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Builders FirstSource (BLDR) Up on Q3 Earnings & Revenue Beat
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Builders FirstSource’s (BLDR - Free Report) shares gained 5.6% on Nov 8 after the company released its third-quarter 2022 results, wherein it reported 6.9% core organic sales growth.
The company’s earnings and net sales surpassed the Zacks Consensus Estimate and increased year over year. The results were driven by an increase in net sales in value-added product categories, gross margin as well as contributions from acquisitions amid continuous raw material supply woes.
Dave Flitman, President and CEO of Builders FirstSource, said, “While we have begun to experience increasing macro headwinds, our leading position in the market, focus on innovation and prudent capital allocation have positioned us to succeed in any environment. I am confident that we will continue to deliver on our strategic pillars given the skill and dedication of our team members.”
Earnings & Revenue Discussion
The manufacturer and supplier of building materials reported adjusted earnings of $5.20 per share, which handily topped the consensus mark of $3.53. The reported figure also increased by 16.8% from the year-ago quarter.
For the quarter, net sales of $5.8 billion surpassed the consensus mark of $5.2 billion. The top line grew 4.6% on a year-over-year basis. Core organic sales grew 6.9% from the prior-year quarter. Commodity price deflation impacted 7.5% of net sales. Acquisitions added 5.2% to net sales growth. The upside was led by solid demand for its products amid supply woes.
Notably, core organic sales in value-added products increased 19.9% compared with the prior-year period.
Core organic customer growth in Single Family increased 1.8%, while R&R/Other and Multi-Family grew 31.1% and 16.2% year over year, respectively.
Builders FirstSource, Inc. Price, Consensus and EPS Surprise
Value-Added Product Sales: For the reported quarter, sales of value-added products (comprising 48.1% of the quarterly net sales) were $2.77 billion, up 29.4% from the prior year.
Specialized Product & Other: Gypsum, Roofing & Insulation products sales (comprising 20.3% of the quarterly net sales) increased 22.2% from the year-ago quarter to $1.17 billion.
Lumber & Lumber Sheet Goods: For the quarter, segment sales (comprising 31.5% of the quarterly net sales) decreased 24.5% year over year to $1.82 billion.
Operating Highlights
Gross profit for the quarter increased 17.6% year over year to $2 billion. Gross margin of 35% expanded 390 basis points (bps) year over year, owing to higher sales in value-added product categories and disciplined pricing in a supply-constrained marketplace. As a percentage of net sales, total SG&A expenses increased 150 bps to 17.4%.
Adjusted EBITDA increased 20.1% on a year-over-year basis to $1.17 billion, primarily driven by higher sales, pricing and more mix of sales from value-added product categories. Adjusted EBITDA margin expanded 260 bps year over year to 20.3%.
Other Financial Details
As of Sep 30, 2022, Builders FirstSource had cash and cash equivalents of $85 million compared with $42.6 million at 2021-end. Long-term debt — net of current portion, discounts and issuance costs — was $3.17 billion, up from $2.93 billion at 2021-end.
The company had liquidity of $1.3 billion at September 2022-end, consisting of approximately $1.2 billion in net borrowing availability under the revolving credit facility and cash on hand.
During the quarter, BLDR repurchased 11.2 million shares of its stock for $658.2 million.
Buyouts
On Oct 3, 2022, BLDR acquired Pima Door & Supply and Sunrise Carpentry’s Arizona businesses.
On Sep 1, 2022, BLDR took over a multi-brand operator of pro-focused lumberyards and millwork facilities in the Florida Panhandle and Alabama Coast — Fulcrum Building Group.
Again, on Sep 1, 2022, the company acquired Trussway, a leading manufacturer of floor and roof trusses.
Guidance
For 2022, BLDR expects sales to range between $22.5 billion and $23 billion. This represents 13-16% year-over-year growth.
Adjusted EBITDA is expected to be between $4.2 billion and $4.4 billion, representing 35-42% year-over-year growth. EBITDA margin will likely range from $18.5% to 19.5%. This is 310-410 bps improvement from the 2021 level.
For 2022, the company now expects free cash flow between $3.1 and $3.3 billion versus $2.5-$3 billion expected earlier. Interest expense is expected to be in the range of $190 million to $200 million (versus $175-$185 million expected earlier). BLDR projects an effective tax rate between 23% and 25%, total capital expenditures between $250 million and $300 million, and depreciation and amortization expenses between $480 million and $500 million for 2022.
Acquisitions will likely contribute to net sales growth between 7% and 8%.
Beacon Roofing Supply, Inc. (BECN - Free Report) reported strong results for third-quarter 2022. Both earnings and revenues surpassed their respective Zacks Consensus Estimate and increased significantly on a year-over-year basis. The solid results were backed by strong net sales and operational improvement.
Julian Francis, BECN’s president and CEO, said, “We continued to deliver value to our customers, driving record third quarter net income and our 11th straight quarter of year-over-year increases in Adjusted EBITDA. At the same time, we continued making strategic investments toward achieving our Ambition 2025 growth and margin targets.”
Fastenal Company (FAST - Free Report) reported third-quarter 2022 results, wherein earnings and revenues topped the respective Zacks Consensus Estimate. The company’s top and bottom lines also improved on a year-over-year basis, given the strong demand in markets associated with industrial capital goods and commodities.
FAST reported daily sales of $27.8 million, reflecting an increase of 18% year over year in the reported quarter. The upside was mainly due to higher unit sales owing to good demand from industrial capital goods and commodities, which offset softer markets tied to consumer goods and relatively lower growth in construction.
United Rentals, Inc. (URI - Free Report) reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.
URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.
