[Q1 2025 Performance Highlights](index=1&type=section&id=First%20Quarter%202025%20Highlights) 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](index=1&type=chunk)[2](index=2&type=chunk) 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)](index=2&type=section&id=First%20Quarter%202025%20Financial%20Performance%20Highlights) GAAP financial performance in Q1 showed declines across key metrics, primarily due to reduced core organic sales and margin normalization [Net Sales Analysis](index=2&type=section&id=Net%20Sales) 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](index=7&type=chunk) - 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](index=7&type=chunk) [Profitability Analysis](index=2&type=section&id=Gross%20Profit) 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](index=4&type=chunk) [Operating and Other Expenses](index=2&type=section&id=Selling%2C%20General%20and%20Administrative%20Expenses) 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](index=5&type=chunk) - Net interest expense increased by **$16.6 million** to **$64.9 million**, primarily due to higher average debt balances[6](index=6&type=chunk) - The effective tax rate for the quarter decreased by **100 basis points** year-over-year to **19.4%**[6](index=6&type=chunk) [Non-GAAP Measures, Capital Structure, and Productivity](index=3&type=section&id=Adjusted%20Net%20Income) Adjusted performance metrics declined, but the company maintained strong liquidity, continued share repurchases, and achieved productivity savings [Adjusted Performance Metrics](index=3&type=section&id=Adjusted%20Performance%20Metrics) 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](index=3&type=section&id=Capital%20Structure%2C%20Leverage%2C%20and%20Liquidity%20Information) 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](index=13&type=chunk) - 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](index=13&type=chunk) - On April 30, 2025, the Board authorized a new share repurchase program of up to **$500 million**[13](index=13&type=chunk) [Operational Excellence and Productivity](index=3&type=section&id=Productivity%20Savings%20From%20Operational%20Excellence) 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](index=17&type=chunk) - For the full year 2025, the company expects to deliver **$70 million to $90 million** in productivity savings[17](index=17&type=chunk) [2025 Full Year Outlook and Assumptions](index=4&type=section&id=2025%20Full%20Year%20Total%20Company%20Outlook) 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](index=17&type=chunk) [Consolidated Financial Statements (Unaudited)](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) This section presents unaudited consolidated financial statements, detailing operations, cash flows, balance sheet, and sales by product category [Statement of Operations](index=8&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20OPERATIONS) 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](index=9&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENT%20OF%20CASH%20FLOWS) 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](index=10&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEET) 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](index=13&type=section&id=Sales%20by%20Product%20Category) 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](index=11&type=section&id=Reconciliation%20of%20GAAP%20Net%20Income%20to%20Adjusted%20Net%20Income) 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](index=35&type=chunk) - 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](index=37&type=chunk) - 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](index=40&type=chunk)

Market Overview - The S&P 500 has declined approximately 6% since the beginning of the year, with a more significant drop earlier in April when global tariffs were announced [1] - Despite a recent recovery, the risk of further market sell-offs remains [1] Investment Opportunities - Long-term investors may find buying opportunities in stocks that are down over 10% this year and trading at low earnings multiples, specifically Pfizer, PayPal, and Builders FirstSource [2] Pfizer - Pfizer's stock has decreased by 13% in 2025, with expectations of nearly unchanged or declining revenue for the year [3][4] - The company trades at a forward P/E multiple of less than 8 and aims to add $25 billion in revenue through in-house development and acquisitions despite potential losses of $18 billion from generics by the end of the decade [4] - Recent acquisitions, including oncology company Seagen, are expected to contribute up to $10 billion in revenue by the end of the decade [5] - Pfizer's mRNA pipeline is projected to generate between $10 billion and $15 billion by 2030, and the company has over 100 drug candidates in clinical trials [6] - The stock offers a dividend yield of over 7%, making it an attractive long-term investment [7] PayPal - PayPal's stock is down more than 20% this year and trades at only 13 times its future earnings, with concerns about a global economic slowdown affecting its growth prospects [8] - The company holds a significant position in the global payments market, accounting for nearly 45% of it, and is well-positioned for long-term recovery [9] - PayPal is expanding into the crypto market with the launch of PayPal USD, offering a 3.7% yield to attract investors, which could drive more transactions and revenue growth [10] - The company's payment volume rose by 10% last year, indicating potential for long-term investment despite short-term concerns [11] Builders FirstSource - Builders FirstSource trades at a forward P/E of less than 13 and plays a vital role in the homebuilding industry [12] - The company experienced a 4% decline in sales in 2024, totaling $16.4 billion, but is expected to benefit from long-term housing market growth [13] - Builders FirstSource has grown significantly from $8.6 billion in sales in 2020, aided by acquisitions and a strong housing market [14] - The company invested $352 million in 13 acquisitions last year and projects a net sales growth of 4% to 4.5% from these acquisitions [15] - Despite a 15% decline in stock price this year, Builders FirstSource remains a strong long-term investment [16]

