What were the sequential price/cost trends in Site-Built, and is there a natural tailwind for profitability in the second half if lumber prices level out, or will the competitive environment prevent repricing?

The competitive pressure in Site-Built pricing remained consistent from Q1 to Q2. Elevated costs are harder to pass along due to market conditions. Transportation cost pressure is less significant in Site-Built compared to other segments. “There's still a lot of competitive pressure, Kurt. I would say that I don't know that I saw the pricing sequentially Q1, Q2 change much. I think it was just continued to be pressured.”

How should we think about incremental freight cost pressures in the back half of the year, and where are the most significant impacts and expected recovery across segments?

Q2 was the most difficult quarter for transportation cost increases. While costs will remain elevated, the impact won't be as severe in H2 as the company is less reliant on the spot market. Management is working to pass these structural cost increases to customers. ProWood, PalletOne, and Structural Packaging are most affected due to flatbed demand, while Site-Built is least affected. “the second quarter was and will be the most difficult quarter for us in the way of cost increases being realized in transportation. But what happened is structural and it will carry through.”

Given recent changes in distribution partnerships and the MoistureShield acquisition, how is UFP positioning Deckorators strategically regarding third-party versus internal distribution?

Management was not surprised by recent distribution changes and is comfortable with its position. The MoistureShield acquisition was key to capacity. The strategy involves a balanced approach, expecting a 50-50 mix between internal (ProWood) and external distribution partners. “I would tell you the first thing I would say to you is none of that was surprising to us. None of that was concerning to us. We were prepared and fully expected that. That self-distribution piece, we just can't speak enough to it.”

UFPI

UFP Industries (UFPI) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Materials· Jul 30, 2026

Source: earnings call transcript

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

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

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

Category	Target	Timeline	Confidence
Full-year outlook	Unchanged high materiality	FY26	High
Demand for remainder of year	Toward the lower end of prior guidance (flat to slightly down unit expectations in each segment) medium materiality	H2 FY26	Medium
Input costs (energy and transportation)	Remain elevated high materiality	Foreseeable future	High
Combined decking and railing growth	$100 million high materiality	FY26	High
Capital projects investment	$175 million to $200 million medium materiality	FY26	High
Cost-out initiative	Achieve or exceed remaining $25 million of $60 million initiative medium materiality	FY26	High
SG&A	On plan for the year low materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
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 million	4%	—	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 million	7%	—	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

Orderbook & backlog

Deckorators Surestone backlog $30 million quarter end

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

Construction segment multifamily backlog higher quarter end

year-over-year

Contributing to cautious optimism for the business.

Product announcements

Product	Type	Timeline	Details
Arris trim product	launch	mid-July
Frame Forward Systems solution	launch	February

Deals & partnerships

MoistureShield Acquisition of composite decking manufacturer

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

Berry Pallets Acquisition of pallet operations

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

John Rock Acquisition of pallet operations

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

Risks & headwinds

Elevated Transportation Costs Q2 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 Market Q2 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 Pressure Q2 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 Costs Q2 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

Deckorators Surestone backlog reduction

through the year

Current $30 million

Target Reduced 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.

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

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

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