Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the Q4 2022 UFP Industries, Inc. Earnings Conference Call and Webcast. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker, Mr. Dick Gauthier, Vice President of Communications. yours. is floor the Sir,

Dick Gauthier

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

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

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

Matt Missad

Dick, and our quarter It everyone. couldn't an together know I it even year are why XXXX Thank happy you you wondering, fourth record call. year goal another for hit I years make our was early. cobble in end joining XXXX with five $XX banner to sales. net Tuesday and a $XXX a you, billion Thank billion $X.X to some million of

I is will something on. It work

so our to add $XX to allowed to customers, reward were one services I other and able is truly teammates of well-deserved in also teammates production to We exceptional. for the It million which excellent yearend products our each and want over compensation thank and hourly year, teammates. in our break hard with incredible bonuses For bonuses. provide our and records accolades. UFP all turn to the them us for working to to deserve

this I as best immediately Now I finishes certainly ever who says, get? have it is the like good meal and that so. he ever think will bit a we meal Well, as And feel don't someone, thinks, is a delicious eaten.

and achievements, we looking to While positive are we celebrate improve. constantly enjoy

sure We new more. can you for the recipes future creating to are join to celebrate But planning make XXXX do savored to this that pretty even or be the call didn't sure meal future. I'm

You to are far XXXX happen more and going what's interested beyond. in in

It predictions, difficult leadership reviewed today. and but is have here pure consensus, depths, to opinions, is a countless to where find change We forecasts, which our frequently. seem stands team

New will home to the QX domestic Interest spending. early from year, XX% and rates first construction of move levels. borrow continue Government larger will of become and probably XXXX. in to fall is XXXX even an half or the XX% to maybe down up during portion late likely total

will aside, probably in send the it individual end. landing economy or a an believe continue likely landing? we points consumer wheels should the are hard a data Or the which of Will have clear, up, smooth have note effects are a we definitely while Will spending we for thank is question this As some soft with a inflation landing? marks? soft power? leave A will curved the spending Other you already recession, funding. mild less our how grandkids

success future. than cannot poised to does, we the external always what team even to better company position UFP it and our plan factors, is the our for these do Since control execute continue

expect capital significant of We have accumulated amount a advantages the two we to positioned, years, last during and well take of are see. opportunities

to conservative fiscally and balance our and support using growth sheet aggressive operationally our value stay will We creation.

don't we those on model in pursuing decisions closest be we inventory by operations to but wait be levels adjust handled year, staffing, be Our events our and needed to quickly decisions. XXXX action, in as cost being will containment, business growth. nimble to allows to efficient for turbulent a may and unique make the while

outlook. seller, solutions performance for as and professional segment a retail review products In as consumer provide manufacturer, contractor. our value-added and self-distributor, solutions, the well as let's Now, the DIY

Our ground and new sales Will products. Solutions scaling opportunities Schwartz existing and largest and it new president has segment creating volume Retail This has of our synergies significant is the hit running. by for

research in capacity Story list. to products, recently be to line while its additional brand product already we decorator's And are us becoming for number added installers up, homeowners the three a the XXXX moved aesthetics, and best durability, moving we has up is which launch on Our allow most focused our sustainability. and to on Life pleased staying trusted among patented there. mineral-based technology, manufacturing new and will The utilize which favorite are

certified has brand The enthusiastic have become advocates. number and of they decorators professional installers grown

lumber Our ProWood to improved preservatives grow future growth. formulations position and new Sunbelt developing retardant our fire treated sales, to while are units utilizing chemical performance and our company

We market proposition continue industry our enhance value position. expand leading with to customers to our to work our and

and as and in product a are well timely are received. offerings equipment as modified capabilities our The financial thermally to delays fashion. on installed pattern automation excellent not in being coding trim due was wood Siding Edge UFP XXXX performance custom products delivered as disappointing well

for results looking unit. this in from better significantly We XXXX are

continues and purchasing and serve provide solutions. One, national and many to and and brands. on with new innovative the build value. customers to solutions select network Three, the grow harness is provide best our retail fulfillment customer platform utilize our Our simple. Two, find expertise direct distribution our manufactured products e-commerce reach, right our strategy opportunities. of and Four, products,

Big retailers is expected XXXX somewhat. forecasting are for other box is volumes generally unit in retailers. and retail for flat repair take outlook from predicting and steady bound share to The to flat remodel. Independent

