UFPI - Earnings call transcript Q2 2022

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the UFP Industries Inc. Q2, 2022 Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a Q&A session. advised conference be being Please Instructions] that is today’s recorded. [Operator the now to like would conference to I Mr. hand over today, your speaker Gauthier, Communication Dick of Relations. President and Investor Vice Please ahead, sir. go

Dick Gauthier

our UFP CEO, Matt call and quarter conference second will the and Cole. in will Missad for the and offer and to its are conference at call available at prepared through entirety news CFO, all This call available Welcome be remarks for questions. today call replay simultaneously opened Industries. A investors Matt to interested media XXXX Mike be will webcast ufpi.com. is Mike Hosting also website. that the then

from Before Litigation subject These and to are remind that as to release XXXX. differ forward-looking I Missad, to expectations in the are statements Matt today’s Reform Securities filings These call materially in statements could and uncertainties and but presentation let include Commission. company’s to the uncertainties Private include Act press the you projections. defined turn of actual Securities with cause not factors me and identified press the the the and over risks Exchange those results that limited release risks and

Matt like the would to Now I call Missad. over turn to

Matt Missad

business we QX with of outlook to Net of in a sales but them continues the of of I’ll the Thank in for files have unit components. working for from much off, was incredible the up billion with UFP all lack look start family performance machine business state. a and construction. due to The more results been telling sunny results our we which demonstrate for would beautiful thank profit don’t $XXX Instead, in by earnings of night We’ll time bit. model, has team site X%. and built side segment. the dedication you the and has that of achievement. performance tell same you, more as were new Dick. a supply the tailwinds, the share. don’t our most in These The want are turning group quarter. as diluted built from them and $X.XX day But impacted future? us resilience EPS site and rapidly for falling The delivered the the team on overall music balance I this It’s market, says in turn and and benefited past negatively. in review companies. out were quarter has supply. are record teammates us market to lumber resulted up. about markets our these market softened are that song somewhat modest results spectacular QX the some experience At Northeast the order the and keeping were the records Net demand diversified let’s through part a at UFP with in well which a to sales back, The the units strong just strong of available $X.X Many migration party. day their queue ‘XX the pundits on from post first and congratulate stop skill, million performance

they’re ‘XX. we still the bullish the strong are as markets of ‘XX softened are market taking for for serve and and in orders And multifamily developers the pricing of advantage the balance ahead, materials. outlook Looking on owners

Reserve, QX actions and which the of rates on rate or surprisingly in by Federal on based outlook is forward latest XXXX declines the enough, through site QX built of Our increasing part show in predictions of QX XXXX.

see not and move approach patience dialogue wait change does favor months we be current or of to to impact to for the the each patient six exhibit allow absorbed three While rate acumen. the after a

continue our this of has still move built As inflationary and makes locations, option a homes next has earlier there of from performance good have ensure to as rationalized additional at environment. services modular supply worked it the a they homes yet forming operate are manufactured entry as term options. and from Where items They not tend our improve areas value declined suffer a improved In panel and significant in People assembled form and sales. priced expand very and look path too provide. not that presence result to convert opportunities result, for of are RV though during and With return seen outlook plan they QX The the the Factory They variable QX of did slowdown QX our very we price infrastructure has and mobile orders. Variable the business. as highly and year. sales is some to site-build our rate well although to normalize model targets. margin their built domestically spending. they expect market concrete growth the single percentage towards digit and up quarter are receive as Commercial forming level geographic some we margin construction any good to in will still an great on for Factory to should affordability seen is factory saw in business in during options interest well still which percentage starts need to level housing area, and large hard lower activity have in strong and be remained they that capacity product built attractive as issues designed, manufacturers rising heading in certain with concrete our declines significant this mix during built the to geographic imports units. functional is a during improvement a positive business. we the products where compression customer factory products quarter. move expand activity for custom from provide years. production chain overall remains our and two the Asia and a it supply appropriate long meet expected, over priced sticks the erosion

continue Moving solid demand spring as to better the retail retail Year-over-year northern generally markets. comparables were solutions, our after to customers slow June see to the in start in a business Deckorators to have are levels normal busy. to lead times back plastic for the composite remain well. as pre-pandemic seen contractors channel professional inventories levels throughout normal return wood units and the

plastic XX% which capacity, approximately still in levels. to XX% the wood XXXX the is operating operations at are of total We above composite

products to such are the lengthy increased and On Deckorators’ other at for base operating year, unmet today. by times to hand, a experience capacity we last our approximately mineral We compared on and Voyage. full our as lead capacity an still XX% basis continue demand annualized composite

