Report to Shareholders
2022
Dear Shareholders:
UFP Industries’ story is a vibrant one, built by genera(cid:415)ons of hard-working people who join our
companies and, seeing all we offer, stay to grow their careers and opportunity. They understand that
doors here open to those who share our compe(cid:415)(cid:415)ve, entrepreneurial spirit, work ethic, love of country,
and dedica(cid:415)on to serving our customers be(cid:425)er than anyone else. Together, we share success, overcome
challenges, and make a hard day’s work worthwhile. These things reflect our values, our responsibili(cid:415)es,
and our joy.
In 2022, our teams turned in record results including $9.6 billion in net sales, an 11 percent increase over
2021, and diluted earnings per share of $10.97, up 28 percent over the previous year. New product sales
were $736 million, up 53 percent, and adjusted EBITDA of $1.1 billion represented a 32 percent increase
over 2021, including $25.5 million contributed by 2022 acquisi(cid:415)ons. Because of this, we were able to
share an addi(cid:415)onal $60 million in bonuses and other compensa(cid:415)on with our hourly teammates. There
are few things more rewarding.
The unprecedented success of 2022 followed a terrific 2021 we thought couldn’t be topped. We were
happy to be wrong. But our conserva(cid:415)ve outlook and years of experience tell us that excep(cid:415)onally
strong (cid:415)mes don’t last. So, we are posi(cid:415)oning ourselves for the challenges of an already so(cid:332)ening
economy. How? By asking our people to work and innovate like never before, knowing they’ll deliver.
They’ve done it each of the previous 68 years, and they’ll do it again.
We’re aided by a balanced business model and a global presence that protect us from having to rely on
any one industry, product line, or geographic region for our performance. And we con(cid:415)nue to ver(cid:415)cally
integrate in select areas to protect and enhance our supply chain. One example in 2022 was our
purchase of Cedar Poly, a recycler of polyethylene for use in many products, including composite
decking.
Our internal theme in 2022 was Innov8! Graphically, the 8 was represented by the sign for infinity—
because our opportuni(cid:415)es to innovate are endless. Innova(cid:415)on allowed us to think crea(cid:415)vely in
acquisi(cid:415)ons, in produc(cid:415)on techniques, in new product development, in employee benefits and
opportuni(cid:415)es, and in our communi(cid:415)es. As examples, we added corrugated packaging and aluminum
gates to our por(cid:414)olio and grew enrollment for the eighth year of the UFP Business School where
students can take advantage of a rigorous, hands-on approach to learning with a full scholarship
provided by UFP and individual donors.
We’re not afraid to do things differently or to execute difficult changes, and that’s exactly what we did
with our business units. Three years ago, a(cid:332)er over half a century of being organized by geographic
regions, we realigned our company by industry to accommodate our growth and vision. The disrup(cid:415)on
of the first few years is being replaced by excitement for the opportuni(cid:415)es it has created. It is improving
our efficiencies and bringing be(cid:425)er products to market more quickly. Our salespeople and other
teammates are now even more knowledgeable in their respec(cid:415)ve products, solu(cid:415)ons, and industries.
And there are increased opportuni(cid:415)es for them to grow and succeed.
i
By business segment, our 2022 results were as follows:
UFP Retail Solu(cid:415)ons: $3.65 billion in net sales, up 7 percent over 2021 due to a 5 percent increase in unit
sales from acquisi(cid:415)ons and a 7 percent increase in selling prices, which was offset by a 3 percent decline
in organic unit sales and a 2 percent decrease due to the transfer of certain products to the construc(cid:415)on
segment. We saw a significant increase in demand during the pandemic and expect more normalized
demand in 2023. We an(cid:415)cipate lumber prices to normalize and follow more seasonal historical trends in
2023, and for the segment to experience flat unit sales.
UFP Packaging (formerly UFP Industrial): $2.39 billion in net sales, up 11 percent over the previous year
due to a 12 percent increase in selling prices, a 1 percent increase in unit sales from acquisi(cid:415)ons, and a 2
percent decrease in organic unit sales. This is an area of great long-term opportunity for the company,
and we con(cid:415)nue to invest in new materials, in our world-class tes(cid:415)ng facili(cid:415)es, and in acquisi(cid:415)ons. We
are monitoring key economic indicators that drive this segment and expect unit sales to be flat to slightly
down for 2023, even as we strengthen and grow our capacity and capabili(cid:415)es.
UFP Construc(cid:415)on: $3.14 billion in net sales, up 17 percent over the previous year due to an 11 percent
increase in selling prices, a 4 percent increase in organic unit sales, and a 2 percent increase from the
transfer of certain products from one of our retail business units. Es(cid:415)mates call for housing starts to
decline anywhere from 15 to 20 percent in 2023. Because we’re so o(cid:332)en (cid:415)ed to home building, it’s
important to note that single-family site-built construc(cid:415)on represented just 14% of our total revenues
and less than half -- 45% -- of the revenues of UFP Construc(cid:415)on in 2022.
New to the UFP family in 2022 were the following strategic acquisi(cid:415)ons intended to drive growth and
results for our shareholders:
· Titan Corrugated, a manufacturer of corrugated packaging products with a 20-year history of success,
located in Flower Mound, Texas, and its affiliate All Boxed Up, LLC, a corrugated box distributor.
· Cedar Poly, a Tipton, Iowa-based recycler of high-and low-density polyethylene flakes and pellets used
in various products, including composite decking. This allows the companies of UFP to ver(cid:415)cally integrate
sourcing of recycled polymers and increase our use of post-industrial waste while ensuring the quality
we need for our products.
· Ultra Aluminum Manufacturing, a Michigan-based leading manufacturer of aluminum fencing, gates,
and railing founded in 1996. Ultra designs and produces an extensive selec(cid:415)on of ornamental aluminum
fence and railing products for contractors, landscapers, fence dealers and wholesalers, adding to UFP’s
exis(cid:415)ng por(cid:414)olio of vinyl and wood fencing.
· Dempsey Wood Products (50 percent ownership with the remaining 50 percent available for purchase
in three years). Orangeburg, S.C.-based Dempsey produces kiln-dried lumber, pallet lumber, and other
industrial wood products.
Our balance sheet remains strong, and we con(cid:415)nue to seek acquisi(cid:415)ons that allow us to drive long-term
growth and margin improvements, enhance our capabili(cid:415)es and create value for our shareholders.
ii
We established the $100 million Innov8 fund with an ini(cid:415)al investment of $25 million in 2022 to invest in
late-stage development and early-stage commercializa(cid:415)on projects. Our goal is to bring to market new
products and services that might be too small or not otherwise appropriate for one of our business units
or that have a longer (cid:415)me to ROI than we plan for in our exis(cid:415)ng businesses.
Our focus is to make sure everything we do creates more value for those who have invested their
treasure and trust in us. Our commitment is to do that ethically and responsibly while taking care of our
customers and our teammates. Providing excellent products and services while adding more value and
new product solu(cid:415)ons for our customers is our recipe for success.
We’ve been doing those things for 68 years and know that we must, as our 2023 internal theme states,
“Innov8 2 Dominate” to stay ahead of the compe(cid:415)(cid:415)on and to con(cid:415)nue to earn your investment.
Cordially,
Ma(cid:425) Missad
Chairman and CEO
iii
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 – Opinion on Internal Control over Financial
Reporting (PCAOB ID 34)
Report of Independent Registered Public Accounting Firm – Opinion on the Financial Statements (PCAOB
ID 34)
Consolidated Balance Sheets as of December 31, 2022 and December 25, 2021
Consolidated Statements of Earnings and Comprehensive Income for the Years Ended December 31, 2022,
December 25, 2021, and December 26, 2020
Consolidated Statements of Shareholders’ Equity for the Years Ended December 31, 2022, December 25,
2021, and December 26, 2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2022, December 25, 2021, and
December 26, 2020
Notes to Consolidated Financial Statements
Market Information for our Common Stock
Stock Performance Graph
Directors and Executive Officers
Shareholder Information
2
3
24
25
27
28
29
30
31
57
57
58
59
SELECTED FINANCIAL DATA
(In thousands, except per share and statistics data)
Consolidated Statement of Earnings
Data
Net sales
Gross profit
Earnings from operations
Earnings before income taxes
Net earnings attributable to controlling
interest
Diluted earnings per share
Dividends per share
Consolidated Balance Sheet Data
Working capital(1)
Cash and cash equivalents
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)
2022
2021
2020
2019
2018
$ 9,626,739
1,789,461
950,184
934,816
$ 8,636,134
1,406,967
737,554
726,336
$ 5,153,998
800,296
345,826
340,983
$ 4,416,009
685,518
244,906
240,674
$ 4,489,180
592,894
207,263
197,853
$ 692,651
10.97
$
0.95
$
$ 535,640
8.59
$
0.65
$
$ 246,778
4.00
$
0.50
$
$ 179,650
2.91
$
0.40
$
$ 148,598
2.40
$
0.36
$
$ 1,650,278
559,397
3,672,073
278,096
2,596,823
$ 1,297,434
286,662
3,245,271
320,250
2,016,569
$ 1,074,613
436,507
2,404,891
311,707
1,483,152
$ 739,030
168,336
1,889,477
163,683
1,257,733
$ 685,108
27,316
1,647,548
202,278
1,088,684
18.6 %
16.3 %
15.5 %
15.5 %
13.2 %
7.2 %
34.3 %
3.70
0.11
42.14
$
6.2 %
36.1 %
2.67
0.16
32.58
$
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
$
(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 2018 to 2022.
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 31, 2022.
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
design, manufacture, and supply products made from wood, wood and non-wood composites, and other materials to three
markets: retail, packaging, 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 currency and inflation; fluctuations in the price of lumber; adverse economic conditions in the markets we
serve; concentration of sales to customers; vertical integration strategies; excess capacity or supply chain challenges; our
ability to make successful business acquisitions; government regulations, particularly involving environmental and safety
regulations; adverse or unusual weather conditions; inbound and outbound transportation costs; alternatives to replace
treated wood products; Cybersecurity breaches; tariffs on import and export sales; and the COVID-19 pandemic
(“pandemic”). 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 2022.
Our results for 2022 were impacted by the following:
OVERVIEW
Our net sales increased 11.5% in 2022 due to a 9.5% increase in our overall selling prices (see “Historical Lumber
Prices”) and a 3% increase in unit sales due to acquired businesses, which was partially offset by a 1% decrease
in organic unit sales. Organic unit growth of 6% in our construction segment was offset by organic unit declines
of 2% and 5% in our packaging and retail segments, respectively.
Earnings from operations increased 28.8% to $950.2 million. This increase resulted from a variety of factors
including improved leveraging of our fixed costs in business units that experienced organic growth, increased
sales of new and value-added products which have higher gross margins, our ability to effectively include lumber
and other cost increases in the selling prices of our products, and our value-based and selective selling practices
have enabled us to improve our profit per unit. Acquisitions contributed approximately $16.5 million to our
increase in operating profits.
Our cash flows provided by operations in 2022 was $831.6 million compared to $512.5 million in 2021. This
increase is due primarily to an increase in our net earnings and non-cash expenses of $188.7 million and a decrease
in our investment in net working capital of $130.4 million compared to the prior period. This year, customer
demand softened in the fourth quarter and lumber prices declined which reduced our investment in net working
capital.
We invested $174.1 million in capital expenditures to support and grow our business and invested $180.2 million
in acquired businesses.
3
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
We returned $58.9 million to our shareholders through dividends and repurchased approximately 1,247,000
shares of our common stock for $95.8 million, at an average price of $76.83 per share.
Our net surplus cash (cash less debt and cash overdraft) at the end of 2022 was $281.4 million compared to net
debt of $50.6 million at the end of 2021.
Our available borrowing capacity under revolving credit facilities of $1.3 billion and cash surplus of $559.4
million resulted in total liquidity of approximately $1.8 billion at the end of December 2022.
