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UFP Industries (UFPI) Stock Up on Q1 Earnings & Sales Beat

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UFP Industries, Inc. (UFPI - Free Report) reported stellar results for first-quarter 2022. Both earnings and net sales beat the Zacks Consensus Estimate as well as improved impressively on a year-over-year basis. With this, the company’s earnings and sales surpassed the consensus mark in all the trailing five quarters. The uptrend was mainly driven by the diversity of markets and an improved pricing model.

Shares of this wood products provider gained 6% in the after-hours trading session on Apr 21.

Matthew J. Missad, CEO of UFP Industries, said, “Our impressive results also demonstrate the advantage of our balanced business model, which operates in diverse markets, positioning us for success even when some markets face uncertainty and challenges. The company’s reorganization in 2020 has given us a deeper level of focus and expertise in our diverse markets.”

Earnings & Revenue Discussion

UFP Industries’ first-quarter earnings came in at $3.00 per share, which comfortably surpassed the consensus mark of $2.01 by 49.3% and increased 80% from the year-ago level of $1.67.

Net sales of $2,489.3 million outpaced the consensus mark of $2,178 million by 14.3% and improved 36% on a year-over-year basis. The growth is attributable to a 3% rise in organic unit sales, a 7% increase in unit sales from buyouts and a 26% boost in lumber price.

New product sales were $151 million, up 58% year over year driven by the recent buyouts.

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

Segment Discussion

UFP Retail Solutions: The segment reported sales of $993 million for the quarter, which grew 31% year over year as unit sales edged up 14%. Also, a 2% drop in organic unit sales was more than offset by a 19% increase in selling price.

UFP Industrial: The Industrial segment’s sales totaled $611 million, reflecting growth of 36% from the year-ago period. For the quarter, selling prices slipped 39% year over year, but unit sales edged up 1% on account of acquisitions. Meanwhile, organic unit sales dropped 4% from the prior-year quarter.

UFP Construction: Sales in the segment were $786 million, up 41% year over year. This improvement in the segment sales is mainly attributable to a 26% increase in selling price, an 11% rise in organic unit growth and 1% growth from acquisitions. Also, 3% growth from the transfer of some concrete forming products from retail led to the improvement.

Operating Highlights

Selling, general and administrative expenses — accounting for 8.8% of net sales — improved 60 basis points (bps) year over year. Adjusted EBITDA of $292.2 million increased 16.9% year over year. Adjusted EBITDA margin also expanded 280 bps from the prior year to 11.7%.

Balance Sheet & Cash Flow

The company ended first-quarter 2022 with approximately $445 million liquidity. Cash and cash equivalents were $73.8 million at quarter-end compared with $286.7 million at 2021-end. For the quarter, net cash used in operating activities was $248.3 million compared with $196.7 million in the corresponding year-ago period. UFP Industries expects capital expenditure within $175-225 million for 2022, indicating an increase from $151 million spent in 2021.

UFPI’s board approved an increase in the share repurchase program up to 2.6 million shares. UFPI purchased 800,000 shares at an average price of $77.53 in March and April 2022 under the share repurchase plan.

Meanwhile, the board also approved an increase in its quarterly dividend payment to 25 cents per share in April 2022, reflecting an increase of 25% from the dividend paid on Mar 15, 2022 and 67% from that paid on Jun 15, 2021. The dividend is payable on Jun 15, 2022, to shareholders of record on Jun 1, 2022.

Zacks Rank

Currently, UFP Industries carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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