Builders FirstSource (BLDR) 10-K risk factor changes: FY2021 vs FY2020

[removed: In particular,] [added: However, as noted above,] the COVID-19 pandemic has [removed: recently] caused significant disruptions and delays in the manufacture and distribution of building products throughout the industry supply chain, resulting in shortages and shipping delays of several categories of building products, [removed: such as] [added: including] windows and lumber.

In turn, these supply chain disruptions have in many cases led to significant spikes in the prices of the affected building [removed: products.][added: products, which may impact our margins if we are unable to pass along these price increases to our customers.]

[removed: The] [added: Furthermore, the] inability of our suppliers to meet our supply needs in a timely [added: manner or our quality standards could cause delays to delivery date requirements of our customers.]

Our inability to identify and secure alternative sources of supply [removed: in this situation] could have a material [added: and] adverse effect on our ability to satisfy customer orders.

We cannot predict the duration or scope of the COVID-19 pandemic or when or how our business, financial conditions and results of operations will be further impacted by it, including as a result of [removed: the recent] [added: a] deterioration in the U.S. [removed: economy and any related impact on the residential homebuilding industry, and based on the duration and scope, such impact could be material.][added: economy, inflation, rising interest rates, supply chain disruption or labor shortages.]

[removed: Any] [added: In particular, any] significant downturn in [removed: new home] [added: residential] construction as a result of the economic impact of the COVID-19 pandemic could have an adverse effect on our business, financial condition and results of operations.

Unfavorable changes in demographics, credit markets, consumer confidence, [added: household incomes, inflation,] housing affordability, or housing inventory levels and occupancy, or a weakening of the U.S. economy or of any regional or local economy, including as a result of the COVID-19 pandemic, in which we operate could adversely affect consumer spending, result in decreased demand for our products, and adversely affect our business.

Prices of building products are subject to fluctuations arising from changes in supply and demand, national and international economic conditions, [added: including inflation and interest rates,] labor costs, competition, market speculation, government regulation, and trade policies, as well as from periodic delays in the delivery of lumber and other products.

For example, prices of wood products, including lumber and panel products, are subject to significant volatility, such as the spike in lumber prices [removed: during] [added: experienced in our industry as a result of] the COVID-19 outbreak, and directly affect our sales and earnings.

Our lumber and lumber sheet goods product category represented [removed: 35.9%] [added: 42.3%] of total net sales for the year ended December 31, [removed: 2020.][added: 2021.]

We face, and will continue to face, significant competition from [removed: local and] [added: local,] regional [added: and other national] building materials chains, as well as from privately-owned single site enterprises.

Any of these competitors may (1) foresee the course of market development more accurately than we do, (2) develop products that are superior to our products, (3) have the ability to produce or supply similar products at a lower cost, (4) develop stronger relationships with local homebuilders or commercial [removed: builders,] [added: builders or] (5) adapt more quickly to new technologies or evolving customer requirements than we [removed: do, or (6) have access to financing on more favorable terms than we can obtain in the market.][added: do or.]

[removed: Homebuyer] [added: Homebuyer] demand may shift towards smaller homes creating fluctuations in demand for our [removed: products.][added: products.]

Home affordability can be a key driver in demand for our [removed: products.][added: products and home prices have increased meaningfully since the beginning of the COVID-19 pandemic.]

The factors expected to contribute to this variability include, among others: (1) the volatility of prices of lumber, wood products and other building products, (2) the cyclical nature of the homebuilding industry, (3) general economic conditions in the various areas that we serve, (4) the intense competition in the industry, including expansion and growth strategies by competitors, (5) the production schedules of our customers and suppliers, [removed: and] (6) the effects of the [removed: weather.][added: weather and (7) labor costs, labor shortages and available capacity to meet customer demand for our products.]

We may be unable to successfully implement our growth strategy, which includes increasing sales of our prefabricated components and other value-added products, pursuing strategic acquisitions, opening new facilities, implementing operational excellence, [added: pursuing digitization opportunities] and [added: initiatives, and] maintaining a balanced debt level.

Our long-term strategy depends in part on growing our sales of prefabricated components and other value-added products, increasing our market share, and implementing various initiatives to increase our operational [removed: efficiency.][added: efficiency, improve our margins, optimize our pricing strategies, and streamline the customer experience.]

Our failure to make successful acquisitions or to build or expand needed facilities, including manufacturing facilities, produce saleable [added: product, or meet customer demand in a timely manner could adversely affect our financial condition, operating results, and cash flows.]

[removed: In addition, although] [added: Although] we have been successful in the past with the integration of numerous acquisitions, we may not be able to [removed: fully] [added: successfully] integrate the operations of any future acquired businesses, including the recent BMC Merger, with our own in an efficient and cost-effective manner or without significant disruption to our or the acquired companies’ existing operations.

Our failure to fully integrate future acquired businesses effectively or to manage other consequences of our acquisitions, including increased indebtedness, could prevent us from remaining competitive and, ultimately, could adversely affect our financial condition, operating results and cash [removed: flows.][added: flows]

As a result, we may face heightened pricing pressures in the event of an [removed: ongoing] economic downturn resulting from the continuing COVID-19 pandemic or otherwise, and our financial condition, operating results and cash flows may be adversely affected.

Our ten largest customers generated approximately [removed: 15.8%] [added: 18%] of our net sales for the year ended December 31, [removed: 2020.][added: 2021.]

[removed: The loss] of one or more of our significant customers or deterioration in our relations with any of them could significantly affect our financial condition, operating results and cash flows.

[removed: However, as noted above,] [added: While demand for building products has remained high throughout most of] the [added: pandemic, the] COVID-19 pandemic has [removed: recently] caused significant disruptions and delays in the manufacture and distribution of building products throughout the industry supply chain, resulting in shortages and shipping delays of several categories of building products, [removed: including] [added: such as] windows and lumber.

Short-term changes in the cost of these materials, some of which are subject to significant fluctuations, are oftentimes, but not [removed: always] [added: always,] passed on to our customers.

[removed: We] [added: We] may be adversely affected by any disruption in our respective information technology [removed: systems.][added: systems.]

Our primary ERP [removed: system is a] [added: systems are] proprietary [removed: system] [added: systems] that [removed: has] [added: have] been highly customized by our computer programmers.

While we have not experienced any material losses relating to cyber-attacks or other information security breaches to date, we have been the subject of attempted hacking and cyber-attacks and there can be no assurance that we will [added: not suffer such significant losses in the future.]

[removed: The] [added: The] implementation of our supply chain and technology initiatives could disrupt our operations, and these initiatives might not provide the anticipated benefits or might [removed: fail.][added: fail.]

[added: We have closed] or idled a number of facilities for which we continue to remain liable.

The success of the BMC Merger will depend on, among other things, our [added: continued] ability to integrate the business of BMC into our existing business in a manner that facilitates growth opportunities and realizes cost savings.

[removed: Actual] [added: While our integration of BMC has been largely successful to date, anticipated] growth and cost savings, [removed: if achieved, however,] may be lower than what we expect and may take longer to achieve than anticipated, which could have an adverse effect on our revenues, level of expenses and operating results.

In addition, [added: the continued] integrating [added: of] the business of BMC into our existing business may result in additional and unforeseen expenses, and the anticipated benefits of our integration plan may not be [added: fully] realized.

If we are not able to adequately address integration challenges, we may be unable to [added: fully] realize the anticipated benefits of the integration of BMC’s operations into our existing business.

If we are not able to successfully achieve these objectives, the anticipated benefits of the BMC Merger may not be realized fully, or [removed: at all, or] may take longer to realize than expected.

Although we expect that these benefits will offset the transaction expenses and implementation costs over time, this net benefit may not be achieved in the near term or at [removed: all.][added: all]

As of December 31, [removed: 2020,] [added: 2021,] our debt totaled [removed: $1,642.4] [added: $2,957.3] million, which includes [removed: $239.9] [added: $206.8] million of finance lease and other finance obligations.

We had [removed: $75.0] [added: $588.0] million [removed: of] [added: in] outstanding borrowings and [removed: $78.0] [added: $126.4] million of letters of credit outstanding as of December 31, [removed: 2020] [added: 2021] under the [removed: 2023] [added: 2026] facility.

In addition, we also have [removed: $280.9] [added: $472.0] million in obligations under operating leases.

| | • | requiring a substantial portion of our operating cash flow to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our liquidity and our ability to use our cash flow to fund our operations, capital expenditures, [removed: and] future business [removed: opportunities;] [added: opportunities, share repurchases and retirement of debt;] |

Furthermore, the COVID-19 pandemic has resulted in increased labor costs and a general labor shortage in our industry to meet the high demand for our services.

These developments include the scope, duration and severity of the pandemic (including the possibility of further surges or variations of concern of COVID-19 or the emergence of other health epidemics or pandemics), the efficacy of the vaccination program in the U.S., supply chain disruptions, decreased demand for our products and services, rising inflation, our ability to maintain sufficient qualified personnel due to labor shortages, employee illness, quarantine, willingness to return to work, vaccine and/or testing mandates, face-coverings and other safety requirements, or travel and other restrictions, and the actions taken by governments, businesses and individuals to contain the impact of COVID-19, as well as further actions taken to limit the resulting economic impact.

Any of these developments could materially and adversely affect our business, financial condition and results of operations.

Furthermore, we have made significant investments, and intend to continue to invest, in technology solutions designed to increase the efficiency of the homebuilding process.

There is no guarantee that such solutions will be effective, will be adopted by our customers, will be able to compete with alternative technology solutions, including from start-up and more well established technology companies or our competitors, or that we will realize the anticipated benefits from our investments in these solutions.

As a result, we may suffer losses on these investments or lose market share if competing technology solutions are more widely adopted than the technology solutions we are developing.

We have consummated a number of strategic acquisitions as part of our growth strategy and intend to continue to pursue strategic acquisitions in the future as part of our growth strategy.

Strategic acquisitions involve risks and if we are unable to realize the anticipated benefits of these transactions or identify suitable acquisition candidates in the future our growth, financial condition and results of operations could be materially and adversely affected

Strategic acquisitions are an important part of our growth strategy and we seek to identify attractive acquisitions opportunities that we believe will be accretive and result in increased sales and EBITDA, cost savings, synergies and various other benefits.

Assessing the viability and realizing the benefits of these transactions is subject to significant uncertainty.

Additionally, in connection with evaluating potential strategic transactions, we may incur significant expenses for the evaluation and due diligence investigation and negotiation of any potential transaction.

Furthermore, multiples for acquisition targets have generally increased over the past few years and we face increased competition from other acquirors for attractive acquisition opportunities.

As a result, we may not be able to consummate acquisitions on favorable terms, if at all.

We may also not be able to obtain necessary approvals to consummate acquisitions.

An inability to continue to identify and consummate attractive acquisitions could adversely affect our growth.

If we complete an acquisition, we need to successfully integrate the target company’s products, services, associates and systems into our business operations in order to realize the anticipated benefits from an acquisition.

Integration can be a complex and time-consuming process, and if the integration is not fully successful or is delayed for a material period of time, we may not achieve the anticipated synergies or benefits of the acquisition.

