TopBuild : Presentation Q1 2020

First Quarter

2020

_____________

May 5, 2020

Jerry Volas, CEO

Robert Buck, President & COO

John Peterson, CFO

Safe Harbor	2

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

Business Update	3

• Experienced,cycle-tested management team
• Where permissible, TruTeam on job sites and Service Partners filling and delivering orders
• Proactively flexing cost model
• Strict safety protocols in place
• Ample liquidity

Our Safety Culture Remains a Top Priority

1Q 2020 Financial Highlights*	4

• 5.5% sales growth
• 26.3% gross margin, up 120 bps
• 13.5% adjusted EBITDA margin, up 150 bps
• 40.8% incremental EBITDA margin
• 29.2% increase in adjusted EPS to $1.37 per diluted share

Strong Q1 with Minimal Impact from COVID-19

* See slide 15 for adjusted EBITDA reconciliation

Capital Allocation	5

• Two Acquisitions YTD
• • Hunter Insulation
  • Cooper Glass
• Delaying further acquisitions due to uncertain environment
• • Will resume when appropriate
  • Strong balance sheet and ample dry powder
• Share repurchase program on hold

Liquidity Number One Priority

Operations Update	6

• Focused on:
• • Safeguarding employees' health at our facilities and on job sites
  • Maintaining key operations and servicing customers
  • Monitoring shifting state regulations
• Construction deemed "essential" in most states
• Supply chain across both business segments remains strong

Responding Proactively to Changing Environment

Background	7

• Since the last downturn:
• • Closed over 130 redundant branches
  • Moved all branches to common ERP system
  • Simplified our business processes
  • Exitednon-core products
  • Cut redundant fixed overhead
  • Brought key talent back to the business
  • Leveraged supply chain scale
  • Focused on labor and sales productivity, operational efficiency
  • Leveraged model to expand margins and improve profitability

Stronger, Leaner More Flexible Business Model

Flexing the Business	8

• Discretionary spending controlled/eliminated
• Capital expenditures significantly reduced
• Overhead expenses cut
• Working closely with supplier partners
• COVID-19Leave Plan for employees
• Common ERP system distinct competitive advantage
• Ongoing review of branch level performance

Multiple Levers to Pull to Drive Performance

Looking Ahead…	9

• Demonstrating to our customers, current and prospective:
• • We can and will support them better than any other company in our industry
  • We are financially strong, ensuring we have the resources to meet their needs
  • We know how to quickly and successfully adapt to changing market conditions

We are here for them today, and we will be here tomorrow with equipment, material, facilities, labor and the best operators to meet their needs

Opportunity to Differentiate Our Company

Financial Overview	10

	($ in 000s)	Three Months Ended March 31, 2020
	Sales	$653,228
	Y-O-Y Change	5.5%
	Adjusted Operating Profit*	$70,261
	Y-O-Y Change	18.9%
	Adjusted Operating Margin*	10.8%
	Y-O-Y Change	130 bps
	Adjusted EBITDA*	$88,359
	Y-O-Y Change	18.5%
	Adjusted EBITDA Margin*	13.5%
	Y-O-Y Change	150 bps
	Adjusted Net Income*	$45,873
	Y-O-Y Change	25.3%
	Adjusted Net Income Per Diluted Share*	$1.37
	Y-O-Y Change	29.2%

Solid First Quarter

* See slides 15, 16 & 17 for adjusted EBITDA reconciliation, GAAP to non-GAAP reconciliation and Income per Common Share reconciliation

CapEx, Working Capital & Cash Flow	11

	($ in 000s)	Three Months Ended
		March 31, 2020
	CAPEX	$15,892
	Working Capital % to Sales	10.5%
	Operating Cash Flow	$72,930
	Cash Balance	$187,039

Strong Cash Flow Generation

	Leverage					12
	First Quarter 2020
		$ in millions
			$731.4
		Total Debt	▪	$389M available on $450M Revolver
		Less Cash		187.0
		▪	No debt maturing until 2025
		Net Debt	$544.4
		▪	Significant room under debt covenants
			$372.9
		TTM Adj. EBITDA
		Leverage		1.46x

Total Liquidity of $576 Million

COVID-19 Initiatives

▪Flexible business model enables Company to adapt quickly

•70% variable costs, 20% fixed costs, 10% mix of both

13

Mix

10%

•	Expand margins in periods of growth
•	Adjust to downturns to mitigate impact on operations
▪Cost Savings
•	Elimination of most travel, entertainment and in-person meetings
•	Postponing non-essential CapEx
•	Reducing workforce in the field and at Branch Support Center
▪Defensive capital allocation strategy - preserve capital

Fixed Costs

20%

Variable Costs

70%

Responding Proactively to Changing Environment

Appendix

Adjusted EBITDA Reconciliation	15
($ in 000s)

		Three Months Ended March 31,
		2020		2019
Net income, as reported	$	50,771	$	37,983
Adjustments to arrive at EBITDA, as adjusted:
Interest expense and other, net		8,270		9,269
Income tax expense		10,715		9,366
Depreciation and amortization		14,190		12,475
Share-based compensation		3,908		2,972
Rationalization charges		-		1,827
Acquisition related costs		235		652
Refinancing costs and loss on extinguishment of debt		270		-
EBITDA, as adjusted	$	88,359	$	74,544

Segment GAAP to Non-GAAP Reconciliation	16
($ in 000s)

TruTeam
Sales	$
Operating profit, as reported	$
Operating margin, as reported
Rationalization charges
Acquisition related costs
Operating profit, as adjusted	$
Operating margin, as adjusted
Service Partners
Sales	$
Operating profit, as reported	$
Operating margin, as reported
Rationalization charges
Operating profit, as adjusted	$
Operating margin, as adjusted

Three Months Ended March 31,
2020		2019	Change
475,873	$	449,383	5.9 %
60,351	$	51,299
12.7	%	11.4	%
-		118
4		125
60,355	$	51,542
12.7	%	11.5	%
214,223	$	204,464	4.8 %
24,669	$	20,597
11.5	%	10.1	%
-		109
24,669	$	20,706
11.5	%	10.1	%

Income Per Common Share Reconciliation	17
($ in 000s)

		Three Months Ending March 31,
		2020		2019
Income before income taxes, as reported	$	61,486	$	47,349
Rationalization charges		-		1,827
Acquisition related costs		235		652
Refinancing costs and loss on extinguishment of debt		270		-
Income before income taxes, as adjusted		61,991		49,828
Tax rate at 26.0% and 26.5% for 2020 and 2019, respectively		(16,118)		(13,204)
Income, as adjusted	$	45,873	$	36,624
Income per common share, as adjusted	$	1.37	$	1.06
Weighted average diluted common shares outstanding		33,599,847		34,703,289