UFP Industries (NASDAQ:UFPI) held its first-quarter earnings conference call on Thursday. Below is the complete transcript from the call.
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The full earnings call is available at https://edge.media-server.com/mmc/p/7czr42fo/
Summary
UFP Industries Inc reported Q1 2026 net sales of $1.46 billion, an 8% decrease from the previous year, influenced by a 7% decrease in units and a 1% decrease in price.
The company’s adjusted EBITDA margin for the quarter was 7.6%, with earnings per share at $0.89, impacted by higher medical and transportation costs and adverse weather conditions.
Strategically, UFP Industries Inc announced two acquisitions: Moisture Shield and Berry Pallets, to expand capacity and geographic reach, and introduced new products like True Frame Joist and Arris trim.
Despite macroeconomic headwinds, the company remains focused on cost control, opportunistic M&A, and maintaining a strong financial position with $2 billion in liquidity.
Future guidance is cautious, with expectations of flat to slightly down unit volumes for the year, but with strategic investments aimed at achieving long-term growth targets.
Full Transcript
OPERATOR
Good day and welcome to UFP Industries Inc Q1 2026 earnings conference call and webcast. At this time all participants are in a listen only mode. After the speaker presentation there will be a question and answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised to withdraw your question. Press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Stanley Elliott, Director of Investor Relations. Please go ahead. Good morning everyone. Thank you for joining us to discuss UFP Industries first quarter 2026 results.
Stanley Elliott (Director of Investor Relations)
Joining me on our call are Will Schwartz, our President and Chief Executive Officer, and Mike Cole, our Chief Financial Officer. Following our prepared remarks, we will open the call for questions. Before I turn the call over, let me remind you that yesterday’s press release and presentation include forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from expectations. These risks and uncertainties include, but are not limited to, the factors identified in this release, in our most recent annual report on Form 10K and in our other filings with the Securities and Exchange Commission. Today’s presentation will also include certain non GAAP measures. For a reconciliation of these non GAAP measures to the corresponding GAAP measures, please refer to our earnings press release and our website ufpi.com I will now turn
Will Schwartz (President and Chief Executive Officer)
the call over to Will Good morning, everyone, and thank you for joining today’s call to discuss our financial results for the first quarter of fiscal year 2026. We’ll start by sharing our thoughts on the quarter, what we are seeing in the marketplace, and provide some thoughts on how we see the business performing for the balance of the year before opening the call for questions. the call for questions. Many of these same dynamics that we saw through much of 2025 continued into our first quarter. After seeing some stabilization through much of the quarter, macro headwinds and competitive pressures increased volatility as the quarter progressed. We were also adversely affected this quarter by a longer than normal winter season and so the normal seasonal uplift during the month of March failed to materialize. In addition to the impacts of softer demand, our results were impacted by higher medical costs than the previous year. This abnormal activity throughout March contributed to roughly 60% of the year over year decline in profitability in the quarter. Business conditions have since leveled out, but given the ongoing geopolitical uncertainty and broadening inflation, particularly around higher transportation costs. We are approaching the remainder of the year with a slightly more cautious outlook. Our Q1 results are reflective of the current operating environment. Net sales of $1.46 billion were down 8% from Q1 of 2025, representing a 7% decrease in units and a 1% decrease in price. Our adjusted EBITDA margin for the quarter was 7.6% and earnings per share for quarter was $0.89. Despite the temporarily challenged environment, we will continue to be focused on refining and growing our core business. We will focus on controlling costs and we plan to use this period of uncertainty to be more opportunistic and leverage our strong financial position. With approximately $2 billion in liquidity, we intend to pursue meaningful MA while returning our free cash flow to shareholders through opportunistic share repurchase and dividends. As we’ve said before, we continue to target above market growth with an emphasis on returns and we continue to make strategyic investments that contribute to the long term success of our business. In the immediate term, new product sales remain consistent at 7.5% of sales on a trailing 12 month basis. We also have a sharp eye towards strengthening our core business for the long term, deploying capital for greenfield investments in Matt, introducing innovative products and structurally lowering our cost base. On the cost side, we are actively mitigating higher costs and remain on track to deliver the remaining 25 million of our $60 million cost out program by year end with the potential to capture incremental savings beyond our initial targets. While Mike will share additional color on the results, we were also pleased to announce two post quarter end acquisitions that align with our disciplined strategy to deploy capital toward high quality strategyic fits. Before I get into the details, I’d like to start by welcoming the employees of Moisture Shield and Berry Pallets into the UFP family. These companies were a strategyic financial fit, but equally important they aligned well with our future. In our Decorators business unit, we announced the acquisition of Moisture Shield Decking Operations from Old Castle APG. The acquisition adds a wood plastic composite plant in Springdale, Arkansas which meaningfully expands our capacity, adds redundancy to our operation and enhances our ability to bring unique products to market. Additionally, this acquisition eliminates the need to spend capital on a new green field as demand for our product has outpaced capacity. We anticipate that this acquisition gives us the needed footprint to double our wood plastic composite decking manufacturing capacity by 20. Additionally, the acquisition also brings the rights to Moisture Shield’s Cool Deck technology, a proprietary heat mitigating technology which reduces heat transfer by up to 35%. We believe this would fit alongside our Decorators decking line, including integration into our surestone technology