GRAND RAPIDS, Mich., Oct. 20, 2022 (GLOBE NEWSWIRE) -- UFP Industries, Inc. (Nasdaq: UFPI) today announced record net sales of $2.3 billion and net earnings attributable to controlling interests of $167 million for the third quarter of 2022. The company also reported record earnings per diluted share of $2.66, a 37 percent increase over the third quarter of 2021.

“UFP’s ability to deliver record-setting performance in a challenging economic environment is a direct result of the efforts of our hard-working teammates and a balanced business model that minimizes risk by operating in diverse but complementary markets,” said CEO Matthew J. Missad. “Our market-focused organizational structure helps us to better address customer needs, and our increased commitment to innovation and new, value-added products continues to improve our operating results and set us apart from competitors.”

Third Quarter 2022 Highlights (comparisons on a year-over-year basis):

  • Net sales of $2.3 billion increased 11 percent due to a 6 percent increase in prices and a 5 percent increase in unit sales, including a 2 percent increase in unit sales from acquisitions.
  • Earnings from operations of $237 million increased 41 percent. In the third quarter of 2021, the company recognized a gain on the sale of real estate of $9 million.
  • SG&A increased $45 million or 26 percent. SG&A as a percentage of gross profit fell from 52 percent to 48 percent.
  • New product sales of $178 million increased 38 percent. This excludes new products that were sunset at the end of 2021. New product sales leaders included Deckorators mineral-based composite decking and Strip Pak mixed-material packaging solutions.
  • The percentage of total sales that are value-added increased to 66 percent from 64 percent.
  • Adjusted EBITDA of $274 million increased 46 percent, and adjusted EBITDA margin improved by 280 basis points to 11.8 percent. Acquisitions completed during 2022 contributed $7.3 million to adjusted EBITDA.

By business segment, the company reported the following third quarter 2022 results (all quarterly numbers):

UFP Retail Solutions

$845 million in net sales, up 21 percent over the third quarter of 2021 due to a 15 percent increase in selling prices and a 6 percent increase in unit sales, including a 3 percent increase in unit sales from acquisitions. Unit growth was driven by increases in the company’s pressure-treating operations (Sunbelt Forest Products and ProWood), Deckorators and UFP-Edge. Unit sales growth for the company’s pressure-treating operations benefited from favorable year-over-year comparisons, as orders slowed in the third quarter of 2021 when retailers focused on reducing inventory.

Gross profit for UFP Retail Solutions rose to $77 million, a 615 percent increase over the third quarter of 2021, when rapidly falling lumber prices reduced margins for variable-priced products such as pressure-treated wood. Gross profit margin rose to 9.2 percent in 2022 from 1.6 percent in 2021.

Retail sales accounted for 38 percent of the company’s sales year to date. When evaluating future demand for the segment, the company analyzes data such as the same-store sales growth of national home improvement retailers and forecasts of remodeling activity.

UFP Industrial

$585 million in net sales, up 2 percent from the third quarter of 2021 due to a 3 percent increase in unit sales from acquisitions, a 1 percent increase in selling prices, and a 2 percent decline in organic unit growth. The organic unit sales decline is attributable to an intentional change in product mix, as the segment focuses more on higher-margin products and being selective in taking on new business. New product sales increased 52 percent to $64 million, and the segment’s percentage of value-added sales increased to 74 percent from 69 percent in 2021.

Gross profit rose 14 percent to $144 million, and gross profit margin rose 250 basis points, reflecting the company’s ability to pass on the impact of higher operating costs, as well as the successful implementation of value-based selling initiatives.

UFP Industrial sales accounted for 24 percent of the company’s sales year to date. When evaluating future demand, the company considers a number of metrics, including the Purchasing Managers Index (PMI), durable goods manufacturing, and U.S. real GDP.

UFP Construction

$777 million in net sales, up 8 percent over the third quarter of 2021, due to an 8 percent increase in organic unit sales growth. Unit sales growth was driven by the Factory Built, Commercial and Concrete Forming Services business units. Gross profit increased $46 million or 30 percent to $200 million in the third quarter, led by Site Built and Commercial.

The company’s site-built residential customers have accounted for approximately 14 percent of total company sales year to date. Approximately one-third of site-built customers are multifamily builders. More than 75 percent of the company’s site-built residential housing sales are in areas such as Texas and the Mid-Atlantic, Southeast and Mountain West regions, which have experienced significant population growth through migration from other states and are forecasted to continue to grow in the long term. The company’s factory-built customers have accounted for 13 percent of total company sales year to date. This business, along with the company’s multifamily business, could benefit from higher interest rates as buyers seek more affordable housing alternatives. As a result of these factors, we believe these customers are better insulated from downturns in the housing market.

