Builders FirstSource (BLDR 8.54%) is a major supplier of building products, prefabricated components, and construction services to homebuilders and contractors across the United States. The company reported its second quarter 2025 results on July 31, 2025, showing a mixed performance. Adjusted earnings per share came in at $2.38, surpassing the consensus non-GAAP EPS estimate of $2.21, while revenue (GAAP) totaled $4.23 billion, slightly below the $4.28 billion analyst forecast (GAAP). While profits were higher than expected, both earnings (non-GAAP EPS) and sales (GAAP revenue) declined compared to last year. Gross and operating margins moved lower, reflecting normalization in housing market activity and competitive pricing pressures. Overall, the results point to ongoing challenges in new construction volumes and margin pressure, even as the company executes on its strategic priorities.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS – Diluted (Non-GAAP) | $2.38 | $2.21 | $3.50 | (32.0%) |
| Revenue | $4.23 billion | $4.28 billion | $4.46 billion | (5.2%) |
| Adjusted EBITDA | $506.1 million | $669.7 million | (24.4%) | |
| Free Cash Flow | $255.0 million | $366.7 million | (30.5%) | |
| Gross Profit Margin | 30.7 % | 32.8 % | (2.1 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Builders FirstSource: Business Model and Strategic Focus
Builders FirstSource provides a comprehensive suite of construction materials, manufactured building components like trusses and wall panels, and other value-added solutions. Its clients range from large homebuilders to small and mid-sized contractors. The company operates nationwide, operating approximately 585 locations across 43 states.
Recently, Builders FirstSource has focused on expanding its range of manufactured and value-added products, integrating digital tools for customers, and driving productivity through scale. Key success factors include disciplined capital deployment, timely acquisitions, operational efficiency, and innovation in digital offerings. Strategic initiatives also center on adapting to industry moves toward prefabrication, installation services, and technology-led process improvements.
Quarter in Review: Performance Drivers and Segment Trends
Net sales (GAAP) fell 5.0% from the prior year, primarily due to weakness in core homebuilding markets and lower demand in both single-family and multifamily segments. Segment data reveals declines in single-family sales of 9.1% and multifamily net sales declined 23.3% year-over-year. Meanwhile, repair and remodel sales rose 3.0%, offering some support as new construction activity slowed.
The company’s margin profile weakened. Gross profit margin (GAAP) dropped by 2.1 percentage points to 30.7%. Lower volumes and increased competition in both single-family and multifamily segments contributed to this result, with the normalization of gross margins in these categories specifically cited by the company. Adjusted EBITDA, a measure of operating profitability before interest, taxes, depreciation, and amortization, declined 24.4% to $506.1 million.
Builders FirstSource’s value-added products, which include manufactured building components plus windows, doors, and millwork, made up 46.8% of sales. However, value-added product sales dropped 8.7%, and manufactured products sales fell 9.8%. Within its digital platform initiatives, the company reported $19 million in new incremental digital sales and is on track to reach $200 million this fiscal year.
Free cash flow (non-GAAP) fell 30.5% year-over-year to $255.0 million, reflecting reduced net income (GAAP). Despite these pressures, the company accelerated its share buyback activity, retiring 3.3 million shares at an average price of $118.27. This increased net leverage, with net debt to LTM Adjusted EBITDA rising from 1.4x a year ago to 2.3x. Liquidity remains robust, with $1.6 billion in available revolver capacity and cash.
Acquisitions remained an important source of growth, adding 5.0% to the top line. Recent purchases included Alpine Lumber, O.C. Cluss, and Truckee Tahoe Lumber, which helped offset some declines in organic sales. However, executives noted a general slowdown in merger and acquisition opportunities as market uncertainty caused many potential sellers to delay deals.
Operations and productivity initiatives contributed $5 million in savings, with a year-to-date total of $22 million against a company goal of $45–65 million for fiscal 2025. Selling, general, and administrative expenses (GAAP) rose as a percentage of sales to 23.3%, up from 21.8% last year, due in part to ongoing investment in enterprise resource planning (ERP) technology and reduced operating leverage from lower revenue.
Management flagged ongoing competitive dynamics, where margin pressure reflects efforts to defend market share against both regional and national players. The company balances price discipline with customer retention, a strategy that may keep margins under pressure until broader end-market demand strengthens.
For its digital solutions, the company’s digital tools, led by its Paradigm platform, support smaller builders and contractors by streamlining orders and workflows. Digital sales and adoption continued to rise, though growth remains tied to broader construction market trends.
Looking Ahead: Management Guidance and Investor Watch Items
Management reaffirmed its full-year 2025 outlook for net sales of $14.8–$15.6 billion, adjusted EBITDA of $1.5–$1.7 billion, and gross profit margin between 29.0% and 30.5% for the year. Free cash flow (non-GAAP) is projected to fall within a $0.8–$1.0 billion range. The 2025 guidance assumes single-family housing starts will be down 10–12% for the year, multifamily starts projected to be down mid-teens, and repair and remodel activity is projected to be flat. Acquisitions are expected to add around 5% to annual sales.
management noted that its forecasts do not include any impact from potential new tariffs, which remain a risk factor for both margin and pricing in later quarters. Investors should watch for trends in gross margin, debt levels, and the rate of adoption of new digital and value-added products. Additional areas to monitor are changes in acquisition activity, as well as any further developments in tariffs, commodity pricing, or industry demand that could influence results.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