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
Year-to-date average
Year-to-date percentage change
Random Lengths Composite
Average $/MBF
$
2022
1,112
1,225
1,321
1,051
948
670
621
625
556
503
483
420
$
2021
890
954
1,035
1,080
1,428
1,344
690
443
412
520
585
746
$
795
$
844
(5.8)%
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 comprised approximately 60% and 57% of total lumber purchases, excluding plywood and other
panel products, in 2022 and 2021, respectively.
January
February
March
April
May
June
July
August
September
October
November
December
Year-to-date average
Year-to-date percentage change
$
Southern Yellow Pine
Average $/MBF
2022
1,010
1,115
1,198
902
732
574
547
589
533
490
472
445
$
2021
858
903
938
922
1,150
1,052
564
448
438
512
599
675
$
717
$
755
(5.0)%
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
and other panel products, were 49.6% and 47.7% of our net sales in 2022 and 2021, 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 manufactured items,
sold within all segments. Prices for these products are generally fixed at the time of the sales quotation for a
specified period of time. In order to reduce any exposure to adverse trends in the price of component lumber
products, we attempt to lock in costs with our suppliers or purchase necessary inventory for these sales
commitments. The time period limitation eventually allows us to periodically re-price our products for changes
in lumber costs 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, panel goods, other commodity-
type items, 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 gross margins. We believe our
sales of these products are at their highest relative level in our second quarter, primarily due to pressure-treated
lumber sold in our retail segment.
For each of the product pricing categories above, our margins are exposed to changes in the trend of lumber prices. As a
result of the balance in our net sales of each category we believe our gross profits are more stable than those of our
competitors who are less diversified.
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 21% of our
total sales. This exposure is less significant with remanufactured lumber, panel goods, other commodity-type
items, and trusses sold to the manufactured housing market due to the higher rate of inventory turnover. We
attempt to mitigate the risk associated with treated lumber through inventory consignment programs with our
vendors. We estimate that 15.6% of our total purchases for 2022 were completed under these 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 and longer vendor
commitments.
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.
6
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
December 31,
Annual Change from Prior Year End
December 25,
2021
2022
Units sold
Gross profit
Selling, general, and administrative expenses
Earnings from operations
2.0 %
27.2
22.0
28.8
28.0 %
75.8
53.5
113.3
It is our long-term 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, increase our profit per unit sold. We also have a long-term goal of improving our
efficiencies and leveraging the fixed costs in our selling, general, and administrative expenses as we grow, which would
result in a rate of growth of these expenses which is less than our unit sales growth resulting in a lower cost per unit.
BUSINESS COMBINATIONS AND ASSET PURCHASES
We completed four business acquisitions during 2022 and nine during 2021. The annual historical sales attributable to
acquisitions in 2022 and 2021 were approximately $177.8 million and $1.3 billion, respectively. These business
combinations were not significant to our operating results individually or in aggregate; consequently pro forma results for
2022 and 2021 are not presented.
See Notes to Consolidated Financial Statements, Note C, "Business Combinations" for additional information.
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”.
RESULTS OF OPERATIONS
Year Ended
December 31, December 25,
2022
100.0 %
81.4
18.6
8.6
0.1
9.9
0.2
9.7
2.4
7.3
(0.1)
7.2 %
2021
100.0 %
83.7
16.3
7.9
(0.1)
8.5
0.1
8.4
2.0
6.4
(0.2)
6.2 %
Net sales
Cost of goods sold
Gross profit
Selling, general, and administrative expenses
Other losses (gains), 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
Note: Actual percentages are calculated and may not sum to total due to rounding.
7
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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
OPERATING RESULTS BY SEGMENT
Year Ended
December 31,
2022
1,789,461
832,079
46.5%
$
$
December 25,
2021
1,406,967
682,253
48.5%
$
$
Our business segments consist of UFP Retail Solutions (“Retail”), UFP Packaging (“Packaging” and formerly known as
UFP Industrial) and UFP Construction (“Construction”), and align with the end markets we serve. Among other things,
this structure 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, Packaging, and Construction segments. The exception to this
market-centered reporting and management structure is our International segment, which comprises our Mexico, Canada,
Europe, Asia, and Australia operations and sales and buying offices in other parts of the world. Our International segment
and Ardellis (our insurance captive) are 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, leases, and operates transportation equipment, are also
included in the Corporate column. Inter-company lease and services charges are assessed to our operating segments for
the use of these assets and services at fair market value rates.
The following tables present our operating results by segment for December 31, 2022 and December 25, 2021.
Year Ended December 31, 2022
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Other
Earnings from
operations
Retail
$ 3,650,639
3,306,112
344,527
Packaging
$ 2,394,681
1,808,449
586,232
Construction
$ 3,143,868
2,417,212
726,656
$
All Other
431,611
300,307
131,304
$
Corporate
5,940
5,198
742
Total
$ 9,626,739
7,837,278
1,789,461
193,383
817
250,858
129
328,125
1,097
66,745
5,929
(7,032)
(774)
832,079
7,198
$
150,327
$
335,245
$
397,434
$
58,630
$
8,548
$
950,184
8
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Year Ended December 25, 2021
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Other
Earnings from
operations
Retail
Packaging
$ 3,418,337 $ 2,148,142 $ 2,698,434 $
1,683,466
464,676
3,120,634
297,703
2,167,405
531,029
Construction
All Other
362,473 $
237,696
124,777
Corporate
Total
8,748 $ 8,636,134
7,229,167
1,406,967
19,966
(11,218)
169,033
(94)
200,194
(456)
267,292
(493)
52,204
(2,237)
(6,470)
(9,560)
682,253
(12,840)
128,764 $
264,938 $
264,230 $
74,810 $
4,812 $
737,554
$
The following tables present the components of our operating results as a percentage of net sales by segment for December
31, 2022 and December 25, 2021.
Year Ended December 31, 2022
Retail
Packaging
Construction
All Other
Corporate
Total
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Other
Earnings from operations
100.0 %
90.6
9.4
5.3
—
4.1 %
100.0 %
75.5
24.5
10.5
—
14.0 %
100.0 %
76.9
23.1
10.4
—
12.6 %
100.0 %
69.6
30.4
15.5
1.4
13.6 %
N/A
—
—
—
—
—
100.0 %
81.4
18.6
8.6
0.1
9.9 %
Note: Actual percentages are calculated and may not sum to total due to rounding.
Year Ended December 25, 2021
Retail
Packaging
Construction
All Other
Corporate
Total
Net sales
Cost of goods sold
Gross profit
Selling, general,
administrative expenses
Other
Earnings from operations
100.0 %
91.3
8.7
4.9
(0.1)
3.8 %
100.0 %
78.4
21.6
9.3
—
12.3 %
100.0 %
80.3
19.7
9.9
—
9.8 %
100.0 %
65.6
34.4
14.4
(0.6)
20.6 %
N/A
—
—
—
—
—
100.0 %
83.7
16.3
7.9
(0.1)
8.5 %
Note: Actual percentages are calculated and may not sum to total due to rounding.
9
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
NET SALES
We design, manufacture and market wood and wood-alternative products, primarily used to enhance outdoor living
environments, for national home centers and other retailers, engineered wood components, structural lumber, and other
products for factory-built and site-built residential and commercial construction, customized interior fixtures used in a
variety of retail stores, commercial, and other structures, and structural wood packaging, components and 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
2022 versus 2021
2021 versus 2020
11.5 %
67.6 %
in Sales
in Selling
Prices
Acquisition
Unit
Change
Organic
Unit
in Units
2.0 %
39.6 % 28.0 %
9.5 %
Change
3.0 % (1.0)%
4.0 %
24.0 %
Diversifying our end market sales mix by increasing sales of structural and protective packaging and machine-
built pallets to industrial users, increasing our penetration of the concrete forming market, and increasing our
market share with independent retailers.
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
in the Retail segment; structural and protective packaging and machine-built pallets sold in the Packaging
segment; engineered wood components, customized interior fixtures, manufactured and assembled concrete
forms sold in the Construction segment; 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 sold in each of our segments. 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.
10
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.
Year Ended December 31, 2022 Year Ended December 25, 2021
Retail
Packaging
Construction
All Other
Corporate
Total Sales
Value-Added
44.9 %
72.0 %
77.2 %
76.3 %
44.3 %
63.4 %
Commodity-
Based
Value-Added
43.2 %
67.7 %
73.0 %
74.7 %
67.9 %
59.7 %
55.1 %
28.0 %
22.8 %
23.7 %
55.7 %
36.6 %
Commodity-
Based
56.8 %
32.3 %
27.0 %
25.3 %
32.1 %
40.3 %
Note: Certain prior year product reclassifications and the change in designation of certain products as "value-added" resulted in a change in prior
year's sales.
Our overall unit sales of value-added products increased approximately 3% in 2022 compared to 2021, due
primarily to acquisitions completed in 2022. Our unit sales of commodity-based products were flat compared to
2021.
Developing new products. We define new products as those that will generate sales of at least $1 million per year
within 4 years of launch and are still growing and gaining market penetration. Our goal was to achieve annual
new product sales of at least $575 million in 2022. New product sales and gross profits in 2022 were up 53% and
22%, respectively, from the prior year. Acquisitions contributed approximately $64 million to new product sales
in 2022. Approximately $377 million of new product sales for 2021, while still sold, were sunset in 2022 and
excluded from the table below because they no longer meet the definition above. The table below presents new
product sales in thousands.
Retail
Packaging
Construction
All Other and Corporate
Total New Product Sales
New Product Sales by Segment
Year Ended
December 31,
2022
December 25,
2021
$
$
307,368
278,402
147,748
2,507
736,025
$
$
226,649
148,953
102,661
1,759
480,022
%
Change
35.6 %
86.9 %
43.9 %
42.5 %
53.3 %
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.
Retail Segment:
Net sales from the Retail segment increased 7% in 2022 compared to 2021 due to a 7% increase in selling prices and unit
growth from acquisitions of 5%, offset by a 2% decrease due to the transfer of certain product sales to the Construction
segment this year and an organic unit decline of 3%. Our change in organic unit sales was comprised of:
A 3% increase of UFP Edge due to capacity expansion.
A 1% increase of ProWood due primarily to expansion of our fire treating capabilities.
11
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
A 4% decline of Deckorators due to more normalized demand in Canada in 2022 compared to 2021 when we had
a large inventory build with a customer in the prior period.
A 4% decline of Sunbelt due to more normalized demand from their big box customers.
A 16% decline of Outdoor Essentials primarily due to a softening of fencing demand in the second half of 2022.
In addition, new product sales increased approximately 35.6% to $307 million in 2022 compared to 2021 and our sales
to big box customers increased 9%.
Gross profits increased 15.7% to $344.5 million in 2022 compared to 2021. Our change in gross profits was attributable
to the following:
The gross profits of our Sunbelt and ProWood business units increased by a total of $45.3 million. The products
sold by these units consist primarily of pressure treated lumber sold at a variable price tied to the lumber market.
Our gross profits improved in 2022 due to a less severe impact of volatile lumber prices due, in part, to better
inventory positioning relative to demand and increased use of vendor managed inventory programs.
Acquisitions contributed $19.9 million to the increase.
Our Deckorator’s business unit increased by approximately $1.7 million.
The gross profit of our Outdoor Essentials and other business units collectively decreased by approximately $8.6
million.
The transfer of certain sales to the Construction segment reduced gross profits by $11.7 million.
Selling, general and administrative (“SG&A”) expenses increased by approximately $24.4 million, or 14.4%, in 2022
compared to 2021. The SG&A of recently acquired businesses contributed approximately $8.4 million to this increase.
Accrued bonus expense, which varies with our overall profitability and return on investment, increased approximately
$2.0 million and totaled approximately $37.0 million in 2022. The remaining increase was primarily due to increases in
sales incentive compensation of $8.6 million, travel related expenses of $2.5 million, advertising expenses of $2.0 million,
and bad debt expenses of $1.4 million.
Earnings from operations of the Retail reportable segment increased in 2022 compared to 2021 by $21.6 million, or 16.8%,
as a result of the factors mentioned above.
