TopBuild Corp. (BLD) Q3 2025 Earnings Call Transcript
Total Sales Growth 1.4% to $1.4 billion, driven by M&A of 7.9% and pricing of 0.3%, partially offset by a 6.7% decline in volume. The growth was supported by acquisitions and pricing adjustments, while volume decline was a negative factor.
Installation Services Sales $858.3 million, up 0.2%. M&A added 11%, offset by a 10.4% decline in volume and a 0.5% pricing decrease. The growth was primarily driven by acquisitions, while volume and pricing declines negatively impacted results.
Specialty Distribution Sales $608.9 million, up 1.4%. Growth was driven by acquisitions of 2.3% and pricing of 1.2%, partially offset by a 2.1% volume decline. Residential product volumes and pricing were challenged, but commercial products, especially mechanical insulation, performed well.
Adjusted Gross Profit 30.1%, compared to 30.7% last year. The decline was due to incremental amortization from acquisitions.
Adjusted SG&A as a Percentage of Sales 13.6%, compared to 12.8% last year. The increase was primarily driven by incremental amortization from acquisitions.
Adjusted EBITDA $275.6 million, with a margin of 19.8%, down 100 basis points from last year. Resilient margins were supported by cost-saving actions and supply chain improvements, offsetting price pressure on residential insulation products.
Installation Services Adjusted EBITDA Margin 22.5%, an improvement of 20 basis points from last year. The improvement was due to operational efficiencies.
Specialty Distribution Adjusted EBITDA Margin 16.9%, down 150 basis points from last year. The decline was attributed to pricing and volume challenges in residential products.
Other Expense $24.5 million, compared to $16.1 million last year. The increase was due to higher interest expenses from increased borrowing on the upsized credit facility.
Adjusted Earnings Per Diluted Share $5.36, compared to $5.68 last year. The decline was due to higher interest expenses and other factors.
Total Liquidity $2.1 billion, including $1.1 billion in cash and $933.4 million available under the revolver. This reflects a strong liquidity position.
Total Debt $2.9 billion, $1.5 billion higher than last year due to refinancing, credit facility expansion, and senior notes issuance.
Net Debt $1.7 billion, with a net debt leverage ratio of 1.6 times trailing 12 months pro forma adjusted EBITDA. This reflects the impact of recent acquisitions and financing activities.
TTM Free Cash Flow $791.2 million, up 13.4% from last year, primarily due to working capital improvements.
Working Capital as a Percentage of Sales 14.2%, compared to 14.1% last year. This indicates stable working capital management.
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TopBuild Acquires Applied Coatings and Upstate Spray Foam to Expand Northeast Presence
- Acquisition Announcement: TopBuild Corp. has announced the acquisition of Applied Coatings and Upstate Spray Foam, based in New York, which together generate approximately $20 million in annual revenue, primarily providing spray foam and fireproofing services, thereby enhancing TopBuild's business footprint in the Northeast.
- Market Expansion: This acquisition will further solidify TopBuild's market position in the residential and commercial sectors across New York, Pennsylvania, and Massachusetts, and is expected to drive overall growth and profitability for the company.
- Management Insights: TopBuild's CEO Robert Buck stated that this acquisition exemplifies the company's strategic focus on driving growth and profitability, reflecting a strong recognition and trust in the teams of Applied Coatings and Upstate Spray Foam.
- Customer Relationships: Billy Gibson, co-owner of Applied Coatings and Upstate Spray Foam, emphasized that the alignment in customer relationships and values between the two companies will facilitate continued growth in Upstate New York and beyond, further enhancing TopBuild's competitive edge in the market.
Kevin Simpson Invests in Building Materials Firms, Targeting AI Growth Opportunities
- Investment Opportunity: Kevin Simpson identified opportunities amid market volatility by acquiring Eagle Materials, a heavy construction materials manufacturer, anticipating benefits from the AI buildout, particularly in data center demand.
- Financial Performance: Eagle Materials trades at a forward P/E ratio of 17 and boasts substantial free cash flow, indicating strong financial health that supports future growth potential.
- Market Trends: Simpson noted that as tech companies build data centers, building material suppliers will be significant beneficiaries, with Eagle Materials' stock up over 7% year-to-date, despite a 4% decline this week.
- Industry Outlook: Another beneficiary, TopBuild, focuses on building insulation materials, and Simpson believes that the expansion in the construction sector over the next few years will yield tremendous benefits for suppliers, with TopBuild's stock up nearly 16% this year.
