UFP Industries Inc.
05/06/2026 | Press release | Distributed by Public on 05/06/2026 10:52
Quarterly Report for Quarter Ending March 28, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
UFP Industries, Inc. is a holding company with subsidiaries in North America, Europe, Asia, and Australia that design, manufacture, and supply products made from wood, wood and non-wood composites, and other materials to three segments: retail, packaging, and construction. We are headquartered in Grand Rapids, Michigan. Our business segments are functionally interdependent and are supported by common corporate services, such as accounting and finance, information technology, human resources, marketing, purchasing, transportation, legal and compliance, among others. We regularly invest in automation and implement best practices to improve the efficiency of our manufacturing facilities across each of the segments. The results and improvements from these investments are shared among the segments. This exchange of ideas drives faster innovation for new products, processes, and product improvements.
Importantly, our structure allows us to evaluate market conditions and opportunities, while effectively allocating capital and resources to the appropriate segments and business units. We believe that the diversification and manner in which we operate our business segments provides an inherent hedge against the inevitable business cycles that our markets experience and over which we have little control. Accordingly, our goal is to provide stable earnings and cash flows to our shareholders. Our diversification and operating practices also mitigate the impact of volatile lumber market conditions experienced by traditional lumber companies.
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management's 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. We do 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 currency and inflation; fluctuations in the price of lumber; adverse economic conditions in the markets we serve; changes in tariffs, import/export regulations, and other trade policies; concentration of sales to customers; the success of vertical integration strategies; excess capacity or supply chain challenges; our ability to make successful business acquisitions; government regulations, particularly involving environmental and safety regulations; adverse or unusual weather conditions; inbound and outbound transportation costs; alternatives to replace treated wood products; cybersecurity breaches; artificial intelligence; and potential pandemics. Certain of these risk factors as well as other risk factors and additional information are included in our reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission.
OVERVIEW
Our results for the first quarter of 2026 include the following highlights:
| ● | Our net sales decreased 8% compared to the first quarter of 2025, which was comprised of a 1% decrease in selling prices and a 7% decrease in unit sales. The overall decrease in our selling prices is primarily due to more competitive pricing in our Site Built business unit resulting from weak consumer demand for new residential housing. Organic unit sales declined by 13% in our retail segment, 5% in our construction segment, and 3% in our packaging segment. An acquired business contributed a 1% unit increase in our packaging segment. The sales in our ProWood business unit were also adversely impacted by soft demand for new housing, as well as less favorable weather, the absence of storm-related demand, and weaker consumer sentiment compared to the first quarter of 2025. |
UFP INDUSTRIES, INC.
| ● | Our gross profits decreased by $32 million, or 12%, compared to the same period of the prior year. By segment, gross profits decreased by $13 million in Construction, $9 million in Packaging, $1 million in Retail, and $10 million in Corporate, while All Other increased $1 million. The overall decrease in our gross profits is primarily due to weaker demand impacting volumes and pricing in our Site-Built business unit, lower volumes in our ProWood business, higher material costs in our PalletOne business, and higher transportation and healthcare costs generally across all of our business units. |
| ● | Our operating profits decreased $28 million, or 31%, compared to the first quarter of 2025. This decrease is a result of the decline in gross profits mentioned above which was partially offset by a $3 million decrease in selling, general, and administrative ("SG&A") expenses, and a $1 million increase in other gains primarily from the sale of real estate. The decrease in SG&A is due to a reduction in incentive compensation tied to profitability and return on investment. |
| ● | Our cash flows used in operations were $104 million in the first three months of 2026 compared to $109 million during the first three months of 2025. The $5 million improvement resulted from a change in our investment in net working capital which was $36 million lower in 2026 than 2025, offset by a $31 million decrease in net earnings and non-cash expenses so far this year. We anticipate that the seasonal increase in our net working capital since year end totaling approximately $203 million will be converted to cash by early in our fourth quarter. |
| ● | Our Cash and cash equivalents at the end of March 2026 was $714 million compared to $904 million at the end of March 2025. The decline in our cash is primarily due to share repurchase activity since the end of the first quarter last year. Our unused borrowing capacity under our revolving credit facility and a shelf agreement with certain lenders along with our cash resulted in total liquidity of approximately $2.0 billion at the end of the first quarter of 2026. |
HISTORICAL LUMBER PRICES
We experience significant fluctuations in the cost of commodity lumber products from primary producers ("Lumber Market"). The following table presents the Random Lengths framing lumber composite price:
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Random Lengths Composite |
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Average $/MBF |
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2026 |
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2025 |
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January |
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$ |
400 |
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$ |
434 |
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February |
|
436 |
|
442 |
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March |
|
443 |
|
479 |
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First quarter average |
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$ |
426 |
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$ |
452 |
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First quarter percentage change |
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(5.8) |
% |
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UFP INDUSTRIES, INC.
In addition, a Southern Yellow Pine ("SYP") composite price, which we prepare and use, is presented below. Our purchases of this species comprise approximately 73% of our total lumber purchases.
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Random Lengths SYP |
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Average $/MBF |
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2026 |
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2025 |
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January |
|
$ |
392 |
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$ |
386 |
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February |
|
415 |
|
401 |
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March |
|
422 |
|
424 |
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First quarter average |
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$ |
410 |
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$ |
404 |
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First quarter percentage change |
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1.5 |
% |
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Finally, a Spruce Pine Fir ("SPF") composite price, which we prepare and use, is presented below. Our purchases of this species comprise approximately 12% of our total lumber purchases.
