BLDR - Earnings call transcript Q2 2024 | Builders FirstSource, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, and welcome to the Builders FirstSource Second Quarter 2024 Earnings Conference Call. Today's call is scheduled to last about 1 hour, including remarks by management and the question-and-answer session. [Operator Instructions].

I'd now like to turn the call over to Heather Kos, Senior Vice President, Investor Relations for Builders FirstSource. ahead. go Please

Heather Kos

release welcome With and our second XXXX earnings quarter and our available Good at website on to the call. investors.bldr.com. press The CFO. me Jackson, Rush, presentation call earnings are Peter on morning, our our and are CEO; Dave

be results results they adjusted refer items. for to The We during in for GAAP and include considered provide our presentation will today the not and comparable non-GAAP informational from certain should purposes, measures. We GAAP call. these most the discussed isolation non-GAAP results directly .

find of they release, and presentation. discussion the of You in be measures can a measures SEC filings believe we investors reconciliation press can to GAAP the earnings corresponding why and useful non-GAAP applicable where to these our

the projections and Private cause Please of future meaning filings call Our on our within cautionary statements our that in and to from release, and the review actual for and press forward-looking forward-looking remarks section presentation various SEC projections. Act differ could this of statements factors Reform in in forward-looking contain today's statements release the and these results results. Securities Litigation press

turn Dave. over call I'll to that, With the

David Rush

joining Thank our morning, thanks everyone, you, Heather. and call. Good for

differentiated members. complex extraordinary model As our our quarter our proud results, the and we mid-teens demonstrates of environment, highlighted the work team EBITDA in continue business to of operate of a strength by am hard I resilient second margin which

industry-leading driving While affordability we our by controlling investing what solutions in of digital control, multifamily, platform. we and strategy adoption continue our see executing we to the expected and are in challenges can . normalization value-added

customers product as points exceptional pain industry us service, this macro and solve portfolio landscape. our complex a customer trusted to with our makes ability best-in-class partner navigate Our

months intact. long-term for near-term on remain are and focused our dynamics tailwinds the challenging momentum, lost remain we are housing positioned growth as executing market as strategy weeks ahead, have in we and starts While well

pillars Slide strategic on our X. Moving to

We solutions more products, providing install services customer leads manage continue digital with BFS. value-added a and increased to efficiency efficient way This and business operational are to we to customers new construction. stickiness, [indiscernible] cost-effective invest and improved in for our home

leveraging delivering improvement highest We have initiatives quality on products robust the of scale to our while set and continuous focused our services a customers.

Our experienced day. while every these are team our with members highly excellence delivering serving integrity critical customers and initiatives

continue a disciplined term. we manner a capital Finally, shares buying track a of attractive long over at allocate in strategy M&A proven record with the prices to and back

Turning to our X. Slide second quarter on highlights

by softer-than-expected challenge we sales. seen market currents, a cross have navigating While

margins However, EBITDA QX or in nearly we strong better mid-teens remained in XX delivered gross of quarters. XX% and margin consecutive adjusted for the our has

Our a model key durable business and margin our scale. is portfolio transformed point product of differentiated and proof profile our

opportunities share. we gross aggressively profitable after of see to go Given margin, base the strength our more

We improved manufacturing value-added have and the ourselves our innovation. processes mix of grown products our efficiency of over past at homebuilding X positioned forefront the years, and

strategy. to Slide we X, how our Let's we're executing move show where

with partnerships BFS services full Our continues remains customers. value-added competitive bolster a advantage our of to for suite and products and

procurement through QX from with delivering by digital operational see million on manufacturing great hear pleased primarily levels productivity We're $XX increasing year-to-date we efficient our in adoption more demonstrated rigor week. initiatives. feedback $XX customers progress savings to We continue have each as of in driven million and and and

focus as growth continue services to by the address use to our I've sales our that drive customers in year-over-year I'm business. helping we playbooks about spoken labor XX% install past, we As on challenges. in increased install pleased

effective real-time decisions. managers environment navigate Our best-in-class dynamic them have information this to make help and

XX%. while and and levels over on in with full rate consolidated X time flexibility We maintaining are delivery service facilities also of customers our to have operational maximizing our

[indiscernible]. operating remain will of We disciplined no the managers spending matter discretionary

as than into We expected. single-family the lower in to cuts have come growth has to second occurring momentum and flex appropriate. in stalled starts not where are rate earlier of The XXXX take the the continuing actions interest business year have half materialized

the new market addition, fallen value start has challenges. to adapted affordability the as of In a has

headwind specs, continues multifamily Multifamily year, detailed us. prior our current be to muted very amid activity environment, even is profitable multifamily continues Builders buydowns today's was last to affordability normalize, In business and for an expected and Smaller sizes the the rate regulatory, having to [indiscernible] to navigate have been of be tough which all to options. a availability issues comparison. development rates. especially help impacted This performance land of record and find to relative creating to along simpler with levels, buy increasingly at challenges. limited interest on smaller have as and a and continues employed are land by Builders options builders homes down buyers and affordable infrastructure

as product with our balancing needs partnering margins. are consumers address material maintain We well them the includes our cost help mix through for This customers as lower of while their passing their homes lower to costs. to

affordability. constrained For address normalized number down, a builder's as prices biggest example, trusts, Products, and Wood floor EWP, of supplied came or sold the have fewer floor we helping been more have to higher-value and current customers when to trusses we Engineered provide EWP was challenge, able larger specifically with supply EWP

them. the right by do We have builders what what's want and

profile means strong. and margin trend dollars, remains profit our gross less this Although sales

We and partner have financial the operational to opportunities. with flexibility our capture meet growth needs and their to customers needed

