UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM ~~10‑Q~~10-Q


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

For the quarterly period ended ~~September 30, 2017~~March 28, 2020


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

Commission File Number ~~0‑22684~~0-22684

~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


	Michigan		~~38‑1465835~~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~~364-6161


	Universal Forest Products, Inc.
	~~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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ 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~~12b-2 of the Exchange Act.


Large Accelerated Filer ☒⌧	Accelerated Filer ☐◻	Non-Accelerated Filer ☐◻	Smaller ~~reporting company~~ 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 ana 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~~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 30, 2017~~March 28, 2020
	Common stock, $1 par value		~~20,391,399~~61,102,481

~~Table of Contents~~

~~UNIVERSAL FOREST PRODUCTS, INC.~~

~~TABLE OF CONTENTS~~

~~PART I.~~				~~FINANCIAL INFORMATION.~~	~~Page No.~~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

~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED ~~CONDENSED~~ BALANCE SHEETS

(Unaudited)

~~(Unaudited)~~

(in thousands, except share data)

September 30,

December 31,

September 24,


2017

2016

2016

ASSETS





CURRENT ASSETS:





Cash and cash equivalents

$
22,044

$
34,091

$
36,683

Restricted cash

905

398


909

Investments

10,781

10,348


10,453

Accounts receivable, net

419,183

282,253


343,771

Inventories:





Raw materials

203,930

198,954


180,740

Finished goods

208,556

198,273


189,188

Total inventories

412,486

397,227


369,928

Refundable income taxes

763

11,459


7,407

Other current assets

22,438

20,662


21,636

TOTAL CURRENT ASSETS

888,600

756,438

790,787

DEFERRED INCOME TAXES

1,899

1,546


2,416

RESTRICTED INVESTMENTS

7,982

—


—

OTHER ASSETS

7,634

8,617


8,757

GOODWILL

212,029

198,535


207,832

INDEFINITE-LIVED INTANGIBLE ASSETS

7,580

2,340


2,340

OTHER INTANGIBLE ASSETS, NET

36,093

26,731


14,014

PROPERTY, PLANT AND EQUIPMENT:





  Property, plant and equipment

754,175

699,462

717,287

Less accumulated depreciation and amortization

(429,066)

(401,611)


(432,796)

       PROPERTY, PLANT AND EQUIPMENT, NET

325,109

297,851

284,491

TOTAL ASSETS

1,486,926

1,292,058

1,310,637

LIABILITIES AND SHAREHOLDERS’ EQUITY





CURRENT LIABILITIES:





Cash overdraft

$
26,617

$
19,761

$
13,940

Accounts payable

171,774

124,660


137,979

Accrued liabilities:





Compensation and benefits

88,185

92,441


99,549

Other

50,179

32,281


57,104

Current portion of long-term debt

2,197

2,634


1,584

TOTAL CURRENT LIABILITIES

338,952

271,777


310,156

LONG-TERM DEBT

145,884

109,059


110,362

DEFERRED INCOME TAXES

22,806

20,817


14,066

OTHER LIABILITIES

29,204

29,939


28,963

TOTAL LIABILITIES

536,846

431,592


463,547

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, 20,391,399, 20,342,069 and 20,330,939

20,391

20,342


20,331

Additional paid-in capital

200,778

185,333


183,962

Retained earnings

715,497

649,135


637,536

Accumulated other comprehensive income

(871)

(5,630)


(4,854)

Total controlling interest shareholders’ equity

935,795

849,180


836,975

Noncontrolling interest

14,285

11,286


10,115

TOTAL SHAREHOLDERS’ EQUITY

950,080

860,466


847,090

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

$
1,486,926

$
1,292,058

$
1,310,637


(in thousands, except share data)
	March 28,		December 28,		March 30,
	2020		2019		2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	32,129	$	168,336	$	17,111
Restricted cash		724		330		1,024
Investments		17,778		18,527		16,197
Accounts receivable, net		460,821		364,027		444,111
Inventories:
Raw materials		263,857		236,283		279,265
Finished goods		246,824		250,591		300,898
Total inventories		510,681		486,874		580,163
Refundable income taxes		2,624		13,272		4,629
Other current assets		36,152		41,706		40,237
TOTAL CURRENT ASSETS		1,060,909		1,093,072		1,103,472
DEFERRED INCOME TAXES		2,145		2,763		2,364
RESTRICTED INVESTMENTS		16,111		16,214		13,580
RIGHT OF USE ASSETS		81,065		80,167		66,100
OTHER ASSETS		25,198		24,884		8,419
GOODWILL		246,459		229,536		224,247
INDEFINITE-LIVED INTANGIBLE ASSETS		7,288		7,354		7,364
OTHER INTANGIBLE ASSETS, NET		46,232		48,313		39,686
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment		906,171		884,963		828,837
Less accumulated depreciation and amortization		(508,596)		(497,789)		(472,671)
PROPERTY, PLANT AND EQUIPMENT, NET		397,575		387,174		356,166
TOTAL ASSETS		1,882,982		1,889,477		1,821,398
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Cash overdraft	$	—	$	—	$	18,732
Accounts payable		162,039		142,479		170,667
Accrued liabilities:
Compensation and benefits		92,504		141,892		70,867
Other		55,760		51,572		45,618
Current portion of lease liability		16,180		15,283		14,500
Current portion of long-term debt		2,772		2,816		185
TOTAL CURRENT LIABILITIES		329,255		354,042		320,569
LONG-TERM DEBT		160,550		160,867		266,428
LEASE LIABILITY		64,937		64,884		51,600
DEFERRED INCOME TAXES		22,799		22,880		14,622
OTHER LIABILITIES		33,159		29,071		29,813
TOTAL LIABILITIES		610,700		631,744		683,032
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, 61,102,481, 61,408,589 and 61,352,372		61,102		61,409		61,352
Additional paid-in capital		211,724		192,173		190,879
Retained earnings		998,996		995,022		875,457
Accumulated other comprehensive income		(11,110)		(4,889)		(4,789)
Total controlling interest shareholders’ equity		1,260,712		1,243,715		1,122,899
Noncontrolling interest		11,570		14,018		15,467
TOTAL SHAREHOLDERS’ EQUITY		1,272,282		1,257,733		1,138,366
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,882,982	$	1,889,477	$	1,821,398

See notes to consolidated condensed financial ~~statements.~~statements.

Table of Contents

~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED ~~CONDENSED~~ STATEMENTS OF EARNINGS

AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share data)

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,


2017

2016

2017

2016

NET SALES

$
1,056,586

$
826,665

$
2,975,091

$
2,380,909

COST OF GOODS SOLD

911,899

708,611


2,561,424

2,028,629

GROSS PROFIT

144,687

118,054


413,667

352,280

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

92,416

74,502


273,676

223,153

EARNINGS FROM OPERATIONS

52,271

43,552


139,991

129,127

INTEREST EXPENSE

1,481

1,096


4,825

3,274

INTEREST INCOME

(130)

(119)


(541)

(431)

EQUITY IN EARNINGS OF INVESTEE

1

(50)


(25)

(241)

1,352

927


4,259

2,602

EARNINGS BEFORE INCOME TAXES

50,919

42,625


135,732

126,525

INCOME TAXES

16,250

13,861


44,855

43,268

NET EARNINGS

34,669

28,764


90,877

83,257

LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST

(976)

(945)


(2,480)

(2,828)

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST

$
33,693

$
27,819

$
88,397

$
80,429

EARNINGS PER SHARE - BASIC

$
1.65

$
1.36

$
4.32

$
3.95

EARNINGS PER SHARE - DILUTED

$
1.64

$
1.36

$
4.31

$
3.94

OTHER COMPREHENSIVE INCOME:

NET EARNINGS

34,669

28,764


90,877

83,257

OTHER COMPREHENSIVE GAIN (LOSS)

1,719

(1,156)


6,141

(1,521)

COMPREHENSIVE INCOME

36,388

27,608


97,018

81,736

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

(975)

(495)


(3,862)

(1,576)

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST

$
35,413

$
27,113

$
93,156

$
80,160


(in thousands, except per share data)
	Three Months Ended
	March 28,		March 30,
	2020		2019
NET SALES	$	1,032,062	$	1,015,125
COST OF GOODS SOLD		864,826		860,858
GROSS PROFIT		167,236		154,267
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		109,339		105,317
OTHER		(735)		504
EARNINGS FROM OPERATIONS		58,632		48,446
INTEREST EXPENSE		1,908		2,460
INTEREST INCOME		(341)		(245)
UNREALIZED LOSS (GAIN) ON INVESTMENTS AND OTHER		3,173		(1,348)
		4,740		867
EARNINGS BEFORE INCOME TAXES		53,892		47,579
INCOME TAXES		13,322		11,577
NET EARNINGS		40,570		36,002
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(411)		(462)
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST	$	40,159	$	35,540

EARNINGS PER SHARE - BASIC	$	0.65	$	0.58
EARNINGS PER SHARE - DILUTED	$	0.65	$	0.58

OTHER COMPREHENSIVE INCOME:
NET EARNINGS		40,570		36,002
OTHER COMPREHENSIVE GAIN (LOSS)		(8,556)		1,373
COMPREHENSIVE INCOME		32,014		37,375
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		1,924		(686)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$	33,938	$	36,689

See notes to consolidated condensed financial statements.

Table of Contents

~~UNIVERSAL FOREST PRODUCTS,~~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 at December 29, 2018	$	60,884	$	178,540	$	839,917	$	(5,938)	$	15,281	$	1,088,684
Net earnings						35,540				462		36,002
Foreign currency translation adjustment								982		224		1,206
Unrealized gain (loss) on investment & foreign currency								167				167
Distributions to noncontrolling interest										(500)		(500)
Issuance of 10,259 shares under employee stock plans		10		251								261
Issuance of 320,069 shares under stock grant programs		320		6,101								6,421
Issuance of 138,295 shares under deferred compensation plans		138		(138)								—
Expense associated with share-based compensation arrangements				1,226								1,226
Accrued expense under deferred compensation plans				4,899								4,899
Balance at March 30, 2019	$	61,352	$	190,879	$	875,457	$	(4,789)	$	15,467	$	1,138,366
Balance at 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 plans		10		309								319
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 at March 28, 2020	$	61,102	$	211,724	$	998,996	$	(11,110)	$	11,570	$	1,272,282

~~(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 at December 26, 2015

$
20,142

$
171,562

$
565,636

$
(4,585)

$
13,654

$
766,409
Net earnings





80,429



2,828


83,257
Foreign currency translation adjustment







(620)

(1,252)


(1,872)
Unrealized gain (loss) on investment & foreign currency







351



351
Distributions to noncontrolling interest









(3,160)

(3,160)
Purchases of noncontrolling interest



855






(1,955)

(1,100)
Cash dividends $0.420 per share





(8,529)





(8,529)
Issuance of 5,195 shares under employee stock plans

5

390








395
Issuance of 133,293 shares under stock grant programs

133

5,143








5,276
Issuance of 50,742 shares under deferred compensation plans

51

(51)








—
Expense associated with share-based compensation arrangements



1,568







1,568
Accrued expense under deferred compensation plans



4,495











4,495
Balance at September 24, 2016

$
20,331

$
183,962

$
637,536

$
(4,854)

$
10,115

$
847,090
Balance at December 31, 2016

20,342

185,333

649,135

(5,630)

11,286

860,466
Net earnings





88,397



2,480


90,877
Foreign currency translation adjustment







4,325

1,382


5,707
Unrealized gain (loss) on investment & foreign currency







434



434
Distributions to noncontrolling interest









(3,272)

(3,272)
Additional purchases of noncontrolling interest







2,409


2,409
Cash dividends - $0.450 per share





(9,208)





(9,208)
Issuance of 5,975 shares under employee stock plans

6

470








476
Issuance of 142,775 shares under stock grant programs

143

7,037








7,180
Issuance of 49,160 shares under deferred compensation plans

49

(49)








—
Repurchase of 148,580 shares

(149)

(12,827)

(12,976)
Expense associated with share-based compensation arrangements



1,978







1,978
Accrued expense under deferred compensation plans



6,009







6,009
Balance at September 30, 2017

$
20,391

$
200,778

$
715,497

$
(871)

$
14,285

$
950,080

See notes to consolidated condensed financial statements.

Table of Contents

~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED ~~CONDENSED~~ STATEMENTS OF CASH FLOWS

(Unaudited)


(in thousands)	Three Months Ended
	March 28,		March 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	40,570	$	36,002
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation		15,717		14,475
Amortization of intangibles		1,571		1,852
Expense associated with share-based and grant compensation arrangements		1,444		1,287
Deferred income taxes (credit)		286		(742)
Unrealized (gain) loss on investments		3,173		(1,348)
Net gain on disposition of assets and impairment of assets		(285)		(122)
Changes in:
Accounts receivable		(94,253)		(100,716)
Inventories		(25,783)		(23,649)
Accounts payable and cash overdraft		20,047		25,056
Accrued liabilities and other		(8,648)		(7,924)
NET CASH USED IN OPERATING ACTIVITIES		(46,161)		(55,829)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(27,286)		(15,883)
Proceeds from sale of property, plant and equipment		409		241
Acquisitions and purchases of non-controlling interest, net of cash received		(18,487)		—
Investment in life insurance contracts
Purchases of investments		(14,052)		(449)
Proceeds from sale of investments		11,260		340
Other		(54)		200
NET CASH USED IN INVESTING ACTIVITIES		(48,210)		(15,551)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities		6,759		237,560
Repayments under revolving credit facilities		(6,498)		(173,232)
Repayment of debt		(3,074)		(3,029)
Proceeds from issuance of common stock		319		261
Dividends paid to shareholders		(7,730)		—
Distributions to noncontrolling interest		(299)		(500)
Repurchase of common stock		(29,212)		—
Other		12		9
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(39,723)		61,069
Effect of exchange rate changes on cash		(1,719)		248
NET CHANGE IN CASH AND CASH EQUIVALENTS		(135,813)		(10,063)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR		168,666		28,198
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$	32,853	$	18,135

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents, beginning of period	$	168,336	$	27,316
Restricted cash, beginning of period		330		882
Cash, cash equivalents, and restricted cash, beginning of period	$	168,666	$	28,198

Cash and cash equivalents, end of period	$	32,129	$	17,111
Restricted cash, end of period		724		1,024
Cash, cash equivalents, and restricted cash, end of period	$	32,853	$	18,135

SUPPLEMENTAL INFORMATION:
Interest paid	$	374	$	570
Income taxes paid		2,307		2,801
NON-CASH FINANCING ACTIVITIES:
Common stock issued under deferred compensation plans		4,900		4,457

~~(Unaudited)~~

(in thousands)

Nine Months Ended

September 30,

September 24,


2017

2016

CASH FLOWS FROM OPERATING ACTIVITIES:



Net earnings

$
90,877

$
83,257

Adjustments to reconcile net earnings to net cash from operating activities:



Depreciation

36,010

29,014

Amortization of intangibles

3,549

1,868

Expense associated with share-based compensation arrangements

1,978

1,568

Expense associated with stock grant plans

144

105

Deferred income taxes (credits)

117

(53)

Equity in earnings of investee

(25)

(241)

Net (gain) loss on disposition and impairment of assets

(437)

94

Changes in:



Accounts receivable

(121,688)

(69,357)

Inventories

(820)

21,683

Accounts payable and cash overdraft

53,424

35,026

Accrued liabilities and other

34,221

33,413

NET CASH FROM OPERATING ACTIVITIES

97,350

136,377

CASH FLOWS FROM INVESTING ACTIVITIES:



Purchases of property, plant and equipment

(57,189)

(35,723)

Proceeds from sale of property, plant and equipment

2,121

516

Acquisitions, net of cash received

(59,859)

(66,615)

Repayments of debt of acquiree

—

(92,830)

Purchase of remaining noncontrolling interest, net of cash received

—

(1,100)

Cash contributed from noncontrolling interest

464

—

Advances of notes receivable

(234)

(5,400)

Collections on notes receivable

1,334

5,819

Purchases of investments

(12,155)

(4,468)

Proceeds from sale of investments

4,227

1,395

Other

(84)

(1,733)

NET CASH USED IN INVESTING ACTIVITIES

(121,375)

(200,139)

CASH FLOWS FROM FINANCING ACTIVITIES:



Borrowings under revolving credit facilities

610,038

52,479

Repayments under revolving credit facilities

(573,829)

(27,177)

Proceeds from issuance of common stock

476

396

Dividends paid to shareholders

(9,207)

(8,529)

Distributions to noncontrolling interest

(3,272)

(3,160)

Repurchase of common stock

(12,976)

—

Other

—

(28)

NET CASH FROM (USED IN) FINANCING ACTIVITIES

11,230

13,981

Effect of exchange rate changes on cash

1,255

(969)

NET CHANGE IN CASH AND CASH EQUIVALENTS

(11,540)

(50,750)

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR

34,489

88,342

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD

$
22,949

$
37,592

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:

Cash and cash equivalents, beginning of period

$
34,091

$
87,756

Restricted cash, beginning of period

398

586

Cash, cash equivalents, and restricted cash, beginning of period

$
34,489

$
88,342

Cash and cash equivalents, end of period

$
22,044

$
36,683

Restricted cash, end of period

905

909

Cash, cash equivalents, and restricted cash, end of period

$
22,949

$
37,592

SUPPLEMENTAL INFORMATION:



Interest paid

$
3,910

$
2,587

Income taxes paid

34,108

43,384

NON-CASH FINANCING ACTIVITIES:

Common stock issued under deferred compensation plans

4,673

3,657

See notes to consolidated condensed financial statements.

