Core Insights - TopBuild reported $1.3 billion in revenue for the quarter ended June 2025, reflecting a year-over-year decline of 5% [1] - The EPS for the same period was $5.31, down from $5.42 a year ago, but exceeded the consensus estimate of $5.07 by 4.73% [1] - The revenue surpassed the Zacks Consensus Estimate of $1.29 billion by 0.21% [1] Financial Performance Metrics - Net Sales in Specialty Distribution reached $599 million, exceeding the average estimate of $589.99 million, with a year-over-year increase of 1% [4] - Net Sales in Installation amounted to $781 million, slightly above the estimated $774.74 million, but showed a decline of 8.2% compared to the previous year [4] - Intercompany eliminations reported a figure of $-82.46 million, worse than the average estimate of $-73.93 million, but improved by 5.5% year-over-year [4] Operating Profit Analysis - Operating profit for Installation was reported at $155.44 million, surpassing the average estimate of $145.26 million [4] - Operating profit for Specialty Distribution was $87.48 million, slightly above the average estimate of $86.58 million [4] - General corporate expense netted $-9.5 million, better than the estimated $-14.6 million [4] Stock Performance - TopBuild shares have returned +12.7% over the past month, outperforming the Zacks S&P 500 composite's +1% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Total sales in the second quarter declined by 5% to $1.3 billion, with volume down 7.8%, partially offset by M&A growth of 1.9% and pricing of 0.9% [14][15] - Adjusted EBITDA margin for the second quarter was 20.1%, reflecting a sequential improvement of 110 basis points from the first quarter [17] - Adjusted earnings per diluted share were $5.31, compared to $5.42 in the previous year [18] Business Line Data and Key Metrics Changes - Installation segment sales totaled $780.7 million, down 8.3%, driven by a 10.5% volume decline, partially offset by acquisitions of 1.4% and pricing of 0.9% [15] - Specialty distribution sales improved by 1.1% to $599.2 million, with acquisitions contributing 2.3% and pricing adding 0.8%, despite a 2.1% decline in volume [15][16] Market Data and Key Metrics Changes - Weakness in residential new construction was noted, with single-family demand sliding further year-over-year [7] - Heavy commercial and industrial sectors showed growth, particularly in technology, education, and healthcare [7][14] Company Strategy and Development Direction - The acquisition of Progressive Roofing was completed, establishing a new growth platform in the $75 billion commercial roofing services market [4][8] - The company aims to diversify its business, with commercial and industrial sales now accounting for approximately 40% of total sales, up from 15% in 2015 [11] - The total addressable market for insulation and commercial roofing is nearly $95 billion, indicating significant growth opportunities [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying fundamentals of the business, emphasizing a flexible and diversified business model [24] - The company anticipates continued challenges in the residential market, projecting low double-digit declines in residential sales for the year [21] - The guidance for full-year sales is expected to be between $5.15 billion and $5.35 billion, with M&A expected to add approximately $300 million to sales [21][22] Other Important Information - The company repurchased approximately 455,000 shares, returning $136 million in capital to shareholders [9][20] - Total liquidity at the end of the quarter was $1.8 billion, with total debt at $2.4 billion [18][19] Q&A Session Summary Question: Impact of Progressive on margins and sales synergy opportunities - Management indicated that Progressive is expected to contribute approximately $215 million in incremental sales, with EBITDA around 20%, not significantly dilutive to current margins [27][28] Question: Details on residential market softness - Management noted that the residential market is primarily affected by single-family construction, with light commercial also facing challenges, while heavy commercial remains strong [31][34] Question: Pricing and cost dynamics - Management acknowledged a $30 million headwind in the second half due to price-cost dynamics, with expectations of tougher comparisons on pricing [56][57] Question: Outlook for M&A in commercial roofing - Management expressed optimism about the M&A pipeline in commercial roofing, with several larger deals anticipated [101][102] Question: Staffing adjustments in response to market conditions - Management confirmed that they have calibrated staffing levels in response to current market conditions, with ongoing monitoring for further adjustments if necessary [96][98]

