UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March ~~28, 2020~~27, 2021


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 0-22684

UFP INDUSTRIES, INC.

(Exact name of registrant as specified in its charter)


	Michigan		38-1465835
	(State or other jurisdiction of incorporation or		(I.R.S. Employer Identification Number)
	organization)

	2801 East Beltline NE, Grand Rapids, Michigan		49525
	(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (616) 364-6161


	~~Universal Forest Products, Inc.~~NONE
	(Former name or former address, if changed since last report.)

Indicate by checkmark 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 checkmark 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. ☐

Indicate by checkmark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


	Class		Outstanding as of March ~~28, 2020~~27, 2021
	Common stock, $1 par value		~~61,102,481~~61,838,256


Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class	Trading Symbol	Name of Each Exchange On Which Registered
Common Stock,, no par value	UFPI	The Nasdaq Stock Market, LLC

Table of Contents

UFP INDUSTRIES, INC.

TABLE OF CONTENTS

PART I.		FINANCIAL INFORMATION.	Page No.

	Item 1.	Financial Statements

		Condensed Consolidated Balance Sheets at March ~~28,~~27, 2021, December 26, 2020 ~~December 28, 2019~~ and March ~~30, 2019~~28, 2020	3

		Condensed Consolidated Statements of Earnings and Comprehensive Income for the Three Months Ended March ~~28, 2020~~27, 2021 and March ~~30, 2019~~28, 2020	4

		Condensed Consolidated Statements of Shareholders’ Equity for the Three Months Ended March ~~28, 2020~~27, 2021 and March ~~30, 2019~~28, 2020	5

		Condensed Consolidated Statements of Cash Flows for the Three Months Ended March ~~28, 2020~~27, 2021 and March ~~30, 2019~~28, 2020	6

		Notes to Unaudited Condensed Consolidated Financial Statements	7

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1516

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2628

	Item 4.	Controls and Procedures	2728

PART II.		OTHER INFORMATION

	Item 1.	Legal Proceedings – NONE

	Item 1A.	Risk Factors - NONE	2829

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2829

	Item 3.	Defaults upon Senior Securities – NONE

	Item 4.	Mine Safety Disclosures – NONE

	Item 5.	Other Information – NONE	29

	Item 6.	Exhibits	3029

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


(in thousands, except share data)
	March 28,		December 28,		March 30,		March 27,		December 26,		March 28,
	2020		2019		2019		2021		2020		2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	32,129	$	168,336	$	17,111	$	44,399	$	436,507	$	32,129
Restricted cash		724		330		1,024		629		101		724
Investments		17,778		18,527		16,197		31,439		24,308		17,778
Accounts receivable, net		460,821		364,027		444,111		808,105		470,504		460,821
Inventories:
Raw materials		263,857		236,283		279,265		438,762		316,481		263,857
Finished goods		246,824		250,591		300,898		384,652		250,813		246,824
Total inventories		510,681		486,874		580,163		823,414		567,294		510,681
Refundable income taxes		2,624		13,272		4,629		—		5,836		2,624
Other current assets		36,152		41,706		40,237		29,072		33,812		36,152
TOTAL CURRENT ASSETS		1,060,909		1,093,072		1,103,472		1,737,058		1,538,362		1,060,909
DEFERRED INCOME TAXES		2,145		2,763		2,364		2,290		2,413		2,145
RESTRICTED INVESTMENTS		16,111		16,214		13,580		17,209		17,565		16,111
RIGHT OF USE ASSETS		81,065		80,167		66,100		98,404		77,245		81,065
OTHER ASSETS		25,198		24,884		8,419		27,358		20,298		25,198
GOODWILL		246,459		229,536		224,247		314,189		252,193		246,459
INDEFINITE-LIVED INTANGIBLE ASSETS		7,288		7,354		7,364		7,401		7,401		7,288
OTHER INTANGIBLE ASSETS, NET		46,232		48,313		39,686		93,812		72,252		46,232
PROPERTY, PLANT AND EQUIPMENT:
Property, plant and equipment		906,171		884,963		828,837		1,060,893		974,497		906,171
Less accumulated depreciation and amortization		(508,596)		(497,789)		(472,671)		(572,526)		(557,335)		(508,596)
PROPERTY, PLANT AND EQUIPMENT, NET		397,575		387,174		356,166		488,367		417,162		397,575
TOTAL ASSETS		1,882,982		1,889,477		1,821,398		2,786,088		2,404,891		1,882,982
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Cash overdraft	$	—	$	—	$	18,732	$	47,140	$	—	$	—
Accounts payable		162,039		142,479		170,667		299,398		211,518		162,039
Accrued liabilities:
Compensation and benefits		92,504		141,892		70,867		137,208		166,478		92,504
Income taxes								25,565		—		—
Other		55,760		51,572		45,618		78,560		69,104		55,760
Current portion of lease liability		16,180		15,283		14,500		23,051		16,549		16,180
Current portion of long-term debt		2,772		2,816		185		109		100		2,772
TOTAL CURRENT LIABILITIES		329,255		354,042		320,569		611,031		463,749		329,255
LONG-TERM DEBT		160,550		160,867		266,428		426,310		311,607		160,550
LEASE LIABILITY		64,937		64,884		51,600		76,408		61,509		64,937
DEFERRED INCOME TAXES		22,799		22,880		14,622		34,940		25,266		22,799
OTHER LIABILITIES		33,159		29,071		29,813		50,856		59,608		33,159
TOTAL LIABILITIES		610,700		631,744		683,032		1,199,545		921,739		610,700
SHAREHOLDERS’ EQUITY:
Controlling interest shareholders’ equity:
Preferred stock, no par value; shares authorized 1,000,000; issued and outstanding, none	$	—	$	—	$	—
Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding, 61,102,481, 61,408,589 and 61,352,372		61,102		61,409		61,352
Preferred stock, 0 par value; shares authorized 1,000,000; issued and outstanding, none							$	—	$	—	$	—
Common stock, $1 par value; shares authorized 80,000,000; issued and outstanding, 61,838,256, 61,205,780 and 61,102,481								61,838		61,206		61,102
Additional paid-in capital		211,724		192,173		190,879		231,111		218,224		211,724
Retained earnings		998,996		995,022		875,457		1,276,722		1,182,680		998,996
Accumulated other comprehensive income		(11,110)		(4,889)		(4,789)
Accumulated other comprehensive loss								(3,464)		(1,794)		(11,110)
Total controlling interest shareholders’ equity		1,260,712		1,243,715		1,122,899		1,566,207		1,460,316		1,260,712
Noncontrolling interest		11,570		14,018		15,467		20,336		22,836		11,570
TOTAL SHAREHOLDERS’ EQUITY		1,272,282		1,257,733		1,138,366		1,586,543		1,483,152		1,272,282
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	1,882,982	$	1,889,477	$	1,821,398	$	2,786,088	$	2,404,891	$	1,882,982

See notes to consolidated condensed financial statements.

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

AND COMPREHENSIVE INCOME

(Unaudited)

(in thousands, except per share data)

Three Months Ended

March 28,

March 30,

2020

2019

NET SALES
$
1,032,062

$
1,015,125

COST OF GOODS SOLD

864,826

860,858

GROSS PROFIT

167,236

154,267

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

109,339

105,317

OTHER

(735)

504

EARNINGS FROM OPERATIONS

58,632

48,446

INTEREST EXPENSE

1,908

2,460

INTEREST INCOME

(341)

(245)

UNREALIZED LOSS (GAIN) ON INVESTMENTS AND OTHER

3,173

(1,348)

4,740

867

EARNINGS BEFORE INCOME TAXES

53,892

47,579

INCOME TAXES

13,322

11,577

NET EARNINGS

40,570

36,002

LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST

(411)

(462)

NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST
$
40,159

$
35,540

EARNINGS PER SHARE - BASIC
$
0.65

$
0.58

EARNINGS PER SHARE - DILUTED
$
0.65

$
0.58

OTHER COMPREHENSIVE INCOME:

NET EARNINGS

40,570

36,002

OTHER COMPREHENSIVE GAIN (LOSS)

(8,556)

1,373

COMPREHENSIVE INCOME

32,014

37,375

LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST

1,924

(686)

COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST
$
33,938

$
36,689


(in thousands, except per share data)
	Three Months Ended
	March 27,		March 28,
	2021		2020
NET SALES	$	1,825,004	$	1,032,062
COST OF GOODS SOLD		1,538,450		864,826
GROSS PROFIT		286,554		167,236
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES		150,098		109,339
OTHER LOSSES (GAINS), NET		(1,031)		(735)
EARNINGS FROM OPERATIONS		137,487		58,632
INTEREST EXPENSE		3,151		1,908
INTEREST AND INVESTMENT (INCOME) LOSS		(2,296)		2,832
EQUITY IN EARNINGS OF INVESTEE		630		—
		1,485		4,740
EARNINGS BEFORE INCOME TAXES		136,002		53,892
INCOME TAXES		31,751		13,322
NET EARNINGS		104,251		40,570
LESS NET EARNINGS ATTRIBUTABLE TO NONCONTROLLING INTEREST		(940)		(411)
NET EARNINGS ATTRIBUTABLE TO CONTROLLING INTEREST	$	103,311	$	40,159

EARNINGS PER SHARE – BASIC	$	1.67	$	0.65
EARNINGS PER SHARE – DILUTED	$	1.67	$	0.65

OTHER COMPREHENSIVE INCOME:
NET EARNINGS		104,251		40,570
OTHER COMPREHENSIVE GAIN (LOSS)		(2,196)		(8,556)
COMPREHENSIVE INCOME		102,055		32,014
LESS COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTEREST		(414)		1,924
COMPREHENSIVE INCOME ATTRIBUTABLE TO CONTROLLING INTEREST	$	101,641	$	33,938

See notes to consolidated condensed financial statements.

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(Unaudited)


(in thousands, except share and per share data)
	Controlling Interest Shareholders’ Equity
							Accumulated
			Additional				Other
	Common		Paid-In		Retained		Comprehensive		Noncontrolling
	Stock		Capital		Earnings		Earnings		Interest		Total
Balance at December 26, 2020	$	61,206	$	218,224	$	1,182,680	$	(1,794)	$	22,836	$	1,483,152
Net earnings						103,311				940		104,251
Foreign currency translation adjustment								(374)		(526)		(900)
Unrealized loss on debt securities								(1,296)				(1,296)
Distributions to noncontrolling interest										(2,914)		(2,914)
Additional purchase of noncontrolling interest												—
Cash dividends - $0.15 per share - quarterly						(9,274)						(9,274)
Issuance of 5,816 shares under employee stock purchase plan		6		357								363
Net issuance of 536,970 shares under stock grant programs		537		3,888		5						4,430
Issuance of 89,690 shares under deferred compensation plans		89		(89)								—
Expense associated with share-based compensation arrangements				2,936								2,936
Accrued expense under deferred compensation plans				5,795								5,795
Balance at March 27, 2021	$	61,838	$	231,111	$	1,276,722	$	(3,464)	$	20,336	$	1,586,543

(in thousands, except share and per share data)

Controlling Interest Shareholders’ Equity

Accumulated

Additional

Other

Common

Paid-In

Retained

Comprehensive

Noncontrolling


Stock

Capital

Earnings

Earnings

Interest

Total
Balance at December 29, 2018

$
60,884

$
178,540

$
839,917

$
(5,938)

$
15,281

$
1,088,684
Net earnings





35,540



462


36,002
Foreign currency translation adjustment







982

224


1,206
Unrealized gain (loss) on investment & foreign currency







167



167
Distributions to noncontrolling interest









(500)

(500)
Issuance of 10,259 shares under employee stock plans

10

251








261
Issuance of 320,069 shares under stock grant programs

320

6,101








6,421
Issuance of 138,295 shares under deferred compensation plans

138

(138)








—
Expense associated with share-based compensation arrangements



1,226







1,226
Accrued expense under deferred compensation plans



4,899







4,899
Balance at March 30, 2019

$
61,352

$
190,879

$
875,457

$
(4,789)

$
15,467

$
1,138,366
Balance at December 28, 2019

$
61,409

$
192,173

$
995,022

$
(4,889)

$
14,018

$
1,257,733
Net earnings





40,159



411


40,570
Foreign currency translation adjustment







(5,951)

(2,335)


(8,286)
Unrealized loss on debt securities







(270)