Slide X. M&A to Turning on

disciplined. to we pursue financially opportunities $XX In sales quarter, with remaining continue X the We completed second deals while million. XXXX roughly aggregate attractive of

Products, serve In we which Florida. acquired Schoeneman's establishes QX Wood RPM high-end our enhances TRS manufacturing ability which Detroit. acquired we call which June, May, our In to within in builders trust Materials, we and Northeast components, Metro detailed custom on Building

Trust Components County. Arizona Finally, windows area doors a in and installer capacitive and July, dealer of we Flagstaff, CRI in acquired Western adding and and SoCal, trust high-end Orange

the excited family. We new team are to BFS these talented welcome to members

solutions market retention. customer in our position value-added lead increasing desirable includes and geographies and enhancing our M&A extending to approach disciplined and Our specialty in

pipeline update allocation. believe we remains can M&A On we in acquire we a capital healthy. market. to fragmented on continue and provide Slide X, Our an

the the tuck-in second X during nearly of repurchased $X billion acquisitions to we addition In shares. quarter,

I'm track share We announce happy repurchase billion of authorized Day by outlined strategically allocating high-return as proven opportunities. last to on billion to XXXX our a remain has plan as from Board our new deploy that to to to $X.X XXXX at Investor capital capital billion December. $X $X.X

digital X to strategy. turn let's an on Slides Now update our for X and

of space, As growth. organic believe provider in end-to-end substantial a platform will the and digital digital of industry tools the we only for BFS be driver transformative an our

Since of platform they endure backdrop. interest over a of even with as our so in seen February, X challenging to nearly top $XXX audience including XXX from We've digital through value have far, smaller builders had broad We have go operating seen multiple we the strong late adoption acceptance million. and growth of the platform launching builders. orders from target the placed

sales Year-to-date through totaled QX, million. $XX incremental have

million commitment and behalf charity underscores to in While share ability and am achievement target we $X confident I by meet communities. our in $X incremental of Society. billion to win on our remain Leukemia recent that our event, thrilled positive grow sales still of have raised a go, long a new XXXX in to way share annual wallet over impact a customers. we we our our to team the as members' making Lymphoma successfully At we significant

support failed partnering since heart crucial to $XX These event and patient made want aimed funds This cancers. brings cures to a gratitude with I our overwhelming partners whose treatments and research, at in first and LLS advocacy our total extend advancing possible. to industry contributions support successful nearly programs XXXX. million blood finding are for to sponsors

I'll over to detail. now turn to call results discuss Greg's our the in Peter financial

Peter Jackson

repurchases and housing navigate share during leaning to our the our to We weakness into financial second Thank expand model, competitive and and footprint. successfully quarter believe $X pillars leveraging stock value the were strategy softer-than-expected billion our executed tuck-in position long-term and to balance you, coverage, and manage value-added nearly morning, into are Dave, sustainable and and advantages environment fortress a geographic financial exceptional strong dynamics We good extensive us made enabling and we the our of everyone. enhance flexibility, creation. operating of market acquisitions X able price effectively deliver solutions sheet by

X cover our first, second I'll results; will revised our discuss with guidance you I'll assumptions. on I'll recap second, update an topics our XXXX this and related finally, provide and I quarter morning: deployment; capital

X.X% by amid partially sales with downward begin offset of acquisitions higher the core by decline of of X.X% our increases net growth reviewing X.X%. on The declined multifamily Net in XX commodity XX%, core offset a sales billion, and X.X%. from and multifamily XX. Let's second partially Slides was $X.X expected quarter decrease inflation sales sales decline and of single family was organic repair and X%, organic X.X% driven remodel by in by The trend. as performance [indiscernible] decrease a of of were

take to moment want variables core single-family the impacting discuss disconnect I a starts the sales. and organic between to

a As the are shifted starts as current changing ] permits, the lag relative has environment, response a we that in X-month the In between market. of sale. to lag there's order start historically, reminder, a [ and and extend roughly seeing timing completions

seeing decline value fallen. meaningful changes seen start dollars per less it logical challenges that strong Second, as size, start the the our has and the we the in the but affordability of average XXXX These have in we operating are home opportunity sales means are a given a of despite in market. performance. complexity

To starts looking supplying cheaper, As continue about are superior to XX%. smaller, our where more deliver to material dollar leader roughly are summarize, the to up we less an market XX% are the results. market, a complex remain despite market sales and example, but we at Phoenix only homes

we more second During year's multifamily expected, we as prior lapped signaled XX% the the than and as comps. strong declined quarter,

the the was from over ongoing other driven West. our particularly multifamily. decrease represented of to still of retail improved were the by billion, XX% in $X.X sales strength the X% approximately primarily Gross a points, quarter despite Value-added net and basis X% prior in approximately XX.X%, second growing faster our compared period. year headwinds Gross XXX multifamily. by margins given products R&R normalization, decreasing profit during

to by primarily partially SG&A operations. decreased acquired to $XXX compensation, million lower attributable offset $XX million, variable

the a team offset EBITDA we as approximately excellent job offset EBITDA partially by lower market expenses. partially percentage As Adjusted of lower an margin operating down was points $XX fixed up SG&A The has lower basis to was XXX $XXX $XXX costs prior driven expenses. due gross margin million by leverage, of million, by leverage basis sequential XXX grows. to was basis, EBITDA total lower SG&A, from primarily the margin. approximately partially XX%, Adjusted primarily offset net by decreased done million down points, a to sales, our year, prior gross lower On from Adjusted operating positioned by XX%, operating XX.X%. points XX profit, was are basis gross well managing adjusted driven net of profit, primarily down and income year. the

