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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 24, 2022

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 24, 2022

Common stock, $1 par value

61,637,514

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

3

Condensed Consolidated Balance Sheets at September 24, 2022, December 25, 2021 and September 25, 2021

3

Condensed Consolidated Statements of Earnings and Comprehensive Income for the Three and Nine Months Ended September 24, 2022 and September 25, 2021

4

Condensed Consolidated Statements of Shareholders’ Equity for the Three and Nine Months Ended September 24, 2022 and September 25, 2021

5

Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 24, 2022 and September 25, 2021

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

36

Item 4.

Controls and Procedures

36

PART II.

OTHER INFORMATION

Item 1.

Legal Proceedings – NONE

Item 1A.

Risk Factors - NONE

37

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

37

Item 3.

Defaults upon Senior Securities – NONE

Item 4.

Mine Safety Disclosures – NONE

Item 5.

Other Information – NONE

37

Item 6.

Exhibits

37

2

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data)

September 24,

December 25,

September 25,

    

2022

    

2021

    

2021

ASSETS

  

  

CURRENT ASSETS:

  

  

Cash and cash equivalents

$

449,135

    

$

286,662

  

$

138,637

Restricted cash

 

729

 

4,561

  

 

17,592

Investments

 

33,113

 

36,495

  

 

33,723

Accounts receivable, net

 

877,776

 

737,805

  

 

783,959

Inventories:

  

  

Raw materials

 

425,765

 

416,043

  

 

368,185

Finished goods

 

581,118

 

547,277

  

 

532,480

Total inventories

 

1,006,883

 

963,320

  

 

900,665

Refundable income taxes

 

28,771

 

4,806

  

 

14,134

Other current assets

 

39,956

 

39,827

  

 

34,040

TOTAL CURRENT ASSETS

 

2,436,363

 

2,073,476

 

1,922,750

DEFERRED INCOME TAXES

 

3,139

 

3,462

  

 

2,330

RESTRICTED INVESTMENTS

19,552

 

19,310

  

 

18,925

RIGHT OF USE ASSETS

101,001

96,703

94,481

OTHER ASSETS

 

94,090

 

31,876

  

 

29,168

GOODWILL

 

319,183

 

315,038

  

 

292,318

INDEFINITE-LIVED INTANGIBLE ASSETS

 

7,332

 

7,369

  

 

7,380

OTHER INTANGIBLE ASSETS, NET

 

113,880

 

109,017

  

 

93,984

PROPERTY, PLANT AND EQUIPMENT:

  

  

Property, plant and equipment

1,323,896

1,212,113

1,156,070

Less accumulated depreciation and amortization

 

(679,889)

 

(623,093)

  

 

(603,159)

PROPERTY, PLANT AND EQUIPMENT, NET

644,007

589,020

552,911

TOTAL ASSETS

3,738,547

3,245,271

3,014,247

LIABILITIES AND SHAREHOLDERS’ EQUITY

  

  

CURRENT LIABILITIES:

  

  

Cash overdraft

$

4,174

$

17,030

  

$

10,812

Accounts payable

323,404

319,125

  

292,933

Accrued liabilities:

  

  

Compensation and benefits

 

298,384

 

289,196

  

 

249,242

Other

 

111,596

 

84,853

  

 

90,348

Current portion of lease liability

23,767

23,155

22,242

Current portion of long-term debt

 

41,536

 

42,683

  

 

93

TOTAL CURRENT LIABILITIES

 

802,861

 

776,042

  

 

665,670

LONG-TERM DEBT

 

275,417

 

277,567

  

 

310,119

LEASE LIABILITY

80,903

76,632

75,548

DEFERRED INCOME TAXES

 

62,436

 

60,964

  

 

39,198

OTHER LIABILITIES

 

40,628

 

37,497

  

 

46,238

TOTAL LIABILITIES

 

1,262,245

 

1,228,702

  

 

1,136,773

TEMPORARY EQUITY:

Redeemable noncontrolling interest

$

7,563

$

$

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 160,000,000; issued and outstanding, 61,637,514, 61,901,851 and 61,887,770

 

61,638

 

61,902

  

 

61,888

Additional paid-in capital

 

284,025

 

243,995

  

 

239,563

Retained earnings

 

2,102,764

 

1,678,121

  

 

1,552,593

Accumulated other comprehensive loss

 

(11,348)

 

(5,405)

  

 

(3,278)

Total controlling interest shareholders’ equity

 

2,437,079

 

1,978,613

  

 

1,850,766

Noncontrolling interest

 

31,660

 

37,956

  

 

26,708

TOTAL SHAREHOLDERS’ EQUITY

 

2,468,739

 

2,016,569

  

 

1,877,474

TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY

$

3,738,547

$

3,245,271

  

$

3,014,247

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 24,

September 25,

September 24,

September 25,

    

2022

    

2021

    

2022

    

2021

    

NET SALES

$

2,322,855

    

$

2,093,784

  

$

7,713,042

    

$

6,619,329

    

COST OF GOODS SOLD

 

1,872,679

 

1,766,229

  

 

6,281,051

 

5,583,926

GROSS PROFIT

 

450,176

 

327,555

  

 

1,431,991

 

1,035,403

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

 

214,327

 

169,467

  

 

649,015

 

