Builders FirstSource(BLDR) - 2025 Q1 - Quarterly Results

Q1 2025 Performance Highlights 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][2] 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) GAAP financial performance in Q1 showed declines across key metrics, primarily due to reduced core organic sales and margin normalization Net Sales Analysis 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] - 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] Profitability Analysis 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] Operating and Other Expenses 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] - Net interest expense increased by $16.6 million to $64.9 million, primarily due to higher average debt balances[6] - The effective tax rate for the quarter decreased by 100 basis points year-over-year to 19.4%[6] Non-GAAP Measures, Capital Structure, and Productivity Adjusted performance metrics declined, but the company maintained strong liquidity, continued share repurchases, and achieved productivity savings Adjusted Performance Metrics 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 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] - 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] - On April 30, 2025, the Board authorized a new share repurchase program of up to $500 million[13] Operational Excellence and Productivity 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] - For the full year 2025, the company expects to deliver $70 million to $90 million in productivity savings[17] 2025 Full Year Outlook and Assumptions 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] Consolidated Financial Statements (Unaudited) This section presents unaudited consolidated financial statements, detailing operations, cash flows, balance sheet, and sales by product category Statement of Operations 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 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 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 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 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] - 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] - 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]