SEC Filing - UFP Industries, Inc.

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 26, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-22684

UFP INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


	Michigan		38-1465835
	(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification Number)
	organization)

	2801 East Beltline NE, Grand Rapids, Michigan		49525
	(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (616) 364-6161


	NONE
	(Former name or former address, if changed since last report.)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ⌧	Accelerated Filer ◻	Non-Accelerated Filer ◻	Smaller Reporting Company ☐
			Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with a new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


	Class		Outstanding as of June 26, 2021
	Common stock, $1 par value		61,850,733


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Stock, no par value	UFPI	The Nasdaq Stock Market, LLC

Table of Contents

UFP INDUSTRIES, INC.

TABLE OF CONTENTS

PART I.		FINANCIAL INFORMATION.	Page No.

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets at June 26, 2021, December 26, 2020 and June 27, 2020	3

		Condensed Consolidated Statements of Earnings and Comprehensive Income for the Three and Six Months Ended June 26, 2021 and June 27, 2020	4

		Condensed Consolidated Statements of Shareholders’ Equity for the Three and Six Months Ended June 26, 2021 and June 27, 2020	5

		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 26, 2021 and June 27, 2020	7

		Notes to Unaudited Condensed Consolidated Financial Statements	8

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

	Item 4.	Controls and Procedures	34

PART II.		OTHER INFORMATION

	Item 1.	Legal Proceedings – NONE

	Item 1A.	Risk Factors - NONE	35

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

	Item 3.	Defaults upon Senior Securities – NONE

	Item 4.	Mine Safety Disclosures – NONE

	Item 5.	Other Information – NONE	35

	Item 6.	Exhibits	35

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UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands, except share data)
	June 26,		December 26,		June 27,
	2021		2020		2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	44,286	$	436,507	$	200,546
Restricted cash		629		101		724
Investments		33,827		24,308		19,195
Accounts receivable, net		980,571		470,504		522,930
Inventories:
Raw materials		540,289		316,481		244,073
Finished goods		486,199		250,813		215,351
Total inventories		1,026,488		567,294		459,424
Refundable income taxes		—		5,836		—
Other current assets		36,699		33,812		33,786
TOTAL CURRENT ASSETS		2,122,500		1,538,362		1,236,605
DEFERRED INCOME TAXES		2,362		2,413		2,058
RESTRICTED INVESTMENTS		18,896		17,565		17,162
RIGHT OF USE ASSETS		97,597		77,245		77,039
OTHER ASSETS		29,631		20,298		24,205
GOODWILL		318,108		252,193		247,482
INDEFINITE-LIVED INTANGIBLE ASSETS		7,401		7,401		7,350
OTHER INTANGIBLE ASSETS, NET		98,601		72,252		45,131
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment		1,120,381		974,497		922,427
Less accumulated depreciation and amortization		(587,194)		(557,335)		(520,851)
PROPERTY, PLANT AND EQUIPMENT, NET		533,187		417,162		401,576
TOTAL ASSETS		3,228,283		2,404,891		2,058,608
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Cash overdraft	$	34,229	$	—	$	—
Accounts payable		359,484		211,518		199,338
Accrued liabilities:
Compensation and benefits		213,655		166,478		129,290
Income taxes		11,188		—		25,109
Other		90,153		69,104		63,278
Current portion of lease liability		22,511		16,549		15,411
Current portion of long-term debt		97		100		2,786
TOTAL CURRENT LIABILITIES		731,317		463,749		435,212
LONG-TERM DEBT		571,856		311,607		161,057
LEASE LIABILITY		78,564		61,509		61,674
DEFERRED INCOME TAXES		34,983		25,266		22,685
OTHER LIABILITIES		52,000		59,608		38,655
TOTAL LIABILITIES		1,468,720		921,739		719,283
SHAREHOLDERS’ EQUITY:
Controlling interest shareholders’ equity:
Preferred stock, no par value; shares authorized 1,000,000; issued and outstanding, none	$	—	$	—	$	—
Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding, 61,850,733, 61,205,780 and 61,169,181		61,851		61,206		61,169
Additional paid-in capital		235,309		218,224		213,809
Retained earnings		1,440,833		1,182,680		1,057,817
Accumulated other comprehensive loss		(1,464)		(1,794)		(8,396)
Total controlling interest shareholders’ equity		1,736,529		1,460,316		1,324,399
Noncontrolling interest		23,034		22,836		14,926
TOTAL SHAREHOLDERS’ EQUITY		1,759,563		1,483,152		1,339,325
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,228,283	$	2,404,891	$	2,058,608

See notes to consolidated condensed financial statements.

