Company Overview - TopBuild (BLD) shares have increased by approximately 1.4% over the past month, underperforming the S&P 500 [1] - The most recent earnings report is crucial for understanding the catalysts affecting the stock [1] Earnings Estimates - Estimates for TopBuild have trended downward in the past month, indicating a negative outlook [2][4] - The stock currently holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [4] VGM Scores - TopBuild has a Growth Score of A, but a low Momentum Score of F, resulting in an overall VGM Score of B [3] - The stock is positioned in the second quintile for the value strategy, indicating moderate value potential [3] Industry Performance - TopBuild is part of the Zacks Building Products - Miscellaneous industry, where competitor Masco (MAS) has seen a 4.9% increase in the past month [5] - Masco reported revenues of $1.8 billion for the last quarter, reflecting a year-over-year decline of 6.5% [5] - Masco's expected earnings for the current quarter are $1.07 per share, down 10.8% year-over-year, with a Zacks Rank 4 (Sell) [6]

Core Viewpoint - TopBuild Corp. has successfully extended and increased its senior secured credit facilities to $2.25 billion, enhancing its liquidity and financial flexibility to support its capital allocation strategy [1][2]. Group 1: Financial Details - The new credit facilities consist of a $1.0 billion term loan, a $1.0 billion revolving credit facility, and a $250.0 million delayed draw term loan, all maturing in May 2030 [1]. - The amended credit facilities will incur interest at the Secured Overnight Financing Rate (SOFR) plus 1.25% per annum, subject to adjustments based on a leverage-based pricing grid [2]. Group 2: Company Overview - TopBuild Corp. is a leading installer and specialty distributor of insulation and building material products in the construction industry across the United States and Canada [3]. - The company operates more than 200 branches for insulation installation services and over 150 branches for its Specialty Distribution business, which includes building and mechanical insulation and related products [3].

Company Overview - TopBuild Corp. (NYSE: BLD) is a leading installer and specialty distributor of insulation and building material products, serving the construction industry across residential, commercial, and industrial markets [1] Business Segments - The company operates through two primary segments: Installation and Distribution, which allows it to maintain a nationwide footprint [1]

Group 1 - Tomas Riba is an economist and former CFO who focuses on investing in high-quality companies capable of compounding cash flow at double-digit rates [1] - His investment journey began in 2007, and he has a background in accounting and finance [1] - Riba has experience in various industries including pharma, medical devices, textiles, food, and real estate [1] Group 2 - Currently, Riba teaches courses on "Derivatives for risk management" and "Investment analysis" at a Master's Degree program in Financial Management [1] - He adopts a long-term investment approach, targeting companies with strong competitive advantages, growing industries, expanding margins, low debt, and aligned management [1]

Core Viewpoint - TopBuild Corp. reported mixed results for Q1 2025, with adjusted earnings exceeding estimates while net sales fell short, reflecting a year-over-year decline in both metrics [1][4]. Financial Performance - Adjusted EPS was $4.63, surpassing the Zacks Consensus Estimate of $4.43 by 4.5%, but down from $4.81 in the previous year [4]. - Net sales reached $1.23 billion, missing the consensus mark of $1.24 billion by 0.6% and declining 3.6% year over year [4]. - M&A contributed a 2.6% increase in sales, while prices rose by 1.2%, but volume decreased by 7.4% [4]. Segment Performance - **Installation Segment**: - Accounted for 57.1% of total net sales, with net sales of $745.5 million, down 6.7% year over year. M&A contributed 1.8% and pricing added 1.1%, while volume declined by 9.6% [5]. - Adjusted operating margin contracted by 110 basis points to 18.5% [5]. - **Specialty Distribution Segment**: - Represented 42.9% of total net sales, with net sales rising 2.6% year over year to $559.8 million. M&A contributed 3.4% and pricing added 1.4%, while volume decreased by 2.2% [6]. - Adjusted operating margin reduced by 50 basis points to 13.6% [7]. Operating Highlights - Adjusted gross margin contracted by 70 basis points to 29.6% [8]. - Adjusted SG&A expenses as a percentage of sales increased by 40 basis points to 13.9% [8]. - Adjusted EBITDA fell 7.5% year over year to $234.8 million, with the adjusted EBITDA margin contracting by 80 basis points to 19% [8]. Financial Position - As of March 31, 2025, cash and cash equivalents were $308.8 million, down from $400.3 million at the end of 2024 [9]. - Long-term debt was $1.31 billion, a decrease from $1.33 billion at the end of 2024 [9]. - Net cash provided by operations was $152.6 million, down from $178.8 million a year ago [9]. - The company repurchased 693,881 shares for a total of $215.6 million during the quarter [9]. Strategic Moves - In April 2025, TopBuild completed the acquisition of Seal-Rite Insulation, which generates approximately $15 million in annual revenues, aimed at expanding its market base [10]. Guidance - TopBuild expects net sales for the full year to be between $5.05 billion and $5.35 billion, compared to $5.33 billion reported last year [11]. - Adjusted EBITDA is projected to be between $925 million and $1.075 billion, compared to $725.8 million in 2024 [11]. - Residential sales are expected to decline in the high-single digits, while Commercial/Industrial sales are anticipated to grow in the low-single digits [11]. - M&As are expected to contribute about $85 million to full-year net sales [12].

Table of Contents ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 193 For the transition period from to Commission file number: 001-36870 TopBuild Corp. (Exact name of Registrant as Specified in its Charter) Delaware UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period March 31, 2025 (State or Other Jurisdiction of In ...

Financial Performance - First quarter sales were $1,233.278 million, a decrease of 3.6% compared to the same period in 2024 [7] - Adjusted operating profit was $194.147 million, a decrease of 9.5% compared to the same period in 2024 [7] - The company returned $215.6 million to shareholders through share repurchases in Q1 [6, 23] - Net debt is $1,067.4 million with a net leverage of 1.00x [19] Segment Performance - Installation segment sales were $745.533 million, a decrease of 6.7% compared to the same period in 2024 [11] - Specialty Distribution segment sales were $559.804 million, an increase of 2.6% compared to the same period in 2024 [15] Outlook and Strategy - The company is confirming full year 2025 guidance, with sales estimated between $5,050 million and $5,350 million and adjusted EBITDA between $925 million and $1,075 million [6, 48, 64] - The company completed the acquisition of Seal-Rite Insulation in April [26] - The company anticipates a high single-digit decline in residential sales and low single-digit growth in commercial & industrial sales for 2025 [45]

Financial Data and Key Metrics Changes - Total sales for the first quarter declined 3.6% to $1,200,000,000, impacted by weakness in new residential construction, partially offset by growth in commercial and industrial sectors [8][17] - Adjusted EBITDA totaled $234,800,000, with an EBITDA margin of 19%, representing an 80 basis point decline compared to the previous year [19][20] - Volume declined 7.4%, with M&A contributing 2.6% and pricing contributing 1.2% to offset the decline [16][17] Business Line Data and Key Metrics Changes - The installation segment, comprising about 62% of total sales, reported a mid-single-digit sales decline, with sales down 6.7% to $745,500,000 [9][17] - Specialty Distribution segment, representing approximately 38% of total revenue, grew sales by 2.6% to $559,800,000, with volume declining 2.2% [9][17] - Recurring revenue in the Specialty Distribution segment accounts for about 25% of segment revenue, driven by certain industrial verticals [10] Market Data and Key Metrics Changes - New residential construction demand remained soft, with economic uncertainty eroding consumer confidence [5][6] - Commercial and industrial markets showed positive trends, particularly in data center construction and healthcare sectors [6][7] - Tariffs and trade restrictions are being monitored, with minimal direct impact anticipated on the company's business [7][22] Company Strategy and Development Direction - The company is focused on acquisitions as a top priority for capital allocation, recently closing the acquisition of SealRite [13][21] - Operational improvements include a footprint optimization project that consolidated 33 facilities, expected to drive ongoing efficiencies [12][18] - The company aims to leverage its core strengths and maintain a disciplined approach to drive shareholder returns [13][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the business despite current macroeconomic challenges [5][6] - The company anticipates continued meaningful growth in commercial and industrial sectors, while residential sales are expected to decline [24] - Full-year sales guidance is maintained at $5,050,000,000 to $5,350,000, with expectations for residential sales to be down high single digits [23][24] Other Important Information - The company has returned $215,600,000 in capital to shareholders through share buybacks [21] - Total liquidity at the end of the quarter was $746,400,000, with net debt totaling $1,070,000,000 [20][21] - The company published its 2024 sustainability report, emphasizing its commitment to sustainability and energy efficiency [15] Q&A Session Summary Question: Insights on commercial and industrial project financing - Management noted that projects previously delayed are now moving forward as stakeholders have accepted the current financing environment, aided by effective execution of their vertical market strategy [28][30] Question: Pricing dynamics and competitive advantage - Management indicated that while they do not expect new pricing in 2025, they have successfully held onto pricing and leveraged their size for competitive advantage [32][34][36] Question: Guidance on residential market outlook - Management acknowledged a slight reduction in residential outlook due to anticipated slower single-family sales, offset by stronger commercial and industrial sales [40][42] Question: Impact of footprint optimization on guidance - Management confirmed that the consolidation of facilities is expected to yield about $30,000,000 or more in annual savings, which is included in their guidance [48][49] Question: Material pricing trends - Management indicated that material prices have remained flattish, with some fluctuations, but they expect pricing to moderate as the year progresses [52][53] Question: Regional performance differences in housing markets - Management provided insights into varying market conditions across regions, noting that while some areas like Florida and Texas are soft, others like Dallas and the Midwest are showing strength [98][100][103]

