10-Q
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li

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, 2022

OR

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

 

 

Smaller 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 3, 2022 was 147,175,704.

 

 


 

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 Three and Nine Months Ended September 30, 2022 and 2021

 

3

 

 

Condensed Consolidated Balance Sheet (Unaudited) as of September 30, 2022 and December 31, 2021

 

4

 

 

Condensed Consolidated Statement of Cash Flows (Unaudited) for the Nine Months ended September 30, 2022 and 2021

 

5

 

 

Condensed Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) for the Three and Nine Months Ended September 30, 2022 and 2021

 

6

 

 

Notes to Condensed Consolidated Financial Statements (Unaudited)

 

7

Item 2.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

17

Item 3.

 

Quantitative and Qualitative Disclosures About Market Risk

 

24

Item 4.

 

Controls and Procedures

 

24

 

 

PART II — OTHER INFORMATION

 

26

Item 1.

 

Legal Proceedings

 

26

Item 1A.

 

Risk Factors

 

26

Item 2.

 

Unregistered Sales of Equity Securities and Use of Proceeds

 

26

Item 6.

 

Exhibits

 

27

 

2


 

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)

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Net sales

 

$

5,761,463

 

 

$

5,508,590

 

 

$

18,368,853

 

 

$

15,259,047

 

Cost of sales

 

 

3,746,731

 

 

 

3,796,138

 

 

 

12,109,601

 

 

 

10,893,890

 

Gross margin

 

 

2,014,732

 

 

 

1,712,452

 

 

 

6,259,252

 

 

 

4,365,157

 

Selling, general and administrative expenses

 

 

1,000,204

 

 

 

875,012

 

 

 

3,015,051

 

 

 

2,599,523

 

Income from operations

 

 

1,014,528

 

 

 

837,440

 

 

 

3,244,201

 

 

 

1,765,634

 

Interest expense, net

 

 

44,111

 

 

 

35,954

 

 

 

156,140

 

 

 

95,593

 

Income before income taxes

 

 

970,417

 

 

 

801,486

 

 

 

3,088,061

 

 

 

1,670,041

 

Income tax expense

 

 

232,410

 

 

 

188,341

 

 

 

723,205

 

 

 

387,081

 

Net income

 

$

738,007

 

 

$

613,145

 

 

$

2,364,856

 

 

$

1,282,960

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

4.75

 

 

$

3.00

 

 

$

14.12

 

 

$

6.23

 

Diluted

 

$

4.72

 

 

$

2.98

 

 

$

13.98

 

 

$

6.18

 

Weighted average common shares:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

155,309

 

 

 

204,268

 

 

 

167,522

 

 

 

205,976

 

Diluted

 

 

156,493

 

 

 

205,630

 

 

 

169,111

 

 

 

207,513

 

 

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

 

3


 

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEET

(Unaudited)

 

(in thousands, except per share amounts)

 

September 30,
2022

 

 

December 31,
2021

 

ASSETS

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

84,982

 

 

$

42,603

 

Accounts receivable, less allowances of $54,156 and $39,510 at September 30, 2022 and December 31, 2021, respectively

 

 

1,924,912

 

 

 

1,708,796

 

Other receivables

 

 

268,694

 

 

 

255,075

 

Inventories, net

 

 

1,758,881

 

 

 

1,626,244

 

Contract assets

 

 

240,346

 

 

 

207,587

 

Other current assets

 

 

142,316

 

 

 

127,964

 

Total current assets

 

 

4,420,131

 

 

 

3,968,269

 

Property, plant and equipment, net

 

 

1,491,622

 

 

 

1,385,441

 

Operating lease right-of-use assets, net

 

 

500,031

 

 

 

457,833

 

Goodwill

 

 

3,453,340

 

 

 

3,270,192

 

Intangible assets, net

 

 

1,637,358

 

 

 

1,603,409

 

Other assets, net

 

 

35,216

 

 

 

29,199

 

Total assets

 

$

11,537,698

 

 

$

10,714,343

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

1,087,994

 

 

$

1,093,370

 

Accrued liabilities

 

 

850,758

 

 

 

718,904

 

Contract liabilities

 

 

250,166

 

 

 

216,097

 

Current portion of operating lease liabilities

 

 

100,972

 

 

 

96,680

 

Current maturities of long-term debt

 

 

3,837

 

 

 

3,660

 

Total current liabilities

 

 

2,293,727

 

 

 

2,128,711

 

Noncurrent portion of operating lease liabilities

 

 

414,911

 

 

 

375,289

 

Long-term debt, net of current maturities, discounts and issuance costs

 

 

3,169,429

 

 

 

2,926,122

 

Deferred income taxes

 

 

304,939

 

 

 

362,121

 

Other long-term liabilities

 

 

130,089

 

 

 

119,619

 

Total liabilities

 

 

6,313,095

 

