SEGMENT REPORTING

12 Months Ended

Dec. 31, 2022

SEGMENT REPORTING

M.SEGMENT REPORTING

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 in deciding how to allocate resources and in assessing performance.

We operate manufacturing, treating and distribution facilities internationally, but primarily in the United States. Our business segments consist of UFP Retail Solutions, UFP Packaging and UFP Construction and align with the end markets we serve. This segment structure allows for a specialized and consistent sales approach among Company operations, 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 which serve multiple segments, results are allocated and accounted for by segment. Two customers, The Home Depot and Lowes, accounted for approximately 15% and 11%, respectively, of our total net sales in fiscal 2022, 16% and 10%, respectively, of our total net sales in fiscal 2021 and 24% and 4%, respectively, in 2020.

The exception to this market-centered reporting and management structure is our International segment, which comprises our Mexico, Canada, Europe, India, and Australia operations 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 and Ardellis segments do not meet the quantitative thresholds in order to be separately reported and accordingly, the International and Ardellis segments have been aggregated in the “All Other” segment for reporting purposes.

“Corporate” includes purchasing, transportation and administrative functions that serve our operating segments. Operating results of Corporate primarily consist of net sales to external customers initiated by UFP Purchasing and UFP Transportation and over (under) allocated costs. The operating results of UFP Real Estate, Inc., which owns and leases real estate, and UFP Transportation Ltd., which owns, leases and operates transportation equipment, are also included in the Corporate column. 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. Total assets in the Corporate column include unallocated cash and cash equivalents, certain prepaid assets, certain property, equipment and other assets pertaining to the centralized activities of Corporate, UFP Real Estate, Inc., UFP Transportation Ltd, UFP Purchasing, and UFP RMS, LLC. The tables below are presented in thousands.

	2022
							All
	Retail		Packaging		Construction		Other		Corporate		Total
Net sales to outside customers	$	3,650,639	$	2,394,681	$	3,143,868	$	431,611	$	5,940	$	9,626,739
Intersegment net sales		392,740		78,409		110,523		421,406		(1,003,078)		—
Interest expense		177		(2)		—		(1,310)		15,045		13,910
Amortization expense		4,131		6,925		3,358		4,571		514		19,499
Depreciation expense		19,898		28,191		15,364		2,992		27,618		94,063
Segment earnings before income taxes		150,165		333,087		397,446		56,813		(2,695)		934,816
Segment assets		889,417		885,878		712,837		308,688		875,253		3,672,073
Capital expenditures		55,806		55,129		54,167		3,968		5,054		174,124

	2021
							All
	Retail		Packaging		Construction		Other		Corporate		Total
Net sales to outside customers	$	3,418,337	$	2,148,142	$	2,698,434	$	362,473	$	8,748	$	8,636,134
Intersegment net sales		214,400		85,954		82,026		455,874		(838,254)		—
Interest expense		98		12		1		184		13,519		13,814
Amortization expense		2,780		6,093		3,525		1,336		214		13,948
Depreciation expense		16,955		26,219		13,151		2,094		25,765		84,184
Segment earnings before income taxes		124,790		264,958		264,238		80,905		(8,555)		726,336
Segment assets		844,189		741,672		736,157		343,363		579,890		3,245,271
Capital expenditures		40,408		42,652		22,344		5,140		40,622		151,166

	2020
							All
	Retail		Packaging		Construction		Other		Corporate		Total
Net sales to outside customers	$	2,167,122	$	1,072,117	$	1,695,684	$	217,094	$	1,981	$	5,153,998
Intersegment net sales		142,839		45,217		68,294		283,689		(540,039)		—
Interest expense		2		22		—		90		9,197		9,311
Amortization expense		1,482		4,159		2,152		877		46		8,716
Depreciation expense		11,675		15,163		12,123		1,619		23,384		63,964
Segment earnings before income taxes		155,364		83,430		69,092		38,333		(5,236)		340,983
Segment assets		510,464		416,487		510,972		196,856		770,112		2,404,891
Capital expenditures		16,277		21,141		16,902		2,258		32,604		89,182

Information regarding principal geographic areas was as follows (in thousands):

	2022				2021				2020
			Long-Lived				Long-Lived				Long-Lived
			Tangible				Tangible				Tangible
	Net Sales		Assets		Net Sales		Assets		Net Sales		Assets
United States	$	9,254,676	$	770,921	$	8,395,737	$	679,757	$	5,022,014	$	478,325
Foreign		372,063		126,840		240,397		54,873		131,984		36,380
Total	$	9,626,739	$	897,761	$	8,636,134	$	734,630	$	5,153,998	$	514,705

The following table presents, for the periods indicated, our disaggregated net sales (in thousands) by business unit for each segment.

	2022		2021		2020
Retail
Deckorators	$	326,011	$	248,765	$	219,930
Prowood and Outdoor Essentials		2,228,509		2,239,711		1,828,489
Sunbelt		924,441		773,909		—
UFP Edge		168,190		148,927		114,987
Other		3,488		7,025		3,716
Total Retail	$	3,650,639	$	3,418,337	$	2,167,122
Packaging
North (1)	$	646,278	$	615,092	$	385,132
Southeast (1)		445,203		395,069		229,316
Southwest (1)		468,274		400,515		238,643
West (1)		379,038		363,300		206,022
PalletOne		399,356		355,347		—
Protective Packaging		56,532		18,819		13,004
Total Packaging	$	2,394,681	$	2,148,142	$	1,072,117
Construction
Factory Built	$	1,181,837	$	1,098,905	$	597,017
Site Built		1,361,607		1,190,393		725,899
Commercial		336,298		259,360		221,988
Concrete Forming		264,126		149,776		150,780
Total Construction	$	3,143,868	$	2,698,434	$	1,695,684
All Other	$	431,611	$	362,473	$	217,094
Corporate	$	5,940	$	8,748	$	1,981
Total Net Sales	$	9,626,739	$	8,636,134	$	5,153,998

(1) Effective January 1, 2023, the Packaging segment established new business units as followings: Structural Packaging, PalletOne, and Protective Packaging Solutions. This change will result in the transfer of net sales from the these geographic business units to Structural Packaging and PalletOne in 2023.

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

	2022		2021		2020
Value-Added
Retail		44.9%		43.2%		53.8%
Packaging		72.0%		67.7%		64.7%
Construction		77.2%		73.0%		76.3%
All Other		76.3%		74.7%		76.0%
Corporate		44.3%		67.9%		100.0%
Total		63.4%		59.7%		64.3%
Commodity-Based
Retail		55.1%		56.8%		46.2%
Packaging		28.0%		32.3%		35.3%
Construction		22.8%		27.0%		23.7%
All Other		23.7%		25.3%		24.0%
Corporate		55.7%		32.1%		0.0%
Total		36.6%		40.3%		35.7%

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