Builders FirstSource, Inc 10-Q for FY2026 Q3
Builders FirstSource, Inc. (BLDR)
About this 10-Q
Builders FirstSource, Inc filed this 10-Q on October 29, 2026, covering the quarter ended September 30, 2026 (FY2026 Q3).
Headline figures
Quarter ended September 30, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $3.85B
- down 2.2% from $3.94B a year earlier
- Net income
- $60.41M
- down 50.6% from net income of $122.38M a year earlier
- Diluted EPS
- $0.56
- down 49.1% from $1.10 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
For the quarterly period ended
OR
For the transition period from to
Commission File Number
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
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(Address of principal executive offices) |
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(Zip Code) |
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(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 |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).Yes ☐ No
The number of shares of the issuer’s common stock, par value $0.01, outstanding as of October 23, 2026, was
BUILDERS FIRSTSOURCE, INC.
Index to Form 10-Q
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Item 1. |
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Condensed Consolidated Balance Sheets (Unaudited) as of September 30, 2026, and December 31, 2025 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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Item 4. |
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Item 1. |
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Item 1A. |
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Item 2. |
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Item 5. |
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Item 6. |
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2
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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Three Months Ended |
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Nine Months Ended |
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(in thousands, except per share amounts) |
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2026 |
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2025 |
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2026 |
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2025 |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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Cost of sales |
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Gross margin |
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Selling, general and administrative expenses |
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Income from operations |
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Interest expense, net |
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Income before income taxes |
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Income tax expense (benefit) |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Net income per share: |
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Basic |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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Weighted average common shares: |
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Basic |
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Diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except par value amounts) |
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September 30, |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, less allowances of $ |
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Other receivables |
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Inventories, net |
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Contract assets |
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Other current assets |
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Total current assets |
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Property, plant and equipment, net |
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Operating lease right-of-use assets, net |
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Goodwill |
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Intangible assets, net |
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Deferred income taxes |
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Other assets, net |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Contract liabilities |
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Current portion of operating lease liabilities |
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Current maturities of long-term debt |
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Total current liabilities |
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Noncurrent portion of operating lease liabilities |
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Long-term debt, net of current maturities, discounts and issuance costs |
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Deferred income taxes |
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Other long-term liabilities |
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Total liabilities |
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(Note 11) |
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Stockholders’ equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
4
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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Nine Months Ended |
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(in thousands) |
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2026 |
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2025 |
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Cash flows from operating activities: |
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Net income |
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$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
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Deferred income taxes |
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Stock-based compensation expense |
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Other non-cash adjustments |
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Changes in assets and liabilities, net of assets acquired and liabilities assumed: |
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Receivables |
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Inventories, net |
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Contract assets |
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Other current assets |
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Other assets and liabilities |
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Accounts payable |
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Accrued liabilities |
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Contract liabilities |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Cash used for acquisitions, net of cash acquired |
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Purchases of property, plant and equipment |
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Proceeds from sale of property, plant and equipment |
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Cash used for equity investments |
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Net cash used in investing activities |
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Cash flows from financing activities: |
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Borrowings under revolving credit facility |
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Repayments under revolving credit facility |
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Proceeds from long-term debt and other loans |
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— |
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Repayments of long-term debt and other loans |
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( |
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( |
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Payments of loan costs |
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— |
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Payments of acquisition-related deferred and contingent consideration |
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Tax withholdings on and exercises of equity awards |
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Repurchase of common stock |
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Net cash (used in) provided by financing activities |
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Net change in cash and cash equivalents |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosures of cash flow information: |
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Cash paid for interest |
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$ |
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$ |
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Cash paid for income taxes |
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Supplemental disclosures of non-cash activities: |
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Right-of-use assets obtained in exchange for operating lease obligations |
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$ |
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$ |
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Accrued consideration for acquisitions |
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Accrued purchases of property, plant and equipment |
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Accrued excise tax on repurchases of common stock |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
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Common Stock |
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Additional |
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Retained Earnings |
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(in thousands) |
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Shares |
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Amount |
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Paid-in Capital |
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(Accumulated Deficit) |
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Total |
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Balance at December 31, 2024 |
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$ |
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$ |
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$ |
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$ |
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Vesting of restricted stock units |
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( |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Repurchase of common stock (1) |
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( |
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( |
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— |
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( |
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( |
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Exercise of stock options |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
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( |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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Balance at March 31, 2025 |
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Vesting of restricted stock units |
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( |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Repurchase of common stock (1)(3) |
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( |
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( |
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( |
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( |
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Exercise of stock options |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
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( |
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— |
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Net income |
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— |
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— |
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— |
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Balance at June 30, 2025 |
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— |
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Vesting of restricted stock units |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Exercise of stock options |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
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— |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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Balance at September 30, 2025 |
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$ |
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$ |
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$ |
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$ |
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Balance at December 31, 2025 |
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$ |
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$ |
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$ |
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$ |
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Vesting of restricted stock units |
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( |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Repurchase of common stock (2)(3) |
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( |
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( |
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( |
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( |
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( |
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Exercise of stock options |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
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( |
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( |
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— |
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( |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balance at March 31, 2026 |
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— |
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Vesting of restricted stock units |
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( |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
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— |
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( |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balance at June 30, 2026 |
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( |
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Vesting of restricted stock units |
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— |
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— |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Shares withheld for restricted stock units vested |
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( |
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— |
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( |
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— |
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( |
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Net income |
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— |
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— |
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— |
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Balance at September 30, 2026 |
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$ |
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$ |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
BUILDERS FIRSTSOURCE, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
Builders FirstSource, Inc., a Delaware corporation formed in
In the opinion of management, the accompanying unaudited condensed consolidated financial statements include all recurring adjustments and normal accruals necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the dates and periods presented. Results for interim periods are not necessarily indicative of the results to be expected during the remainder of the current year or for any future period. Intercompany transactions are eliminated in consolidation.
The Condensed Consolidated Balance Sheet as of December 31, 2025, is derived from the audited consolidated financial statements but does not include all disclosures required by Generally Accepted Accounting Principles in the United States of America (“GAAP”). The Condensed Consolidated Balance Sheet as of December 31, 2025, and the unaudited condensed consolidated financial statements included herein should be read in conjunction with the more detailed audited consolidated financial statements for the year ended December 31, 2025, included in our most recent annual report on Form 10-K for the year ended December 31, 2025 (“2025 Form 10-K”). Accounting policies used in the preparation of these unaudited condensed consolidated financial statements are consistent with the accounting policies described in the Notes to Consolidated Financial Statements included in our 2025 Form 10-K.
Business Combinations
When they meet the requirements under ASC 805, Business Combinations, merger and acquisition transactions are accounted for using the acquisition method, and accordingly the results of operations of the acquiree are included in the Company’s consolidated financial statements from the acquisition date. The consideration transferred is allocated to the identifiable assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with any excess recorded as goodwill. Transaction-related costs are expensed in the period the costs are incurred. During the measurement period, which may be up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding adjustment to goodwill.
Segments
We offer an integrated solution to our customers providing manufacturing, supply, and installation of a full range of structural and related building products. Given the span and depth of our geographical reach, our locations are organized into geographical divisions. During the second quarter of 2026, the Company realigned its geographical divisional structure from
Our operating segments have similar customers, products and services, and distribution methods. Due to these similarities, along with the similar economic profitability achieved across our operating segments, we aggregate our
Cloud Computing Arrangements
We assess cloud computing arrangements to determine whether the contract meets the definition of a service contract or conveys a software license. When cloud computing arrangements meet the definition of a service contract, we capitalize expenditures for implementation, set-up, and other upfront costs incurred. Once the implementation of a cloud computing arrangement is complete and ready for its intended use, we amortize the costs over the expected term of the hosting arrangement using the straight-line method to the same income statement line as the associated cloud operating expenses. We had capitalized costs, net of amortization, included in other current assets totaling $
7
Comprehensive Income
Comprehensive income is equal to net income for all periods presented.
Equity Investments
On August 25, 2026, the Company announced a strategic investment in Digs, an AI-based platform serving the homebuilding industry, and participated as the solo lead investor on Digs' $
The Company’s equity investments are accounted for using equity method accounting and are included in other assets, net in the accompanying Condensed Consolidated Balance Sheets.
Reclassifications
The prior period revenue by product category amounts disclosed in Note 3 have been reclassified to conform to current year presentation. These reclassifications had no impact on net income, total assets and liabilities, stockholders’ equity or cash flows as previously reported.