(270)
Distributions to noncontrolling interest









(299)

(299)
Additional purchase of noncontrolling interest

130

(225)

(95)
Cash dividends - $0.125 per share - quarterly





(7,730)





(7,730)
Issuance of 10,549 shares under employee stock plans

10

309








319
Issuance of 350,124 shares under stock grant programs

350

12,454


1






12,805
Issuance of 89,616 shares under deferred compensation plans

89

(89)








—
Repurchase of 756,397 shares

(756)

(28,456)

(29,212)
Expense associated with share-based compensation arrangements



1,404







1,404
Accrued expense under deferred compensation plans



5,343







5,343
Balance at March 28, 2020

$
61,102

$
211,724

$
998,996

$
(11,110)

$
11,570

$
1,272,282


(in thousands, except share and per share data)
	Controlling Interest Shareholders’ Equity
							Accumulated
			Additional				Other
	Common		Paid-In		Retained		Comprehensive		Noncontrolling
	Stock		Capital		Earnings		Earnings		Interest		Total
Balance at December 28, 2019	$	61,409	$	192,173	$	995,022	$	(4,889)	$	14,018	$	1,257,733
Net earnings						40,159				411		40,570
Foreign currency translation adjustment								(5,951)		(2,335)		(8,286)
Unrealized loss on debt securities								(270)				(270)
Distributions to noncontrolling interest										(299)		(299)
Additional purchase of noncontrolling interest				130						(225)		(95)
Cash dividends - $0.125 per share - quarterly						(7,730)						(7,730)
Issuance of 10,549 shares under employee stock purchase plan		10		309								319
Net issuance of 350,124 shares under stock grant programs		350		12,454		1						12,805
Issuance of 89,616 shares under deferred compensation plans		89		(89)								—
Repurchase of 756,397 shares		(756)				(28,456)						(29,212)
Expense associated with share-based compensation arrangements				1,404								1,404
Accrued expense under deferred compensation plans				5,343								5,343
Balance at March 28, 2020	$	61,102	$	211,724	$	998,996	$	(11,110)	$	11,570	$	1,272,282

See notes to consolidated condensed financial statements.

Table of Contents

UFP INDUSTRIES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


(in thousands)	Three Months Ended				Three Months Ended
	March 28,		March 30,		March 27,		March 28,
	2020		2019		2021		2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	40,570	$	36,002	$	104,251	$	40,570
Adjustments to reconcile net earnings to net cash from operating activities:
Depreciation		15,717		14,475		18,733		15,717
Amortization of intangibles		1,571		1,852		3,998		1,571
Expense associated with share-based and grant compensation arrangements		1,444		1,287		2,981		1,444
Deferred income taxes (credit)		286		(742)
Unrealized (gain) loss on investments		3,173		(1,348)
Net gain on disposition of assets and impairment of assets		(285)		(122)
Deferred income taxes						142		286
Unrealized (gain) loss on investments and other						(1,754)		3,173
Equity in earnings of investee						630		—
Net gain on disposition of assets						(532)		(285)
Changes in:
Accounts receivable		(94,253)		(100,716)		(253,323)		(94,253)
Inventories		(25,783)		(23,649)		(207,768)		(25,783)
Accounts payable and cash overdraft		20,047		25,056		121,892		20,047
Accrued liabilities and other		(8,648)		(7,924)		14,090		(8,648)
NET CASH USED IN OPERATING ACTIVITIES		(46,161)		(55,829)		(196,660)		(46,161)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(27,286)		(15,883)		(34,656)		(27,286)
Proceeds from sale of property, plant and equipment		409		241		5,062		409
Acquisitions and purchases of non-controlling interest, net of cash received		(18,487)		—		(261,133)		(18,487)
Investment in life insurance contracts
Purchases of investments		(14,052)		(449)		(8,738)		(14,052)
Proceeds from sale of investments		11,260		340		3,381		11,260
Other		(54)		200		(414)		(54)
NET CASH USED IN INVESTING ACTIVITIES		(48,210)		(15,551)		(296,498)		(48,210)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under revolving credit facilities		6,759		237,560		236,280		6,759
Repayments under revolving credit facilities		(6,498)		(173,232)		(121,570)		(6,498)
Repayment of debt		(3,074)		(3,029)
Contingent consideration payments and other						(627)		(3,074)
Proceeds from issuance of common stock		319		261		363		319
Dividends paid to shareholders		(7,730)		—		(9,274)		(7,730)
Distributions to noncontrolling interest		(299)		(500)		(2,914)		(299)
Repurchase of common stock		(29,212)		—		—		(29,212)
Other		12		9		(331)		12
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(39,723)		61,069
NET CASH FROM (USED IN) FINANCING ACTIVITIES						101,927		(39,723)
Effect of exchange rate changes on cash		(1,719)		248		(349)		(1,719)
NET CHANGE IN CASH AND CASH EQUIVALENTS		(135,813)		(10,063)		(391,580)		(135,813)
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR		168,666		28,198		436,608		168,666
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD	$	32,853	$	18,135	$	45,028	$	32,853

RECONCILIATION OF CASH AND CASH EQUIVALENTS AND RESTRICTED CASH:
Cash and cash equivalents, beginning of period	$	168,336	$	27,316	$	436,507	$	168,336
Restricted cash, beginning of period		330		882		101		330
Cash, cash equivalents, and restricted cash, beginning of period	$	168,666	$	28,198	$	436,608	$	168,666

Cash and cash equivalents, end of period	$	32,129	$	17,111	$	44,399	$	32,129
Restricted cash, end of period		724		1,024		629		724
Cash, cash equivalents, and restricted cash, end of period	$	32,853	$	18,135	$	45,028	$	32,853

SUPPLEMENTAL INFORMATION:
Interest paid	$	374	$	570	$	2,694	$	374
Income taxes paid		2,307		2,801		249		2,307
NON-CASH FINANCING ACTIVITIES:
Common stock issued under deferred compensation plans		4,900		4,457		5,359		4,900

See notes to consolidated condensed financial statements.

Table of Contents

UFP INDUSTRIES, INC.

NOTES TO UNAUDITED

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

A. BASIS OF PRESENTATION

The accompanying unaudited interim consolidated condensed financial statements (the “Financial Statements”) include our accounts and those of our wholly-owned and majority-owned subsidiaries and partnerships, and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, the Financial Statements do not include all the information and footnotes normally included in the annual consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States. All intercompany transactions and balances have been eliminated. Certain prior year amounts have been reclassified to conform to the current year presentation.

In our opinion, the Financial Statements contain all material adjustments necessary to present fairly our consolidated financial position, results of operations and cash flows for the interim periods presented. All such adjustments are of a normal recurring nature. These Financial Statements should be read in conjunction with the annual consolidated financial statements, and footnotes thereto, included in our Annual Report to Shareholders on Form 10-K for the fiscal year ended December ~~28, 2019.~~

~~On April 22, 2020, the shareholders approved changing the name of the Company from Universal Forest Products, Inc., to UFP Industries, Inc.~~26, 2020.

Seasonality has a significant impact on our working capital from March to August, which historically results in negative or modest cash flows from operations in our first and second quarters. Conversely, we experience a substantial decrease in working capital from September to February which typically results in significant cash flow from operations in our third and fourth quarters. For comparative purposes, we have included the March ~~30, 2019~~28, 2020 balances in the accompanying unaudited condensed consolidated balance sheets.

~~On March 11, 2020, the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation~~ ~~measures worldwide, which subsequently resulted in a variety of “stay at home” orders issued by states in which we operate. As of the date of this filing,~~ ~~the majority of our customers and operations have been deemed to be essential businesses under these state orders.~~ Consequently, all but 3 of our 150 plant locations remain operating. We cannot reasonably estimate the length or severity of this pandemic and government restrictions on business activity, or the extent to which these restrictions may materially impact our consolidated financial position, consolidated results of operations, and consolidated cash flows in fiscal 2020.

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~~UFP INDUSTRIES, INC.~~

B. FAIR VALUE

We apply the provisions of ASC 820, Fair Value Measurements and Disclosures, to assets and liabilities measured at fair value. Assets measured at fair value are as ~~follows:~~follows (in thousands):

																��
	March 28, 2020								March 30, 2019								March 27, 2021								March 28, 2020
	Quoted		Prices with						Quoted		Prices with						Quoted		Prices with						Quoted		Prices with
	Prices in		Other			Prices with			Prices in		Other			Prices with			Prices in		Other			Prices with			Prices in		Other			Prices with
	Active		Observable			Unobservable			Active		Observable			Unobservable			Active		Observable			Unobservable			Active		Observable			Unobservable
	Markets		Inputs			Inputs			Markets		Inputs			Inputs			Markets		Inputs			Inputs			Markets		Inputs			Inputs
(in thousands)	(Level 1)		(Level 2)			(Level 3)	Total		(Level 1)		(Level 2)			(Level 3)	Total
																	(Level 1)		(Level 2)			(Level 3)	Total		(Level 1)		(Level 2)			(Level 3)	Total
Money market funds	$	29,561	$	837	$	—	$	30,398	$	56	$	549	$	—	$	605	$	19	$	1,127	$	—	$	1,146	$	29,561	$	837	$	—	$	30,398
Fixed income funds		237		15,124		—		15,361		3,860		9,763		—		13,623		244		16,264		—		16,508		237		15,124		—		15,361
Equity securities		9,089		—		—		9,089		8,258		—		—		8,258		18,496		—		—		18,496		9,089		—		—		9,089
Alternative investments		—		—		1,960		1,960		—		—		1,782		1,782		—		—		2,126		2,126		—		—		1,960		1,960
Mutual funds:																—
Domestic stock funds		5,204		—		—		5,204		2,151		—		—		2,151		9,388		—		—		9,388		5,204		—		—		5,204
International stock funds		947		—		—		947		2,085		—		—		2,085		1,395		—		—		1,395		947		—		—		947
Target funds		242		—		—		242		257		—		—		257		21		—		—		21		242		—		—		242
Bond funds		222		—		—		222		799		—		—		799		145		—		—		145		222		—		—		222
Alternative funds		921		—		—		921		1,344		—		—		1,344		496		—		—		496		921		—		—		921
Total mutual funds		7,536		—		—		7,536		6,636		—		—		6,636		11,445		—		—		11,445		7,536		—		—		7,536
Total	$	46,423	$	15,961	$	1,960	$	64,344	$	18,810	$	10,312	$	1,782	$	30,904	$	30,204	$	17,391	$	2,126	$	49,721	$	46,423	$	15,961	$	1,960	$	64,344
Assets at fair value	$	46,423	$	15,961	$	1,960	$	64,344	$	18,810	$	10,312	$	1,782	$	30,904	$	30,204	$	17,391	$	2,126	$	49,721	$	46,423	$	15,961	$	1,960	$	64,344

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UFP INDUSTRIES, INC.

From the assets measured at fair value as of March ~~28, 2020,~~27, 2021, listed in the table above, ~~$29.5 million of money market funds are held in Cash and Cash Equivalents, $17.7~~$31.4 million of mutual funds, equity securities, and alternative investments are held in Investments, ~~$0.9~~$0.5 million of money market funds are held in Cash and Cash Equivalents, $0.6 million of money market and mutual funds are held in Other Assets for our deferred compensation plan, and ~~$15.4~~$16.9 million of fixed income funds and ~~$0.8~~$0.3 million of money markets funds are held in Restricted Investments.

We maintain money market, mutual funds, bonds, and/or ~~stocks~~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.

In accordance with our investment policy, our wholly-owned captive, Ardellis Insurance Ltd. (“Ardellis”), maintains an investment portfolio, totaling ~~$33.1~~$47.9 million as of March ~~28, 2020, consisting~~27, 2021, which has been included in the aforementioned table of total investments. This portfolio consists of domestic and international ~~stocks,~~equity securities, alternative investments, and fixed income bonds.