Distillate Capital Announces Q4 2025 Portfolio Adjustments
- Portfolio Changes: Distillate Capital's Q4 2025 rebalancing saw the U.S. Fundamental Stability & Value Composite purchase Bristol-Myers Squibb (BMY), Vistra (VST), and TE Connectivity (TEL), while divesting from Elevance Health (ELV), HCA Healthcare (HCA), and Lowe's Companies (LOW), indicating a strategic shift in healthcare and consumer sectors.
- Increases and Reductions: The U.S. FSV Strategy increased stakes in Uber Technologies (UBER), T-Mobile US (TMUS), and Marathon Petroleum (MPC), while trimming positions in Johnson & Johnson (JNJ), Merck & Co. (MRK), and Cisco Systems (CSCO), reflecting changing confidence in technology and energy sectors.
- Small Cap Investments: The U.S. Small/Mid Cap Quality & Value Composite acquired CF Industries Holdings (CF), Molson Coors Beverage (TAP), and Toll Brothers (TOL), exiting Range Resources (RRC), Gap (GAP), and TopBuild (BLD), showcasing a proactive approach towards small-cap stocks.
- International Investment Dynamics: The International Fundamental Stability & Value Composite acquired Agnico Eagle Mines (AEM), HD HYUNDAI, and Rio Tinto (RIO), while divesting from SK Hynix (HXSC.F), LVMH (LVMHF), and Aluminum Corporation of China (ALMMF), highlighting a focus on international mining and consumer goods.
Jim Cramer Warns About Lumen Technologies: Exercise Caution, Stock Has 'Increased Too Much'
Caution on Lumen Technologies: Jim Cramer advised caution regarding Lumen Technologies, noting that the stock has "run too much," while the company recently appointed Jim Fowler as chief technology & product officer.
Concerns about Unusual Machines: Cramer expressed skepticism about Unusual Machines, highlighting its significant financial losses and labeling it as a "highly speculative" investment, despite a recent Buy rating from Jones Trading.
TopBuild Corp Performance: Cramer acknowledged the strong market for TopBuild Corp, suggesting to take some profits after its recent gains, while Jefferies raised its price target for the stock.
Skepticism towards Horizon Technology Finance: Cramer stated he does not trust Horizon Technology Finance due to a lack of transparency about its assets, while the company recently priced a $57.50 million offering of notes.
Cramer's Lighting Round: Exercise Caution with Lumen Technologies
Drone Technology: Caution is advised regarding drone technology investments due to high speculation and significant financial losses.
TopBuild: The insulation market is promising, but there is a suggestion to take profits after a strong performance.
Horizon Technology Finance: Lack of transparency in the company's holdings raises trust issues, making it a non-recommendation.
Lumen Technologies: The stock has seen substantial gains, prompting a warning to exercise caution with future investments.
IBM, Toast, AppLovin, and an Industrial Stock Featured in CNBC's 'Final Trades'
IBM's Acquisition of Confluent: IBM announced its acquisition of Confluent for $31 per share, valued at $11 billion, enhancing its data streaming capabilities and supporting AI deployment.
Final Trades on CNBC: Analysts highlighted several stocks, including Toast, which was upgraded by JP Morgan, and TopBuild, which reported strong earnings, while AppLovin is expected to approach its all-time high.
Market Reactions: Following the announcements, IBM shares rose by 0.4%, Toast increased by 0.1%, while TopBuild fell by 3.3%, and AppLovin jumped by 5.1%.
Analyst Insights: Stephanie Link praised IBM's acquisition, while other analysts provided insights on their final trades, indicating a mix of optimism and caution in the market.
TopBuild Acquires Applied Coatings and Upstate Spray Foam to Expand Northeast Presence
- Acquisition Announcement: TopBuild Corp. has announced the acquisition of Applied Coatings and Upstate Spray Foam, based in New York, which together generate approximately $20 million in annual revenue, primarily providing spray foam and fireproofing services, thereby enhancing TopBuild's business footprint in the Northeast.
- Market Expansion: This acquisition will further solidify TopBuild's market position in the residential and commercial sectors across New York, Pennsylvania, and Massachusetts, and is expected to drive overall growth and profitability for the company.
- Management Insights: TopBuild's CEO Robert Buck stated that this acquisition exemplifies the company's strategic focus on driving growth and profitability, reflecting a strong recognition and trust in the teams of Applied Coatings and Upstate Spray Foam.
- Customer Relationships: Billy Gibson, co-owner of Applied Coatings and Upstate Spray Foam, emphasized that the alignment in customer relationships and values between the two companies will facilitate continued growth in Upstate New York and beyond, further enhancing TopBuild's competitive edge in the market.
