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UFP Industries (UFPI) Up 2.1% 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 2.1% in that time frame, underperforming 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 Q1 Earnings Top, Sales Miss, Down Y/Y
UFP Industries reported mixed results for the first quarter of 2024. Earnings beat the Zacks Consensus Estimate but net sales missed the same. The top and bottom lines declined on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $1.96 per share, which surpassed the consensus mark of $1.62 by 21% but declined 1% from the year-ago quarter’s level of $1.98.
Net sales of $1.64 billion, however, lagged the consensus mark of $1.68 billion by 2.7% and declined 10% year over year. The downside was mainly due to a 9% fall in selling prices and a 1% decline in organic unit sales.
New product sales were $124 million. Contribution from new product sales rose to 7.6% from 7.4% in the prior-year quarter.
Segment Discussion
UFP Retail Solutions: The segment reported net sales of $628.8 million for the quarter, which declined 17% year over year due to a 6% decline in selling prices and 8% lower organic unit sales. Also, a 3% reduction due to the transfer of certain sales to other segments added to the decline.
Adjusted EBITDA margin rose 240 basis points (bps) from the prior year to 8.8%.
UFP Packaging: The Packaging segment’s net sales totaled $424.4 million, down 13% from the year-ago period’s levels. In the first quarter, selling prices declined 11% and organic unit sales were down 6% year over year. This was partially balanced by a 4% increase resulting from the transfer of certain sales from the retail segment.
Adjusted EBITDA margin fell 330 bps from the prior year to 10.4%.
UFP Construction: Net sales in the segment were $517.9 million, which remained at par with the year-ago level. This segment registered a 10% decrease in selling prices being counteracted by an 8% increase in organic unit sales and a 2% increase due to the transfer of certain sales from the retail segment.
Adjusted EBITDA margin contracted 160 bps from the prior year to 10.4%.
Operating Highlights
During the first quarter, selling, general and administrative expenses — accounting for 11.7% of net sales — increased 100 bps year over year.
Adjusted EBITDA of $180.8 million declined 10.5% year over year. Adjusted EBITDA margin also contracted 10 bps from the prior year to 11%.
Balance Sheet & Cash Flow
The company ended first-quarter 2024 with more than $2.2 billion in liquidity. Cash and cash equivalents were $979.7 million at the first-quarter end compared with $1.1 billion at the end of 2023. At the first-quarter end, net cash used in operating activities was $16.8 million compared with $37.1 million cash used in the corresponding year-ago period.
During 2023, capital expenditures totaled $49.1 million. In 2024, the company aims to allocate capital investments totaling up to $300 million. Around $100 million is earmarked for enhancing automation and implementing technological upgrades, while an additional $100 million will be allocated for constructing new facilities and augmenting capacity at current sites.
In the quarter, UFPI purchased approximately 319,000 shares at an average price of $114.74 under the share repurchase plan. On Jul 26, 2023, its board of directors authorized up to $200 million for share repurchases through Jul 31, 2024. Again, in April, the company repurchased 352,000 shares at an average share price of $114.15. Of this authorization, $97 million remained at April-end.
Outlook
For Lumber Market, UFP Industries maintains its expectation that lumber prices will persist at lower, historically typical levels throughout 2024, driven by existing supply and demand dynamics.
In regard to end-market demand, UFP Industries has adjusted its previous outlook based on recent macroeconomic data and revised expectations regarding potential cuts in federal interest rates in the latter part of 2024. Forecasts suggest a decline in demand for packaging and retail segments by mid-single digits, while demand for the construction segment is projected to fluctuate slightly, either increasing marginally or experiencing a slight decrease compared to 2023. The company foresees a continuation of subdued demand and competitive pricing conditions throughout most of 2024, with improvements expected in the latter half due to more favorable year-over-year comparisons.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.66% due to these changes.
VGM Scores
Currently, UFP Industries has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, 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 B. 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.
