766,409

Net earnings

80,429

2,828

83,257

Foreign currency translation adjustment

(620)

(1,252)

(1,872)

Unrealized gain (loss) on investment & foreign currency

351

351

Distributions to noncontrolling interest

(3,160)

(3,160)

Purchases of noncontrolling interest

855

(1,955)

(1,100)

Cash dividends $0.420 per share

(8,529)

(8,529)

Issuance of 5,195 shares under employee stock plans

5

390

395

Issuance of 133,293 shares under stock grant programs

133

5,143

5,276

Issuance of 50,742 shares under deferred compensation plans

51

(51)

Expense associated with share-based compensation arrangements

1,568

1,568

Accrued expense under deferred compensation plans

4,495

4,495

Balance at September 24, 2016

$

20,331

$

183,962

$

637,536

$

(4,854)

$

10,115

$

847,090

Balance at December 31, 2016

20,342

185,333

649,135

(5,630)

11,286

860,466

Net earnings

88,397

2,480

90,877

Foreign currency translation adjustment

4,325

1,382

5,707

Unrealized gain (loss) on investment & foreign currency

434

434

Distributions to noncontrolling interest

(3,272)

(3,272)

Additional purchases of noncontrolling interest

2,409

2,409

Cash dividends - $0.450 per share

(9,208)

(9,208)

Issuance of 5,975 shares under employee stock plans

6

470

476

Issuance of 142,775 shares under stock grant programs

143

7,037

7,180

Issuance of 49,160 shares under deferred compensation plans

49

(49)

Repurchase of 148,580 shares

(149)

(12,827)

(12,976)

Expense associated with share-based compensation arrangements

1,978

1,978

Accrued expense under deferred compensation plans

6,009

6,009

Balance at September 30, 2017

$

20,391

$

200,778

$

715,497

$

(871)

$

14,285

$

950,080

See notes to consolidated condensed financial statements.

5


Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

(in thousands)

Nine Months Ended

September 30,

September 24,

2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings

$

90,877

$

83,257

Adjustments to reconcile net earnings to net cash from operating activities:

Depreciation

36,010

29,014

Amortization of intangibles

3,549

1,868

Expense associated with share-based compensation arrangements

1,978

1,568

Expense associated with stock grant plans

144

105

Deferred income taxes (credits)

117

(53)

Equity in earnings of investee

(25)

(241)

Net (gain) loss on disposition and impairment of assets

(437)

94

Changes in:

Accounts receivable

(121,688)

(69,357)

Inventories

(820)

21,683

Accounts payable and cash overdraft

53,424

35,026

Accrued liabilities and other

34,221

33,413

NET CASH FROM OPERATING ACTIVITIES

97,350

136,377

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchases of property, plant and equipment

(57,189)

(35,723)

Proceeds from sale of property, plant and equipment

2,121

516

Acquisitions, net of cash received

(59,859)

(66,615)

Repayments of debt of acquiree

(92,830)

Purchase of remaining noncontrolling interest, net of cash received

(1,100)

Cash contributed from noncontrolling interest

464

Advances of notes receivable

(234)

(5,400)

Collections on notes receivable

1,334

5,819

Purchases of investments

(12,155)

(4,468)

Proceeds from sale of investments

4,227

1,395

Other

(84)

(1,733)

NET CASH USED IN INVESTING ACTIVITIES

(121,375)

(200,139)

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings under revolving credit facilities

610,038

52,479

Repayments under revolving credit facilities

(573,829)

(27,177)

Proceeds from issuance of common stock

476

396

Dividends paid to shareholders

(9,207)

(8,529)

Distributions to noncontrolling interest

(3,272)

(3,160)

Repurchase of common stock

(12,976)

Other

(28)

NET CASH FROM (USED IN) FINANCING ACTIVITIES

11,230

13,981

Effect of exchange rate changes on cash

1,255

(969)

NET CHANGE IN CASH AND CASH EQUIVALENTS

(11,540)

(50,750)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR

34,489

88,342

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD

$

22,949

$

37,592

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:

Cash and cash equivalents, beginning of period

$

34,091

$

87,756

Restricted cash, beginning of period

398

586

Cash, cash equivalents, and restricted cash, beginning of period

$

34,489

$

88,342

Cash and cash equivalents, end of period

$

22,044

$

36,683

Restricted cash, end of period

905

909

Cash, cash equivalents, and restricted cash, end of period

$

22,949

$

37,592

SUPPLEMENTAL INFORMATION:

Interest paid

$

3,910

$

2,587

Income taxes paid

34,108

43,384

NON-CASH FINANCING ACTIVITIES:

Common stock issued under deferred compensation plans

4,673

3,657

See notes to consolidated condensed financial statements .

6


Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

NOTES TO UNAUDITED

CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

A.       BASIS OF PRESENTATION

The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all of the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. All intercompany transactions and balances have been eliminated.

In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10‑K for the fiscal year ended December 31, 2016.

Seasonality has a significant impact on our working capital from March to August which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the September 24, 2016 balances in the accompanying unaudited consolidated condensed balance sheets.

B.       FAIR VALUE

We apply the provisions of ASC 820, Fair Value Measurements and Disclosures , to assets and liabilities measured at fair value. Assets measured at fair value are as follows:

September 30, 2017

September 24, 2016

Quoted

Prices with

Quoted

Prices with

Prices in

Other

Prices in

Other

Active

Observable

Active

Observable

Markets

Inputs

Markets

Inputs

(in thousands)

(Level 1)

(Level 2)

Total

(Level 1)

(Level 2)

Total

Money market funds

$

64

$

413

$

477

$

64

$

132

$

196

Fixed income funds

1,299

6,905

8,204

2,049

2,335

4,384

Equity securities

10,194

10,194

5,592

5,592

Mutual funds:

Domestic stock funds

335

335

760

760

International stock funds

87

87

70

70

Target funds

260

260

234

234

Bond funds

208

208

203

203

Total mutual funds

890

890

1,267

1,267

Total

$

12,447

$

7,318

$

19,765

$

8,972

$

2,467

$

11,439

Assets at fair value

$

12,447

$

7,318

$

19,765

$

8,972

$

2,467

$

11,439

We maintain money market, mutual funds, bonds, and/or stocks in our non-qualified deferred compensation plan and our wholly owned licensed captive insurance company. These funds are valued at prices quoted in an active

7


Table of Contents

UNIVERSAL FOREST PRODUCTS, INC.

exchange market and are included in “Cash and Cash Equivalents”, “Investments”, “Restricted Cash”, and “Restricted Investments”. We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.

We did not maintain any Level 3 assets or liabilities at September 30, 2017 or September 24, 2016.

In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-18, “Statement of Cash Flows (Topic 230)” (ASU 2016-18). Under ASU 2016-18, an entity will be required to explain changes in the statement of cash flows during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents.  Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows.  The amendments in this update should be applied using retrospective transition method to each period presented.  Companies are required to adopt the new standard for fiscal years beginning after December 15, 2017. Early adoption of ASU 2016-18 is permitted, including adoption in an interim period. The Company has early adopted this standard during the first quarter of 2017.

In the first nine months of 2017, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”) transferred $4.1 million in fixed income securities from its Investment Account and purchased an additional $3.8 million in fixed income securities which are held in a newly formed collateral trust account in line with regulatory requirements in the State of Michigan to allow Ardellis to act as an admitted carrier in the State.  These funds are intended to safeguard the insureds of the Michigan Branch of Ardellis.  The funds are classified as “Restricted Investments”.