Recent Accounting Pronouncements
In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date (“ASU 2025-01”). ASU 2024-03 requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027. The requirements will be applied prospectively with the option for retrospective application and early adoption is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
In September 2025, the FASB issued ASU No. 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). The standard applies to costs incurred to develop or obtain software for internal use. ASU 2025-06 amends the existing standard that refers to various stages of a software development project to align better with current software development methods, such as agile programming. Under the new standard, entities will commence capitalizing eligible costs when (i) management has authorized and committed to funding the software project and (ii) it is probable that the project will be completed and the software will be used to perform the function intended. The amendments in ASU 2025-06 are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
2. Business Combinations
During the first nine months of 2026, we completed the acquisitions of (i) Premium Building Components, Inc. (“PBC”), (ii) Precision Design and Trim, LLC (“Precision Design”), (iii) Innovative Construction Group, LLC (“ICG”), and (iv) Gleckler, LLC, Gleckler & Sons Construction, LLC, Gleckler and Sons Engineering, LLC (collectively, “Gleckler and Sons”) for a combined total purchase consideration of approximately $
During the first nine months of 2025, we completed the acquisitions of (i) Alpine Lumber Company (“Alpine Lumber”), (ii) O.C. Cluss Lumber Company (“Cluss Lumber”), (iii) Truckee Tahoe Lumber Company (“Truckee Tahoe”), and (iv) St. George Truss Company (“St. George Truss”) for a combined total purchase consideration of approximately $
The acquisitions were funded with a combination of cash on hand and borrowings under our $
8
Pro forma financial information for the acquisitions discussed above for 2026 and 2025 is not presented as these acquisitions did not have a material impact on our results of operations, individually or in the aggregate for each respective period.
The following table summarizes the aggregate fair values of the assets acquired and liabilities assumed for acquisitions during the periods ended September 30, 2026, and September 30, 2025:
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Total Acquisitions |
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2026 |
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2025 |
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(in thousands) |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable |
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Other receivables |
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Inventories |
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Contract assets |
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Other current assets |
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Property, plant and equipment |
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Operating lease right-of-use assets |
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Finance lease right-of-use assets |
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Intangible assets |
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Other assets |
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Total assets |
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Accounts payable |
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Accrued liabilities |
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Contract liabilities |
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Operating lease liabilities |
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Finance lease liabilities |
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Other long-term liabilities |
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Total liabilities |
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Goodwill |
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Total purchase consideration |
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Accrued contingent consideration and purchase price adjustments |
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( |
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( |
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Less: cash acquired |
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( |
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Total cash consideration |
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$ |
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$ |
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3. Revenue
The following table disaggregates our net sales by product category:
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Three Months Ended |
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Nine Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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(in thousands) |
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Manufactured products |
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$ |
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$ |
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$ |
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$ |
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Windows, doors and millwork |
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Specialty building products and services |
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Lumber and lumber sheet goods |
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Net sales |
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$ |
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$ |
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$ |
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$ |
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As our product category alignment continues to be refined, we have reclassified prior periods’ net sales by product category to conform to current period presentation. The impact to each of the prior periods’ net sales for manufactured products, windows, doors and millwork, specialty building products and services, and lumber and lumber sheet goods was
The timing of revenue recognition, invoicing, and cash collection results in accounts receivable, unbilled receivables, contract assets, and contract liabilities. Contract assets include unbilled amounts when the revenue recognized exceeds the amount billed to the customer, and amounts representing a right to payment from previous performance that is conditional on something other than passage of time, such as retainage. Contract liabilities consist of customer advances and deposits, and deferred revenue.
9
Through September 30, 2026, and 2025, we recognized as revenue substantially all of the contract liabilities balances outstanding as of December 31, 2025, and 2024, respectively.
4. Net Income per Common Share
Net income per common share (“EPS”) is calculated in accordance with the Earnings per Share topic of the FASB Accounting Standards Codification, which requires the presentation of basic and diluted EPS. Basic EPS is computed using the weighted average number of common shares outstanding during the period. Diluted EPS is computed using the weighted average number of common shares outstanding during the period, plus the dilutive effect of potential common shares.
The table below presents the calculation of basic and diluted EPS:
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Three Months Ended |
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Nine Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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(in thousands, except per share amounts) |
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Numerator: |
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Net income |
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$ |
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$ |
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$ |
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$ |
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Denominator: |
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Weighted average shares outstanding, basic |
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Dilutive effect of options and RSUs |
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Weighted average shares outstanding, diluted |
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Net income per share: |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Antidilutive and contingent RSUs excluded from diluted EPS |
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5. Goodwill
The following table sets forth the changes in the carrying amount of goodwill:
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(in thousands) |
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Balance as of December 31, 2025 (1) |
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$ |
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Acquisitions |
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Balance as of September 30, 2026 (1) |
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$ |
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(1) Goodwill is presented net of historical accumulated impairment losses of $
In 2026, the change in the carrying amount of goodwill is attributable to the acquisitions completed during the period. The amount allocated to goodwill is attributable to the assembled workforce, synergies, and expected growth from the expanded product and service offerings of the acquisitions. The goodwill recognized from the current year acquisitions is expected to be deductible and amortized ratably over a
As a result of the division realignment discussed in Note 1, the Company reassessed its reporting unit structure during the second quarter of 2026 and determined that the division realignment resulted in a change in the composition of its reporting units. Accordingly, goodwill was reassigned to the affected reporting units using a relative fair value approach. In connection with the realignment, the Company performed qualitative impairment assessments both before and after the change in reporting unit structure. For each assessment, the Company evaluated all relevant events or circumstances that could impact estimates for fair value and determined it was more likely than not that the fair value of each reporting unit exceeded its carrying amount and that no impairment existed as of the date of the realignment. The Company further evaluated whether any impairment triggering events or changes in circumstances occurred subsequent to the realignment through September 30, 2026, and determined that no such events or circumstances existed that would indicate potential impairment.
10
6. Intangible Assets
The following table presents intangible assets as of:
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September 30, 2026 |
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December 31, 2025 |
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Gross |
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Accumulated Amortization |
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Gross |
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Accumulated Amortization |
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(in thousands) |
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Customer relationships |
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$ |
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$ |
( |
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$ |
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$ |
( |
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Developed technology |
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( |
) |
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( |
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Trade names |
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( |
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( |
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Non-compete agreements |
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( |
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( |
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Total intangible assets |
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$ |
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$ |
( |
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$ |
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$ |
( |
) |
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In connection with the current year acquisitions, we recorded customer relationship intangible assets of $
During the three and nine months ended September 30, 2026, we recorded amortization expense in relation to the above-listed intangible assets of $
During the second quarter of 2026, in connection with the division realignment disclosed in Note 1, we derecognized certain intangible assets, including customer relationships, developed technology, trade names, and non-compete agreements as they were fully amortized, resulting in a decrease in the gross carrying amount of the intangible assets and the related accumulated amortization. The derecognition had no impact on net income, stockholders’ equity, or cash flows.
The following table presents the estimated amortization expense for intangible assets for the years ending December 31:
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(in thousands) |
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2026 (from October 1, 2026) |
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$ |
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2027 |
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2028 |
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2029 |
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2030 |
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Thereafter |
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Total future intangible amortization expense |
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$ |
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7. Accrued Liabilities
Accrued liabilities consisted of the following as of:
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September 30, |
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December 31, |
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(in thousands) |
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Accrued payroll and other employee related expenses |
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$ |
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$ |
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Self-insurance reserves |
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Accrued business and other taxes |
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Accrued interest |
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Accrued rebates payable |
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Accrued professional service fees |
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Other |
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Total accrued liabilities |
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$ |
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$ |
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11
8. Long-Term Debt
Long-term debt consisted of the following as of:
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September 30, |
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December 31, |
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(in thousands) |
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Revolving credit facility (1) |
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$ |
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$ |
— |
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Other finance obligations |
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Finance lease obligations |
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Unamortized debt discount/premium and debt issuance costs |
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( |
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( |
) |
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Less: current maturities of long-term debt |
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Long-term debt, net of current maturities, discounts and issuance costs |
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$ |
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$ |
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(1) The weighted average interest rate was
The Company’s Revolving Facility and outstanding senior unsecured notes are discussed in more detail in our 2025 Form 10-K.
Fair Value
As of September 30, 2026, and December 31, 2025, the Company does not have any financial instruments that are measured at fair value on a recurring basis. We have elected to report the value of our Revolving Facility,
The following table presents the fair value of each such series of notes as of September 30, 2026, which was determined using Level 2 inputs based on market prices:
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(in thousands) |
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$ |
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We were not in violation of any covenants or restrictions imposed by any of our debt agreements at September 30, 2026.
9. Employee Stock-Based Compensation
2026 Equity Incentive Plan
On May 14, 2026, the Company’s stockholders approved the Builders FirstSource, Inc. 2026 Equity Incentive Plan (the “2026 Plan”). Under the 2026 Plan, the Company is authorized to grant awards in the form of incentive stock options, non-qualified stock options, stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), other stock-based awards, and cash-based awards. As of September 30, 2026, the Company had reserved
Time Based Restricted Stock Unit Grants
12
In the first nine months of 2026, our board of directors granted
Performance, Market and Service Condition Based Restricted Stock Unit Grants
In the first nine months of 2026, our board of directors granted
Expected volatility (Company) |
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Expected volatility (peer group median) |
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Correlation between the Company and peer group median |
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Expected dividend yield |
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Risk-free rate |
The expected volatilities and correlation are based on the historical daily returns of our common stock and the common stocks of the constituents of our peer group over the most recent period equal to the measurement period. The expected dividend yield is based on our history of not paying regular dividends in the past and our current intention to not pay regular dividends in the foreseeable future. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant and has a term equal to the measurement period.
