UFP Industries Inc (UFPI) 2011 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the second quarter 2011 Universal Forest Products earnings conference call. My name is Katie, and I'll be your coordinator for today. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session towards the end of the conference call.

(Operator Instructions) I would like to now hand the call over to your host for today, Lynn Afendoulis, Director of Communications. Please proceed.

Good morning, and welcome to Universal Forest Products second quarter 2011 conference call. On the call today are outgoing Chief Executive Officer, Mike Glenn; Chief Financial Officer, Mike Cole; and new Chief Executive Officer, Matt Missad. Please be aware that statements included in this call that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, and 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 "anticipate," "believe," "confident," "estimates," "expect," "forecast," "likely," "plan," "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 (inaudible.) The Company does not undertake to update forward-looking statements to reflect facts, circumstances, assumptions or events 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 uncertainties. 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 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 excluded in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission. This call is the property of Universal Forest Products. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Universal is strictly prohibited. At this time, I'd like to turn the call over to Mike Glenn.

Good morning, everyone. As I was preparing for our last call, or my last call, I found that I had something in common with Herbert Hoover. Hoover became the president of the United States in 1929, just nine months before the stock market crashed and the Great Depression began. When he left office, the economy wasn't much better but the worst was over and the slow climb back to prosperity was imminent. Clearly, better days were ahead.

I became CEO of Universal Forest Products in July of 2006 and quickly found myself managing and leading the Company through our most difficult years in our five decades of business. Like Hoover, I led during the years of downsizing and had the tough responsibility of closing plants, cutting back operations and right sizing our way to stability. A few weeks ago, I announced my retirement and today I'll say goodbye to a Company that's been my professional home for nearly 40 years. Like Hoover, I'm handing over the reins in time for our new CEO, Matt Missad, to have more positive calls with you. So I'll do my best to enjoy what will be my last call and be content to hear better calls ahead as an interested shareholder.

Fortunately, I don't have the pain that Hoover did as he watched his successor, Franklin Roosevelt, create deficit spending, increase taxes, create new controls and new programs that would saddle us with debt, even today. Hmmm. Sounds a lot like our current administration. And if this country doesn't take care of that, if we elect the current President and allow Congress to [wrangle] over things that don't matter and ignore things that do, like housing, I'm afraid Matt won't have it much easier.

Enough about the politics. Those are my own comments and don't necessarily reflect the Company's views, but what the hell, it's my last call and I can get away with it.

Our second quarter was tough. Overall, our unit sales declined by only 5% but lumber prices brought down our selling prices another 10%. Weak markets and lackluster consumer spending on big ticket home improvement items hampered our results, but I am optimistic about future quarters. Our inventory costs are in line with the market and our inventory is in line with sales.

We worked hard to cut $10 million in annualized costs and we'll start to realize that in the third and fourth quarters. We are on solid ground. We have a strong balance sheet, the best and most efficient operations in the business, a diverse business model, good opportunities in our market, especially the DIY and also housing, and hard working people who are hungry for success.

We have exciting things happening. We're finally opening our new plant in North Carolina where we'll hire 50 people initially to grow our industrial sales. Even though our existing industrial customers aren't doing as much business with us because of lower overall manufacturing output in this country, we added 300 new industrial accounts in the second quarter, so we continue to gain share in that promising industry.

We're excited about our retail business, about our business with the big box customers, as well as our growing business with independent retailers, and about new products we're closer to launching. There are many good things happening. I believe Universal has a bright future and I look forward to watching the Company grow and succeed in the coming quarters and years.

Matt Missad will lead this Company with great skill and enthusiasm. Matt has been with the Company since 1985. Actually, he started before that. When he was in high school, he started working part-time on the ground crews and got the nickname "Lawnboy," which he holds to this day. In 1985, he joined the Company full time and for the past 15 years he has been our Executive Vice President, General Counsel, and Secretary to the Board. He has also been an adviser to the past three CEOs.

He's been a great colleague and friend and will be a visionary and strategic CEO. I'm confident in handing over the reins to him and to his leadership team, including Mike Cole, and Pat Webster, our Chief Operating Officer. Now I'll turn the call over to Mike Cole for a review of our financials.