In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling $18.4 million as of September 30, 2017, consisting of domestic and international stocks, and fixed income bonds.

Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following:

Unrealized

Cost

Gain/(Loss)

Fair Value

Fixed Income

$

8,170

$

34

$

8,204

Equity

9,123

1,071

10,194

Total

$

17,293

$

1,105

$

18,398

Our Fixed Income investments consist of short, intermediate, and long term bonds, as well as fixed blend bonds. Within the fixed income investments, we maintain a specific mixture of US treasury notes, US agency mortgage backed securities, private label mortgage backed securities, and various corporate securities. Our equity investments consist of small, mid, and large cap growth and value funds, as well as international equity. The net pre-tax effected unrealized gain was $1.1 million. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of September 30, 2017. During the first nine months of 2017, Ardellis investments reported a net realized gain of $185 thousand, which was recorded in interest income on the statement of earnings.

8


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UNIVERSAL FOREST PRODUCTS, INC.

C.       REVENUE RECOGNITION

Revenue is recognized at the time the product is shipped to the customer. Generally, title passes at the time of shipment. In certain circumstances, the customer takes title when the shipment arrives at the destination. However, our shipping process is typically completed the same day.

On May 28, 2014, the FASB issued ASU No. 2014-09 (Accounting Standard Codification 606), Revenue from Contracts with Customers, which will replace most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is that an entity should recognize revenue for the transfer of goods or services equal to the amount that it expects to be entitled to receive for those goods or services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The Company plans to adopt the guidance in the first quarter of fiscal 2018 and apply the modified retrospective method. The Company is in the process of finalizing contract reviews and the completion of the new standard’s impact on its Consolidated Financial Statements.

Earnings on construction contracts are reflected in operations using percentage-of-completion accounting, under either cost to cost or units of delivery methods, depending on the nature of the business at individual operations. Under percentage-of-completion using the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships of actual costs incurred related to the total estimated costs. Under percentage-of-completion using the units of delivery method, revenues and related earnings on construction contracts are measured by the relationships of actual units produced related to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent. Construction contract revenue increased to approximately $36.6 million, during the third quarter of 2017, from $31.9 million during the same period of 2016.  Construction contract revenue was approximately $99.6 million and $95.2 million through the first nine months of 2017 and 2016, respectively.

Our construction contracts are generally entered into with a fixed price and completion of the projects can range from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates and commodity costs. During the year, we update our estimated costs to complete our projects using current labor and commodity costs and recognize losses to the extent that they exist.

The following table presents the balances of percentage-of-completion accounts which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in thousands):

September 30,

December 31,

September 24,

2017

2016

2016

Cost and Earnings in Excess of Billings

$

2,594

$

2,573

$

2,788

Billings in Excess of Cost and Earnings

4,802

4,748

6,222

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D.       EARNINGS PER SHARE

The computation of earnings per share (“EPS”) is as follows (in thousands):

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2017

2016

2017

2016

Numerator:

Net earnings attributable to controlling interest

$

33,693

$

27,819

$

88,397

$

80,429

Adjustment for earnings allocated to non-vested restricted common stock

(656)

(463)

(1,633)

(1,281)

Net earnings for calculating EPS

$

33,037

$

27,356

$

86,764

$

79,148

Denominator:

Weighted average shares outstanding

20,474

20,402

20,481

20,360

Adjustment for non-vested restricted common stock

(399)

(340)

(378)

(324)

Shares for calculating basic EPS

20,075

20,062

20,103

20,036

Effect of dilutive stock options

41

33

37

32

Shares for calculating diluted EPS

20,116

20,095

20,140

20,068

Net earnings per share:

Basic

$

1.65

$

1.36

$

4.32

$

3.95

Diluted

$

1.64

$

1.36

$

4.31

$

3.94

No options were excluded from the computation of diluted EPS for the quarters ended September 30, 2017 or September 24, 2016.

On October 17, 2017, our Board of Directors declared a three-for-one stock split effected in the form of a stock dividend.  The record date of the stock split will be October 31, 2017, and the eventual stock distribution to shareholders will occur November 14, 2017.  All references made to share or earnings per share amounts in the accompanying unaudited consolidated financial statements and applicable disclosures are presented on a pre-split basis.  As a result of the stock split, all historical per share data and number of shares outstanding presented in future financial statements will be retroactively adjusted.

The following table provides pro forma earnings per share, giving retroactive effect to the stock split:

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2017

2016

2017

2016

Shares for calculating basic EPS - Post stock split basis

60,225

60,186

60,309

60,108

Shares for calculating diluted EPS - Post stock split basis

60,348

60,285

60,420

60,204

Net earnings per share (post stock split):

Basic

$

0.55

$

0.45

$

1.44

$

1.32

Diluted

$

0.55

$

0.45

$

1.44

$

1.31

E.       COMMITMENTS, CONTINGENCIES, AND GUARANTEES

We are self-insured for environmental impairment liability, including certain liabilities which are insured through a wholly owned subsidiary, Ardellis Insurance Ltd., a licensed captive insurance company.

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UNIVERSAL FOREST PRODUCTS, INC.

We own and operate a number of facilities throughout the United States that chemically treat lumber products. In connection with the ownership and operation of these and other real properties, and the disposal or treatment of hazardous or toxic substances, we may, under various federal, state, and local environmental laws, ordinances, and regulations, be potentially liable for removal and remediation costs, as well as other potential costs, damages, and expenses. Environmental reserves, calculated with no discount rate, have been established to cover remediation activities at wood preservation facilities in Stockertown, PA; Elizabeth City, NC; Auburndale, FL; and Medley, FL. In addition, a reserve was established for our facility in Thornton, CA to remove certain lead containing materials which existed on the property at the time of purchase.

On a consolidated basis, we have reserved approximately $3.6 million and $3.4 million on September 30, 2017, and September 24, 2016, respectively, representing the estimated costs to complete future remediation efforts. These amounts have not been reduced by an insurance receivable.

Many of our wood treating operations utilize “Subpart W” drip pads, defined as hazardous waste management units by the Environmental Protection Agency. The rules regulating drip pads require that a pad be “closed” at the point that it is no longer intended to be used for wood treating operations or to manage hazardous waste. Closure involves identification and disposal of contaminants which are required to be removed from the facility. The cost of closure is dependent upon a number of factors including, but not limited to, identification and removal of contaminants, cleanup standards that vary from state to state, and the time period over which the cleanup would be completed. Based on our present knowledge of existing circumstances, it is considered probable that these costs will approximate $0.2 million. As a result, this amount is recorded in other long-term liabilities on September 30, 2017.

In February 2014, one of our operations was served with a federal grand jury subpoena from the Southern District of New York. The subpoena was issued in connection with an investigation being conducted by the US Attorney’s Office for the Southern District of New York. The subpoena requested documents relating to a developer and construction projects for which our operation had provided materials and labor. Following receipt of the subpoena, the Audit Committee of the Company’s Board of Directors retained outside counsel to conduct an internal investigation and respond to the subpoena. The Company cooperated in all respects with the US Attorney’s Office, complied with this subpoena and voluntarily provided additional information. As a result of the internal investigation, in 2014, two Company employees were terminated for violating the Company’s Code of Business Conduct and Ethics. In May 2015, those ex-employees were indicted by the grand jury. In April 2016, one of the two former employees pled guilty to four of the charges included in the indictment. In May 2016, the other former employee was found guilty by a jury on four of the charges included in the indictment. The Company has not been named as a target and continues to cooperate with the US Attorney’s Office in this matter.  Based upon prior communications with the US Attorney’s Office, we do not believe that the resolution of this matter will have a material adverse impact on our financial condition or the results of our operations.

