Builders FirstSource Inc. (NYSE:BLDR)

Current Income Tax Expense

The current income tax expense demonstrates a significant upward trend over the five-year period. Starting from $3,741 thousand in 2018, it shows steady increases in 2019 and 2020, reaching $9,952 thousand and $78,015 thousand respectively. This rising pattern becomes more pronounced in 2021 and 2022, with considerable jumps to $560,704 thousand and $914,925 thousand, indicating substantial growth in current tax obligations.

Deferred Income Tax Expense

The deferred income tax expense exhibits a contrasting trend, beginning at $51,823 thousand in 2018 and slightly declining to $50,994 thousand in 2019. It then substantially decreases in 2020 to $16,614 thousand, followed by a further decline into negative territory in 2021 and 2022 with values of -$34,573 thousand and -$92,461 thousand respectively. This shift from a positive to a negative deferred tax expense suggests an increasing recognition of deferred tax assets or a reduction in deferred tax liabilities during the latter years.

Total Income Tax Expense

The total income tax expense reflects the combined impact of current and deferred taxes and fluctuates over the observed period. It increases steadily from $55,564 thousand in 2018 to $60,946 thousand in 2019 and then more markedly to $94,629 thousand in 2020. A dramatic surge occurs in 2021 and 2022, reaching $526,131 thousand and $822,464 thousand respectively. These substantial increases correspond primarily to the sharp rise in current tax expense, even as deferred tax expenses move negatively, partially offsetting the total tax expense.

Insights

The data indicates escalating taxable income or changes in tax rates affecting the current tax expense significantly, especially in the last two years. The decreasing and negative deferred tax expenses could be tied to accounting adjustments, tax planning initiatives, or changes in timing differences between book and tax income. Overall, the upward trajectory in total income tax expenses points to growing tax liabilities, with deferred tax considerations moderating but not reversing this trend.

The data presents multiple components influencing the overall effective tax rate for continuing operations over a five-year period, ending in 2022. The analysis reveals certain trends and variations within these components.

Statutory Federal Income Tax Rate

The statutory federal income tax rate remains constant at 21% throughout the entire period, indicating no legislative changes affecting this rate over these years.

State Income Taxes, Net of Federal Income Tax

This component exhibits a declining trend, starting at 4.3% in 2018 and falling to 2.3% by 2022. There is a noticeable drop between 2018 and 2019, followed by some fluctuations and an overall gradual decrease. This decline suggests either a reduction in state tax obligations or more effective tax planning related to state taxes.

Stock-Based Compensation Windfall Benefit

The percentage values are all negative, indicating a tax benefit realized from stock-based compensation. The magnitude of this benefit is decreasing over time (from -1.6% in 2018 to around -0.5% in 2022), implying the windfall effect diminishes progressively through these years.

Permanent Difference, 162(m) Limitation

This factor remains relatively stable, with small positive values fluctuating between 0.3% and 0.6%, showing limited impact on the overall tax rate and no clear trend either upward or downward.

Permanent Difference, Credits

A consistent upward trend is observable, where the negative impact (tax benefit) lessens markedly over time, moving from -4.6% in 2018 to -0.2% in 2022. This suggests a reduction in credits being applied, which could contribute to an increasing effective tax rate unless offset by other factors.

Permanent Difference, Other

Values decline from 1.4% in 2018 to 0.2% in 2021, after which the data is missing for 2022. The positive values indicate a tax cost component that is diminishing over time.

Other

This component shows minor fluctuations around zero, with a small negative dip in 2019 and 2020, no value in 2021, and a slight positive value in 2022, suggesting a marginal and volatile influence on the effective tax rate.

Effective Tax Rate for Continuing Operations

The effective tax rate rises gradually from 21.3% in 2018 to a peak of 23.4% in 2021, before slightly declining to 23.0% in 2022. This upward movement reflects the net effect of decreasing tax credits and state taxes balanced against other factors such as stock-based compensation benefits and permanent differences. The overall increase suggests a modest rise in tax burden over the period.

In summary, the data depicts a stable federal tax rate environment, with state taxes decreasing but tax credits significantly diminishing, resulting in an overall increase in the effective tax rate. Benefits from stock-based compensation windfalls are waning, while other permanent differences have limited and somewhat decreasing impact. The culmination of these trends points toward a slowly rising tax expense relative to income from continuing operations over the examined timeframe.

