With a combined revenue of $21 trillion and $2.1 trillion in profits, the 2026 Fortune 500 is the definitive list of America's largest companies.

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Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

Industries included in the sector are building materials, forest products, metals, and packaging.

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The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

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Industrials came out on top this year, with 22 companies featured on the list.

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This year’s Fortune 500 marks the 68th running of the list.

This year’s group delivered stellar revenue and profit growth, but it underperformed the broader stock market.

This year’s Fortune 500 marks the 67th running of the list.

Formed in 1998, Builders FirstSource is the largest supplier of structural building products, value-added components, and services in the U.S.

This year's Fortune 500 marks the 66th running of the list.

Net sales at Builders First Source, a Dallas-based supplier of construction materials, fell 5.8% in 2019, but profits were up 8.1%; both metrics reflected the impact of falling commodity prices.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

Everybody loves an up-and-comer: 2018's top three-year performers in revenues, profits, and stock returns.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

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Builders FirstSource is a manufacturer and supplier of building materials, manufactured components, and construction services to homebuilders, contractors, remodelers, and U.S. consumers. Its manufactured products include wood floors, wall panels, stairs, windows, doors, mouldings, wood siding, roofing, insulation, cabinets, and much more. The company also offers software products for drafting, estimating, quoting, and designing home services for retailers, distributors, manufacturers, and homebuilders. Founded in 1998, the company was originally named BSL Holdings, but changed its name in 1999.

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Builders FirstSource

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I'd now like to turn the call over to Heather Kos, Senior Vice President, Investor Relations for Builders FirstSource. Please go ahead.

Good morning, and welcome to our first quarter twenty twenty five earnings call. With me on the call are Peter Jackson, our CEO and Pete Beckman, our CFO. The earnings press release and presentation are available on our website at investors.bldr.com. We will refer to the presentation during our call. The results discussed today include GAAP and non GAAP results adjusted for certain items.

We provide these non GAAP results for informational purposes, and they should not be considered in isolation from the most directly comparable GAAP measures. You can find a reconciliation of these non GAAP measures to the corresponding GAAP measures where applicable and a discussion of why we believe they can be useful to investors in our earnings press release, SEC filings and presentation. Our remarks in the press release presentation and on this call contain forward looking and cautionary statements within the meaning of the Private Securities Litigation Reform Act and projections of future results. Please review the forward looking statements section in today's press release and in our SEC filings for various factors that could cause our actual results to differ from forward looking statements and projections. And with that, I'll turn the call over to Peter.

Thank you, Heather, and good morning, everyone. Given the current environment, I'm proud of our resilient results for the first quarter, which reflect the strength of our differentiated product portfolio and our continued focus on driving operational excellence. While macro and industry dynamics continue to be unsettled, we remain confident in our ability to navigate any challenges. We are a cycle tested team that has withstood economic uncertainty in the past. We will execute again by staying rooted in our strategy and focusing on the factors within our control.

During these uncertain times, our role as trusted partner is vital as we help our customers address affordability challenges and increase efficiency. We are focused on the near term while laying the groundwork for future growth. As the market recovers, I'm confident we will outperform. As shown on Slide three, our strategy remains consistent. We are focused on organic growth, operational excellence and disciplined capital allocation.

We are committed to advancing our strong foundation and driving value creation for our customers through investments in innovation. Our significant investments in value added products, digital tools and internal systems are cementing our leading industry position. Let's turn now to our first quarter performance on Slide four. Our team's ability to drive resilient results despite external headwinds reflects our focus on execution, operational rigor and customer success. Pete will expand on our results more later in the presentation.

On Slide five, we highlight key areas where we've been executing our strategy. In the first quarter, we invested $23,000,000 in our value added facilities to prepare for future demand in key markets. This included opening one new millwork location, expanding another millwork plant and upgrading a truss facility. Adoption rates for our industry leading VFS digital tools are steadily climbing each week, and we are garnering consistent positive feedback from our growing customer base. I'm pleased that we realized $19,000,000 in incremental digital sales for the quarter, bringing our total to $153,000,000 since launch despite the challenging environment that has persisted for our target customers.

