UFPI 10-K & 10-Q changes, risk factors and insider trading

Pressures from various global and national macroeconomic events, including heightened inflation, uncertainty regarding future interest rates, foreign currency exchange rate fluctuations, recent adverse weather conditions, geo-political events, and potential governmental responses to these events have created, and continue to create, significant economic uncertainty and could materially and adversely impact our financial performance. The extent to which these macroeconomic pressures may impact our business, results of operations, costs and financial condition will depend on future developments, which continue to be highly uncertain and difficult to predict. While we have planned for and anticipate continueda softeningcontinuation of soft demand within our markets into 2025,2026, any one or more of the above macroeconomic factors could result in a more severe and longer downturn and/or increased costs, which would have an adverse and potentially material impact on our business and financial performance.

We may be impacted by new tariffs and duties on U.S. imports and foreign export sales and changes in import/export regulations. Instability of established free trade agreements, the potential imposition of new or increased tariffs on U.S. imports or exports, and potential changes to import/export regulations may lead to raw material and finished goods price volatility as well as instability and uncertainty in our supply chain. The proposed tariffs in Canada continue to be paused. If they are activated, the demand for domestic lumber products may increase, which will likely result in higher costs if capacity gets challenged. Although the trade landscape continues to evolve, since we do not own any foreign sawmills and have excellent relationships with our mill partners, we believe we are currently in a strong position to adapt quickly to tariffs without material adverse financial impact after a short adjustment period. We will continue to monitor the market and intend to make decisions quickly to minimize disruption. As of December 27, 2025, 84% of our lumber purchases are from domestic suppliers, 11% are imported from Canada, and 5% are imported from other international suppliers An increase in foreign tariffs on U.S. goods could curtail our export sales to other countries, which were approximately $239.5 million in 2025, compared to $258.9 million in 2024. Increased tariffs and duties on U.S. imports will increase pricing by adding duty cost, where the duty is sustainable in light of overall unit price, or otherwise constrain supply by eliminating historical production sources by country or commodity type with unsustainable duties. Our purchases that were impacted by tariffs were approximately $407.1 million in 2025 (compared to $390.9 million in 2024,2024), including UFP’s U.S.our import of Canadian Softwood Lumber of approximately $174.9 million in 2025 (compared to $211.8 million,million in 2024) which is the largest imported commodity. In addition, there is a risk that U.S. tariffs on imports and countering tariffs on U.S. exports could trigger broader international trade conflicts that could adversely impact our business.

We may be impacted by a significant change in the value of the U.S. dollar and our results of operations may be harmed by currency fluctuations and inflation. We purchase a variety of raw materials and finished goods from sources around the world and export certain products. The impact of a change in U.S. dollar exchange rates, and inflation, would impact our import purchases and export sales, which totaled $407.1 million and $239.5 million respectively, in 2025, compared to $390.9 million and $258.9 million respectively, in 2024.2024, respectively. In addition, many of our packaging customers export their products; consequently, any adverse impact on those customers from currency fluctuations and inflation may have an adverse impact on our sales to those customers.

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 and 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, cost of materials, and gross profits. Our products are generally priced to the customer based on a quoted, fixed selling price or "indexed" to the Lumber Market with a fixed dollar adder to cover conversion costs and profit. The impact on our profitability from changes in lumber prices is discussed in the “Historical Lumber Prices” and "Impact of the Lumber Market on Our Operating Results" captions of our Management’s Discussion and Analysis of Financial Condition and Results of Operations section under Item 7 of this Form 10-K. Our lumber costs, including plywood, as a percentage of net sales were 41.6% in 2025, compared to 40.4% in 2024.

UFP Industries, Inc. is a holding company with subsidiaries in the United States, Mexico, Canada, Spain, India, United Arab EmiratesIndia and Australia that design, manufacture, and supply products made from wood, wood and non-wood composites, and other materials to three segments: retail, packaging, and construction. We are headquartered in Grand Rapids, Michigan.

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. We do 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 currency and inflation; fluctuations in the price of lumber; adverse economic conditions in the markets we serve; concentration of sales to customers; vertical integration strategies; excess capacity or supply chain challenges; our ability to make successful business acquisitions; government regulations, particularly involving environmental and safety regulations; adverse or unusual weather conditions; inbound and outbound transportation costs; alternatives to replace treated wood products; cybersecurity breaches; tariffs on import and export sales; and potential pandemics. Certain of these risk factors as well as other risk factors and additional information are included in our reports on Form 10-K and 10-Q on file with the Securities and Exchange Commission, included under Item 1A above.

