Builders FirstSource, Inc. [BLDR] Filings

10-Q 1 bldr-10q_20210930.htm 10-Q bldr-10q_20210930.htm

liI

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-40620

BUILDERS FIRSTSOURCE, INC.

(Exact name of registrant as specified in its charter)

Delaware		52-2084569
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

2001 Bryan Street, Suite 1600
Dallas, Texas		75201
(Address of principal executive offices)		(Zip Code)

(214) 880-3500

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common stock, par value $0.01 per share	BLDR	New York Stock Exchange

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. Yes ☒ No ☐

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). Yes ☒ No ☐

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.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Small reporting company	☐
Emerging growth company	☐

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 November 2, 2021 was 191,501,088.

BUILDERS FIRSTSOURCE, INC.

Index to Form 10-Q

		Page
	PART I — FINANCIAL INFORMATION	3
Item 1.	Financial Statements	3
	Condensed Consolidated Statement of Operations (Unaudited) for the Three and Nine Months Ended September 30, 2021 and 2020	3
	Condensed Consolidated Balance Sheet (Unaudited) as of September 30, 2021 and December 31, 2020	4
	Condensed Consolidated Statement of Cash Flows (Unaudited) for the Nine Months Ended September 30, 2021 and 2020	5
	Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2021 and 2020	6
	Notes to Condensed Consolidated Financial Statements (Unaudited)	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	29
Item 4.	Controls and Procedures	30
	PART II — OTHER INFORMATION	31
Item 1.	Legal Proceedings	31
Item 1A.	Risk Factors	31
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 6.	Exhibits	32

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2021		2020		2021		2020
Net sales	$	5,508,590	$	2,295,450	$	15,259,047	$	6,028,114
Cost of sales		3,796,138		1,724,799		10,893,890		4,474,718
Gross margin		1,712,452		570,651		4,365,157		1,553,396
Selling, general and administrative expenses		875,012		430,893		2,599,523		1,223,436
Income from operations		837,440		139,758		1,765,634		329,960
Interest expense, net		35,954		28,043		95,593		106,786
Income before income taxes		801,486		111,715		1,670,041		223,174
Income tax expense		188,341		25,783		387,081		49,551
Net income	$	613,145	$	85,932	$	1,282,960	$	173,623

Net income per share:
Basic	$	3.00	$	0.74	$	6.23	$	1.49
Diluted	$	2.98	$	0.73	$	6.18	$	1.48
Weighted average common shares:
Basic		204,268		116,731		205,976		116,542
Diluted		205,630		118,026		207,513		117,690

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

(in thousands, except per share amounts)	September 30, 2021		December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	224,735	$	423,806
Accounts receivable, less allowances of $38,627 and $17,637 at September 30, 2021 and December 31, 2020, respectively		2,134,269		880,018
Other receivables		167,309		76,436
Inventories, net		1,616,553		784,527
Other current assets		88,368		58,895
Total current assets		4,231,234		2,223,682
Property, plant and equipment, net		1,336,890		749,130
Operating lease right-of-use assets, net		444,073		274,562
Goodwill		3,141,594		785,305
Intangible assets, net		1,629,363		119,882
Other assets, net		25,994		21,110
Total assets	$	10,809,148	$	4,173,671
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	1,004,521	$	600,357
Accrued liabilities		930,189		385,536
Current portion of operating lease liabilities		94,651		61,625
Current maturities of long-term debt		3,819		27,335
Total current liabilities		2,033,180		1,074,853
Noncurrent portion of operating lease liabilities		360,271		219,239
Long-term debt, net of current maturities, discounts and issuance costs		2,419,664		1,596,905
Deferred income taxes		330,998		49,495
Other long-term liabilities		141,609		80,396
Total liabilities		5,285,722		3,020,888
Commitments and contingencies (Note 13)
Stockholders' equity:
Preferred stock, $0.01 par value, 10,000 shares authorized; zero shares issued and outstanding		—		—
Common stock, $0.01 par value, 300,000 shares authorized; 196,288 and 116,829 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		1,963		1,168
Additional paid-in capital		4,254,262		589,241
Retained earnings		1,267,201		562,374
Total stockholders' equity		5,523,426		1,152,783
Total liabilities and stockholders' equity	$	10,809,148	$	4,173,671