Packaging Segment:
Net sales from the Packaging segment increased 11% in 2022 compared to 2021 due to a 12% increase in selling prices
attributable to favorable sales mix changes, as well as selective and value-based selling strategies. Unit sales declined 1%
as the favorable impact of recent acquisitions was offset by a 2% decrease in organic unit sales.
12
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Gross profits increased by $121.6 million, or 26%, to $586.2 million in 2022 compared to 2021. Acquisitions contributed
$7.0 million to the increase in gross profit. The remaining increase is primarily a result of the pricing increases discussed
above as well as favorable changes in our value-added sales mix. Excluding acquisitions, we estimate that value-added
products contributed $117.7 million to the increase in gross profit, offset by a decrease of $3.1 million in the gross profit
of commodity-based products. Value-added sales increased to 71.7% of total net sales in 2022 compared to 67.9% in 2021.
The increase in value-added sales and gross profits is due in part to new products which contributed $78.7 million to gross
profits this year ($6.2 million from the acquisition of Advantage Label at the end of 2021).
Selling, general and administrative (“SG&A”) expenses increased by approximately $50.7 million, or 25.3%, in 2022
compared to 2021. Acquired operations in 2022 contributed approximately $4.5 million to total SG&A expenses. Accrued
bonus expense increased approximately $11.1 million compared to last year and totaled approximately $82.2 million for
2022. The remaining increase was primarily due to increases in bad debt expenses of $10.1 million, salaries and wages of
$6.0 million, sales incentive compensation of $3.3 million, and travel related expenses of $2.2 million.
Earnings from operations of the Packaging reportable segment in 2022 increased by $70.3 million, or 26.5%, compared to
2021 due to the factors discussed above.
Construction Segment:
Net sales from the Construction segment increased 17% in 2022 compared to 2021 due to an 11% increase in selling prices,
2% due to the transfer of certain product sales from the Retail segment, and organic unit sales growth of 4%. Organic unit
changes within this segment consisted of increases of 28% in concrete forming, 30% in commercial construction, and 8%
in factory-built housing. The organic unit sales of our site-built business unit decreased by 8% due to a combination of
capacity and supply constraints and being more selective in the business we pursued.
The organic increase in commercial is primarily due to an increase in customer demand in its retail market. As of
December 31, 2022, we estimate that backlog orders associated with commercial construction totaled $136.7
million compared to $84.6 million as of December 25, 2021.
The organic unit increase in concrete forming is primarily due to market share gains from sales of new products
and new customers, including geographic expansion in the northeast. The increase is comprised of a 30% increase
in our value-added unit sales and a 22% increase in our commodity-based unit sales. The value-added unit
increase includes sales of manufactured and assembled concrete forms and engineered wood product sales.
The organic unit increase in factory-built housing is primarily due to an increase in industry production.
Capacity and supply constraints combined with our selective selling strategy impacted our ability to grow the unit
sales of our site-built business unit. As of December 31, 2022 and December 25, 2021, we estimate that backlog
orders associated with site-built construction totaled $91.1 million and $113.5 million, respectively.
Gross profits increased by $195.6 million, or 36.8% to $726.7 million in 2022 compared to 2021. The increase in our gross
profit was comprised of the following factors:
Gross profits in our site-built construction business unit increased by $136.4 million as a result of being more
selective in the business that we took during a period of elevated demand and capacity and supply constraints.
13
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Gross profit of our factory-built housing business unit increased by $20.7 million as a result of increased unit
sales and leveraging fixed costs. In addition, value-added sales in this business unit increased to 57.8% of total
net sales in 2022 compared to 52.0% in 2021, and an increase in new product sales contributed approximately $4
million in gross profits this year.
The gross profit of our commercial business unit increased $18.2 million as a result of increases in unit sales,
better productivity and other operational improvements, as well as improved pricing discipline.
The gross profit of our concrete forming business unit increased by $19.1 million, including $11.7 million as a
result of the transfer of sales from the Retail segment.
Acquired businesses contributed $1.2 million.
SG&A expenses increased by approximately $60.8 million, or 22.8%, in 2022 compared to 2021. Acquired operations in
2022 contributed approximately $1.2 million to total SG&A expenses. Accrued bonus expense increased approximately
$25.1 million compared to last year and totaled approximately $95.9 million for 2022. The remaining increase was
primarily due to increases in sales incentives of $8.1 million, bad debt expense of $6.2 million, salaries, wages, and benefits
of $6.3 million, and travel related expenses of $2.6 million.
Earnings from operations of the Construction reportable segment increased in 2022 compared to 2021 by $133.2 million,
or 50.4%, 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 not
significant to our overall results. The decrease in earnings from operations is primarily due to a 4% decrease in gross
margin in the International segment and a 16% decrease in gross margin in our Ardellis segment, as well as a 3% increase
in SG&A as a percentage of net sales in our Ardellis segment, and $4.3 million of impairments of goodwill and other
intangible assets in our Italian reporting unit.
Corporate:
The corporate segment primarily consists of net sales and gross profits on sales to external customers initiated by UFP
Purchasing and UFP Transportation and over (under) allocated costs that are not significant.
INTEREST EXPENSE
Interest expense increased by only $0.1 million in 2022 compared to 2021 due to consistent debt balances year over year
and interest on our outstanding debt during each period was primarily charged at fixed rates. See “Note C 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 24.6% in 2022 compared to 23.9% in 2021. The increase
was primarily due to an increase in non-deductible compensation, as well as prior year one time credits which decreased
the 2021 tax expense.
14
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 31, 2022 (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
Less than
1 Year
2,851 $ 40,846 $ 5,734 $ 228,665 $ 278,096
After
5 Years
1 – 3
Years
Total
Payments Due by Period
3 – 5
Years
$
10,074
29,501
67,599
77,850
132,205
67,599
$ 110,025 $ 106,057 $ 55,007 $ 284,661 $ 555,750
18,036
47,175
—
16,444
32,829
—
33,296
22,700
—
As of December 31, 2022, we also had $59.0 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
Cash from operating activities
Cash used in investing activities
Cash 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
December 31, December 25,
2022
2021
$ 831,567 $ 512,477
(611,187)
(353,936)
(45,006)
(210,210)
(1,669)
979
(145,385)
268,400
436,608
291,223
$ 559,623 $ 291,223
In general, we fund our growth through a combination of operating cash flows, our revolving credit facility, and issuance
of long-term notes payable at times when interest rates are favorable. We have not issued equity to finance growth except
in the case of a large acquisition that occurred many years ago. 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 September. 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.
15
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 of sales
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 slightly to 56 days in 2022 from 57 days in 2021.
Days of sales outstanding
Days supply of inventory
Days payables outstanding
Days in cash cycle
Twelve Months Ended
December 31, December 25,
2022
2021
36
40
(20)
56
34
43
(20)
57
The increase in our days of sales outstanding was primarily due to increases in our packaging and construction segments.
The decrease in our days supply of inventory was due to better inventory positioning relative to demand and increased
usage of vendor managed inventories in 2022.
Our cash flows from operating activities in 2022 was $831.6 million, which was comprised of net earnings of $705.0
million and $138.9 million of non-cash expenses, offset by a $12.3 million increase in working capital since the end of
December 2021. Comparatively, cash generated from operating activities was approximately $512.5 million in 2021,
which was comprised of net earnings of $552.4 million and $114.8 million of non-cash expenses, offset by a $12.0 million
gain on the sale of certain assets and $142.7 million increase in working capital since the end of December 2020. Our
investment in working capital at the end of 2022 was impacted by a softening of demand and a decline in lumber prices
near the end of the year.
Our cash used in investing activities during 2022 was $353.9 million, primarily reflecting purchases of property, plant,
and equipment totaling $174.1 million and business acquisitions totaling $180.2 million. See “Note C of Notes to the
Consolidated Financial Statements”. Our outstanding purchase commitments on existing capital projects totaled
approximately $63.2 million on December 31, 2022. Capital spending primarily consists of several projects to expand
capacity to manufacture new and value-added products, achieve efficiencies through automation, make improvements to
a number of facilities, and increase our transportation capacity (tractors, trailers) in order to meet higher volumes and
replace old rolling stock. Notable areas of capital spending include projects to:
Increase the capacity and efficiency of our plants that produce our Deckorators mineral-based composite and
wood-plastic composite decking
Expand our capacity to produce UFP Edge siding, pattern and trim products, machine-built pallets, engineered
wood and metal components for site-built construction
Invest in automation opportunities.
Enhance the working environment of several facilities.
In addition, we sold property, plants, and equipment for proceeds of $3.8 million. Finally, the sale and purchase of
investments totaling $12.9 million and $19.9 million, respectively, are due to investment activity in our captive insurance
subsidiary. Comparatively, cash used in investing activities during 2021 was $611.2 million, reflecting purchases of
property, plant, and equipment totaling $151.2 million, business acquisitions totaling $476.0 million, proceeds from the
sale of property, plant, and equipment of $30.0 million, and the sale and purchase of investments totaling $14.9 million
and $23.8 million, respectively, due to investment activity in our captive insurance subsidiary.
16
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cash flows used in financing activities during 2022 primarily consisted of the payment of quarterly dividends totaling
$58.9 million, distributions to noncontrolling interests of $12.0 million, $95.8 million in repurchases of our common stock
at an average price of $76.83 per share, and net debt repayments of $41.2 million. Comparatively in 2021, cash flows used
in financing activities consisted of $40.2 million in dividend payments, $6.8 million in distributions to noncontrolling
interests, and net borrowings under our revolving credit facility of $3.4 million. The increase in our dividends is primarily
due to an increase in the rates our board approved as a result of our growth in earnings and operating cash flow.
On November 1, 2018, we entered into a five-year, $375 million unsecured revolving credit facility with a syndicate of
U.S. banks. On February 28, 2021, this credit agreement was amended to increase the availability from $375 million to
$550 million by exercising the accordion feature in the original agreement. On December 6, 2022, a second amendment
was filed increasing the availability from $550 million to $750 million. The facilities now include up to $60 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, Sterling, Euros and such other foreign currencies as may subsequently be agreed
upon among the parties. 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 15.0 to 30.0 basis points, also determined based upon our performance. The facility fee is payable quarterly in arrears.
On December 31, 2022, we had $5.5 million outstanding on our $750 million revolving credit facility, and we had
approximately $741.2 million in remaining availability after considering $3.3 million in outstanding letters of credit.
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 31, 2022.
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.
17
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 24, 2022, we experienced significantly lower than expected operating results
within our italian reporting unit, which is within the All Other segment. It was determined that the carrying value of the
Italian reporting unit exceeded its fair value and we recorded a non-cash goodwill impairment charge of $2.5 million as of
December 31, 2022, which represented the entire amount of the goodwill recorded within the reporting unit, as a result.
For the remaining reporting units, the fair values exceed the carrying values and there were no indicators for impairment.
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.
SHORT-TERM OUTLOOK
We believe current economic conditions indicate the U.S. economy is either in or headed towards a recession, which will
impact our results and vary depending on its severity and duration. The following factors should be considered when
evaluating our future results:
Lumber prices, which impact our cost of goods sold and selling prices, have normalized due to additional capacity
added by sawmills and demand falling from peak levels as a result of inflation and increase in interest rates. We
anticipate lumber prices will follow a more typical seasonal pattern consistent with historical trends and demand.
18
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Retail segment sales accounted for 38% of our net sales in 2022. When evaluating future demand for the segment,
we analyze data such as the same-store sales growth of national home improvement retailers and forecasts of
home remodeling activity. Based on this data, we currently anticipate market demand to be flat to slightly down
in 2023.
Packaging segment sales accounted for 25% of our net sales in 2022. When evaluating future demand, we
consider a number of metrics, including the Purchasing Managers Index (PMI), durable goods manufacturing,
and U.S. real GDP. We currently estimate industrial production to be flat to slightly down in 2023.
Construction segment sales accounted for 33% of our net sales in 2022.
