UFP Industries (NASDAQ:UFPI) reported first-quarter fiscal 2026 results against a backdrop of “macro headwinds and competitive pressures” that, according to management, intensified late in the period and were exacerbated by an unusually long winter season that limited typical March seasonal demand.
President and CEO Will Schwartz said “the normal seasonal uplift during the month of March failed to materialize,” and the company also faced higher medical costs year over year. Schwartz added that abnormal activity in March contributed to “roughly 60% of the year-over-year decline in profitability in the quarter.”
Quarterly performance and key cost pressures
Chief Financial Officer Mike Cole said net sales for the March quarter were $1.5 billion, down from $1.6 billion a year earlier. He attributed unit declines to “continued weakness in residential construction activity, adverse weather, the exiting of select low-margin commodity sales, and softer demand for new pallets.” Pricing was pressured by a 6% decline in lumber and “continued price pressure” in the company’s Site-Built business.
Adjusted EBITDA was $111 million, down $31 million year over year, with adjusted EBITDA margin decreasing to 7.6% from 8.9% in the prior-year quarter. Cole said the decline was driven primarily by Site-Built, where gross profit fell by nearly $19 million, alongside higher healthcare and transportation costs across the portfolio, which increased by approximately $7 million and $3 million, respectively.
In the Q&A, management provided additional detail on transportation and energy inflation. Cole said the impact was “about a $3 million headwind in March,” and that it increased in April. Schwartz said the company began customer conversations once it appeared the impact would persist, and described a mix of freight surcharges and repricing depending on customer preferences. Schwartz told analysts he would not expect the company “to be taking hits as a result of those increased fuel costs” by the back half of the year, assuming conditions do not worsen.
Retail: ProWood softness, Deckorators growth, and Edge restructuring
Retail segment sales were $531 million, down 12% year over year, driven by a 13% decline in units, partially offset by 1% higher pricing, according to Cole. ProWood units declined 15% amid adverse weather, weaker consumer sentiment, the absence of storm-related demand, and the company’s prior exit from certain low-margin commodity sales beginning in the second quarter of 2025.
Schwartz highlighted product and process initiatives within the segment, including the launch of TrueFrame joist at JLC, which he called ProWood’s “first proprietary product designed specifically for use in deck substructures.” He said production has expanded to four plants and the company has increased sales efforts to “capitalize on the demand pull.”
Within Deckorators, Schwartz said “strong momentum from last year” continued into the first quarter. He noted Surestone decking sales rose 27% and traditional wood plastic composite decking sales increased 4% year over year, which management believes outpaced broader industry trends. Schwartz also said the company’s measures of consumer interest—such as contractor searches, “where to buy,” and sample requests—more than doubled over the past year.
Cole added that Deckorators produced 2% unit growth overall, and said total decking sales increased 16% on the strength of Surestone growth supported by capacity added at an Alabama plant. He explained that other categories weighed on the broader Deckorators “bucket,” including a 6% decline in railing and softer demand for decorative aluminum fencing, accessories, post caps, balusters, and vinyl lattice.
Edge volume declined 20%, which Cole attributed to the closure of Bonner facilities and a narrowed portfolio “to products we expect to meet profitability targets by the end of 2026.” Retail adjusted EBITDA was down $1 million year over year, with gross profit and SG&A “essentially flat,” reflecting improved mix and cost control while continuing to invest in the Deckorators brand, Cole said.
Packaging: mixed customer demand and commodity cost overhang
Packaging sales were $394 million, down 4% year over year, reflecting a 2% decline in units and a 2% decline in pricing. Cole said Structural Packaging volumes were flat, PalletOne units declined 7%, and Protective Packaging units increased 5% as greenfield locations ramped up.
Packaging adjusted EBITDA fell to $28 million, down $7 million year over year. Cole cited lower volumes and higher input costs in PalletOne, along with unabsorbed overhead tied to Protective Packaging greenfield operations. He said the company partially offset the gross profit impact with a $2 million reduction in SG&A, “primarily from incentives tied to profitability.”
Schwartz said quoting activity remained strong, but “customer takeaway remain mixed,” reflecting uncertainty across end markets. He also said higher commodity prices and a competitive market remained “an overhang on profitability,” though management was encouraged that margins were stabilizing sequentially.
