UFP Industries Announces Second Quarter Results

UFP Industries, Inc. announced second quarter 2024 results including net sales of $1.9 billion, net earnings attributable to controlling interest of $126 million, and earnings per diluted share of $2.05.

“Our second quarter results were in line with expectations in a more challenging business cycle, and I am grateful for the efforts of all of our UFP teammates to adapt to this environment and adjust capacity to meet demand,” said Chairman and CEO Matthew J. Missad. “The weaker environment and expected near-term softness in demand have enabled us to more aggressively pursue our long-term expansion plans and improvement strategies. These efforts include investments in automation and consolidating operations to eliminate redundancies, lower costs and enhance the profitability of each of our facilities. Additionally, we are using our strong balance sheet to stay on offense by investing in acquisitions, new ventures, new value-added products, and organic expansion, while returning capital to shareholders through our recently increased dividend and share repurchase program. Our long-term outlook for growth remains strong.”

Second Quarter 2024 Highlights (comparisons on a year-over-year basis except where noted):

• Net sales of $1.9 billion decreased 7 percent due to a 6 percent decrease in selling prices and a 1 percent decrease in organic unit sales. Quarter over quarter, the price of Southern Yellow Pine (SYP) decreased 19 percent, which contributed to our decrease in selling prices.
• New product sales of $134 million were 7.0 percent of total sales compared to 7.4 percent in the second quarter of 2023. Many products that were considered new products in 2023 were sunset and not included in 2024 totals.
• Net earnings attributable to controlling interests of $126 million represents a 16 percent decrease from last year.
• Adjusted EBITDA¹ of $204 million represents a decrease of 13 percent while adjusted EBITDA margin¹ declined 80 basis points to 10.7 percent.

Capital Allocation

UFP Industries maintains a strong balance sheet with $1.04 billion in cash on June 29, 2024, compared to $702 million in cash at the end of the second quarter of 2023. The company had approximately $2.3 billion of liquidity as of June 29, 2024. The company’s return-focused approach to capital allocation includes the following:

– Acquisitions and Organic Growth. The company continues to pursue strategic acquisitions and will invest in organic growth opportunities when acquisition targets are not available at valuations that will allow us to meet or exceed targeted return rates. The company is targeting capital investments in 2024 of up to $300 million for automation, technology upgrades, geographic expansion and increased capacity at existing facilities, specifically for its Deckorators, Site Built, metal packaging, and machine-built pallet businesses. Approximately $200 million of projects have been approved in 2024 and another $96 million in projects are pending approval. Longer lead times for equipment and site selection in the case of new locations may delay some investments until 2025.

– Dividend payments. On July 24, 2024, the UFP Industries Board of Directors approved a quarterly dividend payment of $0.33 per share, a 10 percent increase over the quarterly dividend of $0.30 per share paid in September 2023. The dividend is payable on September 16, 2024, to shareholders of record on September 2, 2024.

– Share repurchases. The company was authorized to purchase up to $200 million of outstanding stock through July 31, 2024. From July 26, 2023, through the end of the second quarter of 2024, the company repurchased approximately 1,477,000 shares at an average price of $110.96 (a total of $163.9 million). On July 24, 2024, the Board of Directors for UFP Industries authorized the company to repurchase up to $200 million of shares through July 31, 2025.

By business segment, the company reported the following second quarter 2024 results:

UFP Retail Solutions

Net sales of $809 million, down 14 percent compared to the second quarter of 2023, while gross profit increased 3 percent. Sales performance was attributable to a 7 percent decline in selling prices, a 5 percent decline in organic unit sales, and a 2 percent decline due to the transfer of certain product sales to the Packaging and Construction segments. Organic unit sales decreased 2 percent for Deckorators, 6 percent for ProWood and 4 percent for UFP-Edge. Overall, unit sales decreased 5 percent with big box customers, a decline that largely correlates with an easing in repair and remodel activity, and were flat with independent retailers. Gross profit for the retail segment increased 3 percent to $127 million, primarily due to operational improvements, SKU rationalization, and better inventory positioning and utilization of our managed inventory programs.

UFP Packaging

Net sales of $435 million were down 11 percent compared to the second quarter of 2023, due to an 8 percent decrease in selling prices and a 6 percent decline in organic unit sales, offset by a 3 percent increase from the transfer of certain product sales from the Retail segment. A 10 percent increase in organic unit sales for PalletOne, due to market share gains, partially offset an 11 percent decline in organic unit sales for Protective Packaging and a 12 percent decline in organic unit sales for Structural Packaging, attributable to weaker demand. Gross profit for the packaging segment decreased 29 percent to $84 million due to competitive price pressure and lower sales volumes.

UFP Construction

Net sales of $575 million increased 4 percent compared to the second quarter of 2023 as a 4 percent decrease in selling prices was offset by a 7 percent increase in organic unit sales and a 1 percent increase from the transfer of certain product sales from the Retail segment. Organic unit sales increased in Factory Built, up 19 percent due to an increase in industry production, and Site Built, up 4 percent, we believe due to market share gains in both existing and new product categories. Gross profit for the construction segment decreased 8 percent to $126 million due to competitive price pressure.

Short-Term Outlook

Lumber Market: We continue to anticipate lumber prices will remain at lower levels in 2024 based on current supply and demand dynamics.

End Market Demand: We continue to follow key indicators and forecasts in the markets we serve and have revised our outlook for the balance of 2024. We anticipate demand will decrease in Retail by mid-single digits, decrease in Packaging by mid- to high-single digits, and increase in Construction by low- to mid-single digits, reflecting continued strength in our Factory Built business. Generally, we expect the soft demand and competitive price environment will continue for the remainder of the year, resulting in more challenging year-over-year unit sales and profitability comparisons. We believe market share gains will help offset lower demand in each of our segments for the balance of the year.

For the full second quarter results, click here.

¹ Represents a non-GAAP measurement; see the reconciliation of non-GAAP financial measures and related explanations below.

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 #493 on the Fortune 500 and #128 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.