We achieved $17,000,000 in productivity savings in Q1, primarily through targeted supply chain initiatives, more efficient truss manufacturing and fleet management. We are focused on optimizing processes, leveraging technology and improving supplier relationships to enhance efficiency. We remain disciplined stewards of discretionary spending, and we are continuing to maximize operational flexibility. We increased our service levels to our customers with an on time and in full delivery rate of 92%. Single family starts remain soft as builders manage the pace of construction amid affordability challenges, inventory buildup and increased economic uncertainty.

As we expected and communicated previously, multifamily also remains a headwind compared to 2024. In response to lower volumes over the last year, we have taken steps to align capacity across our facilities, manage headcount and control expenses. This continues to be an attractive and profitable business for us. Turning to single family, builders continue to employ specs, smaller and simpler homes and interest rate buy downs to help buyers find affordable options. Our comprehensive product portfolio enables builders to optimize their costs while maintaining quality, And we continue to supply more lower cost offerings in products like engineered wood, windows and doors.

We are standing alongside our customers to battle affordability challenges and grow with them through the investment in our people, technology and innovation. While critical for the long term health of the industry, these actions mean less near term sales and gross profit dollars for BFS. Ultimately, this positions our company to accelerate when starts increase and current headwinds begin to subside. Turning to M and A on Slide six. We remain focused on pursuing high return opportunities that expand our value added product offerings and advance our leadership position in desirable geographies.

Over the years, we have developed substantial and proven muscle memory to grow through M and A and have a track record of successful integration. In the first quarter, we completed two acquisitions with aggregate prior year sales of roughly $565,000,000 As a reminder, in early January, we acquired Alpine Lumber, the largest independently operated supplier of building materials and value added products in Colorado and Northern New Mexico. In February, we acquired OC Plus, a leading supplier of lumber, building materials and installation services with locations in Pennsylvania, Maryland and West Virginia. In addition, we acquired Truckee Tahoe lumber in early April after quarter end. Truckee Tahoe has built a reputation of excellence as a leading supplier of lumber and building materials in the Northern California and Nevada markets.

We are excited to welcome these talented new team members to the BFS family. Our industry remains highly fragmented. And despite a slowing M and A environment, we are confident that our M and A capabilities will remain an important catalyst for our long term growth. Turning to Slide seven. Our disciplined capital allocation strategy focuses on maximizing shareholder returns through organic growth, inorganic growth and share repurchases.

In the first quarter, we deployed over $900,000,000 towards investing in the business, acquisitions and share repurchases. Now let's turn to Slide eight and discuss the latest updates on our digital strategy. With our BFS digital tools, we are focused on creating value for our homebuilder customers, and in doing so, further extending our industry leadership position and driving substantial organic growth. Despite the challenging market, we have seen continued adoption and growth with our target audience of smaller builders. Our sales team continues to increase digital tool usage, which will further drive customer adoption.

Since launch in early twenty twenty four, we have seen more than $1,500,000,000 of orders placed through our BFS digital tools, of which $153,000,000 were incremental sales from existing and new customers. We're pleased with our progress to date and expect an additional $200,000,000 of incremental sales in 2025, bringing our total to three thirty four million dollars at the end of the year. I'm incredibly grateful to lead such a talented and hardworking team that makes a difference every day. One great example is Del Mar Little Deer in Oklahoma City, who has been with BFS for more than twenty years. Del Mar excels as a trusted partner to our customers who have relied on him both as a driver and now as a dispatcher to ensure the deliveries are accurate and on time.

As a dispatcher, he has helped keep his location ranked among the best in the company for dispatch and delivery management efficiency. Beyond his technical skills, Delmar is a mentor to our drivers. His experience in the field allows him to guide them not just on routes and best practices, including safety, but also on ways to provide value to our customers. His leadership and calm demeanor helped keep our team running efficiently, even on the most challenging of days. I'm proud of Delma and our countless other dedicated team members who continually raise the bar in service to our customers and each other.

