Bufetico
The Builders FirstSource store just south of Newport, Oregon, on Southeast Ash Street in South Beach, closed for good on a Friday in June. Eighteen people worked there. The company had moved the store into that building only two years earlier, from a more visible spot along Highway 101 in Newport. Now it was folding it into its locations in Seaside, McMinnville, Tangent, Coos Bay and Forest Grove. A spokeswoman, Lori Conrad, told the Lincoln Chronicle that many of the employees “have already chosen to transfer to one of those locations.”
The same month, Rob Riesland was closing his Carpet One store in Newport. He’d owned it for ten years. In its best days it had twenty-five people working there, and over the past year closer to a dozen. For him, the Chronicle wrote, it was a hard decision. The paper ran the two closures in one story. That’s two fewer places on that stretch of coast for a contractor or a homeowner to get supplies.
The company didn’t name Newport on its July 30 call with analysts. CEO Peter Jackson said it had consolidated 36 facilities so far in 2026. Builders FirstSource describes itself as the nation’s leading provider of building materials for professional builders, and when fewer houses get started, it has more yards than it needs.
I’m telling you about Newport because I used this company as my clean example of a cyclical at the bottom: revenue down, profit crossing into a loss, and the operations still producing cash. I went back and checked my own example, and it’s less clean than I made it sound.
What the loss is made of
In the first half of this year the company reported a net loss of $51.3 million. Underneath, the business that sells lumber and trusses and windows made money: income from operations was $145.0 million. Take the $150.5 million of interest off and you’re a little under. Take the tax off and you’re at the loss. So after paying its interest the company sat at about breakeven, and then came the tax charge. More on that at the end.
So far, that’s the argument I made, and it still holds. The operations make money; the interest bill has grown past them. What I missed is in the cash flow statement.
Now the payables line
Cash from operations for the half was $155.5 million. Inventory rose by $170.8 million, which eats cash. Accounts payable rose by $318.2 million, which produces it. The company bought more lumber than it sold, and it paid its suppliers for less of it than it received. Net the two and the suppliers were carrying $147 million on top of the inventory they’d shipped. A year earlier the same two lines, 126.6 minus 30.5, netted to $96 million. The cash I called proof that the business “kept collecting more than it spent” was mostly suppliers waiting to be paid.
Riesland told the Chronicle his expenses had been going up by double digits year after year and the store couldn’t grow as fast as they did. Builders FirstSource’s interest bill went up too. Part of how it got through the spring was letting its bills to suppliers run higher than the year before.
This is a seasonal business, and the company says so in the half-year filing: working capital rises in the first and second quarters, when houses get built, and comes back down after the season, when the receivables get collected and the inventory sells. Payables rise every spring and come back down in the fall. In 2025 they rose by June, and over the full year the cash flow statement shows them down $167.2 million. So some of this is just the calendar. But 147 against 96 is more than the calendar explains. The company leaned on its suppliers harder this year than last, in the half when it reported a loss. That’s the one-period cash bump I warned about, and I didn’t check for it in my own example.
What the cash paid for
Cash on hand was $181.8 million in December and $65.7 million in June. In those six months, $303.5 million went to share buybacks. On April 30 the company reported its first-quarter loss. That same day it announced that its board had authorized up to $500 million of buybacks. Since August 2021, it said, it had bought back 49.7 percent of its shares.
The interest comes from the debt. The notes pay interest twice a year, no matter what the season looks like. None of it comes due before 2030, so the principal is years away. On Friday I asked one question about a company at the bottom: can it wait. With nothing coming due for four years, this one can. It doesn’t control the other line, though: operating income against interest, and for six months the operations didn’t quite cover the interest.
Where this breaks
Two half-years aren’t a trend, and I’ve built most of this on one of them. Payables that rise in the spring come back down in the fall, as they did last year. If the second half of the year unwinds the spring’s payables the way the company’s own seasonality note says its working capital usually does, the cash from operations for the full year will look ordinary and this article will look alarmist.
And then there’s what fell. Sales for the half were down 9.4 percent, and the filing says 7.5 of those points came from fewer housing starts and the work that follows them. If it was prices that fell, the company recovers when prices come back. If it was volume, somebody has to start building again, and most of this drop is volume.
The bill that landed in Newport’s last quarter
There’s one more thing in the tax note. Of the $45.8 million of tax in the half, $43.9 million came from a settlement with the IRS, signed in the second quarter, over research and development credits the company had claimed for earlier years. The company ended up with less credit than it had claimed, and the difference got booked as a charge this year. Without it, the half would have come in close to breakeven, and the second quarter, with $52.4 million before tax against $56.3 million of tax, would have shown a profit. The filing says no cash went out for the settlement this period, because the company had already paid more tax for those years than it ended up owing.