UFP Industries Reports Record Earnings for Fourth Quarter and Year

UFP Industries, Inc. (“UFP Industries”) announced record net sales and net earnings for the fourth quarter and fiscal year 2021. The company, which passed $8.6 billion in net sales for fiscal 2021, also reported record earnings per diluted share of $8.59, a 115 percent increase over the previous year. During the fourth quarter of fiscal 2021, net sales were $2 billion, a 45 percent increase over the fourth quarter of 2020, while earnings per diluted share were $2.21, a 117 percent increase over the fourth quarter of 2020.

“Our new market-focused organizational structure is helping us to better identify growth opportunities, and we are more strategically investing our capital. These investments, coupled with the addition of new value-added products and very strong demand, have resulted in unprecedented growth,” said CEO Matthew J. Missad. “We are grateful for our hard-working teammates who overcame what we hope are once-in-a-lifetime COVID-19 disruptions, as well as normal production and delivery challenges, to meet the demand and serve our customers. We are delighted to recognize the contributions of our hourly and production employees during this challenging period by paying them more than $50 million in additional bonuses and other compensation for 2021.”

UFP Industries made four acquisitions during the fourth quarter: Shelter Products (distribution in U.S.); Boxpack Packaging (Australia), a 70 percent equity stake in Ficus Pax (industrial packaging in India), and Advantage Label & Packaging (U.S.). Altogether, UFP Industries acquired nine companies, including PalletOne and Spartanburg Forest Products, during fiscal 2021. Together, they contributed 20 percent of the unit sales growth during the fourth quarter and 24 percent during fiscal 2021.

Fourth Quarter 2021 Highlights (comparisons on a year-over-year basis):

• Net sales of $2.02 billion increased 45 percent due to a 5 percent increase in organic unit sales, a 20 percent increase in unit sales from acquisitions, and a 20 percent increase in lumber prices.
• Earnings from operations of $195 million increased 121 percent. Acquisitions contributed $19 million to earnings.
• An increase in SG&A of $91 million, or 105 percent, is largely attributable to bonus and sales incentive compensation expenses resulting from increased profitability (up $67 million), recent acquisitions ($10 million), increases in wages and benefits ($4 million), and travel and lodging (up $3 million) as employees resumed more normal business travel activity. SG&A as a percentage of gross profit rose from 46 percent to 48 percent.
• New product sales of $189.1 million increased 42 percent.
• Adjusted EBITDA of $223.3 million increased 89 percent, and adjusted EBITDA margin expanded by 260 basis points to 11.1 percent. Acquisitions contributed $25 million to adjusted EBITDA.

Fiscal 2021 Highlights (comparisons on a year-over-year basis):

• Net sales of $8.64 billion increased 68 percent due to a 4 percent increase in organic unit sales, a 24 percent increase in unit sales from acquisitions, and a 40 percent increase in lumber prices.
• Earnings from operations of $737.6 million increased 113 percent. Acquisitions contributed $50 million to earnings.
• An increase in SG&A of $238 million or 54 percent is largely attributable to increases in bonus and sales incentive compensation expenses due to increased profitability (up $147 million), recent acquisitions ($50 million), and increases in wages and benefits ($19 million) and travel and lodging ($5 million). SG&A as a percentage of gross profit fell from 56 percent to 49 percent.
• New product sales were $842 million, up 56 percent.
• Adjusted EBITDA of $834.9 million increased 93 percent, and adjusted EBITDA margin expanded by 130 basis points to 9.7 percent. Acquisitions contributed $71 million to adjusted EBITDA.

UFP Industries maintains a strong balance sheet with just over $50 million in net debt and $805 million of liquidity at the end of December 2021. As a result of the cash flow generated in 2021 and the growth opportunities ahead, the company is increasing its capital expenditure target to a range of $175-225 million in 2022, an increase over the $151 million spent in 2021. This growth reflects the enhanced speed and focus created by the new organizational structure as well as the recognition that certain organic growth has a better return on investment than some acquisition growth opportunities, as pricing for acquisitions remains elevated. The investments include additional capacity for Deckorators and UFP-Edge; new locations that expand the geographic reach of the company’s site-built operations; automation, robotics and technology; and upgrades to existing facilities that will help strengthen UFP’s position as an employer of choice. In order to be approved, each expansionary capital project must meet the company’s financial targets.

The company has also increased capital available for share repurchases. The company’s board authorized an increase in its share repurchase program to a total of up to 2.6 million shares. The company may utilize this authorization to repurchase shares to offset dilution resulting from long-term, share-based incentive compensation programs.

