DAYTONA BEACH, Fla.,
May 11, 2016 /PRNewswire/
-- TopBuild Corp. (NYSE: BLD), the leading
installer and distributor of insulation products to the U.S.
construction industry, reported financial results for the quarter
ended March 31, 2016.
Jerry Volas, Chief Executive
Officer, stated, "We had an excellent quarter. The mild
winter was a strong contributor to our top line results and our
focus on operating efficiency drove a significant improvement in
our first quarter operating margin to an adjusted 5.0% from an
adjusted 1.9% a year ago. As we look to the remainder of the
year, we expect business to remain strong. As a reminder, the
first quarter is historically the lowest of the year, reflecting
the seasonality of our business. Although we expect that to
remain true this year, the magnitude of this seasonality may be
less significant due to the strong first quarter.
"From a macro perspective, we believe the U.S. housing
recovery will continue for the next several years. Although we
expect that TopBuild will certainly be advantaged by that, we
intend to outperform that recovery with organic growth and
strategically selective acquisitions in both the residential and
commercial space. Additionally, we believe that continued
improvements in operating efficiency will optimize the impact of
this expected growth on operating margins."
First Quarter Financial Highlights
(unless otherwise indicated, comparisons are to quarter ended
March 31, 2015)
The Company noted that it had one operating adjustment in the
first quarter of 2016, totaling $1.0
million, primarily related to the closing of 13 branches and
headcount reductions at its corporate headquarters, both of which
were announced in March 2016.
- Net sales increased 15.5% to $414.0
million.
- Gross margin was 21.6%, up 100 basis points.
- Operating profit was $19.8
million compared to a loss of $1.1
million. Adjusted operating profit was $20.8 million compared to $6.6 million.
- Operating margin was 4.8%. Adjusted operating margin was
5.0%, up 310 basis points.
- Net income was $11.1 million, or
$0.29 per diluted share, compared to
a loss of $3.8 million or
$0.10 per diluted share.
Adjusted net income was $11.9
million, or $0.31 per diluted
share, compared to $2.2 million or
$0.06 per diluted share.
At quarter end, the Company had cash and cash equivalents of
$108 million and availability under
its revolving credit facility of $70
million for total liquidity of $178
million.
Operating Segment Highlights
(all comparisons are to
quarter ended March 31, 2015)
- Installation (TruTeamSM)
- Net sales increased 16.9%.
- Operating margin was 4.9%. On an adjusted basis,
operating margin was 5.3%, a 530 basis point improvement.
- Distribution (Service Partners®)
- Net sales rose 11.3%.
- Operating margin was 8.9%. On an adjusted basis,
operating margin was 9.0%, a 110 basis point
improvement.
Share Repurchase Program
On March 3, 2016, the Company announced that its
Board of Directors had approved a share repurchase program.
Under the program, the Company may purchase up to $50 million in shares of its common stock during
a twelve-month period ending February
28, 2017. In the first quarter, the Company
repurchased 53,408 shares at an average price of $28.81.
Repurchases will be made from time to time at the Company's
discretion, based on ongoing assessments of the capital needs of
the Company, the market price of its common stock and general
market conditions. The program may be suspended or
discontinued at any time.
Additional Information
Quarterly supplemental
materials, including a presentation that will be referenced on
today's conference call, are available on the "Investors" section
of the Company's website at www.topbuild.com.
Conference Call
A conference call to discuss the
Company's first quarter 2016 financial results is scheduled for
today, Wednesday, May 11, 2016, at
9:00 a.m. Eastern Time. Call
participants may access the call by dialing (800) 667-9701.
The conference call will be webcast simultaneously on the
"Investors" section of the Company's website at
www.topbuild.com.
A replay of the call will be available for one week on
TopBuild's website or by phone by dialing
(800) 633-8284. The replay passcode is 21807487.
Use of Non-GAAP Financial Measures
The "adjusted"
financial measures presented above are not calculated in accordance
with generally accepted accounting principles ("GAAP"). The
Company believes that these non-GAAP financial measures, which are
used in managing the business, may provide users of this financial
information with additional meaningful comparisons between current
results and results in prior periods. Such non-GAAP financial
measures are reconciled to their closest GAAP financial measures in
tables contained in this news release. Non-GAAP financial measures
and ratios should be viewed in addition to, and not as an
alternative for, the Company's reported results under GAAP.
Additional information may be found in the Company's filings with
the Securities and Exchange Commission which are available on
TopBuild's website under "Investors" at www.topbuild.com.
About TopBuild
TopBuild Corp., headquartered in
Daytona Beach, Florida, is the
leading installer and distributor of insulation products to the
U.S. construction industry. We provide insulation services
nationwide through TruTeamSM, which has over 175
branches in 40 states. Our Service Partners®
business distributes insulation from over 70 branches in 33
states. We leverage our national footprint to gain economies
of scale while capitalizing on our local market presence to forge
strong relationships with our customers. To learn more about
TopBuild visit our website at www.topbuild.com.
