UFP Industries Reports Record Net Earnings for Second Quarter
GRAND RAPIDS, Mich., July 22, 2020 (GLOBE NEWSWIRE) -- UFP Industries, Inc. (Nasdaq: UFPI) today announced record net earnings attributable to controlling interest of $66.5 million for the second quarter of 2020, as well as record EPS of $1.08 per diluted share, a 23 percent increase over the same period of 2019.
“I am very grateful that our operations were deemed essential and we were able to continue to serve customers during the second quarter,” said CEO Matthew J. Missad. “I am also grateful to our customers, many of whom continued to operate by finding new ways to serve the public and keep their employees safe. Their extraordinary efforts contributed to the success we experienced in the second quarter.
“While virus-related shutdowns negatively impacted our industrial and construction segments in ways we expected, the increase in home improvement activity resulting from stay-at-home orders benefited our retail segment. Conditions improved as we progressed through the second quarter, as demand in our retail segment accelerated sharply while the headwinds in our industrial and construction segments eased. Overall, our results once again validate our balanced business model and diverse product portfolio, which combine to mitigate the risk of a decline in a single market.
“We experienced much greater than expected demand for our home improvement products, and I give credit to our managers, treating and production teams, and buyers who worked tirelessly to fill customer orders and continue to do so. Our decentralized, entrepreneurial model empowers our local leaders with the decision-making authority they need to respond quickly to market changes, and our experienced team answered the call again, just as they have during other challenging times. They rapidly adapted to the changes in the markets they serve and made the changes necessary to keep our employees safe.”
The company continues to execute strategies to grow and enhance its value-added service and product offering, including:
- The company recently acquired T&R Lumber, which manufactures and distributes a range of products used primarily by nurseries, including tree boxes, plastic containers, stakes and trellises.
- New product sales grew 6 percent, driven by retail sales, which grew nearly 16 percent
UFP Industries maintains a disciplined and balanced approach to capital allocation with ample availability for growth and to return to shareholders. The company’s long-term credit facilities and cash currently provide over $562 million in available liquidity, and it continues to maintain a strong pipeline of acquisition targets. Additionally, on July 22, 2020, the company’s board approved a quarterly dividend payment of 12.5 cents a share, a prorated 25 percent increase over the dividends paid in 2019. The dividend is payable on September 15, 2020, to shareholders of record on September 1, 2020. During the first quarter, the company repurchased 750,000 shares of its common stock at an average price of $38.62; it is authorized to repurchase an additional 1.1 million shares.
Second Quarter 2020 Highlights (comparisons on a year-over-year basis):
- Earnings from operations of $92.4 million were up 24 percent, and net earnings attributable to controlling interest of $66.5 million were up 22 percent
- EBITDA of $110.4 million increased by 22 percent
- Net sales of $1.24 billion; higher lumber prices contributed 3 percent in net sales which was substantially offset by a 3 percent decrease in units sold
- Operating cash flow more than doubled to $147.2 million for the first six months of 2020, up 107 percent over the same period of 2019
- Cash reserves exceed debt by almost $37 million
By business segment, the company reported the following second-quarter results:
UFP Retail
- $609.2 million in net sales, up 26 percent over the second quarter of 2019. Retail unit sales increased 22 percent, with higher selling prices increasing sales by 4 percent. The following business units drove unit sales growth: Home and Décor (up 72 percent); ProWood (up 27 percent); Fence, Lawn and Garden (up 23 percent); and UFP-Edge (up 9 percent). Retail sales growth accelerated as the second quarter progressed, with year-over-year sales increasing from 3 percent higher in April to 47 percent higher in June.
UFP Industrial
- $224.4 million in net sales, down 23 percent from the second quarter of 2019. Unit sales decreased 27 percent, while higher selling prices contributed a 4 percent increase in gross sales. Industrial sales showed steady improvement as the second quarter progressed, with year-over-year sales improving from 32 percent lower in April to 14 percent lower in June.
