0001558370-21-014297 | 10-Q | XBRL Viewer

Document and Entity Information	9 Months Ended
Document and Entity Information	Sep. 25, 2021 shares
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 25, 2021
Entity File Number	0-22684
Entity Registrant Name	UFP INDUSTRIES, INC.
Entity Incorporation, State or Country Code	MI
Entity Tax Identification Number	38-1465835
Entity Address, Address Line One	2801 East Beltline NE
Entity Address, City or Town	Grand Rapids
Entity Address, State or Province	MI
Entity Address, Postal Zip Code	49525
City Area Code	616
Local Phone Number	364-6161
Title of 12(b) Security	Common Stock, no par value
Trading Symbol	UFPI
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)	61,887,770
Current Fiscal Year End Date	--12-25
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000912767
Amendment Flag	false

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 25, 2021	Dec. 26, 2020	Sep. 26, 2020
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
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
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

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 25, 2021	Dec. 26, 2020	Sep. 26, 2020
SHAREHOLDERS' EQUITY:
Preferred stock, no par value (in dollars per share)	$ 0	$ 0	$ 0
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0	0
Preferred stock, shares outstanding (in shares)	0	0	0
Common Stock, Par or Stated Value Per Share	$ 1	$ 1	$ 1
Common stock, shares authorized (in shares)	80,000,000	80,000,000	80,000,000
Common stock, shares issued (in shares)	61,887,770	61,205,780	61,186,636
Common stock, shares outstanding (in shares)	61,887,770	61,205,780	61,186,636

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 25, 2021	Sep. 26, 2020	Sep. 25, 2021	Sep. 26, 2020
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
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
NON-OPERATING (INCOME)/EXPENSE	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 (USD per share)	$ 1.94	$ 1.25	$ 6.40	$ 2.98
EARNINGS PER SHARE - DILUTED (USD per share)	$ 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

