Financial Data and Key Metrics Changes - Consolidated third-quarter sales were $1.7 billion, down 3% from the third quarter of 2024 [3] - Net income was $21.8 million, or $0.58 per share, compared to $91 million, or $2.33 per share, in the year-ago quarter [3] - Gross margin for the third quarter was 15.1%, a 60 basis point year-over-year decline [8] - BMD's EBITDA margin was 4.5% for the quarter, down from 5.6% in the year-ago quarter [8] Business Line Data and Key Metrics Changes - Wood product sales in the third quarter were $396.4 million, down 13% compared to the third quarter of 2024 [5] - BMD sales in the quarter were $1.6 billion, down 1% from the third quarter of 2024 [5] - I-Joist and LVL volumes were down 10% and 7% respectively compared to the year-ago quarter [6] - Plywood sales volume was $387 million compared to $391 million in the third quarter of 2024 [7] Market Data and Key Metrics Changes - U.S. housing starts increased 2% year-over-year, while single-family housing starts decreased 3% [3] - BMD's year-over-year third-quarter sales decline of 1% was driven by a 1% decrease in price, with sales volumes flat [8] - BMD's daily sales pace in October was approximately 5% below the third-quarter sales pace [15] Company Strategy and Development Direction - The company remains focused on a two-step distribution model and enhancing its market-leading EWP and plywood franchises [4] - Capital expenditures for the nine months ended September 2025 were $187 million, with a commitment to a capital spending range of $230 million to $250 million for 2025 [10][11] - The company is expanding its market-leading national distribution presence, including the opening of a new distribution center in Texas [11] Management's Comments on Operating Environment and Future Outlook - Management expects demand weakness, trade policy uncertainties, and seasonal factors to influence financial results in the fourth quarter [13] - Early industry projections for 2026 are consistent with 2025 housing starts levels, with gradual improvement expected later in the year [17] - The company anticipates that prices for EWP have bottomed and expects to move prices higher as 2026 progresses [18] Other Important Information - The company paid $27 million in regular dividends in the nine months ended September 30, 2025, and has authorized up to $300 million for share repurchases [12] - The company is focused on maintaining a balanced capital deployment strategy, investing in existing assets while pursuing growth opportunities [13] Q&A Session Summary Question: Can you talk about share gains in the general line part of the business? - Management noted that demand held up well in general line product categories due to significant investments in capacity and partnerships with suppliers [21][22] Question: Can you discuss competitive dynamics in EWP and pricing confidence? - Management indicated that prices have stabilized and they expect to see improvements in pricing as demand recovers [25][28] Question: What are the constraints for generating higher margins in BMD? - Management expressed confidence in maintaining gross margins above 15% and highlighted the importance of enriching the product mix [32][34] Question: How is the company planning to balance M&A with share repurchases? - Management stated that their priorities remain investing in existing assets and pursuing organic growth, with share repurchases being active in the absence of meaningful M&A [72]

in that space. First though, let's get some housing data with Diana Ola. Morning, Diana. >> Good morning, Carl.Pending home sales in September were unchanged from August and dropped.9% year-over-year. That according to the National Association of Realtors, the street was looking for a 1% gain after an even larger gain in August. Now, this count is based on signed contracts.So, people out shopping in September and making that decision when the average rate on the 30-year fix was generally on the decline, but ...

