

3 Months Ended 12/31/22	Adj. Same Branch	Change
Sales	$1,214,183	14.2%
Gross Margin	29.8%	170 bps
Operating Margin	16.3%	210 bps
EBITDA Margin	18.8%	170 bps
Incremental EBITDA Margin	30.8%

Full Year 2022 Financial Highlights

(comparisons are to twelve months ended December 31, 2021)


12 Months Ended 12/31/22	Reported	Change
Sales	$5,008,744	43.7%
Gross Margin	29.7%	180 bps
SG&A as % of revenue	13.8%	(50 bps)
Operating Profit	$797,164	67.3%
Operating Margin	15.9%	220 bps
Net Income	$555,989	71.6%
Net Income per diluted share	$17.14	75.3%

12 Months Ended 12/31/22	Adjusted	Change
Sales	$5,008,744	43.7%
Gross Margin	29.7%	130 bps
SG&A as % of revenue	13.6%	0 bps
Operating Profit	$804,966	56.2%
Operating Margin	16.1%	130 bps
Net Income	$554,953	54.3%
Net Income per diluted share	$17.11	57.7%
EBITDA	$940,611	55.2%
EBITDA Margin	18.8%	140 bps

12 Months Ended 12/31/22	Adj. Same Branch	Change
Sales	$4,140,512	18.8%
Gross Margin	30.5%	210 bps
Operating Margin	17.2%	240 bps
EBITDA Margin	19.5%	210 bps
Incremental EBITDA Margin	30.8%

“Throughout 2022, the TopBuild team demonstrated profitable growth, benefitting from a relentless focus on improving operational efficiencies and leveraging fixed costs. We also successfully integrated DI and demonstrated improved operating results with this key acquisition.

“TopBuild’s unique operating model continues to enable our ability to outperform in any environment. Since 2018, revenue has doubled, growing at a compounded annual rate of 20% and our adjusted EBITDA margin has expanded 690 basis points.

“Looking at 2023 and beyond, we see multiple avenues of growth available to us. We have a strong track record of executing on our plan, producing solid results, and creating value for our shareholders.”

ROBERT BUCK, PRESIDENT & CEO, TOPBUILD


NYSE:BLD	February 23, 2023	topbuild.com

Operating Segment Highlights ($ in 000s)

(comparisons are to the period ended December 31, 2021)


Installation	3 Months Ended 12/31/22	12 Months Ended 12/31/22	Specialty Distribution	3 Months Ended 12/31/22	12 Months Ended 12/31/22
Sales	$761,261	$2,969,978	Sales	$563,065	$2,278,261
Change			Change
Volume	12.4%	9.2%	Volume	-5.1%	-0.6%
Price	8.2%	12.2%	Price	11.5%	15.8%
M&A	0.8%	3.4%	M&A	9.5%	61.8%
Total Change	21.4%	24.9%	Total Change	15.9%	77.0%
Operating Margin	18.6%	18.5%	Operating Margin	14.3%	14.3%
Change	170 bps	240 bps	Change	530 bps	110 bps
Adj. Operating Margin	18.7%	18.5%	Adj. Operating Margin	14.4%	14.4%
Change	170 bps	230 bps	Change	200 bps	0 bps
Adj. EBITDA Margin	20.8%	20.6%	Adj. EBITDA Margin	16.7%	16.9%
Change	140 bps	190 bps	Change	170 bps	90 bps

Capital Allocation

Acquisitions

In 2022, the Company acquired five residential insulation installation companies which are expected to generate over $17 million in annual revenue. They are listed in the chart below.			“We remain focused on acquiring quality installation and specialty distribution companies that fit within our core insulation businesses. Disciplined identification, analysis, and integration of strategic acquisitions are core competencies as evidenced by our successful track record. “Over the past five years we have acquired 24 companies that are contributing approximately $1.6 billion of annual revenue. ROBERT BUCK, PRESIDENT & CEO, TOPBUILD
	TTM Revenue at	Month
Company Acquired	Acquisition ($ millions)	Acquired
Southwest Insulation	$1.7	January
Billings Insulation	$6.5	February
Green Energy Solutions	$2.0	March
Assured Insulating	$5.5	April
CV Insulation	$1.6	July
Total	$17.3
On January 26, 2023, the Company acquired SRI Holdings, a residential insulation installation company founded in 2012, which generated annual revenue of approximately $62 million for the twelve months ended November 30, 2022.

