Exhibit 99.1

Graphic

NYSE: BLD

A leading installer and distributor of insulation and building material products to the U.S. construction industry

TopBuild Reports Third Quarter 2020 Results

2.2% increase in net sales
210 basis point gross margin expansion to 28.4%
280 basis point operating margin expansion to 14.6%
270 basis point adjusted EBITDA margin expansion to 17.1%
$2.11 net income per diluted share

Third Quarter Financial Highlights

(unless otherwise indicated, comparisons are to the quarter ended September 30, 2019)

   

Gross margin increased 110 basis points to 27.6%.  On an adjusted basis, gross margin increased 130 basis points to 27.8%

   Operating profit was $80.5 million, compared to operating profit of $76.0 million.  On an adjusted basis, operating profit was $83.5 million, compared to $76.4 million, a 9.3% improvement.

   Net income was $55.5 million, or $1.67 per diluted share, compared to $52.1 million, or $1.51 per diluted share. Adjusted income was $55.7 million, or $1.68 per diluted share, compared to $49.5 million, or $1.43 per diluted share.

   

Net sales increased 2.2% to $697.2 million, driven by increased volume and sales from acquisitions.

   

Gross margin increased 210 basis points to 28.4%

   Operating profit was $101.5 million, compared to operating profit of $80.4 million.  On an adjusted basis, operating profit was $101.7 million, compared to $80.6 million, a 26.2% improvement.

   

Operating margin, both reported and adjusted, was 14.6%, up 280 basis points.

   Net income was $70.0 million, or $2.11 per diluted share, compared to $55.0 million, or $1.60 per diluted share. Adjusted income was $69.6 million, or $2.10 per diluted share, compared to $52.7 million, or $1.53 per diluted share.

   Adjusted EBITDA was $119.2 million, compared to $98.0 million, a 21.6% increase, and adjusted EBITDA margin improved 270 basis points to 17.1%.


“We are pleased with our overall results that included strong adjusted operating and EBITDA margins. Our team continues to do an outstanding job of generating profitable growth.

“Sales at TruTeam were adversely impacted by our commercial business where some projects have been delayed due to COVID-19 safety protocols.

“Looking ahead, we are bullish on the overall fundamentals of our end markets and our ability to leverage our size and scale to drive market share.”

JERRY VOLAS, CEO, TOPBUILD

   At September 30, 2020, the Company had cash and cash equivalents of $315.3 million and availability under its revolving credit facility of $389.6 million for total liquidity of $704.9 million.

NYSE:BLD

November 3, 2020

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Nine Month Financial Highlights

(unless otherwise indicated, comparisons are to nine months ended September 30, 2019)

   Net sales increased 1.8% to $1,996.6 million.

   

Gross margin expanded 150 basis points to 27.5%.

   Operating profit was $252.0 million, compared to operating profit of $213.1 million. On an adjusted basis, operating profit was $255.5 million, compared to $216.1 million, a 18.2% improvement.

   

Operating margin was 12.6% a 170-basis point improvement.  On an adjusted basis, operating margin improved 180 basis points to 12.8%.

   Net income was $176.3 million, or $5.29 per diluted share, compared to $145.0 million, or $4.20 per diluted share.  Adjusted income was $171.2 million, or $5.14 per diluted share, compared to $138.8 million, or $4.02 per diluted share.

   

Adjusted EBITDA was $315.3 million, compared to $266.5 million, a 18.3% increase.  Adjusted EBITDA margin was 15.8%, a 220-basis point improvement.

Operating Segment Highlights ($ in 000s)

(comparisons are to the period ended September 30, 2019)

Graphic

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November 3, 2020

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3

Capital Allocation

Acquisitions

On October 1, 2020, the Company completed the acquisition of Garland Insulating, one of the largest locally owned and operated insulation installation companies in Texas.  Garland generated approximately $60 million in revenue for the trailing twelve months ended June 30, 2020.  

Year-to-date, the Company has announced three acquisitions, which combined, are expected to generate approximately $79 million in annual revenue.  

“Acquisitions continue to be our number one capital allocation priority. Garland Insulating, which has a great reputation, strong customer base and outstanding leadership, is a good example of the type of quality companies we have in our pipeline.”

