Good day, ladies and gentlemen, and welcome to the Second Quarter 2008 Universal Forest Products Incorporated Conference Call. My name is Katrina and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to our host for today's call Ms. Lynn Afendoulis. Please proceed.

Good morning and welcome to Universal Forest Products second quarter 2008 conference call. On the call today are Executive Chairman William G. Currie, CEO and President Michael B. Glenn, and CFO Michael Cole. Please be aware that any statements included in this call that are not historical are forward-looking statements within the meanings of Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements are based on the beliefs of the Company's management as well as on the assumptions made by, and information currently available to, the Company at the time such statements were made. 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 are the following: adverse lumber market trends, competitive activity, negative economic trends, government regulations, and weather. These risk factors and additional information are included in the Company's report on Form 10-K and 10-Q on file with the Securities and Exchange Commission. This call is a property of Universal Forest Products. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Universal is strictly prohibited. At this time I would like to turn the call over to Bill Currie.

Thank you, Lynn. Good morning, everyone, and thanks for taking time out of your busy schedules to be part of the Universal Forest Products second quarter conference call. Mike Glenn and his team have done a good job of right-sizing our business to the opportunities that are available in the marketplace. And that isn’t just something you do and it’s over with. This is something we constantly do. And the senior team is consistently evaluating what we think business will look like in the next 18 months and where we have to be and what size we have to be. The process will continue on a daily basis. Over our whole history we have opened and closed plants in tough markets and in good ones. We did make $0.61 for the quarter, which was a little better than we expected. The amazing part of that number is that if you were to take out the huge spike in our cost of energy – I am talking about transportation cost, inbound and outbound fuel – and you take the percentage increase for 2008 versus 2007, our second quarter of 2008 would have been as good or better than it was last year. It was impossible to keep up with the constant price increases and we are now making the adjustments in our delivered prices to reflect these new costs. We are watching our business and we are very confident that we will continue to weather this storm in a positive healthy manner and that we will be in very good shape as this economy makes its turn. We are watching our competition, what there is left of it, as we have lost a tremendous amount of competition and are going to lose a lot more. Even the big guys now have serious problems and we are sitting with an underleveraged balance sheet that will damn near no leverage by the end of the year. We are going to continue to drive and manage our business, exceed customer expectations and grow where we can grow. Mike Glenn will give you a good update on the markets and where we are going, but first I would like to have Mike Cole fill you in on the numbers. Mike?

Thanks, Bill. I will start by reviewing our income statement for the quarter. As you notices in the press release our total net sales for the quarter decreased by 8%. We estimate this was comprised of a 6% decrease in unit sales and a 2% decline in overall selling prices. Reviewing by market, our sales to the DIY market decreased 7% compared to the second quarter last year primarily due to a decline in unit sales as a result of the effect of the housing market on our retail customers whose business is more closely correlated with single-family starts and a decline in consumer spending. Our sales to the manufactured housing market decreased 20% for the quarter primarily due to a decrease in unit sales. HUD-code shipments were off 8% in April and May and we believe modular production, which was off 27% in the first quarter was down similarly this quarter. Our sales to the site-built construction market decreased 18% this quarter due to an estimated 10% decrease in unit sales and an 8% decrease in our average selling prices, due to low lumber prices and intense pricing pressure. Single-family housing starts were off over 40%. We have been able to mitigate some of the challenges of the single-family market on our volume by pursuing multifamily and light-commercial business and increasing our turn-key framing activities. Finally, our sales to the industrial market increased by 6% for the quarter primarily due to a 9% increase in unit sales partially offset by a 3% decline in selling prices. Unit sales growth this quarter was a result of acquisitions and continuing to gain market share and add new customers include concrete forming. Moving down the income statement, our second quarter gross margin decreased to 12% from 13.2% last year and our gross…

Thank you, Mike. Now, Mike Glenn will give you a business update and where he is taking the Company. Mike?

Thanks, Bill. These really are some of the toughest times in markets that I can remember. But I really am proud of what we have been able to accomplish in spite of all the challenges. Price pressures are tremendous. Fuel costs are eroding margins, and the economy is shaky, and consumers aren’t buying. Some of our markets are affected in ways no one predicted like the prolonged impact of site-built on the manufactured housing industry. In spite of all that we were profitable in the second quarter. We gained market share, we were successful in our focus to diversify our business, and we are getting leaner and stronger by the day. When the markets return, we are going to be right in charge of the gate. In the mean time, we have some tough work to do. One of our priorities for the rest of the year is building our margins. Our division presidents are holding weekly calls with each of our plants to talk about their strategies for doing that and to provide and support and guidance. We are capitalizing on our knowledge of procuring and using lumber efficiently. We continue to bring our cost in line with our business. We are managing our inventory better and making sure it stays in line with business and we are working to pass through the fuel surcharges so they don’t have such a severe impact on our business. And we are making sure everyone is focused on it. Our management team prides itself on managing forward, not looking back. We are focused on controlling the things we can to improve our business and we are making tough decisions daily in the interest of our shareholders. Now, let me run through our markets and I will start with the site-built. Our single-family…

Thank you, Mike. Now, we will open the floor for questions and try to give you honest, candid answers.

