TopBuild(US:BLD)2025-08-05 20:05PART I. FINANCIAL INFORMATION Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for TopBuild Corp. as of June 30, 2025, including balance sheets, statements of operations, comprehensive income, cash flows, and changes in equity, along with detailed accounting policy notes Condensed Consolidated Balance Sheets As of June 30, 2025, Total Assets increased to $5.12 billion from $4.74 billion at year-end 2024, primarily driven by a significant rise in cash and cash equivalents to $842.5 million and an increase in long-term debt to $1.83 billion, while total equity slightly decreased to $2.14 billion Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $842,493 | $400,318 | | Goodwill | $2,125,827 | $2,112,259 | | Total assets | $5,119,818 | $4,735,426 | | Liabilities & Equity | | | | Long-term debt | $1,833,213 | $1,327,159 | | Total liabilities | $2,975,820 | $2,525,808 | | Total equity | $2,143,998 | $2,209,618 | Condensed Consolidated Statements of Operations For the second quarter of 2025, net sales decreased to $1.30 billion from $1.37 billion year-over-year, while net income remained flat at $151.6 million; for the six-month period, net sales fell to $2.53 billion from $2.64 billion, and net income decreased to $275.0 million from $303.1 million in the prior year Q2 Financial Performance (in thousands, except per share data) | Metric | Q2 2025 | Q2 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 | Six-Month Financial Performance (in thousands, except per share data) | Metric | H1 2025 | H1 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 | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash from operating activities increased to $346.3 million from $269.1 million, driven by favorable working capital changes, while investing activities used $45.5 million and financing activities provided $139.1 million, largely due to debt refinancing offsetting significant share repurchases Six-Month Cash Flow Summary (in thousands) | Cash Flow Activity | H1 2025 | H1 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 | $442,175 | ($385,344) | - Financing activities in H1 2025 included $1.0 billion in proceeds from new long-term debt, offset by $487.5 million in debt repayment and $351.6 million in common stock repurchases15 Notes to Condensed Consolidated Financial Statements The notes detail the company's accounting policies and provide further information on financial statement items, covering revenue recognition, goodwill, debt, segment performance, share-based compensation, share repurchases, business combinations, and subsequent events, including a major acquisition - The company operates in two reportable segments: Installation and Specialty Distribution19 - On May 16, 2025, the company amended its Credit Agreement, increasing its term loan facility to $1.0 billion and its revolving credit facility to $1.0 billion34 - Subsequent to the quarter end, on July 14, 2025, the company acquired Progressive, a commercial roofing installer, for approximately $810.0 million101 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the financial results for the second quarter and first half of 2025, noting net sales declines due to softer housing demand and lower volumes, partially offset by acquisitions and higher pricing, while operating margins were impacted by lower sales and restructuring costs but benefited from cost-saving measures and the absence of a prior-year acquisition termination fee, maintaining a strong liquidity position and providing an outlook on residential and commercial markets Results of Operations Q2 2025 net sales fell 5.0% YoY to $1.30 billion, driven by a 7.8% volume decrease, partially offset by a 1.9% contribution from acquisitions and a 0.9% price increase, with operating margin improving to 16.9% from 15.4% due to the absence of a prior-year acquisition termination fee; H1 2025 net sales decreased 4.3% to $2.53 billion, with operating margin slightly declining to 15.7% from 16.1% due to one-time restructuring costs and lower volume Q2 2025 vs Q2 2024 Performance Summary | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net Sales | $1,297.4M | $1,365.6M | | Gross Profit Margin | 30.4% | 31.0% | | Operating Profit Margin | 16.9% | 15.4% | - The decline in Q2 net sales was primarily driven by a 7.8% decrease in volume due to softened housing demand111 - Q2 2024 SG&A included a $23.0 million fee to terminate a previous acquisition agreement, which favorably impacted the YoY comparison for operating margin in Q2 2025113 Business Segment Results In Q2 2025, the Installation segment's sales decreased 8.3% to $780.7 million due to a 10.5% volume decline, with operating margin stable at 19.9%, while the Specialty Distribution segment's sales grew 1.1% to $599.2 million, driven by acquisitions and pricing, but its operating margin fell to 14.6% from 15.1% due to price pressures on residential products Q2 2025 Segment Performance | Segment | Net Sales (in millions) | % Change YoY | Operating Margin | | :--- | :--- | :--- | :--- | | Installation | $780.7 | (8.3)% | 19.9% | | Specialty Distribution | $599.2 | 1.1% | 14.6% | Cash Flows and Liquidity The company's liquidity position strengthened significantly, with total liquidity reaching $1.78 billion as of June 30, 2025, up from $836.5 million at year-end 2024, driven by increased cash from operations and an expanded revolving credit facility, with cash and cash equivalents standing at $842.5 million Liquidity Summary (in thousands) | Component | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $842,493 | $400,318 | | Availability under Revolving facility | $938,802 | $436,230 | | Total liquidity | $1,781,295 | $836,548 | - Net cash from operating activities increased by $77.2 million in H1 2025 compared to H1 2024, mainly due to favorable changes in working capital138 Outlook Management notes uneven demand for single-family homes and a slowdown in multi-family activity due to near-term uncertainty but remains optimistic about long-term fundamentals, while the commercial and industrial outlook is positive, supported by a strong backlog, active bidding, and the recent acquisition of Progressive - Residential: Demand for single-family homes is uneven, and multi-family activity has slowed. Long-term fundamentals remain positive due to prior underbuilding145 - Commercial/Industrial: The outlook is positive, supported by a strong backlog, active bidding, and the acquisition of Progressive146 Quantitative and Qualitative Disclosures About Market Risk The company is exposed to interest rate risk on its variable-rate debt, which includes a $1.0 billion Term Loan, with a hypothetical 100-basis point (1%) increase in interest rates resulting in a $9.8 million increase in annualized interest expense based on outstanding borrowings at June 30, 2025 - The company has a $1.0 billion Term Loan with a variable interest rate, exposing it to market risk from rate fluctuations156 - A 100-basis point increase in interest rates would increase annualized interest expense by an estimated $9.8 million based on outstanding borrowings at June 30, 2025157 Controls and Procedures Based on an evaluation as of June 30, 2025, the company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective, with no material changes to the company's internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of June 30, 2025158 - No material changes were made to the company's internal control over financial reporting during the second quarter of 2025159 PART II. OTHER INFORMATION Legal Proceedings The company is subject to various claims and litigation in the ordinary course of business but does not believe the ultimate outcome of these matters will have a material adverse effect - The company is involved in routine litigation incidental to its business, which is not expected to have a material adverse impact97161 Risk Factors There have been no material changes to the company's risk factors as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes to risk factors were reported since the last Annual Report162 Unregistered Sales of Equity Securities and Use of Proceeds During the second quarter of 2025, the company repurchased 454,802 shares of its common stock at an average price of $299.01 per share, with approximately $836.4 million remaining available for future repurchases under the authorized program as of June 30, 2025 Share Repurchases for Q2 2025 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 123,690 | $300.79 | | May 2025 | 80,970 | $281.55 | | June 2025 | 250,142 | $303.79 | | Total Q2 | 454,802 | $299.01 | - As of June 30, 2025, $836.4 million remained authorized for share repurchases81163 Other Information On May 21, 2025, Alec Covington, a director of the company, adopted a Rule 10b5-1 trading arrangement for the potential sale of up to 3,500 shares of common stock, with an expiration date of July 24, 2026 - A director, Alec Covington, adopted a Rule 10b5-1 trading plan on May 21, 2025, for the sale of up to 3,500 shares167