Jerry Volas, CEO, TopBuild

Share Repurchases

In the third quarter of 2020, the Company repurchased 57,810 shares at an average price of $155.63 per share.  These shares were purchased as part of the Company’s $200 million share repurchase authorization announced on February 26, 2019.  As of September 30, 2020, $46 million of the $200 million authorization remained.

Additional Information

Quarterly supplemental materials, including a presentation that will be referenced on today’s conference call, are available on the “Investors” section of the Company’s website at www.topbuild.com.

Conference Call

A conference call to discuss third quarter 2020 financial results is scheduled for today, Tuesday,  November 3, 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 “Investors” section of the Company’s website at www.topbuild.com.  

About TopBuild

TopBuild Corp., a Fortune 1000 Company headquartered in Daytona Beach, Florida, is a leading installer and distributor of insulation and building material products to the U.S. construction industry. We provide insulation and building material services nationwide through TruTeam®, which has close to 200 branches, and through Service Partners® which distributes insulation and building material products from over 75 branches.  We leverage our national footprint to gain economies of scale while capitalizing on our local market presence to forge strong relationships with our customers.  To learn more about TopBuild please visit our website at www.topbuild.com.

Use of Non-GAAP Financial Measures

Adjusted EBITDA, incremental EBITDA margin, adjusted EBITDA margin, the “adjusted” financial measures presented above, and figures presented on a “same branch basis” are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).  The Company believes that these non-GAAP financial measures, which are used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. We define same branch sales as sales from branches in operation for at least 12 full calendar months.  Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in tables contained in this press release.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results under GAAP.  Additional information may be found in the Company’s filings with the Securities and Exchange Commission which are available on TopBuild’s website under “Investors” at www.topbuild.com.

NYSE:BLD

November 3, 2020

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Safe Harbor Statement

Statements contained herein reflect our views about future periods, including our future plans and performance, constitute “forward-looking statements” under the Private Securities Litigation Reform Act of 1995.  Forward-looking statements can be identified by words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” or “intend,” the negative of these terms, and similar references to future periods.  These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements.  We caution you against unduly relying on any of these forward-looking statements.  Our future performance may be affected by the duration and impact of the COVID-19 pandemic on the United States economy, specifically with respect to residential and commercial construction; our ability to continue operations in markets affected by the COVID-19 pandemic and our ability to collect receivables from our customers; our reliance on residential new construction, residential repair/remodel, and commercial construction; our reliance on third-party suppliers and manufacturers; our ability to attract, develop, and retain talented personnel and our sales and labor force; our ability to maintain consistent practices across our locations; and our ability to maintain our competitive position.  We discuss the material risks we face under the caption entitled “Risk Factors” in our Annual Report for the year ended December 31, 2019, as filed with the SEC on February 25, 2020, as well as under the caption entitled “Risk Factors” in subsequent reports that we file with the SEC.  Our forward-looking statements in this filing speak only as of the date of this filing.  Factors or events that could cause our actual results to differ may emerge from time to time and it is not possible for us to predict all of them.  Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise.  The Company believes that the non-GAAP performance measures and ratios that are contained herein, which management uses to manage our business, provide users of this financial information with additional meaningful comparisons between current results and results in our prior periods. Non-GAAP performance measures and ratios should be viewed in addition, and not as an alternative, to the Company's reported results under accounting principles generally accepted in the United States. Additional information about the Company is contained in the Company's filings with the SEC and is available on TopBuild's website at www.topbuild.com.

Investor Relations and Media Contact

Tabitha Zane

tabitha.zane@topbuild.com

386-763-8801

(tables follow)

NYSE:BLD

November 3, 2020

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5

TopBuild Corp.

