BLDR Q1 Earnings Surpass Estimates, Sales Miss, Stock Declines

Core Insights - Builders FirstSource, Inc. (BLDR) reported mixed results for Q1 2025, with earnings exceeding estimates but net sales falling short [1][4] - The company faced year-over-year declines in both earnings and net sales due to lower core organic sales and commodity deflation, although acquisitions provided some offset [1][4] Earnings & Revenue Discussion - Adjusted earnings per share were $1.51, surpassing the consensus estimate of $1.50 by 0.7%, but down 43% from the previous year [4] - Net sales totaled $3.66 billion, missing the consensus mark of $3.69 billion by 0.8% and declining 6% year-over-year [4] - Core organic sales decreased by 8.1%, with Single-Family and Multi-Family sales down 5.9% and 32.7%, respectively [5][4] Product Category Sales - Value-added product sales, which accounted for 48.4% of quarterly net sales, were $1.77 billion, down 12% from the prior year [6] - Sales of gypsum, roofing, and insulation products increased by 1.2% to $914 million, while lumber and lumber sheet goods sales decreased by 0.5% to $974.4 million [7] Operating Highlights - Gross margin contracted by 290 basis points to 30.5%, influenced by margin normalization in Single-Family and Multi-Family segments [8] - Adjusted EBITDA fell 31.7% year-over-year to $369.2 million, with an adjusted EBITDA margin of 10.1%, down 380 basis points [8] Financial Details - As of March 31, 2025, cash and cash equivalents were $115.4 million, down from $153.6 million at the end of 2024 [11] - Long-term debt increased to $4.5 billion from $3.7 billion at the end of 2024, with a net debt to trailing 12-month adjusted EBITDA ratio of 2.0x [12] Share Repurchase Activity - The company repurchased 0.1 million shares at an average price of $131.51 per share for $12.8 million, and an additional 3.3 million shares in April at an average price of $118.27 per share for $390.9 million [13] 2025 Guidance - BLDR revised its 2025 net sales guidance to between $16.05 billion and $17.05 billion, down from the previous range of $16.5 billion to $17.5 billion [14] - Adjusted EBITDA is now expected to be between $1.7 billion and $2.1 billion, down from earlier projections of $1.9 billion to $2.3 billion [16] - Free cash flow expectations were raised to between $800 million and $1.2 billion, assuming average commodity prices of $400 to $440 per thousand board feet [17]