In addition, on September 30, 2017, we were parties either as plaintiff or defendant to a number of lawsuits and claims arising through the normal course of our business. In the opinion of management, our consolidated financial statements will not be materially affected by the outcome of these contingencies and claims.

On September 30, 2017, we had outstanding purchase commitments on commenced capital projects of approximately $26.1 million.

We provide a variety of warranties for products we manufacture. Historically, warranty claims have not been material. We distribute products manufactured by other companies, some of which are no longer in business. While we do not warrant these products, we have received claims as a distributor of these products when the manufacturer no longer exists or has the ability to pay. Historically, these costs have not had a material effect on our consolidated financial statements.

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UNIVERSAL FOREST PRODUCTS, INC.

As part of our operations, we supply building materials and labor to site-built construction projects or we jointly bid on contracts with framing companies for such projects. In some instances, we are required to post payment and performance bonds to insure the project owner that the products and installation services are completed in accordance with our contractual obligations. We have agreed to indemnify the surety for claims made against the bonds. As of September 30, 2017 we had approximately $8.8 million outstanding payment and performance bonds for open projects. We had approximately $1.7 million in payment and performance bonds outstanding for completed projects which are still under warranty.

On September 30, 2017, we had outstanding letters of credit totaling $26.5 million, primarily related to certain insurance contracts and industrial development revenue bonds described further below.

In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers to guarantee our performance under certain insurance contracts. We currently have irrevocable letters of credit outstanding totaling approximately $16.7 million for these types of insurance arrangements. We have reserves recorded on our balance sheet, in accrued liabilities, that reflect our expected future liabilities under these insurance arrangements.

We are required to provide irrevocable letters of credit in favor of the bond trustees for all industrial development revenue bonds that have been issued. These letters of credit guarantee principal and interest payments to the bondholders. We currently have irrevocable letters of credit outstanding totaling approximately $9.8 million related to our outstanding industrial development revenue bonds. These letters of credit have varying terms but may be renewed at the option of the issuing banks.

Certain wholly owned domestic subsidiaries have guaranteed the indebtedness of Universal Forest Products, Inc. in certain debt agreements, including the Series 2012 Senior Notes and our revolving credit facility. The maximum exposure of these guarantees is limited to the indebtedness outstanding under these debt arrangements and this exposure will expire concurrent with the expiration of the debt agreements.

We did not enter into any new guarantee arrangements during the third quarter of 2017 which would require us to recognize a liability on our balance sheet.

F.       BUSINESS COMBINATIONS

We completed the following acquisitions in nine months ended 2017 and 2016 which were accounted for using the purchase method in thousands unless otherwise noted:

Net

Company

Acquisition

Intangible

Tangible

Operating

Name

Date

Purchase Price

Assets

Assets

Segment

May 26, 2017

$5,042
cash paid for 100% asset purchase

$

4,880

$

162

South

Go Boy Pallets, LLC ("Go Boy")

A manufacturer and distributor of industrial pallets and packaging in Georgia and North Carolina.  Go Boy has annual sales of approximately $8 million.  The acquisition of Go Boy enabled us to expand our industrial packaging product offering and lumber sourcing in this region.

March 6, 2017

$31,818
cash paid for 100% asset purchase

$

7,533

$

24,285

South

Robbins Manufacturing Co. ("Robbins")

A manufacturer of treated wood products with facilities in Florida, Georgia, and North Carolina.  Robbins has annual sales of approximately $86 million.  The acquisition of Robbins allowed us to expand our presence in this region and serve customers more cost effectively.

March 6, 2017

$22,789
cash paid for 100% asset purchase

$

14,266

$

8,523

North

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Quality Hardwood Sales, LLC ("Quality")

A manufacturer and supplier of hardwood products, including components of cabinets used in homes and recreational vehicles.  Quality has annual sales of approximately $30 million.  The acquisition of Quality enabled us to expand our product offering to include hardwood-based products.

November 29, 2016

$9,455
cash paid for 100% stock purchase

$

7,314

$

2,141

All Other

The UBEECO Group Pty. Ltd. ("Ubeeco")

A manufacturer and distributor of a variety of wood packaging and alternative material products, including boxes, crates, pallets, skids, protective packaging, packaging accessories and loose lumber. Ubeeco has annual sales of approximately $20 million.  The acquisition of Ubeeco allows us to make progress on our goal of becoming a global provider of packaging solutions.

September 16, 2016

$66,691
cash paid for 100% stock purchase which includes $11,337 in net cash received. Also, paid $86,294 to retire outstanding debt and $6,536 of certain other obligations.

$

17,455

$

49,236

All Other

idX Holdings, Inc. ("idX")

A designer, producer, and installer of customized interior fixtures and related products used in a variety of commercial structures.  idX has annual sales of $300 million.  The acquisition of idX enables us to enhance our design, product and service offering to become a tier 1 supplier of interior fixtures to retail customers, and continue to use idX's capabilities to continue to develop new markets for growth.  Our goal is to achieve long-term synergies, including:

a.

Eliminating redundant administrative support costs.

b.

Using the scale advantage of the Company to reduce material costs of common raw materials.

c.

Utilizing manufacturing capacity of certain existing locations to supply idX.

d.

Utilizing idX’s international footprint to identify sourcing opportunities for certain products.

e.

Cross selling one another’s products and services with our respective customers.

f.

Collaborating on new product development.

July 29, 2016

$1,246

cash paid for asset purchase

$

405

$

841

North

Seven D Truss, L.P.

A manufacturer and distributor of roof and floor trusses. 7D had annual sales of approximately $4.0 million.  The acquisition of 7D gave us the opportunity to consolidate operations with our Gordon, Pennsylvania location.

The intangible assets for each acquisition were finalized and allocated to their respective identifiable intangible asset and goodwill accounts during 2017, excluding Go Boy.  In aggregate, acquisitions completed since September of 2016 contributed approximately $292.1 million in revenue and $5.3 million in operating profit during 2017.

G.       SEGMENT REPORTING

ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

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UNIVERSAL FOREST PRODUCTS, INC.

The Company operates manufacturing, treating and distribution facilities throughout North America, but primarily in the United States. The Company manages the operations of its individual locations primarily through a geographic reporting structure under which each location is included in a region and regions are included in our North, South, and West divisions. The exceptions to this geographic reporting and management structure are (a) the Company’s Alternative Materials Division, which offers a portfolio of non-wood products and distributes those products nation-wide (b) the Company’s distribution unit (referred to as UFPD) which distributes a variety of products to the manufactured housing industry nation-wide and is accounted for as a reporting unit within the North segment, and (c) the idX division, which designs, produces, and installs customized in-store environments, for customers world-wide.

With respect to the facilities in the north, south, and west segments, these facilities generally supply the three markets the Company serves nationally - Retail, Industrial, and Construction. Also, substantially all of our facilities support customers in the immediate geographical region surrounding the facility.

Our Alternative Materials, International and idX division have been included in the “All Other” column of the table below. The “Corporate” column includes unallocated administrative costs and certain incentive compensation expense.

