UFPI

• Strategic Growth & Acquisitions

  • Completed three acquisitions for $122 million in the quarter: MoistureShield, Berry Pallets, and John Rock. These acquisitions fill key geographic gaps, expand service capabilities, and add capacity to support long-term growth. The M&A pipeline remains robust, and the company holds ample financial flexibility via a conservative capital structure.
  • Prioritizes disciplined growth focused on outperforming end markets, repositioning the business to meet long-term margin and return targets, with focus on investing in high-margin core businesses, strategic M&A, brand building, product innovation, value-added mix enhancement, and enterprise-wide operational excellence.

• Product Innovation & New Product Growth

  • Innovation is a core growth engine, with meaningful sequential and YoY new product growth across all three segments. New products represented 8.4% of total sales in Q2 2026, up from 6.5% YoY, and the company is on track to deliver 33% full-year new product sales growth.
  • Key recent launches include ARIS trim (launched mid-July 2026, positive early customer feedback), ProWood TrueFrame joist (strong customer response driven by time and cost savings for contractors), and the Frame Forward System for site-built construction (steady new product growth, particularly for light gauge metal offerings).
  • The $30 million national advertising program for decking has more than doubled sample orders, website traffic, and customer awareness, supporting strong demand growth.
  • MoistureShield integration is progressing on schedule, with key operational and training milestones completed, and the acquired facility will be integrated under the Decorators brand.

• Operational Efficiency & Cost Management

  • The company is actively right-sizing and optimizing capacity, while investing in automation, technology, and machine learning to improve real-time operations and long-term value. The company remains on track to achieve the remaining $25 million of its $60 million total cost-out initiative, following 2025 capacity consolidations.
  • Sharp 30% increase in non-fuel transportation rates occurred during the quarter, driven by tightened carrier capacity from regulatory changes and stronger enforcement. Spot rates have stabilized at elevated levels expected to persist; the company is adjusting pricing and pursuing operational efficiencies to mitigate impact.
  • Capital expenditure planning for 2026 was reduced by $125 million from original plans, as the company shifted to acquiring existing capacity rather than building new greenfield facilities and paused non-critical projects amid current market conditions.

• Full-year 2026 guidance is unchanged overall, but demand for the remainder of 2026 is now expected to come in at the lower end of the prior flat to slightly down unit growth outlook across all segments.
• Input costs, particularly for energy and transportation, are expected to remain elevated at current levels for the foreseeable future. The 30% non-fuel rate increase from Q2 is structural, though the magnitude of year-over-year cost pressure is expected to gradually decline in the back half of 2026 as spot market reliance decreases and pricing adjustments take effect, with the headwind expected to be eliminated by 2027.
• The company remains on track to deliver $100 million of decking sales growth in 2026, excluding the MoistureShield acquisition.
• Capital expenditures for 2026 are projected to be $175 to $200 million, including approximately $75 million in maintenance capital expenditures.
• Long-term target EBITDA margin remains 12.5%, contingent on eventual end market demand normalization.
• Capital allocation prioritizes organic and inorganic growth investments in high-margin core businesses, with opportunistic share repurchases when shares trade below intrinsic value, and growing dividends in line with long-term free cash flow growth.

UFP Industries reported consolidated net sales of $1.88 billion for Q2 2026, up 3% year-over-year (YoY), with 2% contribution from acquisitions and 1% organic unit growth. Adjusted EBITDA was $154 million, down $20 million YoY, with a margin of 8.2% (down from 9.5% YoY), entirely due to sharp increases in flatbed transportation costs.

1. Retail Segment: Net sales of $819 million, up 4% YoY, contributing 43.6% of total consolidated net sales. Performance included a 3% pricing increase and 2% acquisition contribution, partially offset by a 1% organic unit decline. ProWood organic units declined 1% and the Edge business declined 17% as part of ongoing restructuring, while Decorators delivered 9% unit growth driven by 59% YoY decking sales growth. Retail adjusted EBITDA was flat YoY, as favorable lumber prices, product mix improvements, productivity gains, and Edge restructuring offset higher transportation costs. The segment ended the quarter with a $30 million backlog for SureStone decking due to demand exceeding production capacity.

2. Packaging Segment: Net sales of $458 million, up 7% YoY, contributing 24.4% of total consolidated net sales. Growth came from 4% organic unit growth and 4% acquisition contribution, partially offset by a 1% pricing decline. Structural packaging volumes grew 8% on new national customer wins, Pallet 1 volumes grew 9% from recent acquisitions, and protective packaging volumes grew 15% as new greenfield operations in Indiana and Nevada ramp up. Packaging adjusted EBITDA declined $11 million YoY to $28 million, primarily due to higher transportation costs. Excluding transportation costs, higher profitability in structural packaging offset pressure from Pallet 1 pricing and unabsorbed overhead at new protective packaging facilities.

