Slide 1: Second Quarter 2023
SECOND QUARTER 2023 Robert Buck, President & CEO Rob Kuhns, CFO August 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 $8.5B 39% 35% 61% 65% Employees ~13,000 83% Installation Insulation & Accessories Residential Total Branches ~410 Specialty Distribution Gutters Commercial/Industrial
Slide 4: Business Update
BUSINESS UPDATE Solid second quarter results Favorable operating environment Installation sales up 8.0% primarily driven by: • Strong backlog of multi-family homes • Growing mix of commercial work, increased 22.6% from 2Q 2022 Specialty Distribution sales down 2.3% primarily driven by: • Con
Slide 5: Second Quarter Financial Highlights
SECOND QUARTER FINANCIAL HIGHLIGHTS* 3.4% sales increase 32.0% gross margin, up 190 bps • Highest in BLD’s history 18.2% adjusted operating margin, up 180 bps 20.9% adjusted EBITDA margin, up 190 bps Highest in BLD’s history DELIVERING ANOTHER SOLID QUARTER *See Appendix for Reconciliation
Slide 6: Installation
INSTALLATION Comparisons are to the quarter ended June 30, 2022 Three Months Ended Capitalizing on multiple avenues for ($ in 000s) June 30, 2023 growth with strategic mix of business Sales $809,055 Y-O-Y Change 8.0% Solid backlog of multi-family homes Adjusted Operating Profit* $172,505 Takin
Slide 7: Select Commercial Installation Projects
SELECT COMMERCIAL INSTALLATION PROJECTS Nashville International Airport UCI Medical Center Festival Pier Shopify Distribution Center Nashville, TN Irvine, CA Philadelphia, PA San Bernadino, CA Rendering Credit: The Metropolitan Nashville Airport Authority Rendering Credit: Kilograph Rendering Credit
Slide 8: Specialty Distribution
SPECIALTY DISTRIBUTION Comparisons are to the quarter ended June 30, 2022 Three Months Ended Residential distribution volumes ($ in 000s) normalizing June 30, 2023 Sales $574,488 Growing backlog of projects across Y-O-Y Change (2.3%) diverse industries Adjusted Operating Profit* $85,980 Y-O-Y Ch
Slide 9: Select Specialty Distribution Projects
SELECT SPECIALTY DISTRIBUTION PROJECTS Chevron Phillips Cedar Chevron Phillips Plant – Hampton University Bayou Plant Hexene Unit Addition Dorms Baytown, TX Sweeney, TX Hampton, VA Photo Credit: Chevron Phillips Chemical Photo Credit: Chevron Phillips Chemical Photo Credit: Douglas W Reynolds (https
Slide 10: Capital Allocation
CAPITAL ALLOCATION Three acquisitions completed YTD, ~$170M annual revenue ENHANCING OPERATIONS ACROSS OUR FOOTPRINT • Residential insulation • $62M annual revenue Dedicated integration team with proven expertise • Acquired January 2023 Highly complementary businesses enable • Residential insulati
Slide 11: Capex, Working Capital & Cash Flow
CAPEX, WORKING CAPITAL & CASH FLOW $ in 000s Six Months Ended Six Months Ended June 30, 2023 June 30, 2022 Operating Cash Flow $385,797 $217,697 CAPEX $30,672 $36,034 FREE CASH FLOW $355,125 $181,663 June 30, 2023 December 31, 2022 Cash Balance $526,327 $240,069 Working Capital % to 14.9% 15.7% TTM
Slide 12: Flexible Capital Structure
FLEXIBLE CAPITAL STRUCTURE Capital Summary & Financial Highlights ($M) Capital Structure (As of June 30, 2023) Debt Maturity Schedule1 ($M) June 30, 2023 $551 Cash $ 526.3 Senior Secured $500 Term Loan 4.125% $400 Total Debt $ 1,455.8 Senior Notes 3.625% Senior Notes Net Debt $929.5 TTM Proforma Adj
Slide 13: 2023 Outlook
2023 OUTLOOK (as of August 3, 2023) SALES ASSUMPTIONS COMMERCIAL/ $5,025M to $5,175M RESIDENTIAL INDUSTRIAL CAPEX Low Single Digit Revenue Decline Mid-Single Digit 1.5% to 2% of Revenue Revenue Growth ADJUSTED EBITDA* WORKING CAPITAL INCOME TAX RATE INCREMENTAL EBITDA $950M to $1,000M Organic: 22% t
Slide 14: 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 15: 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 Insulation ~$6.0B ~11% • Provide services f
Slide 16: Capital Allocation Past Five Years
CAPITAL ALLOCATION PAST FIVE YEARS USE OF CAPITAL (1/1/18-7/30/23) • CapEx 1.6% of Sales 5% 10% Internal Investments • Investing in equipment upgrades 17% and digitization ~$3.0B Acquisitions • Completed 26 transactions • ~$1.7B in revenue added • End-markets very fragmented 68% • ~$510M in repurcha
Slide 17: M&A: A Core Competency
M&A: A Core Competency Strategic Integration Track Record Rationale Competency of Success ROIC1 • Focus on core • Integrated 26 companies • Exceeded projected 18.5% Insulation products since 1/1/2018 synergies, including DI and USI integrations 15.6% • Enhance resources and • Dedicated integration t
Slide 18: Our People Make a Difference
OUR PEOPLE MAKE A DIFFERENCE *As of 12/31/22 **Branch Center Support/Corporate Office Only 80% OF OUR EMPLOYEES RATE TOPBUILD AS A ‘GREAT PLACE TO WORK’ 18
Slide 19: ESG Focus Areas
ESG FOCUS AREAS STRONG COMMITMENT BY BOARD AND MANAGEMENT
Slide 20: Appendix
oN Q APPENDIX
Slide 21: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION (unaudited) ($ in 000s) Trailing Twelve Three Months Ended June 30, Six Months Ended June 30, Months Ended 2023 2022 2023 2022 June 30, 2023 Net income, as reported $ 164,400 $ 143,697 $ 300,270 $ 258,410 $ 597,850 Adjustments to arrive at EBITDA, as adjusted: Interest
Slide 22: Segment Data
SEGMENT DATA (unaudited) ($ in 000s) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 Change 2023 2022 Change Installation Sales $ 809,055 $ 748,968 8.0 % $ 1,576,145 $ 1,425,661 10.6 % Operating profit, as reported $ 172,278 $ 139,919 $ 319,176 $ 252,598 Operating margin, as reported
Slide 23: Margin Reconciliation
MARGIN RECONCILIATION (unaudited) ($ in 000s) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Gross profit, as reported $ 421,800 $ 384,097 $ 792,015 $ 715,298 Gross margin, as reported 32.0 % 30.1 % 30.7 % 29.3 % Acquisition related costs — — — 121 Gross profit, as adjuste
Slide 24: Same Branch and Acquisition Metrics
SAME BRANCH AND ACQUISITION METRICS (unaudited) ($ in 000s) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net Sales Same branch $ 1,300,736 $ 1,274,285 $ 2,551,130 $ 2,443,203 Acquisitions (a) 16,526 — 31,370 — Total $ 1,317,262 $ 1,274,285 $ 2,582,500 $ 2,443,203 EBITDA,
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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Income before income taxes, as reported $ 223,150 $ 193,532 $ 406,465 $ 346,206 Rationalization charges — — — 473 Acquisi
Slide 26: Acquisition Adjusted Net Sales
ACQUISITION ADJUSTED NET SALES (unaudited) ($ in 000s) Trailing Twelve 2022 2023 Months Ended Q3 Q4 Q1 Q2 June 30, 2023 Net Sales $ 1,300,998 $ 1,264,543 $ 1,265,238 $ 1,317,262 $ 5,148,041 Acquisitions proforma adjustment † 17,576 18,279 6,187 - 42,042 Net sales, acquisition adjusted $ 1,318,574 $
Slide 27: Reconciliation Guidance Table
RECONCILIATION GUIDANCE TABLE (unaudited) ($ in 000,000) Twelve Months Ending December 31, 2023 Low High Estimated net income $ 543.0 586.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 62.0 59.0 Income tax expense 191.0 206.0 Depreciation and amortization 1
Slide 28: TopBuild
4 TopBuild