Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 29, 2025
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-22684
UFP INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Michigan
38-1465835
(State or other jurisdiction of incorporation or
(I.R.S. Employer Identification Number)
organization)
2801 East Beltline NE, Grand Rapids, Michigan
49525
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code (616) 364-6161
NONE
(Former name or former address, if changed since last report.)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol
Name of Each Exchange On Which Registered
Common Stock, $1 par value
UFPI
The Nasdaq Stock Market, LLC
Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻
Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated Filer ⌧
Accelerated Filer ◻
Non-Accelerated Filer ◻
Smaller Reporting Company ☐
Emerging Growth Company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with a new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
Class
Outstanding as of March 29, 2025
Common stock, $1 par value
60,394,887
=
TABLE OF CONTENTS
PART I.
FINANCIAL INFORMATION.
Page No.
Item 1.
Financial Statements
3
Condensed Consolidated Balance Sheets at March 29, 2025, December 28, 2024 and March 30, 2024
Condensed Consolidated Statements of Earnings and Comprehensive Income for the Three Months Ended March 29, 2025 and March 30, 2024
4
Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March 29, 2025 and March 30, 2024
5
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 29, 2025 and March 30, 2024
6
Notes to Unaudited Condensed Consolidated Financial Statements
7
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
19
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
33
Item 4.
Controls and Procedures
34
PART II.
OTHER INFORMATION
Legal Proceedings – NONE
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Defaults upon Senior Securities – NONE
Mine Safety Disclosures – NONE
Item 5.
Other Information
Item 6.
Exhibits
35
2
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of United States dollars, except share data)
March 29,
December 28,
March 30,
2025
2024
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
$
903,562
1,171,828
979,746
Restricted cash
1,061
7,766
761
Investments
30,725
31,087
36,978
Accounts receivable, net
712,990
500,920
713,414
Inventories:
Raw materials
388,413
388,435
410,959
Finished goods
366,500
332,389
334,336
Total inventories
754,913
720,824
745,295
Refundable income taxes
1,819
20,588
2,185
Other current assets
59,321
50,012
36,036
TOTAL CURRENT ASSETS
2,464,391
2,503,025
2,514,415
DEFERRED INCOME TAXES
4,796
5,263
3,595
RESTRICTED INVESTMENTS
42,038
39,140
29,119
RIGHT OF USE ASSETS
116,457
114,721
128,846
OTHER ASSETS
103,658
98,409
96,977
GOODWILL
340,255
339,839
335,596
INDEFINITE-LIVED INTANGIBLE ASSETS
7,307
7,300
7,322
OTHER INTANGIBLE ASSETS, NET
148,359
152,498
168,209
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment
1,810,735
1,750,211
1,596,622
Less accumulated depreciation and amortization
(887,710)
(859,468)
(802,062)
PROPERTY, PLANT AND EQUIPMENT, NET
923,025
890,743
794,560
TOTAL ASSETS
4,150,286
4,150,938
4,078,639
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
277,690
224,659
254,902
Accrued liabilities:
Compensation and benefits
123,587
193,438
133,513
Other
63,113
62,356
66,032
Current portion of lease liability
28,051
27,870
26,520
Current portion of long-term debt
4,085
4,125
44,051
TOTAL CURRENT LIABILITIES
496,526
512,448
525,018
LONG-TERM DEBT
229,936
229,830
233,046
LEASE LIABILITY
96,218
95,095
106,231
30,682
31,244
44,726
OTHER LIABILITIES
32,588
32,330
34,140
TOTAL LIABILITIES
885,950
900,947
943,161
TEMPORARY EQUITY:
Redeemable noncontrolling interest
5,280
5,366
19,383
SHAREHOLDERS’ EQUITY:
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 160,000,000; issued and outstanding, 60,394,887, 60,724,308 and 61,753,899
60,395
60,724
61,754
Additional paid-in capital
416,562
403,379
362,231
Retained earnings
2,772,821
2,775,280
2,664,081
Accumulated other comprehensive (loss) income
(12,097)
(15,311)
(307)
Total controlling interest shareholders’ equity
3,237,681
3,224,072
3,087,759
Noncontrolling interest
21,375
20,553
28,336
TOTAL SHAREHOLDERS’ EQUITY
3,259,056
3,244,625
3,116,095
TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY
See notes to consolidated condensed financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE INCOME
(in thousands of United States dollars, except per share data)
Three Months Ended
NET SALES
1,595,519
1,638,966
COST OF GOODS SOLD
1,327,323
1,312,888
GROSS PROFIT
268,196
326,078
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
176,254
192,059
NET GAIN ON DISPOSITION AND IMPAIRMENT OF ASSETS
(76)
(231)
OTHER (GAINS) LOSSES, NET
(234)
427
EARNINGS FROM OPERATIONS
92,252
133,823
INTEREST EXPENSE
2,669
3,136
INTEREST AND INVESTMENT INCOME
(11,117)
(16,493)
EQUITY IN LOSS OF INVESTEE
594
INTEREST AND OTHER
(8,429)
(12,763)
EARNINGS BEFORE INCOME TAXES
100,681
146,586
INCOME TAXES
21,258
25,487
NET EARNINGS
79,423
121,099
NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST
(670)
(308)
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST
78,753
120,791
EARNINGS PER SHARE – BASIC
1.30
1.96
EARNINGS PER SHARE – DILUTED
OTHER COMPREHENSIVE INCOME:
OTHER COMPREHENSIVE INCOME (LOSS)
3,181
(1,130)
COMPREHENSIVE INCOME
82,604
119,969
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST
(637)
(591)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST
81,967
119,378
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands of United States dollars,
Controlling Interest Shareholders’ Equity
except share and per share data)
Additional
Accumulated Other
Common
Paid-In
Retained
Comprehensive
Noncontrolling
Temporary
Stock
Capital
Earnings
Loss
Interest (NCI)
Total
Equity
Balance on December 28, 2024
Net earnings (loss)
853
79,606
(183)
Foreign currency translation adjustment
2,744
(31)
2,713
(2)
Unrealized gain on debt securities
470
(355)
99
Cash dividends - $0.35 per share - quarterly
(21,322)
Issuance of 7,197 shares under employee stock purchase plan
643
650
Issuance of 232,101 shares under stock grant programs
232
3,055
101
3,388
Issuance of 80,341 shares under deferred compensation plans
81
(81)
Repurchase of 649,060 shares
(649)
(9,460)
(59,991)
(70,100)
Expense associated with share-based compensation arrangements
11,493
Accrued expense under deferred compensation plans
7,888
Balance on March 29, 2025
Balance on December 30, 2023
61,621
354,702
2,582,332
1,106
30,429
3,030,190
20,030
622
121,413
(314)
(1,419)
616
(803)
(333)
Unrealized loss on debt securities
Distributions to NCI
(3,331)
Cash dividends - $0.33 per share - quarterly
(20,411)
Issuance of 6,251 shares under employee stock purchase plan