Financial Data and Key Metrics Changes - Non-GAAP earnings per share increased by 7% year over year, reaching $1.10, driven by a record third quarter non-GAAP operating margin of 10.8% [4][5] - Total net sales in the third quarter increased by 3% organically compared to the same period last year [5] - Non-GAAP operating margin expanded by 10 basis points year over year, marking the highest EBIT margin for the third quarter [5] Business Line Data and Key Metrics Changes - In the workplace furnishings segment, organic net sales increased by 3% year over year, with a non-GAAP segment operating profit margin exceeding 12% [5][6] - Residential building products revenue was roughly unchanged year over year, with new construction revenue down slightly and remodel retrofit sales growing modestly [6] - Orders in the residential building products segment increased by 2% year over year, with remodel retrofit orders up mid-single digits [8] Market Data and Key Metrics Changes - Builder sentiment has weakened recently, reflecting elevated interest rates and affordability issues, with permits moving lower [8] - The office space market is showing signs of recovery, with net absorption expected to be the highest since 2019, indicating improved demand for office furniture [11] - 18 of the largest U.S. markets are exceeding pre-pandemic leasing activity, suggesting a positive trend for workplace furnishings [11] Company Strategy and Development Direction - The company remains focused on margin expansion efforts and continued revenue growth while investing for future growth [7][15] - The pending acquisition of Steelcase is expected to create synergies of $120 million and accretion of $1.20 per share when fully mature [19] - The company is optimistic about long-term market fundamentals in residential building products, despite a soft new construction environment [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving a fourth consecutive year of double-digit non-GAAP EPS growth, supported by strong third quarter performance and ongoing visibility [18] - The macro and industry backdrops are improving, with expectations for the contract business to benefit from these trends [12] - Management remains cautious about ongoing macro-related risks and tariff-driven volatility but is optimistic about future growth opportunities [18] Other Important Information - The company anticipates fourth quarter revenue in workplace furnishings to increase at a high single-digit rate year over year, with residential building products also projected to grow at a high single-digit rate [16] - The company is committed to maintaining its dividend while investing in business growth [17] Q&A Session Summary Question: Is the $1.20 of accretion from Steelcase considering just the synergies outlined? - Yes, the $120 million in synergies translates to about $1.20 in accretion based on share count [23][25] Question: Where are you in terms of the $0.75 to $0.80 from KI and Mexico? - The company expects to recognize $45 to $50 million between 2025 and 2026, with more expected in 2025 than 2026 [28] Question: How does the current industry volume compare to pre-pandemic levels? - The company estimates that industry-wide volumes are still down by 30% to 35% compared to pre-pandemic levels, but there is potential for mid-single-digit volume growth in the coming years [31][32] Question: Can you compare your full-year guidance with previous expectations? - Revenue expectations remain in line with prior expectations, but there is some pressure on product mix and timing of investments [34][36] Question: How much runway do you have for growth in residential building products? - The company believes it can outperform the market due to ongoing investments and strong relationships with builders [37] Question: What risks are associated with integrating Steelcase? - The company plans to maintain dealer partnerships and brand distribution intact, which should allow for participation in any demand upswing [39]

Core Insights - The bond market is positioned to potentially revitalize the stagnant housing market following the recent Federal Reserve decision [1] Group 1: Bond Market Impact - The Federal Reserve's decision this week may lead to lower interest rates, which could stimulate demand in the housing market [1] - A decrease in bond yields is expected, making mortgages more affordable and encouraging home purchases [1] Group 2: Housing Market Dynamics - The housing market has been experiencing a slowdown, with many potential buyers sidelined due to high borrowing costs [1] - The anticipated changes in the bond market could unlock new opportunities for both buyers and sellers in the housing sector [1]

Core Insights - NVR, Inc. reported third-quarter 2025 results with earnings and Homebuilding revenues exceeding the Zacks Consensus Estimate, although both metrics showed a year-over-year decline [1][4][5] Financial Performance - Earnings per share were $112.33, surpassing the consensus estimate of $107.88 by 4.1%, but down 14% from $130.50 in the prior-year quarter [4] - Homebuilding revenues reached $2.56 billion, exceeding the consensus mark of $2.41 billion by 6.3%, yet declined 4.4% year over year [5] - Consolidated revenues, combining Homebuilding and Mortgage Banking fees, totaled $2.61 billion, a slight decrease of 4.5% year over year [5] Homebuilding Segment Analysis - Homebuilding segment revenues fell 4.4% year over year to $2.56 billion, with settlements down 5% to 5,639 units [6] - The average selling price (ASP) for settlements remained stable at $454,000, slightly below the estimated $460,000 [6] - New orders decreased 16% year over year to 4,735 units, while the ASP for new orders increased by 3% to $464,800 [8] Market Conditions - The housing market continues to show softness, with affordability challenges exacerbated by macroeconomic uncertainty and inflation [2] - Backlog units decreased 19% year over year to 9,165 homes, with a dollar value of $4.39 billion [8] - The cancellation rate for new orders increased to 19%, up from 15% a year ago [8] Cost and Margin Analysis - Gross margin contracted by 240 basis points year over year to 21%, primarily due to higher lot costs and pricing pressures [7] - Contract land deposit impairments totaled approximately $18.9 million, contributing to the decline in profitability [7] Mortgage Banking Performance - Mortgage banking fees fell 11.1% year over year to $49.2 million, with closed loan production totaling $1.54 billion, down 7% [9] - The capture rate remained stable at 86%, consistent with the previous year [9] Cash Position and Share Repurchase - As of September 30, 2025, NVR had cash and cash equivalents of $1.93 billion for Homebuilding and $39.3 million for Mortgage Banking, down from $2.56 billion and $49.6 million at the end of 2024 [10] - The company repurchased 178,178 shares for $1.33 billion during the first nine months of 2025 [10]