We are pleased to present this overview of 2024.2025. Our results for 20242025 were impacted byinclude the following highlights:

In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprise approximately two-thirds75% of our total lumber purchases.

ItThe results above reflect the impact of generally weaker demand across most of the end markets we serve as well as more competitive pricing and higher material costs for most of 2025. Notwithstanding our recent results, it is our long-term goal to increase our gross profits and earnings from operations at a rate of growth that exceeds our unit sales growth, or in other words, increase our profit per unit sold. We also have a long-term goal of improving our efficiencies and leveraging the fixed costs in our selling, general, and administrative expenses as we grow, which would result in a rate of growth of these expenses which is less than our unit sales growth resulting in a lower cost per unit.

We completed two business acquisitions during 2025 that had annual historical sales of approximately $24 million in aggregate. During 2024 we completed one business acquisition duringthat 2024 and one during 2023. The annual historical sales attributable to these acquisitions in 2024 and 2023 washad approximately $25 million andin $38annual million,historical respectively.sales. These business combinationcombinations were not significant to our operating results; consequently pro forma results for 20242025 and 20232024 are not presented.

See NotesNote toC “Business Combinations” of our Consolidated Financial Statements,Statements Notewhich C,are "Businesspresented Combinations"under Item 8 below for additional information.

The following table presents, for the periods indicated, our selling, general, and administrative (SG&A) costs as a percentage of gross profit. WeOver time, we believe this ratio provides an enhanced view of our effectiveness in managing these costs given our strategies to enhance our capabilities and improve our value-added product offering and recognizing the higher relative level of SG&A these strategies require. This ratio also mitigates the impact of changing lumber prices. The increase in the ratio of SG&A as a percentage of gross profit from the prior year is primarily due to the impact of competitive pricing and higher material costs for most of the year, which has reduced our gross profits.

Our business segments consist of UFP Retail Solutions (“Retail”),Solutions, UFP Packaging (“Packaging”) and UFP Construction (“Construction”),Construction, and align with the end markets we serve. Among other advantages, this structure allows for a more specialized and consistent sales approach, more efficient use of resources and capital, and quicker introduction of new products and services. We manage the operations of our individual locations primarily through a market-centered reporting structure under which each location is included in a business unit, and business units are included in our Retail, Packaging, and Construction segments. The exception to this market-centered reporting and management structure is our International segment, which comprises our packaging operations in Mexico, Canada, Spain, India, United Arab EmiratesIndia and Australia and sales and buying offices in other parts of the world. Our International segment and Ardellis (our insurance captive) are included in the “All Other” column of the table below. The “Corporate” column includes purchasing, transportation, corporate ventures, and administrative functions that serve our operating segments. Operating results of Corporate primarily consistsconsist of over (under) allocated costs.costs Theand operatingnet resultssales ofto external customers initiated by UFP Purchasing, which manages supplier relationships and purchases lumber and other materials, UFP Transportation, which owns, leases and operates transportation equipment, and UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns, leases, and operates transportation equipment, are also included in the Corporate column.estate. Inter-company lease and servicesservice charges are assessed to our operating segments for the use of these assets and services at fair market value rates.

The following tables present our operating results by segment for December 28,27, 20242025 and December 30,28, 2023.2024 (in thousands).

Net sales from the Retail segment decreased 12%6% in 20242025 compared to 20232024 due to a 5%1% decreaseincrease in selling prices, a 2% decrease due to the transfer of certain sales to the Construction and Packaging segments,prices and a 5%7% declinedecrease in units. Unit changes within this segment consisted of decreases of 3% in Deckorators, 6%27% in UFP Edge, as we complete the closure of our Bonner, Montana plants and 5%transition production to other facilities, and 6% in ProWood.ProWood; Ourwhile sellingDeckorators pricesunit ofsales variable-pricedwere products declined due to lower lumber prices. The selling prices of these products are indexed to the lumber market at the time they are shipped.flat. Additionally, our unit sales to big box customerscustomers, which we believe are more closely correlated with repair and remodel activity, decreased approximately 4%,7%, while unit sales to independent retailersretailers, which we believe are more closely correlated to new housing starts, decreased approximately 7%.9%. WithinThe ourdecline Deckoratorsin businessProWood unit,volume ouris salesprimarily due to higher interest rates and weaker consumer sentiment resulting in a softening of wood-plasticdemand compositeto decking,complete mineral-based-composite deckingrepair and railingremodel systems increased 4%.projects.