I'll now turn the call over to Pete to discuss our financial results in greater detail.

Thank you, Peter, and good morning, everyone. Our first quarter results were driven by our durable business model and unwavering commitment to executing our strategy. We have a proven track record of generating strong free cash flow through the cycle and deploying capital in a disciplined manner, in line with our capital allocation priorities. Our scale, differentiated platform and talented team members give us confidence that we will continue to compound value now and into the future. Let's begin by reviewing our first quarter performance on Slides nine through 11.

Net sales decreased 6% to $3,700,000,000 driven by lower organic sales, one fewer selling day and commodity deflation, partially offset by growth from acquisitions. Although we expect higher commodity prices for the full year, we experienced commodity deflation in Q1 given the prior year spike in OSB prices. The core organic sales decrease was driven by a 33% decline in multifamily with muted activity levels against stronger prior year comps. Additionally, single family declined 6% attributable to lower starts activity, value per start, and weather, while repair and remodel increased 4% driven by strength in the Mid Atlantic and Southeast regions. As we have shared on recent calls, there are a few main variables reconciling single family starts to our core organic sales.

First, the value of the average home has fallen as size and complexity have decreased. Second, we have seen ongoing margin pressure as starts remain below normal. Third, extreme weather in the Southeast in California impacted the quarter by approximately $80,000,000 in long term deferrals. Although macro headwinds persist and there are fewer sales dollars available per start today, we are the market leader in building products and continue to be a trusted partner to our customers that starts to remain below normal levels. For the first quarter, gross profit was $1,100,000,000 a decrease of 14% compared to the prior year period.

Gross margins were 30.5%, down two ninety basis points, primarily driven by single and multifamily margin normalization as well as a below normal starts environment. Adjusted SG and A of $771,000,000 decreased $9,000,000 primarily attributable to lower variable compensation due to lower core organic net sales, partially offset by acquired operations. On an annual basis, adjusted SG and A is approximately 30% fixed and 70% variable with volumes, enabling flexibility during challenging periods. As Peter mentioned, we are investing in technology with a look toward the future despite ongoing headwinds. One big component of this is moving to a single, modern ERP platform.

Our ERP investment is projected to incur approximately $140,000,000 this year. This positions us to drive innovation, enhance efficiency and support our long term growth objectives. We are focused on carefully managing our SG and A and are well positioned to leverage our fixed costs as the market grows. Adjusted EBITDA was $369,000,000 down 32%, primarily driven by lower gross profit. Adjusted EBITDA margin was 10.1%, down three eighty basis points from the prior year, primarily due to lower gross profit margins and reduced operating leverage.

Adjusted EPS was 1.51 a decrease of 43% compared to the prior year. On a year over year basis, share repurchases, enabled by our strong free cash flow generation, added roughly $0.11 per share for the first quarter. Now let's turn to our cash flow, balance sheet and liquidity on slide 12. Our first quarter operating cash flow was $132,000,000 a decrease of $185,000,000 mainly attributable to lower net income. We generated free cash flow of $45,000,000 Our trailing twelve months free cash flow yield was 9%.

Operating cash flow return on invested capital was 19%. Our net debt to adjusted EBITDA ratio was approximately two times. Excluding our ABL, we have no long term debt maturities until 02/1930. At quarter end, our total liquidity was 1,100,000,000 consisting of $944,000,000 in net borrowing availability under the ABL and $115,000,000 in cash. Moving to capital deployment.

Capital expenditures were $87,000,000 in the first quarter. We deployed $828,000,000 on two acquisitions. In Q1, we repurchased roughly 100,000 shares for $13,000,000 Additionally, in April, we repurchased 3,300,000.0 shares for $391,000,000 As we announced this morning, our Board has authorized a $500,000,000 share repurchase program, inclusive of the $100,000,000 remaining on the prior $1,000,000,000 authorization. This reflects our commitment to returning capital to shareholders while maintaining flexibility for strategic investments. With our current leverage ratio at approximately 2x, we remain mindful of maintaining a leverage ratio of roughly 1x to 2x at year end.