The difficult XXXX, comparisons QX. quarter expect will compare against QX first and we be in easier but to

adjusted new cops difficult most record line XXXX his performance. of factory to and to Patrick both already Moving The provide in lower construction, the but team XXXX. excellent on will the and to built. construction, housing, impressive details our an be job in more trends, results the site-built did were on president will in group has Benton, area trend this is Mike where leading

to forecast starts in And to markets The XX% serving XX% the balanced XXXX we population. single tend range and resilient the family the as serve, continue country approach to is levels. as position well more well multi-family for our markets in which which of below also in housing be gain the helps us

with to starts for us X.X rough around forward. needs ample million adjust to will to We market still anticipated provide to bolster strong and actual ROI. in opportunities equity noticed good the housing We've are numbers. multi-family that rent to well may help show positioned a a to going year Overall strength funds the starts the and meet by market conditions produce build investments continue the continues many estimates markets

a site-built are changes. is barring rate the more trend half. is expected build have ‘XX of predicting first option back line interest build half a affordable to similar still housing factory-built Factory most our better customers than the to Factory and

portion RV take may longer is our big it although not of to business. recover, a

solid size. online. forming gain help and in the for construction for some Our coming is share XXXX market projects smaller may with RV infrastructure outlook concrete with new The even us for product commercial innovations

we lay and on growth existing our prospects markets. through experience forming rely construction, capabilities guide yards serve strong produce and for to better management additional We'll in adding with concrete results. any to to for Overall will both team the in markets uncertainty expand XXXX business our down new still

focus you We better, to hope streamlined with customers Packaging me UFP agree. Scott speed and UFP generated than fitting the sure more creating team. Industrial. as have seems with packaging more team enthusiasm have as segment his well and like name the Worthington and a both their

and as goods, agriculture, diverse appliances, moving furnishings, light share We pursue, leaves tremendous to The our very market opportunity storage, growth. modest packaging horticulture such industry have and many in and equipment, durable markets very for runways is glass. automotive, and end heavy fragmented

opportunities bring The mixed analytical materials in and to our solutions customers, Titan expertise connection helped that existing increased packaging. printing gift improved to gives and create more recent a steel value level Increasing for value up has capabilities great capacity to new of creates acquisition a to conversion and all Adding customers. point material design, creativity. and proposition who other core engineering, touch and and with testing and of boxed creates

expand in expect our We these capabilities markets. to

PalletOne UFP locations existing has footprint also practical. outlook performed where for very strong. well national and will will while utilizing continue expand be UFP remain to there the Again, its long-term Packaging challenges, economic

becoming provider. of to automation, advance goal We solutions packaging and invest a our will continue global acquisition innovation to in

an outlook, down. to others some grow, From while economic expect are runway flat to we

estimate units. UFP conservative Our for in X% flat is to down Packaging overall

branded of total multinational markets and our products this product focused on extending Our and packaging in heavily Asia and our The Sprint the Australia, end packaging backed other international India is and customers. Mexico, in enhance and markets core capabilities solutions team Europe in pallet structural offerings. other to our

and sourcing efforts be international capabilities which and both for enhancing worldwide XXXX our Our sales foreign with supply in also technologies. will customers, we domestic new create

product million beat Some our for that for provide the way for we were are value quarter while moving in we exceeded new our meets And in unmet better an a other targets. XXXX, of with and both $XXX to stay ahead. need. targets We the were need target and space a to $XXX the know and sales interest to areas consumer we year have the lasting XXXX of product best $XXX fourth the million, need do faster the is to world created million. numbers And add

synergy. by innovation to the rapid ideas speed new in product this that investments and faster market accelerator iteration and Our scale for

is organization. rapidly development broadly actively will The fit our commercialization Our enterprise opportunities throughout very Fund and recently early can seeking stage scaled projects. be and launched best stage Innovate the within late or

The We volatility appear slightly, goal innovate but up year, need the the trending same for or to theme team has beginning XXXX. dominate. of our of lumber to as matches does the purchasing, a have not In the innovation ago. internal to movement since market year this been company's

new unless the demand, cause unexpected lower even XXXX we supply or transportation the that This to expect sales. in same efficiencies leadership. the there mills high lumber UFP unit we new market to with will of invested on level and has be same and don't manage anticipate technology the our likely We saw cost better revenues is improve and delivery the XXXX. will of side levels

