Builders FirstSource (BLDR) came out with quarterly earnings of $3.50 per share, beating the Zacks Consensus Estimate of $3.14 per share. This compares to earnings of $3.89 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 11.46%. A quarter ago, it was expected that this construction supply company would post earnings of $2.42 per share when it actually produced earnings of $2.65, delivering a surprise of 9.50%. Over the last f ...

Footnote Builders® OUTPERFORM TODAY. TRANSFORM TOMORROW. Q2 2024 Earnings Presentation D A V E R U S H , C E O P E T E R J A C K S O N , C F O A U G U S T 6 , 2 0 2 4 Safe Harbor & Non-GAAP Financial Measures Footnote Cautionary Notice Statements in this presentation and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including statements about forecasted financial performance or other statements about anticipations, beliefs, expectations, hopes, syne ...

[Second Quarter 2024 Highlights](index=1&type=section&id=Second%20Quarter%202024%20Highlights) The company's second quarter 2024 performance saw a decline in net sales and profitability, alongside strong cash flow generation and significant share repurchases Q2 2024 Key Financial Metrics (YoY Comparison) | Metric | Q2 2024 | Change (YoY) | Notes | | :--- | :--- | :--- | :--- | | Net Sales | $4.5 billion | -1.6% | Core organic sales down 3.8%, driven by Multi-Family decline | | Gross Profit Margin | 32.8% | -240 bps | Primarily driven by normalization, especially in Multi-Family | | Net Income | $344.1 million | -15.0% | - | | Diluted EPS | $2.87 | -9.2% | Compared to $3.16 in Q2 2023 | | Adjusted EBITDA | $669.7 million | -12.9% | Driven by lower gross profit, offset by lower operating expenses | | Adjusted EBITDA Margin | 15.0% | -200 bps | Has remained in the mid-teens or better for 13 consecutive quarters | - Cash provided by operating activities increased to **$452.1 million**, and free cash flow grew by **35.9%** to **$366.7 million** compared to the prior year period[3](index=3&type=chunk) - The company repurchased **5.8 million** shares of common stock for **$989.6 million** during the quarter at an average price of **$170.01 per share**[3](index=3&type=chunk) [Management Commentary](index=1&type=section&id=Management%20Commentary) Management emphasized resilient performance in a challenging housing market, focusing on cost control, value-added solutions, and strategic capital allocation - CEO Dave Rush highlighted the company's resilient performance, maintaining a **mid-teens EBITDA margin** despite a complex environment with weaker Single-Family starts, slowing Multi-Family, and housing affordability challenges[4](index=4&type=chunk) - The company's strategy focuses on controlling costs, investing in value-added solutions, and driving adoption of its digital platform to navigate the uncertain macroeconomic landscape[4](index=4&type=chunk) - CFO Peter Jackson noted the effective navigation of a softer housing market by leveraging the company's strong balance sheet to execute nearly **$1 billion** in share repurchases and three tuck-in acquisitions[4](index=4&type=chunk)[5](index=5&type=chunk) [Second Quarter 2024 Financial Performance](index=2&type=section&id=Second%20Quarter%202024%20Financial%20Performance%20Highlights) The second quarter saw a decline in net sales and gross profit margins, while operating expenses decreased, leading to reduced net income and Adjusted EBITDA [Net Sales](index=2&type=section&id=Net%20Sales) Net sales decreased by **1.6%** to **$4.5 billion**, primarily due to a **3.8%** decline in core organic sales. A significant **31.3%** drop in the Multi-Family segment was the main driver, which was partially offset by growth in Single-Family (**+1.1%**), R&R/Other (**+1.5%**), and acquisitions (**+1.9%**) Q2 2024 Net Sales Breakdown (YoY) | Category | Change | Impact on Net Sales | | :--- | :--- | :--- | | Core Organic Sales | -3.8% | - | | - Single-Family | +1.1% | +0.7% | | - Multi-Family | -31.3% | -4.8% | | - R&R/Other | +1.5% | +0.3% | | Acquisitions | +1.9% | +1.9% | | Commodity Inflation | +0.3% | +0.3% | [Gross Profit](index=2&type=section&id=Gross%20Profit) Gross profit fell **8.3%** to **$1.5 billion**. The gross profit margin contracted by **240 basis points** to **32.8%**, which the company attributes to ongoing margin normalization, particularly within the Multi-Family segment - Gross profit decreased by **8.3%** to **$1.5 billion**[5](index=5&type=chunk) - Gross profit margin declined **240 basis points** to **32.8%** due to normalization, especially in Multi-Family[5](index=5&type=chunk) [Operating and Other Expenses](index=2&type=section&id=Operating%20and%20Other%20Expenses) SG&A expenses decreased by **4.4%** to **$973.2 million**, mainly from lower variable compensation, leading