Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period March 31, 2026
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 001-36870
TopBuild Corp.
(Exact name of Registrant as Specified in its Charter)
Delaware
(State or Other Jurisdiction of Incorporation orOrganization)
47-3096382
(I.R.S. EmployerIdentification No.)
475 North Williamson Boulevard
Daytona Beach, Florida
(Address of Principal Executive Offices)
32114
(Zip Code)
(386) 304-2200
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common stock, par value $0.01 per share
BLD
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.⌧ Yes ◻ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ⌧ Yes ◻ No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒ Accelerated filer ☐ Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ◻
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☒ No
The registrant had outstanding 28,142,161 shares of Common Stock, par value $0.01 per share as of April 24, 2026.
TOPBUILD CORP.
TABLE OF CONTENTS
Page No.
Part I.
Financial Information
Item 1.
Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets
4
Condensed Consolidated Statements of Operations
5
Condensed Consolidated Statements of Comprehensive Income
6
Condensed Consolidated Statements of Cash Flows
7
Condensed Consolidated Statements of Changes in Equity
8
Notes to Condensed Consolidated Financial Statements
9
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
23
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
28
Item 4.
Controls and Procedures
29
Part II.
Other Information
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
31
Defaults upon Senior Securities
Mine Safety Disclosures
Item 5.
Item 6.
Exhibits
Index to Exhibits
32
Signatures
33
2
GLOSSARY
We use acronyms, abbreviations, and other defined terms throughout this Quarterly Report, which are defined in the glossary below:
Term
Definition
3.625% Senior Notes
TopBuild's 3.625% senior unsecured notes issued March 15, 2021 and due March 15, 2029
4.125% Senior Notes
TopBuild's 4.125% senior unsecured notes issued October 14, 2021 and due February 15, 2032
5.625% Senior Notes
TopBuild's 5.625% senior unsecured notes issued September 25, 2025 and due January 31, 2034
2015 LTIP
2015 Long-Term Incentive Program authorizes the Board to grant stock options, stock appreciation rights, restricted shares, restricted share units, performance awards, and dividend equivalents
2025 LTIP
TopBuild Corp. Amended and Restated 2015 Long Term Stock Incentive Plan, as amended April 28, 2025
2025 Repurchase Program
$1 billion share repurchase program authorized by the Board on February 17, 2025, and effective following shareholder approval on April 28, 2025.
Amendment No. 5
Amendment No. 5 to the Credit Agreement dated May 16, 2025
Annual Report
Annual report filed with the SEC on Form 10-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Applied Coatings and Upstate Spray Foam
Applied Coatings, LLC and The Top Gun Group, LLC d/b/a Upstate Spray Foam
ASC
Accounting Standards Codification
ASU
Accounting Standards Update
Board
Board of Directors of TopBuild
BofA
Bank of America, N.A.
Claremont
The Claremont Sales Corporation and Kenneth Industrial Products, Inc.
CODM
Chief Operating Decision Maker
Credit Agreement
Amended and Restated Credit Agreement, originally dated March 20, 2020 and amended May 16, 2025, among TopBuild, BofA as administrative agent, and the other lenders and agents party thereto
Diamond Doors
Diamond Door Products, Ltd.
EBITDA
Earnings before interest, taxes, depreciation, and amortization
Exchange Act
The Securities Exchange Act of 1934, as amended
FASB
Financial Accounting Standards Board
GAAP
Generally accepted accounting principles in the United States of America
Insulation Fabrics
Insulation Fabrics, LLC
Johnson Roofing
Johnson Roofing, Inc.
L&L Insulation
L&L Insulation, LLC
Lenders
Bank of America, N.A., together with the other lenders party to "Credit Agreement"
Net Leverage Ratio
As defined in the “Credit Agreement,” the ratio of outstanding indebtedness, less up to $350 million of unrestricted cash, to EBITDA
NYSE
Performance Insulation Fabricators
Performance Insulation Fabricators Company, Inc. and Insulation Supply Company, Inc.
Progressive
PR Midco LLC, d/b/a Progressive Roofing
Quarterly Report
Quarterly report filed with the SEC on Form 10-Q pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
QXO
QXO, Inc.
ROU
Right of use (asset), as defined in ASC 842
RSA
Restricted stock award
Seal-Rite
Seal-Rite Insulation Inc
SEC
United States Securities and Exchange Commission
Secured Leverage Ratio
As defined in the “Credit Agreement,” the ratio of outstanding secured indebtedness to EBITDA
SOFR
Secured overnight financing rate
SPI
SPI LLC d/b/a Specialty Products & Insulation
Term Loan
TopBuild's secured borrowings under the "Credit Agreement" due May 16, 2030
TopBuild
TopBuild Corp. and its wholly-owned consolidated domestic subsidiaries
3
PART I – FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands except share data)
As of
March 31,
December 31,
2026
2025
ASSETS
Current assets:
Cash and cash equivalents
$
268,847
184,742
Receivables, net of an allowance for credit losses of $29,680 at March 31, 2026, and $29,081 at December 31, 2025
930,521
894,408
Inventories
515,143
505,167
Prepaid expenses and other current assets
42,148
50,478
Total current assets
1,756,659
1,634,795
Right of use assets
261,536
271,396
Property and equipment, net
286,525
291,556
Goodwill
3,070,940
3,045,227
Other intangible assets, net
1,325,038
1,351,612
Other assets
10,465
10,726
Total assets
6,711,163
6,605,312
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable
471,217
440,214
Current portion of long-term debt
62,500
Accrued liabilities
251,991
249,361
Short-term operating lease liabilities
87,302
86,170
Short-term finance lease liabilities
6,611
6,571
Total current liabilities
879,621
844,816
Long-term debt
2,769,888
2,784,197
Deferred tax liabilities, net
395,765
387,594
Long-term portion of insurance reserves
58,645
58,681
Long-term operating lease liabilities
190,086
200,729
Long-term finance lease liabilities
11,014
11,020
Other liabilities
1,782
2,115
Total liabilities
4,306,801
4,289,152
Commitments and contingencies
Equity:
Preferred stock, $0.01 par value: 10,000,000 shares authorized; 0 shares issued and outstanding
-
Common stock, $0.01 par value: 250,000,000 shares authorized; 39,747,055 shares issued and 28,139,211 outstanding at March 31, 2026, and 39,643,887 shares issued and 28,069,250 outstanding at December 31, 2025
397
396
Treasury stock, 11,607,844 shares at March 31, 2026, and 11,574,637 shares at December 31, 2025, at cost
(2,142,193)
(2,124,964)
Additional paid-in capital
950,262
945,303
Retained earnings
3,620,061
3,515,248
Accumulated other comprehensive loss
(24,165)
(19,823)
Total equity
2,404,362
2,316,160
Total liabilities and equity
See notes to our unaudited condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands except share and per common share data)
Three Months Ended March 31,
Net sales
1,445,860
1,233,278
Cost of sales
1,045,607
881,805
Gross profit
400,253
351,473
Selling, general, and administrative expense
225,210
173,984
Operating profit
175,043
177,489
Other income (expense), net:
Interest expense
(36,623)
(16,602)
Other, net
1,327
5,086
Other expense, net
(35,296)
(11,516)
Income before income taxes
139,747
165,973
Income tax expense
(34,934)
(42,588)
Net income
104,813
123,385
Net income per common share:
Basic
3.75
4.25
Diluted
3.73
4.23
Weighted average shares outstanding:
27,976,514
29,028,234
28,130,208
29,174,892
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
(In thousands)
Other comprehensive (loss) income:
Foreign currency translation adjustment
(4,342)
229
Comprehensive income
100,471
123,614
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Cash Flows Provided by (Used in) Operating Activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
56,295
35,791
Share-based compensation
4,629
5,042
Loss on sale of assets
327
829
Amortization of debt issuance costs
1,216
720
Provision for bad debt expense
3,412
3,666
Provision for inventory obsolescence
2,284
2,820
Impairment losses
—
9,868
Deferred income taxes, net
(20)
(1,822)
Change in certain assets and liabilities, net of effects of businesses acquired:
Receivables, net
(38,542)
