UFP INDUSTRIES INC
For the period ended Jun 27, 2026. Filed Aug 5, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 27, 2026 · Filed Aug 5, 2026
UFPI$79.92-3.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-28; filed 2026-05-06.
0001104659-26-056076
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-27; filed 2026-08-05.
0001104659-26-090859
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 86 previous paragraphs and 97 current paragraphs.
49 unchanged; 31 reworded; 17 added; 5 removed; 1 previous and 0 current paragraphs rearranged.
Tables are not compared: 60 previous and 75 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (17)
Current report
Lumber prices increased during the second quarter of 2026, after declining during the first quarter. Commodity lumber costs increased due to mill curtailments and higher duties on Canadian lumber, partially offset by weak overall demand resulting from lower consumer sentiment and greater economic uncertainty.
Current report
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. As of June 27, 2026, we have received $3 million in tariff refunds and recorded a receivable of $20 million related to the expected refund of tariffs previously paid under the IEEPA, including applicable interest, with 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 customers certain of the tariff refunds we receive. If we collect the entire $23 million of tariffs paid pursuant to the IEEPA, we will be required to refund approximately $11 million to customers. As a result, we recorded $11 million as a 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 tariff refunds, $6 million related to products sold in the current quarter and $3 million related to products sold in prior quarters. Subsequent to June 27, 2026, we received approximately $18 million of the tariff refund receivable, including related interest.
Current report
Net sales in the first six months of 2026 decreased by 3% compared to the same period of 2025, due to a 6% decrease in organic units, partially offset by a 2% increase in selling prices and a 1% increase due to acquisitions. Organic unit changes within this segment consisted of decreases of 18% in Edge and 7% in ProWood, partially offset by a 5% increase in Deckorators. Within our Deckorators business unit, our mineral-based-composite decking sales increased by 33% as consumers continue to see the benefits of its superior product attributes, and wood-plastic composite decking increased by 51%. An acquired business contributed an additional 9% in sales growth to Deckorators and 30% in sales growth to wood-plastic composite decking sales. These increases were partially offset by a 13% decrease in railing sales. Unit sales to big box customers decreased approximately 5%, while unit sales to independent retailers decreased approximately 4%.
Current report
Gross profit remained flat for the first six months of 2026 compared to the same period in 2025. The components of gross profit were as follows:
Current report
SG&A increased by approximately $5 million, or 4%, in the first six months of 2026 compared to the same period of 2025. The overall increase was due to a $1 million increase due to acquired operations, a $2 million increase in professional fees, and a $3 million increase in expenses across several other categories. These increases were partially offset by a decline in accrued bonus expense of $1 million, which totaled $24 million for the first six months of 2026.
Current report
Earnings from operations decreased in the first six months of 2026 compared to the same period of 2025 by $6 million, or 7%, as a result of the factors mentioned above.
Current report
Gross profit decreased by $10 million, or 14%, for the second quarter of 2026 compared to the same period of 2025. The change in gross profit was attributable to the following:
Current report
Net sales in the first six months of 2026 increased 2% compared to the same period of 2025, due to acquired businesses which contributed 3% to unit growth, partially offset by a 1% decrease in selling prices. Organic unit changes consist of a 10% increase in Protective Packaging and a 4% increase in Structural Packaging, offset by a 7% decrease in PalletOne. Acquisitions contributed an additional 7% in unit sales growth to PalletOne.
Current report
Gross profit decreased by $19 million, or 14%, for the first six months of 2026 compared to the same period in 2025. The change in gross profit was attributable to the following.
Current report
SG&A remained flat for first six months of 2026 compared to the same period of 2025. Accrued bonus expense decreased $4 million, and totaled $12 million for the six months of 2026. The decrease was offset by a one-time write off on an earnout liability in 2025 for $2 million, a $1 million increase due to acquired businesses, and a $1 million increase in bad debt expense.
Current report
Earnings from operations decreased in the first six months of 2026 compared to the same period 2025 by $18 million, or 38%, due to the factors discussed above, partially offset by a decrease in the net loss on disposition and impairment of assets, which primarily related to a $1 million lease impairment in 2025.
