Builders FirstSource, Inc. (BLDR)

CIK: 0001316835. SIC: 5211 Retail-Lumber & Other Building Materials Dealers. Latest 10-K as of: 2026-02-17.

SIC breadcrumb: Retail Trade > Building Materials, Hardware, Garden Supply, And Mobile Home Dealers > SIC 5211 Retail-Lumber & Other Building Materials Dealers

SEC company page: https://www.sec.gov/edgar/browse/?CIK=1316835. Latest filing source: 0001193125-26-054643.

Selected Fundamentals

Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-17. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001316835.json. Derived margins are computed from the extracted annual SEC facts.

Flow metrics use full-year FY periods from 10-K/10-K/A filings; balance-sheet metrics use FY-end instants. Missing metrics are omitted rather than fabricated.

Financial Charts

Macro Cross-References

• CPIAUCSL - Consumer Price Index for All Urban Consumers: All Items in U.S. City Average
• UNRATE - Unemployment Rate
• FEDFUNDS - Federal Funds Effective Rate
• CES0500000003 - Average Hourly Earnings of All Employees, Total Private
• DFEDTARU - Federal Funds Target Range - Upper Limit
• DFEDTARL - Federal Funds Target Range - Lower Limit
• DGS3MO - Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity
• DGS2 - Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
• DGS10 - Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
• DGS30 - Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity
• T10Y2Y - 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
• CPILFESL - Consumer Price Index for All Urban Consumers: All Items Less Food and Energy
• CPIUFDSL - Consumer Price Index for All Urban Consumers: Food
• CPIENGSL - Consumer Price Index for All Urban Consumers: Energy
• CUSR0000SAH1 - Consumer Price Index for All Urban Consumers: Shelter
• PCEPI - Personal Consumption Expenditures: Chain-type Price Index
• PCEPILFE - Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index
• PPIACO - Producer Price Index by Commodity: All Commodities
• T10YIE - 10-Year Breakeven Inflation Rate
• U6RATE - Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons
• PAYEMS - All Employees, Total Nonfarm
• CIVPART - Labor Force Participation Rate
• EMRATIO - Employment-Population Ratio
• UNEMPLOY - Unemployed
• CE16OV - Employment Level
• ICSA - Initial Claims
• JTSJOL - Job Openings: Total Nonfarm
• JTSQUR - Quits: Total Nonfarm
• GDPC1 - Real Gross Domestic Product
• A191RL1Q225SBEA - Real Gross Domestic Product: Percent Change from Preceding Period
• INDPRO - Industrial Production: Total Index
• TCU - Capacity Utilization: Total Index
• HOUST - New Privately-Owned Housing Units Started: Total Units
• PERMIT - New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units
• RSAFS - Advance Retail Sales: Retail Trade
• PCE - Personal Consumption Expenditures
• DSPIC96 - Real Disposable Personal Income
• PSAVERT - Personal Saving Rate
• M2SL - M2
• BOPGSTB - U.S. International Trade in Goods and Services: Balance

Latest 10-K MD&A

Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high. Filing date: 2026-02-17. Report date: 2025-12-31.

Item 7. 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 consolidated financial statements and related notes contained in Item 8. Financial Statements and Supplementary Data of this annual report on Form 10-K. See “Risk Factors” contained in Item 1A. Risk Factors of this annual report on Form 10-K and “Cautionary Statement” contained in Item 1. Business of this annual report on Form 10-K for a discussion of the uncertainties, risks and assumptions associated with these statements.

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 585 locations in 43 states across the U.S. Given the span and depth of our geographical reach, our locations are organized into three geographical divisions (East, Central, and West), which are also our operating segments. All of our segments have similar customers, products and services, and distribution methods. Due to the similar economic characteristics, categories of products, distribution methods and customers, our 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, 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 professional installation, turnkey framing, and shell construction. Supported by the latest construction innovations and digital solutions, we help drive greater efficiency across homebuilding.

We group our building products into four product categories:

•
Manufactured Products. Manufactured products consist of wood floor and roof trusses, wall panels, engineered wood, our Ready-Frame® framing system, and manufactured and modular homes.

•
Windows, Doors and Millwork. Windows and doors are comprised of the manufacturing, assembly, and distribution of windows and the assembly and distribution of interior and exterior door units. Millwork includes interior trim and custom features that we manufacture, such as intricate mouldings, stair parts, and columns.