(1,118)
(18,336)
(2,215)
8,198
9,646
31,464
(32,342)
4,739
(1,050)
257
(631)
Net cash provided by operating activities
160,736
152,589
Cash Flows Provided by (Used in) Investing Activities:
Purchases of property and equipment
(13,999)
(13,395)
Acquisition of businesses, net of cash acquired
(27,888)
294
Proceeds from sale of assets
394
248
Net cash used in investing activities
(41,493)
(12,853)
Cash Flows Provided by (Used in) Financing Activities:
Repayment of long-term debt
(15,625)
(11,250)
Proceeds from revolving credit facility
65,000
Repayment of revolving credit facility
(65,000)
Principal payments on finance lease obligations
(1,861)
Taxes withheld and paid on employees' equity awards
(18,293)
(4,466)
Exercise of stock options
1,394
Repurchase of shares of common stock
(215,628)
Net cash used in financing activities
(34,385)
(231,344)
Impact of exchange rate changes on cash
(753)
101
Net increase (decrease) in cash and cash equivalents
84,105
(91,507)
Cash and cash equivalents - Beginning of period
400,318
Cash and cash equivalents - End of period
308,811
Supplemental disclosure of noncash activities:
Leased assets obtained in exchange for new operating lease liabilities
12,987
17,547
Leased assets obtained in exchange for new finance lease liabilities
1,831
Accruals for property and equipment
685
444
Excise taxes capitalized to treasury stock
2,156
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)
Accumulated
Common
Treasury
Additional
Other
Stock
Paid-in
Retained
Comprehensive
($0.01 par value)
at cost
Capital
Earnings
Loss
Equity
Balance at December 31, 2025
Issuance of 79,168 restricted share awards under long-term equity incentive plan, net of forfeitures
1
33,207 shares withheld to pay taxes on employees' equity awards
(17,229)
(1,064)
24,000 shares issued upon exercise of stock options
Other comprehensive loss, net of tax
Balance at March 31, 2026
(Loss)/Income
Balance at December 31, 2024
(1,681,230)
926,137
2,993,521
(29,206)
2,209,618
Issuance of 51,633 restricted share awards under long-term equity incentive plan, net of forfeitures
Repurchase of 693,881 shares pursuant to the Share Repurchase Programs
(217,784)
14,178 shares withheld to pay taxes on employees' equity awards
(4,307)
(159)
Other comprehensive income, net of tax
Balance at March 31, 2025
(1,903,321)
931,020
3,116,906
(28,977)
2,116,024
See notes to our unaudited condensed consolidated financial statements
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
TopBuild is a Delaware corporation and trades on the NYSE under the symbol “BLD.” We report our business in two segments: Installation Services and Specialty Distribution. Our Installation Services segment primarily installs insulation, commercial roofing and other building products. Our Specialty Distribution segment primarily sells and distributes insulation and other building products. Our segments are based on our operating units, for which further discussion is included in Note 7 – Segment Information.
We believe 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, 2026, our results of operations and comprehensive income for the three months ended March 31, 2026 and 2025, and our cash flows for the three months ended March 31, 2026 and 2025. The condensed consolidated balance sheet at December 31, 2025 was derived from our audited financial statements, but does not include all disclosures required by GAAP.
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, 2025, as filed with the SEC on February 26, 2026.
2. ACCOUNTING POLICIES
Financial Statement Presentation. Our condensed consolidated financial statements have been developed in conformity with GAAP, which requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from these estimates. All intercompany transactions between TopBuild entities have been eliminated.
Recently Issued Accounting Pronouncements Not Yet Adopted
In November 2024, the FASB issued ASU 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40)”. This standard requires disclosure, in the notes to financial statements, of specified information about certain costs and expenses. This standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. This standard may be applied either prospectively or retrospectively. We do not anticipate that this standard will affect our consolidated results of operations, financial position or cash flows and we are assessing the impact of its adoption in our disclosures to our consolidated financial statements.
In September 2025, the FASB issued ASU 2025-06 “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software”. This standard removes all references to prescriptive and sequential software development stages and requires an entity to start capitalizing software costs when both of the following occur when (1) management has authorized and committed to funding the software project, and (2) it is probable that the project will be completed and the software will be used to perform the function intended. This standard is effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted as of the beginning of an annual reporting period. This standard may be applied using a prospective, modified or retrospective transition approach. We do not anticipate that this standard will affect our results of operations, financial position or cash flows to our consolidated financial statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
3. REVENUE RECOGNITION
Revenue is disaggregated between our Installation Services and Specialty Distribution segments and further based on market and product, as we believe this best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.
The following table present our revenues disaggregated by market (in thousands):
Installation Services
Specialty Distribution
Eliminations
Total
Residential
540,181
224,103
(55,185)
709,099
620,961
210,014
(61,224)
769,751
Commercial/Industrial
237,148
512,977
(13,364)
736,761
124,572
349,790
(10,835)
463,527
777,329
737,080
(68,549)
745,533
559,804
(72,059)
The following table present our revenues disaggregated by product (in thousands):
Insulation and accessories
525,501
661,752
(57,675)
1,129,578
596,284
500,765
(64,025)
1,033,024
Roofing
120,144
Gutters
23,894
50,533
(9,532)
64,895
24,895
43,435
(7,074)
61,256
Glass and windows
51,150
59,516
All other
56,640
24,795
(1,342)
80,093
64,838
15,604
(960)
79,482
The following table represents our contract assets and contract liabilities with customers, in thousands:
Included in Line Item on
Condensed Consolidated
Balance Sheets
Contract Assets:
Receivables, unbilled
91,125
73,968
Contract Liabilities:
Deferred revenue (a)
37,276
38,307
The aggregate amount remaining on uncompleted performance obligations was $600.7 million as of March 31, 2026. We expect to satisfy the performance obligations and recognize revenue on substantially all of these uncompleted contracts over the next 18 months.
On certain of our long-term contracts, a percentage of the total project cost is withheld and not invoiced to the customer and collected until satisfactory completion of the customer’s project, typically within a year. This amount is referred to as retainage and is common practice in the construction industry. Retainage receivables are classified as a component of Receivables, net on our condensed consolidated balance sheets and were $78.8 million and $81.6 million as of March 31, 2026 and December 31, 2025, respectively.
10
4. GOODWILL AND OTHER INTANGIBLES
Prior to the acquisition of Progressive on July 14, 2025, we had two reporting units which were also our operating and reportable segments: Installation and Specialty Distribution. Progressive became its own reporting unit for goodwill testing. All three reporting units contain goodwill. Assets acquired and liabilities assumed are assigned to the applicable reporting unit based on whether the acquired assets and liabilities relate to the operations of such unit and determination of its fair value. Goodwill assigned to the reporting unit is the excess of the fair value of the acquired business over the fair value of the individual assets acquired and liabilities assumed for the reporting unit.
In the fourth quarter of 2025, we performed an annual assessment of our goodwill resulting in no impairment and there were no indicators of impairment for the three months ended March 31, 2026.