Transportation bring of will VP center. new several performance changes and our already, improved profit instituted has to Evans, this Shannon

the for remain low, excited over rate is is shape. Human numbers vision are the participation workforce her and unemployment Index X%, highs. UC take Capital, to We while historical the typical below

applicants those hard teammates part in choice to seek by who face others a in work our to our to so know is employer significant challenges, getting providing similar wish industry of we We yet we remains Finding challenge. an easier, finding perform be when well. rewards

to segments among easy transfers from slowdown to those workforce which our balance areas remain ensure strong. that We a seeing are

We their and also recruiting a areas company. better way by create our floor practical with company. breadth mentorship, expanded encouraged work to work to and life of at UFP All have are and ground the start may not efforts offered their Those who UFP. for who want the and to families understood up welcome provided training, with are unfamiliar by at that opportunities and hard experience the have themselves

turn Now, to I'd review information. Cole it over to to the Mike like financial

Mike Cole

and Matt, good afternoon, Thanks, everyone.

quarter our flat, volume units, despite in a was decreases retail and offset our a site were decline Our build packaging over by decrease gain partially in while of unit as reflecting packaging our include this These our demand overall our substantial XX% stability unit, volume business EBITDA the XX% segment well in factory consolidated segment. forming the results organic an dropped segment. concrete as as build margin

up a $X.X million XX% Operating on cashflow year. investing million. And for the resulting sheet capital the liquidity, in balance net with exceptionally million cash of year, for in about strong a last an $XXX including $XXX surplus over strong year of $XXX return billion

in our sales Now, to due from statements for through drop acquisitions X% financial X% starting sales sales decreased of we'll X% segment. details, to with decline X% sales unit organic were X%-unit walk prices. retail contribution increase transfer product and certain quarter the more a by in decreases and by a segment. the a from our Retail partially These construction a offset in by selling the from our segment

ProWood in our this expected, faced categories UFP unit organic tough of volume Essentials the as we experience flat down compared and drop modestly Outdoor to significant Edge decorators was year, our As comparisons last was Organic each Sunbelt volume. volume while quarter year-over-year.

certain increased volume packaging the share to selling from to segment due were customers an we units decline in to X% were as increase offset prices. a Sales market in with gains. Organic able flat

mix our packaging enhancing on focus to value-added to of products customers solutions continues our team Our that offer requirements.

XX% XX% compared value benefit to in sales year. to QX, a I'll gross margins, our strategy review to added and As continues which last profits shortly. This result, increased of sales

from to $XX sales Our existing of These locations sales gains were change million million gains offset new accounts. sales. in to $XX $XX in in organic sales volume million includes new customers, of new of customers, and by other to declines product

Our construction cycle, and X% offset sales backlog a to unit, concrete pricing of a built, which orders. decline These decreased XX% commercial. XX% X% is prices increase organic a factory overall The and work decline a of XX% a in due our retail. by transfer a segment through by XX% organic to continues in its The declines from XX% our in increase primarily to in sales a business in offset decline increase site decline overall resulted in decline unit were to the build due warming. increase X% due from unit

Moving down comparing by fourth in X% gross the million quarter unit or statement, $XX decline with favorably income our our decreased sales. profits X%

of New $XX segments. increase year. An mix products this and increased contributed profits, last gross in value-added sales to enhancing new to to sales million value-added from to of XX% be strategies key and sales all improve continue year across margins sales product our XX% product our total

and by a changes value-based combined to by due products. compared to with unit year, in gross increased initiative favorable our By decreased mix, selling million, primarily Packaging's profit cost product sale segment, variances. gross including due $X million -- $X a unfavorable new to retail's primarily value-based profit last drop-in

and by unfavorable in overall Construction's gross decreases increases The we million. varis we experienced decreases due its as profit by profit These cost site-built organic unit in units. our our decreased was to factory-built and offset decline forming $XX as our drop-in unit concrete volume. the in due experienced were units, commercial site-built to gross well

sales the the $XX partially million. wages The an $X down in from bonus million by travel a move SG&A components QX, increase our fell increase debt expenses SG&A costs, to Continuing $X in from primarily a and a million increase in and in million bonus bad QX to in Sequentially, statement, in benefits, and decline incentives. of income nearly expense. by $XXX increased $XX $XXX million include and resulting incentives our million and decrease offset sales

