We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Builders FirstSource (BLDR) Up 0.3% Since Last Earnings Report: Can It Continue?
Read MoreHide Full Article
It has been about a month since the last earnings report for Builders FirstSource (BLDR - Free Report) . Shares have added about 0.3% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Builders FirstSource Q2 Earnings & Sales Beat
Builders FirstSource 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.
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.
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%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 51.17% due to these changes.
VGM Scores
At this time, Builders FirstSource has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Builders FirstSource has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Builders FirstSource (BLDR) Up 0.3% 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 0.3% in that time frame, outperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.
Builders FirstSource Q2 Earnings & Sales Beat
Builders FirstSource 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.
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.
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%.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 51.17% due to these changes.
VGM Scores
At this time, Builders FirstSource has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, 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 trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Builders FirstSource has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.