to a **70 basis point** improvement as a percentage of sales. Interest expense remained stable at **$52.0 million**, while income tax expense decreased due to lower pre-tax income and a lower effective tax rate of **21.3%** - SG&A expenses decreased by **$44.7 million** (**4.4%**) to **$973.2 million**, primarily due to lower variable compensation[6](index=6&type=chunk) - The effective tax rate for Q2 decreased by **150 basis points** year-over-year to **21.3%**, mainly due to a stock-based compensation windfall benefit[7](index=7&type=chunk) [Net Income and Adjusted EBITDA](index=2&type=section&id=Net%20Income%20and%20Adjusted%20EBITDA) Net income declined **15.0%** to **$344.1 million**, resulting in diluted EPS of **$2.87**. Adjusted net income also fell **15.6%** to **$420.4 million**. Adjusted EBITDA decreased **12.9%** to **$669.7 million**, with the margin contracting by **200 basis points** to **15.0%**, primarily due to lower gross profit margins Q2 2024 Profitability Metrics (YoY) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $344.1M | $404.6M | -15.0% | | Diluted EPS | $2.87 | $3.16 | -9.2% | | Adjusted Net Income | $420.4M | - | -15.6% | | Adjusted Diluted EPS | $3.50 | $3.89 | -10.0% | | Adjusted EBITDA | $669.7M | - | -12.9% | | Adjusted EBITDA Margin | 15.0% | 17.0% | -200 bps | [Capital Structure, Leverage, and Liquidity](index=3&type=section&id=Capital%20Structure%2C%20Leverage%2C%20and%20Liquidity%20Information) The company maintained strong liquidity and a moderate leverage ratio, actively engaging in significant share repurchases to return capital to shareholders [Liquidity and Leverage](index=3&type=section&id=Liquidity%20and%20Leverage) As of June 30, 2024, the company maintained a strong liquidity position of approximately **$1.7 billion**. Net debt stood at **$3.8 billion**, resulting in a net debt to LTM Adjusted EBITDA ratio of **1.4x**, an increase from **1.1x** in the prior year period - Total liquidity was approximately **$1.7 billion**, consisting of **$1.6 billion** in revolving credit facility availability and **$0.1 billion** in cash[9](index=9&type=chunk) - The net debt to LTM Adjusted EBITDA ratio was **1.4x** as of June 30, 2024, compared to **1.1x** in the prior year period[9](index=9&type=chunk) [Share Repurchases](index=3&type=section&id=Share%20Repurchases) The company was active in its share repurchase program, buying back **5.8 million** shares for **$989.6 million** in Q2. The Board authorized a new **$1.0 billion** repurchase plan. Since August 2021, the company has repurchased **45.0%** of its total shares outstanding for **$7.1 billion** - In Q2 2024, repurchased **5.8 million** shares for **$989.6 million**[9](index=9&type=chunk) - The Board of Directors authorized a new share repurchase plan of up to **$1.0 billion**[10](index=10&type=chunk) - Since the program's inception in August 2021, the company has repurchased **93.0 million** shares (**45.0%** of total shares outstanding) for a total of **$7.1 billion**[10](index=10&type=chunk) [Operational Excellence Productivity](index=3&type=section&id=Operational%20Excellence%20Productivity) The company achieved significant productivity savings in Q2 and year-to-date, expecting to meet full-year targets through operational and supply chain initiatives - The company achieved approximately **$37 million** in productivity savings in Q2 2024 from operations excellence and supply chain initiatives[11](index=11&type=chunk) - Year-to-date savings total approximately **$77 million**[11](index=11&type=chunk) - The company expects to deliver total productivity savings of **$90 million to $110 million** for the full year 2024[11](index=11&type=chunk) [2024 Full Year Outlook](index=3&type=section&id=2024%20Full%20Year%20Total%20Company%20Outlook) The company provided its full-year 2024 financial guidance, reflecting market assumptions for housing starts and operational targets for sales, profitability, and cash flow [Full Year Guidance](index=3&type=section&id=Full%20Year%20Guidance) The company provided its full-year 2024 outlook, projecting net sales between **$16.4 billion** and **$17.2 billion** and Adjusted EBITDA between **$2.2 billion** and **$2.4 billion**. Free cash flow is expected to be in the range of **$1.0 billion** to **$1.2 billion** 2024 Full Year Financial Outlook | Metric | Guidance Range | | :--- | :--- | | Net Sales | $16.4B - $17.2B | | Gross Profit Margin | 31.5% - 32.5% | | Adjusted EBITDA | $2.2B - $2.4B | | Adjusted EBITDA Margin | 13.4% - 14.0% | | Free Cash Flow | $1.0B - $1.2B | [Key Assumptions for 2024](index=4&type=section&id=2024%20Full%20Year%20Assumptions) The 2024 outlook is based on several key market and operational assumptions. These include low-single-digit growth in Single-Family starts, a significant **25-30%** decline in Multi-Family starts, and flat R&R activity. Acquisitions are expected to contribute **1.5% to 2.0%** to net sales growth - **Market Assumptions:** - Single-Family starts: Up **low-single digits** - Multi-Family starts: Down **25% to 30%** - R&R: Flat to prior year[13](index=13&type=chunk) - **Operational & Financial Assumptions:** - Net sales growth from acquisitions: **1.5% to 2.0%** - Capital expenditures: **$400 million to $500 million** - Average commodity prices: **$380 to $400 per mbf** - Effective tax rate: **23.0% to 25.0%**[13](index=13&type=chunk) [Financial Statements and Reconciliations](index=7&type=section&id=Financial%20Statements%20and%20Reconciliations) This section details consolidated financial statements, including operations, cash flows, balance sheet, sales by category, and non-GAAP reconciliations [Consolidated Statement of Operations](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) For the second quarter ended June 30, 2024, net sales were **$4.46 billion**, down from **$4.53 billion** in the prior year. Net income was **$344.1 million**, or **$2.87** per diluted share, compared to **$404.6 million**, or **$3.16** per diluted share, in Q2 2023 Statement of Operations Summary (Three Months Ended June 30) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Net sales | $4,456,340 | $4,528,890 | | Gross margin | $1,462,684 | $1,594,946 | | Income from operations | $489,483 | $577,072 | | Net income | $344,090 | $404,619 | | Diluted EPS | $2.87 | $3.16 | [Consolidated Statement of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) For the six months ended June 30, 2024, net cash provided by operating activities was **$769.3 million**. The company used **$315.6 million** in investing activities, primarily for acquisitions and capital expenditures, and **$444.2 million** in financing activities, driven by **$1.0 billion** in common stock repurchases Cash Flow Summary (Six Months Ended June 30, 2024) | (in thousands) | Amount | | :--- | :--- | | Net cash provided by operating activities | $769,271 | | Net cash used in investing activities | ($315,625) | | Net cash used in financing activities | ($444,233) | | Net change in cash | $9,413 | [Consolidated Balance Sheet](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEET) As of June 30, 2024, the company reported total assets of **$10.72 billion**, up from **$10.50 billion** at year-end 2023. Total liabilities increased to **$6.42 billion** from **$5.77 billion**, while total stockholders' equity decreased to **$4.30 billion** from **$4.73 billion**, reflecting significant share repurchase activity Balance Sheet Summary (in thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total current assets | $3,454,705 | $3,300,728 | | Total assets | $10,721,187 | $10,499,452 | | Total current liabilities | $1,892,541 | $1,863,437 | | Total liabilities | $6,416,545 | $5,767,101 | | Total stockholders' equity | $4,304,642 | $4,732,351 | [Sales by Product Category](index=13&type=section&id=Sales%20by%20Product%20Category) In Q2 2024, Value-added products constituted the largest portion of sales at **48.7%**, though sales in this category declined **9.0%** YoY. Lumber & lumber sheet goods saw a significant **12.7%** increase in sales, driven by commodity price changes Q2 2024 Net Sales by Product Category (YoY % Change) | Product Category | Net Sales (in millions) | % of Net Sales | % Change YoY | | :--- | :--- | :--- | :--- | | **Value-added products** | **$2,170.3** | **48.7%** | **(9.0%)** | | - Manufactured products | $1,054.9 | 23.7% | (18.5%) | | - Windows, doors & millwork | $1,115.4 | 25.0% | 2.2% | | Specialty building products & services | $1,091.2 | 24.5% | 0.8% | | Lumber & lumber sheet goods | $1,194.8 | 26.8% | 12.7% | | **Total net sales** | **$4,456.3** | **100.0%** | **(1.6%)** | [Reconciliation of Non-GAAP Measures](index=11&type=section&id=Reconciliation%20of%20Adjusted%20Non-GAAP%20Financial%20Measures%20to%20their%20GAAP%20Equivalents) The company reconciled its GAAP net income of **$344.1 million** for Q2 2024 to its non-GAAP Adjusted EBITDA of **$669.7 million**. Key adjustments included adding back income tax expense (**$117.5 million**), amortization (**$81.0 million**), depreciation (**$62.3 million**), and interest expense (**$52.0 million**) Q2 2024 Reconciliation to Adjusted EBITDA (in millions) | Item | Amount | | :--- | :--- | | **GAAP net income** | **$344.1** | | Tax-effect of adjustments to net income | ($24.1) | | Amortization expense | $81.0 | | **Adjusted net income** | **$420.4** | | Depreciation expense | $62.3 | | Interest expense, net | $52.0 | | Income tax expense | $117.5 | | Stock compensation expense | $16.7 | | Other adjustments | $1.9 | | **Adjusted EBITDA** | **$669.7** |