Thanks, Mike. I'll start by reviewing our income statement for the quarter. Our sales for the quarter decreased 15%, as Mike said, driven by a 10% decrease in selling prices due to the lumber market and unit sales that were 5% lower. By market, our sales to the retail market decreased 19% due to an 11% decrease in selling prices combined with an 8% decrease in unit sales.

As we mentioned in our press release, we believe demand for building materials associated with more expensive homeowner projects has decreased. In addition, our sales of composite wood have decreased as we're working to bring our new decking product to market. On a positive note, our efforts to increase share with independent retailers resulted in a 4% increase in unit sales to those customers. Sales to the manufactured housing market decreased 22% due to an 11% decrease in unit sales and the 11% decrease in prices.

The quantity decline is comprised of a 13% decline in sales out of existing plants resulting from a decrease in industry production of homes, offset by a 2% increase due to acquisitions. Based on the most recent data, HUD-code production is down approximately 14% year-over-year. Our sales to the residential construction market decreased 15% between 8% decrease in pricing and a 7% decrease in unit sales. Unit sales comprised of plants that recently closed caused a 15% decline in unit sales while existing plants actually increased their unit sales by 8% as we've shifted our focus to the growing multi-family market.

Finally, our sales to the industrial market decreased 2% due to a 9% decrease in pricing, offset by a 7% increase in units shipped. Our rate of growth slowed this quarter due to a drop in demand of our existing customers which we believe reflects a softening of manufacturing output in the US and a decline in sales of our Mexican partnership as changes in exchange rates have made their pricing in the US less competitive resulting in a loss of volume.

Excluding our Mexican partnership, our industrial unit sales grew 10% and we added almost 300 new customers again this quarter. Moving down the income statement, our second quarter gross margin decreased by 1.8 percentage points and our gross profit dollars decreased by 27%. Our decline in gross margin this quarter was comprised of a handful of factors. Most notably, gross margins on sales to the retail market declined 230 basis points for the quarter resulting primarily from an increase in material costs as a percentage of sales to this market. This was primarily due to the lumber market which decreased from March until June of this year.

As a result, this adversely impacted our gross margins on products whose prices were indexed to the current lumber market at the time they were shipped like treated lumber. Secondly, the decline in unit sales for our retail and manufactured housing customers adversely impacted our margins due to fixed manufacturing costs. In addition, as some markets have contracted, competitive pricing pressures become greater. Third, we recorded a $2 million loss on a construction project this quarter which represents the entire loss we believe will occur on the project.

Finally, our freight costs increased as a percentage of sales this quarter primarily due to higher year-over-year fuel prices. The reductions in gross margin I just went through were offset slightly by a 40-basis-point improvement in our labor costs as a percentage of sales. SG&A expenses decreased by $8.7 million to 16.1% this quarter primarily due to a decline in accrued bonus expense, compensation and related expenses, and bad debt expenses. In our press release, we mentioned that we've identified $10 million of annual cost reductions. Very little of those cost reductions impacted the second quarter. Approximately $8 million of the annualized cost reductions have been completed which should favorably impact the third and fourth quarters.

Moving on to our cash flow statement, our cash flow used in operations was $58 million this year compared to $56 million last year. Our operating cash flow in 2011 is comprised of a $77 million increase in working capital since December, offset by $600,000 of net earnings and $19 million in non-cash expenses. Working capital increased from December primarily due to the usual seasonal impact of our business, combined with higher inventory levels than we would like primarily due to weaker sales to the retail market than we planned.

We currently anticipate achieving strong cash flows from operations for the balance of the year as we move beyond our seasonal peak for working capital requirements and manage our inventories down to a level necessary to support current demand. Investing activities include capital expenditures of almost $12 million and we still expect to spend approximately $35 million for the year.

Finally, our seasonal working capital requirements were funded through cash reserves and $23 million in borrowings under our revolving credit facility. Today, our revolver balance is down to $5 million from $23 million which demonstrates the drop in working capital we expect. That's all I have on the financials. Mike?

Thanks, Mike. Now, I'd like to focus on giving you the information you need, so let's get started with the questions.

(Operator Instructions) Your first question comes from the line of Trey Grooms from Stephens. Please proceed.

Good morning, Trey.

Good morning, Trey.

Good morning, guys. First off, Mike, we hate to see you go. Wish you the best and congratulations to Matt on your new leadership role there.

Thank you.

Thank you.

