UFP Industries Reports All-time Quarterly Records
GRAND RAPIDS, Mich., April 21, 2021 – UFP Industries, Inc. (Nasdaq: UFPI) today announced record net sales of $1.83 billion for the first quarter of 2021, a 77 percent increase over the first quarter of 2020, and record net earnings attributable to controlling interest of $103 million, a 157 percent increase over the same period of 2020. The company also reported record EPS of $1.67 per diluted share compared to $0.65 in the first quarter last year. While first quarter performance is typically limited by seasonality, net sales and earnings for the first quarter of 2021 were the highest of any quarter in company history.
“UFP Industries is enjoying unprecedented growth as we benefit from strong market conditions and the successful execution of our strategic plans. We are using our new market-focused structure to target and quickly assimilate acquisitions, better leverage our fixed costs, and reallocate resources to increase capacity efficiently,” said CEO Matthew J. Missad. “As a result, we are experiencing strong organic growth in our retail and industrial segments as well as in our site-built and factory-built housing business units. Our improvement in gross profit resulted from these changes, as well as a better pricing model that quickly adjusts to lumber market fluctuations and our growing line-up of new and value-added products. I want to thank our employees for their outstanding efforts and especially recognize our general managers for the improvements they’ve made at our facilities. I remain very encouraged about the growth prospects for our business as we look forward.”
The elevated level of softwood lumber prices contributed to a significant increase in the company’s cost of materials and was responsible for 44 percent of the 77 percent increase in net sales. The remaining 33 percent came from increased unit sales – 23 percent from acquisitions and 10 percent from organic growth.
New product sales of $159.4 million increased 58 percent over the first quarter of 2020, led by Deckorators Vault decking and deck accessories, UFP-Edge shiplap and trim, Handprint project panels and ProWood Fire Retardant treated lumber.
First Quarter 2021 Highlights (comparisons on a year-over-year basis):
- Net sales of $1.83 billion increased 77 percent due to a 33 percent increase in unit sales and 44 percent increase in selling prices
- An increase in SG&A of nearly $41 million, or 37 percent, is largely attributable to recent acquisitions ($11.5 million, including amortization expense of $1.7 million), accrued bonus expenses ($22.5 million) resulting from increased profitability, and increased compensation costs of $10 million, offset by net decreases of $3 million in travel costs and bad debt expense
- Earnings from operations of $137.5 million increased 134 percent
- Adjusted EBITDA of $162.7 million increased 111 percent
UFP Industries maintains a strong balance sheet with liquidity of approximately $421 million at the end of the first quarter. The company’s operating cash flow decreased by approximately $150 million as a result of a greater seasonal investment in net working capital of $216 million associated with higher accounts receivable and to build inventory to satisfy strong customer demand, particularly in the retail business. Net debt increased to $429 million from $131 million at the end of the first quarter of 2020 due to these factors and the acquisition of PalletOne and its wholly owned subsidiary, Sunbelt Forest Products.
On April 12, 2021, Sunbelt (an affiliate of UFP Retails Solutions) completed its acquisition of Spartanburg Forest Products and its affiliates, expanding its pressure-treating capacity throughout the eastern U.S. In addition, on April 19, 2021, UFP closed on the purchase of Walnut Hollow Farm, which produces a variety of finely finished wood surfaces used in hobby, craft and woodworking projects, as well as in taxidermy. Both transactions broaden UFP Retail Solutions’ customer base and product offerings.
“The recent acquisitions of Sunbelt and Spartanburg not only allow us to leverage costs and improve efficiencies in wood treating, they allow us to bring our value-added products to a broader and more diverse customer base. UFP will continue to pursue acquisitions that expand our capacity, enhance our capabilities, improve efficiencies and increase our sales of value-added products,” said Missad. “Growth is baked into our DNA, and I’d encourage those looking for attractive career opportunities to consider UFP during this dynamic time. We are hiring at nearly every location in many roles and currently have about 500 jobs available for hard working, highly motivated future team members.”
By business segment, the company reported the following first quarter 2021 results:
UFP Retail Solutions
- $759 million in net sales, up 116 percent over the first quarter of 2020 due to a 56 percent increase in selling prices, a 19 percent increase in organic unit sales, and a 41 percent unit increase resulting from acquisitions, primarily Sunbelt Forest Products. Organic unit growth was driven by Deckorators (up 64 percent), Handprint (up 30 percent), Outdoor Essentials (up 28 percent), and UFP Edge (up 24 percent). Gross profit for the segment grew 122 percent. Acquisitions contributed over $10 million, or almost 23 percent, to the increase in gross profit.
- $448.9 million in net sales, up 75 percent from the first quarter of 2020. Unit sales increased 37 percent and selling prices increased 38 percent. Organic growth accounted for 5 percent of the unit sales growth; the acquisitions of PalletOne and T&R Lumber accounted for 32 percent. Gross profit for the segment rose 83 percent, far exceeding unit sales growth, due to the company’s focus on adding value-added products and its ability to effectively increase capacity. PalletOne and T&R Lumber contributed over $13 million, or 30 percent, to the increase in gross profit.
UFP Construction$559.5 million in net sales, up 47 percent over the first quarter of 2020, due to an 8 percent increase in unit sales and a 39 percent increase in selling prices. Unit sales to site-built and factory-built housing customers rose 21 percent and 15 percent, respectively. Unit sales to commercial customers fell 9 percent. Gross profit for the construction segment grew 40 percent over the first quarter of 2020, led by the site-built and factory-built business units.