By Craig Webb, President, Webb Analytics
As Chief Financial Officer of Builders FirstSource, Peter Jackson is paid to collect, manage, and find insights in numbers. On Aug. 6, reporting on the dealer's second quarter results, he had a doozy.
"The size, complexity, and value of the average home has fallen," he told analysts "… We are seeing less dollars per start. As an example, looking at the Phoenix market, we are supplying materials to 45% more homes, but our dollar sales are up only about 15%.”
Anecdotes like that help explain why America's biggest full-service lumberyard no longer predicts its net sales in 2024 will top the $17.1 billion it collected last year (see guidance above). And that decline comes despite a boost from acquisitions.
Other publicly traded construction supply companies couldn't match Jackson's anecdote, but they were alike in downgrading their expectations going forward. The euphemism of the day is "resilience." Here's a look at what various companies are telling stockholders now.
The Home Depot: “Pros tell us that, for the first time, their customers aren’t just deferring because of higher financing costs," CFO Richard McPhail told CNBC. "They’re deferring because of a sense of greater uncertainty in the economy.” The Home Depot now predicts 3% to 4% comp sales decline this year, but total sales will rise 2.5% to 3.5% thanks in part to buying SRS Distribution.
Beacon: Previously, it forecast net sales growth in mid-single-digits after accounting for acquisitions. Now it's expecting net sales growth of 6% to 8%, "split approximately equally between organic growth and M&A."
Fortune Brands: It had prevously predicted repair and remodeling sales would decline by 2% to 4%. Now it's at least a 3% drop and could fall as much as 4%.
Masco: “In the second half of the year, we anticipate ongoing demand headwinds as market conditions remain challenged."
SiteOne Landscape Supply: It warned investors in early June that Organic Daily Sales were trending down 4% to 5%, in part from softer demand. By the end of June, it could report that Organic Sales were down 3% for the entire quarter.
Ferguson: It kept its net sales guidance at "broadly flat," while its adjusted operating margin was trimmed to a maximum of 9.6% from a previously forecast maximum of 9.8%
Tractor Supply: The previous net sales forecast of $14.7 billion to $15.1 billion was narrowed to between $14.8 billion and $15.0 billion. Comp sales used to be forecast at -1.0% to +1.5%; now they're -0.5% to 1.0%.
Weyerhaeuser: In the third quarter, the lumber division "expects lower sales volumes, slightly lower log costs, and higher unit manufacturing costs. And for the distribution division, "the company anticipates slightly lower results compared to the second quarter."
Trex: In April, it forecast revenues of $1.215 billion to $1.235 billion. In August, it lowered the full-year forecast to $1.13 billion to $1.15 billion. It added: "We are pleased to be able to maintain our full year EBITDA margin guidance range at 30.0% to 30.5%. SG&A as a percentage of net sales, is projected to be flat with the prior year at approximately 16%, depreciation and amortization is estimated between $53 million and $55 million, and our tax rate is expected to be in the 25% to 26% range.
AZEK: It now expects the Residential segment will have net sales of $1.351 billion to $1.365 billion. Previously, it had forecast net sales of $1.385 billion to $1.425 billion.
LL Flooring: It has filed for protection from creditors under Chapter 11 of the federal bankruptcy laws.
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