UFP Industries
Annual Report 2023

Plain-text annual report

Annual Report to Shareholders 2023 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ☐ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the fiscal year ended December 30, 2023. OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the transition period of ____ to _____. Commission File No.: 0-22684 UFP INDUSTRIES, INC. (Exact name of registrant as specified in its charter) Michigan (State or other jurisdiction of incorporation or organization) 2801 East Beltline, N.E., Grand Rapids, Michigan (Address of principal executive offices) Registrant’s telephone number, including area code (616) 364-6161 Securities registered pursuant to Section 12(b) of the Act: 38-1465835 (I.R.S. Employer Identification No.) 49525 (Zip Code) Title of Each Class Common Stock, $1 par value Trading Symbol UFPI Name of Each Exchange on Which Registered The NASDAQ Global Select Market Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  No  Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  No  Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No  Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files) Yes  No  Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. Large accelerated filer  Accelerated filer  Non-accelerated filer  Smaller Reporting Company ☐ Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with a new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. Yes  No  Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. Yes ☐ No  Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). Yes  No  Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No  The aggregate market value of the common stock held by non-affiliates of the registrant (i.e. excluding shares held by executive officers, directors, and control persons as defined in Rule 405, 17 CFR 230.405) on July 1, 2023 (which was the last trading day of the registrant’s second quarter in the fiscal year ended December 30, 2023) was $5,684,288,927 computed at the closing price of $97.05 on that date. As of February 3, 2024, 61,624,287 shares of the registrant’s common stock, $1 par value, were outstanding. Documents incorporated by reference: (1) Certain portions of the registrant’s Annual Report to Shareholders for the fiscal year ended December 30, 2023 are incorporated by reference into Part I and II of this Report. (2) Certain portions of the registrant’s Proxy Statement for its 2024 Annual Meeting of Shareholders are incorporated by reference into Part III of this Report. Exhibit Index located on page E-21. ANNUAL REPORT ON FORM 10-K DECEMBER 30, 2023 TABLE OF CONTENTS PART I Business. Item 1. Item 1A. Risk Factors. Item 1B. Unresolved Staff Comments. Item 1C. Cybersecurity. Item 2. Item 3. Item 4. Mine Safety Disclosures. Properties. Legal Proceedings. Additional item: Executive Officers of the Registrant. PART II Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. [Reserved] Item 6. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. Item 7A. Quantitative and Qualitative Disclosures About Market Risk. Item 8. Item 9. Item 9A. Controls and Procedures. Item 9B. Other Information. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Financial Statements and Supplementary Data. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure. PART III Item 10. Directors, Executive Officers and Corporate Governance. Item 11. Executive Compensation. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. Item 13. Certain Relationships and Related Transactions, and Director Independence. Item 14. Principal Accountant Fees and Services. Item 15. Exhibits, Financial Statement Schedules. Exhibit Index. PART IV 1 2 8 10 10 13 15 15 15 16 16 16 16 17 17 17 18 18 18 18 18 19 19 20 21 Item 1. Business. General Development of the Business. PART I UFP Industries, Inc. (“we” or “our”) is a holding company with subsidiaries throughout North America, Europe, Asia, and Australia that design, manufacture and supply products made from wood, composites, and other materials to three markets: retail, packaging, and construction. We are headquartered in Grand Rapids, Michigan. For more information about UFP Industries, Inc., or our affiliated operations, go to www.ufpi.com. Information relating to current developments in our business is incorporated by reference from our Annual Report to Shareholders for the fiscal year ended December 30, 2023 ("2023 Annual Report") under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations." Selected portions of the 2023 Annual Report are filed as Exhibit 13 with this Form 10-K Report. Financial Information About Segments. 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. Our business segments consist of UFP Retail Solutions, UFP Packaging and UFP Construction and align with the end markets we serve. Among other things, this 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 that serve multiple segments, results are allocated and accounted for by segment. 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 referred to as “All Other” throughout this report. The Corporate segment includes purchasing, transportation, corporate ventures, 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 Corporate. 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. Narrative Description of Business. Historically, we owned and operated a number of manufacturing facilities across North America that served our various markets, and we managed those operations primarily on a geographic basis. As part of that structure, the managers of those facilities and geographic business units were responsible for and compensated on the basis of each facility's, unit's, and region's respective financial performance. This structure fostered a strong entrepreneurial and sales culture, as well as significant revenue growth – from 2011 to 2019 our revenues increased from $1.8 billion to $4.4 billion. We believe that the duration and durability of our relationships with many of our customers, which extend over several decades with certain key customers, is a reflection of our strong sales culture and intense focus on providing custom solutions. 2 The growth in our business, and in the size and number of our customers, generated an increased need for a deeper understanding of the markets we serve, as well as the need to offer more complete solutions, services, and products for existing and prospective customers. That need, combined with our growth objectives, required a structure that would reorient the company’s focus from geography to end markets. Our 2020 restructuring accomplished that objective and now allows us to better serve our customers, recognize and exploit market opportunities, enhance the efficiency of our operations, and improve the deployment of capital. At the same time, we continue to maintain our existing compensation philosophy and practices of rewarding the financial performance of our plants, business units, and segments, based upon pre-bonus operating profits and return on investment, to preserve our strong entrepreneurial and sales culture. Our business segments are functionally interdependent and are supported by common corporate services, such as accounting and finance, information technology, human resources, legal and compliance, and others. We regularly invest in automation and create best practices to improve the efficiency of our manufacturing facilities across each of the segments. The results and improvements from these investments are shared among the segments. This exchange of improvements and ideas has also prompted better and faster innovation for new products, processes, and product improvements. Importantly, the restructuring allows us to better evaluate market conditions and opportunities, while effectively allocating capital and resources to the appropriate segments and business units. Also, we believe that the diversification and manner in which we operate our business provides an inherent hedge against the inevitable business cycles that our markets experience and over which we have little control. Accordingly, our goal is to provide stable earnings and cash flows to our shareholders. Our diversification and operating practices also mitigate the impact of volatile lumber market conditions experienced by traditional lumber companies. Retail Solutions segment. Our Retail Solutions segment is comprised of the following business units: ProWood, Deckorators and UFP-Edge. The segment is focused on distinct product offerings which are grouped by brands and business units. These groupings may change periodically as opportunities to gain efficiencies occur or development of products that deliver increased scale and synergy are developed. ProWood. Our ProWood business unit manufactures and sells pressure-treated lumber products, including decking, fencing, and lattice, as well as decorative and functional lawn and garden products to building products retailers across the nation. This business unit includes our branded ProWood line of pressure-treated and fire-retardant products used primarily for outdoor decking environments, including associated accessories. It also includes our branded Outdoor Essentials line of lawn and garden products, consisting of wood and vinyl fencing and lattice, garden beds and planters, pergolas, picnic tables, and other landscaping products. Numerous pressure-treaters exist on local and regional scales with none approaching the volume sold by UFP. We estimate we produce approximately 28% of all residential treated wood, 9% of all wood fencing, and 8% of all fire-retardant wood products. Deckorators. This business unit includes the manufacture of wood plastic composite and our patented Surestone mineral based composite decking and related decking accessories, including aluminum railing systems, balusters, post caps, and similar products, as well as customized, aluminum fencing. Customers include big box home improvement retailers, regional home centers and wholesale distributors. We estimate we manufacture 6% of all composite decking and railing in the U.S. UFP-Edge. This business unit manufactures and sells exterior siding, pattern, trim and facia products. These products include traditional wood, engineered wood and modified wood siding with a variety of finish and profile alternatives as well as primed wood trim boards and facia. It also includes interior pattern and trim products, as well as pre-painted and primed shiplap and project boards. UFP-Edge is sold to home improvement retailers and two-step distributors. UFP Retail Solutions has numerous competitive advantages. We are not aware of any competitor that currently manufactures, treats and distributes a full line of both value-added and commodity-based products, on a national basis, as we do within this segment. We believe the breadth of our product offering, scale and geographic dispersion, proximity of our plants to core customers and key vendors, product innovation initiatives, purchasing and manufacturing expertise, procurement advantages, and service capabilities provide us a competitive edge in this market. 3 We supply customers in this segment from many of our locations. Our facilities supply mixed truckloads of products, delivered to customers with rapid turnaround. Freight costs are a factor in the ability to competitively service this market, especially with treated wood products due to their weight. The proximity of our manufacturing facilities to customer locations is factored into annual sales programs. The Retail segment services two of our largest customers, The Home Depot and Lowes, which accounted for approximately 17% and 12%, respectively, of our total net sales in fiscal 2023, 15% and 11%, respectively, in 2022, and 16% and 10%, respectively, in 2021. See Note M "Segment Reporting" of our Annual Report to Shareholders for the fiscal year ended December 30, 2023 for our disaggregated net sales by business unit for our Retail Solutions segment. Packaging segment. Formerly known as our Industrial segment, it is comprised of the following business units: Structural Packaging, PalletOne, and Protective Packaging Solutions. Structural Packaging. This business unit designs, engineers, manufactures and tests custom packaging products primarily made of wood and metal. These products are custom designed, often including mixed materials, and manufactured based upon specific customer needs and requirements. We serve a wide variety of regional, national, and global customers in several end markets such as building materials, durable goods, agricultural, moving and storage, heavy equipment and automotive. We utilize combinations of various materials through industrial engineering and testing to promote the best value and functionality for our customers. In Structural Packaging there are regional companies that produce similar product lines, and small single-location competitors in most of our markets. We estimate our domestic market share in Structural Packaging to be 10-12%. PalletOne. This business unit designs and manufactures pallets primarily made of wood and heat-treated wood. Our pallets are designed and manufactured in numerous sizes and configurations and are used by our customers for shipping a wide assortment of consumer and industrial products. This business unit also includes a recycling operation of previously used pallets. Keys to our success in this business unit are low-cost production through expanded automation, including robotics and high efficiency pallet machines, and the procurement of competitively priced industrial grade wood fiber. In 2022 the company acquired a 50% equity stake in Dempsey Wood Products, LLC, which produces pallet lumber and other industrial wood products in Orangeburg, South Carolina. The lumber Dempsey produces is a crucial product for pallet operations and has been in short supply as larger mills produce less of this type of lumber. PalletOne’s investment in Dempsey helps it secure and grow a critical long-term supply source. There are numerous local and regional pallet manufacturers that compete with PalletOne. We estimate that, as the largest supplier, we manufacture approximately 10% of new machine-built pallets nationally. Protective Packaging Solutions. This business unit consists of a wide variety of products, such as corrugate, foam, labels, strapping and films. These products are primarily sold as additional offerings to our structural packaging products and pallets and are generally sold as a means of providing a more complete solution to our customers' packaging needs and requirements. Over the last five years, we have added additional products and services to this business unit to meet the increasing demand of our customers to provide a wider array of innovative solutions to their packaging and shipping needs. Through the acquisitions of Advantage Label in Grand Rapids, MI, and Titan Manufacturing, a highly-automated corrugate converter in Flower Mound, TX, UFP has become a manufacturer of labels and corrugate boxes, two significant growth categories for UFP Packaging. Competitive advantages for UFP Packaging include: being a low cost pallet producer due to our supply agreements, investments in vertical integration, and level of automation in our manufacturing plants; our scale and ability to serve large global, national and regional customers; design and engineering expertise, coupled with our ability to manufacture structural packaging with mixed materials, allowing us to provide creative, value-added solutions to our customers; single- source supplier offering a wide breadth of products, allowing customers to buy more efficiently. We plan to acquire companies across the industrial packaging spectrum with capabilities in product categories that allow us to fill geographical gaps that enhance our ability to offer valuable packaging solutions to our customers. See Note M "Segment Reporting" of our Annual Report to Shareholders for the fiscal year ended December 30, 2023 for our disaggregated net sales by business unit for our Packaging segment. 4 Construction segment. Our construction segment is comprised of the following business units – Factory-Built Housing, Site-Built Construction, Commercial Construction, and Concrete Forming. Factory-Built Housing. This business unit designs and manufactures roof trusses, cut-to-size dimensional and board lumber, plywood, and oriented strand board, all intended for use in the construction of manufactured housing. Our customers in this market are producers of mobile, modular and prefabricated homes and, to a lesser extent, recreational vehicles (RV) and cargo trailers. Our principal competitive advantages include our product knowledge, the strength of our engineering support services, the proximity of our regional facilities to our customers, our purchasing and manufacturing expertise and our ability to provide national sales programs to certain customers. As a result of these advantages, we estimate we produce approximately 45% of all roof trusses used in factory-built housing in the United States. We also distribute products such as siding, electrical, plumbing, and many other specialty products to factory-built housing and RV customers. Customer vertical integration strategies have affected us in certain regions, and we’ve taken steps to mitigate this risk by increasing our value as a supplier through innovation and low cost production. Site-Built Construction. This business unit designs and manufactures roof and floor trusses, wall panels, I-joists and lumber packages as well as engineered wood components used to frame residential and light commercial projects. Recent acquisitions, including Atlantic Prefab, Inc., Exterior Designs, LLC, and Patriot Building Systems, LLC, and Endurable Building Products have given the company manufacturing capability in alternate material components such as metal trusses, sheathed and pre-finished light gauge metal wall panels and aluminum balconies, decks and rail accessories. We’ve made a variety of investments in automation, allowing us to enhance efficiency and capacity in numerous UFP Construction operations. Our recently launched proprietary smartphone application, TrussTrax, provides a convenient, simple way for builders to track orders, shipments and engineered documents 24 hours a day, and has enjoyed wide customer adoption. Our customers in this market are primarily large-volume, multi-tract builders and smaller volume custom builders. We also supply builders engaged in multi-family and light commercial construction. We currently estimate that approximately 65% of the unit's business is for single-family homes while 35% is for multi-family structures. Competition in site-built construction consists of numerous national and regional building products dealers who also manufacture components and/or provide framing services, as well as regional manufacturers of engineered wood components. We believe our primary competitive advantages relate to the engineering and design capabilities of our staff, purchasing and manufacturing expertise, product quality, timeliness of delivery, and financial strength, as well as providing a comprehensive turn-key package, including installation in selected markets. As a result of these strengths, we estimate we produce approximately 12% of all engineered wood components used in housing in the United States. Generally, terms of sale and pricing are determined based on contracts we enter into with our customers. We currently supply customers in these markets from manufacturing facilities in many different states, primarily located in the non-urban Northeast, mid- Atlantic, Southeast, Texas, and Colorado. We have intentionally avoided markets that have experienced more severe demand volatility for housing. Also, the states in which we have a presence are forecast to continue to benefit from migration trends in the United States. Freight costs are a factor in the ability to competitively service this market due to the space requirements of these products on each truckload. We also provide framing services for builders in certain regional markets in which we erect the wood structure. Commercial Construction. Our commercial construction business unit primarily includes the operations of idX Holdings, Inc. idX is a designer, manufacturer and installer of highly customized interior fixtures, casework and architectural millwork used in a variety of retail and commercial structures. This business unit serves customers throughout North America and to a lesser extent, Asia and Europe, in healthcare, hospitality, quick service restaurants, retail, and financial, offering comprehensive, streamlined solutions and customized products while managing programs from concept through completion, on a global scale. We believe we are one of the top five custom interior environment providers globally and the largest diversified custom solutions provider. Concrete Forming. This business unit designs, manufactures and supplies wood forms and related products that are used by our customers to set or form concrete for various structures, including large parking garages, stadiums, commercial structures, and infrastructure projects such as bridges. Our customers in this business unit include general contractors as well as distributors. We believe we are unique in our ability to deliver highly engineered, factory-built solutions to job sites. 