GRAND RAPIDS — Wood products manufacturer UFP Industries Inc. emerged from a turbulent 2020 with another record-breaking year.
Despite the pandemic-plagued operating environment, the company formerly known as Universal Forest Products set a new annual sales milestone, generating $5.15 billion in revenue for 2020, a 40-percent year-over-year increase. The sales accounted for a 15-percent increase in unit sales and a 25-percent increase in lumber prices, the company said in an earnings report.
UFP Industries (Nasdaq: UFPI) reported annual net earnings of nearly $253.9 million, or $4 per diluted share, a 37-percent increase from the previous year.
“Despite the disruptions that marked 2020, our reorganized structure allowed our employees to remain focused on bringing new value-added products to market faster and using capital more efficiently, while supporting more rapid growth at a lower incremental cost,” UFP Industries CEO Matthew Missad said in a statement. “I am most impressed by the perseverance of our hourly production employees who safely served our customers.”
The year was capped by a fourth quarter in which the company generated $1.39 billion in net sales, a 40-percent year-over-year increase. UFP reported quarterly net earnings of nearly $64.8 million, or $1.02 per diluted share, up from 61 cents per diluted share a year earlier.
The company’s retail segment fueled the strong year as the industrial and construction markets continued to find their footing amid the pandemic.
In retail, UFP finished the fourth quarter with $505.2 million in net sales and $2.17 billion for the full year, a 45-increase from 2019. Every business unit in the segment saw a double-digit increase in net sales, led by Deckorators, which increased by 80 percent in the fourth quarter and 20 percent on the year. Deckorators produces composite decking, deck rails, balusters, postcaps and deck lighting.
UFP’s industrial segment finished with $1.07 billion in net sales for 2020, down 1 percent from 2019. The construction segment was especially rattled, finishing the year with $1.70 billion in net sales. However, business for the commercial construction unit declined by around $70 million, leading the unit to a $25 million annual operating loss, according to the company.
“This unit was hit the hardest by COVID lockdowns and has underperformed for the last few years,” Missad said on a conference call with investors today. “We undertook a complete review of the business to determine whether it was sustainable and whether our execution challenges were self-inflicted or externally driven. We have created a new path forward which includes streamlining our operations team, exiting unprofitable product lines, consolidating facilities and sizing staffing levels based on actual, not anticipated sales volumes.”
UFP Industries maintains a strong cash position with $436.5 million in cash on its balance sheet, providing it plenty of dry powder to continue its acquisition spree in 2021. The company also increased its revolving long-term credit facility by $175 million to $550 million as of this month.
“For acquisitions in 2021 and thereafter, we expect that new target companies will bring similar qualities to our business units and accelerate growth in sales and profits,” Missad said in the call with brokerage analysts. “We have added more resources to our internal M&A team to help each business unit identify and negotiate acquisition opportunities, as well as streamlining the closing and post-closing transitions. We remain committed to improving our return on investment and not merely growing for the sake of growth.”
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