Universal Forest Products' Earnings Up

Grand Rapids, MI, Feb. 2--Universal Forest Products, Inc. today announced results for the fourth quarter and year ended December 27, 2003 that exceeded its internal targets for sales and earnings growth. For the year, diluted earnings per share totaled $2.18, up 10.7% over reported results for 2002. Diluted earnings per share for the fourth quarter totaled $0.34, a 36.0% increase over reported results for the fourth quarter of 2002. Net sales for the year were $1.90 billion compared to 2002 net sales of $1.64 billion, a 15.8% increase. Net sales for the fourth quarter were $454.5 million, an increase of 33.5% over net sales of $340.3 million in the fourth quarter of 2002. Changes in lumber prices had little impact on the company's sales growth for the year but were responsible for almost half of its sales growth for the fourth quarter of 2003. "Our sales and earnings growth reflect the successful efforts of a focused management team, a hard-working and well-trained workforce, and best practices that we've implemented in operations throughout the organization," said William G. Currie, Universal's chief executive officer and vice chairman. "We're pleased with our performance in 2003 and look forward to 2004 with optimism." Currie added: "2003 was the first year of our new five-year growth strategy, Building it Forward, and we delivered on our key performance targets. Many of those targets were difficult--especially given the depressed (but improving) manufactured housing industry, tough weather in the first quarter, and an economy that remained uncertain for much of the year." Performance was strong across all markets as Universal posted the following year-over-year sales increases: *DIY retail increased 18.5% over 2002 and was up 34.0% for the fourth quarter 2003; * Site-built construction was up 22.4% for the year and increased 36.0% for the quarter; * In spite of a 23% and a 19% decline in manufactured housing industry production for the year and fourth quarter, respectively, Universal posted a slight decrease of 2.7% in annual sales and a 20.2% increase in sales for the quarter; and *Industrial/other increased 20.4% for the year and 43.5% for the fourth quarter. The company anticipates continued growth in its business in 2004. Key assumptions with respect to the company's 2004 outlook include: *Stable commodity lumber prices and interest rates; *A DIY/retail market that shows moderate growth; *A site-built construction market that will continue to benefit from low interest rates; and *A manufactured housing market that will continue its slow recovery. "We're experiencing powerful marketshare growth in each of our business segments and we've made moves that will enhance our business with our largest customers while enabling us to expand our customer base," Currie added. With these factors in mind, the company is targeting both sales and diluted earnings per share growth of 10% to 14% for 2004. These targets factor in a number of new operations, a plant closing and a divestiture that will take place in the first quarter of 2004. During the quarter, the company plans to be operating five new facilities, one each in Berlin, NJ; Dallas, TX; Indianapolis, IN; Houston, TX and Tecate, Mexico. In addition, the company has closed its Modesto, CA plant and will sell its 60% ownership in Nascor, a Calgary, Alberta-based manufacturer of engineered building products and licensor of I-joist manufacturing technology, for $6 million (Canadian). "Five years ago, when we acquired an interest in Nascor, part of our strategy was to manufacture I-joists in order to supply a full-line of value-added components to builders," Currie explained. "Since then, the I-joist has become a commodity, so we shifted our strategy. While we'll continue to manufacture our I-joists in our Burlington, NC plant to serve our customers who prefer them, we've chosen to concentrate our marketing and manufacturing expertise on our Open Joist 2000 product, which offers Universal great competitive advantages. This transaction allows us to put our resources to better use." The company expects to record an after-tax accounting loss from the sale of its Nascor shares ranging from $400,000 to $600,000 in the first quarter of 2004. Nascor had annual sales in 2003 totaling $37 million (Canadian).

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