Slide 1: Fourth Quarter
FOURTH QUARTER Robert Buck, President & CEO Rob Kuhns, CFO February 23, 2023
Slide 2: Safe Harbor
SAFE HARBOR Statements contained herein reflect our views about future periods, including our future plans and performance, constitute “forward- looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “will,” “woul
Slide 3: TopBuild Snapshot (NYSE: BLD)
TOPBUILD SNAPSHOT (NYSE: BLD) Key Stats Sales Breakdown SEGMENT PRODUCT MIX END-MARKET Headquarters Daytona Beach, FL 12% 5% Market Cap1 $6.1B 41% 35% 59% 65% Employees ~13,000 83% Installation Insulation & Accessories Residential Total Branches ~410 Specialty Distribution Gutters Commercial/Industr
Slide 4: Our Business Model
OUR BUSINESS MODEL Core Strengths Our Values ▪ Unique model, diversified end markets ▪ Laser focus on core business, insulation ▪ Multiple avenues for growth ▪ Unrivaled North American size and scale ▪ Operational excellence and performance driven ▪ M&A a core competency ▪ Recognized for exceptional
Slide 5: Multiple Avenues for Growth
MULTIPLE AVENUES FOR GROWTH Total Addressable Market of ~$16.0B END-MARKET MARKET SIZE OUR SHARE OUR FOCUS • Superior labor network Residential ~$5.5B ~40% • Ability to serve builders/contractors of all sizes Commercial • Bundled product solutions Building ~$5.5B ~11% Insulation • Provide services f
Slide 6: Business Update
BUSINESS UPDATE ▪ Outstanding fourth quarter and record full-year results ▪ Strong backlog of single and multi-family homes ▪ Commercial/Industrial environment continues to improve - Strong bidding activity and growing backlog - Increasing demand for mechanical insulation…new projects and MRO work ▪
Slide 7: 2022 Accomplishments
2022 ACCOMPLISHMENTS ▪ Record sales and profitability ▪ Best year ever with regards to employee safety ▪ Successfully integrated Distribution International into Specialty Distribution segment ▪ Improved labor and sales productivity through technology tools ▪ Back-office technology initiatives result
Slide 8: 2022 Financial Highlights
2022 FINANCIAL HIGHLIGHTS* 4Q ADJUSTED ▪ 18.9% sales increase ▪ 29.7% gross margin, up 160 bps ▪ 16.2% operating margin, up 200 bps ▪ 18.8% EBITDA margin, up 170 bps ▪ 30.8% same branch incremental EBITDA margin FULL-YEAR ADJUSTED ▪ 43.7% sales increase ▪ 29.7% gross margin, up 130 bps ▪ 16.1% opera
Slide 9: Installation
INSTALLATION ($ in 000s) Three Months Ended Twelve Months Ended Comparisons are to the period ended December 31, 2022 December 31, 2022 December 31, 2021 Sales $761,261 $2,969,978 ✓ Revenue growth driven by Change 21.4% 24.9% increased volume and higher selling prices Adjusted Operating Profit* $142
Slide 10: Specialty Distribution
SPECIALTY DISTRIBUTION ($ in 000s) Three Months Ended Twelve Months Ended Comparisons are to the period ended December 31, 2022 December 31, 2022 December 31, 2021 Sales $563,065 $2,278,261 ✓ Revenue growth primarily driven by Change 15.9% 77.0% M&A and improved pricing Adjusted Operating Profit* $8
Slide 11: Capital Allocation Past Five Years
CAPITAL ALLOCATION PAST FIVE YEARS USE OF CAPITAL (Since Jan 1, 2018) • CapEx 1.7% of Sales 5% 10% Internal Investments • Investing in equipment upgrades 18% and digitization ~$2.8B Acquisitions • Completed 24 transactions • ~$1.6B in revenue added • End-markets very fragmented 67% • ~$510M in repur
Slide 12: M&A: A Core Competency
M&A: A CORE COMPETENCY STRATEGIC FINANCIAL INTEGRATION RATIONALE DISCIPLINE COMPETENCY ▪ Focus on core of Insulation ▪ Utilize proven and thorough ▪ Integrated 24 companies diligence process since January 2018 ▪ Enhance scale ▪ TTM EBITDA multiples 5x or ▪ Dedicated integration team ▪ Expand market
Slide 13: Capital Allocation
CAPITAL ALLOCATION ▪ Five acquisitions completed in 2022 • Residential insulation • Residential insulation • Residential insulation • Residential insulation • Residential insulation • $1.7M annual revenue • $6.5M annual revenue • $2.0M annual revenue • $5.5M annual revenue • $1.6M annual revenue ▪ R
Slide 14: CapEx, Working Capital & Cash Flow