Employee Stock Purchase Plan
On May 14, 2026, the Company’s stockholders approved the Builders FirstSource, Inc. Employee Stock Purchase Plan (the “ESPP”). A total of
Expected volatility |
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Expected dividend yield |
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Risk-free rate |
The expected volatility is based on the historical daily returns of our common stock over the most recent period equal to the measurement period. The expected dividend yield is based on our history of not paying regular dividends in the past and our current intention to not pay regular dividends in the foreseeable future. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant and has a term equal to the measurement period.
10. Income Taxes
A reconciliation of the statutory federal income tax rate to our effective rate for continuing operations is provided below:
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Three Months Ended |
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Nine Months Ended |
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2026 |
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2025 |
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2026 |
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2025 |
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Statutory federal income tax rate |
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% |
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% |
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% |
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% |
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Discrete federal research and development credits, including non-cash settlement agreement |
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State income taxes, net of federal income tax |
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( |
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( |
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Stock-based compensation windfall/shortfall |
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( |
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( |
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Permanent differences and other |
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( |
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( |
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( |
) |
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( |
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Effective tax rate for continuing operations |
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( |
)% |
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% |
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% |
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% |
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13
During the second quarter of 2026, the Company entered into a settlement agreement with the Internal Revenue Service (the “IRS”) regarding the treatment of certain research and development expenses claimed in prior years. As a result of the settlement agreement, the Company recognized a discrete income tax expense of approximately $
We base our estimate of deferred tax assets and liabilities on current tax laws and rates. In certain cases, we also base our estimate on business plan forecasts and other expectations about future outcomes. Changes in existing tax laws or rates could affect our actual tax results, and future business results may affect the amount of our deferred tax liabilities or the valuation of our deferred tax assets over time. Due to uncertainties in the estimation process, particularly with respect to changes in facts and circumstances in future reporting periods, as well as the residential homebuilding industry’s cyclicality and sensitivity to changes in economic conditions, it is possible that actual results could differ from the estimates used in previous analyses. These differences could have a material impact on our consolidated results of operations or financial position.
On July 4, 2025, H.R.1 - One Big Beautiful Bill was enacted into law (the “Act”). The Act makes permanent key elements of the Tax Cuts and Jobs Act, including
11. Commitments and Contingencies
As of September 30, 2026, we had outstanding letters of credit totaling $
The Company has a number of known and threatened construction defect legal claims. While these claims are generally covered under the Company’s existing insurance programs to the extent any loss exceeds the deductible, there is a reasonable possibility of loss that is not able to be estimated at this time because (i) many of the proceedings are in the discovery stage, (ii) the outcome of future litigation is uncertain, and/or (iii) the nature of the claims is complex. Although the Company cannot estimate a reasonable range of loss based on currently available information, the resolution of these matters could materially affect the Company's financial position, results of operations or cash flows.
In addition, we are involved in various other claims and lawsuits incidental to the conduct of our business in the ordinary course. We carry insurance coverage in amounts in excess of our self-insured retention that we believe to be reasonable under the circumstances and that may or may not cover any or all of our liabilities in respect of such claims and lawsuits. Although the ultimate disposition of these other proceedings cannot be predicted with certainty, management believes the outcome of any such claims that are pending or threatened, either individually or on a combined basis, will not materially affect our consolidated financial position, cash flows or results of operations. However, there can be no assurances that future adverse judgments and costs would not be material to our results of operations or liquidity for a particular period.
12. Significant Segment Expenses
As discussed in Note 1, during the second quarter of 2026, the Company reorganized the structure of its internal organization from
The primary measures reviewed by the CODM, including revenue, gross margin, and income before income taxes, are shown in these condensed consolidated financial statements. The CODM uses these measures to assess performance for the reportable segment and to decide how to allocate resources. Gross margin and income before income taxes are driven by the segment’s significant expense items of cost of sales and compensation and benefits, as well as other segment items. Cost of sales is shown in these condensed consolidated financial statements. Compensation and benefits, which are reported within selling, general, and administrative expenses in these condensed consolidated financial statements, were $
14
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion of our financial condition and results of operations should be read in conjunction with the Management’s Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and notes thereto for the year ended December 31, 2025, included in our 2025 Form 10-K. The following discussion and analysis should also be read in conjunction with the unaudited condensed consolidated financial statements appearing elsewhere in this report.
Cautionary Statement
Statements in this report and the schedules hereto that are not purely historical facts or that necessarily depend upon future events, including statements about expected market share gains, forecasted financial performance, industry and business outlook, including single and multifamily housing starts and repair and remodel activity, capital allocation, acquisitions and integration, or other statements about anticipations, beliefs, expectations, hopes, intentions or strategies for the future, may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Readers are cautioned not to place undue reliance on forward-looking statements. In addition, oral statements made by the Company’s directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. All forward-looking statements are based upon currently available information and the Company’s current assumptions, expectations and projections about future events. Forward-looking statements are by nature inherently uncertain, and actual results or events may differ materially from the results or events described in the forward-looking statements as a result of many factors. Forward-looking statements involve risks and uncertainties, many of which are beyond the Company’s control or may be currently unknown to the Company, that could cause actual events or results to differ materially from the events or results described in the forward-looking statements; such risks or uncertainties include those related to the Company’s growth strategies, including acquisitions and the integration of acquired businesses and realization of their anticipated benefits, organic growth and digital and technology strategies, including the Company’s ability to drive growth by incorporating artificial intelligence and machine learning solutions into its platform, or the dependence of the Company’s revenues and operating results on, among other things, the homebuilding industry and, to a lesser extent, repair and remodel activity, which in each case is dependent on economic conditions, including inflation, interest rates, home size and affordability, consumer confidence, labor and supply shortages, tariffs and duties, and also lumber and other commodity prices, as well as risks related to the Company’s level of indebtedness and ability to reduce leverage, the outcome of tax positions and settlements with taxing authorities, and the implementation of its enterprise resource planning system. The Company may not succeed in addressing these and other risks. Further information regarding the risk factors that could affect the Company’s financial and other results can be found in Part I, Item 1A, “Risk Factors” of the Company’s 2025 Form 10-K and may also be described from time to time in the other reports the Company files with the Securities and Exchange Commission. Consequently, all forward-looking statements in this report are qualified by the factors, risks and uncertainties contained therein. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
COMPANY OVERVIEW
We are a leading provider of building materials for professional builders in new residential construction and repair and remodeling. We deliver integrated homebuilding solutions by manufacturing, supplying, and installing a full range of structural and related building products. The Company operates approximately 575 locations in 43 states across the United States, which are internally organized into two geographic operating divisions (East and West), which represent the Company’s operating segments. Due to the similar economic characteristics, categories of products, distribution methods and customers, our two operating segments are aggregated into one reportable segment.
Our leading network of strategically located manufacturing facilities produces factory-built roof and floor trusses, wall panels, vinyl windows, custom millwork and trim, manufactured and semi-custom modular homes, as well as engineered wood that we design and cut specifically for each home. We also assemble interior and exterior doors into pre-hung units for easy installation. Additionally, we distribute a wide range of building products, including lumber, sheet goods, windows, doors, millwork, and specialty items. Our services, which vary by market, include, among others, professional installation, turnkey framing, and shell construction. Supported by the latest construction innovations and digital solutions, we help drive greater efficiency across homebuilding.
RECENT DEVELOPMENTS
Business Combinations
Through September 30, 2026, we completed the acquisitions of PBC, Precision Design, ICG, and Gleckler and Sons for an aggregate purchase price of approximately $129.3 million. Among other opportunities, these acquisitions further expand our market footprint and provide additional operations in our value-added product categories. These transactions are described in further detail in Note 2 to the condensed consolidated financial statements included in Part I, Item 1 of this quarterly report on Form 10-Q.
Investment
On August 25, 2026, we announced a strategic investment in, and collaboration with, Digs, an AI-based platform for homebuilders and homeowners. Under the partnership, the Company was the solo lead investor on Digs’ $25.3 million Series A financing and also entered into a five-year commercial agreement with Digs to accelerate product development, strengthen platform integration, and expand AI capabilities. The investment in and collaboration with Digs is intended to strengthen our digital ecosystem to better serve homebuilders by helping them eliminate disconnected workflows, reduce manual work, and improve the homeowner experience from pre-construction through warranty and beyond.
