GlobeNewswire Inc | Jul 22, 2020 04:11PM EDT

July 22, 2020

GRAND RAPIDS, Mich., July 22, 2020 (GLOBE NEWSWIRE) -- UFP Industries, Inc. (Nasdaq: UFPI) today announced record net earnings attributable to controlling interest of $66.5 million for the second quarter of 2020, as well as record EPS of $1.08 per diluted share, a 23 percent increase over the same period of 2019.

I am very grateful that our operations were deemed essential and we were able to continue to serve customers during the second quarter, said CEO Matthew J. Missad. I am also grateful to our customers, many of whom continued to operate by finding new ways to serve the public and keep their employees safe. Their extraordinary efforts contributed to the success we experienced in the second quarter.

While virus-related shutdowns negatively impacted our industrial and construction segments in ways we expected, the increase in home improvement activity resulting from stay-at-home orders benefited our retail segment. Conditions improved as we progressed through the second quarter, as demand in our retail segment accelerated sharply while the headwinds in our industrial and construction segments eased. Overall, our results once again validate our balanced business model and diverse product portfolio, which combine to mitigate the risk of a decline in a single market.

We experienced much greater than expected demand for our home improvement products, and I give credit to our managers, treating and production teams, and buyers who worked tirelessly to fill customer orders and continue to do so. Our decentralized, entrepreneurial model empowers our local leaders with the decision-making authority they need to respond quickly to market changes, and our experienced team answered the call again, just as they have during other challenging times. They rapidly adapted to the changes in the markets they serve and made the changes necessary to keep our employees safe.

The company continues to execute strategies to grow and enhance its value-added service and product offering, including:

-- The company recently acquired T&R Lumber, which manufactures and distributes a range of products used primarily by nurseries, including tree boxes, plastic containers, stakes and trellises. -- New product sales grew 6 percent, driven by retail sales, which grew nearly 16 percent

UFP Industries maintains a disciplined and balanced approach to capital allocation with ample availability for growth and to return to shareholders. The companys long-term credit facilities and cash currently provide over $562 million in available liquidity, and it continues to maintain a strong pipeline of acquisition targets. Additionally, on July 22, 2020, the companys board approved a quarterly dividend payment of 12.5 cents a share, a prorated 25 percent increase over the dividends paid in 2019. The dividend is payable on September 15, 2020, to shareholders of record on September 1, 2020. During the first quarter, the company repurchased 750,000 shares of its common stock at an average price of $38.62; it is authorized to repurchase an additional 1.1 million shares.

Second Quarter 2020 Highlights (comparisons on a year-over-year basis):

-- Earnings from operations of $92.4 million were up 24 percent, and net earnings attributable to controlling interest of $66.5 million were up 22 percent -- EBITDA of $110.4 million increased by 22 percent -- Net sales of $1.24 billion; higher lumber prices contributed 3 percent in net sales which was substantially offset by a 3 percent decrease in units sold -- Operating cash flow more than doubled to $147.2 million for the first six months of 2020, up 107 percent over the same period of 2019 -- Cash reserves exceed debt by almost $37 million

By business segment, the company reported the following second-quarter results:

UFP Retail

-- $609.2 million in net sales, up 26 percent over the second quarter of 2019. Retail unit sales increased 22 percent, with higher selling prices increasing sales by 4 percent. The following business units drove unit sales growth: Home and Dcor (up 72 percent); ProWood (up 27 percent); Fence, Lawn and Garden (up 23 percent); and UFP-Edge (up 9 percent). Retail sales growth accelerated as the second quarter progressed, with year-over-year sales increasing from 3 percent higher in April to 47 percent higher in June.

UFP Industrial

-- $224.4 million in net sales, down 23 percent from the second quarter of 2019. Unit sales decreased 27 percent, while higher selling prices contributed a 4 percent increase in gross sales. Industrial sales showed steady improvement as the second quarter progressed, with year-over-year sales improving from 32 percent lower in April to 14 percent lower in June.

