Yahoo Finance Builders FirstSource (BLDR) Q3 Earnings Beat, Margins Down
Builders FirstSource’s BLDR third-quarter 2023 earnings and net sales surpassed the Zacks Consensus Estimate. However, both metrics declined year over year.
Shares of the company gained 8.25% on Nov 1.
Dave Rush, CEO of Builders FirstSource, said, “As we look toward 2024, we will maintain our best-in-class customer service, offer an attractive product mix, and launch our BFS Digital Tools to make the building process faster, more efficient, and more affordable. We are committed to investing in automation and process improvements, which will continue to generate productivity savings, help solve the labor issues currently facing our customers, and solidify us as a trusted partner.”
Earnings & Revenue Discussion
The manufacturer and supplier of building materials reported adjusted earnings of $4.24 per share, which topped the consensus mark of $4.05 by 4.7%. The reported figure decreased by 18.5% from the year-ago quarter owing to lower net sales, partially offset by share repurchases.
Net sales of $4.53 billion surpassed the consensus mark of $4.87 billion by 6.9% but fell 21.3% on a year-over-year basis. The decline was mainly due to a weaker housing market and commodity deflation, partially offset by 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 sales also declined 13.5% from the prior-year quarter. A commodity price deflation of 9.1% of net sales and a decline of 1.6% due to one fewer selling day were partially offset by contributions from acquisitions of 2.9%.
Core organic growth in Single-Family decreased by 19.2% and R&R/Other and Multi-Family grew by 1.4% and 6.4% year over year, respectively.
Sales According to Product Category
Value-Added Product Sales: For the reported quarter, sales of value-added products (comprising 50.7% of the quarterly net sales) were $2.3 billion, down 17.7% from the prior year. Within the segment, Manufactured products totaled $1.2 billion and Windows, doors & millwork stood at $1.1 billion, down 20.2% and 14.8%, respectively, from a year ago.
Specialized Product & Other: Gypsum, Roofing & Insulation products sales (comprising 23.9% of the quarterly net sales) decreased 5.8% from the year-ago quarter to $1.08 billion.
Lumber & Lumber Sheet Goods: For the quarter, segment sales (comprising 25.4% of the quarterly net sales) decreased 36.7% year over year to $1.15 billion.
Operating Highlights
Gross margin of 34.9% contracted 10 basis points (bps) due to core organic margin normalization and partially offset by Multi-Family strength. As a percentage of net sales, total SG&A expenses increased 330 bps to 20.7%.
Adjusted EBITDA fell 30.6% on a year-over-year basis to $813.3 million. Adjusted EBITDA margin also contracted by 240 bps year over year to 17.9%, owing to lower net sales and reduced operating leverage.
Financial Details
As of Sep 30, 2023, Builders FirstSource had cash and cash equivalents of $88.1 million, up from $80.4 million at 2022-end. The company had liquidity of $1.1 billion at the third quarter’s end, including $1 billion in net borrowing available under the revolving credit facility. Long-term debt — net of current portion, discounts and issuance costs — was $3.4 billion, up from $2.98 billion at 2022-end.
Net cash from operations was $649.5 million during the quarter versus $851.3 million a year ago. The free cash flow was $537.8 million for the third quarter, reflecting a decrease from $611.5 million in the year-ago period.
During the quarter, BLDR repurchased 1.7 million shares of its stock for $244.9 million and completed two acquisitions. It has $0.4 billion remaining on its $1 billion share repurchase authorization approved in April 2023.
Guidance
For 2023, the company reduced the upper limit of its net sales projection to $16.8-17.1 billion from $17.8 billion. Gross margin is now anticipated between 34% and 35% (from 33-35%), adjusted EBITDA in the band of $2.7-$2.8 billion (from $2.6-$2.9 billion) and adjusted EBITDA margin between 15.8% and 16.7% (versus 15-17%).
Single-Family starts are projected to be down low double-digits to high single-digits. Multi-Family starts are likely to be up low double-digits and R&R is projected to be up low-to-mid-single digits.
Acquisitions completed within the last twelve months are projected to add net sales growth of 2-3%.
Zacks Rank & Recent Releases
BLDR currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Yum China Holdings, Inc. YUMC reported third-quarter 2023 results, with earnings and revenues missing the Zacks Consensus Estimate after beating in the preceding two quarters.
For 2023, management now expects to open 1,400-1,600 stores, up from the prior estimate of 1,100-1,300. It anticipates solid expansion related to KFC and Pizza Hut stores along with growth of same-store sales. Capital expenditure in 2023 is projected to be $700-$900 million.
YUM! Brands, Inc. YUM reported mixed third-quarter 2023 results, with earnings beating the Zacks Consensus Estimate but revenues missing the same. The top and e bottom lines increased on a year-over-year basis. The company benefited from robust same-store sales and unit growth.
In third-quarter 2023, YUM’s adjusted earnings per share reached $1.44, surpassing the Zacks Consensus Estimate of $1.26. The metric jumped 32% from the prior year.
Brinker International, Inc. EAT reported fourth-quarter fiscal 2023 results, with earnings beating the Zacks Consensus Estimate and revenues missing the same. The top and the bottom line increased on a year-over-year basis. The upside was primarily driven by improved menu pricing and a favorable menu item mix.
For fiscal 2024, the company anticipates total revenues in the range of $4.27-$4.35 billion. Capital expenditures are expected in the range of $175-$195 million. The company expects fiscal 2023 diluted EPS in the range of $3.15-$3.55.
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