Ufp Industries, Inc. · NASDAQ:UFPI
Ufp Industries — Q4 2023 Earnings Presentation
32 slides from Ufp Industries's earnings presentation, Feb 20, 2024
Slide 1: Investor Relations Presentation
S INVESTOR RELATIONS PRESENTATION Results through December 30, 2023 Mixed materials structural crate Deckorators Surestone composite decking, ProWood Fencing Commercial wood truss UFP Packaging UFP Retail Solutions UFP Construction
Slide 2: UFP Industries, Inc. forward-looking statements
UFP INDUSTRIES, INC. 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, estimates,
Slide 3: No mission statement. Just people on a mission.
The operating segments of UFP Industries – UFP Packaging, UFP Construction and UFP Retail Solutions – manufacture and sell a wide variety of value-added products used in residential and commercial construction, outdoor living, packaging and other industrial applications worldwide. NO MISSION STATEME
Slide 4: UFP at a Glance
UFP AT A GLANCE 1955 15,800+ 219 $7.2B $809.9M Founded in Grand Employees Facilities 2023 Net Sales 2023 Adjusted Rapids, MI worldwide worldwide EBITDA Business segments and markets Based on 2023 Net Sales $2.9B $1.8B Big box, independents, & buying co-ops Industrial manufacturers, OEM’s, agricultur
Slide 5: Where We Are
WHERE WE ARE 1 1 193 1 1 2 11 4 219 5 Locations 9 Countries 5
Slide 6: Business model provides sustainable competitive advantages
BUSINESS MODEL PROVIDES SUSTAINABLE COMPETITIVE ADVANTAGES Scale through Incentives Aligned Commitment To Culture Structure Diversification With Shareholders Innovation As North America’s largest Each of our 219 operations Teamwork, accountability, buyer of softwood lumber, While in its early stages
Slide 7: Short-Term Forward Outlook
SHORT-TERM FORWARD OUTLOOK RETAIL PACKAGING Market demand slightly up to slightly down based on Industrial production flat to slightly up based on metrics from forecasts of • Purchasing Managers Index (PMI) • Same-store sales growth of Big Box • Durable goods manufacturing • Home remodeling activity
Slide 8: Long-Term Financial Goals
LONG-TERM FINANCIAL GOALS Earn an incremental Annual unit sales Achieving and return on new Maintain a growth of 7-10% sustaining a 12.5% investment conservative capital including small adjusted greater than our structure acquisitions EBITDA margin hurdle rate 8
Slide 9: Value Added Sales
VALUE ADDED SALES Value-added as a percent of sales Commodity Value-added 69% 68% 64% 63% 60% 40% 36% 37% 31% 32% 2013 2019 2020 2021 2022 2023 . Improved mix raises EBITDA margins and contributes to long-term financial goals.
Slide 10: Innovation and New Products
INNOVATION AND NEW PRODUCTS % of Net Sales New Products Sunset Sales* 3.3% 3.9% 9.6% 10.5% 9.7% 9.9% 7.9% 2019 2020 2021 2022 2023 *New product sales that were excluded because they no longer meet our definition of new products, which are defined as those that will generate sales of at least $1 mill
Slide 11: Innovation and New Products: UFP Venture Fund
INNOVATION AND NEW PRODUCTS UFP VENTURE FUND In 2022 we launched our In 2023 we started the Innovation Accelerator to: UFP Venture Fund to: Spur external growth through Bring new products and services to late-stage development and early-stage market faster commercialization opportunities Empower ent
Slide 12: Business Segments
BUSINESS SEGMENTS 2023 Net Sales 2023 Net Sales 2023 Net Sales Site Built $977 Million ProWood Group Structural Packaging $2.5 Billion $1.2 Billion Factory Built $719 Million Deckorators PalletOne Commercial $2.9B $309 Million $1.8B $531 Million $2.2B $265 Million UFP Edge Protective Packaging Concr
Slide 13: UFP Retail Solutions product categories
TREATED & FENCE, LAWN BUILDING DECK SPECALTIES & GARDEN MATERIALS Innovator and manufacturer Premium siding, Pressure-treated lumber, Wood and vinyl fence, ProWood FR, project panels, of composite decking, railing pattern, trim; interior decking, handrail, stairs, planters, garden beds, short boards
Slide 14: Structural Packaging, PalletOne, Protective Packaging
Structural Packaging PalletOne Protective Packaging Wood, steel, foam and corrugated for mixed material crates Machine-built pallets; design, Corrugated conversion, stretch/shrink films, labels, and specialty containers; hard cases, lumber processing, engineering and testing strapping, hardware and
Slide 15: Site-Built, Factory-Built, Commercial, Concrete Forming
Site-Built Factory-Built Commercial Concrete Forming Roof trusses, wall panels, floor Floor, wall and roof panels, cabinet Turnkey project management of Offsite prefabrication of value-add systems and framing services for components, countertops and consumer environment and formwork, aluminum horizo
Slide 16: Sustainability Continuum
SUSTAINABILITY CONTINUUM We believe profitability, asset values and shareholder return are optimized by acting responsibly, and that our investors experience higher sustainable returns when we support our customers, employees and communities. Our views on ESG and maintaining a sustainable enterprise
Slide 17: Financials
FINANCIALS (§) UFP INDUSTRIES
Slide 18: Our Performance
OUR PERFORMANCE Net Sales Adjusted EBITDA Adjusted EBITDA Margin $ Sales in Millions 31% 2019 28% 94% (26)% 6% 6% 2% (9)% 2020 19% 36% $4,416 $5,154 $8,636 $9,627 $7,218 $317 $431 $835 $1,097 $810 7.2% 8.4% 9.7% 11.4% 11.2% 2021 Net Earnings (ACI) ROIC Net Debt to Adjusted EBITDA 2022 29% 117% 2023
Slide 19: Managing Lumber Market Risk
MANAGING LUMBER MARKET RISK 50% 50% Level of lumber prices does 39.9% 39.9% Lumber Market Volatility* Adjusted EBITDA Margin not drive profitability 40% 40% 34.5% Sequential trends impact 30% 30% profit per unit 20% 20% 11.4% Balanced mix of variable and fixed- 9.7% 11.2% 8.4% price products mitigat
Slide 20: Net Sales (in millions)
NET SALES (in millions) UFP Consolidated UFP Retail Solutions $3,418 $3,651 $9,627 $8,636 $2,887 $7,218 28% $2,167 $5,154 $4,416 $1,499 31% 25% 6% 6% 2% 10% 5% 24% 0% 5% 4% (4)% (6)% (9)% 10% (1)% (3)% (10)% (6)% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 UFP Packaging UFP Construction $3,144
Slide 21: Adjusted EBITDA (in millions)
ADJUSTED EBITDA (in millions) UFP Consolidated $1,097 UFP Retail Solutions $202 $835 $810 $180 $170 $151 $431 $317 $75 7.8% 7.0% 11.4% 11.2% 8.4% 9.7% 5.0% 4.9% 7.2% 4.4% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 UFP Packaging $376 UFP Construction $422 $300 $244 Adjusted EBITDA $283 $272 Ad
Slide 22: Adjusted EBITDA Growth and Unit Sales
ADJUSTED EBITDA GROWTH AND UNIT SALES UFP Consolidated UFP Retail Solutions 100% 160% 80% 127% 94% 120% Percent Growth 60% Percent Growth 36% 40% 19% 28% 80% 31% 20% 6% 25% 31% 6% 2% 40% 19% 12% 0% (9)% 18% 0% 10% (11)% -20% (26)% 0% (6)% -40% -40% 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 U
Slide 23: Balanced Use of Free Cash Flow
BALANCED USE OF FREE CASH FLOW Acquisitions to contribute Operating Cash Flow and Capital Allocation half of our total annual (in millions) unit sales growth Acquisitions CapEx plan of $250-300M in 2024 Capex Share Buyback Dividends Opportunistic share repurchases and OCF to offset issuances $960 In
Slide 24: Return on Invested Capital
RETURN ON INVESTED CAPITAL 40% 34.6% 35% 31.9% 30% 25% 22.2% 20.9% Percent 20% 14.9% 15% Hurdle Rate = 15% 10% WACC = 10% 5% 0% 2019 2020 2021 2022 2023 Long-Term Goal: Earn an incremental return on new investment greater than our hurdle rate Non-GAAP Financial Information: Please visit ufpinvestor.
Slide 25: Cash Cycle
CASH CYCLE 80 70 65* 64* 64* 63 60 56* Days 50 40 30 20 10 0 2019 2020 2021 2022 2023 Cash Cycle = Days Receivables Outstanding + Days Supply of Inventory – Days Payables Outstanding Strong working capital management * Within the cash cycle, we’ve modified our calculation of days payables outstandin
Slide 26: Recent Acquisitions
26 RECENT ACQUISITIONS Process Purpose Goal Identify attractive growth runways in Find new products and services to Achieve scale and synergy targets to each Business Unit under each Business speed our transformation from optimize growth, margins and returns. Segment and identify gaps in our commodi
Slide 27: Capital Structure
CAPITAL STRUCTURE Net Debt to Total Capitalization Net Debt to Adjusted EBITDA vs Maximum Target vs Maximum Target 45% 2.5 40% 35% 2.0 30% 1.5 Percent 25% 20% 1.0 15% 10% 0.5 2.5% 5% 0.1 0.0% 0.0% 0.0% 0.0% - - - - 0% 0.0 2019 2020 2021 2022 2023 2019 2020 2021 2022 2023 Net Debt to Total Capital Ma
Slide 28: Stock Performance
STOCK PERFORMANCE Annualized Stock Return 70% 66.5% 60% 60.1% 50% 37.9% Annual % Return 40% 32.3% 30% 24.9% 24.3% 22.4% 20% 17.0% 15.1% 15.5% 13.3% 13.7% 9.9% 10.1% 10.0% 10% 8.3% 7.6% 13.8% 8.6% 6.7% 7.2% 8.5% 0.9% 5.7% 6.6% 0% 1 Year 3 Year 5 Year 10 Year 20 Year UFPI Peer Group Average SP500 DJIA
Slide 29: Quarterly Results
QUARTERLY RESULTS (§) UFP INDUSTRIES
Slide 30: Net Sales Q4 2023 (in millions)
NET SALES Q4 2023 (in millions) UFP Consolidated UFP Retail Solutions $920 $1,914 $2,044 $1,822 $1,828 $750 $711 $691 $1,524 0% (2)% $506 0% (7)% (7)% (8)% (9)% (2)% (9)% (9)% (10)% (8)% (7)% (8)% (9)% (11)% (18)% (10)% (11)% (18)% Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q4 2022 Q1 2023 Q2 2023 Q3 2
Slide 31: Adjusted EBITDA Q4 2023 (in millions)
ADJUSTED EBITDA Q4 2023 (in millions) UFP Consolidated UFP Retail Solutions $234 $69 $213 $208 $202 $166 $54 $49 11.5% 11.4% $34 $31 11.1% 11.1% 7.5% 7.6% 5.0% 6.6% 6.1% 10.9% Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Q4 2023 UFP Packaging UFP Construction $89 $84 $77 $
Slide 32: Thank You
THANK YOU 2801 E. Beltline Ave. NE Grand Rapids, MI 49506 (800) 598-9663 - UFPI.com 32