CAPEX, WORKING CAPITAL & CASH FLOW $ in 000s Twelve Months Ended Twelve Months Ended December 31, 2022 December 31, 2021 Operating Cash Flow $495,801 $403,025 CAPEX $76,382 $55,546 FREE CASH FLOW $419,419 $347,479 December 31, 2022 December 31, 2021 Cash Balance $240,069 $139,779 Working Capital % t
Slide 15: Flexible Capital Structure
FLEXIBLE CAPITAL STRUCTURE Capital Summary & Financial Highlights ($M) Capital Structure (As of December 31, 2022) Debt Maturity Schedule ($M) December 31, 2022 $574 Cash $ 240.1 Senior Secured $500 Term Loan 4.125% $400 Total Debt $ 1,474.7 Senior Notes 3.625% Senior Notes Net Debt $1,234.6 TTM Pro
Slide 16: 2023 Outlook
2023 OUTLOOK (as of February 22, 2023) SALES ASSUMPTIONS COMMERCIAL/ $4,700M to $4,900M RESIDENTIAL INDUSTRIAL CAPEX Mid to Upper Single Digit Revenue Decline Low to Mid-Single Digit 1.5% to 2% of Revenue Revenue Growth ADJUSTED EBITDA* WORKING CAPITAL INCOME TAX RATE INCREMENTAL EBITDA $820M to $91
Slide 17: Our ESG Focus
OUR ESG FOCUS ENVIRONMENTAL SOCIAL GOVERNANCE ▪ Utilize materials often made from ▪ Safety-first culture ▪ Independent Board Chair recycled, re-used and long- lasting materials ▪ Workplace fostering equity, ▪ Directors serve one-year terms diversity and inclusion ▪ Waste minimization program ▪ Major
Slide 18: Our Business Is Inherently Environmentally Friendly
OUR BUSINESS IS INHERENTLY ENVIRONMENTALLY FRIENDLY ▪ Insulation products we install and distribute significantly enhance energy efficiency ▪ A typical pound of fiberglass insulation saves 12x as much energy in its first year in place as the energy used to produce it ▪ Building insulation benefits -
Slide 19: Appendix
oN a APPENDIX
Slide 20: Adjusted EBITDA Reconciliation (unaudited)
ADJUSTED EBITDA RECONCILIATION (unaudited) ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net income, as reported $ 143,834 $ 78,360 $ 555,989 $ 324,016 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 15,194 11,140 55,029 29,139
Slide 21: Segment Data (unaudited)
SEGMENT DATA (unaudited) ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2022 2021 Change 2022 2021 Change Installation Sales $ 761,261 $ 627,123 21.4 % $ 2,969,978 $ 2,378,401 24.9 % Operating profit, as reported $ 141,961 $ 105,975 $ 548,795 $ 383,722 Operating margin, as repor
Slide 22: Margin Reconciliation (unaudited)
MARGIN RECONCILIATION (unaudited) ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Gross profit, as reported $ 375,672 $ 283,161 $ 1,486,719 $ 974,389 Gross margin, as reported 29.7 % 26.6 % 29.7 % 27.9 % Acquisition purchase accounting (inventory step-up) — 15
Slide 23: Same Branch and Acquisition Metrics (unaudited)
SAME BRANCH AND ACQUISITION METRICS (unaudited) ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net Sales Same branch $ 1,214,183 $ 1,063,398 $ 4,140,512 $ 3,486,207 Acquisitions (a) 50,360 — 868,232 — Total $ 1,264,543 $ 1,063,398 $ 5,008,744 $ 3,486,207 Gros
Slide 24: Same Branch and Acquisition Metrics (unaudited)
SAME BRANCH AND ACQUISITION METRICS (unaudited) ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 EBITDA, as adjusted Same branch $ 228,459 $ 182,072 $ 807,309 $ 605,948 Acquisitions (a) 8,954 — 133,302 — Total $ 237,413 $ 182,072 $ 940,611 $ 605,948 EBITDA, as
Slide 25: Income Per Common Share Reconciliation (unaudited)
INCOME PER COMMON SHARE RECONCILIATION (unaudited) ($ in 000s except share and per common share amounts) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Income before income taxes, as reported $ 187,920 $ 107,328 $ 742,135 $ 433,443 Rationalization charges 162 — (172) 16
Slide 26: Acquisition Adjusted Net Sales (unaudited)
ACQUISITION ADJUSTED NET SALES (unaudited) ($ in 000s) 2022 Year Ended Q1 Q2 Q3 Q4 December 31, 2022 Net Sales $ 1,168,918 $ 1,274,285 $ 1,300,998 $ 1,264,543 $ 5,008,744 † Acquisitions proforma adjustment 2,934 438 - - 3,372 Net sales, acquisition adjusted $ 1,171,852 $ 1,274,723 $ 1,300,998 $ 1,26
Slide 27: Reconciliation Guidance Table (unaudited)
RECONCILIATION GUIDANCE TABLE (unaudited) ($ in 000s) Twelve Months Ending December 31, 2023 Low High Estimated net income $ 445.0 $ 523.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 72.0 66.0 Income tax expense 157.0 184.0 Depreciation and amortization 12
Slide 28: TopBuild
4 TopBuild