With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

Fortune 500

Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

See which workplaces made this year's list.

GPTW Manufacturing & Production Large 2024-UFP Industries

<p>Employees say:</p><p>"UFP's entrepreneurial spirit is our key industry differentiator. From our business leaders to machine operators, our employees know they have the power to influence our business, including strategic direction, safe working conditions, profitability, customer experience, and a creating productive and positive work environment."</p>

Best Large Workplaces in Manufacturing and Production

Industries included in the sector are building materials, forest products, metals, and packaging.

Fortune Sector Leaders: Materials

The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

The Fortune 500, in its 69th year in 2023, ranks the biggest U.S. companies by revenue.

Industrials came out on top this year, with 22 companies featured on the list.

100 Fastest-Growing Companies

This year’s Fortune 500 marks the 68th running of the list.

This year’s group delivered stellar revenue and profit growth, but it underperformed the broader stock market.

This year’s Fortune 500 marks the 67th running of the list.

This year's Fortune 500 marks the 66th running of the list.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Q1 2025

Q4 2024

Get insights into UFP Industries including business profile, stock information, news, and rankings from Fortune.

UFP Industries (UFPI): Company Profile, Stock Price, News, Rankings

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UFP Industries

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Good day, and welcome to the Q1 twenty twenty five UFP Industries, Inc. Earnings Conference Call and Webcast. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. 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, and thank you for joining us to discuss our first quarter results. Joining me on the call today are Will Schwartz, our Chief Executive Officer and Mike Cole, our Chief Financial Officer. Will and Mike will offer prepared remarks, and then we will open the call to questions. This conference call is available simultaneously to all interested investors and news media through the Investor Relations section of our website, ufpi.com. A replay of the call will be posted to our website as well.

Before I turn the call over, let me remind you that today's press release and presentation include forward looking statements as defined by 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 also include, but are not limited to, those factors identified in the press release and in the company's filings with the Securities and Exchange Commission. I will now turn the call over to Will.

Thank you. Good morning, everyone, and thank you for joining us to discuss our first quarter twenty twenty five earnings results. The challenging trends we discussed with you on our last call in February have continued, and the macro environment has become increasingly uncertain. Operations remain challenging, and we are focused on multiple levers under our control to improve results going forward. Despite a slower start in January and February, we are more encouraged by recent business trends.

Business activity improved sequentially in each month during the quarter with March trends continuing into the first three weeks of April. While we are encouraged by these recent trends, we would also note that visibility remains limited in this current environment. Regardless of the backdrop, we have a sound strategy in place and the right people to execute on our strategies. We will continue to focus on things under our control to deliver improved results going forward. We are on track with our cost out programs and have levers to pull should a market recovery fail to materialize.

Our portfolio is more diversified and better positioned than at any point in our seventy year history to win in the marketplace. Lastly, we finished the quarter with $9.00 $5,000,000 in cash, giving us ample flexibility to continue investing in our future while maintaining our conservative capital structure. We believe this positions us well in any environment. Turning to the quarter. First quarter sales generally matched our expectations for low single digit sales declines despite the slower start to the year.

Total sales declined 3% from year ago levels. Business improvement from January through the end of the quarter allowed us to recover many of the volumes lost early, but manufacturing variances and higher material costs couldn't be overcome. Pricing remains competitive across most markets given the lack of forward visibility. All of this contributed to our earnings per share of 1.3 and adjusted EBITDA of $142,000,000 for the quarter. Margins remain pressured from unfavorable manufacturing variances, competitive pricing, higher input and transportation costs and unfavorable mix shifts.

We believe some of this shortfall is timing, and we remain on track to realize 60,000,000 of structural cost savings from our cost out and capacity reductions by 2026. We also stand ready to further adjust our cost structure depending on what the market environment dictates. Despite ongoing market volatility, our go forward strategy remains unchanged, and we will continue to focus on what is under our control and invest in the strategies that have made UFP's industry so successful over the long term. We will continue targeting markets that we believe can deliver higher growth rates and make the necessary organic and inorganic investments to drive these results. We will continue to focus on expanding more value add products and innovation across the portfolio with a focus on expanding our margins while deemphasizing underperforming products and operations.

We will continue to closely monitor our expenses and our plant network as well. And finally, all of this will be underpinned by our commitment to maintaining our strong return on capital profile and conservative capital structure, which will remain at the center in guiding our strategy. New product sales totaled $106,000,000 in the quarter or 6.7% of sales. We continue to see a pathway for these new products to become 10% of sales over time. We are seeing momentum across the portfolio and are excited about these products' growth potential and margin opportunities over time.

