UFP Industries, Inc. (Nasdaq: UFPI) has announced record net sales of US$1.83 billion for the first quarter of 2021, a 77% increase over the first quarter of 2020, and record net earnings attributable to controlling interest of US$103 million, a 157% increase over the same period in 2020. The company also reported record earnings per share of US$1.67 per diluted share compared to US$0.65 in the first quarter last year. While first quarter performance is typically limited by seasonality, net sales and earnings for the first quarter of 2021 were the highest of any quarter in the company’s history.
“UFP Industries is enjoying unprecedented growth as we benefit from strong market conditions and the successful execution of our strategic plans. We are using our new market-focused structure to target and quickly assimilate acquisitions, better leverage our fixed costs, and reallocate resources to increase capacity efficiently,” said Matthew J. Missad, Chief Executive Officer of UFP. “As a result, we are experiencing strong organic growth in our retail and industrial segments as well as in our site-built and factory-built housing business units. Our improvement in gross profit resulted from these changes, as well as a better pricing model that quickly adjusts to lumber market fluctuations and our growing line-up of new and value-added products. I want to thank our employees for their outstanding efforts and especially recognise our general managers for the improvements they’ve made at our facilities. I remain very encouraged about the growth prospects for our business as we look forward.”
The elevated level of softwood lumber prices contributed to a significant increase in the company’s cost of materials and was responsible for 44% of the 77% increase in net sales. The remaining 33% came from increased unit sales – 23% from acquisitions and 10% from organic growth.
New product sales of US$159.4 million increased 58% over the first quarter of 2020, led by Deckorators Vault decking and deck accessories, UFP-Edge shiplap and trim, Handprint project panels and ProWood Fire Retardant treated lumber.
Q1 2021 highlights (comparisons on a year-on-year basis):
- Net sales of US$1.83 billion increased 77% due to a 33% increase in unit sales and 44% increase in selling prices
- An increase in SG&A of nearly US$41 million, or 37%, is largely attributable to recent acquisitions (US$11.5 million, including amortisation expense of US$1.7 million), accrued bonus expenses (US$22.5 million) resulting from increased profitability, and increased compensation costs of US$10 million, offset by net decreases of US$3 million in travel costs and bad debt expense
- Earnings from operations of US$137.5 million increased 134%
- Adjusted EBITDA of US$162.7 million increased 111%
UFP Industries maintains a strong balance sheet with liquidity of approximately US$421 million at the end of the first quarter. The company’s operating cash flow decreased by approximately US$150 million as a result of a greater seasonal investment in net working capital of US$216 million associated with higher accounts receivable and to build inventory to satisfy strong customer demand, particularly in the retail business. Net debt increased to US$429 million from US$131 million at the end of the first quarter of 2020 due to these factors and the acquisition of PalletOne and its wholly owned subsidiary, Sunbelt Forest Products.
On 12 April 2021, Sunbelt (an affiliate of UFP Retails Solutions) completed its acquisition of Spartanburg Forest Products and its affiliates, expanding its pressure-treating capacity throughout the eastern US. In addition, on 19 April 2021, UFP closed on the purchase of Walnut Hollow Farm, which produces a variety of finely finished wood surfaces used in hobby, craft and woodworking projects, as well as in taxidermy. Both transactions broaden UFP Retail Solutions’ customer base and product offerings.
“The recent acquisitions of Sunbelt and Spartanburg not only allow us to leverage costs and improve efficiencies in wood treating, they allow us to bring our value-added products to a broader and more diverse customer base. UFP will continue to pursue acquisitions that expand our capacity, enhance our capabilities, improve efficiencies and increase our sales of value-added products,” said Missad. “Growth is baked into our DNA, and I’d encourage those looking for attractive career opportunities to consider UFP during this dynamic time. We are hiring at nearly every location in many roles and currently have about 500 jobs available for hard-working, highly motivated future team members.”
By business segment, the company reported the following first quarter 2021 results:
UFP Retail Solutions
US$759 million in net sales, up 116% over the first quarter of 2020 due to a 56% increase in selling prices, a 19% increase in organic unit sales, and a 41% unit increase resulting from acquisitions, primarily Sunbelt Forest Products. Organic unit growth was driven by Deckorators (up 64%), Handprint (up 30%), Outdoor Essentials (up 28%), and UFP Edge (up 24%). Gross profit for the segment grew 122%. Acquisitions contributed over US$10 million, or almost 23%, to the increase in gross profit.
US$448.9 million in net sales, up 75% from the first quarter of 2020. Unit sales increased 37% and selling prices increased 38%. Organic growth accounted for 5% of the unit sales growth; the acquisitions of PalletOne and T&R Lumber accounted for 32%. Gross profit for the segment rose 83%, far exceeding unit sales growth, due to the company’s focus on adding value-added products and its ability to effectively increase capacity. PalletOne and T&R Lumber contributed over US$13 million, or 30%, to the increase in gross profit.
US$559.5 million in net sales, up 47% over the first quarter of 2020, due to an 8% increase in unit sales and a 39% increase in selling prices. Unit sales to site-built and factory-built housing customers rose 21% and 15%, respectively. Unit sales to commercial customers fell 9%. Gross profit for the construction segment grew 40% over the first quarter of 2020, led by the site-built and factory-built business units.