Key Highlights

  • Adjusted EPS of USD 1.51 beat the consensus estimate of USD 1.06 but fell 25% from the prior year.
  • Net sales of USD 3.85 billion declined 2.2%, yet topped the consensus estimate of USD 3.75 billion.
  • Gross margin was 27.8%, down 260 basis points, and adjusted EBITDA fell 28% to USD 311 million.
  • Net debt to adjusted EBITDA stood at about 4.1x, with roughly USD 1.5 billion of liquidity.

Builders FirstSource, Inc. (NYSE:BLDR) reported third quarter 2026 adjusted earnings per share of USD 1.51, above a consensus estimate of USD 1.06 and 25% below a year earlier. GAAP diluted EPS was USD 0.56 versus USD 1.10, with net income of USD 60.4 million compared with USD 122.4 million, helped by a USD 33.6 million income tax benefit. Net sales were USD 3.85 billion, down 2.2% from USD 3.94 billion and above a consensus estimate of USD 3.75 billion. The company changed its adjusted EPS definition this quarter to align with adjusted EBITDA and recast prior periods.

Lower Starts Pressure Margins

Core organic sales declined 6% in single-family, rose 2% in multifamily and were roughly flat in repair and remodel, with acquisitions offsetting part of the drop. The chief financial officer said the company gained roughly 1 to 2 points of share. Gross profit was USD 1.1 billion, down 11%, and gross margin of 27.8% reflected the lower housing starts environment. Adjusted SG&A was USD 785 million, down USD 5 million, as lower variable pay, reduced headcount and cost actions outweighed acquired operations and higher insurance, fuel and delivery costs.

Adjusted EBITDA was USD 311 million, down 28%, with a margin of 8.1%, down 290 basis points. Chief Executive Officer Peter Jackson noted continued softness in Texas and Colorado, partly offset by relative strength in California, Florida and the Northeast. The company has consolidated 45 facilities this year and generated USD 23 million of productivity savings in the quarter.

Narrowed Ranges and Housing Assumptions

Management maintained the midpoints of its full year outlook while narrowing the ranges: net sales of USD 14.2 to 14.6 billion, adjusted EBITDA of USD 1.075 to 1.125 billion, adjusted EBITDA margin of 7.4% to 7.9%, gross margin of 27.5% to 28.5%, and free cash flow of about USD 400 to 450 million. The guidance assumes single-family starts down nearly 7%, multifamily starts down about 4%, repair and remodel down 1%, and lumber near USD 390 to 410 per thousand board feet.

Mr. Jackson cited mortgage rates back above 7% and weak consumer confidence as the main constraint on demand. Cost actions are projected at USD 115 million in 2026 and USD 140 million on a full run rate basis, with USD 25 million of savings landing next year. Management stressed that its 2027 scenarios are not guidance.

Balance Sheet and Calendar Items to Watch

Operating cash flow was USD 147 million versus USD 548 million a year earlier, and free cash flow was USD 76 million. Capital spending was USD 71 million and acquisitions took USD 91 million, including ICG and Gleckler and Sons. No shares were repurchased in the quarter. The 4.1x leverage ratio sits above the long-term target, which management ties to a recovery in EBITDA. An Investor Day is scheduled for November 17 at the New York Stock Exchange, where long-term targets are due to be shared, and the USD 400 to 450 million free cash flow range gives a fourth quarter reference alongside OSB price moves after mill curtailments.