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UFP Industries (UFPI) Up 5.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for UFP Industries (UFPI - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.
Will the recent positive 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 Q4 Earnings Beat Estimates
UFP Industries, Inc. reported stellar results for fourth-quarter 2021. Both earnings and net sales beat the Zacks Consensus Estimate as well as improved impressively on a year-over-year basis. With this, the company’s earnings and sales surpassed the consensus mark in all the trailing four quarters. The uptrend was mainly driven by the diversity of markets and an improved pricing model.
Matthew J. Missad, CEO of UFP Industries, said, “Our new market-focused organizational structure is helping us to better identify growth opportunities, and we are more strategically investing our capital. These investments, coupled with the addition of new value-added products and very strong demand, have resulted in unprecedented growth.”
Earnings & Revenue Discussion
UFP Industries’ fourth-quarter adjusted earnings came in at $2.19 per share, which comfortably surpassed the consensus mark of $1.25 by 75.2% and increased 114.7% from the year-ago level of $1.02.
Net sales of $2,016.8 million outpaced the consensus mark of $1,925 million by 4.8% and improved 45% on a year-over-year basis. The growth is attributable to a 5% rise in organic unit sales, a 20% increase in unit sales from buyouts and a 20% boost in lumber price.
New product sales were $189.1 million, up 42% year over year driven by recent buyouts.
Segment Discussion
UFP Retail Solutions: The segment reported sales of $703.9 million for the quarter, which grew 39% year over year as unit sales edged up 34%. A 2% rise in organic unit sales and a 3% increase in selling price also led to the upside.
UFP Industrial: The Industrial segment’s sales totaled $514.9 million, reflecting growth of 67% from the year-ago period. For the quarter, unit sales rose 29% year over year and selling prices increased 42%.
UFP Construction: Sales in the segment were $677.3 million, up 33% year over year. This improvement in the segment sales is mainly attributable to an 18% increase in selling price, a 13% rise in organic unit growth and 2% growth from acquisitions.
Operating Highlights
Selling, general and administrative expenses — accounting for 8.8% of net sales — improved 260 bps year over year. Adjusted EBITDA of $223.3 million increased 89% year over year. Adjusted EBITDA margin also expanded 260 bps from the prior year to 11.1%.
Balance Sheet & Cash Flow
The company ended 2021 with approximately $805 million liquidity and $50 million of net debt. Cash and cash equivalents were $286.7 million at 2021-end compared with $436.5 million at 2020-end.
For 2021, net cash provided by operating activities was $512.5 million compared with $336.5 million in the corresponding year-ago period. UFP Industries now expects capital expenditure within $175-225 million for 2022, indicating an increase from $151 million spent in 2021. UFPI’s board approved an increase in the share repurchase program up to 2.6 million shares.
Acquisitions
The company made four acquisitions during the fourth quarter that contributed 20% to the unit sales growth. These buyouts are of Shelter Products (distribution in the United States); Boxpack Packaging (Australia), a 70% stake in Ficus Pax (industrial packaging in India), and Advantage Label & Packaging (U.S.). Overall, UFPI acquired nine companies during full-year 2021, which contributed 24% to unit sales growth for 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 64.02% due to these changes.
VGM Scores
At this time, UFP Industries has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, UFP Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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UFP Industries (UFPI) Up 5.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for UFP Industries (UFPI - Free Report) . Shares have added about 5.3% in that time frame, outperforming the S&P 500.
Will the recent positive 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 Q4 Earnings Beat Estimates
UFP Industries, Inc. reported stellar results for fourth-quarter 2021. Both earnings and net sales beat the Zacks Consensus Estimate as well as improved impressively on a year-over-year basis. With this, the company’s earnings and sales surpassed the consensus mark in all the trailing four quarters. The uptrend was mainly driven by the diversity of markets and an improved pricing model.
Matthew J. Missad, CEO of UFP Industries, said, “Our new market-focused organizational structure is helping us to better identify growth opportunities, and we are more strategically investing our capital. These investments, coupled with the addition of new value-added products and very strong demand, have resulted in unprecedented growth.”
Earnings & Revenue Discussion
UFP Industries’ fourth-quarter adjusted earnings came in at $2.19 per share, which comfortably surpassed the consensus mark of $1.25 by 75.2% and increased 114.7% from the year-ago level of $1.02.
Net sales of $2,016.8 million outpaced the consensus mark of $1,925 million by 4.8% and improved 45% on a year-over-year basis. The growth is attributable to a 5% rise in organic unit sales, a 20% increase in unit sales from buyouts and a 20% boost in lumber price.
New product sales were $189.1 million, up 42% year over year driven by recent buyouts.
Segment Discussion
UFP Retail Solutions: The segment reported sales of $703.9 million for the quarter, which grew 39% year over year as unit sales edged up 34%. A 2% rise in organic unit sales and a 3% increase in selling price also led to the upside.
UFP Industrial: The Industrial segment’s sales totaled $514.9 million, reflecting growth of 67% from the year-ago period. For the quarter, unit sales rose 29% year over year and selling prices increased 42%.
UFP Construction: Sales in the segment were $677.3 million, up 33% year over year. This improvement in the segment sales is mainly attributable to an 18% increase in selling price, a 13% rise in organic unit growth and 2% growth from acquisitions.
Operating Highlights
Selling, general and administrative expenses — accounting for 8.8% of net sales — improved 260 bps year over year. Adjusted EBITDA of $223.3 million increased 89% year over year. Adjusted EBITDA margin also expanded 260 bps from the prior year to 11.1%.
Balance Sheet & Cash Flow
The company ended 2021 with approximately $805 million liquidity and $50 million of net debt. Cash and cash equivalents were $286.7 million at 2021-end compared with $436.5 million at 2020-end.
For 2021, net cash provided by operating activities was $512.5 million compared with $336.5 million in the corresponding year-ago period. UFP Industries now expects capital expenditure within $175-225 million for 2022, indicating an increase from $151 million spent in 2021. UFPI’s board approved an increase in the share repurchase program up to 2.6 million shares.
Acquisitions
The company made four acquisitions during the fourth quarter that contributed 20% to the unit sales growth. These buyouts are of Shelter Products (distribution in the United States); Boxpack Packaging (Australia), a 70% stake in Ficus Pax (industrial packaging in India), and Advantage Label & Packaging (U.S.). Overall, UFPI acquired nine companies during full-year 2021, which contributed 24% to unit sales growth for 2021.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates review.
The consensus estimate has shifted 64.02% due to these changes.
VGM Scores
At this time, UFP Industries has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% 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 trending upward for the stock, and the magnitude of these revisions looks promising. Notably, UFP Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.