0001558370-22-001761 | 10-K | XBRL Viewer

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Dec. 25, 2021	Dec. 26, 2020
CURRENT ASSETS:
Cash and cash equivalents	$ 286,662	$ 436,507
Restricted cash	4,561	101
Investments	36,495	24,308
Accounts receivable, net	737,805	470,504
Inventories:
Raw materials	416,043	316,481
Finished goods	547,277	250,813
Total inventories	963,320	567,294
Refundable income taxes	4,806	5,836
Other current assets	39,827	33,812
TOTAL CURRENT ASSETS	2,073,476	1,538,362
DEFERRED INCOME TAXES	3,462	2,413
RESTRICTED INVESTMENTS	19,310	17,565
RIGHT OF USE ASSETS	96,703	77,245
OTHER ASSETS	31,876	20,298
GOODWILL	315,038	252,193
INDEFINITE-LIVED INTANGIBLE ASSETS	7,369	7,401
OTHER INTANGIBLE ASSETS, NET	109,017	72,252
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements	163,289	128,301
Building and improvements	329,698	272,864
Machinery and equipment	632,864	525,542
Furniture and fixtures	24,063	21,110
Construction in progress	62,199	26,680
PROPERTY, PLANT AND EQUIPMENT, GROSS	1,212,113	974,497
Less accumulated depreciation and amortization	(623,093)	(557,335)
PROPERTY, PLANT AND EQUIPMENT, NET	589,020	417,162
TOTAL ASSETS	3,245,271	2,404,891
CURRENT LIABILITIES:
Cash overdraft	17,030
Accounts payable	319,125	211,518
Accrued liabilities:
Compensation and benefits	289,196	166,478
Other	84,853	69,104
Current portion of lease liability	23,155	16,549
Current portion of long-term debt	42,683	100
TOTAL CURRENT LIABILITIES	776,042	463,749
LONG-TERM DEBT	277,567	311,607
LEASE LIABILITY	76,632	61,509
DEFERRED INCOME TAXES	60,964	25,266
OTHER LIABILITIES	37,497	59,608
TOTAL LIABILITIES	1,228,702	921,739
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, 61,901,851 and 61,205,780	61,902	61,206
Additional paid-in capital	243,995	218,224
Retained earnings	1,678,121	1,182,680
Accumulated other comprehensive loss	(5,405)	(1,794)
Total controlling interest shareholders' equity	1,978,613	1,460,316
Noncontrolling interest	37,956	22,836
TOTAL SHAREHOLDERS' EQUITY	2,016,569	1,483,152
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 3,245,271	$ 2,404,891

CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Dec. 25, 2021	Dec. 26, 2020
SHAREHOLDERS' EQUITY:
Preferred stock, no par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common Stock, Par or Stated Value Per Share	$ 1	$ 1
Common stock, shares authorized (in shares)	80,000,000	80,000,000
Common stock, shares issued (in shares)	61,901,851	61,205,780
Common stock, shares outstanding (in shares)	61,901,851	61,205,780

CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME - USD ($) $ in Thousands	12 Months Ended
	Dec. 25, 2021	Dec. 26, 2020	Dec. 28, 2019
NET SALES	$ 8,636,134	$ 5,153,998	$ 4,416,009
COST OF GOODS SOLD	7,229,167	4,353,702	3,730,491
GROSS PROFIT	1,406,967	800,296	685,518
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	682,253	444,596	439,047
OTHER (GAINS) LOSSES, NET	(12,840)	9,874	1,565
EARNINGS FROM OPERATIONS	737,554	345,826	244,906
INTEREST EXPENSE	13,814	9,311	8,700
INTEREST AND INVESTMENT INCOME	(6,498)	(4,468)	(4,468)
EQUITY IN EARNINGS OF INVESTEE	3,902
NON-OPERATING (INCOME)/EXPENSE	11,218	4,843	4,232
EARNINGS BEFORE INCOME TAXES	726,336	340,983	240,674
INCOME TAXES	173,972	87,101	58,270
NET EARNINGS	552,364	253,882	182,404
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST	(16,724)	(7,104)	(2,754)
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST	$ 535,640	$ 246,778	$ 179,650
EARNINGS PER SHARE - BASIC (USD per share)	$ 8.61	$ 4.00	$ 2.91
EARNINGS PER SHARE - DILUTED (USD per share)	$ 8.59	$ 4.00	$ 2.91
OTHER COMPREHENSIVE INCOME:
NET EARNINGS	$ 552,364	$ 253,882	$ 182,404
OTHER COMPREHENSIVE GAIN (LOSS)	(5,296)	5,967	1,513
COMPREHENSIVE INCOME	547,068	259,849	183,917
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST	(15,039)	(9,976)	(3,218)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$ 532,029	$ 249,873	$ 180,699

