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UFP INDUSTRIES INC (UFPI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 came in soft versus expectations: revenue $1.84B and diluted EPS $1.70, both below S&P Global consensus ($1.85B and $1.84, respectively); adjusted EBITDA was $174.1M with margin at 9.5%, down year over year . EPS miss reflects weaker demand, competitive pricing, higher input costs, and an unfavorable mix, with site-built housing accounting for a $28M decline in gross profit YoY per management .
  • Management reiterated macro/tariff uncertainty, announced closure of Bonner, MT facilities (Q3 impairment $15–$17M) and a July one-time gain ~$13M (+$2M expected in Q3), while reaffirming the $60M cost-out by end-2026 and targeting SG&A of ~$554M in 2026 (ex variable incentives) .
  • Deckorators’ mineral-based SureStone composite decking grew >45% YoY; retail mix is shifting with losses at one large customer offset by wins at another and a push to 1,500 stores by 2026; packaging appears sequentially stabilized, while site-built remains under pronounced pricing pressure .
  • Capital allocation is active: dividend raised 6% to $0.35, ~$269.6M repurchased YTD under prior program, and a new $300M buyback authorization through July 2026; company maintains ~$2.1B liquidity and plans $300–$325M capex in 2025 .

What Went Well and What Went Wrong

What Went Well

  • SureStone composite decking momentum: “Sales of our decking board portfolio featuring our SureStone technology increased 45% year-over-year” and capacity expansions remain on track (Buffalo facility Q1 2026) .
  • Sequential stabilization outside site-built: “With the exception of our site-built business unit, it appears that most of our business units are beginning to see a stabilization in sales and profit margins on a sequential basis” .
  • Cost actions and structural improvements: “On track to realize approximately $60 million of structural cost savings by year-end 2026” with SG&A and capacity reductions underway; Bonner closures expected to eliminate ~$16M operating losses in 2026 .

What Went Wrong

  • Site-built housing headwinds: $28M of the $50M gross profit decline tied to site-built volume and price competition; management doesn’t believe cycle bottom is in yet .
  • Margin compression: Adjusted EBITDA margin fell to 9.5% from 10.7% YoY; gross margin declined to 17.0% from 19.1% YoY due to competitive pricing and mix .
  • Retail mix pressure and operational challenges: Railing sales down 25% from shelf loss; composite decking gross profit impacted by higher material/manufacturing costs and Edge operational challenges (prompting the Bonner exit) .

Financial Results

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$1.462 $1.596 $1.835
Diluted EPS ($USD)$1.12 $1.30 $1.70
Adjusted EBITDA ($USD Millions)$132.7 $142.2 $174.1
Gross Margin %16.4% 16.8% 17.0%
Adjusted EBITDA Margin %9.1% 8.9% 9.5%

Estimates vs Actuals (S&P Global as anchor):

MetricQ4 2024Q1 2025Q2 2025
Revenue Actual ($USD Billions)$1.462 $1.596 $1.835
Revenue Consensus Mean ($USD Billions)$1.426*$1.601*$1.854*
Diluted EPS Actual ($USD)$1.12 $1.30 $1.70
Primary EPS Consensus Mean ($USD)$1.235*$1.565*$1.844*
EBITDA Consensus Mean ($USD Millions)128.6*159.3*179.7*
EBITDA Actual (SPGI definition, $USD Millions)124.0*130.9*166.8*
Values retrieved from S&P Global.*

Segment breakdown (Q2 2025 vs Q2 2024):

SegmentQ2 2024 Net Sales ($MM)Q2 2025 Net Sales ($MM)Q2 2024 Gross Profit ($MM)Q2 2025 Gross Profit ($MM)
Retail Solutions$809.1 $788.2 $126.8 $113.7
Packaging$435.2 $428.7 $83.7 $70.6
Construction$574.5 $551.6 $125.6 $100.2

KPIs and capital allocation:

KPIQ2 2024Q2 2025
New product sales ($MM; % of net sales)$—; 6.7% $129.1; 7.0%
Liquidity ($B)—~$2.1
Cash ($MM)—$841.9
Dividend per share ($)—$0.35 (6% YoY increase)
Share repurchases—2.6M shares; $269.6M; avg $103.55
2025 Capex plan ($MM)$300–$350 $300–$325

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Unit volumes by segmentFY 2025Slightly down across segments Low single-digit unit declines across segments Maintained (clarified)
Site Built vs Factory BuiltFY 2025Site Built down; Factory Built up More pronounced decline in Site Built; offset by Factory Built Maintained (emphasis)
CapexFY 2025$300–$350M $300–$325M Narrowed/lowered
DividendQ3 2025$0.35 (approved Apr-23) $0.35 payable Sep 15, 2025 Maintained rate; payment scheduled
Share repurchase authorizationThrough Jul 31, 2025$300M (amended Apr-23) New $300M through Jul 31, 2026 Renewed/New authorization
Bonner, MT closures (Edge)Q3 2025—Impairment/one-time costs $15–$17M; minimal revenue impact New
One-time gains on asset salesQ3 2025—$13M in July; +$2M expected in Q3 New
SG&A plan (ex variable)FY 2026—~$554M; $30M cost reductions offset by $20M Deckorators advertising New quantitative detail
Structural cost savingsThrough 2026$60M by year-end 2026 $60M by year-end 2026 (affirmed) Maintained

