UFP Industries Q4 Earnings Call Highlights

Key Points

• UFP reported Q4 net sales of $1.33 billion and Adjusted EBITDA of $124 million, an 8% decline driven by a 7% unit drop and 2% price weakness; retail and construction were pressured while Deckorators delivered strong unit growth.
• Management returned capital aggressively — repurchasing $443 million of stock and paying $82 million in dividends in 2025, approved a $300 million buyback authorization and a 3% dividend increase — and exited the year with $914 million surplus cash and $2.2 billion total liquidity.
• UFP is on track with a $60 million cost-out program, expects 2026 organic volumes to be flat to down low single digits, plans $300–325 million in capex (Deckorators-focused), and says its M&A pipeline is the most active in 36 months.

UFP Industries NASDAQ: UFPI executives said the company ended fiscal 2025 facing continued demand and pricing pressure in several end markets, but emphasized cost reductions, product innovation and a strengthening pipeline of acquisition opportunities as key drivers heading into 2026.

Fourth-quarter results reflected softer demand and competitive pricing

CEO Will Schwartz said market dynamics seen earlier in 2025 continued into the fourth quarter, with net sales totaling $1.33 billion. Management attributed the decline to a 7% drop in units and a 2% decline in price, alongside what Schwartz described as “cyclical and competitive pricing pressures” in several key markets.

CFO Michael Cole reported net sales of $1.3 billion for the December quarter, down from $1.46 billion a year earlier. Gross profit fell 10% to $217 million, primarily due to weaker results in the company’s Site-Built and ProWood business units. Cole also highlighted quarter-specific non-recurring, non-cash items, including gains from insurance settlements and real estate sales, as well as losses from asset impairments and additional deferred income tax expense.

To help frame underlying performance, Cole said the company focused on Adjusted EBITDA, noting that bonus-expense timing also affected comparisons. Excluding bonus expense from each period, Adjusted EBITDA was $124 million versus $135 million last year, an 8% decline.

Capital returns, cash flow, and balance sheet capacity

Management emphasized capital deployment during the year. Schwartz said UFP repurchased $443 million of stock in 2025, representing 7% of outstanding shares, and paid $82 million in dividends. The company also announced a 3% dividend increase for 2026.

Cole reported full-year free cash flow of $451 million, down 5% from 2024, and operating cash flow of $546 million. UFP spent $270 million on maintenance and growth capex in 2025, with Cole noting total capex came in below the company’s $275 million to $300 million target due to longer lead times and a decision to postpone adding capacity in weaker end markets.

On liquidity, Cole said UFP ended December with $914 million in surplus cash and no borrowings outstanding under lending agreements, totaling $2.2 billion in liquidity. The board approved a quarterly dividend of $0.36 per share to be paid in March, which Cole described as a 1% increase from October and a 3% increase versus a year ago. He also pointed to a $300 million share repurchase authorization effective through July 2026.

Cost-out program and 2026 expense expectations

Both executives pointed to progress on UFP’s cost-reduction initiatives. Schwartz said the company exited underperforming businesses, reduced excess capacity, and remains on track to achieve a $60 million cost-out program.

Cole provided additional detail, saying the company achieved an $11 million reduction in core SG&A in the fourth quarter, even with a $3 million increase in Deckorators advertising. Total SG&A increased due to bonus expense timing; Cole said a prior-year adjustment led to very little bonus expense in Q4 2024, resulting in a $14 million year-over-year increase in Q4 2025 bonus expense.

For the full year, Cole said annual core SG&A decreased $21 million due to $35 million of targeted cost reductions (surpassing a $30 million target) and a $6 million insurance-settlement gain, partly offset by a $20 million increase in Deckorators advertising. The company also achieved $7 million of cost reductions from capacity consolidations in 2025 and expects an additional $25 million in 2026.

