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TopBuild Corp (BLD)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered stable top-line and margin resilience amid residential softness: net sales $1.31B (+2.0% YoY), gross margin 29.9% (-50 bps YoY), and adjusted EBITDA margin 19.7% (+10 bps YoY) .
  • Installation was flat while Specialty Distribution grew 6.6% YoY; adjusted EPS rose to $5.13 vs. $4.69 in Q4 2023 .
  • 2025 outlook guides sales to $5.05–$5.35B and adjusted EBITDA to $925–$1,075M, with residential mid-single-digit decline and C&I low-single-digit growth; new $1.0B share repurchase authorization (total availability $1.2B) is a notable catalyst .
  • Management expects choppiness in residential through 2025; Q1 2025 anticipated weakest profitability within full-year margin range due to seasonality and ongoing pressures (price/volume, labor retention) .

What Went Well and What Went Wrong

What Went Well

  • Specialty Distribution strength: Q4 sales +6.6% YoY to $601.8M; adjusted EBITDA margin expanded 20 bps to 17.7% .
  • Operational discipline supported margin stability: adjusted EBITDA margin improved 10 bps YoY to 19.7% despite gross margin pressure; “We also improved adjusted EBITDA margin by 10 basis points to 19.7%.” — CEO Robert Buck .
  • Robust capital allocation: eight acquisitions totaling $153.1M annual sales and $966.4M buybacks in 2024; new $1.0B authorization underscores confidence .

What Went Wrong

  • Residential headwinds and pricing pressure: gross margin down 50 bps YoY to 29.9% as management balanced price and volume decisions, with spray foam price pressure and softer demand noted by CFO .
  • Installation soft: Q4 sales -0.2% YoY; Installation adjusted EBITDA margin flat at 21.4%, with labor retention creating deleveraging as volumes slowed .
  • Q1 2025 expected weakest quarter: management flagged lower year-over-year comps, fewer working days, and weather effects; full-year quarterly margins anticipated within 18.3–20.1% .

Financial Results

Quarter-over-Quarter (Q2 → Q3 → Q4 2024)

MetricQ2 2024Q3 2024Q4 2024
Net Sales ($USD Billions)$1.366 $1.373 $1.312
Diluted EPS ($)$4.78 $5.65 $5.11
Adjusted EPS ($)$5.42 $5.68 $5.13
Gross Margin (%)31.0% 30.7% 29.9%
Adjusted EBITDA ($USD Millions)$277.7 $285.1 $258.0
Adjusted EBITDA Margin (%)20.3% 20.8% 19.7%

Year-over-Year (Q4 2023 → Q4 2024)

MetricQ4 2023Q4 2024
Net Sales ($USD Billions)$1.286 $1.312
Diluted EPS ($)$4.60 $5.11
Adjusted EPS ($)$4.69 $5.13
Gross Margin (%)30.4% 29.9%
Adjusted EBITDA ($USD Millions)$251.6 $258.0
Adjusted EBITDA Margin (%)19.6% 19.7%

Segment Breakdown (Q4 2024 vs. Q4 2023)

SegmentSales Q4 2023 ($MM)Sales Q4 2024 ($MM)YoY Change (%)Adj. Operating Margin Q4 2023Adj. Operating Margin Q4 2024Adj. EBITDA Q4 2023 ($MM)Adj. EBITDA Q4 2024 ($MM)Adj. EBITDA Margin Q4 2023Adj. EBITDA Margin Q4 2024
Installation$790.4 $788.6 -0.2% 19.0% 19.0% $168.8 $169.0 21.4% 21.4%
Specialty Distribution$564.5 $601.8 +6.6% 14.8% 15.1% $98.8 $106.7 17.5% 17.7%

