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UFP Industries (UFPI) Q4 Earnings Beat Estimates, Stock Up

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UFP Industries, Inc.’s (UFPI - Free Report) shares jumped nearly 4% during after-hours trading on Feb 24, after the company reported impressive fourth-quarter 2020 results. Both earnings and revenues not only surpassed the Zacks Consensus Estimate but also improved significantly on a year-over-year basis.

The company’s results in the quarter were driven by robust performance of UFP Retail Solutions, which benefited from increased lumber prices and higher consumer demand.

Notably, the company completed the acquisition of PalletOne and its wholly-owned subsidiary, Sunbelt Forest Products (Sunbelt), at the beginning of fiscal 2021. The transaction is valued at $259 million.

Earnings & Revenue Discussion

During the reported quarter, UFP Industries reported earnings of $1.02 per share, comfortably surpassing the consensus mark of 81 cents by 25.9% and increasing 67.2% from the year-ago period.

Net sales of $1.39 billion outpaced the consensus mark of $1.20 billion by 16.4% and improved 39.6% on a year-over-year basis. The increase was driven by a 25% rise in lumber pricing and 15% increase in units sold. New product sales grew 46% year over year.

UFP Industries, Inc. Price, Consensus and EPS Surprise

 

UFP Industries, Inc. Price, Consensus and EPS Surprise

UFP Industries, Inc. price-consensus-eps-surprise-chart | UFP Industries, Inc. Quote

End-Market Sales Discussion

UFP Retail: The segment reported sales of $505.2 million during the quarter, up 76% year over year. Unit sales were also rose 38% from the year-ago quarter, backed by 38% growth in Home and Decor, 25% rise in ProWood, 27% increase in UFP Edge, 64% improvement in Outdoor Essentials, and 80% increase in Deckorators. Selling prices drove the same by 38%.

UFP Industrial: The Industrial segment’s sales totaled $309.1 million, reflecting growth of 25% from the year-ago period. During the quarter, unit sales rose 10% year over year and selling prices increased 15%.

UFP Construction: Sales in the segment were $508.3 million, up 24% year over year. This improvement in the segment sales is mainly attributable to the increase in selling price. Unit sales to residential and manufactured housing customers rose 16% and 11%, respectively. Unit sales to commercial customers fell 30%, with an organic unit sales decrease of 35% offset by a 5% unit sales increase from acquisitions.

Operating Highlights

Gross margin of 13.4% contracted 240 basis points (bps) year over year. Selling, general and administrative expenses — accounting for 6.2% of net sales — improved 430 bps year over year. EBITDA of $118.2 million increased 66.8% year over year.

Balance Sheet & Cash Flow

At the end of 2020, cash and cash equivalents were $436.5 million, significantly up from $168.3 million at 2019-end. In 2020, net cash from operating activities totaled $336.5 million compared with $349.3 million in 2019.

Meanwhile, the company’s the board of directors has raised annual dividend by 20% to 60 cents per share, payable on Mar 15, 2021.

2020 Highlights

Net sales in 2020 came in at $5.15 billion compared with $4.42 billion in 2019, up 16.7%. Total earnings from operations increased 41.2% to $345.8 million from $244.9 million in 2019.

Adjusted EBITDA in 2020 rose 35.9% to $431.4 from $317.3 million in 2019.

Adjusted earnings per share in 2020 came in at $4.00 compared with $2.91 in 2019.

Zacks Rank & Key Picks

UFP Industries currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Zacks Building Products - Wood industry include Louisiana-Pacific Corporation (LPX - Free Report) , Weyerhaeuser Company (WY - Free Report) and Rayonier Inc. (RYN - Free Report) . While Louisiana-Pacific and Weyerhaeuser sport a Zacks Rank #1 (Strong Buy), Rayonier carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Louisiana-Pacific’s 2021 earnings are expected to rise 30.9%.

Weyerhaeuser’s 2021 earnings are likely to surge 28.7%.

Rayonier’s 2021 earnings are estimated to increase of 20%.

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