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)

Core Insights - Builders FirstSource, Inc. (BLDR) reported mixed results for Q2 2025, with earnings exceeding estimates but net sales falling short [1][5][11] - Year-over-year declines in both earnings and net sales were attributed to lower core organic sales and commodity deflation, although acquisitions provided some offset [1][6][11] Financial Performance - Adjusted earnings per share were $2.38, surpassing the consensus estimate of $2.35 by 1.3%, but down 32% from the previous year [5][11] - Net sales totaled $4.23 billion, slightly missing the consensus mark of $4.24 billion by 0.1% and declining 5% year-over-year [6][11] - Core organic sales decreased by 8.5%, with Single-Family and Multi-Family sales down 9.1% and 23.3%, respectively [6][7] Product Category Sales - Value-added product sales, which accounted for 46.8% of quarterly net sales, were $1.98 billion, down 8.7% from the prior year [8] - Specialized product sales increased by 2.2% to $1.12 billion, while Lumber & Lumber Sheet Goods sales decreased by 4.9% to $1.13 billion [9] Margin and Guidance - Gross margin contracted by 210 basis points to 30.7%, influenced by margin normalization in Single-Family and Multi-Family segments [12] - The company revised its 2025 net sales guidance to between $14.8 billion and $15.6 billion, down from earlier expectations of $16.05-$17.05 billion [17][18] Operational Highlights - BLDR achieved approximately $5 million in productivity savings through operational excellence and supply-chain initiatives [13] - As of June 30, 2025, the company had cash and cash equivalents of $87 million and liquidity of approximately $1.6 billion [14] Debt and Cash Flow - Long-term debt increased to $4.67 billion, with a net debt to trailing 12-month adjusted EBITDA ratio of 2.3x [15] - Free cash flow for the second quarter was $255 million, down from $366.7 million a year ago [15] Future Outlook - The company plans to invest in value-added solutions, digital tools, and operational improvements to strengthen its market position [4] - Adjusted EBITDA is now expected to be between $1.5 billion and $1.7 billion, down from earlier projections [19]

Financial Data and Key Metrics Changes - Net sales decreased by 5% to $4.2 billion, driven by lower organic sales and commodity deflation, partially offset by growth from acquisitions [20][21] - Gross profit was $1.3 billion, a decrease of 11% compared to the prior year, with a gross margin of 30.7%, down 20 basis points [23] - Adjusted EBITDA was $506 million, down 24%, with an adjusted EBITDA margin of 12%, down 300 basis points from the prior year [24] Business Line Data and Key Metrics Changes - Multifamily sales declined by 23%, while single-family sales decreased by 9%, attributed to lower starts activity and value per start [21] - Repair and remodel increased by 3%, driven by strength in the Mid Atlantic and South Central regions [21] - The company invested over $35 million in value-added solutions, including opening a new millwork location in Florida and upgrading plants in seven states [8][9] Market Data and Key Metrics Changes - Single-family starts are expected to decrease through year-end due to builders managing construction pace amid affordability concerns [10] - Multifamily remains muted due to higher input and financing costs, but it is still considered an appealing and profitable business [11] - The company anticipates a headwind to sales of $400 million to $500 million in multifamily and a headwind to EBITDA of less than $200 million [28] Company Strategy and Development Direction - The company focuses on three key areas: customer service, operational excellence, and disciplined capital allocation [6][7] - Investments in technology, including the implementation of a single ERP system, are expected to unlock growth and efficiency opportunities [7] - The company remains committed to pursuing higher return opportunities through acquisitions, despite a slower M&A environment [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging market environment but emphasizes the importance of operational discipline and customer service [5][10] - The company expects net sales for 2025 to be in the range of $14.8 billion to $15.6 billion, with adjusted EBITDA forecasted between $1.5 billion and $1.7 billion [28][29] - Management remains confident in the company's ability to drive long-term growth by executing its strategy and maintaining financial flexibility [29] Other Important Information - The company completed a $750 million offering of senior unsecured