to into end and capacity see And wood composites. We moving the traditional our redwood and XXX% by XXXX. ramp making mineral end we our and increase higher goal XXXX cedar continue based from installations expect complete products, our to year equipment over up jump primarily for of buyers away

increased advocates Poly essentials, installers and certified issues. customer higher driver of see In impact needed and to Cedar be aluminum our seasonally have and after acquisitions as inventories to the in QX chain earlier than concerns of normalized from this most freight due outdoor year. being ultra growth customers supply continued are a in here demand also see excited the professional the our we become brand Our of we they best continue continue to to primary have

other Our new Haven line is our of momentum will lawn tool as and by products expand we and too free offering. followed garden products several gaining be

dramatically We better to have the communicate and with been consumers. our QX. the prices to the and their in slowed merchandise orders business had mass or to costs our they’ve craft customers value proposition this higher in In increase handprint working reflect stores unit market input to customers

are has much we have down see channel. XX% lead so started of for as seasonal quarter supply inventory been falling needed pre-pandemic our a up. a build as due traditional XX as levels to the in to Most customers for also improvement. day large customers decreased time to the able normalized volume the In We have demand faced excess the with times ProWood lumber order lead majority inventory have products craft of to the Some catch up. has and market

distribution fire FR expand continues in Our up and to picking is market. product retardant the share ProWood

the market, cost a of QX. as at backlog Sunbelt. in lower solid The year Sunbelt expect to or We to similar not million decline Nevertheless, and approximately scope a impact XXXX. while will similar price level compared the had of lower QX, in as XXXX outdoor $X ago. rapid for ProWood is Situation performance favor consumer badly Sunbelt a adjustments did market in projects

not It purchasing eliminate model to their well improve Dempsey national PalletOne opportunity manufacturing, within packaging and create Instructional provides UFP continues with geographically gain national is dynamic our industrial will necessary may also the of sales try to to as continues footprint. more improve execute to expanding perform improve our supply be combination team improvement line Products bottom continue recent sales We as the targets and which overall as The that more to return chain. Forest well strategy sourcing meet a segment efficiencies The performance. or performance. as with additional business drive does to pricing programs, in we business accounts.

materials to business manufacturing. including that customers. design, our to provide proprietary product continue a our strip for and convert also value we is Enhancing of We good engineered mixed commodity pack added unique solutions example more

share alternative Our agriculture products business increases. is also the of petroleum cost as gaining based

businesses customers have ahead Looking somewhat some while remain others strong. slowed

not to the parts Europe continued in efficiencies opportunities our as are business and in our perform great end weakening Mexico with see housing reduce provide our opportunities. as of search going lagging gaining packaging standards. diverse in Australia customers gaining forward. growth remains pandemic. in our stability. demand in still the industrial grow coming business improving very our group, India slight given to and We we this in positive and mirror and products lead has are related end Middle chain industrial. well space, of tied and continue UFP We a which In similar international to generally nicely also the up the But out facing times. challenges manufacturing. markets supply to is performance operations overall the unit East our which products are as customer the new mix seen these well In improving we’ll strong helps markets have The outlook overall

side, sourcing On shipping continues costs the to world. international our resources the valuable of battle finding other parts in team while

look lumber in we and normal half transportation purchasing a at and back more stable and the panel market of we As expect XXXX.

higher by labor have and but offset improving And Our due rate fuel fuel party cost third increased to prices. are internal transportation decreases is availability increases. trucking costs potential being

remain rate expect to expect reductions. We do significant not we trucking availability also good but

we half inventories during As at and reducing are would they transportation like the as will look alleviated. our the of are overall them to back concerns expected than supply and we be year be we higher

the has higher freight Labor end. been have year through for by costs a and using have trucks be and rail pressure carriers cars. rather plagued equipment However, likely concern UFP third rail than caused created the us quarter which and continue and users have will pay to like through shortages to

through new piece continuing designed intellectual chain, stage Our acquisitions development, which and are through others businesses sales for are find accelerator Because and property of to products at value $XXX.X In innovation we the new and do. of exploring and to ensure commitment and $XXX.X the ventures an quarter and seeing our we our enable disrupt improvement develop come faster new scaling. to we property, before get products, better process were million of new innovate, is and processes technology commercialization continue efforts have new stronger Innovation product the Fund, continue million the and to our year-to-date. to to earlier and a products our intellectual products

investment. a year more industry. some our develop As and and seven to issue a continues pipeline, to tight the we an in from term several to time results a it has Labor for over deliver unique be to others products while million has up it which remains long period of will expect somewhat. years $XXX three and new loosened result, very markets, In find over robust invest to the next