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehen- sive Earnings	Noncontrolling Interest	Total
Beginning balance at Dec. 28, 2019	$ 61,409	$ 192,173	$ 995,022	$ (4,889)	$ 14,018	$ 1,257,733
Increase (Decrease) in Stockholders' Equity
Net earnings			40,159		411	40,570
Foreign currency translation adjustment				(5,951)	(2,335)	(8,286)
Unrealized gain (loss) on debt securities				(270)		(270)
Distributions to noncontrolling interest					(299)	(299)
Additional purchases and adjustment of noncontrolling interest		130			(225)	(95)
Cash dividends			(7,730)			(7,730)
Issuance of shares under employee stock plans	10	309				319
Net issuance (forfeiture) of shares under stock grant programs	350	12,454	1			12,805
Issuance of shares under deferred compensation plans	89	(89)
Repurchase of 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
Ending balance at Mar. 28, 2020	61,102	211,724	998,996	(11,110)	11,570	1,272,282
Beginning balance at Dec. 28, 2019	61,409	192,173	995,022	(4,889)	14,018	1,257,733
Increase (Decrease) in Stockholders' Equity
Net earnings						189,125
Ending balance at Sep. 26, 2020	61,187	216,002	1,127,375	(6,974)	16,214	1,413,804
Beginning balance at Mar. 28, 2020	61,102	211,724	998,996	(11,110)	11,570	1,272,282
Increase (Decrease) in Stockholders' Equity
Net earnings			66,463		3,231	69,694
Foreign currency translation adjustment				2,026	125	2,151
Unrealized gain (loss) on debt securities				688		688
Cash dividends			(7,644)			(7,644)
Issuance of shares under employee stock plans	10	367				377
Net issuance (forfeiture) of shares under stock grant programs	43	(174)	2			(129)
Issuance of 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
Ending balance at Jun. 27, 2020	61,169	213,809	1,057,817	(8,396)	14,926	1,339,325
Increase (Decrease) in Stockholders' Equity
Net earnings			77,204		1,657	78,861
Foreign currency translation adjustment				1,319	265	1,584
Unrealized gain (loss) on debt securities				103		103
Distributions to noncontrolling interest					(634)	(634)
Cash dividends			(7,646)			(7,646)
Issuance of shares under employee stock plans	7	338				345
Net issuance (forfeiture) of shares under stock grant programs	(1)	(56)				(57)
Issuance of shares under deferred compensation plans	12	(12)
Expense associated with share-based compensation arrangements		826				826
Accrued expense under deferred compensation plans		1,097				1,097
Ending balance at Sep. 26, 2020	61,187	216,002	1,127,375	(6,974)	16,214	1,413,804
Beginning balance at Dec. 26, 2020	61,206	218,224	1,182,680	(1,794)	22,836	1,483,152
Increase (Decrease) in Stockholders' Equity
Net earnings			103,311		940	104,251
Foreign currency translation adjustment				(374)	(526)	(900)
Unrealized gain (loss) on debt securities				(1,296)		(1,296)
Distributions to noncontrolling interest					(2,914)	(2,914)
Cash dividends			(9,274)			(9,274)
Issuance of shares under employee stock plans	6	357				363
Net issuance (forfeiture) of shares under stock grant programs	537	3,888	5			4,430
Issuance of 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
Ending balance at Mar. 27, 2021	61,838	231,111	1,276,722	(3,464)	20,336	1,586,543
Beginning balance at Dec. 26, 2020	61,206	218,224	1,182,680	(1,794)	22,836	1,483,152
Increase (Decrease) in Stockholders' Equity
Net earnings						405,358
Ending balance at Sep. 25, 2021	61,888	239,563	1,552,593	(3,278)	26,708	1,877,474
Beginning balance at Mar. 27, 2021	61,838	231,111	1,276,722	(3,464)	20,336	1,586,543
Increase (Decrease) in Stockholders' Equity
Net earnings			173,382		1,978	175,360
Foreign currency translation adjustment				1,759	720	2,479
Unrealized gain (loss) on debt securities				241		241
Cash dividends			(9,276)			(9,276)
Issuance of shares under employee stock plans	9	564				573
Net issuance (forfeiture) of shares under stock grant programs	(6)	(224)	5			(225)
Issuance of 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
Ending balance at Jun. 26, 2021	61,851	235,309	1,440,833	(1,464)	23,034	1,759,563
Increase (Decrease) in Stockholders' Equity
Net earnings			121,041		4,706	125,747
Foreign currency translation adjustment				(1,897)	(210)	(2,107)
Unrealized gain (loss) on debt securities				83		83
Additional purchases and adjustment of noncontrolling interest					(822)	(822)
Cash dividends			(9,281)			(9,281)
Issuance of shares under employee stock plans	10	573				583
Net issuance (forfeiture) of shares under stock grant programs	17	(115)				(98)
Issuance of 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
Ending balance at Sep. 25, 2021	$ 61,888	$ 239,563	$ 1,552,593	$ (3,278)	$ 26,708	$ 1,877,474

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	3 Months Ended
	Sep. 25, 2021	Jun. 26, 2021	Mar. 27, 2021	Sep. 26, 2020	Jun. 27, 2020	Mar. 28, 2020
Increase (Decrease) in Stockholders' Equity
Cash dividends per share (USD per share)	$ 0.15	$ 0.15	$ 0.15	$ 0.125	$ 0.125	$ 0.125
Net issuance of shares under employee stock plans (in shares)	10,008	9,282	5,816	7,511	9,714	10,549
Net issuance (forfeiture) of shares under stock grant programs (in shares)	17,165	5,718	536,970	(1,382)	42,880	350,124
Issuance of shares under deferred compensation plans (in shares)	9,864	8,913	89,690	11,326	14,106	89,616
Repurchase of shares (in shares)						756,397