Adjusted per repurchases XX% was the a a decrease to of second compared added share share the diluted share prior per roughly quarter. $X.XX basis, $X.XX, year. year-over-year for earnings On

and flow, Slide our turn cash to balance let's Now sheet liquidity on XX.

cash of than decline offsetting almost increase Our decrease cash $XX flow mainly a how QX generates any This point proof a $XXX was EBITDA. capital business in environment. robust million, net $XXX to our million amount of adjusted an more approximately attributable in working is operating in a of million and

the for cash flow and million Capital $XX $XXX million. was expenditures approximately free quarter were

return XX%, XX XX, while months ended approximately invested was last capital on cash our was flow flow June the For operating XX%. cash free yield

was debt-to-adjusted in At net approximately borrowing end, approximately EBITDA and was net was our facility of hand. billion, liquidity business availability $XXX credit leverage consisting million X.Xx, X.Xx. approximately under Our while $X.X base in on total cash quarter ratio revolving billion the $X.X

capital deployment. Moving to

During our for $XXX of the share the of price of roughly at second Since in billion. have buyback for an quarter, shares $XX.XX X.X average of million of shares $XX.XX August we program total million an per at XXXX, per we repurchased $X.X share. stock outstanding approximately XX% repurchased price inception average

capital value We remain maximize approved of for to a creation billion Board stewards of for authorization have of common to the mentioned, paths multiple and disciplined Dave stock. $X repurchase the returns. new As up

commodities. Now which we turn our Slide given let's are a outlook softer-than-anticipated lowering to hub and weaker on XX, market

billion XXXX, company net year be to $XX.X billion expect total full previous to of sales $XX.X $XX.X our to billion. $XX.X versus For billion range we

XX.X% guide is to forecasted billion We range EBITDA $X.X to Adjusted XX.X% $X.X previous updating in of $X.X of range to the billion XX% billion versus to be XX%, $X.X billion. our versus range the margin margin be the expect the of of XX.X% from full gross adjusted to to XX% previous XXXX XX%. EBITDA to year to to range XX%

XX% $X line in remains normalized also of to This expectation starts million. to single-family long-term million $X.X with of at XX% our

of recent profile management. acquisitions greater Our and value-added mix a reflects pricing long-term margin disciplined products,

[ full expect the million free XXXX an of $XXX $X in $X.X We thousand board price assuming flow of commodity to $XXX year cash per million foot. range to average ],

assumptions. outlook several of XXXX and Slide release the for is on a Please assumptions. refer investor our based Our these key XX to list presentation of earnings

not QX uncertainty color to and for give typically we ongoing wanted provide While we do housing guidance, quarterly multifamily given normalization.

We be net between in $X.X QX. to expect be in $XXX of million billion to Adjusted QX and EBITDA to range the sales billion. $XXX is $X.X expected million

Turning to Slides XX and XX.

sales strength of and our showcases for the As and by normalizing base margins business approach volatility. underlying company reminder, a commodity resiliency our

sustainable business have drive outperformance. where helps the our This to clearly to the aspects of attention we focused assess core

guide XXXX billion. approximately Our on for was sales $XX.X business base net

Our of XX.X%, a billion reflects roughly business from EBITDA X approximately adjusted is a impact margin guide at which net base $X.X commodities.

XX Slide EBITDA $X.X at adjusted that was $XXX,XXX lower our year. single-family better billion this at base expecting XXXX context, starts we EBITDA shows business adjusted are starts, For and roughly single-family

gives to of million I remained out long-term to financial As that Day goals exceptional and assuming to ability execute confidence December flexibility XXXX. in want $X.X our strategy laid our we our the reiterate drive Investor return achievable, starts us in I wrap and up, The a normalized single-family in growth. positioning

final back let Dave call that, to thoughts. me With for the turn over some

David Rush

Thanks, Peter.

profit strong cash and generation. flow as by reiterating close evidenced our me we to by margins continue execute Let that

housing resilient Our any EBITDA an at us we X.X% adjusted model base environment. XXXX, had business year, we starts. single-family margin to business in a win In mid-teens adjusted allows XXX,XXX This expect starts. strong level resiliency is demand. transformed the a the to at meet to margin a market from This as build base grows lower housing EBITDA business our of demonstrates of and

in demographic trends. strength of the confident to housing significant the due long-term am I the industry and favorable underbilled

are of those will customers' our positioned install help value-added points growth strategy. well we drive execute are and advantage unquestioned in we for leader the to our come products, services. pain our We in years digital to investments tools take tailwinds, addressing believe which through as We

us and free continue long-term robust flow us compound you, Our Thank growth proven playbook for for to help again shareholder cash joining generation will today. value.

let's for Operator, now please open the call questions.

Operator

Bouley Matthew to Barclays. with first go We'll Instructions] [Operator

Matthew Bouley

margin you're exit guide the the fourth as margin of for the guide curious, as XXXX, the side, land kind margins of second could where we're at air for the would into guide, of is and looking starts highlight at quite half. imply think the Maybe begs an getting around certainly, kind yet on that overall point gross starting what in be we'll gross housing given the gross start is as the there's on not we gross certainly we at to about your kind outlook? long-term kind of starts. the if I'm normalized at quarter, would continue new normalized zoom you margins. 'XX of 'XX kind pocket margin that where And cadence housing XXXX, And rate implying is I'm the starts question to the what if that

