Deckorators Q1 2025: Contradictions in Capacity Expansion, Competitive Pressures, and Market Strategy

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Challenging Market Environment and Sales Performance:
- UFP Industries reported a 3% decline in total sales to $1.6 billion for Q1 2025 compared to the previous year.
- This decrease was due to ongoing market volatility and limited visibility, as well as competitive pricing and manufacturing variances.

Profitability and Earnings Impact:
- Adjusted EBITDA declined by 21% to $142 million, and earnings per share were $1.30 for the quarter.
- The decline in profitability was attributed to unfavorable manufacturing variances, competitive pricing, higher input costs, and unfavorable mixed shifts.

Focus on Growth and Innovation:
- New product sales totaled $106 million, representing 6.7% of total sales, indicating an effort to expand into value-added products.
- The focus on innovation and new products is part of their strategy to drive higher growth rates and improve margins.

Retail Segment Challenges and Opportunities:
- Retail sales declined by 3% compared to the previous year, driven by a 4% decrease in volume, with an 1% increase in prices.
- The decline was attributed to a customer shift within the Deckorators business, but recent distribution wins and product placements are expected to contribute to future growth.

M&A and Capital Allocation:
- UFP Industries has an active M&A pipeline, with expectations that the expectations between buyers and sellers have rationalized, providing opportunities for growth.
- The company remains committed to returning capital to shareholders, with a quarterly dividend increase to $0.35 per share and share repurchases totaling $171 million in Q1.