15
Company Shares Repurchases
During the nine months ended September 30, 2026, the Company repurchased 3.3 million shares at a weighted average price of $92.25 per share, for a total cost of $302.9 million, inclusive of applicable fees and taxes. On April 29, 2026, the Company’s board of directors authorized the repurchase of up to $500.0 million of the Company’s outstanding shares of common stock, inclusive of the approximately $200.0 million remaining under the Company’s prior April 2025 $500.0 million share repurchase authorization.
CURRENT OPERATING CONDITIONS AND OUTLOOK
According to the U.S. Census Bureau, actual U.S. total housing starts were 341 thousand for the third quarter of 2026, a decrease of 4.2% compared to the third quarter of 2025. Actual U.S. single-family starts for the third quarter of 2026 were 232 thousand, representing a decrease of 1.6%, compared to the third quarter of 2025.
A composite of third-party sources, including the National Association of Home Builders, Zonda Home, and John Burns Research and Consulting, is forecasting approximately 1.3 million U.S. total housing starts and 880 thousand U.S. single-family housing starts for 2026. These forecasts represent decreases of 3.5% and 6.4%, respectively, compared to 2025 housing starts data, as reported by the U.S. Census Bureau.
Notwithstanding these headwinds, we believe the housing industry’s long-term outlook is positive and that it remains underbuilt due to growth in the underlying demographics relative to historical new construction levels. However, consumer confidence and macroeconomic uncertainty, including domestic and global conditions, fluctuations in interest rates, stock market volatility, and the impact of changes in tariffs and inflation, have adversely impacted, and may continue to adversely impact near-term housing industry demand as homes are less affordable for consumers, investors, and builders. In addition, the housing industry may continue to experience labor constraints, including shortages of skilled tradespeople, which could affect residential construction activity and housing supply.
Despite these challenges, we believe we are well-positioned to grow and capture market share as industry conditions improve in the long term. We believe our value-added products, including factory-built trusses, wall panels, and pre-hung doors, help builders address the ongoing shortage of skilled construction labor. By moving work from the jobsite into our manufacturing facilities, these products reduce the on-site labor needed and help builders improve cycle times and build quality. Our focus remains on managing the business through this cycle by maintaining disciplined working capital practices, including closely monitoring the credit exposure of our customers, maintaining appropriate inventory levels, and working with our vendors to improve payment terms. We strive to achieve the appropriate balance of short-term expense control while maintaining the expertise and capacity to grow the business.
SEASONALITY AND OTHER FACTORS
Our first and fourth quarters have historically been, and are generally expected to continue to be, adversely affected by weather, causing reduced construction activity during these quarters. In addition, quarterly results historically have reflected, and are expected to continue to reflect, fluctuations from period to period arising from the following:
The composition and level of working capital typically change during periods of increasing sales as we carry more inventory and receivables. Working capital levels typically increase in the first and second quarters of the year due to higher sales during the peak residential construction season. These increases may result in negative operating cash flows during this peak season, which historically have been financed through available cash and borrowing availability under credit facilities. Generally, collection of receivables and reduction in inventory levels following the peak building and construction season positively impact cash flow.
16
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to net sales of certain costs, expenses and income items:
|
|
Three Months Ended |
|
|
Nine Months Ended |
|
||||||||||
|
|
2026 |
|
|
2025 |
|
|
2026 |
|
|
2025 |
|
||||
Net sales |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
Cost of sales |
|
|
72.2 |
% |
|
|
69.6 |
% |
|
|
71.9 |
% |
|
|
69.5 |
% |
Gross margin |
|
|
27.8 |
% |
|
|
30.4 |
% |
|
|
28.1 |
% |
|
|
30.5 |
% |
Selling, general and administrative expenses |
|
|
25.3 |
% |
|
|
24.6 |
% |
|
|
25.8 |
% |
|
|
24.4 |
% |
Income from operations |
|
|
2.5 |
% |
|
|
5.8 |
% |
|
|
2.3 |
% |
|
|
6.1 |
% |
Interest expense, net |
|
|
1.8 |
% |
|
|
1.8 |
% |
|
|
2.1 |
% |
|
|
1.7 |
% |
Income tax expense (benefit) |
|
|
(0.9 |
)% |
|
|
0.9 |
% |
|
|
0.1 |
% |
|
|
1.0 |
% |
Net income |
|
|
1.6 |
% |
|
|
3.1 |
% |
|
|
0.1 |
% |
|
|
3.4 |
% |
Three Months Ended September 30, 2026 Compared with the Three Months Ended September 30, 2025
Net Sales. Net sales for the three months ended September 30, 2026, were $3.9 billion, a 2.2% decrease from net sales of $3.9 billion for the three months ended September 30, 2025. Core organic sales decreased net sales by 3.9%, primarily due to a lower housing starts environment and related headwinds, while commodity price deflation decreased net sales by another 0.1%. These decreases were partially offset by an increase in net sales from acquisitions of 1.8%.
The following table shows net sales classified by product category:
|
Three Months Ended September 30, |
|
|
|
|
||||||||||||||
|
2026 |
|
|
2025 |
|
|
|
|
|||||||||||
|
(in millions) |
|
|
|
|
||||||||||||||
|
Net Sales |
|
|
% of Net Sales |
|
|
Net Sales |
|
|
% of Net Sales |
|
|
% Change |
|
|||||
Manufactured products (1) |
$ |
845.4 |
|
|
|
21.9 |
% |
|
$ |
869.9 |
|
|
|
22.1 |
% |
|
|
(2.8 |
)% |
Windows, doors and millwork (1) |
|
937.8 |
|
|
|
24.3 |
% |
|
|
1,011.2 |
|
|
|
25.7 |
% |
|
|
(7.3 |
)% |
Specialty building products and services |
|
1,034.3 |
|
|
|
26.9 |
% |
|
|
1,070.6 |
|
|
|
27.1 |
% |
|
|
(3.4 |
)% |
Lumber and lumber sheet goods |
|
1,036.5 |
|
|
|
26.9 |
% |
|
|
989.5 |
|
|
|
25.1 |
% |
|
|
4.7 |
% |
Net sales |
$ |
3,854.0 |
|
|
|
100.0 |
% |
|
$ |
3,941.2 |
|
|
|
100.0 |
% |
|
|
(2.2 |
)% |
We experienced decreased net sales in our manufactured products category primarily due to a lower single-family housing starts environment and commodity price deflation, partially offset by an increase in net sales from acquisitions. Our windows, doors and millwork and specialty building products and services net sales decreased primarily due to decreased single-family activity resulting from a lower housing starts environment, partially offset by an increase in net sales from acquisitions. Our lumber and lumber sheet goods category increased primarily due to increased sales volumes resulting from certain sales initiatives.
Gross Margin. Gross margin decreased $0.1 billion to $1.1 billion. Our gross margin percentage decreased to 27.8% in the third quarter of 2026 from 30.4% in the third quarter of 2025, a 2.6% decrease. This decrease was primarily driven by a lower housing starts environment and related headwinds.
Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by $2.5 million, or 0.3%, primarily due to additional operating expenses from locations acquired within the last twelve months as well as increased insurance and fuel costs, partially offset by lower variable compensation resulting from decreased net sales and lower wages as a result of cost saving actions.
As a percentage of net sales, selling, general and administrative expenses increased to 25.3%, up from 24.6%, for the three months ended September 30, 2026 and 2025, respectively, primarily attributable to reduced operating leverage.
Interest Expense, Net. Interest expense was $72.2 million in the third quarter of 2026, an increase of $3.0 million from the third quarter of 2025. The increase was primarily due to additional interest expense from other finance obligations and higher average debt balances.
Income Tax Expense (Benefit). We recorded an income tax benefit of $33.6 million in the third quarter of 2026, compared to income tax expense of $37.1 million in the third quarter of 2025. The change was primarily driven by losses before income taxes incurred by certain subsidiaries in the current year period, as well as lower consolidated income before income taxes. Our effective tax rate was (125.0)% in the third quarter of 2026, compared to 23.3% in the third quarter of 2025.
17
Nine Months Ended September 30, 2026 Compared with the Nine Months Ended September 30, 2025
Net Sales. Net sales for the nine months ended September 30, 2026, were $11.0 billion, a 7.0% decrease from net sales of $11.8 billion for the nine months ended September 30, 2025. Core organic sales decreased net sales by 6.4%, primarily due to a lower housing starts environment and related headwinds, while commodity price deflation decreased net sales by another 2.0%. These decreases were partially offset by increased net sales from acquisitions of 1.4%.
