GRAND RAPIDS, Mich., Oct. 20, 2022 (GLOBE NEWSWIRE) -- UFP Industries, Inc. (NASDAQ:UFPI) today announced record net sales of $2.3 billion and net earnings attributable to controlling interests of $167 million for the third quarter of 2022. The company also reported record earnings per diluted share of $2.66, a 37 percent increase over the third quarter of 2021.

"UFP's ability to deliver record-setting performance in a challenging economic environment is a direct result of the efforts of our hard-working teammates and a balanced business model that minimizes risk by operating in diverse but complementary markets," said CEO Matthew J. Missad. "Our market-focused organizational structure helps us to better address customer needs, and our increased commitment to innovation and new, value-added products continues to improve our operating results and set us apart from competitors."

Third Quarter 2022 Highlights (comparisons on a year-over-year basis):

Net sales of $2.3 billion increased 11 percent due to a 6 percent increase in prices and a 5 percent increase in unit sales, including a 2 percent increase in unit sales from acquisitions.
Earnings from operations of $237 million increased 41 percent. In the third quarter of 2021, the company recognized a gain on the sale of real estate of $9 million.
SG&A increased $45 million or 26 percent. SG&A as a percentage of gross profit fell from 52 percent to 48 percent.
New product sales of $178 million increased 38 percent. This excludes new products that were sunset at the end of 2021. New product sales leaders included Deckorators mineral-based composite decking and Strip Pak mixed-material packaging solutions.
The percentage of total sales that are value-added increased to 66 percent from 64 percent.
Adjusted EBITDA of $274 million increased 46 percent, and adjusted EBITDA margin improved by 280 basis points to 11.8 percent. Acquisitions completed during 2022 contributed $7.3 million to adjusted EBITDA.

By business segment, the company reported the following third quarter 2022 results (all quarterly numbers):

UFP Retail Solutions

$845 million in net sales, up 21 percent over the third quarter of 2021 due to a 15 percent increase in selling prices and a 6 percent increase in unit sales, including a 3 percent increase in unit sales from acquisitions. Unit growth was driven by increases in the company's pressure-treating operations (Sunbelt Forest Products and ProWood), Deckorators and UFP-Edge. Unit sales growth for the company's pressure-treating operations benefited from favorable year-over-year comparisons, as orders slowed in the third quarter of 2021 when retailers focused on reducing inventory.

Gross profit for UFP Retail Solutions rose to $77 million, a 615 percent increase over the third quarter of 2021, when rapidly falling lumber prices reduced margins for variable-priced products such as pressure-treated wood. Gross profit margin rose to 9.2 percent in 2022 from 1.6 percent in 2021.

Retail sales accounted for 38 percent of the company's sales year to date. When evaluating future demand for the segment, the company analyzes data such as the same-store sales growth of national home improvement retailers and forecasts of remodeling activity.

UFP Industrial

$585 million in net sales, up 2 percent from the third quarter of 2021 due to a 3 percent increase in unit sales from acquisitions, a 1 percent increase in selling prices, and a 2 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 and being selective in taking on new business. New product sales increased 52 percent to $64 million, and the segment's percentage of value-added sales increased to 74 percent from 69 percent in 2021.

Gross profit rose 14 percent to $144 million, and gross profit margin rose 250 basis points, reflecting the company's ability to pass on the impact of higher operating costs, as well as the successful implementation of value-based selling initiatives.

UFP Industrial sales accounted for 24 percent of the company's sales year to date. When evaluating future demand, the company considers a number of metrics, including the Purchasing Managers Index (PMI), durable goods manufacturing, and U.S. real GDP.

UFP Construction

$777 million in net sales, up 8 percent over the third quarter of 2021, due to an 8 percent increase in organic unit sales growth. Unit sales growth was driven by the Factory Built, Commercial and Concrete Forming Services business units. Gross profit increased $46 million or 30 percent to $200 million in the third quarter, led by Site Built and Commercial.

The company's site-built residential customers have accounted for approximately 14 percent of total company sales year to date. Approximately one-third of site-built customers are multifamily builders. More than 75 percent of the company's site-built residential housing sales are in areas such as Texas and the Mid-Atlantic, Southeast and Mountain West regions, which have experienced significant population growth through migration from other states and are forecasted to continue to grow in the long term. The company's factory-built customers have accounted for 13 percent of total company sales year to date. This business, along with the company's multifamily business, could benefit from higher interest rates as buyers seek more affordable housing alternatives. As a result of these factors, we believe these customers are better insulated from downturns in the housing market.

UFP Industries maintains a strong balance sheet with nearly $1.5 billion of liquidity as of September 24, 2022, consisting of $456 million of surplus cash, plus availability under its revolving credit facility and shelf agreements with lenders. The company's diversified and return-focused 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. The company's capital expenditures during the first nine months of 2022 totaled $115 million. Longer lead times required for most equipment and rolling stock may cause the company to fall short of its 2022 expenditures target.
In February 2022, our Board of Directors authorized an increase in the company's share repurchase program of up to 2.6 million shares. Through September 24, 2022, the company has purchased approximately 1.2 million shares at an average price of $77.06. The company has issued 911,000 shares in 2022 for share-based compensation programs at an average issue price of $82.69 per share.
On October 19, 2022, the Board approved a quarterly dividend payment of $0.25 per share, payable on December 15, 2022, to shareholders of record on December 1, 2022. This dividend is 67 percent higher than the dividend of $0.15 per share paid on December 15, 2021.
The company continues to seek opportunities to acquire companies that represent a strong strategic fit and allow it to drive new growth and margin improvements, enhance its capabilities, and create more incremental value for its customers and shareholders.

OUTLOOK

The following outlook remains largely unchanged from the guidance provided in the second quarter 2022 earnings release.

We expect our balanced business model and operational improvements will continue to help us navigate new external challenges, including rising interest rates and historically high inflation. In the near term, we continue to expect more normalized demand in our largest segment, UFP Retail Solutions. For UFP Industrial, we continue to monitor business activity and the key economic indicators that drive this segment with many of those metrics remaining mixed. Pricing remains healthy as we pass through inflationary costs and benefit from our focus on value-added products. For UFP Construction, we see continued activity in commercial and infrastructure end markets and expect our exposure to a projected softening in the housing market to be somewhat offset by favorable demographic trends in the markets we serve and our participation in more affordable housing and the multifamily market. Our diversified business and strong track record of executing our strategy gives us confidence that we can continue to successfully navigate various market environments while delivering returns to shareholders.

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 Thursday, October 20, 2022. The call will be hosted by 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 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. 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 AND NINE MONTHS ENDED

SEPTEMBER 2022/2021

	Quarter Period												Year to Date
(In thousands, except per share data)	2022						2021						2022						2021
NET SALES	$	2,322,855		100.0		%	$	2,093,784		100.0		%	$	7,713,042		100.0		%	$	6,619,329		100.0		%

COST OF GOODS SOLD		1,872,679		80.6				1,766,229		84.4				6,281,051		81.4				5,583,926		84.4

GROSS PROFIT		450,176		19.4				327,555		15.6				1,431,991		18.6				1,035,403		15.6

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		214,327		9.2				169,467		8.1				649,015		8.4				504,104		7.6
OTHER (GAINS) LOSSES, NET		(1,195	)	(0.1	)			(10,037	)	(0.5	)			1,341		—				(11,248	)	(0.2	)

EARNINGS FROM OPERATIONS		237,044		10.2				168,125		8.0				781,635		10.1				542,547		8.2

INTEREST AND OTHER EXPENSE, NET		6,382		0.3				4,750		0.2				19,858		0.3				9,280		0.1

EARNINGS BEFORE INCOME TAXES		230,662		9.9				163,375		7.8				761,777		9.9				533,267		8.1

INCOME TAXES		58,561		2.5				37,628		1.8				188,692		2.4				127,909		1.9

NET EARNINGS		172,101		7.4				125,747		6.0				573,085		7.4				405,358		6.1

LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(4,860	)	(0.2	)			(4,706	)	(0.2	)			(13,023	)	(0.2	)			(7,624	)	(0.1	)

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST	$	167,241		7.2			$	121,041		5.8			$	560,062		7.3			$	397,734		6.0

EARNINGS PER SHARE - BASIC	$	2.68					$	1.94					$	8.93					$	6.40

EARNINGS PER SHARE - DILUTED	$	2.66					$	1.94					$	8.89					$	6.38

COMPREHENSIVE INCOME	$	167,624					$	123,723					$	567,409					$	403,858

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		(4,273	)					(4,496	)					(13,290	)					(7,608	)

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$	163,351					$	119,227					$	554,119					$	396,250

SUPPLEMENTAL DATA
(In thousands)	Quarter Period										Year to Date
Segment Classification	2022					2021			% change		2022					2021			% change
Retail	$	845,304				$	696,201		21.4	%	$	2,959,976				$	2,714,440		9.0	%
Industrial		584,808					573,234		2.0	%		1,872,510					1,633,289		14.6	%
Construction		777,126					722,872		7.5	%		2,538,973					2,021,106		25.6	%
All Other		115,617					101,477		13.9	%		341,583					250,494		36.4	%
Total Net Sales	$	2,322,855				$	2,093,784		10.9	%	$	7,713,042				$	6,619,329		16.5	%

	2022			% of Sales		2021			% of Sales		2022			% of Sales		2021			% of Sales
SG&A	$	214,327		9.2	%	$	169,467		8.1	%	$	649,015		8.4	%	$	504,104		7.6	%
SG&A as a Percentage of Gross Profit		47.6	%				51.7	%				45.3	%				48.7	%

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS BY SEGMENT (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 2022/2021

	Quarter Period
	2022
(In thousands)	Retail		Industrial		Construction			All Other			Corporate			Total
NET SALES	$	845,304	$	584,808	$	777,126		$	112,203		$	3,414		$	2,322,855
COST OF GOODS SOLD		767,841		440,975		577,552			82,740			3,571			1,872,679
GROSS PROFIT		77,463		143,833		199,574			29,463			(157	)		450,176
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		48,435		66,521		89,455			16,752			(6,836	)		214,327
OTHER		96		14		(265	)		(994	)		(46	)		(1,195	)
EARNINGS FROM OPERATIONS	$	28,932	$	77,298	$	110,384		$	13,705		$	6,725		$	237,044

	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

	Year to Date
	2022
(In thousands)	Retail		Industrial		Construction			All Other		Corporate			Total
NET SALES	$	2,959,976	$	1,872,510	$	2,538,973		$	332,186	$	9,397		$	7,713,042
COST OF GOODS SOLD		2,674,996		1,417,006		1,950,671			230,100		8,278			6,281,051
GROSS PROFIT		284,980		455,504		588,302			102,086		1,119			1,431,991
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		159,490		200,987		266,430			49,733		(27,625	)		649,015
OTHER		634		618		(162	)		1,085		(834	)		1,341
EARNINGS FROM OPERATIONS	$	124,856	$	253,899	$	322,034		$	51,268	$	29,578		$	781,635

	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

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

SEPTEMBER 2022/2021

(In thousands)
ASSETS		2022		2021	LIABILITIES AND EQUITY		2022		2021

CURRENT ASSETS					CURRENT LIABILITIES
Cash and cash equivalents	$	455,743	$	138,637	Cash Overdraft	$	4,174	$	10,812
Restricted cash		729		17,592	Accounts payable		327,459		292,933
Investments		33,113		33,723	Accrued liabilities and other		434,045		361,832
Accounts receivable		880,581		783,959	Current portion of debt		41,536		93
Inventories		1,009,358		900,665
Other current assets		71,420		48,174

TOTAL CURRENT ASSETS		2,450,944		1,922,750	TOTAL CURRENT LIABILITIES		807,214		665,670

OTHER ASSETS		150,826		144,904	LONG-TERM DEBT AND FINANCE LEASE OBLIGATIONS		275,417		310,119
INTANGIBLE ASSETS, NET		502,311		393,682	OTHER LIABILITIES		183,967		160,984

					TEMPORARY EQUITY		72,454		—

PROPERTY, PLANT AND EQUIPMENT, NET		703,161		552,911	SHAREHOLDERS' EQUITY		2,468,190		1,877,474


TOTAL ASSETS	$	3,807,242	$	3,014,247	TOTAL LIABILITIES AND EQUITY	$	3,807,242	$	3,014,247

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE NINE MONTHS ENDED

SEPTEMBER 2022/2021

(In thousands)		2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	573,085		$	405,358
Adjustments to reconcile net earnings to net cash from operating activities:

Depreciation		68,881			61,741
Amortization of intangibles		13,448			9,369
Expense associated with share-based and grant compensation arrangements		19,979			8,444
Deferred income taxes (credit)		(269	)		(594	)
Unrealized loss (gain) on investment and other		8,453			(1,756	)
Equity in earnings of investee		2,740			2,411
Net loss (gain) on sale and disposition of assets		352			(10,482	)
Changes in:
Accounts receivable		(138,200	)		(141,088	)
Inventories		(35,956	)		(204,144	)
Accounts payable and cash overdraft		(11,239	)		53,437
Accrued liabilities and other		33,871			99,067
NET CASH FROM OPERATING ACTIVITIES		535,145			281,763

CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property, plant, and equipment		(114,497	)		(110,092	)
Proceeds from sale of property, plant and equipment		2,303			26,597
Acquisitions and purchase of noncontrolling interest, net of cash received		(101,030	)		(433,275	)
Purchases of investments		(16,925	)		(17,866	)
Proceeds from sale of investments		10,036			9,857
Other		2,010			(3,478	)
NET CASH USED IN INVESTING ACTIVITIES		(218,103	)		(528,257	)

CASH FLOWS USED IN FINANCING ACTIVITIES:
Borrowings under revolving credit facilities		570,700			886,966
Repayments under revolving credit facilities		(571,075	)		(888,335	)
Repayments of debt		(1,957	)		—
Contingent consideration payments and other		(2,564	)		(2,664	)
Proceeds from issuance of common stock		2,110			1,519
Dividends paid to shareholders		(43,420	)		(27,831	)
Distributions to noncontrolling interest		(12,024	)		(2,914	)
Repurchase of common stock		(93,215	)		—
Other		(209	)		(334	)
NET CASH USED IN FINANCING ACTIVITIES		(151,654	)		(33,593	)

Effect of exchange rate changes on cash		(139	)		(292	)
NET CHANGE IN CASH AND CASH EQUIVALENTS		165,249			(280,379	)

ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		291,223			436,608

ALL CASH AND CASH EQUIVALENTS, END OF PERIOD	$	456,472		$	156,229

Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents, beginning of period	$	286,662		$	436,507
Restricted cash, beginning of period		4,561			101
All cash and cash equivalents, beginning of period	$	291,223		$	436,608

Cash and cash equivalents, end of period	$	455,743		$	138,637
Restricted cash, end of period		729			17,592
All cash and cash equivalents, end of period	$	456,472		$	156,229

ADJUSTED EBITDA RECONCILIATION (UNAUDITED)

FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 2022/2021

	Quarter Period						Year to Date
(In thousands)	2022			2021			2022			2021
Net earnings	$	172,101		$	125,747		$	573,085		$	405,358
Interest expense		3,516			3,433			10,213			10,483
Interest and investment income		(614	)		(658	)		(1,548	)		(1,859	)
Income taxes		58,561			37,628			188,692			127,909
Expenses associated with share-based compensation arrangements		7,437			2,702			19,979			8,444
Net (gain) loss on disposition and impairment of assets		(414	)		(8,905	)		352			(10,482	)
Equity in earnings of investee		1,208			946			2,740			2,411
Unrealized loss (gain) on investments		2,272			1,028			8,453			(1,756	)
Depreciation expense		24,847			23,399			68,881			61,741
Amortization of intangibles		4,708			2,176			13,448			9,369
Adjusted EBITDA	$	273,622		$	187,496		$	884,295		$	611,618

Adjusted EBITDA as a Percentage of Net Sales		11.8	%		9.0	%		11.5	%		9.2	%

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

Dick Gauthier
VP, Communications and Investor Relations
(616) 365-1555

UFP Industries Reports Record Third Quarter Results