Income Taxes

12 Months Ended

Dec. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company recorded a provision for (benefit from) income taxes of $124.0 million, $151.1 million, and $161.3 million for the years ended December 31, 2024, 2023, and 2022, respectively.

The following table summarizes the components of the income tax provision (benefit) (in millions):

	Year Ended December 31,
	2024		2023		2022
Current:
Federal	$	76.9	$	87.8	$	91.5
Foreign	3.0		5.8		7.2
State	24.8		29.0		32.6
Total current taxes	104.7		122.6		131.3
Deferred:
Federal	13.7		22.0		25.5
Foreign	1.7		0.6		(0.6)
State	3.9		5.9		5.1
Total deferred taxes	19.3		28.5		30.0
Provision for (benefit from) income taxes	$	124.0	$	151.1	$	161.3

The following table is a reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate for the periods presented:

	Year Ended December 31,
	2024		2023		2022
U.S. federal income taxes at statutory rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal benefit	4.7	%	4.7	%	4.8	%
Share-based payments	(1.0)	%	(0.8)	%	(0.4)	%
Non-deductible meals and entertainment	0.5	%	0.4	%	0.2	%
Other	0.3	%	0.5	%	0.4	%
Effective tax rate	25.5	%	25.8	%	26.0	%

Deferred income taxes reflect the tax consequences of temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax law. These temporary differences are determined according to ASC 740. The following table presents temporary differences that give rise to deferred tax assets and liabilities for the periods presented (in millions):

	December 31,
	2024		2023
Deferred tax assets:
Deferred compensation	$	13.6	$	11.4
Allowance for doubtful accounts	6.2		6.8
Accrued vacation and other	13.1		10.8
Inventory valuation	19.4		17.4
Tax loss carryforwards1	3.3		0.4
Unrealized (gain) loss on financial derivatives	(1.4)		(1.7)
Lease liability	161.2		131.5
Total deferred tax assets	215.4		176.6
Deferred tax liabilities:
Excess book over tax depreciation and amortization	(113.8)		(75.1)
Lease right-of-use asset	(138.6)		(119.5)
Total deferred tax liabilities	(252.4)		(194.6)
Net deferred income tax assets (liabilities)	$	(37.0)	$	(18.0)

1.Composed of interest limitation carryforwards and state net operating loss carryforwards.

The Company acquired $135.3 million of federal and state net operating loss carryforwards (“NOLs”) as part of its acquisition of Roofing Supply Group, LLC in fiscal year 2016. The Company has $0.1 million in state NOLs remaining as of December 31, 2024.

The Company’s non-domestic subsidiary, BRSCC, is treated as a controlled foreign corporation. On August 1, 2024, BRSCC acquired SSR which was also treated as a controlled foreign corporation. SSR amalgamated into BRSCC effective December 31, 2024. BRSCC and SSR’s taxable income, which reflects all of the Company’s Canadian operations, is being taxed only in Canada and would generally be taxed in the U.S. only upon an actual or deemed distribution. The Company expects that BRSCC’s earnings will be indefinitely reinvested for the foreseeable future; therefore, no U.S. deferred tax asset or liability for the differences between the book basis and the tax basis of BRSCC has been recorded as of December 31, 2024. Under the Tax Cuts and Jobs Act enacted in December 2017, future distributions from foreign subsidiaries will generally be subject to a federal dividends received deduction in the U.S. Should the earnings be remitted as dividends, the Company may be subject to additional foreign withholding and state income taxes. It is not practicable to estimate the amount of any additional taxes which may be payable on the undistributed earnings.

As of December 31, 2024, the Company’s goodwill balance on its consolidated balance sheet was $2.09 billion, of which there remains an amortizable tax basis of $1.02 billion for income tax purposes.

As of December 31, 2024, there were no uncertain tax positions which, if recognized, would affect the Company’s effective tax rate. The Company’s accounting policy is to recognize any interest and penalties related to uncertain tax positions in income tax expense in the consolidated statements of operations.

The Company has operations in 50 U.S. states and seven provinces in Canada. The Company is currently under audit in certain state and local jurisdictions for various years. These audits may involve complex issues, which may require an extended period of time to resolve. Additional taxes are reasonably possible; however, the amounts cannot be estimated at this time or would not be significant. The Company is no longer subject to U.S. federal income tax examinations for any fiscal years ended on or before September 30, 2020. For the majority of states, the Company is also no longer subject to tax examinations for any fiscal years ended on or before September 30, 2020. In Canada, the Company is no longer subject to federal or provincial tax examinations for any fiscal years ended on or before September 30, 2020.

On October 8, 2021, the Organization for Economic Co-operation and Development (“OECD”) released a statement on the OECD/G20 Inclusive Framework on Base Erosion and Profit Shifting, which agreed to a two-pillar solution to address tax challenges of the digital economy. On December 20, 2021, the OECD released the Model GloBE Rules for Pillar Two defining a 15% global minimum tax rate for large multinational corporations. Canada and other jurisdictions have enacted Pillar Two legislation in 2024, but the Company believes that any Pillar Two exposure in those jurisdictions would be immaterial. The OECD continues to release additional guidance and countries are implementing legislation with widespread adoption of the Model GloBE Rules for Pillar Two. The Company is continuing to evaluate the Model GloBE Rules for Pillar Two and related legislation, and their potential impact on future periods.