Ufp Industries, Inc. · NASDAQ:UFPI
Ufp Industries — Investor Presentation (June 2020)
48 slides from Ufp Industries's investor presentation, Jun 9, 2020
Slide 1: 2020 Investor Relations Presentation
1 2020 Investor Relations Presentation
Slide 2: Forward-looking statements
2 UFP INDUSTRIES, INC. 2020 Please be aware that: Statements included in this presentation that are not historical are forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, and are based on management’s beliefs, assumptions, current expectations, es
Slide 3: One of the world's largest producers of wood and wood-alternative products
3 With over 142 operations in 8 countries, the companies of UFP Industries comprise one of the world’s largest producers of wood and wood-alternative products for retail, construction and industrial markets. NO MISSION STATEMENTS. JUST PEOPLE ON A MISSION.
Slide 4: Our Performance
4 BUSINESS MODEL OUR PERFORMANCE 2020 6.0% EBITDA Margin 5.9% 7.2% $3,941 Net Sales $4,489 $4,416 $124 Net Earnings $152 $182 0.60 Net Debt to EBITDA 0.76 0.0 $238 EBITDA $266 $317 13.2% ROIC 14.0% 15.1% 2017 2018 2019 Unit sales growth rate 15% 6% 6% 13% 12% 19% $ Sales in Millions Change in growth
Slide 5: Who We Are
5 Company founded in Grand Rapids, MI 1955 INTRODUCTION WHO WE ARE Number of employees worldwide 12,000 Number of facilities worldwide 142 2020 2019 Revenue $4.4B 2019 EBITDA $317M $
Slide 6: Where We Are
6 INTRODUCTION WHERE WE ARE 2020 127 1 4 1 1 3 1 4
Slide 7: Our Customers
7 Industrial - $1.1B Big box, independents, & buying co-ops Single and multi-family builders, commercial builders, concrete formers, factory-built housing (mobile & modular homes), & RVs Industrial packaging, packaging materials, & OEM components Based on 2019 Sales INTRODUCTION OUR CUSTOMERS Retail
Slide 8: UFP Industries Business Segments
8 UFP INDUSTRIES BUSINESS SEGMENTS
Slide 9: Management (R)Evolution: 2020 and Beyond
9 Since our founding through 2019, we managed our people and plants regionally. Beginning January 1, 2020, we realigned our management teams to focus specifically on business segments rather than geographies. At the same time, we changed our name to better reflect the breadth of our product mix. The
Slide 10: Business Segments: Retail Solutions
10 We manufacture and sell on-trend brands to all major building products retailers, while supporting our customers with best-in-class in-store and e-commerce support. Our national footprint, commitment to innovation and consistent approach create sustainable competitive advantages in the marketplac
Slide 11: Retail Solutions: Deckorators
11 The industry’s leading innovator of composite decking, railing and accessories. Deckorators.com BUSINESS SEGMENTS RETAIL SOLUTIONS 2020
Slide 12: Retail Solutions: ProWood
12 Preserved lumber including timbers, decking, construction materials and fire treated. BUSINESS SEGMENTS RETAIL SOLUTIONS ProWoodLumber.com 2020
Slide 13: Retail Solutions: UFP Edge
13 UFPEdge.com Premium siding, pattern, trim and accent wall products. BUSINESS SEGMENTS RETAIL SOLUTIONS 2020
Slide 14: Retail Solutions: Outdoor Essentials
14 OutdoorEssentialProducts.com Outdoor lifestyle products including wood and vinyl fencing, landscape and garden décor, picnic tables, pergolas, trellises and more. BUSINESS SEGMENTS RETAIL SOLUTIONS 2020
Slide 15: Retail Solutions: Dimensions
15 DimensionsDIY.com DIY project panels, short lumber and boards, kits, packs, home and décor retail products. BUSINESS SEGMENTS RETAIL SOLUTIONS 2020
Slide 16: Retail Solutions: E-Commerce
16 Supports the largest home improvement retailers in the U.S. in multichannel online B2B2C sales strategies. Provides thousands of curated products and assortments to support customers’ distribution efforts such as direct-to-home, ship-to-store, including UPS, USPS and LTL shipments. YOY revenue gr
Slide 17: Business Segments: Construction
17 Single-source provider of concrete forms, building components, framing, exterior and interior finishing programs designed to make building processes run at maximum efficiency. BUSINESS SEGMENTS CONSTRUCTION • SITE BUILT •FACTORY-BUILT • CONCRETE FORMING •COMMERCIAL 2020 2019: Site Built - $714M,
Slide 18: Construction: Site Built
