TopBuild Corp Q3 2025 Earnings Call Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Aatish Shah - Evercore ISI - Analyst : This is Aatish for Steve. I just wanted to touch on Progressive. Can you talk about the sales contribution for Progressive in the quarter? And are you still on track for the -- I think the incremental $215 million for the full year. If you can touch on that, that would be helpful.

Question: Michael Rehaut - JPMorgan Chase & Co - Analyst : Great. First question, wanted to zero in, and apologies have I missed this in your prepared remarks, but quarter ago, you kind of baked in some price cost headwind into the back half of the year based on the potential for maybe pricing on the margin to weaken insulation pricing that is wanted to know in your current guidance, if that headwind is still baked in. I believe it was a $30 million headwind. And more broadly, how insulation pricing has trended during 3Q? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 04, 2025 / 2:00PM, BLD.N - Q3 2025 TopBuild Corp Earnings Call

Question: Michael Rehaut - JPMorgan Chase & Co - Analyst : Great. That's very helpful, Rob. I appreciate all the detail there. Maybe secondly, you reiterated, I believe, your end market assumption for the year for residential to be down low double digits, commercial and industrial flattish. If we kind of took the trend line where it is today, the level of activity kind of more interested in residential, but if you have any comments on commercial industrial as well. I'm trying to think about the first half of '26 and recognizing guidance is a little premature. But -- if we think about the fact that just mathematically, if residential kind of did have softness that progressed throughout 2025, would this still point to some level of year-over-year decline in the first half of '26 year-over-year. Just trying to understand the trajectory of '25 and how it might impact at least 1H '26?

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : My first question is on the margin. It's really nice to see how, especially in installation the operating margin is held up in there. Can you talk about your efforts to support that? And how we should be thinking about the path there for fourth quarter and anything looking out from that?

Question: Susan Maklari - Goldman Sachs Group Inc - Analyst : Yes. Okay. And then turning to Progressive. Given the weakness that we've seen on the new construction side, especially in some of the end markets there. Can you talk about what you're seeing on the reroofing side of that business? Is there any change in the competition and your ability to come up against that and continue to see the level of growth that you expect?

Question: Ken Zener - Seaport Research - Analyst : Robert, great investor summary. Save me a trip. All right. So Rob, the question about -- look, public builder inventory units are down 15% to 20%. I mean, you can pick a range in there, but call it mid-teens. To the extent that, that correction tied to demand what they REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 04, 2025 / 2:00PM, BLD.N - Q3 2025 TopBuild Corp Earnings Call consider too many spec homes, accelerating cycle time. You know the routine suggest they could have fewer inventory units. What gives you confidence that, that kind of bogey of mid-teens, which we're seeing broadly in at least if we had permit data, that would be useful, but you do have better data. It gives you confidence that the first half in res can be so benign. And it kind of reminds me of the whole concerns around multifamilies we exited last year, but could you expand on that a little bit given your view the data you have on bids in the absence of government data. I really appreciate that.

Question: Ken Zener - Seaport Research - Analyst : And if I can ask you to expand on that then, given your substitution for the census data in many ways, -- we've seen builders really the margin pressure really coming out of places like Florida select parts of Texas. But are you seeing them really slamming on the brakes in those areas? And could you kind of contrast that with not public builder type business, I'm thinking above the smile, so to speak?

Question: Philip Ng - Jefferies LLC - Analyst : Congrats on another strong quarter in a choppy environment. Robert, I guess it would be helpful to kind of give us a little more color in terms of backlogs and the pace of orders particularly in your C&I business. Any nuances between your legacy business versus some of the stuff you acquired, whether it's progressive, SPI. Are things accelerating? I'm asking just because obviously, the headlines REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 04, 2025 / 2:00PM, BLD.N - Q3 2025 TopBuild Corp Earnings Call data points on data center has been pretty encouraging. But -- is it more steady than inflecting? Are you starting to see light commercial bottom out here? Just a little more perspective on what you're seeing on the C&I side of things.