3. Construction Segment: Net sales of $523 million, down 4% YoY, contributing 27.8% of total consolidated net sales. The decline reflected a 3% pricing drop and 2% organic unit decline, partially offset by a 1% acquisition contribution. Site-built organic units declined 3% amid weak new residential construction demand, while factory-built units declined 5% from planned exit of low-margin commodity sales. Commercial and concrete forming delivered volume growth of 11% and 6% YoY, respectively, on continued share gains. Construction adjusted EBITDA declined $9 million YoY to $36 million, driven by new housing market and pricing pressure and higher freight costs, partially offset by growth and operating leverage in commercial and concrete forming.

• Persistently elevated structural transportation costs driven by industry-wide capacity reductions from new regulatory changes and stricter enforcement, which created a $27 million year-over-year headwind in Q2 2026 net of surcharges, equal to 1.6% of net sales. Full pass-through of these increased costs to customers will take time and may not be fully achieved amid competitive market conditions.
• Challenging macroeconomic and market conditions, particularly for new residential construction, where weak demand and competitive pricing continue to pressure profitability, and the business outlook remains highly uncertain.
• Persistently competitive pricing environments in the Pallet 1 and site-built construction segments, which makes passing along elevated input and transportation costs more difficult.
• Ramp-up risk for new production capacity: the new Greenfield SureStone facility in Buffalo is not yet operating at full optimized capacity, leading to temporary margin drag that is expected to improve as throughput increases.

Q: The analyst asks two questions about Decorators: 1) Will the $30 million SureStone backlog be cleared by the end of 2026? 2) What is driving strong organic growth in wood plastic composite decking, and is the growth broad-based? / A: Management confirmed the company remains on track to hit the 2026 full-year $100 million decking growth target, and capacity optimization at new facilities will clear the backlog in the second half of the year. Wood plastic composite growth is driven by broad-based shelf space gains across big box and independent distributors, ongoing industry consolidation (UFP is now the clear third-largest player in the space), and the payoff from sustained brand development investments, which have strengthened market positioning. (341 characters)

Q: The analyst asks about transportation cost pressure in the back half of 2026: how large will incremental cost increases be, which segments are most affected, and how much of the increased cost can be passed to customers? / A: Management states Q2 2026 was the most impacted quarter for transportation cost increases, and while elevated rates are structural and will persist, the magnitude of the headwind will gradually decrease in the back half as reliance on the expensive spot market falls. The most impacted segments are ProWood, pallets, and structural packaging (all high flatbed demand), while site-built construction is the least impacted. Pricing adjustments are already underway with customers, and management expects the transportation headwind to be fully eliminated by 2027. (412 characters)

Q: The analyst asks how M&A pipeline strength and how management balances M&A investment against share repurchases. / A: Management confirms the M&A pipeline remains healthy and well-aligned with the company's core strategic growth priorities, with discipline maintained on valuation to avoid overpaying. Capital allocation prioritizes growth investments, with a preference for M&A over new greenfield capital projects when attractive opportunities are available. The company remains committed to significant opportunistic share repurchases when shares trade below intrinsic value; it has already repurchased 3% of outstanding shares year-to-date 2026 and maintains $1.9 billion in liquidity to support larger M&A deals. (405 characters)

Q: The analyst asks what the path is for Decorators gross margins as the new Buffalo facility ramps production, and how should investors think about margins in the back half of 2026? / A: Management explains the new Buffalo greenfield facility created a significant margin drag in Q1 2026, when it was not yet shipping product. While still not at full optimal capacity in Q2, the drag has decreased, and margins will continue to improve as volume rises and the plant reaches optimal throughput. Management expects both higher absolute gross profits and improved segment margins for Decorators in the second half of 2026 as volume and productivity improve. (323 characters)

Q: The analyst asks if UFP has sufficient capacity to capitalize on recent industry distribution changes that have created market share opportunities for the company as the third-largest composite decking producer. / A: Management confirms the recent MoistureShield acquisition was specifically completed to add the capacity needed to take advantage of these market share opportunities. In addition to capacity from the acquired facility, limited incremental capital expenditures are underway, and management feels very well-positioned to meet growing demand and capture new market share. (286 characters)