Why Are Builders FirstSource Shares Dipping Today?

Builders FirstSource Inc BLDR shares are trading lower by around 3% after it reported Q3 FY23 results. 

The company posted a sales decline of 21.3% Y/Y to $4.53 billion, missing the consensus of $4.84 billion.

The sales fall was owing to a decline in core organic net sales of 13.5%, commodity deflation of 9.1%, and one fewer selling day having a negative impact of 1.6%, partly offset by impact from acquisitions of 2.9%.

Gross profit decreased 21.5% Y/Y to $1.6 billion, and the profit margin contracted 10 bps Y/Y to 34.9%, reflecting core organic margin normalization.

Adjusted EBITDA decreased 30.6% Y/Y to $813.3 million due to lower net sales, with margin declining by 240 bps Y/Y to 17.9%.

Adjusted EPS of $4.24, beating the consensus of $3.73.

For the nine months ended September 30, 2023, operating cash flow totaled $1.7 billion, and free cash was $1.4 billion.

As of September 30, 2023, liquidity was $1.1 billion, consisting of $1.0 billion in net borrowing availability under the revolving credit facility and $0.1 billion of cash on hand.

The company repurchased 1.7 million shares worth $224.9 million during the quarter and has $0.4 billion remaining on its $1.0 billion share repurchase authorization approved in April 2023.

FY23 Outlook: Builders FirstSource revised outlook for sales to $16.8 billion-$17.1 billion (from $16.8 billion-$17.8 billion earlier) against the consensus of $17.43 billion and adjusted EBITDA to $2.7 billion-$2.8 billion (from $2.6 billion-$2.9 billion).

The company revised its adjusted EBITDA margin outlook to 15.8%-16.7% from 15%-17% in FY23.

The company expects to deliver productivity savings of $140 million to $160 million in FY23.

"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," said Dave Rush, CEO. 

Price Action: BLDR shares are down 3.13% at $105.12 premarket on the last check Wednesday.