Construction: Site-Built pressured, other units grow
Construction segment sales were $465 million, down 10% year over year, with price down 5% and units down 5%. Cole said the decline was driven primarily by a 14% unit decrease in Site-Built, as affordability and weaker sentiment pressured housing demand and larger builders focused on lowering inventory. Cole noted improving trends among multi-family customers.
Factory-Built units declined 7% as the company exited certain low-margin commodity sales; Cole said mix improved and supported higher profitability. Commercial and Concrete Forming each achieved mid-teens unit growth, according to Cole, but Construction adjusted EBITDA still declined by $12 million to $26 million due to market weakness and competitive pricing pressure in Site-Built.
Schwartz described Site-Built as “the hardest part of the business for us today,” adding that cost inputs such as fuel increases and lumber cost movement during the quarter were “hardest to pass along” in that market, contributing to margin pressure.
Acquisitions, integration focus, and capital allocation
Management emphasized its balance sheet capacity and an active approach to acquisitions. Schwartz said UFP had approximately $2 billion in liquidity and intended to pursue “meaningful M&A while returning our free cash flow to shareholders through opportunistic share repurchase and dividends.” Cole said the company ended March with $714 million in surplus cash and no borrowings under its credit agreements, and that surplus cash was about $200 million lower than year-end due to a seasonal working capital build expected to convert to cash by early Q4.
Two acquisitions were announced after quarter end:
- MoistureShield: On April 6, UFP purchased the net operating assets of MoistureShield Inc., a decking operation acquired from Oldcastle APG, adding a wood plastic composite plant in Springdale, Arkansas. Schwartz said the deal expands capacity, adds redundancy, and eliminates the need for a new greenfield project as demand outpaced capacity.
- Berry Pallets: On April 28, UFP announced a plan to acquire the net operating assets of Berry Pallets, which Cole said is expected to close in May and will expand the company’s pallet network in the upper Midwest.
Schwartz said the MoistureShield deal also includes rights to CoolDeck technology, which he described as a heat-mitigating technology that can reduce heat transfer by up to 35%. In response to analyst questions, Schwartz said UFP intends to operate MoistureShield as a brand through the remainder of 2026 and begin transitioning it “under the Deckorators umbrella” in 2027 while exploring how to apply CoolDeck across the portfolio.
To support faster integration of acquired businesses, Schwartz said Patrick Benton will transition from president of UFP’s Construction Segment to a newly created role as executive vice president of operations integration.
Cole also detailed capital allocation items, including a quarterly dividend of $0.36 per share, up 3% from a year ago, and a $300 million share repurchase authorization through July 2026. The company expects 2026 capital expenditures of $250 million to $275 million, about $50 million lower than the February target due to the MoistureShield transaction. Cole said the company plans to repurchase shares primarily to offset dilution from stock-based compensation, while evaluating additional repurchases opportunistically when shares trade below intrinsic value.
On the outlook, Cole said UFP expects the current market environment to persist through 2026 and that demand trends for the rest of the year are “toward the lower end of our prior guidance.” Management expects continued pressure from energy and transportation costs, with pricing actions underway but taking time to flow through results. Still, the company reiterated its expectation for $100 million of incremental growth in Deckorators decking and railing sales this year, supported by capacity investments and the addition of MoistureShield assets.
About UFP Industries (NASDAQ:UFPI)
UFP Industries, Inc, founded in 1955 and headquartered in Grand Rapids, Michigan, designs, manufactures, and distributes a broad range of wood and wood-alternative products. The company operates through two primary segments: UFP Retail Solutions, which supplies building materials and components to home improvement retailers and lumber dealers, and UFP Distribution Solutions, which offers packaging, pallets, skids, and other industrial products for a variety of end markets. Its product portfolio includes treated and untreated lumber, engineered wood, decking, railing, fencing, vinyl sheets and profiles, and custom-designed packaging solutions.
With manufacturing facilities and distribution centers across the United States, Canada, Mexico and Europe, UFP Industries serves professional contractors, industrial customers, and do-it-yourself consumers.
