UFP Industries Buys T&R, Fortifies Agricultural Business

UFP Industries, Inc. UFPI has acquired the operating assets of T&R Lumber Company and its affiliates, thereby enhancing its agricultural product offerings and customer base across the country. However, the financial terms of deal have been still kept under wraps. Shares of UFP Industries gained 3.1% on Jul 14, 2020.

T&R makes and distributes a wide range of products, mainly for nurseries. These include plastic growing containers, pots and trays, wooden stakes, trellises, tree boxes, shipping racks, as well as other nursery supplies.

T&R, which recorded $31 million sales in 2019, has an impressive track record of growth with new and existing products. T&R will be an affiliate of the UFP Industrial business segment with this acquisition.

According to Scott Worthington, president of the UFP Industrial business segment, “We look forward to harnessing their expertise to grow our agricultural product offerings and customer base at UFP affiliates across the country.”

UFP Industries’ Inorganic 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 the recent buyouts. It completed three business acquisitions during 2019 and seven in 2018. In 2019, new product sales grew 13% from the year-ago period. Further, in first-quarter 2020, the same grew 7% year over year.

In March 2020, UFP Industries acquired the operating assets of Quest Design & Fabrication and Quest Architectural Millwork, collectively known as Quest. Quest designs, fabricates and installs millwork and case goods for a number of commercial uses that include builders’ sales centers, design studios, hospitality, corporate offices, as well as healthcare.

Overall, acquisitions contributed 1% to total unit sales growth in first-quarter 2020. The company plans more acquisitions in 2020 despite COVID-19 impacts on the business.

Shares of UFP Industries have outperformed the industry year to date. Its ability to leverage fixed costs, increased unit sales and improved sales of higher-margin, value-added products will further drive growth.

Zacks Rank & Other Key Picks

UFP Industries currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same space include PotlatchDeltic Corporation PCH, Louisiana-Pacific Corporation LPX and Norbord Inc. OSB, each carrying the same rank as UFP Industries. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

PotlatchDeltic’s earnings estimates for the current year have increased 160.9% over the past 30 days to 60 cents.

Louisiana-Pacific and Norbord’s 2020 earnings are expected to grow 113.5% and 310.8%, respectively.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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