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 25, 2021	Sep. 26, 2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$ 405,358	$ 189,125
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation	61,741	47,226
Amortization of intangibles	9,369	5,863
Expense associated with share-based and grant compensation arrangements	8,444	3,152
Deferred income taxes	(594)	110
Unrealized loss (gain) on investments and other	(1,756)	(81)
Equity in earnings of investee	2,411
Net gain on sale and disposition of assets	(10,482)	(662)
Changes in:
Accounts receivable	(141,088)	(211,238)
Inventories	(204,144)	(39,167)
Accounts payable and cash overdraft	53,437	85,354
Accrued liabilities and other	99,067	105,401
NET CASH PROVIDED BY OPERATING ACTIVITIES	281,763	185,083
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(110,092)	(67,024)
Proceeds from sale of property, plant and equipment	26,597	2,588
Acquisitions and purchases of non-controlling interest, net of cash received	(433,275)	(34,820)
Purchases of investments	(17,866)	(24,266)
Proceeds from sale of investments	9,857	22,281
Other	(3,478)	314
NET CASH USED IN INVESTING ACTIVITIES	(528,257)	(100,927)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities	886,966	6,862
Repayments under revolving credit facilities	(888,335)	(6,498)
Contingent consideration payments and other	(2,664)	(3,087)
Issuance of long-term debt		150,000
Proceeds from issuance of common stock	1,519	1,042
Dividends paid to shareholders	(27,831)	(23,020)
Distributions to noncontrolling interest	(2,914)	(932)
Repurchase of common stock		(29,212)
Other	(334)	23
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(33,593)	95,178
Effect of exchange rate changes on cash	(292)	(1,122)
NET CHANGE IN CASH AND CASH EQUIVALENTS	(280,379)	178,212
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR	436,608	168,666
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$ 156,229	$ 346,878

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL (Parenthetical) - USD ($) $ in Thousands	Sep. 25, 2021	Dec. 26, 2020	Sep. 26, 2020
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents, beginning of period	$ 436,507	$ 346,154	$ 168,336
Restricted cash, beginning of period	101	724	330
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR	436,608	346,878	168,666
Cash and cash equivalents, end of period	138,637	436,507	346,154
Restricted cash, end of period	17,592	101	724
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$ 156,229	$ 436,608	$ 346,878

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL AND NON-CASH FINANCING ACTIVITIES (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Sep. 25, 2021	Sep. 26, 2020
SUPPLEMENTAL INFORMATION:
Interest paid	$ 10,360	$ 4,112
Income taxes paid	136,893	47,301
NON-CASH INVESTING ACTIVITIES
Capital expenditures included in accounts payable	2,366
NON-CASH FINANCING ACTIVITIES:
Common stock issued under deferred compensation plans	$ 6,778	$ 6,195

BASIS OF PRESENTATION

9 Months Ended

Sep. 25, 2021

BASIS OF PRESENTATION

BASIS OF PRESENTATION

A. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. All intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation.

In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10-K for the fiscal year ended December 26, 2020.

Seasonality has a significant impact on our working capital from March to August, which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the September 26, 2020 balances in the accompanying unaudited condensed consolidated balance sheets.

FAIR VALUE

9 Months Ended

Sep. 25, 2021

FAIR VALUE

FAIR VALUE

B. FAIR VALUE

We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value. Assets measured at fair value are as follows (in thousands):


	September 25, 2021								September 26, 2020
	Quoted		Prices with						Quoted		Prices with
	Prices in		Other			Prices with			Prices in		Other			Prices with
	Active		Observable			Unobservable			Active		Observable			Unobservable
	Markets		Inputs			Inputs			Markets		Inputs			Inputs
	(Level 1)		(Level 2)			(Level 3)	Total		(Level 1)		(Level 2)			(Level 3)	Total
Money market funds	$	19	$	2,631	$	—	$	2,650	$	64	$	3,133	$	—	$	3,197
Fixed income funds		962		17,021		—		17,983		248		16,522		—		16,770
Treasury securities		310		—		—		310		—		—		—		—
Equity securities		18,543		—		—		18,543		10,524		—		—		10,524
Alternative investments		—		—		3,536		3,536		—		—		1,926		1,926
Mutual funds:
Domestic stock funds		9,968		—		—		9,968		6,826		—		—		6,826
International stock funds		1,675		—		—		1,675		1,243		—		—		1,243
Target funds		23		—		—		23		260		—		—		260
Bond funds		146		—		—		146		208		—		—		208
Alternative funds		497		—		—		497		433		—		—		433
Total mutual funds		12,309		—		—		12,309		8,970		—		—		8,970
Total	$	32,143	$	19,652	$	3,536	$	55,331	$	19,806	$	19,655	$	1,926	$	41,387
Assets at fair value	$	32,143	$	19,652	$	3,536	$	55,331	$	19,806	$	19,655	$	1,926	$	41,387

From the assets measured at fair value as of September 25, 2021, listed in the table above, $33.6 million of mutual funds, equity securities, and alternative investments are held in Investments, $0.1 million of money market funds are held in Cash and Cash Equivalents, $0.7 million of money market and mutual funds are held in Other Assets for our deferred compensation plan, and $18.3 million of fixed income funds and $2.6 million of money markets funds are held in Restricted Investments.

