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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 25, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-22684

UFP INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)

Michigan

    

38-1465835

(State or other jurisdiction of incorporation or

(I.R.S. Employer Identification Number)

organization)

2801 East Beltline NE, Grand Rapids, Michigan

49525

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code (616) 364-6161

NONE

(Former name or former address, if changed since last report.)

Indicate by checkmark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  No

Indicate by checkmark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer

Non-Accelerated Filer

Smaller Reporting Company

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with a new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes    No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Class

    

Outstanding as of September 25, 2021

Common stock, $1 par value

61,887,770

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange On Which Registered

Common Stock, no par value

UFPI

The Nasdaq Stock Market, LLC

Table of Contents

UFP INDUSTRIES, INC.

TABLE OF CONTENTS

PART I.

FINANCIAL INFORMATION.

Page No.

Item 1.

Financial Statements

Condensed Consolidated Balance Sheets at September 25, 2021, December 26, 2020 and September 26, 2020

3

Condensed Consolidated Statements of Earnings and Comprehensive Income for the Three and Nine Months Ended September 25, 2021 and September 26, 2020

4

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 25, 2021 and September 26, 2020

5

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 25, 2021 and September 26, 2020

7

Notes to Unaudited Condensed Consolidated Financial Statements

8

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

18

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

34

Item 4.

Controls and Procedures

34

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings – NONE

Item 1A.

Risk Factors - NONE

35

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

35

Item 3.

Defaults upon Senior Securities – NONE

Item 4.

Mine Safety Disclosures – NONE

Item 5.

Other Information – NONE

35

Item 6.

Exhibits

35

2

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)

September 25,

December 26,

September 26,

    

2021

    

2020

    

2020

ASSETS

  

  

CURRENT ASSETS:

  

  

Cash and cash equivalents

$

138,637

    

$

436,507

  

$

346,154

Restricted cash

 

17,592

 

101

  

 

724

Investments

 

33,723

 

24,308

  

 

20,530

Accounts receivable, net

 

783,959

 

470,504

  

 

583,079

Inventories:

  

  

Raw materials

 

368,185

 

316,481

  

 

286,418

Finished goods

 

532,480

 

250,813

  

 

242,316

Total inventories

 

900,665

 

567,294

  

 

528,734

Refundable income taxes

 

14,134

 

5,836

  

 

Other current assets

 

34,040

 

33,812

  

 

32,888

TOTAL CURRENT ASSETS

 

1,922,750

 

1,538,362

 

1,512,109

DEFERRED INCOME TAXES

 

2,330

 

2,413

  

 

2,070

RESTRICTED INVESTMENTS

18,925

 

17,565

  

 

17,327

RIGHT OF USE ASSETS

94,481

77,245

77,412

OTHER ASSETS

 

29,168

 

20,298

  

 

24,216

GOODWILL

 

292,318

 

252,193

  

 

245,925

INDEFINITE-LIVED INTANGIBLE ASSETS

 

7,380

 

7,401

  

 

7,361

OTHER INTANGIBLE ASSETS, NET

 

93,984

 

72,252

  

 

58,205

PROPERTY, PLANT AND EQUIPMENT:

  

  

Property, plant and equipment

1,156,070

974,497

935,639

Less accumulated depreciation and amortization

 

(603,159)

 

(557,335)

  

 

(529,644)

PROPERTY, PLANT AND EQUIPMENT, NET

552,911

417,162

405,995

TOTAL ASSETS

3,014,247

2,404,891

2,350,620

LIABILITIES AND SHAREHOLDERS’ EQUITY

  

  

CURRENT LIABILITIES:

  

  

Cash overdraft

$

10,812

$

  

$

Accounts payable

292,933

211,518

  

231,111

Accrued liabilities:

  

  

Compensation and benefits

 

249,242

 

166,478

  

 

171,472

Income taxes

3,024

Other

 

90,348

 

69,104

  

 

69,888

Current portion of lease liability

22,242

16,549

15,349

Current portion of long-term debt

 

93

 

100

  

 

2,760

TOTAL CURRENT LIABILITIES

 

665,670

 

463,749

  

 

493,604

LONG-TERM DEBT

 

310,119

 

311,607

  

 

311,267

LEASE LIABILITY

75,548

61,509

62,100

DEFERRED INCOME TAXES

 

39,198

 

25,266

  

 

22,478

OTHER LIABILITIES

 

46,238

 

59,608

  

 

47,367

TOTAL LIABILITIES

 

1,136,773

 

921,739

  

 

936,816

SHAREHOLDERS’ EQUITY:

  

  

Controlling interest shareholders’ equity:

  

  