UFP Construction
- $359.2 million in net sales, down 13 percent from the second quarter of 2019, due to a 16 percent decrease in unit sales and a 3 percent increase in selling prices. Unit sales fell in all business units: Concrete Forming (down 5 percent), Site Built (down 15 percent), Commercial (down 19 percent), and Factory Built (down 20 percent). Construction sales showed steady improvement as the second quarter progressed, with year-over-year sales improving from 19 percent lower in April to 6 percent lower in June.
CONFERENCE CALLUFP Industries will conduct a conference call to discuss information included in this news release and related matters at 8:30 a.m. ET on Thursday, July 23, 2020. The call will be hosted by CEO Matthew J. Missad and CFO Michael Cole, and will be available for analysts and institutional investors domestically at 866-518-4547 and internationally at 213-660-0879. Use conference pass code 6095819. The conference call 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 July 25, 2020, at 855-859-2056 or 404-537-3406.
UFP Industries, Inc. (formerly Universal Forest Products, Inc.)UFP Industries is a holding company whose subsidiaries supply wood, wood composite and other products to three robust markets: retail, construction and industrial. Founded in 1955, the company is headquartered in Grand Rapids, Mich., with affiliates throughout North America, Europe, Asia and Australia. 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 EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.
| CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (UNAUDITED) | ||||||||||||||||||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED | ||||||||||||||||||||||||||||
| JUNE 2020/2019 | ||||||||||||||||||||||||||||
| Quarter Period | Year to Date | |||||||||||||||||||||||||||
| (In thousands, except per share data) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||
| NET SALES | $ | 1,242,001 | 100 | % | $ | 1,239,817 | 100 | % | $ | 2,274,063 | 100 | % | $ | 2,254,943 | 100.0 | % | ||||||||||||
| COST OF GOODS SOLD | 1,037,070 | 83.5 | 1,053,091 | 84.9 | 1,901,896 | 83.6 | 1,913,950 | 84.9 | ||||||||||||||||||||
| GROSS PROFIT | 204,931 | 16.5 | 186,726 | 15.1 | 372,167 | 16.4 | 340,993 | 15.1 | ||||||||||||||||||||
| SELLING, GENERAL AND | ||||||||||||||||||||||||||||
| ADMINISTRATIVE EXPENSES | 113,781 | 9.2 | 112,891 | 9.1 | 223,121 | 9.8 | 218,207 | 9.7 | ||||||||||||||||||||
| OTHER | (1,209 | ) | (0.1 | ) | (402 | ) | - | (1,944 | ) | (0.1 | ) | 103 | - | |||||||||||||||
| EARNINGS FROM OPERATIONS | 92,359 | 7.4 | 74,237 | 6.0 | 150,990 | 6.6 | 122,683 | 5.4 | ||||||||||||||||||||
| OTHER EXPENSE, NET | (992 | ) | (0.1 | ) | 1,725 | 0.1 | 3,747 | 0.2 | 2,592 | 0.1 | ||||||||||||||||||
| EARNINGS BEFORE INCOME TAXES | 93,351 | 7.5 | 72,512 | 5.8 | 147,243 | 6.5 | 120,091 | 5.3 | ||||||||||||||||||||
| INCOME TAXES | 23,657 | 1.9 | 17,367 | 1.4 | 36,979 | 1.6 | 28,944 | 1.3 | ||||||||||||||||||||
| NET EARNINGS | 69,694 | 5.6 | 55,145 | 4.4 | 110,264 | 4.8 | 91,147 | 4.0 | ||||||||||||||||||||