5 We believe the diversification of the end markets we serve in our Construction segment as well as the breadth of our products and services represent a competitive advantage. See Note M "Segment Reporting" of our Annual Report to Shareholders for the fiscal year ended December 30, 2023 for our disaggregated net sales by business unit for our Construction segment. UFP Purchasing/Suppliers. Our purchasing team manages and purchases wood fiber for each of our segments. The three main end markets for softwood lumber in North America – retail, construction, and packaging – align with our three business segments We are the largest converter of solid sawn softwood lumber from North American primary producers (lumber mills). For 2023, we estimate we purchased approximately 8% of the 51.5 billion board feet of North America softwood lumber production. The volume and variety of lumber dimensions purchased allows us to consume all grades and dimensions of what many of our mill suppliers produce, effecting and maintaining long-term, beneficial relationships with many of those suppliers. In turn, this has allowed us to better manage our raw materials inventory (including vendor- managed inventory), lower our costs, and mitigate the volatility of lumber prices. We use primarily southern yellow pine in our pressure-treating operations and our site-built housing, structural packaging, and machine-built pallet operations in the Southeastern United States. Southern yellow pine is sourced from mills ranging from Texas to the Carolinas. We also use spruce-pine-fir from both Eastern and Western Canada; hemlock, douglas fir and cedar from the Pacific Northwest; inland species of pine, plantation grown radiata and southern yellow pines from South America; and various European softwoods. During 2023 our annual purchases of lumber totaled approximately $2.2 billion and consisted of the following species and their respective percent of total lumber purchases: southern yellow pine (69%), spruce-pine-fir (13%), and douglas fir (2%), while the remaining 16% of lumber purchases comprise various other species and imports outside of North America. Additionally, we purchased approximately $571.7 million in plywood in 2023. There are numerous primary producers for all varieties we use, and we are not dependent on any particular source of supply. Intellectual Property. We own numerous patents and have several patents pending on technologies related to our business. Examples include our Deckorators brand of composite decking and railing and its proprietary, patented Surestone technology used to produce mineral-based composite decking; Trusstrax, mobile application offered to our Site-Built customers; and the ProWood brand of pressure-treated lumber and outdoor living products. In addition, we own numerous registered trademarks and claim common law trademark rights to several others. As we develop proprietary brands, we may pursue registration or other formal protection. While we believe our patent and trademark rights are valuable, the loss of a patent or any trademark would not be likely to have a material adverse impact on our competitive position. Backlog. Due to the nature of our retail and industrial businesses, backlog information is not meaningful. The maximum time between receipt of a firm order and shipment does not usually exceed a few days. Therefore, we would not normally have a backlog of unfilled orders in a material amount. The relationships with our major customers are such that we are either the exclusive supplier of certain products and/or certain geographic areas, or the designated source for a specified portion of a customer's requirements. In such cases, either we are able to forecast the customer's requirements, or the customer may provide an estimate of its future needs. In neither case, however, will we receive firm orders until just prior to the anticipated delivery dates for the products ordered. On December 30, 2023 and December 31, 2022, we estimate that backlog orders associated with our customized interior fixture businesses approximated $59.2 million and $90.1 million, respectively. Cancelled orders have been removed from the prior year figure. On December 30, 2023 and December 31, 2022, we estimate that backlog orders associated with our site-built construction businesses approximated $79.7 million and $91.1 million, respectively. We expect that the orders above will be primarily filled within the next fiscal year; however, it is possible that some orders could be canceled. Environmental. Information required for environmental disclosures is incorporated by reference from Note L of the Consolidated Financial Statements presented under Item 8 herein. 6 Seasonality. Information required for seasonality disclosures is incorporated by reference from Item 1A. Risk Factors under the caption “Seasonality and weather conditions, including those arising from climate change, could adversely affect us.” Human Capital Management. On December 30, 2023, we had approximately 15,800 employees. For nearly 70 years, the success of our company has rested on the skill, motivation and performance of our employees. We treat our people honestly and fairly, creating career paths and training opportunities to develop and expand their scope of responsibilities and financial rewards. This approach to human capital, which is embedded in the Company's culture, has fostered an environment where our employees often commit their respective careers to UFP Industries, Inc. Environmental, Social, and Governance. Matters of sustainability, health and safety, employee welfare, supply chain management, and community engagement are managed by our executive team, with oversight from our Nominating and Corporate Governance and Personnel and Compensation Committees. In March 2023, we published on our website our fiscal year 2022 “Governance Report,” detailing our responsible practices as well as our future outlook. We anticipate publishing on our website our fiscal year 2023 Governance Report during the second quarter of 2024. Our manufacturing operations have a long history of environmental stewardship through efficiency and energy savings, waste management, and responsible product sourcing. We quantified our 2022 Scope 1 and Scope 2 greenhouse gas (GHG) emissions in our fiscal year 2022 Governance Report and plan to disclose our 2023 Scope 1 and Scope 2 GHG emissions in 2024. We are driven by operational excellence throughout the enterprise and by cultivating a unique culture that provides significant opportunity for professional and personal growth. In managing our human capital, we have focused our efforts on employee health and safety, equal opportunity for all, and learning and development. At UFP we welcome all who are willing to work hard. We do not discriminate in hiring, promotion, or opportunity – we believe the best performers should be rewarded commensurately. We prefer hiring people with potential and helping them grow and achieve their goals within our company. To provide opportunity to a broader base of our teammates we removed the requirement of a 4-year degree for sales and management positions and give credit for work experience. We use our internal training programs and UFP Business School to help employees gain functional knowledge and hone the skills and competencies that allow them advancement to greater roles and responsibilities. We have a long history of supporting talented and hard-working employees go from factory floor to management, sales and operations roles. These transformations require diligence and dedication, and they demonstrate that regardless of background, our teammates at UFP have a chance to make a better life for themselves and their families. We also recognize the need to hire talented individuals from outside the company who bring special expertise and innovative skills to UFP. Available Information. Our Internet address is www.ufpi.com. Through our Internet website under "Financial Information" in the Investor Relations section, we make available free of charge, as soon as reasonably practical after such information has been filed with the SEC, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act. Also available through our Internet website under "Our Company - Governance" is our Code of Ethics for Senior Financial Officers. Reports to Security Holders. Not applicable. Enforceability of Civil Liabilities Against Foreign Persons. Not applicable. 7 Item 1A. Risk Factors. Pressures from various global and national macroeconomic events, including recessionary concerns, heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, recent adverse weather conditions, escalating tensions in the Middle East, the continuation of the Russia-Ukraine war, and potential governmental responses to these events have created, and continue to create, significant economic uncertainty and could materially and adversely impact our financial performance. The extent to which these macroeconomic pressures may impact our business, results of operations, costs and financial condition will depend on future developments, which continue to be highly uncertain and difficult to predict. While we have planned for and anticipate a mild U.S. recession continuing into 2024, any one or more of the above macroeconomic factors could result in a more severe and longer recessionary cycle, which would have an adverse and potentially material impact on our business and financial performance. We may be impacted by a significant change in the value of the U.S. dollar and our results of operations may be harmed by currency fluctuations and inflation. We purchase a variety of raw materials and finished goods from sources around the world and export certain products. The impact of a change in U.S. dollar exchange rates, and inflation, would impact our import purchases and export sales, which totaled $391.2 million and $246.3 million, respectively, in 2023. In addition, many of our packaging customers export their products; consequently, any adverse impact on those customers from currency fluctuations and inflation may have an adverse impact on our sales to those customers. Our growth may be limited by the customer demand in the markets we serve, including our construction market which is highly cyclical. Our sales growth is dependent, in part, upon the growth of the markets we serve. If our markets do not achieve anticipated growth, or if we fail to maintain our market share, financial results could be impaired. We are subject to fluctuations in the price of lumber. We experience significant fluctuations in the cost of commodity lumber products from primary producers (the "Lumber Market"). A variety of factors over which we have no control, including government and environmental regulations, weather conditions, economic conditions, and natural disasters, impact the cost of lumber products and our selling prices. While we attempt to minimize our risk from severe price fluctuations, substantial, prolonged trends in lumber prices can affect our sales, cost of materials, and gross profits. Our products are generally priced to the customer based on a quoted, fixed selling price or "indexed" to the Lumber Market with a fixed dollar adder to cover conversion costs and profit. The impact on our profitability from changes in lumber prices is discussed in the “Historical Lumber Prices” and "Impact of the Lumber Market on Our Operating Results" captions of our Management’s Discussion and Analysis of Financial Condition and Results of Operations section under Item 7 of this Form 10-K. Our lumber costs, including plywood, as a percentage of net sales were 43.5% in 2023. A significant portion of our sales are concentrated with two customers. Our sales to The Home Depot and Lowes comprised 17% and 12%, respectively, of our total net sales in fiscal 2023, 15% and 11%, respectively, in 2022, and 16% and 10%, respectively, in 2021. We may be impacted by vertical integration strategies. In certain markets and product lines, our customers or vendors could pursue vertical integration strategies that could have an adverse effect on our sales. We strive to add value and be a low-cost producer while maintaining competitive pricing in each of our markets to mitigate this risk. We may be impacted by industry capacity of products we supply. From time to time, we may experience excess capacity among suppliers of certain products in some of the markets we serve. Our selling prices and profitability are impacted during periods of shortages or excess industry capacity relative to market demand. We may also experience limited capacity among suppliers of certain products as a result of supply chain challenges, which may impact our profitability and ability to meet sales objectives. Our growth may be limited by our ability to make successful acquisitions. A key component of our growth strategy is to complete business combinations. Business combinations involve inherent risks, including assimilation and successfully managing growth. While we conduct extensive due diligence and have taken steps to ensure successful assimilation, factors beyond our control could influence the relative success of these acquisitions. 8 We may be adversely affected by the impact of environmental and safety regulations. We are subject to the requirements of federal, state, and local environmental and occupational health and safety laws and regulations. There can be no assurance that we are at all times in complete compliance with all of these requirements. We have made and will continue to make capital and other expenditures to comply with environmental regulations. If additional laws and regulations are enacted, which restrict our ability to manufacture and market our products, including our treated lumber products, it could adversely affect our sales and profits. Changes in the interpretation of existing laws could also adversely impact our financial results. Seasonality and weather conditions, including those arising from climate change, could adversely affect us. Some aspects of our business are seasonal in nature and results of operations vary from quarter to quarter. In addition, the majority of our products sold to the Retail and Construction markets are used or installed in outdoor construction applications; therefore, short-term sales volume, productivity and gross profits can be negatively affected by adverse weather conditions, particularly in our first and fourth quarters. To the extent changes in the world’s climate have a greater impact on adverse weather conditions, we would expect more variability in our business operations and results. Climate change, which could result in more and more severe and adverse weather events, would likely create greater volatility in our financial results. In addition, it is possible that new legislation or regulation enacted to address the impact of climate change could increase costs for us and our suppliers, including costs associated with raw materials, energy, production, transportation, environmental monitoring and reporting, and capital expenditures. Inbound and outbound transportation costs represent a significant part of our cost structure. An increase in fuel and other operating expenses will significantly increase our costs. While we attempt to pass these costs along to our customers, there can be no assurance that they would agree to these price increases. Our total inbound and outbound transportation costs were approximately 9.4%, 7.4%, and 7.3% of net sales in 2023, 2022, and 2021, respectively. New alternatives may be developed to replace traditional treated wood products. The manufacturers of wood preservatives continue to develop new preservatives. While we believe treated products are reasonably priced relative to alternative products such as composites or vinyl, new alternatives may impact the sales of treated wood products. In addition, new preservatives could increase our cost of treating products in the future. Cybersecurity breaches or a failure in our e-commerce operations could disrupt our business. We rely upon information technology systems and network products and the secure operation of these systems and products. Despite security measures, these systems and products may be vulnerable to physical damage, hackers, computer viruses, or breaches due to errors or malfeasance by employees, vendors, or customers. We have experienced such events in the past and, although past events were immaterial, future events may occur and may be material. Additionally, consumers are increasingly shopping online and through mobile commerce applications. As a result, we are vulnerable to additional risks and uncertainties associated with e-commerce sales, including rapid changes in technology, website downtime and other technical failures, security breaches, cyber-attacks, consumer privacy concerns, changes in state tax regimes and government regulation of internet activities. Our failure to successfully respond to these risks and uncertainties could reduce our e-commerce sales and increase our costs, which could negatively impact our results of operations. In addition, there is no guarantee that we will be able to expand our e-commerce business. Our competitors may have e-commerce businesses that are substantially larger and more developed than ours, which could place us at a competitive disadvantage. We may be impacted by new tariffs and duties on U.S. imports and foreign export sales. Instability of established free trade agreements may lead to raw material and finished goods price volatility. An increase in foreign tariffs on U.S. goods could curtail our export sales to other countries which was approximately $246.3 million in 2023. Increased tariffs and duties on U.S. imports will increase pricing by adding duty cost, where the duty is sustainable in light of overall unit price, or otherwise constrain supply by eliminating historical production sources by country or commodity type with unsustainable duties. Our purchases that are impacted by tariffs were approximately $391.2 million in 2023, including UFP’s U.S. import of Canadian Softwood Lumber of approximately $223.8 million, which is the largest imported commodity. In addition, there is a risk that U.S. tariffs on imports and countering tariffs on U.S. exports could trigger broader international trade conflicts that could adversely impact our business. 9 Our financial results could be negatively impacted by costs associated with product liability, casualty, manufacturing and construction defects, and other claims. From time to time, we are exposed to claims relating to product liability, casualty events, manufacturing and construction defects, and similar claims, including as the result of the conduct of our employees and subcontractors. These claims could have a negative impact on our results of operation and financial condition, including through increased litigation costs, insurance-related costs, and damage to our reputation and customer relationships. We may be adversely affected by the impact of pandemics and similar outbreaks. Disease outbreaks, such as the recent COVID-19 pandemic, could have an adverse impact on the Company's operations and financial results. These outbreaks may adversely impact our business, consolidated results of operations and financial condition. Any such outbreak, as well as measures taken by governmental authorities and businesses to limit the spread of any outbreak, may result in adverse changes in customer demand and our sales, interfere with the ability of our employees and suppliers to perform and function in a manner consistent with targeted objectives and otherwise adversely impact the efficiency of our operations. This may cause us to materially curtail certain segments and could have a material adverse effect on the results of our operations and cash flow. Adverse economic conditions and our customers’ ability to operate may impact their ability to pay. This may result in higher write-offs of receivables than we normally experience. We continue to monitor our customers’ business activities, payment patterns, and credit profiles carefully and make changes in our terms when necessary in response to this risk. As a result, our accounts receivable aging as of December 30, 2023 was approximately 91% current. Our bad debt expense as a percentage of sales was 0.03%, 0.15%, and 0.01%, in 2023, 2022, and 2021, respectively. During the most difficult collection period of the Great Recession, from 2008 through 2010, our bad debt expense as a percentage of sales averaged 0.25%. Item 1B. Unresolved Staff Comments. Not applicable. Item 1C. Cybersecurity. Risk Management and Strategy. Risks from Cybersecurity Threats. Information relating to risks from cybersecurity threats is included in this report in Item 1A under the caption “Cybersecurity breaches or a failure in our e-commerce operations and could disrupt our business.” We manage and oversee a cybersecurity risk program designed to evaluate potential threats, vulnerabilities, and the potential impact on our operations, data, and stakeholders. This program undergoes regular reviews and updates to address emerging risks. Our process for addressing risk aligns with industry standards as outlined in the NIST Cybersecurity Framework, NIST Risk Management Framework, and CIS Top 18 Security Controls. We utilize a three-step process to effectively manage cybersecurity risks: Identify We establish an understanding of our critical operational assets and those that could be attractive to potential threat actors. We consider any cyber activity that could diminish an asset’s value, hinder our ability to use or access the asset, or covertly allow a threat actor to gain access to an asset as a potential risk. Assess We evaluate the exposure of our assets to identified cyber risks and the potential impacts on our operations or reputation if we were unable to access or utilize an asset or realize its value, or if a threat actor gained access to an asset or its value. We also assess the potential materiality of these risks based on their potential impact on our operations or reputation. 10 Manage We apply a multi-layered defense strategy to maintain our ability to access or utilize an asset or its value and prevent threat actors from gaining or increasing their access to an asset or its value. We prioritize our defensive mechanisms, including administrative, procedural, and technical controls, based on their cost-effectiveness and their ability to reduce risk. Periodically, we engage consultants and other third parties to assist in the continued improvement of our cybersecurity program. These engagements are designed to enhance our cybersecurity posture, and we work closely with these experts to help us identify and address vulnerabilities. Examples of these engagements include penetration testing, risk assessments, and cybersecurity control audits. We maintain policies and procedures to oversee and identify cybersecurity risks associated with our third-party service providers, especially those with access to customer and employee data. Our selection and oversight of these providers incorporate cybersecurity considerations, including contractual and other mechanisms to mitigate and continually monitor risks. We undertake proactive activities to prevent, detect, and minimize the impact of cybersecurity incidents. We maintain an incident response plan to respond to breaches and minimize disruption to our operations swiftly. The incident response process is consistently tested and reviewed through simulated incidents. To bolster the incident response process, we have business continuity, contingency, and recovery plans to ensure operational resilience during a cybersecurity incident. Previous cybersecurity incidents guide continuous improvements in our governance, policies, procedures, and technology. We use these lessons to strengthen our cybersecurity defenses. Cybersecurity threats and risks, to include any previous cybersecurity incidents, have not materially affected, or are not reasonably likely to materially affect, our business strategy, results of operations, or financial condition. We have not, as of the date of this filing, experienced a cybersecurity breach that has materially affected our business or financial condition. However, because our business involves the collection, transmission, and storage of certain customer and employee data, it is possible that we could be susceptible to various cybersecurity threats, including cyberattacks, unauthorized access, and similar events. We are committed to the ongoing identification and management of cybersecurity risks as part of our business strategy, financial planning, and capital allocation. We strive to incorporate cybersecurity considerations into all aspects of our operations. As the cybersecurity landscape evolves, so does our strategy to identify and mitigate these risks. We continuously work towards enhancing our processes to ensure an effective cybersecurity posture. Board of Directors and Management Governance. Board of Directors Oversight. We recognize the critical importance of cybersecurity and data protection and understand the potential harm to our business from cybersecurity incidents. Accordingly, we place a high priority on mitigating risks associated with cybersecurity threats and any cybersecurity incidents. Company management maintains primary responsibility for the risk management of the Company, including cybersecurity risks. The Board’s Audit Committee is responsible for the oversight of risks associated with cybersecurity threats. The Audit Committee Charter provides that the Committee is responsible for reviewing management’s assessment of the Company’s information technology process framework and practices and the controls implemented to monitor and mitigate information technology risks. In addition, as part of the Audit Committee’s quarterly meetings and as provided for in its Charter, the Committee receives reports and briefings from the Company’s Chief Information Officer (CIO), Director of Cybersecurity, and management’s cybersecurity team. Those reports and briefings include management’s review of emerging cybersecurity developments and threats, the Company’s risk relating to cybersecurity, and the Company’s strategy to mitigate data protection and cybersecurity risks. The Audit Committee has the authority to obtain advice and input from external cybersecurity resources to assist in its oversight functions. Management’s Role. Our management team is actively engaged in assessing and managing material risks from cybersecurity threats. We have established a robust framework for identifying, evaluating, and mitigating these risks. 11 Responsibility for Cybersecurity Risks. Our CIO has developed expertise in cybersecurity, compliance, enterprise architecture and design, data analytics, digital transformation, and customer service through years of experience in the information technology space. Our Director of Cybersecurity is designated as the senior executive responsible for cybersecurity and reports directly to our CIO. He has a comprehensive information technology background with 30 years of information technology experience, to include 10 years of systems architecture and design, 12 years of management, and 14 years of service in managing, or assisting in managing, cybersecurity related risks. To support the CIO and Director of Cybersecurity in managing cybersecurity risks, we established a cross- functional cybersecurity team that includes experts in various aspects of information security. Combined, this team of employees includes individuals with over 85 years of prior work experience in cybersecurity and data protection. These individuals are responsible for the day-to-day implementation of our cybersecurity program. Additionally, the cybersecurity management team regularly consults with additional resources, to include attorneys, accountants, human resources personnel, and other information technology specialists, to determine materiality for cybersecurity related risks and incidents. There is an established Incident Response Plan that clearly identifies escalation measures based on the impact to our organization. Processes for Monitoring and Mitigating Risks and Incidents. We employ a comprehensive set of processes to monitor and mitigate cybersecurity risks. These processes include:  Continuous monitoring of network traffic and systems for signs of potential threats.  Regular vulnerability assessments and penetration testing to identify and address weaknesses.  Implementation of cybersecurity measures, such as firewalls, intrusion detection systems, and data encryption.  Employee training and awareness programs to educate staff about cybersecurity best practices.  Incident response plans to ensure swift and effective responses to cybersecurity incidents.  Software and Vendor Risk Assessments.  Vulnerability management solution to prioritize patches based on risk.  Privileged account management solutions for administrative access. These processes are designed to prevent cybersecurity incidents, but also allows our organization to quickly detect and respond to incidents if they do occur. They are regularly reviewed and updated to adapt to evolving cybersecurity threats. If any incidents occur, we have a comprehensive Incident Response Plan in place. The Plan includes materiality qualifiers based on the size and scope of the incident. Furthermore, there is an escalation matrix that identifies who is directly involved with managing the incident based on the severity. An Incident Report is compiled for all incidents, regardless of materiality. Management reviews the incident reports and ensures all incidents are mitigated and remediated effectively. These reports are shared with the CIO, CFO, and Audit Committee so they can effectively manage resources to reduce risk and prevent future incidents. Reporting to the Board. As noted above, our CIO, Director of Cybersecurity, and cybersecurity team provide quarterly updates and reports to our Audit Committee on cybersecurity risks as well as a review of the processes described above. Our management personnel are also required to provide more frequent updates to the Audit Committee on major developments regarding cybersecurity matters. The Committee, in turn, provides regular updates to the Board on these matters. 12 Item 2. Properties. Our corporate headquarters building is located in suburban Grand Rapids, Michigan. We currently have approximately 219 facilities located throughout the United States, Canada, Mexico, Europe, Asia, and Australia. Depending upon function and location, these facilities typically utilize office, manufacturing, and indoor and outdoor storage space. The following tables summarize our property locations assigned by the primary segment the plant serves. Property Location Athens, AL Bartow, FL Belchertown, MA Bennett, IA Bonner, MT Brunswick, GA Callao, VA Dodgeville, WI Elizabeth City, NC* Fairless Hills, PA Fort Worth, TX Grand Rapids, MI Greeneville, TN Hamilton, OH Hampton, VA Hazelhurst, GA Howell, MI Idabel, OK Janesville, WI* Kearneysville, WV* Lansing, MI* Lockhart, FL Louisville, AL Matthews, NC Property Location Adairsville, GA Ashburn, GA* Auburndale, FL* Barnesville, GA Bartow, FL Blanchester, OH Blue Island, IL* Burnsville, MN Butner, NC Chaffee, NY Chandler, AZ* Chase City, VA Clarksville, TX Clearfield, UT* Dallas, TX Delano, PA Douglas, GA* Eatonton, GA Flower Mound, TX Forsyth, GA Franklinton, NC* Gilmer, TX Grand Rapids, MI Grandview, TX Harrisonville, MO* RETAIL SEGMENT Number of Properties 1 2 1 1 2 1 1 1 1 1 1 1 1 1 1 1 2 1 1 2 1 1 1 1 Property Location Miami, FL* Moneta, VA Mosheim, TN Moultrie, GA Ponce, PR Poulsbo, WA Prairie du Chien, WI Rancho Cucamonga, CA* Ranson, WV* Ringgold, GA Rockledge, FL Rockwell, NC Saginaw, TX* Schertz, TX* Selma, AL Silsbee, TX Stockertown, PA Tampa, FL Thomaston, GA Tipton, IA Union City, GA* White Bear Lake, MN* White Pigeon, MI Windsor, CO* TOTAL PACKAGING SEGMENT Number of Properties 1 1 1 1 2 1 1 1 1 1 1 1 1 1 1 1 1 2 2 1 1 1 2 5 1 Property Location Martin, TN McMinnville, OR* Milwaukee, WI Minneota, MN* Mocksville, NC Morristown, TN Muscle Shoals, AL Nappanee, IN New Boston, TX New London, WI Newnan, GA Newton, NC Orangeburg, SC Parker, PA Peru, IL Port Arthur, TX Prattville, AL Riverside, CA* Robertsdale, AL Rowesville, SC Salina, KS* Salisbury, NC* Sharon, TN Shawnee, OK Shipshewana, IN 13 Number of Properties 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 2 1 1 1 1 1 1 54 Number of Properties 1 1 2 1 1 1 2 1 1 2 2 1 1 1 1 1 1 1 1 1 1 1 2 1 1 Hartford, WI Hazelhurst, GA Kansas City, MO Lawrenceburg, TN Livermore Falls, ME Magna, UT* Marietta, GA Property Location Athena, OR Auburn, NY Aurora, CO Bangalore, India Belchertown, MA Berlin, NJ Berthoud, CO Bridgeton, MO Brooklyn Center, MN Burlington, NC Cedar Hill, TX Chesapeake, VA Chicago, IL Chicopee, MA Clinton, NC Conway, SC Cordele, GA Dayton, OH DuBois, PA Edwardsburg, MI* Elkhart, IN Folkston, GA Fredericksburg, VA Gordon, PA* Granger, IN* Haleyville, AL* Hillsboro, TX* Hudson, NY 1 1 1 1 1 1 1 Siler City, NC Snohomish, WA* Thornton, CA* Warrens, WI* Wenatchee, WA Woodburn, OR* Yakima, WA TOTAL CONSTRUCTION SEGMENT Number of Properties 1 1 1 1 1 2 1 1 1 2 1 1 1 1 1 1 1 2 1 1 2 2 1 1 1 1 1 1 Property Location Jefferson, GA Jeffersonville, IN Kyle, TX Lafayette, CO Lenoir City, TN Liberty, NC Locust, NC Londonderry, NH Nampa, ID* Naugatuck, CT New London, NC* New Waverly, TX* New Windsor, MD Ontario, CA Ooltewah, TN Pearisburg, VA* Plainville, MA San Antonio, TX Shippenville, PA Sidney, NY Stafford, TX Stanfield, NC Swindon, United Kingdom Temple, TX Washington, NC Westbury, NY Wilton, NH Wujinang, China TOTAL ALL OTHER SEGMENT 1 1 1 1 1 1 1 77 Number of Properties 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 1 1 1 1 1 1 62 Property Location Abu Dhabi, United Arab Emirates Apaseo el Grande, Mexico Bangalore, India Carole Park, Australia Castellón, Spain Chennai, India Coimbatore, India Deer Park, Australia Dubai, United Arab Emirates Durango, Mexico Number of Properties 1 1 3 1 1 1 1 1 1 2 Property Location Erskine Park, Australia Noida, India Guntur, India Hyderabad, India Lacolle, Canada Mordialloc, Australia Nuevo Leon, Mexico Port Melbourne, Australia Pune, India Vadodara, India TOTAL Number of Properties 1 1 1 1 1 1 1 1 1 1 23 CORPORATE SEGMENT Property Location Grand Rapids, MI Spring Lake, MI TOTAL Number of Properties 2 1 3 * Due to the nature of our business and historical operating strategy, many of our locations service more than one segment. We own all of our properties, free from any significant mortgage or other encumbrance, except for approximately 74 facilities which are leased. We believe all of these operating facilities are adequate in capacity and condition to service our existing markets. 