Builders FirstSource Reports Fourth Quarter and Full-Year 2024 Results

Builders FirstSource, Inc. reported its results for the fourth quarter and full year ended December 31, 2024.

BFS Highlights

All Year-Over-Year Comparisons Unless Otherwise Noted:

• For the fourth quarter, net sales were $3.8 billion, an 8.0% decrease, primarily driven by lower core organic sales and commodity deflation, partially offset by growth from acquisitions and one additional selling day.
• For the fourth quarter, gross margin decreased 300 basis points to 32.3%, primarily driven by ongoing Single-Family and Multi-Family margin normalization.
• For the fourth quarter, net income was $190.2 million, or diluted EPS of $1.65 compared to diluted EPS of $2.83 in the prior year period. Net income as a percent of net sales decreased by 347 basis points to 5.0%.
• For the fourth quarter, Adjusted EBITDA decreased 28.0% to $493.6 million, primarily driven by lower gross profit, partially offset by lower operating expenses after adjustments.
• For the fourth quarter, Adjusted EBITDA margin decreased by 360 basis points from the prior year period to 12.9%, attributable to lower gross margin and reduced operating leverage.
• For full-year 2024, cash provided by operating activities was $1.9 billion, compared to $2.3 billion in the prior year period, primarily driven by lower net income. The Company’s free cash flow was $1.5 billion, a decrease of $0.4 billion compared to the prior year period. The decrease was primarily driven by lower net income.
• For full-year 2024, the Company repurchased 8.9 million shares of common stock at an average price of $170.74 for $1.5 billion, inclusive of applicable fees and taxes, reducing total shares outstanding by 6.8% in 2024.

“Our fourth quarter and full year results demonstrate our resilience and ability to drive results in the face of a complex operating environment, while maintaining our focus on building for the future. The strength of our differentiated platform and our operational excellence initiatives drove a mid-teens EBITDA margin in 2024. Results this year are further proof that our success is driven by the dedication of our hardworking team members and support of our customers,” commented Peter Jackson, CEO of Builders FirstSource.

Mr. Jackson continued, “By continuing to invest in our value-added solutions and our installation business, along with leveraging cutting-edge technology, we are addressing customer challenges and serving as the supplier of choice. Our investments today in organic growth opportunities and value-enhancing acquisitions position us to perform well in any environment.”

Pete Beckmann, CFO of Builders FirstSource, added, “Our fourth quarter and full year results reflect our ability to execute our strategy by leveraging our exceptional operating platform and financial flexibility. Our business generates consistently strong free cash flow through the cycle, which we deploy under our balanced capital allocation strategy. This disciplined capital deployment framework remains in place: maintaining a fortress balance sheet, investing in organic growth, making value-enhancing acquisitions, and returning capital to shareholders through share repurchases.”

Fourth Quarter 2024 Financial Performance Highlights

All Year-Over-Year Comparisons Unless Otherwise Noted:

Net Sales

• Net sales of $3.8 billion, an 8.0% decrease, were primarily driven by lower core organic sales of 8.8% and commodity deflation of 3.1%, partially offset by growth from acquisitions of 2.5% and one additional selling day contributing 1.4%.
• Core organic net sales decreased by 8.8%, driven by declines across end markets: Multi-Family by 29.1%, Single-Family by 6.8%, and Repair and Remodel (“R&R”)/Other by 0.1%. On a weighted basis, Single-Family and Multi-Family reduced sales by 4.7% and 4.1%, respectively, while R&R/Other was flat.

Gross Profit

• Gross profit was $1.2 billion, a decrease of 15.7%. Gross profit margin percentage decreased 300 basis points to 32.3%, primarily driven by ongoing Single-Family and Multi-Family margin normalization.

Selling, General and Administrative Expenses

• SG&A was $930.0 million, a decrease of $44.4 million, or 4.6%, primarily driven by variable compensation due to lower core organic net sales and intangible amortization expense, partially offset by additional expenses from operations acquired within the last twelve months. As a percentage of net sales, total SG&A increased by 80 basis points to 24.3%, primarily attributable to reduced operating leverage.

Interest Expense

• Interest expense increased $6.3 million to $53.1 million, primarily due to higher average debt balances.