Thank you. (Operator instructions) Your first question comes from the line of Tom Hayes representing Piper Jeffery. Please proceed.

Good morning, Tom. Tom Hayes – Piper Jeffery: Good morning. How are you guys?

Good, Tom. Tom Hayes – Piper Jeffery: Good. Thanks. I guess an area I would like to focus on first is on the AR. Coming out of the first quarter you had indicated that that you probably didn’t see any particular problems but it sounds like through second quarter perhaps some problems that picked up. You mentioned the addition to bad debt expense and stuff like that. Can you just give a little more color about A) what you are seeing and what is the extent do you add it to the bad debt expense?

Sure. Just kind of – I’ll give you some data just kind of put it in perspective, our (inaudible) is only about 1% worse than it was last year. Out bad expense in the quarter was up, it’s up about $600,000 from what it was last year. For the year-to-date I think it’s about $1.3 million. So, it’s – there are certainly more credit risk now than we had last year and are feeling by – it’s not a huge – not a huge magnitude at this point. As far as DSO goes, for our site-built customers it’s off a few days. So, that’s been a challenge, but like we have said before, we continue to work on that very hard. We are very focused on it and in the grand scheme of things we have got a track record that’s very good. Tom Hayes – Piper Jeffery: Have you moved anyone to a COD basis here anymore than you had expected.

There is a handful of those cases for COD, but for the size of our company it’s very small. Tom Hayes – Piper Jeffery: You said both you and Mike talked about the fuel surcharge. Could you just talk about – are you getting a lot of pushback or is it pretty much everyone knows it’s coming.

Yeah, Tom, here is what happened. A lot of our business is contractual and when we start at the beginning, we did these contracts last November and so we weren’t able to push through a lot of the fuel cost that came through until late in the quarter and starting now. It significantly impacted especially our big box business. Tom Hayes – Piper Jeffery: Okay. I guess just lastly then on the industrial segment, I guess with the success you guys have had with acquisitions I was kind of expecting a little more growth in the unit volume. I guess could you just talk about what your kind of expectations are for some of the organic growth within the industrial segment for the balance of the year?

We are – Tom, we are continuing to add new customers. The challenge we had was we just had a lot of slowdown. They are not manufacturing as many conditioners as they used to, they are not doing as many lawn mowers as they did. All that has kind of slowed down, so we are not doing as many crates as we did for some of these folks. But we did pick up a lot of customers in the quarter. We are picking up a lot of organic growth. Tom Hayes – Piper Jeffery: Okay. Appreciate it. Thank you.

Thank you.

Your next question will come from the line of John Emerich representing Iron Works Capital. Please proceed.

Good morning, John. John Emerich – Iron Works Capital: Good morning. Could you just make any comments about what acquisitions if any had impact on the quarter and therefore what organic trends might look like?

Yeah, I think that was in the opening statements that I gave. The – yeah, the acquisitions had a just a couple of percent impact on the unit sales. The acquisitions that had an impact on the quarter were D-Stake – had a very, very small impact as we bought it in June, primarily International Wood Industries, which we bought in February. John Emerich – Iron Works Capital: Okay. A couple of percent impact on volumes. And then lastly, I might generalize here, I don’t follow commodity prices or anything like that, but as you look out at what lumber prices are doing, do you see any relief either from the negative year-over-year trends or even opportunity for sequential improvement as far as it impacts your financial reports?

We don’t think there is going to be much change in the lumber market for the rest of this year and until the supply-demand curve really makes a change. We think we are going to have a fairly stable market. Now -- and I would say that’s for the near term, John. If you look out a couple of years when – and we really do believe before there is any serious recovery it’s – we are not looking around the corner, we are looking out there. John Emerich – Iron Works Capital: Yeah.

With the tremendous amount of supply restriction and the primary – the primaries at that levels they are producing, when this thing does recover, there is going to be some tremendous – there is going to be some tremendous price escalation in forest products related products because it’s – when you are talking about 600,000 housing starts versus what we think we need over the long term about 2 million, it’s going to take a long time for that supply to catch back up with the demand. So, you are going to see it -- at some point in time in the future you are going to see some severely escalating forest product prices. John Emerich – Iron Works Capital: Okay. Thank you.

