Builders FirstSource (NYSE: BLDR) swings to Q2 loss as housing softens
Builders FirstSource, Inc. reported softer results for the quarter ended June 30, 2026. Net sales were approximately $3.9 billion, down 8.8% from a year earlier, as core organic sales fell in a weaker housing starts environment and lumber commodity price deflation further reduced revenue. Gross margin declined to 28.1% from 30.7%, and income from operations fell to $128.5 million from $311.3 million.
Higher interest expense and a discrete income tax charge of about $43.9 million from an IRS settlement on prior research and development credits pushed the quarter to a small net loss of $3.9 million, versus net income of $185.0 million a year ago. For the first six months of 2026, net sales fell 9.4% to about $7.1 billion and the company recorded a net loss of $51.3 million compared with $281.3 million of net income in 2025, as gross margin compressed to 28.2%.
Builders FirstSource closed two bolt‑on acquisitions for roughly $31.0 million and repurchased 3.3 million shares for $302.9 million in the first half. Liquidity remained sizable with about $1.6 billion of total liquidity, including $65.7 million of cash and $1.56 billion of unused Revolving Facility capacity. The company expects recently enacted tax legislation, including permanent 100% bonus depreciation and domestic research cost expensing, to reduce future cash tax payments and increase operating cash flows over time.
Positive
- None.
Negative
- Q2 2026 swung to a net loss of $3.9 million versus prior-year profit.
- Six-month results deteriorated to a net loss of $51.3 million from $281.3 million income.
- Operating cash flow fell to $155.5 million from $473.4 million year over year.
- Gross margin compressed to 28.2% for six months 2026 from 30.6% in 2025.
Filing Explained
The new equity plans create future share-issuance capacity, but no Employee Stock Purchase Plan shares had been purchased or issued by June 30, 2026.
The June 30, 2026 Form 10-Q is an unaudited quarterly report and records two approved equity plans at a capacity stage: 2.5 million shares were available under the 2026 Equity Incentive Plan, while no Employee Stock Purchase Plan shares had been purchased or issued, so plan-related dilution is potential rather than current.
The 2026 Equity Incentive Plan permits options, stock appreciation rights, restricted stock, restricted stock units and other stock- or cash-based awards; 3.6 million shares were reserved, with 2.5 million available for issuance at quarter-end.
Under the Employee Stock Purchase Plan, eligible employees may buy shares at 85% of the lesser of the stock's value at the start or end of an offering period. If additional shares are issued, the total share count can rise and existing holders' percentage ownership can decline.
At
The company also reorganized its internal structure from three geographic divisions to two, East and West, while continuing to present one reportable segment.
The next stated milestone for the Employee Stock Purchase Plan is its initial offering period during the third quarter of 2026; the filing does not report purchases or issuances as of quarter-end.
Key Figures
Key Terms
core organic sales financial
commodity price deflation financial
discrete income tax expense financial
bonus depreciation financial
domestic research cost expensing financial
multi-period excess earnings method financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
How did Builders FirstSource (BLDR) perform financially in Q2 2026?
What drove the year-over-year decline in BLDR’s Q2 2026 results?
How did the IRS settlement affect BLDR’s Q2 2026 earnings?
What were Builders FirstSource (BLDR)’s cash flow trends in the first half of 2026?
What is BLDR’s liquidity and debt position as of June 30, 2026?
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
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Securities registered pursuant to Section 12(b) of the Act:
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NYSE Texas |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).Yes ☐ No
The number of shares of the issuer’s common stock, par value $0.01, outstanding as of July 23, 2026, was
BUILDERS FIRSTSOURCE, INC.
Index to Form 10-Q
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PART I — FINANCIAL INFORMATION |
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Item 1. |
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Financial Statements (Unaudited) |
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Condensed Consolidated Statements of Operations (Unaudited) for the Three and Six Months Ended June 30, 2026 and 2025 |
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Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2026, and December 31, 2025 |
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Condensed Consolidated Statements of Cash Flows (Unaudited) for the Six Months Ended June 30, 2026 and 2025 |
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Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) for the Three and Six Months Ended June 30, 2026 and 2025 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Quantitative and Qualitative Disclosures About Market Risk |
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Item 4. |
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Controls and Procedures |
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PART II — OTHER INFORMATION |
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Item 1. |
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Legal Proceedings |
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Item 1A. |
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Risk Factors |
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Item 2. |
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Unregistered Sales of Equity Securities and Use of Proceeds |
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Item 5. |
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Other Information |
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Item 6. |
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Exhibits |
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2
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
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Six Months Ended |
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(in thousands, except per share amounts) |
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2026 |
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2025 |
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2026 |
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2025 |
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Net sales |
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Cost of sales |
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Income from operations |
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Interest expense, net |
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Income (loss) before income taxes |
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Income tax expense |
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Net income (loss) |
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Net income (loss) per share: |
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Basic |
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Diluted |
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Weighted average common shares: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except par value amounts) |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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Accounts receivable, less allowances of $ |
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Inventories, net |
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Contract assets |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets, net |
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Goodwill |
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Intangible assets, net |
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Deferred income taxes |
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Other assets, net |
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Total assets |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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Accrued liabilities |
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Contract liabilities |
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Current portion of operating lease liabilities |
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Current maturities of long-term debt |
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Total current liabilities |
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Noncurrent portion of operating lease liabilities |
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Long-term debt, net of current maturities, discounts and issuance costs |
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Deferred income taxes |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 11) |
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Stockholders’ equity: |
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Preferred stock, $ |
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— |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings (accumulated deficit) |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Six Months Ended |
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(in thousands) |
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2026 |
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2025 |
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Cash flows from operating activities: |
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Net income (loss) |
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$ |
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$ |
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
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Deferred income taxes |
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Stock-based compensation expense |
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Other non-cash adjustments |
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Changes in assets and liabilities, net of assets acquired and liabilities assumed: |
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Receivables |
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Inventories, net |
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Contract assets |
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Other current assets |
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Other assets and liabilities |
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Accounts payable |
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Accrued liabilities |
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Contract liabilities |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Cash used for acquisitions, net of cash acquired |
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Purchases of property, plant and equipment |
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Proceeds from sale of property, plant and equipment |
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Cash used for equity investments |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Borrowings under revolving credit facility |
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Repayments under revolving credit facility |
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Proceeds from long-term debt and other loans |
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— |
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Repayments of long-term debt and other loans |
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( |
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( |
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Payments of loan costs |
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— |
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Payments of acquisition-related deferred and contingent consideration |
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Tax withholdings on and exercises of equity awards |
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Repurchase of common stock |
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Net cash (used in) provided by financing activities |
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Net change in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosures of cash flow information: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes |
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Supplemental disclosures of non-cash activities: |
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Right-of-use assets obtained in exchange for operating lease obligations |
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$ |
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$ |
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Accrued consideration for acquisitions |
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Accrued purchases of property, plant and equipment |
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Accrued excise tax on repurchases of common stock |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
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Common Stock |
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Additional |
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Retained Earnings |
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(in thousands) |
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Shares |
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Amount |
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Paid-in Capital |
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(Accumulated Deficit) |
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Total |
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Balance at December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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Vesting of restricted stock units |
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( |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Repurchase of common stock (1) |
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( |
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( |
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— |
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( |
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( |
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Exercise of stock options |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
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( |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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Balance at March 31, 2025 |
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Vesting of restricted stock units |
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( |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Repurchase of common stock (1)(3) |
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( |
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( |
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( |
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( |
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( |
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Exercise of stock options |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
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( |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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Balance at June 30, 2025 |
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$ |
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$ |
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$ |
— |
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$ |
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Balance at December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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Vesting of restricted stock units |
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( |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Repurchase of common stock (2)(3) |
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( |
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( |
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( |
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( |
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Exercise of stock options |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
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( |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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( |
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Balance at March 31, 2026 |
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— |
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Vesting of restricted stock units |
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( |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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— |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
) |
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— |
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( |
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— |
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( |
) |
Net loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Balance at June 30, 2026 |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Builders FirstSource, Inc., a Delaware corporation formed in
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the dates and periods presented. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. Intercompany transactions are eliminated in consolidation.
The Condensed Consolidated Balance Sheet as of December 31, 2025, is derived from the audited consolidated financial statements but does not include all disclosures required by Generally Accepted Accounting Principles in the United States of America (“GAAP”). The Condensed Consolidated Balance Sheet as of December 31, 2025, and the unaudited condensed consolidated financial statements included herein should be read in conjunction with the more detailed audited consolidated financial statements for the year ended December 31, 2025, included in our most recent annual report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”). Accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in our 2025 Form 10-K.
Business Combinations
When they meet the requirements under ASC 805, Business Combinations, merger and acquisition transactions are accounted for using the acquisition method, and accordingly the results of operations of the acquiree are included in the Company’s consolidated financial statements from the acquisition date. The consideration transferred is allocated to the identifiable assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with any excess recorded as goodwill. Transaction-related costs are expensed in the period the costs are incurred. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill.
Segments
We offer an integrated solution to our customers providing manufacturing, supply, and installation of a full range of structural and related building products. Given the span and depth of our geographical reach, our locations are organized into geographical divisions. During the second quarter of 2026, the Company realigned its geographical divisional structure from
Our operating segments have similar customers, products and services, and distribution methods. Due to these similarities, along with the similar economic profitability achieved across our operating segments, we aggregate our
Cloud Computing Arrangements
We assess cloud computing arrangements to determine whether the contract meets the definition of a service contract or conveys a software license. When cloud computing arrangements meet the definition of a service contract, we capitalize expenditures for implementation, set-up, and other upfront costs incurred. Once the implementation of a cloud computing arrangement is complete and ready for its intended use, we amortize the costs over the expected term of the hosting arrangement using the straight-line method to the same income statement line as the associated cloud operating expenses. We had capitalized costs, net of amortization, included in other current assets totaling $
7
Comprehensive Income (Loss)
Comprehensive income (loss) is equal to net income (loss) for all periods presented.
