Slide 1: Fourth Quarter And Year End 2023
Fourth Quarter And Year End 2023 Robert Buck, President & CEO Rob Kuhns, CFO Published February 28, 2024
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 CHANNEL Headquarters Daytona Beach, FL 12% 5% Market Cap1 $12.0B 39% 36% 61% 64% Employees ~14,000 83% Installation Insulation & Accessories Residential Total Branches ~410 Specialty Distribution Gutters Commercial/Industria
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 ~$18.25B END-MARKET MARKET SIZE OUR FOCUS • Superior labor network Residential ~$6.25B • Ability to serve builders/contractors of all sizes Commercial • Bundled product solutions Building Insulation ~$6.25B • Provide services for light and heav
Slide 6: Our People Make a Difference
OUR PEOPLE MAKE A DIFFERENCE WORKFORCE AT A GLANCE SAFETY PERFORMANCE TOTAL INCIDENT RATE LOST TIME CASE RATE 3.06 3.06 2.79 2.79 0.72 0.72 2.59 0.70 0.70 0.70 0.67 14,012 8,542 1.92 1.97 0.56 0.56 0.57 0.57 TOTAL EMPLOYEES INSTALLERS 1.92 2019 2020 2021 2022 2023 2019 200 2021 2022 2023 66% 43% 36%
Slide 7: Highlights
HIGHLIGHTS ▪ Strong 2023 results - Significantly better operating performance than original outlook - Light and heavy commercial and multi-family work driving organic growth - Improved working capital to 13.2% of sales - Generated $785M of free cash flow ▪ Special operations initiatives expanded. Te
Slide 8: Fourth Quarter Financial Highlights
FOURTH QUARTER FINANCIAL HIGHLIGHTS* ▪ 1.7% sales increase to $1.3 billion ▪ 30.4% gross margin, up 70 bps ▪ 16.5% adjusted operating margin, up 30 bps ▪ 19.6% adjusted EBITDA margin, up 80 bps CONSISTENTLY DELIVERING STRONG OPERATING RESULTS *See Appendix for Reconciliation 8
Slide 9: 2023 Financial Highlights
2023 FINANCIAL HIGHLIGHTS* ▪ 3.7% sales increase to $5.2 billion ▪ 30.9% gross margin, up 120 bps ▪ 17.3% adjusted operating margin, up 120 bps ▪ 20.2% adjusted EBITDA margin, up 140 bps ANOTHER GREAT YEAR FOR TOPBUILD *See Appendix for Reconciliation 9
Slide 10: Installation
INSTALLATION Comparisons are to the periods ended December 31, 2022 ($ in 000s) Three Months Ended Twelve Months Ended ✓ Revenue growth driven by strategic December 31, 2023 December 31, 2023 sales focus and M&A Sales $790,414 $3,188,232 Change 3.8% 7.3% ✓ Strong multi-family backlog Adjusted Operat
Slide 11: Select Commercial Installation Projects
SELECT COMMERCIAL INSTALLATION PROJECTS Los Angeles County Museum of Arts Ranch Lot Studio Nashville International Airport Los Angeles, CA Burbank, CA Nashville, TN Rendering Credit: LACMA Rendering Credit: Worthe Real Estate Group Rendering Credit: The Metropolitan Nashville Airport Authority 11
Slide 12: Specialty Distribution
SPECIALTY DISTRIBUTION Comparisons are to the periods ended December 31, 2022 ($ in 000s) Three Months Ended Twelve Months Ended ✓ Full-year revenue decline largely driven by December 31, 2023 December 31, 2023 market shift to multi-family ✓ Solid commercial and industrial sales Sales $564,468 $2,26
Slide 13: Select Specialty Distribution Projects
SELECT SPECIALTY DISTRIBUTION PROJECTS Eastman Chemical Austal USA LG Battery Plant Kingsport, TN Mobile, AL Holland, MI Credit: Eastman Chemical Credit: Austal USA Credit: LG Energy Solution 13
Slide 14: Capital Allocation
CAPITAL ALLOCATION ▪ Four acquisitions completed in 2023, ~$173M in annual revenue ▪ Includes our third and fourth largest installation acquisitions, SRI and Best Insulation • Residential insulation • Residential insulation • ~$62M annual revenue • ~$5.4M annual revenue • Acquired January 2023 • Acq
Slide 15: Historical Capital Allocation
HISTORICAL CAPITAL ALLOCATION USE OF CAPITAL (1/1/19-12/31/23) • CapEx 1.5% of Sales 6% Internal 12% Investments • Investing in equipment upgrades and digitization 19% ~$2.4B Acquisitions • Completed 24 transactions • ~$1.3B in revenue added • End-markets very fragmented 63% • ~$446M in repurchases
Slide 16: M&A: A Core Competency
M&A: A CORE COMPETENCY Strategic Rationale Integration Expertise Track Record of Success ROIC1 • Focus on core • Integrated 24 companies • Exceeded projected 18.5% 18.3% Insulation products since 1/1/2019 synergies, including DI and 15.6% USI integrations • Enhance resources and • Dedicated integrat
Slide 17: CapEx, Working Capital & Cash Flow
CAPEX, WORKING CAPITAL & CASH FLOW $ in 000s Twelve Months Ended Twelve Months Ended December 31, 2023 December 31, 2022 Operating Cash Flow $849,409 $495,801 CAPEX $63,998 $76,382 FREE CASH FLOW $785,411 $419,419 December 31, 2023 December 31, 2022 Cash Balance $848,565 $240,069 Working Capital % t
Slide 18: Flexible Capital Structure
FLEXIBLE CAPITAL STRUCTURE Capital Summary & Financial Highlights ($M) Capital Structure (As of December 31, 2023) Debt Maturity Schedule1 ($M) December 31, 2023 $533 Cash $ 848.6 Senior Secured $500 Term Loan 4.125% $400 Total Debt $ 1,434.5 Senior Notes 3.625% Senior Notes Net Debt $585.9 TTM Prof
Slide 19: 2024 Outlook
2024 OUTLOOK (as of February 28, 2024) SALES 2024 FULL-YEAR ASSUMPTIONS COMMERCIAL/ RESIDENTIAL $5,360M to $5,560M Mid-Single Digit INDUSTRIAL INCOME TAX RATE Revenue Growth Mid-Single Digit 25% to 27% Revenue Growth ADJUSTED EBITDA* WORKING CAPITAL CAPEX INCREMENTAL EBITDA $1,040M to $1,130M 1.5% t
Slide 20: Appendix
oN a APPENDIX
Slide 21: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION (unaudited) ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net income, as reported $ 146,382 $ 143,834 $ 614,254 $ 555,989 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 10,458 15,194 53,342 55,029
Slide 22: Segment Data
SEGMENT DATA (unaudited) ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2023 2022 Change 2023 2022 Change Installation Sales $ 790,414 $ 761,261 3.8 % $ 3,188,232 $ 2,969,978 7.3 % Operating profit, as reported $ 149,999 $ 141,961 $ 644,392 $ 548,795 Operating margin, as reporte
Slide 23: Margin Reconciliation
MARGIN RECONCILIATION (unaudited) ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Gross profit, as reported $ 391,116 $ 375,672 $ 1,603,820 $ 1,486,719 Gross margin, as reported 30.4 % 29.7 % 30.9 % 29.7 % Acquisition related costs — 15 — 135 Gross profit, as
Slide 24: Same Branch and Acquisition Metrics
SAME BRANCH AND ACQUISITION METRICS (unaudited) ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Net Sales Sam e branch $ 1,247,631 $ 1,259,612 $ 5,087,232 $ 4,999,692 Acquis itions (a) 38,443 — 107,462 — Dis pos itions (b) — 4,931 — 9,052 Total $ 1,286,074 $ 1
Slide 25: Income Per Common Share Reconciliation
INCOME PER COMMON SHARE RECONCILIATION (unaudited) ($ in 000s except share and per common share amounts) Three Months Ended December 31, Year Ended December 31, 2023 2022 2023 2022 Income before income taxes, as reported $ 194,342 $ 187,920 $ 825,483 $ 742,135 Rationalization charges 41 162 1,923 (1
Slide 26: Acquisition Adjusted Net Sales
ACQUISITION ADJUSTED NET SALES (unaudited) ($ in 000s) 2023 Year Ended Q1 Q2 Q3 Q4 December 31, 2023 Net Sales $ 1,265,238 $ 1,317,262 $ 1,326,120 $ 1,286,074 $ 5,194,694 † Acquisitions proforma adjustment 31,847 26,978 5,400 55 64,280 Net sales, acquisition adjusted $ 1,297,085 $ 1,344,240 $ 1,331,
Slide 27: Reconciliation Guidance Table
RECONCILIATION GUIDANCE TABLE (unaudited) ($ in 000,000) Twelve Months Ending December 31, 2024 Low High Estimated net income $ 588.0 $ 667.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 60.0 54.0 Income tax expense 206.0 234.0 Depreciation and amortization
Slide 28: TopBuild
4 TopBuild