Slide 1: First Quarter 2023
FIRST QUARTER 2023 Robert Buck, President & CEO Rob Kuhns, CFO May 4, 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 $6.6B 40% 35% 60% 65% Employees ~13,000 83% Installation Insulation & Accessories Residential Total Branches ~415 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 $17.5B+ END-MARKET MARKET SIZE OUR SHARE OUR FOCUS • Superior labor network Residential ~$6.0B ~40% • Ability to serve builders/contractors of all sizes Commercial • Bundled product solutions Building ~$6.0B ~11% Insulation • Provide services f
Slide 6: Capital Allocation Past Five Years
CAPITAL ALLOCATION PAST FIVE YEARS USE OF CAPITAL (Since Jan 1, 2018) • CapEx 1.6% of Sales 5% 10% Internal Investments • Investing in equipment upgrades 18% and digitization ~$2.9B Acquisitions • Completed 24 transactions • ~$1.6B in revenue added • End-markets very fragmented 67% • ~$510M in repur
Slide 7: M&A: A Core Competency
M&A: A CORE COMPETENCY STRATEGIC FINANCIAL INTEGRATION RATIONALE DISCIPLINE COMPETENCY ▪ Integrated 24 companies ▪ Focus on core of Insulation ▪ Utilize proven and thorough since January 2018 diligence process ▪ Enhance scale ▪ Dedicated integration team ▪ TTM EBITDA multiples 5x or ▪ Expand market
Slide 8: Our ESG Focus
OUR ESG FOCUS ENVIRONMENTAL SOCIAL GOVERNANCE ▪ Utilize products often made from ▪ Safety-first culture ▪ Independent Board Chair recycled, re-used and long- lasting materials ▪ Workplace fostering equity, ▪ Directors serve one-year terms diversity and inclusion ▪ Waste minimization program ▪ Majori
Slide 9: Our Business Is Inherently Environmentally Friendly
OUR BUSINESS IS INHERENTLY ENVIRONMENTALLY FRIENDLY ▪ Insulation products we install and distribute significantly enhance energy efficiency ▪ A typical pound of fiberglass insulation saves 12x as much energy in its first year in place as the energy used to produce it ▪ Building insulation benefits -
Slide 10: Business Update
BUSINESS UPDATE ▪ Solid first quarter results - Revenue increased 8.2% - Adjusted EBITDA margin expanded 150 basis points to 18.8% ▪ Installation volume driven by backlog of single and multi-family homes ▪ Commercial/Industrial a second lever for organic growth - Strong bidding activity and growing
Slide 11: First Quarter Financial Highlights
FIRST QUARTER FINANCIAL HIGHLIGHTS* Adjusted ▪ 8.2% sales increase ▪ 29.3% gross margin, up 100 bps ▪ 16.1% operating margin, up 180 bps ▪ 18.8% EBITDA margin, up 150 bps ▪ 38.0% incremental EBITDA ▪ 43.0% incremental EBITDA on a same branch basis ANOTHER QUARTER OF STRONG PERFORMANCE *See Appendix
Slide 12: Installation
INSTALLATION Comparisons are to the quarter ended March 31, 2022 ($ in 000s) Three Months Ended ✓ Revenue growth driven by increased March 31, 2023 volume and higher selling prices Sales $767,090 Y-O-Y Change 13.4% ✓ Solid backlog of single and multi-family homes Adjusted Operating Profit* $147,160
Slide 13: Select Commercial Installation Projects
SELECT COMMERCIAL INSTALLATION PROJECTS SLC International Airport Microsoft Redmond Campus YouTube Headquarters Intuit Dome Salt Lake City, UT Redmond, WA San Bruno, CA Inglewood, CA Photo Credit: Salt Lake City International Airport Photo Credit: City of Redmond, WA Photo Credit: William McDonough
Slide 14: Specialty Distribution
SPECIALTY DISTRIBUTION Comparisons are to the quarter ended March 31, 2022 Three Months Ended ✓ Revenue growth driven by increased ($ in 000s) pricing and improved March 31, 2023 commercial/industrial volume Sales $558,375 Y-O-Y Change 2.7% ✓ Several new projects kicking off across diverse industrie
Slide 15: Select Specialty Distribution Projects