 

 

5,911,862

 

Commitments and contingencies (Note 11)

 

 

 

 

 

 

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; 148,994 and 179,820 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

1,490

 

 

 

1,798

 

Additional paid-in capital

 

 

4,252,851

 

 

 

4,260,670

 

Retained earnings

 

 

970,262

 

 

 

540,013

 

Total stockholders' equity

 

 

5,224,603

 

 

 

4,802,481

 

Total liabilities and stockholders' equity

 

$

11,537,698

 

 

$

10,714,343

 

 

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

 

4


 

BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)

 

 

 

Nine Months Ended
September 30,

 

(in thousands)

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

Net income

 

$

2,364,856

 

 

$

1,282,960

 

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

 

 

 

 

 

 

Depreciation and amortization

 

 

355,472

 

 

 

401,500

 

Deferred income taxes

 

 

(57,183

)

 

 

(65,696

)

Stock-based compensation expense

 

 

26,652

 

 

 

25,288

 

Net gain on sale of assets

 

 

(1,813

)

 

 

(32,235

)

Other non-cash adjustments

 

 

31,026

 

 

 

4,805

 

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

 

 

 

 

 

 

Receivables

 

 

(91,485

)

 

 

(615,453

)

Inventories

 

 

(61,926

)

 

 

(321,068

)

Contract assets

 

 

(32,596

)

 

 

(141,058

)

Other current assets

 

 

(2,982

)

 

 

5,491

 

Other assets and liabilities

 

 

5,307

 

 

 

16,653

 

Accounts payable

 

 

(31,260

)

 

 

103,006

 

Accrued liabilities

 

 

99,778

 

 

 

177,874

 

Contract liabilities

 

 

24,020

 

 

 

61,150

 

Net cash provided by operating activities

 

 

2,627,866

 

 

 

903,217

 

Cash flows from investing activities:

 

 

 

 

 

 

Cash used for acquisitions, net of cash acquired

 

 

(619,551

)

 

 

(898,113

)

Proceeds from divestiture of business

 

 

 

 

 

76,162

 

Purchases of property, plant and equipment

 

 

(205,241

)

 

 

(160,179

)

Proceeds from sale of property, plant and equipment

 

 

7,461

 

 

 

11,728

 

Net cash used in investing activities

 

 

(817,331

)

 

 

(970,402

)

Cash flows from financing activities:

 

 

 

 

 

 

Borrowings under revolving credit facility

 

 

5,267,000

 

 

 

2,420,000

 

Repayments under revolving credit facility

 

 

(5,405,000

)

 

 

(2,495,000

)

Proceeds from long-term debt and other loans

 

 

1,001,500

 

 

 

1,000,000

 

Repayments of long-term debt and other loans

 

 

(615,082

)

 

 

(471,360

)

Payments of debt extinguishment costs

 

 

(20,672

)

 

 

(2,475

)

Payments of loan costs

 

 

(16,797

)

 

 

(17,970

)

Exercise of stock options

 

 

440

 

 

 

537

 

Repurchase of common stock

 

 

(1,979,545

)

 

 

(565,618

)

Net cash used in financing activities

 

 

(1,768,156

)

 

 

(131,886

)

Net change in cash and cash equivalents

 

 

42,379

 

 

 

(199,071

)

Cash and cash equivalents at beginning of period

 

 

42,603

 

 

 

423,806

 

Cash and cash equivalents at end of period

 

$

84,982

 

 

$

224,735

 

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information:

 

 

 

 

 

 

Cash paid for interest

 

$

138,034

 

 

$

75,531

 

Cash paid for income taxes

 

 

790,994

 

 

 

414,515

 

Supplemental disclosures of non-cash activities:

 

 

 

 

 

 

Non-cash or accrued consideration for acquisitions

 

$

9,985

 

 

$

3,658,362

 

Accrued purchases of property, plant and equipment

 

 

12,711

 

 

 

13,164

 

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

 

 

89,400

 

 

 

49,135

 

Assets acquired under finance lease obligations

 

 

 

 

 

1,644

 

Amounts accrued for repurchases of common stock

 

 

41,826

 

 

 

30,756

 

 

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

5


 

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, 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2021

 

 

179,820

 

 

$

1,798

 

 

$

4,260,670

 

 

$

540,013

 

 

$

4,802,481

 

Vesting of restricted stock units

 

 

1,018

 

 

 

11

 

 

 

(11

)

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

8,840

 

 

 

 

 

8,840

 

Repurchase of common stock (1)

 

 

(3,593

)

 

 

(36

)

 

 

 

 

 

(285,915

)

 

 

(285,951

)

Exercise of stock options

 

 

42

 

 

 

 

 

 

421

 

 

 

 

 

421

 

Shares withheld for restricted stock units vested

 

 

(401

)

 

 

(4

)

 

 

(29,380

)