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UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period March 31, 2024

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to               

Commission file number: 001-36870

TopBuild Corp.

(Exact name of Registrant as Specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation or
Organization)

47-3096382

(I.R.S. Employer
Identification No.)

475 North Williamson Boulevard

Daytona Beach, Florida

(Address of Principal Executive Offices)

32114

(Zip Code)

(386) 304-2200

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

BLD

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes             No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes             No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  

Large accelerated filer      Accelerated filer      Non-accelerated filer   Smaller reporting company     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes             No

The registrant had outstanding 31,817,709 shares of Common Stock, par value $0.01 per share as of April 30, 2024.

TOPBUILD CORP.

TABLE OF CONTENTS

Page No.

Part I.

Financial Information

Item 1.

Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets

4

Condensed Consolidated Statements of Operations

5

Condensed Consolidated Statements of Comprehensive Income

6

Condensed Consolidated Statements of Cash Flows

7

Condensed Consolidated Statements of Changes in Equity

8

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

26

Item 4.

Controls and Procedures

27

Part II.

Other Information

Item 1.

Legal Proceedings

27

Item 1A.

Risk Factors

27

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

27

Item 3.

Defaults upon Senior Securities

27

Item 4.

Mine Safety Disclosures

27

Item 5.

Other Information

27

Item 6.

Exhibits

27

Index to Exhibits

28

Signature

29

2

GLOSSARY

We use acronyms, abbreviations, and other defined terms throughout this quarterly report on Form 10-Q, which are defined in the glossary below:

Term

Definition

3.625% Senior Notes

TopBuild's 3.625% senior unsecured notes issued March 15, 2021 and due March 15, 2029

4.125% Senior Notes

TopBuild's 4.125% senior unsecured notes issued October 14, 2021 and due February 15, 2032

2015 LTIP

2015 Long-Term Incentive Program authorizes the Board to grant stock options, stock appreciation rights, restricted shares, restricted share units, performance awards, and dividend equivalents

2022 Repurchase Program

$200 million share repurchase program authorized by the Board on July 25, 2022

Amendment No. 4

Amendment No. 4 to the Credit Agreement dated July 26, 2023

Annual Report

Annual report filed with the SEC on Form 10-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

ASC

Accounting Standards Codification

ASU

Accounting Standards Update

Board

Board of Directors of TopBuild

BofA

Bank of America, N.A.

Brabble

Brabble Insulation, Inc.

Credit Agreement

Amended and Restated Credit Agreement, dated March 20, 2020, among TopBuild, BofA as administrative agent, and the other lenders and agents party thereto

Current Report

Current report filed with the SEC on Form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

EBITDA

Earnings before interest, taxes, depreciation, and amortization

Exchange Act

The Securities Exchange Act of 1934, as amended

FASB

Financial Accounting Standards Board

GAAP

Generally accepted accounting principles in the United States of America

Lenders

Bank of America, N.A., together with the other lenders party to "Credit Agreement"

Morris Black

Morris Black & Sons, Inc.

Net Leverage Ratio

As defined in the “Credit Agreement,” the ratio of outstanding indebtedness, less up to $100 million of unrestricted cash, to EBITDA

NYSE

New York Stock Exchange

PCI

Pest Control Insulation, LLC

Quarterly Report

Quarterly report filed with the SEC on Form 10-Q pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

ROU

Right of use (asset), as defined in ASC 842

RSA

Restricted stock award

SEC

United States Securities and Exchange Commission

Secured Leverage Ratio

As defined in the “Credit Agreement,” the ratio of outstanding indebtedness, including letters of credit, to EBITDA

SOFR

Secured overnight financing rate

SPI

SPI LLC d/b/a Specialty Products & Insulation

SRI

SRI Holdings, LLC

Term Loan

TopBuild's secured borrowings under the "Credit Agreement" due October 7, 2026

Term Facility Two

$550 million delayed draw term loan to be used to fund the future acquisition of SPI

TopBuild

TopBuild Corp. and its wholly-owned consolidated domestic subsidiaries

3

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

TOPBUILD CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands except share data)