We remain disciplined stewards of capital and have multiple paths for value creation to maximize returns. On Slide 13, we show our 2025 outlook. For full year 2025, our forecast assumes a down mid single digit single family market and continued weakness in multifamily. As a result, we are guiding net sales in the range of $16,050,000,000 to $17,050,000,000 We expect adjusted EBITDA to be $1,700,000,000 to $2,100,000,000 Adjusted EBITDA margin is forecasted to be in the range of 10.6% to 12.3%. Given a lower starts environment, we expect our twenty twenty five full year gross margin to be in a range of 29% to 31%.

We expect free cash flow of $800,000,000 to $1,200,000,000 The change from the prior guidance is primarily due to a lower working capital assumption based on our lower sales outlook for the year. As we have stated previously, imports accounted for approximately 15% of our total raw material spend in 2024, comprised of roughly 11% commodities and 4% non commodities. Given what we know today, we estimate a tariff cost impact of $175,000,000 to $250,000,000 annually. This impact reflects the products we import as well as potential U. S.

Supplier impacts. This range also assumes USMCA tariff exemptions on Canadian lumber. 2025 guidance assumes average commodity prices in the range of $400 to $440 per thousand board foot, an increase of $15 at the midpoint. Note that this is our best current estimate and subject to change. Our guide does not reflect potential tariff and duty impacts.

Please refer to our earnings release and presentation for a list of key 2025 assumptions. Additionally, we want to provide color for Q2 given ongoing macro volatility. We expect Q2 net sales to be between $4,100,000,000 and $4,400,000,000 Q2 adjusted EBITDA is expected to be between $4.75 and $525,000,000 In closing, I am confident in our ability to drive long term growth by executing our strategy, leveraging our exceptional platform and maintaining financial flexibility. With that, I'll turn the call back over to Peter for some final thoughts.

Thanks, Pete. Let me close by reiterating that we remain focused on controlling the controllables. Our resilient business model enables us to win in any environment, given our scale, breadth of product offerings and our disciplined investments in technology. I'm confident in the long term strength of our industry due to the significant housing underbuild across our core markets. We are well positioned to capitalize on this, driving growth for years to come as we execute our strategy.

We continue to deepen our value proposition as a key partner to our customers by helping them solve problems through our investments in value added products, digital tools and install services. Our proven growth playbook, fortress balance sheet and robust free cash flow generation through the cycle will help us continue to compound long term shareholder value. In the meantime, we are closely monitoring the current environment and remain agile to mitigate downside risks in the near term while also investing strategically for the future. Thank you again for joining us today. Operator, let's please open the call now for questions.

Thank you. You. And your first question comes from the line of Matthew Bouley with Barclays. Please go ahead.

Good morning, everyone. Thank you for taking the questions. So the question is on market share. If I look at single family housing starts in Q1, they were down 6%. Your single family was down 6% even with presumably, you know, still being impacted by less dollar content per home.

So however you look at it, it is a really notable change in terms of your growth versus the market from 2024. And what I'm getting at, of course, your thoughts on share, how your views on share have evolved over the past year? And in this declining market, are you actually looking to increase your market share going forward or simply maintain your share in this type of market?

Matt, thank you for the question. So I will consistently say we are always trying to increase our share no matter what the market is. I think the dynamic over the past year, and we talked about it a little bit, this below normal starts environment has changed some patterns of behavior, and we have had to fight the fight. So being in the market each day, reacting acting and reacting to competitive dynamics, partnering with customers and some of the strategic things they're trying to do, adapting to the affordability challenges in the marketplace, It's all part of what we do every day. I think the team is doing a fantastic job.

Absence flows every quarter. And I think what you're seeing here is the hard work, the kind of the culmination of the hard work over the last year of the team to lean back in and drive behaviors at the local market level that allow us to continue to be consistent and competitive. We've done the right things to invest. Our cost positions are very good. We continue to run the operations very efficiently and focused on our customers.