Condensed Consolidated Statements of Operations (Unaudited)

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

Three Months Ended September 30, 

Nine Months Ended September 30, 

2020

2019

2020

2019

Net sales

$

697,223

    

$

682,330

    

$

1,996,551

    

$

1,961,771

Cost of sales

498,895

502,999

1,448,210

1,451,822

Gross profit

198,328

179,331

548,341

509,949

Selling, general, and administrative expense

96,805

98,886

296,372

296,846

Operating profit

101,523

80,445

251,969

213,103

Other income (expense), net:

Interest expense

(7,692)

(9,507)

(24,711)

(28,740)

Loss on extinguishment of debt

(233)

Other, net

86

653

648

1,512

Other expense, net

(7,606)

(8,854)

(24,296)

(27,228)

Income before income taxes

93,917

71,591

227,673

185,875

Income tax expense

(23,921)

(16,615)

(51,407)

(40,864)

Net income

$

69,996

$

54,976

$

176,266

$

145,011

Net income per common share:

Basic

$

2.13

$

1.63

$

5.35

$

4.27

Diluted

$

2.11

$

1.60

$

5.29

$

4.20

 

Weighted average shares outstanding:

Basic

32,847,652

33,790,857

32,960,969

33,977,464

Diluted

33,210,545

34,367,902

33,337,259

34,541,635

NYSE:BLD

November 3, 2020

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TopBuild Corp.

Condensed Consolidated Balance Sheets and Other Financial Data (Unaudited)

(dollars in thousands)

As of

September 30, 

    

December 31, 

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

315,338

$

184,807

Receivables, net of an allowance for credit losses of $8,122 at September 30, 2020, and allowance for doubtful accounts of $4,854 at December 31, 2019

436,548

 

428,844

Inventories, net

142,517

 

149,078

Prepaid expenses and other current assets

32,101

 

17,098

Total current assets

926,504

 

779,827

Right of use assets

81,692

 

87,134

Property and equipment, net

172,099

 

178,080

Goodwill

1,379,721

 

1,367,918

Other intangible assets, net

172,390

 

181,122

Deferred tax assets, net

4,397

 

4,259

Other assets

10,998

 

5,623

Total assets

$

2,747,801

$

2,603,963

LIABILITIES

Current liabilities:

Accounts payable

$

311,696

$

307,970

Current portion of long-term debt

23,247

34,272

Accrued liabilities

117,456

 

98,418

Short-term lease liabilities

32,747

 

36,094

Total current liabilities

485,146

 

476,754

Long-term debt

688,870

 

697,955

Deferred tax liabilities, net

173,597

 

175,263

Long-term portion of insurance reserves

49,927

45,605

Long-term lease liabilities

52,672

54,010

Other liabilities

15,995

 

1,487

Total liabilities

1,466,207

 

1,451,074

EQUITY

1,281,594

 

1,152,889

Total liabilities and equity

$

2,747,801

$

2,603,963

As of September 30, 

    

2020

2019

Other Financial Data

Receivable days

48

51

Inventory days

27

28

Accounts payable days

81

77

Receivables, net plus inventories, net less accounts payable

$

267,369

$

301,217

Receivables, net plus inventories, net less accounts payable as a percent of sales (TTM)

10.1

%

11.6

%

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November 3, 2020

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

Nine Months Ended September 30, 

2020

2019

Cash Flows Provided by (Used in) Operating Activities:

    

    

    

Net income

$

176,266

$

145,011

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

47,527

39,005

Share-based compensation

12,159

11,411

Loss on extinguishment of debt

233

Loss on sale or abandonment of property and equipment

290

885

Amortization of debt issuance costs

1,103

1,169

Provision for bad debt expense

5,625

5,697

Loss from inventory obsolescence

1,908

1,794

Deferred income taxes, net

(709)

(381)

Change in certain assets and liabilities

Receivables, net

(13,645)

(51,585)

Inventories, net

4,759

20,637

Prepaid expenses and other current assets

(14,989)

10,003

Accounts payable

2,152

(12,529)

Accrued liabilities

33,436

10,758

Payment of contingent consideration

(413)

Other, net

21

904

Net cash provided by operating activities

255,723

182,779

Cash Flows Provided by (Used in) Investing Activities:

Purchases of property and equipment

(27,206)

(34,100)

Acquisition of businesses

(21,450)

(6,452)

Proceeds from sale of property and equipment

2,332

2,239

Other, net

25

Net cash used in investing activities

(46,324)

(38,288)

Cash Flows Provided by (Used in) Financing Activities:

