Slide 1: Third Quarter 2023
THIRD QUARTER 2023 Robert Buck, President & CEO Rob Kuhns, CFO Published October 31, 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 CHANNEL Headquarters Daytona Beach, FL 12% 5% Market Cap1 $8.0B 39% 36% 61% 64% Employees ~13,000 83% Installation Insulation & Accessories Residential Total Branches ~410 Specialty Distribution Gutters Commercial/Industrial
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 ~$6.0B ~11% Insulation • Provide services f
Slide 6: Our People Make a Difference
OUR PEOPLE MAKE A DIFFERENCE *As of 12/31/22 **Branch Center Support/Corporate Office Only 80% OF OUR EMPLOYEES RATE TOPBUILD AS A ‘GREAT PLACE TO WORK’ 6
Slide 7: Business Update
BUSINESS UPDATE ▪ Solid third quarter results ▪ Installation sales up 4.9% primarily driven by: • On-going focus on light and heavy commercial work o Commercial sales increased 9.4% from 3Q 2022, up 13.0% YTD • Strong backlog of multi-family homes • Contributions from M&A ▪ Specialty Distribution sa
Slide 8: Third Quarter Financial Highlights
THIRD QUARTER FINANCIAL HIGHLIGHTS* ▪ 1.9% sales increase ▪ 31.7% gross margin, up 130 bps ▪ 18.5% adjusted operating margin, up 130 bps ▪ 21.4% adjusted EBITDA margin, up 150 bps CONSISTENTLY DELIVERING SOLID OPERATING RESULTS *See Appendix for Reconciliation 8
Slide 9: Installation
INSTALLATION Comparisons are to the quarter ended September 30, 2022 ($ in 000s) Three Months Ended Nine Months Ended ✓ Revenue growth driven by strategic sales September 30, 2023 September 30, 2023 focus and M&A Sales $821,673 $2,397,818 ✓ Solid backlog of multi-family homes Change 4.9% 8.6% Adjust
Slide 10: Select Commercial Installation Projects
SELECT COMMERCIAL INSTALLATION PROJECTS Seatac Airport Renovation & Expansion OSF Cancer Center UCI Medical Center Seattle, WA Peoria, IL Irvine, CA Rendering Credit: Port of Seattle Rendering Credit: OSF Healthcare Rendering Credit: Kilograph AGNOSTIC AS TO PROJECT TYPE 10
Slide 11: Specialty Distribution
SPECIALTY DISTRIBUTION Comparisons are to the quarter ended September 30, 2022 ($ in 000s) Three Months Ended Nine Months Ended ✓ Revenue decline driven by lower September 30, 2023 September 30, 2023 prices and continued market shift to multi-family Sales $571,009 $1,703,871 ✓ Projects coming on-lin
Slide 12: Select Specialty Distribution Projects
SELECT SPECIALTY DISTRIBUTION PROJECTS Ragon Institute of Mass SLC International Airport Intel Ocotillo Campus General, MIT & Harvard – Construction Updates – Chip Factories Cambridge, MA Salt Lake City, UT Chandler, AZ Render Credit: Ragon Institute of Mass General, MIT & Harvard Photo Credit: Salt
Slide 13: Capital Allocation
CAPITAL ALLOCATION ▪ Four acquisitions completed YTD, ~$173M annual revenue • Residential insulation • Residential insulation • $62M annual revenue • $5.4M annual revenue • Acquired January 2023 • Acquired July 2023 • Residential insulation • Residential and commercial insulation • $100M annual reve
Slide 14: Historical Capital Allocation
HISTORICAL CAPITAL ALLOCATION USE OF CAPITAL (1/1/18-10/31/23) • CapEx 1.6% of Sales 5% 11% Internal Investments • Investing in equipment upgrades 17% and digitization ~$3.0B Acquisitions • Completed 27 transactions • ~$1.7B in revenue added • End-markets very fragmented 67% • ~$510M in repurchases
Slide 15: M&A: A Core Competency