Builders FirstSource, Inc. (BLDR) is slated to report first-quarter 2025 results on May 1, before market open.In the last reported quarter, the company’s adjusted earnings per share (EPS) surpassed the Zacks Consensus Estimate, but net sales missed the same. On a year-over-year basis, both the top and bottom lines tumbled 8% and 34.9%, respectively.BLDR’s earnings topped the consensus mark in three of the trailing four quarters and missed on the remaining occasion, with the average surprise being 5.9%.Trend ...

Company Performance - Builders FirstSource (BLDR) ended the latest trading session at $120.90, reflecting a +0.8% adjustment from the previous day's close, which lagged behind the S&P 500's gain of 1.81% [1] - Over the last month, the company's shares have decreased by 2.33%, outperforming the Retail-Wholesale sector's loss of 5.27% and the S&P 500's loss of 6.14% [1] Upcoming Earnings Report - Builders FirstSource is scheduled to release its earnings report on May 1, 2025, with analysts expecting earnings of $1.35 per share, indicating a year-over-year decline of 49.06% [2] - The consensus estimate projects revenue of $3.69 billion, reflecting a 5.3% decline from the same quarter last year [2] Fiscal Year Estimates - For the entire fiscal year, Zacks Consensus Estimates predict earnings of $9.52 per share and revenue of $16.85 billion, representing changes of -17.65% and +2.72% respectively from the previous year [3] Analyst Forecast Revisions - Recent revisions to analyst forecasts for Builders FirstSource are important as they indicate changing near-term business trends, with positive revisions reflecting analyst optimism about the company's business and profitability [4] Zacks Rank and Stock Performance - The Zacks Rank system, which ranges from 1 (Strong Buy) to 5 (Strong Sell), currently ranks Builders FirstSource at 4 (Sell), with a 0.3% decrease in the consensus EPS estimate over the last 30 days [6] - Historically, 1 ranked stocks have returned an average annual gain of +25% since 1988 [6] Valuation Metrics - Builders FirstSource has a Forward P/E ratio of 12.6, which is a discount compared to the industry's average Forward P/E of 14.59 [7] - The company has a PEG ratio of 1.47, while the average PEG ratio for Building Products - Retail stocks is 2.54 [7] Industry Context - The Building Products - Retail industry is part of the Retail-Wholesale sector and currently holds a Zacks Industry Rank of 232, placing it within the bottom 7% of over 250 industries [8] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Core Viewpoint - Builders FirstSource (BLDR) is experiencing a decline in stock price and is expected to report lower earnings and revenue in the upcoming financial results [1][2][3]. Company Performance - The stock closed at $128.99, reflecting a -1.42% change from the previous session, underperforming compared to the S&P 500's loss of 1.12% [1]. - Over the past month, shares have decreased by 7.05%, while the Retail-Wholesale sector and S&P 500 have lost 5.39% and 2.91%, respectively [1]. Financial Expectations - The upcoming earnings per share (EPS) is projected at $1.36, which is a decrease of 48.68% from the same quarter last year [2]. - The Zacks Consensus Estimate for revenue is $3.69 billion, down 5.15% year-over-year [2]. - Full-year estimates suggest earnings of $9.55 per share and revenue of $16.92 billion, indicating year-over-year changes of -17.39% and +3.16%, respectively [3]. Analyst Projections - Recent shifts in analyst projections should be monitored, as they reflect changes in short-term business dynamics [4]. - A decrease of 2.71% in the consensus EPS projection over the past 30 days indicates a negative outlook, resulting in a Zacks Rank of 4 (Sell) for Builders FirstSource [6]. Valuation Metrics - Builders FirstSource has a Forward P/E ratio of 13.7, which is lower than the industry average of 15.09, suggesting it is trading at a discount [7]. - The current PEG ratio is 1.6, compared to the industry average of 2.63, indicating a more favorable valuation relative to expected earnings growth [8]. Industry Context - The Building Products - Retail industry ranks in the bottom 10% of all industries, with a Zacks Industry Rank of 226 [9]. - The strength of individual industry groups is measured by the Zacks Industry Rank, with top-rated industries outperforming the bottom half by a factor of 2 to 1 [9].

