Report to Shareholders
2020
Dear Shareholders:
When something is leashed, its power is restrained so it is easier to manage. Unleashing that power
brings risk – but also the possibility of unprecedented capability, intensity, and opportunity. And in
2020, UFP Industries took that risk. After years of planning, we unleashed the potential and might of our
people and resources. It is paying off and wins are accumulating.
After 65 years as Universal Forest Products, we changed our name to UFP Industries to reflect our
expansive growth and opportunity outside of wood products. At the same time, we created a new
business model that we believed could bring new value-added products to market faster and use capital
more efficiently, while supporting rapid growth at a lower incremental cost. The model is working and
has sparked a surge of opportunity and enthusiasm for our people and increased value for our
shareholders.
Today, we are structured around our business markets, instead of geographic territory, to lever our
scale and scope and to better serve our customers. Our new structure is allowing our leadership teams
to focus more specifically on their business unit or segment.
Thanks to experienced, hard-working teammates, we turned in the best results in the history of our
company: Net sales of $5.15 billion, surpassing $5 billion for the first time, were up 17 percent over the
previous year; net earnings from controlling interest of $247 million in 2020 represented an increase of
37 percent over 2019, and adjusted EBITDA of $431.4 million was up 36 percent, dramatically exceeding
the company’s unit sales increase of 6 percent. In addition, new product sales were $539 million, more
than 10% of total sales.
The people of UFP Industries accomplished this during a pandemic that crimped supply chains and labor
markets, which caused the most volatile lumber market in recent memory.
We couldn’t be prouder of our 15,000+ team members who drove these results by managing inventory
wisely and adjusting quickly to shifting customer demands. Thanks to them, we were able to reward our
hourly employees – whose perseverance and hard work are the backbone of our company – with $25
million in bonuses and additional benefits in 2020. This is one of the benefits of being in these roles at a
company like ours – we have the great honor of rewarding performers and helping them bring
opportunity to their careers and prosperity to their families.
We are pleased to provide you these 2020 highlights:
ACQUISITIONS
Two thousand twenty was one of the busiest acquisition years in our history. From PalletOne, our
largest acquisition ever, to the smaller but equally impressive Fire Retardant Chemical Technologies, we
added broad capability and scale in all three of our business segments
Twenty twenty-one is off to a quick start for acquisitions with the already closed PalletOne acquisition,
the recently closed Gilmores acquisition in Australia and the announced Spartanburg Forest Products
asset purchase.
MARKETS
We saw net sales increase in two of our three business segments:
UFP Retail Solutions: $2.17 billion in net sales, up 45 percent over 2019, due to a 25 percent increase in
unit sales and a 20 percent increase in selling prices. All business units experienced double-digit unit
sales increases. Our Deckorators brand continues to grow in popularity and use. Its unique, patented
mineral composite decking product is a contractor favorite. Although a smaller proportion of total sales,
e-commerce unit sales that are not included in other business units increased 93 percent. Total e-
commerce sales for the year, including sales in other business units, were $129 million, up 96 percent
over 2019.
In 2020 UFP Retail Solutions acquired Fire Retardant Chemical Technologies, LLC, now known as
Performance Formulation Solutions (PFS). PFS’s business includes a laboratory that specializes in
developing and testing high-performance chemicals, including fire retardants and water repellants.
UFP Industrial: $1.07 billion in net sales, down 1 percent from the previous year. Unit sales fell 6 percent
due to pandemic-related shutdowns, while selling prices increased 5 percent. UFP Industrial’s sales
improved throughout the year as pandemic-related restrictions eased and the fourth quarter saw a sales
record for the segment. We continue to rationalize our product offering by focusing more on designed,
engineered and manufactured sales, while de-emphasizing commodity sales.
UFP Industrial strengthened its position in agricultural products in 2020 with the acquisition of T&R
Lumber Company and its affiliates Sullivan & Mann and Kelmar Creations. T&R manufactures and
distributes a wide range of nursery supplies, such as tree boxes and growing containers.
As 2020 ended UFP Industrial executed the largest acquisition in our history by acquiring PalletOne, Inc.,
moving us closer to our goal of becoming the preferred global packaging solutions provider. PalletOne is
the leading manufacturer of new pallets in the U.S., with 17 manufacturing facilities and 1,500
employees.
Its Sunbelt Forest Products subsidiary, which will be part of UFP Retail Solutions, operates five facilities
in the Southeastern U.S. and enhances our position as the nation’s leading wood preserver.
UFP Construction: $1.70 billion in net sales, up 4 percent over the previous year due to a 10 percent
increase in selling prices offset by a 6 percent decrease in unit sales. Unit sales to manufactured housing
ii
customers rose 2 percent for the year and fell 2 percent and 23 percent, respectively, to site built and
commercial customers. UFP Construction was especially hard-hit by the volatility of the lumber market.
The backlog of business in single and multifamily projects remained strong, as did demand for factory-
built housing with the focus on affordable housing in communities across the United States, which we
expect to continue to drive business. Our concrete forming business saw increased demand for its rental
programs, and its designed, engineered, and manufactured formwork solutions.
In 2020 UFP Construction acquired Quest Design and Fabrication and Quest Architectural Millwork,
collectively known as Quest. Quest specializes in designing, fabricating, and installing premium millwork
and case goods for a variety of commercial uses, including builders’ sales centers, design studios,
hospitality, corporate offices and healthcare. UFP Construction also added Atlantic Prefab, Inc., Exterior
Designs, LLC, and Patriot Building Systems, LLC to the UFP family of companies. These three firms serve
the commercial and multi-family construction markets in the Northeast with prefabricated steel wall
panels, light gauge metal trusses, exterior cladding, exterior insulation and finish systems, and
commercial and multi-family framing services.
Our UFP International business unit continued its expansion efforts by forming Enwrap Logistic &
Packaging S.r.l. Headquartered in Milan, Italy, Enwrap provides high-value, mixed material industrial
packaging and logistics services through eight locations in Italy, allowing UFP to establish its presence in
the region and to serve customers in Central and Southern Europe.
As the nation’s leading manufacturer and distributor of wood products we take pride in the fact our
primary product, wood, is the most sustainable building product on earth. Wood is renewable,
biodegradable, and recyclable, and takes much less energy to produce and distribute than competitive
products. Our role as the world’s largest wood preserver extends the useful life of well over 2 billion
board feet of lumber each year, further reducing environmental impact. Our record as a good corporate
citizen speaks for itself, as demonstrated in our continued attention to the well-being and success of all
UFP stakeholders. We tend to let our actions speak louder than words and recognize that we need to
inform those who are not familiar with our efforts in this area.
We started the UFP Business school in 2016 to help bring more educational opportunities to employees
and outsiders who couldn’t afford traditional college. In 2020, we expanded it by offering an additional
five scholarships for minority and low-income students.
We have a long history of helping talented and hard-working newcomers go from factory floor to
management roles, and our practice of helping each team member achieve their desired level of success
remains. As we look to the future, our focus remains on creating opportunities for our teammates so
they can build wealth for themselves and their families. We have high expectations of our workforce
and are committed to giving each employee the training and tools needed to meet demanding goals.
We treat employees equally and support fairness throughout our organization. All are welcome in the
UFP family and we continue to enhance our recruiting efforts to cast a wider net among low income and
minority communities. In hiring and employee development we do not use quotas to determine results,
rather, we provide equal opportunities and rely on each employee to select their desired path. With
control over their own progress, those with a commitment to improvement, strong work ethic,
motivation to excel, and superior performance are rewarded, regardless of superficial traits or social
category.
iii
We are grateful for those who laid the foundation for our success, especially our former CEO and
Chairman, Peter F. Secchia. Peter, or PFS as he was affectionately known, passed away on October 21,
2020. He built the early success of our company and created programs and practices that continue to
drive our success. Peter would say he lived an incredible life, and we agree wholeheartedly. He drove
success not just at UFP, but in the community he loved, Grand Rapids, Michigan; in Italy, where he
served as U.S. Ambassador; and through his numerous philanthropic ventures. He lived his mantra – life
is not a spectator sport! We loved him, we miss him, and we are grateful for his deeds and his lessons.
Our success in 2020 is dedicated to his memory, and the acknowledgement that he and other UFP
leaders before him paved the path to our future success. Thanks to them, and our current crew of
outstanding teammates, We. Will. Win.
Thank you for your investment in us and best wishes for a safe and prosperous 2021.
Cordially,
Matthew J. Missad
Chief Executive Officer
William G. Currie
Chairman of the Board
iv
UFP INDUSTRIES, INC.
FINANCIAL INFORMATION
Table of Contents
Exhibit 13
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Report of Independent Registered Public Accounting Firm
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 26, 2020 and December 28, 2019
Consolidated Statements of Earnings and Comprehensive Income for the Years Ended December 26, 2020,
December 28, 2019, and December 29, 2018
Consolidated Statements of Shareholders’ Equity for the Years Ended December 26, 2020, December 28,
2019, and December 29, 2018
Consolidated Statements of Cash Flows for the Years Ended December 26, 2020, December 28, 2019, and
December 29, 2018
Notes to Consolidated Financial Statements
Market Information for our Common Stock
Stock Performance Graph
Directors and Executive Officers
Shareholder Information
2
3
25
26
27
28
29
30
31
56
56
57
58
SELECTED FINANCIAL DATA
(In thousands, except per share and statistics data)
2020
2019
2018
2017
2016
Consolidated Statement of Earnings
Data
Net sales
Gross profit
Earnings before income taxes
Net earnings attributable to controlling
interest
Diluted earnings per share
Dividends per share
Consolidated Balance Sheet Data
Working capital(1)
Total assets
Total debt
Shareholders’ equity
Statistics
Gross profit as a percentage of net sales
Net earnings attributable to controlling
interest as a percentage of net sales
Return on beginning equity(2)
Current ratio(4)
Debt to equity ratio(5)
Book value per common share(3)
$ 5,153,998
800,296
340,983
$ 246,778
4.00
$
0.50
$
$ 1,074,613
2,404,891
311,707
1,483,152
$ 4,416,009
685,518
240,674
$ 4,489,180
592,894
197,853
$ 3,941,182
542,826
176,007
$ 3,240,493
474,590
160,671
$ 179,650
2.91
$
0.40
$
$ 148,598
2.40
$
0.36
$
$
$
$
119,512
1.94
0.32
$
$
$
101,179
1.65
0.29
$ 739,030
1,889,477
163,683
1,257,733
$ 685,108
1,647,548
202,278
1,088,684
$
560,241
1,464,677
146,003
974,023
484,661
$
1,292,058
111,693
860,466
15.5 %
15.5 %
13.2 %
13.8 %
14.6 %
4.8 %
19.6 %
3.32
0.21
24.23
$
4.1 %
16.5 %
3.09
0.13
20.48
$
3.3 %
15.3 %
3.21
0.19
17.88
$
3.0 %
13.9 %
2.85
0.15
15.92
$
3.1 %
13.2 %
2.78
0.13
14.10
$
(1) Current assets less current liabilities.
(2) Net earnings attributable to controlling interest divided by beginning shareholders’ equity.
(3) Shareholders’ equity divided by common stock outstanding.
(4) Current assets divided by current liabilities.
(5) Total debt divided by shareholders’ equity.
Acquisition growth is one of the primary contributing factors to material increases over the period from 2016 to 2020.
Refer to Note C under the “Notes to the Consolidated Financial Statements” for further discussion on our business
combinations and impact on our financial statements for the three years ended December 26, 2020.
2
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
UFP Industries, Inc. is a holding company with subsidiaries throughout North America, Europe, Asia, and Australia that
supply manufactured products made from wood, wood and non-wood composites, and other materials to three markets:
retail, industrial, and construction. We are headquartered in Grand Rapids, Mich. For more information about UFP
Industries, Inc., or its affiliated operations, go to www.ufpi.com.
This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act, as
amended, that are based on management’s beliefs, assumptions, current expectations, estimates and projections about the
markets we serve, the economy and the Company itself. Words like “anticipates,” “believes,” “confident,” “estimates,”
“expects,” “forecasts,” “likely,” “plans,” “projects,” “should,” variations of such words, and similar expressions identify
such forward-looking statements. These statements do not guarantee future performance and involve certain risks,
uncertainties and assumptions that are difficult to predict with regard to timing, extent, likelihood and degree of occurrence.
We do not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that
occur after the date the forward-looking statements are made. Actual results could differ materially from those included in
such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty.
Among the factors that could cause actual results to differ materially from forward-looking statements are the following:
fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we
serve; government regulations, particularly involving environmental and safety regulations, the COVID-19 pandemic
(“pandemic”); and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk
factors and additional information are included in our reports on Form 10-K and 10-Q on file with the Securities and
Exchange Commission. We are pleased to present this overview of 2020.
Our results for 2020 were impacted by the following:
OVERVIEW
Our net sales increased almost 17% in 2020 due to an 11% increase in our overall selling prices (see “Historical
Lumber Prices”) and a 6% increase in our unit sales. The unit sales of our retail segment increased 25% due to
an increase in consumer demand and home improvement activities. We believe that this increase is largely
attributable to the impact of the pandemic on consumer behavior. This increase was offset by our industrial and
construction segments, which both declined 6% as our customers in these segments were adversely impacted by
the government-imposed shutdowns resulting from the pandemic. As of the end of the year, each of our industrial
and construction segments (except for the commercial business unit within our construction segment) have
experienced recent positive trends as the U.S. economy has recovered from the initial shutdowns due to the
pandemic.
Earnings from operations increased 41% to $345.8 million. The improvement in our profitability was driven by
a number of factors, including strong organic growth in our retail segment while effectively leveraging fixed
costs, and the favorable impact of rising lumber prices on the selling prices of commodity-based products such
as our ProWood pressure-treated products which are sold on a variable price formula tied to the Lumber Market.
See Historical Lumber Prices and Impact of the Lumber Market on Our Operating Results below.
Our cash flow from operating activities decreased by $13 million and was attributable to an $80 million increase
in our net earnings and non-cash expenses, offset by a $93 million increase in our investment in net working
capital (see “Liquidity and Capital Resources”). The increase in net working capital was a result of unusually
high lumber prices and retail market demand, which drove increases in our accounts receivable and inventory.
We invested $89.2 million in capital expenditures to support and grow our business and invested $65.3 million
in acquired businesses.
3
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We returned $30.7 million to our shareholders through dividends and $29.2 million through share repurchases.
Our cash surplus exceeded our debt by approximately $125 million.
Our available borrowing capacity under revolving credit facilities and cash surplus resulted in total liquidity of
approximately $800 million at the end of December 2020. In August of 2020 we issued $150 million of long-
term debt to finance our future growth. The notes have an average maturity of 13 years and have an average fixed
rate of interest of 3.09%.
The following table presents the Random Lengths framing lumber composite price.
HISTORICAL LUMBER PRICES
January
February
March
April
May
June
July
August
September
October
November
December
Annual average
Annual percentage change
Random Lengths Composite
Average $/MBF
2020
2019
$
$
377
402
420
358
394
455
530
716
934
826
571
643
$
552
55.5 %
$
331
370
365
354
346
329
356
346
364
360
373
371
355
(23.2)%
4
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our
purchases of this species comprise approximately 62% and 58% of total lumber purchases, excluding plywood, for 2020
and 2019, respectively.
January
February
March
April
May
June
July
August
September
October
November
December
Annual average
Annual percentage change
$
Random Lengths SYP
Average $/MBF
2020
2019
346 $
345
360
333
412
494
552
729
886
711
508
565
370
403
408
401
383
344
359
348
355
345
344
335
$
520 $
42.1 %
366
(20.3)%
IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS
We experience significant fluctuations in the cost of commodity lumber products from primary producers ("Lumber
Market"). We generally price our products to pass lumber costs through to our customers so that our profitability is based
on the value-added manufacturing, distribution, engineering, and other services we provide. As a result, our sales levels
(and working capital requirements) are impacted by the lumber costs of our products. Lumber costs, including plywood,
were 51.0% and 43.4% of our net sales in 2020 and 2019, respectively.
Our gross margins are impacted by (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower
from comparative periods), and (2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing
or decreasing within a period or from period to period). Moreover, as explained below, our products are priced differently.
Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported
Lumber Market with a fixed dollar adder to cover conversion costs and profits. Consequently, the level and trend of the
Lumber Market impact our products differently.
Below is a general description of the primary ways in which our products are priced.
Products with fixed selling prices. These products include value-added products such as decking and fencing sold
to retail building materials customers, as well as trusses, wall panels and other components sold to the residential
construction market, and most industrial packaging products. Prices for these products are generally fixed at the
time of the sales quotation for a specified period of time or are based upon a specific quantity. In order to maintain
margins and reduce any exposure to adverse trends in the price of component lumber products, we attempt to
lock in costs with our suppliers for these sales commitments. Also, the time period and quantity limitations
generally allow us to eventually re-price our products for changes in lumber prices from our suppliers.
5
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Products with selling prices indexed to the reported Lumber Market with a fixed dollar "adder" to cover
conversion costs and profits. These products primarily include treated lumber, remanufactured lumber, and
trusses sold to the manufactured housing industry. For these products, we estimate the customers’ needs and we
carry anticipated levels of inventory. Because lumber costs are incurred in advance of final sale prices, subsequent
increases or decreases in the market price of lumber impact our profitability. In other words, for these products,
our margins are exposed to changes in the trend of lumber prices. We believe our sales of these products are at
their highest relative level in our second quarter, primarily due to treated lumber sold to the retail market.
The greatest risk associated with changes in the trend of lumber prices is on the following products:
Products with significant inventory levels with low turnover rates, whose selling prices are indexed to the Lumber
Market. In other words, the longer the period of time these products remain in inventory, the greater the exposure
to changes in the price of lumber. This would include treated lumber, which comprises approximately 16% of our
total sales. This exposure is less significant with remanufactured lumber, trusses sold to the manufactured housing
market, and other similar products, due to our higher rate of inventory turnover of these products. We attempt to
mitigate the risk associated with treated lumber through vendor consignment inventory programs. (Please refer
to the “Risk Factors” section of our annual report on form 10-K, filed with the United States Securities and
Exchange Commission.)
Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-
family construction projects. We attempt to mitigate this risk through our purchasing practices by locking in costs
or including re-pricing triggers with customers if lumber prices change in excess of an agreed upon percentage.
In addition to the impact of the Lumber Market trends on gross margins, changes in the level of the market cause
fluctuations in gross margins when comparing operating results from period to period. This is explained in the following
example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend
within each period.
Lumber cost
Conversion cost
= Product cost
Adder
= Sell price
Gross margin
Period 1
$
$
$
300
50
350
50
400
$
12.5 %
Period 2
400
50
450
50
500
10.0 %
As is apparent from the preceding example, the level of lumber prices does not impact our overall profits but does impact
our margins. Gross margins and operating margins are negatively impacted during periods of high lumber prices;
conversely, we experience margin improvement when lumber prices are relatively low. As a result of this factor, we believe
it is useful to compare our change in units sold with our change in gross profits, selling, general, and administrative
expenses, and operating profits as presented in the following table.