- The site-built business unit accounted for approximately 14% of our net sales in 2022. Approximately
one-third of site-built customers are multifamily builders. More than 75% of our site-built residential
housing sales are in areas such as Texas and the Mid-Atlantic, Southeast and Mountain West regions,
which have experienced significant population growth through migration from other states and are
forecasted to continue to grow in the long term. When evaluating future demand, we analyze data from
housing starts in those regions. The Mortgage Bankers Association of America forecasts a 10% decrease
in national housing starts to an estimated 1.42 million starts in 2023 and the National Association of
Home Builders forecasts starts of 1.14 million, a 27% decrease from 2022. The consensus estimates of
all housing starts is for a 15% to 20% decline in 2023.
- The factory-built business unit accounted for 12% of our net sales in 2022. This business, along with
our multifamily business, could benefit from higher interest rates as buyers seek more affordable housing
alternatives. As a result of these factors, we believe these customers are better insulated from downturns
in the housing market. When evaluating future demand, we analyze data from production of
manufactured housing. The National Association of Home Builders forecasts a 24% decrease in
manufactured home shipments in 2023.
- The commercial and concrete forming business units accounted for approximately 6% of our net sales
in 2022. When evaluating future demand, we analyze data from non-residential construction spending.
On a consolidated basis, and based on our 2022 results of operations and business mix, we believe our decremental
operating margin is in a range of 15% to 20% of net sales. In other words, we believe for every dollar decrease
in sales, relative to the prior year, our earnings from operations may decline by $0.15 to $0.20. As a point of
reference, our peak to trough decremental operating margin during the Great Recession was approximately 13.5%
(2006 peak to 2011 trough). We estimate that our decremental margins by segment are as follows:
-
Packaging is in a range of 20% to 25%
- Construction is in a range of 20% to 25%
- We currently anticipate improvement in operating profits in our Retail segment in 2023, primarily due
to an expectation of less volatile lumber prices in 2023 and other operational improvements. The severe
volatility of lumber prices in 2022 and 2021 adversely impacted the results of this segment.
Key factors that may impact the ranges provided above include estimates of:
- The impact and level of the Lumber Market and trends in the commodity and other material costs of our
products
19
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Changes in our selling prices
Changes in our sales mix by segment, business unit, and product
Changes in labor rates
Our ability to reduce variable manufacturing, freight, selling, general, and administrative costs,
particularly certain personnel costs, in line with net sales
The results of our salaried bonus plan, which is based on pre-bonus profits and achieving minimum
levels of pre-bonus return on investment over a required hurdle rate
Inflation and other changes in costs
LONG-TERM OUTLOOK
-
-
-
-
-
-
GOALS
Our long-term objectives include:
Growing our annual unit sales by 5 to 7 percent. We anticipate smaller tuck-in acquisitions will contribute toward
this goal;
Achieving and sustaining a 10 percent EBITDA margin by continuing to enhance our capabilities and grow our
portfolio and sales of value-added products;
Earning an incremental return on new investment over our cost of capital; and
Maintaining a conservative capital structure.
RETAIL SEGMENT
The Home Improvement Research Institute (“HIRI”) anticipates growth in home improvement spending and has forecasted
a 3.9% compounded annual growth rate through 2025. Sales of our Retail Solutions segment comprised approximately
38% of our annual sales in 2022.
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, Edge, and Outdoor Essentials
product lines. Continued investment in capacity for Deckorators and Edge is expected to contribute to this
increase.
Developing new products and increasing our emphasis on product innovation and product differentiation in order
to counter commoditization trends and influences.
20
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Acquiring businesses in core product categories when those opportunities exist.
Adding new products and customers through strategic business acquisitions or alliances.
PACKAGING SEGMENT
Our goal is to increase our sales of wood, wood alternative, and protective packaging products to a wide variety of
packaging customers and manufactured wood components for OEM users. We believe the vast amount of hardwood and
softwood lumber consumed for packaging 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
international 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 international customers in targeted markets. We plan to continue to pursue acquisition opportunities
that meet our strategic criteria and help us meet these objectives. The recently implemented reorganization of our business
to market-based segments is intended to promote higher rates of sales growth through the introduction of new products,
including protective and other packaging materials, 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 packaging segment
include industrial production, the Purchasing Managers Index, and U.S. GDP. Sales in this segment comprised
approximately 25% of our annual sales in 2022.
CONSTRUCTION SEGMENT
The National Association of Home Builders forecasts a 6% decrease in manufactured home shipments from 2023 to 2024.
We currently supply approximately 45.0% 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 2022.
The Mortgage Bankers Association of America forecasts national housing starts of 1.54 million in 2024 and the National
Association of Home Builders forecasts starts of 1.3 million in 2024. The consensus estimate of all housing starts is 1.36
million, a 7% increase from 2023. As a result of 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 2022.
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 4% and 3%, respectively, of our annual sales in 2022.
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 and price our products based on the value
we offer our customers.
21
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The effective implementation of our strategy to focus and manage our operations around the markets we serve.
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 due to acquisitions and added
personnel hired 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; 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 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 packaging 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
threshold levels of 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.
22
UFP INDUSTRIES, INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Our cash cycle will continue to be impacted in the future by our mix of sales by segment. Sales from our Construction and
Packaging segments require a greater investment in receivables than sales to our Retail segment, while our Retail segment
generally requires a greater investment in inventory. Also, our net investment in trade receivables, inventory, and accounts
payable will continue to be impacted by the level of lumber prices.
Additionally, we expect to spend approximately $200 million to $225 million on capital expenditures, incur depreciation
of approximately $120 million, and incur amortization and other non-cash expenses of approximately $35 million in 2023.
On December 31, 2022, we had outstanding purchase commitments on capital projects of approximately $63.2 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.
Our dividend rates are reviewed and approved at each of our February, April, July, and October board meetings and
payments are made in March, June, September, and December of each year. Our board considers our dividend yield,
payout ratios relative to earnings and operating cash flow, and potential variability of future results, among other factors,
as part of its decision-making process.
We have a share repurchase program approved by our Board of Directors, and as of March 1, 2023 we have remaining
authorization to buy back approximately 2 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.
23
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of UFP Industries, 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 31, 2022, 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, the Company maintained,
in all material respects, effective internal control over financial reporting as of December 31, 2022, 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 31, 2022, of the Company
and our report dated March 1, 2023, 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.
/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
March 1, 2023
24
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the shareholders and the Board of Directors of UFP Industries, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of UFP Industries, Inc. and subsidiaries (the "Company")
as of December 31, 2022 and December 25, 2021, 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 31, 2022, 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 31, 2022 and December 25, 2021, and the
results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, 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 31, 2022, 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 1, 2023, expressed an unqualified opinion on the Company's
internal control over financial reporting.
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 Matter
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.
Accounting for Unconsolidated Variable Interest Entities - Refer to Note C, Business Combinations, to the financial
statements
Critical Audit Matter Description
The Company periodically purchases a partial ownership interest in other entities. The agreements related to such
purchases can be complex, requiring management to evaluate whether the entities should be accounted for under the
equity method or consolidated. In addition, management must also evaluate whether the acquired interest in the entity
represents a variable interest entity (“VIE”) and if so, whether the Company is the primary beneficiary. This assessment
requires judgment by management.
25
We identified the equity method or consolidation accounting and the related VIE primary beneficiary assessment of the
Company’s partial ownership interest acquisitions as a critical audit matter given the judgment required by management.
This required a higher degree of auditor judgment and an increased extent of audit effort due to the complexity of the
entity structures and agreements.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the determination of equity method or consolidation accounting, inclusive of VIE
primary beneficiary assessment, included the following, among others:
We tested the effectiveness of the controls over the accounting assessment of acquisitions.
We evaluated the appropriateness of the Company’s accounting conclusions related to equity method or
consolidation accounting for a partial ownership interest entity by:
- Reading the acquisition agreement and other related documents and evaluating the structure and terms
of the agreements to determine if the acquired ownership interest should be classified as a VIE.
If an entity is determined to be a VIE, considered whether the Company appropriately determined the primary
beneficiary by evaluating the contractual arrangements of the entity to determine if the Company has the power
to direct activities, and if the Company has the obligation to absorb losses of the entity or the right to receive
benefits from the entity that could be significant to the VIE.
Consulted with our internal firm specialists to assist in auditing management’s equity method or consolidation
accounting conclusion inclusive of the VIE primary beneficiary assessment.
/s/ Deloitte & Touche LLP
Grand Rapids, Michigan
March 1, 2023
We have served as the Company's auditor since 2014.
26
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:
Property, plant and equipment
Less accumulated depreciation and amortization
PROPERTY, PLANT AND EQUIPMENT, NET
TOTAL ASSETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Cash overdraft
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
TEMPORARY EQUITY:
Redeemable noncontrolling interest
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 160,000,000; issued and outstanding,
61,618,193 and 61,901,851
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Total controlling interest shareholders’ equity
Noncontrolling interest
TOTAL SHAREHOLDERS’ EQUITY
December 31,
2022
December 25,
2021
$
559,397 $
226
36,013
617,604
$
$
— $
206,941
17,030
319,125
286,662
4,561
36,495
737,805
416,043
547,277
963,320
4,806
39,827
2,073,476
3,462
19,310
96,703
31,876
315,038
7,369
109,017
1,212,113
(623,093)
589,020
3,245,271
289,196
84,853
23,155
42,683
776,042
277,567
76,632
60,964
37,497
1,228,702
—
—
61,902
243,995
1,678,121
(5,405)
1,978,613
37,956
2,016,569
3,245,271
398,798
574,429
973,227
33,126
42,520
2,262,113
3,750
19,898
107,517
101,262
337,320
7,339
143,892
1,379,968
(690,986)
688,982
3,672,073
$
296,120
80,255
25,577
2,942
611,835
275,154
85,419
51,265
44,697
1,068,370
6,880
$
— $
61,618
294,029
2,217,410
(9,075)
2,563,982
32,841
2,596,823
3,672,073 $
TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY
$
See notes to consolidated financial statements.
27
UFP INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME
(in thousands, except per share data)
NET SALES
COST OF GOODS SOLD
GROSS PROFIT
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
OTHER LOSS (GAINS), NET
EARNINGS FROM OPERATIONS
INTEREST EXPENSE
INTEREST AND INVESTMENT INCOME
EQUITY IN LOSS OF INVESTEE
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 LOSS
COMPREHENSIVE INCOME
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO
NONCONTROLLING INTEREST
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING
INTEREST
See notes to consolidated financial statements.