Core Viewpoint - The article provides an update on Builders FirstSource (NYSE: BLDR) following a previous recommendation to hold due to anticipated headwinds affecting growth potential [1] Group 1: Investment Philosophy - The investment approach is fundamentally based, focusing on long-term durability and affordability rather than merely low multiples [1] - There is a belief that successful investments can be risky if overvaluation occurs, emphasizing the importance of valuation [1] - The article suggests that in certain situations, the potential for growth may outweigh immediate price concerns [1]

Group 1 - Builders FirstSource, Inc. (BLDR) is experiencing significant activity in the options market, particularly with the Jun 20, 2025 $75 Call showing high implied volatility, indicating potential for a major price movement [1] - Implied volatility reflects market expectations for future stock movement, suggesting that investors anticipate a significant event that could lead to a rally or sell-off [2] - Builders FirstSource currently holds a Zacks Rank 5 (Strong Sell) in the Building Products - Retail industry, which is in the bottom 26% of the Zacks Industry Rank, with recent downward revisions in earnings estimates from analysts [3] Group 2 - The high implied volatility for Builders FirstSource may indicate a developing trading opportunity, as options traders often seek to sell premium on such options to capture decay, hoping the stock does not move as much as expected by expiration [4]

Core Viewpoint - Builders FirstSource is the largest supplier of structural building products in the U.S., focusing on professional builders and contractors, and is currently navigating a challenging market environment while laying the groundwork for future growth through acquisitions and operational improvements [3][4][11]. Company Overview - Builders FirstSource operates nearly 570 distribution and manufacturing centers across 43 states, primarily serving contractors and professional homebuilders [3]. - The company has a P/E ratio of 15.70 and a current stock price of $142.20, with a price target of $190.72, indicating potential upside [3][4]. Recent Performance - In Q4 2024, Builders FirstSource reported EPS of $2.31, exceeding consensus estimates of $2.12 by 19 cents, while revenues fell 8% year-over-year to $3.82 billion, missing the $3.92 billion consensus [7]. - The decline in revenue was attributed to commodity deflation and lower core organic sales, partially offset by growth from acquisitions and an extra selling day [7]. - Gross margins decreased by 300 basis points to 32.3%, and net income dropped to $190.2 million, or $1.65 per share, compared to $2.83 per share in the previous year [9]. Acquisition Strategy - Builders FirstSource has a history of acquisitions to enhance vertical integration and control over the supply chain, with over 30 acquisitions executed since the BMC merger in 2021 [5][6]. - Recent acquisitions include California TrussFrame and Alpine Lumber Company, aimed at expanding the company's geographic footprint and manufacturing capabilities [6]. Market Position and Analyst Sentiment - Builders FirstSource holds a "Moderate Buy" rating among analysts, with a projected earnings growth of 9.58% and a significant upside potential of 34.1% [8][14]. - The stock has a 3.59% short interest, indicating a healthy market sentiment [14]. Share Buyback Program - In 2024, Builders FirstSource repurchased 8.9 million shares at an average price of $170.74, totaling $1.5 billion, with current shares trading 19.6% lower than the buyback price [10].