Effective our generally quarters. to intend benefits takeaway, fall previous protecting in reasonable and we to prioritize on growth, the years, value of manage continue better capital been over long and hourly programs our Regardless shareholders. allocation we more have our internally long have term next this focus face a and spring enhancing able providing keep will significantly, teammate. bonus shareholder than Wages on our for them cornerstone. increased solid value. We return we few capital and with term of hurdles the we creating on head a and to face However, and is

growth strategic and products expansionary Our to directed capital capital new expenditures. services, acquisitions, and is efficiency

our We consistent of we’ll acquisition keep in and future. of disciplined our with have plenty view model pipeline, approach but adjust targets our the the

sheet strong advantage opportunistic have they the We a dry take of of powder which in supply balance to us situations and great occur runways. targeted a enables as

In addition to industrial solution the all goal in products of our and growth business opportunities pursue being see our global we as services new we provider. units, packaging with

our well unit’s new recent our footprint. network, We will business and as across our continue as to acquisitions M&A scale finding throughout products

and increase share Our return shareholders takes to forms; three dividends on cash in value. repurchases, capital share

on shareholders remain demand September quarter, dividends the are to consistent our investment we value our and while return thoughtful report a September for authorized that in on again XX approach our X. board record to to addition And per is the to believe of share payable $X.XX adds on shareholders true we repurchases organization, the and to will throughout during the growing dividend of that the stay focus. In and higher share pleased capital

Now let’s more turn to it information. over to Cole Mike share

Mike Cole

Thanks, Matt everyone. and good afternoon

trailing growth quarter EBITDA volumes results with EBITDA unit growth, including and XX than XX less to debt by XXX capital X% sales liquidity over a XX% times sheet X.X XX% this basis of return margin balance organic points XX% expansion consolidated record and month invested strong are over to trailing X.X billion. Our net last month EBITDA on of a highlighted year adjusted X% a

in our selling decrease our certain decrease X% a consisted of sales of through of decreased unit sales The our all transfer more in results. optimally and QX year-over-year construction X%. the in business a segment segments business and strong walk a acquisitions decline year with quarter our growth we’ll align starting organic experienced Sales is unit of Now, detail the in segment. with difficult to of decline nearly unit to continue from retail comparison of X% retail result and we statements organic by the financial XX% for last to prices segment as units a the X% as in

year by unit year orders pricing strong value demand more didn’t next comparisons to we’ve product As will by execute price initiatives organically we steady demand. customers as you Sales recall and stopped was may inventories XX%. since QX This level Cumulatively anticipating QX. orders increased are driven When to industrial customers unit in were XX% quarter seen XXXX, continue segment as in that strong added last our significantly our retail improve and mix, increased of be the selling and value based increases which selling maintain have favorable. sales order consumer discipline. more materialize optimistic register slowed exceptionally sales our our fully flow sales of

Consistent take sales The the gross profitable margin our order in in and growth shortly. of the improvement sales Strong capacity I’ll including XX in flat of lead last new equipment channels. labor unit of to the new strategy our locations that with offset products of change the of existing our business organic demand million to through to accounts. sales beginning constraints, to again profits long from added quarter, was with organic selective on availability resulted by gains. Customer to million the share million gains market demonstrating on due unit of volumes unit customers, value focus we sales products. in components able XX gains Our balance softening loss review been continue of our organic includes share sales in market associated be we sales to on in signs and discussion of XX execution industry is we’ve acquisitions show These unit less in tremendous of growth intentional customers which higher the new were these to as mitigate increased times X%.

in remain backlogs in concrete Finally, X% in a Organic focused due and elevated site unit we build driven in demand our mid transfer XX% our show the prices, challenge we from segment of constraints regions of Atlantic, to organic Colorado by to built retail, of selective business take and also Multifamily pre-pandemic consisting unit growth. to and increase increased in growth on signs business being been Order sales increase XX% unit housing. XX% a selling Northeast and for files built the maximize softening the construction serve and commercial, commercial, was XX% beginning our business growth XX% units. so business our in in a a profitability. we forming of concrete factory demand is site built healthy increase Capacity XX% regions strong. have in the factory forming remain remain while business Texas to Within in levels. the

Moving down income the statement.

to sales of its Sunbelt net the unit. Industrials total totaling changes selling of products. increased units retail the added totaling industrial The quarter. over our year new XX%, $X building X% have million to decrease second dropped million profits and of of $X,XXX these primarily at gross an units $XX site realizable In in product this increased in favorable $XXX decreased June. based by to added Value that prices This or XX or was XX% XX increased $X total by last of or the by our added products lumber million cost business commercial significantly XX% under sales recorded profit variable sales have The million million value in and increase of XXXX tied our gross to built outpaced peak per primarily XX% also July, Value a million in March a factory increase year quarter last XX year. in June million, products increase constructions products including profit Retail a unit $XX profit segment and from an end mix, million. of by and the value initiative, driven By price $XX this $XX improved. increased due on our from by sold build or led or business as XX%, unit products in increased more have resulted increase Our by lower gross in ProWood, market, are a from business year. we at at the to for million. XX% which end end reserves stabilized. XX% XX%

