DALLAS — Dallas-based Builders FirstSource, the largest supplier of materials to homebuilders in the U.S., cut 2,600 jobs nationwide in response to this year’s decline in new home construction, CEO Dave Flitman told investors in a third-quarter earnings call Tuesday.
The cuts are in response to steep declines in homebuilding as higher mortgage rates and affordability challenges have slashed the pool of available buyers. Atlanta-based PulteGroup reported a 28% decline in orders in the third quarter from a year before, and Taylor Morrison reported a 39% decline in orders.
The job cuts happened mostly at the end of the second quarter and early in the third quarter, Flitman said. The company also put a moratorium on nonessential travel and reduced overtime due to sales declines in September and October.
“This work is never easy, and these are difficult decisions with respect to our respective team members, but we must be responsive to the market deceleration and best position the company to navigate this environment,” Flitman said. “We are proactively managing into the downturn, and we are prepared to act decisively to protect and resize the business as necessary.”
The majority of the layoffs were temporary positions, Michael Neese, senior vice president of investor relations, clarified in a statement provided to The News.
“Given the challenging market environment, we’ve had to take a deep look into our business and make some difficult decisions in order to continue ensuring the company is positioned for long-term growth,” Neese said. “We believe the steps we have taken to right-size the business at this point will allow us to weather the decline in housing starts while effectively serving our shareholders, customers and our team members.”
The company has reduced redundant facilities in some smaller markets where it had multiple locations, but Flitman stressed that the moves will not reduce its manufacturing capacity.
“Our industry is clearly experiencing deceleration versus the prior year, but we are not discouraged,” Flitman said. “We are confident in our ability to navigate through any market environment, and we will remain proactive in implementing our downturn playbook to streamline costs and stay close to our customers and supply partners.”
The company still made about $700 million in profit in the third quarter, up more than 20%, and it saw an almost 5% increase in sales to $5.8 billion. It expects $22.5 billion to $23 billion in net sales for the full year, a 13% to 16% increase from 2021.
Builders FirstSource has repurchased $2 billion in shares this year, and despite the market downturn, the company remains bullish on continuing its acquisition streak. It has purchased 13 companies totaling $2 billion since August 2020, when it bought rival BMC Stock Holdings Inc. of Raleigh.
In the third quarter, the company bought Trussway, a Houston-based floor and roof truss manufacturer. It also acquired Fulcrum Building Group in September, which operates lumberyards and millwork facilities along the Gulf Coast in Florida and Alabama, the company said Tuesday.
In October, it purchased two companies in the Phoenix area, Pima Door & Supply and Sunrise Carpentry, that had about $10 million in sales in 2021.
