Builders FirstSource reports lower sales and profitability in the fourth quarter and full year as it describes a below-normal housing starts environment and commodity deflation across its residential end markets, Builders FirstSource announced.
Fourth-quarter net sales fall 12.1% to $3.4 billion. The company reports a 14.0% decline in core organic net sales and 1.9% commodity deflation, partly offset by 3.8% growth from acquisitions. Core organic net sales fall 20.4% in multifamily, 15.4% in single family, and 6.5% in repair-and-remodel and other.
Fourth-quarter gross profit margin decreases 250 basis points to 29.8%. Net income is $31.5 million. Adjusted EBITDA decreases 44.3% to $274.9 million and adjusted EBITDA margin declines 470 basis points to 8.2%. Cash provided by operating activities is $194.8 million and free cash flow is $109.1 million.
For 2025, net sales fall 7.4% to $15.2 billion. The company attributes the change to a 10.3% core organic decline, 1.3% commodity deflation, and a 0.4% impact from one fewer selling day, partly offset by 4.6% growth from acquisitions. Core organic net sales fall 23.5% in multifamily, 9.0% in single family, and 6.9% in repair-and-remodel and other.
Full-year gross margin is 30.4%. SG&A increases 1.1% to $3.8 billion, which the company links to costs from recent acquisitions and its enterprise resource planning implementation. Adjusted EBITDA margin is 10.4%.
In its market commentary, the company cites housing affordability challenges, weak consumer confidence, and depressed commodity prices during 2025. It reports approximately $15 million in productivity savings in the fourth quarter and approximately $48 million in productivity savings for 2025, and it expects $50 million to $70 million in productivity savings in 2026.
For 2026, Builders FirstSource forecasts net sales of $14.8 billion to $15.8 billion, gross profit margin of 28.5% to 30.0%, and adjusted EBITDA of $1.3 billion to $1.7 billion, with adjusted EBITDA margin of 8.8% to 10.8%. It forecasts free cash flow of approximately $0.5 billion, assuming average commodity prices of $365 to $385 per thousand board foot (mbf).
The company bases its 2026 assumptions on flat single-family starts and flat multifamily starts in its geographies, with repair-and-remodel up 1% and recent acquisitions adding approximately 1% to net sales growth. It forecasts capital expenditures of $250 million to $300 million, interest expense of $270 million to $280 million, an effective tax rate of 20% to 22%, and depreciation and amortization of $525 million to $575 million.