Units sold
Gross profit
Selling, general, and administrative expenses
Earnings from operations
6
Annual Percentage Change
From 2019 to 2020 From 2018 to 2019
6.3 %
15.6
11.9
18.2
6.0 %
16.7
1.3
41.2
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
It is our goal to increase our gross profits and earnings from operations at a rate of growth that exceeds our unit sales
growth, or in other words, increasing our profitability per unit sold. We also have a goal of improving our efficiencies and
leveraging the fixed costs in our selling, general, and administrative expenses as we grow, which will result in a rate of
growth of these expenses which is less than our unit sales growth and a lower cost per unit. In 2020, we increased the
amount of planned long-term share-based bonus awards that will be used to settle bonus obligations instead of cash, which
resulted in a decrease in expense. This change was made to encourage employee retention and align their interests with
shareholders. See discussion of share-based bonus awards in Note H — Common Stock.
BUSINESS COMBINATIONS AND ASSET PURCHASES
We completed five business acquisitions during 2020 and three during 2019. The annual historical sales attributable to
acquisitions in 2020 and 2019 were approximately $101 million and $37 million, respectively. These business
combinations were not significant to our operating results individually or in aggregate, and thus pro forma results for 2020
and 2019 are not presented.
On December 28, 2020, we closed on an agreement to purchase 100 percent of the equity of PalletOne, Inc., for
approximately $232 million plus $21 million for certain investments in capital projects and $6 million for a purchase price
adjustment based on the actual amount of net working capital at close compared to a pre-determined target. Based in
Bartow, Florida, PalletOne is a leading manufacturer of new pallets in the U.S., with 17 pallet manufacturing facilities in
the southern and eastern regions of the country. The company also supplies other specialized industrial packaging,
including custom bins and crates, and its Sunbelt Forest Products subsidiary operates five pressure-treating facilities in the
Southeastern U.S.
On February 28, 2021, we closed on an agreement to purchase 100 percent of the equity of J.C. Gilmore Pty Ltd located
in Australia for approximately $2.4 million. This transaction adds a wide portfolio of consumable packaging to certain
industrial packaging products and expands the companies’ customer base throughout Australia.
See Notes to Consolidated Financial Statements, Note C, "Business Combinations" and Note O, “Subsequent Events” for
additional information.
7
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table presents, for the periods indicated, the components of our Consolidated Statements of Earnings as
a percentage of net sales. See “Impact of the Lumber Market on our Operating Results”. Due to the segment change as of
January 1, 2020, 2018 and 2019 amounts have been retroactively adjusted and as such, we have included 2018 results by
segment and the discussion of our 2019 results by segment compared to 2018. Please see our 2019 10-K for discussion of
our 2019 consolidated results of operations compared to 2018.
Net sales
Cost of goods sold
Gross profit
Selling, general, and administrative expenses
Asset impairment charges and other costs, net
Earnings from operations
Other expense, net
Earnings before income taxes
Income taxes
Net earnings
Less net earnings attributable to noncontrolling interest
Net earnings attributable to controlling interest
Year Ended
December 26, December 28,
2020
100.0 %
84.5
15.5
8.6
0.2
6.7
0.1
6.6
1.7
4.9
(0.1)
4.8 %
2019
100.0 %
84.5
15.5
9.9
—
5.5
0.1
5.5
1.3
4.1
(0.1)
4.1 %
Note: Actual percentages are calculated and may not sum to total due to rounding.
The following table presents, for the periods indicated, our selling, general, and administrative (SG&A) costs as a
percentage of gross profit. Given our strategies to enhance our capabilities and improve our value-added product offering
and recognizing the higher relative level of SG&A costs these strategies require, we believe this ratio provides an enhanced
view of our effectiveness in managing these costs and mitigates the impact of changing lumber prices.
Gross profit
Selling, general, and administrative expenses
SG&A as percentage of gross profit
SG&A as a Percentage of Gross Profit
Year Ended
December 26,
2020
December 28,
2019
$
$
800,296
444,596
$
$
55.6%
685,518
439,047
64.0%
In 2020, we increased the amount of planned long-term share-based bonus awards that will be used to settle bonus
obligations instead of cash, which resulted in a decrease in expense. This change was made to encourage employee
retention and align their interests with shareholders. See discussion of share-based bonus awards in Note H — Common
Stock.
8
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OPERATING RESULTS BY SEGMENT
Effective January 1, 2020, we re-organized around the markets we serve rather than geography and the historical segment
information has been recast for all periods presented. Our new business segments align with the following markets: UFP
Retail Solutions, UFP Construction and UFP Industrial. Among other things, this change allows for a more specialized
and consistent sales approach among Company operations, more efficient use of resources and capital, and quicker
introduction of new products and services. We manage the operations of our 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 our Retail, Industrial, and Construction segments. The exception to this market-centered reporting and management
structure is our International segment, which comprises our Mexico, Canada, Europe, and Australia operations and sales
and buying offices in other parts of the world. Our International segment and Ardellis (our insurance captive) have been
included in the “All Other” column of the table below. The “Corporate” column includes purchasing, transportation and
administrative functions that serve our operating segments. Operating results of Corporate primarily consists of over
(under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP
Transportation Ltd., which owns and leases transportation equipment, are also included in the Corporate column. An inter-
company lease charge is assessed to our operating segments for the use of these assets at fair market value rates.
The following tables present our operating results by segment for December 26, 2020, December 28, 2019 and December
29, 2018.
(in thousands)
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Asset impairment
charges and other costs,
net
Earnings from
operations
(in thousands)
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Asset impairment
charges and other costs,
net
Earnings from
operations
Retail
Industrial
$ 2,167,122 $ 1,072,117
895,466
176,651
1,874,114
293,008
Year Ended December 26, 2020
Construction
$ 1,695,684
1,433,469
262,215
All Other
Corporate
Total
$
$
217,094
147,117
69,977
1,981 $ 5,153,998
4,353,702
3,536
800,296
(1,555)
137,641
97,146
179,516
34,471
(4,178)
444,596
56
(3,873)
13,690
775
(774)
9,874
155,311 $
83,378
$
69,009
$
34,731
$
3,397 $
345,826
$
Retail
Industrial
$ 1,498,710 $ 1,085,635
906,025
179,610
1,324,339
174,371
Year Ended December 28, 2019
Construction
$ 1,637,156
1,365,394
271,762
All Other
Corporate
Total
$
$
193,785
141,916
51,869
723 $ 4,416,009
3,730,491
685,518
(7,183)
7,906
112,422
96,157
188,339
33,173
8,956
439,047
269
482
1,037
159
(382)
1,565
61,680 $
82,971
$
82,386
$
18,537
$
(668) $
244,906
$
Note: Allocations of corporate expenses in 2019 were modified to align with the methodology used to allocate corporate expenses in the current year.
9
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(in thousands)
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Asset impairment
charges and other costs,
net
Earnings from
operations
$
Retail
Industrial
$ 1,512,477 $ 1,050,945
916,512
134,433
1,363,118
149,359
Year Ended December 29, 2018
Construction
$ 1,705,016
1,451,460
253,556
All Other
Corporate
Total
$
$
219,920
170,913
49,007
822 $ 4,489,180
3,896,286
592,894
(5,717)
6,539
97,260
74,830
181,459
29,967
8,719
392,235
(59)
85
720
1
(7,351)
(6,604)
52,158 $
59,518
$
71,377
$
19,039
$
5,171 $
207,263
Note: Allocations of corporate expenses in 2018 were modified to align with the methodology used to allocate corporate expenses in the current year.
The following tables present the components of our operating results as a percentage of net sales by segment for December
26, 2020, December 28, 2019 and December 29, 2018.
Year Ended December 26, 2020
Note: Actual percentages are calculated and may not sum to total due to rounding.
Year Ended December 28, 2019
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Asset impairment charges
and other costs, net
Earnings from operations
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Asset impairment charges
and other costs, net
Earnings from operations
Retail
Industrial
100.0 %
86.5
13.5
100.0 %
83.5
16.5
Construction
100.0 %
84.5
15.5
100.0 %
67.8
32.2
All Other
Corporate
Total
6.4
—
7.2 %
9.1
10.6
15.9
(0.4)
7.8 %
0.8
4.1 %
0.4
16.0 %
Retail
Industrial
100.0 %
88.4
11.6
100.0 %
83.5
16.5
Construction
100.0 %
83.4
16.6
100.0 %
73.2
26.8
All Other
Corporate
Total
7.5
—
4.1 %
8.9
—
7.6 %
11.5
17.1
0.1
5.0 %
0.1
9.6 %
N/A
—
—
—
—
—
100.0 %
84.5
15.5
8.6
0.2
6.7 %
N/A
—
—
—
—
—
100.0 %
84.5
15.5
9.9
0.0
5.5 %
Note: Actual percentages are calculated and may not sum to total due to rounding.
10
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year Ended December 29, 2018
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Asset impairment charges
and other costs, net
Earnings from operations
Retail
Industrial
100.0 %
90.1
9.9
100.0 %
87.2
12.8
Construction
100.0 %
85.1
14.9
100.0 %
77.7
22.3
All Other
Corporate
Total
6.4
—
3.4 %
7.1
—
5.7 %
10.6
13.6
—
4.2 %
0.0
8.7 %
N/A
—
—
—
—
—
100.0 %
86.8
13.2
8.7
(0.1)
4.6 %
Note: Actual percentages are calculated and may not sum to total due to rounding.
NET SALES
We primarily design, manufacture and market wood and wood-alternative products for national home centers and other
retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for
residential and commercial construction, customized interior fixtures used in a variety of retail stores, commercial and
other structures, and specialty wood packaging, components and other packing materials for various industries. Our
strategic long-term sales objectives include:
Maximizing unit sales growth while achieving return on investment goals. The following table presents estimates,
for the periods indicated, of our percentage change in net sales which were attributable to changes in overall
selling prices versus changes in units shipped.
% Change
2020 versus 2019
2019 versus 2018
in Sales in Selling Prices in Units
6.0 %
6.3 %
16.7 %
(1.6)%
10.7 %
(7.9)%
Acquisition
Unit
Change
1.0 %
1.5 %
Organic
Unit
Change
5.0 %
4.8 %
Diversifying our end market sales mix by increasing sales of specialty wood and protective packaging to industrial
users, increasing our penetration of the concrete forming market, increasing our sales of engineered wood
components for custom home, multi-family, military and light commercial construction, increasing our market
share with independent retailers, and increasing our sales of customized interior fixtures, casework and millwork
used in a variety of commercial markets.
Expanding geographically in our core businesses, domestically and internationally.
Increasing our sales of "value-added" products and enhancing our product offering with new or improved
products. Value-added products generally consist of fencing, decking, lattice, and other specialty products sold
to the retail segment, specialty wood packaging, engineered wood components, customized interior fixtures, and
"wood alternative" products. Engineered wood components include roof trusses, wall panels, and floor systems.
Wood alternative products consist of products manufactured with wood and non-wood composites, metals and
plastics. Although we consider the treatment of dimensional lumber and panels with certain chemical
preservatives a value-added process, treated lumber is not presently included in the value-added sales totals.
Remanufactured lumber and panels that are components of finished goods are also generally categorized as
“commodity-based” products.
11
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales
to total sales by our segments (Retail, Industrial, Construction, and All Other and Corporate). Value-added
products are typically sold at fixed selling prices for a pre-determined time period and carry higher gross margins
than our commodity-based products. The increase in our ratio of commodity-based product sales to total sales
reflected in the tables below is primarily due to the impact of dramatically higher lumber prices in 2020 as the
selling prices of these products are generally indexed to the current Lumber Market at the time they are shipped.
For example, a majority of our commodity-based sales are sold through our ProWood business unit and selling
prices were up 30% in 2020 compared to 2019. Also, our Industrial and Construction segments primarily sell
value-added products and their unit sales were both down 6% compared to last year.
Year Ended December 26, 2020
Year Ended December 28, 2019
Year Ended December 29, 2018
Retail
Industrial
Construction
All Other and
Corporate
Total Sales
Value-Added Commodity-Based Value-Added Commodity-Based Value-Added Commodity-Based
46.0 %
39.5 %
23.5 %
53.8 %
64.7 %
76.3 %
54.0 %
60.5 %
76.5 %
46.2 %
35.3 %
23.7 %
57.8 %
66.2 %
81.4 %
42.2 %
33.8 %
18.6 %
75.6 %
64.3 %
24.4 %
35.7 %
75.8 %
69.3 %
24.2 %
30.7 %
65.9 %
64.6 %
34.1 %
35.4 %
Developing new products. We define new products as those that will generate sales of at least a $1 million per
year within 4 years of launch and are still growing and gaining market penetration. New product sales and gross
profits in 2020 were up 26% and 36%, respectively, from the prior year. Approximately $126 million of new
product sales for 2019, while still sold, were sunset in 2020 and excluded from the table below because they no
longer meet the definition above.
New Product Sales by Segment
Year Ended
(in thousands)
Retail
Industrial
Construction
All Other and Corporate
Total New Product Sales
December 26,
December 28,
$
$
2020
394,838
78,142
54,307
11,397
538,684
2019
284,182
68,672
60,177
13,016
426,047
%
Change
38.9 % $
13.8 %
(9.8)%
(12.4)%
26.4 %
December 29,
2018
316,017
88,063
75,174
n/a
479,254
%
Change
(10.1)%
(22.0)%
(19.9)%
n/a
(11.1)%
Note: Certain prior year product reclassifications and the change in designation of certain products as "new" resulted in a change in prior year's sales.
12
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Retail Segment:
2020 versus 2019
Net sales to the retail segment increased 45% in 2020 compared to 2019 due to a 25% increase in unit sales and a 20%
increase in selling prices. Our unit growth was primarily driven by a 49% increase in our Dimensions Home & Décor
products including project panels and short lumber, a 28% increase in Outdoor Essentials Fence, Lawn & Garden products,
a 25% increase in our ProWood pressure-treated products, and a 20% increase in our Deckorators composite decking and
railing. Acquisitions contributed 1% to the overall growth in unit sales, primarily in our UFP Edge siding and trim products.
Our new product sales contributed to these increases and were up 39% for the year. Finally, our sales to big box customers
increased 48%, and sales to other independent retailers increased 38%. Our unit sales increases were primarily due to an
increase in demand as consumers invested in home improvement activities over other spending alternatives. We believe
that the pandemic and related disruptions in the lives of consumers contributed to this increase in demand.
Gross profits increased by $118.6 million, or 68% to $293 million in 2020 compared to 2019, comparing favorably with
our 25% increase in unit sales. Our increase in gross profits was due to the following factors:
Increased unit sales of value-added products within our Deckorators, Outdoor Essentials, and Dimensions
business units contributed $53.1 million to the increase.
Our ProWood business unit, which produces and sells pressure treated lumber, contributed $48.9 million to the
increase attributable to unit sales growth and the favorable trend of rising lumber prices as the selling prices of
these products are primarily determined on a variable price formula.
The remaining $16.6 million increase is attributed to favorable cost variances as a result of operating leverage
combined with strong organic unit growth.
Selling, general and administrative (“SG&A”) expenses increased by approximately $25.2 million, or 22.4%, in 2020
compared to 2019, lower than our 25% increase in unit sales. Acquired operations in 2020 contributed approximately $2.2
million to this increase. Accrued bonus expense increased approximately $18.7 million and totaled approximately $35.3
million for 2020. The remaining increase was due to increases in salaries and wages ($5.2 million), sales compensation
($1.4 million), and in-store merchandising costs ($1.6 million), offset by a decline in advertising ($2.5 million) and travel
and related costs ($1.2 million).
Earnings from operations of the Retail reportable segment increased in 2020 compared to 2019 by $93.6 million, or
151.8%, well in excess of our 25% increase in unit sales as a result of the factors mentioned above.
2019 versus 2018
Net sales to the retail segment decreased 1% in 2019 compared to 2018 due to an 11% decrease in selling prices which
was mostly offset by a 10% increase in unit sales. The decrease in selling prices was as a result of the decline in lumber
prices in 2019. Our organic unit growth was primarily driven by a 40% increase in Deckorators composite decking and
railing, an 18% increase in our UFP Edge siding and trim products. and a 6% increase in our ProWood pressure-treated
products. Within this segment, sales to our big box customers increased 5% while our sales to other retailers decreased
10%.
13
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Gross profits increased $25 million, or 17% to $174 million in 2019 compared to 2018 comparing favorably with our 10%
increase in units sold due to strong organic sales growth and leveraging of fixed costs, lower lumber costs on sales of fixed
price products, value-added sales mix improvements and a favorable lumber market trend in 2019 which resulted in an
improvement in gross profit per unit on sales of variable priced products. Increased unit sales of value-added products
within Deckorators, Outdoor Essentials, and UFP Edge contributed $20.8 million to the increase in gross profit. ProWood
contributed $7.6 million to the increase and the remaining $3.4 million is due to unfavorable cost variances.
SG&A expenses increased $15.2 million, or 16%, in 2019 compared to 2018, while we reported a 10% increase in unit
sales. Acquired operations in 2019 contributed approximately $1.2 million to the increase. Accrued bonus increased
approximately $4 million and totaled approximately $16.6 million in 2019. The remaining increase was due to increases
of $4.0 million in compensation and sales incentives, $3.1 million in advertising, and other insignificant increases spread
over several accounts.
Earnings from operations increased $9.5 million, or 18%, due to the factors mentioned above, which was well in excess
of our 10% increase in unit sales.
Industrial Segment:
2020 versus 2019
Net sales to the industrial segment decreased 1% in 2020 compared to 2019 due to a 5% increase in selling prices
attributable to the Lumber Market, offset by a 6% decrease in unit sales due to the impact of the pandemic and government
imposed shutdowns on certain of our customers.
Gross profits decreased by 1.6% to $176.7 million in 2020 compared to 2019, comparing favorably with our 6% decrease
in our unit sales. We believe we achieved these results by continuing to make favorable changes in our sales mix of value-
added products and effectively passing along increases in commodity lumber costs to our customers.
SG&A expenses increased by approximately $1.0 million, or 1.0%, in 2020 compared to 2019. Acquired operations in
2020 contributed approximately $3.0 million to total SG&A expenses. Accrued bonus expense decreased $5.0 million
compared to last year and totaled approximately $18.8 million for 2020. The remaining increase was primarily due to
compensation and sales incentives.
Certain contingent liabilities related to earnout incentives associated with business acquisitions by our industrial segment
were reduced in 2020 and the impact to earnings was an increase of $4.1 million.
Earnings from operations of the Industrial reportable segment in 2020 increased $0.4 million, or 0.5%, compared to 2019
due to the factors discussed above.
2019 versus 2018
Net sales to the industrial segment increased 3% in 2019 compared to 2018, resulting from a 4% increase in overall unit
sales and a 1% decrease in selling prices. Businesses we acquired contributed 6% to our growth in unit sales.
Gross profits increased $45.2 million, or 34%, in the industrial segment, primarily driven by favorable changes in product
mix and lower lumber costs in 2019 as most products sold to this market have fixed selling prices for a period of time.
14
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SG&A expenses increased by approximately $21.3 million, or 29%, in 2020 compared to 2019. Acquired operations in
2019 contributed approximately $6.3 million to total SG&A expenses. Accrued bonus expense increased approximately
$9.5 million and totaled approximately $23.7 million in 2019. The remaining increases were due to a $3.5 million increase
in salaries and wages, a $1.1 million increase in sales compensation, and a $0.8 million increase in bad debt expense.