Financial Data and Key Metrics Changes - Total sales in Q2 2025 declined by 5% to $1,300,000,000, with volume down 7.8%, partially offset by M&A contributing 1.9% and pricing contributing 0.9% [13][14] - Adjusted EBITDA for Q2 was $261,300,000, representing a margin of 20.1%, which improved by 110 basis points from Q1 and was down only 20 basis points year-over-year [15][16] - Adjusted earnings per diluted share were $5.31, compared to $5.42 in the previous year [17] Business Line Data and Key Metrics Changes - Installation segment sales totaled $780,700,000, down 8.3%, driven by a 10.5% volume decline, partially offset by acquisitions and pricing [14] - Specialty distribution sales improved by 1.1% to $599,200,000, with acquisitions growing sales by 2.3% and pricing adding 0.8% [14][15] - Adjusted EBITDA margin for the installation segment was 22.3%, up 120 basis points sequentially and flat year-over-year [16] Market Data and Key Metrics Changes - The residential new construction market remained weak, with single-family demand sliding further year-over-year [6][7] - Heavy commercial and industrial sectors showed growth, particularly in technology, education, and healthcare [6][14] - The company noted a mixed economic environment affecting consumer confidence, particularly in the housing market [6][7] Company Strategy and Development Direction - The acquisition of Progressive Roofing aims to establish a new growth platform in the $75 billion commercial roofing services market, enhancing service offerings and exposure to non-cyclical revenue [4][5] - The company has diversified its business, with commercial and industrial sales now accounting for approximately 40% of total sales, up from 15% in 2015 [10] - The total addressable market for insulation and commercial roofing is nearly $95 billion, indicating significant growth opportunities [11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying fundamentals of the business, emphasizing the ability to adjust operations as demand changes [24] - The company anticipates continued challenges in the residential market, projecting low double-digit declines in residential sales for the year [21][33] - Management highlighted a robust pipeline of acquisition candidates and remains disciplined around valuation to drive shareholder returns [7][20] Other Important Information - The company repurchased approximately 455,000 shares, returning $136,000,000 to shareholders in Q2 [8][20] - Total liquidity at the end of Q2 was $1,800,000,000, with total debt at $2,400,000,000 [17][18] Q&A Session Summary Question: Impact of Progressive on margins and future contributions - Management indicated that Progressive is expected to contribute approximately $215,000,000 in incremental sales, with EBITDA around 20%, not significantly dilutive to current margins [27][28] Question: Details on residential market softness - Management noted that the residential market is primarily affected by single-family construction, with light commercial also facing challenges, while heavy commercial remains strong [31][33] Question: Pricing and cost dynamics - Management acknowledged a $30,000,000 headwind in the second half due to pricing pressures, particularly in the residential distribution side, while maintaining solid pricing in commercial products [55][56] Question: Outlook for M&A in commercial roofing - Management expressed optimism about the M&A pipeline in commercial roofing, with several larger deals anticipated and a disciplined approach to acquisitions [99][100] Question: Staffing adjustments in response to market conditions - Management confirmed that they have calibrated staffing levels appropriately and will continue to monitor the situation as market conditions evolve [91][93]

Financial Performance - Q2 2025 - Sales decreased by 50% to $1297403000 compared to the three months ended June 30 2024[8] - Adjusted Operating Profit decreased by 73% to $220651000[8] - Adjusted Operating Margin was 170% a decrease of 40 bps[8] - Adjusted EBITDA Margin was 201% a decrease of 20 bps[8] Segment Performance - Installation - Installation sales decreased by 83% to $780678000[12] - Installation Adjusted Operating Profit decreased by 96% to $154541000[12] - Installation Adjusted Operating Margin was 198% a decrease of 30 bps[12] - Installation Adjusted EBITDA Margin was 223%[12] Segment Performance - Specialty Distribution - Specialty Distribution sales increased by 11% to $599184000[16] - Specialty Distribution Adjusted Operating Profit decreased by 22% to $87429000[16] - Specialty Distribution Adjusted Operating Margin was 146% a decrease of 50 bps[16] - Specialty Distribution Adjusted EBITDA Margin was 172% a decrease of 50 bps[16] Capital Allocation and Outlook - The company completed the Progressive Roofing acquisition adding approximately $438 million in annual revenue[7] - The company returned $1360 million in capital to shareholders in Q2 2025[25] - The company estimates sales of $5150 million to $5350 million and adjusted EBITDA of $970 million to $1070 million for 2025[34]

Company Performance - TopBuild reported quarterly earnings of $5.31 per share, exceeding the Zacks Consensus Estimate of $5.07 per share, but down from $5.42 per share a year ago, representing an earnings surprise of +4.73% [1] - The company posted revenues of $1.3 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.21%, but down from $1.37 billion year-over-year [2] - Over the last four quarters, TopBuild has surpassed consensus EPS estimates four times and topped consensus revenue estimates two times [2] Stock Performance - TopBuild shares have increased approximately 24.4% since the beginning of the year, significantly outperforming the S&P 500's gain of 7.6% [3] - The current Zacks Rank for TopBuild is 3 (Hold), indicating that the shares are expected to perform in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $5.32 on revenues of $1.34 billion, and for the current fiscal year, it is $19.92 on revenues of $5.17 billion [7] - The outlook for the industry, specifically the Building Products - Miscellaneous sector, is currently in the bottom 35% of over 250 Zacks industries, which may impact TopBuild's stock performance [8]

