UFP Industries Stock

UFP Industries, Inc. designs, manufactures, and supplies products made from wood, composites, and other materials to three markets: retail, packaging, and construction. The company is a holding company with subsidiaries throughout North America, Europe, Asia, and Australia.

Segments

The company's business segments consist of UFP Retail Solutions, UFP Packaging, and UFP Construction, and align with the end markets the company serves. The company manages the operations of its individual locations primarily through a market-centered reporting structure under which each location is included in a business unit and business units are included in the company's Retail, Packaging, and Construction segments. The exception to this market-centered reporting and management structure is the company's International segment, which comprises the company's Mexico, Canada, Europe, Asia, and Australia operations, and sales and buying offices in other parts of the world. The company's International segment and Ardellis, the company's insurance captive, are referred to as 'All Other'.

The Corporate segment includes purchasing, transportation, corporate ventures, and administrative functions that serve the company's operating segments. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns, leases, and operates transportation equipment, are also included in Corporate.

Retail Solutions segment

The company's Retail Solutions segment is consisted of the following business units: ProWood, Deckorators, and UFP-Edge. The segment is focused on distinct product offerings, which are grouped by brands and business units.

ProWood

The company's ProWood business unit manufactures and sells pressure-treated lumber products, including decking, fencing, and lattice, as well as decorative and functional lawn and garden products to building products retailers across the nation. This business unit includes the company's branded ProWood line of pressure-treated and fire-retardant products used primarily for outdoor decking environments, including associated accessories. It also includes the company's branded Outdoor Essentials line of lawn and garden products, consisting of wood and vinyl fencing and lattice, garden beds and planters, pergolas, picnic tables, and other landscaping products. Numerous pressure-treaters exist on local and regional scales with none approaching the volume sold by UFP.

Deckorators

This business unit includes the manufacture of wood plastic composite and the company's patented Surestone mineral based composite decking and related decking accessories, including aluminum railing systems, balusters, post caps, and similar products, as well as customized, aluminum fencing. Customers include big box home improvement retailers, regional home centers and wholesale distributors.

UFP-Edge

This business unit manufactures and sells exterior siding, pattern, trim and facia products. These products include traditional wood, engineered wood and modified wood siding with a variety of finish and profile alternatives, as well as primed wood trim boards and facia. It also includes interior pattern and trim products, as well as pre-painted and primed shiplap and project boards. UFP-Edge is sold to home improvement retailers and two-step distributors.

The company supplies customers in this segment from many of the company's locations. The company's facilities supply mixed truckloads of products, delivered to customers with rapid turnaround. The Retail segment services two of the company's largest customers, The Home Depot and Lowes, which accounted for approximately 17% and 12%, respectively, of the company's total net sales in the year ended December 30, 2023 (fiscal 2023).

Packaging segment

This segment, formerly known as the company's Industrial segment, is consisted of the following business units: Structural Packaging, PalletOne, and Protective Packaging Solutions.

Structural Packaging

This business unit designs, engineers, manufactures and tests custom packaging products primarily made of wood and metal. These products are custom designed, often including mixed materials, and manufactured based upon specific customer needs and requirements. The company serves a wide variety of regional, national, and global customers in several end markets, such as building materials, durable goods, agricultural, moving and storage, heavy equipment and automotive. The company utilizes combinations of various materials through industrial engineering and testing to promote the best value and functionality for the company's customers.

PalletOne

This business unit designs and manufactures pallets primarily made of wood and heat-treated wood. The company's pallets are designed and manufactured in numerous sizes and configurations and are used by the company's customers for shipping a wide assortment of consumer and industrial products. This business unit also includes a recycling operation of previously used pallets. Keys to the company's success in this business unit are low-cost production through expanded automation, including robotics and high efficiency pallet machines, and the procurement of competitively priced industrial grade wood fiber. In 2022, the company acquired a 50% equity stake in Dempsey Wood Products, LLC, which produces pallet lumber and other industrial wood products in Orangeburg, South Carolina. The lumber Dempsey produces is a crucial product for pallet operations and has been in short supply as larger mills produce less of this type of lumber. PalletOne's investment in Dempsey helps it secure and grow a critical long-term supply source.

Protective Packaging Solutions

This business unit consists of a wide variety of products, such as corrugate, foam, labels, strapping and films. These products are primarily sold as additional offerings to the company's structural packaging products and pallets and are generally sold as a means of providing a more complete solution to the company's customers' packaging needs and requirements. Over the last five years, the company has added additional products and services to this business unit to meet the increasing demand of the company's customers to provide a wider array of innovative solutions to their packaging and shipping needs. Through the acquisitions of Advantage Label in Grand Rapids, MI, and Titan Manufacturing, a highly-automated corrugate converter in Flower Mound, TX, UFP has become a manufacturer of labels and corrugate boxes, two significant growth categories for UFP Packaging.

