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Builders FirstSource (BLDR) Q2 Earnings & Sales Beat, Shares Up
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Builders FirstSource (BLDR - Free Report) reported second-quarter 2023 results wherein earnings and net sales surpassed the Zacks Consensus Estimate. The company has exceeded expectations, thanks to a more stable housing environment, a strong value-added product portfolio and the positive impact of operational initiatives implemented in recent years.
Shares of BLDR jumped 5.6% during the pre-market trading session following the earnings release on Aug 2, 2023.
However, on a year-over-year basis, the results were hampered by declining single-family starts and commodity deflation.
Nonetheless, the company’s consistent focus on operational excellence, the strength of its product portfolio, continued investments in value-added products, productivity initiatives and digital solutions are expected to navigate the challenging macroeconomic conditions.
Earnings & Revenue Discussion
The manufacturer and supplier of building materials reported adjusted earnings per share (EPS) of $3.89, which handily topped the consensus mark of $2.69 by 44.6%. However, the reported figure decreased 37.9% from the year-ago quarter.
Net sales of $4.5 billion surpassed the consensus mark of $4.2 billion by 6.6% but fell 34.6% on a year-over-year basis. The downside was mainly due to the decrease in core organic net sales and commodity deflation.
A commodity price deflation was 16.2% and core organic sales declined 22.3% from the prior-year quarter. These were partially offset by acquisitions contributing 3.9% to growth. Meanwhile, although core organic net sales in Value-Added Products experienced a 19.5% decline, the proportion of Value-Added Products in the overall net sales mix rose significantly to 53% in the quarter from 43% a year ago.
Core organic growth in Single Family decreased 31%, while R&R/Other and Multi-Family grew 4.6% and 29.6% year over year, respectively.
Builders FirstSource, Inc. Price, Consensus and EPS Surprise
Value-Added Product : For the reported quarter, sales of value-added products (comprising 52.8% of the quarterly net sales) were $2.39 billion, down 17.4% from the prior year. Within the segment, Manufactured products sales totaled $1.29 billion (down 23.3% year over year) and Windows, doors & millwork stood at $1.11 billion (down 9.3%).
Specialized Product & Other: Gypsum, Roofing & Insulation products sales (comprising 23.8% of the quarterly net sales) decreased 9.8% from the year-ago quarter to $1.08 billion.
Lumber & Lumber Sheet Goods: For the quarter, segment sales (comprising 23.4% of the quarterly net sales) decreased 62.7% year over year to $1.06 billion.
Operating Highlights
Gross margin of 35.2% expanded 40 basis points (bps) on a higher Multi-Family value-added product category mix. As a percentage of net sales, total SG&A expenses increased 740 bps to 22.5%, owing to lower leverage to net sales.
Adjusted EBITDA fell 49% on a year-over-year basis to $768.8 billion. The adjusted EBITDA margin contracted 480 bps year over year to 17%. The decrease in adjusted EBITDA margin was primarily driven by reduced commodity prices and declining Single-Family volumes, which led to expense deleveraging.
Financial Details
As of Jun 30, 2023, Builders FirstSource had cash and cash equivalents of $89.3 million, up from $80.4 million at 2022-end. The company had liquidity of $0.9 billion at the second-quarter end, including $0.8 billion in net borrowing available under the revolving credit facility. Long-term debt — net of current portion, discounts and issuance costs — was $3.67 billion, up from $2.98 billion at 2022-end.
Net cash from operations was $1.05 billion versus $1.13 million a year ago. During the quarter, BLDR repurchased 7 million shares of its stock for $722.7 million. The free cash flow was $269.9 million for the second quarter, reflecting a decrease from $611.5 million in the year-ago period.
2023 Guidance
For 2023, the company expects net sales to be in the range of $16.8 billion-17.8 billion, gross margin between 33% and 35%, adjusted EBITDA in the band of $2.6 billion-$2.9 billion and adjusted EBITDA margin between 15% and 17%.
Owens Corning (OC - Free Report) reported impressive results for second-quarter 2023, wherein earnings and net sales surpassed the Zacks Consensus Estimate. Moreover, earnings increased on a year-over-year basis despite net sales decline.
Given the quarter’s solid bottom-line results, OC maintained its optimistic outlook of elevating performance and achieving higher earnings.
Otis Worldwide Corporation’s (OTIS - Free Report) second-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected 11th consecutive quarters of organic sales growth and solid operating margin expansion contributing to mid-single digit adjusted EPS growth.
Otis remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Armstrong World Industries, Inc. (AWI - Free Report) reported mixed results for second-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate, but net sales missed the same. Both metrics increased on a year-over-year basis.
AWI’s results were backed by robust growth in operating income and adjusted EBITDA, as well as expanded margins, fueled by positive performances from both the Mineral Fiber and Architectural Specialties segments. The company remains focused on advancing digital and healthy space initiatives and pursuing attractive bolt-on acquisitions.