[Executive Summary](index=1&type=section&id=Executive%20Summary) TopBuild reported a 5.0% sales decline in Q2 2025, maintaining a 20.1% adjusted EBITDA margin, while strategically expanding into commercial roofing and prioritizing M&A and share repurchases [Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) TopBuild reported second quarter 2025 sales of $1.3 billion, a 5.0% decline year-over-year, primarily due to an 8.3% decrease in the Installation segment, partially offset by 1.1% growth in Specialty Distribution - Second quarter sales of **$1.3 billion** declined **5.0%** year-over-year[2](index=2&type=chunk) - Adjusted EBITDA margin for Q2 2025 was **20.1%**[1](index=1&type=chunk)[2](index=2&type=chunk) - Sales decline was driven by an **8.3%** decrease in Installation, partly offset by **1.1%** growth in Specialty Distribution[2](index=2&type=chunk) [Strategic Initiatives & Outlook](index=1&type=section&id=Strategic%20Initiatives%20%26%20Outlook) TopBuild recently closed the acquisition of Progressive Roofing, establishing a new growth platform in commercial roofing services, with the 2025 outlook incorporating its contributions to offset market weakness - TopBuild closed the acquisition of Progressive Roofing, establishing a new platform for growth in the commercial roofing services sector[2](index=2&type=chunk) - The 2025 outlook assumes Progressive Roofing's contribution will offset further weakness in residential new construction and light commercial markets[3](index=3&type=chunk) - M&A remains a priority for capital deployment, and the company repurchased nearly **455,000 shares** for **$136.0 million** in Q2 2025[4](index=4&type=chunk) [Financial Highlights](index=2&type=section&id=Financial%20Highlights) The company experienced sales declines of 5.0% for Q2 and 4.3% for the six months ended June 30, 2025, with adjusted EBITDA margins remaining strong at 20.1% and 19.6% respectively [Three Months Ended June 30, 2025](index=2&type=section&id=Three%20Months%20Ended%20June%2030%2C%202025) For the three months ended June 30, 2025, TopBuild reported sales of $1,297.4 million, a decrease from $1,365.6 million in the prior year, with adjusted net income per diluted share slightly down at $5.31 | ($ in thousands) | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | **Sales** | $1,297,403 | $1,365,612 | -5.0% | | **Gross Profit (Adjusted)** | $392,943 | $423,922 | -7.3% | | **Gross Margin (Adjusted)** | 30.3% | 31.0% | -0.7 pp | | **Operating Profit (Adjusted)** | $220,651 | $238,029 | -7.3% | | **Operating Margin (Adjusted)** | 17.0% | 17.4% | -0.4 pp | | **Net Income (Adjusted)** | $151,296 | $170,800 | -11.4% | | **Net Income per diluted share (Adjusted)** | $5.31 | $5.42 | -2.0% | | **EBITDA (Adjusted)** | $261,302 | $277,694 | -5.9% | | **EBITDA Margin (Adjusted)** | 20.1% | 20.3% | -0.2 pp | [Six Months Ended June 30, 2025](index=2&type=section&id=Six%20Months%20Ended%20June%2030%2C%202025) For the six months ended June 30, 2025, total sales were $2,530.7 million, down 4.3% from the previous year, with adjusted net income per diluted share at $9.93 and an adjusted EBITDA margin of 19.6% | ($ in thousands) | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | **Sales** | $2,530,681 | $2,644,329 | -4.3% | | **Gross Profit (Adjusted)** | $757,919 | $811,072 | -6.6% | | **Gross Margin (Adjusted)** | 29.9% | 30.7% | -0.8 pp | | **Operating Profit (Adjusted)** | $414,797 | $452,463 | -8.3% | | **Operating Margin (Adjusted)** | 16.4% | 17.1% | -0.7 pp | | **Net Income (Adjusted)** | $286,442 | $323,922 | -11.5% | | **Net Income per diluted share (Adjusted)** | $9.93 | $10.22 | -2.8% | | **EBITDA (Adjusted)** | $496,060 | $531,513 | -6.7% | | **EBITDA Margin (Adjusted)** | 19.6% | 20.1% | -0.5 pp | [Sales Drivers & Segment Profitability](index=3&type=section&id=Sales%20Drivers%20%26%20Segment%20Profitability) Q2 2025 sales declined 5.0% due to volume decreases, partially offset by price increases and M&A, with Installation's adjusted EBITDA declining more than Specialty Distribution [Sales Drivers Analysis](index=3&type=section&id=Sales%20Drivers%20Analysis) In Q2 2025, TopBuild's total sales declined 5.0%, primarily driven by a 7.8% decrease in volume, partially offset by a 0.9% price increase and 1.9% contribution from M&A Three Months Ended June 30, 2025 - Sales Drivers | Sales Drivers | Installation | Specialty Distribution | TopBuild, net of eliminations | | :--- | :--- | :--- | :--- | | Volume | (10.5%) | (2.1%) | (7.8%) | | Price | 0.9% | 0.8% | 0.9% | | M&A | 1.4% | 2.3% | 1.9% | | **Total Sales Change** | **(8.3%)** | **1.1%** | **(5.0%)** | Six Months Ended June 30, 2025 - Sales Drivers | Sales Drivers | Installation | Specialty Distribution | TopBuild, net of eliminations | | :--- | :--- | :--- | :--- | | Volume | (10.1%) | (2.1%) | (7.6%) | | Price | 1.0% | 1.1% | 1.1% | | M&A | 1.6% | 2.8% | 2.2% | | **Total Sales