Builders FirstSource Q2 2026 sales fell 8.8% to $3.86B as single-family volumes and lumber prices dropped; a one-off $43.9M IRS charge tipped it to a $3.9M loss, and 2026 guidance was cut again.
Revenue
$3.9B
-8.8% YoY
Net income
-$3.9M
Diluted EPS
$-0.04
Operating margin
3.3%
Overview: fewer new homes, cheaper lumber, and a tax bill push BLDR to a small loss
Builders FirstSource is the largest US supplier of building materials to professional homebuilders: it sells lumber and panels, makes roof trusses and wall panels in its own plants, and supplies windows, doors, trim and installation services. Because most of its sales go into newly built single-family homes, its results track the housing cycle closely.
In the second quarter of 2026 (April–June), net sales fell 8.8% to $3.86 billion. The company breaks that decline into three parts:
Core organic sales −7.0% — lower volumes at locations it already owned, which management attributes "primarily [to] a lower housing starts environment and related headwinds."
Commodity deflation −2.7% — lumber and panel prices were lower than a year ago, so the same boards bring in fewer dollars.
Acquisitions +0.9% — sales from businesses bought in the past year (mainly Alpine Lumber, Cluss Lumber and Truckee Tahoe, bought in the first half of 2025 for about $892 million).
The company swung to a net loss of $3.9 million ($0.04 per share) from a profit of $185.0 million ($1.66 per share) a year earlier. Two things drove that: weaker trading (operating income fell 58.7%) and a one-off $43.9 million tax charge from a settlement with the IRS over research-and-development expenses claimed in earlier years. The 10-Q says the settlement required no cash payment in the quarter, because the company had already paid more tax than was ultimately owed.
Key metrics
Metric
Q2 2026
Q2 2025
YoY Change
Net sales
$3,862.5M
$4,234.1M
−8.8%
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Gross margin is revenue minus the direct cost of the goods sold. Operating margin is the share of revenue left after running the business, before interest and tax. "n/m" = not meaningful because profit turned into a loss. Adjusted EBITDA figures, the prior-year adjusted EBITDA margin and the adjusted EPS below come from the company's Q2 earnings release (8-K Exhibit 99.1, July 30, 2026), not the 10-Q; they are non-GAAP measures that strip out items such as depreciation, amortization, stock pay and the tax settlement.
First half of 2026 (six months to June 30): net sales $7,149.6M (−9.4%), gross margin 28.2% (vs. 30.6%), operating income $145.0M (vs. $495.7M), and a net loss of $51.3M, or $(0.47) per share, versus a profit of $281.3M, or $2.50 per share. First-half core organic sales fell 7.5%, commodity deflation took off another 3.0%, and acquisitions added 1.1%.
Prior-year category figures were reclassified by the company to match its current groupings (e.g. Q2 2025 windows/doors/millwork restated up 2.0%, specialty down 2.3%), so compare these rather than figures from last year's filing.
The weakest category was manufactured products (−13.3%), which the 10-Q says fell "primarily due to a lower single-family housing starts environment and commodity price deflation." That matters because this is the company's highest-value work: factory-built trusses and wall panels replace on-site labor for builders, and the CEO names "our value-added solutions" as one of the levers management is leaning on. Value-added products slipped from 47.5% to 46.2% of sales, so the mix moved slightly the wrong way.
Lumber and sheet goods fell 8.1%, with the filing citing commodity deflation first and fewer single-family starts second. Specialty products held up best (−5.1%). Over the full half-year, lumber was down 10.4% and manufactured products 13.6%.
By end market: single-family is the drag, and it fell faster than starts
The earnings release breaks the 7.0% core organic decline down by the type of customer project:
End market
Organic change
Contribution to total decline
Single-family new homes
−8.1%
−5.6 pts
Multi-family (apartments)
−9.7%
−1.0 pt
Repair & remodel / other
−1.8%
−0.4 pt
Single-family explains about four-fifths of the organic drop. Two points stand out:
BLDR's single-family sales fell roughly twice as fast as national starts. The 10-Q cites Census Bureau data showing US single-family starts of 253,000 in Q2 2026, down 4.2% from a year earlier (total starts 372,000, −0.7%). The filing does not explain the gap. Possible reasons include the lag between a home being started and its materials being delivered, where in the country the company operates, and lower prices, but the company does not quantify any of these.
Multi-family worsened sharply. It fell only 1.4% in Q1 2026 (per the Q1 release) and 9.7% in Q2. Single-family improved slightly, from −11.1% in Q1 to −8.1% in Q2.
Repair and remodel, a smaller business for BLDR, stayed close to flat.
Why margins fell
Gross margin dropped 2.6 points to 28.1%. The 10-Q gives a short explanation: "primarily driven by a lower housing starts environment and related headwinds." The filing does not split that into price versus volume or mix effects.
