Builders FirstSource Inc

Previous wording

Statements in this report and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including statements about expected market share gains, forecasted financial performance, industry and business outlook or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. All forward-looking statements are based upon currently available information and the Company’s current assumptions, expectations and projections about future events. Forward-looking statements are by nature inherently uncertain, and actual results or events may differ materially from the results or events described in the forward-looking statements as a result of many factors. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements involve risks and uncertainties, many of which are beyond the Company’s control or may be currently unknown to the Company, that could cause actual events or results to differ materially from the events or results described in the forward-looking statements; such risks or uncertainties include those related to the Company’s growth strategies, including acquisitions, organic growth and digital strategies, or the dependence of the Company’s revenues and operating results on, among other things, the homebuilding industry and, to a lesser extent, repair and remodel activity, which in each case is dependent on economic conditions, including inflation, interest rates, consumer confidence, labor and supply shortages, and also lumber and other commodity prices. The Company may not succeed in addressing these and other risks. Further information regarding the risk factors that could affect our financial and other results can be found in the risk factors section of the Company’s 2023 Form 10-K filed with the Securities and Exchange Commission. Consequently, all forward-looking statements in this report are qualified by the factors, risks and uncertainties contained therein.

Current wording

Statements in this report and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including statements about expected market share gains, forecasted financial performance, industry and business outlook or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. All forward-looking statements are based upon currently available information and the Company’s current assumptions, expectations and projections about future events. Forward-looking statements are by nature inherently uncertain, and actual results or events may differ materially from the results or events described in the forward-looking statements as a result of many factors. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Forward-looking statements involve risks and uncertainties, many of which are beyond the Company’s control or may be currently unknown to the Company, that could cause actual events or results to differ materially from the events or results described in the forward-looking statements; such risks or uncertainties include those related to the Company’s growth strategies, including acquisitions, organic growth and digital strategies, or the dependence of the Company’s revenues and operating results on, among other things, the homebuilding industry and, to a lesser extent, repair and remodel activity, which in each case is dependent on economic conditions, including inflation, interest rates, consumer confidence, labor and supply shortages, and also lumber and other commodity prices, which may be impacted by changes in tariffs. The Company may not succeed in addressing these and other risks. Further information regarding the risk factors that could affect our financial and other results can be found in the risk factors section of the Company’s 2024 Form 10-K filed with the Securities and Exchange Commission. Consequently, all forward-looking statements in this report are qualified by the factors, risks and uncertainties contained therein.

Previous wording

We are a leading supplier and manufacturer of building materials, manufactured components and construction services to professional contractors, sub-contractors and consumers. The Company operates approximately 580 locations in 43 states across the United States, which are internally organized into geographic operating divisions. Due to the similar economic characteristics, categories of products, distribution methods and customers, our operating divisions are aggregated into one reportable segment.

Current wording

We are a leading supplier and manufacturer of building materials, manufactured components and construction services to professional contractors, sub-contractors and consumers. The Company operates approximately 595 locations in 43 states across the United States, which are internally organized into geographic operating divisions. Due to the similar economic characteristics, categories of products, distribution methods and customers, our operating divisions are aggregated into one reportable segment.

Previous wording

We offer an integrated solution to our customers, providing manufacturing, supply and installation of a full range of structural and related building products. Our manufactured products include our factory-built roof and floor trusses, wall panels and stairs, vinyl windows, custom millwork and trim, as well as engineered wood that we design, cut, and assemble for each home. We also assemble interior and exterior doors into pre-hung units. Additionally, we supply our customers with a broad offering of professional-grade building products not manufactured by us, such as dimensional lumber and lumber sheet goods and various window, door and millwork lines, along with a full complement of specialty building products. Our full range of construction-related services includes professional installation, turn-key framing and shell construction, and spans our product categories.

Current wording

We offer an integrated solution to our customers, providing manufacturing, supply and installation of a full range of structural and related building products. Our manufactured products include our factory-built roof and floor trusses, wall panels, vinyl windows, custom millwork and trim, as well as engineered wood that we design, cut, and assemble for each home. We also assemble interior and exterior doors into pre-hung units. Additionally, we supply our customers with a broad offering of professional-grade building products not manufactured by us, such as dimensional lumber and lumber sheet goods and various window, door and millwork lines, along with a full complement of specialty building products. Our full range of construction-related services includes professional installation, turn-key framing and shell construction that spans our product categories.