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UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

AND COMPREHENSIVE INCOME

(Unaudited)


(in thousands, except per share data)
	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
NET SALES	$	2,700,541	$	1,242,001	$	4,525,545	$	2,274,063
COST OF GOODS SOLD		2,279,247		1,037,070		3,817,697		1,901,896
GROSS PROFIT		421,294		204,931		707,848		372,167
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		184,539		113,781		334,637		223,121
OTHER GAINS, NET		(180)		(1,209)		(1,211)		(1,944)
EARNINGS FROM OPERATIONS		236,935		92,359		374,422		150,990
INTEREST EXPENSE		3,899		1,898		7,050		3,805
INTEREST AND INVESTMENT INCOME		(1,689)		(2,890)		(3,985)		(58)
EQUITY IN EARNINGS OF INVESTEE		835		—		1,465		—
		3,045		(992)		4,530		3,747
EARNINGS BEFORE INCOME TAXES		233,890		93,351		369,892		147,243
INCOME TAXES		58,530		23,657		90,281		36,979
NET EARNINGS		175,360		69,694		279,611		110,264
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(1,978)		(3,231)		(2,918)		(3,642)
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST	$	173,382	$	66,463	$	276,693	$	106,622

EARNINGS PER SHARE – BASIC	$	2.79	$	1.08	$	4.46	$	1.73
EARNINGS PER SHARE – DILUTED	$	2.78	$	1.08	$	4.45	$	1.73

OTHER COMPREHENSIVE INCOME:
NET EARNINGS		175,360		69,694		279,611		110,264
OTHER COMPREHENSIVE GAIN (LOSS)		2,720		2,839		524		(5,717)
COMPREHENSIVE INCOME		178,080		72,533		280,135		104,547
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		(2,698)		(3,356)		(3,112)		(1,432)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$	175,382	$	69,177	$	277,023	$	103,115

See notes to consolidated condensed financial statements.

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


(in thousands, except share and per share data)
	Controlling Interest Shareholders’ Equity
							Accumulated
			Additional				Other
	Common		Paid-In		Retained		Comprehensive		Noncontrolling
	Stock		Capital		Earnings		Earnings		Interest		Total
Balance on December 26, 2020	$	61,206	$	218,224	$	1,182,680	$	(1,794)	$	22,836	$	1,483,152
Net earnings						103,311				940		104,251
Foreign currency translation adjustment								(374)		(526)		(900)
Unrealized loss on debt securities								(1,296)				(1,296)
Distributions to noncontrolling interest										(2,914)		(2,914)
Cash dividends - $0.15 per share - quarterly						(9,274)						(9,274)
Issuance of 5,816 shares under employee stock purchase plan		6		357								363
Net issuance of 536,970 shares under stock grant programs		537		3,888		5						4,430
Issuance of 89,690 shares under deferred compensation plans		89		(89)								—
Expense associated with share-based compensation arrangements				2,936								2,936
Accrued expense under deferred compensation plans				5,795								5,795
Balance on March 27, 2021	$	61,838	$	231,111	$	1,276,722	$	(3,464)	$	20,336	$	1,586,543
Net earnings						173,382				1,978		175,360
Foreign currency translation adjustment								1,759		720		2,479
Unrealized gain on debt securities								241				241
Cash dividends - $0.15 per share - quarterly						(9,276)						(9,276)
Issuance of 9,282 shares under employee stock plans		9		564								573
Net forfeitures of 5,718 shares under stock grant programs		(6)		(224)		5						(225)
Issuance of 8,913 shares under deferred compensation plans		10		(10)								—
Expense associated with share-based compensation arrangements				2,728								2,728
Accrued expense under deferred compensation plans				1,140								1,140
Balance on June 26, 2021	$	61,851	$	235,309	$	1,440,833	$	(1,464)	$	23,034	$	1,759,563

