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 and technology strategies, including our ability to drive growth by incorporating artificial intelligence and machine learning solutions into our platform, 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, home size and affordability, 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.

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 (the “Exchange Act”). Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by the Company’s 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 and technology strategies, including the Company’s ability to drive growth by incorporating artificial intelligence and machine learning solutions into its platform, 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, home size and affordability, consumer confidence, labor and supply shortages, tariffs and duties 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 the Company’s financial and other results can be found in the risk factors section of the Company’s 2025 Form 10-K and may also be described from time to time in the other reports the Company files 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 provider of building materials for professional builders in new residential construction and repair and remodeling. We deliver integrated homebuilding solutions by manufacturing, supplying, and installing a full range of structural and related building products. The Company operates approximately 585 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 provider of building materials for professional builders in new residential construction and repair and remodeling. We deliver integrated homebuilding solutions by manufacturing, supplying, and installing a full range of structural and related building products. The Company operates approximately 570 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

Our leading network of strategically located manufacturing facilities produces factory-built roof and floor trusses, wall panels, vinyl windows, custom millwork and trim, as well as engineered wood that we design and cut specifically for each home. We also assemble interior and exterior doors into pre-hung units for easy installation. Additionally, we distribute a wide range of building products, including lumber, sheet goods, windows, doors, millwork, and specialty items. Our services, which vary by market, include professional installation, turnkey framing, and shell construction. Supported by the latest construction innovations and digital solutions, we help drive greater efficiency across homebuilding.

Current wording

Our leading network of strategically located manufacturing facilities produces factory-built roof and floor trusses, wall panels, vinyl windows, custom millwork and trim, manufactured and semi-custom modular homes, as well as engineered wood that we design and cut specifically for each home. We also assemble interior and exterior doors into pre-hung units for easy installation. Additionally, we distribute a wide range of building products, including lumber, sheet goods, windows, doors, millwork, and specialty items. Our services, which vary by market, include, among others, professional installation, turnkey framing, and shell construction. Supported by the latest construction innovations and digital solutions, we help drive greater efficiency across homebuilding.

Previous wording

Through September 30, 2025, we have completed the acquisitions of Alpine Lumber, Cluss Lumber, Truckee Tahoe, and St. George Truss for an aggregate purchase price of approximately $910.8 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 and allow us to better serve our customers in these markets. 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.

Current wording

On January 2, 2026, we completed the acquisition of PBC for an aggregate purchase price of approximately $13.0 million, net of cash acquired. Among other opportunities, this acquisition further expands our market footprint and provides additional operations in our value-added product categories. This transaction is 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 April 30, 2025, the Company’s board of directors authorized a new repurchase plan of up to $500.0 million of the Company’s outstanding shares of common stock. The new repurchase plan replaced the Company’s prior $1.0 billion share repurchase authorization announced in August 2024, which had approximately $100.0 million remaining under its authorization.

Current wording

During the three months ended March 31, 2026, the Company repurchased 3.3 million shares at a weighted average price of $92.25 per share, for a total cost of $302.9 million, inclusive of applicable fees and taxes. On April 29, 2026, the Company’s Board of Directors authorized the repurchase of up to $500.0 million of the Company’s outstanding shares of common stock, inclusive of the approximately $200.0 million remaining under the Company’s prior $500.0 million April 30, 2025, share repurchase authorization.

Previous wording

As a result of the U.S. federal government shutdown, September 2025 housing starts have not been published as of the date of this quarterly report on Form 10-Q. According to the U.S. Census Bureau, as of August 2025, the seasonally adjusted annual rate (“SAAR”) U.S. total housing starts were 1.3 million and the SAAR U.S. single-family housing starts were 890 thousand, a decrease of 6.0% and 11.7%, respectively, compared to the comparable period of 2024. A composite of third-party sources, including the National Association of Home Builders and John Burns Research and Consulting, are forecasting 1.3 million U.S. total housing starts and 940 thousand U.S single-family housing starts for 2025, which are decreases of 2.5% and 7.4%, respectively from 2024.

Current wording

Housing starts data for the full first quarter of 2026 are not presented in this Quarterly Report on Form 10-Q due to the timing of the U.S. Census Bureau’s publication. According to the U.S. Census Bureau, as of January 2026, the seasonally adjusted annual rate U.S. single-family housing starts were 935 thousand, representing a decrease of 6.5%, compared to the comparable period of 2025.