Current report
SG&A remained flat in the second quarter of 2026 compared to the same period of 2025. Accrued bonus expense decreased by $2 million and totaled $9 million for the quarter. The decrease in accrued bonus expense was offset by increases of $1 million in wages and benefits and $1 million in travel expenses.
Current report
Earnings from operations decreased in the second quarter of 2026 compared to the same period of 2025 by $10 million, or 27%, due to the factors mentioned above.
Current report
Net sales in the first six months of 2026 decreased 7% compared to the same period of 2025 and consisted of a 4% decrease in selling prices and a 4% decrease in unit organic sales, partially offset by a 1% contribution from acquisitions. Organic unit changes within this segment consist of decreases of 7% in Factory Built and 8% in Site Built, partially offset by increases of 13% in Commercial and 10% in Concrete Forming.
Current report
Gross profit decreased by $23 million, or 12%, for the first six months of 2026 compared to the same period of 2025. The change in our gross profit was attributable to the following:
Current report
SG&A decreased by approximately $1 million, or 1%, in the first six months of 2026 compared to the same period of 2025. Accrued bonus expenses decreased $5 million and totaled $15 million for the first six months of 2026. The decrease in SG&A was partially offset by increases in wages and benefits totaling $2 million, professional fees totaling $1 million and travel expenses totaling $1 million.
Current report
Earnings from operations decreased in the first six months of 2026 compared to the same period of 2025 by $22 million, or 35%, due to the factors mentioned above.
Removed paragraphs (5)
Previous report
Lumber prices in 2026 remain lower due to overall weak demand in the end markets that primarily consume softwood lumber – new housing, housing repair and remodel activity, and industrial (including packaging). Recent sequential increases are primarily due to recent mill capacity curtailments as they attempt to better align supply with demand. Weak overall demand has been impacted by a variety of factors, including higher inflation and interest rates as well as lower consumer sentiment and greater economic uncertainty.
Previous report
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 importers of record to submit refund requests related to tariffs issued under the IEEPA. The Company has submitted refund requests for tariffs paid to CBP under the IEEPA 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 refund will be paid, and we have not accrued any receivable relating to these potential refunds. It is anticipated that the administration will file appeals or take other action with respect to orders issued by CIT concerning the refund process. As a result, there is uncertainty as to the timing and extent of refund payments.
Previous report
Gross profits decreased by $9 million, or 13%, for the first quarter of 2026 compared to the same period last year. The change in gross profit was attributable to the following:
Previous report
SG&A decreased by approximately $1 million, or 2%, in the first quarter of 2026 compared to the same period of 2025. Accrued bonus expense decreased by $4 million and totaled $6 million for the quarter. This decrease was partially offset by an increase in legal fees and settlements of $2 million and an increase in healthcare costs of $1 million.
Previous report
Earnings from operations decreased in the first quarter of 2026 compared to 2025 by $13 million, or 45%, due to the factors mentioned above.
Reworded paragraphs (31)
Previous wording
Our results for the first quarter of 2026 include the following highlights:
Current wording
Our results for the second quarter of 2026 include the following highlights:
Previous wording
In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprise approximately 73% of our total lumber purchases.
Current wording
In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprise approximately 76% of our total lumber purchases.
Previous wording
Finally, a Spruce Pine Fir (“SPF”) composite price, which we prepare and use, is presented below. Our purchases of this species comprise approximately 12% of our total lumber purchases.
Current wording
Finally, a Spruce Pine Fir (“SPF”) composite price, which we prepare and use, is presented below. Our purchases of this species comprise approximately 11% of our total lumber purchases.
Previous wording
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% and 43.8% of our sales in the first three months of 2026 and 2025, respectively.
Current wording
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 43.7% and 42.9% of our total net sales in the first six months of 2026 and 2025, respectively.
Previous wording
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 profits are more stable than those of our competitors who are less diversified.
Current wording
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 profit is more stable compared to our competitors who are less diversified.
Previous wording
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 March 28, 2026, 82% of our lumber purchases are from domestic suppliers, 10% are imported from Canada, and 8% are imported from other international suppliers.
