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TopBuild Reports Fourth Quarter and Year-End 2022 Results
المصدر: Nasdaq GlobeNewswire / 23 فبراير 2023 06:45:40 America/New_York
Fourth Quarter Highlights
- Sales increase 18.9% to $1.3 billion, with same branch revenue increasing 14.2%
- Net income increases 83.6% to $143.8 million, or $4.52 per diluted share
- Adjusted EBITDA margin expands 170 basis points to 18.8%
Full Year Highlights
- Sales increase 43.7% to $5.0 billion, with same branch revenue increasing 18.8%
- Net income increases 71.6% to $556.0 million, or $17.14 per diluted share
- Adjusted EBITDA margin expands 140 basis points to 18.8%
Provides 2023 Sales, Adjusted EBITDA Guidance and Assumptions
DAYTONA BEACH, Fla., Feb. 23, 2023 (GLOBE NEWSWIRE) -- TopBuild Corp. (NYSE:BLD), a leading installer and specialty distributor of insulation and related building material products to the construction industry in the United States and Canada today reported results for the fourth quarter and full-year ended December 31, 2022.
Robert Buck, President and Chief Executive Officer, stated, “We closed 2022 with a solid fourth quarter, completing another outstanding year for TopBuild. The TopBuild team delivered on our objective of achieving strong top and bottom-line growth as our unique operating model continues to differentiate TopBuild, giving us distinct competitive advantages in the three end-markets we serve.
“Throughout 2022, the TopBuild team demonstrated profitable growth, benefitting from a relentless focus on improving operational efficiencies and leveraging fixed costs. We also successfully integrated DI and demonstrated improved operating results with this key acquisition.
“TopBuild’s unique operating model continues to enable our ability to outperform in any environment. Since 2018, revenue has doubled, growing at a compounded annual rate of 20% and our adjusted EBITDA margin has expanded 690 basis points.
“Looking at 2023 and beyond, we see multiple avenues of growth available to us. We have a strong track record of executing on our plan, producing solid results, and creating value for our shareholders.”
Fourth Quarter Financial Highlights
(comparisons are to the quarter ended December 31, 2021)
3 Months Ended 12/31/22 Reported Change Sales $1,264,543 18.9% Gross Margin 29.7% 310 bps SG&A as % of revenue 13.6% (190 bps) Operating Profit $203,114 71.5% Operating Margin 16.1% 500 bps Net Income $143,834 83.6% Net Income per diluted share $4.52 90.7% 3 Months Ended 12/31/22 Adjusted Change Sales $1,264,543 18.9% Gross Margin 29.7% 160 bps SG&A as % of revenue 13.5% (40 bps) Operating Profit $204,492 35.7% Operating Margin 16.2% 200 bps Net Income $140,081 35.6% Net Income per diluted share $4.40 41.0% EBITDA $237,413 30.4% EBITDA Margin 18.8% 170 bps 3 Months Ended 12/31/22 Adj. Same Branch Change Sales $1,214,183 14.2% Gross Margin 29.8% 170 bps Operating Margin 16.3% 210 bps EBITDA Margin 18.8% 170 bps Incremental EBITDA Margin 30.8% Full Year 2022 Financial Highlights
(comparisons are to twelve months ended December 31, 2021)
12 Months Ended 12/31/22 Reported Change Sales $5,008,744 43.7% Gross Margin 29.7% 180 bps SG&A as % of revenue 13.8% (50 bps) Operating Profit $797,164 67.3% Operating Margin 15.9% 220 bps Net Income $555,989 71.6% Net Income per diluted share $17.14 75.3% 12 Months Ended 12/31/22 Adjusted Change Sales $5,008,744 43.7% Gross Margin 29.7% 130 bps SG&A as % of revenue 13.6% 0 bps Operating Profit $804,966 56.2% Operating Margin 16.1% 130 bps Net Income $554,953 54.3% Net Income per diluted share $17.11 57.7% EBITDA $940,611 55.2% EBITDA Margin 18.8% 140 bps 12 Months Ended 12/31/22 Adj. Same Branch Change Sales $4,140,512 18.8% Gross Margin 30.5% 210 bps Operating Margin 17.2% 240 bps EBITDA Margin 19.5% 210 bps Incremental EBITDA Margin 30.8% Operating Segment Highlights ($ in 000s)
