News Releases

UFP Industries Reports Record Earnings for Fourth Quarter and Year

February 24, 2021 at 4:05 PM EST
Value-added products and operational efficiencies help drive performance

GRAND RAPIDS, Mich., Feb. 24, 2021 (GLOBE NEWSWIRE) -- UFP Industries, Inc. (Nasdaq: UFPI) today announced record net sales and net earnings for the fourth quarter and fiscal year 2020. The company, while surpassing the $5 billion mark in annual net sales for the first time, also reported record EPS of $4.00 per diluted share for fiscal 2020, a 37 percent increase over the previous year. During the fourth quarter of fiscal 2020, net sales were $1.39 billion, a 40 percent increase over the fourth quarter of 2019, while EPS was $1.02 per diluted share, a 67 percent increase over the fourth quarter of 2019.

“Despite the disruptions that marked 2020, our reorganized structure allowed our employees to remain focused on bringing new value-added products to market faster and using capital more efficiently, while supporting more rapid growth at a lower incremental cost,” said CEO Matthew J. Missad. “I am most impressed by the perseverance of our hourly production employees who safely served our customers. Their commitment to our company enabled us to reward our hourly employees with more than $25 million in bonuses and additional benefits for 2020. I want to express my deepest gratitude for their dedication.”

New product sales for the fourth quarter increased 46 percent over the same period of 2019, led by the company’s new Deckorators Voyage decking line and Dimensions project panels business. These improvements in sales mix contributed to an increase in the company’s gross profit per unit, as gross profit increased by 19 percent, exceeding the company’s 15 percent increase in unit sales growth. Additionally, the company’s SG&A expense as a percentage of gross profit improved to 46 percent compared to 67 percent in 2019, due to its continued efforts to focus on leveraging fixed costs and creating efficiencies as it grows organically and through acquisitions. Certain expenses, such as travel, decreased due to the impact of the pandemic and the company’s increased use of equity awards as part of its annual incentive compensation program.

“I’m pleased to see our strategies and execution are continuing to drive improvements in profit per unit, especially in a quarter like this when lumber market volatility was a formidable challenge,” said Missad. “As usual, our people were up to the challenge.”

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

  • Net sales of $1.39 billion increased 40 percent due to a 15 percent increase in unit sales and 25 percent increase in lumber prices
  • Earnings from operations of $88.2 million increased 70 percent despite $12 million in asset impairment charges and other costs taken during the quarter (detailed in the Business Segment section below). The company’s use of share grants as part of its annual incentive program resulted in a $20 million decrease in bonus expense in the fourth quarter of 2020 compared to 2019. Excluding impairment charges and the decrease in bonus expense, earnings from operations increased 55 percent.
  • New product sales of $131.8 million increased 46 percent

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

  • Net sales of $5.15 billion increased 17 percent due to a unit sales increase of 6 percent and an increase in lumber prices of 11 percent
  • Earnings from operations of $345.8 million increased 41 percent
  • Adjusted EBITDA of $431.4 million increased 36 percent, exceeding the company’s unit sales increase of 6 percent
  • New product sales were $539 million, up 26 percent

UFP Industries maintains a strong balance sheet and had liquidity of approximately $485 million at the end of January 2021. As previously announced, the company was able to utilize its strong cash position to complete the $259 million acquisition of PalletOne and its wholly owned subsidiary, Sunbelt Forest Products (Sunbelt), at the beginning of fiscal 2021. PalletOne operates 17 pallet manufacturing facilities in the U.S. and expands UFP’s geographic reach, capacity and ability to grow sales of machine-built pallets. Sunbelt operates five pressure-treating facilities in the Southeastern U.S. The companies had combined 2020 sales of $698 million. In addition, on February 22, 2021, UFP announced an agreement for Sunbelt to purchase Spartanburg Forest Products and its affiliates, further expanding its pressure-treating capacity. Also in February 2021, the company increased its revolving long-term credit facility by $175 million to $550 million.

As a result of the company’s strong balance sheet and confidence in future earnings and cash flow, on January 28, 2021, UFP’s Board of Directors voted to increase its quarterly dividend by 20 percent to 15 cents a share, payable on March 15, 2021, to shareholders of record on March 1, 2021.

