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    UFPI
    Earnings call· Jun 2026(Q2 FY26)

    UFP INDUSTRIES Q2 FY26 earnings call UFPI

    Jul 30, 2026 Source

    Executive summary

    UFP Industries Q2 FY26 — Organic Volume Growth Returns Amidst Freight Headwinds

    UFP Industries achieved its first positive organic volume growth in nearly four years, driven by strong performance in Deckorators and the Packaging segment, alongside successful new product introductions. However, profitability was significantly impacted by a sharp, structural increase in transportation costs, particularly affecting the Retail and Packaging segments. New residential construction continued to be a drag, though management is focused on passing through costs and optimizing operations.

    Highlights

    5

    • Net sales increased 2.6% year-over-year, driven by 1% organic volume growth and 2% from acquisitions, marking the first positive organic growth since Q3 2022.

    • Deckorators decking sales increased 59%, with Surestone products up 37% and wood plastic composite up 85%.

    • New product sales increased 33%, representing 8.4% of total sales compared to 6.5% last year.

    • Packaging segment sales increased 7%, with Structural Packaging volumes up 8%, PalletOne volumes up 9%, and Protective Packaging volumes up 15%.

    • The Board approved a 3% increase in the quarterly dividend to $0.36 per share.

    Concerns

    5

    • Adjusted EBITDA declined $20 million to $154 million, with the margin falling to 8.2% from 9.5% last year.

    • Transportation costs, net of fuel surcharges, increased $27 million or 1.6% of net sales, with spot rates rising over 30% excluding fuel.

    • New residential construction remained soft, accounting for all of the profit pressure in the Construction segment.

    • Retail segment experienced a 1% organic unit decline, with ProWood units down 1% and Edge down 17%.

    • Construction sales declined 4%, reflecting a 2% organic unit decline in Site-Built and a 5% decline in Factory-Built units.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year outlook
    Unchanged
    high materiality
    High
    Demand for remainder of year
    Toward the lower end of prior guidance (flat to slightly down unit expectations in each segment)
    medium materiality
    Medium
    Input costs (energy and transportation)
    Remain elevated
    high materiality
    High
    Combined decking and railing growth
    $100 million
    high materiality
    High
    Capital projects investment
    $175 million to $200 million
    medium materiality
    High
    Cost-out initiative
    Achieve or exceed remaining $25 million of $60 million initiative
    medium materiality
    High
    SG&A
    On plan for the year
    low materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Retail
    Favorable lumber price trends, mix, productivity improvements, and Edge restructuring offset higher transportation costs.
    Organic unit decline: 1%Pricing increase: 3%Acquisition contribution: 2%ProWood units declined: 1%Edge declined: 17%Deckorators units grew: 9%Decking sales increased: 59%Surestone products growth: 37%Wood plastic composite growth: 85%MoistureShield contribution to WPC growth: 51%MoistureShield contribution to overall composite decking growth: 23%Railing products declined: 17%
    		$819 million4%—Adjusted EBITDA flat
    Packaging
    Decline primarily due to higher transportation costs. Excluding transportation, higher material costs and pricing pressure in PalletOne and unabsorbed overhead in protective packaging greenfield operations were substantially offset by improved profitability in Structural Packaging.
    Organic unit growth: 4%Acquisition contribution: 4%Pricing decline: 1%Structural Packaging volumes grew: 8%PalletOne volumes increased: 9%Protective Packaging volumes grew: 15%
    		$458 million7%—Adjusted EBITDA declined $11 million to $28 million
    Construction
    Decline driven by market and pricing pressure in Site-Built and higher freight costs. These headwinds were partially offset by growth and operating leverage in commercial and concrete forming. Factory-Built results were flat due to lower volume offset by favorable product mix.
    Selling prices decline: 3%Organic unit decline: 2%Acquisition contribution: 1%Site-Built organic unit decline: 3%Factory-Built units declined: 5%Commercial volumes grew: 11%Concrete forming volumes grew: 6%
    		$523 million-4%—Adjusted EBITDA declined $9 million to $36 million

    Operational metrics

    19
    Net sales
    $1.88 billionup 3% YoY
    Q2 FY26

    Ahead of plan, up from $1.84 billion last year.