You lumber prices and of end may June of August. end the fall by year continue $X,XXX $X,XXX May, recall that under approximately the to by dropped $XXX to to by rose of the last over end to

current favorable profits move the down the we’re positions inventory market we our well in timing of quarter. a positioned our improvement statement. to to income Given Continuing and lumber the show believe declines, gross next

lower increased Our These increase million million earned $X offset remaining sales recently the million culture while to aligned of plan reduce of expense, to reduce ultimate sure bonus results under a SG&A made our size resulted greater the number modifications year in of increases our incentives and increase We’ve be quarter. our benefits modifications decrease made investment. bonuses our expenses with bonus higher to from in and incentives, $XX more in result incentives accrued businesses. still The foster reward to value. The bonus is on as shareholder The by operating excluding for in our nearly other are encourages. the pre-bonus million teamwork new million including current make goal a appropriately bonus in debt adjustment and plan. return in decrease our drive primarily The profits well allocated rate our is wages a changes employees increase increase achieved, acquired a travel continue expense $X XX levels to growth the a of by in to in These increase broadly make due to of $X costs. million, $X and X a $XX bonus. a employees expense, that to rewarding bonus million when a consisted are million modifications our expense sure bad were to plan the

bonus XX% pre-bonus bad accrued to due in from operating plan provisions, profit. was SG&A bonus of by at QX in expense $XXX Our million sales expense QX our increases in of decreased operating old recorded pre-bonus profit. bonus expenses Sequentially, and primarily debt year-to-date the nearly Historically, $XXX now incentives. offset XX.X% lower under million expense approximately to

million in $X.X retail. operating in increase million in million a construction, a industrial increase profits million Acquisitions driven nearly $XX in operating Finally, by increased a profits. the increase $XX $XX $XX to contributed million our decrease and our

statement. Moving on flow to our cash

year-to-date Our expenses earnings $XXX increase million was since million $XX million net $XXX year compared compared cash for the year flows year. the of from consisted and last cash to a million of and operations net in to of last capital prior non in the $XXX end $XXX working million increase and net

the converting year, working due trends, than the lumber an half it business we working which We is during more $XXX our remain back normalized to anticipate last net our the in pattern. our inventory. historical XX million capital to day prices days to consistent cash increase management and levels primarily cash measure cycle capital our but our this year normal to increase a and days supply those of with higher assuming follows at forward, increased assess three seasonal of in year Looking

and delivery these could Our pushed And as of and capital of $XXX of $XX million for $XX on most to get announced equipment $XXX investing stock million, of Extended we $XX invested items previously XXXX. cause to us short fall expansionary acquisitions. year our of may CapEx plan XXXX, million expenditures activities million. CapEx million times rolling for lead included including the totaling to efficiency on

repurchases. included XX million cash our surplus over our availability cash only allocation With of in shelf flow lenders. at compared $XXX of of our liquidity financing XX the year to $X $XXX respect total and million structure in debt the our equity. trailing of billion June, $X.X resources net to total capital for billion was month dividends billion Finally, activities end EBITDA in And $X.X million share and and our XX was agreement of The credit facility, of plans. revolving under with generation cash also business million structure and capital provides comments with $XXX finish of plenty million up capital conservative under million $XXX about with consisting strength our of certain grow return to and and shareholders. our to us a capital our and I’ll

pursue approach We return investments, balanced a share buybacks, continue to and M&A. driven and across capital dividends,

$X.XX our Specifically, another year-over-year in just of share of board business approved a dividend network. reflecting increase quarterly a XX% future representing our confidence

rate ratios to and our consider determining again our year-over-year once and are continue We appropriate the raise yield when dividend. to pleased payout

far X.X $XX. shares stock an of our year repurchased So price at of million we’ve for the average

the remaining so have target. pre-established authorization when continue million hits will additional X.X do of price repurchase to shares times We up at our an balance year through and to the the

range automation of continues opportunities growth. now the capacity our and operations low of meet and our given advantage of include take of structural and automation packaging projects build the projects Priority operations, CapEx Notable investments Moving drive pallet automation expand lead machine expand the fleet I earlier. growth needs. to capacity expand the expand on million business enhance extended capacity times $XXX of enhance unit, of to appears UFP The geographically our added edge our wood working to long environments enhance of to transportation Deckorators our expand including and our and to value and our plants, built site other that have mentioned new strategies to be of potential the that end targeted due term likely more geographically, customers’ products.