notes to pay down the balance on its ABL [26] - The company has a net debt to adjusted EBITDA ratio of approximately 2.3x and a fixed charge coverage ratio of roughly 6x [26] - The company has repurchased 3.3 million shares at an average price of $118.27 per share, with $500 million remaining on its share repurchase authorization [27] Q&A Session Summary Question: How is the company strengthening its competitive position in a disappointing starts environment? - Management highlighted improvements in on-time and in-full performance, aligning closely with builders to enhance affordability and efficiency through technology [34][35] Question: What drove the sequential improvement in gross margins in Q2? - Management noted better-than-expected performance in multifamily and repair and remodel sectors contributed to the margin outperformance [40][41] Question: Can you discuss the impact of Canadian lumber tariffs on your outlook? - Management has factored in the duties into their guidance, expecting minimal impact on financial results in 2025 due to lead times on existing orders [62][64] Question: How does the company plan to balance market share and margin? - Management emphasized maintaining a fair return while being prepared to walk away from business that does not meet margin expectations [91][92] Question: What is the status of the ERP rollout and associated costs? - The ERP project went live on July 1, with expected cash expenses of $140 million in 2025, but no changes to the projection at this time [108][110]

Financial Data and Key Metrics Changes - Net sales decreased by 5% to $4.2 billion, driven by lower organic sales and commodity deflation, partially offset by growth from acquisitions [19][20] - Gross profit was $1.3 billion, a decrease of 11% compared to the prior year, with a gross margin of 30.7%, down 20 basis points [21] - Adjusted EBITDA was $506 million, down 24%, with an adjusted EBITDA margin of 12%, down 300 basis points from the prior year [22] Business Line Data and Key Metrics Changes - Multifamily sales declined by 23%, while single-family sales decreased by 9%, attributed to lower starts activity and value per start [20] - Repair and remodel increased by 3%, driven by strength in the Mid Atlantic and South Central regions [20] - The company invested over $35 million in value-added solutions, including opening a new millwork location in Florida and upgrading plants in seven states [7][8] Market Data and Key Metrics Changes - Single-family starts are expected to decrease through year-end due to builders managing construction pace amid affordability concerns [9] - Multifamily remains muted due to higher input and financing costs, but it is still considered an appealing and profitable business [10] - The company anticipates a headwind to sales of $400 million to $500 million in multifamily and a headwind to EBITDA of less than $200 million [26] Company Strategy and Development Direction - The company focuses on three key areas: customer service, operational excellence, and disciplined capital allocation [5][6] - The transition to a single ERP system is expected to unlock further growth opportunities and efficiencies [6] - The company remains committed to pursuing higher return opportunities through acquisitions, with a focus on expanding value-added product offerings [11] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenging market environment but emphasizes the importance of operational discipline and customer service [4][7] - The company expects net sales for Q3 to be between $3.65 billion and $3.95 billion, reflecting a weaker than normal building season [28] - The full-year guidance for net sales is projected to be between $14.8 billion and $15.6 billion, with adjusted EBITDA expected to be between $1.5 billion and $1.7 billion [26] Other Important Information - The company completed a $750 million offering of senior unsecured notes to pay down the balance on its ABL [24] - Capital expenditures for the quarter were $86 million, with $61 million allocated to acquisitions and $391 million used for share repurchases [25] - The company has a net debt to adjusted EBITDA ratio of approximately 2.3x, indicating a comfortable leverage position [24] Q&A Session Summary Question: How is the company strengthening its competitive position in a disappointing starts environment? - The company focuses on improving on-time and in-full performance, enhancing integrations with builders, and leveraging technology to optimize the build process [34][36] Question: What drove the sequential improvement in gross margins in