•
Specialty Building Products and Services. Specialty building products and services consist of various products, including vinyl, composite and wood siding, exterior trim, metal studs, cement, roofing, insulation, wallboard, ceilings, cabinets, and hardware. This category also includes services such as turn-key framing, shell construction, design assistance and professional installation of products spanning all of our product categories. We also offer software products through our Paradigm subsidiary, including drafting, estimating, quoting, and virtual home design services, which provide digital solutions to retailers, distributors, manufacturers and homebuilders that help them boost sales, reduce costs, and become more competitive.

•
Lumber and Lumber Sheet Goods. Lumber and lumber sheet goods include dimensional lumber, plywood, and OSB products used in on-site house framing.

Our operating results are dependent on the following trends, strategies, events and uncertainties, some of which are beyond our control:

•
Homebuilding Industry and Market Competition. Our business is driven primarily by the residential new construction market and the residential repair and remodel market, which are in turn dependent upon a number of factors, including demographic trends, interest rates, consumer confidence, employment rates, housing affordability, household formation, land development costs, the availability of skilled construction labor, rising inflationary pressures, mortgage markets and the health of the economy. Many factors have impacted and may continue to impact our sales and gross margins, including continued consolidation within the building products supply industry, increased competition for homebuilder business, supply chain constraints and cyclical fluctuations in commodity prices. Moreover, our industry remains highly fragmented and competitive, and we will continue to face significant competition from local and regional suppliers. As various current market dynamics, including inflationary pressures, mortgage rates and housing affordability shift, a composite of industry forecasters, including the National Association of Home Builders, John Burns Research and Consulting, and Zonda Homes (collectively, the “Industry Forecast Composite”) expect to see housing demand decrease in the near-term. Despite recent tempered market conditions, we believe the housing industry remains underbuilt and that there are several meaningful trends that indicate U.S. housing demand will continue to be strong over the long-term, including the aging of housing stock and normal population growth due to immigration and birthrate exceeding death rate.

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•
Targeting Large Production Homebuilders. The homebuilding industry continues to undergo consolidation, and the larger homebuilders continue to increase their market share. We expect that trend to continue as larger homebuilders have better liquidity and land positions relative to the smaller, less capitalized homebuilders. Our focus is on maintaining relationships and market share with these customers while balancing the competitive pressures we face in servicing large homebuilders with certain profitability expectations. Additionally, we continue to focus on expanding our custom homebuilder base while maintaining acceptable credit standards.

•
Multi-family and Light Commercial Business. Our primary focus has been on single-family residential new construction and the repair and remodel end market. However, through recent acquisitions completed over the past five years, we have expanded our operational footprint in the multi-family market, predominantly five-story and smaller, wood construction, and the light commercial market, growing our value-added components and millwork product offerings in this end market. We will continue to identify opportunities for profitable growth in these areas.

•
Repair and remodel end market. While influenced by housing starts to a lesser degree than the homebuilding market, the repair and remodel market is still dependent upon some of the same factors, including demographic trends, interest rates, consumer confidence, employment rates, the health of the economy and home financing markets. As a result of these pressures, we may experience reduced sales demand, challenges in the supply chain, increased margin pressures and/or increased operating costs in this area of our business. We expect that our ability to remain competitive in this space will depend on our continued ability to provide a high level of customer service coupled with a broad product offering.

•
Use of Prefabricated Components. Homebuilders are increasingly using prefabricated components in order to realize increased efficiency, overcome skilled construction labor shortages and improve quality. Shortening construction cycle times is a critical priority for homebuilders during periods of strong consumer demand. As the availability of skilled construction labor remains limited, we continue to see the demand for prefabricated components increasing within the residential new construction market.

•
Economic Conditions. Economic changes both nationally and locally in our markets impact our financial performance. The building products supply industry is highly dependent upon new home construction and, to a lesser extent, repair and remodel activities, and is subject to cyclical market changes. Our operations are subject to fluctuations arising from changes in supply and demand, national and local economic conditions, labor costs and availability, competition, government regulation, trade policies (including with respect to tariffs on imported goods), inflation and other factors that affect the homebuilding industry, such as demographic trends, interest rates, housing starts, the high cost of land development, employment levels, consumer confidence, and the availability of credit to homebuilders, contractors, and homeowners. Disruptions and uncertainties as a result of a number of unforeseen environmental, social, economic or other factors, may have a significant impact on our future operating results.

