UFP Industries(UFPI) - 2025 Q1 - Quarterly Results

First Quarter 2025 Financial Overview UFP Industries reported Q1 2025 net sales and earnings decline, emphasizing sequential improvement and strategic focus Summary of Results and CEO Commentary UFP Industries announced first quarter 2025 results with net sales of $1.60 billion, net earnings attributable to controlling interests of $78.8 million, and earnings per diluted share of $1.30, with CEO Will Schwartz noting improving sequential business trends and a focus on profitability and strategic investments | Metric | Q1 2025 | Q1 2024 | | :----------------------------------- | :---------- | :---------- | | Net Sales | $1.60 billion | $1.64 billion | | Net Earnings Attributable to Controlling Interests | $78.8 million | $120.8 million | | Earnings Per Diluted Share | $1.30 | $1.96 | - CEO Will Schwartz stated that business activity improved sequentially each month during the quarter and continued into April, despite limited visibility. The company remains focused on improving profitability and streamlining costs, targeting $60 million in structural cost savings by year-end 2026[4] - The company plans to accelerate investments into higher-growth and higher-margin opportunities that meet return on capital targets, leveraging its scale, diversification, and culture as strategic advantages in tough economic climates[4] Key Financial Highlights In Q1 2025, Net sales decreased 2.7% year-over-year to $1.60 billion, primarily due to a 0.7% decrease in selling prices and a 2% decrease in organic unit sales; Net earnings attributable to controlling interests declined 35% to $78.8 million; Adjusted EBITDA was $142.2 million, representing 8.9% of sales, down from 11.0% in the prior year | Metric | Q1 2025 | Q1 2024 | YoY Change | | :----------------------------------- | :---------- | :---------- | :--------- | | Net Sales | $1.60 billion | $1.64 billion | -2.7% | | New Product Sales | $106 million | N/A | N/A | | New Product Sales as % of Total Sales | 6.7% | 7.2% | -0.5 pp | | Net Earnings Attributable to Controlling Interests | $78.8 million | $120.8 million | -35% | | Adjusted EBITDA | $142.2 million | $180.8 million | -21.4% | | Adjusted EBITDA as % of Sales | 8.9% | 11.0% | -2.1 pp | - The decrease in net sales was attributed to a 0.7% decrease in selling prices and a 2% decrease in organic unit sales[5] - Net earnings attributable to controlling interests in Q1 2024 included $7.3 million of additional tax benefits related to share-based compensation[5][6] Capital Allocation Strategy The company maintains a strong balance sheet, prioritizing acquisitions, organic growth, increased dividends, and share repurchases Capital Allocation UFP Industries maintains a strong balance sheet with nearly $903.6 million in cash and approximately $2.2 billion of liquidity as of March 29, 2025, focusing its capital allocation strategy on strategic acquisitions, organic growth investments, increased quarterly dividends, and an expanded share repurchase authorization | Metric | As of March 29, 2025 | As of Q1 2024 | | :------------------- | :------------------- | :------------ | | Cash | $903.6 million | $979.7 million | | Total Liquidity | ~$2.2 billion | N/A | - The company seeks strategic acquisitions and invests in organic growth opportunities, with plans to invest approximately $300 million to $350 million in capital projects in 2025[10] - The Board of Directors approved a quarterly dividend payment of $0.35 per share, a 6% increase over the $0.33 per share paid throughout 2024[10] - The share repurchase authorization was amended to up to $300 million through July 31, 2025. Since July 24, 2024, the company repurchased 1,624,069 shares ($172 million total), including 649,060 shares ($70.1 million) in Q1 2025 and 1,022,493 shares ($107 million) in April[10] Segment Performance All segments experienced Q1 2025 net sales and gross profit declines due to lower organic unit sales, competitive pricing, and higher material costs UFP Retail Solutions UFP Retail Solutions reported a 3% decrease in net sales to $607 million in Q1 2025, primarily due to a 4% decline in organic unit sales, partially offset by a 1% increase in selling prices, with Gross profit decreased to $81 million (13.3% of sales) from $101 million (16.1% of sales) in Q1 2024, impacted by volume decline and competitive pressure | Metric | Q1 2025 | Q1 2024 | YoY Change | | :------------------- | :---------- | :---------- | :--------- | | Net Sales | $607 million | $628.8 million | -3% | | Gross Profit | $81 million | $101.1 million | -19.9% | | Gross Profit as % of Sales | 13.3% | 16.1% | -2.8 pp | - Organic unit sales decreased 4%, with Deckorators down 11% due to a strategic shift and ProWood down 3% due to softer demand and competitive price pressure[11] - Gross profit for ProWood declined primarily due to higher material costs on certain products sold with a fixed price, though price increases have recently been accepted to offset these costs[11] UFP Packaging UFP Packaging's net sales decreased 3% to $410 million in Q1 2025, driven by a 3% decline in organic unit sales and a 1% decline in selling prices, partially offset by a 1% increase from an acquisition, with Gross profit was $70 million (17.0% of sales), down from $85 million (20.1% of sales) in Q1 2024 due to softer demand, lower unit sales, competitive pricing, and higher material costs | Metric | Q1 2025 | Q1 2024 | YoY Change | | :------------------- | :---------- | :---------- | :--------- | | Net Sales | $410 million | $424.4 million | -3% | | Gross Profit | $70 million | $85.4 million | -18% | | Gross Profit as % of Sales | 17.0% | 20.1% | -3.1 pp | - Organic unit sales declined 5% for Structural Packaging and 1% for PalletOne due to softer demand, while Protective Packaging saw a 13% increase in organic unit sales due to capacity increases[12] UFP Construction UFP Construction's net sales were flat at $516 million in Q1 2025, as a 3% increase in organic unit sales was offset by a 3% decrease in selling prices, with Gross profit declined to $91 million (17.6% of sales) from $114 million (22.1% of sales) in Q1 2024, primarily due to more competitive pricing in the Site Built business unit | Metric | Q1 2025 | Q1 2024 | YoY Change | | :------------------- | :---------- | :---------- | :--------- | | Net Sales | $516 million | $517.9 million | 0% | | Gross Profit | $91 million | $114.3 million | -20.3% | | Gross Profit as % of Sales | 17.6% | 22.1% | -4.5 pp | - Organic unit sales increased 13% in Factory Built due to industry production, 4% in Commercial, and 3% in Concrete Forming. Site Built organic unit sales decreased 5% due to softer demand[13] Outlook The company anticipates continued softer demand and competitive pricing short-term, maintaining long-term growth and profitability goals Short-Term Outlook UFP Industries anticipates continued softer demand and competitive pricing through the remainder of 2025, with overall demand slightly down in each segment, and believes it is well-equipped to adapt quickly to potential lumber tariffs - The company anticipates softer demand and competitive pricing to continue through 2025, with overall demand slightly down in each segment[16] - A decline in Site Built is anticipated to be partially offset by an increase in Factory Built[16] - UFP Industries believes it is in a strong position to adapt quickly to potential tariffs on raw materials without material adverse financial impact after a short adjustment period, due to its relationships with mill partners and lack of foreign sawmills[14][15] Long-Term Outlook UFP Industries' long-term goals remain unchanged, focusing on annual unit sales growth, new product sales contribution, EBITDA margins, incremental returns on new investments, and maintaining a conservative capital structure - Long-term goals include: * Achieving 7-10% unit sales growth annually (including bolt-on acquisitions) * At least 10% of all sales coming from new products * Achieving 12.5% EBITDA margins * Earning an incremental return on new investments over the hurdle rate * Maintaining a conservative capital structure[17] Company Information & Disclosures This section details conference call information, company overview, forward-looking statements, and non-GAAP financial definitions Conference Call Details UFP Industries will host a conference call on Tuesday, April 29, 2025, at 9:00 a.m. ET to discuss its outlook and Q1 2025 results, accessible via webcast at ufpinvestor.com with a replay available - A conference call to discuss the outlook and Q1 results will be held on Tuesday, April 29, 2025, at 9:00 a.m. ET[18] - The call will be hosted by CEO Will Schwartz and CFO Michael Cole and will be available via webcast at https://www.ufpinvestor.com/news-filings-reportsevents---presentations, with a replay also available[18] About UFP Industries, Inc. UFP Industries, Inc. is a holding company with operating subsidiaries that manufacture, distribute, and sell value-added products for residential and commercial construction, packaging, and other industrial applications globally, founded in 1955 and ranked 493 on the Fortune 500 - 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[19] - Products are used in residential and commercial construction, packaging and other industrial applications worldwide[19] - Founded in 1955, headquartered in Grand Rapids, Mich., with