A good example of this is our proprietary mineral based SureStone technology. At the recent IBS trade show in Las Vegas, we launched a new line of decking boards featuring SureStone technology. We also introduced our SureStone based trim offerings, which will be released in late twenty twenty five. Last quarter, we shared that we have secured 1,500 new retail locations for 2025, and we are also actively adding stocking relationships with traditional two step building products distributors. The new products are shipping to retailers and distributors as we speak.

To meet this demand, we continue to invest in our existing manufacturing capabilities to drive increased productivity and throughput. We are also actively expanding the geographic reach of our manufacturing capacity. In the quarter, we announced plans for a new Deckorators facility in the Northeast. All of this is part of our capital expansion plan for Deckorators, which provides the foundation for our plans to double market share over time. In addition to our investments in decorators and retail more broadly, we have identified growth runways across each of our other business units that meet our high return threshold.

We remain committed to our plan to invest $1,000,000,000 in growth capital investments over the next five years, but also maintain the flexibility to pivot some of that capital earmarked for greenfield operations to M and A should the right opportunities arise. We would prefer M and A to greenfield expansion in most cases, but only when valuations are in line with our expectations for return. Our goal with all investments is to expand our growth runways in new and value add products, strengthen our core portfolio, and improve our cost position and become more efficient across all layers of the organization. All of these projects will be accretive to margins, either by improving product mix or by lowering our manufacturing cost. We will continue to invest heavily in automation, technology, new product development and capacity expansion that will leave us better positioned to drive margins and create shareholder value.

In all cases, any investments are expected to meet our internal return on capital threshold. M and A has always been an important part of UOP's history and a key part of our growth strategy. And as I mentioned a moment ago, we are willing to pivot more towards acquisition growth versus greenfield growth should the right opportunity arise. Our M and A team continues to be extremely active, and we would say our pipeline is better today than at any point over the past few years. I think some of this is that the expectations between what buyers want and what sellers are willing to pay has rationalized as earnings are normalizing post COVID.

Some of the recent macro uncertainties have likely contributed to this uptick in activity as well given the fragmented nature in many of our markets. Regardless, we wanna grow sales aggressively, but we will be mindful in that we are growing the right sales that drive higher margins and support our strong return profile. We also view share repurchases as an attractive way to return capital to shareholders and have been very active through April. With the additional $100,000,000 authorization provided by our Board, we anticipate remaining active throughout Q2 as long as the price is below our target. Turning quickly to our segments.

Retail sales declined 3% in the quarter compared to a year ago. Results were largely driven by 4% decline in volume, with 1% positive pricing helping offset. Much of the quarter decline was due to a customer shift within our decorators business, which will become less impactful as the year progresses. With new product placement and recent distribution wins taking place throughout the spring season, we expect this business will help offset soft demand. We expect the decorators business will build momentum through the rest of the year as more stores begin to stock our SureStone decking.

Profitability should improve also as our capital investments not only expand our capacity but allow us to produce more efficiently. On the ProWood side, recent price increases should help offset material cost increases. Packaging unit sales declined 2% in total and 3% excluding the acquisition of pallet manufacturer, C and L Wood Products, this past December. Weaker sales in our structural packaging and pallet one businesses drove the declines. Pricing remains competitive, and recent increases in material costs have pressured margins further.

We've said on calls in the past that if we aren't at a bottom, we continue to think we're getting close. Construction sales were largely unchanged from year ago levels. A 3% boost in volumes for the business unit was offset by a similar decline in price in the quarter. Strength in our factory built business was largely offset by softness in our site built business. This trend has shown up in our results for the past several quarters.

And with a downgraded housing outlook and many homebuilders lowering their full year forecast, we expect this dynamic will remain through the balance of the year. Turning to our outlook. We expect the business conditions that impacted our first quarter results will carry over for the remainder of 2025. News around tariffs on Canadian lumber has only created additional headwinds. The ninety day reprieve on any tariffs has helped the overall lumber market remain relatively stable, but the overall environment is fluid.

And if something changes, the industry would most likely see some levels of inflation as prices are ultimately passed along to the consumer. From an impact standpoint, we'd note that we import less than 15% of the lumber we purchase from Canada. We'd also note that Southern Yellow Pine is domestically produced and represents over 70% of our purchases of lumber. Historically, a tighter lumber market has allowed us to have better availability of product, including low grade for packaging applications as a result of our scale. This has allowed us to improve our market share and lower costs.