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Earnings	Noncontrolling Interest	Total
Beginning balance at Dec. 29, 2018	$ 60,884	$ 178,540	$ 839,917	$ (5,938)	$ 15,281	$ 1,088,684
Increase (Decrease) in Stockholders' Equity
Net earnings			179,650		2,754	182,404
Foreign currency translation adjustment				568	464	1,032
Unrealized loss on investment & foreign currency				481		481
Distributions to noncontrolling interest					(2,143)	(2,143)
Acquisitions of noncontrolling interest		(4,737)			(2,338)	(7,075)
Cash dividends			(24,549)			(24,549)
Issuance of shares under employee stock purchase plan	34	1,059				1,093
Issuance of shares under stock grant programs	310	5,654	4			5,968
Issuance of shares under deferred compensation plans	181	(181)
Expense associated with share-based compensation arrangements		3,843				3,843
Accrued expense under deferred compensation plans		7,995				7,995
Ending 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			246,778		7,104	253,882
Foreign currency translation adjustment				1,373	2,872	4,245
Unrealized gain on debt securities				1,722		1,722
Distributions to noncontrolling interest					(933)	(933)
Acquisitions of noncontrolling interest		130			(225)	(95)
Cash dividends			(30,669)			(30,669)
Issuance of shares under employee stock purchase plan	35	1,360				1,395
Issuance of shares under stock grant programs	390	12,140	5			12,535
Issuance of shares under deferred compensation plans	128	(128)
Repurchase of shares	(756)		(28,456)			(29,212)
Expense associated with share-based compensation arrangements		3,905				3,905
Accrued expense under deferred compensation plans		8,644				8,644
Ending 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			535,640		16,724	552,364
Foreign currency translation adjustment				(2,584)	(1,685)	(4,269)
Unrealized gain on investments and other				(1,027)		(1,027)
Noncontrolling interest associated with business acquisitions					6,831	6,831
Distributions to noncontrolling interest					(6,750)	(6,750)
Cash dividends			(40,209)			(40,209)
Issuance of shares under employee stock purchase plan	33	2,083				2,116
Issuance of shares under stock grant programs	546	3,506	10			4,062
Issuance of shares under deferred compensation plans	117	(117)
Expense associated with share-based compensation arrangements		11,071				11,071
Accrued expense under deferred compensation plans		9,228				9,228
Ending balance at Dec. 25, 2021	$ 61,902	$ 243,995	$ 1,678,121	$ (5,405)	$ 37,956	$ 2,016,569

CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Parenthetical) - $ / shares	12 Months Ended
	Dec. 25, 2021	Dec. 26, 2020	Dec. 28, 2019
Increase (Decrease) in Stockholders' Equity
Cash dividends per share (USD per share)	$ 0.65	$ 0.50	$ 0.40
Net issuance of shares under employee stock plans (in shares)	33,104	35,133	33,647
Issuance of shares under deferred compensation plans (in shares)	116,732	127,735	181,565
Repurchase of shares (in shares)	0	756,397
No of shares under stock grant programs	546,235	390,720	309,628

