UFP Industries Reports Record First Quarter Results
UFP Industries Reports Record First Quarter Results
Strong sales growth and continued execution results in year-over-year increases in diluted EPS of 80 percent and quarterly dividend of 67 percent
GRAND RAPIDS, Mich., Thursday, April 21, 2022 – UFP Industries, Inc. (Nasdaq: UFPI) today announced record net sales of $2.49 billion and net earnings of $190 million for the first quarter of 2022. The company also reported record earnings per diluted share of $3.00, an 80 percent increase over the first quarter of 2021.
“We cannot give enough credit to the entire UFP team for the significant progress they have made to add more value to our products and services to better serve our customers. Our long streak of record-breaking results is evidence of their hard work and success,” said CEO Matthew J. Missad. “Our impressive results also demonstrate the advantage of our balanced business model, which operates in diverse markets, positioning us for success even when some markets face uncertainty and challenges. The company’s reorganization in 2020 has given us a deeper level of focus and expertise in our diverse markets. We are increasingly the supplier of choice because we are unmatched in providing the value-added products and services businesses need to lower their costs and reduce their labor needs. We remain optimistic as this transformation is still underway and will continue to benefit our customers and company in the years to come.”
First Quarter 2022 Highlights (comparisons on a year-over-year basis):
- Net sales of $2.49 billion increased 36 percent due to a 26 percent increase in lumber prices, a 3 percent increase in organic unit sales, and a 7 percent increase in unit sales from acquisitions.
- Earnings from operations of $259 million increased 88 percent. Acquisitions contributed $10 million to earnings.
- An increase in SG&A of $70 million, or 47 percent, is largely attributable to increases in bonus and sales incentive compensation expenses ($46 million) resulting from increased profitability, increases in wages and benefits ($10 million), and recent acquisitions ($5 million). SG&A as a percentage of gross profit fell from 52 percent to 46 percent.
- New product sales of $151 million increased 58 percent. This does not include new products sales of $80 million during the first quarter of 2021 that no longer meet our criteria of being a new product.
- Adjusted EBITDA of $292.2 million increased 80 percent, and adjusted EBITDA margin improved by 280 basis points to 11.7 percent. Acquisitions contributed $12 million to adjusted EBITDA.
UFP Industries maintains a strong balance sheet, with $445 million of liquidity at the end of March 2022. The company’s diversified approach to capital allocation includes the following:
- The company has targeted $175-225 million for capital expenditures in 2022, an increase over the $151 million spent in 2021.
- In February 2022, the Board of Directors of UFP Industries authorized an increase in the company’s share repurchase program of up to 2.6 million shares, and the company purchased approximately 800,000 shares at an average price of $77.53 in March and April 2022 under its 10b51 share repurchase plan.
- On April 20, 2022, the Board approved an increase in its quarterly dividend payment to $0.25 per share, an increase of 25 percent over the dividend paid on March 15, 2022, and 67 percent higher than the dividend paid on June 15, 2021. The dividend is payable on June 15, 2022, to shareholders of record on June 1, 2022.
- The company continues to seek opportunities to invest in companies that represent a strong strategic fit and allow it to drive new growth, enhance its capabilities, and create more value for its customers and shareholders.
“We continue to invest in and build upon the successful transformation of UFP Industries into a value-added solutions provider to our customers, which has led to impressive operating results and returns on investment,” added Missad. “We’ll continue to invest our capital wisely for long-term growth and focus on opportunities that generate attractive returns. We anticipate continuing to use cash for share buybacks, as we think UFP Industries is a great investment, while also rewarding shareholders with increased dividends.”
By business segment, the company reported the following first quarter 2022 results:
UFP Retail Solutions
$993 million in net sales, up 31 percent over the first quarter of 2021 due to a 19 percent increase in selling prices, a 14 percent increase in unit sales from the acquisitions of Sunbelt Forest Products and Spartanburg Forest Products, and a 2 percent decline in organic unit sales. The company transferred certain concrete forming products from the retail segment to the construction segment during the quarter, which accounted for a 3 percent decline in organic unit sales.
An organic unit sales decline in several product lines is largely attributable to the return to more normal consumer buying habits in 2022 after the unusually high pandemic-related sales of pressure-treated lumber in the first quarter of 2021. Organic unit sales fell 7 percent for Deckorators, primarily because of a 13 percent drop in sales of decking accessories, while composite decking sales rose 5 percent. Organic unit sales also fell 2 percent for both Outdoor Essentials and ProWood but were up 7 percent for UFP-Edge due to expanded capacity and market share gains.
Gross profit for the retail segment rose 34 percent to $134 million, primarily due to acquisitions and increased sales of UFP-Edge. Gross profit margin rose to 13.5 percent in 2022 from 13.2 percent in 2021.
$611 million in net sales, up 36 percent from the first quarter of 2021 due to a 39 percent increase in selling prices, a 1 percent increase in unit sales from acquisitions, and a 4 percent decline in organic unit growth. The organic unit sales decline is attributable to an intentional change in product mix, as the segment focuses more on higher-margin products while being more selective in taking on new business.
Gross profit rose 87 percent to $150 million, primarily due to better pricing discipline that includes the impact of higher lumber, labor and transportation costs, and the value the company provides to customers.
$786 million in net sales, up 41 percent over the first quarter of 2021, due to a 26 percent increase in selling prices, an 11 percent increase in organic unit growth, 3 percent growth from the transfer of certain concrete forming products from retail, and a 1 percent increase in unit sales from acquisitions. Unit sales increased to these markets: commercial (up 30 percent), manufactured housing (up 16 percent), concrete forming (up 13 percent), and residential (up 2 percent).
Gross profit increased 83 percent to $161 million in the first quarter, due to increased unit sales, the company’s ability to better leverage fixed costs, and better pricing discipline.
More than 75 percent of the company’s residential construction sales were in areas such as Texas and the Mid-Atlantic, Southeast and Mountain West regions, which have experienced significant population growth and are forecast to continue to grow. As such, our customers are better insulated from downturns in the housing market.
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 Thursday, April 21, 2022. 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 4287318. 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 April 23, 2022, at 855-859-2056 or 404-537-3406.