UFP Industries Reports Record Third Quarter Results
– Net sales increase 41 percent, earnings increase 57 percent;
Quarterly dividend increases by
GRAND RAPIDS, Mich., Oct. 20, 2021 (GLOBE NEWSWIRE) -- UFP Industries, Inc. (Nasdaq: UFPI) today announced net sales of
“Our outstanding third-quarter results once again validate our balanced business model and reflect the hard work and commitment of our employees,” said CEO Matthew J. Missad. “Our diversity of markets, coupled with an improved pricing model that quickly adjusts to lumber market fluctuations, have helped UFP deliver record profitability and provide a favorable return on investment to our shareholders, even when some markets face headwinds. When the pandemic and rising lumber prices presented challenges to our industrial and construction segments, our teams responded quickly to meet the unprecedented demand in the retail segment. As we anticipated, retail demand and lumber prices have normalized, and our industrial and construction segments are now experiencing favorable growth trends and profitability.”
Third Quarter 2021 Highlights (comparisons on a year-over-year basis):
- Net sales of
$2.1 billion increased 41 percent due to a 28 percent increase in selling prices and 16 percent unit increase from acquisitions, offset by a 3 percent decrease in organic unit sales. - Earnings from operations increased 58 percent to
$168 million , including a$9 million gain on the sale of real estate. - The increase in SG&A of nearly
$35 million , or 26 percent, is largely attributable to recent acquisitions ($14 million ), an increase in incentive compensation resulting from improved profitability ($10 million ), and increases in wages and benefits ($8 million ). SG&A as a percentage of gross profit improved by 400 basis points to 52 percent in 2021, as the company continues to focus on leveraging its cost structure as it grows and continues to invest in capabilities to enhance its value-added mix of products. - New product sales of
$196.7 million increased 24 percent. Recent acquisitions contributed$15.6 million to the total. - Adjusted EBITDA of
$187.5 million increased 49 percent and adjusted EBITDA margin expanded by 50 basis points to 9 percent.
UFP Industries continues to maintain a strong balance sheet with liquidity of approximately
On October 20, 2021, the Board of Directors of UFP Industries approved a quarterly dividend payment of
By business segment, the company reported the following third quarter 2021 results.
UFP Retail Solutions
$696 million in net sales, down 1 percent compared to the third quarter of 2020. Unit sales fell 1 percent, mostly due to a 38 percent decline in the ProWood business unit. The decrease in ProWood’s year-over-year comparable numbers — an 11 percent drop in prices and a 27 percent drop in unit sales — is the result of the unusually high demand for pressure-treated wood in 2020 that followed the pandemic-related closures.- Organic unit growth was achieved by UFP-Edge (up 12 percent). Other business units experienced organic unit declines compared to the third quarter of 2020, which experienced unusually high demand attributable to the pandemic-related closures; they include Handprint (down 17 percent), Deckorators (down 14 percent) and Outdoor Essentials (down 8 percent). Additional capacity for the Deckorators and UFP-Edge product lines is expected to provide growth in 2022.
- Gross profit for the retail segment fell 90 percent to
$11 million from$106 million in the same quarter of 2020, as dramatically falling lumber prices reduced margins for variable-priced products such as pressure-treated wood.
UFP Industrial
$573 million in net sales, up 103 percent from the third quarter of 2020. Selling prices increased 69 percent, and unit sales increased 34 percent. The unit sales increase is attributable to the acquisitions of PalletOne and T&R Lumber. New product sales grew 93 percent from the third quarter of 2020.- Gross profit for the segment rose 162 percent to
$126 million , exceeding unit sales growth of 34 percent, due to the company’s focus on adding value-added products and its ability to better leverage fixed costs and include the impact of higher lumber, labor, and transportation costs in its selling prices. Acquisitions contributed$22 million , or 45 percent, to the increase in gross profit. - Value-added sales contributed to the increase in gross profits and improved from 64 percent of net sales in the third quarter of 2020 to 69 percent of net sales in the third quarter of 2021.
UFP Construction
$723 million in net sales, up 62 percent over the third quarter of 2020, due to a 43 percent increase in selling prices, a 16 percent increase in organic unit sales and a 3 percent increase in unit sales from acquisitions. Unit sales to site-built and factory-built housing customers rose 31 percent and 17 percent, respectively. Unit sales to commercial customers rose 26 percent, and the business unit returned to profitability after a loss in 2020. New product sales increased 131 percent from the third quarter of 2020.- Gross profit of
$154 million improved 148 percent over the third quarter of 2020, primarily as a result of improved unit sales, falling lumber prices, and the company’s ability to better leverage fixed costs.
