BLDR · Q2 2026 Earnings

Bearish

Builders FirstSource

Reported July 30, 2026

30-second summary

Revenue fell 8.8% YoY to $3.86B and missed consensus by 1.5%; adjusted EPS of $1.17 missed the $1.28 estimate by 8.6%. Management cut the FY26 revenue guide midpoint by $700M to $14.4B (from $15.1B) and slashed Adjusted EBITDA to $1.0–1.2B from $1.1–1.5B — the high end came down $300M in a single quarter, and the EBITDA margin high end collapsed 150bps to 8.1%. Q2 EBITDA of $329M cleared the $325M trigger by a whisker but the FY was cut anyway, single-family core organic printed -8.1%, leverage stepped to 3.6x (vs. 2.3x prior-year), and FCF of $32M in Q2 leaves the reaffirmed $0.4B floor mathematically strained. The macro assumptions were also cut: single-family starts assumption moved from "down low-single digits" to "down mid- to high-single digits," and multi-family from "down low-single digits" to "down mid-single digits."

Headline numbers

EPS

Q2 FY2026

$1.17

-8.6% vs est.

Revenue

Q2 FY2026

$3.86B

-8.8% YoY

-1.5% vs est.

Gross margin

Q2 FY2026

28.1%

Free cash flow

Q2 FY2026

$0.03B

Operating margin

Q2 FY2026

3.3%

Key financials

Q2 FY2026

Metric	Q2 FY2026	Q2 FY2025	YoY	Q1 FY2026	QoQ
Revenue	$3.86B	$4.23B	-8.8%	$3.29B	+17.4%
EPS	$1.17	$2.38	-50.8%	$0.27	+333.3%
Gross margin	28.1%	30.7%	-260bps	28.3%	-20bps
Operating margin	3.3%	7.3%	-400bps	0.5%	+280bps
Free cash flow	$0.03B	$0.26B	-87.5%	$0.04B	-25.1%

Guidance

Lowered FY2026 full-year revenue guidance to $14.0–14.8B (from $14.6–15.6B) and cut Adjusted EBITDA to $1.0–1.2B (from $1.1–1.5B), citing persistent housing affordability challenges and weaker second-half demand.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Revenue	FY 2026	$14.6 billion to $15.6 billion	$14.0 billion to $14.8 billion	Midpoint lowered $0.3B (from $15.1B to $14.4B); range compressed downward	Lowered
Adjusted EBITDA	FY 2026	$1.1 billion to $1.5 billion	$1.0 billion to $1.2 billion	Midpoint lowered $0.1B (from $1.3B to $1.1B); range contracted by $0.3B at high end	Lowered
Adjusted EBITDA margin	FY 2026	7.5% to 9.6%	7.1% to 8.1%	Range compressed by 150bps at midpoint (from 8.55% to 7.6%); high-end cut by 150bps	Lowered
Gross Profit margin	FY 2026	27.5% to 29%	27.5% to 28.5%	High end reduced by 50bps (from 29% to 28.5%); midpoint lowered to 28%	Lowered

Reaffirmed unchanged this quarter: Free cash flow ($0.4 billion to $0.5 billion), Productivity savings ($50 million to $70 million)

Segment KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Manufactured products	$0.832B	—	-13.3%
Windows, doors & millwork	$0.955B	—	-9.1%
Value-added products	$1.786B	—	-11.1%
Specialty building products & services	$1.037B	—	-5.1%
Lumber & lumber sheet goods	$1.039B	—	-8.1%

Other KPIs

Q2 FY2026

Segment	Q2 FY2026	Q2 FY2025	YoY
Adjusted EBITDA	$329.3M	$506.1M	—
Adjusted EBITDA margin	8.5%	—	—
Core organic net sales decline	-7.0%	—	—
Single Family core organic decline	-8.1%	—	—
Multi-Family core organic decline	-9.7%	—	—
Repair and Remodel core organic decline	-1.8%	—	—
Productivity savings delivered	$28M	—	—
Net debt to LTM Adjusted EBITDA	3.6x	—	—

Management tone

Q3 25 "compete effectively today, poised to accelerate growth in a normal starts environment" → Q4 25 "operating from a position of strength" → Q1 26 "reinforcing our role as a preferred provider and extending our competitive advantages" → Q2 26 "business model built to perform through the cycle."

The migration from offense to defense is now complete. Three quarters ago management framed BLDR as positioned to accelerate when the market normalized; two quarters ago as operating from strength; last quarter as extending competitive advantages; this quarter the language is explicitly cyclical-defensive. The Q2 release drops any reference to accelerating growth and replaces it with "perform through the cycle" — the vocabulary of a company that no longer expects the macro to help within the guidance horizon.

The macro assumption cuts reinforce this. The single-family starts assumption moved from "down low-single digits" to "down mid- to high-single digits," and multi-family from "down low-single digits" to "down mid-single digits." The release cites "persistent housing affordability challenges" and a "more cautious view of the second half" — the softness is now framed as structural to the affordability equation, not cyclical to the rate environment.

The productivity savings guide has been held at $50–70M. This is the last piece of the FY26 architecture management refuses to touch — every other line item has been cut. That the cost-out lever remains untouched while revenue, EBITDA, EBITDA margin, and gross margin have all been sliced signals management is banking the equity story on execution of the $50–70M savings program. Any narrowing of this range next quarter would remove the last intact piece of the guide.

Answers to last quarter's watch list

Whether Q2 26 Adjusted EBITDA exceeds $325M. Q2 printed $329.3M — cleared the $325M threshold by $4M. But the FY guide was cut anyway, with the midpoint dropping from $1.3B to $1.1B, meaning even an in-line quarterly print wasn't enough to hold the guide. The threshold was met but the read-through was worse than expected — H2 quarterly EBITDA now implied at ~$229M average ($1.0–1.2B FY less H1 $543M actual, split across Q3/Q4).

Resolved negatively

Whether gross margin holds above 27.5%. Q2 gross margin printed 28.1%, 60bps above the 27.5% floor. The floor held, but the high end of the FY guide was cut from 29% to 28.5% — so while the immediate trigger didn't fire, management quietly narrowed the range from the top. Status: Resolved (mixed — floor held, ceiling cut).

Single-family starts trajectory vs. the "down low-single digits" macro assumption. The Q2 release explicitly updated the single-family starts assumption from "down low-single digits" to "down mid- to high-single digits," and multi-family from "down low-single digits" to "down mid-single digits." Single-family core organic at -8.1% ran below even the revised assumption. The FY revenue low end of $14.6B was breached, with the new range at $14.0–14.8B.

Resolved negatively

Leverage trajectory. Net debt / LTM EBITDA printed 3.6x vs. 2.3x in the prior-year period — above the 3.5x threshold that would signal covenant scrutiny and buyback pressure. As LTM EBITDA continues compressing under the new guide, 4.0x by year-end is plausible if buybacks continue at prior pace.

Resolved negatively

FCF run-rate vs. the $0.4B floor. Q2 FCF printed $32M — well below the $100M threshold flagged as the sign the $0.4B floor was still credible. H1 total FCF is $75M against a $0.4B floor requiring $325M in H2. The floor is now mathematically strained, though management reaffirmed it.

Resolved negatively

Whether the productivity savings guide of $50–70M gets touched. It wasn't. The range was held unchanged, with Q2 delivering $28M and YTD delivering $34M per the press release. H2 needs $16–36M more to hit the range. Status: Resolved positively (held) — but this is now the only fully intact piece of the FY guide.

What to watch into next quarter

Whether the FY26 EBITDA low end of $1.0B survives Q3. H1 delivered $543M ($214M + $329M). The new $1.0B FY floor requires $457M from H2 — roughly $229M quarterly average, well below the H1 quarterly average of $272M. If Q3 26 prints below $250M, the $1.0B floor breaks and a third consecutive guide cut becomes the base case.

Whether FCF Q3 26 exceeds $150M. Reaffirmed FY FCF of $0.4B needs $325M from H2 against Q3-Q4. A Q3 print below $150M would make the $0.4B floor mathematically indefensible and force either an implicit cut in the Q4 print or an explicit revision. This is the most likely next disclosure crack.

Whether leverage prints above 3.8x in Q3. 3.6x this quarter vs. 2.3x prior-year — a full turn of deterioration YoY. A print above 3.8x would signal buyback moderation is imminent and remove the per-share support that has cushioned EPS. Above 4.0x, covenant conversations become material.

Whether the productivity savings guide narrows. It's the last untouched line. If Q3 26 tightens the range in either direction, the cost-out story cracks and the equity thesis loses its final defensible pillar.

Whether gross margin holds 27.5%. Q2 at 28.1% left 60bps of cushion above the floor. Another 60bps of compression in Q3 breaks the floor and forces a further gross margin guide cut.

Single-family core organic trajectory toward -5%. Q2 printed -8.1%, below the revised "down mid- to high-single digits" starts assumption. Improvement toward -5% in Q3 would be the first genuine signal that the revenue trough is forming; deterioration back below -10% breaks the new FY revenue floor of $14.0B.

Sources

Builders FirstSource Q2 2026 press release (SEC 8-K exhibit 99.1): https://www.sec.gov/Archives/edgar/data/1316835/000119312526324859/bldr-ex99_1.htm
Builders FirstSource Q1 2026 press release (prior-period guidance baseline): https://www.sec.gov/Archives/edgar/data/1316835/000119312526193923/bldr-ex99_1.htm

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