Building materials company Builders FirstSource (NYSE:BLDR) met Wall Street’s revenue expectations in Q1 CY2025, but sales fell by 6% year on year to $3.66 billion. On the other hand, the company’s full-year revenue guidance of $16.55 billion at the midpoint came in 0.9% below analysts’ estimates. Its non-GAAP profit of $1.51 per share was 6.4% above analysts’ consensus estimates.
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Builders FirstSource (BLDR) Q1 CY2025 Highlights:
- Revenue: $3.66 billion vs analyst estimates of $3.67 billion (6% year-on-year decline, in line)
- Adjusted EPS: $1.51 vs analyst estimates of $1.42 (6.4% beat)
- Adjusted EBITDA: $369.2 million vs analyst estimates of $377.5 million (10.1% margin, 2.2% miss)
- The company dropped its revenue guidance for the full year to $16.55 billion at the midpoint from $17 billion, a 2.6% decrease
- EBITDA guidance for the full year is $1.9 billion at the midpoint, below analyst estimates of $2.04 billion
- Operating Margin: 5%, down from 9.6% in the same quarter last year
- Free Cash Flow Margin: 0.9%, down from 5.8% in the same quarter last year
- Market Capitalization: $13.61 billion
"Given the current environment, I'm proud of our resilient results in the first quarter. These results reflect the strength of our differentiated product portfolio and our focus on operational excellence. While macro and industry dynamics continue to be unsettled, we remain confident in our ability to navigate any challenges by staying rooted in our strategy and focusing on the factors within our control. During these uncertain times, our role as trusted partners is vital as we help customers address affordability challenges and increase efficiency. We are laying the groundwork for future growth, and as the market recovers, we expect to outperform," commented Peter Jackson, CEO of Builders FirstSource.
Company Overview
Headquartered in Irving, TX, Builders FirstSource (NYSE:BLDR) is a construction materials manufacturer that offers a variety of lumber and lumber-related building products.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Builders FirstSource’s 16.8% annualized revenue growth over the last five years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Builders FirstSource’s recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 12.1% over the last two years. 
We can dig further into the company’s revenue dynamics by analyzing its most important segments, Manufactured products and Windows, doors & millwork , which are 23.1% and 25.2% of revenue. Over the last two years, Builders FirstSource’s Manufactured products revenue (floors, wall panels, and engineered wood) averaged 15.5% year-on-year declines while its Windows, doors & millwork revenue (self explanatory) averaged 6% declines.
This quarter, Builders FirstSource reported a rather uninspiring 6% year-on-year revenue decline to $3.66 billion of revenue, in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 4.6% over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average.
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Operating Margin
Builders FirstSource has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 12.1%.
Analyzing the trend in its profitability, Builders FirstSource’s operating margin rose by 2.6 percentage points over the last five years, as its sales growth gave it operating leverage.
In Q1, Builders FirstSource generated an operating profit margin of 5%, down 4.6 percentage points year on year. Since Builders FirstSource’s operating margin decreased more than its gross margin, we can assume it was less efficient because expenses such as marketing, R&D, and administrative overhead increased.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Builders FirstSource’s EPS grew at an astounding 38.7% compounded annual growth rate over the last five years, higher than its 16.8% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into Builders FirstSource’s earnings quality to better understand the drivers of its performance. As we mentioned earlier, Builders FirstSource’s operating margin declined this quarter but expanded by 2.6 percentage points over the last five years. Its share count also shrank by 2.7%, and these factors together are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth. 
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
For Builders FirstSource, its two-year annual EPS declines of 23.2% mark a reversal from its (seemingly) healthy five-year trend. We hope Builders FirstSource can return to earnings growth in the future.
In Q1, Builders FirstSource reported EPS at $1.51, down from $2.65 in the same quarter last year. Despite falling year on year, this print beat analysts’ estimates by 6.4%. Over the next 12 months, Wall Street expects Builders FirstSource’s full-year EPS of $10.39 to shrink by 6.3%.
Key Takeaways from Builders FirstSource’s Q1 Results
It was encouraging to see Builders FirstSource beat analysts’ EPS expectations this quarter. On the other hand, its Windows, doors & millwork revenue missed and its full-year EBITDA guidance fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 4.9% to $113.50 immediately following the results.
Builders FirstSource may have had a tough quarter, but does that actually create an opportunity to invest right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.