As of

March 31, 

December 31, 

2024

2023

ASSETS

Current assets:

Cash and cash equivalents

$

968,809

$

848,565

Receivables, net of an allowance for credit losses of $22,398 at March 31, 2024, and $23,948 at December 31, 2023

829,221

 

799,009

Inventories

375,056

 

364,731

Prepaid expenses and other current assets

29,376

 

36,939

Total current assets

2,202,462

 

2,049,244

Right of use assets

201,392

204,629

Property and equipment, net

266,422

 

264,487

Goodwill

2,052,319

 

2,042,568

Other intangible assets, net

578,335

 

591,058

Other assets

9,522

 

10,865

Total assets

$

5,310,452

$

5,162,851

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

467,863

$

469,585

Current portion of long-term debt

46,230

47,039

Accrued liabilities

201,402

187,217

Short-term operating lease liabilities

67,041

65,780

Short-term finance lease liabilities

1,829

1,917

Total current liabilities

784,365

771,538

Long-term debt

1,362,498

1,373,028

Deferred tax liabilities, net

243,622

243,930

Long-term portion of insurance reserves

60,179

58,783

Long-term operating lease liabilities

142,552

146,213

Long-term finance lease liabilities

3,716

4,150

Other liabilities

1,487

1,554

Total liabilities

2,598,419

2,599,196

Commitments and contingencies

Equity:

Preferred stock, $0.01 par value: 10,000,000 shares authorized; 0 shares issued and outstanding

-

-

Common stock, $0.01 par value: 250,000,000 shares authorized; 39,549,030 shares issued and 31,818,099 outstanding at March 31, 2024, and 39,492,037 shares issued and 31,776,039 outstanding at December 31, 2023

395

394

Treasury stock, 7,730,931 shares at March 31, 2024, and 7,715,998 shares at December 31, 2023, at cost

(705,386)

(699,327)

Additional paid-in capital

912,481

906,334

Retained earnings

2,523,300

2,370,919

Accumulated other comprehensive loss

(18,757)

(14,665)

Total equity

2,712,033

2,563,655

Total liabilities and equity

$

5,310,452

$

5,162,851

See notes to our unaudited condensed consolidated financial statements.

4

TOPBUILD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands except share and per common share data)

Three Months Ended March 31, 

2024

2023

Net sales

$

1,278,717

    

$

1,265,238

Cost of sales

891,567

895,023

Gross profit

387,150

370,215

Selling, general, and administrative expense

172,642

170,784

Operating profit

214,508

199,431

Other income (expense), net:

Interest expense

(18,795)

(18,039)

Other, net

11,282

1,923

Other expense, net

(7,513)

(16,116)

Income before income taxes

206,995

183,315

Income tax expense

(54,614)

(47,445)

Net income

$

152,381

$

135,870

Net income per common share:

Basic

$

4.82

$

4.31

Diluted

$

4.79

$

4.28

Weighted average shares outstanding:

Basic

31,641,454

31,550,658

Diluted

31,843,818

31,713,239

See notes to our unaudited condensed consolidated financial statements.

5

TOPBUILD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)

(In thousands)

Three Months Ended March 31, 

2024

2023

Net income

$

152,381

$

135,870

Other comprehensive (loss) income:

Foreign currency translation adjustment

(4,092)

1,753

Comprehensive income

$

148,289

$

137,623

See notes to our unaudited condensed consolidated financial statements.