Along those same lines, softer patches in the economy have allowed UFP to use our scale, strong financial position, and lower cost manufacturing position to gain share in the marketplace. While all of this uncertainty is contributing to a lack of visibility beyond the first half of twenty twenty five, regardless of the outcome, we remain confident in our ability to navigate any potential tariff impacts. Longer term, we are well positioned to take advantage of favorable demographic trends in an underbuilt housing market. We plan to position our business to take market share as well. We remain committed to our long term targets, which includes 7% to 10% unit growth, 12.5% EBITDA margins, all while maintaining our strong return on capital profile and conservative capital structure.

The timeline to achieve these targets is pushed out due to the current economic environment, but the goals remain unchanged. Before I turn the call over to Mike, I wanna thank our 15,000 plus employees for their hard work and dedication. The uncertain macro environment will undoubtedly pass, and it is with their effort that we'll emerge from this period a much stronger and more profitable company.

Thank you, Will. Our consolidated results this quarter include a 3% decline in sales to $1,600,000,000 driven by a 2% reduction in volumes and a 1% reduction in selling prices. The decline in selling prices primarily resulted from a slower start to the year and weaker demand, which led to more competitive pricing in our construction and packaging segments. The volume declines were primarily due to a seasonally weaker January and February across most business units. Lower volumes, pricing pressure, higher material costs and a less favorable product mix weighed on profitability this quarter as adjusted EBITDA declined 21% to $142,000,000 while our adjusted EBITDA margin fell to 8.9%.

Even with these headwinds, our return on invested capital remained resilient at 15.5%, well above our weighted average cost of capital. We believe this highlights the strength of our business model and the efforts of our team, demonstrating the strong returns our business can achieve even when faced with more challenging market conditions. Our balance sheet continues to be a competitive advantage for providing us with the flexibility to pursue our financial and strategic objectives to drive sustained returns and long term value even in uncertain or challenging environments. Moving on to our segments. Sales in our Retail segment were six zero seven million dollars a 3% decline compared to last year due to a 4% decline in units, partially offset by a 1% increase in price.

The unit decrease was comprised of a 3% decline in volume with big box customers, while our volume with independent retailers declined by 7%. By business unit, we experienced a 3% decrease in ProWood and an 11% decline in decorators. The majority of the decorators decline was driven by a customer change that temporarily reduced volumes as we transitioned business. This was primarily experienced in our railing and wood plastic composite decking categories as our sales of these products dropped 26%, while our sales of SURStone decking increased 24%. SURESTONE was more than 50% of our total composite decking sales this quarter and will continue to benefit from the Summit product launch, expanded distribution, new and more efficient capacity coming online and our increased marketing efforts to build the SureStone brand.

Our year over year gross profits and gross margins declined in retail due to the decrease in volume and unfavorable manufacturing variances given the slow start to the year as well as higher material costs on certain products sold with a fixed price. However, we're optimistic our margins will improve in future quarters given recent price increases implemented to offset these higher costs and benefits from more efficient manufacturing as a result of capital investments made to produce our SureStone product. Our operating profits in Retail declined by roughly $20,000,000 as a result of the decline in gross profit as we were able to hold SG and A flat as an increase in Deckorators advertising costs was offset by a decrease in bonus expense. Moving on to Packaging. Sales in this segment dropped 3% to $410,000,000 consisting of a 3% decrease in organic units and a 1% decrease in selling prices, partially offset by a 1% increase from the recently completed C and L Wood Products acquisition.

Customer demand in this segment remains soft and the environment remains competitive, but we continue to gain share with key customers. As a result of soft demand, competitive headwinds and an increase in material costs, our year over year gross profit dropped by $16,000,000 for the quarter and gross margin declined by three sixteen basis points. The margin decline was also due to an unfavorable change in product mix this quarter as our largest and most profitable business unit, Structural Packaging, experienced the greatest decline in volume. Operating profits in the Packaging segment declined by almost $10,000,000 to a total of 22,000,000 for the quarter due to the decrease in gross profits, offset by a $6,000,000 decrease in SG and A primarily due to lower bonus and sales incentives and our cost reduction efforts. Turning to construction, sales in this segment were largely flat at $516,000,000 as a 3% decline in selling prices was substantially offset by a 3% increase in units.