Share Repurchases

In 2022, the Company repurchased a total of 1,390,667 shares of its common stock for approximately $250.0 million.


NYSE:BLD	February 23, 2023	topbuild.com

2023 Outlook

Sales and Adjusted EBITDA Guidance ⁽¹⁾

($ in millions)

2023	Low		High
Sales	$	4,700	$	4,900
Adjusted EBITDA*	$	820	$	910

*See table for adjusted EBITDA reconciliation.

Assumptions⁽¹⁾


($ in millions)		Range
2023	Low		High
Estimated net income	$	445.0	$	523.0
Interest Expense and other, net		72.0		66.0
Income tax expense		157.0		184.0
Depreciation and Amortization		128.0		123.0
Share based compensation		16.0		13.0
Acquisition related costs		2.0		1.0
Estimated EBITDA, as adjusted	$	820.0	$	910.0

⁽¹⁾This guidance and long-term targets reflect management’s current view of present and future market conditions and are based on assumptions such as housing starts, general and administrative expenses, weighted average diluted shares outstanding and interest rates. These targets do not include any effects related to potential acquisitions or divestitures that may occur after the date of this press release. A reconciliation of non-GAAP targets to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, the costs and expenses that may be incurred in the future and therefore, cannot be reasonably predicted. The effect of these excluded items may be significant. Factors that could cause actual long-term results to differ materially from TopBuild’s current expectations are discussed below and are also detailed in the Company’s most recent Annual Report on Form 10-K and subsequent SEC reports.

Conference Call

A conference call to discuss fourth quarter 2022 financial results is scheduled for today, Thursday, February 23, at 9:00 a.m. Eastern Time. The call may be accessed by dialing (877) 407-9037. The conference call will be webcast simultaneously on the Company’s website at www.topbuild.com. In addition, a copy of management’s formal remarks and a presentation that summarizes management’s formal remarks will be available immediately prior to the conference call on www.topbuild.com.

About TopBuild

TopBuild Corp., headquartered in Daytona Beach, Florida, is a leading installer and specialty distributor of insulation and related building material products to the construction industry in the United States and Canada. We provide insulation installation services nationwide through our Installation segment which has approximately 230 branches located across the United States. We distribute building and mechanical insulation, insulation accessories and other building product materials for the residential, commercial, and industrial end markets through our Specialty Distribution business. Our Specialty Distribution network encompasses approximately 180 branches. To learn more about TopBuild please visit our website at www.topbuild.com.


NYSE:BLD	February 23, 2023	topbuild.com

TopBuild Corp.

Consolidated Statements of Operations

(in thousands, except share and per common share amounts)


	Three Months Ended December 31,				Year Ended December 31,
	2022		2021		2022		2021
Net sales	$	1,264,543	$	1,063,398	$	5,008,744	$	3,486,207
Cost of sales		888,871		780,237		3,522,025		2,511,818
Gross profit		375,672		283,161		1,486,719		974,389

Selling, general, and administrative expense		172,558		164,718		689,555		497,970
Operating profit		203,114		118,443		797,164		476,419

Other income (expense), net:
Interest expense		(16,779)		(10,933)		(56,716)		(29,143)
Loss on extinguishment of debt		—		25		—		(13,837)
Other, net		1,585		(207)		1,687		4
Other expense, net		(15,194)		(11,115)		(55,029)		(42,976)
Income before income taxes		187,920		107,328		742,135		433,443

Income tax expense		(44,086)		(28,968)		(186,146)		(109,427)
Net income	$	143,834	$	78,360	$	555,989	$	324,016

Net income per common share:
Basic	$	4.54	$	2.39	$	17.26	$	9.88
Diluted	$	4.52	$	2.37	$	17.14	$	9.78

Weighted average shares outstanding:
Basic		31,648,741		32,753,719		32,213,839		32,801,906
Diluted		31,838,352		33,117,227		32,440,405		33,146,171


NYSE:BLD	February 23, 2023	topbuild.com

TopBuild Corp.