Current wording
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 June 27, 2026, 84% of our lumber purchases were from domestic suppliers, 9% were imported from Canada, and 7% were imported from other international suppliers.
Previous wording
Recent geopolitical events have contributed to an increase in our costs across the enterprise, primarily related to fuel and transportation. In the first quarter of 2026, we estimate that we absorbed an additional $3 million of these costs which adversely impacted our profitability in March. These costs continued to increase in April. We are taking actions intended to recover these costs through pricing to our customers. 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.
Current wording
A 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 second quarter of 2026, we estimate that we incurred an additional $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 the “spot” market with market rates up over 30% excluding fuel. These market conditions have resulted in $6 million in additional fuel costs and $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 our transportation 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.
Previous wording
We did not complete any business combinations in the first quarter of 2026 and completed two in fiscal 2025. The annual historical sales attributable to these acquisitions are approximately $24 million in aggregate. These business combinations are not significant to our quarterly results and thus proforma results for 2026 and 2025 are not presented.
Current wording
We completed three business combinations in the second quarter of 2026 and two in fiscal 2025. The annual historical sales attributable to these acquisitions are approximately $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.
Previous wording
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, selling, general, and administrative expenses, and operating profits as presented in the following table.
Current wording
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 profit, selling, general, and administrative expenses, and operating profits as presented in the following table.
Previous wording
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 and selling at lower prices, which has reduced our gross profits.
Current wording
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 reflecting lower selling prices as well as higher transportation costs, which have reduced our gross profit.
Previous wording
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 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 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.
Current wording
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 “All Other” in the table below. The “Corporate” segment 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.
Previous wording
Our overall unit sales of value-added products were down 6% in the first quarter of 2026 compared to the prior year. Our overall unit sales of commodity-based products decreased approximately 12% in the first quarter of 2026 compared to the prior year.
Current wording
Our overall unit sales of value-added products were up 4% in the second quarter and down 1% in the first six months of 2026 compared to the prior year. Our overall unit sales of commodity-based products were flat in the second quarter and down 3% in the first six months of 2026 compared to the prior year.
Previous wording
Net sales in the first quarter of 2026 decreased by 12% compared to the same period of 2025 due to a 13% decrease in units and a 1% increase in selling prices. Our unit sales to big box customers, which we believe are more closely correlated with repair and remodel activity, decreased approximately 15%, while unit sales to independent retailers, which we believe are more closely correlated to new housing starts, decreased approximately 8%. The 15% decline in ProWood volume is primarily due to unfavorable winter weather across the Midwest and Northeast, the absence of storm-related demand which carried over from the fall of 2024 into early 2025, the loss of low margin commodity sales which commenced in the second quarter of 2025, and generally weaker consumer sentiment. UFP Edge unit sales declined 20% due to the closure of the Bonner, MT facilities at the end of 2025 and rationalizing product portfolio to those that can achieve profitability targets. Deckorators’ unit sales increased 2% compared to the same period of 2025. Within that business unit, sales of wood-plastic composite decking and Surestone™ mineral-based composite decking increased 27% and 4% from the prior year, respectively. The increases were offset by railings, which declined 6% from the prior year.
Current wording
Net sales in the second quarter of 2026 increased by 4% compared to the same period of 2025 due to a 3% increase in selling prices and a 2% increase due to acquisitions, partially offset by a 1% decrease in organic unit sales. Organic unit changes within this segment consisted of a 17% decrease in Edge and a 1% decrease in ProWood, partially offset by a 9% increase in Deckorators. Of the 25% year over year increase in net sales for our Deckorators business unit, wood-plastic composite decking and mineral-based-composite decking (sold under our new Surestone tradename) increased 85% and 37%, respectively. An acquired business contributed 13% in sales growth to Deckorators and 51% in sales growth to wood-plastic composite decking sales. These increases were partially offset by railings which declined 17%. Our unit sales to big box customers, which we believe are more closely correlated with repair and remodel activity, increased approximately 2%, while unit sales to independent retailers, which we believe are more closely correlated to new housing starts, decreased approximately 2%. The decline in ProWood volume is primarily due to weaker consumer sentiment and economic uncertainty resulting in a softening of demand to complete repair and remodel projects.
