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Builders FirstSource (BLDR) Up as Q1 Earnings Top Estimates

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Builders FirstSource BLDR reported first-quarter 2020 results, with earnings and revenues surpassing the Zacks Consensus Estimate. Notably, the company’s earnings surpassed the Zacks Consensus Estimate for the 11th straight quarter. Moreover, the top and the bottom line increased on a year-over-year basis. Following the results, shares of the company soared 6% during trading hours on May 6.

Earnings & Revenue Discussion

During the first quarter, the manufacturer and supplier of building materials reported adjusted earnings of $1.10 per share, which topped the consensus mark of 81 cents by 35.8%. In the year-ago period, it recorded earnings of 28 cents per share. Notably, solid demand in residential housing markets coupled with disciplined cost management added to the upside.

During the quarter, net sales of $4.2 billion surpassed the consensus mark of $3.8 billion by 10.1%. Moreover, the top line grew 133.6% on a year-over-year basis.

Sales According to Product Category

Value-Added Product Sales: For the reported quarter, sales of manufactured products were $816.1 million, up 130.2% from the prior

Specialized Product & other: Gypsum, Roofing & Insulation products sales increased 32.1% to $146.4 million. Siding metals & concrete product sales were $301.9 million, up 78.7% year over year. During the quarter, sales of other products increased to $462.3 million from $209 million during first-quarter 2020.

Lumber & Lumber Sheet Goods: During the quarter, sales in the segment increased 212.9% year over year to $1728.5 million.

Operating Highlights

Gross profit for the quarter increased 129.8% year over year to $1069.6 million primarily driven by the merger with BMC and commodity inflation.

Adjusted EBITDA increased 186.8% on a year-over-year basis primarily driven by solid demand across single family and repair and remodel end markets, commodity inflation and cost leverage. Meanwhile, adjusted EBITDA margin expanded 500 basis points year over year to 10.9%.

Builders FirstSource, Inc. Price, Consensus and EPS Surprise

Builders FirstSource, Inc. Price, Consensus and EPS Surprise
Builders FirstSource, Inc. Price, Consensus and EPS Surprise

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

Other Financial Details

As of Mar 31, 2021, the company reported cash and cash equivalents of $19.1 million, compared with $163.9 million in the year-ago period. Long-term debt — net of current portion — stood at $1.7 billion, up from $1.6 billion at 2020-end.

Total liquidity as of Mar 31, came in at $1.1 billion, comprising more than $1 billion under the revolving credit facility.

During the first quarter, cash used in operating activities was $200.5 million compared with $50.7 million in the year-ago period.

Fiscal 2021 Guidance

For 2021, the company is optimistic about significant improvements in its financial performance. It assumes single-family starts percentage growth in the low double digits across all geographical boundaries. Also, repair and remodeling activities are expected to grow in the low to mid-single digits. However, the company expects multi-family starts percentage decline in the high single to low double digits.

For 2021, the company expects net sales in the range of $16.0-$17.0 billion. Notably, the company expects 25% to 33% year-over-year growth on a pro-forma basis. Adjusted EBITDA is projected in the range of $1.75-$1.85 billion. The company anticipates realized cost savings of $60 million to $70 million and free cash flow in the range of $1.3-$1.5 billion. Commodity price appreciation is expected at 10% to 20% on a year-over-year basis.

Depreciation and amortization expenses for 2021 are expected in the range of $540 million to $550 million. Interest expenses are anticipated in the range of $110-$115 million.

Capital expenditure for 2021 is anticipated in the range of 1.4% to 1.6% of net sales. Builders FirstSource expects the effective tax rate between 23.0% and 25.0%.

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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