UFP Industries, Inc. Q4 FY2025 earnings call

• Market dynamics in early 2025 continued into Q4 with net sales $1.33 billion, 7% unit decline and 2% price decline. - Took disciplined steps to invest and return capital, executed $443 million share repurchases, paid $82 million dividends. - Exited underperforming businesses, reduced excess capacity, on track for $60 million cost-out program. - Showcased 5 new products at IBS, expanded Deckorators' offerings, launched Frame Forward Systems. - M&A pipeline active, focused on complementing core business. - Retail's ProWood performing well despite market tough, Deckorators saw strong demand and capacity expansions. - Packaging business stabilizing with design and engineering capabilities. - Construction markets consistent with prior quarter, made investments in automation.

Retail segment: Sales $444 million, 15% decline; ProWood had 13% unit decline, Deckorators had 17% increase. Packaging segment: Sales $370 million, 1% decline. Construction segment: Sales $440 million, 10% decline. Retail's Deckorators saw 44% increase in Surestone sales and 35% in wood plastic composite. Packaging showed signs of stabilizing. Construction was impacted by housing affordability and inventory challenges.

• Expect full year organic volumes flat to down low single digits in 2026. - Anticipate market share gains and cost-out initiatives to offset new residential construction headwinds. - Plan to spend approximately $300 million to $325 million in capital expenditures in 2026. - Board approved quarterly dividend of $0.36 a share, 1% increase from October, 3% from year ago. - Board approved $300 million share repurchase authorization effective through end of July 2026.

• Market dynamics with weaker demand and competitive pricing pressures. - Volatile lumber pricing and ongoing tariff discussions affecting Packaging segment. - Challenges in new residential construction impacting Construction segment. - Capacity and production limitations affecting sales in prior periods.

Q: Update on Deckorators Summit store rollout and margin opportunities as new capacity grows.

A: Continues to gain share, $100 million expected increase in 2026 sales, margin lift coming as capacity fully optimized.

Q: SG&A facility consolidation and upside levers for $60 million target.

A: Heavy lift done, ongoing effort to control capacity, surpassing cost-out goal with capacity consolidations.

Q: M&A pipeline and packaging M&A opportunity.

A: Pipeline better than past 3 years, packaging seen as fragmented M&A target.

Q: ProWood and repair remodeling trends.

A: Soft market, but portfolio allows capturing opportunities.

Q: Factory build trends and expectations.

A: Committed to enhancing visual appeal, some unit challenges but new product momentum.

Q: EBITDA margin stabilization and first half second half guidance.

A: Optimistic about margin improvement with offsets in various segments, Site-Built challenging in first half.

Q: Deckorators advertising investment breakdown and sustainment.

A: Marketing to reach end consumers, expect investment to continue, may become percentage of sales type.