14 Item 3. Legal Proceedings. Information regarding our legal proceedings is set forth in Note L of our Consolidated Financial Statements which are presented under Item 8 of this Form 10-K and are incorporated herein by reference. Item 4. Mine Safety Disclosures. Not applicable. Additional Item: Executive Officers of the Registrant. Our executive officers are appointed annually by our Board of Directors. There are no family relationships among these officers and our directors nor any arrangement or understanding between any of these officers and any other person pursuant to which the officer was appointed. The following table lists the names, ages, and positions of our executive officers as of February, 2024. Name Matthew J. Missad Michael R. Cole Patrick M. Benton Scott A. Worthington William D. Schwartz, Jr. David A. Tutas Age 63 57 54 53 46 54 Position Chairman of the Board and Chief Executive Officer Chief Financial Officer and Treasurer President of UFP Construction, LLC President of UFP Packaging, LLC President of UFP Retail Solutions, LLC General Counsel, Chief Compliance Officer and Secretary Matthew J. Missad joined us in 1985. In February 1996, Mr. Missad was promoted to Executive Vice President of the Company. On July 13, 2011, Mr. Missad became Chief Executive Officer of the Company. Michael R. Cole joined us in 1993 from the international public accounting firm Deloitte & Touche. In December 1999, he was promoted to Vice President of Finance. On July 19, 2000, Mr. Cole became Chief Financial Officer of the Company. Patrick M. Benton joined us in 1993. In 2008 he became Operations Vice President of the South Texas Region, and on July 1, 2014, he became Executive Vice President of UFP Eastern Division – North. On February 1, 2017, Mr. Benton became President of the UFP Northern Division, and on January 1, 2020, he became President of UFP Construction, LLC. Scott A. Worthington joined us in 1997. In 2014, he was promoted to Regional Vice President of the South Texas Region. On January 1, 2020, he became President of UFP Packaging, LLC. William D. Schwartz, Jr. joined us in 1998. He became Operations Vice President in 2014 and Executive Vice President of Purchasing and Transportation in 2020. On July 1, 2022, he became Executive Vice President of Operations Services and on September 26, 2022, he became President of UFP Retail Solutions, LLC. David A. Tutas joined us in 2003 as a staff counsel. In 2007, he was promoted to Director of Legal Services. On August 1, 2011, he was promoted to General Counsel. On January 18, 2013, he became Secretary of the Company, and on February 1, 2019, he became Chief Compliance Officer. The following information items in this Part II, which are contained in the 2023 Annual Report, are specifically incorporated by reference into this Form 10-K Report. These portions of the 2023 Annual Report that are specifically incorporated by reference are filed as Exhibit 13 with this Form 10-K Report. PART II 15 Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities. (a) The information relating to market, holders and dividends is incorporated by reference from the 2023 Annual Report under the captions "Market Information for Our Common Stock" and “Stock Performance Graph.” As of February 3, 2024, there were approximately 2,566 record holders of our common stock. There were no sales of securities by the Company during fiscal 2023 that were not registered under the Securities Act of 1933. (b) Not applicable. (c) Issuer purchases of equity securities during the fourth quarter: Fiscal Month October 1 - November 4, 2023 November 5 - December 2, 2023 December 3 - 30, 2023 (1) 208,057 — — (2) (3) (4) 96.48 208,057 $ 173,335,471 — 173,335,471 — 173,335,471 — — (1) Total number of shares purchased. (2) Average price paid per share. (3) Total number of shares purchased as part of publicly announced plans or programs. (4) Approximate dollar value of shares that may yet be purchased under the plans or programs. On and effective as of July 26, 2023, our board authorized the repurchase of up to $200 million worth of shares of our common stock through the period ending July 31, 2024, which supersedes and replaces prior authorizations. Item 6. [RESERVED.] Not applicable. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The information required by this item is incorporated by reference from the 2023 Annual Report under the caption "Management’s Discussion and Analysis of Financial Condition and Results of Operations." Item 7A. Quantitative and Qualitative Disclosures about Market Risk. We are exposed to market risks related to fluctuations in interest rates on our variable rate debt, which consists of a revolving credit facility and industrial development revenue bonds. We do not enter into any material interest rate swaps, futures contracts or options on futures, or other types of derivative financial instruments to mitigate this risk. For fixed rate debt, changes in interest rates generally affect the fair market value, but not earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not influence fair market value, but do affect future earnings and cash flows. We do not have an obligation to prepay fixed rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we would be required to refinance it. On December 30, 2023, the estimated fair value of our long-term debt, including the current portion, was $241.4 million. The estimated fair value is based on rates anticipated to be available to us for debt with similar terms and maturities. The estimated fair value of notes payable included in current liabilities and the revolving credit facility approximated the carrying values as these debt instruments have interest rates that fluctuate with current market conditions. 16 Expected cash flows over the next five years related to debt instruments, excluding debt issuance costs, are as follows: ($US equivalents, in thousands) Long-term Debt: Fixed Rate ($US) Average interest rate Variable Rate ($US) Average interest rate(1) 2024 2025 2026 2027 2028 Thereafter Total $ 40,098 $ 671 $ 194 $ 212 $ 40,232 $ 185,383 $ 266,790 4.01 % 9.45 % 9.45 % — $ 2,802 $ — $ — $ 3,692 9.45 % — % — % $ 5.44 % 4.27 % — $ — % 3.36 % 3,300 $ 3.33 % 9,794 (1) Average of rates at December 30, 2023 Item 8. Financial Statements and Supplementary Data. The information required by this Item is incorporated by reference from the 2023 Annual Report under the following captions: "Report of Independent Registered Public Accounting Firm" "Report of Independent Registered Public Accounting Firm" "Consolidated Balance Sheets" "Consolidated Statements of Earnings and Comprehensive Income" "Consolidated Statements of Shareholders’ Equity" "Consolidated Statements of Cash Flows" "Notes to Consolidated Financial Statements" Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. Item 9A. Controls and Procedures. Evaluation of Disclosure Controls and Procedures We conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended, referred to herein as “Disclosure Controls”) as of the end of the period covered by this Annual Report on Form 10-K. The controls evaluation was performed under the supervision and with the participation of management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO). Based upon our most recent evaluation, we have concluded that the consolidated financial statements included in this Annual Report on Form 10-K fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Management’s Annual Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act and based upon the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our management assessed the effectiveness of our internal control over financial reporting as of December 30, 2023. Based on this assessment, our internal control over financial reporting was effective as of December 30, 2023. 17 Deloitte & Touche LLP, our independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 30, 2023. Deloitte & Touche LLP's opinion, as stated in their report which appears on page 20 of this Form 10-K, is consistent with management's report on internal control over financial reporting as set forth above. Changes in internal control over financial reporting There were no changes in our internal control over financial reporting that occurred during the quarter ended December 30, 2023, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information. During the quarter ended December 30, 2023, no director or officer adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections. Not applicable. Item 10. Directors, Executive Officers and Corporate Governance. PART III Information relating to our directors, compliance with Section 16(a) of the Securities Exchange Act of 1934 and various corporate governance matters is incorporated by reference from our definitive Proxy Statement for the year ended December 30, 2023 for the 2024 Annual Meeting of Shareholders, to be filed with the Commission ("2024 Proxy Statement"), under the captions "Election of Directors," "Corporate Governance and Board Matters," and "Delinquent Section 16(a) Reports." Information relating to executive officers is included in this report in the last Section of Part I under the caption "Additional Item: Executive Officers of the Registrant." Information relating to our code of ethics is included in this report in Part I, Item 1 under the caption “Available Information”. Item 11. Executive Compensation. Information relating to director and executive compensation is incorporated by reference from the 2024 Proxy Statement under the caption "Executive Compensation." The "Personnel and Compensation Committee Report" included in the 2024 Proxy Statement is incorporated by reference for the purpose of being furnished herein and is not and shall not be deemed to be filed under the Securities Exchange Act of 1934, as amended. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters. Information relating to security ownership of certain beneficial owners and management is incorporated by reference from our 2024 Proxy Statement under the captions "Ownership of Common Stock" and "Securities Ownership of Management." 18 Information relating to securities authorized for issuance under equity compensation plans as of December 30, 2023, is as follows: Number of shares remaining available for future issuance under equity compensation plans [excluding shares reflected in Number of Weighted average exercise price of outstanding options, warrants, shares to be issued upon exercise of outstanding options, warrants, and rights (a) and rights column (a)] (1) Equity compensation plans approved by security holders Equity compensation plans not approved by security holders — $ none — 2,132,181 (1) The number of shares remaining available for future issuance under equity compensation plans, excluding outstanding options, warrants, or similar rights, as of December 30, 2023, is as follows: 128,821 shares for our Employee Stock Purchase Plan, 167,372 shares for our Director Compensation Plan, and 10,073 shares for our Employee Stock Gift Program. In addition, of the remaining 1,825,915 shares available for future issuance under our Long-Term Stock Incentive Plan, those awards may be made in the form of options as well as stock appreciation rights, restricted stock, performance shares, or other stock-based awards. See Note H "Common Stock" of our 2023 Annual Report for information regarding these plans. Item 13. Certain Relationships and Related Transactions, and Director Independence. Information relating to certain relationships and related transactions, and director independence is incorporated by reference from the 2024 Proxy Statement under the captions "Election of Directors", “Affirmative Determination Regarding Director Independence and Other Matters” and "Related Party Transactions." Item 14. Principal Accountant Fees and Services. Information relating to the types of services rendered by our Independent Registered Public Accounting Firm and the fees paid for these services is incorporated by reference from our 2024 Proxy Statement under the caption "Independent Registered Public Accounting Firm – Disclosure of Fees.” 19 Item 15. Exhibits, Financial Statement Schedules. PART IV (a) 1. Financial Statements. The following are incorporated by reference, under Item 8 of this report, from the 2023 Annual Report: Management’s Report on Internal Control Over Financial Reporting Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm Consolidated Statements of Earnings and Comprehensive Income Consolidated Statements of Shareholders’ Equity Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements 2. Financial Statement Schedules. All schedules required by this Form 10-K Report have been omitted because they were inapplicable, included in the Consolidated Financial Statements or Notes to Consolidated Financial Statements, or otherwise not required under instructions contained in Regulation S-X. 3. Exhibits. Reference is made to the Exhibit Index which is included in this Form 10-K Report. Reference is made to the Exhibit Index which is included in this Form 10-K Report. Not applicable (b) (c) 20 EXHIBIT INDEX Exhibit # Description 3 Articles of Incorporation and Bylaws. (a) (b) Restated Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1 of the Registrant's Current Report on Form 8-K filed on May 3, 2022). Amended Bylaws (incorporated by reference to Exhibit 3(b) of the Registrant's Annual Report on Form 10-K for the year ended December 31, 2016). 4 Instruments Defining the Rights of Security Holders. (a) Description of Registrant’s Securities (incorporated by reference to Exhibit 4(b) of the Registrant's Annual Report on Form 10-K for the year ended December 30, 2023). 10 Material Contracts. (a) Credit Agreement dated November 1, 2018 incorporated by reference to Exhibit 10(i)(2) of the Registrant's Current Report on Form 8-K filed November 2, 2018). (i) (ii) First Amendment to Credit Agreement dated February 19, 2021 (incorporated by reference to Exhibit 10(a) of the Registrant's Quarterly Report on Form 10-Q filed May 5, 2021). Second Amendment to Credit Agreement dated December 6, 2022 (incorporated by reference to Exhibit 10(l) of the Registrant's Current Report on Form 8-K filed December 12, 2022). (iii) Third Amendment to Credit Agreement dated August 11, 2023. (b) Form of Indemnity Agreement entered into between the Registrant and each of its directors (incorporated by reference to Exhibit 10(b) of a Registration Statement on Form S-1 filed by the Registrant on September 28, 1993). *(c) UFP Industries, Inc. Deferred Compensation Plan (as conformed through 2023-1 Amendment effective January 1, 2024). *(d) UFP Industries, Inc. Executive Stock Grant Program. *(e) *(f) Second Restatement of the UFP Industries, Inc. Director Compensation Plan. UFP Industries, Inc. Long-Term Stock Incentive Plan (as conformed through the 2023 Amendment to the UFP Industries, Inc. Long-Term Incentive Plan effective October 24, 2023). *(g) Form of Restricted Stock Grant Agreement issued pursuant to the Long-Term Incentive Plan. *(h) Form of Performance Share Award Agreement issued pursuant to the Long-Term Incentive Plan. 13 Selected portions of the Company’s Annual Report to Shareholders for the fiscal year ended December 30, 2023. 21 23 24 Subsidiaries of the Registrant. Consent of Deloitte & Touche LLP. Power of Attorney (included on page 23). 21 31 Certifications. (a) (b) Certificate of the Chief Executive Officer of UFP Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). Certificate of the Chief Financial Officer of UFP Industries, Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). 32 Certifications. (a) (b) Certificate of the Chief Executive Officer of UFP Industries, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). Certificate of the Chief Financial Officer of UFP Industries, Inc., pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350). 97 101 Amended and Restated UFP Industries, Inc. Clawback Policy. Interactive Data File in iXBRL (Inline eXtensible Business Reporting Language). (INS) XBRL Instance Document. (SCH) XBRL Schema Document. (CAL) XBRL Taxonomy Extension Calculation Linkbase Document. (LAB) XBRL Taxonomy Extension Label Linkbase Document. (PRE) XBRL Taxonomy Extension Presentation Linkbase Document. (DEF) XBRL Taxonomy Extension Definition Linkbase Document. 104 Cover Page Interactive Data File (the cover page XBRL tags are embedded in the inline XBRL document).  Indicates a compensatory arrangement. 22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: February 28, 2024 UFP INDUSTRIES, INC. By: /s/ Matthew J. Missad Matthew J. Missad, Chairman of the Board, Chief Executive Officer and Principal Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on this 28th day of February, 2024, by the following persons on behalf of us and in the capacities indicated. By: /s/ Matthew J. Missad Matthew J. Missad, Chairman of the Board, Chief Executive Officer and Principal Executive Officer /s/ Michael R. Cole Michael R. Cole, Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer Each Director whose signature appears below hereby appoints Matthew J. Missad and Michael R. Cole, and each of them individually, as his or her attorney-in-fact to sign in his or her name and on his or her behalf as a Director, and to file with the Commission any and all amendments to this report on Form 10-K to the same extent and with the same effect as if done personally. /s/ Joan A. Budden Joan A. Budden, Director /s/ Benjamin J. McLean Benjamin J. McLean, Director /s/ Matthew J. Missad Matthew J. Missad, Director /s/ Mary Tuuk Kuras Mary Tuuk Kuras, Director /s/ Michael G. Wooldridge Michael G. Wooldridge, Director /s/ William G. Currie William G. Currie, Director Bruce A. Merino, Director /s/ Thomas W. Rhodes Thomas W. Rhodes, Director /s/ Brian C. Walker Brian C. Walker, Director 23 UFP INDUSTRIES, INC. FINANCIAL INFORMATION Table of Contents Exhibit 13 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 30, 2023 and December 31, 2022 Consolidated Statements of Earnings and Comprehensive Income for the Years Ended December 30, 2023, December 31, 2022, and December 25, 2021 Consolidated Statements of Shareholders’ Equity for the Years Ended December 30, 2023, December 31, 2022, and December 25, 2021 Consolidated Statements of Cash Flows for the Years Ended December 30, 2023, December 31, 2022, and December 25, 2021 Notes to Consolidated Financial Statements Market Information for our Common Stock Stock Performance Graph Directors and Executive Officers Shareholder Information 2 22 23 25 26 27 28 29 54 54 55 56 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; costs associated with product liability, casualty, manufacturing and construction defects, and other claims; and potential pandemics. 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 2023. Our results for 2023 were impacted by the following: OVERVIEW  Our net sales decreased 25% compared to 2022, which was comprised of a 16% decrease in selling prices and a 9% decrease in unit sales. The overall decrease in our selling prices is primarily due to lower lumber prices and a more competitive pricing environment in certain of our business units. The overall unit decline consists of a 6% decrease in our retail segment, a 6% decrease in our packaging segment, and a 13% decrease in our construction segment. Acquired businesses contributed 2% unit growth in our packaging segment.  Our gross profits decreased by $370.5 million, or 20.7%, compared to last year, exceeding our 9% decline in unit sales. By segment, gross profits decreased by $203 million in Construction and $171 million in Packaging, while Retail experienced a $33 million increase in gross profits. The overall decrease in our gross profits is primarily due to the decline in unit sales, unfavorable cost variances as a result of fixed manufacturing costs, and more competitive pricing in certain business units. These unfavorable factors were partially offset by more favorable lumber price trends in 2023 on products sold in our Retail segment that are based on variable selling prices. The remaining decline in our gross profits is primarily due to our International segment, which is presented under “All Other” in the segment reporting tables below. 