BLDR Q2 Earnings Surpass Estimates, Sales Miss, Stock Down

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]