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Builders FirstSource (BLDR) Stock Up on Q2 Earnings Beat

Builders FirstSource BLDR reported second-quarter 2021 results, with earnings and revenues surpassing the Zacks Consensus Estimate and increasing year over year. It is to be noted that the company’s earnings surpassed the Zacks Consensus Estimate for the 12th straight quarter. The results were driven by BMC merger, commodity inflation and solid organic growth. Following the results, the stock soared 3% during trading hours on Aug 5.

Earnings & Revenue Discussion

For the second quarter, the manufacturer and supplier of building materials reported adjusted earnings of $1.76 per share, which topped the consensus mark of $1.41 by 95.7%. Quarterly earnings grew a significant 311.9% from the year-ago period. Solid demand in residential housing markets and disciplined cost management led to the upside.

For the quarter, net sales of $5.6 billion surpassed the consensus mark by 16.4%. Further, the top line grew 186.6% on a year-over-year basis. Core organic sales grew 35.3% from the prior-year quarter.

Builders FirstSource, Inc. Price, Consensus and EPS Surprise

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

Sales According to Product Category

Value-Added Product Sales: For the reported quarter, sales of value-added products were $1,929.3 million, up 150.6% from the prior year.

Specialized Product & Other: Gypsum, Roofing & Insulation products sales increased 88.4% from the year-ago quarter to $1,043.4 million.

Lumber & Lumber Sheet Goods: For the quarter, sales in the segment increased 318.6% year over year to $2,604 million.

Operating Highlights

Gross profit for the quarter increased 105.4% year over year to $1,583.2 million, primarily driven by the merger with BMC, commodity inflation and double-digit organic growth. Gross margin of 28.4% grew 210 basis points (bps) year over year owing to prudent pricing amid a volatile, supply constrained market.

Adjusted EBITDA increased 416.2% on a year-over-year basis to $835.8 million, primarily driven by solid demand across single family and repair and remodel end markets, commodity inflation as well as cost leverage. Meanwhile, adjusted EBITDA margin expanded 670 bps year over year to 15%.

Other Financial Details

As of Jun 30, 2021, the company reported cash and cash equivalents of $90.3 million compared with $19.1 million in first-quarter 2021. Long-term debt — net of current portion — was $2.04 billion, up from $1.7 billion at first quarter-end.

Total liquidity as of Jun 30 came in at $750 million, comprising more than $660 billion net borrowing available under the revolving credit facility.

Buyouts

On Jul 1, 2021, Builders FirstSource completed the acquisition of Alliance Lumber, the largest independently operated supplier of building materials in Arizona.

On Jun 29, 2021, Builders FirstSource entered into an agreement to buy WTS Paradigm, a software solutions and services provider for the building products industry.

On May 3, 2021, Builders FirstSource acquired John’s Lumber, a premier building materials supplier serving the largest housing markets in Michigan.

Fiscal 2021 Guidance

For 2021, the company is optimistic about significant improvement in financial performance.

The company expects net sales in the range of $18-$19 billion versus $16-$17 billion expected earlier. Also, it expects 41-48% year-over-year growth on a pro-forma basis.

Adjusted EBITDA is projected in the range of $2.2-$2.4 billion (up from earlier expectation of $1.75-$1.85 billion). The company anticipates 105-124% growth on a year-over-year basis. It expects to realize cost savings of $80-$100 million and free cash flow in the range of $1.4-$1.6 billion.

Zacks Rank

Builders FirstSource — which shares space with Fastenal Company FAST, Beacon Roofing Supply Inc. BECN and Lumber Liquidators Holdings, Inc. LL in the Zacks Building Products – Retail industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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Fastenal Company (FAST): Free Stock Analysis Report
 
Beacon Roofing Supply, Inc. (BECN): Free Stock Analysis Report
 
Builders FirstSource, Inc. (BLDR): Free Stock Analysis Report
 
Lumber Liquidators Holdings, Inc (LL): Free Stock Analysis Report
 
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