Good day ladies and gentlemen and welcome to the fourth quarter 2007 Universal Forest Products Incorporated earnings conference call. (Operator Instructions) I would now like to turn your call over to Miss Lynn Afendoulis, Director of Corporate Communications.

Good morning and welcome to Universal Forest Products’ fourth quarter 2007 conference call. On the call today are William Currie, Executive Chairman, Michael Glenn, President and CEO, and Michael Cole, CFO. Please be aware that any statements included in this call that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements are based on the belief of the company’s management as well as on assumptions made by 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 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 re-broadcast of this call in any form without the express written consent of Universal is strictly prohibited. At this time I would like to turn the call over to Bill Currie.

Good morning everyone and thanks for joining us on this cold wintry morning. I open the third quarter conference call by talking about our performance and successes under some tough market conditions and I guess I don’t need to change the script very much. It was more of the same in the fourth quarter except conditions were even more challenging if that’s possible. And the moves we made to pave the way to a solid future were even more aggressive and bolder. I don’t like where the markets are today but I do like where we sit thanks to our strong management team and our hard-working group of people. Because when the markets return, no company will be better positioned than Universal for powerful growth and success. Michael and his management team guided us through tough times with skill and patience and led us to market share gains in all four of our businesses. They made aggressive moves and decisions that will ensure we’re a stronger company moving forward. We’re continuing to face challenges. The housing market, that’s not going to do much improving in the upcoming year and enormous price pressure brought on by competitors willing to slice prices to extreme lows to get any business effectively destroying margins and the softest lumber market in decades. But we’re doing all the right things. We’re consolidating operations and taking advantage of synergies where we can. We are focused on customer relationships and on quality product service and old fashion values like loyalty, respect and a focus on mutual success. We’re continuing to diversify within our markets and we’re always evaluating new opportunities for growth, like expanding into new territories and adding successful operations, people and opportunity through acquisition. And because we know Universal’s a great value, we bought back over 0.25 million shares in the last six months of ‘07. Because of our current acquisition activity we haven’t been in the market recently, but we will be again when we can. These are tough times, but the light at the end of the tunnel is starting to get a little brighter. That’s partly because the turnaround is inevitable. The Fed is working properly, and partly because Mike Glenn and his team are doing all the right things to position us for success when the markets return. Mike Glenn will talk more to you about our performance and our strategy and outlook for 2008. But first I will turn it over to Mike Cole for a review of our numbers. Mike?

Thanks Bill. I will start by reviewing our income statement for the quarter. As you noticed in the press release, our total sales for the quarter increased by 3%. We estimate this was comprised of a 6% increase in unit sales offset by a 3% decline in overall selling prices due to a soft lumber market and pricing pressure on the site-built market. Reviewing by market, our sales for the DIY market increased 10% compared to the fourth quarter last year, primarily due to unit sales growth as a result of our acquisition of Aljoma Lumber. Sales out of existing facilities were only down 1% compared with the same period last year, in spite of challenging market conditions as a result of market share gains we realized with big-box retailers, offset by lower sales to other retailers whose businesses more closely correlated with housing starts. Our sales for the manufactured housing market increased 8% for the quarter due to a 9% increase in unit sales partially offset by a 1% decline in selling prices. Our acquisition of Banks Lumber provided all of our unit sales growth this quarter and made up for soft, modular and HUD market conditions which resulted in a decline in unit sales out of existing facilities. The industry reported a decrease in HUD-code shipments in October through December of 3.5%. Our sales to the site-built construction market decreased 16% this quarter due to a 7% decrease in unit sales out of existing plants and a 9% decrease in our average selling prices due to a soft lumber market and intense pricing pressure. Single-family housing starts for the quarter were off a reported 32%. Finally, our sales to the industrial market increased by 16% for the quarter primarily due to an increase in unit sales. Unit sales…

Thank you very much Mike. And now turn it over to Mike Glenn for business review and outlook.