Change** | **(7.5%)** | **1.8%** | **(4.3%)** | [Segment Profitability Analysis](index=3&type=section&id=Segment%20Profitability%20Analysis) For Q2 2025, the Installation segment's adjusted EBITDA declined by 8.4% to $174.1 million, maintaining a 22.3% adjusted EBITDA margin, while Specialty Distribution saw a smaller decline Three Months Ended June 30, 2025 - Segment Profitability | ($ in thousands) | Installation | Specialty Distribution | | :--- | :--- | :--- | | **Operating Profit** | $155,441 | $87,482 | | **Change (YoY)** | (8.9%) | (2.1%) | | **Operating Margin** | 19.9% | 14.6% | | **Adj. EBITDA** | $174,062 | $102,946 | | **Change (YoY)** | (8.4%) | (1.8%) | | **Adj. EBITDA Margin** | 22.3% | 17.2% | Six Months Ended June 30, 2025 - Segment Profitability | ($ in thousands) | Installation | Specialty Distribution | | :--- | :--- | :--- | | **Operating Profit** | $285,057 | $156,541 | | **Change (YoY)** | (13.0%) | (6.2%) | | **Operating Margin** | 18.7% | 13.5% | | **Adj. EBITDA** | $331,618 | $194,313 | | **Change (YoY)** | (9.3%) | (1.3%) | | **Adj. EBITDA Margin** | 21.7% | 16.8% | [Capital Allocation & Outlook](index=4&type=section&id=Capital%20Allocation%20%26%20Outlook) TopBuild deployed $833 million year-to-date on acquisitions, including Progressive Roofing, repurchased $136 million in shares, and projects 2025 sales between $5.15 billion and $5.35 billion [Acquisitions](index=4&type=section&id=Acquisitions) TopBuild continues to prioritize acquisitions, deploying approximately $833 million year-to-date for acquisitions, including the $810 million acquisition of Progressive Roofing in July 2025 - As of June 30, 2025, TopBuild spent approximately **$23 million** on acquisitions, with an additional **$810 million** for Progressive Roofing in July, bringing year-to-date deployed capital to **$833 million**[10](index=10&type=chunk) 2025 Acquisitions | Company | Annual Revenue ($ in millions) | Month Closed | | :--- | :--- | :--- | | Progressive Roofing | $438.0 | July | | Seal-Rite Insulation | $15.2 | April | | **Total** | **$453.2** | | [Share Repurchases](index=4&type=section&id=Share%20Repurchases) TopBuild returned $136.0 million to shareholders by repurchasing 454,802 shares during the second quarter of 2025, with $836.4 million remaining for future repurchases - During Q2 2025, TopBuild repurchased **454,802 shares** totaling **$136.0 million**[11](index=11&type=chunk) - Year-to-date, the company bought back **1,148,683 shares** for **$351.6 million**[11](index=11&type=chunk) - Remaining availability for share repurchases at the end of Q2 2025 totaled **$836.4 million**[11](index=11&type=chunk) [2025 Full Year Outlook](index=4&type=section&id=2025%20Full%20Year%20Outlook) TopBuild issued its full-year 2025 outlook, projecting sales between $5.150 billion and $5.350 billion, and adjusted EBITDA between $970 million and $1,070 million - The 2025 full-year outlook includes the contribution from the Progressive Roofing acquisition[12](index=12&type=chunk) 2025 Outlook | $ in millions | Low | High | | :--- | :--- | :--- | | **Sales** | $5,150.0 | $5,350.0 | | **Adjusted EBITDA** | $970.0 | $1,070.0 | [Company Information & Disclosures](index=5&type=section&id=Company%20Information%20%26%20Disclosures) TopBuild is a leading insulation and roofing installer and distributor, utilizing non-GAAP measures for performance comparison, and provides a safe harbor statement for forward-looking information [About TopBuild](index=5&type=section&id=About%20TopBuild) TopBuild Corp. is a leading installer of insulation and commercial roofing, and a specialty distributor of insulation and related building material products in the U.S. and Canada - TopBuild is a leading installer of insulation and commercial roofing and a specialty distributor of building materials in the U.S. and Canada[16](index=16&type=chunk) - The Installation segment has over **200 branches**, and the Specialty Distribution network encompasses more than **150 branches**[16](index=16&type=chunk) [Use of Non-GAAP Financial Measures](index=5&type=section&id=Use%20of%20Non-GAAP%20Financial%20Measures) TopBuild utilizes non-GAAP financial measures such as Adjusted EBITDA to provide additional meaningful comparisons of current and prior period results, which are reconciled to GAAP equivalents - Non-GAAP financial measures like Adjusted EBITDA are used to provide additional meaningful comparisons between current and prior period results[17](index=17&type=chunk) - These non-GAAP measures are reconciled to their closest GAAP financial measures in the press release and should be viewed in addition to, not as an alternative for, GAAP results[17](index=17&type=chunk) [Safe Harbor Statement](index=5&type=section&id=Safe%20Harbor%20Statement) The press release contains forward-looking statements regarding expected financial and operational results and stock repurchase plans, which involve risks and uncertainties - The press release contains forward-looking statements regarding expected financial and operational results and stock repurchase plans[18](index=18&type=chunk) - These statements involve risks and uncertainties that could cause actual results to differ materially from expectations[18](index=18&type=chunk) - TopBuild undertakes no obligation to update any forward-looking statements, except as