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

Good morning, Steve.

Hey, Steve. Steve Chercover – D. A. Davidson: First question please. The second quarter I think exceeded everyone’s expectations and yet the guidance for the full year has come down. So, is this a pipeline thing beyond what you can attribute to escalating fuel cost? Have you really seen the order book come down? And related question, what’s the upside in the second quarter due to maybe some orders that weren’t delivered late in Q1 due to the weather?

Steve, I think the first part of your question is we are seeing a slowdown in our orders, in our business. We have seen the slowdown starting probably a month ago or they just weren’t as great as we watch them on a year-over-year basis and they have cut back. A pickup in the second quarter business from the first quarter – we got a little bit of that, not a lot, we got a little. And to be honest with you, although we did $0.61 and beat everybody’s estimates we were disappointed at ourselves. We thought we could have done better. We thought we just missed a few opportunities. Steve Chercover – D. A. Davidson: Understood. Bill made a comment that he thought you guys would end the year virtually – without any leverage. That does not imply debt-free but just you are extremely comfortable with the balance sheet? Is that –?

Yeah, that implies that I am extremely comfortable with the balance sheet and we – our forecast show us throwing up a lot of cash the second half of the year and really – if we don’t do any acquisitions or we don’t decide on a major stock buyback everything which is all on the table will have a balance sheet that anybody will be proud of. Steve Chercover – D. A. Davidson: And finally, with respect to the competitors that are falling by the wayside, are there any somewhat household names that we would know that maybe I can't just think of and would you be willing to pick around the carcasses there or just go and re-bid the business if they go away?

We will re-bid the business if they go away.

No comment on the first. Steve Chercover – D. A. Davidson: Okay. Lastly, you guys have been on the call so the housing starts just came out. Permits at around just shy of 1.1 million, which is up 11%. Does that bode well? I mean –

Yeah, that bodes well. I don’t know if I believe it or not, but it bodes well. Steve Chercover – D. A. Davidson: How to think of a recovery maybe sooner than the 24 months you were discussing?

We are not that confident, Jay [ph].

I don’t think the worst is over yet. Steve, I think you still got some foreclosures coming, and you still got some repricing of some subprimes coming and you also got the government working to help it but – we are just not going to – we are not going to – we are not going to give you a rosy picture and then disappoint you. We would rather give you a realistic picture and exceed it. Steve Chercover – D. A. Davidson: Understood. Okay, last question. Sorry if I am taking too much time. I believe your initiatives called GO 2010 – is that whole target being revisited at this stage?

Correct.

We are working at a new plan and should be able to give you something probably by the next time we talk. Steve Chercover – D. A. Davidson: Great. Thank you.

The next question will come from the line of Jay McCanless representing FTN Midwest. Please proceed. Jay McCanless – FTN Midwest: Hi, good morning, everyone.

Good morning, Jay.

Hi, Jay. Jay McCanless – FTN Midwest: First thing, I wanted to touch again on the competitors and not to pick on you guys but other companies (inaudible) building materials have said our competitors are going where competitors are going away. Hasn’t really happened yet. Why – can you give me a little color as to why and what do you think the timeline is for thinning out the field a little bit?

Well, you are – you got – you are looking at two different – you are looking at the people in your public space, in the public company space, but you have to remember that a tremendous amount of the competition is not public, it’s private. And there are hundreds of plants that have closed, that are manufacturing components the same as us and stock Stock [ph] and BMHC and Pro-Build and the few biggies that are public or closely watched. The mom and pop side of this business has been devastated and even including us all of the big guys have closed. I can't even imagine how many facilities have been closed or mothballed or sold that are in the component scheme. So, understand you read the numbers. I don’t have to tell you what’s happening and it’s – anybody that’s in (inaudible) that one segment and isn’t big is taking the ass-kicking. Jay McCanless – FTN Midwest: Sure.

We have also, Jay, we have also lost some competitors in the DIY side of it. Jay McCanless – FTN Midwest: Okay. And that’s good because I wanted to ask you about DIY next. With Home Depot announcing that they are dramatically slowing the growth rate lows I am not sure what Menards plans are right now, but can you talk a little bit about how if the unit growth is slowing down for those guys that you are going to grow the business. Are there areas of the store that you are not in now? Can you get even deeper index and decking products than you already have? Can you talk about that a little bit?

Sure. We are – even as we talk we are picking up different product lines in different parts of the country that we don’t currently have and I guess an example I could give you this part of the country may not be right for you, but in northern California the other day we picked up $20 million worth of pickets with the company, product that we didn’t have today and earlier in the year we picked up some plastic lattice with some folks that we didn’t have that amounted to $3 million or $4 million worth of business. With the boxes, we continue to pick up share –

We just picked up Puerto Rico.

Yeah, we opened up Puerto Rico and we are doing close to $1 million a month there. We are picking up other SKU’s within the box that we don’t presently have. We are very comfortable with our position in the DIY side of it. Our folks are doing a real good job out there. Jay McCanless – FTN Midwest: Okay. Great. Jumping over to manufacturing housing, the 85,000 number is a pretty scary number for manufactured housing, overall. What are you seeing in terms of DSO’s for your – I mean DSO’s but maybe a bad debt expense, et cetera for your manufactured and your modular guys? Is that improving, is it getting worse? How do things look there?

It has not moved much. Haven’t had a lot of write-offs in that area and the DSO has not changed fairly at all either. So, it has been good. Jay McCanless – FTN Midwest: What about RV market?

We are not a beginner and I don’t – I think that market is – if the fuel thing doesn’t change that’s a serious problem Jay McCanless – FTN Midwest: Okay, and then last one. Thank you for letting me ask all these questions. The last one I have is on industrial. We have heard anecdotal discussions about the commercial mortgage backed security market freezing up, potential slowing of projects later this year. What’s your take on that and how does the book look to you right now?

We are seeing some of the projects that we had commitments for being pushed back, some as much as a quarter. We have seen some of them where they have asked for more money and they haven’t been able to do that. So, we are seeing a slowdown in some of that light-commercial and multifamily side of the stuff.

But if you are also talking about industrial I will tell you that we still have – we probably still have 1000 accounts that we are working through the process of re-design, testing, and some of these are very large accounts. So, don’t look for our industrial business to deteriorate on us because I think you were talking about industrial. I still think we got lots of room there. Jay McCanless – FTN Midwest: Okay. In terms of doing more of the packaging side then the construction side or --?

That’s correct.

Yeah. Jay McCanless – FTN Midwest: Okay. Okay great. Thank you.

The next question comes from the line of Keith Johnson representing Morgan Keegan. Please proceed. Keith Johnson – Morgan Keegan: Good morning.

Good morning, Keith.

Good morning, Keith. Keith Johnson – Morgan Keegan: Just a couple of quick questions. Just talk a little bit about the trends here in the second quarter. I think you touched on a little bit earlier. Did things start off okay for you in the second quarter and then just basically slow way down when we got over into June or was it in different channels pretty much slow the whole quarter?

I think business was pretty good for the quarter. We just saw a downward trend in the DIY side of it that we thought maybe would pick up because of the slow first quarter but to be honest with you it was with the exception of manufactured housing it was pretty much what we thought it would be. Keith Johnson – Morgan Keegan: Okay. When you take a look at the revised guidance for 2008, how did you handle or what where your assumptions around fuel surcharges in other words do you assume that you are making it up in the second half of the year or are you keeping it – a similar impact as maybe what you saw in the second quarter or exactly how you are handling that?

We expect that the impact would continue on for the second half of the year but mitigated some because of the fuel surcharge. Keith Johnson – Morgan Keegan: Okay. I had (inaudible) part of the comments at the very beginning of the call but how much did the fuel charges hit the quarter or the lack of fuel surcharges for the quarter?

It – we can't be exact on it but somewhere between $6.5 million and $8 million. Keith Johnson – Morgan Keegan: Okay. So, you are only expecting maybe a – to get a little bit of that back in the second half?

Well, sometime we are on some yearly contracts which we are kind of cranked on, we are negotiating, but on our day-to-day business we can definitely get it and we are. On some of our longer terms contracts it’s more difficult to negotiate that. Keith Johnson – Morgan Keegan: Okay. And what’s that split on the kind of the business swing day-to-day long-term contracts?

I am not sure I can give you that. You know, Home Depot is a big customer -- that’s Lowe’s is a big customer. Those are difficult to change in mid-year with a contract. Keith Johnson – Morgan Keegan: Okay. You talked about continuing to work to kind of right-size the business in today’s environment and in the environment you guys are looking for in the future. Did you make additional plant closures or were there some other right-sizing steps that took place in the second quarter?

Yeah, Keith, I think Bill touched on it in his comments. We have always even in good times looked at facilities that weren’t performing and we closed them or we mothballed them. And we are doing the same thing today. Keith Johnson – Morgan Keegan: Okay.

We are looking at facilities that aren’t performing and facilities that we don’t think are going to perform in the near future and we will look at mothballing or closing them.