Three Months Ended September 30, 2017

North

South

West

All Other

Corporate

Total

Net sales to outside customers

$

310,384

$

206,050

$

378,714

$

161,438

$

$

1,056,586

Intersegment net sales

18,897

18,817

21,384

47,539

106,637

Segment operating profit

16,697

10,234

22,538

6,882

(4,080)

52,271

Three Months Ended September 24, 2016

North

South

West

All Other

Corporate

Total

Net sales to outside customers

$

267,156

$

173,715

$

335,981

$

49,813

$

$

826,665

Intersegment net sales

14,318

9,642

22,054

4,574

50,588

Segment operating profit

14,630

9,900

19,962

2,959

(3,899)

43,552

Nine Months Ended September 30, 2017

North

South

West

All Other

Corporate

Total

Net sales to outside customers

$

857,858

$

616,376

$

1,088,744

$

412,113

$

$

2,975,091

Intersegment net sales

51,859

55,472

65,466

116,743

289,540

Segment operating profit (loss)

42,921

31,152

65,547

13,285

(12,914)

139,991

Nine Months Ended September 24, 2016

North

South

West

All Other

Corporate

Total

Net sales to outside customers

$

758,066

$

533,239

$

940,188

$

149,416

$

$

2,380,909

Intersegment net sales

42,071

28,693

65,325

16,559

152,648

Segment operating profit

43,054

35,830

58,434

11,542

(19,733)

129,127

H.       INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income taxes and permanent tax differences.  Our effective tax rate was 31.9 % in the third quarter of 201 7 compared to 32.5 % for same period in 201 6 .  Our effective tax rate was 33.0 % in the first nine months of 201 7 compared to 34.2 % in 201 6 , primarily due to recording a tax deduction for certain share-based compensation and fees at fair market value.

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UNIVERSAL FOREST PRODUCTS, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Universal Forest Products, Inc. is a holding company with subsidiaries throughout North America, Europe, Asia, and in Australia that supply wood, wood composite and other products to three robust markets: retail, industrial, and construction. The Company is headquartered in Grand Rapids, Mich. For more information about Universal Forest Products, Inc., or its affiliated operations, go to www.ufpi.com .

This report 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, events, or assumptions 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 economic 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. We are pleased to present this overview of 2017.

OVERVIEW

Our results for the third quarter of 2017 were impacted by the following:

·

Our gross sales increased by 28% compared to the third quarter of 2016, which was comprised of a 22% increase in unit sales and a 6% increase in selling prices primarily due to the commodity lumber market (see Historical Lumber Prices below).  Acquired operations contributed 15% to our unit sales growth.  Our 7% organic growth rate was primarily driven by our sales to industrial, retail, residential construction, and manufactured housing customers.  Unit sales to commercial construction customers decreased.

·

Our operating profits increased by 20.0%, which is comparable with our 22% increase in unit sales.  The shortfall in our profit growth was primarily due to the impact of volatile lumber prices on gross profits and the impact of acquired operations which contributed unit sales growth without a proportionate increase in operating profits.

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UNIVERSAL FOREST PRODUCTS, INC.

HISTORICAL LUMBER PRICES

We experience significant fluctuations in the cost of commodity lumber products from primary producers (“Lumber Market”). The following table presents the Random Lengths framing lumber composite price:

Random Lengths Composite

Average $/MBF

2017

2016

January

$

356

$

316

February

393

310

March

401

321

April

424

345

May

416

356

June

399

353

July

411

351

August

417

367

September

416

354

Third quarter average

$

415

$

357

Year-to-date average

$

404

$

341

Third quarter percentage change

16.2

%

Year-to-date percentage change

18.5

%

In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprised approximately 44% and 42% of total lumber purchases through the first nine months of 2017 and 2016, respectively.

Random Lengths SYP

Average $/MBF

2017

2016

January

$

397

$

358

February

420

357

March

433

366

April

438

389

May

416

397

June

399

382

July

381

380

August

383

391

September

387

375

Third quarter average

$

384

$

382

Year-to-date average

$

406

$

377

Third quarter percentage change

0.5

%

Year-to-date percentage change

7.7

%

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UNIVERSAL FOREST PRODUCTS, INC.

IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS

We generally price our products to pass lumber costs through to our customers so that our profitability is based on the value-added manufacturing, distribution, engineering, and other services we provide. As a result, our sales levels (and working capital requirements) are impacted by the lumber costs of our products.  Lumber costs were 48.2% and 48.4% of our sales in the first nine months of 2017 and 2016, respectively.

Our gross margins are impacted by (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower from comparative periods), and (2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing or decreasing within a period or from period to period). Moreover, as explained below, our products are priced differently. Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported Lumber Market with a fixed dollar adder to cover conversion costs and profits. Consequently, the level and trend of the Lumber Market impact our products differently.

Below is a general description of the primary ways in which our products are priced.

·

Products with fixed selling prices. These products include value-added products such as deck components and fencing sold to retail customers, as well as trusses, wall panels and other components sold to the construction market, and most industrial packaging products. Prices for these products are generally fixed at the time of the sales quotation for a specified period of time or are based upon a specific quantity. In order to maintain margins and reduce any exposure to adverse trends in the price of component lumber products, we attempt to lock in costs with our suppliers for these sales commitments. Also, the time period and quantity limitations eventually allow us to re-price our products for changes in lumber costs from our suppliers.

·

Products with selling prices indexed to the reported Lumber Market with a fixed dollar “adder” to cover conversion costs and profits. These products primarily include treated lumber, remanufactured lumber, and trusses sold to the manufactured housing industry. For these products, we estimate the customers’ needs and we carry anticipated levels of inventory. Because lumber costs are incurred in advance of final sale prices, subsequent increases or decreases in the market price of lumber impact our gross margins.

For each of the product pricing categories above, our margins are exposed to changes in the trend of lumber prices.

The greatest risk associated with changes in the trend of lumber prices is on the following products :

·

Products with significant inventory levels with low turnover rates, whose selling prices are indexed to the Lumber Market. In other words, the longer the period of time these products remain in inventory, the greater the exposure to changes in the price of lumber. This would include treated lumber, which comprises approximately 19% of our total sales. This exposure is less significant with remanufactured lumber, trusses sold to the manufactured housing market, and other similar products, due to the higher rate of inventory turnover. We attempt to mitigate the risk associated with treated lumber through vendor consignment inventory programs. ( Please refer to the “Risk Factors” section of our annual report on form 10‑K, filed with the United States Securities and Exchange Commission. )

·

Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-family construction projects. We attempt to mitigate this risk through our purchasing practices by locking in costs.

During the first nine months of 2017, volatility in the lumber market has impacted our gross profits on products sold under each of the general pricing methods described above.  For example, the dramatic rise in lumber prices, which peaked in April, resulted in a decline in gross profit per unit on products sold with fixed prices primarily in the second

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quarter.  Additionally, the subsequent decline in lumber prices in May, June, and July resulted in a decline in gross profit per unit on products sold with a variable price indexed to the lumber market.  We anticipate these trends may continue to impact our results into the fourth quarter until we reach a point of re-pricing products sold via a fixed price with our customers and selling through higher cost material sold on a variable price which is mitigated to some degree by stability of the SYP market.

Finally, hurricane Harvey and Irma as well as recent wildfires in British Columbia have resulted in sharp increases in lumber prices in the third quarter of 2017.

In addition to the impact of the Lumber Market trends on gross margins, changes in the level of the market cause fluctuations in gross margins when comparing operating results from period to period. This is explained in the following example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend within each period.

Period 1

Period 2

Lumber cost

$

300

$

400

Conversion cost

50

50

= Product cost

350

450

Adder

50

50

= Sell price

$

400

$

500

Gross margin

12.5

%

10.0

%

As is apparent from the preceding example, the level of lumber prices does not impact our overall profits, but does impact our margins. Gross margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low.  In order to more effectively evaluate our profitability in such periods, we believe it is useful to compare our change in units shipped with our changes in costs and profits.