The following table shows net sales classified by product category:
|
Nine Months Ended September 30, |
|
|
|
|
||||||||||||||
|
2026 |
|
|
2025 |
|
|
|
|
|||||||||||
|
(in millions) |
|
|
|
|
||||||||||||||
|
Net Sales |
|
|
% of Net Sales |
|
|
Net Sales |
|
|
% of Net Sales |
|
|
% Change |
|
|||||
Manufactured products (1) |
$ |
2,412.2 |
|
|
|
21.9 |
% |
|
$ |
2,683.2 |
|
|
|
22.7 |
% |
|
|
(10.1 |
)% |
Windows, doors and millwork (1) |
|
2,746.4 |
|
|
|
25.0 |
% |
|
|
3,006.0 |
|
|
|
25.4 |
% |
|
|
(8.6 |
)% |
Specialty building products & services |
|
2,922.6 |
|
|
|
26.5 |
% |
|
|
3,051.6 |
|
|
|
25.8 |
% |
|
|
(4.2 |
)% |
Lumber & lumber sheet goods |
|
2,922.5 |
|
|
|
26.6 |
% |
|
|
3,092.0 |
|
|
|
26.1 |
% |
|
|
(5.5 |
)% |
Net sales |
$ |
11,003.7 |
|
|
|
100.0 |
% |
|
$ |
11,832.8 |
|
|
|
100.0 |
% |
|
|
(7.0 |
)% |
We experienced decreased net sales in our manufactured products category primarily due to a lower single-family housing starts environment and commodity price deflation, partially offset by an increase in net sales from acquisitions. Our windows, doors and millwork and specialty building products and services net sales decreased primarily due to decreased single-family activity resulting from a lower housing starts environment, partially offset by an increase in net sales from acquisitions. Our lumber and lumber sheet goods category decreased primarily due to commodity price deflation and a lower single-family housing starts environment, partially offset by an increase in net sales from acquisitions.
Gross Margin. Gross margin decreased $0.5 billion to $3.1 billion, and our gross margin percentage decreased to 28.1% for the nine months ended September 30, 2026, from 30.5% in the nine months ended September 30, 2025, a 2.4% decrease. This decrease was primarily driven by a lower housing starts environment and related headwinds.
Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased $45.4 million, or 1.6%. This decrease was primarily due to lower variable compensation resulting from decreased net sales and lower wages as a result of cost saving actions, partially offset by additional operating expenses from locations acquired within the last twelve months and increased fuel costs.
As a percentage of net sales, selling, general and administrative expenses increased to 25.8%, up from 24.4%, for the nine months ended September 30, 2026 and 2025, respectively, primarily attributable to reduced operating leverage.
Interest Expense, Net. Interest expense was $222.7 million in the nine months ended September 30, 2026, an increase of $16.6 million from the nine months ended September 30, 2025. Interest expense increased primarily due to additional interest expense from purchase options exercised related to other finance obligations.
Income Tax Expense. We recorded income tax expense of $12.3 million and $114.6 million for the nine months ended September 30, 2026 and 2025, respectively. Current year tax expense was primarily driven by a settlement agreement with the IRS regarding the treatment of certain research and development expenses claimed in prior years. As a result of the settlement agreement, we recognized a discrete income tax expense of approximately $43.9 million in the current year period. Excluding the impact of the settlement agreement, income tax expense decreased primarily as a result of losses before income taxes incurred by certain subsidiaries in the current year period, as well as lower consolidated income before income taxes. Our effective tax rate was 57.4% for the nine months ended September 30, 2026, compared to 22.1% for the nine months ended September 30, 2025.
LIQUIDITY AND CAPITAL RESOURCES
Our primary capital requirements are to fund working capital needs and operating expenses, meet required interest and principal payments, and to fund capital expenditures and potential future growth opportunities. Our capital resources at September 30, 2026, consist of cash on hand and borrowing availability under our Revolving Facility.
Our Revolving Facility is primarily used for working capital, general corporate purposes and funding capital expenditures and growth opportunities. In addition, we may use borrowings under the Revolving Facility to facilitate debt repayment and consolidation, invest in strategic acquisitions, and fund share repurchases. Availability under the Revolving Facility is determined by a borrowing base. Our borrowing base consists of accounts receivable, inventory, and qualified cash that all meet specific criteria contained within the credit agreement, minus agent-specified reserves. Net excess borrowing availability is equal to the maximum borrowing amount minus outstanding borrowings and letters of credit.
18
The following table shows our borrowing base and excess availability as of:
|
|
September 30, |
|
|
December 31, |
|
||
|
|
(in millions) |
|
|||||
Accounts receivable availability |
|
$ |
880.0 |
|
|
$ |
686.2 |
|
Inventory availability |
|
|
886.1 |
|
|
|
804.2 |
|
Gross availability |
|
|
1,766.1 |
|
|
|
1,490.4 |
|
Less: |
|
|
|
|
|
|
||
Agent-specified reserves |
|
|
(55.7 |
) |
|
|
(42.6 |
) |
Plus: |
|
|
|
|
|
|
||
Cash in qualified accounts |
|
|
21.3 |
|
|
|
159.1 |
|
Borrowing base |
|
|
1,731.7 |
|
|
|
1,606.9 |
|
Aggregate revolving commitments |
|
|
2,200.0 |
|
|
|
2,200.0 |
|
Maximum borrowing amount (lesser of borrowing base and |
|
|
1,731.7 |
|
|
|
1,606.9 |
|
Less: |
|
|
|
|
|
|
||
Outstanding borrowings |
|
|
(197.0 |
) |
|
|
— |
|
Letters of credit |
|
|
(75.6 |
) |
|
|
(79.6 |
) |
Net excess borrowing availability on revolving facility |
|
$ |
1,459.1 |
|
|
$ |
1,527.3 |
|
As of September 30, 2026, we had $197.0 million outstanding borrowings under our Revolving Facility, and our net excess borrowing availability was approximately $1.4 billion after being reduced by outstanding letters of credit totaling $75.6 million. Excess availability must equal or exceed a minimum specified amount, currently $173.2 million, or we are required to meet a fixed charge coverage ratio of 1.00 to 1.00. We were not in violation of any covenants or restrictions imposed by any of our debt agreements at September 30, 2026.
Liquidity
Our liquidity at September 30, 2026, was $1.5 billion, consisting of approximately $1.4 billion in net borrowing availability under the Revolving Facility and $0.1 billion cash on hand.
Our level of indebtedness results in significant interest expense and could have the effect of, among other things, reducing our flexibility to respond to changing business and economic conditions. From time to time, based on market conditions and other factors and subject to compliance with applicable laws and regulations, we may repurchase or call our notes, repay, refinance or modify our debt or otherwise enter into transactions regarding our capital structure.
If industry conditions deteriorate or if we pursue additional acquisitions, we may be required to raise additional funds through the sale of capital stock or debt in the public capital markets or in privately negotiated transactions. There can be no assurance that any of these financing options would be available on favorable terms, if at all. Alternatives to help supplement our liquidity position could include, but are not limited to, idling or permanently closing additional facilities, adjusting our headcount in response to current business conditions, attempts to renegotiate leases, managing our working capital, and/or divesting of non-core businesses. There are no assurances that these steps would prove successful or materially improve our liquidity position.
Consolidated Cash Flows
Cash provided by operating activities was $302.0 million for the nine months ended September 30, 2026, compared to cash provided by operating activities of $1,021.1 million for the nine months ended September 30, 2025. The decrease in cash provided by operating activities was primarily driven by the decrease in net income in the current period compared to the prior year period, and an increase in net working capital in the first nine months of 2026.
For the nine months ended September 30, 2026, cash used in investing activities decreased $866.6 million compared to the nine months ended September 30, 2025, primarily due to $787.8 million less cash used for acquisitions.
Cash used in financing activities was $133.4 million for the nine months ended September 30, 2026, which consisted primarily of using $303.5 million for repurchases of common stock, partially offset by $197.0 million in net borrowings on the Revolving Facility. Cash provided by financing activities was $283.4 million for the nine months ended September 30, 2025, which consisted primarily of a net $739.3 million received for the issuance of the 6.75% 2035 Notes, offset by $414.0 million for repurchases of common stock.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Critical accounting policies are those that are both important to the accurate portrayal of a company’s financial condition and results, and require subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
19
To prepare financial statements that conform to generally accepted accounting principles, we make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Certain estimates are particularly sensitive due to their significance to the financial statements and the possibility that future events may be significantly different from our expectations.
Refer to Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Form 10-K for a discussion of our critical accounting estimates and assumptions.
RECENT ACCOUNTING PRONOUNCEMENTS
Information regarding recent accounting pronouncements is discussed in Note 1 to the condensed consolidated financial statements included in Part I, Item 1 of this quarterly report on Form 10-Q.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We may experience changes in interest expense if changes in our debt occur. Changes in market interest rates could also affect our interest expense. Borrowings under the Revolving Facility bear interest at either a base rate or SOFR, plus, in each case, an applicable margin. A 1.0% increase in interest rates on the Revolving Facility would result in approximately $2.0 million additional interest expense annually based on our $197.0 million in outstanding borrowings as of September 30, 2026. The Revolving Facility also assesses variable commitment and outstanding letter of credit fees based on quarterly average loan utilization. Our 4.25% 2032 Notes, 6.375% 2034 Notes, 6.75% 2035 Notes, 6.375% 2032 Notes, and 5.00% 2030 Notes, bear interest at a fixed rate, and therefore our interest expense related to these notes would not be affected by an increase in market interest rates.
We purchase certain materials, including lumber products, which are then sold to customers, as well as used as direct production inputs for our manufactured products that we deliver. Short-term changes in the cost of these materials and the related transportation costs, including fuel and in-bound freight costs, some of which are subject to significant fluctuations, are sometimes, but not always, passed on to our customers. Delays in our ability to pass on material price increases to our customers can adversely impact our operating results.
Item 4. Controls and Procedures
Disclosure Controls Evaluation and Related CEO and CFO Certifications. Our management, with the participation of our principal executive officer (“CEO”) and principal financial officer (“CFO”), conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this quarterly report.
Certifications of our CEO and our CFO, which are required in accordance with Rule 13a-14 of the Exchange Act, are attached as exhibits to this quarterly report. This “Controls and Procedures” section includes the information concerning the controls evaluation referred to in the certifications, and it should be read in conjunction with the certifications for a more complete understanding of the topics presented.
Limitations on the Effectiveness of Controls. We do not expect that our disclosure controls and procedures will prevent all errors and all fraud. A system of controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the system are met. Because of the limitations in all such systems, no evaluation can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Furthermore, the design of any system of controls and procedures is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how unlikely. Because of these inherent limitations in a cost-effective system of controls and procedures, misstatements or omissions due to error or fraud may occur and not be detected.
Scope of the Controls Evaluation. The evaluation of our disclosure controls and procedures included a review of their objectives and design, the Company’s implementation of the controls and procedures and the effect of the controls and procedures on the information generated for use in this quarterly report. In the course of the evaluation, we sought to identify whether we had any data errors, control problems, or acts of fraud and to confirm that appropriate corrective action, including process improvements, were being undertaken if needed. This type of evaluation is performed on a quarterly basis so that conclusions concerning the effectiveness of our disclosure controls and procedures can be reported in our quarterly reports on Form 10-Q. Many of the components of our disclosure controls and procedures are also evaluated by our internal audit department, by our legal department, and by personnel in our finance organization. The overall goals of these various evaluation activities are to monitor our disclosure controls and procedures on an ongoing basis, and to maintain them as dynamic systems that change as conditions warrant.
Conclusions Regarding Disclosure Controls. Based on the required evaluation of our disclosure controls and procedures, our CEO and CFO have concluded that, as of September 30, 2026, we maintained disclosure controls and procedures that were effective in providing reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting. During the period covered by this report, there were no changes in our internal control over financial reporting identified in connection with the evaluation described above that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
20
PART II — OTHER INFORMATION
Item 1. Legal Proceedings
The Company has a number of known and threatened construction defect legal claims. While these claims are generally covered under the Company’s existing insurance programs to the extent any loss exceeds the deductible, there is a reasonable possibility of loss that is not able to be estimated at this time because (i) many of the proceedings are in the discovery stage, (ii) the outcome of future litigation is uncertain, and/or (iii) the nature of the claims is complex.
In addition, we are involved in various other claims and lawsuits incidental to the conduct of our business in the ordinary course. We carry insurance coverage in such amounts in excess of our self-insured retention as we believe to be reasonable under the circumstances and that may or may not cover any or all of our liabilities in respect of such claims and lawsuits.
Although the ultimate disposition of these proceedings cannot be predicted with certainty, management believes the outcome of any such claims that are currently pending or threatened, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position, cash flows or results of operations. However, there can be no assurances that future adverse judgments and costs would not be material to our results of operations or liquidity for a particular period.
Item 1A. Risk Factors
In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our 2025 Form 10-K, which could materially affect our business, financial condition or future results. The risks described in our 2025 Form 10-K are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.
There were no material changes to the risk factors reported in Part I, “Item 1A. Risk Factors” in our 2025 Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Company Stock Repurchases
The following table provides information with respect to the purchases of our common stock during the third quarter of fiscal year 2026:
Period |
|
Total Number of Shares Purchased |
|
|
Average Price Paid per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |
|
|
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (1) |
|
||||
July 1, 2026 — July 31, 2026 |
|
|
1,694 |
|
|
$ |
80.01 |
|
|
|
— |
|
|
$ |
500,000,000 |
|
August 1, 2026 — August 31, 2026 |
|
|
1,106 |
|
|
|
73.56 |
|
|
|
— |
|
|
|
500,000,000 |
|
September 1, 2026 — September 30, 2026 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
500,000,000 |
|
Total |
|
|
2,800 |
|
|
$ |
77.46 |
|
|
|
— |
|
|
$ |
500,000,000 |
|
In the third quarter of 2026, the Company did not repurchase or retire shares pursuant to the share repurchase plan authorized by our board of directors. The 2,800 shares presented in the table above represent stock tendered in order to meet tax withholding requirements for restricted stock units vested. Share repurchases under the program may be made through a variety of methods, which may include open market purchases, block trades, accelerated share repurchases, trading plans in accordance with Rule 10b5-1 or Rule 10b-18 under the Exchange Act, or any combination of such methods. The program does not obligate the Company to acquire any particular amount of its common stock, and the share repurchase program may be suspended or discontinued at any time at the Company’s discretion.
Item 5. Other Information
In the third quarter of 2026,
21
Item 6. Exhibits
|
|
Description |
3.1 |
|
|
3.2 |
|
|
10.1+* |
|
Form of Restricted Stock Unit Award Certificate (Time-Based) under the Builders FirstSource, Inc. 2026 Equity Incentive Plan |
10.2+* |
|
Form of Restricted Stock Unit Award Certificate (Time-Based and Performance-Based) under the Builders FirstSource, Inc. 2026 Equity Incentive Plan |
31.1* |
|
|
31.2* |
|
|
32.1** |
|
|
101* |
|
The following financial information from Builders FirstSource, Inc.’s Form 10-Q filed on October 29, 2026 formatted in Inline eXtensible Business Reporting Language (“Inline XBRL”): (i) Condensed Consolidated Statement of Operations for the three and nine months ended September 30, 2026 and 2025, (ii) Condensed Consolidated Balance Sheet as of September 30, 2026 and December 31, 2025, (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2026 and 2025, (iv) Condensed Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2026 and 2025 and (v) the Notes to Condensed Consolidated Financial Statements. |
104* |
|
The cover page for the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2026, has been formatted in Inline XBRL. |
* Filed herewith.
** Builders FirstSource, Inc. is furnishing, but not filing, the written statement pursuant to Title 18 United States Code 1350, as added by Section 906 of the Sarbanes-Oxley Act of 2002, of Peter M. Jackson, our Chief Executive Officer, and Pete R. Beckmann, our Chief Financial Officer.
+ Indicates a management contract or compensatory plan or arrangement.
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
BUILDERS FIRSTSOURCE, INC. |
|
|
|
/s/ PETER M. JACKSON |
|
Peter M. Jackson |
|
President and Chief Executive Officer |
|
(Principal Executive Officer) |
October 29, 2026
|
/s/ PETE R. BECKMANN |
|
Pete R. Beckmann |
|
Executive Vice President and Chief Financial Officer (Principal Financial Officer) |
October 29, 2026
|
/s/ MATTHEW TRESTER |
|
Matthew Trester |
|
Vice President and Controller |
|
(Principal Accounting Officer) |
October 29, 2026
23
BUILDERS FIRSTSOURCE, INC.
2026 INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD CERTIFICATE
Non-transferable
GRANT TO
______________________________
(“Grantee”)
by Builders FirstSource, Inc. (the “Company”) of
restricted stock units (the “Units”) convertible, on a one-for-one basis, into shares of its common stock (the “Stock”), par value $0.01 per share.
The Units are granted pursuant to and subject to the provisions of the Builders FirstSource, Inc. 2026 Incentive Plan (the “Plan”) and this Restricted Stock Unit Award Certificate (the “Certificate”), including without limitation the Terms and Conditions beginning on page 2 hereof. By accepting the Units, Grantee shall be deemed to have agreed to the terms and conditions set forth in this Certificate and the Plan. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.
Unless vesting is accelerated as provided in Section 1 hereof or otherwise in the discretion of the Committee, the Units shall vest (become non-forfeitable) in accordance with the following schedule, provided that the Grantee remains in Continuous Service with the Company or its Parent or any of their subsidiaries on the vesting dates:
Vesting Date |
|
Percent of Units Vested |
|
|
|
|
|
|
|
|
|
|
|
|
IN WITNESS WHEREOF, Builders FirstSource, Inc., acting by and through its duly authorized officers, has caused this Certificate to be duly executed.
BUILDERS FIRSTSOURCE, INC.