We maintain money market, mutual funds, bonds, and/or equity securities in our non-qualified deferred compensation plan, our wholly owned licensed captive insurance company, and assets held in financial institutions. These funds are valued at prices quoted in an active exchange market and are included in “Cash and Cash Equivalents”, “Investments”, “Other Assets”, and “Restricted Investments”. We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.

In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling $52.0 million as of September 25, 2021, which has been included in the aforementioned table of total investments. This portfolio consists of domestic and international equity securities, alternative investments, and fixed income bonds.

Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following (in thousands):


	September 25, 2021						September 26, 2020
			Unrealized						Unrealized
	Cost		Gain		Fair Value		Cost		Gain		Fair Value
Fixed Income	$	17,293	$	690	$	17,983	$	15,750	$	1,020	$	16,770
Treasury Securities		310		—		310		—		—		—
Equity		14,392		4,151		18,543		9,121		1,403		10,524
Mutual Funds		9,210		2,435		11,645		7,228		852		8,080
Alternative Investments		3,370		166		3,536		1,881		45		1,926
Total	$	44,575	$	7,442	$	52,017	$	33,980	$	3,320	$	37,300

Our fixed income investments consist of a blend of US Government and Agency bonds and investment grade corporate bonds with varying maturities. Our equity investments consist of small, mid, and large cap growth and value funds, as well as international equity. Our mutual fund investments consist of domestic and international stock. Our alternative investments consist of a private real estate income trust which is valued as a Level 3 asset. The net unrealized gain of the portfolio was $7.4 million. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of September 25, 2021 and September 26, 2020.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

REVENUE RECOGNITION

9 Months Ended

Sep. 25, 2021

REVENUE RECOGNITION

REVENUE RECOGNITION

C. REVENUE RECOGNITION

Within the three primary segments (Retail, Industrial, and Construction) that the Company operates, there are a variety of written agreements governing the sale of our products and services. The transaction price is stated at the purchase order level, which includes shipping and/or freight costs and any applicable governmental authority taxes. The majority of our contracts have a single performance obligation concentrated around the delivery of goods to the carrier, Free On Board (FOB) shipping point. Therefore, revenue is recognized when this performance obligation is satisfied. Generally, title and control passes at the time of shipment. In certain circumstances, the customer takes title when the shipment arrives at the destination. However, our shipping process is typically completed the same day.

Certain customer products that we provide require installation by the Company or a 3^rd party. Installation revenue is recognized upon completion. If the Company uses a 3^rd party for installation, the party will act as an agent to the Company until completion of the installation. Installation revenue represents an immaterial share of the Company’s total sales.

The Company utilizes rebates, credits, discounts and/or cash-based incentives with certain customers which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We believe that there will not be significant changes to our estimates of variable consideration. The allocation of these costs are applied at the invoice level and recognized in conjunction with revenue. Additionally, returns and refunds are estimated on a historical and expected basis which is a reduction of revenue recognized.

Earnings on construction contracts are reflected in operations using over time accounting, under either cost to cost or units of delivery methods, depending on the nature of the business at individual operations, which is in accordance with ASC 606 as revenue is recognized when certain performance obligations are performed. Under over time accounting using the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships of actual costs incurred relative to the total estimated costs. Under over time accounting using the units of delivery method, revenues and related earnings on construction contracts are measured by the relationships of actual units produced relative to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent.

Our construction contracts are generally entered into with a fixed price, and completion of the projects can range from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates and commodity costs. During the year, we update our estimated costs to complete our projects using current labor and commodity costs and recognize losses to the extent that they exist.

The following table presents our net sales disaggregated by revenue source (in thousands):


	Three Months Ended					Nine Months Ended
	September 25,		September 26,			September 25,		September 26,
	2021		2020		% Change	2021		2020		% Change
FOB Shipping Point Revenue	$	2,063,647	$	1,454,220	41.9%	$	6,530,204	$	3,663,140	78.3%
Construction Contract Revenue		30,137		32,007	(5.8)%		89,125		97,150	(8.3)%
Total Net Sales		2,093,784		1,486,227	40.9%	$	6,619,329	$	3,760,290	76.0%

The Construction segment comprises the construction contract revenue shown above. Construction contract revenue is primarily made up of site-built and framing customers.

