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Universal Forest Products Inc (UFPI -0.99%)
Q1Â 2019 Earnings Call
April 25, 2019, 8:30 a.m. ET
Contents:
- Prepared Remarks
- Questions and Answers
- Call Participants
Prepared Remarks:
Operator
Good morning, ladies and gentlemen. And welcome to the Universal Forest Products First Quarter 2019 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.
I would now like to turn the conference over to your host, Mr. Brandon Froysland, Finance Director. Sir?
Brandon Froysland -- finance director
Welcome to the Universal Forest Products, Incorporated First Quarter 2019 Conference Call. Hosting the call today are CEO Matt Missad and CFO Mike Cole. Matt and Mike will offer prepared remarks, and then the call will be opened up for questions.
This conference call is available simultaneously and in its entirety to all interested investors and news media through our webcast at www.ufpi.com. A replay will also be available at that website through May 25, 2019.
Before I turn the call over to Matt Missad, let me remind you that yesterday's press release and today's presentation 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 the company's expectations and projections. These risks and uncertainties include, but are not limited to, those factors identified in the press release and in the filings with the Securities and Exchange Commission.
At this time, I'd like to turn the call over to Matt Missad.
Matthew J. Missad -- Chief Executive Officer
Thank you, Brandon. And good morning, everyone. Welcome to our first quarter 2019 investor call.
Our goal in 2019 is to be exponentially greater than before. And judging by the first quarter results, our teams, like Christian Yelich, are knocking the ball out of the park. They set sales records in the first quarter in spite of lumber market prices that were 27% below 2018 levels. And I want to thank each and every member of the UFP family of companies for their outstanding performance.
A few highlights include. Net sales reached a record $1.02 billion for the quarter, up 2% over 2018. Unit sales grew nicely and were up 7% over 2018. Earnings per share was $0.58 per share versus $0.53 in 2018. And excluding the $7 million gain in 2018, earnings were up 28% this year. EBITDA for the quarter was $65.9 million, up 25% over 2018. New product sales were $99.5 million for the quarter, up 8% over 2018.
We use gross profit dollars per unit as a tool to measure performance, because it takes out lumber market pricing as a variable. We were very pleased that gross profit dollars per unit grew by 18%, more than double our unit sales increase.
Now I'd like to discuss our individual markets, starting with the overall lumber market. The Southern Yellow Pine lumber market has been trending down slightly for several weeks and remains well below 2018 levels. For the quarter, the SYP market averaged 12.9% lower than 2018. More mill capacity has come online since last year from new mills as well as efficiency enhancements at existing mills.
The Random Lengths Composite Index has fallen steadily for the last several weeks. And it, too, is well below 2018 levels, down 26.5% on average from 2018. OSB and plywood markets remain soft, as increased supply and mill capacity have not yet been met by demand.
Our order files remain strong, and customers remain optimistic about the year. Lower lumber prices are reflected in the sales numbers. But on balance they are good for UFP and for consumers.
We have been told that mill sales have been negatively impacted by some wholesalers and distributors who discounted their inventory to move it in the face of demand that was weaker than they anticipated. Obviously, this puts added pricing pressure on lumber mills.
Our inventory strategy is to make sure we have ample inventory for our customers' needs with safety stock in case of transportation shortages or other contingencies. Our quarter end inventory levels were 156% of March sales, which is higher than it should be at this time of the year and includes higher-than-normal amounts of position wood and safety stock, as I mentioned. Inventories should be back to normal levels by the end of Q2.
The retail market finished the quarter on a strong note after a February that was a slower month for many of our customers, as weather challenges impacted building projects. March brought more volume and was better than our expectations. Our focus in retail remains on new product sales and expansion of our customer base. At the risk of sounding like Don Pardo or Joe Cipriano, I have to share my excitement by highlighting a few of our new products.
First, our newly launched UFP-Edge Timeless line features nickel gap smooth shiplap in a variety of colors. The Cavalry Blue product has expanded to over 300 stocking locations and, like most of our retail products, is available nationally online. The UFP-Edge product line can viewed at ufpedge.com.
