Ufp Industries, Inc. · NASDAQ:UFPI
Ufp Industries — Investor Presentation (November 2021)
55 slides from Ufp Industries's investor presentation, Nov 9, 2021
Slide 1: 2020 Investor Relations Presentation
1 2020 Investor Relations Presentation
Slide 2: Forward-looking statements
2 UFP INDUSTRIES, INC. 2021 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: 184 locations in 9 countries; people on a mission
3 With 184 locations in 9 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 2021 5.9% Adjusted EBITDA Margin 7.2% 8.4% $4,489 Net Sales $4,416 $5,154 $149 Net Earnings (ACI) $180 $247 0.76 Net Debt to Adjusted EBITDA 0.0 0.0 $266 Adjusted EBITDA $317 $431 14.0% ROIC 15.1% 21.0% 2018 2019 2020 Unit sales growth rate 6% 6% 6% 12% 19% 36% $ Sal
Slide 5: Who We Are
5 Company founded in Grand Rapids, MI 1955 INTRODUCTION WHO WE ARE Number of employees worldwide 15,000+ Number of facilities worldwide 184 2021 2020 Revenue $5.2B 2020 Adjusted EBITDA $431M $ Employee and facility counts in this presentation include the PalletOne acquisition, which closed on Decemb
Slide 6: Where We Are
6 INTRODUCTION WHERE WE ARE 2021 166 2 4 1 1 3 1 5 GLOBAL LOCATIONS 184 1
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 2020 Sales INTRODUCTION OUR CUSTOMERS Retail -
Slide 8: UFP Industries Business Segments
8 UFP INDUSTRIES BUSINESS SEGMENTS
Slide 9: Retail Solutions
9 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. BUSINESS SEGMENTS RETAIL SOLUTIONS 2021 2020: ProWood - $1.2B, Outdoor Essentials - $300M, Deckorators - $220M, UFP Edge - $115M, Han
Slide 10: Deckorators
10 The industry’s leading innovator of composite decking, railing and accessories. Deckorators.com BUSINESS SEGMENTS RETAIL SOLUTIONS 2021
Slide 11: ProWood
11 Preserved lumber including timbers, decking, construction materials and fire-treated. BUSINESS SEGMENTS RETAIL SOLUTIONS ProWoodLumber.com 2021
Slide 12: UFP Edge
12 UFPEdge.com Premium siding, pattern, trim and accent wall products. BUSINESS SEGMENTS RETAIL SOLUTIONS 2021
Slide 13: Outdoor Essentials
13 OutdoorEssentialProducts.com Outdoor lifestyle products including wood and vinyl fencing, landscape and garden décor, picnic tables, pergolas, trellises and more. BUSINESS SEGMENTS RETAIL SOLUTIONS 2021
Slide 14: Handprint
14 Coming soon: Handprintmade.com Wood components and ready-to-make products for a variety of inspired home décor and craft projects. BUSINESS SEGMENTS RETAIL SOLUTIONS 2021
Slide 15: E-Commerce
15 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. BUSINESS SEGME
Slide 16: Construction segment
16 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 2021 2020: Site Built - $726M
Slide 17: Site Built
17 SITE BUILT Roof trusses, wall panels, floor systems, doors and framing services for residential and light commercial builders. BUSINESS SEGMENTS CONSTRUCTION 2021 UFPConstruction.com
Slide 18: Factory Built
18 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 2021
Slide 19: Concrete Forming
19 CONCRETE FORMING BUSINESS SEGMENTS CONSTRUCTION Custom radius forms, wall and column forms, gang systems, lumber and panels. 2021
Slide 20: Commercial (IDX)
20 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 2021
Slide 21: Industrial segment
21 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 • INDUSTRIAL PACKAGING • PACKAGING MATERIALS • MANUFACTURED COMPONENTS 2021 Focus Ar
Slide 22: Industrial Packaging
22 Wood, steel and mixed material crates and specialty containers, hard cases, tracking technology, logistics solutions and onsite packaging services. BUSINESS SEGMENTS INDUSTRIAL INDUSTRIAL PACKAGING 2021
Slide 23: Packaging Materials
23 Solutions for manufacturing, energy, technology, agriculture and transportation. Stretch wrap, corrugated and boxboard, facility supplies and safety products, labels and tags, printers, hardware and software solutions BUSINESS SEGMENTS INDUSTRIAL 2021 PACKAGING MATERIALS
Slide 24: Manufactured Components
24 Precision-milled hardwoods, softwoods, composites and panel goods for bed foundations; cabinet components; shed, door and window companies. Laminated panels for a variety of industries. BUSINESS SEGMENTS INDUSTRIAL MANUFACTURED COMPONENTS 2021
Slide 25: International segment
25 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 assets in Canada, Mexico, Australia and Italy. BUSINESS SEGMENTS INTERNATIONAL 2021
Slide 26: Acquisitions: process, purpose, goal
26 BUSINESS MODEL ACQUISITIONS 2021 PROCESS Identify attractive growth runways in each Business Unit under each Business Segment and identify gaps in our capabilities to pursue those runways. PURPOSE Find new products and services to continue our transformation from commodity sales to value-added se
Slide 27: 2020 Acquisitions (Quest, T&R)
27 BUSINESS MODEL 2020 ACQUISITIONS 2021 Quest Design and Fabrication and Quest Architectural Millwork, collectively known as Quest Quest specializes in designing, fabricating, and installing premium millwork and case goods for a variety of commercial uses, including builder’s sales centers, design
Slide 28: 2020 Acquisitions (Enwrap, Atlantic Prefab)
28 BUSINESS MODEL 2020 ACQUISITIONS 2021 Enwrap Logistic & Packaging S.r.l. This newly formed company is dedicated to the logistics and packaging business of its predecessor, Job Service S.p.A. Headquartered in Milan, Italy, Enwrap provides high-value, mixed material industrial packaging and logisti
Slide 29: 2021 Acquisitions: PalletOne
29 BUSINESS MODEL 2021 ACQUISITIONS 2021 PalletOne, Inc. PalletOne is the leading manufacturer of new pallets in the U.S., with 17 manufacturing facilities and 1,500 employees in the Southern and Eastern regions of the U.S. The company also supplies specialized industrial packaging, including custom
Slide 30: 2021 Acquisitions: Gilmores, Walnut Hollow
30 BUSINESS MODEL 2021 ACQUISITIONS 2021 Gilmores, Pty Ltd Gilmores adds a wide portfolio of consumable packaging to certain industrial packaging products and expands UFP Industrial’s customer base throughout Australia. Founded in 1988 and operating from its distribution facility in Port Melbourne,
Slide 31: 2021 Acquisitions: Spartanburg, Endurable
31 BUSINESS MODEL 2021 ACQUISITIONS 2021 Spartanburg Forest Products Corporation Acquired by UFP’s wholly-owned subsidiary Sunbelt Forest Products, Spartanburg and its affiliates are a wood treating operation in the southeastern U.S., with approximately 150 employees and operations in five states. T
Slide 32: 2021 Acquisitions: Shelter Products, Boxpack
32 BUSINESS MODEL 2021 ACQUISITIONS 2021 Shelter Products, Inc. Based in Haleyville, Alabama, Shelter Products, Inc. provides distribution and logistics support to factory-built manufacturers through nine warehouses across the U.S., expanding UFP’s reach in its Factory-Built business segment. 2020 A
Slide 33: Product Mix Evolution
33 BUSINESS MODEL PRODUCT MIX EVOLUTION 2013 31% 58% 69% 42% Commodity Value-added as a percent of sales 2021 Value-added 2019 Commodity Value-added 2020 Commodity Value-added 64% 36% 2013 Note: Lumber price appreciation more significantly impacts commodity-based products compared to value-add produ
Slide 34: Product Mix Evolution: New Products
34 BUSINESS MODEL PRODUCT MIX EVOLUTION 2013 $426m 3% 10% $85m New Products 2021 2019 2020 10% $539m 2013 % of Sales Sales % of Sales Sales % of Sales Sales
Slide 35: How We Got Here
35 BUSINESS MODEL HOW WE GOT HERE 2021 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 36: What Gets in Our Way
36 BUSINESS MODEL WHAT GETS IN OUR WAY Availability of quality labor General economic trends Fluctuation in commodity lumber costs Regulatory burdens 2021
Slide 37: Long-Term Financial Goals
37 BUSINESS MODEL LONG-TERM FINANCIAL GOALS 2021 Annual unit sales growth that exceeds positive U.S. GDP growth by 4-6 percentage points including acquisitions Adjusted EBITDA growth exceeding unit sales growth Earn ROIC greater than WACC
Slide 38: Built for Tough Times
38 Experienced Leadership BUSINESS MODEL BUILT FOR TOUGH TIMES 2021 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 39: Financials
UFP INDUSTRIES FINANCIALS
Slide 40: Lumber Market Impact on Operating Results
40 BUSINESS MODEL LUMBER MARKET IMPACT ON OPERATING RESULTS Goal: to earn a stable profit per unit 2021 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 41: Lumber Market
41 890 954 1035 1080 1428 1344 690 443 412 520 377 402 420 358 394 455 530 716 934 826 571 643 331 370 365 354 346 329 356 346 364 360 373 371 $300 $350 $400 $450 $500 $550 $600 $650 $700 $750 $800 $850 $900 $950 $1,000 $1,050 $1,100 $1,150 $1,200 $1,250 $1,300 $1,350 $1,400 $1,450 Jan Feb Mar Apr M
