Financial Analysis

2. Business Combinations During the first six months of 2026, we completed the acquisitions of Premium Building Components, Inc. (PBC) and Precision Design and Trim LLC (Precision Design) for a combined total of approximately $ 31.0 million . PBC is based in New York and supplies trusses and wall panels to customers from western New York to Maine and Delaware. Precision Design provides finish work installation services in the Boise, Idaho area. During the first six months of 2025, we completed the acquisitions of Alpine Lumber Company (Alpine Lumber), O.C. Cluss Lumber Company (Cluss Lumber) and Truckee Tahoe Lumber (Truckee Tahoe) for a combined total of approximately $ 891.9 million , net of cash acquired. Alpine Lumber was the largest independently operated supplier of building materials in Colorado and northern New Mexico. Alpine Lumber serves the Colorado Front Range, western Colorado and northern New Mexico, providing a broad product range which includes prefabricated trusses and wall panels, and millwork. Cluss Lumber is a supplier of lumber and building materials to southwestern Pennsylvania, western Maryland and northern West Virginia. Truckee Tahoe is a supplier of lumber and building materials in the northern California and northwestern Nevada markets. The acquisitions were funded with a combination of cash on hand and borrowings under our $ 2.2 billion revolving credit facility due May 20, 2030 (the Revolving Facility ). The transactions were accounted for by the …

BusinessCombinationDisclosureTextBlock · excerpt; the full note is in the filing

11. Commitments and Contingencies As of June 30, 2026, we had outstanding letters of credit totaling $ 76.0 million under our Revolving Facility that principally support our self-insurance programs. The Company has a number of known and threatened construction defect legal claims. While these claims are generally covered under the Companys 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 to 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 …

CommitmentsAndContingenciesDisclosureTextBlock · excerpt; the full note is in the filing

8. Long-Term Debt Long-term debt consisted of the following as of: June 30, 2026 December 31, 2025 (in thousands) Revolving credit facility (1) $ 165,000 $ 4.25 % 2032 notes 1,300,000 1,300,000 6.375 % 2034 notes 1,000,000 1,000,000 6.75 % 2035 notes 750,000 750,000 6.375 % 2032 notes 700,000 700,000 5.00 % 2030 notes 550,000 550,000 Other finance obligations 166,565 183,891 Finance lease obligations 821 1,155 4,632,386 4,485,046 Unamortized debt discount/premium and debt issuance costs ( 41,072 ) ( 43,679 ) 4,591,314 4,441,367 Less: current maturities of long-term debt 11,923 14,334 Long-term debt, net of current maturities, discounts and issuance costs $ 4,579,391 $ 4,427,033 (1) The weighted average interest rate was 4.7 % as of June 30, 2026 . The Companys Revolving Facility and outstanding senior unsecured notes are discussed in more detail in our 2025 Form 10-K. Fair Value As of June 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, 4.25 % senior notes due 2032 (the 4.25 % 2032 Notes), 6.375 % senior notes due 2034 (the 6.375 % 2034 Notes), 6.75 % senior notes due 2035 (the 6.75 % 2035 Notes), 6.375 % senior notes due 2032 (the 6.375 % 2032 Notes), and 5.00 % senior notes due 2030 (the 5.00 % 2030 Notes), at amortized cost. The following table presents the fair value of each such series of notes as of June 30, 2026, whic …

DebtDisclosureTextBlock · excerpt; the full note is in the filing

The following table disaggregates our net sales by product category: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) Manufactured products $ 831,622 $ 959,349 $ 1,566,208 $ 1,813,232 Windows, doors and millwork 954,610 1,050,742 1,808,574 1,994,837 Specialty building products and services 1,036,890 1,092,342 1,890,276 1,980,959 Lumber and lumber sheet goods 1,039,426 1,131,631 1,884,567 2,102,532 Net sales $ 3,862,548 $ 4,234,064 $ 7,149,625 $ 7,891,560