Lastly, and to potential. are a our margin, in companies that continue all providing healthy I pursue higher a financials, strategic capabilities, It’s have pipeline Matt. growth while fit acquisition the and of return opportunities we enhance strong

Matt Missad

Mike. you, Thank

Now I’d like for open up questions. to it

Operator

Thank Please BMO Instructions] And Capital Markets. come [Operator from ahead. with Ketan will question our Mamtora go you. first

Ketan Mamtora

on UFP another and congratulations the to strong you, Thank quarter team.

were Because we what’s basis this about price down price, only Yet side. First Matt you I Southern have segment. retail prices a quarter, guys the on in at a it would X% the bit. you yellow look talk the with with fell sort question, sharply past second year-over-year starting of doing differently? Yellow quite down the is Can segment, are on what a happening closer on pine seen the lumber correlation your in quite even if was

Matt Missad

Yes. That’s we purchased a I And that how changed. good a on pricing specifically know I Ketan. don’t there’s and if I question, ton that of you can something know or that discipline, color give has specific lumber has how impacting the are think market. time. we there’s in lag things also may manage our that are inventories, other the be over definitely improved period of that But percentage there a I And to. some you referring

in market past a parts in months the pricing. timing growing does in prices keep the to this just more quarter the value of the at I is the think than had business toward become then we as us Dropping and weighted the and is then June the not year you out of giving generally more probably and more cleaner through other elevated running for lumber, less our little more fixed and that calculation spending, started the added the look quarter. accomplish it’s value means year, obviously, prices and declined, movements to more difficult a of sales business added timing the last do then and

disconnect why occur. to is So that reason that’s of part starting the

Ketan Mamtora

helpful. Okay, that’s

I about high versus more it But segment. price year-over-year we you how think does impact level, that would us when or falling of know a this see I at this positive kind that? having an QX Mike mean have of in will think Matt So performance about then quarter? of talked you the about in QX third

Matt Missad

things, the as of Sunbelt. and look That’s would did QX than a I lumber And results a we think XXXX little best to similar in expect disconnected that biggest better rest more Ketan way Well, the it think like should at ProWood, the profiles, at I the business what comparisons, take in demand the units said from probably is I it probably units year-over-year the given do as market. Mike are maybe XXXX. yield area look

Mike Cole

and I And year on that which that it that prices got well extent that there lower in to to lost make I what occurred operating this in cost the And and was positions July. for dead million they line with of never in the forward. in above two were a They but really think, seen August $XX market. into I’ve market adding cost market we maybe was because in before, was profit, were We to good the stabilized our of outset. margin basically guess, have last inventories we the year, obviously down year, got Ketan selling months. occurred is sales that’s million us on and drop Last straight market rate did going a in $X market down now stay that which those July something

a very just one. and gross positions QX to retail so And strong show improvement really that in we different pretty well dynamics us and profit feel

Ketan Mamtora

you. Got

and better where to too if lumber demand point? prices, and were would profile I’m fine this does tough change this. or dramatically they on not if prices put the So be again, to But but stay QX not line at trying lumber are side, QX on to too price it’s say the than if

Matt Missad

assume question related retail, Yes. which you’re your I what is took we Yes, it because to? for

Ketan Mamtora

Yes.

Matt Missad

down throughout market QX painful. from of you QX in impact was the see into change the selling to QX. Because And that that Yes.

Ketan Mamtora

Yes.

that’s back in now I Thank you. jump the helpful. Okay, queue.

Operator

next that our for come Elliot moment of Stanley with from question Stifel. line the will One

Stanley Elliot

marketing business even is up it we see negligible do you speaking, for enough nice of for selective, If should away of some more continue and much softening, to runway being kind and have you impact guys, less and and generally on kind the walking Matt, a business proceed there Hi all trend that improvement? maybe the mixing being more further very margins from taking selective. of thank actual question. done profitable you so the be guys job the that

Matt Missad

fair sales. would amount our I say of commodity specifically, more without still to is there’s type runway what margins guess grow added in referring us from a to, for more I I to you Stanley think what value are conversion as sales Yes knowing

And provide we product or should margin so would just versus in we products a overall margin, rate they’re in improve now I are a overall it. improve. Generally, caution with at selling specific from that margins, the value low you that total. will the specific in blended comparing