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~~UFP INDUSTRIES, INC.~~

Ardellis’ available for sale investment portfolio, including funds held with the State of Michigan, consists of the following (in thousands):


	March 28, 2020						March 27, 2021						March 28, 2020
			Unrealized						Unrealized						Unrealized
	Cost		Gain/(Loss)		Fair Value		Cost		Gain/(Loss)		Fair Value		Cost		Gain/(Loss)		Fair Value
Fixed Income	$	1,834	$	126	$	1,960	$	15,867	$	642	$	16,509	$	15,257	$	104	$	15,361
Equity		15,257		104		15,361		14,664		3,832		18,496		9,690		(601)		9,089
Mutual Funds		9,690		(601)		9,089		8,769		2,049		10,818		7,298		(569)		6,729
Alternative Investments		7,298		(569)		6,729		1,929		197		2,126		1,834		126		1,960
Total	$	34,079	$	(940)	$	33,139	$	41,229	$	6,720	$	47,949	$	34,079	$	(940)	$	33,139

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 ~~the~~a private real estate income trust which is valued as a Level 3 asset. The net unrealized ~~loss~~gain was ~~$0.9~~$6.7 million. Carrying amounts above are recorded in the investments and restricted investments line items within the balance sheet as of March 27, 2021 and March 28, 2020.

C. REVENUE RECOGNITION

Within the 3 primary segments (Retail, Industrial, and Construction) that the Company operates, there are a variety of written agreements governing the sale of our products and services. The transaction price is stated at the purchase order level, which includes shipping and/or freight costs and any applicable governmental authority taxes. The majority of our contracts have a single performance obligation concentrated around the delivery of goods to the carrier, Free On Board (FOB) shipping point. Therefore, revenue is recognized when this performance obligation is satisfied. Generally, title and control passes at the time of shipment. In certain circumstances, the customer takes title when the shipment arrives at the destination. However, our shipping process is typically completed the same day.

Certain customer products that we provide require installation by the Company or a 3^rd party. Installation revenue is recognized upon completion. If the Company uses a 3^rd party for installation, the party will act as an agent to the Company until completion of the installation. Installation revenue represents an immaterial share of the Company’s total sales.

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The Company utilizes rebates, credits, discounts and/or cash-based incentives with certain customers which are accounted for as variable consideration. We estimate these amounts based on the expected amount to be provided to customers and reduce revenues recognized. We believe that there will not be significant changes to our estimates of variable consideration. The allocation of these costs are applied at the invoice level and recognized in conjunction with revenue. Additionally, returns and refunds are estimated on a historical and expected basis which is a reduction of revenue recognized.

Earnings on construction contracts are reflected in operations using over time accounting, under either cost to cost or units of delivery methods, depending on the nature of the business at individual operations, which is in accordance with ASC 606 as revenue is recognized when certain performance obligations are performed. Under over time accounting using the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships of actual costs incurred related to the total estimated costs. Under over time accounting using the units of delivery method, revenues and related earnings on construction contracts are measured by the relationships of actual units produced related to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent.

Our construction contracts are generally entered into with a fixed price and completion of the projects can range from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates

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~~UFP INDUSTRIES, INC.~~

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 ~~gross revenues~~net sales disaggregated by revenue ~~source:~~source (in thousands):


(in thousands)	March 28,		March 30,
Market Classification	2020		2019		% Change
						March 27,		March 28,
						2021		2020		% Change
FOB Shipping Point Revenue	$	1,017,906	$	996,823	2.1%	$	1,797,399	$	999,262	79.9%
Construction Contract Revenue		32,800		34,782	-5.7%		27,605		32,800	(15.8)%
Total Gross Sales		1,050,706		1,031,605	1.9%
Sales Allowances		(18,644)		(16,480)	13.1%
Total Net Sales	$	1,032,062	$	1,015,125	1.7%	$	1,825,004	$	1,032,062	76.8%

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 which are included in “Other current assets” and “Accrued liabilities: Other”, respectively (in thousands):


	March 28,		December 28,		March 30,		March 27,		December 26,		March 28,
	2020		2019		2019		2021		2020		2020
Cost and Earnings in Excess of Billings	$	5,744	$	4,960	$	7,880	$	3,408	$	4,169	$	5,744
Billings in Excess of Cost and Earnings		9,920		6,622		5,020		9,396		11,530		9,920

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UFP INDUSTRIES, INC.

D. EARNINGS PER SHARE

The computation of earnings per share (“EPS”) is as follows (in thousands):


	Three Months Ended				Three Months Ended
	March 28,		March 30,		March 27,		March 28,
	2020		2019		2021		2020
Numerator:
Net earnings attributable to controlling interest	$	40,159	$	35,540	$	103,311	$	40,159
Adjustment for earnings allocated to non-vested restricted common stock		(1,059)		(865)		(3,175)		(1,059)
Net earnings for calculating EPS	$	39,100	$	34,675	$	100,136	$	39,100
Denominator:
Weighted average shares outstanding		61,842		61,372		61,889		61,842
Adjustment for non-vested restricted common stock		(1,630)		(1,493)		(1,902)		(1,630)
Shares for calculating basic EPS		60,212		59,879		59,987		60,212
Effect of dilutive restricted common stock		18		75		28		18
Shares for calculating diluted EPS		60,230		59,954		60,015		60,230
Net earnings per share:
Basic	$	0.65	$	0.58	$	1.67	$	0.65
Diluted	$	0.65	$	0.58	$	1.67	$	0.65

E. 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.

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~~UFP INDUSTRIES, INC.~~

We own and operate a number of facilities throughout the United States that chemically treat lumber products. In connection with the ownership and operation of these and other real properties, and the disposal or treatment of hazardous or toxic substances, we may, under various federal, state, and local environmental laws, ordinances, and regulations, be potentially liable for removal and remediation costs, as well as other potential costs, damages, and expenses. Environmental reserves, calculated with no0 discount rate, have been established to cover remediation activities at wood preservation facilities in Stockertown, PA; Elizabeth City, NC; and Auburndale, FL. In addition, a reserve was established for our facility in Thornton, CA to remove certain lead containing materials which existed on the property at the time of purchase.

On a consolidated basis, we have reserved approximately $1.9 million on March 27, 2021 and $2.0 million on March 28, 2020, ~~and on March 30, 2019,~~ respectively, representing the estimated costs to complete future remediation efforts. These amounts have not been reduced by an insurance receivable.

In addition, on March ~~28, 2020,~~27, 2021, 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 March ~~28, 2020,~~27, 2021, we had outstanding purchase commitments on commenced capital projects of approximately ~~$26.3~~$41.3 million.

We provide a variety of warranties for products we manufacture. Historically, warranty claims have not been material. We also distribute products manufactured by other companies, some of which are no longer in business. While we do not warrant these products, we have received claims as a distributor of these products when the manufacturer no longer exists or has the ability to pay. Historically, these costs have not had a material effect on our consolidated financial statements.

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UFP INDUSTRIES, INC.

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 ensure the products and installation services are completed in accordance with our contractual obligations. We have agreed to indemnify the surety for claims properly made against these bonds. As of March ~~28, 2020,~~27, 2021, we had approximately ~~$8.7~~$27.0 million outstanding payment and performance bonds for open projects. We had approximately ~~$11.6~~$4.0 million in payment and performance bonds outstanding for completed projects which are still under warranty.

On March ~~28, 2020,~~27, 2021, we had outstanding letters of credit totaling ~~$37.3~~$50.9 million, primarily related to certain insurance contracts and industrial development revenue bonds described further below.

In lieu of cash deposits, we provide irrevocable letters of credit in favor of our insurers to guarantee our performance under certain insurance contracts. As of March ~~28, 2020,~~27, 2021, we have irrevocable letters of credit outstanding totaling approximately ~~$27.4~~$43.8 million for these types of insurance arrangements. We have reserves recorded on our balance sheet, in accrued liabilities, that reflect our expected future liabilities under these insurance arrangements.

We are required to provide irrevocable letters of credit in favor of the bond trustees for all industrial development revenue bonds that have been issued. These letters of credit guarantee principal and interest payments to the bondholders. We currently have irrevocable letters of credit outstanding totaling approximately ~~$9.8~~$7.1 million related to our outstanding industrial development revenue bonds. These letters of credit have varying terms but may be renewed at the option of the issuing banks.

Certain wholly owned domestic subsidiaries have guaranteed the indebtedness of UFP Industries, Inc. in certain debt agreements, including the Series 2012, 2018 and ~~2018~~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.

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We did not enter into any new guarantee arrangements during the first quarter of ~~2020~~2021 which would require us to recognize a liability on our balance sheet.

~~F. BUSINESS COMBINATIONS~~

~~We completed the following acquisitions in 2020 and 2019, which were accounted for using the purchase method in thousands unless otherwise noted:~~

Net

Company
Acquisition

Intangible
Tangible
Operating
Name
Date
Purchase Price
Assets
Assets
Segment

March 13, 2020
$21,851
cash paid for 100% asset purchase and estimated contingent consideration
$
18,219
$
3,632
Construction
Quest Design & Fabrication and Quest Architectural Millwork ("Quest")
A designer, fabricator, and installer of premium millwork and case goods for a variety of commercial uses. Quest had annual sales of approximately $22 million. The acquisition of Quest will expand our architectural millwork in the commercial construction business unit, which aligns with our growth goals in the construction segment.

September 16, 2019
$12,422
cash paid for 100% asset purchase
$
7,464
$
4,958
Industrial
Pallet USA, LLC ("Pallet USA")
A manufacturer and recycler of wood pallet and crating products in the Midwest. Pallet USA had annual sales of approximately $18 million. The acquisition of Pallet USA allows us to expand our capacity to manufacture wood-based industrial packaging products and offer new services to customers in the Midwest.

August 12, 2019
$17,809
cash paid for 100% asset purchase and estimated contingent consideration
$
8,089
$
9,720
Retail
Northwest Painting, Inc. ("Northwest")
A supplier of pre-painted building materials, including siding, soffit, panels and trim to the Western U.S. Northwest had annual sales of approximately $14 million. The acquisition of Northwest will expand our capacity to produce coated siding and trim for customers in the Northwest and Mountain West regions.

May 1, 2019
$7,168
cash paid for 100% asset purchase and estimated contingent consideration
$
6,180
$
988
Industrial
Wolverine Wood Products, Inc. ("Wolverine")
A manufacturer of wood panel components for furniture, store fixtures and case goods manufacturers. Wolverine had annual sales of approximately $5 million. The acquisition of Wolverine allows us to expand capacity to produce value-added wood components for customers in the Midwest.

The intangible assets for the Quest, Pallet USA, Northwest, and Wolverine acquisitions have not been finalized and allocated to their respective identifiable asset and goodwill accounts. In aggregate, acquisitions completed since the end of March 2019 and not consolidated with other operations contributed approximately $9.1 million in revenue and a $0.4 million in operating profit during the first quarter of 2020.

~~G. SEGMENT REPORTING~~

The Company operates manufacturing, treating and distribution facilities internationally, but primarily in the United States. Effective January 1, 2020, the Company re-organized around the markets it serves rather than geography. The prior periods have been recast to reflect the new segment structure. The business segments align with the following markets: UFP Retail Solutions, UFP Construction and UFP Industrial. This change allows for a more specialized and consistent sales approach among Company operations, more efficient use of resources and capital, and quicker introduction of new

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UFP INDUSTRIES, INC.