(comparisons are to the period ended December 31, 2021)Installation 3 Months Ended 12/31/22 12 Months Ended 12/31/22 Specialty Distribution 3 Months Ended 12/31/22 12 Months Ended 12/31/22 Sales $761,261 $2,969,978 Sales $563,065 $2,278,261 Change Change Volume 12.4% 9.2% Volume -5.1% -0.6% Price 8.2% 12.2% Price 11.5% 15.8% M&A 0.8% 3.4% M&A 9.5% 61.8% Total Change 21.4% 24.9% Total Change 15.9% 77.0% Operating Margin 18.6% 18.5% Operating Margin 14.3% 14.3% Change 170 bps 240 bps Change 530 bps 110 bps Adj. Operating Margin 18.7% 18.5% Adj. Operating Margin 14.4% 14.4% Change 170 bps 230 bps Change 200 bps 0 bps Adj. EBITDA Margin 20.8% 20.6% Adj. EBITDA Margin 16.7% 16.9% Change 140 bps 190 bps Change 170 bps 90 bps Capital Allocation
“We remain focused on acquiring quality installation and specialty distribution companies that fit within our core insulation businesses. Disciplined identification, analysis, and integration of strategic acquisitions are core competencies as evidenced by our successful track record.“Over the past five years we have acquired 24 companies that are contributing approximately $1.6 billion of annual revenue,” added Buck.
Acquisitions
In 2022, the Company acquired five residential insulation installation companies which are expected to generate over $17 million in annual revenue. They are listed in the chart below.TTM Revenue at Month Company Acquired Acquisition ($ millions) Acquired Southwest Insulation $1.7 January Billings Insulation $6.5 February Green Energy Solutions $2.0 March Assured Insulating $5.5 April CV Insulation $1.6 July Total $17.3 On January 26, 2023, the Company acquired SRI Holdings, a residential insulation installation company founded in 2012, which generated annual revenue of approximately $62 million for the twelve months ended November 30, 2022.
Share Repurchases
In 2022, the Company repurchased a total of 1,390,667 shares of its common stock for approximately $250.0 million.2023 Outlook
Sales and Adjusted EBITDA Guidance (1)
($ in millions)2023 Low High Sales $ 4,700 $ 4,900 Adjusted EBITDA* $ 820 $ 910 *See table for adjusted EBITDA reconciliation.
Assumptions(1)
($ in millions) Range 2023 Low High Estimated net income $ 445.0 $ 523.0 Interest Expense and other, net 72.0 66.0 Income tax expense 157.0 184.0 Depreciation and Amortization 128.0 123.0 Share based compensation 16.0 13.0 Acquisition related costs 2.0 1.0 Estimated EBITDA, as adjusted $ 820.0 $ 910.0 (1) This guidance and long-term targets reflect management’s current view of present and future market conditions and are based on assumptions such as housing starts, general and administrative expenses, weighted average diluted shares outstanding and interest rates. These targets do not include any effects related to potential acquisitions or divestitures that may occur after the date of this press release. A reconciliation of non-GAAP targets to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, the costs and expenses that may be incurred in the future and therefore, cannot be reasonably predicted. The effect of these excluded items may be significant. Factors that could cause actual long-term results to differ materially from TopBuild’s current expectations are discussed below and are also detailed in the Company’s most recent Annual Report on Form 10-K and subsequent SEC reports.