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~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

NOTES TO UNAUDITED

CONDENSED CONSOLIDATED ~~CONDENSED~~ FINANCIAL STATEMENTS

A. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all of the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. All intercompany transactions and balances have been eliminated.

In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form ~~10‑K~~10-K for the fiscal year ended December ~~31, 2016.~~28, 2019.

On April 22, 2020, the shareholders approved changing the name of the Company from Universal Forest Products, Inc., to UFP Industries, Inc.

Seasonality has a significant impact on our working capital from March to August which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the ~~September 24, 2016~~March 30, 2019 balances in the accompanying unaudited condensed consolidated ~~condensed~~ balance sheets.

On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide, which subsequently resulted in a variety of “stay at home” orders issued by states in which we operate. As of the date of this filing, the majority of our customers and operations have been deemed to be essential businesses under these state orders. Consequently, all but 3 of our 150 plant locations remain operating. We cannot reasonably estimate the length or severity of this pandemic and government restrictions on business activity, or the extent to which these restrictions may materially impact our consolidated financial position, consolidated results of operations, and consolidated cash flows in fiscal 2020.

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UFP INDUSTRIES, INC.

B. FAIR VALUE

We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value. Assets measured at fair value are as follows:

September 30, 2017

September 24, 2016

Quoted

Prices with

Quoted

Prices with

Prices in

Other

Prices in

Other

Active

Observable

Active

Observable

Markets

Inputs

Markets

Inputs

(in thousands)

(Level 1)

(Level 2)

Total

(Level 1)

(Level 2)

Total
Money market funds

$
64

$
413

$
477

$
64

$
132

$
196
Fixed income funds

1,299

6,905

8,204

2,049

2,335

4,384
Equity securities

10,194

—

10,194

5,592

—

5,592
Mutual funds:







Domestic stock funds

335

—

335

760

—

760
International stock funds

87

—

87

70

—

70
Target funds

260

—

260

234

—

234
Bond funds

208

—

208

203

—

203
Total mutual funds

890

—

890

1,267

—

1,267
Total

$
12,447

$
7,318

$
19,765

$
8,972

$
2,467

$
11,439
Assets at fair value

$
12,447

$
7,318

$
19,765

$
8,972

$
2,467

$
11,439

																��
	March 28, 2020								March 30, 2019
	Quoted		Prices with						Quoted		Prices with
	Prices in		Other			Prices with			Prices in		Other			Prices with
	Active		Observable			Unobservable			Active		Observable			Unobservable
	Markets		Inputs			Inputs			Markets		Inputs			Inputs
(in thousands)	(Level 1)		(Level 2)			(Level 3)	Total		(Level 1)		(Level 2)			(Level 3)	Total
Money market funds	$	29,561	$	837	$	—	$	30,398	$	56	$	549	$	—	$	605
Fixed income funds		237		15,124		—		15,361		3,860		9,763		—		13,623
Equity securities		9,089		—		—		9,089		8,258		—		—		8,258
Alternative investments		—		—		1,960		1,960		—		—		1,782		1,782
Mutual funds:																—
Domestic stock funds		5,204		—		—		5,204		2,151		—		—		2,151
International stock funds		947		—		—		947		2,085		—		—		2,085
Target funds		242		—		—		242		257		—		—		257
Bond funds		222		—		—		222		799		—		—		799
Alternative funds		921		—		—		921		1,344		—		—		1,344
Total mutual funds		7,536		—		—		7,536		6,636		—		—		6,636
Total	$	46,423	$	15,961	$	1,960	$	64,344	$	18,810	$	10,312	$	1,782	$	30,904
Assets at fair value	$	46,423	$	15,961	$	1,960	$	64,344	$	18,810	$	10,312	$	1,782	$	30,904

From the assets measured at fair value as of March 28, 2020, listed in the table above, $29.5 million of money market funds are held in Cash and Cash Equivalents, $17.7 million of mutual funds, equity securities, and alternative investments are held in Investments, $0.9 million of money market and mutual funds are held in Other Assets for our deferred compensation plan, and $15.4 million of fixed income funds and $0.8 million of money markets funds are held in Restricted Investments.

We maintain money market, mutual funds, bonds, and/or stocks in our non-qualified deferred compensation plan, ~~and~~ our wholly owned licensed captive insurance ~~company.~~company, and assets held in financial institutions. These funds are valued at prices quoted in an active

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

exchange market and are included in “Cash and Cash Equivalents”, “Investments”, ~~“Restricted Cash”~~“Other Assets”, and “Restricted Investments”. We have elected not to apply the fair value option under ASC 825, Financial Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.

~~We did not~~ ~~maintain any Level 3 assets or liabilities at September 30, 2017 or September 24, 2016.~~

In November 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standard Update (ASU) No. 2016-18, “Statement of Cash Flows (Topic 230)” (ASU 2016-18). Under ASU 2016-18, an entity will be required to explain changes in the statement of cash flows during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update should be applied using retrospective transition method to each period presented. Companies are required to adopt the new standard for fiscal years beginning after December 15, 2017. Early adoption of ASU 2016-18 is permitted, including adoption in an interim period. The Company has early adopted this standard during the first quarter of 2017.

~~In the first nine months of 2017,~~ ~~our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”)~~ transferred $4.1 million in fixed income securities from its Investment Account and purchased an additional $3.8 million in fixed income securities which are held in a newly formed collateral trust account in line with regulatory requirements in the State of Michigan to allow Ardellis to act as an admitted carrier in the State. These funds are intended to safeguard the insureds of the Michigan Branch of Ardellis. The funds are classified as “Restricted Investments”.

In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling ~~$18.4~~$33.1 million as of ~~September 30, 2017,~~March 28, 2020, consisting of domestic and international stocks, alternative investments, and fixed income bonds.

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UFP INDUSTRIES, INC.

Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the ~~following:~~following (in thousands):


			Unrealized
	Cost		Gain/(Loss)		Fair Value

							March 28, 2020
									Unrealized
							Cost		Gain/(Loss)		Fair Value
Fixed Income	$	8,170	$	34	$	8,204	$	1,834	$	126	$	1,960
Equity		9,123		1,071		10,194		15,257		104		15,361
Mutual Funds								9,690		(601)		9,089
Alternative Investments								7,298		(569)		6,729
Total	$	17,293	$	1,105	$	18,398	$	34,079	$	(940)	$	33,139

Our ~~Fixed Income~~fixed income investments consist of ~~short, intermediate, and long term bonds, as well as fixed~~a blend ~~bonds. Within the fixed income investments, we maintain a specific mixture~~ of US ~~treasury notes, US agency mortgage backed securities, private label mortgage backed securities,~~Government and ~~various~~Agency bonds and investment grade corporate ~~securities.~~bonds with varying maturities. Our equity investments consist of small, mid, and large cap growth and value funds, as well as international equity. Our alternative investments consist of the private real estate income trust which is valued as a Level 3 asset. The net ~~pre-tax effected~~ unrealized ~~gain~~loss was ~~$1.1~~$0.9 million. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of ~~September 30, 2017. During the first nine months of 2017, Ardellis investments reported a net realized gain of $185 thousand, which was recorded in interest income on the statement of earnings.~~

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

March 28, 2020.

C. REVENUE RECOGNITION

~~Revenue~~Within the 3 primary segments (Retail, Industrial, and Construction) that the Company operates, there are a variety of written agreements governing the sale of our products and services. The transaction price is stated at the purchase order level, which includes shipping and/or freight costs and any applicable governmental authority taxes. The majority of our contracts have a single performance obligation concentrated around the delivery of goods to the carrier, Free On Board (FOB) shipping point. Therefore, revenue is recognized ~~at the time the product~~when this performance obligation is ~~shipped to the customer.~~satisfied. Generally, title and control passes at the time of shipment. In certain circumstances, the customer takes title when the shipment arrives at the destination. However, our shipping process is typically completed the same day.

~~On May 28, 2014,~~Certain customer products that we provide require installation by the ~~FASB issued ASU No. 2014-09 (Accounting Standard Codification 606), Revenue from Contracts with Customers, which~~Company or a 3^rd party. Installation revenue is recognized upon completion. If the Company uses a 3^rd party for installation, the party will ~~replace most existing revenue recognition guidance in U.S. GAAP. The core principle of the ASU is that~~act as an ~~entity should recognize revenue for the transfer of goods or services equal~~agent to the amount that it expects to be entitled to receive for those goods or services. The ASU requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments. The Company ~~plans to adopt the guidance in the first quarter of fiscal 2018 and apply the modified retrospective method. The Company is in the process of finalizing contract reviews and the~~until completion of the ~~new standard’s impact~~installation. Installation revenue represents an immaterial share of the Company’s total sales.

The Company utilizes rebates, credits, discounts and/or cash-based incentives with certain customers which are accounted for as variable consideration. We estimate these amounts based on ~~its Consolidated Financial Statements.~~the expected amount to be provided to customers and reduce revenues recognized. We believe that there will not be significant changes to our estimates of variable consideration. The allocation of these costs are applied at the invoice level and recognized in conjunction with revenue. Additionally, returns and refunds are estimated on a historical and expected basis which is a reduction of revenue recognized.

Earnings on construction contracts are reflected in operations using ~~percentage-of-completion~~over time accounting, under either cost to cost or units of delivery methods, depending on the nature of the business at individual ~~operations.~~operations, which is in accordance with ASC 606 as revenue is recognized when certain performance obligations are performed. Under ~~percentage-of-completion~~over time accounting using the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships of actual costs incurred related to the total estimated costs. Under ~~percentage-of-completion~~over time accounting using the units of delivery method, revenues and related earnings on construction contracts are measured by the relationships of actual units produced related to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent. Construction contract revenue increased to approximately $36.6 million, during the third quarter of 2017, from $31.9 million during the same period of 2016. Construction contract revenue was approximately $99.6 million and $95.2 million through the first nine months of 2017 and 2016, respectively.

Our construction contracts are generally entered into with a fixed price and completion of the projects can range from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates

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UFP INDUSTRIES, INC.

and commodity costs. During the year, we update our estimated costs to complete our projects using current labor and commodity costs and recognize losses to the extent that they exist.

The following table presents our gross revenues disaggregated by revenue source:


(in thousands)	March 28,		March 30,
Market Classification	2020		2019		% Change
FOB Shipping Point Revenue	$	1,017,906	$	996,823	2.1%
Construction Contract Revenue		32,800		34,782	-5.7%
Total Gross Sales		1,050,706		1,031,605	1.9%
Sales Allowances		(18,644)		(16,480)	13.1%
Total Net Sales	$	1,032,062	$	1,015,125	1.7%

The Construction segment comprises the construction contract revenue shown above. Construction contract revenue is primarily made up of site-built and framing customers.

The following table presents the balances of ~~percentage-of-completion~~over time accounting accounts which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in thousands):


	September 30,		December 31,		September 24,
	2017		2016		2016

							March 28,		December 28,		March 30,
							2020		2019		2019
Cost and Earnings in Excess of Billings	$	2,594	$	2,573	$	2,788	$	5,744	$	4,960	$	7,880
Billings in Excess of Cost and Earnings		4,802		4,748		6,222		9,920		6,622		5,020

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

D. EARNINGS PER SHARE

The computation of earnings per share (“EPS”) is as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,		September 24,		September 30,		September 24,
	2017		2016		2017		2016

									Three Months Ended
									March 28,		March 30,
									2020		2019
Numerator:
Net earnings attributable to controlling interest	$	33,693	$	27,819	$	88,397	$	80,429	$	40,159	$	35,540
Adjustment for earnings allocated to non-vested restricted common stock		(656)		(463)		(1,633)		(1,281)		(1,059)		(865)
Net earnings for calculating EPS	$	33,037	$	27,356	$	86,764	$	79,148	$	39,100	$	34,675
Denominator:
Weighted average shares outstanding		20,474		20,402		20,481		20,360		61,842		61,372
Adjustment for non-vested restricted common stock		(399)		(340)		(378)		(324)		(1,630)		(1,493)
Shares for calculating basic EPS		20,075		20,062		20,103		20,036		60,212		59,879
Effect of dilutive stock options		41		33		37		32
Effect of dilutive restricted common stock										18		75
Shares for calculating diluted EPS		20,116		20,095		20,140		20,068		60,230		59,954
Net earnings per share:
Basic	$	1.65	$	1.36	$	4.32	$	3.95	$	0.65	$	0.58
Diluted	$	1.64	$	1.36	$	4.31	$	3.94	$	0.65	$	0.58

~~No options were excluded from the computation of diluted EPS for the quarters ended September 30, 2017 or September 24, 2016.~~

On October 17, 2017, our Board of Directors declared a three-for-one stock split effected in the form of a stock dividend. The record date of the stock split will be October 31, 2017, and the eventual stock distribution to shareholders will occur November 14, 2017. All references made to share or earnings per share amounts in the accompanying unaudited consolidated financial statements and applicable disclosures are presented on a pre-split basis. As a result of the stock split, all historical per share data and number of shares outstanding presented in future financial statements will be retroactively adjusted.

~~The following table provides pro forma earnings per share, giving retroactive effect to the stock split:~~

Three Months Ended

Nine Months Ended


September 30,

September 24,

September 30,

September 24,


2017

2016

2017

2016

Shares for calculating basic EPS - Post stock split basis

60,225

60,186

60,309

60,108

Shares for calculating diluted EPS - Post stock split basis

60,348

60,285

60,420

60,204

Net earnings per share (post stock split):









Basic

$
0.55

$
0.45

$
1.44

$
1.32

Diluted

$
0.55

$
0.45

$
1.44

$
1.31

E. COMMITMENTS, CONTINGENCIES, AND GUARANTEES

We are self-insured for environmental impairment liability, including certain liabilities which are insured through a wholly owned subsidiary, Ardellis Insurance Ltd., a licensed captive insurance company.

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~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

We own and operate a number of facilities throughout the United States that chemically treat lumber products. In connection with the ownership and operation of these and other real properties, and the disposal or treatment of hazardous or toxic substances, we may, under various federal, state, and local environmental laws, ordinances, and regulations, be potentially liable for removal and remediation costs, as well as other potential costs, damages, and expenses. Environmental reserves, calculated with no discount rate, have been established to cover remediation activities at wood preservation facilities in Stockertown, PA; Elizabeth City, NC; ~~Auburndale, FL;~~ and ~~Medley,~~Auburndale, FL. In addition, a reserve was established for our facility in Thornton, CA to remove certain lead containing materials which existed on the property at the time of purchase.

