Builders FirstSource Inc. (NYSE:BLDR)

Debt to Equity

The ratio exhibited a notable decline from 2.5 in the first quarter of 2019 to 1.41 by the end of 2020, indicating a significant reduction in debt relative to equity during this period. From 2021 onward, the ratio stabilized at a much lower range, fluctuating between 0.34 and 0.85, representing a more conservative capital structure with less leverage.

Debt to Equity (Including Operating Lease Liability)

This ratio follows a similar downward trend as the standard debt to equity metric, decreasing from 2.93 in early 2019 to 1.65 in late 2020. Starting 2021, it remained relatively low, ranging between 0.43 and 0.96, illustrating that considering operating lease liabilities does not drastically change the leverage view but confirms the reduced reliance on debt over the years.

Debt to Capital

The debt to capital ratio declined steadily from 0.71 in early 2019 to 0.58 at the end of 2020, suggesting improving equity financing relative to total capital. For the subsequent quarters, the ratio maintained a lower level between 0.25 and 0.46, indicating a persistent reduction in debt proportion within the capital structure.

Debt to Capital (Including Operating Lease Liability)

This ratio also decreased from 0.75 to 0.62 across 2019 through 2020 and stabilized around 0.30 to 0.49 thereafter. The inclusion of operating lease liabilities slightly increases the debt proportion but the long-term trend remains consistent with a decline in financial risk.

Debt to Assets

The debt to assets ratio decreased from 0.49 at the beginning of 2019 to 0.39 at the end of 2020, reflecting a reduction in debt relative to total assets. Since 2021, the ratio has stayed in the range of approximately 0.18 to 0.34, indicating less leverage and possibly an increased asset base or lower debt load.

Debt to Assets (Including Operating Lease Liability)

When factoring in operating lease liabilities, the ratio started at 0.58 in early 2019 and dropped to 0.46 by the end of 2020. Thereafter, it fluctuated between 0.23 and 0.39, following a similar pattern of deleveraging and confirming that leases contribute moderately to total liabilities.

Financial Leverage

Financial leverage saw a consistent decline from 5.06 in early 2019 to 3.62 by the end of 2020, indicating a significant reduction in total assets supported by equity. From 2021 onwards, leverage ratios remained below 2.5, suggesting a more balanced capital structure with less risk exposure to creditors.

Interest Coverage

Interest coverage ratio demonstrated improvement over the period reviewed. Starting at 3.65 in the first quarter of 2019, it showed moderate fluctuations with a dip in early 2020 but then increased impressively from 6.32 in the first quarter of 2021 to a peak of 20.66 by the first quarter of 2022. This upward trend implies strengthened earnings relative to interest expenses, enhancing the company’s ability to service its debt. In more recent quarters, the ratio decreased gradually but remained at healthy levels above 11.

Total Debt

Total debt exhibited a fluctuating trend over the examined periods. From the first quarter of 2019 to the end of 2019, total debt showed a gradual decline from approximately $1.58 billion to $1.29 billion. Beginning in early 2020, there was a noticeable increase, peaking near $3.39 billion by the first quarter of 2022. Subsequently, total debt declined through most of 2022 before rising again in the first half of 2023, reaching near $3.67 billion in the second quarter of 2023 and slightly decreasing afterward.

Stockholders' Equity

Stockholders’ equity generally trended upward until the end of 2020, increasing from about $632 million at the start of 2019 to a peak around $1.15 billion in late 2020. A remarkable surge occurred in early 2021, with equity rising sharply to over $4.9 billion by the first quarter of 2021. After this peak, equity remained relatively stable but showed a slight downward trend through 2022 and into early 2023, declining from about $5.2 billion in the first quarter of 2022 to approximately $4.3 billion in the third quarter of 2023.

Debt to Equity Ratio

The debt to equity ratio declined steadily during 2019, indicating an improving balance between debt and equity. This ratio dropped from 2.5 in the first quarter of 2019 to about 1.41 by the end of the year. In early 2020, it fluctuated between 1.41 and 1.88 before sharply decreasing to a low of 0.34 in the first quarter of 2021, reflecting the substantial increase in equity at that time.

Following this low point, the ratio gradually increased again, reaching around 0.85 in the third quarter of 2023, indicating a growing proportion of debt relative to equity, although still significantly lower than in the 2019 baseline periods.

Overall Trends and Insights

The financial structure experienced significant changes throughout the period. The sharp increase in equity in early 2021 may suggest a sizeable capital infusion or equity issuance. Total debt rose in the years following 2019, peaking in early 2022, before partially retreating. Meanwhile, the progressive lowering of the debt to equity ratio until early 2021, followed by a moderate climb, signals shifts in capital management strategies possibly aligned with changing market conditions or business needs.

Despite fluctuations, the company maintained a debt to equity ratio below the levels observed at the start of 2019 for most of the reviewed period after 2020, which implies an improved capital structure with more balanced leverage.

The financial data exhibits notable trends in the company's capital structure over multiple quarters. Total debt and stockholders' equity levels, as well as their interrelation through the debt to equity ratio, show distinct patterns reflecting the company's financing strategy and operational circumstances.

Total Debt (including operating lease liability)

From early 2019 through the end of 2020, total debt remained relatively stable with slight fluctuations, hovering around the 1.6 to 1.9 billion USD range. Starting in 2021, total debt increased substantially, reaching a peak near 3.4 billion USD by the end of 2021 and continuing upward into 2022, with the highest value recorded in mid-2022 at approximately 4.05 billion USD. Debt levels then showed a moderate decline towards the end of 2022 and fluctuated around 3.7 to 4.1 billion USD in the first three quarters of 2023.

Stockholders’ Equity

Equity grew steadily from 2019 through 2020, increasing from around 630 million USD to over 1.15 billion USD. A significant surge occurred entering 2021, with equity jumping dramatically to around 4.98 billion USD, maintaining a high plateau through 2021 before fluctuating between approximately 4.5 and 5.2 billion USD over 2022 and early 2023. Despite minor decreases during this latter period, the equity base remained substantially elevated relative to the pre-2021 period.

Debt to Equity Ratio

The ratio generally decreased from nearly 3.0 in early 2019 to below 2.0 by the end of 2020, indicating a gradual reduction in leverage or an improved equity base relative to debt. However, in 2021, this ratio dropped sharply to about 0.43 in March, reflecting the disproportionate increase in equity relative to debt. In subsequent quarters, the ratio showed a rising trend, reaching peaks near 0.96 by September 2023. This indicates a trend toward increasing leverage relative to equity after a period of notably low leverage.

Overall, the data reveals a transition from moderately high leverage in 2019 and 2020 to a period of significant strengthening in the equity position in 2021. Since then, debt levels have risen again, albeit more moderately, while equity has remained robust but with slight contraction trends. The debt-to-equity ratio's movement from high leverage, to strong equity dominance, and back toward moderate leverage suggests active capital structure management possibly aimed at funding growth or operational needs while balancing financial risk.

Total Debt

The total debt exhibited a generally increasing trend over the examined periods, with some fluctuations. Starting at approximately 1.58 billion US dollars at the end of March 2019, it declined moderately until the end of 2019, reaching about 1.29 billion US dollars. However, from early 2020 onwards, total debt began rising again, experiencing a marked acceleration from March 2021 to December 2021, peaking close to 2.93 billion US dollars. Afterward, total debt decreases were observed in subsequent quarters of 2022 but increased again in 2023, fluctuating between approximately 3.2 billion and 3.7 billion US dollars. This overall trajectory indicates an increase in leverage with some volatility, especially in the more recent years.

Total Capital

Total capital showed a steady growth trajectory with some notable shifts. Initially, it gradually increased from around 2.21 billion US dollars at the end of March 2019 to approximately 2.78 billion US dollars by December 2020. A substantial jump occurred by March 2021, with capital rising to about 6.66 billion US dollars, which was maintained or slightly increased through 2021, reaching near 7.94 billion US dollars by September 2021. Subsequently, total capital experienced a moderate decline across 2022 and into 2023, stabilizing in the range of 7.85 billion to 8.69 billion US dollars. This pattern suggests significant capital expansion in early 2021, followed by some normalization in the following periods.

Debt to Capital Ratio

The debt-to-capital ratio reveals a shifting capital structure dynamic. Initially high at 0.71 in March 2019, the ratio declined to 0.58 by December 2020, indicating a reduction in leverage relative to total capital. This trend reversed sharply with the substantial increase in total capital seen in early 2021, where the ratio dropped significantly to as low as 0.25 in March 2021. After this low point, the ratio increased progressively throughout the remainder of 2021 and into 2023, rising to around 0.43 by September 2023. This increase indicates a gradual rise in debt relative to capital in recent quarters, though leverage remains below the levels observed prior to 2021.

