0001564590-22-007980 | 10-K | XBRL Viewer

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CONSOLIDATED STATEMENT OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Statement [Abstract]
Net sales	$ 19,893,856	$ 8,558,874	$ 7,280,431
Cost of sales	14,042,900	6,336,290	5,303,602
Gross margin	5,850,956	2,222,584	1,976,829
Selling, general and administrative expenses	3,463,532	1,678,730	1,584,523
Income from operations	2,387,424	543,854	392,306
Interest expense, net	135,877	135,688	109,551
Income before income taxes	2,251,547	408,166	282,755
Income tax expense	526,131	94,629	60,946
Net income	$ 1,725,416	$ 313,537	$ 221,809
Net income per share:
Basic	$ 8.55	$ 2.69	$ 1.92
Diluted	$ 8.48	$ 2.66	$ 1.90
Weighted average common shares:
Basic	201,839	116,611	115,713
Diluted	203,470	117,917	117,025

CONSOLIDATED BALANCE SHEET - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 42,603	$ 423,806
Accounts receivable, less allowances of $39,510 and $17,637 at December 31, 2021 and December 31, 2020, respectively	1,708,796	822,753
Other receivables	255,075	76,436
Inventories, net	1,626,244	784,527
Contract assets	207,587	57,265
Other current assets	127,964	58,895
Total current assets	3,968,269	2,223,682
Property, plant and equipment, net	1,385,441	749,130
Operating lease right-of-use assets, net	457,833	274,562
Goodwill	3,270,192	785,305
Intangible assets, net	1,603,409	119,882
Other assets, net	29,199	21,110
Total assets	10,714,343	4,173,671
Current liabilities:
Accounts payable	1,093,370	600,357
Accrued liabilities	718,904	327,081
Contract liabilities	216,097	58,455
Current portion of operating lease liabilities	96,680	61,625
Current maturities of long-term debt	3,660	27,335
Total current liabilities	2,128,711	1,074,853
Noncurrent portion of operating lease liabilities	375,289	219,239
Long-term debt, net of current maturities, discounts and issuance costs	2,926,122	1,596,905
Deferred income taxes	362,121	49,495
Other long-term liabilities	119,619	80,396
Total liabilities	5,911,862	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; 179,820 and 116,829 shares issued and outstanding at December 31, 2021 and December 31, 2020, respectively	1,798	1,168
Additional paid-in capital	4,260,670	589,241
Retained earnings	540,013	562,374
Total stockholders' equity	4,802,481	1,152,783
Total liabilities and stockholders' equity	$ 10,714,343	$ 4,173,671

CONSOLIDATED BALANCE SHEET (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Statement Of Financial Position [Abstract]
Allowances on trade accounts receivable	$ 39,510	$ 17,637
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	300,000,000	300,000,000
Common stock, shares issued	179,820,000	116,829,000
Common stock, shares outstanding	179,820,000	116,829,000

CONSOLIDATED STATEMENT OF CASH FLOWS - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2021

Dec. 31, 2020

Dec. 31, 2019

Cash flows from operating activities:

Net income

$ 1,725,416

$ 313,537

$ 221,809

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

547,352

116,566

100,038

Amortization of debt discount, premium and issuance costs

3,869

3,508

3,880

Loss on extinguishment of debt

3,027

6,700

8,189

Deferred income taxes

(34,573)

16,614

50,994

Stock-based compensation expense

31,486

17,022

12,239

Net gain on sales of assets and asset impairments

(32,421)

(1,067)

(949)

Changes in assets and liabilities, net of assets acquired and liabilities assumed:

Receivables

(453,911)

(246,912)

45,687

Inventories

(282,165)

(220,101)

44,202

Contract assets

103,326

12,631

2,898

Other current assets

(33,489)

(19,743)

4,674

Other assets and liabilities

(1,155)

50,370

1,611

Accounts payable

191,885

160,947

4,070

Accrued liabilities

91,419

55,361

7,004

Contract liabilities

90,135

19,896

3,496

Net cash provided by operating activities

1,743,549

260,067

504,046

Cash flows from investing activities:

Cash used for acquisitions, net of cash acquired

(1,206,471)

(32,643)

(92,855)

Proceeds from divestiture of business

76,162

Purchases of property, plant and equipment

(227,891)

(112,082)

(112,870)

Proceeds from sale of property, plant and equipment

13,560

8,500

6,545

Net cash used in investing activities

(1,344,640)

(136,225)

(199,180)

Cash flows from financing activities:

Borrowings under revolving credit facility

3,125,000

891,000

1,040,000

Repayments under revolving credit facility

(2,612,000)

(843,000)

(1,192,000)

Proceeds from long-term debt and other loans

1,000,000

895,625

478,375

Repayments of long-term debt and other loans

(554,677)

(618,542)

(610,834)

Payments of debt extinguishment costs

(4,950)

(22,686)

(2,301)

Payments of loan costs

(19,450)

(13,800)

(8,618)

Exercise of stock options

726

1,424

4,873

Repurchase of common stock

(1,714,761)

(4,153)

(10,392)

Net cash (used in) provided by financing activities

(780,112)

285,868

(300,897)

Net change in cash and cash equivalents

(381,203)

409,710

3,969

Cash and cash equivalents at beginning of period

423,806

14,096

10,127

Cash and cash equivalents at end of period

42,603

423,806

14,096

Supplemental disclosures of cash flow information:

Cash paid for interest

^[1]

105,570

110,600

100,354

Cash paid for income taxes

633,060

43,400

18,107

Supplemental disclosures of non-cash activities:

Non-cash consideration for the BMC Merger

3,658,362

Accrued purchases of property, plant and equipment

8,052

1,962

3,378

Right-of-use assets obtained in exchange for operating lease obligations

64,939

42,606

86,373

Assets acquired under finance lease obligations

1,644

$ 16,964

$ 16,462

Amounts accrued for repurchases of common stock

$ 51,545

[1]	Includes $5.0 million, $22.7 million and $2.3 million of debt extinguishment costs paid in 2021, 2020, and 2019, respectively, classified as financing outflows above and discussed more fully in Note 8.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Statement Of Cash Flows [Abstract]
Payments of debt extinguishment costs classified as financing outflows	$ 4,950	$ 22,686	$ 2,301