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY, CONTINUED

(Unaudited)


(in thousands, except share and per share data)
	Controlling Interest Shareholders’ Equity
							Accumulated
			Additional				Other
	Common		Paid-In		Retained		Comprehensive		Noncontrolling
	Stock		Capital		Earnings		Earnings		Interest		Total
Balance on December 28, 2019	$	61,409	$	192,173	$	995,022	$	(4,889)	$	14,018	$	1,257,733
Net earnings						40,159				411		40,570
Foreign currency translation adjustment								(5,951)		(2,335)		(8,286)
Unrealized loss on debt securities								(270)				(270)
Distributions to noncontrolling interest										(299)		(299)
Additional purchase of noncontrolling interest				130						(225)		(95)
Cash dividends - $0.125 per share - quarterly						(7,730)						(7,730)
Issuance of 10,549 shares under employee stock purchase plan		10		309								319
Net issuance of 350,124 shares under stock grant programs		350		12,454		1						12,805
Issuance of 89,616 shares under deferred compensation plans		89		(89)								—
Repurchase of 756,397 shares		(756)				(28,456)						(29,212)
Expense associated with share-based compensation arrangements				1,404								1,404
Accrued expense under deferred compensation plans				5,343								5,343
Balance on March 28, 2020	$	61,102	$	211,724	$	998,996	$	(11,110)	$	11,570	$	1,272,282
Net earnings						66,463				3,231		69,694
Foreign currency translation adjustment								2,026		125		2,151
Unrealized gain on debt securities								688				688
Cash dividends - $0.125 per share - quarterly						(7,644)						(7,644)
Issuance of 9,714 shares under employee stock plans		10		367								377
Net issuance of 42,880 shares under stock grant programs		43		(174)		2						(129)
Issuance of 14,106 shares under deferred compensation plans		14		(14)								—
Expense associated with share-based compensation arrangements				824								824
Accrued expense under deferred compensation plans				1,082								1,082
Balance on June 27, 2020	$	61,169	$	213,809	$	1,057,817	$	(8,396)	$	14,926	$	1,339,325

See notes to consolidated condensed financial statements.

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UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(in thousands)	Six Months Ended
	June 26,		June 27,
	2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	279,611	$	110,264
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation		38,342		31,330
Amortization of intangibles		7,193		3,129
Expense associated with share-based and grant compensation arrangements		5,742		2,303
Deferred income taxes		177		290
Unrealized (gain) loss on investments and other		(2,784)		473
Equity in earnings of investee		1,465		—
Net gain on sale and disposition of assets		(1,577)		(271)
Changes in:
Accounts receivable		(336,094)		(155,554)
Inventories		(329,577)		25,983
Accounts payable and cash overdraft		143,018		57,017
Accrued liabilities and other		78,751		72,246
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES		(115,733)		147,210
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(79,028)		(46,730)
Proceeds from sale of property, plant and equipment		6,673		644
Acquisitions and purchases of non-controlling interest, net of cash received		(433,239)		(18,689)
Purchases of investments		(14,581)		(20,094)
Proceeds from sale of investments		6,885		18,339
Other		(708)		318
NET CASH USED IN INVESTING ACTIVITIES		(513,998)		(66,212)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities		849,944		6,759
Repayments under revolving credit facilities		(589,695)		(6,498)
Contingent consideration payments and other		(1,464)		(3,077)
Proceeds from issuance of common stock		936		697
Dividends paid to shareholders		(18,550)		(15,374)
Distributions to noncontrolling interest		(2,914)		(299)
Repurchase of common stock		—		(29,212)
Other		(331)		32
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES		237,926		(46,972)
Effect of exchange rate changes on cash		112		(1,422)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(391,693)		32,604
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR		436,608		168,666
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$	44,915	$	201,270

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
Cash, cash equivalents, and restricted cash, beginning of period	$	436,608	$	168,666

Cash and cash equivalents, end of period	$	44,286	$	200,546
Restricted cash, end of period		629		724
Cash, cash equivalents, and restricted cash, end of period	$	44,915	$	201,270

SUPPLEMENTAL INFORMATION: