a7eed60357807acbe3ffe330d50ba6c1dbbf76e688342262012b1922834cdd17

Builders FirstSource, Inc. (BLDR) is a leading supplier and manufacturer of building materials, manufactured components, and construction services, primarily serving professional contractors, sub-contractors, and consumers across the United States **[0000950170-24-018584_bldr-20231231.htm:47]** **[0000950170-24-054249_bldr-20240331.htm:11]** **[0000950170-24-018584_bldr-20231231.htm:69]**. The company operates approximately 570 locations in 43 states, organized into three geographical divisions: East, Central, and West, which are aggregated into one reportable segment due to their similar economic characteristics, products, and services **[0000950170-24-018584_bldr-20231231.htm:47]** **[0000950170-24-054249_bldr-20240331.htm:11]** **[0000950170-24-018584_bldr-20231231.htm:69]**. BLDR's product offerings are categorized into four main groups: Lumber and Lumber Sheet Goods, Manufactured Products, Windows, Doors and Millwork, and Specialty Building Products and Services **[0000950170-24-018584_bldr-20231231.htm:48]** **[0000950170-24-018584_bldr-20231231.htm:8]**.

1. **Manufactured Products** - Produces wood floor and roof trusses, wall panels, and engineered wood.
2. **Windows, Doors and Millwork** - Involves the manufacturing and distribution of windows and doors, as well as custom millwork.
3. **Lumber and Lumber Sheet Goods** - Supplies dimensional lumber and plywood.
4. **Specialty Building Products and Services** - Offers a variety of products such as siding, roofing, and insulation, along with services like turn-key framing and professional installation.

dc8f2d7c063eddb210a717ac56b4f53f088826a297053f9667bcbe0fa8baff51

Adjustments for Non-Cash Items [USD, Thousands]

Stock-Based Compensation [USD, Thousands]

Changes in Working Capital [USD, Thousands]

Capital Expenditures (CapEx) [USD, Thousands]

Proceeds from / Repayments of Debt [USD, Thousands]

Share Repurchases [USD, Thousands]

Dividend Payments [USD, Thousands]

Net Change in Cash [USD, Thousands]

221671b151bc6076968e80da9d168231366fa2665d325c56a7eb29bbfb2c1758

| Product Segment                          | Q4 2022  **[0000950170-23-004857_bldr-ex99_1.htm:0]**  | Q1 2023  **[0000950170-23-016998_bldr-20230331.htm:19]**  | Q2 2023  **[0000950170-23-036892_bldr-20230630.htm:15]**  | Q3 2023  **[0000950170-23-057261_bldr-20230930.htm:16]**  | Q4 2023  **[0000950170-24-018404_bldr-ex99_1.htm:12]**  | Q1 2024  **[0000950170-24-054249_bldr-20240331.htm:15]**  | Q2 2024  **[0000950170-24-091788_bldr-20240630.htm:16]**  | Q3 2024  **[0000950170-24-121436_bldr-20240930.htm:17]**  |
|------------------------------------------|---------------|---------------|---------------|---------------|---------------|---------------|---------------|---------------|
| **Lumber & Lumber Sheet Goods ($M)**     | N/A           | **872.1**     | **1,059.0**   | **1,150.5**   | **1,040.3**   | **980.6**     | **1,194.8**   | **1,069.1**   |
| **Manufactured Products ($M)**           | N/A           | **1,114.8**   | **1,288.1**   | **1,197.9**   | **1,105.6**   | **979.1**     | **1,054.9**   | **997.6**     |
| **Windows, Doors & Millwork ($M)**       | N/A           | **1,058.0**   | **1,105.2**   | **1,102.1**   | **1,056.2**   | **1,030.1**   | **1,115.4**   | **1,084.8**   |
| **Specialty Building Products & Services ($M)** | N/A     | **838.4**     | **1,076.6**   | **1,083.8**   | **948.8**     | **901.6**     | **1,091.2**   | **1,081.0**   |
| **Total Net Sales ($M)**                 | **4,400.0**   | **3,883.3**   | **4,528.9**   | **4,534.3**   | **4,150.9**   | **3,891.4**   | **4,456.3**   | **4,232.5**   |

c4195dcb171d24f77f6949073a0c5bce54ff0869a75375f07477fc142dee8ead

06e2e0715a6f45aaab10682ed0bd35fc2374f8d8ab84f86e7f01e0c3bb410cef

b7d854f687a784bd94217984f9a8ef57444fe81ba1d54aa777fe52603547b07b

1. Given that you've reduced your 2024 incremental sales expectations from $200 million to approximately $110 million due to market headwinds, what specific factors led to this shortfall, and how confident are you in achieving your $1 billion incremental sales target by 2026?
2. Multifamily has been a significant headwind, with manufactured products in that segment down nearly 45% to 50%; what actions are you taking to mitigate the impact on your margins and overall business, and when do you anticipate this segment stabilizing?
3. With the upcoming CEO and CFO transitions, how do you plan to ensure strategic continuity and what changes, if any, should we expect in your approach to capital allocation, particularly regarding M&A and share repurchases?
4. Your base business adjusted EBITDA guidance for 2024 is approximately $2.3 billion at a margin of 14%, despite lower single-family starts; what are the key drivers supporting this guidance, and how sustainable is this performance given the current market conditions?
5. As you shift towards offering lower-cost products to help builders address affordability challenges, how is this impacting your gross profit margins, and what measures are you implementing to preserve profitability while meeting customer needs?