Furthermore, even if a target company is successfully integrated, an acquisition may fail to further our business strategy as anticipated, expose us to increased competition or challenges with respect to our products or services, and expose us to additional liabilities.

Any impairment of goodwill or other intangible assets acquired in a strategic transaction may reduce our earnings.

Given this pricing pressure, we may not be able to pass along price increases for lumber, wood products and other building products to our customers, which could impact our margins.

The loss

In addition, competition for non-management employees has increased significantly since the COVID-19 pandemic resulting in higher labor costs and labor shortages at our facilities.

As a result, we may continue to face higher operating expenses and may lose revenue opportunities if we lack capacity due to labor shortages to meet customer demand.

While only a small percentage of our workforce is unionized, there can be no assurance that additional employees will not conduct union organization campaigns or become union members in the future and a failure to renew existing collective bargaining agreements on favorable terms could lead to further labor shortages and higher labor costs.

We anticipate digitization trends in the home-building industry to continue and have made significant investments in technology solutions to further drive digitization of the home-building industry.

As of December 31, 2021, we also had a $1.4 billion revolving credit facility which was extended in December 2021 to a maturity date of December 17, 2026 (“2026 facility”) and increased on February 4, 2022 to $1.8 billion.

Subsequent to December 31, 2021, the Company also completed a private offering of an additional $300.0 million in aggregate principal amount of 2032 notes.

| | • | make it more difficult for us to satisfy our obligations with respect to our other indebtedness, resulting in possible defaults on and acceleration of such indebtedness; |

Our working capital requirements are likely to grow as we continue to grow organically and through acquisitions.

Throughout 2021, we generated significant excess cash flows.

We have also repurchased approximately $2.0 billion of our shares since January 2021 and intend to continue repurchasing shares pursuant to the additional $1.0 billion share repurchase authorization approved by our board of directors and announced on February 18, 2022.

Any future changes in federal and state tax laws and regulations could have an adverse direct impact on our corporate taxes and/or an adverse indirect impact such as making purchasing a home less attractive, which could reduce demand for homes.

reopen or replace a damaged facility.

Furthermore, if certain regions where we have made significant investments become less desirable for new home building due to the frequency of adverse weather events or climate change, we could incur significant losses at our facilities throughout these regions

These developments include the scope, duration and severity of the pandemic (including the possibility of further surges or variations of COVID-19 or the emergence of other health epidemics or pandemics), the timing and efficacy of the vaccination program in the U.S., further actions taken by governmental authorities, including future stimulus programs, in response to the pandemic and changing consumer and supplier behavior.

The current COVID-19 pandemic has impacted and may continue to impact our industry and cause disruptions to our operations, including as a result of temporary closure of locations, decreased demand for our products and services or disruption to our supply chain, all of which could materially and adversely affect our business, financial condition and results of operations.

While we have taken significant precautions to ensure the health and safety of our team members and customers throughout the pandemic, we have had several employees test positive for COVID-19 to date, requiring us to quarantine certain groups of employees and disinfect at certain locations and to occasionally temporarily close certain locations to disinfect.

Our operations could be further disrupted in the future if additional employees or employees of our suppliers or customers were suspected or confirmed of having COVID-19 or other illnesses, and such illness required us or our suppliers or customers to quarantine some or all such employees or disinfect additional locations.

Also, a number of our administrative employees are working remotely.

Remote working may heighten cybersecurity, information security and operational risks and affect the productivity of our employees.

The COVID-19 pandemic has caused, and may continue to cause disruptions in our supply chain.

Such disruptions may also be caused by the outbreak of new health epidemics or pandemics.

manner or our quality standards could cause delays to delivery date requirements of our customers.

Although we believe that we can manage our exposure to these risks, we cannot be certain that we will be able to identify such alternative materials or sources without delay or without greater cost to us.

While only some of our locations were temporarily closed in the few states or counties where construction activities were temporarily prohibited at the beginning of the pandemic, we could also be adversely affected if government authorities impose further mandatory closures, seek voluntary closures or impose restrictions on our operations.

Even if such measures are not further implemented and a virus or other disease does not spread significantly, the perceived risk of infection or health risk may adversely affect our business and operating results.

Historically, in times of an economic recession, new home construction in the United States has slowed considerably.

product, or meet customer demand in a timely manner could adversely affect our financial condition, operating results, and cash flows.

Over the past several years, these pricing pressures have adversely affected our operating results and cash flows.

not suffer such significant losses in the future.

Some Company employees are unionized.

Less than 2% of the workforce at our company are members of 12 different unions.

There can be no assurance that additional employees of our company will not conduct union organization campaigns or become union members in the future.

Further, many of our collective bargaining agreements are scheduled to be renewed within the next 18 months.

Failure to successfully renew such agreements could have a material adverse effect on our financial condition, operating results and cash flows.

We anticipate digitization trends in the home-building industry to continue.

We have closed

BMC Merger Risks

We may not be able to retain customers or suppliers, or customers or suppliers may seek to modify contractual obligations with us, which could have an adverse effect on our business and operations.

If any of our customers or suppliers seeks to terminate or modify contractual or other obligations or discontinue its relationship with us as a result of the BMC Merger, then our business and results of operations may be harmed.

There can be no guarantee that our customers and suppliers will remain or continue to have a relationship with us or do so on the same or similar contractual terms to those they had with either us or BMC prior to the BMC Merger.

If any of our suppliers seeks to terminate or modify its relationship with us, we may be unable to procure necessary supplies from other suppliers in a timely and efficient manner and on acceptable terms, or at all.

Any such disruptions could limit our ability to achieve the anticipated benefits of the BMC Merger.

The failure to successfully integrate the businesses and operations of the Company and BMC in the expected time frame may adversely affect the combined company’s future results.

There can be no assurance that BMC’s operations can be integrated successfully into our existing operations.

It is possible that the integration process could result in the loss of key employees, the loss of customers, the disruption of our ongoing business, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.

Specifically, the following issues, among others, must be addressed in integrating the operations of BMC into the Company’s existing operations in order to realize the anticipated benefits of the BMC Merger:

| | • | managing a larger company and meeting our capital requirements; |

| --- | --- | --- |

| | • | integrating personnel from the two companies and maintaining employee morale; |

| | • | integrating the companies’ technologies; |

| | • | integrating and unifying the offerings and services available to customers; |

| | • | identifying and eliminating redundant and underperforming locations, functions and assets; |

| | • | harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes; |

The following discussion of our financial condition and results of operations should be read in conjunction with the [removed: selected financial data and the] consolidated financial statements and related [removed: notes] [added: footnotes] contained in Item [removed: 6.][added: 8.]

Financial Statements and Supplementary Data of this annual report on Form [removed: 10-K, respectively.][added: 10-K.]

[removed: Following the BMC Merger, the] [added: The] Company operates approximately [removed: 550] [added: 565] locations in [removed: 40] [added: 42] states across the United States.

[removed: Our financial statements contain additional information regarding segment performance which is discussed] [added: These transactions are described] in Note [removed: 15] [added: 3] to the consolidated financial statements included in Item 8 of this annual report on Form 10-K.

Our manufactured products include our factory-built roof and floor trusses, wall [removed: panels and stairs,] [added: panels,] vinyl windows, custom millwork and trim, as well as engineered wood that we design, cut, and assemble for each home.

Additionally, we supply our customers with a broad offering of professional grade building products not manufactured by us, such as dimensional lumber and lumber sheet goods and various window, door and millwork [removed: lines.][added: lines along with other various building products.]

| | • | *Manufactured Products.* Manufactured products consist of wood floor and roof trusses, steel roof trusses, wall panels, [removed: stairs,] and engineered wood. |

| | • | *Windows, Door & Millwork.* Windows & 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 [added: and exterior] trim and custom features that we [removed: manufacture under the Synboard ® brand name.] [added: manufacture, such as intricate mouldings, stair parts, and columns.] |

| | • | *Other Building Products & Services.* Other building products & services are comprised of products such as cabinets and hardware as well as services such as turn-key framing, shell construction, design assistance, and professional installation spanning the majority of our product [removed: categories.] [added: categories, as well as revenue from our Paradigm subsidiary.] |

| | • | *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, and the health of the economy and mortgage markets. According to the U.S. Census Bureau, annual U.S. total and single-family housing starts were [removed: 1.4] [added: 1.6] million and [removed: 1.0] [added: 1.1] million, respectively, in [removed: 2020.] [added: 2021.] Due to increased competition for homebuilder business and cyclical fluctuations in commodity prices, we may experience pressure on our gross margins. In addition to these factors, there has been a trend of consolidation within the building products supply industry. However, our industry remains highly fragmented and competitive and we will continue to face significant competition from local and regional suppliers. We believe there are several meaningful trends that indicate U.S. housing demand will continue to grow, including historically low interest rates, the aging of housing stock, and normal population growth due to immigration and birthrate exceeding death rate. Building upon the current rate of market growth, industry forecasters, including the National Association of Homebuilders (“NAHB”), expect to see continued increases in housing demand over the next year. |

| | • | *Effect of COVID-19 Pandemic.* In March of 2020, the U.S. economy began to see significant disruption, uncertainty and record high levels of unemployment as a result of the COVID-19 pandemic. While the COVID-19 pandemic [removed: did] [added: has] not [removed: have] [added: had] a materially adverse impact on our financial results [removed: in 2020,] [added: to date,] the extent and duration of any future impact resulting from the pandemic is not fully known, and we may experience a decline in housing starts, reduced sales demand, volatility in commodity prices, challenges in the supply chain, [added: labor shortages,] increased margin pressures and/or increased operating costs as a result. |

| | • | *Targeting Large Production Homebuilders.* [removed: In recent years, the] [added: The] homebuilding industry [removed: has undergone] [added: continues to undergo] consolidation, and the larger homebuilders [removed: have increased] [added: 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 are facing in servicing large homebuilders with certain profitability expectations. Additionally, we have been successful in expanding our custom homebuilder base while maintaining acceptable credit standards. |

| | • | *Repair and remodel end market*. Although the repair and remodel end market is influenced by housing starts to a lesser degree than the homebuilding market, the repair and remodel end market is still dependent upon some of the same factors as the homebuilding market, including demographic trends, interest rates, consumer confidence, employment rates and the health of the economy and home financing markets. The repair and remodel end market has been impacted by the COVID-19 pandemic and while the extent of this impact and related uncertainties are yet to be fully known, we may experience reduced sales demand, [added: challenges in the supply chain,] increased margin pressures and/or increased operating costs in this area of our business as a result. 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. |

| | • | *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 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 [removed: policies] [added: policies, rising 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. The disruptions and uncertainties as a result of the ensuing COVID-19 pandemic may have a significant impact on our future operating results. |

| | • | *Cost [added: and/or Availability] of Materials.* Prices of wood products, which are subject to cyclical market fluctuations, may adversely impact operating income when prices rapidly rise or fall within a relatively short period of time. We purchase certain materials, including lumber products, 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 [added: and/or availability] of these materials, some of which are subject to significant fluctuations, are oftentimes 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. [added: We may also be limited in our ability to find suitable products for our customers and may be forced to provide other materials as substitution for contracted orders.] Our inability to pass on material price increases to our customers could adversely impact our operating results. |

| | • | *Capital Structure.* [removed: As a result of our historical growth through acquisitions, we] [added: We] had [removed: $1,642.4] [added: $2,957.3] million of indebtedness as of December 31, [removed: 2020.] [added: 2021.] 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 and market interest rates. As such, we may enter into various debt or equity transactions in order to appropriately manage and optimize our capital structure and liquidity needs. |

On January 1, 2021, we completed our [removed: previously announced] all stock merger transaction with BMC.