Consolidated Balance Sheets and Other Financial Data

(dollars in thousands)


	As of December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	240,069	$	139,779
Receivables, net of an allowance for credit losses of $16,281 at December 31, 2022, and $8,798 at December 31, 2021		836,071		668,419
Inventories, net		438,644		352,801
Prepaid expenses and other current assets		34,257		26,692
Total current assets		1,549,041		1,187,691

Right of use assets		205,892		177,177
Property and equipment, net		253,484		244,574
Goodwill		1,966,994		1,949,763
Other intangible assets, net		614,967		684,209
Other assets		16,453		15,116
Total assets	$	4,606,831	$	4,258,530

LIABILITIES
Current liabilities:
Accounts payable	$	487,114	$	461,917
Current portion of long-term debt		40,068		38,640
Accrued liabilities		199,370		175,891
Short-term operating lease liabilities		60,880		54,591
Short-term finance lease liabilities		2,207		2,387
Total current liabilities		789,639		733,426

Long-term debt		1,417,257		1,454,483
Deferred tax liabilities, net		251,481		248,243
Long-term portion of insurance reserves		59,783		51,875
Long-term operating lease liabilities		149,943		125,339
Long-term finance lease liabilities		6,673		7,770
Other liabilities		2,349		960
Total liabilities		2,677,125		2,622,096

EQUITY		1,929,706		1,636,434
Total liabilities and equity	$	4,606,831	$	4,258,530


	As of December 31,
	2022			2021
Other Financial Data
Receivable days		54			48
Inventory days		45			43
Accounts payable days		66			65
Receivables, net plus inventories, net less accounts payable	$	787,601		$	559,303
Receivables, net plus inventories, net less accounts payable as a percent of sales (TTM) †		15.7	%		13.3	%

† Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches


NYSE:BLD	February 23, 2023	topbuild.com

TopBuild Corp.
Consolidated Statements of Cash Flows
(in thousands)


	Year Ended December 31,
	2022		2021
Cash Flows Provided by (Used in) Operating Activities:
Net income	$	555,989	$	324,016
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		123,335		79,390
Share-based compensation		12,310		11,316
Loss on extinguishment of debt		—		13,837
Loss on sale of property and equipment		1,833		1,356
Amortization of debt issuance costs		2,867		2,036
Provision for bad debt expense		5,510		7,304
Loss from inventory obsolescence		6,659		2,637
Deferred income taxes, net		6,041		(2,818)
Change in certain assets and liabilities:
Receivables, net		(169,327)		(69,042)
Inventories, net		(93,874)		(46,518)
Prepaid expenses and other current assets		(9,222)		558
Accounts payable		26,581		54,961
Accrued liabilities		20,703		24,816
Other, net		6,396		(824)
Net cash provided by operating activities		495,801		403,025

Cash Flows Provided by (Used in) Investing Activities:
Purchases of property and equipment		(76,382)		(55,546)
Acquisition of businesses, net of cash acquired		(20,500)		(1,267,114)
Proceeds from sale of property and equipment		2,975		415
Net cash used in investing activities		(93,907)		(1,322,245)

Cash Flows Provided by (Used in) Financing Activities:
Proceeds from issuance of long-term debt		—		1,218,750
Repayment of long-term debt		(38,658)		(433,070)
Payment of debt issuance costs		—		(14,965)
Proceeds from revolving credit facility		70,000		—
Repayment of revolving credit facility		(70,000)		—
Taxes withheld and paid on employees' equity awards		(11,719)		(8,805)
Exercise of stock options		2,028		3,303
Repurchase of shares of common stock		(250,050)		(35,556)
Payment of contingent consideration		(1,674)		(650)
Net cash (used in) provided by financing activities		(300,073)		729,007
Impact of exchange rate changes on cash		(1,531)		(15)
Net increase (decrease) in cash and cash equivalents		100,290		(190,228)
Cash and cash equivalents- Beginning of period		139,779		330,007
Cash and cash equivalents- End of period	$	240,069	$	139,779

Supplemental disclosure of cash paid for:
Interest	$	49,888	$	22,144
Income taxes		186,722		109,179

Supplemental disclosure of noncash activities:
Leased assets obtained in exchange for new operating lease liabilities	$	103,997	$	131,909
Leased assets obtained in exchange for new finance lease liabilities		—		10,469
Accruals for property and equipment		141		1,060


NYSE:BLD	February 23, 2023	topbuild.com

TopBuild Corp.

Segment Data (Unaudited)

(dollars in thousands)


	Three Months Ended December 31,									Year Ended December 31,
	2022			2021			Change			2022			2021			Change
Installation
Sales	$	761,261		$	627,123			21.4	%	$	2,969,978		$	2,378,401			24.9	%

Operating profit, as reported	$	141,961		$	105,975					$	548,795		$	383,722
Operating margin, as reported		18.6	%		16.9	%					18.5	%		16.1	%

Rationalization charges		161			−						(174)			−
Acquisition related costs		23			362						135			1,642
COVID-19 pay		−			−						−			605
Operating profit, as adjusted	$	142,145		$	106,337					$	548,756		$	385,969
Operating margin, as adjusted		18.7	%		17.0	%					18.5	%		16.2	%

Share-based compensation		339			270						1,296			1,157
Depreciation and amortization		15,869			15,227						62,483			57,815
EBITDA, as adjusted	$	158,353		$	121,834			30.0	%	$	612,535		$	444,941			37.7	%
EBITDA margin, as adjusted		20.8	%		19.4	%					20.6	%		18.7	%

Specialty Distribution
Sales	$	563,065		$	485,813			15.9	%	$	2,278,261		$	1,287,176			77.0	%

Operating profit, as reported	$	80,692		$	43,964					$	326,226		$	169,368
Operating margin, as reported		14.3	%		9.0	%					14.3	%		13.2	%

Acquisition related costs		266			530						1,502			530
Acquisition purchase accounting (inventory step-up)		−			15,853						−			15,853
COVID-19 pay		−			−						−			54
Operating profit, as adjusted	$	80,958		$	60,347					$	327,728		$	185,805
Operating margin, as adjusted		14.4	%		12.4	%					14.4	%		14.4	%

Share-based compensation		104			304						1,041			1,032
Depreciation and amortization		13,184			12,405						56,881			18,743
EBITDA, as adjusted	$	94,246		$	73,056			29.0	%	$	385,650		$	205,580			87.6	%
EBITDA margin, as adjusted		16.7	%		15.0	%					16.9	%		16.0	%


NYSE:BLD	February 23, 2023	topbuild.com

TopBuild Corp.

Adjusted EBITDA (Unaudited)

(dollars in thousands)


	Three Months Ended December 31,									Year Ended December 31,
	2022			2021			Change			2022			2021			Change
Total net sales
Sales before eliminations	$	1,324,326		$	1,112,936					$	5,248,239		$	3,665,577
Intercompany eliminations		(59,783)			(49,538)						(239,495)			(179,370)
Net sales after eliminations	$	1,264,543		$	1,063,398			18.9	%	$	5,008,744		$	3,486,207			43.7	%

Operating profit, as reported - segments	$	222,653		$	149,939					$	875,021		$	553,090
General corporate expense, net		(9,650)			(22,893)						(38,018)			(47,018)
Intercompany eliminations		(9,889)			(8,603)						(39,839)			(29,653)
Operating profit, as reported	$	203,114		$	118,443					$	797,164		$	476,419
Operating margin, as reported		16.1	%		11.1	%					15.9	%		13.7	%

Rationalization charges		162			-						(172)			16
Acquisition related costs †		1,216			16,262						7,974			22,107
Acquisition purchase accounting (inventory step-up)		-			15,853						-			15,853
Refinancing costs		-			188						-			188
COVID-19 pay		-			-						-			659
Operating profit, as adjusted	$	204,492		$	150,746					$	804,966		$	515,242
Operating margin, as adjusted		16.2	%		14.2	%					16.1	%		14.8	%

Share-based compensation		2,637			2,941						12,310			11,316
Depreciation and amortization		30,284			28,385						123,335			79,390
EBITDA, as adjusted	$	237,413		$	182,072			30.4	%	$	940,611		$	605,948			55.2	%
EBITDA margin, as adjusted		18.8	%		17.1	%					18.8	%		17.4	%

Sales change period over period		201,145									1,522,537
EBITDA, as adjusted, change period over period		55,341									334,663
Incremental EBITDA, as adjusted, as a percentage of change in sales		27.5	%								22.0	%

† Acquisition related costs include corporate level adjustments as well as segment operating adjustments.


NYSE:BLD	February 23, 2023	topbuild.com

TopBuild Corp.

Non-GAAP Reconciliations (Unaudited)

(in thousands, except share and per common share amounts)


	Three Months Ended December 31,						Year Ended December 31,
	2022			2021			2022			2021
Gross Profit Reconciliation

Net sales	$	1,264,543		$	1,063,398		$	5,008,744		$	3,486,207

Gross profit, as reported	$	375,672		$	283,161		$	1,486,719		$	974,389

Acquisition purchase accounting (inventory step-up)		-			15,853			-			15,853
Acquisition related costs		15			-			135			-
COVID-19 pay		-			-			-			592
Gross profit, as adjusted	$	375,687		$	299,014		$	1,486,854		$	990,834

Gross margin, as reported		29.7	%		26.6	%		29.7	%		27.9	%
Gross margin, as adjusted		29.7	%		28.1	%		29.7	%		28.4	%

Selling, General and Administrative Expense Reconciliation

Selling, general, and administrative expense, as reported	$	172,558		$	164,718		$	689,555		$	497,970

Rationalization charges		162			-			(172)			16
Acquisition related costs		1,201			16,262			7,839			22,107
Refinancing costs		-			188			-			188
COVID-19 pay		-			-			-			67
Selling, general, and administrative expense, as adjusted	$	171,195		$	148,268		$	681,888		$	475,592

Operating Profit Reconciliation

Operating profit, as reported	$	203,114		$	118,443		$	797,164		$	476,419

Rationalization charges		162			-			(172)			16
Acquisition related costs		1,216			16,262			7,974			22,107
Acquisition purchase accounting (inventory step-up)		-			15,853			-			15,853
Refinancing costs		-			188			-			188
COVID-19 pay		-			-			-			659
Operating profit, as adjusted	$	204,492		$	150,746		$	804,966		$	515,242

Operating margin, as reported		16.1	%		11.1	%		15.9	%		13.7	%
Operating margin, as adjusted		16.2	%		14.2	%		16.1	%		14.8	%

Income Per Common Share Reconciliation

Income before income taxes, as reported	$	187,920		$	107,328		$	742,135		$	433,443

Rationalization charges		162			-			(172)			16
Acquisition related costs		1,216			16,262			7,974			22,107
Acquisition purchase accounting (inventory step-up)		-			15,853			-			15,853
Refinancing costs and loss on extinguishment of debt		-			163			-			14,025
COVID-19 pay		-			-			-			659
Income before income taxes, as adjusted		189,298			139,606			749,937			486,103

Tax rate at 26.0%		(49,217)			(36,298)			(194,984)			(126,387)
Income, as adjusted	$	140,081		$	103,308		$	554,953		$	359,716

Income per common share, as adjusted	$	4.40		$	3.12		$	17.11		$	10.85

Weighted average diluted common shares outstanding		31,838,352			33,117,227			32,440,405			33,146,171


NYSE:BLD	February 23, 2023	topbuild.com

TopBuild Corp.

Same Branch and Acquisition Metrics (Unaudited)

(dollars in thousands)


	Three Months Ended December 31,						Year Ended December 31,
	2022			2021			2022			2021
Net sales
Same branch:
Installation	$	756,312		$	627,123		$	2,889,145		$	2,378,401
Specialty Distribution		517,010			485,813			1,483,155			1,287,176
Eliminations		(59,139)			(49,538)			(231,788)			(179,370)
Total same branch		1,214,183			1,063,398			4,140,512			3,486,207

Acquisitions (a):
Installation	$	4,949		$	-		$	80,833		$	-
Specialty Distribution		46,055			-			795,106			-
Eliminations		(644)			-			(7,707)			-
Total acquisitions		50,360			-			868,232			-
Total	$	1,264,543		$	1,063,398		$	5,008,744		$	3,486,207