6

TOPBUILD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

Three Months Ended March 31, 

2024

2023

Cash Flows Provided by (Used in) Operating Activities:

    

    

Net income

$

152,381

$

135,870

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

34,257

32,100

Share-based compensation

5,127

3,135

(Gain)/loss on sale of assets

(561)

185

Amortization of debt issuance costs

720

720

Provision for bad debt expense

4,464

1,338

Provision for inventory obsolescence

2,902

1,642

Deferred income taxes, net

(240)

563

Change in certain assets and liabilities:

Receivables, net

(28,486)

(10,847)

Inventories

(12,056)

20,096

Prepaid expenses and other current assets

7,541

11,579

Accounts payable

(2,659)

(25,480)

Accrued liabilities

16,170

(3,339)

Other, net

(783)

2,239

Net cash provided by operating activities

178,777

169,801

Cash Flows Provided by (Used in) Investing Activities:

Purchases of property and equipment

(19,881)

(15,580)

Acquisition of businesses, net of cash acquired

(22,240)

(45,845)

Proceeds from sale of assets

1,608

455

Net cash used in investing activities

(40,513)

(60,970)

Cash Flows Provided by (Used in) Financing Activities:

Repayment of long-term debt

(12,059)

(9,743)

Taxes withheld and paid on employees' equity awards

(6,059)

(6,350)

Exercise of stock options

1,020

1,029

Net cash used in financing activities

(17,098)

(15,064)

Impact of exchange rate changes on cash

(922)

(58)

Net increase in cash and cash equivalents

120,244

93,709

Cash and cash equivalents - Beginning of period

 

848,565

 

240,069

Cash and cash equivalents - End of period

$

968,809

$

333,778

Supplemental disclosure of noncash activities:

Leased assets obtained in exchange for new operating lease liabilities

$

13,737

$

18,271

Accruals for property and equipment

307

835

See notes to our unaudited condensed consolidated financial statements.

7

TOPBUILD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(In thousands except share data)

Accumulated

Common

Treasury

Additional

Other

Stock

Stock

Paid-in

Retained

Comprehensive

($0.01 par value)

at cost

Capital

Earnings

(Loss) Income

Equity

Balance at December 31, 2022

$

393

$

(692,799)

$

887,367

$

1,756,665

$

(21,920)

$

1,929,706

Net income

-

-

-

135,870

-

135,870

Share-based compensation

-

-

3,135

-

-

3,135

Issuance of 95,012 restricted share awards under long-term equity incentive plan

2

-

-

-

-

2

32,594 shares withheld to pay taxes on employees' equity awards

-

(6,350)

-

-

-

(6,350)

28,840 shares issued upon exercise of stock options

-

-

1,028

-

-

1,028

Other comprehensive income, net of tax

-

-

-

-

1,753

1,753

Balance at March 31, 2023

$

395

$

(699,149)

$

891,530

$

1,892,535

$

(20,167)

$

2,065,144

Accumulated

Common

Treasury

Additional

Other

Stock

Stock

Paid-in

Retained

Comprehensive

($0.01 par value)

at cost

Capital

Earnings

Loss

Equity

Balance at December 31, 2023

$

394

$

(699,327)

$

906,334

$

2,370,919

$

(14,665)

$

2,563,655

Net income

-

-

-

152,381

-

152,381

Share-based compensation

-

-

5,127

-

-

5,127

Issuance of 51,236 restricted share awards under long-term equity incentive plan, net of forfeitures

1

-

-

-

-

1

14,933 shares withheld to pay taxes on employees' equity awards

-

(6,059)

-

-

-

(6,059)

5,757 shares issued upon exercise of stock options

-

-

1,020

-

-

1,020

Other comprehensive loss, net of tax

-

-

-

-

(4,092)

(4,092)

Balance at March 31, 2024

$

395

$

(705,386)

$

912,481

$

2,523,300

$

(18,757)

$

2,712,033

See notes to our unaudited condensed consolidated financial statements.

8

Table of Contents

TOPBUILD CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  BASIS OF PRESENTATION

TopBuild is listed on the NYSE under the ticker symbol “BLD.” We report our business in two segments: Installation and Specialty Distribution.  Our Installation segment primarily installs insulation and other building products. Our Specialty Distribution segment primarily sells and distributes insulation and other building products. Our segments are based on our operating units, for which financial information is regularly evaluated by our chief operating decision maker.

We believe the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to state fairly our financial position as of March 31, 2024, our results of operations and comprehensive income for the three months ended March 31, 2024 and 2023, and our cash flows for the three months ended March 31, 2024 and 2023. The condensed consolidated balance sheet at December 31, 2023 was derived from our audited financial statements, but does not include all disclosures required by GAAP.