Peter Jackson

for you thank Yes. the question. Matt,

right? We're So We saw it going so margins questions get on a it. the a important the us. was factor side, an performed how we're to on knew lot margins pleased progressed. for It's far, certainly been years. with happen. how of have it's with has particularly multifamily certainly We pleased We but normalization lot changed coming, over

expectations Hopefully, in is to to be ball. comes second change we've I outlined. clear into normalization exit this 'XX look that think real next future more what of been And to into We and pretty half clear, no 'XX. the crystal want year I a about the are. it When in We what is so the As have not rate, right? guide this you for that. be don't intended know we've year, into don't

on work We give done this seeing kind at in now, we're of we're We're right? that, level right to right that coming roughly range. that of XX% take. on starts, based $X.XX of Based that at yet. what we're haven't guiding performance or out on But that year

what XXXX XXX probably on of right? As seeing kind based right points level, you we another basis it's think at this now, think we're about

another line about is that basis half If you'd kind you based just of on extend points right? see the and made XXX seeing. operations. out, X core headwind into multifamily pieces XXXX, that of you'd of is half the what we're expect, of of up About

So to a the the on end is question. of normalization The closer than see. we terms definitely story, multifamily what we're beginning in based the no

EBITDA you if points out XXX XX called We'll we of the a of points points a basis about couple little that well, get probably the think that that right maybe performing in million really to back with we that's in give a like range, of We and other multifamily. a into business, year, coming rest is 'XX strong last 'XX. worth 'XX, basis in we'll dollars headwind overcome this from back multifamily. And feel hundred little the we to look from over tailwind of as basis position in be

profile our is install, Matt, the the customer on thing doing customer more help doing Those offset continuing any and I'd with variation. for more products the value-add. with only start that for are focus higher-margin we focus add

Matthew Bouley

it. Got

color into in Okay. That's dovetails my very a question. next quantification that helpful

million is But guess the business $XXX for by it's total I million. EBITDA guide So about base I the down guide EBITDA if $XXX down midpoint. at kind only the look at year, of the

guide. the in presumably, So actually largest in is commodity guess, the change change the I prices

of if talking value-add outlook, to in changed the in just the I side, about on just side, kind specifically terms when of value-add specifically kind margins. to stability what I mean, the case. the we're clarify value-add can starts the has you want and growth of speak if And so, that's

Just of kind there? the driven guidance change kind of of piece that what's really

Peter Jackson

All right.

So X question in XX parts.

all. I Let's them see if get

So right. overall, you're

We kind absolutely the is that of and change ran of have dollar called market weaker, seen shift lumber up That in the a right? -- a in and largest both we've component the back. little has been OSB So the value reset pulled sales OSB -- has out. for commodities, bit,

So than half of of change. commodity is that more the billion, just the $X.X valuation

call is rest to the majority of terms call to means right? of business the vast of It's the deleveraging. down fixed the down of of that it, costs. What EBITDA output overhead bulk the business on less the EBITDA, absorbs smaller in It's the

see this some quarter, substantial in can we You months. pretty just had the are we improvement summer busiest because

the We half in be. back we're thought going to be busier than we'd

So we're we Value giving add back. continue strength. some see of specifically, that to more

to moving demand very continue stayed consistently We the see have the very is The strong. Customers well. product. with volumes

out We affordability. haven't are in seeing pointed from seen what What here, right? do How a shift to customers on the broadly. we get and Dave was what they pointed cost really this mix away goes we out his remarks, dynamic, out. focusing value-add It

unique They're you doing from square a affordability has sorry, had or sales value shifting value-add, to of taking think ways Open of if are product, Web dollar combined They're garages but within other surprise It's -- lot That's from value-add the reducing -- a of the of it's EWP, number a One challenge, and bonus that shift just with value-add. things. about lower rooms, is a the the not out broad they're not Trust footage not shrinking that's all basements. pressure. that a things house. right? the that to They're

that pass-through value-add seen the where price really think of has pressure is around I type in mix.

specifically, thing the still I Margins more trust even product categories. increases. component are as add the efficiently to volumes ability is strong. core on Matt, are Volumes value-add strong our would decline, on manufacture One still

our As the is because go profitable up we we you most of shifts cost. least that's to X obvious shift. that XXX% you to fixed go but second reasons, with from profitable When the our shift, X shift, X shift leverage for put

maintain in So margins being even [indiscernible] less because because may shift. of be we're the is as ability actually top most easier efficient to line less, the demand

Operator

Dahl Markets. hear RBC from Capital We'll with next Mike

Michael Dahl

Probably comments on just it's or estimate Peter, a a there. to certainly just in point this on know clear formal year the not But of over things at hand there's to follow-up ringing of that yours give margins couple guidance gross rate a your this. be out been margin exit and pinpoint about give But, a so just want on year. I not 'XX on to because much I last practice crystal

seems starting my for about, way, point talking the Would my midpoint you're 'XX in gross saying, maybe around bit my maybe my XX% you year, that another exit XX if XQ it gross you XX% or rate XX or is this more intended is hey, midpoint were that When margin message? Or is like a be could margin. specifically in XQ of clarify said here? little on

Peter Jackson

short, you In got yes, it right.

We You this XX% we're everything to short so is think just a seeing heard directionality. we're year. right. intended alluded did think I rates crystal The it and today, are around be not guide. to that, to It's it We trying you on based exit to It's XX% ball. not Matt. and answer . around our give think this

we're XXX,XXX now, are that starts. does going margins Our to XX% $X.X at long-range margins, mean? are be that we're right at that This would XX [ indicate to strong. seeing means ]. million What at normalized XX Well, stocks

positively good. environment to out tone We've underbuild, the they the belatedly, it. optimistic rate it's market, playing the that's overall are is which think put which capacity million got got plays but see than now. expected, good. all about this So war right the sort great. plus, but better interest ground of Margins under said Ours we filed means the now going extra in is is market the in we right on are we're for, that's out. like Pretty we're and in versus stake how able pressure right? not and it why our maybe a claim the we're total terms in to demos, what also $X.X of

it's good. a and But that's positioned see. strong look business really we'll margins well So

Michael Dahl

And Yes, talking that's pay, quite actually about helpful. I the out even constructive. levels which we're even XX, is the at perspective and -- term, it's the and depressed of agree of appreciate look, volume, about if kind longer zooming XX at

think, the gears. part model stuff around the shifting of of mix, appreciate Just building tends and that's complexity. kind all focused. another us out I investors for to hard volume kind that the All is, when This of a we're be to

guess think And great. drive headwind we low so all on a would pieces be to that? if it seeing to way low a and against on and you that delta of the a moving single, to against -- changes much the that, any there, could just up single-digit are single-family is you're here's would ballparking a help there complexity date it Is I of hey, headwind articulate, I we're it's when how for equal, you -- what of it to kind relative kind think is -- else changes that, mix all mid-single-digit hold, my a starts is or provide

Peter Jackson

Yes.

of that's it's great spent We've time on lot question. -- So this. a a

As trying lot we a business granular understand know, energy a spend you really level. to at of our

to XXX lot of of signal. understand get lot adventure the an markets, Unfortunately, data. really the the it's of thousands noise in it's right? of of at SKUs data, impact ability the XX hundreds to So sometimes really get a have a to We through locations mix

seeing, this it. you we to reacting earlier to saw what were understand think us trying year, I

value is this around than the we is the storyline bigger I magnitude conversation whole order expected. that think of

storyline again, expected. the I of think of magnitude order than around starts a versus we permits is, little the timing bigger

that roughly gap if We've our broken why we we bit biggest down the X-month it's use lot and -- a the saying, And we're pieces, starts XX-point that between right? single up tracking about that down permits few got aren't think So lag. is lag piece The is a a longer. probably a more. QX, you we're into

little the is I time think cycle longer. a

it haven't permits to changes, to code starts have. quantity would put traditional rush, large it pulling as large the market be builders and doing up, of quickly ground the the doing was those saw the builders really You they in as thought beat custom going and

large year all pie. that bigger we causing progresses, on, They've early a the know think I the bit. the but settle at overstated We the of think guys winning, that's share out it distortion that, are least in And bit got starts of a the nationals, starts will right? a big little as number

are other talked is changes. related it to the Maybe pricing pieces The about, pieces we've of right? probably another X/X

to current We of there lot A that had have about of doors, bunch PP Vendors response. millwork, vendor. categories a and to were have in that is have cut. prices talked readjust the demand, they adjusted

talking category good, So to, to not in And let's important it. It's seeing another right? better, do roughly you're good that better if piece. X/X that's to an mix, best is we're you terms best, the about of in what of think about traditional better, good,

that before that in meaningful from were regard that in changing into with The house. goes is the product to like the and sound value slab has a the talking basement a decline we going percent things of big deal, construction a not but to and about statistics,

categories, of it. think kind rough about how that's So we

with But numbers if we be lying I'd precision. had you I those told

we're moved I think it to sure though, directionality, going to good one it, we've quickly our we how move have to make It can't we're plays it of no got of the There's right? and volatile, customers it's can. close just part way. quickly We're but stay Mike, all other. reason to is going best serving see so out. the that interesting

David Rush

us I we to that only manage would thing scenario a add, have The line Mike, is it's top through. primarily for

of the that. one started, And in margins Peter revenue. the houses appreciative strong. and we've number Our XX% stayed that is have in we're best Arizona. regardless that another the gave increase example XX% very very consistent of is -- But

impact. that the do math can [indiscernible] You to XX% say

we're the market. what of end depending it on What we levers able time, can their because sale get to to for the the on of the the both. that solution But though provide use varies the works problem. to having ability And same customer to alternative depending seeing at day, hold pull that we're an the chooses we that our margins solve have to is at

Operator

. to We'll with Jadrosich Bank go Rafe America. of next

Rafe Jadrosich

Peter, the of the color progression on about margin we I appreciate here. all should so how far think

much comments basis of in and Just multifamily margins versus past? the is the off multifamily excess how of had XX off about multifamily margins earlier following is up multifamily how much of in have to do another you've in elevated from mix? that seen levels normalization how roughly the points today? And 'XX of how much the XX Or 'XX, basis like And you normalization go? more on points, think headwinds margins we there a of about the

Peter Jackson

the for question. Thanks Yes.

the We've and So how the other to we're a the it's words, one. seeing, didn't didn't not what just multifamily terms dynamic it's really of we be a in around open it convenient but X, turn. tried honest In about on clean stop tricky and playing January is out. have nice

last this So nice clean I don't numbers year or have year.

to of this, bit can I a sense give best my of there's directionality. sort you're probably little poke but at, of going So you the

window. that in in to began really last see continue turn to all that business year. multifamily strong of QX throughout We

of what seeing are we're that and in driven in margins points right? XXX meaningful multifamily, headwind We those starting and by our kind declines to QX, stronger QX in seeing periods XX in basis

the because the category. shift of That's downward add value within shift and that sort of mix the it's all combination

with continue in it mind, to we that So year. this expect do

will was XX points, I is headwinds to a perspective, did. that average one, see throughout chunky a going on continue year. and on it it the dollar But QX a from going to XX be from mentioned based lot, I obviously, hurt to the a overall of right? basis the timing, It of multifamily to we me company but business. our around give impact rough band around with Again, of XX kind think segment full