The company plans to acquire companies across the industrial packaging spectrum with capabilities in product categories that allow the company to fill geographical gaps that enhance the company's ability to offer valuable packaging solutions to the company's customers.

Construction segment

The company's construction segment is consisted of the following business units - Factory-Built Housing, Site-Built Construction, Commercial Construction, and Concrete Forming.

Factory-Built Housing

This business unit designs and manufactures roof trusses, cut-to-size dimensional and board lumber, plywood, and oriented strand board, all intended for use in the construction of manufactured housing. The company's customers in this market are producers of mobile, modular and prefabricated homes and, to a lesser extent, recreational vehicles (RV) and cargo trailers. The company also distributes products, such as siding, electrical, plumbing, and many other specialty products to factory-built housing and RV customers. Customer vertical integration strategies have affected the company in certain regions.

Site-Built Construction

This business unit designs and manufactures roof and floor trusses, wall panels, I-joists and lumber packages as well as engineered wood components used to frame residential and light commercial projects. Recent acquisitions, including Atlantic Prefab, Inc., Exterior Designs, LLC, and Patriot Building Systems, LLC, and Endurable Building Products have given the company manufacturing capability in alternate material components, such as metal trusses, sheathed and pre-finished light gauge metal wall panels and aluminum balconies, decks and rail accessories.

The company has made a variety of investments in automation, allowing the company to enhance efficiency and capacity in numerous UFP Construction operations. The company's recently launched proprietary smartphone application, TrussTrax, provides a convenient, simple way for builders to track orders, shipments and engineered documents 24 hours a day, and has enjoyed wide customer adoption. The company's customers in this market are primarily large-volume, multi-tract builders and smaller volume custom builders. The company also supplies builders engaged in multi-family and light commercial construction.

The company supplies customers in various markets from manufacturing facilities in many different states, primarily located in the non-urban Northeast, mid-Atlantic, Southeast, Texas, and Colorado. The company also provides framing services for builders in certain regional markets in which the company erects the wood structure.

Commercial Construction

The company's commercial construction business unit primarily includes the operations of idX Holdings, Inc. idX is a designer, manufacturer and installer of highly customized interior fixtures, casework and architectural millwork used in a variety of retail and commercial structures. This business unit serves customers throughout North America and to a lesser extent, Asia and Europe, in healthcare, hospitality, quick service restaurants, retail, and financial, offering comprehensive, streamlined solutions and customized products while managing programs from concept through completion, on a global scale. The company is one of the top five custom interior environment providers globally and the largest diversified custom solutions provider.

Concrete Forming

This business unit designs, manufactures and supplies wood forms and related products that are used by the company's customers to set or form concrete for various structures, including large parking garages, stadiums, commercial structures, and infrastructure projects, such as bridges. The company's customers in this business unit include general contractors, as well as distributors. The company is unique in its ability to deliver highly engineered, factory-built solutions to job sites.

UFP Purchasing/Suppliers

The company's purchasing team manages and purchases wood fiber for each of the company's segments. The three main end markets for softwood lumber in North America - retail, construction, and packaging - align with the company's three business segments. The company is the largest converter of solid sawn softwood lumber from North American primary producers (lumber mills).

The company uses primarily southern yellow pine in its pressure-treating operations and the company's site-built housing, structural packaging, and machine-built pallet operations in the Southeastern United States. Southern yellow pine is sourced from mills ranging from Texas to the Carolinas. The company also uses spruce-pine-fir from both Eastern and Western Canada; hemlock, douglas fir and cedar from the Pacific Northwest; inland species of pine, plantation grown radiata and southern yellow pines from South America; and various European softwoods. During 2023, the company's annual purchases of lumber consisted of the following species and their respective percent of total lumber purchases: southern yellow pine (69%), spruce-pine-fir (13%), and douglas fir (2%), while the remaining 16% of lumber purchases comprise various other species and imports outside of North America.

Intellectual Property

The company owns numerous patents and has several patents pending on technologies related to the company's business. Examples include the company's Deckorators brand of composite decking and railing and its proprietary, patented Surestone technology used to produce mineral-based composite decking; Trusstrax, mobile application offered to the company's Site-Built customers; and the ProWood brand of pressure-treated lumber and outdoor living products. In addition, the company owns numerous registered trademarks and claim common law trademark rights to several others.

History

The company was founded in 1955. It was incorporated in 1955. The company was formerly known as Universal Forest Products, Inc. and changed its name to UFP Industries, Inc. in 2020.