Costs came down, but not as fast as sales. SG&A (selling, general and administrative expenses — overhead such as wages, branches and trucks) fell only 3.0%, to $958.3M. That included lower bonuses and "lower wages as a result of cost saving actions," partly offset by spending on a new company-wide software system (ERP) and higher fuel costs. Because sales fell 8.8%, SG&A rose from 23.3% to 24.8% of sales. The company calls this "reduced operating leverage": fixed costs are spread over less revenue. The release reports about $28M of productivity savings in Q2 ($34M so far in 2026), but that was not enough to offset the lost gross margin of $212M.
Interest expense rose $4.1M to $76.1M, which the filing ties to purchase options exercised on other finance obligations.
The tax charge, and what earnings looked like without it
Pre-tax income was $52.4M, but tax expense was $56.3M, an effective tax rate of 107.4%. The $43.9M IRS settlement accounts for most of that tax. Taking the settlement out of the reported figures, Q2 would have shown net income of roughly $40M. That is our own subtraction, not a company figure, and it is still about 78% below last year's $185.0M. So the loss is mostly a tax event, but the fall in profit is not.
The company's own adjusted EPS, which also adds back amortization of acquired intangibles (about $72M this quarter) and other items, was $1.17 versus $2.38 (−50.8%), per the earnings release.
Cash, debt and buybacks
Buybacks paused in Q2. The company bought back 3.3M shares for $302.9M in Q1 (average $92.25). In Q2 it repurchased no shares under its program; the only shares acquired were withheld from employee stock awards for tax. On April 29 the board approved a new $500M authorization, which replaces the ~$200M left on the old one, and all of it remained unused at quarter-end. Earlier buybacks still reduced diluted share count 3.3% year over year, to 107.6M.
Cash generation weakened. Q2 operating cash flow was $68.0M and free cash flow (cash from operations minus net capital spending) was $32.2M, compared with $255.0M a year earlier, per the release. For the half-year, operating cash flow was $155.5M versus $473.4M. Cash on hand fell to $65.7M, and the company drew $165M on its revolving credit line.
Leverage is up sharply. Per the release, net debt was $4.6B, or 3.6x trailing-12-month adjusted EBITDA, up from 2.3x a year ago. Most of that rise comes from lower EBITDA rather than more debt. Liquidity was $1.6B, and the company was within all debt covenants. Its notes are fixed-rate and mature in 2030–2035, so there is no near-term refinancing need.
Guidance: cut for the second time this year
With the Q2 results, management lowered its full-year 2026 outlook. The CFO cited "persistent housing affordability challenges and softer demand trends" and "a more cautious view of the second half":
2026 outlook
Q1 release (Apr 30)
Q2 release (Jul 30)
Net sales
$14.6B – $15.6B
$14.0B – $14.8B
Gross margin
27.5% – 29.0%
27.5% – 28.5%
Adjusted EBITDA
$1.1B – $1.5B
$1.0B – $1.2B
Adjusted EBITDA margin
7.5% – 9.6%
7.1% – 8.1%
Free cash flow
$0.4B – $0.5B
$0.4B – $0.5B (unchanged)
Single-family starts (its markets)
down low-single digits
down mid- to high-single digits
The new outlook assumes lumber averages $390–$410 per thousand board feet, multi-family starts down mid-single digits, repair & remodel down 1%, and acquisitions adding about 1% to sales. The 10-Q separately cites industry forecasts (NAHB, John Burns) of about 1.3 million total US housing starts (−2.3%) and 910,000 single-family starts (−3.2%) for 2026. The company's own assumption for its markets is weaker than that national forecast.
Takeaway: The headline loss is mostly a one-off, non-cash IRS charge. The underlying problem is volume. Single-family organic sales fell 8.1% while national single-family starts fell 4.2%, gross margin lost 2.6 points, and management now expects single-family starts in its markets to fall mid- to high-single digits instead of low-single digits. Buybacks have been paused since Q1 and leverage is at 3.6x EBITDA, so the company has less financial room than a year ago.
Outlook: what the numbers imply
First-half sales were $7.15B. To hit the new full-year range, second-half sales need to come in at roughly $6.85–7.65B, meaning the low end allows for a weaker second half than the first. The unchanged free-cash-flow target of $0.4–0.5B depends on the usual seasonal release of cash in the second half: receivables and inventory, which rose by $236M and $171M in the first half, turn back into cash as the building season winds down. The target is also helped by lower cash taxes under the 2025 tax law (the "One Big Beautiful Bill"), which the 10-Q expects to lift operating cash flow.
The main signals to watch in Q3 are whether single-family organic sales stop falling faster than national starts, whether gross margin holds inside the new 27.5–28.5% range, and whether buybacks resume under the $500M authorization. Buybacks returning would suggest management is comfortable with leverage near 3.6x. A continued pause would suggest the priority has shifted to protecting the balance sheet until housing demand recovers.
Source: Builders FirstSource Form 10-Q for the quarter ended June 30, 2026 (filed July 30, 2026). End-market breakdown, adjusted EBITDA, adjusted EPS, free cash flow, leverage, productivity savings and guidance are from the company's Q2 2026 earnings release (Form 8-K Exhibit 99.1, July 30, 2026); prior guidance and Q1 end-market figures are from the Q1 2026 earnings release (April 30, 2026).