504,104

OTHER (GAINS) LOSS, NET

(1,195)

(10,037)

1,341

(11,248)

EARNINGS FROM OPERATIONS

 

237,044

 

168,125

  

 

781,635

 

542,547

INTEREST EXPENSE

 

3,516

 

3,433

  

 

10,213

 

10,483

INTEREST AND INVESTMENT LOSS (INCOME)

 

1,658

 

371

  

 

6,905

 

(3,614)

EQUITY IN EARNINGS OF INVESTEE

1,208

946

2,740

2,411

 

6,382

 

4,750

  

 

19,858

 

9,280

EARNINGS BEFORE INCOME TAXES

 

230,662

 

163,375

  

 

761,777

 

533,267

INCOME TAXES

 

58,561

 

37,628

  

 

188,692

 

127,909

NET EARNINGS

 

172,101

 

125,747

  

 

573,085

 

405,358

LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

(4,860)

 

(4,706)

  

 

(13,023)

 

(7,624)

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST

$

167,241

$

121,041

  

$

560,062

$

397,734

EARNINGS PER SHARE – BASIC

$

2.68

$

1.94

  

$

8.93

$

6.40

EARNINGS PER SHARE – DILUTED

$

2.66

$

1.94

  

$

8.89

$

6.38

OTHER COMPREHENSIVE INCOME:

NET EARNINGS

 

172,101

 

125,747

  

 

573,085

 

405,358

OTHER COMPREHENSIVE LOSS

 

(4,477)

 

(2,024)

  

 

(5,676)

 

(1,500)

COMPREHENSIVE INCOME

 

167,624

 

123,723

  

 

567,409

 

403,858

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

 

(4,273)

 

(4,496)

  

 

(13,290)

 

(7,608)

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

$

163,351

$

119,227

  

$

554,119

$

396,250

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

Temporary

    

Stock

    

Capital

    

Earnings

    

Earnings

    

Interest

    

Total

Equity

Balance on December 26, 2021

$

61,902

$

243,995

$

1,678,121

$

(5,405)

$

37,956

  

$

2,016,569

$

Net earnings

  

  

 

189,703

 

  

 

3,428

  

 

193,131

 

Foreign currency translation adjustment

  

  

  

 

2,930

 

949

  

 

3,879

 

Unrealized loss on debt securities

  

  

  

 

(695)

 

  

 

(695)

 

Distributions to noncontrolling interest

  

  

  

  

 

(2,053)

 

(2,053)

 

Cash dividends - $0.20 per share - quarterly

(12,541)

 

  

 

  

 

(12,541)

 

Issuance of 9,734 shares under employee stock purchase plan

 

10

653

  

  

  

 

663

 

Issuance of 787,045 shares under stock grant programs

 

787

8,959

  

  

  

 

9,746

 

Issuance of 79,973 shares under deferred compensation plans

 

80

(80)

  

  

  

 

 

Repurchase of 44,442 shares

 

(45)

(3,499)

  

  

 

  

 

(3,544)

 

Expense associated with share-based compensation arrangements

6,883

 

  

 

  

 

6,883

 

Accrued expense under deferred compensation plans

6,134

  

  

  

  

  

6,134

  

Balance on March 26, 2022

$

62,734

$

266,544

  

$

1,851,784

$

(3,170)

  

$

40,280

  

$

2,218,172

$

Net earnings

203,118

4,735

 

207,853

 

Foreign currency translation adjustment

(3,660)

(95)

 

(3,755)

 

Unrealized loss on debt securities

(628)

 

(628)

 

Cash dividends - $0.25 per share - quarterly

(15,474)

 

(15,474)

 

Issuance of 13,875 shares under employee stock purchase plan

 

14

781

 

795

 

Issuance of 28,154 shares under stock grant programs

 

28

1,092

 

1,120

 

Issuance of 11,605 shares under deferred compensation plans

 

12

(12)

 

 

Repurchase of 1,165,268 shares

(1,165)

(88,506)

(89,671)

Expense associated with share-based compensation arrangements

5,556

 

5,556

 

Accrued expense under deferred compensation plans

1,100

 

1,100

 

Balance on June 25, 2022

$

61,623

$

275,061

  

$

1,950,922

$

(7,458)

  

$

44,920

  

$

2,325,068

$

Net earnings

167,241

4,380

171,621

480

Foreign currency translation adjustment

(3,330)

(29)

(3,359)

(558)

Unrealized loss on debt securities

(560)

(560)

Distributions to noncontrolling interest

(9,970)

(9,970)

Redeemable noncontrolling interest

(7,641)

(7,641)

7,641

Cash dividends - $0.25 per share - quarterly

(15,405)

(15,405)

Issuance of 10,678 shares under employee stock purchase plans

11

641

652

Net forfeitures of 6,396 shares under stock grant programs

(6)

(159)

6

(159)

Issuance of 10,705 shares under deferred compensation plans

10

(10)

Expense associated with share-based compensation arrangements

7,407

7,407

Accrued expense under deferred compensation plans

1,085

1,085

Balance on September 24, 2022

$

61,638

$

284,025

$

2,102,764

$

(11,348)

$

31,660

$

2,468,739

$

7,563

5

Table of Contents

UFP INDUSTRIES, INC.

(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 27, 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 purchase plan

 

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

$