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Random Lengths SPF |
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Average $/MBF |
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2026 |
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2025 |
||
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January |
|
$ |
430 |
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$ |
480 |
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February |
|
457 |
|
479 |
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March |
|
464 |
|
526 |
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First quarter average |
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$ |
450 |
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$ |
495 |
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First quarter percentage change |
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(9.1) |
% |
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Lumber prices in 2026 remain lower due to overall weak demand in the end markets that primarily consume softwood lumber - new housing, housing repair and remodel activity, and industrial (including packaging). Recent sequential increases are primarily due to recent mill capacity curtailments as they attempt to better align supply with demand. Weak overall demand has been impacted by a variety of factors, including higher inflation and interest rates as well as lower consumer sentiment and greater economic uncertainty.
A change in lumber prices impacts profitability of products sold with fixed and variable prices, as discussed below.
IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS
We generally price our products to pass lumber costs through to our customers so that our profitability is based on the value-added manufacturing, distribution, engineering, and other services we provide. As a result, our dollar sales levels (and working capital requirements) are impacted by the lumber costs of our products. Lumber costs were 43.3% and 43.8% of our sales in the first three months of 2026 and 2025, respectively.
Our gross margins are impacted by (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower from comparative periods), and (2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing or decreasing within a period or from period to period). Additionally, as explained below, product categories can be priced differently. Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported Lumber Market with a fixed dollar adder to cover conversion costs and profits. Consequently, the level and trend of the Lumber Market impact our products differently.
Below is a general description of the primary ways in which our products are priced.
UFP INDUSTRIES, INC.
| ● | Products with fixed selling prices. These products include value-added products, such as manufactured items, sold within all segments. Prices for these products are generally fixed at the time of the sales quotation for a specified period of time. In order to reduce any exposure to adverse trends in the price of component lumber products, we attempt to lock in costs with our suppliers or purchase necessary inventory for these sales commitments. The time period limitation eventually allows us to periodically re-price our products for changes in lumber costs from our suppliers. |
| ● | Products with selling prices indexed to the reported Lumber Market with a fixed dollar "adder" to cover conversion costs and profit. These products primarily include treated lumber, panel goods, other commodity-type items, and trusses sold to the manufactured housing industry. For these products, we estimate customers' needs and carry appropriate levels of inventory. Because lumber costs are incurred in advance of final sale prices, subsequent increases or decreases in the market price of lumber impact our gross margins. We believe our sales of these products are at their highest relative level in our second quarter, primarily due to pressure-treated lumber sold in our retail segment. |
For each of the product pricing categories above, our margins are exposed to changes in the trend of lumber prices. As a result of the balance in our net sales to each of our end markets, we believe our gross profits are more stable than those of our competitors who are less diversified.
The greatest risk associated with changes in the trend of lumber prices is on the following products:
| ● | Products with significant inventory levels with low turnover rates, whose selling prices are indexed to the Lumber Market. In other words, the longer the period of time these products remain in inventory, the greater the exposure to changes in the price of lumber. This includes treated lumber, which comprised approximately 20% of our total net sales in the first three months of 2026. This exposure is less significant with remanufactured lumber, panel goods, other commodity-type items, and trusses sold to the manufactured housing market due to the higher rate of inventory turnover. We attempt to mitigate the risk associated with treated lumber through managed inventory programs with our vendors. We estimate that 14% of our total purchases for the first three months of 2026 were transacted under these programs. (Please refer to the "Risk Factors" section of our annual report on form 10-K, filed with the United States Securities and Exchange Commission.) |
| ● | Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-family construction projects. We attempt to mitigate this risk through our purchasing practices and longer vendor commitments. |
In addition to the impact of Lumber Market trends on gross margins, changes in the level of the market cause fluctuations in gross margins when comparing operating results from period to period. This is explained in the following example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend within each period.
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Period 1 |
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Period 2 |
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Lumber cost |
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$ |
300 |
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$ |
400 |
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Conversion cost |
|
50 |
|
50 |
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= Product cost |
|
350 |
|
450 |
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Adder |
|
50 |
|
50 |
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= Sell price |
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$ |
400 |
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$ |
500 |
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Gross margin |
|
12.5 |
% |
10.0 |
% |
||
As is apparent from the preceding example, the level of lumber prices does not impact our overall profits but does impact our margins. Gross margins and operating margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low.
UFP INDUSTRIES, INC.
IMPACT OF TARIFFS ON OUR OPERATING RESULTS
The trade landscape continues to evolve. Since we do not own any foreign sawmills and have excellent relationships with our mill partners, we believe we are currently in a strong position to adapt quickly to tariffs without material adverse financial impact after a short adjustment period. We will continue to monitor the market and intend to make decisions quickly to minimize disruption. As of March 28, 2026, 82% of our lumber purchases are from domestic suppliers, 10% are imported from Canada, and 8% are imported from other international suppliers.
In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act ("IEEPA"), which the U.S. administration relied on to impose certain tariffs, does not authorize the administration to impose tariffs. As a result of this ruling, the U.S. Court of International Trade ("CIT") issued an order directing the U.S. Customs and Border Protection ("CBP") agency to begin formalizing a process for refunds. The CBP recently opened an online portal allowing importers of record to submit refund requests related to tariffs issued under the IEEPA. The Company has submitted refund requests for tariffs paid to CBP under the IEEPA totaling approximately $20 million, and the request has been acknowledged by the CBP. Acknowledgment of a request by CBP does not indicate approval of the request or that a refund will be paid, and we have not accrued any receivable relating to these potential refunds. It is anticipated that the administration will file appeals or take other action with respect to orders issued by CIT concerning the refund process. As a result, there is uncertainty as to the timing and extent of refund payments.
