Builders Firstsource Demonstrates Resilience Amid Market Fluctuations
$BLDR
Builders FirstSource, Inc. (NYSE:BLDR), a leading supplier of building products, prefabricated components and value-added services, today reported its financial results for the first quarter ended March 31, 2024. The company, headquartered in Irving, Texas, continues to show resilience in a challenging economic environment, marked by a slight increase in net sales and strategic acquisitions despite facing market headwinds.
The first quarter of 2024 saw Builders FirstSource achieve net sales of $3.9 billion, a modest increase of 0.2% year-over-year. This growth was primarily attributed to strategic acquisitions that contributed a 1.9% increase, although this was partially offset by a 1.7% decline due to commodity deflation. The company’s core organic net sales remained flat compared to the previous year, with a notable increase in Single-Family sales by 4.3%, while Multi-Family sales saw a decline of 13.4%.
Due to economic pressures, Builders FirstSource’s gross profit margin experienced a decrease, dropping 190 basis points to 33.4%. This decline was largely due to a shift in product mix towards lower-margin, early-stage homebuilding products and margin normalization, particularly in the Multi-Family sector. Additionally, selling, general and administrative expenses rose slightly by 2.4% to $926.3 million, driven by costs associated with recently acquired operations.
Net income for the quarter stood at $258.8 million, down 22.5% from the previous year, with earnings per diluted share decreasing by 12.9% to $2.10. Adjusted EBITDA also saw a decrease, falling 14.4% to $540.9 million, with the adjusted EBITDA margin declining by 240 basis points to 13.9%. This reduction in profitability was primarily due to lower gross profit and higher operating expenses stemming from acquisitions.
Builders FirstSource has maintained a strong focus on operational efficiency and strategic growth initiatives. According to Dave Rush, CEO of Builders FirstSource, “Our resilient first quarter results reflect our differentiated product portfolio and scale, our team members’ consistent focus on executing our strategic priorities and our operational efficiency initiatives.” He noted that despite macroeconomic challenges, such as a weakening Multi-Family market and higher mortgage rates, the company is committed to driving growth through its value-added products portfolio and industry-leading digital platform.
Looking ahead, Builders FirstSource remains optimistic about its financial outlook for 2024. The company projects net sales to be in the range of $17.5 billion to $18.5 billion, with an adjusted EBITDA margin between 14.0% and 15.0%. These expectations are based on assumptions including a mid-single-digit increase in Single-Family starts, a 20% to 30% decrease in Multi-Family starts and low single-digit growth in repair and remodel activities.
Builders FirstSource continues to navigate a complex market landscape with strategic agility and operational excellence. While facing headwinds from market volatility and economic uncertainty, the company’s focus on innovation, customer service and strategic growth initiatives positions it well to maintain its leadership in the building products industry and create value for its stakeholders in the coming year.