UFP Industries maintains a strong balance sheet with nearly $1.5 billion of liquidity as of September 24, 2022, consisting of $456 million of surplus cash, plus availability under its revolving credit facility and shelf agreements with lenders. The company’s diversified and return-focused approach to capital allocation includes the following:

  • The company has targeted $175-225 million for capital expenditures in 2022, an increase over the $151 million spent in 2021. The company’s capital expenditures during the first nine months of 2022 totaled $115 million. Longer lead times required for most equipment and rolling stock may cause the company to fall short of its 2022 expenditures target.
  • In February 2022, our Board of Directors authorized an increase in the company’s share repurchase program of up to 2.6 million shares. Through September 24, 2022, the company has purchased approximately 1.2 million shares at an average price of $77.06. The company has issued 911,000 shares in 2022 for share-based compensation programs at an average issue price of $82.69 per share.
  • On October 19, 2022, the Board approved a quarterly dividend payment of $0.25 per share, payable on December 15, 2022, to shareholders of record on December 1, 2022. This dividend is 67 percent higher than the dividend of $0.15 per share paid on December 15, 2021.
  • The company continues to seek opportunities to acquire companies that represent a strong strategic fit and allow it to drive new growth and margin improvements, enhance its capabilities, and create more incremental value for its customers and shareholders.

OUTLOOK

The following outlook remains largely unchanged from the guidance provided in the second quarter 2022 earnings release.

We expect our balanced business model and operational improvements will continue to help us navigate new external challenges, including rising interest rates and historically high inflation. In the near term, we continue to expect more normalized demand in our largest segment, UFP Retail Solutions. For UFP Industrial, we continue to monitor business activity and the key economic indicators that drive this segment with many of those metrics remaining mixed. Pricing remains healthy as we pass through inflationary costs and benefit from our focus on value-added products. For UFP Construction, we see continued activity in commercial and infrastructure end markets and expect our exposure to a projected softening in the housing market to be somewhat offset by favorable demographic trends in the markets we serve and our participation in more affordable housing and the multifamily market. Our diversified business and strong track record of executing our strategy gives us confidence that we can continue to successfully navigate various market environments while delivering returns to shareholders.

CONFERENCE CALL

UFP Industries will conduct a conference call to discuss information included in this news release and related matters at 4:30 p.m. ET on Thursday, October 20, 2022. The call will be hosted by CEO Matthew J. Missad and CFO Michael Cole, and will be available simultaneously and in its entirety to all interested investors and news media through a webcast at http://www.ufpi.com. A replay of the call will be available through the website.

UFP Industries, Inc.

UFP Industries is a holding company whose operating subsidiaries – UFP Industrial, UFP Construction and UFP Retail Solutions – manufacture, distribute and sell a wide variety of value-added products used in residential and commercial construction, packaging and other industrial applications worldwide. Founded in 1955, the company is headquartered in Grand Rapids, Mich., with affiliates in North America, Europe, Asia and Australia. UFP Industries is ranked #401 on the Fortune 500 and #149 on Industry Week’s list of America’s Largest Manufacturers. For more about UFP Industries, go to www.ufpi.com.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions 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 uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission.

Non-GAAP Financial Information

This release includes certain financial information not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Management considers Adjusted EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.

Net earnings

Net earnings refers to net earnings attributable to controlling interest unless specifically noted.


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 2022/2021

  Quarter PeriodYear to Date
(In thousands, except per share data)    2022202120222021
NET SALES $2,322,855  100.0 %$2,093,784  100.0 %$7,713,042  100.0 %$6,619,329  100.0 %
                      
COST OF GOODS SOLD   1,872,679  80.6   1,766,229  84.4   6,281,051  81.4   5,583,926  84.4  
                      
GROSS PROFIT  450,176  19.4   327,555  15.6   1,431,991  18.6   1,035,403  15.6  
                      
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES  214,327  9.2   169,467  8.1   649,015  8.4   504,104  7.6  
OTHER (GAINS) LOSSES, NET  (1,195) (0.1)  (10,037) (0.5)  1,341  —   (11,248) (0.2) 
                      
EARNINGS FROM OPERATIONS  237,044  10.2   168,125  8.0   781,635  10.1   542,547  8.2  
                      
INTEREST AND OTHER EXPENSE, NET  6,382  0.3   4,750  0.2   19,858  0.3   9,280  0.1  
                      
EARNINGS BEFORE INCOME TAXES  230,662  9.9   163,375  7.8   761,777  9.9   533,267  8.1  
                      
INCOME TAXES  58,561  2.5   37,628  1.8   188,692  2.4   127,909  1.9  
                      
NET EARNINGS  172,101  7.4   125,747  6.0   573,085  7.4   405,358  6.1  
                      
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST  (4,860) (0.2)  (4,706) (0.2)  (13,023) (0.2)  (7,624) (0.1) 
                      