Earnings from operations of the Retail segment increaseddecreased in 20242025 compared to 20232024 by $6.9$64 million, or 4%,36%, as a result of the factors mentioned above,above as well as a foreign exchange loss totaling $1 million and an increase in the net loss on disposition and impairment of assets, which was comprised of machinery and equipment impairments and losses of $11 million, lease impairment charges of $2 million and intangible asset impairment charges of $1 million, partially offset by a gain on the sale of real estate totaling $5 million. The prior year included a $3 million net loss on disposition and impairment of assets which was comprised of lease impairment charges of $1.4 million and intangible asset impairments of $1.2 million, partiallyimpairments, offset by foreign exchange gains totalingof $3.0$3 million.

Net sales from the Packaging segment decreased 11%2% in 20242025 compared to 20232024 due to ana 8%2% decrease in selling pricesprices, and a 5%1% decrease in organic unit sales, partially offset by aan 2%acquired increasebusiness duewhich contributed 1% to the transfer of sales from the Retail segment. Unit changes consist of a decrease of 10% in structural packaging and 6% in protective packaging, primarily due to a decline in demand, partially offset by unit growth of 9% in PalletOne due to market share gains.growth. The declinedecrease in prices is primarily due to competitive price pressurepressure. asThe welldecrease asin lowerunits lumberwas costs.due to organic unit declines of 3% in Structural Packaging and 2% in PalletOne, which was partially offset by an increase in unit sales of 8% in Protective Packaging due to geographic expansion and market share gains.

Earnings from operations of the Packaging segment decreased by $93.0$15 million in 2024,2025, or 47.5%,15%, compared to 20232024 due to the factors discussed above,above. asThe welllosses aswere anoffset increaseby innet gains on the net loss on disposition and impairment of assets whichtotaling is$3 comprisedmillion, ofcompared intangibleto asseta impairments of $4.2$7 million andloss leasein impairment charges of $1.7 million.2024.

Gross profits decreased by $85.2$81 million, or 16%18%, to $438.5$358 million in 20242025 compared to 2023.2024. The decrease in our gross profit was comprised of the following factors:

SG&A expenses within the Construction segment decreased by approximately $16.6$25 million, or 6%,9%, in 20242025 compared to 2023.2024. Accrued bonus expense, which varies with the overall profitability of the segment and return on investment, decreased approximately $19.6$10 million compared to last year and totaled approximately $45.4$36 million for 2024.2025. The decline in SG&A was also due to decreases in saleswages incentiveand benefits of $4.0$4 millionmillion, sales incentives of $4 million, insurance costs of $2 million, gains on insurance settlements of $2 million, and several smaller decreases in many accounts. The overall decrease was partially offset by an increase in salaries, wages, and benefits of approximately $8.7 million as well as an increase in severance chargesaccounts totaling $1.3$3 million.

The Corporate segment consists primarily of over (under) allocated costs thatwhich are not significant.significant and net sales to external customers initiated by UFP Purchasing, UFP Transportation, and UFP Real Estate.

Interest and investment income increaseddecreased by $20.6$22.0 million in 20242025 compared to 20232024 due to the increasedecrease in cash and a higherlower interest rate earned on those deposits.deposits as well as an impairment loss of $6.5 million on an investment in our Innov8 Fund recorded in the fourth quarter.

Effective tax rates differ from statutory federal income tax rates, primarily due to provisions for state and local income taxes, and permanent tax differences. Our effective tax rate was 22.5%24.5% in 20242025 compared to 23.4%22.5% in 2023.2024. The decrease in our overall effective tax rateincrease was primarily due to an increase in our estimatedstate income tax deduction associated with stock-based compensation accounted forexpense as a permanentresult difference.of timing differences in the deductibility of R&D costs between federal and state, as well as an increase in nondeductible officer compensation relative to overall income.

In general, we fund our growth through a combination of operating cash flows, our revolving credit facility, and issuance of long-term notes payable at times when interest rates are favorable.notes. We have not issued equity to finance growth except in the case of a large acquisition that occurred many years ago. 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 these financial ratios are among many other 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 occursoccurring during the period from March to September. Consequently, our working capital increases during our first and second quarters resulting in negative or modest cash flows from operations during those periods. Conversely, we experience a 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.

