What happened

Shares of Builders FirstSource, Inc. (NASDAQ:BLDR) surged more than 10% by 2:45 p.m. EDT on Friday after the building supply company reported strong third-quarter results.

So what

Builders FirstSource collected $2.1 billion in revenue during the third quarter. That was not only 12.7% higher than the year-ago period but came in $40 million ahead of analysts' expectations. While the company's overall sales volume grew 1.5%, price increases relating to commodity inflation added 11.5% to its top line.

A closeup of a stack of 2 by 4's at a construction site.

Image source: Getty Images.

Adjusted net income, meanwhile, came in at $77.3 million, or $0.63 per share. Profits not only topped the year-ago result of $45.4 million, or $0.39 per share, but came in $0.08 per share ahead of the consensus estimate, which was its second earnings beat this year. Driving the company's improved profitability was higher sales, -- especially in higher-margin value-added product categories, which grew 13.9% year over year -- the company's cost management initiatives, and lower interest expenses due to refinancing transactions completed last year.

Now what

"While the rate of market growth has recently eased, the long-term outlook for the housing industry continues to be favorable, as do the opportunities for Builders FirstSource to generate profitable growth for the balance of 2018 and beyond," stated CEO Chad Crow in the third-quarter earnings release. The CEO noted that the company's focus going forward is on achieving its de-leveraging target while continuing to invest in high-margin value-added products, which should position it to continue "delivering strong earnings and cash flow to our shareholders."

Matthew DiLallo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.