Earnings Call Themes & Trends

TopicQ4 2024 Mentions (Q-2)Q1 2025 Mentions (Q-1)Current Period (Q2 2025)Trend
Tariffs/lumber dutiesTariffs paused in MX/CA; positioned to adapt Working closely with suppliers; tariff plan maintained Proposed tariffs/duties; 75% domestic sourcing; ~2/3 SYP fiber; confident to adapt Rising uncertainty; management confident
Deckorators/SureStoneNew product lines highlighted ahead of IBS Launch momentum; 1,500 retail locations secured >45% YoY growth; retail shelf shift; load-in largely back-half; capacity ramp Accelerating adoption
Site-built housingVolumes/pricing pressure; GP decline More competitive pricing; softer demand Pricing pressure persists; cycle bottom not yet; $28M GP impact YoY Worsening/has not bottomed
PackagingGP compression; competitive mix Soft demand; higher material costs; Protective Packaging strength Sequential stabilization; no acceleration Stabilizing
Factory-built/data centerFactory-built volumes strong Factory-built +13% units Double-digit unit growth; data center infra a bright spot Improving
SG&A/cost actionsYear-end impairments/severances Cost-out program reaffirmed SG&A plan ~$554M for 2026; cost-outs and closures progressing Executing
Capital allocationDividend raised; small repurchases Expanded buyback to $300M; repurchases in Q1/Apr ~$270M repurchased YTD; new $300M authorization to 2026 Accelerating buybacks

Management Commentary

  • “We remain on target to realize approximately $60 million of structural cost savings by year-end 2026 and will continue to evaluate all aspects of our business to drive additional margin improvement.” — CEO Will Schwartz .
  • “Second quarter sales matched our expectations for low single digit unit volume declines across each segment... All of this contributed to our earnings per share of $1.70... adjusted EBITDA of $174 million.” — CEO Will Schwartz .
  • “It’s worth noting that $28 million of the $50 million decline in our gross profit was due to lower volume and price competition in our site-built business unit.” — CFO Mike Cole .
  • “We anticipate these [Bonner] actions will result in between $15 million and $17 million of impairment and other one-time costs in Q3... expected to eliminate operating losses totaling $16 million in 2026.” — CFO Mike Cole .

Q&A Highlights

  • Site-built dynamics: Sequential volumes improved seasonally, but pricing pressure intensified; management expects continued headwinds through year-end and does not think the cycle has bottomed yet .
  • Deckorators load-in: ~400 of 1,500 stores loaded at Q1; majority of remaining load-in scheduled for back-half to avoid selling-season disruption; marketing focused on consumer education of SureStone value .
  • Packaging outlook: Markets remain competitive; sequential stabilization observed but no clear signs of acceleration yet .
  • Lumber duties: ~75% domestic sourcing and ~2/3 SYP fiber; management believes it can pass through and substitute species as needed; largest exposure is site-built/construction .
  • Capital allocation: Preference for M&A/organic growth first; buybacks opportunistic at perceived discount; new $300M authorization extends program through July 2026 .

Estimates Context

  • Q2 2025 EPS and revenue missed S&P Global consensus: $1.70 vs $1.844 EPS*, and $1.835B vs $1.854B revenue*; EBITDA also below consensus (actual $166.8M* vs $179.7M*) despite company-reported adjusted EBITDA of $174.1M . Values retrieved from S&P Global.*
  • Consensus for FY 2025 EPS stands at ~$5.37* and for FY 2026 at ~$5.83*, with revenue ~$6.39B* (FY25) and ~$6.58B* (FY26); given persistent site-built pressure and competitive pricing, near-term EPS revisions may bias lower absent clearer demand recovery. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term softness persists: Site-built remains the key drag; expect continued pricing pressure and modest unit declines through 2025, keeping margins below prior-year levels .
  • Deckorators/SureStone is a bright spot: >45% growth, retail wins and distribution expansion underpin 2026-ready capacity; marketing spend is stepping up into consumer education .
  • Cost actions should begin to show through: Bonner closures, SG&A reductions, and capacity consolidation target ~$60M structural savings by 2026; watch Q3 for one-time impairment and gains timing .
  • Capital deployment supportive: $0.35 dividend and renewed $300M buyback provide downside support; liquidity of ~$2.1B offers flexibility for bolt-on M&A and organic investments .
  • Stock reaction catalyst: Miss vs consensus, tariff/duty headlines, and Q3 impairment/gain recognition could drive near-term volatility; sequential stabilization in packaging and Factory Built momentum are potential offsets .
  • Estimate implications: EPS and revenue misses, plus management’s unchanged soft-demand outlook, argue for conservative near-term estimate resets; monitor site-built pricing actions and Deckorators sell-through to gauge trajectory .
  • Medium-term thesis: Diversification, innovation, and cost-outs position UFPI to expand margins and grow above-market when housing/industrial demand normalizes; 12.5% adjusted EBITDA margin long-term target remains intact .