So it about. talking same you’re effect may have not the that corollary

Stanley Elliot

for more heard Switching Poly we’ve on, fair. see in marketplace. gears follow a so a is be with things this Is about guess to product? to Cedar nice Sounds and I’m assuming kind that a all the size I Deckorators planned margin availability of guys material can this you this Do more to And play internal going recycler. grow of as continue use? you play the

Matt Missad

Yes.

our acquisition, it at obviously, the grow think to continue and of was dedicated properly, definitely perspective, quite time will costs. down create path. that’s to reduce enhance think ways not sized we’d more the want a But the it operations more I there. capable it to Hopefully, needs. efficient. fully It decorators it all handling is like and to our And make term Deckorators, a we’ll of I long of opportunities from we be and

Stanley Elliot

kind with on having lumber out little bit. prices, lastly, M&A the a then settled environment, And of

well, kind the kind aggressive the in of out curious of kind it are with You disconnect? Just the year have you how M&A some a seller environment? of interested expectations being all still of settled as in back is half a

Matt Missad

chime Mike normalized use I I’ll think opposed of peak targets of We hitting look past Yes, we a what we numbers to our try as picture, year And or lot than to to just sure we’re numbers with ROI make kind call want the I have. at transactions. when broad detail gave the in still more so. you can

Mike? have So to in do to put talked things with diligent that to What but and and mind, willing in hopefully, maybe be that them. be you able come I’ve The expectations, from together. we’ll high see sellers we’ll dedicated still they’re down

Mike Cole

pipeline slower for we part opportunities a fewer have a many few, we’ve Even grow runways. so in it’s than though, though because when that is past. have a the lots that a business slower of little of great we’ve less be the them the bidders maybe And proposals the might think competitive. been seen past maybe probably than we’ve what it different little been in have I opportunities we in pipeline Yes bidding, in to units little their

what Matt relative valuation like careful to on and very So just said, we’re being peak performance. could be

So looking normalized. at we are

Stanley Elliot

guys, Perfect, thanks best for the time luck. and of

Operator

for A. ahead. Please come One from Davidson. D. the moment next will our go with that Kurt you. line question Thank Yinger of

Kurt Yinger

afternoon Mike. good thank and Matt you. And Great,

Matt Missad

Hi Kurt.

Kurt Yinger

lumber about me, and to just but mean, striking I was kind of on up still full kind we’ve kind Ketan’s don’t follow what positive on price retail basis, past. aimed impact but the double kind segment, And think wanted in and of to at really to talk done I of construction the seen getting understand lumbers question this it’s there industrial. digit isn’t kind of I given wanted I year-over-year story you’re I of it disconnected a

lumber the businesses the And pricing in question is, a some anything more on or of so issues is you’ve sustain else there? normalized timing there can kind guess those I environment? achieved going maybe Or even in

Matt Missad

so I different Yes, stories. probably they’re think two

So I absolutely and instincts to correct. your probably are would say, point construction

QX otherwise some and and lumber a agreements think so both there’s very was tailwind in there think continues normalized timing and pricing a I I in market that good in on that and don’t benefit situation.

in tail site a and say, I’d of improved there’s running business, But should size better more think their say efficient. they business is historical build, we getting have margins. the team certainly, And have I that’s in same wind than the scope by of token, lot effect and the I’d able QX. that be given to that particular,

much is more a situation. I On the probably other close would industrial, to hand, call what think normalized I

think And business were plus the sticks adjustment, portion bigger for I some and be efficiencies driven historical a they’ve And construction. what which not they’ve expanded to so the the I commodity industrial I’d how much like may more value as of how call but to can and and their some opposed panels to there look probably business five ago. years you and think

I that’s way it would Kurt. So the describe I think

Kurt Yinger

rolls industrial mean, And construction how into of being question. that the frame well? is terms businesses And my you of we makes I about I to that in those seeing think should kind as next that sense. a mean, way fairly segment, fair it about maybe Yes. the some of but think normalization, sustainable complete margin profiles

Matt Missad

Yes that my be would expectation.

Kurt Yinger

Perfect.

on homes kind we number to of backlogs construction. site a Okay. start then will just business, you talked back, extended, of still still And pull under have record the being about

talked think could of for strong. about think being or multifamily Is kind still something residential proxy? You should still smooth the we best your that kind of pretty starts family that businesses help potentially being the profile you of demand single exposed

Matt Missad

affordability are more few and a No, ago would when I Kurt. there but lot move only you issue. out. multifamily run, year definitely have it might years resilient I with think seems I probably instincts to thought it few it ever the the had does you talked to a to stronger. much And question been told your would that good have than I a it say it’s And it be much do

on more and look are, encourage we to definitely those that if national other that smooth is national it thing challenges. regional to because at the multifamily capacity our starts areas, the any mirror and I think will there. help help necessarily permits looking mind you’re I with statistics overall, in trends future out facilities would you and I don’t where keep But