We continue to receive great feedback on our Deckorators Premium decking products, Vault and Voyage, which are made with our patented Eovations technology. We are also seeing dramatically increased sales of our Tropics wood/plastic composite decking and our various railing systems. You can see the complete line of innovative Deckorators products at deckorators.com.
Our third new product has applications in each of our markets. It is a laminated and insulated panel called Superstratum that can be used in commercial construction, OEM products for industrial and in many retail products. We just completed ASTM E84 testing and received a Class A fire rating for the product.
One more new product is our ProWood FR fire retardant. We are increasing fire retardant treated sales with this new formulation and expect this business to continue to grow nicely. We plan to expand production capacity significantly within the next 12 months.
In the construction market, we saw solid results as well. When looking at housing data for site built construction, we focus more on regional than national results, given our footprint in that submarket.
National single-family starts were down 3.7% from Q1 of 2018, while multifamily starts were down 17% from Q1 of 2018. When we look at regional data, we see that in the West, starts were down 27% from Q1 of 2018 due to a multitude of factors; while in the Midwest, starts were down 7.3% sequentially due largely to weather in Minnesota and Wisconsin and flooding in many other areas.
But in the Northeast and the South, where most of our site built component operations are located, starts are actually up 1.5% in the South, led by single-family increases; and up 3% sequentially in the Northeast, driven by multifamily starts. In our geographic markets, we expect the demand to remain at levels that would yield good results for UFP.
Manufactured housing sales were down from a hurricane-aided Q1 of 2018. But going forward, the comparable numbers should be normalized. In commercial construction and concrete forming, unit sales grew 15% as we continued to add customers and projects. The much-talked-about but not-very-well-executed infrastructure spending package could provide a boost, too, if our government pauses from mudslinging and our legislature stops pretending to be the judicial branch long enough to actually propose, debate and pass legislation.
Another bright spot for us was the industrial market, where unit sales grew 16% in the first quarter. Our recent acquisitions in the industrial space added 10% of that growth, while our ability to add product and packaging solutions organically accounted for the rest. We saw growth in product assortment, value-add and number of customers. We continue our quest to be the complete industrial packaging solution provider to our customers and are aggressively pursuing acquisition targets which help us achieve that goal.
I do want to note that one such transaction we expected to be closed by now fell through due to compliance issues discovered in due diligence. But we still have a full pipeline of targets. And if pricing targets can be met, we expect to continue growing by acquisition.
Our capital allocation strategy targets acquisitions at reasonable ROI-based values first, followed by greenfield growth and automation efficiency projects. In order to meet our desire to be the low-cost producer and to grow our businesses, we expect increased capital expenditures, including automation, for the foreseeable future. We intend to use the remainder of capital generated for cash dividends and opportunistic share repurchases.
We are very excited about our business. Unlike last year, the vast majority of our operations are at or above budget, including idX. The idX business unit leader retired at the end of March and will remain available to assist the leadership team. idX will be rationalizing capacity for current sales levels by consolidating the two West Coast operations into one location, and by improving purchasing, manufacturing and transportation through better coordination with other UFP companies. Displaced employees will have priority eligibility at other UFP locations.
The back-office integration continues, with system changes, HR consolidation and other functions being consolidated to make us both more efficient. I am excited about the idX opportunity in business and leadership team. Like all of our regions, idX is committed to meet or exceed their budget targets and generate an ROI in excess of their cost of capital.
While the first quarter of 2019 was excellent, we recognize that we have areas of improvement which could yield even greater results. For example, non-bonus-related SG&A growth remains a challenge. Driving higher value-added sales and more innovation necessitates greater SG&A spending. Thus far, that increased innovation-related SG&A spending has generated a greater gross profit dollar return and is a net positive. There's also significantly increased compliance, regulatory and legislative-related spend that are a drag on gross profit.