18 SITE BUILT Roof trusses, wall panels, floor systems, doors and framing services for residential and light commercial builders. BUSINESS SEGMENTS CONSTRUCTION 2020
Slide 19: Construction: Factory-Built
19 FACTORY-BUILT Roof trusses, floor joists, laminated wall panels, cabinet components, countertops and milled components for the modular and manufactured home, RV and mobile office. BUSINESS SEGMENTS CONSTRUCTION 2020
Slide 20: Construction: Concrete Forming
20 CONCRETE FORMING BUSINESS SEGMENTS CONSTRUCTION Custom radius forms, wall and column forms, gang systems, lumber and panels. 2020
Slide 21: Construction: Commercial
21 Full-service, turnkey project management of consumer environment and architectural interiors: Design, development, engineering, manufacturing, assembly, distribution and installation. BUSINESS SEGMENTS CONSTRUCTION COMMERCIAL IDXCorporation.com 2020
Slide 22: Business Segments: Industrial
22 PP Delivering innovative structural packaging solutions backed by the industry’s leading design team, a global manufacturing footprint, and integrated hyper-responsive service teams. BUSINESS SEGMENTS INDUSTRIAL • TOTAL PACKAGING SOLUTIONS • OEM COMPONENTS & PANELS • PROTECTIVE PACKAGING 2020 Pro
Slide 23: Industrial: Total Packaging Solutions
23 Wood, steel and mixed material crates and specialty containers, paper board, foils, labels and corrugate. BUSINESS SEGMENTS INDUSTRIAL TOTAL PACKAGING SOLUTIONS 2020
Slide 24: Industrial: OEM Components and Panels
24 Precision-milled hardwoods, softwoods, and panel goods for bedding, furniture, shed, door and window companies. BUSINESS SEGMENTS INDUSTRIAL OEM COMPONENTS AND PANELS 2020
Slide 25: Industrial: Protective Packaging
25 Crates, cases, VCI’s, foam, mixed materials, design and testing. Protective and preserving OEM products, serving all industries. BUSINESS SEGMENTS INDUSTRIAL 2020 PROTECTIVE PACKAGING
Slide 26: Business Segments: International
26 UFP International sources and sells products in 65 countries, extending our reach with multinational customers, while opening global opportunities for growth. Additionally, we own manufacturing and design assets in Canada, Mexico, Australia, China, Japan and UK. BUSINESS SEGMENTS INTERNATIONAL 20
Slide 27: Product Mix Evolution
27 BUSINESS MODEL PRODUCT MIX EVOLUTION 2013 2019 Value-added 31% 58% 69% 42% Commodity Value-added as a percent of sales Value-added Commodity 2013 2019 % of Sales $540m 3% 12% $85m Sales New products % of Sales Sales 2020
Slide 28: How We Got Here
28 BUSINESS MODEL HOW WE GOT HERE 2020 Founded in 1955. Managers are required to own stock. Management team has an average tenure of 22 years. 2020 management realignment from geographic to business segment. International in scope, regional in focus. Local decision-making for local customers. Win-Lo
Slide 29: What Gets in Our Way
29 BUSINESS MODEL WHAT GETS IN OUR WAY Availability of quality labor General economic trends Fluctuation in commodity lumber costs Regulatory burdens 2020
Slide 30: Long-Term Financial Goals
30 BUSINESS MODEL LONG-TERM FINANCIAL GOALS 2020 Annual unit sales growth that exceeds positive U.S. GDP growth by 4-6 percentage points including acquisitions EBITDA growth exceeding unit sales growth Earn ROIC greater than WACC
Slide 31: COVID-19: Forward Outlook
31 Although we have a low degree of visibility into future demand, we observe the following today: Construction was essential in many markets. Volume was normal in some geographies and lagged in others, depending on state directives. BUSINESS MODEL COVID-19: FORWARD OUTLOOK Some of our Industrial cu
Slide 32: Built for Tough Times
32 Experienced Leadership BUSINESS MODEL BUILT FOR TOUGH TIMES 2020 Our profit center organization model results in a stable of seasoned leaders skilled in managing their business. These profit centers have highly variable cost structures allowing rapid adjustment to market demand and have heavier i
Slide 33: Financials
UFP INDUSTRIES FINANCIALS
Slide 34: Lumber Market Impact on Operating Results
34 BUSINESS MODEL LUMBER MARKET IMPACT ON OPERATING RESULTS Goal: to earn a stable profit per unit 2020 We are less affected by the level of lumber prices than the primary producers of lumber are Level of lumber prices affects gross profit and SG&A to sales ratios Profit per unit is primarily impact