Changes in the carrying amount of goodwill for the three months ended March 31, 2026, by reporting unit, were as follows, in thousands:
Accumulated
Gross Goodwill
FX Translation
Impairment
Net Goodwill
December 31, 2025
Additions
Adjustment
March 31, 2026
Losses
Installation
1,960,011
15,176
1,975,187
(762,021)
1,213,166
442,316
13
442,329
2,402,327
15,189
2,417,516
1,655,495
1,404,921
12,266
(1,742)
1,415,445
Total goodwill
3,807,248
27,455
3,832,961
Additions during the three months ended March 31, 2026, primarily reflects acquisitions made during the period, as well as measurement period adjustments to the fair value of goodwill assigned to businesses acquired in the last twelve months.
Other intangible assets, net includes customer relationships, non-compete agreements, and trademarks / trade names. The following table sets forth our other intangible assets, in thousands:
Gross definite-lived intangible assets
1,763,989
1,755,193
Accumulated amortization
(438,951)
(403,581)
The following table sets forth our amortization expense, in thousands:
Amortization expense
35,880
18,156
11
5. LONG-TERM DEBT
The following table reconciles the principal balances of our outstanding debt to our condensed consolidated balance sheets, in thousands:
3.625% Senior Notes due 2029
400,000
4.125% Senior Notes due 2032
500,000
5.625% Senior Notes due 2034
750,000
Term loan due 2030
1,206,250
1,221,875
Unamortized debt issuance costs
(23,862)
(25,178)
Total debt, net of unamortized debt issuance costs
2,832,388
2,846,697
Less: current portion of long-term debt
Total long-term debt
The following table sets forth our remaining principal payments for our outstanding debt balances as of March 31, 2026, in thousands:
2027
2028
2029
2030
Thereafter
Term loan
46,875
971,875
462,500
1,250,000
2,856,250
On May 16, 2025, we entered into Amendment No. 5 to the Credit Agreement, which increased our term loan facility to an aggregate principal amount of $1.0 billion, increased the aggregate borrowing capacity on our revolving credit facility to $1.0 billion, and added a delayed draw term facility with an aggregate borrowing capacity of $250.0 million. On July 11, 2025, we borrowed $250.0 million of the delayed draw facility, and the outstanding balance is included in the outstanding balances of the term loan due 2030.
The following table outlines the key terms of Amendment No. 5 to the Credit Agreement (dollars in thousands):
Senior secured term loan facility
1,000,000
Delayed draw term loan
250,000
Revolving facility (a)
Sublimit for issuance of letters of credit under revolving facility
150,000
Sublimit for swingline loans under revolving facility
50,000
Interest rate as of March 31, 2026
4.92
%
Scheduled maturity date
May 16, 2030
Interest expense on borrowings under Amendment No. 5 to the Credit Agreement is based on an applicable margin rate plus, at our option, either:
12
The applicable margin rate is determined based on our Secured Leverage Ratio. In the case of base rate borrowings, the applicable margin rate ranges from 0.25 percent to 1.00 percent and in the case of SOFR rate borrowings, the applicable margin ranges from 1.25 percent to 2.00 percent. Borrowings under Amendment No. 5 are prepayable at the Company’s option without premium or penalty. The Company is required to make prepayments with the net cash proceeds of certain asset sales and certain extraordinary receipts.
Revolving Facility
The Company has outstanding standby letters of credit that secure our financial obligations related to our workers’ compensation, general insurance, and auto liability programs. These standby letters of credit, as well as any outstanding amount borrowed under our revolving facility, reduce the availability under the revolving facility.
The following table summarizes our availability under the revolving facility, in thousands:
Revolving facility
Less: standby letters of credit
(65,897)
(66,103)
Availability under revolving facility
934,103
933,897
We are required to pay commitment fees to the Lenders in respect of any unutilized commitments. The commitment fees range from 0.175 percent to 0.25 percent per annum, depending on our Secured Leverage Ratio. We must also pay customary fees on outstanding letters of credit.
The 3.625% Senior Notes are $400.0 million senior unsecured obligations and bear interest at 3.625% per year, payable semiannually in arrears on March 15 and September 15. The 3.625% Senior Notes mature on March 15, 2029, unless redeemed early or repurchased. If we undergo a change in control, we must make an offer to repurchase all of the 3.625% Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date.
The Company may redeem the 3.625% Senior Notes, in whole or in part, at par plus accrued and unpaid interest at any time on or after March 15, 2026 through maturity.
The 4.125% Senior Notes are $500.0 million senior unsecured obligations and bear interest at 4.125% per year, payable semiannually in arrears on February 15 and August 15. The 4.125% Senior Notes mature on February 15, 2032, unless redeemed early or repurchased. If we undergo a change in control, we must make an offer to repurchase all of the 4.125% Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date.
The Company may redeem the 4.125% Senior Notes, in whole or in part, at any time on or after October 15, 2026 at the redemption prices specified in the notes plus accrued and unpaid interest if redeemed during the 12 month period commencing on October 15 of the years set for: 2026 – 102.063%, 2027 – 101.375%, 2028 – 100.688%, 2029 and thereafter – 100.000%. The Company may also exercise its make-whole redemption option with respect to the 4.125% Senior Notes at any time prior to October 15, 2026, at the treasury rate plus 50 basis points.
On September 25, 2025, the Company completed a private offering of $750 million aggregate principal amount of 5.625% Senior Notes due 2034. The 5.625% Senior Notes are $750 million senior unsecured obligations and bear interest at 5.625% per year, payable semiannually in arrears on January 31 and July 31, beginning July 31, 2026. The 5.625% Senior Notes mature on January 31, 2034, unless redeemed early or repurchased. If we undergo a change in control, we must make an offer to repurchase all of the 5.625% Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date.
The Company may redeem the 5.625% Senior Notes, in whole or in part, at any time on or after September 30, 2028 at the redemption prices specified in the notes plus accrued and unpaid interest if redeemed during the 12-month period commencing on September 30 of the years set for: 2028 – 102.813%, 2029 – 101.406%, 2030 and thereafter – 100.000%. The Company may also redeem all or part of the Notes to be redeemed, plus the Applicable Premium (as defined in the indenture), as of, and accrued and unpaid interest to, the redemption date. Additionally, the Company may redeem up to 40% of the aggregate principal amount of the 5.625% Senior Notes prior to September 30, 2028 with the net cash proceeds of certain sales of its capital stock at 105.625% of the principal amount of the notes, plus accrued and unpaid interest, if any, to the date of redemption only if, after the redemption, at least 60% of the aggregate principal amount of the notes originally issued remains outstanding. The Company may also exercise its make-whole redemption with respect to the 5.625% Senior Notes at any time prior to September 30, 2028, at the treasury rate plus 50 basis points.
Covenant Compliance
The indentures governing our 3.625% Senior Notes, our 4.125% Senior Notes and our 5.625% Senior Notes (together, our “Senior Notes”) contain restrictive covenants that, among other things, generally limit the ability of the Company and certain of its subsidiaries (subject to certain exceptions) to (i) create liens, (ii) pay dividends, acquire shares of capital stock and make payments on subordinated debt, (iii) place limitations on distributions from certain subsidiaries, (iv) issue or sell the capital stock of certain subsidiaries, (v) sell assets, (vi) enter into transactions with affiliates, and (vii) effect mergers. The indentures provide for customary events of default which include (subject in certain cases to customary grace and cure periods), among others: nonpayment of principal or interest; breach of covenants or other agreements in the indenture; defaults in failure to pay certain other indebtedness; and certain events of bankruptcy or insolvency. Generally, if an event of default occurs and is continuing under the indenture, the trustee or the holders of at least 30% in aggregate principal amount of each of our Senior Notes then outstanding may declare the principal of, premium, if any, and accrued interest on the Senior Notes subject to such declaration immediately due and payable. The Senior Notes and related guarantees have not been registered under the Securities Act of 1933, and we are not required to register either the Senior Notes or the guarantees in the future.