The third category is acquisition-related SG&A costs. Given our acquisitive nature, these costs can be significant. As we continue to isolate innovation and expansion spending, compliance spending and acquisition spending from core SG&A costs, we will refine our process to reduce these costs.
Production labor also remains a challenge in most of our markets. And we continue to look for ways to reward our employees in the face of increasing costs, especially healthcare. We have rolled out an employee choice program to help employees defray benefit costs or save more for their retirement.
Now I'd like to turn it over to Mike Cole, who will provide more details on our financial performance.
Michael Richard Cole -- Chief Financial Officer And Treasurer
Thanks, Matt. Before discussing the financials, I'll briefly address lumber market trends impacting the quarter.
First, overall prices dropped during the fourth quarter to reach a 12-month low by the end of 2018. And our people did a great job taking advantage of buying opportunities, which benefited our first quarter gross profits. Second, the overall level of lumber prices were down about 27% for the quarter. This reduced our selling prices in overall sales dollars but had less impact on our profitability.
Moving on to the income statement. Our overall sales for the quarter increased 2%, resulting from a healthy 7% increase in unit sales that was partially offset by a 5% decrease in selling prices due to the lumber market. We're pleased with organic unit growth of 4% during the quarter, with all markets reporting an increase except manufactured housing, which I'll talk about more in a minute.
New products continued to be a bright spot and grew 8% this quarter, while continuing to contribute to the lift in our gross margins. Breaking down our sales by market. Sales to the retail market decreased $13 million or 3%, resulting from a decline in selling prices of 6%, offset by an organic unit increase of 3%, which was in line with our expectations. Gross profits on sales to this market increased by over 7%, exceeding our unit growth, with new products and inventory positioning being contributing factors.
Moving on to the industrial market. Our sales to these customers increased 15%, driven by a 16% increase in units, offset by a 1% decrease in selling prices. Acquisitions contributed 10% to unit growth, while organic growth was 6%, which is in line with previous quarters and slightly above plan. The organic unit increase was primarily driven by adding 94 new customers, 146 new locations of existing customers and $5 million of new product sales growth, as our efforts to improve market share continue to produce results.
Our overall sales to the construction market decreased 3% due to a 5% organic unit increase, offset by an 8% decrease in selling prices. Within the construction category, our unit sales increased by 15% to commercial construction customers, 6% to residential construction; and decreased 6% to manufactured housing. The decrease in our unit sales to manufactured housing customers was driven by a decline in industry production of more than 11%. This appears to be due to a tough year-ago comparison from a spike in FEMA-related shipments in 2018, resulting from temporary housing needs due to the impact of hurricanes on the Gulf states.
Moving down the income statement. Our first quarter gross profit increased by over $23 million or nearly 18%, surpassing our 7% growth in unit sales as our profit per unit improved. The overall gross profit increase was comprised of a $14 improvement in our industrial gross profits, an $8 million increase in our construction gross profits and an increase in retail of almost $3 million.
You may have also noticed in the press release, we included a table that computes this year's unit sales at last year's lumber prices for the quarter to give you a better comparison of the movement in our profits and costs as a percentage of sales with last year. Based on this information, we're very pleased to report our gross margins improved by 130 basis points, with effective inventory positioning and continued improvements in our value-added product mix being primary contributors.
Continuing to move down the income statement. SG&A expenses included $12.4 million of accrued bonus expense, up $3.3 million from last year, due to an increase in pre-bonus operating profit. Our SG&A excluding bonus expense increased by $8.7 million or 10%, which was on plan for the quarter. This increase included $2.5 million in SG&A from businesses we acquired last year, with the remaining year-over-year increases driven by higher salaries, wages and benefits, sales incentives and marketing costs to drive sales of certain branded products.
Given the change over the years in our value-added sales mix and resulting higher levels of SG&A those sales require, we've added another operating metric to those we use to the manage the business: SG&A as a percentage of gross profit. Viewed in this way, our SG&A has improved to 60% of gross profit compared to over 64% last year.
Excluding the $7 million gain we recorded on the sale of certain real estate last year, we're happy to report our operating profits and EBITDA increased by 30% and 25% respectively, each well in excess of our 7% growth in unit sales.