drop $X $XX construction, million by in million interest driven attributable $X $X international a decreases in offset offset in statement. income million, which in $X million important of in It's were earnings $XX decreased non-controlling profits decrease operating and farther corporate. our Finally, increases the to by note is of personally $XX to in million the down in million that international, and by partially retail, million presented packaging

cash statement. to flow our on Moving

XXXX and compared and to increase Our compared last net net year, a $XX and year million year. of networking with operations capital last from increase of earnings million end since cash the flows non-cash with for million $XXX expenses $XXX totaling the million $XXX consisted in million to $XXX

and four in capital increased this primarily our to last days our days increase measure cycle in day our working and year, increase day assess cash a QX it XX day to our four management year to XX supply compared inventory. receivable of to due and a cycle We

the equipment, capital times to of Titan Our investing year its year, purchase range acquisitions, including December and Due on expansionary Corrugated announced including anticipated the low invested long lead million boxed included expenditures our and at the million. amount affiliate for activities the CapEx of million, of $XX the previously we up. end totaling inefficiency $XXX for for all $XXX was

$XX revolving of million. and the year, with compared $XX and to shelf structure was and to shared million of $XXX total respect repurchases capital dividends, under consisting financing and in certain $X.X surplus $XX million million surplus million the year our of million we a credit repayments at in lenders. under $XX last cash our availability With our resources, cash agreement of December, net net for debt facility $XXX debt million liquidity $XXX and of of $XXX our Finally, billion end at included activities million had

approach of cash grow capital our capital us and business our to of driven flow generation, with structure has allocation provided to return shareholders. return to strength also managing our approach abundance and prudent capital The conservative to an

continue a specifically payment return capital ago. M&A, quarterly will of a and investments a to approach driven March our across representing pursue We a just and the buybacks, balance XX% another approved $X.XX of over year increase dividends, Board dividend share, year-over-year

approved X by of of predetermined from In and times plans offset share the have effect to falls our shares at issuances, repurchase employee benefit program opportune their to price to when our past, to up Board Directors a shares. the authorization back we and buy our million We levels. resulting repurchased have stock

continues We anticipate be advantage $XXX of drive value-added the $XXX opportunities capital value to given the strategies strong and products. potential year. of automation expenditures Priority projects take have of and environments enhance long-term million million next of growth that that to and new plants, working our

to of capabilities opportunities and Lastly, and a return growth return acquisition and fit margin competitive enhance we continue healthy pursue companies are that position, while a potential. providing strong strategic our pipeline of higher

our year. have our trends I'll for finish and believe to pattern, pass elevated a lumber our overall historical prices about This seasonal we prices normalized experienced demand. to up which year, price and will consistent with when with next compared comments follow customers. not outlook anticipate we sales the last through will We levels impact

building growth in volume box that U.S. are big our have and to Housing and units. same-store factory a we in recession markets decline segment. retail $X.X impacting a sales follows. million XXXX, We of is Remodeling serve site duration volumes for about XX% XX% starts with mild flat in short fairly as currently activity XXXX the planning our impacting build impacting

a production net down to by runway, based our Packaging results of industrial respect sales. our on our XXXX profitability volume a segment. decremental basis on consolidated impacting to flat is margin and operations overall XX% business operating in of And our we with and slightly believe With in XX% mix, of range mixed to results

as In may consider and our that and you expectations we XX-Q of results. in margin a key XX-K, future encourage evaluate mentioned detrimental factors those impact to our our of our variety you

operating in the Finally, recent softening impact market additional the of I'll economy, sales our in and cooling you leave trends with information and light some housing on of profits.

In QX year-over-year by December. results January we sales down our filed believe we year-over-year line in provided. just trended which recently, operating after strong XX.X% in profit October, were in a down and Most November our roughly about and is with outlook the information XX.X%

the Matt? That completes of financials. my review

Matt Missad

Thank Mike. you,

Now it any may to I'd up for that you like open questions have.

Operator

Instructions]. Thank you. [Operator

come Sidoti. First Julio question Romero will with from

is line Your open.