On a consolidated basis, we have reserved approximately ~~$3.6 million and $3.4~~$2.0 million on ~~September~~March 28, 2020, and on March 30, ~~2017, and September 24, 2016,~~2019, respectively, representing the estimated costs to complete future remediation efforts. These amounts have not been reduced by an insurance receivable.

Many of our wood treating operations utilize “Subpart W” drip pads, defined as hazardous waste management units by the Environmental Protection Agency. The rules regulating drip pads require that a pad be “closed” at the point that it is no longer intended to be used for wood treating operations or to manage hazardous waste. Closure involves identification and disposal of contaminants which are required to be removed from the facility. The cost of closure is dependent upon a number of factors including, but not limited to, identification and removal of contaminants, cleanup standards that vary from state to state, and the time period over which the cleanup would be completed. Based on our present knowledge of existing circumstances, it is considered probable that these costs will approximate $0.2 million. As a result, this amount is recorded in other long-term liabilities on September 30, 2017.

In February 2014, one of our operations was served with a federal grand jury subpoena from the Southern District of New York. The subpoena was issued in connection with an investigation being conducted by the US Attorney’s Office for the Southern District of New York. The subpoena requested documents relating to a developer and construction projects for which our operation had provided materials and labor. Following receipt of the subpoena, the Audit Committee of the Company’s Board of Directors retained outside counsel to conduct an internal investigation and respond to the subpoena. The Company cooperated in all respects with the US Attorney’s Office, complied with this subpoena and voluntarily provided additional information. As a result of the internal investigation, in 2014, two Company employees were terminated for violating the Company’s Code of Business Conduct and Ethics. In May 2015, those ex-employees were indicted by the grand jury. In April 2016, one of the two former employees pled guilty to four of the charges included in the indictment. In May 2016, the other former employee was found guilty by a jury on four of the charges included in the indictment. The Company has not been named as a target and continues to cooperate with the US Attorney’s Office in this matter. Based upon prior communications with the US Attorney’s Office, we do not believe that the resolution of this matter will have a material adverse impact on our financial condition or the results of our operations.

In addition, on ~~September 30, 2017,~~March 28, 2020, we were parties either as plaintiff or defendant to a number of lawsuits and claims arising through the normal course of our business. In the opinion of management, our consolidated financial statements will not be materially affected by the outcome of these contingencies and claims.

On ~~September 30, 2017,~~March 28, 2020, we had outstanding purchase commitments on commenced capital projects of approximately ~~$26.1~~$26.3 million.

We provide a variety of warranties for products we manufacture. Historically, warranty claims have not been material. We also distribute products manufactured by other companies, some of which are no longer in business. While we do not warrant these products, we have received claims as a distributor of these products when the manufacturer no longer exists or has the ability to pay. Historically, these costs have not had a material effect on our consolidated financial statements.

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

As part of our operations, we supply building materials and labor to site-built construction projects or we jointly bid on contracts with framing companies for such projects. In some instances, we are required to post payment and performance bonds to ~~insure the project owner that~~ensure the products and installation services are completed in accordance with our contractual obligations. We have agreed to indemnify the surety for claims properly made against ~~the~~these bonds. As of ~~September 30, 2017~~March 28, 2020, we had approximately ~~$8.8~~$8.7 million outstanding payment and performance bonds for open projects. We had approximately ~~$1.7~~$11.6 million in payment and performance bonds outstanding for completed projects which are still under warranty.

On ~~September 30, 2017,~~March 28, 2020, we had outstanding letters of credit totaling ~~$26.5~~$37.3 million, primarily related to certain insurance contracts and industrial development revenue bonds described further below.

In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers to guarantee our performance under certain insurance contracts. ~~We currently~~As of March 28, 2020, we have irrevocable letters of credit outstanding totaling approximately ~~$16.7~~$27.4 million for these types of insurance arrangements. We have reserves recorded on our balance sheet, in accrued liabilities, that reflect our expected future liabilities under these insurance arrangements.

We are required to provide irrevocable letters of credit in favor of the bond trustees for all industrial development revenue bonds that have been issued. These letters of credit guarantee principal and interest payments to the bondholders. We currently have irrevocable letters of credit outstanding totaling approximately $9.8 million related to our outstanding industrial development revenue bonds. These letters of credit have varying terms but may be renewed at the option of the issuing banks.

Certain wholly owned domestic subsidiaries have guaranteed the indebtedness of ~~Universal Forest Products,~~UFP Industries, Inc. in certain debt agreements, including the Series 2012 and 2018 Senior Notes and our revolving credit facility. The maximum exposure of these guarantees is limited to the indebtedness outstanding under these debt arrangements and this exposure will expire concurrent with the expiration of the debt agreements.

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UFP INDUSTRIES, INC.

We did not enter into any new guarantee arrangements during the ~~third~~first quarter of ~~2017~~2020 which would require us to recognize a liability on our balance sheet.

F. BUSINESS COMBINATIONS

We completed the following acquisitions in ~~nine months ended 2017~~2020 and ~~2016~~2019, which were accounted for using the purchase method in thousands unless otherwise noted:

Net

Company
Acquisition

Intangible
Tangible
Operating
Name
Date
Purchase Price
Assets
Assets
Segment

May 26, 2017
$5,042
cash paid for 100% asset purchase
$
4,880
$
162
South
Go Boy Pallets, LLC ("Go Boy")
A manufacturer and distributor of industrial pallets and packaging in Georgia and North Carolina. Go Boy has annual sales of approximately $8 million. The acquisition of Go Boy enabled us to expand our industrial packaging product offering and lumber sourcing in this region.

March 6, 2017
$31,818
cash paid for 100% asset purchase
$
7,533
$
24,285
South
Robbins Manufacturing Co. ("Robbins")
A manufacturer of treated wood products with facilities in Florida, Georgia, and North Carolina. Robbins has annual sales of approximately $86 million. The acquisition of Robbins allowed us to expand our presence in this region and serve customers more cost effectively.

March 6, 2017
$22,789
cash paid for 100% asset purchase
$
14,266
$
8,523
North


					Net
Company	Acquisition		Intangible		Tangible		Operating
Name	Date	Purchase Price	Assets		Assets		Segment
	March 13, 2020	$21,851 cash paid for 100% asset purchase and estimated contingent consideration	$	18,219	$	3,632	Construction
Quest Design & Fabrication and Quest Architectural Millwork ("Quest")	A designer, fabricator, and installer of premium millwork and case goods for a variety of commercial uses. Quest had annual sales of approximately $22 million. The acquisition of Quest will expand our architectural millwork in the commercial construction business unit, which aligns with our growth goals in the construction segment.
	September 16, 2019	$12,422 cash paid for 100% asset purchase	$	7,464	$	4,958	Industrial
Pallet USA, LLC ("Pallet USA")	A manufacturer and recycler of wood pallet and crating products in the Midwest. Pallet USA had annual sales of approximately $18 million. The acquisition of Pallet USA allows us to expand our capacity to manufacture wood-based industrial packaging products and offer new services to customers in the Midwest.
	August 12, 2019	$17,809 cash paid for 100% asset purchase and estimated contingent consideration	$	8,089	$	9,720	Retail
Northwest Painting, Inc. ("Northwest")	A supplier of pre-painted building materials, including siding, soffit, panels and trim to the Western U.S. Northwest had annual sales of approximately $14 million. The acquisition of Northwest will expand our capacity to produce coated siding and trim for customers in the Northwest and Mountain West regions.
	May 1, 2019	$7,168 cash paid for 100% asset purchase and estimated contingent consideration	$	6,180	$	988	Industrial
Wolverine Wood Products, Inc. ("Wolverine")	A manufacturer of wood panel components for furniture, store fixtures and case goods manufacturers. Wolverine had annual sales of approximately $5 million. The acquisition of Wolverine allows us to expand capacity to produce value-added wood components for customers in the Midwest.

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

Quality Hardwood Sales, LLC ("Quality")
A manufacturer and supplier of hardwood products, including components of cabinets used in homes and recreational vehicles.  Quality has annual sales of approximately $30 million. The acquisition of Quality enabled us to expand our product offering to include hardwood-based products.

November 29, 2016
$9,455
cash paid for 100% stock purchase
$
7,314
$
2,141
All Other
The UBEECO Group Pty. Ltd. ("Ubeeco")
A manufacturer and distributor of a variety of wood packaging and alternative material products, including boxes, crates, pallets, skids, protective packaging, packaging accessories and loose lumber. Ubeeco has annual sales of approximately $20 million.  The acquisition of Ubeeco allows us to make progress on our goal of becoming a global provider of packaging solutions.

September 16, 2016
$66,691
cash paid for 100% stock purchase which includes $11,337 in net cash received. Also, paid $86,294 to retire outstanding debt and $6,536 of certain other obligations.
$
17,455
$
49,236
All Other
idX Holdings, Inc. ("idX")
A designer, producer, and installer of customized interior fixtures and related products used in a variety of commercial structures.  idX has annual sales of $300 million.  The acquisition of idX enables us to enhance our design, product and service offering to become a tier 1 supplier of interior fixtures to retail customers, and continue to use idX's capabilities to continue to develop new markets for growth.  Our goal is to achieve long-term synergies, including:

a.
Eliminating redundant administrative support costs.

b.
Using the scale advantage of the Company to reduce material costs of common raw materials.

c.
Utilizing manufacturing capacity of certain existing locations to supply idX.

d.
Utilizing idX’s international footprint to identify sourcing opportunities for certain products.

e.
Cross selling one another’s products and services with our respective customers.

f.
Collaborating on new product development.

July 29, 2016
$1,246

cash paid for asset purchase
$
405
$
841
North
Seven D Truss, L.P.
A manufacturer and distributor of roof and floor trusses. 7D had annual sales of approximately $4.0 million.  The acquisition of 7D gave us the opportunity to consolidate operations with our Gordon, Pennsylvania location.

The intangible assets for ~~each acquisition were~~the Quest, Pallet USA, Northwest, and Wolverine acquisitions have not been finalized and allocated to their respective identifiable ~~intangible~~ asset and goodwill ~~accounts during 2017, excluding Go Boy.~~accounts. In aggregate, acquisitions completed since ~~September~~the end of ~~2016~~March 2019 and not consolidated with other operations contributed approximately ~~$292.1~~$9.1 million in revenue and ~~$5.3~~a $0.4 million in operating profit during ~~2017.~~the first quarter of 2020.

G. SEGMENT REPORTING

ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance.

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

The Company operates manufacturing, treating and distribution facilities ~~throughout North America,~~internationally, but primarily in the United States. Effective January 1, 2020, the Company re-organized around the markets it serves rather than geography. The prior periods have been recast to reflect the new segment structure. The business segments align with the following markets: UFP Retail Solutions, UFP Construction and UFP Industrial. This change allows for a more specialized and consistent sales approach among Company operations, more efficient use of resources and capital, and quicker introduction of new

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UFP INDUSTRIES, INC.

products and services. The Company manages the operations of its individual locations primarily through ~~a geographic~~the market-centered reporting structure under which each location is included in a ~~region~~business unit and ~~regions~~business units are included in our ~~North, South,~~Retail, Industrial, and ~~West divisions.~~Construction segments. The ~~exceptions~~exception to this ~~geographic~~market-centered reporting and management structure ~~are (a)~~is the Company’s ~~Alternative Materials Division,~~International segment, which ~~offers a portfolio~~comprises our Mexico, Canada, and Australia operations and sales and buying offices in other parts of ~~non-wood products and distributes those products nation-wide (b)~~ the ~~Company’s distribution unit (referred to as UFPD) which distributes a variety of products to the manufactured housing industry nation-wide and is accounted for as a reporting unit within the North~~world.

Our International segment and ~~(c) the idX division, which designs, produces, and installs customized in-store environments, for customers world-wide.~~

With respect to the facilities in the north, south, and west segments, these facilities generally supply the three markets the Company serves nationally - Retail, Industrial, and Construction. Also, substantially all of our facilities support customers in the immediate geographical region surrounding the facility.

~~Our Alternative Materials, International and idX division~~Ardellis (our insurance captive) have been included in the “All Other” column of the table below.

The “Corporate” column includes ~~unallocated~~purchasing, transportation and administrative ~~costs~~functions that serve our operating segments. Operating results of Corporate primarily consists of over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and ~~certain incentive compensation expense.~~

Three Months Ended September 30, 2017


      North

      South

      West

  All Other

  Corporate

      Total

Net sales to outside customers

$
310,384

$
206,050

$
378,714

$
161,438

$
—

$
1,056,586

Intersegment net sales

18,897

18,817

21,384

47,539

—

106,637

Segment operating profit

16,697

10,234

22,538

6,882

(4,080)

52,271

Three Months Ended September 24, 2016


      North

      South

      West

  All Other

  Corporate

      Total

Net sales to outside customers

$
267,156

$
173,715

$
335,981

$
49,813

$
—

$
826,665

Intersegment net sales

14,318

9,642

22,054

4,574

—

50,588

Segment operating profit

14,630

9,900

19,962

2,959

(3,899)

43,552

leases real estate, and UFP Transportation Ltd., which owns and leases transportation equipment, are also included in the Corporate column. An inter-company lease charge is assessed to our operating segments for the use of these assets at fair market value rates.


	Nine Months Ended September 30, 2017
	North		South		West		All Other		Corporate		Total

													Three Months Ended March 28, 2020
(in thousands)													Retail		Industrial		Construction		All Other		Corporate		Total
Net sales to outside customers	$	857,858	$	616,376	$	1,088,744	$	412,113	$	—	$	2,975,091	$	352,161	$	256,543	$	381,155	$	42,392	$	(189)	$	1,032,062
Intersegment net sales		51,859		55,472		65,466		116,743		—		289,540		29,858		11,220		15,423		53,167		(109,668)		—
Segment operating profit (loss)		42,921		31,152		65,547		13,285		(12,914)		139,991
Segment operating profit														15,512		18,074		17,135		4,739		3,172		58,632


	Nine Months Ended September 24, 2016
	North		South		West		All Other		Corporate		Total

													Three Months Ended March 30, 2019
(in thousands)													Retail		Industrial		Construction		All Other		Corporate		Total
Net sales to outside customers	$	758,066	$	533,239	$	940,188	$	149,416	$	—	$	2,380,909	$	333,100	$	274,759	$	365,137	$	42,110	$	19	$	1,015,125
Intersegment net sales		42,071		28,693		65,325		16,559		—		152,648		29,571		11,062		11,831		53,129		(105,593)		—
Segment operating profit		43,054		35,830		58,434		11,542		(19,733)		129,127		11,031		18,823		15,267		2,048		1,277		48,446

Intangibles have been transferred and goodwill was re-allocated, based on their relative fair values, to our new segments and reporting units. The following table presents goodwill by segment as of March 28, 2020, and December 28, 2019 (in thousands):


	Retail		Industrial		Construction		All Other		Corporate		Total
Balance as of December 28, 2019	$	58,098	$	81,276	$	82,911	$	7,251	$	—	$	229,536
2020 Acquisitions		—		—		18,219		—		—		18,219
Foreign Exchange, Net		—		—		—		(1,296)		—		(1,296)
Balance as of March 28, 2020	$	58,098	$	81,276	$	101,130	$	5,955	$	—	$	246,459

The following table presents total assets by segment as of March 28, 2020, and December 28, 2019.


	Total Assets by Segment
(in thousands)	March 28,		December 28,
Segment Classification	2020		2019		% Change
Retail	$	521,977	$	436,397	19.6	%
Industrial		363,508		410,383	(11.4)
Construction		544,826		583,107	(6.6)
All Other		127,406		145,418	(12.4)
Corporate		325,265		314,172	3.5
Total Assets	$	1,882,982	$	1,889,477	(0.3)	%

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UFP INDUSTRIES, INC.

H. INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income taxes and permanent tax differences. Our effective tax rate was ~~31.9~~%24.7% in the ~~third~~first quarter of ~~201~~72020 compared to ~~32.5~~%24.3% for same period in ~~201~~6~~. Our effective tax rate~~ 2019. The slight increase was ~~33.0% in the first nine months of 201~~7 ~~compared to~~ ~~34.2% in 201~~6, primarily due to ~~recording~~an increase in the permanent tax difference for non-deductible officer compensation.

I. COMMON STOCK

Below is a ~~tax deduction~~summary of common stock issuances for ~~certain share-based compensation~~the first three months of 2020 and ~~fees~~2019 (in thousands, except average share price):


	March 28, 2020
Share Issuance Activity	Common Stock		Average Share Price
Shares issued under the employee stock purchase plan	10	$	35.59

Shares issued under the employee stock gift program	1		45.22
Shares issued under the director retainer stock program	1		47.90
Shares issued under the long term stock incentive plan	271		47.51
Shares issued under the executive stock match grants	80		47.60
Forfeitures	(3)
Total shares issued under stock grant programs	350	$	47.52

Shares issued under the deferred compensation plans	89	$	54.68

During the first three months of 2020, we repurchased approximately 756,000 shares of our common stock at ~~fair market value.~~an average share price of $38.62.


	March 30, 2019
Share Issuance Activity	Common Stock		Average Share Price
Shares issued under the employee stock purchase plan	10	$	29.88

Shares issued under the employee stock gift program	2		30.90
Shares issued under the director retainer stock program	1		31.00
Shares issued under the long term stock incentive plan	211		30.83
Shares issued under the executive stock match grants	109		31.57
Forfeitures	(3)
Total shares issued under stock grant programs	320	$	31.08

Shares issued under the deferred compensation plans	138	$	32.23

During the first three months of 2019, we did not repurchase any of our common stock.

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~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

UFP Industries, Inc. (formerly Universal Forest Products, Inc.) is a holding company with subsidiaries throughout North America, Europe, Asia, and in Australia that supply wood, wood composite and other products to three robust markets: retail, industrial, and construction. The Company is headquartered in Grand Rapids, Mich. For more information about ~~Universal Forest Products,~~UFP Industries, Inc., or its affiliated operations, go to ~~www.ufpi.com~~.www.ufpi.com.

On April 22, 2020, the shareholders approved changing the name of the Company from Universal Forest Products, Inc., to UFP Industries, Inc.

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,” “expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify such forward-looking statements. These statements do not guarantee future performance and involve certain risks, uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety ~~regulations;~~regulations, government imposed “stay at home” orders and directives to cease or curtail operations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission. We are pleased to present this overview of ~~2017.~~the first quarter of 2020.

OVERVIEW

Our results for the ~~third~~first quarter of ~~2017 were impacted by~~2020 include the ~~following:~~following highlights:

●

Our ~~gross~~net sales increased by ~~28%~~2% compared to the ~~third~~first quarter of ~~2016,~~2019, which was comprised of a ~~22%~~5% increase in unit sales, ~~and~~offset by a ~~6% increase~~3% decrease in selling prices primarily due to the commodity lumber market (see Historical Lumber Prices below). ~~Acquired operations contributed 15% to our~~Organic unit ~~sales growth. Our 7% organic~~ growth ~~rate~~ was ~~primarily~~4% and was driven by 8% growth by our ~~sales to industrial, retail, residential construction,~~Retail segment and ~~manufactured housing customers. Unit sales to commercial construction customers decreased.~~

6% growth by our Construction segment.

●

Our operating profits increased ~~by 20.0%~~21%, which ~~is comparable~~compares very favorably with our ~~22%~~5% increase in unit sales. The ~~shortfall~~improvement in our ~~profit~~profitability was driven by a number of factors, including effective positioning of lumber inventories, favorable changes in product mix, and strong organic growth ~~was primarily due to~~resulting in effective leveraging of fixed costs.

●

We repurchased approximately 756,000 shares of our common stock for $29.2 million resulting in an average price paid of $38.62.

●

Available borrowing capacity under our revolving credit facilities and surplus cash resulted in total liquidity of approximately $393 million at the ~~impact~~end of ~~volatile lumber prices on gross profits and the impact of acquired operations which contributed unit sales growth without a proportionate increase in operating profits.~~

March 2020.

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~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

HISTORICAL LUMBER PRICES

We experience significant fluctuations in the cost of commodity lumber products from primary producers (“Lumber Market”). The following table presents the Random Lengths framing lumber composite price:

Random Lengths Composite

Average $/MBF


2017

2016

January

$
356

$
316

February

393

310

March

401

321

April

424

345

May

416

356

June

399

353

July

411

351

August

417

367

September

416

354

Third quarter average

$
415

$
357

Year-to-date average

$
404

$
341

Third quarter percentage change

16.2
%

Year-to-date percentage change

18.5
%


	Random Lengths Composite
	Average $/MBF
	2020			2019
January	$	377		$	331
February		402			370
March		420			365

First quarter average	$	400		$	355
First quarter percentage change		12.7	%

In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprised ~~approximately 44% and 42%~~almost two-thirds of our total lumber purchases, ~~through the first nine months~~which has generally caused a decrease in our selling prices of ~~2017 and 2016, respectively.~~related products.

Random Lengths SYP

Average $/MBF


2017

2016

January

$
397

$
358

February

420

357

March

433

366

April

438

389

May

416

397

June

399

382

July

381

380

August

383

391

September

387

375

Third quarter average

$
384

$
382

Year-to-date average

$
406

$
377

Third quarter percentage change

0.5
%

Year-to-date percentage change

7.7
%


	Random Lengths SYP
	Average $/MBF
	2020			2019
January	$	346		$	370
February		345			403
March		360			408

First quarter average	$	350		$	394
First quarter percentage change		(11.2)	%

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS

We generally price our products to pass lumber costs through to our customers so that our profitability is based on the value-added manufacturing, distribution, engineering, and other services we provide. As a result, our sales levels (and working capital requirements) are impacted by the lumber costs of our products. Lumber costs were ~~48.2%~~45.6% and ~~48.4%~~45.9% of our sales in the first ~~nine~~three months of ~~2017~~2020 and ~~2016,~~2019, respectively.

Our gross margins are impacted by (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower from comparative periods), and (2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing or decreasing within a period or from period to period). Moreover, as explained below, our products are priced differently. Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported Lumber Market with a fixed dollar adder to cover conversion costs and profits. Consequently, the level and trend of the Lumber Market impact our products differently.

Below is a general description of the primary ways in which our products are priced.

●

Products with fixed selling prices. These products include value-added products, such as ~~deck components and fencing~~manufactured items, sold ~~to retail customers, as well as trusses, wall panels and other components sold to the construction market, and most industrial packaging products.~~within all segments. Prices for these products are generally fixed at the time of the sales quotation for a specified period of ~~time or are based upon a specific quantity.~~time. In order to ~~maintain margins and~~ reduce any exposure to adverse trends in the price of component lumber products, we attempt to lock in costs with our suppliers or purchase necessary inventory for these sales commitments. ~~Also, the~~The time period ~~and quantity limitations~~limitation eventually ~~allow~~allows us to periodically re-price our products for changes

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UFP INDUSTRIES, INC.

in lumber costs from our suppliers.

We believe our percentage of sales of fixed price items is greatest in our third and fourth quarters.

●

Products with selling prices indexed to the reported Lumber Market with a fixed dollar “adder” to cover conversion costs and ~~profits.~~profit. These products primarily include treated lumber, ~~remanufactured lumber,~~panel goods, other commodity-type items, and trusses sold to the manufactured housing industry. For these products, we estimate the customers’ needs and we carry anticipated levels of inventory. Because lumber costs are incurred in advance of final sale prices, subsequent increases or decreases in the market price of lumber impact our gross margins.

We believe our sales of these products are at their highest relative level in our second quarter, primarily due to treated lumber sold to the retail market.

For each of the product pricing categories above, our margins are exposed to changes in the trend of lumber prices.

The greatest risk associated with changes in the trend of lumber prices is on the following ~~products~~:products:

●

Products with significant inventory levels with low turnover rates, whose selling prices are indexed to the Lumber Market. In other words, the longer the period of time these products remain in inventory, the greater the exposure to changes in the price of lumber. This would include treated lumber, which comprises approximately ~~19%~~16% of our total sales. This exposure is less significant with remanufactured lumber, panel goods, other commodity-type items, and trusses sold to the manufactured housing market ~~and other similar products,~~ due to the higher rate of inventory turnover. We attempt to mitigate the risk associated with treated lumber through ~~vendor~~inventory consignment ~~inventory programs.~~programs with our vendors. (Please refer to the “Risk Factors” section of our annual report on form ~~10‑K,~~10-K, filed with the United States Securities and Exchange Commission.)

●

Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-family construction projects. We attempt to mitigate this risk through our purchasing practices ~~by locking in costs.~~

and longer vendor commitments.

During the first nine months of 2017, volatility in the lumber market has impacted our gross profits on products sold under each of the general pricing methods described above. For example, the dramatic rise in lumber prices, which peaked in April, resulted in a decline in gross profit per unit on products sold with fixed prices primarily in the second

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

quarter. Additionally, the subsequent decline in lumber prices in May, June, and July resulted in a decline in gross profit per unit on products sold with a variable price indexed to the lumber market. We anticipate these trends may continue to impact our results into the fourth quarter until we reach a point of re-pricing products sold via a fixed price with our customers and selling through higher cost material sold on a variable price which is mitigated to some degree by stability of the SYP market.

~~Finally, hurricane Harvey and Irma as well as recent wildfires in British Columbia have resulted in sharp increases in lumber prices in the third quarter of 2017.~~

In addition to the impact of the Lumber Market trends on gross margins, changes in the level of the market cause fluctuations in gross margins when comparing operating results from period to period. This is explained in the following example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend within each period.


	Period 1			Period 2

							Period 1			Period 2
Lumber cost	$	300		$	400		$	300		$	400
Conversion cost		50			50			50			50
= Product cost		350			450			350			450
Adder		50			50			50			50
= Sell price	$	400		$	500		$	400		$	500
Gross margin		12.5	%		10.0	%		12.5	%		10.0	%

As is apparent from the preceding example, the level of lumber prices does not impact our overall profits, but does impact our margins. Gross margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low. In order to more effectively evaluate our profitability in such periods, we believe it is useful to compare our change in units shipped with our changes in costs and profits.

BUSINESS COMBINATIONS

We completed ~~three~~one business ~~acquisitions~~acquisition during the first ~~nine~~three months of ~~2017~~2020 and ~~six~~three during all of ~~2016.~~2019. The annual historical sales attributable to acquisitions completed in ~~2017~~the first three months of 2020 and ~~2016 was~~all of 2019 were approximately ~~$124~~$22 million and ~~$324~~$37 million, respectively. These business combinations were not significant to our quarterly ~~or year-to-date operating~~ results individually or in aggregate and thus pro forma results for ~~2017 or 2016~~2020 and 2019 are not presented.

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UFP INDUSTRIES, INC.

See Notes to the Unaudited Condensed Consolidated Financial Statements, Note F, “Business Combinations” for additional information.

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, the components of our Unaudited Condensed Consolidated Statements of Earnings as a percentage of net sales.


	Three Months Ended				Nine Months Ended
	September 30,		September 24,		September 30,		September 24,
	2017		2016		2017		2016

									Three Months Ended
									March 28,		March 30,
									2020		2019
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	86.3		85.7		86.1		85.2		83.8		84.8
Gross profit	13.7		14.3		13.9		14.8		16.2		15.2
Selling, general, and administrative expenses	8.8		9.1		9.2		9.3		10.6		10.4
Other									(0.1)		0.1
Earnings from operations	4.9		5.3		4.7		5.4		5.7		4.8
Other expense (income), net	0.1		0.1		0.1		0.1
Other expense, net									0.5		0.1
Earnings before income taxes	4.8		5.2		4.6		5.3		5.2		4.7
Income taxes	1.5		1.7		1.5		1.8		1.3		1.1
Net earnings	3.3		3.5		3.1		3.5		3.9		3.5
Less net earnings attributable to noncontrolling interest	(0.1)		(0.1)		(0.1)		(0.1)		—		—
Net earnings attributable to controlling interest	3.2	%	3.4	%	3.0	%	3.4	%	3.9	%	3.5	%

Note: Actual percentages are calculated and may not sum to total due to rounding.

~~GROSS~~The following table presents, for the periods indicated, the components of our Consolidated Statements of Earnings as a percentage of net sales, adjusted to restate 2020 net sales and cost of goods sold at prior year lumber prices. The restated sales amounts were calculated by applying the decrease in lumber prices in 2020 to 2019 sales levels. By eliminating the “pass-through” impact of higher or lower lumber prices on net sales and cost of goods sold from year to year, we believe this provides an enhanced view of our change in profitability and costs as a percentage of sales. The amount of the adjustment to 2020 net sales was also applied to cost of goods sold so that gross profit remains unchanged.


	Adjusted for Lumber Market Change
	Three Months Ended
	March 28,		March 30,
	2020		2019
Net sales	100.0	%	100.0	%
Cost of goods sold	84.3		84.8
Gross profit	15.7		15.2
Selling, general, and administrative expenses	10.3		10.4
Other	(0.1)		0.1
Earnings from operations	5.5		4.8
Other expense, net	0.4		0.1
Earnings before income taxes	5.1		4.7
Income taxes	1.3		1.1
Net earnings	3.8		3.5
Less net earnings attributable to noncontrolling interest	—		—
Net earnings attributable to controlling interest	3.8	%	3.5	%

Note: Actual percentages are calculated and may not sum to total due to rounding.

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UFP INDUSTRIES, INC.

Operating Results by Segment:

Effective January 1, 2020, the Company re-organized around the markets it serves rather than geography. The business segments align with the following markets: UFP Retail Solutions, UFP Construction and UFP Industrial. This change allows for a more specialized and consistent sales approach among Company operations, more efficient use of resources and capital, and quicker introduction of new products and services. The Company manages the operations of its individual locations primarily through the market-centered reporting structure under which each location is included in a business unit and business units are included in our Retail, Industrial, and Construction segments. The exception to this market-centered reporting and management structure is the Company’s International segment, which comprises our Mexico, Canada, and Australia operations and sales and buying offices in other parts of the world. Our International segment and Ardellis (our insurance captive) have been included in the “All Other” column of the table below. The “Corporate” column includes purchasing, transportation and administrative functions that serve our operating segments. Operating results of Corporate primarily consists of over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns and leases transportation equipment, are also included in the Corporate column. An inter-company lease charge is assessed to our operating segments for the use of these assets at fair market value rates.

The following tables present our operating results, for the periods indicated, by segment.


	Three Months Ended March 28, 2020

(in thousands)	Retail		Industrial		Construction		All Other		Corporate		Total
Net sales	$	352,161	$	256,543	$	381,155	$	42,392	$	(189)	$	1,032,062
Cost of goods sold		306,932		212,626		317,817		30,086		(2,635)		864,826
Gross profit		45,229		43,917		63,338		12,306		2,446		167,236
Selling, general, administrative expenses		29,627		25,835		46,386		8,351		(860)		109,339
Other		90		8		(183)		(784)		134		(735)
Earnings from operations	$	15,512	$	18,074	$	17,135	$	4,739	$	3,172	$	58,632


	Three Months Ended March 30, 2019

(in thousands)	Retail		Industrial		Construction		All Other		Corporate		Total
Net sales	$	333,100	$	274,759	$	365,137	$	42,110	$	19	$	1,015,125
Cost of goods sold		296,240		231,435		303,963		31,652		(2,432)		860,858
Gross profit		36,860		43,324		61,174		10,458		2,451		154,267
Selling, general, administrative expenses		25,785		24,521		45,784		8,107		1,120		105,317
Other		44		(20)		123		303		54		504
Earnings from operations	$	11,031	$	18,823	$	15,267	$	2,048	$	1,277	$	48,446

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UFP INDUSTRIES, INC.