BUSINESS COMBINATIONS

We completed three business acquisitions during the first nine months of 2017 and six during all of 2016. The annual historical sales attributable to acquisitions completed in 2017 and 2016 was approximately $124 million and $324 million, respectively.  These business combinations were not significant to our quarterly or year-to-date operating results individually or in aggregate and thus pro forma results for 2017 or 2016 are not presented.

See Notes to the Unaudited Condensed Consolidated Financial Statements, Note F, “Business Combinations” for additional information.

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UNIVERSAL FOREST PRODUCTS, INC.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, the components of our Unaudited Condensed Consolidated Statements of Earnings as a percentage of net sales.

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2017

2016

2017

2016

Net sales

100.0

%

100.0

%

100.0

%

100.0

%

Cost of goods sold

86.3

85.7

86.1

85.2

Gross profit

13.7

14.3

13.9

14.8

Selling, general, and administrative expenses

8.8

9.1

9.2

9.3

Earnings from operations

4.9

5.3

4.7

5.4

Other expense (income), net

0.1

0.1

0.1

0.1

Earnings before income taxes

4.8

5.2

4.6

5.3

Income taxes

1.5

1.7

1.5

1.8

Net earnings

3.3

3.5

3.1

3.5

Less net earnings attributable to noncontrolling interest

(0.1)

(0.1)

(0.1)

(0.1)

Net earnings attributable to controlling interest

3.2

%

3.4

%

3.0

%

3.4

%

Note: Actual percentages are calculated and may not sum to total due to rounding.

GROSS SALES

We design, manufacture and market wood and wood-alternative products for national home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for residential and commercial construction, specialty wood packaging, components and packing materials for various industries, and customized interior fixtures used in a variety of retail stores, commercial and other structures.  Our strategic long-term sales objectives include:

·

Diversifying our end market sales mix by increasing sales of specialty wood packaging to industrial users, increasing our penetration of the concrete forming market, increasing our sales of engineered wood components for custom home, multi-family, military and light commercial construction, increasing our market share with independent retailers, and increasing our sales of customized interior fixtures used in a variety of markets.

·

Expanding geographically in our core businesses, domestically and internationally.

·

Increasing sales of "value-added" products, which primarily consist of fencing, decking, lattice, and other specialty products sold to the retail  market, specialty wood packaging, engineered wood components, customized interior fixtures, and "wood alternative" products. Engineered wood components include roof trusses, wall panels, and floor systems.  Wood alternative products consist primarily of composite wood and plastics. Although we consider the treatment of dimensional lumber with certain chemical preservatives a value-added process, treated lumber is not presently included in the value-added sales totals.

·

Maximizing unit sales growth while achieving return on investment goals.

·

Developing new products and expanding our product offering for existing customers. New product sales were $107.7 million in the third quarter of 2017 compared to $88.5 million during the third quarter of 2016.  New product sales year-to-date for 2017 and 2016 were $313.6 million and $255.3 million, respectively.

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New Product Sales by Market

New Product Sales by Market

Three Months Ended

Nine Months Ended

(in thousands)

September 30,

September 24,

September 30,

September 24,

Market Classification

2017

2016

% Change

2017

2016

% Change

Retail

$

65,383

53,252

22.78%

$

192,194

$

153,966

24.83%

Industrial

26,738

23,374

14.39%

76,125

65,642

15.97%

Construction

15,577

11,911

30.78%

45,321

35,717

26.89%

Total New Product Sales

107,698

88,537

21.64%

313,640

255,325

22.84%

Note:  Certain prior year product reclassifications and the change in designation of certain products as “new” resulted in a change in prior year’s sales.

The following table presents, for the periods indicated, our gross sales and percentage change in gross sales by market classification.

Three Months Ended

Nine Months Ended

(in thousands)

September 30,

September 24,

September 30,

September 24,

Market Classification

2017

2016

% Change

2017

2016

% Change

Retail

$

391,895

$

339,275

15.5

%

$

1,162,785

$

1,018,203

14.2

%

Industrial

369,506

232,017

59.3

%

982,675

661,718

48.5

%

Construction

310,026

267,772

15.8

%

872,997

740,393

17.9

%

Total Gross Sales

1,071,427

839,064

27.7

%

3,018,457

2,420,314

24.7

%

Sales Allowances

(14,841)

(12,399)

19.7

%

(43,366)

(39,405)

10.1

%

Total Net Sales

$

1,056,586

$

826,665

27.8

%

$

2,975,091

$

2,380,909

25.0

%

Note:  During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.

Gross sales in the third quarter of 2017 increased 28% compared to the same period of 2016, due to a 22% increase in unit sales and a 6% increase in selling prices primarily due to the Lumber Market.  Acquired operations contributed 15% to our unit sales growth, and our organic unit sales growth was 7%.

Changes in our gross sales by market are discussed below.

Retail:

Gross sales to the retail market increased almost 16% in the third quarter of 2017 compared to the same period of 2016, due to a 12% increase in unit sales and a 4% increase in selling prices. Within this market, sales to our big box customers increased almost 13%, and sales to other independent retailers increased over 20%.  Businesses we acquired contributed 7% to our growth in unit sales, primarily to independent retail customers.  Our organic unit growth was 5% for the quarter.  By comparison, “big box” same store sales growth during the third quarter has been reported at approximately 6.3%.

Gross sales to the retail market increased over 14% in the first nine months of 2017 compared to the same period of 2016, due to a 9% increase in unit sales and a 5% increase in selling prices. Within this market, sales to our big box customers increased almost 15%, and sales to other independent retailers increased almost 14%.  Businesses we acquired contributed 6% to our growth in unit sales, primarily to independent retail customers.  Our organic unit growth was 3% in the first nine months of 2017.  By comparison, “big box” same store sales growth in the first nine months of 2017 has been reported at approximately 6.0%.

Industrial:

Gross sales to the industrial market increased over 59% in the third quarter of 2017 compared to the same period of 2016, resulting from a 54% increase in unit sales and a 5% increase in selling prices. Businesses we acquired contributed

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43% to our growth in unit sales.  Our organic growth in unit sales of 11% was primarily due to new operations, adding 578 new customers, and share gains with several existing customers.

Gross sales to the industrial market increased almost 49% in the first nine months of 2017 compared to the same period of 2016, resulting from a 43% increase in unit sales and a 6% increase in selling prices. Businesses we acquired contributed 34% to our growth in unit sales.  Our organic growth in unit sales of 9% was primarily due to same factors discussed above.

Construction:

Gross sales to the construction market increased almost 16% in the third quarter of 2017 compared to 2016. The increase was due to an 8% increase in unit sales and an 8% increase in our selling prices. Our increase in unit sales was driven by a 12% increase to manufactured housing customers, and an 8% increase to residential construction customers, offset by a  5% decrease to commercial construction customers.

By comparison (and based upon various industry publications):

·

Production of HUD-code manufactured homes in June, July, August 2017, the most recent period reported, was up 12.0% compared to the same period of 2016.

·

Non-residential construction activity in July and August increased approximately 10.2% compared to the same period of 2016.

·

National housing starts increased approximately 0.9% in the period from June through August 2017 (our sales trail housing starts by about a month) compared to the same period of 2016.  Our sales growth exceeds national industry growth due to certain market share gains and organic sales growth in our eastern regions.