The increase in volume was due to a double digit increase in our factory built business and low single digit growth in both our commercial and concrete forming business units. These increases were partially offset by a mid single digit decline in our site built business. The volume increase in our factory built unit was primarily due to an increase in industry production as this market continues to outperform. Selling prices were largely stable across the business with the exception of our site built unit. Gross profit for the segment decreased by $24,000,000 year over year with gross margin down four forty eight basis points driven by the decline in site built selling prices, higher material costs and a less favorable product mix as site book comprised a lower percentage of our total sales.

Our operating profits declined by $18,000,000 to a total of $28,000,000 for the quarter due to the decline in gross profit offset by a $6,000,000 decrease in SG and A due to lower bonus and sales incentives and our cost reduction efforts. As we progress through this cycle, we're mindful of our cost structure and working to strike the right balance of making sure the company is appropriately sized relative to demand while still investing in the resources needed to achieve our strategic long term objectives for growth, product innovation, building brand awareness and improving our efficiency through technology. Our consolidated SG and A expenses declined $16,000,000 for the quarter due to a $14,000,000 decline in bonus and sales incentives and a $2,000,000 decline in our core SG and A, which includes a $5,000,000 increase in our Deckorators advertising costs to support the Showstone Summit product launch as we remain excited about the growth opportunity of this brand. Looking forward, we've targeted an annual run rate of EBITDA improvements from cost and capacity reductions of $60,000,000 in 2026. Our plan for SG and A expenses this year, excluding highly variable sales and bonus incentives tied to profitability, remains at $565,000,000 This is flat when compared with 2024 and is comprised of 26,000,000 of anticipated cost reductions, offset by 6,000,000 of planned increases, primarily associated with new greenfield operations, technology improvements and product innovation, and a $20,000,000 increase in our Deckorators advertising spend as we invest in building the SureStone brand.

We're also planning for current year bonus expense of 16% to 17% of pre bonus operating profit, 27,000,000 of investing expense associated with prior year share grants and sales incentives of about 3% of gross profit. In addition to SG and A cost reductions, we've taken actions to curtail capacity at locations that are not meeting our profitability targets. We are confident these actions will have a favorable impact on gross profits totaling at least $15,000,000 in 2025. Based on the actions we've taken to date and opportunities for continued improvement, we're optimistic we will achieve our 2026 goal. Moving on to our cash flow statement.

Our operating cash flow was a use of $109,000,000 in the quarter compared to a use of $17,000,000 last year, primarily due to our seasonal investment in net working capital, which was $55,000,000 higher this year, as well as a decline in our net earnings and non cash expenses, which were $37,000,000 lower. We expect the seasonal increase in net working capital of $239,000,000 to be converted to cash by the end of Q3. Our investing activities included $67,000,000 in capital expenditures, comprising $19,000,000 in maintenance CapEx and $48,000,000 of expansionary CapEx. As a reminder, our expansionary investments are primarily focused on three key areas: expanding our capacity to manufacture new and value added products geographic expansion in core higher margin businesses and achieving efficiencies through automation. Finally, our financing activities primarily consisted of returning capital to shareholders through almost $21,000,000 of dividends and $70,000,000 of share repurchases during the quarter.

Turning to our capital structure and resources, we continue to have a strong balance sheet with nearly $9.00 $5,000,000 in surplus cash, while our total liquidity, including cash and amounts available to borrow under our long term lending agreements, is $2,200,000,000 at quarter end. With respect to capital allocation, we remain committed to a balanced and return driven approach. As we've discussed, our highest priority for capital allocation is to drive organic and inorganic growth that results in higher margins and returns. Our strategy also includes growing our dividends in line with our long term anticipated free cash flow growth, repurchasing our stock to offset dilution from share based compensation plans, and opportunistically buying back more stock when we believe it's trading at a discounted value. With these points in mind, our board approved a quarterly dividend of $0.35 a share to be paid in June, representing a 6% increase from the rate paid a year ago.

On April 23, our board amended and increased our share repurchase authorization from $200,000,000 to 300,000,000 The authorization expires on 07/31/2025. During the first quarter, we repurchased 649,000 shares for $70,000,000 And so far in April, we've repurchased over 1,000,000 shares for 107,000,000 Our remaining authorization through the July is $122,000,000 Regarding capital expenditures, we currently plan to approve new CapEx projects totaling 300,000,000 to $350,000,000 for the year. Through the March, we've already approved $167,000,000 with another $87,000,000 pending approval. Large projects this year include expanding our capacity to produce our Shurstone product, our corrugate packaging footprint and our site build presence in Utah. Finally, we continue to pursue a pipeline of m and a opportunities that are a strong strategic fit while providing higher margin return and growth potential.

