We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
A month has gone by since the last earnings report for UFP Industries (UFPI - Free Report) . Shares were flat in that time frame, underperforming the S&P 500.
Will the recent trend continue leading up to its next earnings release, or is UFP Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
UFP Industries' Q2 Earnings Top Estimates
UFP Industries, Inc. reported impressive second-quarter 2021 results, wherein earnings and revenues not only surpassed the Zacks Consensus Estimate but also improved significantly on a year-over-year basis.
UFP Industries’ CEO Matthew J. Missad, said, “We expect market conditions to normalize during the second half of 2021. While falling lumber prices and more normalized demand create challenging year-over-year profitability comparisons for our retail segment, the stabilized lumber market should benefit our industrial and construction segments. Furthermore, we expect all of our segments to benefit from more stable pricing in 2022. In addition, our industrial and retail segments should continue to benefit from the integration of our recent acquisitions of PalletOne and its subsidiary, Sunbelt Forest Products, as well as Spartanburg Forest Products.”
Earnings & Revenue Discussion
UFP Industries reported earnings of $2.61 per share, which comfortably surpassed the consensus mark of $1.84 cents by 41.9% and increased nearly 141.7% from the year-ago level of $1.08.
Net sales of $2.7 billion outpaced the consensus mark of $2.37 billion by 13.9% and improved 117.4% on a year-over-year basis. Of this growth, 70% was contributed by elevated selling price. Acquisitions and organic growth added 36% and 11%, respectively. New product sales were $232.1 million for the quarter, up 61% year over year.
End-Market Sales Discussion
UFP Retail: The segment reported sales of $1.26 billion for the quarter, up 107% year over year. The increase was primarily driven by a 59% increase in selling prices and Sunbelt and Spartanburg Forest products drove the same by 48%. Organic growth was driven by a 27% rise in UFP-Edge, 11% uptick in Deckorators and 6% increase in Outdoor Essentials on higher operational capacity. However, the ProWood business unit saw a 17% drop in organic sales which led a 4% year-over-year decline in overall organic sales.
New product sales in the segment were up 32% year over year, driven by UFP-Edge shiplap and trim, ProWood Fire Retardant treated lumber, and Outdoor Essentials fencing and picnic tables.
UFP Industrial: The Industrial segment’s sales totaled $611 million, reflecting growth of 172% from the year-ago period. For the quarter, unit sales rose 73% year over year and selling prices increased 99%. Organic growth accounted for 26%, and acquisitions of PalletOne and T&R Lumber contributed 47% to unit sales growth. New product sales increased 192% from the year-ago quarter.
UFP Construction: Sales in the segment were $739 million, up 106% year over year. This improvement was mainly attributable to a 29% increase in unit sales and 77% rise in selling price. Unit sales to site-built and factory-built housing customers rose 56% and 32%, respectively. Also, unit sales to commercial customers improved 11% from the prior-year quarter. During the reported quarter, new product sales rose 184% from second-quarter 2020.
Operating Highlights
Gross margin of 15.6% contracted 90 basis points (bps) year over year. Selling, general and administrative expenses — accounting for 6.8% of net sales — improved 240 bps year over year. Adjusted EBITDA of $261.5 million increased 136.8% year over year. During the first quarter of 2021, adjusted EBITDA margin expanded 80 bps to 9.7%.
Balance Sheet & Cash Flow
At the end of second-quarter 2021, cash and cash equivalents were $44.3 million compared with $200.5 million at second-quarter 2020. During the first six months of 2021, net cash used in operating activities totaled $115.7 million against net cash provided by operating activities of $147.2 million in the comparable 2020 period.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.06% due to these changes.
VGM Scores
At this time, UFP Industries has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UFP Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
How Has UFPI Performed 30 Days Post Earnings
A month has gone by since the last earnings report for UFP Industries (UFPI - Free Report) . Shares were flat in that time frame, underperforming the S&P 500.
Will the recent trend continue leading up to its next earnings release, or is UFP Industries due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
UFP Industries' Q2 Earnings Top Estimates
UFP Industries, Inc. reported impressive second-quarter 2021 results, wherein earnings and revenues not only surpassed the Zacks Consensus Estimate but also improved significantly on a year-over-year basis.
UFP Industries’ CEO Matthew J. Missad, said, “We expect market conditions to normalize during the second half of 2021. While falling lumber prices and more normalized demand create challenging year-over-year profitability comparisons for our retail segment, the stabilized lumber market should benefit our industrial and construction segments. Furthermore, we expect all of our segments to benefit from more stable pricing in 2022. In addition, our industrial and retail segments should continue to benefit from the integration of our recent acquisitions of PalletOne and its subsidiary, Sunbelt Forest Products, as well as Spartanburg Forest Products.”
Earnings & Revenue Discussion
UFP Industries reported earnings of $2.61 per share, which comfortably surpassed the consensus mark of $1.84 cents by 41.9% and increased nearly 141.7% from the year-ago level of $1.08.
Net sales of $2.7 billion outpaced the consensus mark of $2.37 billion by 13.9% and improved 117.4% on a year-over-year basis. Of this growth, 70% was contributed by elevated selling price. Acquisitions and organic growth added 36% and 11%, respectively. New product sales were $232.1 million for the quarter, up 61% year over year.
End-Market Sales Discussion
UFP Retail: The segment reported sales of $1.26 billion for the quarter, up 107% year over year. The increase was primarily driven by a 59% increase in selling prices and Sunbelt and Spartanburg Forest products drove the same by 48%. Organic growth was driven by a 27% rise in UFP-Edge, 11% uptick in Deckorators and 6% increase in Outdoor Essentials on higher operational capacity. However, the ProWood business unit saw a 17% drop in organic sales which led a 4% year-over-year decline in overall organic sales.
New product sales in the segment were up 32% year over year, driven by UFP-Edge shiplap and trim, ProWood Fire Retardant treated lumber, and Outdoor Essentials fencing and picnic tables.
UFP Industrial: The Industrial segment’s sales totaled $611 million, reflecting growth of 172% from the year-ago period. For the quarter, unit sales rose 73% year over year and selling prices increased 99%. Organic growth accounted for 26%, and acquisitions of PalletOne and T&R Lumber contributed 47% to unit sales growth. New product sales increased 192% from the year-ago quarter.
UFP Construction: Sales in the segment were $739 million, up 106% year over year. This improvement was mainly attributable to a 29% increase in unit sales and 77% rise in selling price. Unit sales to site-built and factory-built housing customers rose 56% and 32%, respectively. Also, unit sales to commercial customers improved 11% from the prior-year quarter. During the reported quarter, new product sales rose 184% from second-quarter 2020.
Operating Highlights
Gross margin of 15.6% contracted 90 basis points (bps) year over year. Selling, general and administrative expenses — accounting for 6.8% of net sales — improved 240 bps year over year. Adjusted EBITDA of $261.5 million increased 136.8% year over year. During the first quarter of 2021, adjusted EBITDA margin expanded 80 bps to 9.7%.
Balance Sheet & Cash Flow
At the end of second-quarter 2021, cash and cash equivalents were $44.3 million compared with $200.5 million at second-quarter 2020. During the first six months of 2021, net cash used in operating activities totaled $115.7 million against net cash provided by operating activities of $147.2 million in the comparable 2020 period.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -6.06% due to these changes.
VGM Scores
At this time, UFP Industries has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, UFP Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.