The Credit Agreement contains certain covenants that limit, among other things, the ability of the Company to incur additional indebtedness or liens; to make certain investments or loans; to make certain restricted payments; to enter into consolidations, mergers, sales of material assets, and other fundamental changes; to transact with affiliates; to enter into agreements restricting the ability of subsidiaries to incur liens or pay dividends; or to make certain accounting changes. The Credit Agreement contains customary affirmative covenants and events of default.
The Credit Agreement requires that we maintain a Net Leverage Ratio and minimum Interest Coverage Ratio throughout the term of the agreement. The following table outlines the key financial covenants effective for the period covered by this Quarterly Report:
As of March 31, 2026
Maximum Net Leverage Ratio
3.75:1.00
Minimum Interest Coverage Ratio
3.00:1.00
Compliance as of period end
In Compliance
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6. FAIR VALUE MEASUREMENTS
The carrying values of cash and cash equivalents, receivables, net, and accounts payable are considered to be representative of their respective fair values due to the short-term nature of these instruments.
Fair value measurements were applied to our long-term debt portfolio. We believe the carrying value of our Term Loan approximates the fair market value primarily due to the fact that the non-performance risk of servicing our debt obligations, as reflected in our business and credit risk profile, has not materially changed since we assumed our debt obligations under the Credit Agreement. In addition, due to the floating-rate nature of our Term Loan, the market value is not subject to variability solely due to changes in the general level of interest rates as is the case with a fixed-rate debt obligation.
Based on market trades of our 3.625% Senior Notes, 4.125% Senior Notes and 5.625% Senior Notes close to March 31, 2026 (Level 1 fair value measurement), we estimate the fair value of each in the table below:
Fair Value
Gross Carrying Value
384,000
463,750
738,750
7. SEGMENT INFORMATION
Our business consists of two reportable segments: Installation Services and Specialty Distribution. We operate primarily in the U.S. and to a lesser extent Canada.
Our Installation Services segment installs insulation, commercial roofing and other building products. It sells primarily to the residential new construction market, with increasing activity in the commercial/industrial construction market, along with repair/remodel of residential housing. In addition, it provides commercial roofing installation services that includes re-roofing, recurring maintenance services, and new construction. Installation Services also installs other building products including glass and windows, rain gutters, garage doors, closet shelving, and fireplaces, among other items.
Our Specialty Distribution segment distributes building and mechanical insulation, insulation accessories and other building product materials for the residential and commercial/industrial end markets. In addition to insulation and accessories, it distributes rain gutters, closet shelving, and roofing materials, among other items. Distributed products are sold from distribution centers in various parts of the United States and Canada, primarily to contractors and dealers (including lumber yards) serving a wide variety of commercial/industrial markets.
Intercompany sales from the Specialty Distribution segment to the Installation Services segment are recorded by the Specialty Distribution segment with a profit margin and by our Installation Services segment at cost. This intercompany profit is eliminated in consolidation.
Our CODM is our Chief Executive Officer. Our CODM measures performance for our reportable segments based on segment net sales and operating profit. Our CODM uses these measures to evaluate resource allocation and other strategic initiatives (e.g., making acquisitions and internal investments). Segment performance measures are compared to budgeted and forecasted amounts periodically to assist in evaluating performance versus expectations and to inform future allocation and strategic decisions.
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Key information is presented below by segment for our profit measures for the three months ended March 31, 2026 and 2025, in thousands:
Three Months Ended March 31, 2026
Net sales from external customers
668,531
Intercompany net sales
68,549
Segment net sales
1,514,409
Reconciliation of Net Sales
Elimination of intercompany net sales
Consolidated net sales
Less (a):
Cost of sales (b)
540,053
560,620
1,100,673
Selling, general and administrative expenses (c)
118,085
96,452
214,537
Segment operating profit
119,191
80,008
199,199
Reconciliation of Segment Operating Profit
Elimination of intercompany profit
(13,482)
General corporate expense, net (d)
(10,674)
Other expense, net (e)
Consolidated income before taxes
Three Months Ended March 31, 2025
487,745
72,059
1,305,337
511,438
430,499
941,937
104,479
60,246
164,725
129,616
69,059
198,675
(11,927)
(9,259)
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(e) Other expense, net is presented on the accompanying condensed consolidated statement of operations and is primarily composed of interest expense and interest income.
Key information by segment is as follows for the three months ended March 31, 2026 and 2025, in thousands:
Total Reportable Segments
Other (a)
Consolidated Totals
Depreciation and amortization (b)
29,191
25,420
54,611
1,684
Property additions (c)
7,568
4,365
11,933
1,978
13,911
3,126,391
3,378,346
6,504,737
206,426
19,326
15,001
34,327
1,464
7,468
3,259
10,727
887
11,614
2,183,831
2,094,398
4,278,229
318,067
4,596,296
8. INCOME TAXES
Our effective tax rates were 25.0 percent and 25.7 percent for the three months ended March 31, 2026 and 2025, respectively. The lower 2026 tax rate was primarily related to an increase in tax benefit related to share-based compensation.
A tax benefit of $0.8 million and a tax expense of $0.7 million related to share-based compensation was recognized in our condensed consolidated statements of operations as a discrete item in income tax expense for the three months ended March 31, 2026 and 2025, respectively.
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9. NET INCOME PER SHARE
Basic net income per share is calculated by dividing net income by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net income per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury stock method.
Basic and diluted net income per share were computed as follows:
Net income (in thousands)
Weighted average number of common shares outstanding - basic
Dilutive effect of common stock equivalents:
RSAs with service-based conditions
24,389
31,211
RSAs with market-based conditions
59,390
13,686
RSAs with performance-based conditions
21,826
18,693
Stock options
48,089
83,068
Weighted average number of common shares outstanding - diluted
Basic net income per common share
Diluted net income per common share
The following table summarizes shares excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive:
Anti-dilutive common stock equivalents:
7,246
10,151
12,844
Total anti-dilutive common stock equivalents
22,995
10. SHARE-BASED COMPENSATION
Our eligible employees commenced participation in the 2015 LTIP. The 2015 LTIP authorized the Board to grant stock options, stock appreciation rights, restricted shares, restricted share units, performance awards, and dividend equivalents. All grants were made by issuing new shares and no more than 4.0 million shares of common stock may be issued under the 2015 LTIP.
On February 18, 2025, the Board of Directors adopted the 2025 LTIP, which replaces and supersedes the 2015 LTIP for all common stock awards made following its effective date of April 28, 2025. Shares of our common stock remaining available for awards under the previous 2015 LTIP continue to be authorized for future awards under the 2025 LTIP. As of March 31, 2026, we had 1.6 million shares remaining available for issuance under the 2025 LTIP.
Share-based compensation expense is included in selling, general, and administrative expense. The income tax effect associated with share-based compensation awards is included in income tax expense.
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The following table presents share-based compensation amounts recognized in our condensed consolidated statements of operations, in thousands:
Share-based compensation expense
Income tax benefit/(expense)
801
(661)
The following table presents a summary of our share-based compensation activity for the three months ended March 31, 2026, in thousands, except per share amounts:
RSAs
Stock Options
Number of Shares
Weighted Average Grant Date Fair Value Per Share
Weighted Average Exercise Price Per Share
AggregateIntrinsicValue
Balance December 31, 2025
154.0
303.35
78.8
29.84
84.86
26,172.9
Granted
63.6
511.99
Converted/Exercised
(98.5)
241.49
(24.0)
21.16
58.08
10,476.7
Forfeited/Expired
(5.9)
472.67
Balance March 31, 2026
113.2
465.54
54.8
33.64
96.60
13,946.4
Exercisable March 31, 2026 (a)
Unrecognized compensation expense on unvested RSAs was $38.5 million as of March 31, 2026, with the weighted average remaining compensation expense period of approximately 1.2 years.
