Ufp industries announces first quarter results
Grand rapids, mich.--(business wire)--ufp industries, inc. (nasdaq: ufpi) today announced first quarter 2023 results including net sales of $1.82 billion, net earnings attributable to controlling interest of $126 million, and earnings per diluted share of $1.98. “given the softer economy and general uncertainty in the markets, these results are in line with our expectations and, in some instances, better than we anticipated, thanks to the hard work of our ufp teammates,” said chairman and ceo matthew j. missad. “our experienced team continues to provide excellent value to our customers while efficiently managing the business with a determination to deliver strong results for our shareholders. our strong cash flow, excellent balance sheet and prudent capital allocation enable us to take advantage of opportunities that may become available during this cycle. of course, our operations will continue to make sure we are sized correctly for current demand, while still investing in product and service enhancements and innovations to create value for our customers. our outlook remains positive, albeit at a lower level than 2021 and 2022.” first quarter 2023 highlights (comparisons on a year-over-year basis): net sales of $1.82 billion decreased 27 percent due to a 20 percent decrease in prices, an 8 percent decrease in organic unit sales, and a 1 percent increase in sales from acquisitions. new product sales of $167 million decreased 10 percent, largely due to lower lumber prices. new product sales as a percent of total sales rose to 9.1 percent from 7.4 percent in 2022. adjusted ebitda of $202 million decreased 31 percent, and adjusted ebitda margin dropped to 11.1 percent from 11.7 percent in 2022. diluted eps of $1.98 represents a 34 percent decrease from last year. capital allocation ufp industries maintains a strong balance sheet, with $145.3 million in net surplus cash (surplus cash less interest-bearing debt and cash overdraft) on april 1, 2023, compared to $409.8 million in net debt at the end of the first quarter of 2022. the company had approximately $1.7 billion of liquidity as of april 1, 2023. the company’s return-focused approach to capital allocation includes the following: - a target of $200 million for capital investments in 2023, including value-added growth investments and significant investments in robotics, automation and technology. - repurchases of approximately 451,000 shares of common stock for $35.3 million during the first quarter of 2023 (at an average price of $78.27 per share). the company is authorized to purchase an additional 1.5 million shares through february 3, 2024, and intends to continue to repurchase ufpi shares when the price is advantageous and to offset dilution resulting from long-term, share-based incentive compensation programs. - a quarterly dividend payment of $0.25 per share, approved by the board of directors on april 26, 2023, payable on june 15, 2023, to shareholders of record on june 1, 2023. the company continues to seek strategic acquisitions that drive long-term growth and margin improvements, enhance its capabilities, and create incremental value for its customers and shareholders. by business segment, the company reported the following first-quarter 2023 results: ufp retail solutions $749.6 million in net sales, down 25 percent compared to the first quarter of 2022, due to a 23 percent decline in selling prices (due to the relative decrease in the lumber market) and a 2 percent decline in organic unit sales. gross profit decreased 30 percent to $94.4 million, primarily due to the impact of products sold with a variable price. those products benefited from a significant increase in lumber prices during the first quarter of 2022. based on anticipated lumber prices, the company expects more favorable comparisons for the second quarter of 2023 over 2022. ufp packaging (formerly ufp industrial) $486.6 million in net sales, down 20 percent compared to the first quarter of 2022, due to an 18 percent decrease in selling prices, a 4 percent decline in organic unit sales, and a 2 percent increase in sales from acquisitions. gross profit decreased 19 percent to $120.9 million due to normalizing market pricing and a small decline in volume. ufp construction $515.6 million in net sales, down 34 percent compared to the first quarter of 2022, due to an 18 percent decrease in selling prices and a 16 percent decrease in organic unit sales. gross profit decreased 25 percent to $121.7 million, largely due to normalizing market pricing and a decline in volume among residential and manufactured housing customers in line with market conditions. conference