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 25, 2021	Dec. 26, 2020	Dec. 28, 2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$ 552,364	$ 253,882	$ 182,404
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation	84,184	63,964	60,494
Amortization of intangibles	13,948	8,716	6,325
Expense associated with share-based and grant compensation arrangements	11,224	4,034	4,007
Deferred income taxes	5,653	1,857	7,176
Unrealized gain on investments and other	(4,118)	(2,076)	(2,523)
Equity in earnings of investee	3,902
Net gain on sale and disposition of assets	(11,992)	1,470	1,565
Goodwill impairment		11,485
Gain from reduction of estimated earnout liability		(4,134)
Changes in:
Accounts receivable	(85,439)	(87,552)	(16,872)
Inventories	(260,301)	(76,022)	73,120
Accounts payable and cash overdraft	78,060	62,405	(24,132)
Accrued liabilities and other	124,992	98,448	57,727
NET CASH PROVIDED BY OPERATING ACTIVITIES	512,477	336,477	349,291
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment	(151,166)	(89,182)	(84,933)
Proceeds from sale of property, plant and equipment	29,973	2,922	1,777
Acquisitions and purchases of non-controlling interest, net of cash received	(475,960)	(65,255)	(39,122)
Investment in life insurance contracts			(15,253)
Purchases of investments	(23,797)	(28,054)	(13,352)
Proceeds from sale of investments	14,882	24,805	9,828
Other	(5,119)	46	(982)
NET CASH USED IN INVESTING ACTIVITIES	(611,187)	(154,718)	(142,037)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities	892,072	6,862	422,057
Repayments under revolving credit facilities	(888,695)	(6,498)	(460,537)
Contingent consideration payments and other	(3,176)	(5,787)	(3,136)
Issuance of long-term debt		150,000
Proceeds from issuance of common stock	2,116	1,395	1,093
Dividends paid to shareholders	(40,209)	(30,669)	(24,549)
Distributions to noncontrolling interest	(6,750)	(932)	(2,216)
Repurchase of common stock		(29,212)
Other	(364)	62	20
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(45,006)	85,221	(67,268)
Effect of exchange rate changes on cash	(1,669)	962	482
NET CHANGE IN CASH AND CASH EQUIVALENTS	(145,385)	267,942	140,468
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR	436,608	168,666	28,198
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$ 291,223	$ 436,608	$ 168,666

CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL (Parenthetical) - USD ($) $ in Thousands	Dec. 25, 2021	Dec. 26, 2020	Dec. 28, 2019
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents, beginning of period	$ 436,507	$ 168,336	$ 27,316
Restricted cash, beginning of period	101	330	882
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR	436,608	168,666	28,198
Cash and cash equivalents, end of period	286,662	436,507	168,336
Restricted cash, end of period	4,561	101	330
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$ 291,223	$ 436,608	$ 168,666

CONSOLIDATED STATEMENTS OF CASH FLOWS - SUPPLEMENTAL AND NON-CASH FINANCING ACTIVITIES (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 25, 2021	Dec. 26, 2020	Dec. 28, 2019
SUPPLEMENTAL INFORMATION:
Interest paid	$ 14,077	$ 7,204	$ 8,763
Income taxes paid	167,043	77,964	50,224
NON-CASH INVESTING ACTIVITIES
Capital expenditures included in accounts payable	3,256
NON-CASH FINANCING ACTIVITIES:
Common stock issued under deferred compensation plans	$ 7,487	$ 6,870	$ 6,229

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 25, 2021

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

OPERATIONS

We are a holding company whose subsidiaries supply wood, wood composite and other products to three markets: retail, construction and industrial. Founded in 1955, we are headquartered in Grand Rapids, Michigan, with affiliates throughout North America, Europe, Asia and Australia.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships. In addition, we consolidate any entity which we own 50% or more and exercise control. Intercompany transactions and balances have been eliminated.

NONCONTROLLING INTEREST IN SUBSIDIARIES

Noncontrolling interest in results of operations of consolidated subsidiaries represents the noncontrolling shareholders’ share of the income or loss of various consolidated subsidiaries. The noncontrolling interest reflects the original investment by these noncontrolling shareholders combined with their proportional share of the earnings or losses of these subsidiaries, net of distributions paid.

FISCAL YEAR

Our fiscal year is a 52 or 53 week period, ending on the last Saturday of December. Unless otherwise stated, references to 2021, 2020, and 2019 relate to the fiscal years ended December 25, 2021, December 26, 2020, and December 28, 2019, respectively. Fiscal years 2021, 2020, and 2019 were comprised of 52 weeks.

FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS

We follow ASC Topic 820, Fair Value Measurements and Disclosures, which provides a consistent definition of fair value, focuses on exit price, prioritizes the use of market-based inputs over entity-specific inputs for measuring fair value and establishes a three-tier hierarchy for fair value measurements. This topic requires fair value measurements to be classified and disclosed in one of the following three categories:

●

Level 1 — Financial instruments with unadjusted, quoted prices listed on active market exchanges.

●

Level 2 — Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-the-counter traded financial instruments. Financial instrument values are determined using prices for recently traded financial instruments with similar underlying terms and direct or indirect observational inputs, such as interest rates and yield curves at commonly quoted intervals.

●

Level 3 — Financial instruments not actively traded on a market exchange and there is little, if any, market activity. Values are determined using significant unobservable inputs or valuation techniques.

Our investment portfolio includes restricted investments within our wholly-owned subsidiary, Ardellis Insurance Ltd. There are $19.3 million of restricted investments recorded as of December 25, 2021.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash and highly liquid investments purchased with an original maturity of three months or less.

INVESTMENTS

Investments are deemed to be "available for sale" and are, accordingly, carried at fair value being the quoted market value.

ACCOUNTS RECEIVABLE AND ALLOWANCES

We perform periodic credit evaluations of our customers and generally do not require collateral. Accounts receivable are due under a range of terms we offer to our customers. Discounts are offered, in most instances, as an incentive for early payment.

We base our allowances related to receivables on historical credit and collections experience, reasonable and supportable forecasts, and the specific identification of other potential problems, including the general economic climate. Actual collections can differ, requiring adjustments to the allowances. Individual accounts receivable balances are evaluated on a monthly basis, and those balances considered uncollectible are charged to the allowance.

The following table presents the activity in our accounts receivable allowances (in thousands):


			Additions
			Charged to
	Beginning		Costs and				Ending
	Balance		Expenses		Deductions*		Balance
Year Ended December 25, 2021:
Allowance for possible losses on accounts receivable	$	4,629	$	66,883	$	(66,427)	$	5,085
Year Ended December 26, 2020:
Allowance for possible losses on accounts receivable	$	4,440	$	48,954	$	(48,765)	$	4,629
Year Ended December 28, 2019:
Allowance for possible losses on accounts receivable	$	2,601	$	39,481	$	(37,642)	$	4,440

*	Includes accounts charged off, discounts given to customers and actual customer returns and allowances.

We record estimated sales returns, discounts, and other applicable adjustments as a reduction of net sales in the same period revenue is recognized.

Accounts receivable retainage amounts related to long term construction contracts totaled $7.8 million and $8.7 million as of December 25, 2021 and December 26, 2020, respectively. All amounts are expected to be collected within 18 months. Concentration of accounts receivable related to our two largest customers totaled $87.6 million and $97.9 million as of December 25, 2021 and December 26, 2020, respectively.

In June 2016, the FASB issued ASU 2016-13, Financial Instrument-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which changes the current incurred loss model to a forward looking expected credit loss model for most financial assets, such as trade and other receivables, loans and other instruments. The ASU is effective for fiscal years beginning after December 15, 2019. Entities are required to apply the provisions of the standard through a cumulative-effect adjustment to retained earnings as of effective date. We have adopted the new standard as of the beginning of fiscal year 2020 and have concluded the standard does not have a material impact on our consolidated financial statements and disclosures, accounting processes, and internal controls.

INVENTORIES

Inventories are stated at the lower of cost or market. The cost of inventories includes raw materials, direct labor, and manufacturing overhead. Cost is determined on a weighted average basis. Raw materials consist primarily of unfinished wood products and other materials expected to be manufactured or treated prior to sale, while finished goods represent various manufactured and treated wood products ready for sale. We have inventory on consignment at customer locations valued at $37.8 million as of December 25, 2021 and $20.8 million as of December 26, 2020.