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 are outstanding) is a good indicator of our working capital management. As indicated in the table below, our cash cycle decreasedincreased to 63 days in 2025 from 60 days in 2024 from 63 days in 2023.2024.

The decreaseincrease in our days supply of inventory in 20242025 is due to improvementsadditional safety stock inventory resulting from anticipated supply chain disruptions and new stocking programs in inventorythe turnsDeckorators inbusiness our Construction and Packaging segments.unit. The increase in our days of sales outstanding is primarily due to ourthe RetailUFP andEdge Packagingbusiness segments.unit resulting from a decline in sales due to restructuring. We continue to focus on past due account balances with customers, and the percentage of our accounts receivable that are current was 90% in 2024both compared2025 toand 91% in 2023.2024.

Our cash flows from operating activities in 20242025 waswere $643$546 million, which was comprised of net earnings of $419$296 million, $173$253 million of non-cash expenses, and a $51$3 million decreaseincrease in working capital since the end of December 2023.2024. Our cash flows from operations decreased by $317$97 million compared to last year primarily due to a $237$54 million decreaseincrease in our investment in net working capital compared to the prior year period and a decrease in our net earnings and non-cash expenses of $80$43 million. In 2023 our net working capital declined significantly as a result of demand normalizing from the peak of the pandemic period.

PurchasesCapital expenditures of property, plant, and equipment of $232$269 million comprised most of our cash used in investing activities during 2024.2025. Capital spending primarily consists of several projects to expand capacity to manufacture new and value-added products, primarily in our Packaging segment and Site-Built, Deckorators and ProWood business units, and Packaging segment. Additionally there were investments to achieve efficiencies through automation in all segments,segments and to make improvements to a number of facilities. On December 28,27, 2024,2025, we had outstanding purchase commitments on capital projects of approximately $142.8$135.4 million. We intend to fund capital expenditures and purchase commitments through our operating cash flows. Cash used for acquisitions during the year totaled $30$18 million compared to $52$30 million in 2023.2024. In 2024,2025, we madecompleted onetwo acquisition,acquisitions, C&LRWP WoodWest, Products.LLC and National Supply, LLC. See Notes to Consolidated Financial Statements, Note C,C “Business Combinations” of our Consolidated Financial Statements which are presented under Item 8 below for additional information. Our cash used in investing activities was partially offset by $31 million of proceeds from sale of property, plant and equipment as we divest assets that do not meet our profitability targets and strategic objectives.

SHORT-TERM DEMAND AND OUTLOOK

We believe improvements in demand in the end markets we serve and effectively executing our strategies will allow us to achieve our long-term goals below. However, in the short-term, demand in our markets has contracted, primarilycontracted due to highera shortvariety andof long-termmacro-economic interest rates,factors, which will continue to impact our results andto varyvarying degrees depending on the severity and duration of this cycle. As a result of these more challenging conditions, we have developed and are executing plans to reduce or eliminate capacity ofat locations that are not meeting our profitability targets and reduce our SG&A costs. OurAt the beginning of 2025, we announced that our goal through these actions iswas to lower our cost structure and improve our operating profits by $60 million by 2026.the We anticipate benefitsend of approximately2026. $40In 2025, we achieved $35 million inof 2025, including approximately $26 million from plannedtargeted SG&A cost reductions and $14$7 million fromof plannedprofitability improvements due to capacity reductions.consolidations that reduced our cost of goods sold. The reductions in SG&A were partially offset by an additional $20 million of investments in advertising to build our Surestone™ brand of mineral-based composite decking. In 2026, we anticipate capacity consolidations completed in 2025 will reduce our cost of goods sold and improve our profitability by $25 million, primarily in our Retail segment. Therefore, we currently anticipate achieving cumulative cost reductions in 2025 and 2026 totaling $67 million, exceeding our original goal.

The Home Improvement Research Institute (“HIRI”) anticipates growth in home improvement spending and has forecasted 3.9% growth in 2025 and 4.1%4.0% annual growth from 2026 through 2028.2029. WeMarkets continueremain tocompetitive competeand forwe target market share forgains with certain retail customers by introducing new value-add products and facefocusing intenseon pricingcustomer pressure from other suppliers to this market.service.

Market indicators that should be considered when evaluating future demand for our products in the packaging segment include industrial production, durable goods manufacturing, the Purchasing Managers Index, andPMI, U.S. GDP growth.growth, and others.