By:
|
Grant Date:
|
TERMS AND CONDITIONS
1. Vesting of Units. The Units shall vest (become non-forfeitable) in accordance with the vesting schedule shown on the cover page of this Certificate. Notwithstanding the vesting schedule, the Units shall become fully vested and exercisable upon (i) the termination of Grantee’s Continuous Service with the Company or its Parent or any of their subsidiaries due to death, Disability or Qualifying Retirement (as defined below), (ii) a Change in Control, unless the Units are assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control, or (iii) if the Units are assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change in Control, the termination of Grantee’s employment without Cause or Grantee resigns for Good Reason after the effective date of the Change in Control.
For purposes of this Certificate, “Qualifying Retirement” means a Participant’s termination of employment with the Company or an Affiliate with the Committee’s approval after attaining age 62 with at least 10 years of Continuous Service with the Company, provided that the Grantee has provided at least 6 months’ notice of termination and remains an employee “in good standing” during such notice period.
Unless vesting is accelerated as set forth above or otherwise under the Plan, if Grantee’s Continuous Service with the Company or its Parent or any of their subsidiaries ceases prior to the vesting date, Grantee shall forfeit all right, title and interest in and to the unvested Units as of the date of such termination and the unvested Units will be reconveyed to the Company without further consideration or any act or action by Grantee.
Notwithstanding the other provisions of this Section 1, the Committee may accelerate the vesting of the Units granted hereunder in such other circumstances as it may determine.
2. Conversion to Stock. Unless the Units are forfeited prior to the vesting date as provided in Section 1 above, the Units will be converted to actual shares of Stock on the vesting date. The Company shall issue such shares in the name of the Grantee in either certificated or book entry form, as selected by the Company. Notwithstanding the foregoing, the Company shall have no obligation to issue Stock in payment of the Units until such issuance and payment shall comply with all relevant provisions of law and the requirements of any Exchange upon which the Stock is then listed. Notwithstanding the foregoing, the Committee may, in its sole discretion, direct the Company to pay the Grantee the cash value of vesting shares upon vesting in lieu of the issuance of shares.
3. Dividend Equivalents. No adjustment to the Units will be made for any dividend that is paid.
4. Changes in Capital Structure. If the Stock shall be changed into or exchanged for a different number or class of shares of stock or securities of the Company or of another company, whether through reorganization, recapitalization, statutory share exchange, reclassification, stock split-up, combination of shares, merger or consolidation, or otherwise, there shall be substituted for each share of Stock then underlying a Unit subject to this Certificate the number and class of shares of stock or securities into which each outstanding share of Stock shall be so exchanged.
5. Restrictions on Transfer. No right or interest of Grantee in the Units may be pledged, hypothecated or otherwise encumbered to or in favor of any party other than the Company or its Parent or any of their subsidiaries, or be subjected to any lien, obligation or liability of Grantee to any other party other than the Company or its Parent or any of their subsidiaries. Units are not assignable or transferable by Grantee other than by will or the laws of descent and distribution; but the Committee may permit other transfers.
6. Limitation of Rights. The Units do not confer to Grantee or Grantee’s beneficiary any rights of a stockholder of the Company unless and until shares of Stock are in fact issued to such person in connection with the Units. Nothing in this Certificate shall interfere with or limit in any way the right of the Company
or any Affiliate to terminate Grantee’s employment at any time, nor confer upon Grantee any right to continue in employment of the Company or any Affiliate.
7. Payment of Taxes. Grantee will, no later than the date as of which any amount related to the Units first becomes includable in Grantee’s gross income for federal income tax purposes, pay to the Company, or make other arrangements satisfactory to the Committee regarding payment of, any federal, state and local taxes of any kind (including Grantee’s FICA obligation) required by law to be withheld with respect to such amount. Unless otherwise determined by the Committee, the withholding requirement will be satisfied by the Company withholding from the Units upon settlement a number of shares of Stock having a Fair Market Value on the date of withholding equal to the amount required to be withheld for tax purposes (up to the maximum individual statutory rate in the applicable jurisdiction as may be permitted under then-current accounting principles to qualify for equity classification), all in accordance with such procedures as the Company establishes. The obligations of the Company under this Certificate will be conditional on such payment or arrangements, and the Company, and, where applicable, its Affiliates will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Grantee.
8. Amendment. The Committee may amend, modify or terminate this Certificate without approval of Grantee; provided, however, that such amendment, modification or termination shall not, without Grantee’s consent, reduce or diminish the value of this award determined as if it had been fully vested (i.e., as if all restrictions on the Units hereunder had expired) on the date of such amendment or termination.
9. Plan Controls. The terms contained in the Plan shall be and are hereby incorporated into and made a part of this Certificate. This Certificate shall be governed by and construed in accordance with the Plan.
10. Compensation Recoupment Policy. This Award is subject to any compensation recoupment policy applicable by its terms to Grantee that the Company may adopt from time to time to comply with any applicable law, rule or regulation of any governmental authority or to comply with the rules and regulations of any stock exchange upon which the Company’s securities are registered.
11. Notice. Notices hereunder must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to Builders FirstSource, Inc., 6031 Connection Dr., Ste. 400, Irving, Texas 75039; Attn: General Counsel, or any other address designated by the Company in a written notice to Grantee. Notices to Grantee will be directed to the address of Grantee then currently on file with the Company, or at any other address given by Grantee in a written notice to the Company.
12. Entire Agreement. This Certificate, including, without limitation, the terms and conditions set forth herein, and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and therein and supersede all prior communications, representations and negotiations in respect thereto.
13. Confidentiality. By accepting this Certificate and the related award, Grantee agrees to keep confidential and not to disclose to any person or entity information concerning the terms of this Certificate, the number of Units or Shares covered by this Certificate or any transactions between the Grantee and the Company pursuant to this Certificate, except as required by applicable law. Nothing in this Certificate is intended to limit Grantee’s right to make disclosures to, or participate in communications with, the Securities and Exchange Commission or any other government agency regarding possible violations of law, without prior notice to the Company.
BUILDERS FIRSTSOURCE, INC.
2026 INCENTIVE PLAN
RESTRICTED STOCK UNIT AWARD CERTIFICATE
Non-transferable
GRANT TO
______________________________
(“Grantee”)
by Builders FirstSource, Inc. (the “Company”) of
restricted stock units (the “Units”) representing the right to earn, on a one-for-one basis, shares of the Company’s common stock, par value $0.01 per share (the “Stock”).
The Units are granted pursuant to and subject to the provisions of the Builders FirstSource, Inc. 2026 Incentive Plan (the “Plan”), and to the terms and conditions set forth on the following pages of this Restricted Stock Unit Award Certificate (the “Certificate”). By accepting the Units, Grantee shall be deemed to have agreed to the terms and conditions set forth in this Certificate and the Plan. Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Plan.
Unless vesting is accelerated as provided in Section 1 hereof, or otherwise in the discretion of the Committee, the Units will vest in accordance with Sections A and B below, provided that Grantee remains in Continuous Service with the Company or an Affiliate on each applicable vesting date.
A. Time-Based Units. of the Units (one-half of the total grant hereunder) (the “Time-Based Units”) shall vest (become non-forfeitable) in accordance with the following schedule, subject to Grantee’s Continuous Service on each vesting date:
Vesting Date |
|
Percent of Time- Based Units Vested |
|
|
|
|
|
|
|
|
|
|
|
|
B. Performance-Based Units. of the Units (one-half of the total grant hereunder) (the “Performance-Based Target Award”) shall vest (become non-forfeitable) on _________, 20__, based on the Company’s achievement of performance goals as set forth on Exhibit A, and subject to Grantee’s Continuous Service on such date. Depending on the Company’s level of achievement of performance goals relating to _________ (“______,” as defined on Exhibit A) during a three-year performance period beginning January 1, 20__ and ending December 31, 20__ (which includes three discreet and independent performance periods consisting of calendar years 20__, 20__ and 20__ and a cumulative three-year performance period (individually and in the aggregate, the “Performance Period”)), Grantee may earn between 0% and __% of the Performance-Based Target Award, which may be further increased or decreased by % based on the Company’s ___________ (“__________,” as defined on Exhibit A) during
the Performance Period (the “Performance Goals”), in each case subject to the terms and conditions of this Certificate and as set forth on Exhibit A (the number of Units earned based on achievement of the Performance Goals, the “Earned Performance-Based Units”).
IN WITNESS WHEREOF, Builders FirstSource, Inc., acting by and through its duly authorized officers, has caused this Certificate to be duly executed.
BUILDERS FIRSTSOURCE, INC.
By:
|
Grant Date: _________, 20__
|
TERMS AND CONDITIONS
1. Vesting of Units.
(a) Vesting of Time-Based Units. The Time-Based Units shall vest (become non-forfeitable) in accordance with the vesting schedule set forth in Section A of the cover page of this Certificate.