December 31,
2022
$ 9,626,739
7,837,278
1,789,461
832,079
7,198
950,184
13,910
(725)
2,183
15,368
934,816
229,852
704,964
Year Ended
December 25,
2021
$ 8,636,134
7,229,167
1,406,967
682,253
(12,840)
737,554
13,814
(6,498)
3,902
11,218
726,336
173,972
552,364
December 26,
2020
$ 5,153,998
4,353,702
800,296
444,596
9,874
345,826
9,311
(4,468)
—
4,843
340,983
87,101
253,882
(12,313)
692,651
$
(16,724)
535,640
$
(7,104)
246,778
11.05
10.97
$
$
8.61
8.59
$
$
4.00
4.00
$
$
$
704,964
(2,498)
702,466
552,364
(5,296)
547,068
253,882
5,967
259,849
(13,485)
(15,039)
(9,976)
$
688,981 $
532,029 $
249,873
28
UFP INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(in thousands, except share and per share data)
Controlling Interest Shareholders’ Equity
Additional
Accumulated Other
Commo
n
Paid-In
Capital Earnings
Stock
$ 61,409 $ 192,173 $ 995,022 $
Retained
Comprehensive
Earnings
Noncontrolling
Interest (NCI)
Temporary
Total
Equity
(4,889) $
14,018 $ 1,257,733 $
—
246,778
1,373
1,722
Balance on December 28, 2019
Net earnings
Foreign currency translation adjustment
Unrealized gain on debt securities
Distributions to NCI
NCI related to business combinations
Cash dividends - $0.50 per share
Issuance of 35,133 shares under employee stock purchase
plan
Issuance of 390,720 shares under stock grant programs
Issuance of 127,735 shares under deferred compensation
plan
Repurchase of 756,397 shares
Expense associated with share-based compensation
arrangements
Accrued expense under deferred compensation plans
Balance on December 26, 2020
Net earnings
Foreign currency translation adjustment
Unrealized gain on investments and other
Distributions to NCI
NCI related to business combinations
Cash dividends - $0.65 per share
Issuance of 33,104 shares under employee stock purchase
plan
Issuance of 546,235 shares under stock grant programs
Issuance of 116,732 shares under deferred compensation
plan
Expense associated with share-based compensation
arrangements
Accrued expense under deferred compensation plans
Balance on December 25, 2021
Net earnings
Foreign currency translation adjustment
Unrealized gain on investments and other
Distributions to NCI
Contributions to NCI
NCI related to business combinations
Redeemable NCI
Cash dividends - $0.95 per share
Issuance of 44,012 shares under employee stock purchase
plan
Issuance of 805,562 shares under stock grant programs
Issuance of 113,384 shares under deferred compensation
plan
Repurchase of 1,246,616 shares
Expense associated with share-based compensation
arrangements
Accrued expense under deferred compensation plans
Balance on December 31, 2022
130
(30,669)
35
390
1,360
12,140
5
128
(756)
(128)
(28,456)
3,905
8,644
$ 61,206 $ 218,224 $ 1,182,680 $
535,640
(40,209)
10
33
546
117
2,083
3,506
(117)
11,071
9,228
$ 61,902 $ 243,995 $ 1,678,121 $
692,651
44
806
113
(1,247)
2,725
9,919
(113)
(58,860)
25
(94,527)
27,987
9,516
$ 61,618 $ 294,029 $ 2,217,410 $
7,104
2,872
(933)
(225)
253,882
4,245
1,722
(933)
(95)
(30,669)
1,395
12,535
—
(29,212)
3,905
8,644
22,836 $ 1,483,152 $
16,724
(1,685)
(6,750)
6,831
—
—
103
(630)
(234)
7,641
552,364
(4,269)
(1,027)
(6,750)
6,831
(40,209)
2,116
4,062
—
11,071
9,228
704,861
(39)
(1,829)
(12,024)
538
—
(7,641)
(58,860)
37,956 $ 2,016,569 $
12,210
1,802
(12,024)
538
(7,641)
(1,794) $
(2,584)
(1,027)
(5,405) $
(1,841)
(1,829)
2,769
10,750
—
(95,774)
27,987
9,516
(9,075) $
32,841 $ 2,596,823 $
6,880
See notes to consolidated financial statements
29
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 (credit)
Unrealized loss (gain) on investments and other
Equity in loss of investee
Net loss (gain) on sale and disposition of assets
Impairment of goodwill and other intangibles
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 USED IN INVESTING ACTIVITIES:
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Acquisitions, net of cash received and purchase of equity method investment
Purchases of investments
Proceeds from sale of investments
Other
NET CASH USED IN INVESTING ACTIVITIES
CASH FLOWS USED IN FINANCING ACTIVITIES:
Borrowings under revolving credit facilities
Repayments under revolving credit facilities
Repayments of debt
Contingent consideration payments 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 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 INVESTING ACTIVITIES
Capital expenditures included in accounts payable
NON-CASH FINANCING ACTIVITIES:
Common stock issued under deferred compensation plans
See notes to consolidated financial statements
30
Year Ended
December 31, December 25, December 26,
2022
2021
2020
$
704,964 $
552,364 $
253,882
94,063
19,499
28,156
(16,289)
5,768
2,183
1,285
4,261
—
130,704
718
(137,907)
(5,838)
831,567
(174,124)
3,805
(180,151)
(19,875)
12,874
3,535
(353,936)
605,101
(607,549)
(38,719)
(2,856)
—
2,769
(58,860)
(12,024)
(95,774)
(2,298)
(210,210)
979
268,400
291,223
559,623
286,662
4,561
291,223
559,397
226
559,623
$
$
$
$
$
$
13,953
274,616
$
$
$
$
$
$
84,184
13,948
11,224
5,653
(4,118)
3,902
(11,992)
—
—
(85,439)
(260,301)
78,060
124,992
512,477
(151,166)
29,973
(475,960)
(23,797)
14,882
(5,119)
(611,187)
892,072
(888,695)
—
(3,176)
—
2,116
(40,209)
(6,750)
—
(364)
(45,006)
(1,669)
(145,385)
436,608
291,223
436,507
101
436,608
286,662
4,561
291,223
14,077
167,043
$
$
$
$
$
$
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
3,185
3,256
—
$
9,282
$
7,487
$
6,870
UFP INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
OPERATIONS
We are a holding company whose subsidiaries supply products primarily manufactured from wood, wood and
non-wood composites, metals, and other materials to three markets: retail, construction and packaging. Founded in 1955,
we are headquartered in Grand Rapids, Michigan, with affiliates throughout North America, Europe, Asia and Australia.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements, have been prepared in conformity with accounting
principles generally accepted in the United States of America (“GAAP”) and with the rules and regulations of the Securities
and Exchange Commission (the "SEC"), represent our assets and liabilities and operating results. The consolidated
financial statements include our accounts and those of our wholly-owned and majority-owned subsidiaries and
partnerships. All significant intercompany balances and transactions have been eliminated in consolidation.
We consolidate entities in which we have a controlling financial interest. In determining whether we have a
controlling financial interest in a partially owned entity and the requirement to consolidate the accounts of that entity, we
consider factors such as ownership interest, board representation, management representation, authority to make decisions,
and contractual and substantive participating rights of the partners/members as well as whether the entity is a variable
interest entity (“VIE”) and whether we are the primary beneficiary. The primary beneficiary of a VIE is the entity that has
(i) the power to direct the activities that most significantly impact the entity's economic performance and (ii) the obligation
to absorb losses of the VIE or the right to receive benefits from the VIE that could be significant to the VIE. The primary
beneficiary is required to consolidate the VIE. We account for unconsolidated VIEs using the equity method of accounting.
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 2022, 2021, and 2020 relate to the fiscal years ended December 31, 2022, December 25, 2021, and December
26, 2020, respectively. Fiscal year 2022 was comprised of 53 weeks and fiscal years 2021 and 2020 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.
31
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 $19.9 million of restricted investments recorded as of December 31, 2022.
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*
Ending
Balance
Year Ended December 31, 2022:
Allowance for possible losses on accounts receivable
$
5,085 $ 79,862 $ (73,220) $ 11,727
Year Ended December 25, 2021:
Allowance for possible losses on accounts receivable
$
4,629 $ 66,883 $ (66,427) $
5,085
Year Ended December 26, 2020:
Allowance for possible losses on accounts receivable
$
4,440 $ 48,954 $ (48,765) $
4,629
*
Includes accounts charged off, discounts given to customers and actual customer returns and allowances.
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 $8.0 million and $7.8
million as of December 31, 2022 and December 25, 2021, respectively. All amounts are expected to be collected within
18 months. Concentration of accounts receivable related to our two largest customers totaled $131.0 million and $87.6
million as of December 31, 2022 and December 25, 2021, respectively.
32
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract
Assets and Contract Liabilities from Contracts with Customers. The ASU requires that an acquirer recognize and measure
contract assets and contract liabilities in a business combination in accordance with Topic 606. The ASU is effective for
fiscal years beginning after December 15, 2022, including interim periods within those fiscal years and will be applied
prospectively to all business combinations occurring after this date.
INVENTORIES
Inventories are stated at the lower of cost or net realizable value. The cost of inventories includes raw materials,
direct labor, and manufacturing overhead and is determined using the weighted average cost method. 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 $27.9 million as of December 31, 2022 and $37.8 million as of December 25,
2021.
We write down the value of inventory, the impact of which is reflected in cost of goods sold in the Consolidated
Statement of Earnings and Comprehensive Income, if the cost of specific inventory items on hand exceeds the amount we
expect to realize from the ultimate sale or disposal of the inventory. These estimates are based on management's judgment
regarding future demand and market conditions and analysis of historical experience. There was no lower of cost or net
realizable value adjustment to inventory as of December 31, 2022 and December 25, 2021.
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. The components of property, plant and equipment as of December 31,
2022 and and December 25, 2021 were as follows:
Land and improvements
Building and improvements
Machinery and equipment
Furniture and fixtures
Construction in progress
Total Property, Plant and Equipment, Gross
Year Ended
December 31, December 25,
2022
2021
$ 171,729 $ 163,289
329,698
632,864
24,063
62,199
$ 1,379,968 $ 1,212,113
355,228
708,095
23,186
121,730
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 $5.7 million and $5.4 million as of December 31, 2022, and $6.0 million and $5.3
million as of December 25, 2021, respectively.
33
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. As of the date of the most recent goodwill impairment test, which utilized data and assumptions as of September
24, 2022, it was determined that the carrying value of the Italian reporting unit exceeded its fair value and we recorded a
non-cash goodwill impairment charge of $2.5 million as of December 31, 2022, which represented the entire amount of
the goodwill recorded within the reporting unit. For the remaining reporting units, the fair values exceed the carrying
values and there were no indicators for impairment. 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. 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
determine whether a mid-year impairment analysis is required.
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 31, 2022 and December 25, 2021. 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.
34
In addition to providing coverage for the Company, Ardellis provides Excess Loss Insurance (primarily medical
and prescription drug) and Excess General Liability and Property Insurance to certain third parties. As of December 31,
2022, Ardellis had 70 such contracts in place. Reserves associated with these contracts were $5.0 million at December 31,
2022, and $7.1 million at December 25, 2021, 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, Packaging, 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 third party. Installation revenue
is recognized upon completion. If we use a third 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.
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.
35
The following table presents our net sales disaggregated by revenue source (in thousands):
December 31,
December 25,
Point in Time Revenue
Over Time Revenue
Total Net Sales
2022
9,442,794 $
183,945
9,626,739 $
$
$
Year Ended
December 26,
2020
2022 vs. 2021
% Change
2021 vs. 2020
% Change
2021
8,512,012 $
124,122
8,636,134 $
5,025,895
128,103
5,153,998
10.9%
48.2%
11.5%
69.4%
(3.1)%
67.6%
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 31, 2022 and December
25, 2021 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 31,
2022
December 25,
2021
$
6,798 $
10,184
5,602
10,744
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.
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.
36
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
$
$
692,651 $ 535,640 $ 246,778
(27,488)
(6,903)
(17,342)
665,163 $ 518,298 $ 239,875
December 31,
2022
December 25, December 26,
2021
2020
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
USE OF ACCOUNTING ESTIMATES
62,667
(2,487)
60,180
473
60,653
62,209
(2,014)
60,195
159
60,354
61,632
(1,724)
59,908
20
59,928
$
$
11.05 $
10.97 $
8.61 $
8.59 $
4.00
4.00
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.
37
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 (in thousands):
Quoted
Prices in
Active
Markets
(Level 1)
December 31, 2022
Prices with
Other
Prices with
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
Total
December 25, 2021
Quoted
Prices in
Active
Markets
(Level 1)
Prices with
Other
Prices with
Observable Unobservable
Inputs
(Level 2)
Inputs
(Level 3)
Total
$ 390,219
$ 1,286 $
—
$ 391,505
$
19
$
9,392 $
—
$ 9,411
2,594
343
17,337
16,692
—
—
—
—
—
19,286
343
17,337
1,668
342
20,163
16,910
—
—
—
—
—
18,578
342
20,163
—
—
4,102
4,102
—
—
3,785
3,785
13,067
1,414
8
130
474
15,093
$ 425,586
—
—
—
—
—
—
$ 17,978 $
—
13,067
10,910
—
—
—
—
—
4,102
1,414
8
130
474
15,093
$ 447,666
1,687
23
146
483
13,249
$ 35,441
—
—
—
—
—
—
$ 26,302 $
—
10,910
—
—
—
—
—
3,785
1,687
23
146
483
13,249
$ 65,528
Money market
funds
Fixed income
funds
Treasury securities
Equity securities
Alternative
investments
Mutual funds:
Domestic stock
funds
International
stock funds
Target funds
Bond funds
Alternative funds
Total mutual funds
Total
From the assets measured at fair value as of December 31, 2022, listed in the table above, $391.2 million of
money market funds are held in Cash and Cash Equivalents, $36.1 million of mutual funds, equity securities, and
alternative investments are held in Investments, $0.5 million of money market and mutual funds are held in Other Assets
for our deferred compensation plan, and $19.6 million of fixed income funds and $0.3 million of money market funds are
held in Restricted Investments.
