TopBuild Q4 Earnings Call Highlights

Key Points

• TopBuild reported Q4 sales of $1.49 billion (up 13.2%) driven largely by acquisitions (23% of growth) even as volume fell 10.5%, with adjusted EBITDA of $265 million (17.9% margin) and adjusted EPS of $4.50.
• For full-year 2025 the company delivered >$5.4 billion in revenue and $1.04 billion of adjusted EBITDA (19.2% margin), generated $697 million of free cash flow, deployed $1.9 billion of capital to add ~$1.2 billion of revenue, and finished with net debt of $2.7 billion (2.35x leverage).
• For 2026 TopBuild guided sales of $5.925B–$6.225B and adjusted EBITDA of $1.005B–$1.155B, forecasting low-single-digit volume and price pressure (residential down mid-single digits, commercial/industrial up low single digits) and citing about $55 million of price‑cost headwind and a ~27% EBITDA decremental at the midpoint.

TopBuild NYSE: BLD reported fourth-quarter and full-year 2025 results while emphasizing a continued focus on acquisitions and operational execution amid ongoing softness in residential and light commercial end markets. Management said consumer confidence remains low, interest rates are elevated, and affordability continues to weigh on demand, but it reiterated confidence in long-term housing fundamentals and pointed to solid bidding activity and backlog in commercial and industrial categories.

Fourth-quarter results shaped by acquisitions and weaker volume

Fourth-quarter sales increased 13.2% year over year to $1.49 billion, driven primarily by acquisitions completed during 2025, including SPI, which was acquired in the fourth quarter. CFO Robert Kuhns said acquisitions contributed 23% to the quarter’s sales growth, while pricing contributed 0.7%. Volume declined 10.5%, which management attributed to continued weakness in residential and light commercial markets.

By segment, Installation Services posted fourth-quarter sales of $798 million, up 1.2% from the prior year. Kuhns said M&A contributed 16.3% but was more than offset by a 14.5% volume decline and a 0.5% pricing decline. Specialty Distribution revenue rose 25.5% to $755 million, with acquisitions adding 28.9% and pricing up 2.2%, partially offset by a 5.5% decline in volume.

Adjusted gross profit was $416 million, with a margin of 28%, down 190 basis points year over year. Kuhns attributed 100 basis points of the decline to mix, as the SPI acquisition increased the weighting of distribution relative to Installation Services, and to weaker volumes in the legacy installation business. The remainder of the margin decline was tied to price-cost pressure and deleveraging on lower volumes.

Adjusted SG&A was 14.1% of sales versus 13.2% a year earlier, driven by acquisitions and related amortization of customer lists and trade names. On a same-branch basis, Kuhns said SG&A fell $19 million, or 20 basis points, due to cost reduction actions taken during the year.

Adjusted EBITDA totaled $265 million, with a margin of 17.9%, down 180 basis points. Installation Services adjusted EBITDA margin was 21%, down 40 basis points, while Specialty Distribution adjusted EBITDA margin was 15.4%, down 230 basis points. Kuhns said interest and other expense rose to $36 million due to expanded credit facilities and the issuance of $750 million of bonds due in 2034. Adjusted earnings were $4.50 per diluted share, down from $5.13 in 2024.

Full-year 2025: revenue above $5.4 billion and strong free cash flow

CEO Robert Buck said the company finished 2025 with more than $5.4 billion in revenue and adjusted EBITDA of $1.04 billion, representing a 19.2% margin. Kuhns added that TopBuild generated $697 million in free cash flow for the full year.

Management highlighted the scale of its M&A activity in 2025, describing acquisitions as its top capital allocation priority. Buck said the company deployed $1.9 billion in capital across the business, adding approximately $1.2 billion in annual revenue. TopBuild also returned about $434 million to shareholders through share repurchases during the year.

At year-end, Kuhns said liquidity totaled $1.1 billion, including $185 million in cash and $934 million of revolver availability. Net debt ended the quarter at $2.7 billion, with net leverage of 2.35x trailing twelve-month adjusted EBITDA.

Operational focus: supply chain conditions and branch-level discipline

COO John Achille said insulation supply conditions have loosened as housing demand softened, particularly in fiberglass. He noted that in the second half of 2025, a couple of fiberglass lines were down for extended maintenance as manufacturers sought to balance supply and demand and stabilize pricing. Achille said TopBuild is using its technology platform to manage inventory across its branch network.

In other categories, Achille said spray foam availability remains ample, while fiberglass pipe insulation in mechanical insulation remains on allocation. He said the company continues to work with suppliers to secure its “fair share” of supply.

On cost actions, Achille and Kuhns pointed to steps taken early in 2025 to align the cost structure with demand. Kuhns said branch rationalization and headcount realignment helped offset price-cost headwinds, and Achille added that field teams have remained disciplined in pricing and volume decisions at the local level. In the Q&A, management noted that more than 70% of costs are variable, which it said allows the company to adjust quickly as conditions change.

Integration progress and commercial roofing expansion

Achille said the company has made progress integrating SPI into the Specialty Distribution business, including a realignment of field leadership late in 2025 to better serve customers and pursue cross-selling opportunities. He said the IT integration is expected to be completed by the end of the second quarter, and management said it expects to meet or exceed original synergy targets.

TopBuild also discussed continued investment in commercial roofing through its Progressive platform. Achille highlighted the recently announced acquisition of Johnson Roofing, expected to close later in the first quarter. He said Johnson Roofing generates about $29 million in annual sales and is based in Waco, serving markets in Texas, Louisiana, and Oklahoma. Management said the deal is expected to support relationships with general contractors in technology, industrial manufacturing, and education verticals.

In response to questions about commercial roofing pricing, Kuhns said pricing appears “flattish” overall, with outcomes varying based on mix between new roof and re-roof work and end-market exposure.

2026 guidance: cautious assumptions, with headwinds from volumes and price-cost

For 2026, management said it is assuming no significant change in end-market conditions at the midpoint of its outlook due to near-term uncertainty in residential demand. TopBuild guided for:

• Sales: $5.925 billion to $6.225 billion
• Adjusted EBITDA: $1.005 billion to $1.155 billion

At the midpoint, Kuhns said the revenue outlook assumes both volume and price down low single digits for 2026. Residential sales—about 52% of total—are expected to be down mid-single digits, inclusive of volume and price. Commercial and industrial—about 48% of sales—are expected to grow low single digits. The company expects M&A closed in the last 12 months to contribute $800 million to $850 million of revenue.

At the midpoint of adjusted EBITDA guidance ($1.08 billion), Kuhns cited an EBITDA decremental of about 27% on lower volumes, $55 million of price-cost headwinds, and M&A EBITDA margins in the mid-teens, inclusive of $15 million of Progressive and SPI synergies impacting 2026. He said the company remains confident in delivering at or above the high end of its two-year synergy targets.

Management said quarterly sales are expected to range between $1.4 billion and $1.6 billion, with EBITDA margins between 16.5% and 18.5%, with the first quarter expected to be the weakest and the third quarter the strongest. Additional modeling items included interest and other expense of $143 million to $149 million, an estimated tax rate of about 26%, capital expenditures of 1% to 2% of sales, and working capital of 15% to 17% of sales.

In closing remarks, Buck said it is “too early” to rely on a second-half residential recovery, despite some external forecasts suggesting improving conditions later in the year. He added that commercial and industrial bidding activity and backlog remain solid and said TopBuild expects to continue pursuing both organic growth and acquisitions while maintaining discipline in capital allocation.

About TopBuild NYSE: BLD

TopBuild Corp. NYSE: BLD is a leading installer and distributor of insulation and building material products serving primarily the U.S. construction market. Headquartered in Daytona Beach, Florida, the company was formed in 2011 as a spin-off from ABF Freight System and has since grown through a combination of organic expansion and targeted acquisitions. TopBuild's core mission is to enhance energy efficiency and comfort in new residential and light commercial construction projects by providing comprehensive insulation solutions and related services.

The company operates through two main segments.

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