Accrued Expenses

The accrued expenses demonstrate a fluctuating upward trend over the five-year period, increasing from $10,019 thousand in 2018 to $33,146 thousand in 2022. Notably, there was a sharp increase after 2019, with the amount nearly quadrupling by 2021.

Insurance Reserves

Insurance reserves steadily increased from $13,245 thousand in 2018 to $33,824 thousand in 2022, almost doubling between 2020 and 2021, indicating a significant rise in reserves set aside during this period.

Stock-based Compensation Expense

Stock-based compensation expenses declined from $4,770 thousand in 2018 to a low of $3,325 thousand in 2019 but subsequently rose gradually to $5,696 thousand by 2022, reflecting increased compensation costs in recent years.

Accounts Receivable

Accounts receivable exhibited a marked upward trajectory, growing from $3,892 thousand in 2018 to $16,480 thousand in 2022. The growth was particularly steep between 2020 and 2022, more than doubling in that interval.

Inventories

Inventories experienced substantial volatility, dropping sharply from $13,348 thousand in 2018 to $5,394 thousand in 2019, then recovering steadily to reach $14,965 thousand in 2022. This reflects an initial reduction followed by consistent inventory buildup after 2019.

Operating Loss and Credit Carryforwards

Operating loss and credit carryforwards declined from $38,813 thousand in 2018 to $10,812 thousand in 2020, followed by a partial recovery to $18,356 thousand in 2021 before decreasing again to $14,221 thousand in 2022, indicating fluctuation in tax benefit carryforwards.

Operating Lease Liabilities

Operating lease liabilities were introduced in 2019 with $74,650 thousand and showed substantial increases through 2022, reaching $119,232 thousand. This suggests growing obligations related to leased assets, with a notable acceleration post-2020.

Other Assets and Liabilities

The "Other" category showed variable data with a slight increase from $1,677 thousand in 2019 to $4,751 thousand in 2022, implying growth in miscellaneous asset or liability categories. An adjacent data row labeled "Other" shows missing data in subsequent years, suggesting inconsistency or reclassification.

Deferred Tax Assets and Valuation Allowance

Deferred tax assets before valuation allowance increased consistently from $84,087 thousand in 2018 to $242,315 thousand in 2022, indicating growing recognized future tax benefits. The valuation allowance was stable around -$2,400 thousand until 2021 but was not reported for 2022. Net deferred tax assets rose significantly until 2020 but turned sharply negative afterward, reaching a net liability of -$269,660 thousand in 2022, largely influenced by growing deferred tax liabilities.

Prepaid Expenses

Prepaid expenses remained negative throughout the period, with values becoming more negative particularly in 2021 (-$8,960 thousand) and slightly improving in 2022 (-$7,953 thousand), indicating ongoing prepaid amounts impacting liquidity.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets showed an increasing negative balance, escalating dramatically from -$28,055 thousand in 2018 to -$231,223 thousand in 2022, with a particularly large jump between 2020 and 2021, reflecting impairments or write-downs.

Property, Plant and Equipment (PP&E)

PP&E assets expanded negatively over the period, from -$26,670 thousand in 2018 to -$158,173 thousand in 2022, similarly showing substantial growth in recorded negative balances, likely indicating accumulated depreciation, impairments, or accounting classification.

Operating Lease Right-of-Use Assets

Operating lease right-of-use assets appeared from 2019 onward, with negative values increasing from -$73,171 thousand in 2019 to -$114,626 thousand in 2022, in line with corresponding increases in lease liabilities, suggesting recognition of lease assets parallel to liabilities.

Deferred Tax Liabilities

Deferred tax liabilities grew markedly from -$58,912 thousand in 2018 to -$511,975 thousand in 2022, demonstrating a significant accumulation of future tax obligations over the period, substantially outweighing deferred tax assets and influencing the net deferred tax position negatively.

Deferred Tax Assets

Deferred tax assets exhibited a considerable decline over the observed period. Starting at approximately US$22.8 million at the end of 2018, these assets decreased significantly to around US$8.4 million by the end of 2019. The downward trend continued into 2020, with assets further diminishing to slightly over US$4.6 million. Data beyond 2020 is unavailable, indicating either a cessation or non-reporting of deferred tax assets in subsequent years. This trend may imply a reduced expectation of future taxable income against which these assets can be utilized.