Our RSAs with performance-based conditions are evaluated on a quarterly basis with adjustments to compensation expense based on the likelihood of the performance target being achieved or exceeded. The following table shows the range of payouts and the related expense for our outstanding RSAs with performance-based conditions, in thousands:
Payout Ranges and Related Expense
RSAs with Performance-Based Conditions
Grant Date Fair Value
0%
25%
100%
200%
February 21, 2024
4,115
1,029
8,230
February 18, 2025
4,550
1,138
9,100
February 17, 2026
6,703
1,676
13,406
During the first quarter of 2026, RSAs with performance-based conditions that were granted on February 21, 2023, vested based on cumulative three-year achievement of 200%. Total compensation expense recognized over the three-year performance period, net of forfeitures, was $7.4 million.
The fair value of our RSAs with a market-based condition granted under the 2025 and 2015 LTIP was determined using a Monte Carlo simulation. The following are key inputs in the Monte Carlo analysis for awards granted in 2026, 2025 and 2024:
2024
Measurement period (years)
2.87
2.86
Risk free interest rate
3.44
4.28
4.36
Dividend yield
0.00
Estimated fair value of market-based RSAs at grant date
792.10
393.39
503.68
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11. BUSINESS COMBINATIONS
Acquiring businesses is a key part of our ongoing strategy to grow our company and expand our offerings. Each acquisition has been accounted for as a business combination under ASC 805, “Business Combinations.” Acquisition related costs were $1.4 million and $0.3 million in the three months ended March 31, 2026 and 2025, respectively. Acquisition related costs are included in selling, general, and administrative expense in our condensed consolidated statements of operations.
2026 Acquisitions
On February 2, 2026, we acquired the assets of Applied Coatings and Upstate Spray Foam. These companies primarily install spray foam and fireproofing for the residential and commercial end markets in upstate New York, Pennsylvania and Massachusetts. The combined purchase price of approximately $27.5 million was funded by cash on hand and we recognized $15.0 million of goodwill in connection with their acquisition.
Customer relationships related to the acquisitions completed in the three months ended March 31, 2026, were assigned a total fair value of $8.3 million and are being amortized over their useful lives of 12 years.
As third-party or internal valuations are finalized, certain tax aspects of the foregoing transactions are completed, and customer post-closing reviews are concluded, adjustments may be made to the fair value of assets acquired, and in some cases total purchase price, through the end of each measurement period, generally one year following the applicable acquisition date. See Note 4 – Goodwill and Other Intangibles for disclosure of measurement period adjustments.
Goodwill to be recognized in connection with acquisitions is attributable to the synergies expected to be realized and improvements in the businesses after the acquisitions. Primarily all of the $15.0 million of goodwill recorded on the acquisition of Applied Coatings and Upstate Spray Foam completed in the three months ended March 31, 2026, is expected to be deductible for income tax purposes.
2025 Acquisitions
On April 7, 2025, we acquired the assets of the residential and commercial insulation business Seal-Rite. This Installation Services acquisition enhances our presence in the Omaha and Lincoln, Nebraska markets. The purchase price of approximately $23.0 million was funded by cash on hand and we recognized $12.5 million of goodwill in connection with this acquisition.
On July 14, 2025, we acquired Progressive, a leader in commercial roofing installation and roof maintenance services based in Phoenix, Arizona. The purchase price of approximately $818.2 million was funded by the $250.0 million delayed draw term facility that we borrowed on July 11, 2025, and cash on hand. We recognized $442.3 million of goodwill in connection with this acquisition.
On September 15, 2025, we acquired the assets of Insulation Fabrics, which sells safety materials and uniforms to the domestic insulation market. The purchase price of approximately $9.4 million was funded by cash on hand and we recognized $5.1 million of goodwill in connection with this acquisition.
On October 7, 2025, we acquired SPI, a leading specialty distributor and fabricator of mechanical insulation solutions for the commercial, industrial and residential end markets in North America. The purchase price of approximately $1.0 billion was funded with cash on hand, including proceeds from our 5.625% Senior Notes issuance, and we recognized $438.0 million of goodwill in connection with this acquisition.
On October 20, 2025, we acquired the assets of Diamond Doors, which fabricates and assembles insulated knock-down steel door systems for commercial and industrial metal buildings with locations in Georgia and Indiana. The purchase price of approximately $70.3 million was funded by cash on hand and we recognized $40.4 million of goodwill in connection with this acquisition.
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On October 31, 2025, we acquired the assets of Performance Insulation Fabricators, which distributes and fabricates mechanical insulation for the commercial and industrial end markets. The purchase price of approximately $6.7 million was funded by cash on hand and we recognized $3.4 million of goodwill in connection with this acquisition.
On November 24, 2025, we acquired the assets of L&L Insulation, a residential fiberglass and spray foam insulation installation business serving the northern Colorado and southern Wyoming regions. The purchase price of approximately $4.5 million was funded by cash on hand and we recognized $2.8 million of goodwill in connection with this acquisition.
The estimated fair values of the assets acquired and liabilities assumed for our 2025 acquisitions are as follows as of March 31, 2026, in thousands:
Preliminary purchase price allocations:
All Others
Cash consideration paid
818,166
1,010,381
113,807
Recognized amounts of identifiable assets acquired and liabilities assumed
Cash
7,853
Accounts receivable
121,424
105,825
7,796
5,406
103,251
7,774
Prepaid and other assets
1,533
5,442
307
Property and equipment
17,250
19,762
4,674
ROU asset (operating)
12,222
46,446
5,823
Intangible assets
397,776
457,462
32,645
Other long-term assets
1,071
(20,384)
(24,832)
(3,487)
(44,615)
(18,256)
(177)
Operating lease liabilities
(12,222)
(47,264)
(5,821)
Financing lease liabilities
(8,575)
(6,693)
(92,801)
(77,647)
(1,177)
Total identifiable net assets
375,837
572,420
49,562
437,961
64,245
12. ACCRUED LIABILITIES
The following table sets forth the components of accrued liabilities, in thousands:
Accrued liabilities:
Salaries, wages, and bonus/commissions
60,258
80,577
Deferred revenue
Short-term portion of insurance liabilities
36,976
36,189
Income taxes payable
35,892
6,396
Interest payable on long-term debt
25,608
23,849
Customer rebates
15,844
24,346
Sales and property taxes
14,749
14,332
Excise taxes
4,074
21,314
21,291
Total accrued liabilities
See Note 3 – Revenue Recognition for discussion of our deferred revenue balances. Accrued income taxes payable increased compared to December 31, 2025, due to the timing of tax payments, which typically occur later in the year.
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13. OTHER COMMITMENTS AND CONTINGENCIES
Litigation. We are subject to certain claims, charges, litigation, and other proceedings in the ordinary course of our business, including those arising from or related to contractual matters, intellectual property, personal injury, environmental matters, product liability, product recalls, construction defects, insurance coverage, personnel and employment disputes, antitrust, and other matters, including class actions. We believe we have adequate defenses in these matters, and we do not believe that the ultimate outcome of these matters will have a material adverse effect on us. However, there is no assurance that we will prevail in any of these pending matters, and we could in the future incur judgments, enter into settlements of claims, or revise our expectations regarding the outcome of these matters, which could materially impact our liquidity and our results of operations.