This press release contains "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act.
These forward-looking statements may address, among other things,
our expected financial and operational results and the related
assumptions underlying our expected results. These forward-looking
statements are distinguished by use of words such as "will,"
"would," "anticipate," "expect," "believe," "plan" or "intend," the
negative of these terms, and similar references to future
periods. These views involve risks and uncertainties that are
difficult to predict and, accordingly, our actual results may
differ materially from the results discussed in our forward-looking
statements. Our forward-looking statements contained herein
speak only as of the date of this press release. Factors or
events that we cannot predict, including those described in the
risk factors contained in our filings with the Securities and
Exchange Commission, may cause our actual results to differ from
those expressed in forward-looking statements. Although
TopBuild believes the expectations reflected in such
forward-looking statements are based on reasonable assumptions, it
can give no assurance that its expectations will be achieved and it
undertakes no obligation to update publicly any forward-looking
statements as a result of new information, future events, or
otherwise, except as required by applicable law.
Investor Relations and Media Contact
Tabitha Zane
tabitha.zane@topbuild.com
386-763-8801
(tables follow)
TopBuild
Corp.
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited)
|
|
|
|
|
|
|
(in thousands,
except common share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015
|
Net sales
|
|
$
|
414,024
|
|
$
|
358,460
|
Cost of
sales
|
|
|
324,569
|
|
|
284,644
|
Gross
profit
|
|
|
89,455
|
|
|
73,816
|
|
|
|
|
|
|
|
Selling, general, and
administrative expense
|
|
|
69,688
|
|
|
74,963
|
Operating profit
(loss)
|
|
|
19,767
|
|
|
(1,147)
|
|
|
|
|
|
|
|
Other income
(expense), net:
|
|
|
|
|
|
|
Interest
expense
|
|
|
(1,673)
|
|
|
(3,161)
|
Other,
net
|
|
|
75
|
|
|
8
|
Other expense,
net
|
|
|
(1,598)
|
|
|
(3,153)
|
Income (loss) from
continuing operations before income taxes
|
|
|
18,169
|
|
|
(4,300)
|
|
|
|
|
|
|
|
Income tax (expense)
benefit from continuing operations
|
|
|
(7,053)
|
|
|
500
|
Income (loss) from
continuing operations
|
|
|
11,116
|
|
|
(3,800)
|
|
|
|
|
|
|
|
Income from
discontinued operations, net
|
|
|
—
|
|
|
1
|
Net income
(loss)
|
|
$
|
11,116
|
|
$
|
(3,799)
|
|
|
|
|
|
|
|
Income (loss) per
common share:
|
|
|
|
|
|
|
Basic:
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
$
|
0.29
|
|
$
|
(0.10)
|
Income from
discontinued operations, net
|
|
|
—
|
|
|
—
|
Net income
(loss)
|
|
$
|
0.29
|
|
$
|
(0.10)
|
|
|
|
|
|
|
|
Diluted:
|
|
|
|
|
|
|
Income (loss)
from continuing operations
|
|
$
|
0.29
|
|
$
|
(0.10)
|
Income from
discontinued operations, net
|
|
|
—
|
|
|
—
|
Net income
(loss)
|
|
$
|
0.29
|
|
$
|
(0.10)
|
|
|
|
|
|
|
|
TopBuild
Corp.