6b676d38a8704421cfb785644ccf94cdde1adaf097d25ded34dda7b757039e5b

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | August 5, 2024  **[0000950170-24-121436_bldr-20240930.htm:26]**  |
| End Date/Duration        | N/A             |
| Total additional amount  | **$1.0 billion**  **[0000950170-24-121436_bldr-20240930.htm:26]**  |
| Remaining authorization amount | **$841,816,489**  **[0000950170-24-121436_bldr-20240930.htm:26]**  |
| Details                  | Offset dilution from the BMC Merger  **[0000950170-24-018584_bldr-20231231.htm:67]** **[0001564590-22-007980_bldr-10k_20211231.htm:64]**  |

a6e96d28a6c613aa5f2eca8c16ce005fcb47d2f81fde9eea214dc478c3e84b07

- U.S. LBM, 84 Lumber and Carter Lumber; specialty dealers, such as roofing building supply companies  **[0000950170-24-018584_bldr-20231231.htm:13]** 
- Regional and local building supplies dealers; single and multi-site lumber yards; framing contractors  **[0000950170-24-018584_bldr-20231231.htm:13]** 
- Component manufacturers, including Universal Forest Products and Stark Truss  **[0000950170-24-018584_bldr-20231231.htm:13]** 
- Millwork operators, such as American Cedar and Millwork, and Western Pacific  **[0000950170-24-018584_bldr-20231231.htm:13]** 

4f005cfd2e788f42377594c259afb21b0ccfc727d59b066881854466ff8905ea

Lumber & Lumber Sheet Goods

Manufactured Products

Windows, Doors & Millwork

- Windows & Doors

- Millwork

Specialty Building Products & Services

Siding, Metal & Concrete Products

Gypsum, Roofing & Insulation

Other Building Products & Services

Total Revenue

a7445f6a8fffc1fc32941ee96586c21d1da61f8e0c3bca842eb823ad93725e96

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Net Sales**: $16.25 billion to $16.5 billion
  - **Adjusted EBITDA**: $2.25 billion to $2.35 billion
  - **Adjusted EBITDA Margin**: 13.8% to 14.2%
  - **Gross Margin**: 32% to 33%
  - **Free Cash Flow**: $1.2 billion to $1.4 billion
  - **Impact from Hurricane Helene and Milton**: $40 million in sales
  - **Commodity Prices**: $380 to $400 per 1,000 board foot  **[BLDR_3405746_6]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Full Year 2024 Guidance**:
    - **Net Sales**: $16.4 billion to $17.2 billion
    - **Adjusted EBITDA**: $2.2 billion to $2.4 billion
    - **Adjusted EBITDA Margin**: 13.4% to 14%
    - **Gross Margin**: 31.5% to 32.5%
    - **Free Cash Flow**: $1 million to $1.2 million
  - **Q3 2024 Guidance**:
    - **Net Sales**: $4.3 billion to $4.6 billion
    - **Adjusted EBITDA**: $575 million to $625 million
  - **Base Business Guidance for 2024**:
    - **Net Sales**: Approximately $16.8 billion
    - **Adjusted EBITDA**: Approximately $2.3 billion at a margin of 13.7%  **[BLDR_3396548_6]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Total Company Net Sales**: $17.5 billion to $18.5 billion
  - **Adjusted EBITDA**: $2.4 billion to $2.8 billion
  - **Adjusted EBITDA Margin**: 14% to 15%
  - **Gross Margins**: 30% to 33%
  - **Free Cash Flow**: $1 billion to $1.2 billion
  - **Base Business Net Sales**: Approximately $17.6 billion
  - **Base Business Adjusted EBITDA**: Approximately $2.4 billion at a margin of 13.5%  **[BLDR_3386751_6]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  - **Total Company Net Sales**: $17.5 billion to $18.5 billion
  - **Adjusted EBITDA**: $2.4 billion to $2.8 billion
  - **Adjusted EBITDA Margin**: 14% to 15%
  - **Gross Margins**: 30% to 33%
  - **Free Cash Flow**: $1 billion to $1.2 billion
  - **Base Business Net Sales**: Approximately $17.6 billion
  - **Base Business Adjusted EBITDA**: Approximately $2.4 billion at a margin of 13.5%
  - **Q1 2024 Guidance**:
    - **Q1 Net Sales**: Expected to be flat to down low single digits year-over-year
    - **Q1 Adjusted EBITDA**: Expected to be down high teens to low 20s year-over-year  **[BLDR_3374531_5]** .

8cbf781a56e0c0b238f458774ad87eeb3d4c7888f6c7ec1d50a8982a4ba79c74

**Annual guidance for FY 2024:**
- **Net Sales**: $16.25B to $16.5B  **[BLDR_3405746_6]**  (lowered from $16.4B to $17.2B  **[BLDR_3396548_6]** )  
- **Adjusted EBITDA**: $2.25B to $2.35B  **[BLDR_3405746_6]**  (no change from $2.2B to $2.4B  **[BLDR_3396548_6]** )  
- **Adjusted EBITDA Margin**: 13.8% to 14.2%  **[BLDR_3405746_6]**  (raised from 13.4% to 14.0%  **[BLDR_3396548_6]** )  
- **Gross Margin**: 32% to 33%  **[BLDR_3405746_6]**  (raised from 31.5% to 32.5%  **[BLDR_3396548_6]** )  
- **Free Cash Flow**: $1.2B to $1.4B  **[BLDR_3405746_6]**  (raised from $1M to $1.2M  **[BLDR_3396548_6]** )  
- **Impact from Hurricane Helene and Milton**: $40M in sales  **[BLDR_3405746_6]**  (no prior guidance)  
- **Commodity Prices**: $380 to $400 per 1,000 board foot  **[BLDR_3405746_6]**  (no prior guidance)  

2cb893bb76f6f2d9e843581a69083954d6ceb46c92a5fc04cd9a88729632cce7

| Name               | Position                                      | Start Date          | Short Bio                                                                                                                                                                                                 |
|--------------------|-----------------------------------------------|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| David E. Rush      | President & CEO (Retiring)                    | November 2022       | David E. Rush has been with Builders FirstSource since **1999**, serving in various senior executive roles. He was appointed as President and CEO in **November 2022** and is retiring effective **November 6, 2024**  **[0001193125-23-288822_d572379dex991.htm:24]** **[0000950170-24-047767_bldr-20240423.htm:11]** **[0000950170-24-121065_bldr-ex99_1.htm:1]** .                 |
| Peter M. Jackson   | Upcoming President & CEO                      | November 6, 2024    | Peter Jackson has been appointed as the next President & CEO, effective **November 6, 2024**. He has served as Executive Vice President and CFO since January 2021  **[0000950170-24-124276_bldr-20240919.htm:1]** **[0000950170-24-107987_bldr-20240919.htm:1]** **[0000950170-24-047767_bldr-20240423.htm:31]** .                                                                  |
| Peter M. Jackson   | Current Chief Financial Officer               | January 2021        | Peter M. Jackson was appointed as Executive Vice President and CFO in January 2021. He previously served as Senior Vice President and CFO since November 2016  **[0000950170-24-047767_bldr-20240423.htm:31]** **[0000950170-24-107987_bldr-20240919.htm:1]** .                                                                           |
| Pete Beckmann      | Upcoming Chief Financial Officer              | November 6, 2024    | Pete Beckmann has been with Builders FirstSource since **1999**. He was appointed as Senior Vice President of Financial Planning & Analysis in January **2021** and will become CFO effective **November 6, 2024**  **[0000950170-24-124276_bldr-20240919.htm:1]** **[0000950170-24-107987_bldr-20240919.htm:1]** **[BLDR_3405746_5]** .                    |
| Timothy D. Johnson | Executive Vice President, General Counsel     | January 2021        | Timothy D. Johnson joined Builders FirstSource in January 2021. He previously served as Executive Vice President, General Counsel, and Corporate Secretary of BMC Stock Holdings, Inc.  **[0000950170-24-047767_bldr-20240423.htm:31]** **[0001193125-23-124119_d395061ddef14a.htm:34]** .                                                  |
| Stephen J. Herron  | Chief Operating Officer                       | March 2023          | Stephen J. Herron was appointed as COO in March 2023. He previously served as President of Commercial Operations from January 2021 to February 2023  **[0000950170-24-047767_bldr-20240423.htm:31]** **[0001193125-23-124119_d395061ddef14a.htm:34]** .                                                                                      |
| Amy B. Messersmith | Chief People Officer                          | March 2022          | Amy B. Messersmith has been the Chief People Officer since March 2022. She previously held roles as Chief Human Resources Officer at U.S. Anesthesia Partners Inc. and Chief People Officer at TDIndustries Inc.  **[0000950170-24-047767_bldr-20240423.htm:32]** **[0001193125-23-124119_d395061ddef14a.htm:35]** .                         |
| Michael A. Farmer  | President – Commercial Operations             | January 2021        | Michael A. Farmer was appointed as President – Commercial Operations in January 2021. He previously held various roles at BMC Stock Holdings, Inc.  **[0000950170-24-047767_bldr-20240423.htm:32]** **[0001193125-23-124119_d395061ddef14a.htm:35]** .                                                                                       |
| Mike McCrobie      | President – East Division                     | April 2023          | Mike McCrobie was appointed as President – East Division in April 2023. He joined Builders FirstSource in 2017 as Vice President of National Accounts – East Division  **[0000950170-24-047767_bldr-20240423.htm:32]** **[0001193125-23-124119_d395061ddef14a.htm:35]** .                                                                   |
| Michael Hiller     | President – Central Division                  | January 2021        | Michael Hiller serves as President – Central Division since January 2021. He previously held various roles at BMC Stock Holdings, Inc.  **[0000950170-24-047767_bldr-20240423.htm:32]** **[0001193125-23-124119_d395061ddef14a.htm:35]** .                                                                                                   |
| Scott L. Robins    | President – West Division                     | January 2021        | Scott L. Robins was appointed as President of the West Division in January 2021. He has been with the Corporation since the acquisition of ProBuild Holdings LLC in 2015  **[0000950170-24-047767_bldr-20240423.htm:32]** **[0001193125-23-124119_d395061ddef14a.htm:35]** .                                                                 |
| Matt Trester       | Principal Accounting Officer                  | November 6, 2024    | Matt Trester was appointed as Principal Accounting Officer effective **November 6, 2024**. He previously served as Vice President and Controller since 2022  **[0000950170-24-124274_bldr-20241106.htm:1]** .                                                                                |

946becdb9ff063622d1290aab023689543673146f7dd47c80903f47295909587

Northeast

Southeast

South

West

All Other

62bbba667b9f7597f7b376f39a2e573d6f51b9aa33283b7083fb14ff01d1c709

| Name                          | Start Date | End Date | Reason for Change |
|-------------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP    | 1999  **[0000950170-24-018584_bldr-20231231.htm:63]**    | Present  | Current auditor   |

390dfbe35f97f04c6a7d3cab3d21389d035ffb79b3955b3ec414a2da6f62f296

835e3e8ab1ba4d0599227d8934d0538b4351f09eca96784dc2ebe48142621712

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $4,232.5 million (-7% YoY)  **[0000950170-24-121436_bldr-20240930.htm:8]** **[0000950170-23-057261_bldr-20230930.htm:7]**   
- Manufactured Products: $997.6 million **(-17% YoY)**  **[0000950170-24-121436_bldr-20240930.htm:8]** **[0000950170-23-057261_bldr-20230930.htm:7]**   
- Operating Income (EBIT): $428.0 million (-33% YoY)  **[0000950170-24-121436_bldr-20240930.htm:1]** **[0000950170-23-057261_bldr-20230930.htm:1]** **[0000950170-23-057261_bldr-20230930.htm:16]** **[0000950170-23-057261_bldr-20230930.htm:17]**   
- Net Income: $284.8 million **(-37% YoY)**  **[0000950170-24-121436_bldr-20240930.htm:1]** **[0000950170-23-057261_bldr-20230930.htm:1]** **[0000950170-23-057261_bldr-20230930.htm:3]** **[0000950170-23-057261_bldr-20230930.htm:16]**   
- EPS (Basic): $2.45 (-31% YoY)  **[0000950170-24-121436_bldr-20240930.htm:1]** **[0000950170-23-057261_bldr-20230930.htm:1]** **[0000950170-23-057261_bldr-20230930.htm:16]**   