Preferred stock, no par value; shares authorized 1,000,000; issued and outstanding, none

$

$

  

$

Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding, 61,887,770, 61,205,780 and 61,186,636

 

61,888

 

61,206

  

 

61,187

Additional paid-in capital

 

239,563

 

218,224

  

 

216,002

Retained earnings

 

1,552,593

 

1,182,680

  

 

1,127,375

Accumulated other comprehensive loss

 

(3,278)

 

(1,794)

  

 

(6,974)

Total controlling interest shareholders’ equity

 

1,850,766

 

1,460,316

  

 

1,397,590

Noncontrolling interest

 

26,708

 

22,836

  

 

16,214

TOTAL SHAREHOLDERS’ EQUITY

 

1,877,474

 

1,483,152

  

 

1,413,804

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$

3,014,247

$

2,404,891

  

$

2,350,620

See notes to consolidated condensed financial statements.

3

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 25,

September 26,

September 25,

September 26,

    

2021

    

2020

    

2021

    

2020

    

NET SALES

$

2,093,784

    

$

1,486,227

  

$

6,619,329

    

$

3,760,290

    

COST OF GOODS SOLD

 

1,766,229

 

1,245,153

  

 

5,583,926

 

3,147,049

GROSS PROFIT

 

327,555

 

241,074

  

 

1,035,403

 

613,241

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

169,467

 

134,649

  

 

504,104

 

357,770

OTHER GAINS, NET

(10,037)

(176)

(11,248)

(2,120)

EARNINGS FROM OPERATIONS

 

168,125

 

106,601

  

 

542,547

 

257,591

INTEREST EXPENSE

 

3,433

 

2,486

  

 

10,483

 

6,291

INTEREST AND INVESTMENT LOSS (INCOME)

 

371

 

(1,565)

  

 

(3,614)

 

(1,623)

EQUITY IN EARNINGS OF INVESTEE

946

2,411

 

4,750

 

921

  

 

9,280

 

4,668

EARNINGS BEFORE INCOME TAXES

 

163,375

 

105,680

  

 

533,267

 

252,923

INCOME TAXES

 

37,628

 

26,819

  

 

127,909

 

63,798

NET EARNINGS

 

125,747

 

78,861

  

 

405,358

 

189,125

LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

(4,706)

 

(1,657)

  

 

(7,624)

 

(5,299)

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST

$

121,041

$

77,204

  

$

397,734

$

183,826

EARNINGS PER SHARE – BASIC

$

1.94

$

1.25

  

$

6.40

$

2.98

EARNINGS PER SHARE – DILUTED

$

1.94

$

1.25

  

$

6.38

$

2.98

OTHER COMPREHENSIVE INCOME:

NET EARNINGS

 

125,747

 

78,861

  

 

405,358

 

189,125

OTHER COMPREHENSIVE GAIN (LOSS)

 

(2,024)

 

1,687

  

 

(1,500)

 

(4,030)

COMPREHENSIVE INCOME

 

123,723

 

80,548

  

 

403,858

 

185,095

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

(4,496)

 

(1,922)

  

 

(7,608)

 

(3,354)

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

$

119,227

$

78,626

  

$

396,250

$

181,741

See notes to consolidated condensed financial statements.

4

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)

(in thousands, except share and per share data)

Controlling Interest Shareholders’ Equity

Accumulated

Additional

Other

Common

Paid-In

Retained

Comprehensive

Noncontrolling

    

Stock

    

Capital

    

Earnings

    

Earnings

    

Interest

    

Total

Balance on December 26, 2020

$

61,206

$

218,224

$

1,182,680

$

(1,794)

$

22,836

  

$

1,483,152

Net earnings

  

  

 

103,311

 

  

 

940

  

 

104,251

Foreign currency translation adjustment

  

  

  

 

(374)

 

(526)

  

 

(900)

Unrealized loss on debt securities

  

  

  

 

(1,296)

 

  

 

(1,296)

Distributions to noncontrolling interest

  

  

  

  

 

(2,914)

 

(2,914)

Cash dividends - $0.15 per share - quarterly

(9,274)

 

  

 

  

 

(9,274)

Issuance of 5,816 shares under employee stock purchase plan

 

6

357

  

  

  

 

363

Net issuance of 536,970 shares under stock grant programs

 

537

3,888

5

  

  

  

 

4,430

Issuance of 89,690 shares under deferred compensation plans

 

89

(89)

  

  

  

 

Expense associated with share-based compensation arrangements

2,936

 

  

 

  

 

2,936

Accrued expense under deferred compensation plans

5,795

  

  

  

  

  

