The nation's largest supplier of residential building products is reporting products such as lumber are showing signs of growth after a weakened housing market hurt the company's bottom line last year.
Executives at Builders FirstSource, based in Irving, Texas, told investors that building products such as lumber and truss that help connect building materials grew by the single digits in the fourth quarter. That marked a change from the company's third-quarter results that were challenged due to the weakened single-family housing industry.
"There are signs that the single-family market is starting to pick up," Builders FirstSource Chief Financial Officer Peter Jackson told investors during the company's recent earnings call. "Our early cycle products are beginning to show growth, including high single-digits growth in lumber and mid-single-digits growth in truss."
In general, Jackson said the rise in lumber sales is "indicative of the beginning of the turn" in the housing market. Meanwhile, the company's later cycle products, such as doors and trim, have yet to show any meaningful recovery from the weakened market, he added.
CEO Dave Rush told investors it's difficult to project the timing of a rebound, but his conversations with customers are "almost uniformly" optimistic for the year ahead.
"There are differences in when they believe that timing of that rebound will start, and that's all obviously driven by the macro environment to a degree," Rush explained to investors, noting that he expects any recovery to be weighted to the back half of the year. He added, "The long-term demand still is very encouraging."
In addition, Builders FirstSource's multifamily business grew more than 4% in the fourth quarter, driven by the prior year's acquisitions and favorable margins, the company said. Jackson said he anticipates a downturn in the company's multifamily business after developers have finished building their apartment projects moving into 2024.
We're "definitely seeing it turn down starting in the first quarter and then in every quarter during the year for the multifamily business," he added.
The company has a multifamily division that makes up about 13% of its overall business. That downturn in this part of the business is tied to challenges in attracting capital to deals, executives said.
"Just like in single-family, the long-term outlook for multifamily is very positive when you look at the demand curve and what people need [in terms of] housing," Rush said. "We're still very positive on the business."