Notwithstanding the regular vesting schedule, Grantee shall become fully vested in the Time-Based Units upon (i) the termination of Grantee’s Continuous Service with the Company or an Affiliate due to death, Disability or Qualifying Retirement (as defined below), (ii) a Change in Control, unless the Units are assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control, or (iii) if the Units are assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change in Control, the termination of Grantee’s employment without Cause or Grantee resigns for Good Reason after the effective date of the Change in Control.
For purposes of this Certificate, “Qualifying Retirement” means a Participant’s termination of employment with the Company or an Affiliate with the Committee’s approval after attaining age 62 with at least 10 years of Continuous Service with the Company, provided that the Grantee has provided at least 6 months’ notice of termination and remains an employee “in good standing” during such notice period.
(b) Earning and Vesting of Performance-Based Target Award. The Performance-Based Target Award may be earned and shall vest as described in Section B of the cover page of this Certificate and as set forth on Exhibit A.
In the event that Grantee’s Continuous Service with the Company or an Affiliate is terminated prior to the vesting date due to death, Disability or Qualifying Retirement, Grantee shall retain the Performance-Based Target Award, which may be earned and shall vest as described in Section B of the cover page of this Certificate and as set forth on Exhibit A, as if Grantee’s Continuous Service had not terminated, provided, however, that in the event of Grantee’s Qualifying Retirement, the number of Earned Performance-Based Units shall be prorated by multiplying the number of Units by a fraction, the numerator of which is the number of days elapsed in the applicable Performance Period prior to Grantee’s Qualifying Retirement and the denominator of which is the total number of days in the applicable Performance Period (for example, if Grantee has a Qualifying Retirement effective as of _________, 20__, the number of Earned Performance-Based Units with respect to the 20__ Calendar Year Performance Period shall be multiplied by 365/365; the number of Earned Performance-Based Units with respect to the 20__ Calendar Year Performance Period shall be multiplied by 180/365; the number of Earned Performance-Based Units with respect to the 20__ Calendar Year Performance Period shall be multiplied by 0/365; and the number of Earned Performance-Based Units with respect to the January 1, 20__ – December 31, 20__ Performance Period shall be multiplied by 545/1,095).
Notwithstanding the regular vesting schedule, Grantee shall become fully vested in 100% of the Performance-Based Target Award in the event of (i) a Change in Control, unless the Units are assumed by the surviving entity or otherwise equitably converted or substituted in connection with the Change in Control, or (ii) if the Units are assumed by the surviving entity or otherwise equitably converted or substituted in connection with a Change in Control, the termination of Grantee’s employment without Cause or Grantee resigns for Good Reason after the effective date of the Change in Control.
Notwithstanding the other provisions of this Section 1, the Committee may accelerate the vesting of the Units granted hereunder in such other circumstances as it may determine.
Except as set forth above or otherwise under the Plan, if Grantee’s Continuous Service with the Company or an Affiliate ceases prior to the vesting date for any reason other than death, Disability or Qualifying Retirement, Grantee shall forfeit all right, title and interest in and to the Units as of the date of
such termination and the Units will be reconveyed to the Company without further consideration or any act or action by Grantee.
2. Conversion to Stock. Unless the Units are forfeited prior to the vesting date as provided in Section 1 above, the Units will be converted to actual shares of Stock on the vesting date. The Company shall issue the Stock in the name of Grantee in either certificated or book entry form, as selected by the Company. Notwithstanding the foregoing, the Company shall have no obligation to issue Stock in payment of the Units until such issuance and payment shall comply with all relevant provisions of law and the requirements of any Exchange upon which the Stock is then listed. Notwithstanding the foregoing, the Committee may, in its sole discretion, direct the Company to pay Grantee the cash value of vesting shares upon vesting in lieu of the issuance of shares.
3. Dividend Equivalents. No adjustment to the Units will be made for any dividend that is paid.
4. Changes in Capital Structure. If the Stock shall be changed into or exchanged for a different number or class of shares of stock or securities of the Company or of another company, whether through reorganization, recapitalization, statutory share exchange, reclassification, stock split-up, combination of shares, merger or consolidation, or otherwise, there shall be substituted for each share of Stock then underlying a Unit subject to this Certificate the number and class of shares of stock or securities into which each outstanding share of Stock shall be so exchanged.
5. Restrictions on Transfer. No right or interest of Grantee in the Units may be pledged, hypothecated or otherwise encumbered to or in favor of any party other than the Company or an Affiliate, or be subjected to any lien, obligation or liability of Grantee to any other party other than the Company or an Affiliate. Units are not assignable or transferable by Grantee other than by will or the laws of descent and distribution; but the Committee may permit other transfers.
6. Limitation of Rights. The Units do not confer to Grantee or Grantee’s beneficiary any rights of a stockholder of the Company unless and until shares of Stock are in fact issued to such person in connection with the Units. Nothing in this Certificate shall interfere with or limit in any way the right of the Company or any Affiliate to terminate Grantee’s employment at any time, nor confer upon Grantee any right to continue in employment of the Company or any Affiliate.
7. Payment of Taxes. Grantee will, no later than the date as of which any amount related to the Units first becomes includable in Grantee’s gross income for federal income tax purposes, pay to the Company, or make other arrangements satisfactory to the Committee regarding payment of, any federal, state and local taxes of any kind (including Grantee’s FICA obligation) required by law to be withheld with respect to such amount. Unless otherwise determined by the Committee, the withholding requirement will be satisfied by the Company withholding from the Units upon settlement a number of shares of Stock having a Fair Market Value on the date of withholding equal to the amount required to be withheld for tax purposes (up to the maximum individual statutory rate in the applicable jurisdiction as may be permitted under then-current accounting principles to qualify for equity classification), all in accordance with such procedures as the Company establishes. The obligations of the Company under this Certificate will be conditional on such payment or arrangements, and the Company, and, where applicable, its Affiliates will, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to Grantee.
8. Amendment. The Committee may amend, modify or terminate this Certificate without approval of Grantee; provided, however, that such amendment, modification or termination shall not, without Grantee’s consent, reduce or diminish the value of this award determined as if it had been fully vested (i.e., as if all restrictions on the Units hereunder had expired) on the date of such amendment or termination.
9. Plan Controls. The terms contained in the Plan shall be and are hereby incorporated into and made a part of this Certificate. This Certificate shall be governed by and construed in accordance with the Plan.
10. Compensation Recoupment Policy. This Award is subject to any compensation recoupment policy applicable by its terms to Grantee that the Company may adopt from time to time to comply with any applicable law, rule or regulation of any governmental authority or to comply with the rules and regulations of any stock exchange upon which the Company’s securities are registered.
11. Notice. Notices hereunder must be in writing and either personally delivered or sent by registered or certified United States mail, return receipt requested, postage prepaid. Notices to the Company must be addressed to Builders FirstSource, Inc., 6031 Connection Dr., Ste. 400, Irving, Texas 75039; Attn: General Counsel, or any other address designated by the Company in a written notice to Grantee. Notices to Grantee will be directed to the address of Grantee then currently on file with the Company, or at any other address given by Grantee in a written notice to the Company.
12. Entire Agreement. This Certificate, including, without limitation, the terms and conditions set forth herein, and the Plan contain the entire agreement and understanding of the parties hereto with respect to the subject matter contained herein and therein and supersede all prior communications, representations and negotiations in respect thereto.
13. Confidentiality. By accepting this Certificate and the related award, Grantee agrees to keep confidential and not to disclose to any person or entity information concerning the terms of this Certificate, the number of Units or the Stock covered by this Certificate or any transactions between Grantee and the Company pursuant to this Certificate, except as required by applicable law. Nothing in this Certificate or the Plan is intended to limit Grantee’s right to make disclosures to, or participate in communications with, the Securities and Exchange Commission or any other government agency regarding possible violations of law, without prior notice to the Company.
Exhibit 31.1
Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Peter M. Jackson, certify that:
1. I have reviewed this report on Form 10-Q of Builders FirstSource, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ PETER M. JACKSON |
Peter M. Jackson |
President and Chief Executive Officer |
Date: October 29, 2026
Exhibit 31.2
Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Pete R. Beckmann, certify that:
1. I have reviewed this report on Form 10-Q of Builders FirstSource, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ PETE R. BECKMANN |
Pete R. Beckmann |
Executive Vice President and Chief Financial Officer |
Date: October 29, 2026
Exhibit 32.1
Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350
(Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002)
In connection with the quarterly report of Builders FirstSource, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Peter M. Jackson, as President and Chief Executive Officer of the Company, and Pete R. Beckmann, as Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to our knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ PETER M. JACKSON |
Peter M. Jackson |
President and Chief Executive Officer |
/s/ PETE R. BECKMANN |
Pete R. Beckmann |
Executive Vice President and Chief Financial Officer |
Date: October 29, 2026
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.