TopBuild(US:BLD)2025-08-05 10:50Executive Summary 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 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-year2 - Adjusted EBITDA margin for Q2 2025 was 20.1%12 - Sales decline was driven by an 8.3% decrease in Installation, partly offset by 1.1% growth in Specialty Distribution2 Strategic Initiatives & Outlook 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 sector2 - The 2025 outlook assumes Progressive Roofing's contribution will offset further weakness in residential new construction and light commercial markets3 - M&A remains a priority for capital deployment, and the company repurchased nearly 455,000 shares for $136.0 million in Q2 20254 Financial Highlights 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 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 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 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 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 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 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 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 $833 million10 2025 Acquisitions | Company | Annual Revenue ($ in millions) | Month Closed | | :--- | :--- | :--- | | Progressive Roofing | $438.0 | July | | Seal-Rite Insulation | $15.2 | April | | Total | $453.2 | | Share Repurchases 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 million11 - Year-to-date, the company bought back 1,148,683 shares for $351.6 million11 - Remaining availability for share repurchases at the end of Q2 2025 totaled $836.4 million11 2025 Full Year Outlook 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 acquisition12 2025 Outlook | $ in millions | Low | High | | :--- | :--- | :--- | | Sales | $5,150.0 | $5,350.0 | | Adjusted EBITDA | $970.0 | $1,070.0 | Company Information & Disclosures 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 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 Canada16 - The Installation segment has over 200 branches, and the Specialty Distribution network encompasses more than 150 branches16 Use of Non-GAAP Financial Measures 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 results17 - 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 results17 Safe Harbor Statement 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 plans18 - These statements involve risks and uncertainties that could cause actual results to differ materially from expectations18 - TopBuild undertakes no obligation to update any forward-looking statements, except as required by applicable law18 Condensed Consolidated Financial Statements (Unaudited) 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 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 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 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 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) 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 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 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 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 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) 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 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) 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 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 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 |