Earnings from operations for the Industrial reportable segment increased in 2019 compared to 2018 by $23.5 million, or
39%, which was well in excess of our 4% increase in unit sales, due to the factors above.
Construction Segment:
2020 versus 2019
Net sales to the construction segment increased 4% in 2020 compared to 2019 due to a 10% increase in selling prices,
offset by a 6% decrease in unit sales due to the impact of the pandemic and government-imposed shutdowns on customer
demand. Unit sales changes of our business units that comprise this segment consisted of declines of 2% in site-built
construction, 8% in concrete forming, and 23% in commercial construction, offset by a 2% increase in factory-built
housing.
Gross profits decreased by $9.5 million, or 3.5% to $262.2 million in 2020 compared to 2019 comparing favorably with
our 6% decrease in unit sales. The decrease in our gross profit was comprised of the following factors:
Gross profits in our site-built construction business unit decreased by $15.2 million due to a combination of lower
unit sales and higher commodity lumber costs, which adversely impacted our profit per unit of products we sell
on a fixed price to our customers for a period of time.
A decline in unit sales in our commercial business unit, which has a more significant fixed cost structure, caused
a decrease in gross profit of $27.4 million.
The impact of rising lumber prices on variable priced products contributed $11.7 million in gross profit in our
factory-built housing and concrete forming business units.
Favorable cost variances contributed $14.7 million in gross profit.
Acquired businesses contributed $6.7 million.
SG&A expenses decreased by approximately $8.8 million, or 4.7%, in 2020 compared to 2019 due to decreases in salaries
and wages of $2.2 million, travel expenses of $3.8 million and medical expenses of $2.1 million, primarily due to
reductions in headcount in our commercial business unit as a result of efforts to re-align our capacity with lower customer
demand. These decreases were offset by the SG&A expenses of acquired operations in 2020 which contributed
approximately $4.6 million of additional SG&A expenses in 2020. Accrued bonus expense decreased $5.0 million
compared to 2019 and totaled approximately $18.6 million for 2020.
Due to the underperformance of our commercial business unit, we recorded a charge against earnings of $11.5 million to
impair the goodwill associated with that business unit. In addition, certain leases of our commercial business unit were
impaired with a charge against earnings of $1.6 million as a result of our efforts to re-align our capacity with lower
customer demand.
Earnings from operations of the Construction reportable segment decreased in 2020 compared to 2019 by $13.4 million,
or 16.2%, due to the factors mentioned above.
15
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2019 versus 2018
Net sales to the construction segment decreased 4% in 2019 compared to 2018, due to a 6% increase in unit sales offset
by a decrease of 10% in selling prices. Unit changes within this segment consisted of increases of 14% in commercial
construction, 10% in concrete forming, and 2% in site-built construction, offset by a 2% decrease in factory-built housing.
Gross profits increased by $18.2 million, or 7.2% to $271.8 million in 2019 compared to 2018 , comparing favorably with
our 6% increase in unit sales.
SG&A expenses increased by approximately $6.9 million, or 4%, in 2019 compared to 2020 and was primarily due to an
increase in accrued bonus expense of $6.4 million.
Earnings from operations for the Construction reportable segment increased in 2019 compared to 2018 by $11.0 million,
or 15%, due to the factors mentioned above.
All Other Segment:
Our All Other reportable segment consists of our International and Ardellis (our insurance captive) segments that are
overall not significant.
Earnings from operations increased in 2020 compared to 2019 by $16.2 million, or 87.4%, primarily driven by increases
in gross profit of our Mexican affiliate as well as our import/export trading business. Gross profit increases at our Mexican
affiliate were driven by unit increases of approximately 15% as well as selling price increases due to the rising lumber
market.
Earnings from operations decreased in 2019 compared to 2018 by $.5 million, or 2.6%.
Corporate:
The corporate segment consists of over (under) allocated costs that are not significant.
INTEREST EXPENSE
Interest expense increased in 2020 compared to 2019, due to the issuance of $150 million of long-term debt in August of
2020 to provide capital to support our future growth. See “Note E of Notes to the Consolidated Financial Statements”.
INCOME TAXES
Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income
taxes, and permanent tax differences. Our effective tax rate was 25.5% in 2020 compared to 24.2% in 2019. The increase
was primarily due to recording non-deductible goodwill impairment expense in 2020, along with a valuation allowance
against deferred tax assets associated with net operating loss carryforwards of foreign subsidiaries in our commercial
business unit totaling approximately $3.6 million.
16
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OFF-BALANCE SHEET COMMITMENTS AND CONTRACTUAL OBLIGATIONS
We have no significant off-balance sheet commitments. The following table summarizes our contractual obligations as of
December 26, 2020 (in thousands).
Contractual Obligation
Long-term debt and finance lease obligations
Estimated interest on long-term debt and finance lease
obligations
Operating leases
Capital project purchase obligations
Total
Payments Due by Period
Less than
1 Year
100
$
1 – 3
Years
$ 43,384
3 – 5
Years
After
5 Years
$ 39,971 $ 228,252
Total
$ 311,707
10,873
18,671
22,761
$ 52,405
20,352
27,345
—
$ 91,081
17,260
17,696
—
48,949
25,961
—
$ 74,927 $ 303,162
97,434
89,673
22,761
$ 521,575
As of December 26, 2020, we also had $41.0 million in outstanding letters of credit issued during the normal course of
business, as required by some vendor contracts.
The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):
LIQUIDITY AND CAPITAL RESOURCES
December 26, December 28,
Cash from operating activities
Cash used in investing activities
Cash from (used in) financing activities
Effect of exchange rate changes on cash
Net change in cash and cash equivalents
Cash, cash equivalents, and restricted cash, beginning of year
Cash, cash equivalents, and restricted cash, end of year
2020
336,477
(154,718)
85,221
962
267,942
168,666
2019
349,291
(142,037)
(67,268)
482
140,468
28,198
$ 436,608 $ 168,666
In general, we financed our growth in the past through a combination of operating cash flows, our revolving credit facility,
industrial development bonds (when circumstances permit), and issuance of long-term notes payable at times when interest
rates are favorable. We manage our capital structure by attempting to maintain a targeted ratio of debt to equity and debt
to earnings before interest, taxes, depreciation and amortization. We believe these financial ratios are among many other
important factors to maintaining a strong credit profile, which in turn helps ensure timely access to capital when needed.
Seasonality has a significant impact on our working capital due to our primary selling season which occurs during the
period from March to August. Consequently, our working capital increases during our first and second quarters resulting
in negative or modest cash flows from operations during those periods. Conversely, we experience a substantial decrease
in working capital once we move beyond our peak selling season which typically results in significant cash flows from
operations in our third and fourth quarters.
17
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Due to the seasonality of our business and the effects of the Lumber Market, we believe our cash cycle (days sales are
outstanding plus days supply of inventory less days payables are outstanding) is a good indicator of our working capital
management. As indicated in the table below, our cash cycle decreased to 48 days in 2020 from 56 days in 2019.
Days of sales outstanding
Days supply of inventory
Days payables outstanding
Days in cash cycle
Year Ended
December 26,
2020
December 28,
2019
32
36
(20)
48
33
44
(21)
56
The decrease in our days supply of inventory in 2020 was primarily due to opportunistic buying when lumber prices were
low in early 2019 to improve gross profits and higher levels of “safety stock” we carried to address transportation
challenges and ensure timely deliveries to our customers. We did not engage in this level of opportunistic buying in late
2019 and early 2020. Additionally, strong demand in our retail segment and shortages of supply contributed to higher
inventory turns in 2020.
Our cash flows from operating activities in 2020 was $336.5 million, which was comprised of net earnings of $253.9
million, $85.3 million of non-cash expenses, including $11.5 million of Goodwill Impairment charges, and a $2.7 million
increase in working capital since the end of December 2019. Comparatively, cash generated from operating activities was
approximately $349.3 million in 2019, which was comprised of net earnings of $182.4 million, $77 million of non-cash
expenses, and a $89.9 million decrease in working capital since the end of 2018. Our net working capital increased during
2020 due to unusually high lumber prices as well as strong sales growth and demand in our retail segment, which resulted
in an increase in our accounts receivable and inventory.
Our cash used in investing activities during 2020 was $154.7 million, which was comprised primarily of purchases of
property, plant, and equipment totaling $89.2 million and business acquisitions totaling $65.3 million. Our outstanding
purchase commitments on existing capital projects totaled approximately $22.8 million on December 26, 2020. Our capital
expenditures primarily consist of “maintenance” capital expenditures totaling approximately $55 million, as well as
“expansionary and efficiency” capital expenditures. Notable areas of capital spending include projects to expand capacity
and enhance the productivity of our Deckorators product line, several projects to expand manufacturing capacity to serve
industrial customers and achieve efficiencies through automation, improvements to a number of facilities, and an increase
of our transportation capacity (tractors, trailers) in order to meet higher volumes and replace old rolling stock. The sale
and purchase of investments totaling $24.8 million and $28.1 million, respectively, are due to investment activity in our
captive insurance subsidiary.
In 2019, investments in business acquisitions and purchases of property, plant, and equipment were $39.1 million and
$84.9 million, respectively. Outstanding purchase commitments on existing capital projects totaled approximately $33.8
million on December 28, 2019. Investments in life insurance contracts and net investment activity used an additional $15.2
million and $3.5 million of cash.
Cash flows from financing activities during 2020 primarily consisted of proceeds of $150.0 million from the issuance of
Senior E, F and G Notes and $6.9 million of borrowings under the revolving credit facilities (See Notes to Consolidated
Financial Statements “Debt”); offset by repayments under these facilities of approximately $6.5 million, $30.7 million in
dividend payments, and $29.2 million in stock repurchases at an average price of $38.62. We paid quarterly dividends in
March, June, September and December of 2020 at a quarterly rate of $0.125 per share. Comparatively in 2019, cash flows
from financing activities primarily consisted of $422.1 million in borrowings under the revolving credit facilities,
repayments under these facilities of $460.5 million, and $24.5 million in dividend payments at a semi-annual rate of $0.20
per share.
18
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On November 1, 2018, we entered into a five-year, $375 million unsecured revolving credit facility with a syndicate of
U.S. and Canadian banks led by JPMorgan Chase Bank, N.A., as administrative agent and Wells Fargo Bank, N.A., as
syndication agent. The facilities include up to $40 million which may be advanced in the form of letters of credit, and up
to $100 million (U.S. dollar equivalent) which may be advanced in Canadian dollars, Australian dollars, pounds Sterling,
Euros and such other foreign currencies as may subsequently be agreed upon among the parties. This facility replaced our
$295 million unsecured revolving credit facility. On February 19, 2021, the credit agreement was amended to increase the
availability from $375 million to $550 million by exercising the accordion feature in the original agreement.
On August 10, 2020, we entered into an unsecured Note Purchase Agreement (the "Agreement") under which we issued
our 3.04% Series 2020 E Senior Notes, due August 10, 2032, in the aggregate principal amount of $50 million, our 3.08%
Series 2020 F Senior Notes, due August 10, 2033, in the aggregate principal amount of $50 million, and our 3.15% Series
2020 G Senior Notes, due August 10, 2035, in the aggregate principal amount of $50 million. Proceeds from the sale of
the Series E, F and G Senior Notes have been used to fund working capital needs and the PalletOne, Inc. acquisition. Refer
to Note O, “Subsequent Events” for additional information.
On December 26, 2020, we had $4.7 million outstanding on our $375 million revolving credit facility. The revolving credit
facility also supports letters of credit totaling approximately $7.1 million on December 26, 2020. As a result, we have
approximately $363 million in remaining availability on our revolver. Financial covenants on the unsecured revolving
credit facility and unsecured notes include minimum interest tests and a maximum leverage ratio. The agreements also
restrict the amount of additional indebtedness we may incur and the amount of assets which may be sold. We were in
compliance with all our covenant requirements on December 26, 2020.
ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS
See Notes to Consolidated Financial Statements, Note L, “Commitments, Contingencies, and Guarantees”.
CRITICAL ACCOUNTING POLICIES
In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States.
These principles require us to make certain estimates and apply judgments that affect our financial position and results of
operations. We continually review our accounting policies and financial information disclosures. Following is a summary
of our more significant accounting policies that require the use of estimates and judgments in preparing the financial
statements.
GOODWILL
We evaluate goodwill for indicators of impairment when events or circumstances indicate that this risk may be present.
Our judgments regarding the existence of impairment are based on market conditions, operational performance and
estimated future cash flows. Determining whether an impairment has occurred requires the valuation of the respective
reporting unit, which we have consistently estimated using primarily a weighted average between income and market
valuation approaches. We believe this approach is the most appropriate and accurate method to measure the fair value of
our intangible assets. We use discounted cash flow analysis with the following assumption: a business is worth today what
it can generate in future cash flows; cash received today is worth more than an equal amount of cash received in the future;
and future cash flows can be reasonably estimated. The discounted cash flow analysis is based on the present value of
projected cash flows and residual values.
19
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
If the carrying value of goodwill is considered impaired, an impairment charge is recorded to adjust it to its fair value.
Changes in forecasted operations and changes in discount rates can materially affect these estimates. In addition, we test
goodwill annually for impairment or more frequently if changes in circumstances or the occurrence of other events suggest
impairments exist. The test for impairment requires us to make several estimates about fair value, most of which are based
on projected future cash flows and market valuation multiples. Changes in these estimates may result in the recognition of
an impairment loss.
On our annual testing date of September 26, 2020, we experienced significantly lower than expected operating results
within our commercial reporting unit, which is within the Construction segment. In conjunction with completing our
annual planning activities, we noted an expectation for significantly lower customer demand for the foreseeable future.
As a result, we revised our future cash flow projections for this reporting unit and performed the goodwill impairment test
by calculating the fair value of the reporting unit based on its discounted estimated future cash flows. It was determined
that the carrying value of the reporting unit exceeded its fair value and we recorded a non-cash goodwill impairment charge
of $11.5 million, which represents the entire amount of the goodwill recorded within the reporting unit, as a result. All
other reporting units had a fair value that was substantially in excess of the carrying value. We believe we have sufficient
available information, both current and historical, to support our assumptions, judgments and estimates used in the
goodwill impairment test.
REVENUE RECOGNITION
Revenue for product sales is recognized at the time the performance obligation is satisfied, which is primarily when the
goods are delivered to the carrier, Free On Board (FOB) shipping point. Generally, title passes at the time of shipment. In
certain circumstances, the customer takes title when the shipment arrives at the destination. However, our shipping process
is typically completed the same day.
Performance on construction contracts is reflected in operations using over time accounting, under either the cost to cost
or units of delivery methods, depending on the nature of the business at individual operations. Under over time accounting
using the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships
of actual costs incurred related to the total estimated costs. Under over time accounting using the units of delivery method,
revenues and related earnings on construction contracts are measured by the relationships of actual units produced related
to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting
period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to
operations in their entirety when such losses become apparent.
Our construction contracts are generally entered into with a fixed price and completion of the projects can range from 6 to
18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates and
commodity costs. During the year, we update our estimated costs to complete our projects using current labor and
commodity costs and recognize losses to the extent that they exist.
GOALS
FORWARD OUTLOOK
Our goal is to achieve long-term unit sales growth that exceeds positive U.S. GDP growth by 4 percent to 6 percent,
including business acquisitions.
20
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our general long-term objectives also include:
Achieving sales growth primarily through new product introduction, international business expansion, and
gaining additional market share, particularly in our core retail, industrial and construction segments;
Identifying new growth opportunities in businesses with adjacencies to our core businesses, primarily through
strategic business acquisitions;
Increasing our profitability through cost reductions, productivity improvements as volume improves and through
investments in automation, and a more favorable mix of value-added products resulting in growth in earnings
from operations in excess of our unit sales growth; and
Earning a return on invested capital in excess of our weighted average cost of capital.
RETAIL SEGMENT
The Home Improvement Research Institute (“HIRI”) anticipates growth in home improvement spending and has forecasted
a 4.3% compounded annual growth rate through 2024. Most recently, large “big box” customers like The Home Depot
and Lowes have cautioned that they cannot predict if pandemic driven demand trends from 2020 will continue into 2021.
The Home Depot has stated that if the demand environment during the last half of 2020 were to persist through the current
year, it would imply flat to slightly positive comparable sales growth in 2021. Lowe’s has forecasted a 5% to 7% decline
in demand in 2021. Sales of our Retail Solutions segment comprised approximately 42% of our annual sales in 2020 and
34% of our annual sales in 2019 and 2018.
We continue to compete for market share for certain retail customers and face intense pricing pressure from other suppliers
to this market.
Our long-term goal is to achieve sales growth by:
Increasing our market share of value-added products, including our Deckorators product line.
Developing new products.
Acquiring competitors in core product categories when those opportunities exist.
Adding new products and customers through strategic business acquisitions or alliances.
Increasing our emphasis on product innovation and product differentiation in order to counter commoditization
trends and influences.
21
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INDUSTRIAL SEGMENT
Our goal is to increase our sales of wood, wood alternative, and protective packaging products to a wide variety of
industrial customers and manufactured wood components for OEM users. We believe the vast amount of hardwood and
softwood lumber consumed for industrial applications, combined with the highly fragmented nature of this market,
provides us with market share growth opportunities as a result of our competitive advantages in manufacturing, purchasing,
and material utilization. In addition, purchasers of packaging products with a wide geographic footprint increasingly desire
to reduce the number of suppliers they buy from, which provides an opportunity to gain market share due to our national
presence. We plan to continue to obtain market share by expanding our manufacturing capacity, enhancing our capabilities
and product offerings to enhance the solutions we offer our customers, and improving our ability to serve large regional
and national customers in targeted markets. We plan to continue to pursue acquisition opportunities that meet our strategic
criteria and help us meet these objectives. As discussed above, the recently implemented reorganization of our business is
intended to promote revenue growth through the introduction of new products and services and enhanced expertise in this
market as well as improved earnings through more efficient use of our people, resources and capital.
Market indicators that should be considered when evaluating future demand for our products in the Industrial segment
include Industrial production and the Purchasing Managers Index. Industrial Production in the United States is estimated
to stand at .90% in 2021. The Purchasing Managers Index is projected to trend around 53.4 points in 2022 and 52.4 points
in 2023. Sales in this segment comprised approximately 21% of our annual sales in 2020.
CONSTRUCTION SEGMENT
The National Association of Home Builders forecasts a 21% increase in manufactured home shipments in 2021 followed
by a 5% increase in 2022. We currently supply approximately 40% of the trusses used in manufactured housing and we
will strive to maintain our market share of trusses produced for this market. Sales of our Factory Built business unit within
our Construction segment comprised approximately 12% of our annual sales in 2020.
The Mortgage Bankers Association of America forecasts a 10% increase in national housing starts to an estimated 1.5
million starts in 2021. The National Association of Home Builders forecasts starts of 1.2 million, a 4% increase from 2020.
We believe we are well-positioned to capture our share of any increase that may occur in housing starts in the regions we
operate, which is primarily Texas, Colorado, the mid-Atlantic states, and the Northeast. However, due to our conservative
approach to adding capacity to serve this market and focus on managing potential channel conflicts with certain customers,
our growth may trail the market in future years. Sales of our Site Built business unit within our Construction segment
comprised approximately 14% of our annual sales in 2020.