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9 . Employee Stock-Based Compensation 2026 Equity Incentive Plan On May 14, 2026, the Companys 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 June 30, 2026, the Company had reserved 3.6 million shares of common stock for the grant of awards under the 2026 Plan, subject to adjustment as provided by the 2026 Plan, and less one share for every one share subject to an award granted under the Builders FirstSource, Inc. 2014 Incentive Plan (the 2014 Plan) after March 1, 2026 and prior to May 14, 2026. All shares under the 2026 Plan may be made subject to options, SARs, or full value stock awards. Stock options and SARs granted under the 2026 Plan may not have a term exceeding 10 years from the date of grant. The 2026 Plan also provides that all awards will become fully vested and/or exercisable upon a change in control (as defined in the 2026 Plan) if those awards (i) are not assumed or equitably substituted by the surviving entity or (ii) have been assumed or equitably substituted by the surviving entity, and the grantees employment is terminated under certain circumstances. Other specific terms for awards granted under the 2026 Plan shall be determined by our board …

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10 . Income Taxes A reconciliation of the statutory federal income tax rate to our effective rate for continuing operations is provided below : Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 Statutory federal income tax rate 21.0 % 21.0 % 21.0 % 21.0 % Discrete federal research and development credits, including non-cash settlement agreement 83.8 ( 802.5 ) State income taxes, net of federal income tax 3.2 2.4 1.0 2.4 Stock-based compensation windfall/shortfall 0.7 ( 0.7 ) ( 50.7 ) ( 1.4 ) Permanent differences and other ( 1.3 ) ( 6.4 ) ( 0.4 ) Effective tax rate for continuing operations 107.4 % 22.7 % ( 837.6 )% 21.6 % During the three months ended June 30, 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 $ 43.9 million during the quarter. The settlement agreement did not result in a current period cash payment, as the Company had previously remitted cash tax payments in excess of the amounts claimed in prior years and ultimately due under the settlement agreement. A comparison of the Companys effective tax rate for the three months ended June 30, 2026, to the three months ended June 30, 2025, is not meaningful due to the impact of the discrete settlement agreement relative to the amount of income ea …

IncomeTaxDisclosureTextBlock · excerpt; the full note is in the filing

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. The standard applies to costs incurred to develop or obtain software for internal use. ASU 2025-06 amends the exis …

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3. Revenue The following table disaggregates our net sales by product category: Three Months Ended June 30, Six Months Ended June 30, 2026 2025 2026 2025 (in thousands) Manufactured products $ 831,622 $ 959,349 $ 1,566,208 $ 1,813,232 Windows, doors and millwork 954,610 1,050,742 1,808,574 1,994,837 Specialty building products and services 1,036,890 1,092,342 1,890,276 1,980,959 Lumber and lumber sheet goods 1,039,426 1,131,631 1,884,567 2,102,532 Net sales $ 3,862,548 $ 4,234,064 $ 7,149,625 $ 7,891,560 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 0.7 % , 2.0 % , - 2.3 % , and - 0.1 % , respectively, for the three months ended June 30, 2025 and 0.5 % , 1.8 % , - 2.1 % , and - 0.2 % , respectively, for the six months ended June 30, 2025. 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 liabilitie …

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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 three geographical divisions (East, Central, and West) to two geographical divisions (East and West), which represent the Companys operating segments. We aggregate our two operating segments into one reportable segment in accordance with GAAP. The primary measures reviewed by the CODM, including revenue, gross margin, and income (loss) 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 (loss) before income taxes are driven by the segments 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 $ 0.5 billion and $ 0.6 billion for the three months ended June 30, 2026 and 2025, respectively, and $ 1.1 billion for both six month periods ended June 30, 2026 and 2025. O ther segment items are substantially all the remaining selling, general, and administrative expenses reported in these condensed consolidated financial statements. The measure of segment assets is repo …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing