The S&P 500 Index ($SPX) (SPY) on Friday closed down -0.05%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.59%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +0.42%.  September E-mini S&P futures (ESU25) fell -0.06%, and September E-mini Nasdaq futures (NQU25) rose +0.41%. Stock indexes settled mixed on Friday, as higher bond yields sparked long liquidation in equities.  The 10-year T-note yield rose +5 bp to 4.06%.  Also, the larger-than-expected decline in the University of Michigan US S ...

The S&P 500 Index ($SPX) (SPY) today is up +0.09%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.31%, and the Nasdaq 100 Index ($IUXX) (QQQ) is up +0.37%.  September E-mini S&P futures (ESU25) are up +0.06%, and September E-mini Nasdaq futures (NQU25) are up +0.36%. Stock indexes are mostly higher today, with the S&P 500 and Nasdaq 100 posting new all-time highs.  Today’s news on weaker-than-expected report on US consumer sentiment for September added to this week’s Fed-friendly news that has bol ...

loveguli/E+ via Getty Images Dear Partner, Throughout the second quarter of 2025, the fund continued to sell slower-growth firms and purchased durable, faster-growing firms in temporarily depressed sectors, while identifying similar opportunities in new industries. The purchased firms align with our longer-term growth themes of consolidation (serial acquirers), buying from forced sellers, focused on financial compounders, transaction processing, affordable housing finance, distribution, infrastructure ...

The S&P 500 Index ($SPX) (SPY) today is up +0.02%, the Dow Jones Industrials Index ($DOWI) (DIA) is up +0.07%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.08%.  September E-mini S&P futures (ESU25) are down -0.08%, and September E-mini Nasdaq futures (NQU25) are down -0.07%. Stock indexes today fell back from early gains and turned mixed after the preliminary revision to US payrolls in the year through March showed the number of jobs was fewer than previously stated.  Stocks remain underpinned by the ...

The Federal Open Market Committee (FOMC) meeting on September 17 is likely to bring an interest rate cut. Although analysts expect a modest trimming amid concerns over unemployment figures, this would mark the first time in 2025 that the Fed opted to lower rates. As such, the market is anticipating some relief in this area, and investors are seeking ways to benefit in advance. A host of industries are closely tied to the federal funds rate, with financial services firms and real estate companies being the f ...

Core Viewpoint - The current earnings season for U.S. consumer stocks has led to an unusual sell-off, despite strong earnings reports, indicating deep-seated market concerns about the sustainability of consumer strength [1][2]. Group 1: Earnings Performance - 83% of the 317 S&P 500 companies that have reported earnings exceeded expectations, yet stock prices generally fell post-announcement [1]. - Companies like Procter & Gamble (PG) and PepsiCo (PEP) experienced initial stock price increases after reporting strong earnings, but ultimately saw declines in the following days [3]. Group 2: Market Sentiment - The prevailing market environment suggests a tactical "sell-the-news" approach, with investors opting to take profits rather than establish new long positions [2]. - Negative earnings surprises have led to significant stock price drops, with companies like Philip Morris International (PM) and Chipotle Mexican Grill (CMG) facing severe sell-offs following disappointing results [4]. Group 3: Exceptions to the Trend - A few companies managed to resist the broader sell-off, including Las Vegas Sands (LVS), Wingstop (WING), and Builders FirstSource (BLDR), which showed resilience due to specific business strengths [5]. - Despite these exceptions, the overall sentiment in the consumer sector remains pessimistic, with investors wary of future economic uncertainties [5].