Kevin Simpson Invests in Building Materials Firms, Targeting AI Growth Opportunities
- Investment Opportunity: Kevin Simpson identified opportunities amid market volatility by acquiring Eagle Materials, a heavy construction materials manufacturer, anticipating benefits from the AI buildout, particularly in data center demand.
- Financial Performance: Eagle Materials trades at a forward P/E ratio of 17 and boasts substantial free cash flow, indicating strong financial health that supports future growth potential.
- Market Trends: Simpson noted that as tech companies build data centers, building material suppliers will be significant beneficiaries, with Eagle Materials' stock up over 7% year-to-date, despite a 4% decline this week.
- Industry Outlook: Another beneficiary, TopBuild, focuses on building insulation materials, and Simpson believes that the expansion in the construction sector over the next few years will yield tremendous benefits for suppliers, with TopBuild's stock up nearly 16% this year.
Distillate Capital Announces Q4 2025 Portfolio Adjustments
- Portfolio Changes: Distillate Capital's Q4 2025 rebalancing saw the U.S. Fundamental Stability & Value Composite purchase Bristol-Myers Squibb (BMY), Vistra (VST), and TE Connectivity (TEL), while divesting from Elevance Health (ELV), HCA Healthcare (HCA), and Lowe's Companies (LOW), indicating a strategic shift in healthcare and consumer sectors.
- Increases and Reductions: The U.S. FSV Strategy increased stakes in Uber Technologies (UBER), T-Mobile US (TMUS), and Marathon Petroleum (MPC), while trimming positions in Johnson & Johnson (JNJ), Merck & Co. (MRK), and Cisco Systems (CSCO), reflecting changing confidence in technology and energy sectors.
- Small Cap Investments: The U.S. Small/Mid Cap Quality & Value Composite acquired CF Industries Holdings (CF), Molson Coors Beverage (TAP), and Toll Brothers (TOL), exiting Range Resources (RRC), Gap (GAP), and TopBuild (BLD), showcasing a proactive approach towards small-cap stocks.
- International Investment Dynamics: The International Fundamental Stability & Value Composite acquired Agnico Eagle Mines (AEM), HD HYUNDAI, and Rio Tinto (RIO), while divesting from SK Hynix (HXSC.F), LVMH (LVMHF), and Aluminum Corporation of China (ALMMF), highlighting a focus on international mining and consumer goods.
Jim Cramer Warns About Lumen Technologies: Exercise Caution, Stock Has 'Increased Too Much'
Caution on Lumen Technologies: Jim Cramer advised caution regarding Lumen Technologies, noting that the stock has "run too much," while the company recently appointed Jim Fowler as chief technology & product officer.
Concerns about Unusual Machines: Cramer expressed skepticism about Unusual Machines, highlighting its significant financial losses and labeling it as a "highly speculative" investment, despite a recent Buy rating from Jones Trading.
TopBuild Corp Performance: Cramer acknowledged the strong market for TopBuild Corp, suggesting to take some profits after its recent gains, while Jefferies raised its price target for the stock.
Skepticism towards Horizon Technology Finance: Cramer stated he does not trust Horizon Technology Finance due to a lack of transparency about its assets, while the company recently priced a $57.50 million offering of notes.
Cramer's Lighting Round: Exercise Caution with Lumen Technologies
Drone Technology: Caution is advised regarding drone technology investments due to high speculation and significant financial losses.
TopBuild: The insulation market is promising, but there is a suggestion to take profits after a strong performance.
Horizon Technology Finance: Lack of transparency in the company's holdings raises trust issues, making it a non-recommendation.
Lumen Technologies: The stock has seen substantial gains, prompting a warning to exercise caution with future investments.
IBM, Toast, AppLovin, and an Industrial Stock Featured in CNBC's 'Final Trades'
IBM's Acquisition of Confluent: IBM announced its acquisition of Confluent for $31 per share, valued at $11 billion, enhancing its data streaming capabilities and supporting AI deployment.
Final Trades on CNBC: Analysts highlighted several stocks, including Toast, which was upgraded by JP Morgan, and TopBuild, which reported strong earnings, while AppLovin is expected to approach its all-time high.
Market Reactions: Following the announcements, IBM shares rose by 0.4%, Toast increased by 0.1%, while TopBuild fell by 3.3%, and AppLovin jumped by 5.1%.
Analyst Insights: Stephanie Link praised IBM's acquisition, while other analysts provided insights on their final trades, indicating a mix of optimism and caution in the market.