The following tables present the components of our operating results, for the periods indicated, as a percentage of net sales by segment.


	Three Months Ended March 28, 2020

(in thousands)	Retail		Industrial		Construction		All Other		Corporate	Total
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	N/A	100.0	%
Cost of goods sold	87.2		82.9		83.4		71.0		—	83.8
Gross profit	12.8		17.1		16.6		29.0		—	16.2
Selling, general, administrative expenses	8.4		10.1		12.2		19.7		—	10.6
Other	—		—		—		(1.8)		—	(0.1)
Earnings from operations	4.4	%	7.0	%	4.5	%	11.2	%	—	5.7	%

Note: Actual percentages are calculated and may not sum to total due to rounding.


	Three Months Ended March 30, 2019

(in thousands)	Retail		Industrial		Construction		All Other		Corporate	Total
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	N/A	100.0	%
Cost of goods sold	88.9		84.2		83.2		75.2		—	84.8
Gross profit	11.1		15.8		16.8		24.8		—	15.2
Selling, general, administrative expenses	7.7		8.9		12.5		19.3		—	10.4
Other	—		—		—		0.7		—	0.1
Earnings from operations	3.3	%	6.9	%	4.2	%	4.9	%	—	4.8	%

Note: Actual percentages are calculated and may not sum to total due to rounding.

NET SALES

We design, manufacture and market wood and wood-alternative products for national home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for residential and commercial construction, ~~specialty wood packaging, components and packing materials for various industries, and~~ customized interior fixtures used in a variety of retail ~~stores,~~and commercial applications, and ~~other structures.~~specialty wood packaging, components and packaging materials for various industries. Our strategic long-term sales objectives generally include:

●

~~Diversifying~~Increasing our end market sales mix by increasing sales of specialty wood packaging to industrial users, increasing our penetration of the concrete forming market, increasing our sales of engineered wood components for custom home, multi-family, military and light commercial construction, increasing our market share with independent retailers, and increasing our sales of customized interior fixtures used in a variety of markets.

~~Expanding geographically in our core businesses, domestically and internationally.~~

~~Increasing~~ sales of "value-added" products ~~which primarily~~and enhancing our product offering with new or improved products. Value-added products generally consist of fencing, decking, lattice, and other specialty products sold to the retail market, specialty wood packaging, engineered wood components, customized interior fixtures, and "wood alternative" products. Engineered wood components include roof trusses, wall panels, and floor systems. Wood alternative products consist primarily of composite wood and plastics. Although we consider the treatment of dimensional lumber and panels with certain chemical preservatives a value-added process, treated lumber is not presently included in the value-added sales totals.

Remanufactured lumber and panels that are components of finished goods are also generally categorized as “commodity-based” products.

The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total net sales by our primary segments (Retail, Industrial, and Construction). Value-added products are typically sold at fixed selling prices for a pre-determined time period and carry higher gross margins than our commodity-based products.

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UFP INDUSTRIES, INC.


	Three Months Ended March 28, 2020				Three Months Ended March 30, 2019

	Value-Added		Commodity-Based		Value-Added		Commodity-Based
Retail	56.5	%	43.5	%	56.0	%	44.0	%
Industrial	66.8	%	33.2	%	65.8	%	34.2	%
Construction	79.1	%	20.9	%	80.0	%	20.0	%
Total Net Sales	68.0	%	32.0	%	67.9	%	32.1	%

●

~~Maximizing unit sales growth while achieving return on investment goals.~~

Developing new products. New products are defined as products that will generate sales of at least a $1 million per year within 4 years of launch and ~~expanding our product offering for existing customers.~~are still growing sales penetration. New product sales and gross profits in the first quarter were ~~$107.7~~up 7% and 16%, respectively. Approximately $24 million of new product sales from March 30, 2019, while still sold, were sunset in 2020 and excluded from the table below because they no longer meet the definition above. Our goal is to achieve annual new product sales of at least $475 million in ~~the third quarter of 2017 compared to $88.5 million during the third quarter of 2016. New product sales year-to-date for 2017 and 2016 were $313.6 million and $255.3 million, respectively.~~

2020.

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~~UNIVERSAL FOREST PRODUCTS, INC.~~


	New Product Sales by Market					New Product Sales by Market
	Three Months Ended					Nine Months Ended
(in thousands)	September 30,		September 24,			September 30,		September 24,
Market Classification	2017		2016		% Change	2017		2016		% Change

											New Product Sales by Segment
											Three Months Ended
											March 28,		March 30,		%
Segment Classification											2020		2019		Change
Retail	$	65,383		53,252	22.78%	$	192,194	$	153,966	24.83%	$	64,601		59,038	9.4	%
Industrial		26,738		23,374	14.39%		76,125		65,642	15.97%		16,252		16,268	(0.1)	%
Construction		15,577		11,911	30.78%		45,321		35,717	26.89%		13,732		12,820	7.1	%
All Other												3,081		3,272	(5.8)	%
Total New Product Sales		107,698		88,537	21.64%		313,640		255,325	22.84%		97,666		91,398	6.9	%

Note: Certain prior year product reclassifications and the change in designation of certain products as “new” resulted in a change in prior year’s sales.

~~The following table presents, for the periods indicated, our gross sales and percentage change in gross sales by market classification.~~

●

Selling to new customers and markets.

Three Months Ended

Nine Months Ended
(in thousands)

September 30,

September 24,


September 30,

September 24,



Market Classification

2017

2016

% Change

2017

2016

% Change
Retail

$
391,895

$
339,275

15.5
%

$
1,162,785

$
1,018,203

14.2
%
Industrial

369,506

232,017

59.3
%

982,675

661,718

48.5
%
Construction

310,026

267,772

15.8
%

872,997

740,393

17.9
%
Total Gross Sales

1,071,427

839,064

27.7
%

3,018,457

2,420,314

24.7
%
Sales Allowances

(14,841)

(12,399)

19.7
%

(43,366)

(39,405)

10.1
%
Total Net Sales

$
1,056,586

$
826,665

27.8
%

$
2,975,091

$
2,380,909

25.0
%

~~Note: During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.~~Retail Segment

~~Gross~~

Net sales in the ~~third quarter~~first three months of ~~2017~~2020 increased ~~28%~~approximately 6% compared to the same period of ~~2016,~~2019, due to a ~~22%~~9% increase in unit sales, ~~and~~offset by a ~~6% increase~~3% decrease in selling prices primarily due to the Lumber Market. Acquired operations contributed ~~15%~~1% to our unit sales growth, and ~~our~~ organic unit sales growth was 7%8%.

~~Changes~~ Our organic unit growth was primarily driven by a 14% increase in each of our ProWood treated products and UFP Edge (siding, pattern, trim) products, an 8% increase in Fence, Lawn & Garden, and a 26% increase in Home & Décor products. These increases were offset by a 14% unit decrease in our ~~gross sales by market are discussed below.~~

~~Retail:~~

~~Gross sales~~Deckorators branded products, which was anticipated due to ~~the retail market increased almost 16%~~large first-time store builds that took place in the ~~third~~first quarter of ~~2017 compared~~last year. Our new product sales contributed to these increases and were up 9% for the ~~same period of 2016, due to a 12% increase in unit sales and a 4% increase in selling prices. Within this market,~~quarter. Finally, our customer mix remained consistent as our sales to ~~our~~ big box customers increased ~~almost 13%~~7%, and sales to other independent retailers increased ~~over 20%~~5%. Businesses we acquired contributed 7% to our growth in unit sales, primarily to independent retail customers. Our organic unit growth was 5% for the quarter. By comparison, “big box” same store sales growth during the third quarter has been reported at approximately 6.3%.

Gross sales to the retail market increased over 14% in the first nine months of 2017 compared to the same period of 2016, due to a 9% increase in unit sales and a 5% increase in selling prices. Within this market, sales to our big box customers increased almost 15%, and sales to other independent retailers increased almost 14%. Businesses we acquired contributed 6% to our growth in unit sales, primarily to independent retail customers. Our organic unit growth was 3% in the first nine months of 2017. By comparison, “big box” same store sales growth in the first nine months of 2017 has been reported at approximately 6.0%.

~~Industrial:~~

Gross sales to the industrial market increased over 59% in the third quarter of 2017 compared to the same period of 2016, resulting from a 54% increase in unit sales and a 5% increase in selling prices. Businesses we acquired contributed

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

~~43% to our growth in unit sales. Our organic growth in unit sales of 11% was primarily due to new operations, adding 578 new customers, and share gains with several existing customers.~~

Gross sales to the industrial market increased almost 49% in the first nine months of 2017 compared to the same period of 2016, resulting from a 43% increase in unit sales and a 6% increase in selling prices. Businesses we acquired contributed 34% to our growth in unit sales. Our organic growth in unit sales of 9% was primarily due to same factors discussed above.

~~Construction:~~

Gross sales to the construction market increased almost 16% in the third quarter of 2017 compared to 2016. The increase was due to an 8% increase in unit sales and an 8% increase in our selling prices. Our increase in unit sales was driven by a 12% increase to manufactured housing customers, and an 8% increase to residential construction customers, offset by a 5% decrease to commercial construction customers.

~~By comparison (and based upon various industry publications):~~

~~Production of HUD-code manufactured homes in June, July, August 2017, the most recent period reported, was up 12.0% compared to the same period of 2016.~~

~~Non-residential construction activity in July and August increased approximately 10.2% compared to the same period of 2016.~~

National housing starts increased approximately 0.9% in the period from June through August 2017 (our sales trail housing starts by about a month) compared to the same period of 2016. Our sales growth exceeds national industry growth due to certain market share gains and organic sales growth in our eastern regions.

Gross sales to the construction market increased almost 18% in the first nine months of 2017 compared to 2016. The increase was due to a 9% increase in unit sales and a 9% increase in our selling prices. Our increase in unit sales was driven by an 11% increase to manufactured housing customers, an 11% increase to residential construction customers, and a 1% increase to commercial construction customers due to the same factors discussed above.

~~Value-Added and Commodity-Based Sales:~~

The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total sales. Value-added products generally carry higher gross margins than our commodity-based products.

Three Months Ended

Nine Months Ended


September 30,

September 24,

September 30,

September 24,

2017

2016

2017

2016
Value-Added

63.9
%

61.1
%

62.9
%

61.5
%
Commodity-Based

36.1
%

38.9
%

37.1
%

38.5
%

~~COST OF GOODS SOLD AND GROSS PROFIT~~

Our gross margin decreased to 13.7% from 14.3% comparing the third quarter of 2017 to the same period of 2016 due to the higher level of lumber prices. Our 22.6% increase in gross profit dollars compares favorably with our 22% increase in unit sales during the same period. Acquired operations contributed $19.9 million of gross profit in the third quarter of 2017. Excluding acquisitions, our gross profits increased by ~~$6.7~~22.7% to $45.2 million ~~or 5.7%, over~~for the first three months of 2020 compared to the same period last year as ~~follows:~~

~~Our gross profit on sales to the retail market increased by approximately $1 million.~~

~~Our gross profit on sales to the industrial market increased by approximately $1 million.~~

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

~~Our gross profit on sales to the construction market increased by over $3 million.~~

~~Our~~ gross ~~margin decreased~~margins increased to ~~13.9% from 14.8% comparing the first nine months of 2017~~12.8% compared to 11.1% for the same period of ~~2016.~~2019. We estimate the lower level of lumber prices (see “Impact of the Lumber Market on Our ~~17.4% increase~~Operating Results”) contributed 40 basis points to our improvement in gross ~~profit dollars compares unfavorably with our 19% increase in unit sales in the first nine months of 2017 compared to the same period last year.~~margin. The ~~increase~~remaining improvement in our ~~gross profit dollars~~profitability was primarily due to ~~acquired operations~~the impact of effective inventory positioning resulting in lower lumber costs, favorable changes in product mix, and strong organic growth which ~~contributed $45.6 million of gross profit in the first nine months of 2017. Excluding acquisitions, our gross profits increased by $15.8 million over the same period last year as follows:~~allowed us to leverage fixed costs.

~~Our gross profit on sales to the retail market increased by over $3 million.~~

~~Our gross profit on sales to the industrial market decreased by over $5 million.~~

~~Our gross profit on sales to the construction market increased by over $12 million.~~

~~SELLING, GENERAL AND ADMINISTRATIVE EXPENSES~~

Selling, general and administrative (“SG&A”) expenses increased by approximately ~~$17.9~~$3.8 million, or ~~24.0%~~14.9%, in the ~~third~~first quarter of ~~2017~~2020 compared to the same period of ~~2016,~~2019, while we reported a ~~22%~~9% increase in unit sales. Acquired operations since the first quarter of 2019 contributed approximately $0.8 million to this increase. Accrued bonus expense, which varies with our overall profitability and return on investment, increased approximately $0.8 million and totaled approximately $3.5 million for the quarter. The remaining increase was due to increases in salaries and wages, benefits, and sales incentive compensation.

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UFP INDUSTRIES, INC.

Earnings from operations for the Retail reportable segment increased in the first quarter of 2020 compared to 2019 by $4.5 million, or 40.6%, well in excess of our 9% increase in unit sales as a result of the factors above.

Industrial Segment

Net sales in the first three months of 2020 decreased 7% compared to the same period of 2019, due to a 7% decrease in selling prices due to the Lumber Market. Unit sales remained flat year over year as recently acquired companies contributed 2% to unit growth but this was offset by a 2% decrease in sales out of existing locations. Sales to new customers contributed $5 million to our sales this quarter and helped mitigate the decline in demand of our existing customers.

Gross profits increased by 1.4% to $43.9 million for the first three months of 2020 compared to the same period of 2019. Gross margin increased to 17.1% from 15.8% for the same period last year. We estimate the lower level of lumber prices (see “Impact of the Lumber Market on Our Operating Results”) contributed 110 basis points to our improvement in gross margin. The remaining improvement in our profitability was primarily due to the impact of lower lumber costs on products we sell with fixed selling prices and a modest improvement in our sales mix value-added products.

Selling, general and administrative (“SG&A”) expenses increased by approximately $1.3 million, or 5%, in the first quarter of 2020 compared to the same period of 2019. Acquired operations since the first quarter of 2019 contributed approximately $0.6 million to this increase. The remaining increase was due to increases in salaries and wages, benefits, and sales incentive compensation. Additionally, accrued bonus expense, which varies with our pre-bonus operating profit and return on investment, decreased approximately $0.5 million, and totaled $4.2 million for the quarter.

Earnings from operations for the Industrial reportable segment decreased in the first quarter of 2020 compared to 2019 by $0.7 million, or 4.0%, due to the factors discussed above.

Construction Segment

Net sales in the first three months of 2020 increased 4% compared to the same period of 2019, due to a 6% increase in unit sales, offset by a 2% decrease in selling prices primarily due to the Lumber Market. Our unit growth was organic and driven by a 15% increase in unit sales of concrete forming, a 12% unit increase to factory-built housing, a 3% unit increase to commercial, and a 1% unit increase to site-built construction. The increase in our unit sales of concrete forming was due to share gains. Our unit sales to producers of factory-built homes increased primarily due to an increase in industry production.

Gross profits increased by 3.5% to $63.3 million for the first three months of 2020 compared to the same period of 2019. Gross margin declined slightly to 16.6% from 16.8% for the same period last year, in spite of the lower level of lumber prices (see “Impact of the Lumber Market on Our Operating Results”). The decline in our gross margin was primarily due to our commercial business unit as a result of customer and product mix.