call ufp industries will conduct a conference call to discuss its outlook and information included in this news release at 4:30 p.m. et on tuesday, may 2, 2023. the call will be hosted by chairman and ceo matthew j. missad and cfo michael cole and will be available simultaneously and in its entirety to all interested investors and news media through a webcast at http://www.ufpi.com. a replay of the call will be available through the website. ufp industries, inc. ufp industries is a holding company whose operating subsidiaries – ufp packaging, 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. ufp industries is ranked #401 on the fortune 500 and #149 on industry week’s list of america’s largest manufacturers. for more about ufp industries, go to www.ufpi.com. this press release contains forward-looking statements within the meaning of section 21e of the securities exchange act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the company itself. words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. these statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. the company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. actual results could differ materially from those included in such forward-looking statements. investors are cautioned that all forward-looking statements involve risks and uncertainty. among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations; and our ability to make successful business acquisitions. certain of these risk factors as well as other risk factors and additional information are included in the company's reports on form 10-k and 10-q on file with the securities and exchange commission non-gaap financial information this release includes certain financial information not prepared in accordance with u.s. gaap. because not all companies calculate non-gaap financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. management considers adjusted ebitda, a non-gaap measure, an alternative performance measure which may provide useful information to investors. net earnings net earnings refers to net earnings attributable to controlling interest unless specifically noted. condensed consolidated statements of earnings and comprehensive income (unaudited) for the three months ended march 2023/2022 quarter period and year to date (in thousands, except per share data) 2023 2022 net sales $ 1,822,476 100.0 % $ 2,489,313 100.0 % cost of goods sold 1,464,147 80.3 2,010,950 80.8 gross profit 358,329 19.7 478,363 19.2 selling, general and administrative expenses 194,683 10.7 220,150 8.8 other losses (gains), net 1,938 0.1 (812 ) — earnings from operations 161,708 8.9 259,025 10.4 interest and other (2,841 ) (0.2 ) 4,910 0.2 earnings before income taxes 164,549 9.0 254,115 10.2 income taxes 38,971 2.1 60,984 2.4 net earnings 125,578 6.9 193,131 7.8 less net loss (earnings) attributable to noncontrolling interest 491 — (3,428 ) (0.1 ) net earnings attributable to controlling interest $ 126,069 6.9 $ 189,703 7.6 earnings per share - basic $ 2.01 $ 3.01 earnings per share - diluted $ 1.98 $ 3.00 comprehensive income $ 131,830 $ 196,315 less comprehensive income attributable to noncontrolling interest (1,760 ) (4,377 ) comprehensive income attributable to controlling interest $ 130,070 $ 191,938 condensed consolidated statements of earnings by segment (unaudited) for the three months ended march 2023/2022 quarter period and year to date 2023 (in thousands) retail packaging construction all other corporate total net sales $ 749,577 $ 486,561 $ 515,593 $ 67,512 $ 3,233 $ 1,822,476 cost of goods sold 655,139 365,663 393,934 47,876 1,535 1,464,147 gross profit 94,438 120,898 121,659 19,636 1,698 358,329 selling, general and administrative expenses 53,355 66,252 67,338 13,522 (5,784 ) 194,683 other 27 (86 ) 73 2,080 (156 ) 1,938 earnings from operations $ 41,056 $ 54,732 $ 54,248 $ 4,034 $ 7,638 $ 161,708 quarter period and year to date 2022 (in thousands) retail packaging construction all other corporate total net sales $ 993,232 $ 611,369 $ 786,471 $ 95,567 $ 2,674 $ 2,489,313 cost of goods sold 858,895 461,815 625,059 64,024 1,157 2,010,950 gross profit 134,337 149,554 161,412 31,543 1,517 478,363 selling, general and administrative expenses 62,668 67,231 82,337 16,625 (8,711 ) 220,150 other 272 (68 ) 257 103 (1,376 ) (812 ) earnings from operations $ 71,397 $ 82,391 $ 78,818 $ 14,815 $ 11,604 $ 259,025 adjusted ebitda reconciliation by segment (unaudited) for the three months ended march 2023/2022 quarter period and year to date 2023 (in thousands) retail packaging construction all other corporate total net earnings $ 31,316 $ 41,325 $ 41,404 $ 4,688 $ 6,845 $ 125,578 interest and other 21 583 (5 ) (2,109 ) (1,331 ) (2,841 ) income taxes 9,719 12,824 12,849 1,455 2,124 38,971 expenses associated with share-based compensation arrangements 1,615 2,096 2,121 278 3,527 9,637 net loss (gain) on disposition and impairment of assets 36 (86 ) (47 ) (10 ) (57 ) (164 ) depreciation expense 5,618 7,682 4,628 615 7,231 25,774 amortization of intangibles 1,055 2,246 797 532 379 5,009 adjusted ebitda $ 49,380 $ 66,670 $ 61,747 $ 5,449 $ 18,718 $ 201,964 adjusted ebitda as a percentage of net sales 6.6 % 13.7 % 12.0 % 8.1 % 579.0 % 11.1 % quarter period and year to date 2022 (in thousands) retail packaging construction all other corporate total net earnings $ 54,246 $ 62,228 $ 59,903 $ 10,611 $ 6,143 $ 193,131 interest and other 23 512 — 854 3,521 4,910 income taxes 17,128 19,651 18,915 3,350 1,940 60,984 expenses associated with share-based compensation arrangements 1,221 1,408 1,464 224 2,614 6,931 net loss (gain) on disposition and impairment of assets 305 (65 ) (11 ) 10 (545 ) (306 ) depreciation expense 4,436 6,807 3,434 572 6,593 21,842 amortization of intangibles 883 1,715 864 1,082 128 4,672 adjusted ebitda $ 78,242 $ 92,256 $ 84,569 $ 16,703 $ 20,394 $ 292,164 adjusted ebitda as a percentage of net sales 7.9 % 15.1 % 10.8 % 17.5 % 762.7 % 11.7 % condensed consolidated balance sheets (unaudited) march 2023/2022 (in thousands) assets 2023 2022 liabilities and equity 2023 2022 current assets current liabilities cash and cash equivalents $ 423,299 $ 73,783 cash overdraft $ — $ 61,711 restricted cash 761 729 accounts payable 277,989 425,956 investments 37,534 35,465 accrued liabilities and other 249,350 372,640 accounts receivable 809,389 1,095,362 current portion of debt 3,020 42,895 inventories 960,338 1,230,351 other current assets 35,692 36,727 total current assets 2,267,013 2,472,417 total current liabilities 530,359 903,202 other assets 242,541 155,438 long-term debt and finance lease obligations 275,002 379,015 intangible assets, net 487,080 445,232 other liabilities 178,986 173,577 temporary equity 6,801 — property, plant and equipment, net 700,155 600,879 shareholders' equity 2,705,641 2,218,172 total assets $ 3,696,789 $ 3,673,966 total liabilities and equity $ 3,696,789 $ 3,673,966 condensed consolidated statements of cash flows (unaudited) for the three months ended march 2023/2022 (in thousands) 2023 2022 cash flows used in operating activities: net earnings $ 125,578 $ 193,131 adjustments to reconcile net earnings to net cash used in operating activities: depreciation 25,774 21,842 amortization of intangibles 5,009 4,672 expense associated with share-based and grant compensation arrangements 9,637 6,931 deferred income taxes (credit) (242 ) 101 unrealized (gain) loss on investment and other (149 ) 1,601 equity in loss of investee 588 515 net gain on sale and disposition of assets (164 ) (306 ) changes in: accounts receivable (191,064 ) (352,928 ) inventories 14,674 (258,019 ) accounts payable and cash overdraft 68,388 143,895 accrued liabilities and other (95,105 ) (6,466 ) net cash used in operating activities (37,076 ) (245,031 ) cash flows used in investing activities: purchases of property, plant, and equipment (38,166 ) (32,072 ) proceeds from sale of property, plant and equipment 319 1,207 acquisitions, net of cash received and purchase of equity method investment — (24,571 ) purchases of investments (11,709 ) (6,030 ) proceeds from sale of investments 8,849 4,725 other (1,151 ) (2,995 ) net cash used in investing activities (41,858 ) (59,736 ) cash flows (used in) from financing activities: borrowings under revolving credit facilities 4,437 242,950 repayments under revolving credit facilities (4,518 ) (141,438 ) repayments of debt (29 ) (199 ) contingent consideration payments and other (6,179 ) (551 ) proceeds from issuance of common stock 685 663 dividends paid to shareholders (15,642 ) (12,541 ) distributions to noncontrolling interest (4,859 ) (2,053 ) repurchase of common stock (33,288 ) (501 ) other 25 — net cash (used in) from financing activities (59,368 ) 86,330 effect of exchange rate changes on cash 2,739 1,726 net change in cash and cash equivalents (135,563 ) (216,711 ) all cash and cash equivalents, beginning of period 559,623 291,223 all cash and cash equivalents, end of period $ 424,060 $ 74,512 reconciliation of cash and cash equivalents and restricted cash: cash and cash equivalents, beginning of period $ 559,397 $ 286,662 restricted cash, beginning of period 226 4,561 all cash and cash equivalents, beginning of period $ 559,623 $ 291,223 cash and cash equivalents, end of period $ 423,299 $ 73,783 restricted cash, end of period 761 729 all cash and cash equivalents, end of period $ 424,060 $ 74,512
