Ufp Industries, Inc. · NASDAQ:UFPI
Ufp Industries — Q3 2023 Earnings Presentation
32 slides from Ufp Industries's earnings presentation, Nov 8, 2023
Slide 1: Investor Relations Presentation: Results through September 30, 2023
INVESTOR RELATIONS PRESENTATION Results through September 30, 2023
Slide 2: Forward-looking statements and non-GAAP information
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, and projections abou
Slide 3: UFP Industries operating segments overview
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
15,000+ Employees worldwide 222 Facilities worldwide 1955 Founded in Grand Rapids, MI $7.6B Q3 2023 TTM Net Sales 41% 30% 25% 4% Based on Q3 2023 TTM Net Sales $3.1B Big box, independents, & buying co-ops $1.9B Industrial manufacturers, OEM’s, agricultural and logistics UFP AT A GLANCE $2.3B Single-
Slide 5: Where We Are
WHERE WE ARE 197 2 4 1 1 9 1 5 222 Locations 9 Countries 5 2
Slide 6: Sustainability Continuum
Drive operational excellence throughout the enterprise Cultivate a unique, rewarding culture throughout the UFP family of companies Provide significant opportunity for professional and personal growth Support communities in which we operate Supply exceptional products from sustainable sources Mainta
Slide 7: Business Model Provides Sustainable Competitive Advantages
BUSINESS MODEL PROVIDES SUSTAINABLE COMPETITIVE ADVANTAGES 7 As North America’s largest buyer of softwood lumber, UFP owns scale advantage in sourcing and in serving the three largest softwood end markets – residential construction, retail building products and industrial packaging. While in its ear
Slide 8: Short-Term Forward Outlook and Capital Allocation
RETAIL Market demand flat to slightly down based on: • Same-store sales growth of Big Box • Home remodeling activity PACKAGING Industrial production slightly down based on: • Purchasing Managers Index (PMI) • Durable goods manufacturing • U.S. real GDP CONSTRUCTION 10%-12% YoY decline in housing sta
Slide 9: Long-Term Financial Goals
Annual unit sales growth of 5-7% including small acquisitions Minimum 10% adjusted EBITDA margin Earn incremental return on new investment greater than WACC Maintain a conservative capital structure LONG-TERM FINANCIAL GOALS 9
Slide 10: Value Added Sales
2013 31% 69% 36% 64% 40% 60% 37% 63% 32% 68% Value-added as a percent of sales .. VALUE ADDED SALES Commodity Value-added 2019 2020 2021 2022 Q3 2023 TTM Improved mix raises EBITDA margins and contributes to long-term financial goals.
Slide 11: Innovation and New Products
New Products INNOVATION AND NEW PRODUCTS 10% 10% 8% 10% 9% 2019 2020 2021 2022 Q3 2023 TTM % of Net Sales 4% *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 million per year within 4
Slide 12: Innovation and New Products: Accelerator and UFP Venture Fund
• Create alternative product lines in close adjacencies to our current business • Address a shortage of skilled labor The company is making investments to Commitment to innovation moves the company steadily up the value chain. INNOVATION AND NEW PRODUCTS In 2022 we launched our Innovation Accelerato
Slide 13: Business Segments
BUSINESS SEGMENTS Commodity 50% Value Added 50% Commodity 23% Value Added 77% Commodity 17% Value Added 83% ProWood Group $2.7 Billion Deckorators $317 Million UFP Edge $97 Million Structural Packaging $1.3 Billion PalletOne $557 Million Protective Packaging Solutions $78 Million Site Built $1.0 Bil
Slide 14: ProWood Group
Outdoor lifestyle products including wood and vinyl fencing, landscape and garden décor, picnic tables, pergolas, trellises and more Premium siding, pattern, trim; interior accent wall products Pressure-treated decking, timbers, panels and construction materials, including fire-retardant The industr
Slide 15: Structural Packaging
Innovative packaging solutions and components backed by a global manufacturing footprint and the industry’s leading engineering, design, and integrated service teams STRUCTURAL PACKAGING Wood, steel, foam and corrugated for mixed material crates and specialty containers; hard cases, lumber processin
Slide 16: UFP Construction businesses
Floor, wall and roof panels, cabinet components, countertops and milled components for modular and manufactured homes; Components for RV/cargo trailer and mobile offices. Offsite prefabrication of value-add formwork, aluminum horizontal shoring and vertical forming solutions for use in infrastructur
Slide 17: Financials
FINANCIALS () UFP INDUSTRIES
Slide 18: Our Performance
