UFP Industries, Inc. UFPI reported mixed fourth-quarter 2024 results, wherein earnings missed the Zacks Consensus Estimate but revenues beat the same. Both metrics declined year over year.
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The quarterly results were affected by softer demand and broad-based pricing pressures. While economic challenges are expected to persist in 2025, the company remains confident that its balanced business model, variable incentive-compensation structure and ongoing growth initiatives will support continued success. Additionally, with a strong leadership team in place, the company aims to maintain culture of employee development and high performance as it pursues further expansion.
UFPI’s Earnings & Revenue Discussion
UFP Industries reported earnings per share of $1.20, which missed the Zacks Consensus Estimate of $1.23 by 2.4% and declined 25.9% from the year-ago quarter.
Net sales of $1.46 billion beat the consensus mark of $1.44 billion, but declined 4.1% year over year. This downside was mainly due to a 4% fall in selling prices. New product sales of $102 million contributed 7% to total net sales compared with 7.7% in the prior-year quarter.
UFP Industries, Inc. Price, Consensus and EPS Surprise
UFP Industries, Inc. price-consensus-eps-surprise-chart | UFP Industries, Inc. Quote
Segmental Discussion of UFPI
UFP Retail Solutions: The segment reported net sales of $525 million (up from our projection of $480 million), flat year over year. Organic unit sales grew 1%, but this gain was offset by 1% decline resulting from the transfer of certain product sales to the Packaging segment. Within specific product lines, ProWood saw 1% increase in organic unit sales, while UFP-Edge and Deckorators experienced a decrease of 2% and 4%, respectively.
Adjusted EBITDA margin rose 180 basis points (bps) from the prior year to 8.4%.
UFP Packaging: The segment’s net sales totaled $375 million, down 9% from the year-ago period’s level (down from our expectation of $377.3 million). Selling prices declined 8% and organic unit sales were down 2% year over year. This was partially balanced by a 1% increase from the transfer of certain product sales from the Retail segment.
Adjusted EBITDA margin contracted 280 bps from the prior year to 10%.
UFP Construction: Net sales in the segment were $487 million, which declined 5% from the year-ago period (down from our expectation of $491.1 million). This downturn was due to a 7% decrease in selling prices, which was overshadowed by 2% increase in organic unit sales. Factory Built saw an 18% rise in organic unit sales, driven by higher industry production and market share expansion, while Concrete Forming posted a 6% increase. In contrast, organic unit sales declined 9% in Site Built and 2% in the Commercial segment, largely due to softer demand.
Adjusted EBITDA margin contracted 360 bps from the prior year to 9.2%.
UFPI’s Operating Highlights
Selling, general and administrative expenses, accounting for 10.7% of net sales, decreased 60 bps year over year.
Adjusted EBITDA of $132.7 million declined year over year from $165.6 million. Adjusted EBITDA margin also contracted 180 bps from the prior year to 9.1%.
Balance Sheet & Cash Flow of UFPI
As of Dec. 28, 2024, the company had nearly $2.5 billion in liquidity. Cash and cash equivalents were $1.17 billion at the fourth-quarter end compared with $1.1 billion at the end of 2023. Long-term debt and finance lease obligations were $229.8 million, down from $233.5 million at 2023-end.
Net cash from operating activities was $642.6 million at the fourth-quarter end compared with $959.9 million in the year-ago period.
On Feb. 13, 2025, UFPI’s board of directors approved a quarterly dividend payment of 35 cents per share, a 6% increase from the quarterly dividend of 33 cents. The dividend is payable on March 17 to its shareholders of record as of March 3.
Short-Term Outlook of UFPI
UFPI is actively working with its domestic and international suppliers to manage the potential impact of proposed tariffs, which are currently on hold in Mexico and Canada. If implemented, tariffs could drive higher demand for domestic products, potentially increasing costs due to capacity constraints. However, with strong relationships across supply chain and no ownership of foreign sawmills, the company believes that it is well-positioned to adapt with minimal financial disruption after an initial adjustment period. UFPI continues to monitor the evolving trade landscape and remains prepared to act swiftly to mitigate any negative effects.
In terms of market conditions, the company expects demand to remain subdued in the first half of 2025, alongside a competitive pricing environment. Retail, Packaging and Construction segments are all expected to experience a slight decline in overall demand during this period.
Long-Term Outlook of UFPI
Despite near-term challenges, UFPI remains committed to its long-term growth strategy. The company aims to achieve annual unit sales growth of 7-10%, including contributions from bolt-on acquisitions, while driving at least 10% of total sales from new products. Additionally, UFPI targets EBITDA margins of 12.5%.
UFPI’s Zacks Rank & Recent Construction Releases
UFP Industries currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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