UFP Industries Reports Record Net Earnings for Second Quarter

Rhea-AI Summary

UFP Industries, Inc. (Nasdaq: UFPI) reported second-quarter 2020 net earnings of $66.5 million and record EPS of $1.08, up 23% year-over-year. Retail sales surged 26% to $609.2 million, driven by home improvement demand amid the pandemic. In contrast, Industrial and Construction segments faced declines, with sales down 23% and 13% respectively. The company maintains liquidity of over $562 million and announced a 25% dividend increase, reflecting strong capital management. Operating cash flow more than doubled to $147.2 million.

Positive

• Record net earnings of $66.5 million, a 22% increase.
• Record EPS of $1.08 per diluted share, up 23% year-over-year.
• Retail sales increased 26% ($609.2 million) driven by home improvement demand.
• Cash reserves exceed debt by $37 million, with $562 million available liquidity.
• Quarterly dividend payment increased by 25%, reflecting strong capital allocation.

Negative

• Industrial segment sales down 23% year-over-year.
• Construction segment sales down 13% year-over-year.
• Unit sales decreased significantly across all construction business units.

GRAND RAPIDS, Mich., July 22, 2020 (GLOBE NEWSWIRE) -- UFP Industries, Inc. (Nasdaq: UFPI) today announced record net earnings attributable to controlling interest of $66.5 million for the second quarter of 2020, as well as record EPS of $1.08 per diluted share, a 23 percent increase over the same period of 2019.

“I am very grateful that our operations were deemed essential and we were able to continue to serve customers during the second quarter,” said CEO Matthew J. Missad. “I am also grateful to our customers, many of whom continued to operate by finding new ways to serve the public and keep their employees safe. Their extraordinary efforts contributed to the success we experienced in the second quarter.

“While virus-related shutdowns negatively impacted our industrial and construction segments in ways we expected, the increase in home improvement activity resulting from stay-at-home orders benefited our retail segment. Conditions improved as we progressed through the second quarter, as demand in our retail segment accelerated sharply while the headwinds in our industrial and construction segments eased. Overall, our results once again validate our balanced business model and diverse product portfolio, which combine to mitigate the risk of a decline in a single market.

“We experienced much greater than expected demand for our home improvement products, and I give credit to our managers, treating and production teams, and buyers who worked tirelessly to fill customer orders and continue to do so. Our decentralized, entrepreneurial model empowers our local leaders with the decision-making authority they need to respond quickly to market changes, and our experienced team answered the call again, just as they have during other challenging times. They rapidly adapted to the changes in the markets they serve and made the changes necessary to keep our employees safe.”

The company continues to execute strategies to grow and enhance its value-added service and product offering, including:

• The company recently acquired T&R Lumber, which manufactures and distributes a range of products used primarily by nurseries, including tree boxes, plastic containers, stakes and trellises.
• New product sales grew 6 percent, driven by retail sales, which grew nearly 16 percent
  

UFP Industries maintains a disciplined and balanced approach to capital allocation with ample availability for growth and to return to shareholders. The company’s long-term credit facilities and cash currently provide over $562 million in available liquidity, and it continues to maintain a strong pipeline of acquisition targets.  Additionally, on July 22, 2020, the company’s board approved a quarterly dividend payment of 12.5 cents a share, a prorated 25 percent increase over the dividends paid in 2019. The dividend is payable on September 15, 2020, to shareholders of record on September 1, 2020. During the first quarter, the company repurchased 750,000 shares of its common stock at an average price of $38.62; it is authorized to repurchase an additional 1.1 million shares.

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

• Earnings from operations of $92.4 million were up 24 percent, and net earnings attributable to controlling interest of $66.5 million were up 22 percent
• EBITDA of $110.4 million increased by 22 percent
• Net sales of $1.24 billion; higher lumber prices contributed 3 percent in net sales which was substantially offset by a 3 percent decrease in units sold
• Operating cash flow more than doubled to $147.2 million for the first six months of 2020, up 107 percent over the same period of 2019
• Cash reserves exceed debt by almost $37 million

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

UFP Retail

• $609.2 million in net sales, up 26 percent over the second quarter of 2019. Retail unit sales increased 22 percent, with higher selling prices increasing sales by 4 percent. The following business units drove unit sales growth: Home and Décor (up 72 percent); ProWood (up 27 percent); Fence, Lawn and Garden (up 23 percent); and UFP-Edge (up 9 percent). Retail sales growth accelerated as the second quarter progressed, with year-over-year sales increasing from 3 percent higher in April to 47 percent higher in June.  