First off, on demand picking up, or shipments picking up in June, could you kind of talk about or maybe quantify that a little bit and what you've seen thus far in July?

Trey, here is kind of what we're seeing. It's really a tough market to kind of forecast what's going to happen. It seems to be very sensitive to anything that happens in the marketplace. We see things kind of shut off, whether it's the noise that's going on in Washington, or whether we have these heat waves that are happening in Texas and other parts of the country. It just kind of slows our business down more than normal.

For some reason, it just seems to give people or manufacturers a reason to back off a little bit. So our trends have been for, certainly for June and July, from a sales standpoint, they were better. Looking forward, all I can tell you is it's a very, very sensitive market. What I can tell you about that though is two things. In the business that we're in, whether it be the retail segment, we deal with the number one, the number two and the number three players in that market, and whether it's in manufactured housing we have an 80% market share. And whether it's in manufacturing, we deal with the best players in the market.

We have the best ones, so we are gaining share. We have the best players and if business picks up in general, you know we're going to grow because we've got the customers, but to be able to tell you how much at this point, it's really difficult for us.

Okay, that's understandable. But when you say you're gaining share, is that gaining share across, I know looking at some of the, I guess, the segments, it is pretty obvious but even like with some of your more mature segments like retail you feel like you're continuing to gain share there as well?

Yes, we set out an initiative about 18 months ago to work on the independent business and that business grew--.

Our unit sales were up 4%.

Yes, our unit sales with independent business was up 4%, I think the quarter before that it was up more. I don't have the numbers in front of me. But we are gaining share in that, so when you look at the business from that standpoint, what business you have with the boxed business, you kind of have for the year. You aren't picking up stuff during the year. Maybe a little bit here and there, but the independent business, we are gaining share. The industrial side of it, we picked up 300 new customers in the quarter.

We had some of our big players just kind of slow down a little bit on us, but we are gaining share in every one of our segments. Our housing side of it, I think we talked last time, we've put a pretty big focus on military and multi-family business and that has, that still continues to grow for us and we've picked up pretty good share there. We're opening up a new plant in North Carolina next month.

I think we talked about it on previous calls. It's an industrial play for us. We're going to put about -- opening up with about 50 new employees. We have customers. We're not going in there without customers. So I guess I can say this because I won't be on the next call, but I'm guessing we're going to have somewhere in the neighborhood of $6 million to $8 million worth of sales out of that plant between now and the end of the year. And looking forward, it's a very promising plant for us, so I hope I answered your question, but we--.

No, very helpful, thank you.

You bet.

And then just on the $10 million in savings, Mike, is that going to be more SG&A kind of related? Is any of it going to be in the COGS line? How do we break that out?

Yes, the majority of it is going to be on the SG&A line. There's going to be a little bit in COGS but most of it in SG&A. And like I said, $8 million of it, we see has been implemented near the end of the quarter, so part of that is going to get realized and annualized because that's an annualized amount, part of that will get realized in the back half of the year.

Okay. So looking at this quarter, you said that the second quarter there wasn't really any impact, any real impact, from this, so would it be safe to say that looking at this quarter that's a good kind of base kind of SG&A and then we can kind of take the savings from there? Is that a decent way to think about it?

Yes, I think that's a good way to think about it. The quarter didn't have much in the way of bonus expense because of where profitability landed, so it's a pretty good base number to start with, and then you got the savings that we just talked about.

Okay. And then my last question and I'll jump back in queue. So when you announced the cost savings a few weeks ago, you pointed out focus on consolidation improvement or divestitures. Can you talk about some areas where you're focusing on at least for potential consolidation or divestitures? And then also, does this indicate that there could be more cost savings going forward over and above the $10 million you've already kind of talked about?

Yes, we did have a plant closure that we did, that kind of really relates to plant closures. We did close a plant first part of July and we've consolidated the volume into some other treating plants that we have, so no loss of sales, no impairments or exit costs or anything like that that were significant at all. And that comment relates more to, it's forward-looking too in terms of we're always looking at cash flow and profitability, and if we feel like we're not going to be able to be profitable on the cash flow, we'll close plants and we've done that a lot over the years. No different than what we're typically doing.

Okay, thanks a lot guys. That was all helpful. And, again, thanks, Mike, and wish you the best.

Thanks, Trey, I appreciate it.

Your next question comes from the line of Robert Kelly from Sidoti. Please proceed.

Good morning, guys.

Good morning, Robert.

Just had a question on the prepared comments, you mentioned that inventory was in line with the market, I believe, and your sales were also in line with inventory. So the implication is that you took a hit on your inventory costs during Q2. Does that wash out completely as soon as 3Q, assuming stable lumber, stable demand?

Yes, I think what happened early on, and Mike touched on, was we had 11 consecutive weeks of a falling market that certainly didn't help our margins. And a year ago at this time, we were facing a situation where the market had fallen $150 a thousand and sales had shut off after the stimulus money. So our inventories were high in relation to sales and our inventory values were certainly high in relation to market.

So what we're talking about is where we sit today, for the most part, our inventory is totally in line with today's market and our inventory levels today are in line with the sales that we have. So we view that as we're not fighting a downward pressure on a market. We're turning the inventory now probably on a once-a-month basis in general, so that bodes well as you look forward to our margins. It's pretty stabilizing at this time.

Just to kind of add on to that a little bit, Bob. Early in the quarter, with the drop in the market our inventory cost position was upside down relative to the market and what we were able to sell at, so that hurt margins. But now this year it's kind of more forward-looking and you look at our inventory cost position relative to the market, like Mike said, it's in good shape.

And conversely last year at this time, our inventory cost position was in tough shape relative to the market. So that kind of bodes well for that part of margin going forward into Q3.

Okay, as far as some of the plant closures you've made, especially over the last couple years, Mike Glenn attributed so much of the work you guys have done on the cost front due to market conditions. How many plants, how much cost have we taken out over the past four years? And then secondly, if lumber were to stabilize and demand were to stabilize, what sort of gross margin can we expect in that type of environment? What's kind of your bogey for a stable lumber, stable environment and your inventory costs are aligned?

Boy, that's a tough question, Bob, because I don't have all that data from four years. We've closed 30 plants and we've gone from 10,000 employees to 5,000. We've taken a ton of cost out. With the data I can go back and quantify that with you when I get back to my office. But I think one thing that's safe to say is that there's a lot of operating leverage in the business and we can grow the business pretty substantially without adding a lot of cost.

I think we've mentioned before that it's always been kind of a goal to be able to grow sales 10% in a year, let's say, and hold the SG&A line fairly fixed. So I could probably give you more color on that as I get more data back in my office but that's how I'd answer it now.

I think the other thing, Robert, is the one thing that continues to impact our margin is fuel costs. Compared to a year ago we're up and it's impacting our margins and we see that going forward also into the third and fourth quarters. Even though fuel has come down a little bit, it's still above where we had set some of our pricing early in the year.

And the other thing that impacts the margin is a lot of our plants are running at 50% or 60% or 70% of capacity and certainly all those fixed costs on 60% of capacity drive our costs up a little bit. Any uptick in the market and we move these plants to 80% drives our costs and drives our margins to a positive way. So that's why we work so hard on gaining share and kind of chase some other business around the way because we need to get more volume through those plants.

Yes, I think I understand all that. I guess what I'm trying to get at is there are structural cost improvements you all have made to the business over the past four years. Is it fair to say that the adverse swings in the lumber market, the cost/price mismatch that you endured here in Q2, is that masking it or is this kind of 10.5% gross margin something that we should look to be sustainable in a steady lumber market?

Oh, I would say the 10.5% we should beat. The decline in the lumber prices and the impact on our material cost as a percent of sales has been huge. And even, for example, in my prepared comments I mentioned that our labor costs, even as the markets were falling and the sales volume was dropping, our labor costs as a percent of sales was improving. It improved 40 basis points and that's a 10%, I think, of our sales. So the 10.5% to me is a number we should be able to beat easily as we move forward and things begin to normalize.

Okay, fair enough. And that kind of leads me to my next question. The SG&A was down 16%. You called out no tremendous bonus expense in this quarter but still in the past you've said you manage SG&A to unit growth or declines. You're far below the unit decline you saw in 2Q. Should we expect that same relationship to hold if units are up X percent, your SG&A will be up or down that same percent, or are we more disciplined on the cost front than we've been in the past?

Like I mentioned with Trey, I think a good way to look at the SG&A is to take a look at Q2 as a base, apply cost savings and know that that number should be a fairly fixed number. So we grow unit sales, again, I think it will be our goal that if we're able to grow unit sales 10% down the road. I'm not saying that we'll do that for the back half of the year, but as we grow unit sales and things start to normalize that that number will try to maintain pretty fixed.