Proceeds from issuance of long-term debt

300,000

9,998

Repayment of long-term debt

(319,168)

(19,424)

Payment of debt issuance costs

(2,280)

Taxes withheld and paid on employees' equity awards

(14,781)

(11,135)

Exercise of stock options

1,438

Repurchase of shares of common stock

(43,149)

(52,177)

Payment of contingent consideration

(928)

(1,091)

Net cash used in financing activities

(78,868)

(73,829)

Cash and Cash Equivalents

Increase for the period

130,531

70,662

Beginning of period

 

184,807

 

100,929

End of period

$

315,338

$

171,591

Supplemental disclosure of noncash activities:

Leased assets obtained in exchange for new operating lease liabilities

$

27,098

$

120,726

Accruals for property and equipment

278

102

NYSE:BLD

November 3, 2020

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TopBuild Corp.

Segment Data (Unaudited)

(dollars in thousands)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2020

2019

Change

2020

2019

Change

TruTeam

Sales

$

492,206

$

498,390

(1.2)

%

$

1,434,648

$

1,430,800

0.3

%

Operating profit, as reported

$

83,142

$

69,846

$

213,136

$

189,568

Operating margin, as reported

16.9

%

14.0

%

14.9

%

13.2

%

Rationalization charges

9

(16)

866

183

Acquisition related costs

56

4

459

COVID-19 pay

278

916

Operating profit, as adjusted

$

83,429

$

69,886

$

214,922

$

190,210

Operating margin, as adjusted

17.0

%

14.0

%

15.0

%

13.3

%

Service Partners

Sales

$

244,113

$

220,947

10.5

%

$

674,672

$

638,899

5.6

%

Operating profit, as reported

$

32,787

$

23,406

$

81,612

$

65,154

Operating margin, as reported

13.4

%

10.6

%

12.1

%

10.2

%

Rationalization charges

(161)

783

109

COVID-19 pay

15

70

Operating profit, as adjusted

$

32,641

$

23,406

$

82,464

$

65,263

Operating margin, as adjusted

13.4

%

10.6

%

12.2

%

10.2

%

Total

Sales before eliminations

$

736,319

$

719,337

$

2,109,320

$

2,069,699

Intercompany eliminations

(39,096)

(37,007)

(112,769)

(107,928)

Net sales after eliminations

$

697,223

$

682,330

2.2

%

$

1,996,551

$

1,961,771

1.8

%

Operating profit, as reported - segments

$

115,929

$

93,252

$

294,748

$

254,722

General corporate expense, net

(8,032)

(6,872)

(24,610)

(23,606)

Intercompany eliminations

(6,374)

(5,935)

(18,169)

(18,013)

Operating profit, as reported

$

101,523

$

80,445

$

251,969

$

213,103

Operating margin, as reported

14.6

%

11.8

%

12.6

%

10.9

%

Rationalization charges †

(274)

8

2,102

1,977

Acquisition related costs †

142

131

338

1,034

Refinancing costs

57

COVID-19 pay

293

984

Operating profit, as adjusted

$

101,684

$

80,584

$

255,450

$

216,114

Operating margin, as adjusted

14.6

%

11.8

%

12.8

%

11.0

%

Share-based compensation

3,280

3,926

12,317

11,411

Depreciation and amortization

14,216

13,467

47,527

39,005

EBITDA, as adjusted

$

119,180

$

97,977

$

315,294

$

266,530

EBITDA margin, as adjusted

17.1

%

14.4

%

15.8

%

13.6

%

Sales change period over period

14,893

34,780

EBITDA, as adjusted, change period over period

21,203

48,764

Incremental EBITDA, as adjusted, as a percentage of change in sales

142.4

%

140.2

%

†Rationalization charges and acquisition related costs include corporate level adjustments as well as segment operating adjustments.

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November 3, 2020

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TopBuild Corp.