boards in our packaging segment. We also welcome to the UFP Family Berry Pallets, a new pallet manufacturer in the upper Midwest that expands our geographic reach and strengthens the density of our pallet network. These opportunities to increase the scale and synergy of our business only create value if we integrate it well. And that’s exactly why earlier this month we announced Patrick Benton will transition from his role as President of UFP Industries Construction segment path to the newly created Executive Vice President of Operations Integration position. Patrick has spent his career running some of our most profitable plants and business units and he knows firsthand what it takes to drive efficiency, reduce cost and accelerate the path to strong returns. In his new role, Patrick will apply that operational discipline across our growing portfolio of acquisitions, ensuring we move faster from close to contribution and that every business we bring into the UFP family performs to its full potential. Now moving on to segment highlights beginning with retail, our largest business unit, Prowood continues to make progress on lowering our cost positions and improving our manufacturing process. Some of this progress was overshadowed by the levels of inflation we saw in the quarter as well as the later than usual winter conditions. Prowood is an industry leading brand and we continue to add more value across our portfolio. A great example of this is our True Frame Joist product launched last month at jlc. As a reminder, this is the business unit’s first proprietary product designed specifically for use in deck substructures. The value we add on the front end eases several common pain points for contractors saving time and money. We have expanded production into four manufacturing plants and increased our sales efforts to capitalize on the demand pull. While still relatively small, this is a compelling product line extension in our core pressure treating and decking products. Similarly, we are pleased with the repositioning of our edge business and prospects for profitable growth. Our new Arris trim, made with Sheerstone technology, will begin shipping to customers late this quarter. Early demand indicators look quite favorable as contractors are gravitating to the same product features that has made our surestone decking offering so compelling. Turning to deckorators, we continue to see strong momentum from last year carryover into our first quarter. Our Shearstone decking sales increased 27% and our traditional wood plastic composite decking increased by 4%, both from the same quarter a year ago. We believe both metrics remain ahead of the broader industry. We were pleased with the results of our efforts last year to enhance Deckorator’s brand and intend to maintain that effort in 2026. In addition to our elevated sales volumes, our measures of consumer interest have more than doubled over the past year. These metrics include where to find a contractor, where to buy decorators and sample requests both at big box retailers and through our website. The outperforming demand stated earlier combined with the measurable customer feedback gives us confidence in our stated plan to double market share over the next five years. We remain excited about the progress we are making within both our surestone and Wood plastic manufacturing facilities to increase capacity and meet growing consumer demand. Our first truck left Buffalo in mid April and we continue to ramp up production at both our surestone production locations. We look forward to being fully operational in Q2, which will help us continue to work through the sales backlogs that we were not able to realize in the first quarter. Coupled with the recent Moisture Shield acquisition, we are well positioned to capture growth entering 2026 and beyond. Despite near term macro uncertainty, our confidence in the business remains strong and we continue to expect 100 million of incremental decorators growth this year. Our packaging segment continues to make progress despite an uneven macro backdrop. We are positioning the business for longer term success by introducing new value add products to our customers, investing in automation and investing in new and lower cost manufacturing Quoting activity has remained strong, but customer takeaway remained mixed which is reflective of the uncertainty across many end markets. The combination of higher commodity prices and a competitive market remain an overhang on profitability. That said, we are encouraged that our margins continue to stabilize sequentially and supports our view that we are closer to the bottom of the cycle. We continue to believe that our national footprint gives us geographic expansion opportunities and and our design and engineering capabilities separate us from many of our smaller, more regional competitors who lack the manufacturing scale and financial position to compete with national customers. With the improvements we made to the business, we can deliver above market growth in a recovery. Moving on to Construction the macro story in our construction segment has been fairly consistent for the past several quarters, but we continue to actively reposition our portfolio. A challenging new residential construction environment continues to weigh on, results overshadowing improvements across our other businesses. Residential builders remain cautious managing home inventories carefully ahead of the spring selling season. While consumer confidence and affordability headwinds persist. We continue to make investments in automation and other initiatives to improve our cost, position and throughput. One of these initiatives is the Frame Forward Systems brand that we launched in February at the International Builder Show. Frame Forward Systems positions our site built business unit to move our wood framing business beyond commodity component sale to capture increased margin through a system selling approach and to drive greater customer loyalty. While early Frame Forward Systems has been very well received by the construction trademark as we continue to raise the bar on off site manufacturing to address the on site challenges in the construction industry. Similarly in our factory built business, this business unit continues to actively add more value to our customers through partnerships, expansion of distribution capabilities and by facilitating cross selling with other parts of our business. Our concrete forming business continues to expand our product and services offerings to capture more of our customers wallets while helping them address labor challenges on the job site. Finally, our commercial business continues to build on new products, new customer relationships …
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