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Builders FirstSource (BLDR) Q2 Earnings & Sales Beat, Shares Up
Builders FirstSource (BLDR - Free Report) reported second-quarter 2023 results wherein earnings and net sales surpassed the Zacks Consensus Estimate. The company has exceeded expectations, thanks to a more stable housing environment, a strong value-added product portfolio and the positive impact of operational initiatives implemented in recent years.
Shares of BLDR jumped 5.6% during the pre-market trading session following the earnings release on Aug 2, 2023.
However, on a year-over-year basis, the results were hampered by declining single-family starts and commodity deflation.
Nonetheless, the company’s consistent focus on operational excellence, the strength of its product portfolio, continued investments in value-added products, productivity initiatives and digital solutions are expected to navigate the challenging macroeconomic conditions.
Earnings & Revenue Discussion
The manufacturer and supplier of building materials reported adjusted earnings per share (EPS) of $3.89, which handily topped the consensus mark of $2.69 by 44.6%. However, the reported figure decreased 37.9% from the year-ago quarter.
Net sales of $4.5 billion surpassed the consensus mark of $4.2 billion by 6.6% but fell 34.6% on a year-over-year basis. The downside was mainly due to the decrease in core organic net sales and commodity deflation.
A commodity price deflation was 16.2% and core organic sales declined 22.3% from the prior-year quarter. These were partially offset by acquisitions contributing 3.9% to growth. Meanwhile, although core organic net sales in Value-Added Products experienced a 19.5% decline, the proportion of Value-Added Products in the overall net sales mix rose significantly to 53% in the quarter from 43% a year ago.
Core organic growth in Single Family decreased 31%, while R&R/Other and Multi-Family grew 4.6% and 29.6% 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 : For the reported quarter, sales of value-added products (comprising 52.8% of the quarterly net sales) were $2.39 billion, down 17.4% from the prior year. Within the segment, Manufactured products sales totaled $1.29 billion (down 23.3% year over year) and Windows, doors & millwork stood at $1.11 billion (down 9.3%).
Specialized Product & Other: Gypsum, Roofing & Insulation products sales (comprising 23.8% of the quarterly net sales) decreased 9.8% from the year-ago quarter to $1.08 billion.
Lumber & Lumber Sheet Goods: For the quarter, segment sales (comprising 23.4% of the quarterly net sales) decreased 62.7% year over year to $1.06 billion.
Operating Highlights
Gross margin of 35.2% expanded 40 basis points (bps) on a higher Multi-Family value-added product category mix. As a percentage of net sales, total SG&A expenses increased 740 bps to 22.5%, owing to lower leverage to net sales.
Adjusted EBITDA fell 49% on a year-over-year basis to $768.8 billion. The adjusted EBITDA margin contracted 480 bps year over year to 17%. The decrease in adjusted EBITDA margin was primarily driven by reduced commodity prices and declining Single-Family volumes, which led to expense deleveraging.
Financial Details
As of Jun 30, 2023, Builders FirstSource had cash and cash equivalents of $89.3 million, up from $80.4 million at 2022-end. The company had liquidity of $0.9 billion at the second-quarter end, including $0.8 billion in net borrowing available under the revolving credit facility. Long-term debt — net of current portion, discounts and issuance costs — was $3.67 billion, up from $2.98 billion at 2022-end.
Net cash from operations was $1.05 billion versus $1.13 million a year ago. During the quarter, BLDR repurchased 7 million shares of its stock for $722.7 million. The free cash flow was $269.9 million for the second quarter, reflecting a decrease from $611.5 million in the year-ago period.
2023 Guidance
For 2023, the company expects net sales to be in the range of $16.8 billion-17.8 billion, gross margin between 33% and 35%, adjusted EBITDA in the band of $2.6 billion-$2.9 billion and adjusted EBITDA margin between 15% and 17%.
Zacks Rank
BLDR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Few Releases
Owens Corning (OC - Free Report) reported impressive results for second-quarter 2023, wherein earnings and net sales surpassed the Zacks Consensus Estimate. Moreover, earnings increased on a year-over-year basis despite net sales decline.
Given the quarter’s solid bottom-line results, OC maintained its optimistic outlook of elevating performance and achieving higher earnings.
Otis Worldwide Corporation’s (OTIS - Free Report) second-quarter 2023 earnings and sales surpassed the Zacks Consensus Estimate. Its quarterly results reflected 11th consecutive quarters of organic sales growth and solid operating margin expansion contributing to mid-single digit adjusted EPS growth.
Otis remains focused on strong portfolio growth and generating a solid New Equipment backlog. It also intends to expand operating margins, return cash to shareholders through a capital-allocation strategy and pursue additional progress toward ESG goals.
Armstrong World Industries, Inc. (AWI - Free Report) reported mixed results for second-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimate, but net sales missed the same. Both metrics increased on a year-over-year basis.
AWI’s results were backed by robust growth in operating income and adjusted EBITDA, as well as expanded margins, fueled by positive performances from both the Mineral Fiber and Architectural Specialties segments. The company remains focused on advancing digital and healthy space initiatives and pursuing attractive bolt-on acquisitions.