Core Viewpoint - Builders FirstSource reported quarterly earnings of $1.51 per share, exceeding the Zacks Consensus Estimate of $1.50 per share, but down from $2.65 per share a year ago, indicating a decline in profitability [1][2] Financial Performance - The company posted revenues of $3.66 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.78% and down from $3.89 billion year-over-year [2] - Over the last four quarters, Builders FirstSource has surpassed consensus EPS estimates three times, but has not beaten consensus revenue estimates [2] Stock Performance - Builders FirstSource shares have declined approximately 16.3% since the beginning of the year, compared to a 5.3% decline in the S&P 500 [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $3 on revenues of $4.49 billion, and for the current fiscal year, it is $9.80 on revenues of $16.72 billion [7] - The trend of estimate revisions for Builders FirstSource has been unfavorable ahead of the earnings release [6] Industry Context - The Building Products - Retail industry, to which Builders FirstSource belongs, is currently ranked in the bottom 7% of over 250 Zacks industries, suggesting a challenging environment [8]

Financial Data and Key Metrics Changes - Net sales decreased by 6% to $3.7 billion, driven by lower organic sales, one fewer selling day, and commodity deflation, partially offset by growth from acquisitions [19] - Gross profit was $1.1 billion, a decrease of 14% compared to the prior year, with gross margins at 30.5%, down 290 basis points [20][21] - Adjusted EBITDA was $369 million, down 32%, with an adjusted EBITDA margin of 10.1%, down 380 basis points from the prior year [22] - Adjusted EPS was $1.51, a decrease of 43% compared to the prior year [23] Business Line Data and Key Metrics Changes - Multifamily sales decreased by 33%, while single-family sales declined by 6% due to lower starts activity and weather impacts [19] - Repair and remodel increased by 4%, driven by strength in the Mid Atlantic and Southeast regions [19] - Productivity savings of $17 million were achieved in Q1, primarily through targeted supply chain initiatives and more efficient manufacturing [8] Market Data and Key Metrics Changes - Single-family starts remain soft as builders manage construction pace amid affordability challenges and inventory buildup [8] - The multifamily segment continues to face headwinds compared to 2024, with actions taken to align capacity and manage expenses [9] - The company anticipates a down mid-single-digit single-family market and continued weakness in multifamily for the full year 2025 [26] Company Strategy and Development Direction - The company remains focused on organic growth, operational excellence, and disciplined capital allocation [5] - Significant investments in value-added products, digital tools, and internal systems are aimed at solidifying the company's industry position [6] - The company completed two acquisitions in Q1, with a focus on expanding value-added product offerings and leadership in desirable geographies [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges due to a resilient business model and a focus on execution [4] - The company expects to outperform as the market recovers, despite current macro and industry dynamics being unsettled [5] - For 2025, the company forecasts net sales between $16.05 billion and $17.05 billion, with adjusted EBITDA expected to be between $1.7 billion and $2.1 billion [26] Other Important Information - The company invested $23 million in value-added facilities in Q1 to prepare for future demand [7] - The company has a disciplined capital allocation strategy, deploying over $900 million towards investments, acquisitions, and share repurchases [12][25] - The company expects free cash flow of $800 million to $1.2 billion for 2025, with a focus on maintaining a leverage ratio of approximately 1x to 2x [27][25] Q&A Session Summary Question: Market share and growth in a declining market - Management stated that they are always striving to increase market share, adapting to competitive dynamics and affordability challenges [34][36] Question: Gross margin strategy - Management indicated that while margins are expected to drift lower, they will balance share versus margin based on competitive pressures [39][41] Question: Capital allocation and buybacks - Management