| LESS NET EARNINGS ATTRIBUTABLE TO | ||||||||||||||||||||||||||||
| NONCONTROLLING INTEREST | (3,231 | ) | (0.3 | ) | (630 | ) | (0.1 | ) | (3,642 | ) | (0.2 | ) | (1,092 | ) | - | |||||||||||||
| NET EARNINGS ATTRIBUTABLE TO | ||||||||||||||||||||||||||||
| CONTROLLING INTEREST | $ | 66,463 | 5.4 | $ | 54,515 | 4.4 | $ | 106,622 | 4.7 | $ | 90,055 | 4.0 | ||||||||||||||||
| EARNINGS PER SHARE - BASIC | $ | 1.08 | $ | 0.88 | $ | 1.73 | $ | 1.46 | ||||||||||||||||||||
| EARNINGS PER SHARE - DILUTED | $ | 1.08 | $ | 0.88 | $ | 1.73 | $ | 1.46 | ||||||||||||||||||||
| SUPPLEMENTAL SALES AND SG&A DATA | ||||||||||||||||||||||||||||
| Quarter Period | Year to Date | |||||||||||||||||||||||||||
| Segment Classification | 2020 | 2019 | % | 2020 | 2019 | % | ||||||||||||||||||||||
| Retail | $ | 609,190 | $ | 482,090 | 26.4 | % | $ | 961,351 | $ | 815,190 | 17.9 | % | ||||||||||||||||
| Industrial | 224,379 | 291,245 | -23.0 | % | 480,922 | 566,004 | -15.0 | % | ||||||||||||||||||||
| Construction | 359,170 | 414,825 | -13.4 | % | 740,325 | 779,962 | -5.1 | % | ||||||||||||||||||||
| All Other | 49,411 | 52,669 | -6.2 | % | 91,804 | 94,779 | -3.1 | % | ||||||||||||||||||||
| Corporate | (149 | ) | (1,012 | ) | -85.3 | % | (339 | ) | (992 | ) | -65.8 | % | ||||||||||||||||
| Total Net Sales | $ | 1,242,001 | $ | 1,239,817 | 0.2 | % | $ | 2,274,063 | $ | 2,254,943 | 0.8 | % | ||||||||||||||||
| 2020 | % of Sales | 2019 | % of Sales | 2020 | % of Sales | 2019 | % of Sales | |||||||||||||||||||||
| SG&A, Excluding Bonus Expense | $ | 85,884 | 6.9 | $ | 94,620 | 7.6 | $ | 181,232 | 8.0 | $ | 187,554 | 8.3 | ||||||||||||||||
| Bonus Expense | 27,897 | 2.2 | 18,271 | 1.5 | 41,889 | 1.8 | 30,653 | 1.4 | ||||||||||||||||||||
| Total SG&A | $ | 113,781 | 9.2 | $ | 112,891 | 9.1 | $ | 223,121 | 9.8 | $ | 218,207 | 9.7 | ||||||||||||||||
| SG&A, Excluding Bonus Expense, as a Percentage of Gross Profit | 41.9 | % | 50.7 | % | 48.7 | % | 55.0 | % | ||||||||||||||||||||
| CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED) | ||||||||||||||||||
| JUNE 2020/2019 | ||||||||||||||||||
| (In thousands) | ||||||||||||||||||
| ASSETS | 2020 | 2019 | LIABILITIES AND EQUITY | 2020 | 2019 | |||||||||||||
| CURRENT ASSETS | CURRENT LIABILITIES | |||||||||||||||||
| Cash and cash equivalents | $ | 200,546 | $ | 20,497 | Cash overdraft | $ | - | $ | 24,972 | |||||||||
| Restricted cash | 724 | 1,024 | Accounts payable | 199,338 | 189,649 | |||||||||||||
| Investments | 19,195 | 16,776 | Accrued liabilities | 233,088 | 164,812 | |||||||||||||
| Accounts receivable | 522,930 | 483,263 | Current portion of debt | 2,786 | 173 | |||||||||||||
| Inventories | 459,424 | 528,680 | ||||||||||||||||
| Other current assets | 33,786 | 46,868 | ||||||||||||||||
| TOTAL CURRENT ASSETS | 1,236,605 | 1,097,108 | TOTAL CURRENT LIABILITIES | 435,212 | 379,606 | |||||||||||||
| OTHER ASSETS | 120,464 | 111,175 | LONG-TERM DEBT AND | |||||||||||||||
| INTANGIBLE ASSETS, NET | 299,963 | 273,804 | CAPITAL LEASE OBLIGATIONS | 161,057 | 187,471 | |||||||||||||
| PROPERTY, PLANT | OTHER LIABILITIES | 123,014 | 100,349 | |||||||||||||||
| AND EQUIPMENT, NET | 401,576 | 368,572 | EQUITY | 1,339,325 | 1,183,233 | |||||||||||||
| TOTAL ASSETS | $ | 2,058,608 | $ | 1,850,659 | TOTAL LIABILITIES AND EQUITY | $ | 2,058,608 | $ | 1,850,659 | |||||||||
| CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) | |||||||||
| FOR THE SIX MONTHS ENDED | |||||||||
| JUNE 2020/2019 | |||||||||
| (In thousands) | 2020 | 2019 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||
| Net earnings | $ | 110,264 | $ | 91,147 | |||||
| Adjustments to reconcile net earnings to net cash from operating activities: | |||||||||
| Depreciation | 31,330 | 29,200 | |||||||
| Amortization of intangibles | 3,129 | 2,946 | |||||||
| Expense associated with share-based and grant compensation arrangements | 2,303 | 2,209 | |||||||
| Deferred income taxes (credit) | 290 | (536 | ) | ||||||
| Unrealized loss (gain) on investments and other | 473 | (1,518 | ) | ||||||
| Net gain on disposition and impairment of assets | (271 | ) | (321 | ) | |||||
| Changes in: | |||||||||
| Accounts receivable | (155,554 | ) | (139,468 | ) | |||||
| Inventories | 25,983 | 28,008 | |||||||
| Accounts payable and cash overdraft | 57,017 | 49,947 | |||||||
| Accrued liabilities and other | 72,246 | 9,334 | |||||||
| NET CASH FROM OPERATING ACTIVITIES | 147,210 | 70,948 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||
| Purchases of property, plant, and equipment | (46,730 | ) | (42,477 | ) | |||||
| Proceeds from sale of property, plant and equipment | 644 | 977 | |||||||
| Acquisitions and purchase of noncontrolling interest, net of cash received | (18,689 | ) | (5,034 | ) | |||||
| Purchases of investments | (20,094 | ) | (4,859 | ) | |||||
| Proceeds from sale of investments | 18,339 | 3,667 | |||||||
| Other | 318 | (10 | ) | ||||||
| NET CASH USED IN INVESTING ACTIVITIES | (66,212 | ) | (47,736 | ) | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||
| Borrowings under revolving credit facilities | 6,759 | 393,434 | |||||||
| Repayments under revolving credit facilities | (6,498 | ) | (408,027 | ) | |||||
| Repayments of debt | (3,077 | ) | (3,061 | ) | |||||
| Proceeds from issuance of common stock | 697 | 542 | |||||||
| Dividends paid to shareholders | (15,374 | ) | (12,271 | ) | |||||
| Distributions to noncontrolling interest | (299 | ) | (900 | ) | |||||
| Repurchase of common stock | (29,212 | ) | - | ||||||
| Other | 32 | 28 | |||||||
| NET CASH FROM (USED IN) FINANCING ACTIVITIES | (46,972 | ) | (30,255 | ) | |||||
| Effect of exchange rate changes on cash | (1,422 | ) | 366 | ||||||
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 32,604 | (6,677 | ) | ||||||
| ALL CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 168,666 | 28,198 | |||||||
| ALL CASH AND CASH EQUIVALENTS, END OF PERIOD | $ | 201,270 | $ | 21,521 | |||||
| Reconciliation of cash and cash equivalents and restricted cash: | |||||||||
| Cash and cash equivalents, beginning of period | $ | 168,336 | $ | 27,316 | |||||
| Restricted cash, beginning of period | 330 | 882 | |||||||
| All cash and cash equivalents, beginning of period | $ | 168,666 | $ | 28,198 | |||||