Julio Romero

Hey, good Thanks and Dick. questions. for Mike afternoon, taking the Matt,

So, about this with have you answered comments on in on ending has you trend talk January, I maybe the side. residential how if might Mike, your could just guess just trending been demand but the There's given coming been or January or optimism, somewhat anything activity or February? seen demand anything you some through that rates indicated heard in has levels just January. in change any down the maybe Have mortgage

Matt Missad

Yes. it's detail to say say a be into would it, bumpy. probably is What little little going that, more but can what I'd with Mike dive Julio, a I

have changes little up I the bit. down, think, there's they've rate come a been, gone

are So, where say the today. consistent I I trends outlines think, it's we Mike would kind that with of

Julio Romero

the segment more fitting deal industrial you Okay. a packaging how talk That Titan about the you pack guys segment? to the Corrugated of guess maybe broadly could and touch that and on I into And rebranding the see makes little of the sense.

Matt Missad

Yes. Sure.

give team I UFP the the think, credit that. packaging a for of lot I name,

What about They Industrial. that because capabilities, segment engineering what is mean? is is to to that? name talk the think, that have, providing customers, the design informative utilizing I ability creativity materials. does mixed packaging, describes that that The investors we are also packaging the what really descriptive, solutions doing. several provide and and is us more involved name UFP with What UFP to it, the

spend packaging is on The goal customer's each take of to their more materials. of share

that and we we The So, in that in at it over to a help a the in a India. year And little we company both and is looked thought have company an been labeling Titan in in involved business Corrugated forward. we've extensively Australia going area really drive added U.S. corrugate the good ago.

that synergies customers we of their product, all as have lot Titan a did mix, not up have. with that and utilize the has that as customer boxed both that we our There's have well customers

point sales. expand of more to our is customer it I going think those whole supplier packaging notion the to well. reach will going this customers. So, to be as complete But more a We're we're at drive

Operator

of the Kurt Yinger That D.A. will from Davidson. with come line

Your line is open.

Kurt Yinger

afternoon good and Mike. and Thanks, Great. Matt

disappointing about what Just organic QX in you maybe retail wanted XXXX to volumes know, different there performance talk business the kind flattish start can into what but lines, of of terms I QX. off that and talked confidence some you you was in on gives you units could of about the perhaps hold there?

Matt Missad

Yes. I don't there necessarily was know disappointing. anything that

I comps. expected tough to think, we have

backing there the think in is that's of somewhat and going channel. I this on, somewhat

but contributed profitability. we're unit not because only in sales QX, and but And the of so to optimistic of that because for also for retail, XXXX, pretty sales software

more Last year did or over tough recently. tough year low the lumber that much we the that the retail what and for so It lumber it for it, quite particularly falling treated do thousand market dealing and, was to a battle from for well was really that, did, tough, levels that to it a with was them segment.

of much of that we're overall terms prices, better is optimistic but dollars of sales maybe a So, terms lumber good in in much lower profitability. for because

Kurt Yinger

but it I the been perhaps on have guess the downside the and benefits but more meaningful upside. bit stole seen you a little XXXX question, in the thunder ways, on seems than next mean, I as lumbers headwinds and XXXX like swings of well, Okay. both my we've the And with

that perhaps margins the do two years gross digits idea business? consider you forward? what you with normalized comfortable last for are that going Potentially segment So, feel the below would double

Mike Cole

I would looking you're say, exactly you're it talking if correctly. I at I about what retail, yes, think think

the the compressed I of from of the extended rapid high and decline think, the rise those declines market in market margins. levels, the definitely

in a a definitely market recently very as And aren't little I kind in they Mike I big that originally sales. thought, outlook trends balance right boxes the know They the but from think us very, their they'll initiative. in is to So, I of lumber there. from still I them. flattish the plan think, unit be announced more of will take for as market that I strong kind others think think successful and help share

Kurt Yinger

Got it.

make side, last And then being least Okay. recognize perhaps That the perspective. lumber And I sense. just lastly, unique kind that two mean, they thought little profitability. been impact about on of years the specifically we've bit have from on how fairly margins fluctuations at and I detrimental that sales a historically neutral

does margin expect apply from lower guess, sales on to, lumber I a and detrimental But that the you range the over prices that being year statement headwinds year basis?