KPIs and Sales Drivers

KPIQ4 2024
Liquidity ($MM)$836.5
Cash ($MM)$400.3
Revolver Availability ($MM)$436.2
Net Debt ($MM)$987.2
Net Debt / TTM Adj. EBITDA (x)0.91x
Working Capital as % of Sales13.0%
Sales Driver (Q4 2024)InstallationSpecialty DistributionTopBuild (net of eliminations)
Volume (%)-4.1% +4.4% -1.3%
Price (%)+1.5% 0.0% +0.9%
M&A (%)+2.3% +2.2% +2.4%
Total Sales Change (%)-0.2% +6.6% +2.0%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Sales ($USD Billions)FY 2025N/A$5.05–$5.35 New
Adjusted EBITDA ($USD Millions)FY 2025N/A$925–$1,075 New
Residential SalesFY 2025N/AMid-single digit decline New
Commercial/Industrial SalesFY 2025N/ALow-single digit growth New
Interest Expense ($MM)FY 2025N/A$49–$55 New
Capital Expenditures (% of Sales)FY 2025N/A1.5–2.0% New
Tax Rate (%)FY 2025N/A25–27% New
Share Repurchase AuthorizationAs of Q4 2024$188.1M remaining prior plan New $1.0B; total $1.2B available Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Residential demand/interest ratesQ2/Q3 noted uneven housing, elevated rates, backlog support; narrowed 2024 outlook Choppiness continues; single-family flat; multifamily down double-digit; 2025 down low-single digit revenue each quarter Persistent pressure, cautious outlook
Pricing (fiberglass/spray foam)Prior commentary on 2023 margin benefits; demand-driven price environment Spray foam pressure; fiberglass increases in Jan didn’t gain traction; pricing depends on demand improvement Pricing pressure near-term
C&I backlog/biddingRobust backlog/bidding in Q2; delayed projects noted Growth in C&I; active bidding across data centers, manufacturing, pharma; some EV/battery softness Improving activity
Labor strategyOperational excellence; disciplined cost control Conscious labor decisions to retain productive labor; deleveraging in slower markets Retain talent, manage deleverage
Technology/ERP/data analyticsEmphasis on operational tools Single ERP used for pricing guardrails, productivity, early visibility to order slowing; e-commerce investments Increasing digital enablement
M&A pipeline/adjacenciesHealthy pipeline; multiple acquisitions closed YTD Robust pipeline; potential larger adjacent opportunities beyond core C&I Active, potential larger deals
Tariffs/regulatoryN/ATariffs impact expected limited; monitoring deportations/labor environment Low direct impact, watchful stance

Management Commentary

  • “Sales improved 2.0%, driven by 6.6% growth in Specialty Distribution, while Installation was relatively flat in the quarter. We also improved adjusted EBITDA margin by 10 basis points to 19.7%.” — Robert Buck, CEO .
  • “Gross margins were lower… driven by strategic price and volume decisions on residential products… as well as conscious decisions around labor in certain installation markets.” — Rob Kuhns, CFO .
  • “Our guidance for 2025 is sales of $5.05 billion to $5.35 billion and adjusted EBITDA of $925 million to $1.075 billion… Q1 is expected to be the weakest and near the bottom end of the range.” — Rob Kuhns, CFO .
  • “Our Board… authorized a new share buyback program of up to $1 billion… bringing total available under authorization to $1.2 billion.” — Robert Buck, CEO .

Q&A Highlights

  • Pricing dynamics: Builders’ affordability pressures driving selective concessions; spray foam under pressure due to excess supply; fiberglass increases lacked traction without demand improvement .
  • Segment mix and outlook: C&I expected low-single-digit growth and constitutes a larger share of distribution vs. installation; distribution should feel less pressure .
  • Labor retention and cost management: Management prioritizes retaining A/B labor despite volume pressure; will act more aggressively on costs if prolonged weakness persists .
  • Quarterly cadence: Q1 down the most YoY due to comps, weather, and one fewer day; no macro upturn baked into guidance; margins within 18.3–20.1% full-year range .
  • M&A adjacencies: Potential for larger deals beyond core installations and C&I; pipeline strong across segments .

Estimates Context

  • S&P Global consensus estimates for revenue and EPS were unavailable at the time of this analysis due to data access limits. As a result, we cannot quantify beat/miss versus consensus for Q4 2024 and FY 2024 at this time.
  • Where estimates are required for modeling, use company guidance ranges as anchors and revisit S&P Global consensus when accessible .

Key Takeaways for Investors

  • Margin resilience in a choppy quarter: adjusted EBITDA margin rose to 19.7% (+10 bps YoY) despite gross margin compression; Specialty Distribution led growth .
  • Residential softness persists; management cautious: 2025 sales guided to $5.05–$5.35B, with residential mid-single-digit decline and price/mix down slightly; Q1 expected weakest .
  • C&I strength and backlog support: strong bidding in data centers, manufacturing, pharma; some EV/battery softness but diversified exposure .
  • Capital allocation as catalyst: new $1.0B buyback authorization (total $1.2B available) alongside active M&A pipeline, including recent Metro Supply and Shannon Global transactions .
  • Operating discipline: ERP-enabled pricing guardrails and productivity actions; intentional labor retention to preserve capacity for recovery and integration of acquisitions .
  • Modeling notes: Expect full-year EBITDA margin 18.3–20.1%; interest expense $49–$55M; CapEx 1.5–2.0% of sales; tax rate 25–27% .
  • Near-term trading implication: watch Q1 print for confirmation of margin range and residential trajectory; upside catalysts include larger M&A and stabilization in pricing dynamics .

Appendix: Additional Context from Prior Quarters

  • Q3 2024: record quarterly sales $1.37B; adjusted EBITDA $285.1M; narrowed FY 2024 guidance to $5.3–$5.35B sales and $1.055–$1.085B adjusted EBITDA .
  • Q2 2024: sales $1.37B; adjusted EBITDA $277.7M; revised FY 2024 guidance to $5.3–$5.5B sales and $1.055–$1.125B adjusted EBITDA; share repurchases $505.2M .