M&A: A Core Competency Strategic Integration Track Record Rationale Competency of Success ROIC1 • Focus on core • Integrated 27 companies • Exceeded projected 18.5% Insulation products since 1/1/2018 synergies, including DI and USI integrations 15.6% • Enhance resources and • Dedicated integration t
Slide 16: CapEx, Working Capital & Cash Flow
CAPEX, WORKING CAPITAL & CASH FLOW $ in 000s Nine Months Ended Nine Months Ended September 30, 2023 September 30, 2022 Operating Cash Flow $588,478 $335,630 CAPEX $48,076 $56,044 FREE CASH FLOW $540,402 $279,586 September 30, 2023 December 31, 2022 Cash Balance $615,612 $240,069 September 30, 2023 S
Slide 17: Flexible Capital Structure
FLEXIBLE CAPITAL STRUCTURE Capital Summary & Financial Highlights ($M) Capital Structure (As of September 30, 2023) Debt Maturity Schedule1 ($M) September 30, 2023 $544 Cash $ 615.6 Senior Secured $500 Term Loan 4.125% $400 Total Debt $ 1,447.0 Senior Notes 3.625% Senior Notes Net Debt $831.4 TTM Pr
Slide 18: 2023 Outlook
2023 OUTLOOK (as of October 31, 2023) SALES 2023 FULL-YEAR ASSUMPTIONS COMMERCIAL/ $5,130M to $5,210M RESIDENTIAL INDUSTRIAL INCOME TAX RATE Revenue Flat Mid-Single Digit 25% to 27% Revenue Growth ADJUSTED EBITDA* LONG-TERM ASSUMPTIONS WORKING CAPITAL CAPEX INCREMENTAL EBITDA $1,025M to $1,055M 1.5%
Slide 19: Appendix
oN a APPENDIX
Slide 20: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION (unaudited) ($ in 000s) Trailing Twelve Three Months Ended September 30, Nine Months Ended September 30, Months Ended 2023 2022 2023 2022 September 30, Net income, as reported $ 167,602 $ 153,746 $ 467,870 $ 412,156 $ 611,706 Adjustments to arrive at EBITDA, as adjuste
Slide 21: Segment Data
SEGMENT DATA (unaudited) ($ in 000s) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 Change 2023 2022 Change Installation Sales $ 821,673 $ 783,056 4.9 % $ 2,397,818 $ 2,208,717 8.6 % Operating profit, as reported $ 175,218 $ 154,236 $ 494,394 $ 406,835 Operating margin, a
Slide 22: Margin Reconciliation
MARGIN RECONCILIATION (unaudited) ($ in 000s) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Gross profit, as reported $ 420,690 $ 395,748 $ 1,212,704 $ 1,111,046 Gross margin, as reported 31.7 % 30.4 % 31.0 % 29.7 % Acquisition related costs — — — 121 Gross pro
Slide 23: Same Branch and Acquisition Metrics
SAME BRANCH AND ACQUISITION METRICS (unaudited) ($ in 000s) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Net Sales Same branch $ 1,288,472 $ 1,300,998 $ 3,839,602 $ 3,744,201 Acquisitions (a) 37,648 — 69,018 — Total $ 1,326,120 $ 1,300,998 $ 3,908,620 $ 3,744,
Slide 24: Income Per Common Share Reconciliation
INCOME PER COMMON SHARE RECONCILIATION (unaudited) ($ in 000s except share and per common share amounts) Three Months Ended September 30, Nine Months Ended September 30, 2023 2022 2023 2022 Income before income taxes, as reported $ 224,677 $ 208,010 $ 631,140 $ 554,216 Rationalization charges 1,882
Slide 25: Acquisition Adjusted Net Sales
ACQUISITION ADJUSTED NET SALES (unaudited) ($ in 000s) Trailing Twelve 2022 2023 Months Ended Q4 Q1 Q2 Q3 September 30, 2023 Net Sales $ 1,264,543 $ 1,265,238 $ 1,317,262 $ 1,326,120 $ 5,173,163 † Acquisitions proforma adjustment 45,575 30,745 25,753 4,258 106,331 Net sales, acquisition adjusted $ 1
Slide 26: Reconciliation Guidance Table
RECONCILIATION GUIDANCE TABLE (unaudited) ($ in 000,000) Twelve Months Ending December 31, 2023 Low High Estimated net income $ 597.0 625.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 54.0 51.0 Income tax expense 210.0 219.0 Depreciation and amortization 1
Slide 27: TopBuild
4 TopBuild