2cac7f172fc9589f3f189e7ba71eed378dcb7852934678757c3cce6e40149983

| Year | Amount Due (in billions) | Debt Type         | Interest Rate (%) | % of Total Debt                                                                 |
|----------|------------------------------|-----------------------|-----------------------|------------------------------------------------------------------------------------|
| 2030     | 0.550                        | 5.00% Senior Notes    | 5.00                 | 14.7% = (0.550 / 3.742) * 100 **[0000950170-24-121436_bldr-20240930.htm:10]**                                             |
| 2032     | 1.300                        | 4.25% Senior Notes    | 4.25                 | 34.7% = (1.300 / 3.742) * 100 **[0000950170-24-121436_bldr-20240930.htm:10]**                                             |
| 2032     | 0.700                        | 6.375% Senior Notes   | 6.375                | 18.7% = (0.700 / 3.742) * 100 **[0000950170-24-121436_bldr-20240930.htm:10]**                                             |
| 2034     | 1.000                        | 6.375% Senior Notes   | 6.375                | 26.7% = (1.000 / 3.742) * 100 **[0000950170-24-121436_bldr-20240930.htm:10]**                                             |
| N/A      | 0.191                        | Other Finance Obligations | N/A                 | 5.1% = (0.191 / 3.742) * 100 **[0000950170-24-121436_bldr-20240930.htm:10]**                                             |
| N/A      | 0.001                        | Finance Lease Obligations | N/A                 | 0.0% = (0.001 / 3.742) * 100 **[0000950170-24-121436_bldr-20240930.htm:10]**                                             |

5500f37e812ca3423d70026cc16336905f6c99d08f61fb46946894018bc1b1a0

592c081687a582c011d3e85950dd7e9ac1fba5dce58a3b9fb6a669a60bd372ca

Number of operating locations (locations)

Number of states with operations (states)

d164844d45bc9ea847e1bbb559089adc48a2f44e20cbf52acebd4eada1ff0474

- **Margin normalization is leading to lower profitability**, as the company acknowledges that margins in certain segments are returning to normal levels, which could pressure profits.  **[BLDR_3374531_14]** **[BLDR_3374531_19]**
- **Weather-related disruptions in Q1 are expected to cause sales to be flat to down**, with **adjusted EBITDA down high teens to low 20%**, potentially impacting near-term financial performance.  **[BLDR_3374531_10]** **[BLDR_3374531_19]**
- **Increased competition in manufactured products like truss**, as competitors are ramping up capacity, could impact market share or pressure pricing.  **[BLDR_3374531_17]**

d33c9a1e9f322360e2e253462f567c59ec7550ad1b33de49c998cd5015825afd

1. **Gross Margin Outlook**  
   **Q:** What's the expected gross margin in Q4 '24 and 2025?  
   **A:** Management expects gross margins to normalize further, with an exit rate of around **31%** in Q4 '24 and possibly another **100 basis points** headwind in 2025, reaching margins around **30%** at current starts levels.  **[BLDR_3396548_11]** ,  **[BLDR_3396548_12]** 

2. **Multifamily Impact on Margins**  
   **Q:** How will multifamily normalization affect margins in '24 and '25?  
   **A:** Multifamily normalization is expected to contribute about **60 basis points** of gross margin headwind in '24 and an additional **50 basis points** in '25, totaling around **100 basis points**. This is due to both margin normalization and mix shifts.  **[BLDR_3396548_9]** ,  **[BLDR_3396548_13]** 

3. **Revenue Mix and Value Decline**  
   **Q:** How is mix impacting revenue amid smaller homes and less complexity?  
   **A:** The shift to smaller homes with reduced features like basements is causing a significant decline in sales per house. Comparable homes have seen sales opportunities down **mid-teens** in overall value, impacting revenues despite starts activity.  **[BLDR_3396548_12]** ,  **[BLDR_3396548_18]** 

4. **EBITDA Guidance and Commodity Impact**  
   **Q:** What's driving changes in EBITDA guidance?  
   **A:** The EBITDA guidance reduction is mainly due to commodity price declines, with over half of the **$1.2 billion** sales guidance reduction attributed to commodity valuation changes. The base business EBITDA guide is only down by **$100 million**, reflecting the business's resilience.  **[BLDR_3396548_10]** 

5. **Competitive Positioning and Market Share**  
   **Q:** Are you pursuing market share gains amid current margins?  
   **A:** With strong base gross margins, the company sees opportunities to capture profitable market share through disciplined, targeted approaches that leverage incremental volume against fixed costs, aiming for win-win solutions without compromising margins.  **[BLDR_3396548_14]** ,  **[BLDR_3396548_15]** 

6. **Digital Sales Progress**  
   **Q:** How is the digital sales platform performing?  
   **A:** The company has processed over **$250 million** in orders through its digital platform, primarily with existing customers. While challenging, they remain committed to the **$200 million** incremental sales target for 2024, anticipating growth as adoption increases.  **[BLDR_3396548_19]** 

7. **M&A Strategy and Share Repurchases**  
   **Q:** Any changes to M&A strategy given share repurchases?  
   **A:** The company continues to see a robust M&A pipeline, closing on several smaller acquisitions, and remains optimistic about growing the business through healthy assets, with no significant change to the M&A strategy despite increased share repurchase activity.  **[BLDR_3396548_19]** 

8. **Commodity Lumber Pricing and Market Share**  
   **Q:** Are you taking market share in commodity lumber sales?  
   **A:** Despite competitive pricing pressures, the company is not chasing volume at the expense of margins in commodities. They focus on providing value through bundled offerings and passing through pricing adjustments, maintaining disciplined pricing strategies.  **[BLDR_3396548_15]** ,  **[BLDR_3396548_16]** ,  **[BLDR_3396548_25]** 

9. **Multifamily Outlook and Stabilization**  
   **Q:** When will multifamily stabilize and recover?  
   **A:** Multifamily projects are experiencing delays, but the company expects excess capacity to burn off during 2024, potentially encouraging a rebound in 2025. Recovery may be gradual due to capital costs and project timelines.  **[BLDR_3396548_17]** 