Matt Missad

and, it's to what disclosure, does it it detrimental that margin of parts prices right? the in lumber to so to per but moving and one line but Kurt them to a do units. what there's So, overall our also profit and do -- lumber going prices in of going lot cost Yeah, the sales, is are

a running mix the So, and in to factors different with current mind range. those XX like looks scenarios to tried different with thoughtful, we've in be all good XX

Kurt Yinger

Okay.

Sounds good.

Operator

the come line Stifel. Elliott of with We'll from Stanley

open. line is Your

Stanley Elliott

and of hand group. POS your quick like actually products to get the there. to work you in capabilities The business, new to conversation How expanded out really you started of from the packaging definitely when guys have time have, put kind

of course Just see level trying to we of as see what opportunities to I well. guess the might the within kind be year able

Matt Missad

a it happen it's quick an question, as existing going unlike to products and I tends you adding a shorter a rather, help of them, where customer just make additional operation or it of little new good we something an or in But, areas providing be than I'd frame their take bring tell we out on some a want it's cost we're time if solution for customer, Yeah, to think, Stanley. never new to as value really a customer if really to bit them value. to. better for are

those be tend longer to efforts, those of be to results So the tend duration greater. but sales

Stanley Elliott

Great. kind how really the worse the some pull guess And the can additional if than I a that? maybe with guys to quickly on appreciate all kind a share of quarter-to-date. not to to market, too? restructuring, But additional I pivot the the leverage insurgents of of color take in And we in you then for conversely, kind of there it's if have growth some milder you session continue to are

Matt Missad

good really Again, questions.

is company, don't where decisions day-to-day we making occur a react tech really conditions on we look our like of operations our my -- decentralized a do think Each basis. for an model event, very And not where us serve. to quickly like mass enables adjustment. entrepreneur those locations I the runs that mentioned I to as each in that in we the we that comments,

accumulated think will happen that of get I the that expect for term, I out we very very, react quickly in will we the have so, the past. if very near And well think capital advantage to we have Mike And us as take things can allow opportunities pointed others. particularly in here proven tougher we

but well-positioned of are take weather we and advantage to positioned wants the Obviously, storm. So, opportunities are we nobody market share. growth one, to also well take

Stanley Elliott

Perfect of for luck. Thanks best the and guys. color

Operator

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

Your line is open.

Reuben Garner

evening, Thanks, good guys.

seasonally, thus give to of than today, kind would a of kind Mike, great. us given modeling the any can a for pressure and prices of up obviously from maybe normal volume to top-line that square are or of obviously what lower perspective decremental color you higher if some lumber But the it couple where you could is pricing the do been give And discussing segment. like sense just if what act a what, just way by of on kind helpful us of look it it's color you gave margin, purposes? so It's adjustments. make we may on be year the kind kind for years, So kind volatile puts of can you of

Mike Cole

of mix of because change as a less becoming more And value-added, in lumber component becoming Yes. the less sales. and is the and

us And that, the said prices the lower lower so effect XX.X% on a effect does lumber of -- having be the is in of to can and good January parameter sales dollars. volumes decline but for pretty what

So, up that. prices and obviously half lumber January at ago, in were when a year of you they're they now look $X,XXX

-- January month lower a lumber. and pretty that So be volumes lower so good from representative prices could of

Reuben Garner

Perfect.

on stuck mute. was I Sorry,

And so, my follow-up retail business. would be on the

Is channel, -- shoots retail you and we pre-COVID? were like So, encouraging the could both channel we at the some more there be It for look the that few about what normal were initial downside? weeks show there there's upside these Like, builder least in the housing. a say obviously to at maybe ago. spring like we like green you from does destocking, here what mentioned sounded a document than are point you where relative -- when to saw

Matt Missad

I product think what there, specific. I'd it's Reuben, tell you very

think their their And I the for the levels. they their how think, retailers adjust managing inventory forecast have think adjusted, most that's outlook, I inventories. I are part, and their

roller retail, execution it'll than lumber the going structure, current happen again, good outlook ago but the But we better going year simply better not a we stable be if continues, the forward, of coaster market. think can't with still trends a better should of to the and predict because and I very year I say, and did would what's perform we and

Reuben Garner

on good Okay, the of Congrats ‘XX. Thanks. year in strong luck the close and guys great.

