Builders FirstSource, a leading building product supplier, has revised its sales outlook for the full year following disappointing third-quarter results. The company expects sales to fall between $16.25 billion and $16.55 billion for 2024, a decrease from its earlier estimate of $16.4 billion to $17.2 billion.
The consensus among analysts on Capital IQ is set at $16.85 billion. Single-family housing starts are anticipated to show a slight increase, while the multi-family sector is projected to decline by 25% to 30%. Incoming Chief Financial Officer Pete Beckmann indicated during an earnings call that the company predicts a regional financial impact from Hurricane Helene and Milton, estimating around $40 million in sales losses.
This amount is considered relatively modest due to the company's geographic diversification. Beckmann will take over from Peter Jackson, who will assume the role of Chief Executive Officer from Dave Rush starting Wednesday. For the current year, Builders FirstSource has adjusted its earnings before interest, taxes, depreciation, and amortization (EBITDA) forecast to between $2.25 billion and $2.35 billion, compared to the previous range of $2.2 billion to $2.4 billion. In the September quarter, adjusted earnings per share for Builders FirstSource dropped to $3.07, down from $4.24 year-over-year, yet managed to exceed analysts' expectations of $3.02.
Sales also saw a decline, with figures falling to $4.23 billion from $4.53 billion in the previous year's quarter, compared to a forecast of $4.45 billion by experts. Jackson noted challenges in the single-family housing segment, citing ongoing affordability issues and lower-than-normal housing starts.
He highlighted that homebuyer reactions to the Federal Reserve's first interest rate cut in September have been mixed. Some buyers remain on the sidelines, waiting for further rate cuts as mortgage rates fluctuate. The company reported a 7.2% decline in core organic sales, primarily driven by a significant 31% drop in the multi-family segment.
Jackson commented, “Multifamily continues to be a headwind amid muted activity expected.” He further indicated that future comparisons would improve as the company begins to assess performance against last year's record figures. Lastly, gross margin has decreased by 210 basis points to 32.8%, reflecting the ongoing normalization in both the multi-family and core organic segments..