UFP Industries Q2 Earnings & Net Sales Beat, Down Y/Y

UFP Industries, Inc. UFPI reported impressive results for the second quarter of 2024. Both earnings and net sales surpassed the Zacks Consensus Estimate. The top and bottom lines, however, declined on a year-over-year basis due to lower contributions from Retail and Packaging businesses.

The company remains focused on its long-term expansion plans and improvement strategies amid a weaker environment and near-term softness in demand. These efforts are investments in automation and consolidating operations to eliminate redundancies, as well as reduce costs and enhance the profitability of its facilities.

Earnings & Revenue Discussion

UFP Industries reported earnings per share of $2.05, which topped the consensus mark of $2.00 by 2.5% but declined 13.1% from the year-ago quarter's level of $2.36.

Net sales of $1.9 billion beat the consensus mark of $1.87 billion by 1.7% but declined 7% year over year. The downside was mainly due to a 6% fall in selling prices and a 1% decline in organic unit sales. New product sales of $134 million contributed 7% to total net sales versus 7.4% in the prior-year quarter.

Segment Discussion

UFP Retail Solutions: The segment reported net sales of $809.1 million for the quarter (below our projection of $848.7 million), which declined 14% year over year due to a 7% decline in selling prices and 5% lower organic unit sales. Also, a 2% reduction due to the transfer of certain sales to other segments added to the decline.

Adjusted EBITDA margin rose 130 basis points (bps) from the prior year to 8.7%.

UFP Packaging: The segment's net sales totaled $435.2 million, down 11% from the year-ago period's levels (above our expectation of $418.5 million). In the reported quarter, selling prices declined 8% and organic unit sales were down 6% year over year. This was partially balanced by a 3% increase resulting from the transfer of certain sales from the retail segment.

Adjusted EBITDA margin fell 420 bps from the prior year to 9.9%.

UFP Construction: Net sales in the segment were $574.5 million, which increased 4% from the year-ago period (above our expectation of $540.8 million). This segment registered a 4% decrease in selling prices, offset by a 7% increase in organic unit sales and a 1% increase due to the transfer of certain sales from the retail segment.

Adjusted EBITDA margin contracted 230 bps from the prior year to 10.2%.

Operating Highlights

Selling, general and administrative expenses — accounting for 10.7% of net sales — increased 70 bps year over year.

Adjusted EBITDA of $203.9 million declined 13% year over year. Adjusted EBITDA margin also contracted 80 bps from the prior year to 10.7%.

Balance Sheet & Cash Flow

As of Jun 29, 2024, the company had nearly $2.3 billion in liquidity. Cash and cash equivalents were $1.04 billion at the second-quarter end compared with $1.1 billion at the end of 2023. Long-term debt and finance lease obligations were $233 million versus $274.8 million at 2023-end.

Net cash from operating activities was $239.1 million at the second-quarter end compared with $321.1 million in the year-ago period.

From Jul 26, 2023, through the second quarter of 2024-end, UFPI purchased approximately 1,477,000 shares at an average price of $110.96 under the previous share repurchase plan. On Jul 24, 2024, the board of directors authorized the company to repurchase up to $200 million of shares through Jul 31, 2025.

Outlook

UFP Industries expects lumber prices to remain lower in 2024, driven by existing supply and demand dynamics.

The company has revised its guidance for 2024. UFPI now anticipates Retail demand to decrease by mid-single digits and Packaging demand to fall by mid- to high-single digits. The same for Construction is expected to increase by low- to mid-single digits, reflecting continued strength in the Factory Built business.

Overall, the company expects soft demand and a competitive price environment to remain a headwind for the remainder of the year, resulting in more challenging year-over-year unit sales and profitability. UFPI believes market share gains will somewhat offset lower demand in each segment.

Zacks Rank & Recent Construction Releases

Currently, UFP Industries carries a Zacks Rank #4 (Sell).

RPM International Inc. RPM reported fiscal fourth-quarter 2024 (ended May 31, 2024) results on an impressive note. This specialty chemicals manufacturer reported strong earnings in the fourth quarter of fiscal 2024 on the back of solid adjusted EBIT for the 10th consecutive quarter.

Although net sales slightly missed the Zacks Consensus Estimate and slipped from the previous year, it generated positive organic sales growth.

Masco Corporation MAS reported strong earnings for the second quarter of 2024 amid challenging market conditions. Strong operational efficiency helped it deliver solid results.

However, net sales missed the analysts' expectations and declined on a year-over-year basis. Masco's focus on a balanced capital deployment strategy helped it return $206 million to shareholders via dividends and share repurchases. Masco narrowed its adjusted EPS guidance while the mid-point remains unaffected.

United Rentals, Inc. URI reported mixed second-quarter 2024 results. The company's EPS surpassed the Zacks Consensus Estimate, but revenues missed the same. Nonetheless, both metrics registered improvement on a year-over-year basis.

The company showcased robust second-quarter results for 2024, achieving record highs in revenues, adjusted EBITDA, and EPS. The company's performance aligns with its expectations for the year, driven by the successful integration of Yak. This acquisition enhances URI's strategy to expand its specialty rental business, enhance its one-stop-shop offerings, and leverage opportunities for both secular growth and cross-selling. The company's unwavering commitment to safety, operational excellence, and innovation underpins its unique value proposition, positioning it for long-term shareholder value.

To read this article on Zacks.com click here.