Net sales of $1.82 billion, diluted EPS of $1.98

UFP Industries, Inc. (NASDAQ:UFPI) today announced first quarter 2023 results including net sales of $1.82 billion, net earnings attributable to controlling interest of $126 million, and earnings per diluted share of $1.98.

"Given the softer economy and general uncertainty in the markets, these results are in line with our expectations and, in some instances, better than we anticipated, thanks to the hard work of our UFP teammates," said Chairman and CEO Matthew J. Missad. "Our experienced team continues to provide excellent value to our customers while efficiently managing the business with a determination to deliver strong results for our shareholders. Our strong cash flow, excellent balance sheet and prudent capital allocation enable us to take advantage of opportunities that may become available during this cycle. Of course, our operations will continue to make sure we are sized correctly for current demand, while still investing in product and service enhancements and innovations to create value for our customers. Our outlook remains positive, albeit at a lower level than 2021 and 2022."

First Quarter 2023 Highlights (comparisons on a year-over-year basis):

Net sales of $1.82 billion decreased 27 percent due to a 20 percent decrease in prices, an 8 percent decrease in organic unit sales, and a 1 percent increase in sales from acquisitions.
New product sales of $167 million decreased 10 percent, largely due to lower lumber prices. New product sales as a percent of total sales rose to 9.1 percent from 7.4 percent in 2022.
Adjusted EBITDA of $202 million decreased 31 percent, and adjusted EBITDA margin dropped to 11.1 percent from 11.7 percent in 2022.
Diluted EPS of $1.98 represents a 34 percent decrease from last year.

Capital Allocation

UFP Industries maintains a strong balance sheet, with $145.3 million in net surplus cash (surplus cash less interest-bearing debt and cash overdraft) on April 1, 2023, compared to $409.8 million in net debt at the end of the first quarter of 2022. The company had approximately $1.7 billion of liquidity as of April 1, 2023. The company's return-focused approach to capital allocation includes the following:

- A target of $200 million for capital investments in 2023, including value-added growth investments and significant investments in robotics, automation and technology.

- Repurchases of approximately 451,000 shares of common stock for $35.3 million during the first quarter of 2023 (at an average price of $78.27 per share). The company is authorized to purchase an additional 1.5 million shares through February 3, 2024, and intends to continue to repurchase UFPI shares when the price is advantageous and to offset dilution resulting from long-term, share-based incentive compensation programs.

- A quarterly dividend payment of $0.25 per share, approved by the board of directors on April 26, 2023, payable on June 15, 2023, to shareholders of record on June 1, 2023.

The company continues to seek strategic acquisitions that drive long-term growth and margin improvements, enhance its capabilities, and create incremental value for its customers and shareholders.

By business segment, the company reported the following first-quarter 2023 results:

UFP Retail Solutions

$749.6 million in net sales, down 25 percent compared to the first quarter of 2022, due to a 23 percent decline in selling prices (due to the relative decrease in the lumber market) and a 2 percent decline in organic unit sales. Gross profit decreased 30 percent to $94.4 million, primarily due to the impact of products sold with a variable price. Those products benefited from a significant increase in lumber prices during the first quarter of 2022. Based on anticipated lumber prices, the company expects more favorable comparisons for the second quarter of 2023 over 2022.

UFP Packaging (formerly UFP Industrial)

$486.6 million in net sales, down 20 percent compared to the first quarter of 2022, due to an 18 percent decrease in selling prices, a 4 percent decline in organic unit sales, and a 2 percent increase in sales from acquisitions. Gross profit decreased 19 percent to $120.9 million due to normalizing market pricing and a small decline in volume.

UFP Construction

$515.6 million in net sales, down 34 percent compared to the first quarter of 2022, due to an 18 percent decrease in selling prices and a 16 percent decrease in organic unit sales. Gross profit decreased 25 percent to $121.7 million, largely due to normalizing market pricing and a decline in volume among residential and manufactured housing customers in line with market conditions.

CONFERENCE CALL

UFP Industries will conduct a conference call to discuss its outlook and information included in this news release at 4:30 p.m. ET on Tuesday, May 2, 2023. The call will be hosted by Chairman and CEO Matthew J. Missad and CFO Michael Cole and 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 the website.

UFP Industries, Inc.