10. **Lumber Price Deflation Impact**  
    **Q:** What's the impact of lumber price deflation in Q2 '24?  
    **A:** Lumber price deflation had limited impact in Q2 '24, with a small **3%** headwind through COGS. The company expects it to be a headwind in the second half, leading to a full-year average lumber price slightly below **$400**.  **[BLDR_3396548_24]** 

11. **Pricing Contracts Duration**  
    **Q:** Have lumber pricing contract terms extended?  
    **A:** Contract terms have modestly extended to around **45 days**, aligning with inventory levels. The company avoids longer terms like 90 or 120 days to mitigate market risk and maintain disciplined pricing.  **[BLDR_3396548_23]** 

12. **Value-Added Products Mix Outlook**  
    **Q:** Will complexity and value-add mix improve?  
    **A:** While value-added products remain strong, shifts within the category due to affordability focus are impacting sales value. Management expects the value-add mix to maintain and incrementally grow as housing starts return to normal levels over time.  **[BLDR_3396548_26]** 

9993e955a6d56f90fb8a1da55d21ee8dc6f7323b959a5ec6ad5a9be1dc1ba21d

- **Significant decline in the multifamily segment**, with manufactured products down **almost 45% to 50%** within the multifamily mix, and this decline is **anticipated to continue**, representing a **big headwind** for the company.  **[BLDR_3405746_17]**
- **Challenges in adopting the company's digital tools**, as the homebuilding industry **has not historically adopted technology quickly**, and their target customers—**smaller builders (50 to 250 starts a year)**—have been under pressure due to interest rates, making near-term digital sales more difficult.  **[BLDR_3405746_30]**
- **Continued pressure and normalization in core business margins** due to a **competitive environment**, leading to **lower gross profit margins** and challenges in maintaining previous margin levels.  **[BLDR_3405746_13]**

5489fd6832365c55f62a47fd80afb9ed08a7ac63a23adb8bee5a33fb54c50214

- Builders FirstSource is leveraging **cutting-edge digital tools**, which are **unique in the industry**, to help smaller builders become more efficient and competitive, positioning the company for future growth.  **[BLDR_3405746_30]**
- The company is achieving **resilient margins** and a **positive uplift from productivity**, driven by process improvements and leveraging its scale, which continues to deliver better-than-expected performance.  **[BLDR_3405746_13]** ,  **[BLDR_3405746_15]**
- Builders FirstSource is confident in achieving **normalized gross margins between 30% and 33%** by 2026, reflecting improved clarity about their future business and sustained strength in their core product offerings and value-added services.  **[BLDR_3405746_22]** ,  **[BLDR_3405746_11]**

c8453bb4af78834992d13a216101ccc4acdabced46a95a3ada08ffe972ff9377

1. **Guidance and Margin Outlook**  
   **Q:** Is full-year guidance achievable despite margin normalization?  
   **A:** Management reaffirmed confidence in achieving the full-year guidance, stating that margins are normalizing as expected within the **30% to 33%** range.  **[BLDR_3386751_8]**  They noted that early-stage products are performing well and momentum is building.  **[BLDR_3386751_11]**  While acknowledging headwinds like weather and multifamily decline, they believe strong demand and growth in value-added categories will drive results in the back half of the year.  **[BLDR_3386751_11]** 

2. **Multifamily Segment Decline**  
   **Q:** How is the decline in multifamily impacting results?  
   **A:** The multifamily segment is experiencing a consistent decline throughout the year, as anticipated.  **[BLDR_3386751_9]**  Management indicated that multifamily backlog is extending, smoothing the transition.  **[BLDR_3386751_12]**  They are adjusting to market conditions, and the decline is in line with expectations, with no surprises in variables impacting the business.  **[BLDR_3386751_12]** 

3. **Commodity Pricing and Competition**  
   **Q:** How is commodity deflation affecting margins and competition?  
   **A:** Commodity pricing, particularly in lumber and OSB, is highly competitive and volatile.  **[BLDR_3386751_14]**  Management expects the negative impacts of commodity price deflation to be mostly over.  **[BLDR_3386751_14]**  They noted increased competition in commodities but emphasized their strategy remains unchanged, focusing on just-in-time products and appropriate pricing.  **[BLDR_3386751_14]** 

4. **M&A Pipeline**  
   **Q:** What is the outlook for M&A activities?  
   **A:** Management expressed excitement about the M&A pipeline, noting they are sitting on about **$700 million** in cash plus capacity in the ABL.  **[BLDR_3386751_11]**  Several assets fit their strategic focus, and they are prepared to take advantage of opportunities as they arise.  **[BLDR_3386751_19]** 

5. **Install Business Growth**  
   **Q:** What is driving growth in the install business?  
   **A:** The install business is off to a great start, with strong interest and good people and plans.  **[BLDR_3386751_17]**  They reported **$2.5 billion** in labor and materials installed in 2023.  **[BLDR_3386751_17]**  Growth is driven by leveraging existing markets and products, and methodically solving customer pain points.  **[BLDR_3386751_17]** 

6. **SG&A and Labor Management**  
   **Q:** How is the company managing SG&A expenses and labor costs?  
   **A:** The company has effectively managed labor expenses, keeping labor as a percentage of gross profit in line with targets.  **[BLDR_3386751_15]**  Tools for managing costs are as good as they've ever been, and there is an expected pullback in bonus dollars due to performance alignment.  **[BLDR_3386751_15]** 

7. **Market Share and Competition**  
   **Q:** Are smaller competitors impacting market share?  
   **A:** Management acknowledged competition from smaller players, especially on the commodity side.  **[BLDR_3386751_20]**  However, they emphasized their strength in value-added products, and their reputation carries them.  **[BLDR_3386751_20]**  They choose where to compete and maintain a high percentage in lumber by meeting schedules and ensuring product availability.  **[BLDR_3386751_20]** 

8. **Digital Platform Adoption**  
   **Q:** How is the digital platform being received by customers?  
   **A:** The digital tools are gaining traction, with increasing user numbers and strong interest at the International Builders' Show.  **[BLDR_3386751_21]**  The platform helps smaller builders leverage technology without significant investment, and there's excitement about its capabilities.  **[BLDR_3386751_21]** 