Conference Call
A conference call to discuss fourth quarter 2022 financial results is scheduled for today, Thursday, February 23, at 9:00 a.m. Eastern Time. The call may be accessed by dialing (877) 407-9037. The conference call will be webcast simultaneously on the Company’s website at www.topbuild.com. In addition, a copy of management’s formal remarks and a presentation that summarizes management’s formal remarks will be available immediately prior to the conference call on www.topbuild.com.About TopBuild
TopBuild Corp., headquartered in Daytona Beach, Florida, is a leading installer and specialty distributor of insulation and related building material products to the construction industry in the United States and Canada. We provide insulation installation services nationwide through our Installation segment, which has approximately 230 branches located across the United States. We distribute building and mechanical insulation, insulation accessories and other building product materials for the residential, commercial, and industrial end markets through our Specialty Distribution business. Our Specialty Distribution network encompasses approximately 180 branches. To learn more about TopBuild please visit our website at www.topbuild.com.Use of Non-GAAP Financial Measures
Adjusted EBITDA, incremental EBITDA margin, adjusted EBITDA margin, the “adjusted” financial measures presented above, and figures presented on a “same branch basis” are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company believes that these non-GAAP financial measures, which are used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. We define same branch sales as sales from branches in operation for at least 12 full calendar months. Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in tables contained in this press release. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results under GAAP. Additional information may be found in the Company’s filings with the Securities and Exchange Commission which are available on TopBuild’s website under “SEC Filings” at www.topbuild.com.Safe Harbor Statement
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements may address, among other things, our expected financial and operational results, the related assumptions underlying our expected results, and our plan to repurchase our common stock under stock repurchase transactions. These forward-looking statements can be identified by words such as “will,” “would,” “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. Our forward-looking statements contained herein speak only as of the date of this press release. Factors or events that we cannot predict, including those described in the risk factors contained in our filings with the Securities and Exchange Commission, may cause our actual results to differ from those expressed in forward-looking statements. Although TopBuild believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be achieved and it undertakes no obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law.Investor Relations and Media Contact
Tabitha Zane
tabitha.zane@topbuild.com
386-763-8801(tables follow)