We maintain money market, mutual funds, bonds, and/or equity securities in our non-qualified deferred
compensation plan, 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 $55.6 million and 55.4 million as of December 31, 2022 and December 25,
2021, respectively, which has been included in the aforementioned table of total investments. This portfolio consists of
domestic and international equity securities, alternative investments, and fixed income bonds.
38
Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the
following (in thousands):
Fixed Income
Treasury Securities
Equity
Mutual Funds
Alternative Investments
Total
Cost
December 31, 2022
Unrealized
Gain (Loss) Fair Value
$ (2,113) $ 19,286 $ 18,169
342
15,196
9,222
3,003
$ 55,642 $ 45,932
—
1,575
1,144
997
1,603
343
17,337
14,574
4,102
$
Cost
$ 21,399
343
15,762
13,430
3,105
$ 54,039
December 25, 2021
Unrealized
Gain
$
409
—
4,967
3,325
782
$ 9,483
Fair Value
$ 18,578
342
20,163
12,547
3,785
$ 55,415
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 mutual fund investments consist of domestic and international stock. Our
alternative investments consist of a private real estate income trust which is valued as a Level 3 asset. The net pre-tax
unrealized gain was $1.6 million for the year ended December 31, 2022. Carrying amounts above are recorded in the
investments and restricted investments line items within the balance sheet as of December 31, 2022 and December 25,
2021.
39
C.
BUSINESS COMBINATIONS
We completed the following business combinations in fiscal 2022 and 2021, which were accounted for using the
purchase or equity method (in thousands).
Company
Name
Acquisition
Date
December 6, 2022
Purchase Price
$71,009 cash paid for
100% asset purchase
Intangible
Assets
Net
Tangible
Assets
Operating
Segment
$
48,812 $
22,197
Packaging
Titan Corrugated, Inc. (Titan) and
All Boxed Up, LLC
Located in Flower Mound, TX and founded in 2003, Titan’s primary products include boxes
used in moving and storage, jumbo boxes for industrial products, corrugated shipping
containers, and point-of-purchase displays. All Boxed Up distributes common box sizes
manufactured by Titan throughout the United States. The combined companies had trailing 12-
month sales through October 2022 of approximately $46.5 million.
$69,791 cash paid for
equity method
investment
June 27, 2022
Packaging
34,552 $
35,239
$
Dempsey Wood Products, Inc.
(Dempsey)
Located in Orangeburg, South Carolina and founded in 1988, Dempsey is a sawmill which
produces products such as kiln dried finished lumber, industrial lumber, green cut stock lumber,
pine chips and shavings, landscaping mulch, and sawdust. The Company had sales of
approximately $69 million in 2021.
Cedar Poly, LLC
May 9, 2022
$15,398
cash paid for 100% asset
purchase
$
4,821 $
10,577
Retail
Located in Tipton, Iowa, Cedar Poly is a full-service recycler of high-density and low-density
polyethylene (HDPE and LDPE) flakes and pellets used in various products, including
composite decking. The company also recycles corrugate and operates its own transportation
fleet. Cedar Poly had 2021 sales of approximately $17.3 million and will operate in UFP’s
Deckorators business unit.
December 27, 2021
$24,057
cash paid for 100% stock
purchase, net of acquired
$
cash and $2,000
estimated contingent
consideration
20,390 $
5,667
Retail
Ultra Aluminum Manufacturing, Inc.
(Ultra)
Located in Howell, Michigan and founded in 1996, Ultra is a leading manufacturer of aluminum
fencing, gates and railing. The company designs and produces an extensive selection of
ornamental aluminum fence and railing products for contractors, landscapers, fence dealers and
wholesalers. The Company had sales of approximately $45 million in 2021.
December 20, 2021
$23,154
cash paid for 100% stock
$
purchase and estimated
contingent consideration
13,817 $
9,337
Packaging
Advantage Labels & Packaging, Inc.
(Advantage)
Based in Grand Rapids, Michigan, Advantage provides blank and customized labels, printers,
label applicators and other packaging supplies. Key industries served by the company include
beer and beverage; body armor; food production and processing; greenhouse and nursery; hobby
and craft; manufacturing; and automotive. The company had trailing 12-month sales through
November 2021 of approximately $19.8 million.
40
Company
Name
Acquisition
Date
November 22, 2021
Purchase Price
$10,831
cash paid for 70% stock
purchase and
noncontrolling interest,
net of acquired cash
Intangible
Assets
Net
Tangible
Assets
Operating
Segment
$
12,686 $
(1,855)
Other
Ficus Pax Private Limited (Ficus) Headquartered in Bangalore, India, Ficus manufactures mixed-material cases and crates, nail-
less plywood boxes, wooden pallets and other packaging products through 10 facilities located
in major industrial markets throughout southern India. Ficus also owns a majority stake in
Wadpack, a manufacturer of corrugated fiber board containers, corrugated pallets and display
solutions. The Company had trailing 12-month sales through August 2021 of approximately $39
million USD.
November 1, 2021
$5,984
cash paid for 100% asset
purchase and estimated
contingent consideration
$
6,963 $
(979)
Other
Boxpack Packaging (Boxpack) Based near Melbourne, Australia, Boxpack specializes in flexographic and lithographic
cardboard packaging, using the latest CAD design and finishing techniques. Boxpack serves
multiple industries, including food and beverage, confectionary, pharmaceutical, industrial and
agricultural. The Company had trailing 12-month sales through June 30, 2021, of $6.2 million
USD ($8.2 million AUD).
September 27, 2021
$6,443
cash paid for 100% asset
purchase and estimated
contingent consideration
$
4,039 $
2,404 Construction
Shelter Products, Inc. (Shelter) Based in Haleyville, Alabama, Shelter operates its distribution and logistics business from an
Endurable Building Products, LLC
(Endurable)
Walnut Hollow Farm, Inc.
87,800 sq.-ft. warehouse that specializes in manufactured housing industry customers. Shelter’s
facility is adjacent to a UFP manufacturing facility that supplies trusses to manufactured housing
builders, and the proximity will enable additional operational synergies. The Company had sales
of approximately $11.4 million in 2020.
April 29, 2021
$10,129
cash paid for 100% asset
purchase
$
7,099 $
3,030 Construction
Based near Minneapolis, Minnesota, Endurable is a leading manufacturer of customized
structural aluminum systems and products for exterior purposes, such as deck framing,
balconies, sunshades, railings and stairs. The company’s trademarked alumiLAST aluminum
deck and balcony systems are known for their low-maintenance design and ease of installation.
Endurable serves general contractors in the multifamily market throughout the U.S. and had
sales of approximately $15 million in 2020.
April 19, 2021
$8,549
cash paid for 100% asset
purchase
$
1,526 $
7,023
Retail
Walnut Hollow Farm, located in Wisconsin, is engaged in the business of designing,
manufacturing, selling, and distributing wood products, tools, and accessories for the craft and
hobby, outdoor sportsman art, personalized home décor, and hardware categories, with sales of
approximately $11.6 million in 2020.
41
Company
Name
Acquisition
Date
April 12, 2021
Purchase Price
$153,462
cash paid for 100% asset
purchase
$
Intangible
Assets
Net
Tangible
Assets
Operating
Segment
— $
153,462
Retail
Spartanburg Forest Products, Inc. Headquartered in Greer, South Carolina, Spartanburg Forest Products and its affiliates are a
premier wood treating operation in the U.S., with approximately 150 employees and operations
in five states. Its affiliates include Appalachian Forest Products, Innovative Design Industries,
Blue Ridge Wood Preserving, Blue Ridge Wood Products, and Tidewater Wood Products and
had combined sales of approximately $543.0 million in 2020.
March 1, 2021
$5,511
cash paid for 100% asset
purchase and estimated
contingent consideration
$
5,469 $
42
Other
J.C. Gilmore Pty Ltd (Gilmores) Founded in 1988 and operating from its distribution facility in Port Melbourne, Australia,
PalletOne, Inc. (PalletOne)
Gilmores is a leading distributor in the industrial and construction industries of packaging tapes,
stretch films, packaging equipment, strapping, construction protection products and other items,
with 2020 sales of $15 million AUD ($10 million USD).
December 28, 2020
$259,011
cash paid for 100% stock
$
purchase
79,917 $
179,094 Retail/Packaging
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 (Sunbelt) subsidiary operates five pressure-treating facilities in
the Southeastern U.S. PalletOne and its affiliates had 2020 sales of $698 million.
The intangible assets for each acquisition were finalized and allocated to their respective identifiable intangible
asset and goodwill accounts during 2022, except for the acquisitions of All Boxed Up, Titan and Cedar Poly. In aggregate,
acquisitions made during 2022 and 2021, contributed approximately $1.5 billion in net sales and $67.0 million in operating
profit during 2022.
The amounts assigned to major intangible classes for the business combinations mentioned above are as follows
(in thousands):
All Boxed Up
Titan
Cedar Poly
Ultra
Advantage
Ficus
Boxpack
Shelter
Endurable
Walnut Hollow
Gilmores
PalletOne
*(estimate)
Non-
Compete
Customer
Agreements Patents Relationships Tradename Goodwill
$
980 * $
934 * $
— $ — $
—
—
—
310
2,784
821
30
—
—
1,631
—
—
—
—
—
—
—
—
—
—
—
—
23,970 *
2,401 *
6,820
5,100
4,931
4,011
2,200
4,080
410
—
18,089
— $
—
—
5,020
420
1,718
—
190
1,210
560
—
17,450
22,928 *
2,420 *
8,550
7,987
3,253
2,131
1,619
1,809
556
3,838
44,378
Intangibles -
Tax
Deductible
1,914
46,898
4,821
20,390
13,817
12,686
6,963
4,039
7,099
1,526
5,469
79,917
42
As a result of the investment in Dempsey on June 27, 2022, we own 50% of the issued equity of the Company,
and the remaining 50% of the issued equity is owned by the previous owners (“Sellers”). The investment in Dempsey is
an unconsolidated variable interest entity and we have accounted for it using the equity method of accounting because we
do not have a controlling financial interest in the entity. Per the contracts, the Sellers have a put right to sell their equity
interest to us for $50 million and we have a call right to purchase the Seller’s equity interest for $70 million, which are
both first exercisable in June 2025 and expire in June 2030. As of December 31, 2022, the carrying value of our investment
in Dempsey is $67.4 million and is recorded in Other Assets. Our maximum exposure to loss consists of our investment
amount and any contingent loss that may occur in the future as a result of a change in the fair value of Dempsey relative
to the strike price of the put option.
The business combinations mentioned above were not significant to our operating results individually or in
aggregate, and thus pro forma results for 2022 and 2021 are not presented.
D.
GOODWILL AND OTHER INTANGIBLE ASSETS
As described in Note M — Segment Reporting, our segment structure is based upon the markets we serve and
goodwill has been allocated to the segments using a relative fair value approach. The changes in the net carrying amount
of goodwill by reporting segment for the years ended December 31, 2022 and December 25, 2021, are as follows (in
thousands):
Balance as of December 26, 2020
2021 Acquisitions
2021 Purchase Accounting Adjustments
Foreign Exchange, Net
Balance as of December 25, 2021
2022 Acquisitions
2022 Purchase Accounting Adjustments
2022 Impairments
Foreign Exchange, Net
Balance as of December 31, 2022
Packaging Construction All Other Corporate
Total
Retail
$ 61,943 $ 87,827 $ 90,729 $ 11,694 $
13,115
(1,682)
—
13,880
(478)
(975)
43,006
(2,292)
—
4,502
(6,228)
(3)
$ 73,376 $ 128,541 $ 89,000 $ 24,121 $
10,971
293
23,862
(3,494)
—
(1,074)
—
—
(256)
$ 84,640 $ 148,909 $ 87,670 $ 16,101 $
—
(4,766)
(2,480)
(774)
— $ 252,193
74,503
—
(10,680)
—
—
(978)
— $ 315,038
34,833
—
(9,041)
—
(2,480)
—
—
(1,030)
— $ 337,320
As of the date of the most recent goodwill impairment test, which utilized data and assumptions as of September
24, 2022, all reporting units had fair values that were substantially in excess of their carrying values, except for the Italian
reporting unit. It was determined that the carrying value of the Italian reporting unit exceeded its fair value and we recorded
a non-cash goodwill impairment charge of $2.5 million as of December 31, 2022, which represented the entire amount of
the goodwill recorded within the reporting unit. During 2020, we experienced significantly lower than expected operating
results within our commercial reporting unit, which is within the Construction segment. 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
as of December 26, 2020, which represented the entire amount of the goodwill recorded within the reporting unit, as a
result.
