Chief Executive Officer & President, Builders FirstSource, Inc
Builders FirstSource CEO Dave Rush goes one-on-one with Jim Cramer
Builders FirstSource CEO Dave Rush joins 'Mad Money' host Jim Cramer to talk the real estate sector, the state of home builders and more.
About David Rush
David Rush, CEO of Builders FirstSource, has appeared on financial news programs to discuss the housing market and his company's performance. In late 2024, he stated that housing demand is "really strong," attributing this to a long-term underbuilding of homes and low existing home inventory. He noted that national home builders have successfully used interest rate buydowns and smaller home designs to create affordable monthly payments for buyers, calling the market "healthy" though "not robust." Earlier in 2024, Rush highlighted the company's strategic focus on value-added products and automation, stating that Builders FirstSource had invested over $100 million in automation technology to control costs and address affordability concerns. In 2023, Rush described the housing market as stable and expressed cautious optimism, stating that single-family home construction had "bottomed" in the current macro environment. He said that home builder customers had reported better-than-expected demand and that the company was focused on maintaining on-time delivery and investing in manufacturing to address ongoing labor shortages. Rush also discussed the company's capital allocation strategy, which prioritizes maintaining a strong balance sheet, investing in organic growth and acquisitions, and conducting share buybacks when the company is perceived as undervalued.
Transcript (13 segments)
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Jim Cramer0:12
With NVIDIA getting all the attention today, I don't want you to overlook the fact that another one of the market's best performers over the past five years, Builder's First Source, reported its own terrific upside surprises. This supplier of building materials to home builders and contractors delivered a massive 1.06 earnings beat over a 2.40 basis, fueled by dramatically higher than expected sales. On top of that, management gave a terrific full-year forecast and announced a $1 billion buyback on top of the 1.8 billion of stock they retired last year. The stock jumped to an all-time high. I wouldn't be surprised if it's got a lot more room to run. Let's take a closer look with Dave Rusch, CEO of Builder's Source. Welcome to Mad Money.
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David Rush0:55
Thank you, Jim. I appreciate you having me on.
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Jim Cramer1:10
Structure and people aren't moving like that. Then I looked at Builders FirstSource, which works with every big contractor and the big home builders. You guys crushed it. How can you crush it and some of the big dogs not do as well?
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David Rush1:25
I'll tell you what has been amazing. When we came into the year, we were a little cautious as well, and what proved to be a point is housing demand is really strong. And the demand for housing and the fact that housing has been underbuilt kept housing at a relatively stable level. That, coupled with the fact that there's low existing home inventory out there, set the precedent for national builders at least to work on less options. But they got to a price point, a monthly payment, that people that needed homes were able to get into the home. So it's not robust, but they kept it healthy. We just need a little help on the mortgage rate side, and then we really have some positive thoughts that we're looking forward to.
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Jim Cramer2:29
It's incredible. We just had 11 straight interest rate hikes, and Builders FirstSource is one of the best performing stocks in the entire market. That is a tribute to you, to your team, but also a consolidated fragmenting industry and also I think most importantly technology. You've got the technology that lowers the gross margins of the builders. What I'm saying is because you do great technology, they can constraints.
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David Rush3:11
So our value added solutions, our components that are built in a controlled environment, they get delivered to the job site, they're ready to install, addresses labor constraints. It addresses cycle time challenges, and it's a higher quality product. So we have chosen to invest heavily in this segment. We're invested over 100 million in automation technology that also helps us control the cost or lower the cost of these products and address affordability concerns in that fashion. We've looked to ways to help reduce cycle times, give builders a better control over the labor constraint, and more importantly we've continued to add capacity all through this cycle, even though it's a flat that.
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Jim Cramer4:12
It's primarily trust and panel for the shell construction, and then it's our component mill work ready to install doors and then windows. We want to be the best at the stuff that's hardest to do. These are the things that address current builder pain points better than lumber alone. Lumber's always going to be in our DNA. We love lumber. We're good at lumber. But we want to be the best at the value add solution because that's what differentiates us from the competition.
Sir, I've got to tell you, you're brilliant at your use of capital. You are consolidating a fragmented industry in just acquisition after acquisition and it's clearly paying off. But you bought back a ton of starting to learn. As you've seen the stock price recently.
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David Rush5:10
But at the end of the day, we've had a really disciplined capital allocation strategy. We start first and foremost with maintaining our fortress balance sheet. We don't want to ever be overlevered. Then we go with our organic capex needs and the things we want to do to continue to grow organically. Then we look to our M&A strategy, which we've been very successful at from 2015 all the way up to the current year. Last but not least, we'll buy back our shares when we see they're undervalued. But we do that opportunistically and after we've looked at ways to grow the business.
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Jim Cramer5:50
I want people to know, it isn't like you go to the stores, this is not a Home Depot, these are professional stores. There's 570 of them according to your last deck.
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David Rush6:10
Well, we're in 88 of the top 100 MSAs. So we are focused on growing where our customers are growing. But you're right. We tailor our business to the professional contractor. 90-plus percent of our business is delivered to the job site. We have a repair and remodel business, but it's tailored to more of the pro remodeler than it is the weekend warrior DIY consumer. So we believe there's still room to grow both organically and inorganically in the new construction space. And like I say, with currently you a little unaware but I saw the numbers, I said I've got to get this guy on, this guy is just delivering, delivering, delivering. I love NVIDIA but I love people who make us money all the time and there's more than one NVIDIA in this market. There's Dave Rusch who's the CEO of Builders FirstSource. What a performer. And it's so terrific to have you on the show. Thank you.
Thank you, Jim. And thanks to the 30,000 BFS employees that make it happen.
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Jim Cramer7:35
Fantastic. Mad Money's back after the break.