Operator

that moment from of will for Wedbush Jay One next with and Securities. come McCanless the our question, line

Your line open. is

Jay McCanless

my Hi, question. good afternoon. taking Thanks for

to in lumber SG&A prices? run closer from lower The ‘XX first probably going one, what rate like so Is the that look XQ. quarterly level in really run with rate, to dollars something is to deceleration XQ good

Matt Missad

to Yes. was The drop from QX much relative had lower the pretty driven in QX, Jay, by we QX QX. to profitability

So variable base. is much of our comp

bonuses about So, pre-bonus operating profit. sales of X% gross average of the incentives XX% about profits, average

quarter-to-quarter So, bonus from with figure roughly, of are. you what and those can numbers out incentives sales kind the

to then the sales core runs flat remove and current the so, building which the to take think it structure, bonuses other and in cost operating whatever typically From incentives inflation is and of there, based you it of, gross And and bonuses, headcount you most and and can then in, profit, what model that way is in make be. SG&A but on kind some representative structure. pre-bonus cross may me changes more about other adjustments if to quarter, sales you we course, our I profits, incentives, need the

that's pretty quarter-to-quarter. from much they why so fluctuate So, much

Jay McCanless

in And then the we versus based the that be of it majority last Or it. would add gross other from this some growth? say the larger with just of year Got percentage, percentage margin fair need there that to percentage that on increase year-over-year things are year? gross think margin is the about value in to

Matt Missad

Yes.

retail. retail. we there, within I and profit we we -- low. all lot talked of two has year, expect about for the a Looking low, retail's products, percentage the at and the back volatility it having and think variable Retail better for last gross The price was prices years been that for

packaging, just structural part that the business mix at lagging is and some Most changes. of in prices sales there's value-based positive back that get the with packaging number Looking some of you those selling, great the changes year feel though part like of all Maybe pricing. we following kind of is that that and a certain had for year.

side. we going But the the to big on change cycle is think occur

on we we're then there's gross falling, unit, And held strong profits the conditions. much cycle cycle and prices the those prices of the market very with are really within lumber strong. fixed for year side, So, the

one there's then area detrimental the helpful And normalize retail that's that. that is is that's to a it prominent site-built area. offset to if so, the most margin, And going within

Jay McCanless

so think the to ago? that the know you was think expect I should I some sales a things and net I and up -- was higher And if concrete just benefits had, of or we maybe said, XX% infrastructure starting in see forming or announced highway in don't a then you volumes, it to bill was I question finally some And were is other from year that last if the trend are continue? that XX%

Matt Missad

to starting job the Many great we're new are a growing. see think, that's Jay, really say impact type some done benefit. those team a And from works would has being I funded, of I of infrastructure Yeah, some so items projects. public

going help built personnel about sales. locations They've and to drive are up we talked these additional more

to and to there So, geographic the the added, provide our service push value continue customers expand that to more reach. be continue

forming. money is point. very this being the concrete optimistic the of part I but line think, So, we're for invested it that's about show up, trend growth And I starting a to think at that's small

like in operating that further retail be room for Concrete improvement offset helpful too, help really there. -- commercial farming a to great detrimental on margin, just a role opportunity there's have

Operator

And Markets. line BMO that will the with of come Mamtora Ketan from Capital

open. line Your is

Ketan Mamtora

good congratulations today. your have and progress in in the also to want disclosures highlight; and XXXX. a you, I all the you the remarks both prepared guys release on in also Thank improving made

So, congratulations.

Matt Missad

job make easier. want We your to

Ketan Mamtora

And of Maybe sell as coming versus context it XXXX, yet? point, retail sell to with, or some in the back to inventory first is matching through at possible start looking curious, for side not from as how no we I'm provide we to the is now, talking start talked is about customers? or some question, your earlier. less just more that this to

Matt Missad

their to variety tend their to match centers, of our up Yeah, that is feel into that we they'll if is can we I be Ket, they're distribution numbers Since follow What a do like have inventory able that. do great providing what to to I we in direct, store think, for have retailer’s visibility try what delivery. sales in better and you in the ship and don't stores.

more we that And the most distribution of product to sales, tend that So, on match we'd we try and at those specialty what little more movement the I offerings, sales think our of store see center, difficult to be items more closer a through like go to it's some with our a are. main of through to quantify.