These condensed consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual report for the year ended December 31, 2023, as filed with the SEC on February 28, 2024.

2.  ACCOUNTING POLICIES

Financial Statement Presentation.  Our condensed consolidated financial statements have been developed in conformity with GAAP, which requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from these estimates. All intercompany transactions between TopBuild entities have been eliminated.

Recently Adopted Accounting Pronouncements

In October 2021, the FASB issued ASU 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers”. This standard improved the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency related to recognition of an acquired contract liability, as well as payment terms and their effect on subsequent revenue recognized by the acquirer. This standard became effective for us on January 1, 2023, and did not have a material impact to our financial statements upon adoption.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures”.  This standard amends Topic 280 to require all entities to disclose, on an annual and interim basis, significant segment expenses and an amount for other segment items by reportable segment.  This standard is effective for fiscal years beginning after December 15, 2023, with early adoption permitted.  We do not anticipate that this standard will affect our consolidated results of operations, financial position or cash flows and we are assessing the impact of adoption in our disclosures to the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740), Improvements to Income Tax Disclosures”.  This standard amends Topic 740 to require all entities to disclose specific categories in the rate reconciliation, income taxes paid and other income tax information.  This standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted and should be applied on a prospective basis.  We do not anticipate that this standard will affect our consolidated results of operations, financial position or cash flows and we are assessing the impact of its adoption in our disclosures to our consolidated financial statements.

9

Table of Contents

TOPBUILD CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

3.  REVENUE RECOGNITION

Revenue is disaggregated between our Installation and Specialty Distribution segments and further based on market and product, as we believe this best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.  

The following tables present our revenues disaggregated by market (in thousands):

Three Months Ended March 31, 

2024

2023

Installation

Specialty
Distribution

Eliminations

Total

Installation

Specialty
Distribution

Eliminations

Total

Residential

$

674,436

$

216,397

$

(55,990)

$

834,843

$

645,703

$

224,326

$

(51,390)

$

818,639

Commercial/Industrial

124,307

329,397

(9,830)

443,874

121,387

334,049

(8,837)

446,599

Net sales

$

798,743

$

545,794

$

(65,820)

$

1,278,717

$

767,090

$

558,375

$

(60,227)

$

1,265,238

The following tables present our revenues disaggregated by product (in thousands):

Three Months Ended March 31, 

2024

2023

Installation

Specialty
Distribution

Eliminations

Total

Installation

Specialty
Distribution

Eliminations

Total

Insulation and accessories

$

643,650

$

490,669

$

(57,509)

$

1,076,810

$

600,767

$

502,802

$

(51,973)

$

1,051,596

Glass and windows

58,117

-

-

58,117

63,442

-

-

63,442

Gutters

27,967

40,316

(7,309)

60,974

28,278

39,842

(7,165)

60,955

All other

69,009

14,809

(1,002)

82,816

74,603

15,731

(1,089)

89,245

Net sales

$

798,743

$

545,794

$

(65,820)

$

1,278,717

$

767,090

$

558,375

$

(60,227)

$

1,265,238

The following table represents our contract assets and contract liabilities with customers, in thousands:

Included in Line Item on

As of

March 31, 

December 31, 

Condensed Consolidated Balance Sheets

2024

2023

Contract Assets:

Receivables, unbilled

Receivables, net

$

70,591

$

64,882

Contract Liabilities:

Deferred revenue

Accrued liabilities

$

15,716

$

18,365

The aggregate amount remaining on uncompleted performance obligations was $392.4 million as of March 31, 2024. We expect to satisfy the performance obligations and recognize revenue on substantially all of these uncompleted contracts over the next 18 months.

On certain of our long-term contracts, a percentage of the total project cost is withheld and not invoiced to the customer and collected until satisfactory completion of the customer’s project, typically within a year. This amount is referred to as retainage and is common practice in the construction industry. Retainage receivables are classified as a component of Receivables, net on our condensed consolidated balance sheets and were $82.2 million and $81.9 million as of March 31, 2024 and December 31, 2023, respectively.

10

Table of Contents

TOPBUILD CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4.  GOODWILL AND OTHER INTANGIBLES

We have two reporting units which are also our operating and reporting segments: Installation and Specialty Distribution.  Both reporting units contain goodwill.  Assets acquired and liabilities assumed are assigned to the applicable reporting unit based on whether the acquired assets and liabilities relate to the operations of such unit and determination of its fair value.  Goodwill assigned to the reporting unit is the excess of the fair value of the acquired business over the fair value of the individual assets acquired and liabilities assumed for the reporting unit.

In the fourth quarter of 2023, we performed an annual assessment on our goodwill resulting in no impairment and there were no indicators of impairment for the three months ended March 31, 2024.

Changes in the carrying amount of goodwill for the three months ended March 31, 2024, by segment, were as follows, in thousands:

    

    

    

    

   Accumulated   

    

Gross Goodwill

FX Translation

Gross Goodwill

Impairment

Net Goodwill

December 31, 2023

Additions

Adjustment

March 31, 2024

Losses

March 31, 2024

Goodwill, by segment:

Installation

$

1,901,160

$

4,916

$

-

$

1,906,076

$

(762,021)

$

1,144,055

Specialty Distribution

 

903,429

 

6,261

(1,426)

 

908,264

 

-

 

908,264

Total goodwill

$

2,804,589

$

11,177

$

(1,426)

$

2,814,340

$

(762,021)

$

2,052,319

See Note 11 – Business Combinations for goodwill recognized on acquisitions that occurred during the three months ended March 31, 2024.

Other intangible assets, net includes customer relationships, non-compete agreements, and trademarks / trade names. The following table sets forth our other intangible assets, in thousands:

As of

March 31, 2024

December 31, 2023

Gross definite-lived intangible assets

    

$

832,327

$

827,793

Accumulated amortization

    

(253,992)

(236,735)

Other intangible assets, net

$

578,335

$

591,058

The following table sets forth our amortization expense, in thousands:

Three Months Ended March 31, 

    

2024

    

2023

Amortization expense

$

17,686

$

16,896

5. LONG-TERM DEBT

The following table reconciles the principal balances of our outstanding debt to our condensed consolidated balance sheets, in thousands:

As of

March 31, 2024

    

December 31, 2023

3.625% Senior Notes due 2029

$

400,000

$

400,000

4.125% Senior Notes due 2032

500,000

500,000

Term loan due 2026

521,250

532,500

Equipment notes

1,230

2,039

Unamortized debt issuance costs

(13,752)

(14,472)

Total debt, net of unamortized debt issuance costs

1,408,728

1,420,067

Less: current portion of long-term debt

46,230

47,039

Total long-term debt

$

1,362,498

$

1,373,028

11

Table of Contents

TOPBUILD CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table sets forth our remaining principal payments for our outstanding debt balances as of March 31, 2024, in thousands:

2024

2025

2026

2027

2028

Thereafter

Total

3.625% Senior Notes

$

-

$

-

$

-

$

-

$

-

$

400,000

$

400,000

4.125% Senior Notes

-

-

-

-

-

500,000

500,000

Term loan

33,750

48,750

438,750

-

-

-

521,250

Equipment notes

1,230

-

-

-

-

-

1,230

Total

$

34,980

$

48,750

$

438,750

$

-

$

-

$

900,000

$

1,422,480

Credit Agreement

On July 26, 2023, we entered into Amendment No. 4 to our Credit Agreement, which provided for a new $550.0 million Term Facility Two, the proceeds of which were intended to be used, in part, to finance the acquisition of SPI, including the payment of related fees and expenses.  Refer to Note 14 – Subsequent Events for details regarding the termination of our agreement to acquire SPI and Term Facility Two.