UFP Construction

-- $359.2 million in net sales, down 13 percent from the second quarter of 2019, due to a 16 percent decrease in unit sales and a 3 percent increase in selling prices. Unit sales fell in all business units: Concrete Forming (down 5 percent), Site Built (down 15 percent), Commercial (down 19 percent), and Factory Built (down 20 percent). Construction sales showed steady improvement as the second quarter progressed, with year-over-year sales improving from 19 percent lower in April to 6 percent lower in June.

CONFERENCE CALLUFP Industries will conduct a conference call to discuss information included in this news release and related matters at 8:30 a.m. ET on Thursday, July 23, 2020. The call will be hosted by CEO Matthew J. Missad and CFO Michael Cole, and will be available for analysts and institutional investors domestically at 866-518-4547 and internationally at 213-660-0879. Use conference pass code 6095819. The conference call will be available simultaneously and in its entirety to all interested investors and news media through a webcast at http://www.ufpi.com. A replay of the call will be available through July 25, 2020, at 855-859-2056 or 404-537-3406.

UFP Industries, Inc. (formerly Universal Forest Products, Inc.)UFP Industries is a holding company whose subsidiaries supply wood, wood composite and other products to three robust markets: retail, construction and industrial. Founded in 1955, the company is headquartered in Grand Rapids, Mich., with affiliates throughout North America, Europe, Asia and Australia. For more about UFP Industries, go to www.ufpi.com.

This press release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on managements beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like anticipates, believes, confident, estimates, expects, forecasts, likely, plans, projects, should, variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission.

Non-GAAP Financial Information

This release includes certain financial information not prepared in accordance with U.S. GAAP. Because not all companies calculate non-GAAP financial information identically (or at all), the presentations herein may not be comparable to other similarly titled measures used by other companies. Management considers EBITDA, a non-GAAP measure, an alternative performance measure which may provide useful information to investors.

CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME(UNAUDITED)FOR THE THREE AND SIX MONTHS ENDEDJUNE 2020/2019 Quarter Period Year to Date (In thousands,except per 2020 2019 2020 2019 share data) NET SALES $ 1,242,001 100 % $ 1,239,817 100 % $ 2,274,063 100 % $ 2,254,943 100.0 % COST OF GOODS 1,037,070 83.5 1,053,091 84.9 1,901,896 83.6 1,913,950 84.9 SOLD GROSS PROFIT 204,931 16.5 186,726 15.1 372,167 16.4 340,993 15.1 SELLING, GENERAL AND

ADMINISTRATIVE 113,781 9.2 112,891 9.1 223,121 9.8 218,207 9.7 EXPENSESOTHER (1,209 ) (0.1 ) (402 ) - (1,944 ) (0.1 ) 103 - EARNINGS FROM 92,359 7.4 74,237 6.0 150,990 6.6 122,683 5.4 OPERATIONS OTHER EXPENSE, (992 ) (0.1 ) 1,725 0.1 3,747 0.2 2,592 0.1 NET EARNINGSBEFORE INCOME 93,351 7.5 72,512 5.8 147,243 6.5 120,091 5.3 TAXES INCOME TAXES 23,657 1.9 17,367 1.4 36,979 1.6 28,944 1.3 NET EARNINGS 69,694 5.6 55,145 4.4 110,264 4.8 91,147 4.0 LESS NETEARNINGS ATTRIBUTABLETO