2 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  Our operating profits decreased $304 million, or 32.0%, compared to last year. The overall decrease is a result of the decline in gross profits mentioned above offset by a $65 million decrease in selling, general, and administrative (“SG&A”) expenses. Our SG&A declined primarily due to our incentive compensation plans which are tied to profitability and return on investment. More specifically, our sales incentive expense declined by $30 million to approximately $59 million for the year and bonus expense declined by $54 million to $175 million for the year. Our decremental operating margin comparing our decrease in operating profits relative to our decrease in net sales was 12.6%.  Our cash flows from operations in 2023 was $959.9 million compared to $831.6 million in 2022. The $128 million improvement resulted from the change in our investment in net working capital, which was $300 million lower in 2023 than it was in 2022 resulting in an increase in operating cash flows, offset by a $172 million decrease in net earnings and non-cash expenses compared to the prior year. Our investment in net working capital has declined primarily due to a decline in market demand in the industries we serve as well a decline in the cost of lumber.  We invested $180.4 million in capital expenditures to support and grow our existing businesses and invested $52.4 million in an acquired business.  We returned $68.2 million to our shareholders through dividends and repurchased approximately 975,000 shares of our common stock for $82.1 million, at an average price of $84.27 per share.  Our net surplus cash (cash less debt and cash overdraft) at the end of 2023 was $841.9 million compared to $281.4 million at the end of 2022. Our unused borrowing capacity under our revolving credit facility and a shelf agreement with certain lenders along with our cash surplus resulted in total liquidity of approximately $2.4 billion at the end of December 2023. We plan to continue to pursue a balanced and return driven approach to capital allocation focused on continuing to increase our dividend at a rate that is aligned with our anticipated long-term earnings growth rate, repurchasing our common stock to offset dilution from issuances under our equity-based compensation programs, making capital investments needed to execute our organic growth and operating improvement strategies, and completing business acquisitions that complement our existing businesses and provide new avenues for growth. 3 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS HISTORICAL LUMBER PRICES The following table presents the Random Lengths framing lumber composite price. 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 $ 2023 386 $ 437 411 420 400 398 455 430 430 400 371 383 2022 1,112 1,225 1,321 1,051 948 670 621 625 556 503 483 420 $ 410 $ 795 (48.4)% In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprise almost two-thirds of our total lumber purchases. 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 2023 406 $ 452 464 474 437 427 442 417 424 396 355 369 2022 1,010 1,115 1,198 902 732 574 547 589 533 490 472 445 $ 422 $ 717 (41.1)% Lower overall lumber prices in 2023 compared to 2022 is primarily due to increased capacity of the supply of lumber in North America combined with an increase in imports from other countries while demand for lumber has declined. A change in lumber prices impacts our profitability of products sold with fixed and variable prices, as discussed below. 4 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 43.5% and 49.6% of our net sales in 2023 and 2022, 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.  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 net sales in 2023. 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 18% of our total purchases for 2023 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.) 5 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  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 $ Period 2 $ 300 50 350 50 $ 400 12.5 % 400 50 450 50 500 10.0 % $ As is apparent from the preceding example, the level of lumber prices does not impact our overall profits but does impact our margins. Gross margins and operating margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low. As a result of this factor, we believe it is useful to compare our change in units sold with our change in gross profits, selling, general, and administrative expenses, and operating profits as presented in the following table. Units sold Gross profit Selling, general, and administrative expenses Earnings from operations Annual Percentage Change from Prior Year Ended December 30, 2023 (9.0)% (20.7) (7.9) (32.0) December 31, 2022 2.0 % 27.2 22.0 28.8 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 one business acquisition during 2023 and four during 2022. The annual historical sales attributable to acquisitions in 2023 and 2022 were approximately $38.0 million and $177.8 million, respectively. These business combinations were not significant to our operating results individually or in aggregate; consequently pro forma results for 2023 and 2022 are not presented. See Notes to Consolidated Financial Statements, Note C, "Business Combinations" for additional information. 6 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The following table presents, for the periods indicated, the components of our Consolidated Statements of Earnings as a percentage of net sales. See “Impact of the Lumber Market on our Operating Results”. Net sales Cost of goods sold Gross profit Selling, general, and administrative expenses Other losses (gains), net Earnings from operations Other (income) 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. Year Ended December 30, December 31, 2023 100.0 % 80.3 19.7 10.6 0.1 9.0 (0.3) 9.3 2.2 7.1 — 7.1 % 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 % The following table presents, for the periods indicated, our selling, general, and administrative (SG&A) costs as a percentage of gross profit. We believe this ratio provides an enhanced view of our effectiveness in managing these costs given our strategies to enhance our capabilities and improve our value-added product offering and recognizing the higher relative level of SG&A these strategies require, and mitigates the impact of changing lumber prices. Gross profit Selling, general, and administrative expenses SG&A as percentage of gross profit Year Ended December 30, 2023 1,418,938 766,633 54.0% $ $ December 31, 2022 1,789,461 832,079 46.5% $ $ The increase in the ratio above is primarily due to a combination of fixed SG&A costs and more competitive pricing in certain business units as the markets we serve have declined from peak levels experienced during and shortly after the pandemic. For comparison purposes, our SG&A costs as a percentage of gross profits in 2019 (immediately prior to the pandemic) was 64%. 7 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OPERATING RESULTS BY SEGMENT 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. In the case of locations that serve multiple segments, results are allocated and accounted for by segment. 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, corporate ventures, 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 service 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 30, 2023 and December 31, 2022. Year Ended December 30, 2023 Net sales Cost of goods sold Gross profit Selling, general, administrative expenses Other Earnings from operations $ Net sales Cost of goods sold Gross profit Selling, general, administrative expenses Other Earnings from operations $ Retail Packaging $ 2,886,515 $ 1,838,200 $ 2,161,059 $ 1,422,940 415,260 2,508,513 378,002 1,637,329 523,730 Construction All Other Corporate Total 328,884 $ 240,106 88,778 3,726 $ 7,218,384 5,799,446 (9,442) 1,418,938 13,168 209,182 757 219,323 8 279,107 1,277 55,654 4,482 3,367 (753) 766,633 5,771 168,063 $ 195,929 $ 243,346 $ 28,642 $ 10,554 $ 646,534 Year Ended December 31, 2022 Retail Packaging $ 3,650,639 $ 2,394,681 $ 3,143,868 $ 1,808,449 586,232 3,306,112 344,527 2,417,212 726,656 Construction All Other Corporate Total 431,611 $ 300,307 131,304 5,940 $ 9,626,739 7,837,278 5,198 1,789,461 742 193,383 817 250,858 129 328,125 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 The following tables present the components of our operating results as a percentage of net sales by segment for December 30, 2023 and December 31, 2022. Year Ended December 30, 2023 Net sales Cost of goods sold Gross profit Selling, general, administrative expenses Other Earnings from operations Retail Packaging Construction All Other Corporate Total 100.0 % 86.9 13.1 7.2 — 5.8 % 100.0 % 77.4 22.6 11.9 — 10.7 % 100.0 % 75.8 24.2 12.9 0.1 11.3 % 100.0 % 73.0 27.0 16.9 1.4 8.7 % N/A — — — — — 100.0 % 80.3 19.7 10.6 0.1 9.0 % Note: Actual percentages are calculated and may not sum to total due to rounding. Year Ended December 31, 2022 Net sales Cost of goods sold Gross profit Selling, general, administrative expenses Other Earnings from operations Retail Packaging Construction All Other Corporate Total 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. 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 2023 versus 2022 2022 versus 2021 in Selling Prices in Sales in Units (25.0)% (16.0)% (9.0)% 2.0 % 11.5 % 9.5 %  Expanding geographically in our core businesses, domestically and internationally. 9 Acquisition Unit Change Organic Unit Change 1.0 % (10.0)% 3.0 % (1.0)% UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  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. 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 30, 2023 Year Ended December 31, 2022 Retail Packaging Construction All Other Corporate Total Sales Value-Added 50.5 % 77.0 % 83.2 % 83.8 % 27.5 % 68.4 % Commodity- Based Value-Added 44.9 % 72.0 % 77.2 % 76.3 % 44.3 % 63.4 % 49.5 % 23.0 % 16.8 % 16.2 % 72.5 % 31.6 % Commodity- Based 55.1 % 28.0 % 22.8 % 23.7 % 55.7 % 36.6 % 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 decreased approximately 9% in 2023 compared to 2022. Our unit sales of commodity-based products also decreased approximately 9% compared to 2022.  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. New product sales in 2023 decreased 8% compared to the prior year, primarily due to a decline in lumber prices, which were passed to our customers in our selling prices. Approximately $17.4 million of new product sales for 2022, while still sold, were sunset in 2023 and excluded from the table below because they no longer meet the definition above. Our goal was to achieve annual new product sales of at least $795 million in 2023. For 2024, we have redefined our definition of new products as we focus on more value-added products and services. As a result, we have lowered the forecast for new product sales to $510 million for 2024. On a long-term basis, our goal is for new product sales to comprise at least 10% of our total net sales. 10 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The table below presents new product sales in thousands: New Product Sales by Segment Year Ended Retail Packaging Construction All Other and Corporate Total New Product Sales December 30, % of Segment December 31, % of Segment % Change $ 2023 327,019 277,703 109,617 1,808 716,147 Net Sales 11.3 % $ 15.1 % 5.1 % 0.5 % 9.9 % 2022 338,547 277,859 140,176 2,508 759,090 Net Sales in Sales 9.3 % 11.6 % 4.5 % 0.6 % 7.9 % (3.4)% (0.1)% (21.8)% (27.9)% (5.7)% 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 decreased 21% in 2023 compared to 2022 due to a 15% decrease in selling prices and a 6% decrease in organic unit growth. Our selling prices of variable-priced products declined due to lower lumber prices. The selling prices of these products are indexed to the lumber market at the time they are shipped. Additionally, our unit sales to big box customers, which we believe are more closely correlated with repair and remodel activity, increased nearly 2%, while unit sales to independent retailers, which we believe are more closely correlated to new housing starts, decreased approximately 20%. Gross profits increased by $33.5 million, or 9.7%, to $378.0 million in 2023 compared to 2022. Our change in gross profits was attributable to the following:  The gross profits of our ProWood business unit increased $28.7 million, primarily due to less volatile lumber prices during 2023 compared to severe, adverse volatility in 2022. The products sold by this unit consists primarily of pressure treated lumber sold at a variable price indexed to the lumber market at the time they are shipped.  Our Deckorator’s business unit increased by approximately $18.2 million due to an increase in overall unit sales, sales of new products, and operational improvements.  The improvements above were offset by a $14 million decrease in gross profits of our Edge business unit. Selling, general and administrative (“SG&A”) expenses increased by approximately $15.8 million, or 8.2%, in 2023 compared to 2022. Accrued bonus expense, which varies with the overall profitability and return on investment of the segment, increased approximately $8.8 million and totaled approximately $45.8 million in 2023. The remaining increase is comprised of many smaller increases spread over several accounts. Earnings from operations of the Retail reportable segment increased in 2023 compared to 2022 by $17.7 million, or 11.8%, as a result of the factors mentioned above. Packaging Segment: Net sales from the Packaging segment decreased 23% in 2023 compared to 2022 due to a 17% decrease in selling prices and an 8% decrease in organic unit sales, partially offset by unit growth from acquisitions of 2%. The decline in prices is due to competitive price pressure as well as lower lumber costs passed to customers. 11 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Gross profits decreased by $171.0 million, or 29.2%, to $415.3 million in 2023 compared to 2022. The decrease in gross profits is primarily due to lower demand resulting in lower unit sales, as well as competitive price pressure, and unfavorable cost variances as a result of fixed manufacturing costs. Acquisitions contributed $8.1 million to gross profit. Selling, general and administrative (“SG&A”) expenses decreased by approximately $31.5 million, or 12.6%, in 2023 compared to 2022. Accrued bonus expense, which varies with the overall profitability and return on investment of the segment, decreased approximately $28.4 million, and totaled approximately $53.8 million for 2023. Additionally, our bad debt expense decreased by $8.1 million and incentive compensation expense decreased by $8.5 million. These decreases were partially offset by an increase in salaries and wages of $8.7 million, and acquired operations, which contributed approximately $5.6 million to our SG&A. Earnings from operations of the Packaging reportable segment in 2023 decreased by $139.3 million, or 41.6%, compared to 2022 due to the factors discussed above. Construction Segment: Net sales from the Construction segment decreased 31% in 2023 compared to 2022 due to an 18% decrease in selling prices and a decline in organic unit sales of 13%. Organic unit changes within this segment consisted of decreases of 2% in concrete forming, 12% in site-built housing, 14% in factory-built housing, and 24% in commercial construction. The decline in pricing was due to competitive price pressure as well as the decline in lumber prices, which were passed to our customers. Gross profits decreased by $202.9 million, or 27.9% to $523.7 million in 2023 compared to 2022. The decrease in our gross profit was comprised of the following factors:  Gross profits in our factory-built housing and site-built construction business unit decreased by $65.6 million and $118.2 million, respectively, due to competitive price pressure as well as lower sales volumes and unfavorable cost variances due to fixed manufacturing costs.  The gross profit of our concrete forming business unit decreased by $17.4 million due to a decline in selling prices. SG&A expenses decreased by approximately $49.0 million, or 14.9%, in 2023 compared to 2022. Accrued bonus expense, which varies with the overall profitability of the segment and return on investment, decreased approximately $31.0 million compared to last year and totaled approximately $65.0 million for 2023. The remaining decrease was primarily due to decreases in sales incentive compensation of $13.9 million, bad debt expense of $5.3 million, and professional fees of $3.2 million. These decreases were offset by an increase in salaries, wages, and benefits of approximately $3.0 million. Earnings from operations of the Construction reportable segment increased in 2023 compared to 2022 by $154.1 million, or 38.8%, 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. The decline in sales and earnings from operations is primarily due to our operation in Mexico that exports molding and millwork products to the U.S. 12 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Corporate: The corporate segment consists of over (under) allocated costs that are not significant. INTEREST EXPENSE Interest expense in 2023 was similar to 2022 due to consistent amounts of outstanding debt during each period as well as fixed interest rates on these debts. See “Note C of Notes to the Consolidated Financial Statements”. INTEREST AND INVESTMENT INCOME Interest and investment income increased by $39.2 million in 2023 compared to 2022 due to the increase in cash and the higher interest rate environment. 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 23.4% in 2023 compared to 24.6% in 2022. The decrease in our overall effective tax rate was primarily due to an increase in our tax deduction from stock-based compensation accounted for as a permanent difference, and an increase in the research and development tax credit, and a manufacturing exemption which reduced our income tax in one of the states we operate. 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 30, 2023 (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 $ 42,823 $ Payments Due by Period 3 – 5 Years After 5 Years 1 – 3 Years Total 826 $ 44,119 $ 188,666 $ 276,434 10,062 32,796 93,566 69,530 152,536 93,566 $ 179,247 $ 74,470 $ 91,277 $ 247,072 $ 592,066 26,720 31,686 — 15,643 31,515 — 17,105 56,539 — As of December 30, 2023, we also had $47.8 million in outstanding letters of credit issued during the normal course of business, as required by some vendor contracts. 13 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands): 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 30, December 31, 2023 2022 $ 959,890 $ 831,567 (240,164) (353,936) (162,860) (210,210) 979 268,400 291,223 $ 1,122,256 $ 559,623 5,767 562,633 559,623 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. 