Question: Philip Ng - Jefferies LLC - Analyst : Okay. I mean everything you're saying, guys, probably some level of growth next year for 26 on C&I. Is that a fair characterization?

Question: Philip Ng - Jefferies LLC - Analyst : Okay. And then from a pricing standpoint, appreciating maybe the little choppier and your customers are dealing with affordability, but your commercial industrial business is 50% of the business at this point, post all the acquisitions you've announced this year. How should we think about pricing in those categories just because like mechanical insulation, everything we're reading, it's on allocation, I think prices are going higher, certainly don't have as great as a feel for commercial roofing. But internal perspective on pricing momentum and, I guess, at this point, half of your business?

Question: Philip Ng - Jefferies LLC - Analyst : Okay. Appreciate great color, guys.

Question: Jeffrey Stevenson - Loop Capital Markets LLC - Analyst : Yes, I was hoping to dive deeper into the variance between residential installation and distribution pricing. And I wondered if the better relative installation pricing is driven by builders reliance on TopBuild National and high-quality service levels compared with independent competitors. And then in distribution, our channel inventories currently at elevated levels, leading to increased competitive dynamics?

Question: Jeffrey Stevenson - Loop Capital Markets LLC - Analyst : Great. And then I appreciate all the updates on the integration of Progressive Roofing, but just wondered on the roofing M&A pipeline and now that you've had that business for several months now, how has the pipeline evolved given the fragmented nature of that market? And would you expect an acceleration in bolt-on acquisitions as we move through 2026.

Question: Keith Hughes - Truist Securities - Analyst : Kind of building on the last question on more commercial routing deals. Is there a specific region that you're looking specifically going after to acquire? And does it make a difference in terms of deals who the major suppliers of membrane are to the installers.

Question: Kurt Yinger - DA Davidson & Co - Analyst : Just wanted to go back to competitive dynamics on the residential install side. It sounds to me like that's primarily some savings on the material side. Is that the case? Or are you seeing increased bidding pressures depending on geography. And then maybe stepping REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 04, 2025 / 2:00PM, BLD.N - Q3 2025 TopBuild Corp Earnings Call back, can you just talk about kind of the tone of customer conversations as builders kind of battle the affordability challenges and maybe work to share some of that with suppliers like yourself?

Question: Kurt Yinger - DA Davidson & Co - Analyst : Okay. I appreciate that. And maybe just following up on kind of the balance of price and volume. Does it feel like as the year has progressed and we've kind of seen that additional step down in residential that more often, you're maybe having to walk away from some of these projects or bids? Or has that been pretty consistent with what you felt over the last couple of quarters?

Question: Rafe Jadrosich - Bofa Merrill Lynch Asset Holdings Inc - Analyst : On the distribution side, the pricing improved, but to price/cost getting sort of worse there. I think that's just on the residential piece of that. Can you just help me understand and like what's going on there? And just if the market stays soft, is there an opportunity REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 04, 2025 / 2:00PM, BLD.N - Q3 2025 TopBuild Corp Earnings Call from a cost perspective said differently, like if the market like kind of stays like this, could you get to a point where you're able to lower your costs where you can get to price cost neutral even if pricing stays negative?

Question: Rafe Jadrosich - Bofa Merrill Lynch Asset Holdings Inc - Analyst : That's helpful. And then in the quarter, you bought back stock and then you obviously continued to close acquisitions. How much of a priority is getting the leverage sort of below 2 times versus just continued M&A and buyback? Like are you comfortable sort of continuing to do that with the leverage above the long-term target?

Question: Adam Baumgarten - Vertical Research Partners LLC - Analyst : Just on the kind of implied 4Q guidance, it kind of points to worsening year-over-year margin pressure. Maybe if you could sort of run through the drivers there, whether it's some of the acquisitions, pricing, price cost, just kind of the outlook there in the near term.