IMPACT OF HIGHER TRANSPORTATION COSTS ON OUR OPERATING RESULTS
Recent geopolitical events have contributed to an increase in our costs across the enterprise, primarily related to fuel and transportation. In the first quarter of 2026, we estimate that we absorbed an additional $3 million of these costs which adversely impacted our profitability in March. These costs continued to increase in April. We are taking actions intended to recover these costs through pricing to our customers. However, there are factors beyond our control, including contract terms and market conditions, that may impact our ability to be successful in these efforts. Please see "Risk Factors" below for more information.
BUSINESS COMBINATIONS AND ASSET PURCHASES
We did not complete any business combinations in the first quarter of 2026 and completed two in fiscal 2025. The annual historical sales attributable to these acquisitions are approximately $24 million in aggregate. These business combinations are not significant to our quarterly results and thus proforma results for 2026 and 2025 are not presented.
See Notes to the Unaudited Interim Condensed Consolidated Financial Statements, Note F, "Business Combinations" for additional information.
UFP INDUSTRIES, INC.
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the components of our Unaudited Condensed Consolidated Statements of Earnings as a percentage of net sales.
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Three Months Ended |
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March 28, |
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March 29, |
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2026 |
2025 |
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Net sales |
100.0 |
% |
100.0 |
% |
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Cost of goods sold |
83.9 |
83.2 |
|||
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Gross profit |
16.1 |
16.8 |
|||
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Selling, general, and administrative expenses |
11.8 |
11.0 |
|||
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Net gain on disposition and impairment of assets |
(0.1) |
|
- |
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|
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Other losses (gains), net |
- |
- |
|||
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Earnings from operations |
4.4 |
5.8 |
|||
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Interest and other |
(0.2) |
(0.5) |
|||
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Earnings before income taxes |
4.6 |
6.3 |
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Income taxes |
1.1 |
1.3 |
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Net earnings |
3.5 |
5.0 |
|||
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Less net earnings attributable to noncontrolling interest |
- |
- |
|||
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Net earnings attributable to controlling interest |
3.4 |
% |
4.9 |
% |
|
Note: Actual percentages are calculated and may not sum to total due to rounding.
As a result of the impact of the level of lumber prices on the percentages displayed in the table above (see Impact of the Lumber Market on Our Operating Results), we believe it is useful to compare our change in units sold with our change in gross profits, selling, general, and administrative expenses, and operating profits as presented in the following table.
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Percentage Change |
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Three Months Ended |
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March 28, |
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March 29, |
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2026 |
|
2025 |
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Units sold |
(7.0) |
% |
|
(2.0) |
% |
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Gross profit |
|
(12.0) |
|
|
17.8 |
|
|
Selling, general, and administrative expenses |
|
(1.9) |
|
|
(8.2) |
|
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Earnings from operations |
|
(30.5) |
|
|
(31.1) |
|
The following table presents, for the periods indicated, our selling, general, and administrative (SG&A) costs as a percentage of gross profit. Over time, we believe this ratio provides an enhanced view of our effectiveness in managing these costs given our strategies to enhance our capabilities and improve our value-added product offering and recognizing the higher relative level of SG&A these strategies require. This ratio also mitigates the impact of changing lumber prices. The increase in the ratio of SG&A as a percentage of gross profit from the prior year is primarily due to the impact of weak consumer demand and selling at lower prices, which has reduced our gross profits.
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Three Months Ended |
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March 28, |
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March 29, |
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2026 |
|
2025 |
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Gross profit |
$ |
235,889 |
|
$ |
268,196 |
|
Selling, general, and administrative expenses |
$ |
172,883 |
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$ |
176,254 |
|
SG&A as percentage of gross profit |
73.3% |
|
65.7% |
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UFP INDUSTRIES, INC.
Operating Results by Segment:
Our business segments consist of Retail, Packaging and Construction, and align with the end markets we serve. Among other advantages, this structure allows for a specialized and consistent sales approach, more efficient use of resources and capital, and quicker introduction of new products and services. We manage the operations of our individual locations primarily through a market-centered reporting structure under which each location is included in a business unit, and business units are included in our Retail, Packaging, and Construction segments. The exception to this market-centered reporting and management structure is our International segment, which comprises our packaging operations in Mexico, Canada, Spain, India, and Australia and sales and buying offices in other parts of the world. Our International segment and Ardellis (our insurance captive) are included in the "All Other" column of the table below. The "Corporate" column includes purchasing, transportation, corporate ventures, and administrative functions that serve our operating segments. Operating results of Corporate primarily consists of over (under) allocated costs and net sales to external customers initiated by UFP Purchasing, which manages supplier relationships and purchases lumber and other materials, UFP Transportation, which owns, leases and operates transportation equipment, and UFP Real Estate, which owns and leases real estate. Inter-company lease and service charges are assessed to our operating segments for the use of these assets and services at fair market value rates.
The following tables present our operating results, for the periods indicated, by segment (in thousands).
