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    UFPI
    Earnings call· Dec 2025(Q4 FY25)

    UFP INDUSTRIES Q4 FY25 earnings call UFPI

    Feb 24, 2026 Source

    Executive summary

    UFP Industries Q4 FY25 — Strong Deckorators Growth and Cost Reductions Offset Market Headwinds

    UFP Industries navigated a challenging Q4 FY25 with declining sales and gross profits, primarily due to soft demand in new home construction and competitive pricing. Despite these headwinds, the company demonstrated strong execution in cost management, surpassing its SG&A reduction targets, and saw significant growth in its Deckorators brand. With substantial liquidity and an active M&A pipeline, UFP is positioned to pursue strategic growth and continue capital returns, while anticipating a more normalized market in 2026.

    Highlights

    5

    • Deckorators sales increased 44% for Surestone and 35% for wood plastic composite, driven by capacity expansion and strong demand.

    • Achieved $11 million reduction in core SG&A in Q4, contributing to a $35 million reduction for the full year 2025, surpassing the $30 million target.

    • Generated robust free cash flow of $451 million in 2025, off only 5% from 2024.

    • Returned $443 million to shareholders through share repurchases (7% of outstanding shares) and paid $82 million in dividends, with a 3% dividend increase for 2026.

    • Maintained return on invested capital at 13.2% for the year, well above the cost of capital.

    Concerns

    5

    • Net sales declined 9% to $1.3 billion, driven by a 7% unit decline and 2% price decline due to weaker demand and competitive markets.

    • Gross profits decreased 10% to $217 million, primarily due to Site-Built and ProWood business units.

    • Retail segment sales declined 15% to $444 million, with ProWood unit decrease of 13% and Edge unit decrease of 57%.

    • Construction segment sales declined 10% to $440 million, with Site-Built experiencing a 17% unit decline due to housing affordability and builder inventory management.

    • Overall SG&A increased by $3 million due to a $14 million increase in bonus expense compared to prior year.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year organic volumes
    flat to down low single digits
    high materiality
    Medium
    Core SG&A expense
    $570 million
    medium materiality
    High
    Bonus expense as percent of pre-bonus operating profit
    17% to 18%
    low materiality
    High
    Vesting expense associated with share-based bonus awards
    $21 million
    low materiality
    High
    Sales incentives as percent of gross profit
    approximately 3%
    low materiality
    High
    Cost reductions from capacity consolidations
    additional $25 million
    medium materiality
    High
    Capital expenditures
    $300 million to $325 million
    high materiality
    High
    Deckorators sales increase
    $100 million
    high materiality
    High
    Dividend increase
    3%
    low materiality
    High
    Composite decking market share
    double
    high materiality
    High
    EBITDA margin
    12.5%
    high materiality
    High
    Unit sales growth
    7% to 10%
    high materiality
    High
    Return on invested capital
    in excess of 15%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Retail
    Sales decline driven by lower unit sales and pricing. ProWood impacted by lack of storm activity and softer demand. Edge decline due to restructuring. Deckorators growth driven by market share gains and strong demand for composite decking, despite railing sales decline due to loss of a large retail customer.
    Unit sales decline: 13%Pricing decrease: 2%ProWood unit decrease: 13%Edge unit decrease: 57%Deckorators unit increase: 17%Deckorators wood plastic composite sales increase: 35%Deckorators Surestone composite sales increase: 44%Deckorators railing sales decline: 7%
    		$444 million-15%——
    Packaging
    Customer demand consistent with prior quarters, but pricing remains competitive. Structural Packaging saw its first positive year-over-year comparison since 2021. Protective Packaging and PalletOne experienced unit declines due to challenging market conditions.
    Unit sales decline: 1%Pricing: flatStructural Packaging volume increase: 1%Protective Packaging unit decline: 2%PalletOne unit decline: 4%
    		$370 million-1%——
    Construction
    Decline driven by lower selling prices and units. Site-Built impacted by housing affordability, weak consumer sentiment, and builder inventory management, particularly in Texas and Colorado. Factory-Built, Commercial, and Concrete Forming businesses showed positive volume growth.
    Selling prices decline: 5%Units decline: 5%Site-Built unit decline: 17%Factory-Built volume increase: low single-digitCommercial volume increase: low single-digitConcrete Forming volume increase: low single-digit
    		$440 million-10%——

    Operational metrics

    22
    Net sales growth
    -9%YoY
    Q4 FY25

    Overall net sales declined from $1.46 billion last year to $1.3 billion this quarter.

    Gross profit growth
    -10%YoY
    Q4 FY25

    Gross profits declined from $240 million last year to $217 million this quarter, primarily due to Site-Built and ProWood.

    Core SG&A reduction
    $11 millionYoY
    Q4 FY25

    Reduction in core SG&A, excluding bonus and sales incentives, for the quarter and full year, surpassing the target.

    Deckorators advertising costs increase
    $3 millionYoY
    Q4 FY25

    Increase in advertising costs to support future growth in the Deckorators business unit.

    Bonus expense increase
    $14 millionYoY
    Q4 FY25

    Increase in bonus expense for the fourth quarter compared to the year-ago period due to an overstated estimate in the first three quarters of the prior year.

    Adjusted EBITDA (excluding bonus)
    $124 milliondown 8% YoY
    Q4 FY25

    Adjusted EBITDA for the quarter, excluding bonus expense, compared to $135 million last year.

    Return on invested capital
    13.2%
    FY25

    ROIC for the full year, remaining resilient and well above the weighted average cost of capital.

    Share repurchases
    $443 million
    FY25

    Amount of share repurchases executed during the year, representing 7% of outstanding shares at the beginning of the year.

    Dividends paid
    $82 million
    FY25

    Total dividends paid during the year.

    Maintenance CapEx
    $106 million
    FY25

    Maintenance capital expenditures for the full year.

    Growth CapEx
    $164 million
    FY25

    Capital expenditures to drive future growth and profitability for the full year.

    Total CapEx
    $270 millionbelow target
    FY25

    Total capital expenditures for the full year, which was below the target of $275 million to $300 million due to longer lead times and postponed capacity additions.

    Surplus cash
    $914 million
    As of Dec 31, 2025

    Cash balance at the end of the fiscal year.

    Total liquidity
    $2.2 billion
    As of Dec 31, 2025

    Total liquidity including surplus cash and no borrowings outstanding under lending agreements.

    Quarterly dividend per share
    $0.361% increase from Oct, 3% increase YoY
    Q1 2026

    Dividend approved by the Board, to be paid in March.

    Share repurchase authorization
    $300 million
    Through July 2026

    Remaining authorization for share repurchases approved by the Board.

    New product sales as percent of total sales
    7.6%
    FY25

    New product sales as a percentage of total sales for the full year.

    EBITDA margin improvement vs 2019
    170 bpshigher than 2019
    FY25

    EBITDA margin for the full year 2025 compared to 2019, indicating structural improvements.

    Cost-out program target
    $60 million
    By end of 2026

    Total target for cost reductions by the end of fiscal year 2026.

    Cost reductions from capacity consolidations
    $7 million
    FY25

    Cost reductions achieved from capacity consolidations in 2025, with additional savings expected in 2026.

    Deckorators marketing spend
    $30 million
    FY25

    Investment made to support the Deckorators brand, with positive internal metrics.

    ProWood unit decline due to storm-related demand
    8%
    Q4 FY25

    Estimated portion of the 13% unit decline in ProWood attributed to the lack of storm-related demand compared to the prior year.

    Industry KPIs

    3
    MetricValueDetails
    Price cost-2%%
    Order backlogstrong
    Orders bookings growth by vertical—

    Orderbook & backlog

    1
    Deckorators Surestone backlogstrongQ4 FY25

    Being worked through with recently added capacity from Selma and Buffalo expansions.

    Product announcements

    5
    ProductTypeDetails
    Surestone trim boardlaunch
    Deckorators Class B fire rated optionlaunch
    ProWood TrueFrame Joistlaunch
    UFP Site-Built Frame Forward Systemslaunch
    U-Loc 200 crate fastenermilestone

    Capital programs

    3
    Selma expansion (Deckorators)completed

    The Selma expansion is complete and fully operational, contributing to increased capacity for Deckorators products.

    Buffalo plant startup (Deckorators)underway

    Startup at the Buffalo plant is progressing nicely, with additional capacity expected to come online by the end of the first quarter to support robust demand.

    Deckorators capacity expansion (Selma and Buffalo)underway$250 million

    Benefit: Increased production capacity for Deckorators products

    Total capacity added between the Selma and Buffalo plants once both are fully running.

    Risks & headwinds

    9
    Weaker demand and competitive pricingQ4 FY25

    7% unit decline, 2% price decline, 9% net sales decline

    Mitigation: Cost-out program, market share gains, product innovation, operational efficiency.

    Cyclical and competitive pricing pressuresFY25

    Profitability remained pressured

    Mitigation: Exiting underperforming businesses, reducing excess capacity, $60 million cost-out program.

    Unfavorable comparison due to lack of storm activityQ4 FY25

    Impacted ProWood results

    Mitigation: Lowering cost positions and improving manufacturing processes in ProWood.

    Loss of placement with a large retail customerQ4 FY25

    Deckorators railing sales declined 7%

    Mitigation: Expanding distribution partnerships and investing in internal distribution capabilities.

    Challenged housing affordability and weak consumer sentimentQ4 FY25

    Site-Built 17% unit decline

    Mitigation: Investments in automation, Frame Forward Systems, enhancing manufactured housing aesthetics, expanding concrete forming product portfolio.

    Builder customers working to lower inventoryQ4 FY25

    Impacted Site-Built results

    Mitigation: Investments in automation and other initiatives to improve cost position and throughput.

    Regional footprint heavily weighted to single-family housing in Texas and ColoradoQ4 FY25

    Negatively impacted Construction segment results

    Mitigation: Diversifying product mix and leveraging expertise in factory-built and concrete forming.

    Lack of visibility due to ongoing tariff discussions and volatile lumber pricingFY25

    Made 2025 a challenging market for Packaging

    Mitigation: Investing in automation, developing innovative and patented solutions, leveraging national footprint to support strategic customers.

    Higher compensation, healthcare, and other benefit costsFY26

    $20 million increase in core SG&A

    Mitigation: Ongoing cost discipline and efficiency improvements.

    What to watch in Q1 FY26

    5

    Deckorators sales growth

    Q1/Q2 2026
    Current17% unit increase in Q4 FY25
    Target$100 million increase in 2026

    Why it matters

    Key driver of revenue and margin expansion, leveraging new capacity.

    We expect $100 million of increase in Deckorators sales in 2026.

    Q&A highlights

    8

    Asked for an update on the Summit store rollout for Deckorators and the potential for margin expansion from new capacity at Selma and Buffalo.

    Management stated that a $100 million increase in Deckorators sales is expected in 2026, predominantly from decking, driven by wins in retail and independent channels. They noted significant margin opportunities from bringing outsourced production in-house and optimizing new equipment, with Selma fully operational and Buffalo coming online by end of Q1/early Q2.

    “We expect $100 million of increase in Deckorators sales in 2026.”

    asked by Kurt Yinger · answered by William Schwartz

    2 min read6 chapters

    Detailed Narrative

    01

    Deckorators Growth and Capacity Expansion

    UFP Industries reported significant growth in its Deckorators brand, with Surestone composite sales increasing 44% and wood plastic composite sales up 35% in Q4 FY25. This growth outstripped production capacity for much of 2025, but new capacity from the completed Selma expansion and the Buffalo plant (expected online by end of Q1 2026) is addressing strong backlogs. The company anticipates a $100 million increase in Deckorators sales in 2026, primarily from decking, and plans to maintain its $30 million marketing spend to support brand momentum and expand distribution partnerships, aiming to double composite decking market share over the next five years.

    02

    Strategic M&A and Capital Allocation

    The company highlighted an active M&A pipeline, describing it as more robust than in the past 36 months, with identified targets across all business units focused on strengthening the core. With $2.2 billion in liquidity and strong free cash flow, UFP plans to pursue meaningful M&A opportunities while remaining disciplined on valuation. Capital allocation also includes returning capital to shareholders through opportunistic share repurchases, totaling $443 million in FY25, and increasing dividends, with a 3% increase announced for 2026.

    03

    Cost Reduction Initiatives

    UFP Industries is on track to achieve its $60 million cost-out program by the end of 2026. In FY25, core SG&A expenses decreased by $35 million, surpassing the $30 million target, and $7 million in cost reductions were realized from capacity consolidations. The company expects an additional $25 million in cost reductions from capacity consolidations in 2026, further lowering its cost structure and positioning for improved profitability.

    04

    Challenging Construction Market

    The Construction segment faced continued headwinds in Q4 FY25, with sales declining 10% and Site-Built experiencing a 17% unit decline. This was attributed to housing affordability challenges, weak consumer sentiment, and builders actively managing home inventories. The company's regional footprint, with a heavy weighting in single-family housing in Texas and Colorado, amplified the negative impact. Despite these challenges, Factory-Built, Commercial, and Concrete Forming business units saw low single-digit volume increases.

    05

    Packaging Stabilization and Innovation

    The Packaging segment showed signs of stabilization in Q4 FY25, with sales volume and gross profit stabilizing, although pricing remained competitive. Structural Packaging volume increased by 1%, marking its first positive year-over-year comparison since 2021. The company continues to gain share with key customers, leveraging its national footprint, design capabilities, and investments in automation. UFP also highlighted new patented solutions like the U-Loc 200 nailgun-free crate fastener, positioning for above-market growth when the market recovers.

    06

    New Product Development

    Innovation remains a key focus, with new product sales accounting for 7.6% of total sales in FY25. Recent introductions include a Surestone trim board, a Class B fire-rated option for Deckorators, ProWood TrueFrame Joist for deck substructures, and UFP Site-Built Frame Forward Systems for off-site construction. The company also secured a patent for its U-Loc 200 crate fastener, demonstrating a commitment to value-added and higher-margin offerings across its brand portfolio.

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