    Organic unit growth
    1%
    Q2 FY26

    First quarter of positive year-over-year organic growth since Q3 2022.

    Acquisition contribution to volume
    2%
    Q2 FY26

    Contribution from recently completed acquisitions.

    Adjusted EBITDA
    $154 milliondown $20 million YoY
    Q2 FY26

    Down from last year, primarily due to transportation costs.

    Adjusted EBITDA margin
    8.2%down from 9.5% YoY
    Q2 FY26

    Decline driven entirely by flatbed transportation costs.

    Transportation costs (net of fuel surcharges)
    $27 millionincreased YoY
    Q2 FY26

    Caused by sharp increase in flatbed transportation costs as carrier capacity tightened.

    Transportation spot rates
    over 30%increased sequentially
    Q2 FY26

    More rapid and severe increase than experienced during COVID; stabilized at elevated levels.

    New product sales
    8.4%up from 6.5% last year
    Q2 FY26

    Improvement seen in each segment.

    Cost-out initiative remaining target
    $25 million
    FY26

    On track to achieve or exceed, supported by capacity consolidations.

    SG&A
    on plan
    FY26

    Focus on maintaining savings achieved last year.

    Cash balance
    nearly $600 million
    Q2 FY26

    At the end of June.

    Working capital seasonal increase
    $170 million
    Q2 FY26

    Expected to convert to cash by early Q4.

    Total liquidity
    $1.9 billion
    Q2 FY26

    Includes no borrowings outstanding under revolver.

    Free cash flow conversion
    70% to 80%
    historical

    Historically, the company converts this percentage of adjusted EBITDA into free cash flow.

    Quarterly dividend
    $0.36up 3% YoY
    Q3 FY26

    Approved by the Board, representing a 3% increase from the dividend paid a year ago.

    Share repurchase authorization
    $300 million
    April 2027

    New authorization approved by the Board in April.

    Shares repurchased
    $142 million
    YTD

    Represents roughly 3% of current market capitalization.

    Margins vs 2019
    100 bps highervs 2019
    Q2 FY26

    Despite headwinds, current margins remain 100 basis points higher than in 2019.

    Gross transportation cost increase
    $34 million
    YTD

    Year-to-date increase in transportation costs, including fuel.

    Industry KPIs

    3
    MetricValueDetails
    Price costflat
    Order backlog$30 millionUSD
    Orders bookings growth by vertical—

    Orderbook & backlog

    2
    Deckorators Surestone backlog$30 millionquarter end

    Expected to reduce through the year as plant capacity optimization efforts are completed.

    Construction segment multifamily backloghigherquarter end

    year-over-year

    Contributing to cautious optimism for the business.

    Product announcements

    2
    ProductTypeDetails
    Arris trim productlaunch
    Frame Forward Systems solutionlaunch

    Deals & partnerships

    3
    MoistureShieldAcquisition of composite decking manufacturer

    Acquisition discussed on prior call, integration into Deckorators progressing well. Adds capacity and enhances market position.

    Berry PalletsAcquisition of pallet operations

    Acquisition discussed on prior call. Fills geographic gaps, enhances service capabilities, and adds capacity.

    John RockAcquisition of pallet operations

    Adds to industry-leading PalletOne operations. Fills geographic gaps, enhances service capabilities, and adds capacity.

    Risks & headwinds

    4
    Elevated Transportation CostsQ2 FY26, expected to persist for foreseeable future

    Increased $27 million (1.6% of net sales) net of fuel surcharges; spot rates up over 30% (excluding fuel).

    Mitigation: Adjusting pricing where appropriate and pursuing operational efficiencies to mitigate impact; less reliance on spot market in H2.

    Soft New Residential Construction MarketQ2 FY26, expected to remain difficult

    Accounted for all profit pressure in Construction segment; Site-Built organic unit decline of 3%.

    Mitigation: Balancing cost discipline with long-term growth, investing in market share gains, product innovation, brand awareness, and technology-driven efficiency.