Core Insights - Builders FirstSource, Inc. (BLDR) reported disappointing fourth-quarter 2024 results, primarily due to weak sales in the Value-Added product category and reduced operating leverage amid a challenging housing market [1][2] Financial Performance - Adjusted earnings were $2.31 per share, exceeding the Zacks Consensus Estimate by 3.1%, while net sales were $3.82 billion, falling short by 2.4% [2] - Year-over-year, adjusted earnings decreased by 34.9% on an 8% decline in net sales during the quarter [2] - The adjusted EBITDA margin contracted by 360 basis points to 12.9% due to lower gross margins and reduced operating leverage [2] Sales Trends - The Value-Added Product category, which accounted for 49.7% of net sales, saw a 12% decline to $1.9 billion compared to the previous year [3] - Sales of manufactured products dropped by 18.9% to $899.6 million, while sales of windows, doors, and millwork decreased by 4.7% to $997.8 million [3] - Demand uncertainty in the multi-family sector, which represents about 9-10% of net sales, negatively impacted overall sales growth [4] Strategic Initiatives - The company has implemented various initiatives, including aligning capacity, reducing headcount, and managing expenses to mitigate the impact of lower volumes [5] - Builders FirstSource is investing in a product portfolio to offer cost-flexible options to builders, aiming to address affordability challenges [6] - In 2024, the company invested over $75 million in value-added facilities, including opening two new truss manufacturing facilities and upgrading existing ones [7] Future Outlook - For 2025, Builders FirstSource expects net sales to range between $16.5 billion and $17.5 billion, compared to $16.4 billion in 2024 [8] - Gross margin is projected to decline to between 30% and 32%, down from 32.8% in 2024, while consolidated adjusted EBITDA is expected to be between $1.9 billion and $2.3 billion [8] - Despite anticipated top-line improvement, margins are expected to decrease due to inflationary pressures and increased investments [9]

Financial Position - As of December 31, 2024, the company's total debt amounted to $3.7 billion, including $0.2 billion in finance lease and other finance obligations[105]. - The company has a $1.8 billion revolving credit facility with no outstanding borrowings and $0.1 billion in letters of credit as of December 31, 2024[106]. - As of December 31, 2024, the maximum borrowing amount under the Revolving Facility was $171.4 million, with a financial covenant requiring a minimum fixed charge ratio of 1.00 to 1.00 if excess availability falls below $80.0 million or 10% of the maximum borrowing amount[114]. - The company had no outstanding debt at variable interest rates as of December 31, 2024, but future interest rate increases could significantly raise debt service obligations and decrease net income and cash flows[116]. - The company has unsecured senior notes with fixed interest rates of 5.00% due 2030, 4.25% due 2032, and 6.375% due 2032 and 2034, which are not affected by market interest rate increases[216]. - The company did not have any outstanding borrowings on the Revolving Facility as of December 31, 2024, indicating no immediate interest rate risk from this source[216]. - The company is exposed to interest rate risk under the Revolving Facility, which bears interest at a variable rate based on either a base rate or SOFR[216]. Operational Challenges - The company faces significant competition for key employees, which may adversely impact its ability to execute business strategies[91]. - Labor shortages and increased labor costs are affecting the company's operating expenses and revenue opportunities[92]. - The company is implementing a new ERP system, which is critical for its operations, but there are risks of disruptions during the implementation[93]. - Cybersecurity risks are increasing, and the company expects to incur higher costs to strengthen its systems against potential breaches[96]. - The company relies on third-party service providers for certain business processes, and any disruptions in their systems could materially affect operations[94]. - The company may face challenges in securing additional financing on favorable terms, which could impact its ability to fund operations and growth[112]. - The company may need to take impairment charges if the housing market declines, which could adversely affect financial results and may require idling or closing under-performing locations[117]. - The company is subject to various federal, state, and local regulations that could impose substantial costs and restrictions, adversely affecting net income and financial condition[120]. - Ongoing geopolitical conflicts and unstable economic conditions may adversely impact the company's business, financial condition, and operations[128]. - The company is exposed to environmental liabilities and regulations that could increase costs and adversely affect financial condition and cash flows[126]. Market Performance - The market price of the company's common stock ranged from $132.60 to $211.12 per share between January 1, 2024, and December 31, 2024, indicating significant volatility[135]. - The company has repurchased approximately $7.6 billion of its shares since January 2021 and intends to continue share repurchases under the authorization approved in August 2024[118]. Strategic Investments - The company generates significant business from large single-family homebuilders, but gross margins on these sales are lower compared to other market segments[98]. - The company is investing in supply chain and technology initiatives, but these may disrupt operations and not provide the anticipated benefits[100]. - The company generated significant excess cash flows throughout 2024, which it plans to deploy through organic growth and potential acquisitions to enhance long-term shareholder value[118]. Cost Management - The company purchases materials, including lumber products, which are subject to significant cost fluctuations that may impact operating results if price increases cannot be passed on to customers[217]. - The company faces risks related to product liability and legal claims that could adversely affect financial condition and operating results[119].