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Builders FirstSource (BLDR) Up 4% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Builders FirstSource (BLDR - Free Report) . Shares have added about 4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Builders FirstSource due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Builders FirstSource reported its first-quarter 2022 results, wherein it reported solid core organic sales growth of 15%.
The company’s earnings and net sales surpassed the Zacks Consensus Estimate as well as increased significantly year over year. The results were driven by an increase in net sales and gross margin amid continuous raw material supply woes.
Dave Flitman, CEO of Builders FirstSource, said, “We started the year out strong achieving another quarter of record net sales, gross margin and Adjusted EBITDA, while also producing strong core organic sales growth of 15%. In addition, we continue to make progress investing prudently in our operations and delivering outstanding service to our customers as we work to overcome the supply chain constraints that persist throughout our industry. Our efforts to broaden our value-added products, which saw core organic sales up 31%, alongside our strategic investments in digital, are helping our customers get their jobs done quickly, on time and cost-effectively.”
Flitman added, “For 2022, we have increased our expectations for growth and significant free cash flow generation. We remain committed to deploying capital to high return internal investments, accretive bolt-on M&A and share repurchases.”
Earnings & Revenue Discussion
The manufacturer and supplier of building materials reported adjusted earnings of $3.90 per share, which handily topped the consensus mark of $2.15 by 81.4%.
For the quarter, net sales of $5.68 billion surpassed the consensus mark of $4.75 billion by 19.6%. The top line grew 36.1% on a year-over-year basis. Core organic sales grew 15% from the prior-year quarter. Commodity price inflation contributed 12.8% to net sales. Acquisitions added 8.3% to net sales growth. The upside was led by a solid demand for its products amid supply woes.
Notably, core organic sales in value-added products increased 30.8% compared with the prior-year period.
Core organic customer growth in Single Family increased 16.6%, while that of R&R/Other and Multi Family improved 9.5% and 10.2%, respectively.
Sales According to Product Category
Value-Added Product Sales: For the reported quarter, sales of value-added products (comprising 41.7% of the quarterly net sales) were $2.37 billion, up 48.2% from the prior year.
Specialized Product & Other: Gypsum, Roofing & Insulation products sales (comprising 17.4% of the quarterly net sales) increased 22.6% from the year-ago quarter to $989.5 million.
Lumber & Lumber Sheet Goods: For the quarter, segment sales (comprising 40.9% of the quarterly net sales) increased 31.4% year over year to $2.33 billion.
Operating Highlights
Gross profit for the quarter increased 71.3% year over year to $1.8 billion. Gross margin of 32.3% expanded 670 basis points (bps) year over year owing to disciplined pricing in a volatile, supply-constrained marketplace and effective and timely sourcing. As a percentage of net sales, total SG&A expenses declined 270 bps to 17%.
Adjusted EBITDA increased 119.8% on a year-over-year basis to $1 billion, primarily driven by solid demand across key customer end markets, commodity inflation and pricing. Adjusted EBITDA margin expanded 670 bps year over year to 17.6%.
Other Financial Details
As of Mar 31, 2022, Builders FirstSource had cash and cash equivalents of $281.8 million compared with $42.6 million at 2021-end. Long-term debt — net of current portion — was $3.39 billion, up from $2.93 billion at 2021-end.
The company had liquidity of $1.2 billion at March 2022 end, consisting of approximately $0.9 billion in net borrowing availability under the revolving credit facility and cash on hand.
During the first quarter, BLDR repurchased 3.6 million shares of its stock for $286 million.
Buyouts
On Apr 1, 2022, BLDR wrapped up the acquisition of both the Texas Panel Truss and East Panel Truss businesses for an aggregate of $150 million.
Additionally, Builders FirstSource acquired Valley Truss Co., Inc. — a provider of building components to the single and multi-family markets in Boise, ID — for $30.5 million.
Guidance
The company expects free cash flow in the range of $2 billion to $2.4 billion for 2022. Interest expense is expected in the range of $175 million to $185 million. BLDR projects an effective tax rate between 23% and 25%, total capital expenditures between $375 million and $400 million, depreciation and amortization expenses between $440 million and $460 million for 2022.
Acquisitions will likely contribute to net sales growth between 5% and 6%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 17.06% due to these changes.
VGM Scores
At this time, Builders FirstSource has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Builders FirstSource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Builders FirstSource belongs to the Zacks Building Products - Retail industry. Another stock from the same industry, Beacon Roofing Supply (BECN - Free Report) , has gained 6.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Beacon Roofing reported revenues of $1.69 billion in the last reported quarter, representing a year-over-year change of +28%. EPS of $0.89 for the same period compares with $0.23 a year ago.
Beacon Roofing is expected to post earnings of $2.31 per share for the current quarter, representing a year-over-year change of +45.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +5.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Beacon Roofing. Also, the stock has a VGM Score of A.
