What's Going On With TopBuild Stock Wednesday? - TopBuild (NYSE:BLD)

Core Viewpoint - TopBuild Corp. has completed the acquisition of Specialty Products and Insulation (SPI) for approximately $1 billion, enhancing its position in the mechanical insulation and specialty distribution market in North America [1][2]. Acquisition Details - The acquisition was finalized on October 7 and funded through existing liquidity and proceeds from a senior notes offering in September [1]. - SPI generated around $700 million in revenue and $75 million in EBITDA for the twelve months ending June 30, 2025, with the acquisition valued at approximately 12.4 times SPI's trailing EBITDA, including a $70 million tax benefit [2]. Financial Impact - Once cost synergies of $35 million to $40 million are realized within two years, the effective multiple is expected to drop to about 8.3 times [3]. - The acquisition is anticipated to be immediately accretive to earnings per share [3]. Strategic Rationale - The acquisition is described as "highly strategic" by TopBuild's CEO, as it expands the company's footprint and enhances customer offerings through SPI's manufacturing reach and service expertise [3]. - Approximately 55% of SPI's business is derived from recurring maintenance and repair, which provides TopBuild with exposure to less cyclical revenue sources [4]. Company Profile - SPI, headquartered in Charlotte, North Carolina, operates around 90 branches with nearly 1,000 employees, serving a diverse customer base [5]. - About 87% of SPI's revenue is linked to commercial and industrial sectors, aligning well with TopBuild's existing specialty distribution network [5]. Growth Strategy - Mergers and acquisitions are central to TopBuild's growth model, with 45 acquisitions completed since its 2015 spin-off and an 18.2% return on invested capital as of the end of 2024 [6].