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Three Months Ended March 28, 2026 |
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Retail |
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Packaging |
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Construction |
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All Other |
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Corporate |
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Total |
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Net sales |
|
$ |
531,176 |
|
$ |
394,093 |
|
$ |
465,513 |
|
$ |
68,505 |
|
$ |
1,980 |
|
$ |
1,461,267 |
|
Cost of goods sold |
|
450,614 |
|
333,745 |
|
387,896 |
|
56,782 |
|
|
(3,659) |
|
|
1,225,378 |
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Gross profit |
|
|
80,562 |
|
|
60,348 |
|
|
77,617 |
|
|
11,723 |
|
|
5,639 |
|
|
235,889 |
|
Selling, general, administrative expenses |
|
|
56,046 |
|
|
45,203 |
|
|
61,826 |
|
|
8,978 |
|
|
830 |
|
|
172,883 |
|
Net loss (gain) on disposition and impairment of assets |
|
|
68 |
|
|
(170) |
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|
13 |
|
|
1 |
|
|
(1,564) |
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|
(1,652) |
|
Other losses (gains), net |
|
55 |
|
|
- |
|
|
423 |
|
|
106 |
|
|
(7) |
|
|
577 |
|
|
Earnings from operations |
|
$ |
24,393 |
|
$ |
15,315 |
|
$ |
15,355 |
|
$ |
2,638 |
|
$ |
6,380 |
|
$ |
64,081 |
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Three Months Ended March 29, 2025 |
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Retail |
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Packaging |
|
Construction |
|
All Other |
|
Corporate |
|
Total |
||||||
|
Net sales |
|
$ |
607,383 |
|
$ |
410,008 |
|
$ |
515,940 |
|
$ |
60,298 |
|
$ |
1,890 |
|
$ |
1,595,519 |
|
Cost of goods sold |
|
526,088 |
|
340,434 |
|
425,140 |
|
49,666 |
|
|
(14,005) |
|
|
1,327,323 |
||||
|
Gross profit |
|
|
81,295 |
|
|
69,574 |
|
|
90,800 |
|
|
10,632 |
|
|
15,895 |
|
|
268,196 |
|
Selling, general, administrative expenses |
|
|
55,355 |
|
|
47,769 |
|
|
62,784 |
|
|
8,462 |
|
|
1,884 |
|
|
176,254 |
|
Net loss (gain) on disposition and impairment of assets |
|
|
24 |
|
|
32 |
|
|
120 |
|
|
- |
|
|
(252) |
|
|
(76) |
|
Other (gains) losses, net |
|
(218) |
|
|
- |
|
|
80 |
|
|
(54) |
|
|
(42) |
|
|
(234) |
|
|
Earnings from operations |
|
$ |
26,134 |
|
$ |
21,773 |
|
$ |
27,816 |
|
$ |
2,224 |
|
$ |
14,305 |
|
$ |
92,252 |
UFP INDUSTRIES, INC.
The following tables present the components of our operating results, for the periods indicated, as a percentage of net sales by segment.
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Three Months Ended March 28, 2026 |
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Retail |
|
Packaging |
|
Construction |
|
All Other |
|
Corporate |
|
Total |
|
|
Net sales |
|
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
N/A |
|
100.0 |
% |
|
Cost of goods sold |
|
84.8 |
|
84.7 |
|
83.3 |
|
82.9 |
|
- |
|
83.9 |
|
|
Gross profit |
|
15.2 |
|
15.3 |
|
16.7 |
|
17.1 |
|
- |
|
16.1 |
|
|
Selling, general, administrative expenses |
|
10.6 |
|
11.5 |
|
13.3 |
|
13.1 |
|
- |
|
11.8 |
|
|
Net loss (gain) on disposition and impairment of assets |
|
- |
|
- |
|
- |
|
- |
|
- |
|
(0.1) |
|
|
Other losses (gains), net |
|
- |
|
- |
|
0.1 |
|
0.2 |
|
- |
|
- |
|
|
Earnings from operations |
|
4.6 |
% |
3.9 |
% |
3.3 |
% |
3.9 |
% |
- |
|
4.4 |
% |
Note: Actual percentages are calculated and may not sum to total due to rounding.
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|
Three Months Ended March 29, 2025 |
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retail |
|
Packaging |
|
Construction |
|
All Other |
|
Corporate |
|
Total |
|
|
Net sales |
|
100.0 |
% |
100.0 |
% |
100.0 |
% |
100.0 |
% |
N/A |
|
100.0 |
% |
|
Cost of goods sold |
|
86.6 |
|
83.0 |
|
82.4 |
|
82.4 |
|
- |
|
83.2 |
|
|
Gross profit |
|
13.4 |
|
17.0 |
|
17.6 |
|
17.6 |
|
- |
|
16.8 |
|
|
Selling, general, administrative expenses |
|
9.1 |
|
11.7 |
|
12.2 |
|
14.0 |
|
- |
|
11.0 |
|
|
Net loss (gain) on disposition and impairment of assets |
|
- |
|
- |
|
- |
|
- |
|
- |
|
- |
|
|
Other (gains) losses, net |
|
- |
|
- |
|
- |
|
(0.1) |
|
- |
|
- |
|
|
Earnings from operations |
|
4.3 |
% |
5.3 |
% |
5.4 |
% |
3.7 |
% |
- |
|
5.8 |
% |
Note: Actual percentages are calculated and may not sum to total due to rounding.
UFP INDUSTRIES, INC.
