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    UFPI
    Earnings call· Mar 2026(Q1 FY26)

    UFP INDUSTRIES Q1 FY26 earnings call UFPI

    Apr 30, 2026 Source

    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

    5

    • 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

    5

    • 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

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

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    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

    Operational metrics

    15
    Net sales
    $1.46 billiondown 8% YoY
    Q1 FY26
    Adjusted EBITDA margin
    7.6%vs 8.9% in Q1 FY25
    Q1 FY26
    New product sales
    7.5%
    TTM

    As a percentage of total sales.

    Return on invested capital (ROIC)
    nearly 11%
    TTM

    Above weighted average cost of capital.

    Free cash flow conversion
    80%
    FY25

    Conversion rate vs adjusted EBITDA.

    Surplus cash
    $714 millionapproximately $200 million lower than year-end
    end of March
    Total liquidity
    approximately $2 billion
    end of March

    Includes surplus cash and no borrowings under credit agreements.

    Dividend per share
    $0.363% increase from a year ago
    quarterly
    Share repurchase authorization
    $300 million
    through July 2026
    Shares repurchased YTD
    30 million
    YTD
    SG&A expense
    declined over $3 millionYoY
    Q1 FY26

    Due to lower incentive compensation tied to profitability.

    Lumber price impact
    -6%
    Q1 FY26

    Decline in lumber prices impacting overall pricing.

    Transportation costs impact
    increased approximately $3 millionYoY
    Q1 FY26

    Across the portfolio.

    Health care costs impact
    increased approximately $7 millionYoY
    Q1 FY26

    Across the portfolio.

    Profitability decline due to March activity
    roughly 60%
    Q1 FY26

    Of the year-over-year decline in profitability, attributed to abnormal activity throughout March (longer winter, macro headwinds).

    Industry KPIs

    3
    MetricValueDetails
    Price cost-1%%
    Order backlogunrealizednot stated
    Orders bookings growth by vertical27%%

    Orderbook & backlog

    1
    Deckorators sales backlogunrealized in Q1Q1 FY26

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

    Product announcements

    3
    ProductTypeDetails
    TrueFrame Joistslaunch
    Arris trim with Surestone technologylaunch
    Frame Forward Systemslaunch

    Deals & partnerships

    2
    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 PalletsAcquisition 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

    1
    Cost-out programunderway$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

    7
    Macro headwinds and competitive pressuresQ1 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 seasonQ1 FY26

    Impacted normal seasonal uplift in March.

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

    Higher medical costsQ1 FY26

    Increased approximately $7 million YoY.

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

    Higher transportation costsQ1 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 environmentQ1 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 BuiltQ1 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 inflationRemainder 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

    5

    Deckorators incremental growth

    Next quarter and beyond
    CurrentStrong Q1 growth, capacity ramping
    TargetContinued 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.

    Q&A highlights

    6

    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 read6 chapters

    Detailed Narrative

    01

    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.

    02

    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.

    03

    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.

    04

    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.

    05

    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.

    06

    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.

    AI-generated summary of the company’s earnings call. Not investment advice.