Slide 1: Second Quarter 2020
2020 Second QUARTER Jerry Volas, CEO Robert Buck, President & COO John Peterson, CFO August 4, 2020
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,” “would
Slide 3: Business Update
BUSINESS UPDATE ▪ Strict safety protocols remain in place ▪ Revenue increased each month as we moved through the quarter ▪ Growing builder optimism ▪ Continue to proactively flex business model ▪ Ample liquidity OUR SAFETY CULTURE REMAINS A TOP PRIORITY 3
Slide 4: 2Q 2020 Financial Highlights
2Q 2020 FINANCIAL HIGHLIGHTS* ▪ 2.1% sales decline driven by impact of COVID-19 ▪ 27.8% adjusted gross margin, up 130 bps ▪ 12.9% adjusted operating margin, up 130 bps ▪ 16.7% adjusted EBITDA margin, up 250 bps ▪ 17.5% increase in adjusted EPS to $1.68 per diluted share STRONG MARGIN EXPANSION * See
Slide 5: Capital Allocation
Capital Allocation ▪ Resuming acquisition program…#1 capital allocation priority - Full pipeline of prospects - Almost $650M of liquidity - Primary focus core insulation businesses - Secondary focus on glass businesses ▪ Share repurchase program in place ROBUST PIPELINE OF ACQUISTION PROSPECTS 5
Slide 6: Thank You TopBuild Team
HARD WORK, DEDICATION & TEAMWORK THANK YOU TOPBUILD TEAM Installers, warehouse workers, drivers, office and sales staff, field leadership and branch support center team. You helped deliver our very strong second quarter results! 6
Slide 7: Responding to Current Environment
Responding to current environment ▪ Strict safety protocols in place at branches and on job sites - Social distancing - Sanitizing and disinfecting ▪ Work-from-home policy remains in place at Branch Support Center ▪ Internal communications significantly ramped up ▪ Maintaining focus on core values -
Slide 8: Operations Overview
Operations Overview ▪ Flexible business model enables us to quickly adapt to changing market conditions…on both upside and downside ▪ Ability to attract labor important competitive advantage ▪ Integrated systems allow us to share labor, equipment and inventory ▪ Strong supply chain ensures we can me
Slide 9: Quickly Flexed the Business
Quickly Flexed the Business ▪ Continued tight control of key input costs ▪ Capital expenditures significantly reduced ▪ Overhead expenses reduced ▪ Travel & Entertainment significantly curtailed ▪ COVID-19 Leave Plan implemented MULTIPLE LEVERS PULLED 9
Slide 10: Results Improved as Quarter Progressed
($ in 000s) Three Months Ended Six Months Ended June 30, 2020 June 30, 2020 Sales $466,569 $942,442 Y-O-Y Change (3.4%) 1.1% Adjusted Operating Profit* $71,138 $131,493 Y-O-Y Change 3.4% 9.3% Adjusted Operating Margin* 15.2% 14.0% Y-O-Y Change 100 bps 110 bps RESULTS IMPROVED AS QUARTER PROGRESSED *
Slide 11: Solid Sales Growth, Strong Margin Expansion
($ in 000s) Three Months Ended Six Months Ended June 30, 2020 June 30, 2020 Sales $216,336 $430,558 Y-O-Y Change 1.3% 3.0% Adjusted Operating Profit* $25,153 $49,823 Y-O-Y Change 18.9% 19.0% Adjusted Operating Margin* 11.6% 11.6% Y-O-Y Change 170 bps 160 bps SOLID SALES GROWTH…STRONG MARGIN EXPANSIO
Slide 12: New Product Line: Disinfection Supplies
New Product Line: Disinfection Supplies CREATIVELY MEETING NEW MARKET DEMAND 12
Slide 13: Commercial Business
Commercial Business ▪ Declined 12.9% in 2Q, 6.9% YTD (same branch)* ▪ Large number of commercial projects delayed - New guidelines governing density of construction crews on site ▪ Some commercial projects cancelled, but partially offset by new projects awarded - Distribution centers - Healthcare fa
Slide 14: Financial Overview
FINANCIAL OVERVIEW Second Quarter 2020 ($ in 000s except per share Three Months Ended Six Months Ended amounts) June 30, 2020 June 30, 2020 Sales $646,099 $1,299,327 Y-O-Y Change -2.1% 1.6% Adjusted Operating Profit* $83,502 $153,764 Y-O-Y Change 9.3% 13.5% Adjusted Operating Margin* 12.9% 11.8% Y-O
Slide 15: CapEx, Working Capital & Cash Flow
CapEx, Working Capital & Cash Flow $ in 000s Six Months Ended Six Months Ended June 30, 2020 June 30, 2019 CAPEX $20,937 $21,982 Operating Cash Flow $178,162 $96,264 June 30, 2020 December 31, 2019 Cash Balance $258,837 $184,807 June 30, 2020 June 30, 2019 Working Capital % to 10.5% 11.9% Sales STRO
Slide 16: Leverage
Leverage $ in millions Total Debt $725.7 ✓ $389.6M available on $450M Revolver ✓ Significant room under debt covenants Less Cash 258.8 Net Debt $466.9 TTM Adj. EBITDA $386.7 Leverage 1.21x STRONG BALANCE SHEET * See slide 18 for adjusted EBITDA reconciliation 16
Slide 17: Appendix
oN a APPENDIX
Slide 18: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in 000s) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Net income, as reported $ 55,496 $ 52,051 $ 106,268 $ 90,035 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 8,188 9,105 16,457 18,374 Income tax expense
Slide 19: Segment GAAP to Non-GAAP Reconciliation
SEGMENT GAAP TO NON-GAAP RECONCILIATION ($ in 000s) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 Change 2020 2019 Change TruTeam Sales $ 466,569 $ 483,028 (3.4) % $ 942,442 $ 932,410 1.1 % Operating profit, as reported $ 69,643 $ 68,423 $ 129,994 $ 119,722 Operating margin, as rep
Slide 20: Income Per Common Share Reconciliation
INCOME PER COMMON SHARE RECONCILIATION ($ in 000s) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Income Per Common Share Reconciliation Income before income taxes, as reported $ 72,266 $ 66,934 $ 133,753 $ 114,284 Rationalization charges 2,376 142 2,376 1,969 Acquisition
Slide 21: Same Branch and Acquisition Net Sales Reconciliation
SAME BRANCH AND ACQUISITION NET SALES RECONCILIATION ($ in 000s) Three Months Ended June 30, Six Months Ended June 30, 2020 2019 2020 2019 Same branch: Residential $ 503,928 $ 504,659 $ 1,009,615 $ 980,794 Commercial 135,422 155,453 278,098 298,648 Same branch net sales 639,350 660,112 1,287,713 1,2
Slide 22: TopBuild
4 TopBuild