Previous 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 accelerate growth and capture market share as industry conditions improve in the long term. We will continue to focus on working capital by closely monitoring the credit exposure of our customers, 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.

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 relative to historical new construction levels. However, consumer confidence and macroeconomic uncertainty, including domestic and global conditions, fluctuations in interest rates, stock market volatility, and the impact of changes in tariffs and inflation, has adversely impacted, and may continue to adversely impact near-term housing industry demand as homes are less affordable for consumers, investors and builders. Despite these challenges, we believe we are well-positioned to grow and capture market share as industry conditions improve in the long term. Our focus remains on managing the business through this cycle by maintaining disciplined working capital practices, including closely monitoring the credit exposure of our customers, maintaining appropriate inventory levels, 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.

Previous wording

The following table sets forth the percentage relationship to net sales of certain costs, expenses and income items:

Current wording

The following table sets forth the percentage relationship to net sales of certain costs, expenses and income (loss) items:

Previous wording

Net Sales. Net sales for the three months ended September 30, 2025, were $3.9 billion, a 6.9% decrease from net sales of $4.2 billion for the three months ended September 30, 2024. Core organic sales decreased net sales by 10.6%, primarily due to decreases in the multi-family and single-family customer segments, while commodity price deflation decreased net sales by another 1.1%. These decreases were partially offset by an increase in net sales from acquisitions of 4.8%.

Current wording

Net Sales. Net sales for the three months ended March 31, 2026, were $3.3 billion, a 10.1% decrease from net sales of $3.7 billion for the three months ended March 31, 2025. Core organic sales decreased net sales by 8.3%, primarily due to a lower starts environment, while commodity price deflation decreased net sales by another 3.3%. These decreases were partially offset by an increase in net sales from acquisitions of 1.5%.

Previous wording

We experienced decreased net sales in our manufactured products category primarily due to decreased single-family activity due to lower housing starts and decreased multi-family activity, partially offset by an increase in net sales from acquisitions. Our windows, doors, and millwork declined primarily due to decreased single-family activity due to lower housing starts. Our lumber and lumber sheet goods category decreased primarily due to lower single-family housing starts and commodity price deflation, partially offset by an increase in net sales from acquisitions. For the comparable period, specialty building products remained relatively consistent.

Current wording

Excluding lumber and lumber sheet goods, we experienced decreased net sales in all product categories primarily due to decreased single-family activity resulting from lower housing starts, partially offset by an increase in net sales from acquisitions. Our lumber and lumber sheet goods category decreased primarily due to commodity price deflation and lower single-family housing starts, partially offset by an increase in net sales from acquisitions.

Previous wording

Gross Margin. Gross margin decreased $0.2 billion to $1.2 billion. Our gross margin percentage decreased to 30.4% in the third quarter of 2025 from 32.8% in the third quarter of 2024, a 2.4% decrease. This decrease was primarily driven by a below-normal starts environment.

Current wording

Gross Margin. Gross margin decreased $0.2 billion to $0.9 billion. Our gross margin percentage decreased to 28.3% in the first quarter of 2026 from 30.5% in the first quarter of 2025, a 2.2% decrease. This decrease was primarily driven by a lower housing starts environment.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $12.4 million, or 1.3%, primarily due to additional operating expenses from locations acquired within the last twelve months and our ongoing enterprise resource planning (“ERP”) system implementation, partially offset by lower variable compensation due to decreased sales and the absence of prior year asset write-offs.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $18.4 million, or 2.0%, primarily due to decreased variable compensation as a result of decreased sales, partially offset by additional operating expenses from locations acquired within the last twelve months.

Previous wording

As a percentage of net sales, selling, general and administrative expenses increased to 24.6%, up from 22.6%, for the three months ended September 30, 2025 and 2024, respectively, primarily attributable to reduced operating leverage.

Current wording

As a percentage of net sales, selling, general and administrative expenses increased to 27.8%, up from 25.4%, for the three months ended March 31, 2026 and 2025, respectively, primarily attributable to reduced operating leverage.

Previous wording

Interest Expense, Net. Interest expense was $69.3 million in the third quarter of 2025, an increase of $15.0 million from the third quarter of 2024. The increase was primarily due to higher average debt balances.

