Builders FirstSource (BLDR) 10-K risk factor changes: FY2023 vs FY2022

Risks associated with our business, any investment in our securities, and with achieving the [removed: forward looking] [added: forward-looking] statements contained in this report or in our news releases, websites, public filings, investor and analyst conferences or elsewhere, include the risk factors described below.

[removed: You should read these Risk Factors in conjunction with “Management’s] Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and our consolidated financial statements and related notes in Item 8.

If lumber or structural panel prices were to significantly decline from current levels, our sales and profits would be negatively affected as compared to [removed: 2022] [added: 2023] operating results.

Our lumber and lumber sheet goods product category represented [removed: 35.6%] [added: 24.1%] of total net sales for the year ended December 31, [removed: 2022.][added: 2023.]

[removed: Industry forecasters expect that we will face future downturns] [added: An economic downturn] in the homebuilding industry [removed: which] could have an adverse effect on our operating results, financial condition or cash flows.

We face, and will continue to face, significant competition from local, regional and other national building materials chains, as well as from privately-owned single site [removed: enterprises.][added: enterprises and new entrants into the market, due to the relatively low barrier to, and cost of, entry.]

[removed: Finally, we may not be able] to maintain our operating costs or product prices at a level sufficiently low for us to compete effectively.

[removed: 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.

We may also not be able to obtain necessary [removed: approvals] [added: approvals, including regulatory or shareholder approvals,] to consummate acquisitions.

Our ten largest customers generated [removed: approximately 18%] [added: 14.7%] of our net sales for the year ended December 31, [removed: 2022.][added: 2023.]

We cannot guarantee that we will maintain or improve our relationships with these customers or that we will supply these customers at historical [added: levels.]

Historically, our products [removed: are] [added: were] obtainable from various sources and in sufficient quantities.

While the COVID-19 pandemic caused significant disruptions and delays in the manufacture and distribution of building products throughout the industry supply chain, we [removed: are beginning to see] [added: have seen] a return to pre-pandemic levels in many areas.

Failure to attract and retain our key employees [removed: and the impact of our recent leadership changes] may adversely impact our ability to successfully execute our business strategies.

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

[added: Consequently, we may continue to face higher operating expenses and may lose revenue opportunities if we lack capacity to meet customer demands due to labor shortages 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.

[removed: Such disruptions, delays, problems, or associated costs relating to our systems or those of our significant] customers, suppliers or third-party providers could have a material adverse effect on our financial condition, operating results and cash flows.

In the event that we continue to grow, there can be no assurance that we will be able to keep up, expand or adapt our IT [removed: infrastructure to meet evolving demand on a timely basis and at a commercially reasonable cost, or at all.]

In addition, such improvements can be challenging to integrate with our existing technology [removed: systems,] [added: systems] or may uncover problems with our existing technology systems.

If we close or idle a [removed: facility] [added: facility,] we would remain committed to perform our obligations under the applicable lease, which would include, among other things, payment of the base rent, insurance, taxes and other expenses on the leased property for the balance of the lease term.

As of December 31, [removed: 2022,] [added: 2023,] our debt totaled [removed: $3,015.4] [added: $3,209.3] million, which includes [removed: $201.4] [added: $195.3] million of finance lease and other finance obligations.

We have a $1.8 billion revolving credit facility with [added: a] maturity [removed: dates between December 17, 2026 and] [added: date of] January 17, 2028 (“Revolving facility”), under which we had [removed: $264.0] [added: $464.0] million in outstanding borrowings and [removed: $128.9] [added: $70.3] million of letters of credit outstanding as of December 31, [removed: 2022.][added: 2023.]

In addition, we also have [removed: $505.2] [added: $532.3] million in obligations under operating leases.

We are substantially reliant on cash on hand and borrowing availability under the Revolving facility, which totaled [removed: $1,487.5 million] [added: $1.3 billion] at December 31, [removed: 2022,] [added: 2023,] to provide working capital and fund our operations.

The agreement governing the Revolving facility contains a financial covenant requiring the satisfaction of a minimum fixed charge ratio of 1.00 to 1.00 if our excess availability falls below the greater of $80.0 million or 10% of the maximum borrowing amount, which was $180.0 million as of December 31, [removed: 2022.][added: 2023.]

As of December 31, [removed: 2022,] [added: 2023,] we had [removed: approximately $264.0] [added: $464.0] million, or [removed: 8.8%,] [added: 14.5%,] of our outstanding debt at variable interest rates.

A 1.0% increase in interest rates on the Revolving facility would result in [removed: approximately $2.6] [added: $4.6] million in additional interest expense annually as we had [removed: $264.0] [added: $464.0] million in outstanding borrowings as of December 31, [removed: 2022.][added: 2023.]

If conditions in the housing industry continue to [removed: deteriorate] [added: deteriorate,] we may need to take goodwill and/or asset impairment charges relating to certain of our reporting units.

In addition, in response to industry conditions, we may have to temporarily idle or permanently close certain facilities in under-performing [removed: markets.]

Throughout [removed: 2022,] [added: 2023,] we generated significant excess cash flows.

We have also repurchased approximately [removed: $4.4] [added: $6.1] billion of our shares since January 2021 through the date of this [removed: filing,] [added: filing] and intend to continue repurchasing shares pursuant to share repurchase authorization approved by our board of directors [removed: and announced on November 28, 2022.][added: in April 2023.]

We are [added: primarily] subject to income and other taxes in the [removed: United States.][added: U.S., and on a very limited basis in certain foreign jurisdictions.]

[removed: 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.

Unstable global economic conditions [added: and geopolitical conflicts] may have serious adverse consequences on our business, financial condition, and operations.

[removed: Sanctions] [added: In addition, sanctions] imposed by the [removed: United States] [added: U.S.] and other countries in response to [removed: such conflict] [added: the Russia and Ukraine war] could further adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability.

The specific consequences of [removed: the conflict in Ukraine] [added: these geopolitical conflicts] on our business [removed: is] [added: are] difficult to predict at this time, but in addition to inflationary pressures affecting our operations, any shortages of fuel or significant fuel cost increases could seriously disrupt our ability to distribute products to our customers.

Adverse weather events, natural disasters or similar events, including as a result of climate change, could generally reduce or delay construction activity, which could [removed: adversely impact our financial condition, operating results and cash flows.]

ESG risks could adversely affect our reputation and shareholder, employee, customer and [removed: third party] [added: third-party] relationships and may negatively affect our stock price.

We risk damage to our brand and reputation if we fail to act responsibly [added: or meet any commitments that we may set] in a number of areas, such as DEI, environmental stewardship, including with respect to climate change, human capital management, support for our local communities, corporate governance and transparency, or fail to consider ESG factors in our business operations.

For example, between January 1, [removed: 2022] [added: 2023,] and December 31, [removed: 2022,] [added: 2023,] the closing price of our common stock on the NYSE ranged from [removed: $50.02] [added: $65.35] to [removed: $85.42] [added: $170.56] per share.

You should read these Risk Factors in conjunction with “Management’s

Finally, we may not be able

Additionally, in connection

Such disruptions, delays, problems, or associated costs relating to our systems or those of our significant

infrastructure to meet evolving demand on a timely basis and at a commercially reasonable cost, or at all.

For example, we are in the process of implementing a new ERP system.

The new ERP system is intended to transform areas such as manufacturing, supply chain, procurement, warehouse management, delivery, quote to cash, financial reporting, and analytics, and position us to better leverage automation and process efficiency and enable productivity enhancements.

An implementation of this scale is a major financial undertaking and has required, and will continue to require, substantial time and attention of management and key employees.

Furthermore, we may not realize the anticipated benefits from the implementation of the new ERP system.

We anticipate full integration of the new ERP system to take many years.

Additionally, the effectiveness of our internal control over financial reporting could be adversely affected if the new ERP system is not successfully implemented.

Any of these items, along with any failure to effectively manage data governance risks prior to or during ERP implementation, could adversely affect our results of operations, cash flows and financial condition, and the trading price of our common stock.

markets.

Any

In addition, the financial markets and the global economy may also be adversely affected by ongoing geopolitical conflicts, including the wars between Russia and Ukraine and between Israel and Hamas.

These conflicts have impacted, and may continue to impact, commodity and energy prices, global supply chains and financial markets.

adversely impact our financial condition, operating results and cash flows.

For example, prices of wood products, including lumber and panel products, are subject to significant volatility, such as the spike in lumber prices experienced in our industry in 2020 and 2021 and the more recent decline in lumber prices.

levels.

Furthermore, we have had recent leadership changes and transitions involving our senior leadership team, as previously announced.

Such leadership changes can be inherently difficult to manage, and an inadequate transition may cause disruption to our business, including to our relationships with our customers, suppliers, vendors and employees.

It may also make it more difficult for us to hire and retain key employees.

In addition, any failure to ensure the effective transfer of knowledge and a smooth transition could hinder our strategic planning, execution and future performance.

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

The Company has a number of known and threatened construction defect legal claims.

The ongoing COVID-19 pandemic and its contributory effects on the economy could adversely impact, our business, financial condition, liquidity, capital and results of operations.

While the level of disruption caused by, and the economic impact of, the COVID-19 pandemic lessened in 2022, there is no assurance that the pandemic will not worsen again, including as a result of the emergence of new strains of the virus, or another health-related emergency will not emerge.

Any worsening of the pandemic, a new health-related emergency and their effects on the economy could have an adverse impact our business, financial condition and results of operations.

In addition, the financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the current conflict between Russia and Ukraine, which is increasing volatility in commodity and energy prices, creating supply chain issues and causing instability in financial markets.

Item 2. Properties

We have a broad network of distribution and manufacturing facilities in 42 states throughout the U.S. Based on available 2022 U.S. Census data, we have operations in 47 of the top 50 and 86 of the top 100 U.S. Metropolitan Statistical Areas, as ranked by single family housing permits in 2022.

Distribution centers typically include 10 to 15 acres of outside storage, a 45,000 square foot warehouse, 4,000 square feet of office space, and 15,000 square feet of covered storage.

The outside area provides space for lumber storage and a staging area for delivery while the warehouse stores millwork, windows and doors.