required by applicable law[18](index=18&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20%28Unaudited%29) Consolidated financial statements show decreased net sales, increased operating cash flow, and a rise in total assets and long-term debt as of June 30, 2025 [Statements of Operations](index=6&type=section&id=Statements%20of%20Operations) TopBuild's condensed consolidated statements of operations show a decrease in net sales for both the three and six months ended June 30, 2025, compared to the prior year, with operating profit for the three-month period increasing slightly Condensed Consolidated Statements of Operations (Unaudited) - Three Months Ended June 30 | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $1,297,403 | $1,365,612 | | Gross profit | $394,043 | $423,922 | | Operating profit | $219,789 | $210,392 | | Net income | $151,602 | $150,723 | | Diluted EPS | $5.32 | $4.78 | Condensed Consolidated Statements of Operations (Unaudited) - Six Months Ended June 30 | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net sales | $2,530,681 | $2,644,329 | | Gross profit | $745,516 | $811,072 | | Operating profit | $397,277 | $424,900 | | Net income | $274,986 | $303,104 | | Diluted EPS | $9.53 | $9.56 | [Statements of Comprehensive Income](index=7&type=section&id=Statements%20of%20Comprehensive%20Income) Comprehensive income for the three months ended June 30, 2025, increased to $161.5 million from $148.9 million in the prior year, primarily due to a positive foreign currency translation adjustment Consolidated Statements of Comprehensive Income (Unaudited) | (in thousands) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income | $151,602 | $150,723 | $274,986 | $303,104 | | Foreign currency translation adjustment | $9,868 | $(1,836) | $10,096 | $(5,928) | | **Comprehensive income** | **$161,470** | **$148,887** | **$285,082** | **$297,176** | [Balance Sheets and Other Financial Data](index=8&type=section&id=Balance%20Sheets%20and%20Other%20Financial%20Data) As of June 30, 2025, TopBuild's total assets increased to $5.12 billion from $4.74 billion at December 31, 2024, driven by a significant increase in cash and cash equivalents and long-term debt Condensed Consolidated Balance Sheets (Unaudited) | (dollars in thousands) | As of June 30, 2025 | As of December 31, 2024 | | :--- | :--- | :--- | | **ASSETS** | | | | Cash and cash equivalents | $842,493 | $400,318 | | Total current assets | $2,018,084 | $1,598,974 | | Goodwill | $2,125,827 | $2,112,259 | | **Total assets** | **$5,119,818** | **$4,735,426** | | **LIABILITIES** | | | | Total current liabilities | $714,285 | $767,182 | | Long-term debt | $1,833,213 | $1,327,159 | | **Total liabilities** | **$2,975,820** | **$2,525,808** | | **EQUITY** | **$2,143,998** | **$2,209,618** | | **Total liabilities and equity** | **$5,119,818** | **$4,735,426** | Other Financial Data (As of June 30) | Other Financial Data | 2025 | 2024 | | :--- | :--- | :--- | | Receivables, net plus inventories less accounts payable | $720,525 | $792,396 | | Receivables, net plus inventories less accounts payable as a percent of sales (TTM) | 13.7% | 14.8% | [Statements of Cash Flows](index=9&type=section&id=Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $346.3 million, while financing activities generated a net cash inflow of $139.1 million due to long-term debt issuance Condensed Consolidated Statements of Cash Flows (Unaudited) - Six Months Ended June 30 | (in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $346,279 | $269,128 | | Net cash used in investing activities | $(45,490) | $(121,947) | | Net cash provided by (used in) financing activities | $139,091 | $(531,949) | | Net increase (decrease) in cash and cash equivalents | $442,175 | $(385,344) | | Cash and cash equivalents - End of period | $842,493 | $463,221 | [Segment Data & Non-GAAP Reconciliations (Unaudited)](index=10&type=section&id=Segment%20Data%20%26%20Non-GAAP%20Reconciliations%20%28Unaudited%29) Segment data reveals sales declines in Installation and growth in Specialty Distribution, with detailed reconciliations provided for adjusted EBITDA and other non-GAAP financial measures [Segment Data](index=10&type=section&id=Segment%20Data) The Installation segment reported a sales decrease of 8.3% for Q2 2025 and 7.5% for the six months ended June 30, 2025, with adjusted EBITDA margins of 22.3% and 21.7% respectively Installation Segment Data (Unaudited) | (dollars in thousands) | Q2 2025 | Q2 2024 | Change (YoY) | 6M 2025 | 6M 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | $780,678 | $850,983 | (8.3)% | $1,526,211 | $1,649,726 | (7.5)% | | Adj. Operating Profit | $154,541 | $171,006 | | $292,581 | $327,808 | | | Adj. Operating Margin | 19.8% | 20.1% | | 19.2% | 19.9% | | | Adj. EBITDA | $174,062 | $190,036 | (8.4)% | $331,618 | $365,435 | (9.3)% | | Adj. EBITDA Margin | 22.3% | 22.3% | | 21.7% | 22.2% | | Specialty Distribution Segment Data (Unaudited) | (dollars in thousands) | Q2 2025 | Q2 2024 | Change (YoY) | 6M 2025 | 6M 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Sales | $599,184 | $592,826 | 1.1% | $1,158,987 | $1,138,620 | 1.8% | | Adj. Operating Profit | $87,429 | $89,383 | | $163,393 | $166,211 | | | Adj. Operating Margin | 14.6% | 15.1% | | 14.1% | 14.6% | | | Adj. EBITDA | $102,946 | $104,810 | (1.8)% | $194,313 | $196,907 | (1.3)% | | Adj. EBITDA Margin | 17.2% | 17.7% | | 16.8% | 17.3% | | [Adjusted EBITDA Reconciliation](index=11&type=section&id=Adjusted%20EBITDA%20Reconciliation) TopBuild's adjusted EBITDA for Q2 2025 was $261.3 million, a 5.9% decrease year-over-year, with an adjusted EBITDA margin of 20.1%, reflecting various operational and acquisition-related adjustments Adjusted EBITDA Reconciliation (Unaudited) | (dollars in thousands) | Q2 2025 | Q2 2024 | Change (YoY) | 6M 2025 | 6M 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Operating profit, as reported | $219,789 | $210,392 | | $397,277 | $424,900 | | | Rationalization charges | $(1,021) | $258 | | $14,337 | $(492) | | | Refinancing costs | $226 | $- | | $226 | $- | | | Acquisition related costs | $1,657 | $4,379 | | $2,957 | $5,055 | | | Acquisition termination fee | $- | $23,000 | | $- | $23,000 | | | Operating profit, as adjusted | $220,651 | $238,029 | | $414,797 | $452,463 | | | Share-based compensation | $4,765 | $4,632 | | $9,806 | $9,759 | | | Depreciation and amortization | $35,886 | $35,033 | | $71,457 | $69,291 | | | **EBITDA, as adjusted** | **$261,302** | **$277,694** | **(5.9)%** | **$496,060** | **$531,513** | **(6.7)%** | | EBITDA margin, as adjusted | 20.1% | 20.3% | | 19.6% | 20.1% | | [Same Branch and Acquisition Metrics](index=12&type=section&id=Same%20Branch%20and%20Acquisition%20Metrics) Same branch sales for Q2 2025 decreased to $1,271.9 million, while acquisitions contributed $25.5 million, with same branch adjusted EBITDA at $255.9 million and a 20.1% margin Same Branch and Acquisition Metrics (Unaudited) - Three Months Ended June 30 | (dollars in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | **Net sales** | | | | Same branch | $1,271,869 | $1,365,612 | | Acquisitions | $25,534 | $- | | **Total net sales** | **$1,297,403** | **$1,365,612** | | **EBITDA, as adjusted** | | | | Same branch | $255,946 | $277,694 | | Acquisitions | $5,356 | $- | | **Total** | **$261,302** | **$277,694** | | EBITDA, as adjusted, as a percentage of sales (Same branch) | 20.1% | | | EBITDA, as adjusted, as a percentage of sales (Acquisitions) | 21.0% | | Same Branch and Acquisition Metrics (Unaudited) - Six Months Ended June 30 | (dollars in thousands) | 2025 | 2024 | | :--- | :--- | :--- | | **Net sales** | | | | Same branch | $2,471,893 | $2,644,329 | | Acquisitions | $58,788 | $- | | **Total net sales** | **$2,530,681** | **$2,644,329** | | **EBITDA, as adjusted** | | | | Same branch | $485,860 | $531,513 | | Acquisitions | $10,200 | $- | | **Total** | **$496,060** | **$531,513** | | EBITDA, as adjusted, as a percentage of sales (Same branch) | 19.7% | | | EBITDA, as adjusted, as a percentage of sales (Acquisitions) | 17.4% | | [Same Branch Revenue by Line of Business](index=13&type=section&id=Same%20Branch%20Revenue%20by%20Line%20of%20Business) Residential same branch sales declined by 9.4% in Q2 2025, while Commercial/Industrial same branch sales saw a smaller decline of 2.2%, with acquisitions contributing to total sales growth in both segments Same Branch Revenue by Line of Business (Unaudited) - Three Months Ended June 30 | (dollars in thousands) | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | **Residential:** | | | | | Same branch | $801,031 | $884,100 | (9.4)% | | Acquisitions | $8,469 | $- | | | **Total Residential sales** | **$809,500** | **$884,100** | **(8.4)%** | | **Commercial/Industrial:** | | | | | Same branch | $470,838 | $481,512 | (2.2)% | | Acquisitions | $17,065 | $- | | | **Total Commercial/Industrial sales** | **$487,903** | **$481,512** | **1.3%** | | **Total net sales** | **$1,297,403** | **$1,365,612** | **(5.0)%** | Same Branch Revenue by Line of Business (Unaudited) - Six Months Ended June 30 | (dollars in thousands) | 2025 | 2024 | Change (YoY) | | :--- | :--- | :--- | :--- | | **Residential:** | | | | | Same branch | $1,555,856 | $1,718,943 | (9.5)% | | Acquisitions | $23,396 | $- | | | **Total Residential sales** | **$1,579,252** | **$1,718,943** | **(8.1)%** | | **Commercial/Industrial:** | | | | | Same branch | $916,037 | $925,386 | (1.0)% | | Acquisitions | $35,392 | $- | | | **Total Commercial/Industrial sales** | **$951,429** | **$925,386** | **2.8%** | | **Total net sales** | **$2,530,681** | **$2,644,329** | **(4.3)%** | [Non-GAAP Reconciliations (Gross Profit, SG&A, Operating Profit, EPS)](index=14&type=section&id=Non-GAAP%20Reconciliations%20%28Gross%20Profit%2C%20SG%26A%2C%20Operating%20Profit%2C%20EPS%29) TopBuild provides reconciliations for various non-GAAP measures, with adjusted gross profit for Q2 2025 at $392.9 million (30.3% margin) and adjusted diluted EPS at $5.31 Gross Profit Reconciliation (Unaudited) | (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--- | :--- | :--- | :--- | :--- | | Gross profit, as reported | $394,043 | $423,922 | $745,516 | $811,072 | | Rationalization charges | $(1,100) | $- | $12,403 | $- | | **Gross profit, as adjusted** | **$392,943** | **$423,922** | **$757,919** | **$811,072** | | Gross margin, as adjusted | 30.3% | 31.0% | 29.9% | 30.7% | Selling, General and Administrative Expense Reconciliation (Unaudited) | (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--- | :--- | :--- | :--- | :--- | | SG&A, as reported | $174,254 | $213,530 | $348,239 | $386,172 | | Rationalization charges | $79 | $258 | $1,934 | $(492) | | Refinancing costs | $226 | $- | $226 | $- | | Acquisition related costs | $1,657 | $4,379 | $2,957 | $5,055 | | Acquisition termination fee | $- | $23,000 | $- | $23,000 | | **SG&A, as adjusted** | **$172,292** | **$185,893** | **$343,122** | **$358,609** | Operating Profit and Income Per Common Share Reconciliation (Unaudited) | (in thousands, except per share) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating profit, as reported | $219,789 | $210,392 | $397,277 | $424,900 | | Adjustments (Rationalization, Refinancing, Acquisition costs, Termination fee) | $862 | $27,637 | $17,520 | $27,563 | | **Operating profit, as adjusted** | **$220,651** | **$238,029** | **$414,797** | **$452,463** | | Operating margin, as adjusted | 17.0% | 17.4% | 16.4% | 17.1% | | **Income per common share, as adjusted** | **$5.31** | **$5.42** | **$9.93** | **$10.22** | [Reconciliation of Adjusted EBITDA to Net Income](index=15&type=section&id=Reconciliation%20of%20Adjusted%20EBITDA%20to%20Net%20Income) The reconciliation from net income to adjusted EBITDA for Q2 2025 shows adjustments totaling $109.7 million, resulting in an adjusted EBITDA of $261.3 million Reconciliation of Adjusted EBITDA to Net Income (Unaudited) | (in thousands) | Q2 2025 | Q2 2024 | 6M 2025 | 6M 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income, as reported | $151,602 | $150,723 | $274,986 | $303,104 | | Interest expense and other, net | $16,197 | $7,218 | $27,713 | $14,731 | | Income tax expense | $51,990 | $52,451 | $94,578 | $107,065 | | Depreciation and amortization | $35,886 | $35,033 | $71,457 | $69,291 | | Share-based compensation | $4,765 | $4,632 | $9,806 | $9,759 | | Rationalization charges | $(1,021) | $258 | $14,337 | $(492) | | Refinancing costs | $226 | $- | $226 | $- | | Acquisition related costs | $1,657 | $4,379 | $2,957 | $5,055 | | Acquisition termination fee | $- | $23,000 | $- | $23,000 | | **EBITDA, as adjusted** | **$261,302** | **$277,694** | **$496,060** | **$531,513** | [Acquisition Adjusted Net Sales & Estimated Adjusted EBITDA Range (Unaudited)](index=16&type=section&id=Acquisition%20Adjusted%20Net%20Sales%20%26%20Estimated%20Adjusted%20EBITDA%20Range%20%28Unaudited%29) Trailing twelve months acquisition-adjusted net sales reached $5.25 billion, with the 2025 estimated adjusted EBITDA projected between $970 million and $1.07 billion [Acquisition Adjusted Net Sales](index=16&type=section&id=Acquisition%20Adjusted%20Net%20Sales) TopBuild's trailing twelve months (TTM) net sales, adjusted for the pro forma effect of acquired branches, reached $5,248.4 million as of June 30, 2025 Acquisition Adjusted Net Sales (Unaudited) | (in thousands) | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Trailing Twelve Months Ended June 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | $1,373,268 | $1,312,206 | $1,233,278 | $1,297,403 | $5,216,155 | | Acquisitions proforma adjustment | $16,695 | $12,058 | $3,297 | $210 | $32,260 | | **Net sales, acquisition adjusted** | **$1,389,963** | **$1,324,264** | **$1,236,575** | **$1,297,613** | **$5,248,415** | [2025 Estimated Adjusted EBITDA Range](index=17&type=section&id=2025%20Estimated%20Adjusted%20EBITDA%20Range) TopBuild's estimated adjusted EBITDA for the full year 2025 is projected to be between $970 million and $1,070 million, derived from an estimated net income of $499 million to $584 million with various adjustments 2025 Estimated Adjusted EBITDA Range (Unaudited) | (in millions) | Low | High | | :--- | :--- | :--- | | Estimated net income, as reported | $499.0 | $584.0 | | Adjustments to arrive at estimated EBITDA, as adjusted: | | | | Interest expense and other, net | $82.0 | $78.0 | | Income tax expense | $175.0 | $205.0 | | Depreciation and amortization | $163.0 | $155.0 | | Share-based compensation | $19.0 | $18.0 | | Rationalization charges | $15.0 | $15.0 | | Acquisition related costs | $17.0 | $15.0 | | **Estimated EBITDA, as adjusted** | **$970.0** | **$1,070.0** |

Core Insights - TopBuild Corp. reported second quarter sales of $1.3 billion, reflecting a 5.0% decline compared to the previous year, primarily due to an 8.3% decrease in Installation sales, partially offset by a 1.1% increase in Specialty Distribution sales [2][5][9] - The company achieved an adjusted EBITDA margin of 20.1% for the second quarter, indicating effective cost management and operational improvements [2][5] - For 2025, TopBuild projects sales between $5.150 billion and $5.350 billion, with adjusted EBITDA expected to range from $970 million to $1,070 million, including contributions from the recent acquisition of Progressive Roofing [1][15] Financial Performance - Second quarter net income was $151.6 million, with net income per diluted share at $5.32, compared to $150.7 million and $4.78 per share in the same quarter of 2024 [5][21] - The gross profit for the second quarter was $394.0 million, resulting in a gross margin of 30.4%, slightly down from 31.0% in the prior year [5][21] - Selling, general, and administrative expenses (SG&A) decreased to $174.3 million, representing 13.4% of sales, down from 15.6% in the previous year [5][21] Segment Analysis - In the Installation segment, sales were $781 