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TopBuild Corp (BLD)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered sales of $1.393B and adjusted EBITDA margin of 19.8%, broadly in line with expectations; adjusted EPS of $5.36 modestly beat S&P Global consensus ($5.29), and revenue exceeded consensus ($1.378B) on M&A contributions and resilient commercial/industrial end markets .*
  • Management raised FY2025 guidance to $5.35–$5.45B sales and $1.01–$1.06B adjusted EBITDA to incorporate SPI and four recent acquisitions; added detail for D&A, SB compensation, EBIT (adj.), interest and tax, and adjusted income .
  • Residential new construction remained weak (volume declines and pricing pressure), while heavy commercial/industrial strength and Progressive Roofing support revenue mix and pricing; SPI synergies targeted at $35–$40M run-rate within two years .
  • Capital allocation remains M&A-first; YTD buybacks of $417.1M; total liquidity ~$2.1B; net debt leverage at 1.6x TTM (2.4x pro forma w/SPI and recent deals), manageable versus long-term 1–2x target .

What Went Well and What Went Wrong

What Went Well

  • Commercial/industrial strength and Progressive Roofing integration: “We posted total sales growth...partially offset by ongoing growth in heavy commercial and industrial. We're also benefiting from the contribution of our Commercial Roofing acquisition.”
  • Raised FY2025 guidance with acquisitive growth: “We are raising our 2025 outlook to incorporate SPI and our four recent acquisitions.”
  • Margin resiliency from cost actions: Installation adjusted EBITDA margin improved to 22.5% (+20 bps YoY) as productivity initiatives offset residential price pressure .
  • SPI strategic fit, recurring revenue, and synergy plan: ~$700M TTM revenue, ~$75M EBITDA; 35–40M run-rate synergies; mix ~55% recurring maintenance/repair .

What Went Wrong

  • Residential softness drove same-branch declines: Residential same-branch revenue down 10.0% YoY in Q3; installation volume -10.4% and price -0.5% in Q3 .
  • Gross and EBITDA margin compression YoY: Adjusted gross margin 30.1% (vs 30.7% LY) and adjusted EBITDA margin 19.8% (vs 20.8%) on price-cost headwinds and higher amortization from M&A .
  • Specialty Distribution margin pressure: Adjusted EBITDA margin fell to 16.9% (vs 18.4% LY), reflecting residential product pricing pressure despite commercial strength .

Financial Results

MetricQ3 2024Q1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$1.373 $1.233 $1.297 $1.393
Diluted EPS (GAAP, $USD)$5.65 $4.23 $5.32 $5.04
Adjusted EPS ($USD)$5.68 $4.63 $5.31 $5.36
Gross Margin % (Adjusted)30.7% 29.6% 30.3% 30.1%
Operating Margin % (Adjusted)17.9% 15.7% 17.0% 16.4%
Adjusted EBITDA Margin %20.8% 19.0% 20.1% 19.8%
Segment Breakdown (Q3)Q3 2024Q3 2025
Installation Sales ($USD Billions)$0.856 $0.858
Specialty Distribution Sales ($USD Billions)$0.600 $0.609
Installation Adj. Operating Margin %20.1% 19.5%
Specialty Distribution Adj. Operating Margin %15.8% 14.4%
Installation Adj. EBITDA Margin %22.3% 22.5%
Specialty Distribution Adj. EBITDA Margin %18.4% 16.9%
Sales Drivers (Q3 2025)Installation ServicesSpecialty DistributionTopBuild
Volume %(10.4%) (2.1%) (6.7%)
Price %(0.5%) 1.2% 0.3%
M&A %11.0% 2.3% 7.9%
Total Sales Change %0.2% 1.4% 1.4%
KPIsQ2 2025Q3 2025
Cash & Equivalents ($USD Billions)$0.842 $1.142
Long-term Debt ($USD Billions)$1.833 $2.799
Working Capital as % of Sales (TTM)13.7% 14.2%
Liquidity (Cash + Revolver, $USD Billions)—~$2.1
Net Debt Leverage (TTM)—1.6x (2.4x pro forma incl. SPI + deals)
TTM Free Cash Flow ($USD Millions)—$791.2
Q3 Share Repurchases—177,983 shares; $65.5M
YTD Share Repurchases—1,326,666 shares; $417.1M
Progressive Roofing Q3 Sales Contribution—~$92M
Actual vs S&P Global ConsensusQ1 2025Q2 2025Q3 2025
Revenue Estimate ($USD Billions)$1.230*$1.306*$1.379*
Revenue Actual ($USD Billions)$1.233 $1.297 $1.393
Primary EPS Estimate ($USD)$4.40*$5.09*$5.29*
Adjusted EPS Actual ($USD)$4.63 $5.31 $5.36

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales ($USD Billions)FY 2025$5.15–$5.35 $5.35–$5.45 Raised
Adjusted EBITDA ($USD Billions)FY 2025$0.97–$1.07 $1.01–$1.06 Raised (midpoint)
Depreciation & Amortization ($USD Millions)FY 2025N/A166–171 New detail
Share-based Compensation ($USD Millions)FY 2025N/A18–19 New detail
Adjusted EBIT ($USD Millions)FY 2025N/A820–876 New detail
Interest Expense & Other, net ($USD Millions)FY 2025N/A88–91 New detail
Adjusted Profit Before Tax ($USD Millions)FY 2025N/A729–788 New detail
Adjusted Income Tax Expense ($USD Millions)FY 2025N/A190–205 New detail
Adjusted Income ($USD Millions)FY 2025N/A539–583 New detail

