UFP Industries Inc: Form 10-K for the period ended Dec 27, 2025

General Development of the Business.

UFP Industries, Inc. (“we,” “our,” “the Company,” or “UFP”) is a holding company with subsidiaries throughout the United States, Mexico, Canada, Spain, India 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.

For information relating to current developments in our business please see "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in Item 7 below.

Financial Information About Segments.

ASC 280, *Segment Reporting (“*ASC 280”) defines operating segments as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance.

Our business segments consist of UFP Retail Solutions (“Retail”), UFP Packaging (“Packaging”) and UFP Construction (“Construction”), and align with the end markets we serve. Among other advantages, this structure allows for a more specialized and focused 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. In the case of locations that serve multiple segments, results are allocated and accounted for by segment.

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, and our Ardellis segment, which represents our wholly owned fully licensed captive insurance company based in Bermuda. Our International segment and Ardellis are referred to as “All Other” throughout this report.

“Corporate” includes purchasing, transportation, corporate ventures, and administrative functions that serve our operating segments. Operating results of Corporate primarily consist 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.

Narrative Description of Business.

Historically, we owned and operated a number of manufacturing facilities across North America that served our various markets, and we managed those operations primarily on a geographic basis. As part of that structure, the managers of those facilities and geographic business units were responsible for and compensated on the basis of each facility's, unit's, and region's respective financial performance. This structure fostered a strong entrepreneurial and sales culture, as well as significant revenue growth – from 2011 to 2019 our revenues increased from $1.8 billion to $4.4 billion. We believe that the duration and durability of our relationships with many of our customers, which extend over several decades with certain key customers, is a reflection of our strong sales culture and intense focus on providing custom solutions.

Our current structure focuses on our end markets which allows us to better serve our customers, recognize and exploit market opportunities, enhance the efficiency of our operations, and improve the deployment of capital. We continue to maintain our existing compensation philosophy and practices of rewarding the financial performance of our plants, business units, and segments, based upon pre-bonus operating profits and return on investment, to preserve our strong entrepreneurial and sales culture.

Our business segments are functionally interdependent and are supported by common corporate services, such as accounting and finance, information technology, human resources, legal and compliance, and others. We regularly invest in automation and create best practices to improve the efficiency of our manufacturing facilities across each of the segments. The results and improvements from these investments are shared among the segments. This exchange of improvements and ideas has also prompted better and faster innovation for new products, processes, and product improvements.

Importantly, our structure allows us to evaluate market conditions and opportunities, while effectively allocating capital and resources to the appropriate segments and business units. We believe that the diversification and manner in which we operate our business provides an inherent hedge against the inevitable business cycles that our markets experience and over which we have little control. Accordingly, our goal is to provide stable earnings and cash flows to our shareholders. Our diversification and operating practices also mitigate the impact of volatile lumber market conditions experienced by traditional lumber companies.

Retail Solutions segment. Our Retail Solutions segment is comprised of the following business units: ProWood, Deckorators and UFP Edge. The segment is focused on distinct product offerings which are grouped by brands and business units. These groupings may change periodically as opportunities to gain efficiencies occur or new products that deliver increased scale and synergy are developed. The segment primarily sells to three main verticals including big box retailers, independent distributors, and distribution centers including two-step distributors.

ProWood. Our ProWood business unit manufactures and sells pressure-treated lumber products, including decking, fencing, and lattice, as well as decorative and functional lawn and garden products to building products retailers across the U.S. This business unit includes our branded ProWood line of pressure-treated and fire-retardant products used primarily for outdoor decking environments, including associated accessories. It also includes our branded Outdoor Essentials line of lawn and garden products, consisting of wood and vinyl fencing and lattice, garden beds and planters, pergolas, picnic tables, and other landscaping products. Numerous pressure-treaters exist on local and regional scales with none approaching the volume sold by UFP. We estimate we produce approximately 28% of all residential treated wood, 17% of all wood fencing, and 7% of all fire-retardant wood products within the U.S.

Deckorators. This business unit includes the manufacture of wood plastic composite and our patented Surestone™ mineral based composite decking and related decking accessories, including aluminum railing systems, balusters, post caps, and similar products, as well as customized, aluminum fencing. Customers include big box home improvement retailers, regional home centers and two-step distributors. We estimate we manufacture approximately 6-8% of all composite decking and railing in the U.S.

UFP Edge. This business unit manufactures and sells exterior siding, pattern, trim and fascia products. These products include traditional wood, engineered wood and modified wood siding with a variety of finish and profile alternatives as well as primed wood trim boards and fascia. The products also include interior pattern and trim products, as well as pre-painted and primed shiplap and project boards.

UFP Retail Solutions has numerous competitive advantages. We are not aware of any competitor that currently manufactures, treats and distributes a full line of both value-added and commodity-based products, on a national basis, as we do within this segment. We believe the breadth of our product offering, scale and geographic dispersion, proximity of our plants to core customers and key vendors, product innovation initiatives, purchasing and manufacturing expertise, procurement advantages, and service capabilities provide us a competitive edge in this segment.

We supply customers in this segment from many of our locations. Our facilities supply mixed truckloads of products delivered to customers with rapid turnaround. Freight costs are a factor in the ability to competitively service this market, especially with treated wood products due to their weight. The proximity of our manufacturing facilities to customer locations is factored into annual sales programs. The Retail segment services two of our largest customers, The Home Depot and Lowes, which accounted for approximately 17% and 11%, respectively, of our total net sales in fiscal 2025, 17% and 11%, respectively, in 2024, and 17% and 12%, respectively, in 2023.

See Note M "Segment Reporting" to our consolidated financial statements for the fiscal year ended December 27, 2025 in Item 8 for our disaggregated net sales by business unit for our Retail Solutions segment.

Packaging segment. Our Packaging segment is comprised of the following business units: Structural Packaging, PalletOne, and Protective Packaging Solutions. We serve a wide variety of regional, national, and global customers across several verticals including building materials, durable goods, agricultural, moving and storage, heavy equipment and automotive.

Structural Packaging. This business unit designs, engineers, manufactures and tests custom packaging products primarily made of wood and metal. These products are custom designed, often including mixed materials, and manufactured based upon specific customer needs and requirements. We utilize combinations of various materials through industrial engineering and testing to promote the best value and functionality for our customers. In Structural Packaging there are regional companies that produce similar product lines and small single-location competitors in most of our markets. We estimate our domestic market share in Structural Packaging to be 10-12%.

PalletOne. This business unit designs and manufactures pallets primarily made of wood and heat-treated wood. Our pallets are designed and manufactured in numerous sizes and configurations and are used by our customers for shipping a wide assortment of consumer and industrial products. This business unit also includes a recycling operation of previously used pallets. Keys to our success in this business unit are low-cost production through expanded automation, including robotics and high efficiency pallet machines, and the procurement of competitively priced industrial grade wood fiber. We own 50% of Dempsey Wood Products, LLC (“Dempsey”), which produces pallet lumber and other industrial wood products in Orangeburg, South Carolina. The lumber Dempsey produces is a crucial product for pallet operations and has been in short supply as larger mills produce less of this type of lumber. PalletOne’s investment in Dempsey helps it secure and grow a critical long-term supply source. There are numerous local and regional pallet manufacturers that compete with PalletOne. We estimate that, as the largest supplier, we manufacture approximately 8-10% of new machine-built pallets nationally.

Protective Packaging Solutions. This business unit consists of a wide variety of products, such as corrugate, foam, labels, strapping and films. These products are primarily sold as additional offerings to our structural packaging products and pallets and are generally sold as a means of providing a more complete solution to our customers' packaging needs and requirements. Over the last several years, we have added additional products and services to this business unit to meet the increasing demand of our customers to provide a wider array of innovative solutions to their packaging and shipping needs. Through the acquisitions of Advantage Label in Grand Rapids, Michigan, and Titan Manufacturing, a highly-automated corrugate converter in Flower Mound, Texas, we have become a manufacturer of labels and corrugate boxes, two significant growth categories for UFP Packaging.

Competitive advantages for UFP Packaging include: being a low cost pallet producer due to our supply agreements, investments in vertical integration, and level of automation in our manufacturing plants; our scale and ability to serve large global, national and regional customers; design and engineering expertise, coupled with our ability to manufacture structural packaging with mixed materials, allowing us to provide creative, value-added solutions to our customers; and serving as a single-source supplier offering a wide breadth of products, allowing customers to buy more efficiently.

We plan to acquire companies across the industrial packaging spectrum with capabilities in product categories that allow us to fill geographical gaps that enhance our ability to offer valuable packaging solutions to our customers.

See Note M "Segment Reporting" to our consolidated financial statements for the fiscal year ended December 27, 2025 in Item 8 for our disaggregated net sales by business unit for our Packaging segment.

Construction segment. Our Construction segment is comprised of the following business units: Factory-Built Housing, Site-Built Construction, Commercial Construction, and Concrete Forming.

Factory-Built Housing. This business unit designs and manufactures roof trusses, cut-to-size dimensional and board lumber, plywood, and oriented strand board, all intended for use in the construction of manufactured housing. Our three main verticals in this business unit include producers of mobile, modular and prefabricated homes and, to a lesser extent, recreational vehicles (RV) and cargo trailers. Our principal competitive advantages include our product knowledge, the strength of our engineering support services, the proximity of our regional facilities to our customers, our purchasing and manufacturing expertise and our ability to provide national sales programs to certain customers. As a result of these advantages, we estimate we produce approximately 35% of all roof trusses used in factory-built housing in the United States. We also distribute products such as siding, electrical, plumbing, and many other specialty products to factory-built housing and RV customers. Customer vertical integration strategies have affected us in certain regions, and we’ve taken steps to mitigate this risk by increasing our value as a supplier through innovation and low cost production.

Site-Built Construction. This business unit designs and manufactures roof and floor trusses, wall panels, I-joists and lumber packages as well as engineered wood components used to frame residential and light commercial projects. Historical acquisitions, including Atlantic Prefab, Inc., Exterior Designs, LLC, Patriot Building Systems, LLC, and Endurable Building Products have given the Company manufacturing capability in alternate material components such as metal trusses, sheathed and pre-finished light gauge metal wall panels and aluminum balconies, decks and rail accessories. We also provide framing services for builders in certain regional markets in which we erect the wood structure. We’ve made a variety of investments in automation, allowing us to enhance efficiency and capacity in numerous UFP Construction operations. Our proprietary smartphone application, TrussTrax, provides a convenient, simple way for builders to track orders, shipments and engineered documents 24 hours a day, and has enjoyed wide customer adoption. Our customers in this market are primarily large-volume, multi-tract builders and smaller volume custom builders. We also supply builders engaged in multi-family and light commercial construction. We currently estimate that approximately 70% of the unit's business is for single-family homes while 30% is for multi-family structures.

Competition in site-built construction consists of numerous national and regional building products dealers who also manufacture components and/or provide framing services, as well as regional manufacturers of engineered wood components. We believe our primary competitive advantages relate to the engineering and design capabilities of our staff, purchasing and manufacturing expertise, product quality, timeliness of delivery, and financial strength, as well as providing a comprehensive turn-key package, including installation in selected markets. As a result of these strengths, we estimate we produce approximately 12% of all engineered wood components used in housing in the United States. Generally, terms of sale and pricing are determined based on contracts we enter into with our customers. We currently supply customers in these markets from manufacturing facilities in many different states, primarily located in the non-urban Northeast, mid-Atlantic, Southeast, Texas, and Colorado. We have intentionally avoided markets that have experienced more severe demand volatility for housing. Also, the states in which we have a presence are forecasted to continue to benefit from migration trends in the United States. Freight costs are a factor in the ability to competitively service this market due to the space requirements of these products on each truckload.

Commercial Construction. Our commercial construction business unit primarily includes the operations of idX Holdings, Inc. idX is a designer, manufacturer and installer of highly customized interior fixtures, casework and architectural millwork used in a variety of retail and commercial structures. This business unit serves customers throughout North America and to a lesser extent, Asia and Europe, in healthcare, hospitality, quick service restaurants, retail, and financial, offering comprehensive, streamlined solutions and customized products while managing programs from concept through completion, on a global scale. We believe we are one of the top five custom interior environment providers globally and the largest diversified custom solutions provider.

Concrete Forming. This business unit designs, manufactures and supplies wood forms and related products that are used by our customers to set or form concrete for various structures. This business unit serves four verticals including residential building, non-residential building, distribution, and infrastructure. Our customers in this business unit include general contractors as well as distributors. We believe we are unique in our ability to deliver highly engineered, factory-built solutions to job sites.

We believe the diversification of the end markets we serve in our Construction segment as well as the breadth of our products and services represent competitive advantages.

See Note M "Segment Reporting" to our consolidated financial statements for the fiscal year ended December 27, 2025 in Item 8 for our disaggregated net sales by business unit for our Construction segment.

UFP Purchasing/Suppliers. Our purchasing team manages and purchases wood fiber for each of our segments. The three main end markets for softwood lumber in North America – retail, construction, and packaging – align with our three business segments We are the largest converter of solid sawn softwood lumber from North American primary producers (lumber mills). For 2025, we estimate we purchased approximately 6.4% of the 56 billion board feet of North America softwood lumber production. The volume and variety of lumber dimensions purchased allows us to consume all grades and dimensions of what many of our mill suppliers produce, effecting and maintaining long-term, beneficial relationships with many of those suppliers. In turn, this has allowed us to better manage our raw materials inventory (including vendor-managed inventory), lower our costs, and mitigate the volatility of lumber prices.

We use primarily southern yellow pine in our pressure-treating operations and our site-built housing, structural packaging, and machine-built pallet operations in the Southeastern United States. Southern yellow pine is sourced from mills ranging from Texas to the Carolinas. We also use spruce-pine-fir from both Eastern and Western Canada; hemlock, douglas fir and cedar from the Pacific Northwest; inland species of pine, plantation grown radiata and southern yellow pines from South America; and various European softwoods. During 2025 our annual purchases of lumber, excluding panels, totaled approximately $1.7 billion and consisted of the following species and their respective percent of total lumber purchases: southern yellow pine (75%), spruce-pine-fir (12%), and douglas fir (4%), while the remaining 9% of lumber purchases comprise various other species and imports outside of North America. Additionally, we purchased approximately $545 million in plywood and $464 million in other panel products in 2025. There are numerous primary producers for all varieties we use, and we are not dependent on any particular source of supply.

Intellectual Property. We own numerous patents and have several patents pending on technologies related to our business. Examples include our Deckorators brand of composite decking and railing and its proprietary, patented Surestone™ technology used to produce mineral-based composite decking; TrussTrax, a mobile application offered to our Site-Built customers; and the ProWood brand of pressure-treated lumber and outdoor living products. In addition, we own numerous registered trademarks and claim common law trademark rights to several others. As we develop proprietary brands, we may pursue registration or other formal protection. While we believe our patent and trademark rights are valuable, the loss of a patent or any trademark would not be likely to have a material adverse impact on our competitive position.

Backlog. Due to the nature of our retail and industrial businesses, backlog information is not meaningful. The maximum time between receipt of a firm order and shipment does not usually exceed a few days. Therefore, we would not normally have a backlog of unfilled orders in a material amount. The relationships with our major customers are such that we are either the exclusive supplier of certain products and/or certain geographic areas, or the designated source for a specified portion of a customer's requirements. In such cases, either we are able to forecast the customer's requirements, or the customer may provide an estimate of its future needs. In neither case, however, will we receive firm orders until just prior to the anticipated delivery dates for the products ordered.

On December 27, 2025 and December 28, 2024, we estimate that backlog orders associated with our customized interior fixture businesses approximated $56.6 million and $41.9 million, respectively. On December 27, 2025 and December 28, 2024, we estimate that backlog orders associated with our site-built construction businesses approximated $45.9 million and $74.4 million, respectively. The decline is due to a decrease in demand and slowdown associated with tariff policy. We expect that the orders above will be primarily filled within the next fiscal year; however, it is possible that some orders could be canceled.

Environmental. We are self-insured for environmental impairment liability, including certain liabilities which are insured through a wholly owned subsidiary, Ardellis Insurance Ltd., a licensed captive insurance company.

Seasonality. Seasonality has a significant impact on our working capital due to our primary selling season occurring 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. Please also see the risk factor in Item 1A. Risk Factors under the caption “Seasonality and weather conditions, including those arising from climate change, could adversely affect us.”

Human Capital Management. On December 27, 2025, we had approximately 13,800 employees. For over 70 years, the success of our company has rested on the skill, motivation and performance of our employees. We treat our people honestly and fairly, creating career paths and training opportunities to develop and expand their scope of responsibilities and financial rewards. This approach to human capital, which is embedded in the Company's culture, has fostered an environment where our employees often commit their respective careers to UFP Industries, Inc.

Environmental, Social, and Governance. Matters of sustainability, health and safety, employee welfare, supply chain management, and community engagement are managed by our executive team, with oversight from our Nominating and Corporate Governance and Personnel and Compensation Committees. In July 2025, we published on our website our fiscal year 2024 “Governance Report,” detailing our responsible practices as well as our future outlook. We anticipate publishing on our website our fiscal year 2025 Governance Report during 2026.

Our manufacturing operations have a long history of environmental stewardship through efficiency and energy savings, waste management, and responsible product sourcing. We quantified our 2024 Scope 1 and Scope 2 greenhouse gas (GHG) emissions in our fiscal year 2024 Governance Report and plan to disclose our 2025 Scope 1 and Scope 2 GHG emissions in 2026.

We are driven by operational excellence throughout the enterprise and by cultivating a unique culture that provides significant opportunity for professional and personal growth. In managing our human capital, we have focused our efforts on employee health and safety, equal opportunity for all, and learning and development.

At UFP, we welcome all who are willing to work hard. We do not discriminate in hiring, promotion, or opportunity – we believe the best performers should be rewarded commensurately. We prefer hiring people with potential and helping them grow and achieve their goals within our company. To provide opportunity to a broader base of our teammates, we removed the requirement of a 4-year degree for sales and management positions and give credit for work experience. We use our internal training programs and UFP Business School to help employees gain functional knowledge and hone the skills and competencies that allow them advancement to greater roles and responsibilities.

We have a long history of supporting talented and hard-working employees go from factory floor to management, sales and operations roles. These transformations require diligence and dedication, and they demonstrate that regardless of background, our teammates at UFP have a chance to make a better life for themselves and their families. We also recognize the need to hire talented individuals from outside the company who bring special expertise and innovative skills to UFP.

Available Information.

Our Internet address is www.ufpi.com (http://www.ufpi.com). Through our Internet website under "News Filings & Reports – SEC Filings" in the Investor Relations section, we make available free of charge, as soon as reasonably practical after such information has been filed with the SEC, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act. Also available through our Internet website under " Governance – Governance Documents” in the Investor Relations sections is our Code of Ethics for Senior Financial Officers.

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 a continuation of soft demand within our markets into 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), including our import of Canadian Softwood Lumber of approximately $174.9 million in 2025 (compared to $211.8 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 in 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.

Our growth may be limited by the customer demand in the markets we serve, including our construction market which is highly cyclical. Our sales growth is dependent, in part, upon the growth of the markets we serve. If our markets do not achieve anticipated growth, or if we fail to maintain our market share, financial results could be impaired.

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.

A significant portion of our sales are concentrated with two customers. Our sales to The Home Depot and Lowes comprised 17% and 11%, respectively, of our total net sales in fiscal 2025, 17% and 11%, respectively, in 2024, and 17% and 12%, respectively, in 2023.

We may be impacted by vertical integration strategies. In certain markets and product lines, our customers or vendors could pursue vertical integration strategies that could have an adverse effect on our sales. We strive to add value and be a low-cost producer while maintaining competitive pricing in each of our markets to mitigate this risk.

We may be impacted by industry capacity of products we supply. From time to time, we may experience excess capacity among suppliers of certain products in some of the markets we serve. Our selling prices and profitability are impacted during periods of shortages or excess industry capacity relative to market demand. We may also experience limited capacity among suppliers of certain products as a result of supply chain challenges, which may impact our profitability and ability to meet sales objectives.

Our growth may be limited by our ability to make successful acquisitions. A key component of our growth strategy is to complete business combinations. Business combinations involve inherent risks, including assimilation and successfully managing growth. While we conduct extensive due diligence and have taken steps to ensure successful assimilation, factors beyond our control could influence the relative success of these acquisitions.

We may be adversely affected by the impact of environmental and safety regulations. We are subject to the requirements of federal, state, and local environmental and occupational health and safety laws and regulations. There can be no assurance that we are at all times in complete compliance with all of these requirements. We have made and will continue to make capital and other expenditures to comply with environmental regulations. If additional laws and regulations are enacted, which restrict our ability to manufacture and market our products, including our treated lumber products, it could adversely affect our sales and profits. Changes in the interpretation of existing laws could also adversely impact our financial results.

Seasonality and weather conditions, including those arising from climate change, could adversely affect us. Some aspects of our business are seasonal in nature and results of operations vary from quarter to quarter. In addition, the majority of our products sold to the Retail and Construction markets are used or installed in outdoor construction applications; therefore, short-term sales volume, productivity and gross profits can be negatively affected by adverse weather conditions, particularly in our first and fourth quarters. To the extent changes in the world’s climate have a greater impact on adverse weather conditions, we would expect more variability in our business operations and results. Climate change, which could result in more and more severe and adverse weather events, would likely create greater volatility in our financial results. In addition, it is possible that new legislation or regulation enacted to address the impact of climate change could increase costs for us and our suppliers, including costs associated with raw materials, energy, production, transportation, environmental monitoring and reporting, and capital expenditures.

Inbound and outbound transportation costs represent a significant part of our cost structure. An increase in fuel and other operating expenses will significantly increase our costs. While we attempt to pass these costs along to our customers, there can be no assurance that they would agree to these price increases. Our total inbound and outbound transportation costs were approximately 9.5%, 7.8%, and 9.4% of net sales in 2025, 2024, and 2023, respectively.

New alternatives may be developed to replace traditional treated wood products. The manufacturers of wood preservatives continue to develop new preservatives. While we believe treated products are reasonably priced relative to alternative products such as composites or vinyl, new alternatives may impact the sales of treated wood products. In addition, new preservatives could increase our cost of treating products in the future.

Cybersecurity breaches or other failures in our information technology systems could disrupt our business. We rely upon information technology systems and network products and the secure operation of these systems and products. Despite security measures, these systems and products may be vulnerable to physical damage, hackers, computer viruses, or breaches due to errors or malfeasance by employees, vendors, or customers. We have experienced such events in the past and, although past events were immaterial, future events may occur and may be material. Our failure to successfully identify and manage these risks and uncertainties could disrupt our operations and increase our costs, which could negatively impact our results of operations.

Artificial intelligence (“AI”) is an emerging area of technology that has and may further impact various aspects of our business operations, and we may not be successful in our artificial intelligence initiatives, which could adversely affect our business, financial condition and/or operating results. We have made, and expect to continue making, investments in the integration of artificial intelligence into our platforms, products, and services. However, AI presents various risks, challenges, and potential unintended consequences that could disrupt our ability to effectively integrate and leverage these technologies. The integration of AI may also require significant capital investment, specialized talent, and new safety protocols, and we may be unable to recruit or retain personnel with the necessary expertise. Additionally, competitors may develop more effective or efficient AI solutions, potentially undermining our competitive position. The regulatory environment surrounding AI is still in development, and new laws or regulations could emerge that require substantial adjustments to our business practices. These changes could impose unexpected costs or operational disruptions, and the full scope and impact of such regulatory developments remain uncertain. If we suffer adverse consequences due to any of these factors, it could in turn have a material adverse effect on our financial performance and operations.

Our financial results could be negatively impacted by costs associated with product liability, casualty, manufacturing and construction defects, and other claims. From time to time, we are exposed to claims relating to product liability, casualty events, manufacturing and construction defects, and similar claims, including as the result of the conduct of our employees and subcontractors. These claims could have a negative impact on our results of operation and financial condition, including through increased litigation costs, insurance-related costs, and damage to our reputation and customer relationships.

We may be adversely affected by the impact of pandemics and similar outbreaks. Disease outbreaks could have an adverse impact on the Company's operations and financial results. These outbreaks may adversely impact our business, consolidated results of operations and financial condition. Any such outbreak, as well as measures taken by governmental authorities and businesses to limit the spread of any outbreak, may result in adverse changes in customer demand and our sales, interfere with the ability of our employees and suppliers to perform and function in a manner consistent with targeted objectives and otherwise adversely impact the efficiency of our operations. This may cause us to materially curtail certain segments and could have a material adverse effect on the results of our operations and cash flow.

Adverse economic conditions and our customers’ ability to operate may impact their ability to pay. This may result in higher write-offs of receivables than we normally experience. We continue to monitor our customers’ business activities, payment patterns, and credit profiles carefully and make changes in our terms when necessary in response to this risk. As a result, our accounts receivable aging as of December 27, 2025 was approximately 90% current. Our bad debt expense as a percentage of sales was 0.01%, 0.05%, and 0.03%, in 2025, 2024, and 2023, respectively. During the most difficult collection period of the Great Recession, from 2008 through 2010, our bad debt expense as a percentage of sales averaged 0.25%.

Risk Management and Strategy.

We recognize the importance of managing cybersecurity risks to protect our business operations, assets, data, and stakeholders. This is achieved through implementation of an enterprise-wide security risk management program, risk-based approach to cybersecurity program management, and an internal security control framework. We employ a structured approach to frame, assess, treat and monitor risks to determine if such risks are material.

Material cybersecurity risks are identified, assessed and managed in several ways. Cybersecurity risk management processes are embedded in our enterprise-level activities, business processes as well as day-to-day operations. This includes but is not limited to:

• Program foundations and standards. We established information security, cybersecurity and risk management frameworks that serve as the foundation for our cybersecurity program, which aligns with internationally recognized frameworks, including the NIST CSF and ISO 27001, as well as risk management guidelines such as NIST SP 800-37 (RMF) and ISO 27005. These frameworks have been adapted to include the assessment and management of risks associated with emerging technologies, including artificial intelligence (AI). Additional security and privacy controls are selected, implemented, assessed and monitored for organizational systems and processes that access, process, transfer or store data categorized to fall under regulatory requirements.
• Integration with enterprise risk management (ERM). Cybersecurity risk management is an integral component of our ERM program, ensuring that cybersecurity risks are aggregated and compared against other enterprise-level risks to inform strategic decision-making.
• Risk management process. Our strategic and operational risk management approach begins with risk framing activities to align the enterprise-wide cybersecurity strategy with day-to-day operations. Cybersecurity risks are identified, analyzed, evaluated, communicated, and prioritized across the organization through a comprehensive assessment. Risk responses are then managed to reflect our established risk appetite, tolerance, and thresholds. Ongoing monitoring of risk factors, treatment effectiveness, and compliance changes are performed to maintain continuous oversight and monitoring of acceptable risk levels consistent with our governance model.
• Threat monitoring, detection and response. Our dedicated Cybersecurity Incident Response Team (CSIRT) in conjunction with our Security Operations Center (SOC) monitors threats and vulnerabilities, investigates potential incidents, and coordinates response and remediation. Our Incident Response Plan is maintained and tested to verify completeness and effectiveness of its preparation, detection and analysis, containment, eradication and recovery, as well as post-incident review stages. Incidents are risk-ranked, prioritized and escalated according to defined thresholds to members of the Incident Response Team, including executive leadership, when warranted, consisting of our CIO, our Director of Cybersecurity, and other members of the executive team to facilitate timely assessment of potential materiality and coordination of required disclosures.
• Security controls and layered defense. As part of our defense in depth strategy, we operate multiple layers of frontline controls spanning network security, endpoint protection, identity and access management (including privileged access management) along with data protection and encryption safeguards. In addition to these technical frontline controls, we maintain a secondary layer of defense consisting of internal control owners and functional managers who perform regular self-assessments and monitoring of control effectiveness. This dual-layered approach is further validated by periodic independent testing and internal audits. These preventive layers are reinforced by comprehensive logging, detection, and response capabilities, ensuring that threats are identified and contained even if one control layer is bypassed. This layered approach strengthens our overall security posture by creating overlapping defenses that collectively reduce risk and improve resilience across the enterprise.
• Testing, exercises, and continuous improvement. We conduct tabletop exercises for our incident response and disaster recovery activities and perform internal and external vulnerability assessments as well as penetration testing. Lessons learned from these activities are analyzed and integrated into our policies, governance, and technology through a risk-managed approach.
• Training and awareness. Mandatory, periodic security and privacy training is provided to all employees during their onboarding and employment with our organization. This training is supplemented with phishing simulations and awareness activities on an ongoing basis.
• Use of external parties. We engage external assessors, consultants, independent auditors and, as needed, outside counsel, to evaluate aspects of our cybersecurity program, controls and overall posture. This is achieved through control audits as well as testing, exercises, and continuous improvement activities.
• Supply chain security. We monitor third party service providers and suppliers through risk-based onboarding and periodic assessments. Beyond initial and periodic evaluations, we actively monitor security events and threat intelligence related to our significant third-party providers to identify potential "downstream" incidents that could impact our systems or data. Additionally, we maintain security-focused contractual requirements and conduct risk-based continuous vendor monitoring (including targeted cybersecurity assessment correlated to vendor risk level).

As of the date of this report, we have not experienced any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. While we have not identified any such material risks to date, we recognize that the threat landscape is constantly evolving. We remain committed to our structured approach to identifying and managing these risks as a core component of our business resilience strategy.

Governance.

Management’s Role. Primary responsibility for risk management, including cybersecurity risks, lies with management. Our management team actively assesses and manages material cybersecurity risks through a structured framework. The CIO and Director of Cybersecurity lead our efforts in managing these risks:

• CIO. With over 20 years of experience in the information technology space, our CIO brings expertise and strategic insight to cybersecurity, compliance, enterprise architecture, systems resilience, and digital transformation.
• Director of Cybersecurity. With over 30 years of experience in information technology, including systems architecture and management, our Director of Cybersecurity holds the Certified Information Security Manager (CISM) designation. This expertise supports the Director's responsibility for day-to-day cybersecurity operations, the alignment of security strategies with business objectives, and the management of our information security risk framework. The Director reports directly to the CIO and leads the cross-functional team in identifying and mitigating material risks.

Our cross-functional cybersecurity team, composed of experts with decades of combined experience, supports the CIO and Director in implementing our cybersecurity program. This team consults with legal, HR, and IT specialists to assess the materiality of cybersecurity risks and incidents, using a well-established Incident Response Plan that includes clear escalation measures.

Board of Directors Oversight. The role of the Board of Directors with respect to our cybersecurity program is one of oversight of management, and the Board has delegated primary oversight authority over the program to the Audit Committee. The Audit Committee oversees these risks as outlined in its Charter, which mandates reviewing the company's information technology framework, practices, and implemented controls to monitor and mitigate IT risks.

The Audit Committee meets quarterly and receives reports and briefings from the CIO, Director of Cybersecurity, and the cybersecurity team on emerging threats, risk status, and mitigation strategies. The Committee engages with the cybersecurity team to increase their understanding of the specific issues facing the Company and to challenge the team as appropriate. The Committee also may consult external cybersecurity experts as needed to fulfill its oversight role. The Audit Committee regularly reports to the Board on matters addressed during the Committee’s quarterly meetings, including any material cybersecurity risks or developments.

Our corporate headquarters building is located in suburban Grand Rapids, Michigan. We currently have approximately 196 facilities located throughout the United States, Mexico, Canada, Spain, India and Australia. Depending upon function and location, these facilities typically utilize office, manufacturing, and indoor and outdoor storage space.

The following tables summarize our property locations assigned by the primary segment the plant serves.

RETAIL SEGMENT

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PACKAGING SEGMENT

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ALL OTHER SEGMENT

* Due to the nature of our business and historical operating strategy, many of our locations service more than one segment.

We own all of our properties, free from any significant mortgage or other encumbrance, except for approximately 73 facilities which are leased. We believe all of these operating facilities are adequate in capacity and condition to service our existing markets.

Information regarding our legal proceedings is set forth in Note L of our Consolidated Financial Statements which are presented under Item 8 of this Form 10-K.

UFP Industries, Inc. is a holding company with subsidiaries in the United States, Mexico, Canada, Spain, India 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.

OVERVIEW

We are pleased to present this overview of 2025. Our results for 2025 include the following highlights:

• Our net sales decreased 5% compared to 2024, which was comprised of a 2% decrease in selling prices and a 3% decrease in unit sales. The overall decrease in our selling prices is primarily due to more competitive pricing in our Site-Built business unit. The overall organic unit decline consists of a 7% decrease in our Retail segment and a 1% decrease in our Packaging segment, while unit sales in our Construction segment were flat compared to 2024. An acquired business contributed a 1% unit increase in our Packaging segment. We believe we maintained or gained market share in each of our business units.
• Our gross profits decreased by $167 million, or 14%, compared to last year, exceeding our 3% decrease in unit sales. By segment, gross profits decreased by $81 million in Construction, $36 million in Packaging, and $43 million in Retail. The overall decrease in our gross profits is primarily due to the decline in unit sales as a result of weaker demand, which also resulted in more competitive pricing.
• Our operating profits decreased $128 million, or 26%, compared to last year. The overall decrease is a result of the decline in gross profits above which was partially offset by a $44 million decrease in selling, general, and administrative (“SG&A”) expenses. The decrease in SG&A is due to our cost reduction efforts totaling $40 million and our incentive compensation plans (bonus and sales incentives) totaling $24 million. These decreases in SG&A were partially offset by a $20 million increase in advertising costs to build brand awareness of our Deckorators’ Surestone™ composite decking.
• Our cash flows from operations in 2025 were $546 million compared to $643 million in 2024. The $97 million decline resulted primarily from the change in our investment in net working capital, which was $54 million higher in 2025 than 2024. In 2025, working capital increased by $3 million, reflecting a $35 million decrease in current assets and a $38 million decrease in current liabilities. The prior year included a $53 million net decrease in working capital comprised of a $54 million decrease in current assets and $3 million decrease in current liabilities. Additionally, net earnings and non-cash expenses decreased $43 million compared to the prior year due to the factors stated above.
• We invested $269 million in capital expenditures, which was comprised of expansionary and efficiency capital expenditures, to support and grow our existing businesses, totaling $163 million, maintenance capital expenditures totaling $106 million, and $18 million invested in business combinations.
• We returned $82 million to our shareholders through dividends. We repurchased 4,498,835 shares of our common stock for $443 million, at an average price of $98.39 per share. Of this amount, 87,327 shares were repurchased in order to settle tax withholding obligations of long-term stock incentive plan participants’ awards that vested in 2025. These shares were purchased at an average price of $109.83 per share, totaling $10 million.
• Our Cash and cash equivalents at the end of 2025 was $914 million compared to $1.2 billion at the end of 2024. Our unused borrowing capacity under our revolving credit facility and a shelf agreement with certain lenders along with our cash resulted in total liquidity of approximately $2.2 billion at the end of December 2025. We plan to continue to pursue a balanced and return driven approach to capital allocation focused on continuing to increase our dividend at a rate that is aligned with our anticipated long-term earnings growth rate, repurchasing our common stock to offset dilution from issuances under our equity-based compensation programs, making capital investments needed to execute our organic growth and operating improvement strategies, and completing business acquisitions that complement our existing businesses and provide new avenues for growth. We will opportunistically increase repurchases of our stock when the price reaches a pre-determined level that we believe represents an attractive investment.

HISTORICAL LUMBER PRICES

The following table presents the Random Lengths framing lumber composite price.

In addition, a Southern Yellow Pine (“SYP”) composite price, which we prepare and use, is presented below. Our purchases of this species comprise approximately 75% of our total lumber purchases.

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.

Overall lumber prices in 2025 have increased compared to 2024 despite overall weak demand in the end markets that primarily consume softwood lumber – new housing, housing repair and remodel activity, and industrial (including packaging) – as a result of higher duties on Canadian lumber imported to the United States and capacity curtailments in the U.S. and Canada.

IMPACT OF THE LUMBER MARKET ON OUR OPERATING RESULTS

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 41.6% and 40.4% of our net sales in 2025 and 2024, respectively.

Our gross margins are impacted by (1) the relative level of the Lumber Market (i.e. whether prices are higher or lower from comparative periods), and (2) the trend in the market price of lumber (i.e. whether the price of lumber is increasing or decreasing within a period or from period to period). Moreover, as explained below, our products are priced differently. Some of our products have fixed selling prices, while the selling prices of other products are indexed to the reported Lumber Market with a fixed dollar adder to cover conversion costs and profits. Consequently, the level and trend of the Lumber Market impact our products differently.

Below is a general description of the primary ways in which our products are priced.

• Products with fixed selling prices. These products include value-added products, such as manufactured items, sold within all segments. Prices for these products are generally fixed at the time of the sales quotation for a specified period of time. In order to reduce any exposure to adverse trends in the price of component lumber products, we attempt to lock in costs with our suppliers or purchase necessary inventory for these sales commitments. The time period limitation eventually allows us to periodically re-price our products for changes in lumber costs from our suppliers.
• Products with selling prices indexed to the reported Lumber Market with a fixed dollar "adder" to cover conversion costs and profits. These products primarily include treated lumber, panel goods, other commodity-type items, and trusses sold to the manufactured housing industry. For these products, we estimate customers’ needs and carry appropriate levels of inventory. Because lumber costs are incurred in advance of final sale prices, subsequent increases or decreases in the market price of lumber impact our gross margins. We believe our sales of these products are at their highest relative level in our second quarter, primarily due to pressure-treated lumber sold in our retail segment.

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.

The greatest risk associated with changes in the trend of lumber prices is on the following products:

• Products with significant inventory levels with low turnover rates, whose selling prices are indexed to the Lumber Market. In other words, the longer the period of time these products remain in inventory, the greater the exposure to changes in the price of lumber. This includes treated lumber, which comprised approximately 21% of our total net sales in 2025. This exposure is less significant with remanufactured lumber, panel goods, other commodity-type items, and trusses sold to the manufactured housing market due to the higher rate of inventory turnover. We attempt to mitigate the risk associated with treated lumber through inventory consignment programs with our vendors. We estimate that 13% of our total purchases for 2025 were completed under these programs. (Please refer to the “Risk Factors” in Item 1A above for more information.)
• Products with fixed selling prices sold under long-term supply arrangements, particularly those involving multi-family construction projects. We attempt to mitigate this risk through our purchasing practices and longer vendor commitments.

In addition to the impact of the Lumber Market trends on gross margins, changes in the level of the market cause fluctuations in gross margins when comparing operating results from period to period. This is explained in the following example, which assumes the price of lumber has increased from period one to period two, with no changes in the trend within each period.

As is apparent from the preceding example, the level of lumber prices does not impact our overall profits but does impact our margins. Gross margins and operating margins are negatively impacted during periods of high lumber prices; conversely, we experience margin improvement when lumber prices are relatively low. As a result of this factor, 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.

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The 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.

BUSINESS COMBINATIONS AND ASSET PURCHASES

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 that had approximately $25 million in annual historical sales. These business combinations were not significant to our operating results; consequently pro forma results for 2025 and 2024 are not presented.

See Note C “Business Combinations” of our Consolidated Financial Statements which are presented under Item 8 below for additional information.

RESULTS OF OPERATIONS

The following table presents, for the periods indicated, the components of our Consolidated Statements of Earnings as a percentage of net sales. See “Impact of the Lumber Market on our Operating Results”.

Note: Actual percentages are calculated and may not sum to total due to rounding.

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 competitive pricing and higher material costs for most of the year, which has reduced our gross profits.

OPERATING RESULTS BY SEGMENT

Our business segments consist of UFP Retail Solutions, UFP Packaging and UFP 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” includes purchasing, transportation, corporate ventures, and administrative functions that serve our operating segments. Operating results of Corporate primarily consist 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.

The following tables present our operating results by segment for December 27, 2025 and December 28, 2024 (in thousands).

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The following tables present the components of our operating results as a percentage of net sales by segment for December 27, 2025 and December 28, 2024.

Note: Actual percentages are calculated and may not sum to total due to rounding.

Note: Actual percentages are calculated and may not sum to total due to rounding.

NET SALES

We design, manufacture and market wood and wood-alternative products, primarily used to enhance outdoor living environments sold to national home centers and other retailers; engineered wood components, structural lumber, and other products for factory-built and site-built residential and commercial construction; customized interior fixtures used in a variety of retail stores, commercial, and other structures; and structural wood packaging, components and packing materials for various industries. Our strategic long-term sales objectives include:

• Maximizing unit sales growth while achieving return on investment goals. The following table presents estimates, for the periods indicated, of our percentage change in net sales attributable to changes in overall selling prices versus changes in units shipped by segment.

• Expanding geographically in our core businesses, domestically and internationally.
• Increasing our sales of “value-added” products and enhancing our product offering with new or improved products. Value-added products generally consist of fencing, decking, lattice, and other specialty products sold in the Retail segment; structural and protective packaging and machine-built pallets sold in the Packaging segment; engineered wood components, customized interior fixtures, manufactured and assembled concrete forms sold in the Construction segment; and “wood alternative” products. Engineered wood components include roof trusses, wall panels, and floor systems. Wood alternative products consist of products manufactured with wood and non-wood composites, metals and plastics sold in each of our segments. Although we consider the treatment of dimensional lumber and panels with certain chemical preservatives a value-added process, treated lumber is not presently included in the value-added sales totals. Remanufactured lumber and panels that are components of finished goods are also generally categorized as “commodity-based” products. We estimate that approximately 80% of our sales consist of products we manufacture at our locations, while 20% of our sales consist of products manufactured by suppliers that we inventory and distribute to customers.

The following table presents, for the periods indicated, our percentage of value-added and commodity-based sales to total sales by our segments.

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Our overall unit sales of value-added products decreased approximately 1% in 2025 compared to 2024. Our overall unit sales of commodity-based products decreased approximately 3% compared to 2024.

• Developing new products. We define new products as those that will generate sales of at least $1 million per year within 4 years of launch and are still growing and gaining market penetration and meet our internal definition of value-added products. New product sales in 2025 increased 6% compared to the prior year, primarily due to an increase in unit sales in our Deckorators business unit. Approximately $76.2 million of new product sales for 2024, while still sold, were sunset in 2025 and excluded from the table below because they no longer meet the definition above. Our goal was to achieve annual new product sales of at least $550 million in 2025. Our short-term goal is to achieve annual new product sales of at least $560 million for 2026. On a long-term basis, our goal is for new product sales to comprise at least 10% of our total net sales.

The table below presents new product sales in thousands:

Retail Segment:

Net sales from the Retail segment decreased 6% in 2025 compared to 2024 due to a 1% increase in selling prices and a 7% decrease in units. Unit changes within this segment consisted of decreases of 27% in UFP Edge, as we complete the closure of our Bonner, Montana plants and transition production to other facilities, and 6% in ProWood; while Deckorators unit sales were flat. Additionally, our unit sales to big box customers, which we believe are more closely correlated with repair and remodel activity, decreased approximately 7%, while unit sales to independent retailers, which we believe are more closely correlated to new housing starts, decreased approximately 9%. The decline in ProWood volume is primarily due to higher interest rates and weaker consumer sentiment resulting in a softening of demand to complete repair and remodel projects.

Within our Deckorators business unit, our sales of wood-plastic composite decking and Surestone™ mineral-based-composite decking increased 20%. Of the 20% 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 5% and 36% from the prior year, respectively. The increases were offset by railings, which declined 23% from the prior year. The decline in our railing sales is due to lost market share with a big box customer which began impacting sales at the beginning of the year. However, we gained market share with another big box customer which began to more favorably impact the sales of our mineral-based composite decking products beginning in July with most of the growth from these market share gains expected to be realized in 2026. Our long-term goal is to double our market share of composite decking and railing over the next 5 years.

Gross profits declined by $43 million, or 11%, and totaled $346 million in 2025 compared to $389 million in 2024. The change in gross profit was attributable to the following:

• The gross profit of our ProWood pressure-treated products decreased by $25 million, primarily due to falling lumber prices in our primary selling season. Additionally, gross profits associated with our Edge products declined by $9 million due to inefficiencies and the closure of our Edge manufacturing facilities in Bonner, MT and the shift of that volume to other locations.
• The gross profit of our Deckorators business unit decreased by $9 million due to lower railing sales and inefficiencies associated with adding new capacity to produce our mineral-based composite decking. In the future, we believe this new, more efficient technology will allow us to achieve our targeted cost per unit. Additionally, our wood plastic composite plant has experienced an unfavorable change in sales mix.

Selling, general and administrative expenses (“SG&A”) within our Retail segment increased $9 million, or 4%, in 2025 compared to 2024. This increase is a result of a $20 million increase in advertising expenses primarily related to Deckorators. The increase was partially offset by a decrease in wages and benefits of $5 million, a decrease in accrued bonus expense of $5 million, and decreases across several other accounts totaling $1 million. Accrued bonus expense varies with the overall profitability and return on investment of the segment, and totaled approximately $42 million in 2025.

Earnings from operations of the Retail segment decreased in 2025 compared to 2024 by $64 million, or 36%, as a result of the factors mentioned 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 and intangible asset impairments, offset by foreign exchange gains of $3 million.

Packaging Segment:

Net sales from the Packaging segment decreased 2% in 2025 compared to 2024 due to a 2% decrease in selling prices, and a 1% decrease in organic unit sales, partially offset by an acquired business which contributed 1% to unit growth. The decrease in prices is primarily due to competitive price pressure. The decrease in units was 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.

Gross profits decreased by $36 million, or 12%, to $266 million in 2025 compared to 2024. The decrease in gross profits was attributable to the following:

• The gross profit of our PalletOne business unit decreased by a total of $17 million. The decline in gross profit is attributable to competitive price pressure as we continue to execute our strategy to gain market share.
• The gross profit of our Structural Packaging business unit decreased by $15 million primarily due to lower unit sales and competitive price pressure due to lower demand.
• The gross profit of our Protective Packaging business unit decreased by $4 million due to fixed manufacturing costs resulting in unfavorable cost variances related to new greenfield locations which more than offset the sales increase resulting from increased prices and unit sales.

SG&A expenses within the Packaging segment decreased by approximately $11 million, or 6%, in 2025 compared to 2024. The decrease in SG&A was due to decreases in insurance expense of $3 million, sales incentive compensation of $2 million, travel expenses of $2 million, accrued bonus expense of $2 million, and several smaller decreases in many accounts totaling $2 million. Accrued bonus varies with the overall profitability and return on investment of the segment, and totaled approximately $29 million for 2025.

Earnings from operations of the Packaging segment decreased by $15 million in 2025, or 15%, compared to 2024 due to the factors discussed above. The losses were offset by net gains on the disposition of assets totaling $3 million, compared to a $7 million loss in 2024.

Construction Segment:

Net sales from the Construction segment decreased 5% in 2025 compared to 2024 due to a 5% decrease in selling prices, while unit sales remained flat. Increases in unit sales of 7% in each of our Factory-Built, Commercial, and Concrete Forming business units were fully offset by a decrease in unit sales of 11% in Site-Built.

Gross profits decreased by $81 million, or 18%, to $358 million in 2025 compared to 2024. The decrease in our gross profit was comprised of the following:

• The gross profit of our Site-Built business unit decreased by $92 million due to a decline in unit sales and competitive price pressure due to weaker demand.
• The gross profit of our Concrete Forming and Commercial business units increased by $5 million and $3 million, respectively, due to the favorable impact of unit sales growth. The gross profit of our Factory-Built business unit increased by $4 million due to an increase in unit sales.

SG&A expenses within the Construction segment decreased by approximately $25 million, or 9%, in 2025 compared to 2024. Accrued bonus expense, which varies with the overall profitability of the segment and return on investment, decreased approximately $10 million compared to last year and totaled approximately $36 million for 2025. The decline in SG&A was also due to decreases in wages and benefits of $4 million, sales incentives of $4 million, insurance costs of $2 million, gains on insurance settlements of $2 million, and several smaller decreases in many accounts totaling $3 million.

Earnings from operations of the Construction reportable segment decreased by $56 million in 2025 compared to 2024, or 32%, due to the factors mentioned above.

All Other Segment:

Our All Other reportable segment consists of our International and Ardellis (our insurance captive) segments that are not significant.

Corporate:

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

INTEREST EXPENSE

Interest expense in 2025 decreased by $2 million compared to 2024 due to a $40 million debt repayment at the end of 2024 on our Series 2012 Senior Note Tranche B, which matured on December 17, 2024. See “Note E of our Consolidated Financial Statements” which are presented under Item 8 below.

INTEREST AND INVESTMENT INCOME

Interest and investment income decreased by $22.0 million in 2025 compared to 2024 due to the decrease in cash and a lower interest rate earned on those deposits as well as an impairment loss of $6.5 million on an investment in our Innov8 Fund recorded in the fourth quarter.

INCOME TAXES

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 24.5% in 2025 compared to 22.5% in 2024. The increase was primarily due to an increase in our state income tax expense as a result 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.

OFF-BALANCE SHEET COMMITMENTS AND CONTRACTUAL OBLIGATIONS

We have no significant off-balance sheet commitments. The following table summarizes our contractual obligations as of December 27, 2025 (in thousands).

As of December 27, 2025, we also had $40.4 million in outstanding letters of credit issued during the normal course of business, as required by some vendor contracts.