The following table presents the balances of over time accounting accounts which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in thousands):


	September 25,		December 26,		September 26,
	2021		2020		2020
Cost and Earnings in Excess of Billings	$	3,776	$	4,169	$	4,130
Billings in Excess of Cost and Earnings		10,373		11,530		11,264

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130554-203045

+ Details

EARNINGS PER SHARE

9 Months Ended

Sep. 25, 2021

EARNINGS PER SHARE

EARNINGS PER SHARE

D. EARNINGS PER SHARE

The computation of earnings per share (“EPS”) is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 25,		September 26,		September 25,		September 26,
	2021		2020		2021		2020
Numerator:
Net earnings attributable to controlling interest	$	121,041	$	77,204	$	397,734	$	183,826
Adjustment for earnings allocated to non-vested restricted common stock		(3,952)		(2,195)		(12,800)		(5,110)
Net earnings for calculating EPS	$	117,089	$	75,009	$	384,934	$	178,716
Denominator:
Weighted average shares outstanding		62,266		61,548		62,162		61,642
Adjustment for non-vested restricted common stock		(2,033)		(1,750)		(2,001)		(1,713)
Shares for calculating basic EPS		60,233		59,798		60,161		59,929
Effect of dilutive restricted common stock		168		20		137		19
Shares for calculating diluted EPS		60,401		59,818		60,298		59,948
Net earnings per share:
Basic	$	1.94	$	1.25	$	6.40	$	2.98
Diluted	$	1.94	$	1.25	$	6.38	$	2.98

COMMITMENTS, CONTINGENCIES, AND GUARANTEES

9 Months Ended

Sep. 25, 2021

COMMITMENTS, CONTINGENCIES, AND GUARANTEES

COMMITMENTS, CONTINGENCIES, AND GUARANTEES

E. COMMITMENTS, CONTINGENCIES, AND GUARANTEES

We are self-insured for environmental impairment liability, including certain liabilities which are insured through a wholly owned subsidiary, Ardellis Insurance Ltd., a licensed captive insurance company.

In addition, on September 25, 2021, we were parties either as plaintiff or defendant to a number of lawsuits and claims arising through the normal course of our business. In the opinion of management, our consolidated financial statements will not be materially affected by the outcome of these contingencies and claims.

On September 25, 2021, we had outstanding purchase commitments on commenced capital projects of approximately $44.1 million.

We provide a variety of warranties for products we manufacture. Historically, warranty claims have not been material. We also distribute products manufactured by other companies, some of which are no longer in business. While we do not warrant these products, we have received claims as a distributor of these products when the manufacturer no longer exists or has the ability to pay. Historically, these costs have not had a material effect on our consolidated financial statements.

As part of our operations, we supply building materials and labor to site-built construction projects or we jointly bid on contracts with framing companies for such projects. In some instances, we are required to post payment and performance bonds to ensure the products and installation services are completed in accordance with our contractual obligations. We have agreed to indemnify the surety for claims properly made against these bonds. As of September 25, 2021, we had approximately $39.6 million outstanding payment and performance bonds for open projects. We had approximately $2.1 million in payment and performance bonds outstanding for completed projects which are still under warranty.

On September 25, 2021, we had outstanding letters of credit totaling $52.6 million, primarily related to certain insurance contracts and industrial development revenue bonds described further below.

In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers to guarantee our performance under certain insurance contracts. As of September 25, 2021, we have irrevocable letters of credit outstanding totaling approximately $45.5 million for these types of insurance arrangements. We have reserves recorded on our balance sheet, in accrued liabilities, that reflect our expected future liabilities under these insurance arrangements.

We are required to provide irrevocable letters of credit in favor of the bond trustees for all industrial development revenue bonds that have been issued. These letters of credit guarantee principal and interest payments to the bondholders. We currently have irrevocable letters of credit outstanding totaling approximately $7.1 million related to our outstanding industrial development revenue bonds. These letters of credit have varying terms but may be renewed at the option of the issuing banks.