NONCONTROLLING (3,231 ) (0.3 ) (630 ) (0.1 ) (3,642 ) (0.2 ) (1,092 ) - INTEREST NET EARNINGSATTRIBUTABLE TO CONTROLLING $ 66,463 5.4 $ 54,515 4.4 $ 106,622 4.7 $ 90,055 4.0 INTEREST EARNINGS PER $ 1.08 $ 0.88 $ 1.73 $ 1.46 SHARE - BASIC EARNINGS PERSHARE - $ 1.08 $ 0.88 $ 1.73 $ 1.46 DILUTED SUPPLEMENTALSALES AND SG&A DATA Quarter Period Year to DateSegment 2020 2019 % 2020 2019 %ClassificationRetail $ 609,190 $ 482,090 26.4 % $ 961,351 $ 815,190 17.9 %Industrial 224,379 291,245 -23.0 % 480,922 566,004 -15.0 %Construction 359,170 414,825 -13.4 % 740,325 779,962 -5.1 %All Other 49,411 52,669 -6.2 % 91,804 94,779 -3.1 %Corporate (149 ) (1,012 ) -85.3 % (339 ) (992 ) -65.8 %Total Net $ 1,242,001 $ 1,239,817 0.2 % $ 2,274,063 $ 2,254,943 0.8 %Sales 2020 % of 2019 % of 2020 % of 2019 % of Sales Sales Sales SalesSG&A,Excluding $ 85,884 6.9 $ 94,620 7.6 $ 181,232 8.0 $ 187,554 8.3 Bonus ExpenseBonus Expense 27,897 2.2 18,271 1.5 41,889 1.8 30,653 1.4 Total SG&A $ 113,781 9.2 $ 112,891 9.1 $ 223,121 9.8 $ 218,207 9.7 SG&A,ExcludingBonus Expense, 41.9 % 50.7 % 48.7 % 55.0 % as aPercentage ofGross Profit

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)JUNE 2020/2019 (In thousands) ASSETS 2020 2019 LIABILITIES 2020 2019 AND EQUITY CURRENT ASSETS CURRENT LIABILITIES Cash and Cash cash $ 200,546 $ 20,497 overdraft $ - $ 24,972 equivalents Restricted 724 1,024 Accounts 199,338 189,649 cash payable Investments 19,195 16,776 Accrued 233,088 164,812 liabilities Accounts Current receivable 522,930 483,263 portion of 2,786 173 debt Inventories 459,424 528,680 Other current 33,786 46,868 assets TOTAL CURRENT 1,236,605 1,097,108 TOTAL CURRENT 435,212 379,606ASSETS LIABILITIES OTHER ASSETS 120,464 111,175 LONG-TERM DEBT ANDINTANGIBLE CAPITALASSETS, NET 299,963 273,804 LEASE 161,057 187,471 OBLIGATIONSPROPERTY, OTHER 123,014 100,349PLANT LIABILITIES AND EQUIPMENT, 401,576 368,572 EQUITY 1,339,325 1,183,233 NET TOTALTOTAL ASSETS $ 2,058,608 $ 1,850,659 LIABILITIES $ 2,058,608 $ 1,850,659 AND EQUITY

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)FOR THE SIX MONTHS ENDEDJUNE 2020/2019(In thousands) 2020 2019 CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 110,264 $ 91,147 Adjustments to reconcile net earnings to net cash from operating activities: Depreciation 31,330 29,200 Amortization of intangibles 3,129 2,946 Expense associated with share-based and 2,303 2,209 grant compensation arrangementsDeferred income taxes (credit) 290 (536 )Unrealized loss (gain) on investments 473 (1,518 )and otherNet gain on disposition and impairment (271 ) (321 )of assetsChanges in: Accounts receivable (155,554 ) (139,468 )Inventories 25,983 28,008 Accounts payable and cash overdraft 57,017 49,947 Accrued liabilities and other 72,246 9,334 NET CASH FROM OPERATING ACTIVITIES 147,210 70,948 CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property, plant, and (46,730 ) (42,477 )equipmentProceeds from sale of property, plant 644 977 and equipmentAcquisitions and purchase of noncontrolling (18,689 ) (5,034 )interest, net of cash receivedPurchases of investments (20,094 ) (4,859 )Proceeds from sale of investments 18,339 3,667 Other 318 (10 ) NET CASH USED IN INVESTING ACTIVITIES (66,212 ) (47,736 ) CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings under revolving credit 6,759 393,434 facilitiesRepayments under revolving credit (6,498 ) (408,027 )facilitiesRepayments of debt (3,077 ) (3,061 )Proceeds from issuance of common stock 697 542 Dividends paid to shareholders (15,374 ) (12,271 )Distributions to noncontrolling interest (299 ) (900 )Repurchase of common stock (29,212 ) - Other 32 28 NET CASH FROM (USED IN) FINANCING (46,972 ) (30,255 )ACTIVITIES Effect of exchange rate changes on cash (1,422 ) 366 NET CHANGE IN CASH AND CASH EQUIVALENTS 32,604 (6,677 ) ALL CASH AND CASH EQUIVALENTS, BEGINNING OF 168,666 28,198 PERIOD ALL CASH AND CASH EQUIVALENTS, END OF $ 201,270 $ 21,521 PERIOD Reconciliation of cash and cash equivalents and restricted cash:Cash and cash equivalents, beginning of $ 168,336 $ 27,316 periodRestricted cash, beginning of period 330 882 All cash and cash equivalents, beginning $ 168,666 $ 28,198 of period Cash and cash equivalents, end of period $ 200,546 $ 20,497 Restricted cash, end of period 724 1,024 All cash and cash equivalents, end of $ 201,270 $ 21,521 period