By business segment, the Company reported the following 2020 results:

UFP Retail Solutions

  • Fourth Quarter: $505.2 million in net sales, up 76 percent over the fourth quarter of 2019 due to a 38 percent increase in unit sales and a 38 percent increase in selling prices. All business units experienced double-digit unit sales increases: Deckorators (up 80 percent), Outdoor Essentials (up 64 percent), Home & Decor (up 38 percent), UFP Edge (up 27 percent), and ProWood (up 25 percent).
  • Full Year: $2.17 billion in net sales, up 45 percent from 2019, due to a 25 percent increase in unit sales and a 20 percent increase in selling prices. All business units experienced double-digit unit sales increases: Home & Decor (up 49 percent), Outdoor Essentials (up 28 percent), ProWood (up 25 percent), Deckorators (up 20 percent) and UFP Edge (up 14 percent). Total E-Commerce sales for the year, including sales in other business units, were $129 million, up 96 percent over 2019.

UFP Industrial

  • Fourth Quarter: $309.1 million in net sales, up 25 percent from the fourth quarter of 2019; unit sales increased 10 percent and selling prices increased 15 percent. Organic growth accounted for 6 percent of the unit sales growth; acquisitions accounted for 4 percent.
  • Full Year: $1.07 billion in net sales, down 1 percent from the previous year. Unit sales fell 6 percent due to pandemic-related shutdowns, while selling prices increased 5 percent. UFP Industrial’s sales improved throughout the year as pandemic-related restrictions eased, and the fourth quarter was a sales record for the segment.

UFP Construction

  • Fourth Quarter: $508.3 million in net sales, up 24 percent over the fourth quarter of 2019, due entirely to an increase in selling prices. Unit sales to residential and manufactured housing customers rose 16 percent and 11 percent, respectively. Unit sales to commercial customers fell 30 percent, with an organic unit sales decrease of 35 percent offset by a 5 percent unit sales increase from acquisitions.
  • Full Year: $1.70 billion in net sales, up 4 percent from the previous year due to a 10 percent increase in selling prices offset by a 6 percent decrease in unit sales. Unit sales to manufactured housing customers rose 2 percent for the year; unit sales to site built and commercial customers fell 2 percent and 23 percent, respectively.
  • Annual net sales in the Commercial Construction business unit declined by approximately $70 million in 2020 from 2019, and the unit reported an annual operating loss, exclusive of impairment charges, totaling $25 million in 2020. As a result, the company is consolidating production, eliminating less profitable products and services, and executing a plan to drive more efficiencies in the business unit. These actions and lower future demand expectations resulted in an impairment in the value of certain leased assets and goodwill associated with the business unit of approximately $15 million, which was recorded in the fourth quarter.

“Our Commercial Construction business unit was one of the hardest hit by the lockdowns related to the pandemic,” said Missad. “While this unit reacted quickly to provide a variety of protective structures and signage for COVID-related needs, many core commercial construction markets, such as hospitality, financial services, and branded retail markets, slowed dramatically. Market conditions necessitated that we take significant actions to align capacity with current demand, and as a result of our actions, we believe the business unit will return to profitability in 2021.”

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, February 24, 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 1799103. 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 February 26, 2021, at 855-859-2056, 404-537-3406 or 800-585-5367.

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.

 
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED
DECEMBER 2020/2019
                                     
                                   
    Quarter Period Year to Date
(In thousands, except per share data)      2020 2019 2020 2019
NET SALES   $ 1,393,708     100.0 % $ 998,041     100.0 % $ 5,153,998     100.0 % $ 4,416,009     100.0 %
                                     
COST OF GOODS SOLD     1,206,653      86.6     840,786     84.2     4,353,702     84.5     3,730,491     84.5  
                                   
GROSS PROFIT     187,055     13.4     157,255     15.8     800,296     15.5     685,518     15.5  
                                   
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES     86,826     6.2     104,764     10.5     444,596     8.6     439,047     9.9  
ASSET IMPAIRMENT CHARGES AND OTHER COSTS, NET (1)     11,995     0.9     735     0.1     9,874     0.2     1,565      
                                   