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Builders FirstSource (BLDR) Up on Q3 Earnings & Revenue Beat
Builders FirstSource’s (BLDR - Free Report) shares gained 5.6% on Nov 8 after the company released its third-quarter 2022 results, wherein it reported 6.9% core organic sales growth.
The company’s earnings and net sales surpassed the Zacks Consensus Estimate and increased year over year. The results were driven by an increase in net sales in value-added product categories, gross margin as well as contributions from acquisitions amid continuous raw material supply woes.
Dave Flitman, President and CEO of Builders FirstSource, said, “While we have begun to experience increasing macro headwinds, our leading position in the market, focus on innovation and prudent capital allocation have positioned us to succeed in any environment. I am confident that we will continue to deliver on our strategic pillars given the skill and dedication of our team members.”
Earnings & Revenue Discussion
The manufacturer and supplier of building materials reported adjusted earnings of $5.20 per share, which handily topped the consensus mark of $3.53. The reported figure also increased by 16.8% from the year-ago quarter.
For the quarter, net sales of $5.8 billion surpassed the consensus mark of $5.2 billion. The top line grew 4.6% on a year-over-year basis. Core organic sales grew 6.9% from the prior-year quarter. Commodity price deflation impacted 7.5% of net sales. Acquisitions added 5.2% to net sales growth. The upside was led by solid demand for its products amid supply woes.
Notably, core organic sales in value-added products increased 19.9% compared with the prior-year period.
Core organic customer growth in Single Family increased 1.8%, while R&R/Other and Multi-Family grew 31.1% and 16.2% year over year, respectively.
Builders FirstSource, Inc. Price, Consensus and EPS Surprise
Builders FirstSource, Inc. price-consensus-eps-surprise-chart | Builders FirstSource, Inc. Quote
Sales According to Product Category
Value-Added Product Sales: For the reported quarter, sales of value-added products (comprising 48.1% of the quarterly net sales) were $2.77 billion, up 29.4% from the prior year.
Specialized Product & Other: Gypsum, Roofing & Insulation products sales (comprising 20.3% of the quarterly net sales) increased 22.2% from the year-ago quarter to $1.17 billion.
Lumber & Lumber Sheet Goods: For the quarter, segment sales (comprising 31.5% of the quarterly net sales) decreased 24.5% year over year to $1.82 billion.
Operating Highlights
Gross profit for the quarter increased 17.6% year over year to $2 billion. Gross margin of 35% expanded 390 basis points (bps) year over year, owing to higher sales in value-added product categories and disciplined pricing in a supply-constrained marketplace. As a percentage of net sales, total SG&A expenses increased 150 bps to 17.4%.
Adjusted EBITDA increased 20.1% on a year-over-year basis to $1.17 billion, primarily driven by higher sales, pricing and more mix of sales from value-added product categories. Adjusted EBITDA margin expanded 260 bps year over year to 20.3%.
Other Financial Details
As of Sep 30, 2022, Builders FirstSource had cash and cash equivalents of $85 million compared with $42.6 million at 2021-end. Long-term debt — net of current portion, discounts and issuance costs — was $3.17 billion, up from $2.93 billion at 2021-end.
The company had liquidity of $1.3 billion at September 2022-end, consisting of approximately $1.2 billion in net borrowing availability under the revolving credit facility and cash on hand.
During the quarter, BLDR repurchased 11.2 million shares of its stock for $658.2 million.
Buyouts
On Oct 3, 2022, BLDR acquired Pima Door & Supply and Sunrise Carpentry’s Arizona businesses.
On Sep 1, 2022, BLDR took over a multi-brand operator of pro-focused lumberyards and millwork facilities in the Florida Panhandle and Alabama Coast — Fulcrum Building Group.
Again, on Sep 1, 2022, the company acquired Trussway, a leading manufacturer of floor and roof trusses.
Guidance
For 2022, BLDR expects sales to range between $22.5 billion and $23 billion. This represents 13-16% year-over-year growth.
Adjusted EBITDA is expected to be between $4.2 billion and $4.4 billion, representing 35-42% year-over-year growth. EBITDA margin will likely range from $18.5% to 19.5%. This is 310-410 bps improvement from the 2021 level.
For 2022, the company now expects free cash flow between $3.1 and $3.3 billion versus $2.5-$3 billion expected earlier. Interest expense is expected to be in the range of $190 million to $200 million (versus $175-$185 million expected earlier). BLDR projects an effective tax rate between 23% and 25%, total capital expenditures between $250 million and $300 million, and depreciation and amortization expenses between $480 million and $500 million for 2022.
Acquisitions will likely contribute to net sales growth between 7% and 8%.
Zacks Rank
BLDR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
A Few Recent Releases
Beacon Roofing Supply, Inc. (BECN - Free Report) reported strong results for third-quarter 2022. Both earnings and revenues surpassed their respective Zacks Consensus Estimate and increased significantly on a year-over-year basis. The solid results were backed by strong net sales and operational improvement.
Julian Francis, BECN’s president and CEO, said, “We continued to deliver value to our customers, driving record third quarter net income and our 11th straight quarter of year-over-year increases in Adjusted EBITDA. At the same time, we continued making strategic investments toward achieving our Ambition 2025 growth and margin targets.”
Fastenal Company (FAST - Free Report) reported third-quarter 2022 results, wherein earnings and revenues topped the respective Zacks Consensus Estimate. The company’s top and bottom lines also improved on a year-over-year basis, given the strong demand in markets associated with industrial capital goods and commodities.
FAST reported daily sales of $27.8 million, reflecting an increase of 18% year over year in the reported quarter. The upside was mainly due to higher unit sales owing to good demand from industrial capital goods and commodities, which offset softer markets tied to consumer goods and relatively lower growth in construction.
United Rentals, Inc. (URI - Free Report) reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.
URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.