Non-residential construction spending is a market indicator that should be considered when evaluating future demand for
our products in our Commercial and Concrete Forming business units within our Construction segment. Sales in these
business units comprised approximately 7% of our annual sales in 2020.
GROSS PROFIT
We believe the following factors may impact our gross profits and margins in the future:
End market demand and our ability to grow and leverage fixed costs.
The effective implementation of our strategy to focus and manage our operations around the markets we serve.
22
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our ability to maintain market share and gross margins on products sold to our largest customers. We believe our
level of service, geographic diversity, and quality of products provides an added value to our customers. However,
if our customers are unwilling to pay for these advantages, our sales and gross margins may be reduced.
Sales mix of value-added and commodity products.
Fluctuations in the relative level of the Lumber Market and trends in the market price of lumber. (See "Impact of
the Lumber Market on our Operating Results.")
Fuel and transportation costs.
Rising labor and benefit costs.
Our ability to continue to achieve productivity improvements as our unit sales increase and planned cost
reductions through continuous improvement activities, automation, and other initiatives.
Changes in corporate income tax rates and the cost of complying with new or increased government regulations.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
In recent years, selling, general and administrative (SG&A) expenses have increased as we have added personnel needed
to take advantage of growth opportunities and execute our initiatives intended to increase our sales of new products and
improve our sales mix of value-added products. We anticipate our trend of increases in these costs will continue in 2021;
however, our objective is to reduce these costs on a per unit basis and as a percentage of gross profits as we grow through
the improved productivity of our people and as a result of fixed costs. In addition, bonus and other incentive expenses for
all salaried and sales employees is based on our profitability and the effective management of our assets and will continue
to fluctuate based on our results. See Note H — Common Stock for discussion of future compensation costs related to
long-term share-based bonus awards.
On a long-term basis, we expect that our SG&A expenses will primarily be impacted by:
Our growth in sales to the industrial and the construction segments. Our sales to these segments require a higher
ratio of SG&A costs due, in part, to product design and engineering requirements.
Sales of new products and value-added, branded products to the retail segment, which generally require higher
product development, marketing, advertising, and other selling costs.
Our incentive compensation programs which are tied to gross profits, pre-bonus earnings from operations and
return on investment.
Our growth and success in achieving continuous improvement objectives designed to improve our productivity
and leverage our fixed costs as we grow.
LIQUIDITY AND CAPITAL RESOURCES
Our cash cycle will continue to be impacted in the future by our mix of sales by market. Sales to our construction and
industrial segments require a greater investment in working capital than sales to our retail segment. Additionally, our net
investment in trade receivables, inventory, and accounts payable will continue to be impacted by the level of lumber prices.
23
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Additionally, we expect to spend approximately $115.5 million on capital expenditures, incur depreciation of
approximately $71 million, and incur amortization and other non-cash expenses of approximately $19 million in 2021.
On December 26, 2020, we had outstanding purchase commitments on capital projects of approximately $22.8 million.
We intend to fund capital expenditures and purchase commitments through our operating cash flows and availability under
our revolving credit facility which is considered sufficient to meet these commitments and working capital needs.
In 2020, the frequency of our dividend payments increased from semi-annually to quarterly and the pro-rata rate increased
by 25%. Our dividend rates are reviewed and approved at each of our January, April, July, and October board meetings
and payments are made in March, June, September, and December of each year.
We have a share repurchase program approved by our Board of Directors, and as of December 26, 2020, we have
remaining authorization to buy back approximately 1.1 million shares. In the past, we have repurchased shares in order to
offset the effect of issuances resulting from our employee benefit plans and at opportune times when our stock price falls
to predetermined levels.
24
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of UFP Industries, Inc. (formerly Universal Forest Products, Inc.)
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of UFP Industries, Inc. and subsidiaries (the “Company”) as
of December 26, 2020, based on criteria established in Internal Control — Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, because of the effect of
the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not
maintained effective internal control over financial reporting as of December 26, 2020, based on criteria established in
Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended December 26, 2020, of the Company
and our report dated March 3, 2021, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s
Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s
internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over financial reporting,
assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal
control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies
and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles,
and that receipts and expenditures of the company are being made only in accordance with authorizations of management
and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
25
Material Weakness
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such
that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements
will not be prevented or detected on a timely basis. The following material weakness has been identified and included in
management's assessment: Management identified a material weakness in the design and operation of their controls
regarding the accounting for the Company’s share-based bonus awards. The controls were not adequately designed to
review the appropriate accounting conclusions with enough precision related to the determination of the appropriate period
over which to recognize the expense associated with share-based bonus awards.
This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of
the consolidated financial statements as of and for the year ended December 26, 2020, of the Company, and this report
does not affect our report on such financial statements.
/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
March 3, 2021
26
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of UFP Industries, Inc. (formerly Universal Forest Products, Inc.)
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of UFP Industries, Inc. (formerly Universal Forest
Products, Inc.) and subsidiaries (the "Company") as of December 26, 2020 and December 28, 2019, the related
consolidated statements of earnings and comprehensive income, shareholders' equity, and cash flows, for each of the three
years in the period ended December 26, 2020, and the related notes (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 26, 2020 and December 28, 2019, and the results of its operations and its cash flows for each of the three years
in the period ended December 26, 2020, in conformity with accounting principles generally accepted in the United States
of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company's internal control over financial reporting as of December 26, 2020, based on criteria
established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of
the Treadway Commission and our report dated March 3, 2021, expressed an adverse opinion on the Company's internal
control over financial reporting because of a material weakness.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and
the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of
the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.
Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for
our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements
that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial
statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Share-Based Bonus Expense – Refer to Notes A and H to the financial statements
Critical Audit Matter Description
The Company recognizes share-based bonus expense over the associated service and vesting period of the awards in
accordance with ASC Topic 718, Compensation - Stock Compensation.
27
We identified share-based bonus expense as a critical audit matter because of the material weakness identified by the
Company related to the design and operation of the Company’s control regarding the accounting for their share-based
bonus awards. This made auditing share-based bonus expense more challenging and required an increased extent of audit
effort, including the need to involve professionals in our firm having expertise in share-based compensation accounting
and to modify the nature and extent of our audit procedures.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to share-based bonus expense included the following, among others:
• We read the applicable agreements, recalculated the share-based bonus expense calculations and compared
the key terms from the agreements to management’s analysis.
• We assessed the appropriateness of judgments made by management in determining key assumptions
related to the awards, such as service inception date.
• We tested the accuracy and completeness of the data used in measuring the share-based bonus awards by
agreeing the underlying inputs, such as grant date and vesting terms, among others, back to source
documents, such as compensation committee meeting minutes or share-based bonus award letters.
With the assistance of professionals in our firm having expertise in accounting for share-based bonus awards, we evaluated
the Company’s conclusions regarding the accounting model to record share-based bonus expense over the requisite service
and vesting period of the awards in accordance with accounting principles generally accepted in the United States of
America.
/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
March 3, 2021
We have served as the Company's auditor since 2014.
28
UFP INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents
Restricted cash
Investments
Accounts receivable, net
Inventories:
Raw materials
Finished goods
Total inventories
Refundable income taxes
Other current assets
TOTAL CURRENT ASSETS
DEFERRED INCOME TAXES
RESTRICTED INVESTMENTS
RIGHT OF USE ASSETS
OTHER ASSETS
GOODWILL
INDEFINITE-LIVED INTANGIBLE ASSETS
OTHER INTANGIBLE ASSETS, NET
PROPERTY, PLANT AND EQUIPMENT:
Land and improvements
Building and improvements
Machinery and equipment
Furniture and fixtures
Construction in progress
PROPERTY, PLANT AND EQUIPMENT, GROSS
Less accumulated depreciation and amortization
PROPERTY, PLANT AND EQUIPMENT, NET
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable
Accrued liabilities:
Compensation and benefits
Other
Current portion of lease liability
Current portion of long-term debt
TOTAL CURRENT LIABILITIES
LONG-TERM DEBT
LEASE LIABILITY
DEFERRED INCOME TAXES
OTHER LIABILITIES
TOTAL LIABILITIES
SHAREHOLDERS’ EQUITY:
Controlling interest shareholders’ equity:
Preferred stock, no par value; shares authorized 1,000,000; issued and outstanding, none
Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding, 61,205,780
and 61,408,589
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total controlling interest shareholders’ equity
Noncontrolling interest
TOTAL SHAREHOLDERS’ EQUITY
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
See notes to consolidated financial statements.
29
December 26,
2020
December 28,
2019
$
436,507 $
101
24,308
470,504
168,336
330
18,527
364,027
236,283
250,591
486,874
13,272
41,706
1,093,072
2,763
16,214
80,167
24,884
229,536
7,354
48,313
125,097
253,589
467,963
16,972
21,342
884,963
(497,789)
387,174
1,889,477
316,481
250,813
567,294
5,836
33,812
1,538,362
2,413
17,565
77,245
20,298
252,193
7,401
72,252
128,301
272,864
525,542
21,110
26,680
974,497
(557,335)
417,162
2,404,891
$
211,518 $
142,479
166,478
69,104
16,549
100
463,749
311,607
61,509
25,266
59,608
921,739
141,892
51,572
15,283
2,816
354,042
160,867
64,884
22,880
29,071
631,744
— $
—
61,206
218,224
1,182,680
(1,794)
1,460,316
22,836
1,483,152
2,404,891 $
61,409
192,173
995,022
(4,889)
1,243,715
14,018
1,257,733
1,889,477
$
$
$
$
UFP INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(in thousands, except per share data)
December 26,
2020
Year Ended
December 28,
2019
December 29,
2018
$ 5,153,998 $ 4,416,009 $ 4,489,180
3,896,286
592,894
392,235
(6,604)
207,263
8,893
(1,371)
1,888
9,410
197,853
45,441
152,412
3,730,491
685,518
439,047
1,565
244,906
8,700
(1,945)
(2,523)
4,232
240,674
58,270
182,404
4,353,702
800,296
444,596
9,874
345,826
9,311
(2,392)
(2,076)
4,843
340,983
87,101
253,882
(7,104)
246,778 $
(2,754)
179,650 $
(3,814)
148,598
4.00 $
4.00 $
2.91 $
2.91 $
2.41
2.40
$
$
$
253,882
5,967
259,849
182,404
1,513
183,917
152,412
(5,076)
147,336
(9,976)
(3,218)
(3,873)
$
249,873 $
180,699 $
143,463
NET SALES
COST OF GOODS SOLD
GROSS PROFIT
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
ASSET IMPAIRMENT CHARGES AND OTHER COSTS, NET
EARNINGS FROM OPERATIONS
INTEREST EXPENSE
INTEREST INCOME
UNREALIZED (GAIN) LOSS ON INVESTMENTS AND OTHER
EARNINGS BEFORE INCOME TAXES
INCOME TAXES
NET EARNINGS
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING
INTEREST
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST
EARNINGS PER SHARE – BASIC
EARNINGS PER SHARE – DILUTED
OTHER COMPREHENSIVE INCOME:
NET EARNINGS
OTHER COMPREHENSIVE GAIN (LOSS)
COMPREHENSIVE INCOME
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING
INTEREST
See notes to consolidated financial statements.
30
UFP INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands, except share and per share data)
Controlling Interest Shareholders’ Equity
Additional
Accumulated
Other
Paid-In Retained Comprehensive Noncontrolling
Common
Stock
$ 61,192
Capital Earnings
$ 161,928 $ 736,212
$
148,598
Balance at December 30, 2017
Net earnings
Foreign currency translation adjustment
Unrealized gain (loss) on investment & foreign
currency
Distributions to noncontrolling interest
Cash dividends - $0.180 per share – semiannually
Issuance of 37,794 shares under employee stock plans
Issuance of 348,208 shares under stock grant
programs
Issuance of 166,528 shares under deferred
compensation plans
Repurchase of 860,669 shares
Expense associated with share-based compensation
arrangements
Accrued expense under deferred compensation plans
Balance at December 29, 2018
Net earnings
Foreign currency translation adjustment
Unrealized gain on debt securities
Distributions to noncontrolling interest
Additional purchase of noncontrolling interest
Cash dividends - $0.200 per share – semiannually
Issuance of 33,647 shares under employee stock plans
Issuance of 309,628 shares under stock grant
programs
Issuance of 181,565 shares under deferred
compensation plans
Expense associated with share-based compensation
arrangements
Accrued expense under deferred compensation plans
Balance at December 28, 2019
Net earnings
Foreign currency translation adjustment
Unrealized gain on investments and other
Distributions to noncontrolling interest
Additional purchase of noncontrolling interest
Cash dividends - $0.125 per share – quarterly
Issuance of 35,133 shares under employee stock plans
Issuance of 390,720 shares under stock grant
programs
Issuance of 127,735 shares under deferred
compensation plans
Repurchase of 756,397 shares
Expense associated with share-based compensation
arrangements
Accrued expense under deferred compensation plans
Balance at December 26, 2020
Earnings
Interest
144 $
(4,973)
(1,109)
14,547 $
3,814
59
(3,139)
Total
974,023
152,412
(4,914)
(162)
(3,139)
(22,072)
1,026
5,175
—
(24,629)
2,754
464
3,379
7,585
15,281 $ 1,088,684
182,404
1,032
481
(2,143)
(7,075)
(24,549)
1,093
(2,143)
(2,338)
5,968
—
7,104
2,872
3,843
7,995
14,018 $ 1,257,733
253,882
4,245
1,722
(933)
(95)
(30,669)
1,395
(933)
(225)
12,535
—
(29,212)
3,905
8,644
$ 1,483,152
$ 60,884
$ 178,540 $ 839,917
179,650
$
(5,938) $
568
481
$ 61,409
$ 192,173 $ 995,022
246,778
$
(4,889) $
1,373
1,722
947
(22,072)
(23,768)
38
348
167
(861)
988
4,827
(167)
3,379
7,585
(24,549)
4
34
310
181
(4,737)
1,059
5,654
(181)
3,843
7,995
35
390
128
(756)
(30,669)
5
(28,456)
130
1,360
12,140
(128)
3,905
8,644
$ 218,224
31
$ 61,206
$ 1,182,680
$
(1,794) $
22,836
See notes to consolidated financial statements
UFP INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation
Amortization of intangibles
Expense associated with share-based and grant compensation arrangements
Deferred income taxes
Unrealized (gain) loss on investments and other
Net loss (gain) on disposition of assets and impairment of assets
Goodwill impairment
Gain from reduction of estimated earnout liability
Changes in:
Accounts receivable
Inventories
Accounts payable and cash overdraft
Accrued liabilities and other
NET CASH FROM OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisitions and purchases of non-controlling interest, net of cash received
Investment in life insurance contracts
Purchases of investments
Proceeds from sale of investments
Other
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities
Repayments under revolving credit facilities
Borrowings of debt
Contingent consideration payment and other
Issuance of long-term debt
Proceeds from issuance of common stock
Dividends paid to shareholders
Distributions to noncontrolling interest
Repurchase of common stock
Other
NET CASH FROM (USED IN) FINANCING ACTIVITIES
Effect of exchange rate changes on cash
NET CHANGE IN CASH AND CASH EQUIVALENTS
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents, beginning of period
Restricted cash, beginning of period
Cash, cash equivalents, and restricted cash, beginning of period
Cash and cash equivalents, end of period
Restricted cash, end of period
Cash, cash equivalents, and restricted cash, end of period
SUPPLEMENTAL INFORMATION:
Interest paid
Income taxes paid
NON-CASH FINANCING ACTIVITIES:
Common stock issued under deferred compensation plans
See notes to consolidated financial statements
32
Year Ended
December 26, December 28, December 29,
2020
2019
2018
$
253,882 $
182,404 $
152,412
63,964
8,716
4,034
1,857
(2,076)
1,470
11,485
(4,134)
(87,552)
(76,022)
62,405
98,448
336,477
(89,182)
2,922
(65,255)
—
(28,054)
24,805
46
(154,718)
6,862
(6,498)
—
(5,787)
150,000
1,395
(30,669)
(932)
(29,212)
62
85,221
962
267,942
168,666
436,608
168,336
330
168,666
436,507
101
436,608
7,204
77,964
$
$
$
$
$
$
60,494
6,325
4,007
7,176
(2,523)
1,565
—
—
(16,872)
73,120
(24,132)
57,727
349,291
(84,933)
1,777
(39,122)
(15,253)
(13,352)
9,828
(982)
(142,037)
422,057
(460,537)
—
(3,136)
—
1,093
(24,549)
(2,216)
—
20
(67,268)
482
140,468
28,198
168,666
27,316
882
28,198
168,336
330
168,666
8,763
50,224
6,870
$
6,229
$
$
$
$
$
$
$
54,949
6,393
3,574
857
1,888
(6,604)
—
—
(8,512)
(84,304)
(5,213)
1,245
116,685
(95,862)
38,373
(54,017)
—
(13,338)
3,678
(66)
(121,232)
732,370
(748,496)
927
(5,540)
75,000
1,026
(22,072)
(3,139)
(24,629)
(1,054)
4,393
(464)
(618)
28,816
28,198
28,339
477
28,816
27,316
882
28,198
8,860
51,578
5,837
$
$
$
$
$
$
$
UFP INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS
We are a holding company whose subsidiaries supply wood, wood composite and other products to three markets:
retail, construction and industrial. Founded in 1955, we are headquartered in Grand Rapids, Michigan, with affiliates
throughout North America, Europe, Asia and Australia.
On April 22, 2020, the shareholders approved changing the name of the Company from Universal Forest Products,
Inc., to UFP Industries, Inc.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include our accounts and those of our wholly-owned and majority-owned
subsidiaries and partnerships. In addition, we consolidate any entity which we own 50% or more and exercise control.
Intercompany transactions and balances have been eliminated.
NONCONTROLLING INTEREST IN SUBSIDIARIES
Noncontrolling interest in results of operations of consolidated subsidiaries represents the noncontrolling
shareholders’ share of the income or loss of various consolidated subsidiaries. The noncontrolling interest reflects the
original investment by these noncontrolling shareholders combined with their proportional share of the earnings or losses
of these subsidiaries, net of distributions paid.
FISCAL YEAR
Our fiscal year is a 52 or 53 week period, ending on the last Saturday of December. Unless otherwise stated,
references to 2020, 2019, and 2018 relate to the fiscal years ended December 26, 2020, December 28, 2019, and
December 29, 2018, respectively. Fiscal years 2020, 2019, and 2018 were comprised of 52 weeks.
FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS
We follow ASC Topic 820, Fair Value Measurements and Disclosures, which provides a consistent definition of
fair value, focuses on exit price, prioritizes the use of market-based inputs over entity-specific inputs for measuring fair
value and establishes a three-tier hierarchy for fair value measurements. This topic requires fair value measurements to be
classified and disclosed in one of the following three categories:
Level 1 — Financial instruments with unadjusted, quoted prices listed on active market exchanges.
Level 2 — Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over-
the-counter traded financial instruments. Financial instrument values are determined using prices for recently
traded financial instruments with similar underlying terms and direct or indirect observational inputs, such as
interest rates and yield curves at commonly quoted intervals.
Level 3 — Financial instruments not actively traded on a market exchange and there is little, if any, market
activity. Values are determined using significant unobservable inputs or valuation techniques.