Deferred Tax Liabilities

Deferred tax liabilities were non-existent or not reported at the end of 2018 but rose sharply beginning in 2019, reaching approximately US$36.6 million. The upward trajectory continued into 2020, with liabilities increasing to nearly US$49.5 million. A significant surge is observed in 2021, with deferred tax liabilities reaching over US$362 million, representing a substantial increase relative to previous years. In 2022, liabilities slightly decreased yet remained substantially high at around US$269.7 million. This pronounced increase may reflect changes in tax regulations, asset revaluations, or shifts in the company's financial structure and obligations.

The financial data reveals significant growth and fluctuations in the company's balance sheet and profitability metrics over the analyzed period from 2018 to 2022.

Total Assets

Reported total assets demonstrated a consistent upward trend from approximately $2.93 billion in 2018 to over $10.7 billion in 2021, before a slight decline to $10.6 billion in 2022. The adjusted total assets closely mirror these values, indicating minor adjustments primarily in the earlier years, with both metrics reflecting substantial asset growth likely due to expansion or acquisitions.

Total Liabilities

The reported total liabilities increased steadily from around $2.34 billion in 2018 to $5.76 billion in 2021, followed by a modest reduction to approximately $5.63 billion in 2022. The adjusted liabilities are slightly lower than the reported figures in most years, suggesting that deferred income tax adjustments reduced liabilities marginally. Overall, liabilities have grown, but not as rapidly as assets, contributing to an improved financial structure.

Stockholders’ Equity

Reported equity rose markedly from $596 million in 2018 to nearly $4.8 billion in 2021, with a further increase to about $4.96 billion in 2022. Adjusted equity, which accounts for the deferred tax effects, consistently exceeds reported equity by a modest margin each year, peaking at approximately $5.23 billion in 2022. The equity's strong growth reflects retained earnings accumulation and possibly capital injection, resulting in a strengthened equity base.

Net Income

Reported net income exhibited solid growth from $205 million in 2018 to $1.73 billion in 2021, with a substantial jump to nearly $2.75 billion in 2022. Adjusted net income, which includes deferred tax adjustments, is consistently higher than reported net income, indicating that deferred tax items positively impact net earnings. The trend reflects improved profitability, with particularly notable gains in 2021 and 2022.

In summary, the company has shown considerable expansion in asset base and equity over the analyzed period, supported by robust profitability increases. Adjusted figures that incorporate deferred income tax impacts generally indicate a stronger financial position and higher earnings than reported numbers alone suggest. The overall financial trends point to successful growth strategies and enhanced shareholder value.

Net Profit Margin Trends

Both reported and adjusted net profit margins demonstrate a clear upward trend over the five-year period. Reported margins increased steadily from 2.66% in 2018 to 12.1% in 2022, with a particularly notable rise between 2020 and 2022. Adjusted margins follow a similar trajectory, moving from 3.33% to 11.69%, suggesting improved profitability even after accounting for tax adjustments.

Total Asset Turnover Trends

Reported and adjusted total asset turnover ratios show a declining pattern from 2018 through 2021, dropping from around 2.63-2.65 to 1.86 in 2021. However, there is a moderate recovery in 2022 to 2.14, indicating slightly improved efficiency in asset utilization during the most recent year after several years of decline.

Financial Leverage Trends

Financial leverage ratios, both reported and adjusted, consistently trend downward throughout the period. Reported financial leverage drops sharply from 4.92 in 2018 to 2.14 in 2022, while adjusted leverage decreases from 5.07 to 2.02. This suggests a considerable reduction in reliance on debt or other liabilities to finance assets, implying a stronger equity base or deleveraging strategy over time.

Return on Equity (ROE) Trends

Reported ROE exhibits fluctuations with an overall upward shift, declining from 34.41% in 2018 to a low in the range of 26-27% in 2019-2020, then surging to 55.4% in 2022. Adjusted ROE follows a similar pattern but with lower volatility, initially peaking at 44.81% in 2018, falling to approximately 27.57% in 2020, and rising to 50.78% by 2022. This indicates enhanced shareholder returns primarily in the latter years, supported by profitability gains and prudent financial management.

Return on Assets (ROA) Trends

ROA metrics, both reported and adjusted, indicate progressive enhancement in asset profitability. Reported ROA increases from 7.00% in 2018 to a peak of 25.95% in 2022, while adjusted ROA moves from 8.83% down slightly in 2020 but then rises strongly to 25.08% by 2022. This reflects the company's growing efficiency in generating profits from its asset base, particularly in the recent years.

Overall Insight

The data portrays a company experiencing significant improvements in profitability margins, returns on equity and assets, alongside a strategic reduction in financial leverage. Despite a temporary decline in asset turnover efficiency through 2021, the recovery in 2022 aligns with overall better financial performance. These trends suggest strengthened operational performance and a shift toward a healthier capital structure over the observed period.

Net Income Trends

The reported net income showed a consistent increase from 2018 through 2020, rising from approximately $205 million to $314 million. A significant jump occurred in 2021, with reported net income reaching over $1.7 billion, followed by a further increase in 2022 to nearly $2.75 billion. Adjusted net income followed a similar pattern, beginning at around $257 million in 2018 and increasing steadily through 2020. Like the reported figures, adjusted net income saw a substantial rise in 2021 to around $1.69 billion, with a slight decrease compared to reported income in 2022, totaling about $2.66 billion.

Profit Margin Analysis

The reported net profit margin showed a gradual improvement from 2.66% in 2018 to 3.66% in 2020, before sharply increasing to 8.67% in 2021 and further to 12.1% in 2022. The adjusted net profit margin mirrored this trend but exhibited slightly lower percentages each year. It rose from 3.33% in 2018 to 3.86% in 2020, then surged to 8.5% in 2021 and 11.69% in 2022. The close alignment of reported and adjusted margins over the years indicates consistent operational profitability, with tax-related adjustments having a moderate impact on margins.

Overall Insights

The data reflects a period of notable growth in both reported and adjusted net incomes, particularly marked by sharp increases in 2021 and 2022. The substantial upward shifts in net profit margins during these years suggest improved efficiency or favorable market conditions contributing to enhanced profitability. The relatively parallel movement between reported and adjusted figures indicates that deferred income tax adjustments have not drastically altered the overall financial profitability trends. This strong performance trajectory points to a significant strengthening of the company’s financial position over the five-year period.

The analysis of the financial data reveals several notable trends over the period from the end of 2018 through the end of 2022.

Total Assets

The reported total assets show a consistent increase from 2018 through 2021, rising from approximately 2.93 billion USD to over 10.7 billion USD, which suggests significant growth or acquisition activity during this period. However, there is a slight decline in 2022 to nearly 10.6 billion USD. The adjusted total assets, which account for deferred income tax adjustments, closely follow the same pattern and amounts, indicating minimal impact from these adjustments on total assets.

Total Asset Turnover

The reported total asset turnover ratio shows a declining trend from 2.63 in 2018 down to a low of 1.86 in 2021, indicating that the company generated less revenue per dollar of assets over time until 2021. Nevertheless, this ratio rebounds somewhat in 2022 to 2.14, suggesting improved efficiency or increased revenue generation relative to asset base. The adjusted ratio mirrors the reported values precisely, reflecting that deferred taxes do not significantly affect this efficiency metric.

Overall, the financial data point to substantial asset growth up to 2021 followed by stabilization or slight reduction. Meanwhile, asset utilization efficiency decreased until 2021 but shows signs of recovery in the final year analyzed. Consistency between reported and adjusted figures across both assets and turnover ratios suggests that deferred income tax adjustments have a negligible effect on these key financial indicators.

Total Assets

The reported total assets showed a steady increase from 2,932,309 thousand USD in 2018 to 4,173,671 thousand USD in 2020, followed by a substantial jump to over 10.7 million thousand USD in 2021. In 2022, total assets slightly decreased but remained close to the 2021 level, at approximately 10.6 million thousand USD. The adjusted total assets closely mirrored this trend, with only minor differences in values, indicating consistency in asset valuation after tax adjustments.

Stockholders’ Equity

Reported stockholders’ equity exhibited a strong upward trend from 596,338 thousand USD in 2018 to 1,152,783 thousand USD in 2020. There was then a significant increase to nearly 4.8 million thousand USD in 2021, with a marginal increase reaching approximately 4.96 million thousand USD in 2022. Adjusted stockholders’ equity followed a similar pattern, albeit with slightly higher values in some years, particularly in 2021 and 2022, indicating that deferred income tax adjustments had a positive effect on equity figures in the later periods.

Financial Leverage

Reported financial leverage ratios decreased steadily from 4.92 in 2018 to 2.14 in 2022, suggesting a consistent reduction in reliance on debt relative to equity over this period. The adjusted financial leverage figures reflect a similar declining trend, starting at 5.07 in 2018 and ending at 2.02 in 2022, reinforcing the observation of deleveraging. The close alignment between reported and adjusted leverage ratios indicates that tax-related adjustments had a minimal impact on the leverage metric overall.

The analysis of the provided financial data over the five-year period reveals several noteworthy trends and changes in the company's financial performance and position.

Net Income

Both reported and adjusted net income show an increasing trend from 2018 to 2022, with a significant jump observed in 2021 and 2022. Reported net income increased from approximately 205 million USD in 2018 to nearly 2.75 billion USD in 2022. Similarly, adjusted net income rose from around 257 million USD in 2018 to approximately 2.66 billion USD in 2022. The gap between reported and adjusted net income narrows over the years, indicating adjustments becoming less significant relative to net income.

Stockholders’ Equity

Stockholders’ equity, both reported and adjusted, displayed a substantial increase over the period, particularly from 2020 to 2021. Reported stockholders’ equity increased from about 596 million USD in 2018 to nearly 4.96 billion USD in 2022. Adjusted stockholders’ equity closely follows this pattern, rising from approximately 574 million USD to around 5.23 billion USD in the same period. The divergence between reported and adjusted figures is relatively small, suggesting consistent accounting treatments of equity adjustments.

Return on Equity (ROE)

Reported ROE showed fluctuations with a decline from 34.41% in 2018 to around 26.89% in 2019, followed by a slight increase and a peak of 55.4% in 2022. Adjusted ROE demonstrated a similar pattern, starting higher at 44.81% in 2018, declining and then rising again, reaching 50.78% in 2022. The adjusted ROE values are generally higher than the reported ROE except in 2022, implying that adjustments had variable impacts on profitability relative to equity over the years.

Overall Insights

The data reflects strong growth in net income and equity, indicating an expanding company size and profitability. The significant increases in 2021 and 2022 suggest strategic or operational improvements or market conditions favorable to the company. The rise in ROE, especially in the last reported year, points to enhanced efficiency in generating earnings from equity. The narrowing differences between reported and adjusted figures over time suggest that the company’s reported financials are becoming more aligned with adjusted financial measures, potentially reflecting improved earnings quality or reduced tax and other adjustments.

The financial data reveals several notable trends over the five-year period under review. Both reported and adjusted net income figures exhibit a consistent upward trajectory, with reported net income increasing from approximately 205 million to nearly 2.75 billion US dollars. Adjusted net income follows a similar pattern, rising from roughly 257 million to 2.66 billion US dollars. This signifies substantial growth in profitability, particularly sharp between 2020 and 2021, and continuing into 2022, despite a slight moderated pace in adjusted net income growth in the final year.

Total assets have also experienced pronounced growth over the period. Reported total assets increased from about 2.93 billion at the end of 2018 to a peak exceeding 10.7 billion by the end of 2021, with a slight decline to approximately 10.6 billion in 2022. Adjusted total assets closely mirror this trend, indicating minimal adjustments between reported and adjusted figures. The dramatic asset base expansion coincides with the sharp increase in net income, suggesting significant scaling of operations or asset acquisitions during this timeframe.

Return on Assets (ROA), both reported and adjusted, demonstrates improvement but with some fluctuation. Reported ROA started at 7% in 2018, dipped slightly in 2019 to 6.83%, then rose steadily to a high of 25.95% in 2022. Adjusted ROA shows a comparable pattern, beginning higher at 8.83% in 2018, experiencing a mild decline to 7.92% in 2020, and increasing to 25.08% by 2022. The sharp rise in ROA in the last two years reflects enhanced efficiency in asset utilization or improved profitability relative to the asset base.

Overall, the data indicates robust financial expansion characterized by strong income growth and significantly enlarged asset holdings. The increasing ROA values suggest that the company is not only growing in size but also improving its effectiveness in generating profits from its assets. Minor discrepancies between reported and adjusted figures imply some tax-related adjustments, yet these do not materially alter the underlying financial trends observed.

Net Income

Steady and substantial increases in both reported and adjusted figures, with reported net income peaking at nearly 2.75 billion USD in 2022.

Total Assets

Marked growth in total assets from under 3 billion USD in 2018 to over 10 billion USD by 2021, stable thereafter with minimal difference between reported and adjusted values.

Return on Assets (ROA)

Improvement in profitability ratios, with reported ROA climbing from 7% to almost 26% and adjusted ROA showing a similar upward trend despite mid-period fluctuations.