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($)
shares in Thousands, $ in Thousands

Total

Common Stock

Additional Paid-in Capital

Retained Earnings

Balance at Dec. 31, 2018

$ 596,338

$ 1,151

$ 560,221

$ 34,966

Balance, shares at Dec. 31, 2018

115,078

Vesting of restricted stock units

$ 7

(7)

Vesting of restricted stock units, shares

735

Shares withheld for restricted stock units vested

(2,450)

$ (2)

(2,448)

Shares withheld for restricted stock units vested, shares

(196)

Repurchase of common stock

^[1]

$ (7,942)

$ (4)

(7,938)

Repurchase of common stock, shares

(500)

(460)

^[1]

Exercise of stock options

$ 4,959

$ 9

4,950

Exercise of stock options, shares

895

Stock compensation expense

12,239

Net income

221,809

Balance at Dec. 31, 2019

824,953

$ 1,161

574,955

248,837

Balance, shares at Dec. 31, 2019

116,052

Vesting of restricted stock units

$ 7

(7)

Vesting of restricted stock units, shares

732

Shares withheld for restricted stock units vested

(4,153)

$ (2)

(4,151)

Shares withheld for restricted stock units vested, shares

(190)

Exercise of stock options

1,424

$ 2

1,422

Exercise of stock options, shares

235

Stock compensation expense

17,022

Net income

313,537

Balance at Dec. 31, 2020

$ 1,152,783

$ 1,168

589,241

562,374

Balance, shares at Dec. 31, 2020

116,829

Merger consideration

$ 3,658,362

$ 896

3,657,466

Merger consideration, shares

89,586

Vesting of restricted stock units

$ 11

(11)

Vesting of restricted stock units, shares

1,168

Shares withheld for restricted stock units vested

(18,255)

$ (4)

(18,251)

Shares withheld for restricted stock units vested, shares

(394)

Repurchase of common stock

^[2]

$ (1,748,051)

$ (274)

(1,747,777)

Repurchase of common stock, shares

(27,500)

(27,459)

^[2]

Exercise of stock options

$ 740

$ 1

739

Exercise of stock options, shares

Stock compensation expense

$ 31,486

31,486

Net income

1,725,416

Balance at Dec. 31, 2021

$ 4,802,481

$ 1,798

$ 4,260,670

$ 540,013

Balance, shares at Dec. 31, 2021

179,820

[1]

During the year ended December 31, 2019, we repurchased and retired 0.5 million shares of our common stock, at an average price of $17.24 per share, for $7.9 million pursuant to the repurchase program authorized by our board of directors in February 2019. The primary purpose of the repurchase program was to offset dilution from employee stock awards.

[2]

During the year ended December 31, 2021, we repurchased and retired 27.5 million shares of our common stock at an average price of $63.63 per share, for $1,748.1 million, net of fees, pursuant to the repurchase program authorized by our board of directors in August 2021, and further expanded by our board of directors in November 2021. The primary purpose of the repurchase program was to offset dilution from the BMC Merger.

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (Parenthetical) - USD ($)
shares in Thousands, $ in Thousands

12 Months Ended

Dec. 31, 2021

Dec. 31, 2019

Statement Of Stockholders Equity [Abstract]

Repurchased and retired common stock, shares

27,500

500

Repurchased and retired common stock

$ 1,748,051

^[1]

$ 7,942

^[2]

Average price of common shares repurchased and retired

$ 63.63

$ 17.24

[1]

[2]

Description of the Business

12 Months Ended

Dec. 31, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Description of the Business

1. Description of the Business

Builders FirstSource, Inc., a Delaware corporation formed in 1998, is a leading supplier of building materials, manufactured components and construction services to professional contractors, sub-contractors, and consumers. The company operates approximately 565 locations in 42 states across the United States.

In this annual 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.

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Principles of Consolidation

The consolidated financial statements present the results of operations, financial position, and cash flows of Builders FirstSource, Inc. and its wholly-owned subsidiaries. All intercompany transactions have been eliminated in consolidation.

Accounting Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Estimates are used when accounting for items such as revenue, vendor rebates, allowance for returns, discounts and credit losses, employee compensation programs, depreciation and amortization periods, income taxes, inventory values, insurance programs, goodwill, other intangible assets and long-lived assets.

Reclassifications

Certain prior periods’ amounts have been reclassified to conform to the current year presentation, including presenting contract assets and contract liabilities separately on the face of the financial statements, whereas, these contract assets and contract liabilities had previously been presented as a component of accounts receivable and accrued liabilities, respectively. These reclassifications had no impact on net income, total assets and liabilities, stockholders’ equity, or cash flows as previously reported

Segments

We offer an integrated solution to our customers providing manufacturing, supply, and installation of a full range of structural and related building products. We provide a wide variety of building products and services 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. For the period ended December 31, 2021, these product and service offerings are distributed across approximately 565 locations operating in 42 states across the United States.

Following the merger with BMC Stock Holdings, Inc. on January 1, 2021, which is discussed in Note 3 to these 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 in accordance with GAAP. Centralized financial and operational oversight, including resource allocation and assessment of performance on an income from continuing operations 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 this Note 2 to these consolidated financial statements. 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 consolidated financial statements. Our segments do not have any revenues or long-lived assets located in foreign countries.

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.

Accounting Estimates

Revenue Recognition

We recognize revenue as performance obligations are satisfied by transferring control of a promised good or service to a customer in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We generally classify our revenues into two types: (i) distribution sales; or (ii) sales related to contracts with service elements.

