UFP Industries, Inc. (Nasdaq: UFPI) today announced net sales of $2.1 billion for the third quarter of 2021, a 41 percent increase over the third quarter of 2020, and net earnings attributable to controlling interest of $121 million, a 57 percent increase over the same period of 2020. The company also reported EPS of $1.93 per diluted share compared to $1.25 in the third quarter last year.

“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 $668 million at the end of the third quarter despite an increase in our seasonal investment in net working capital of $193 million. This increase resulted from unprecedentedly high lumber prices and market demand. Net debt was $182 million compared to $32 million in net surplus cash at the end of the third quarter of 2020, primarily due to these factors and the acquisitions of PalletOne and Spartanburg Forest Products. The company had a cash surplus of $139 million at the end of the third quarter, and it continues to reduce working capital and generate strong free cash flow, allowing it to pursue growth opportunities and returns to shareholders through its dividend and share repurchase activities. UFP Industries has the authority to buy back approximately 1.1 million additional shares.

On October 20, 2021, the Board of Directors of UFP Industries approved a quarterly dividend payment of $0.20 per share, a 33 percent increase over the dividend of 15 cents paid on September 15, 2021, and a 60 percent increase over the dividend of 12.5 cents paid on December 15, 2020. The dividend is payable on December 15, 2021, to shareholders of record on December 1, 2021.

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 ENDEDSEPTEMBER 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 ENDEDSEPTEMBER 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 ENDEDSEPTEMBER 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 ENDEDSEPTEMBER 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 GauthierVP, Corporate Communications and Investor Relations(616) 365-1555

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