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UFP Industries (UFPI) to Leverage Buyouts, Diverse End Markets
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UFP Industries, Inc. (UFPI - Free Report) has been benefiting from continuous improvements in Industrial and Construction units, its diverse end markets and strategic acquisitions to broaden its footprint. These tailwinds have been helping this Grand Rapids, MI-based wood and wood-alternative products manufacturer to navigate external challenges comprising rising interest rates and historically high inflation.
Let’s take a look at the factors supporting the growth.
Persistent Growth in Construction & Industrial: During the second quarter of 2022, Construction segment sales were up 32% year over year. This improvement in the segment sales is mainly attributable to a 15% increase in selling price, a 15% rise in organic unit growth and 2% growth from the transfer of certain sales from the retail segment.
The organic unit growth was driven by a 63% increase in commercial, a 35% increase in concrete forming and a 16% rise in factory-built housing. Meanwhile, the Industrial segment continues to perform well as PalletOne has been improving its sourcing and manufacturing and is expanding geographically within the UFP footprint.
Again, the latest combination with Dempsey Forest Products provides added opportunity to create efficiencies in the supply chain. Instructional packaging or national sales team continues to gain business and drive more sales with national accounts.
Strategic Buyouts: UFP Industries has been following a systematic inorganic strategy to expand market reach, boost profitability and strengthen its product portfolio. UFPI acquired nine companies in 2021 and five in 2020. Acquisitions contributed 24% to unit sales growth in 2021.
In the first and second quarters of 2022, UFPI recorded a 7% and 1% increase, respectively, in unit sales from acquisitions. Acquisitions also contributed $12 million and $3.5 million to adjusted EBITDA and $10 million and $2.5 million to earnings, respectively, in the first and the second quarters.
Diverse End-Markets: The company, which shares its space with Arcosa, Inc. (ACA - Free Report) , United Rentals, Inc. (URI - Free Report) and Dycom Industries, Inc. (DY - Free Report) in the Zacks Construction sector, serves various end markets from more than 200 locations worldwide. This diversified approach has helped the company mitigate challenges through the years, including the latest new external risks like rising interest rates and high inflation.
In the near term, the company expects continued improvement in the Industrial and Construction segments. It also expects more normalized demand in its largest segment, Retail Solutions. UFP Industries’ diversified business and end markets will likely successfully navigate various market environments and deliver impressive returns to shareholders.
A Brief Discussion on the Above-Mentioned Stocks
Arcosa is a manufacturer of infrastructure-related products and services, serving construction, energy and transportation markets. The company is benefiting from a strong performance in Engineered Structures and Construction Products segments as well as growth in Transportation Products. Recent acquisitions and solid construction activities have been contributing to the upside.
United Rentals has been benefiting from a broad-based recovery of activity across its end markets served. Higher margins from rental revenues and used equipment sales are added benefits.
Dycom Industries is benefiting from the higher demand for network bandwidth and mobile broadband, extended geography, proficient program management and network planning services. Dycom expects considerable opportunities across a broad array of customers.
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UFP Industries (UFPI) to Leverage Buyouts, Diverse End Markets
UFP Industries, Inc. (UFPI - Free Report) has been benefiting from continuous improvements in Industrial and Construction units, its diverse end markets and strategic acquisitions to broaden its footprint. These tailwinds have been helping this Grand Rapids, MI-based wood and wood-alternative products manufacturer to navigate external challenges comprising rising interest rates and historically high inflation.
Let’s take a look at the factors supporting the growth.
Persistent Growth in Construction & Industrial: During the second quarter of 2022, Construction segment sales were up 32% year over year. This improvement in the segment sales is mainly attributable to a 15% increase in selling price, a 15% rise in organic unit growth and 2% growth from the transfer of certain sales from the retail segment.
The organic unit growth was driven by a 63% increase in commercial, a 35% increase in concrete forming and a 16% rise in factory-built housing. Meanwhile, the Industrial segment continues to perform well as PalletOne has been improving its sourcing and manufacturing and is expanding geographically within the UFP footprint.
Again, the latest combination with Dempsey Forest Products provides added opportunity to create efficiencies in the supply chain. Instructional packaging or national sales team continues to gain business and drive more sales with national accounts.
Strategic Buyouts: UFP Industries has been following a systematic inorganic strategy to expand market reach, boost profitability and strengthen its product portfolio. UFPI acquired nine companies in 2021 and five in 2020. Acquisitions contributed 24% to unit sales growth in 2021.
In the first and second quarters of 2022, UFPI recorded a 7% and 1% increase, respectively, in unit sales from acquisitions. Acquisitions also contributed $12 million and $3.5 million to adjusted EBITDA and $10 million and $2.5 million to earnings, respectively, in the first and the second quarters.
Diverse End-Markets: The company, which shares its space with Arcosa, Inc. (ACA - Free Report) , United Rentals, Inc. (URI - Free Report) and Dycom Industries, Inc. (DY - Free Report) in the Zacks Construction sector, serves various end markets from more than 200 locations worldwide. This diversified approach has helped the company mitigate challenges through the years, including the latest new external risks like rising interest rates and high inflation.
In the near term, the company expects continued improvement in the Industrial and Construction segments. It also expects more normalized demand in its largest segment, Retail Solutions. UFP Industries’ diversified business and end markets will likely successfully navigate various market environments and deliver impressive returns to shareholders.
A Brief Discussion on the Above-Mentioned Stocks
Arcosa is a manufacturer of infrastructure-related products and services, serving construction, energy and transportation markets. The company is benefiting from a strong performance in Engineered Structures and Construction Products segments as well as growth in Transportation Products. Recent acquisitions and solid construction activities have been contributing to the upside.
United Rentals has been benefiting from a broad-based recovery of activity across its end markets served. Higher margins from rental revenues and used equipment sales are added benefits.
Dycom Industries is benefiting from the higher demand for network bandwidth and mobile broadband, extended geography, proficient program management and network planning services. Dycom expects considerable opportunities across a broad array of customers.