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST $167,241  7.2  $121,041  5.8  $560,062  7.3  $397,734  6.0  
                      
EARNINGS PER SHARE - BASIC  $2.68    $1.94    $8.93    $6.40    
                      
EARNINGS PER SHARE - DILUTED $2.66    $1.94    $8.89    $6.38    
                      
COMPREHENSIVE INCOME $167,624    $123,723    $567,409    $403,858    
                      
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST  (4,273)    (4,496)    (13,290)    (7,608)   
                      
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST $163,351    $119,227    $554,119    $396,250    
                      


SUPPLEMENTAL DATA                          
(In thousands)  Quarter Period  Year to Date
Segment Classification     2022      2021  % change     2022         2021  % change
Retail  $845,304      $696,201  21.4%  $2,959,976      $2,714,440  9.0%
Industrial   584,808       573,234  2.0%   1,872,510       1,633,289  14.6%
Construction   777,126       722,872  7.5%   2,538,973       2,021,106  25.6%
All Other   115,617       101,477  13.9%   341,583       250,494  36.4%
Total Net Sales  $2,322,855      $2,093,784  10.9%  $7,713,042      $6,619,329  16.5%
                           
   2022  % of Sales 2021  % of Sales  2022  % of Sales 2021  % of Sales
SG&A  $214,327  9.2% $169,467  8.1%  $649,015  8.4% $504,104  7.6%
SG&A as a Percentage of Gross Profit   47.6%      51.7%     45.3%      48.7%  


CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS BY SEGMENT (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 2022/2021

  Quarter Period
     2022 
(In thousands) Retail Industrial Construction All Other Corporate Total
NET SALES $845,304 $584,808 $777,126  $112,203  $3,414  $2,322,855 
COST OF GOODS SOLD  767,841  440,975  577,552   82,740   3,571   1,872,679 
GROSS PROFIT  77,463  143,833  199,574   29,463   (157)  450,176 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES  48,435  66,521  89,455   16,752   (6,836)  214,327 
OTHER  96  14  (265)  (994)  (46)  (1,195)
EARNINGS FROM OPERATIONS $28,932 $77,298 $110,384  $13,705  $6,725  $237,044 
                   


  Quarter Period
     2021 
(In thousands) Retail Industrial Construction All Other Corporate Total
NET SALES $696,201  $573,234 $722,872  $98,689  $2,788  $2,093,784 
COST OF GOODS SOLD  685,369   446,822  568,809   63,082   2,147   1,766,229 
GROSS PROFIT  10,832   126,412  154,063   35,607   641   327,555 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES  36,899   55,723  70,663   15,996   (9,814)  169,467 
OTHER  86   281  (805)  (672)  (8,927)  (10,037)
EARNINGS FROM OPERATIONS $(26,153) $70,408 $84,205  $20,283  $19,382  $168,125 
                   


  Year to Date
  2022
(In thousands) Retail Industrial Construction All Other Corporate Total
NET SALES $2,959,976 $1,872,510 $2,538,973  $332,186 $9,397  $7,713,042
COST OF GOODS SOLD  2,674,996  1,417,006  1,950,671   230,100  8,278   6,281,051
GROSS PROFIT  284,980  455,504  588,302   102,086  1,119   1,431,991
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES  159,490  200,987  266,430   49,733  (27,625)  649,015
OTHER  634  618  (162)  1,085  (834)  1,341
EARNINGS FROM OPERATIONS $124,856 $253,899 $322,034  $51,268 $29,578  $781,635
                   


  Year to Date
  2021 
(In thousands) Retail Industrial Construction All Other Corporate Total
NET SALES $2,714,440  $1,633,289 $2,021,106  $243,736  $6,758  $6,619,329 
COST OF GOODS SOLD  2,480,804   1,292,102  1,644,069   160,853   6,098   5,583,926 
GROSS PROFIT  233,636   341,187  377,037   82,883   660   1,035,403 
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES  144,375   150,739  193,144   40,021   (24,175)  504,104 
OTHER  (182)  104  (437)  (1,703)  (9,030)  (11,248)
EARNINGS FROM OPERATIONS $89,443  $190,344 $184,330  $44,565  $33,865  $542,547 
                   


CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2022/2021

(In thousands)               
ASSETS     2022     2021    LIABILITIES AND EQUITY     2022     2021 
                
CURRENT ASSETS       CURRENT LIABILITIES       
Cash and cash equivalents $455,743 $138,637 Cash Overdraft $4,174 $10,812 
Restricted cash  729  17,592 Accounts payable  327,459  292,933 
Investments  33,113  33,723 Accrued liabilities and other  434,045  361,832 
Accounts receivable  880,581  783,959 Current portion of debt  41,536  93 
Inventories  1,009,358  900,665         
Other current assets  71,420  48,174         
                
