How does Deckorators' Q1 performance compare to internal plans, and will the new capacity from Buffalo and MoistureShield significantly accelerate growth in Q2 or primarily in the second half to meet the $100 million target?

Q1 sales were limited by production capacity, and the new capacity coming online will help realize backlog, with the full impact building through Q3 and Q4. “Our first quarter sales matched up to what we had to sell. So we were very happy. It's right on track in those CapEx advance. It's right where we expect it to be at this point.”

Can you quantify the transportation and energy cost headwind and explain the process and timing for passing these costs on to customers?

The headwind was about $3 million in March, increasing in April. Pricing actions, including freight surcharges and price increases, are underway and expected to offset these costs by the second half of the year. “Yes, it was about a $3 million headwind in March, [ Andrew, ] and it did increase in April. But the good news is that in April, as Will had indicated, that's when we started taking actions with our customers and now through freight surcharges and price increases on the products, depending on which approach the customers prefer, we're now beginning to pass that through.”

How do the MoistureShield assets fit into the long-term Deckorators strategy, and what is the plan for leveraging MoistureShield's distribution partnerships and branding?

The acquisition provides needed capacity, a secondary plant, and proprietary Cool Deck technology. The MoistureShield brand will run through 2026 and then transition under the Deckorators umbrella in 2027, while expanding distribution with new partners. “So the intent is to run the MoistureShield brand for the remainder of the year and in 2027, we'll start to transition moving that under the Deckorators umbrella and starting to introduce some of those products into the mix as well as the cool deck technology, applying that towards the whole portfolio of products where we deem fit.”

UFPI

UFP Industries (UFPI) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Materials· Apr 30, 2026

Source: earnings call transcript

Executive summary

UFP Industries Q1 FY26 — Strong Deckorators Growth and Strategic Acquisitions Amidst Macro Headwinds

UFP Industries navigated a challenging Q1 FY26 marked by macro headwinds and competitive pressures, resulting in an 8% decline in net sales. Despite this, the company demonstrated strong performance in its Deckorators segment, driven by capacity expansion and strategic acquisitions. Management is focused on cost control, M&A, and returning capital to shareholders, while maintaining a cautious outlook for the remainder of the year.

Highlights

Deckorators Surestone sales increased 27% year-over-year.
Deckorators traditional wood/plastic composite decking increased 4% year-over-year.
Acquired MoistureShield, expanding wood/plastic composite capacity and adding proprietary Cool Deck technology.
Maintained strong liquidity of approximately $2 billion.
Achieved 80% free cash flow conversion of adjusted EBITDA in the prior year.

Concerns

Net sales decreased 8% year-over-year to $1.46 billion (7% unit decline, 1% price decline).
Adjusted EBITDA margin declined to 7.6% from 8.9% year-over-year.
Q1 profitability impacted by $7 million higher healthcare costs and $3 million higher transportation costs.
Site-built construction segment experienced a 14% unit decline due to housing demand pressure.
Demand for the balance of the year is trending toward the lower end of prior guidance (flat to slightly down unit volumes).

Guidance & targets

Category	Target	Timeline	Confidence
Cost savings from cost-out program	$25 million medium materiality	FY26 · 2026	High
Core SG&A	approximately $570 million medium materiality	FY26 · 2026	High
Bonus expense	17% to 18% of pre-bonus operating profit low materiality	FY26 · 2026	High
Sales incentives	about 3% of gross profit low materiality	FY26 · 2026	High
Vesting expense for prior year stock-based incentives	$21 million low materiality	FY26 · 2026	High
Effective tax rate	25% to 26% medium materiality	FY26 · 2026	High
Total depreciation, amortization and other noncash expenses	approximately $200 million medium materiality	FY26 · 2026	High
Capital expenditures	$250 million to $275 million high materiality	FY26 · 2026	High
Deckorators growth	$100 million of incremental sales high materiality	FY26 · 2026	High
Demand outlook	trending toward the lower end of prior guidance high materiality	balance of FY26 · 2026	Medium
Wood/plastic composite decking manufacturing capacity	double high materiality	by 2027	High
Deckorators market share	double high materiality	over the next five years	High
EBITDA margin (long-term target)	12.5% high materiality	Long-term	High
Unit sales growth (long-term target)	7% to 10% high materiality	Long-term	High
ROIC (long-term target)	in excess of 15% high materiality	Long-term	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Retail Driven by soft demand and adverse weather for ProWood, and exiting low-margin commodity sales. Deckorators outperformed the market. Edge volume declined due to facility closure and portfolio narrowing. Units: -13%Pricing: +1%ProWood units: -15%Deckorators unit growth: +2%Overall decking sales: +16%Surestone sales: +27%Wood/plastic composite decking sales: +4%Edge volume: -20%	$531 million	-12%	—	Adjusted EBITDA: down $1 million YoY
Packaging Decline due to lower volumes and higher input costs in PalletOne, and unabsorbed overhead in protective packaging greenfield operations. SG&A reduced by $2 million. Units: -2%Pricing: -2%Structural packaging volumes: flatPalletOne units: -7%Protective packaging units: +5%	$394 million	-4%	—	Adjusted EBITDA: $28 million, down $7 million YoY
Construction Driven by market weakness and competitive pricing pressure in Site Built. Other business units improved profitability through growth and favorable mix. Units: -5%Pricing: -5%Site-built unit decline: -14%Factory-built units: -7%Commercial and concrete forming unit growth: mid-teens	$465 million	-10%	—	Adjusted EBITDA: $26 million, down $12 million YoY

Orderbook & backlog

Deckorators sales backlog unrealized in Q1 Q1 FY26

Expected to be realized in Q2 and beyond as new capacity comes online.