confirmed that capital allocation priorities remain focused on protecting the balance sheet while evaluating M&A and stock buybacks [52][53] Question: Commodity prices and inflation expectations - Management discussed the impact of higher lumber prices and the expectation to pass through tariff costs to customers [58][110] Question: Digital initiatives and sales targets - Management expressed confidence in reaching the $200 million target for digital sales in 2025, citing positive customer feedback and adoption rates [66] Question: Competition and sustainability - Management noted that some competitors are struggling with sustainability, emphasizing the importance of providing stable partnerships and quality products [70][75] Question: Productivity savings and future actions - Management highlighted that productivity improvements are a continuous effort, with expectations for savings to roll in throughout the year [78][82]

Financial Data and Key Metrics Changes - Net sales decreased by 6% to $3.7 billion, driven by lower organic sales, one fewer selling day, and commodity deflation, partially offset by growth from acquisitions [19] - Gross profit was $1.1 billion, a decrease of 14% compared to the prior year, with gross margins at 30.5%, down 290 basis points [20][21] - Adjusted EBITDA was $369 million, down 32%, with an adjusted EBITDA margin of 10.1%, down 380 basis points from the prior year [22] - Adjusted EPS was $1.51, a decrease of 43% compared to the prior year [23] - Operating cash flow was $132 million, a decrease of $185 million mainly due to lower net income [24] Business Line Data and Key Metrics Changes - Multifamily sales decreased by 33%, while single-family sales declined by 6% due to lower starts activity and weather impacts [19] - Repair and remodel increased by 4%, driven by strength in the Mid Atlantic and Southeast regions [19] - Productivity savings of $17 million were achieved in Q1, with a target of $70 million to $90 million for the full year [9][78] Market Data and Key Metrics Changes - Single-family starts remain soft as builders manage construction pace amid affordability challenges and inventory buildup [9] - The multifamily segment continues to be a headwind compared to 2024, with actions taken to align capacity and manage expenses [10] Company Strategy and Development Direction - The company remains focused on organic growth, operational excellence, and disciplined capital allocation [6][11] - Significant investments in value-added products, digital tools, and internal systems are aimed at solidifying the company's industry position [7][14] - The company completed two acquisitions in Q1 with prior year sales of approximately $565 million, indicating a focus on M&A for growth [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges and emphasized the importance of being a trusted partner to customers [5][6] - The company anticipates a down mid-single-digit single-family market and continued weakness in multifamily for 2025, guiding net sales between $16.05 billion and $17.05 billion [27] - Management highlighted the importance of maintaining financial flexibility while investing strategically for future growth [32] Other Important Information - The company expects free cash flow of $800 million to $1.2 billion for 2025, with a projected tariff cost impact of $175 million to $250 million annually [28][29] - Capital expenditures were $87 million in Q1, with over $900 million deployed towards investments, acquisitions, and share repurchases [26] Q&A Session Summary Question: Market share and growth in a declining market - Management stated that they are always striving to increase market share, adapting to competitive dynamics and affordability challenges [36][38] Question: Gross margin strategy - Management indicated that while margins are expected to drift lower, they are pleased with current performance and will balance share versus margin [40][41][43] Question: Capital allocation and buybacks - Management confirmed that capital allocation priorities remain focused on protecting the balance sheet while evaluating M&A and stock buybacks [54][56] Question: Commodity prices and inflation impact - Management discussed the impact of higher lumber prices and the expectation to pass through tariff costs to customers [60][108] Question: Digital initiatives and sales targets - Management expressed confidence in reaching the $200 million target for digital sales in 2025, citing positive customer feedback and adoption rates [64][66] Question: Competition and sustainability - Management noted that some competitors are struggling with sustainability due to low margins and emphasized the importance of providing value to customers [71][75] Question: Productivity savings and future actions - Management highlighted that productivity is a core focus and savings will continue to be realized throughout the year, despite some impact from ERP rollout [78][81]