Selling, general and administrative (“SG&A”) expenses increased by approximately $0.6 million, or 1.3%, in the first quarter of 2020 compared to the same period of 2019, while we reported a 6% increase in unit sales. Accrued bonus expense, which varies with our overall profitability and return on investment, totaled ~~$12.4~~approximately $3.5 million infor the ~~third~~ quarter, ~~of 2017 compared~~which was comparable to ~~$12.0 million in 2016. Acquired~~last year.

Earnings from operations ~~contributed approximately $15 million to our year over year increase. The remaining increase was primarily due to an increase in compensation and benefit costs.~~

~~Selling, general and administrative (“SG&A”) expenses~~for the Construction reportable segment increased ~~by approximately $50.5 million, or 22.6%,~~ in the first ~~nine months~~quarter of ~~2017~~2020 compared to 2019 by $1.9 million, or 12.2%, which compares favorably with our 6% increase in unit sales due to the factors above.

All Other Segment

Our All Other reportable segment consists of our International and Ardellis (our insurance captive) segments that are not significant.

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UFP INDUSTRIES, INC.

Corporate

The corporate segment consists of over (under) allocated costs that are not significant.

INTEREST, NET

Interest expense was lower in the first quarter of 2020 compared to the same period of 2016, while we reported a 19% increase in unit sales. Accrued bonus expense totaled $32.6 million in the nine months of 2017 compared to $33.9 million in 2016. Acquired operations contributed approximately $41 million to our year over year increase. The remaining increase was2019 primarily due to ~~an increase~~lower outstanding debt balances and variable interest rates in ~~compensation and benefit costs and foreign currency exchange losses.~~ 2020.

~~INTEREST, NET~~UNREALIZED LOSS (GAIN) ON INVESTMENTS

~~Net interest costs were higher~~Ardellis (our insurance captive) recorded a $3.2 million unrealized loss on equity investments held in its portfolio in the ~~third quarter~~first three months of ~~2017~~2020 compared to a $1.3 million gain in the same period of ~~2016 due to carrying a higher amount of debt and a slight increase in short-term borrowing rates.~~the prior year.

INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income taxes and permanent tax differences. Our effective tax rate was ~~31.9~~%24.7% in the ~~third~~first quarter of ~~201~~72020 compared to ~~32.5~~%24.3% for same period in ~~201~~6~~. Our effective tax rate~~ 2019. The slight increase was ~~33.0% in the first nine months of 201~~7 ~~compared to~~ ~~34.2% in 2016. The decrease in our effective tax rate is~~ primarily ~~due to recording a tax deduction for certain share-based compensation at fair market value.~~

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

~~SEGMENT REPORTING~~

~~The following table presents, for the periods indicated, our net sales and earnings from operations by reportable segment.~~

Net Sales

Earnings from Operations

Three Months Ended

Three Months Ended


September 30,

September 24,

$

%


September 30,

September 24,

$

%
(in thousands)

2017

2016

    Change

Change

2017

2016

    Change

Change
North

$
310,384

$
267,156

$
43,228

16.2
%

$
16,697

$
14,630

$
2,067

14.1
%
South

206,050

173,715

32,335

18.6
%

10,234

9,900

334

3.4
%
West

378,714

335,981

42,733

12.7
%

22,538

19,962

2,576

12.9
%
All Other

161,438

49,813

111,625

224.1
%

6,882

2,959

3,923

132.6
%
Corporate

—

—

—

—

(4,080)

(3,899)

(181)

4.6
%
Total

$
1,056,586

$
826,665

$
229,921

27.8
%

$
52,271

$
43,552

$
8,719

20.0
%

Net Sales

Earnings from Operations

Nine Months Ended

Nine Months Ended


September 30,

September 24,

$

%


September 30,

September 24,

$

%

(in thousands)

2017

2016

    Change

Change

2017

2016

    Change

Change
North

$
857,858

$
758,066

$
99,792

13.2
%

$
42,921

$
43,054

$
(133)

(0.3)
%
South

616,376

533,239

83,137

15.6
%

31,152

35,830

(4,678)

(13.1)
%
West

1,088,744

940,188

148,556

15.8
%

65,547

58,434

7,113

12.2
%
All Other

412,113

149,416

262,697

175.8
%

13,285

11,542

1,743

15.1
%
Corporate

—

—

—

—

(12,914)

(19,733)

6,819

34.6
%
Total

$
2,975,091

$
2,380,909

$
594,182

25.0
%

$
139,991

$
129,127

$
10,864

8.4
%

~~(1)~~

~~Corporate primarily represents over (under) allocated administrative costs and accrued bonus expense.~~

~~North~~

Net Sales

Net Sales

North Segment by Market

North Segment by Market

Three Months Ended

Nine Months Ended
(in thousands)

September 30,

September 24,



September 30,

September 24,


Market Classification

2017

2016

% Change

2017

2016

% Change
Retail

$
139,284

$
131,333

6.1
%

$
387,925

$
369,699

4.9
%
Industrial

40,192

27,524

46.0
%

114,533

87,287

31.2
%
Construction

137,616

113,897

20.8
%

373,838

316,204

18.2
%
Total Gross Sales

317,092

272,754

16.3
%

876,296

773,190

13.3
%
Sales Allowances

(6,708)

(5,598)

19.8
%

(18,438)

(15,124)

21.9
%
Total Net Sales

$
310,384

$
267,156

16.2
%

$
857,858

$
758,066

13.2
%

~~Note: During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.~~

Net sales attributable to the North reportable segment increased in the third quarter of 2017 compared to 2016 as a result of increased sales to each of our markets primarily due to the same factors previously discussed. Acquired operations contributed $8.7 million to our industrial sales increase.

~~Earnings from operations for the North reportable segment increased in the third quarter of 2017 by $2.1 million, or 14.1%,~~ due to an increase in ~~gross profit of $2.7 million, offset by a $0.6 million increase in SG&A expenses compared to last year. Acquired operations contributed $0.4 million to our operating profits in~~ the ~~third quarter.~~

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

Net sales attributable to the North reportable segment increased in the first nine months of 2017 compared to 2016 due to an increase in sales to each of our markets primarily due to the same factors previously discussed. Acquired operations contributed $21.0 million to our industrial sales increase.

~~Earnings from operations~~permanent tax difference for the North reportable segment decreased in the first nine months of 2017 by $0.1 million, or 0.3%, due to an increase in gross profit of $4.5 million offset by a $4.6 million increase in SG&A expenses compared to last year. Acquired operations contributed $1.4 million to our operating profits in the first nine months of 2017. non-deductible officer compensation.

~~South~~

Net Sales

Net Sales

South Segment by Market

South Segment by Market

Three Months Ended

Nine Months Ended
(in thousands)

September 30,

September 24,




September 30,

September 24,


Market Classification

2017

2016

% Change

2017

2016

% Change
Retail

$
92,146

$
75,130

22.6
%

$
282,809

$
240,175

17.8
%
Industrial

69,390

61,749

12.4
%

201,928

185,529

8.8
%
Construction

49,054

40,385

21.5
%

145,387

118,223

23.0
%
Total Gross Sales

210,590

177,264

18.8
%

630,124

543,927

15.8
%
Sales Allowances

(4,540)

(3,549)

27.9
%

(13,748)

(10,688)

28.6
%
Total Net Sales

$
206,050

$
173,715

18.6
%

$
616,376

$
533,239

15.6
%

~~Note: During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.~~

Net sales attributable to the South reportable segment increased in the third quarter of 2017 compared to 2016 due to increased sales to all markets primarily due to the same factors previously discussed. Acquired operations contributed $24.4 million and $1.8 million to our growth in sales to the retail and industrial market, respectively.

Earnings from operations for the South reportable segment increased in the third quarter of 2017 by $0.3 million, or 3.4%, due to a increase in gross profit of $0.7 million offset by a $0.4 million increase in SG&A expenses. Acquired operations contributed $0.6 million to our operating profits in the third quarter.

Net sales attributable to the South reportable segment increased in the first nine months of 2017 compared to 2016 due to increased sales to all markets primarily due to the factors previously discussed. Acquired operations contributed $59.9 million of sales growth to our retail market.

Earnings from operations for the South reportable segment decreased in the first nine months of 2017 by $4.7 million, or 13.1%, due to a decrease in gross profit of $3.1 million and an increase of $1.6 million in SG&A expenses. The decrease in gross profit was primarily due to the impact of the volatility in lumber prices. Acquired operations contributed $2.0 million to our operating profits in the first nine months of 2017.

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

~~West~~

Net Sales

Net Sales

West Segment by Market

West Segment by Market

Three Months Ended

Nine Months Ended

(in thousands)

September 30,

September 24,



September 30,

September 24,


Market Classification

2017

2016

% Change

2017

2016

% Change

Retail

$
115,069

$
99,762

15.3
%

$
347,270

$
298,723

16.3
%

Industrial

145,132

126,836

14.4
%

401,850

347,902

15.5
%

Construction

123,026

113,488

8.4
%

353,238

305,962

15.5
%

Total Gross Sales

383,227

340,086

12.7
%

1,102,358

952,587

15.7
%

Sales Allowances

(4,513)

(4,105)

9.9
%

(13,614)

(12,399)

9.8
%

Total Net Sales

$
378,714

$
335,981

12.7
%

$
1,088,744

$
940,188

15.8
%

~~Note: During 2017, certain customers were reclassified to a different market. Prior year information has been restated to reflect these changes.~~

~~Net sales attributable to the West reportable segment increased in the third quarter of 2017 compared to 2016 due to increases in sales to all markets primarily due to factors previously discussed.~~

Earnings from operations for the West reportable segment increased in the third quarter of 2017 by $2.6 million, or 12.9%, compared to the same period in 2016 due to a $2.5 million increase in gross profit combined with a $0.1 million decrease in SG&A expenses.

Net sales attributable to the West reportable segment increased in the first nine months of 2017 compared to 2016 due to an increase in sales to all markets due to the same factors previously discussed.

Earnings from operations for the West reportable segment increased in the first nine months of 2017 by $7.1 million, or 12.2%, compared to the same period in 2016 due to a $10.8 million increase in gross profit, offset by a $3.7 million increase in SG&A expenses.

~~All Other~~

Net Sales

Net Sales

All Other Segment by Market

All Other Segment by Market

Three Months Ended

Nine Months Ended

(in thousands)

September 30,

September 24,



September 30,

September 24,



Market Classification

2017

2016

% Change

2017

2016

% Change

Retail

$
45,396

$
33,049

37.4
%

$
144,782

$
109,606

32.1
%

Industrial

114,792

15,907

621.6
%

264,364

41,000

544.8
%

Construction

331

4

8,175.0
%

533

4

13,225.0
%

Total Gross Sales

160,519

48,960

227.9
%

409,679

150,610

172.0
%

Sales Allowances & Other

919

853

7.7
%

2,434

(1,194)

(303.9)
%

Total Net Sales

$
161,438

$
49,813

224.1
%

$
412,113

$
149,416

175.8
%

~~Our All Other reportable segment consists of our Alternative Materials, International, idX, and certain other segments which are not significant.~~

Net sales attributable to All Other reportable segments increased in the third quarter of 2017 compared to 2016 due to increases in sales to the retail and industrial markets. Our increase in sales to the industrial market was primarily due to an $89.3 million increase from businesses we acquired since September of 2016.

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

Earnings from operations for All Other reportable segments increased during the third quarter of 2017 by $3.9 million, or 132.6%, compared to the same period of 2016. During the third quarter of 2017, gross profit dollars increased $20.6 million, offset by an increase in SG&A expenses of $16.1 million compared to the same period of 2016. Businesses we acquired contributed $3.7 million to our earnings from operations during the third quarter of 2017.

Net sales attributable to All Other reportable segments increased in the first nine months of 2017 compared to 2016 due to increases in sales to the retail and industrial markets. Our increase in sales to the industrial market was primarily due to a $203.1 million increase from businesses we acquired since September of 2016.

Earnings from operations for All Other reportable segments increased during the first nine months of 2017 by $1.7 million, or 15.1%, compared to the same period of 2016. During the first nine months of 2017, gross profit dollars increased $48.4 million, offset by an increase in SG&A expenses of $46.7 million compared to the same period of 2016. Businesses we acquired since September of 2016 contributed $1.1 million to the earnings from operations increase in the first nine months of 2017.

OFF-BALANCE SHEET TRANSACTIONS

We have no significant off-balance sheet ~~transactions other than operating leases.~~transactions.

LIQUIDITY AND CAPITAL RESOURCES

The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):


	Nine Months Ended
	September 30,		September 24,
	2017		2016
Cash from operating activities	$	97,350	$	136,377

					Three Months Ended
					March 28,		March 30,
					2020		2019
Cash used in operating activities					$	(46,161)	$	(55,829)
Cash used in investing activities		(121,375)		(200,139)		(48,210)		(15,551)
Cash from (used in) financing activities		11,230		13,981
Cash (used in)/provided by financing activities						(39,723)		61,069
Effect of exchange rate changes on cash		1,255		(969)		(1,719)		248
Net change in all cash and cash equivalents		(11,540)		(50,750)		(135,813)		(10,063)
Cash, cash equivalents, and restricted cash, beginning of period		34,489		88,342		168,666		28,198
Cash, cash equivalents, and restricted cash, end of period	$	22,949	$	37,592	$	32,853	$	18,135

In general, we funded our growth in the past through a combination of operating cash flows, our revolving credit facility, industrial development bonds (when circumstances permit), and issuance of long-term notes payable at times when interest rates are favorable. We have not issued equity to finance growth except in the case of a large acquisition. We manage our capital structure by attempting to maintain a targeted ratio of debt to equity and debt to earnings before interest, taxes, depreciation and amortization. We believe this is one of many important factors to maintaining a strong credit profile, which in turn helps ensure timely access to capital when needed.

Seasonality has a significant impact on our working capital due to our primary selling season which occurs during the period from March to ~~August.~~September. Consequently, our working capital increases during our first and second quarters ~~resulting~~which typically results in negative or modest cash flows from operations during those periods. Conversely, we experience a

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UFP INDUSTRIES, INC.

substantial decrease in working capital once we move beyond our peak selling season which typically results in significant cash flows from operations in our third and fourth quarters.

Due to the seasonality of our business and the effects of the Lumber Market, we believe our cash cycle (days of sales outstanding plus days supply of inventory less days payables outstanding) is a good indicator of our working capital management. As indicated in the table below, our cash cycle ~~increased~~improved to 4959 days from 4465 days during the ~~third~~first quarter ~~and increased to 52 days from 47 in the first nine months~~ of ~~2017~~2020 compared to the prior ~~periods,~~periods.


	Three Months Ended
	March 28,		March 30,
	2020		2019
Days of sales outstanding		34		34
Days supply of inventory		46		52
Days payables outstanding		(21)		(21)
Days in cash cycle		59		65

The decrease in our days supply of inventory for the first three months of 2020 was primarily due to opportunistic buying when lumber prices were low during the ~~impact of~~

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

~~acquired operations which carry comparatively higher investments in inventory than our other operations. Excluding acquired operations our cash cycle was 44 days in the third~~fourth quarter of ~~2017~~2018 and ~~47 days~~into early 2019 to improve gross profits and higher levels of “safety stock” we carried to address transportation challenges and ensure timely deliveries to our customers. The company did not engage in ~~the first nine months~~this level of ~~2017.~~opportunistic buying in late 2019 and early 2020.

Three Months Ended

Nine Months Ended

September 30,

September 24,

September 30,

September 24,

2017

2016

2017

2016

Days of sales outstanding


31


31


31


31

Days supply of inventory

38

34

41

37

Days payables outstanding

(20)

(21)

(20)

(21)

Days in cash cycle

49

44

52

47

In the first ~~nine~~three months of ~~2017,~~2020, our cash ~~from~~used in operating activities was ~~$97.3~~$46.2 million, which was comprised of net earnings of ~~$90.9~~$40.6 million and ~~$41.3~~$21.9 million of non-cash expenses, offset by a ~~$34.9~~$108.6 million seasonal increase ~~in cash invested~~ in working capital since the end of December ~~2016 due to the strong sales growth and higher lumber prices. Comparatively, cash from~~2019. Our operating ~~activities was $136.4~~cash flow this year improved by $9.7 million in the first nine months of 2016, which was comprised of net earnings of $83.3 million and $32.3 million of non-cash expenses, offset by a $20.8 million seasonal decrease in working capital since the end of 2015. The increase in working capital compared to the same period of last year ~~was~~ primarily due to ~~significant increases~~an improvement in ~~inventory~~earnings and ~~accounts receivable offset by increases~~an increase in ~~accounts payable which can be attributed to sales growth~~non-cash expenses and ~~higher lumber prices.~~losses.

