UFP Industries, Inc.

Good day and welcome to the Q3 2025 UFP Industries, Inc. Earnings Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker, Mr. Stanley Elliott, Director of Investor Relations. Please go ahead.

Good morning, everyone, and thank you for joining us to discuss our third quarter results. With me on the call are Will Schwartz, our President and Chief Executive Officer, and Mike Cole, our Chief Financial Officer. Will and Mike will offer prepared remarks, and then we will open the call for questions. This conference call is available to all interested investors and news media through the investor relations section of our company's website, ufpi.com, where we will also post a replay of this call. Before I turn the call over, let me remind you that yesterday's press release and presentation include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risk and uncertainties that could cause actual results to differ materially from expectations. These statements also include, but are not limited to, those factors identified in the press release and in the company's filings with the Securities and Exchange Commission. I will now turn the call over to Will.

Welcome everyone and thank you for joining today's call to discuss our financial results for the third quarter of fiscal year 2025. Share our thoughts on what we are seeing in the marketplace and provide some preliminary thoughts on how we see the business heading into 2026. Net sales remain steady at $1.56 billion on a 4% decline in units and 1% decline in price. We saw encouraging traction in new product sales, which totaled 7.2% of total sales. Our profitability remains pressured when compared to a year ago, but on a trailing 12-month basis, we continue to flatten out. Much of the market dynamics that we've seen early in the year have continued. We're seeing cyclically soft demand, ongoing trade uncertainty, and competitive pricing pressures, creating a difficult operating environment. Despite the ongoing market headwinds, we continue to see a number of our business units finding a level of unit and profit stabilization. While it might be early to identify what we are seeing as green shoots, it does leave us cautiously optimistic heading into 2026. I couldn't be more proud of the team and how they've managed through a difficult 2025. I think it's important for investors to understand we are not sitting idly by in managing through what this cycle dictates to us. We have and will continue to take the necessary steps to emerge from this market a much stronger, leaner, and profitable company. Across all of our businesses, we target above-market growth, but with an overarching focus on returns. How we get there will vary by business, and it speaks to the balanced nature of our portfolio. We continue to introduce value-added products across our portfolio that will improve mix and drive higher margins. And we continue to address underperforming operations, primarily through active restructuring efforts, but in some cases, divestitures. We continue to make the necessary investments to upgrade our capital base and capabilities, as we've discussed with our $1 billion CapEx program. Within this framework, we have earmarked $200 million towards automation to improve throughput and lower our cost structure. We are making select greenfield investments for certain products to expand geographically or expand capacity. In addition to what we are doing organically to drive outcomes, we remain very active on the M&A front and continue to explore transactions of various sizes. M&A has always been a key part of the UFP growth story and will be an important part of the story and a great complement to the other actions we're taking to win in the marketplace. We have completed three bolt-on acquisitions this year, all smaller in nature, but all are great fits from both a cultural and products perspective. The first, a wood packaging manufacturer located in Mexico that allows us to strengthen our business with certain multinational customers. Two, a supplier to the manufactured housing, RV, and cargo markets whose location is complementary to our existing footprint and allows us to execute strategies to reduce our operating costs while providing additional capacity for growth. And lastly, a distributor to the RV market that complements our existing locations and product lines. We have taken steps to become more intentional, more strategic, and focused in our deal evaluation. Our process around M&A targeting continues to mature. Centered around this is how an asset aligns with our core business while delivering on growth, margins, and return targets. While the pace has improved, we will remain patient and disciplined. And to that point, we have been able to pivot to share repurchases this year, given the market conditions and market volatility, and have bought back roughly $350 million, or 6% of our market cap, through October. As we look ahead, the opportunities for our business are positive across the board, and we are using this period of softer demand to strengthen the core of our business. We believe we have the right team in place to weather the current climate and capitalize aggressively on opportunities when the market recovers to deliver on our long-term targets. Now, turning to the individual segments. In our retail segment, let's start with ProWood, which has performed well even in a tougher market. We continue to work on our cost positions and improving our manufacturing process. ProWood recently introduced TruFrame, a proprietary kiln-dried and factory-planed joist product. The value we add on the front end helps the structure resist warping and twisting, which reduces build time and improves product quality and aesthetics. Along those lines, SureStone is another area of focus. We continue to see strong demand for our SureStone products, and efforts to raise brand awareness