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UFP Industries (UFPI) Down 8.3% Since Last Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for UFP Industries (UFPI - Free Report) . Shares have lost about 8.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is UFP Industries due for a breakout? 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 drivers.
UFP Industries Q2 Earnings & Net Sales Beat, Down Y/Y
UFP Industries 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 (EPS) 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -9.08% due to these changes.
VGM Scores
Currently, UFP Industries has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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 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.
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UFP Industries (UFPI) Down 8.3% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for UFP Industries (UFPI - Free Report) . Shares have lost about 8.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is UFP Industries due for a breakout? 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 drivers.
UFP Industries Q2 Earnings & Net Sales Beat, Down Y/Y
UFP Industries 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 (EPS) 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.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -9.08% due to these changes.
VGM Scores
Currently, UFP Industries has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. 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 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.