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.

Many of our distribution centers are situated on rail lines for efficient receipt of goods.

Our manufacturing facilities produce trusses, wall panels, engineered wood, windows, pre-hung doors and custom millwork.

Where efficient, they are located on the same premises as our distribution facilities.

Truss and panel manufacturing facilities vary in size from 30,000 square feet to 60,000 square feet with eight to 10 acres of outside storage for lumber and for finished goods.

Our window manufacturing facility in Houston, Texas is approximately 200,000 square feet.

We own 147 actively operating facilities contractually and lease 422 actively operating facilities.

These leases typically have an initial lease term of five to 15 years and most provide options to renew for specified periods of time.

A majority of our leases provide for fixed annual rentals.

Certain of our leases include provisions for escalating rent, as an example, based on changes in the consumer price index.

Most of the leases require us to pay taxes, insurance and common area maintenance expenses associated with the properties.

As described in Note 9 to the consolidated financial statements included in Item 8 of this annual report on Form 10-K, 118 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, we operate a fleet of approximately 18,800 rolling stock units which includes trucks, forklifts, and trailers used to deliver products from our distribution and manufacturing centers to our customers’ job sites.

Through our emphasis on local market flexibility and strategically placed locations, we minimize shipping and freight costs while maintaining a high degree of local market expertise.

Through knowledge of local homebuilder needs, customer coordination and rapid restocking ability, we reduce working capital requirements and guard against out-of-stock products.

We believe that this reliability is highly valued by our customers and reinforces customer relationships.

Item 3. Legal Proceedings

While these claims are generally covered under the Company’s existing insurance programs to the extent any loss exceeds the deductible, there is a reasonable possibility of

loss that is not able to be estimated at this time because (i) many of the proceedings are in the discovery stage, (ii) the outcome of future litigation is uncertain, and/or (iii) the complex nature of the claims.

Although the Company cannot estimate a reasonable range of loss based on currently available information, the resolution of these matters could have a material adverse effect on the Company's financial position, results of operations or cash flows.

In addition, we are involved in various other claims and lawsuits incidental to the conduct of our business in the ordinary course.

We carry insurance coverage in such amounts in excess of our self-insured retention as we believe to be reasonable under the circumstances and that may or may not cover any or all of our liabilities in respect of such claims and lawsuits.

Although the ultimate disposition of these other proceedings cannot be predicted with certainty, management believes the outcome of any such claims that are pending or threatened, either individually or on a combined basis, will not have a material adverse effect on our consolidated financial position, cash flows or results of operations.

[added: The Company operates approximately 570 locations in 43 states across the U.S.] Given the span and depth of our geographical reach, our locations are organized into three geographical divisions (East, Central, and West), which are also our operating segments.

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

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

*Windows, [removed: Door] [added: Doors] and Millwork.* Windows and doors are comprised of the manufacturing, assembly, and distribution of windows and the assembly and distribution of interior and exterior door units.

We also offer software products through our Paradigm subsidiary, including drafting, estimating, quoting, and virtual home design services, which provide software solutions to retailers, distributors, manufacturers and homebuilders that [added: help them] boost sales, reduce costs, and [removed: help them] become more competitive.

According to the U.S. Census Bureau, [removed: the seasonally adjusted annual] [added: actual] U.S. total [removed: and single-family] housing starts [added: for the year ended December 31, 2023,] were 1.4 [removed: million and 0.9] million, [removed: respectively, in] [added: a decrease of 9.0% compared to the year ended December 31,] 2022.

As [removed: a result of] various current market dynamics, including [removed: rising] inflationary pressures, mortgage rate increases and shifts in housing [removed: affordability,] [added: affordability improve,] industry forecasters, including the National Association of Home Builders (“NAHB”), expect to see housing demand [removed: soften] [added: increase in the] near-term.

Despite [removed: expected near-term] [added: recent] tempered market conditions, we believe the housing industry remains underbuilt and that there are several meaningful trends that indicate U.S. housing demand will continue to be strong over the long-term, including the aging of housing stock and normal population growth due to immigration and birthrate exceeding death rate.

As a result of these pressures, we may experience reduced sales demand, challenges in the supply chain, increased margin pressures and/or increased operating costs in this area of our [removed: business as a result.][added: business.]

Disruptions and uncertainties as a result of a [removed: pandemic,] [added: number of unforeseen environmental, social, economic] or other [removed: health related emergency, like the COVID-19 pandemic,] [added: factors,] may have a significant impact on our future operating results.

[removed: Further,] [added: We closely manage our working capital and operating expenses, and] we pay careful attention to our logistics function and its effect on our shipping and handling costs.

However, through recent acquisitions we have expanded our operational footprint in the multifamily [added: market, predominantly five-story] and [added: smaller, wood construction, and the] light commercial [removed: markets,] [added: market,] growing our value-add components and millwork product offerings in this end market.

[added: *Capital Structure.*] We strive to optimize our capital structure to ensure that our financial needs are met in light of economic conditions, business activities, organic investments, opportunities for growth through acquisition and the overall risk characteristics of our underlying assets.

These acquisitions further expand our market footprint and provide additional operations in our value-add product categories and our multifamily customer segment and are further described in Note 3 [removed: and Note 15] to the consolidated financial statements included in Item 8 of this annual report on Form 10-K.

Under [removed: the] share repurchase programs authorized by the board of directors since August [removed: of] 2021, the Company has repurchased a total of [removed: 70.2] [added: 87.1] million shares of common stock, or [removed: approximately 34.0%] [added: 42.2%] of the Company’s total shares outstanding, at an average price of [removed: $62.58,] [added: $70.27, inclusive of fees and taxes,] including [removed: 41.9] [added: 17.8] million shares of common stock at an average price of [removed: $61.79] [added: $100.49, inclusive of fees and taxes,] in [removed: 2022.][added: 2023.]

As of December 31, [removed: 2022,] [added: 2023,] the Company had [removed: approximately $967.2] [added: $200.5] million authorization remaining under its current share repurchase program.

[removed: Subsequent to year-end, on] [added: On] January [removed: 17,] [added: 17 and April 3,] 2023, the Company amended [removed: its revolving credit] [added: the Revolving] facility to extend the maturity [removed: on a portion of the total commitments by 13 months] to January 17, 2028, and to include additional pricing tiers for the applicable margin.

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

[removed: According to the U.S. Census Bureau, actual] [added: Actual] U.S. [removed: total] [added: single-family] housing starts for the year ended December 31, [removed: 2022] [added: 2023,] were [removed: 1.6] [added: 0.9] million, a decrease of [removed: 3.0%] [added: 6.0%] compared to the year ended December 31, [removed: 2021.][added: 2022.]

A composite of [removed: third party] [added: third-party] sources, including the NAHB, are forecasting [removed: 1.3] [added: 1.4] million U.S. total housing starts and [removed: 0.9] [added: 1.0] million U.S. single-family housing starts for [removed: 2023,] [added: 2024,] which [removed: are projected decreases of 16.6%] [added: is relatively flat] and [removed: 11.6%,] [added: an increase of 4.7%,] respectively, from [removed: 2022.][added: 2023.]

In addition, in its September [removed: 2022] [added: 2023] semi-annual forecast, the Home Improvement Research Institute (“HIRI”) forecasted sales in the professional repair and remodel end market to increase [removed: approximately 3.6%] [added: 1.3%] in [removed: 2023] [added: 2024] compared to [removed: 2022.][added: 2023.]

However, [removed: rising] [added: uncertainty around] interest rates and inflation may [added: continue to] dampen near-term housing industry demand as homes [removed: become] [added: are] less affordable for consumers, investors and builders.

A discussion regarding our financial condition and results of operations for the year ended December 31, [removed: 2022] [added: 2023,] compared to the year ended December 31, [removed: 2021] [added: 2022,] is presented below.

A discussion regarding our financial condition and results of operations for the year ended December 31, [removed: 2021] [added: 2022,] compared to the year ended December 31, [removed: 2020] [added: 2021,] can be found under Item 7 of Part II of our Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2021,] [added: 2022,] filed with the SEC on [removed: March 1, 2022.][added: February 28, 2023.]

[removed: 2022] [added: 2023] Compared with [removed: 2021][added: 2022]

| Cost of sales | | | [removed: 65.9] [added: 64.8] | % | | | [removed: 70.6] [added: 65.9] | % |

| Gross margin | | | [removed: 34.1] [added: 35.2] | % | | | [removed: 29.4] [added: 34.1] | % |

| Selling, general and administrative expenses | | | [removed: 17.5] [added: 22.4] | % | | | [removed: 17.4] [added: 17.5] | % |

| Income from operations | | | [removed: 16.6] [added: 12.8] | % | | | [removed: 12.0] [added: 16.6] | % |

| Interest expense, net | | | [removed: 0.9] [added: 1.1] | % | | | [removed: 0.7] [added: 0.9] | % |

| Income tax expense | | | [removed: 3.6] [added: 2.6] | % | | | [removed: 2.6] [added: 3.6] | % |

| Net income | | | [removed: 12.1] [added: 9.1] | % | | | [removed: 8.7] [added: 12.1] | % |

*Net Sales.* Net sales for the year ended December 31, [removed: 2022] [added: 2023,] were [removed: $22.7] [added: $17.1] billion, a [removed: 14.2% increase] [added: 24.8% decrease] from net sales of [removed: $19.9] [added: $22.7] billion for [removed: 2021.][added: 2022.]

| Net sales | $ | [removed: 22,726.4] [added: 17,097.3] | | | | 100.0 | % | | $ | [removed: 19,893.9] [added: 22,726.4] | | | | 100.0 | % | | | [removed: 14.2] [added: (24.8] | [removed: %] [added: )%] |

[removed: *Gross Margin.* Gross margin increased $1.9 billion to $7.7 billion and our] [added: Our] gross margin percentage increased to [removed: 34.1%] [added: 35.2%] in [removed: 2022] [added: 2023] from [removed: 29.4%] [added: 34.1%] in [removed: 2021,] [added: 2022,] a [removed: 4.7%] [added: 1.1%] increase.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses [removed: increased $0.5] [added: decreased $0.1] billion, or [removed: 14.7%.][added: 3.5%.]