OUR PERFORMANCE Net Earnings (ACI) ROIC Net Debt to Adjusted EBITDA 2019 2021 2020 Unit sales growth rate $ Sales in Millions Growth rate Strong track record of growth and performance improvement with emphasis on improving gross profit dollars per unit sold and ROIC. 2022 Non-GAAP Financial Informat
Slide 19: Managing Lumber Market Risk
MANAGING LUMBER MARKET RISK Adjusted EBITDA Margin Lumber Market Volatility* 4.2% 34.5% 39.9% 39.9% 5.2% 7.2% 8.4% 9.7% 11.4% 11.3% 0% 10% 20% 30% 40% 50% 0% 10% 20% 30% 40% 50% 2019 2020 2021 2022 Q3 2023 YTD Lumber Market Volatility Adjusted EBITDA Margin *Standard deviation of lumber prices divid
Slide 20: Net Sales
NET SALES (in millions) $4,416 $5,154 $8,636 $9,627 $7,608 2019 2020 2021 2022 Q3 2023 TTM UFP Consolidated $1,499 $2,167 $3,418 $3,651 $3,072 2019 2020 2021 2022 Q3 2023 TTM UFP Retail Solutions $1,086 $1,072 $2,148 $2,395 $1,947 2019 2020 2021 2022 Q3 2023 TTM UFP Packaging $1,637 $1,696 $2,698 $3
Slide 21: Adjusted EBITDA
$317 $431 $835 $1,097 $857 2019 2020 2021 2022 Q3 2023 TTM UFP Consolidated $75 $170 $151 $180 $206 2019 2020 2021 2022 Q3 2023 TTM UFP Retail Solutions $101 $100 $300 $376 $278 2019 2020 2021 2022 Q3 2023 TTM UFP Packaging $96 $98 $283 $422 $292 2019 2020 2021 2022 Q3 2023 TTM UFP Construction 5.0%
Slide 22: Adjusted EBITDA Growth and Unit Sales
UFP Consolidated UFP Retail Solutions UFP Packaging UFP Construction ADJUSTED EBITDA GROWTH AND UNIT SALES 6% 6% 28% 2% (8)% 19% 36% 94% 31% (22)% -40% -20% 0% 20% 40% 60% 80% 100% 2019 2020 2021 2022 Q3 2023 TTM 4% (6)% 40% (1)% (4)% 34% (1)% 200% 25% -30% (26)% 10% 50% 90% 130% 170% 210% 2019 2020
Slide 23: Balanced Use of Free Cash Flow
BALANCED USE OF FREE CASH FLOW Acquisitions to contribute half of our total annual unit sales growth CapEx plan of $175–$200M in 2023 Opportunistic share repurchases and to offset issuances Increasing dividends Return-focused approach to capital allocation $349 $336 $512 $832 $712 $25 $31 $40 $59 $5
Slide 24: Return on Invested Capital
RETURN ON INVESTED CAPITAL Hurdle Rate = 20% Percent 15.1% 21.0% 32.2% 34.6% 24.3% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2019 2020 2021 2022 Q3 2023 TTM WACC = 10% Long-Term Goal: Earn an incremental return on new investment greater than our WACC Non-GAAP Financial Information: Please visit ufpinvestor.
Slide 25: Cash Cycle
CASH CYCLE Cash Cycle = Days Receivables Outstanding + Days Supply of Inventory – Days Payables Outstanding 65* 56* 64* 64* 65 0 10 20 30 40 50 60 70 80 2019 2020 2021 2022 Q3 2023 YTD Days * Within the cash cycle, we’ve modified our calculation of days payables outstanding to be based on CGS and AP
Slide 26: Recent Acquisitions
Process Identify attractive growth runways in each Business Unit under each Business Segment and identify gaps in our capabilities to pursue those runways. Find new products and services to speed our transformation from commodity sales to value-added selling solutions and brands. Purpose Achieve sca
Slide 27: Capital Structure
CAPITAL STRUCTURE Conservative capital structure ensures ample resources to pursue investment opportunities with the highest return potential. Net Debt to Total Capitalization vs Maximum Target Net Debt to Adjusted EBITDA vs Maximum Target 0.0% 0.0% 2.5% 0.0% 0.0% 0% 5% 10% 15% 20% 25% 30% 35% 40% 4
Slide 28: Stock Performance
STOCK PERFORMANCE Peers include MAS, BLDR, TREX, LPX, SSD, BCC, PATK, AMWD, WRK, SON, GEF, ROCK Returns are adjusted to account for dividend payouts. Source: FactSet as of 10/13/2023 closing prices 35.9% 19.7% 25.3% 22.0% 12.6% 35.7% 10.6% 14.5% 14.1% 9.2% 17.9% 7.2% 9.4% 9.8% 7.4% 12.1% 5.5% 5.8% 8
Slide 29: Quarterly Results
QUARTERLY RESULTS () UFP INDUSTRIES
Slide 30: Net Sales Q3 2023
NET SALES Q3 2023 (in millions) $2,323 $1,914 $1,822 $2,044 $1,828 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 UFP Consolidated $845 $691 $750 $920 $711 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 UFP Retail Solutions $585 $522 $487 $488 $450 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 UFP Packaging $777 $605 $
Slide 31: Adjusted EBITDA Q3 2023
ADJUSTED EBITDA Q3 2023 (in millions) $274 $213 $202 $234 $208 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 UFP Consolidated $36 $34 $49 $69 $54 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 UFP Retail Solutions $90 $89 $67 $69 $54 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 UFP Packaging $116 $84 $62 $69 $77 Q3 2
Slide 32: Thank You
2801 E. Beltline Ave. NE Grand Rapids, MI 49506 (800) 598-9663 - UFPI.com THANK YOU 32