F. BUSINESS COMBINATIONS

We completed the following acquisitions in 2021 and since the end of March 2020, which were accounted for using the purchase method in thousands unless otherwise noted:


					Net
Company	Acquisition		Intangible		Tangible		Operating
Name	Date	Purchase Price	Assets		Assets		Segment
	March 1, 2021	$4,724 cash paid for 100% asset purchase and estimated contingent consideration	$	4,176	$	548	Other
J.C. Gilmore Pty Ltd (Gilmores)	Founded in 1988 and operating from its distribution facility in Port Melbourne, Australia, Gilmores is a leading distributor in the industrial and construction industries of packaging tapes, stretch films, packaging equipment, strapping, construction protection products and other items, with 2020 sales of $15 million AUD ($10 million USD).
	December 28, 2020	$258,770 cash paid for 100% stock purchase	$	82,546	$	176,224	Retail/Industrial
PalletOne, Inc. (PalletOne)	Based in Bartow, Florida, PalletOne is a leading manufacturer of new pallets in the U.S., with 17 pallet manufacturing facilities in the southern and eastern regions of the country. The company also supplies other specialized industrial packaging, including custom bins and crates, and its Sunbelt Forest Products (Sunbelt) subsidiary operates 5 pressure-treating facilities in the Southeastern U.S. PalletOne and its affiliates had 2019 and 2020 sales of $525 million and $698 million, respectively.
	November 10, 2020	$27,274 cash paid for 100% asset purchase and estimated contingent consideration	$	17,894	$	9,380	Construction
Atlantic Prefab, Inc.; Exterior Designs, LLC; and Patriot Building Systems, LLC	Based in Wilton, New Hampshire, Atlantic Prefab produces prefabricated steel wall panels and light gauge metal trusses. The company’s steel component and prefinished wall panel lines are new, value-added product additions for UFP Construction that help shorten project timelines. Exterior Designs is a leading installer of siding and exterior cladding such as fiber cement, ACM (aluminum composite material) panels, phenolic panels, and EIFS (exterior insulation and finish systems). The company is based in Londonderry, New Hampshire, and serves commercial and multi-family clients throughout the Northeast. Also based in Londonderry, Patriot Building Systems provides commercial and multi-family framing services in the Northeast and will focus on markets not currently served by companies of UFP Industries. The companies had combined annual sales of approximately $28 million.
	October 1, 2020	$7,936 cash paid for 100% asset purchase and estimated contingent consideration	$	7,222	$	714	Retail
Fire Retardant Chemical Technologies, LLC (FRCT)	Founded in 2014 and based in Matthews, North Carolina, FRCT’s business includes a research and development laboratory specializing in developing and testing a wide range of high-performance chemicals, including fire retardants and water repellants. The company had annual sales of approximately $6.4 million.
	September 30, 2020	$4,465 cash paid for 50% stock purchase and estimated contingent consideration	$	4,607	$	(142)	Other
Enwrap Logistic & Packaging S.r.l. (Enwrap)	Enwrap is a newly formed company dedicated to the logistics and packaging business of its predecessor, Job Service S.p.A. Headquartered in Milan, Italy, Enwrap provides high-value, mixed material industrial packaging and logistics services through 8 locations in Italy. These locations generated annual sales of approximately $14 million.

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UFP INDUSTRIES, INC.


					Net
Company	Acquisition		Intangible		Tangible		Operating
Name	Date	Purchase Price	Assets		Assets		Segment
	July 14, 2020	$19,136 cash paid for 100% asset purchase and estimated contingent consideration	$	13,098	$	6,038	Industrial
T&R Lumber Company ("T&R")	A manufacturer and distributor of a range of products used primarily by nurseries, including plastic growing containers, pots and trays; wooden stakes; trellises; tree boxes; shipping racks; and other nursery supplies based in Rancho Cucamonga, California. T&R had annual sales of approximately $31 million. The acquisition of T&R will allow us to leverage their expertise using our national manufacturing capacity to grow our agricultural product offerings and customer base across the country.

The intangible assets for the above acquisitions have not been finalized and allocated to their respective identifiable asset and goodwill accounts. In aggregate, acquisitions completed since the end of March 2020 and not consolidated with other operations contributed approximately $242.8 million in net sales and $14.2 million in operating profits during the first quarter of 2021.

~~products~~G. SEGMENT REPORTING

The Company operates manufacturing, treating and ~~services.~~distribution facilities internationally, but primarily in the United States. The business segments align with the following markets: UFP Retail Solutions, UFP Construction and UFP Industrial. The Company manages the operations of its individual locations primarily through ~~the~~a market-centered reporting structure under which each location is included in a business unit and business units are included in our Retail, Industrial, and Construction segments. In the case of locations which serve multiple segments, results are allocated and accounted for by segment. The exception to this market-centered reporting and management structure is the Company’s International segment, which comprises our Mexico, Canada, and Australia operations and sales and buying offices in other parts of the world.

Our International segment and Ardellis (our insurance captive) have been included in the “All Other” column of the table below.

The “Corporate” column includes purchasing, transportation and administrative functions that serve our operating segments. Operating results of Corporate primarily consists of over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns and leases transportation equipment, are also included in the Corporate column. An inter-company lease charge is assessed to our operating segments for the use of these assets at fair market value rates. Total assets of the Corporate column include unallocated cash and cash equivalents, certain prepaid assets, certain property, equipment and other assets pertaining to the centralized activities of Corporate, UFP Real Estate, Inc., and UFP Transportation Ltd. The tables below are presented in thousands:


	Three Months Ended March 28, 2020												Three Months Ended March 27, 2021
(in thousands)	Retail		Industrial		Construction		All Other		Corporate		Total
													Retail		Industrial		Construction		All Other		Corporate		Total
Net sales to outside customers	$	352,161	$	256,543	$	381,155	$	42,392	$	(189)	$	1,032,062	$	759,021	$	448,874	$	559,530	$	55,577	$	2,002	$	1,825,004
Intersegment net sales		29,858		11,220		15,423		53,167		(109,668)		—		47,586		17,906		14,461		97,396		(177,349)		—
Segment operating profit		15,512		18,074		17,135		4,739		3,172		58,632		53,545		40,410		33,018		7,978		2,536		137,487

Three Months Ended March 30, 2019
(in thousands)

Retail

Industrial

Construction

  All Other

  Corporate

      Total
Net sales to outside customers

$
333,100

$
274,759

$
365,137

$
42,110

$
19

$
1,015,125
Intersegment net sales

29,571

11,062

11,831

53,129

(105,593)

—
Segment operating profit

11,031

18,823

15,267

2,048

1,277

48,446

Intangibles have been transferred and goodwill was re-allocated, based on their relative fair values, to our new segments and reporting units. The following table presents goodwill by segment as of March 28, 2020, and December 28, 2019 (in thousands):

Retail

Industrial

Construction

All Other

Corporate

Total
Balance as of December 28, 2019

$
58,098

$
81,276

$
82,911

$
7,251

$
—

$
229,536
2020 Acquisitions

—

—

18,219

—

—

18,219
Foreign Exchange, Net

—

—

—

(1,296)

—

(1,296)
Balance as of March 28, 2020

$
58,098

$
81,276

$
101,130

$
5,955

$
—

$
246,459

~~The following table presents total assets by segment as of March 28, 2020, and December 28, 2019.~~

Total Assets by Segment
(in thousands)
March 28,

December 28,

Segment Classification
2020

2019

% Change
Retail
$
521,977

$
436,397

19.6
%
Industrial

363,508

410,383

(11.4)

Construction

544,826

583,107

(6.6)

All Other

127,406

145,418

(12.4)

Corporate

325,265

314,172

3.5

Total Assets
$
1,882,982

$
1,889,477

(0.3)
%


	Three Months Ended March 28, 2020
	Retail		Industrial		Construction		All Other		Corporate		Total
Net sales to outside customers	$	352,161	$	256,543	$	381,155	$	42,392	$	(189)	$	1,032,062
Intersegment net sales		29,858		11,220		15,423		53,167		(109,668)		—
Segment operating profit		15,512		18,074		17,135		4,739		3,172		58,632

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UFP INDUSTRIES, INC.

The following table presents goodwill by segment as of March 27, 2021, and December 26, 2020 (in thousands):


	Retail		Industrial		Construction		All Other		Corporate		Total
Balance as of December 26, 2020	$	61,943	$	87,827	$	90,729	$	11,694	$	—	$	252,193
2021 Acquisitions		18,178		43,844		—		4,176		—		66,198
2021 Purchase Accounting Adjustments		—		(2,291)		(1,653)		(145)		—		(4,089)
Foreign Exchange, Net		—		—				(113)		—		(113)
Balance as of March 27, 2021	$	80,121	$	129,380	$	89,076	$	15,612	$	—	$	314,189

The following table presents total assets by segment as of March 27, 2021, and December 26, 2020 (in thousands).


	Total Assets by Segment
	March 27,		December 26,
Segment Classification	2021		2020		% Change
Retail	$	944,637	$	510,464	85.1	%
Industrial		657,572		416,487	57.9
Construction		535,527		510,972	4.8
All Other		214,815		196,856	9.1
Corporate		433,537		770,112	(43.7)
Total Assets	$	2,786,088	$	2,404,891	15.9	%

H. INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for foreign, state and local income taxes and permanent tax differences. Our effective tax rate was ~~24.7%~~23.3% in the first quarter of ~~2020~~2021 compared to ~~24.3%~~24.7% for same period in ~~2019.~~ 2020.The ~~slight increase~~decrease was primarily due to an ~~increase~~anticipated decrease in ~~the permanent~~our U.S. tax ~~difference for non-deductible officer compensation.~~ rate and a variety of other discrete tax items, none of which are individually significant.

I. COMMON STOCK

Below is a summary of common stock issuances for the first three months of ~~2020~~2021 and ~~2019~~2020 (in thousands, except average share price):


	March 28, 2020			March 27, 2021
Share Issuance Activity	Common Stock		Average Share Price	Common Stock		Average Share Price
Shares issued under the employee stock purchase plan	10	$	35.59	6	$	73.28

Shares issued under the employee stock gift program	1		45.22	1		79.91
Shares issued under the director retainer stock program	1		47.90	2		56.80
Shares issued under the long term stock incentive plan	271		47.51
Shares issued under the executive stock match grants	80		47.60
Shares issued under the bonus plan				468		53.68
Shares issued under the executive stock match grants plan				77		60.24
Forfeitures	(3)			(11)
Total shares issued under stock grant programs	350	$	47.52	537	$	54.63

Shares issued under the deferred compensation plans	89	$	54.68	89	$	59.75

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UFP INDUSTRIES, INC.


	March 28, 2020
Share Issuance Activity	Common Stock		Average Share Price
Shares issued under the employee stock purchase plan	10	$	35.59

Shares issued under the employee stock gift program	1		45.22
Shares issued under the director retainer stock program	1		47.90
Shares issued under the bonus plan	271		47.51
Shares issued under the executive stock match grants plan	80		47.60
Forfeitures	(3)
Total shares issued under stock grant programs	350	$	47.52

Shares issued under the deferred compensation plans	89	$	54.68

During the first three months of 2021, we did not repurchase any of our shares of common stock.

During the first three months of 2020, we repurchased approximately 756,000 shares of our common stock at an average share price of $38.62.

J. SUBSEQUENT EVENTS

March 30, 2019
Share Issuance Activity

Common Stock

Average Share Price
Shares issued under the employee stock purchase plan

10

$
29.88

Shares issued under the employee stock gift program

2

30.90
Shares issued under the director retainer stock program

1

31.00
Shares issued under the long term stock incentive plan

211

30.83
Shares issued under the executive stock match grants

109

31.57
Forfeitures

(3)

Total shares issued under stock grant programs

320

$
31.08

Shares issued under the deferred compensation plans

138

$
32.23

On April 12, 2021, Sunbelt Forest Products Corporation, a wholly owned subsidiary, closed on its agreement to purchase the net operating assets of Spartanburg Forest Products, Inc. and its affiliates. The purchase price for Spartanburg’s property, plant and equipment is approximately $16.5 million. Sunbelt also purchased Spartanburg’s net working capital for an amount equal to the net book value determined on the date of closing, which totaled approximately $146.5 million. Spartanburg and its affiliates are a wood treating operation in the southeastern U.S., with approximately 150 employees and operations in 5 states.

~~During~~On April 19, 2021, UFP Craft and Hobby, LLC, a wholly owned subsidiary, closed on its agreement to purchase the ~~first three months~~net operating assets of ~~2019, we did not repurchase any~~Walnut Hollow Farm, Inc., for $8.7 million. Walnut Hollow Farm, located in Wisconsin, is engaged in the business of ~~our common stock.~~designing, manufacturing, selling, and distributing wood products, tools, and accessories for the craft and hobby, outdoor sportsman art, personalized home décor, and hardware categories.

On April 29, 2021, UFP Construction, LLC, a wholly owned subsidiary, closed on its agreement to purchase the net operating assets of Endurable Building Products, LLC for $10.5 million. Endurable Building Products, based near Minneapolis, Minnesota, is a leading manufacturer of customized structural aluminum systems and products for exterior purposes, such as deck framing, balconies, sunshades, railings and stairs.

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UFP INDUSTRIES, INC.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

UFP Industries, Inc. ~~(formerly Universal Forest Products, Inc.)~~ is a holding company with subsidiaries throughout North America, Europe, Asia, and in Australia that supply wood, wood composite and other products to three ~~robust~~ markets: retail, industrial, and construction. ~~The Company is~~We are headquartered in Grand Rapids, ~~Mich.~~Michigan. For more information about UFP Industries, Inc., or ~~its~~our affiliated operations, go to www.ufpi.com.