And I think that's why you're seeing the performance. We're going to continue to strive for it over time.

Okay. Got it. And then that of course then leads to the gross margin question. If we're in this kind of market that requires a balance between share versus margin and your gross margin guide now does have 29% at the low end for this year, It begs the question of sort of where you are willing to go on the gross margin. Is there a level on that margin at which you would prioritize the margin again?

Or should we be looking for share to kind of be the dominant strategy? So kind of where would you be willing to go on that gross margin in this type of market? Thank you.

Good morning, Matt. This is Pete. What I would say is our margins are still very strong. We're pleased with the performance. We are anticipating margins to drift lower through the year.

Some of that is due to the margin normalization that we're experiencing with the multifamily as well as the single family side. But as this market continues to present additional challenges, being below normal levels, now calling down about 5%, I think you're gonna see continued competitive pressure, and we have to make that call every day on how to balance share versus margin. And as Peter mentioned, that's that's just part of running the business every day, and we know that we need to be in the game in order to continue to win and position ourselves to bundle the products or we're gonna be more competitive.

overall very pleased with the performance of margins. It's been, a a bit of a discovery process post the whole COVID push as to where normal is. We've tried to talk about that with everybody. Hopefully, that's come through as an attempt to be transparent. What I think we're seeing now is a lot of that normalization is done.

Now it's just hand to hand combat in given markets with specific competitors. So that dynamic is where our advantaged position from a cost perspective, from a coverage perspective allows us to have superior margins than the competition. Our pricing discipline and knowing exactly where we stand and what we're doing in each individual decision is a powerful advantage to some of our competitors. So we'll continue to balance it. It has to be a balance.

You can't walk away from the table. But the reality is our continued success has led to that bundling ability. Our customers do see the value of the combined offering that we have in our product portfolio. The benefits of value add have been very sticky even when there's some uncertainty and challenges in the market. And we still continue to sell to a wide variety of customers, both ups and downs in various markets.

So we feel good, but no question, it's a time of pressure, and we're happy to be smart about it.

Thank you. And we will take our next question from Mike Dahl with RBC Capital Markets. Please go ahead.

Good morning. Thanks for taking my questions.

Just I guess to pick up on the gross margin dynamic, can we just put a finer point on what drifts lower through the year means? You're starting at 30.5%. Presumably, there's still some near term pressure doing where you've guided 2Q. Just, you know, how just help us ballpark what the 2Q gross margin is and and then, you know, drift lower through the year, I guess.

Are you expecting sequential declines each each quarter from here?

Yeah. Thanks, Mike. So when we look at our results excluding the multifamily, we really see margins flattening out, for Q2 and slightly down if we continue to see a below normal source environment. So that's kind of what we've baked in. From a multifamily standpoint, we continue to have a little bit of that normalization.

I think we're on our last leg of that. But when we look year over year, it's a much bigger, step down. So it it has an impact as we look at the overall year to year. So I would say we're we're getting pretty close to flat. Our competitive advantages with what we've invested in our manufacturing continues to support our margins, with our our value added products, and, we're very confident in our ability to deliver higher margins.

Okay. Thanks. That that's helpful, Pete. The the I

guess the the second question is capital allocation.

I mean, look, this has been a hallmark of the company for a number of years in terms of the ability to aggressively deploy capital both on m and a and buybacks. We're reaching a point here where given the compression we're seeing in EBITDA and cash flow and some of what you've already deployed on the acquisitions and now this big buyback in February, your pro form a leverage does look to be, you know, a couple ticks higher than your your two x range, you

in an uncertain environment. So how are you thinking about balancing that? I mean, as much as we like to see the buybacks, it's it's that that's a pretty big number to to lean into in in the quarter given what's transpiring. Just maybe a little more elaboration on on how you plan to balance all of this in the coming quarters.

Yeah. Great question, Mike. So our capital allocation priorities remain the same. We are going to focus on protecting our balance sheet, making sure that we're investing in the core. The next priorities of M and A and stock buyback, we will have to continue to evaluate, as we move forward so that we're commit staying to our commitment of managing to a one to two times leverage by year end.

