Builders FirstSource cut its full-year sales outlook as the building product supplier recorded lower-than-expected third-quarter revenue, while earnings surpassed market estimates. The company now projects sales between $16.25 billion and $16.55 billion for 2024, a decrease from its previous guidance of $16.4 billion to $17.2 billion.
The current consensus on Capital IQ is for revenue of $16.85 billion. Builders FirstSource continues to estimate single-family starts will increase by low single digits, while the multi-family sector is expected to decline by 25% to 30%. "We anticipate a regional financial impact from Hurricane Helene and Milton, around $40 million in sales, a relatively modest amount given our geographic diversification," incoming Chief Financial Officer Pete Beckmann commented during an earnings call.
Beckmann is set to succeed Peter Jackson, who is transitioning to chief executive from Dave Rush, effective Wednesday. Adjusted earnings before interest, taxes, depreciation, and amortization are now projected at $2.25 billion to $2.35 billion for the current year, an adjustment from the prior outlook of $2.2 billion to $2.4 billion. For the September quarter, Builders FirstSource's adjusted earnings dropped to $3.07 per share, down from $4.24 the previous year, yet exceeded analysts’ expectations of $3.02.
Sales declined to $4.23 billion from $4.53 billion in the same period last year, compared to the analysts’ estimate of $4.45 billion. "Single-family softness continued in the third quarter, amid ongoing affordability challenges and below normal starts," Jackson stated during the call. "The initial response to the first interest rate cut by the Federal Reserve in September has been mixed, with some homebuyers remaining on the sidelines and waiting for additional rate cuts as mortgage rates fluctuate in the near term." Core organic sales fell 7.2%, attributed to a 31% decrease in the multi-family segment.
"Multi-family continues to present a headwind amid muted activity. Expect comparisons to become less negative as we move past last year's record performance," according to Jackson. Gross margin reduced by 210 basis points to 32.8%, driven by ongoing multi-family and core organic normalization, the company noted. Price: 182.96, Change: +10.53, Percent Change: +6.11.