EBITDA RECONCILIATION (UNAUDITED)FOR THE THREE AND SIX MONTHS ENDEDJUNE 2020/2019 Quarter Period Year to Date(In thousands) 2020 2019 2020 2019Net earnings 69,694 55,145 110,264 91,147 Interest expense 1,898 2,407 3,805 4,867 Interest and (189 ) (512 ) (530 ) (757 ) investment incomeIncome taxes 23,657 17,367 36,979 28,944 Expense associatedwith share-based 859 922 2,303 2,209 compensationarrangementsNet (gain) loss ondisposition and 14 (199 ) (271 ) (321 ) impairment of assetsUnrealized (gain) (2,701 ) (170 ) 472 (1,518 ) loss on investmentsDepreciation expense 15,613 14,725 31,330 29,200 Amortization of 1,558 1,094 3,129 2,946 intangiblesEBITDA 110,403 90,779 187,481 156,717

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS AS A PERCENTAGE OF SALESCURRENT YEAR'S SALES STATED AT LAST YEAR'S SELLING PRICES (UNAUDITED)FOR THE THREE MONTHS ENDED - JUNE 2020/2019 Quarter Period Sales Adjusted to Actual Last Year's Actual Selling Prices 2020 2020 2019 NET SALES 100.0 % 100.0 % 100.0 %COST OF GOODS SOLD 83.5 83.0 84.9 GROSS PROFIT 16.5 17.0 15.1 SELLING, GENERAL AND 9.2 9.5 9.1 ADMINISTRATIVE EXPENSESOTHER (0.1 ) (0.1 ) - EARNINGS FROM OPERATIONS 7.4 7.7 6.0 OTHER EXPENSE, NET (0.1 ) (0.1 ) 0.1 EARNINGS BEFORE INCOME TAXES 7.5 7.8 5.8 INCOME TAXES 1.9 2.0 1.4 NET EARNINGS 5.6 5.8 4.4 LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST (0.3 ) (0.3 ) (0.1 ) NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST 5.4 % 5.5 % 4.4 % Note: Actualpercentages arecalculated and may not sum to total due to rounding. 2020 NET SALES $ 1,242,001 2020 SELL PRICE INCREASE (3.00 ) % INCREASE IN 2020 NET SALES DUE $ (37,260 ) TO SELL PRICE INCREASEACTUAL 2020 NET SALES 1,242,001 ADJUSTED 2020 NET SALES $ 1,204,741 ACTUAL 2020 COST OF GOODS SOLD $ 1,037,070 PLUS DIFFERENCE IN NET SALES (37,260 ) (ABOVE)ADJUSTED 2020 COST OF GOODS $ 999,810 SOLD



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Dick GauthierVP, Business Outreach(616) 365-1555