NET SALES
We design, manufacture and market wood and wood-alternative products, primarily used to enhance outdoor living environments; for national home centers and other retailers; for engineered wood components, structural lumber, and other products for factory-built and site-built residential and commercial construction; customized interior fixtures used in a variety of retail stores, commercial, and other structures; and structural wood packaging, components and packing materials for various industries. Our strategic long-term sales objectives include:
| ● | Maximizing unit sales growth while achieving return on investment goals. The following table presents estimates, for the periods indicated, of our percentage change in net sales attributable to changes in overall selling prices versus changes in units shipped by segment. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
% Change |
|||||||||
|
|
|
First Quarter 2026 versus First Quarter 2025 |
|||||||||
|
|
|
in Sales |
|
in Selling |
|
in Units |
|
Acquisition Unit Change |
|
Organic Unit Change |
|
|
Retail |
|
(12.5) |
% |
0.5 |
% |
(13.0) |
% |
- |
% |
(13.0) |
% |
|
Packaging |
|
(3.9) |
% |
(1.9) |
% |
(2.0) |
% |
1.0 |
% |
(3.0) |
% |
|
Construction |
|
(9.8) |
% |
(4.8) |
% |
(5.0) |
% |
- |
% |
(5.0) |
% |
|
All Other |
|
13.6 |
% |
(2.4) |
% |
16.0 |
% |
- |
% |
16.0 |
% |
|
Corporate |
|
4.8 |
% |
(0.2) |
% |
5.0 |
% |
- |
% |
5.0 |
% |
|
Total Sales |
|
(8.4) |
% |
(1.4) |
% |
(7.0) |
% |
- |
% |
(7.0) |
% |
| ● | Expanding geographically in our higher margin core businesses. |
| ● | Increasing our sales of "value-added" products and enhancing our product offering with new or improved products. Value-added products generally consist of fencing, decking, lattice, and other specialty products sold in the Retail segment; structural and protective packaging and machine-built pallets sold in the Packaging segment; engineered wood components, customized interior fixtures, manufactured and assembled concrete forms sold in the Construction segment; and "wood alternative" products. Engineered wood components include roof trusses, wall panels, and floor systems. Wood-alternative products consist of products manufactured with wood and non-wood composites, metals and plastics sold in each of our segments. Although we consider the treatment of dimensional lumber and panels with certain chemical preservatives a value-added process, treated lumber is not presently included in the value-added sales totals. Remanufactured lumber and panels that are components of finished goods are also generally categorized as "commodity-based" products. We estimate that approximately 80% of our sales consist of products we manufacture at our locations, while 20% of our sales consist of products manufactured by suppliers that we inventory and distribute to customers. |
The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total sales by our segments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 28, 2026 |
|
Three Months Ended March 29, 2025 |
|
||||||||
|
|
|
Value-Added |
|
Commodity-Based |
|
Value-Added |
|
Commodity-Based |
|
||||
|
Retail |
50.9 |
% |
|
49.1 |
% |
51.4 |
% |
|
48.6 |
% |
|
||
|
Packaging |
|
75.3 |
% |
|
24.7 |
% |
|
75.2 |
% |
|
24.8 |
% |
|
|
Construction |
|
83.0 |
% |
|
17.0 |
% |
|
79.8 |
% |
|
20.2 |
% |
|
|
All Other |
|
72.7 |
% |
|
27.3 |
% |
|
75.6 |
% |
|
24.4 |
% |
|
|
Corporate |
|
85.3 |
% |
|
14.7 |
% |
|
55.0 |
% |
|
45.0 |
% |
|
|
Total Sales |
|
68.6 |
% |
|
31.4 |
% |
|
67.4 |
% |
|
32.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note: Certain prior year product reclassifications and the change in designation of certain products as "value-added" resulted in a change in prior year's sales. |
|||||||||||||
UFP INDUSTRIES, INC.
Our overall unit sales of value-added products were down 6% in the first quarter of 2026 compared to the prior year. Our overall unit sales of commodity-based products decreased approximately 12% in the first quarter of 2026 compared to the prior year.
| ● | Developing new products. We define new products as those that will generate sales of at least $1 million per year within 4 years of launch and are still growing and gaining market penetration and meet our internal definition of value-added products. New product sales in the first quarter of 2026 increased 18%. Approximately $7.9 million of new product sales for the first three months of 2025, while they continue to be sold, were sunset in 2026 and excluded from the table below because they no longer meet the definition above. Our short-term goal is to achieve annual new product sales of at least $560 million in 2026. For the first three months of 2026, new product sales totaled $114 million. Our long-term goal is for new products to comprise at least 10% of our total net sales. |
The table below presents new product sales in thousands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
|
New Product Sales by Segment |
|
|
||||||||||||||||||||||
|
|
|
Three Months Ended |
|
|
||||||||||||||||||||||
|
|
|
March 28, |
|
% of Segment |
|
March 29, |
|
% of Segment |
|
% Change |
|
|||||||||||||||
|
|
|
2026 |
|
Net Sales |
|
2025 |
|
Net Sales |
|
in Sales |
|
|||||||||||||||
|
Retail |
|
$ |
47,408 |
|
8.9 |
% |
|
$ |
44,410 |
|
7.3 |
% |
6.8 |
% |
|
|||||||||||
|
Packaging |
|
48,451 |
|
12.3 |
% |
|
|
39,959 |
|
9.7 |
% |
21.3 |
% |
|
||||||||||||
|
Construction |
|
|
17,243 |
|
3.7 |
% |
|
|
11,422 |
|
2.2 |
% |
|
51.0 |
% |
|
||||||||||
|
All Other |
|
|
221 |
|
0.3 |
% |
|
|
193 |
|
0.3 |
% |
|
14.5 |
% |
|
||||||||||
|
Corporate |
|
525 |
|
26.5 |
% |
|
|
417 |
|
22.1 |
% |
25.9 |
% |
|
||||||||||||
|
Total New Product Sales |
|
113,848 |
|
7.8 |
% |
|
|
96,401 |
|
6.0 |
% |
18.1 |
% |
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Note: Certain prior year product reclassifications and the change in designation of certain products as "new" resulted in a change in prior year's sales. |
||||||||||||||||||||||||||
Retail Segment
Net sales in the first quarter of 2026 decreased by 12% compared to the same period of 2025 due to a 13% decrease in units and a 1% increase in selling prices. Our unit sales to big box customers, which we believe are more closely correlated with repair and remodel activity, decreased approximately 15%, while unit sales to independent retailers, which we believe are more closely correlated to new housing starts, decreased approximately 8%. The 15% decline in ProWood volume is primarily due to unfavorable winter weather across the Midwest and Northeast, the absence of storm-related demand which carried over from the fall of 2024 into early 2025, the loss of low margin commodity sales which commenced in the second quarter of 2025, and generally weaker consumer sentiment. UFP Edge unit sales declined 20% due to the closure of the Bonner, MT facilities at the end of 2025 and rationalizing product portfolio to those that can achieve profitability targets. Deckorators' unit sales increased 2% compared to the same period of 2025. Within that business unit, sales of wood-plastic composite decking and Surestone™ mineral-based composite decking increased 27% and 4% from the prior year, respectively. The increases were offset by railings, which declined 6% from the prior year.