•
Housing Affordability. The affordability of housing can be a key driver in demand for our products. Home affordability is influenced by a number of economic factors, such as the level of employment, consumer confidence, consumer income, supply of houses, the availability of financing and interest rates. Changes in the inventory of available homes and other economic factors relative to home prices could result in changes to the affordability of homes. As a result, homebuyer demand may shift toward smaller or larger homes creating fluctuations in demand for our products.

•
Cost and/or Availability of Materials. Prices of building materials, including wood products, are subject to cyclical market fluctuations, which may adversely impact operating income when prices rapidly rise or fall within a relatively short period of time. We purchase materials which are then sold to customers as well as used as direct production inputs for our manufactured and prefabricated products. Short-term changes in the cost and/or availability of these materials, some of which are subject to significant fluctuations, are often passed on to our customers, but our pricing quotation periods and market competition may limit our ability to pass on such price changes. We may also be limited in our ability to pass on increases on in-bound freight costs on our products. We may also experience challenges sourcing suitable products for our customers and may be forced to provide alternative materials as substitution for contracted orders. Our inability to pass on material price increases to our customers could adversely impact our operating results.

•
Controlling Expenses. Another important aspect of our strategy is controlling costs and striving to be a low total-cost building materials supplier in the markets we serve. We closely manage our working capital and operating expenses, and we pay careful attention to our logistics function and its effect on our shipping and handling costs. However, we do have significant fixed costs and declines in our customer demand could have an adverse impact on our operating results.

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•
Capital Structure. We strive to optimize our capital structure to ensure that our financial needs are met in light of economic conditions, business activities, organic investments, opportunities for growth through acquisition and the overall risk characteristics of our underlying assets. In addition to these factors, we also evaluate our capital structure on the basis of our leverage ratio, our liquidity position, our debt maturity profile, our market capitalization, and market interest rates. As such, we may enter into various debt or equity transactions to appropriately manage and optimize our capital structure and liquidity needs.

RECENT DEVELOPMENTS

Business Combinations

During 2025, we completed a number of acquisitions for a combined $1.1 billion purchase price, net of cash acquired, including the acquisitions of (i) Alpine Lumber Company (“Alpine Lumber”), (ii) O.C. Cluss Lumber Company (“O.C. Cluss”), (iii) Truckee Tahoe Lumber (“Truckee Tahoe”), (iv) St. George Truss Co. (“St. George Truss”), (v) Stately Las Vegas Holdings, LLC (“Stately Las Vegas”), (vi) Rystin Construction, Inc (“Rystin”), (vii) Lengefeld Lumber Co., LP (“Lengefeld Lumber”), and (viii) Pleasant Valley Homes, Inc (“Pleasant Valley”).

On January 2, 2026, we completed the acquisition of Premium Building Components (“Premium Building”). Premium Building provides truss and wall panel products, serving customers in eastern New York.

These acquisitions further expand our market footprint and provide additional operations in our value-added product categories and are further described in Notes 3 and 15 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K.

Company Shares Repurchases

On April 30, 2025, the Company’s board of directors authorized a new repurchase plan of up to $500.0 million of the Company’s outstanding shares of common stock. The new repurchase plan replaced the Company’s prior $1.0 billion share repurchase authorization announced in August 2024, which had approximately $100.0 million remaining under its authorization.

Under share repurchase programs authorized by the board of directors since August 2021, the Company has repurchased a total of 99.3 million shares of common stock, or 48.1% of the Company’s total shares outstanding, at an average price of $80.90, inclusive of fees and taxes, including 3.4 million shares of common stock at an average price of $118.65, inclusive of fees and taxes, in 2025. As of December 31, 2025, the Company had $500.0 million authorization remaining under its current share repurchase program.

Debt Transactions

On May 8, 2025, the Company completed a private offering of $750.0 million in aggregate principal amount of 6.750% senior unsecured notes due 2035 (“6.75% 2035 notes”), at an issue price equal to 100% of par value. The net proceeds from the offering were used to repay indebtedness outstanding under the Revolving Facility.