Okay, got it. Just two last things. You talked about a $2 million loss on a construction job. Was that in the one-timers that you put in the release, or did you include that in the gross profit for this quarter?

No, the one-timer really related to severance and retirement which is about $3.5 million for the quarter. I think that translates into about $0.11 a share. The $2 million is separate. That's just buried in the cost of goods sold and it's very unusual. We haven't had anything like that before. I don't expect it to get repeated again and--.

That's over and done with?

Yes, it is.

No spillover. Okay, great.

Yes.

And just finally, could you just maybe talk about, you said that Matt Missad had advised the past three CEOs. Could you just talk about the role he played and maybe how it changes or maybe it doesn't change at all in the future here, what he will be bringing to the table as the new CEO? If Matt is even there maybe he can just talk about his goals for the next couple of years?

Well, I think the initial goals are to try to get our strategic plan in order and we're going to try to look a little more long term. In terms of the role that I've played in the past, it's been learning, advising, counseling, and I'm going to continue to learn and advise and counsel. But also our management team is very, very strong and we're going to continue to try to lead, so probably premature for me to say much more than that at this point but looking forward to it.

Okay, great. Thanks.

Thanks, Bob.

Your next question comes from the line of Steve Chercover from D.A. Davidson. Please proceed.

Thank you, and I guess I'd also like to extend my thanks to Mike Glenn and congratulations to Matt.

Thanks, Steve.

Good morning.

Good morning. Just two quick questions. First of all, as we look at the new segment called Commercial, does that -- historically did we pull a little bit of revenues out of site-built and the concrete form out of the industrial segment?

Right. Commercial was, in the site-built, correct, and that is the smaller piece of commercial and concrete forming and, yes, concrete forming was in industrial, correct.

Got it. Do you have any plans to restate years beyond the couple quarters that you've given us?

Yes, we do. In fact when we file our 10-Q, which we'll get out quickly like we usually do, we're providing an exhibit that's got several years of quarterly data.

Great. That will be helpful. And then just if my memory serves me properly and that's a real if, I believe you said that with the plants that you had in place, and this is probably about a year ago, that you could handle $4 billion worth of revenue which would probably imply not only volume but also better lumber markets. Is that still the case, that you could handle about $4 billion worth of business if it was there or have there been cuts that make that a number that wouldn't be achievable without significant CapEx?

Yes. Steve, you would fit in with our Company really well. That's a little bit of a stretch in what we said. I think it was $3 billion. We could handle $3 billion in sales with the existing facilities that we have, and we can still handle $3 billion with the existing facilities that we have, and probably with a small increase in headcount to do that.

And then I would say that we have sold very few facilities as we've down turned. So a lot of the facilities are idle. We still own them and so it does take time to stretch those out so don't think you can just flip a switch and it's there.

Sure. And having closed 30 facilities and basically cut the labor force in half, let's hope that things don't get worse, but, I mean, do we get to a point where you can't shrink yourself to prosperity or profitability because you just need to have facilities in each geographic region?

Well, we need to have facilities that are profitable in each geographic region. Your statement is right. We know we can't cut ourselves of profitability, but we also know that if we've got plants that are losing money or negative cash flow that we can't keep them on-board.

We can, in the case, I guess, the best example I'd give you is in Ohio where we had three treating plants and we've now consolidated those down to basically one plant and we've held on to the majority of our business that we had. If we have to do that in other parts and ship a little bit further, that's what we would do.

Okay, and you really can't conceive of a, I guess, it would be such a doomsday scenario for the nation that it's not going to get to the point where nothing makes money.

No. That's not our bloodline.

Okay, well, we look forward to getting to know Matt. Thank you.

Thanks, Steve.

Thanks, Steve.

Your next question comes from the line of Don Dion from Dion Money Management. Please proceed.

Matt, could you comment on how long you think the housing problem will be an issue and its impact on the manufactured housing, with the level of foreclosures we're seeing?

