UFP Industries (UFPI) Q4 Earnings & Net Sales Miss, Down Y/Y

UFP Industries, Inc. UFPI reported tepid results for fourth-quarter 2023, with earnings and revenues missing the Zacks Consensus Estimate and declining on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.

Following the results, the company’s shares dropped 7.2% during the trading session on Feb 20, 2024.

Moreover, UFPI's performance in 2023 underscores its capacity to drive future sales and profit growth, supported by robust operating margins and cash flow. With ample capital for strategic investments in organic growth and acquisitions, UFPI is well-positioned to enhance its value-added product offerings and elevate its long-term growth and profitability targets.

Looking ahead to 2024, the company anticipates challenging market conditions in the first half and gradual improvement in the second half. UFPI is dedicated to enhancing every aspect of its business, aiming for increased efficiencies, reduced costs and more innovative products and services.

Earnings & Revenue Discussion

UFP Industries’ quarterly earnings came in at $1.62 per share, which missed the consensus mark of $1.68 by 3.6% and declined 22.9% from the year-ago quarter’s level of $2.10.

Net sales of $1.52 billion also lagged the consensus mark of $1.75 billion by 13% and declined 20% year over year. The downside was mainly due to a 10% fall in prices and a 10% decline in organic unit sales.

UFP Industries, Inc. Price, Consensus and EPS Surprise

 

UFP Industries, Inc. Price, Consensus and EPS Surprise

UFP Industries, Inc. price-consensus-eps-surprise-chart | UFP Industries, Inc. Quote

 

New product sales were $142 million, down 18% year over year, mainly due to lower lumber prices. Contribution from new product sales rose to 9.2% from 8.9% in the prior year.

Segment Discussion

UFP Retail Solutions: The segment reported net sales of $505.6 million for the quarter, which declined 27% year over year due to a 9% decline in selling prices and 18% lower organic unit sales. Our model predicted net sales in the segment to be $683.7 million.

Adjusted EBITDA margin rose 110 basis points (bps) from the prior year to 6.1%.

UFP Packaging: The Packaging segment’s net sales totaled $413.7 million, down 21% from the year-ago period’s levels. In the quarter, selling prices declined by 10% and organic unit sales were down by 11% year over year. Our estimate for net sales in the segment was $502.1 million.

Adjusted EBITDA margin fell 420 bps from the prior year to 12.8%.

UFP Construction: Net sales in the segment were $511 million, down 16% year over year. The downside was mainly due to a 3% decline in organic unit sales and a 13% decline in selling prices. Our model predicted net sales in the segment to be $530.3 million.

Adjusted EBITDA margin contracted 110 bps from the prior year to 12.8%.

Operating Highlights

During the fourth quarter, selling, general and administrative expenses — accounting for 11.3% of net sales — increased 170 bps year over year.

Adjusted EBITDA of $166 million reduced by 22% year over year. Adjusted EBITDA margin also contracted 20 bps from the prior year to 10.9%.

Balance Sheet & Cash Flow

The company ended 2023 with more than $2.4 billion in liquidity. Cash and cash equivalents were $1.1 billion at the end of 2023 compared with $559.2 million at the end of 2022. At 2023-end, net cash from operating activities was $959.9 million, up from $831.6 million in the corresponding year-ago period.

During 2023, capital expenditures totaled $180 million. The company anticipates $250-300 million in capital expenditures in 2024.

In 2023, UFPI purchased approximately 975,000 shares at an average price of $84.27 under the share repurchase plan. On Jul 26, its board of directors authorized up to $200 million for share repurchases through Jul 31, 2024. Of this authorization, $173 million remained at 2023-end.

2023 Highlights

The company’s net sales fell 25% year over year to $7.2 billion due to a 16% decline in prices and a 9% reduction in organic unit sales.

New product sales decreased 6% to $716 million compared to the prior year.

Adjusted EBITDA decreased 26% to $810 million. The adjusted EBITDA margin contracted 20 bps year over year to 11.2%.

Zacks Rank & Recent Construction Releases

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

Owens Corning OC reported better-than-expected results for fourth-quarter 2023. Both earnings and net sales surpassed the Zacks Consensus Estimate and increased on a year-over-year basis.

Chair and chief executive officer of OC, Brian Chambers, said, “Looking ahead, we will continue to focus on delivering outstanding results in the near term as we execute the strategic moves announced last week, which will further strengthen our leadership in building and construction materials and position the company for long-term success.”

Martin Marietta Materials, Inc. MLM reported mixed fourth-quarter 2023 results, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Revenues missed the consensus mark but rose year over year.

Going forward, MLM anticipates strong demand for infrastructure, large-scale energy and domestic manufacturing projects. This will largely offset weaker residential demand and the anticipated softening in light non-residential activity. With mortgage rates stabilizing and affordability headwinds receding, MLM fully expects single-family residential construction to recover, as demand still exceeds supply, particularly in its key markets.

Louisiana-Pacific Corporation LPX, or LP, reported impressive fourth-quarter 2023 results. Earnings and net sales beat their respective Zacks Consensus Estimate.

On a year-over-year basis, earnings increased despite net sales decline on lower costs and reduced inflationary pressure.

5 Stocks Set to Double

Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2023. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

UFP Industries, Inc. (UFPI) : Free Stock Analysis Report

Louisiana-Pacific Corporation (LPX) : Free Stock Analysis Report

Martin Marietta Materials, Inc. (MLM) : Free Stock Analysis Report

Owens Corning Inc (OC) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.