EARNINGS FROM OPERATIONS     88,234     6.3     51,756     5.2     345,826     6.7     244,906     5.5  
                                   
OTHER EXPENSE, NET     174         150         4,843     0.1     4,232     0.1  
                                   
EARNINGS BEFORE INCOME TAXES     88,060     6.3     51,606     5.2     340,983     6.6     240,674     5.5  
                                   
INCOME TAXES     23,303     1.7     12,930     1.3     87,101     1.7     58,270     1.3  
                                   
NET EARNINGS     64,757     4.6     38,676     3.9     253,882     4.9     182,404     4.1  
                                   
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST     (1,805 )   (0.1 )   (940 )   (0.1 )   (7,104 )   (0.1 )   (2,754 )   (0.1 )
                                   
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST   $ 62,952     4.5   $ 37,736     3.8   $ 246,778     4.8   $ 179,650     4.1  
                                   
EARNINGS PER SHARE - BASIC   $ 1.02       $ 0.61       $ 4.00       $ 2.91      
                                   
EARNINGS PER SHARE - DILUTED   $ 1.02       $ 0.61       $ 4.00       $ 2.91      
                                   
COMPREHENSIVE INCOME     74,754         39,545         259,849         183,917      
                                   
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST     (6,622 )       (1,383 )       (9,976 )       (3,218 )    
                                   
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST   $ 68,132       $ 38,162       $ 249,873       $ 180,699      
                                   
(1) Includes asset impairment charges totaling $15 million offset by a $4 million adjustment to decrease certain earnout liabilities, each recorded in the fourth quarter of 2020.
                                   


                                                     
SUPPLEMENTAL DATA                                                    
(In thousands)     Quarter Period     Year to Date
Segment Classification      2020
          2019   %      2020            2019   %
Retail     $ 505,249             $ 286,380     76.4 %     $ 2,167,122             $ 1,498,710     44.6 %
Industrial       309,071               247,965     24.6 %       1,072,117               1,085,636     -1.2 %
Construction       508,254               411,689     23.5 %       1,695,683               1,637,156     3.6 %
All Other       71,134               52,007     36.8 %       219,076               194,507     12.6 %
Total Net Sales     $ 1,393,708             $ 998,041     39.6 %     $ 5,153,998             $ 4,416,009     16.7 %
                                                     
      2020     % of
Sales
  2019   % of
Sales
    2020   % of
Sales
  2019   % of
Sales
SG&A     $ 86,826     6.2 %   $ 104,764     10.5 %     $ 444,596     8.6 %   $ 439,047     9.9 %
                                                     
SG&A as a Percentage of Gross Profit       46.4%             66.6 %           55.6 %             64.0 %    


   
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)  
DECEMBER 2020/2019  
                               
(In thousands)                              
ASSETS        2020        2019      LIABILITIES AND EQUITY        2020        2019  
                               
CURRENT ASSETS               CURRENT LIABILITIES              
Cash and cash equivalents   $ 436,507   $ 168,336   Accounts payable   $ 211,518   $ 142,479  
Restricted cash     101     330   Accrued liabilities     252,131     208,747  
Investments     24,308     18,527   Current portion of debt     100     2,816  
Accounts receivable     470,504     364,027                  
Inventories     567,294     486,874                  
Other current assets     39,648     54,978                  
                               
TOTAL CURRENT ASSETS     1,538,362     1,093,072   TOTAL CURRENT LIABILITIES     463,749     354,042  
                               
OTHER ASSETS     117,521     124,028                  
INTANGIBLE ASSETS, NET     331,846     285,203   LONG-TERM DEBT AND CAPITAL LEASE OBLIGATIONS     311,607     160,867  
                OTHER LIABILITIES     146,383     116,835  
PROPERTY, PLANT AND EQUIPMENT, NET     417,162     387,174   EQUITY     1,483,152     1,257,733  
                               
