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WIKI ANALYSIS
Headquartered in Grand Rapids, Michigan, Universal Forest Products, Inc. (UFPI) engineers, manufacturers, treats, distributes, and installs lumber, composite wood, plastic and other building products to the do-it-yourself (DIY), site-built construction (homebuilders), manufactured housing, and industrial markets. The company has approximately 8,000 employees across approximately 100 locations in North America. In the DIY market, the company sells dimensional lumber, composite wood, and plastic products to national home center retailers, such as Home Depot and Lowes, retail-oriented lumberyards, and contractor-oriented lumberyards. The proximity of its regional facilities to customers reduces lead times, increases turnarounds, and generates a competitive advantage relative to peers. By the end of the third quarter of 2007, sales to the DIY segment/market totaled 41% of net sales (39% of Q307 sales), up from 37% in the same period a year ago (35% of Q306 sales).
Universal Forest Products manufactures building products for the site-built construction market as well. The company sells engineered wood components, such as roof and floor trusses, wall panels, and I-joists and lumber packages to small and large residential homebuilders as well as multi-family and commercial builders. Management plans to expand manufacturing capacity, increase framing capabilities, and develop a national presence. By the end of the third quarter of 2007, sales to this segment/market totaled 22% of net sales (23% of Q307 sales), down from 29% in the same period a year ago (30% of Q306 sales). Site built revenue made up a lower percentage of total revenue on account of the plunge in U.S housing starts. We expect other business units, such as Industrial, to pick-up the slack.
The Industrial segment sells products to industrial manufacturers that use pallets, crates, and wooden boxes for shipping, packaging, and material handling purposes. By the end of the third quarter of 2007, sales to this segment/market totaled 22% of net sales (22% of Q307 sales), up from 20% in the same period a year ago (21% of Q306 sales). The Manufactured Housing market segment comprises the mobile, modular, and prefrabricated builders. The company sells roof trusses, plywood, particle board, and dimensional lumber to its customers. By the end of the third quarter of 2007, sales to this segment/market totaled 15% of net sales (16% of Q307 sales), up from 14% in the same period a year ago (14% of Q306 sales).
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