Slide 42: Lumber Market - SYP
42 FINANCIALS LUMBER MARKET - SYP 2021 858 903 938 922 1150 1052 564 448 438 512 346 345 360 333 412 494 552 729 886 711 508 565 370 403 408 401 383 344 359 348 355 345 344 335 $300 $350 $400 $450 $500 $550 $600 $650 $700 $750 $800 $850 $900 $950 $1,000 $1,050 $1,100 $1,150 $1,200 Jan Feb Mar Apr Ma
Slide 43: Net Sales
43 FINANCIALS 2021 NET SALES Long-Term Goal: Unit sales growth of 4% to 6% over positive GDP, including acquisitions Net Sales (in millions) Percent Change $3,240 $3,941 $4,489 $4,416 $5,154 11% 15% 6% 6% 6% 8% 4% 3% 5% 5% 3% 11% 3% 1% 1% 0% 3% 6% 9% 12% 15% 18% 21% 24% 27% 30% $- $500 $1,000 $1,500
Slide 44: Unit Sales and Profit Growth
44 FINANCIALS UNIT SALES AND PROFIT GROWTH 2021 Percent Growth 11% 15% 14% 6% 6% 19% 14% 15% 16% 17% 18% 13% 12% 19% 36% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2016 2017 2018 2019 2020 Long-Term Goal: Achieve Adjusted EBITDA growth exceeding unit sales growth. Unit Sales Growth Gross Profit Growth Adjust
Slide 45: Adjusted EBITDA
45 FINANCIALS Adjusted EBITDA 2021 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
Slide 46: Margin Improvement Drivers
46 BUSINESS MODEL MARGIN IMPROVEMENT DRIVERS 2021 Operating leverage on sales growth Product mix improvements - New product and core line innovation initiatives - Enhanced capabilities drive conversion from commodity to value-added Strength of market demand Automation initiatives
Slide 47: Return on Invested Capital
47 FINANCIALS RETURN ON INVESTED CAPITAL 2021 Hurdle Rate = 12% WACC = 10% (1) See the company’s website at ufpi.com for reconciliation to related GAAP measurement. Percent 13.7% 13.2% 14.0% 15.1% 21.0% 0.00% 3.00% 6.00% 9.00% 12.00% 15.00% 18.00% 21.00% 24.00% 2016 2017 2018 2019 2020
Slide 48: Cash Cycle
48 FINANCIALS CASH CYCLE 2021 Cash Cycle = Days Receivables Outstanding + Days Supply of Inventory – Days Payables Outstanding Days 47.9 52.4 54.1 55.7 48.1 0 10 20 30 40 50 60 70 2016 2017 2018 2019 2020
Slide 49: Net Debt
49 FINANCIALS NET DEBT 2021 $ In thousands Sep-21 Dec-20 Dec-19 Dec-18 3.89% series 2012 - A notes, Tranche A, due December 2022 $ 35,000 $ 35,000 $ 35,000 $ 35,000 3.98% series 2012 - B notes, Tranche B, due December 2024 40,000 40,000 40,000 40,000 4.20% series 2018 - C notes, Tranche C, due June
Slide 50: Capital Structure
50 FINANCIALS CAPITAL STRUCTURE 2021 Percent Net Debt to Total Capitalization vs Maximum Target Net Debt to Adjusted EBITDA vs Maximum Target 11.8% 11.5% 12.4% 0.0% 10.2% 12.8% 15.7% 0.0% 0.0% 8.9% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 2012 2013 2014 2015 2016 2017 2018 2019 2020 Sep-21 1.10 0.80 0.
Slide 51: Balanced Use of Free Cash Flow
51 BUSINESS MODEL BALANCED USE OF FREE CASH FLOW 2021 Current dividend rate of $0.20/quarter effective in Q4, increased annually based on earnings and free cash flow growth Share repurchases totaled over $29M in 2020 (1.1M remaining share authorization) CapEx plan of $147M in 2021 Long-term target f
Slide 52: Selected Income Statement Data: 3rd Quarter
52 FINANCIALS SELECTED INCOME STATEMENT DATA 3rd QUARTER 2021 (1) See the company’s website at ufpi.com for reconciliation to related GAAP measurement. $ In thousands, except per share data Q3 2021 Q3 2020 % Change Unit % Change Retail $ 696,201 $ 700,522 -0.6 -1.0 Industrial 573,234 282,124 103.2 3
Slide 53: Selected Income Statement Data: 3rd Quarter YTD
53 FINANCIALS SELECTED INCOME STATEMENT DATA 3rd QUARTER YTD 2021 (1) See the company’s website at ufpi.com for reconciliation to related GAAP measurement. $ In thousands, except per share data Q3 YTD 2021 Q3 YTD 2020 % Change Unit % Change Retail $ 2,714,440 $ 1,661,873 63.3 30.0 Industrial 1,633,2
Slide 54: Selected Income Statement Data: Annual Results
54 FINANCIALS SELECTED INCOME STATEMENT DATA ANNUAL RESULTS 2021 $ In thousands, except per share data 2020 2019 % Change Unit % Change Retail $ 2,167,122 $ 1,498,710 44.6 25.0 Industrial 1,072,117 1,085,636 -1.2 -6.0 Construction 1,695,683 1,637,156 3.6 -6.0 All Other 219,076 194,507 12.6 Total Net
Slide 55: Thank You
55 2801 E. Beltline Ave. NE Grand Rapids, MI 49506 (800) 598-9663 - UFPI.com THANK YOU.
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