1.  BASIS OF PRESENTATION

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TopBuild was formed on June 30, 2015, and is listed on the NYSE under the ticker symbol “BLD.”  We report our business in two segments: Installation and Distribution.  Our Installation segment primarily installs insulation and other building products.  Our Distribution segment primarily sells and distributes insulation and other building products.  Our segments are based on our operating units, for which financial information is regularly evaluated by our chief operating decision maker.

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In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to state fairly our financial position as of March 31, 2020, our results of operations for the three months ended March 31, 2020 and 2019 and cash flows for the three months ended March 31, 2020 and 2019.  The condensed consolidated balance sheet at December 31, 2019, was derived from our audited financial statements, but does not include all disclosures required by GAAP.

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These condensed consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report for the year ended December 31, 2019, as filed with the SEC on February 25, 2020.

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Liquidity and Impact of COVID-19

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During the quarter ended March 31, 2020, the Company began to see impacts from the economic slowdown as a result of the COVID-19 pandemic.  Subsequent to March 31, 2020, the United States has continued to implement measures in response to the COVID-19 pandemic, including enhanced social distancing guidelines and additional stay-at-home orders in various municipalities, counties and states.  To date, with the exception of a few states, residential and commercial construction has been deemed an essential service.  In those locations, the Company continues to operate.  Management continues to monitor operations and evaluate every aspect of the business, however the full extent of the impact that the COVID-19 pandemic will have on our results of operations, financial condition and cash flows is unknown and will be highly dependent on the duration and magnitude of disruptions for the remainder of 2020. However, we believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to support our ongoing operations and working capital needs, despite the current reductions in economic activity due to COVID-19.