Distribution sales typically consist of the sale of building products we manufacture and the resale of purchased building products. We recognize revenue related to distribution sales at a point in time upon delivery of the ordered goods to our customers. Payment terms related to distribution sales are not significant as payment is generally received shortly after the point of sale.

Our contracts with service elements primarily relate to installation and construction services. We evaluate whether multiple contracts should be combined and accounted for as a single contract and whether a single or combined contract should be accounted for as a single performance obligation or multiple performance obligations. If a contract is separated into more than one performance obligation, we allocate the transaction price to each performance obligation generally based on observable standalone selling prices of the underlying goods or services. Revenue related to contracts with service elements is generally recognized over time based on the extent of progress towards completion of the performance obligation because of continuous transfer of control to the customer. We consider costs incurred to be indicative of goods and services delivered to the customer. As such, we use a cost-based input method to recognize revenue on our contracts with service elements as it best depicts the transfer of assets to our customers. Payment terms related to sales for contracts with service elements are specific to each customer and contract. However, they are considered to be short-term in nature as payments are normally received either throughout the life of the contract or shortly after the contract is complete.

Contract costs include all direct material and labor, equipment costs and those indirect costs related to contract performance. Provisions for estimated losses on uncompleted contracts are recognized in the period in which such losses are determinable. Prepayments for materials or services are deferred until such materials have been delivered or services have been provided. All sales recognized are net of allowances for discounts and estimated returns, based on historical experience. The Company records sales incentives provided to customers as a reduction of revenue. We present all sales tax on a net basis in our consolidated financial statements.

Costs to obtain contracts are expensed as incurred as our contracts are typically completed in one year or less, and where applicable, we generally would incur these costs whether or not we ultimately obtain the contract. We do not disclose the value of our remaining performance obligations on uncompleted contracts as our contracts generally have a duration of one year or less.

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 deferred revenue and customer advances and deposits.

The following table disaggregates our net sales by product category for the years ended December 31:


(in thousands)	2021		2020		2019
	(in thousands)
Lumber & lumber sheet goods	$	8,412,210	$	3,076,376	$	2,251,580
Manufactured products		4,333,283		1,640,460		1,449,550
Windows, doors & millwork		3,332,005		1,629,179		1,542,924
Siding, metal & concrete products		1,531,058		773,640		712,644
Gypsum, roofing & insulation		656,383		514,638		528,571
Other building products & services		1,628,917		924,581		795,162
Net sales	$	19,893,856	$	8,558,874	$	7,280,431

Net sales from installation and construction services represents less than 10% of the Company’s net sales for each period presented.

Cash and Cash Equivalents & Checks Outstanding

Cash and cash equivalents consist of cash on hand and all highly liquid investments with an original maturity date of three months or less. Also included in cash and cash equivalents are proceeds due from credit card transactions that generally settle within two business days. We maintain cash at financial institutions in excess of federally insured limits. Further, we maintain various banking relationships with different financial institutions. Accordingly, when there is a negative net book cash balance resulting from outstanding checks that had not yet been paid by any single financial institution, they are reflected in accounts payable on the accompanying consolidated balance sheets.

Accounts Receivable

We extend credit to qualified professional homebuilders and contractors, in many cases on a non-collateralized basis. Accounts receivable potentially expose us to concentrations of credit risk. Because our customers are dispersed among our various markets, our credit risk to any one customer or geographic economy is not significant. Other receivables consist primarily of vendor rebates receivables and income tax receivables.

Our customer mix is a balance of large national homebuilders, regional homebuilders, local and custom homebuilders and repair and remodeling contractors as well as multi-family builders. For the year ended December 31, 2021, our top 10 customers accounted for approximately 18% of our net sales, with our largest customer accounting for approximately 5% of net sales.

The allowance for credit losses is based on management’s assessment of the amount which may become uncollectible in the future and is estimated using specific review of problem accounts, overall portfolio quality, current and forecasted economic conditions that may affect the customer’s ability to pay, and historical experience. Accounts receivable are written off when deemed uncollectible.

We also establish reserves for credit memos and customer returns. The reserve balance was $17.7 million and $11.9 million at December 31, 2021 and 2020, respectively. The activity in this reserve was not significant for each year presented.

The following table shows the changes in our allowance for credit losses (in thousands):

	2021			2020			2019
Balance at January 1,	$	5,774		$	5,936		$	6,195
Additions		20,451			4,720			5,811
Deductions (write-offs, net of recoveries)		(4,464	)		(4,882	)		(6,070	)
Balance at December 31,	$	21,761		$	5,774		$	5,936

Accounts receivable consisted of the following at December 31 (in thousands):

	2021			2020
Accounts receivable	$	1,748,306		$	840,390
Less: allowances for returns and credit losses		(39,510	)		(17,637	)
Accounts receivable, net	$	1,708,796		$	822,753

Inventories

Inventories consist principally of materials purchased for resale, including lumber, lumber sheet goods, windows, doors and millwork and other building products, as well as certain manufactured products and are stated at the lower of cost and net realizable value. Cost is determined using the weighted average method, the use of which approximates the first-in, first-out method. We accrue for shrink based on the actual historical shrink results of our most recent physical inventories adjusted, if necessary, for current economic conditions. These estimates are compared with actual results as physical inventory counts are taken and reconciled to the general ledger.

During the year, we monitor our inventory levels by market and record provisions for excess inventories based on slower moving inventory. We define potential excess inventory as the amount of inventory on hand in excess of the historical usage, excluding special order items purchased in the last six months. We then apply our judgment as to forecasted demand and other factors, including liquidation value, to determine the required adjustments to net realizable value. Our inventories are generally not susceptible to technological obsolescence.

Our arrangements with vendors provide for rebates of a specified amount of consideration, payable when certain measures, generally related to a stipulated level of purchases, have been achieved. We account for estimated rebates as a reduction of the prices of the vendor’s inventory until the product is sold, at which time such rebates reduce cost of sales in the accompanying consolidated statement of operations. Throughout the year we estimate the amount of the rebates based upon the expected level of purchases. We continually evaluate and revise these estimates as necessary based on actual purchase levels.

