Good day, ladies and gentlemen, and welcome to the Q4 2014 Universal Forest Products Inc. Earnings Conference Call. My name is Mark and I'll be your operator for today. At this time all participants are in a listen-only mode. Later we'll conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. I would now like to turn the call over to your host for today, Lynn Afendoulis. Please proceed ma’am.

Good morning and welcome to the Universal Forest Products Incorporated Fourth Quarter 2014 Conference Call. Hosting the call today are CEO, Matt Missad; and CFO, Mike Cole. Matt and Mike will offer prepared remarks and then we’ll open up the call for questions. This conference call is available simultaneously and in its entirety to all interested investors and news media through a webcast at www.ufpi.com. A replay will also be available at that website for the next month. Before I turn the call over to Matt Missad, let me remind you that yesterday's press release and today's presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include, but are not limited to those factors identified in the press release and in our filings with the Securities and Exchange Commission. At this time, I would like to turn the call over to Matt Missad.

Thank you, Lynn and good morning, ladies and gentlemen; wanted to thank you very much for taking the time to join us on our fourth quarter 2014 conference call. I want to start out the call by saying congratulations and thank you to the employees of the family of Universal Companies who posted the best results since 2006. I would also like to wish Universal Forest Products a happy 60th birthday. What began as a lumber wholesaler in February of 1955 continues to become stronger today; thanks to the foundation built by the founders and previous leaders of our company. They provided a great springboard to grow from their fundamental approach to business was one of the trading lessons, which helped us lead dramatically approved results in 2014 and as good as the performance was in 2014, we know we must be better in 2015 and beyond. But before I gauge too much into the future, let's do a quick review of our key indicators for our 2014 performance. Starting with sales, sales for the fourth quarter were up nearly 18% to $628 million. Each market showed positive sales growth. Retail was up 22%, construction up 10% and industrial up 24%. For the year 2014, sales were up 8% in spite of a very slow start to the year when first quarter sales were flat compared with 2013. The increase for the last three quarters of 2014 was 10% better than 2013 with growth accelerating through Q4. Overall for the year, retail sales were up 10%, construction was up 2% and industrial was up 12%. Our gross profit dollars were up $8.5 million for the quarter, a 13.3% increase and up $44.8 million for the year, an increase of 16%. Gross margin however declined for the fourth quarter to 11.7%…

Thanks Matt. Before reviewing the financials, I should briefly address the impact of the lumber market this quarter. Overall lumber prices were down almost 4%, but prices for southern yellow pine, which is a higher percentage of our volume were up almost 10% for the quarter and drove an overall increase in our selling prices. Now I'll move on to some income statement highlights. Overall sales for the quarter increased 18% due to a 14% increase in unit sales, combined with a 4% increase in prices. By market, sales to the retail market increased 22% driven by an 18% increase in units. The unit sales increased primarily due to improved consumer demand. We had strong sales growth to each of our big box customers, which collectively grew by 25% this quarter, while sales to other retail customers increased 19%. Our sales to the industrial market increased 24%, which included an 18% increase in unit sales. Recently, completed acquisitions drove about 6% of our unit increase, while the remaining 12% unit growth was primarily driven by better demand and gaining share with existing customers. Our overall sales for the construction market increased 10%, consisting of a 7% increase in unit sales and a 3% increase in prices. Our greatest unit sales growth continues to be experienced with customers that buy concrete forms as we continue to gain share. Our unit sales to manufactured housing in residential customers increased by 3% and 4% respectively. By comparison, HUD-code home production increased by about 5% for the quarter and year-over-year national housing starts increased by about 8%. Moving down the income statement, our fourth quarter gross profit increased by 13%, but dropped by 50 basis points as a percent of sales. This decline in gross margin was due to an increase in unfavorable cost…

Thank you. Mike. Now I would like to open it up for questions.

[Operator Instructions] Your first question comes from the line of Steve Chercover from D. A. Davidson, Please proceed.

Good morning, Hi Matt.

Good morning, Steve. How are you?

Hey Mike. So you say you've got locked your goals for 2015, can you be specific? You don’t need to be too granule, just sales gross margin and EPS?

Well as soon as we decide to give guidance, Steve you will be the first among many to know.