The BMC Merger [removed: will be] [added: and the other acquisitions were] accounted for using the acquisition method of accounting, [removed: and] [added: with] Builders FirstSource, Inc. [removed: will be treated] as the accounting acquirer.

The operating results of BMC [removed: will be reported] [added: are included] as part of the Company beginning on [added: January 1, 2021, while] the [removed: closing date] [added: results] of the [removed: BMC Merger] [added: other acquired companies are included from the date of each acquisition] and as such, the historical financial condition, results of operations and cash flows of the Company presented in this annual report [added: Form 10-K for periods prior to that date] do not include [removed: BMC.][added: BMC or the other acquired companies.]

Despite experiencing disruptions to our operations and implementing a number of health and safety precautions as a result of the [added: COVID-19] pandemic, our financial results and financial condition were not materially adversely affected by the pandemic.

Furthermore, housing starts and repair and remodeling activity generally increased throughout our markets [removed: in 2020] despite the pandemic.

Despite the limited impact of the COVID-19 pandemic on our [removed: 2020] financial results, the extent to which the pandemic may impact our results in future periods is uncertain and will depend upon, among other things, the duration and severity of the outbreak or subsequent outbreaks, related government responses, [removed: such as required physical distancing or restrictions on business operations and travel,] the pace of recovery of economic activity and the impact to consumers, [removed: the effectiveness of available vaccines,] and [added: contributing effects of the pandemic including] any potential supply disruptions, [added: labor shortages, inflation, and the impact of housing starts and repair and remodeling activity,] all of which are uncertain and difficult to predict in light of the rapidly evolving landscape.

These [removed: acquisitions] [added: transactions] are described in Note [removed: 5] [added: 15] to the consolidated financial statements included in Item 8 of this annual report on Form 10-K.

During the year ended December 31, [removed: 2020,] [added: 2021,] the Company executed several debt transactions, including the [removed: redemption] [added: issuance] of [removed: $503.9 million] [added: $1.0 billion] in [removed: outstanding] aggregate principal amount of [removed: 5.625%] [added: 4.25%] senior [removed: secured] [added: unsecured] notes due [removed: 2024 (“2024] [added: 2032 (“2032] notes”), [removed: the] redemption of [removed: $47.5] [added: $165.0] million in [added: outstanding] aggregate principal amount of 6.75% senior secured notes due 2027 (“2027 notes”), and [removed: repayment of $52.0 million of] [added: amendments to] our [removed: senior secured term loan] [added: 2026] facility [removed: due 2024 (“2024 term loan”).][added: to both extend maturity and increase the total commitments.]

On [removed: January 29, 2021,] [added: February 4, 2022,] the Company amended the [removed: 2023] [added: 2026] facility [removed: to, among other things,] [added: to] increase the total commitments by an aggregate amount of [removed: $500.0] [added: $400.0] million resulting in a new [removed: $1.4] [added: $1.8] billion amended credit [removed: facility, and extended the maturity date from November 2023 to January 2026.][added: facility.]

These transactions are described in Notes [removed: 9] [added: 8] and [removed: 18] [added: 15] to the consolidated financial statements included in Item 8 of this annual report on Form 10-K.

[removed: CURRENT] [added: CURRENT] OPERATING CONDITIONS AND [removed: OUTLOOK][added: OUTLOOK]

According to the U.S. Census Bureau, actual U.S. total housing starts for the year ended December 31, [removed: 2020] [added: 2021] were [removed: 1.4] [added: 1.6] million, an increase of [removed: 7.0%] [added: 15.8%] compared to the year ended December 31, [removed: 2019.][added: 2020.]

Actual U.S. single-family housing starts for the year ended December 31, [removed: 2020] [added: 2021] were [removed: 1.0] [added: 1.1] million, an increase of [removed: 11.7%] [added: 13.6%] compared to the year ended December 31 [removed: 2019.][added: 2020.]

A composite of third party sources, including the NAHB, are forecasting [removed: 1.5] [added: 1.7] million U.S. total housing starts and [removed: 1.1] [added: 1.2] million U.S. single-family housing starts for [removed: 2021,] [added: 2022,] which are increases of [removed: 6.0%] [added: 4.0%] and [removed: 11.0%,] [added: 4.0%,] respectively, from [removed: 2020.][added: 2021.]

In addition, in its September [removed: 2020] [added: 2021] semi-annual forecast, the Home Improvement Research Institute (“HIRI”) forecasted sales in the professional repair and remodel end market to increase approximately [removed: 5.3%] [added: 7.1%] in [removed: 2021] [added: 2022] compared to [removed: 2020.][added: 2021.]

Our net sales for the year ended December 31, [removed: 2020] [added: 2021] increased [removed: 17.6%] [added: 132.4%] over the same period last year.

Our gross margin percentage [removed: decreased] [added: increased] by [removed: 1.2%] [added: 3.4%] during the year ended December 31, [removed: 2020] [added: 2021] compared to the year ended December 31, [removed: 2019,] [added: 2020,] primarily attributable to [removed: margin pressures as a result] [added: effective pricing relative to the impact] of commodity [removed: price inflation.][added: inflation, as well as growth in value-added product categories.]

Our selling, general and administrative expenses, as a percentage of net sales, were [removed: 19.6%] [added: 17.4%] in [removed: 2020,] [added: 2021,] a 2.2% decrease from [removed: 21.8%] [added: 19.6%] in [removed: 2019,] [added: 2020,] primarily driven by [removed: the effect of] [added: cost] leverage [removed: from commodity price inflation in our] [added: on increased] net sales in the year ended December 31, [removed: 2020] [added: 2021] compared to the year ended December 31, [removed: 2019.][added: 2020.]

We believe the long-term outlook for the housing industry is positive due to growth in the underlying demographics compared to historical new construction [removed: levels.][added: levels, despite the uncertainty in the industry at the outset of the COVID-19 pandemic.]

We strive to achieve the appropriate balance of short-term expense control while maintaining the expertise and capacity to grow the business as market conditions [removed: continue to improve.][added: expand.]

A discussion regarding our financial condition and results of operations for the year ended December 31, [removed: 2020] [added: 2021] compared to the year ended December 31, [removed: 2019] [added: 2020] is presented below.

A discussion regarding our financial condition and results of operations for the year ended December 31, [removed: 2019] [added: 2020] compared to the year ended December 31, [removed: 2018] [added: 2019] can be found under Item 7 of Part II of our Annual Report on Form [removed: 10-K] [added: 10-K, as amended] for the fiscal year ended December 31, [removed: 2019,] [added: 2020,] filed with the SEC on February 21, [removed: 2020.][added: 2021, with such amendment filed with the SEC on July 21, 2021.]

[removed: 2020 Compared] [added: 2021 Compared] with [removed: 2019][added: 2020]

| Net sales | | | 100.0 | % | | | 100.0 | % | [removed: |]

Given the span and depth of our geographical reach, our locations are organized into three geographical divisions (East, Central, and West), which were also our operating segments.

Due to the similar economic characteristics, categories of products, distribution methods and customers, our operating segments are aggregated into one reportable segment.

BMC Merger & Other Acquisitions

During the twelve months ended December 31, 2021, we have also completed six other acquisitions.

Company Shares Repurchases

Subsequent to year-end, on February 18, 2022, the Company announced that its board of directors authorized the repurchase of an additional $1.0 billion of its shares of common stock.

This authorization is in addition to the two previous $1.0 billion authorizations in 2021, which were completed on January 12, 2022.

Subsequent to year-end, on January 21, 2022, the Company completed a private offering of an additional $300.0 million in aggregate principal amount of 2032 notes at an issue price equal to 100.50% of par value.

The significant increase was primarily driven by acquisitions with our BMC Merger accounting for 76.6% of our sales growth in the year ended December 31, 2021, while commodity price inflation accounted for another 30.2%.

The remainder of the increase was a result of core organic sales growth primarily in the single-family customer segment.

| | | 2021 | | | | 2020 | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

The BMC Merger and commodity price inflation increased net sales by 76.6% and 30.2%, respectively.

The remaining increase in sales is attributable to core organic growth in our single family customer segment and net sales from other acquisitions.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 2021 | | | | | | | | 2020 | | | | | | | | | | |

| Net sales | $ | 19,893.9 | | | | 100.0 | % | | $ | 8,558.9 | | | | 100.0 | % | | | 132.4 | % |

We achieved increased net sales in all of our product categories, primarily due to the BMC Merger, commodity inflation and core organic sales growth.

Gross margin increased $3.6 billion to $5.9 billion, driven primarily by the BMC Merger, commodity price inflation, and core organic sales growth.

This increase was primarily attributable to pricing relative to the impact of commodity price inflation, as well as growth particularly in value-added product categories.

This increase in expenses was primarily due to the BMC Merger, which accounted for approximately 73% of the increase including an increase of $387.4 million in related depreciation and amortization expense, and higher variable compensation costs as a result of higher sales and profitability.

Our effective tax rate was approximately 23% in both 2021 and 2020.

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Less: | | | | | | | | |

On February 4, 2022, the Company amended the 2026 facility to increase the total commitments by an aggregate amount of $400.0 million resulting in a new $1.8 billion amended credit facility.

The increase in cash used in operating activities was largely the result of an increase in net income in 2021, exceeding the net income in 2020.

For the year ended December 31, 2021 the Company used $1.3 billion in cash in investing activities, $1.2 billion more than the same period in the prior year.

Of this increase, $1.2 billion more was spent on acquisitions and $110.7 million more as a net investment in property, plant and equipment.

Offsetting these increases in cash used for investing activities was cash acquired from the Gypsum Divestiture.

Cash used in financing activities was $780.1 million in 2021, which consisted primarily of $1.7 billion in repurchases of common stock, cash used to extinguish $359.8 million of debt acquired in the BMC Merger and the redemption of $165.0 million of the Company’s 2027 notes, partially offset by cash received from the issuance of $1.0 billion of 2032 notes and net borrowings under the 2026 facility of $513.0 million.

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

We allocate the purchase price of acquired companies to the assets acquired and liabilities assumed based on estimated fair values at the acquisition date, with the excess of purchase price over the estimated fair value of the identifiable net assets acquired recorded as goodwill.

The allocation of the purchase price requires us to make significant estimates and assumptions to determine the fair value of assets acquired and liabilities assumed and the related useful lives of the acquired assets, when applicable, as of the acquisition date.

Examples of critical estimates used in valuing certain of the intangible assets we have acquired or may acquire in the future include, but are not limited to, future expected cash flows, trade names and customer relationships, the period of time the acquired trade names and customer relationships will continue to be used, anticipated customer attrition rates, and discount rates used to determine the present value of estimated future cash flows.