648
654
Issuance of 369,012 shares under stock grant programs
369
5,829
6,198
Issuance of 76,927 shares under deferred compensation plans
77
(77)
Repurchase of 319,295 shares
(319)
(17,686)
(18,631)
(36,636)
11,194
7,621
Balance on March 30, 2024
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of United States dollars)
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net earnings
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation
32,941
30,019
Amortization of intangibles
5,817
5,882
Expense associated with share-based and grant compensation arrangements
11,561
11,277
Deferred income taxes
(17)
119
Unrealized loss (gain) on investments and other
672
(2,130)
Equity in loss of investee
Net gain on sale, disposition and impairment of assets
Gain from reduction of estimated earnout liability
(344)
Changes in:
Accounts receivable
(211,709)
(164,613)
Inventories
(33,830)
(17,788)
Accounts payable and cash overdraft
52,902
52,264
Accrued liabilities and other
(46,166)
(53,290)
NET CASH USED IN OPERATING ACTIVITIES
(108,807)
(16,798)
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchases of property, plant and equipment
(67,268)
(49,148)
Proceeds from sale of property, plant and equipment
758
1,344
Acquisitions, net of cash received and purchase of equity method investment
(3,735)
Purchases of investments
(7,191)
(9,352)
Proceeds from sale of investments
2,304
4,300
(418)
(3,206)
NET CASH USED IN INVESTING ACTIVITIES
(75,550)
(56,062)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Borrowings under revolving credit facilities
4,798
5,100
Repayments under revolving credit facilities
(4,752)
(4,278)
Repayment of debt on behalf of investee
(6,303)
Contingent consideration payments and other
(221)
(3,779)
Proceeds from issuance of common stock
Dividends paid to shareholders
Distributions to noncontrolling interest
Payments to taxing authorities in connection with shares directly withheld from employees
(9,547)
(17,838)
Repurchase of common stock
(60,553)
(18,798)
21
16
NET CASH USED IN FINANCING ACTIVITIES
(90,926)
(68,968)
Effect of exchange rate changes on cash
312
79
NET CHANGE IN CASH AND CASH EQUIVALENTS
(274,971)
(141,749)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR
1,179,594
1,122,256
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
904,623
980,507
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents, beginning of period
1,118,329
Restricted cash, beginning of period
3,927
Cash, cash equivalents, and restricted cash, beginning of period
Cash and cash equivalents, end of period
Restricted cash, end of period
Cash, cash equivalents, and restricted cash, end of period
SUPPLEMENTAL INFORMATION:
Interest paid
3,038
3,099
Income taxes paid
2,496
1,778
NON-CASH INVESTING ACTIVITIES:
Capital expenditures included in accounts payable
1,770
3,351
NON-CASH FINANCING ACTIVITIES:
Common stock issued under deferred compensation plans
8,823
8,616
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
A. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements are presented in United States dollars (“US dollars” or “USD”), unless otherwise indicated.
The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America. All significant intercompany balances and transactions have been eliminated in consolidation.
We consolidate entities in which we have a controlling financial interest. In determining whether we have a controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we consider factors such as ownership interest, board representation, management representation, authority to make decisions, and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable interest entity (“VIE”) and whether we are the primary beneficiary. The primary beneficiary of a VIE is the entity that has (i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The primary beneficiary is required to consolidate the VIE. We account for unconsolidated VIEs using the equity method of accounting.
As a result of the investment in Dempsey on June 27, 2022, we own 50% of the issued equity of that entity, and the remaining 50% of the issued equity is owned by the previous owners (“Sellers”). The investment in Dempsey is an unconsolidated variable interest entity and we have accounted for it using the equity method of accounting because we do not have a controlling financial interest in the entity. The Sellers have a put right to sell their equity interest to us for $50 million and we have a call right to purchase the Seller’s equity interest for $70 million, which are both first exercisable in June 2025 and expire in June 2030. As of March 29, 2025, the carrying value of our investment in Dempsey is $55.4 million and is recorded in Other Assets. Our maximum exposure to loss consists of our investment amount and any contingent loss that may occur in the future as a result of a change in the fair value of Dempsey relative to the strike price of the put option.
In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10-K for the fiscal year ended December 28, 2024.
Seasonality has a significant impact on our working capital from March to August, which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the March 30, 2024 balances in the accompanying unaudited condensed consolidated balance sheets.
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income (Topic 220): Expense Disaggregation Disclosures. Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. This ASU provides guidance to expand disclosures related to the disaggregation of income statement expenses. Also, this ASU requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization included in each relevant expense caption. ASU 2025-01 is effective for fiscal years beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, on a retrospective or prospective basis, with early adoption permitted. We are currently evaluating the impact of adopting this guidance on the financial statement disclosures.
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures. The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories. A public entity is also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions. The amendments also remove certain disclosures that are no longer considered cost beneficial. The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. Although the ASU only modifies our required income tax disclosures, we are currently evaluating the impact of adopting this guidance on the consolidated financial statements.
In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We adopted this new standard in 2024. Our disclosures required by the new standard have been provided and updated retrospectively for all periods presented. Refer to Note G — Segment Reporting.
8
B. FAIR VALUE
We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value. Assets measured at fair value are as follows (in thousands):
March 29, 2025
December 28, 2024
Quoted
Prices with
Prices in
Active
Observable
Unobservable
Markets
Inputs
(Level 1)
(Level 2)
(Level 3)
Money market funds
80,500
39,428
119,928
356,700
21,150
377,850
Fixed income funds
5,256
33,990
39,246
5,272
33,076
38,348
Treasury securities
344
Equity securities
16,319
28,500
44,819
16,431
26,000
42,431
Alternative investments
4,034
4,044
Mutual funds:
Domestic stock funds
9,267
9,534
International stock funds
665
641
Target funds
10
Bond funds
Alternative funds
480
477
Total mutual funds
10,428
10,668
112,847
73,418
32,534
218,799
389,415
54,226
30,044
473,685
From the assets measured at fair value as of March 29, 2025, listed in the table above, $117.5 million of money market funds are held in Cash and Cash Equivalents, $30.6 million of mutual funds, equity securities, and alternative investments are held in Investments, $28.5 million of equity securities are held in Other Assets, $0.2 million of mutual funds are held in Other Assets for our deferred compensation plan, and $39.6 million of fixed income funds and $2.4 million of money market funds are held in Restricted Investments. As of December 28, 2024, $377.4 million of money market funds were held in Cash and Cash Equivalents, $31.0 million of mutual funds, equity securities, and alternative investments were held in Investments, $26.0 million of equity securities were held in Other Assets, $0.2 million of mutual funds were held in Other Assets for our deferred compensation plan, and $38.7 million of fixed income funds and $0.4 million of money market funds were held in Restricted Investments.
We maintain money market, mutual funds, bonds, and/or equity securities in our non-qualified deferred compensation plan, our wholly owned licensed captive insurance company, and assets held in financial institutions. These funds are valued at prices quoted in an active exchange market and are included in “Cash and Cash Equivalents”, “Investments”, “Other Assets”, and “Restricted Investments”. We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.
We have $28.5 million of investments through our Innov8 Fund, which is designed to invest in emerging projects, services, and technologies. These investments are valued as Level 3 assets and are categorized as “Equity securities.”
9
In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling $70.3 million and $69.8 million as of March 29, 2025 and December 28, 2024, respectively, which has been included in the aforementioned table of total investments. This portfolio consists of domestic and international equity securities, alternative investments, and fixed income bonds.
Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following (in thousands):
Unrealized
Cost
Gain (Loss)
Fair Value
Fixed income
39,913
(667)
39,645
(1,297)
13,456
2,863
13,161
3,270
Mutual funds
8,549
1,823
10,372
2,064
10,613
3,349
685
3,321
723
65,611
4,704
70,315
65,020
4,760
69,780
Our fixed income investments consist of a blend of US Government and Agency bonds and investment grade corporate bonds with varying maturities. Our equity investments consist of small, mid, and large cap growth and value funds, as well as international equity. Our mutual fund investments consist of domestic and international stock. Our alternative investments consist of a private real estate income trust which is valued as a Level 3 asset. The net pre-tax unrealized gain of the portfolio was $4.7 million and $4.8 million as of March 29, 2025 and December 28, 2024, respectively. Carrying amounts above are recorded in the Investments and Restricted Investments line items within the balance sheet as of March 29, 2025 and December 28, 2024.
C. REVENUE RECOGNITION
Within the three primary segments, UFP Retail Solutions (“Retail”), UFP Packaging (“Packaging”) and UFP Construction (“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 relative to the total estimated costs. Under over time accounting using the units of delivery method, revenues and related earnings on construction contracts are measured by the relationships of actual units produced relative to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent.
Our construction contracts are generally entered into with a fixed price, and completion of the projects can range from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates and commodity costs. During the year, we update our estimated costs to complete our projects using current labor and commodity costs and recognize losses to the extent that they exist.
The following table presents our net sales disaggregated by revenue source (in thousands):
% Change
Point in Time Revenue
1,549,304
1,604,835
(3.5)%
Over Time Revenue
46,215
34,131
35.4%
Total Net Sales
(2.7)%
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 which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in thousands):
Cost and Earnings in Excess of Billings
8,242
7,478
6,592
Billings in Excess of Cost and Earnings
4,488
6,483
10,122
11
D. EARNINGS PER SHARE
The computation of earnings per share (“EPS”) is as follows (in thousands):
Numerator:
Net earnings attributable to controlling interest
Adjustment for earnings allocated to non-vested restricted common stock equivalents
(2,975)
(4,901)
Net earnings for calculating EPS
75,778
115,890
Denominator:
Weighted average shares outstanding
60,900
61,985
Adjustment for non-vested restricted common stock equivalents
(2,523)
(2,809)
Shares for calculating basic EPS
58,377
59,176
Effect of dilutive restricted common stock equivalents
83
86
Shares for calculating diluted EPS
58,460
59,262
Net earnings per share:
Basic
Diluted
E. COMMITMENTS, CONTINGENCIES, AND GUARANTEES
We are self-insured for environmental impairment liability, including certain liabilities which are insured through a wholly owned subsidiary, Ardellis Insurance Ltd., a licensed captive insurance company.
In addition, on March 29, 2025, we were parties either as plaintiff or defendant to a number of lawsuits and claims arising through the normal course of our business. In the opinion of management, our consolidated financial statements will not be materially affected by the outcome of these contingencies and claims.
On March 29, 2025, we had outstanding purchase commitments on commenced capital projects of approximately $153.4 million.
We provide a variety of warranties for products we manufacture. Historically, warranty claims have not been material. We also distribute products manufactured by other companies. While we do not warrant these products, we have received claims as a distributor of these products when the manufacturer no longer exists or has the ability to pay. Historically, these costs have not had a material effect on our consolidated financial statements.
As part of our operations, we supply building materials and labor to site-built construction projects or we jointly bid on contracts with framing companies for such projects. In some instances, we are required to post payment and performance bonds to ensure the products and installation services are completed in accordance with our contractual obligations. We have agreed to indemnify the surety for claims properly made against these bonds. As of March 29, 2025, we had approximately $15.9 million in outstanding payment and performance bonds for open projects. We had approximately $19.7 million in payment and performance bonds outstanding for completed projects which are still under warranty.
On March 29, 2025, we had outstanding letters of credit totaling $39.6 million, primarily related to certain insurance contracts, industrial development revenue bonds, and other debt agreements described further below.
12
In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers and other third parties to guarantee our performance under certain insurance contracts and other legal agreements. As of March 29, 2025, we have irrevocable letters of credit outstanding totaling approximately $36.3 million for these types of arrangements. We have reserves recorded on our balance sheet, in accrued liabilities, that reflect our expected future liabilities under those insurance arrangements.
We are required to provide irrevocable letters of credit in favor of the bond trustees for all industrial development revenue bonds that have been issued. These letters of credit guarantee principal and interest payments to the bondholders. We currently have irrevocable letters of credit outstanding totaling approximately $3.3 million related to our outstanding industrial development revenue bonds. These letters of credit have varying terms but may be renewed at the option of the issuing banks.
Certain wholly owned domestic subsidiaries have guaranteed the indebtedness of UFP Industries, Inc. in certain debt agreements, including the Series 2018 and 2020 Senior Notes and our revolving credit facility. The maximum exposure of these guarantees is limited to the indebtedness outstanding under these debt arrangements and this exposure will expire concurrent with the expiration of the debt agreements.
We did not enter into any new guarantee arrangements during the first quarter of 2025 which would require us to recognize a liability on our balance sheet.
F. BUSINESS COMBINATIONS
We completed the following acquisitions since the end of March 2024, which were accounted for using the purchase method. Dollars below are in thousands unless otherwise noted:
Net
Company
Acquisition
Intangible
Tangible
Operating
Name
Date
Purchase Price
Assets
Segment
December 23, 2024
$29,901consideration for 100% asset purchase
12,662
17,239
Packaging
C&L Wood Products (C&L)
Located in Hartselle, AL and founded in 1975, C&L is a manufacturer of machine-built pallets, mulch, and other wood products. The company had trailing 12-month sales of approximately $25 million through November 2024.
The intangible assets for the above investment have not been finalized and allocated to their respective identifiable asset and goodwill accounts. This investment contributed approximately $6.1 million to net sales and $0.2 million to operating profits during the first three months of 2025.
The business combination mentioned above was not significant to our operating results and thus pro forma results for 2025 and 2024 are not presented.
G. SEGMENT REPORTING
ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. Our CODM is the chief executive officer, as he has the ultimate decision-making authority related to assessing the Company’s performance and allocating resources. The CODM assesses performance for our segments and decides how to allocate resources based on net sales, cost of goods sold, earnings from operations and net earnings. These metrics are also reported on the Consolidated Statement of Earnings and Comprehensive Income. The measure of segment assets is reported on the Consolidated Balance Sheet as total consolidated assets. The CODM uses earnings from operations and net earnings to evaluate income generated from segment assets (return on investment) in determining wage increase allocations and bonus pools, and in deciding whether to reinvest profits into the business, such as for acquisitions, or to pay dividends.
13
We operate manufacturing, treating and distribution facilities internationally, but primarily in the United States. Our business segments consist of UFP Retail Solutions, UFP Packaging and UFP Construction and align with the end markets we serve. This segment structure allows for a specialized and consistent sales approach among Company operations, efficient use of resources and capital, and quicker introduction of new products and services. We manage the operations of our individual locations primarily through a market-centered reporting structure under which each location is included in a business unit and business units are included in our Retail, Packaging, and Construction segments. In the case of locations that serve multiple segments, results are allocated and accounted for by segment.
The exception to this market-centered reporting and management structure is our International segment, which comprises our packaging operations in Mexico, Canada, Spain, India, United Arab Emirates and Australia and sales and buying offices in other parts of the world, and our Ardellis segment, which represents our wholly owned fully licensed captive insurance company based in Bermuda. Our International and Ardellis segments do not meet the quantitative thresholds in order to be separately reported and accordingly, the International and Ardellis segments have been aggregated in the “All Other” segment for reporting purposes.
“Corporate” includes purchasing, transportation, corporate ventures, and administrative functions that serve our operating segments. Operating results of Corporate primarily consist of net sales to external customers initiated by UFP Purchasing and over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns, leases and operates transportation equipment, are also included in the Corporate column. Inter-company lease and service charges are assessed to our operating segments for the use of these assets and services at fair market value rates. Total assets in the Corporate column include unallocated cash and cash equivalents, certain prepaid assets, and certain property, equipment and other assets pertaining to the centralized activities of Corporate, UFP Real Estate, Inc., UFP Transportation, Inc., and UFP Purchasing, Inc. Real estate activities are conducted by the real estate company on behalf of the segments, and capital expenditures associated with real estate are allocated to the segments.
The tables below are presented in thousands:
Three Months Ended March 29, 2025
All
Retail
Construction
Corporate
Net sales to outside customers
607,383
410,008
515,940
60,298
1,890
Intersegment net sales
(64,645)
(23,714)
(26,561)
(90,484)
205,404
Cost of goods sold
526,088
340,434
425,140
49,666
(14,005)
Gross Profit
81,295
69,574
90,800
10,632
15,895
Selling, general, administrative expenses
55,355
47,769
62,784
8,462
1,884
Net loss (gain) on disposition and impairment of assets
24
32
120
(252)
Other (gains) losses, net
(218)
80
(54)
(42)
Earnings from operations
26,134
21,773
27,816
2,224
14,305
Interest expense
30
2,969
Interest and investment income
(90)
(1)
(10,718)
325
(306)
Interest and other
(60)
328
(947)
(7,749)
Earnings before income taxes
26,194
21,445
27,817
3,171
22,054
Income taxes
5,531
4,528
5,873
669
4,657
20,663
16,917
21,944
2,502
17,397
Other significant items:
Amortization expense
957
2,179
702
1,601
378
Depreciation expense
7,310
8,897
6,191
944
9,599
Segment assets
995,830
812,033
659,478
341,947
1,340,998
Capital expenditures
32,308
25,260
6,428
614
2,658
67,268
14
Three Months Ended March 30, 2024
628,765
424,418
517,896
66,947
940
59,346
20,926
20,035
71,257
(171,564)
527,641
338,978
403,561
49,002
(6,294)
101,124
85,440
114,335
17,945
7,234
55,610
53,941
69,150
13,391
(33)
Net (gain) loss on disposition and impairment of assets
(272)
253
(9)
(202)
(194)
(156)
690
87
45,980
31,246
45,342
3,873
7,382
29
(817)
3,920
(123)
(10)
(11)
(2,774)
(13,575)
(94)
588
(3,591)
(9,655)
46,074
30,658
45,353
7,464
17,037
8,011
5,330
7,885
1,298
2,963
38,063
25,328
37,468
6,166
14,074
998
2,192
1,534
456
6,965
8,469
5,384
789
8,412
966,544
794,418
655,972
310,360
1,351,345
13,400
13,311
12,626
1,029
8,782
49,148
The following table presents goodwill by segment as of March 29, 2025, and December 28, 2024 (in thousands):
All Other
Balance as of December 28, 2024
84,116
146,747
87,401
21,575
2025 Purchase Accounting Adjustments
Foreign Exchange, Net
372
404
Balance as of March 29, 2025
84,115
146,759
87,434
21,947
15
The following table presents our disaggregated net sales (in thousands) by business unit for each segment for the three months ended March 29, 2025, and March 30, 2024 (in thousands).
Deckorators
65,612
74,135
ProWood
540,469
553,245
1,302
1,385
Total Retail
Structural Packaging
255,982
274,150
PalletOne
134,219
132,490
Protective Packaging
19,807
17,778
Total Packaging
Factory Built
217,219
191,834
Site Built
190,617
221,559
Commercial
63,720
61,384
Concrete Forming
44,384
43,119
Total Construction
H. INCOME TAXES
Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for foreign, state and local income taxes and permanent tax differences. Our effective tax rate was 21.1% in the first quarter of 2025 compared to 17.4% in the same period of 2024. The increase in our effective tax rate for the first quarter was primarily due to a decrease in our tax deduction from stock-based compensation accounted for as a permanent difference.
I. COMMON STOCK
Below is a summary of common stock issuances for the first three months of 2025 and 2024 (in thousands, except average share price):
Share Issuance Activity
Common Stock
Average Share Price
Shares issued under the employee stock purchase plan
106.31
Shares issued under the employee stock gift program
1
114.30
Shares issued under the director compensation plan
115.32
Shares issued under the LTSIP
179
106.65
Shares issued under the executive stock match plan
60
109.84
Forfeitures
Total shares issued under stock grant programs
107.49
Shares issued under the deferred compensation plans
109.82
During the first three months of 2025, we repurchased 649,060 shares of our common stock at an average share price of $108.00.
March 30, 2024
123.01
117.78
Shares issued under the director retainer stock program
116.27
306
113.49
Shares issued under the executive stock grants plan
64
111.35
(3)
113.13
112.00
During the first three months of 2024, we repurchased approximately 319,295 shares of our common stock at an average share price of $114.74.
J. INVENTORIES
Inventories are stated at the lower of cost or net realizable value. The cost of inventories includes raw materials, direct labor, and manufacturing overhead and is determined using the weighted average cost method. 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 write down the value of inventory, the impact of which is reflected in cost of goods sold in the Condensed Consolidated Statement of Earnings and Comprehensive Income, if the cost of specific inventory items on hand exceeds the amount we expect to realize from the ultimate sale or disposal of the inventory. These estimates are based on management's judgment regarding future demand and market conditions and analysis of historical experience. The lower of cost or net realizable value adjustments to inventory were not significant as of March 29, 2025 and March 30, 2024.
17
K. SUBSEQUENT EVENTS
Subsequent to our reporting date, we repurchased 1,153,370 shares for $120.6 million, at an average share price of $104.56.
18
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
UFP Industries, Inc. is a holding company with subsidiaries in North America, Europe, Asia, and Australia that design, manufacture, and supply products made from wood, wood and non-wood composites, and other materials to three segments: retail, packaging, and construction. Our business segments are functionally interdependent and are supported by common corporate services, such as accounting and finance, information technology, human resources, marketing, purchasing, transportation, legal and compliance, among others. We regularly invest in automation and implement best practices to improve the efficiency of our manufacturing facilities across each of the segments. The results and improvements from these investments are shared among the segments. This exchange of ideas drives faster innovation for new products, processes, and product improvements. While the majority of our facilities serve only one business segment, many of our larger facilities serve two or more segments.
We believe that our operating structure allows us to better evaluate market conditions and opportunities and more effectively allocate capital and resources to the appropriate segments and business units. Also, we believe our diversification and manner in which we operate our business provide an inherent hedge against the business cycles our end markets experience and over which we have limited control. Accordingly, we have the ability to provide more stable earnings and cash flows to our shareholders. Our diversification and operating practices also mitigate the impact that more volatile lumber market conditions have on traditional lumber companies. We are headquartered in Grand Rapids, Mich.
This report 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. We do 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 currency and inflation; fluctuations in the price of lumber; adverse economic conditions in the markets we serve; changes in tariffs, import/export regulations, and other trade policies; concentration of sales to customers; the success of vertical integration strategies; excess capacity or supply chain challenges; our ability to make successful business acquisitions; government regulations, particularly involving environmental and safety regulations; adverse or unusual weather conditions; inbound and outbound transportation costs; alternatives to replace treated wood products; cybersecurity breaches; and potential pandemics. Certain of these risk factors as well as other risk factors and additional information are included in our reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission.
OVERVIEW
Our results for the first quarter of 2025 include the following highlights:
HISTORICAL LUMBER PRICES
We experience significant fluctuations in the cost of commodity lumber products from primary producers (“Lumber Market”). The following table presents the Random Lengths framing lumber composite price:
Random Lengths Composite
Average $/MBF
January
434
398
February
442
389
March
479
416
First quarter average
452
401
First quarter percentage change
12.7
%
In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprise almost two-thirds of our total lumber purchases.
Random Lengths SYP
386
380
371
424
394
382
5.8
20
Higher overall lumber prices in 2025 compared to 2024 is primarily due to increased end market demand in the U.S. as well as various supply constraints. A change in lumber prices impacts profitability of products sold with fixed and variable prices, as discussed below. If recently proposed tariffs are enforced, which have been paused in Mexico and Canada, the demand for domestic product is expected to increase, which will likely increase costs as capacity gets challenged. Although the trade landscape continues to evolve, since we do not own any foreign sawmills and have excellent relationships with our mill partners, we believe we are currently in a strong position to adapt quickly to tariffs without material adverse financial impact after a short adjustment period. We will continue to monitor the market and make decisions quickly to minimize disruption. As of March 29, 2025, 84% of our lumber purchases are from domestic suppliers and 15% are imported from Canada and other international suppliers.
IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS
We generally price our products to pass lumber costs through to our customers so that our profitability is based on the value-added manufacturing, distribution, engineering, and other services we provide. As a result, our dollar sales levels (and working capital requirements) are impacted by the lumber costs of our products. Lumber costs were 43.8% and 39.8% of our sales in the first three months of 2025 and 2024, respectively.