Finally, our effective tax rate this quarter was 24% compared to 22% last year. We anticipate an overall effective tax rate for the year of 24% to 25%.
Moving on to our cash flow statement. Our cash outflows from operations for the year so far were $56 million and comprised of net earnings and noncash expenses totaling $51 million, offset by $107 million increase in net working capital since year-end, as we've entered the peak of our selling season in some of our larger markets.
As I've mentioned before, we measure our cash cycle to assess our working capital management. Our cash cycle for the first quarter increased to 65 days compared to 57 days last year, primarily due to an increase in our days' supply of inventory, which we attribute to what's turned out to be timely and effective inventory positioning.
Investing activities consisted of capital expenditures totaling almost $16 million including expansionary CapEx of $4 million. We still plan to spend approximately $95 million for the year, which will include significant projects to replace our capacity in South Florida as a result of the sale of our Medley facility; and expand capacity and enhance the productivity of our wood/plastic composite product line, which is one of the product categories we're targeting for growth due to favorable demand trends and market share gains our people have achieved.
Financing activities primarily consisted of $64 million in net borrowings on our credit facility and $3 million in debt repayments. In future quarters, we will target about 500,000 of our shares for repurchase to offset recent issuances under our share-based compensation plans.
With respect to our balance sheet and capital structure. Our net debt excluding new operating lease liabilities not recorded in the balance sheet was about $268 million at the end of Q1 compared to $266 million last year, as we continued to be under-levered with ample availability for growth, including acquisitions.
While currently at our seasonal peak, net debt is less than 1x EBITDA and only 19% of total capitalization. Consequently, our unused debt capacity remains at about $300 million, which we currently plan to use to fund future growth.
As we've discussed on previous calls, our highest priorities for capital allocation continue to be capital expenditures and acquisitions. But we always seek the highest return for investors and will allocate more to dividends or share repurchases if appropriate.
Finally, our trailing 12-month return on invested capital is 12.5%, exceeding our weighted average cost of capital, and up from 11.7% last year.
That's all I have on the financials. Matt?
Matthew J. Missad -- Chief Executive Officer
Thank you, Mike. Now I'd like to open it up for any questions you may have.
Questions and Answers:
Operator
(Operator Instructions) Our first question is from Ketan Mamtora, with BMO Capital Markets. Your line is open.
Ketan Mamtora -- BMO Capital Markets -- Analyst
Thank you. Good morning Madam Mike. And congrats on our strong start to 2019.
Matthew J. Missad -- Chief Executive Officer
Morning Ketan thank you. Good morning.
Ketan Mamtora -- BMO Capital Markets -- Analyst
First question, I just want to talk a little bit more about the lumber markets. You talked about it in your prepared remarks. But to the extent that you can comment a little more, I mean, we are in late April, almost getting into May. And lumber pricing is still falling, pretty unusual for this time of the year. So what are you guys seeing right now in terms of the key drivers for this price decline?
And then, as we think about Q2, if you can just help us understand how does this impact your results from a gross profit standpoint? Because as I understand, Q2 is seasonally strong for your variable-priced products. So to the extent that you can comment, even if just qualitatively, that will be helpful.
Michael Richard Cole -- Chief Financial Officer And Treasurer
Sure. Well, I'll start with the first part of it, Ketan. And the key drivers for us -- I think what we're hearing from our suppliers is that the demand really just hasn't caught up, and partly because of the added capacity in the marketplace. So it makes it a little more difficult for them.
One of the Canadian mills just announced a curtailment up in Canada. So that's more FPS stuff. But they're definitely to the spot now where they're trying to firm up the market pricing. So obviously for us, the best type of market is a gently rising market through Q2. So right now, obviously, gross margin percentages are benefiting from lower pricing.
But we expect that these two will get more aligned. And by that, I mean demand and supply during Q2. There was a little bit of a late start because of February. So we're seeing very positive trends on the demand side. But they may not meet the expectations that all the mills combined at. I think they just added too much capacity, and they thought that the overall market was going to grow a lot more than it actually was going to grow.
