Builders FirstSource — Third Quarter 2026 Earnings Summary

Financial Performance:

• Net sales were $3.9 billion, a 2.2% decrease year-over-year, driven by a 3.9% decline in core organic net sales and 0.1% commodity deflation, partially offset by 1.8% growth from acquisitions.
• Gross profit was $1.1 billion, a 10.6% decrease year-over-year, with gross margin percentage declining 260 basis points to 27.8%.
• Net income was $60.4 million ($0.56 diluted EPS), compared to $122.4 million ($1.10 diluted EPS) in the prior year period; net income as a percentage of sales decreased 150 basis points to 1.6%.
• Adjusted EBITDA decreased 28.3% to $311.1 million, with Adjusted EBITDA margin declining 290 basis points to 8.1%.
• Adjusted net income was $162.2 million, a 26.9% decrease year-over-year; Adjusted EPS was $1.51, down from $2.00.
• Cash provided by operating activities was $146.6 million, a decrease of $401.2 million year-over-year.
• Free cash flow was $76.0 million, an 83.7% decrease from $464.9 million in the prior year period, driven by lower net income and higher net working capital.
• SG&A expenses were $973.2 million, a 0.3% increase year-over-year, representing 25.3% of net sales (up 70 basis points).
• Net interest expense increased $3.0 million to $72.2 million.
• Income tax expense was a benefit of $33.6 million, compared to an expense of $37.1 million in the prior year.
• As of September 30, 2026, net debt was $4.6 billion, resulting in a net debt to LTM Adjusted EBITDA ratio of 4.1x (up from 2.3x).
• Liquidity was $1.5 billion, consisting of $1.4 billion in net borrowing availability and $0.1 billion in cash on hand.

Guidance and Future Outlook:

• Full-year 2026 Net Sales guidance remains $14.2 billion to $14.6 billion.
• Full-year 2026 Gross Profit margin guidance remains 27.5% to 28.5%.
• Full-year 2026 Adjusted EBITDA guidance remains $1.075 billion to $1.125 billion.
• Full-year 2026 Adjusted EBITDA margin guidance remains 7.4% to 7.9%.
• Full-year 2026 Free cash flow guidance is approximately $400 million to $450 million, assuming average commodity prices of $390 to $410 per thousand board foot.
• Full-year 2026 assumptions include Single Family starts down mid- to high-single digits, Multi-Family starts down mid-single digits, and Repair & Remodel activity down 1%.
• Acquisitions completed within the last twelve months are projected to add 1.5% to 2% net sales growth.
• Total capital expenditures are projected to be $175 million to $225 million.
• Interest expense is projected to be $290 million to $300 million.
• Depreciation and amortization expenses are projected to be $580 million to $610 million.
• The Company expects to deliver $60 million to $70 million in productivity savings for 2026.

Business Segments and Product Lines:

• Single Family net sales declined 6.2%, lowering overall net sales by 4.3% on a weighted basis.
• Multi-Family net sales increased 2.0%, adding 0.2% to overall net sales on a weighted basis.
• Repair and Remodel ("R&R")/Other net sales increased 0.3%, adding 0.2% to overall net sales on a weighted basis.
• Manufactured products sales were $845.4 million (21.9% of net sales), a 2.8% decrease.
• Windows, doors & millwork sales were $937.8 million (24.3% of net sales), a 7.3% decrease.
• Value-added products sales were $1,783.2 million (46.2% of net sales), a 5.2% decrease.
• Specialty building products & services sales were $1,034.3 million (26.9% of net sales), a 3.4% decrease.
• Lumber & lumber sheet goods sales were $1,036.5 million (26.9% of net sales), a 4.7% increase.
• The Company delivered approximately $23 million in productivity savings during the third quarter and $57 million year-to-date.

Market and Competitive Landscape:

• The housing market environment remains challenging with lower housing starts acting as a primary headwind.
• The Company serves 48 of the top 50 and 91 of the top 100 Core Based Statistical Areas (CBSAs).
• Management stated that investments in value-added offerings and technology strengthen competitive advantages and position the company to outperform as conditions improve.

Risks and Challenges:

• Performance is dependent on the homebuilding industry and repair and remodel activity, which are sensitive to economic conditions, inflation, interest rates, home size, affordability, consumer confidence, and labor/supply shortages.
• Risks include lumber and other commodity prices, tariffs, duties, and the level of indebtedness.
• Forward-looking statements regarding Adjusted EBITDA, free cash flow, and tax rates exclude certain non-recurring items that are difficult to predict.
• Risks related to the integration of acquired businesses and the realization of anticipated benefits from acquisitions.
• Risks associated with the implementation of the enterprise resource planning system and the ability to drive growth through AI and machine learning solutions.

Management Commentary and Tone:

• CEO Peter Jackson described results as reflecting "disciplined execution" and "resilience," noting a focus on delivering solutions for builder efficiency and investing in value-added products and technology.
• CFO Pete Beckmann stated results "met our expectations" and highlighted a "sustained focus on cost management."
• Management noted they are narrowing the full-year outlook while maintaining midpoints for net sales and Adjusted EBITDA.
• Management emphasized the importance of operational excellence and differentiated capabilities at scale to outperform as the market improves.

Other Key Points:

• The Company has $500 million remaining under its share repurchase authorization.
• Since the buyback program's inception in August 2021, the Company has repurchased 102.6 million shares (49.7% of total shares outstanding) at an average price of $81.26 per share for a total cost of $8.3 billion.
• The Company will host an Investor Day at the NYSE on November 17, 2026, and will participate in the Goldman Sachs Industrials and Materials Conference on December 3, 2026.
• The Company reported a discrete federal research and development credit of $43.9 million in the nine-month period, which was excluded from Adjusted Net Income.
• Cash used for acquisitions was $90.8 million in the third quarter and $116.7 million year-to-date.
• Capital expenditures were $72.6 million in the third quarter and $157.4 million year-to-date.