Previous wording

Through September 30, 2024, we have completed the acquisitions of Quality Door, Hanson Truss, RPM, Schoeneman, TRSMI, Western Truss, CRi, Wyoming Millwork, Sunrise Wood Designs, Reno Truss and High Mountain for an aggregate purchase price of approximately $265.4 million, net of cash acquired. Among other opportunities, these acquisitions further expand our market footprint and provide additional operations in our value-add product categories. These transactions are described in further detail in Note 2 to these condensed consolidated financial statements included in Item 1 of this quarterly report on Form 10-Q.

Current wording

Through March 31, 2025, we have completed the acquisitions of Alpine Lumber and Cluss Lumber for an aggregate purchase price of approximately $828.0 million, net of cash acquired. Among other opportunities, these acquisitions further expand our market footprint and provide additional operations in our value-added product categories. These transactions are described in further detail in Note 2 to the condensed consolidated financial statements included in Item 1 of this quarterly report on Form 10-Q.

Previous wording

On August 5, 2024, the Company’s board of directors authorized a new repurchase plan of up to $1.0 billion of the Company’s outstanding shares of common stock. During the nine months ended September 30, 2024, under the previous program and the current authorization, the Company repurchased 6.8 million shares at a weighted average price of $171.37 per share, inclusive of applicable fees and taxes, for a total cost of $1.2 billion.

Current wording

During the three months ended March 31, 2025, the Company repurchased 0.1 million shares at a weighted average price of $131.51 per share, inclusive of applicable fees and taxes, for a total cost of $12.8 million. Subsequent to March 31, 2025, the Company repurchased an additional 3.3 million shares at a weighted average price of $118.27 per share, inclusive of applicable fees and taxes, for a total cost of $390.9 million under the August 2024 authorization. On April 30, 2025, the Company’s Board of

Previous wording

According to the U.S. Census Bureau, actual U.S. total housing starts were 0.4 million for thethird quarter of 2024, a decrease of 3.5% compared to the third quarter of 2023, and 1.0 million for the nine months ended September 30, 2024, a 3.4% decrease compared to the nine months ended September 30, 2023. Actual U.S. single-family starts for the third quarter of 2024 were 0.3 million, a decrease of 0.5% compared to the third quarter of 2023, and 0.8 million in the first nine months of 2024, a 10.1% increase compared to the same period a year ago. A composite of third-party sources, including the National Association of Home Builders, are forecasting 1.3 million U.S. total housing starts and 1.0 million single-family starts for 2024, which is a decrease of 5.3% and an increase of 5.6%, respectively from 2023. In addition, the Home Improvement Research Institute is forecasting sales in the professional repair and remodel end market to increase approximately 0.1% in 2024 compared to 2023.

Current wording

According to the U.S. Census Bureau, actual U.S. total housing starts were 0.3 million for thefirst quarter of 2025, a decrease of 1.6% compared to the first quarter of 2024. Actual U.S. single-family starts for the first quarter of 2025 were 0.2 million, a decrease of 5.7% compared to the first quarter of 2024. A composite of third-party sources, including the National Association of Home Builders and John Burns Research and Consulting, are forecasting 1.4 million U.S. total housing starts and 1.0 million U.S single-family housing starts for 2025, which are decreases of 1.3% from 2024.

Previous wording

We believe the long-term outlook for the housing industry is positive and that the housing industry remains underbuilt due to growth in the underlying demographics compared to historical new construction levels. Despite the challenges posed by higher interest rates and inflation that have impacted demand and affordability for consumers, investors and builders, new home sales remain resilient due to low inventory of existing homes for sale, builder incentives and modifications to home size and complexity. We believe we are well-positioned to take advantage of favorable long-term industry trends and to strategically increase our market share, both organically and through acquisitions. We will continue to focus on working capital by closely monitoring the credit exposure of our customers, remaining focused on maintaining the right level of inventory and by working with our vendors to improve payment terms and pricing on our products. We strive to achieve the appropriate balance of short-term expense control while maintaining the expertise and capacity to grow the business as market conditions expand.