PROPERTY, PLANT, AND EQUIPMENT

Property, plant, and equipment are stated at cost. Expenditures for renewals and betterments are capitalized, and maintenance and repairs are expensed as incurred. Amortization of assets held under finance leases is included in depreciation and amortized over the shorter of the estimated useful life of the asset or the lease term. Depreciation is computed principally by the straight-line method over the estimated useful lives of the assets as follows:


Land improvements		5 to 15 years
Buildings and improvements		10 to 32 years
Machinery, equipment and office furniture		2 to 20 years

Software costs are included in machinery and equipment on the balance sheet with gross amounts and accumulated amortization totaling $6.0 million and $5.3 million as of December 25, 2021, and $5.5 million and $4.9 million as of December 26, 2020, respectively.

LONG-LIVED ASSETS

In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), when an indicator of potential impairment exists, we evaluate the recoverability of our long-lived assets by determining whether unamortized balances could be recovered through undiscounted future operating cash flows over the remaining lives of the assets. If the sum of the expected future cash flows was less than the carrying value of the assets, an impairment loss would be recognized for the excess of the carrying value over the fair value.

GOODWILL

Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets of acquired businesses. Goodwill and intangible assets deemed to have indefinite lives are not amortized and are subject to impairment tests at least annually in accordance with ASC 350, Intangibles-Goodwill and Other. We review the carrying amounts of goodwill and other non-amortizable intangibles by reporting unit to determine if such assets may be impaired. As of the date of the most recent goodwill impairment test, which utilized data and assumptions as of September 25, 2021, all other reporting units had a fair value that was substantially in excess of the carrying value. In the fourth quarter of 2020, we recorded a non-cash goodwill impairment charge of $11.5 million related to the commercial reporting unit within our construction segment. We believe we have sufficient available information, both current and historical, to support our assumptions, judgments and estimates used in the goodwill impairment test.

Our annual testing date for evaluating goodwill and indefinite-lived intangible asset impairment is the first day of our fourth fiscal quarter for all reporting units. Additionally, we review various triggering events throughout the year to determine whether a mid-year impairment analysis is required.

FOREIGN CURRENCY

Our foreign operations use the local currency as their functional currency. Accordingly, assets and liabilities are translated at exchange rates as of the balance sheet date and revenues and expenses are translated using weighted average rates, with translation adjustments included as a separate component of shareholders’ equity. Gains and losses arising from re-measuring foreign currency transactions are included in earnings.

INSURANCE RESERVES

Our wholly-owned insurance company, Ardellis Insurance Ltd.(“Ardellis”), was incorporated on April 21, 2001 under the laws of Bermuda and is licensed as a Class 3A insurer under the Insurance Act 1978 of Bermuda. On April 14, 2017 the U.S. Branch of Ardellis Insurance Ltd. was granted its Certificate of Authority to transact property and casualty insurance lines as an admitted carrier in the State of Michigan.

We are primarily self-insured for certain employee health benefits, and have self-funded retentions for general liability, automobile liability, property and workers’ compensation. We are fully self-insured for environmental liabilities. The general liability, automobile liability, property, workers’ compensation, and certain environmental liabilities are managed through Ardellis; the related assets and liabilities of which are included in the consolidated financial statements as of December 25, 2021 and December 26, 2020. Our policy is to accrue amounts equal to actuarially determined or internally computed liabilities. The actuarial and internal valuations are based on historical information along with certain assumptions about future events. Changes in assumptions for such matters as legal actions, medical cost trends, and changes in claims experience could cause these estimates to change in the future.

In addition to providing coverage for the Company, Ardellis provides Excess Loss Insurance (primarily medical and prescription drug) to certain third parties. As of December 25, 2021, Ardellis had 43 such contracts in place. Reserves associated with these contracts were $7.1 million at December 25, 2021, and $4.5 million at December 26, 2020, and are accrued based on third party actuarial valuations of the expected future liabilities.

INCOME TAXES

Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future. Such deferred income tax asset and liability computations are based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred income tax assets to the amounts expected to be realized. Income tax expense is the tax payable or refundable for the period plus or minus the change during the period in deferred income tax assets and liabilities.

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 third party. Installation revenue is recognized upon completion. If we use a third party for installation, the party will act as an agent to us until completion of the installation. Installation revenue represents an immaterial share of our total net sales.