Summary of Trends and Insights

The data shows a notable transformation in capital structure beginning in early 2021, characterized by a strong increase in total capital, which considerably lowered leverage as expressed by the debt-to-capital ratio. Before 2021, the firm held relatively higher leverage with smaller capital bases, while after the capital expansion, leverage ratios declined significantly before trending upward again in the most recent quarters. Total debt increased over time with intermittent reductions, likely reflecting strategic debt management or operational financing needs. Overall, the firm’s financial strategy seems to have shifted around 2021 towards expanding capital and then balancing leverage levels, demonstrating responsive adjustments to market or internal conditions.

Total debt (including operating lease liability)

The total debt exhibited a general upward trend over the observed periods. Starting at approximately 1.85 billion US dollars in March 2019, it fluctuated slightly until the end of 2019, after which it showed a significant increase from early 2020 to the end of 2021, peaking at around 3.4 billion US dollars. Although there was some decline during 2022, the debt again rose in 2023, reaching values above 4 billion US dollars before a slight reduction towards the final quarter observed.

Total capital (including operating lease liability)

Total capital also increased over time but with notable variations. It started at roughly 2.49 billion US dollars in early 2019 and remained relatively stable until the end of 2019. Entering 2020 and continuing through 2021, total capital increased sharply, peaking at over 8.4 billion US dollars in late 2021. Following this peak, there was a gradual decrease throughout 2022 and early 2023, stabilizing around 8.5 billion US dollars by the latest date.

Debt to capital ratio (including operating lease liability)

The debt to capital ratio initially decreased steadily from 0.75 in early 2019 to 0.62 by the end of 2020, indicating a reduction in the proportion of debt relative to capital. However, starting in 2021, this ratio dropped significantly to around 0.30 but then reversed course, increasing to a ratio as high as 0.49 by late 2023. This suggests an increasing reliance on debt financing relative to total capital in recent periods after a phase of deleveraging around 2020 and early 2021.

Summary of trends and insights

The data reflects a period of rising financial leverage through 2019 and 2020, followed by a marked expansion in total capital during 2021, which corresponded with a reduced debt to capital ratio indicative of improved capitalization. However, from late 2021 onward, total debt rose faster than total capital, pushing the leverage ratio upward. The fluctuations suggest strategic shifts in financing, possibly reflecting responses to market conditions or investment needs. The increase in debt level toward 2023 highlights a higher financial risk profile, which warrants monitoring for impact on liquidity and solvency metrics going forward.

Total Debt

Over the observed period, total debt displayed significant fluctuations. Initially, it declined from approximately $1.58 billion to around $1.29 billion between the first quarter of 2019 and the fourth quarter of 2019. Following this decline, total debt rose steadily through 2020 and early 2021, peaking near $2.93 billion at the end of 2021. Subsequently, total debt decreased through 2022 before rising again in 2023, reaching levels slightly below $3.7 billion before a slight drop towards the third quarter of 2023. This pattern suggests periods of borrowing and repayment likely aligning with strategic financing or operational needs.

Total Assets

Total assets demonstrated consistent growth throughout the timeframe with few reversals. Beginning at about $3.2 billion in early 2019, assets increased steadily through 2020. Notably, a sharp rise occurred in 2021, with assets nearly tripling relative to 2020 figures and peaking around $12 billion in the first quarter of 2022. After that peak, assets experienced a gradual decline over the following quarters but remained above $10 billion through 2023, indicating sustained substantial asset base despite some contraction.

Debt to Assets Ratio

The debt-to-assets ratio exhibited a downward trend from 0.49 at the beginning of 2019 to a low of about 0.39 by the end of 2020, representing an improvement in the company's leverage position. However, starting in 2021, the ratio increased from roughly 0.18 to 0.27 by the end of that year, reflecting an increase in debt relative to assets. The ratio continued to hover around 0.28 to 0.34 throughout 2022 and into 2023, suggesting a moderate increase in leverage but contained within a stable range. This pattern suggests heightened borrowing that is somewhat balanced by asset levels but hints at a cautious increase in financial risk exposure during recent periods.

Total Debt (Including Operating Lease Liability)

The total debt displayed a generally increasing trend over the entire period. Initially, it rose moderately from $1.85 billion in Q1 2019 to about $1.91 billion by the end of 2020. From early 2021, debt levels accelerated significantly, reaching a peak of approximately $4.06 billion in Q2 2022. Subsequently, there was a decline toward the end of 2022, dropping below $3.5 billion by Q4 2022. However, in 2023, debt levels climbed again, reaching around $4.18 billion in Q2 2023 before a slight decrease in Q3 2023.

Total Assets

Total assets increased steadily from around $3.2 billion in early 2019 to a peak exceeding $10.8 billion in late 2021. This sharp rise primarily occurred between 2019 and 2021, indicating substantial asset growth during this time frame. After peaking, assets decreased somewhat in 2022, falling to approximately $10.6 billion by the end of the year. Throughout 2023, asset levels remained relatively stable, fluctuating slightly around $10.7 billion.