Ketan Mamtora

Got you what it. That's new guys year? a product can targeting for terms this And you in of sales helpful. are then, talk bit Mike, little about

Mike Cole

of terms number $XXX both? million of specific or in products or Yes, the

Ketan Mamtora

lot may a But you maybe a things Both. have couple you to things. got highlight? through. want of highlights Obviously, of a They found the of couple different of things just coming

Mike Cole

Yes.

have provide items don't there, but and building the that categories. normally I on using out really you closure working I tell new able to there we to on, general be what individual kind called are been items, Obviously, some other technology, hadn't line decorator’s product of product capacity had just So, that products can items pursue those.

can of Now product have some ample that we those we pursue lines. other capacity,

category, So I would that's one say.

have side, that Pack, then the of number there that things Strip new help we as other And product that provide, example, some well for is a drive of things on we there will the the the some Packaging sales. as acquired of items that

Ketan Mamtora

No, want that's it. trend, about I numbers. Got I to right the have helpful. when January just make talked Mike, And sure then you

talked did also thought I sales heard an Did and EBIT not? about, I You catch down about number. or that you I XX.X% talk right I

Mike Cole

Operating profit.

adjusted operating So XX.X%, not Operating just were sales profit, XX.X%. profit down down straight EBITDA. was

Ketan Mamtora

Got it. of And is performed within all, it gave? you that to just just the Mike, directionally, the how about numbers possible then segments talk at three sort

Mike Cole

Yes.

that's probably think I good color.

even, if and So to January very that year lumber allowed bit that in money prices right? conservative those high last this So of lumber that January I that use year. would at versus But, present last the you a quite prices make forward. sales, going a retail year, mentioned high look XX.X%

market year. So March because of low lumber cost they in retail is January. buying it selling a had February, QX, dropped of into furnished in last January, But much higher

and and that done was to that, our held pretty excuse retail -- packaging, me, So industrial site or drop, getting well. all biggest was the used build next

Ketan Mamtora

helpful Got you. over. it it. color. turn Thank I'll That's

Operator

you. D.A. One a from have question for next we question. moment our follow-up Thank Kurt with Davidson. Yinger And do

is open. line Your

Kurt Yinger

thanks. Hey,

two Just follow ups. quick

are Packaging this sustainable the even assumption upon within of something that can impressive. on you perhaps volumes? mean, recent flat think business, build be gross the three the perhaps year Do kind on to of margins or you I to First continue very results down there

Mike Cole

it's But say Kurt, increase going. really that and they fair would that a that's it's direction not a Well, value I can think, to I add, I they're question. have one answer. opportunities

that talk more As still to all that's time, being value we and about done sticks panels there's they're add. that business to the convert trying

enhancement. So that's definitely margin a

kind at of Some the difficult the to on of this point things side quantify. other are sales more

Kurt Yinger

XXXX? that going do deflation And That's lumber We'll in the then, start last we you quarters to show there a the I decoupled how forward, side. or I seen enough. Okay. should up expect trends mean, we've almost over pricing sticking element to there extent? has about the think Is greater kind lumber year-over-year the of on guess with completely the fair couple with pricing packaging segment.

Matt Missad

Yes.

and this being before, some and there compression be total of think out, that that's pointed is the a I as of added, the say has sale lumber would the to to a percentage packaging the out as we're the solutions that, may I overall but value team. due gotten adding design due less -- Mike through other value total this added our value engineering

So, remain. I vast would the value add majority say that, to expect of we would that

Kurt Yinger

Got it.

luck that, here QX, in guys. and for Thanks Okay. Matt, good

Operator

over no in would call closing the time. to turn to I'm like at questions remarks. this Speakers, queue for further back the showing I Mr. any now Matt Missad

Matt Missad

good spending to personal to own We hope again that goes so know headed of XXXX, few all know have as we you the knows your and I it good in the a I XXXX eater, referred we forecasted create us as that the professional time We're are be with year to still off not but Gras, well, celebrate can is Mardi next best confident would that new in today. for Thank you be meal. many very ever maybe as opening years. a well. will

and those future and a Have intervention With a passion I our ingredients, problems for We economy all recipe an little in XXXX who create team people, dominate great even better to products, less that and the create am success. than the day. more will from solve, beyond. from to cooperation have the they innovate the confident the

Operator

program. concludes This today's Thank you for all participating.

You may disconnect. now

UFP Industries (UFPI) 21 Feb 232022 Q4 Earnings call transcript