~~On April 22, 2020, the shareholders approved changing the name of the Company from Universal Forest Products, Inc., to UFP Industries, Inc.~~

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. The Company does not undertake to update forward-looking statements to reflect facts, circumstances, events, or assumptions that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially from forward-looking statements are the following: fluctuations in the price of lumber; adverse or unusual weather conditions; adverse economic conditions in the markets we serve; government regulations, particularly involving environmental and safety regulations, government imposed “stay at home” orders and directives to cease or curtail operations; and our ability to make successful business acquisitions. Certain of these risk factors as well as other risk factors and additional information are included in the Company's reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission. We are pleased to present this overview of the first quarter of ~~2020.~~2021.

OVERVIEW

Our results for the first quarter of ~~2020~~2021 include the following highlights:

●

Our net sales ~~increased by 2%~~were up 77% compared to the first quarter of ~~2019,~~2020, which was comprised of a 5%44% increase ~~in unit sales, offset by a 3% decrease~~ in selling prices primarily due to the commodity lumber market (see Historical Lumber Prices below)., a 10% increase in organic unit sales, and a 23% increase in unit sales due to acquisitions completed since March of last year. Organic unit growth was ~~4% and was~~ driven by ~~8% growth by~~an 18% increase in our ~~Retail~~retail segment, 6% in our construction segment, and ~~6% growth by~~5% in our ~~Construction~~industrial segment.

●

Our operating profits increased ~~21%~~$78.9 million, or 134%, ~~which compares very favorably with~~compared to the first quarter of 2020. Acquisitions contributed approximately $25.5 million to our 5% increase in ~~unit sales.~~gross profits and $14.2 million to our increase in operating profits. The remaining improvement in our profitability was driven by a number of factors, including ~~effective~~organic unit growth in all of our segments while effectively leveraging fixed costs, inventory positioning and the impact of rising lumber ~~inventories, favorable changes~~prices on the selling prices of commodity-based products sold on a variable price formula and growth of our new and value-added products which have higher gross margins. In addition, our ability to effectively include lumber cost increases in ~~product mix,~~the selling prices of certain fixed price products enabled us to maintain our profit per unit. Excluding the impact of acquisitions, we estimate value-added and ~~strong organic growth resulting~~commodity-based products contributed $38.8 million and $55.0 million, respectively, to our increase in ~~effective leveraging of fixed costs.~~gross profits.

●

~~We repurchased approximately 756,000 shares~~Our cash flows used in operations for the first three months of 2021 decreased to $197 million compared to $46 million during the first quarter of 2020, primarily due to an increased investment in working capital of $216 million compared to the prior year. The increase in our ~~common stock for $29.2 million resulting~~net working capital requirements during the first quarter of 2021 were due to unusually high lumber prices and strong market demand, particularly in ~~an average price paid of $38.62.~~our retail segment.

●

~~Available borrowing capacity under our revolving credit facilities and surplus cash resulted in total liquidity of approximately $393 million at the end of March 2020.~~

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UFP INDUSTRIES, INC.

●

We purchased 100% of the common stock of PalletOne and its wholly owned subsidiaries, including Sunbelt Forest Products, for approximately $259 million (includes a seasonal working capital adjustment of $6 million).

●

Our net debt (debt and cash overdraft less cash) at the end of March 2021 was $429 million compared to $131 million at the end of March 2020. The increase of $298 million was due to an increased investment in working capital and the purchase of PalletOne discussed above. Our available borrowing capacity under revolving credit facilities and cash surplus resulted in total liquidity of approximately $420.8 million at the end of the first quarter of 2021.

HISTORICAL LUMBER PRICES

We experience significant fluctuations in the cost of commodity lumber products from primary producers (“Lumber Market”). The following table presents the Random Lengths framing lumber composite price:


	Random Lengths Composite					Random Lengths Composite
	Average $/MBF					Average $/MBF
	2020			2019		2021			2020
January	$	377		$	331	$	890		$	377
February		402			370		954			402
March		420			365		1,035			420

First quarter average	$	400		$	355	$	960		$	400
First quarter percentage change		12.7	%				140.0	%

In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species ~~comprised~~comprise almost two-thirds of our total lumber ~~purchases, which has generally caused a decrease in our selling prices of related products.~~purchases.


	Random Lengths SYP					Random Lengths SYP
	Average $/MBF					Average $/MBF
	2020			2019		2021			2020
January	$	346		$	370	$	858		$	346
February		345			403		903			345
March		360			408		938			360

First quarter average	$	350		$	394	$	900		$	350
First quarter percentage change		(11.2)	%				157.1	%

The sequential increase in lumber prices above is primarily due to the continuation of strong market demand as well as certain constraints in the supply chain of lumber. We anticipate lumber prices will normalize during the last half of this year as these constraints on supply improve. A sequential decline in lumber prices will impact our profitability of products sold with fixed and variable prices as discussed below.

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UFP INDUSTRIES, INC.

IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS

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 were ~~45.6%~~63.1% and ~~45.9%~~45.6% of our sales in the first three months of 2021 and 2020, respectively. The increase from the prior year ratio reflects the impact of higher lumber prices and ~~2019, respectively.~~ the results of PalletOne and its subsidiaries.

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

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~~UFP INDUSTRIES, INC.~~

in lumber costs from our suppliers. We believe our percentage of sales of fixed price items is greatest in our third and fourth quarters.

●

Products with selling prices indexed to the reported Lumber Market with a fixed dollar “adder” to cover conversion costs and profit. 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 ~~treated~~pressure-treated lumber sold to the retail market.

For each of the product pricing categories above, our margins are exposed to changes in the trend of lumber prices.

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~~comprised approximately ~~16%~~20% of our total ~~sales.~~annual sales in 2020. 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. Our annual purchases of inventory through these consignment programs was approximately 19% of our total lumber purchases in 2020. (Please refer to the “Risk Factors” section of our annual report on form 10-K, filed with the United States Securities and Exchange Commission.)

●

Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-family construction projects. We attempt to mitigate this risk through our purchasing practices and longer vendor commitments.

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UFP INDUSTRIES, INC.

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.


	Period 1			Period 2
Lumber cost	$	300		$	400
Conversion cost		50			50
= Product cost		350			450
Adder		50			50
= Sell price	$	400		$	500
Gross margin		12.5	%		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. ~~In order to more effectively evaluate our profitability in such periods, we believe it is useful to compare our change in units shipped with our changes in costs and profits.~~

BUSINESS COMBINATIONS

We completed ~~one~~two business ~~acquisition~~acquisitions during the first three months of ~~2020~~2021 and ~~three~~five during all of ~~2019.~~2020. The annual historical sales attributable to acquisitions completed in the first three months of 2021 is approximately $708 million, while acquisitions completed from April through December 2020 ~~and all~~have annual sales of ~~2019 were~~ approximately ~~$22 million and $37 million, respectively.~~$79 million. These business combinations were not significant to our quarterly results individually or in aggregate and thus pro forma results for ~~2020~~2021 and ~~2019~~2020 are not presented.

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~~UFP INDUSTRIES, INC.~~

See Notes to the Unaudited Condensed Consolidated Financial Statements, Note F, “Business Combinations” for additional information.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, the components of our Unaudited Condensed Consolidated Statements of Earnings as a percentage of net sales.

Three Months Ended


March 28,

March 30,


2020

2019

Net sales

100.0
%
100.0
%
Cost of goods sold

83.8

84.8

Gross profit

16.2

15.2

Selling, general, and administrative expenses

10.6

10.4

Other

(0.1)

0.1

Earnings from operations

5.7

4.8

Other expense, net

0.5

0.1

Earnings before income taxes

5.2

4.7

Income taxes

1.3

1.1

Net earnings

3.9

3.5

Less net earnings attributable to noncontrolling interest

—

—

Net earnings attributable to controlling interest

3.9
%
3.5
%

~~Note: Actual percentages are calculated and may not sum to total due to rounding.~~

The following table presents, for the periods indicated, the components of our Consolidated Statements of Earnings as a percentage of net sales, adjusted to restate 2020 net sales and cost of goods sold at prior year lumber prices. The restated sales amounts were calculated by applying the decrease in lumber prices in 2020 to 2019 sales levels. By eliminating the “pass-through” impact of higher or lower lumber prices on net sales and cost of goods sold from year to year, we believe this provides an enhanced view of our change in profitability and costs as a percentage of sales. The amount of the adjustment to 2020 net sales was also applied to cost of goods sold so that gross profit remains unchanged.


	Adjusted for Lumber Market Change
	Three Months Ended				Three Months Ended
	March 28,		March 30,		March 27,		March 28,
	2020		2019		2021		2020
Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of goods sold	84.3		84.8		84.3		83.8
Gross profit	15.7		15.2		15.7		16.2
Selling, general, and administrative expenses	10.3		10.4		8.2		10.6
Other	(0.1)		0.1
Other losses (gains), net					(0.1)		(0.1)
Earnings from operations	5.5		4.8		7.6		5.7
Other expense, net	0.4		0.1		0.1		0.5
Earnings before income taxes	5.1		4.7		7.5		5.2
Income taxes	1.3		1.1		1.7		1.3
Net earnings	3.8		3.5		5.7		3.9
Less net earnings attributable to noncontrolling interest	—		—		(0.1)		—
Net earnings attributable to controlling interest	3.8	%	3.5	%	5.7	%	3.9	%

Note: Actual percentages are calculated and may not sum to total due to rounding.

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UFP INDUSTRIES, INC.

As a result of the impact of the level of lumber prices on the percentages displayed in the table above (see Impact of the Lumber Market on Our Operating Results), 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. The percentages displayed below represent the percentage change from the prior year.


	Percentage Change
	March 27,		March 28,
	2021		2020
Units sold	33.0	%	5.0	%
Gross profit	71.3		8.4
Selling, general, and administrative expenses	37.3		3.8
Earnings from operations	134.5		21.0

The following table presents, for the periods indicated, our selling, general, and administrative (SG&A) costs as a percentage of gross profit. Given our strategies to enhance our capabilities and improve our value-added product offering and recognizing the higher relative level of SG&A costs these strategies require, we believe this ratio provides an enhanced view of our effectiveness in managing these costs and mitigates the impact of changing lumber prices.



		Three Months Ended
		March 27,		March 28,
		2021		2020
Gross profit	$	286,554	$	167,236
Selling, general, and administrative expenses	$	150,098	$	109,339
SG&A as percentage of gross profit		52.4%		65.4%

Operating Results by Segment:

~~Effective January 1, 2020, the Company re-organized around the markets it serves rather than geography. The~~Our business segments align with the following markets: UFP Retail Solutions, UFP Construction and UFP Industrial. ~~This change allows for a more specialized and consistent sales approach among Company operations, more efficient use of resources and capital, and quicker introduction of new products and services.~~ The Company manages the operations of its individual locations primarily through ~~the~~a market-centered reporting structure under which each location is included in a business unit and business units are included in our Retail, Industrial, and Construction segments. In the case of locations which serve multiple segments, results are allocated and accounted for by segment. The exception to this market-centered reporting and management structure is the Company’s International segment, which comprises our Mexico, Canada, and Australia operations and sales and ~~buying~~purchasing offices in other parts of the world. Our International segment and Ardellis (our insurance captive) have been included in the “All Other” column of the table below. The “Corporate” column includes purchasing, transportation and administrative functions that serve our operating segments. Operating results of Corporate primarily consists of over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns and leases transportation equipment, are also included in the Corporate column. An inter-company lease charge is assessed to our operating segments for the use of these assets at fair market value rates.

~~The following tables present our operating results, for the periods indicated, by segment.~~

Three Months Ended March 28, 2020









(in thousands)

Retail

Industrial

Construction

All Other

Corporate

Total
Net sales

$
352,161

$
256,543

$
381,155

$
42,392

$
(189)

$
1,032,062
Cost of goods sold

306,932

212,626

317,817

30,086

(2,635)

864,826
Gross profit

45,229

43,917

63,338

12,306

2,446

167,236
Selling, general, administrative expenses

29,627

25,835

46,386

8,351

(860)

109,339
Other

90

8

(183)

(784)

134

(735)
Earnings from operations

$
15,512

$
18,074

$
17,135

$
4,739

$
3,172

$
58,632

Three Months Ended March 30, 2019









(in thousands)

Retail

Industrial

Construction

All Other

Corporate

Total
Net sales

$
333,100

$
274,759

$
365,137

$
42,110

$
19

$
1,015,125
Cost of goods sold

296,240

231,435

303,963

31,652

(2,432)

860,858
Gross profit

36,860

43,324

61,174

10,458

2,451

154,267
Selling, general, administrative expenses

25,785

24,521

45,784

8,107

1,120

105,317
Other

44

(20)

123

303

54

504
Earnings from operations

$
11,031

$
18,823

$
15,267

$
2,048

$
1,277

$
48,446

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UFP INDUSTRIES, INC.