Okay, but seriously you said, sales should grow 4% to 6% above GDP and your target EBITDA margin is 5% to 6% of sales?

Correct.

And you have a GDP growth assumption?

We think it will be somewhere between 2% and 3%.

That sounds reasonable. Okay, and then you said $190 million of new product sales will be achieved like is that a run rate or that’s -- you'll get that?

Well, that is our goal for this year. We’ll have that for annual new product sales in 2015. We did a $149 million last year. So it’s about $50 million in growth this year.

Okay, and what are those products?

Probably about 79 different products and we’ll probably adding over 50 additional ones this year. They range all across the spectrum of our markets and it can be anywhere from retail, building material type items to industrial products, to products for the construction market.

That can be things that you fabricate or add value to or are they sourced elsewhere?

It’s both, but the ones who we're really trying to focus on are things that we add values to.

Yeah, and then last year we had the Polar Vortex, seems like you guys are getting some pretty harsh weather now. Are we going to be hearing about that on the Q1 call or is this pretty well a normal winter?

Yeah, I guess so far I’ve learned not to make weather predictions Steve. So I think the whole idea is right now it’s certainly a manageable situation. Depends on what happens over the next six weeks or so.

Yeah, so it just sounds like with the exception of maybe Boston and up into Maine, it’s just winter, its cold -- actually it delays everyday or every quarter.

All right. That’s all I have got. Thank you.

All right. Thank you, Steve.

Thanks Steve.

Your next question comes from Jay McCanless from Sterne Agee. Please proceed.

Good morning, everyone.

Good morning, Jay.

Okay. So the first question on the gross margin I missed, I think you said you guys were talking about stocking program for composite lumber, but then also there were some weather impact on gross margin. Could you reconcile those two and if you pull the weather stuff out of it, what should the gross margin have looked like?

I think if you just look at it in aggregate Jay, there’s about $3 million or so in additional unfavorable cost variances for the quarter, which are due to a lot of different factors, the ones that Matt had mentioned earlier in the call and weather are the biggest.

Okay. The three main cost variances okay. And then the second question on the big unit sales gain to the big box retailers, is that -- is the majority of that just a easy comp, because of the weather last year or is it the retailer actually taking more product and stocking deeper. And then the second part of that question is, are you guys actually gaining shelf space at some of the big box retailers?

Yeah, just from a high-level standpoint Jay, I think what we’re seeing the big boxes did better last year. Their year-over-year comps for our products were better than they were. So that’s a big part of it. And obviously we’re continuing to try to pick up share overall. So we expect that trend to continue.

Okay, and in terms of weather comparisons this versus last year, do you think any of that was -- any of that was 24% increase in unit sales to the retail segment or excuse me, 18% gain, was any of that just a weather comp?

Yeah, some of it certainly could have been, but I don’t think there’s a big portion of that and we’re referring right now to the fourth quarter of 2014 versus the fourth quarter of 2013 right.

Right.

Yeah, I think the weather comp issues will be different for first quarter. We don’t -- we can’t really predict that yet, but…

Got it, okay. And then on the HUD-code side, are you seeing any new entrants into that market, new customers and is the impact of the customer or the financial impact from the customer who decided to vertically integrate some of their operations, is that pretty much done now?

Yeah -- the second question, the answer to the second question is yeah, that's pretty well baked in now. The first part of the question, we did have one customer that actually added capacity opened up in a previously shuttered facility, but there’s not a ton of that going on that we can tell.

Okay, great. Thanks guys.

Thank you, Jay.

I would now like to hand over to Matt Missad, for closing remarks.

Well, thank you. As you can tell, we have a very strong balance sheet. We have a diversified capital plan, which balances short term and long term shareholder returns through dividends and buyback programs. We also are using our capital for maintenance, expansionary and innovation capital investments together with targeted acquisitions to strengthen our customer relationships, our positions in the markets we serve and our expansion of new products and services. Obviously, I am very proud of our universal family of companies and the people who drive our business. Their enthusiasm is contagious. They are shareholders who want better results and they have the talent and ability to achieve them. Thank you again for your time and investment in UFP. And while, as a lifelong lion's fan I might trade one super bowl victory for seven feet of snow. Let's hope for a break from the severe weather for our friends in New England and well along the East Coast. Thanks and have a great day.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.