Financial Data and Key Metrics Changes - Total sales for the first quarter declined 3.6% to $1,200 million, impacted by weakness in new residential construction, partially offset by growth in commercial and industrial sectors [6][15] - Adjusted EBITDA totaled $234.8 million, with an EBITDA margin of 19%, representing an 80 basis point decline compared to the previous year [19][20] - Volume declined 7.4%, with M&A contributing 2.6% and pricing contributing 1.2% [15][16] Business Line Data and Key Metrics Changes - The installation segment, accounting for about 62% of total sales, reported a mid-single-digit sales decline, driven by the residential end market [7][16] - Specialty Distribution segment, representing approximately 38% of total revenue, grew sales by low single digits, with acquisitions adding 3.4% and pricing contributing 1.4% [7][18] - The Service Partners business experienced declines due to softened residential demand, while the DI mechanical insulation business in the U.S. and Canada showed healthy growth [9][10] Market Data and Key Metrics Changes - New residential construction demand remained soft, with economic uncertainty eroding consumer confidence, negatively impacting housing demand [4][5] - Commercial and industrial markets showed positive trends, particularly in data center construction and healthcare sectors [5][6] - The company noted that tariffs and trade restrictions have minimal direct impact on its business, with potential tariff impacts estimated at less than 5% of cost of sales [22] Company Strategy and Development Direction - The company is focused on acquisitions as a top priority for capital allocation, recently closing the acquisition of SealRite [12][21] - Operational improvements include a footprint optimization project that consolidated 33 facilities, expected to drive ongoing efficiencies [11][48] - The company remains committed to returning capital to shareholders, having repurchased nearly 694,000 shares in the first quarter [12][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term prospects of the business despite current macroeconomic challenges [5][14] - The company anticipates continued meaningful growth in commercial and industrial sectors, while residential sales are expected to decline by high single digits for the full year [23][24] - Management highlighted the importance of monitoring the economic environment closely, particularly regarding tariffs and their potential impacts [22] Other Important Information - The company celebrated its ten-year anniversary as a public company, emphasizing the importance of its workforce and culture [13] - The 2024 sustainability report was published, reflecting the company's commitment to energy efficiency and sustainability [14] Q&A Session Summary Question: What has improved in the commercial and industrial side? - Management noted that projects have moved forward as teams have accepted the current financing environment, and execution of the vertical market strategy has contributed to this improvement [28][30] Question: How does pricing dynamics affect the company? - Management indicated that while they do not expect new pricing in 2025, they have been able to hold on to pricing due to strong execution and relationships with manufacturers [32][36] Question: What is the outlook for residential sales? - The company has lowered its residential sales outlook to down high single digits, driven by expectations of slower single-family sales [40][42] Question: How does the footprint optimization impact the business? - The consolidation of facilities is expected to yield about $30 million or more in annual savings, which is already included in the guidance [49][50] Question: What is the current state of the M&A pipeline? - The M&A pipeline remains healthy with a variety of opportunities across all segments, and management is actively engaging with potential sellers [59][109] Question: How are different regions performing in the housing market? - Management provided insights into regional performance, noting that while Florida and Texas are slower, areas like Dallas and the Midwest are showing positive trends [96][99]

Core Viewpoint - TopBuild reported quarterly earnings of $4.63 per share, exceeding the Zacks Consensus Estimate of $4.43 per share, but down from $4.81 per share a year ago, indicating a 3.74% year-over-year decline in earnings [1][2] Financial Performance - The company posted revenues of $1.23 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 0.56% and down from $1.28 billion year-over-year, reflecting a 3.91% decrease [2] - Over the last four quarters, TopBuild has surpassed consensus EPS estimates three times, but has only topped consensus revenue estimates once [2] Stock Performance - TopBuild shares have declined approximately 6.2% since the beginning of the year, compared to a 3.9% decline in the S&P 500 [3] - The current Zacks Rank for TopBuild is 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $5.13 on revenues of $1.32 billion, and for the current fiscal year, it is $20.02 on revenues of $5.19 billion [7] - The trend for estimate revisions ahead of the earnings release was unfavorable, which may impact future stock performance [6] Industry Context - The Building Products - Miscellaneous industry, to which TopBuild belongs, is currently ranked in the bottom 36% of over 250 Zacks industries, suggesting potential challenges for stocks in this sector [8]