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
(in thousands)	2021			2020
Cash flows from operating activities:
Net income	$	1,282,960		$	173,623
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		401,500			87,298
Deferred income taxes		(65,696	)		3,155
Stock-based compensation expense		25,288			12,098
Net gain on sale of assets		(32,235	)		(1,413	)
Other non-cash adjustments		4,805			7,884
Changes in assets and liabilities, net of assets acquired and liabilities assumed:
Receivables		(756,511	)		(230,627	)
Inventories		(321,068	)		(189,692	)
Other current assets		5,491			(5,076	)
Other assets and liabilities		16,653			60,439
Accounts payable		103,006			205,570
Accrued liabilities		239,024			31,887
Net cash provided by operating activities		903,217			155,146
Cash flows from investing activities:
Cash used for acquisitions, net of cash acquired		(898,113	)		(15,893	)
Proceeds from divestiture of business		76,162			—
Purchases of property, plant and equipment		(160,179	)		(83,508	)
Proceeds from sale of property, plant and equipment		11,728			3,298
Net cash used in investing activities		(970,402	)		(96,103	)
Cash flows from financing activities:
Borrowings under revolving credit facility		2,420,000			791,000
Repayments under revolving credit facility		(2,495,000	)		(818,000	)
Proceeds from long-term debt and other loans		1,000,000			895,625
Repayments of long-term debt and other loans		(471,360	)		(561,541	)
Payments of debt extinguishment costs		(2,475	)		(22,686	)
Payments of loan costs		(17,970	)		(13,800	)
Exercise of stock options		537			1,343
Repurchase of common stock		(565,618	)		(4,153	)
Net cash (used in) provided by financing activities		(131,886	)		267,788
Net change in cash and cash equivalents		(199,071	)		326,831
Cash and cash equivalents at beginning of period		423,806			14,096
Cash and cash equivalents at end of period	$	224,735		$	340,927

Supplemental disclosures of cash flow information:
Cash paid for interest	$	75,531		$	77,734
Cash paid for income taxes		414,515			21,280
Supplemental disclosures of non-cash activities:
Non-cash consideration for the BMC Merger	$	3,658,362		$	—
Accrued purchases of property, plant and equipment		13,164			1,336
Right-of-use assets obtained in exchange for operating lease obligations		49,135			33,379
Assets acquired under finance lease obligations		1,644			16,096
Amounts accrued for repurchases of common stock		30,756			—

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)

							Additional
	Common Stock						Paid-in			Retained
(in thousands)	Shares			Amount			Capital			Earnings			Total
Balance at December 31, 2019		116,052		$	1,161		$	574,955		$	248,837		$	824,953
Vesting of restricted stock units		579			6			(6	)	—				—
Stock-based compensation expense	—			—				3,254		—				3,254
Exercise of stock options		82		—				398		—				398
Shares withheld for restricted stock units vested		(168	)		(2	)		(3,832	)	—				(3,834	)
Net income	—			—			—				8,767			8,767
Balance at March 31, 2020		116,545			1,165			574,769			257,604			833,538
Vesting of restricted stock units		130			2			(2	)	—				—
Stock-based compensation expense	—			—				3,466		—				3,466
Exercise of stock options		48		—				325		—				325
Shares withheld for restricted stock units vested		(22	)	—				(319	)	—				(319	)
Net income	—			—			—				78,924			78,924
Balance at June 30, 2020		116,701		$	1,167		$	578,239		$	336,528		$	915,934
Vesting of restricted stock units		13			—			—			—			—
Stock-based compensation expense		—			—			5,379			—			5,379
Exercise of stock options		89			1			619			—			620
Net income		—			—			—			85,932			85,932
Balance at September 30, 2020		116,803		$	1,168		$	584,237		$	422,460		$	1,007,865

Balance at December 31, 2020		116,829		$	1,168		$	589,241		$	562,374		$	1,152,783
Merger consideration		89,586			896			3,657,466		—				3,658,362
Vesting of restricted stock units		648			6			(6	)	—				—
Stock-based compensation expense	—			—				10,402		—				10,402
Exercise of stock options		27			1			234		—				235
Shares withheld for restricted stock units vested		(232	)		(2	)		(10,415	)	—				(10,417	)
Net income	—			—			—				172,580			172,580
Balance at March 31, 2021		206,858			2,069			4,246,922			734,954			4,983,945
Vesting of restricted stock units		472			5			(5	)	—				—
Stock-based compensation expense	—			—				8,465		—				8,465
Exercise of stock options		16			—			99		—				99
Shares withheld for restricted stock units vested		(150	)		(2	)		(7,287	)	—				(7,289	)
Net income	—			—			—				497,235			497,235
Balance at June 30, 2021		207,196		$	2,072		$	4,248,194		$	1,232,189		$	5,482,455
Vesting of restricted stock units		38			—			—		—				—
Stock-based compensation expense	—			—				6,421		—				6,421
Repurchase of common stock (1)		(10,958	)		(109	)		—			(578,133	)		(578,242	)
Exercise of stock options		22			—			202		—				202
Shares withheld for restricted stock units vested		(10	)		—			(555	)	—				(555	)
Net income	—			—			—				613,145			613,145
Balance at September 30, 2021		196,288		$	1,963		$	4,254,262		$	1,267,201		$	5,523,426

(1)

During the three and nine months ended September 30, 2021 we repurchased and retired 10,958,400 shares of our common stock at an average price of $52.74 per share for $578.2 million, net of fees, pursuant to the repurchase program authorized by our board of directors in August 2021.

The accompanying notes are an integral part of these consolidated financial statements.

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

Builders FirstSource, Inc., a Delaware corporation formed in 1998, is a leading supplier and manufacturer of building materials, manufactured components and construction services to professional homebuilders, sub-contractors, remodelers and consumers. The Company operates approximately 550 locations in 39 states across the United States. In this quarterly report, references to the “Company,” “we,” “our,” “ours” or “us” refer to Builders FirstSource, Inc. and its consolidated subsidiaries unless otherwise stated or the context otherwise requires.

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, 2020 is derived from the audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. This condensed consolidated balance sheet as of December 31, 2020 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, 2020 included in our most recent annual report on Form 10-K, as amended (“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 Form 10-K.

Segments

We offer an integrated solution to our customers by providing manufacturing, supply, and installation of a full range of structural and related building products directly to homebuilder customers. We manufacture floor trusses, roof trusses, wall panels, stairs, millwork, windows, and doors. We also provide a full range of construction services. These product and service offerings are distributed across our approximately 550 locations operating in 39 states across the United States. Following the merger with BMC Stock Holdings, Inc. on January 1, 2021, which is discussed in Note 2 to these condensed consolidated financial statements, the Company reorganized the structure of its internal organization.

Given the span and depth of our geographical reach, our locations are organized into three geographical divisions (East, Central, and West), which are also our operating segments. Our operating divisions are organized on a geographical basis to facilitate a disaggregated management of the Company and to respond to the local needs of the customers in the markets we serve. All of our segments have similar customers, products and services, and distribution methods.

Due to these similarities, along with the similar economic profitability achieved across all our operating segments, we aggregate our three operating segments into one reportable segment. Centralized financial and operational oversight, including resource allocation and assessment of performance on an income before income taxes basis, is performed by our CEO, whom we have determined to be our chief operating decision maker (“CODM”).

The accounting policies of our operating segments are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in our Form 10-K. Since the Company operates in one reportable segment, the primary measures reviewed by the CODM, including revenue, gross margin and income before income taxes, are shown in these condensed consolidated financial statements.

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.

Comprehensive Income

Comprehensive income is equal to the net income for all periods presented.

Reclassifications

Certain prior periods’ amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on net income, total assets and liabilities, stockholders’ equity, or cash flows as previously reported.

Builders FirstSource, Inc. [BLDR] Filings
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-26]
10-Q	[2020-10-30]
10-Q	[2020-07-31]
10-Q	[2020-05-01]
10-K	[2020-02-21]
10-Q	[2019-11-01]
10-Q	[2019-08-02]
10-Q	[2019-05-03]
10-K	[2019-03-01]
10-Q	[2018-11-02]
10-Q	[2018-08-08]
10-Q	[2018-05-10]
10-K	[2018-03-01]
10-Q	[2017-11-09]
10-Q	[2017-08-04]
10-Q	[2017-05-09]
10-K	[2017-03-01]
10-Q	[2016-11-04]
10-Q	[2016-08-05]
10-Q	[2016-05-06]
10-K	[2016-03-11]
10-Q	[2015-11-09]
10-Q	[2015-08-07]
10-Q	[2015-05-11]
10-K	[2015-03-03]
10-Q	[2014-11-05]
10-Q	[2014-08-01]
10-Q	[2014-05-02]
10-K	[2014-02-28]
10-Q	[2013-11-01]
10-Q	[2013-08-02]
10-Q	[2013-05-03]
10-K	[2013-03-01]
10-Q	[2012-10-31]
10-Q	[2012-08-01]
10-Q	[2012-05-04]