Builders FirstSource, Inc. reported its results for the Q1 ended March 31, 2024. Net sales of $3.9 billion, a 0.2% increase driven by growth from acquisitions of 1.9%, partially offset by commodity deflation of 1.7%.
Gross profit was $1.3 billion, a decrease of 5.2% compared to the prior year period. The gross profit margin percentage decrease of 190 basis points to 33.4% was primarily driven by a timing shift in product mix toward lower-margin, early stage homebuilding products, as well as margin normalization, particularly in Multi-Family.
Net income was $258.8 million, or $2.10 earnings per diluted share, compared to net income of $333.8 million, or $2.41 earnings per diluted share, in the same period a year ago. The 22.5% decrease in net income was primarily driven by lower gross profit and higher operating expenses, largely due to acquisitions, partially offset by lower income tax expense.
Adjusted net income was $327.4 million, a decrease of 20.2%, primarily driven by lower gross profit and higher operating expenses due to acquisitions.
Adjusted EBITDA decreased 14.4% to $540.9 million, primarily driven by lower gross profit and higher operating expenses due to acquisitions.
Adjusted EBITDA margin declined by 240 basis points from the prior year period to 13.9%, primarily due to lower gross profit margins and higher operating expenses due to acquisitions.
“Our resilient Q1 results reflect our differentiated product portfolio and scale, our team members' consistent focus on executing our strategic priorities, and our operational efficiency initiatives,” commented Dave Rush, CEO of Builders FirstSource. “As we expected, a weakening Multi-Family market and higher mortgage rates driving affordability challenges were headwinds to start the year. Despite these macro challenges, we are building on our successes and driving growth through our value-added products portfolio and industry-leading digital platform. We are committed to advancing innovation and delivering exceptional customer service as a trusted and preferred partner to our customers.”
Peter Jackson, CFO of Builders FirstSource, added, “Our Q1 results demonstrate the effectiveness of our strategy and operating model amid a measured start to the year. We are maintaining our fortress balance sheet and prudently deploying capital to the highest return opportunities, which included acquisitions and share repurchases during the Q1.Our $1 billion senior notes offering priced in February strengthens our financial flexibility to grow organically and remain acquisitive. We are leveraging our sustainable competitive advantages and strong financial position to drive future growth and value creation for our customers and shareholders.”
For 2024, the Company expects to achieve the financial performance highlighted below. Projected Net Sales and Adjusted EBITDA include the expected impact of price, commodities, and margins for 2024.
Net Sales to be in a range of $17.5 billion to $18.5 billion. Gross Profit margin to be in a range of 30% to 33%. Adjusted EBITDA to be in a range of $2.4 billion to $2.8 billion. Adjusted EBITDA margin to be in a range of 14.0% to 15.0%.
Free cash flow in the range of $1.0 billion to $1.2 billion, assuming average commodity prices in the range of $400 to $440 per thousand board feet (mbf).
Headquartered in Irving, Texas, Builders FirstSource is the largest U.S. supplier of building products, prefabricated components, and value-added services to the professional market segment for new residential construction and repair and remodeling.