Previous wording
Gross profits decreased by $1 million, or 1% to $81 million for the first quarter of 2026 compared to the same period last year. The change in gross profit was attributable to the following:
Current wording
Gross profit increased by $1 million, or 1% to $115 million for the second quarter of 2026 compared to the same period of 2025. The change in gross profit was attributable to the following:
Previous wording
SG&A increased by $1 million, or 1%, in the first quarter of 2026 compared to the same period of 2025 primarily due to an increase in advertising costs related to our efforts to build brand awareness of our Deckorators Surestone™ decking. Accrued bonus expense, which varies primarily with the overall profitability and return on investment of the segment, remained flat from the first quarter of 2025 and totaled $9 million for the quarter.
Current wording
SG&A increased by $4 million, or 7%, in the second quarter of 2026 compared to the same period of 2025. The increase was caused by a $1 million increase due to acquired operations, a $1 million increase in professional fees, and a $2 million increase in expenses across several other categories. Accrued bonus expense, which varies with overall profitability and return on investment of the segment remained flat from the second quarter of 2025 and totaled $15 million for the quarter.
Previous wording
Earnings from operations decreased in the first quarter of 2026 compared to 2025 by $2 million, or 7%, as a result of the factors mentioned above.
Current wording
Earnings from operations decreased in the second quarter of 2026 compared to the same period of 2025 by $4 million, or 7%, as a result of the factors mentioned above.
Previous wording
Net sales in the first quarter of 2026 decreased 4% compared to the same period of 2025, due to a 3% decrease in organic unit sales, and a 2% decrease in pricing, partially offset by an acquired business by PalletOne that contributed 1% to unit growth. Organic unit changes consist of an 11% decrease in PalletOne, partially offset by a 5% increase in Protective Packaging, while Structural Packaging remained flat.
Current wording
Net sales in the second quarter of 2026 increased 7% compared to the same period of 2025, due to a 4% increase in organic unit sales and a 4% contribution from business acquisitions. These increases were partially offset by a 1% decrease in selling prices. Organic unit changes consist of a 15% increase in Protective Packaging and an 8% increase in Structural Packaging, partially offset by a 3% decrease in PalletOne. Acquisitions contributed an additional 12% in unit sales growth to PalletOne.
Previous wording
SG&A decreased by approximately $3 million, or 5%, in the first quarter of 2026 compared to the same period of 2025. Accrued bonus expense 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.
Current wording
SG&A increased by approximately $2 million, or 6%, in the second quarter of 2026 compared to the same period of 2025. The 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 expense, which decreased approximately $2 million relative to the same period of 2025 and totaled $6 million for the quarter.
Previous wording
Earnings from operations decreased in the first quarter of 2026 compared to 2025 by $7 million, or 30%, due to the factors discussed above.
Current wording
Earnings from operations decreased in the second quarter of 2026 compared to the same period of 2025 by $12 million, or 44%, due to the factors discussed above.
Previous wording
Net sales in the first quarter of 2026 decreased 10% compared to the same period of 2025 due to a 5% decrease in selling prices resulting from competitive price pressure in our Site-Built business unit, and a 5% decrease in unit sales. We experienced a unit sales decrease in Site-Built of 14%, due to weaker demand for housing, and a unit sales decrease of 7% in Factory Built, primarily due to lost market of certain low margin commodity products. These decreases were partially offset by 14% unit growth 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.
Current wording
Net sales in the second quarter of 2026 decreased 4% compared to the same period of 2025 due to a 3% decrease in selling prices due to competitive price pressure in our Site-Built business unit and a 2% decrease in organic unit sales, partially offset by a 1% contribution from acquisitions. We experienced organic unit sales decreases of 6% in Factory Built and 3% in Site-Built due to weaker demand for housing, which was partially offset by an 11% increase in Commercial and a 6% increase in Concrete Forming.