Our gross margins are impacted by (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower from comparative periods), and (2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing or decreasing within a period or from period to period). Additionally, as explained below, product categories can be priced differently. Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported Lumber Market with a fixed dollar adder to cover conversion costs and profits. Consequently, the level and trend of the Lumber Market impact our products differently.
Below is a general description of the primary ways in which our products are priced.
For each of the product pricing categories above, our margins are exposed to changes in the trend of lumber prices. As a result of the balance in our net sales to each of our end markets, we believe our gross profits are more stable than those of our competitors who are less diversified.
The greatest risk associated with changes in the trend of lumber prices is on the following products:
In addition to the impact of Lumber Market trends on gross margins, changes in the level of the market cause fluctuations in gross margins when comparing operating results from period to period. This is explained in the following example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend within each period.
Period 1
Period 2
Lumber cost
300
400
Conversion cost
50
= Product cost
350
450
Adder
= Sell price
500
Gross margin
12.5
10.0
As is apparent from the preceding example, the level of lumber prices does not impact our overall profits but does impact our margins. Gross margins and operating margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low.
BUSINESS COMBINATIONS AND ASSET PURCHASES
We completed one business acquisition in fiscal 2024. The annual historical sales attributable to this acquisition are approximately $25 million. This business combination is not significant to our quarterly results and thus pro forma results for 2025 and 2024 are not presented.
See Notes to the Unaudited Condensed Consolidated Financial Statements, Note F, “Business Combinations” for additional information.
22
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the components of our Unaudited Condensed Consolidated Statements of Earnings as a percentage of net sales.
Net sales
100.0
83.2
80.1
Gross profit
16.8
19.9
Selling, general, and administrative expenses
11.0
11.7
Net gain on disposition and impairment of assets
8.2
(0.5)
(0.8)
6.3
8.9
1.3
1.6
5.0
7.4
Less net earnings attributable to noncontrolling interest
4.9
Note: Actual percentages are calculated and may not sum to total due to rounding.
As a result of the impact of the level of lumber prices on the percentages displayed in the table above (see Impact of the Lumber Market on Our Operating Results), we believe it is useful to compare our change in units sold with our change in gross profits, selling, general, and administrative expenses, and operating profits as presented in the following table.
Percentage Change
Units sold
(2.0)
(1.0)
(17.8)
(9.0)
(8.2)
(1.3)
(31.1)
(17.2)
The following table presents, for the periods indicated, our selling, general, and administrative (SG&A) costs as a percentage of gross profit. Over time, we believe this ratio provides an enhanced view of our effectiveness in managing these costs given our strategies to enhance our capabilities and improve our value-added product offering and recognizing the higher relative level of SG&A these strategies require. This ratio also mitigates the impact of changing lumber prices. The increase in the ratio of SG&A as a percentage of gross profit from the prior year is primarily due to the impact of competitive pricing and higher material costs, which has reduced our gross profits.
SG&A as percentage of gross profit
65.7%
58.9%
23
Operating Results by Segment:
Our business segments consist of UFP Retail Solutions (“Retail”), UFP Packaging (“Packaging”) and UFP Construction (“Construction”), and align with the end markets we serve. Among other advantages, this structure allows for a more specialized and consistent sales approach, more efficient use of resources and capital, and quicker introduction of new products and services. We manage the operations of our individual locations primarily through a market-centered reporting structure under which each location is included in a business unit, and business units are included in our Retail, Packaging, and Construction segments. The exception to this market-centered reporting and management structure is our International segment, which comprises our packaging operations in Mexico, Canada, Spain, India, and Australia and sales and buying offices in other parts of the world. Our International segment and Ardellis (our insurance captive) are included in the “All Other” column of the table below. The “Corporate” column includes purchasing, transportation, corporate ventures, and administrative functions that serve our operating segments. Operating results of Corporate primarily consists of over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns, leases, and operates transportation equipment, are also included in the Corporate column. Inter-company lease and services charges are assessed to our operating segments for the use of these assets and services at fair market value rates.
The following tables present our operating results, for the periods indicated, by segment (in thousands).
The following tables present the components of our operating results, for the periods indicated, as a percentage of net sales by segment.
N/A
86.6
83.0
82.4
13.4
17.0
17.6
9.1
12.2
14.0
(0.1)
4.3
5.3
5.4
3.7
83.9
79.9
77.9
73.2
16.1
20.1
22.1
26.8
8.8
20.0
0.1
1.0
7.3
25
We design, manufacture and market wood and wood-alternative products, primarily used to enhance outdoor living environments; for national home centers and other retailers; for engineered wood components, structural lumber, and other products for factory-built and site-built residential and commercial construction; customized interior fixtures used in a variety of retail stores, commercial, and other structures; and structural wood packaging, components and packing materials for various industries. Our strategic long-term sales objectives include:
First Quarter 2025 versus First Quarter 2024
in Sales
in Selling Prices
in Units
Acquisition Unit Change
Organic Unit Change
(3.4)
0.6
(4.0)
(1.4)
(3.0)
(0.4)
3.0
(9.9)
1.1
(11.0)
101.1
Total Sales
(2.7)
(0.7)
The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total sales by our segments:
Value-Added
Commodity-Based
51.4
48.6
75.2
24.8
75.7
24.3
79.8
20.2
80.5
19.5
75.4
24.6
77.7
22.3
66.1
33.9
82.9
17.1
67.4
32.6
67.8
32.2
Note: Certain prior year product reclassifications and the change in designation of certain products as "value-added" resulted in a change in prior year's sales.
26
Our overall unit sales of value-added products were up 2% in the first quarter of 2025 compared to the same period last year. Our overall unit sales of commodity-based products decreased approximately 3% in the first quarter of 2025 compared to the same period last year.
The table below presents new product sales in thousands:
New Product Sales by Segment
% of Segment
Net Sales
45,274
7.5
45,780
(1.1)
45,028
49,881
11.8
(9.7)
15,353
20,940
4.0
(26.7)
216
0.4
106
0.2
103.8
417
504
53.6
(17.3)
Total New Product Sales
106,288
6.7
117,211
7.2
(9.3)
Note: Certain prior year product reclassifications and the change in designation of certain products as "new" resulted in a change in prior year's sales.