Q1 2025 Financial Performance - Net sales were $3.7 billion, a 6% decrease year-over-year[8, 92] - Gross profit was $1.1 billion with a gross margin of 30.5%[8] - Adjusted EBITDA was $369 million, a 31.7% decrease year-over-year, with an adjusted EBITDA margin of 10.1%[8] - Adjusted diluted EPS was $1.51, a 43% decrease year-over-year[8] - Free cash flow generated was $45 million[9] Strategic Initiatives and Capital Allocation - Value-added product mix reached 48.4% in Q1, a 340 bps growth[11, 13] - $17 million in productivity savings were delivered through efficient manufacturing and procurement[11] - $19 million of incremental sales were generated from BFS digital tools in Q1[11] - Approximately $0.9 billion was deployed in Q1, including $828 million on acquisitions, $87 million on organic growth, and $13 million on share repurchases[17, 20] - Since August 2021, approximately 48% of total shares outstanding have been repurchased[11] 2025 Outlook - Total net sales are projected to be $16.05 to $17.05 billion[48] - Adjusted EBITDA is projected to be $1.7 to $2.1 billion[48] - Free cash flow is expected to be $0.8 to $1.2 billion[48]

[Q1 2025 Performance Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) Builders FirstSource reported resilient Q1 results, focusing on operational excellence and strategic investments despite year-over-year declines in key financial metrics - CEO Peter Jackson emphasized the company's **resilience** and focus on its **differentiated product portfolio** and **operational excellence** in a challenging environment. The company is investing in **value-added products** and **digital tools** to solidify its **industry leadership**[1](index=1&type=chunk)[2](index=2&type=chunk) Q1 2025 Key Financial Metrics (YoY) | Metric | Q1 2025 | YoY Change | | :--- | :--- | :--- | | Net Sales | $3.7 billion | -6.0% | | Gross Profit Margin | 30.5% | -290 bps | | Net Income | $96.3 million | -62.8% | | Diluted EPS | $0.84 | -60.0% | | Adjusted EBITDA | $369.2 million | -31.7% | | Adjusted EBITDA Margin | 10.1% | -380 bps | | Free Cash Flow | $45.0 million | -80.2% | [Detailed Financial Performance (GAAP)](index=2&type=section&id=First%20Quarter%202025%20Financial%20Performance%20Highlights) GAAP financial performance in Q1 showed declines across key metrics, primarily due to reduced core organic sales and margin normalization [Net Sales Analysis](index=2&type=section&id=Net%20Sales) Net sales decreased due to lower core organic sales and fewer selling days, partially offset by acquisitions - The **6.0% decrease** in net sales was primarily driven by an **8.1% decline** in core organic sales and a **1.6% headwind** from one fewer selling day. This was partially offset by a **4.7% growth contribution** from acquisitions[7](index=7&type=chunk) - By market segment, core organic sales saw a significant **32.7% decline** in Multi-Family and a **5.9% decline** in Single-Family, while Repair and Remodel (R&R)/Other grew by **3.6%**[7](index=7&type=chunk) [Profitability Analysis](index=2&type=section&id=Gross%20Profit) Profitability metrics declined in Q1, with gross profit and net income significantly impacted by margin normalization Q1 Profitability Metrics (YoY) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Gross Profit | $1.1 billion | $1.3 billion | -14.2% | | Gross Margin | 30.5% | 33.4% | -290 bps | | Net Income | $96.3 million | $258.8 million | -62.8% | | Diluted EPS | $0.84 | $2.10 | -60.0% | - The decrease in gross profit margin was primarily driven by margin normalization in the Single- and Multi-Family segments and a below-normal housing starts environment[4](index=4&type=chunk) [Operating and Other Expenses](index=2&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) Operating expenses