Ketan Mamtora -- BMO Capital Markets -- Analyst
And then, just in terms of kind of your end market demand, what are you seeing thus far in Q2? You talked about kind of late start. But in terms of what you've seen more recently, any color you can provide there?
Matthew J. Missad -- Chief Executive Officer
Yes. Right now everything appears to be very good and kind of more of the same in terms of demand. We've got very good order files. The construction markets that we are in are doing very well. They're extremely busy. And they're very optimistic, at least through the visibility we have, which is through Q3.
Ketan Mamtora -- BMO Capital Markets -- Analyst
And then, just one more on sort of your M&A pipeline. You talked about there was one deal, but that didn't kind of materialize. But how does your M&A pipeline look like, and kind of your general expectations for 2019?
Matthew J. Missad -- Chief Executive Officer
Yes, I think the pipeline is very strong. There's a lot of targets in there. Obviously, we're engaged in many conversations. And we still maintain our expectation that we're going to put together transactions this year. And that would be a big contributing factor to our 2020 growth.
Ketan Mamtora -- BMO Capital Markets -- Analyst
And, Matt, is it fair to say that the vast majority of this is likely to be on the industrial side?
Matthew J. Missad -- Chief Executive Officer
Yes, that's certainly a focus area for us is industrial targets. And then there'll be some other consolidation or geographic type expansions, we'll call smaller bolt-on type acquisitions, in potentially other markets.
Ketan Mamtora -- BMO Capital Markets -- Analyst
Thank you.
Operator
Thank you. Our next question is from Reuben Garner, with Seaport Global Securities. Your line is open.
Reuben Garner -- Seaport Global Securities -- Analyst
Good morning.
Matthew J. Missad -- Chief Executive Officer
Good morning.
Reuben Garner -- Seaport Global Securities -- Analyst
Congrats on the Christian Yelich quarter. So I guess maybe we could start -- you guys have a pretty broad exposure to the U.S. economy. Can you maybe, for the year, talk about, in all your end markets, where you see the most upside or where you're most positive on; and then, maybe on the flipside, which of your markets maybe will have a softer 2019?
Matthew J. Missad -- Chief Executive Officer
Yes. Kind of as we looked at it in overall retail terms, we're still on track with what we talked about before, which is kind of a low to mid-single-digit organic type growth in the retail space. New products and product mix can help us there, as well as market share gains will help us there.
And you go to industrial, very strong first quarter performance. We expect that to continue. Again, a lot of more value-add product sales, and a lot more packaging solution type sales will help us in that market.
On the construction side, again, we think modest growth in the areas that we're in on site built with respect to manufactured housing, that the unit sales -- we'll see if they are able to bounce back in Q2 from Q1 levels. And then, I think there's going to be -- we're rationalizing how we look at some of the lower-margin business on the MH side. So we may voluntarily or -- take a different look at some of these low-margin items that we do for that space.
On concrete forming and commercial construction side, we expect that to be a good growth area for us again throughout the balance of the year.
Reuben Garner -- Seaport Global Securities -- Analyst
And then, I know gross margin is not the right way to look at you guys. But just from a modeling perspective, is how Q1 played out from a unit growth and a profit per unit growth, at least on the gross line -- is that the right way to kind of think about the rest of the year as we progress through 2019? Or is there any other puts and takes that you'd keep in mind? I mean, I know lumber can change things. But just assuming lumber kind of acts normal from a seasonal perspective, what do you think the year looks like modeling-wise?
Matthew J. Missad -- Chief Executive Officer
Yes. So Reuben, I'll have Mike give you a little more color on this piece. But I think kind of generally, the way I would look at it is our gross profit dollars per unit grew nicely. Part of that was due to, I think, what was very strategic purchasing and what we call position buying. Some of that will continue. But I think there should be continued strength in the gross profit dollars per unit, given kind of a reasonable lumber market.