Retail Segment
Net sales in the first quarter of 2025 decreased by 3% compared to the same period of 2024 due to a 1% increase in selling prices and a 4% decrease in units. Unit changes within this segment consisted of decreases of 11% in Deckorators and 3% in ProWood. Our unit sales to big box customers, which we believe are more closely correlated with repair and remodel activity, decreased approximately 3%, while unit sales to independent retailers, which we believe are more closely correlated to new housing starts, decreased approximately 7%. Within our Deckorators business unit, our sales of wood-plastic composite decking, mineral-based-composite decking (sold under our new Surestone tradename) and railing systems decreased 14%. We believe our unit decline is due to a recent change in customer mix in which we lost market share with one big box customer and gained market share with another. For the remainder of the year we believe we will benefit from a modest net gain in market share as we begin stocking approximately 1,500 stores and continue to add capacity to produce our mineral-based composite decking. We expect to realize the full benefit of our net market share gain in 2026. Our long-term goal is to double our market share over the next 5 years.
27
Gross profits decreased by $20 million, or 20% to $81 million for the first quarter of 2025 compared to the same period last year. The change in gross profit was attributable to the following:
SG&A remained flat in the first quarter of 2025 compared to the same period of 2024. Accrued bonus expense, which varies with the overall profitability and return on investment of the segment, decreased approximately $5 million from the first quarter of 2024 and totaled approximately $9 million for the quarter. This decrease, along with other smaller decreases in various accounts, was substantially offset by an increase in advertising of $5 million related to Deckorators.
Earnings from operations for the Retail reportable segment decreased in the first quarter of 2025 compared to 2024 by $20 million, or 43%, as a result of the factors mentioned above.
Packaging Segment
Net sales in the first quarter of 2025 decreased 3% compared to the same period of 2024, due to a 1% decrease in selling prices and a 3% decrease in organic unit sales, partially offset by an acquired business which contributed to 1% unit growth. Organic unit changes consist of decreases of 1% in PalletOne and 5% in Structural Packaging, primarily due to a decline in demand, partially offset by growth of 13% in Protective Packaging due to market share gains. The decrease in selling prices is due to competitive price pressure primarily in our Structural Packaging business unit.
Gross profits decreased by $16 million, or 19%, for the first quarter of 2025 compared to the same period last year. The change in gross profit was attributable to the following:
SG&A decreased by approximately $6 million, or 11%, in the first quarter of 2025 compared to the same period of 2024. Accrued bonus expense, which varies with the overall profitability and return on investment of the segment, decreased approximately $2 million relative to the same period of 2024, and totaled $8 million for the quarter. The remaining decrease is attributable to other incentives which declined by $1 million for this quarter as well as many smaller decreases in several accounts.
Earnings from operations for the Packaging reportable segment decreased in the first quarter of 2025 compared to 2024 by $10 million, or 30%, due to the factors discussed above.
28
Construction Segment
Net sales in the first quarter of 2025 remained flat compared to the same period of 2024 due to a 3% decrease in selling prices offset by a 3% organic unit increase. We experienced unit increases of 13% in factory-built, 4% in commercial construction, and 3% in concrete forming. Our growth in factory-built is primarily due to an increase in industry production. These increases were partially offset by a 5% decrease in site-built, primarily due to softer demand for housing. As of March 29, 2025 and March 30, 2024, we estimate that our backlog of orders in our site-built construction business unit were $65 million and $79 million, respectively. The decrease in pricing was primarily due to competitive price pressure in our site-built business unit.
Gross profits decreased by $24 million, or 21%, in the first quarter of 2025 compared to the same period of 2024. The change in our gross profit was comprised of the following:
SG&A decreased by approximately $6 million, or 9%, in the first quarter of 2025 compared to the same period of 2024. Accrued bonus expense declined by $4 million and totaled $10 million for the quarter. The decline in SG&A was also attributable to other incentives and many smaller decreases in several accounts.
Earnings from operations for the Construction reportable segment decreased in the first quarter of 2025 compared to 2024 by $18 million, or 39%, due to the factors mentioned above.
All Other Segment
Our All Other reportable segment consists of our International and Ardellis (our insurance captive) segments that are not significant.
The corporate segment consists of over (under) allocated costs that are not significant.
OFF-BALANCE SHEET TRANSACTIONS
We have no significant off-balance sheet transactions.
LIQUIDITY AND CAPITAL RESOURCES
The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):
Cash used in operating activities
Cash used in investing activities
Cash used in financing activities
Net change in all cash and cash equivalents
In general, we fund our growth through a combination of operating cash flows, our revolving credit facility, and issuance of long-term notes payable at times when interest rates are favorable. We have not issued equity to finance growth except in the case of a large acquisition that occurred many years ago. We manage our capital structure by attempting to maintain a targeted ratio of debt to equity and debt to earnings before interest, taxes, depreciation and amortization. We believe this is one of many important factors to maintaining a strong credit profile, which in turn helps ensure timely access to capital when needed.
Seasonality has a significant impact on our working capital due to our primary selling season which occurs during the period from March to September. Consequently, our working capital typically increases during our first and second quarters resulting in negative or modest cash flows from operations during those periods. Conversely, we tend to experience a substantial decrease in working capital once we move beyond our peak selling season which typically results in significant cash flows from operations in our third and fourth quarters.
Due to the seasonality of our business and the effects of the Lumber Market, we believe our cash cycle (days of sales outstanding plus days supply of inventory less days of payables outstanding) is a good indicator of our working capital management. As indicated in the table below, our cash cycle was 62 days during the first quarter of 2025 and in the same period of the prior year.
Days of sales outstanding
Days supply of inventory
41
Days of payables outstanding
(13)
Days in cash cycle
62
We continue to focus on past due account balances with customers, and the percentage of our accounts receivable that are current was 94% and 95% at the end of the first quarter of 2025 and 2024, respectively.
In the first three months of 2025, our cash flows used in operations were $109 million and were comprised of net earnings of $79 million, $51 million of non-cash expenses, and a $239 million increase in working capital since the end of December 2024. Our cash flows used in operations increased by $92 million compared to the same period of last year primarily due to the increase in our investment in net working capital since year end, which was $55 million higher in 2025 compared to 2024.