Well, with all the current news, my crystal ball is probably not better than anyone else's on that. We've been reading all the trades and looking at all of the journals and at least a two- to three-year period is kind of the consensus out there of a soft housing market. You saw the Bank of America news earlier this week, another 850,000 foreclosures. That's going to make it tough but I think that's a problem we're going to slog through for several years. The manufactured housing piece of that, I think, is forecasted probably similarly and we think that we can position ourselves and we can make money. So that's really our goal. We're going to deal with what the economy brings us and that's going to be our objective.

Okay. And just to follow-up, Matt, since it's not your problem, but this $2 million loss that the Company had to take, could you give us more color on that?

I'm not really sure that I can give you too much more color. My understanding of the situation is that we probably had some subcontractors that were unable to perform and didn't do what they needed to do, and didn't have the financial wherewithal to step up to the plate to fix the problem, and we have a commitment to our customers to take care of our problems so that's what we do.

And finally, what are your thoughts going forward on, given the stock performance of your Company, what are your thoughts on stock buybacks and increasing your dividend?

I think at this time, again, it's probably premature. Our management team is going to be sitting down and talking about a lot of those types of issues, so everything is on the table as far as we're concerned. We want to increase our shareholder value, so whatever we can do to do that, that's our goal.

Great. Thank you.

Your next question comes from the line of Keith Johnson from Morgan, Keegan. Please proceed.

Good morning, guys.

Good morning, Keith.

Morning, Keith.

Just as with the past callers, congratulations, Matt, and best of luck, Mike, on the retirement and your future there.

Thank you.

Thank you.

A couple of clarification questions. First off, on the year-over-year change in gross margin, I guess, down 180 basis points, is there a way you could kind of put that basis-point change into buckets for us, maybe how much of it was lumber, how much of it may have been fuel related, just to kind of, I guess, put a framework around how much of an impact each one of those items were?

Sure. Material cost as a percent of sales was about 1.4% down, 1.3% down. The overhead as a percent of sales about 50 basis points down. Freight about 30 to 40 basis points down and labor was 40 basis points improved.

Okay, and so, I guess, similar to one of the earlier questions, with the lumber market kind of stabilizing in June, maybe showing a little bit of an uptick depending on the grade of lumber to move into July, does that 1.3% on the material hit you took automatically go to zero for you? Is that the way to think about it as we kind of model into the third quarter? Does it change that quickly for you?

Yes, it does improve. Last year, that ratio was quite high, and you can already see, we can already see that trend line improving in June. And so, yes, that 140 basis points now should shrink to zero and could even flip the other way if, depending on what the market does.

Okay. That's helpful. And then if, you mentioned earlier when you're talking about the change in the residential market year-over-year sales there was a piece of it and it has been for several quarters a drag because of closed plants. How should we think about that as we kind of look into when you would potentially annualize that drag, or how much of an effect you think it will continue to have on you in the second half of the year?

I'm sorry, Keith, are you talking about the impact of the closed plants and the residential construction (inaudible)?

Yes, in the residential, going back to my notes here real quick, residential markets, closed plants was a 15% year-over-year hit?

Yes, that's right. We're getting to the point where we're starting to lapse. We exited California, to be more specific, last July and so we're getting to the point now where that's going to be less of a drag. But by the same token, as for site-built and residential construction, I mean, we're managing for profitability. So I don't know that sales volume is really our goal there. I think it's profitability and our ability to cash flow because it's still tough.

And in the residential kind of site-built, how much of that market is now kind of in that multi-family category for you guys?

What you're basically asking, our mix of single-family and multi-family within the residential construction?

Yes.

I don't have a specific number for you but it's a guesstimate. I think I'd probably say 50/50.

Okay. All right, great. Thanks a lot.

Thank you, Keith.

At this time, I'm showing you have no further questions. I'd like to hand the call back over to Mike Glenn for closing remarks.

All right. I'd like to thank you all for your support of Universal. I only wish that you could visit the plants with me and meet our people because after all, what you're really investing in is our people, not our bricks and mortar, and we have some outstanding employees and a management group that is second to none. So I thank you for your support.

Now we need to go back to work and grow Universal's profitability and success. And I look forward to listening to our next call, and I hope for everyone that it's filled with nothing but positive news and statistics and stories that illustrate growth and success. The team at Universal can and will make it happen. I just hope, unlike Hoover, that I'm remembered as part of the leadership group that laid the [bottom] work for better days ahead. Thank you. Good day.

Ladies and gentlemen, thank you very much for your participation in today's conference call. You may now disconnect. Have a wonderful day.