Builders FirstSource Beats on Q3 Earnings Despite Housing Weakness

Core Insights - Builders FirstSource, Inc. (BLDR) reported better-than-expected third-quarter 2025 results, surpassing Zacks Consensus Estimates for both earnings and revenues despite a challenging housing market [1][3] - The company's shares rose over 4% in pre-market trading following the earnings announcement [1] Financial Performance - Adjusted earnings were $1.88 per share, exceeding the Zacks Consensus Estimate of $1.69, but down 38.8% year-over-year [3] - GAAP EPS was $1.10, reflecting a 57% decline from the previous year, with net income at $122.4 million compared to $284.8 million a year earlier [4] - Revenues reached $3.94 billion, surpassing the Zacks Consensus Estimate of $3.8 billion, but down 6.9% year-over-year [5] Sales and Product Mix - Value-added products accounted for 47.1% of total revenue, with manufactured products generating $868.4 million, down 14.4% year-over-year [6] - Specialty Building Products & Services was the only category with positive growth, increasing 3.6% year-over-year to $1.09 billion [7] - Revenue from Lumber & Lumber Sheet Goods declined 7.9% year-over-year to $995.6 million due to commodity price deflation and lower volumes [7] Operational Highlights - Gross profit decreased 13.5% year-over-year to $1.2 billion, with gross margin contracting 240 basis points to 30.4% [8] - Adjusted EBITDA fell 30.8% year-over-year to $433.7 million, with the margin down 380 basis points to 11.0% [8] - The company generated $547.7 million in operating cash flow and $464.9 million in free cash flow during the quarter, maintaining liquidity near $2.1 billion [11] Guidance and Market Conditions - Builders FirstSource reaffirmed its full-year 2025 expectations, projecting net sales between $15.1 billion and $15.4 billion and adjusted EBITDA between $1.625 billion and $1.675 billion [12] - The guidance assumes approximately 9% lower single-family starts and mid-teens declines in multi-family activity [12]