UFP Industries Reports Best Quarterly Results in the Company’s History

10/22, 12:04 AM (Source: GlobeNewswire)

GRAND RAPIDS, Mich., Oct. 21, 2020 (GLOBE NEWSWIRE) -- UFP Industries, Inc. (Nasdaq: UFPI) today announced record sales of $1.49 billion and net earnings attributable to controlling interest of $77.2 million for the third quarter ended September 26, 2020. The company also reported record EPS of $1.25 per diluted share, a 49 percent increase over the same period of 2019. These are the best quarterly sales and earnings results in the company’s 65-year history.

“One of the many lessons I will take from 2020 is that UFP Industries has the business diversification, processes, and experienced team members to face serious challenges and continue to serve customers while delivering strong results for our stakeholders,” said CEO Matthew J. Missad. “So far this year, we faced a pandemic, shut-down orders that disrupted economic activity, a record increase in lumber pricing, supply constraints, wildfires, hurricanes and rail shortages. Despite that, our teams worked diligently to address shifting customer demands, managed inventory wisely, and delivered record results. When it comes to what we can achieve, they set the bar even higher. I want to thank each of our over 13,000 team members for their fantastic efforts. I’d like to also acknowledge an extraordinary American business leader, UFP’s former president, CEO and chairman, my early and lifelong mentor, Ambassador Peter Secchia, who died today. Peter, the architect of UFP’s remarkable early growth, would have been extremely gratified to see his legacy acknowledged and celebrated today with the reporting of the best quarter in the company’s history.”

UFP Industries’ third quarter unit sales grew 8 percent over the same period of 2019, almost entirely from organic sales increases. Unit sales to Retail customers grew 34 percent organically over this period, led by the company’s ProWood, Dimensions, Outdoor Essentials, and Deckorators product lines.

“At the beginning of the pandemic, no one in the industry predicted the growth we’d see in our Retail segment,” Missad said. “Although UFP Retail Solutions has benefited from higher lumber prices and the spike in consumer demand during the past several months, it was well-positioned for improvement even before the pandemic began. In addition to the extraordinary efforts of our team members, I credit our investments in new products and in our new management structure, which allows us to focus better on our customers’ needs, each market we serve, and launch new products and execute initiatives with greater speed.” New product sales grew 41 percent in the third quarter over the same period of last year.

Keeping with the new product focus, UFP Industries recently completed the acquisition of Fire Retardant Chemical Technologies, LLC (FRCT), the leading R&D company specializing in wood treating technologies such as fire retardants. The addition of FRCT will allow UFP to develop new technologies and value-added wood products for the company’s ProWood pressure-treated line, as well as for other customers.

UFP Industries continues to maintain a strong pipeline of acquisition targets and a disciplined approach to capital allocation. The company’s long-term credit facilities and cash currently provide more than $70 million in available liquidity. Additionally, today the company’s board approved a quarterly dividend payment of 12.5 cents per share, bringing the annual total for 2020 to 50 cents per share, a 25 percent increase over the dividends paid in 2019. The dividend is payable on December 15, 2020, to shareholders of record on December 1, 2020.

“This year has been a difficult year for many, and we hope that those who have lost businesses or livelihoods due to the lockdowns will soon be able to start their recovery. UFP has been very fortunate, and even with market headwinds and COVID-19 restrictions, our record performance has validated the confidence we have in our organization’s ability to execute. Our operations will take the lessons we’ve learned and turn them into improvement opportunities for even higher levels of performance. We know that when challenged, UFP employees answer the call and do great things.”

Third Quarter 2020 Highlights (comparisons on a year-over-year basis):

  • Net sales of $1.49 billion, up 28 percent due to a 20 percent increase in pricing and an 8 percent increase in units sold
  • Gross profits increased 29 percent to over $241 million for the quarter as our profit per unit sold increased substantially
  • Earnings from operations of $106.6 million were up 51 percent, and net earnings attributable to controlling interest of $77.2 million were up 49 percent
  • EBITDA of $125.7 million increased 40 percent

By business segment, the company reported the following third-quarter results:

UFP Retail Solutions

  • $700.5 million in net sales, up 76 percent over the third quarter of 2019. Unit sales increased 34 percent, with higher selling prices increasing sales by 42 percent. The following business units drove unit sales growth: Dimensions Home and Décor (unit sales up 57 percent); Deckorators (up 50 percent); ProWood (up 30 percent); and Outdoor Essentials Fence, Lawn and Garden (up 28 percent). Unit sales in the segment’s E-Commerce unit, which include sales through large online retailers, grew 94 percent.

UFP Industrial

  • $282.1 million in net sales, up 4 percent from the third quarter of 2019. Unit sales decreased 2 percent, while higher selling prices increased sales by 6 percent. Industrial unit sales showed steady improvement as the third quarter progressed, with year-over-year sales improving from 5 percent lower in July to 1 percent higher in September. The company has been focusing on providing more value-added products to customers in this segment.

UFP Construction

  • $447.1 million in net sales, up 0.4 percent from the third quarter of 2019, due to a 9 percent decrease in unit sales and a 9 percent increase in selling prices. Unit sales changes by business unit for the quarter are as follows: Factory Built (up 7 percent); Concrete Forming (down 2 percent), Site Built (down 8 percent), Commercial (down 37 percent). Unit sales for Site Built showed continued improvement during the third quarter as business conditions improved. The Commercial business unit has been the most adversely impacted by the pandemic due to the slowdown in retail and other commercial construction and remodeling activity.

CONFERENCE CALL
UFP Industries will conduct a conference call to discuss information included in this news release and related matters at 8:30 a.m. ET on Thursday, October 22, 2020. 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 7497854. 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 from October 22, 2020, at 11:30 p.m. through October 24, 2020, 11:30 p.m. at 855-859-2056 or 404-537-3406.

UFP Industries, Inc. (formerly Universal Forest Products, Inc.)
UFP Industries is a holding company whose subsidiaries supply wood, wood composite and other products to three markets: retail, construction and industrial. Founded in 1955, the company is headquartered in Grand Rapids, Mich., with affiliates throughout 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 EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 2020/2019
  Quarter Period   Year to Date  
(In thousands, except per share data)  2020     2019     2020     2019   
                 
                 
                 
NET SALES $1,486,227  100% $1,163,026  100% $3,760,290  100% $3,417,969  100.0%
                 
COST OF GOODS SOLD   1,245,153  83.8   975,756  83.9   3,147,049  83.7   2,889,706  84.5 
                 
GROSS PROFIT  241,074  16.2   187,270  16.1   613,241  16.3   528,263  15.5 
                 
SELLING, GENERAL AND                 
   ADMINISTRATIVE EXPENSES  134,649  9.1   115,958  10.0   357,770  9.5   334,165  9.8 
OTHER  (176) -   845  0.1   (2,120) (0.1)  948  - 
                 
EARNINGS FROM OPERATIONS  106,601  7.2   70,467  6.1   257,591  6.9   193,150  5.7 
                 
OTHER EXPENSE, NET  921  0.1   1,490  0.1   4,668  0.1   4,082  0.1 
                 
EARNINGS BEFORE INCOME TAXES  105,680  7.1   68,977  5.9   252,923  6.7   189,068  5.5 
                 
INCOME TAXES  26,819  1.8   16,396  1.4   63,798  1.7   45,340  1.3 
                 
NET EARNINGS  78,861  5.3   52,581  4.5   189,125  5.0   143,728  4.2 
                 
LESS NET EARNINGS ATTRIBUTABLE TO                
     NONCONTROLLING INTEREST   (1,657) (0.1)  (722) (0.1)  (5,299) (0.1)  (1,814) (0.1)
                 
NET EARNINGS ATTRIBUTABLE TO                
     CONTROLLING INTEREST $77,204  5.2  $51,859  4.5  $183,826  4.9  $141,914  4.2 
                 
                 
EARNINGS PER SHARE - BASIC  $1.25    $0.84    $2.98    $2.30   
                 
EARNINGS PER SHARE - DILUTED $1.25    $0.84    $2.98    $2.30   
                 
SUPPLEMENTAL SALES AND SG&A DATA                
  Quarter Period Year to Date
Segment Classification  2020     2019  %  2020     2019  %
Retail $700,522    $397,140  76.4% $1,661,873    $1,212,330  37.1%
Industrial  282,124     271,667  3.8%  763,046     837,671  -8.9%
Construction  447,103     445,505  0.4%  1,187,429     1,225,467  -3.1%
All Other  56,478     48,714  15.9%  147,942     142,501  3.8%
Total Net Sales $1,486,227    $1,163,026  27.8% $3,760,290    $3,417,969  10.0%
                 
   2020  % of Sales  2019  % of Sales  2020  % of Sales  2019  % of Sales
SG&A, Excluding Bonus Expense $92,342  6.2  $93,344  8.0  $273,574  7.3  $280,898  8.2 
Bonus Expense  42,307  2.8   22,614  1.9   84,196  2.2   53,267  1.6 
Total SG&A $134,649  9.1  $115,958  10.0  $357,770  9.5  $334,165  9.8 
                 
SG&A as a Percentage of Gross Profit  55.9%    61.9%    58.3%    63.3%  



CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 2020/2019
              
(In thousands)           
ASSETS  2020  2019 LIABILITIES AND EQUITY  2020  2019
              
CURRENT ASSETS     CURRENT LIABILITIES    
 Cash and cash equivalents $346,154 $64,498  Accounts payable $231,111 $180,767
 Restricted cash  724  729  Accrued liabilities  259,733  204,529
 Investments  20,530  17,028  Current portion of debt  2,760  152
 Accounts receivable  583,079  474,648       
 Inventories  528,734  479,356       
 Other current assets  32,888  55,845       
              
TOTAL CURRENT ASSETS  1,512,109  1,092,104 TOTAL CURRENT LIABILITIES  493,604  385,448
              
OTHER ASSETS  121,025  116,887 LONG-TERM DEBT AND    
INTANGIBLE ASSETS, NET  311,491  286,627  CAPITAL LEASE OBLIGATIONS  311,267  162,853
PROPERTY, PLANT     OTHER LIABILITIES  131,945  103,221
 AND EQUIPMENT, NET  405,995  385,007 EQUITY  1,413,804  1,229,103
              
              
TOTAL ASSETS $2,350,620 $1,880,625 TOTAL LIABILITIES AND EQUITY $2,350,620 $1,880,625
              



CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED
SEPTEMBER 2020/2019
(In thousands)  2020   2019 
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net earnings $189,125  $143,728 
Adjustments to reconcile net earnings to net cash from operating activities:    
     
      Depreciation  47,226   44,652 
      Amortization of intangibles  5,863   4,690 
      Expense associated with share-based and grant compensation arrangements  3,152   3,105 
      Deferred income taxes (credit)  110   (367)
      Unrealized gain on investments and other  (81)  (1,611)
      Net (gain) loss on disposition and impairment of assets  (662)  830 
      Changes in:    
        Accounts receivable  (211,238)  (127,841)
        Inventories  (39,167)  80,178 
        Accounts payable and cash overdraft  85,354   14,293 
        Accrued liabilities and other  105,401   36,423 
          NET CASH FROM OPERATING ACTIVITIES  185,083   198,080 
     
CASH FLOWS FROM INVESTING ACTIVITIES:    
Purchases of property, plant, and equipment  (67,024)  (66,338)
Proceeds from sale of property, plant and equipment  2,588   1,180 
Acquisitions and purchase of noncontrolling interest, net of cash received  (34,820)  (38,710)
Purchases of investments  (24,266)  (6,475)
Proceeds from sale of investments  22,281   4,159 
Other  314   199 
          NET CASH USED IN INVESTING ACTIVITIES  (100,927)  (105,985)
     
CASH FLOWS FROM FINANCING ACTIVITIES:    
Borrowings under revolving credit facilities  6,862   421,464 
Repayments under revolving credit facilities  (6,498)  (460,537)
Repayments of debt  (3,087)  (3,099)
Issuance of long-term debt  150,000   - 
Proceeds from issuance of common stock  1,042   812 
Dividends paid to shareholders  (23,020)  (12,270)
Distributions to noncontrolling interest  (932)  (1,634)
Repurchase of common stock  (29,212)  - 
Other  23   41 
          NET CASH FROM (USED IN) FINANCING ACTIVITIES  95,178   (55,223)
     
Effect of exchange rate changes on cash  (1,122)  157 
NET CHANGE IN CASH AND CASH EQUIVALENTS  178,212   37,029 
     
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD  168,666   28,198 
     
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD $346,878  $65,227 
     
Reconciliation of cash and cash equivalents and restricted cash:    
Cash and cash equivalents, beginning of period $168,336  $27,316 
Restricted cash, beginning of period  330   882 
All cash and cash equivalents, beginning of period $168,666  $28,198 
     
Cash and cash equivalents, end of period $346,154  $64,498 
Restricted cash, end of period  724   729 
All cash and cash equivalents, end of period $346,878  $65,227 
     



EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 2020/2019
 Quarter PeriodYear to Date
(In thousands)2020201920202019
Net earnings78,861  52,581  189,125  143,728  
Interest expense2,486  1,900  6,291  6,767  
Interest and investment income(1,011) (317) (1,541) (1,074) 
Income taxes26,819  16,396  63,798  45,340  
Expense associated with share-based compensation arrangements849  896  3,152  3,105  
Net (gain) loss on disposition and impairment of assets(391) 1,151  (662) 830  
Unrealized gain on investments(554) (93) (82) (1,611) 
Depreciation expense15,896  15,452  47,226  44,652  
Amortization of intangibles2,734  1,744  5,863  4,690  
EBITDA125,689  89,710  313,170  246,427  



CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AS A PERCENTAGE OF SALES
CURRENT YEAR'S SALES STATED AT LAST YEAR'S SELLING PRICES (UNAUDITED)
FOR THE THREE MONTHS ENDED - SEPTEMBER 2020/2019
 Quarter Period
 ActualSales Adjusted to Last Year's Selling PricesActual
  2020   2020   2019  
          
NET SALES 100.0 % 100.0 % 100.0 %
COST OF GOODS SOLD  83.8   80.8   83.9  
GROSS PROFIT 16.2   19.2   16.1  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 9.1   10.7   9.9  
OTHER -   -   0.1  
EARNINGS FROM OPERATIONS 7.2   8.5   6.1  
OTHER EXPENSE, NET 0.1   0.1   0.1  
EARNINGS BEFORE INCOME TAXES 7.1   8.4   5.9  
INCOME TAXES 1.8   2.1   1.4  
NET EARNINGS 5.3   6.3   4.5  
LESS NET EARNINGS ATTRIBUTABLE TO         
     NONCONTROLLING INTEREST  (0.1)  (0.1)  (0.1) 
NET EARNINGS ATTRIBUTABLE TO         
     CONTROLLING INTEREST 5.2 % 6.2 % 4.5 %
          
Note: Actual percentages are calculated and may not sum to total due to rounding.         
          
          
2019 NET SALES$1,163,026        
2020 SELL PRICE INCREASE 20.00 %      
INCREASE IN 2020 NET SALES DUE TO SELL PRICE INCREASE$232,605        
          
ACTUAL 2020 NET SALES 1,486,227        
LESS SELL PRICE ADJUSTMENT FOR LUMBER COSTS 232,605        
ADJUSTED 2020 NET SALES$1,253,622        
          
ACTUAL 2020 COST OF GOODS SOLD$1,245,153        
LESS ADJUSTMENT FOR LUMBER COSTS 232,605        
ADJUSTED 2020 COST OF GOODS SOLD$1,012,548        
          

---------------AT THE COMPANY---------------

Dick Gauthier
VP, Business Outreach
(616) 365-1555 

Primary Logo

Copyright GlobeNewswire, Inc. 2016. All rights reserved.
You can register yourself on the website to receive press releases directly via e-mail to your own e-mail account.