Rafe Jadrosich

about any how headwind? forward. more strength Okay. any comment, about the of the market half multisource with had you And remarks, mix -- to you was the been how forward, seen like impacts see just -- expectations you margin, your you're the changes That's do sort have of then interesting, your expect are it to And in do think going after a And try that about I helpful. go more? thought that the there's share of there? Has thinking trended of the do then market How like in expect share opportunity of builders you And this going a profitable first gross take forward? prepared going of have that year? Like talking -- base you what to kind do you some does share? to given

David Rush

we where that I would Dave. looking is manufactured be Rick volume where distributed this We identify have incentive you what [ to opportunity where tell disciplined may even our win-win with approach, offset an it leverage a at opportunities is we incremental that we're or a that to product go can our product right? after have and whether customer, against business. a use want we costs, ], fixed volume it's volume to the

It we guys that that will the approach. be and Thankfully, volume targeted meeting opportunities first had had in back where part a focus July, about of they It the be strategy sense there. the felt all win-win only half. of of will plethora will going to we're the was execute they in and a description, a makes there that and the to it has and approach. be the all be a solution So disciplined

Operator

to next Trey Stephens with go Inc. We'll Grooms

Trey Grooms

of wondering weaker we've one environment. new. you've the kind of the competitive or I color appreciate widespread seen all lumber this given the thus intense the pricing lumber, on far. -- side, become seeing the is, given if more guess, I that commodity you're kind But just nothing this And on on

taken with on value-add pulling back, Are value-add supply. the side which started and to that multifamily side a has lot of you up was behavior clearly also more trust multifamily on trusses, that any or the now But seeing competitive normalize?

David Rush

question. the for thanks Trey,

is to the offer. part customers that because not we're too What see though choosing becomes the the partner a do low game. package. We And of will that that always On to our players they in marketplace have question. in commodity it's play take with the part all commodity of we commodities

value-add from back we package, provide. value packaging buy of the incentive and volume incentives that of create we can a to all whereby we piece us overall through And level earn the whatever products

building for to the is if won't advantage add It efficiencies. be best. win on focus will be got value sustainable the you to approach we it be only share a our won't a our It's So for only and still an customer win maintain or not be is over still a going way where win-win. a the work with that's it specifically

one drive as comments, shift, the in we're efficiencies. we're possibly to We as earlier in one be said I have we're And when shift. if can we efficient continued

ability a number provide the volume. profitable an have in volume idle customers create again, leverage incremental and the to that incentive for as capacity us we we for even incremental So to more net-net

of to kind been drive how, managed tried the even that's top to board. as the able hold pick line, we've on opportunities and to we've So to

Trey Grooms

Yes.

helpful. the think sure pass-through, . that comment and just trying heard I side, when mentioned meant. it Okay. what something value-add price you I understand That's about Peter was I were make about talking to

David Rush

not the let I'll -- on don't when profitability we reduction immediately we're impacted answer, impactful cost margin -- standpoint. a vendors lower-cost actually that That's profile I the selling we and follow is top right? then on again, a under is, from for model line of now products, It a get our I'll you but and operating product, that through. because kind our we're same was from pass up.

Peter Jackson

Yes.

thought, in customers very sure we that key our acting in disciplined echo making manner stay same to just focused categories. a with So on we're do

bit I As commodities, you on we color through. guess, little know, disappointed. that, all I'm a pass A it

have continue is willing I a units, I little actor behavior intentional I out to teeth industry are business that and category, call to that's Hopefully, but would everyone moving indicate but you to Not awful the hoped will, there, be -- right There not see remain longer the expected. have weeping money. in is lumber bad about ashing many sustain lot we I that want more of but we're loss of and mills, surprised than disappointing. it, have would an losing of or would direction. expected, is whatever in a lot I'm to how making a bad that would at a be players

some customers. And absolutely I players we seen, are certain what to numbers players, think through we've see give the reductions price of that lumber our and doors seen our adjusted you What by because right, where millwork I weaker customers cuts to nothing sorry, vendors. [indiscernible] we've in players, that overall sales our before price to charging the attributable specific the others prices customer was are referring to pass actions than we are mid-single-digit else -- low taken

Trey Grooms

I take quickly outlook. thoughts my one Yes. could a maybe okay. There's Got that. how love And the views follow-up. to it. And very, kind on I'd on guess, multifamily kind normalize. of of for that then get differing just quick to your maybe

that for but like mentioned you some the more rebound to color of see trade could it's we there maybe be timing you when think I a lower much does do And quick Or . pretty think there a kind on say, level could directionally, maybe see hard multifamily? I in stabilization? at bit headwind any we how know a there then feel we while? may there do in 'XX. water could that it you come fund after to But of little might stabilization

David Rush

tell Trey, on actually the still even getting to of hesitant projects half, multifamily projects which overall. line first the projects get quite addition start we've new people we've -- pushed you Yes, we've is project though but done, the still small the to pushed, top the board, of frankly, going was piece what get headwind in the it's The seen part seen dynamic throughout delayed and seen in the to existing in pretty I'll year. the XXXX is consistently --

is so that come down. going have to for seeing, where that thing the happen are than to of rental is think going. has rates to to we but in of the is projects favor that a of going mortgage same order essentially living ground, capital the they're new underway long Then get of a New that to we now there's cost take currently get I come be The to the less multifamily are have arrangement. though, one projects rates while gap take out type

excess to that do and So feel lot a rebound levels just into expect capacity a to during like we the which off XXXX. will this be will us. the profitable it continue a year, a into with business still came and rest year have at 'XX takes levels The problem lot in multifamily believe of quicker burn with encourage multifamily, these for through the will 'XX. we we of [indiscernible]. [indiscernible] is very in at we the

Operator

now We'll Baumgarten to Adam go . with Zelman.