Income Tax Expense

• Income tax expense was $60.8 million, compared to $92.9 million in the prior year period, primarily driven by a decrease in income before income tax. The effective tax rate in the fourth quarter increased 320 basis points year-over-year to 24.2%, primarily due to fewer tax credits.

Net Income

• Net income was $190.2 million, or diluted EPS of $1.65, compared to net income of $350.7 million, or diluted EPS of $2.83, in the same period a year ago. The 45.8% decrease in net income was primarily driven by lower gross profit, partially offset by lower operating and income tax expenses.
• Net income as a percentage of net sales decreased by 347 basis points to 5.0%, primarily due to lower gross profit margins, partially offset by lower operating and income tax expenses.

Adjusted Net Income

• Adjusted net income was $267.5 million, a decrease of 39.1%, primarily driven by lower gross profit, partially offset by lower operating expenses after adjustments and income tax expenses.

Adjusted Diluted Earnings Per Share

• Adjusted diluted EPS was $2.31, compared to $3.55 in the same period a year ago. The 34.9% decrease was primarily driven by lower adjusted net income, partially offset by share repurchases.

Adjusted EBITDA

• Adjusted EBITDA decreased 28.0% to $493.6 million, primarily driven by lower gross profit, partially offset by lower operating expenses after adjustments.
• Adjusted EBITDA margin decreased by 360 basis points from the prior year period to 12.9%, primarily attributable to lower gross margin and reduced operating leverage.

Full-Year 2024 Financial Performance Highlights

All Year-Over-Year Comparisons Unless Otherwise Noted:

Net Sales

• Net sales of $16.4 billion, a 4.1% decrease, primarily driven by lower core organic net sales of 5.1% and commodity deflation of 1.8%, partially offset by growth from acquisitions of 2.1% and the benefit from two additional selling days of 0.7%.
• Core organic net sales were lower by 5.1%. Multi-Family declined 26.4% and Single-Family decreased 2.0%, while R&R/Other increased 0.8%. On a weighted basis, the declines in Multi-Family and Single-Family reduced sales by 3.9% and 1.3%, respectively, while R&R/Other increased sales by 0.1%.

Gross Profit

• Gross profit was $5.4 billion, a decrease of 10.5%. Gross profit margin percentage decreased 240 basis points to 32.8%, primarily driven by ongoing Single-Family and Multi-Family margin normalization.

Selling, General and Administrative Expenses

• SG&A was $3.8 billion, a decrease of $48.2 million, or 1.3%, primarily driven by lower variable compensation due to lower core organic net sales and intangible amortization expense, partially offset by additional expenses from operations acquired within the last twelve months and asset write-offs. As a percentage of net sales, total SG&A increased by 70 basis points to 23.1%, primarily attributable to reduced operating leverage.

Interest Expense

• Interest expense increased $15.6 million to $207.7 million, primarily due to higher debt balances and average interest rates, partially offset by interest income.

Income Tax Expense

• Income tax expense was $309.6 million, compared to $443.6 million in the prior year period, primarily driven by a decrease in income before income tax. The effective tax rate for the year decreased 10 basis points to 22.3%.

Net Income

• Net income was $1.1 billion, or diluted EPS of $9.06, compared to net income of $1.5 billion, or diluted EPS of $11.94, in the prior year period. The 30.0% decrease in net income was primarily driven by lower gross profit, partially offset by lower operating and income tax expenses.
• Net income as a percentage of net sales decreased by 244 basis points to 6.6%, primarily due to lower gross profit margins, partially offset by lower operating and income tax expenses.

Adjusted Net Income

• Adjusted net income was $1.4 billion, a decrease of 26.9%, primarily driven by lower gross profit, partially offset by lower operating and income tax expenses.

Adjusted Diluted Earnings Per Share

• Adjusted diluted EPS was $11.56, compared to $14.59 in the prior year period. The 20.8% decrease was primarily driven by lower adjusted net income, partially offset by share repurchases.

Adjusted EBITDA

• Adjusted EBITDA decreased 19.6% to $2.3 billion, primarily driven by lower gross profit, partially offset by lower operating expenses after adjustments.
• Adjusted EBITDA margin decreased by 280 basis points from the prior year period to 14.2%, primarily due to lower gross profit and reduced operating leverage.