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 Wednesday, October 20, 2021. The call will be hosted by CEO Matthew J. Missad and CFO Michael Cole, and will be available for analysts and institutional investors domestically at 866-518-4547 and internationally at 213-660-0879. Use conference pass code 6541729. The conference call 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 October 22, 2021, at 855-859-2056, 404-537-3406 or 800-585-8367.
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. 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 2021/2020
| Quarter Period | Year to Date | ||||||||||||||||||||||||||||
| (In thousands, except per share data) | 2021 | 2020 | 2021 | 2020 | |||||||||||||||||||||||||
| NET SALES | $ | 2,093,784 | 100.0 | % | $ | 1,486,227 | 100.0 | % | $ | 6,619,329 | 100.0 | % | $ | 3,760,290 | 100.0 | % | |||||||||||||
| COST OF GOODS SOLD | 1,766,229 | 84.4 | 1,245,153 | 83.8 | 5,583,926 | 84.4 | 3,147,049 | 83.7 | |||||||||||||||||||||
| GROSS PROFIT | 327,555 | 15.6 | 241,074 | 16.2 | 1,035,403 | 15.6 | 613,241 | 16.3 | |||||||||||||||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 169,467 | 8.1 | 134,649 | 9.1 | 504,104 | 7.6 | 357,770 | 9.5 | |||||||||||||||||||||
| OTHER GAINS, NET | (10,037 | ) | (0.5 | ) | (176 | ) | — | (11,248 | ) | (0.2 | ) | (2,120 | ) | (0.1 | ) | ||||||||||||||
| EARNINGS FROM OPERATIONS | 168,125 | 8.0 | 106,601 | 7.2 | 542,547 | 8.2 | 257,591 | 6.9 | |||||||||||||||||||||
| OTHER INTEREST AND EXPENSE, NET | 4,750 | 0.2 | 921 | 0.1 | 9,280 | 0.1 | 4,668 | 0.1 | |||||||||||||||||||||
| EARNINGS BEFORE INCOME TAXES | 163,375 | 7.8 | 105,680 | 7.1 | 533,267 | 8.1 | 252,923 | 6.7 | |||||||||||||||||||||
| INCOME TAXES | 37,628 | 1.8 | 26,819 | 1.8 | 127,909 | 1.9 | 63,798 | 1.7 | |||||||||||||||||||||
| NET EARNINGS | 125,747 | 6.0 | 78,861 | 5.3 | 405,358 | 6.1 | 189,125 | 5.0 | |||||||||||||||||||||
| LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST | (4,706 | ) | (0.2 | ) | (1,657 | ) | (0.1 | ) | (7,624 | ) | (0.1 | ) | (5,299 | ) | (0.1 | ) | |||||||||||||
| NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 121,041 | 5.8 | $ | 77,204 | 5.2 | $ | 397,734 | 6.0 | $ | 183,826 | 4.9 | |||||||||||||||||
| EARNINGS PER SHARE - BASIC | $ | 1.94 | $ | 1.25 | $ | 6.40 | $ | 2.98 | |||||||||||||||||||||
| EARNINGS PER SHARE - DILUTED | $ | 1.93 | $ | 1.25 | $ | 6.38 | $ | 2.98 | |||||||||||||||||||||
| COMPREHENSIVE INCOME | 123,723 | 80,548 | 403,858 | 185,095 | |||||||||||||||||||||||||
| LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST | (4,496 | ) | (1,922 | ) | (7,608 | ) | (3,354 | ) | |||||||||||||||||||||
| COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST | $ | 119,227 | $ | 78,626 | $ | 396,250 | $ | 181,741 | |||||||||||||||||||||
| SUPPLEMENTAL DATA | ||||||||||||||||||||||
| (In thousands) | Quarter Period | Year to Date | ||||||||||||||||||||
| Segment Classification | 2021 | 2020 | % change | 2021 | 2020 | % change | ||||||||||||||||
| Retail | $ | 696,201 | $ | 700,522 | (0.6 | )% | $ | 2,714,440 | $ | 1,661,873 | 63.3 | % | ||||||||||
| Industrial | 573,234 | 282,124 | 103.2 | % | 1,633,289 | 763,046 | 114.0 | % | ||||||||||||||
| Construction | 722,872 | 447,103 | 61.7 | % | 2,021,106 | 1,187,429 | 70.2 | % | ||||||||||||||
| All Other | 101,477 | 56,478 | 79.7 | % | 250,494 | 147,942 | 69.3 | % | ||||||||||||||
| Total Net Sales | $ | 2,093,784 | $ | 1,486,227 | 40.9 | % | $ | 6,619,329 | $ | 3,760,290 | 76.0 | % | ||||||||||
| SG&A as a Percentage of Gross Profit | 51.7 | % | 55.9 | % | 48.7 | % | 58.3 | % | ||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS BY SEGMENT (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 2021/2020