Indefinite-lived intangible assets totaled $7.3 million as of December 31, 2022 and $7.4 million December 25,
2021 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.
43
The following amounts were included in other amortizable intangible assets, net as of December 31, 2022 and
December 25, 2021 (in thousands):
Non-compete agreements
Customer relationships and other
Licensing agreements
Patents
Tradename
Software
Total
(7,109) $
2022
Accumulated
Amortization Net Value
2021
Accumulated
Amortization Net Value
4,330
76,146
—
2,084
25,793
664
$ 201,468 $ (57,576) $ 143,892 $ 148,809 $ (39,792) $ 109,017
Assets
$ 12,577 $
141,712
4,589
1,976
38,826
1,788
(35,521)
(4,589)
(1,104)
(8,393)
(860)
(25,012)
(4,589)
(1,137)
(4,599)
(295)
101,158
4,589
3,221
30,392
959
106,191
—
872
30,433
928
Assets
8,490 $
(4,160) $
5,468 $
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 relationships and other
Licensing agreements
Patents
Tradename (amortizable)
Software
Weighted Average
Estimated Useful Life Amortization Period
6.5 years
10 years
10 years
10 years
10.9 years
3.2 years
2 to 15 years
5 to 15 years
10 years
10 years
5 to 25 years
3 to 5 years
Amortization expense of intangibles totaled $19.5 million, $13.9 million and $8.7 million in 2022, 2021 and
2020, respectively. The estimated amortization expense for intangibles for each of the five succeeding fiscal years is as
follows (in thousands):
2023
2024
2025
2026
2027
Thereafter
Total
E.
DEBT
$
$
18,948
18,318
17,533
16,460
15,230
57,403
143,892
On November 1, 2018, we entered into a five-year, $375 million unsecured revolving credit facility with a
syndicate of U.S. banks. On February 28, 2021, this credit agreement was amended to increase the availability from
$375 million to $550 million by exercising the accordion feature in the original agreement. On December 6, 2022, a
second amendment was filed increasing the availability from $550 million to $750 million. The facilities now include
up to $60 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, Sterling, Euros and such other foreign currencies as may
subsequently be agreed upon among the parties. 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 15.0 to 30.0 basis points, also determined based upon our performance. The facility fee
is payable quarterly in arrears.
44
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 were used to fund the acquisition of PalletOne in January 2021.
Outstanding letters of credit extended on our behalf on December 31, 2022 and December 25, 2021 aggregated
$59.0 million and $54.2 million; respectively, which includes approximately $3.3 million related to industrial development
revenue bonds. We had an outstanding balance of $5.5 million and $7.8 million, which includes foreign subsidiary
borrowings, on the revolver at December 31, 2022, and December 25, 2021, respectively. After considering letters of
credit, we had $741.2 million and $535.1 million in remaining availability on the revolver on December 31, 2022, and
December 25, 2021, 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.
Long-term debt obligations are summarized as follows on December 31, 2022 and December 25, 2021 (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%
Foreign subsidiary borrowings under revolving credit facility, due on December 6, 2027,
interest payable monthly at a floating rate (4.13% on December 31, 2022 and 1.06% on
December 25, 2021)
Series 1999 Industrial Development Revenue Bonds, due on August 1, 2029, interest
payable monthly at a floating rate (1.04% on December 31, 2022 and 0.14% on December
25, 2021)
Series 2002 Industrial Development Revenue Bonds, due on December 1, 2022, interest
payable monthly at a floating rate (N/A on December 31, 2022 and 0.18% on December 25,
2021)
Finance leases and foreign affiliate debt
Less current portion
Less debt issuance costs
Long-term portion
2022
2021
$ 50,000
$ 50,000
50,000
50,000
50,000
40,000
35,000
50,000
40,000
35,000
—
35,000
40,000
40,000
5,465
7,818
3,300
3,300
—
4,565
278,330
(2,942)
(234)
$ 275,154
3,700
5,544
320,362
(42,683)
(112)
$ 277,567
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 31, 2022 and December 25, 2021.
45
On December 31, 2022, the principal maturities of long-term debt and finance lease obligations are as follows (in
thousands):
2023
2024
2025
2026
2027
Thereafter
Total
$
$
2,942
40,817
132
136
5,614
228,689
278,330
On December 31, 2022, the estimated fair value of our long-term debt, including the current portion, was $242.1
million, which was $36.2 million less 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 statement of earnings
as of December 31, 2022.
As of December 31, 2022, 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 31, 2022.
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 10 to 15
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 31, 2022 and December 25, 2021 are as follows
(in thousands):
Operating lease cost
Short-term lease cost
Variable lease cost
Sublease income
Total lease cost
2022
2021
$ 32,458 $ 30,054
5,264
4,761
(3,109)
$ 45,363 $ 36,970
10,490
5,291
(2,876)
The amounts paid for operating leases, included in the measurement of lease liabilities, were $30.2 million in the
year ended December 31, 2022 and $27.4 million in the year ended December 25, 2021. In addition, right-of-use assets
obtained in exchange for new operating lease liabilities were approximately $32.0 million and $46.7 million,
respectively, for the years ended December 31, 2022 and December 25, 2021.
46
Future minimum payments under non-cancelable operating leases on December 31, 2022 are as follows (in
thousands):
2023
2024
2025
2026
2027
Thereafter
Total minimum lease payments
Less present value discount
Total lease liability
$
Operating
Leases
29,501
25,246
21,929
19,287
13,542
22,700
$ 132,205
(21,209)
$ 110,996
Rent expense was approximately $48.2 million, $40.1 million, and $28.4 million in 2022, 2021, and 2020,
respectively.
As of December 31, 2022 and December 25, 2021, the weighted average lease term for operating leases was 6.78
years and 7.33 years, respectively. Similarly, the weighted average discount rate for operating leases was 3.70% and
2.87%, 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 commenced upon their retirement. The
remaining deferred compensation liability on December 31, 2022 was $0.1 million and on December 25, 2021 was $0.2
million. 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. The investment in life insurance contracts as of
December 31, 2022 and December 25, 2021, was $11.6 million and $12.7 million, respectively, and is recorded in “Other
Assets” on the Consolidated Balance Sheet.
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 $0.5 million and $0.7
million on December 31, 2022 and December 25, 2021, respectively, and are included in "Other Assets." Related liabilities
totaled $50.4 million and $42.1 million on December 31, 2022 and December 25, 2021, 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 also 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.
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.
47
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 $2.0 million in 2022, $1.7
million in 2021, and $1.8 million in 2020. 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, sales
incentive awards, 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 2022, 2021, and 2020.
Below is a summary of common stock issuances for 2022 and 2021:
December 31, 2022
Shares issued under the deferred compensation plans
113
$
81.86
December 25, 2021
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 plan
Forfeitures
Total shares issued under stock grant programs
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 grants plan
Forfeitures
Total shares issued under stock grant programs
Common
Stock
44
$
$
82.71
Average
Share
Price
73.45
78.23
79.98
82.73
82.87
Average
Share
Price
75.18
78.37
72.66
59.56
60.24
$
59.84
2
4
755
62
(17)
806
2
5
487
77
(24)
547
Common
Stock
33
$
Shares issued under the deferred compensation plans
117
$
64.14
48
A summary of the nonvested restricted stock awards granted under the LTSIP is as follows:
Nonvested at December 28, 2019
Granted
Vested
Forfeited
Nonvested at December 26, 2020
Granted
Vested
Forfeited
Nonvested at December 25, 2021
Granted
Vested
Forfeited
Nonvested at December 31, 2022
Weighted-
Average Grant
Date Fair Value
Weighted-
Unrecognized Average
Compensation Period to
Recognize
Expense
7.9 0.86 years
Expense
(in millions)
Restricted
Awards
1,202,895 $
348,016
(177,790)
(9,327)
1,363,794 $
560,516
(274,271)
(23,007)
1,627,032 $
815,874
(286,661)
(17,990)
2,138,255 $
29.68 $
47.60
22.69
33.46
35.14 $
60.24
26.50
39.68
45.23 $
79.97
34.00
54.07
58.70 $
6.3 0.62 years
6.6 0.43 years
51.4 3.74 years
Under the Stock Purchase Plan and LTSIP, we recognized share-based compensation expense of $28.2 million,
$11.2 million, and $4.0 million and the related total income tax benefits of $6.9 million, $2.7 million, and $1.0 million in
2022, 2021 and 2020, respectively.
For the year-ended December 31, 2022, we determined that $54 million of share-based bonus awards,
representing 625,658 shares, will be awarded to qualified employees as it relates to the company’s 2022 performance and
granted in 2023. Awards granted generally vest after a period of three, five or eight years from the grant date. In addition
to the share-based bonus awards, certain employees are eligible to receive performance units equivalent to $2.3 million,
or 26,360 shares of stock, if certain performance metrics are achieved after three years. As of December 31, 2022 and
December 25, 2021, we recognized approximately $13.8 million and $11.5 million, respectively, of compensation expense
related to share-based bonus awards for each of those respective performance years.
We have a Sales Incentive Plan for certain eligible employees. According to the policy, sales incentives are
determined and calculated using a formula-based approach and estimated monthly based on specific performance metrics.
Beginning July 2022, we modified the Sales Incentive Plan to place a cap on cash payments with the remaining earned
incentive being settled in share-based awards. For the year-ended December 31, 2022, we determined that $10.5 million
of share-based sales incentive awards, representing 122,022 shares, will be awarded to qualified employees based on the
2022 performance year and granted in 2023. These awards will vest after a period of five years from the grant date. As of
December 31, 2022, we recognized approximately $0.9 million of compensation expense related to share-based sales
incentive awards for the 2022 performance year.
In 2022, 2021 and 2020, cash received from share issuances under our plans was $2.8 million, $2.1 million and
$1.4 million, respectively.
Effective February 3, 2023, our Board authorized an additional 2 million shares to be repurchased under our
existing share repurchase program. We repurchased 1,246,616 shares in 2022 and no shares in 2021 under this program.
Following the most recent authorization, the cumulative total authorized shares available for repurchase is approximately
2 million shares which expire in one year.
49
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 2022, 2021, and 2020, on a discretionary basis, totaling $11.7
million, $9.2 million, and $7.2 million respectively. Included within the total employee matched contribution was an
additional matched contribution for hourly employees of $4.6 million, $3.7 million and $2.9 million for 2022, 2021 and
2020, 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 (who have 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, certain benefits including
health care benefits, for a specified period of time if certain eligibility requirements are met. Approximately $14.8 million
and $13.1 million are accrued in “Other Liabilities” for this plan on December 31, 2022 and December 25, 2021,
respectively.
J.