Slide 35: Lumber Market
35 377 402 420 331 370 365 354 346 329 356 346 364 360 373 371 449 496 505 496 554 572 525 449 443 375 339 338 $300 $325 $350 $375 $400 $425 $450 $475 $500 $525 $550 $575 $600 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec FINANCIALS LUMBER MARKET 2020 Lumber Market (in $/MBF) Average weekly random
Slide 36: Lumber Market - SYP
36 FINANCIALS LUMBER MARKET - SYP 2020 346 345 360 370 403 408 401 383 344 359 348 355 345 344 335 418 459 480 483 535 562 512 449 440 410 378 377 $325 $350 $375 $400 $425 $450 $475 $500 $525 $550 $575 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Lumber Market (in $/MBF) Average weekly Southern Y
Slide 37: Net Sales
37 FINANCIALS 2020 NET SALES Long-Term Goal: Unit sales growth of 4% to 6% over positive GDP, including acquisitions Net Sales (in millions) Percent Change $2,887 $3,240 $3,941 $4,489 $4,416 11% 11% 15% 6% 6% 7% 8% 4% 3% 5% 4% 3% 11% 3% 1% 0% 3% 6% 9% 12% 15% 18% 21% 24% 27% 30% $- $500 $1,000 $1,50
Slide 38: Unit Sales and Profit Growth
38 FINANCIALS UNIT SALES AND PROFIT GROWTH 2020 Percent Growth 11% 11% 14% 6% 6% 23% 19% 15% 9% 16% 33% 18% 13% 12% 19% 0% 5% 10% 15% 20% 25% 30% 35% 2015 2016 2017 2018 2019 Long-Term Goal: Achieve EBITDA growth exceeding unit sales growth. Unit Sales Growth Gross Profit Growth EBITDA Growth
Slide 39: EBITDA
39 FINANCIALS EBITDA 2020 (1) Lumber Market Adjusted EBITDA Margin determined by restating 2016-2019 sales to be based upon 2015 lumber prices. (2) Non-GAAP Financial Information: This release includes certain financial information not prepared in accordance with U.S. GAAP. Because not all companies
Slide 40: Margin Improvement Drivers
40 BUSINESS MODEL MARGIN IMPROVEMENT DRIVERS 2020 Operating leverage on sales growth Product mix improvements - New product and core line innovation initiatives - Conversion from commodity to value-added Strength of market demand Automation initiatives
Slide 41: Return on Invested Capital
41 FINANCIALS RETURN ON INVESTED CAPITAL 2020 Hurdle Rate = 12% 10% WACC and Minimum ROIC Goal (1) See the company’s website at ufpi.com for reconciliation to related GAAP measurement. Percent 11.2% 13.7% 13.2% 14.0% 15.1% -2.00% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 2015 2016 20
Slide 42: Cash Cycle
42 FINANCIALS CASH CYCLE 2020 Cash Cycle = Days Receivables Outstanding + Days Supply of Inventory – Days Payables Outstanding Days 53.2 47.9 52.4 54.1 55.7 0 10 20 30 40 50 60 70 2015 2016 2017 2018 2019
Slide 43: Net Debt
43 FINANCIALS NET DEBT 2020 $ In thousands Mar-20 Dec-19 Dec-18 3.89% series 2012 - A notes, Tranche A, due December 2022 $ 35,000 $ 35,000 $ 35,000 3.98% series 2012 - B notes, Tranche B, due December 2024 40,000 40,000 40,000 4.20% series 2018 - C notes, Tranche C, due June 2028 40,000 40,000 40,0
Slide 44: Capital Structure
44 FINANCIALS CAPITAL STRUCTURE 2020 Percent Net Debt to Total Capitalization vs Maximum Target Net Debt to EBITDA vs Maximum Target 2.0% 6.6% 11.8% 11.5% 12.4% 0.0% 10.2% 12.8% 15.7% 0.0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 0.17 0.74 1.10 0.80 0.7
Slide 45: Balanced Use of Free Cash Flow
45 BUSINESS MODEL BALANCED USE OF FREE CASH FLOW 2020 Dividend yield approximately 1.0% Share repurchases total over $29M YTD (1.1M remaining share authorization) Capex plan of $80M (expansionary plan of $30M) Long-term target for acquisitions to contribute half of our total annual unit sales growth
Slide 46: Selected Income Statement Data: 1st Quarter
46 FINANCIALS SELECTED INCOME STATEMENT DATA 1ST QUARTER 2020 (1) See the company’s website at ufpi.com for reconciliation to related GAAP measurement. $ In thousands, except per share data Q1 2020 Q1 2019 % Change Unit % Change Retail $ 352,161 $ 333,100 5.7 9.0 Industrial 256,543 274,759 -6.6 0.0
Slide 47: Selected Income Statement Data: YTD Results
47 FINANCIALS SELECTED INCOME STATEMENT DATA YTD RESULTS 2020 $ In thousands, except per share data YTD 2020 YTD 2019 % Change Unit % Change Retail $ 352,161 $ 333,100 5.7 9.0 Industrial 256,543 274,759 -6.6 0.0 Construction 381,155 365,137 4.4 6.0 International 35,804 35,867 -0.2 2.0 Other 6,399 6,
Slide 48: Thank You
48 2801 E. Beltline Ave. NE Grand Rapids, MI 49506 (800) 598-9663 - UFPI.com THANK YOU.