9. **Product Mix and Gross Margins**  
   **Q:** How is the product mix affecting gross margins?  
   **A:** Current sales growth is concentrated in early-stage products like commodities and trusses, which typically have lower margins.  **[BLDR_3386751_18]**  As later-stage products like doors and millwork pick up, it's expected to positively impact margins.  **[BLDR_3386751_18]**  Gross margin normalization is within the expected range, and mix is one of the variables influencing it.  **[BLDR_3386751_18]** 

edd51b396ef8da5e61339dc482a00bdedf0fac0275d1e981dc97047bee96c4d9

- **Price erosion in the core business due to aggressive competitors** is impacting margins, accounting for approximately **50 basis points** of headwinds in gross margin. Peter Jackson noted, "you're going to see some price erosion... That's the bulk of that 0.5 point."  **[BLDR_3396548_20]**
- **Declining value per new housing start** is reducing sales opportunities. David Rush mentioned that even when comparing the exact same house model to last year, the **sale opportunity is down mid-teens**.  **[BLDR_3396548_18]**
- **Intense competition and price pressures in commodity lumber and value-added products** are leading to reduced sales and margins. Peter Jackson expressed disappointment that they are seeing **weaker lumber numbers**, which they have to pass through to customers, and they have observed **low to mid-single-digit reductions** in sales due to vendor price cuts.  **[BLDR_3396548_16]**

d080052a54971fdf132bdcc4d72b447855d27d7acb1cb4da0c227a52226ffb5d

- **Builders FirstSource is actively gaining market share**, leveraging opportunities to outgrow and take share even in challenging market conditions, including in commodity products.  **[BLDR_3396548_25]**
- The company's **digital platform is gaining strong momentum**, with expectations to achieve **$200 million** in incremental sales in **2024**, indicating significant growth potential. They are not giving up on this target.  **[BLDR_3396548_19]**
- **Builders FirstSource's M&A strategy remains robust**, with a healthy pipeline and recent acquisitions adding value, positioning the company for continued growth.  **[BLDR_3396548_19]**

6eef3441203f0c1e5dfbea63ce19c04b64748fb230ee493cb3c99ab8a6052880

- **Builders FirstSource is leveraging productivity initiatives through automation and technology to improve efficiency and customer service**, including **investing over $100 million** in existing plants with **over 65% of tables having some level of automation**, strengthening their competitive advantage.  **[BLDR_3374531_17]**
- **Positive signs in the housing market** are emerging, with expectations for **unit volumes to turn and start to accelerate**, as national builder customers report **increased foot traffic** and a higher likelihood of closings, indicating a healthy market ahead.  **[BLDR_3374531_15]** **[BLDR_3374531_19]**
- The company's focus on **value-added products and solutions** enhances their **gross margin resilience**, even if housing starts are below target, as these products are **more valuable to customers and have better margin opportunities**, helping to maintain **gross margins above 30%**.  **[BLDR_3374531_14]**

736a23231e301f79117894ee2ab5b6ee9e774c3ed1e04cb30a4bc97a34494a2b

- **Margins in the single-family segment are under pressure due to ongoing margin normalization and competitive dynamics, with volumes still below normal levels.**  **[BLDR_3386751_22]**
- **The company is facing headwinds in the multifamily market, with backlogs declining and expectations of progressive normalization impacting gross margins and EBITDA.**  **[BLDR_3386751_12]**
- **Second-quarter guidance is lower than expected, with headwinds such as weather disruptions and affordability challenges from higher mortgage rates posing risks to meeting full-year expectations.**  **[BLDR_3386751_12]**

95b26225434acafab2de0a0aa228dd7215eb76582b6e74591f05b4c8aa5bf394

1. **Gross Margin Outlook**  
   **Q:** How will gross margins normalize back below 33%?  
   **A:** Peter Jackson explained that gross margins are expected to normalize due to a pullback in the multifamily sector and increasing competition in certain markets. Despite tailwinds like volume growth, **$100 million** in productivity gains this year, and growth in value-added mix, margins will erode as the year progresses due to these headwinds.  **[BLDR_3374531_7]** 

2. **Guidance and Market Growth**  
   **Q:** How will your growth outpace the modest market tailwind?  
   **A:** Peter Jackson stated they anticipate modest market growth but are challenging themselves in areas like digital initiatives and value-added products. New capacity and equipment will drive growth, and they aim to gain market share through their strong team.  **[BLDR_3374531_8]** 

3. **Free Cash Flow Outlook**  
   **Q:** Why is free cash flow conversion lower in 2024?  
   **A:** Peter Jackson explained that the lower free cash flow is due to working capital usage as the business shifts from shrinking to growing sales. The headwind from growth is larger in a turning year but is expected to normalize in future years. They remain committed to delivering cumulative free cash flow benefits as outlined in their Investor Day.  **[BLDR_3374531_9]** 

4. **Multifamily Decline Impact**  
   **Q:** How will a 20–30% decline in multifamily starts affect sales?  
   **A:** Peter Jackson indicated that they expect a meaningful decline in multifamily sales and margins starting in Q1 and continuing throughout the year due to a pullback in the sector. However, it's only **13%** of their overall business, and they are focusing on smaller multifamily projects to help bridge the headwind.  **[BLDR_3374531_16]** 

5. **Digital Sales Impact**  
   **Q:** What is the outlook for digital sales growth this year?  
   **A:** David Rush mentioned they expect an additional **$200 million** in digital sales, weighted towards the back half of the year as they launch new digital tools and drive adoption. The full rollout starts next week, and they are excited about its potential.  **[BLDR_3374531_22]** 

6. **Productivity Initiatives**  
   **Q:** What productivity projects will benefit 2024?  
   **A:** Peter Jackson highlighted initiatives focusing on automation, technology, and best practices to improve throughput and customer service. Investments over **$100 million** have been made in existing plants, with over **65%** of tables having some level of automation. These efforts are expected to continue driving productivity gains.  **[BLDR_3374531_17]** 

