TopBuild Corp Earnings Per Share Disclosure
13. NET INCOME PER SHARE
Basic net income per share is calculated by dividing net income by the weighted average shares outstanding during the period, without consideration for common stock equivalents. Diluted net income per share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury stock method.
Basic and diluted net income per share were computed as follows:
Years Ended December 31, | |||||||||
2025 | 2024 | 2023 | |||||||
Net income (in thousands) | $ | 521,727 | $ | 622,602 | $ | 614,254 | |||
Weighted average number of common shares outstanding - basic | 28,333,633 | 30,504,064 | 31,597,508 | ||||||
Dilutive effect of common stock equivalents: | |||||||||
RSAs with service-based conditions | 23,767 | 36,609 | 30,368 | ||||||
RSAs with market-based conditions | 66,165 | 21,020 | 37,519 | ||||||
RSAs with performance-based conditions | 42,286 | 27,298 | 25,645 | ||||||
Stock options | 75,412 | 90,669 | 85,861 | ||||||
Weighted average number of common shares outstanding - diluted | 28,541,263 | 30,679,660 | 31,776,901 | ||||||
Basic net income per common share | $ | 18.41 | $ | 20.41 | $ | 19.44 | |||
Diluted net income per common share | $ | 18.28 | $ | 20.29 | $ | 19.33 | |||
The following table summarizes shares excluded from the calculation of diluted net income per share because their effect would have been anti-dilutive:
Year Ended December 31, | |||||||||
2025 | 2024 | 2023 | |||||||
Anti-dilutive common stock equivalents: | |||||||||
RSAs with service-based conditions | 1,807 | - | - | ||||||
RSAs with market-based conditions | 24 | 3,271 | 3,876 | ||||||
RSAs with performance-based conditions | - | - | - | ||||||
Stock options | - | - | 504 | ||||||
Total anti-dilutive common stock equivalents | 1,831 | 3,271 | 4,380 | ||||||
About Earnings Per Share Disclosures
The earnings per share disclosure breaks down the calculation from net income to both basic and diluted EPS, revealing the full impact of a company's capital structure on per-share economics. The reconciliation between basic and diluted share counts exposes how many stock options, RSUs, convertible securities, and warrants are potentially dilutive to existing shareholders.
Key signals: a widening gap between basic and diluted shares indicates growing dilution from equity compensation or convertible instruments. Anti-dilutive securities excluded from the diluted calculation deserve attention — they represent latent dilution that will materialize if the stock price rises. Watch for the effect of share buybacks on per-share metrics: EPS growth driven primarily by repurchases rather than income growth signals weakening fundamentals. Compare year-over-year changes in the diluted share count against equity compensation expense to assess whether management is effectively managing dilution.