Builders FirstSource Inc. (NYSE:BLDR)

Goodwill

The goodwill balance showed a steady increase from 2018 to 2020, rising from approximately $740 million to $785 million. From 2020 to 2021, there was a significant surge, with goodwill escalating sharply to over $3.2 billion, and a further modest increase to about $3.46 billion in 2022. This jump indicates notable business acquisitions or revaluations occurring in 2021.

Customer Relationships

Customer relationships intangible assets increased steadily from $149 million in 2018 to nearly $195 million in 2020. A dramatic rise occurred in 2021, reaching approximately $1.78 billion, followed by a further increase to about $2.03 billion in 2022. This pattern parallels the goodwill trend, suggesting significant acquisitions enhancing customer-related intangibles.

Trade Names

Trade names values remained stable at around $51 million from 2018 through 2020. In 2021, the value increased nearly fourfold to about $201 million, maintaining this level in 2022. This increase aligns with the overall trend of elevated intangible assets due to acquisitions.

Subcontractor Relationships

This asset category only appears from 2019 onward, starting at $4.7 million, rising slightly to $5.44 million in 2020, and then stabilizing at that level through 2022. The relatively small and stable value compared to other intangible assets suggests a specific and contained acquisition or valuation addition.

Non-compete Agreements

Non-compete agreements increased from $1.4 million in 2018 to approximately $3.7 million in 2020. They experienced a notable jump to about $13.5 million in 2021, followed by a modest rise to nearly $15 million in 2022. This reflects increased valuation or purchase of non-compete covenants, likely linked to acquisitions.

Developed Technology

Developed technology intangibles are reported only in 2021 and 2022, at a constant value of $95.6 million in both years. The introduction of this asset suggests recognition of technology-related intangible assets in recent periods, possibly from new acquisitions.

Favorable Lease Intangibles

This intangible asset is reported only in 2018, with a value of approximately $6.4 million, and is absent in subsequent years, indicating either disposal, reclassification, or impairment.

Intangible Assets, Gross Carrying Amount

The gross carrying amount of intangible assets showed a steady increase from around $208 million in 2018 to approximately $257 million in 2020. From 2020 to 2021, there was a substantial increase to about $2.1 billion, with a further rise to approximately $2.35 billion in 2022. This significant growth correlates with the surge in goodwill and other intangibles, consistent with large acquisitions.

Accumulated Amortization

Accumulated amortization increased steadily in absolute value from approximately $105 million in 2018 to $137 million in 2020. Following the large increase in intangible assets in 2021, accumulated amortization rose markedly to nearly $494 million and further to approximately $797 million in 2022, reflecting amortization of newly acquired intangible assets.

Intangible Assets, Net

Net intangible assets rose from about $103 million in 2018 to approximately $128 million in 2019, then declined slightly to $120 million in 2020. A remarkable increase occurred in 2021, with net intangibles jumping to roughly $1.6 billion, followed by a slight decrease to about $1.55 billion in 2022. This pattern is consistent with significant acquisitions, partially offset by amortization.

Goodwill and Intangible Assets Total

The combined total of goodwill and intangible assets remained relatively stable between $843 million and $905 million from 2018 through 2020. It then surged dramatically to about $4.87 billion in 2021 and further to approximately $5 billion in 2022, underscoring a major increase in intangible asset base, likely due to strategic acquisitions.

Total Assets

The reported total assets show a steady increase from 2018 to 2020, rising from approximately $2.93 billion to $4.17 billion. There is a significant jump in 2021 to around $10.71 billion, followed by a slight decline in 2022 to approximately $10.60 billion. The adjusted total assets follow a similar pattern with lower values reflecting adjustments primarily for goodwill. The adjusted assets increase from about $2.19 billion in 2018 to $3.39 billion in 2020, then surge to approximately $7.44 billion in 2021 before slightly decreasing to $7.14 billion in 2022.

Stockholders’ Equity

The reported stockholders’ equity demonstrates a consistent upward trend from 2018 through 2020, growing from $596 million to about $1.15 billion. There is a dramatic increase in 2021 to $4.80 billion, which is maintained in 2022 with a slight increase to $4.96 billion. The adjusted stockholders’ equity figures differ notably, starting negative in 2018 at approximately -$144 million, then turning positive in 2019 at $56 million. This adjusted equity grows steadily each year, reaching about $368 million in 2020 and then sharply increasing to $1.53 billion in 2021 and slightly decreasing to $1.51 billion in 2022.

Overall Analysis

The data reflects significant growth in both assets and equity over the period analyzed, particularly between 2020 and 2021. The notable jump in reported total assets and equity in 2021 suggests a major acquisition or similar event impacting the balance sheet, as also indicated by the discrepancy between reported and goodwill adjusted figures. Adjusted figures indicate that goodwill plays a substantial role in the reported values, with the adjusted equity remaining positive but considerably lower than the reported equity post-adjustment. The decrease in adjusted total assets and equity in 2022 may indicate asset impairments, disposals, or write-downs affecting the adjusted balances. Overall, the data suggests strong expansion with underlying intangible asset considerations affecting reported equity and asset values.

Total Asset Turnover

The reported total asset turnover ratio shows a declining trend from 2.63 in 2018 to a low of 1.86 in 2021, followed by a modest recovery to 2.14 in 2022. In contrast, the adjusted total asset turnover ratio, which accounts for goodwill adjustments, also declines from 3.52 in 2018 to 2.53 in 2020, but then exhibits a steady improvement, reaching 3.18 by 2022. This suggests that when excluding goodwill, asset utilization efficiency has improved in recent years despite the reported figures showing a dip.

Financial Leverage

The reported financial leverage ratio demonstrates a consistent decrease from 4.92 in 2018 to 2.14 in 2022, indicating a reduction in reliance on debt or a change in balance sheet structure. The adjusted financial leverage ratio, which incorporates goodwill adjustments, starts extremely high at 44.35 in 2019, then sharply declines in subsequent years to 4.74 in 2022. This sharp decrease might reflect impaired goodwill or asset revaluations significantly impacting leverage metrics, making the recent years' leverage levels more comparable to the reported figures.

Return on Equity (ROE)

The reported ROE fluctuates but overall increases from 34.41% in 2018, dipping slightly in 2019 and 2020, then rising to a notable 55.4% by 2022. The adjusted ROE, available from 2019 onwards, displays much higher values, with an initial extreme level of 396.58%, decreasing to 182.6% by 2022. The high adjusted ROE values suggest significant effects from goodwill adjustments, which amplify equity returns but also indicate substantial volatility in the equity base or earnings quality when factoring out goodwill.

Return on Assets (ROA)

The reported ROA remains relatively stable at around 7% from 2018 to 2020, then substantially increases to 16.1% in 2021 and 25.95% in 2022, highlighting improving profitability relative to total assets. The adjusted ROA shows a similar but more pronounced trend, starting at 9.36% in 2018, gradually increasing to 9.25% in 2020, then jumping sharply to 23.18% in 2021 and 38.52% in 2022. This indicates that excluding goodwill impacts reveals stronger asset profitability growth in recent years compared to reported metrics.

The financial data reveals distinct trends in the total assets and asset turnover ratios over the five-year period.

Total Assets (Reported vs. Adjusted)

The reported total assets increased steadily from 2.93 billion US dollars in 2018 to a peak of approximately 10.71 billion in 2021, followed by a slight decrease to around 10.60 billion in 2022. This indicates significant growth over the initial years, with the largest jump occurring between 2020 and 2021, before stabilizing in 2022.

The adjusted total assets, which account for goodwill adjustments, exhibit a similar pattern but with lower absolute values. Starting at about 2.19 billion in 2018, adjusted assets rose consistently to approximately 7.44 billion in 2021 then dipped slightly to 7.14 billion in 2022. This suggests that intangible assets like goodwill constitute a substantial portion of total assets, particularly notable in the years 2021 and 2022.

Total Asset Turnover (Reported vs. Adjusted)

The reported total asset turnover ratio shows a decreasing trend from 2.63 in 2018 to 1.86 in 2021, indicating that the company was generating less revenue per dollar of assets over time. However, in 2022, this ratio rebounded to 2.14, signaling an improvement in asset utilization efficiency.

In contrast, the adjusted total asset turnover begins at a higher level of 3.52 in 2018 and decreases through 2020 to 2.53. Unlike the reported ratio, it then increases slightly in 2021 to 2.67 and further rises to 3.18 in 2022, reflecting a stronger recovery and heightened efficiency when excluding goodwill.

Overall, the data indicates substantial asset growth primarily between 2020 and 2021, followed by a minor contraction in 2022. Despite the growth in asset base, efficiency as measured by turnover ratios declined initially but improved in the final year, especially when adjusted for goodwill. This suggests enhanced management of core operating assets and potentially better revenue generation relative to tangible assets in the most recent period.

The analysis of the financial data over the five-year period reveals significant developments in both reported and goodwill-adjusted figures.

Total Assets

Reported total assets increased consistently from 2,932,309 thousand USD at the end of 2018 to a peak of 10,714,343 thousand USD at the end of 2021, before marginally declining to 10,595,160 thousand USD in 2022. The adjusted total assets exhibit a similar upward trend, growing from 2,191,898 thousand USD in 2018 to 7,444,151 thousand USD in 2021, then declining slightly to 7,138,306 thousand USD in 2022. Both metrics demonstrate substantial asset growth, particularly between 2020 and 2021.

Stockholders’ Equity

The reported stockholders’ equity showed a strong upward trajectory, rising from 596,338 thousand USD in 2018 to 4,802,481 thousand USD in 2021, with a slight increase to 4,962,566 thousand USD in 2022. In contrast, the adjusted stockholders’ equity started at a negative value of -144,073 thousand USD in 2018, turned positive by 2019 at 55,931 thousand USD, and continued to increase steadily, reaching 1,532,289 thousand USD in 2021 and slightly decreasing to 1,505,712 thousand USD in 2022. The negative adjusted equity in 2018 suggests significant goodwill impairments or adjustments, which were subsequently improved over the years.

Financial Leverage

The reported financial leverage ratio declined continuously over the period, from 4.92 in 2018 to 2.14 in 2022, indicating a decreasing reliance on debt relative to equity. The adjusted financial leverage ratio shows a more volatile pattern. No data is available for 2018, but it was extremely high at 44.35 in 2019, before sharply decreasing to 9.22 in 2020 and further lowering to around 4.74 by 2022. This reduction indicates improved financial stability when goodwill adjustments are considered, with leverage ratios converging closer to the reported ratios toward the end of the period.

Overall, the company has experienced substantial growth in asset base and equity, both reported and adjusted for goodwill, with corresponding reductions in financial leverage. The significant improvement in adjusted equity and leverage ratios over time indicates better capitalization and reduced financial risk when excluding goodwill effects, highlighting effective management of intangible assets and liabilities.

Reported Stockholders’ Equity

The reported stockholders’ equity showed a consistent upward trend from 2018 to 2020, rising from approximately $596 million to $1.15 billion. A significant increase occurred between 2020 and 2021, with the equity value surging to about $4.8 billion. In 2022, the reported equity further increased slightly to approximately $4.96 billion. This trajectory indicates strong growth in equity over the analyzed period, particularly marked by the notable jump in 2021.

Adjusted Stockholders’ Equity

The adjusted stockholders’ equity started with a negative value in 2018, indicating an adjusted deficit of about $144 million. A positive turnaround was observed in 2019, with equity rising to roughly $56 million, followed by a steady increase through 2020 and 2021 to $367 million and $1.53 billion, respectively. In 2022, a slight decrease occurred, bringing adjusted equity down to approximately $1.51 billion. Overall, the adjusted equity showed a recovery from deficit to strong positive values, despite a minor retreat in the final year.

Reported Return on Equity (ROE)

The reported ROE exhibited fluctuations but generally remained robust. Starting at 34.41% in 2018, it decreased to 26.89% in 2019, then slightly increased to 27.2% in 2020. A substantial rise was recorded in 2021, reaching 35.93%, followed by a sharp increase to 55.4% in 2022. This pattern indicates improving profitability relative to equity, with a notable surge in returns during the last two years.

Adjusted Return on Equity (ROE)

The adjusted ROE data is incomplete for 2018 but shows an exceptionally high value of 396.58% in 2019, which then declined to 85.32% in 2020. A rebound occurred in 2021 with a rise to 112.6%, continuing upward to 182.6% in 2022. Despite volatility, the adjusted ROE remains markedly elevated, demonstrating strong adjusted profitability and significant fluctuations in the company’s performance metric over time.

Total Assets

The reported total assets demonstrated a consistent increase from 2018 to 2021, expanding from approximately $2.93 billion to $10.71 billion. In 2022, there was a slight decrease to about $10.60 billion. Adjusted total assets similarly increased from around $2.19 billion in 2018 to $7.44 billion in 2021, followed by a modest decline to $7.14 billion in 2022. This pattern suggests substantial asset growth over the first four years, with a stabilization or slight contraction in the final year.

Return on Assets (ROA)

The reported ROA exhibited a generally upward trend, beginning at 7% in 2018 and rising steadily to 16.1% in 2021, before sharply increasing to 25.95% in 2022. The adjusted ROA, which accounts for goodwill adjustments, showed a similar trajectory but with consistently higher percentages. It rose from 9.36% in 2018 to an especially notable 38.52% in 2022. This indicates improved asset efficiency and profitability when excluding goodwill, with a marked performance enhancement in the most recent period.

Summary of Trends

Over the examined periods, the company experienced substantial asset growth before reaching a plateau or slight decline in 2022. Concurrently, profitability relative to assets improved markedly, especially after adjustments for goodwill. The increasing gap between reported and adjusted ROA suggests that the adjusted measures provide a clearer indication of underlying operational performance improvements. These trends point to strengthened financial efficiency alongside asset base expansion, culminating in peak profitability as of the latest year.