Gross sales to the construction market increased almost 18% in the first nine months of 2017 compared to 2016. The increase was due to a 9% increase in unit sales and a 9% increase in our selling prices. Our increase in unit sales was driven by an 11% increase to manufactured housing customers, an 11% increase to residential construction customers, and a 1% increase to commercial construction customers due to the same factors discussed above.

Value-Added and Commodity-Based Sales:

The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total sales. Value-added products generally carry higher gross margins than our commodity-based products.

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2017

2016

2017

2016

Value-Added

63.9

%

61.1

%

62.9

%

61.5

%

Commodity-Based

36.1

%

38.9

%

37.1

%

38.5

%

COST OF GOODS SOLD AND GROSS PROFIT

Our gross margin decreased to 13.7% from 14.3% comparing the third quarter of 2017 to the same period of 2016 due to the higher level of lumber prices.  Our 22.6% increase in gross profit dollars compares favorably with our 22% increase in unit sales during the same period.  Acquired operations contributed $19.9 million of gross profit in the third quarter of 2017.  Excluding acquisitions, our gross profits increased by $6.7 million, or 5.7%, over the same period last year as follows:

·

Our gross profit on sales to the retail market increased by approximately $1 million.

·

Our gross profit on sales to the industrial market increased by approximately $1 million.

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·

Our gross profit on sales to the construction market increased by over $3 million.

Our gross margin decreased to 13.9% from 14.8% comparing the first nine months of 2017 to the same period of 2016.  Our 17.4% increase in gross profit dollars compares unfavorably with our 19% increase in unit sales in the first nine months of 2017 compared to the same period last year. The increase in our gross profit dollars was primarily due to acquired operations which contributed $45.6 million of gross profit in the first nine months of 2017.  Excluding acquisitions, our gross profits increased by $15.8 million over the same period last year as follows:

·

Our gross profit on sales to the retail market increased by over $3 million.

·

Our gross profit on sales to the industrial market decreased by over $5 million.

·

Our gross profit on sales to the construction market increased by over $12 million.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative (“SG&A”) expenses increased by approximately $17.9 million, or 24.0%, in the third quarter of 2017 compared to the same period of 2016, while we reported a 22% increase in unit sales. Accrued bonus expense, which varies with our overall profitability and return on investment, totaled $12.4 million in the third quarter of 2017 compared to $12.0 million in 2016.  Acquired operations contributed approximately $15 million to our year over year increase.  The remaining increase was primarily due to an increase in compensation and benefit costs.

Selling, general and administrative (“SG&A”) expenses increased by approximately $50.5 million, or 22.6%, in the first nine months of 2017 compared to the same period of 2016, while we reported a 19% increase in unit sales.  Accrued bonus expense totaled $32.6 million in the nine months of 2017 compared to $33.9 million in 2016.  Acquired operations contributed approximately $41 million to our year over year increase.  The remaining increase was primarily due to an increase in compensation and benefit costs and foreign currency exchange losses.

INTEREST, NET

Net interest costs were higher in the third quarter of 2017 compared to the same period of 2016 due to carrying a higher amount of debt and a slight increase in short-term borrowing rates.

INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income taxes and permanent tax differences.  Our effective tax rate was 31.9 % in the third quarter of 201 7 compared to 32.5 % for same period in 201 6 .  Our effective tax rate was 33.0 % in the first nine months of 201 7 compared to 34.2 % in 201 6.  The decrease in our effective tax rate is primarily due to recording a tax deduction for certain share-based compensation at fair market value.

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SEGMENT REPORTING

The following table presents, for the periods indicated, our net sales and earnings from operations by reportable segment.

Net Sales

Earnings from Operations

Three Months Ended

Three Months Ended

September 30,

September 24,

$

%

September 30,

September 24,

$

%

(in thousands)

2017

2016

Change

Change

2017

2016

Change

Change

North

$

310,384

$

267,156

$

43,228

16.2

%

$

16,697

$

14,630

$

2,067

14.1

%

South

206,050

173,715

32,335

18.6

%

10,234

9,900

334

3.4

%

West

378,714

335,981

42,733

12.7

%

22,538

19,962

2,576

12.9

%

All Other

161,438

49,813

111,625

224.1

%

6,882

2,959

3,923

132.6

%

Corporate

(4,080)

(3,899)

(181)

4.6

%

Total

$

1,056,586

$

826,665

$

229,921

27.8

%

$

52,271

$

43,552

$

8,719

20.0

%

Net Sales

Earnings from Operations

Nine Months Ended

Nine Months Ended

September 30,

September 24,

$

%

September 30,

September 24,

$

%

(in thousands)

2017

2016

Change

Change

2017

2016

Change

Change

North

$

857,858

$

758,066

$

99,792

13.2

%

$

42,921

$

43,054

$

(133)

(0.3)

%

South

616,376

533,239

83,137

15.6

%

31,152

35,830

(4,678)

(13.1)

%

West

1,088,744

940,188

148,556

15.8

%

65,547

58,434

7,113

12.2

%

All Other

412,113

149,416

262,697

175.8

%

13,285

11,542

1,743

15.1

%

Corporate

(12,914)

(19,733)

6,819

34.6

%

Total

$

2,975,091

$

2,380,909

$

594,182

25.0

%

$

139,991

$

129,127

$

10,864

8.4

%


(1)

Corporate primarily represents over (under) allocated administrative costs and accrued bonus expense.

North

Net Sales

Net Sales

North Segment by Market

North Segment by Market

Three Months Ended

Nine Months Ended

(in thousands)

September 30,

September 24,

September 30,

September 24,

Market Classification

2017

2016

% Change

2017

2016

% Change

Retail

$

139,284

$

131,333

6.1

%

$

387,925

$

369,699

4.9

%

Industrial

40,192

27,524

46.0

%

114,533

87,287

31.2

%

Construction

137,616

113,897

20.8

%

373,838

316,204

18.2

%

Total Gross Sales

317,092

272,754

16.3

%

876,296

773,190

13.3

%

Sales Allowances

(6,708)

(5,598)

19.8

%

(18,438)

(15,124)

21.9

%

Total Net Sales

$

310,384

$

267,156

16.2

%

$

857,858

$

758,066

13.2

%

Note:  During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.

Net sales attributable to the North reportable segment increased in the third quarter of 2017 compared to 2016 as a result of increased sales to each of our markets primarily due to the same factors previously discussed.  Acquired operations contributed $8.7 million to our industrial sales increase.

Earnings from operations for the North reportable segment increased in the third quarter of 2017 by $2.1 million, or 14.1%, due to an increase in gross profit of $2.7 million, offset by a $0.6 million increase in SG&A expenses compared to last year.  Acquired operations contributed $0.4 million to our operating profits in the third quarter.

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Net sales attributable to the North reportable segment increased in the first nine months of 2017 compared to 2016 due to an increase in sales to each of our markets primarily due to the same factors previously discussed.  Acquired operations contributed $21.0 million to our industrial sales increase.

Earnings from operations for the North reportable segment decreased in the first nine months of 2017 by $0.1 million, or 0.3%, due to an increase in gross profit of $4.5 million offset by a $4.6 million increase in SG&A expenses compared to last year.  Acquired operations contributed $1.4 million to our operating profits in the first nine months of 2017.

South

Net Sales

Net Sales

South Segment by Market

South Segment by Market

Three Months Ended

Nine Months Ended

(in thousands)

September 30,

September 24,

September 30,

September 24,

Market Classification

2017

2016

% Change

2017

2016

% Change

Retail

$

92,146

$

75,130

22.6

%

$

282,809

$

240,175

17.8

%

Industrial

69,390

61,749

12.4

%

201,928

185,529

8.8

%

Construction

49,054

40,385

21.5

%

145,387

118,223

23.0

%

Total Gross Sales

210,590

177,264

18.8

%

630,124

543,927

15.8

%

Sales Allowances

(4,540)

(3,549)

27.9

%

(13,748)

(10,688)

28.6

%

Total Net Sales

$

206,050

$

173,715

18.6

%

$

616,376

$

533,239

15.6

%

Note:  During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.

Net sales attributable to the South reportable segment increased in the third quarter of 2017 compared to 2016 due to increased sales to all markets primarily due to the same factors previously discussed.  Acquired operations contributed $24.4 million and $1.8 million to our growth in sales to the retail and industrial market, respectively.

Earnings from operations for the South reportable segment increased in the third quarter of 2017 by $0.3 million, or 3.4%, due to a increase in gross profit of $0.7 million offset by a $0.4 million increase in SG&A expenses.  Acquired operations contributed $0.6 million to our operating profits in the third quarter.

Net sales attributable to the South reportable segment increased in the first nine months of 2017 compared to 2016 due to increased sales to all markets primarily due to the factors previously discussed.  Acquired operations contributed $59.9 million of sales growth to our retail market.

Earnings from operations for the South reportable segment decreased in the first nine months of 2017 by $4.7 million, or 13.1%, due to a decrease in gross profit of $3.1 million and an increase of $1.6 million in SG&A expenses.  The decrease in gross profit was primarily due to the impact of the volatility in lumber prices.  Acquired operations contributed $2.0 million to our operating profits in the first nine months of 2017.

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West

Net Sales

Net Sales

West Segment by Market

West Segment by Market

Three Months Ended

Nine Months Ended

(in thousands)

September 30,

September 24,

September 30,

September 24,

Market Classification

2017

2016

% Change

2017

2016

% Change

Retail

$

115,069

$

99,762

15.3

%

$

347,270

$

298,723

16.3

%

Industrial

145,132

126,836

14.4

%

401,850

347,902

15.5

%

Construction

123,026

113,488

8.4

%

353,238

305,962

15.5

%

Total Gross Sales

383,227

340,086

12.7

%

1,102,358

952,587

15.7

%

Sales Allowances

(4,513)

(4,105)

9.9

%

(13,614)

(12,399)

9.8

%

Total Net Sales

$

378,714

$

335,981

12.7

%

$

1,088,744

$

940,188

15.8

%

Note:  During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.

Net sales attributable to the West reportable segment increased in the third quarter of 2017 compared to 2016 due to increases in sales to all markets primarily due to factors previously discussed.

Earnings from operations for the West reportable segment increased in the third quarter of 2017 by $2.6 million, or 12.9%, compared to the same period in 2016 due to a $2.5 million increase in gross profit combined with a $0.1 million decrease in SG&A expenses.

Net sales attributable to the West reportable segment increased in the first nine months of 2017 compared to 2016 due to an increase in sales to all markets due to the same factors previously discussed.

Earnings from operations for the West reportable segment increased in the first nine months of 2017 by $7.1 million, or 12.2%, compared to the same period in 2016 due to a $10.8 million increase in gross profit, offset by a $3.7 million increase in SG&A expenses.

All Other

Net Sales

Net Sales

All Other Segment by Market

All Other Segment by Market

Three Months Ended

Nine Months Ended

(in thousands)

September 30,

September 24,

September 30,

September 24,

Market Classification

2017

2016

% Change

2017

2016

% Change

Retail

$

45,396

$

33,049

37.4

%

$

144,782

$

109,606

32.1

%

Industrial

114,792

15,907

621.6

%

264,364

41,000

544.8

%

Construction

331

4

8,175.0

%

533

4

13,225.0

%

Total Gross Sales

160,519

48,960

227.9

%

409,679

150,610

172.0

%

Sales Allowances & Other

919

853

7.7

%

2,434

(1,194)

(303.9)

%

Total Net Sales

$

161,438

$

49,813

224.1

%

$

412,113

$

149,416

175.8

%

Our All Other reportable segment consists of our Alternative Materials, International, idX, and certain other segments which are not significant.

Net sales attributable to All Other reportable segments increased in the third quarter of 2017 compared to 2016 due to increases in sales to the retail and industrial markets.  Our increase in sales to the industrial market was primarily due to an $89.3 million increase from businesses we acquired since September of 2016.

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Earnings from operations for All Other reportable segments increased during the third quarter of 2017 by $3.9 million, or 132.6%, compared to the same period of 2016.  During the third quarter of 2017, gross profit dollars increased $20.6 million, offset by an increase in SG&A expenses of $16.1 million compared to the same period of 2016.  Businesses we acquired contributed $3.7 million to our earnings from operations during the third quarter of 2017.

Net sales attributable to All Other reportable segments increased in the first nine months of 2017 compared to 2016 due to increases in sales to the retail and industrial markets.  Our increase in sales to the industrial market was primarily due to a $203.1 million increase from businesses we acquired since September of 2016.

Earnings from operations for All Other reportable segments increased during the first nine months of 2017 by $1.7 million, or 15.1%, compared to the same period of 2016.  During the first nine months of 2017, gross profit dollars increased $48.4 million, offset by an increase in SG&A expenses of $46.7 million compared to the same period of 2016.    Businesses we acquired since September of 2016 contributed $1.1 million to the earnings from operations increase in the first nine months of 2017.

OFF-BALANCE SHEET TRANSACTIONS

We have no significant off-balance sheet transactions other than operating leases.

LIQUIDITY AND CAPITAL RESOURCES

The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):

Nine Months Ended

September 30,

September 24,

2017

2016

Cash from operating activities

$

97,350

$

136,377

Cash used in investing activities

(121,375)

(200,139)

Cash from (used in) financing activities

11,230

13,981

Effect of exchange rate changes on cash

1,255

(969)

Net change in all cash and cash equivalents

(11,540)

(50,750)

Cash, cash equivalents, and restricted cash, beginning of period

34,489

88,342

Cash, cash equivalents, and restricted cash, end of period

$

22,949

$

37,592

In general, we funded our growth in the past through a combination of operating cash flows, our revolving credit facility, industrial development bonds (when circumstances permit), and issuance of long-term notes payable at times when interest rates are favorable. We have not issued equity to finance growth except in the case of a large acquisition. We manage our capital structure by attempting to maintain a targeted ratio of debt to equity and debt to earnings before interest, taxes, depreciation and amortization. We believe this is one of many important factors to maintaining a strong credit profile, which in turn helps ensure timely access to capital when needed.

Seasonality has a significant impact on our working capital due to our primary selling season which occurs during the period from March to August. Consequently, our working capital increases during our first and second quarters resulting in negative or modest cash flows from operations during those periods. Conversely, we experience a substantial decrease in working capital once we move beyond our peak selling season which typically results in significant cash flows from operations in our third and fourth quarters.

Due to the seasonality of our business and the effects of the Lumber Market, we believe our cash cycle (days of sales outstanding plus days supply of inventory less days payables outstanding) is a good indicator of our working capital management. As indicated in the table below, our cash cycle increased to 49 days from 44 days during the third quarter and increased to 52 days from 47 in the first nine months of 2017 compared to the prior periods, due to the impact of

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acquired operations which carry comparatively higher investments in inventory than our other operations.  Excluding acquired operations our cash cycle was 44 days in the third quarter of 2017 and 47 days in the first nine months of 2017.

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2017

2016

2017

2016

Days of sales outstanding

31

31

31

31

Days supply of inventory

38

34

41

37

Days payables outstanding

(20)

(21)

(20)

(21)

Days in cash cycle

49

44

52

47

In the first nine months of 2017, our cash from operating activities was $97.3 million, which was comprised of net earnings of $90.9 million and $41.3 million of non-cash expenses, offset by a $34.9 million increase in cash invested in working capital since the end of December 2016 due to the strong sales growth and higher lumber prices.  Comparatively, c ash from operating activities was $136.4 million in the first nine months of 2016, which was comprised of net earnings of $83.3 million and $32.3 million of non-cash expenses, offset by a $20.8 million seasonal decrease in working capital since the end of 2015.  The increase in working capital compared to the same period last year was primarily due to significant increases in inventory and accounts receivable offset by increases in accounts payable which can be attributed to sales growth and higher lumber prices.

Acquisitions and purchases of property, plant, and equipment comprised most of our cash used in investing activities during the first nine months of 2017 and totaled $59.9 million and $57.2 million, respectively. Outstanding purchase commitments on existing capital projects totaled approximately $26.1 million on September 30, 2017. We currently plan to spend $70 million for the year in 2017 on capital expenditures.  We intend to fund capital expenditures and purchase commitments through our operating cash flows for the balance of the year.  Comparatively, capital expenditures were $35.7 million during the first nine months of 2016.  The increase in our capital expenditures in 2017 is primarily due to the additional requirements of our recently acquired operations and an increase in our “expansionary and efficiency” capital expenditures tied to initiatives including new products, value-added product capacity expansion, and automation.  The sale and purchase of investments totaling $12.2 million and $4.2 million, respectively, are due to investment activity in our captive insurance subsidiary.

Cash flows from financing activities primarily consisted of net borrowings under our revolving credit facility of approximately $36.2 million, primarily to finance the $59.9 million of acquisitions we completed in the first nine months of 2017.  Additionally, we had $9.2 million in dividend payments and $13.0 million in payments for stock repurchases.

On September 30, 2017, we had $70.8 million outstanding on our $295 million revolving credit facility. The outstanding revolving credit facility also includes letters of credit totaling approximately $9.8 million on September 30, 2017; as a result, we have approximately $224.2 million in remaining availability on our revolver after considering letters of credit. Additionally, we have $150 million in availability under a “shelf agreement” for long term debt with a current lender. Financial covenants on the unsecured revolving credit facility and unsecured notes include minimum interest tests and a maximum leverage ratio. The agreements also restrict the amount of additional indebtedness we may incur and the amount of assets which may be sold. We were in compliance with all our covenant requirements on September 30, 2017.

ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS

See Notes to Unaudited Consolidated Condensed Financial Statements, Note E, “Commitments, Contingencies, and Guarantees.”

CRITICAL ACCOUNTING POLICIES

In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States. These principles require us to make certain estimates and apply judgments that affect our financial position and

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UNIVERSAL FOREST PRODUCTS, INC.

results of operations. We continually review our accounting policies and financial information disclosures. There have been no material changes in our policies or estimates since December 31, 2016.

Item 3. Quantitative and Qualitative Disclosures about Market Risk .

We are exposed to market risks related to fluctuations in interest rates on our variable rate debt, which consists of a revolving credit facility and industrial development revenue bonds. We do not currently use interest rate swaps, futures contracts or options on futures, or other types of derivative financial instruments to mitigate this risk.

For fixed rate debt, changes in interest rates generally affect the fair market value, but not earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not influence fair market value, but do affect future earnings and cash flows. We do not have an obligation to prepay fixed rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we would be required to refinance it.

We are subject to fluctuations in the price of lumber. We experience significant fluctuations in the cost of commodity lumber products from primary producers (the “Lumber Market”). A variety of factors over which we have no control, including government regulations, transportation, environmental regulations, weather conditions, economic conditions, and natural disasters, impact the cost of lumber products and our selling prices. While we attempt to minimize our risk from severe price fluctuations, substantial, prolonged trends in lumber prices can affect our sales volume, our gross margins, and our profitability. We anticipate that these fluctuations will continue in the future. (See “Impact of the Lumber Market on Our Operating Results.”)

Our international operations have exposure to foreign currency rate risks, primarily due to fluctuations in their local currency, which is their functional currency, compared to the U.S. dollar. Additionally, certain of our operations enter into transactions that will be settled in a currency other than the U.S. Dollar. We have entered into forward foreign exchange rate contracts in 2017 and may enter into further forward contracts in the future associated with mitigating the foreign currency exchange risk. Historically, our hedge contracts are deemed immaterial to the financial statements, however any material hedge contract in the future will be disclosed.

Item 4. Controls and Procedures .

(a)

Evaluation of Disclosure Controls and Procedures . With the participation of management, our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15e and 15d – 15e) as of the quarter ended September 30, 2017 (the “Evaluation Date”), have concluded that, as of such date, our disclosure controls and procedures were effective.

(b)

Changes in Internal Controls . During the quarter ended September 30, 2017, there were no changes in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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UNIVERSAL FOREST PRODUCTS, INC.

PART II. OTHER INFORMATION

Item 1A. Risk Factors .

None.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds .

(a)

None.

(b)

None.

(c)

Issuer purchases of equity securities.

Fiscal Month

(a)

(b)

(c)

(d)

July 2 - August 5, 2017

2,800

84.01

2,755,923

August 6 - September 2, 2017

34,900

80.40

2,721,023

September 3 - September 30, 2017

2,721,023


(a)

Total number of shares purchased.

(b)

Average price paid per share.

(c)

Total number of shares purchased as part of publicly announced plans or programs.

(d)

Maximum number of shares that may yet be purchased under the plans or programs.

On November 14, 2001, the Board of Directors approved a share repurchase program (which succeeded a previous program) allowing us to repurchase up to 2.5 million shares of our common stock. On October 14, 2011, our Board authorized an additional 2 million shares to be repurchased under our share repurchase program. The total number of remaining shares that may be repurchased under the program is approximately 2.8 million.

Item 5. Other Information .

None.

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UNIVERSAL FOREST PRODUCTS, INC.

PART II. OTHER INFORMATION

Item 6. Exhibits .

The following exhibits (listed by number corresponding to the Exhibit Table as Item 601 in Regulation S-K) are filed with this report:

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Certifications.

(a)

Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

(b)

Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

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Certifications.

(a)

Certificate of the Chief Executive Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

(b)

Certificate of the Chief Financial Officer of Universal Forest Products, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

101

Interactive Data File.

(INS)

XBRL Instance Document.

(SCH)

XBRL Schema Document.

(CAL)

XBRL Taxonomy Extension Calculation Linkbase Document.

(LAB)

XBRL Taxonomy Extension Label Linkbase Document.

(PRE)

XBRL Taxonomy Extension Presentation Linkbase Document.

(DEF)

XBRL Taxonomy Extension Definition Linkbase Document.


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UNIVERSAL FOREST PRODUCTS, INC.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

UNIVERSAL FOREST PRODUCTS, INC.

Date: November 1, 2017

By:

/s/ Matthew J. Missad

Matthew J. Missad,

Chief Executive Officer and Principal Executive Officer

Date: November 1, 2017

By:

/s/ Michael R. Cole

Michael R. Cole,

Chief Financial Officer,

Principal Financial Officer and

Principal Accounting Officer

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