As we pursue these opportunities, we'll remain disciplined on valuation. I'll finish with comments about our outlook. On our last call, we guided to expectations for modest declines in demand and pricing in each segment through the first half of the year, but stopped short of providing context for the full year given the uncertainty in the market. At this point, visibility into the second half of the year has become even more challenged. As Will indicated earlier, we saw revenue and profit momentum improve through the quarter.

Still, many of the same market dynamics and uncertainties remain in place, so we continue to approach the second half of the year with a sense of caution. The prospect for tariffs only adds more uncertainty and increases the likelihood of inflation and demand challenges going forward. Against this backdrop, we anticipate demand will remain slightly down in each of our segments through the remainder of the year. While we believe demand in factory built will increase, we believe it will be offset by declines in site built and the other business units in our construction segment. As a result of the soft demand environment, we anticipate competitive pricing will continue.

Positively, we anticipate market share gains in most business units will help mitigate the decline in demand and benefit the company going forward. In the current environment, we'll continue to focus on what's in our control to manage through these more challenging conditions in the short term, reducing costs, eliminating excess capacity and divesting underperforming assets, while positioning ourselves for eventual improvements in market demand and executing our strategies to drive long term growth and margin improvements. With that, we'll open it up for questions.

And our first question will come from the line of Kurt Yinger with D. A. Davidson. Your line is open.

Great. Thanks, and good morning, everyone. Good

Good morning. Just on the outlook, it seems like some of the caution around demand is prudent at this stage. I'm curious when you talk about kind of the competitive dynamics and pricing pressures persisting, is the expectation that maybe those get incrementally more challenging kind of as the year progresses? Or just that kind of the current set of challenges remains but is kind of stable sequentially over the next few quarters?

I guess I'll I'll jump in on that one. Kurt, I I at this point, we're expecting that the current challenges to continue in future quarters. When I when I look at the packaging segment, margins there are up a little bit from q four, which you'd expect with with volumes improving a little bit. But but it seems like margins there have have more or less stabilized. Challenge in there, though, is that we have had some cost increase that has been difficult to pass along fully.

On the construction side, the site built area in particular has has been more challenged. And she saw a big step down in the construction margins driven by pricing challenges in in site built. I would expect that those to continue for the balance of the year. And and and like packaging, we've we've we've experienced cost increases on the on the material side of things, lumber in particular, And and and it'll be challenging, I think, in a in a softer demand environment to to pass those maybe fully along to builders. So I I think those areas, I think we expect them to continue, the trend we saw in q one.

Positively, though, I I I think in retail, it's a it's in a completely different story. I I I think you see you're gonna see benefits on the decorator side from the more efficient capacity coming online in q two. The and then the cost increases we've seen on some of the fixed price products, we've we've had success in implementing price increases as an as an offset. And so those weren't fully enacted in in in q one. So we expect to get the benefit of those more or less going forward for the balance of the year.

So more optimistic on the on the retail side, bouncing up and more or less continuing in the tougher tougher environment for the other two segments.

Yep. Well said, Mike. Nothing to add there.

That's great. And and it kinda dovetails into my next question that you referenced around lumber prices. Right? And historically, you know, the business has done a great job kinda managing fluctuations there. I think with the variable versus fixed price, you kind of have a natural hedge, but it does seem like a unique environment in terms of demand soft, competitive pressures.

But at the same time, lumber has been inflationary. I guess how do you balance, you know, desire to to pass that through and and not see that kind of price card spread narrow versus, you know, the desire to keep the plants busy and the recognition that there is, you know, some cost absorption if you walk away, from business at this stage. I guess, how are you kinda managing that balance in the current environment?

Yeah. That's a really good question. And what I would tell you is we do not wanna give up market share. At the same time, we're managing those margins. We think we can mitigate most of those increases, but but we wanna retain and grow market share as as Mike described in his in his script.

So we're gonna continue to fight that. We know that packaging and and construction will be more difficult than retail, but certainly don't wanna give up market share.

And the and the team is well aware of, you know, what market pricing is and what their variable costs are. So they you know, they're making good business decisions every day about market share.