TopBuild Corp. Consolidated Statements of Operations (in thousands, except share and per common share amounts) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net sales $ 1,264,543 $ 1,063,398 $ 5,008,744 $ 3,486,207 Cost of sales 888,871 780,237 3,522,025 2,511,818 Gross profit 375,672 283,161 1,486,719 974,389 Selling, general, and administrative expense 172,558 164,718 689,555 497,970 Operating profit 203,114 118,443 797,164 476,419 Other income (expense), net: Interest expense (16,779 ) (10,933 ) (56,716 ) (29,143 ) Loss on extinguishment of debt — 25 — (13,837 ) Other, net 1,585 (207 ) 1,687 4 Other expense, net (15,194 ) (11,115 ) (55,029 ) (42,976 ) Income before income taxes 187,920 107,328 742,135 433,443 Income tax expense (44,086 ) (28,968 ) (186,146 ) (109,427 ) Net income $ 143,834 $ 78,360 $ 555,989 $ 324,016 Net income per common share: Basic $ 4.54 $ 2.39 $ 17.26 $ 9.88 Diluted $ 4.52 $ 2.37 $ 17.14 $ 9.78 Weighted average shares outstanding: Basic 31,648,741 32,753,719 32,213,839 32,801,906 Diluted 31,838,352 33,117,227 32,440,405 33,146,171 TopBuild Corp. Consolidated Statements of Comprehensive Income (in thousands) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net income $ 143,834 $ 78,360 $ 555,989 $ 324,016 Other comprehensive loss: Foreign currency translation adjustment (6,762 ) (6,634 ) (15,286 ) (6,634 ) Comprehensive income $ 137,072 $ 71,726 $ 540,703 $ 317,382 TopBuild Corp. Consolidated Balance Sheets and Other Financial Data (dollars in thousands) As of December 31, ASSETS 2022 2021 Current assets: Cash and cash equivalents $ 240,069 $ 139,779 Receivables, net of an allowance for credit losses of $16,281 at December 31, 2022, and $8,798 at December 31, 2021 836,071 668,419 Inventories, net 438,644 352,801 Prepaid expenses and other current assets 34,257 26,692 Total current assets 1,549,041 1,187,691 Right of use assets 205,892 177,177 Property and equipment, net 253,484 244,574 Goodwill 1,966,994 1,949,763 Other intangible assets, net 614,967 684,209 Other assets 16,453 15,116 Total assets $ 4,606,831 $ 4,258,530 LIABILITIES Current liabilities: Accounts payable $ 487,114 $ 461,917 Current portion of long-term debt 40,068 38,640 Accrued liabilities 199,370 175,891 Short-term operating lease liabilities 60,880 54,591 Short-term finance lease liabilities 2,207 2,387 Total current liabilities 789,639 733,426 Long-term debt 1,417,257 1,454,483 Deferred tax liabilities, net 251,481 248,243 Long-term portion of insurance reserves 59,783 51,875 Long-term operating lease liabilities 149,943 125,339 Long-term finance lease liabilities 6,673 7,770 Other liabilities 2,349 960 Total liabilities 2,677,125 2,622,096 EQUITY 1,929,706 1,636,434 Total liabilities and equity $ 4,606,831 $ 4,258,530 As of December 31, 2022 2021 Other Financial Data Receivable days 54 48 Inventory days 45 43 Accounts payable days 66 65 Receivables, net plus inventories, net less accounts payable $ 787,601 $ 559,303 Receivables, net plus inventories, net less accounts payable as a percent of sales (TTM) † 15.7 % 13.3 % † Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches TopBuild Corp. Consolidated Statement of Cash Flows (in thousands) Year Ended December 31, 2022 2021 Cash Flows Provided by (Used in) Operating Activities: Net income $ 555,989 $ 324,016 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 123,335 79,390 Share-based compensation 12,310 11,316 Loss on extinguishment of debt — 13,837 Loss on sale of property and equipment 1,833 1,356 Amortization of debt issuance costs 2,867 2,036 Provision for bad debt expense 5,510 7,304 Loss from inventory obsolescence 6,659 2,637 Deferred income taxes, net 6,041 (2,818 ) Change in certain assets and liabilities Receivables, net (169,327 ) (69,042 ) Inventories, net (93,874 ) (46,518 ) Prepaid expenses and other current assets (9,222 ) 558 Accounts payable 26,581 54,961 Accrued liabilities 20,703 24,816 Other, net 6,396 (824 ) Net cash provided by operating activities 