UFP Industries, Inc. UFPI reported strong earnings in fourth-quarter 2019 on the back of increased unit sales, its ability to leverage fixed costs, and improved sales of higher-margin, value-added products that comprise a greater portion of its product mix. The company’s bottom line not only surpassed the Zacks Consensus Estimate but also increased year over year. Notably, this was the best fourth-quarter performance in the company’s history.
The stock inched up 0.4% in the after-hour trading session on Feb 19.
On Feb 3, 2020, it announced changes in the frequency of dividend payments from semi-annual to quarterly. Also, it raised quarterly cash dividend by 25% to 12.5 cents a share, payable on Mar 15, 2020 to its shareholders of record on Mar 1, 2020.
Earnings & Net sales Discussion
The company’s earnings of 61 cents per share topped the consensus estimate of 59 cents by 3.4%. Also, the reported figure increased 19.6% from 54 cents reported in the year-ago period.
UFP Industries, Inc. Price, Consensus and EPS Surprise
Net sales of $998 million marginally missed the consensus mark of $998.8 million but grew 1% on a year-over-year basis from $988.2 million. Lower lumber prices reduced gross sales by 5%.
End-Market Sales Discussion
UFP Industries classifies top-line results on the basis of end-markets served. Investors should note that UFP Industries’ end-market sales sum up to total gross sales. Gross sales during the reported quarter came in at $1,012 million, up 1% from the year-ago period.
UFP Retail: The segment’s sales increased 7% year over year to $323.3 million during the quarter. Retail unit sales were up 10% on the back of new product growth and market share gains. However, lower selling prices partially offset the same by 3%.
UFP Industrial: The Industrial segment’s sales totaled $309.7 million, reflecting a decline of 4% from the year-ago period. During the quarter, unit sales increased 2%, offset by 6% lower lumber pricing. The unit sales growth was attributed to acquisitions.
UFP Construction: Sales in the segment were $379 million, up 1% year over year. A 5% improvement in unit sales was partially offset by 4% decrease in selling prices. Unit sales in commercial, manufactured housing and residential customers grew 9%, 4%, and 3%, respectively, during the quarter.
Cost of goods sold, as a percentage of net sales, contracted 190 basis points (bps) from the year-ago quarter to 84.2%. Gross margin of 15.8% improved 190 bps year over year.
Selling, general and administrative expenses, accounting for 10.5% of net sales, increased 120 bps year over year. Operating margin in the quarter improved 60 bps to 5.2%. EBITDA totaled $70.9, reflecting an increase of 12% year over year.
Balance Sheet & Cash Flow
At the end of 2019, cash and cash equivalents were $168.3 million, significantly up from $27.3 million at 2018-end.
In 2019, net cash from operating activities totaled $349.3 million against net cash used in operating activities of $1167 million a year ago.
UFP Industries reported adjusted earnings of $2.91 per share, surpassing the consensus estimate of $2.89 and increasing 20.7% from the year-ago figure of $2.41. However, net sales of $4.42 billion declined almost 2% due to 8% lower lumber prices.
New product sales were $540 million in the year, up 13% from 2018. For 2020, it has removed $126 million of 2019 sales from its new products classification, despite continuing to sell those products.
Zacks Rank & Peer Releases
UFP Industries, which shares space with Company, Inc. TREX in the Zacks Building Products - Wood industry, currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Louisiana-Pacific Corporation LPX reported unimpressive results in fourth-quarter 2019. Lower Oriented Strand Board (“OSB”) prices and reduced commodity OSB shipments across all North America segments (down 29%) negatively impacted its performance. However, these headwinds were partially offset by SmartSide Strand revenue growth of 11%.
Weyerhaeuser Company WY reported mixed fourth-quarter 2019 results, with earnings missing the Zacks Consensus Estimate by 57.1%, while net sales beating the same by 1.6%. However, the top and bottom lines declined 5.4% and 70%, respectively, year over year. Its two major segments reported significantly lower net sales on a year-over-year basis.
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