| 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 | |||||||||||
| Quarter Period | ||||||||||||||||||||||||
| 2020 | ||||||||||||||||||||||||
| (In thousands) | Retail | Industrial | Construction | All Other | Corporate | Total | ||||||||||||||||||
| NET SALES | $ | 700,522 | $ | 282,124 | $ | 447,103 | $ | 56,700 | $ | (222 | ) | $ | 1,486,227 | |||||||||||
| COST OF GOODS SOLD | 594,896 | 233,971 | 385,028 | 38,543 | (7,285 | ) | 1,245,153 | |||||||||||||||||
| GROSS PROFIT | 105,626 | 48,153 | 62,075 | 18,157 | 7,063 | 241,074 | ||||||||||||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 43,515 | 26,080 | 45,411 | 10,499 | 9,144 | 134,649 | ||||||||||||||||||
| OTHER | (70 | ) | 36 | 151 | 209 | (502 | ) | (176 | ) | |||||||||||||||
| EARNINGS FROM OPERATIONS | $ | 62,181 | $ | 22,037 | $ | 16,513 | $ | 7,449 | $ | (1,579 | ) | $ | 106,601 | |||||||||||
| 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 | ||||||||||||
| Year to Date | ||||||||||||||||||||||||
| 2020 | ||||||||||||||||||||||||
| (In thousands) | Retail | Industrial | Construction | All Other | Corporate | Total | ||||||||||||||||||
| NET SALES | $ | 1,661,873 | $ | 763,046 | $ | 1,187,429 | $ | 148,503 | $ | (561 | ) | $ | 3,760,290 | |||||||||||
| COST OF GOODS SOLD | 1,429,229 | 635,424 | 1,002,932 | 101,240 | (21,776 | ) | 3,147,049 | |||||||||||||||||
| GROSS PROFIT | 232,644 | 127,622 | 184,497 | 47,263 | 21,215 | 613,241 | ||||||||||||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 110,596 | 73,662 | 134,098 | 28,228 | 11,186 | 357,770 | ||||||||||||||||||
| OTHER | (34 | ) | 123 | (145 | ) | (1,538 | ) | (526 | ) | (2,120 | ) | |||||||||||||
| EARNINGS FROM OPERATIONS | $ | 122,082 | $ | 53,837 | $ | 50,544 | $ | 20,573 | $ | 10,555 | $ | 257,591 | ||||||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2021/2020
| (In thousands) | ||||||||||||||||
| ASSETS | 2021 | 2020 | LIABILITIES AND EQUITY | 2021 | 2020 | |||||||||||
| CURRENT ASSETS | CURRENT LIABILITIES | |||||||||||||||
| Cash and cash equivalents | $ | 138,637 | $ | 346,154 | Cash Overdraft | $ | 10,812 | $ | — | |||||||
| Restricted cash | 17,592 | 724 | Accounts payable | 292,933 | 231,111 | |||||||||||
| Investments | 33,723 | 20,530 | Accrued liabilities | 362,832 | 259,733 | |||||||||||
| Accounts receivable | 783,959 | 583,079 | Current portion of debt | 93 | 2,760 | |||||||||||
| Inventories | 900,665 | 528,734 | ||||||||||||||
| Other current assets | 48,174 | 32,888 | ||||||||||||||
| TOTAL CURRENT ASSETS | 1,922,750 | 1,512,109 | TOTAL CURRENT LIABILITIES | 666,670 | 493,604 | |||||||||||
| OTHER ASSETS | 144,904 | 121,025 | ||||||||||||||
| INTANGIBLE ASSETS, NET | 389,682 | 311,491 | LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS | 310,119 | 311,267 | |||||||||||
| OTHER LIABILITIES | 155,984 | 131,945 | ||||||||||||||
| PROPERTY, PLANT AND EQUIPMENT, NET | 552,911 | 405,995 | EQUITY | 1,877,474 | 1,413,804 | |||||||||||
| TOTAL ASSETS | $ | 3,010,247 | $ | 2,350,620 | TOTAL LIABILITIES AND EQUITY | $ | 3,010,247 | $ | 2,350,620 |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2021/2020
| (In thousands) | 2021 | 2020 | ||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
| Net earnings | $ | 405,358 | $ | 189,125 | ||||||
| Adjustments to reconcile net earnings to net cash from operating activities: | ||||||||||
| Depreciation | 61,741 | 47,226 | ||||||||
| Amortization of intangibles | 9,369 | 5,863 | ||||||||
| Expense associated with share-based and grant compensation arrangements | 8,444 | 3,152 | ||||||||
| Deferred income taxes | (594 | ) | 110 | |||||||
| Unrealized gain on investment and other | (1,756 | ) | (81 | ) | ||||||
| Equity in earnings of investee | 2,411 | — | ||||||||
| Net gain on sale and disposition of assets | (10,482 | ) | (662 | ) | ||||||