Current wording

We believe the housing industry’s long-term outlook is positive and that it remains underbuilt due to growth in the underlying demographics compared to historical new construction levels. However, macroeconomic uncertainty, including fluctuations in interest rates, stock market volatility, impact of changes in tariffs and inflation, may continue to pressure near-term housing industry demand as homes are less affordable for consumers, investors and builders. We believe we are well-positioned to take advantage of the construction activity in our markets and to increase our market share, which may include strategic acquisitions. We will continue to focus on working capital by closely monitoring the credit exposure of our customers, remaining focused on maintaining the right level of inventory and by working with our vendors to improve payment terms. We strive to achieve the appropriate balance of short-term expense control while maintaining the expertise and capacity to grow the business as market conditions change.

Previous wording

Disruptions in our supply chain;

Current wording

Disruptions in our supply chain; and

Previous wording

The production schedules of our customers; and

Current wording

The production schedules of our customers.

Previous wording

Net Sales. Net sales for the three months ended September 30, 2024, were $4.2 billion, a 6.7% decrease from net sales for the three months ended September 30, 2023. Core organic sales decreased net sales by 7.2%, primarily due to a continued downward trend in the multi-family customer segment and decreased single-family activity due to lower housing starts, while commodity price deflation decreased net sales by another 2.9%. These decreases were partially offset by increases in net sales from acquisitions and increased selling days of 2.0% and 1.4%, respectively.

Current wording

Net Sales. Net sales for the three months ended March 31, 2025, were $3.7 billion, a 6.0% decrease over net sales of $3.9 billion for the three months ended March 31, 2024. Core organic sales decreased net sales by 8.1%, due to decreases in the multi-family and single-family customer segments, while commodity price deflation and one fewer selling day decreased net sales by another 1.0% and 1.6%, respectively. These decreases were partially offset by an increase in net sales from acquisitions of 4.7%.

Previous wording

We experienced decreased net sales in our lumber and lumber sheet goods primarily due to commodity deflation. Our manufactured products sales declined as multi-family continues to trend downward. For the comparable period, specialty building products and services and windows, doors and millwork sales remained consistent.

Current wording

We experienced decreased net sales in our manufactured products category primarily due to continued normalization in multi-family. Our windows, doors, and millwork sales declined primarily due to price normalization. For the comparable period, specialty building products and services and lumber and lumber sheet goods sales remained relatively consistent.

Previous wording

Gross Margin. Gross margin decreased $0.2 billion to $1.4 billion. Our gross margin percentage decreased to 32.8% in the third quarter of 2024 from 34.9% in the third quarter of 2023, a 2.1% decrease. This decrease was driven by ongoing multi-family and core organic margin normalization.

Current wording

Gross Margin. Gross margin decreased $0.2 billion to $1.1 billion. Our gross margin percentage decreased to 30.5% in the first quarter of 2025 from 33.4% in the first quarter of 2024, a 2.9% decrease. This decrease was primarily driven by single-family and multi-family margin normalization, as well as a below-normal starts environment.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $2.9 billion, a decrease of $3.8 million, or 0.1% from 2023. This decrease was primarily due to decreased variable compensation on decreased sales and reduced intangible amortization, partially offset by additional operating expenses from locations acquired within the last twelve months and asset write-offs.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $4.5 million, or 0.5%, primarily due to additional operating expenses from additional locations acquired within the last twelve months and our ongoing enterprise resource planning system implementation, partially offset by lower variable compensation due to decreased sales, and lower intangible amortization.

Previous wording

As a percentage of net sales, selling, general and administrative expenses increased to 22.6%, up from 20.7%, for the three months ended September 30, 2024 and 2023, respectively, primarily attributable to reduced operating leverage.

Current wording

As a percentage of net sales, selling, general and administrative expenses increased to 25.4%, up from 23.8%, for the three months ended March 31, 2025 and 2024, respectively, primarily attributable to reduced operating leverage.

Previous wording

Interest Expense, Net. Interest expense was $54.3 million in the third quarter of 2024, an increase of $4.1 million from the third quarter of 2023. The increase was due to higher average debt balances.

