Topbuild Corp. · NYSE:BLD
Topbuild — Q1 2024 Earnings Presentation
23 slides from Topbuild's earnings presentation, May 7, 2024
Slide 1: First Quarter 2024
First Quarter 2024 Robert Buck, President & CEO Rob Kuhns, CFO Published May 7, 2024 1
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: Q1 2024 Key Takeaways
Q1 2024 Key Takeaways Our Unique and Proven Business Model Positions Us to Outperform • Solid start to 2024 • Meaningful profit improvement across both segments • We continue to drive operational improvements • Fiberglass environment remains tight • Capital allocation strategy is disciplined and unc
Slide 4: Q1 2024 Financial Results
Q1 2024 Financial Results Continuing Strong Track Record of Profitable Growth ($ in 000s) Sales Up 1.1% $1,265.2 $1,278.7 Q1 2023 Q1 2024 Adjusted EBITDA* Grew 6.5% Margin* Expanded 100 bps $253.8 $238.3 19.8% 18.8% Q1 2023 Q1 2024 Top: TruTeam insulation installation at residential location. Bottom
Slide 5: Installation
Installation Continued Strong Performance Across Residential and Commercial Comparisons are to the periods ended March 31, 2023 ($ in 000s) Three Months Ended March 31, 2024 Revenue $ 798,743 Change 4.1% Adjusted Operating Profit* 156,802 Change 6.6% Adjusted Operating Margin* 19.6% Change 40 bps Ad
Slide 6: Specialty Distribution
Specialty Distribution Margin Expansion Driven by Improved Productivity and Pricing Comparisons are to the periods ended March 31, 2023 ($ in 000s) Three Months Ended March 31, 2024 Revenue $ 545,794 Change (2.3)% Adjusted Operating Profit* 76,829 Change 4.3% Adjusted Operating Margin* 14.1% Change
Slide 7: Healthy Balance Sheet and Strong Cash Flow
Healthy Balance Sheet and Strong Cash Flow New $1 Billion Share Repurchase Authorization Demonstrates Confidence in Long-term Strategy and Importance of Returning Capital to Shareholders ($ in 000s) Free Cash Flow1 Cash, Available Liquidity & Working Capital $790.1 ($ in 000s) Cash & Cash Equivalent
Slide 8: Focused and Disciplined M&A Strategy
Focused and Disciplined M&A Strategy Five Acquisitions Announced to Date in 2024 Totaling ~$68M in Annual Revenue Brabble Insulation Morris Black • Residential and light commercial insulation • Residential and light commercial insulation installer serving northeast North Carolina installer serving P
Slide 9: We Serve Large, Highly Fragmented Insulation End Markets
We Serve Large, Highly Fragmented Insulation End Markets Total Addressable Market of ~$18.25B to Grow Organically and Via Acquisition STRUCTURE Residential Commercial / Industrial Building Envelope Mechanical MARKET SIZE ~$6.25B ~$6.25B ~$5.75B SUB-MARKETS/ Multi Industrial Energy & Single Family Li
Slide 10: Commercial Building Insulation
Commercial Building Insulation Insulating the Building Envelope Across Diverse Customer Base Light Commercial Heavy Commercial • Restaurants • Data Centers • Institutional Buildings • Manufacturing • Retail Buildings • Entertainment Venues (Education, Healthcare, facilities Research, Religious) • Wa
Slide 11: Commercial/Industrial Mechanical Insulation
Commercial/Industrial Mechanical Insulation Includes Recurring Revenue Stream of Maintenance and Repair Work Providing equipment insulation and custom fabrication for commercial and industrial construction projects • Industrial Manufacturing • Pharmaceuticals & Biotech • Oil & Gas • Food and Beverag
Slide 12: Raising 2024 Outlook
Raising 2024 Outlook Another Year of Profitable Growth Expected (as of May 7, 2024) SALES ADJUSTED EBITDA* $5,400M to $5,600M $1,065M to $1,155M • Mid single digit residential growth • Mid single digit commercial/industrial growth *See Appendix for Reconciliation 12
Slide 13: About Us
About Us
Slide 14: TopBuild Snapshot
TopBuild Snapshot Leading installer and specialty distributor of insulation and related building material products Key Stats Sales Breakdown SEGMENT PRODUCT MIX CHANNEL Headquarters Daytona Beach, FL 12% 5% 35% Employees ~14,000 39% 61% 65% Total Branches ~410 83% Installation Insulation & Accessori
Slide 15: Our Business Model
Our Business Model Best in class execution and making a difference locally Core Strengths Our Values • Unique model, diversified end markets • Laser focus on core business of insulation • Unrivaled North American size and scale • Multiple avenues for growth • M&A a core competency • Safety of our pe
Slide 16: M&A: A Core Competency
M&A: A Core Competency Disciplined acquisition strategy creating significant shareholder returns Strategic Rationale Integration Expertise Track Record of Success ROIC1 • Focus on core • Integrated 28 companies • Exceeded projected 18.5% 18.3% Insulation products since 1/1/2019 synergies, including
Slide 17: Historical Capital Allocation
Historical Capital Allocation Acquisitions are our #1 capital allocation priority USE OF CAPITAL (1/1/19-3/31/24) • CapEx 1.5% of Sales 7% Internal 12% • Investing in equipment upgrades Investments and digitization 18% ~$2.5B Acquisitions • Completed 28 transactions • ~$1.3B in revenue added • End-m
Slide 18: Appendix
Appendix
Slide 19: Reconciliation of Adjusted EBITDA to Net Income
Reconciliation of Adjusted EBITDA to Net Income (unaudited) (in thousands) Trailing Twelve Three Months Ended March 31, Months Ended 2024 2023 March 31, 2024 Net income, as reported $ 152,381 $ 135,870 $ 630,765 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 7,513 16,1
Slide 20: Acquisition Adjusted Net Sales
Acquisition Adjusted Net Sales (unaudited) (dollars in thousands) Trailing Twelve 2023 2024 Months Ended Q2 Q3 Q4 Q1 March 31, 2024 Net Sales $ 1,317,262 $ 1,326,120 $ 1,286,074 $ 1,278,717 $ 5,208,173 Acquisitions proforma adjustment † 35,527 13,815 9,525 5,691 64,558 Net sales, acquisition adjuste
Slide 21: Segment Data
Segment Data (unaudited) (dollars in thousands) Three Months Ended March 31, 2024 2023 Change Installation Sales $ 798,743 $ 767,090 4.1 % Operating profit, as reported $ 156,757 $ 146,897 Operating margin, as reported 19.6 % 19.1 % Acquisition related costs 45 263 Operating profit, as adjusted $ 15
Slide 22: Margin Reconciliations
Margin Reconciliations (unaudited) (dollars in thousands) Three Months Ended March 31, 2024 2023 Gross profit, as reported $ 387,150 $ 370,215 Gross margin, as reported 30.3 % 29.3 % Acquisition related costs — — Gross profit, as adjusted $ 387,150 $ 370,215 Gross margin, as adjusted 30.3 % 29.3 % O
Slide 23: 2024 Estimated Adjusted EBITDA Range
2024 Estimated Adjusted EBITDA Range (unaudited) (in millions) Twelve Months Ending December 31, 2024 Low High Estimated net income $ 611.0 $ 689.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 47.0 43.0 Income tax expense 216.0 241.0 Depreciation and amorti