Core Insights - The article highlights the seven most expensive mistakes first-time home buyers make and emphasizes that these mistakes are often avoidable with proper preparation and expert guidance. Group 1: Home Inspection - Skipping the home inspection can lead to costly repairs that may not be apparent initially, such as roof leaks or plumbing issues, which can cost tens of thousands to fix [2][19] - A professional inspection provides a clearer picture of projected expenses and should be treated as nonnegotiable [2][4] Group 2: Maintenance and Repair Costs - First-time buyers often underestimate ongoing maintenance and repair costs, which can lead to financial strain [3][4] - It is recommended to set aside 1% to 3% of the home's value annually for maintenance, which for a $400,000 home translates to $4,000 to $12,000 per year [4][20] Group 3: Homeowners Insurance - Many first-time buyers overlook gaps in homeowners insurance, assuming it covers all types of damage, including natural disasters, which it typically does not [7][21] - Separate insurance for floods or earthquakes can add significant costs, but these are minor compared to the potential financial loss from a disaster [8][9] Group 4: Market Timing - Waiting for the market to improve before buying can lead to missed opportunities, as market conditions rarely shift dramatically overnight [10][11] - Buyers should act when their finances are ready rather than waiting for an ideal market [12] Group 5: Agent Advice - Ignoring the advice of experienced real estate agents can lead to significant financial losses, as they provide valuable insights into the buying process [13] - Trusting an agent's expertise can help buyers navigate complex negotiations and avoid costly mistakes [13] Group 6: Preparation for Negotiation - Entering negotiations unprepared can result in unfavorable outcomes, including unexpected closing costs that can range from 2% to 5% of the purchase price [14][15] - Preapproval for a mortgage and understanding closing costs are essential steps before house hunting [15][16] Group 7: DIY Projects - Taking on DIY projects without adequate experience can lead to increased costs if professional help is needed to fix mistakes [17] - It is advisable to start with small projects and leave complex tasks to licensed professionals to avoid budget overruns [18]

Core Viewpoint - Builders FirstSource, Inc. is highlighted as a key player in the housing market, with potential for growth if housing conditions improve, particularly if mortgage rates decline [1][2]. Company Overview - Builders FirstSource, Inc. manufactures and distributes building materials, prefabricated components, and construction services for both residential and commercial builders [2]. - The company also offers design software, professional installation, and custom millwork, positioning itself as a major consolidator in a previously fragmented industry [2]. Market Performance - The stock has been a strong long-term performer but peaked early last year and has since declined due to a weak housing market influenced by high interest rates [2]. - Unlike other market stocks, Builders FirstSource did not see significant recovery in April, and following the earnings report on May 1st, the stock further declined as management lowered their full-year forecast [2].