Adam Baumgarten

it's value new and from value the know And can how Just a lower us is of you mix declining, I how . guess, I down? Phoenix that on sense the much overall, much is add. example, -- of it for starts footage but you have give maybe smaller of square what that of

Peter Jackson

don't influenced I'd know and us. volatile too What have that of customer-specific, are missing there But we're precision, points for regionally you answer we buckets, again, with confidence Honestly guys. too where terms to which if XX prove point. our probably that way that points data call We sale? to is way know the is in individual in

it's permit -- is between biggest directionally, extended on of think chunk sale time taking X/X we on know is value. another the I it the the and

rest to I'm Just I of It's footage, X, the X it's that price don't is is it it's component. square know. honest. cheaper. mix charged the and smaller, to be guessing,

David Rush

same exact proof house, sale that we from for enough builder to national a year bid in what part mid-teens took it's exact same it and and model house. this same and year, done down a points of decide to It's example, opportunity a -- aspect We've right? last to is thing, was compared harder what overall the know exact for

again, at was point builder. that what selling day, the that is market end it at way. least profile the volume selling along possibly what could is the the what the we dealing was we're at the is making between every all another of we also And the keep that happening. margin we're check have And actually again, in know But I that's in proof with. we and want get. on that -- of to and encouraging thing as what every day, directionally, have And changes, happening changing. balance love we're don't we're So the not what But I'd to end suspected we the

Adam Baumgarten

couple it. Got just And more. then a Okay.

sales share any change sales, in I you the the the to then strategy the the talked still think the M&A, increase there incremental and repurchase on about expect given in $XXX authorization? the year? And expected million just in activity that for Is you've on Just digital 'XX, the past.

David Rush

Yes.

digital. me about Let talk little a bit

started benefits customers. first isn't that we've we've and out existing have customers adoption, the of them probably customers. to surprise our The their employees, fully up we've to think they to and to that can gotten on done it digital gone the speed a the digital we've As been roll I so more initially explain

So we the system stat it's orders through that why of million. of you give $XXX

would probably Now already we orders through had. pushing that's the customers expect have existing business we fully that system,

digital. still had to as We would have an indication it have track want not still acceptance. gotten we we of But

more And incremental new continue so more in customers we get and get existing be the come to those from But stake. guys. obviously is as comfortable the to going form wallet a from to of more we customers hockey that business is incremental going

in acceptance little going bit So no, customers a up million time. know M&A piece. we're it getting, but hockey really to not the talk $XXX high to the is there. stake is get at point this giving a for is point to tougher the on that encouraging. is the admittedly stick, Peter year existing be still It I'll as And let we to we're even from this

Peter Jackson

The It there, Yes. M&A, encouraging. digital. good the momentum On is agree good. is on too. is I XXX% momentum

our negotiations quarter. business Certainly added with smaller, good. you've bit the we're that increasing assets on, number really I grow The but the a ones going. of with way out closing targets pipeline pleased the to the we are potential that and pace. very continue looks a like little really this an to acquisition seen way optimistic we there still targets nice like really, in about ability We're still healthy still think very

Operator

hear David We'll you. from Manthey next Thank with . Baird.

David Manthey

that XX the basis the core said operations. bit Or Is overall because just of Peter, XX% of was just the that something if you about the margin is demand? other little XX explain gross wondering on leverage operating sense. XXXX, you lower I and non of else? XXX more. exiting guidance, you from then year, And levels multifamily, lower points when a talked it starts But headwind, makes could your .

Peter Jackson

thanks Yes, question. the for

starts, have They're willing XXX,XXX seen simply be are more have competent where volume. The would normalization pressure, to seeing at sometimes we margin results, that what core tougher, less you their capture we've is 'XX business. sales threshold, in to the competitors, which try the It's and in that's to consider estimate competitors So the right? I right? sort particularly drop margins battle order is for the running of on rough the markets, in

markets, as here see business mix when seeing. bulk that and you there the what right, a the is we're bit this of a same but there's that's aggressive So to erosion, some in point. little price you're bit and of the matched in competitors of X.X that's going There's have there, a

David Manthey

Got it.

and ranges lackluster base business, midpoint assume the And Could in you well, margin which with to EBITDA raised increased you right? that confidence of your intact your the that XX basis of XX.X. source the kind macros is XXXX on here? I as XX.X% then is by And points share Okay. the despite us also, that

Peter Jackson

base business. is [indiscernible], in to bit intact. clarity like ability commodity but dialing year volatility where a we looks and half getting market profile dial and the breakout a informs in on of bit we from is a around in that us feel leveling I dial 'XX We the commodities level we we're what think current a not our better ton, our looks EBITDA think healthy seeing level of the better just like around in little of the ton margin market, profile that are for number. being business what performance. full what yes, good core kind to So still in of question, right that our And $XXX without need of a the more is the would the the rebound, kind about to out giving volumes able neutral a second it really to of real but sort

as Core be business healthy. is we to very as want it much still bigger.

the seeing and think of even based in lays the how is core I ups that the of and a you've you're market. starts some kind customers. been what seen our we out though service downs we business the performance and in overall base on business, here stability really of chart what sell that's transformed business

Operator

Gartner now Company. the go Benchmark We'll Reuben to with

Reuben Garner

a year. the top line on follow-up about have the multifamily, but for Harp I do quick next

-- well, I little are off think a of levels. XX% the your business starts multifamily over is peak

Does your range. that business this kind think in rate of XX for your I at of imply been to starts, to within that multifamily points has current XX we have XX% run business pressure XX% top another line 'XX.