Gross profits decreased by $1 million, or 1% to $81 million for the first quarter of 2026 compared to the same period last year. The change in gross profit was attributable to the following:
| ● | The gross profit of our ProWood pressure-treated products decreased by $4 million, primarily due to lower volumes. |
| ● | The gross profit of our Deckorators business unit increased by $3 million. |
| ● | The gross profit of our Edge business increased by $1 million as a result of cost savings from the closure of the Bonner, MT facility and restructuring of this business unit. |
UFP INDUSTRIES, INC.
SG&A increased by $1 million, or 1%, in the first quarter of 2026 compared to the same period of 2025 primarily due to an increase in advertising costs related to our efforts to build brand awareness of our Deckorators Surestone™ decking. Accrued bonus expense, which varies primarily with the overall profitability and return on investment of the segment, remained flat from the first quarter of 2025 and totaled $9 million for the quarter.
Earnings from operations decreased in the first quarter of 2026 compared to 2025 by $2 million, or 7%, as a result of the factors mentioned above.
Packaging Segment
Net sales in the first quarter of 2026 decreased 4% compared to the same period of 2025, due to a 3% decrease in organic unit sales, and a 2% decrease in pricing, partially offset by an acquired business by PalletOne that contributed 1% to unit growth. Organic unit changes consist of an 11% decrease in PalletOne, partially offset by a 5% increase in Protective Packaging, while Structural Packaging remained flat.
Gross profits decreased by $9 million, or 13%, for the first quarter of 2026 compared to the same period last year. The change in gross profit was attributable to the following:
| ● | The gross profit of our PalletOne business unit decreased by $6 million due to weak demand and increasing material and transportation costs which have not been fully passed on to customers. |
| ● | The gross profit of our Structural Packaging business unit decreased by $2 million primarily due to competitive price pressure. |
| ● | The gross profit of our Protective Packaging business unit decreased $1 million compared to last year resulting from unabsorbed manufacturing overhead costs associated with two new greenfield locations. |
SG&A decreased by approximately $3 million, or 5%, in the first quarter of 2026 compared to the same period of 2025. Accrued bonus expense decreased approximately $2 million relative to the same period of 2025 and totaled $6 million for the quarter. We also achieved $2 million of savings from our cost reduction efforts. These reductions were offset by a $1 million increase in healthcare costs.
Earnings from operations decreased in the first quarter of 2026 compared to 2025 by $7 million, or 30%, due to the factors discussed above.
Construction Segment
Net sales in the first quarter of 2026 decreased 10% compared to the same period of 2025 due to a 5% decrease in selling prices resulting from competitive price pressure in our Site-Built business unit, and a 5% decrease in unit sales. We experienced a unit sales decrease in Site-Built of 14%, due to weaker demand for housing, and a unit sales decrease of 7% in Factory Built, primarily due to lost market of certain low margin commodity products. These decreases were partially offset by 14% unit growth in Concrete Forming and 15% unit growth in Commercial. As of March 28, 2026 and March 29, 2025, we estimate that our backlog of orders in our site-built housing business unit were $80 million and $65 million, respectively.
Gross profits decreased by $13 million, or 15%, in the first quarter of 2026 compared to the same period of 2025. The change in our gross profit was comprised of the following:
| ● | The gross profit of our Site-Built housing business unit decreased by $19 million, primarily due to weak demand and competitive pricing primarily caused by affordability challenges and economic uncertainty. Inclement weather in the first quarter of 2026 also contributed to the decline. |
| ● | The gross profit of our Commercial construction business unit increased by $5 million due to higher volumes. |
UFP INDUSTRIES, INC.
| ● | The gross profit of our Factory-Built business unit increased by $1 million despite the lost market share discussed above. |
| ● | The gross profit of our Concrete-Forming business unit remained flat. |
SG&A decreased by approximately $1 million, or 2%, in the first quarter of 2026 compared to the same period of 2025. Accrued bonus expense decreased by $4 million and totaled $6 million for the quarter. This decrease was partially offset by an increase in legal fees and settlements of $2 million and an increase in healthcare costs of $1 million.
Earnings from operations decreased in the first quarter of 2026 compared to 2025 by $13 million, or 45%, due to the factors mentioned above.
All Other Segment
Our All Other reportable segment consists of our International and Ardellis (our insurance captive) segments that are not significant.
Corporate
The corporate segment consists of over (under) allocated costs that are not significant and net sales to external customers initiated by UFP Purchasing, UFP Transportation, and UFP Real Estate. In 2026, we modified our cost allocation methods to more closely approximate actual.
INCOME TAXES
Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for foreign, state and local income taxes and permanent tax differences. Our effective tax rate was 23.7% in the first quarter of 2026 compared to 21.1% in the same period of 2025. The increase in our effective tax rate for the first quarter was primarily due to a decrease in our tax deduction from stock-based compensation accounted for as a permanent difference.
OFF-BALANCE SHEET TRANSACTIONS
We have no significant off-balance sheet transactions.
LIQUIDITY AND CAPITAL RESOURCES
The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
||||
|
|
|
March 28, |
|
March 29, |
||
|
|
|
2026 |
|
2025 |
||
|
Cash used in operating activities |
|
$ |
(103,619) |
|
$ |
(108,807) |
|
Cash used in investing activities |
|
(47,828) |
|
(75,550) |
||
|
Cash used in financing activities |
|
(45,360) |
|
(90,926) |
||
|
Effect of exchange rate changes on cash |
|
141 |
|
312 |
||
|
Net change in all cash and cash equivalents |
|
(196,666) |
|
(274,971) |
||
|
Cash, cash equivalents, and restricted cash, beginning of period |
|
925,071 |
|
1,179,594 |
||
|
Cash, cash equivalents, and restricted cash, end of period |
|
$ |
728,405 |
|
$ |
904,623 |
UFP INDUSTRIES, INC.