Acquisitions and purchases of property, plant, and equipment comprised most of our cash used in investing activities during the first ~~nine~~three months of ~~2017~~2020 and totaled ~~$59.9~~$18.5 million and ~~$57.2~~$27.2 million, respectively. Outstanding purchase commitments on existing capital projects totaled approximately ~~$26.1~~$26.3 million on ~~September 30, 2017. We currently plan~~March 28, 2020. Notable areas of capital spending include projects to ~~spend $70 million for~~expand capacity and enhance the ~~year~~productivity of our Deckorators product line, several projects to expand manufacturing capacity to serve industrial customers and achieve efficiencies through automation, improvements to a number of facilities, and increase our transportation capacity (tractors, trailers) in ~~2017 on capital expenditures.~~order to meet higher volumes and replace old rolling stock. We intend to fund capital expenditures and purchase commitments through our operating cash flows or our revolving credit facility for the balance of the year. ~~Comparatively, capital expenditures were $35.7 million during the first nine months of 2016.~~ The ~~increase in our capital expenditures in 2017 is primarily due to the additional requirements of our recently acquired operations~~sales and ~~an increase in our “expansionary and efficiency” capital expenditures tied to initiatives including new products, value-added product capacity expansion, and automation. The sale and purchase~~purchases of investments totaling ~~$12.2~~$11.3 million and ~~$4.2~~$14 million, respectively, are due to investment activity in our captive insurance subsidiary.

Cash flows from financing activities primarily consisted of net ~~borrowings under our revolving credit facility~~repayments of debt of approximately ~~$36.2 million, primarily to finance the $59.9 million of acquisitions we completed in the first nine months of 2017.~~$2.8 million. Additionally, we ~~had $9.2~~paid a quarterly dividend totaling $7.8 million, or $0.125 per share, and repurchased approximately 756,000 shares of our common stock for $29.2 million resulting in ~~dividend payments and $13.0 million in payments for stock repurchases.~~an average price paid of $38.62.

On ~~September 30, 2017,~~March 28, 2020, we had ~~$70.8~~$3.7 million outstanding on our ~~$295~~$375 million revolving credit ~~facility. The outstanding revolving credit~~ facility, ~~also includes letters of credit totaling~~and we had approximately ~~$9.8 million on September 30, 2017; as a result, we have approximately $224.2~~$361.5 million in remaining availability ~~on our revolver~~ after considering $9.8 million in outstanding letters of credit. Additionally, we have $150 million in availability under aan existing “shelf agreement” for long term ~~debt with a current lender.~~debt. Financial covenants on the unsecured revolving credit facility and unsecured notes include minimum interest tests and a maximum leverage ratio. The agreements also restrict the amount of additional indebtedness we may incur and the amount of assets which may be sold. We were in compliance with all our covenant requirements on ~~September 30, 2017.~~March 28, 2020.

ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS

See Notes to Unaudited Consolidated Condensed Financial Statements, Note E, “Commitments, Contingencies, and Guarantees.”

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UFP INDUSTRIES, INC.

CRITICAL ACCOUNTING POLICIES

In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States. These principles require us to make certain estimates and apply judgments that affect our financial position and

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~~UNIVERSAL FOREST PRODUCTS, INC.~~

results of operations. We continually review our accounting policies and financial information disclosures. There have been no material changes in our policies or estimates since December ~~31, 2016.~~28, 2019.

Under the recent re-organization of our reportable segments now centered on our primary markets (retail, industrial, and construction), there were no indicators for impairment for any of the new reporting units. We continue to monitor the results of idX (a reporting unit under the Construction segment) as they have performed below expectations through 2019. While it has faced challenging end market conditions resulting in this under-performance, we believe our growth and operating improvement strategies and related long-term projections for idX are still reasonable and attainable. Consequently, while the risk of impairment exists, management does not believe an impairment is currently required. Should the Company’s future analysis indicate a significant change in any of the triggering events for this reporting unit, it could result in impairment of the carrying value of goodwill to its implied fair value. There can be no assurance that the Company’s future goodwill impairment testing will not result in a charge to earnings. The total value of goodwill and identifiable intangibles associated with the idX reporting unit is $12.3 million and $4.5 million, respectively, at the end of March 2020.

FORWARD OUTLOOK

Most recently, the Company’s goals have been to:

●

Achieve long-term unit sales growth that exceeds positive U.S. GDP by 4 percent to 6 percent;

●

Grow earnings from operations in excess of our unit sales growth; and

●

Earn a return on invested capital in excess of our weighted average cost of capital.

While we believe the effective execution of our strategies will allow us to continue to achieve these long-term goals in the future, our ability to achieve them in 2020 has been adversely impacted by the COVID-19 pandemic. The following variables should be considered when evaluating our performance for the remainder of 2020.

●

We have experienced a decrease in customer demand and sales. While the vast majority of our customers and operations have been deemed to be essential businesses under the numerous stay at home orders that have been issued by states in which we operate, some of our customers do not meet these requirements and have temporarily shut down. For those customers who remain operating, demand has declined for the majority of them. Market indicators that should be considered when evaluating future demand for our products include:

Same store sales growth of national home improvement retail customers, the leading indicator for remodeling activity and home improvement spending forecasts. Sales of our Retail segment comprises approximately 35% of our annual total sales.

Housing starts in the northeast and mid-Atlantic states, Colorado, and Texas. Sales of our Site Built business unit within our Construction segment comprises approximately 16% of our total annual sales.

Production of manufactured housing. Sales of our Factory Built business unit within our Construction segment comprises 10% of our total annual sales.

Non-residential construction spending. Sales of our Commercial and Concrete Forming business units within our Construction segment comprises approximately 10% of our total annual sales.

Industrial production, Purchasing Managers Index, and U.S. GDP. Sales of our Industrial segment comprises approximately 25% of our total annual sales.

●

We have over 150 geographically dispersed plant locations, many of which have the ability to serve multiple market segments. These capabilities enhance our ability to supply our customers from multiple locations in

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UFP INDUSTRIES, INC.

the event an operation is idled due to the pandemic. To date, two of our operations have been temporarily idled and one has been permanently idled. We do not anticipate a significant loss of sales from these actions. Depending on the length of the “stay at home” orders and the severity of the impact on future customer demand, we may temporarily or permanently idle additional locations in the future. These actions could result in certain losses including asset impairment charges to property, plant and equipment, right of use leased assets, inventory and other long-lived assets as well certain exit costs.

●

On a consolidated basis, and based on our 2019 results of operations and business mix, we believe our decremental operating margin is in a range of 10% to 15% of net sales. In other words, we believe for every dollar decrease in sales, relative to the prior year, our earnings from operations may decline by 10 cents to 15 cents. As a point of reference, our peak to trough decremental operating margin during the Great Recession was approximately 13.5% (2006 peak to 2011 trough). In addition to the variables above, factors that may cause our actual results to vary significantly from this range include:

Changes in our selling prices

Changes in our sales mix by market segment and product

The impact and level of the Lumber Market and trends in the commodity costs of our products

Changes in labor rates

Our ability to reduce variable manufacturing, freight, selling, general, and administrative costs, particularly certain personnel costs, in line with net sales

The results of our salaried bonus plan, which is based on pre-bonus profits and achieving minimum levels of pre-bonus return on investment over a required hurdle rate

●

We have reduced our capital expenditure budget to $80 million from $100 million for 2020.

●

The CARES act allows us to defer certain payroll taxes from the end of March through the end of our 2020 fiscal year, which we estimate will total approximately $20 million. This liability must be paid in equal annual installments on December 31, 2021 and December 31, 2022.

●

We believe our cash cycle will remain consistent with historical trends and result in a reduction in working capital and increase in cash as sales decline.

The Company has a strong balance sheet and liquidity position, which improved to $433 million at the end of April 2020. Based on current economic forecasts of GDP and other factors above, as well as our assumptions for projected sales for the balance of the year, we believe the Company will generate positive cash flow and net earnings for the full fiscal year of 2020, while continuing to enhance its strong liquidity position.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

We are exposed to market risks related to fluctuations in interest rates on our variable rate debt, which consists of a revolving credit facility and industrial development revenue bonds. We do not currently use interest rate swaps, futures contracts or options on futures, or other types of derivative financial instruments to mitigate this risk.

For fixed rate debt, changes in interest rates generally affect the fair market value, but not earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not influence fair market value, but do affect future earnings and cash flows. We do not have an obligation to prepay fixed rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we would be required to refinance it.

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UFP INDUSTRIES, INC.

We are subject to fluctuations in the price of lumber. We experience significant fluctuations in the cost of commodity lumber products from primary producers (the “Lumber Market”). A variety of factors over which we have no control, including government regulations, transportation, environmental regulations, weather conditions, economic conditions, and natural disasters, impact the cost of lumber products and our selling prices. While we attempt to minimize our risk from severe price fluctuations, substantial, prolonged trends in lumber prices can affect our sales volume, our gross margins, and our profitability. We anticipate that these fluctuations will continue in the future. (See “Impact of the Lumber Market on Our Operating Results.”)

Our international operations have exposure to foreign currency rate risks, primarily due to fluctuations in their local currency, which is their functional currency, compared to the U.S. ~~dollar.~~Dollar. Additionally, certain of our operations enter into transactions that will be settled in a currency other than the U.S. Dollar. We ~~have~~ entered into forward foreign exchange rate contracts in ~~2017~~2018, which have since expired, and may enter into further forward contracts in the future associated with mitigating the foreign currency exchange risk. Historically, our hedge contracts are deemed immaterial to the financial statements, however any material hedge contract in the future will be disclosed.

Item 4. Controls and Procedures.

(a)

Evaluation of Disclosure Controls and Procedures. With the participation of management, our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15e and 15d – 15e) as of the quarter ended ~~September 30, 2017~~March 28, 2020 (the “Evaluation Date”), have concluded that, as of such date, our disclosure controls and procedures were effective.

(b)

Changes in Internal Controls. During the quarter ended ~~September 30, 2017,~~March 28, 2020, there were no changes in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial ~~reporting.~~

reporting; however, due to the segment structure change, there was a material change in our internal controls specific to the segment structure change process.

2827

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~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

PART II. OTHER INFORMATION

Item 1A. Risk Factors.

We may be adversely affected by the impact of COVID-19 (Coronavirus) pandemic. Disease outbreaks, such as the COVID-19 pandemic, could have an adverse impact on the Company's operations and financial results.These outbreaks may adversely impact our business, consolidated results of operations and financial condition, such as the current COVID-19 pandemic. COVID-19, as well as measures taken by governmental authorities and businesses to limit the spread of this virus, may result in an adverse change in customer demand and our sales, interfere with the ability of our employees and suppliers to perform and function in a manner consistent with targeted objectives and otherwise adversely impact the efficiency of our operations. This has caused, and may continue to cause, us to materially curtail certain of our business operations, and has had and could continue to have, a material adverse effect on the results of our operations and cash flow.

Adverse economic conditions and our customers’ ability to operate may impact their ability to pay. This may result in higher write-offs of receivables than we normally experience. We continue to monitor our customers’ business activities, payment patterns, and credit profiles carefully and make changes in our terms when necessary in response to this risk. As a result, our accounts receivable aging at the end of April was over 90% current. Most recently our bad debt expense as a percentage of sales was 0.09%, 0.03%, and 0.03%, in 2019, 2018, and 2017, respectively. During the most difficult collection period of the Great Recession, from 2008 through 2010, our bad debt expense as a percentage of sales averaged 0.25%.

There could be limited future availability of materials from our suppliers. While many of our suppliers have reduced their manufacturing capacity in response to the anticipated reduction in demand, we currently believe we have sufficient sources of supply to meet our customers’ needs in our primary product categories.

~~None.~~

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

None.

(b)

None.

(c)

Issuer purchases of equity securities.


Fiscal Month	(a)	(b)	(c)	(d)
December 29, 2019 – February 1, 2020	—	—	—	1,860,354
February 2 – February 29, 2020	—	—	—	1,860,354
March 1 – March 28, 2020	756,397	38.62	756,397	1,103,957

Fiscal Month

(a)

(b)

(c)

(d)
July 2 - August 5, 2017

2,800

84.01

—

2,755,923
August 6 - September 2, 2017

34,900

80.40

—

2,721,023
September 3 - September 30, 2017

—

—

—

2,721,023

(a)

~~(a)~~

Total number of shares purchased.

(b)

~~(b)~~

Average price paid per share.

(c)

~~(c)~~

Total number of shares purchased as part of publicly announced plans or programs.

(d)

~~(d)~~

Maximum number of shares that may yet be purchased under the plans or programs.

On November 14, 2001, the Board of Directors approved a share repurchase program (which succeeded a previous program) allowing us to repurchase up to 2.5 million shares of our common stock. On October 14, ~~2011,~~2010, our Board authorized an additional 2 million shares to be repurchased under our share repurchase program. The total number of remaining shares that may be repurchased under the program is approximately ~~2.8~~1.1 million.

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UFP INDUSTRIES, INC.

Item 5. Other Information.

None.

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~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

PART II. OTHER INFORMATION

Item 6. Exhibits.

The following exhibits (listed by number corresponding to the Exhibit Table as Item 601 in Regulation S-K) are filed with this report:


31	Certifications.

	(a)	Certificate of the Chief Executive Officer of ~~Universal Forest Products,~~UFP Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

	(b)	Certificate of the Chief Financial Officer of ~~Universal Forest Products,~~UFP Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

32	Certifications.

	(a)	Certificate of the Chief Executive Officer of ~~Universal Forest Products,~~UFP Industries, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

	(b)	Certificate of the Chief Financial Officer of ~~Universal Forest Products,~~UFP Industries, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350).

101	Interactive Data ~~File.~~File formatted in iXBRL (Inline eXtensible Business Reporting Language).

	(INS)	~~XBRL~~iXBRL Instance Document.

	(SCH)	~~XBRL~~iXBRL Schema Document.

	(CAL)	~~XBRL~~iXBRL Taxonomy Extension Calculation Linkbase Document.

	(LAB)	~~XBRL~~iXBRL Taxonomy Extension Label Linkbase Document.

	(PRE)	~~XBRL~~iXBRL Taxonomy Extension Presentation Linkbase Document.

	(DEF)	~~XBRL~~iXBRL Taxonomy Extension Definition Linkbase Document.

104	Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document).

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~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	~~UNIVERSAL FOREST PRODUCTS,~~UFP INDUSTRIES, INC.

Date: ~~November 1, 2017~~May 6, 2020	By:	/s/ Matthew J. Missad
	Matthew J. Missad,
	Chief Executive Officer and Principal Executive Officer


Date: ~~November 1, 2017~~May 6, 2020	By:	/s/ Michael R. Cole
	Michael R. Cole,
	Chief Financial Officer,
	Principal Financial Officer and
	Principal Accounting Officer

PART I.		FINANCIAL INFORMATION.	Page No.