Certain wholly owned domestic subsidiaries have guaranteed the indebtedness of UFP Industries, Inc. in certain debt agreements, including the Series 2012, 2018 and 2020 Senior Notes and our revolving credit facility. The maximum exposure of these guarantees is limited to the indebtedness outstanding under these debt arrangements and this exposure will expire concurrent with the expiration of the debt agreements.

We did not enter into any new guarantee arrangements during the third quarter of 2021 which would require us to recognize a liability on our balance sheet.

BUSINESS COMBINATIONS

9 Months Ended

Sep. 25, 2021

BUSINESS COMBINATIONS

BUSINESS COMBINATIONS

F. BUSINESS COMBINATIONS

We completed the following acquisitions in 2021 and since the end of September 2020, which were accounted for using the purchase method in thousands unless otherwise noted:


					Net
Company	Acquisition		Intangible		Tangible		Operating
Name	Date	Purchase Price	Assets		Assets		Segment
	April 29, 2021	$10,108 cash paid for 100% asset purchase	$	7,099	$	3,009	Construction
Endurable Building Products, LLC (Endurable)	Based near Minneapolis, Minnesota, Endurable is a leading manufacturer of customized structural aluminum systems and products for exterior purposes, such as deck framing, balconies, sunshades, railings and stairs. The company’s trademarked alumiLAST aluminum deck and balcony systems are known for their low-maintenance design and ease of installation. Endurable serves general contractors in the multifamily market throughout the U.S. and had sales of approximately $15 million in 2020.
	April 19, 2021	$8,549 cash paid for 100% asset purchase	$	1,526	$	7,023	Retail
Walnut Hollow Farm, Inc.	Walnut Hollow Farm, located in Wisconsin, is engaged in the business of designing, manufacturing, selling, and distributing wood products, tools, and accessories for the craft and hobby, outdoor sportsman art, personalized home décor, and hardware categories, with sales of approximately $11.6 million in 2020.
	April 12, 2021	$153,462 cash paid for 100% asset purchase	$	—	$	153,462	Retail
Spartanburg Forest Products, Inc.	Headquartered in Greer, South Carolina, Spartanburg Forest Products and its affiliates are a premier wood treating operation in the U.S., with approximately 150 employees and operations in five states. Its affiliates include Appalachian Forest Products, Innovative Design Industries, Blue Ridge Wood Preserving, Blue Ridge Wood Products, and Tidewater Wood Products and had combined sales of approximately $543.0 million in 2020.
	March 1, 2021	$4,724 cash paid for 100% asset purchase and estimated contingent consideration	$	4,264	$	460	Other
J.C. Gilmore Pty Ltd (Gilmores)	Founded in 1988 and operating from its distribution facility in Port Melbourne, Australia, Gilmores is a leading distributor in the industrial and construction industries of packaging tapes, stretch films, packaging equipment, strapping, construction protection products and other items, with 2020 sales of $15 million AUD ($10 million USD).
	December 28, 2020	$259,011 cash paid for 100% stock purchase	$	66,899	$	192,112	Retail/Industrial
PalletOne, Inc. (PalletOne)	Based in Bartow, Florida, PalletOne is a leading manufacturer of new pallets in the U.S., with 17 pallet manufacturing facilities in the southern and eastern regions of the country. The company also supplies other specialized industrial packaging, including custom bins and crates, and its Sunbelt Forest Products (Sunbelt) subsidiary operates five pressure-treating facilities in the Southeastern U.S. PalletOne and its affiliates had 2019 and 2020 sales of $525 million and $698 million, respectively.