Got it. Okay. And then just lastly on on decorators, you referenced some of the timing dynamics that impacted that this quarter. Is that something that you expect to kind of be fully in the rearview as we move into Q2? And all considered, I guess, how are you thinking about Decorators growth this year?

Is that is it somewhat of a transitional year? And as those new retail wins ramp, maybe 2026 we're talking about growth? Or can we get to year over year kind of sales growth this year even with some of those timing dynamics?

Yeah. So, certainly, timing in the first quarter hit us. Q two, we're about 30% of the way through that load in that we talked about on the last quarter call, the 1,500 plus stores, the Shearstone product. So you'll see that really taking place in q two. We believe by the end of the year, we'll actually have gains over 2024 in volume.

And, you know, the secondary piece that I would add to that, you know, the margin piece on the decorators side, we didn't really realize, the benefits of a lot of that capital expenditure piece. And in fact, it probably hindered us in in q one and the load in as we're still working through CapEx improvements, a lot of disruption at the plant that also will take place in q two. That'll be behind us. So we believe the second half of year will be really good.

Awesome. Thank you. Appreciate the color.

Thank you. One moment for our next question. And that will come from the line of Reuben Garner with Benchmark. Your line is open. Hi,

Decorators comment. Just to be clear, are you are you fully missing business with one retailer and only partially way through the load on the other side, and that's why there's a volume headwind? How do we think about that, or is there still headwinds to come? I know I know you've got a lot of moving pieces there.

No. No real headwinds to come. You you described it well. It's just transition period. So, I mean, that's, for the most part, behind us, and you'll see that really change in q two.

Okay. And then a longer term question on on Deckorators and the capacity you've added. Can you update us on kind of what the what capacity you will have after this latest round of announcements in terms of revenue opportunity and how that kinda compares to what revenue you did in in 02/2024 in decorators?

Yeah. There there's three parts to the capacity increase, I think, for decorators, Ruben. It's it's it's about a about a hundred million, I'd say, in in capacity that's more more recently added, at our Selma plant. There's another hundred million, that'll come into play later this year, from a further expansion there. And then we have the Buffalo plant, which we're really excited out, about.

This should be fully operational early, next year. So, the two expansions at Sama, again, a hundred million each. And then the the Buffalo expansion gives us the ability to to get to that goal, that five year goal of doubling our market share, but it also allows us to, look at new products, manufacturing new products, the Trim product, for example, that you saw at IBS.

So so, Mike, just to be clear, I mean, does that imply that you're more than doubling your your capacity? I assume there's market growth baked in you know, in addition to doubling your market share, you've got a growing market over the next five years. Am I thinking about that the right way? Or would you need incremental capacity additions to get to that goal?

Nope. You're you're exactly right, Ruben.

Okay. And then a follow-up on, the competitive pricing, comments you made, I guess, specifically in site built. You know, I I see your I wanna be clear. So this has gone on for a few quarters now. Is your expectation that you'll still have year over year headwinds in the second half, meaning it it's kind of sequentially getting worse at this point, or have you seen a stabilization in pricing there and we're just not anniversarying the start of it yet?

Visibility is tough, Ruben. There there's a there's a significant step down from from q four to q one. Obviously, you can see that in the margin, for construction, and and that's really driven by site build. We're expecting at this point that it that that trend continues forward. So I I think this is a time when it you know, seasonality, you know, we've always encouraged you to look at, you know, year over year, when when looking at modeling.

But I I think this is a time where where cost and and price trends really kinda lend itself to looking at the sequential trends as well. And I and I think going from q four to q one and seeing that that adverse price trend and the and the cost trend as well, I think you wanna you wanna look at carrying those forward. At with respect to, you know, whether or not we found a bottom, I think that's, you know, tough to say. I mean, reading through what your question is, visibility is just too tough to be able to say, I think, right now.

No. That's really helpful, Mike. Appreciate it. Thanks, guys, and good luck.

Thank you. One moment for our next question. And that will come from the line of Keaton Mamtora with BMO Capital Markets. Your line is open.

Good morning, Will, Mike, and thanks for taking my question. Coming back to Decorators, is there any way to sort of just rough order of magnitude, the EBITDA impact in Q1 you know, from this customer shift that we are talking about in in retail. Is there is there any way to for us to sort of just think about that?

