Executive Summary

Q1 2025 missed Street: revenue $1.596B vs $1.601B consensus* and EPS $1.30 vs $1.565 consensus*, driven by softer demand, competitive pricing, higher material costs, and unfavorable mix .
Management highlighted sequential improvement through the quarter and into April, reiterated $60M structural cost-savings by 2026, and remains focused on higher-margin growth (Deckorators/Surestone) and cost control .
Capital deployment remained active: dividend raised to $0.35, buyback authorization increased to $300M (with $122M remaining as of Apr 28), liquidity ~$2.2B; 2025 capex plan $300–$350M .
Key near-term watch items: Site Built pricing pressure, packaging margin stabilization amid input inflation, and any tariff outcomes; management expects demand “slightly down” across segments through 2025, with market share gains as partial offset .

What Went Well and What Went Wrong

What Went Well

Sequential activity improved every month in Q1 and continued into April, despite limited visibility: “Business activity improved sequentially in each month… and that improvement has continued into April.” – CEO Will Schwartz .
Strategic focus and cost-out: on track for $60M structural savings by 2026; ROIC remained resilient at 15.5% even with headwinds – CFO .
Retail product innovation and footprint: Surestone-led Deckorators launch progressing; 1,500 new retail locations in 2025; capacity expansions in Sunbelt and new Northeast facility to support share gains and margin mix over time .

What Went Wrong

Profitability compressed: Adjusted EBITDA fell to $142.2M (8.9% margin) vs $180.8M (11.0%) a year ago, reflecting lower volumes, competitive pricing, higher material and transport costs, and unfavorable mix .
Deckorators volume down 11% on a customer transition and early-quarter manufacturing variances; management expects normalization from Q2 and YoY growth in 2H .
Site Built and Packaging under pressure: Site Built pricing drove a step-down in Construction margins; Packaging faced input inflation and tough pricing; both trends likely to persist near term per Q&A .

Financial Results

Consolidated performance (oldest → newest)

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$1,649.4	$1,462.0	$1,595.5
Diluted EPS ($)	$1.64	$1.12	$1.30
Adjusted EBITDA ($USD Millions)	$164.9	$132.7	$142.2
Gross Margin %	18.1%	16.4%	16.8%
EBITDA Margin %	10.0%	9.1%	8.9%
Operating Income ($USD Millions)	$119.9	$79.5	$92.3
Operating Margin %	7.3%	5.4%	5.8%
Net Income Attrib. to Controlling Interest ($USD Millions)	$99.8	$68.0	$78.8
Net Income Margin %	6.1%	4.7%	4.9%

Q1 2025 vs S&P Global consensus and YoY

Metric	Q1 2024 Actual	Q1 2025 Actual	Q1 2025 S&P Consensus*
Revenue ($USD Millions)	$1,639.0	$1,595.5	$1,601.0*
Diluted EPS ($)	$1.96	$1.30	$1.565*

Values retrieved from S&P Global.

Key drivers of the miss: softer demand, competitive pricing (esp. Site Built and Packaging), higher material costs, unfavorable mix, and early-quarter manufacturing variances .

Segment breakdown – Q1 2025 vs Q1 2024

Segment	Net Sales Q1 2024 ($MM)	Net Sales Q1 2025 ($MM)	Gross Profit Q1 2024 ($MM)	GP % Q1 2024	Gross Profit Q1 2025 ($MM)	GP % Q1 2025
UFP Retail Solutions	$628.8	$607.4	$101.1	16.1%	$81.3	13.3%
UFP Packaging	$424.4	$410.0	$85.4	20.1%	$69.6	17.0%
UFP Construction	$517.9	$515.9	$114.3	22.1%	$90.8	17.6%

Retail declines were concentrated in Deckorators (−11% units) and ProWood (−3% units), with price increases now accepted to offset higher costs; Construction mix pressured by Site Built pricing; Packaging faced softer demand and competitive pricing with higher input costs .

KPIs and balance sheet/capital returns

KPI	Q1 2025
New product sales ($, % of sales)	$106M; 6.7% (vs. 7.2% in Q1’24)
Cash & equivalents	$903.6M
Liquidity	~$2.2B (cash + revolver/shelf)
Q1 share repurchases	~649,060 shares; ~$70.1M; avg price $108.00
April repurchases (post-Q1)	~1,022,493 shares; ~$107M; avg price $104.65
Quarterly dividend (approved Apr 23)	$0.35/share (vs. $0.33 in 2024)
Adjusted EBITDA	$142.2M (8.9% of sales)
ROIC (management comment)	15.5%