The industry consensus estimate of national housing starts for 20252026 is 1.361.34 million, with estimates generally predicting slightly positiveflat to slightly negative growth in the coming year2026 with a softer single-family generallyand performingmulti-family better than multi-family.outlook. Housing starts are projected to increase low single-digits in both 2026 and 2027.

The National Association of Home Builders forecasts a 2%1% decrease in manufactured home shipments from 20242025 to 20252026 and a 1% to 2% compounded annual growth rate through 2027.

As a result of more challenging market conditions, we have developed and are executing planscontinue to reduce or eliminate capacity ofat locations that are not meeting our profitability targets.targets and to better align capacity with current demand. We anticipate these actions will improve operating profits by $14$25 million in 2025.2026.

As indicated above, we are taking actions to reduce our cost structure to better align it with current demand. We are also investing in the resources needed to achieve our long-term objectives for growth, product innovation, building brand awareness for certain products, and improving our efficiency through technology. With these considerations in mind, we have targeted “core” selling, general, and administrative expenses (SG&A) totaling approximately $565$570 million in 2025,2026, excluding highly variable sales incentive and bonus expenses tied to profitability and return on investment.investment, This target amount is comparablecompared to our 2024 expenses and is comprised of approximately $26$550 million ofin planned2025 costexcluding reductionsinsurance offsetsettlement bygains. $6We millionexpect an increase of increases primarily associated with new greenfield operations, technology improvements and product innovation, and a $20 million increasein core SG&A primarily due to increases in ourcompensation Deckoratorsand advertisingrelated expenses as we invest in building the SureStone brand.benefits. Additionally, we anticipate sales incentives will range frombe 3% to 4% of gross profits (3% of gross profits in 2025) and bonus expense will range from 16%17% to 18% of pre-bonus operating profits (17% of pre-bonus operating profits in 2025) plus approximately $31$21 million associated with the vesting expense of shares granted in prior years under our bonus plan.plan ($29 million in 2025). See Note H — “Common Stock” of our Consolidated Financial Statements which are presented under Item 8 below for a discussion of future compensation costs related to long-term share-based bonus awards.

Our cash cycle will continue to be impacted in the future by our mix of sales by segment. Sales from our Construction and Packaging segments generally require a greater investment in receivables than sales toin our Retail segment, while our Retail segment generally requires a greater investment in inventory. Also, our net investment in trade receivables, inventory, and accounts payable will continue to be impacted by the level of lumber prices.

Our dividend rates are typically reviewed and approved at each of our February, April, July, and October board meetings and payments are typically made in March, June, September, and December of each year. On February 13,12, 2025,2026, our board approved a quarterly cash dividend of $0.35$0.36 per share, which represents a 6%3% increase from Decemberthe 2024.quarterly dividend of $0.35 per share paid in 2025. This dividend will be payable on March 17,16, 2025,2026, to shareholders of record on March 3,2, 2025.2026. Our board considers our dividend yield, payout ratios relative to earnings and operating cash flow, and potential variability of future results, among other factors, as part of its decision-making process. Future declarations of dividends and the establishment of future record and payment dates are subject to approval by the Board of Directors.

Other than the risk factor noted below, thereThere have been no material changes to the risk factors disclosed in Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 27, 2025.2025, as updated by the Part II - Item 1A Risk Factors of our Quarterly Report on Form 10-Q for the quarter ended March 28, 2026.

Our results for the firstsecond quarter of 2026 include the following highlights:

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 dollar sales levels (and working capital requirements) are impacted by the lumber costs of our products. Lumber costs were 43.3%43.7% and 43.8%42.9% of our total net sales in the first threesix months of 2026 and 2025, respectively.

For each of the product pricing categories above, our margins are exposed to changes in the trend of lumber prices. As a result of the balance in our net sales to each of our end markets, we believe our gross profitsprofit areis more stable thancompared those ofto our competitors who are less diversified.

The trade landscape continues to evolve. Since we do not own any foreign sawmills and have excellent relationships with our mill partners, we believe we are currently in a strong position to adapt quickly to tariffs without material adverse financial impact after a short adjustment period. We will continue to monitor the market and intend to make decisions quickly to minimize disruption. As of MarchJune 28,27, 2026, 82%84% of our lumber purchases arewere from domestic suppliers, 10%9% arewere imported from Canada, and 8%7% arewere imported from other international suppliers.