Other Matters. We enter into contracts, which include customary indemnities that are standard for the industries in which we operate. Such indemnities include, among other things, claims against our builder customers for issues relating to our workmanship. We generally exclude from our contracts with builder customers indemnity relating to product quality and warranty claims, as we pass such claims directly to the manufacturers of the products we install or distribute. In conjunction with divestitures and other transactions, we occasionally provide customary indemnities relating to various items including, among others, the enforceability of trademarks, legal and environmental issues, and asset valuations. We evaluate the probability that we may incur liabilities under these customary indemnities and appropriately record an estimated liability when deemed probable.
We also maintain indemnification agreements with our directors and officers that may require us to indemnify them against liabilities that arise by reason of their status or service as directors or officers, except as prohibited by applicable law.
14. SUBSEQUENT EVENTS
On April 1, 2026, we acquired the assets of the commercial roofing business Johnson Roofing, which will build on our commercial roofing platform and enhance our presence in the Texas, Oklahoma and Louisiana markets. The purchase price of approximately $25.0 million was funded by cash on hand. This acquisition will be accounted for as a business combination under ASC 805, “Business Combinations.”
On May 4, 2026, we acquired the assets of Claremont, a leader in industrial insulation distribution and custom fabrication, which will enhance our presence in the Northeast and mid-Atlantic markets. The purchase price of approximately $30.0 million was funded by cash on hand. This acquisition will be accounted for as a business combination under ASC 805, “Business Combinations.”
Merger Agreement
On April 18, 2026, TopBuild entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) with QXO, Inc., a Delaware corporation, and certain wholly owned subsidiaries of QXO. Under the terms of the Merger Agreement, at the effective time of the merger, each share of issued and outstanding common stock of TopBuild (subject to certain exceptions and elections) will be converted into the right to receive one of the following forms of consideration, subject to proration as described in the Merger Agreement: (i) an amount in cash equal to $505.00 or (ii) 20.200 shares of common stock of QXO (the “QXO Transaction”).
The QXO Transaction has been unanimously approved by the boards of directors of both companies and is subject to customary closing conditions, including, among other things, (i) approval by of TopBuild’s and QXO’s stockholders, and (ii) the expiration or termination of any applicable waiting period (and any extensions thereof) under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder, and other specified regulatory clearances.
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Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
TopBuild, headquartered in Daytona Beach, Florida, is a leading installer of insulation and commercial roofing and a specialty distributor of insulation and related building products to the construction industry in the United States and Canada.
We operate in two segments: Installation Services and Specialty Distribution. Our Installation Services segment installs insulation, roofing materials and other building products nationwide. As of March 31, 2026, we had more than 200 Installation Services branches located across the United States. We install various insulation applications, including fiberglass batts and rolls, blown-in loose fill fiberglass, polyurethane spray foam, and blown-in loose fill cellulose. Additionally, we install other building products including glass and windows, rain gutters, garage doors, closet shelving, and fireplaces, among other items. We handle every stage of the installation process, including material procurement supplied by leading manufacturers, project scheduling and logistics, multi-phase professional installation, and installation quality assurance.
Our acquisition of Progressive on July 14, 2025 enables us to expand our building envelope offering to general contractor customers and provide a broad suite of solutions. We construct and repair commercial roofs using various construction application types including built-up roofing, single ply, tile, metal, shingle and others. We provide the full lifecycle of comprehensive roofing services spanning non-discretionary re-roofing, recurring maintenance services and new construction to a diverse set of commercial customers including education, technology, industrial, government and healthcare.
Our Specialty Distribution segment distributes a comprehensive portfolio of building envelope, specialty products and mechanical and fabricated insulation for the residential and commercial/industrial end markets. We also offer insulation accessories, rain gutters, and other related building products. As of March 31, 2026, we had more than 250 distribution centers across the United States and Canada. Our Specialty Distribution customer base consists of thousands of general contractors of all sizes serving a wide variety of residential and commercial/industrial industries, gutter contractors, weatherization contractors, other contractors, dealers, metal building erectors, and modular home builders.
We believe that having both Installation Services and Specialty Distribution provides us with a number of distinct competitive advantages. First, the combined buying power of our two business segments, along with our scale, strengthens our ties to the major manufacturers of insulation, commercial roofing and other building products. This enables us to buy competitively and ensures the availability of supply to our local branches and distribution centers. The overall effect drives efficiencies throughout our supply chain. Second, being a leader in both installation services and specialty distribution allows us to reach a broader set of builders and contractors more effectively, regardless of their size or geographic location in the U.S. and Canada, and leverage residential, commercial, and industrial construction growth regardless of location. Third, during housing industry downturns, many insulation contractors who buy directly from manufacturers during industry peaks return to purchasing through specialty distributors. This helps to reduce our exposure to cyclical swings in our business. We’ve also increased our exposure to non-cyclical revenue through maintenance and other recurring installation services through acquisitions.
For additional details pertaining to our operating results by segment, see Note 7 – Segment Information to our unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report. For additional details regarding our strategy, material trends in our business and seasonality, please refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report for the year ended December 31, 2025, as filed with the SEC on February 26, 2026.
Recent Developments
To date, tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") and other trade authorities have had a minimal impact on our business because we purchase a limited number of products directly or indirectly from jurisdictions exposed to those tariffs. On February 20, 2026, the U.S. Supreme Court ruled in Learning Resources, Inc. v. Trump that IEEPA does not authorize the President to impose tariffs, and all IEEPA-based tariffs were terminated effective February 24, 2026. Given the minimal impact of tariffs on our business, we do not expect the Court's ruling, or the termination of IEEPA tariffs, to have a material impact on our supply chain costs or our results of operations. In addition, we do not believe we have any material obligation to reimburse customers or other counterparties in connection with tariff-related charges previously collected or passed through. While tariffs remain in effect under other legal authorities, including Sections 232 and 301 of applicable trade statutes, and the President has imposed a temporary 10% global tariff under Section 122 of the Trade Act of 1974, we do not currently anticipate that these measures will have a material impact on our business. We continue to monitor developments in U.S. trade policy, including potential new tariff actions and related litigation, and will update our disclosures as circumstances warrant.
FIRST QUARTER 2026 VERSUS FIRST QUARTER 2025
The following table sets forth our net sales, gross profit, operating profit, and margins, as reported in our condensed consolidated statements of operations, in thousands:
Cost of sales ratio
72.3
71.5
Gross profit margin
27.7
28.5
Selling, general, and administrative expense to sales ratio
15.6
14.1
Operating profit margin
12.1
14.4
Net margin
7.2
10.0
Sales and Operations
Net sales increased by 17.2% for the three months ended March 31, 2026, from the comparable period of 2025. The increase was primarily driven by a 24.3% increase in sales from acquisitions, partially offset by a 5.5% decline in volume and a 1.6% impact from lower selling prices.
Gross profit margins were 27.7% and 28.5% for the three months ended March 31, 2026 and 2025, respectively. The decline in gross profit margin is primarily due to lower sales volume and lower customer pricing.
Selling, general, and administrative expenses as a percentage of sales were 15.6% and 14.1% for the three months ended March 31, 2026 and 2025, respectively. The increase in the percentage of sales during the three months ended March 31, 2026 is due to incremental selling, general, and administrative expenses from acquisitions, including intangible amortization.
Operating profit margins were 12.1% and 14.4% for the three months ended March 31, 2026 and 2025, respectively. Operating profit margins during the three months ended March 31, 2026 as a percentage of sales decreased due to lower sales volume and lower customer pricing, as well as incremental selling, general and administrative expenses from acquisitions, including intangible amortization.
