Slide 1: Third Quarter 2020
2020 Third QUARTER Jerry Volas, CEO Robert Buck, President & COO John Peterson, CFO November 3, 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: Housing Industry Demonstrating Strength
BUSINESS UPDATE ▪ TopBuild performing well in current environment ▪ Housing industry remains a positive story • Builders reporting strong traffic and record-setting order growth • COVID-19 Impacts • Buyers looking to escape dense urban environments • Work from home policies driving demand for more s
Slide 4: 3Q 2020 Financial Highlights
3Q 2020 FINANCIAL HIGHLIGHTS* ▪ 2.2% net sales increase ▪ 28.4% gross margin, up 210 bps ▪ 14.6% adjusted operating margin, up 280 bps ▪ 17.1% adjusted EBITDA margin, up 270 bps ▪ 37.3% increase in adjusted EPS to $2.10 per diluted share RESULTS REFLECT STRENGTH OF DIVERSIFIED MODEL * See slide 14-1
Slide 5: Capital Allocation
CAPITAL ALLOCATION ▪ Acquired Garland Insulating October 1 • One of the largest locally owned and operated installation companies in Texas • Generated ~$60M in revenue TTM ended June 30, 2020 ▪ Announced three acquisitions year-to-date • Expected to generate ~$79M in annual revenue ▪ Repurchased ~58
Slide 6: Operational Excellence Driving Strong Margin Expansion
($ in 000s) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2020 Sales $492,206 $1,434,648 Y-O-Y Change (1.2%) 0.3% Adjusted Operating Profit* $83,429 $214,922 Y-O-Y Change 19.4% 13.0% Adjusted Operating Margin* 17.0% 15.0% Y-O-Y Change 300 bps 170 bps OPERATIONAL EXCELLENCE DR
Slide 7: Solid Sales Growth...Strong Margin Expansion
($ in 000s) Three Months Ended Nine Months Ended September 30, 2020 September 30, 2020 Sales $244,113 $674,672 Y-O-Y Change 10.5% 5.6% Adjusted Operating Profit* $32,641 $82,464 Y-O-Y Change 39.5% 26.4% Adjusted Operating Margin* 13.4% 12.2% Y-O-Y Change 280 bps 200 bps SOLID SALES GROWTH…STRONG MAR
Slide 8: Commercial Business
COMMERCIAL BUSINESS ▪ Declined 6.8% in 3Q, 6.9% YTD (same branch)* ▪ Some heavy commercial projects delayed • New guidelines governing density of construction crews on site ▪ Few heavy commercial projects cancelled, partially offset by new projects • Distribution centers • Healthcare facilities • In
Slide 9: Industry Trends
INDUSTRY TRENDS LABOR CONSTRAINED MATERIAL CONSTRAINED ▪ “Friends and Family” referral program ▪ Capacity tightening for many building materials ▪ Employer of Choice ▪ Additional fiberglass capacity coming online • Full suite of benefits next year • Opportunity to move up in the organization ▪ Comfo
Slide 10: Financial Overview
FINANCIAL OVERVIEW Third Quarter 2020 ($ in 000s except per share Three Months Ended Nine Months Ended amounts) September 30, 2020 September 30, 2020 Sales $697,223 $1,996,551 Y-O-Y Change 2.2% 1.8% Adjusted Operating Profit* $101,684 $255,450 Y-O-Y Change 26.2% 18.2% Adjusted Operating Margin* 14.6
Slide 11: Capex, Working Capital & Cash Flow
CAPEX, WORKING CAPITAL & CASH FLOW $ in 000s Nine Months Ended Nine Months Ended September 30, 2020 September 30, 2019 CAPEX $27,206 $34,100 Operating Cash Flow $255,723 $182,779 September 30, 2020 December 31, 2019 Cash Balance $315,338 $184,807 September 30, 2020 September 30, 2019 Working Capital
Slide 12: Leverage
LEVERAGE $ in millions Total Debt $720.0 ▪ $389.6M available on $450M Revolver Less Cash 315.3 ▪ Significant room under Net Debt $404.7 debt covenants TTM Adj. EBITDA $407.8 Leverage 0.99x STRONG BALANCE SHEET…AMPLE LIQUIDITY * See slide 14 for adjusted EBITDA reconciliation 12
Slide 13: Appendix
oN a APPENDIX
Slide 14: Adjusted EBITDA Reconciliation
ADJUSTED EBITDA RECONCILIATION ($ in 000s) TTM1 Ended Three Months Ended September 30, Nine Months Ended September 30, September 30, 2020 2019 2020 2019 2020 Net income, as reported $ 69,996 $ 54,976 $ 176,266 $ 145,011 $ 222,251 Adjustments to arrive at EBITDA, as adjusted: Interest expense and oth
Slide 15: Segment GAAP to Non-GAAP Reconciliation
SEGMENT GAAP TO NON-GAAP RECONCILIATION ($ in 000s) Three Months Ended September 30, 2020 2019 Change Nine Months Ended September 30, 2020 2019 Change TruTeam Sales $ 492,206 $ 498,390 (1.2) % $ 1,434,648 $ 1,430,800 0.3 % Operating profit, as reported $ 83,142 $ 69,846 $ 213,136 $ 189,568 Operating
Slide 16: Income Per Common Share Reconciliation
INCOME PER COMMON SHARE RECONCILIATION ($ in 000s) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Income before income taxes, as reported $ 93,917 $ 71,591 $ 227,673 $ 185,875 Rationalization charges (274) 8 2,102 1,977 Acquisition related costs 142 131 338 1,03
Slide 17: Same Branch and Acquisition Net Sales Reconciliation
SAME BRANCH AND ACQUISITION NET SALES RECONCILIATION ($ in 000s) Three Months Ended September 30, Nine Months Ended September 30, 2020 2019 2020 2019 Same branch: Residential $ 543,658 $ 522,506 $ 1,553,273 $ 1,503,300 Commercial 148,949 159,824 427,048 458,471 Same branch net sales 692,607 682,330
Slide 18: TopBuild
4 TopBuild