Well, I I you know, you have a you have an 11%, I I think, unit decline. And so I I think you probably have maybe enough information to take the 11% unit decline and and estimate an incremental impact there. But I I think and I'd just throw in there as well that the the manufacturing variances associated with the decline in units, were a negative 2,000,000. And so, obviously, you know, we're we're looking at those things obviously reversing We think that the sales will will pick back up.

manufacturing variances will be eliminated. And then back half of the year, once that that more efficient capacity comes online, margins will improve materially.

Got it. So so it's fair to say then this of the 11% volume decline is is all due to this volume shift and and underlying market from what you guys see is kind of flattish at this point. Is there is that a fair way to think about it?

Got it. And then as we move from q one to q two, just to sort of clarify, should we assume that all of that all of this shift has played out? And as we move into q two, we are kind of back to kind of more normal, you know, sort of business trends, or there is some, you know, some sort of this shift still left to be played out in q two?

Yeah. Ketan, I think that's a a fair assessment. I think by the time we have that load in, we see and realize the the remainder of that store load in, you'll see more normalized levels. And then second half of the year, I expect that to actually be up year over year.

Understood. Okay. Got it. And then just switching to m and a. I mean, to to your comments in the prepared remarks that the M and A pipeline is quite active.

I'm curious as you see the world today, on one side, have kind of macroeconomic uncertainty, which should, in some ways, provide opportunity for you guys. Balance sheet is obviously very strong. Where do you see the most opportunity from a growth standpoint? In in recent years, we've seen kind of investment m and a investment in in packaging. But curious as as you see the world today, where do you think there's most m and a growth opportunity?

Yeah. So I'll hit on that one a little bit. The exciting part for us is is really we see opportunities existing in in each of our BUs and runways. You know, we've got a much more robust pipeline than we've had in the past, and so we see opportunities across the board, and we're actively pursuing that. If we see that we can't get something, done in one, we can pivot to another, but we have a very defined pathway to growth, which is also one of the reasons that you didn't see a a greater share buyback number because we really wanna weight that towards growth, and we think we're gonna have more opportunities going forward than we've had for the last few years.

Got it. And and, Will, is the preference still for tuck in style m and a, or would you also be open to something larger if the right opportunity were to come?

I both. Tuck ins is is just a part of what we've done. We are we would certainly look at larger transactions. Palette One and Spartanburg and Sunbelt transactions, might be a few to reference that are examples of larger transactions we've had a lot of success with. I think when it comes to larger transactions, you can take comfort from the fact that we're gonna be very disciplined on valuation.

We're gonna be very disciplined on capital structure, and we're gonna stay, you know, close to the core in what we know.

you. And we do have a follow-up question, and that will come from the line of Kurt Yinger with D. A. Davidson. Your line is open.

Great. Thanks for taking my follow ups. Just on ProWood, historically, I believe that's kind of a pretty explicit price mechanism kind of tied to published market pricing. Sounds like there's a price increase maybe separate from that. So can you just help me understand, I guess, what that price increase was as well as maybe a little bit of a refresher on the fixed price products that would be under that kind of ProWood umbrella?

So yeah. First of all, let me talk about that. So ProWood, during the quarter, following up on previous years, we experienced some cost increases that it took a little time through the quarter to get passed along to customers, and and we were able to do that. So that should be behind us as well, and you'll see more normalized margins in that space as we move through Q2 and through the rest of the year. Between the fixed and variable pricing, there is a portion of the business that is fixed based on some of the, more value added products that are, you know, worked through the year.

But most of the business that is is we'll call it more, more on the commodity side is directly tied to the market indicators and moves on a weekly basis. So we feel like most of that's behind us and more normalized margins going forward will be realized.

Okay. That's great. And then just lastly on the two step expansions you'd referenced, clearly that should kind of support the growth in the retail business that you're seeing. How does that fit into the strategy in terms of maybe expanding share in the dealer channel? And does this maybe represent a shift in terms of your own strategy of what has historically been, you know, more of a kinda self distribution model?

No. Really good question. It's it's actually both. You know, it it shows the value that's seen in our products and in the mix, and we continue to grow with traditional two step distributors, but we continue to also grow internal. And it's one of the things we've talked about for the last few years.

It's actually one of the things that we've invested heavily in to be able to utilize our existing facilities to get product to the end customer. It's actually very healthy and gives us access in places that we might otherwise not be able to get to. So it's it's a long term strategy for us. We'll continue to work both ways.

UFP Industries (UFPI) Q1 2025 Earnings Call Transcript

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