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Business Segment Results
The following table sets forth our net sales and operating profit margins by business segment, in thousands:
Percent Change
Net sales by business segment:
4.3
31.7
Intercompany eliminations
17.2
Operating profit by business segment:
(8.0)
15.9
Operating profit before general corporate expense
185,717
186,748
(0.6)
General corporate expense, net
(1.4)
Operating profit margins:
15.3
17.4
10.9
12.3
Operating profit margin before general corporate expense
12.8
15.1
Sales
Sales in our Installation Services segment increased $31.8 million, or 4.3%, for the three months ended March 31, 2026, as compared to the same period in 2025. Sales increased 16.9% from acquisitions, partially offset by a 9.8% decline in sales volume and a 2.9% impact from lower selling prices.
Operating profit margins
Operating profit margins in our Installation Services segment were 15.3% and 17.4% for the three months ended March 31, 2026 and 2025, respectively. The decline in operating profit margin is primarily due to lower sales volume and lower customer pricing, as well as incremental selling, general and administrative expenses from acquisitions, including intangible amortization.
Sales in our Specialty Distribution segment increased $177.3 million, or 31.7%, for the three months ended March 31, 2026, as compared to the same period in 2025. Sales increased 31.1% from acquisitions, 0.3% from higher selling prices and a 0.3% increase in sales volume.
Operating profit margins in our Specialty Distribution segment were 10.9% and 12.3% for the three months ended March 31, 2026 and 2025, respectively. The decline in operating profit margin is primarily due to incremental selling, general and administrative expenses from acquisitions, including intangible amortization.
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OTHER ITEMS
Other expense, net, increased to $35.3 million from $11.5 million in the three months ended March 31, 2026 and 2025, respectively. The increase was primarily driven by $20.0 million higher interest expense from Amendment No. 5 and issuance of our 5.625% Senior Notes, along with $2.9 million lower interest income due to lower average levels of invested cash balances during the first quarter of 2026.
Income tax expense was $34.9 million, an effective tax rate of 25.0 percent, for the three months ended March 31, 2026, compared to $42.6 million, an effective tax rate of 25.7 percent, for the comparable period in 2025. The tax rate for the three months ended March 31, 2026, was lower primarily related to an increase in tax benefit related to share-based compensation.
Cash Flows and Liquidity
Significant sources (uses) of cash and cash equivalents are summarized for the periods indicated, in thousands:
Changes in cash and cash equivalents:
Net cash flows provided by operating activities increased $8.1 million for the three months ended March 31, 2026, as compared to the prior year period. The increase compared to the three months ended March 31, 2025 was primarily driven by favorable changes in working capital accounts, specifically accounts payable, which was partially offset by $18.6 million lower net income mainly due to higher intangible amortization.
Net cash used in investing activities was $41.5 million for the three months ended March 31, 2026, primarily composed of $27.9 million for our acquisitions and $14.0 million for purchases of property and equipment, mainly vehicles and equipment. Net cash used in investing activities was $12.9 million for the three months ended March 31, 2025, primarily composed of $13.4 million for purchases of property and equipment, mainly vehicles.
Net cash used in financing activities was $34.4 million for the three months ended March 31, 2026. During the three months ended March 31, 2026, we incurred $16.9 million net cash outflow related to exercise of share-based incentive awards and stock options, used $15.6 million for debt repayments and repaid $1.9 million in principal on finance lease obligations. Additionally, we borrowed and repaid $65.0 million on our revolving facility, all within the first quarter of 2026. Net cash used in financing activities was $231.3 million for the three months ended March 31, 2025. During the three months ended March 31, 2025, we used $215.6 million to repurchase shares of our common stock under the 2024 and 2025 Repurchase Programs, $11.3 million for debt repayments and incurred $4.5 million cash outflow related to exercise of share-based incentive awards.
We have access to liquidity through our cash from operations and available borrowing capacity under Amendment No. 5, which provides for borrowing and/or standby letter of credit issuances of up to $1.0 billion under the revolving facility. Additional information regarding our outstanding debt and borrowing capacity is incorporated by reference from Note 5 – Long-term Debt to our unaudited condensed consolidated financial statements contained in Part 1, Item 1 of this Quarterly Report.
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The following table summarizes our liquidity, in thousands:
Cash and cash equivalents (a)
Availability under Revolving facility
Total liquidity
1,202,950
1,118,639
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 known contractual obligations including funding our debt service requirements, capital expenditures, lease obligations and working capital needs for at least the next twelve months. We also have adequate liquidity to maintain off-balance sheet arrangements for short-term leases, letters of credit, and performance and license bonds.
OUTLOOK
Residential New Construction
Demand for single- and multi-family homes continues to be uneven across the country and challenged by elevated price levels and borrowing costs, which continue to affect consumer purchasing power and spending behavior. Although the residential end-markets are facing near-term uncertainty around tariffs, inflation, interest rates, and consumer confidence, we remain optimistic about the longer-term fundamentals due to underbuilding in the United States in prior years.
Commercial and Industrial Construction
Our heavy commercial and industrial backlog is strong, our bidding activity is active, and our acquisitions of Progressive and SPI last year all continue to support our positive view of commercial/industrial sales for our Installation Services and Specialty Distribution segments. In addition, recurring maintenance, service and repair work on industrial sites serves as a continued demand driver for our business.
OFF-BALANCE SHEET ARRANGEMENTS
We had no material off-balance sheet arrangements during the three months ended March 31, 2026, other than short-term leases, letters of credit, and performance and license bonds, which have been disclosed in Part 1, Item 1 of this Quarterly report.
We use performance bonds to ensure completion of our work on certain larger customer contracts that can span multiple accounting periods. Performance bonds generally do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. We also have bonds outstanding for license and insurance.
The following table summarizes our outstanding performance, licensing, insurance, and other bonds, in thousands:
Outstanding bonds:
Performance bonds
280,569
251,622
Licensing, insurance, and other bonds
30,663
30,656
Total bonds
311,232
282,278
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CONTRACTUAL OBLIGATIONS
There have been no material changes to our contractual obligations from those previously disclosed in our Annual Report for the year ended December 31, 2025, as filed with the SEC on February 26, 2026.
CRITICAL ACCOUNTING POLICIES
We prepare our condensed consolidated financial statements in conformity with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of the financial statements, and the reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates. Our critical accounting policies have not changed from those previously reported in our Annual Report for the year ended December 31, 2025, as filed with the SEC on February 26, 2026.
APPLICATION OF NEW ACCOUNTING STANDARDS
Information regarding the application of new accounting standards is incorporated by reference from Note 2 – Accounting Policies to our unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report.
FORWARD-LOOKING STATEMENTS
Statements contained in this report that 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,” “should,” “anticipate,” “expect,” “believe,” “designed,” “plan,” “may,” “project,” “estimate” 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 negative macro-economic impacts on the United States economy, specifically with respect to residential, commercial/industrial construction, our ability to collect our receivables from our customers, our reliance on residential new construction, residential repair/remodel, and commercial/industrial 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; our ability to maintain our competitive position; and our ability to find attractive acquisition targets, successfully complete acquisitions and realize the expected benefits of our acquisitions. We discuss the material risks we face under the caption entitled “Risk Factors” in our Annual Report for the year ended December 31, 2025, as filed with the SEC on February 26, 2026, 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.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
We have a Term Loan outstanding with a principal balance of $1.2 billion and a revolving facility with an aggregate borrowing capacity of $1.0 billion. We also have outstanding 3.625% Senior Notes with an aggregate principal balance of $400.0 million, 4.125% Senior Notes with an aggregate principal balance of $500.0 million, and 5.625% Senior Notes with an aggregate principal balance of $750.0 million. The 3.625% Senior Notes, 4.125% Senior Notes, and 5.625% Senior Notes bear a fixed rate of interest and therefore are excluded from the calculation below as they are not subject to fluctuations in interest rates.