We source products from a large number of suppliers. Materials purchased from our largest single supplier represented approximately 7% of our total materials purchased in 2021.

Shipping and Handling Costs

Handling costs incurred in manufacturing activities are included in cost of sales. All other shipping and handling costs are included in selling, general and administrative expenses in the accompanying consolidated statement of operations and totaled $512.8 million, $347.7 million and $332.5 million in 2021, 2020 and 2019, respectively.

Income Taxes

We account for income taxes utilizing the asset and liability method described in the Income Taxes topic of the FASB Accounting Standards Codification (“Codification”). Deferred income taxes are recorded to reflect consequences on future years of differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which differences are expected to affect taxable earnings. We record a valuation allowance to reduce deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Warranty Expense

We have warranty obligations with respect to most manufactured products; however, the liability for the warranty obligations is not significant as a result of third-party inspection and acceptance processes.

Debt Issuance Costs and Debt Discount/Premium

Loan costs are capitalized upon the issuance of long-term debt and amortized over the life of the related debt. Debt issuance costs associated with term debt are presented as a reduction to long-term debt. Debt issuance costs associated with revolving debt arrangements are presented as a component of other assets. Debt issuance costs incurred in connection with revolving debt

arrangements are amortized using the straight-line method. Debt issuance costs, discounts and premiums incurred in connection with term debt are amortized over the life of the related debt using the effective interest method. Amortization of debt issuance costs, discounts and premiums are included in interest expense. Upon changes to our debt structure, we evaluate debt issuance costs, discounts and premiums in accordance with the Debt topic of the Codification. We adjust debt issuance costs, discounts and premiums as necessary based on the results of this evaluation, as discussed in Note 8.

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. The estimated lives of the various classes of assets are as follows:

Buildings and improvements	10 to 40 years
Machinery and equipment	7 to 10 years
Furniture, fixtures and information technology	3 to 5 years
Leasehold improvements	The shorter of the estimated useful life or the remaining lease term

Major additions and improvements are capitalized, while maintenance and repairs that do not extend the useful life of the property are charged to expense as incurred. Gains or losses from dispositions of property, plant and equipment are recorded in the period incurred. We also capitalize certain costs of computer software developed or obtained for internal use, including interest, provided that those costs are not research and development, and certain other criteria are met. Internal use computer software costs are included in furniture, fixtures and information technology and generally depreciated using the straight-line method over the estimated useful lives of the assets, generally three years.

Leases

We lease certain land, buildings, rolling stock and other types of equipment for use in our operations. These leases typically have initial terms ranging from five to 15 years. Many of our leases contain renewal options which are exercisable at our discretion. These renewal options generally have terms ranging from one to five years. We also lease certain properties from related parties, including current employees and non-affiliate stockholders.

Under the Leases topic of the Codification, lessees are required to recognize the following for all leases, with the exception of short-term leases, at the commencement date: (1) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (2) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.

We determine if an arrangement is a lease at the inception of the arrangement. Lease liabilities are recognized based on the present value of lease payments over the lease term at the arrangement’s commencement date. Right-of-use assets are recognized based on the amount of the measurement of the lease liability adjusted for any lease payments made to the lessor at or before the commencement date, minus any lease incentives received and any initial direct costs incurred. Renewal options are included in the calculation of our right-of-use assets and lease liabilities when it is determined that they are reasonably certain of exercise based on an analysis of the relevant facts and circumstances. As the implicit rate of return of our lease agreements is usually not readily determinable, we generally use our incremental borrowing rate in determining the present value of lease payments. We determine our incremental borrowing rate based on information available to us at the lease commencement date. Certain of our lease arrangements contain lease and non-lease components. We have elected to account for non-lease components as a part of the related lease components for all of our leases. Leases with an initial term of 12 months or less are not recognized on our balance sheet. We recognize the expense for these leases on a straight-line basis over the lease term.

We have certain lease agreements that are subject to changes based on the Consumer Price Index or another referenced index. In the event of changes to the relevant index, lease liabilities are not remeasured and incremental costs are treated as variable lease payments and recognized in the period in which the obligation for those payments is incurred.

In addition, we have residual value guarantees on certain equipment leases. Under these leases, we have the option of (a) purchasing the equipment at the end of the lease term, (b) arranging for the sale of the equipment to a third party, or (c) returning the equipment to the lessor to sell the equipment. If the sales proceeds in any case are less than the residual value, we are required to reimburse the lessor for the deficiency up to a specified level as stated in each lease agreement. If the sales proceeds exceed the residual value, we are entitled to all of such excess amounts.

Long-Lived Assets

We evaluate our long-lived assets, other than goodwill, for impairment when events or changes in circumstances indicate, in our judgment, that the carrying amount of such assets may not be recoverable. The determination of whether or not impairment exists is based on our estimate of undiscounted future cash flows before interest attributable to the assets as compared to the net carrying amount of the assets. If impairment is indicated, the amount of the impairment recognized is determined by estimating the fair value of the assets based on estimated discounted future cash flows and recording a provision for loss if the carrying amount is greater than estimated fair value. The net carrying amount of assets identified to be disposed of in the future is compared to their estimated fair value, usually the quoted market price obtained from an independent third-party less the cost to sell, to determine if impairment exists. Until the assets are disposed of, an estimate of the fair value is reassessed when related events or circumstances change.

