Overview

General Thesis

The US housing market is short 5.5 million homes due to a lag over the past 20 years.
We are seeing an increase in average home prices because of supply constraints and low mortgage rates.
The need for new homes will kick off a “supercycle” of homebuilding. Some of the homebuilding was stalled earlier this year as the cost of materials shot up, but as supply chains recovered, the prices have started to come back down. The “bullwhip” effect.
Homebuilding products > Homebuilders because they are generally less capital intensive. $BLDR at 6.3x EV/(EBITDA - CapEx). Traditionally trades around 9x - 12x.

Stock Repurchase Plan | August 12, 2021

Builders FirstSource announced the board has authorized the Company to buy back up to $1 billion of its common shares.
The timing and amount of any share repurchases under the share repurchase program will be determined by BLDR’s management at its discretion.

Q2 Earnings Highlights

Net sales of $5.6 billion (90.6% increase compared to previous year pro forma).
- Commodity inflation increased net sales by 51.8%.
- Core organic sales increased 35.3%.
- Acquisitions (excluding BMC) contributed to 3.5% growth.
Gross profit of $1.6 billion (105.4% YoY).
SG&A decreased 360 basis points to 16.2%.
Net income of $497.2 million.
Adjusted EBITDA increased to $835.8 million (640 basis point increase to 15%).