On May 20, 2025, the Company amended the Revolving Facility to increase the existing revolving commitments of $1.8 billion with new revolving commitments of $2.2 billion and to extend the maturity date to May 20, 2030.

These transactions are described further in Note 8 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K. From time to time, based on market conditions and other factors and subject to compliance with applicable laws and regulations, the Company may repurchase or call our notes, repay debt, repurchase shares of our common stock or otherwise enter into transactions with respect to its capital structure.

Market Information

Our common stock is dual listed on the New York Stock Exchange and the NYSE Texas under the trading symbol “BLDR”. The listing and trading of the common stock on the NYSE Texas commenced on August 12, 2025.

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CURRENT OPERATING CONDITIONS AND OUTLOOK

Full year 2025 housing starts have not been published by the U.S. Census Bureau as of the date of this annual report on Form 10-K. The Industry Forecast Composite is forecasting 1.3 million U.S. total housing starts and 925 thousand U.S. single-family housing starts for the year ended December 31, 2025, which are decreases of 3.7% and 8.7%, respectively, compared to the year ended December 31, 2024. For the year ended December 31, 2026, the Industry Forecast Composite is forecasting U.S. total housing starts and U.S. single-family housing starts to remain relatively flat compared to 2025. In addition, in its September 2025 semi-annual forecast, the Home Improvement Research Institute forecasted sales in the professional repair and remodel end market to increase 2.9% in 2026 compared to 2025.

We believe the housing industry’s long-term outlook is positive and that it remains underbuilt due to growth in the underlying demographics compared to historical new construction levels. However, macroeconomic uncertainty, including fluctuations in interest rates, stock market volatility, impact of changes in tariffs and inflation, may continue to pressure near-term housing industry demand as homes are less affordable for consumers, investors and builders. We believe we are well-positioned to grow and capture market share as industry conditions improve in the long term. We will continue to focus on working capital by closely monitoring the credit exposure of our customers, maintaining the right level of inventory and by 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.

RESULTS OF OPERATIONS

A discussion regarding our financial condition and results of operations for the year ended December 31, 2025, compared to the year ended December 31, 2024, is presented below. A discussion regarding our financial condition and results of operations for the year ended December 31, 2024, compared to the year ended December 31, 2023, can be found under Item 7 of Part II of our annual report on Form 10-K for the fiscal year ended December 31, 2024, filed with the SEC on February 20, 2025.

2025 Compared with 2024

The following table sets forth the percentage relationship to net sales of certain costs, expenses and income items for the years ended December 31:

2025

2024

Net sales

100.0

%

100.0

%

Cost of sales

69.6

%

67.2

%

Gross margin

30.4

%

32.8

%

Selling, general and administrative expenses

25.2

%

23.1

%

Income from operations

5.2

%

9.7

%

Interest expense, net

1.8

%

1.3

%

Income tax expense

0.5

%

1.9

%

Net income

2.9

%

6.5

%

Net Sales. Net sales for the year ended December 31, 2025, were $15.2 billion, a 7.4% decrease from net sales of $16.4 billion for 2024. Core organic sales decreased net sales by 10.3%, primarily due to a below-normal starts environment, while commodity price deflation and one fewer selling day decreased net sales by another 1.3% and 0.4%, respectively. These decreases were partially offset by an increase in net sales from acquisitions of 4.6%.

The following table shows net sales classified by major product category for the years ended December 31:

2025

2024

($ amounts in millions)

Net Sales

% of Net Sales

Net Sales

% of Net Sales

% Change

Manufactured products (1)

$

3,410.5

22.4

%

$

3,985.8

24.3

%

(14.4

)%

Windows, doors and millwork (1)

3,836.2

25.3

%

4,238.1

25.8

%

(9.5

)%

Specialty building products and services

4,068.0

26.8

%

3,907.5

23.9

%

4.1

%

Lumber and lumber sheet goods

3,875.9

25.5

%

4,269.1

26.0

%

(9.2

)%

Total net sales

$

15,190.6

100.0

%

$

16,400.5

100.0

%

(7.4

)%

(1) Manufactured products and windows, doors and millwork are collectively referred to as total value-added products.

