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TopBuild Corp (BLD)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 results were broadly in line: revenue $1.23B (-3.6% YoY), adjusted EBITDA $234.8M (19.0% margin), and adjusted EPS $4.63, with weakness in new residential offset by growth in commercial/industrial and solid execution .
  • Versus consensus, TopBuild delivered a modest beat on revenue ($1.233B vs ~$1.230B*) and adjusted EPS ($4.63 vs ~$4.40*), and a slight beat on EBITDA (company-adjusted $234.8M vs ~$227.7M*)—helped by pricing resilience and C&I strength; residential volumes were softer than anticipated .
  • Full-year 2025 guidance reaffirmed (sales $5.05–$5.35B; adjusted EBITDA $925–$1,075M), with the residential outlook cut to down high-single digits while C&I remains up low-single digits; M&A carryover plus Seal-Rite expected to add ~$85M to sales .
  • Strategic catalysts: consolidation of 33 facilities and headcount actions to drive ~$30M+ annual savings, continued buybacks ($215.6M in Q1), and upsized $2.25B credit facilities enhancing liquidity and flexibility .

What Went Well and What Went Wrong

  • What Went Well

    • Specialty Distribution grew 2.6% YoY with healthy top-line and bottom-line performance in DI mechanical insulation (U.S. and Canada); recurring revenue now ~25% of segment sales supporting durability .
    • Pricing held up better than expected (especially C&I), supporting margins despite softer residential demand; adjusted gross margin was 29.6% and adjusted EBITDA margin 19.0% .
    • Operational optimization: 33 facility consolidations executed using the company’s technology platform and “Agility” tool; management expects ~$30M+ annual savings from footprint and headcount actions (contemplated in guidance) .

  • What Went Wrong

    • Residential demand was weak across single-family, multifamily, and light commercial; installation volume declined 9.6%, driving an overall sales decline of 3.6% and lower adjusted margins YoY .
    • Distribution pricing pressure on residential products (primarily spray foam) weighed on adjusted gross margin (down ~70 bps YoY); adjusted EBITDA margin fell 80 bps YoY to 19.0% .
    • Multifamily exposure in Installation amplified volume declines; light commercial was down double digits even as heavy commercial rose, highlighting mixed end-market dynamics .

Financial Results

Consolidated Performance (comparisons across recent quarters)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Thousands)$1,373,268 $1,312,206 $1,233,278
Diluted EPS (Reported) ($)$5.65 $5.11 $4.23
Diluted EPS (Adjusted) ($)$5.68 $5.13 $4.63
Gross Margin (Reported, %)30.7% 29.9% 28.5%
Gross Margin (Adjusted, %)30.7% 29.9% 29.6%
Adjusted EBITDA ($USD Thousands)$285,057 $258,025 $234,759
Adjusted EBITDA Margin (%)20.8% 19.7% 19.0%

Segment Breakdown – Q1 2025

MetricInstallationSpecialty Distribution
Sales ($USD Thousands)$745,533 $559,804
Operating Margin (Reported, %)17.4% 12.3%
Operating Margin (Adjusted, %)18.5% 13.6%
Adjusted EBITDA ($USD Thousands)$157,556 $91,366
Adjusted EBITDA Margin (%)21.1% 16.3%

Sales Drivers – Q1 2025

DriverInstallationSpecialty DistributionTopBuild (net of eliminations)
Volume (%)(9.6%) (2.2%) (7.4%)
Price (%)1.1% 1.4% 1.2%
M&A (%)1.8% 3.4% 2.6%
Total Sales Change (%)(6.7%) 2.6% (3.6%)

KPIs – Q1 2025

KPIQ1 2025
Cash and Cash Equivalents ($USD Thousands)$308,811
Working Capital as % of Sales (TTM)13.7%
Share Repurchases (Shares / $USD Millions)693,881 / $215.6
Cash from Operations ($USD Thousands)$152,589
Decremental Adjusted EBITDA vs Sales Change (%)(41.9%)
Revolver Availability ($USD Millions)$437.6
Liquidity ($USD Millions)$746.4
Net Debt ($USD Billions)~$1.07

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales ($USD Billions)FY 2025$5.05 – $5.35 $5.05 – $5.35 Maintained
Adjusted EBITDA ($USD Millions)FY 2025$925 – $1,075 $925 – $1,075 Maintained
Residential Sales TrendFY 2025Down mid-single digits Down high-single digits Lowered
C&I Sales TrendFY 2025Up low-single digits Up low-single digits; toward higher end Slightly more positive
M&A Sales Contribution ($USD Millions)FY 2025Not specified ~85 (carryover + Seal-Rite) New detail
Interest Expense ($USD Millions)FY 2025$49–$55 No update provided in Q1 materials N/A
Capex (% of Sales)FY 20251.5%–2.0% No update provided in Q1 materials N/A
Tax Rate (%)FY 202525%–27% No update provided in Q1 materials N/A