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 63 days in 2023 from 64 days in 2022. Days of sales outstanding Days supply of inventory Days of payables outstanding1 Days in cash cycle Year Ended December 30, December 31, 2023 2022 33 41 (11) 63 36 40 (12) 64 1 We’ve modified our calculation of days of payables outstanding to be based on the cost of goods sold and accounts payable balances in our monthly financial statements. In prior periods, our calculation was based on invoice data. We’ve made this change to simplify the calculation and more easily integrate acquired operations into our financial metrics. The prior year metrics have been restated for the new method which reduced days of payables from a previously reported 20 days to 12 days. We continue to focus on past due account balances with customers, and the percentage of our accounts receivable that are current are 91% in 2023 compared to 87% in 2022, which contributed to the improvement in our days of sales outstanding. 14 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Our cash flows from operating activities in 2023 was $960 million, which was comprised of net earnings of $514 million, $158 million of non-cash expenses, and a $288 million decrease in working capital since the end of December 2022. Our cash flows from operations increased by $128 million compared to last year primarily due to a $300 million decrease in our investment in net working capital compared to the prior year period, offset by a decrease in our net earnings and non- cash expenses of $172 million. The elevated decrease in our net working capital this year was due to the drop in lumber prices and a decline in demand in certain markets we serve. Purchases of property, plant, and equipment of $180 million comprised most of our cash used in investing activities during 2023. Capital spending primarily consists of several projects to expand capacity to manufacture new and value-added products, primarily in our Packaging segment and Deckorators and ProWood business units, achieve efficiencies through automation in all segments, make improvements to a number of facilities, and increase our transportation capacity (tractors, trailers). Cash used for acquisitions during the year totaled $52 million compared to $180 million in 2022. In the current year we made one acquisition, UFP Palets y Embalajes SL. See Notes to Consolidated Financial Statements, Note C, "Business Combinations" for additional information. Cash flows used in financing activities primarily consisted of:  Cash paid for repurchases of common stock of $82 million. We repurchased 974,869 shares of our common stock for the year at an average share price of $84.27.  Dividends paid during 2023 include first quarter dividends of $16 million ($0.25 per share), second quarter dividends of $15 million ($0.25 per share) third quarter dividends of $19 million ($0.30 per share), and fourth quarter dividends of $18 million ($0.30 per share).  Contingent consideration payments of $6 million.  Distributions to noncontrolling interests of $7 million. 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 increased 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. On December 30, 2023, we had $3.7 million outstanding on our $750 million revolving credit facility. The revolving credit facility also supports letters of credit totaling $37.3 million which includes approximately $3.3 million related to industrial development revenue bonds. As a result, we have approximately $709.0 million in remaining availability. We also had approximately $10.5 million of outstanding letters of credit that were issued outside of the revolving credit facility. 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 30, 2023. 15 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. 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 30, 2023, the fair values exceed the carrying values for all reporting units 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. 16 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 DEMAND OUTLOOK We believe effectively executing our strategies will allow us to achieve long-term goals in the future. However, demand in the markets we serve has contracted, which will impact our results and vary depending on the severity and duration of this cycle. 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. We anticipate lumber prices will remain in range near current levels, and experience more typical seasonal trends, until there is a substantial change in the balance of supply and demand.  Retail segment sales accounted for 40% of our net sales in 2023. 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 2024.  Packaging segment sales accounted for 26% of our net sales in 2023. 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 believe overall demand in the markets we serve to be slightly up to slightly down in 2024.  Construction segment sales accounted for 30% of our net sales in 2023. - The site-built business unit accounted for approximately 14% of our net sales in 2023. Approximately one-third of site-built customers are multifamily builders. The Mortgage Bankers Association of America forecasts a 1% decrease in national housing starts to an estimated 1.42 million starts in 2024 and the National Association of Home Builders forecasts starts of 1.34 million, a 6% decrease from 2023. - The factory-built business unit accounted for 10% of our net sales in 2023. When evaluating future demand, we analyze data from production and shipments of manufactured housing. The National Association of Home Builders and John Burns Real Estate Consulting forecast the manufactured home shipments in 2024 to be flat to slightly up. 17 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - The commercial and concrete forming business units accounted for approximately 6% of our net sales in 2023. When evaluating future demand, we analyze data from non-residential construction spending. We anticipate overall demand in this business unit to be flat to slightly up in 2024. LONG-TERM OUTLOOK GOALS Our long-term financial goals include:  Growing our annual unit sales by 7 to 10 percent. We anticipate smaller tuck-in acquisitions will contribute toward this goal;  Achieving and sustaining a 12.5 percent EBITDA margin by continuing to enhance our capabilities and grow our portfolio and sales of value-added products and by achieving operating improvements;  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 2.4% growth in 2025 and 3.0% annual growth through 2027. 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 and Edge 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.  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. 18 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 growth. CONSTRUCTION SEGMENT The National Association of Home Builders forecasts a 3% increase in manufactured home shipments from 2023 to 2024 and a 4% compounded annual growth rate through 2026. The Mortgage Bankers Association of America forecasts national housing starts of 1.42 million in 2024 and 1.47 million in 2025. The National Association of Home Builders forecasts starts of 1.34 million in 2024 and 1.42 million in 2025. The consensus estimate of all housing starts is 1.4 million in 2024, 1.47 million in 2025, and 1.5 million is 2026. 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. GROSS PROFIT We believe the following factors are likely to 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.  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 and our ability to sell new 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. 19 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS  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. 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 $250 million to $300 million on capital expenditures, incur depreciation of approximately $110 million, and incur amortization and other non-cash expenses of approximately $45 million in 2024. On December 30, 2023, we had outstanding purchase commitments on capital projects of approximately $93.6 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. On February 1, 2024, our board approved a quarterly cash dividend of $0.33 per share, which represents a 10% increase from December 2023. This dividend will be payable on March 15, 2024, to shareholders of record on March 1, 2024. 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. 20 UFP INDUSTRIES, INC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS We have a share repurchase program approved by our Board of Directors, and on July 26, 2023, our board authorized the repurchase of up to $200 million worth of shares of outstanding stock through July 31, 2024. This share authorization supersedes and replaces our prior share repurchase authorizations. We currently have remaining authorization to repurchase up to $173 million through July 31, 2024. 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. 21 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 30, 2023, 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 30, 2023, 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 30, 2023, of the Company and our report dated February 28, 2024, 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 February 28, 2024 22 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 30, 2023 and December 31, 2022, 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 30, 2023, 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 30, 2023 and December 31, 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2023, 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 30, 2023, 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 February 28, 2024, 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 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 consolidated or accounted for under the equity method. 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. 23 We identified the Company’s assessment of consolidation or equity method accounting related to its acquisition of a partial ownership interest in UFP Palets, as well as the VIE primary beneficiary assessment, 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 structure and the related acquisition agreement. 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 the acquisition.  We evaluated the appropriateness of the Company’s accounting conclusion related to consolidation or equity method accounting for a partial ownership interest entity by reading the acquisition agreement and other related documents.  We evaluated the terms of the agreement to determine if the acquired ownership interest should be classified as a VIE. If an entity was determined to be a VIE, we 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. /s/ Deloitte & Touche LLP Grand Rapids, Michigan February 28, 2024 We have served as the Company's auditor since 2014. 24 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: 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, 61,621,004 and 61,618,193 Additional paid-in capital Retained earnings Accumulated other comprehensive loss Total controlling interest shareholders’ equity Noncontrolling interest TOTAL SHAREHOLDERS’ EQUITY December 30, 2023 December 31, 2022 $ 1,118,329 $ 3,927 34,745 549,499 559,397 226 36,013 617,604 398,798 574,429 973,227 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 3,672,073 352,785 375,003 727,788 29,327 38,474 2,502,089 4,228 24,838 103,774 87,438 336,313 7,345 175,195 1,559,304 (782,727) 776,577 4,017,797 $ $ $ 203,055 $ 206,941 232,331 66,713 22,977 42,900 567,976 233,534 84,885 45,248 35,934 967,577 296,120 80,255 25,577 2,942 611,835 275,154 85,419 51,265 44,697 1,068,370 20,030 6,880 $ — $ — 61,621 354,702 2,582,332 1,106 2,999,761 30,429 3,030,190 4,017,797 $ 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. 25 UFP INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF EARNINGS AND COMPREHENSIVE INCOME (in thousands, except per share data) December 30, 2023 Year Ended December 31, 2022 December 25, 2021 NET SALES COST OF GOODS SOLD GROSS PROFIT SELLING, GENERAL AND ADMINISTRATIVE EXPENSES OTHER LOSSES (GAINS), NET EARNINGS FROM OPERATIONS INTEREST EXPENSE INTEREST AND INVESTMENT INCOME EQUITY IN LOSS OF INVESTEE INTEREST AND OTHER EARNINGS BEFORE INCOME TAXES INCOME TAXES NET EARNINGS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST $ 7,218,384 $ 9,626,739 $ 8,636,134 5,799,446 7,837,278 7,229,167 1,418,938 1,789,461 1,406,967 682,253 (12,840) 737,554 13,814 (6,498) 3,902 11,218 726,336 173,972 552,364 (16,724) 535,640 766,633 5,771 646,534 12,842 (39,916) 2,367 (24,707) 671,241 156,784 514,457 (145) 514,312 $ 832,079 7,198 950,184 13,910 (725) 2,183 15,368 934,816 229,852 704,964 (12,313) 692,651 $ $ EARNINGS PER SHARE – BASIC EARNINGS PER SHARE – DILUTED $ $ 8.21 $ 8.07 $ 11.05 $ 10.97 $ 8.61 8.59 OTHER COMPREHENSIVE INCOME: NET EARNINGS OTHER COMPREHENSIVE INCOME (LOSS) COMPREHENSIVE INCOME COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST See notes to consolidated financial statements. 514,457 14,836 529,293 704,964 (2,498) 702,466 552,364 (5,296) 547,068 (4,800) (13,485) (15,039) $ 524,493 $ 688,981 $ 532,029 26 UFP INDUSTRIES, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (in thousands, except share and per share data) Controlling Interest Shareholders’ Equity Additional Accumulated Other Noncontrolling Interest (NCI) Total Temporary Equity Common Paid-In Retained Comprehensive Stock $ 61,206 $ 218,224 $ 1,182,680 $ 535,640 Capital Earnings Earnings (1,794) $ (2,584) (1,027) (5,405) $ (1,841) (1,829) (9,075) $ 9,762 419 (40,209) 33 2,083 546 3,506 10 117 (117) 11,071 9,228 $ 61,902 $ 243,995 $ 1,678,121 $ 692,651 (58,860) 44 2,725 806 9,919 25 113 (1,247) (113) (94,527) 27,987 9,516 $ 61,618 $ 294,029 $ 2,217,410 $ 514,312 (817) (1,210) (68,238) 33 2,717 821 14,485 22 124 (975) (124) (81,174) 34,727 Balance on December 26, 2020 Net earnings Foreign currency translation adjustment Unrealized gain on investments and other Distributions to noncontrolling interest 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 Net earnings (loss) Foreign currency translation adjustment Unrealized loss on investments and other Other Distributions to NCI Purchase of remaining NCI of subsidiary NCI related to business combinations Cash dividends - $1.10 per share Issuance of 32,944 shares under employee stock purchase plan Issuance of 820,591 shares under stock grant programs Issuance of 124,145 shares under deferred compensation plan Repurchase of 974,869 shares Expense associated with share-based compensation arrangements Accrued expense under deferred compensation plans Balance on December 30, 2023 See notes to consolidated financial statements 27 — 22,836 $ 1,483,152 $ 552,364 16,724 (4,269) (1,685) (1,027) (6,750) 6,831 (40,209) (6,750) 6,831 2,116 4,062 — 11,071 — 103 (630) (234) 7,641 6,880 (518) 388 43 13,237 9,228 37,956 $ 2,016,569 $ 704,861 12,210 (39) 1,802 (1,829) (12,024) 538 — (7,641) (58,860) (12,024) 538 (7,641) 2,769 10,750 — (95,774) 27,987 663 4,267 9,516 32,841 $ 2,596,823 $ 514,975 14,029 419 113 (7,355) (2,127) — (68,238) 930 (7,355) (917) 2,750 15,328 — (82,149) 34,727 10,895 $ 61,621 $ 354,702 $ 2,582,332 $ 1,106 $ 10,895 30,429 $ 3,030,190 $ 20,030 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 used in operating activities: Depreciation Amortization of intangibles Expense associated with share-based and grant compensation arrangements Deferred income taxes (credit) Unrealized (gain) loss on investments and other Equity in loss of investee Net (gain) loss 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 Purchase of remaining noncontrolling interest of subsidiary 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 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 28 Year Ended December 30, December 31, December 25, 2023 2022 2021 $ 514,457 $ 704,964 $ 552,364 110,563 21,327 34,899 (5,573) (2,435) 2,367 (260) — (3,177) 81,659 250,561 (3,578) (40,920) 959,890 (180,382) 3,291 (52,383) (2,127) (29,806) 29,935 (8,692) (240,164) 28,462 (30,125) (29) (6,262) 2,750 (68,238) (7,355) (82,149) 86 (162,860) 5,767 562,633 559,623 1,122,256 559,397 226 559,623 1,118,329 3,927 1,122,256 $ $ $ $ $ $ 12,736 158,145 $ $ $ $ $ $ 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 3,178 3,185 3,256 $ 10,978 $ 9,282 $ 7,487 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 made from wood, wood and non-wood composites, 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. As a result of the investment in Dempsey on June 27, 2022, we own 50% of the issued equity of that entity, 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 30, 2023, the carrying value of our investment in Dempsey is $61.4 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. 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 2023, 2022, and 2021 relate to the fiscal years ended December 30, 2023, December 31, 2022, and December 25, 2021, respectively. Fiscal year 2023 was comprised of 52 weeks, fiscal year 2022 was comprised of 53 weeks and fiscal year 2021 was comprised of 52 weeks. 29 FAIR VALUE DISCLOSURES OF FINANCIAL INSTRUMENTS We follow ASC Topic 820, Fair Value Measurements and Disclosures, which provides a consistent definition of fair value, focuses on exit price, prioritizes the use of market-based inputs over entity-specific inputs for measuring fair value and establishes a three-tier hierarchy for fair value measurements. This topic requires fair value measurements to be classified and disclosed in one of the following three categories:  Level 1 — Financial instruments with unadjusted, quoted prices listed on active market exchanges.  Level 2 — Financial instruments lacking unadjusted, quoted prices from active market exchanges, including over- the-counter traded financial instruments. Financial instrument values are determined using prices for recently traded financial instruments with similar underlying terms and direct or indirect observational inputs, such as interest rates and yield curves at commonly quoted intervals.  Level 3 — Financial instruments not actively traded on a market exchange and there is little, if any, market activity. Values are determined using significant unobservable inputs or valuation techniques. Our investment portfolio includes restricted investments within our wholly-owned subsidiary, Ardellis Insurance Ltd. There are $24.8 million of restricted investments recorded as of December 30, 2023. 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 30, 2023: Allowance for possible losses on accounts receivable $ 11,727 $ 56,522 $ (63,116) $ 5,133 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 * Includes accounts charged off, discounts given to customers and actual customer returns and allowances. 