INCOME TAXES
Income tax provisions for the years ended December 31, 2022, December 25, 2021, and December 26, 2020 are
summarized as follows (in thousands):
2022
2021
2020
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
$ 181,029 $ 115,077 $ 59,055
16,709
8,601
84,365
30,441
21,095
166,613
44,646
17,336
243,011
(8,561)
(3,657)
(941)
(13,159)
2,292
(1,518)
1,962
2,736
$ 229,852 $ 173,972 $ 87,101
6,242
118
999
7,359
2022
2021
$ 876,071 $ 645,316 $ 308,167
32,816
$ 934,816 $ 726,336 $ 340,983
81,020
58,745
2020
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
Effective income tax rate
2022
21.0 %
3.4
n/a
(0.8)
(0.1)
0.1
1.0
24.6 %
2021
21.0 %
3.3
n/a
(0.6)
(0.1)
(0.4)
0.7
23.9 %
2020
21.0 %
3.4
n/a
(0.9)
(0.1)
0.6
1.5
25.5 %
50
Temporary differences which give rise to deferred income tax assets and (liabilities) on December 31, 2022 and
December 25, 2021 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
$
2022
37,893 $
28,746
6,891
500
102
3,732
3,273
6,791
10,378
98,306
(4,618)
93,688
(69,711)
(43,643)
(27,849)
(141,203)
2021
27,543
24,627
5,502
527
450
2,007
1,446
5,735
5,233
73,070
(3,952)
69,118
(64,387)
(38,367)
(23,866)
(126,620)
$ (47,515) $ (57,502)
As of December 31, 2022, we had federal, state and foreign net operating loss carryforwards of $6.9 million and
state tax credit carryforwards of $0.1 million, which will expire at various dates.
The NOL and credit carryforwards expire as follows:
2023 - 2027
2028 - 2032
2033 - 2037
2038 - 2042
Thereafter
Total
$
42 $ 363 $
— $
—
—
499
—
230
1,696
1,804
—
$ 499 $ 3,772 $ 2,618 $
1,406
255
—
594
Net Operating Losses
State
U.S.
Foreign
Tax Credits
U.S.
State
—
— $
—
—
102
—
—
—
—
—
— $ 102
As of December 31, 2022, 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 $4.1 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
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.
51
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands):
2022
2021
2020
Gross unrecognized tax benefits beginning of year
(Decrease) 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
$ 3,603 $ 3,892 $ 4,166
(82)
730
(922)
$ 3,217 $ 3,603 $ 3,892
437
839
(1,565)
(216)
764
(934)
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 $0.3 million for the year December 31, 2022 and
$0.5 million for each of the years December 25, 2021, and December 26, 2020.
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, the expiration of various statutes of limitation, and new positions that may be taken, it is reasonably possible
that the amount of unrecognized tax benefits that would reverse through the income statement in the next twelve months
is $1.2 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.
In addition, on December 31, 2022, 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.
On December 31, 2022, we had outstanding purchase commitments on commenced capital projects of
approximately $63.2 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. 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
31, 2022, we had approximately $15.2 million in outstanding payment and performance bonds for open projects. We had
approximately $30.9 million in payment and performance bonds outstanding for completed projects which are still under
warranty.
On December 31, 2022, we had outstanding letters of credit totaling $59.0 million, primarily related to certain
insurance contracts and industrial development revenue bonds described further below.
52
In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers and other lenders to
guarantee our performance under certain contracts. We currently have irrevocable letters of credit outstanding totaling
approximately $51.9 million for these types of arrangements. We have reserves recorded on our balance sheet, in accrued
liabilities, that reflect our expected future liabilities under these 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 2022 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.
Our business segments consist of UFP Retail Solutions, UFP Packaging and UFP Construction and align with the end
markets we serve. This segment structure allows for a specialized and consistent sales approach among Company
operations, 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, Packaging, and Construction segments. In the
case of locations which serve multiple segments, results are allocated and accounted for by segment. Two customers, The
Home Depot and Lowes, accounted for approximately 15% and 11%, respectively, of our total net sales in fiscal 2022,
16% and 10%, respectively, of our total net sales in fiscal 2021 and 24% and 4%, respectively, in 2020.
The exception to this market-centered reporting and management structure is our International segment, which
comprises our Mexico, Canada, Europe, India, 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 consist of net sales to external customers initiated by UFP Purchasing and UFP
Transportation and over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases
real estate, and UFP Transportation Ltd., which owns, leases and operates transportation equipment, are also included in
the Corporate column. Inter-company lease and service charges are assessed to our operating segments for the use of these
assets and services at fair market value rates. Total assets in 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., UFP Transportation Ltd, UFP Purchasing, and UFP RMS, LLC. The tables below are
presented in thousands.
53
Net sales to outside customers
Intersegment net sales
Interest expense
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
Net sales to outside customers
Intersegment net sales
Interest expense
Amortization expense
Depreciation expense
Segment earnings before income
taxes
Segment assets
Capital expenditures
Retail
Packaging
Construction Other
Corporate
Total
2022
All
$ 3,650,639 $ 2,394,681 $ 3,143,868 $ 431,611 $
78,409
(2)
6,925
28,191
110,523
—
3,358
15,364
421,406
(1,310)
4,571
2,992
5,940 $ 9,626,739
—
13,910
19,499
94,063
(1,003,078)
15,045
514
27,618
333,087
885,878
55,129
397,446
712,837
54,167
56,813
308,688
3,968
(2,695)
875,253
5,054
934,816
3,672,073
174,124
Retail
Packaging
Construction Other
Corporate
Total
2021
All
$ 3,418,337 $ 2,148,142 $ 2,698,434 $ 362,473 $
85,954
12
6,093
26,219
82,026
1
3,525
13,151
455,874
184
1,336
2,094
8,748 $ 8,636,134
—
13,814
13,948
84,184
(838,254)
13,519
214
25,765
264,958
741,672
42,652
264,238
736,157
22,344
80,905
343,363
5,140
(8,555)
579,890
40,622
726,336
3,245,271
151,166
Retail
Packaging
Construction Other
Corporate
Total
2020
All
$ 2,167,122 $ 1,072,117 $ 1,695,684 $ 217,094 $
45,217
22
4,159
15,163
68,294
—
2,152
12,123
283,689
90
877
1,619
1,981 $ 5,153,998
—
9,311
8,716
63,964
(540,039)
9,197
46
23,384
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
392,740
177
4,131
19,898
150,165
889,417
55,806
214,400
98
2,780
16,955
124,790
844,189
40,408
142,839
2
1,482
11,675
155,364
510,464
16,277
Information regarding principal geographic areas was as follows (in thousands):
2022
Long-Lived
Tangible
2021
Long-Lived
Tangible
2020
Long-Lived
Tangible
United States
Foreign
Total
Assets
Net Sales
Net Sales
$ 9,254,676 $ 770,921 $ 8,395,737 $ 679,757 $ 5,022,014 $ 478,325
36,380
$ 9,626,739 $ 897,761 $ 8,636,134 $ 734,630 $ 5,153,998 $ 514,705
126,840
Net Sales
240,397
372,063
131,984
54,873
Assets
Assets
54
The following table presents, for the periods indicated, our disaggregated net sales (in thousands) by business
unit for each segment.
Retail
Deckorators
Prowood and Outdoor Essentials
Sunbelt
UFP Edge
Other
Total Retail
Packaging
North (1)
Southeast (1)
Southwest (1)
West (1)
PalletOne
Protective Packaging
Total Packaging
Construction
Factory Built
Site Built
Commercial
Concrete Forming
Total Construction
All Other
Corporate
Total Net Sales
2022
2021
2020
$ 326,011 $ 248,765 $ 219,930
1,828,489
—
114,987
3,716
$ 3,650,639 $ 3,418,337 $ 2,167,122
2,239,711
773,909
148,927
7,025
2,228,509
924,441
168,190
3,488
$
646,278 $ 615,092 $ 385,132
229,316
395,069
445,203
238,643
400,515
468,274
206,022
363,300
379,038
—
355,347
399,356
13,004
18,819
56,532
$ 2,394,681 $ 2,148,142 $ 1,072,117
$ 1,181,837 $ 1,098,905 $ 597,017
725,899
221,988
150,780
$ 3,143,868 $ 2,698,434 $ 1,695,684
1,190,393
259,360
149,776
1,361,607
336,298
264,126
$ 431,611 $ 362,473 $ 217,094
$
5,940 $
8,748 $
1,981
$ 9,626,739 $ 8,636,134 $ 5,153,998
(1) Effective January 1, 2023, the Packaging segment established new business units as followings: Structural Packaging, PalletOne, and Protective
Packaging Solutions. This change will result in the transfer of net sales from the these geographic business units to Structural Packaging and PalletOne
in 2023.
55
The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales
to total net sales by segment.
Value-Added
Retail
Packaging
Construction
All Other
Corporate
Total
Commodity-Based
Retail
Packaging
Construction
All Other
Corporate
Total
2022
2021
2020
44.9%
72.0%
77.2%
76.3%
44.3%
63.4%
55.1%
28.0%
22.8%
23.7%
55.7%
36.6%
43.2%
67.7%
73.0%
74.7%
67.9%
59.7%
53.8%
64.7%
76.3%
76.0%
100.0%
64.3%
56.8%
32.3%
27.0%
25.3%
32.1%
40.3%
46.2%
35.3%
23.7%
24.0%
0.0%
35.7%
fddf
N.
QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following table sets forth selected financial information for all of the quarters, consisting of 53 weeks during
the year ended December 31, 2022 and 52 weeks during the year ended December 25, 2021, (in thousands, except per
share data):
First
Second
Third
Fourth
2022
2021
2022
2021
2022
2021
2022
2021
$ 2,489,313 $ 1,825,004 $ 2,900,874 $ 2,700,541 $ 2,322,855 $ 2,093,784 $ 1,913,697 $ 2,016,805
371,564
147,006
421,294
175,360
357,470
131,879
327,555
125,747
286,554
104,251
503,452
207,853
450,176
172,101
478,363
193,131
189,703
103,311
203,118
173,382
167,241
121,041
132,589
137,906
3.01
1.67
3.24
2.79
2.68
1.94
2.12
2.21
3.00
1.67
3.23
2.78
2.66
1.94
2.10
2.21
56
Net sales
Gross profit
Net earnings
Net earnings
attributable
to
controlling
interest
Basic
earnings per
share
Diluted
earnings per
share
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 stock price performance graph compares the annual percentage change in the cumulative total
return on our common stock with the cumulative total returns of companies comprising the NASDAQ US Benchmark TR
index and an industry peer group we selected. The NASDAQ US Benchmark TR index replaces the NASDAQ Stock
Market (US Companies) Index in this analysis and going forward, as the CRSP Index data is no longer accessible. The
CRSP indexes has been included with data through 2020. The graph assumes an investment of $100 on December 30,
2017, and reinvestment of dividends in all cases.
The companies included in our self-determined industry peer group are as follows:
American Woodmark Corporation
Louisiana-Pacific Corporation
BlueLinx Holdings, Inc.*
Boise Cascade Company
Builders FirstSource, Inc.
Masco Corporation
Patrick Industries, Inc.**
Simpson Manufacturing Company, Inc.
Cornerstone Building Brands, Inc.*
Sonoco Products Company
Gibraltar Industries, Inc.
Greif, Inc.
Trex Company, Inc.
WestRock Company
* BlueLinx Holdings, Inc. and Cornerstone Building Brands, Inc.were removed from the current year peer group.
** Patrick Industries, Inc. was added to the current year peer group.
57
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.
DIRECTORS AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS
SECTION 16 OFFICERS
Matthew J. Missad
Chairman of the Board and Chief Executive Officer
UFP Industries, Inc.
Matthew J. Missad
Chairman of the Board and Chief Executive Officer
Michael R. Cole
Chief Financial Officer and Treasurer
Patrick Benton
President
UFP Construction, LLC
Scott A. Worthington
President
UFP Packaging, LLC
William D. Schwartz, Jr.
President
UFP Retail Solutions, LLC
David A. Tutas
Chief Compliance Officer
General Counsel
William G. Currie
Director
UFP Industries, Inc.
Thomas W. Rhodes
President and Chief Executive Officer
TWR Enterprises, Inc.
Bruce A. Merino
Director
UFP Industries, Inc.
Mary Tuuk Kuras
Director
UFP Industries, Inc.
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.
58
ANNUAL MEETING
SHAREHOLDER INFORMATION
The 2023 Annual Shareholder’s Meeting of UFP Industries, Inc. will be held at 8:30 a.m. on April 26, 2022, at 2880 East
Beltline Lane NE, Grand Rapids, MI 49525.
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
59