| --- | --- | --- | |-------|---------------------------|-------| | | | | | | | | | | | | | | UFP INDUSTRIES March 2020 | | | 1 | | | UNIVERSAL FOREST PRODUCTS, INC. (d/b/a UFP Industries) Please be aware that: Statements included in this presentation that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, and are based on management's beliefs, assumptions, current expectations, estimates, and projections about the markets we serve ...

PART I [Item 1. Business](index=4&type=section&id=Item%201.%20Business.) UFP Industries, a global holding company, supplies wood and wood-alternative products to retail, industrial, and construction markets, with a 2020 reorganization aligning with these segments [General Development of the Business](index=4&type=section&id=General%20Development%20of%20the%20Business.) Universal Forest Products, Inc. is now known as UFP Industries, a global holding company supplying wood and wood-alternative products - Universal Forest Products, Inc. is now known as **UFP Industries**[15](index=15&type=chunk) - The company is a holding company with subsidiaries across North America, Europe, Asia, and Australia, supplying wood, wood composite, and other products to retail, industrial, and construction markets[15](index=15&type=chunk) - Effective January 1, 2020, management reorganized operations around the markets it serves (retail, industrial, construction) instead of geography[18](index=18&type=chunk)[55](index=55&type=chunk) [Financial Information About Segments](index=4&type=section&id=Financial%20Information%20About%20Segments.) The company's operating segments were reorganized on January 1, 2020, from geographical divisions to market-focused segments: retail, construction, and industrial - Prior operating segments included Northern, Southern, and Western divisions as stand-alone reportable segments[18](index=18&type=chunk) - Alternative Materials, International, idX, and Corporate business units were aggregated into the 'All Other' reportable segment[18](index=18&type=chunk) - Beginning January 1, 2020, the company's operations are managed through three business segments: retail, construction, and industrial[18](index=18&type=chunk)[55](index=55&type=chunk) [Narrative Description of Business](index=4&type=section&id=Narrative%20Description%20of%20Business.) This section details the company's business operations across its retail, industrial, and construction markets, including supplier relationships, intellectual property, backlog, environmental considerations, seasonality, and employee information [Retail Market](index=4&type=section&id=Retail.) The retail market segment, with Home Depot as a key customer, offers dimensional lumber and outdoor living products, leveraging broad product lines and service capabilities - The Home Depot accounted for approximately **19% of total sales** in fiscal 2019, 2018, and 2017[20](index=20&type=chunk)[43](index=43&type=chunk) - Products include dimensional lumber (preserved and unpreserved), outdoor living products (decking, accessories, lawn/garden), and engineered wood components, sold under trademarks like ProWood and Deckorators[22](index=22&type=chunk)[23](index=23&type=chunk) - Competitive advantages stem from product breadth, geographic dispersion, proximity to customers, purchasing/manufacturing expertise, and service capabilities[24](index=24&type=chunk) [Industrial Market](index=5&type=section&id=Industrial%20Market.) The industrial market serves manufacturers and agricultural customers with pallets, crates, and packaging, often utilizing by-products and facing fragmented competition - Serves manufacturers and agricultural customers with pallets, specialty crates, wooden boxes, and other packaging/material handling products[25](index=25&type=chunk) - Many products are produced from by-products of other manufactured goods, increasing raw material yields[25](index=25&type=chunk) - Competition in this market is fragmented[25](index=25&type=chunk) [Construction Market](index=5&type=section&id=Construction%20Market.) The construction market encompasses manufactured housing, residential, and commercial submarkets, providing engineered wood components and customized interior fixtures - Comprises manufactured housing, residential construction, and commercial construction submarkets[26](index=26&type=chunk) - Products include roof trusses, custom-cut lumber, plywood, OSB, dimensional lumber for manufactured housing, and engineered wood components (trusses, wall panels, I-joists) for residential/light commercial projects[27](index=27&type=chunk)[28](index=28&type=chunk) - The commercial market includes idX Holdings, Inc., which designs, manufactures, and installs customized interior fixtures[29](index=29&type=chunk) - Competitive advantages include product knowledge, engineering support, proximity to customers, purchasing/manufacturing expertise, and providing comprehensive turn-key packages[27](index=27&type=chunk)[28](index=28&type=chunk) [Suppliers](index=5&type=section&id=Suppliers.) The company is a major buyer of softwood