UFP Industrial

• $224.4 million in net sales, down 23 percent from the second quarter of 2019. Unit sales decreased 27 percent, while higher selling prices contributed a 4 percent increase in gross sales. Industrial sales showed steady improvement as the second quarter progressed, with year-over-year sales improving from 32 percent lower in April to 14 percent lower in June.

UFP Construction

• $359.2 million in net sales, down 13 percent from the second quarter of 2019, due to a 16 percent decrease in unit sales and a 3 percent increase in selling prices. Unit sales fell in all business units: Concrete Forming (down 5 percent), Site Built (down 15 percent), Commercial (down 19 percent), and Factory Built (down 20 percent). Construction sales showed steady improvement as the second quarter progressed, with year-over-year sales improving from 19 percent lower in April to 6 percent lower in June.

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, July 23, 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 6095819. 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 July 25, 2020, 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 robust 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.

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CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 2020/2019
		Quarter Period				Year to Date
(In thousands, except per share data)			2020						2019						2020						2019
40%; width:40%; min-width:40%;">NET SALES	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">1,242,001	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	4%; width:4%; min-width:4%;">100	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">1,239,817	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	4%; width:4%; min-width:4%;">100	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">2,274,063	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	4%; width:4%; min-width:4%;">100	1%; width:1%; min-width:1%;">%	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	6%; width:6%; min-width:6%;">2,254,943	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	4%; width:4%; min-width:4%;">100.0	1%; width:1%; min-width:1%;">%
COST OF GOODS SOLD			1,037,070			83.5				1,053,091			84.9				1,901,896			83.6				1,913,950			84.9
GROSS PROFIT			204,931			16.5				186,726			15.1				372,167			16.4				340,993			15.1
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES			113,781			9.2				112,891			9.1				223,121			9.8				218,207			9.7
OTHER			(1,209	)		(0.1	)			(402	)		-				(1,944	)		(0.1	)			103			-
EARNINGS FROM OPERATIONS			92,359			7.4				74,237			6.0				150,990			6.6				122,683			5.4
OTHER EXPENSE, NET			(992	)		(0.1	)			1,725			0.1				3,747			0.2				2,592			0.1
EARNINGS BEFORE INCOME TAXES			93,351			7.5				72,512			5.8				147,243			6.5				120,091			5.3
INCOME TAXES			23,657			1.9				17,367			1.4				36,979			1.6				28,944			1.3
NET EARNINGS			69,694			5.6				55,145			4.4				110,264			4.8				91,147			4.0
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST			(3,231	)		(0.3	)			(630	)		(0.1	)			(3,642	)		(0.2	)			(1,092	)		-
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST		$	66,463			5.4			$	54,515			4.4			$	106,622			4.7			$	90,055			4.0
EARNINGS PER SHARE - BASIC		$	1.08					$	0.88					$	1.73					$	1.46
EARNINGS PER SHARE - DILUTED		$	1.08					$	0.88					$	1.73					$	1.46
SUPPLEMENTAL SALES AND SG&A DATA
		Quarter Period		Year to Date
Segment Classification			2020						2019			%			2020						2019			%
Retail		$	609,190					$	482,090			26.4	%		$	961,351					$	815,190			17.9	%
Industrial			224,379						291,245			-23.0	%			480,922						566,004			-15.0	%
Construction			359,170						414,825			-13.4	%			740,325						779,962			-5.1	%
All Other			49,411						52,669			-6.2	%			91,804						94,779			-3.1	%
Corporate			(149	)					(1,012	)		-85.3	%			(339	)					(992	)		-65.8	%
Total Net Sales		$	1,242,001					$	1,239,817			0.2	%		$	2,274,063					$	2,254,943			0.8	%
			2020			% of Sales			2019			% of Sales			2020			% of Sales			2019			% of Sales
SG&A, Excluding Bonus Expense		$	85,884			6.9			$	94,620			7.6			$	181,232			8.0			$	187,554			8.3
Bonus Expense			27,897			2.2				18,271			1.5				41,889			1.8				30,653			1.4
Total SG&A		$	113,781			9.2			$	112,891			9.1			$	223,121			9.8			$	218,207			9.7
SG&A, Excluding Bonus Expense, as a Percentage of Gross Profit			41.9	%					50.7	%					48.7	%					55.0	%

