BLD

TopBuild is the leading installer and distributor of insulation and building products, and over the cycle it has been a strong operator — net income compounded from $324M in FY2021 to a $623M peak in FY2024, with high returns on capital (ROE still 22.5% in FY2025). It remains solidly profitable: gross margin 29.0%, operating margin 14.6%, net margin 9.6%, and $756M of operating cash flow.

But FY2025 marks a clear inflection. Revenue grew just 1.5% to $5.41B while net income fell 16.2% to $522M, operating income dropped 10.7%, and gross profit declined 3.4% — margins are compressing as housing/construction demand softens. At the same time the balance sheet was levered up substantially: long-term debt more than doubled (+109.8%) to $2.78B and total liabilities rose 69.8%, while cash fell 53.9% to $185M. Total assets jumped 39.5%, indicating a sizable debt-funded acquisition. Liabilities/equity rose to 1.85x. This is a riskier profile heading into a cyclical downturn than the prior asset-light, low-debt TopBuild.