Our investment portfolio includes restricted investments within our wholly-owned subsidiary, Ardellis
Insurance Ltd. There are $17.6 million of restricted investments recorded as of December 26, 2020.
33
CASH AND CASH EQUIVALENTS
Cash and cash equivalents consist of cash and highly liquid investments purchased with an original maturity of
three months or less.
INVESTMENTS
Investments are deemed to be "available for sale" and are, accordingly, carried at fair value being the quoted
market value.
ACCOUNTS RECEIVABLE AND ALLOWANCES
We perform periodic credit evaluations of our customers and generally do not require collateral. Accounts
receivable are due under a range of terms we offer to our customers. Discounts are offered, in most instances, as an
incentive for early payment.
We base our allowances related to receivables on historical credit and collections experience, reasonable and
supportable forecasts, and the specific identification of other potential problems, including the general economic climate.
Actual collections can differ, requiring adjustments to the allowances. Individual accounts receivable balances are
evaluated on a monthly basis, and those balances considered uncollectible are charged to the allowance.
The following table presents the activity in our accounts receivable allowances (in thousands):
Additions
Charged to
Costs and
Expenses
Beginning
Balance
Deductions*
Year Ended December 26, 2020:
Allowance for possible losses on accounts receivable
Year Ended December 28, 2019:
Allowance for possible losses on accounts receivable
Year Ended December 29, 2018:
Allowance for possible losses on accounts receivable
$
$
$
4,440
$ 48,954 $ (48,765)
2,601
$ 39,481 $ (37,642)
2,424
$ 38,963 $ (38,786)
*
Includes accounts charged off, discounts given to customers and actual customer returns and allowances.
Ending
Balance
$
$
$
4,629
4,440
2,601
We record estimated sales returns, discounts, and other applicable adjustments as a reduction of net sales in the
same period revenue is recognized.
Accounts receivable retainage amounts related to long term construction contracts totaled $8.7 million and $7.4
million as of December 26, 2020 and December 28, 2019, respectively. All amounts are expected to be collected within
18 months. Concentration of accounts receivable related to our largest customer totaled $77.5 million and $42.8 million
as of December 26, 2020 and December 28, 2019, respectively.
In June 2016, the FASB issued ASU 2016-13, Financial Instrument-Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments (ASU 2016-13), which changes the current incurred loss model to a forward
looking expected credit loss model for most financial assets, such as trade and other receivables, loans and other
instruments. The ASU is effective for fiscal years beginning after December 15, 2019. Entities are required to apply the
provisions of the standard through a cumulative-effect adjustment to retained earnings as of effective date. We have
adopted the new standard as of the beginning of our fiscal year and have concluded the standard does not have a material
impact on our consolidated financial statements and disclosures, accounting processes, and internal controls.
34
INVENTORIES
Inventories are stated at the lower of cost or market. The cost of inventories includes raw materials, direct labor,
and manufacturing overhead. Cost is determined on a weighted average basis. Raw materials consist primarily of
unfinished wood products and other materials expected to be manufactured or treated prior to sale, while finished goods
represent various manufactured and treated wood products ready for sale. We have inventory on consignment at customer
locations valued at $20.8 million as of December 26, 2020 and $20.2 million as of December 28, 2019.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment are stated at cost. Expenditures for renewals and betterments are capitalized, and
maintenance and repairs are expensed as incurred. Amortization of assets held under finance leases is included in
depreciation and amortized over the shorter of the estimated useful life of the asset or the lease term. Depreciation is
computed principally by the straight-line method over the estimated useful lives of the assets as follows:
Land improvements
Buildings and improvements
Machinery, equipment and office furniture
5 to 15 years
10 to 32 years
2 to 20 years
Software costs are included in machinery and equipment on the balance sheet with gross amounts and
accumulated amortization totaling $5.5 million and $4.9 million as of December 26, 2020, and $6.1 million and $5.2
million as of December 28, 2019, respectively.
LONG-LIVED ASSETS
In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), when an indicator of potential
impairment exists, we evaluate the recoverability of our long-lived assets by determining whether unamortized balances
could be recovered through undiscounted future operating cash flows over the remaining lives of the assets. If the sum of
the expected future cash flows was less than the carrying value of the assets, an impairment loss would be recognized for
the excess of the carrying value over the fair value.
GOODWILL
Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible
assets of acquired businesses. Goodwill and intangible assets deemed to have indefinite lives are not amortized and are
subject to impairment tests at least annually in accordance with ASC 350, Intangibles-Goodwill and Other. We review the
carrying amounts of goodwill and other non-amortizable intangibles by reporting unit to determine if such assets may be
impaired. In the fourth quarter of 2020, we recorded a non-cash goodwill impairment charge of $11.5 million related to
the commercial reporting unit within our construction segment. Refer to Note D, Goodwill and Other Intangible Assets,
in the notes to the consolidated financial statements for additional information related to the impairment of this goodwill.
As of the date of the most recent goodwill impairment test, which utilized data and assumptions as of September 26, 2020,
all other reporting units had a fair value that was substantially in excess of the carrying value. We believe we have sufficient
available information, both current and historical, to support our assumptions, judgments and estimates used in the
goodwill impairment test.
Our annual testing date for evaluating goodwill and indefinite-lived intangible asset impairment is the first day
of our fourth fiscal quarter for all reporting units. Additionally, we review various triggering events throughout the year to
ensure that a mid-year impairment analysis is not required.
35
FOREIGN CURRENCY
Our foreign operations use the local currency as their functional currency. Accordingly, assets and liabilities are
translated at exchange rates as of the balance sheet date and revenues and expenses are translated using weighted average
rates, with translation adjustments included as a separate component of shareholders’ equity. Gains and losses arising from
re-measuring foreign currency transactions are included in earnings.
INSURANCE RESERVES
Our wholly-owned insurance company, Ardellis Insurance Ltd.(“Ardellis”), was incorporated on April 21, 2001
under the laws of Bermuda and is licensed as a Class 3A insurer under the Insurance Act 1978 of Bermuda. On April 14,
2017 the U.S. Branch of Ardellis Insurance Ltd. was granted its Certificate of Authority to transact property and casualty
insurance lines as an admitted carrier in the State of Michigan.
We are primarily self-insured for certain employee health benefits, and have self-funded retentions for general
liability, automobile liability, property and workers’ compensation. We are fully self-insured for environmental liabilities.
The general liability, automobile liability, property, workers’ compensation, and certain environmental liabilities are
managed through Ardellis; the related assets and liabilities of which are included in the consolidated financial statements
as of December 26, 2020 and December 28, 2019. Our policy is to accrue amounts equal to actuarially determined or
internally computed liabilities. The actuarial and internal valuations are based on historical information along with certain
assumptions about future events. Changes in assumptions for such matters as legal actions, medical cost trends, and
changes in claims experience could cause these estimates to change in the future.
In addition to providing coverage for the Company, Ardellis provides Excess Loss Insurance (primarily medical
and prescription drug) to certain third parties. As of December 26, 2020, Ardellis had 45 such contracts in place. Reserves
associated with these contracts were $4.5 million at December 26, 2020 and $5.7 million at December 28, 2019 and are
accrued based on third party actuarial valuations of the expected future liabilities.
INCOME TAXES
Deferred income tax assets and liabilities are computed for differences between the financial statement and tax
basis of assets and liabilities that will result in taxable or deductible amounts in the future. Such deferred income tax asset
and liability computations are based on enacted tax laws and rates. Valuation allowances are established when necessary
to reduce deferred income tax assets to the amounts expected to be realized. Income tax expense is the tax payable or
refundable for the period plus or minus the change during the period in deferred income tax assets and liabilities.
REVENUE RECOGNITION
Within the three primary segments (Retail, Industrial, and Construction) that the Company operates, there are a
variety of written agreements governing the sale of our products and services. The transaction price is stated at the purchase
order level, which includes shipping and/or freight costs and any applicable governmental authority taxes. The majority
of our contracts have a single performance obligation concentrated around the delivery of goods to the carrier, Free On
Board (FOB) shipping point. Therefore, revenue is recognized when this performance obligation is satisfied. Generally,
title and control passes at the time of shipment. In certain circumstances, the customer takes title when the shipment arrives
at the destination. However, our shipping process is typically completed the same day.
Certain customer products that we provide require installation by the Company or a 3rd party. Installation revenue
is recognized upon completion. If we use a 3rd party for installation, the party will act as an agent to us until completion
of the installation. Installation revenue represents an immaterial share of our total net sales.
36
We utilize rebates, credits, discounts and/or cash-based incentives with certain customers which are accounted for
as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and
reduce revenues recognized. We believe that there will not be significant changes to our estimates of variable
consideration. The allocation of these costs are applied at the invoice level and recognized in conjunction with revenue.
Additionally, returns and refunds are estimated on a historical and expected basis which is a reduction of revenue
recognized.
Earnings on construction contracts are reflected in operations using over time accounting, under either cost to cost
or units of delivery methods, depending on the nature of the business at individual operations, which is in accordance with
ASC 606 as revenue is recognized when certain performance obligations are performed. Under over time accounting using
the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships of actual
costs incurred related to the total estimated costs. Under over time accounting using the units of delivery method, revenues
and related earnings on construction contracts are measured by the relationships of actual units produced related to the
total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period
in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations
in their entirety when such losses become apparent.
Our construction contracts are generally entered into with a fixed price and completion of the projects can range
from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates
and commodity costs. During the year, we update our estimated costs to complete our projects using current labor and
commodity costs and recognize losses to the extent that they exist.
The following table presents our net sales disaggregated by revenue source:
(in thousands)
FOB Shipping Point Revenue
Construction Contract Revenue
Total Net Sales
December 26,
2020
December 28,
2019
% Change
$
$
5,025,895
128,103
5,153,998
$
$
4,272,583
143,426
4,416,009
17.6%
(10.7)%
16.7%
The Construction segment comprises the construction contract revenue shown above. Construction contract
revenue is primarily made up of site-built and framing customers.
The following table presents the balances of over time accounting accounts on December 26, 2020 and
December 28, 2019 which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in
thousands):
Cost and Earnings in Excess of Billings
Billings in Excess of Cost and Earnings
SHIPPING AND HANDLING OF PRODUCT
December 26,
2020
December 28,
2019
$
4,169 $
11,530
4,690
6,622
Shipping and handling costs that are charged to and reimbursed by the customer are recognized as revenue. Costs
incurred related to the shipment and handling of products are classified in cost of goods sold.
37
SHARE-BASED COMPENSATION
We account for share-based awards in accordance with ASC Topic 718, Compensation – Stock Compensation
(“ASC 718”), which requires recognition of share-based compensation costs in financial statements based on fair value.
Compensation cost is recognized over the period during which an employee is required to provide services in exchange
for the award (the requisite service period). Forfeitures are recognized as they occur.
EARNINGS PER SHARE
Earnings per share (“EPS”) is computed using the two-class method. The two-class method determines EPS for
each class of common stock and participating securities according to dividends and their respective participation rights in
undistributed earnings. Participating securities include non-vested shares of restricted stock in which the participants have
non-forfeitable rights to dividends during the performance period. EPS, basic and diluted, is calculated by dividing net
earnings attributable to controlling interest, net of applicable taxes, by the weighted average number of shares of common
stock outstanding for the period. The computation of EPS is as follows (in thousands):
Numerator:
Net earnings attributable to controlling interest
Adjustment for earnings allocated to non-vested restricted common stock
Net earnings for calculating EPS
$
$
246,778 $ 179,650 $ 148,598
(3,396)
(4,496)
239,875 $ 175,154 $ 145,202
(6,903)
December 26, December 28, December 29,
2020
2019
2018
Denominator:
Weighted average shares outstanding
Adjustment for non-vested restricted common stock
Shares for calculating basic EPS
Effect of dilutive restricted common stock
Shares for calculating diluted EPS
Net earnings per share:
Basic
Diluted
61,632
(1,724)
59,908
20
59,928
61,649
(1,543)
60,106
24
60,130
61,762
(1,411)
60,351
82
60,433
$
$
4.00 $
4.00 $
2.91 $
2.91 $
2.41
2.40
No options were excluded from the computation of diluted EPS for 2020, 2019, or 2018.
USE OF ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with accounting principles generally accepted in the United
States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and
expenses during the reporting period. We believe our estimates to be reasonable; however, actual results could differ from
these estimates.
38
B.
FAIR VALUE
We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities
measured at fair value. Assets and liabilities measured at fair value are as follows:
December 26, 2020
Prices with
Observable Unobservable
Prices with
Other
Quoted
Prices in
Active
Markets
(Level 1) (Level 2)
19 $ 4,643 $
Inputs
246
12,602
16,224
—
December 28, 2019
Prices with
Other
Prices with
Observable Unobservable
Quoted
Prices in
Active
Markets
(Level 1)
Inputs
(Level 3)
— $
—
—
Total
4,662 $ 162,626 $
16,470
12,602
234
9,734
Inputs
(Level 2)
562 $
15,495
—
Inputs
(Level 3)
Total
— $ 163,188
15,729
—
9,734
—
—
—
2,040
2,040
—
—
1,941
1,941
(in thousands)
Money market funds $
Fixed income funds
Equity securities
Alternative
investments
Mutual funds:
Domestic stock
funds
International stock
funds
Target funds
Bond funds
Alternative funds
Total mutual funds
Total
Assets at fair value
8,088
1,440
114
147
482
10,271
—
—
—
—
—
—
$ 23,138 $ 20,867 $
$ 23,138 $ 20,867 $
—
8,088
3,308
—
—
—
—
—
2,040
2,040
1,440
114
147
482
10,271
$ 46,045
$ 46,045
1,741
281
850
1,747
7,927
$ 180,521
$ 180,521
—
—
—
—
—
—
$ 16,057 $
$ 16,057 $
—
3,308
—
—
—
—
—
1,941
1,941
1,741
281
850
1,747
7,927
$ 198,519
$ 198,519
From the assets measured at fair value as of December 26, 2020, listed in the table above, less than $0.1 million
of money market funds are held in Cash and Cash Equivalents, $24.2 million of mutual funds, equity securities, and
alternative investments are held in Investments, $0.6 million of money market and mutual funds are held in Other Assets
for our deferred compensation plan, and $16.5 million of fixed income funds and $4.6 million of money market funds are
held in Restricted Investments.
We maintain money market, mutual funds, bonds, and/or stocks in our non-qualified deferred compensation plan
and our wholly owned licensed captive insurance company, and assets held in financial institutions. These funds are valued
at prices quoted in an active exchange market and are included in "Cash and Cash Equivalents", "Investments", "Other
Assets", and “Restricted Investments.” We have elected not to apply the fair value option under ASC 825, Financial
Instruments, to any of our financial instruments except for those expressly required by U.S. GAAP.
During 2018, we purchased a private real estate income trust which is valued as a Level 3 asset and is categorized
as an “Alternative Investment.”
In accordance with our investment policy, our wholly-owned company, Ardellis Insurance Ltd. ("Ardellis"),
maintains an investment portfolio, totaling $40.8 million as of December 26, 2020, consisting of domestic and international
stocks, alternative investments, and fixed income bonds.
39
Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the
following (in thousands):
Fixed Income
Equity
Mutual Funds
Alternative Investments
Total
$ 15,325 $
9,787
8,235
1,904
$ 35,251
$
1,145 $ 16,470
12,602
2,815
9,665
1,430
2,040
136
5,526 $ 40,777
December 26, 2020
Unrealized
Gain/(Loss) Fair Value
Cost
Cost
December 28, 2019
Unrealized
Gain/(Loss) Fair Value
353 $ 15,729
9,734
6,852
1,941
2,543 $ 34,256
1,776
284
130
$ 15,376 $
7,958
6,568
1,811
$ 31,713 $
Our fixed income investments consist of a blend of US Government and Agency bonds and investment grade
corporate bonds with varying maturities. Our equity investments consist of small, mid, and large cap growth and value
funds, as well as international equity. Our alternative investments consist of the private real estate income trust which is
valued as a Level 3 asset. The net pre-tax unrealized gain was $5.5 million for the year ended December 26, 2020. Carrying
amounts above are recorded in the investments and restricted investments line items within the balance sheet as of
December 26, 2020 and December 28, 2019.
C.
BUSINESS COMBINATIONS
We completed the following business combinations in fiscal 2020 and 2019, which were accounted for using the
purchase method (in thousands).
Company
Name
Acquisition
Date
November 10, 2020
Purchase Price
$27,274
cash paid for 100% asset
purchase and estimated
contingent consideration
Intangible
Assets
Net
Tangible
Assets
Operating
Segment
$
17,894 $
9,380 Construction
Atlantic Prefab, Inc.; Exterior
Designs, LLC; and Patriot Building
Systems, LLC (these are affiliated
companies through common former
ownership)
Based in Wilton, New Hampshire, Atlantic Prefab produces prefabricated steel wall panels and
light gauge metal trusses. The company’s steel component and prefinished wall panel lines are
new, value-added product additions for UFP Construction that help shorten project timelines.
Exterior Designs is a leading installer of siding and exterior cladding such as fiber cement,
ACM (aluminum composite material) panels, phenolic panels, and EIFS (exterior insulation
and finish systems). The company is based in Londonderry, New Hampshire, and serves
commercial and multi-family clients throughout the Northeast. Also based in Londonderry,
Patriot Building Systems provides commercial and multi-family framing services in the
Northeast and will focus on markets not currently served by companies of UFP Industries. The
companies had combined annual sales of approximately $28 million.
$7,936
cash paid for 100% asset
purchase and estimated
contingent consideration
October 1, 2020
7,222 $
Retail
714
$
Fire Retardant Chemical
Technologies, LLC (FRCT)
Founded in 2014 and based in Matthews, North Carolina, FRCT’s business includes a research
and development laboratory specializing in developing and testing a wide range of high-
performance chemicals, including fire retardants and water repellants. The company had annual
sales of approximately $6.4 million.
September 30, 2020
$4,465
cash paid for 100% asset
purchase and estimated
contingent consideration
$
4,607 $
(142)
Other
Enwrap Logistic & Packaging S.r.l.
(Enwrap)
Enwrap is a newly formed company dedicated to the logistics and packaging business of its
predecessor, Job Service S.p.A. Headquartered in Milan, Italy, Enwrap provides high-value,
mixed material industrial packaging and logistics services through eight locations in Italy.
These locations generated annual sales of approximately $14 million.
40
July 14, 2020
$19,136
cash paid for 100% asset
purchase and estimated
contingent consideration
$
13,098 $
6,038
Industrial
T&R Lumber Company ("T&R") A manufacturer and distributor of a range of products used primarily by nurseries, including
plastic growing containers, pots and trays; wooden stakes; trellises; tree boxes; shipping racks;
and other nursery supplies based in Rancho Cucamonga, California. T&R had annual sales of
approximately $31 million. The acquisition of T&R will allow us to leverage their expertise
using our national manufacturing capacity to grow our agricultural product offerings and
customer base across the country.