We engage third-party valuation experts to assist in determining the fair value associated with our business combinations and related identifiable intangible assets.

These estimates are inherently uncertain and unpredictable, and if different estimates were used, the purchase price for the acquisition could be allocated to the acquired assets and assumed liabilities differently from the allocation that we have made.

Future changes in the judgments, assumptions and estimates that are used in our acquisition valuations and intangible asset and goodwill impairment testing, including discount rates or future operating results and related cash flow projections, could result in significantly different estimates of the fair values in the future.

An increase in discount rates, a reduction in projected cash flows or a combination of the two could lead to a reduction in the estimated fair values, which may result in impairment charges that could materially affect our financial statements in any given year.

Selected Financial Data and Item 8.

Given the span and depth of our geographical reach, prior to the BMC Merger our locations were organized into nine geographical regions (Regions 1 through 9), which were also our operating segments, and these were further aggregated into four reportable segments: Northeast, Southeast, South and West.

Following the BMC Merger, we will re-evaluate our operating and reportable segments for future reporting periods.

General

The COVID-19 pandemic resulted in significant disruption to the U.S. economy in 2020 and impacted our operations and those of our customers.

In most of the states in which we operate, construction was deemed an essential activity and, as a result, our operations faced limited temporary closures early on in the pandemic.

On January 9, 2020, we acquired certain assets and operations of Bianchi & Company, Inc. (“Bianchi”) for $15.9 million in cash.

Located in Charlotte, North Carolina, Bianchi is a supplier and installer of interior and exterior millwork.

On November 2, 2020 we acquired certain assets and operations of Kansas Building Supply Company, Inc. (“KBS”) for $16.8 million in cash.

Located in Overland Park, Kansas, KBS is a supplier for interior and exterior doors, windows, millwork cabinetry, and hardware.

The repayments of our 2024 notes and 2027 notes were funded with the proceeds of the issuance of $550.0 million in aggregate principal amount of 5.00% unsecured senior notes due 2030 (“2030 notes”) and borrowings on our $900.0 million revolving credit facility (“2023 facility”).

The repayment of our 2024 term loan was funded with cash on hand.

The Company also issued an additional $350.0 million in aggregate principal amount of our 2027 notes.

On February 16, 2021, pursuant to the optional call feature in the 2027 Indenture, the Company gave notice that on March 3, 2021, $82.5 million of 2027 notes will be redeemed at a redemption price equal to 103% of the principal amount of the notes, plus accrued and unpaid interest.

Retirement of President and Chief Executive Officer

In January 2020, Mr. Chad Crow notified our Board of his decision to retire as President and Chief Executive Officer of the Company during 2020 after assisting the Board in hiring his replacement.

Mr. Crow will continue to serve as the Company’s Chief Executive Officer for a transition period of 90 days after the BMC Merger, following which BMC’s former Chief Executive Officer, and the recently appointed President of the Company, Mr. Dave Flitman, will succeed Mr. Crow as Chief Executive Officer of the Company.

Composition of the Board of Directors of the Company

As a result of the BMC Merger, effective January 1, 2021, the size of the board of directors was increased to twelve directors, with seven directors designated by the Company and five directors designated by BMC.

Commodity price inflation increased our net sales in 2020 by an estimated 9.0%, while acquisitions and one more selling day increased our sales by 2.5% and 0.5%, respectively.

Excluding the impact of commodity price inflation, acquisitions and the impact of one more selling day, we achieved 5.6% net sales growth in the single-family, multi-family and repair and remodel/other end markets.

In addition, optimization of our capital structure will continue to be a key area of focus for the Company.

| | | 2020 | | | | 2019 | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Core organic growth increased net sales by 5.6%, commodity price inflation accounted for another 9.0% of the change, while acquisitions and one additional selling day accounted for 2.5% and 0.5%, respectively, of the increase.

Core organic growth came primarily from increased sales volume within our single-family end market.

| | | 2020 | | | | | | | | 2019 | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Total sales | | $ | 8,558.9 | | | | 100.0 | % | | $ | 7,280.4 | | | | 100.0 | % | | | 17.6 | % |

We achieved increased net sales in all our product categories, except in the gypsum, roofing & insulation category, in part due to higher sales volumes in our single-family end market and as a result of our continued efforts to focus on higher margin opportunities through both acquisition targets and core organic growth, as well as the impact of commodity price inflation, primarily on the lumber & lumber sheet goods category, in the period.

Gross margin increased $245.8 million to $2,222.6 million.

The decrease was primarily attributable to the impact of commodity price inflation during the year ended December 31, 2020 relative to our short-term customer pricing commitments.

This increase in selling, general and administrative expenses was primarily driven by higher variable compensation expense, professional service expense, and depreciation expense, which were partially offset by lower fuel costs, as well as lower travel and entertainment costs, resulting from changed behavior during the pandemic.

We expect these variable costs to increase post pandemic.

Contributing to the decrease as a percentage of net sales was the effect of commodity price inflation on our net sales in the year ended December, 31 2020.

Adjusting for the one-time charges, interest expense increased for the year ended December 31, 2020 due to higher outstanding debt balance as compared to the year ended December 31, 2019, partially offset by the effect of lower interest rates.

Our effective tax rate was 23.2% for the year ended December 31, 2020 compared to 21.6% for the year ended December 31, 2019.

Results by Reportable Segment

The following tables show net sales and income before income taxes by reportable segment excluding the “All Other” caption as shown in Note 15 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K (dollars in thousands):

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Our 2027 [added: notes, 2030] notes and [removed: 2030] [added: 2032] notes bear interest at a fixed rate, therefore, our interest expense related to these notes would not be affected by an increase in market interest rates.

Borrowings under the [removed: 2023] [added: 2026] facility bear interest at either a base rate or eurodollar rate, plus, in each case, an applicable margin.

A 1.0% increase in interest rates on the [removed: 2023] [added: 2026] facility would result in approximately [removed: $0.8] [added: $5.9 million] in additional interest expense annually based on our [removed: $75.0] [added: $588.0] million in outstanding borrowings as of December 31, [removed: 2020.][added: 2021.]

The [removed: 2023] [added: 2026] facility also assesses variable commitment and outstanding letter of credit fees based on quarterly average loan utilization.

Item 8.

Financial Statements and Supplementary Data

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

| [Report of Independent Registered Public Accounting Firm](#REPORT_INDEPENDENT_REGISTERED_PUBLIC_ACC) | | 38 |

| --- | --- | --- |

| [Consolidated Statement of Operations and Comprehensive Income for the years ended December 31, 2020, 2019 and 2018](#COMPREHENSIVE_LOSS) | | 40 |

| [Consolidated Balance Sheet at December 31, 2020 and 2019](#BALANCE_SHEETS) | | 41 |

| [Consolidated Statement of Cash Flows for the years ended December 31, 2020, 2019 and 2018](#CASH_FLOWS) | | 42 |

| [Consolidated Statement of Changes in Stockholders’ Equity for the years ended December 31, 2020, 2019 and 2018](#STOCKHOLDERS_EQUITY) | | 43 |

| [Notes to Consolidated Financial Statements](#NOTES_TO) | | 44 |

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of Builders FirstSource, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Builders FirstSource, Inc. and its subsidiaries (the “Company”) as of December 31, 2020 and 2019, and the related consolidated statements of operations and comprehensive income, of changes in stockholders’ equity and of cash flows for each of the three years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Quantitative Impairment Test

Any 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, including risks or uncertainties related to the [removed: novel coronavirus disease 2019 (“COVID-19”),] [added: continuing COVID-19 pandemic,] the BMC Merger (as defined [removed: below),] [added: below) and] the Company’s [added: other acquisitions, the Company’s] growth strategies, including gaining market [removed: share,] [added: share and its digital strategies,] or the Company’s revenues and operating results being highly dependent on, among other things, the homebuilding industry, lumber prices and the [removed: economy.][added: economy, including labor and supply shortages.]

On January 1, 2021, Builders FirstSource, Inc. completed its [removed: previously announced] all stock merger transaction with BMC Stock Holdings, Inc., a Delaware corporation (“BMC”), pursuant to the Agreement and Plan of Merger, dated as of August 26, 2020 (as amended, restated, supplemented, or otherwise modified from time to time, the “Merger Agreement”), by and among Builders FirstSource, Inc., Boston Merger Sub I Inc., a Delaware corporation and direct wholly owned subsidiary of Builders FirstSource, Inc. (“Merger Sub”), and BMC.

The BMC Merger [removed: will be] [added: was] accounted for using the acquisition method of accounting, and the Company [removed: will be] [added: was] treated as the accounting acquirer.

The operating results of BMC [removed: will be] [added: are] reported as part of the Company beginning on January 1, 2021, and as such, references to the [removed: Company in this annual report, including the] Company’s historical financial [removed: condition,] [added: condition prior to that date, including] results of operations and cash flows, [removed: does] [added: do] not include BMC, unless otherwise noted.

Our manufactured products include our factory-built roof and floor trusses, wall [removed: panels and stairs,] [added: panels,] vinyl windows, custom millwork and trim, as well as engineered wood that we design, cut, and assemble specifically for each home.

Our full range of construction-related services include professional installation, turn-key framing and shell [removed: construction, spanning all of our product categories.]

Builders FirstSource, Inc. is a Delaware corporation formed in 1998 as BSL Holdings, Inc. On October 13, 1999, our name changed to Builders FirstSource, Inc. Our common stock [removed: is listed] [added: traded] on the NASDAQ [added: Global Select Market of the NASDAQ] Stock Market LLC [added: (“NASDAQ”)] under the [removed: ticker] symbol [removed: “BLDR”.][added: “BLDR” from June 22, 2005 until July 16, 2021.]

[removed: OUR INDUSTRY][added: OUR INDUSTRY]

Because of the predominance of smaller privately owned companies and the overall size and diversity of the target customer market, the Pro Segment remains [added: highly] fragmented.

There were only [removed: eight] [added: nine] building product suppliers, [removed: one of which was] [added: excluding] BMC, with manufacturing capabilities in the Pro Segment that generated more than $500 million in sales, according to [removed: *ProSales*] [added: *HBS Dealer*] magazine’s [removed: 2020 ProSales 100] [added: 2021 Top 300] list.

According to the U.S. Census Bureau, the single-family residential construction market was an estimated [removed: $365.0] [added: $421.0] billion in [removed: 2020,] [added: 2021,] which was [removed: 23.5%] [added: 12.5%] higher than [removed: 2019, and] [added: 2020, but] still [removed: down from] [added: lagging] the historical high of [removed: $413.2] [added: $470.4] billion in 2006.

Further, according to the Home Improvement Research Institute (“HIRI”) in its September [removed: 2020] [added: 2021] semi-annual forecast, the professional repair and remodel end market was an estimated [removed: $126.8] [added: $160.9] billion in [removed: 2020,] [added: 2021,] which was [removed: 3.5%] [added: 18.2%] higher than [removed: 2019.][added: 2020.]

We have a diverse geographic [removed: footprint] [added: footprint,] as we [removed: now] have operations in [added: 47 of the top 50 and] 85 of the top 100 U.S. Metropolitan Statistical Areas [removed: (“MSAs”) following the BMC Merger,] [added: (“MSAs”),] as ranked by single family housing permits based on available [removed: 2020] [added: 2021] U.S. Census data.

In addition, approximately [removed: 91%] [added: 93%] of U.S. single-family housing permits in [removed: 2020] [added: 2021] were issued in MSAs in which we operate.

For the year ended December 31, [removed: 2020,] [added: 2021,] our top 10 customers accounted for approximately [removed: 15.8%] [added: 18%] of net sales, [removed: and no single] [added: with our largest] customer [removed: accounted] [added: accounting] for [removed: more than 6%] [added: approximately 5%] of net sales.

Our top 10 customers are comprised primarily of the largest [added: national] production homebuilders, including publicly traded companies such as D.R. Horton, Inc., Pulte Homes, Inc., Lennar Corporation, Taylor Morrison Home Corporation, and M/I Homes, Inc.

Our sales team expects to work very closely with the designers on a day-to-day basis in order to ensure [added: the appropriate products are identified, ordered or produced and delivered on time to the building site.]

Manufactured products are factory-built substitutes for job-site framing and include wood floor and roof trusses, steel roof trusses, wall panels, [removed: stairs,] and engineered wood that we design, cut, and assemble for each home.

Roof trusses, floor trusses, [added: and] wall panels [removed: and stair units] are built in a factory-controlled environment.

Synboard is produced from extruded PVC and offers several advantages over traditional wood features, such as greater durability and no ongoing [removed: maintenance] [added: maintenance,] such as periodic caulking and painting.

We work closely with the homebuilder to select the appropriate mix of our products [removed: in order] to meet current and forthcoming energy codes.

We believe our integrated approach and scale allow us to compete effectively through our comprehensive product lines, prefabricated [removed: components,] [added: components] and value-added services, combined with the knowledge of our integrated sales forces to enable our homebuilder customers to complete construction more quickly, with higher quality and at a lower cost.

[removed: MANUFACTURING][added: MANUFACTURING]

Our manufacturing facilities utilize industry leading technology and [removed: high quality] [added: high-quality] materials to improve product quality, increase efficiency, reduce lead times and minimize production errors.

We assemble the cut lumber to form roof trusses, floor trusses or wall panels, [removed: and store] [added: before shipping] the finished components by house [removed: awaiting shipment] to the job site.

We believe our national manufacturing footprint and differentiated capabilities will allow us to capture growth in our higher margin value-added products, [removed: including trusses, wall panels and millwork.]

We plan to accelerate this growth by further [removed: expansion of] [added: expanding] our national manufacturing footprint to serve locations that do not currently have adequate access to these high margin products.

This operational platform often will make us a preferred distributor for [removed: large scale] [added: large\-scale] national homebuilders as well as local and custom [added: homebuilders looking for more efficient ways to build a home.]

We are implementing operational excellence initiatives that are designed to further improve [removed: efficiency] [added: efficiency,] as well as customer service.

These initiatives, including distribution and logistics, pricing and margin management, [removed: back office] [added: back-office] efficiencies, customer integration and systems-enabled process improvements, should yield significant cost savings.

We recognize that the environmental sustainability of our products is important to both us as a [removed: company,] [added: company] and to our customers.

First, we plan to selectively seek acquisition targets that manufacture prefabricated components such as factory-built roof and floor trusses, wall panels, [removed: stairs,] and engineered wood, as well as other value-added products such as vinyl windows and millwork.

[removed: When entering a new market, our strategy is] to acquire market-leading distributors and subsequently expand their product offerings or add manufacturing facilities while integrating their operations into our centralized platform.

[removed: SALES] [added: SALES] AND [removed: MARKETING][added: MARKETING]

At [removed: January] [added: December] 31, 2021, [removed: following the BMC Merger,] we employed approximately [removed: 2,400] [added: 2,300] sales representatives, who are paid a commission based on gross margin dollars collected and worked with approximately [removed: 2,100] [added: 2,500] sales coordinators and product specialists.

Our largest suppliers are national companies such as Boise Cascade Company, Weyerhaeuser Company, Canfor Corporation, Norbord, Inc., [added: West Fraser Timber Co. Ltd.,] James Hardie Industries plc, [removed: National Gypsum Company,] PlyGem Holdings, Inc., [added: Mitek Industries, Inc.,] M I Windows and Doors, Inc., Andersen Corporation, Masonite International Corporation and JELD-WEN Inc. We believe marketplace supply allows us to competitively source most of our requirements without reliance on any particular supplier and that our diversity of suppliers affords us purchasing flexibility.

Due to our centralized procurement platform for commodity wood products and corporate oversight of purchasing programs, we believe we are [removed: better] able to maximize the advantages of both our and our suppliers’ broad geographic footprints and negotiate purchases across multiple markets to achieve more favorable contracts with respect to price, terms of sale, and [removed: supply than our regional competitors.][added: supply.]

Although no purchases from any single supplier represented more than [removed: 6%] [added: approximately 7%] of our total materials purchases for the year ended December 31, [removed: 2020,] [added: 2021,] we believe we are one of the largest customers for many suppliers, and therefore have significant purchasing leverage.

[removed: COMPETITION][added: COMPETITION]

Most of these companies have limited access to capital and lack [added: sophisticated information technology systems and large-scale procurement capabilities.]

On January 1, 2022, we completed a legal entity reorganization pursuant to which, among other things, BMC was merged with and into Builders FirstSource, Inc., with Builders FirstSource, Inc. continuing as the surviving corporation.

The Company operates approximately 565 locations in 42 states across the United States, which are internally organized into geographic operating divisions.

Due to the similar economic characteristics, categories of products, distribution methods and customers, our operating divisions are aggregated into one reportable segment.

construction, spanning all of our product categories.

Further, through our Paradigm subsidiary, we offer software solutions and services for the building products industry.

On July 19, 2021, we transferred the listing of our common stock to the New York Stock Exchange (“NYSE”) under the symbol “BLDR.”

Including BMC, we are the largest building product supplier with manufacturing capabilities on the *HBS Dealer’s* list and the only building supplier with manufacturing capabilities with over $5 billion in sales.

Additionally, there is increasing interest in using digital tools to help drive end-to-end efficiencies throughout the construction industry.

Manufactured products also include our proprietary whole-house framing solution, Ready-Frame®, which designs, pre-cuts, labels, and bundles lumber and lumber sheet goods into customized framing packages, saving builders both time and money and improving job site safety.

We also offer software products through our Paradigm subsidiary, including drafting, estimating, quoting, and virtual

home design services, help provide software solutions to retailers, distributors, manufacturers and homebuilders that boost sales, reduce costs, and become more competitive.

In addition, we offer our Ready-Frame® framing system which uses specialty software to calculate project-specific lumber needs to provide pre-cut and labeled packages delivered and ready to assemble on the jobsite.

Our manufactured custom millwork consists primarily of interior and exterior pre hung door systems, intricate interior and exterior mouldings, custom and premium windows, finish hardware, stair parts, mantels and columns units.

including trusses, wall panels and millwork.

When entering a new market, our strategy is

We have successfully integrated approximately 50 acquisitions since 1998, including the BMC and ProBuild transactions both of which were company and industry transforming.

At December 31, 2021, we had approximately 28,000 employees.

To assess and improve our efforts, the Company recently surveyed employees finding that the majority of employees feel welcome, safe and included, treated fairly with opportunities to reach full potential, supported professionally, emotionally and socially and are comfortable sharing experiences and opinions, and valued as a team member.

We identified four key priorities through our

survey: enhance awareness, increase diversity of the workforce, improve and enhance communication, and increase inclusion and engagement.

With these priorities in mind we have launched diversity and inclusion trainings, introduced quarterly town halls and engage in regular Companywide communications, introduced leadership development and sales trainings, and are in the process of establishing regional and local employee resource groups.

We significantly expanded our online course availability during 2021 by offering approximately 8,000 courses in our system which is available to all team members.

Following the BMC Merger, we operate approximately 550 locations in 40 states across the United States.

We were the largest building product supplier with manufacturing capabilities on *ProSales*’ list and have further increased our size through the BMC Merger.

the appropriate products are identified, ordered or produced and delivered on time to the building site.

Manufactured Products — Stairs.

We manufacture box stairs at some of our locations.

After a house is framed, our salesman takes measurements at the job site prior to manufacturing to account for any variation between the blueprints and the actual framed house.

The fabricated box stairs are based on these measurements.

Our manufactured custom millwork consists primarily of interior and exterior trim, interior and exterior doors, custom windows, features and box columns.

In addition, we sell many of these custom millwork products in a synthetic material under our Synboard brand name.

We sand, cut, and shape sheets of 4 foot by 18 or 20 foot Celuka-blown, extruded PVC, or Synboard, to produce the desired product.

homebuilders looking for more efficient ways to build a home.

Prior to the BMC Merger, we successfully integrated 43 acquisitions since 1998.

sophisticated information technology systems and large-scale procurement capabilities.

Following the BMC Merger, we had more than 26,000 employees.

& Management, Providing Exceptional Customer Service, Hiring for Fit and Building a Diverse and Inclusive Team.

We continually adapt and modify existing programs to meet the changing needs of our business and our workforce.

To assess and improve employee retention and engagement, the Company surveys employees with the assistance of third-party consultants, and takes actions to address areas of employee concern.

Approximately 85% of team members participated in our most recent engagement survey.

The highest scoring categories were Safety, Ethics, Future Outlook for the company, Manager Effectiveness and Trust in Leadership.

Additionally, we won Best Places to Work awards in Raleigh, North Carolina, Dallas, Texas and Kansas City, Kansas.

However, in 2020, the Company’s typical seasonal working capital was influenced by the COVID-19 pandemic, which had the effect of deferring the typical peak residential construction season later into the year.

This, along with the significant commodity price inflation experienced in the third and fourth quarters of 2020, led to increased working capital levels as of December 31, 2020, as compared to December 31, 2019.

For the fiscal year ended December 31, [removed: 2020][added: 2021]

Commission File Number: [removed: 0-51357][added: 001-40620]

| Common stock, par value $0.01 per share | BLDR | [removed: NASDAQ] [added: New York] Stock [removed: Market LLC] [added: Exchange] |

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, [removed: 2020] [added: 2021] was approximately [removed: $2,375.5] [added: $8,744.7] million based on the closing price per share on that date of [removed: $20.70] [added: $42.66] as reported on the NASDAQ Stock Market LLC.

The number of shares of the registrant’s common stock, par value $0.01, outstanding as of February [removed: 24, 2021] [added: 23, 2022] was [removed: 206,431,681.][added: 176,772,541.]

Portions of the registrant’s definitive proxy statement for its annual meeting of stockholders to be held on June [removed: 16, 2021] [added: 14, 2022] are incorporated by reference into Part II and Part III of this Form 10-K.

[removed: BUILDERS] [added: BUILDERS] FIRSTSOURCE, [removed: INC.][added: INC.]

| Item 1B. | | [Unresolved Staff Comments](#Item_1B_Unresolved_Staff_Comments) | | [removed: 23] [added: 22] |

| Item 2. | | [Properties](#Item_2_Properties) | | [removed: 23] [added: 22] |

| Item 3. | | [Legal Proceedings](#Item_3_Legal_Proceedings) | | [removed: 24] [added: 23] |

| Item 4. | | [Mine Safety Disclosures](#Item_4_Mine_Safety_Disclosures) | | [removed: 24] [added: 23] |

| Item 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#Item_5) | | [removed: 25] [added: 24] |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#ITEM_7_MANAGEMENTS_DISCUSSION_ANALYSIS_F) | | [removed: 27] [added: 26] |

| Item 7A. | | [Quantitative and Qualitative Disclosures About Market Risk](#Item_7A) | | [removed: 36] [added: 33] |

| Item 8. | | [Financial Statements and Supplementary [removed: Data](#Item_8)] [added: Data](#ITEM_8_FINANCIAL_STATEMENTS_SUPPLEMENTAR)] | | [removed: 37] [added: 34] |

| Item 9. | | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#Item_9) | | [removed: 69] [added: 67] |

| Item 9A. | | [Controls and Procedures](#Item_9A) | | [removed: 69] [added: 67] |

| Item 9B. | | [Other [removed: Information](#Item_9B)] [added: Information](#ITEM_9B_OR_INFORMATION)] | | [removed: 70] [added: 68] |

| Item 10. | | [Directors, Executive Officers and Corporate Governance](#Item_10_Directors_Executive_Officers) | | [removed: 71] [added: 69] |

| Item 11. | | [Executive Compensation](#Item_11_Executive_Compensation) | | [removed: 71] [added: 69] |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#Item_12) | | [removed: 71] [added: 69] |

| Item 13. | | [Certain Relationships and Related Transactions, and Director Independence](#Item_13) | | [removed: 72] [added: 70] |

| Item 14. | | [Principal Accountant Fees and Services](#Item_14) | | [removed: 72] [added: 70] |

| Item 15. | | [Exhibits and Financial Statement Schedules](#ITEM_15_EXHIBITS_FINANCIAL_STATEMENT_SCH) | | [removed: 73] [added: 71] |

| Item 16 | | [Form 10-K Summary](#ITEM_16_FORM_10K_SUMMARY) | | [removed: 76] [added: 74] |

| Item 6. | | [Reserved](#Item_6) | | 25 |

| Item 9C. | | [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](#ITEM_9C_DISCLOSURE_REGARDING_FOREIGN_JUR) | | 68 |

PART I

| Item 6. | | [Selected Financial Data](#Item_6) | | 26 |

PART I

We have a broad network of distribution and manufacturing facilities in [removed: 40] [added: 42] states throughout the U.S. Based on available [removed: 2020] [added: 2021] U.S. Census data, we have operations in [added: 47 of the top 50 and] 85 of the top 100 U.S. Metropolitan Statistical [removed: Areas following the BMC Merger,] [added: Areas,] as ranked by single family housing permits in [removed: 2020.][added: 2021.]

[removed: The distribution centers are usually located in industrial areas with] low cost real estate and easy access to freeways to maximize distribution efficiency and convenience.

Our manufacturing facilities produce trusses, wall panels, engineered wood, [removed: stairs,] windows, pre-hung doors and custom millwork.

[removed: In many cases,] [added: Where efficient,] they are located on the same premises as our distribution facilities.

[removed: Following the BMC Merger, we] [added: We] contractually lease approximately [removed: 400] [added: 415] facilities and own approximately 150 facilities.

As described in Note [removed: 10] [added: 9] to the consolidated financial statements included in Item 8 of this annual report on Form 10-K, [removed: 131] [added: 121] of our leased facilities are subject to a sales-lease back transaction that is accounted for in our financial statements as owned assets with offsetting financing obligations.

In addition, [removed: following the BMC Merger,] we operate a fleet of approximately [removed: 17,000] [added: 17,700] rolling stock units, which includes approximately [removed: 7,500] [added: 7,700] trucks and [removed: 6,500] [added: 7,100] forklifts as well as trailers to deliver products from our distribution and manufacturing centers to our customers’ job sites.

The distribution centers are usually located in industrial areas with

Our common stock is traded on the [removed: NASDAQ Stock Market LLC] [added: NYSE] under the symbol “BLDR”.

The approximate number of stockholders of record of our common stock as of February [removed: 24, 2021] [added: 23, 2022] was [removed: 139.][added: 96.]

The graph assumes that the value of the investment in our common stock, in each index, and in the peer group (including reinvestment of dividends) was $100 on December 31, [removed: 2015] [added: 2016] and tracks it through December 31, [removed: 2020.][added: 2021.]

[removed: ][added: ]

The information regarding securities authorized for issuance under equity compensation plans appears in our definitive proxy statement for our annual meeting of stockholders to be held on June [removed: 16, 2021] [added: 14, 2022] under the caption “Equity Compensation Plan Information,” which information is incorporated herein by reference.

| | | 12/16 | | | | 12/17 | | | | 12/18 | | | | 12/19 | | | | 12/20 | | | | 12/21 | |

| Builders FirstSource, Inc. | | | 100.00 | | | | 198.63 | | | | 99.45 | | | | 231.63 | | | | 372.01 | | | | 781.31 |

| Russell 2000 | | | 100.00 | | | | 114.65 | | | | 102.02 | | | | 128.06 | | | | 153.62 | | | | 176.39 |

| S&P 600 Building Products Index | | | 100.00 | | | | 108.38 | | | | 78.68 | | | | 99.77 | | | | 126.08 | | | | 157.71 |

Company Stock Repurchases

The following table provides information with respect to our purchases of Builders FirstSource, Inc. common stock during the fourth quarter of fiscal year 2021:

| Period | | Total Number of Shares Purchased | | | | Average Price Paid per Share (including fees) | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | | Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1, 2021 — October 31, 2021 | | | 4,475,045 | | | $ | 56.01 | | | | 4,474,200 | | | $ | 171,531,266 | |

| November 1, 2021 — November 30, 2021 | | | 3,128,981 | | | | 70.10 | | | | 3,128,800 | | | | 952,276,139 | |

| December 1, 2021 — December 31, 2021 | | | 8,898,768 | | | | 78.65 | | | | 8,898,000 | | | | 252,635,195 | |

| Total | | | 16,502,794 | | | $ | 70.89 | | | | 16,501,000 | | | $ | 252,635,195 | |

In the fourth quarter of 2021, 16,501,000 share were repurchased and retired pursuant to the total $2.0 billion share repurchase plan authorized by our board of directors, including an incremental $1.0 billion share repurchase authorization in November 2021.

The remaining 1,794 shares presented in the table above represent shares tendered in order to meet tax withholding requirements for restricted stock units vested.

| | | 12/15 | | | | 12/16 | | | | 12/17 | | | | 12/18 | | | | 12/19 | | | | 12/20 | |

| Builders FirstSource, Inc. | | | 100.00 | | | | 99.01 | | | | 196.66 | | | | 98.47 | | | | 229.33 | | | | 368.32 |

| Russell 2000 | | | 100.00 | | | | 121.31 | | | | 139.08 | | | | 123.76 | | | | 155.35 | | | | 186.36 |

| S&P 600 Building Products Index | | | 100.00 | | | | 131.67 | | | | 141.97 | | | | 102.71 | | | | 130.08 | | | | 164.06 |

The following selected consolidated financial data for the years ended December 31, 2020, 2019 and 2018 and as of December 31, 2020 and 2019 were derived from our consolidated financial statements which are included in Item 8 of this annual report on Form 10-K.

Selected consolidated financial data as of December 31, 2018 and as of and for the years ended December 31, 2017 and 2016 were derived from our consolidated financial statements, but are not included herein.

The following data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in Item 7 of this annual report on Form 10-K and with our consolidated financial statements and related notes included in Item 8 of this annual report on Form 10-K.

| | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2020 | | | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | |

| | | (In thousands, except per share amounts) | | | | | | | | | | | | | | | | | | | |

| Statement of operations data: | | | | | | | | | | | | | | | | | | | | | |

| Net sales (1) | | $ | 8,558,874 | | | $ | 7,280,431 | | | $ | 7,724,771 | | | $ | 7,034,209 | | | $ | 6,367,284 | | |

| Gross margin | | | 2,222,584 | | | | 1,976,829 | | | | 1,922,940 | | | | 1,727,391 | | | | 1,596,748 | | |

| Selling, general and administrative expenses | | | 1,678,730 | | | | 1,584,523 | | | | 1,553,972 | | | | 1,442,288 | | | | 1,360,412 | | |

| Net income (loss) (2)(3) | | | 313,537 | | | | 221,809 | | | | 205,191 | | | | 38,781 | | | | 144,341 | | |

| Net income (loss) per share — basic | | $ | 2.69 | | | $ | 1.92 | | | $ | 1.79 | | | $ | 0.34 | | | $ | 1.30 | | |

| Net income (loss) per share — diluted | | $ | 2.66 | | | $ | 1.90 | | | $ | 1.76 | | | $ | 0.34 | | | $ | 1.27 | | |

| Balance sheet data (end of period): | | | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents | | $ | 423,806 | | | $ | 14,096 | | | $ | 10,127 | | | $ | 57,533 | | | $ | 14,449 | | |

| Total assets (4) | | | 4,173,671 | | | | 3,249,490 | | | | 2,932,309 | | | | 3,006,124 | | | | 2,909,887 | | |

| Total debt (including current portion) | | | 1,624,240 | | | | 1,291,273 | | | | 1,561,294 | | | | 1,784,420 | | | | 1,802,052 | | |

| Stockholders’ equity | | | 1,152,783 | | | | 824,953 | | | | 596,338 | | | | 376,209 | | | | 309,620 | | |

| Other financial data: | | | | | | | | | | | | | | | | | | | | | |

| Depreciation and amortization | | $ | 116,566 | | | $ | 100,038 | | | $ | 97,906 | | | $ | 92,993 | | | $ | 109,793 | | |

| (1) | We adopted updated revenue recognition guidance using the modified retrospective method as of January 1, 2018. As such, periods prior to the adoption date have not been restated and continue to be presented in accordance with previous guidance. |

| --- | --- |

| (2) | Net income for the year ended December 31, 2017 includes $29.0 million in income tax expense attributable to revaluation of our net deferred tax assets resulting from the enactment of the 2017 Tax Act. Net income for the year ended December 31, 2016 includes a reduction to our valuation allowance of $131.7 million as we released the valuation allowance against our net federal and certain state deferred tax assets in that period. |

| (3) | Net income for the year ended December 31, 2020 includes net losses on debt extinguishment and other financing costs of $29.4 million. Net income for the year ended December 31, 2019 includes net losses on debt extinguishment and other financing costs of $10.2 million. Net income for the year ended December 31, 2018 includes a net gain on debt extinguishment of $3.2 million. Our 2020, 2019, and 2018 debt transactions are discussed in detail in Note 9 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K. Net income for the year ended December 31, 2017 includes net losses on debt extinguishment and other financing costs of $58.7 million. Net income for the year ended December 31, 2016 includes net losses on debt extinguishment and other financing costs of $56.9 million. |

| (4) | We adopted guidance relating to leases using the modified retrospective method as of January 1, 2019. As such, periods prior to the adoption date have not been restated and continue to be presented in accordance with previous guidance. |

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

| [Report of Independent Registered Public Accounting Firm](#REPORT_INDEPENDENT_REGISTERED_PUBLIC_ACC) – PCAOB ID 238 | | 35 |

| --- | --- | --- |

| [Consolidated Statement of Operations for the years ended December 31, 2021, 2020 and 2019](#COMPREHENSIVE_LOSS) | | 37 |

| [Consolidated Balance Sheet at December 31, 2021 and 2020](#BALANCE_SHEETS) | | 38 |

| [Consolidated Statement of Cash Flows for the years ended December 31, 2021, 2020 and 2019](#CASH_FLOWS) | | 39 |

| [Consolidated Statement of Changes in Stockholders’ Equity for the years ended December 31, 2021, 2020 and 2019](#STOCKHOLDERS_EQUITY) | | 40 |

| [Notes to Consolidated Financial Statements](#NOTES_TO) | | 41 |

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders’ of Builders FirstSource, Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of Builders FirstSource, Inc. and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of operations, of changes in stockholders' equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed 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.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Merger with BMC Stock Holdings, Inc. - Valuation of Customer Relationships

As described in Notes 3 and 6 to the consolidated financial statements, the Company completed an all stock merger transaction with BMC Stock Holdings, Inc. on January 1, 2021 for consideration transferred of $3.7 billion.

This merger transaction resulted in the recording of $1.47 billion of intangible assets, of which a significant portion relates to customer relationship intangible assets.

Management estimated the fair value of acquired customer relationship intangible assets by applying the multi-period excess earnings method, which involved the use of significant estimates and assumptions related to forecasted revenue growth rates, gross margin, contributory asset charges, customer attrition rates, and market-participant discount rates.

The principal considerations for our determination that performing procedures relating to the valuation of customer relationships acquired in connection with the merger with BMC Stock Holdings, Inc. is a critical audit matter are the significant judgment by management when estimating the fair value of the customer relationships acquired; this in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to the forecasted revenue growth rates, gross margin, customer attrition rates, and market-participant discount rates.

Based on the required evaluation of our disclosure controls and procedures, our CEO and CFO have concluded that, as of December 31, [removed: 2020,] [added: 2021,] 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.

Based on our evaluation under the framework set forth in *Internal Control — Integrated Framework (2013)*, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

The effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears herein.

During the [removed: quarter ended December 31, 2020,] [added: period covered by this report, other than described below,] there were no changes in our internal control over financial reporting [added: 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.

On January 1, 2021, the Company completed the BMC Merger.

Throughout 2021, the Company was in the process of integrating BMC pursuant to the Sarbanes-Oxley Act of 2002.

The Company evaluated changes to processes, information technology systems and other components of internal controls over financial reporting as part of its ongoing integration activities, and as a result, controls were periodically changed throughout the period.

The Company believes, however, that it was able to maintain sufficient controls over the substantive results of its financial reporting throughout this integration process.

PART III

Not applicable.

PART III

The information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held June [removed: 16, 2021] [added: 14, 2022] under the captions “Proposal 1 — Election of Directors,” “Continuing Directors,” “Information Regarding the Board and Its Committees,” “Corporate Governance,” “Section 16(a) Beneficial Ownership Reporting Compliance,” and “Executive Officers of the Registrant,” which information is incorporated herein by reference.

In addition, we will disclose [added: on our Web site at the Internet address above] any amendments and waivers to our Code of Business Conduct and Ethics or our Supplemental Code of Ethics for Chief Executive Officer, President and Senior Financial Officers of Builders FirstSource, Inc. [removed: as required by] [added: that relate to any element of] the [removed: listing standards] [added: definition] of [added: “code of ethics” enumerated in Item 406(b) of Regulation S-K under] the [removed: NASDAQ Stock Market LLC.][added: Securities Exchange Act of 1934, as amended.]

The information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held June [removed: 16, 2021,] [added: 14, 2022,] under the captions “Executive Compensation and Other Information,” “Information Regarding the Board and its Committees — Compensation of Directors,” and “Compensation Committee Interlocks and Insider Participation,” which information is incorporated herein by reference.

The information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held on June [removed: 16, 2021,] [added: 14, 2022,] under the caption “Ownership of Securities” and “Equity Compensation Plan Information,” which information is incorporated herein by reference.

The information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held June [removed: 16, 2021,] [added: 14, 2022,] under the caption “Election of Directors and Management Information,” “Information Regarding the Board and its Committees,” and “Certain Relationships and Related Party Transactions,” which information is incorporated herein by reference.

The information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held June [removed: 16, 2021,] [added: 14, 2022,] under the caption “Proposal 3 — Ratification of Selection of Independent Registered Public Accounting Firm — Fees Paid to PricewaterhouseCoopers LLP,” which information is incorporated herein by reference.

PART IV

PART IV

| 4.4 | | [Indenture, dated as of [removed: February 11, 2020,] [added: July 23, 2021,] among Builders FirstSource, Inc., the guarantors [removed: party thereto,] [added: named therein] and Wilmington Trust, National Association, as trustee [removed: (form of Note included therein)] (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on [removed: February 11, 2020,] [added: July 23, 2021,] File Number [removed: 0-51357](http://www.sec.gov/Archives/edgar/data/1316835/000119312520031497/d880246dex41.htm))] [added: 001-40620)](http://www.sec.gov/Archives/edgar/data/1316835/000119312521222999/d169326dex41.htm)] |

| 4.5* | | [Description of Capital [removed: Stock](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex45_7.htm)] [added: Stock](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex45_11.htm)] |

| [removed: 10.5] [added: 10.7] | | [ABL/Bond Intercreditor Agreement, dated as of May 29, 2013, among Builders FirstSource, Inc. and certain of its subsidiaries, as grantors, SunTrust Bank, as ABL agent, and Wilmington Trust, National Association, as notes collateral agent (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on June 3, 2013, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000119312513245434/d547322dex102.htm) |

| [removed: 10.6] [added: 10.8] | | [Amended and Restated ABL Collateral Agreement, dated as of July 31, 2015, among the Company, certain of its subsidiaries, and SunTrust Bank (incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on August 6, 2015, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000119312515281152/d89945dex105.htm) |

| [removed: 10.7] [added: 10.9] | | [Notes Collateral Agreement, dated as of May 30, 2019, among Builders FirstSource, Inc., certain of its subsidiaries, and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on May 31, 2019, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000119312519162897/d736510dex101.htm) |

| [removed: 10.8] [added: 10.10] | | [Amended and Restated ABL Guarantee Agreement, dated as of July 31, 2015, among the Guarantors (as defined therein) and SunTrust Bank (incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on August 6, 2015, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000119312515281152/d89945dex107.htm) |

| [removed: 10.9] [added: 10.11] | | [Lease and Master Agreement Guaranty, dated as of July 31, 2015, by the Company in favor of LN Real Estate LLC (incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, filed with the Securities and Exchange Commission on November 9, 2015, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459015010186/bldr-ex1010_344.htm) |

| [removed: 10.10+] [added: 10.14+] | | [removed: [Builders] [added: [Second Amendment to the Builders] FirstSource, Inc. [removed: 2007] [added: 2014] Incentive Plan (incorporated by reference to [removed: Annex D of] [added: Exhibit 10.14 to] the Company’s [removed: Definitive Proxy Statement] [added: Annual Report] on [removed: Schedule 14A,] [added: Form 10-K for the year ended December 31, 2020,] filed with the Securities and Exchange Commission on [removed: December 15, 2009,] [added: February 26, 2021,] File Number [removed: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000095012309070917/d69871ddef14a.htm)] [added: 0-51351)](http://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex1014_302.htm)] |

| [removed: 10.11+] [added: 10.15+] | | [removed: [2014] [added: [2017] Form of Builders FirstSource, Inc. [removed: 2007] [added: 2014] Incentive Plan [added: Director] Restricted Stock Unit Award Certificate (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended [removed: June] [added: September] 30, [removed: 2014,] [added: 2017,] filed with the Securities and Exchange Commission on [removed: August 1, 2014,] [added: November 9, 2017,] File Number [removed: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459014003053/bldr-ex10_2014063097.htm)] [added: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459017023142/bldr-ex102_14.htm)] |

| [removed: 10.15+] [added: 10.17+] | | [removed: [2014] [added: [2019] Form of Builders FirstSource, Inc. 2014 Incentive Plan Restricted Stock Unit Award Certificate (incorporated by reference to Exhibit [removed: 10.3] [added: 10.1] to the Company’s Quarterly Report on Form 10-Q for the quarter ended [removed: June 30, 2014,] [added: March 31, 2019,] filed with the Securities and Exchange Commission on [removed: August 1, 2014,] [added: May 3, 2019,] File Number [removed: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459014003053/bldr-ex10_2014063098.htm)] [added: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459019015572/bldr-ex101_104.htm)] |

| 10.16+ | | [removed: [2015] [added: [2017] Form of Builders FirstSource, Inc. 2014 Incentive Plan [removed: Non-Statutory] [added: Restricted] Stock [removed: Option] [added: Unit] Award Certificate (incorporated by reference to Exhibit [removed: 10.22] [added: 10.29] to the Company’s Annual Report on Form 10-K for the year ended December 31, [removed: 2014,] [added: 2017,] filed with the Securities and Exchange Commission on March [removed: 3, 2015,] [added: 1, 2018,] File Number [removed: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459015001235/bldr-ex1022_20141231219.htm)] [added: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459018004035/bldr-ex1029_236.htm)] |

| [removed: 10.17+] [added: 10.30+] | | [removed: [2016 Form] [added: [Consulting Agreement, dated as] of [added: March 5, 2021, between] Builders FirstSource, Inc. [removed: 2014 Incentive Plan Restricted Stock Unit Award Certificate] [added: and M. Chad Crow] (incorporated by reference to Exhibit [removed: 10.2] [added: 10.4] to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, [removed: 2016,] [added: 2021,] filed with the Securities and Exchange Commission on May 6, [removed: 2016,] [added: 2021,] File Number [removed: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459016018235/bldr-ex102_83.htm)] [added: 0-51357](http://www.sec.gov/Archives/edgar/data/1316835/000156459021024887/bldr-ex104_24.htm))] |

| [removed: 10.18+] [added: 10.22+] | | [removed: [2017 Form] [added: [Amended and Restated Employment Agreement, dated as] of [added: August 26, 2020, between David E. Flitman,] Builders FirstSource, [removed: Inc. 2014 Incentive Plan Director Restricted] [added: Inc., and BMC] Stock [removed: Unit Award Certificate] [added: Holdings, Inc.] (incorporated by reference to Exhibit [removed: 10.2] [added: 10.1] to the Company’s [removed: Quarterly] [added: Current] Report on Form [removed: 10-Q for the quarter ended September 30, 2017,] [added: 8-K,] filed with the Securities and Exchange Commission on [removed: November 9, 2017,] [added: August 27, 2020,] File Number [removed: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459017023142/bldr-ex102_14.htm)] [added: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000119312520233278/d89165dex101.htm)] |

| [removed: 10.20+] [added: 10.21+] | | [removed: [2019 Form of Builders] [added: [Builders] FirstSource, Inc. [removed: 2014 Incentive Plan Restricted Stock Unit Award Certificate] [added: Form of Director Indemnification Agreement] (incorporated by reference to Exhibit [removed: 10.1] [added: 10.13] to [added: Amendment No. 3 to] the [removed: Company’s Quarterly Report] [added: Registration Statement of the Company] on Form [removed: 10-Q for the quarter ended March 31, 2019,] [added: S-1,] filed with the Securities and Exchange Commission on May [removed: 3, 2019,] [added: 26, 2005,] File Number [removed: 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459019015572/bldr-ex101_104.htm)] [added: 333-122788)](http://www.sec.gov/Archives/edgar/data/1316835/000095012305006750/e05301a3exv10w13.txt)] |

| [removed: 10.21+] [added: 10.18+] | | [Stock Building Supply Holdings, Inc. 2013 Incentive Compensation Plan (incorporated by reference to Exhibit 10.21 to Amendment No. 2 to the Registration Statement of BMC Stock Holdings, Inc. on Form S-1, filed with the Commission on July 29, 2013, File Number 333-189368)](http://www.sec.gov/Archives/edgar/data/1574815/000119312513306259/d520315dex1021.htm) |

| [removed: 10.22+] [added: 10.19+] | | [Form of Nonqualified Stock Option Agreement Pursuant to the Stock Building Supply Holdings, Inc. 2013 Incentive Compensation Plan (incorporated by reference to Exhibit 10.23 to Amendment No. 2 to the Registration Statement of Stock Building Supply Holdings, Inc. on Form S-1, filed with the Securities and Exchange Commission on July 29, 2013, File Number 333-189368)](http://www.sec.gov/Archives/edgar/data/1574815/000119312513306259/d520315dex1023.htm) |

| [removed: 10.23*+] [added: 10.20*+] | | [Builders FirstSource, Inc. Director Compensation [removed: Policy](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex1023_8.htm)] [added: Policy](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1020_435.htm)] |

| [removed: 10.33*+] [added: 10.23*+] | | [removed: [Amended] [added: [Amendment No. 1 to Amended] and Restated Employment Agreement, [removed: dated] [added: entered into] as of January [removed: 1, 2021,] [added: 31, 2022,] between [removed: Builders FirstSource, Inc. and] David E. [removed: Rush](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex1033_303.htm)] [added: Flitman and Builders FirstSource, Inc.](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1023_443.htm)] |

| 21.1* | | [Subsidiaries of the [removed: Registrant](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex211_6.htm)] [added: Registrant](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex211_14.htm)] |

| 23.1* | | [Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex231_12.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex231_8.htm)] |

| 31.1* | | [Certification of Chief Executive Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by [removed: M. Chad Crow] [added: David E. Flitman] as Chief Executive [removed: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex311_10.htm)] [added: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex311_13.htm)] |

| 31.2* | | [Certification of Chief Financial Officer pursuant to 17 CFR 240.13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, signed by Peter M. Jackson as Chief Financial [removed: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex312_11.htm)] [added: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex312_9.htm)] |

| 32.1 | | [Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by [removed: M. Chad Crow] [added: David E. Flitman] as Chief Executive Officer and Peter M. Jackson as Chief Financial [removed: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex321_9.htm)] [added: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex321_6.htm)] |

| 101* | | The following financial information from Builders FirstSource, Inc.’s Form 10-K filed on [removed: February 26, 2021,] [added: March 1, 2022,] formatted in Inline eXtensible Business Reporting Language (“Inline XBRL”): (i) Consolidated Statement of Operations and Comprehensive Income for the years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018,] [added: 2019,] (ii) Consolidated Balance Sheet at December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] (iii) Consolidated Statement of Cash Flows for the years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018,] [added: 2019,] (iv) Consolidated Statement of Changes in Stockholders’ Equity for the years ended December 31, [added: 2021,] 2020, [removed: 2019,] and [removed: 2018,] [added: 2019,] and (v) the Notes to Consolidated Financial Statements. |

| 104* | | The cover page from the Company’s Annual Report on Form 10-K for the year ended December 31, [removed: 2020] [added: 2021] has been formatted in Inline XBRL. |

| | 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 [removed: M. Chad Crow,] [added: David E Flitman,] our Chief Executive Officer, and Peter M. Jackson, our Chief Financial Officer. |

| 10.5 | | [Amendment No. 4 to Credit Agreement, dated as of December 17, 2021, among the Company, Truist Bank (as successor by merger to SunTrust Bank), as administrative agent and collateral agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on December 22, 2021, File Number 001-40620)](http://www.sec.gov/Archives/edgar/data/0001316835/000119312521364975/d272527dex101.htm) |

| 10.6 | | [Amendment No. 5 to Credit Agreement, dated as of February 4, 2022, among the Company, Truist Bank (as successor by merger to SunTrust Bank), as administrative agent and collateral agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on February 8, 2022, File Number 001-40620)](http://www.sec.gov/Archives/edgar/data/1316835/000119312522030386/d304596dex101.htm) |

| 10.24*+ | | [Employment Agreement, entered into as of January 31, 2022, between Peter M. Jackson and Builders FirstSource, Inc.](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1024_442.htm) |

| 10.25*+ | | [Employment Agreement, entered into as of January 31, 2022, between Timothy D. Johnson and Builders FirstSource, Inc.](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1025_441.htm) |

| 10.26*+ | | [Employment Agreement, entered into as of January 31, 2022, between Michael A. Farmer and Builders FirstSource, Inc.](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1026_440.htm) |

| 10.27*+ | | [Employment Agreement, entered into as of January 31, 2022, between Stephen J. Herron and Builders FirstSource, Inc.](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1027_439.htm) |

| 10.28*+ | | [Employment Agreement, entered into as of January 31, 2022, between Michael Hiller and Builders FirstSource, Inc.](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1028_438.htm) |

| 10.29*+ | | [Employment Agreement, entered into as of January 31, 2022, between Scott L. Robins and Builders FirstSource, Inc.](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1029_437.htm) |

| 14.1* | | [Builders FirstSource, Inc. Code of Business Conduct and Ethics](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex141_436.htm) |

| 10.14+* | | [Second Amendment to the Builders FirstSource, Inc. 2014 Incentive Plan](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex1014_302.htm) |

| 10.19+ | | [2017 Form of Builders FirstSource, Inc. 2014 Incentive Plan Restricted Stock Unit Award Certificate (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on March 1, 2018, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459018004035/bldr-ex1029_236.htm) |

| 10.24+ | | [Builders FirstSource, Inc. Form of Director Indemnification Agreement (incorporated by reference to Exhibit 10.13 to Amendment No. 3 to the Registration Statement of the Company on Form S-1, filed with the Securities and Exchange Commission on May 26, 2005, File Number 333-122788)](http://www.sec.gov/Archives/edgar/data/1316835/000095012305006750/e05301a3exv10w13.txt) |

| 10.25+ | | [Amended and Restated Employment Agreement, dated December 29, 2017, between Builders FirstSource, Inc. and M. Chad Crow (incorporated by reference to Exhibit 10.32 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the Securities and Exchange Commission on March 1, 2018, File Number 0-51357](http://www.sec.gov/Archives/edgar/data/1316835/000156459018004035/bldr-ex1032_241.htm)) |

| 10.26+ | | [Employment Agreement, dated January 15, 2004, between Builders FirstSource, Inc. and Donald F. McAleenan (incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2005, filed with the Securities Exchange Commission on November 2, 2005, File Number 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex1031_8.htm) |

| 10.27+ | | [Amendment to Employment Agreement, dated October 29, 2008, between Builders FirstSource, Inc. and Donald F. McAleenan (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission on March 2, 2009, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000095013409004066/d66600exv10w33.htm) |

| 10.28+ | | [Second Amendment to Employment Agreement, dated as of May 19, 2017, between Builders FirstSource, Inc. and Donald F. McAleenan (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed with the Securities Exchange Commission on August 4, 2017, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459017015617/bldr-ex104_212.htm) |

| 10.29+ | | [Employment Agreement, dated November 14, 2016, between Builders FirstSource, Inc. and Peter M. Jackson (incorporated by reference to Exhibit 10.39 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission on March 1, 2017, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459017003114/bldr-ex1039_212.htm) |

| 10.30+ | | [First Amendment to Employment Agreement, dated as of May 19, 2017, between Builders FirstSource, Inc. and Peter M. Jackson (incorporated by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, filed with the Securities Exchange Commission on August 4, 2017, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459017015617/bldr-ex105_211.htm) |

| 10.31+ | | [Employment Agreement between Builders FirstSource, Inc. and Scott L. Robins dated effective as of February 20, 2018 (incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, filed with the Securities and Exchange Commission on November 2, 2018, File Number 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex1031_8.htm) |

| 10.32+ | | [Employment Agreement between Builders FirstSource, Inc. and David E. Rush dated effective as of November 29, 2018 (incorporated by reference to Exhibit 10.37 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission on March 1, 2019, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459019005770/bldr-ex1037_152.htm) |

| 10.34+ | | [Amended and Restated Employment Agreement, dated as of August 26, 2020, between David E. Flitman, Builders FirstSource, Inc., and BMC Stock Holdings, Inc. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 27, 2020, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000119312520233278/d89165dex101.htm) |

| 14.1 | | [Builders FirstSource, Inc. Code of Business Conduct and Ethics (incorporated by reference to Exhibit 14.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission on March 1, 2019, File Number 0-51357)](http://www.sec.gov/Archives/edgar/data/1316835/000156459019005770/bldr-ex141_256.htm) |

| | Chief Executive Officer [added: and Director] |

| [removed: M. Chad Crow] [added: David E. Flitman] | | (Principal Executive Officer) | | |

| /s/ PETER M. JACKSON | | Executive Vice President and Chief Financial Officer | | [removed: February 26, 2021] [added: March 1, 2022] |

| /s/ JAMI COULTER | | Senior Vice President and Chief Accounting Officer | | [removed: February 26, 2021] [added: March 1, 2022] |

| [removed: David E. Flitman] | [removed: | | |] [added: /s/ DAVID E. FLITMAN] |

| /s/ PAUL S. LEVY | | Chairman and Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| /s/ DANIEL AGROSKIN | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| /s/ MARK ALEXANDER | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| /s/ CORY J. BOYDSTON | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| /s/ DAVID W. BULLOCK | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| /s/ CLEVELAND A. CHRISTOPHE | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| /s/ WILLIAM B. HAYES | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| /s/ BRETT N. MILGRIM | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| /s/ JAMES O’LEARY | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| Floyd F. Sherman | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

| Craig A. Steinke | | Director | | [removed: February 26, 2021] [added: March 1, 2022] |

March 1, 2022

| | David E. Flitman |

| /s/ DAVID E. FLITMAN | | Chief Executive Officer and Director | | March 1, 2022 |

February 26, 2021

| | /s/ M. CHAD CROW |

| | M. Chad Crow |

| /s/ M. CHAD CROW | | Chief Executive Officer | | February 26, 2021 |

| /s/ DAVID E. FLITMAN | | President and Director | | February 26, 2021 |