UFP Industries is a holding company whose operating subsidiaries – UFP Packaging, 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. UFP Industries is ranked #401 on the Fortune 500 and #149 on Industry Week's list of America's Largest Manufacturers. 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 MONTHS ENDED
MARCH 2023/2022

	Quarter Period and Year to Date
(In thousands, except per share data)	2023						2022
NET SALES	$	1,822,476		100.0		%	$	2,489,313		100.0		%

COST OF GOODS SOLD		1,464,147		80.3				2,010,950		80.8

GROSS PROFIT		358,329		19.7				478,363		19.2

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		194,683		10.7				220,150		8.8
OTHER LOSSES (GAINS), NET		1,938		0.1				(812	)	—

EARNINGS FROM OPERATIONS		161,708		8.9				259,025		10.4

INTEREST AND OTHER		(2,841	)	(0.2	)			4,910		0.2

EARNINGS BEFORE INCOME TAXES		164,549		9.0				254,115		10.2

INCOME TAXES		38,971		2.1				60,984		2.4

NET EARNINGS		125,578		6.9				193,131		7.8

LESS NET LOSS (EARNINGS) ATTRIBUTABLE TO NONCONTROLLING INTEREST		491		—				(3,428	)	(0.1	)

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST	$	126,069		6.9			$	189,703		7.6

EARNINGS PER SHARE - BASIC	$	2.01					$	3.01

EARNINGS PER SHARE - DILUTED	$	1.98					$	3.00

COMPREHENSIVE INCOME	$	131,830					$	196,315

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		(1,760	)					(4,377	)

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$	130,070					$	191,938

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS BY SEGMENT (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 2023/2022

	Quarter Period and Year to Date
	2023
(In thousands)	Retail		Packaging			Construction		All Other		Corporate			Total
NET SALES	$	749,577	$	486,561		$	515,593	$	67,512	$	3,233		$	1,822,476
COST OF GOODS SOLD		655,139		365,663			393,934		47,876		1,535			1,464,147
GROSS PROFIT		94,438		120,898			121,659		19,636		1,698			358,329
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		53,355		66,252			67,338		13,522		(5,784	)		194,683
OTHER		27		(86	)		73		2,080		(156	)		1,938
EARNINGS FROM OPERATIONS	$	41,056	$	54,732		$	54,248	$	4,034	$	7,638		$	161,708


	Quarter Period and Year to Date
	2022
(In thousands)	Retail		Packaging			Construction		All Other		Corporate			Total
NET SALES	$	993,232	$	611,369		$	786,471	$	95,567	$	2,674		$	2,489,313
COST OF GOODS SOLD		858,895		461,815			625,059		64,024		1,157			2,010,950
GROSS PROFIT		134,337		149,554			161,412		31,543		1,517			478,363
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		62,668		67,231			82,337		16,625		(8,711	)		220,150
OTHER		272		(68	)		257		103		(1,376	)		(812	)
EARNINGS FROM OPERATIONS	$	71,397	$	82,391		$	78,818	$	14,815	$	11,604		$	259,025

ADJUSTED EBITDA RECONCILIATION BY SEGMENT (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 2023/2022

	Quarter Period and Year to Date
	2023
(In thousands)	Retail			Packaging			Construction			All Other			Corporate			Total
Net earnings	$	31,316		$	41,325		$	41,404		$	4,688		$	6,845		$	125,578
Interest and other		21			583			(5	)		(2,109	)		(1,331	)		(2,841	)
Income taxes		9,719			12,824			12,849			1,455			2,124			38,971
Expenses associated with share-based compensation arrangements		1,615			2,096			2,121			278			3,527			9,637
Net loss (gain) on disposition and impairment of assets		36			(86	)		(47	)		(10	)		(57	)		(164	)
Depreciation expense		5,618			7,682			4,628			615			7,231			25,774
Amortization of intangibles		1,055			2,246			797			532			379			5,009
Adjusted EBITDA	$	49,380		$	66,670		$	61,747		$	5,449		$	18,718		$	201,964

Adjusted EBITDA as a Percentage of Net Sales		6.6	%		13.7	%		12.0	%		8.1	%		579.0	%		11.1	%

	Quarter Period and Year to Date
	2022
(In thousands)	Retail			Packaging			Construction			All Other			Corporate			Total
Net earnings	$	54,246		$	62,228		$	59,903		$	10,611		$	6,143		$	193,131
Interest and other		23			512			—			854			3,521			4,910
Income taxes		17,128			19,651			18,915			3,350			1,940			60,984
Expenses associated with share-based compensation arrangements		1,221			1,408			1,464			224			2,614			6,931
Net loss (gain) on disposition and impairment of assets		305			(65	)		(11	)		10			(545	)		(306	)
Depreciation expense		4,436			6,807			3,434			572			6,593			21,842
Amortization of intangibles		883			1,715			864			1,082			128			4,672
Adjusted EBITDA	$	78,242		$	92,256		$	84,569		$	16,703		$	20,394		$	292,164

Adjusted EBITDA as a Percentage of Net Sales		7.9	%		15.1	%		10.8	%		17.5	%		762.7	%		11.7	%

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
MARCH 2023/2022

(In thousands)
ASSETS		2023		2022	LIABILITIES AND EQUITY		2023		2022

CURRENT ASSETS					CURRENT LIABILITIES
Cash and cash equivalents	$	423,299	$	73,783	Cash Overdraft	$	—	$	61,711
Restricted cash		761		729	Accounts payable		277,989		425,956
Investments		37,534		35,465	Accrued liabilities and other		249,350		372,640
Accounts receivable		809,389		1,095,362	Current portion of debt		3,020		42,895
Inventories		960,338		1,230,351
Other current assets		35,692		36,727

TOTAL CURRENT ASSETS		2,267,013		2,472,417	TOTAL CURRENT LIABILITIES		530,359		903,202

OTHER ASSETS		242,541		155,438	LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS		275,002		379,015
INTANGIBLE ASSETS, NET		487,080		445,232	OTHER LIABILITIES		178,986		173,577

					TEMPORARY EQUITY		6,801		—

PROPERTY, PLANT AND EQUIPMENT, NET		700,155		600,879	SHAREHOLDERS' EQUITY		2,705,641		2,218,172


TOTAL ASSETS	$	3,696,789	$	3,673,966	TOTAL LIABILITIES AND EQUITY	$	3,696,789	$	3,673,966

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 2023/2022

(In thousands)	2023			2022
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net earnings	$	125,578		$	193,131
Adjustments to reconcile net earnings to net cash used in operating activities:

Depreciation		25,774			21,842
Amortization of intangibles		5,009			4,672
Expense associated with share-based and grant compensation arrangements		9,637			6,931
Deferred income taxes (credit)		(242	)		101
Unrealized (gain) loss on investment and other		(149	)		1,601
Equity in loss of investee		588			515
Net gain on sale and disposition of assets		(164	)		(306	)
Changes in:
Accounts receivable		(191,064	)		(352,928	)
Inventories		14,674			(258,019	)
Accounts payable and cash overdraft		68,388			143,895
Accrued liabilities and other		(95,105	)		(6,466	)
NET CASH USED IN OPERATING ACTIVITIES		(37,076	)		(245,031	)

CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property, plant, and equipment		(38,166	)		(32,072	)
Proceeds from sale of property, plant and equipment		319			1,207
Acquisitions, net of cash received and purchase of equity method investment		—			(24,571	)
Purchases of investments		(11,709	)		(6,030	)
Proceeds from sale of investments		8,849			4,725
Other		(1,151	)		(2,995	)
NET CASH USED IN INVESTING ACTIVITIES		(41,858	)		(59,736	)

CASH FLOWS (USED IN) FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities		4,437			242,950
Repayments under revolving credit facilities		(4,518	)		(141,438	)
Repayments of debt		(29	)		(199	)
Contingent consideration payments and other		(6,179	)		(551	)
Proceeds from issuance of common stock		685			663
Dividends paid to shareholders		(15,642	)		(12,541	)
Distributions to noncontrolling interest		(4,859	)		(2,053	)
Repurchase of common stock		(33,288	)		(501	)
Other		25			—
NET CASH (USED IN) FROM FINANCING ACTIVITIES		(59,368	)		86,330

Effect of exchange rate changes on cash		2,739			1,726
NET CHANGE IN CASH AND CASH EQUIVALENTS		(135,563	)		(216,711	)

ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		559,623			291,223

ALL CASH AND CASH EQUIVALENTS, END OF PERIOD	$	424,060		$	74,512

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	559,397		$	286,662
Restricted cash, beginning of period		226			4,561
All cash and cash equivalents, beginning of period	$	559,623		$	291,223

Cash and cash equivalents, end of period	$	423,299		$	73,783
Restricted cash, end of period		761			729
All cash and cash equivalents, end of period	$	424,060		$	74,512

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