We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
UFP Industries (UFPI) Q2 Earnings Miss, Adjusted EBITDA Down
Read MoreHide Full Article
UFP Industries, Inc. (UFPI - Free Report) reported tepid results for second-quarter 2023, with earnings and revenues missing the Zacks Consensus Estimate. Both metrics declined on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.
Shares of this wood manufacturer and supplier moved down 3.2% in the after-hours trading session on Aug 2, post the earnings release.
Despite a tough year-over-year comparison, UFPI's emphasis on innovation, efficiencies, and value-added solutions helped in margin expansion. The company remains focused on expanding its business through new products and acquisitions, on the back of strong cash-flow generation and balance sheet position.
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $2.36 per share, missing the consensus mark of $2.42 by 2.5% and declining 26.9% from the year-ago adjusted level of $3.23 per share.
UFP Industries, Inc. Price, Consensus and EPS Surprise
Net sales of $2.04 billion missed the consensus mark of $2.30 billion by 11.3% and declined 29.5% year over year. The decline was due to an 8% decline in organic unit sales and a 22% decline in prices.
New product sales were $184 million, down 9% year over year, mainly due to lower lumber prices that was passed on to customers. Contribution from new product sales rose to 9% from 7% in prior year.
Segment Discussion
UFP Retail Solutions: The segment reported net sales of $920 million for the quarter, which declined 18% year over year due to 18% decline in selling prices. Our model predicted net sales for the segment to be $881.3 million.
Gross profit increased 65% from a year ago to $121 million. The segment’s gross profit margin improved to 13.2% compared with 6.5% a year ago, the upside was driven by increased sales of new Deckorators products and products sold with a variable price such as treated lumber.
UFP Packaging: The Packaging segment’s net sales totaled $488 million, reflecting a decline of 28% from the year-ago period. For the quarter, selling prices decreased 21% and organic unit sales were down by 9% year over year, partly offset by a 2% increase in sales from acquisitions. Our estimate for net sales in the segment was $587.2 million.
Gross profit declined 27% to $118.2 million from a year ago, due to normalizing market pricing and a decline in volume. The gross profit margin remained unchanged for the quarter, backed by the company’s focus on value-added sales and new products. On a year-over-year basis, value-added sales and new product sales, as a percent of total net sales, increased to 78% and 14.9% from 71% and 10.6%, respectively.
UFP Construction: Net sales in the segment were $550 million, down 44% year over year. This decline in segment sales was mainly due to an 18% decline in organic unit sales and an 26% decline in selling prices. Our model predicted net sales in the segment to be $713.1 million.
Gross profit declined 40% from a year ago to $137.2 million. The downside was primarily due to normalizing market pricing and a decrease in volume driven by a decline in housing starts and industry production of manufactured homes. The segment’s gross profit margin improved to 25% compared with 23% a year ago.
Operating Highlights
During the second quarter, selling, general and administrative expenses — accounting for 10% of net sales — increased 260 basis points (bps) year over year.
Adjusted EBITDA of $234 million declined 27% year over year. Adjusted EBITDA margin improved 50 bps year over year to 11.5%. Our model estimated the metric to be 10.2%.
Balance Sheet & Cash Flow
The company ended second-quarter 2023 with $2 billion in liquidity. Cash and cash equivalents were $702.1 million at the second-quarter end compared with $559.4 million at 2022-end. At Jun 30, 2023-end, net cash from operating activities was $321.1 million compared with $90.4 million in the corresponding year-ago period.
During the first half of 2023, UFPI repurchased 700,597 shares at an average price of $79.20 under the share repurchase plan. On Jul 26, the Board of Directors authorized up to $200 million for share repurchases through Jul 31, 2024.
The company will also pay a quarterly dividend of 30 cents per share, up 20% compared with 25 cents in the first quarter of 2023. The Dividend will be payable on Sep 15, 2023, to shareholders of record on Sep 1, 2023.
NVR, Inc. (NVR - Free Report) reported second-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and revenues missed the same. The top and bottom lines declined on a year-over-year basis, thanks to delayed housing activities and macroeconomic woes.
NVR reported earnings of $116.54 per share, which topped the consensus mark of $100.98 by 15.4%. The reported figure, however, decreased by 6% from the prior-year quarter’s figure of $123.65 per share.
PulteGroup Inc. (PHM - Free Report) reported impressive results in second-quarter 2023. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year. The upside was mainly driven by its solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid gross closings, orders and margins in the reported quarter and posted a 12-month return on equity of 32%.
D.R. Horton, Inc. (DHI - Free Report) reported third-quarter fiscal 2023 (ended Jun 30, 2023) results, wherein earnings and revenues surpassed their respective Zacks Consensus Estimate.
On a year-over-year basis, although earnings declined, revenues increased. The company highlighted that the supply of both new and existing homes at affordable price points remains limited and that the demographics supporting housing demand remain favorable. This tailwind has helped this Arlington, TX-based homebuilder witness net sales order growth of 37% year over year in the fiscal third quarter.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
UFP Industries (UFPI) Q2 Earnings Miss, Adjusted EBITDA Down
UFP Industries, Inc. (UFPI - Free Report) reported tepid results for second-quarter 2023, with earnings and revenues missing the Zacks Consensus Estimate. Both metrics declined on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.