| Changes in: | ||||||||||
| Accounts receivable | (141,088 | ) | (211,238 | ) | ||||||
| Inventories | (204,144 | ) | (39,167 | ) | ||||||
| Accounts payable and cash overdraft | 53,437 | 85,354 | ||||||||
| Accrued liabilities and other | 99,067 | 105,401 | ||||||||
| NET CASH FROM OPERATING ACTIVITIES | 281,763 | 185,083 | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
| Purchases of property, plant, and equipment | (110,092 | ) | (67,024 | ) | ||||||
| Proceeds from sale of property, plant and equipment | 26,597 | 2,588 | ||||||||
| Acquisitions and purchase of noncontrolling interest, net of cash received | (433,275 | ) | (34,820 | ) | ||||||
| Purchases of investments | (17,866 | ) | (24,266 | ) | ||||||
| Proceeds from sale of investments | 9,857 | 22,281 | ||||||||
| Other | (3,478 | ) | 314 | |||||||
| NET CASH USED IN INVESTING ACTIVITIES | (528,257 | ) | (100,927 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
| Borrowings under revolving credit facilities | 886,966 | 6,862 | ||||||||
| Repayments under revolving credit facilities | (888,335 | ) | (6,498 | ) | ||||||
| Contingent consideration payment and other | (2,664 | ) | (3,087 | ) | ||||||
| Issuance of long-term debt | — | 150,000 | ||||||||
| Proceeds from issuance of common stock | 1,519 | 1,042 | ||||||||
| Dividends paid to shareholders | (27,831 | ) | (23,020 | ) | ||||||
| Distributions to noncontrolling interest | (2,914 | ) | (932 | ) | ||||||
| Repurchase of common stock | — | (29,212 | ) | |||||||
| Other | (334 | ) | 23 | |||||||
| NET CASH (USED IN) FROM FINANCING ACTIVITIES | (33,593 | ) | 95,178 | |||||||
| Effect of exchange rate changes on cash | (292 | ) | (1,122 | ) | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | (280,379 | ) | 178,212 | |||||||
| ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 436,608 | 168,666 | ||||||||
| ALL CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 156,229 | $ | 346,878 | ||||||
| Reconciliation of cash and cash equivalents and restricted cash: | ||||||||||
| Cash and cash equivalents, beginning of period | $ | 436,507 | $ | 168,336 | ||||||
| Restricted cash, beginning of period | 101 | 330 | ||||||||
| All cash and cash equivalents, beginning of period | $ | 436,608 | $ | 168,666 | ||||||
| Cash and cash equivalents, end of period | $ | 138,637 | $ | 346,154 | ||||||
| Restricted cash, end of period | 17,592 | 724 | ||||||||
| All cash and cash equivalents, end of period | $ | 156,229 | $ | 346,878 | ||||||
ADJUSTED EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 2021/2020
| Quarter Period | Year to Date | ||||||||||||||
| (In thousands) | 2021 | 2020 | 2021 | 2020 | |||||||||||
| Net earnings | $ | 125,747 | $ | 78,861 | $ | 405,358 | $ | 189,125 | |||||||
| Interest expense | 3,433 | 2,486 | 10,483 | 6,291 | |||||||||||
| Interest and investment income | (658 | ) | (1,011 | ) | (1,859 | ) | (1,541 | ) | |||||||
| Income taxes | 37,628 | 26,819 | 127,909 | 63,798 | |||||||||||
| Expenses associated with share-based compensation arrangements | 2,702 | 849 | 8,444 | 3,152 | |||||||||||
| Net gain on disposition and impairment of assets | (8,905 | ) | (391 | ) | (10,482 | ) | (662 | ) | |||||||
| Equity in earnings of investee | 946 | — | 2,411 | — | |||||||||||
| Unrealized loss (gain) on investments | 1,028 | (554 | ) | (1,756 | ) | (82 | ) | ||||||||
| Depreciation expense | 23,399 | 15,896 | 61,741 | 47,226 | |||||||||||
| Amortization of intangibles | 2,176 | 2,734 | 9,369 | 5,863 | |||||||||||
| Adjusted EBITDA | $ | 187,496 | $ | 125,689 | $ | 611,618 | $ | 313,170 | |||||||
---------------AT THE COMPANY---------------
Dick Gauthier
VP, Corporate Communications and Investor Relations
(616) 365-1555
