TopBuild Posts Revenue Growth as Margins Narrow
The building-products distributor’s first-quarter sales rose 17.2% year over year to $1.45 billion.
The building-products distributor TopBuild (BLD) reported first-quarter revenue growth that accelerated from prior quarters, though margin compression and volume declines weighed on profitability. Sales rose 17.2% year over year to $1.45 billion, outpacing the 13.2% growth in the prior quarter and marking the strongest expansion in at least a year. The result, however, was driven largely by acquisitions, which contributed 24.3% of the quarter’s revenue, while organic volume fell 5.5%.
The quarter underscored a divergence between topline momentum and operational pressures. Adjusted earnings fell to $3.75 a share from $4.50 in the prior quarter and $5.36 a year earlier, as gross margin narrowed to 27.7% from 28.0% in the fourth quarter and 30.1% in the third quarter of 2025. Adjusted EBITDA margin followed a similar trajectory, declining to 16.5% from 17.9% in the prior quarter and 19.8% a year earlier.
Performance varied sharply by segment. The Specialty Distribution unit, which includes insulation and other building materials, saw sales surge 31.7% year over year, with acquisitions accounting for nearly all of the growth. Adjusted EBITDA margin in the segment ticked down to 14.5% from 15.4% in the prior quarter but remained above the 13.0% reported a year earlier. Meanwhile, the Installation Services business, which handles insulation installation for residential and commercial projects, posted a 4.3% sales increase, decelerating from 1.2% growth in the prior quarter as volume fell 9.8%. Its adjusted EBITDA margin contracted to 19.2% from 21.0% in the fourth quarter and 22.5% a year earlier.
Same-branch sales declined 7.5% year over year, an improvement from the 9.8% drop in the prior quarter but still reflecting weak demand. Residential same-branch sales fell 10.9%, accelerating from a 14.4% decline in the fourth quarter, while commercial and industrial sales slipped 0.8% after a 1.7% drop in the prior period. Acquisitions contributed $300.1 million in sales, down slightly from $302.0 million in the fourth quarter but up from $174.1 million a year earlier.
The company did not update its full-year guidance, which was introduced in the fourth quarter. TopBuild had projected 2026 sales of $5.925 billion to $6.225 billion and adjusted EBITDA of $1.005 billion to $1.155 billion, with acquisitions expected to contribute $800 million to $850 million in revenue. The outlook compared with 2025 guidance of $5.35 billion to $5.45 billion in sales and $1.01 billion to $1.06 billion in adjusted EBITDA.
TopBuild also disclosed progress on its planned $17 billion acquisition by QXO, announced in April. The deal, which the company said would generate $300 million in synergies by 2030, followed $1.2 billion in acquisitions in 2025 and $83.8 million in early 2026. Share repurchases slowed in the quarter, with the company buying back $17.0 million in stock, down from $65.5 million in the prior quarter.