Thanks Bill. It doesn’t seem too long ago when in one of these calls you talked about the perfect storm of opportunity that was driving our business to new heights. Well, today we have a different kind of storm. It’s a one that unfortunately a lot like the movie. But let me assure you of something. This ship may get battered a bit but we’re staying the course and we will be ready when the seas calm a bit. The fourth quarter was a tough quarter. That was a tough ending to a tough year. There is no good news on the housing market front and I am not sure we have seen the bottom and we won’t see a turnaround begin until next year. Manufactured housing isn’t as healthy as we had hoped and some of our customers have closed plants. DIY has been affected by the downturn in housing and we expect it to be soft in 2008. And the lumber market is one of the lowest levels in decades. In fact, the last time lumber traded at these levels based on the composite was in 1991, 17 years ago. And it’s having a major impact on our selling prices and our ability to be creative with our cuts and yields in ways that benefit our customers and our bottom line. Now that I have the bad news out of way, there are a lot of good things to talk about. First, there is industrial which continues to be a bright spot for us and it’s even brighter with our entry into the concrete forming market, which I’ll talk about in a little bit. Yesterday we announced the acquisition of International Wood Industries. This is a company that we have been talking to for some time. IWI is…

Thank you, Mike. We are all very proud of this company and working very hard to achieve the results and our management team is second to none. I thank all of you for your interest and now I will open up the floor for questions.

(Operator Instructions) Your first question will come from the line of Michael Cox - Piper Jaffray.

I’d be interested if you could comment on the gross margin conditions you are seeing in the non-site-built areas of your business.

Mike, we are seeing pressures in the DIY business. Everybody is kind of fighting for a little bit of market share. And really what’s happened in the marketplace is traditionally there are spreads between, I don’t want to get too technical here, but there are spreads between different grades of lumber. And so our model was built on taking advantage of those spreads by doing cuts and yields by buying maybe some low-grade lumber, cutting it up and chopping it up and pulling different grades out of it, and what’s happened right now is those spreads have compressed. And so the difference between number four lumber and number three, and number three and number two, and number two and number one have really compressed and there’s not a lot of difference between them right now. So that’s impacted our margins as much as our competitors chasing us.

And within industrial, are the margin characteristics there also challenging?

Yes, it’s a little bit of the same thing. Our advantage was that are pretty creative on how we do some things, plus we imported quite a bit out of Honduras and Brazil, and a lot of that advantage has kind of dried up with what’s happened with the lumber market and what’s happened over in Brazil. So we still have a major advantage over our customers in terms of our expertise, but a lot of our margin opportunity has shrunk.

You have a done a very nice job in managing working capital through this downturn. I am curious as to what opportunities do you still have as you look to 2008. And then a follow-up on that, the receivable dates have remained very steady. I was just wondering if you could talk about the overall health of your customers particularly in site-built and perhaps manufactured housing.

Yes, with respect to working capital and inventory, we have a goal of increasing our inventory turns by 10%. That’s part of our 2010 goals and it’s one we are starting to make progress on. Started to in the fourth quarter and would expect that we’d continue to make progress on in 2008 and beyond. With respect to DSO, yes it has remained pretty flat. We have had some pressure though on the DSO for the site-built market. That’s extended out a little bit. The other markets have offset it. So that’s still an area of risk and concern for us, but we manage it very carefully.

Your next question will be from the line of Mukul Kochhar - Oppenheimer.

In site-built construction, are you profitable at all at this point? Are you making any money?

In fourth quarter we were not profitable on site-built, no.

And secondly how much has the margin declined in the current cycle in that segment, any quantification on that?

Well yes, it’s about nine margin points.

Is there any expectation in the near-term that suppliers will probably stand back and say this just doesn’t make sense?

A lot of our competitors are just working for payroll. So it’s a matter of when they say “uncle,” but Mukul, I would say that we’re going to fight this for at least the first six months of the year.

On the new business in multi-family and light commercial how will you characterize profitability there?

Well its certainly better than our single family. Our key to that is not just that we sell the trusses and the loose lumber but we come in and frame the whole deal. So we bundle it and we bring a whole package to it and that gives us a lot more opportunity.