Purchases of property, plant, and equipment of $67 million comprised most of our cash used in investing activities during the first three months of 2025. Outstanding purchase commitments on existing capital projects totaled approximately $153.4 million on March 29, 2025. Capital spending primarily consists of several projects to expand capacity to manufacture new and value-added products, primarily in our Packaging segment and our Site-Built and Deckorators business units, to achieve efficiencies through automation in all segments, and make improvements to a number of facilities. We intend to fund capital expenditures and purchase commitments through our operating cash flows for the balance of the year.
Cash flows used in financing activities during the first three months of 2025 primarily consisted of the following:
On March 29, 2025, we had no amount outstanding on our $750 million revolving credit facility, and we had approximately $713 million in remaining availability after considering $37 million in outstanding letters of credit. Financial covenants on the unsecured revolving credit facility and unsecured notes include minimum interest tests and a maximum leverage ratio. The agreements also restrict the amount of additional indebtedness we may incur and the amount of assets which may be sold. We were in compliance with all our covenant requirements on March 29, 2025.
At the end of the first quarter of 2025, we had approximately $2.2 billion in total liquidity, consisting of our cash, remaining availability under our revolving credit facility, and a shelf agreement with certain lenders providing up to $575 million in remaining borrowing capacity.
ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS
See Notes to Unaudited Consolidated Condensed Financial Statements, Note E, “Commitments, Contingencies, and Guarantees.”
CRITICAL ACCOUNTING POLICIES
In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States. These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations. We continually review our accounting policies and financial information disclosures. There have been no material changes in our policies or estimates since December 28, 2024.
FORWARD OUTLOOK
Our long-term financial goals include:
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We believe improvements in demand in the end markets we serve and effectively executing our strategies will allow us to achieve our long-term goals. However, in the short-term, demand in our markets has contracted due to a variety of factors, which will continue to impact our results and vary depending on the severity and duration of this cycle. As a result of these more challenging conditions, we have developed and are executing plans to reduce or eliminate capacity of locations that are not meeting our profitability targets, exit business that does not meet our profitability targets, and reduce our SG&A costs. Our goal through these actions is to lower our cost structure and improve our operating profits by $60 million by year-end 2026. We anticipate benefits of approximately $40 million by the end of 2025, including approximately $26 million from planned SG&A cost reductions and $14 million from planned capacity reductions. In 2025 we anticipate these planned decreases will be offset a $20 million increase in advertising costs in our Deckorators business unit to build our Surestone brand and other increases primarily to pursue greenfield growth opportunities, technology improvements, and product innovation.
The following factors should be considered when evaluating our future prospects:
Capital Allocation:
We believe the strength of our cash flow generation and conservative capital structure provide us with sufficient resources to grow our business and also fund returns to our shareholders. We plan to continue to pursue a balanced and return-driven approach to capital allocation across dividends, share buybacks, capital investments and acquisitions. Specifically:
Item 3. Quantitative and Qualitative Disclosures about Market Risk.
We are exposed to market risks related to fluctuations in interest rates on our variable rate debt, which consists of a revolving credit facility and industrial development revenue bonds. We do not currently enter into any material interest rate swaps, futures contracts or options on futures, or other types of derivative financial instruments to mitigate this risk.
For fixed rate debt, changes in interest rates generally affect the fair market value, but not earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not influence fair market value, but do affect future earnings and cash flows. We do not have an obligation to prepay fixed rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we are required to refinance it.
We are subject to fluctuations in the price of lumber. We experience significant fluctuations in the cost of commodity lumber products from primary producers (the “Lumber Market”). A variety of factors over which we have no control, including government regulations, tariffs and trade policies, transportation, environmental regulations, weather conditions, economic conditions, and natural disasters, impact the cost of lumber products and our selling prices. While we attempt to minimize our risk from severe price fluctuations, substantial, prolonged trends in lumber prices can affect our sales volume, our gross margins, and our profitability. We anticipate that these fluctuations will continue in the future. (See “Impact of the Lumber Market on Our Operating Results.”)
Our international operations have exposure to foreign currency rate risks, primarily due to fluctuations in their local currency, which is their functional currency, compared to the U.S. Dollar. Additionally, certain of our operations enter into transactions that will be settled in a currency other than the U.S. Dollar. We may enter into forward foreign exchange rate contracts in the future to mitigate foreign currency exchange risk. Historically, our hedge contracts have been immaterial to the financial statements.
Item 4. Controls and Procedures.
PART II. OTHER INFORMATION
Item 1A. Risk Factors.
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Fiscal Month
(4)
December 29, 2024 - February 1, 2025
62,900
111.27
191,959,011
February 2 - March 1, 2025
151,708
110.05
175,263,084
March 2 - 29, 2025
434,452
106.81
128,857,306
Note: February includes 86,899 shares tendered by certain employees of the Company (and repurchased by the Company) in order to satisfy their respective tax withholding obligations resulting from the vesting of restricted stock awards.
On and effective as of April 23, 2025, our board authorized the amendment of its share repurchase authorization, dated July 24, 2024, from up to $200 million of shares through July 31, 2025, to $300 million through the same period.
Item 5. Other Information.
During the quarter ended March 29, 2025, no director or officer adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 6. Exhibits.
The following exhibits (listed by number corresponding to the Exhibit Table as Item 601 in Regulation S-K) are filed with this report:
Certifications.
(a)
Certificate of the Chief Executive Officer of UFP Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
(b)
Certificate of the Chief Financial Officer of UFP Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
Certificate of the Chief Executive Officer of UFP Industries, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
Certificate of the Chief Financial Officer of UFP Industries, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).
Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language).
(INS)
iXBRL Instance Document.
(SCH)
iXBRL Schema Document.
(CAL)
iXBRL Taxonomy Extension Calculation Linkbase Document.
(LAB)
iXBRL Taxonomy Extension Label Linkbase Document.
(PRE)
iXBRL Taxonomy Extension Presentation Linkbase Document.
(DEF)
iXBRL Taxonomy Extension Definition Linkbase Document.
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Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: May 7, 2025
By:
/s/ William D. Schwartz, Jr.
William D. Schwartz, Jr.,
Chief Executive Officer and
Principal Executive Officer
/s/ Michael R. Cole
Michael R. Cole,
Chief Financial Officer,
Principal Financial Officer and
Principal Accounting Officer
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