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UFP Industries (UFPI) Down 5.1% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for UFP Industries (UFPI - Free Report) . Shares have lost about 5.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is UFP Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
UFP Industries Q1 Earnings Beat Estimates
UFP Industries reported mixed results for first-quarter 2023, with earnings beating the Zacks Consensus Estimate but net sales missing the same. Both metrics declined on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.
Nonetheless, the company has been investing in product and service enhancements and innovations to create value for customers. The company’s outlook remains positive, albeit at a slower pace compared to 2021 and 2022.
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $1.98 per share, surpassing the consensus mark of $1.65 by 20% but declined 34% from the year-ago adjusted level of $3.00.
Net sales of $1.82 billion missed the consensus mark of $1.83 billion by 0.5% and declined 27% year over year. The decline was due to an 8% decline in organic unit sales and a 20% decline in prices, partly offset by a 1% increase from acquisitions.
New product sales were $167 million, down 10% year over year, mainly due to lower lumber prices.
Segment Discussion
UFP Retail Solutions: The segment reported sales of $749.6 million for the quarter, which declined 25% year over year. A 23% decline in selling prices and a 2% decline in organic unit sales impacted the result. Gross profit declined 30% from a year ago to $94.4 million.
UFP Packaging: The Packaging segment’s sales totaled $486.6 million, reflecting growth of 20% from the year-ago period. For the quarter, selling prices increased 18% year over year while organic unit sales were down by 4%, partly offset by a 2% increase in sales from acquisitions. The segment focuses more on higher-margin products and is selective in taking on new business. Gross margin declined 19% to $120.9 million from a year ago.
UFP Construction: Sales in the segment were $515.6 million, down 34% year over year. This decline in segment sales was mainly due to a 16% decline in organic unit sales and an 18% decline in selling prices. Gross margin decreased 25% from a year ago to $121.7 million.
Operating Highlights
Selling, general and administrative expenses — accounting for 10.7% of net sales — increased 190 basis points (bps) year over year. Adjusted EBITDA of $202 million declined 31% year over year. Adjusted EBITDA margin contracted 60 bps year over year to 11.1%.
Balance Sheet & Cash Flow
The company ended first-quarter 2023 with $1.7 billion in liquidity. Cash and cash equivalents were $423.3 million at the first-quarter end compared with $559.4 million at 2022-end. At Mar 31, 2023-end, net cash used in operating activities was $37.1 million compared with $245 million in the corresponding year-ago period.
During the quarter, UFPI purchased approximately 451,000 shares at an average price of $78.27 under the share repurchase plan. It has an additional 1.5 million shares for repurchase through Feb 3, 2024. The company will also pay a quarterly dividend of 25 cents per share, payable on Jun 15, 2023, to shareholders of record on Jun 1, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, UFP Industries has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise UFP Industries has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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UFP Industries (UFPI) Down 5.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for UFP Industries (UFPI - Free Report) . Shares have lost about 5.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is UFP Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
UFP Industries Q1 Earnings Beat Estimates
UFP Industries reported mixed results for first-quarter 2023, with earnings beating the Zacks Consensus Estimate but net sales missing the same. Both metrics declined on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.
Nonetheless, the company has been investing in product and service enhancements and innovations to create value for customers. The company’s outlook remains positive, albeit at a slower pace compared to 2021 and 2022.
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $1.98 per share, surpassing the consensus mark of $1.65 by 20% but declined 34% from the year-ago adjusted level of $3.00.
Net sales of $1.82 billion missed the consensus mark of $1.83 billion by 0.5% and declined 27% year over year. The decline was due to an 8% decline in organic unit sales and a 20% decline in prices, partly offset by a 1% increase from acquisitions.
New product sales were $167 million, down 10% year over year, mainly due to lower lumber prices.
Segment Discussion
UFP Retail Solutions: The segment reported sales of $749.6 million for the quarter, which declined 25% year over year. A 23% decline in selling prices and a 2% decline in organic unit sales impacted the result. Gross profit declined 30% from a year ago to $94.4 million.
UFP Packaging: The Packaging segment’s sales totaled $486.6 million, reflecting growth of 20% from the year-ago period. For the quarter, selling prices increased 18% year over year while organic unit sales were down by 4%, partly offset by a 2% increase in sales from acquisitions. The segment focuses more on higher-margin products and is selective in taking on new business. Gross margin declined 19% to $120.9 million from a year ago.
UFP Construction: Sales in the segment were $515.6 million, down 34% year over year. This decline in segment sales was mainly due to a 16% decline in organic unit sales and an 18% decline in selling prices. Gross margin decreased 25% from a year ago to $121.7 million.
Operating Highlights
Selling, general and administrative expenses — accounting for 10.7% of net sales — increased 190 basis points (bps) year over year. Adjusted EBITDA of $202 million declined 31% year over year. Adjusted EBITDA margin contracted 60 bps year over year to 11.1%.
Balance Sheet & Cash Flow
The company ended first-quarter 2023 with $1.7 billion in liquidity. Cash and cash equivalents were $423.3 million at the first-quarter end compared with $559.4 million at 2022-end. At Mar 31, 2023-end, net cash used in operating activities was $37.1 million compared with $245 million in the corresponding year-ago period.
During the quarter, UFPI purchased approximately 451,000 shares at an average price of $78.27 under the share repurchase plan. It has an additional 1.5 million shares for repurchase through Feb 3, 2024. The company will also pay a quarterly dividend of 25 cents per share, payable on Jun 15, 2023, to shareholders of record on Jun 1, 2023.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, UFP Industries has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise UFP Industries has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.