Right, and profitability, generally, is it much better I think?

Right now it’s better, yes.

And long run, but you expect single family probably to be more profitable or roughly comparable?

Well I don’t know if we’ll ever go back to the days of where we had our plants that we’re totally focused on production builders in single family. We are going to go back like our business model is in all our other segments and we will maintain a balance in that business. So we will always have some single family and we will always have a multi-family and light commercial. It will be very difficult for us to answer that question but when you blend them all together because they will feed off of each other, so we think that model in itself will strengthen us and increase our margins as a whole.

On the DIY right, I mean, normally as lumber prices go down you would expect gross margin to expand. What’s happening there and is it that any improvement there is being completely swamped by other factors like pricing pressure?

Well, what’s happened is the big-box fellows also have a tremendous amount of pressure on them right now for earnings, and so through negotiations this year with those individuals, they put a tremendous amount of pressure on us to reduce. We weren’t so much concerned about our treated products, but all the other products that they came after, the fencing and our strips and our facia. Those took a tremendous amount of price pressure, deck necessities. So we lost a little bit of margin in there right now and that’s what we are talking about.

And IWI when would you expect this transaction to be accretive?

No, IWI will be accretive immediately.

In terms of your composites business, is there any quantification on the kind of growth that you are seeing there?

Quantification on the growth for composite business was up 20% this year.

And finally the industrial growth is that primarily coming just from concrete forming?

Is it coming just from concrete forming? No, it’s really not just from the concrete forming. It’s certainly a part of it though.

Your next question will come from the line of Steve Chercover - D. A. Davidson.

First question the facilities that you are selling, is there any chance that when the market perks up that these will be competing against you? I mean I fully recognize that your cost structure is going to make it tough for someone to walk into your old plant and beat you. But will they compete against you?

We won’t sell those facilities to folks that will have the opportunity to compete against us. Just the property and buildings, we are not selling the assets, the equipment.

On the manufactured homes, I was under the impression, I guess as recently as September or so, that you were seeing growth in that business. Not just because of the acquisition of Banks but because folks who had kind of migrated from manufactured homes into starter homes were now coming back. Did something change there or was it the economy in general or what happened?

No that’s correct. And I think you’ll see that the growth in manufactured housing is back to the single-wide. That’s true, but what’s happened in the fourth quarter early now is everybody is getting a little skittish and they’ve backed off. And that’s why it’s really important for us to have this FHA financing to get approved by Congress.

So, is it still your belief that longer-term kind of the marginal first-time homebuyer has in fact been pushed back legitimately to the single-wide market?

Yes.

But, you guys do strive to give us guidance and at the end of third quarter you suggested that we would come in between, call it break even and $0.15. And then when you gave us your pre-release outlining the charges on the 21st, you didn’t mention that the organic business or the standalone business was going to be a loss in its own right, which I compute to be around $0.22. Why did you not at that time take the medicine and say, “And by the way, our previous guidance is not going to hold in this environment.”

Well, Steve, we didn’t know exactly where the fourth quarter was going to come in at. So, when you’re going through the year-end, you are going through a more expensive process to close your books, you are going through an audit. And without knowing with some better certainty exactly where we were going to end up, we didn’t feel like it was appropriate to come out with preliminary numbers like that.

Your next question will be from the line of Chris [Wyness] - Wachovia. Chris [Wyness] - Wachovia : Can you give us a little bit of color on the revenue line as far as across the segment, how revenues trended during the quarter and maybe any insight on January as well?

Well January isn’t closed out yet and so we’re not really prepared to talk about January. But within the quarter, October started out pretty good and then things deteriorated in November, and December was much softer.

I would say that the weather here in the first quarter hadn’t helped us.

Yes, that’s really impacted our business. Chris [Wyness] - Wachovia : When you guys said that you had picked up some share with some big-box customers and is that general geographic expansion or is that just more product kind of getting pushed through existing stores and that kind of stuff?

Well, a bit of both. Chris [Wyness] - Wachovia : Okay and what kind of products are you seeing take hold with that kind of market share expansion?