Non-GAAP Reconciliations (Unaudited)

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

Three Months Ended September 30, 

Nine Months Ended September 30, 

2020

2019

2020

2019

Gross Profit and Operating Profit Reconciliations

Net sales

$

697,223

$

682,330

$

1,996,551

$

1,961,771

Gross profit, as reported

$

198,328

$

179,331

$

548,341

$

509,949

Rationalization charges

(63)

1,016

COVID-19 pay

273

755

Gross profit, as adjusted

$

198,538

$

179,331

$

550,111

$

509,949

Gross margin, as reported

28.4

%

26.3

%

27.5

%

26.0

%

Gross margin, as adjusted

28.5

%

26.3

%

27.6

%

26.0

%

Operating profit, as reported

$

101,523

$

80,445

$

251,969

$

213,103

Rationalization charges

(274)

8

2,102

1,977

Acquisition related costs

142

131

338

1,034

Refinancing costs

57

COVID-19 pay

293

984

Operating profit, as adjusted

$

101,684

$

80,584

$

255,450

$

216,114

Operating margin, as reported

14.6

%

11.8

%

12.6

%

10.9

%

Operating margin, as adjusted

14.6

%

11.8

%

12.8

%

11.0

%

Income Per Common Share Reconciliation

Income before income taxes, as reported

$

93,917

$

71,591

$

227,673

$

185,875

Rationalization charges

(274)

8

2,102

1,977

Acquisition related costs

142

131

338

1,034

Refinancing costs and loss on extinguishment of debt

290

COVID-19 pay

293

984

Income before income taxes, as adjusted

94,078

71,730

231,387

188,886

Tax rate at 26.0% and 26.5% for 2020 and 2019, respectively

(24,460)

(19,008)

(60,161)

(50,055)

Income, as adjusted

$

69,618

$

52,722

$

171,226

$

138,831

Income per common share, as adjusted

$

2.10

$

1.53

$

5.14

$

4.02

Weighted average diluted common shares outstanding

33,210,545

34,367,902

33,337,259

34,541,635

NYSE:BLD

November 3, 2020

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10

TopBuild Corp.

Same Branch and Acquisition Net Sales and Adjusted EBITDA (Unaudited)

(dollars in thousands)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2020

2019

2020

2019

Net sales

Same branch:

TruTeam

$

487,590

$

498,390

$

1,418,418

$

1,430,800

Service Partners

244,113

220,947

674,672

638,899

Eliminations

(39,096)

(37,007)

(112,769)

(107,928)

Total same branch

692,607

682,330

1,980,321

1,961,771

Acquisitions (a):

TruTeam

$

4,616

$

$

16,230

$

Service Partners

Eliminations

Total acquisitions

4,616

16,230

Total

$

697,223

$

682,330

$

1,996,551

$

1,961,771

EBITDA, as adjusted

Same branch

$

118,506

$

97,977

$

312,099

$

266,530

Acquisitions (a)

674

3,195

Total

$

119,180

$

97,977

$

315,294

$

266,530

EBITDA, as adjusted, as a percentage of sales

Same branch (b)

17.1

%

15.8

%

Acquisitions (c)

14.6

%

19.7

%

Total (d)

17.1

%

14.4

%

15.8

%

13.6

%

As Adjusted Incremental EBITDA, as a percentage of change in sales

Same branch (e)

199.8

%

245.7

%

Acquisitions (c)

14.6

%

19.7

%

Total (f)

142.4

%

140.2

%


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

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

(c) Acquired EBITDA, as adjusted, as a percentage of acquired 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

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November 3, 2020

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TopBuild Corp.

Same Branch and Acquisition Net Sales by Market (Unaudited)

(in thousands)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2020

2019

2020

2019

Same branch:

Residential

$

543,658

$

522,506

$

1,553,273

$

1,503,300

Commercial

148,949

159,824

427,048

458,471

Same branch net sales

692,607

682,330

1,980,321

1,961,771

Acquisitions (a):

Residential

$

2,030

$

$

4,681

$

Commercial

2,586

11,549

Acquisitions net sales

4,616

16,230

Total net sales

$

697,223

$

682,330

$

1,996,551

$

1,961,771


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

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November 3, 2020

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12

TopBuild Corp.

Reconciliation of Adjusted EBITDA to Net Income (Unaudited)

(in thousands)

Three Months Ended September 30, 

Nine Months Ended September 30, 

2020

2019

2020