Builders FirstSource, Inc.
For the period ended Jun 30, 2026. Filed Jul 30, 2026.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2026 · Filed Jul 30, 2026
BLDR$62.54-4.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2026-03-31; filed 2026-04-30.
0001193125-26-195140
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-06-30; filed 2026-07-30.
0001193125-26-325451
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 56 previous paragraphs and 66 current paragraphs.
36 unchanged; 18 reworded; 7 added; 2 removed; 0 previous and 5 current paragraphs rearranged.
Tables are not compared: 3 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (7)
Current report
According to the U.S. Census Bureau, actual U.S. total housing starts were 372 thousand for the second quarter of 2026, a decrease of 0.7% compared to the second quarter of 2025. Actual U.S. single-family starts for the second quarter of 2026 were 253 thousand, representing a decrease of 4.2%, compared to the second quarter of 2025.
Current report
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by $29.5 million, or 3.0%, primarily due to lower variable compensation resulting from decreased net sales and lower wages as a result of cost saving actions, partially offset by expenses from our ongoing enterprise resource planning system implementation and higher fuel costs.
Current report
Income Tax Expense. We recorded income tax expense of $56.3 million and $54.3 million in the second quarters of 2026 and 2025, respectively. The increase in the tax expense was primarily driven by a settlement agreement with the IRS regarding the treatment of certain research and development expenses claimed in prior years. As a result of the settlement agreement, we recognized a discrete income tax expense of approximately $43.9 million in the current year period, which significantly increased income tax expense and our effective tax rate. Excluding the impact of the settlement agreement, income tax expense decreased primarily as a result of a decrease in income before income taxes in the current period. Our effective tax rate was 107.4% in the second quarter of 2026, compared to 22.7% in the second quarter of 2025.
Current report
Six Months Ended June 30, 2026 Compared with the Six Months Ended June 30, 2025
Current report
Gross Margin. Gross margin decreased $0.4 billion to $2.0 billion, and our gross margin percentage decreased to 28.2% for the six months ended June 30, 2026, from 30.6% in the six months ended June 30, 2025, a 2.4% decrease. This decrease was primarily driven by a lower housing starts environment and related headwinds.
Current report
Interest Expense, Net. Interest expense was $150.5 million in the six months ended June 30, 2026, an increase of $13.6 million from the six months ended June 30, 2025. Interest expense increased primarily due to additional interest expense from purchase options exercised related to other finance obligations.
Current report
Income Tax Expense. We recorded income tax expense of $45.8 million and $77.5 million for the six months ended June 30, 2026 and 2025, respectively. Current period tax expense was primarily driven by a settlement agreement with the IRS regarding the treatment of certain research and development expenses claimed in prior years. As a result of the settlement agreement, we recognized a discrete income tax expense of approximately $43.9 million in the current year period, which significantly increased income tax expense and decreased our effective tax rate. Excluding the impact of the settlement agreement, income tax expense decreased primarily as a result of a net loss before income taxes in 2026 compared to net income in 2025. Due to the Company’s loss before income taxes and the recognition of the discrete tax expense associated with the IRS settlement agreement, the effective tax rate for the six months ended June 30, 2026 is not meaningful and not comparable to the effective tax rate of 21.6% for the six months ended June 30, 2025.
Removed paragraphs (2)
Previous report
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 report
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.
Reworded paragraphs (18)
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 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.
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 565 locations in 43 states across the United States, which are internally organized into two geographic operating divisions (East and West), which represent the Company’s operating segments. Due to the similar economic characteristics, categories of products, distribution methods and customers, our two operating segments are aggregated into one reportable segment.
Previous 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.
Current wording
Through June 30, 2026, we completed the acquisitions of PBC and Precision Design for an aggregate purchase price of approximately $31.0 million. 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 Part I, Item 1 of this quarterly report on Form 10-Q.
Previous 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.
Current wording
During the six months ended June 30, 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 April 2025 $500.0 million share repurchase authorization.
Previous wording
A composite of third-party sources, including the National Association of Home Builders and John Burns Research and Consulting, are forecasting approximately 1.3 million U.S. total housing starts and 930 thousand U.S. single-family housing starts for 2026. These forecasts represent decreases of 3.8% and 1.1%, respectively, compared to 2025 housing starts data, as reported by the U.S. Census Bureau.
Current wording
A composite of third-party sources, including the National Association of Home Builders and John Burns Research and Consulting, are forecasting approximately 1.3 million U.S. total housing starts and 910 thousand U.S. single-family housing starts for 2026. These forecasts represent decreases of 2.3% and 3.2%, respectively, compared to 2025 housing starts data, as reported by the U.S. Census Bureau.
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 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.
Current wording
Notwithstanding these headwinds, 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, have 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 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
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%.
Current wording
Net Sales. Net sales for the three months ended June 30, 2026, were $3.9 billion, an 8.8% decrease from net sales of $4.2 billion for the three months ended June 30, 2025. Core organic sales decreased net sales by 7.0%, primarily due to a lower housing starts environment and related headwinds, while commodity price deflation decreased net sales by another 2.7%. These decreases were partially offset by an increase in net sales from acquisitions of 0.9%.
Previous 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.
Current wording
We experienced decreased net sales in our manufactured products category primarily due to a lower single-family housing starts environment and commodity price deflation, partially offset by an increase in net sales from acquisitions. Our windows, doors and millwork and specialty building products and services net sales decreased primarily due to decreased single-family activity resulting from a lower housing starts environment, 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 a lower single-family housing starts environment, partially offset by an increase in net sales from acquisitions.
Previous 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.
Current wording
Gross Margin. Gross margin decreased $0.2 billion to $1.1 billion. Our gross margin percentage decreased to 28.1% in the second quarter of 2026 from 30.7% in the second quarter of 2025, a 2.6% decrease. This decrease was primarily driven by a lower housing starts environment and related headwinds.
Previous 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.
Current wording
As a percentage of net sales, selling, general and administrative expenses increased to 24.8%, up from 23.3%, for the three months ended June 30, 2026 and 2025, respectively, primarily attributable to reduced operating leverage.
Previous 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.
Current wording
Interest Expense, Net. Interest expense was $76.1 million in the second quarter of 2026, an increase of $4.1 million from the second quarter of 2025. The increase was primarily due to additional interest expense from purchase options exercised related to other finance obligations.
Previous 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.
Current wording
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $47.8 million, or 2.5%. This decrease was primarily due to lower variable compensation resulting from decreased net sales and lower wages as a result of cost saving actions, partially offset by additional operating expenses from locations acquired within the last twelve months and expenses from our ongoing enterprise resource planning system implementation.
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, 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.
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 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 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.
Current wording
As of June 30, 2026, we had $165.0 million outstanding borrowings under our Revolving Facility, and our net excess borrowing availability was $1.6 billion after being reduced by outstanding letters of credit totaling $76.0 million. Excess availability must equal or exceed a minimum specified amount, currently $180.1 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 June 30, 2026.
Previous 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.
Current wording
Our liquidity at June 30, 2026, was $1.6 billion, consisting of approximately $1.5 billion in net borrowing availability under the Revolving Facility and $0.1 billion cash on hand.
Previous 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.
Current wording
Cash provided by operating activities was $155.5 million for the six months ended June 30, 2026, compared to cash provided by operating activities of $473.4 million for the six months ended June 30, 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 tax liabilities and a decrease in net working capital in the first six months of 2026.
Previous 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.
Current wording
For the six months ended June 30, 2026, cash used in investing activities decreased $952.4 million compared to the six months ended June 30, 2025, primarily due to $859.6 million less cash used for acquisitions.
Previous 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.
Current wording
Cash used in financing activities was $164.5 million for the six months ended June 30, 2026, which consisted primarily of using $303.5 million for repurchases of common stock, partially offset by $165.0 million in net borrowings on the Revolving Facility. Cash provided by financing activities was $519.5 million for the six months ended June 30, 2025, which consisted primarily of a net $739.3 million received for the issuance of the 6.75% 2035 Notes, and $233.0 million net borrowings on the Revolving Facility, offset by $414.0 million for repurchases of common stock.
Previous wording
Information regarding recent accounting pronouncements is discussed in Note 1 to the condensed consolidated financial statements included in Item 1 of this quarterly report on Form 10-Q.
Current wording
Information regarding recent accounting pronouncements is discussed in Note 1 to the condensed consolidated financial statements included in Part I, Item 1 of this quarterly report on Form 10-Q.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Net Sales. Net sales for the six months ended June 30, 2026, were $7.1 billion, a 9.4% decrease from net sales of $7.9 billion for the six months ended June 30, 2025. Core organic sales decreased net sales by 7.5%, primarily due to a lower housing starts environment and related headwinds, while commodity price deflation decreased net sales by another 3.0%. These decreases were partially offset by increased net sales from acquisitions of 1.1%.
Current report — wording carried from elsewhere
The following table shows net sales classified by product category:
Current report — wording carried from elsewhere
Manufactured products and windows, doors and millwork are collectively referred to as total value-added products.
Current report — wording carried from elsewhere
We experienced decreased net sales in our manufactured products category primarily due to a lower single-family housing starts environment and commodity price deflation, partially offset by an increase in net sales from acquisitions. Our windows, doors and millwork and specialty building products and services net sales decreased primarily due to decreased single-family activity resulting from a lower housing starts environment, 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 a lower single-family housing starts environment, partially offset by an increase in net sales from acquisitions.
Current report — wording carried from elsewhere
As a percentage of net sales, selling, general and administrative expenses increased to 26.2% up from 24.3% for the six months ended June 30, 2026 and 2025, respectively, primarily attributable to reduced operating leverage.