UFP Industries, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 25, 2021. This is an annual report, not a standalone fourth-quarter report. The filing incorporates key financial statements and management discussion from a separate 2021 Annual Report; those details are not included in the supplied text, so many headline financial values cannot be summarized here.
Business context
UFP Industries is a holding company supplying wood, composite and other products to retail, industrial and construction markets across North America and international locations. Its principal segments are UFP Retail Solutions, UFP Industrial and UFP Construction; international operations and its insurance captive are reported as “All Other.” The company reported approximately 216 facilities and 15,000 employees at year-end.
Financial metrics and operating indicators
- Revenue, profit and cash flow: The supplied filing text does not provide clear values for net sales, earnings, operating income, margins, or cash flow. The statements are incorporated by reference from the 2021 Annual Report.
- Raw materials: Lumber costs, including plywood, were 47.7% of net sales in 2021, versus 51.0% in 2020 and 43.4% in 2019. The company purchased approximately $3.0 billion of lumber and $1.0 billion of plywood in 2021.
- Transportation: Inbound and outbound transportation costs were approximately 7.3% of net sales in 2021, compared with 9.2% in 2020 and 9.5% in 2019.
- Debt and interest-rate exposure: Estimated fair value of long-term debt, including its current portion, was $329.7 million at year-end. The filing also reports expected debt cash flows by maturity through 2026 and thereafter. UFP had variable-rate debt and no material interest-rate derivatives to hedge exposure; the supplied text does not provide a clear cash or liquidity balance.
- Customer concentration: The Home Depot represented 16% of 2021 net sales and Lowe’s 10%, compared with 24% and 4%, respectively, in 2020.
- Backlog: Customized interior-fixture backlog was $84.6 million at year-end, up from $65.2 million a year earlier; site-built construction backlog was $113.5 million, versus $106.0 million. The company expected to fill most of these orders in the next fiscal year, while noting cancellations were possible.
- Receivables: Approximately 92% of accounts receivable were current at year-end. Bad-debt expense was 0.01% of sales in 2021, versus 0.02% in 2020 and 0.09% in 2019.
- Repurchases: No shares were repurchased during the reported fourth quarter. In February 2022, the board authorized an additional 1.5 million shares; approximately 2.6 million shares remained available under the program through February 3, 2023.
Changes, outlook and risks
Compared with 2020, Home Depot’s share of sales declined while Lowe’s share increased. Lumber cost and transportation cost as a percentage of sales were both lower than in 2020; the filing text supplied does not establish the drivers or provide enough data to assess their effect on profit or margins. Backlog increased in both the customized interior-fixture and site-built construction businesses.
The filing gives no quantified earnings or revenue guidance in the supplied text. Risks highlighted include volatile lumber prices, inflation and currency movements, supply-chain constraints, dependence on major customers, cyclical construction markets, tariffs and trade disputes, transportation costs, adverse weather and seasonality, environmental and safety regulation, cybersecurity, and COVID-19-related disruption. Management reported that internal control over financial reporting was effective as of December 25, 2021; the independent auditor also audited that effectiveness.
Important facts for investors to verify
- Review the incorporated 2021 Annual Report for complete revenue, earnings, margins, cash-flow, balance-sheet, liquidity and segment results, plus the year-over-year drivers.
- Check debt balances, credit-facility availability, covenant terms and scheduled maturities against the full financial statements and notes.
- Assess exposure to lumber-price and supply changes, including how quickly selling prices adjust and the impact on gross profit.
- Monitor major-customer concentration, construction-market conditions, and whether reported backlog converts to sales or is canceled.
- Review the incorporated notes for legal proceedings, environmental contingencies and other commitments, which are not detailed in the supplied text.