Peter Jackson

do sort So all that's can and the rest way I a go specific. tough be is the for rest is of specific, you question. it. appreciate of question. down. very expect lapping It's of the the to question multifamily. not What the say in there decline I of very Thank we I'm The I the sure will

we're $XXX around headwinds for EBITDA seeing headwind on continued multifamily. be on $XXX-ish million the kind to there maybe expect of sales based the certainly that what now, of line, So line on in range and

all in. is multifamily remember, But

color certainly year we're full we're muddy just Does trust multifamily overall do only. multifamily shrinks say talking normalize? waters. the anymore going I've You've year to be declining not smaller the we're percentage. would a what headwind, an just I back the based I and to think I around trend when decline bit only that the the kind I'm total on about try further talking your XX% the on little as that today, some out products it next is question? in about of even got going of portfolio this impact but a that's our business I It's when is and answer to thrown because past, out multifamily of seeing some know But nut,

Reuben Garner

And Yes. is contract the pre-XXXX, guys. you a update way up would can it set would us builders helpful. for It then the work does. you That's

the the think kind still the of and . those and of all time, during that contracts averaged between years the Are XXX framing package up in move and few market? the I with at inventory. length at that somewhere with the seen you it still for commodity XX range significantly. shrunk their of reset last days kind of lined XX-day we Have

David Rush

what buy range It's that it. with to we the but still hasn't price work rate, we homes. the to also we plus we we're where our And hold, to with The however it how inventory, a to to we willing have in with what -- builders, generally But how match it whatever. which in or up their they much exactly exposure gotten XX-day point we that's how inventory how XX was we've carry to, need sell, long do. is the ability as tried cover our we're always as

Peter Jackson

back during the talked of point, to it think the pressure really ground But quoting XX we that been smart certain of been good tried players certainly we've to are on There's disciplined. chain some Yes. where we you numbers We've about to of increase definitely market. hold quick. Dave's what days the there have the business we're sort those is had way issues, tried move less in supply to back

XX to on XX-day of XXX-day customers discipline way of wrong back because Now the We're tie a more the lot you what's what's and that it together the on market. and that wrong we that's line the terms still absolutely normal think It's of ground, sort work and XX- where to will, a of day-ish with we've terms, between and use approaching thing. some we're if cadence opposed order. got sight, easier into that

-- touch a covered trying that if range. mitigate ground Well, customer. is our that solve our try market in helps for do find we're we'll We in that XX-day and and But at risk. and sure problem general, And to that with the we're adjust point, their I covered. of work do them middle and that mean mitigate market it risk. take . we they're risk and actually what specific work to off to make

Operator

McCanless We'll to go Jay . with Wedbush. now

James McCanless

assumption. about XQ in the the Could about talk The I think $XXX what about prices where look guys when it first was one versus at kind you talking lumber you seen XQ deflation you base you've had, being and it, way 'XX of 'XX?

Peter Jackson

sequence you whatever that went out basically is to We does lengths. with terms half what It a was COGS, like in just or second number right, headwind in going year the called a level. That sort X% out 'XX to get of in it -- what how be you first move see which random small million it it that's is was of of X, versus sync something a headwind. little little is full below half, through a $XXX in the the that

James McCanless

in commodity other then double it's to slowing had of outgrow second but those what was. in up, bit remember little That's because back down a I XX% the starts trying market more think, guess, you almost the readings impressive as had, if well even are single-family growth maybe to numbers that I the were of I value slide sales question where rate And the Okay. the look general the these I bit, you lumber quarter. on, can't the a as South on national side commodity at share the market until rest little the readings. for pretty comes with census relative add numbers was for take and

Peter Jackson

honest of want Well, Jay, XXs. see share And that in always about [indiscernible]. think all to couple in We up starts if a take QX you was in the No, we number, lag. all other all the the sincerity. we month of saw always

little into a seeing QX. you're over that bit So just flash

we're We that's explanation think not performance it. say really doing in opportunities keep are going we business. to take we'll aggressive, for in a the lean to Dave when said, certainly there's comparable and But like seeing the QX. share,

Operator

to We'll with go Research . Thompson Group. Ramsey Steven now

Steven Ramsey

need have. one going into pretty But my The think wrap housing X market dynamics Maybe [indiscernible] the complexity current you you even to just allow you long-term of do questions impressive do XX%, reach your it towards can here. Clearly, of up over a the complexity headwinds lot normalizes complexity move up VAPS here. reach mix to the with level the at level to that to allow you from levels years complexity for current Or couple next or to plan? your targets? that .

Peter Jackson

products It's right? question. category, the Keep value the value-added -- mind, movement engineered is the Yes. in wood Thanks within the products still still for are add.

go we're and held sale doing at The you their trust But engineered to addressing opportunity again, what as profiles less. So maintaining we're And the category, as can in same affordability leading to within time, the product margins it. moving from our keep our blood, value-add we're well. margin customers are we not there. is

And in shift incremental normal, general. So be will I as returns will higher value-add products, don't come products spectrum. now, the the see the a but we right there full to market offer for in those

to go framing trust into packages and we to and grow would category you we value-added as want panel normal sure, housing to from maintain would value-add. for return install in don't incrementally expect sticks panel it product the if to will which total, We the funnel fully then But frame and ready you send levels. to starts normal all

Operator

the gentlemen, that and Earnings FirstSource your and Thank you session Quarter today's Ladies Call. Second Builders will XXXX for participation. conclude question-and-answer Conference

a your And time. disconnect line may wonderful have everyone, this at . You day.

Builders FirstSource (BLDR) 6 Aug 242024 Q2 Earnings call transcript