Q2? - The improvement was attributed to better-than-expected performance in multifamily and repair and remodel segments, despite ongoing pressures [41][42] Question: What is the outlook for gross margins in Q3 and the second half of the year? - The company expects sequential normalization or declines in margins due to the competitive landscape and softer starts environment [43] Question: How does the company view the impact of Canadian lumber tariffs on its forecast? - The company has factored in the duties and believes the impact will be minimal in 2025, with lumber prices remaining stable [62] Question: What are the main drivers of the sequential change from Q2 to Q3? - The main drivers include a weakening start environment, continued normalization of multifamily, and commodity deflation [70][71] Question: How is the ERP rollout progressing? - The ERP system went live on July 1, with ongoing support and adjustments being made to address initial challenges [106][107]

Q2 2025 Performance - Net sales decreased by 5% to $42341 billion compared to $445634 billion in the prior year[13, 100] - Gross profit decreased to $13 billion, with a gross margin of 307%[13] - Net income decreased by 462% to $185 million, representing 44% of sales[13] - Adjusted EBITDA decreased by 244% to $506 million, with an adjusted EBITDA margin of 12%[13] - Adjusted diluted EPS decreased by 32% to $238[13] - The company generated $255 million in free cash flow during Q2[14] Strategic Execution and Capital Allocation - The company invested over $35 million in expanding value-added facilities and opened a new millwork location in Florida[16] - Approximately 47% of the product mix in Q2 was value-added products[16] - The company repurchased $391 million of common stock in Q2, representing approximately 48% of total shares outstanding since the buyback program began in August 2021[16] - $61 million was deployed on one acquisition to expand the company's footprint into high-growth geographies and enhance value-added offerings[26] 2025 Outlook - The company anticipates total net sales between $148 billion and $156 billion, compared to $164 billion in 2024[56] - The company projects adjusted EBITDA between $15 billion and $17 billion, compared to $23 billion in 2024[56]

[Executive Summary and Highlights](index=1&type=section&id=Second%20Quarter%202025%20Highlights) Builders FirstSource reported durable Q2 2025 results with a **5.0%** decrease in net sales to **$4.2 billion**, driven by market challenges, margin normalization, and lower housing starts, yet maintained strong free cash flow and disciplined execution - CEO Peter Jackson highlighted the company's focus on controllable factors such as customer service, technology, and disciplined management to navigate the challenging market and strengthen its industry position for long-term value creation[1](index=1&type=chunk) - CFO Pete Beckmann emphasized the strength and adaptability of the operating model, which continues to generate strong free cash flow and preserve financial flexibility for disciplined capital deployment[1](index=1&type=chunk) Q2 2025 Key Performance Indicators (Y-o-Y) | Metric | Q2 2025 | Change (Y-o-Y) | | :--- | :--- | :--- | | Net Sales | $4.2 billion | -5.0% | | Gross Profit Margin | 30.7% | -210 bps | | Net Income | $185.0 million | -46.2% | | Diluted EPS | $1.66 | -42.2% | | Adjusted EBITDA | $506.1 million | -24.4% | | Adjusted EBITDA Margin | 12.0% | -300 bps | | Free Cash Flow | $255.0 million | -30.5% | | Shares Repurchased | 3.3 million | - | [Financial Performance Analysis](index=1&type=section&id=Second%20Quarter%202025%20Financial%20Performance%20Highlights) The company's Q2 2025 financial performance saw net sales decline **5.0%** to **$4.2 billion** due to market headwinds and an **8.5%** drop in core organic sales, leading to compressed profitability with gross margin at **30.7%** and Adjusted EBITDA margin at **12.0%** [Net Sales](index=2&type=section&id=Net%20Sales) Q2 2025 net sales decreased **5.0%** to **$4.2 billion**, primarily due to an **8.5%** drop in core organic sales across Multi-Family and Single-Family segments, partially offset by acquisitions Q2 2025 Net Sales Change Breakdown (Y-o-Y) | Component | Percentage Change | | :--- | :--- | | Core Organic Net Sales | -8.5% | | Commodity Deflation | -1.5% | | Acquisitions | +5.0% | | **Total Net Sales** | **-5.0%** | Q2 2025 Core Organic Net Sales Change by End Market (Y-o-Y) | End Market | Percentage Change | | :--- | :--- | | Multi-Family | -23.3% | | Single-Family | -9.1% | | R&R/Other | +3.0% | [Profitability](index=2&type=section&id=Gross%20Profit) Q2 2025 profitability declined significantly, with gross profit falling **11.2%** to **$1.3 billion**, net income decreasing **46.2%** to **$185.0 million**, and Adjusted EBITDA dropping **24.4%** to **$506.1 million** Q2 2025 Profitability Metrics (Y-o-Y) | Metric | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Gross Profit | $1.3 billion | $1.46 billion | -11.2% | | Gross Margin | 30.7% | 32.8% | -210 bps | | Net Income | $185.0 million | $344.1 million | -46.2% | | Diluted EPS | $1.66 | $2.87 | -42.2% | | Adjusted Net Income | $264.3 million | $420.4 million | -37.1% | | Adjusted Diluted EPS | $2.38 | $3.50 | -32.0% | | Adjusted EBITDA | $506.1 million | $669.7 million | -24.4% | | Adjusted EBITDA Margin | 12.0% | 15.0% | -300 bps | [Operating Expenses and Other](index=2&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) SG&A expenses increased **1.5%** to **$987.8 million**, rising to **23.3%** of net sales, while net interest expense grew to **$72.0 million** and the effective tax rate increased to **22.7%** - SG&A increased **1.5% to $987.8 million**, representing **23.3% of net sales**, up **150 basis points** from the prior year due to reduced operating leverage[5](index=5&type=chunk) - Net interest expense rose by **$20.0 million to $72.0 million**, primarily due to higher average debt balances[6](index=6&type=chunk) - The effective tax rate increased by **140 basis points** year-over-year to **22.7%**, mainly due to a lower stock-based compensation windfall benefit[7](index=7&type=chunk) [Capital Management and Liquidity](index=3&type=section&id=Capital%20Structure%2C%20Leverage%2C%20and%20Liquidity%20Information) The company maintained strong liquidity of **$1.6 billion** and generated **$255.0 million** in free cash flow, while its net debt to LTM Adjusted EBITDA ratio increased to **2.3x**, supported by strategic debt issuance and share repurchases - Total liquidity as of June 30, 2025, was approximately **$1.6 billion**, consisting of **$1.54 billion** in borrowing availability and **$87 million** in cash[13](index=13&type=chunk) - The net debt to LTM Adjusted EBITDA ratio was **2.3x**, with net debt at **$4.6 billion** and LTM Adjusted EBITDA at **$2.0 billion**[13](index=13&type=chunk) - In Q2, the company repurchased **3.3 million shares for $390.9 million**. Since August 2021, it has repurchased **48.1% of its total shares outstanding for $8.0 billion**[13](index=13&type=chunk) - Completed a **$750 million offering of 6.750% senior notes due 2035** and amended its ABL facility, increasing commitments to **$2.2 billion** and extending maturity to May 2030[13](index=13&type=chunk) [Operational Excellence and Productivity](index=3&type=section&id=Productivity%20Savings%20From%20Operational%20Excellence) The company achieved **$5 million in Q2 2025 productivity savings**, bringing year-to-date totals to **$22 million**, with full-year 2025 savings projected between **$45 million and $65 million** - Delivered approximately **$5 million in productivity savings** in Q2 2025[13](index=13&type=chunk) - Year-to-date productivity savings total approximately **$22 million**[13](index=13&type=chunk) - The company expects to achieve **$45 million to $65 million in total productivity savings** in 2025[13](index=13&type=chunk) [Full Year 2025 Outlook and Assumptions](index=3&type=section&id=2025%20Full%20Year%20Total%20Company%20Outlook) Builders FirstSource projects full-year 2025 net sales between **$14.8 billion and $15.6 billion**, Adjusted EBITDA between **$1.5 billion and $1.7 billion**, and free cash flow between **$0.8 billion and $1.0 billion**, assuming continued market softness in housing starts Full Year 2025 Outlook | Metric | 2025 Guidance Range | | :--- | :--- | | Net Sales | $14.8B - $15.6B | | Gross Profit Margin | 29.0% - 30.5% | | Adjusted EBITDA | $1.5B - $1.7B | | Adjusted EBITDA Margin | 10.1% - 10.9% | | Free Cash Flow | $0.8B - $1.0B | Full Year 2025 Key Assumptions | Assumption | Projected Change/Value | | :--- | :--- | | Single-Family Starts | Down 10% - 12% | | Multi-Family Starts | Down mid-teens | | R&R | Flat | | Acquisition Net Sales Growth | +5.0% to +5.5% | | Total Capital Expenditures | $300M - $350M | | Interest Expense | $270M - $280M | | Effective Tax Rate | 23.0% - 25.0% | [Company and Investor Information](index=4&type=section&id=Conference%20Call) The company will host a Q2 2025 earnings conference call on July 31, 2025, and participate in September investor conferences, reinforcing its position as the largest U.S. building products supplier with approximately **585 locations in 43 states** - A conference call to discuss Q2 2025 financial results is scheduled for Thursday, July 31, 2025, at 8:00 a.m. Central Time[15](index=15&type=chunk) - Management will participate in the Goldman Sachs Consumer/Retail Conference on September 3, 2025, and the Jefferies Industrials Conference on September 4, 2025[17](index=17&type=chunk) - Builders FirstSource is described as the largest U.S. supplier of building products, prefabricated components, and value-added services, operating approximately **585 locations in 43 states**[18](index=18&type=chunk)[20](index=20&type=chunk) [Financial Statements](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) The unaudited condensed consolidated financial statements for Q2 2025 show a year-over-year decline in net income, lower operating cash flow, significant cash used for share repurchases, and an increase in total assets and liabilities due to acquisitions and debt issuance [Condensed Consolidated Statement of Operations](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) For the three months ended June 30, 2025, net sales decreased to **$4.23 billion**, with net income falling to **$185.0 million** and diluted EPS to **$1.66**, reflecting a significant year-over-year decline Statement of Operations Summary (Three Months Ended June 30) | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $4,234,064 | $4,456,340 | | Gross margin | $1,299,041 | $1,462,684 | | Income from operations | $311,287 | $489,483 | | Net income | $185,031 | $344,090 | | Diluted EPS | $1.66 | $2.87 | [Condensed Consolidated Statement of Cash Flows](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash provided by operating activities decreased to **$473.4 million**, while investing activities used **$1.06 billion** primarily for acquisitions, and financing activities provided **$519.5 million**, offsetting share repurchases Cash Flow Summary (Six Months Ended June 30) | (in thousands) | 2025 | 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 | [Condensed Consolidated Balance Sheet](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEET) As of June 30, 2025, total assets increased to **$11.46 billion** and total liabilities rose to **$7.29 billion**, primarily due to long-term debt, while stockholders' equity slightly decreased to **$4.18 billion** Balance Sheet Summary | (in thousands) | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total current assets | $3,287,617 | $3,141,239 | | Total assets | $11,464,555 | $10,583,086 | | Total current liabilities | $1,834,631 | $1,777,276 | | 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 | [Non-GAAP Financial Measures and Reconciliations](index=5&type=section&id=Non-GAAP%20Financial%20Measures) The company provides non-GAAP measures such as Adjusted EBITDA, Adjusted Net Income, and Free Cash Flow, with detailed reconciliations, to offer a clearer view of operational performance by excluding specific non-cash or special items [Reconciliation of GAAP Net Income to Adjusted Net Income](index=11&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20Net%20Income) For Q2 2025, GAAP net income of **$185.0 million** was adjusted for items like amortization and technology implementation, resulting in an Adjusted Net Income of **$264.3 million**, a decrease from Q2 2024 Q2 Reconciliation: GAAP Net Income to Adjusted Net Income (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **GAAP net income** | **$185.0** | **$344.1** | | Amortization expense | $73.9 | $81.0 | | Technology implementation expense | $28.8 | $17.5 | | Other adjustments | $1.6 | $1.9 | | Tax-effect of adjustments | ($25.0) | ($24.1) | | **Adjusted net income** | **$264.3** | **$420.4** | [Reconciliation of GAAP Net Income to Adjusted EBITDA](index=11&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20EBITDA) Adjusted EBITDA for Q2 2025 was **$506.1 million**, reconciled from GAAP net income of **$185.0 million** by adding back items such as interest, taxes, D&A, stock compensation, and technology implementation expenses, representing a decrease from Q2 2024 Q2 Reconciliation: GAAP Net Income to Adjusted EBITDA (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **GAAP net income** | **$185.0** | **$344.1** | | Interest, Taxes, D&A | $300.6 | $312.8 | | Stock compensation expense | $16.2 | $16.7 | | Technology implementation expense | $28.8 | $17.5 | | Other adjustments | $5.5 | $2.8 | | **Adjusted EBITDA** | **$506.1** | **$669.7** | [Reconciliation of GAAP SG&A to Adjusted SG&A](index=12&type=section&id=Reconciliation%20of%20GAAP%20Selling%2C%20General%20%26%20Administrative%20Expenses%20to%20Adjusted%20Selling%2C%20General%20%26%20Administrative%20Expenses) GAAP SG&A of **$987.8 million** for Q2 2025 was adjusted to **$818.4 million**, with key deductions including amortization and technology implementation costs, resulting in Adjusted SG&A as **19.3%** of sales, up from the prior year Q2 Reconciliation: GAAP SG&A to Adjusted SG&A (in millions) | Line Item | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | **GAAP SG&A expense** | **$987.8** | **$973.2** | | Less: D&A, Stock Comp, etc. | ($168.6) | ($158.2) | | **Adjusted SG&A expense** | **$818.4** | **$814.6** | | Adjusted SG&A as % of sales | 19.3% | 18.3% | [Interest Reconciliation and Free Cash Flow](index=12&type=section&id=Interest%20Reconciliation) As of June 30, 2025, total net debt was **$4.64 billion** with a Q2 interest expense of **$72.3 million**, while free cash flow for the quarter was **$255.0 million**, derived from operating cash flow less net capital expenditures - As of June 30, 2025, total net debt was **$4.64 billion**, resulting in a Q2 interest expense of **$72.3 million**[44](index=44&type=chunk) Free Cash Flow Calculation (in millions) | Line Item | Q2 2025 | H1 2025 | | :--- | :--- | :--- | | Cash from Operating Activities | $341.0 | $473.4 | | Less: Capital expenditures, net | ($86.0) | ($173.3) | | **Free cash flow** | **$255.0** | **$300.1** | [Supplemental Data](index=13&type=section&id=Sales%20by%20Product%20Category) This section details Q2 2025 net sales by product category, showing Value-added products as the largest segment at **46.8%**, followed by Lumber & lumber sheet goods and Specialty building products & services [Sales by Product Category](index=13&type=section&id=Sales%20by%20Product%20Category) In Q2 2025, most product categories experienced year-over-year sales declines, with Value-added products down **8.7%** and Lumber & Lumber Sheet Goods down **4.9%**, while Specialty Building Products & Services grew **2.2%** Net Sales by Product Category (Three Months Ended June 30) | (in millions) | 2025 Net Sales | 2024 Net Sales | % Change | | :--- | :--- | :--- | :--- | | Manufactured products | $953.1 | $1,056.1 | (9.8)% | | Windows, doors & millwork | $1,030.0 | $1,114.9 | (7.6)% | | **Value-added products (Subtotal)** | **$1,983.1** | **$2,171.0** | **(8.7)%** | | Specialty building products & services | $1,117.8 | $1,093.6 | 2.2% | | Lumber & lumber sheet goods | $1,133.2 | $1,191.7 | (4.9)% | | **Total net sales** | **$4,234.1** | **$4,456.3** | **(5.0)%** |

Core Viewpoint - Builders FirstSource, Inc. (BLDR) is expected to report second-quarter 2025 results on July 31, with anticipated declines in both earnings and net sales due to ongoing challenges in the housing market and margin pressures [1][5][9]. Financial Performance - In the last reported quarter, BLDR's adjusted earnings per share (EPS) exceeded the Zacks Consensus Estimate by 0.7%, while net sales fell short by 0.8%. Year-over-year, net sales and EPS decreased by 6% and 43%, respectively [1][2]. - The Zacks Consensus Estimate for BLDR's second-quarter EPS has increased to $2.35 from $2.33, reflecting a 32.9% decline from $3.50 in the same quarter last year. Net sales are projected at $4.24 billion, down 4.9% from $4.46 billion reported a year ago [3][9]. Sales and Market Conditions - The anticipated decline in net sales is attributed to significant decreases in the multi-family and single-family customer segments, along with reduced sales volume in manufactured products and windows, doors, and millwork categories [4][5]. - The housing market remains soft due to high mortgage rates and inflationary pressures, which are expected to negatively impact BLDR's top-line results. The company forecasts net sales between $4.1 billion and $4.4 billion for the quarter, down from $4.5 billion a year ago [5][6]. Earnings Outlook - BLDR's bottom line is expected to decline year-over-year due to margin normalization in single-family and multi-family segments, alongside a challenging housing starts environment. Reduced operating leverage and ongoing pressures in commodity product categories are also anticipated to affect margins [7][9]. - The company expects adjusted EBITDA to range from $475 million to $525 million, a decrease from $669.7 million reported in the previous year, with tariff cost impacts contributing to the headwinds [8][9]. Earnings Prediction Model - The current model does not predict an earnings beat for BLDR, as it has an Earnings ESP of -2.07% and a Zacks Rank of 3, indicating a neutral outlook [10][11].