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Builders FirstSource (BLDR) Up 4% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Builders FirstSource (BLDR - Free Report) . Shares have added about 4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Builders FirstSource due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Builders FirstSource Q1 Earnings & Revenues Beat Estimates
Builders FirstSource reported its first-quarter 2022 results, wherein it reported solid core organic sales growth of 15%.
The company’s earnings and net sales surpassed the Zacks Consensus Estimate as well as increased significantly year over year. The results were driven by an increase in net sales and gross margin amid continuous raw material supply woes.
Dave Flitman, CEO of Builders FirstSource, said, “We started the year out strong achieving another quarter of record net sales, gross margin and Adjusted EBITDA, while also producing strong core organic sales growth of 15%. In addition, we continue to make progress investing prudently in our operations and delivering outstanding service to our customers as we work to overcome the supply chain constraints that persist throughout our industry. Our efforts to broaden our value-added products, which saw core organic sales up 31%, alongside our strategic investments in digital, are helping our customers get their jobs done quickly, on time and cost-effectively.”
Flitman added, “For 2022, we have increased our expectations for growth and significant free cash flow generation. We remain committed to deploying capital to high return internal investments, accretive bolt-on M&A and share repurchases.”
Earnings & Revenue Discussion
The manufacturer and supplier of building materials reported adjusted earnings of $3.90 per share, which handily topped the consensus mark of $2.15 by 81.4%.
For the quarter, net sales of $5.68 billion surpassed the consensus mark of $4.75 billion by 19.6%. The top line grew 36.1% on a year-over-year basis. Core organic sales grew 15% from the prior-year quarter. Commodity price inflation contributed 12.8% to net sales. Acquisitions added 8.3% to net sales growth. The upside was led by a solid demand for its products amid supply woes.
Notably, core organic sales in value-added products increased 30.8% compared with the prior-year period.
Core organic customer growth in Single Family increased 16.6%, while that of R&R/Other and Multi Family improved 9.5% and 10.2%, respectively.
Sales According to Product Category
Value-Added Product Sales: For the reported quarter, sales of value-added products (comprising 41.7% of the quarterly net sales) were $2.37 billion, up 48.2% from the prior year.
Specialized Product & Other: Gypsum, Roofing & Insulation products sales (comprising 17.4% of the quarterly net sales) increased 22.6% from the year-ago quarter to $989.5 million.
Lumber & Lumber Sheet Goods: For the quarter, segment sales (comprising 40.9% of the quarterly net sales) increased 31.4% year over year to $2.33 billion.
Operating Highlights
Gross profit for the quarter increased 71.3% year over year to $1.8 billion. Gross margin of 32.3% expanded 670 basis points (bps) year over year owing to disciplined pricing in a volatile, supply-constrained marketplace and effective and timely sourcing. As a percentage of net sales, total SG&A expenses declined 270 bps to 17%.
Adjusted EBITDA increased 119.8% on a year-over-year basis to $1 billion, primarily driven by solid demand across key customer end markets, commodity inflation and pricing. Adjusted EBITDA margin expanded 670 bps year over year to 17.6%.
Other Financial Details
As of Mar 31, 2022, Builders FirstSource had cash and cash equivalents of $281.8 million compared with $42.6 million at 2021-end. Long-term debt — net of current portion — was $3.39 billion, up from $2.93 billion at 2021-end.
The company had liquidity of $1.2 billion at March 2022 end, consisting of approximately $0.9 billion in net borrowing availability under the revolving credit facility and cash on hand.
During the first quarter, BLDR repurchased 3.6 million shares of its stock for $286 million.
Buyouts
On Apr 1, 2022, BLDR wrapped up the acquisition of both the Texas Panel Truss and East Panel Truss businesses for an aggregate of $150 million.
Additionally, Builders FirstSource acquired Valley Truss Co., Inc. — a provider of building components to the single and multi-family markets in Boise, ID — for $30.5 million.
Guidance
The company expects free cash flow in the range of $2 billion to $2.4 billion for 2022. Interest expense is expected in the range of $175 million to $185 million. BLDR projects an effective tax rate between 23% and 25%, total capital expenditures between $375 million and $400 million, depreciation and amortization expenses between $440 million and $460 million for 2022.
Acquisitions will likely contribute to net sales growth between 5% and 6%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 17.06% due to these changes.
VGM Scores
At this time, Builders FirstSource has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Builders FirstSource has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Builders FirstSource belongs to the Zacks Building Products - Retail industry. Another stock from the same industry, Beacon Roofing Supply (BECN - Free Report) , has gained 6.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Beacon Roofing reported revenues of $1.69 billion in the last reported quarter, representing a year-over-year change of +28%. EPS of $0.89 for the same period compares with $0.23 a year ago.
Beacon Roofing is expected to post earnings of $2.31 per share for the current quarter, representing a year-over-year change of +45.3%. Over the last 30 days, the Zacks Consensus Estimate has changed +5.4%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for Beacon Roofing. Also, the stock has a VGM Score of A.