In This Article:
Building materials manufacturer UFP Industries (NASDAQ:UFPI) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 2.7% year on year to $1.6 billion. Its non-GAAP profit of $1.30 per share was 16.9% below analysts’ consensus estimates.
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UFP Industries (UFPI) Q1 CY2025 Highlights:
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Revenue: $1.6 billion vs analyst estimates of $1.63 billion (2.7% year-on-year decline, 1.9% miss)
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Adjusted EPS: $1.30 vs analyst expectations of $1.57 (16.9% miss)
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Adjusted EBITDA: $142.2 million vs analyst estimates of $159.3 million (8.9% margin, 10.8% miss)
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Operating Margin: 5.8%, down from 8.2% in the same quarter last year
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Free Cash Flow was -$197.4 million compared to -$89.69 million in the same quarter last year
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Sales Volumes fell 2% year on year (-13% in the same quarter last year)
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Market Capitalization: $5.88 billion
StockStory’s Take
UFP Industries' first quarter was shaped by ongoing macroeconomic uncertainty and persistent margin pressure, with management citing unfavorable manufacturing variances, competitive pricing, and higher input costs as key contributors. CEO Will Schwartz emphasized that while business activity improved sequentially through the quarter, overall sales trends remained challenging, particularly in the packaging and construction segments. The company also pointed to a temporary customer transition in its Deckorators business as a factor in retail volumes.
Looking ahead, management expects these headwinds to persist, with limited visibility into the second half of the year. They noted continued caution on demand, competitive pricing, and the potential impact of tariffs on Canadian lumber. Still, Schwartz reiterated a commitment to cost reduction initiatives and capacity investments, stating, “We are on track with our cost-out programs and have levers to pull should a market recovery fail to materialize.”
Key Insights from Management’s Remarks
UFP Industries' first quarter performance was largely influenced by weak demand, margin challenges from cost inflation, and product transitions within its retail division. Management focused on cost control, segment-specific performance, and capacity investments as levers to improve future results.
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Margin pressure from input costs: Management highlighted that higher material and transportation costs, coupled with unfavorable manufacturing variances, weighed on margins, particularly in the packaging and construction segments. CFO Mike Cole stated these headwinds were difficult to offset fully in a soft demand environment.
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Deckorators transition and outlook: The retail segment experienced an 11% decline in Deckorators units due to a customer shift, but management expects this to reverse as new store placements ramp up through Q2. CEO Will Schwartz noted that Surestone decking sales rose 24% and now represent more than half of composite sales.
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Cost reduction initiatives: The company is progressing toward $60 million in structural cost savings by 2026 through capacity reductions, SG&A cuts, and automation investments. These are expected to improve margins over time, even if demand recovery is delayed.
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Diversification and M&A pipeline: Management underscored a diversified business mix and an active pipeline of acquisition opportunities across business units. They reiterated flexibility to pivot capital from organic expansion to M&A based on market conditions and return thresholds.
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Capacity expansion: UFP Industries continued to invest in expanding manufacturing for new products, particularly Surestone, and announced a new Deckorators facility in the Northeast. These investments aim to support market share growth and improved efficiency as market conditions evolve.