In February 2026, the U.S. Supreme Court ruled that the International Emergency Economic Powers Act (“IEEPA”), which the U.S. administration relied on to impose certain tariffs, does not authorize the administration to impose tariffs. As a result of this ruling, the U.S. Court of International Trade (“CIT”) issued an order directing the U.S. Customs and Border Protection (“CBP”) agency to begin formalizing a process for refunds. The CBP recently opened an online portal allowing importersAs of recordJune to27, submit2026, refundwe requestshave received $3 million in tariff refunds and recorded a receivable of $20 million related to the expected refund of tariffs issuedpreviously paid under the IEEPA.IEEPA, Theincluding Companyapplicable hasinterest, submittedwith the corresponding offsets of $20 million to Cost of goods sold, $1 million to interest income, and $2 million as a reduction to the carrying value of inventory on hand. We have certain contractual obligations that will require us to refund requestscustomers forcertain of the tariff refunds we receive. If we collect the entire $23 million of tariffs paid pursuant to CBP under the IEEPAIEEPA, totaling approximately $20 million, and the request has been acknowledged by the CBP. Acknowledgment of a request by CBP does not indicate approval of the request or that a refundwe will be paid,required andto refund approximately $11 million to customers. As a result, we haverecorded not$11 accruedmillion anyas receivablea liability as of June 27, 2026, with a corresponding reduction to Net sales. Of the $9 million net increase in Earnings from operations relating to these potentialtariff refunds.refunds, It$6 ismillion anticipatedrelated thatto products sold in the administrationcurrent willquarter fileand appeals$3 ormillion take other action with respectrelated to ordersproducts issuedsold byin CITprior concerningquarters. Subsequent to June 27, 2026, we received approximately $18 million of the refund process. As a result, there is uncertainty as to the timing and extent oftariff refund payments.receivable, including related interest.

RecentA combination of macroeconomic and geopolitical events and capacity constraints in the flatbed carrier market have contributed to an increase in our input costs across the enterprise, primarily related to fuel and transportation. In the firstsecond quarter of 2026, we estimate that we absorbedincurred an additional $3$31 million of these costs which adversely impacted our profitability reflecting increased fuel costs and flatbed carrier rates as a result of many small carriers exiting the market. This has increased our cost in March.the “spot” market with market rates up over 30% excluding fuel. These market conditions have resulted in $6 million in additional fuel costs continuedand $25 million in higher flatbed carrier costs. Our efforts to pass through these higher costs to our customers have been concentrated on fuel and through surcharges and increased product pricing, which resulted in an offset totaling approximately $4 million for the quarter. We plan to negotiate with our customers to pass through the remaining increase in April. We are taking actions intended to recover these costs through pricing to our customers.transportation However,costs, however, there are factors beyond our control, including contract terms and market conditions, that may impact our ability to be successful in these efforts. Please see “Risk Factors” below for more information.

We didcompleted not complete anythree business combinations in the firstsecond quarter of 2026 and completed two in fiscal 2025. The annual historical sales attributable to these acquisitions are approximately $24$183 million in aggregate. These business combinations are not significant to our quarterly results and thus proforma results for 2026 and 2025 are not presented. See Notes to the Unaudited Interim Condensed Consolidated Financial Statements, Note F, “Business Combinations” for additional information.

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,profit, selling, general, and administrative expenses, and operating profits as presented in the following table.

The following table presents, for the periods indicated, our selling, general, and administrative (SG&A) costs as a percentage of gross profit. Over time, we believe this ratio provides an enhanced view of our effectiveness in managing these costs given our strategies to enhance our capabilities and improve our value-added product offering and recognizing the higher relative level of SG&A these strategies require. This ratio also mitigates the impact of changing lumber prices. The increase in the ratio of SG&A as a percentage of gross profit from the prior year is primarily due to the impact of weak consumer demand andreflecting lower selling atprices loweras prices,well as higher transportation costs, which hashave reduced our gross profits.profit.

Our business segments consist of Retail, Packaging and Construction, and align with the end markets we serve. Among other advantages, this structure allows for a specialized and consistent sales approach, more efficient use of resources and capital, and quicker introduction of new products and services. We manage the operations of our individual locations primarily through a market-centered reporting structure under which each location is included in a business unit, and business units are included in our Retail, Packaging, and Construction segments. The exception to this market-centered reporting and management structure is our International segment, which comprises our packaging operations in Mexico, Canada, Spain, India, and Australia and sales and buying offices in other parts of the world. Our International segment and Ardellis (our insurance captive) are included in the “All Other” column ofin the table below. The “Corporate” columnsegment includes purchasing, transportation, corporate ventures, and administrative functions that serve our operating segments. Operating results of Corporate primarily consists of over (under) allocated costs and net sales to external customers initiated by UFP Purchasing, which manages supplier relationships and purchases lumber and other materials, UFP Transportation, which owns, leases and operates transportation equipment, and UFP Real Estate, which owns and leases real estate. Inter-company lease and service charges are assessed to our operating segments for the use of these assets and services at fair market value rates.