In general, we fund our growth through a combination of operating cash flows, our revolving credit facility, and issuance of long-term notes payable at times when interest rates are favorable. We have not issued equity to finance growth except in the case of a large acquisition that occurred many years ago. We manage our capital structure by attempting to maintain a targeted ratio of debt to equity and debt to earnings before interest, taxes, depreciation and amortization. We believe this is one of many important factors to maintaining a strong credit profile, which in turn helps ensure timely access to capital when needed.
Seasonality has a significant impact on our working capital due to our primary selling season which occurs during the period from March to September. Consequently, our working capital typically increases during our first and second quarters resulting in negative or modest cash flows from operations during those periods. Conversely, we tend to experience a substantial decrease in working capital once we move beyond our peak selling season which typically results in significant cash flows from operations in our third and fourth quarters.
Due to the seasonality of our business and the effects of the Lumber Market, we believe our cash cycle (days of sales outstanding plus days supply of inventory less days of payables outstanding) is a good indicator of our working capital management. As indicated in the table below, our cash cycle increased to 68 days from 62 days during the first quarter of 2026 compared to the same period of the prior year.
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
||||
|
|
|
March 28, |
|
March 29, |
|
||
|
|
|
2026 |
|
2025 |
|
||
|
Days of sales outstanding |
|
|
35 |
|
|
34 |
|
|
Days supply of inventory |
|
46 |
|
41 |
|
||
|
Days of payables outstanding |
|
(13) |
|
(13) |
|
||
|
Days in cash cycle |
|
68 |
|
62 |
|
||
The increase in our days supply of inventory for the first quarter of 2026 is due to slower inventory turns in our Retail segment due to an increase in safety stock and as we work to normalize inventory as a result of weaker than anticipated demand in the first quarter of 2026. We continue to focus on past due account balances with customers, and the percentage of our accounts receivable that are current was 95% and 94% at the end of the first quarter of 2026 and 2025, respectively.
In the first three months of 2026, our cash flows used in operations were $104 million and were comprised of net earnings of $51 million and $48 million of non-cash expenses, offset by a $203 million increase in working capital since the end of December 2025 due to seasonal demand. Our cash flows used in operations decreased by $5 million compared to the same period of the prior year primarily due to the increase in our investment in net working capital since year end, which was $36 million lower in 2026 compared to 2025, partially offset by a $31 million decline in our net earnings and non-cash expenses. We anticipate the seasonal increase in net working capital in 2026 will be converted to cash by early in the fourth quarter.
Purchases of property, plant, and equipment of $48 million comprised most of our cash used in investing activities during the first three months of 2026. Outstanding purchase commitments on existing capital projects totaled approximately $108 million on March 28, 2026. Capital spending primarily consists of several projects to expand capacity to manufacture new and value-added products, primarily in our Packaging segment and our Deckorators business unit, to achieve efficiencies through automation in all segments, and make improvements to a number of facilities. We intend to fund capital expenditures and purchase commitments through our operating cash flows for the balance of the year.
Cash flows used in financing activities during the first three months of 2026 primarily consisted of the following:
| ● | We repurchased 334,541 shares of our common stock for $30 million during the first three months of 2026 at an average price of $89.76 per share. Of this amount, 11,996 shares were repurchased in order to settle tax withholding obligations of long-term stock incentive plan participants' awards which vested in the current year. The shares were purchased at an average price of $100.42 per share, totaling $1 million. |
UFP INDUSTRIES, INC.
| ● | Dividends paid during the first three months of 2026 were $20 million ($0.36 per share), which represents a 3% increase from the quarterly dividend of $0.35 per share paid in 2025. |
On March 28, 2026, we had no amount outstanding on our $750 million revolving credit facility, and we had approximately $711 million in remaining availability after considering $39 million in outstanding letters of credit under the revolving credit facility. Financial covenants on the unsecured revolving credit facility and unsecured notes include minimum interest tests and a maximum leverage ratio. The agreements also restrict the amount of additional indebtedness we may incur and the amount of assets which may be sold. We were in compliance with all our covenant requirements on March 28, 2026.
At the end of the first quarter of 2026, we had approximately $2.0 billion in total liquidity, consisting of our cash, remaining availability under our revolving credit facility, and a shelf agreement with certain lenders providing up to $575 million in remaining borrowing capacity.
ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS
See Notes to Unaudited Interim Condensed Consolidated Financial Statements, Note E, "Commitments, Contingencies, and Guarantees."
CRITICAL ACCOUNTING POLICIES
In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States. These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations. We continually review our accounting policies and financial information disclosures. There have been no material changes in our policies or estimates since December 27, 2025.