Mike, you want to add some color there?
Michael Richard Cole -- Chief Financial Officer And Treasurer
Yes. Just adding on to that, we would expect and plan for gross profits to grow at a greater rate than unit sales as we continue to move up value-added sales mix. This quarter was a little bit unique because of the inventory positioning. So obviously, that contributed a lot more than gross profits. But that's certainly part of plan for gross profit dollars to increase at a greater rate than unit sales.
Reuben Garner -- Seaport Global Securities -- Analyst
And then, two quick ones, if I could sneak them in. So your Deckorators brand, we've learned you guys had some wins. Can you talk about, have you started to realize the benefits of that? I know it's not the biggest business right now, but growing pretty nicely. Have you started to realize the benefits of some of your market share gains? Or is that something that we'll see that there's some seasonality that will lead to that showing up later in the year? Or just help me with how that sell-in works?
Matthew J. Missad -- Chief Executive Officer
Yes, that's a good question. So we would probably see initial stocking orders that have gone in in many locations, kind of March, early April. We are not fully implemented yet with all of the new locations. So we would expect that to kind of continue through Q2. And then, what we are seeing is very good trends thus far in the stores, where product is in. So year-over-year comparisons are very good versus the prior product.
So we're excited about that. It's kind of difficult to predict. But I would say if you're looking at the first quarter, really only maybe March would have any kind of significant impact from that yet.
Reuben Garner -- Seaport Global Securities -- Analyst
And then, last one, a quick one. I think I heard you say insulated metal panels. Can you maybe just elaborate more on that? Maybe I missed what detail you gave. But just talk about how you got involved in that business, if I heard it correctly, and what your kind of strategy is there?
Matthew J. Missad -- Chief Executive Officer
So basically, it is a laminated panel with insulative material as a substrate. And we laminate on an exterior metal product on both sides. And it is going to be used for commercial building applications, can be used for transportation applications and a number of other items. But the big factor we're really excited about is that Class A fire rating, which basically makes it useful pretty much anywhere in the commercial space. So that's something we're excited about. And we see that as a good growth market for us. And it's really a testament to our guys who've put that together and made it work from the research side. And as they've looked for solutions for a customer, this is a good example of finding the solution and bringing it to the bear.
Reuben Garner -- Seaport Global Securities -- Analyst
Thank you.
Operator
Thank you. Our next question comes from the line of Dan Jacome, with Sidoti. Your line is open.
Dan Jacome -- Sidoti -- Analyst
Good morning.
Matthew J. Missad -- Chief Executive Officer
Good morning, Dan.
Dan Jacome -- Sidoti -- Analyst
Just a couple questions. Can you just first talk a little bit more about the new mill capacity you said you're seeing on the Southern Yellow Pine? I know that's been an increasing trend so far this year. Do you have any visibility just where these new mills are right now? Or on the cost curve, how efficient are they? What do you they look like if you look at all the processes like kilns and log bucking automation? That was my first question. And then, wondering, maybe a little bit more color to that regarding how it's going to impact, you think, lumber prices in the next couple quarters?
Matthew J. Missad -- Chief Executive Officer
Yes, good question, Dan. So if we just kind of take a look -- and one of the things I called out was our at least 4 new mills that I can think of. I'm not going to name any of them, but there's 4 new mills that came online. And they're not totally 100% capacity utilization yet. But I expect that will happen between now and the end of the year.
And then, there's a number of other mills that have spent significant capital to upgrade their production capability, make their mills more efficient. So I think that combination added a significant capacity to the market. And I think that's what I was referring to. They're going to have to make some decisions if the demand curve doesn't really kick in that they were expecting it to be. So hard to say what impact that'll have on the market. But I think most of the mills are showing a very quick willingness to adjust their capacities to keep their prices at a stable level.
Dan Jacome -- Sidoti -- Analyst
That's helpful. My concern was just general rationalization over the next couple years. Because, obviously, no one has a crystal ball. Fair enough.