30 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 $8.2 million and $8.0 million as of December 30, 2023 and December 31, 2022, respectively. All amounts are expected to be collected within 18 months. Concentration of accounts receivable related to our two largest customers totaled $118.0 million and $131.0 million as of December 30, 2023 and December 31, 2022, respectively. RECENTLY ISSUED ACCOUNTING GUIDANCE In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures," which is intended to enhance the transparency, decision usefulness and effectiveness of income tax disclosures. The amendments in this ASU require a public entity to disclose a tabular tax rate reconciliation, using both percentages and currency, with specific categories. A public entity is also required to provide a qualitative description of the states and local jurisdictions that make up the majority of the effect of the state and local income tax category and the net amount of income taxes paid, disaggregated by federal, state and foreign taxes and also disaggregated by individual jurisdictions. The amendments also remove certain disclosures that are no longer considered cost beneficial. The amendments are effective prospectively for annual periods beginning after December 15, 2024, and early adoption and retrospective application are permitted. Although the ASU only modifies our required income tax disclosures, we are currently evaluating the impact of adopting this guidance on the consolidated financial statements. In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures," which is intended to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses, allowing financial statement users to better understand the components of a segment's profit or loss to assess potential future cash flows for each reportable segment and the entity as a whole. The amendments expand a public entity's segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"), clarifying when an entity may report one or more additional measures to assess segment performance, requiring enhanced interim disclosures, providing new disclosure requirements for entities with a single reportable segment, and requiring other new disclosures. The amendments are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, and early adoption is permitted. Although the ASU only requires additional disclosures about the Company's operating segments, we are currently evaluating the impact of adopting this guidance on the consolidated financial statements. 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 has been 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 $23.2 million as of December 30, 2023 and $27.9 million as of December 31, 2022. 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. 31 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 30, 2023 and December 31, 2022 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 30, December 31, 2023 2022 $ 185,188 $ 171,729 355,228 708,095 23,186 121,730 $ 1,559,304 $ 1,379,968 400,232 884,880 26,275 62,729 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 $5.8 million and $5.7 million as of December 30, 2023, and $5.7 million and $5.4 million as of December 31, 2022, respectively. LONG-LIVED ASSETS In accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”), when an indicator of potential impairment exists, we evaluate the recoverability of our long-lived assets by determining whether unamortized balances could be recovered through undiscounted future operating cash flows over the remaining lives of the assets. If the sum of the expected future cash flows was less than the carrying value of the assets, an impairment loss would be recognized for the excess of the carrying value over the fair value. GOODWILL Goodwill represents the excess of the purchase price over the fair value of net tangible and identifiable intangible assets of acquired businesses. Goodwill and intangible assets deemed to have indefinite lives are not amortized and are subject to impairment tests at least annually in accordance with ASC 350, Intangibles-Goodwill and Other. We review the carrying amounts of goodwill and other non-amortizable intangibles by reporting unit to determine if such assets may be impaired. As of the date of the most recent goodwill impairment test, which utilized data and assumptions as of September 30, 2023, it was determined that the fair values exceed the carrying values and there were no indicators for impairment for all of our reporting units. In the fourth quarter of 2022, we recorded a non-cash goodwill impairment charge of $2.5 million related to the Italian reporting unit within our all other segment. Subsequently, the Italian reporting unit was divested in 2023. 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. 32 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 30, 2023 and December 31, 2022. Our policy is to accrue amounts equal to actuarially determined or internally computed liabilities. The actuarial and internal valuations are based on historical information along with certain assumptions about future events. Changes in assumptions for such matters as legal actions, medical cost trends, and changes in claims experience could cause these estimates to change in the future. In addition to providing coverage for the Company, Ardellis provides Excess Loss Insurance (primarily medical and prescription drug) and Excess General Liability and Property Insurance to certain third parties. As of December 30, 2023, Ardellis had 207 such contracts in place. Reserves associated with these contracts were $7.5 million at December 30, 2023, and $5.0 million at December 31, 2022, 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. 33 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 relative 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 relative to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent. Our construction contracts are generally entered into with a fixed price and completion of the projects can range from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates and commodity costs. During the year, we update our estimated costs to complete our projects using current labor and commodity costs and recognize losses to the extent that they exist. The following table presents our net sales disaggregated by revenue source (in thousands): December 30, December 31, Year Ended December 25, 2023 vs. 2022 Point in Time Revenue Over Time Revenue Total Net Sales 2023 7,069,690 $ 148,694 7,218,384 $ $ $ 2021 2022 9,442,794 $ 8,512,012 124,122 9,626,739 $ 8,636,134 183,945 % Change 2022 vs. 2021 % Change (25.1)% (19.2)% (25.0)% 10.9% 48.2% 11.5% 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 30, 2023 and December 31, 2022 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 30, 2023 December 31, 2022 $ 3,572 $ 9,487 6,798 10,184 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. 34 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): December 30, December 31, December 25, 2022 2021 2023 Numerator: Net earnings attributable to controlling interest Adjustment for earnings allocated to non-vested restricted common stock equivalents Net earnings for calculating EPS $ 514,312 $ 692,651 $ 535,640 (25,139) 489,173 $ 665,163 $ (27,488) (17,342) 518,298 $ Denominator: Weighted average shares outstanding Adjustment for non-vested restricted common stock equivalents Shares for calculating basic EPS Effect of dilutive restricted common stock equivalents Shares for calculating diluted EPS Net earnings per share: Basic Diluted USE OF ACCOUNTING ESTIMATES 62,683 (3,064) 59,619 1,020 60,639 62,667 (2,487) 60,180 473 60,653 62,209 (2,014) 60,195 159 60,354 $ $ 8.21 $ 8.07 $ 11.05 $ 10.97 $ 8.61 8.59 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. 35 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): December 30, 2023 December 31, 2022 Quoted Prices in Active Markets Prices with Other Prices with Observable Unobservable Inputs (Level 1) (Level 2) $ 492,800 $ 6,133 $ Quoted Prices in Active Prices with Other Prices with Observable Unobservable Inputs (Level 3) Total Markets (Level 1) (Level 2) Inputs Inputs (Level 3) Total — $ 498,933 $ 390,219 $ 1,286 $ — $ 391,505 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 5,112 18,976 — 24,088 2,594 16,692 — 19,286 344 16,411 — 13,330 509 9 5 474 — — — — — — — — 14,327 $ 528,994 $ 25,109 $ — — 344 10,500 26,911 343 17,337 4,052 4,052 — — 13,330 13,067 — — — 509 9 5 1,414 8 130 — 474 474 — 14,327 15,093 — — — — — — — — — 14,552 $ 568,655 $ 425,586 $ 17,978 $ — 343 — 17,337 4,102 4,102 — 13,067 — — — 1,414 8 130 — 474 — 15,093 4,102 $ 447,666 From the assets measured at fair value as of December 30, 2023, listed in the table above, $498.5 million of money market funds are held in Cash and Cash Equivalents, $34.8 million of mutual funds, equity securities, and alternative investments are held in Investments, $10.5 million of equity securities are held in Other Assets, $0.1 million of money market and mutual funds are held in Other Assets for our deferred compensation plan, and $24.4 million of fixed income funds and $0.4 million of money market funds are held in Restricted Investments. As of December 31, 2022, $36.1 million of mutual funds, equity securities, and alternative investments were held in Investments, $391.2 million of money market funds were held in Cash and Cash Equivalents, $0.5 million of money market and mutual funds were 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 were 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 2023, we made $10.5 million of investments through our Innov8 Fund, which is designed to invest in emerging projects, services, and technologies. These investments are valued as Level 3 assets and are categorized as “Equity securities.” 36 In accordance with our investment policy, our wholly-owned company, Ardellis Insurance Ltd. ("Ardellis"), maintains an investment portfolio, totaling $59.2 million and $55.6 million as of December 30, 2023 and December 31, 2022, 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. 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 December 30, 2023 Unrealized Gain (Loss) Fair Value Cost December 31, 2022 Unrealized Gain (Loss) Fair Value Cost $ 25,514 $ (1,426) $ 24,088 $ 21,399 $ (2,113) $ 19,286 343 343 1,575 17,337 15,762 14,574 1,144 13,430 4,102 997 3,105 4,237 $ 59,177 $ 54,039 $ 1,603 $ 55,642 344 13,523 12,348 3,211 $ 54,940 $ 344 2,888 16,411 14,282 1,934 4,052 841 — — 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 $4.2 million and $1.6 million as of December 30, 2023 and December 31, 2022. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of December 30, 2023 and December 31, 2022. 37 C. BUSINESS COMBINATIONS We completed the following business combinations in fiscal 2023 and 2022, which were accounted for using the purchase or equity method (in thousands). Company Name Acquisition Date September 20, 2023 Purchase Price $52,841 consideration for 80% stock purchase, net of acquired cash Intangible Assets Net Tangible Assets Operating Segment $ 43,785 $ 9,056 International UFP Palets y Embalajes SL (UFP Palets) Headquartered in Castellón, Spain, UFP Palets (formerly known as Palets Suller Group) is the market leader in machine-built wood pallets, serving the region's large ceramic tile industry. The company had trailing 12-month sales of approximately $38 million through August 2023. December 6, 2022 $70,942 consideration for 100% asset purchase $ 48,745 $ 22,197 Packaging Titan Corrugated, Inc. (Titan) and All Boxed Up, LLC (ABU) 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. ABU 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. June 27, 2022 $69,791 consideration for equity method investment $ 34,552 $ 35,239 Packaging 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 consideration 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 operates in UFP’s Deckorators business unit. December 27, 2021 $24,057 consideration 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. The intangible assets for each acquisition were finalized and allocated to their respective identifiable intangible asset and goodwill accounts during 2023, except for the acquisition of UFP Palets. In aggregate, acquisitions made during 2023 and 2022, contributed approximately $95.0 million in net sales and $3.3 million in operating profit during 2023. 38 We acquired UFP Palets on September 20, 2023, in which we own 80% of the issued equity of that entity, and the remaining 20% of the issued equity is owned by the previous owner (“Seller”). In the fourth quarter of 2023, we gained control over UFP Palets and thus began consolidating this entity. The investment in UFP Palets is accounted for as a business acquisition. Per the contract, the Seller has a put right to sell their equity interest to us and we have a call right to purchase the Seller’s equity interest, which are both first exercisable in September 2026. The values of the put and call options are based upon future performance. As a result of this redemption feature, we recorded redeemable noncontrolling interest, at its acquisition‑date fair value, that is classified as temporary equity in the accompanying consolidated balance sheets at December 30, 2023. The amounts assigned to major intangible classes for the business combinations mentioned above are as follows (in thousands): UFP Palets All Boxed Up Titan Cedar Poly Ultra *(estimate) Non- Intangibles - Compete Customer Agreements Technology Patents Relationships Tradename Goodwill Deductible — $ 7,077 * $ 43,785 $ 1,914 628 29 46,831 721 15,367 4,821 1,441 500 20,390 8,550 5,020 36,708 * $ 864 21,136 2,490 6,820 — $ — — 390 — 393 9,607 — — — — — — — $ — $ Tax The business combinations mentioned above were not significant to our operating results individually or in aggregate, and thus pro forma results for 2023 and 2022 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 30, 2023 and December 31, 2022, are as follows (in thousands): Balance as of December 25, 2021 2022 Acquisitions 2022 Purchase Accounting Adjustments 2022 Impairments Foreign Exchange, Net Balance as of December 31, 2022 2023 Acquisitions 2023 Purchase Accounting Adjustments Foreign Exchange, Net Balance as of December 30, 2023 Packaging Construction All Other Corporate Total Retail $ 73,376 $ 128,541 $ 89,000 $ 24,121 $ 10,971 293 — — — (4,766) (2,480) (774) 23,862 (3,494) — — — (1,074) — (256) $ 84,640 $ 148,909 $ 87,670 $ 16,101 $ — (979) — — (7,867) — — — 135 7,077 — 627 $ 83,661 $ 141,042 $ 87,805 $ 23,805 $ — $ 315,038 34,833 — (9,041) — (2,480) — — (1,030) — $ 337,320 7,077 — (8,846) — — 762 — $ 336,313 As of the date of the most recent goodwill impairment test, which utilized data and assumptions as of September 30, 2023, all reporting units had fair values that were substantially in excess of their carrying values. During 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 reporting unit exceeded its fair value and as a result, 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. Subsequently, the Italian reporting unit was divested in 2023. Indefinite-lived intangible assets totaled $7.3 million as of December 30, 2023 and December 31, 2022 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. 39 The following amounts were included in other amortizable intangible assets, net as of December 30, 2023 and December 31, 2022 (in thousands): Non-compete agreements Customer relationships and other Licensing agreements Patents Technology Tradename Software Total $ Assets (5,966) $ 3,920 $ 12,577 $ Assets 9,886 $ 2023 Accumulated Amortization Net Value 2022 Accumulated Amortization Net Value 5,468 104,466 — 872 1,725 30,433 928 $ 242,634 $ (67,439) $ 175,195 $ 201,468 $ (57,576) $ 143,892 (43,403) — (898) (2,173) (12,320) (2,679) (34,646) (4,589) (1,104) (875) (8,393) (860) 139,112 4,589 1,976 2,600 38,826 1,788 171,029 — 1,622 12,600 39,831 7,666 127,626 — 724 10,427 27,511 4,987 (7,109) $ 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 Technology Tradename (amortizable) Software Weighted Average Estimated Useful Life Amortization Period 7.5 years 10.4 years 10 years 10 years 9.5 years 10.9 years 3 years 2 to 15 years 5 to 15 years 10 years 10 years 5 to 12 years 5 to 25 years 3 to 5 years Amortization expense of intangibles totaled $21.3 million, $19.5 million and $13.9 million in 2023, 2022 and 2021, respectively. The estimated amortization expense for intangibles for each of the five succeeding fiscal years is as follows (in thousands): 2024 2025 2026 2027 2028 Thereafter Total E. DEBT $ $ 23,580 22,998 20,520 18,636 18,021 71,440 175,195 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 increased 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. 40 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. Outstanding letters of credit extended on our behalf on December 30, 2023 and December 31, 2022 aggregated $47.8 million and $59.0 million. These letters of credit are comprised of $37.3 million issued under the revolving credit facility, including approximately $3.3 million related to industrial development revenue bonds, and $10.5 million issued outside of the facility. We had an outstanding balance on the revolver of $3.7 million and $5.5 million, which includes foreign subsidiary borrowings at December 30, 2023, and December 31, 2022, respectively. After considering letters of credit, we had $709.0 million and $741.2 million in remaining availability on the revolver on December 30, 2023, and December 31, 2022, respectively. Letters of credit have one-year terms, include an automatic renewal clause, and are charged an annual interest rate of 112.5 to 122.5 basis points, based upon our financial performance. Long-term debt obligations are summarized as follows on December 30, 2023 and December 31, 2022 (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 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 (5.44% on December 30, 2023 and 4.13% on December 31, 2022) Series 1999 Industrial Development Revenue Bonds, due on August 1, 2029, interest payable monthly at a floating rate (3.33% on December 30, 2023 and 1.04% on December 31, 2022) Finance leases and foreign affiliate debt Less current portion Less debt issuance costs Long-term portion 2023 2022 $ 50,000 $ 50,000 50,000 50,000 50,000 40,000 35,000 50,000 40,000 35,000 40,000 40,000 3,692 5,465 3,300 4,592 276,584 (42,900) (150) 3,300 4,565 278,330 (2,942) (234) $ 233,534 $ 275,154 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 30, 2023 and December 31, 2022. 41 On December 30, 2023, the principal maturities of long-term debt and finance lease obligations are as follows (in thousands): 2024 2025 2026 2027 2028 Thereafter Total $ $ 42,823 640 186 3,896 40,223 188,666 276,434 On December 30, 2023, the estimated fair value of our long-term debt, including the current portion, was $241.4 million, which was $35.1 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 30, 2023. As of December 30, 2023, 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 30, 2023. 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 30, 2023 and December 31, 2022 are as follows (in thousands): Operating lease cost Short-term lease cost Variable lease cost Sublease income Total lease cost 2023 2022 $ 33,829 $ 32,458 10,490 5,291 (2,876) $ 47,419 $ 45,363 9,525 6,332 (2,267) Rent expense was approximately $49.7 million, $48.2 million, and $40.1 million in 2023, 2022, and 2021, respectively. 