TOTAL CURRENT ASSETS  2,450,944  1,922,750 TOTAL CURRENT LIABILITIES  807,214  665,670 
                
OTHER ASSETS  150,826  144,904 LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS  275,417  310,119 
INTANGIBLE ASSETS, NET  502,311  393,682 OTHER LIABILITIES  183,967  160,984 
                
        TEMPORARY EQUITY  72,454  — 
                
PROPERTY, PLANT AND EQUIPMENT, NET  703,161  552,911 SHAREHOLDERS' EQUITY  2,468,190  1,877,474 
                
                
TOTAL ASSETS $3,807,242 $3,014,247 TOTAL LIABILITIES AND EQUITY $3,807,242 $3,014,247 


CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2022/2021

(In thousands)  2022       2021  
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net earnings $573,085   $405,358  
Adjustments to reconcile net earnings to net cash from operating activities:        
         
Depreciation  68,881    61,741  
Amortization of intangibles  13,448    9,369  
Expense associated with share-based and grant compensation arrangements  19,979    8,444  
Deferred income taxes (credit)  (269)   (594) 
Unrealized loss (gain) on investment and other  8,453    (1,756) 
Equity in earnings of investee  2,740    2,411  
Net loss (gain) on sale and disposition of assets  352    (10,482) 
Changes in:        
Accounts receivable  (138,200)   (141,088) 
Inventories  (35,956)   (204,144) 
Accounts payable and cash overdraft  (11,239)   53,437  
Accrued liabilities and other  33,871    99,067  
NET CASH FROM OPERATING ACTIVITIES  535,145    281,763  
         
CASH FLOWS USED IN INVESTING ACTIVITIES:        
Purchases of property, plant, and equipment  (114,497)   (110,092) 
Proceeds from sale of property, plant and equipment  2,303    26,597  
Acquisitions and purchase of noncontrolling interest, net of cash received  (101,030)   (433,275) 
Purchases of investments  (16,925)   (17,866) 
Proceeds from sale of investments  10,036    9,857  
Other  2,010    (3,478) 
NET CASH USED IN INVESTING ACTIVITIES  (218,103)   (528,257) 
         
CASH FLOWS USED IN FINANCING ACTIVITIES:        
Borrowings under revolving credit facilities  570,700    886,966  
Repayments under revolving credit facilities  (571,075)   (888,335) 
Repayments of debt  (1,957)   —  
Contingent consideration payments and other  (2,564)   (2,664) 
Proceeds from issuance of common stock  2,110    1,519  
Dividends paid to shareholders  (43,420)   (27,831) 
Distributions to noncontrolling interest  (12,024)   (2,914) 
Repurchase of common stock  (93,215)   —  
Other  (209)   (334) 
NET CASH USED IN FINANCING ACTIVITIES  (151,654)   (33,593) 
         
Effect of exchange rate changes on cash  (139)   (292) 
NET CHANGE IN CASH AND CASH EQUIVALENTS  165,249    (280,379) 
         
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD  291,223    436,608  
         
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $456,472   $156,229  
         
Reconciliation of cash and cash equivalents and restricted cash:        
Cash and cash equivalents, beginning of period $286,662   $436,507  
Restricted cash, beginning of period  4,561    101  
All cash and cash equivalents, beginning of period $291,223   $436,608  
         
Cash and cash equivalents, end of period $455,743   $138,637  
Restricted cash, end of period  729    17,592  
All cash and cash equivalents, end of period $456,472   $156,229  
         

ADJUSTED EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 2022/2021

  Quarter PeriodYear to Date
(In thousands) 2022  2021 20222021 
Net earnings $172,101  $125,747 $573,085  $405,358 
Interest expense  3,516   3,433  10,213   10,483 
Interest and investment income  (614)  (658) (1,548)  (1,859)
Income taxes  58,561   37,628  188,692   127,909 
Expenses associated with share-based compensation arrangements  7,437   2,702  19,979   8,444 
Net (gain) loss on disposition and impairment of assets  (414)  (8,905) 352   (10,482)
Equity in earnings of investee  1,208   946  2,740   2,411 
Unrealized loss (gain) on investments  2,272   1,028  8,453   (1,756)
Depreciation expense  24,847   23,399  68,881   61,741 
Amortization of intangibles  4,708   2,176  13,448   9,369 
Adjusted EBITDA $ 273,622  $ 187,496 $ 884,295  $ 611,618 
            
Adjusted EBITDA as a Percentage of Net Sales  11.8%  9.0% 11.5%  9.2%

---------------AT THE COMPANY---------------

Dick Gauthier
VP, Communications and Investor Relations
(616) 365-1555

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Source: UFP Industries, Inc.

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