Gross profit, as adjusted
Same branch	$	361,974		$	299,014		$	1,261,934		$	990,834
Acquisitions (a)		13,713			-			224,920			-
Total	$	375,687		$	299,014		$	1,486,854		$	990,834

Gross margin, as adjusted
Same branch (b)		29.8	%		28.1	%		30.5	%		28.4	%
Acquisitions (c)		27.2	%					25.9	%

Operating profit, as adjusted
Same branch	$	197,680		$	150,746		$	714,058		$	515,242
Acquisitions (a)		6,812			-			90,908			-
Total	$	204,492		$	150,746		$	804,966		$	515,242

Operating margin, as adjusted
Same branch (b)		16.3	%		14.2	%		17.2	%		14.8	%
Acquisitions (c)		13.5	%					10.5	%

EBITDA, as adjusted
Same branch	$	228,459		$	182,072		$	807,309		$	605,948
Acquisitions (a)		8,954			-			133,302			-
Total	$	237,413		$	182,072		$	940,611		$	605,948

EBITDA, as adjusted, as a percentage of sales
Same branch (b)		18.8	%					19.5	%
Acquisitions (c)		17.8	%					15.4	%
Total (d)		18.8	%		17.1	%		18.8	%		17.4	%

As Adjusted Incremental EBITDA, as a percentage of change in sales
Same branch (e)		30.8	%					30.8	%
Acquisitions (c)		17.8	%					15.4	%
Total (f)		27.5	%					22.0	%

(a) Represents current year impact of acquisitions in their first twelve months

(b) Same branch metric, as adjusted, as a percentage of same branch sales

(d) Total EBITDA, as adjusted, as a percentage of total sales

(e) Change in same branch EBITDA, as adjusted, as a percentage of change in same branch sales

(f) Change in total EBITDA, as adjusted, as a percentage of change in total sales


NYSE:BLD	February 23, 2023	topbuild.com

TopBuild Corp.

Reconciliation of Adjusted EBITDA to Net Income (Unaudited)

(in thousands)


	Three Months Ended December 31,				Year Ended December 31,
	2022		2021		2022		2021
Net income, as reported	$	143,834	$	78,360	$	555,989	$	324,016
Adjustments to arrive at EBITDA, as adjusted:
Interest expense and other, net		15,194		11,140		55,029		29,139
Income tax expense		44,086		28,968		186,146		109,427
Depreciation and amortization		30,284		28,385		123,335		79,390
Share-based compensation		2,637		2,941		12,310		11,316
Rationalization charges		162		-		(172)		16
Acquisition related costs		1,216		16,262		7,974		22,107
Acquisition purchase accounting (inventory step-up)		-		15,853		-		15,853
Refinancing costs and loss on extinguishment of debt		-		163		-		14,025
COVID-19 pay		-		-		-		659
EBITDA, as adjusted	$	237,413	$	182,072	$	940,611	$	605,948

Proforma acquisition EBITDA (a)						548
Proforma TTM EBITDA, as adjusted					$	941,159

(a) Represents the trailing twelve months proforma impact of acquisitions completed in 2022.


NYSE:BLD	February 23, 2023	topbuild.com


	2022								Year Ended
	Q1		Q2		Q3		Q4		December 31, 2022
Net Sales	$	1,168,918	$	1,274,285	$	1,300,998	$	1,264,543	$	5,008,744
Acquisitions proforma adjustment †		2,934		438		-		-		3,372
Net sales, acquisition adjusted	$	1,171,852	$	1,274,723	$	1,300,998	$	1,264,543	$	5,012,116


	Twelve Months Ending December 31, 2023
		Low		High
Estimated net income	$	445.0		523.0
Adjustments to arrive at estimated EBITDA, as adjusted:
Interest expense and other, net		72.0		66.0
Income tax expense		157.0		184.0
Depreciation and amortization		128.0		123.0
Share-based compensation		16.0		13.0
Acquisition related costs		2.0		1.0
Estimated EBITDA, as adjusted	$	820.0	$	910.0