                               
TOTAL ASSETS   $ 2,404,891   $ 1,889,477   TOTAL LIABILITIES AND EQUITY   $ 2,404,891   $ 1,889,477  
                               


 
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED
DECEMBER 2020/2019
           
           
(In thousands)     2020     2019  
CASH FLOWS FROM OPERATING ACTIVITIES:          
Net earnings   $ 253,882   $ 182,404  
Adjustments to reconcile net earnings to net cash from operating activities:          
           
Depreciation     63,964     60,494  
Amortization of intangibles     8,716     6,325  
Expense associated with share-based and grant compensation arrangements     4,034     4,007  
Deferred income taxes     1,857     7,176  
Unrealized gain on investment and other     (2,076 )   (2,523 )
Net loss on disposition and impairment of assets     1,470     1,565  
Goodwill impairment     11,485      
Gain from reduction of estimated earnout liability     (4,134 )    
Changes in:          
Accounts receivable     (87,552 )   (16,872 )
Inventories     (76,022 )   73,120  
Accounts payable and cash overdraft     62,405     (24,132 )
Accrued liabilities and other     98,448     57,727  
NET CASH FROM OPERATING ACTIVITIES     336,477     349,291  
           
CASH FLOWS FROM INVESTING ACTIVITIES:          
Purchases of property, plant, and equipment     (89,182 )   (84,933 )
Proceeds from sale of property, plant and equipment     2,922     1,777  
Acquisitions and purchase of noncontrolling interest, net of cash received     (65,255 )   (39,122 )
Investment in life insurance contracts         (15,253 )
Purchases of investments     (28,054 )   (13,352 )
Proceeds from sale of investments     24,805     9,828  
Other     46     (982 )
NET CASH USED IN INVESTING ACTIVITIES     (154,718 )   (142,037 )
           
CASH FLOWS FROM FINANCING ACTIVITIES:          
Borrowings under revolving credit facilities     6,862     422,057  
Repayments under revolving credit facilities     (6,498 )   (460,537 )
Repayments of debt     (5,787 )   (3,136 )
Issuance of long-term debt     150,000      
Proceeds from issuance of common stock     1,395     1,093  
Dividends paid to shareholders     (30,669 )   (24,549 )
Distributions to noncontrolling interest     (932 )   (2,216 )
Repurchase of common stock     (29,212 )    
Other     62     20  
NET CASH FROM (USED IN) FINANCING ACTIVITIES     85,221     (67,268 )
           
Effect of exchange rate changes on cash     962     482  
NET CHANGE IN CASH AND CASH EQUIVALENTS     267,942     140,468  
           
ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD     168,666     28,198  
           
ALL CASH AND CASH EQUIVALENTS, END OF PERIOD   $ 436,608   $ 168,666  
           
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   $ 436,507   $ 168,336  
Restricted cash, end of period     101     330  
All cash and cash equivalents, end of period   $ 436,608   $ 168,666  
           


 
ADJUSTED EBITDA RECONCILIATION (UNAUDITED)
FOR THE THREE AND TWELVE MONTHS ENDED
DECEMBER 2020/2019
                       
                       
    Quarter Period Year to Date
(In thousands)   2020
  2019
2020 2019
Net earnings   $ 64,757     $ 38,676   $ 253,882     $ 182,404  
Interest expense     3,020       1,933     9,311       8,700  
Interest and investment income     (851 )     (871 )   (2,392 )     (1,945 )
Income taxes     23,303       12,930     87,101       58,270  
Expenses associated with share-based compensation arrangements     882       902     4,034       4,007  
Net loss on disposition and impairment of assets     2,132       735     1,470       1,565  
Goodwill impairment     11,485           11,485        
Gain from reduction of estimated earnout liability     (4,134 )         (4,134 )      
Unrealized gain on investments     (1,994 )     (912 )   (2,076 )     (2,523 )
Depreciation expense     16,738       15,842     63,964       60,494  
Amortization of intangibles     2,853       1,635     8,716       6,325  
Adjusted EBITDA   $ 118,191     $ 70,870   $ 431,361     $ 317,297  
                       

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

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


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Source: UFP Industries, Inc.