Insurance

We have established insurance programs to cover certain insurable risks consisting primarily of physical loss to property, business interruptions resulting from such loss, workers’ compensation, employee healthcare, and comprehensive general and auto liability. Third party insurance coverage is obtained for exposures above predetermined deductibles as well as for those risks required to be insured by law or contract. On a quarterly basis, we engage an external actuarial professional to independently assess and estimate the total liability outstanding. Provisions for losses are developed from these valuations which rely upon our past claims experience, which considers both the frequency and settlement of claims. The legal costs associated with these claims are included in these developed provisions. We discount our worker’s compensation, general liability, and auto liability insurance reserves based upon estimated future payment streams at our risk-free rate. Our total insurance reserve balances were $171.1 million and $90.8 million as of December 31, 2021 and 2020, respectively. Of these balances $103.0 million and $52.1 million were recorded as other long-term liabilities as of December 31, 2021 and 2020, respectively. Included in these reserve balances as of December 31, 2021 and 2020, were approximately $12.6 million and $5.7 million, respectively, of claims that exceeded stop-loss limits and are expected to be recovered under insurance policies which are also recorded as other receivables and other assets in the accompanying consolidated balance sheet.

Net Income per Common Share

Net income per common share, or earnings per share (“EPS”), is calculated in accordance with the Earnings per Share topic of the 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 for the years ended December 31:

	Years Ended December 31,
	2021		2020		2019
	(in thousands, except per share amounts)
Numerator:
Net income	$	1,725,416	$	313,537	$	221,809

Denominator:
Weighted average shares outstanding, basic		201,839		116,611		115,713
Dilutive effect of options and RSUs		1,631		1,306		1,312
Weighted average shares outstanding, diluted		203,470		117,917		117,025

Net income per share:
Basic	$	8.55	$	2.69	$	1.92
Diluted	$	8.48	$	2.66	$	1.90

Antidilutive and contingent RSUs excluded from diluted EPS	225		291		402

Goodwill and Other Intangible Assets

Intangibles subject to amortization

We recognize an acquired intangible asset apart from goodwill whenever the intangible asset arises from contractual or other legal rights, or whenever it can be separated or divided from the acquired entity and sold, transferred, licensed, rented, or exchanged, either individually or in combination with a related contract, asset or liability. Impairment losses are recognized if the carrying amounts of an intangible asset subject to amortization is not recoverable from expected future cash flows and its carrying amount exceeds its estimated fair value.

Goodwill

We recognize goodwill as the excess cost of an acquired entity over the net amount assigned to assets acquired and liabilities assumed. Goodwill is tested for impairment on an annual basis and between annual tests whenever impairment is indicated. This annual test takes place as of December 31 each year. Impairment losses are recognized whenever the carrying amount of a reporting unit exceeds its fair value.

Stock-based Compensation

We have four stock-based employee compensation plans, which are described more fully in Note 10. We issue new common stock shares upon exercises of stock options and vesting of RSUs. We recognize the effect of pre-vesting forfeitures in the period they actually occur.

We did not grant any options during the years ended December 31, 2021, 2020, or 2019.

The fair value of RSU awards which are subject to or contain market conditions is estimated on the date of grant using the Monte Carlo simulation model with the following weighted average assumptions for the year ended December 31:

	2021			2020			2019
Expected volatility (company)		51.3	%		40.0	%		38.3	%
Expected volatility (peer group median)		42.9	%		40.0	%		33.2	%
Correlation between the company and peer group median		0.6			0.5			0.5
Expected dividend yield		0.0	%		0.0	%		0.0	%
Risk-free rate		0.3	%		0.9	%		2.6	%

The expected volatilities and correlation are based on the historical daily returns of our common stock and the common stocks of the constituents of the Company’s 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.

Fair Value

The Fair Value Measurements and Disclosures topic of the Codification provides a framework for measuring the fair value of assets and liabilities and establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The fair value hierarchy can be summarized as follows:

Level 1 — unadjusted quoted prices for identical assets or liabilities in active markets accessible by us

Level 2 — inputs that are observable in the marketplace other than those inputs classified as Level 1

Level 3 — inputs that are unobservable in the marketplace and significant to the valuation

If a financial instrument uses inputs that fall in different levels of the hierarchy, the instrument will be categorized based upon the lowest level of input that is significant to the fair value calculation.

As of December 31, 2021 and 2020, the Company does not have any financial instruments which are measured at fair value on a recurring basis. We have elected to report the value of our 2027 notes, 2030 notes, 2032 notes, and 2026 facility at amortized cost. The fair values of the 2027 notes, 2030 notes, and 2032 notes at December 31, 2021 were approximately $646.2 million, $590.9 million, and $1,045.0 million, respectively, and were determined using Level 2 inputs based on market prices. The carrying amount of the 2026 facility at December 31, 2021 approximates fair value as the rates are comparable to those at which we could currently borrow under similar terms, are variable and incorporate a measure of our credit risk. As such, the fair value of the 2026 facility was also classified as Level 2 in the hierarchy.

Comprehensive Income

Comprehensive income is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. It consists of net income and other gains and losses affecting stockholders’ equity that, under GAAP, are excluded from net income. We had no items of other comprehensive income for the years ended December 31, 2021, 2020, and 2019.

Recently Issued Accounting Pronouncements

In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which intends to address diversity and inconsistency in the accounting related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer. This standard is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The purpose of ASU 2020-04 is to provide optional guidance for a period of time related to accounting for reference rate reform on financial reporting. It is intended to reduce the potential burden of reviewing contract modifications related to discontinued rates. The amendments and expedients in this update are effective, as elected, beginning March 12, 2020 through December 31, 2022 and may be elected by topic. We have yet to elect adoption and the adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In December 2019, the FASB issued an update to existing guidance under the Income Taxes topic of the FASB Accounting Standards Codification (“Codification”). This updated guidance simplifies the accounting for income taxes by removing certain exceptions to the general principles in the Income Taxes topic. This guidance is effective for public companies annual and interim periods beginning after December 15, 2020 with early adoption permitted. The adoption of this guidance did not have a material impact on our consolidated financial statements.