We utilize 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 related 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 related 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):


	Year Ended
	December 25,		December 26,		December 28,		2021 vs. 2020	2020 vs. 2019
	2021		2020		2019		% Change	% Change
FOB Shipping Point Revenue	$	8,512,012	$	5,025,895	$	4,272,583	69.4%	17.6%
Construction Contract Revenue		124,122		128,103		143,426	(3.1)%	(10.7)%
Total Net Sales	$	8,636,134	$	5,153,998	$	4,416,009	67.6%	16.7%

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 on December 25, 2021 and December 26, 2020 which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in thousands):


	December 25,		December 26,
	2021		2020
Cost and Earnings in Excess of Billings	$	5,602	$	4,169
Billings in Excess of Cost and Earnings		10,744		11,530

SHIPPING AND HANDLING OF PRODUCT

Shipping and handling costs that are charged to and reimbursed by the customer are recognized as revenue. Costs incurred related to the shipment and handling of products are classified in cost of goods sold.

SHARE-BASED COMPENSATION

We account for share-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation (“ASC 718”), which requires recognition of share-based compensation costs in financial statements based on fair value. Compensation cost is recognized over the period during which an employee is required to provide services in exchange for the award (the requisite service period). Forfeitures are recognized as they occur.

EARNINGS PER SHARE

Earnings per share (“EPS”) is computed using the two-class method. The two-class method determines EPS for each class of common stock and participating securities according to dividends and their respective participation rights in undistributed earnings. Participating securities include non-vested shares of restricted stock in which the participants have non-forfeitable rights to dividends during the performance period. EPS, basic and diluted, is calculated by dividing net earnings attributable to controlling interest, net of applicable taxes, by the weighted average number of shares of common stock outstanding for the period. The computation of EPS is as follows (in thousands):



	December 25,		December 26,		December 28,
	2021		2020		2019
Numerator:
Net earnings attributable to controlling interest	$	535,640	$	246,778	$	179,650
Adjustment for earnings allocated to non-vested restricted common stock		(17,342)		(6,903)		(4,496)
Net earnings for calculating EPS	$	518,298	$	239,875	$	175,154
Denominator:
Weighted average shares outstanding		62,209		61,632		61,649
Adjustment for non-vested restricted common stock		(2,014)		(1,724)		(1,543)
Shares for calculating basic EPS		60,195		59,908		60,106
Effect of dilutive restricted common stock		159		20		24
Shares for calculating diluted EPS		60,354		59,928		60,130
Net earnings per share:
Basic	$	8.61	$	4.00	$	2.91
Diluted	$	8.59	$	4.00	$	2.91

USE OF ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. We believe our estimates to be reasonable; however, actual results could differ from these estimates.

FAIR VALUE

12 Months Ended

Dec. 25, 2021

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 and liabilities measured at fair value are as follows:


	December 25, 2021								December 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	$	9,392	$	—	$	9,411	$	19	$	4,643	$	—	$	4,662
Fixed income funds		1,668		16,910		—		18,578		246		16,224		—		16,470
Treasury securities		342		—		—		342		—		—		—		—
Equity securities		20,163		—		—		20,163		12,602		—		—		12,602
Alternative investments		—		—		3,785		3,785		—		—		2,040		2,040
Mutual funds:
Domestic stock funds		10,910		—		—		10,910		8,088		—		—		8,088
International stock funds		1,687		—		—		1,687		1,440		—		—		1,440
Target funds		23		—		—		23		114		—		—		114
Bond funds		146		—		—		146		147		—		—		147
Alternative funds		483		—		—		483		482		—		—		482
Total mutual funds		13,249		—		—		13,249		10,271		—		—		10,271
Total	$	35,441	$	26,302	$	3,785	$	65,528	$	23,138	$	20,867	$	2,040	$	46,045
Assets at fair value	$	35,441	$	26,302	$	3,785	$	65,528	$	23,138	$	20,867	$	2,040	$	46,045

From the assets measured at fair value as of December 25, 2021, listed in the table above, $9.0 million of money market funds are held in Cash and Cash Equivalents, $36.5 million of mutual funds, equity securities, and alternative investments are held in Investments, $0.7 million of money market and mutual funds are held in Other Assets for our deferred compensation plan, and $18.9 million of fixed income funds and $0.4 million of money market funds are held in Restricted Investments.