The following table outlines the key terms of the Credit Agreement (dollars in thousands):

Senior secured term loan facility

$

600,000

Revolving facility (a)

$

500,000

Sublimit for issuance of letters of credit under revolving facility

$

100,000

Sublimit for swingline loans under revolving facility

$

35,000

Interest rate as of March 31, 2024

6.43

%

Scheduled maturity date

10/7/2026

(a)Use of the sublimits for the issuance of letters of credit and swingline loans reduces the availability under the revolving facility.

Interest expense on borrowings under the Credit Agreement is based on an applicable margin rate plus, at our option, either:  

A base rate determined by reference to the highest of either (i) the federal funds rate plus 0.50 percent, (ii) BofA’s “prime rate,” and (iii) the SOFR rate for U.S. dollar deposits with a term of one month, plus 1.00 percent (Term Facility One); or
A SOFR rate determined by reference to the costs of funds for deposits in U.S. dollars for the interest period relevant to such borrowings, subject to a floor of 0%.

The applicable margin rate is determined based on our Secured Leverage Ratio. In the case of base rate borrowings, the applicable margin rate ranges from 0.00 percent to 1.50 percent for Term Facility One and in the case of SOFR rate borrowings, the applicable margin ranges from 1.00 percent to 2.50 percent for Term Facility One. Borrowings under the Credit Agreement are prepayable at the Company’s option without premium or penalty. The Company is required to make prepayments with the net cash proceeds of certain asset sales and certain extraordinary receipts.

Revolving Facility

The Company has outstanding standby letters of credit that secure our financial obligations related to our workers’ compensation, general insurance, and auto liability programs. These standby letters of credit, as well as any outstanding amount borrowed under our revolving facility, reduce the availability under the revolving facility.  

12

Table of Contents

TOPBUILD CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

The following table summarizes our availability under the revolving facility, in thousands:

As of

March 31, 2024

    

December 31, 2023

Revolving facility

$

500,000

$

500,000

Less: standby letters of credit

(63,770)

(63,770)

Availability under revolving facility

$

436,230

$

436,230

We are required to pay commitment fees to the Lenders in respect of any unutilized commitments. The commitment fees range from 0.15 percent to 0.275 percent per annum, depending on our Secured Leverage Ratio. We must also pay customary fees on outstanding letters of credit.

3.625% Senior Notes

The 3.625% Senior Notes are $400.0 million senior unsecured obligations and bear interest at 3.625% per year, payable semiannually in arrears on March 15 and September 15, beginning on September 15, 2021. The 3.625% Senior Notes mature on March 15, 2029, unless redeemed early or repurchased. If we undergo a change in control, we must make an offer to repurchase all of the 3.625% Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date. The Company may redeem the 3.625% Senior Notes, in whole or in part, at any time on or after March 15, 2024 at the redemption prices specified in the notes.

4.125% Senior Notes

The 4.125% Senior Notes are $500.0 million senior unsecured obligations and bear interest at 4.125% per year, payable semiannually in arrears on February 15 and August 15, beginning on August 15, 2022. The 4.125% Senior Notes mature on February 15, 2032, unless redeemed early or repurchased. If we undergo a change in control, we must make an offer to repurchase all of the 4.125% Senior Notes then outstanding at a repurchase price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest (if any) to, but not including, the repurchase date. 

The Company may redeem the 4.125% Senior Notes, in whole or in part, at any time on or after October 15, 2026 at the redemption prices specified in the notes plus accrued and unpaid interest if redeemed during the 12 month period commencing on October 15 of the years set for: 2026 – 102.063%, 2027 – 101.375%, 2028 – 100.688%, 2029 and thereafter – 100.000%. The Company may also redeem a make-whole redemption of the 4.125% Senior Notes at any time prior to October 15, 2026 at the treasury rate plus 50 basis points. Additionally, the Company may redeem up to 40% of the aggregate principal amount of the 4.125% Senior Notes prior to October 15, 2024 with the net cash proceeds of certain sales of its capital stock at 104.125% of the principal amount of the notes, plus accrued and unpaid interest, if any, to the date of redemption only if, after the redemption, at least