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UFP Industries, Inc. (UFPI - Free Report) reported impressive results for fourth-quarter 2022, with earnings and net sales beating the Zacks Consensus Estimate. Yet, both metrics declined on a year-over-year basis.
Shares of this wood manufacturer and supplier moved up 3.45% in the after-hours trading session on Feb 21, post the earnings release.
Matthew J. Missad, CEO of UFP Industries, said, “Importantly, our strong balance sheet enables us to remain on offense during periods of economic uncertainty and invest in new product innovation and in markets with significant long-term value potential. Our balanced business model continues to prove its advantage by giving us the flexibility to adjust to market fluctuations and allocate resources where we see the greatest return across our diverse and complementary markets. We see opportunities in challenging times, and, as in the past, we plan to take advantage of them in 2023.”
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $2.10 per share, which surpassed the consensus mark of $1.73 by 21.4% but declined 4.1% from the year-ago adjusted level of $2.19.
Net sales of $1.91 billion outpaced the consensus mark of $1.83 billion by 4.7% but declined 5.1% year over year. The decline was due to a 10% decline in organic unit sales, partly offset by a 4% rise in prices and a 1% increase from acquisitions.
UFP Industries, Inc. Price, Consensus and EPS Surprise
New product sales were $164 million, up 36% year over year, mainly driven by Strip Pak mixed-material packaging solutions.
Segment Discussion
UFP Retail Solutions: The segment reported sales of $690.7 million for the quarter, which declined 2% year over year. A 9% decline in organic unit sales and a 2% decline caused by the transfer of certain building products to the construction segment impacted the result. Gross margin declined to 8.6% from 9.1% a year ago.
UFP Packaging: The Packaging segment’s sales totaled $522.2 million, reflecting growth of 1% from the year-ago period. For the quarter, selling prices increased 1% year over year while organic unit sales remained flat. The segment focuses more on higher-margin products and is selective in taking on new business. Gross margin increased to 25% from 24% a year ago.
UFP Construction: Sales in the segment were $604.9 million, down 11% year over year. This decline in segment sales was mainly due to a 16% decline in organic unit sales, partly offset by a 3% rise in selling prices and a 2% rise caused by the transfer of certain products from the retail solutions segment. Gross margin increased to 22.9% from 22.7% a year ago.
Operating Highlights
Selling, general and administrative expenses — accounting for 9.6% of net sales — increased 80 basis points (bps) year over year. Adjusted EBITDA of $213.2 million declined 4.5% year over year. Adjusted EBITDA margin remained flat year over year at 11.1%.
Balance Sheet & Cash Flow
The company ended 2022 with more than $1.8 billion in liquidity. Cash and cash equivalents were $559.4 million at 2022-end compared with $286.7 at 2021-end. At 2022-end, net cash from operating activities was $831.6 million, up from $512.5 million in the corresponding year-ago period.
During 2022, capital expenditures totaled $174.1 million.
During 2022 UFPI purchased approximately 1,247,000 shares at an average price of $76.83 under the share repurchase plan. Also, it issued 919,000 shares in 2022 at an average issue price of $82.61 per share for share-based compensation programs.
2022 Highlights
The net sales of the company increased 11.5% to $9.63 billion due to a 3% rise from acquisitions and a 9% increase in selling prices, partly offset by a 1% reduction in organic unit sales.
New product sales increased 53% to $736 million compared to the prior year.
Adjusted EBITDA increased 32% to $1.1 billion, wherein acquisitions contributed about $25.5 million.
2023 Guidance
For the Retail Solutions segment, UFPI expects normalized demand in 2023 with flat unit sales.
For the Packaging segment, the company expects flat to somewhat reduced unit sales in 2023.
For the Construction segment, the company anticipates housing start to decline 15-20% in 2023.
The company anticipates $200-225 million in capital expenditures in 2023, up from $174 million in 2022.
Some better-ranked stocks in the Zacks Construction sector are:
Skyline Champion Corporation (SKY - Free Report) currently carries a Zacks Rank #2. SKY has a trailing four-quarter earnings surprise of 43.2%, on average. Its shares have rallied 35.1% in the past three months.
The Zacks Consensus Estimate for SKY’s fiscal 2023 sales and EPS suggests growth of 19% and 55.7%, respectively, from the year-ago levels.
United Rentals, Inc. (URI - Free Report) currently carries a Zacks Rank #2. Shares of URI have gained 45.1% in the past six months. The long-term earnings growth rate of the company is 16.3%.
The Zacks Consensus Estimate for URI’s 2023 sales and EPS suggests growth of 20.3% and 28.3%, respectively, from the year-ago period’s reported levels.
Sterling Infrastructure, Inc. (STRL - Free Report) currently carries a Zacks Rank #2. STRL has a trailing four-quarter earnings surprise of 20%, on average. Shares of the company have gained 38.2% in the past six months.
The Zacks Consensus Estimate for STRL’s fiscal 2023 sales and EPS suggests growth of 0.6% and 9.9%, respectively.
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UFP Industries (UFPI) Q4 Earnings & Revenues Top, Shares Rise
UFP Industries, Inc. (UFPI - Free Report) reported impressive results for fourth-quarter 2022, with earnings and net sales beating the Zacks Consensus Estimate. Yet, both metrics declined on a year-over-year basis.
Shares of this wood manufacturer and supplier moved up 3.45% in the after-hours trading session on Feb 21, post the earnings release.
Matthew J. Missad, CEO of UFP Industries, said, “Importantly, our strong balance sheet enables us to remain on offense during periods of economic uncertainty and invest in new product innovation and in markets with significant long-term value potential. Our balanced business model continues to prove its advantage by giving us the flexibility to adjust to market fluctuations and allocate resources where we see the greatest return across our diverse and complementary markets. We see opportunities in challenging times, and, as in the past, we plan to take advantage of them in 2023.”
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $2.10 per share, which surpassed the consensus mark of $1.73 by 21.4% but declined 4.1% from the year-ago adjusted level of $2.19.
Net sales of $1.91 billion outpaced the consensus mark of $1.83 billion by 4.7% but declined 5.1% year over year. The decline was due to a 10% decline in organic unit sales, partly offset by a 4% rise in prices and a 1% increase from acquisitions.
UFP Industries, Inc. Price, Consensus and EPS Surprise
UFP Industries, Inc. price-consensus-eps-surprise-chart | UFP Industries, Inc. Quote
New product sales were $164 million, up 36% year over year, mainly driven by Strip Pak mixed-material packaging solutions.
Segment Discussion
UFP Retail Solutions: The segment reported sales of $690.7 million for the quarter, which declined 2% year over year. A 9% decline in organic unit sales and a 2% decline caused by the transfer of certain building products to the construction segment impacted the result. Gross margin declined to 8.6% from 9.1% a year ago.
UFP Packaging: The Packaging segment’s sales totaled $522.2 million, reflecting growth of 1% from the year-ago period. For the quarter, selling prices increased 1% year over year while organic unit sales remained flat. The segment focuses more on higher-margin products and is selective in taking on new business. Gross margin increased to 25% from 24% a year ago.
UFP Construction: Sales in the segment were $604.9 million, down 11% year over year. This decline in segment sales was mainly due to a 16% decline in organic unit sales, partly offset by a 3% rise in selling prices and a 2% rise caused by the transfer of certain products from the retail solutions segment. Gross margin increased to 22.9% from 22.7% a year ago.
Operating Highlights
Selling, general and administrative expenses — accounting for 9.6% of net sales — increased 80 basis points (bps) year over year. Adjusted EBITDA of $213.2 million declined 4.5% year over year. Adjusted EBITDA margin remained flat year over year at 11.1%.
Balance Sheet & Cash Flow
The company ended 2022 with more than $1.8 billion in liquidity. Cash and cash equivalents were $559.4 million at 2022-end compared with $286.7 at 2021-end. At 2022-end, net cash from operating activities was $831.6 million, up from $512.5 million in the corresponding year-ago period.
During 2022, capital expenditures totaled $174.1 million.
During 2022 UFPI purchased approximately 1,247,000 shares at an average price of $76.83 under the share repurchase plan. Also, it issued 919,000 shares in 2022 at an average issue price of $82.61 per share for share-based compensation programs.
2022 Highlights
The net sales of the company increased 11.5% to $9.63 billion due to a 3% rise from acquisitions and a 9% increase in selling prices, partly offset by a 1% reduction in organic unit sales.
New product sales increased 53% to $736 million compared to the prior year.
Adjusted EBITDA increased 32% to $1.1 billion, wherein acquisitions contributed about $25.5 million.
2023 Guidance
For the Retail Solutions segment, UFPI expects normalized demand in 2023 with flat unit sales.
For the Packaging segment, the company expects flat to somewhat reduced unit sales in 2023.
For the Construction segment, the company anticipates housing start to decline 15-20% in 2023.
The company anticipates $200-225 million in capital expenditures in 2023, up from $174 million in 2022.
Zacks Rank & Key Picks
UFPI currently carries a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Construction sector are:
Skyline Champion Corporation (SKY - Free Report) currently carries a Zacks Rank #2. SKY has a trailing four-quarter earnings surprise of 43.2%, on average. Its shares have rallied 35.1% in the past three months.
The Zacks Consensus Estimate for SKY’s fiscal 2023 sales and EPS suggests growth of 19% and 55.7%, respectively, from the year-ago levels.
United Rentals, Inc. (URI - Free Report) currently carries a Zacks Rank #2. Shares of URI have gained 45.1% in the past six months. The long-term earnings growth rate of the company is 16.3%.
The Zacks Consensus Estimate for URI’s 2023 sales and EPS suggests growth of 20.3% and 28.3%, respectively, from the year-ago period’s reported levels.
Sterling Infrastructure, Inc. (STRL - Free Report) currently carries a Zacks Rank #2. STRL has a trailing four-quarter earnings surprise of 20%, on average. Shares of the company have gained 38.2% in the past six months.
The Zacks Consensus Estimate for STRL’s fiscal 2023 sales and EPS suggests growth of 0.6% and 9.9%, respectively.