In This Article:
Release Date: February 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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UFP Industries Inc (NASDAQ:UFPI) ended 2024 with strong liquidity, boasting nearly $1.2 billion in cash and an equivalent amount of debt capacity.
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The company achieved a 10.3% EBITA margin for the year, which is 300 basis points higher than 2019 levels.
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UFPI's acquisition of CNL Wood Products expands its geographic reach and strengthens its packaging segment.
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The company is investing heavily in automation, technology, and new product development to enhance shareholder value.
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UFPI's new product sales for 2024 reached $505 million, with a goal to increase new products to 10% of sales over time.
Negative Points
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UFPI experienced a 4% decline in sales for the quarter, driven by a reduction in selling prices due to weaker demand.
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The company's adjusted EBITA fell by 28% to $133 million, with margins pressured by competitive pricing.
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UFPI's packaging segment saw a 9% drop in sales, with a significant decline in structural packaging volume.
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The construction segment faced a 5% decrease in sales, with a notable decline in site-built unit volumes.
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UFPI anticipates challenging business conditions to persist into the first half of 2025, with modest unit declines expected across business units.
Q & A Highlights
Q: Can you provide an update on the decorators' shelf space changes at big box retailers and the expected impact on growth in 2025? A: We are excited about the Surestone technology, which will be placed in a big way in over 1,500 stores in the second half of the year. We are building capacities through CapEx investments, and you will see this come into play significantly in the latter half of the year. (Will Schwartz, CEO)
Q: Regarding construction gross margins, how much of the pressure is due to mix versus pricing declines? A: The pricing declines within site build were significant and are expected to continue into the first half of the year. The mix impact is also significant, as factory-built carries a different margin structure than site build, which is our highest margin business. We expect this mix impact to continue into the first half of the year. (Mike Cole, CFO)
Q: What trends are you seeing in the packaging segment from a demand and pricing standpoint? A: There continues to be pressure with market takeaway down, and we expect this to persist for at least the first half of the year. We believe pricing has reached a bottom, but we do not expect increases until demand improves. (Will Schwartz, CEO)