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We experienced decreased net sales in our manufactured products category primarily due to decreased single-family housing starts and decreased multi-family activity, partially offset by an increase in net sales from acquisitions. Our windows, doors, and millwork net sales declined primarily due to decreased single-family housing starts. Our lumber and lumber sheet goods category decreased primarily due to lower single-family housing starts and commodity price deflation, partially offset by an increase in net sales from acquisitions. For the comparable period, specialty building products and services increased primarily due to an increase in net sales from acquisitions.

Gross Margin. Gross margin decreased $0.8 billion to $4.6 billion due to decreased net sales. Our gross margin percentage decreased to 30.4% in 2025 from 32.8% in 2024, a 2.4% decrease. This decrease was primarily driven by a below-normal starts environment.

Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $41.7 million, or 1.1%. This increase in expense was primarily due to additional operating expenses from locations acquired within the last twelve months and our ongoing ERP system implementation, partially offset by lower variable compensation due to decreased net sales and the absence of prior year asset write-offs.

As a percentage of net sales, selling, general and administrative expenses increased to 25.2% from 23.1% in 2024. This increase was primarily attributable to reduced operating leverage during the period.

Interest Expense, Net. Interest expense, net was $273.9 million in 2025, an increase of $66.2 million from 2024. Interest expense increased primarily due to higher average debt balances.

Income Tax Expense. We recorded income tax expense of $77.2 million during the year ended December 31, 2025, compared to income tax expense of $309.6 million during the year ended December 31, 2024, a decrease of $232.4 million, driven by a decrease in income before income taxes in the current period. Our effective tax rate was 15.1% in 2025, a decrease compared to the 22.3% in 2024, primarily related to the benefit of income tax credits, impact of state income taxes and discrete tax adjustments, partially offset by permanent differences, relative to a decreased income before income taxes.

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 December 31, 2025, 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, and to 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.

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The following table shows our borrowing base and excess availability as of December 31, 2025, and 2024:

December 31,

2025

December 31,

2024

(in millions)

Accounts receivable availability (1)

$

686.2

$

773.4

Inventory availability

804.2

891.7

Gross availability

1,490.4

1,665.1

Less:

Agent reserves

(42.6

)

(39.3

)

Plus:

Cash in qualified accounts

159.1

88.5

Borrowing base

1,606.9

1,714.3

Aggregate revolving commitments

2,200.0

1,800.0

Maximum borrowing amount (lesser of borrowing base and

    aggregate revolving commitments)

1,606.9

1,714.3

Less:

Outstanding borrowings

—

—

Letters of credit

(79.6

)

(83.3

)

Net excess borrowing availability on revolving facility

$

1,527.3

$

1,631.0

(1) The prior year amounts have been conformed to current year presentation. There is no impact on gross availability or net excess borrowing availability on the Revolving Facility as previously reported.

As of December 31, 2025, we had no outstanding borrowings under our Revolving Facility, and our net excess borrowing availability was $1.5 billion after being reduced by outstanding letters of credit of $0.1 billion. Excess availability must equal or exceed a minimum specified amount, currently $165.0 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 December 31, 2025.

Liquidity

Our liquidity at December 31, 2025, was $1.7 billion, which consists of net borrowing availability under the Revolving Facility and 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, the Company may repurchase or call our notes, repay debt, or otherwise enter into transactions regarding its capital structure.

Should the current industry conditions deteriorate or 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

A discussion regarding our consolidated cash flows for the year ended December 31, 2025, compared to the year ended December 31, 2024, is presented below. A discussion regarding our consolidated cash flows for the year ended December 31, 2024, compared to the year ended December 31, 2023, can be found under Item 7 of Part II of our annual report on Form 10-K filed with the SEC on February 20, 2025.

2025 Compared with 2024

Cash provided by operating activities was $1.2 billion in 2025 compared to cash provided by operating activities of $1.9 billion in 2024. The decrease in cash provided by operating activities was largely the result of a decrease in net income in 2025 of $0.6 billion.

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For the year ended December 31, 2025, cash used in investing activities increased $0.8 billion compared to the prior year ended December 31, 2024, primarily due to using an additional $0.8 billion of cash for acquisitions.

