DALLAS - Builders FirstSource, Inc. (NYSE: BLDR), a prominent player in the Building Products industry with a market capitalization of $17.2 billion and annual revenue of $16.7 billion, has announced the signing of a definitive agreement to acquire Alpine Lumber Company, expanding its presence in the Colorado and New Mexico markets. According to InvestingPro data, the company maintains strong financial health with a GOOD overall rating. Alpine Lumber, an employee-owned company founded in 1963, operates 21 locations and has reported trailing twelve months (TTM) sales of approximately $500 million as of November 2024.
Peter Jackson, President and CEO of Builders FirstSource, emphasized the strategic nature of the acquisition, stating that it aligns with the company's goal to invest in high-growth areas and will enhance its footprint in the West Division. Jackson also highlighted the shared commitment to customer service and the potential benefits for customers, employees, and shareholders.
The acquisition is anticipated to be accretive to Builders FirstSource's adjusted earnings per share in 2025. It will be financed through a mix of existing cash and credit facilities and is expected to close early in the first quarter of 2025, subject to standard closing conditions. The company's strong liquidity position, with a current ratio of 1.77, supports its acquisition strategy. InvestingPro subscribers can access detailed financial analysis and 12 additional ProTips about BLDR's performance and outlook.
Hamid Taha, CEO of Alpine, expressed confidence in the future of the combined entity and noted the deal as a reward for Alpine's employee owners' dedication. Taha will remain with the business during a transition period to facilitate the integration of the two companies.
Class VI Partners and Davis Graham advised Alpine on transaction and legal matters, respectively. Builders FirstSource received financial advice from Rothschild & Co and Centerview Partners LLC, with Alston Bird acting as legal advisor.
Based in Irving, Texas, Builders FirstSource operates in 43 states with approximately 580 locations. The company services customers from strategically located distribution and manufacturing facilities, providing a comprehensive range of building products for new residential construction and repair and remodeling. With trailing twelve-month earnings per share of $10.23 and trading near its Fair Value according to InvestingPro analysis, the company demonstrates solid operational execution. Investors can access the comprehensive Pro Research Report, available for BLDR and 1,400+ other US stocks, for deeper insights into the company's performance and prospects.
The information regarding this acquisition is based on a press release statement.
In other recent news, Builders FirstSource has seen some significant developments. The company's third-quarter sales fell short of expectations, leading to a revision of its full-year 2024 sales guidance. Despite this, the adjusted EBITDA margin of 14.8% surpassed estimates, and the company increased its margin guidance. Stephens has raised the price target for Builders FirstSource shares to $200, maintaining an Overweight rating, indicating confidence in the company's ability to navigate the market and the expectation of a housing recovery.
Builders FirstSource also reported a 6.7% year-on-year decline in net sales, totaling $4.2 billion in Q3 2024. However, the company maintained robust gross margins of nearly 33% and stable adjusted EBITDA margins over 14 quarters. The company also completed six acquisitions, contributing $190 million in annual sales, and announced leadership changes with Peter Jackson stepping in as CEO and Pete Beckmann as CFO.
The company's digital tool orders reached nearly $600 million since launch, although 2024 incremental sales expectations were revised down to $110 million. Builders FirstSource also reported repurchasing $160 million in shares with $5.5 billion to $8.5 billion allocated for capital investments from 2024 to 2026. The company's outlook anticipates modest impacts from recent hurricanes, estimating a $40 million reduction in sales. For 2024, net sales are expected to be between $16.25 billion and $16.55 billion, with adjusted EBITDA projected at $2.25 billion to $2.35 billion.
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