Business Combinations and Dispositions

12 Months Ended

Dec. 31, 2021

Business Combinations [Abstract]

Business Combinations and Dispositions

3. Business Combinations and Dispositions

On January 1, 2021, we completed our all stock merger transaction with BMC Stock Holdings, Inc., a Delaware corporation (“BMC”), pursuant to the Agreement and Plan of Merger, dated as of August 26, 2020 (as amended, restated, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among Builders FirstSource, Inc., Boston Merger Sub I Inc., a Delaware corporation and direct wholly owned subsidiary of Builders FirstSource, Inc. (“Merger Sub”) and BMC. On the terms and subject to the conditions set forth in the Merger Agreement, on January 1, 2021, Merger Sub merged with and into BMC, with BMC continuing as the surviving corporation and a wholly owned subsidiary of Builders FirstSource, Inc. (the “BMC Merger”). On January 1, 2022, we completed a legal entity reorganization pursuant to which, among other things, BMC was merged with and into Builders FirstSource, Inc., with Builders FirstSource, Inc. continuing as the surviving corporation. The BMC Merger expands the Company’s geographic reach and value-added offerings.

The BMC Merger was accounted for by the acquisition method, and accordingly the results of operations have been included in the Company’s consolidated financial statements from the acquisition date. Net sales and income before income taxes attributable to BMC were $6.5 billion and $789.5 million, respectively, for the year ended December 31, 2021. Income before income taxes attributable to BMC reflects an increase in depreciation and amortization expense related to the recording of these assets at fair value as of the acquisition date and is also impacted by changes in the business post-acquisition. The consideration transferred was allocated to the identifiable assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with the excess recorded as goodwill. The fair value of acquired intangible assets of $1.5 billion was primarily related to customer relationships. Immediately following the BMC Merger, the Company settled certain assumed long-term debt of $359.8 million using cash on hand. We incurred transaction-related costs of $17.6 million and $22.5 million related to the BMC Merger in the years ended December 31, 2021 and 2020, respectively, which are included in selling, general and administrative expenses in the accompanying consolidated statement of operations.

The consideration transferred was determined as the sum of the following: (A) the price per share of the Company’s common stock (“BFS common stock”) of $40.81 (based on the closing price per share of BFS common stock on December 31, 2020), multiplied by each of: (1) the approximately 88.7 million shares of BFS common stock issued to BMC stockholders in the BMC Merger (based on the number of shares of BMC common stock outstanding on December 31, 2020, multiplied by the exchange ratio as set forth in the Merger Agreement); and (2) the approximately 0.9 million shares of BFS common stock issued to holders of outstanding BMC restricted stock awards in connection with the BMC Merger (based on the number of BMC restricted stock awards outstanding as of December 31, 2020 (with performance-based awards vesting at target level of performance), multiplied by the exchange ratio as set forth in the Merger Agreement); plus (B) the fair value attributable to fully vested, outstanding options for BMC common stock held by current BMC employees that were assumed by the Company at the effective time and became options to purchase BFS common stock, with the number of shares and exercise price adjusted by the exchange ratio.

The calculation of consideration transferred is as follows (in thousands, except ratios and per share amounts):

Number of BMC common shares outstanding		67,568
Exchange ratio for common shares outstanding per Merger Agreement		1.3125
Shares of BFS common stock issued for BMC outstanding common stock		88,683
Number of BMC stock awards that vested as a result of the BMC Merger		688
Exchange ratio for stock awards expected to vest per Merger Agreement		1.3125
Shares of BFS common stock issued for BMC vested restricted stock awards		903
Price per share of BFS common stock	$	40.81
Fair value of BFS common stock issued for BMC outstanding common stock and vested equity awards	$	3,655,988
Fair value of modified BMC fully vested, unexercised options		2,374
Total consideration transferred	$	3,658,362

On May 3, 2021, we acquired certain assets and operations of John’s Lumber and Hardware Co. (“John’s Lumber”) for a purchase price of $24.8 million. Located in Detroit, Michigan, John’s Lumber is a supplier of lumber and sheet goods, windows, doors, millwork, siding, decking, kitchen and bath and installation services to homebuilders, remodel contractors and retail consumers. This acquisition was funded with a combination of cash on hand and borrowings under our 2026 facility.

On July 1, 2021, we acquired all of the operating affiliates of Cornerstone Building Alliance SW, LLC (“Alliance”) for a purchase price of, $408.9 million, net of cash acquired. Alliance operates in Arizona, primarily serving the greater Phoenix, Tucson, and Prescott Valley metropolitan areas. Alliance manufactures roof trusses and distributes lumber and related products to residential homebuilders and commercial contractors. This acquisition was funded with a combination of cash on hand and borrowings under our 2026 facility.

On August 16, 2021, we acquired certain assets and operations of WTS Paradigm, LLC (“Paradigm”), a software solutions and services provider for the building products industry for a purchase price of $449.6 million, net of cash acquired. Located in Middleton, Wisconsin, Paradigm enhances the Company’s digital capabilities and aligns with our broader vision to provide digital solutions that improve efficiency and solve pain points in the homebuilding process. This acquisition was funded with cash on hand.

On September 1, 2021, we acquired certain assets and operations of CTF Holdings Limited Partnership (“CTF”) for a purchase price of $182.5 million, net of cash acquired. Prior to the acquisition, CTF was the largest independent truss manufacturer in California, supplying framing contractors and builders in both the single and multifamily markets. This acquisition was funded with cash on hand.

On December 6, 2021, we acquired certain assets and operations of Truss Technologies, Inc. (“TTI”) for a purchase price of $29.8 million. TTI operates in Michigan, primarily in the greater Grand Rapids area and manufactures roof and floor trusses and engineered wood products. This acquisition was funded with cash on hand.

On December 31, 2021, we acquired certain assets and operations of National Lumber Massachusetts Business Trust and its subsidiary, as well as the affiliated corporation Oxford Lumber and Materials, Inc. (collectively “National Lumber”) for a combined purchase price of $278.3 million, net of cash acquired. National Lumber is the largest independent lumber and building materials platform in New England, distributing lumber and lumber sheet goods, manufacturing prefabricated components and trusses, and providing various service offerings. The purchase agreement for National Lumber contains an earn-out provision contingent upon the

achievement of specified profitability targets through fiscal year 2022 and includes certain employment restrictions. This earn-out provision could result in an additional cash payment ranging from zero to $21.5 million depending on the level of achievement of the specified targets. This acquisition was funded with cash on hand and borrowings under the 2026 facility.