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Demand outlook (all segments)	FY 2025	“Modest declines” through 1H25	Demand “slightly down” for remainder of 2025; Factory Built up, offset by Site Built declines	Lowered/extended
SG&A (ex. variable comps)	FY 2025	n/a	~$565M; cost-out in core SG&A, +$20M Deckorators advertising	New
Structural cost savings run-rate	2026	≥$60M by YE 2026	On track for ≥$60M by YE 2026	Maintained
Gross profit benefit from capacity reductions	FY 2025	n/a	≥$15M in 2025	New
Capital expenditures	FY 2025	~ $350M	$300–$350M	Updated range
Dividend per quarter	Starting Q2 2025	$0.33 (2024 level)	$0.35 (approved Apr 23, 2025)	Raised
Share repurchase authorization	Through 7/31/25	$200M (authorized Jul 24, 2024)	$300M (amended Apr 23, 2025); $122M remaining as of Apr 28	Raised

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3’24, Q4’24)	Current Period (Q1’25)	Trend
Macro/visibility & pricing	Softer demand, pricing pressure across segments ; Q4 noted challenging 2025 setup	Visibility limited; competitive pricing persists; expect demand slightly down through 2025	Negative/unchanged
Lumber tariffs & input costs	Anticipated low lumber prices in 2024	90-day reprieve; <15% of lumber from Canada, SYP >70% of purchases; inflation risk if tariffs enacted	Watch for inflation
Cost-out/capacity actions	$1B multi-year capex; efficiency focus	On track for $60M savings by 2026; ≥$15M 2025 GP benefit from capacity reductions	Positive execution
Deckorators/Surestone	Product innovation cadence referenced	1,500 new doors; Surestone >50% of composite; capacity expansions (Sunbelt +$100M x2, Buffalo ’26)	Positive mix/scale
Site Built pricing	Competitive pricing headwind called out	Step-down in Q1; expected to persist in 2025; focus on share retention vs margin	Negative/ongoing
M&A pipeline	C&L Wood Products acquired (12/23/24)	Pipeline “better today than past few years”; disciplined on valuation/capital structure	Improving opportunity

Management Commentary

“While our first quarter proved more challenging than anticipated and visibility remains limited, we are more encouraged by recent business trends… We remain on target to realize $60 million of structural cost savings by year-end 2026” – CEO Will Schwartz .
“Adjusted EBITDA declined 21% to $142 million, while our adjusted EBITDA margin fell to 8.9%. Even with these headwinds, our return on invested capital remained resilient at 15.5%” – CFO Michael Cole .
“We import less than 15% of the lumber we purchase from Canada… Southern Yellow Pine… represents over 70% of our purchases” – CEO Will Schwartz on tariff exposure and sourcing .
“With the additional $100 million authorization… we anticipate remaining active [in buybacks] throughout Q2 as long as the price is below our target” – CFO Michael Cole .

Q&A Highlights

Pricing/margins: Packaging margins “more or less stabilized,” but input cost pass-through remains challenging; Site Built pricing headwinds likely to persist through 2025 .
Market share vs margins: Management prioritizes share retention while managing margins; teams monitor variable costs and market pricing daily .
Deckorators transition: Customer shift largely behind the company; Q2 normalizes with store load-ins; 2H expected up YoY; Q1 manufacturing variances were a ~$2M headwind .
Capacity & growth runway: Two ~$100M Sunbelt expansions plus Buffalo plant position Deckorators to double market share and add new products (e.g., trim) .
M&A: Robust pipeline across all BUs; open to larger deals with discipline on valuation and capital structure .

Estimates Context

Q1 2025: EPS $1.30 vs $1.565 consensus*; Revenue $1,595.5M vs $1,601.0M consensus* — both misses, with EPS impacted by mix, manufacturing variances, and competitive pricing and costs .
Prior quarter context: Q4 2024 EPS $1.12 vs $1.235 consensus* (miss); revenue $1,462.0M vs $1,426.1M consensus* (beat) .
Values retrieved from S&P Global.

Key Takeaways for Investors

Near-term: Expect continued pricing pressure in Site Built and lingering input inflation in Packaging; watch tariff news flow and pass-through cadence .
Mix/innovation: Surestone mix is rising (>50% of composite decking), with significant capacity added/coming online; should aid margin mix through 2H and 2026 .
Cost discipline: Execution against $60M structural savings and ≥$15M 2025 GP uplift from capacity reductions are key to buttressing margins in a soft demand environment .
Capital allocation: Increased dividend and buyback authorization, plus ~$2.2B liquidity, provide flexibility for M&A, capex ($300–$350M ’25), and opportunistic repurchases .
Modeling: Street likely to temper near-term EPS on persistent Site Built pricing and Packaging cost absorption, offset by retail margin recovery and share gains; focus on sequential trends and 2H retail recovery commentary .
Medium-term: Long-term targets (7–10% unit growth, 12.5% EBITDA margin) maintained; timing pushed out, but capacity/innovation and M&A pipeline support thesis on normalized demand .

Additional sources and details:

8-K earnings press release and financials (Q1 2025) .
Earnings call transcript (Q1 2025) .
Press release announcing Q1 results (duplicate content to 8-K Exhibit 99) .
Prior quarters: Q4 2024 8-K/press release ; Q3 2024 8-K/press release .

UFP INDUSTRIES INC (UFPI)·Q1 2025 Earnings Summary