Our overall unit sales of value-added products were up 4% in the second quarter and down 6%1% in the first quartersix months of 2026 compared to the prior year. Our overall unit sales of commodity-based products decreasedwere approximatelyflat 12%in the second quarter and down 3% in the first quartersix months of 2026 compared to the prior year.

Gross profitsprofit decreasedincreased by $1 million, or 1% to $81$115 million for the firstsecond quarter of 2026 compared to the same period lastof year.2025. The change in gross profit was attributable to the following:

SG&A increased by $1$4 million, or 1%,7%, in the firstsecond quarter of 2026 compared to the same period of 20252025. primarilyThe increase was caused by a $1 million increase due to anacquired operations, a $1 million increase in advertisingprofessional costsfees, relatedand toa our$2 effortsmillion toincrease buildin brandexpenses awarenessacross ofseveral ourother Deckorators Surestone™ decking.categories. Accrued bonus expense, which varies primarily with the overall profitability and return on investment of the segment,segment remained flat from the firstsecond quarter of 2025 and totaled $9$15 million for the quarter.

Earnings from operations decreased in the firstsecond quarter of 2026 compared to the same period of 2025 by $2$4 million, or 7%, as a result of the factors mentioned above.

Net sales in the firstsecond quarter of 2026 decreasedincreased 4%7% compared to the same period of 2025, due to a 3%4% decreaseincrease in organic unit sales,sales and a 2%4% decreasecontribution infrom pricing,business acquisitions. These increases were partially offset by an acquired business by PalletOne that contributeda 1% todecrease unitin growth.selling prices. Organic unit changes consist of ana 11%15% decreaseincrease in PalletOne,Protective Packaging and an 8% increase in Structural Packaging, partially offset by a 5%3% increasedecrease in ProtectivePalletOne. Packaging,Acquisitions whilecontributed Structuralan Packagingadditional remained12% flat.in unit sales growth to PalletOne.

Gross profitsprofit decreased by $9$10 million, or 13%,14%, for the firstsecond quarter of 2026 compared to the same period lastof year.2025. The change in gross profit was attributable to the following:

SG&A decreasedincreased by approximately $3$2 million, or 5%,6%, in the firstsecond quarter of 2026 compared to the same period of 2025. AccruedThe increase is attributable to a one-time write-off on an earnout liability in 2025 for $2 million, a $1 million increase due to acquired operations, and a $1 million increase in expenses across several other categories. The increases were offset by accrued bonus expenseexpense, which decreased approximately $2 million relative to the same period of 2025 and totaled $6 million for the quarter. We also achieved $2 million of savings from our cost reduction efforts. These reductions were offset by a $1 million increase in healthcare costs.

Earnings from operations decreased in the firstsecond quarter of 2026 compared to the same period of 2025 by $7$12 million, or 30%,44%, due to the factors discussed above.

Net sales in the firstsecond quarter of 2026 decreased 10%4% compared to the same period of 2025 due to a 5%3% decrease in selling prices resultingdue fromto competitive price pressure in our Site-Built business unit,unit and a 5%2% decrease in organic unit sales.sales, partially offset by a 1% contribution from acquisitions. We experienced aorganic unit sales decreasedecreases of 6% in Factory Built and 3% in Site-Built of 14%, due to weaker demand for housing, andwhich a unit sales decrease of 7% in Factory Built, primarily due to lost market of certain low margin commodity products. These decreases werewas partially offset by 14%an unit11% growthincrease in Commercial and a 6% increase in Concrete Forming and 15% unit growth in Commercial. As of March 28, 2026 and March 29, 2025, we estimate that our backlog of orders in our site-built housing business unit were $80 million and $65 million, respectively.Forming.

Gross profitsprofit decreased by $13$10 million, or 15%,10%, in the firstsecond quarter of 2026 compared to the same period of 2025. The change in our gross profit was comprisedattributable ofto the following:

SG&A decreasedremained by approximately $1 million, or 2%,flat in the firstsecond quarter of 2026 compared to the same period of 2025. Accrued bonus expense decreased by $4$2 million and totaled $6$9 million for the quarter. ThisThe decrease in accrued bonus expense was partially offset by an increase in legal fees and settlements of $2 million and an increase in healthcare costsincreases of $1 million.million in wages and benefits and $1 million in travel expenses.