5,795

Balance on March 27, 2021

$

61,838

$

231,111

  

$

1,276,722

$

(3,464)

  

$

20,336

  

$

1,586,543

Net earnings

173,382

1,978

 

175,360

Foreign currency translation adjustment

1,759

720

 

2,479

Unrealized gain on debt securities

241

 

241

Cash dividends - $0.15 per share - quarterly

(9,276)

 

(9,276)

Issuance of 9,282 shares under employee stock plans

 

9

564

 

573

Net forfeitures of 5,718 shares under stock grant programs

 

(6)

(224)

5

 

(225)

Issuance of 8,913 shares under deferred compensation plans

 

10

(10)

 

Expense associated with share-based compensation arrangements

2,728

 

2,728

Accrued expense under deferred compensation plans

1,140

 

1,140

Balance on June 26, 2021

$

61,851

$

235,309

  

$

1,440,833

$

(1,464)

  

$

23,034

  

$

1,759,563

Net earnings

121,041

4,706

125,747

Foreign currency translation adjustment

(1,897)

(210)

(2,107)

Unrealized gain on debt securities

83

83

Distributions to noncontrolling interest

Additional purchase and adjustment of noncontrolling interest

(822)

(822)

Cash dividends - $0.15 per share - quarterly

(9,281)

(9,281)

Issuance of 10,008 shares under employee stock plans

10

573

583

Net issuance of 17,165 shares under stock grant programs

17

(115)

(98)

Issuance of 9,864 shares under deferred compensation plans

10

(10)

Expense associated with share-based compensation arrangements

2,657

2,657

Accrued expense under deferred compensation plans

1,149

1,149

Balance on September 25, 2021

$

61,888

$

239,563

$

1,552,593

$

(3,278)

$

26,708

$

1,877,474

5

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY, CONTINUED

(Unaudited)

(in thousands, except share and per share data)

Controlling Interest Shareholders’ Equity

Accumulated

Additional

Other

Common

Paid-In

Retained

Comprehensive

Noncontrolling

    

Stock

    

Capital

    

Earnings

    

Earnings

    

Interest

    

Total

Balance on December 28, 2019

$

61,409

$

192,173

  

$

995,022

$

(4,889)

  

$

14,018

  

$

1,257,733

Net earnings

  

  

 

40,159

 

  

 

411

  

 

40,570

Foreign currency translation adjustment

  

  

  

 

(5,951)

 

(2,335)

  

 

(8,286)

Unrealized loss on debt securities

  

  

  

 

(270)

 

  

 

(270)

Distributions to noncontrolling interest

  

  

  

  

 

(299)

 

(299)

Additional purchase of noncontrolling interest

130

(225)

 

(95)

Cash dividends - $0.125 per share - quarterly

 

  

  

 

(7,730)

 

  

 

  

  

 

(7,730)

Issuance of 10,549 shares under employee stock purchase plan

 

10

 

309

  

  

  

  

 

319

Net issuance of 350,124 shares under stock grant programs

 

350

 

12,454

  

1

  

  

  

 

12,805

Issuance of 89,616 shares under deferred compensation plans

89

 

(89)

  

  

  

Repurchase of 756,397 shares

(756)

 

 

(28,456)

  

  

 

  

 

(29,212)

Expense associated with share-based compensation arrangements

  

 

1,404

 

  

 

  

 

  

1,404

Accrued expense under deferred compensation plans

  

 

5,343

  

  

  

  

  

  

 

5,343

Balance on March 28, 2020

$

61,102

$

211,724

  

$

998,996

$

(11,110)

  

$

11,570

  

$

1,272,282

Net earnings

66,463

3,231

  

 

69,694

Foreign currency translation adjustment

2,026

125

  

 

2,151

Unrealized gain on debt securities

688

 

688

Cash dividends - $0.125 per share - quarterly

(7,644)

 

(7,644)

Issuance of 9,714 shares under employee stock plans

10

367

 

377

Net issuance of 42,880 shares under stock grant programs

 

43

(174)

2

  

 

(129)

Issuance of 14,106 shares under deferred compensation plans

 

14

(14)

  

 

Expense associated with share-based compensation arrangements

 

824

  

 

824

Accrued expense under deferred compensation plans

1,082

 

1,082

Balance on June 27, 2020

$

61,169

$

213,809

  

$

1,057,817

$

(8,396)

  

$

14,926

  

$

1,339,325

Net earnings

77,204

1,657

78,861

Foreign currency translation adjustment

1,319

265

1,584

Unrealized loss on debt securities

103

103

Distributions to noncontrolling interest

(634)

(634)

Cash dividends - $0.125 per share - quarterly

(7,646)