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 September 25, 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 September 25, 2021
	Common stock, $1 par value		61,887,770


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 September 25, 2021, December 26, 2020 and September 26, 2020	3

		Condensed Consolidated Statements of Earnings and Comprehensive Income for the Three and Nine Months Ended September 25, 2021 and September 26, 2020	4

		Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 25, 2021 and September 26, 2020	5

		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 25, 2021 and September 26, 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)
	September 25,		December 26,		September 26,
	2021		2020		2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	138,637	$	436,507	$	346,154
Restricted cash		17,592		101		724
Investments		33,723		24,308		20,530
Accounts receivable, net		783,959		470,504		583,079
Inventories:
Raw materials		368,185		316,481		286,418
Finished goods		532,480		250,813		242,316
Total inventories		900,665		567,294		528,734
Refundable income taxes		14,134		5,836		—
Other current assets		34,040		33,812		32,888
TOTAL CURRENT ASSETS		1,922,750		1,538,362		1,512,109
DEFERRED INCOME TAXES		2,330		2,413		2,070
RESTRICTED INVESTMENTS		18,925		17,565		17,327
RIGHT OF USE ASSETS		94,481		77,245		77,412
OTHER ASSETS		29,168		20,298		24,216
GOODWILL		292,318		252,193		245,925
INDEFINITE-LIVED INTANGIBLE ASSETS		7,380		7,401		7,361
OTHER INTANGIBLE ASSETS, NET		93,984		72,252		58,205
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment		1,156,070		974,497		935,639
Less accumulated depreciation and amortization		(603,159)		(557,335)		(529,644)
PROPERTY, PLANT AND EQUIPMENT, NET		552,911		417,162		405,995
TOTAL ASSETS		3,014,247		2,404,891		2,350,620
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Cash overdraft	$	10,812	$	—	$	—
Accounts payable		292,933		211,518		231,111
Accrued liabilities:
Compensation and benefits		249,242		166,478		171,472
Income taxes		—		—		3,024
Other		90,348		69,104		69,888
Current portion of lease liability		22,242		16,549		15,349
Current portion of long-term debt		93		100		2,760
TOTAL CURRENT LIABILITIES		665,670		463,749		493,604
LONG-TERM DEBT		310,119		311,607		311,267
LEASE LIABILITY		75,548		61,509		62,100
DEFERRED INCOME TAXES		39,198		25,266		22,478
OTHER LIABILITIES		46,238		59,608		47,367
TOTAL LIABILITIES		1,136,773		921,739		936,816
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, 61,887,770, 61,205,780 and 61,186,636		61,888		61,206		61,187
Additional paid-in capital		239,563		218,224		216,002
Retained earnings		1,552,593		1,182,680		1,127,375
Accumulated other comprehensive loss		(3,278)		(1,794)		(6,974)
Total controlling interest shareholders’ equity		1,850,766		1,460,316		1,397,590
Noncontrolling interest		26,708		22,836		16,214
TOTAL SHAREHOLDERS’ EQUITY		1,877,474		1,483,152		1,413,804
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	3,014,247	$	2,404,891	$	2,350,620

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				Nine Months Ended
	September 25,		September 26,		September 25,		September 26,
	2021		2020		2021		2020
NET SALES	$	2,093,784	$	1,486,227	$	6,619,329	$	3,760,290
COST OF GOODS SOLD		1,766,229		1,245,153		5,583,926		3,147,049
GROSS PROFIT		327,555		241,074		1,035,403		613,241
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		169,467		134,649		504,104		357,770
OTHER GAINS, NET		(10,037)		(176)		(11,248)		(2,120)
EARNINGS FROM OPERATIONS		168,125		106,601		542,547		257,591
INTEREST EXPENSE		3,433		2,486		10,483		6,291
INTEREST AND INVESTMENT LOSS (INCOME)		371		(1,565)		(3,614)		(1,623)
EQUITY IN EARNINGS OF INVESTEE		946		—		2,411		—
		4,750		921		9,280		4,668
EARNINGS BEFORE INCOME TAXES		163,375		105,680		533,267		252,923
INCOME TAXES		37,628		26,819		127,909		63,798
NET EARNINGS		125,747		78,861		405,358		189,125
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(4,706)		(1,657)		(7,624)		(5,299)
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST	$	121,041	$	77,204	$	397,734	$	183,826

EARNINGS PER SHARE – BASIC	$	1.94	$	1.25	$	6.40	$	2.98
EARNINGS PER SHARE – DILUTED	$	1.94	$	1.25	$	6.38	$	2.98

OTHER COMPREHENSIVE INCOME:
NET EARNINGS		125,747		78,861		405,358		189,125
OTHER COMPREHENSIVE GAIN (LOSS)		(2,024)		1,687		(1,500)		(4,030)
COMPREHENSIVE INCOME		123,723		80,548		403,858		185,095
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		(4,496)		(1,922)		(7,608)		(3,354)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$	119,227	$	78,626	$	396,250	$	181,741

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
Net earnings						121,041				4,706		125,747
Foreign currency translation adjustment								(1,897)		(210)		(2,107)
Unrealized gain on debt securities								83				83
Distributions to noncontrolling interest												—
Additional purchase and adjustment of noncontrolling interest										(822)		(822)
Cash dividends - $0.15 per share - quarterly						(9,281)						(9,281)
Issuance of 10,008 shares under employee stock plans		10		573								583
Net issuance of 17,165 shares under stock grant programs		17		(115)								(98)
Issuance of 9,864 shares under deferred compensation plans		10		(10)								—
Expense associated with share-based compensation arrangements				2,657								2,657
Accrued expense under deferred compensation plans				1,149								1,149
Balance on September 25, 2021	$	61,888	$	239,563	$	1,552,593	$	(3,278)	$	26,708	$	1,877,474

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
Net earnings						77,204				1,657		78,861
Foreign currency translation adjustment								1,319		265		1,584
Unrealized loss on debt securities								103				103
Distributions to noncontrolling interest										(634)		(634)
Cash dividends - $0.125 per share - quarterly						(7,646)						(7,646)
Issuance of 7,511 shares under employee stock plans		7		338								345
Net forfeiture of 1,382 shares under stock grant programs		(1)		(56)								(57)
Issuance of 11,326 shares under deferred compensation plans		12		(12)