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UFP Industries (UFPI) Q2 Earnings Top Estimates, Stock Up

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UFP Industries, Inc.’s (UFPI - Free Report) shares jumped more than 7% in the after-hours trading session on Jul 22, after the company reported impressive earnings for second-quarter 2020. Earnings and revenues not only surpassed the Zacks Consensus Estimate but also grew on a year-over-year basis, given greater-than-expected demand for home improvement products as well as lower costs.

Recently, the company acquired T&R Lumber, a manufacturer and distributer of products primarily used by nurseries, including tree boxes, plastic containers, stakes as well as trellises.

Earnings & Net Sales Discussion

During the reported quarter, UFP Industries reported earnings of $1.08 per share, comfortably surpassing the consensus mark of 63 cents by 71.4% and increasing 22.7% from the year-ago period.

Net sales of $1.24 billion topped the consensus mark of $1.09 billion by 13.8% and inched up 0.2% on a year-over-year basis. Higher lumber prices resulted in 3% year-over-year growth, offset by a 3% decline in unit sales. Retail sales contributed to overall sales growth, with 3% improvement in April and 47% in June.

New product sales grew 6% year over year, driven by a 16% rise in retail sales.

End-Market Sales Discussion

UFP Retail: The segment reported sales of $609.2 million during the quarter, up 26.4% year over year. Retail unit sales were also up 22% from the year-ago quarter, backed by 72% growth in Home and Decor, 27% rise in ProWood, 23% improvement in Fence, Lawn and Garden, along with 9% increase in UFP-Edge. Selling prices drove the same by 4%.

UFP Industrial: The Industrial segment’s sales totaled $224.4 million, reflecting a decline of 23% from the year-ago period. During the quarter, unit sales fell 27% year over year, partially offset by 4% higher selling prices.

UFP Construction: Sales in the segment were $359.2 million, down 13.4% year over year. A 16% decline in unit sales was partially offset by a 3% increase in selling prices. Unit sales fell in all the segments: 5% in Concrete Forming, 20% in Factory Built, 19% in Commercial and 15% in Site Built.

Notably, both Industrial and Construction showed a steady improvement from April to June.

Operating Highlights

Gross margin of 16.5% improved 140 basis points (bps) year over year. Selling, general and administrative expenses — accounting for 9.2% of net sales — increased 10 bps year over year. EBITDA of $110.4 million increased 22% year over year.

Balance Sheet & Cash Flow

At the end of the quarter, cash and cash equivalents were $200.5 million, significantly up from $20.5 million in the comparable prior-year period. In the past six months, net cash from operating activities totaled $147.2 million compared with $70.9 million in the corresponding period of 2019

Zacks Rank

UFP Industries — which shares space with Trex Company, Inc. (TREX - Free Report) , Louisiana-Pacific Corporation (LPX - Free Report) and Weyerhaeuser Company (WY - Free Report) in the Zacks Building Products - Wood industry — 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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