This [removed: increase] [added: decrease] in expenses was primarily due to [added: decreased variable compensation costs related to decreased sales and profitability, and reduced expense related to customer reserves, partially offset by] additional operating expenses from locations acquired within the last twelve [removed: months and higher variable compensation costs as a result of higher sales and profitability.][added: months.]

As a percentage of net sales, selling, general and administrative expenses increased to [removed: 17.5%] [added: 22.4%] from [removed: 17.4%] [added: 17.5%] in [removed: 2021.][added: 2022.]

Interest expense [removed: increased] [added: decreased] primarily due to [removed: higher average debt balances and rising interest rates in 2022 compared to 2021, as well as] the [added: $27.4 million] loss on extinguishment [removed: of $27.4 million related to the 2027 notes redemption,] [added: recognized in 2022,] partially offset by [removed: $8.1 million expensed] [added: higher debt balances and average interest rates] in [removed: 2021 related] [added: 2023 compared] to [removed: the partial 2027 notes redemption and the Revolving facility amendment.][added: 2022.]

*Income Tax Expense.* We recorded income tax expense of [removed: $822.5] [added: $443.6] million during the year ended December 31, [removed: 2022] [added: 2023,] compared to income tax expense of [removed: $526.1] [added: $822.5] million during the year ended December 31, [removed: 2021, an increase] [added: 2022, a decrease] of [removed: $296.3] [added: $378.9] million, driven by [removed: an increase] [added: a decrease] in income before income taxes in the current period.

However, we do have significant fixed costs and declines in our customer demand could have an adverse impact on our operating results.

During 2023 we completed a number of acquisitions for a combined $252.5 million purchase price, net of cash acquired, including the acquisitions of (i) Noltex Truss and its affiliates (“Noltex”), (ii) Builders Millwork and Supply, Inc. (“BMS”) (iii) J.B. Millworks, LLC (“JBM”), (iv) Church and Church, Inc. (“Church’s”), (v) Franks Cash and Carry, Inc. (“FCC”), (vi) Standale Lumber, LLC and Granville Lumber Co., LLC (“Standale”), and (vii) Encore Performance, LLC (“Encore”).

On February 21, 2024, the Company’s Board of Directors authorized the repurchase of up to $1.0 billion of the Company’s outstanding shares of common stock, inclusive of the approximately $200 million remaining outstanding in the prior share repurchase plan authorized in April 2023.

| | | 2023 | | | | 2022 | | |

Net sales decreased primarily as a result of a core organic sales decrease of 17.3% and a commodity price deflation decrease of 11.1%, partially offset by sales growth from acquisitions of 3.6%.

| | 2023 | | | | | | | | 2022 | | | | | | | | | | |

| Lumber and lumber sheet goods | $ | 4,128.9 | | | | 24.1 | % | | $ | 8,086.8 | | | | 35.6 | % | | | (48.9 | )% |

| Manufactured products | | 4,700.7 | | | | 27.5 | % | | | 5,675.7 | | | | 24.9 | % | | | (17.2 | )% |

| Windows, doors and millwork | | 4,289.1 | | | | 25.1 | % | | | 4,653.3 | | | | 20.5 | % | | | (7.8 | )% |

| Specialty building products and services | | 3,978.6 | | | | 23.3 | % | | | 4,310.6 | | | | 19.0 | % | | | (7.7 | )% |

We experienced decreased net sales in all of our product categories primarily due to a slow-down in single-family housing starts throughout the year, resulting in a decline in core organic sales, and commodity price deflation.

*Gross Margin.* Gross margin decreased $1.7 billion to $6.0 billion due to decreased sales.

This increase was attributable to an improved product mix toward our value-add products, including recent strategic investments in multifamily value-add operations.

This increase was primarily due to decreased cost leverage on lower net sales during the period.

*Interest Expense, Net.* Interest expense, net was $192.1 million in 2023, a decrease of $6.3 million from 2022.

Our effective tax rate was favorably affected in 2023 by the impact of federal and state tax credits on decreased tax expense.

Excess availability must

2023 Compared with 2022

outstanding debt obligations or compliance with covenants contained in the related debt agreements.

The Company operates 569 locations in 42 states across the United States.

We closely manage our working capital and operating expenses.

*Capital Structure.* We had $3,015.4 million of indebtedness as of December 31, 2022.

During 2022 and through the date of this filing, we completed a number of acquisitions for a combined $722.3 million purchase price, net of cash acquired, including the acquisitions of (i) Panel Truss of Longview, Inc., Panel Truss – Hearne, LLC, Case-Hill, Inc., Panel Truss-Dallas, LLC, Truss Ops Trucking, LLC and Truss Ops, LLC (the “Texas Panel Truss Businesses”), (ii) Panel Truss – Oakwood, LLC, Panel Truss – Townville, LLC and Panel Truss – Ringgold, LLC (the “East Panel Truss Businesses”), (iii) Valley Truss Co., Inc. (“Valley Truss”), (iv) Odds-N-Ends, Inc., d/b/a HomCo Lumber & Hardware (“HomCo”), (v) Trussway, LLC and its subsidiaries (“Trussway”), (vi) Fulcrum Building Group Holdings, LLC and its subsidiaries (“Fulcrum”), (vii) Pima Door and Supply and Sunrise Carpentry (“Pima”), and subsequent to year-end, (viii) Noltex Truss and its affiliates (“Noltex”).

On February 18, 2022, the Company announced that its board of directors authorized the repurchase of $1.0 billion of its shares of common stock.

On May 9, 2022, the board of directors authorized a new share repurchase program of $2.0 billion, which replaced the previous $1.0 billion program authorized in February 2022.

On November 28, 2022, the board of directors authorized an additional $1.0 billion to the existing repurchase program for a total of $1.5 billion inclusive of the remaining outstanding authorization existing at that time.

Share repurchases under the program may be made through a variety of methods, which may include open market purchases, block trades, accelerated share repurchase transactions, trading plans in accordance with Rule 10b-5 or Rule 10b-18 under the Exchange Act, or any combination of such methods.

The program does not obligate the Company to acquire any particular amount of its common stock, and the share repurchase program may be suspended or discontinued at any time at the Company’s discretion.

On January 21, 2022, the Company completed a private offering of an additional $300.0 million in aggregate principal amount of 4.25% senior unsecured notes due 2032 (“4.25% 2032 notes”) at an issue price equal to 100.50% of par value.

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

On June 15, 2022, the Company completed a private offering of $700.0 million in aggregate principal amount of 6.375% senior unsecured notes due 2032 (“6.375% 2032 notes,” and together with the 4.25% 2032 notes, the “2032 notes”) at an issue price equal to 100% of par value.

Subsequently, on June 16, 2022, the Company redeemed the remaining $612.5 million in outstanding aggregate principal amount of 6.75% senior secured notes due 2027 (“2027 notes”).

*Departure and Appointment of President and Chief Executive Officer*

On November 18, 2022, Dave Flitman stepped down as President and Chief Executive Officer (“CEO”) to accept another position outside of our industry and the board of directors announced the appointment of Dave Rush as interim CEO.

Subsequently, on January 10, 2023, the board announced that Dave Rush had been named CEO, effectively immediately.

Mr. Rush has 23 years of dedicated service to the company through which he also led the integrations of the BMC Merger and ProBuild acquisition as well as previously held the position of Chief Operating Officer of the Company’s East Division.

Actual U.S. single-family housing starts for the year ended December 31, 2022 were 1.0 million, a decrease of 10.6% compared to the year ended December 31 2021.

Our net sales for the year ended December 31, 2022 increased 14.2% over the same period last year.

The increase was driven by a 7.3% increase in sales related to acquisitions and core organic sales growth of 6.6%, primarily in our single-family and repair and remodel customer segments.

Our gross margin percentage increased by 4.7% during the year ended December 31, 2022 compared to the year ended December 31, 2021, primarily due to core organic growth in value-added product categories, as well as disciplined pricing in a volatile, supply-constrained marketplace.

Our selling, general and administrative expenses, as a percentage of net sales, were 17.5% in 2022, a 0.1% increase from 17.4% in 2021, largely due to additional operating expenses from locations acquired within the last twelve months, and higher wages and variable compensation costs as a result of increased net sales and profitability for the year ended December 31, 2022 compared to the year ended December 31, 2021.

| | | 2022 | | | | 2021 | | |

Net sales from acquisitions and core organic sales growth increased net sales by 7.3% and 6.6% , respectively.

Commodity price inflation added another 1.1% to net sales, partially offset by a 0.8% decrease in net sales due to two fewer selling days.

| | 2022 | | | | | | | | 2021 | | | | | | | | | | |

| Lumber and lumber sheet goods | $ | 8,088.1 | | | | 35.6 | % | | $ | 8,455.0 | | | | 42.5 | % | | | (4.3 | )% |

| Manufactured products | $ | 5,692.4 | | | | 25.0 | % | | $ | 4,404.1 | | | | 22.1 | % | | | 29.3 | % |

| Windows, doors and millwork | $ | 4,790.8 | | | | 21.1 | % | | $ | 3,400.9 | | | | 17.1 | % | | | 40.9 | % |

| Specialty building products and services | $ | 4,155.1 | | | | 18.3 | % | | $ | 3,633.9 | | | | 18.3 | % | | | 14.3 | % |

We achieved increased net sales in all of our product categories except lumber and lumber sheet goods, primarily due to acquisitions, and core organic sales growth.

Lumber and lumber sheet goods net sales decreased primarily due to decreased housing starts throughout the second half of 2022 compared to 2021.

This increase was primarily attributable to core organic growth, particularly in value-added product categories, acquisitions, and from disciplined pricing in a volatile, supply-constrained marketplace.

*Interest Expense, Net.* Interest expense was $198.4 million in 2022, an increase of $62.5 million from 2021.

Compared to the prior year, the Company invested $0.4 billion less primarily due to $0.6 billion less spent on acquisitions, offset by $0.1 billion more as a net investment in property, plant and equipment and $0.1 billion cash proceeds in the prior year from the divestiture of our gypsum operations.

its carrying amount, goodwill is not impaired.

For the fiscal year ended December 31, [removed: 2022][added: 2023]

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive [removed: officers] [added: officers] during the relevant recovery period pursuant to §240.10D-1(b).

The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant as of June 30, [removed: 2022] [added: 2023,] was approximately [removed: $8,478.4 million] [added: $16.7 billion] based on the closing price per share on that date of [removed: $53.70] [added: $136.00] as reported on the New York Stock Exchange.

The number of shares of the registrant’s common stock, par value $0.01, outstanding as of [removed: Feb 23, 2023] [added: February 15, 2024,] was [removed: 138,012,302.][added: 121,940,068.]

Portions of the registrant’s definitive proxy statement for its annual meeting of stockholders to be held on June [removed: 14, 2023] [added: 4, 2024,] are incorporated by reference into Part II and Part III of this Form 10-K.

| Item 1A. | | [Risk Factors](#item_1a_risk_factors) | | [removed: 11] [added: 10] |

| Item 2. | | [Properties](#item_2_properties) | | [removed: 22] [added: 23] |

| Item 3. | | [Legal Proceedings](#item_3_legal_proceedings) | | [removed: 22] [added: 23] |

| Item 4. | | [Mine Safety Disclosures](#item_4_mine_safety_disclosures) | | [removed: 23] [added: 24] |

| Item 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#item_5) | | [removed: 24] [added: 25] |

| Item 6. | | [Reserved](#item_6) | | [removed: 25] [added: 26] |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#item_7_managements_discussion_analysis_f) | | [removed: 26] [added: 27] |

| Item 7A. | | [Quantitative and Qualitative Disclosures About Market Risk](#item_7a) | | [removed: 33] [added: 34] |

| Item 8. | | [Financial Statements and Supplementary Data](#item_8_financial_statements_supplementar) | | [removed: 34] [added: 35] |

| Item 9C. | | [Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](#item_9c_disclosure_regarding_foreign_jur) | | [removed: 67] [added: 66] |

| Item 10. | | [Directors, Executive Officers and Corporate Governance](#item_10_directors_executive_officers) | | [removed: 68] [added: 67] |

| Item 11. | | [Executive Compensation](#item_11_executive_compensation) | | [removed: 68] [added: 67] |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#item_12) | | [removed: 68] [added: 67] |

| Item 13. | | [Certain Relationships and Related Transactions, and Director Independence](#item_13) | | [removed: 69] [added: 68] |

| Item 14. | | [Principal Accountant Fees and Services](#item_14) | | [removed: 69] [added: 68] |

| Item 15. | | [Exhibits and Financial Statement Schedules](#item_15_exhibits_financial_statement_sch) | | [removed: 70] [added: 69] |

| Item 16 | | [Form 10-K Summary](#item_16_form_10k_summary) | | [removed: 74] [added: 71] |

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 Company’s [removed: other] acquisitions, the Company’s growth strategies, including gaining market 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 [removed: the economy,] [added: macroeconomic trends,] including [added: interest rates and potential] labor and supply shortages.

The Company operates [removed: 569] [added: approximately 570] locations in [removed: 42] [added: 43] states across the United [removed: States,] [added: States (“U.S.”),] which are internally organized into geographic operating divisions.

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 specialty building products.]

[removed: While we are the largest building product supplier according to HBS Dealer magazine’s 2022 Top 200 ProDealers list and the only building supplier with manufacturing capabilities with over $10 billion in sales, the] [added: The] industry remains highly fragmented with competition from large national dealers, specialty dealers, large building supply retailers, regional and local material distributors and smaller privately owned suppliers, truss manufacturers and lumberyards.

As such, the industry presents significant opportunities for growth and [removed: a number of potential acquisitions.][added: attractive acquisition opportunities.]

According to the U.S. Census Bureau, the single-family residential construction market was an estimated [removed: $384.4] [added: $392.1] billion in [removed: 2022,] [added: 2023,] which was [removed: 14.7% lower than 2021, and continues to be] [added: 13.5%] lower than [removed: the historical high of $470.4 billion in 2006.][added: 2022.]

Further, according to the Home Improvement Research Institute (“HIRI”) in its September [removed: 2022] [added: 2023] semi-annual forecast, the professional repair and remodel end market was an estimated [removed: $180.7] [added: $167.8] billion in [removed: 2022,] [added: 2023,] which was [removed: 10.2% higher] [added: 5.0% lower] than [removed: 2021.][added: 2022.]

We [added: serve a broad customer base across the U.S. We] have a diverse geographic footprint, as we have operations in [removed: 47] [added: 48] of the top 50 and [removed: 86] [added: 89] of the top 100 U.S. Metropolitan Statistical Areas (“MSAs”), as ranked by single family housing permits based on available [removed: 2022] [added: 2023] U.S. Census data.

For the year ended December 31, [removed: 2022,] [added: 2023,] our top 10 customers accounted for [removed: approximately 18%] [added: 14.7%] of net sales, with our largest customer accounting for [removed: approximately 5%] [added: 4.5%] of net sales.

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

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

[removed: Our manufactured products allow builders to] build higher quality homes more efficiently.

Without manufactured products, builders construct these items [removed: on site,] [added: on-site,] where weather and variable labor quality can negatively impact construction cost, quality and installation time.

Our pre-hung interior and exterior doors consist of a door slab with hinges and door jambs attached, reducing on-site installation time and providing higher quality finished door units than those constructed [removed: on site.][added: on-site.]

We believe that the homebuilding and remodeling industries are increasingly adopting digital solutions and that we are [removed: well positioned] [added: well-positioned] to take advantage of these trends because of our scale and [removed: prior] [added: continuous] investments in digital [removed: technologies, including] [added: technologies through] our [removed: acquisition of Paradigm.][added: Paradigm business.]

We compete in a [added: highly competitive and] fragmented marketplace.

After the design phase, a [removed: printed layout is generated.]

By pursuing the Company’s [removed: four pillar] [added: clear] strategic [removed: priorities] [added: pillars] as outlined below, we intend to build on our advantaged market position to create value for our shareholders by increasing profits and net cash flow generation, while making us a more valuable partner to our customers.

| 6031 Connection Drive, Suite 400 Irving, Texas | | 75039 |

| Item 1C. | | [Cybersecurity](#item_1c_cybersecurity) | | 22 |

Our manufactured products allow builders to

printed layout is generated.

The scope and scale of our existing

Disciplined Capital Allocation

Our long-term acquisition strategy is focused on pursuing potential acquisitions that present opportunities to add manufacturing capabilities in a relatively short period of time, or that provide opportunities to advance our position in desirable geographies and enhance our market strength in key products.

*Consistent capital allocation priorities*.

In addition to our acquisition strategy, we continue to focus on disciplined capital allocation to drive value creation.

We actively monitor our working capital to align our needs with market demand signals and the size of our top-line.

Additionally, our focus remains on maintaining a strong balance sheet, with a low net leverage ratio, providing multiple paths for capital deployment, including returning excess capital to shareholders through opportunistic share repurchases at an attractive long-term cost basis.

At December 31, 2023, we employed approximately 2,500 sales representatives, who are

Respectful and Inclusive Culture

The program began in 2023, with detailed planning and design efforts.

| 2001 Bryan Street, Suite 1600 Dallas, Texas | | 75201 |

We serve a broad customer base across the United States.

Lumber & lumber sheet goods are our largest sales volume product category.

Our large delivery fleet,

*Leverage free cash flow to accelerate strategic growth*.

Our long-term acquisition strategy is focused on the continued growth of our prefabricated components business and on the potential for geographic expansion.

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

We also intend to pursue potential acquisitions that present an opportunity to add manufacturing capabilities in a relatively short period of time.

Second, there remain a number of attractive homebuilding markets where we do not currently operate.

Diversity & Inclusion

We are not including

Risk Management and Strategy

The Company maintains robust and comprehensive processes, procedures and controls to protect and secure its information systems and data infrastructure from cybersecurity threats.

The Company’s cybersecurity program is led by its Chief Information Security Officer (“CISO”).

The Company’s cybersecurity program interfaces with other functional areas within the Company, including but not limited to the Company’s business segments and information technology, legal, risk management, human resources and internal audit departments, as well as external third-party partners, to identify and understand potential cybersecurity threats.

The Company regularly assesses and updates its processes, procedures and management techniques in light of ongoing cybersecurity developments.

Internally, the CISO coordinates oversight of reviewing security alerts, identifying and monitoring ongoing and potential cybersecurity threats, evaluating strategic business impacts of cybersecurity threats and developing programs and initiatives to educate the Company’s employees regarding cybersecurity.

The CISO also manages the Company’s Security Incident Response Plan (the “Incident Response Plan”), which outlines action steps for the preparation, identification, triage, analysis, containment, eradication, recovery and reflection stages of a cybersecurity incident.

The Incident Response Plan serves as the charter for the Company’s Security Incident Response Team (the “Incident Response Team”), which includes a strategic team comprised of executives from various cross-functional management teams, as well as a tactical team comprised of internal technical support roles and external third-party service providers.

The Incident Response Plan provides how the Incident Response Team will analyze and, as necessary, escalate cybersecurity incidents both internally and with third-party service providers based on type and severity of the specific incident.

The Company also requires cybersecurity training for all active employees, focusing on the appropriate protection and security of confidential company and third-party information.

Additionally, the Company provides quarterly cybersecurity awareness training that covers a broad range of security topics, including secure access practice, phishing schemes, remote work and response to suspicious activities.

In addition to online training, employees are educated through several methods, including event-triggered awareness campaigns, recognition programs, security presentations, company intranet articles, videos, system-generated communications, email publications and various simulation exercises.

The Company has engaged a third-party managed detection and response company to monitor the security of its information systems around-the-clock, including intrusion detection, and to provide instantaneous alerting should a cybersecurity event occur.

The Company also maintains a cybersecurity insurance policy and has engaged a third-party digital forensics and incident response consultant and legal counsel on retainer.

The Company does not believe that any risks from cybersecurity threats, nor any previous cybersecurity incidents, have materially affected the Company.

However, the sophistication of cyber threats continues to increase, and the preventative actions the Company has taken and continues to take to reduce the risk of cyber incidents and protect its systems and information may not successfully protect against all cyber incidents.

For more information on how cybersecurity risk may materially affect the Company’s business strategy, results of operations, or financial condition, please refer to Item 1A Risk Factors.

Governance

The Company’s Audit Committee and Board of Directors provide ultimate oversight of the Company’s cybersecurity risk management.

The Audit Committee regularly reviews and discusses with management the strategies, processes, procedures and controls pertaining to the management of the Company’s information technology operations, including cyber risks and cybersecurity.

The Company’s Chief Information Officer (“CIO”) provides quarterly reports to the Audit Committee regarding the evolving cybersecurity risk landscape, including emerging risks, as well as the Company’s processes, program and initiatives for managing these risks.

The Company’s CISO reports directly to the CIO, who in turn reports to the CFO.

The CISO maintains the certified information systems security professional (CISSP) certification and GIAC G2700 (Certified ISO 27000 Specialist) and has over 20 years of

experience in cybersecurity.

Under the direction of the CISO, the Company’s cybersecurity department continuously analyzes cybersecurity and resiliency risks to our business, considers industry trends and implements controls, as appropriate, to mitigate these risks.

The team consists of cybersecurity professionals holding multiple certifications such as the CISSP, CEH (Certified Ethical Hacker), GSOM (GIAC Security Operations Manager), GCIA (GIAC Certified Intrusion Analyst), GCFA (GIAC Certified Forensic Analyst), GNFA (GIAC Network Forensic Analyst), GCTI (GIAC Cyber Threat Intelligence), CISM (Certified Information Security Manager) and CISA (Certified Information Systems Auditor).

This analysis drives the Company’s long- and short-term cybersecurity strategies, which are executed through a collaborative effort within the IT department and are communicated to the Board of Directors regularly.

Item 2. Properties

We have a broad network of distribution and manufacturing facilities in 43 states throughout the U.S. Based on available 2023 U.S. Census data, we have operations in 48 of the top 50 and 89 of the top 100 U.S. Metropolitan Statistical Areas, as ranked by single family housing permits in 2023.

Distribution centers typically include 10 to 15 acres of outside storage, a 45,000 square foot warehouse, 4,000 square feet of office space, and 15,000 square feet of covered storage.

The outside area provides space for lumber storage and a staging area for delivery while the warehouse stores millwork, windows and doors, and other specialty building products.

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.

Many of our distribution centers are situated on rail lines for efficient receipt of goods.

Our manufacturing facilities produce trusses, wall panels, engineered wood, windows, pre-hung doors and custom millwork.

Where efficient, they are located on the same premises as our distribution facilities.

Truss and panel manufacturing facilities vary in size from 30,000 square feet to 60,000 square feet with eight to 10 acres of outside storage for lumber and for finished goods.

Our window manufacturing facility in Houston, Texas is approximately 200,000 square feet.

We own 153 actively operating facilities and contractually lease 418 actively operating facilities.

These leases typically have an initial lease term of five to 15 years and most provide options to renew for specified periods of time.

A majority of our leases provide for fixed annual rentals.

| [removed: Report] [added: [Report] of Independent Registered Public Accounting Firm – PCAOB ID [removed: 238] [added: 238](#report_public_accounting_firm)] | | [added: 36] |

| [Consolidated [removed: Statement] [added: Statements] of Operations for the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020](#comprehensive_loss)] [added: 2021](#consolidated_statements_operations)] | | [removed: 37] [added: 38] |

| [Consolidated Balance [removed: Sheet] [added: Sheets] at December 31, [removed: 2022] [added: 2023,] and [removed: 2021](#balance_sheets)] [added: 2022](#balance_sheets)] | | [removed: 38] [added: 39] |

| [Consolidated [removed: Statement] [added: Statements] of Cash Flows for the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020](#cash_flows)] [added: 2021](#cash_flows)] | | [removed: 39] [added: 40] |

| [Consolidated [removed: Statement] [added: Statements] of Changes in Stockholders’ Equity for the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020](#stockholders_equity)] [added: 2021](#stockholders_equity)] | | [removed: 40] [added: 41] |

| [Notes to Consolidated Financial Statements](#notes_to) | | [removed: 41] [added: 42] |

We have audited the accompanying consolidated balance sheets of Builders FirstSource, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] 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, [removed: 2022,] [added: 2023,] 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, [removed: 2022,] [added: 2023,] 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, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022] [added: 2023] 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, [removed: 2022,] [added: 2023,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

In evaluating goodwill for [removed: impairment, management] [added: impairment at December 31, 2023, we] developed the fair value using a discounted cash flow methodology.

These procedures included testing the effectiveness of controls relating to [removed: management’s goodwill impairment test, including management’s controls over] the [removed: goodwill quantitative impairment test.][added: revenue recognition process.]

| (in thousands, except per share amounts) | | [removed: 2022] [added: 2023] | | | | [removed: 2021] [added: 2022] | | | | [removed: 2020] [added: 2021] | | |

| Net sales | | $ | [removed: 22,726,418] [added: 17,097,330] | | | $ | [removed: 19,893,856] [added: 22,726,418] | | | $ | [removed: 8,558,874] [added: 19,893,856] | |

| Cost of sales | | | [removed: 14,982,039] [added: 11,084,996] | | | | [removed: 14,042,900] [added: 14,982,039] | | | | [removed: 6,336,290] [added: 14,042,900] | |

| Gross margin | | | [removed: 7,744,379] [added: 6,012,334] | | | | [removed: 5,850,956] [added: 7,744,379] | | | | [removed: 2,222,584] [added: 5,850,956] | |

| Selling, general and administrative expenses | | | [removed: 3,974,173] [added: 3,836,015] | | | | [removed: 3,463,532] [added: 3,974,173] | | | | [removed: 1,678,730] [added: 3,463,532] | |

| Income from operations | | | [removed: 3,770,206] [added: 2,176,319] | | | | [removed: 2,387,424] [added: 3,770,206] | | | | [removed: 543,854] [added: 2,387,424] | |

| Interest expense, net | | | [removed: 198,373] [added: 192,115] | | | | [removed: 135,877] [added: 198,373] | | | | [removed: 135,688] [added: 135,877] | |

| Income before income taxes | | | [removed: 3,571,833] [added: 1,984,204] | | | | [removed: 2,251,547] [added: 3,571,833] | | | | [removed: 408,166] [added: 2,251,547] | |

| Income tax expense | | | [removed: 822,464] [added: 443,649] | | | | [removed: 526,131] [added: 822,464] | | | | [removed: 94,629] [added: 526,131] | |

| Net income | | $ | [removed: 2,749,369] [added: 1,540,555] | | | $ | [removed: 1,725,416] [added: 2,749,369] | | | $ | [removed: 313,537] [added: 1,725,416] | |

| Basic | | $ | [removed: 16.98] [added: 12.06] | | | $ | [removed: 8.55] [added: 16.98] | | | $ | [removed: 2.69] [added: 8.55] | |

| Diluted | | $ | [removed: 16.82] [added: 11.94] | | | $ | [removed: 8.48] [added: 16.82] | | | $ | [removed: 2.66] [added: 8.48] | |

| Basic | | | [removed: 161,960] [added: 127,777] | | | | [removed: 201,839] [added: 161,960] | | | | [removed: 116,611] [added: 201,839] | |

| Diluted | | | [removed: 163,481] [added: 128,998] | | | | [removed: 203,470] [added: 163,481] | | | | [removed: 117,917] [added: 203,470] | |

CONSOLIDATED BALANCE [removed: SHEET][added: SHEETS]

| (in thousands, except per share amounts) | | December 31, [removed: 2022] [added: 2023] | | | | December 31, [removed: 2021] [added: 2022] | | |

| Cash and cash equivalents | | $ | [removed: 80,445] [added: 66,156] | | | $ | [removed: 42,603] [added: 80,445] | |

| Accounts receivable, less allowances of [removed: $67,980 and $39,510 at December 31, 2022] [added: $42,488] and [removed: December 31, 2021,] [added: $67,980,] respectively | | | [removed: 1,448,139] [added: 1,436,917] | | | | [removed: 1,708,796] [added: 1,448,139] | |

| Other receivables | | | [removed: 234,966] [added: 290,310] | | | | [removed: 255,075] [added: 234,966] | |

| Inventories, net | | | [removed: 1,426,196] [added: 1,228,265] | | | | [removed: 1,626,244] [added: 1,426,196] | |

| Contract assets | | | [removed: 183,700] [added: 165,677] | | | | [removed: 207,587] [added: 183,700] | |

| Other current assets | | | [removed: 124,201] [added: 113,403] | | | | [removed: 127,964] [added: 124,201] | |

| Total current assets | | | [removed: 3,497,647] [added: 3,300,728] | | | | [removed: 3,968,269] [added: 3,497,647] | |

| Property, plant and equipment, net | | | [removed: 1,567,631] [added: 1,803,824] | | | | [removed: 1,385,441] [added: 1,567,631] | |

| Operating lease right-of-use assets, net | | | [removed: 485,704] [added: 502,184] | | | | [removed: 457,833] [added: 485,704] | |

| Goodwill | | | [removed: 3,456,854] [added: 3,556,556] | | | | [removed: 3,270,192] [added: 3,456,854] | |

| Intangible assets, net | | | [removed: 1,550,944] [added: 1,298,173] | | | | [removed: 1,603,409] [added: 1,550,944] | |

| Other assets, net | | | [removed: 36,380] [added: 37,987] | | | | [removed: 29,199] [added: 36,380] | |

*Revenue Recognition – Distribution Sales*

As described in Note 2 to the consolidated financial statements, the Company recognized consolidated net sales of $17.1 billion for the year ended December 31, 2023, a majority of which pertains to distribution sales.

Revenue is recognized as performance obligations are satisfied by transferring control of a promised good or service to a customer in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.

Distribution sales typically consist of the sale of building products the Company manufactures and the resale of purchased building products.

The Company recognizes revenue related to distribution sales at a point in time upon delivery of the ordered goods to their customers.

The principal consideration for our determination that performing procedures relating to revenue recognition for distribution sales is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s distribution sales.

These procedures also included, among others (i) testing, on a sample basis, revenue recognized by obtaining and inspecting source documents, such as purchase orders, invoices, proof of delivery, and cash receipts or third party confirmations and (ii) testing, on a sample basis, outstanding accounts receivable balances as of December 31, 2023 by obtaining and inspecting source documents, such as purchase orders, invoices, proof of delivery or services performed, and subsequent cash receipts.

February 22, 2024

CONSOLIDATED STATEMENTS OF OPERATIONS

| Net income | | $ | 1,540,555 | | | $ | 2,749,369 | | | $ | 1,725,416 | |

| Credit loss expense | | | (11,488 | ) | | | 38,921 | | | | 20,451 | |

| Non-cash net gain on assets | | | (7,072 | ) | | | (1,965 | ) | | | (32,421 | ) |

| Repurchase of common stock (3) | | | (17,753 | ) | | | (178 | ) | | | — | | | | (1,783,881 | ) | | | (1,784,059 | ) |

| Exercise of stock options | | | 73 | | | | 1 | | | | 658 | | | | — | | | | 659 | |

| Net income | | | — | | | | — | | | | — | | | | 1,540,555 | | | | 1,540,555 | |

| Balance at December 31, 2023 | | | 121,857 | | | $ | 1,219 | | | $ | 4,270,948 | | | $ | 460,184 | | | $ | 4,732,351 | |

(3)

During the year ended December 31, 2023, we repurchased and retired 17.8 million shares of our common stock at an average price of $100.49 per share, for $1.8 billion, inclusive of fees and taxes, pursuant to the repurchase program authorized by our board of directors in November 2022 and further expanded by our board of directors in April 2023.

Offsetting dilution from the BMC Merger continues to be the primary purpose of the repurchase program.

Payment terms related to distribution sales are not significant as payment is generally received shortly after the point of sale.

| Lumber and lumber sheet goods | | $ | 4,128,855 | | | $ | 8,086,838 | | | $ | 8,429,763 | |

| Manufactured products | | | 4,700,670 | | | | 5,675,713 | | | | 4,352,223 | |

| Windows, doors and millwork | | | 4,289,094 | | | | 4,653,255 | | | | 3,335,714 | |

| Specialty building products and services | | | 3,978,711 | | | | 4,310,612 | | | | 3,776,156 | |

| Net sales | | $ | 17,097,330 | | | $ | 22,726,418 | | | $ | 19,893,856 | |

We reclassified net sales of $155.6 million and $142.3 million into the Specialty building products and services product category for the years ended December 31, 2022, and 2021, respectively, to conform to the current year presentation.

| Net additions (reversals) to provision | | | (11,488 | ) | | | 38,921 | | | | 20,451 | |

| Net income | | $ | 1,540,555 | | | $ | 2,749,369 | | | $ | 1,725,416 | |

| Basic | | $ | 12.06 | | | $ | 16.98 | | | $ | 8.55 | |

| Diluted | | $ | 11.94 | | | $ | 16.82 | | | $ | 8.48 | |

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which is intended to improve reportable segment disclosure requirements, primarily through additional and more detailed information about a reportable segment's expenses.

The guidance is to be applied retrospectively to all prior periods presented in the financial statements.

Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of

adoption.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures.

This amendment modifies the rules on income tax disclosures to require entities to disclose: (i) specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold; (ii) the amount of income taxes paid (net of refunds received) disaggregated by federal, state, and foreign taxes, as well as individual jurisdictions in which income taxes paid is equal to or greater than five percent of total income taxes paid net of refunds; (iii) the income or loss from continuing operations before income tax expense, or benefit, disaggregated between domestic and foreign; and (iv) income tax expense or benefit from continuing operations disaggregated by federal, state and foreign.

The guidance is effective for annual periods beginning after December 15, 2024, with early adoption permitted, and should be applied on a prospective basis, though retrospective application is permitted.

We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.

During 2023 we completed a number of acquisitions for a combined $252.5 million purchase price, net of cash acquired, including the acquisitions of (i) Noltex Truss and its affiliates (“Noltex”), (ii) Builders Millwork and Supply, Inc. (“BMS”) (iii) J.B. Millworks, LLC (“JBM”), (iv) Church and Church, Inc. (“Church’s”), (v) Franks Cash and Carry, Inc. (“FCC”), (vi) Standale Lumber, LLC and Granville Lumber Co., LLC (“Standale”), and (vii) Encore Performance, LLC (“Encore”).

*Goodwill Impairment Test - West Geographic Reporting Unit*

As described in Notes 2 and 5 to the consolidated financial statements, the Company’s consolidated goodwill balance was $3.5 billion as of December 31, 2022, a portion of which relates to the Company’s West geographic operating segment.

The Company’s reporting units are aligned with their three geographic operating segments.

Goodwill is tested for impairment on an annual basis and between annual tests whenever impairment is indicated.

This annual test takes place as of December 31 each year.

Impairment losses are recognized whenever the carrying amount of a reporting unit exceeds its fair value.

The significant assumptions used in the discounted cash flow methodology are the discount rate, the terminal value and the expected future revenues and profitability.

The principal considerations for our determination that performing procedures relating to the goodwill impairment test of the West geographic reporting unit is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate of the West reporting unit and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumption related to expected future revenues.

These procedures also included, among others, testing management’s process for developing the fair value estimate of the West reporting unit; evaluating the appropriateness of the discounted cash flow methodology; testing the completeness and accuracy of underlying data used in the discounted cash flow methodology; and evaluating the reasonableness of the significant assumption related to expected future revenues.

Evaluating management’s significant assumption related to expected future revenues involved evaluating whether the assumption used was reasonable considering the current and past performance of the West reporting unit, relevant industry forecasts, and consistency with evidence obtained in other areas of the audit.

February 28, 2023

CONSOLIDATED STATEMENT OF OPERATIONS

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

| Bad debt expense | | | 38,921 | | | | 20,451 | | | | 4,720 | |

| Net gain on sales of assets and asset impairments | | | (1,965 | ) | | | (32,421 | ) | | | (1,067 | ) |

| Assets acquired under finance lease obligations | | | — | | | | 1,644 | | | | 16,964 | |

| Balance at December 31, 2019 | | | 116,052 | | | $ | 1,161 | | | $ | 574,955 | | | $ | 248,837 | | | $ | 824,953 | |

| Exercise of stock options | | | 235 | | | | 2 | | | | 1,422 | | | | — | | | | 1,424 | |

| Net income | | | — | | | | — | | | | — | | | | 313,537 | | | | 313,537 | |

| Lumber & lumber sheet goods | | $ | 8,088,147 | | | $ | 8,455,046 | | | $ | 3,076,376 | |

| Manufactured products | | | 5,692,406 | | | | 4,404,054 | | | | 1,640,460 | |

| Windows, doors & millwork | | | 4,790,820 | | | | 3,400,907 | | | | 1,629,179 | |

| Specialty building products & services | | | 4,155,045 | | | | 3,633,849 | | | | 2,212,859 | |

| Additions | | | 38,921 | | | | 20,451 | | | | 4,720 | |

Accounts receivable consisted of the following at December 31:

| Accounts receivable | | $ | 1,516,119 | | | $ | 1,748,306 | |

| Less: allowances for returns and credit losses | | | (67,980 | ) | | | (39,510 | ) |

| Accounts receivable, net | | $ | 1,448,139 | | | $ | 1,708,796 | |

In October 2021, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers which intends to address diversity and inconsistency in the accounting related to recognition of an acquired contract liability and payment terms and their effect on subsequent revenue recognized by the acquirer.

Early adoption is permitted, including adoption in an interim period.

We have elected to early adopt this guidance effective July 1, 2022, and have determined there is no material impact on our consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and further amended in December 2022 by ASU No. 2022-06 which extends the sunset date.

The purpose of ASU 2020-04 is to provide optional guidance for a period of time related to accounting for reference rate reform on financial reporting.

It is intended to reduce the potential burden of reviewing contract modifications related to discontinued rates.

The amendments and optional expedients in this update are effective, as elected, beginning March 12, 2020 through December 31, 2024 and may be elected by topic.

We have not elected adoption of this optional guidance and do not intend to elect this guidance before the sunset date of December 31, 2024, as there is no material impact on our consolidated financial statements.

On April 1, 2022, we acquired certain assets and operations of Panel Truss of Longview, Inc., Panel Truss – Hearne, LLC, Case-Hill, Inc., Panel Truss-Dallas, LLC, Truss Ops Trucking, LLC and Truss Ops, LLC (the “Texas Panel Truss Businesses”), and Panel Truss – Oakwood, LLC, Panel Truss – Townville, LLC and Panel Truss – Ringgold, LLC (the “East Panel Truss Businesses”) for $89.1 million and $79.6 million, respectively.

Each of the acquired businesses provides building components primarily to multifamily markets, serving such markets in Texas, Georgia and South Carolina.

On April 1, 2022, we acquired substantially all of the assets and operations of Valley Truss Co., Inc. (“Valley Truss”) for $31.6 million.

Valley Truss is a manufacturer of floor and roof trusses located in Boise, Idaho.

None.

On February 24, 2023, our Board of Directors approved and adopted the Builders FirstSource, Inc. Executive and Key Employee Severance Plan (the “Severance Plan”), which provides for severance payments and benefits to certain key employees of the Company in the event their employment is involuntary terminated under certain circumstances.

Under the Severance Plan, participants are grouped into three tiers of benefits, as selected and designated by the Compensation Committee of the Board of Directors (the “Committee”).

The Committee designated the following named executive officers to participate in the Severance Plan: Dave Rush, as a Tier I Participant; and Peter M.

Jackson, Scott L.

Robins, Michael A.

Farmer and Timothy D.

Johnson, as Tier II Participants.

Under the Severance Plan, if a participating executive’s employment is terminated by the Company without cause or by the participant for good reason (as such terms are defined in the Severance Plan), and the termination does not occur within the 3-month period prior to or the 24-month period following a change in control of the Company, the participant will be entitled to certain severance payments and benefits (“Regular Severance Benefits”).

The Regular Severance Benefits include cash payments of the following amounts: (1) a pro rata annual bonus, (2) a severance payment equal to 2.0 times, in the case of a Tier I Participant, or 1.5 times, in the case of a Tier II Participant, the participant’s base salary and target annual bonus, and (3) a payment equal to the full cost to provide group health benefits to the participant for 24 months, in the case of a Tier I Participant, or 18 months, in the case of a Tier II Participant (based on group health benefits sponsored by the Company and maintained by the participant as of the termination date).

In addition, a pro rata portion of the participant’s outstanding stock options, restricted stock units and other stock awards with time-based vesting restrictions will become vested and exercisable, and a pro rata portion of the participant’s outstanding performance-based stock awards will be deemed vested and earned based on the actual level of achievement of all relevant performance measures as of the end of the regular performance period.

If a participating executive’s employment is terminated by the Company without cause or by the participant for good reason, and the termination occurs within the 3-month period prior to or the 24-month period following a change in control of the Company, the participant will be entitled to certain severance payments and benefits (“Change in Control Severance Benefits”).

The Change in Control Severance Benefits include lump sum cash payments of the following amounts: (1) a pro rata target annual bonus, (2) a severance payment equal to 2.5 times, in the case of a Tier I Participant, or 2.0 times, in the case of a Tier II Participant, the participant’s base salary and target annual bonus, and (3) a payment equal to the full cost to provide group health benefits to the participant for 30 months, in the case of a Tier I Participant, or 24 months, in the case of a Tier II Participant (based on group health benefits sponsored by the Company and maintained by the participant as of the termination date).

In addition, the level of achievement of all performance goals relating to the participant’s outstanding performance-based stock awards will be based on (i) the greater of an assumed level of achievement at “target” level or actual level of achievement measured as of the termination date for performance periods that had commenced but were not completed prior to the termination date, and (ii) an assumed level of achievement at “target” level for performance periods that had not commenced prior to the termination date.

As a condition to participating in the Severance Plan, a participant must enter into a restrictive covenant agreement that includes non-competition, customer non-solicitation and employee non-recruitment provisions, that will apply for a period of \[24\] months, in the case of a Tier I Participant, or \[18\] months, in the case of a Tier II Participant, following the participant’s termination of employment.

Upon acknowledgment by a named executive officer of his or her participation in the Severance Plan, any existing employment agreement between the Company and such named executive officer will terminate.

The information required by this item appears in our definitive proxy statement for our annual meeting of stockholders to be held June [removed: 14, 2023] [added: 4, 2024] under the captions “Proposal 1 — Election of Directors,” “Continuing Directors,” “Information Regarding the Board and Its Committees,” “Corporate Governance,” “Delinquent Section 16(a) Reports,” and “Executive Officers of the Registrant,” which information is incorporated herein by reference.

Both of these policies are listed as exhibits to this annual report on Form 10-K and can be found in the “Investors” section of our corporate [removed: Web site] [added: website] at: www.bldr.com.

Stockholders may request a free copy of these policies by contacting the Corporate Secretary, Builders FirstSource, Inc., [removed: 2001 Bryan Street,] [added: 6031 Connection Drive,] Suite [removed: 1600, Dallas,] [added: 400, Irving,] Texas [removed: 75201,] [added: 75309,] United States of America.

We will provide information regarding any such amendment or waiver (including the nature of any waiver, the name of the person to whom the waiver was granted and the date of the waiver) on our [removed: Web site] [added: website] at the Internet address above, and such information will be available on our [removed: Web site] [added: website] for at least a 12-month period.

In addition, we will disclose on our [removed: Web site] [added: website] 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. that relate to any element of the definition of “code of ethics” enumerated in Item 406(b) of Regulation S-K under the 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: 14, 2023,] [added: 4, 2024,] under the captions “Executive Compensation and Other Information,” “Director Compensation — 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: 14, 2023,] [added: 4, 2024,] under the caption “Securities Owned by Directors, Executive Officers, and Certain Beneficial Owners” 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: 14, 2023,] [added: 4, 2024,] 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: 14, 2023,under] [added: 4, 2024, under] the caption [removed: “Proposal 3 — Ratification] [added: “Ratification] of Selection of Independent Registered Public Accounting Firm — Fees Paid to PricewaterhouseCoopers LLP,” which information is incorporated herein by reference.

| [removed: 4.1] [added: 4.2] | | [Indenture, dated as of [removed: May 30, 2019,] [added: July 23, 2021,] among Builders FirstSource, Inc., the guarantors [removed: party thereto,] [added: named therein] and Wilmington Trust, National Association, as trustee [removed: and notes collateral agent (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: May 31, 2019,] [added: July 23, 2021,] File Number [removed: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312519162897/d736510dex41.htm)] [added: 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000119312521222999/d169326dex41.htm)] |

| [removed: 4.2] [added: 4.3] | | [removed: [First] [added: [Second] Supplemental Indenture, dated as of [removed: July 25, 2019,] [added: January 21, 2022,] among Builders FirstSource, Inc., the guarantors [removed: party thereto,] [added: named therein] and Wilmington Trust, National Association, as trustee [removed: and notes collateral agent] [added: (form of Note included therein)] (incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on [removed: July 30, 2019,] [added: January 21, 2022,] File Number [removed: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312519207090/d784014dex43.htm)] [added: 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000119312522014799/d301209dex43.htm)] |

| [removed: 4.3] [added: 4.4] | | [removed: [Second Supplemental Indenture,] [added: [Indenture,] dated as of [removed: April 24, 2020,] [added: June 15, 2022,] among Builders FirstSource, Inc., the guarantors named therein and Wilmington Trust, National Association, as trustee [removed: and as notes collateral agent] (incorporated by reference to Exhibit [removed: 4.4] [added: 4.1] to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on [removed: April 24, 2020,] [added: June 16, 2022,] File Number [removed: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000156459020018519/bldr-ex44_6.htm)] [added: 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000119312522175497/d307421dex41.htm)] |

| [removed: 4.4] [added: 4.1] | | [Indenture, dated as of [removed: July 23, 2021,] [added: February 11, 2020,] among [removed: Builders FirstSource, Inc.,] the [added: Company, the] guarantors named therein and Wilmington Trust, National Association, as trustee (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: July 23, 2021,] [added: February 11, 2020,] File Number [removed: 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000119312521222999/d169326dex41.htm)] [added: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312520031497/d880246dex41.htm)] |

| [removed: 4.5] [added: 10.9] | | [removed: [Second Supplemental Indenture,] [added: [ABL/Bond Intercreditor Agreement,] dated as of [removed: January 21, 2022,] [added: May 29, 2013,] among Builders FirstSource, [removed: Inc., the guarantors named therein] [added: Inc.] and [added: certain of its subsidiaries, as grantors, SunTrust Bank, as ABL agent, and] Wilmington Trust, National Association, as [removed: trustee (form of Note included therein)] [added: notes collateral agent] (incorporated by reference to Exhibit [removed: 4.3] [added: 10.2] to the Company’s Current Report on Form 8-K, filed with the Securities [removed: and] Exchange Commission on [removed: January 21, 2022,] [added: June 3, 2013,] File Number [removed: 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000119312522014799/d301209dex43.htm)] [added: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312513245434/d547322dex102.htm)] |

| [removed: 4.6] [added: 10.21+] | | [removed: [Indenture, dated as of June 15, 2022, among Builders] [added: [Builders] FirstSource, [removed: Inc., the guarantors named therein] [added: Inc. Executive] and [removed: Wilmington Trust, National Association, as trustee] [added: Key Employee Severance Plan] (incorporated by reference to Exhibit [removed: 4.1] [added: 10.34] to the Company’s [removed: Current] [added: Annual] Report on Form [removed: 8-K,] [added: 10-K for the year ended December 31, 2022,] filed with the Securities and Exchange Commission on [removed: June 16, 2022,] [added: February 28, 2023,] File Number [removed: 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000119312522175497/d307421dex41.htm)] [added: 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000095017023004939/bldr-ex10_34.htm)] |

| [removed: 4.7*] [added: 4.5*] | | [Description of Capital [removed: Stock](https://www.sec.gov/Archives/edgar/data/1316835/000095017023004939/bldr-ex4_7.htm)] [added: Stock](https://www.sec.gov/Archives/edgar/data/1316835/000095017024018584/bldr-ex4_5.htm)] |

| [removed: 10.8] [added: 10.10] | | [removed: [ABL/Bond Intercreditor] [added: [Amended and Restated ABL Collateral] Agreement, dated as of [removed: May 29, 2013,] [added: July 31, 2015,] among [removed: Builders FirstSource, Inc. and] [added: the Company,] certain of its subsidiaries, [removed: as grantors, SunTrust Bank, as ABL agent,] and [removed: Wilmington Trust, National Association, as notes collateral agent] [added: SunTrust Bank] (incorporated by reference to Exhibit [removed: 10.2] [added: 10.5] to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on [removed: June 3, 2013,] [added: August 6, 2015,] File Number [removed: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312513245434/d547322dex102.htm)] [added: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312515281152/d89945dex105.htm)] |

| [removed: 10.9] [added: 10.12] | | [Amended and Restated ABL [removed: Collateral] [added: Guarantee] Agreement, dated as of July 31, 2015, among the [removed: Company, certain of its subsidiaries,] [added: Guarantors (as defined therein)] and SunTrust Bank (incorporated by reference to Exhibit [removed: 10.5] [added: 10.7] to the Company’s Current Report on Form 8-K, filed with the Securities Exchange Commission on August 6, 2015, File Number [removed: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312515281152/d89945dex105.htm)] [added: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312515281152/d89945dex107.htm)] |

| [removed: 10.11] [added: 10.13] | | [removed: [Amended] [added: [Lease] and [removed: Restated ABL Guarantee Agreement,] [added: Master Agreement Guaranty,] dated as of July 31, 2015, [removed: among] [added: by] the [removed: Guarantors (as defined therein) and SunTrust Bank] [added: Company in favor of LN Real Estate LLC] (incorporated by reference to Exhibit [removed: 10.7] [added: 10.10] to the Company’s [removed: Current] [added: Quarterly] Report on Form [removed: 8-K,] [added: 10-Q for the quarter ended September 30, 2015,] filed with the Securities [added: and] Exchange Commission on [removed: August 6,] [added: November 9,] 2015, File Number [removed: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312515281152/d89945dex107.htm)] [added: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000156459015010186/bldr-ex1010_344.htm)] |

| [removed: 10.12] [added: 10.17+] | | [removed: [Lease and Master Agreement Guaranty, dated as of July 31, 2015, by the Company in favor] [added: [2019 Form] of [removed: LN Real Estate LLC] [added: Builders FirstSource, Inc. 2014 Incentive Plan Restricted Stock Unit Award Certificate] (incorporated by reference to Exhibit [removed: 10.10] [added: 10.1] to the Company’s Quarterly Report on Form 10-Q for the quarter ended [removed: September 30, 2015,] [added: March 31, 2019,] filed with the Securities and Exchange Commission on [removed: November 9, 2015,] [added: May 3, 2019,] File Number [removed: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000156459015010186/bldr-ex1010_344.htm)] [added: 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000156459019015572/bldr-ex101_104.htm)] |

| [removed: 10.13+] [added: 10.14+] | | [Builders FirstSource, Inc. 2014 Incentive Plan (incorporated herein by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on April 11, 2014, File Number 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312514140211/d709448ddef14a.htm) |

| [added: 10.15+] | | [Amendment to the Builders FirstSource, Inc. 2014 Incentive Plan (incorporated by reference to Appendix A of the Company’s Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on April 14, 2016, File Number 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000119312516541362/d169561ddef14a.htm) |

| [removed: 10.15+] [added: 10.16+] | | [Second Amendment to the Builders FirstSource, Inc. 2014 Incentive Plan (incorporated by reference to Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on February 26, 2021, File Number 0-51351)](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex1014_302.htm) |

| [removed: 10.18+] [added: 10.20+] | | [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)](https://www.sec.gov/Archives/edgar/data/1316835/000156459019015572/bldr-ex101_104.htm)] [added: 333-122788)](https://www.sec.gov/Archives/edgar/data/1316835/000095012305006750/e05301a3exv10w13.txt)] |

| [removed: 10.31+] [added: 10.8] | | [removed: [Employment] [added: [Amendment No. 7 to Credit] Agreement, [removed: entered into] [added: dated] as of [removed: January 31, 2022, between Amy Bass Messersmith] [added: April 3, 2023, among the Company, Truist Bank (as successor by merger to SunTrust Bank), as administrative agent] and [removed: Builders FirstSource, Inc.] [added: collateral agent, and the lenders party thereto] (incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form [removed: 10-Q for the quarter ended March 31, 2022,] [added: 10-Q,] filed with the Securities and Exchange Commission on May [removed: 10, 2022,] [added: 3, 2023,] File Number [removed: 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000156459022019150/bldr-ex102_295.htm)] [added: 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000095017023016998/bldr-ex10_2.htm)] |

| [removed: 10.34*+] [added: 10.19*] | | [Builders FirstSource, Inc. [removed: Executive and Key Employee Severance Plan](https://www.sec.gov/Archives/edgar/data/1316835/000095017023004939/bldr-ex10_34.htm)] [added: Director Compensation Policy](https://www.sec.gov/Archives/edgar/data/1316835/000095017024018584/bldr-ex10_19.htm)] |

| 21.1* | | [Subsidiaries of the [removed: Registrant](https://www.sec.gov/Archives/edgar/data/1316835/000095017023004939/bldr-ex21_1.htm)] [added: Registrant](https://www.sec.gov/Archives/edgar/data/1316835/000095017024018584/bldr-ex21_1.htm)] |

| 23.1* | | [Consent of PricewaterhouseCoopers LLP, Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/1316835/000095017023004939/bldr-ex23_1.htm)] [added: Firm](https://www.sec.gov/Archives/edgar/data/1316835/000095017024018584/bldr-ex23_1.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 Dave Rush as Chief Executive [removed: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000095017023004939/bldr-ex31_1.htm)] [added: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000095017024018584/bldr-ex31_1.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/1316835/000095017023004939/bldr-ex31_2.htm)] [added: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000095017024018584/bldr-ex31_2.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 Dave Rush as Chief Executive Officer and Peter M. Jackson as Chief Financial [removed: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000095017023004939/bldr-ex32_1.htm)] [added: Officer](https://www.sec.gov/Archives/edgar/data/1316835/000095017024018584/bldr-ex32_1.htm)] |

| 101* | | The following financial information from Builders FirstSource, Inc.’s Form 10-K filed on [removed: Feb 28, 2023,] [added: February 22, 2024,] formatted in Inline eXtensible Business Reporting Language (“Inline XBRL”): (i) Consolidated [removed: Statement] [added: Statements] of Operations and Comprehensive Income for the years ended December 31, [removed: 2022, 2021,] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] (ii) Consolidated Balance [removed: Sheet] [added: Sheets] at December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] (iii) Consolidated [removed: Statement] [added: Statements] of Cash Flows for the years ended December 31, [removed: 2022, 2021,] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] (iv) Consolidated [removed: Statement] [added: Statements] of Changes in Stockholders’ Equity for the years ended December 31, [removed: 2022, 2021,] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] 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: 2022] [added: 2023,] has been formatted in Inline XBRL. |

Johnson, Executive Vice President, General Counsel and Corporate Secretary, [removed: 2001 Bryan Street,] [added: 6031 Connection Drive,] Suite [removed: 1600, Dallas,] [added: 400, Irving,] Texas [removed: 75201.][added: 75039.]

| 97.1* | | [Compensation Recoupment Policy](https://www.sec.gov/Archives/edgar/data/1316835/000095017024018584/bldr-ex97_1.htm) |

| | | |

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

| 10.14+ | | |

| 10.16+ | | [2017 Form of Builders FirstSource, Inc. 2014 Incentive Plan 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 September 30, 2017, filed with the Securities and Exchange Commission on November 9, 2017, File Number 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000156459017023142/bldr-ex102_14.htm) |

| 10.17+ | | [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)](https://www.sec.gov/Archives/edgar/data/1316835/000156459018004035/bldr-ex1029_236.htm) |

| 10.19+ | | [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)](https://www.sec.gov/Archives/edgar/data/1574815/000119312513306259/d520315dex1021.htm) |

| 10.20+ | | [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)](https://www.sec.gov/Archives/edgar/data/1574815/000119312513306259/d520315dex1023.htm) |

| 10.21+ | | [Builders FirstSource, Inc. Director Compensation Policy (incorporated by reference to Exhibit 10.20 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022, File Number 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1020_435.htm) |

| 10.22+ | | [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)](https://www.sec.gov/Archives/edgar/data/1316835/000095012305006750/e05301a3exv10w13.txt) |

| 10.23+ | | [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)](https://www.sec.gov/Archives/edgar/data/1316835/000119312520233278/d89165dex101.htm) |

| 10.24+ | | [Amendment No. 1 to Amended and Restated Employment Agreement, entered into as of January 31, 2022, between David E. Flitman and Builders FirstSource, Inc. (incorporated by reference to Exhibit 10.23 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022, File Number 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1023_443.htm) |

| 10.25+ | | [Employment Agreement, entered into as of January 31, 2022, between Peter M. Jackson and Builders FirstSource, Inc. (incorporated by reference to Exhibit 10.24 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022, File Number 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1024_442.htm) |

| 10.26+ | | [Employment Agreement, entered into as of January 31, 2022, between Timothy D. Johnson and Builders FirstSource, Inc. (incorporated by reference to Exhibit 10.25 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022, File Number 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1025_441.htm) |

| 10.27+ | | [Employment Agreement, entered into as of January 31, 2022, between Michael A. Farmer and Builders FirstSource, Inc. (incorporated by reference to Exhibit 10.26 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022, File Number 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1026_440.htm) |

| 10.28+ | | [Employment Agreement, entered into as of January 31, 2022, between Stephen J. Herron and Builders FirstSource, Inc. (incorporated by reference to Exhibit 10.27 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022, File Number 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1027_439.htm) |

| 10.29+ | | [Employment Agreement, entered into as of January 31, 2022, between Michael Hiller and Builders FirstSource, Inc. (incorporated by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022, File Number 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1028_438.htm) |

| 10.30+ | | [Employment Agreement, entered into as of January 31, 2022, between Scott L. Robins and Builders FirstSource, Inc. (incorporated by reference to Exhibit 10.29 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 1, 2022, File Number 001-40620)](https://www.sec.gov/Archives/edgar/data/1316835/000156459022007980/bldr-ex1029_437.htm) |

| 10.32+ | | [Amended and Restated Employment Agreement, entered into as of January 1, 2021, between David E. Rush and Builders FirstSource, Inc. (incorporated by reference to Exhibit 10.33 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the Securities and Exchange Commission on February 26, 2021, File Number 0-51357)](https://www.sec.gov/Archives/edgar/data/1316835/000156459021009308/bldr-ex1033_303.htm) |

| 10.33+ | | [Consulting Agreement, dated as of March 5, 2021, between Builders FirstSource, Inc. and M. Chad Crow (incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, filed with the Securities and Exchange Commission on May 6, 2021, File Number 0-51357](https://www.sec.gov/Archives/edgar/data/1316835/000156459021024887/bldr-ex104_24.htm)[)](https://www.sec.gov/Archives/edgar/data/1316835/000156459021024887/bldr-ex104_24.htm) |

| /s/ DAVE RUSH | | Chief Executive Officer and Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ PETER M. JACKSON | | Executive Vice President and Chief Financial Officer | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ JAMI BECKMANN | | Senior Vice President and Chief Accounting Officer | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ PAUL S. LEVY | | Chairman and Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ MARK ALEXANDER | | Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ CORY J. BOYDSTON | | Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ DIRKSON R. CHARLES | | Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ CLEVELAND A. CHRISTOPHE | | Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ WILLIAM B. HAYES | | Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ BRETT N. MILGRIM | | Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| /s/ JAMES O’LEARY | | Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

| Craig A. Steinke | | Director | | [removed: Feb 28, 2023] [added: February 22, 2024] |

February 22, 2024

Feb 28, 2023