7. **Weather Impact on Sales**  
   **Q:** Will Q1 weather issues push sales into Q2?  
   **A:** Peter Jackson noted that weather-related delays in Q1 are expected to gradually recover over the next quarters, with sales catching up later in the year but not immediately all at once.  **[BLDR_3374531_10]** 

8. **M&A Environment**  
   **Q:** Are acquisition targets more willing to sell now?  
   **A:** Peter Jackson observed that the M&A environment has improved as uncertainties lessen and valuations become clearer. There's more optimism for this year, and they see potential in acquisitions, especially as sellers align with base business valuations.  **[BLDR_3374531_18]** 

9. **Commodity vs. Value-Added Margins**  
   **Q:** How have margins between commodity and value-added products changed?  
   **A:** Peter Jackson stated that margins have improved across both categories, but value-added products have extended their margin differentiation over commodities, driven by productivity improvements and investments in automation and technology.  **[BLDR_3374531_20]** 

10. **R&R Market Outlook**  
    **Q:** What is your outlook for the R&R market?  
    **A:** Peter Jackson explained they expect low single-digit growth in their repair and remodel business, focusing on pro-remodel and specific markets. Their small market share allows them to grow by focusing on this segment despite national forecasts.  **[BLDR_3374531_21]** 

11. **Installation Sales Growth**  
    **Q:** How will installation sales contribute in 2024?  
    **A:** Peter Jackson mentioned that installation is a strategic focus, and they plan to grow both organically and through acquisitions. They aim to expand offerings in existing markets and enter new ones, leveraging their scale and best practices to drive growth starting in Q2.  **[BLDR_3374531_24]** 

12. **Price Deflation in Products**  
    **Q:** Are you expecting price deflation in EWP and millwork?  
    **A:** Peter Jackson expects prices in categories like engineered wood products (EWP) and millwork to remain stable, having already seen supply chain normalization. He doesn't anticipate significant deflation and notes that inflationary operating costs may even lead to price increases.  **[BLDR_3374531_25]** 

13. **Residential Market Turnaround**  
    **Q:** What evidence shows residential is turning around?  
    **A:** Peter Jackson observed high single-digit growth in lumber and low single-digit growth in truss sales in Q4, indicating the beginning of a turnaround. These products are early in the build process and reflect improvements in demand.  **[BLDR_3374531_12]** 

14. **Gross Margin Guidance**  
    **Q:** Can you maintain gross margins above 30% with lower starts?  
    **A:** Peter Jackson believes they can hold gross margins in the **30–33%** range due to continued growth in value-added products and productivity improvements, despite single-family starts being below long-term targets.  **[BLDR_3374531_14]** 

15. **Impact of Competition**  
    **Q:** Are competitors ramping up capacity in manufactured products?  
    **A:** Peter Jackson acknowledged minimal competitive capacity increases but noted their significantly larger scale allows them to manage competition effectively. Their focus on improving throughput in existing plants gives them an advantage.  **[BLDR_3374531_17]** 

16. **Digital Tools Cost Impact**  
    **Q:** What is the cost impact of rolling out digital tools?  
    **A:** Peter Jackson stated that the costs associated with digital tools have been spent over the past few years and are included in the numbers. Sales pull-through is expected to be consistent, and any additional support costs are anticipated to be minimal.  **[BLDR_3374531_23]** 

17. **First Quarter Expectations**  
    **Q:** Why is Q1 EBITDA down more than sales?  
    **A:** Peter Jackson explained that aside from modest weather impacts, the year-over-year decline is due to normalization of margins as the supply chain and competitive environment return to normal, resulting in EBITDA decreasing more than sales.  **[BLDR_3374531_19]** 

18. **Scenario Framework for 2024**  
    **Q:** Does your prior earnings scenario framework still hold?  
    **A:** Peter Jackson confirmed that the prior scenarios are still indicative of their outlook, with no structural changes in variables. They believe the framework remains a fair way to assess the business.  **[BLDR_3374531_13]** 

5e3fc3c908791e5832d2c8315e5875492d2b23dd5a0f53eb114a936c4e6809cf

- Builders FirstSource has a **strong cash position of $700 million** and ample borrowing capacity, enabling the company to capitalize on **M&A opportunities** for future growth.  **[BLDR_3386751_11]** **[BLDR_3386751_19]**
- The company is experiencing **strong growth in value-added products and install services**, with **$2.5 billion** in labor and materials installed in 2023, enhancing margins and offsetting commodity fluctuations.  **[BLDR_3386751_17]** **[BLDR_3386751_10]** **[BLDR_3386751_16]**
- Management is **confident in meeting their full-year guidance**, supported by a **healthy backlog** in early-stage products like trusses and **strong demand** in the single-family housing market.  **[BLDR_3386751_10]** **[BLDR_3386751_12]**

fd4d18704f492853e0eab6f0968a06cc98926f289d8ae81317b9dcc5e3378198

1. **2025 Growth Outlook**  
   **Q:** How do you view your growth versus the market into 2025?  
   **A:** We anticipate growth aligning with market expectations for 2025, based on economists' forecasts.  **[BLDR_3405746_9]** **[BLDR_3405746_14]**  We're investing and competing well, acknowledging choppy market conditions, but remain optimistic about taking advantage of opportunities.  **[BLDR_3405746_9]** 

2. **Gross Margin Guidance**  
   **Q:** Are you still expecting around 31% gross margin as the exit rate for 2024, and how might that drift in 2025?  
   **A:** We expect to exit 2024 with a gross margin around **31.5%**.  **[BLDR_3405746_10]**  Despite a competitive environment, we're focusing on productivity, value-add, and install services to support margins in 2025.  **[BLDR_3405746_10]** 

3. **2025 EBITDA Margin and Sales Content**  
   **Q:** Does the 2025 base case imply approximately 20% incremental EBITDA margin, and how do you see sales content per home stabilizing?  
   **A:** Our numbers reflect ongoing productivity initiatives and the strength of our value-added products.  **[BLDR_3405746_11]**  We expect sales content per home to stabilize, with no continued declines after previous resets.  **[BLDR_3405746_12]** 

4. **Commodity Price Impact**  
   **Q:** How are rising lumber prices affecting your business and competitive dynamics?  
   **A:** Modest increases in lumber prices are positive, supporting sales and margins.  **[BLDR_3405746_12]** **[BLDR_3405746_13]**  We believe a healthy commodity sector benefits us, though R&R demand influences lumber prices more than new construction.  **[BLDR_3405746_13]** 

5. **Gross Margin Performance**  
   **Q:** What drove the gross margin outperformance this quarter, and what's your outlook for Q4?  
   **A:** Margin strength was due to productivity savings, favorable mix, and resilience in value-added products.  **[BLDR_3405746_13]**  We anticipate continued margin normalization in Q4, with competitive dynamics affecting the core business.  **[BLDR_3405746_13]** 

6. **2025 Revenue Assumptions**  
   **Q:** Given some builders' subdued outlooks, how does your revenue guide relate to starts in 2025?  
   **A:** Our scenarios are based on economists' forecasts for housing starts.  **[BLDR_3405746_14]**  We expect to gain share through digital initiatives, M&A carryover, and productivity.  **[BLDR_3405746_14]** 

7. **Productivity and Commercial Benefits**  
   **Q:** Does your productivity capture both process improvements and scale, and what are 'other commercial benefits'?  
   **A:** Yes, productivity includes process improvements and leverages our scale.  **[BLDR_3405746_15]**  Other commercial benefits involve better customer-supplier terms and CRM tools enhancing relationships.  **[BLDR_3405746_15]** 

8. **Single-Family Home Sizes**  
   **Q:** Are you assuming any changes in single-family housing sizes in your scenarios?  
   **A:** We expect home sizes and product mix to flatten out, with no further significant declines.  **[BLDR_3405746_16]** 

9. **Manufactured Products Decline**  
   **Q:** How is multifamily impacting your manufactured products segment?  
   **A:** Multifamily, particularly trusses, has been hardest hit, with manufactured products in that segment down **45-50%**.  **[BLDR_3405746_17]**  Single-family has seen pressure, but we're pleased with overall performance.  **[BLDR_3405746_17]** **[BLDR_3405746_18]** 

10. **Value-Add Margins**  
    **Q:** Are value-add margins changing due to mix or margin improvement within the category?  
    **A:** The performance is due to expanded capacity, acquisitions, and productivity savings within value-added products.  **[BLDR_3405746_18]**  We believe the current margin profile is sustainable.  **[BLDR_3405746_18]** 

11. **Mortgage Rate Assumptions**  
    **Q:** Do your 2025 scenarios assume mortgage rates will pull back, and what's expected for non-commodity product pricing?  
    **A:** We have no explicit mortgage rate assumption; we follow economists' forecasts.  **[BLDR_3405746_20]**  Non-commodity product pricing is stabilizing, with some modest price increases.  **[BLDR_3405746_20]** 

12. **M&A Pipeline**  
    **Q:** How is your M&A pipeline looking?  
    **A:** The pipeline is strong, with sellers actively looking to move.  **[BLDR_3405746_21]**  We've had success with smaller deals and see opportunities ahead.  **[BLDR_3405746_21]** 

13. **Gross Margin and EBITDA Confidence**  
    **Q:** What improved to give you confidence in increasing gross margin and EBITDA numbers?  
    **A:** Normalization of margins and better understanding of where the business is heading gave us confidence to affirm our long-term targets.  **[BLDR_3405746_22]** 

14. **R&R Market Outlook**  
    **Q:** What are you expecting for R&R this coming year and the industry outlook?  
    **A:** There's positive momentum in R&R due to aging housing stock and potential easing of mortgage rates releasing the lock-in effect.  **[BLDR_3405746_23]** 

15. **Productivity Savings Runway**  
    **Q:** How long can you sustain strong productivity savings, and will this continue in 2025?  
    **A:** We see continued opportunities for productivity improvements into the future, balancing with ERP conversion efforts.  **[BLDR_3405746_24]** 

16. **Shift to Lower-Value Products**  
    **Q:** How widespread is the shift to lower-value products, and will it continue into 2025?  
    **A:** The shift is industry-wide as builders address affordability challenges.  **[BLDR_3405746_25]**  We've seen it stabilize with no continued pace of declines.  **[BLDR_3405746_25]** 

17. **R&R Regional Strength**  
    **Q:** What is driving outperformance in R&R, particularly in the central region?  
    **A:** Success in smaller markets and open capacity have allowed us to serve smaller remodelers effectively.  **[BLDR_3405746_26]** 

18. **Multifamily Revenue Decline**  
    **Q:** Is the 2025 multifamily revenue decline due to lapping or further declines?  
    **A:** It's primarily due to lapping year-over-year deterioration; we've stabilized but will still feel the lapping effect.  **[BLDR_3405746_27]** 

19. **Margin Normalization End in Sight**  
    **Q:** Are you closer to the end of margin normalization and competitive price pressures?  
    **A:** We're in the late innings of margin normalization, much closer to the end.  **[BLDR_3405746_28]** 

20. **Installed Sales Impact**  
    **Q:** What percentage of net sales are installed sales, and how do they impact gross margin?  
    **A:** Installed sales were about **$2.5 to $2.6 billion** last year, increasing this year.  **[BLDR_3405746_29]**  They have margin profiles complementary to our overall margins.  **[BLDR_3405746_29]** 

21. **Digital Tools Receptivity**  
    **Q:** How is the receptivity to your digital tools given the housing cycle?  
    **A:** Adoption is progressing but challenging due to pressure on smaller builders.  **[BLDR_3405746_30]**  We believe it's a way for them to compete and be more efficient.  **[BLDR_3405746_30]** 

543fd5e3de27f6e2a6956a85c636fb7a717ccbc2c15c7db7d308e72815cfa110

Builders FirstSource Inc (BLDR)

Financials