Builders FirstSource, Inc. (BLDR) is slated to report second-quarter 2024 results on Aug 6, before the opening bell. In the last reported quarter, the company's adjusted earnings topped the Zacks Consensus Estimate but declined 10.5% year over year due to tepid net sales and a timing shift in product mix toward lower margins. The weakening Multi-Family market and higher mortgage rates were major headwinds despite growth in the Single- Family market. On an impressive note, BLDR has a solid earnings surprise ...

Below are three underperforming S&P 500 stocks that were down 30% or more in the second quarter. They were the worst-performing stocks on the index. But since they are offering extreme discounts, let's see if they are worth diving into now. Despite the IT stock beating analyst estimates for the period, its guidance for the second quarter and full-year underwhelmed the market. EPAM forecasts a 2.6% decline in Q2 sales and a better than 1% drop in revenue for all of 2024. It guided full-year revenue toward a ...

Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings. Builders FirstSource (BLDR) is one of the stocks most watched by Zacks.com visitors lately. So, it might be a good idea to review some of the factors that might affect the near-term performance of the stock. Over the past month, shares of this construction supply com ...

Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Builders FirstSource. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook. The Building Products - Retail industry is part of the Retail-Wholesale sector. Currently, this industry holds a Zacks Industry Rank of 221, positioning it in the bottom 13% of all 250+ industries. The con ...

For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $12.93 per share and a revenue of $17.82 billion, representing changes of -11.38% and +4.25%, respectively, from the prior year. Builders FirstSource (BLDR) closed the latest trading day at $137.86, indicating a +0.82% change from the previous session's end. The stock exceeded the S&P 500, which registered a gain of 0.09% for the day. At the same time, the Dow added 0.09%, and the tech-heavy Nasdaq gained 0.3%. The investme ...

Builders FirstSource (BLDR) closed the most recent trading day at $143.19, moving -1.07% from the previous trading session. The stock's performance was behind the S&P 500's daily loss of 0.16%. Meanwhile, the Dow experienced a rise of 0.04%, and the technology-dominated Nasdaq saw a decrease of 0.18%. The investment community will be paying close attention to the earnings performance of Builders FirstSource in its upcoming release. The company's upcoming EPS is projected at $3.16, signifying a 18.77% drop c ...

Company Performance - Builders FirstSource (BLDR) has shown remarkable stock performance, rising over 225% since the lows of late 2022 [1] - The company's trailing twelve-month (TTM) earnings per share (EPS) surged from $2 to $18 between 2020 and 2022 [2] - BLDR reported quarterly earnings of $2.65 per share, surpassing the Zacks Consensus Estimate of $2.42 per share, although this is a decrease from $2.96 per share a year ago [14] Market Dynamics - The overall housing market is characterized by a significant shortage, particularly in sunbelt markets, which are expected to attract new homeowners [8] - Despite rising interest rates and housing prices affecting affordability, the demand for housing remains strong due to ongoing shortages [7][20] - TTM revenues for BLDR tripled from $7.5 billion to $23 billion during the same period of stock performance [18] Digital Innovation - BLDR has embraced digital tools to enhance construction processes, including the myBLDR.com platform that utilizes 3D modeling to streamline building [21][25] - The READY-FRAME® system offers pre-cut, labeled lumber packages, which aids in efficiency and reduces waste during construction [24][25] - Collaboration with industry experts like Matt Risinger highlights the company's commitment to high-performance construction and building science [23] Future Outlook - Analysts have noted a slowdown in BLDR's growth, leading to downward revisions in EPS estimates, although the adjustments are minor [15][27] - The company is expected to continue benefiting from the digital transformation in home building, with potential buying opportunities identified in the $120-140 range [28]