Builders FirstSource Inc. (NYSE:BLDR)

Debt to Equity Ratio Trends

The debt to equity ratio shows a significant decreasing trend from March 2018 (4.92) through December 2020 (1.41), indicating a substantial reduction in leverage. This decline continues into 2021, reaching a low of 0.34 in the first quarter. Following this low, the ratio exhibits a moderate increase through late 2023, ending at 0.74 in September 2023. Including operating lease liabilities, the pattern is similar, with initial high leverage reducing markedly and remaining below 1.0 since 2021, although slight increases are observed in mid to late 2023.

Debt to Capital Ratio Analysis

The debt to capital ratio decreases steadily from 0.83 in March 2018 to a low of 0.25 in March 2021, reflecting a strengthening capital structure with lower debt reliance. The ratio then shows a moderate increasing trend, rising to 0.43 by September 2023. When including operating lease liabilities, the ratio follows a comparable trajectory but remains higher throughout the period, peaking at 0.62 in December 2020 before decreasing and then rising again towards late 2023.

Debt to Assets Ratio Observations

Debt to assets decrease from 0.63 in early 2018 to a low of 0.18 in March 2021, demonstrating improved asset coverage and reduced debt burden relative to total assets. A slight increase is evident thereafter, with the ratio stabilizing around 0.30 to 0.34 during 2022 and 2023. Including operating lease liabilities, the leverage ratio is consistently higher but mirrors the same downward trend, bottoming out around 0.23 to 0.27 in 2021 before rising slightly in subsequent periods.

Financial Leverage Pattern

Financial leverage declines significantly from 7.76 in the first quarter of 2018 to a range around 1.88 to 2.35 during 2021 and 2022, indicating reduced reliance on debt financing or improved equity base. The leverage ratio shows minor fluctuations but remains relatively stable in this lower range through to late 2023.

Interest Coverage Ratio Developments

The interest coverage ratio is missing in early periods but emerges at 3.41 in September 2018 and improves steadily thereafter. By 2020, it rises moderately to around 4.0 and then increases substantially through 2021 and 2022, reaching a peak of 20.66 in the fourth quarter of 2022. A gradual decline occurs through 2023, settling at 11.79 by September, though still reflecting strong earnings capacity relative to interest expense.

Summary of Financial Health Trends

Overall, the data indicates a marked improvement in the company’s financial leverage and credit metrics over the analyzed period. There is a clear reduction in debt relative to equity, capital, and assets, with associated lowering of financial leverage. Concurrently, the interest coverage ratio strengthens significantly, suggesting enhanced profitability or earnings stability in relation to interest obligations. While slight increases in leverage ratios occur in 2022-2023, the levels remain substantially lower than in 2018. These patterns suggest strengthened financial stability and potentially improved creditworthiness across the period under review.

Total Debt

Total debt exhibits a general pattern of fluctuation over the observed periods. Initially, from early 2018 through late 2019, a declining trend is apparent, decreasing from approximately 1.97 billion USD to around 1.29 billion USD. This reduction suggests effective debt management or repayment during this interval.

Starting in early 2020, total debt increases significantly, reaching a peak of nearly 2.93 billion USD by the end of 2021. This rise may indicate increased borrowing or strategic financing activities during this period.

Following this peak, total debt demonstrates a partial decrease in 2022, dropping to approximately 2.98 billion USD by mid-year, but then raises again in late 2022 and early 2023, fluctuating between roughly 3.19 billion to 3.67 billion USD. The movements toward the latter periods indicate continued active debt issuance and adjustments in capital structure.

Stockholders’ Equity

Stockholders’ equity shows a robust growth trajectory from 2018 through 2020, increasing steadily from around 401 million USD to over 1.15 billion USD by the end of 2020. This consistent rise reflects positive retained earnings or capital infusion enhancing the equity base.

A notable surge occurs in the first quarter of 2021, where equity dramatically increases to nearly 5 billion USD and remains at elevated levels through the end of 2021 and into 2023. This substantial jump indicates a significant capital event, such as equity issuance or comprehensive income gains during 2021.

Subsequently, equity stabilizes between about 4.3 billion and 5.2 billion USD, with minor fluctuations evident through mid-2023. This level suggests a plateau after the marked increase, maintaining a strong equity position.

Debt to Equity Ratio

The debt to equity ratio decreases significantly from early 2018 to the end of 2020, moving from a high of approximately 4.92 down to 1.41, indicating improved leverage and a stronger equity cushion relative to debt.

This ratio then drops sharply at the start of 2021, reaching as low as 0.34, correlating with the large increase in stockholders' equity. This low ratio reflects a substantially strengthened balance sheet with much lower leverage during early 2021.

From mid-2021 onward, the ratio gradually increases, rising to about 0.85 by late 2023. While this represents a moderate rise in leverage, the ratio remains well below the levels seen prior to 2021, indicating a more conservative capital structure compared to earlier periods.

The analyzed financial data indicates notable trends in the company’s capital structure over the observed periods.

Total Debt (including operating lease liability)

The total debt showed fluctuations between 2018 and 2020, with a decrease from around 1.97 billion USD at the end of March 2018 to approximately 1.59 billion USD at the end of December 2018. Subsequently, debt levels increased steadily from 2019 onward, reaching a peak of about 3.41 billion USD at the end of December 2021. After this peak, the total debt remained elevated, fluctuating just below or above 3.5 billion USD through to September 2023.

Stockholders’ Equity

Stockholders’ equity rose steadily from the beginning through 2020, moving from approximately 401 million USD in March 2018 to 1.15 billion USD at the end of December 2020. A sharp increase was observed entering 2021, with equity soaring to around 4.98 billion USD at the end of March 2021 and continuing to rise modestly until peaking near 5.52 billion USD in September 2021. Afterwards, equity levels slightly declined and stabilized in the range of about 4.34 billion to 4.96 billion USD through to September 2023.

Debt to Equity Ratio (including operating lease liability)

This ratio exhibits a significant downward trend from March 2018 to December 2020, decreasing from 4.92 to 1.65, implying reduced leverage and a strengthening equity base relative to debt. A dramatic reduction occurred at the start of 2021, with the ratio falling below 0.5, reaching approximately 0.43 by March 2021. Over the following periods, the debt to equity ratio showed a gradual increase, settling near 0.85 by September 2023. Despite this increase, the leverage remains substantially lower than in the years prior to 2021.

In summary, the data reflects a strategic shift toward strengthening equity financing, significantly reducing reliance on debt as evidenced by the sharp decline in leverage ratios in early 2021. Following this period, both debt and equity increased, though equity levels remain comparatively robust, maintaining a lower debt to equity ratio than observed in prior years. This suggests a more balanced and potentially less risky capital structure than in the past.

The financial data reveals evolving trends in the company's debt and capital structure over the examined periods.

Total Debt

Total debt showed a general decline from an initial level of approximately 1.97 billion USD at March 31, 2018, reaching a low point near 1.29 billion USD by December 31, 2019. Subsequently, total debt increased significantly, reaching a peak of almost 3.7 billion USD at June 30, 2023, before slightly decreasing to approximately 3.4 billion USD by September 30, 2023. This pattern indicates early debt reduction efforts followed by a period of increased borrowing or obligations in the later years.

Total Capital

Total capital remained relatively stable around the 2.1 to 2.8 billion USD range through 2018 to 2020. There was a marked and substantial increase starting from December 31, 2020, peaking in the mid-2021 periods with total capital values exceeding 7.9 billion USD, indicative of a significant infusion or revaluation of capital. From late 2021 through 2023, total capital showed a slight declining trend, settling near 7.98 billion USD by the last reported period.

Debt to Capital Ratio

The debt to capital ratio steadily decreased from 0.83 at March 31, 2018, passing through a consistent downward trajectory to reach 0.58 at December 31, 2020. This trend aligns with the reduction in debt and relatively stable capital at that time, suggesting an improving leverage position. However, beginning in 2021, the ratio dropped sharply to around 0.25 but then increased progressively, climbing back up to 0.43 by September 30, 2023. This indicates rising leverage after an initial period of deleveraging, consistent with the observed substantial increases in both total debt and total capital during the same interval.

Overall, the data shows an initial phase of debt reduction and stable capital, improving leverage ratios, followed by a significant expansion in capital base and debt levels starting around the end of 2020. The subsequent increase in the debt to capital ratio suggests renewed leverage increases, possibly tied to financing growth or investments during this later period.

Total Debt (Including Operating Lease Liability)

Over the period from March 31, 2018, to September 30, 2023, total debt exhibited notable fluctuations with an overall increasing trend. Initially, total debt decreased from approximately $1.97 billion to $1.56 billion by December 31, 2018, before gradually climbing again to reach a peak of around $3.41 billion by December 31, 2021. Following this peak, debt levels slightly decreased but remained elevated, fluctuating between approximately $3.49 billion and $4.18 billion through to June 30, 2023.

This trajectory indicates initial debt reduction efforts which gave way to increased borrowing or liabilities in subsequent years, especially evident from 2020 onwards.

Total Capital (Including Operating Lease Liability)

Total capital showed a pattern of growth with some variability. From a base of roughly $2.37 billion in March 2018, total capital declined to a low near $2.16 billion by December 2018. Subsequently, it rose fairly consistently, surging sharply from $3.06 billion in December 2020 to a peak of $8.40 billion in September 2021. After this dramatic increase, total capital levels settled in the range of approximately $8.35 billion to $8.53 billion through to September 2023.

The significant jump between 2020 and 2021 suggests a substantial increase in equity or other capital components, indicating possible capital raises, asset revaluation, or other financial structuring events during this period.

Debt to Capital Ratio (Including Operating Lease Liability)

The debt to capital ratio demonstrated a clear downward trend from March 2018 through December 2020, moving from a high of 0.83 to a low of 0.62. This reflects a relative reduction in leverage and improved capital structure during that timeframe.

However, a significant shift occurred starting in early 2021, where the ratio sharply dropped to around 0.30, consistent with the noted increase in total capital. After this low point, the ratio began to rise steadily through to the mid-2023 mark, climbing to approximately 0.49 before slightly decreasing to 0.46 at the end of the period.

This increase in leverage ratio post-2021 indicates that while capital levels remained high, debt grew disproportionately, resulting in an increased reliance on debt financing relative to total capital.

Summary of Financial Position Trends

The company’s financial leverage experienced two distinct phases. Initially, from 2018 to late 2020, there was a deleveraging trend with decreasing debt and improving capital structure. This phase was followed by a period of rapid capital increase around 2021, which led to a temporary reduction in leverage.

Subsequent years show rising debt levels alongside relatively stable capital, resulting in a gradual increase in the debt to capital ratio and indicating a shift towards higher leverage. It suggests evolving financing strategies or changes in operational funding needs.

Total Debt

The total debt shows a fluctuating but generally upward trend over the period reviewed. From the first quarter of 2018 through the end of 2019, total debt gradually decreased from approximately $1.97 billion to around $1.29 billion. Beginning in 2020, total debt increased steadily, reaching a peak of approximately $2.93 billion by the fourth quarter of 2021. Following this peak, there is a slight decline in total debt noted in 2022, with values ranging from about $3.39 billion to $2.98 billion, before rising again to over $3.67 billion by the third quarter of 2023. This pattern indicates increased leverage beginning in 2020 with substantial variability thereafter.

Total Assets

Total assets generally trended upward throughout the entire period, with some distinct inflection points. Initially, assets fluctuated modestly around the $3.1 billion to $3.3 billion range between 2018 and 2019. Starting in early 2020, assets increased significantly, notably jumping from around $4.17 billion in late 2020 to over $9.37 billion in the first quarter of 2021. This rise continues through 2022, peaking near $12.09 billion in mid-2022 before slowly declining to around $10.73 billion by the third quarter of 2023. These patterns suggest substantial asset growth beginning in 2021, followed by a stabilization phase with slight decreases.

Debt to Assets Ratio

The debt to assets ratio shows a clear downward trajectory from early 2018 through 2020, decreasing from 0.63 to 0.39. This indicates improved balance sheet strength as debt levels relative to asset size diminished. However, starting in 2021, the ratio sharply drops to as low as 0.18 in the first quarter, coinciding with the substantial increase in total assets relative to the more modest growth in debt. Subsequently, the ratio begins rising gradually throughout 2021 to 2023, reaching a level of approximately 0.32 by the third quarter of 2023. This rebound suggests a relative increase in leverage, though it remains below earlier pre-2021 levels, indicating a moderately higher risk profile compared to the immediate post-increase period but improved compared to the earlier period.

Overall Insights

The financial data reflects a company that underwent significant balance sheet expansion starting in 2021, with total assets nearly tripling in size compared to prior years. This growth was accompanied by a temporary reduction in leverage ratios to historic lows, suggesting an injection of capital or acquisition activity increasing asset base more than debt. From mid-2021 onward, there is a trend of increasing debt levels and a gradual rise in leverage ratios, though these remain moderate in comparison to early 2018 levels. The fluctuations in debt and assets in late 2022 and 2023 indicate ongoing adjustments in capital structure or operational capital needs amid a large asset base.

Total debt (including operating lease liability)

The total debt level demonstrated fluctuations over the period analyzed. Initially, from March 31, 2018, through December 31, 2018, there was a general decline from approximately 1.97 billion USD to about 1.56 billion USD. This was followed by a moderate resurgence in debt levels through 2019 and early 2020, reaching just over 1.9 billion USD by December 31, 2020. A significant increase in total debt occurred starting early 2021, with a rise from approximately 2.12 billion USD in March 31, 2021, to a peak of about 3.41 billion USD at the end of 2021. Throughout 2022 and into 2023, the debt fluctuated but remained elevated overall, peaking again mid-2023 at around 4.18 billion USD before a slight reduction toward the third quarter of 2023.

Total assets

Total assets remained relatively stable from March 2018 through December 2020, fluctuating between approximately 3.1 billion USD and 4.1 billion USD. Starting from March 31, 2021, there was a substantial increase, with total assets more than doubling to nearly 9.38 billion USD and peaking at around 10.8 billion USD by the third quarter of 2021. After this peak, asset levels stabilized within a range of about 10.5 billion to 12.1 billion USD through 2022 and mid-2023, showing no significant growth or contraction during this period.

Debt to assets ratio (including operating lease liability)

The debt to assets ratio showed a consistent decrease from 0.63 at March 31, 2018, reaching a low of 0.46 by December 31, 2020. This trend reflects a reduction in leverage relative to assets during this period. However, beginning in early 2021, the ratio dropped sharply to 0.23, reflecting the rapid increase in total assets outpacing debt growth. Subsequently, the ratio increased gradually from 0.23 in mid-2021 to a higher range of approximately 0.32 to 0.39 over the course of 2022 and into 2023. This indicates a moderate increase in leverage relative to the asset base following the sharp initial decline, though the ratio remained below the levels observed during 2018-2020.

Summary of financial trends

Overall, the company’s financial leverage relative to assets decreased from 2018 through 2020, supported by modest fluctuations in debt and stable asset bases. A significant structural change occurred starting in 2021, with total assets experiencing a more than twofold increase coinciding with a sharp initial decline in leverage ratios. Subsequently, the level of debt increased substantially, resulting in a moderate rise in leverage ratios through 2022 and 2023. Despite this rise, leverage remains lower in relative terms compared to the earlier period. Assets stabilized at significantly higher levels, while debt showed marked growth with notable fluctuations, indicating a period of increased financing and investment activity with a still moderate leverage profile.

Total assets

The total assets showed a fluctuating pattern from March 2018 to September 2023. Initially, assets decreased from $3.11 billion in March 2018 to a low of approximately $2.93 billion in December 2018. From that point, a steady increase is observed, peaking at around $4.17 billion by December 2020. Subsequently, there is a significant surge in total assets starting in the first quarter of 2021, reaching over $9.37 billion by March 2021 and continuing to grow to approximately $10.83 billion by September 2021. After this peak, assets remain high but exhibit a downward trend through 2023, dropping to slightly above $10.73 billion by September 2023.

Stockholders’ equity

Stockholders’ equity follows an overall upward trajectory with some fluctuations. From March 2018 to December 2020, equity increased steadily from about $401 million to approximately $1.15 billion. A marked rise occurs in early 2021, with equity jumping dramatically to nearly $4.98 billion in March 2021 and then peaking around $5.52 billion in September 2021. However, after this peak, equity declines gradually through the subsequent quarters, reaching approximately $4.58 billion by September 2023. This suggests substantial capital changes or revaluations around 2021, followed by a downward adjustment period.

Financial leverage

Financial leverage exhibits a declining trend from 7.76 in March 2018 to a low of 1.88 in March 2021, indicating a reduction in the ratio of total assets to stockholders’ equity over this timeframe. This decline suggests that the company was strengthening its equity base relative to its assets, possibly reducing debt reliance. From March 2021 onwards, leverage begins to rise again, reaching approximately 2.34 by September 2023. Though increased, this leverage ratio is significantly lower than the earlier period, implying a more conservative capital structure in recent years despite some increase in leverage during 2022 and 2023.

The analysis of the quarterly financial data reveals several notable trends and developments over the reported periods.

Earnings Before Interest and Tax (EBIT)

EBIT shows a general upward trajectory with fluctuations throughout the quarters. From early 2018 through 2019, EBIT increased with some volatility, then experienced a dip around the first quarter of 2020. Thereafter, a sharp recovery and growth occurred, reaching a significant peak in the second and third quarters of 2021. Post-peak, EBIT declined notably in early 2022 but surged again in the mid-2022 period, followed by a decrease towards late 2023. Overall, EBIT increased from approximately 52,000 thousand US dollars in early 2018 to a high exceeding 1,300,000 thousand US dollars in 2022, indicating substantial growth despite periodic downturns.

Interest Expense, Net

Interest expense remained relatively stable from 2018 through 2019, generally fluctuating between approximately 24,000 and 29,000 thousand US dollars. In early 2020, interest expense spiked sharply to above 51,000 thousand US dollars, then reverted to previous levels around 26,000 to 29,000 thousand US dollars for the remainder of 2020 and the early part of 2021. From mid-2021 onwards, a rising trend is evident, with values consistently increasing, peaking near 70,000 thousand US dollars in late 2022 before slightly declining yet remaining elevated through 2023. These changes may indicate increased borrowing or refinancing activities and varying interest cost structures.

Interest Coverage Ratio

Interest coverage, representing the ability to cover interest expenses from EBIT, shows an initially unavailable data segment followed by an upward trend starting in late 2018. The ratio improves gradually from approximately 3.4 in late 2018 to double-digit figures by mid-2020, reflecting improved operational profitability relative to interest expenses. The ratio peaks significantly between 2020 and 2022, reaching values above 20, denoting strong coverage capacity. However, after reaching these highs, the interest coverage ratio declines steadily from early 2023 onwards, falling to below 12 by late 2023, signaling a relative decrease in EBIT compared to interest expenses during that timeframe.

In summary, the data points to an overall positive growth in EBIT over the years, punctuated by some periods of decreased profitability. Interest expenses remained moderate with a couple of notable spikes, potentially linked to financing activities. Interest coverage strengthened markedly from 2019 through early 2022 but showed signs of deterioration in the most recent quarters analyzed, suggesting the need for monitoring financial leverage and interest burden going forward.