increased due to acquisitions and ERP implementation, alongside higher net interest expense from increased debt - SG&A expenses increased by **0.5%** to **$930.8 million**, mainly due to expenses from recent acquisitions and an ongoing ERP system implementation. As a percentage of sales, SG&A rose **160 basis points** to **25.4%** due to reduced operating leverage[5](index=5&type=chunk) - Net interest expense increased by **$16.6 million** to **$64.9 million**, primarily due to higher average debt balances[6](index=6&type=chunk) - The effective tax rate for the quarter decreased by **100 basis points** year-over-year to **19.4%**[6](index=6&type=chunk) [Non-GAAP Measures, Capital Structure, and Productivity](index=3&type=section&id=Adjusted%20Net%20Income) Adjusted performance metrics declined, but the company maintained strong liquidity, continued share repurchases, and achieved productivity savings [Adjusted Performance Metrics](index=3&type=section&id=Adjusted%20Performance%20Metrics) Adjusted net income, diluted EPS, and EBITDA all saw significant year-over-year declines in the first quarter Q1 Adjusted Metrics (YoY) | Metric | Q1 2025 | Q1 2024 | % Change | | :--- | :--- | :--- | :--- | | Adjusted Net Income | $172.9 million | $327.4 million | -47.2% | | Adjusted Diluted EPS | $1.51 | $2.65 | -43.0% | | Adjusted EBITDA | $369.2 million | $540.9 million | -31.7% | | Adjusted EBITDA Margin | 10.1% | 13.9% | -380 bps | [Capital Structure, Liquidity, and Share Repurchases](index=3&type=section&id=Capital%20Structure%2C%20Leverage%2C%20and%20Liquidity%20Information) The company maintained strong liquidity and continued its share repurchase program, authorizing a new $500 million program - As of March 31, 2025, liquidity was approximately **$1.1 billion**, and the net debt to LTM Adjusted EBITDA ratio was **2.0x**, up from **1.1x** in the prior year[13](index=13&type=chunk) - The company repurchased **0.1 million shares** for **$12.8 million** in Q1 2025. Subsequent to the quarter end, in April 2025, it repurchased an additional **3.3 million shares** for **$390.9 million**[13](index=13&type=chunk) - On April 30, 2025, the Board authorized a new share repurchase program of up to **$500 million**[13](index=13&type=chunk) [Operational Excellence and Productivity](index=3&type=section&id=Productivity%20Savings%20From%20Operational%20Excellence) The company achieved significant productivity savings in Q1 and projects further savings for the full year 2025 - The company achieved approximately **$17 million** in productivity savings in Q1 2025 from operational excellence and supply chain initiatives[17](index=17&type=chunk) - For the full year 2025, the company expects to deliver **$70 million to $90 million** in productivity savings[17](index=17&type=chunk) [2025 Full Year Outlook and Assumptions](index=4&type=section&id=2025%20Full%20Year%20Total%20Company%20Outlook) The company provided its full-year 2025 outlook, projecting net sales and Adjusted EBITDA within ranges, assuming challenging market conditions Full Year 2025 Guidance | Metric | Guidance Range | | :--- | :--- | | Net Sales | $16.05B - $17.05B | | Gross Profit Margin | 29.0% - 31.0% | | Adjusted EBITDA | $1.7B - $2.1B | | Adjusted EBITDA Margin | 10.6% - 12.3% | | Free Cash Flow | $800M - $1.2B | - Key assumptions for 2025 include: - Single-Family starts down mid-single digits - Multi-Family starts down mid-teens - R&R projected to be flat - Acquisitions to add net sales growth of **5.0% to 5.5%** - Total capital expenditures of **$350 million to $425 million**[17](index=17&type=chunk) [Consolidated Financial Statements (Unaudited)](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) This section presents unaudited consolidated financial statements, detailing operations, cash flows, balance sheet, and sales by product category [Statement of Operations](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) The Statement of Operations shows declines in net sales, gross margin, income from operations, and net income year-over-year Q1 2025 Statement of Operations Highlights (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net sales | $3,657,496 | $3,891,352 | | Gross margin | $1,115,241 | $1,299,854 | | Income from operations | $184,441 | $373,597 | | Net income | $96,304 | $258,781 | | Diluted EPS | $0.84 | $2.10 | [Statement