Debt to Assets Ratio (Including Operating Lease Liability)

The debt-to-assets ratio started relatively high around 0.58 in early 2019, then consistently declined to its lowest point of about 0.46 by the end of 2020. This indicated improvement in the balance sheet leverage during this period. However, from 2021 onwards, the ratio saw a notable increase, rising from about 0.23 in early 2021 to 0.39 in mid-2023, reflecting a rising proportion of debt relative to assets. The ratio experienced some fluctuations but generally trended upward in this latter period, signaling increased leverage or diminished asset growth relative to debt increments.

Overall Analysis

The data reveal a period of asset expansion coupled with relatively controlled debt growth through 2020, resulting in a reduced leverage position. Post-2020, there was significant debt accumulation that outpaced asset growth, causing an increase in leverage ratios. The sharp growth in debt starting in 2021 coincided with a plateau and slight decrease in assets, contributing to a higher financial risk profile. The fluctuations in debt levels in late 2022 and 2023 suggest active debt management, possibly driven by refinancing or repayment strategies. Despite these fluctuations, the debt remains significantly elevated compared to the initial periods, warranting attention to future capital structure and liquidity management.

Total Assets

Total assets exhibited a generally upward trajectory from March 2019 through December 2020, rising from approximately $3.2 billion to over $4.1 billion. A significant increase occurred between December 2020 and March 2021, with assets more than doubling to about $9.4 billion. This elevated level persisted through 2021, peaking in June 2022 at roughly $12.1 billion, before trending downward to around $10.7 billion by September 2023. Overall, total assets show growth with notable volatility in the 2021–2023 period.

Stockholders’ Equity

Stockholders’ equity also rose steadily from March 2019 until December 2020, increasing from approximately $632 million to about $1.15 billion. A dramatic increase followed, with equity surging to nearly $5 billion by March 2021. However, after this peak, equity declined to about $4.8 billion by December 2021. During 2022 and 2023, equity fluctuated in the range of $4.3 billion to $5.2 billion, showing a gradual decreasing trend toward mid-2023 before a slight recovery by September 2023. This pattern indicates a significant capital restructuring or injection around early 2021 followed by some contraction and stabilization.

Financial Leverage Ratio

The financial leverage ratio decreased consistently from 5.06 in March 2019 to 3.62 by December 2020, reflecting a reduction in the reliance on debt relative to equity. Following this period, the ratio dropped sharply to around 1.88 in March 2021, coinciding with the surge in equity, indicating substantially deleveraging. From March 2021 onward, the ratio gradually increased again, reaching approximately 2.47 by June 2023 before slightly declining to 2.34 by September 2023. The leverage pattern suggests a strategic shift towards deleveraging in early 2021, with a modest return to higher leverage levels thereafter.

EBIT Trend

The Earnings Before Interest and Tax (EBIT) exhibited a generally increasing trajectory over the analyzed periods. Starting from a relatively moderate level in early 2019, EBIT showed notable growth in the second half of 2019 and a mixed pattern in 2020. Significant increases were observed starting in 2021, with a peak during mid to late 2021. Despite some declines in late 2022 and early 2023, EBIT remained substantially higher compared to the early years.

Interest Expense Trend

Interest expense displayed fluctuations without a clear directional trend. It rose sharply in the first quarter of 2020, presumedly due to changing debt conditions or cost of borrowing. From mid-2020 to early 2022, interest expenses stayed relatively stable but elevated compared to 2019. Some volatility is evident in 2022 and 2023, highlighting variability in financing costs or debt levels.

Interest Coverage Ratio Trend

The interest coverage ratio, indicating the ability to cover interest expenses from EBIT, showed a marked improvement over time. Starting below 4 in 2019 and early 2020, the ratio improved significantly through 2021 and 2022, peaking above 20 at certain points. There was a gradual decline starting in late 2022, continuing into 2023, though the ratio remained strong above 10, reflecting a robust capability to meet interest obligations despite some increased interest expenses.

Overall Insights

The company demonstrated improved profitability as reflected in rising EBIT, particularly from 2020 onwards. While interest expenses fluctuated and at times increased, they were more than comfortably covered by earnings, as evidenced by the rising interest coverage ratio. The declining trend in the coverage ratio in recent quarters may warrant attention but does not currently indicate a concern given the still ample coverage. Overall, there is evidence of enhanced operational performance and effective management of interest-bearing liabilities during the period analyzed.