TopBuild Corp Leases Disclosure
2. LEASES
We lease various assets to support our business including warehouses for our Installation Services branch locations and Specialty Distribution centers, office space for our Branch Support Center in Daytona Beach, Florida and other administrative locations, as well as fleet vehicles and certain equipment. In addition, we lease certain operating facilities from related parties, primarily former owners (and in certain cases, current management personnel) of companies acquired. These related party leases are immaterial to our Consolidated Statements of Operations.
The following table presents lease-related assets and liabilities and their classification on our Consolidated Balance Sheets, in thousands:
| As of December 31, | |||||||||
2025 | 2024 | |||||||||
Assets | Classification | |||||||||
Operating | Right of use assets | $ | 271,396 | $ | 189,146 | |||||
Finance | 17,347 | 3,771 | ||||||||
Total lease assets | $ | 288,743 | $ | 192,917 | ||||||
Liabilities | ||||||||||
Current | ||||||||||
Operating | Short-term operating lease liabilities | $ | 86,170 | $ | 68,713 | |||||
Finance | Short-term finance lease liabilities | 6,571 | 1,487 | |||||||
Non-Current | ||||||||||
Operating | Long-term operating lease liabilities | 200,729 | 129,360 | |||||||
Finance | Long-term finance lease liabilities | 11,020 | 2,618 | |||||||
Total lease liabilities | $ | 304,490 | $ | 202,178 | ||||||
The acquisition of Progressive in 2025 accounts for $20.8 million of both the right of use assets and lease liabilities increases at December 31, 2025 compared to December 31, 2024. The acquisition of SPI in 2025 accounts for $54.9 million of the increase in right of use assets and $55.2 million increase in lease liabilities at December 31, 2025 compared to December 31, 2024, respectively. See Note 15 – Business Combinations for further information on the preliminary purchase price allocations.
As of December 31, | ||||||||||
2025 | 2024 | |||||||||
Weighted-average remaining lease term: | ||||||||||
Operating leases | 3.9 years | 3.4 years | ||||||||
Finance leases | 3.4 years | 3.2 years | ||||||||
Weighted-average discount rate: | ||||||||||
Operating leases | 5.2 | % | 4.9 | % | ||||||
Finance leases | 5.4 | % | 3.5 | % | ||||||
The components of lease expense were as follows and are primarily included in cost of sales and in selling, general and administrative expenses on the accompanying Consolidated Statement of Operations for finance leases and operating leases, in thousands:
Year Ended December 31, | |||||||||
2025 | 2024 | 2023 | |||||||
Operating lease cost (a) | $ | 114,581 | $ | 95,276 | 88,292 | ||||
Financing lease cost: | |||||||||
Amortization of leased assets | 3,597 | 1,765 | 2,188 | ||||||
Interest on finance lease obligations | 422 | 166 | 210 | ||||||
Short-term lease cost | 27,277 | 25,806 | 24,275 | ||||||
Sublease income | (1,203) | (1,219) | (1,022) | ||||||
Net lease cost | $ | 144,674 | $ | 121,794 | $ | 113,943 | |||
| (a) | Includes variable cost components of $21,698, $18,312, and $16,162 in the years ended December 31, 2025, 2024, and 2023, respectively. |
Future minimum lease payments under non-cancellable operating and finance leases as of December 31, 2025, were as follows, in thousands:
Payments due by Period | | Operating | Finance | |||
2026 | $ | 98,855 | $ | 7,327 | ||
2027 | 82,690 | 5,302 | ||||
2028 | 58,217 | 3,215 | ||||
2029 | 37,826 | 1,775 | ||||
2030 | 23,942 | 1,007 | ||||
2031 and Thereafter | 17,048 | 604 | ||||
Total future minimum lease payments | 318,578 | 19,230 | ||||
Less: imputed interest | (31,679) | (1,639) | ||||
Lease liability at December 31, 2025 | $ | 286,899 | $ | 17,591 | ||
The amounts below are included in the accompanying Consolidated Statement of Cash Flows, in thousands:
| Year Ended December 31, | ||||||||
2025 | 2024 | 2023 | |||||||
Cash paid for amounts included in the measurement of lease liabilities: | |||||||||
Operating cash flows from finance leases | $ | (422) | $ | (166) | $ | (210) | |||
Operating cash flows from operating leases | (91,759) | (76,192) | (71,667) | ||||||
Financing cash flows from finance leases | (3,597) | (1,934) | (2,776) | ||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 25, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 23, 2023 | |
| 2021 | Feb 22, 2022 | |
| 2020 | Feb 23, 2021 | |
| 2019 | Feb 25, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.