Previous wording
Gross profits decreased by $13 million, or 15%, in the first quarter of 2026 compared to the same period of 2025. The change in our gross profit was comprised of the following:
Current wording
Gross profit decreased by $10 million, or 10%, in the second quarter of 2026 compared to the same period of 2025. The change in our gross profit was attributable to the following:
Previous wording
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% in the first quarter of 2026 compared to 21.1% in the same period of 2025. The increase in our effective tax rate for the first quarter was primarily due to a decrease in our tax deduction from stock-based compensation accounted for as a permanent difference.
Current wording
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 26.3% in the second quarter of 2026 compared to 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 six 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.
Previous wording
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 increased to 68 days from 62 days during the first quarter of 2026 compared to the same period of the prior year.
Current wording
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 63 days from 60 days during the first six months of 2026 compared to the same periods of the prior year.
Previous wording
The increase in our days supply of inventory for the first quarter of 2026 is due to slower inventory turns in our Retail segment due to 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. 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 first quarter of 2026 and 2025, respectively.
Current wording
The increase in our days supply of inventory for the first six months of 2026 is due to slower inventory turns in our Retail segment as a result of an increase in safety stock and weaker than anticipated demand in the first quarter. We continue to focus on past due account balances with customers, and the percentage of our accounts receivable that are current was 94% at the end of the second quarter of 2026 and 2025.
Previous wording
In the first three months of 2026, our cash flows used in operations were $104 million and were comprised of net earnings of $51 million and $48 million of non-cash expenses, offset by a $203 million increase in working capital since the end of December 2025 due to seasonal demand. Our cash flows used in operations decreased by $5 million compared to the same period of the prior year primarily due to the increase in our investment in net working capital since year end, which was $36 million lower in 2026 compared to 2025, partially offset by a $31 million decline in our net earnings and non-cash expenses. We anticipate the seasonal increase in net working capital in 2026 will be converted to cash by early in the fourth quarter.
Current wording
In the first six months of 2026, our cash flows from operations were $61 million which consisted of net earnings of $134 million and $95 million of non-cash expenses, partially offset by a $169 million increase in working capital since the end of December 2025 due to seasonal demand. Our cash flows from operations decreased by $52 million compared to the same period of 2025 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 $2 million higher in the first six months of 2026 compared to the first six months of 2025. We anticipate the seasonal increase in net working capital in 2026 will be converted to cash by early in the fourth quarter.
Previous wording
Purchases of property, plant, and equipment of $48 million comprised most of our cash used in investing activities during the first three months of 2026. Outstanding purchase commitments on existing capital projects totaled approximately $108 million on March 28, 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, 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.
Current wording
Purchases of property, plant, and equipment comprised $87 million of our cash used in investing activities during the first six months of 2026. Outstanding purchase commitments on existing capital projects totaled approximately $108 million on June 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 Deckorators business 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).
Previous wording
Cash flows used in financing activities during the first three months of 2026 primarily consisted of the following:
Current wording
Cash flows used in financing activities during the first six months of 2026 primarily consisted of the following:
Previous wording
On March 28, 2026, we had no amount outstanding on our $750 million revolving credit facility, and we had approximately $711 million in remaining availability after considering $39 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 which may be sold. We were in compliance with all our covenant requirements on March 28, 2026.
Current wording
On June 27, 2026, we had no amount outstanding on our $750 million revolving credit facility, and we had approximately $708 million in remaining availability after considering $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 that may be sold. We were in compliance with all of our covenant requirements as of June 27, 2026.
Previous wording
At the end of the first quarter of 2026, we had approximately $2.0 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.
Current wording
At the end of the second quarter of 2026, we had approximately $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.
Previous wording
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. Additionally, we anticipate:
Current wording
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, with most to be realized in the third and fourth quarters. Additionally, we anticipate:
Previous wording
The following factors should be considered when evaluating our future sales and gross profits:
Current wording
The following factors should be considered when evaluating our future sales and gross profit:
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
See Notes to the Unaudited Interim Condensed Consolidated Financial Statements, Note F, “Business Combinations” for additional information.