UFP Industries Announces Third Quarter Results

UFP Industries, Inc. announced third quarter 2024 results including net sales of $1.65 billion, net earnings attributable to controlling interest of $100 million, and earnings per diluted share of $1.64.

“Our third quarter results were impacted by softer demand and broad-based pricing pressure which reduced our revenue and profit margins. We are managing through these ongoing challenges by operating more efficiently, aligning our overhead with lower demand levels and eliminating unnecessary costs. I am confident our teammates will respond appropriately to the changing economy while enhancing the pursuit of our strategic priorities. While we expect conditions to remain challenging as we move into 2025, we are well positioned to capitalize on opportunities when markets recover and remain on track to achieve our longer-term profitability targets,” said Chairman and CEO Matthew J. Missad.

“When the economy slows, it also creates opportunities to obtain more appropriate pricing on strategic acquisitions; invest in new products, automation and technology; and pursue organic expansion. We plan to leverage our strong balance sheet and free cash flow generation to pursue growth initiatives that drive ROI and expand our market share, while pursuing share buybacks when our stock is at an attractive level.”

“Finally, I want to give special thanks to our teammates in the southeastern U.S. for their dedication and perseverance after the recent hurricanes. Despite their own storm-related personal challenges, they worked long hours to make sure our customers were taken care of. They embody the UFP culture by also caring for their neighbors and communities and helping the UFPI Foundation identify charities to support in the hardest-hit communities where we operate. I am proud to be on their team.”

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

• Net sales of $1.65 billion decreased 10 percent due to a 3 percent decrease in organic unit sales and a 7 percent decrease in selling prices. The price of Southern Yellow Pine (SYP), which comprises approximately two-thirds of our lumber purchases, decreased 21 percent and contributed to the decrease in our selling prices.
• New product sales of $119 million were 7.2 percent of total sales compared to 7.6 percent in the third quarter of 2023. Many products that were considered new products in 2023 were sunset and not included in 2024 totals. In 2024, we also increased the margin threshold for new products, resulting in certain product lines no longer meeting our growth and margin requirements for the purpose of being categorized as new products.
• Net earnings attributable to controlling interests of $100 million represents a 26 percent decrease from last year.
• Adjusted EBITDA¹ of $165 million represents a decrease of 21 percent while adjusted EBITDA margin¹ declined 140 basis points to 10.0 percent.

Capital Allocation

UFP Industries maintains a strong balance sheet with $1.19 billion in cash as of September 28, 2024, compared to $957 million in cash at the end of the third quarter of 2023. The company had approximately $2.4 billion of liquidity as of September 28, 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 has targeted approximately $1 billion in capital investments over the next five years, including 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, structural and protective packaging, and machine-built pallet businesses. Approximately $295 million in capital projects have been approved in 2024 and another $55 million are pending approval.

– Dividend payments. On October 23, 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 December 2023. The dividend is payable on December 16, 2024, to shareholders of record on December 2, 2024.

– Share repurchases. On July 24, 2024, the UFP Industries Board of Directors authorized the company to repurchase up to $200 million of shares through July 31, 2025. No shares have been repurchased under this new authorization.

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

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

UFP Retail Solutions

Net sales of $636 million, down 13 percent compared to the third quarter of 2023, attributable to a 4 percent decline in organic unit sales, a 7 percent decline in selling prices, and a 2 percent decline due to the transfer of certain product sales to the Packaging and Construction segments. Organic unit sales decreased 5 percent for ProWood, 4 percent for UFP-Edge, and 3 percent for Deckorators. Overall, unit sales decreased 3 percent with big box customers, reflective of ongoing softening in repair and remodel activity. Independent dealer sales decreased 8 percent, a decline that more closely correlates to housing starts. Gross profit of $93 million decreased 11 percent.

UFP Packaging

Net sales of $402 million were down 11 percent compared to the third quarter of 2023, due to a 5 percent decline in organic unit sales and an 8 percent decrease in selling prices, partially offset by a 2 percent increase from the transfer of certain product sales from the Retail segment. A 10 percent decline in organic unit sales for Structural Packaging, attributable to weaker demand, drove results in the quarter and were partially offset by a 2 percent increase in organic unit sales for PalletOne and a 4 percent increase in organic unit sales for Protective Packaging, both due to market share gains. Gross profit for the Packaging segment decreased 24 percent to $71 million due to competitive price pressure and lower sales volumes.

UFP Construction

Net sales of $535 million decreased 8 percent compared to the third quarter of 2023, attributable to a 2 percent decrease in organic unit sales and a 7 percent decrease in selling prices, partially offset by a 1 percent increase from the transfer of certain product sales from the Retail segment. Organic unit sales increased 11 percent in Factory Built due to an increase in industry production and market share gains. Organic unit sales for Site Built, Concrete Forming and Commercial decreased 8 percent, 7 percent and 6 percent, respectively, primarily due to weaker demand. Gross profit for the Construction segment decreased 23 percent to $112 million, primarily due to a drop in volume and fixed manufacturing costs, as well as a more competitive pricing environment.

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. Recent industry production curtailments combined with new demand from rebuilding after storm damage may better align supply and demand in 2025.

End Market Demand: Our outlook for the fourth quarter remains unchanged for our Retail and Packaging segments. While we continue to anticipate demand will decrease in Retail by mid-single digits and decrease in Packaging by mid- to high-single digits, we now anticipate a decrease in demand for Construction by low-single digits, with continued strength in our Factory Built business offsetting weaker demand in our other Construction business units. We anticipate the softer demand and competitive pricing environment to continue through the remainder of 2024 and into 2025, resulting in more challenging year-over-year unit sales and profitability comparisons, partially offset by market share gains in each of our segments.

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 #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.