495,801 403,025 Cash Flows Provided by (Used in) Investing Activities: Purchases of property and equipment (76,382 ) (55,546 ) Acquisition of businesses, net of cash acquired (20,500 ) (1,267,114 ) Proceeds from sale of property and equipment 2,975 415 Net cash used in investing activities (93,907 ) (1,322,245 ) Cash Flows Provided by (Used in) Financing Activities: Proceeds from issuance of long-term debt — 1,218,750 Repayment of long-term debt (38,658 ) (433,070 ) Payment of debt issuance costs — (14,965 ) Proceeds from revolving credit facility 70,000 — Repayment of revolving credit facility (70,000 ) — Taxes withheld and paid on employees' equity awards (11,719 ) (8,805 ) Exercise of stock options 2,028 3,303 Repurchase of shares of common stock (250,050 ) (35,556 ) Payment of contingent consideration (1,674 ) (650 ) Net cash (used in) provided by financing activities (300,073 ) 729,007 Impact of exchange rate changes on cash (1,531 ) (15 ) Net increase (decrease) in cash and cash equivalents 100,290 (190,228 ) Cash and cash equivalents- Beginning of period 139,779 330,007 Cash and cash equivalents- End of period $ 240,069 $ 139,779 Supplemental disclosure of cash paid for: Interest $ 49,888 $ 22,144 Income taxes 186,722 109,179 Supplemental disclosure of noncash activities: Leased assets obtained in exchange for new operating lease liabilities $ 103,997 $ 131,909 Leased assets obtained in exchange for new finance lease liabilities — 10,469 Accruals for property and equipment 141 1,060 TopBuild Corp. Segment Data (Unaudited) (dollars in thousands) Three Months Ended December 31, Year Ended December 31, 2022 2021 Change 2022 2021 Change Installation Sales $ 761,261 $ 627,123 21.4 % $ 2,969,978 $ 2,378,401 24.9 % Operating profit, as reported $ 141,961 $ 105,975 $ 548,795 $ 383,722 Operating margin, as reported 18.6 % 16.9 % 18.5 % 16.1 % Rationalization charges 161 — (174 ) — Acquisition related costs 23 362 135 1,642 COVID-19 pay — — — 605 Operating profit, as adjusted $ 142,145 $ 106,337 $ 548,756 $ 385,969 Operating margin, as adjusted 18.7 % 17.0 % 18.5 % 16.2 % Share-based compensation 339 270 1,296 1,157 Depreciation and amortization 15,869 15,227 62,483 57,815 EBITDA, as adjusted $ 158,353 $ 121,834 30.0 % $ 612,535 $ 444,941 37.7 % EBITDA margin, as adjusted 20.8 % 19.4 % 20.6 % 18.7 % Specialty Distribution Sales $ 563,065 $ 485,813 15.9 % $ 2,278,261 $ 1,287,176 77.0 % Operating profit, as reported $ 80,692 $ 43,964 $ 326,226 $ 169,368 Operating margin, as reported 14.3 % 9.0 % 14.3 % 13.2 % Acquisition related costs 266 530 1,502 530 Acquisition purchase accounting (inventory step-up) — 15,853 — 15,853 COVID-19 pay — — — 54 Operating profit, as adjusted $ 80,958 $ 60,347 $ 327,728 $ 185,805 Operating margin, as adjusted 14.4 % 12.4 % 14.4 % 14.4 % Share-based compensation 104 304 1,041 1,032 Depreciation and amortization 13,184 12,405 56,881 18,743 EBITDA, as adjusted $ 94,246 $ 73,056 29.0 % $ 385,650 $ 205,580 87.6 % EBITDA margin, as adjusted 16.7 % 15.0 % 16.9 % 16.0 % TopBuild Corp. Adjusted EBITDA (Unaudited) (dollars in thousands) Three Months Ended December 31, Year Ended December 31, 2022 2021 Change 2022 2021 Change Total net sales Sales before eliminations $ 1,324,326 $ 1,112,936 $ 5,248,239 $ 3,665,577 Intercompany eliminations (59,783 ) (49,538 ) (239,495 ) (179,370 ) Net sales after eliminations $ 1,264,543 $ 1,063,398 18.9 % $ 5,008,744 $ 3,486,207 43.7 % Operating profit, as reported - segments $ 222,653 $ 149,939 $ 875,021 $ 553,090 General corporate expense, net (9,650 ) (22,893 ) (38,018 ) (47,018 ) Intercompany eliminations (9,889 ) (8,603 ) (39,839 ) (29,653 ) Operating profit, as reported $ 203,114 $ 118,443 $ 797,164 $ 476,419 Operating margin, as reported 16.1 % 11.1 % 15.9 % 13.7 % Rationalization charges 162 — (172 ) 16 Acquisition related costs† 1,216 16,262 7,974 22,107 Acquisition purchase accounting (inventory step-up) — 15,853 — 15,853 Refinancing costs — 188 — 188 COVID-19 pay — — — 659 Operating profit, as adjusted $ 204,492 $ 150,746 $ 804,966 $ 515,242 Operating margin, as adjusted 16.2 % 14.2 % 16.1 % 14.8 % Share-based compensation 2,637 2,941 12,310 11,316 Depreciation and amortization 30,284 28,385 123,335 79,390 EBITDA, as adjusted $ 237,413 $ 182,072 30.4 % $ 940,611 $ 605,948 55.2 % EBITDA margin, as adjusted 18.8 % 17.1 % 18.8 % 17.4 % Sales change period over period 201,145 1,522,537 EBITDA, as adjusted, change period over period 55,341 334,663 Incremental EBITDA, as adjusted, as a percentage of change in sales 27.5 % 22.0 % † Acquisition related costs include corporate level adjustments as well as segment operating adjustments. TopBuild Corp. Non-GAAP Reconciliations (Unaudited) (in thousands, except share and per common share amounts) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Gross Profit Reconciliation Net sales $ 1,264,543 $ 1,063,398 $ 5,008,744 $ 3,486,207 Gross profit, as reported $ 375,672 $ 283,161 $ 1,486,719 $ 974,389 Acquisition purchase accounting (inventory step-up) — 15,853 — 15,853 Rationalization charges 15 — 135 — COVID-19 pay — — — 592 Gross profit, as adjusted $ 375,687 $ 299,014 $ 1,486,854 $ 990,834 Gross margin, as reported 29.7 % 26.6 % 29.7 % 27.9 % Gross margin, as adjusted 29.7 % 28.1 % 29.7 % 28.4 % Sellling, General and Administrative Expense Reconciliation Selling, general, and administrative expense, as reported $ 172,558 $ 164,718 $ 689,555 $ 497,970 Rationalization charges 162 — (172 ) 16 Acquisition related costs 1,201 16,262 7,839 22,107 Refinancing costs — 188 — 188 COVID-19 pay — — — 67 Selling, general, and administrative expense, as adjusted $ 171,195 $ 148,268 $ 681,888 $ 475,592 Operating Profit Reconciliation Operating profit, as reported $ 203,114 $ 118,443 $ 797,164 $ 476,419 Rationalization charges 162 — (172 ) 16 Acquisition related costs 1,216 16,262 7,974 22,107 Acquisition purchase accounting (inventory step-up) — 15,853 — 15,853 Refinancing costs — 188 — 188 COVID-19 pay — — — 659 Operating profit, as adjusted $ 204,492 $ 150,746 $ 804,966 $ 515,242 Operating margin, as reported 16.1 % 11.1 % 15.9 % 13.7 % Operating margin, as adjusted 16.2 % 14.2 % 16.1 % 14.8 % Income Per Common Share Reconciliation Income before income taxes, as reported $ 187,920 $ 107,328 $ 742,135 $ 433,443 Rationalization charges 162 — (172 ) 16 Acquisition related costs 1,216 16,262 7,974 22,107 Acquisition purchase accounting (inventory step-up) — 15,853 — 15,853 Refinancing costs and loss on extinguishment of debt — 163 — 14,025 COVID-19 pay — — — 659 Income before income taxes, as adjusted 189,298 139,606 749,937 486,103 Tax rate at 26.0% (49,217 ) (36,298 ) (194,984 ) (126,387 ) Income, as adjusted $ 140,081 $ 103,308 $ 554,953 $ 359,716 Income per common share, as adjusted $ 4.40 $ 3.12 $ 17.11 $ 10.85 Weighted average diluted common shares outstanding 31,838,352 33,117,227 32,440,405 33,146,171 TopBuild Corp. Same Branch and Acquisition Metrics (Unaudited) (dollars in thousands) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net sales Same branch: Installation $ 756,312 $ 627,123 $ 2,889,145 $ 2,378,401 Specialty Distribution 