Builders FirstSource, Inc. (NYSE:BLDR) Q2 2023 Earnings Call Transcript

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And as we alluded to with our customer base, there’s confidence in a lot of areas with regard to how consistently they’ve been able to sell through what they’ve been building. It seems pretty obvious that the demand is still out there. And with the reluctance to move out of an existing home, new construction has really been a bright spot, and we’re excited to be leaning into that quite well.

Operator: The next question comes from Adam Baumgarten with Zelman & Associates.

Adam Baumgarten: Just a question on the environment. With the ramping starts you’ve seen year-to-date, are you hearing about any supply chain strains? Maybe not for you guys specifically, but for the industry or maybe an extension in construction cycle times for the builders?

Dave Rush: Yes. I think the supply chain has normalized to a great extent. I think — versus when you saw the COVID-related issues, we’re not seeing anything of that magnitude out there. There’s a couple of product categories where lead times are or slightly extended, premium windows is an example, but still, things are normalizing. Now, with the uptick in demand, there is some adjustments by a lot of our vendor partners on staffing and getting staff back up to the new normal of demand, but those look to be very temporary and very slight. So, I would say, all in all, from a supply chain perspective, we’re in pretty good shape.

Adam Baumgarten: Okay, got it. Good to hear. And then just switching gears to the R&R business, I think you had mentioned increased capacity being a tail and maybe just some more color around that. And then also were there any product categories that really stood out as particularly strong in the R&R channel in the quarter?

Peter Jackson: Yes. So R&R, the way we service R&R, there are a few markets where we’re very focused on it with specific cases. But for the most part, we serve both the Pro new construction and the Pro R&R markets through the same chance. So, you end up with certain time lines where you’ve got pretty heavy demand from one or the other. And obviously, over the past couple of years, the bulk of it has come from the new construction side. So with that pullback a bit, they just opened up more capacity, that Pro R&R business. And as I said in the past, the Pro R&R contractor would generally prefer to use us if we’re available because of all the incremental services and expertise we provide versus a traditional big box or a small player.

The categories, the product categories, I would say we performed well across the outline of products or the family of products within Pro R&R. I would say, just stepping back for the whole business, we’ve continued to see really nice performance in the windows, doors and millwork category. That’s been an outperformer for us all year, and we’re pretty excited about that.

Operator: The next question comes from Mike Dahl with RBC Capital Markets.

Mike Dahl: First question is kind of back on the Multi-Family side. Obviously, there’s been a few big moving pieces. You’ve made some investments both organically and inorganically in that space. And then, Multi-Family as a mix of percentage — mix of the overall market has increased. You look at permit activity that’s now dropping off, and you alluded to some normalization. And in Multi-Family, I think, sales, not just margins looking out to next year. Maybe can you help kind of quantify what you think has been internal versus market shifts? And I don’t know if it’s best framed as what you think your new normal mix of Multi-Family would be when you sort through kind of the ebbs and flows? Maybe a little more quantification there or color?

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