42 The amounts paid for operating leases, included in the measurement of lease liabilities, were $32.4 million in the year ended December 30, 2023 and $30.2 million in the year ended December 31, 2022. In addition, right-of-use assets obtained in exchange for new operating lease liabilities were approximately $35.4 million and $32.0 million, respectively, for the years ended December 30, 2023 and December 31, 2022. Future minimum payments under non-cancelable operating leases on December 30, 2023 are as follows (in thousands): 2024 2025 2026 2027 2028 Thereafter Total minimum lease payments Less present value discount Total lease liability Operating $ Leases 32,796 29,435 27,104 17,998 13,517 31,686 $ 152,536 (44,674) $ 107,862 As of December 30, 2023 and December 31, 2022, the weighted average lease term for operating leases was 7.21 years and 6.78 years, respectively. Similarly, the weighted average discount rate for operating leases was 4.53% and 3.70%, 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. There was no remaining deferred compensation liability on December 30, 2023 and the remaining deferred compensation liability on December 31, 2022 was $0.1 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 30, 2023 and December 31, 2022, was $12.2 million and $11.6 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 $0.1 million and $0.5 million on December 30, 2023 and December 31, 2022, respectively, and are included in "Other Assets." Related liabilities totaled $57.8 million and $50.4 million on December 30, 2023 and December 31, 2022, 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. The Employee 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. 43 We maintain and administer our shareholder approved Director Compensation Plan. The Director Compensation Plan allows eligible members of the Board of Directors to defer the cash portion of their retainer and committee fees, credited in the form of stock units, and receive shares of our stock at the time of or following their retirement, disability or death. The number of shares to be received is equal to the amount of the cash portion of their retainer and committee fees deferred multiplied by 110%, divided by the fair market value of a share of our stock at the time of deferral. The number of units is increased by the amount of dividends paid on our common stock. The units are immediately vested as of the grant date, since they are considered payment for services rendered quarterly. We recognized expense for this plan of $1.9 million in 2023, $2.0 million in 2022, and $1.7 million in 2021. 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. Refer to Notes to Consolidated Financial Statements, Note G, "Deferred Compensation" for additional information on the “Plan”. There is no unrecognized compensation expense remaining for stock options in 2023, 2022, and 2021. Below is a summary of common stock issuances for 2023 and 2022 (in thousands, except per share data): December 30, 2023 Share Issuance Activity Shares issued under the employee stock purchase plan Shares issued under the employee stock gift program Shares issued under the director compensation plan Shares issued under the LTSIP Shares issued under the executive stock match plan Forfeitures Total shares issued under stock grant programs Common Stock 33 $ Average Share Price 98.20 95.42 92.82 86.14 85.89 $ 86.16 2 3 756 75 (15) 821 Shares issued under the deferred compensation plans 124 $ 88.43 44 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 LTSIP Shares issued under the executive stock grants plan Forfeitures Total shares issued under stock grant programs December 31, 2022 Common Stock 44 $ Average Share Price 73.45 78.23 79.98 82.73 82.87 $ 82.71 2 4 755 62 (17) 806 Shares issued under the deferred compensation plans 113 $ 81.86 A summary of the nonvested restricted stock awards granted under the LTSIP is as follows: Nonvested at December 26, 2020 Granted Vested Forfeited Nonvested at December 25, 2021 Granted Vested Forfeited Nonvested at December 31, 2022 Granted Vested Forfeited Nonvested at December 30, 2023 Weighted- Average Grant Date Fair Value Weighted- Unrecognized Average Compensation Period to Recognize Expense 6.3 0.62 years Expense (in millions) Restricted Awards 1,363,794 $ 560,516 (274,271) (23,007) 1,627,032 $ 815,874 (286,661) (17,990) 2,138,255 $ 830,346 (233,763) (14,001) 2,720,837 $ 35.14 $ 60.24 26.50 39.68 45.23 $ 79.97 34.00 54.07 58.70 $ 86.11 40.50 63.54 68.61 $ 6.6 0.43 years 51.4 3.74 years 76.9 3.68 years Under the Stock Purchase Plan and LTSIP, we recognized share-based compensation expense of $34.9 million, $28.2 million, and $11.2 million and the related total income tax benefits of $8.2 million, $6.9 million, and $2.7 million in 2023, 2022 and 2021, respectively. For the year-ended December 30, 2023, we determined that $28.9 million of share-based bonus awards, representing 254,746 shares, will be awarded to qualified employees as it relates to the Company’s 2023 performance and granted in 2024 under the LTSIP. 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 $1.2 million, or 10,893 shares of stock, if certain performance metrics are achieved after three years. As of December 30, 2023 and December 31, 2022, we recognized approximately $5.0 million and $13.8 million, respectively, of compensation expense related to share-based bonus awards and performance units for each of those respective performance years. 45 We have a Sales Incentive Plan for certain eligible employees. Under this plan, sales incentives are determined and calculated using a formula-based approach and estimated monthly based on specific performance metrics. This Plan places a cap on cash payments with the remaining earned incentive being settled in share-based awards. For the year-ended December 30, 2023, we determined that $5.9 million of share-based sales incentive awards, representing 51,802 shares, will be awarded to qualified employees based on the 2023 performance year and granted in 2024. These awards will vest after a period of five years from the grant date. As of December 30, 2023 and December 31, 2022, we recognized approximately $1.0 million and $0.9 million of compensation expense related to share-based sales incentive awards for each of those respective performance years. In 2023, 2022 and 2021, cash received from share issuances under our plans was $2.7 million, $2.8 million and $2.1 million, respectively. During 2023, we repurchased 974,869 shares of our common stock at an average share price of $84.27. During 2022, we repurchased approximately 1,246,616 shares of our common stock at an average share price of $76.83. Effective July 26, 2023, our board authorized the repurchase of up to $200 million worth of shares of outstanding stock through July 31, 2024. This share authorization supersedes and replaces our prior share repurchase authorizations. We currently have remaining authorization to repurchase up to $173 million through July 31, 2024. 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 2023, 2022, and 2021, on a discretionary basis, totaling $8.8 million, $11.7 million, and $9.2 million respectively. Included within the total employee matched contribution was an additional matched contribution for hourly employees of $1.8 million, $4.6 million and $3.7 million for 2023, 2022 and 2021, 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 $15.5 million and $14.8 million are accrued in “Other Liabilities” for this plan on December 30, 2023 and December 31, 2022, respectively. J. INCOME TAXES Income tax provisions for the years ended December 30, 2023, December 31, 2022, and December 25, 2021 are summarized as follows (in thousands): Currently Payable: Federal State and local Foreign Net Deferred: Federal State and local Foreign Total income tax expense 46 2023 2022 2021 $ 123,257 $ 181,029 $ 115,077 30,441 21,095 166,613 28,580 44,646 10,808 17,336 162,645 243,011 (2,249) (3,223) (389) (8,561) (3,657) (941) (5,861) (13,159) 6,242 118 999 7,359 $ 156,784 $ 229,852 $ 173,972 The components of earnings before income taxes consist of the following: 2023 2022 2021 U.S. Foreign Total $ 633,816 $ 876,071 $ 645,316 81,020 $ 671,241 $ 934,816 $ 726,336 58,745 37,425 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) Tax credits, including foreign tax credit Change in uncertain tax positions reserve Other permanent differences Other, net Effective income tax rate 2023 21.0 % 3.6 (0.9) 0.2 0.2 (0.7) 23.4 % 2022 21.0 % 3.4 (0.8) (0.1) 0.1 1.0 24.6 % 2021 21.0 % 3.3 (0.6) (0.1) (0.4) 0.7 23.9 % Temporary differences which give rise to deferred income tax assets and (liabilities) on December 30, 2023 and December 31, 2022 are as follows (in thousands): $ 2023 45,661 $ 27,918 7,881 935 31 2,397 2,203 3,373 28,021 118,420 (6,014) 112,406 (82,617) (43,455) (26,870) (484) (153,426) 2022 37,893 28,746 6,891 500 102 3,732 3,273 6,791 11,080 99,008 (4,618) 94,390 (69,711) (43,643) (27,849) (702) (141,905) $ (41,020) $ (47,515) Employee benefits Lease liability Net operating loss carryforwards Foreign subsidiary capital loss carryforward Other tax credits Inventory Reserves on receivables Accrued expenses Capitalized research and development costs Gross deferred income tax assets Valuation allowance Deferred income tax assets Depreciation Intangibles Right of use assets Other, net Deferred income tax liabilities Net deferred income tax liability 47 As of December 30, 2023, we had federal, state and foreign net operating loss carryforwards of $7.9 million and state tax credit carryforwards of $0.1 million, which will expire at various dates. The NOL and credit carryforwards expire as follows: Net Operating Losses Tax Credits 2024 - 2028 2029 - 2033 2034 - 2038 2039 - 2043 Thereafter Total State Foreign U.S. State U.S. $ 27 $ 206 $ — $ — — 208 — 396 1,618 1,373 — 1,268 1,656 — 570 $ 208 $ 3,414 $ 3,700 $ — $ — — — — — $ — — 31 — — 31 As of December 30, 2023, 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 $5.5 million against the various NOLs. Furthermore, there is a valuation allowance of $0.5 million against a capital loss carryforward we have for a wholly-owned subsidiary, UFP Canada, Inc. Based upon the business activity and the nature of the assets of 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. The Organization of Economic Cooperation and Development (“OECD”) reached an agreement among various countries to implement a minimum 15% tax rate on certain multinational enterprises, commonly referred to as Pillar Two. Many countries continue to announce changes in their tax laws, many of them effective for tax years beginning Jan 1, 2024. We continue to analyze the impacts of these legislative changes to our effective tax rate, consolidated financial statements, and related disclosures. As of Dec 30, 2023, we do not expect the impact of Pillar Two legislation to have a material impact on our tax expense. K. ACCOUNTING FOR UNCERTAINTY IN INCOME TAXES ASC 740, Income Taxes (“ASC 740”) clarifies the accounting for income taxes by prescribing the minimum recognition threshold a tax position is required to meet before being recognized in the financial statements. ASC 740 also provides guidance on derecognition, measurement, classification, interest and penalties, and disclosure requirements. A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows (in thousands): 2023 2022 2021 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 $ 3,217 $ 3,603 $ 3,892 437 839 (1,565) $ 4,771 $ 3,217 $ 3,603 943 1,286 (675) (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 $0.4 million for the year December 30, 2023, $0.3 million for the year December 31, 2022, and $0.5 million for the year December 25, 2021. 48 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 2019. 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 30, 2023, 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 30, 2023, we had outstanding purchase commitments on commenced capital projects of approximately $82.9 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 30, 2023, we had approximately $20.9 million in outstanding payment and performance bonds for open projects. We had approximately $6.9 million in payment and performance bonds outstanding for completed projects which are still under warranty. On December 30, 2023, we had outstanding letters of credit totaling $47.8 million, primarily related to certain insurance contracts, industrial development revenue bonds, and other debt agreements described further below. In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers and other third parties to guarantee our performance under certain insurance contracts and other legal agreements. As of December 30, 2023, we have irrevocable letters of credit outstanding totaling approximately $44.5 million for these types of arrangements. We have reserves recorded on our balance sheet, in accrued liabilities, that reflect our expected future liabilities under those insurance arrangements. We are required to provide irrevocable letters of credit in favor of the bond trustees for all industrial development revenue bonds that have been issued. These letters of credit guarantee principal and interest payments to the bondholders. We currently have irrevocable letters of credit outstanding totaling approximately $3.3 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 2023 which would require us to recognize a liability on our balance sheet. 49 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 17% and 12%, respectively, of our total net sales in fiscal 2023, 15% and 11%, respectively, of our total net sales in fiscal 2022 and 16% and 10%, respectively, in 2021. 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 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, corporate ventures, 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: Retail Packaging Construction Other Corporate Total 2023 All $ 2,886,515 $ 1,838,200 $ 2,161,059 $ 328,884 $ 83,549 7 8,849 32,996 96,729 — 2,904 19,546 268,210 (3,020) 3,488 3,994 3,726 $ 7,218,384 — 12,842 21,327 110,563 (1,013,813) 15,744 1,520 30,084 Net sales to outside customers Intersegment net sales Interest expense(1) Amortization expense Depreciation expense Segment earnings before income taxes Segment assets Capital expenditures 565,325 111 4,566 23,943 167,955 781,005 52,756 193,563 798,623 52,694 243,357 621,762 56,793 37,573 364,274 1,432 28,793 1,452,133 16,707 671,241 4,017,797 180,382 50 Net sales to outside customers Intersegment net sales Interest expense(1) Amortization expense Depreciation expense Segment earnings before income taxes Segment assets Capital expenditures Net sales to outside customers Intersegment net sales Interest expense(1) Amortization expense Depreciation expense Segment earnings before income taxes Segment assets Capital expenditures 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 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 (1) Interest expense includes intercompany interest between segments. Information regarding principal geographic areas was as follows (in thousands): 2023 Long-Lived Tangible 2022 Long-Lived Tangible 2021 Long-Lived Tangible United States Foreign Total Assets Net Sales Net Sales $ 6,935,431 $ 779,748 $ 9,254,676 $ 770,921 $ 8,395,737 $ 679,757 54,873 $ 7,218,384 $ 967,790 $ 9,626,739 $ 897,761 $ 8,636,134 $ 734,630 126,840 188,042 Net Sales 372,063 240,397 282,953 Assets Assets 51 The following table presents, for the periods indicated, our disaggregated net sales (in thousands) by business unit for each segment. Retail Deckorators ProWood UFP Edge Other Total Retail Packaging(1) Structural Packaging PalletOne Protective Packaging Total Packaging Construction Factory Built Site Built Commercial Concrete Forming Total Construction All Other Corporate Total Net Sales 2023 2022 2021 $ 309,419 $ 326,011 $ 248,765 3,013,620 148,927 7,025 $ 2,886,515 $ 3,650,639 $ 3,418,337 2,494,362 81,603 1,131 3,152,950 168,190 3,488 $ 1,225,204 $ 1,716,021 $ 1,554,857 574,466 18,819 $ 1,838,200 $ 2,394,681 $ 2,148,142 628,969 49,691 530,642 82,354 $ 718,773 $ 1,181,837 $ 1,098,905 1,190,393 259,360 149,776 $ 2,161,059 $ 3,143,868 $ 2,698,434 1,361,607 336,298 264,126 977,129 265,079 200,078 $ 328,884 $ 431,611 $ 362,473 $ 3,726 $ 5,940 $ 8,748 $ 7,218,384 $ 9,626,739 $ 8,636,134 (1) Effective January 1, 2023, the Packaging segment established new business units as follows: Structural Packaging, PalletOne, and Protective Packaging Solutions. This change resulted in the transfer of net sales from the these geographic business units to Structural Packaging, PalletOne and Protective Packaging in 2023. Product codes have been transferred within these three business units during 2023, and prior year figures have been updated to reflect the change for comparability purposes. 52 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 2023 2022 2021 50.5% 77.0% 83.2% 83.8% 27.5% 68.4% 49.5% 23.0% 16.8% 16.2% 72.5% 31.6% 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% 56.8% 32.3% 27.0% 25.3% 32.1% 40.3% N. QUARTERLY FINANCIAL INFORMATION (UNAUDITED) The following table sets forth selected financial information for all of the quarters, consisting of 52 weeks during the year ended December 30, 2023 and 53 weeks during the year ended December 31, 2022, (in thousands, except per share data): First Second Third Fourth 2023 2022 2023 2022 2023 2022 2023 2022 $ 1,822,476 $ 2,489,313 $ 2,043,918 $ 2,900,874 $ 1,827,637 $ 2,322,855 $ 1,524,353 $ 1,913,697 357,470 131,879 296,142 103,908 478,363 193,131 503,452 207,853 400,067 150,788 450,176 172,101 358,329 125,578 364,400 134,183 126,069 189,703 150,761 203,118 134,035 167,241 103,447 132,589 2.01 3.01 2.40 3.24 2.14 2.68 1.65 2.12 1.98 3.00 2.36 3.23 2.10 2.66 1.62 2.10 53 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 29, 2018, and reinvestment of dividends in all cases. The companies included in our self-determined industry peer group are as follows: American Woodmark Corporation Boise Cascade Company Builders FirstSource, Inc. Gibraltar Industries, Inc. Greif, Inc. Louisiana-Pacific Corporation Masco Corporation Patrick Industries, Inc. Simpson Manufacturing Company, Inc. Sonoco Products Company Trex Company, Inc. WestRock Company The returns of each company included in the self-determined peer group are weighted according to each respective company’s stock market capitalization at the beginning of each period presented in the graph above. In determining the members of our peer group, we considered companies who selected UFPI as a member of their peer group, and looked for similarly sized companies or companies that are a good fit with the markets we serve. 54 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. 55 ANNUAL MEETING SHAREHOLDER INFORMATION The 2024 Annual Shareholder’s Meeting of UFP Industries, Inc. will be held at 8:30 a.m. on April 24, 2024, 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 56 

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