March 13, 2020
$21,787
cash paid for 100% asset
purchase and estimated
contingent consideration
$
19,098 $
2,689 Construction
Quest Design & Fabrication and
Quest Architectural Millwork
("Quest")
A designer, fabricator, and installer of premium millwork and case goods for a variety of
commercial uses. Quest had annual sales of approximately $22 million. The acquisition of
Quest expands our architectural millwork capabilities and expertise in our commercial
construction business unit, and will allow us to use our national manufacturing capacity to
grow and diversify our sales to this end market
September 16, 2019
$12,422
cash paid for 100% asset
purchase
$
7,464 $
4,958
Industrial
Pallet USA, LLC ("Pallet USA") A manufacturer and recycler of wood pallet and crating products in the Midwest. Pallet USA
had annual sales of approximately $18 million. The acquisition of Pallet USA allows us to
expand our capacity to manufacture wood-based industrial packaging products and offer new
services to customers in the Midwest.
August 12, 2019
$17,809
cash paid for 100% asset
purchase and estimated
contingent consideration
$
8,089 $
9,720
Retail
Northwest Painting, Inc.
("Northwest")
A supplier of pre-painted building materials, including composite lap siding, soffit, panels and
trim to the Western U.S. Northwest had annual sales of approximately $14 million. The
acquisition of Northwest will expand our capacity to produce coated siding and trim for
customers in the Northwest and Mountain West regions.
May 1, 2019
$7,168
cash paid for 100% asset
purchase and estimated
contingent consideration
$
6,180 $
988
Industrial
Wolverine Wood Products, Inc.
("Wolverine")
A manufacturer of wood panel components for furniture, store fixtures and case goods
manufacturers. Wolverine had annual sales of approximately $5 million. The acquisition of
Wolverine allows us to expand capacity to produce value-added wood components for
customers in the Midwest.
The intangible assets for each acquisition were finalized and allocated to their respective identifiable intangible
asset and goodwill accounts during 2020, except for our 2020 acquisitions. In aggregate, acquisitions made during 2020,
not consolidated with other operations, contributed approximately $37.0 million in net sales and $2.4 million in operating
profit during 2020.
41
At December 26, 2020, the amounts assigned to major intangible classes for the business combinations mentioned
above are as follows (in thousands):
Non-
Compete
Customer
Intangibles -
Tax
Atlantic Prefab
Exterior Designs
Patriot Building Systems
FRCT
Enwrap
T&R
Quest
Pallet USA
Northwest
Wolverine
*(estimate)
Agreements Relationships Tradename Goodwill Deductible
5,368
$
8,588
3,939
7,222
8,023
13,098
19,098
7,464
8,290
6,180
— *$ 2,684 * $
— * 4,294 *
— * 1,971 *
— * 3,643 *
— * 4,441 *
— * 6,549 *
— * 9,953 *
2,684 * $
4,294 *
1,968 *
3,579 *
3,582 *
6,549 *
9,145 *
1,409
4,500
3,209
— $
—
—
—
—
—
—
—
—
—
1,909 4,146
1,000 2,790
865 2,106
The business combinations mentioned above were not significant to our operating results individually or in
aggregate, and thus pro forma results for 2020 and 2019 are not presented.
D.
GOODWILL AND OTHER INTANGIBLE ASSETS
As described in Note M — Segment Reporting, we re-organized around the markets we serve rather than
geography and therefore changed our segment structure effective January 1, 2020. As a result, we allocated goodwill to
the new segments using a relative fair value approach. In addition, we completed an assessment of any potential goodwill
impairment for all reporting units immediately prior to the reallocation and determined that no impairment existed. Further,
we have recast the goodwill and indefinite-lived intangible asset tables for the new segment structure. The changes in the
net carrying amount of goodwill by reporting segment for the years ended December 26, 2020 and December 28, 2019,
are as follows (in thousands):
Balance as of December 29, 2018
2019 Acquisitions
2019 Purchase Accounting Adjustments
Foreign Exchange, Net
Balance as of December 28, 2019
2020 Acquisitions
2020 Purchase Accounting Adjustments
2020 Impairments
Foreign Exchange, Net
Balance as of December 26, 2020
Retail
$ 55,509
2,589
Industrial Construction All Other Corporate
Total
$ 82,728
$ 7,234 $
$ 78,646
6,250
(3,620)
58,098
3,643
202
—
—
$ 61,943
81,276
6,549
2
—
—
$ 87,827
183
82,911
18,902
—
(11,485)
401
$ 90,729
17
7,251
4,441
—
—
2
$ 11,694 $
— $ 224,117
8,839
—
(3,620)
—
200
— 229,536
33,535
—
204
—
(11,485)
—
403
—
— $ 252,193
In the fourth quarter of 2020, we experienced significantly lower than expected operating results within the
commercial reporting unit of our construction segment. In conjunction with our planning process we also noted
expectations for lower customer demand for the foreseeable future. As a result, we revised our future cash flow projections
for this reporting unit and performed the goodwill impairment test by calculating the fair value of the reporting unit based
on its discounted estimated future cash flows. It was determined that the carrying value of the reporting unit exceeded its
fair value. Consequently, we recorded a goodwill impairment charge of $11.5 million, which represents the entire amount
of the goodwill in the reporting unit. As of the date of the most recent goodwill impairment test, which utilized data and
assumptions as of September 26, 2020, all other reporting units had fair values that were substantially in excess of their
carrying values.
42
Indefinite-lived intangible assets totaled $7.4 million as of December 26, 2020 and December 28, 2019 related to
the commercial unit within the construction segment, the international unit within the all other segment, and the
Deckorators unit within the retail segment.
The following amounts were included in other amortizable intangible assets, net as of December 26, 2020 and
December 28, 2019 (in thousands):
Non-compete agreements
Customer relationships
Licensing agreements
Patents
Tradename
Software
Total
2020
Accumulated
Assets
$ 4,847
80,343
4,589
965
8,019
505
$ 99,268
Amortization Net Value
(2,728) $ 2,119
$
63,322
(17,021)
—
(4,589)
456
(509)
5,896
(2,123)
459
(46)
$ (27,016) $ 72,252
Assets
2019
Accumulated
Amortization Net Value
(2,262) $ 2,830
38,005
221
493
6,764
—
$ 66,645 $ (18,332) $ 48,313
$ 5,092 $
48,084
4,589
914
7,966
—
(10,079)
(4,368)
(421)
(1,202)
—
Amortization is computed principally by the straight-line method over the estimated useful lives of the intangible
assets as follows:
Intangible Asset Type
Non-compete agreements
Customer relationship
Licensing agreements
Tradename (amortizable)
Software
Weighted Average
Estimated Useful Life Amortization Period
10.1 years
6.3 years
10 years
11.5 years
3.7 years
3 to 15 years
5 to 15 years
10 years
3 to 15 years
3 to 5 years
Amortization expense of intangibles totaled $8.7 million, $6.3 million and $6.4 million in 2020, 2019 and 2018,
respectively. The estimated amortization expense for intangibles for each of the five succeeding fiscal years is as follows
(in thousands):
2021
2022
2023
2024
2025
Thereafter
Total
E.
DEBT
$
$
12,074
11,759
11,018
10,795
7,900
18,706
72,252
On June 14, 2018, we entered into an unsecured Note Purchase Agreement under which we issued our 4.20%
Series 2018 C Senior Notes, due June 14, 2028, in the aggregate principal amount of $40 million and our 4.27%
Series 2018 D Senior Notes, due June 14, 2030, in the aggregate principal amount of $35 million. Proceeds from the sale
of the Series C Senior Notes and Series D Senior Notes were used to pay down our revolving credit facility.
43
On November 1, 2018, we entered into a five-year, $375 million unsecured revolving credit facility with a
syndicate of U.S. banks led by JPMorgan Chase Bank, N.A., as administrative agent and Wells Fargo Bank, N.A., as
syndication agent. The facilities include up to $40 million which may be advanced in the form of letters of credit, and up
to $100 million (U.S. dollar equivalent) which may be advanced in Canadian dollars, Australian dollars, pounds Sterling,
Euros and such other foreign currencies as may subsequently be agreed upon among the parties. This facility replaced our
$295 million unsecured revolving credit facility. Cash borrowings are charged interest based upon an index selected by
the Company, plus a margin that is determined based upon the index selected and upon the financial performance of the
Company and certain of its subsidiaries. We are charged a facility fee on the entire amount of the lending commitment, at
a per annum rate ranging from 12.5 to 30.0 basis points, also determined based upon our performance. The facility fee is
payable quarterly in arrears.
On August 10, 2020, we entered into an unsecured Note Purchase Agreement under which we issued our 3.04%
Series 2020 E Senior Notes, due August 10, 2032, in the aggregate principal amount of $50 million, our 3.08% Series
2020 F Senior Notes, due August 10, 2033, in the aggregate principal amount of $50 million, and our 3.15% Series 2020
G Senior Notes, due August 10, 2035, in the aggregate principal amount of $50 million. Proceeds from the sale of the
Series E, F and G Senior Notes have been used to fund working capital needs and the PalletOne, Inc. acquisition. Refer to
Note O, “Subsequent Events” for additional information.
Outstanding letters of credit extended on our behalf on December 26, 2020 and December 28, 2019 aggregated
$41.0 million and $37.3 million; respectively, which includes approximately $7.1 million and $9.8 million, respectively,
related to industrial development revenue bonds. We had an outstanding balance of $4.7 million and $4.0 million, which
includes foreign subsidiary borrowings, on the revolver at December 26, 2020, and December 28, 2019, respectively. After
considering letters of credit, we had $363.2 million and $361.2 million in remaining availability on the revolver on
December 26, 2020, and December 28, 2019, respectively. Letters of credit have one-year terms, include an automatic
renewal clause, and are charged an annual interest rate of 112.5 basis points, based upon our financial performance.
44
Long-term debt obligations are summarized as follows on December 26, 2020 and December 28, 2019 (amounts
in thousands):
Series 2020 Senior Notes E, due on August 10, 2032, interest payable semi-annually at
3.04%
Series 2020 Senior Notes F, due on August 10, 2033, interest payable semi-annually at
3.08%
Series 2020 Senior Notes G, due on August 10, 2035, interest payable semi-annually at
3.15%
Series 2018 Senior Notes C, due on June 14, 2028, interest payable semi-annually at 4.20%
Series 2018 Senior Notes D, due on June 14, 2030, interest payable semi-annually at 4.27%
Series 2012 Senior Notes Tranche A, due on December 17, 2022, interest payable semi-
annually at 3.89%
Series 2012 Senior Notes Tranche B, due on December 17, 2024, interest payable semi-
annually at 3.98%
Revolving credit facility totaling $375 million due on November 1, 2023, interest
payable monthly at a floating rate (2.54% on December 28, 2019)
Foreign subsidiary borrowings under revolving credit facility, due on November 1, 2023,
interest payable monthly at a floating rate (1.125% on December 26, 2020 and 1.88% on
December 28, 2019)
Series 1999 Industrial Development Revenue Bonds, due on August 1, 2029, interest
payable monthly at a floating rate (0.20% on December 26, 2020 and 1.14% on December
28, 2019)
Series 2000 Industrial Development Revenue Bonds, due on October 1, 2020, interest
payable monthly at a floating rate (1.57% on December 28, 2019)
Series 2002 Industrial Development Revenue Bonds, due on December 1, 2022, interest
payable monthly at a floating rate (0.22% on December 26, 2020 and 1.79% on December
28, 2019)
Finance leases and foreign affiliate debt
Less current portion
Less debt issuance costs
Long-term portion
2020
2019
$ 50,000
$
50,000
50,000
40,000
35,000
—
—
—
40,000
35,000
35,000
35,000
40,000
40,000
—
—
4,715
3,976
3,300
—
3,300
2,700
3,700
138
311,853
(100)
(146)
$ 311,607
3,700
174
163,850
(2,816)
(167)
$ 160,867
Financial covenants on the unsecured revolving credit facility and unsecured notes include minimum interest
coverage tests and a maximum leverage ratio. The agreements also restrict the amount of additional indebtedness we may
incur and the amount of assets which may be sold among other industry standard covenants. We were within all of our
lending requirements on December 26, 2020 and December 28, 2019.
On December 26, 2020, the principal maturities of long-term debt and finance lease obligations are as follows (in
thousands):
2021
2022
2023
2024
2025
Thereafter
Total
$
$
100
38,738
4,715
40,000
—
228,300
311,853
45
On December 26, 2020, the estimated fair value of our long-term debt, including the current portion, was $341.4
million, which was $29.5 million more than the carrying value. The estimated fair value is based on rates anticipated to be
available to us for debt with similar terms and maturities. We consider the valuations of our long-term debt, including the
current portion, to be Level 2 liabilities which rely on quoted prices in markets that are not active or observable inputs
over the full term of the liability.
F.
LEASES
We determine if an arrangement is a lease at inception. We lease certain real estate under non-cancelable operating
lease agreements with typical original terms ranging from one to ten years. We are required to pay real estate taxes and
other occupancy costs under certain leases, which are variable in nature and not included in the right of use asset or lease
liability. Certain leases carry renewal options of five to fifteen years. We believe that future leases will likely have similar
terms. We also lease motor vehicles, equipment, and an aircraft under operating lease agreements for periods of one to
ten years. We do not typically enter into leases with residual value guarantees. There were no restrictions or covenants
imposed by any lease agreements.
We believe finance leases have no significant impact to our consolidated balance sheet and income statement as of
December 26, 2020.
As of December 26, 2020, we have no leases that have not yet commenced that would significantly impact the
rights, obligations, and our financial position.
There were no lease transactions between related parties as of December 26, 2020.
The rates implicit in our leases are primarily not readily available. To determine the discount rate used to present
value the lease payments, we utilize the 7-year treasury note rate plus a blend of rate spreads associated with our revolver
and 10-12-year senior notes along with estimated spreads based on current market conditions. We feel the determined rate
is a reasonable representation of our lease population.
Lease costs under non-cancelable operating leases on December 26, 2020 and December 28, 2019 are as follows
(in thousands):
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease income
Total lease cost
2020
2019
$ 21,594 $ 20,771
110
1,484
(676)
$ 27,429 $ 21,689
2,863
3,985
(1,013)
The amounts paid for operating leases, included in the measurement of lease liabilities, were $20 million for both
years ended December 26, 2020 and December 28, 2019. In addition, right-of-use assets obtained in exchange for new
operating lease liabilities were approximately $12.8 million and $33.4 million, respectively, for the years ended
December 26, 2020 and December 29, 2019.
46
Future minimum payments under non-cancelable operating leases on December 26, 2020 are as follows (in
thousands):
2021
2022
2023
2024
2025
Thereafter
Total minimum lease payments
Less present value discount
Total lease liability
Operating
Leases
$
$
$
18,671
15,219
12,126
9,594
8,102
25,961
89,673
(11,615)
78,058
Rent expense was approximately $28.4 million, $29.9 million, and $28.1 million in 2020, 2019, and 2018,
respectively.
During the first quarter of 2018, we completed a sale and leaseback transaction related to one facility in Medley,
Florida. The sale price for the property was approximately $36 million and created a $7 million pre-tax gain, which was
entirely recognized in 2018. We leased back the facility for two years as it executes its long-term plan for Florida and the
Southeast region.
As of December 26, 2020 and December 28, 2019, the weighted average lease term for operating leases was 6.84
years and 7.29 years, respectively. Similarly, the weighted average discount rate for operating leases was 3.12% and
3.10%, respectively.
G.
DEFERRED COMPENSATION
We have a program whereby certain executives irrevocably elected to defer receipt of certain compensation in
1985 through 1988. Deferred compensation payments to these executives will commence upon their retirement. We
purchased life insurance on these executives, payable to us in amounts which, if assumptions made as to mortality
experience, policy dividends, and other factors are realized, will accumulate cash values adequate to reimburse us for all
payments for insurance and deferred compensation obligations. In the event cash values are not sufficient to fund such
obligations, the program allows us to reduce benefit payments to such amounts as may be funded by accumulated cash
values. Premiums payments, deferred compensation obligations, and accrued interest payments were funded through
policy and premium loans provided by the insurer. During 2019, we settled with the program participants and paid out the
remaining cash value due to them, with the exception of two participants who chose to take the settlement payment over
a five-year period. The deferred compensation liability related to the remaining participant payouts on the balance sheet
as of December 26, 2020 and December 28, 2019, was $0.2 million and $0.3 million, respectively. The investment in life
insurance contracts as of December 26, 2020 and December 28, 2019, was $13.3 million and $16.6 million, respectively.
We also maintain a non-qualified deferred compensation plan (the "Plan") for the benefit of senior management
employees who may elect to defer a portion of their annual bonus payments and salaries. The Plan provides investment
options similar to our 401(k) plan, including our stock. The investment in our stock is funded by the issuance of shares to
a Rabbi trust, and may only be distributed in kind. Assets held by the Plan totaled approximately $0.6 million and $1.1
million on December 26, 2020 and December 28, 2019, respectively, and are included in "Other Assets." Related
liabilities totaled $36.6 million and $33.1 million on December 26, 2020 and December 28, 2019, respectively, and are
included in "Other Liabilities" and "Shareholders’ Equity." Assets associated with the Plan are recorded at fair market
value. The related liabilities are recorded at fair market value, with the exception of obligations associated with investments
in our stock which are recorded at the market value on the date of deferral.
47
H.
COMMON STOCK
We maintain and administer our shareholder approved Employee Stock Purchase Plan ("Stock Purchase Plan").
The Stock Purchase Plan allows eligible employees to purchase shares of our stock at a share price equal to 85% of fair
market value on the purchase date. We have expensed the fair value of the compensation associated with these awards,
which approximates the discount. The amount of expense is nominal.
We maintain and administer our shareholder approved Directors’ Retainer Stock Plan ("Stock Retainer Plan").
The Stock Retainer Plan allows eligible members of the Board of Directors to defer the cash portion of their retainer and
committee fees and receive shares of our stock at the time of or following their retirement, disability or death. The number
of shares to be received is equal to the amount of the cash portion of their retainer and committee fees deferred multiplied
by 110%, divided by the fair market value of a share of our stock at the time of deferral. The number of units is increased
by the amount of dividends paid on our common stock. The units are immediately vested as of the grant date, since they
are considered payment for services rendered quarterly. We recognized expense for this plan of $1.8 million in 2020, $1.8
million in 2019, and $1.7 million in 2018. Effective January 1, 2017, this plan was amended to allow directors to defer
payment of the annual retainer paid in the form of our common stock. The number of shares to be received for their portion
of the retainer that is deferred is equal to the amount of shares plus the number of shares attributable to cash dividends
payable on those deferred shares.
Finally, we maintain and administer our shareholder approved Long Term Stock Incentive Plan (the "LTSIP”).
The LTSIP provides for the grant of stock options, stock appreciation rights, restricted stock, performance shares and other
stock-based awards.
Executive Stock Match awards are granted in the year following the requisite service period, which begins at the
beginning of each fiscal year, and fully vest on the fifth anniversary of the grant date.
There is no unrecognized compensation expense remaining for stock options in 2020, 2019, and 2018.