“The volatility in both the lumber market and the economy during the past few years has only validated the strength of our balanced business model and new market-focused structure,” said Missad. “More businesses are turning to UFP because of our growing portfolio and geographic reach, as well as our reliability as a supplier.”

By business segment, the Company reported the following 2021 results:

UFP Retail Solutions

Fourth Quarter: $703.9 million in net sales, up 39 percent over the fourth quarter of 2020 due to a 34 percent increase in unit sales from the acquisitions of Sunbelt Forest Products and Spartanburg Forest Products, a 2 percent increase in organic unit sales, and a 3 percent increase in selling prices. Unit sales increased for UFP-Edge (up 9 percent), and ProWood (up 1 percent). Unit sales fell for Deckorators (down 7 percent) and Outdoor Essentials (down 4 percent). The decline in Deckorators’ unit sales is attributable to decking accessories (down 21 percent). Unit sales for Deckorators decking rose 11 percent. Gross profit for the retail segment rose 6 percent to $64 million. Gross profit margin fell from 12 percent to 9 percent mostly due to falling lumber prices early in the quarter and a change in product mix resulting from acquisitions whose product mix is more heavily weighted toward treated lumber.

Full Year: $3.42 billion in net sales, up 58 percent from 2020 due to a 35 percent increase in unit sales from acquisitions, a 27 percent increase in selling prices, and a 4 percent decline in organic unit sales. Unit sales rose for UFP Edge (up 17 percent), Deckorators (up 9 percent), and Outdoor Essentials (up 5 percent). Unit sales fell for ProWood (down 14 percent). Gross profit rose 1.6 percent to $298 million, well below the segment’s 31 percent increase in unit sales. Gross profit was unfavorably impacted by falling lumber prices from June through October and the treated lumber sales of acquisitions.

UFP Industrial

Fourth Quarter: $514.9 million in net sales, up 67 percent from the fourth quarter of 2020 due to a 42 percent increase in selling prices, a 29 percent increase in unit sales from the acquisition of PalletOne, and a 4 percent decline in organic unit growth. Organic unit growth was adversely impacted by capacity and labor constraints, long lead times for equipment, and the company’s strategy of being more selective in taking on new business to focus on higher-margin products. Gross profit rose 152 percent to $123 million, exceeding unit sales growth of 29 percent, due to acquisitions, an increasing proportion of value-added products, and value-based pricing discipline that includes the impact of higher lumber, labor and transportation costs.

Full Year: $2.15 billion in net sales, up 100 percent from the previous year due to a 60 percent increase in selling prices, a 35 percent increase in unit sales from the acquisition of PalletOne, and a 5 percent increase in organic unit sales. Gross profit rose 163 percent to $465 million, exceeding unit sales growth of 40 percent, due to value-based pricing discipline and leveraging fixed costs, as well as a greater proportion of value-added products.

UFP Construction

Fourth Quarter: $677.3 million in net sales, up 33 percent over the fourth quarter of 2020, due to an 18 percent increase in selling prices, a 13 percent increase in organic unit growth, and a 2 percent increase in unit sales from acquisitions. Unit sales increased to these markets: commercial (up 38 percent), manufactured housing (up 20 percent) and residential (up 6 percent). Gross profit increased 98 percent to $154 million in the fourth quarter, due to better pricing discipline and the company’s ability to better leverage fixed costs.

Full Year: $2.70 billion in net sales, up 59 percent from the previous year due to a 42 percent increase in selling prices, a 14 percent increase in organic unit sales, and a 3 percent increase in unit sales from acquisitions. Unit sales increased to these markets: manufactured housing (up 25 percent), residential (up 21 percent), and commercial (up 16 percent). For the year, gross profit increased 103 percent to $531 million, exceeding unit sales growth of 17 percent, due to better pricing discipline and the company’s ability to better leverage fixed costs.

For the full fourth quarter results, click here.

About UFP Industries, Inc.

UFP Industries is a holding company whose operating subsidiaries – UFP Industrial, UFP Construction and UFP Retail Solutions – manufacture, distribute and sell a wide variety of value-added products used in residential and commercial construction, packaging and other industrial applications worldwide. Founded in 1955, the company is headquartered in Grand Rapids, Mich., with affiliates in North America, Europe, Asia and Australia. For more about UFP Industries, go to WWW.UFPI.COM.

Contact:

Dick Gauthier – Vice President Communications & Investor Relations – (616) 365-1555

Source: UFP Industries, Inc.