We did not close any facilities thought in the second quarter. So--

And also, Keith, don’t be surprised if you see us open up a couple of facilities maybe with a change of venue. Keith Johnson – Morgan Keegan: Okay. Just where you find an opportunity it will make sense to do it.

You got it. Keith Johnson – Morgan Keegan: Okay.

And we have some. Keith Johnson – Morgan Keegan: Right, well thanks. Appreciate the answers. Thanks.

Thanks.

The next question comes from the line of Tom Zeifang representing Lucrum Capital. Please proceed. Tom Zeifang – Lucrum Capital: Good morning, guys.

Good morning, Tom.

Good morning, Tom. Tom Zeifang – Lucrum Capital: I don’t know if this is – I am in the call every quarter but can you give us a sense by market what is implied in your guidance.

We don’t typically break our guidance down by market. We just provide the total sales and the net earnings number. Tom Zeifang – Lucrum Capital: Okay.

You know we just got a real high level thought. You know, we expect similar types of unit declines as we talked about earlier and across the board and – but a lesser impact of the lumber market. It’s now – it’s gotten down to a level where it’s more comfortable and the (inaudible) was last year. And then where we have had cycle price pressure and that’s impacted our sales levels now we are getting to the point when you get into Q3 where it’s in both periods. So that has less of an impact on the top line sales number. Tom Zeifang – Lucrum Capital: Was there one item that – or was there one business unit that forced you to lower your revenue guidance?

I think it’s – you think collectively each one of the markets got worse as the year progressed from Q1 to Q2— Tom Zeifang – Lucrum Capital: Okay. Then in your commentary on industrial it makes it sound like something dramatically happened in June. Could you elaborate on that?

No. I don’t think anything dramatic happened in June necessarily (inaudible) I will say that in our guidance we are expecting a unit sales increase as Bill and Mike alluded to earlier for the balance of the year. Our sales levels were – there is no question the economy has softened and some of the successes we have had with taking (inaudible) market share and with the acquisition International Wood has been mitigated some by that. That more than anything else. We have been taking a lot of share in industrial. Tom Zeifang – Lucrum Capital: Okay. And then on the debt side, what do you expect to end the calendar year with from the debt perspective.

Oh boy! Somewhere in the $85 million to $95 million range based on our current cash flow projections and taking into account our earnings guidance that we have now. The big item that is a little bit more of an estimated is the inventory that we have – we have built into our model a pretty good size reduction in inventory based on some targets that we have. We think they are achievable and that’s included in those numbers for that debt level. Tom Zeifang – Lucrum Capital: Okay. And is there any issues with buying back stock from a debt perspective?

No. We have the ability to buy back stock if we wish. Tom Zeifang – Lucrum Capital: Okay. And is anything authorized.

1.2 million was authorized towards the buyback at our desire.

That’s an authorization level we have had for many years and from time to time we go into the market when we feel like it makes sense and do small volumes of shares. Tom Zeifang – Lucrum Capital: Okay. Thank you.

You bet, Tom.

The final question comes from the line of Robert Kelly representing Sidoti. Please proceed. Robert Kelly – Sidoti: Good morning, guys. Thanks for taking my call.

Good morning, Robert.

Hey, Rob, how are you doing? Robert Kelly – Sidoti: Great. Just – I don’t know if you covered this already, the outlook that you gave, was it all the increase in fuel and what not that kind of took you by surprise and forced you to lower it. It doesn’t seem like the sales revision is all that material in relation to the EPS.

The fuel number is a big number. That was – you couldn’t anticipate that one. It spiked up on us and as Bill had mentioned earlier, that’s a big number. And we had accomplished a lot of efficiencies and cost reductions in the plants and in the SG&A lines, I am talking the numbers I gave earlier, and it just all got offset by fuel. Robert Kelly – Sidoti: So, basically, the stuff has been controlled as you contained there and fuel is the one kind of variable. You have now leverage to go to your next yearly contracts and say fuel, diesel was up X percentage and have the (inaudible) room to pass that through?

That becomes part of the negotiations for sure. Robert Kelly – Sidoti: When do that start--?

October, November. Robert Kelly – Sidoti: Okay. Alright guys, thanks.

Thank you.

Ladies and gentlemen, this concludes the question-and-answer session. I would now like to turn the call back to Mr. Bill Currie for closing remark.

Okay. Thank you and all you guys thanks a lot for being on the call. We know nobody is having fun in this market, It probably doesn’t matter what segment you are in, and you are still taking the time to listen to us and follow us. And we appreciate it and we’ll keep managing the business the right way. You won't see any surprises and we will get back to work. We got a lot to do. Have a great day.

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes your presentation. You may now disconnect. Good day.