Kurt Yinger

hearing And makes terms perhaps you caution the exposed the the last retail That inventory to levels you kind do your at look it harder was and course And me, Or and areas, remodel of seen the within and kind hoping what them I in bit you looking of with and you of think for DIY speak on repair home about of out? a the more could side, from we’ve talk largely as the sense. a taking one, seen quarter. that conservative? center any you’ve over get do partners play are just

Matt Missad

Pro Yes. I but things, are. but There’s retailers customers which I know to the can’t specifically very different demand inventory be you very, they still I tell very can different all in you strong. is seem levels with comfortable that aren’t markets, where different tell that

think And so comfortable the And building space. that. they are product the retailers products where they least feel our and very in at are in I with seeing

comfortable. very relative peak still of It’s was demand lower pandemic, XXXX. from So good of in than to very the the terms it but it’s

Kurt Yinger

it. Got

turn Okay, well appreciate and color all the I’ll it over.

Operator

next that from Please go with line & our come will Company. Julio for Sidoti Thank you. One the of Romero ahead. question moment

Julio Romero

Hey, for afternoon. good taking my Thanks questions.

Matt Missad

Julio. Hi

Julio Romero

three? Or on kind wanted the level the demand build expand same Colorado? variance regions” the just there to you of on the of extended times? same “healthy healthy Anyway the demand they generally seeing stay Texas, section. within I kind within lead any Atlantic, of could Are those site is mid

Matt Missad

the strong, still Yes. What as you area is as just Texas utilization. New very and is capacity less strong. upstate still particularly out The high And York. I is both I Northeast strong Mike the very probably slightly, would maybe tell called is, but And Mid where Atlantic well, weaker. it’s

way I today, that at look I it that’s Julio. the So would think

to I New am. closer than York are probably the You situation

Julio Romero

sense. makes That

of you remaining expect just my talk if the really I, trend other about the how to that Just on just is question could you working for capital, year?

Matt Missad

do Yes, I’ll let Mike that.

think good his doing he’s stockpile. job a of been I building

Mike Cole

$XXX capital I half pretty Low and of Like my supply, end year back Yes. and cycle excuse and capital sales. day mentioned will year. cash since competent, comments, anyway, that’ll me, million XXs Working the in cash around working very into XX% up consistent is days. XX turn about been or the

high but been lumber the seasonally and high now, it’s year. of have busiest time prices it’s So the its

after turn year. that into back confident will very that cash So

Julio Romero

I Great, much hop the will queue. thanks color. very back for in

Operator

our that will [Operator moment come Thank Please go ahead. Jay One Instructions] for from with question you. Securities. Wedbush McCanless next

Jay McCanless

if your this add you right how questions. my comment I was just on said further products the look increase go customers about think quarter, value much and have add able XX% percentages to mean, value taking can XX% for you you the with do hey, now? industrials, those think construction Matt, thanks you Hey, have being Mike

Matt Missad

through add. a very too, probably go have range they’re on in different. the build by my would to question. as say somewhere fair I business mentioned, long they’re and say a and site true you space I side, XX% the in of it quite that’s because runway. there’s kind would XX% Yes I to say, I concrete would of the value forming remarks, unit

within go. well. long think, have of what There’s most a built, Site ways they So built add opportunities value there. factory I do is to as we

engineered our side, it’s design again, less and panels from a of speak. so to manufactured to on industrial more the conversion then runway, of probably and solutions. a over So And packaging sticks

close So in we industrial can. be we is as there runway my as get a to still goal at, XXX% of lot to to think there’s

Jay McCanless

XX%? the footprint And to geographic region where states you much I you and presence, guys mean, south you And about in defines would of areas up your then dispersion, of about your is XX% like talked say that is XX% in that starts. the the those thinking have the when as how inside construction, typically that make census

Matt Missad

to just with that answer good maybe know that can because I I you a can’t And question. but That’s don’t one. give an back that Jay, circle we

Jay McCanless

your segment maybe at competitors are Poly to of and that what have UFP businesses? you recycled question of opportunities boards, grow? but percentage had for other going Cedar type eventually not a on a industry to or in composite make opportunity high more material runway do guess is of then you get is, Is is for that their of type acquisition several or there of know into add I when a but businesses I larger the that into subset that that starting look their recycled I And other have And pretty industry to space?