of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) The Statement of Cash Flows indicates decreased cash from operating activities and increased cash used in investing activities Q1 2025 Cash Flow Highlights (in thousands) | Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $132,328 | $317,187 | | Net cash used in investing activities | ($912,056) | ($151,036) | | Net cash provided by financing activities | $741,475 | $465,168 | | Net change in cash and cash equivalents | ($38,253) | $631,319 | [Balance Sheet](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEET) The Balance Sheet reflects an increase in total assets and liabilities, with a slight increase in total stockholders' equity Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total current assets | $3,280,405 | $3,141,239 | | Total assets | $11,447,615 | $10,583,086 | | Total current liabilities | $1,801,456 | $1,777,276 | | Total liabilities | $7,073,455 | $6,286,616 | | Total stockholders' equity | $4,374,160 | $4,296,470 | [Sales by Product Category](index=13&type=section&id=Sales%20by%20Product%20Category) Sales by product category show Value-Added Products as the largest contributor, despite a year-over-year decline Q1 2025 Net Sales by Product Category (in millions) | Product Category | Q1 2025 Sales | % of Total Sales | YoY % Change | | :--- | :--- | :--- | :--- | | Manufactured products | $846.3 | 23.1% | -13.6% | | Windows, doors & millwork | $922.8 | 25.3% | -10.4% | | **Value-added products (Total)** | **$1,769.1** | **48.4%** | **-12.0%** | | Specialty building products & services | $914.0 | 25.0% | 1.2% | | Lumber & lumber sheet goods | $974.4 | 26.6% | -0.5% | | **Total net sales** | **$3,657.5** | **100.0%** | **-6.0%** | [Reconciliation of Non-GAAP Financial Measures](index=11&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20Net%20Income) This section provides detailed reconciliations of non-GAAP financial measures to their GAAP equivalents, highlighting key adjustments - GAAP Net Income of **$96.3 million** was reconciled to Adjusted Net Income of **$172.9 million** for Q1 2025. Major adjustments included amortization expense (**$73.3M**) and technology implementation expense (**$24.1M**)[35](index=35&type=chunk) - GAAP Net Income of **$96.3 million** was reconciled to Adjusted EBITDA of **$369.2 million** for Q1 2025. Adjustments included interest, taxes, depreciation, amortization, and other special items[37](index=37&type=chunk) - GAAP SG&A of **$930.8 million** was reconciled to Adjusted SG&A of **$771.0 million** for Q1 2025, with adjustments primarily for depreciation, amortization, stock compensation, and technology implementation expenses[40](index=40&type=chunk)

Market Overview - The S&P 500 has declined approximately 6% since the beginning of the year, with a more significant drop earlier in April when global tariffs were announced [1] - Despite a recent recovery, the risk of further market sell-offs remains [1] Investment Opportunities - Long-term investors may find buying opportunities in stocks that are down over 10% this year and trading at low earnings multiples, specifically Pfizer, PayPal, and Builders FirstSource [2] Pfizer - Pfizer's stock has decreased by 13% in 2025, with expectations of nearly unchanged or declining revenue for the year [3][4] - The company trades at a forward P/E multiple of less than 8 and aims to add $25 billion in revenue through in-house development and acquisitions despite potential losses of $18 billion from generics by the end of the decade [4] - Recent acquisitions, including oncology company Seagen, are expected to contribute up to $10 billion in revenue by the end of the decade [5] - Pfizer's mRNA pipeline is projected to generate between $10 billion and $15 billion by 2030, and the company has over 100 drug candidates in clinical trials [6] - The stock offers a dividend yield of over 7%, making it an attractive long-term investment [7] PayPal - PayPal's stock is down more than 20% this year and trades at only 13 times its future earnings, with concerns about a global economic slowdown affecting its growth prospects [8] - The company holds a significant position in the global payments market, accounting for nearly 45% of it, and is well-positioned for long-term recovery [9] - PayPal is expanding into the crypto market with the launch of PayPal USD, offering a 