Slide 1: Fourth Quarter 2019
Fourth Quarter 2019 _____________ Jerry Volas, CEO February 25, 2020 Robert Buck, President & COO John Peterson, CFO
Slide 2: Safe Harbor
Safe Harbor 2 Statements contained in this presentation that are not historical and reflect our views about future periods and events, including our future performance, constitute “forward- looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-lookin
Slide 3: U.S. Housing Overview
U.S. Housing Overview 3 ▪ Residential housing showed increasing strength as 2019 progressed ▪ Consumer affordability improving • Mortgage rates remain low • Wage growth offsetting home price appreciation • Builders supplying significantly more entry level homes ▪ Household formations strong, pent-up
Slide 4: 2019 Financial Highlights
2019 Financial Highlights* 4 ▪ 4.6% same branch sales growth, exceeding lagged starts ▪ 180 bps gross margin expansion ▪ 13.7% adjusted EBITDA margin, up 180 bps ▪ 31.6% incremental EBITDA margin • 46.1% same branch • 19.2% acquisitions ▪ 31.0% increase in adjusted EPS to $5.49 per diluted share Lev
Slide 5: Capital Allocation
Capital Allocation 5 ▪ Acquisitions number one priority • Acquired 13 companies since 2016 • Two acquired thus far in 2020 • Generating over $530M of annual revenue ▪ Robust pipeline of acquisition targets • Core insulation primary focus • Glass business ancillary product focus ▪ Core competency ide
Slide 6: Financial Overview
Financial Overview 6 ($ in 000s) Three Months Ended December 31, 2019 Twelve Months Ended December 31, 2019 Sales $662,349 $2,624,121 Y-O-Y Change 3.6% 10.1% Adjusted Operating Profit* $76,602 $292,715 Y-O-Y Change 14.1% 25.8% Adjusted Operating Margin* 11.6% 11.2% Y-O-Y Change 110 bps 140 bps Adjus
Slide 7: CapEx, Working Capital & Cash Flow
CapEx, Working Capital & Cash Flow 7 ($ in 000s) Twelve Months Ended December 31, 2019 CAPEX $45,536 Working Capital % to Sales 10.3% Operating Cash Flow $271,777 Cash Balance $184,807 Net Leverage 1.54X Strong Cash Flow Generation
Slide 8: 2020 Guidance
2020 Guidance 8 2020 SALES 2020 ADJUSTED EBITDA* $2,765M to $2,835M $387M to $412M Assumes Housing Starts Between 1.30M and 1.34M * See slide 20 for Reconciliation Guidance
Slide 9: Long-Term Targets
Long-Term Targets 9 Strong Growth Potential
Slide 10: Full-Year Adj. Operating Margin has Expanded 820 bps Since 2015
10 ($ in 000s) Three Months Ended Twelve Months Ended December 31, 2019 December 31, 2019 Sales $475,929 $1,906,730 Y-O-Y Change 4.0% 13.4% Adjusted Operating Profit* $63,814 $254,025 Y-O-Y Change 11.5% 28.4% Adjusted Operating Margin* 13.4% 13.3% Y-O-Y Change 90 bps 150 bps Full-Year Adj. Operating
Slide 11: Driving Top and Bottom Line Growth
11 ($ in 000s) Three Months Ended Twelve Months Ended December 31, 2019 December 31, 2019 Sales $223,244 $862,143 Y-O-Y Change 4.3% 5.1% Adjusted Operating Profit* $25,234 $90,497 Y-O-Y Change 16.8% 14.7% Adjusted Operating Margin* 11.3% 10.5% Y-O-Y Change 120 bps 90 bps Driving Top and Bottom Line
Slide 12: Fiberglass
Fiberglass 12 ▪ January cost increase has had some traction ▪ Could see second cost increase depending on starts growth ▪ More supply available vs. a year ago ▪ Additional supply expected to come on line late this year and early 2021 High Confidence in Strength and Stability of Our Supply Chain
Slide 13: Strong Commercial Growth
Strong Commercial Growth 13 ▪ 24.0% sales growth in 2019 • 18.6% on a same branch basis ▪ Now accounts for ~23% of total TopBuild revenue ▪ Two greenfield locations established last year • GCs bringing us to new markets • Now have 22 heavy commercial branches ▪ Robust pipeline of potential activity
Slide 14: 2020 Acquisitions
2020 Acquisitions 14 Hunter Insulation Cooper Glass Company • Headquartered in Long Island, NY • Headquartered in Marion, AK • Founded in late 1930’s • Services the Memphis market • Fiberglass and spray foam insulation installation • Founded in 1992 for residential and light commercial projects • Co
Slide 15: Safety
Safety 15 ▪ We put the safety of our people first ▪ It is a lifestyle, NOT just a program or initiative ▪ Zero-Accident safety culture ▪ Employee Safety Pledge ▪ Monthly safety training meetings conducted at every branch Safety…a TopBuild Core Value
Slide 16: Appendix
“x Appendix rs Build
Slide 17: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 17 ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2019 2018 2019 2018 Net income, as reported $ 45,985 $ 38,553 $ 190,995 $ 134,752 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 8,517 9,395 35,745 28,129 Income tax e
Slide 18: Segment GAAP to Non-GAAP Reconciliation
Segment GAAP to Non-GAAP Reconciliation 18 ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2019 2018 Change 2019 2018 Change TruTeam Sales $ 475,929 $ 457,610 4.0 $ 1,906,730 $ 1,680,967 13.4 % Operating profit, as reported $ 63,661 $ 57,016 $ 253,230 $ 196,986 Operating margin,
Slide 19: Income Per Common Share Reconciliation
Income Per Common Share Reconciliation 19 ($ in 000s) Three Months Ended December 31, Year Ended December 31, 2019 2018 2019 2018 Income Per Common Share Reconciliation Income before income taxes, as reported $ 67,904 $ 55,766 $ 253,778 $ 180,824 Rationalization charges 15 929 1,992 7,736 Acquisitio
Slide 20: Reconciliation Guidance Table
Reconciliation Guidance Table 20 ($ in 000,000s) TopBuild Corp. 2020 Estimated Adjusted EBITDA Range (Unaudited) (dollars in millions) Twelve Months Ending December 31, 2020 Low High Estimated net income $ 206.5 $ 232.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and oth