Builders FirstSource, Inc. (NYSE: BLDR) today reported its results for the second quarter ended June 30, 2023.
Second Quarter 2023 Highlights
All Year-Over-Year Comparisons Unless Otherwise Noted:
- Net sales of $4.5 billion, a 34.6% decrease driven by a decline in core organic net sales of 22.3% and commodity deflation of 16.2%, partially offset by acquisitions of 3.9%.
- Gross profit margin percentage increased 40 basis points to 35.2% due to stronger mix in value-added products overall, largely driven by our recent strategic investments in Multi-Family and related commodity price fluctuations.
- Net income decreased 59.0% to $404.6 million, or $3.16 per diluted share compared to $5.75 in the prior year period, and adjusted net income decreased 53.6% to $498.4 million, or $3.89 per diluted share compared to $6.26 in the prior year period. Net income and adjusted net income per diluted share declined 45.0% and 37.9%, respectively.
- Adjusted EBITDA decreased 49.0% to $768.8 million, primarily driven by lower net sales including a decline in core organic products and commodity deflation. Adjusted EBITDA margin declined by 480 basis points to 17.0%.
- Cash provided by operating activities was $391.3 million, down $555.9 million compared to the prior year period, while free cash flow was $269.9 million, down $611.5 million compared to the prior year period.
- Strong quarter-end balance sheet with liquidity of $0.9 billion and a net debt to LTM Adjusted EBITDA ratio of 1.1x.
- Repurchased 7.0 million shares of common stock at an average price of $103.68 for $722.7 million, inclusive of fees and taxes.
“Second quarter results surpassed our expectations driven by the strength of our value-added product portfolio, contributions from operational initiatives instilled over the last few years, and a more stable housing environment,” commented Dave Rush, CEO of Builders FirstSource. “We continue to exceed our near-term targets and execute our strategic priorities through the hard work and dedication of our team members. We are creating value for shareholders by driving operational excellence and prudently deploying capital for long-term growth.”
Mr. Rush continued, “We are making deliberate investments to enhance our cutting-edge digital solutions and improve the customer experience, primarily through the Digital Tools on our recently launched myBLDR.com portal. We will continue to leverage these solutions, our value-added offerings, and our purpose-built scale to drive growth into the future.”
Peter Jackson, CFO of Builders FirstSource, added, “Our second quarter performance demonstrates that we are well positioned in the marketplace with differentiated solutions and a strong balance sheet. We continue to generate robust free cash flow and prudently deploy capital, making four value-enhancing, tuck-in acquisitions to date in 2023 and repurchasing over $700 million of shares in the second quarter. As we continue to assess our margin expectations based on our current mix and overall performance, we are confident that our long-term normalized gross margin percentage is now 29% or higher versus our previous expectation of 28% or higher. We believe our industry-leading scale, ongoing investments in value-added products and digital solutions, and strong financial position will lead to a double-digit Adjusted EBITDA margin this year and sustained growth in the years to come.”