FORWARD OUTLOOK
Our long-term financial goals include:
| ● | Growing our annual unit sales by 7 to 10 percent (including smaller tuck-in acquisitions) with at least 10 percent of all sales coming from new products; |
| ● | Achieving and sustaining a 12.5 percent EBITDA margin by continuing to enhance our capabilities and grow our portfolio and sales of value-added products, expanding geographically in our higher margin business units, and achieving operating improvements; |
| ● | Earning an incremental return on new investment over our hurdle rate of 15 percent; and |
| ● | Maintaining a conservative capital structure. |
We believe improvements in demand in the end markets we serve and effectively executing our strategies will allow us to achieve our long-term goals. However, in the short-term, demand in our markets has contracted due to a variety of macro-economic and geopolitical factors, which will continue to impact our results and vary depending on the severity and duration of this cycle. As a result of these more challenging conditions, we have developed and are executing plans to reduce or eliminate capacity at locations that are not meeting our profitability targets and reduce our SG&A costs. At the beginning of 2025, we announced that our goal through these actions was to improve our operating profits by $60 million by the end of 2026. We are on track to deliver the remaining $25 million or more from this cost out program by year end. Additionally, we anticipate:
| ● | Core SG&A will be approximately $570 million for the year. In addition, we anticipate sales incentives will be 3% of gross profits (3% of gross profits in 2025), bonus expense will range from 17% to 18% of pre-bonus operating profits (17% of pre-bonus operating profits in 2025), and vesting expense associated with incentive shares granted in prior years will total $21 million ($28 million in 2025). |
| ● | Depreciation, amortization and other non-cash expenses will be approximately $200 million for the year. |
UFP INDUSTRIES, INC.
| ● | An annual effective tax rate between 25% and 26%. |
The following factors should be considered when evaluating our future sales and gross profits:
| ● | We anticipate lumber prices will remain near current levels, and experience typical seasonal trends, until there is a substantial change in the balance of supply and demand. In the event new tariffs are enacted on imports, we anticipate lumber prices will increase accordingly. We believe we are currently in a strong position to adapt quickly to new tariffs without adverse financial impact after a short adjustment period. Approximately 82% of our purchases of lumber are from domestic sources. |
| ● | Recent geopolitical events have resulted in an increase in certain of our input and transportation costs. While our intention and operating practices are to pass these costs on to customers in our pricing, there are a variety of factors beyond our control that may impact our ability to be successful in these efforts. |
| ● | Retail sales accounted for 36% of our net sales for the first three months of 2026. When evaluating future demand for the segment, we analyze data such as the same-store sales growth of national home improvement retailers and forecasts of home remodeling activity. Based on this data, we currently anticipate market demand to be down low single digits for the remainder of 2026. We anticipate market growth and share gains in our composite decking and railing products will contribute approximately $100 million of sales growth in our Deckorators business unit in 2026. In addition, we anticipate recent investments in equipment to improve the manufacturing throughput and lower the cost of our Surestone™ decking products will result in margin improvements in those products in 2026 as the new capacity is effectively brought on-line and once the higher cost inventory is sold. |
| ● | Packaging sales accounted for 27% of our net sales for the first three months of 2026. When evaluating future demand, we consider a number of metrics, including the Purchasing Managers Index (PMI), durable goods manufacturing, and U.S. real GDP. We currently believe overall demand in the markets we serve to be down low to mid-single digits for the remainder of 2026 resulting from softening demand in our PalletOne business unit. |
| ● | Construction sales accounted for 32% of our net sales for the first three months of 2026. |
| - | The site-built business unit accounted for approximately 10% of our net sales for the first three months of 2026. Our sales mix of single-family and multi-family homes builders is approximately 70% and 30%, respectively. The industry consensus estimate of national housing starts for 2026 is 1.33 million, with estimates generally predicting flat to mid-single digit negative growth in the coming year with multi-family generally showing stronger performance compared to single-family. We anticipate demand in the regions we operate to be down mid-single digits for the remainder of 2026. |
| - | The factory-built housing business unit accounted for 13% of our net sales for the first three months of 2026. When evaluating future demand, we analyze data from production and shipments of manufactured housing. We currently believe overall demand will be flat to down low-single digits for the remainder of 2026. |
| - | The commercial construction and concrete forming business units accounted for approximately 9% of our net sales for the first three months of 2026. When evaluating future demand, we analyze data from non-residential construction spending. We anticipate modest growth in overall demand of these business units for the remainder of 2026. |
Capital Allocation:
We believe the strength of our cash flow generation and conservative capital structure provide us with sufficient resources to grow our business and also fund returns to our shareholders. We plan to continue to pursue a balanced and return-driven approach to capital allocation across dividends, share buybacks, capital investments and acquisitions.
| ● | On April 22, 2026, our board approved a quarterly cash dividend of $0.36 per share, which represents a 3% increase from the 2025 dividend rate. This dividend is payable on June 15, 2026, to shareholders of record on June 1, 2026. We continue to consider our payout ratio and yield when determining the appropriate dividend rate and have a long-term objective of increasing our dividend in line with our earnings growth. |
UFP INDUSTRIES, INC.
| ● | On July 23, 2025, our board authorized the repurchase of up to $300 million worth of our shares through July 31, 2026. This share authorization supersedes and replaces our prior share repurchase authorizations. Our objective is to repurchase our stock at sufficient amounts to offset issuances under our share-based compensation plans. In addition, we will allocate more of our free cash flow to opportunistically buy shares when the price trades at pre-determined levels we believe are at a significant discount to intrinsic value. Through May 6, 2026, we have approximately $73 million of remaining availability under this authorization. |
| ● | Our targeted range for capital expenditures for 2026 has been lowered to $250 to $275 million and will continue to be impacted by extended lead times required for most equipment and rolling stock as well as the time required for site selection in the case of investments in new locations. Our previous target for the year was $300 million to $325 million, which included adding a greenfield location to produce wood plastic composite decking. The planned greenfield location is no longer necessary as a result of acquiring the net operating assets of MoistureShield in April. Priority continues to be given to projects that enhance the working environments of our plants, take advantage of automation opportunities, and drive strategies that have strong long-term growth potential for new and value-added products. |
| ● | We continue to pursue a healthy pipeline of acquisition opportunities of companies that are a strong strategic fit and enhance our capabilities while providing higher margin, return, and growth potential. |
UFP Industries Inc. published this content on May 06, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on May 06, 2026 at 16:52 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]