Cash provided by financing activities was $0.3 billion in 2025 which consisted primarily of a net $0.7 billion received for the issuance of the 6.75% 2035 notes, offset by $0.4 billion for repurchases of common stock. Cash used in financing activities was $1.1 billion for 2024 which consisted primarily of $1.5 billion for repurchases of common stock and $0.5 billion net payments on the Revolving Facility, offset by a net $1.0 billion received for the issuance of the 6.375% senior unsecured notes due 2034 (“6.375% 2034 notes”).

These debt transactions are described in Note 8 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K.

Capital Expenditures

Capital expenditures vary depending on prevailing business factors, including current and anticipated market conditions. Historically, capital expenditures have, for the most part, remained at relatively low levels in comparison to the operating cash flows generated during the corresponding periods. We expect our 2026 capital expenditures to be in the range of $250 million to $300 million primarily related to rolling stock, equipment and facility expansion and improvements to support our operations.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Critical accounting policies are those that both are 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.

In order to prepare financial statements that conform to generally accepted accounting principles (“GAAP”), 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.

We have identified the following accounting policy that requires us to make the most subjective or complex judgments in order to fairly present our consolidated financial position and results of operations.

Goodwill

Goodwill represents the excess of the amount we paid to acquire businesses over the estimated fair value of tangible assets and identifiable intangible assets acquired, less liabilities assumed. At December 31, 2025, our goodwill balance was $4.1 billion, representing 36.8% of our total assets.

We test goodwill for impairment in the fourth quarter of each year or at any other time when impairment indicators exist. Examples of such indicators that could cause us to test goodwill for impairment between annual tests include a significant change in the business climate, unexpected competition, or a significant deterioration in market share. We may also consider market capitalization relative to our net assets. Housing starts are a significant sales driver for us. If there is a significant decline or an expected decline in housing starts, this could adversely affect our expectations for a reporting unit and the value of that reporting unit.

The process of evaluating goodwill for impairment involves the determination of the fair value of our reporting units. Our reporting units are aligned with our three geographical divisions which are also determined to be our operating segments. In evaluating goodwill for impairment, the Company first assesses qualitative factors to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying amount. If we conclude that it is more likely than not that the fair value of the reporting unit is not less than its carrying amount, then no further testing of the goodwill is required.

However, if we determine that it is more likely than not that the fair value of the reporting unit is less than its carrying amount, we perform a quantitative goodwill impairment test. This test identifies both the existence of and the amount of goodwill impairment by comparing the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value of a reporting unit exceeds its carrying amount, goodwill is not impaired. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized in an amount equal to that excess, limited to the amount of goodwill allocated to that reporting unit.

We assessed our goodwill balance at December 31, 2025, using a quantitative assessment. In performing the quantitative impairment test at December 31, 2025, we developed the fair value using a discounted cash flow methodology. Inherent in such fair

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value determinations are significant assumptions relating to future cash flows, expected future revenues, expected future profitability, the discount rate, the terminal value, and our interpretation of current economic indicators and market conditions and their impact on our strategic plans and operations. Due to the uncertainties associated with such estimates, interpretations and assumptions, actual results could differ from projected results, which could result in impairment of goodwill being recorded.

Significant information and assumptions utilized in estimating future cash flows for quantitative goodwill impairment analyses include projections of revenue growth utilizing publicly available industry information, such as lumber commodity prices and housing start forecasts developed by the Industry Forecast Composite. Expected future profitability reflects current headcount levels and cost structure and are flexed in future years based upon historical trends at various revenue levels. Long-term growth was based on terminal value EBITDA multiples to reflect the relevant expected acquisition prices. The discount rate used is intended to reflect the weighted average cost of capital for a potential market participant and includes all risks of ownership and the associated risks of realizing the stream of projected future cash flows.

At December 31, 2025, the fair values of each of our reporting units were substantially in excess of their respective carrying amounts. Factors that could negatively impact the estimated fair value of our reporting units and potentially trigger impairment include, but are not limited to, unexpected competition, lower than expected housing starts, an increase in market participant weighted average cost of capital, increases in material or labor cost, and/or significant declines in our market capitalization. Future impairment of goodwill would have the effect of decreasing our earnings or increasing our losses in such period but would not impact our current outstanding debt obligations or compliance with covenants contained in the related debt agreements. We did not have any goodwill impairments in 2025, 2024 or 2023.

RECENTLY ISSUED ACCOUNTING STANDARDS

Information regarding recent accounting pronouncements is discussed in Note 2 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K.