You know like I’ll give you one example and that is in the Rocky mountain area, we picked up $2 to $4 million worth of cedar picket business. That may be one, yet when you go to California we may pick up a fence panel business, or if you go to Texas it may be 1x2’s and 2x2’s. So that’s-it’s all over the board. We supply them with over 2500, 3000 skews and we’re picking up different skews in different markets. Chris [Wyness] - Wachovia : Mike, I think you’ve mentioned how much that your form business had grown in ‘07. Did you have an actual number? I think you guys read about $40 million at the end of Q3 if my memory serves me right as far as what the total revenues from that business were in ‘07.

Yes, between $40 and $45 million. Chris [Wyness] - Wachovia : Can you give us an average share price you guys paid for your re-post?

I think it’s about $30 bucks in the fourth quarter. You should have the numbers from the Qs from the previous quarters.

Your next question will be from the line of Robert Kelly - Sidoti.

Just a question on the price pressure, is it confined now to the straight lumber packages that you are selling? Are you seeing it slip over into the more value add stuff as well?

It’s across the board. Everything is under intense price pressure.

Within site-built, it’s all product line.

So the value-add mix is moving down from ‘06 levels?

Yes.

Yes, our value added sales in that, we hadn’t mentioned that previously, but our value added was about 59% of total sales this quarter versus about 64% last year.

Just to illustrate what’s happened in the business. Two years ago we had about 27 billion square feet of OSB was manufactured, and that supplied about 2.1 housing starts. This year, they are going to manufacture 25 billion square feet, the supply, what do you figure a million housing starts? I mean the chance for prices to get off the floor is almost impossible.

That soft lumber pricing outlook is included in your ‘08 outlook I assume?

Yes, correct.

The free cash flow, the guidance you have given with net earnings, D&A, CapEx, $2.60-$2.70 a share. How we are going to prioritize the excess cash flow this year?

We are still actively pursuing some acquisitions. So, some will go towards that and we will be back in the market on our shares when we are free to do so.

The IWI acquisition, was that paid for with cash or debt?

The cash from the sales of the properties I mentioned, that will basically fund the IWI acquisition.

There was some talk at least on the composite market of price increases for ‘08. Are you seeing a market that would allow that type of price increase through or some color on the composite market?

We did get a price increase. It was a modest one, but we did move our prices north.

Your next question will be from the line of [Ted Crawford] - Maple Leaf Partners. [Ted Crawford] - Maple Leaf Partners : What is your maturity schedule in ‘08 and ‘09?

In ‘08 we have an $79.5 million maturity on our senior notes. And I would expect to be able to generate enough cash flow to pay off a portion of that and then we would be able to use a revolver to refinance it or term it out in the debt markets. [Ted Crawford] - Maple Leaf Partners : Okay, and ‘09?

I don’t have ‘09 in front of me but we do have some more maturities in ‘09 but not nearly as large. [Ted Crawford] - Maple Leaf Partners : What was the availability on your credit facility?

What is the availability on our credit facility? Right now the remaining availability is $214 million. It’s a $300 million revolver. [Ted Crawford] - Maple Leaf Partners : Do you expect to draw on that other than applying it to refinancing these maturities?

That and seasonal working capital, so we have seasonal working capital that our inventories and receivables go up a lot during the primary selling seasons through July, and then our debt moves back down very significantly from July through December. So during that period of time from March until July we will have seasonal working capital, which we will use our revolver for but we’re off of that by December. [Ted Crawford] - Maple Leaf Partners : What was your maintenance CapEx in ‘07?

Our maintenance CapEx in ‘07 was in the neighborhood of $30 to $35 million.

With no further questions in queue, I will turn the call back over to Mr. Bill Currie for closing remarks.

Okay thank you all again for participating on our call. We’re trying to be as candid and honest as we can about the markets but also we’re pretty optimistic and excited about were we sit and how we’ll come out of this. So appreciate your support and your interest and we’ll get back to work. Thank you very much.