We maintain money market, mutual funds, bonds, and/or stocks in our non-qualified deferred compensation plan and 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.

During 2018, we purchased a private real estate income trust which is valued as a Level 3 asset and is categorized as an “Alternative Investment.”

In accordance with our investment policy, our wholly-owned company, Ardellis Insurance Ltd. ("Ardellis"), maintains an investment portfolio, totaling $55.4 million as of December 25, 2021, consisting of domestic and international stocks, 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):


	December 25, 2021						December 26, 2020
			Unrealized						Unrealized
	Cost		Gain		Fair Value		Cost		Gain		Fair Value
Fixed Income	$	18,169	$	409	$	18,578	$	15,325	$	1,145	$	16,470
Treasury Securities		342		—		342		—		—		—
Equity		15,196		4,967		20,163		9,787		2,815		12,602
Mutual Funds		9,222		3,325		12,547		8,235		1,430		9,665
Alternative Investments		3,003		782		3,785		1,904		136		2,040
Total	$	45,932	$	9,483	$	55,415	$	35,251	$	5,526	$	40,777

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 alternative investments consist of the private real estate income trust which is valued as a Level 3 asset. The net pre-tax unrealized gain was $9.5 million for the year ended December 25, 2021. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of December 25, 2021 and December 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

BUSINESS COMBINATIONS

12 Months Ended

Dec. 25, 2021

BUSINESS COMBINATIONS

C.BUSINESS COMBINATIONS

We completed the following business combinations in fiscal 2021 and 2020, which were accounted for using the purchase method (in thousands).


					Net
Company	Acquisition		Intangible		Tangible		Operating
Name	Date	Purchase Price	Assets		Assets		Segment
	December 20, 2021	$20,854 cash paid for 100% stock purchase	$	11,481	$	9,373	Industrial
Advantage Labels & Packaging, Inc. (Advantage)	Based in Grand Rapids, Michigan, Advantage provides blank and customized labels, printers, label applicators and other packaging supplies. Key industries served by the company include beer and beverage; body armor; food production and processing; greenhouse and nursery; hobby and craft; manufacturing; and automotive. The company had trailing 12-month sales through November 2021 of approximately $19.8 million.
	November 22, 2021	$11,155 cash paid for 70% stock purchase	$	9,106	$	2,049	Other
Ficus Pax Private Limited (Ficus)	Headquartered in Bangalore, India, Ficus manufactures mixed-material cases and crates, nail-less plywood boxes, wooden pallets and other packaging products through 10 facilities located in major industrial markets throughout southern India. Ficus also owns a majority stake in Wadpack, a manufacturer of corrugated fiber board containers, corrugated pallets and display solutions. The company had trailing 12-month sales through August 2021 of approximately $39 million USD.
	November 1, 2021	$5,984 cash paid for 100% asset purchase and estimated contingent consideration	$	5,681	$	303	Other
Boxpack Packaging (Boxpack)	Based near Melbourne, Australia, Boxpack specializes in flexographic and lithographic cardboard packaging, using the latest CAD design and finishing techniques. Boxpack serves multiple industries, including food and beverage, confectionary, pharmaceutical, industrial and agricultural. The company had trailing 12-month sales through June 30, 2021, of $8.2 million AUD.
	September 27, 2021	$6,443 cash paid for 100% asset purchase and estimated contingent consideration	$	4,039	$	2,404	Construction
Shelter Products, Inc. (Shelter)	Based in Haleyville, Alabama, Shelter operates its distribution and logistics business from an 87,800 sq.-ft. warehouse that specializes in manufactured housing industry customers. Shelter’s facility is adjacent to a UFP manufacturing facility that supplies trusses to manufactured housing builders, and the proximity will enable additional operational synergies. The Company had sales of approximately $11.4 million in 2020.
	April 29, 2021	$10,129 cash paid for 100% asset purchase	$	7,099	$	3,030	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.


					Net
Company	Acquisition		Intangible		Tangible		Operating
Name	Date	Purchase Price	Assets		Assets		Segment
	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	$	79,917	$	179,094	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 2020 sales of $698 million.
	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% stock 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.


