Builders FirstSource Inc. (NYSE:BLDR)

The financial metrics over the analyzed period exhibit marked improvements in the company's leverage and coverage ratios, indicating strengthening financial stability and enhanced ability to service debt obligations.

Debt to Equity Ratios

There is a notable downward trend in the debt to equity ratio, decreasing consistently from 2.62 in 2018 to 0.60 by the end of 2022. This suggests a significant reduction in reliance on debt financing relative to equity. When including operating lease liabilities, the ratio follows a similar pattern, albeit consistently higher, moving from 2.62 in 2018 to 0.70 in 2022.

Debt to Capital Ratios

This ratio declines from 0.72 in 2018 to 0.38 in 2022, reflecting a reduction in the proportion of debt within the company’s total capital structure. Including operating lease liabilities, the ratio remains slightly elevated but also decreases from 0.72 to 0.41 over the same period.

Debt to Assets Ratios

Debt to assets ratios demonstrate a steady decrease, falling from 0.53 in 2018 to approximately 0.28 in 2022. The inclusion of operating lease liabilities results in higher ratios but exhibits the same downward trend, moving from 0.53 to 0.33. This reflects a reduction in the company's leverage against its asset base.

Financial Leverage Ratio

This ratio decreases significantly from 4.92 in 2018 to 2.14 in 2022, indicating the company is using less financial leverage over time, thereby possibly reducing financial risk.

Interest Coverage Ratio

The interest coverage ratio improves markedly from 3.41 in 2018 to 19.01 in 2022. This demonstrates a substantially increased ability to cover interest expenses with operating earnings, indicative of enhanced earnings performance or reduced interest expense burden.

Fixed Charge Coverage Ratio

Similarly, fixed charge coverage experiences significant growth, rising from 2.36 in 2018 to 11.41 in 2022. This improvement reflects a stronger capacity to meet fixed financial obligations beyond just interest payments.

Overall, the company has significantly reduced its leverage and improved its coverage of debt-related expenses over the five-year period, suggesting a stronger balance sheet and greater financial resilience.

The financial data reveals significant changes in the capital structure of the company over the analyzed five-year period.

Total Debt

Total debt showed a fluctuating trend, initially decreasing from approximately $1.56 billion in 2018 to about $1.29 billion in 2019. It then increased to around $1.62 billion in 2020, followed by a significant rise to nearly $2.93 billion in 2021. In 2022, total debt slightly increased again, reaching approximately $2.98 billion.

Stockholders’ Equity

Stockholders’ equity exhibited a consistent upward trend, starting at roughly $596 million in 2018 and increasing each year thereafter. The equity rose to about $825 million in 2019, further to approximately $1.15 billion in 2020, and then surged substantially to around $4.80 billion in 2021. By 2022, it had increased slightly more to approximately $4.96 billion.

Debt to Equity Ratio

The debt to equity ratio demonstrated a steady decline over the period, moving from a relatively high 2.62 in 2018 to 1.57 in 2019, and then further decreasing to 1.41 in 2020. This trend continued markedly, with the ratio dropping to 0.61 in 2021, and slightly lower at 0.6 in 2022. This decline reflects a reduction in leverage relative to the growth in equity.

Overall, the data indicates that while the company’s total debt levels increased notably especially after 2020, stockholders' equity grew at a considerably faster pace, leading to a significant reduction in the debt to equity ratio. This shift suggests an improvement in the company's financial leverage position, with a greater reliance on equity financing relative to debt over the recent years.

Total Debt (including operating lease liability)

The total debt exhibited a consistent upward trajectory over the five-year period. It increased moderately from approximately $1.56 billion in 2018 to $1.59 billion in 2019, followed by a more pronounced rise to about $1.91 billion in 2020. A significant surge occurred in 2021, reaching roughly $3.40 billion, with a slight additional increase to approximately $3.49 billion in 2022.

Stockholders' Equity

Stockholders' equity followed an overall increasing trend but with notable fluctuations. It increased from about $596 million in 2018 to $825 million in 2019, then further to approximately $1.15 billion in 2020. However, there was a substantial jump in 2021, with equity rising sharply to nearly $4.80 billion, and it continued to grow moderately to around $4.96 billion in 2022.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio showed a clear decreasing trend, indicating a shift towards relatively lower leverage over time. Starting from a high of 2.62 in 2018, the ratio dropped to 1.93 in 2019 and continued to decline to 1.65 in 2020. It then fell significantly to 0.71 in 2021 and slightly decreased further to 0.7 in 2022. This suggests the company improved its equity base considerably relative to its debt levels.

Total Debt

The total debt experienced fluctuations over the analyzed period. Initially, the debt declined from approximately 1.56 billion USD at the end of 2018 to about 1.29 billion USD in 2019. Subsequently, it increased moderately in 2020 to around 1.62 billion USD, followed by a substantial rise in 2021 reaching approximately 2.93 billion USD. This higher level was maintained into 2022, with debt slightly increasing to nearly 2.98 billion USD. Overall, the data indicates a significant increase in debt during the later years despite an initial dip in 2019.

Total Capital

Total capital remained relatively stable from 2018 through 2019, hovering around 2.15 billion USD to 2.12 billion USD. It then rose to approximately 2.78 billion USD in 2020, which was followed by a dramatic escalation in 2021, climbing to roughly 7.73 billion USD, and a small increase continued into 2022 reaching nearly 7.95 billion USD. This substantial increase in capital suggests considerable capital growth or infusion during the last two years of the period.

Debt to Capital Ratio

The debt to capital ratio steadily declined from 0.72 in 2018 to 0.61 in 2019, and further down to 0.58 in 2020. A notable decrease occurred in 2021 when the ratio dropped significantly to 0.38, a level that was maintained in 2022. This downward trend reflects improved capital structure leverage, with the company reducing the proportion of debt relative to total capital, particularly after 2020.

Summary

Throughout the examined timeframe, total debt initially declined but subsequently increased notably in 2021 and 2022. In contrast, total capital experienced a sharp increase beginning in 2021. The simultaneous rise in capital and relatively smaller increase in debt led to a marked reduction in the debt to capital ratio, indicating enhanced financial leverage and potentially better credit risk positioning during the most recent years. The data suggests strategic capital growth efforts have effectively improved the company's capital structure.

Total debt (including operating lease liability)

The total debt increased consistently over the five-year period. From approximately 1.56 billion USD at the end of 2018, the amount rose gradually to around 1.59 billion USD in 2019, followed by a more substantial increase to about 1.91 billion USD in 2020. Thereafter, a significant jump occurred in 2021, with total debt reaching approximately 3.40 billion USD, and a slight further increase to about 3.49 billion USD in 2022. This indicates a sustained expansion in borrowing, particularly between 2020 and 2021.

Total capital (including operating lease liability)

Total capital showed a steady rise from 2018 through 2020, moving from roughly 2.16 billion USD to about 3.06 billion USD. In 2021, total capital experienced a dramatic increase to approximately 8.20 billion USD, followed by a slight increase to roughly 8.45 billion USD in 2022. This marked growth suggests substantial capital inflows or increases in liabilities and equity during this latter period.

Debt to capital ratio (including operating lease liability)

The debt to capital ratio demonstrated a clear downward trend throughout the observed years. Starting at 0.72 in 2018, the ratio declined steadily to 0.66 in 2019 and further to 0.62 in 2020. The most notable change occurred in 2021, with the ratio dropping significantly to 0.41 and stabilizing at that level in 2022. This reduction implies an improvement in the company's capital structure, with debt constituting a smaller proportion of total capital, largely influenced by the sharp increase in total capital relative to debt in the last two years.

Total Debt

The total debt exhibited an initial decline from 1,561,294 thousand US dollars at the end of 2018 to 1,291,273 thousand in 2019. However, this was followed by an increase to 1,624,240 thousand in 2020, and a substantial rise in 2021 reaching 2,929,782 thousand. The debt level remained relatively stable in 2022 at 2,984,197 thousand, slightly above the previous year’s value.

Total Assets

Total assets showed consistent growth through 2018 to 2020, increasing from 2,932,309 thousand US dollars in 2018 to 4,173,671 thousand in 2020. A significant jump occurred in 2021, with assets peaking at 10,714,343 thousand. In 2022, total assets remained stable with a slight decrease to 10,595,160 thousand.

Debt to Assets Ratio

The ratio of debt to assets decreased steadily from 0.53 in 2018 to 0.40 in 2019 and further to 0.39 in 2020. This trend continued more markedly into 2021, dropping to 0.27, and remained low at 0.28 in 2022, indicating an improvement in the company’s leverage position relative to its asset base over the period.

Summary

Overall, the data indicate a strategic management of leverage, characterized by a growing asset base outpacing the increase in debt, particularly visible from 2020 onwards. Although total debt increased substantially after 2019, the proportion of debt relative to assets declined, suggesting improved solvency. The stability of the debt-to-assets ratio in the most recent year implies a maintained balance between debt levels and asset growth.

Total debt (including operating lease liability)

There is a consistent increase in total debt over the periods, starting from approximately 1.56 billion USD in 2018 and reaching nearly 3.49 billion USD by the end of 2022. The debt level sees a moderate rise between 2018 and 2020, followed by a significant surge in 2021 and a continued increase in 2022.

Total assets

Total assets show a notable upward trend, expanding from roughly 2.93 billion USD in 2018 to over 10.59 billion USD by 2022. The growth is steady through 2020, with a pronounced jump occurring between 2020 and 2021, after which total assets slightly decline but remain at a much higher level than earlier years.

Debt to assets (including operating lease liability)

The debt to assets ratio decreases from 0.53 in 2018 to 0.46 in 2020, indicating an improvement in the company's leverage position relative to asset base during that period. This ratio further declines significantly to 0.32 in 2021, reflecting a stronger asset base relative to debt despite the increase in absolute debt. In 2022, the ratio rises marginally to 0.33 but remains considerably lower than in the earlier years, suggesting improved financial stability and reduced leverage risk.

Total Assets

The total assets exhibited a consistent rising trend from 2018 through 2021, increasing from approximately 2.93 billion to over 10.71 billion US dollars. However, there was a slight contraction in 2022, with total assets decreasing marginally to about 10.60 billion US dollars. This indicates a substantial expansion phase up until 2021, followed by a stabilization or minor reduction in asset base in the subsequent year.

Stockholders’ Equity

Stockholders’ equity followed a similar upward trajectory, beginning at around 596 million US dollars in 2018 and escalating significantly to approximately 4.80 billion US dollars by the end of 2021. By 2022, there was a moderate increase to roughly 4.96 billion US dollars. The rapid equity growth, especially noticeable between 2020 and 2021, suggests considerable capital strengthening during these years.

Financial Leverage Ratio

The financial leverage ratio demonstrated a clear downward trend over the five-year period. Starting at 4.92 in 2018, the ratio steadily decreased every year to reach 2.14 by the end of 2022. This decline points to a progressive reduction in the company’s reliance on debt relative to equity, indicating an overall strengthening of the financial structure and potentially lower financial risk.

The financial data exhibits significant trends in earnings before interest and tax (EBIT), interest expense, and interest coverage ratio over the five-year period ending December 31, 2022.

Earnings Before Interest and Tax (EBIT)

The EBIT values show a consistent upward trend across the years. Beginning at approximately $369 million in 2018, EBIT increased moderately to about $392 million in 2019 and $544 million in 2020. A remarkable surge is observed in 2021, where EBIT rose sharply to approximately $2.39 billion, followed by a continued increase reaching $3.77 billion in 2022. This reflects a substantial growth in operating profitability, with a five-year overall increase of over tenfold from the 2018 figure.

Interest Expense, Net

The net interest expense exhibits a gradual increase from around $108 million in 2018 to roughly $110 million in 2019. It continued to rise to $136 million in 2020 and remained relatively stable in 2021 at about $136 million. However, in 2022, the interest expense increased more noticeably to approximately $198 million. Despite this upward trend, the increase in interest expense is comparatively modest relative to the large growth seen in EBIT during the same period.

Interest Coverage Ratio

The interest coverage ratio, which measures the ability to meet interest payments from operating earnings, improved steadily from 3.41 times in 2018 to 3.58 in 2019 and 4.01 in 2020. Thereafter, it experienced a significant leap to 17.57 in 2021 and further increased to 19.01 in 2022. This sharp rise is consistent with the dramatic increase in EBIT relative to interest expenses, indicating enhanced capacity to cover interest costs and a stronger financial position with respect to debt servicing.

Overall, the data portrays a robust expansion in operational profitability, accompanied by an increased but proportionally smaller rise in interest expenses. The substantial improvement in the interest coverage ratio highlights a strengthened ability to meet interest obligations from earnings, suggesting improved financial stability over the examined period.

Earnings before fixed charges and tax

The earnings before fixed charges and tax demonstrate a consistent upward trend over the five-year period. Starting at approximately $453 million in 2018, there was a modest increase to about $477 million in 2019 and a more substantial rise to nearly $630 million in 2020. Following that, there was a notable surge in earnings in 2021, reaching approximately $2.52 billion, and this growth continued in 2022 with earnings approaching $3.91 billion. This indicates strong operational performance and increased profitability before accounting for fixed charges and taxes.

Fixed charges

Fixed charges also show a steady increase over the period. Beginning at approximately $192 million in 2018, the fixed charges rose gradually to about $194 million in 2019 and to $221 million in 2020. The expenses then accelerated more markedly, reaching around $269 million in 2021, and further increasing to approximately $343 million in 2022. This growth in fixed charges may reflect increased debt servicing costs or other fixed financial obligations accompanying the overall business expansion.

Fixed charge coverage ratio

The fixed charge coverage ratio has improved significantly, indicating stronger ability to cover fixed charges with earnings. Starting at 2.36 times in 2018, the ratio increased slightly to 2.46 in 2019 and further to 2.84 in 2020. The most dramatic increases occurred in the last two years, with the ratio reaching 9.37 in 2021 and then 11.41 in 2022. This suggests a considerably improved cushion for covering fixed financial commitments, consistent with the substantial earnings growth observed during this period.