Builders FirstSource, Inc. BLDR second-quarter 2026 adjusted earnings and net sales missed the Zacks Consensus Estimate. Both metrics also declined on a year-over-year basis.
The top-line pullback reflected weaker housing starts, lower core organic sales and commodity deflation. Acquisition growth partly offset these headwinds.
Shares of this manufacturer and supplier of building materials moved down 2.3% during today’s pre-market trading session. The decline reflected the year-over-year contraction in adjusted earnings and revenues, and management’s lowered 2026 sales and profitability outlook amid persistent housing-market weakness.
BLDR’s Q2 Earnings & Revenue Discussion
The company reported adjusted earnings per share of $1.17, which declined 50.8% year over year and missed the Zacks Consensus Estimate of $1.29 by 9.3%.
Builders FirstSource, Inc. Price, Consensus and EPS Surprise
Builders FirstSource, Inc. price-consensus-eps-surprise-chart | Builders FirstSource, Inc. Quote
Net sales were $3.86 billion, down 8.8% from the year-ago quarter. Sales also missed the $3.91 billion consensus mark by 1.2%. The quarter reflected a softer housing environment and commodity deflation, partly offset by acquisition-related growth.
Builders FirstSource’s End-Market Trends Remained Soft
Core organic net sales declined 7% year over year in the second quarter, reflecting broad-based pressure across end markets. Single-Family was the biggest drag, with core organic net sales down 8.1% on lower starts activity and reduced value per start.
Multi-Family sales fell 9.7% as higher interest rates continued to defer certain projects, while Repair and Remodel/Other sales declined 1.8% amid consumer uncertainty. On a weighted basis, Single-Family lowered total net sales by 5.6%, Multi-Family by 1% and Repair and Remodel/Other by 0.4%.
BLDR’s Product Categories Skewed Lower
Results were weaker across all major product categories during the second quarter.
Value-Added Products: Net sales from value-added products, comprising 46.2% of quarterly net sales, declined 11.1% year over year to $1.79 billion.
Within this category, Manufactured products sales totaled $831.6 million, down 13.3% from the prior-year quarter. Windows, doors & millwork sales decreased 9.1% to $954.6 million.
Specialty Building Products & Services: Net sales from this product category, representing 26.9% of quarterly sales, declined 5.1% year over year to $1.04 billion.
Lumber & Lumber Sheet Goods: Net sales from this category, also accounting for 26.9% of quarterly sales, decreased 8.1% to $1.04 billion.
Builders FirstSource’s Cost Structure Dented Profitability
Gross profit declined 16.3% year over year to $1.09 billion. Gross margin contracted 260 basis points to 28.1%, primarily due to the weaker housing starts environment and related headwinds.
Selling, general and administrative expenses decreased 3% to $958.3 million, reflecting lower variable compensation and wages following cost-saving actions. However, SG&A as a percentage of net sales increased 150 basis points to 24.8% because of reduced operating leverage.
The margin pressure weighed on earnings power. Adjusted EBITDA declined 34.9% to $329.3 million, while adjusted EBITDA margin contracted 350 basis points to 8.5%. BLDR generated about $28 million in productivity savings during the quarter and $34 million during the first six months of 2026.
BLDR’s Cash Flow Stayed Positive
Despite weaker earnings, the company remained cash-generative during the quarter. Cash provided by operating activities was $68 million, down from $273 million in the prior-year period. Free cash flow declined to $32.2 million from $255 million, primarily due to lower net income, partly offset by reduced capital expenditures.
Liquidity was approximately $1.6 billion as of June 30, 2026, comprising $1.5 billion of net borrowing availability and $0.1 billion of cash. Net debt totaled $4.6 billion, resulting in a net debt-to-adjusted EBITDA ratio of 3.6 times compared with 2.3 times a year ago. The company had $500 million remaining under its share repurchase authorization.
Builders FirstSource’s 2026 View Turned More Cautious
BLDR lowered its 2026 net sales outlook to $14-$14.8 billion from $14.6-$15.6 billion. Gross profit margin is now expected between 27.5% and 28.5% compared with the prior range of 27.5-29%.
The company now expects adjusted EBITDA of $1-$1.2 billion, down from $1.1-$1.5 billion, and adjusted EBITDA margin of 7.1-8.1% compared with 7.5-9.6% previously forecasted. Free cash flow expectations were maintained at $0.4-$0.5 billion.
BLDR lowered its capital expenditure forecast to $175-$225 million from $225-$275 million. Interest expense is now anticipated between $280 million and $290 million, while the adjusted effective tax rate is expected between 22% and 24%. For the third quarter, management expects net sales of $3.6-$3.9 billion and adjusted EBITDA of $275-$325 million.
BLDR’s Zacks Rank
Builders FirstSource currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector:
Five Below, Inc. FIVE presently sports a Zacks Rank #1 (Strong Buy). The company delivered a trailing four-quarter earnings surprise of 70.1%, on average. FIVE stock has gained 4.4% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Five Below’s 2026 sales and EPS indicates growth of 15.1% and 36.1%, respectively, from the year-ago period’s levels.
FIGS, Inc. FIGS has a Zacks Rank #2 (Buy) at present. The company delivered a trailing four-quarter earnings surprise of 212.5%, on average. FIGS stock has declined 4.9% in the past six months.
The Zacks Consensus Estimate for FIGS’ 2026 sales and EPS indicates growth of 15.5% and 36.8%, respectively, from the prior-year levels.
Dutch Bros Inc. BROS carries a Zacks Rank of 2 at present. The company delivered a trailing four-quarter earnings surprise of 31.6%, on average. BROS stock has increased 15.8% in the past six months.
The Zacks Consensus Estimate for Dutch Bros’ 2026 sales and EPS indicates growth of 27% and 23.7%, respectively, from the prior-year levels.
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Builders FirstSource, Inc. (BLDR): Free Stock Analysis Report
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FIGS, Inc. (FIGS): Free Stock Analysis Report
Dutch Bros Inc. (BROS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).