Assumptions: residential down low double-digits; commercial/industrial flattish; M&A adds ~$450M to FY sales at midpoint .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3 2025)Trend
Residential demand & pricingQ1: Installation sales -6.7%; pricing modestly positive; aligning cost structure Volume -10.4%; pricing -0.5% in Installation; ongoing softness and bidding competitiveness Deteriorated sequentially
Commercial/industrial strengthQ1: C&I same-branch +0.3%; backlog solid C&I total sales +22.0% YoY (incl. M&A); pricing strong; backlogs growing (mechanical, roofing) Improving
Price-cost headwinds—~$30M FY headwind; ~$12M in Q3; worse in Q4; more acute in distribution’s residential products Worsening near-term
M&A strategy & synergiesQ2: Progressive closed; FY guide included contribution SPI closed; four bolt-ons announced; SPI synergies $35–$40M run-rate in ~2 years Accelerating
Capital structure & leverageQ2: Credit facility upsized; notes offering; cash up Liquidity ~$2.1B; net debt leverage 1.6x (2.4x pro forma); comfortable above LT 1–2x target; path to ~2x via EBITDA growth/cash Stable/manageable
Technology/digital roadmap & Investor Day—Single tech platform; digital roadmap to enhance ops/customer experience; Investor Day Dec 9 Strategic focus intensifying
Roofing (re-roof vs new)—Backlogs strong; mix supports margins; some project pushouts but no cancellations Positive trajectory

Management Commentary

  • “Third quarter results were in line with expectations… Sales totaled $1.4 billion… Installation Services segment sales grew 0.2% and Specialty Distribution sales improved 1.4%.”
  • “We have accomplished a lot recently, including acquiring Progressive Roofing in July and SPI in October… completed acquisitions that total approximately $1.2 billion in annual revenue… raising our 2025 outlook to incorporate SPI and our four recent acquisitions.”
  • “We expect to deliver $35–$40 million in annual run rate synergies over the next two years [for SPI].”
  • “Profitability… solid… adjusted EBITDA margin of 19.8% as we continue our focus on operational excellence across the business and supply chain.”
  • “Although weak consumer confidence and economic uncertainty are weighing on demand for residential new construction… the strength in commercial and industrial is very encouraging.”

Q&A Highlights

  • Progressive Roofing contribution: ~$92M Q3 sales; FY contribution now ~$205M (vs prior $215M) due to project pushouts; back half still low-single-digit growth .
  • Price-cost and margin outlook: ~$30M FY price-cost headwind, ~$12M in Q3; expected slightly worse in Q4; Specialty Distribution more impacted on residential products; gutters and mechanical insulation support pricing .
  • Residential trajectory into 1H26: Single-family weak broadly; Q4 likely softer; 1H26 could be flat to slightly down; multi-family backlogs improving in some markets .
  • Installation margin resiliency: ~$35M annualized savings from Q1 actions (consolidations, labor/productivity) underpin strong installation margins .
  • Leverage and capital allocation: Comfortable at ~2.4x pro forma; goal 1–2x over time via EBITDA growth and/or ~$500M cash; continue balanced M&A and buybacks .
  • Roofing M&A pipeline: Active with fragmented market; leveraging Progressive relationships; pursuing both bolt-ons and “chunkier” deals .

Estimates Context

  • Q3 2025 results modestly beat S&P Global consensus on both revenue ($1.393B actual vs $1.379B estimate) and adjusted EPS ($5.36 actual vs $5.29 estimate), aided by M&A contributions and commercial/industrial strength, partially offset by residential price-cost pressure .*
  • Prior quarters also exceeded consensus (Q1 EPS $4.63 vs $4.40; Q2 EPS $5.31 vs $5.09), though margins compressed YoY; estimate models likely need to reflect updated FY guidance, M&A adds (~$450M sales), and Q4 price-cost headwinds .*

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • FY2025 guidance raised on acquisitive growth; acquisitions (SPI + four bolt-ons) add scale, recurring revenue exposure, and synergy potential—supporting a more resilient earnings profile .
  • Mix shift toward commercial/industrial and commercial roofing is offsetting residential softness; pricing holds better in C&I, sustaining margins despite residential pressure .
  • Near-term headwinds: price-cost ~($30M) and expected Q4 margin pressure; Specialty Distribution margins bear more of the residential pricing impact .
  • Installation margins resilient due to ~$35M cost actions; continued productivity and supply chain improvements are offsetting pricing headwinds .
  • Capital structure is flexible: ~$2.1B liquidity, net leverage 1.6x (2.4x pro forma); capacity to continue M&A and buybacks while targeting ~2x over time .
  • Progressive Roofing integration tracking well; backlogs robust across re-roof and data center/new projects—positive for 2026 setup .
  • Trading implications: modest beat and guidance raise are positives; watch Q4 margin progression and price-cost dynamics; upside catalysts include faster synergy capture and additional roofing bolt-ons; risks include prolonged residential weakness and further price-cost compression .