Earnings from operations decreased in the firstsecond quarter of 2026 compared to the same period of 2025 by $13$10 million, or 45%,27%, due to the factors mentioned above.

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 23.7%26.3% in the firstsecond quarter of 2026 compared to 21.1%23.6% in the same period of 2025 and was 25.3% in the first six months of 2026 compared to 22.5% for the same period in 2025. The increase in our effective tax rate for the second quarter and for the first quartersix months of 2026 was primarily due to $3 million of state income tax benefits recorded as discrete items in the second quarter of 2025 resulting from an approved reduction in our tax rate in Texas and job credits in South Carolina, and a decrease in our tax deduction from stock-based compensation accounted for as a permanent difference.

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 of payables outstanding) is a good indicator of our working capital management. As indicated in the table below, our cash cycle remained at 59 days during the second quarter of 2026 and increased to 6863 days from 6260 days during the first quartersix months of 2026 compared to the same periodperiods of the prior year.

The increase in our days supply of inventory for the first quartersix months of 2026 is due to slower inventory turns in our Retail segment dueas toa result of an increase in safety stock and as we work to normalize inventory as a result of weaker than anticipated demand in the first quarter of 2026.quarter. We continue to focus on past due account balances with customers, and the percentage of our accounts receivable that are current was 95% and 94% at the end of the firstsecond quarter of 2026 and 2025, respectively.2025.

In the first threesix months of 2026, our cash flows used infrom operations were $104$61 million andwhich were comprisedconsisted of net earnings of $51$134 million and $48$95 million of non-cash expenses, partially offset by a $203$169 million increase in working capital since the end of December 2025 due to seasonal demand. Our cash flows used infrom operations decreased by $5$52 million compared to the same period of the prior year2025 primarily due to the decline in our net earnings as well as the increase in our investment in net working capital since year end, which was $36$2 million lowerhigher in the first six months of 2026 compared to 2025,the partiallyfirst offsetsix bymonths aof $31 million decline in our net earnings and non-cash expenses.2025. We anticipate the seasonal increase in net working capital in 2026 will be converted to cash by early in the fourth quarter.

Purchases of property, plant, and equipment ofcomprised $48$87 million comprised most of our cash used in investing activities during the first threesix months of 2026. Outstanding purchase commitments on existing capital projects totaled approximately $108 million on MarchJune 28,27, 2026. Capital spending primarily consists of several projects to expand capacity to manufacture new and value-added products, primarily in our Packaging segment and our Deckorators business unit,units, to achieve efficiencies through automation in all segments, and make improvements to a number of facilities. We intend to fund capital expenditures and purchase commitments through our operating cash flows for the balance of the year. Cash used for acquisitions during the first six months of 2026 totaled $122 million (refer to Note F to our unaudited interim condensed consolidated financial statements).

Cash flows used in financing activities during the first threesix months of 2026 primarily consisted of the following:

On MarchJune 28,27, 2026, we had no amount outstanding on our $750 million revolving credit facility, and we had approximately $711$708 million in remaining availability after considering $39$42 million in outstanding letters of credit under the revolving credit facility. 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 whichthat may be sold. We were in compliance with all of our covenant requirements onas Marchof 28,June 27, 2026.

At the end of the firstsecond quarter of 2026, we had approximately $2.0$1.9 billion in total liquidity, consisting of our cash, remaining availability under our revolving credit facility, and a shelf agreement with certain lenders providing up to $575 million in remaining borrowing capacity.

We believe improvements in demand in the end markets we serve and effectively executing our strategies will allow us to achieve our long-term goals. However, in the short-term, demand in our markets has contracted due to a variety of macro-economic and geopolitical factors, which will continue to impact our results and vary depending on the severity and duration of this cycle. As a result of these more challenging conditions, we have developed and are executing plans to reduce or eliminate capacity at locations that are not meeting our profitability targets and reduce our SG&A costs. At the beginning of 2025, we announced that our goal through these actions was to improve our operating profits by $60 million by the end of 2026. We are on track to deliver the remaining $25 million or more from this cost out program by year end.end, with most to be realized in the third and fourth quarters. Additionally, we anticipate:

The following factors should be considered when evaluating our future sales and gross profitsprofit: