Net sales for Q1 2024 were $1.64 billion, down due to lower demand and a lower level of the lumber market.
Net earnings per share (EPS) for Q1 2024 were $1.96, above expectations, helped by a non-recurring tax benefit.
Adjusted EBITDA dropped 10.5% to $181 million.
Adjusted EBITDA margin improved sequentially from Q4 to 11%.
Retail segment sales dropped 17% to $629 million with a 6% decline in selling prices and an 8% decline in unit sales.
Packaging segment sales dropped 13% to $424 million, with an 11% decline in selling prices and a 6% decrease in units.
Construction segment sales were flat at $518 million, with a 10% decline in selling prices offset by an 8% gain in units.
Future Guidance
Planning for total housing starts that are essentially flat compared to last year, with an expected increase in single-family starts but a decrease in multifamily.
Expect mid-single-digit declines in demand in Retail and Packaging segments, indicative of more conservative inventory positioning and soft demand.
Targeting $250 million to $300 million in capital expenditures for 2024, significantly up from approximately $180 million in 2023.
Anticipating $100 million for greenfield projects and another $100 million for new product capacity increases, technology investments, research and development, and innovation.
Quarterly dividend declared at $0.33 per share, payable on June 17, 2024, to shareholders of record as of June 3, 2024.
Share repurchase program has $97 million remaining on its authorization.
Trends, Market Conditions, Sentiment
The market is experiencing mixed economic indicators, creating difficulty in making confident forecasts for the rest of the year.
Despite a reduction in unit demand, new product sales reached $124 million in the quarter, with a target of $510 million for 2024.
Retail segment witnessing a shift towards cautious inventory management and better bottom line results despite lower sales.
Construction segment showed strong performance with growth led by Site Built and Factory Built business units amidst steady mortgage rates.
Packaging segment faces continued soft demand and competitive pricing pressure, with a plan to consolidate 7 facilities for annual cost savings estimated at $8 million.
Transportation costs have become more competitive but still challenging due to lower industry demand and increased costs such as fuel and insurance.
Job market remains robust, with quality applicants, suggesting potential for growth and strengthening of teams.
Notable Quotes
”The conflicting economic indicators and forecast by various economists have blurred the ability to make confident forecasts.” - Matthew Missad
”Even though we are pursuing growth strategies for the future, we are confident that our shares are a very good long-term investment.” - Matthew Missad
”We will continue to invest in automation, innovation, and acquisition to advance our goal of becoming a global packaging solutions provider.” - Matthew Missad
”Our highest priority for capital allocation is to drive organic and inorganic growth that results in higher margins and returns.” - Michael Cole