are beginning to yield results. Consumers and contractors understand we collectively have something that they can't get anywhere else. While we're waiting for these investments to fully scale, we're confident in its potential once capacity is in place. That includes expansion efforts in Selma and our new plant in Buffalo, New York. Both expansion efforts are progressing well and will be fully operational and realized in first quarter 2026. These expansion plans are consistent with our plans to double market share over the next five years. Throughput improved every month of the quarter and into October. We remain on track to be fully stocked for the 2026 selling season as a part of our big box program, as well as positioned to service our expanding relationships with two-step distributors. ProWood also continues to serve as an important distribution partner for our Shearstone products, and we see distribution as a competitive advantage for our ProWood business. I strongly believe our ability to self-distribute product, both pressure-treated lumber and composite decking products, at the same location are true differentiators versus our market peers. The leveraging of these two strong brands allows us to provide a very high level of service in order of fulfillment. To support the launch of this product, we have invested $30 million to support the brand, and we are pleased with the initial success. All of the metrics we are tracking to determine a successful return on our investment, including unaided brand awareness, product sample questions, and website traffic, to name a few, have exceeded our expectations. We will continue to build on this platform to increase exposure, and we like our position looking ahead to 2026. Moving on to our packaging segment, it was the first to feel the impacts of a down cycle, and based on performance for the past several quarters, we feel it is among the first to begin to stabilize from a sales and margin perspective. We like the long-term trends in these businesses and the complementary nature of packaging to other parts of our portfolio. We're well positioned to aggressively grow market share across the business given our engineering and design capabilities in structural packaging, geographic expansion on our protective packaging business, and leveraging our low-cost position in our pallet business. Like other parts of our portfolio, we continue to invest and drive cost out of the business while developing new solutions to help customers reduce labor while improving safety in their packaging operations. We are working through patent process approval for our ULOT 200 product and received an award for one of our structural packaging solutions this October. Now, wrapping up with construction. Markets remain pretty consistent to our last quarter, where we reported a very competitive site-built business. Builders look to manage home inventories, while consumer confidence and affordability remain challenged. And while we don't have a national footprint yet, We do overlap with some of the markets that have been more pressured. We continue to position this business for longer-term success with investments in automation to improve our cost position and throughput. Our factory-built business continues to outperform our end markets as we develop new products that add content and expand our addressable market. We continue to believe our factory-built business addresses the affordability issues impacting the residential marketplace. and we believe our site-built offerings address these challenges as well. In both cases, we are working to bring solutions to the market that can help improve build times and reduce labor content at the job site. We also bring solutions to the non-residential and public construction markets with our concrete farming business where we provide solutions that reduce job site labor. We have had great success in this fragmented marketplace and appreciate that our products are fungible across all types of concrete construction work. Looking ahead, we remain focused on driving innovation across the portfolio and making strategic investments to create shareholder value. We believe we're in a position of strength when it comes to M&A given our $2.3 billion in liquidity. As we've said before, our focus remains on the most attractive opportunities that enhance our core business. We have identified targets across each of our business units that complement our core strengths. We continue to refine the business, and we are looking to put capital deployment strategies toward the places with the greatest opportunities for shareholder return. Our balance sheet is ready for transaction that strengthen these areas, and we have the right team in place. We'll be patient and discerning, and we're prepared to act when the right opportunity matures. We continue to be committed to our long-term targets and believe the steps we're taking today will position us to achieve these results in the future. As a reminder, we are driving towards a 12.5% EBITDA margin to achieve 7% to 10% unit sales growth, some of which will come from M&A and new products. We will focus on driving ROIC in excess of 15%, which is well ahead of our cost of capital. And all of this while maintaining a conservative capital structure. We are making progress even in this down cycle and performing 200 basis points better than we did in 2019. That's a testament to the strength of our business model, which as previously stated, we continue to refine. In closing, I believe in the work UFP Industries is doing for the benefit of our shareholders, our customers, and our communities. We will continue to bring to market value-added solutions that strengthen all three. Thank you again for joining us today. We're proud of the progress we've made and confident in our path forward. With that, I'll hand it over to Mike Cole, our Chief Financial Officer.