Product announcements

Product	Type	Timeline
TrueFrame Joists	launch	last month
Arris trim with Surestone technology	launch	late this quarter
Frame Forward Systems	launch	February

Deals & partnerships

Moisture Shield (Oldcastle APG) Acquisition of wood/plastic composite decking operations, including a plant in Springdale, Arkansas, and rights to Cool Deck technology.

The acquisition adds a wood/plastic composite plant in Springdale, Arkansas, which meaningfully expands capacity, adds redundancy, and enhances ability to bring unique products to market. It also eliminates the need to spend capital on a new greenfield and brings rights to Moisture Shield's Cool Deck technology. Closed on April 6.

Berry Pallets Acquisition of a new pallet manufacturer in the Upper Midwest.

Acquisition of a new pallet manufacturer in the Upper Midwest that expands geographic reach and strengthens the density of the pallet network. Announced on April 28, expected to close in May.

Capital programs

Cost-out program underway $60 million

Spent to date: $35 million

Start: FY25

Benefit:Cost savings

Remaining $25 million expected to be delivered by year-end, with potential for incremental savings.

Risks & headwinds

Macro headwinds and competitive pressures Q1 FY26, expected to persist through 2026

Contributed to roughly 60% of the year-over-year decline in profitability in Q1.

Mitigation:Controlling costs, opportunistic M&A, returning FCF to shareholders, strategic investments.

Longer-than-normal winter season Q1 FY26

Impacted normal seasonal uplift in March.

Mitigation:Not explicitly stated, but business conditions have since leveled out.

Higher medical costs Q1 FY26

Increased approximately $7 million YoY.

Mitigation:Not explicitly stated, but part of overall cost control efforts.

Higher transportation costs Q1 FY26 and Q2 FY26

Increased approximately $3 million YoY in Q1, expected to continue.

Mitigation:Pricing actions and surcharges underway, expected to offset by H2 FY26.

Challenging new residential construction environment Q1 FY26, expected to persist through 2026

Site-built units declined 14%.

Mitigation:Actively repositioning portfolio, investing in automation, launching Frame Forward Systems, focusing on multifamily customers.

Competitive pricing pressure in Site Built Q1 FY26

Reflected in margins, hardest part of the business to pass along cost increases.

Mitigation:Not explicitly stated, but part of overall cost discipline and strategic repositioning.

Geopolitical uncertainty and broadening inflation Remainder of FY26

Leading to a slightly more cautious outlook for the remainder of the year.

Mitigation:Approaching with cautious outlook, focusing on cost control and strategic investments.

What to watch in Q2 FY26

Deckorators incremental growth

Next quarter and beyond

Current Strong Q1 growth, capacity ramping

Target Continued acceleration towards $100M incremental sales

Why it matters

Key growth driver and market share expansion for the company.

Despite near-term macro uncertainty, our confidence in the business remains strong, and we continue to expect $100 million of incremental Deckorators growth this year.

Find out whether UFPI delivers this. Inve re-checks your case every morning.

Q&A highlights

Given Q1's weather impact and low-margin business exit, and April's leveling out, should we expect better ProWood volume trends going forward?

Management confirmed that after accounting for weather and business mix changes, ProWood's volume trends should align with the single-digit down guidance.

“I think if you take some of that noise out, it really matches up well to some of the guidance we've talked about for single-digit down, and I think that carries forward.”

asked by Kurt Yinger · answered by William Schwartz

2 min read 6 chapters

Detailed narrative

Q1 Performance and Macro Environment

Net sales declined 8% year-over-year to $1.46 billion, driven by a 7% unit decrease and 1% price decrease. Adjusted EBITDA margin was 7.6%, down from 8.9% in Q1 2025. The decline was attributed to macro headwinds, competitive pressures, a longer-than-normal winter season, and higher medical costs.

Management noted that business conditions have since leveled out, but a cautious outlook persists due to geopolitical uncertainty and inflation.

Strategic Acquisitions and Integration

UFP Industries announced two post-quarter end acquisitions: Moisture Shield (wood/plastic composite decking operations) and Berry Pallets (new pallet manufacturer). The Moisture Shield acquisition significantly expands capacity, adds redundancy, and includes proprietary Cool Deck technology. Patrick Benton was appointed EVP of Operations Integration to ensure efficient integration and performance of acquired businesses.

Deckorators Momentum and Capacity Expansion

The Deckorators business unit showed strong momentum, with Surestone decking sales increasing 27% and traditional wood/plastic composite decking up 4% year-over-year, both outperforming the broader industry. The company is ramping up production at its Surestone facilities in Buffalo and leveraging the MoistureShield acquisition to double wood/plastic composite capacity by 2027, aiming for $100 million of incremental Deckorators growth this year.

Packaging Segment Resilience

Despite an uneven macro backdrop, the Packaging segment is positioning for long-term success through new value-add products, automation, and lower-cost manufacturing. Quoting activity remains strong, but customer takeaway is mixed. Margins are stabilizing sequentially, suggesting the business is nearing the bottom of its cycle, with the national footprint providing a competitive advantage.

Construction Segment Challenges and Repositioning

The Construction segment faced a challenging new residential construction environment, with site-built units declining 14%. However, multifamily trends are improving, and factory-built units saw improved mix and profitability despite lower volume. The company is actively repositioning its portfolio, investing in automation, and launching initiatives like Frame Forward Systems to address labor and cost challenges in the industry.

Capital Allocation and Financial Strength

The company maintains a strong balance sheet with $2 billion in liquidity, including $714 million in surplus cash. Capital allocation priorities include organic and inorganic growth in core, higher-margin businesses. The Board approved a 3% dividend increase to $0.36 per share, and the company repurchased 30 million shares YTD under its $300 million authorization.

Capex guidance was lowered to $250-$275 million due to the MoistureShield acquisition.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.