Core Insights - Builders FirstSource reported mixed Q2 2025 results with adjusted EPS of $2.38, exceeding the consensus estimate of $2.21, while GAAP revenue was $4.23 billion, slightly below the forecast of $4.28 billion [1][2] - Both earnings and sales declined year-over-year, indicating ongoing challenges in new construction volumes and margin pressures [1][5] Financial Performance - Adjusted EPS decreased by 32.0% from Q2 2024, while revenue fell by 5.2% year-over-year [2] - Adjusted EBITDA dropped 24.4% to $506.1 million, and free cash flow decreased by 30.5% to $255.0 million [2][8] - Gross profit margin declined by 2.1 percentage points to 30.7%, reflecting increased competition and lower volumes in the housing market [2][6] Market Trends - Net sales fell 5.0% due to weakness in core homebuilding markets, with single-family sales down 9.1% and multifamily sales down 23.3% year-over-year [5] - Repair and remodel sales increased by 3.0%, providing some support amid slowing new construction activity [5] Strategic Focus - The company is expanding its range of manufactured and value-added products, integrating digital tools, and driving productivity through scale [4] - Value-added products accounted for 46.8% of sales, but these sales dropped by 8.7% [7] - Acquisitions contributed 5.0% to revenue growth, with recent purchases including Alpine Lumber and O.C. Cluss [9] Operational Efficiency - Operations and productivity initiatives yielded $5 million in savings year-to-date, with a goal of $45–65 million for fiscal 2025 [11] - Selling, general, and administrative expenses rose to 23.3% of sales, partly due to investments in ERP technology [11] Future Outlook - Management reaffirmed full-year 2025 guidance for net sales of $14.8–$15.6 billion and adjusted EBITDA of $1.5–$1.7 billion [14] - Single-family housing starts are expected to decline by 10–12%, while multifamily starts are projected to decrease in the mid-teens [14] - The company anticipates that acquisitions will add around 5% to annual sales [14]

Group 1 - The logistics sector has seen significant engagement from investors, particularly in the ASEAN and US markets, with a focus on banks, telecommunications, logistics, and hotels [1] - The popularity of insurance companies in the Philippines has influenced investment strategies, leading to diversification beyond traditional savings in banks and properties [1] - The investment approach has evolved from initial investments in blue-chip companies to a diversified portfolio across various industries and market capitalizations [1] Group 2 - The entry into the US market occurred in 2020, following a period of learning and analysis through platforms like Seeking Alpha [1] - The investor has holdings in US banks, hotels, shipping, and logistics companies, reflecting a strategy similar to that in the ASEAN market [1] - The use of comparative analyses between the US and Philippine markets has enhanced investment decision-making [1]

Group 1 - Builders FirstSource (BLDR) shares have underperformed over the past year, losing approximately 25% of their value due to a decline in residential construction activity [1] - On a recent Thursday, shares remained relatively flat as investors reacted to the ongoing challenges in the market [1] Group 2 - The company has been impacted by weakening conditions in the residential construction sector, which has affected its stock performance [1]

[Part I — Financial Information](index=3&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for Q2 and H1 2025 detail decreased net sales and income, increased assets from acquisitions, and significant financing activities [Condensed Consolidated Statements of Operations](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Net sales for Q2 2025 decreased to **$4.23 billion** from **$4.46 billion** year-over-year, with net income falling to **$185.0 million** and diluted EPS at **$1.66** Consolidated Statements of Operations Highlights (in thousands, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | **Net sales** | $4,234,064 | $4,456,340 | $7,891,560 | $8,347,692 | | **Gross margin** | $1,299,041 | $1,462,684 | $2,414,282 | $2,762,538 | | **Income from operations** | $311,287 | $489,483 | $495,728 | $863,080 | | **Net income** | $185,031 | $344,090 | $281,335 | $602,871 | | **Diluted EPS** | $1.66 | $2.87 | $2.50 | $4.95 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to **$11.46 billion** from **$10.58 billion** at year-end 2024, primarily due to acquisitions, with total liabilities rising to **$7.29 billion** from increased long-term debt Consolidated Balance Sheet Highlights (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $87,020 | $153,624 | | Goodwill | $3,988,853 | $3,678,504 | | **Total assets** | **$11,464,555** | **$10,583,086** | | Long-term debt, net | $4,669,983 | $3,700,643 | | **Total liabilities** | **$7,286,463** | **$6,286,616** | | **Total stockholders' equity** | **$4,178,092** | **$4,296,470** | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For H1 2025, net cash from operating activities decreased to **$473.4 million** due to lower net income, while cash used in investing activities significantly increased to **$1.06 billion** due to acquisitions Consolidated Statements of Cash Flows Highlights (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $473,368 | $769,271 | | Net cash used in investing activities | ($1,059,473) | ($315,625) | | Net cash provided by (used in) financing activities | $519,501 | ($444,233) | | Net change in cash and cash equivalents | ($66,604) | $9,413 | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail key accounting policies and events, including three acquisitions totaling **$891.9 million**, issuance of **$750 million** in new senior notes, and amendment of the revolving credit facility to **$2.2 billion** - During the first six months of 2025, the company completed acquisitions of Alpine Lumber, Cluss Lumber, and Truckee Tahoe for a combined total of approximately **$891.9 million**, net of cash acquired[35](index=35&type=chunk) Net Sales by Product Category (in thousands) | Product Category | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Manufactured products | $1,803,373 | $2,035,238 | | Windows, doors and millwork | $1,958,766 | $2,145,328 | | Specialty building products and services | $2,023,106 | $1,996,410 | | Lumber and lumber sheet goods | $2,106,315 | $2,170,716 | | **Total Net sales** | **$7,891,560** | **$8,347,692** | - Goodwill increased from **$3.68 billion** at year-end 2024 to **$3.99 billion** as of June 30, 2025, with the **$310.3 million** increase attributable to acquisitions completed during the period[45](index=45&type=chunk)[46](index=46&type=chunk) - On May 8, 2025, the company issued **$750.0 million** of 6.75% senior unsecured notes due 2035[53](index=53&type=chunk) - On May 20, 2025, the company amended its Revolving Facility, increasing commitments from **$1.8 billion** to **$2.2 billion** and extending the maturity to 2030[61](index=61&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the **5.0%** decrease in Q2 net sales to core organic decline and commodity price deflation, partially offset by acquisitions, with gross margin percentage falling due to normalization [Recent Developments](index=19&type=section&id=Recent%20Developments) Key developments in H1 2025 include three strategic acquisitions totaling approximately **$891.9 million**, a new **$500 million** share repurchase plan, and issuance of **$750 million** in senior notes - Completed acquisitions of Alpine Lumber, Cluss Lumber, and Truckee Tahoe for an aggregate price of approximately **$891.9 million**, net of cash acquired[79](index=79&type=chunk) - The board authorized a new **$500.0 million** share repurchase plan on April 30, 2025, replacing the prior plan[81](index=81&type=chunk) - In the first six months of 2025, **3.4 million** shares were repurchased for **$403.6 million**[82](index=82&type=chunk) - Issued **$750.0 million** of 6.750% senior unsecured notes due 2035 and amended the Revolving Facility to increase commitments to **$2.2 billion**[83](index=83&type=chunk)[84](index=84&type=chunk) [Current Operating Conditions and Outlook](index=20&type=section&id=Current%20Operating%20Conditions%20and%20Outlook) The U.S. housing market shows a near-term slowdown, with Q2 2025 single-family housing starts decreasing **8.4%**, though the long-term outlook remains positive due to the market being underbuilt - U.S. single-family housing starts for Q2 2025 were **0.3 million**, an **8.4%** decrease compared to Q2 2024[87](index=87&type=chunk) - The long-term housing outlook is considered positive as the industry remains underbuilt, though near-term demand is pressured by macroeconomic uncertainty like interest rates and inflation[88](index=88&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) For Q2 2025, net sales fell **5.0%** to **$4.2 billion** due to an **8.5%** core organic decline, with gross margin percentage decreasing to **30.7%** due to normalization - Q2 2025 net sales decreased **5.0%** YoY, driven by an **8.5%** decrease in core organic sales and a **1.5%** decrease from commodity price deflation, partially offset by a **5.0%** increase from acquisitions[92](index=92&type=chunk) Net Sales by Product Category - Q2 2025 vs Q2 2024 (in millions) | Product Category | Net Sales 2025 | % of Net Sales | Net Sales 2024 | % of Net Sales | % Change | | :--- | :--- | :--- | :--- | :--- | :--- | | Manufactured products | $953.1 | 22.5% | $1,056.1 | 23.7% | (9.8)% | | Windows, doors and millwork | $1,030.0 | 24.3% | $1,114.9 | 25.0% | (7.6)% | | Specialty building products and services | $1,117.8 | 26.4% | $1,093.6 | 24.6% | 2.2% | | Lumber and lumber sheet goods | $1,133.2 | 26.8% | $1,191.7 | 26.7% | (4.9)% | | **Total Net sales** | **$4,234.1** | **100.0%** | **$4,456.3** | **100.0%** | **(5.0)%** | - Q2 2025 gross margin percentage decreased to **30.7%** from **32.8%** in Q2 2024, primarily driven by single-family and multi-family margin normalization[95](index=95&type=chunk) - For the six months ended June 30, 2025, net sales decreased **5.5%** YoY, driven by an **8.4%** core organic decline, **1.2%** from commodity deflation, and **0.8%** from one fewer selling day, partially offset by a **4.9%** contribution from acquisitions[99](index=99&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained a strong liquidity position of **$1.6 billion** as of June 30, 2025, with net excess borrowing availability of **$1.54 billion** under its expanded **$2.2 billion** Revolving Facility - Total liquidity as of June 30, 2025, was **$1.6 billion**, consisting of cash on hand and net borrowing availability under the Revolving Facility[110](index=110&type=chunk) Revolving Facility Availability (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Maximum borrowing amount | $1,850.7 | $1,714.3 | | Outstanding borrowings | ($233.0) | — | | Letters of credit | ($79.6) | ($83.3) | | **Net excess borrowing availability** | **$1,538.1** | **$1,631.0** | - Cash provided by operating activities decreased to **$473.4 million** for the six months ended June 30, 2025, from **$769.3 million** in the prior year period, largely due to lower net income[113](index=113&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=27&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rate fluctuations and commodity price volatility, where a **1.0%** rate increase on the Revolving Facility would add approximately **$2.3 million** in annual interest expense - The company is exposed to interest rate risk on its Revolving Facility[120](index=120&type=chunk) - A **1.0%** increase in interest rates would result in approximately **$2.3 million** of additional annual interest expense based on the **$233.0 million** outstanding borrowings as of June 30, 2025[120](index=120&type=chunk) - The company is exposed to commodity price risk, particularly for lumber products[121](index=121&type=chunk) - Delays in passing on material price increases to customers can negatively impact operating results[121](index=121&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level, with no material changes to internal control over financial reporting identified - Based on their evaluation, the CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective at a reasonable assurance level[126](index=126&type=chunk) - There were no changes in internal control over financial reporting during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[127](index=127&type=chunk) [Part II — Other Information](index=29&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal claims, including construction defect claims, for which a reasonable estimate of potential loss cannot be determined, though management believes the ultimate outcome will not have a material adverse effect - The Company faces a number of known and threatened construction defect legal claims, for which a reasonable possibility of loss cannot be estimated at this time[129](index=129&type=chunk) - Management believes the outcome of pending claims will not materially affect the company's consolidated financial position, cash flows, or results of operations[131](index=131&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) There were no material changes to the risk factors previously disclosed in the company's 2024 Form 10-K - There were no material changes to the risk factors reported in the company's 2024 Form 10-K[133](index=133&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=29&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company repurchased approximately **3.4 million** shares of common stock under a new **$500 million** share repurchase authorization, with **$500 million** remaining available - On April 30, 2025, the board approved a new share repurchase authorization of up to **$500.0 million**, terminating the prior plan[134](index=134&type=chunk) Common Stock Repurchases - Q2 2025 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs | | :--- | :--- | :--- | :--- | | April 1-30, 2025 | 3,358,899 | $118.25 | $500,000,000 | | May 1-31, 2025 | 1,055 | $120.64 | $500,000,000 | | June 1-30, 2025 | — | — | $500,000,000 | | **Total** | **3,359,954** | **$118.25** | **$500,000,000** | [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) No information is reported under this item - None[136](index=136&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate governance documents, debt agreements, and required CEO/CFO certifications - Exhibits filed include the Indenture for the new 2035 notes, an amendment to the Credit Agreement, and CEO/CFO certifications (Sections 302 and 906)[139](index=139&type=chunk)