UFP Industries 2025 Q1 Earnings Misses Targets as Net Income Falls 34.4%

UFP Industries (UFPI) reported its fiscal 2025 Q1 earnings on May 7th, 2025. The company's revenue of $1.60 billion was in line with forecasts, but earnings per share (EPS) of $1.30 fell 17% below analyst expectations. UFP Industries anticipates a decline in overall demand across all segments for the remainder of 2025, with expectations of softer demand and competitive pricing persisting. The company aims to achieve structural cost savings of $60 million by year-end 2026 and plans to invest approximately $300 million to $350 million in capital projects throughout 2025.

Revenue

UFP Industries experienced a 2.7% decrease in total revenue, reaching $1.60 billion in Q1 2025, compared to $1.64 billion in Q1 2024. The Retail segment contributed $607.38 million, followed by Packaging with $410.01 million. Construction reported $515.94 million, while Other segments added $60.30 million. Corporate operations accounted for $1.89 million, culminating in the overall revenue figure.

Earnings/Net Income

The company's EPS saw a decline of 33.7%, dropping to $1.30 in Q1 2025 from $1.96 in Q1 2024. Concurrently, net income fell to $79.42 million, marking a 34.4% decrease from $121.10 million in the previous year. Despite the downturn, UFP Industries has maintained profitability over 14 years, showcasing stable business performance. The significant drop in EPS indicates challenging financial conditions.

Price Action

The stock price of UFP Industries has edged down 1.30% during the latest trading day, has edged down 1.96% during the most recent full trading week, and has tumbled 8.95% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing UFP Industries stock after a quarterly revenue increase and holding for 30 days has yielded a 10.40% return over the past five years. This performance has notably lagged behind the benchmark's return of 84.08%, highlighting the strategy's underperformance. The Sharpe ratio for this approach was a low 0.17, reflecting poor risk-adjusted returns. Additionally, the strategy faced a maximum drawdown of -15.27%, emphasizing its high risk and underscoring the necessity of robust risk management practices.

CEO Commentary

"While our first quarter proved more challenging than anticipated and visibility remains limited, we are more encouraged by recent business trends," said Will Schwartz, CEO of UFP Industries. He highlighted that business activity improved sequentially throughout the quarter and continued into April, emphasizing the company's focus on activities that enhance profitability and streamline costs. Schwartz noted the strategic advantage of the company’s scale, diversification, and culture, asserting that these factors have historically led to market outperformance. He expressed confidence in managing potential challenges from lumber tariffs and emphasized the importance of a balanced customer base, along with a strong balance sheet and cash flow generation for pursuing investments and strategic opportunities.

Guidance

UFP Industries anticipates a decline in overall demand slightly across all segments for the remainder of 2025, with expectations of softer demand and competitive pricing persisting. The company aims to achieve structural cost savings of $60 million by year-end 2026 and plans to invest approximately $300 million to $350 million in capital projects throughout 2025. Long-term goals remain focused on achieving 7-10 percent unit sales growth annually and maintaining EBITDA margins of 12.5 percent.

Additional News

Recently, UFP Industries announced a 6% increase in its quarterly dividend to $0.35 per share, payable on June 16, 2025. The company also amended its share repurchase authorization, increasing it from $200 million to $300 million through July 31, 2025. Furthermore, UFP Industries is preparing to participate in two investor conferences in June 2025. The Bank of America Housing Symposium and the Stifel Cross Sector Insight Conference will see company representatives engaging with institutional investors to discuss strategic plans and market outlook. These moves highlight UFP Industries' ongoing commitment to shareholder returns and strategic growth initiatives.