Summary of Key Points from the Conference Call Industry Overview - The report discusses the current state of the U.S. housing market and broader economic conditions, focusing on the impact of interest rates on consumer behavior and asset classes such as stocks and housing [1][20][22]. Core Insights and Arguments 1. **Market Conditions**: - U.S. households currently hold $19.6 trillion in cash, the highest since 1991, while existing home sales are at levels comparable to the Global Financial Crisis (GFC) [21][22]. - The divergence between high stock prices and low housing market activity is attributed to high interest rates, which have made housing less affordable [20][22]. 2. **Interest Rates and Economic Policy**: - The BofA base case anticipates a 4% yield on 10-year Treasuries and a 3.9% Fed rate by the end of Q4 [3][38]. - There is speculation that lower interest rates and potential tariff relief could stimulate economic growth ahead of midterm elections, which may lead to bullish market conditions [3][39]. 3. **Consumer Behavior**: - Despite weak sentiment indicators, consumer spending remains strong, with higher-income households showing a 4% wage growth, supporting continued spending [12][40]. - The report suggests that consumer spending is likely to prevail over negative sentiment, as spending has historically outpaced sentiment trends [44]. 4. **Housing Market Dynamics**: - The housing market is described as "frozen" due to high mortgage rates and low affordability, with existing home sales averaging 4 million in 2025 [22][46]. - A mortgage rate of around 5% is considered necessary to stimulate the housing market, which would require significant cuts in the Fed rate and Treasury yields [46][39]. 5. **Investment Opportunities**: - The report identifies potential investment opportunities in small-cap value stocks, homebuilders, and long-duration Treasuries, particularly if interest rates decline [4][67][78]. - Homebuilders are currently trading at historical averages, and past rate-cutting cycles have shown that they tend to outperform the S&P 500 [73][55]. Additional Important Insights - **Global Monetary Policy**: - 91% of global central banks are currently in easing mode, which is expected to support growth cycles [18][26]. - The report highlights the historical precedent set by Paul Volcker, suggesting that significant rate cuts could lead to a doubling of equity values, as seen in the mid-1980s [31][32]. - **Sector Performance**: - REITs are expected to benefit from declining rates, with healthcare REITs performing particularly well [61][66]. - Emerging market debt is positioned to outperform due to aggressive rate cuts in those regions [84][85]. - **Technical Analysis**: - The Russell 2500 index has shown strong recovery patterns, indicating potential for further upside if it breaks above key resistance levels [96][97]. This summary encapsulates the key points discussed in the conference call, providing insights into the current economic landscape, consumer behavior, and potential investment strategies.

Government Shutdown Implications - The likelihood of a government shutdown is rising significantly, with probabilities now in the very high numbers [1][4][8] - The last continuing resolution was passed on March 1st, and the current impasse is partly due to the political fallout from that event [2] - If the government shuts down, critical labor market data, including jobs data, may not be released, which could impact market sentiment [3][9] Market Reactions and Economic Impact - Despite the uncertainty, it is suggested that the market and investors should not be overly concerned about the shutdown's impact on the overall economy [3][4] - Historical context indicates that previous shutdowns, such as during the Trump administration, did not lead to catastrophic economic effects [4][6] - A shutdown lasting a few days may not be significant, but if it extends to weeks, it could have more serious implications [7] Labor Market and Economic Indicators - Upcoming labor market data, including the Jolts report, is critical, with expectations of around 7.1 million job openings [14] - Consumer confidence is anticipated to dip slightly from 97.4 to 96 due to the looming shutdown [14] - The Case-Shiller home price index showed a month-over-month decline of 0.1% and a year-over-year increase of 1.8%, indicating mixed signals in the housing market [10][11] Federal Reserve Commentary - Several Federal Reserve speakers are scheduled to discuss interest rates and the economy, which may provide insights into future monetary policy [15] - The upcoming October Fed meeting's occurrence during a potential government shutdown raises questions about its implications [15]

Starbucks Restructuring - Starbucks plans to cut its North American store count by about 1% and lay off approximately 900 employees as part of a $1 billion restructuring program aimed at revitalizing the brand [1][2] - The restructuring is seen as necessary to improve efficiency and align with the company's vision of promoting a coffeehouse atmosphere, which some existing stores do not support [2][3] - The company anticipates returning to net unit growth by fiscal 2026, indicating that the contraction is viewed as a temporary measure [2][3] Home Builders Market Analysis - The housing market is experiencing mixed signals, with persistent home shortages contrasted by stagnant existing home sales, which are at levels comparable to the Great Recession [6][7] - New home sales surged by 20% from July to August, reaching a three-year high, while existing home sales remained flat [7][9] - Home builders are increasingly offering incentives, with over half cutting prices and two-thirds providing incentives, the highest in five years, to attract buyers [8][9] Company Performance Insights - KB Home reported earnings that exceeded guidance despite a 7% decline in home sales year-over-year, while Lennar saw a 12% increase in new orders but with reduced sales prices due to incentives [7][8] - The demand for entry-level homes remains strong, but affordability issues are keeping many potential buyers on the sidelines [9][11] - Home builders are benefiting from rising home values outpacing construction costs, creating a favorable profit environment [11][12] Future Outlook - Analysts express cautious optimism about the home building sector, suggesting that if mortgage rates decrease, there could be significant growth opportunities [11][12] - Specific companies like KB Home are noted for their strong profit margins and reduced share counts, making them attractive investments [10][12] - The overall sentiment is that while the home building industry has challenges, there are promising prospects for well-managed companies within the sector [12][13]