SELECT SPECIALTY DISTRIBUTION PROJECTS Semiconductor Marathon Alternative Fuel Facility Tesla Gigafactory Manufacturing Center Martinez, CA Austin, TX Phoenix, AZ Photo Credit: TSMC Photo Credit: Contra Costa County Photo Credit: Tesla 15
Slide 16: Capital Allocation
CAPITAL ALLOCATION ▪ One acquisition completed in Q1, $62M ENHANCING OPERATIONS ACROSS FOOTPRINT annual revenue ▪ Leverage technology and best practices OPERATIONAL ▪ Improve labor and sales productivity • Residential insulation IMPROVEMENT ▪ Enhance value proposition for customers • $62M annual rev
Slide 17: CapEx, Working Capital & Cash Flow
CAPEX, WORKING CAPITAL & CASH FLOW $ in 000s Three Months Ended Three Months Ended March 31, 2023 March 31, 2022 Operating Cash Flow $169,801 $89,483 CAPEX $15,580 $18,413 FREE CASH FLOW $154,221 $71,070 March 31, 2023 December 31, 2022 Cash Balance $333,778 $240,069 Working Capital % to 15.6% 15.7%
Slide 18: Flexible Capital Structure
FLEXIBLE CAPITAL STRUCTURE Capital Summary & Financial Highlights ($M) Capital Structure (As of March 31, 2023) Debt Maturity Schedule1 ($M) March 31, 2023 $559 Cash $ 333.8 Senior Secured $500 Term Loan 4.125% $400 Total Debt $ 1,464.9 Senior Notes 3.625% Senior Notes Net Debt $1,131.1 TTM Proforma
Slide 19: 2023 Outlook
2023 OUTLOOK (as of May 4, 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 $910M Org
Slide 20: Appendix
oN a APPENDIX
Slide 21: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION (unaudited) ($ in 000s) Trailing Twelve Three Months Ended March 31, Months Ended 2023 2022 March 31, 2023 Net income, as reported $ 135,870 $ 114,711 $ 577,148 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 16,116 11,282 59,862 Income ta
Slide 22: Segment Data
SEGMENT DATA (unaudited) ($ in 000s) Three Months Ended March 31, 2023 2022 Change Installation Sales $ 767,090 $ 676,693 13.4 % Operating profit, as reported $ 146,897 $ 112,679 Operating margin, as reported 19.1 % 16.7 % Rationalization charges — 473 Acquisition related costs 263 80 Operating prof
Slide 23: Margin Reconciliation
MARGIN RECONCILIATION (unaudited) ($ in 000s) Three Months Ended March 31, 2023 2022 Gross profit, as reported $ 370,215 $ 331,201 Gross margin, as reported 29.3 % 28.3 % Acquisition related costs — 121 Gross profit, as adjusted $ 370,215 $ 331,322 Gross margin, as adjusted 29.3 % 28.3 % Operating p
Slide 24: Same Branch and Acquisition Metrics
SAME BRANCH AND ACQUISITION METRICS (unaudited) ($ in 000s) Three Months Ended March 31, 2023 2022 Net Sales Same branch $ 1,250,393 $ 1,168,918 Acquisitions (a) 14,845 — Total $ 1,265,238 $ 1,168,918 EBITDA, as adjusted Same branch $ 236,775 $ 201,729 Acquisitions (a) 1,549 — Total $ 238,324 $ 201,
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 March 31, 2023 2022 Income before income taxes, as reported $ 183,315 $ 152,672 Rationalization charges — 473 Acquisition related costs 3,658 3,076 Income before income taxes,
Slide 26: Acquisition Adjusted Net Sales
ACQUISITION ADJUSTED NET SALES (unaudited) ($ in 000s) Trailing Twelve 2022 2023 Months Ended For the Year Ended Q2 Q3 Q4 Q1 March 31, 2023 December 31, 2022 Net Sales $ 1,274,285 $ 1,300,998 $ 1,264,543 $ 1,265,238 $ 5,105,064 $ 5,008,744 † Acquisitions proforma adjustment 15,575 17,576 18,279 6,18
Slide 27: Reconciliation Guidance Table
RECONCILIATION GUIDANCE TABLE (unaudited) ($ in 000,000) Twelve Months Ending December 31, 2023 Low High Estimated net income $ 445.0 521.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 67.0 63.0 Income tax expense 157.0 183.0 Depreciation and amortization 1
Slide 28: TopBuild
4 TopBuild