Capital Structure, Leverage, and Liquidity Information

• For the fourth quarter, cash provided by operating activities was $373.5 million, down $238.2 million compared to the prior year period, while free cash flow was $277.3 million, down $238.0 million compared to the prior year period.
• For the twelve months ended December 31, 2024, cash provided by operating activities was $1.9 billion, compared to $2.3 billion in the prior year period, primarily driven by lower net income. The Company’s free cash flow was $1.5 billion, a decrease of $0.4 billion compared to the prior year period. The decrease in free cash flow was primarily driven by lower net income.
• Liquidity as of December 31, 2024, was approximately $1.8 billion, consisting of $1.6 billion in net borrowing availability under the revolving credit facility and $0.2 billion of cash on hand.
• As of December 31, 2024, LTM Adjusted EBITDA was $2.3 billion and net debt was $3.6 billion, resulting in a net debt to LTM Adjusted EBITDA ratio of 1.5x, compared to 1.1x in the prior year period.
• The Company repurchased 2.0 million shares of its common stock in the fourth quarter at an average price of $168.65 per share for $345.2 million, inclusive of fees and taxes.
• In 2024, the Company repurchased 8.9 million shares of its common stock at an average price of $170.74 per share for $1.5 billion, inclusive of fees and taxes. The Company reduced its total shares outstanding by 6.8% in 2024.
• As of December 31, 2024, the Company has approximately $500 million remaining in its $1 billion share repurchase authorization announced in August 2024.
• Since the inception of its buyback program in August 2021, the Company has repurchased 95.9 million shares of its common stock, or 46.5% of its total shares outstanding, at an average price of $79.56 per share for a total cost of $7.6 billion. As of December 31, 2024, shares outstanding were 113.6 million.

Productivity Savings From Operational Excellence

• For the fourth quarter, the Company delivered approximately $13 million in productivity savings related to operational excellence and supply chain initiatives. In 2024, the Company delivered approximately $117 million in productivity savings.
• The Company expects to deliver $70 million to $90 million in productivity savings in 2025.

2025 Total Company Outlook

For 2025, the Company expects to achieve the financial performance highlighted below.

• Net Sales to be in a range of $16.5 billion to $17.5 billion.
• Gross Profit margin to be in a range of 30% to 32%.
• Adjusted EBITDA to be in a range of $1.9 billion to $2.3 billion.
• Adjusted EBITDA margin to be in a range of 11.5% to 13.0%.
• Free cash flow in the range of $600 million to $1.0 billion, assuming average commodity prices in the range of $380 to $430 per thousand board feet (mbf).

2025 Full-Year Assumptions

The Company’s anticipated 2025 performance is based on several assumptions for the full year, including the following:

• Within the Company’s geographies, Single-Family starts are projected to be flat (down low-single digits to up low-single digits), Multi-Family starts down mid-teens, and R&R is projected to be up low-single digits.
• Acquisitions completed within the last twelve months are projected to add net sales growth of 4.0% to 4.5%.
• Total capital expenditures in the range of $350 million to $450 million.
• Interest expense in the range of $250 million to $270 million.
• An effective tax rate of 23.0% to 25.0%.
• Depreciation and amortization expenses in the range of $550 million to $600 million.
• One fewer selling day is projected to decrease net sales by 0.4% in 2025 versus 2024.

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About Builders FirstSource

Headquartered in Irving, Texas, Builders FirstSource is the largest U.S. supplier of building products, prefabricated components, and value-added services to the professional market segment for new residential construction and repair and remodeling. We provide customers an integrated homebuilding solution, offering manufacturing, supply, delivery, and installation of a full range of structural and related building products. We operate in 43 states with approximately 580 locations and have a market presence in 48 of the top 50 and 90 of the top 100 MSAs, providing geographic diversity and balanced end market exposure. We service customers from strategically located distribution and manufacturing facilities (some of which are co-located) that produce value-added products such as roof and floor trusses, wall panels, stairs, vinyl windows, custom millwork, and pre-hung doors. Builders FirstSource also distributes dimensional lumber and lumber sheet goods, millwork, windows, interior and exterior doors, and other specialty building products. www.bldr.com

Contact:

Heather Kos – Senior Vice President, Investor Relations – investorrelations@bldr.com

Source: Builders FirstSource, Inc.