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets and Other Financial Data
(Unaudited)
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
March 31,
|
|
December 31,
|
|
|
|
2016
|
|
2015
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
108,150
|
|
$
|
112,848
|
|
Receivables, net of
an allowance for doubtful accounts of $3,334 and $3,399 at
March 31, 2016
and December 31, 2015, respectively
|
|
|
243,000
|
|
|
235,549
|
|
Inventories,
net
|
|
|
108,016
|
|
|
118,701
|
|
Prepaid expenses and
other current assets
|
|
|
6,096
|
|
|
13,263
|
|
Total current
assets
|
|
|
465,262
|
|
|
480,361
|
|
|
|
|
|
|
|
|
|
Property and
equipment, net
|
|
|
92,098
|
|
|
93,066
|
|
Goodwill
|
|
|
1,044,041
|
|
|
1,044,041
|
|
Other intangible
assets, net
|
|
|
1,778
|
|
|
1,987
|
|
Deferred tax assets,
net
|
|
|
20,549
|
|
|
20,549
|
|
Other
assets
|
|
|
2,127
|
|
|
2,245
|
|
Total
assets
|
|
$
|
1,625,855
|
|
$
|
1,642,249
|
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
223,308
|
|
$
|
253,311
|
|
Current portion of
long-term debt
|
|
|
17,500
|
|
|
15,000
|
|
Accrued
liabilities
|
|
|
65,527
|
|
|
58,369
|
|
Total current
liabilities
|
|
|
306,335
|
|
|
326,680
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
173,543
|
|
|
178,457
|
|
Deferred tax
liabilities, net
|
|
|
181,251
|
|
|
181,254
|
|
Long-term portion of
insurance reserves
|
|
|
38,641
|
|
|
39,655
|
|
Other
liabilities
|
|
|
435
|
|
|
474
|
|
Total
liabilities
|
|
|
700,205
|
|
|
726,520
|
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
925,650
|
|
|
915,729
|
|
Total liabilities and
equity
|
|
$
|
1,625,855
|
|
$
|
1,642,249
|
|
|
|
|
|
|
|
|
|
|
|
As
of
|
|
|
|
March 31,
|
|
March 31,
|
|
|
|
2016
|
|
2015
|
|
Other Financial
Data
|
|
|
|
|
|
|
|
Working Capital
Days
|
|
|
|
|
|
|
|
Receivable
days
|
|
|
44
|
|
|
46
|
|
Inventory
days
|
|
|
30
|
|
|
32
|
|
Accounts payable
days
|
|
|
90
|
|
|
89
|
|
Working
capital
|
|
$
|
127,708
|
|
$
|
124,121
|
|
Working capital as a
percentage of net sales for the trailing twelve months
|
|
|
7.6
|
%
|
|
8.1
|
%
|
|
|
|
|
|
|
|
|
TopBuild
Corp.
|
|
|
|
|
|
|
Condensed
Consolidated Statement of Cash Flows (Unaudited)
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
2016
|
|
2015
|
Net Cash From
(For) Operating Activities:
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
11,116
|
|
$
|
(3,799)
|
Adjustments to
reconcile net income (loss) to net cash from (for) operating
activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
2,895
|
|
|
3,053
|
Share-based
compensation
|
|
|
1,600
|
|
|
808
|
Loss on sale or
abandonment of property and equipment
|
|
|
950
|
|
|
97
|
Provision for bad
debt expense
|
|
|
1,054
|
|
|
944
|
Loss from inventory
obsolescence
|
|
|
335
|
|
|
358
|
Deferred income
taxes, net
|
|
|
(3)
|
|
|
(500)
|
Changes in certain
assets and liabilities:
|
|
|
|
|
|
|
Receivables,
net
|
|
|
(8,505)
|
|
|
2,047
|
Inventories,
net
|
|
|
10,350
|
|
|
2,223
|
Prepaid expenses and
other current assets
|
|
|
7,167
|
|
|
450
|
Accounts
payable
|
|
|
(29,846)
|
|
|
(31,265)
|
Long-term portion of
insurance reserves
|
|
|
(1,014)
|
|
|
1,713
|
Accrued
liabilities
|
|
|
7,158
|
|
|
5,232
|
Other, net
|
|
|
96
|
|
|
—
|
Net cash from (for)
operating activities
|
|
|
3,353
|
|
|
(18,639)
|
|
|
|
|
|
|
|
Cash Flows From
(For) Investing Activities:
|
|
|
|
|
|
|
Purchases of property
and equipment
|
|
|
(2,900)
|
|
|
(2,298)
|
Proceeds from sale of
property and equipment
|
|
|
76
|
|
|
369
|
Other,
net
|
|
|
68
|
|
|
140
|
Net cash for
investing activities
|
|
|
(2,756)
|
|
|
(1,789)
|
|
|
|
|
|
|
|
Cash Flows From
(For) Financing Activities:
|
|
|
|
|
|
|
Net transfer from
Former Parent
|
|
|
—
|
|
|
21,062
|
Repayment of
long-term debt
|
|
|
(2,500)
|
|
|
—
|
Taxes withheld and
paid on employees' equity awards
|
|
|
(1,256)
|
|
|
—
|
Repurchase of shares
of common stock
|
|
|
(1,539)
|
|
|
—
|
Net cash (for) from
financing activities
|
|
|
(5,295)
|
|
|
21,062
|
|
|
|
|
|
|
|
Cash and Cash
Equivalents
|
|
|
|
|
|
|
(Decrease) increase
for the period
|
|
|
(4,698)
|
|
|
634
|
Beginning of
year
|
|
|
112,848
|
|
|
2,965
|
End of
period
|
|
$
|
108,150
|
|
$
|
3,599
|
|
|
|
|
|
|
|
Supplemental
disclosure of noncash investing activities:
|
|
|
|
|
|
|
Accruals for property
and equipment
|
|
$
|
426
|
|
$
|
—
|
|
|
|
|
|
|
|
TopBuild
Corp.