	Item 1.	Financial Statements

		Condensed Consolidated ~~Condensed~~ Balance Sheets at ~~September~~March 28, 2020, December 28, 2019 and March 30, ~~2017, December 31, 2016 and September 24, 2016~~2019	3


		Condensed Consolidated ~~Condensed~~ Statements of Earnings and Comprehensive Income for the Three Months Ended March 28, 2020 and ~~Nine Months Ended September~~March 30, ~~2017 and September 24, 2016~~2019	4


		Condensed Consolidated ~~Condensed~~ Statements of Shareholders’ Equity for the ~~Nine~~Three Months Ended ~~September~~March 28, 2020 and March 30, ~~2017 and September 24, 2016~~2019	5


		Condensed Consolidated ~~Condensed~~ Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September~~March 28, 2020 and March 30, ~~2017 and September 24, 2016~~2019	6


		Notes to Unaudited Condensed Consolidated ~~Condensed~~ Financial Statements	7


	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15


	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	28
			26

	Item 4.	Controls and Procedures	28
			27
~~PART II.~~		~~OTHER INFORMATION~~
PART II.		OTHER INFORMATION

	Item 1.	Legal Proceedings – NONE

	Item 1A.	Risk Factors ~~– NONE~~	29
			28

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	29
			28

	Item 3.	Defaults upon Senior Securities – NONE

	Item 4.	Mine Safety Disclosures – NONE

	Item 5.	Other Information – NONE	29


	Item 6.	Exhibits	30


(in thousands, except share data)
	September 30,		December 31,		September 24,
	2017		2016		2016
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	22,044	$	34,091	$	36,683
Restricted cash		905		398		909
Investments		10,781		10,348		10,453
Accounts receivable, net		419,183		282,253		343,771
Inventories:
Raw materials		203,930		198,954		180,740
Finished goods		208,556		198,273		189,188
Total inventories		412,486		397,227		369,928
Refundable income taxes		763		11,459		7,407
Other current assets		22,438		20,662		21,636
TOTAL CURRENT ASSETS		888,600		756,438		790,787
DEFERRED INCOME TAXES		1,899		1,546		2,416
RESTRICTED INVESTMENTS		7,982		—		—
OTHER ASSETS		7,634		8,617		8,757
GOODWILL		212,029		198,535		207,832
INDEFINITE-LIVED INTANGIBLE ASSETS		7,580		2,340		2,340
OTHER INTANGIBLE ASSETS, NET		36,093		26,731		14,014
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment		754,175		699,462		717,287
Less accumulated depreciation and amortization		(429,066)		(401,611)		(432,796)
PROPERTY, PLANT AND EQUIPMENT, NET		325,109		297,851		284,491
TOTAL ASSETS		1,486,926		1,292,058		1,310,637
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Cash overdraft	$	26,617	$	19,761	$	13,940
Accounts payable		171,774		124,660		137,979
Accrued liabilities:
Compensation and benefits		88,185		92,441		99,549
Other		50,179		32,281		57,104
Current portion of long-term debt		2,197		2,634		1,584
TOTAL CURRENT LIABILITIES		338,952		271,777		310,156
LONG-TERM DEBT		145,884		109,059		110,362
DEFERRED INCOME TAXES		22,806		20,817		14,066
OTHER LIABILITIES		29,204		29,939		28,963
TOTAL LIABILITIES		536,846		431,592		463,547
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, 20,391,399, 20,342,069 and 20,330,939		20,391		20,342		20,331
Additional paid-in capital		200,778		185,333		183,962
Retained earnings		715,497		649,135		637,536
Accumulated other comprehensive income		(871)		(5,630)		(4,854)
Total controlling interest shareholders’ equity		935,795		849,180		836,975
Noncontrolling interest		14,285		11,286		10,115
TOTAL SHAREHOLDERS’ EQUITY		950,080		860,466		847,090
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,486,926	$	1,292,058	$	1,310,637


(in thousands, except per share data)
	Three Months Ended				Nine Months Ended
	September 30,		September 24,		September 30,		September 24,
	2017		2016		2017		2016
NET SALES	$	1,056,586	$	826,665	$	2,975,091	$	2,380,909
COST OF GOODS SOLD		911,899		708,611		2,561,424		2,028,629
GROSS PROFIT		144,687		118,054		413,667		352,280
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		92,416		74,502		273,676		223,153
EARNINGS FROM OPERATIONS		52,271		43,552		139,991		129,127
INTEREST EXPENSE		1,481		1,096		4,825		3,274
INTEREST INCOME		(130)		(119)		(541)		(431)
EQUITY IN EARNINGS OF INVESTEE		1		(50)		(25)		(241)
		1,352		927		4,259		2,602
EARNINGS BEFORE INCOME TAXES		50,919		42,625		135,732		126,525
INCOME TAXES		16,250		13,861		44,855		43,268
NET EARNINGS		34,669		28,764		90,877		83,257
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(976)		(945)		(2,480)		(2,828)
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST	$	33,693	$	27,819	$	88,397	$	80,429

EARNINGS PER SHARE - BASIC	$	1.65	$	1.36	$	4.32	$	3.95
EARNINGS PER SHARE - DILUTED	$	1.64	$	1.36	$	4.31	$	3.94

OTHER COMPREHENSIVE INCOME:
NET EARNINGS		34,669		28,764		90,877		83,257
OTHER COMPREHENSIVE GAIN (LOSS)		1,719		(1,156)		6,141		(1,521)
COMPREHENSIVE INCOME		36,388		27,608		97,018		81,736
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		(975)		(495)		(3,862)		(1,576)
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$	35,413	$	27,113	$	93,156	$	80,160


(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 at December 26, 2015	$	20,142	$	171,562	$	565,636	$	(4,585)	$	13,654	$	766,409
Net earnings						80,429				2,828		83,257
Foreign currency translation adjustment								(620)		(1,252)		(1,872)
Unrealized gain (loss) on investment & foreign currency								351				351
Distributions to noncontrolling interest										(3,160)		(3,160)
Purchases of noncontrolling interest				855						(1,955)		(1,100)
Cash dividends $0.420 per share						(8,529)						(8,529)
Issuance of 5,195 shares under employee stock plans		5		390								395
Issuance of 133,293 shares under stock grant programs		133		5,143								5,276
Issuance of 50,742 shares under deferred compensation plans		51		(51)								—
Expense associated with share-based compensation arrangements				1,568								1,568
Accrued expense under deferred compensation plans				4,495								4,495
Balance at September 24, 2016	$	20,331	$	183,962	$	637,536	$	(4,854)	$	10,115	$	847,090
Balance at December 31, 2016		20,342		185,333		649,135		(5,630)		11,286		860,466
Net earnings						88,397				2,480		90,877
Foreign currency translation adjustment								4,325		1,382		5,707
Unrealized gain (loss) on investment & foreign currency								434				434
Distributions to noncontrolling interest										(3,272)		(3,272)
Additional purchases of noncontrolling interest										2,409		2,409
Cash dividends - $0.450 per share						(9,208)						(9,208)
Issuance of 5,975 shares under employee stock plans		6		470								476
Issuance of 142,775 shares under stock grant programs		143		7,037								7,180
Issuance of 49,160 shares under deferred compensation plans		49		(49)								—
Repurchase of 148,580 shares		(149)				(12,827)						(12,976)
Expense associated with share-based compensation arrangements				1,978								1,978
Accrued expense under deferred compensation plans				6,009								6,009
Balance at September 30, 2017	$	20,391	$	200,778	$	715,497	$	(871)	$	14,285	$	950,080


	September 30, 2017						September 24, 2016
	Quoted		Prices with				Quoted		Prices with
	Prices in		Other				Prices in		Other
	Active		Observable				Active		Observable
	Markets		Inputs				Markets		Inputs
(in thousands)	(Level 1)		(Level 2)		Total		(Level 1)		(Level 2)		Total
Money market funds	$	64	$	413	$	477	$	64	$	132	$	196
Fixed income funds		1,299		6,905		8,204		2,049		2,335		4,384
Equity securities		10,194		—		10,194		5,592		—		5,592
Mutual funds:
Domestic stock funds		335		—		335		760		—		760
International stock funds		87		—		87		70		—		70
Target funds		260		—		260		234		—		234
Bond funds		208		—		208		203		—		203
Total mutual funds		890		—		890		1,267		—		1,267
Total	$	12,447	$	7,318	$	19,765	$	8,972	$	2,467	$	11,439
Assets at fair value	$	12,447	$	7,318	$	19,765	$	8,972	$	2,467	$	11,439


					Net
Company	Acquisition		Intangible		Tangible		Operating
Name	Date	Purchase Price	Assets		Assets		Segment
	May 26, 2017	$5,042 cash paid for 100% asset purchase	$	4,880	$	162	South
Go Boy Pallets, LLC ("Go Boy")	A manufacturer and distributor of industrial pallets and packaging in Georgia and North Carolina. Go Boy has annual sales of approximately $8 million. The acquisition of Go Boy enabled us to expand our industrial packaging product offering and lumber sourcing in this region.
	March 6, 2017	$31,818 cash paid for 100% asset purchase	$	7,533	$	24,285	South
Robbins Manufacturing Co. ("Robbins")	A manufacturer of treated wood products with facilities in Florida, Georgia, and North Carolina. Robbins has annual sales of approximately $86 million. The acquisition of Robbins allowed us to expand our presence in this region and serve customers more cost effectively.
	March 6, 2017	$22,789 cash paid for 100% asset purchase	$	14,266	$	8,523	North

Quality Hardwood Sales, LLC ("Quality")	A manufacturer and supplier of hardwood products, including components of cabinets used in homes and recreational vehicles. Quality has annual sales of approximately $30 million. The acquisition of Quality enabled us to expand our product offering to include hardwood-based products.
	November 29, 2016	$9,455 cash paid for 100% stock purchase	$	7,314	$	2,141	All Other
The UBEECO Group Pty. Ltd. ("Ubeeco")	A manufacturer and distributor of a variety of wood packaging and alternative material products, including boxes, crates, pallets, skids, protective packaging, packaging accessories and loose lumber. Ubeeco has annual sales of approximately $20 million. The acquisition of Ubeeco allows us to make progress on our goal of becoming a global provider of packaging solutions.
	September 16, 2016	$66,691 cash paid for 100% stock purchase which includes $11,337 in net cash received. Also, paid $86,294 to retire outstanding debt and $6,536 of certain other obligations.	$	17,455	$	49,236	All Other
idX Holdings, Inc. ("idX")	A designer, producer, and installer of customized interior fixtures and related products used in a variety of commercial structures. idX has annual sales of $300 million. The acquisition of idX enables us to enhance our design, product and service offering to become a tier 1 supplier of interior fixtures to retail customers, and continue to use idX's capabilities to continue to develop new markets for growth. Our goal is to achieve long-term synergies, including:
	a.	Eliminating redundant administrative support costs.
	b.	Using the scale advantage of the Company to reduce material costs of common raw materials.
	c.	Utilizing manufacturing capacity of certain existing locations to supply idX.
	d.	Utilizing idX’s international footprint to identify sourcing opportunities for certain products.
	e.	Cross selling one another’s products and services with our respective customers.
	f.	Collaborating on new product development.
	July 29, 2016	$1,246 cash paid for asset purchase	$	405	$	841	North
Seven D Truss, L.P.	A manufacturer and distributor of roof and floor trusses. 7D had annual sales of approximately $4.0 million. The acquisition of 7D gave us the opportunity to consolidate operations with our Gordon, Pennsylvania location.


	Three Months Ended September 30, 2017
	North		South		West		All Other		Corporate		Total
Net sales to outside customers	$	310,384	$	206,050	$	378,714	$	161,438	$	—	$	1,056,586
Intersegment net sales		18,897		18,817		21,384		47,539		—		106,637
Segment operating profit		16,697		10,234		22,538		6,882		(4,080)		52,271


	Three Months Ended September 24, 2016
	North		South		West		All Other		Corporate		Total
Net sales to outside customers	$	267,156	$	173,715	$	335,981	$	49,813	$	—	$	826,665
Intersegment net sales		14,318		9,642		22,054		4,574		—		50,588
Segment operating profit		14,630		9,900		19,962		2,959		(3,899)		43,552


	Random Lengths Composite
	Average $/MBF
	2017			2016
January	$	356		$	316
February		393			310
March		401			321
April		424			345
May		416			356
June		399			353
July		411			351
August		417			367
September		416			354

Third quarter average	$	415		$	357
Year-to-date average	$	404		$	341

Third quarter percentage change		16.2	%
Year-to-date percentage change		18.5	%


	Random Lengths SYP
	Average $/MBF
	2017			2016
January	$	397		$	358
February		420			357
March		433			366
April		438			389
May		416			397
June		399			382
July		381			380
August		383			391
September		387			375

Third quarter average	$	384		$	382
Year-to-date average	$	406		$	377

Third quarter percentage change		0.5	%
Year-to-date percentage change		7.7	%


	Net Sales						Net Sales
	North Segment by Market						North Segment by Market
	Three Months Ended						Nine Months Ended
(in thousands)	September 30,		September 24,				September 30,		September 24,
Market Classification	2017		2016		% Change		2017		2016		% Change
Retail	$	139,284	$	131,333	6.1	%	$	387,925	$	369,699	4.9	%
Industrial		40,192		27,524	46.0	%		114,533		87,287	31.2	%
Construction		137,616		113,897	20.8	%		373,838		316,204	18.2	%
Total Gross Sales		317,092		272,754	16.3	%		876,296		773,190	13.3	%
Sales Allowances		(6,708)		(5,598)	19.8	%		(18,438)		(15,124)	21.9	%
Total Net Sales	$	310,384	$	267,156	16.2	%	$	857,858	$	758,066	13.2	%


	Net Sales						Net Sales
	South Segment by Market						South Segment by Market
	Three Months Ended						Nine Months Ended
(in thousands)	September 30,		September 24,				September 30,		September 24,
Market Classification	2017		2016		% Change		2017		2016		% Change
Retail	$	92,146	$	75,130	22.6	%	$	282,809	$	240,175	17.8	%
Industrial		69,390		61,749	12.4	%		201,928		185,529	8.8	%
Construction		49,054		40,385	21.5	%		145,387		118,223	23.0	%
Total Gross Sales		210,590		177,264	18.8	%		630,124		543,927	15.8	%
Sales Allowances		(4,540)		(3,549)	27.9	%		(13,748)		(10,688)	28.6	%
Total Net Sales	$	206,050	$	173,715	18.6	%	$	616,376	$	533,239	15.6	%


	Net Sales						Net Sales
	West Segment by Market						West Segment by Market
	Three Months Ended						Nine Months Ended
(in thousands)	September 30,		September 24,				September 30,		September 24,
Market Classification	2017		2016		% Change		2017		2016		% Change
Retail	$	115,069	$	99,762	15.3	%	$	347,270	$	298,723	16.3	%
Industrial		145,132		126,836	14.4	%		401,850		347,902	15.5	%
Construction		123,026		113,488	8.4	%		353,238		305,962	15.5	%
Total Gross Sales		383,227		340,086	12.7	%		1,102,358		952,587	15.7	%
Sales Allowances		(4,513)		(4,105)	9.9	%		(13,614)		(12,399)	9.8	%
Total Net Sales	$	378,714	$	335,981	12.7	%	$	1,088,744	$	940,188	15.8	%


	Net Sales						Net Sales
	All Other Segment by Market						All Other Segment by Market
	Three Months Ended						Nine Months Ended
(in thousands)	September 30,		September 24,				September 30,		September 24,
Market Classification	2017		2016		% Change		2017		2016		% Change
Retail	$	45,396	$	33,049	37.4	%	$	144,782	$	109,606	32.1	%
Industrial		114,792		15,907	621.6	%		264,364		41,000	544.8	%
Construction		331		4	8,175.0	%		533		4	13,225.0	%
Total Gross Sales		160,519		48,960	227.9	%		409,679		150,610	172.0	%
Sales Allowances & Other		919		853	7.7	%		2,434		(1,194)	(303.9)	%
Total Net Sales	$	161,438	$	49,813	224.1	%	$	412,113	$	149,416	175.8	%


Fiscal Month	(a)	(b)	(c)	(d)
July 2 - August 5, 2017	2,800	84.01	—	2,755,923
August 6 - September 2, 2017	34,900	80.40	—	2,721,023
September 3 - September 30, 2017	—	—	—	2,721,023