These six transactions were accounted for by the acquisition method, and accordingly the results of operations have been included in the Company’s consolidated financial statements from each respective acquisition date. The purchase price was allocated to the assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the net assets acquired recorded as goodwill. The fair value of acquired intangible assets of $372.1 million was primarily related to customer relationships, and developed technology acquired from Paradigm. Customer relationships associated with John’s Lumber, Alliance, Paradigm, CTF, TTI and National were $2.6 million, $108.2 million, $22.3 million, $52.8 million, $10.8 million and $53.6 million, respectively. Developed Technology associated with Paradigm was $95.6 million. We recorded goodwill for John’s Lumber, Alliance, Paradigm, CTF, TTI and National of $8.4 million, $181.5 million, $318.2 million, $98.1 million, $9.7 million and $127.5 million, respectively.

Pro forma results of operations as well as net sales and income attributable to the acquisitions discussed above are not presented as these acquisitions did not have a material impact on our results of operations, individually or in the aggregate. We incurred $9.3 million of acquisition related costs attributable to these acquisitions in the year ended December 31, 2021, which is included in selling, general and administrative expenses in the consolidated statements of operations.

On July 26, 2021, we completed the sale of our standalone Eastern U.S. gypsum distribution operations (“Gypsum Divestiture”) for total cash proceeds of $76.2 million, resulting in a gain on sale totaling $26.3 million. The disposition does not meet the criteria for discontinued operations classification, thus the results of operations for this divestiture are reported within the Company’s one reportable segment, and the gain on sale is included within selling, general and administrative expenses in the consolidated statement of operations for the year ended December 31, 2021.

The following table summarizes the aggregate fair values of the assets acquired and liabilities assumed for these acquisitions during the year ended December 31, 2021, (in thousands):

	BMC Merger		All Other Acquisitions		Total
Cash and cash equivalents	$	167,490	$	44,469	$	211,959
Accounts receivable		428,221		146,742		574,963
Other receivables		36,704		6,660		43,364
Inventories		460,146		116,571		576,717
Contract assets		40,983		6,014		46,997
Other current assets		32,891		3,716		36,607
Property, plant and equipment		555,170		70,419		625,589
Operating lease right-of-use assets		179,133		44,083		223,216
Goodwill		1,751,604		743,207		2,494,811
Intangible assets		1,470,000		372,100		1,842,100
Other assets		6,244		641		6,885
Total assets	$	5,128,586	$	1,554,622	$	6,683,208

Accounts payable	$	279,980	$	19,808	$	299,788
Accrued liabilities		201,046		47,407		248,453
Contract liabilities		45,072		22,436		67,508
Operating lease liabilities		180,650		44,083		224,733
Long-term debt		366,797		42		366,839
Deferred income taxes		349,971		1,881		351,852
Other long-term liabilities		46,707		535		47,242
Total liabilities	$	1,470,224	$	136,192	$	1,606,416

Total consideration transferred	$	3,658,363	$	1,418,430	$	5,076,793

The following table reflects the unaudited pro forma operating results for the Company which gives effect to the BMC Merger as if it had occurred on January 1, 2020 (in thousands). The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are not necessarily indicative of future results. The pro forma financial

information includes the historical results of the Company and BMC adjusted for certain items, which are described below, and does not include the effects of any synergies or cost reduction initiatives related to the BMC Merger.

	Twelve Months Ended December 31,
	2021		2020
	(in thousands)
Net sales	$	19,893,856	$	12,766,114
Net income		1,874,632		240,699

Pro forma net income reflects the following adjustments:

•

Property, plant and equipment and intangible assets are assumed to be recorded at their estimated fair values as of January 1, 2020, and are depreciated or amortized over their estimated useful lives from that date.

•

Transaction-related expenses of $17.6 million incurred in 2021 are assumed to have occurred on January 1, 2020, and are presented as an expense during the twelve months ended December 31, 2020.

•

Interest expense related to certain assumed long-term debt settled in connection with the BMC Merger has been adjusted.

•

Cost of sales related to the sell-through of inventory stepped-up in value in connection with the BMC Merger has been adjusted and is presented as cost of sales for the year ended December 31, 2020.

Property, Plant and Equipment

12 Months Ended

Dec. 31, 2021

Property Plant And Equipment [Abstract]

Property, Plant and Equipment

4. Property, Plant and Equipment

Property, plant and equipment consisted of the following at December 31:

	2021		2020
	(in thousands)
Land	$	329,354	$	206,321
Buildings and improvements		565,546		386,922
Machinery and equipment		937,648		517,543
Furniture, fixtures and information technology		138,115		102,309
Construction in progress		80,500		16,568
Finance lease right-of-use assets		6,054		43,256
Property, plant and equipment		2,057,217		1,272,919
Less: accumulated depreciation		671,776		523,789
Property, plant and equipment, net	$	1,385,441	$	749,130

Depreciation expense was $189.3 million, $94.5 million and $84.0 million, of which $43.5 million, $20.8 million, and $19.7 million was included in cost of sales, for the years ended December 31, 2021, 2020, and 2019, respectively.

Included in property, plant and equipment are certain assets held under other finance obligations. These assets are recorded at the present value of the lease payments and include land, buildings and equipment. Amortization charges associated with assets held under other finance obligations are included in depreciation expense.

The following balances held under other finance obligations are included on the accompanying consolidated balance sheet as of December 31:

	2021		2020
	(in thousands)
Land	$	110,878	$	116,638
Buildings and improvements		119,240		131,390
Assets held under other finance obligations		230,118		248,028
Less: accumulated amortization		24,309		25,015
Assets held under other finance obligations, net	$	205,809	$	223,013

Goodwill

12 Months Ended

Dec. 31, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill

5. Goodwill

The following table sets forth the changes in the carrying amount of goodwill for the years ended December 31, 2021and 2020 (in thousands):

Balance as of December 31, 2019 (1)	$	769,022
Acquisitions		16,283
Balance as of December 31, 2020 (1)	$	785,305
BMC Merger		1,751,604
All other acquisitions		743,207
Gypsum Divestiture		(9,924	)
Balance as of December 31, 2021 (1)	$	3,270,192

(1)Goodwill is presented net of accumulated impairment losses of $44.6 million.

In 2021, the change in the carrying amount of goodwill is attributable to the BMC Merger and other acquisitions, as well as the Gypsum Divestiture. The amount allocated to goodwill is attributable to the assembled workforces acquired, expected synergies, and expected growth from the new markets the Company entered into. The goodwill recognized from the BMC Merger and CTF will not be deductible for tax purposes. The $645.1 million of goodwill recognized from the other acquisitions is expected to be tax deductible and will be amortized ratably over a 15-year period for tax purposes.

We closely monitor trends in economic factors and their effects on operating results to determine if an impairment trigger was present that would warrant a reassessment of the recoverability of the carrying amount of goodwill prior to the required annual impairment test in accordance with the Intangibles – Goodwill and Other topic of the Codification.

In evaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. If it is concluded that it is more likely than not that the fair value of the reporting unit is not less than its carrying value, then no further testing of the goodwill is required. However, if we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we perform a quantitative goodwill impairment test. This test identifies both the existence of and the amount of goodwill impairment by comparing the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount goodwill is not impaired. If the carrying amount of a reporting unit exceeds its fair value an impairment loss is recognized in an amount equal to that excess, limited to the amount of goodwill allocated to that reporting unit.

The process of evaluating goodwill for impairment involves the determination of the fair value of our reporting units. As a result of the change in segments discussed in Note 2 to these consolidated financial statements, the Company has determined that the reporting units to be used in the analysis of goodwill impairment should align with its three operating segments. Inherent in such fair value determinations are certain judgments and estimates relating to future cash flows, including our interpretation of current economic indicators and market valuations and assumptions about our strategic plans with regard to our operations. Due to the uncertainties associated with such estimates, actual results could differ from such estimates resulting in further impairment of goodwill.

In evaluating goodwill for impairment at December 31, 2021, we developed the fair value using a discounted cash flow methodology. The discounted cash flow methodology establishes fair value by estimating the present value of the projected future cash flows to be generated from the reporting unit. The discount rate applied to the projected future cash flows to arrive at the present value is intended to reflect all risks of ownership and the associated risks of realizing the stream of projected future cash flows. The discounted cash flow methodology uses our projections of financial performance for a five-year period. The significant assumptions used in the discounted cash flow methodology are the discount rate, the terminal value and the expected future revenues and profitability.

We recorded no goodwill impairment charges in 2021, 2020, and 2019.

Intangible Assets

12 Months Ended

Dec. 31, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Intangible Assets

6. Intangible Assets

The following table presents intangible assets as of December 31:

	2021					2020
	Gross Carrying Amount		Accumulated Amortization			Gross Carrying Amount		Accumulated Amortization
	(in thousands)
Customer relationships	$	1,781,264	$	(328,540	)	$	195,435	$	(94,690	)
Trade names		201,861		(155,141	)		52,061		(38,138	)
Subcontractor relationships		5,440		(3,757	)		5,440		(1,944	)
Non-compete agreements		13,519		(3,243	)		3,719		(2,001	)
Developed technology		95,600		(3,594	)		-		-
Total intangible assets	$	2,097,684	$	(494,275	)	$	256,655	$	(136,773	)

During the years ended December 31, 2021, 2020, and 2019, we recorded amortization expense in relation to the above-listed intangible assets of $358.1 million, $22.1 million, and $16.1 million, respectively. We recorded no intangible asset impairment charges for the years ended December 31, 2021, 2020 or 2019.

In connection with the BMC Merger and current year acquisitions, we recorded intangible assets of $1.8 billion, which includes $1.6 billion of customer relationships, $149.8 million of trade names, $95.6 million of developed technology, and $9.8 million of non-compete agreements. The weighted average useful lives of the acquired intangible assets are 12.2 years in total, 12.5 years for customer relationships, 7.0 years for trade names, 9.1 years for developed technology and 5.7 years for non-compete agreements. The fair value of acquired customer relationship intangible assets was primarily estimated by applying the multi-period excess earnings method, which involved the use of significant estimates and assumptions primarily related to forecasted revenue growth rates, gross margin, contributory asset charges, customer attrition rates, and market-participant discount rates. These measures are based on significant Level 3 inputs not observable in the market. Key assumptions developed based on the Company’s historical experience, future projections and comparable market data include future cash flows, long-term growth rates, attrition rates and discount rates.

In connection with the Gypsum Divestiture, we derecognized $0.5 million of intangible assets, net. Refer to Note 3 – Business Combinations and Dispositions for additional information.

The following table presents the estimated amortization expense for intangible assets for the years ending December 31 (in thousands):

2022	$	260,867
2023		230,168
2024		201,423
2025		172,843
2026		153,052
Thereafter		585,056
Total future net intangible amortization expense	$	1,603,409

Accrued Liabilities

12 Months Ended

Dec. 31, 2021

Payables And Accruals [Abstract]

Accrued Liabilities

7. Accrued Liabilities

Accrued liabilities consisted of the following:

	December 31, 2021		December 31, 2020
	(in thousands)
Accrued payroll and other employee related expenses	$	385,800	$	176,379
Accrued business taxes		81,055		46,717
Self-insurance reserves		68,060		38,642
Accrued rebates payable		51,805		18,592
Amounts accrued for repurchases of common stock		51,545	—
Accrued interest		31,666		13,567
Income taxes payable		2,230		12,236