BLDR Q2 Earnings Surpass Estimates, Sales Miss, Stock Down

Builders FirstSource, Inc. BLDR has reported mixed results for the second quarter of 2025, with earnings surpassing the Zacks Consensus Estimate but net sales missing the same.

Both metrics declined year over year, owing to lower core organic sales and commodity deflation, partially offset by growth from acquisitions. Margins also declined due to ongoing Single-Family and Multi-Family margin normalization.

Shares of this manufacturer and supplier of building materials moved down 12.2% in today’s pre-market trading session. Negative investor sentiments were likely caused by an underwhelming performance and reduced net sales guidance for 2025.

Nonetheless, the company remained resilient in a challenging environment. The performance in the second quarter reflected the strength of its product portfolio and disciplined execution. BLDR focused on key priorities such as customer service, use of technology and effective business management.

Going forward, the company remains committed to investing in value-added solutions, digital tools and operational improvements. These actions are helping BLDR strengthen its position and prepare for long-term value creation as the market stabilizes.

BLDR’s Earnings & Revenue Discussion

The company reported adjusted earnings per share of $2.38, which surpassed the consensus mark of $2.35 by 1.3%. However, the reported figure decreased 32% from the year-ago quarter, owing to lower adjusted net income, partially offset by share repurchases.

Net sales of $4.23 billion marginally missed the consensus mark of $4.24 billion by 0.1% and fell 5% on a year-over-year basis. Core organic sales declined 8.5% from the prior-year quarter. A commodity price deflation of 1.5% of net sales and softness in Multi-Family were partially offset by 5% growth from acquisitions.

Builders FirstSource, Inc. Price, Consensus and EPS Surprise

Builders FirstSource, Inc. price-consensus-eps-surprise-chart | Builders FirstSource, Inc. Quote

Core organic growth in Single-Family and Multi-Family decreased 9.1% and 23.3%, respectively. In Repair and Remodel (R&R)/Other, the metric increased 3%. Net sales in Multi-Family and Single-Family lowered 2.6% and 6.5%, respectively, while in R&R/Other rose 0.6%.

BLDR’s Sales According to Product Category

Value-Added Product Sales: For the reported quarter, sales of value-added products (comprising 46.8% of the quarterly net sales) were $1.98 billion, down 8.7% from the prior year. Within the segment, Manufactured products totaled $953.1 million and Windows, doors & millwork was $1.03 billion, down 9.8% and 7.6%, respectively, from a year ago.

Specialized Product & Other: Gypsum, Roofing & Insulation products sales (comprising 26.4% of the quarterly net sales) increased 2.2% from the year-ago quarter to $1.12 billion.

Lumber & Lumber Sheet Goods: For the quarter, segment sales (comprising 26.8% of the quarterly net sales) decreased 4.9% year over year to $1.13 billion.

Operating Highlights of BLDR

Gross margin of 30.7% contracted 210 basis points (bps) due to Single-Family and Multi-Family margin normalization, along with a below-normal starts environment. As a percentage of net sales, adjusted SG&A expenses increased 120 bps to 23.3%.

Adjusted EBITDA fell 24.4% on a year-over-year basis to $506.1 million. Adjusted EBITDA margin also contracted 300 bps year over year to 12%, owing to lower gross profit margins and operating leverage.

In the second quarter, BLDR delivered approximately $5 million in productivity savings, related to operational excellence and supply-chain initiatives.

Financial Details of BLDR

As of June 30, 2025, Builders FirstSource had cash and cash equivalents of $87 million, down from $153.6 million at 2024-end. The company had liquidity of approximately $1.6 billion at June-end, including $1.54 billion in net borrowing available under the revolving credit facility.

Long-term debt, net of current portion, discounts and issuance costs, was $4.67 billion, up from $3.7 billion at 2024-end. As of the second-quarter end, the net debt to trailing 12-month adjusted EBITDA ratio was 2.3x compared with 1.4x in the prior year.

Net cash from operations was $341 million compared with $452.1 million a year ago. Free cash flow was $255 million as of the second quarter-end, down from $366.7 million a year ago.

In the second quarter, BLDR repurchased 3.3 million shares of its common stock at an average price of $118.27 per share for $390.9 million.

BLDR’s 2025 Guidance Cut

For 2025, BLDR now expects net sales between $14.8 billion and $15.6 billion compared with $16.05-$17.05 billion expected earlier. The estimated figure is down from $16.4 billion reported in 2024. Acquisitions completed within the last 12 months are still projected to contribute 5%-5.5% to net sales growth. However, fewer selling days in 2025 are expected to reduce net sales by 0.4%.

Geographically, Single-Family starts are now expected to be down 10-12%. Multi-Family starts are still expected to be down in the mid-teens and R&R activity is anticipated to remain flat compared with the previous year. Earlier, the company had expected Single-Family starts to be down mid-single digits.

Gross margin is now likely to be in the range of 29-30.5% compared with 29-31% expected earlier. The projection was down from 32.8% generated in 2024.

Adjusted EBITDA is now expected to be between $1.5 billion and $1.7 billion (the earlier projection was $1.7-$2.1 billion), down from $2.3 billion reported in 2024. Adjusted EBITDA margin is expected to be in the range of 10.1-10.9% compared with 14.2% in the prior year. The earlier expectation was 10.6-12.3%. For 2025, the company expects to deliver $45-$65 million in productivity savings compared with $70-$90 million expected earlier.

Free cash flow is now expected between $800 million and $1 billion, assuming average commodity prices in the range of $375-$425 per thousand board feet. The company had expected free cash flow to be between $800 million and $1.2 billion earlier, assuming average commodity prices in the range of $400-$440 per thousand board feet.

BLDR now expects interest expense in the range of $270-$280 million (compared with an earlier projection of $260-$280 million), an effective tax rate of 23-25% and total capital expenditures within $300-$350 million (compared with an earlier projection of $350-$425 million). Depreciation and amortization expenses are still estimated to be between $550 million and $600 million.

BLDR’s Zacks Rank

Builders FirstSource currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks in the Zacks Retail-Wholesale sector are Cracker Barrel Old Country Store, Inc. CBRL, Yum China Holdings, Inc. YUMC and Yum! Brands, Inc. YUM.

Cracker Barrel currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cracker Barrel has gained 16.9% in the year-to-date period. The Zacks Consensus Estimate for Cracker Barrel’s fiscal 2026 sales and EPS indicates growth of 1.8% and 9.4%, respectively, from the year-ago period’s levels.

Yum China presently carries a Zacks Rank #2 (Buy). The stock has declined 4.2% in the year-to-date period.

The Zacks Consensus Estimate for Yum China’s 2025 sales and EPS implies growth of 2.9% and 7.3%, respectively, from the year-ago levels.

Yum! Brands presently carries a Zacks Rank #2. The stock has gained 9% in the year-to-date period.

The Zacks Consensus Estimate for Yum! Brands’ 2025 sales and EPS indicates an increase of 6.9% and 10%, respectively, from the year-ago levels.

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This article originally published on Zacks Investment Research (zacks.com).

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