lumber and other wood-based products, with significant annual purchases and competitive advantages in raw material procurement - One of the largest domestic buyers of solid sawn softwood lumber, with annual purchases of approximately **$1.4 billion**[30](index=30&type=chunk)[31](index=31&type=chunk) | Species | Percent of Total Lumber Purchases | | :--- | :--- | | Southern Yellow Pine | 64% | | Spruce-Pine-Fir | 19% | | Douglas Fir | 3% | | Various other species and imports | 14% | - Additionally, approximately **$0.5 billion** is spent annually on plywood, oriented strand board (OSB), and other wood-based products[31](index=31&type=chunk) - Financial resources, size, strong sales network, and remanufacturing ability provide a competitive advantage in purchasing raw materials[32](index=32&type=chunk) [Intellectual Property](index=6&type=section&id=Intellectual%20Property.) The company holds various patents and trademarks, none of which are considered materially adverse if lost - Owns several patents and has pending patents related to its business technologies[33](index=33&type=chunk) - Owns numerous registered trademarks and claims common law trademark rights to others[33](index=33&type=chunk) - The loss of a patent or any trademark is not expected to have a material adverse impact on the company's competitive position[33](index=33&type=chunk) [Backlog](index=6&type=section&id=Backlog.) Backlog information is primarily relevant for customized interior fixtures and construction businesses, with most orders expected to be filled within the next fiscal year - Backlog information is not meaningful for retail and industrial businesses due to short order-to-shipment times[34](index=34&type=chunk) Estimated Backlog Orders (Millions USD) | Business Type | December 28, 2019 | December 29, 2018 | | :--- | :--- | :--- | | Customized Interior Fixtures | $75.0 | $75.4 | | Construction Businesses | $110.1 | $95.1 | - Most backlog orders are expected to be filled within the next fiscal year[35](index=35&type=chunk)[36](index=36&type=chunk) [Environmental](index=6&type=section&id=Environmental.) Environmental disclosures are incorporated by reference from Note L of the Consolidated Financial Statements - Environmental disclosures are incorporated by reference from Note L of the Consolidated Financial Statements[37](index=37&type=chunk) [Seasonality](index=6&type=section&id=Seasonality.) Seasonality disclosures are incorporated by reference from Item 1A. Risk Factors, specifically regarding how seasonality and weather conditions could adversely affect the company - Seasonality disclosures are incorporated by reference from Item 1A. Risk Factors, specifically regarding how seasonality and weather conditions could adversely affect the company[37](index=37&type=chunk) [Employees](index=6&type=section&id=Employees.) As of December 28, 2019, the company had approximately 12,000 employees - As of December 28, 2019, the company had approximately **12,000 employees**[37](index=37&type=chunk) [Available Information](index=6&type=section&id=Available%20Information.) The company provides its annual, quarterly, and current reports, along with amendments and its Code of Ethics, free of charge on its investor relations website - The company makes its annual (10-K), quarterly (10-Q), and current (8-K) reports, along with amendments and its Code of Ethics for Senior Financial Officers, available free of charge on its investor relations website (www.ufpi.com)[38](index=38&type=chunk) [Reports to Security Holders](index=6&type=section&id=Reports%20to%20Security%20Holders.) This section is not applicable - Not applicable[39](index=39&type=chunk) [Enforceability of Civil Liabilities Against Foreign Persons](index=7&type=section&id=Enforceability%20of%20Civil%20Liabilities%20Against%20Foreign%20Persons.) This section is not applicable - Not applicable[40](index=40&type=chunk) [Item 1A. Risk Factors](index=7&type=section&id=Item%201A.%20Risk%20Factors.) The company faces various risks including currency fluctuations, commodity price volatility, market cyclicality, customer concentration, and operational challenges from restructuring and external factors Impact of U.S. Dollar Exchange Rates (2019) | Metric | Value (Millions USD) | | :--- | :--- | | Import Purchases | $472.4 | | Export Sales | $111.3 | Lumber Costs as Percentage of Gross Sales | Year | Percentage of Gross Sales | | :--- | :--- | | 2019 | 42.7% | | 2018 | 50.6% | | 2017 | 49.1% | - Sales to The Home Depot comprised **19% of total sales** in 2019, 2018, and 2017[43](index=43&type=chunk) Healthcare Costs (Millions USD) | Year | Costs | | :--- | :--- | | 2019 | $69.1 | | 2018 | $69.2 | | 2017 | $58.9 | Transportation Costs as Percentage of Sales | Year | Percentage of Sales | | :--- | :--- | | 2019 | 9.5% | | 2018 | 9.3% | | 2017 | 9.0% | - U.S. import of Canadian Softwood Lumber was approximately **$249.5 million** in 2019, representing the primary imported commodity impacted by tariffs[54](index=54&type=chunk) - The

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