Current wording

Interest Expense, Net. Interest expense was $64.9 million in the first quarter of 2025, an increase of $16.6 million from the first quarter of 2024. The increase was primarily due to higher average debt balances.

Previous wording

Income Tax Expense. We recorded income tax expense of $248.8 million and $350.7 million for the nine months ended September 30, 2024 and 2023, respectively. The decrease in the tax expense was primarily driven by a decrease in income before income taxes in the current period. Our effective tax rate was 21.9% in the first nine months ended September 30, 2024, a decrease from 22.8% in the first nine months ended September 30, 2023, primarily related to an increase in our stock-based compensation windfall benefit, partially offset by permanent and other differences.

Current wording

Income Tax Expense. We recorded income tax expense of $23.2 million and $66.5 million in the first quarters of 2025 and 2024, respectively. The decrease in the tax expense was primarily driven by a decrease in income before income taxes in the current period. Our effective tax rate was 19.4% in the first quarter of 2025, a decrease from 20.4% in the first quarter of 2024, primarily related to favorable permanent and other differences, partially offset by a lower stock-based compensation windfall benefit.

Previous wording

As of September 30, 2024, we had no outstanding borrowings under our Revolving Facility, and our net excess borrowing availability was $1.7 billion after being reduced by outstanding letters of credit totaling $65.4 million. Excess availability must equal or exceed a minimum specified amount, currently $180.0 million, or we are required to meet a fixed charge coverage ratio of 1.00 to 1.00. We were not in violation of any covenants or restrictions imposed by any of our debt agreements at September 30, 2024.

Current wording

As of March 31, 2025, we had $775.0 million outstanding borrowings under our Revolving Facility, and our net excess borrowing availability was $944.3 million after being reduced by outstanding letters of credit totaling $80.7 million. Excess availability must equal or exceed a minimum specified amount, currently $180.0 million, or we are required to meet a fixed charge coverage ratio of 1.00 to 1.00. We were not in violation of any covenants or restrictions imposed by any of our debt agreements at March 31, 2025.

Previous wording

Our liquidity at September 30, 2024, was $2.1 billion, which consists of net borrowing availability under the Revolving Facility and cash on hand.

Current wording

Our liquidity at March 31, 2025 was $1.1 billion, which consists of net borrowing availability under the Revolving Facility and cash on hand.

Previous wording

Cash provided by operating activities was $1.5 billion for the nine months ended September 30, 2024, compared to cash provided by operating activities of $1.7 billion for the nine months ended September 30, 2023. The decrease in cash provided by operating activities was largely the result of lower net income and changes in the timing of accounts payable outflows, partially offset by cash inflows from accounts receivable in the first nine months of 2024.

Current wording

Cash provided by operating activities was $132.3 million for the three months ended March 31, 2025, compared to cash provided by operating activities of $317.2 million for the three months ended March 31, 2024. The decrease in cash provided by operating activities was largely the result of lower net income in the first three months of 2025.

Previous wording

For the nine months ended September 30, 2024, the cash used in investing increased $58.8 million when compared to the prior year primarily due to using $114.0 million more cash for acquisitions, offset by $62.8 million less cash for net purchases of property and equipment.

Current wording

For the three months ended March 31, 2025, cash used in investing activities increased $761.0 million compared to the three months ended March 31, 2024, primarily due to using an additional $766.1 million of cash for acquisitions.

Previous wording

Cash used in financing activities was $0.7 billion for the nine months ended September 30, 2024, which consisted primarily of $1.2 billion for repurchases of common stock and $0.5 billion net payments on the Revolving Facility, offset by a net $1.0 billion received for the issuance of the 6.375% 2034 Notes. Cash used in financing activities was $1.2 billion for the nine months ended September 30, 2023, which consisted primarily of $1.6 billion for repurchases of common stock, offset by $0.4 billion in net borrowings on the Revolving Facility.

Current wording

Cash provided by financing activities was $741.5 million for the three months ended March 31, 2025, which consisted primarily of $775.0 million net borrowings on the Revolving Facility. Cash provided by financing activities was $465.2 million for the three months ended March 31, 2024, which consisted primarily of a net $987.5 million received for the issuance of the 6.375% 2034 Notes, offset by $464.0 million in net payments on the Revolving Facility.