					Net
Company	Acquisition		Intangible		Tangible		Operating
Name	Date	Purchase Price	Assets		Assets		Segment
	November 10, 2020	$21,268 cash paid for 100% asset purchase	$	11,923	$	9,345	Construction
Atlantic Prefab, Inc.; Exterior Designs, LLC; and Patriot Building Systems, LLC	Based in Wilton, New Hampshire, Atlantic Prefab produces prefabricated steel wall panels and light gauge metal trusses. The company’s steel component and prefinished wall panel lines are new, value-added product additions for UFP Construction that help shorten project timelines. Exterior Designs is a leading installer of siding and exterior cladding such as fiber cement, ACM (aluminum composite material) panels, phenolic panels, and EIFS (exterior insulation and finish systems). The company is based in Londonderry, New Hampshire, and serves commercial and multi-family clients throughout the Northeast. Also based in Londonderry, Patriot Building Systems provides commercial and multi-family framing services in the Northeast and will focus on markets not currently served by companies of UFP Industries. The companies had combined annual sales of approximately $28 million.
	October 1, 2020	$5,936 cash paid for 100% asset purchase	$	5,222	$	714	Retail
Fire Retardant Chemical Technologies, LLC (FRCT)	Founded in 2014 and based in Matthews, North Carolina, FRCT’s business includes a research and development laboratory specializing in developing and testing a wide range of high-performance chemicals, including fire retardants and water repellants. The company had annual sales of approximately $6.4 million.
	September 30, 2020	$3,475 cash paid for 50% stock purchase and estimated contingent consideration	$	7,267	$	(1,369)	Other
Enwrap Logistic & Packaging S.r.l. (Enwrap)	Enwrap is a newly formed company dedicated to the logistics and packaging business of its predecessor, Job Service S.p.A. Headquartered in Milan, Italy, Enwrap provides high-value, mixed material industrial packaging and logistics services through eight locations in Italy. These locations generated annual sales of approximately $14 million.

The intangible assets for the above acquisitions have not been finalized and allocated to their respective identifiable asset and goodwill accounts. In aggregate, acquisitions completed since the end of September 2020 and not consolidated with other operations contributed approximately $903.0 million in net sales and $26.0 million in operating profits during the first nine months of 2021.

SEGMENT REPORTING

9 Months Ended

Sep. 25, 2021

SEGMENT REPORTING

SEGMENT REPORTING

G. SEGMENT REPORTING

The Company operates manufacturing, treating and distribution facilities internationally, but primarily in the United States. The business segments align with the following markets: UFP Retail Solutions, UFP Construction and UFP Industrial. The Company manages the operations of its individual locations primarily through a market-centered reporting structure under which each location is included in a business unit and business units are included in our Retail, Industrial, and Construction segments. In the case of locations which serve multiple segments, results are allocated and accounted for by segment. The exception to this market-centered reporting and management structure is the Company’s International segment, which comprises our Mexico, Canada, and Australia operations and sales and buying offices in other parts of the world.

Our International segment and Ardellis (our insurance captive) have been included in the “All Other” column of the table below.

The “Corporate” column includes purchasing, transportation and administrative functions that serve our operating segments. Operating results of Corporate primarily consists of over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns and leases transportation equipment, are also included in the Corporate column. An inter-company lease charge is assessed to our operating segments for the use of these assets at fair market value rates. Total assets of the Corporate column include unallocated cash and cash equivalents, certain prepaid assets, certain property, equipment and other assets pertaining to the centralized activities of Corporate, UFP Real Estate, Inc., and UFP Transportation Ltd. The tables below are presented in thousands:


	Three Months Ended September 25, 2021
	Retail		Industrial		Construction		All Other		Corporate		Total
Net sales to outside customers	$	696,201	$	573,234	$	722,872	$	98,689	$	2,788	$	2,093,784
Intersegment net sales		50,546		23,148		27,574		122,470		(223,738)		—
Segment operating profit		(26,153)		70,408		84,205		20,283		19,382		168,125


	Three Months Ended September 26, 2020
	Retail		Industrial		Construction		All Other		Corporate		Total
Net sales to outside customers	$	700,522	$	282,124	$	447,103	$	56,700	$	(222)	$	1,486,227
Intersegment net sales		45,416		11,773		17,909		76,029		(151,127)		—
Segment operating profit		62,181		22,037		16,513		7,449		(1,579)		106,601


	Nine Months Ended September 25, 2021
	Retail		Industrial		Construction		All Other		Corporate		Total
Net sales to outside customers	$	2,714,440	$	1,633,289	$	2,021,106	$	243,736	$	6,758	$	6,619,329
Intersegment net sales		163,279		66,039		62,069		345,920		(637,307)		—
Segment operating profit		89,443		190,344		184,330		44,565		33,865		542,547


	Nine Months Ended September 26, 2020
	Retail		Industrial		Construction		All Other	Corporate	Total
Net sales to outside customers	$	1,661,873	$	763,046	$	1,187,429