Below is a summary of common stock issuances for 2020 and 2019:
(in thousands, except per share data)
Share Issuance Activity
Shares issued under the employee stock purchase plan
Shares issued under the employee stock gift program
Shares issued under the director retainer stock program
Shares issued under the bonus plan
Shares issued under the executive stock match grants plan
Forfeitures
Total shares issued under stock grant programs
Shares issued under the deferred compensation plans
December 26, 2020
Common
Stock
35
$
Average
Share
Price
46.71
3
46
271
79
(9)
390
128
48.10
25.31
47.52
47.60
44.96
53.79
$
$
48
(in thousands, except per share data)
Share Issuance Activity
Shares issued under the employee stock purchase plan
Shares issued under the employee stock gift program
Shares issued under the director retainer stock program
Shares issued under the bonus plan
Shares issued under the executive stock match grants plan
Forfeitures
Total shares issued under stock grant programs
Shares issued under the deferred compensation plans
December 28, 2019
Common
Stock
34
$
Average
Share
Price
32.47
4
5
211
109
(19)
310
181
35.68
38.44
30.83
31.57
31.25
34.31
$
$
A summary of the nonvested restricted stock awards granted under the LTSIP is as follows:
Nonvested at December 30, 2017
Granted
Vested
Forfeited
Nonvested at December 29, 2018
Granted
Vested
Forfeited
Nonvested at December 28, 2019
Granted
Vested
Forfeited
Nonvested at December 26, 2020
Restricted
Awards
1,033,626
247,068
(107,865)
(12,750)
1,160,079
318,496
(224,894)
(50,786)
1,202,895
348,016
(177,790)
(9,327)
1,363,794
Weighted-
Average Grant
Date Fair Value
24.24
36.52
18.11
24.19
23.32
32.60
23.42
24.18
29.68
47.60
22.69
33.46
35.14 $
$
Weighted-
Unrecognized Average
Compensation Period to
Recognize
Expense
1.31 years
Expense
(in millions)
7.1
7.6
1.12 years
7.9
0.86 years
6.3
0.62 years
Under the Stock Purchase Plan and LTSIP, we recognized share-based compensation expense of $4.0 million,
$4.0 million, and $3.6 million and the related total income tax benefits of $1.0 million, $0.8 million, and $0.7 million in
2020, 2019 and 2018, respectively.
For the year-ended December 26, 2020, we determined that $25 million of share-based bonus awards,
representing 465,830 shares, will be awarded to qualified employees as it relates to the company’s 2020 performance and
granted in 2021. In addition to the share-based bonus awards, certain employees are eligible to receive performance share
units equivalent to $1 million, or 22,567 shares of stock, if certain performance metrics are achieved after three years.
These awards fully vest three years from the grant date. As of December 26, 2020, we recognized approximately $4 million
of compensation expense related to these awards. Awards granted prior to 2020, generally vest after a period of three or
five years from the grant date.
In 2020, 2019 and 2018, cash received from share issuances under our plans was $1.4 million, $1.1 million and
$1.0 million, respectively.
49
On November 14, 2001, the Board of Directors approved a share repurchase program (which succeeded a previous
program) allowing us to repurchase up to 2.5 million shares of our common stock. On October 14, 2010, our Board
authorized an additional 2 million shares to be repurchased under our existing share repurchase program. We repurchased
756,397 shares in 2020 and no shares under this program in 2019. As of December 26, 2020, the cumulative total
authorized shares available for repurchase is approximately 1.1 million shares.
I.
RETIREMENT PLANS
We have a profit sharing and 401(k) plan for the benefit of substantially all of our employees, excluding the
employees of certain wholly-owned subsidiaries. Amounts contributed to the plan are made at the discretion of the Board
of Directors. We matched 25% of employee contributions in 2020, 2019, and 2018, on a discretionary basis, totaling $7.2
million, $6.5 million, and $3.4 million respectively. Included within the total employee matched contribution was an
additional matched contribution for hourly employees of $2.9 million and $2.6 million for 2020 and 2019, respectively,
based on meeting certain performance goals during those years. The basis for matching contributions may not exceed the
lesser of 6% of the employee’s annual compensation or the IRS limitation.
We maintain a retirement plan for certain officers of the Company, excluding our CEO, (who has at least 20 years
of service with the Company and at least 10 years of service as an officer) whereby we will pay, upon retirement, benefits
totaling 150% of the officer’s highest base salary in the three years immediately preceding separation from service plus
health care benefits for a specified period of time if certain eligibility requirements are met. Approximately $11.8 million
and $10.6 million are accrued in “Other Liabilities” for this plan at December 26, 2020 and December 28, 2019,
respectively.
J.
INCOME TAXES
Income tax provisions for the years ended December 26, 2020, December 28, 2019, and December 29, 2018 are
summarized as follows (in thousands):
Currently Payable:
Federal
State and local
Foreign
Net Deferred:
Federal
State and local
Foreign
Total income tax expense
The components of earnings before income taxes consist of the following:
U.S.
Foreign
Total
2020
2019
2018
$ 59,055 $ 35,267
10,071
5,834
51,172
16,709
8,601
84,365
$ 31,492
7,544
5,527
44,563
2,292
(1,518)
1,962
2,736
6,895
805
(602)
7,098
$ 87,101 $ 58,270
2,965
(522)
(1,565)
878
$ 45,441
2020
2019
$ 308,167 $ 220,532
20,142
$ 340,983 $ 240,674
32,816
2018
$ 180,261
17,592
$ 197,853
50
The effective income tax rates are different from the statutory federal income tax rates for the following reasons:
Statutory federal income tax rate
State and local taxes (net of federal benefits)
Effect of noncontrolling owned interest in earnings of partnerships
Tax credits, including foreign tax credit
Change in uncertain tax positions reserve
Other permanent differences
Other, net
Impact of Tax Act and reduction of corporate tax rate
Effective income tax rate
2020
21.0 %
3.4
n/a
(0.9)
(0.1)
0.6
1.5
n/a
25.5 %
2019
21.0 %
3.9
(0.1)
(1.3)
(0.1)
0.5
0.3
n/a
24.2 %
2018
21.0 %
3.8
(0.1)
(1.6)
0.1
0.6
(0.7)
(0.1)
23.0 %
Temporary differences which give rise to deferred income tax assets and (liabilities) on December 26, 2020 and
December 28, 2019 are as follows (in thousands):
Employee benefits
Lease liability
Net operating loss carryforwards
Foreign subsidiary capital loss carryforward
Other tax credits
Inventory
Reserves on receivables
Accrued expenses
Other, net
Gross deferred income tax assets
Valuation allowance
Deferred income tax assets
Depreciation
Intangibles
Right of use assets
Deferred income tax liabilities
Net deferred income tax liability
2020
$ 23,236
19,376
6,463
527
391
1,633
1,630
3,071
8,483
64,810
(4,044)
60,766
(41,403)
(22,840)
(19,376)
(83,619)
2019
$ 22,420
20,255
6,411
519
620
993
1,266
2,318
3,159
57,961
(2,447)
55,514
(34,001)
(21,375)
(20,255)
(75,631)
$ (22,853) $ (20,117)
As of December 26, 2020, we had federal, state and foreign net operating loss carryforwards of $6.5 million and
state tax credit carryforwards of $0.4 million, which will expire at various dates.
The NOL and credit carryforwards expire as follows:
Net Operating Losses
Tax Credits
2021 - 2025
2026 - 2030
2031 - 2035
2036 - 2040
Thereafter
Total
U.S.
State
86
454
961
1,048
$ — $
—
—
1,405
—
$ 1,405
—
$ 2,549
Foreign U.S.
$
1,271
79
92
532
State
535 $ — $ 391
—
—
—
—
—
—
—
—
$ 2,509 $ — $ 391
As of December 26, 2020, we believe that it is more likely than not that the benefit from certain state and foreign
NOL carryforwards will not be realized. In recognition of this risk, we have provided a valuation allowance of $3.5 million
against the various NOLs. Furthermore, there is a valuation allowance of $0.5 million against a capital loss carryforward
we have for a wholly-owned subsidiary, UFP Canada, Inc. Based upon the business activity and the nature of the assets of
51
this subsidiary, our ability to realize a future benefit from this carryforward is doubtful. The capital loss has an unlimited
carryforward and therefore will not expire unless there is a change in control of the subsidiary.
K.
ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES
ASC 740, Income Taxes (“ASC 740”) clarifies the accounting for income taxes by prescribing the minimum
recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740 also
provides guidance on derecognition, measurement, classification, interest and penalties, and disclosure requirements.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
Gross unrecognized tax benefits beginning of year
Increase in tax positions for prior years
Increase in tax positions for current year
Lapse in statute of limitations
Gross unrecognized tax benefits end of year
2020
2019
$ 4,166 $ 4,378
(129)
768
(851)
$ 3,892 $ 4,166
(82)
730
(922)
2018
$ 4,000
(366)
1,326
(582)
$ 4,378
Our effective tax rate would have been affected by the unrecognized tax benefits had this amount been recognized
as a reduction to income tax expense.
We recognized interest and penalties for unrecognized tax benefits in our provision for income taxes. The liability
for unrecognized tax benefits included accrued interest and penalties of $0.5 million for each of the years December 26,
2020, December 28, 2019, and December 29, 2018.
We file income tax returns in the United States and in various state, local and foreign jurisdictions. The federal
and a majority of state and foreign jurisdictions are no longer subject to income tax examinations for years before 2017.
A number of routine state and local examinations are currently ongoing. Due to the potential for resolution of state
examinations, and the expiration of various statutes of limitation, and new positions that may be taken, it is reasonably
possible that the amounts of unrecognized tax benefits could change in the next twelve months is $1.3 million.
L.
COMMITMENTS, CONTINGENCIES, AND GUARANTEES
We are self-insured for environmental impairment liability, including certain liabilities which are insured through
a wholly owned subsidiary, Ardellis Insurance Ltd., a licensed captive insurance company.
We own and operate a number of facilities throughout the United States that chemically treat lumber products. In
connection with the ownership and operation of these and other real properties, and the disposal or treatment of hazardous
or toxic substances, we may, under various federal, state, and local environmental laws, ordinances, and regulations, be
potentially liable for removal and remediation costs, as well as other potential costs, damages, and expenses.
Environmental reserves, calculated with no discount rate, have been established to cover remediation activities at wood
preservation facilities in Stockertown, PA; Elizabeth City, NC; and Auburndale, FL. In addition, a reserve was established
for our facility in Thornton, CA to remove certain lead containing materials which existed on the property at the time of
purchase.
On a consolidated basis, we have reserved approximately $1.9 million and $2.0 million on December 26, 2020
and December 28, 2019, respectively, representing the estimated costs to complete future remediation efforts. These
amounts have not been reduced by an insurance receivable.
In addition, on December 26, 2020, we were parties either as plaintiff or defendant to a number of lawsuits and
claims arising through the normal course of our business. In the opinion of management, our consolidated financial
statements will not be materially affected by the outcome of these contingencies and claims.
52
On December 26, 2020, we had outstanding purchase commitments on commenced capital projects of
approximately $22.8 million.
We provide a variety of warranties for products we manufacture. Historically, warranty claims have not been
material. We distribute products manufactured by other companies, some of which are no longer in business. While we do
not warrant these products, we have received claims as a distributor of these products when the manufacturer no longer
exists or has the ability to pay. Historically, these costs have not had a material effect on our consolidated financial
statements.
As part of our operations, we supply building materials and labor to site-built construction projects or we jointly
bid on contracts with framing companies for such projects. In some instances we are required to post payment and
performance bonds to insure the project owner that the products and installation services are completed in accordance with
our contractual obligations. We have agreed to indemnify the surety for claims made against the bonds. As of December 26,
2020, we had approximately $15.4 million in outstanding payment and performance bonds for open projects. We had
approximately $5.2 million in payment and performance bonds outstanding for completed projects which are still under
warranty.
On December 26, 2020, we had outstanding letters of credit totaling $41.0 million, primarily related to certain
insurance contracts and industrial development revenue bonds described further below.
In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers to guarantee our
performance under certain insurance contracts. We currently have irrevocable letters of credit outstanding totaling
approximately $33.9 million for these types of insurance arrangements. We have reserves recorded on our balance sheet,
in accrued liabilities, that reflect our expected future liabilities under these insurance arrangements.
We are required to provide irrevocable letters of credit in favor of the bond trustees for all industrial development
revenue bonds that have been issued. These letters of credit guarantee principal and interest payments to the bondholders.
We currently have irrevocable letters of credit outstanding totaling approximately $7.1 million related to our outstanding
industrial development revenue bonds. These letters of credit have varying terms but may be renewed at the option of the
issuing banks.
Certain wholly owned domestic subsidiaries have guaranteed the indebtedness of UFP Industries, Inc. in certain
debt agreements, including the Series 2012, 2018 and 2020 Senior Notes and our revolving credit facility. The maximum
exposure of these guarantees is limited to the indebtedness outstanding under these debt arrangements and this exposure
will expire concurrent with the expiration of the debt agreements.
We did not enter into any new guarantee arrangements during 2020 which would require us to recognize a liability
on our balance sheet.
M.
SEGMENT REPORTING
ASC 280, Segment Reporting (“ASC 280”), defines operating segments as components of an enterprise about
which separate financial information is available that is evaluated regularly by the chief operating decision maker in
deciding how to allocate resources and in assessing performance.
We operate manufacturing, treating and distribution facilities internationally, but primarily in the United States.
Effective January 1, 2020, we re-organized around the markets we serve rather than geography. The prior periods have
been recast to reflect the new segment structure. The business segments align with the following markets: UFP Retail
Solutions, UFP Construction and UFP Industrial. This change allows for a more specialized and consistent sales approach
among Company operations, more efficient use of resources and capital, and quicker introduction of new products and
services. We manage the operations of our 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 our Retail, Industrial, and
Construction segments. One customer, The Home Depot, accounted for approximately 24% of our total net sales in fiscal
2020 and 19% in 2019 and 2018.
53
The exception to this market-centered reporting and management structure is our International segment, which
comprises our Mexico, Canada, Europe, and Australia operations and sales and buying offices in other parts of the world
and our Ardellis segment, which represents our wholly owned fully licensed captive insurance company based in Bermuda.
Our International and Ardellis segments do not meet the quantitative thresholds in order to be separately reported and
accordingly, the International and Ardellis segments have been aggregated in the “All Other” segment for reporting
purposes.
“Corporate” includes purchasing, transportation and administrative functions that serve our operating segments.
Operating results of Corporate primarily consists of over (under) allocated costs. The operating results of UFP Real Estate,
Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns and leases transportation equipment,
are also included in the Corporate column. An inter-company lease charge is assessed to our operating segments for the
use of these assets at fair market value rates. Total assets of the Corporate column include unallocated cash and cash
equivalents, certain prepaid assets, certain property, equipment and other assets pertaining to the centralized activities of
Corporate, UFP Real Estate, Inc., and UFP Transportation Ltd.
Net sales to outside customers
Intersegment net sales
Interest expense (income)
Amortization expense
Depreciation expense
Segment earnings before income
taxes
Segment assets
Capital expenditures
Net sales to outside customers
Intersegment net sales
Interest expense
Amortization expense
Depreciation expense
Segment earnings before income
taxes
Segment assets
Capital expenditures
Retail
$ 2,167,122
142,839
2
1,482
11,675
Industrial
$ 1,072,117
45,217
22
4,159
15,163
2020
All
Construction Other
Corporate
Total
$ 1,695,684
68,294
—
2,152
12,123
$ 217,094 $
283,689
90
877
1,619
1,981 $ 5,153,998
—
9,311
8,716
63,964
(540,039)
9,197
46
23,384
155,364
510,464
16,277
83,430
416,487
21,141
69,092
510,972
16,902
38,333
196,856
2,258
(5,236)
770,112
32,604
340,983
2,404,891
89,182
Retail
$ 1,498,710
135,705
—
1,380
11,041
Industrial
$ 1,085,635
45,010
108
3,034
14,340
2019
All
Construction Other
Corporate
Total
$ 1,637,156
56,116
16
1,164
11,465
$ 193,785 $
200,426
97
747
1,532
723 $ 4,416,009
—
8,700
6,325
60,494
(437,257)
8,479
—
22,116
61,708
402,221
15,502
82,913
377,329
20,134
82,407
522,638
16,097
22,025
136,990
2,150
(8,379)
450,299
31,050
240,674
1,889,477
84,933
Note: Allocations of corporate expenses in 2019 were modified to align with the methodology used to allocate corporate expenses in the current year.
Net sales to outside customers
Intersegment net sales
Interest expense
Amortization expense
Depreciation expense
Segment earnings before income
taxes
Segment assets
Capital expenditures
Retail
$ 1,512,477
125,310
1
1,038
10,029
Industrial
$ 1,050,945
39,806
191
3,055
13,026
2018
All
Construction Other
Corporate
Total
$ 1,705,016
50,465
202
1,443
10,414
$ 219,920 $
226,053
225
857
1,391
822 $ 4,489,180
—
8,893
6,393
54,949
(441,634)
8,274
—
20,089
52,211
401,012
17,497
59,403
370,386
22,724
71,234
512,670
18,168
18,031
143,614
2,427
(3,026)
219,866
35,046
197,853
1,647,548
95,862
54
Note: Allocations of corporate expenses in 2018 were modified to align with the methodology used to allocate corporate expenses in the current
Information regarding principal geographic areas was as follows (in thousands):
2020
2019
2018
Long-Lived
Tangible
Assets
Net Sales
$ 469,605 $ 4,382,356
106,824
$ 506,483 $ 4,489,180
36,878
Long-Lived
Tangible
Assets
$ 342,326
34,312
$ 376,638
United States
Foreign
Total
Net Sales
$ 5,022,014
131,984
$ 5,153,998
Long-Lived
Tangible
Assets
$ 478,325
36,380
$ 514,705
Net Sales
$ 4,308,618
107,391
$ 4,416,009
55
The following table presents, for the periods indicated, our disaggregated net sales (in thousands) by business
unit for each segment and our percentage of value-added and commodity-based sales to total net sales by segment.
Year Ended
December 26, December 28, December 29,
2019
2018
2020
Retail
Deckorators
Prowood
Outdoor Essentials
UFP Edge
Dimensions
E-Commerce
Other
Total Retail
Industrial
North Industrial
Southeast Industrial
Southwest Industrial
West Industrial
Protective Packaging
Total Industrial
Construction
Factory Built
Site Built
Commercial
Concrete Forming
Total Construction
All Other
Corporate
Total Net Sales
Value-Added
Retail
Industrial
Construction
All Other and Corporate
Total
Commodity-Based
Retail
Industrial
Construction
All Other and Corporate
Total
$ 219,930 $ 185,221 $
136,517
845,994
227,799
85,176
57,403
1,210
158,378
$ 2,167,122 $ 1,498,710 $ 1,512,477
1,215,201
299,684
114,987
88,351
3,716
225,253
786,720
227,767
95,608
52,553
1,688
149,153
$ 385,132 $ 376,515 $
351,345
238,667
237,671
209,049
14,213
$ 1,072,117 $ 1,085,635 $ 1,050,945
255,419
241,774
197,686
14,241
229,316
238,643
206,022
13,004
$ 597,017 $ 479,927 $
561,137
713,729
269,706
160,444
$ 1,695,684 $ 1,637,156 $ 1,705,016
708,767
290,785
157,677
725,899
221,988
150,780
$ 217,094 $ 193,785 $
219,920
$
1,981 $
723 $
822
$ 5,153,998 $ 4,416,009 $ 4,489,180
53.8%
64.7%
76.3%
75.6%
64.3%
46.2%
35.3%
23.7%
24.4%
35.7%
57.8%
66.2%
81.4%
75.8%
69.3%
42.2%
33.8%
18.6%
24.2%
30.7%
54.0%
60.5%
76.5%
65.9%
64.6%
46.0%
39.5%
23.5%
34.1%
35.4%
56
Net sales
Gross profit
Net earnings
Net earnings
attributable to
controlling
interest
Basic earnings
per share
Diluted
earnings per
share
N.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table sets forth selected financial information for all of the quarters, consisting of 13 weeks during
the years ended December 26, 2020 and December 28, 2019, respectively, (in thousands, except per share data):
First
Second
Third
Fourth
2020
2019
2020
$ 1,032,062 $ 1,015,125 $ 1,242,001
204,931
69,694
154,267
36,002
167,236
40,570
2019
$ 1,239,817
186,726
55,145
2020
$ 1,486,227
241,074
78,861
2019
2020
$ 1,163,026 $ 1,393,708
187,055
64,757
187,270
52,581
2019
$ 998,041
157,255
38,676
40,159
35,540
66,463
54,515
77,204
51,859
62,952
37,736
0.65
0.58
1.08
0.65
0.58
1.08
0.88
0.88
1.25
1.25
0.84
1.02
0.61
0.84
1.02
0.61
O.
