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UFPI Nasdaq· UFP Industries Inc
Earnings report Q3 2023

UFPI Reports Decrease in Net Sales for Q3 2023

Segments of revenue

In the third quarter of 2023, UFPI reported net sales of $1.83 billion, a decrease of 21.3% compared to the same period in 2022. The decrease in net sales was primarily driven by declines in both the Packaging and Retail segments.

The Packaging segment experienced a 23% decrease in net sales, primarily due to a 16% decrease in selling prices and a 9% decrease in organic unit sales. The decline in unit sales was attributed to a decline in demand from existing customers, while the decrease in prices was a result of competitive price pressure and lower lumber costs. However, the segment did see a 2% growth in net sales due to acquisition unit growth.

The Retail segment also saw a decrease in net sales, with a 16% decline compared to the same period in 2022. This decline was driven by a 9% decline in selling prices and a 7% decline in organic units. The decline in selling prices was a result of lower lumber prices, as the selling prices of variable-priced products are indexed to the lumber market at the time of shipment. Unit sales to big box customers increased by approximately 1%, while unit sales to independent retailers decreased by approximately 22%.

Strengths

Despite the overall decrease in net sales, UFPI's Retail segment showed a significant increase in gross profits, with a $23.9 million, or 30.9%, increase compared to the same period last year. This increase was attributed to favorable lumber price trends in 2023 on products sold in the Retail segment with variable selling prices. Additionally, the Retail segment experienced a 17.4% increase in earnings from operations for the first nine months of 2023 compared to 2022.

Challenges

UFPI faced challenges in both the Packaging and Retail segments. The Packaging segment saw a significant decrease in gross profits, with a $49.9 million, or 34.7%, decrease compared to the same period last year. This decrease was primarily due to competitive price pressure, lower demand, and lower unit sales. The overall decline in net sales for the Retail segment also presents a challenge for UFPI.

Noteworthy

UFPI's overall gross profits decreased by $85.8 million, or 19.1%, compared to the same period of the prior year. This decrease exceeded the 9% decline in unit sales and was primarily driven by the decline in unit sales, unfavorable cost variances, and more competitive pricing in certain business units. However, the unfavorable factors were partially offset by more favorable lumber price trends in 2023 for products sold in the Retail segment with variable selling prices.

Summary

UFPI reported a decrease in net sales for the third quarter of 2023, primarily driven by declines in both the Packaging and Retail segments. The Packaging segment experienced a decrease in selling prices and organic unit sales, while the Retail segment saw a decline in selling prices and organic units. Despite the challenges faced, UFPI's Retail segment showed an increase in gross profits and earnings from operations. However, the overall decrease in gross profits and net sales presents challenges for the company.

Source documents

Form 10-Q  filed on Nov 08, 2023
86 pages scanned

Reference data

Company financials Q3 revenue 1.52B
Analyst estimates Q3 EPS missed by -1.62%
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