517,010 485,813 1,483,155 1,287,176 Eliminations (59,139 ) (49,538 ) (231,788 ) (179,370 ) Total same branch 1,214,183 1,063,398 4,140,512 3,486,207 Acquisitions (a): Installation $ 4,949 $ — $ 80,833 $ — Specialty Distribution 46,055 — 795,106 — Eliminations (644 ) — (7,707 ) — Total acquisitions 50,360 — 868,232 — Total $ 1,264,543 $ 1,063,398 $ 5,008,744 $ 3,486,207 Gross profit, as adjusted Same branch $ 361,974 $ 299,014 $ 1,261,934 $ 990,834 Acquisitions (a) 13,713 — 224,920 — Total $ 375,687 $ 299,014 $ 1,486,854 $ 990,834 Gross margin, as adjusted Same branch (b) 29.8 % 28.1 % 30.5 % 28.4 % Acquisitions (c) 27.2 % 25.9 % Operating profit, as adjusted Same branch $ 197,680 $ 150,746 $ 714,058 $ 515,242 Acquisitions (a) 6,812 — 90,908 — Total $ 204,492 $ 150,746 $ 804,966 $ 515,242 Operating margin, as adjusted Same branch (b) 16.3 % 14.2 % 17.2 % 14.8 % Acquisitions (c) 13.5 % 10.5 % EBITDA, as adjusted Same branch $ 228,459 $ 182,072 $ 807,309 $ 605,948 Acquisitions (a) 8,954 — 133,302 — Total $ 237,413 $ 182,072 $ 940,611 $ 605,948 EBITDA, as adjusted, as a percentage of sales Same branch (b) 18.8 % 19.5 % Acquisitions (c) 17.8 % 15.4 % Total (d) 18.8 % 17.1 % 18.8 % 17.4 % As Adjusted Incremental EBITDA, as a percentage of change in sales Same branch (e) 30.8 % 30.8 % Acquisitions (c) 17.8 % 15.4 % Total (f) 27.5 % 22.0 % (a) Represents current year impact of acquisitions in their first twelve months (b) Same branch metric, as adjusted, as a percentage of same branch sales (c) Acquired metric, as adjusted, as a percentage of acquired sales (d) Total EBITDA, as adjusted, as a percentage of total sales (e) Change in same branch EBITDA, as adjusted, as a percentage of change in same branch sales (f) Change in total EBITDA, as adjusted, as a percentage of change in total sales TopBuild Corp. Reconciliation of Adjusted EBITDA to Net Income (Unaudited) (in thousands) Three Months Ended December 31, Year Ended December 31, 2022 2021 2022 2021 Net income, as reported $ 143,834 $ 78,360 $ 555,989 $ 324,016 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 15,194 11,140 55,029 29,139 Income tax expense 44,086 28,968 186,146 109,427 Depreciation and amortization 30,284 28,385 123,335 79,390 Share-based compensation 2,637 2,941 12,310 11,316 Rationalization charges 162 — (172 ) 16 Acquisition related costs 1,216 16,262 7,974 22,107 Acquisition purchase accounting (inventory step-up) — 15,853 — 15,853 Refinancing costs and loss on extinguishment of debt — 163 — 14,025 COVID-19 pay — — — 659 EBITDA, as adjusted $ 237,413 $ 182,072 $ 940,611 $ 605,948 Proforma acquisition EBITDA(a) 548 Proforma TTM EBITDA, as adjusted $ 941,159 (a) Represents the trailing twelve months proforma impact of acquisitions completed in 2022. TopBuild Corp. Acquisition Adjusted Net Sales (Unaudited) (in thousands) 2022 Year Ended Q1 Q2 Q3 Q4 December 31, 2022 Net Sales $ 1,168,918 $ 1,274,285 $ 1,300,998 $ 1,264,543 $ 5,008,744 Acquisitions proforma adjustment † 2,934 438 - - 3,372 Net sales, acquisition adjusted $ 1,171,852 $ 1,274,723 $ 1,300,998 $ 1,264,543 $ 5,012,116 † Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches TopBuild Corp. 2023 Estimated Adjusted EBITDA Range (Unaudited) (in millions) Twelve Months Ending December 31, 2023 Low High Estimated net income $ 445.0 $ 523.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 72.0 66.0 Income tax expense 157.0 184.0 Depreciation and amortization 128.0 123.0 Share-based compensation 16.0 13.0 Acquisition related costs 2.0 1.0 Estimated EBITDA, as adjusted $ 820.0 $ 910.0 