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CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
JUNE 2020/2019
(In thousands)
ASSETS			2020			2019		LIABILITIES AND EQUITY			2020			2019
CURRENT ASSETS						CURRENT LIABILITIES
1%; width:1%; min-width:1%;">	32%; width:32%; min-width:32%;">Cash and cash equivalents	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">200,546	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">20,497	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	25%; width:25%; min-width:25%;">Cash overdraft	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">-	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">$	8%; width:8%; min-width:8%;">24,972
	Restricted cash			724			1,024			Accounts payable			199,338			189,649
	Investments			19,195			16,776			Accrued liabilities			233,088			164,812
	Accounts receivable			522,930			483,263			Current portion of debt			2,786			173
	Inventories			459,424			528,680
	Other current assets			33,786			46,868
TOTAL CURRENT ASSETS			1,236,605			1,097,108		TOTAL CURRENT LIABILITIES			435,212			379,606
OTHER ASSETS			120,464			111,175		LONG-TERM DEBT AND
INTANGIBLE ASSETS, NET			299,963			273,804			CAPITAL LEASE OBLIGATIONS			161,057			187,471
PROPERTY, PLANT						OTHER LIABILITIES			123,014			100,349
	AND EQUIPMENT, NET			401,576			368,572		EQUITY			1,339,325			1,183,233
TOTAL ASSETS		$	2,058,608		$	1,850,659		TOTAL LIABILITIES AND EQUITY		$	2,058,608		$	1,850,659

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CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED
JUNE 2020/2019
72%; width:72%; min-width:72%;">(In thousands)	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	10%; width:10%; min-width:10%;">2020	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	2%; width:2%; min-width:2%;">	10%; width:10%; min-width:10%;">2019	1%; width:1%; min-width:1%;">
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings			$	110,264			$	91,147
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation				31,330				29,200
Amortization of intangibles				3,129				2,946
Expense associated with share-based and grant compensation arrangements			2,303				2,209
Deferred income taxes (credit)				290				(536	)
Unrealized loss (gain) on investments and other				473				(1,518	)
Net gain on disposition and impairment of assets				(271	)			(321	)
Changes in:
Accounts receivable				(155,554	)			(139,468	)
Inventories				25,983				28,008
Accounts payable and cash overdraft				57,017				49,947
Accrued liabilities and other				72,246				9,334
NET CASH FROM OPERATING ACTIVITIES			147,210				70,948
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant, and equipment				(46,730	)			(42,477	)
Proceeds from sale of property, plant and equipment				644				977
Acquisitions and purchase of noncontrolling interest, net of cash received			(18,689	)			(5,034	)
Purchases of investments				(20,094	)			(4,859	)
Proceeds from sale of investments				18,339				3,667
Other				318				(10	)
NET CASH USED IN INVESTING ACTIVITIES			(66,212	)			(47,736	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities				6,759				393,434
Repayments under revolving credit facilities				(6,498	)			(408,027	)
Repayments of debt				(3,077	)			(3,061	)
Proceeds from issuance of common stock				697				542
Dividends paid to shareholders				(15,374	)			(12,271	)
Distributions to noncontrolling interest				(299	)			(900	)
Repurchase of common stock				(29,212	)			-
Other				32				28
NET CASH FROM (USED IN) FINANCING ACTIVITIES			(46,972	)			(30,255	)
Effect of exchange rate changes on cash				(1,422	)			366
NET CHANGE IN CASH AND CASH EQUIVALENTS			32,604				(6,677	)
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			168,666				28,198
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD		$	201,270			$	21,521
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			$	200,546			$	20,497
Restricted cash, end of period				724				1,024
All cash and cash equivalents, end of period			$	201,270			$	21,521

