BFS Posts Deep Loss in 1Q as it Becomes Less Optimistic About Economic Prospects

By Craig Webb

Builders FirstSource plunged to a net loss of $47.4 million in the first quarter from net income of $96.3 million in 1Q25 on a 10.1% drop in net sales to $3.3 billion, the company reported April 30. Adjusted EBITDA shrank 42.1% to $213.8 million and the EBITDA margin dropped 360 basis points to 6.5%.

The nation's biggest full-service lumberyard said fewer new-home starts led to an 8.3% drop in core organic net sales at a time in which commodity prices dropped 3.3%. Single-family core organic sales dropped 11% while multifamily and repair & remodeling sales were down 1%. Revenue from its manufactured products decreased 13%, while the windows, doors, and millwork category decreased 10%. The sales decline would have been worse had it not been for a 1.5% gain from facilities acquired over the past year.

Gross profit margin dropped 220 basis points to 28.3%. BFS did manage to cut expenses by 2%, mainly from lower commissions. But because sales dropped faster, its selling, general and administrative expenses as a percentage of net sales increased 240 bp to 27.8%.

For all 2026, BFS now predicts net sales of $14.6 billion to $15.6 billion and Adjusted EBITDA to range from $1.1 billion to $1.5 billion (a margin of 7.5% to 9.6%). It bases this on forecasts that single- and multi-family starts in its geographies will be down in the low single digits, while R&R spending will be down 1%.

The company also lowered its economic assumptions for 2026. Prior predictions of flat single- and multi-family starts in its geographies have been replaced by forecasts of low-single-digit percentage declines. Meanwhile, repair and remodel spending that had been counted on to rise 1% is now expected to shrink by 1%. On the other hand, the price of commodity lumber is expected to rise.

As a result of all this, "We're leaning into our downturn playbook," CFO Pete Beckmann told BFS' stock analysts in an earnings call. That includes cutting discretionary spending, reducing staff counts, and pushing efficiencies. BFS has consolidated 21 facilities YTD on top of the 55 other consolidations it has made the previous two years, CEO Peter Jackson said.

Jackson also said BFS' troubles are shared. "There are smaller players that certainly are struggling," he said. "There are players that have closed down a lot of facilities. People have had significant headcount reductions. … Some people are trying to pursue product categories they haven’t before. We’ve seen irrational numbers that people have had to back off of. In general, a lot of aggressive behavior. … We’re at volume levels comparable to 2019, but the content of the house is smaller. We’re seeing a market with substantially lower levels of volume flowing through it.”

Builders may say they aren’t going to accept price increases, Jackson noted. However, "[T]o the extent we have good long term partnership and the market wants products, there will be a pass-through.” Housing affordability is a problem, and BFS wants to help builders, “but at no point does that mean we become a charitable institution," Jackson said. "They’re going to press, and we’re going to hold the line.”

"There's a bifurcation in the market" for homes, Jackson said. There's strength for big, high-end, high-dollar homes, but at the same time there's "a lot more homes losing complexity at the bottom end." Starter homes are smaller and simpler than they used to be, and thus require fewer materials to build them. Jackson believes people want bigger, more complex homes at the lower and middle price points, and he believes that could happen as the economy improves.

Also on April 30, BFS authorized the repurchase of $500 million worth of its shares. "Since the inception of its buyback program in August 2021, the Company has repurchased 102.6 million shares of its common stock, or 49.7% of its total shares outstanding, at an average price of $81.26 per share for a total cost of $8.3 billion, inclusive of applicable fees and taxes. As of April 30, 2026, shares outstanding were 107,559,876," the company said. About $200 million of the $500 million repurchase plan was authorized in April 2025.