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Oct. 20, 2021, 4:05 p.m. EDT

UFP Industries Reports Record Third Quarter Results

GRAND RAPIDS, Mich., Oct 20, 2021 (GLOBE NEWSWIRE via COMTEX) -- - Net sales increase 41 percent, earnings increase 57 percent;Quarterly dividend increases by 33% to 20 cents per share -

GRAND RAPIDS, Mich., Oct. 20, 2021 (GLOBE NEWSWIRE) -- UFP Industries, Inc. /zigman2/quotes/206543728/composite UFPI +1.76% 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 ENDED
SEPTEMBER 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 ENDED
SEPTEMBER 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 Gauthier
VP, Corporate Communications and Investor Relations
(616) 365-1555

COMTEX_395571766/2471/2021-10-20T16:05:17

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/zigman2/quotes/206543728/composite
US : U.S.: Nasdaq
$ 76.11
+1.32 +1.76%
Volume: 41,331
May 26, 2022 11:11a
P/E Ratio
7.69
Dividend Yield
1.32%
Market Cap
$4.64 billion
Rev. per Employee
$620,030
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