The following tables present our operating results, for the periods indicated, by segment (in thousands).


	Three Months Ended March 27, 2021

	Retail		Industrial		Construction		All Other		Corporate		Total
Net sales	$	759,021	$	448,874	$	559,530	$	55,577	$	2,002	$	1,825,004
Cost of goods sold		658,548		368,549		470,846		38,026		2,481		1,538,450
Gross profit		100,473		80,325		88,684		17,551		(479)		286,554
Selling, general, administrative expenses		47,100		40,113		55,545		10,421		(3,081)		150,098
Other		(172)		(198)		121		(848)		66		(1,031)
Earnings from operations	$	53,545	$	40,410	$	33,018	$	7,978	$	2,536	$	137,487


	Three Months Ended March 28, 2020

	Retail		Industrial		Construction		All Other		Corporate		Total
Net sales	$	352,161	$	256,543	$	381,155	$	42,392	$	(189)	$	1,032,062
Cost of goods sold		306,932		212,626		317,817		30,086		(2,635)		864,826
Gross profit		45,229		43,917		63,338		12,306		2,446		167,236
Selling, general, administrative expenses		29,627		25,835		46,386		8,351		(860)		109,339
Other		90		8		(183)		(784)		134		(735)
Earnings from operations	$	15,512	$	18,074	$	17,135	$	4,739	$	3,172	$	58,632

The following tables present the components of our operating results, for the periods indicated, as a percentage of net sales by segment.


	Three Months Ended March 28, 2020											Three Months Ended March 27, 2021

(in thousands)	Retail		Industrial		Construction		All Other		Corporate	Total
												Retail		Industrial		Construction		All Other		Corporate	Total
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	N/A	100.0	%	100.0	%	100.0	%	100.0	%	100.0	%	N/A	100.0	%
Cost of goods sold	87.2		82.9		83.4		71.0		—	83.8		86.8		82.1		84.2		68.4		—	84.3
Gross profit	12.8		17.1		16.6		29.0		—	16.2		13.2		17.9		15.8		31.6		—	15.7
Selling, general, administrative expenses	8.4		10.1		12.2		19.7		—	10.6		6.2		8.9		9.9		18.8		—	8.2
Other	—		—		—		(1.8)		—	(0.1)		—		—		—		(1.5)		—	—
Earnings from operations	4.4	%	7.0	%	4.5	%	11.2	%	—	5.7	%	7.1	%	9.0	%	5.9	%	14.4	%	—	7.5	%

Note: Actual percentages are calculated and may not sum to total due to rounding.

Three Months Ended March 30, 2019








(in thousands)

Retail

Industrial

Construction

All Other

Corporate

Total

Net sales

100.0
%
100.0
%
100.0
%
100.0
%
N/A

100.0
%
Cost of goods sold

88.9

84.2

83.2

75.2

—

84.8

Gross profit

11.1

15.8

16.8

24.8

—

15.2

Selling, general, administrative expenses

7.7

8.9

12.5

19.3

—

10.4

Other

—

—

—

0.7

—

0.1

Earnings from operations

3.3
%
6.9
%
4.2
%
4.9
%
—

4.8
%

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UFP INDUSTRIES, INC.


	Three Months Ended March 28, 2020

	Retail		Industrial		Construction		All Other		Corporate	Total
Net sales	100.0	%	100.0	%	100.0	%	100.0	%	N/A	100.0	%
Cost of goods sold	87.2		82.9		83.4		71.0		—	83.8
Gross profit	12.8		17.1		16.6		29.0		—	16.2
Selling, general, administrative expenses	8.4		10.1		12.2		19.7		—	10.6
Other	—		—		—		(1.8)		—	(0.1)
Earnings from operations	4.4	%	7.0	%	4.5	%	11.2	%	—	5.7	%

Note: Actual percentages are calculated and may not sum to total due to rounding.

NET SALES

We primarily design, manufacture and market wood and wood-alternative products for national home centers and other retailers, structural lumber and other products for the manufactured housing industry, engineered wood components for residential and commercial construction, customized interior fixtures used in a variety of retail stores, commercial, and ~~commercial applications,~~other structures, and specialty wood packaging, components and ~~packaging~~packing materials for various industries. Our strategic long-term sales objectives ~~generally~~ 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
	in Sales		in Selling Prices		in Units		Acquisition Unit Change		Organic Unit Change
First Quarter 2021 versus First Quarter 2020	76.8	%	43.8	%	33.0	%	23.0	%	10.0	%

●

Diversifying our end market sales mix by increasing sales of specialty wood and protective packaging to industrial users, increasing our penetration of the concrete forming market, increasing our sales of engineered wood components for custom home, multi-family, military and light commercial construction, increasing our market share with independent retailers, and increasing our sales of customized interior fixtures, casework and millwork used in a variety of commercial markets.

●	Expanding geographically in our core businesses, domestically and internationally.

●

Increasing our sales of "value-added" products and enhancing our product offering with new or improved products. Value-added products generally consist of fencing, decking, lattice, and other specialty products sold to the retail market, specialty wood packaging, engineered wood components, customized interior fixtures, and "wood alternative" products. Engineered wood components include roof trusses, wall panels, and floor systems. Wood alternative products consist ~~primarily~~ of ~~composite~~products manufactured with wood and non-wood composites, metal, and plastics. Although we consider the treatment of dimensional lumber and panels with certain chemical preservatives a value-added process, treated lumber is not presently included in the value-added sales totals. Remanufactured lumber and panels that are components of finished goods are also generally categorized as “commodity-based” products. The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total sales by our segments (Retail, Industrial, Construction, All Other and Corporate).

The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total net sales by our primary segments (Retail, Industrial, and Construction). Value-added products are typically sold at fixed selling prices for a pre-determined time period and carry higher gross margins than our commodity-based products.

2022

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Three Months Ended March 28, 2020

Three Months Ended March 30, 2019




Value-Added

Commodity-Based

Value-Added

Commodity-Based
Retail

56.5
%

43.5
%

56.0
%

44.0
%
Industrial

66.8
%

33.2
%

65.8
%

34.2
%
Construction

79.1
%

20.9
%

80.0
%

20.0
%
Total Net Sales

68.0
%

32.0
%

67.9
%

32.1
%


	Three Months Ended March 27, 2021				Three Months Ended March 28, 2020

	Value-Added		Commodity-Based		Value-Added		Commodity-Based
Retail	44.5	%	55.5	%	56.5	%	43.5	%
Industrial	66.9	%	33.1	%	66.8	%	33.2	%
Construction	68.9	%	31.1	%	79.1	%	20.9	%
All Other and Corporate	71.3	%	28.7	%	72.4	%	27.6	%
Total Sales	58.2	%	41.8	%	68.0	%	32.0	%

The increase in our ratio of commodity-based product sales to total sales reflected in the table above is primarily due to the impact of dramatically higher lumber prices in the first quarter of 2021 as the selling prices of these products are generally indexed to the current Lumber Market at the time they are shipped and lumber costs comprise a much higher percentage of the selling price than they do for value-added products. The acquisition of Sunbelt also contributed to the increase in commodity-based sales of treated lumber in our retail segment, while PalletOne contributed to the increase in value-added sales in the industrial segment. Our unit sales of value-added products increased approximately 30% in the first quarter of 2021 compared to 2020, including an 18% contribution from acquisitions and 12% organic growth. Our unit sales of commodity-based products increased approximately 41%, including a 34% contribution from acquisitions and 7% organic growth.

●

Developing new products. ~~New~~We define new products ~~are defined~~ as ~~products~~those that will generate sales of at least a $1 million per year within 4 years of launch and are still growing ~~sales~~and gaining market penetration. New product sales and gross profits in the first quarter were up 7%58% and ~~16%~~57%, respectively. Approximately ~~$24~~$4 million of new product sales ~~from March 30, 2019,~~for the first three months of 2020, respectively, while still sold, were sunset in ~~2020~~2021 and excluded from the table below because they no longer meet the definition above. Our goal is to achieve annual new product sales of at least ~~$475~~$575 million in ~~2020.~~

New Product Sales by Segment

Three Months Ended

March 28,

March 30,

%
Segment Classification

2020

2019

Change
Retail

$
64,601

59,038

9.4
%
Industrial

16,252

16,268

(0.1)
%
Construction

13,732

12,820

7.1
%
All Other

3,081

3,272

(5.8)
%
Total New Product Sales

97,666

91,398

6.9
%

~~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.~~

●

~~Selling to~~2021. The table below presents new ~~customers and markets.~~product sales in thousands:

~~Retail Segment~~

Net sales in the first three months of 2020 increased approximately 6% compared to the same period of 2019, due to a 9% increase in unit sales, offset by a 3% decrease in selling prices primarily due to the Lumber Market. Acquired operations contributed 1% to our unit sales growth, and organic unit sales growth was 8%. Our organic unit growth was primarily driven by a 14% increase in each of our ProWood treated products and UFP Edge (siding, pattern, trim) products, an 8% increase in Fence, Lawn & Garden, and a 26% increase in Home & Décor products. These increases were offset by a 14% unit decrease in our Deckorators branded products, which was anticipated due to large first-time store builds that took place in the first quarter of last year. Our new product sales contributed to these increases and were up 9% for the quarter. Finally, our customer mix remained consistent as our sales to big box customers increased 7%, and sales to other independent retailers increased 5%.

Gross profits increased by 22.7% to $45.2 million for the first three months of 2020 compared to the same period last year as gross margins increased to 12.8% compared to 11.1% for the same period of 2019. We estimate the lower level of lumber prices (see “Impact of the Lumber Market on Our Operating Results”) contributed 40 basis points to our improvement in gross margin. The remaining improvement in our profitability was primarily due to the impact of effective inventory positioning resulting in lower lumber costs, favorable changes in product mix, and strong organic growth which allowed us to leverage fixed costs.

Selling, general and administrative (“SG&A”) expenses increased by approximately $3.8 million, or 14.9%, in the first quarter of 2020 compared to the same period of 2019, while we reported a 9% increase in unit sales. Acquired operations since the first quarter of 2019 contributed approximately $0.8 million to this increase. Accrued bonus expense, which varies with our overall profitability and return on investment, increased approximately $0.8 million and totaled approximately $3.5 million for the quarter. The remaining increase was due to increases in salaries and wages, benefits, and sales incentive compensation.


	New Product Sales by Segment
	Three Months Ended
	March 27,		March 28,		%
	2021		2020		Change
Retail	$	102,699	$	67,547	52.0	%
Industrial		31,292		15,881	97.0	%
Construction		22,712		14,268	59.2	%
All Other and Corporate		2,703		2,958	(8.6)	%
Total New Product Sales		159,406		100,654	58.4	%

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.

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Retail Segment

Net sales in the first quarter of 2021 increased approximately 116% compared to the same period of 2020, due to a 19% increase in organic unit sales, a 56% increase in selling prices, and a 41% increase in unit sales due to acquisitions. Our organic unit growth was primarily driven by a 64% increase in Deckorators composite decking and railing, a 30% increase in our Handprint Home & Décor products including project panels and short lumber, a 28% increase in Outdoor Essentials Fence, Lawn & Garden products, and a 24% increase in our UFP Edge siding, pattern, and trim products. Our new product sales contributed to these increases and were up 52% for the quarter. Finally, our sales to big box customers increased 118%, and sales to other independent retailers increased 112%. Our organic unit sales increases were primarily due to an increase in demand as consumers continue to invest in home improvement activities over other alternatives. We believe this consumer demand trend is largely due to the impact of the pandemic. Lastly, approximately $8 million of sales to customers that distribute products for concrete forming were transferred from the construction segment to the retail segment. This change in structure was made so the personnel in our construction segment can more effectively focus their efforts on the design, manufacturing and sales of assembled forms and other value-added products for concrete forming.