Equity Investments
The Company’s equity investments are accounted for using equity method accounting and are included in other assets, net in the accompanying Condensed Consolidated Balance Sheets and are not considered significant to the Company.
Reclassifications
The prior period revenue by product category amounts disclosed in Note 3 have been reclassified to conform to current year presentation. These reclassifications had no impact on net income (loss), total assets and liabilities, stockholders’ equity or cash flows as previously reported.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application and early adoption is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. The standard applies to costs incurred to develop or obtain software for internal use. ASU 2025-06 amends the existing standard that refers to various stages of a software development project to align better with current software development methods, such as agile programming. Under the new standard, entities will commence capitalizing eligible costs when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The amendments in ASU 2025-06 are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods, with early adoption permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
2. Business Combinations
During the first six months of 2026, we completed the acquisitions of Premium Building Components, Inc. (“PBC”) and Precision Design and Trim LLC (“Precision Design”) for a combined total of approximately $
During the first six months of 2025, we completed the acquisitions of Alpine Lumber Company (“Alpine Lumber”), O.C. Cluss Lumber Company (“Cluss Lumber”) and Truckee Tahoe Lumber (“Truckee Tahoe”) for a combined total of approximately $
The acquisitions were funded with a combination of cash on hand and borrowings under our $
Pro forma financial information for the acquisitions discussed above for 2026 and 2025 are not presented as these acquisitions did not have a material impact on our results of operations, individually or in the aggregate for each respective period.
The following table summarizes the aggregate fair values of the assets acquired and liabilities assumed for acquisitions during the periods ended June 30, 2026, and June 30, 2025:
8
|
|
Total Acquisitions |
|
|||||
|
|
2026 |
|
|
2025 |
|
||
|
|
(in thousands) |
|
|||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Accounts receivable |
|
|
|
|
|
|
||
Other receivables |
|
|
|
|
|
|
||
Inventories |
|
|
|
|
|
|
||
Other current assets |
|
|
|
|
|
|
||
Property, plant and equipment |
|
|
|
|
|
|
||
Operating lease right-of-use assets |
|
|
|
|
|
|
||
Finance lease right-of-use assets |
|
|
|
|
|
|
||
Intangible assets |
|
|
|
|
|
|
||
Other assets |
|
|
|
|
|
|
||
Total assets |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Accounts payable |
|
|
|
|
|
|
||
Accrued liabilities |
|
|
|
|
|
|
||
Contract liabilities |
|
|
|
|
|
|
||
Operating lease liabilities |
|
|
|
|
|
|
||
Finance lease liabilities |
|
|
|
|
|
|
||
Total liabilities |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Goodwill |
|
|
|
|
|
|
||
Total purchase consideration |
|
|
|
|
|
|
||
Accrued contingent consideration and purchase price adjustments |
|
|
( |
) |
|
|
( |
) |
Less: cash acquired |
|
|
|
|
|
( |
) |
|
Total cash consideration |
|
$ |
|
|
$ |
|
||
3. Revenue
The following table disaggregates our net sales by product category:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Manufactured products |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Windows, doors and millwork |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Specialty building products and services |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Lumber and lumber sheet goods |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net sales |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
As our product category alignment continues to be refined, we have reclassified prior periods’ net sales by product category to conform to current period presentation. The impact to each of the prior periods’ net sales for manufactured products, windows, doors and millwork, specialty building products and services, and lumber and lumber sheet goods was
The timing of revenue recognition, invoicing, and cash collection results in accounts receivable, unbilled receivables, contract assets, and contract liabilities. Contract assets include unbilled amounts when the revenue recognized exceeds the amount billed to the customer, and amounts representing a right to payment from previous performance that is conditional on something other than passage of time, such as retainage. Contract liabilities consist of customer advances and deposits, and deferred revenue.
Through June 30, 2026, and 2025, we recognized as revenue approximately
9
4. Net Income (Loss) per Common Share
Net income (loss) per common share (“EPS”) is calculated in accordance with the Earnings per Share topic of the FASB Accounting Standards Codification, which requires the presentation of basic and diluted EPS. Basic EPS is computed using the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common shares.
The table below presents the calculation of basic and diluted EPS:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
|
|
(in thousands, except per share amounts) |
|
|||||||||||||
Numerator: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Denominator: |
|
|
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|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding, basic |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Dilutive effect of options and RSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Weighted average shares outstanding, diluted |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
Diluted |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Antidilutive and contingent RSUs excluded from diluted EPS |
|
|
|
|
|
|
|
|
|
|
|
|
||||
5. Goodwill
The following table sets forth the changes in the carrying amount of goodwill:
|
|
(in thousands) |
|
|
Balance as of December 31, 2025 (1) |
|
$ |
|
|
Acquisitions |
|
|
|
|
Balance as of June 30, 2026 (1) |
|
$ |
|
|
(1) Goodwill is presented net of historical accumulated impairment losses of $
In 2026, the change in the carrying amount of goodwill is attributable to the acquisitions completed during the period. The amount allocated to goodwill is attributable to the assembled workforce, synergies, and expected growth from the expanded product and service offerings of the acquisitions. The goodwill recognized from the current year acquisitions is expected to be deductible and amortized ratably over a
As a result of the division realignment discussed in Note 1, the Company reassessed its reporting unit structure and determined that the division realignment resulted in a change in the composition of its reporting units. Accordingly, goodwill was reassigned to the affected reporting units using a relative fair value approach. In connection with the realignment, the Company performed qualitative impairment assessments both before and after the change in reporting unit structure. For each assessment, the Company evaluated all relevant events or circumstances that could impact estimates for fair value and determined it was more likely than not that the fair value of each reporting unit exceeded their carrying amount and that no impairment existed as of June 30, 2026.
6. Intangible Assets
The following table presents intangible assets as of:
|
|
June 30, 2026 |
|
|
December 31, 2025 |
|
||||||||||
|
|
Gross |
|
|
Accumulated Amortization |
|
|
Gross |
|
|
Accumulated Amortization |
|
||||
|
|
(in thousands) |
|
|||||||||||||
Customer relationships |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
Developed technology |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Trade names |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Non-compete agreements |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Total intangible assets |
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
||
10
In connection with the current year acquisitions, we recorded customer relationship intangible assets of $
During the three and six months ended June 30, 2026, we recorded amortization expense in relation to the above-listed intangible assets of $
During the second quarter of 2026, as part of the Company’s reorganization disclosed in Note 1, we derecognized certain intangible assets, including customer relationships, developed technology, trade names, and non-compete agreements as they were fully amortized, resulting in a decrease in the gross carrying amount of the intangible assets and the related accumulated amortization. The derecognition had no impact on net income (loss), stockholders’ equity, or cash flows.
The following table presents the estimated amortization expense for intangible assets for the years ending December 31:
|
|
(in thousands) |
|
|
2026 (from July 1, 2026) |
|
$ |
|
|
2027 |
|
|
|
|
2028 |
|
|
|
|
2029 |
|
|
|
|
2030 |
|
|
|
|
Thereafter |
|
|
|
|
Total future intangible amortization expense |
|
$ |
|
|
7. Accrued Liabilities
Accrued liabilities consisted of the following as of:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
(in thousands) |
|
|||||
Accrued payroll and other employee related expenses |
|
$ |
|
|
$ |
|
||
Self-insurance reserves |
|
|
|
|
|
|
||
Accrued business and other taxes |
|
|
|
|
|
|
||
Accrued interest |
|
|
|
|
|
|
||
Accrued rebates payable |
|
|
|
|
|
|
||
Accrued professional service fees |
|
|
|
|
|
|
||
Other |
|
|
|
|
|
|
||
Total accrued liabilities |
|
$ |
|
|
$ |
|
||
8. Long-Term Debt
Long-term debt consisted of the following as of:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
(in thousands) |
|
|||||
Revolving credit facility (1) |
|
$ |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
|
|
|
|
|
|
|||
Other finance obligations |
|
|
|
|
|
|
||
Finance lease obligations |
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
Unamortized debt discount/premium and debt issuance costs |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
||
Less: current maturities of long-term debt |
|
|
|
|
|
|
||
Long-term debt, net of current maturities, discounts and issuance costs |
|
$ |
|
|
$ |
|
||
11
(1) The weighted average interest rate was
The Company’s Revolving Facility and outstanding senior unsecured notes are discussed in more detail in our 2025 Form 10-K.
Fair Value
As of June 30, 2026, and December 31, 2025, the Company does not have any financial instruments that are measured at fair value on a recurring basis. We have elected to report the value of our Revolving Facility,
The following table presents the fair value of each such series of notes as of June 30, 2026, which was determined using Level 2 inputs based on market prices:
|
|
(in thousands) |
|
|
|
$ |
|
||
|
|
|
||
|
|
|
||
|
|
|
||
|
|
|
||
We were not in violation of any covenants or restrictions imposed by any of our debt agreements at June 30, 2026.
9. Employee Stock-Based Compensation
2026 Equity Incentive Plan
On May 14, 2026, the Company’s stockholders approved the Builders FirstSource, Inc. 2026 Equity Incentive Plan (the “2026 Plan”). Under the 2026 Plan, the Company is authorized to grant awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), other stock-based awards, and cash-based awards. As of June 30, 2026, the Company had reserved
Employee Stock Purchase Plan
On May 14, 2026, the Company’s stockholders approved the Builders FirstSource, Inc. Employee Stock Purchase Plan (the “ESPP”). Eligible employees may purchase shares through payroll deductions at a purchase price equal to
Time Based Restricted Stock Unit Grants
In the first six months of 2026, our board of directors granted
12
Performance, Market and Service Condition Based Restricted Stock Unit Grants
In the first six months of 2026, our board of directors granted
Expected volatility (Company) |
|
Expected volatility (peer group median) |
|
Correlation between the Company and peer group median |
|
Expected dividend yield |
|
Risk-free rate |
The expected volatilities and correlation are based on the historical daily returns of our common stock and the common stocks of the constituents of our peer group over the most recent period equal to the measurement period. The expected dividend yield is based on our history of not paying regular dividends in the past and our current intention to not pay regular dividends in the foreseeable future. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant and has a term equal to the measurement period.
10. Income Taxes
A reconciliation of the statutory federal income tax rate to our effective rate for continuing operations is provided below:
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Statutory federal income tax rate |
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
Discrete federal research and development credits, including non-cash settlement agreement |
|
|
|
|
|
|
|
( |
) |
|
|
|
|||
State income taxes, net of federal income tax |
|
|
|
|
|
|
|
|
|
|
|
||||
Stock-based compensation windfall/shortfall |
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Permanent differences and other |
|
( |
) |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Effective tax rate for continuing operations |
|
% |
|
|
% |
|
|
( |
)% |
|
|
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|
||||
During the three months ended June 30, 2026, the Company entered into a settlement agreement with the Internal Revenue Service (the “IRS”) regarding the treatment of certain research and development expenses claimed in prior years. As a result of the settlement agreement, the Company recognized a discrete income tax expense of approximately $
We base our estimate of deferred tax assets and liabilities on current tax laws and rates. In certain cases, we also base our estimate on business plan forecasts and other expectations about future outcomes. Changes in existing tax laws or rates could affect our actual tax results, and future business results may affect the amount of our deferred tax liabilities or the valuation of our deferred tax assets over time. Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods, as well as the residential homebuilding industry’s cyclicality and sensitivity to changes in economic conditions, it is possible that actual results could differ from the estimates used in previous analyses. These differences could have a material impact on our consolidated results of operations or financial position.
On July 4, 2025, H.R.1 - One Big Beautiful Bill was enacted into law (the “Act”). The Act makes permanent key elements of the Tax Cuts and Jobs Act, including
13
11. Commitments and Contingencies
As of June 30, 2026, we had outstanding letters of credit totaling $
The Company has a number of known and threatened construction defect legal claims. While these claims are generally covered under the Company’s existing insurance programs to the extent any loss exceeds the deductible, there is a reasonable possibility of loss that is not able to be estimated at this time because (i) many of the proceedings are in the discovery stage, (ii) the outcome of future litigation is uncertain, and/or (iii) the nature of the claims is complex. Although the Company cannot estimate a reasonable range of loss based on currently available information, the resolution of these matters could materially affect the Company's financial position, results of operations or cash flows.
In addition, we are involved in various other claims and lawsuits incidental to the conduct of our business in the ordinary course. We carry insurance coverage in amounts in excess of our self-insured retention that we believe to be reasonable under the circumstances and that may or may not cover any or all of our liabilities in respect to such claims and lawsuits. Although the ultimate disposition of these other proceedings cannot be predicted with certainty, management believes the outcome of any such claims that are pending or threatened, either individually or on a combined basis, will not materially affect our consolidated financial position, cash flows or results of operations. However, there can be no assurances that future adverse judgments and costs would not be material to our results of operations or liquidity for a particular period.
12. Significant Segment Expenses
As discussed in Note 1, during the second quarter of 2026, the Company reorganized the structure of its internal organization from
The primary measures reviewed by the CODM, including revenue, gross margin, and income (loss) before income taxes, are shown in these condensed consolidated financial statements. The CODM uses these measures to assess performance for the reportable segment and to decide how to allocate resources. Gross margin and income (loss) before income taxes are driven by the segment’s significant expense items of cost of sales and compensation and benefits, as well as other segment items. Cost of sales is shown in these condensed consolidated financial statements. Compensation and benefits, which are reported within selling, general, and administrative expenses in these condensed consolidated financial statements, were $
14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto for the year ended December 31, 2025, included in our 2025 Form 10-K. The following discussion and analysis should also be read in conjunction with the unaudited condensed consolidated financial statements appearing elsewhere in this report.
Cautionary Statement
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.
COMPANY OVERVIEW
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.
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.
RECENT DEVELOPMENTS
Business Combinations
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.
Company Shares Repurchases
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.
CURRENT OPERATING CONDITIONS AND OUTLOOK
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.
15
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.
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.
SEASONALITY AND OTHER FACTORS
Our first and fourth quarters have historically been, and are generally expected to continue to be, adversely affected by weather, causing reduced construction activity during these quarters. In addition, quarterly results historically have reflected, and are expected to continue to reflect, fluctuations from period to period arising from the following:
The composition and level of working capital typically change during periods of increasing sales as we carry more inventory and receivables. Working capital levels typically increase in the first and second quarters of the year due to higher sales during the peak residential construction season. These increases may result in negative operating cash flows during this peak season, which historically have been financed through available cash and borrowing availability under credit facilities. Generally, collection of receivables and reduction in inventory levels following the peak building and construction season positively impact cash flow.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to net sales of certain costs, expenses and income (loss) items:
|
|
Three Months Ended |
|
|
Six Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of sales |
|
|
71.9 |
% |
|
|
69.3 |
% |
|
|
71.8 |
% |
|
|
69.4 |
% |
Gross margin |
|
|
28.1 |
% |
|
|
30.7 |
% |
|
|
28.2 |
% |
|
|
30.6 |
% |
Selling, general and administrative expenses |
|
|
24.8 |
% |
|
|
23.3 |
% |
|
|
26.2 |
% |
|
|
24.3 |
% |
Income from operations |
|
|
3.3 |
% |
|
|
7.4 |
% |
|
|
2.0 |
% |
|
|
6.3 |
% |
Interest expense, net |
|
|
1.9 |
% |
|
|
1.7 |
% |
|
|
2.1 |
% |
|
|
1.7 |
% |
Income tax expense |
|
|
1.5 |
% |
|
|
1.3 |
% |
|
|
0.6 |
% |
|
|
1.0 |
% |
Net income (loss) |
|
|
(0.1 |
)% |
|
|
4.4 |
% |
|
|
(0.7 |
)% |
|
|
3.6 |
% |
Three Months Ended June 30, 2026 Compared with the Three Months Ended June 30, 2025
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%.
16
The following table shows net sales classified by product category:
|
Three Months Ended June 30, |
|
|
|
|
||||||||||||||
|
2026 |
|
|
2025 |
|
|
|
|
|||||||||||
|
(in millions) |
|
|
|
|
||||||||||||||
|
Net Sales |
|
|
% of Net Sales |
|
|
Net Sales |
|
|
% of Net Sales |
|
|
% Change |
|
|||||
Manufactured products (1) |
$ |
831.6 |
|
|
|
21.5 |
% |
|
$ |
959.3 |
|
|
|
22.7 |
% |
|
|
(13.3 |
)% |
Windows, doors and millwork (1) |
|
954.6 |
|
|
|
24.7 |
% |
|
|
1,050.7 |
|
|
|
24.8 |
% |
|
|
(9.1 |
)% |
Specialty building products and services |
|
1,036.9 |
|
|
|
26.9 |
% |
|
|
1,092.5 |
|
|
|
25.8 |
% |
|
|
(5.1 |
)% |
Lumber and lumber sheet goods |
|
1,039.4 |
|
|
|
26.9 |
% |
|
|
1,131.6 |
|
|
|
26.7 |
% |
|
|
(8.1 |
)% |
Net sales |
$ |
3,862.5 |
|
|
|
100.0 |
% |
|
$ |
4,234.1 |
|
|
|
100.0 |
% |
|
|
(8.8 |
)% |
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.
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.
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.
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.
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.
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.
Six Months Ended June 30, 2026 Compared with the Six Months Ended June 30, 2025
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%.
The following table shows net sales classified by product category:
|
Six Months Ended June 30, |
|
|
|
|
||||||||||||||
|
2026 |
|
|
2025 |
|
|
|
|
|||||||||||
|
(in millions) |
|
|
|
|
||||||||||||||
|
Net Sales |
|
|
% of Net Sales |
|
|
Net Sales |
|
|
% of Net Sales |
|
|
% Change |
|
|||||
Manufactured products (1) |
$ |
1,566.2 |
|
|
|
21.9 |
% |
|
$ |
1,813.2 |
|
|
|
23.0 |
% |
|
|
(13.6 |
)% |
Windows, doors and millwork (1) |
|
1,808.6 |
|
|
|
25.3 |
% |
|
|
1,994.8 |
|
|
|
25.3 |
% |
|
|
(9.3 |
)% |
Specialty building products & services |
|
1,890.2 |
|
|
|
26.4 |
% |
|
|
1,981.1 |
|
|
|
25.1 |
% |
|
|
(4.6 |
)% |
Lumber & lumber sheet goods |
|
1,884.6 |
|
|
|
26.4 |
% |
|
|
2,102.5 |
|
|
|
26.6 |
% |
|
|
(10.4 |
)% |
Net sales |
$ |
7,149.6 |
|
|
|
100.0 |
% |
|
$ |
7,891.6 |
|
|
|
100.0 |
% |
|
|
(9.4 |
)% |
17
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.
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.
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.
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.
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.
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.
LIQUIDITY AND CAPITAL RESOURCES
Our primary capital requirements are to fund working capital needs and operating expenses, meet required interest and principal payments, and to fund capital expenditures and potential future growth opportunities. Our capital resources at June 30, 2026, consist of cash on hand and borrowing availability under our Revolving Facility.
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.
The following table shows our borrowing base and excess availability as of:
|
|
June 30, |
|
|
December 31, |
|
||
|
|
(in millions) |
|
|||||
Accounts receivable availability |
|
$ |
909.8 |
|
|
$ |
686.2 |
|
Inventory availability |
|
|
910.4 |
|
|
|
804.2 |
|
Gross availability |
|
|
1,820.2 |
|
|
|
1,490.4 |
|
Less: |
|
|
|
|
|
|
||
Agent-specified reserves |
|
|
(59.4 |
) |
|
|
(42.6 |
) |
Plus: |
|
|
|
|
|
|
||
Cash in qualified accounts |
|
|
40.0 |
|
|
|
159.1 |
|
Borrowing base |
|
|
1,800.8 |
|
|
|
1,606.9 |
|
Aggregate revolving commitments |
|
|
2,200.0 |
|
|
|
2,200.0 |
|
Maximum borrowing amount (lesser of borrowing base and |
|
|
1,800.8 |
|
|
|
1,606.9 |
|
Less: |
|
|
|
|
|
|
||
Outstanding borrowings |
|
|
(165.0 |
) |
|
|
— |
|
Letters of credit |
|
|
(76.0 |
) |
|
|
(79.6 |
) |
Net excess borrowing availability on revolving facility |
|
$ |
1,559.8 |
|
|
$ |
1,527.3 |
|
18
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.
Liquidity
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.
Our level of indebtedness results in significant interest expense and could have the effect of, among other things, reducing our flexibility to respond to changing business and economic conditions. From time to time, based on market conditions and other factors and subject to compliance with applicable laws and regulations, we may repurchase or call our notes, repay, refinance or modify our debt or otherwise enter into transactions regarding our capital structure.
If industry conditions deteriorate or if we pursue additional acquisitions, we may be required to raise additional funds through the sale of capital stock or debt in the public capital markets or in privately negotiated transactions. There can be no assurance that any of these financing options would be available on favorable terms, if at all. Alternatives to help supplement our liquidity position could include, but are not limited to, idling or permanently closing additional facilities, adjusting our headcount in response to current business conditions, attempts to renegotiate leases, managing our working capital, and/or divesting of non-core businesses. There are no assurances that these steps would prove successful or materially improve our liquidity position.
Consolidated Cash Flows
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.
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.
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.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies are those that are both important to the accurate portrayal of a company’s financial condition and results, and require subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
To prepare financial statements that conform to generally accepted accounting principles, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the financial statements and the possibility that future events may be significantly different from our expectations.
Refer to Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K for a discussion of our critical accounting estimates and assumptions.
RECENT ACCOUNTING PRONOUNCEMENTS
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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We may experience changes in interest expense if changes in our debt occur. Changes in market interest rates could also affect our interest expense. Borrowings under the Revolving Facility bear interest at either a base rate or SOFR, plus, in each case, an applicable margin. A 1.0% increase in interest rates on the Revolving Facility would result in approximately $1.7 million additional interest expense annually based on our $165.0 million in outstanding borrowings as of June 30, 2026. The Revolving Facility also assesses variable commitment and outstanding letter of credit fees based on quarterly average loan utilization. Our 4.25% 2032 Notes, 6.375% 2034 Notes, 6.75% 2035 Notes, 6.375% 2032 Notes, and 5.00% 2030 Notes, bear interest at a fixed rate, and therefore our interest expense related to these notes would not be affected by an increase in market interest rates.
19
We purchase certain materials, including lumber products, which are then sold to customers, as well as used as direct production inputs for our manufactured products that we deliver. Short-term changes in the cost of these materials and the related in-bound freight costs, some of which are subject to significant fluctuations, are sometimes, but not always, passed on to our customers. Delays in our ability to pass on material price increases to our customers can adversely impact our operating results.
Item 4. Controls and Procedures
Disclosure Controls Evaluation and Related CEO and CFO Certifications. Our management, with the participation of our principal executive officer (“CEO”) and principal financial officer (“CFO”), conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report.
Certifications of our CEO and our CFO, which are required in accordance with Rule 13a-14 of the Exchange Act, are attached as exhibits to this quarterly report. This “Controls and Procedures” section includes the information concerning the controls evaluation referred to in the certifications, and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.
Limitations on the Effectiveness of Controls. We do not expect that our disclosure controls and procedures will prevent all errors and all fraud. A system of controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Because of the limitations in all such systems, no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Furthermore, the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how unlikely. Because of these inherent limitations in a cost-effective system of controls and procedures, misstatements or omissions due to error or fraud may occur and not be detected.
Scope of the Controls Evaluation. The evaluation of our disclosure controls and procedures included a review of their objectives and design, the Company’s implementation of the controls and procedures and the effect of the controls and procedures on the information generated for use in this quarterly report. In the course of the evaluation, we sought to identify whether we had any data errors, control problems, or acts of fraud and to confirm that appropriate corrective action, including process improvements, were being undertaken if needed. This type of evaluation is performed on a quarterly basis so that conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our quarterly reports on Form 10-Q. Many of the components of our disclosure controls and procedures are also evaluated by our internal audit department, by our legal department, and by personnel in our finance organization. The overall goals of these various evaluation activities are to monitor our disclosure controls and procedures on an ongoing basis, and to maintain them as dynamic systems that change as conditions warrant.
Conclusions Regarding Disclosure Controls. Based on the required evaluation of our disclosure controls and procedures, our CEO and CFO have concluded that, as of June 30, 2026, we maintained disclosure controls and procedures that were effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting. During the period covered by this report, there were no changes in our internal control over financial reporting identified in connection with the evaluation described above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
20
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
The Company has a number of known and threatened construction defect legal claims. While these claims are generally covered under the Company’s existing insurance programs to the extent any loss exceeds the deductible, there is a reasonable possibility of loss that is not able to be estimated at this time because (i) many of the proceedings are in the discovery stage, (ii) the outcome of future litigation is uncertain, and/or (iii) the nature of the claims is complex.
In addition, we are involved in various other claims and lawsuits incidental to the conduct of our business in the ordinary course. We carry insurance coverage in such amounts in excess of our self-insured retention as we believe to be reasonable under the circumstances and that may or may not cover any or all of our liabilities in respect of such claims and lawsuits.
Although the ultimate disposition of these proceedings cannot be predicted with certainty, management believes the outcome of any such claims that are currently pending or threatened, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position, cash flows or results of operations. However, there can be no assurances that future adverse judgments and costs would not be material to our results of operations or liquidity for a particular period.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2025 Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2025 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
There were no material changes to the risk factors reported in Part I, “Item 1A. Risk Factors” in our 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Company Stock Repurchases
The following table provides information with respect to the purchases of our common stock during the second quarter of fiscal year 2026:
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |
|
|
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (1) |
|
||||
April 1, 2026 — April 30, 2026 |
|
|
24,328 |
|
|
$ |
88.50 |
|
|
|
— |
|
|
$ |
500,000,000 |
|
May 1, 2026 — May 31, 2026 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
500,000,000 |
|
June 1, 2026 — June 30, 2026 |
|
|
2,842 |
|
|
|
77.77 |
|
|
|
— |
|
|
|
500,000,000 |
|
Total |
|
|
27,170 |
|
|
$ |
87.38 |
|
|
|
— |
|
|
$ |
500,000,000 |
|
In the second quarter of 2026, the Company did not repurchase or retire shares pursuant to the share repurchase plan authorized by our board of directors. The 27,170 shares presented in the table above represent stock tendered in order to meet tax withholding requirements for restricted stock units vested. Share repurchases under the program may be made through a variety of methods, which may include open market purchases, block trades, accelerated share repurchases, trading plans in accordance with Rule 10b-5 or Rule 10b-18 under the Exchange Act, or any combination of such methods. The program does not obligate the Company to acquire any particular amount of its common stock, and the share repurchase program may be suspended or discontinued at any time at the Company’s discretion.
Item 5. Other Information
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Item 6. Exhibits
|
|
Description |
3.1 |
|
Amended and Restated Certificate of Incorporation of Builders FirstSource, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 27, 2025, File Number 001-40620) |
3.2 |
|
Amended and Restated By-Laws of Builders FirstSource, Inc. (incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 27, 2025, File Number 001-40620) |
31.1* |
|
Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Peter M. Jackson as Chief Executive Officer |
31.2* |
|
Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Pete R. Beckmann as Chief Financial Officer |
32.1** |
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Peter M. Jackson as Chief Executive Officer and Pete R. Beckmann as Chief Financial Officer |
10.1 |
|
Builders FirstSource, Inc. 2026 Equity Incentive Plan (incorporated herein by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 2, 2026) |
10.2 |
|
Builders FirstSource, Inc. Employee Stock Purchase Plan (incorporated herein by reference to Appendix B of the Company’s Definitive Proxy Statement on Schedule 14A filed with the Securities and Exchange Commission on April 2, 2026) |
101* |
|
The following financial information from Builders FirstSource, Inc.’s Form 10-Q filed on July 30, 2026 formatted in Inline eXtensible Business Reporting Language (“Inline XBRL”): (i) Condensed Consolidated Statement of Operations for the three and six months ended June 30, 2026 and 2025, (ii) Condensed Consolidated Balance Sheet as of June 30, 2026 and December 31, 2025, (iii) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025, (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2026 and 2025 and (v) the Notes to Condensed Consolidated Financial Statements. |
104* |
|
The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026, has been formatted in Inline XBRL. |
* Filed herewith.
** Builders FirstSource, Inc. is furnishing, but not filing, the written statement pursuant to Title 18 United States Code 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, of Peter M. Jackson, our Chief Executive Officer, and Pete R. Beckmann, our Chief Financial Officer.
+ Indicates a management contract or compensatory plan or arrangement.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
BUILDERS FIRSTSOURCE, INC. |
|
|
|
/s/ PETER M. JACKSON |
|
Peter M. Jackson |
|
President and Chief Executive Officer |
|
(Principal Executive Officer) |
July 30, 2026
|
/s/ PETE R. BECKMANN |
|
Pete R. Beckmann |
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
July 30, 2026
|
/s/ MATTHEW TRESTER |
|
Matthew Trester |
|
Vice President and Controller |
|
(Principal Accounting Officer) |
July 30, 2026
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