Interest payable on both the aggregate Term Loan and revolving facility is based on a variable interest rate. As a result, we are exposed to market risks related to fluctuations in interest rates on this outstanding indebtedness. As of March 31, 2026, the applicable interest rate as of such date was 4.92%. Based on our outstanding borrowings as of March 31, 2026, a 100-basis point increase in the interest rate would result in an $11.8 million increase in our annualized interest expense. There was no outstanding balance under the revolving facility as of March 31, 2026.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this Quarterly Report, we carried out an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective as of March 31, 2026.
Changes in Internal Control over Financial Reporting
There was no change in the Company’s internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) in the most recent fiscal quarter ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
PART II – OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The information set forth under the caption “Litigation” in Note 13 – Other Commitments and Contingencies to our unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report, is incorporated by reference herein.
Item 1A. RISK FACTORS
We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on February 26, 2026, other than as set forth below.
Risks Related to the Proposed QXO Transaction
The QXO Transaction may not be completed within the expected timeframe, or at all, and the failure to complete the QXO Transaction could impact our stock price and our future business and financial results.
There can be no assurance that the QXO Transaction will be completed in the expected timeframe, or at all. The Merger Agreement contains a number of conditions that must be satisfied or waived prior to the completion of the QXO Transaction, including the stockholder approvals. There can be no assurance that all closing conditions will be satisfied (or waived, if applicable). Many of the conditions to completion of the QXO Transaction are not within our control, and we cannot predict when or if these conditions will be satisfied (or waived, as applicable). In addition, either TopBuild or QXO may terminate the Merger Agreement if, subject to certain limitations, the QXO Transaction has not been consummated by January 17, 2027.
If the QXO Transaction is not completed, our ongoing business and financial results may be adversely affected and we will be subject to a number of risks, including the following:
In addition, if the QXO Transaction is not completed, we may experience negative reactions from the financial markets and from our customers and employees. We also may be subject to litigation related to any failure to complete the QXO Transaction or to enforcement proceedings commenced against us to perform our obligations under the Merger Agreement. If the QXO Transaction is not completed, some or all of these risks may materialize and may adversely affect our business, financial results and financial condition, as well as the price of our common stock.
The Merger Agreement restricts our ability to pursue alternative transactions and may require us to pay a termination fee under certain circumstances.
The Merger Agreement contains customary non-solicitation provisions that limit our ability to solicit or engage in discussions regarding alternative acquisition proposals, subject to certain fiduciary exceptions. If the Merger Agreement is terminated under certain specified circumstances, including in connection with a competing acquisition proposal, we may be required to pay a termination fee of $600 million in cash to QXO. These provisions could discourage other potential strategic transactions that may be favorable to us and our stockholders.
Securities class action and derivative lawsuits may be brought against us in connection with the QXO Transaction, which could result in substantial costs.
Securities class action lawsuits and derivative lawsuits are often brought against public companies that have entered into acquisition, merger, or other business combination agreements. Even if such a lawsuit is without merit, defending against these claims can result in substantial costs and divert management time and resources. An adverse judgment could result in monetary damages, or disrupt, delay, or terminate the QXO Transaction, which could have a negative impact on our liquidity and financial condition.
The market value of the QXO common stock that TopBuild stockholders will receive in the QXO Transaction may fluctuate materially and may be less than expected.
Because the value of the consideration in the QXO Transaction depends in part on the market price of QXO common stock, which may be volatile and subject to market and other factors outside of our control, there can be no assurance regarding the value that TopBuild stockholders will ultimately receive. The market price of QXO common stock may be affected by factors relating to QXO, the QXO Transaction, the anticipated benefits of the QXO Transaction, the combined company’s future prospects and results of operations, general market and economic conditions, and other factors. As a result, the value of the stock consideration may increase or decrease prior to or following completion of the QXO Transaction.
Uncertainty about the QXO Transaction may adversely affect our relationships with customers, suppliers, employees and other business partners, and may divert management’s attention.
Uncertainty about the timing and completion of the QXO Transaction may disrupt our business and could affect our relationships with customers, suppliers, and other business partners, including as a result of concerns about the combined company’s future strategy, operations, and financial condition. In addition, the pendency of the QXO Transaction may make it more difficult to attract, motivate, and retain key personnel, and could distract management and employees from day-to-day operations as they devote time and attention to matters relating to the QXO Transaction, including integration planning. Any of these factors could adversely affect our business, financial results and financial condition, whether or not the QXO Transaction is completed.
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The combined company may not achieve the anticipated benefits of the QXO Transaction, and TopBuild stockholders may not realize the expected value of the QXO Transaction.
The QXO Transaction is expected to result in benefits to the combined company, including those associated with the combined company’s scale, enhanced capabilities, and other strategic and financial objectives. However, achieving the anticipated benefits will depend on a number of factors, including the combined company’s ability to successfully integrate TopBuild’s business with QXO’s business, retain key personnel, realize anticipated operational and financial synergies and growth opportunities, and execute the combined company’s business plan. These benefits may not be achieved within the expected timeframe, or at all, and the combined company may incur additional or unexpected costs in connection with the QXO Transaction. If the combined company is unable to achieve some or all of the anticipated benefits of the QXO Transaction, the market price of QXO common stock could decline, and TopBuild stockholders could receive less value from the QXO Transaction than expected.
Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On February 17, 2025, our Board authorized the 2025 Repurchase Program, pursuant to which the Company may purchase up to $1.0 billion of our common stock. There were no share repurchases executed during the three months ended March 31, 2026, leaving $753.9 million remaining under the 2025 Share Repurchase Program. Excluded from this disclosure are shares repurchased to settle statutory employee tax withholdings related to the vesting of stock awards.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. MINE SAFETY DISCLOSURES
Item 5. OTHER INFORMATION
During the quarter ended March 31, 2026, no director or officer (as defined in Rule 16a-1(f) promulgated under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408 of Regulation S-K).
Item 6. EXHIBITS
The Exhibits listed on the accompanying Index to Exhibits are filed or furnished (as noted on such Index) as part of this Quarterly Report and incorporated herein by reference.
INDEX TO EXHIBITS
Incorporated by Reference
Filed
Exhibit No.
Exhibit Title
Form
Exhibit
Filing Date
Herewith
2.1*
Agreement and Plan of Merger, dated as of April 18, 2026, by and among QXO, Inc., TopBuild Corp., Titanium MergerCo, Inc. and Titanium MergerCo 2, LLC
8-K
2.1
4/20/2026
10.1
Voting Agreement, dated as of April 18, 2026, by and between TopBuild Corp. and Jacobs Private Equity II, LLC
31.1
Principal Executive Officer Certification required by Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2
Principal Financial Officer Certification required by Rules 13a-14 and 15d-14 as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1‡
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002
32.2‡
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002
101.INS
Inline XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*Schedules and/or exhibits have been omitted pursuant to Instruction 4 to Item 1.01 of Form 8-K. TopBuild agrees to furnish supplementally a copy of any omitted schedules and/or exhibits to the SEC on a confidential basis upon request.
‡Furnished herewith
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
By:
/s/ Madeline Otero
Name:
Madeline Otero
Title:
Vice President and Chief Accounting Officer
(Principal Accounting Officer)
May 5, 2026
/s/ Robert Kuhns
Robert Kuhns
Vice President and Chief Financial Officer
(Principal Financial Officer)