Deflation erodes sales at Builders FirstSource

Dallas-based pro dealer points to second-quarter gains in value-added products.

BY HBSDealer Staff

Deflation in lumber and lumber sheet goods led to lower second-quarter sales at Dallas-based Builders FirstSource, which reported total net sales of $1.90 billion for the quarter ended June 30. That’s a decline of 8.9% from $2.09 billion in the same quarter last year.

While sales of lumber and lumber sheet goods declined 25.8%, the company reported increased sales of value-added products and services – such as windows, doors and millwork and manufactured products. These sales pushed gross margin percentage to 27.2% in the quarter, up from 23.7%.

Sales volume, excluding commodity deflation, grew by an overall 2.4%. The company also pointed to “above market growth,” as single-family segment sales volume grew by 3.8% versus a decline of 6.2 % in actual U.S. Census Bureau single-family starts during the period.

In July 2019, Builders FirstSource acquired Sun State Components for about $43 million. The assets include three truss manufacturing facilities located in Arizona and Nevada expanding its presence to 40 states and 77 of the top 100 U.S. metropolitan statistical areas.

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Bottom line: Second-quarter net income increased to $66.6 million, up from $56.6 million.

What the CEO said: “Housing market fundamentals and demand for housing remain supportive as we enter the prime selling season,” said Chad Crow, CEO.  As homebuilders have continued their pivot toward home formats and price points that are increasingly in demand by homebuyers, we have seen stabilizing sentiment and activity. In this environment, we are more confident than ever that our network scale, market diversity and value-added product leadership provide us with competitive advantages and a long runway of growth opportunities.

More company information. Read the full earnings release here.



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