So, yeah, the only thing I would add, we have been very disciplined and thoughtful about building out our balance sheet, making sure our tenures, our rates, our liquidity position all remains very strong. So none of that has really changed. All that's really evolved here is that we've seen a pullback in the EBITDA number for the basis of the math. And what I would say is we're targeting a year end one to 2x. It's always been sort of the theme because of our seasonal borrowing fluctuations.

It's pretty normal for us to have some changes across the year. And I think we're still in a position to be able to deploy capital in a very intelligent way to position the business for growth over time at the current level. And as each year passes, we'll have more opportunities. As we return to growth, we'll have more opportunities. So I think fair.

I think your observations are on point, but it's a point in time.

we will take our next question from Charles Perron Piche with Goldman Sachs.

First, I want to talk a bit about the commodity backdrop. Longer prices have been trading higher through the spring and you obviously revised your guidance higher to reflect that. But can you talk about how you expect this to flow through your commodity inflation expectations for 2025? And how are those higher lumber prices impacting the mix of value add? Are you seeing specifically increased elasticity of demand as builders are facing, growing margin pressures?

Yeah. Thanks for the question, Charles. So with commodities, we are seeing the impact of the year to date, higher prices on lumber. But as a reminder, and I don't know if we've shared this with you specifically, but when we look at our commodity prices, it's 70% weighted to the the lumber composite and 30% weighted to the OSB composite. So that's kind of the blend of what we see going into a normal home size.

So with that, with OSB being super depressed, especially to where it was a year ago, we're seeing that pull the number overall down, but we are seeing the lumber composite, year over year higher. So what we see for the balance of the year is kind of holding at this level, if not even drifting down a little bit as people digest some of the initial reaction to tariff concerns. And that's going to continue to benefit but modestly in our results through the balance of the year as we pass that through. With respect to the value added products, it is a portion of the truss and the wall panels that we produce, and that'll that'll change the cost basis as we continue to design and engineer optimize those truss points.

I think your point is right on, though. Anything that grows commodities as a percentage will, by mathematical equation, reduce value add as a percentage of total mix, but it's fairly modest overall. And to clarify a point, so Lumberada Canada is covered under USMCA for tariff reasons, meaning no tariff impact on what we've been up to lately, but the traditional duty regime is still in place. So there is expected to be an update to that duty regime later on this year that, for the time being, looks to be fairly substantial. The reality is by the time it gets implemented, it will be kind

of into the fourth quarter really before we start

to see it hit. And as you know, fourth quarter is a fairly small quarter for us overall. So some development we think will play out. Although I'll be quite candid and tell you that given the amount of uncertainty around tariffs and duties in general, I wouldn't necessarily deposit that check on anything yet.

Got it. That's super helpful color. And second, you talked about the progress of digital initiatives in your prepared remarks, I think adding $19,000,000 this quarter. When you consider softer housing backdrop, what factors lead your confidence to reaching the $200,000,000 target in '25? I think you mentioned last quarter you were adjusting your go to market strategy for those.

Yes. No, that's a great question. So the reality is the tools are being really well received. The customers that are engaging with them and using them like them a lot. They find it valuable in terms of their, their pace of build, their ability to understand the components, the ability to adapt to what they want to do on the ground more quickly.

The interfaces, I think, are more seamless, more modern than anything that the industry has seen before. So the adoption has been good. I think our internal rollout is a lot more about training, dialing in some of the features and functions of the tool internally and getting things replatform to be able to, I would say, accelerate the adoption by the customer. Now the one thing I will point out that came through, hopefully, in the materials is that our initial target audience for this tool is the smaller builder. So production builder between 52,000 homes a year until we get the tool really dialed in the way we want it.

