Lumber prices, housing starts nail Builders FirstSource in Q4
Prodealer and building solutions powerhouse Builders First Source reported fourth quarter sales decreased 6% to $4.4 billion from fourth quarter 2021 sales of $4.6 billion.
The Dallas, Texas-based company attributed the decline to fewer single-family housing starts during the quarter along with commodity deflation.
During the quarter, lumber and sheet good sales dropped 34.7% to $1.1 billion from sales of $1.7 billion for the same period a year ago. For the full year, lumber and sheet good sales decreased 4.3% to approximately $8.1 billion. Lumber and sheet goods accounted for 25.2% of the company’s sales in the fourth quarter and 35.6% for the fiscal year.
For the full year, Builders FirstSource reported that sales climbed 14.2% to $22.7 billion fueled by acquisitions, core organic growth, and commodity inflation.
The company’s net income decreased 13.1% to $384.5 million in the fourth quarter from a net income of $442.5 million for the corresponding quarter a year ago.
Builders FirstSource posted a full-year net income of $2.7 billion, climbing nearly 59% from a net income of $1.7 billion in 2021.
Since August 2021, Builders FirstSource has repurchased approximately 70.2 million shares of its common stock, or approximately 34% of its total shares outstanding, at an average price of $62.58 per share for a total cost of $4.4 billion.
Regarding the first quarter of 2023, Builders FirstSource said it expects sales of $3.4 billion to $3.7 billion.
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The Bottom Line: Builders FirstSource’s net income fades by 13.1% in the fourth quarter but rises about 59% for the full fiscal year 2022.
What the CEO said: “Over my more than two decades with Builders FirstSource, we have never been better positioned to compete in a highly fragmented industry and execute on our strategy to capture share and create long-term profitable growth,” said Dave Rush, CEO of Builders FirstSource.
“While economic conditions have become more complex in recent months, I am confident that our exceptional geographic and end-market exposure as well as our experienced management team will lead us to achieve our strategic growth priorities. We have the right team members and strategy in place to win in any environment,” Rush added.
Rush was named CEO of the company in January after being appointed interim CEO by the board of directors last November.
Rush said Builders FirstSouce has continued to demonstrate progress towards its goals through both organic growth and strategic, tuck-in acquisitions that complement the company’s “industry-leading portfolio of solutions.”
“We spent approximately $2 billion on acquisitions over the last two years to enhance our value-added offerings across the portfolio, expand into high-growth geographies, and increase our presence in the multi-family and R&R sectors,” Rush noted.
What the CFO said: “We generated exceptional free cash flow of approximately $800 million in the fourth quarter and repurchased over $650 million of shares while maintaining a strong balance sheet capable of investing in future growth,” said Builders First CFO Peter Jackson. “We continue to manage through the complex operating environment with a proactive mindset and will act where needed to right-size the business. We expect the structural enhancements that we have made in our business over the past decade will mitigate the impact of softer housing demand and inflationary headwinds.”
Company info: Click here to read the fourth quarter and full-year 2022 financial report from Builders FirstSource.
