Builders FirstSource Authorizes $1 Billion Share Repurchase Plan

Rhea-AI Summary

Builders FirstSource (NYSE: BLDR) has announced a new $1 billion share repurchase authorization on August 5, 2024. This decision reflects the company's confidence in its strategy, operating model, and financial strength. Key highlights include:

- Year-to-date repurchase of 5.9 million shares at an average price of $170.55 per share, totaling $1.0 billion
- 4.4% reduction in total shares outstanding in 2024
- Since August 2021, repurchase of 93.0 million shares (45.0% of total shares) at an average price of $76.65 per share, totaling $7.1 billion
- 116.5 million shares outstanding as of June 30, 2024

The company's Chairman, Paul S. Levy, emphasized BLDR's strong position in the housing industry and its commitment to creating shareholder value through value-added solutions, digital tools, and operational excellence.

Positive

• Authorization of a new $1 billion share repurchase plan
• Year-to-date repurchase of 5.9 million shares for $1.0 billion
• 4.4% reduction in total shares outstanding in 2024
• 45.0% reduction in total shares outstanding since August 2021
• Strong cash flow generation supporting share repurchases
• Confidence in company strategy and housing industry strength

Negative

• None.

Insights

Financial Analyst

This $1 billion share repurchase authorization is a significant move for Builders FirstSource (BLDR). It demonstrates the company's strong financial position and confidence in its future prospects. Here's why it's impactful:

• BLDR has already repurchased $1 billion worth of shares in Q2 2024, reducing outstanding shares by 4.4%.
• Since August 2021, they've bought back 45% of total shares at an average price of $76.65.
• Current stock price ($170.55) is significantly higher, indicating strong market performance.

This aggressive buyback strategy signals management's belief that the stock is undervalued. It's likely to boost earnings per share and potentially drive the stock price higher. However, investors should consider if this capital could be better used for growth initiatives or dividends.

Market Research Analyst

The housing market outlook underpinning this decision is crucial. BLDR cites an underbuilt market and favorable demographics as key factors. This aligns with current industry trends:

• Millennials entering prime home-buying age
• Persistent housing shortage in many markets
• Potential pent-up demand due to high interest rates

BLDR's dominant market position (present in 90 of top 100 MSAs) positions it well to capitalize on these trends. Their integrated homebuilding solutions and value-added products could be significant differentiators in a competitive market. However, investors should monitor housing starts and mortgage rates, as these could impact BLDR's growth trajectory.

Corporate Strategy Expert

This buyback reflects a confident, shareholder-friendly strategy. Key points to consider:

• Flexible execution: The company retains discretion on timing and amount, allowing adaptation to market conditions.
• Balance sheet strength: Emphasis on a "fortress balance sheet" suggests ample liquidity for operations alongside buybacks.
• Long-term focus: Consistent buybacks since 2021 indicate a sustained strategy rather than a one-off move.

While buybacks can boost shareholder value, they also reduce cash available for investments in growth or innovation. Investors should watch for signs that BLDR is balancing short-term returns with long-term competitiveness, especially in areas like digital tools and value-added solutions mentioned in the release.

IRVING, Texas--(BUSINESS WIRE)-- Builders FirstSource, Inc. (NYSE: BLDR) announced that on August 5, 2024, its Board of Directors authorized the repurchase of up to $1.0 billion of the Company’s outstanding shares of common stock.

“After completing nearly $1 billion of share repurchases in the second quarter, the Board’s announcement of a new share repurchase authorization reflects our strong conviction in the Company’s strategy, operating model, and fortress balance sheet underpinned by robust free cash flow generation, especially considering our confidence in the strength of the housing industry due to being underbuilt and favorable demographic trends,” said Paul S. Levy, Chairman of Builders FirstSource. “The Company’s industry-leading value-added solutions and digital tools, operational excellence, and prudent capital deployment will continue to compound growth and value for our shareholders.”

Key Highlights:

• Year to date, the Company has repurchased 5.9 million shares of its common stock at an average price of $170.55 per share for $1.0 billion, inclusive of fees and taxes. The Company has reduced its total shares outstanding by 4.4% in 2024.
• Since the inception of its buyback program in August 2021 through June 30, 2024, the Company has repurchased 93.0 million shares of its common stock, or 45.0% of its total shares outstanding, at an average price of $76.65 per share for a total cost of $7.1 billion.
• As of June 30, 2024, shares outstanding were 116.5 million.

The timing and amount of any share repurchases under the share repurchase program will be determined by Builders FirstSource in its discretion based on several factors, including ongoing assessments of the capital needs of the business, the market price of Builders FirstSource’s common stock, and general market conditions. Share repurchases under the program may be made through a variety of methods, which may include open market purchases, block trades, accelerated share repurchase transactions, trading plans in accordance with Rule 10b-5 or Rule 10b-18 under the Exchange Act, or any combination of such methods. The program does not obligate Builders FirstSource to acquire any particular amount of its common stock, and the share repurchase program may be suspended or discontinued at any time at the Company’s discretion.

About Builders FirstSource

Headquartered in Irving, Texas, Builders FirstSource is the largest U.S. supplier of building products, prefabricated components, and value-added services to the professional market segment for new residential construction and repair and remodeling. We provide customers an integrated homebuilding solution, offering manufacturing, supply, delivery, and installation of a full range of structural and related building products. We operate in 43 states with approximately 570 locations and have a market presence in 48 of the top 50 and 90 of the top 100 MSAs, providing geographic diversity and balanced end market exposure. We service customers from strategically located distribution and manufacturing facilities (some of which are co-located) that produce value-added products such as roof and floor trusses, wall panels, stairs, vinyl windows, custom millwork, and pre-hung doors. Builders FirstSource also distributes dimensional lumber and lumber sheet goods, millwork, windows, interior and exterior doors, and other specialty building products. www.bldr.com

Forward-Looking Statements

Statements in this news release and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including statements about forecasted financial performance or other statements about anticipations, beliefs, expectations, hopes, synergies, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. As with the forward-looking statements included in this release, these forward-looking statements are by nature inherently uncertain, and actual results or events may differ materially as a result of many factors. All forward-looking statements are based upon information, assumptions, expectations, and projections about future events available to Builders FirstSource on the date this release was submitted. Builders FirstSource undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements involve risks and uncertainties, many of which are beyond the Company’s control or may be currently unknown to the Company, that could cause actual events or results to differ materially from the events or results described in the forward-looking statements; such risks or uncertainties include those related to the Company’s growth strategies, including acquisitions, organic growth and digital strategies, or the dependence of the Company’s revenues and operating results on, among other things, the homebuilding industry and, to a lesser extent, repair and remodel activity, which in each case is dependent on economic conditions, including inflation, interest rates, consumer confidence, labor and supply shortages, and also lumber and other commodity prices. Builders FirstSource may not succeed in addressing these and other risks. Further information regarding factors that could affect our financial and other results can be found in the risk factors section of Builders FirstSource’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) and may also be described from time to time in the other reports Builders FirstSource files with the SEC. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240806858587/en/

Heather Kos

SVP, Investor Relations

Builders FirstSource, Inc.

investorrelations@bldr.com

Source: Builders FirstSource, Inc.

FAQ

What is the size of Builders FirstSource's new share repurchase authorization?

Builders FirstSource (BLDR) has authorized a new $1 billion share repurchase plan on August 5, 2024.

How many shares has BLDR repurchased year-to-date in 2024?

Builders FirstSource (BLDR) has repurchased 5.9 million shares year-to-date in 2024 at an average price of $170.55 per share, totaling $1.0 billion.

What percentage of BLDR's total shares outstanding has been repurchased since August 2021?

Since August 2021, Builders FirstSource (BLDR) has repurchased 45.0% of its total shares outstanding, equivalent to 93.0 million shares.

How many shares of BLDR were outstanding as of June 30, 2024?

As of June 30, 2024, Builders FirstSource (BLDR) had 116.5 million shares outstanding.

What factors will determine the timing and amount of BLDR's share repurchases?

The timing and amount of BLDR's share repurchases will be determined based on factors including capital needs, stock price, and market conditions, at the company's discretion.