3.7% yield to attract investors, which could drive more transactions and revenue growth [10] - The company's payment volume rose by 10% last year, indicating potential for long-term investment despite short-term concerns [11] Builders FirstSource - Builders FirstSource trades at a forward P/E of less than 13 and plays a vital role in the homebuilding industry [12] - The company experienced a 4% decline in sales in 2024, totaling $16.4 billion, but is expected to benefit from long-term housing market growth [13] - Builders FirstSource has grown significantly from $8.6 billion in sales in 2020, aided by acquisitions and a strong housing market [14] - The company invested $352 million in 13 acquisitions last year and projects a net sales growth of 4% to 4.5% from these acquisitions [15] - Despite a 15% decline in stock price this year, Builders FirstSource remains a strong long-term investment [16]

Builders FirstSource, Inc. (BLDR) is slated to report first-quarter 2025 results on May 1, before market open.In the last reported quarter, the company’s adjusted earnings per share (EPS) surpassed the Zacks Consensus Estimate, but net sales missed the same. On a year-over-year basis, both the top and bottom lines tumbled 8% and 34.9%, respectively.BLDR’s earnings topped the consensus mark in three of the trailing four quarters and missed on the remaining occasion, with the average surprise being 5.9%.Trend ...

The latest trading session saw Builders FirstSource (BLDR) ending at $120.90, denoting a +0.8% adjustment from its last day's close. This change lagged the S&P 500's 1.81% gain on the day. Elsewhere, the Dow gained 1.56%, while the tech-heavy Nasdaq added 2.06%.The construction supply company's shares have seen a decrease of 2.33% over the last month, surpassing the Retail-Wholesale sector's loss of 5.27% and the S&P 500's loss of 6.14%.The investment community will be closely monitoring the performance of ...

Core Viewpoint - Builders FirstSource (BLDR) is experiencing a decline in stock price and is expected to report lower earnings and revenue in the upcoming financial results [1][2][3]. Company Performance - The stock closed at $128.99, reflecting a -1.42% change from the previous session, underperforming compared to the S&P 500's loss of 1.12% [1]. - Over the past month, shares have decreased by 7.05%, while the Retail-Wholesale sector and S&P 500 have lost 5.39% and 2.91%, respectively [1]. Financial Expectations - The upcoming earnings per share (EPS) is projected at $1.36, which is a decrease of 48.68% from the same quarter last year [2]. - The Zacks Consensus Estimate for revenue is $3.69 billion, down 5.15% year-over-year [2]. - Full-year estimates suggest earnings of $9.55 per share and revenue of $16.92 billion, indicating year-over-year changes of -17.39% and +3.16%, respectively [3]. Analyst Projections - Recent shifts in analyst projections should be monitored, as they reflect changes in short-term business dynamics [4]. - A decrease of 2.71% in the consensus EPS projection over the past 30 days indicates a negative outlook, resulting in a Zacks Rank of 4 (Sell) for Builders FirstSource [6]. Valuation Metrics - Builders FirstSource has a Forward P/E ratio of 13.7, which is lower than the industry average of 15.09, suggesting it is trading at a discount [7]. - The current PEG ratio is 1.6, compared to the industry average of 2.63, indicating a more favorable valuation relative to expected earnings growth [8]. Industry Context - The Building Products - Retail industry ranks in the bottom 10% of all industries, with a Zacks Industry Rank of 226 [9]. - The strength of individual industry groups is measured by the Zacks Industry Rank, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [9].

Core Viewpoint - The article provides an update on Builders FirstSource (NYSE: BLDR) following a previous recommendation to hold due to anticipated headwinds affecting growth potential [1] Group 1: Investment Philosophy - The investment approach is fundamentally based, focusing on long-term durability and affordability rather than merely low multiples [1] - There is a belief that successful investments can be risky if overvaluation occurs, emphasizing the importance of valuation [1] - The article suggests that in certain situations, the potential for growth may outweigh immediate price concerns [1]