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Tariffs / MacroProject delays cited in mid-2024, uneven housing; narrowed 2024 outlook Tariff exposure minimal (<5% of cost of sales); mitigating via supply base and pricing actions Stabilizing / manageable
Pricing DynamicsStrong margins in late 2024; mix supported EBITDA No new manufacturer pricing expected in 2025; C&I price increases realized; spray foam pressures easing sequentially Moderating, resilient
C&I Backlog / ProjectsDelays in 2024 beginning to move forward; healthy pipeline Acceleration in data centers; visibility ~6 months; vertical strategy driving share Improving
Footprint Optimization / TechnologyNot highlighted in prior PRsConsolidated 33 facilities using “Agility” optimization; ~$30M+ annual savings (in guidance) New initiative / cost-on
Regional TrendsNot detailed in prior PRsDallas strong; Florida and parts of Texas softer; Northeast/Midwest/Southern Cal improving Mixed / selective strength
M&A Pipeline7–8 acquisitions in 2024 totaling ~$118–$153M annual sales Seal-Rite closed (~$15M revenue); pipeline very active, disciplined returns focus Ongoing

Management Commentary

  • “Our first quarter results were in line with our expectations… Installation segment sales declined 6.7%, a reflection of the slow start to the year in new residential construction… adjusted EBITDA margin of 19.0%.” — Robert Buck, CEO .
  • “We consolidated 33 facilities… which will drive ongoing efficiencies… our common technology platform… allows us to continually analyze data.” — Robert Buck .
  • “We are confirming our full year outlook… residential sales will be down high single digits… commercial and industrial will be up low single digits… M&A carryover along with Seal-Rite will add approximately $85 million.” — Rob Kuhns, CFO .
  • “Our exposure to tariffs… is minimal… potential impact… less than 5% of our cost of sales.” — Rob Kuhns .

Q&A Highlights

  • Residential outlook trimmed: Single-family expected down low-single digits for the year; total residential down high-single digits; pricing held better than expected in Q1 .
  • Cost actions and savings: ~$13.9M one-time charges (primarily noncash lease impairments) from consolidations; ~$30M+ annual savings from footprint and headcount actions, already contemplated in guidance .
  • Pricing/margin context: No new manufacturer pricing expected in 2025; C&I price increases realized; spray foam sequential improvement; teams focused on offsetting cost challenges .
  • End-market mix: Light commercial down double digits; heavy commercial up double digits; DI mechanical led C&I growth .
  • Regional dispersion: Dallas strong with backlogs; Florida and South Texas softer; Northeast/Midwest/Southern Cal improving .

Estimates Context

  • Q1 2025 actuals vs S&P Global Wall Street consensus:
MetricConsensusActual
Revenue ($USD)$1,229,933,270*$1,233,278,000
Adjusted EPS ($)4.397*4.63
EBITDA ($USD)$227,687,910*$234,759,000 (company-adjusted)

Values marked with an asterisk were retrieved from S&P Global.

  • Implication: Slight beats on revenue, adjusted EPS, and adjusted EBITDA vs consensus; estimate models likely move to reflect stronger C&I pricing realization, ongoing cost savings, and residential volume pressure shifted to pricing resilience .

Key Takeaways for Investors

  • Near-term: Expect continued softness in residential volumes; Q2 likely the largest YoY sales decline among remaining quarters, with normal seasonal margin progression and C&I support—position sizing should reflect volatility in housing demand .
  • Margin durability: Pricing resilience (especially in C&I) and footprint optimization savings underpin FY25 EBITDA guidance despite volume headwinds; risk skew from residential mix appears manageable .
  • Capital allocation: Active, disciplined M&A (Seal-Rite closed) and substantial buyback capacity ($972.4M authorization remaining at Q1), supported by upsized $2.25B credit facilities (SOFR+1.25%)—share count dilution likely improves EPS trajectory .
  • End-market mix: Heavy commercial strength and DI mechanical momentum provide diversification against single-family/multifamily softness; recurring revenue (~25% of SD) adds defensiveness .
  • Watch items: Residential pricing/cost spread (spray foam), tariff developments (<5% cost of sales exposure), regional demand signals (Dallas vs Florida/Texas), and cadence of project releases in data centers and industrials .
  • Guidance posture: Reaffirmed FY25 ranges with more conservative residential outlook; C&I tilted marginally more positive—models should incorporate ~$85M M&A carryover in sales and ~$30M+ annual savings in run-rate margins .
  • Non-GAAP adjustments: Rationalization charges ($15.4M) and acquisition costs ($1.3M) affected reported margins; adjusted figures (GM 29.6%, EBITDA margin 19.0%) better represent operational performance .