UFP Industries, Inc. (UFPI - Free Report) , earlier known as Universal Forest Products, Inc., acquired the operating assets of Quest Design & Fabrication and Quest Architectural Millwork, collectively known as Quest. However, the financial terms of the deal are not yet disclosed.
Quest designs, fabricates and installs millwork and case goods for a number of commercial uses, which includes builder’s sales centers, design studios, hospitality, corporate offices and healthcare. Quest, which is based near Houston, TX, generated $22 million in sales in 2019.
Quest is expected to integrate well into UFP Industries’ commercial construction business unit, which is an important component of the company’s new UFP Construction segment. Notably, the UFP Construction segment — which accounts for more than 37% of the company’s total revenues — will be specially benefited by architectural millwork. Its focus on premium products fits well with UFP Industries’ growth goals.
UFP Industries’ Buyout Strategy Bodes Well
Acquisitions have been strengthening UFP Industries’ performance over the past several years. The company has been expanding the product portfolio and leveraging new business opportunities with recent buyouts. It completed three business acquisitions during 2019 and seven in 2018.
On Sep 16, 2019, one of its affiliates acquired Hartford, WI-based Pallet USA, LLC. Also, on Aug 14, 2019, it acquired Bonner, MT-based Northwest Painting, Inc. These buyouts are expected to expand its value-added offerings and market presence in the Midwest and the Northwest.
On the back of an improving U.S. construction market and solid demand for repair and remodeling activities, the stock has outperformed the industry in a year’s time. UFP Industries — which shares space with Weyerhaeuser Company (WY - Free Report) , Louisiana-Pacific Corporation (LPX - Free Report) and Norbord Inc. (OSB - Free Report) — is also expected to gain from its efforts to introduce products. New product sales are anticipated to constitute at least 10% of total sales, while earnings before interest, tax, depreciation and amortization will exceed unit-sales growth. Also, the company anticipates offering high-quality products to its customers, having started new development and testing facilities.
However, UFP Industries, which currently carries a Zacks Rank #4 (Sell), is exposed to risks arising from higher costs and expenses along with rapid lumber market swings. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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