affiliates in North America, Europe, Asia and Australia. Ranked 493 on the Fortune 500 and 128 on Industry Week's list of America's Largest Manufacturers[19] Forward-Looking Statements This press release contains forward-looking statements based on management's beliefs, assumptions, current expectations, estimates, and projections, which do not guarantee future performance and involve risks, uncertainties, and assumptions that are difficult to predict - The press release contains forward-looking statements based on management's beliefs, assumptions, current expectations, estimates, and projections[20] - These statements do not guarantee future performance and involve certain risks, uncertainties, and assumptions that are difficult to predict[20] - Factors that could cause actual results to differ materially include fluctuations in currency and inflation, lumber prices, adverse economic conditions, changes in tariffs, and cybersecurity breaches[20][21] Non-GAAP Financial Information This release includes non-GAAP financial information, specifically Adjusted EBITDA, which management uses to evaluate historical and ongoing operations and enable meaningful comparisons of performance, intended to supplement rather than substitute GAAP financial results - The release includes non-GAAP financial information, specifically Adjusted EBITDA, which management uses to evaluate historical and ongoing operations[22] - Adjusted EBITDA is intended to supplement and should be read together with the financial results, not considered an alternative or substitute for GAAP results[22] - Net earnings refers to net earnings attributable to controlling interest unless specifically noted[23] Condensed Consolidated Financial Statements (Unaudited) Unaudited Q1 2025 financial statements detail decreased net sales and earnings, segment EBITDA, balance sheet, and cash flow Statements of Earnings and Comprehensive Income The unaudited condensed consolidated statements of earnings and comprehensive income for the three months ended March 2025 and 2024 show a decrease in net sales, gross profit, and net earnings attributable to controlling interest year-over-year | (In thousands, except per share data) | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | NET SALES | $1,595,519 | $1,638,966 | | GROSS PROFIT | $268,196 | $326,078 | | EARNINGS FROM OPERATIONS | $92,252 | $133,823 | | NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST | $78,753 | $120,791 | | EARNINGS PER SHARE - DILUTED | $1.30 | $1.96 | Reconciliation to Adjusted EBITDA by Segment This section provides a reconciliation of net earnings to Adjusted EBITDA by segment for the three months ended March 2025 and 2024, highlighting the contribution of each segment to the overall Adjusted EBITDA and its percentage of net sales | (In thousands) | Retail | Packaging | Construction | All Other | Corporate | Total | | :------------- | :----- | :-------- | :----------- | :-------- | :-------- | :---- | | Adjusted EBITDA 2025 | $35,849 | $35,045 | $37,310 | $5,033 | $28,914 | $142,151 | | Adjusted EBITDA 2024 | $55,359 | $44,349 | $53,892 | $6,486 | $20,684 | $180,770 | | Adjusted EBITDA as a Percentage of Net Sales 2025 | 5.9% | 8.5% | 7.2% | 8.3% | * | 8.9% | | Adjusted EBITDA as a Percentage of Net Sales 2024 | 8.8% | 10.4% | 10.4% | 9.7% | * | 11.0% | Balance Sheets The unaudited condensed consolidated balance sheets show an increase in total assets and shareholders' equity from March 2024 to March 2025, while cash and cash equivalents decreased | (In thousands) | March 2025 | March 2024 | | :------------------------------------ | :--------- | :--------- | | TOTAL ASSETS | $4,150,286 | $4,078,639 | | Cash and cash equivalents | $903,562 | $979,746 | | TOTAL CURRENT ASSETS | $2,464,391 | $2,514,415 | | TOTAL CURRENT LIABILITIES | $496,526 | $525,018 | | SHAREHOLDERS' EQUITY | $3,259,056 | $3,116,095 | | TOTAL LIABILITIES AND EQUITY | $4,150,286 | $4,078,639 | Statements of Cash Flows The unaudited condensed consolidated statements of cash flows indicate that for the three months ended March 2025, the company experienced net cash outflows from operating, investing, and financing activities, resulting in a significant net decrease in cash and cash equivalents compared to the prior year | (In thousands) | 2025 | 2024 | | :------------------------------------ | :--- | :--- | | NET CASH USED IN OPERATING ACTIVITIES | $(108,807) | $(16,798) | | NET CASH USED IN INVESTING ACTIVITIES | $(75,550) | $(56,062) | | NET CASH USED IN FINANCING ACTIVITIES | $(90,926) | $(68,968) | | NET CHANGE IN CASH AND CASH EQUIVALENTS | $(274,971) | $(141,749) | | ALL CASH AND CASH EQUIVALENTS, END OF PERIOD | $904,623 | $980,507 |