Gross profits increased by $55.2 million, or 122.1% to $100.5 million for the first quarter of 2021 compared to the same period last year. Our increase in gross profit was comprised of the following:

●

Increased unit sales and leveraging fixed costs of value-added products within our Deckorators, Outdoor Essentials, and Handprint business units contributed $8.9 of additional gross profit.

●

Our Retail Building Materials and ProWood business units contributed $10.5 million and $25.6 million, respectively, to the increase. These increases are primarily due to unit sales growth, inventory positioning, and the favorable trend of rising lumber prices as the selling prices of these products are primarily determined on a variable price formula.

●

Acquisitions contributed $10.4 million to the increase.

Selling, general and administrative (“SG&A”) expenses increased by approximately $17.5 million, or 59.0%, in the first quarter of 2021 compared to the same period of 2020. The SG&A of recently acquired businesses contributed $3.4 million to the increase. Accrued bonus expense, which varies with our overall profitability and return on investment, increased approximately $10.4 million and totaled approximately $14.0 million for the quarter. The remaining increase was primarily due to increases in salaries and wages and sales compensation, which were offset by decreases in travel related expenses.

Earnings from operations for the Retail reportable segment increased in the first quarter of ~~2020~~2021 compared to ~~2019~~2020 by ~~$4.5~~$38.0 million, or ~~40.6%~~245%, well in excess of our 9%60% increase in total unit sales as a result of the factors above.

Industrial Segment

Net sales in the first ~~three months~~quarter of ~~2020 decreased 7%~~2021 increased 75% compared to the same period of ~~2019,~~2020, due to a ~~7% decrease~~5% increase in organic unit sales, a 38% increase in selling prices ~~due~~attributable to the Lumber ~~Market. Unit~~Market, and a 32% increase in unit sales remained flat year over year as recently acquired companies contributed 2% to unit growth but this was offset by a 2% decrease in sales out of existing locations. Sales to new customers contributed $5 million to our sales this quarter and helped mitigate the decline in demand of our existing customers. from recent acquisitions.

Gross profits increased by ~~1.4% to $43.9~~$36.4 million, or 82.9%, for the first ~~three months~~quarter of ~~2020~~2021 compared to the same period ~~of 2019. Gross margin increased to 17.1% from 15.8% for the same period~~ last year. ~~We estimate~~Acquisitions contributed $13.4 million to the ~~lower level of lumber prices (see “Impact of the Lumber Market on Our Operating Results”) contributed 110 basis points to our improvement~~increase in gross ~~margin.~~profit. The remaining ~~improvement in our profitability~~increase was primarily due to ~~the impact~~organic unit sales growth and leveraging fixed costs and favorable changes in product mix of ~~lower~~value-added products. In addition, we were able to maintain our profit per unit by more effectively passing on commodity lumber ~~costs on products we sell with fixed selling prices and a modest improvement~~price increases in our ~~sales mix value-added products.~~selling prices.

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UFP INDUSTRIES, INC.

Selling, general and administrative (“SG&A”) expenses increased by approximately ~~$1.3~~$14.3 million, or 5%55.3%, in the first quarter of ~~2020~~2021 compared to the same period of ~~2019.~~2020. Acquired operations since the first quarter of ~~2019~~2020 contributed approximately ~~$0.6~~$5.7 million to ~~this increase.~~our increase in costs. Accrued bonus expense, which varies with our overall profitability and return on investment, increased approximately $6.5 million, and totaled $10.7 million for the quarter. The remaining increase was primarily due to increases in salaries and wages ~~benefits,~~ and sales ~~incentive compensation. Additionally, accrued bonus expense,~~compensation, which ~~varies with our pre-bonus operating profit and return on investment, decreased approximately $0.5 million, and totaled $4.2 million for the quarter.~~were offset by decreases in travel related expenses.

Earnings from operations for the Industrial reportable segment ~~decreased~~increased in the first quarter of ~~2020~~2021 compared to ~~2019~~2020 by ~~$0.7~~$22.3 million, or ~~4.0%~~123.6%, due to the factors discussed above.

Construction Segment

Net sales in the first ~~three months~~quarter of ~~2020~~2021 increased 4%47% compared to the same period of ~~2019,~~2020, due to unit growth of 8% (including 2% from acquisitions) and a 6%39% increase ~~in unit sales, offset by a 2% decrease~~ in selling prices ~~primarily due~~attributable to the Lumber Market. ~~Our unit growth was organic~~Unit changes within this segment consisted of increases of 21% in site-built construction and ~~driven~~15% in factory-built housing, offset by a ~~15% increase~~9% decline in commercial construction and a 40% decrease in concrete forming. The transfer of approximately $8 million in sales to the retail segment from the construction segment discussed above contributed to the unit ~~sales of~~decline in the concrete forming a 12% unit increase to factory-built housing, a 3% unit increase to commercial, and a 1% unit increase to site-built construction. The increase in our unit sales of concrete forming was due to share gains. Our unit sales to producers of factory-built homes increased primarily due to an increase in industry production.business unit.

Gross profits increased by ~~3.5%~~$25.3 million, or 40.0% to ~~$63.3~~$88.7 million for the first ~~three months~~quarter of ~~2020~~2021 compared to the same period of ~~2019. Gross margin declined slightly to 16.6% from 16.8% for the same period last year, in spite of the lower level of lumber prices (see “Impact of the Lumber Market on Our Operating Results”).~~2020. The ~~decline~~increase in our gross ~~margin~~profit was ~~primarily due to our commercial business unit as a result~~comprised of ~~customer and product mix.~~the following factors:

●

Gross profits in our site-built construction business unit increased by $12.3 million due to unit sales growth and leveraging fixed costs. In addition, we were able to maintain our profit per unit by more effectively passing on commodity lumber price increases in our selling prices.

●

The impact of rising lumber prices on variable priced products contributed $12.7 million in gross profit in our factory-built housing and concrete forming business units as a result of increased unit sales and leveraging fixed costs and the impact of rising lumber prices on products sold with a variable price.

●

Acquired businesses contributed $1.5 million.

Selling, general and administrative (“SG&A”) expenses increased by approximately ~~$0.6~~$9.2 million, or ~~1.3%~~19.7%, in the first quarter of ~~2020~~2021 compared to the same period of ~~2019,~~2020, while we reported ~~a 6%~~an 8% increase in unit sales. Acquired operations since the first quarter of 2020 contributed approximately $1.9 million to total SG&A expenses for the quarter. Accrued bonus expense, which varies with our overall profitability and return on investment, increased approximately $5.5 million, and totaled ~~approximately $3.5~~$9.0 million for the ~~quarter,~~quarter. The remaining increase was primarily due to increases in salaries and wages and sales compensation, which ~~was comparable to last year.~~ were offset by decreases in travel related expenses.

Earnings from operations for the Construction reportable segment increased in the first quarter of ~~2020~~2021 compared to ~~2019~~2020 by ~~$1.9~~$15.9 million, or ~~12.2%~~92.7%, ~~which compares favorably with our 6% increase in unit sales~~ 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.

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UFP INDUSTRIES, INC.

Corporate

The corporate segment consists of over (under) allocated costs that are not significant.

~~INTEREST, NET~~

~~Interest expense was lower in the first quarter of 2020 compared to the same period of 2019 primarily due to lower outstanding debt balances and variable interest rates in 2020.~~

~~UNREALIZED LOSS (GAIN) ON INVESTMENTS~~

Ardellis (our insurance captive) recorded a $3.2 million unrealized loss on equity investments held in its portfolio in the first three months of 2020 compared to a $1.3 million gain in the same period of the prior year.

INCOME TAXES

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for foreign, state and local income taxes and permanent tax differences. Our effective tax rate was ~~24.7%~~23.3% in the first quarter of ~~2020~~2021 compared to ~~24.3%~~24.7% for same period in ~~2019.~~ 2020. The ~~slight increase~~decrease was primarily due to an ~~increase~~anticipated decrease in ~~the permanent~~our U.S. tax ~~difference for non-deductible officer compensation.~~rate and a variety of other discrete tax items, none of which are individually significant.

OFF-BALANCE SHEET TRANSACTIONS

We have no significant off-balance sheet transactions.

LIQUIDITY AND CAPITAL RESOURCES

The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):


	Three Months Ended				Three Months Ended
	March 28,		March 30,		March 27,		March 28,
	2020		2019		2021		2020
Cash used in operating activities	$	(46,161)	$	(55,829)	$	(196,660)	$	(46,161)
Cash used in investing activities		(48,210)		(15,551)		(296,498)		(48,210)
Cash (used in)/provided by financing activities		(39,723)		61,069
Cash from (used in) financing activities						101,927		(39,723)
Effect of exchange rate changes on cash		(1,719)		248		(349)		(1,719)
Net change in all cash and cash equivalents		(135,813)		(10,063)		(391,580)		(135,813)
Cash, cash equivalents, and restricted cash, beginning of period		168,666		28,198		436,608		168,666
Cash, cash equivalents, and restricted cash, end of period	$	32,853	$	18,135	$	45,028	$	32,853

In general, we funded our growth in the past through a combination of operating cash flows, our revolving credit facility, industrial development bonds (when circumstances permit), and issuance of long-term notes payable at times when interest rates are favorable. We have not issued equity to finance growth except in the case of a large acquisition. 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 this is one of many 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 which typically results in negative or modest cash flows from operations during those periods. Conversely, we typically experience a

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~~UFP INDUSTRIES, INC.~~

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. As explained in more detail below, the unusually large increase in lumber prices this year, as well as the significant increase in sales attributable to our Retail segment, resulted in a more significant increase in net working capital this year relative to prior years.

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UFP INDUSTRIES, INC.

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 outstanding) is a good indicator of our working capital management. As indicated in the table below, our cash cycle improved to 48 days from 59 days ~~from 65 days during the first quarter of 2020 compared to~~in the prior ~~periods.~~year period.


	Three Months Ended				Three Months Ended
	March 28,		March 30,		March 27,		March 28,
	2020		2019		2021		2020
Days of sales outstanding		34		34		30		34
Days supply of inventory		46		52		38		46
Days payables outstanding		(21)		(21)		(20)		(21)
Days in cash cycle		59		65		48		59

The decrease in our days sales outstanding is a result of better focus on timely collection efforts in all of our segments. The decrease in our days supply of inventory for the first three months of ~~2020~~2021 was primarily due to ~~opportunistic buying when lumber prices were low during~~strong market demand and certain supply constraints, which contributed to higher inventory turns in the ~~fourth~~first quarter of 2018 and into early 2019 to improve gross profits and higher levels of “safety stock” we carried to address transportation challenges and ensure timely deliveries to our customers. The company did not engage in this level of opportunistic buying in late 2019 and early 2020.2021.

In the first three months of ~~2020,~~2021, our cash ~~used in~~consumed by operating activities was ~~$46.2~~$196.7 million, which was comprised of net earnings of ~~$40.6~~$104.3 million and ~~$21.9~~$24.1 million of non-cash expenses, offset by a ~~$108.6~~$325.1 million ~~seasonal~~ increase in working capital since the end of December ~~2019.~~2020. Our operating cash flow this year ~~improved~~declined by ~~$9.7~~$150.5 million compared to the same period of last year primarily due to an ~~improvement in earnings and an~~ increase in ~~non-cash expenses~~our seasonal investment in net working capital since the end of 2020, compared to the prior year period. This increase was due to unusually high lumber prices and ~~losses.~~increased market demand and net sales in each of our segments. PalletOne also contributed to the increase in our seasonal investment in net working capital.

Acquisitions and purchases of property, plant, and equipment comprised most of our cash used in investing activities during the first three months of ~~2020~~2021 and totaled ~~$18.5~~$261.1 million and ~~$27.2~~$34.7 million, respectively. Outstanding purchase commitments on existing capital projects totaled approximately ~~$26.3~~$41.3 million on March ~~28, 2020. Notable areas~~27, 2021. Capital spending primarily consists of ~~capital spending include projects to expand capacity and enhance the productivity of our Deckorators product line,~~ several projects to expand manufacturing capacity to serve retail, industrial and construction customers and achieve efficiencies through automation, make improvements to a number of facilities, and increase our transportation capacity (tractors, trailers) in order to meet higher volumes and replace old rolling stock. We intend to fund capital expenditures and purchase commitments through our operating cash flows ~~or our revolving credit facility~~ for the balance of the year. ~~The sales~~We currently plan to spend approximately $115.5 million on capital projects for the year. Notable areas of capital spending include projects to increase the capacity and ~~purchases~~efficiency of ~~investments totaling $11.3 million~~our plants that produce our Deckorators mineral-based composite decking and ~~$14 million, respectively, are due to investment activity in~~wood-plastic composite decking, and our ~~captive insurance subsidiary.~~ UFP Edge siding, pattern and trim products.