					Net
Company	Acquisition		Intangible		Tangible		Operating
Name	Date	Purchase Price	Assets		Assets		Segment
	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.
	July 14, 2020	$18,496 cash paid for 100% asset purchase and estimated contingent consideration	$	12,458	$	6,038	Industrial
T&R Lumber Company (T&R)	A manufacturer and distributor of a range of products used primarily by nurseries, including plastic growing containers, pots and trays; wooden stakes; trellises; tree boxes; shipping racks; and other nursery supplies based in Rancho Cucamonga, California. T&R had annual sales of approximately $31 million. The acquisition of T&R will allow us to leverage their expertise using our national manufacturing capacity to grow our agricultural product offerings and customer base across the country.
	March 13, 2020	$22,951 cash paid for 100% asset purchase and estimated contingent consideration	$	20,262	$	2,689	Construction
Quest Design & Fabrication and Quest Architectural Millwork (Quest)	A designer, fabricator, and installer of premium millwork and case goods for a variety of commercial uses. Quest had annual sales of approximately $22 million. The acquisition of Quest expands our architectural millwork capabilities and expertise in our commercial construction business unit, and will allow us to use our national manufacturing capacity to grow and diversify our sales to this end market

The intangible assets for each acquisition were finalized and allocated to their respective identifiable intangible asset and goodwill accounts during 2021, except for our 2021 acquisitions. In aggregate, acquisitions made during 2021 and 2020, contributed approximately $1.2 billion in net sales and $50.5 million in operating profit during 2021.

At December 25, 2021, the amounts assigned to major intangible classes for the business combinations mentioned above are as follows (in thousands):


	Non-												Intangibles -
	Compete				Customer								Tax
	Agreements		Patents		Relationships			Tradename		Goodwill			Deductible
Advantage	$	—	$	—	$	—		$	—	$	11,481	*	$	11,481
Ficus		—		—		—			—		8,889	*		8,889
Boxpack		—		—		2,694	*		—		1,978	*		4,672
Shelter		—		—		2,019	*		—		2,020	*		4,039
Endurable		—		—		4,617	*		—		2,482	*		7,099
Walnut Hollow		—		—		1,263	*		—		263	*		1,526
Gilmores		—		—		1,938	*		—		1,938	*		3,876
PalletOne		—		—		18,089			17,450		44,378			79,917
Atlantic Prefab		417		—		1,620			150		1,356			3,543
Exterior Designs		667		—		2,592			240		2,241			5,740
Patriot Building Systems		306		—		1,188			110		1,036			2,640
FRCT		1,090		—		1,960			210		1,962			5,222
Enwrap		790		1,293		558			474		3,705			6,820
T&R		600		—		5,000			2,600		4,258			12,458
Quest		—		—		10,318			1,903		8,041			20,262

*(estimate)

The business combinations mentioned above were not significant to our operating results individually or in aggregate, and thus pro forma results for 2021 and 2020 are not presented.

GOODWILL AND OTHER INTANGIBLE ASSETS

12 Months Ended

Dec. 25, 2021

GOODWILL AND OTHER INTANGIBLE ASSETS

D.GOODWILL AND OTHER INTANGIBLE ASSETS

As described in Note M — Segment Reporting, our segment structure is based upon the markets we serve and goodwill has been allocated to the segments using a relative fair value approach. The changes in the net carrying amount of goodwill by reporting segment for the years ended December 25, 2021 and December 26, 2020, are as follows (in thousands):


	Retail		Industrial		Construction		All Other		Corporate		Total
Balance as of December 28, 2019	$	58,098	$	81,276	$	82,911	$	7,251	$	—	$	229,536
2020 Acquisitions		3,643		6,549		18,902		4,441		—		33,535
2020 Purchase Accounting Adjustments		202		2		—		—		—		204
2020 Impairments		—		—		(11,485)		—		—		(11,485)
Foreign Exchange, Net		—		—		401		2		—		403
Balance as of December 26, 2020	$	61,943	$	87,827	$	90,729	$	11,694	$	—	$	252,193
2021 Acquisitions		13,115		43,006		4,502		13,880		—