    Competitive Market and Pricing PressureQ2 FY26, ongoing

    Pricing was flat overall due to competitive pressure in Site-Built and PalletOne.

    Mitigation: Gaining share with key customers across all three business units; improved product mix in Factory-Built.

    Elevated Input CostsQ2 FY26, expected to remain elevated

    Input costs, particularly energy and transportation, remained elevated.

    Mitigation: Adjusting pricing where appropriate and pursuing operational efficiencies.

    What to watch in Q3 FY26

    5

    Deckorators Surestone backlog reduction

    through the year
    Current$30 million
    TargetReduced backlog

    Why it matters

    Indicates successful optimization of new plant capacity and ability to meet strong customer demand for high-growth products.

    We ended the quarter with a $30 million backlog, which we expect to reduce through the year as plant capacity optimization efforts are completed.

    Q&A highlights

    7

    How quickly can the $30 million Surestone backlog be cleared, and what's driving the strong organic growth in wood plastic composite, particularly in terms of shelf space gains or distribution?

    Management expects to clear the Surestone backlog through the year as plant capacity optimizes. Wood plastic composite growth is driven by a combination of big box shelf space gains, independent dealer wins, and the company's strong brand development and internal distribution through ProWood.

    “I mean it's big box shelf space and as well as independents. And so we really like our position. And I'll tell you, the brand development is really, really paying dividends for us.”

    asked by Kurt Yinger · answered by William Schwartz

    2 min read6 chapters

    Detailed Narrative

    01

    Return to Organic Growth Amidst Market Challenges

    UFP Industries achieved its first positive year-over-year organic volume growth of 1% since Q3 2022, contributing to a 2.6% net sales increase. This milestone reflects the strength of the company's innovative products, diversified portfolio, and disciplined execution, even as end markets remain challenging. Management emphasized a commitment to outgrowing respective end markets and repositioning the business towards long-term margin and return objectives.

    02

    Significant Impact of Elevated Transportation Costs

    Profitability was significantly impacted by a sharp increase in transportation costs, with adjusted EBITDA declining $20 million to $154 million and margins falling to 8.2% from 9.5%. Flatbed transportation spot rates increased over 30% (excluding fuel) during the quarter, leading to a $27 million net increase in costs. Management noted this increase was more rapid and severe than during COVID, and while rates have stabilized, they are expected to persist at elevated levels, prompting pricing adjustments and operational efficiencies.

    03

    Strong Performance in Deckorators and New Product Momentum

    The Deckorators brand continued its strong performance, with decking sales increasing 59%, driven by 37% growth in Surestone products and 85% in wood plastic composite. The company remains on track to deliver $100 million in combined decking and railing sales growth in 2026. Overall new product sales increased 33%, now representing 8.4% of total sales, up from 6.5% last year, highlighting innovation as a key growth engine across all segments.

    04

    Strategic Acquisitions and Robust M&A Pipeline

    UFP Industries invested $122 million to acquire MoistureShield, Berry Pallets, and John Rock, strategically filling geographic gaps, enhancing service capabilities, and adding capacity. The M&A team remains active with a robust pipeline, focusing on expanding in core higher-margin businesses where the company holds a sustainable competitive advantage. This strategy allows for growth investments while maintaining a conservative capital structure.

    05

    Construction Segment Headwinds and Multifamily Optimism

    The Construction segment experienced a 4% sales decline, primarily due to a 2% organic unit decline and pricing pressure in the Site-Built business, where new residential construction remains soft. This segment accounted for all profit pressure in the quarter. However, the company noted improved multifamily customer trends, contributing to a higher year-over-year backlog and cautious optimism for finding a bottom in the business in the back half of the year.

    06

    Capital Allocation and Shareholder Returns

    The company maintains a strong financial position with nearly $600 million in cash and $1.9 billion in total liquidity. Capital allocation priorities include growth investments (M&A and capital projects) and returning capital to shareholders. The Board approved a 3% increase in the quarterly dividend to $0.36 per share. Year-to-date, $142 million has been used for share repurchases at an average price of $84.95, representing approximately 3% of the current market capitalization.

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