Cash flows from financing activities primarily consisted of net ~~repayments~~borrowings of debt of approximately ~~$2.8~~$115 million, the payment of quarterly dividends totaling $9.3 million ($0.15 per share), and distributions to noncontrolling interests of $2.9 million. Additionally, we paid a quarterly dividend totaling $7.8 million, or $0.125 per share, and repurchased approximately 756,000 shares of our common stock for $29.2 million resulting in an average price paid of $38.62.

On March ~~28, 2020,~~27, 2021, we had ~~$3.7~~$119.4 million outstanding on our ~~$375~~$550 million revolving credit facility, and we had approximately ~~$361.5~~$423.5 million in remaining availability after considering ~~$9.8~~$7.1 million in outstanding letters of credit. ~~Additionally, we have $150 million in availability under an existing “shelf agreement” for long term debt.~~ 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 March ~~28, 2020.~~27, 2021.

At the end of the first quarter of 2021 we have approximately $420.8 million in total liquidity, consisting of our cash surplus and remaining availability under our revolving credit facility. We plan to use a portion of this amount to fund our future growth, including the purchase of Spartanburg Forest Products, Walnut Hollow, and Endurable Building Products. See Notes to Unaudited Consolidated Condensed Financial Statements, Note J, “Subsequent Events.”

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ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS

See Notes to Unaudited Consolidated Condensed Financial Statements, Note E, “Commitments, Contingencies, and Guarantees.”

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~~UFP INDUSTRIES, INC.~~

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. There have been no material changes in our policies or estimates since December ~~28, 2019.~~

Under the recent re-organization of our reportable segments now centered on our primary markets (retail, industrial, and construction), there were no indicators for impairment for any of the new reporting units. We continue to monitor the results of idX (a reporting unit under the Construction segment) as they have performed below expectations through 2019. While it has faced challenging end market conditions resulting in this under-performance, we believe our growth and operating improvement strategies and related long-term projections for idX are still reasonable and attainable. Consequently, while the risk of impairment exists, management does not believe an impairment is currently required. Should the Company’s future analysis indicate a significant change in any of the triggering events for this reporting unit, it could result in impairment of the carrying value of goodwill to its implied fair value. There can be no assurance that the Company’s future goodwill impairment testing will not result in a charge to earnings. The total value of goodwill and identifiable intangibles associated with the idX reporting unit is $12.3 million and $4.5 million, respectively, at the end of March26, 2020.

~~FORWARD OUTLOOK~~

~~Most recently, the Company’s goals have been to:~~

●

~~Achieve long-term unit sales growth that exceeds positive U.S. GDP by 4 percent to 6 percent;~~

●

~~Grow earnings from operations in excess of our unit sales growth; and~~

●

~~Earn a return on invested capital in excess of our weighted average cost of capital.~~

While we believe the effective execution of our strategies will allow us to continue to achieve these long-term goals in the future, our ability to achieve them in 2020 has been adversely impacted by the COVID-19 pandemic. The following variables should be considered when evaluating our performance for the remainder of 2020.

●

We have experienced a decrease in customer demand and sales. While the vast majority of our customers and operations have been deemed to be essential businesses under the numerous stay at home orders that have been issued by states in which we operate, some of our customers do not meet these requirements and have temporarily shut down. For those customers who remain operating, demand has declined for the majority of them. Market indicators that should be considered when evaluating future demand for our products include:

Same store sales growth of national home improvement retail customers, the leading indicator for remodeling activity and home improvement spending forecasts. Sales of our Retail segment comprises approximately 35% of our annual total sales.

Housing starts in the northeast and mid-Atlantic states, Colorado, and Texas. Sales of our Site Built business unit within our Construction segment comprises approximately 16% of our total annual sales.

~~Production of manufactured housing. Sales of our Factory Built business unit within our Construction segment comprises 10% of our total annual sales.~~

~~Non-residential construction spending. Sales of our Commercial and Concrete Forming business units within our Construction segment comprises approximately 10% of our total annual sales.~~

~~Industrial production, Purchasing Managers Index, and U.S. GDP. Sales of our Industrial segment comprises approximately 25% of our total annual sales.~~

●

We have over 150 geographically dispersed plant locations, many of which have the ability to serve multiple market segments. These capabilities enhance our ability to supply our customers from multiple locations in

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~~UFP INDUSTRIES, INC.~~

the event an operation is idled due to the pandemic. To date, two of our operations have been temporarily idled and one has been permanently idled. We do not anticipate a significant loss of sales from these actions. Depending on the length of the “stay at home” orders and the severity of the impact on future customer demand, we may temporarily or permanently idle additional locations in the future. These actions could result in certain losses including asset impairment charges to property, plant and equipment, right of use leased assets, inventory and other long-lived assets as well certain exit costs.

●

On a consolidated basis, and based on our 2019 results of operations and business mix, we believe our decremental operating margin is in a range of 10% to 15% of net sales. In other words, we believe for every dollar decrease in sales, relative to the prior year, our earnings from operations may decline by 10 cents to 15 cents. As a point of reference, our peak to trough decremental operating margin during the Great Recession was approximately 13.5% (2006 peak to 2011 trough). In addition to the variables above, factors that may cause our actual results to vary significantly from this range include:

~~Changes in our selling prices~~

~~Changes in our sales mix by market segment and product~~

~~The impact and level of the Lumber Market and trends in the commodity costs of our products~~

~~Changes in labor rates~~

~~Our ability to reduce variable manufacturing, freight, selling, general, and administrative costs, particularly certain personnel costs, in line with net sales~~

~~The results of our salaried bonus plan, which is based on pre-bonus profits and achieving minimum levels of pre-bonus return on investment over a required hurdle rate~~

●

~~We have reduced our capital expenditure budget to $80 million from $100 million for 2020.~~

●

The CARES act allows us to defer certain payroll taxes from the end of March through the end of our 2020 fiscal year, which we estimate will total approximately $20 million. This liability must be paid in equal annual installments on December 31, 2021 and December 31, 2022.

●

~~We believe our cash cycle will remain consistent with historical trends and result in a reduction in working capital and increase in cash as sales decline.~~

The Company has a strong balance sheet and liquidity position, which improved to $433 million at the end of April 2020. Based on current economic forecasts of GDP and other factors above, as well as our assumptions for projected sales for the balance of the year, we believe the Company will generate positive cash flow and net earnings for the full fiscal year of 2020, while continuing to enhance its strong liquidity position.

Item 3. 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 currently use 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.

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~~UFP INDUSTRIES, INC.~~

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 regulations, transportation, 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 volume, our gross margins, and our profitability. We anticipate that these fluctuations will continue in the future. (See “Impact of the Lumber Market on Our Operating Results.”)

Our international operations have exposure to foreign currency rate risks, primarily due to fluctuations in their local currency, which is their functional currency, compared to the U.S. Dollar. Additionally, certain of our operations enter into transactions that will be settled in a currency other than the U.S. Dollar. We ~~entered~~may enter into forward foreign exchange rate contracts in ~~2018, which have since expired, and may enter into further forward contracts in~~ the future ~~associated with mitigating the~~to mitigate foreign currency exchange risk. Historically, our hedge contracts are deemed immaterial to the financial statements, however any material hedge contract in the future will be disclosed.

Item 4. Controls and Procedures.

(a)

Evaluation of Disclosure Controls and Procedures. With the participation of management, our chief executive officer and chief financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a – 15e and 15d – 15e) as of the quarter ended March ~~28, 2020~~27, 2021 (the “Evaluation Date”), have concluded that, as of such date, our disclosure controls and procedures were effective.

(b)

Changes in Internal Controls. During the quarter ended March ~~28, 2020,~~27, 2021, there were no changes in our internal control over financial reporting that materially affected, or is reasonably likely to materially affect, our internal control over financial ~~reporting; however, due~~reporting, except for the implementation of a control to address the ~~segment structure change, there was a~~ material ~~change~~weakness in control over our share-based bonus awards disclosed in our ~~internal controls specific to~~2020 Form 10-K, which was remediated in the ~~segment structure change process.~~first quarter of 2021.

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PART II. OTHER INFORMATION

Item 1A. Risk Factors.

~~We may be adversely affected by the impact of COVID-19 (Coronavirus) pandemic~~. ~~Disease outbreaks, such as the 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, such as the current COVID-19 pandemic. COVID-19, as well as measures taken by governmental authorities and businesses to limit the spread of this virus, may result in an adverse change 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 has caused, and may continue to cause, us to materially curtail certain of our business operations, and has had and could continue to 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 at the end of April was over 90% current. Most recently our bad debt expense as a percentage of sales was 0.09%, 0.03%, and 0.03%, in 2019, 2018, and 2017, 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%.

~~There could be limited future availability of materials from our suppliers.~~ While many of our suppliers have reduced their manufacturing capacity in response to the anticipated reduction in demand, we currently believe we have sufficient sources of supply to meet our customers’ needs in our primary product categories.None

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(a)

None.

(b)

None.

(c)

Issuer purchases of equity securities.

Fiscal Month

(a)

(b)

(c)

(d)
December 29, 2019 – February 1, 2020

—

—

—

1,860,354
February 2 – February 29, 2020

—

—

—

1,860,354
March 1 – March 28, 2020

756,397

38.62

756,397

1,103,957


Fiscal Month	(a)	(b)	(c)	(d)
December 27, 2020 – January 30, 2021	—	—	—	1,103,957
January 31 – February 27, 2021	—	—	—	1,103,957
February 28 – March 27, 2021	—	—	—	1,103,957

(a)	Total number of shares purchased.

(b)	Average price paid per share.

(c)	Total number of shares purchased as part of publicly announced plans or programs.

(d)	Maximum number of shares that may yet be purchased under the plans or programs.

On November 14, 2001, the Board of Directors approved a share repurchase program (which succeeded a previous program) allowing us to repurchase up to 2.5 million shares of our common stock. On October 14, 2010, our Board authorized an additional 2 million shares to be repurchased under our share repurchase program. The total number of remaining shares that may be repurchased under the program is approximately 1.1 million.

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Item 5. Other Information.

None.

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PART II. OTHER INFORMATION

Item 6. Exhibits.

The following exhibits (listed by number corresponding to the Exhibit Table as Item 601 in Regulation S-K) are filed with this report:


10	Material Contracts.

	(a)	First Amendment to Credit Agreement dated February 19, 2021.

31	Certifications.

	(a)	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).

	(b)	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).

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32	Certifications.

	(a)	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).

	(b)	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).

101	Interactive Data File formatted in iXBRL (Inline eXtensible Business Reporting Language).

	(INS)	iXBRL Instance Document.

	(SCH)	iXBRL Schema Document.

	(CAL)	iXBRL Taxonomy Extension Calculation Linkbase Document.

	(LAB)	iXBRL Taxonomy Extension Label Linkbase Document.

	(PRE)	iXBRL Taxonomy Extension Presentation Linkbase Document.

	(DEF)	iXBRL Taxonomy Extension Definition Linkbase Document.

104	Cover Page Interactive Data File (the cover page XBRL tags are embedded in the Inline XBRL document).

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UFP INDUSTRIES, INC.

SIGNATURES

Pursuant to the requirements 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.

	UFP INDUSTRIES, INC.

Date: May ~~6, 2020~~5, 2021	By:	/s/ Matthew J. Missad
	Matthew J. Missad,
	Chief Executive Officer and Principal Executive Officer


Date: May ~~6, 2020~~5, 2021	By:	/s/ Michael R. Cole
	Michael R. Cole,
	Chief Financial Officer,
	Principal Financial Officer and
	Principal Accounting Officer


	Three Months Ended March 30, 2019
(in thousands)	Retail		Industrial		Construction		All Other		Corporate		Total
Net sales to outside customers	$	333,100	$	274,759	$	365,137	$	42,110	$	19	$	1,015,125
Intersegment net sales		29,571		11,062		11,831		53,129		(105,593)		—
Segment operating profit		11,031		18,823		15,267		2,048		1,277		48,446