UFP Industries Announces Fourth Quarter and Fiscal 2023 Results
![UFPIndustries UFP Industries Logo - Lumber Mill and Manufacturer](https://www.lumberbluebook.com/wp-content/uploads/2021/04/UFPIndustries.png)
Raising long-term goals for unit growth and profitability
UFP Industries, Inc. announced net sales of $1.5 billion, net earnings attributable to controlling interest of $103 million, and earnings per diluted share of $1.62 for the fourth quarter of 2023. The company also announced net sales of $7.2 billion and earnings per diluted share of $8.07 for fiscal 2023. Fiscal 2023 results reflect the impact of one less week compared to fiscal 2022.
“Our teammates produced solid results in 2023 and built the foundation for future growth in sales and profits,” said Chairman and CEO Matthew J. Missad. “Our operating margins and robust cash flow continue to surpass historic levels and allow us to remain on offense. We have the capital to make significant investments to grow, both organically and through acquisitions, while continuing to enhance our value-added product offering. This gives us the confidence to raise our long-term targets for growth and profitability.”
“As we look to 2024, we expect market conditions to remain challenging in the first half of the year before improving in the second half,” Missad added. “We are committed to make each aspect of our business better as we work toward greater efficiencies, lower costs and more innovative products and services. The team’s commitment to winning contributed greatly to our success in 2023 and positions us well for the future.”
Fourth Quarter 2023 Highlights
(comparisons on a year-over-year basis; results reflect the impact of one less week of operating activity in the fourth quarter of 2023):
- Net sales of $1.52 billion decreased 20 percent due to a 10 percent decrease in prices and a 10 percent decrease in organic unit sales. The organic unit growth decline was due, in part, to the impact of one less week of operating activity in the fourth quarter of 2023, which resulted in a 6 percent unit decline.
- New product sales of $142 million decreased 18 percent, largely due to lower lumber prices. New product sales comprised 9.2 percent of total sales in 2023 compared to 8.9 percent last year.
- Earnings from operations of $124 million decreased 26 percent.
- Adjusted EBITDA1 of $166 million decreased 22 percent, and adjusted EBITDA1 margin declined 20 basis points to 10.9 percent.
Fiscal 2023 Highlights
(comparisons on a year-over-year basis; results reflect the impact of one less week of operating activity in 2023):
- Net sales of $7.2 billion decreased 25 percent from the record year of 2022 due to a 16 percent decrease in prices and a 9 percent decline in organic unit sales. One less week of operating activity in 2023 resulted in a 1 percent unit decline.
- New product sales were $716 million, down 6 percent, primarily due to lower lumber prices. New product sales comprised 9.7 percent of total sales in 2023 compared to 7.7 percent in 2022.
- Higher-margin, value-added product sales improved to 68 percent of total sales, up from 63 percent in 2022.
- Earnings from operations of $647 million decreased 32 percent.
- Diluted EPS of $8.07 decreased 26 percent.
- Adjusted EBITDA1 of $810 million decreased 26 percent. Adjusted EBITDA1 margin declined 20 basis points to 11.2 percent.
________________________
1 Represents a non-GAAP measurement; see the reconciliation of non-GAAP financial measures and related explanations below. |
Capital Allocation
UFP Industries maintains a strong balance sheet with $841.9 million in net surplus cash (surplus cash less interest-bearing debt and cash overdraft) at year-end 2023, compared to $281.3 million in net surplus cash at year-end 2022. The company had more than $2.4 billion of liquidity at year-end 2023. The company’s return-focused approach to capital allocation includes the following:
– Acquisitions. In September 2023, the company acquired Palets Suller Group, a leader in machine-built pallets based in Castellón, Spain, for approximately $52 million. The company continues to seek strategic acquisitions that drive long-term growth and margin improvements, enhance its capabilities, and create incremental value for its customers and shareholders.
– Capital expenditures. The company invested approximately $180 million in capital expenditures during 2023 and is targeting $250 million to $300 million in capital expenditures for 2024. These investments include expanding capacity for its Deckorators line in the Northeastern U.S., its site-built construction business in the Western U.S., and its packaging business nationally.
– Dividend payments. The company paid dividends of $68.2 million or $1.10 per share in 2023, a 16 percent increase per share over 2022. On February 1, 2024, the Board of Directors approved a quarterly dividend payment of $0.33 per share, payable on March 15, 2024, to shareholders of record on March 1, 2024. The dividend represents a 10 percent increase over the quarterly dividend of $0.30 per share paid in December 2023 and a 32 percent increase over the quarterly dividend of $0.25 per share paid in March 2023.
– Share repurchases. The company repurchased approximately 975,000 shares of common stock for $82.1 million during 2023 (an average price of $84.27 per share). The company has remaining authorization to purchase up to $173 million in shares through July 31, 2024.
By business segment, the company reported the following 2023 results:
UFP Retail Solutions
Fourth Quarter: $505.6 million in net sales, down 27 percent from the fourth quarter of 2022 due to a 9 percent decline in selling prices and an 18 percent decline in organic unit sales. One less week of operating activity in the fourth quarter of 2023 resulted in a 6 percent unit decline. The remaining organic unit decline was primarily due to the UFP-Edge and ProWood business units.
Full Year: $2.87 billion in net sales, down 21 percent from 2022 due to a 15 percent decline in selling prices and a 6 percent decline in organic unit sales. One less week of operating activity in 2023 resulted in a 1 percent unit decline.
UFP Packaging
Fourth Quarter: $413.7 million in net sales, down 21 percent compared to the fourth quarter of 2022, due to a 10 percent decline in selling prices and an 11 percent decline in organic unit sales. One less week of operating activity in the fourth quarter of 2023 resulted in a 6 percent unit decline.
Full Year: $1.84 billion in net sales, down 23 percent from the previous year due to a 17 percent decline in selling prices and a 6 percent decrease in organic unit sales. One less week of operating activity in 2023 resulted in a 1 percent unit decline.
UFP Construction
Fourth Quarter: $511 million in net sales, down 16 percent from the fourth quarter of 2022, due to a 13 percent decline in selling prices and a 3 percent decline in organic unit sales. One less week of operating activity in the fourth quarter of 2023 resulted in a 6 percent unit decline.
Full Year: $2.16 billion in net sales, down 31 percent from the previous year due to an 18 percent decline in selling prices and a 13 percent decline in organic unit sales. One less week of operating activity in 2023 resulted in a 1 percent unit decline.
Short-Term Outlook
Lumber Market: We anticipate lumber prices, which returned to more normalized levels in 2023 after pandemic-inflated highs, will remain at lower levels based on current supply and demand and follow more typical seasonal trends.
End Market Demand: Based on key packaging indicators and forecasts for homebuilding and repair and remodeling, we anticipate demand for our packaging segment will be slightly down and demand for our construction and retail segments to be slightly up to slightly down in 2024. We expect softer demand and a more competitive price environment in the first half of 2024, with improvement during the second half of the year.
Long-Term Goals
The company’s five-year financial goals include:
- Achieving compounded annual unit sales growth of 7-10 percent. Smaller tuck-in acquisitions are intended to contribute to this goal.
- Realizing and sustaining a 12.5 percent adjusted EBITDA margin by continuing to enhance our capabilities and grow our portfolio of sales of value-added products, and by achieving operating improvements.
- Earning an incremental return on investment over our cost of capital.
- Maintaining a conservative capital structure.
For full results click here.
About UFP Industries, Inc.
UFP Industries, Inc. is a holding company whose operating subsidiaries – UFP Packaging, 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 #403 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.
Contact:
Dick Gauthier – VP of Investor Relations – (616) 365-1555
Source: UFP Industries, Inc.