Shares of this wood manufacturer and supplier moved down 3.2% in the after-hours trading session on Aug 2, post the earnings release.
Despite a tough year-over-year comparison, UFPI's emphasis on innovation, efficiencies, and value-added solutions helped in margin expansion. The company remains focused on expanding its business through new products and acquisitions, on the back of strong cash-flow generation and balance sheet position.
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $2.36 per share, missing the consensus mark of $2.42 by 2.5% and declining 26.9% from the year-ago adjusted level of $3.23 per share.
UFP Industries, Inc. Price, Consensus and EPS Surprise
UFP Industries, Inc. price-consensus-eps-surprise-chart | UFP Industries, Inc. Quote
Net sales of $2.04 billion missed the consensus mark of $2.30 billion by 11.3% and declined 29.5% year over year. The decline was due to an 8% decline in organic unit sales and a 22% decline in prices.
New product sales were $184 million, down 9% year over year, mainly due to lower lumber prices that was passed on to customers. Contribution from new product sales rose to 9% from 7% in prior year.
Segment Discussion
UFP Retail Solutions: The segment reported net sales of $920 million for the quarter, which declined 18% year over year due to 18% decline in selling prices. Our model predicted net sales for the segment to be $881.3 million.
Gross profit increased 65% from a year ago to $121 million. The segment’s gross profit margin improved to 13.2% compared with 6.5% a year ago, the upside was driven by increased sales of new Deckorators products and products sold with a variable price such as treated lumber.
UFP Packaging: The Packaging segment’s net sales totaled $488 million, reflecting a decline of 28% from the year-ago period. For the quarter, selling prices decreased 21% and organic unit sales were down by 9% year over year, partly offset by a 2% increase in sales from acquisitions. Our estimate for net sales in the segment was $587.2 million.
Gross profit declined 27% to $118.2 million from a year ago, due to normalizing market pricing and a decline in volume. The gross profit margin remained unchanged for the quarter, backed by the company’s focus on value-added sales and new products. On a year-over-year basis, value-added sales and new product sales, as a percent of total net sales, increased to 78% and 14.9% from 71% and 10.6%, respectively.
UFP Construction: Net sales in the segment were $550 million, down 44% year over year. This decline in segment sales was mainly due to an 18% decline in organic unit sales and an 26% decline in selling prices. Our model predicted net sales in the segment to be $713.1 million.
Gross profit declined 40% from a year ago to $137.2 million. The downside was primarily due to normalizing market pricing and a decrease in volume driven by a decline in housing starts and industry production of manufactured homes. The segment’s gross profit margin improved to 25% compared with 23% a year ago.
Operating Highlights
During the second quarter, selling, general and administrative expenses — accounting for 10% of net sales — increased 260 basis points (bps) year over year.
Adjusted EBITDA of $234 million declined 27% year over year. Adjusted EBITDA margin improved 50 bps year over year to 11.5%. Our model estimated the metric to be 10.2%.
Balance Sheet & Cash Flow
The company ended second-quarter 2023 with $2 billion in liquidity. Cash and cash equivalents were $702.1 million at the second-quarter end compared with $559.4 million at 2022-end. At Jun 30, 2023-end, net cash from operating activities was $321.1 million compared with $90.4 million in the corresponding year-ago period.
During the first half of 2023, UFPI repurchased 700,597 shares at an average price of $79.20 under the share repurchase plan. On Jul 26, the Board of Directors authorized up to $200 million for share repurchases through Jul 31, 2024.
The company will also pay a quarterly dividend of 30 cents per share, up 20% compared with 25 cents in the first quarter of 2023. The Dividend will be payable on Sep 15, 2023, to shareholders of record on Sep 1, 2023.
Zacks Rank & Some Recent Construction Releases
UFP Industries currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVR, Inc. (NVR - Free Report) reported second-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and revenues missed the same. The top and bottom lines declined on a year-over-year basis, thanks to delayed housing activities and macroeconomic woes.
NVR reported earnings of $116.54 per share, which topped the consensus mark of $100.98 by 15.4%. The reported figure, however, decreased by 6% from the prior-year quarter’s figure of $123.65 per share.
PulteGroup Inc. (PHM - Free Report) reported impressive results in second-quarter 2023. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and increased year over year. The upside was mainly driven by its solid operating model, which strategically aligns the production of build-to-order and quick-move-in homes with applicable demand across consumer groups.
Backed by its disciplined and balanced business model, the company witnessed solid gross closings, orders and margins in the reported quarter and posted a 12-month return on equity of 32%.
D.R. Horton, Inc. (DHI - Free Report) reported third-quarter fiscal 2023 (ended Jun 30, 2023) results, wherein earnings and revenues surpassed their respective Zacks Consensus Estimate.
On a year-over-year basis, although earnings declined, revenues increased. The company highlighted that the supply of both new and existing homes at affordable price points remains limited and that the demographics supporting housing demand remain favorable. This tailwind has helped this Arlington, TX-based homebuilder witness net sales order growth of 37% year over year in the fiscal third quarter.