LIQUIDITY AND CAPITAL RESOURCES

The table below presents, for the periods indicated, a summary of our cash flow statement (in thousands):

In general, we fund our growth through a combination of operating cash flows, our revolving credit facility, and issuance of long-term 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 occurring 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 increased to 63 days in 2025 from 60 days in 2024.

The increase in our days supply of inventory in 2025 is due to additional safety stock inventory resulting from anticipated supply chain disruptions and new stocking programs in the Deckorators business unit. The increase in our days of sales outstanding is primarily due to the UFP Edge business 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 both 2025 and 2024.

Our cash flows from operating activities in 2025 were $546 million, which was comprised of net earnings of $296 million, $253 million of non-cash expenses, and a $3 million increase in working capital since the end of December 2024. Our cash flows from operations decreased by $97 million compared to last year primarily due to a $54 million increase 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 $43 million.

Capital expenditures of $269 million comprised most of our cash used in investing activities during 2025. Capital spending primarily consists of several projects to expand capacity to manufacture new and value-added products, primarily in our Deckorators and ProWood business units, and Packaging segment. Additionally there were investments to achieve efficiencies through automation in all segments and to make improvements to a number of facilities. On December 27, 2025, we had outstanding purchase commitments on capital projects of approximately $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 $18 million compared to $30 million in 2024. In 2025, we completed two acquisitions, RWP West, LLC and National Supply, LLC. See Note 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.

Cash flows used in financing activities primarily consisted of:

• Cash paid for repurchases of common stock of $443 million. We repurchased 4,498,835 shares of our common stock for the year at an average share price of $98.39. Of this amount, 87,327 shares were repurchased in order to settle tax withholding obligations of long-term stock incentive plan participants’ awards that vested in 2025. These shares were purchased at an average price of $109.83 per share, totaling $10 million.
• Dividends paid during 2025 totaled $82 million, reflecting a quarterly rate of $0.35 per share, a 6% increase over the prior year.
• Distributions to noncontrolling interests of $3 million.

As of December 6, 2022, we entered into a five-year, $750 million unsecured revolving credit facility with a syndicate of U.S. banks. This facility includes up to $60 million which may be advanced in the form of letters of credit, and up to $100 million (U.S. dollar equivalent) which may be advanced in Canadian dollars, Australian dollars, Sterling, Euros and such other foreign currencies as may subsequently be agreed upon among the parties. Cash borrowings are charged interest based upon an index selected by the Company, plus a margin that is determined based upon the index selected and upon the financial performance of the Company and certain of its subsidiaries. We are charged a facility fee on the entire amount of the lending commitment, at a per annum rate ranging from 15.0 to 30.0 basis points, also determined based upon our performance.

On December 27, 2025, we had no amount outstanding on our $750 million revolving credit facility. The revolving credit facility also supports letters of credit totaling $39.2 million which includes approximately $3.3 million related to industrial development revenue bonds. As a result, we have approximately $710.8 million in remaining availability. We also had approximately $1.3 million of outstanding letters of credit that were issued outside of 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 December 27, 2025.

ENVIRONMENTAL CONSIDERATIONS AND REGULATIONS

See Note L “Commitments, Contingencies, and Guarantees” of our Consolidated Financial Statements which are presented under Item 8 below.

CRITICAL ACCOUNTING POLICIES

In preparing our consolidated financial statements, we follow accounting principles generally accepted in the United States. These principles require us to make certain estimates and apply judgments that affect our financial position and results of operations. We continually review our accounting policies and financial information disclosures. Following is a summary of our more significant accounting policies that require the use of estimates and judgments in preparing the financial statements.

GOODWILL

We evaluate goodwill for indicators of impairment when events or circumstances indicate that this risk may be present. Our judgments regarding the existence of impairment are based on market conditions, operational performance and estimated future cash flows. Determining whether an impairment has occurred requires the valuation of the respective reporting unit, which we have consistently estimated using primarily a weighted average between income and market valuation approaches. We believe this approach is the most appropriate and accurate method to measure the fair value of our intangible assets. We use discounted cash flow analysis with the following assumption: a business is worth today what it can generate in future cash flows; cash received today is worth more than an equal amount of cash received in the future; and future cash flows can be reasonably estimated. The discounted cash flow analysis is based on the present value of projected cash flows and residual values.

If the carrying value of goodwill is considered impaired, an impairment charge is recorded to adjust it to its fair value. Changes in forecasted operations and changes in discount rates can materially affect these estimates. In addition, we test goodwill annually for impairment or more frequently if changes in circumstances or the occurrence of other events suggest impairments exist. The test for impairment requires us to make several estimates about fair value, most of which are based on projected future cash flows and market valuation multiples. Changes in these estimates may result in the recognition of an impairment loss.

On our annual testing date of September 27, 2025, the fair values exceeded the carrying values for all reporting units and there were no indicators for impairment. We believe we have sufficient available information, both current and historical, to support our assumptions, judgments and estimates used in the goodwill impairment test.

REVENUE RECOGNITION

Revenue for product sales is recognized at the time the performance obligation is satisfied, which is primarily when the goods are delivered to the carrier, Free On Board (FOB) shipping point. Generally, title passes at the time of shipment. In certain circumstances, the customer takes title when the shipment arrives at the destination. However, our shipping process is typically completed the same day.

Performance on construction contracts is reflected in operations using over time accounting, under either the cost to cost or units of delivery methods, depending on the nature of the business at individual operations. Under over time accounting using the cost to cost method, revenues and related earnings on construction contracts are measured by the relationships of actual costs incurred related to the total estimated costs. Under over time accounting using the units of delivery method, revenues and related earnings on construction contracts are measured by the relationships of actual units produced related to the total number of units. Revisions in earnings estimates on the construction contracts are recorded in the accounting period in which the basis for such revisions becomes known. Projected losses on individual contracts are charged to operations in their entirety when such losses become apparent.

Our construction contracts are generally entered into with a fixed price and completion of the projects can range from 6 to 18 months in duration. Therefore, our operating results are impacted by, among many other things, labor rates and commodity costs. During the year, we update our estimated costs to complete our projects using current labor and commodity costs and recognize losses to the extent that they exist.

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 due to a variety of macro-economic factors, which will continue to impact our results to varying 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 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. In 2025, we achieved $35 million of targeted SG&A cost reductions and $7 million of profitability improvements due to capacity 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 following factors should be considered when evaluating our future results:

• We anticipate lumber prices will remain near current levels, and experience typical seasonal trends, until there is a substantial change in the balance of supply and demand. In the event new tariffs are enacted on imports, we anticipate lumber prices will increase accordingly. We believe we are currently in a strong position to adapt quickly to new tariffs without adverse financial impact after a short adjustment period. Approximately 84% of our purchases of lumber are from domestic sources.
• Retail segment sales accounted for 39% of our net sales in 2025. When evaluating future demand for the segment, we analyze data such as the same-store sales growth of national home improvement retailers and forecasts of home remodeling activity. Based on this data, we currently anticipate market demand to be flat to slightly down in the first half of 2026. We anticipate market share gains in our composite decking and railing products will contribute approximately $100 million of sales growth in our Deckorators business unit. In addition, we anticipate recent investments in equipment to improve the manufacturing throughput and lower the cost of our Surestone™ decking products will result in margin improvements in those products in 2026 as the new capacity is effectively brought on-line and once the higher cost inventory is sold.
• Packaging segment sales accounted for 25% of our net sales in 2025. When evaluating future demand, we consider a number of metrics, including the Purchasing Managers Index (PMI), durable goods manufacturing, and U.S. real GDP. We currently believe overall demand in the markets we serve to be flat to slightly down in the first half of 2026.
• Construction segment sales accounted for 32% of our net sales in 2025.
• The site-built business unit accounted for 11% of our net sales in 2025. Our sales mix of single-family and multi-family homes builders is approximately 70% and 30%, respectively. The industry consensus estimate of national housing starts for 2026 is 1.34 million, with estimates generally predicting flat to slightly negative growth in the coming year with a softer single-family outlook more than offsetting an improving multi-family outlook. We anticipate demand in the regions we operate to be slightly down in the first half of 2026.
• The factory-built business unit accounted for 13% of our net sales in 2025. When evaluating future demand, we analyze data from production and shipments of manufactured housing. The National Association of Home Builders forecast the manufactured home shipments in 2026 to be flat to slightly down.
• The commercial and concrete forming business units accounted for 8% of our net sales in 2025. When evaluating future demand, we analyze data from non-residential construction spending. We anticipate the slightly positive trends seen in 2025 will carry through into the first half of 2026.

LONG-TERM OUTLOOK

GOALS

Our long-term financial goals include:

• Growing our annual unit sales by 7 to 10 percent (including smaller tuck-in acquisitions) with at least 10 percent of all sales coming from new products;
• Achieving and sustaining a 12.5 percent EBITDA margin by continuing to enhance our capabilities and grow our portfolio and sales of value-added products, expanding geographically in our higher margin business units, and achieving operating improvements;
• Earning an incremental return on new investment over our hurdle rate of 15 percent; and
• Maintaining a conservative capital structure.

RETAIL SEGMENT

The Home Improvement Research Institute (“HIRI”) anticipates growth in home improvement spending and has forecasted 4.0% annual growth from 2026 through 2029. Markets remain competitive and we target market share gains with certain retail customers by introducing new value-add products and focusing on customer service.

Our long-term goal is to achieve sales growth by:

• Increasing our market share of value-added products, including our Deckorators business unit, which is focused on capitalizing on the advantages of our Surestone™ technology. Continued investment in capacity for Deckorators is expected to contribute to this increase.
• Developing new products and increasing our emphasis on product innovation and product differentiation in order to counter commoditization trends and influences.
• Acquiring businesses in core product categories.
• Adding new products and customers through business acquisitions that strengthen our core business and meet our strategic objectives.

PACKAGING SEGMENT

Our goal is to increase our sales of wood, wood alternative, and protective packaging products to a wide variety of packaging customers and manufactured wood components for OEM users. We believe the vast amount of hardwood and softwood lumber consumed for packaging applications, combined with the highly fragmented nature of this market, provides us with market share growth opportunities as a result of our competitive advantages in manufacturing, purchasing, and material utilization.

In addition, purchasers of packaging products with a wide geographic footprint increasingly desire to reduce the number of suppliers they buy from, which provides an opportunity to gain market share due to our international presence. We plan to continue to obtain market share by expanding our manufacturing capacity, enhancing our capabilities and product offerings to enhance the solutions we offer our customers, and improving our ability to serve large regional and international customers in targeted markets.

We plan to continue to pursue acquisition opportunities that meet our strategic criteria and help us meet these objectives.

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

CONSTRUCTION SEGMENT

The industry consensus estimate of national housing starts for 2026 is 1.34 million, with estimates generally predicting flat to slightly negative growth in 2026 with a softer single-family and multi-family outlook. Housing starts are projected to increase low single-digits in 2027.

The National Association of Home Builders forecasts a 1% decrease in manufactured home shipments from 2025 to 2026 and a 1% to 2% compounded annual growth rate through 2027.

Non-residential construction spending is a market indicator that should be considered when evaluating future demand for our products in our Commercial and Concrete Forming business units within our Construction segment.

GROSS PROFIT

As a result of more challenging market conditions, we continue to reduce or eliminate capacity at locations that are not meeting our profitability targets and to better align capacity with current demand. We anticipate these actions will improve operating profits by $25 million in 2026.

In addition, we believe the following factors are likely to impact our gross profits and margins in the future:

• End market demand and our ability to grow and leverage fixed costs and price our products based on the value we offer our customers.
• Our ability to maintain market share and gross margins on products sold to our largest customers. We believe our level of service, geographic diversity, and quality of products provides an added value to our customers. However, if our customers are unwilling to pay for these advantages, our sales and gross margins may be reduced.
• Sales mix of value-added and commodity products and our ability to sell new products. We anticipate significant growth in our Deckorators branded products that use our patented Surestone™ technology and believe recent investments in more efficient manufacturing capabilities will lower our costs per unit.
• Fluctuations in the relative level of the Lumber Market and trends in the market price of lumber. (See “Impact of the Lumber Market on our Operating Results.”)
• Fuel and transportation costs.
• Rising labor and benefit costs.
• Our ability to continue to achieve productivity improvements as our unit sales increase and planned cost reductions through continuous improvement activities, automation, and other operating improvement initiatives, including our investments to improve the manufacturing throughput and reduce the cost of our Surestone™ decking products.
• Changes in the cost of complying with new or increased government regulations.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES

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 $570 million in 2026, excluding highly variable sales incentive and bonus expenses tied to profitability and return on investment, compared to approximately $550 million in 2025 excluding insurance settlement gains. We expect an increase of $20 million in core SG&A primarily due to increases in compensation and related benefits. Additionally, we anticipate sales incentives will be 3% of gross profits (3% of gross profits in 2025) and bonus expense will range from 17% to 18% of pre-bonus operating profits (17% of pre-bonus operating profits in 2025) plus approximately $21 million associated with the vesting expense of shares granted in prior years under our bonus 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.

On a long-term basis, we expect that our SG&A expenses will primarily be impacted by:

• Our growth in sales in the Packaging and the Construction segments. Our sales in these segments require a higher ratio of SG&A costs due, in part, to product design and engineering requirements.
• Sales of new and value-added product and branded products in the Retail segment, which generally require higher product development, marketing, advertising, and other selling costs.
• Our incentive compensation programs which are tied to gross profits, pre-bonus earnings from operations and threshold levels of return on investment.
• Our growth and success in achieving continuous improvement and automation objectives designed to improve our productivity and leverage our fixed costs as we grow.

LIQUIDITY AND CAPITAL RESOURCES

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 in 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.

Additionally, we expect to spend approximately $300 million to $325 million on capital expenditures, incur depreciation of approximately $153 million, and incur amortization and other non-cash expenses of approximately $50 million in 2026.

On December 27, 2025, we had outstanding purchase commitments on capital projects of approximately $135.4 million. We intend to fund capital expenditures and purchase commitments through our operating cash flows and availability under our revolving credit facility which is considered sufficient to meet these commitments and working capital needs.

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 12, 2026, our board approved a quarterly cash dividend of $0.36 per share, which represents a 3% increase from the quarterly dividend of $0.35 per share paid in 2025. This dividend will be payable on March 16, 2026, to shareholders of record on March 2, 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.

We have a share repurchase program approved by our Board of Directors, and on July 23, 2025, our board authorized the repurchase of up to $300 million worth of shares of outstanding stock through July 31, 2026. As of February 25, 2026, we have approximately $125 million of remaining availability under this authorization. In the past, we have repurchased shares in order to offset the effect of issuances resulting from our employee benefit plans and at opportune times when our stock price falls to predetermined levels.

We are exposed to market risks related to fluctuations in interest rates on our variable rate debt, which consists of a revolving credit facility and industrial development revenue bonds. We do not enter into any material interest rate swaps, futures contracts or options on futures, or other types of derivative financial instruments to mitigate this risk.

For fixed rate debt, changes in interest rates generally affect the fair market value, but not earnings or cash flows. Conversely, for variable rate debt, changes in interest rates generally do not influence fair market value, but do affect future earnings and cash flows. We do not have an obligation to prepay fixed rate debt prior to maturity, and as a result, interest rate risk and changes in fair market value should not have a significant impact on such debt until we would be required to refinance it.

On December 27, 2025, the estimated fair value of our long-term debt, including the current portion, was $210.1 million. The estimated fair value is based on rates anticipated to be available to us for debt with similar terms and maturities. The estimated fair value of notes payable included in current liabilities and the revolving credit facility approximated the carrying values as these debt instruments have interest rates that fluctuate with current market conditions.

Expected cash flows over the next five years related to debt instruments, excluding debt issuance costs, are as follows:

($US equivalents, in thousands)

Evaluation of Disclosure Controls and Procedures

With the participation of management, our Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in SEC Rules 13a–15(e) and 15d–15(e)) in the manner required by SEC Rule 13a-15(b) and 15d-15(b), have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Management’s Annual Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act and based upon the criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Our management assessed the effectiveness of our internal control over financial reporting as of December 27, 2025. Based on this assessment, our internal control over financial reporting was effective as of December 27, 2025.

Deloitte & Touche LLP, our independent registered public accounting firm, has audited the effectiveness of our internal control over financial reporting as of December 27, 2025. Deloitte & Touche LLP's opinion, as stated in their report which appears on page 38 of this Form 10-K, is consistent with management's report on internal control over financial reporting as set forth above.

Changes in internal control over financial reporting

There were no changes in our internal control over financial reporting that occurred during the quarter ended December 27, 2025, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.