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EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND SIX MONTHS ENDED
JUNE 2020/2019
		Quarter Period	Year to Date
(In thousands)		2020	2019	2020	2019
59%; width:59%; min-width:59%;">Net earnings	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">69,694	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">55,145	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">110,264	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">91,147	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">
Interest expense		1,898			2,407			3,805			4,867
Interest and investment income		(189	)		(512	)		(530	)		(757	)
Income taxes		23,657			17,367			36,979			28,944
Expense associated with share-based compensation arrangements		859			922			2,303			2,209
Net (gain) loss on disposition and impairment of assets		14			(199	)		(271	)		(321	)
Unrealized (gain) loss on investments		(2,701	)		(170	)		472			(1,518	)
Depreciation expense		15,613			14,725			31,330			29,200
Amortization of intangibles		1,558			1,094			3,129			2,946
EBITDA		110,403			90,779			187,481			156,717

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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 - JUNE 2020/2019
	Quarter Period
	Actual	Sales Adjusted to Last Year's Selling Prices	Actual
69%; width:69%; min-width:69%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">2020	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	8%; width:8%; min-width:8%;">2020	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">	6%; width:6%; min-width:6%;">2019	1%; width:1%; min-width:1%;">	1%; width:1%; min-width:1%;">
NET SALES		100.0		%		100.0		%		100.0		%
COST OF GOODS SOLD		83.5				83.0				84.9
GROSS PROFIT		16.5				17.0				15.1
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		9.2				9.5				9.1
OTHER		(0.1	)			(0.1	)			-
EARNINGS FROM OPERATIONS		7.4				7.7				6.0
OTHER EXPENSE, NET		(0.1	)			(0.1	)			0.1
EARNINGS BEFORE INCOME TAXES		7.5				7.8				5.8
INCOME TAXES		1.9				2.0				1.4
NET EARNINGS		5.6				5.8				4.4
LESS NET EARNINGS ATTRIBUTABLE TO
NONCONTROLLING INTEREST		(0.3	)			(0.3	)			(0.1	)
NET EARNINGS ATTRIBUTABLE TO
CONTROLLING INTEREST		5.4		%		5.5		%		4.4		%
Note: Actual percentages are calculated and may not sum to total due to rounding.
2020 NET SALES	$	1,242,001
2020 SELL PRICE INCREASE		(3.00	)	%
INCREASE IN 2020 NET SALES DUE TO SELL PRICE INCREASE	$	(37,260	)
ACTUAL 2020 NET SALES		1,242,001
ADJUSTED 2020 NET SALES	$	1,204,741
ACTUAL 2020 COST OF GOODS SOLD	$	1,037,070
PLUS DIFFERENCE IN NET SALES (ABOVE)		(37,260	)
ADJUSTED 2020 COST OF GOODS SOLD	$	999,810

 

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

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

 

FAQ

What are UFP Industries' second quarter 2020 earnings results?

UFP Industries reported net earnings of $66.5 million for Q2 2020, representing a 22% year-over-year increase.

How did UFP Industries' retail sales perform in Q2 2020?

Retail sales increased by 26% to $609.2 million in Q2 2020, driven by heightened demand for home improvement products.

What is the dividend announcement for UFP Industries in July 2020?

UFP Industries announced a quarterly dividend of 12.5 cents per share, a 25% increase over the previous year.

What challenges did UFP Industries face in Q2 2020?

UFP Industries experienced a 23% decline in industrial segment sales and a 13% decline in construction segment sales.

What is the EPS for UFP Industries for the second quarter of 2020?

The EPS for UFP Industries for Q2 2020 was $1.08 per diluted share, marking a 23% increase from the previous year.