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UFP Industries (UFPI) Up 2.1% 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 2.1% in that time frame, underperforming 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 Q1 Earnings Top, Sales Miss, Down Y/Y
UFP Industries reported mixed results for the first quarter of 2024. Earnings beat the Zacks Consensus Estimate but net sales missed the same. The top and bottom lines declined on a year-over-year basis. Lower pricing and organic unit sales hurt the company’s quarterly results.
Earnings & Revenue Discussion
UFP Industries’ quarterly earnings came in at $1.96 per share, which surpassed the consensus mark of $1.62 by 21% but declined 1% from the year-ago quarter’s level of $1.98.
Net sales of $1.64 billion, however, lagged the consensus mark of $1.68 billion by 2.7% and declined 10% year over year. The downside was mainly due to a 9% fall in selling prices and a 1% decline in organic unit sales.
New product sales were $124 million. Contribution from new product sales rose to 7.6% from 7.4% in the prior-year quarter.
Segment Discussion
UFP Retail Solutions: The segment reported net sales of $628.8 million for the quarter, which declined 17% year over year due to a 6% decline in selling prices and 8% lower organic unit sales. Also, a 3% reduction due to the transfer of certain sales to other segments added to the decline.
Adjusted EBITDA margin rose 240 basis points (bps) from the prior year to 8.8%.
UFP Packaging: The Packaging segment’s net sales totaled $424.4 million, down 13% from the year-ago period’s levels. In the first quarter, selling prices declined 11% and organic unit sales were down 6% year over year. This was partially balanced by a 4% increase resulting from the transfer of certain sales from the retail segment.
Adjusted EBITDA margin fell 330 bps from the prior year to 10.4%.
UFP Construction: Net sales in the segment were $517.9 million, which remained at par with the year-ago level. This segment registered a 10% decrease in selling prices being counteracted by an 8% increase in organic unit sales and a 2% increase due to the transfer of certain sales from the retail segment.
Adjusted EBITDA margin contracted 160 bps from the prior year to 10.4%.
Operating Highlights
During the first quarter, selling, general and administrative expenses — accounting for 11.7% of net sales — increased 100 bps year over year.
Adjusted EBITDA of $180.8 million declined 10.5% year over year. Adjusted EBITDA margin also contracted 10 bps from the prior year to 11%.
Balance Sheet & Cash Flow
The company ended first-quarter 2024 with more than $2.2 billion in liquidity. Cash and cash equivalents were $979.7 million at the first-quarter end compared with $1.1 billion at the end of 2023. At the first-quarter end, net cash used in operating activities was $16.8 million compared with $37.1 million cash used in the corresponding year-ago period.
During 2023, capital expenditures totaled $49.1 million. In 2024, the company aims to allocate capital investments totaling up to $300 million. Around $100 million is earmarked for enhancing automation and implementing technological upgrades, while an additional $100 million will be allocated for constructing new facilities and augmenting capacity at current sites.
In the quarter, UFPI purchased approximately 319,000 shares at an average price of $114.74 under the share repurchase plan. On Jul 26, 2023, its board of directors authorized up to $200 million for share repurchases through Jul 31, 2024. Again, in April, the company repurchased 352,000 shares at an average share price of $114.15. Of this authorization, $97 million remained at April-end.
Outlook
For Lumber Market, UFP Industries maintains its expectation that lumber prices will persist at lower, historically typical levels throughout 2024, driven by existing supply and demand dynamics.
In regard to end-market demand, UFP Industries has adjusted its previous outlook based on recent macroeconomic data and revised expectations regarding potential cuts in federal interest rates in the latter part of 2024. Forecasts suggest a decline in demand for packaging and retail segments by mid-single digits, while demand for the construction segment is projected to fluctuate slightly, either increasing marginally or experiencing a slight decrease compared to 2023. The company foresees a continuation of subdued demand and competitive pricing conditions throughout most of 2024, with improvements expected in the latter half due to more favorable year-over-year comparisons.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -5.66% due to these changes.
VGM Scores
Currently, UFP Industries has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, 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 B. 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.