| Cash and cash equivalents, end of period | $ | 200,546 | $ | 20,497 | |||||
| Restricted cash, end of period | 724 | 1,024 | |||||||
| All cash and cash equivalents, end of period | $ | 201,270 | $ | 21,521 | |||||
| EBITDA RECONCILIATION (UNAUDITED) | |||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED | |||||||||||||
| JUNE 2020/2019 | |||||||||||||
| Quarter Period | Year to Date | ||||||||||||
| (In thousands) | 2020 | 2019 | 2020 | 2019 | |||||||||
| Net earnings | 69,694 | 55,145 | 110,264 | 91,147 | |||||||||
| Interest expense | 1,898 | 2,407 | 3,805 | 4,867 | |||||||||
| Interest and investment income | (189 | ) | (512 | ) | (530 | ) | (757 | ) | |||||
| Income taxes | 23,657 | 17,367 | 36,979 | 28,944 | |||||||||
| Expense associated with share-based compensation arrangements | 859 | 922 | 2,303 | 2,209 | |||||||||
| Net (gain) loss on disposition and impairment of assets | 14 | (199 | ) | (271 | ) | (321 | ) | ||||||
| Unrealized (gain) loss on investments | (2,701 | ) | (170 | ) | 472 | (1,518 | ) | ||||||
| Depreciation expense | 15,613 | 14,725 | 31,330 | 29,200 | |||||||||
| Amortization of intangibles | 1,558 | 1,094 | 3,129 | 2,946 | |||||||||
| EBITDA | 110,403 | 90,779 | 187,481 | 156,717 | |||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AS A PERCENTAGE OF SALES | ||||||||||||
| CURRENT YEAR'S SALES STATED AT LAST YEAR'S SELLING PRICES (UNAUDITED) | ||||||||||||
| FOR THE THREE MONTHS ENDED - JUNE 2020/2019 | ||||||||||||
| Quarter Period | ||||||||||||
| Actual | Sales Adjusted toLast Year's SellingPrices | Actual | ||||||||||
| 2020 | 2020 | 2019 | ||||||||||
| NET SALES | 100.0 | % | 100.0 | % | 100.0 | % | ||||||
| COST OF GOODS SOLD | 83.5 | 83.0 | 84.9 | |||||||||
| GROSS PROFIT | 16.5 | 17.0 | 15.1 | |||||||||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 9.2 | 9.5 | 9.1 | |||||||||
| OTHER | (0.1 | ) | (0.1 | ) | - | |||||||
| EARNINGS FROM OPERATIONS | 7.4 | 7.7 | 6.0 | |||||||||
| OTHER EXPENSE, NET | (0.1 | ) | (0.1 | ) | 0.1 | |||||||
| EARNINGS BEFORE INCOME TAXES | 7.5 | 7.8 | 5.8 | |||||||||
| INCOME TAXES | 1.9 | 2.0 | 1.4 | |||||||||
| NET EARNINGS | 5.6 | 5.8 | 4.4 | |||||||||
| LESS NET EARNINGS ATTRIBUTABLE TO | ||||||||||||
| NONCONTROLLING INTEREST | (0.3 | ) | (0.3 | ) | (0.1 | ) | ||||||
| NET EARNINGS ATTRIBUTABLE TO | ||||||||||||
| CONTROLLING INTEREST | 5.4 | % | 5.5 | % | 4.4 | % | ||||||
| Note: Actual percentages are calculated and may not sum to total due to rounding. | ||||||||||||
| 2020 NET SALES | $ | 1,242,001 | ||||||||||
| 2020 SELL PRICE INCREASE | (3.00 | ) | % | |||||||||
| INCREASE IN 2020 NET SALES DUE TO SELL PRICE INCREASE | $ | (37,260 | ) | |||||||||
| ACTUAL 2020 NET SALES | 1,242,001 | |||||||||||
| ADJUSTED 2020 NET SALES | $ | 1,204,741 | ||||||||||
| ACTUAL 2020 COST OF GOODS SOLD | $ | 1,037,070 | ||||||||||
| PLUS DIFFERENCE IN NET SALES (ABOVE) | (37,260 | ) | ||||||||||
| ADJUSTED 2020 COST OF GOODS SOLD | $ | 999,810 | ||||||||||
---------------AT THE COMPANY---------------
Dick GauthierVP, Business Outreach(616) 365-1555