Looking to 2026, Cole said UFP anticipates core SG&A of $570 million, a $20 million increase largely tied to higher compensation, healthcare, and benefit costs. He also outlined assumptions for bonus and incentive expenses, including bonus expense estimated at 17% to 18% of pre-bonus operating profit, $21 million in vesting expense tied to share-based bonus awards, and sales incentives of approximately 3% of gross profit.

Segment performance: retail pressured, packaging stabilizing, construction challenged

In retail, fourth-quarter sales were $444 million, down 15%, reflecting a 13% unit decline and a 2% price decrease. Cole said ProWood units fell 13%, including an unfavorable comparison tied to storm-related demand in prior periods. In Q&A, management estimated roughly 8% of ProWood’s unit decline was storm-related, with the remainder reflecting softer demand tied to interest rates and sentiment.

Deckorators was a bright spot. Cole reported a 17% unit increase, with wood-plastic composite decking up 35% and SureStone composite decking up 44%. Schwartz said demand for SureStone outpaced the company’s ability to produce for much of the year, though added capacity is helping address backlogs. He said the Selma expansion is complete, the Buffalo startup is progressing, and additional capacity is expected to come online by the end of the first quarter. In Q&A, executives said Selma is fully operational, while Buffalo is expected to come online late Q1/early Q2 with a ramp that could take roughly a quarter, with fuller capacity benefits more visible in the back half of the year.

Railing sales declined 7%, which Cole attributed to the loss of placement with a large retail customer previously discussed in earlier quarters. Management said it plans to maintain higher marketing spend in 2026 after investing $30 million to support the Deckorators brand, citing internal metrics such as unaided brand awareness, sample requests, and website traffic.

In packaging, sales declined 1% to $370 million, driven by a 1% unit decline and flat pricing. Cole said Structural Packaging volume rose 1%, the first positive year-over-year comparison since 2021, while Protective Packaging and PalletOne posted unit declines of 2% and 4%, respectively. Schwartz said the segment is showing signs of stabilizing but remains affected by competitive pricing and uncertainty tied to tariff discussions and lumber volatility.

In construction, sales fell 10% to $440 million on a 5% unit decline and a 5% drop in selling prices. Cole said Site-Built units declined 17% amid affordability challenges and builder efforts to reduce inventory, with UFP’s footprint in Texas and Colorado adding to pressure. Low single-digit volume increases in Factory-Built, commercial, and concrete forming partially offset the decline.

2026 outlook: flat-to-down volumes, share gains and cost actions as offsets

Cole said UFP expects many 2025 trends to persist in 2026, with full-year organic volumes expected to be flat to down low single digits. Even so, he said management is “cautiously optimistic,” expecting market share gains and cost-out initiatives to help offset weakness in businesses tied to new residential construction.

On capital investment, Cole said UFP plans $300 million to $325 million in capex for 2026, with management noting in Q&A that spending is heavily weighted toward completing Deckorators-related capacity projects, including Buffalo and additional wood-plastic composite capacity.

Executives also highlighted M&A as a continued priority. Schwartz said the company’s pipeline is “more active today than it has been in the past 36 months,” which he linked to expanded internal outreach and a more strategic approach to evaluating deals, with a continued emphasis on valuation discipline and return targets.

About UFP Industries NASDAQ: UFPI

UFP Industries, Inc, founded in 1955 and headquartered in Grand Rapids, Michigan, designs, manufactures, and distributes a broad range of wood and wood-alternative products. The company operates through two primary segments: UFP Retail Solutions, which supplies building materials and components to home improvement retailers and lumber dealers, and UFP Distribution Solutions, which offers packaging, pallets, skids, and other industrial products for a variety of end markets. Its product portfolio includes treated and untreated lumber, engineered wood, decking, railing, fencing, vinyl sheets and profiles, and custom-designed packaging solutions.

With manufacturing facilities and distribution centers across the United States, Canada, Mexico and Europe, UFP Industries serves professional contractors, industrial customers, and do-it-yourself consumers.

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