SUBSEQUENT EVENTS
On December 28, 2020, we closed on an agreement to purchase 100 percent of the equity of PalletOne, Inc., for
approximately $232 million plus $21 million for certain investments in capital projects. The agreement also incorporates
a purchase price adjustment based on the actual amount of net working capital at close compared to a pre-determined
target. Based in Bartow, Florida, PalletOne is a leading manufacturer of new pallets in the U.S., with 17 pallet
manufacturing facilities in the southern and eastern regions of the country. The company also supplies other specialized
industrial packaging, including custom bins and crates, and its Sunbelt Forest Products subsidiary operates five pressure-
treating facilities in the Southeastern U.S. At this time the net tangible assets and intangible assets acquired cannot be
disclosed as these are pending final valuations. Additionally, initial estimates have been made for PalletOne's identifiable
intangible and goodwill allocations and deferred tax, however finalization will be completed in 2021.
On February 18, 2021, our credit agreement was amended to increase the availability from $375 million to $550
million by exercising the accordion feature in the original agreement.
On February 28, 2021, we closed on an agreement to purchase 100 percent of the equity of J.C. Gilmore Pty Ltd
located in Australia for approximately $2.4 million. This transaction adds a wide portfolio of consumable packaging to
certain industrial packaging products and expands the companies’ customer base throughout Australia. At this time the net
tangible assets and intangible assets acquired cannot be disclosed as these are pending final valuations. Additionally, initial
estimates have been made for J.C. Gilmore Pty Ltd 's identifiable intangible and goodwill allocations and deferred tax,
however finalization will be completed in 2021.
57
MARKET INFORMATION FOR OUR COMMON STOCK
Our common stock trades on The Nasdaq Stock Market (“NASDAQ”) under the symbol UFPI.
STOCK PERFORMANCE GRAPH
The following graph depicts the cumulative total return on our common stock compared to the cumulative total
return on the indices for The Nasdaq Stock Market (all U.S. companies) and an industry peer group we selected. The graph
assumes an investment of $100 on December 26, 2015, and reinvestment of dividends in all cases.
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2020
300.00
250.00
200.00
150.00
100.00
50.00
0.00
12/26/2015
12/31/2016
12/30/2017
12/29/2018
12/28/2019
12/26/2020
UFP Industries, Inc.
NASDAQ Stock Market (US Companies)
Peer Group
The companies included in our self-determined industry peer group are as follows:
American Woodmark Corporation
Greif, Inc.
BlueLinx Holdings, Inc.
BMC Stock Holdings, Inc.
Boise Cascade Company
Builders FirstSource, Inc.
Cornerstone Building Brands, Inc.
Gibraltar Industries, Inc.
Louisiana-Pacific Corporation
Masco Corporation
Simpson Manufacturing Company, Inc.
Sonoco Products Company
Trex Company, Inc.
WestRock Company
The returns of each company included in the self-determined peer group are weighted according to each respective
company’s stock market capitalization at the beginning of each period presented in the graph above. In determining the
members of our peer group, we considered companies who selected UFPI as a member of their peer group, and looked for
similarly sized companies or companies that are a good fit with the markets we serve.
58
BOARD OF DIRECTORS
SECTION 16 OFFICERS
Directors and Executive Officers
William G. Currie
Chairman of the Board
UFP Industries, Inc.
Matthew J. Missad
Chief Executive Officer
UFP Industries, Inc.
Thomas W. Rhodes
President and Chief Executive Officer
TWR Enterprises, Inc.
Matthew J. Missad
Chief Executive Officer
Patrick M. Webster
President and Chief Operating Officer
Michael R. Cole
Chief Financial Officer and Treasurer
Bruce A. Merino
Former Senior Vice President of Merchandising
The Home Depot
Allen T. Peters
President and Chief Operating Officer
UFP Retail Solutions, LLC
Mary Tuuk Kuras
President and Chief Executive Officer
Grand Rapids Symphony
Brian C. Walker
Partner-Strategic Leadership
Huron Capital
Michael G. Wooldridge
Partner
Varnum, LLP
Joan A. Budden
Former President
Priority Health
Benjamin J. McLean
Chief Executive Officer
Ruan Transportation Management Systems, Inc.
Patrick Benton
President
UFP Construction, LLC
Scott A. Worthington
President
UFP Industrial, LLC
Scott T. Bravata
Vice President of Accounting
David A. Tutas
Chief Compliance Officer
General Counsel
59
ANNUAL MEETING
Shareholder Information
The 2021 Annual Shareholder’s Meeting of UFP Industries, Inc. will be held virtually at 8:30 a.m. on April 21, 2021.
SHAREHOLDER INFORMATION
Shares of our stock are traded under the symbol UFPI on the NASDAQ Stock Market. Our 10-K report, filed with the
Securities and Exchange Commission, will be provided free of charge to any shareholder upon written request. For more
information contact:
Investor Relations Department
UFP Industries, Inc.
2801 East Beltline NE
Grand Rapids, MI 49525
Telephone: (616) 364-6161
Web: www.ufpi.com
SECURITIES COUNSEL
Varnum, LLP
Grand Rapids, MI
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Deloitte & Touche LLP
Grand Rapids, MI
TRANSFER AGENT/SHAREHOLDER INQUIRIES
American Stock Transfer & Trust Company serves as the transfer agent for the Corporation. Inquiries relating to stock
transfers, changes of ownership, lost or stolen stock certificates, changes of address, and dividend payments should be
addressed to:
American Stock Transfer & Trust Co.
6201 15th Ave
Brooklyn, NY 11219
Telephone: (800) 937-5449
UFP INDUSTRIES®, INC., CORPORATE HEADQUARTERS
2801 East Beltline NE
Grand Rapids, MI 49525
Telephone: (616) 364-6161
Facsimile: (616) 364-5558
60
LIST OF REGISTRANT'S SUBSIDIARIES AND AFFILIATES
EXHIBIT 21
UFP Gear, LLC
UFP Global Holdings Limited
UFP Gordon, LLC
UFP Grand Rapids, LLC
UFP Grandview, LLC
UFP Granger, LLC
UFP Great Lakes, LLC
UFP Gulf, LLC
UFP Haleyville, LLC
UFP Hamilton, LLC
UFP Harrisonville, LLC
UFP Hartford, LLC
UFP Hillsboro, LLC
UFP Industrial, LLC
UFP Industries, Inc.
UFP International Employment Services, LLC
UFP International, LLC
UFP Lansing, LLC
UFP Londonderry, LLC
Delaware
Delaware
Delaware
Delaware
Michigan
Florida
Bermuda
Michigan
Michigan
Italy
Michigan
Illinois
Mexico
Indiana
Idaho
China
India
Netherlands UFP Janesville, LLC
Hong Kong UFP Kyle, LLC
Hong Kong UFP Lafayette, LLC
Delaware
Delaware
England/WalesUFP Magna, LLC
Delaware
Delaware
Delaware
Delaware
Delaware
Mexico
China
Australia
Australia
Texas
Michigan
Michigan
Mexico
Texas
Mexico
Mexico
Chile
Puerto Rico UFP Orlando, LLC
Michigan
Michigan
Delaware
Australia
11032 Tidewater Trail, LLC
234 Springs Rd., LLC
2875 Needmore Rd. LLC
621 Hall St., LLC
Aljoma Holding Company, LLC
Aljoma Lumber, Inc.
Ardellis Insurance Ltd.
Caliper Building Systems, LLC
Deckorators, Inc.
Enwrap Logistic and Packaging S.r.l.
Eovations, LLC
Fire Retardant Chemical Technologies, LLC
Forestal Universal SA de CV
Horizon Terra, Incorporated
Idaho Western, Inc.
idX (China) Display System Co., Ltd.
idX (India) Display Private Ltd.
idX Amsterdam B.V.
idX Asia Fixtures Limited
idX Asia Trading Limited
idX Chicago, LLC
idX Corporation
idX Corporation London Limited
idX Dallas, LLC
idX Dayton, LLC
idX Holdings, Inc.
idX Impressions, LLC
idX Los Angeles, LLC
idX Mexico, S. de R.L. de C.V.
idX Shanghai Trading Company Ltd.
Integra International Pty Ltd
Integra Packaging Pty Ltd
Landura, LLC
Metaworld Technologies, LLC
North Atlantic Framing, LLC
Norpal S. de R.L. de C.V.
Pinelli Lumber, Inc.
Pinelli Universal TKT, S de R.L. de C.V.
Pinelli Universal, S de R.L. de C.V.
Pinelli Universal Chile S.A.
PR Distribution, LLC
Shawnlee Construction, LLC
Shepardville Construction, LLC
Store Fixtures Canada Holdings, Inc.
The UBEECO Group Pty Ltd
Tibasa Universal Forest Products S. de R.L. de C.V.Mexico
Tresstar, LLC
Triangle Systems, Inc.
U.F.P. Mexico Holdings, S. de R.L.de CV
UFP Ashburn, LLC
UFP Atlantic Division, LLC
UFP Atlantic, LLC
UFP Auburndale, LLC
UFP Aurora, LLC
UFP Australia Pty Ltd
UFP Australia Real Estate Pty Ltd
UFP Barnesville, LLC
UFP Belchertown, LLC
UFP Berlin, LLC
UFP Biscoe, LLC
Michigan
Delaware
Mexico
Michigan
Michigan
Michigan
Michigan
Michigan
Australia
Australia
Michigan
Michigan
Michigan
Michigan
UFP Packaging, LLC
UFP Palm Beach, LLC
UFP Parker, LLC
UFP Purchasing, Inc.
UFP Ranson, LLC
UFP Real Estate, LLC
UFP Retail, LLC
UFP Riverside, LLC
UFP RMS, LLC
UFP Rockingham, LLC
UFP Rockwell, LLC
UFP Saginaw, LLC
UFP Salisbury, LLC
UFP San Antonio, LLC
UFP Sauk Rapids, LLC
UFP Schertz, LLC
UFP Shawnee, LLC
UFP Site Built, LLC
UFP Southeast, LLC
UFP McMinnville, LLC
UFP Mexico Embalaje y Distribution, S. de R.L. de C. V.Mexico
UFP Mexico Investment, LLC
UFP Mid-Atlantic, LLC
UFP Milwaukee, LLC
UFP Minneota, LLC
UFP Morristown, LLC
UFP Moultrie, LLC
UFP Mountain West, LLC
UFP NAC, LLC
UFP Nappanee, LLC
UFP New London, LLC
UFP New Waverly, LLC
UFP New Windsor, LLC
UFP New York, LLC
UFP North Atlantic, LLC
UFP Northeast, LLC
Michigan
England/Wales
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Wisconsin
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
UFP Blanchester, LLC
UFP Bonner, LLC
UFP Caldwell, LLC
UFP Cameron, LLC
UFP Canada, Inc.
UFP Central Plains, LLC
UFP Chandler, LLC
UFP Chicago, LLC
UFP Concrete Forming Solutions, Inc.
UFP Construction, LLC
UFP Dallas, LLC
UFP Distribution, LLC
UFP Eagan, LLC
UFP East Central, LLC
UFP Eastern Division, Inc.
UFP Eatonton, LLC
UFP Elizabeth City, LLC
UFP Elkwood, LLC
UFP Far West, LLC
UFP Financial Services, Inc.
UFP Folkston, LLC
UFP Franklinton, LLC
UFP Gainesville, LLC
Michigan
Michigan
Michigan
Michigan
Canada
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
UFP Southwest, LLC
UFP Stafford, LLC
UFP Stockertown, LLC
UFP Tampa, LLC
UFP Thomaston, LLC
UFP Thornton, LLC
UFP Transportation, Inc.
UFP Union City, LLC
UFP Ventures II, Inc.
UFP Ventures, Inc.
UFP Warranty Corporation
UFP Warrens, LLC
UFP Washington, LLC
UFP Western Division, Inc.
UFP White Bear Lake, LLC
UFP Windsor, LLC
UFP Woodburn, LLC
United Lumber & Reman, LLC
Universal Forest Products Texas, LLC
Universal Showcase ULC
Upshur Forest Products, LLC
Yard & Home, LLC
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Michigan
Alabama
Michigan
Alberta
Michigan
Michigan
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in Registration Statement Nos. 33-81128, 333-60630, 333-150345, 333-
156596, and 33-84632 on Form S-8 of our reports dated March 3, 2021, relating to the consolidated financial statements
of UFP Industries Inc, (formerly Universal Forest Products, Inc.) and subsidiaries (the “Company”), and the
effectiveness of the Company’s internal control over financial reporting, appearing in this Annual Report on Form 10-K
of the Company for the year ended December 26, 2020.
Exhibit 23
/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
March 3, 2021
Exhibit 31(a)
UFP Industries, Inc.
Certification
I, Matthew J. Missad, certify that:
1. I have reviewed this report on Form 10-K of UFP Industries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the Audit Committee of registrant's Board of
Directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date:
March 3, 2021
/s/ Matthew J. Missad
Matthew J. Missad
Chief Executive Officer and
Principal Executive Officer
Exhibit 31(b)
UFP Industries, Inc.
Certification
I, Michael R. Cole, certify that:
1. I have reviewed this report on Form 10-K of UFP Industries, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as
of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial
reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant's internal control over financial reporting that
occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant's auditors and the Audit Committee of registrant's Board of
Directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant's ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant's internal control over financial reporting.
Date:
March 3, 2021
/s/ Michael R. Cole
Michael R. Cole
Chief Financial Officer,
Principal Financial Officer and
Principal Accounting Officer
CERTIFICATE OF THE
CHIEF EXECUTIVE OFFICER OF
UFP INDUSTRIES, INC.
Exhibit 32(a)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350):
I, Matthew J. Missad, Chief Executive Officer of UFP Industries, Inc., certify, to the best of my knowledge and
belief, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that:
(1) The report on Form 10-K for the year ended December 26, 2020, which this statement accompanies,
fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in this report on Form 10-K for the period ended December 26, 2020 fairly
presents, in all material respects, the financial condition and results of operations of Universal Forest Products, Inc.
Date: March 3, 2021
UFP INDUSTRIES, INC.
By: /s/ Matthew J. Missad
Matthew J. Missad
Its: Chief Executive Officer and
Principal Executive Officer
The signed original of this written statement required by Section 906, or any other document authenticating,
acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to UFP Industries, Inc. and will be retained by UFP
Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
CERTIFICATE OF THE
CHIEF FINANCIAL OFFICER OF
UFP INDUSTRIES, INC.
Exhibit 32(b)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350):
I, Michael R. Cole, Chief Financial Officer of UFP Industries, Inc., certify, to the best of my knowledge and
belief, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350) that:
(1) The report on Form 10-K for the period ended December 26, 2020, which this statement accompanies,
fully complies with requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in this report on Form 10-K for the period ended December 26, 2020 fairly
presents, in all material respects, the financial condition and results of operations of UFP Industries, Inc.
Date: March 3, 2021
UFP INDUSTRIES, INC.
By: /s/ Michael R. Cole
Michael R. Cole
Its: Chief Financial Officer,
Principal Financial Officer and
Principal Accounting Officer
The signed original of this written statement required by Section 906, or any other document authenticating,
acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this
written statement required by Section 906, has been provided to UFP Industries, Inc. and will be retained by UFP
Industries, Inc. and furnished to the Securities and Exchange Commission or its staff upon request.
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF
THE SECURITIES EXCHANGE ACT OF 1934
Exhibit 4(b)
The following is a brief description of the common stock of UFP Industries, Inc. (the “Company”). This summary does not
purport to be complete in all respects and is subject to and qualified in its entirety by reference to the Company’s Restated and Amended
Articles of Incorporation (the "Articles of Incorporation") and Amended Bylaws (the "Bylaws"), each of which are filed as exhibits to
the Annual Report on Form 10-K of which this Exhibit 4(b) is a part.
Authorized Capital Stock
The Company’s authorized capital stock consists of 80,000,000 shares of common stock and 1,000,000 shares of preferred
stock. As of December 26, 2020, there were no shares of preferred stock outstanding.
Dividend and Liquidation Rights
Subject to the prior rights of the holders of shares of preferred stock that may be issued and outstanding, if any, the holders of
common stock are entitled to receive:
dividends when, as, and if declared by the Company’s Board of Directors out of funds legally available for the payment
of dividends; and
in the event of dissolution of the Company, to share ratably in all assets remaining after payment of liabilities and
satisfaction of the liquidation preferences, if any, of then outstanding shares of preferred stock, as provided in the Articles
of Incorporation.
Voting Rights
Each holder of common stock is entitled to one vote for each share held of record on all matters presented to a vote at a
shareholders meeting, including the election of directors. Holders of common stock have no cumulative voting rights.
The Company’s Articles of Incorporation provide that the Company’s Board of Directors be divided into three classes of nearly
equal size, with the classes to hold office for staggered terms of three years each.
The vote required for the election of a director shall, except in a contested election, be the affirmative vote of a majority of the
votes cast in the election of a nominee. For this purpose, a “majority of the votes cast” means that the number of votes cast “for” a
director’s election exceeds the number of votes cast “against” that director’s election. Abstentions and broker non-votes are not counted
as votes cast either “for” or “against” a director’s election. In a contested election, directors are elected by a plurality of the votes cast
at the meeting of shareholders.
An election is considered contested if there are more nominees for election than positions on the Board of Directors to be filled by
election at that meeting.
Listing
The Company’s common stock is currently traded on the Nasdaq Global Select Market under the symbol “ufpi.”
Applicable Anti-Takeover Provisions
The Company's Articles of Incorporation and Bylaws contain provisions that could also have an anti-takeover effect. Some of
the provisions also may make it difficult for shareholders to replace incumbent directors with new directors who may be willing to
entertain changes that shareholders may believe will lead to improvements in the combined company’s business.
Other
All of the outstanding shares of the Company’s common stock are fully paid and non-assessable. Holders of common stock
have no preemptive rights to purchase or subscribe for any additional shares of common stock or other securities, and there are no
conversion rights or redemption or sinking fund provisions with respect to the Company’s common stock.
The transfer agent for the Company’s common stock is American Stock Transfer & Trust Co., 6201 15th Avenue, Brooklyn,
NY 11219.