Matt Missad

one think I that’s core what on innovation from I’ll our that. good also but call this for I makes at some group of think business definitely is some We our of us. recycling Jay. to really materials. And sense with I of absolutely, with that want are good Poly, talk much the it but only things sense lot but point, about instincts environmental very just other makes Yes, it standpoint, a a on. there It really opportunities, not can’t working it’s not expand and And

So to drive it grow we’ll and it. and that try and scale continue to invest

Jay McCanless

the Thanks for taking questions.

Operator

line our Please next that ahead. Garner come of for you. question and from Thank with One go Company. Benchmark will the the Reuben moment

Reuben Garner

decline? Good couple railing of, line Voyage up me If full, composites? the through capacity it questions guys. than so was think XX% but year-over-year you clarification product but I A the else. it anything you retail walk the was other you can brand most products? type on Deckorators’ seeing of that are said but Are Is accessory was you Or Thank a maybe running you, overall And X%? I you. said down you seeing I the Deckorators you evening products? you’re think of your more decline Voyage, it and in it just most said some and misheard wood plastic the is of still

Matt Missad

an give that was annualized place entire But XX% used far. word there not additional for I I’ll all number. year so the was in of an that in think I Yes, a XX% clarification

within had a XXX% year, to that’ll not of end in the the it’s all and we having but that So be we done. the by about going that will quarter, be originally of talked have

all be that fully year, should next for So functional.

it. of part that’s So

inventory. of to example, customers to on lot The want vacuum their it tough in always of again, a it’s is other part the line and a it quarterly depends our at that because, product look for take Deckorators when

it’s sometimes QX, in it’s Sometimes sometimes it’s QX, between.

think headset, kind I opposed XX quarter XX% but But number. I be want it numbers, that’s a you encourage maybe that the to piece of annualized just so the year-over-year as at there. to And I probably didn’t to look would

Reuben Garner

then was of on comps? comment, down think I’m guess I’m for what and June I what instance, And I a for comment few last very the retail quarters. comparisons And it. like just been much what you on are it Got your difficult about was clarification, volume if the I think curious but getting thoughts guys, another ProWood, has at how

we got that that to think with thing. shutdowns the are a lot you COVID the the with sort all by expenses think driven that other to inflation start there do of more just you phases more its was on to get like and you speculating I if your of I and we Some that? growth? of more think forward, early guess return consumers could the do potentially Or maybe recent, when give pull are on plate the thoughts kind declines and point

Matt Missad

fully was Yes bit that’s excuse a the the this than I I And through think me, happened market a XXXX. little what think in, And it’s Reuben. marketing value QX year. question, alluded to XXXX this think before in in the and is baked really materials of is, in or shift more good Mike earlier the it I

see of mentioned, as of way my look So from in maybe in not great forward. well view XXXX as be QX I which the to end think levels, strong it forward still the more was good probably kind demand above but is still going is we as a it And and appropriate I would signaled XX or we going the as XX, earlier what year well. at

enough I have made a of this is So normalized and in so it more kind to the industry quick to years, from there. but being couple lumber figure tough been and last the you’ve fluctuations getting kind and wide be market of scenario should pricing again, long think our normal over know of the we’re jumps so the standpoint around what

Reuben Garner

going luck guys. good Congrats Got forward. and Thanks, results Perfect. strong the it. on

Operator

the over I’m for to time. the to any call this speakers in queue remarks. turn And questions at showing now further back you would closing no like I

Matt Missad

most And to story. of the Jobs compelling. able story part tell Steve I UFP being very is once said, believe is As innovation the important the

We of XX-year have history a shareholders. for returns earning great

also Our market business reduce impacts diverse the protection of market markets and single balanced and a challenge. fluctuations, provide from end models

and We chain automation. the and more value products have with new efficient up operations utilizing moved steadily services,

to further value expand to Our move is and innovation goal chain. continue up the

transform to to for customer by provider. challenge focus a continue a we problem for on seller value and solutions helping And is ease from which customer product solution and We better a providing a us. the a

recent our reach which to of more consistently will EBITDA into a I continue proves to goal, this an an Our could long To term performance our go blueprint, margin and is detail innovator improve the in adjusted we target is we’ll as and provides playing story. XX% achievable. target keep exceed offense.

your is other fact reasons. However, want edged edge includes for of call story to who the and some the Mark downturn that our double What investors audience Hank investors and say It temporary our market, more Chris occurs, sword enjoying market that of teammates the a information hi today. sword. market and and appreciate you public a or should to potential in are all belief I recognizes public than are a us including excellent to use Thank you’re your double of and continue in the may hope will great UFP and that we the of to this value? rest day. prove who an mean even have market We our if valuable is shareholders today.

Operator

participation. This concludes conference for call. your today’s Thank you

disconnect. now You may

UFP Industries (UFPI) 22 Jul 222022 Q2 Earnings call transcript