UFP Industries (UFPI) Expands Industrial Packaging Business

UFP Industries, Inc.’s UFPI affiliate UFP Packaging, LLC has acquired Grand Rapids, Michigan-based Advantage Label & Packaging, Inc. for approximately $16 million. The deal includes $2.9 million for related real estate and incentive payments of up to $4.5 million over five years, subject to certain performance goals.

Founded in 1996, Advantage Label is a provider of labels and related equipment used in industrial packaging. It provides blank and customized labels, printers, label applicators, and other packaging supplies to industries like beer and beverage; body armor; food production and processing; greenhouse and nursery; hobby and craft; manufacturing; and automotive. Advantage Label generated $19.8 million of sales over the trailing 12 months through November 2021. The buyout will help UFP Industries to provide customers with a broad spectrum of industrial packaging products.

Chuck Krawczak, vice president of UFP Packaging, said, “Companies associated with packaging and tracking packages are growing quickly, and the addition of Advantage Label will allow us to participate in that growth.”

Acquisition Strategy a Boon

Acquisitions have been a preferred mode of solidifying UFP Industries' product portfolio and leveraging new business opportunities. On Nov 22, its affiliate UFP Global Holdings Ltd. took over 70% of the equity of Ficus Pax Private Limited, which marks the company’s foray into India. The transaction was valued at $13.5 million.

Again on Sep 27, it acquired the operating assets of Haleyville, AL-based Shelter Products, Inc. for $6.5 million. Shelter Products’ 87,800 sq.-ft. warehouse provides distribution and logistics support to manufactured housing industry customers. Its close proximity to a UFP manufacturing facility, which supplies trusses to manufactured housing builders, will enable additional operational synergies.

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UFP Industries’ shares have gained 50.1% over a year compared with the Zacks Building Products – Wood industry’s 33.3% rally. Also, earnings estimates for 2021 have increased 4.2% to $7.64 per share over the past 60 days, indicating 91% year-over-year growth. UFP Industries is benefiting from a solid U.S. residential market and high demand for repair and remodeling activities. Also, buyout gains and shareholders' rewards will work in its favor.

Zacks Rank & Key Picks

UFP Industries currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Boise, ID-based Boise Cascade Company BCC — which makes wood products and distributes building materials in the United States as well as Canada — is aided by factors like favorable commodity wood products, pricing, and robust construction activity.

Boise Cascade, a Zacks Rank #1 stock, is expected to witness 159.1% growth in 2021 earnings. Shares of the company have jumped 42.3% in the past year.

Louisiana-Pacific LPX is a leading manufacturer of sustainable, quality engineered wood building materials, structural framing products, and exterior siding for use in residential, industrial, and light commercial construction. It operates through four segments: Siding, Oriented Strand Board, Engineered Wood Products, and South America.

Louisiana-Pacific’s shares have appreciated 93.8% in the past year. LPX has an expected earnings growth rate of more than 213.2% for the current year.

Weyerhaeuser Company WY is one of the leading U.S. forest product companies. The company has been benefiting from solid new residential construction activity, which in turn is leading to improved demand. Also, its focus on operational excellence has been advantageous over time.

Weyerhaeuser’s earnings estimates for the current fiscal year grew 0.9% over the past seven days. Shares of the company have jumped 18.1% in the past year.

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