million, down 8.3%, while the Specialty Distribution segment saw sales of $599 million, up 1.1% [9][10] - The operating profit for Installation was $155.4 million with a margin of 19.9%, while Specialty Distribution had an operating profit of $87.5 million and a margin of 14.6% [10][25] - Year-to-date, the company has spent approximately $833 million on acquisitions, including the $810 million acquisition of Progressive Roofing [12][13] Capital Allocation and Shareholder Returns - TopBuild repurchased nearly 455,000 shares in the second quarter, returning $136 million to shareholders, with a total of 1.1 million shares repurchased year-to-date for $351.6 million [4][12] - The company maintains a strong focus on mergers and acquisitions as a key strategy for capital deployment [4][12] Market Outlook - The company remains optimistic about long-term fundamentals despite current challenges in the residential new construction market, citing positive trends in heavy commercial and industrial sectors [3][4] - The outlook for 2025 does not account for any additional acquisitions beyond Progressive Roofing, indicating potential for further growth [14][15]

Core Viewpoint - The analysis compares Compagnie de Saint-Gobain - Unsponsored ADR (CODYY) and TopBuild (BLD) to determine which stock represents a better undervalued investment opportunity for investors in the Building Products - Miscellaneous sector [1]. Valuation Metrics - CODYY has a forward P/E ratio of 15.83, while BLD has a forward P/E of 19.26, indicating that CODYY may be undervalued compared to BLD [5]. - The PEG ratio for CODYY is 4.12, whereas BLD's PEG ratio is 4.93, suggesting that CODYY has a more favorable earnings growth outlook relative to its valuation [5]. - CODYY's P/B ratio stands at 2.2, compared to BLD's P/B of 5.19, further supporting the argument that CODYY is the more attractive value option [6]. Investment Ratings - CODYY currently holds a Zacks Rank of 2 (Buy), while BLD has a Zacks Rank of 3 (Hold), indicating a stronger earnings outlook for CODYY [3]. - The Value grades for the two companies are B for CODYY and C for BLD, reinforcing the conclusion that CODYY is the superior value option at this time [6].

Company Overview - Bow River Capital, a Denver-based alternative asset management firm, has completed the sale of Progressive Roofing to TopBuild Corp. for $810 million in an all-cash transaction [1] - Progressive Roofing, headquartered in Phoenix, Arizona, specializes in commercial roofing services, including re-roofing, maintenance, and new construction, primarily serving education, technology, industrial, healthcare, and government sectors [2] - Progressive Roofing has expanded its workforce to over 1,700 employees and completed three strategic acquisitions during its partnership with Bow River Capital [2][4] Growth and Development - Under Bow River Capital's partnership, Progressive Roofing invested in talent, technology, and operational excellence, enhancing its reputation as a leading commercial roofing contractor [2] - The company has a strong commitment to quality, customer service, culture, and safety, which has solidified its position as a national market leader in commercial roofing [3] Strategic Insights - TopBuild Corp. is well-positioned to support and build upon the strong foundation established by Progressive Roofing, leveraging its proven track record of growth [3] - Progressive Roofing's business philosophy emphasizes customer satisfaction, high quality, and a safety-first workplace environment, which aligns with TopBuild's core strengths [3][4] Industry Context - TopBuild Corp. is a leading installer and distributor of insulation and related building materials in the U.S. and Canada, with over 200 branches for insulation installation services and more than 150 branches for specialty distribution [6] - Bow River Capital focuses on investing in lower and middle markets across various asset classes, including industrial and infrastructure services, which aligns with the growth trajectory of companies like Progressive Roofing [5]

Company Overview - TopBuild Corp. is a leading installer of insulation and commercial roofing, as well as a specialty distributor of insulation and related building materials in the United States and Canada [3] - The company operates over 200 branches for installation services and more than 150 branches for specialty distribution across the two countries [3] Acquisition Details - TopBuild has completed the acquisition of Progressive Roofing for $810 million in an all-cash transaction [1] - Progressive Roofing generated $438 million in revenue and $89 million in EBITDA for the trailing 12 months ended March 31, 2025 [2] - Approximately 70% of Progressive Roofing's revenue comes from non-discretionary re-roofing and maintenance services, while 30% is from new construction [2] Strategic Implications - The acquisition is expected to enhance TopBuild's offerings to commercial customers by providing a comprehensive suite of building envelope solutions [2] - It establishes a scalable platform for growth in the $75 billion commercial roofing sector, which is highly fragmented [1] - The move increases TopBuild's exposure to non-cyclical and non-discretionary revenue drivers, potentially driving growth and profitability [2]