Executive Summary

Q2 results were resilient in a weak residential backdrop: revenue $1.297B (-5% y/y), adjusted EBITDA $261.3M (20.1% margin), and adjusted EPS $5.31; margins improved sequentially on cost actions and supply chain gains despite lower volume .
Versus Wall Street: EPS beat ($5.31 vs $5.09*), EBITDA slightly above consensus ($261.3M vs $251.6M*), while revenue modestly missed ($1.297B vs $1.306B*). Management guided FY25 sales to $5.15–$5.35B and adjusted EBITDA to $970M–$1,070M, incorporating Progressive Roofing . Values marked with * from S&P Global.
Mix continues to shift toward commercial/industrial: heavy commercial strength and Progressive Roofing (closed July 15) expand exposure to non‑cyclical reroof/maintenance; management now expects residential same‑branch sales down low double digits (from high single digits prior) and C&I flattish to up low single digits .
Capital allocation remains active: $136.0M in Q2 repurchases; $351.6M YTD; liquidity of ~$1.8B at quarter-end and expanded $2.25B credit facilities (term loan, revolver, delayed‑draw) maturing 2030 support M&A pipeline and Progressive integration .

What Went Well and What Went Wrong

What Went Well
- Sequential profitability improved: adjusted EBITDA margin rose to 20.1% (+110 bps q/q) on cost actions and supply chain improvements; Installation adj. EBITDA margin rose to 22.3% and Specialty Distribution to 17.2% sequentially .
- Strategic expansion into commercial roofing: Progressive Roofing closed July 15 ($438M TTM revenue, ~$89M EBITDA; ~70% reroof/services), establishing a scalable, non‑cyclical growth platform; management sees cross‑sell and M&A pipeline benefits .
- Heavy commercial/industrial end markets remained solid with healthy bidding and backlogs (data centers, power/LNG, healthcare, education, manufacturing), supporting C&I stability .
- Quote: “Our second quarter adjusted EBITDA margin of 20.1%…is a direct reflection of the command we have over our business” .
What Went Wrong
- Residential new construction softened further; total company volume declined 7.8% y/y and Installation sales fell 8.3% y/y on a 10.5% volume drop .
- Light commercial remained challenged (down double‑digits YTD volumes), partially offsetting heavy commercial strength .
- Price/cost headwinds expected to intensify in 2H: management embedded roughly $30M of net price‑cost headwind as carryover pricing benefits roll off and builders push price .
- Quote: “We’ve adjusted our midpoint guidance around residential to be down low double digits…[starts] slowed in the second quarter” .

Financial Results

Quarterly performance (oldest → newest):

Metric	Q4 2024	Q1 2025	Q2 2025
Revenue ($B)	$1.312	$1.233	$1.297
Adjusted EBITDA ($M)	$258.0	$234.8	$261.3
Adjusted EBITDA Margin (%)	19.7%	19.0%	20.1%
GAAP Diluted EPS ($)	$5.11	$4.23	$5.32
Adjusted EPS ($)	$5.13	$4.63	$5.31
Gross Margin (%) (reported/adj)	29.9%/29.9%	28.5%/29.6%	30.4%/30.3%
Operating Margin (%) (reported/adj)	16.6%/16.7%	14.4%/15.7%	16.9%/17.0%

Q2 vs S&P Global consensus (values with * from S&P Global):

Metric	Actual	Consensus*
Revenue ($B)	$1.297	$1.306*
Adjusted EPS ($)	$5.31	$5.09*
EBITDA ($M)	$261.3 (company adj.)	$251.6*

Segment performance (oldest → newest):

Segment	Q4 2024 Sales ($B)	Q1 2025 Sales ($B)	Q2 2025 Sales ($B)	Q4 2024 Adj. EBITDA Margin (%)	Q1 2025 Adj. EBITDA Margin (%)	Q2 2025 Adj. EBITDA Margin (%)
Installation	$0.789	$0.746	$0.781	21.4%	21.1%	22.3%
Specialty Distribution	$0.602	$0.560	$0.599	17.7%	16.3%	17.2%

Sales drivers (same-branch and mix effects):

Sales Drivers (y/y)	Q1 2025	Q2 2025
Total Company Volume (%)	(7.4%)	(7.8%)
Total Company Price (%)	1.2%	0.9%
Total Company M&A (%)	2.6%	1.9%
Installation Volume / Price / M&A (%)	(9.6%)/1.1%/1.8%	(10.5%)/0.9%/1.4%
Specialty Distribution Volume / Price / M&A (%)	(2.2%)/1.4%/3.4%	(2.1%)/0.8%/2.3%

Other Q2 items:

Liquidity ~$1.8B at quarter-end (cash $842.5M; revolver availability $938.8M); total debt increased with expanded facilities; net leverage 1.01x TTM pro forma adj. EBITDA .
Q2 share repurchases: 454,802 shares for $136.0M; YTD 1,148,683 shares for $351.6M; remaining authorization $836.4M .

Guidance Changes

Metric	Period	Previous Guidance (May 6)	Current Guidance (Aug 5)	Change
Sales ($B)	FY 2025	$5.05–$5.35	$5.15–$5.35	Raised low end
Adjusted EBITDA ($M)	FY 2025	$925–$1,075	$970–$1,070	Midpoint raised; narrowed
Adj. EBITDA Margin (midpoint)	FY 2025	—	~19.4% (implied)	New disclosure
Residential same‑branch sales	FY 2025	Down high single digits (implied Feb/Q1 posture)	Down low double digits	Lowered
C&I same‑branch sales	FY 2025	Low single‑digit growth	Flattish to up low single digits	Trimmed
M&A contribution to sales ($M)	FY 2025	Not specified	~300 (FY); Progressive H2 ~215	New disclosure

Additional color:

Q3 total net sales “flattish” and Q4 “up low single digits” y/y including M&A; back‑half price/cost headwind ~$30M embedded .

Earnings Call Themes & Trends

Topic	Q4 2024 (Q‑2)	Q1 2025 (Q‑1)	Q2 2025 (Current)	Trend
Residential demand	Choppy residential backdrop; Specialty Distribution growth offset	Installation down 6.7% on slow residential start	Residential softness worsened; resi down low double digits assumed	Deteriorating near‑term
Heavy C&I	Positive end‑market fundamentals	Bidding/backlog solid; C&I moving forward	Heavy C&I strong; healthy backlogs; no cancellations	Resilient
Light commercial	—	—	Remains challenged; weighing volumes	Weak
Price/cost	—	Cost alignment underway	~$30M 2H headwind; carryover pricing rolling off	Headwinds rising
Supply chain/logistics	—	—	Network optimization/logistics productivity gains aiding margins	Improving
M&A/Progressive Roofing	—	—	Progressive closed; ~70% reroof/services; platform for M&A	Strategic expansion
Data centers/AI infra	—	—	Multi‑phase data center wins; growing pipeline	Emerging tailwind
Capital allocation/leverage	$966M 2024 buybacks; new $1B authorization	$215.6M Q1 buybacks	$136M Q2 buybacks; leverage ~1.01x; capacity to go 2–3x for the right deal	Ample flexibility

Management Commentary

Strategic diversification: “We’ve grown our commercial/industrial sales to approximately 40% of total sales this year…about 20% of our total sales are recurring, non‑discretionary or non‑cyclical” .
Profit resilience: “Second quarter adjusted EBITDA margin of 20.1%…reflects the command we have over our business” .
Progressive Roofing thesis: “~70% is reroof and services…by far the majority heavy commercial…EBITDA around ~20%” .
Backlog and verticals: “Heavy commercial/industrial looks positive…strength in power/LNG (U.S. & Canada), healthcare, manufacturing, education; data centers are a key one” .
Cost actions: “Lease and people cost savings north of $30M/year…decrementals improved to ~23% in Q2 same‑branch” .
Capital returns and liquidity: “Repurchased nearly 455,000 shares ($136M)…liquidity ~$1.8B; net leverage 1.01x TTM pro forma adjusted EBITDA” .

Q&A Highlights

Progressive Roofing integration and margins: H2 sales contribution ~$215M with EBITDA margin “around ~20%,” broadly in line with core business; cross‑sell opportunities identified; active M&A pipeline within roofing .
Residential outlook reset: Guidance now assumes low double‑digit decline on same‑branch residential; detailed mixed regional reads (e.g., South Florida/Jacksonville slower; Carolinas improving; mixed Texas) .
Price/cost dynamics: ~$(30)M net price‑cost headwind in 2H as prior fiberglass price carryover fades; heavier impact to residential distribution margins .
C&I demand: Heavy commercial backlogs solid; no cancellation trends; Progressive’s backlog stronger y/y .
Leverage and M&A capacity: Comfortable at 1–2x; will go 2–3x for the right deals and then de‑lever quickly, consistent with past DI/USI transactions .

Estimates Context

Q2 2025 EPS: $5.31 vs $5.09* consensus — beat; Revenue: $1.297B vs $1.306B* — slight miss; EBITDA: $261.3M company adj. vs $251.6M* — above. Company uses adjusted EBITDA (20.1% margin) while S&P’s standardized EBITDA actual may differ by definition . Values marked with * retrieved from S&P Global.
Prior quarters: Q1 2025 EPS $4.63 vs $4.40* — beat; revenue modestly above; Q4 2024 EPS $5.13 vs $5.05* — beat; revenue in line . Values with * retrieved from S&P Global.

Key Takeaways for Investors

Mix shift plus Progressive Roofing reduces cyclicality and supports margin durability; heavy C&I and reroof/services exposure are strategic offsets to residential weakness .
Profitability execution is strong: sequential margin expansion with cost/footprint optimization and supply chain improvements; FY25 midpoint implies ~19.4% adj. EBITDA margin despite 2H price‑cost headwinds .
Near‑term top‑line risk sits in residential and light commercial; management proactively reset residential outlook to low double‑digit decline .
Capital deployment remains a catalyst: large liquidity, expanded facilities to 2030, active M&A pipeline (especially roofing), and substantial remaining buyback authorization .
Watch themes likely to drive the stock: Progressive integration synergies and pipeline updates, data center/power project wins, price‑cost progression into 2026, and any stabilization in residential starts/backlogs .

Values marked with * retrieved from S&P Global.

Appendix: Additional Disclosures and Non‑GAAP Notes

Adjusted results exclude rationalization charges, acquisition‑related costs, refinancing costs, and, in prior periods, acquisition termination fees; reconciliations provided in company materials .

TopBuild Corp (BLD)·Q2 2025 Earnings Summary