Builders FirstSource, Inc. BLDR first-quarter 2026 adjusted earnings missed the Zacks Consensus Estimate, while net sales beat the same. However, both metrics declined on a year-over-year basis.
The top-line pullback was due to lower activity across end markets and commodity price pressure. Management attributed the year-over-year decline primarily to a lower starts environment, which reduced core organic net sales and added a commodity deflation headwind.
However, BLDR’s efforts in supply-chain optimization and operational excellence aided its bottom-line growth. Going forward, the company expects to continue investing in enhancing its capabilities and expanding its geographic footprint to manage near-term uncertainties and offer long-term value to the shareholders.
BLDR’s Q1 Earnings & Revenue Discussion
The company reported adjusted earnings per share of 27 cents, which declined 82.1% year over year and missed the Zacks Consensus Estimate of 39 cents by 30.8%.
Builders FirstSource, Inc. Price, Consensus and EPS Surprise
Builders FirstSource, Inc. price-consensus-eps-surprise-chart | Builders FirstSource, Inc. Quote
Net sales were $3.29 billion, down 10.1% from the year-ago quarter. Sales, however, came ahead of the $3.15 billion consensus mark by 4.5%. The quarter reflected a softer start environment and commodity deflation, partly offset by acquisition-related growth.
BLDR’s End-Market Trends Remained Soft
Core organic net sales declined 8.3% year over year in the first quarter, reflecting broad-based pressure across end markets. Single-Family was the biggest drag, with core organic net sales down 11.1% on lower start activity and lower value per start.
Multi-Family and Repair and Remodel (R&R)/Other were more resilient but still negative, declining 1.4% and 1.3%, respectively. On a weighted basis, Single-Family lowered total net sales by 7.9%, while R&R/Other and Multi-Family reduced net sales by 0.3% and 0.1%, respectively, underscoring how BLDR’s sales exposure remains concentrated in Single-Family demand.
Builders FirstSource’s Product Categories Skewed Lower
Results were broadly weaker across the company’s major product groupings.
Value-Added Products: In the first quarter, net sales of value-added products (comprising 48.3% of quarterly net sales) were $1.59 billion, down 11% from the prior-year quarter.
Within this product category, sales from Manufactured products totaled $734.5 million and Windows, doors & millwork were $853.8 million, down 13.7% and 8.6% year over year, respectively.
Specialty Building Products & Services: Net sales from this product category (comprising 26% of quarterly net sales) declined 5.6% from the year-ago quarter to $853.4 million.
Lumber & Lumber Sheet Goods: For the quarter, this product category’s net sales (comprising 25.7% of quarterly net sales) decreased 12.7% year over year to $845.4 million.
BLDR’s Cost Structure Dented Profitability
Margins compressed as volumes softened and operating leverage deteriorated. Gross profit declined 16.7% year over year to $929 million, with gross margin contracting 220 basis points to 28.3% on the lower starts environment.
Selling, general and administrative expenses (SG&A) decreased 2% to $912.5 million, but SG&A as a percentage of net sales increased 240 basis points to 27.8% due to reduced operating leverage.
The margin pressure flowed through to earnings power. Adjusted EBITDA decreased 42.1% to $213.8 million, and adjusted EBITDA margin declined 360 basis points to 6.5%, reflecting lower gross margin and reduced operating leverage.
Builders FirstSource’s Cash Flow Stayed Positive
Despite the earnings shortfall, the company remained cash-generative in the quarter. Cash provided by operating activities was $87.5 million, down $44.9 million year over year. Free cash flow was $42.7 million compared with $45 million in the prior-year period, with the decrease primarily tied to lower net income.
Capital deployment remained active. Builders FirstSource repurchased 3.3 million shares for $302.9 million at an average price of $92.25 per share. The board also authorized an additional $500 million repurchase program on April 29, 2026, which includes roughly $200 million remaining under the prior authorization.
Builders FirstSource’s 2026 View Turned More Cautious
BLDR updated its 2026 full-year outlook, framing expectations around the current price and demand environment. The company now expects net sales of $14.6-$15.6 billion, compared with the prior $14.8-$15.8 billion range, while keeping its assumption of ~1% net sales growth from acquisitions completed within the last 12 months and no change in selling days versus 2025.
Profitability expectations moved down. BLDR now sees gross profit margin of 27.5%-29%, versus the prior 28.5%-30% range, and adjusted EBITDA of $1.1-$1.5 billion, down from the earlier $1.3-$1.7 billion view. Accordingly, adjusted EBITDA margin is now projected at 7.5%-9.6%, compared with the prior 8.8%-10.8% range.
Cash generation expectations also reflect updated commodity assumptions. BLDR now expects free cash flow of approximately $0.4-$0.5 billion versus the prior expectation of about $0.5 billion, and it raised its assumed average commodity price range to $390-$410 per thousand board foot from $365-$385. On the cost and investment side, the company lowered its capital expenditure view to $225-$275 million from $250-$300 million, while interest expense is now expected to be $275-$285 million versus $270-$280 million previously. The effective tax rate (20%-22%) and depreciation and amortization ($525-$575 million) ranges were maintained.
BLDR’s Zacks Rank & Key Picks
Builders FirstSource currently carries a Zacks Rank #4 (Sell).
Here are some better-ranked stocks from the Zacks Retail-Wholesale sector:
FIGS, Inc. FIGS sports a Zacks Rank of 1 (Strong Buy) at present. The company delivered a trailing four-quarter earnings surprise of 187.5%, on average. FIGS stock has surged 101.5% in the past six months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for FIGS’ 2026 sales and EPS indicates growth of 11.9% and 26.3%, respectively, from the prior-year levels.
Five Below, Inc. FIVE presently sports a Zacks Rank #1. The company delivered a trailing four-quarter earnings surprise of 63.4%, on average. FIVE stock has rallied 45% in the past six months.
The Zacks Consensus Estimate for Five Below’s 2026 sales and EPS indicates growth of 11.3% and 19.2%, respectively, from the year-ago period’s levels.
Dutch Bros Inc. BROS carries a Zacks Rank of 2 (Buy) at present. The company delivered a trailing four-quarter earnings surprise of 41.6%, on average. BROS stock has declined 0.3% in the past six months.
The Zacks Consensus Estimate for Dutch Bros’ 2026 sales and EPS indicates growth of 24.6% and 19.7%, respectively, from the prior-year levels.
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Builders FirstSource, Inc. (BLDR): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).