Current wording

Interest Expense, Net. Interest expense was $74.4 million in the first quarter of 2026, an increase of $9.5 million from the first quarter of 2025. The increase was primarily due to higher average debt balances.

Previous wording

Income Tax Expense. We recorded income tax expense of $37.1 million and $89.0 million in the third 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 23.3% in the third quarter of 2025, a decrease from 23.8% in the third quarter of 2024, primarily related to decreased permanent and other differences.

Current wording

Income Tax Expense (Benefit). We recorded income tax benefit of $10.5 million and income tax expense of $23.2 million in the first quarters of 2026 and 2025, 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 18.1% in the first quarter of 2026, a decrease from 19.4% in the first quarter of 2025, primarily related to an increase in stock-based compensation benefit.

Previous wording

Our Revolving Facility is primarily used for working capital, general corporate purposes and funding capital expenditures and growth opportunities. In addition, we may use borrowings under the Revolving Facility to facilitate debt repayment and consolidation, and to fund share repurchases. Availability under the Revolving Facility is determined by a borrowing base. Our borrowing base consists of accounts receivable, inventory, and qualified cash that all meet specific criteria contained within the credit agreement, minus agent specified reserves. Net excess borrowing availability is equal to the maximum borrowing amount minus outstanding borrowings and letters of credit.

Current wording

Our Revolving Facility is primarily used for working capital, general corporate purposes and funding capital expenditures and growth opportunities. In addition, we may use borrowings under the Revolving Facility to facilitate debt repayment and consolidation, invest in strategic acquisitions, and to fund share repurchases. Availability under the Revolving Facility is determined by a borrowing base. Our borrowing base consists of accounts receivable, inventory, and qualified cash that all meet specific criteria contained within the credit agreement, minus agent specified reserves. Net excess borrowing availability is equal to the maximum borrowing amount minus outstanding borrowings and letters of credit.

Previous wording

As of September 30, 2025, we had no outstanding borrowings under our Revolving Facility, and our net excess borrowing availability was $1.8 billion after being reduced by outstanding letters of credit totaling $79.6 million. Excess availability must equal or exceed a minimum specified amount, currently $187.0 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, 2025.

Current wording

As of March 31, 2026, we had $200.0 million outstanding borrowings under our Revolving Facility, and our net excess borrowing availability was $1.4 billion after being reduced by outstanding letters of credit totaling $76.0 million. Excess availability must equal or exceed a minimum specified amount, currently $170.4 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, 2026.

Previous wording

Our liquidity at September 30, 2025, 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, 2026, was $1.5 billion, which consists of net borrowing availability under the Revolving Facility and cash on hand.

Previous wording

Cash provided by operating activities was $1.0 billion for the nine months ended September 30, 2025, compared to cash provided by operating activities of $1.5 billion for the nine months ended September 30, 2024. The decrease in cash provided by operating activities was largely the result of lower net income in the first nine months of 2025.

Current wording

Cash provided by operating activities was $87.5 million for the three months ended March 31, 2026, compared to cash provided by operating activities of $132.3 million for the three months ended March 31, 2025. The decrease in cash provided by operating activities was primarily driven by a net loss in the current period compared to net income in the prior-year period, partially offset by an increase in deferred income taxes and a decrease in net working capital in the first three months of 2026.

Previous wording

For the nine months ended September 30, 2025, cash used in investing activities increased $0.6 billion compared to the nine months ended September 30, 2024, primarily due to using an additional $0.6 billion of cash for acquisitions.

Current wording

For the three months ended March 31, 2026, cash used in investing activities decreased $854.2 million compared to the three months ended March 31, 2025, primarily due to using $812.4 million less cash for acquisitions.

Previous wording

Cash provided by financing activities was $0.3 billion for the nine months ended September 30, 2025, which consisted primarily of a net $0.7 billion received for the issuance of the 6.75% 2035 Notes, offset by $0.4 billion for repurchases of common stock. 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 in net payments on the Revolving Facility, offset by a net $1.0 billion received for the issuance of the 6.375% 2034 Notes.

Current wording

Cash used in financing activities was $113.0 million for the three months ended March 31, 2026, which consisted primarily of $200.0 million in net borrowings on the Revolving Facility, offset by $300.1 million for repurchases of common stock. 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.