And that is a customer category that has been under a lot of pressure. I would say comparative to last year, they're they're pretty stable, pretty good, maybe even up a little. Some other customer categories are maybe down a bit versus last year, but that gives us confidence that we're on the right track, both the momentum we've seen in the initial reset internally as well as customer adoption and overall customer health, I think those are the sort of the three reasons we remain confident that digital is on the right track and going in the right direction.

Okay. Thanks for the color, guys, and good luck.

Thank you. And your next question comes from the line of John Lovallo with UBS. Please go ahead.

Good morning guys. Thanks for taking my questions as well. The first one is kind of working off of Matt's question at the onset here in terms of the competition. I mean, it really what does the competition look like today? And what I'm getting at is if you're expecting gross margins, call it 29% to 31% in your competitors, some of the smaller ones have higher cost new capacity.

I have to imagine that they're running closer to breakeven. I mean how sustainable is some of this newer competition that's coming to the market?

That's a fantastic question. It's an ongoing debate. I I would tell you based on some of the behaviors that we've seen, the lowest of the low is not sustainable, and they're they're regretting some of the decisions they've made, and rightfully so. You know, I think builders, to their credit, are trying to get the lowest cost possible, which I respect. Right?

It's business. The counterpoint to that is they need actual partners to do what they do. They're this is our role in the industry. We we need to be able to provide products to the job site. In order to do that, we need to have a sustainable business.

There are certain players in this space that I think are trying to play the short game. Right? This is a a space that's been known to, you know, try and grow quick and flip the business so that they could make a few bucks. If you're a builder, particularly a big builder, that is gotta be tempting, but also long term, I think very detrimental because they're reliant on a stable industry, an industry that's focused on the future, becoming more efficient, leveraging technology, being able to provide the best quality, most efficient tools for builders to be able to build homes, and that's us.

a cost associated with it. That's the trick.

Right? They they like any good customer, they want everything, and and they want it nearly free. There's a balance that needs to play out in the market. There are some players that have historically, you know, made lower single digit margins and have been comfortable there, but they're unwilling and, frankly, unable to invest in the type of future for this industry that I think we all deserve as Americans. And so my challenge to them, to my competitors, is get better.

Do better for this industry because we deserve it, and we're going to walk the talk. We're going to continue to invest. We're going to make this a business that's able to support the biggest, the best, the fastest, the most innovative homebuilders in this country. We're gonna help solve problems. So is there a balance there on on margins?

Is there a fight that needs to be had? Yeah. There is. Right? And we're gonna stay in the fight.

But I think in the long run, we are gonna win this, and we're gonna make our business, our industry, our country better because of it.

Yeah. That that makes a lot of sense to me. Okay. And the next question is on the productivity savings, dollars 17,000,000 in the quarter, targeting 70,000,000 to 90,000,000 for the full year. Curious how you kind of view the cadence of the remainder of those savings?

And what sort of actions are you taking to drive those savings through the year?

So I'll let Pete talk to the cadence. But productivity for us is very core to who we

Our our expectation is every quarter, every day, really, our employees are looking for ways to get a little bit better. One step better, one step in the right direction, and that incremental progress as a team has had tremendous cumulative value for us as an organization. We're better. We're more profitable. We're faster.

Candidly, jobs are more fun because we take some of the some of the garbage work out. So I think that's something that we have gotten comfortable with as an organization, we're very good at as an organization. That's what you're seeing in terms of our performance. We do have a little bit of pullback because of the diversion that some of our ERP work is requiring. We've got to be able to put ours in some of our best people to make sure that ramp up goes well.

But the numbers in general continue to be a core part of what we do, and our delivering that is critical to our long term success. Yeah.

And as Peter said, from the way that it's gonna roll in, we've been delivering productivity for several years now, and it's not something that just starts and stops. It's a constant, and we're seeing that productivity that'll roll in throughout the course of the year. I would say ratably, and and it's kind of generally in that kind of linear line. However, with the ERP rollout that we're expecting toward the back half of the year, we may see some of that impact that Peter mentioned in in the back half. But right now, we're expecting more of a ratable realization of it.

Builders FirstSource (BLDR) Q1 2025 Earnings Call Transcript

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