TopBuild Corp.

TopBuild reported fourth-quarter sales of $1.49 billion, up 13.2% year over year, with acquisitions contributing 23.0% and volume down 10.5%. Q4 adjusted gross profit was $416 million with a 28% margin, down 190 basis points; adjusted EBITDA was $265 million with a 17.9% margin, down 180 basis points; and adjusted EPS was $4.50 versus $5.13 last year. For full-year 2025, revenue was over $5.4 billion and adjusted EBITDA was $1.04 billion, or a 19.2% margin, with $697 million in free cash flow. For 2026, the company guided to sales of $5.925 billion-$6.225 billion and adjusted EBITDA of $1.005 billion-$1.155 billion; midpoint assumptions include volume and price each down low-single digits, residential sales down mid-single digits, commercial and industrial up low single digits, and M&A revenue of $800 million-$850 million. They also guided to interest and other expense of $143 million-$149 million, a tax rate of about 26%, capex of 1%-2%, and working capital at 15%-17% of sales.

Robert Buck emphasized that TopBuild’s strategy remains centered on profitable growth, strong free cash flow, and disciplined capital deployment through both organic initiatives and M&A. He said the residential market is still challenged by low consumer confidence, elevated rates, and affordability constraints, but reiterated that long-term housing fundamentals remain attractive and that the company is well positioned if demand improves later in the year. He was notably constructive on commercial and industrial, highlighting solid bidding, healthy backlogs, and a robust M&A pipeline.

Rob Kuhns focused on the mix of acquisition contribution, margin pressure, and the company’s flexibility in managing costs. He detailed Q4 adjusted gross margin at 28%, adjusted SG&A at 14.1%, adjusted EBITDA at $265 million, and net debt of $2.7 billion with leverage at 2.35x trailing 12-month adjusted EBITDA; liquidity was $1.1 billion, including $185 million of cash and $934 million of revolver availability. He said 2025 free cash flow was $697 million, $1.9 billion was deployed for acquisitions, and $434 million was returned via share repurchases. For 2026, he pointed to $55 million of price/cost headwinds, a 27% EBITDA decremental assumption on lower volumes, mid-teens EBITDA margins for M&A, and about $15 million of Progressive and SPI synergies in 2026.

Analysts pressed management on whether the guide assumes any residential recovery, and management said it does not bank on a second-half rebound, though regional private builders and smaller custom builders have held up better than large public builders. Several questions focused on pricing: management said pressure is most visible in fiberglass and spray foam, while mechanical pricing remains strong and commercial roofing pricing is generally flattish. Analysts also asked about cost actions and synergy upside; management said more than 70% of costs are variable, cost reductions and branch rationalization have already been taken, and the company remains highly confident it can meet or exceed synergy targets, especially from SPI integration.