And then, my other question was -- saw you bumped up the dividend by 11%, which is encouraging. And I'm just wondering, really at a high level, are you open to widening that dividend to a quarterly rate? And if you can't give us too many details on that, just maybe you could answer this: What would it take for you to reconsider how you're thinking about the dividend?
Matthew J. Missad -- Chief Executive Officer
Yes. So I think the question is really about would be pay the dividend quarterly instead of semiannually. Yes, I think for us, it's really been, is the dollar amount significant enough for a shareholder to deal with the administrative burden of doing it twice more a year? I don't really think that's a big concern overall. It's not something we occupy our time with. But I think if the investors and shareholders believe that a quarterly dividend is better, once we get to the level that we're at where it makes sense from a per-shareholder kind of return level, we'd certainly be open to that.
Dan Jacome -- Sidoti -- Analyst
Lovely. Thank you.
Operator
Thank you. Our next question is from Steve Chercover, with D.A. Davidson. Your line is open
Steve Chercover -- D.A. Davidson -- Analyst
Good morning Matt and Mike.
Matthew J. Missad -- Chief Executive Officer
Morning Steve.
Steve Chercover -- D.A. Davidson -- Analyst
So we know that you guys focus on margin dollars. But I got to tell you, I was a little concerned about your investment in lumber in Q1. Thought it might burn you, but obviously, it didn't. And I'm just wondering, as such a large buyer, you kind of provide a service to the mills. You give them liquidity when other people aren't buying lumber. Is it possible that you're not really paying the price that we would be tracking in Random Lengths, whether it's for Southern Yellow Pine or the composites?
Matthew J. Missad -- Chief Executive Officer
I would certainly hope so, Steve.
Steve Chercover -- D.A. Davidson -- Analyst
I mean, yes, you deserve a volume discount. So that's probably one of the elements. And lumber did not get the spring rally that we're so accustomed to, and it's still showing some weakness. But it appears that -- is it even safe to say that we are going to be de-risking the inventory situation almost by the time we exit Q2? Because I think you said you'll be back to normal levels?
Matthew J. Missad -- Chief Executive Officer
That's correct.
Steve Chercover -- D.A. Davidson -- Analyst
And don't need to belabor other things. But I noticed that you didn't buy any stock back in Q1, I don't think. And is that just because you had other capital allocation priorities? Because I would've thought it was a pretty compelling level.
Matthew J. Missad -- Chief Executive Officer
Yes, I think the challenge we have is kind of open window periods, given the way our year-end release happens. And our own prohibitions for insider buying shares basically left a very short window period. So it was difficult to do.
Steve Chercover -- D.A. Davidson -- Analyst
Yes, your Q4 release was a lot later than, I think, normal.
Matthew J. Missad -- Chief Executive Officer
Correct.
Steve Chercover -- D.A. Davidson -- Analyst
Well thanks and good luck going forward
Matthew J. Missad -- Chief Executive Officer
All right. Thank you Steve.
Operator
Thank you. And I'm not showing any further questions. So I'll now turn the call back over to Matt for closing remarks.
Matthew J. Missad -- Chief Executive Officer
Thank you. As you can tell, we're off to a great start in 2019 and our goal of exponential improvement. We're very encouraged by unit sales growth and gross profit dollar growth. But as the Virginia Cavaliers showed us, good things happen when you work hard the whole game. And I'm confident that no one will outwork our team. Great earnings and a little extra cash dividend for the shareholders is a terrific way to start the year.
Thank you for your investment and trust in us. And have a great day.
Operator
Ladies and gentlemen, this does conclude the program. You may now disconnect.
Duration: 37 minutes
Call participants:
Brandon Froysland -- finance director
Matthew J. Missad -- Chief Executive Officer
Michael Richard Cole -- Chief Financial Officer And Treasurer
Ketan Mamtora -- BMO Capital Markets -- Analyst
Reuben Garner -- Seaport Global Securities -- Analyst
Dan Jacome -- Sidoti -- Analyst
Steve Chercover -- D.A. Davidson -- Analyst
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