|
|
|
|
|
|
|
|
|
|
|
Segment Data
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
|
|
2016
|
|
|
2015
|
|
Change
|
Installation
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
272,878
|
|
|
$
|
233,363
|
|
16.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit
(loss), as reported
|
|
$
|
13,506
|
|
|
$
|
(1,032)
|
|
|
|
Operating margin,
as reported
|
|
|
4.9
|
%
|
|
(0.4)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization
charges†
|
|
|
828
|
|
|
|
642
|
|
|
|
Legal adjustments,
net
|
|
|
—
|
|
|
|
350
|
|
|
|
Operating profit
(loss), as adjusted
|
|
$
|
14,334
|
|
|
$
|
(40)
|
|
|
|
Operating margin,
as adjusted
|
|
|
5.3
|
%
|
|
(0.0)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution
|
|
|
|
|
|
|
|
|
|
|
Sales
|
|
$
|
160,888
|
|
|
$
|
144,611
|
|
11.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as
reported
|
|
$
|
14,333
|
|
|
$
|
11,377
|
|
|
|
Operating margin,
as reported
|
|
|
8.9
|
%
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization
charges
|
|
|
83
|
|
|
|
—
|
|
|
|
Operating profit, as
adjusted
|
|
$
|
14,416
|
|
|
$
|
11,377
|
|
|
|
Operating margin,
as adjusted
|
|
|
9.0
|
%
|
|
7.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
Sales before
eliminations
|
|
$
|
433,766
|
|
|
$
|
377,974
|
|
|
|
Intercompany
eliminations
|
|
|
(19,742)
|
|
|
|
(19,514)
|
|
|
|
Net sales after
eliminations
|
|
$
|
414,024
|
|
|
$
|
358,460
|
|
15.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as
reported - segment
|
|
$
|
27,839
|
|
|
$
|
10,345
|
|
|
|
General corporate
expense, net
|
|
|
(4,720)
|
|
|
|
(7,903)
|
|
|
|
Intercompany
eliminations and other adjustments
|
|
|
(3,352)
|
|
|
|
(3,589)
|
|
|
|
Operating profit
(loss), as reported
|
|
$
|
19,767
|
|
|
$
|
(1,147)
|
|
|
|
Operating margin,
as reported
|
|
|
4.8
|
%
|
|
(0.3)
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization
charges‡
|
|
|
1,008
|
|
|
|
642
|
|
|
|
Legal adjustments,
net
|
|
|
—
|
|
|
|
350
|
|
|
|
Masco general
corporate expense, net
|
|
|
—
|
|
|
|
7,903
|
|
|
|
Masco direct
corporate expense
|
|
|
—
|
|
|
|
4,397
|
|
|
|
Expected standalone
corporate expense
|
|
|
—
|
|
|
|
(5,500)
|
|
|
|
Operating profit, as
adjusted
|
|
$
|
20,775
|
|
|
$
|
6,645
|
|
|
|
Operating margin,
as adjusted
|
|
|
5.0
|
%
|
|
1.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based
compensation
|
|
|
1,600
|
|
|
|
808
|
|
|
|
Depreciation and
amortization
|
|
|
2,895
|
|
|
|
3,053
|
|
|
|
EBITDA, as
adjusted
|
|
$
|
25,270
|
|
|
$
|
10,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales change period
over period
|
|
|
55,564
|
|
|
|
|
|
|
|
EBITDA, as adjusted
change period over period
|
|
|
14,764
|
|
|
|
|
|
|
|
EBITDA, as adjusted
as percentage of sales change
|
|
|
26.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
† 2015 Rationalization charges included
spin-off charges.
|
|
|
|
|
|
|
|
|
|
|
‡ 2016 Rationalization charges include
corporate level adjustments as well as segment operating
adjustments.
|
|
|
|
|
|
|
|
TopBuild
Corp.
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations (Unaudited)
|
|
|
|
|
|
|
|
(in thousands,
except common share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2016
|
|
2015
|
|
Gross Profit and
Operating Profit Reconciliations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
|
$
|
414,024
|
|
$
|
358,460
|
|
|
|
|
|
|
|
|
|
Gross profit, as
reported
|
|
$
|
89,455
|
|
$
|
73,816
|
|
|
|
|
|
|
|
|
|
Gross profit, as
adjusted
|
|
$
|
89,455
|
|
$
|
73,816
|
|
|
|
|
|
|
|
|
|
Gross margin, as
reported
|
|
|
21.6
|
%
|
20.6
|
%
|
Gross margin, as
adjusted
|
|
|
21.6
|
%
|
20.6
|
%
|
|
|
|
|
|
|
|
|
Operating profit
(loss), as reported
|
|
$
|
19,767
|
|
$
|
(1,147)
|
|
|
|
|
|
|
|
|
|
Rationalization
charges†
|
|
|
1,008
|
|
|
642
|
|
Legal adjustments,
net
|
|
|
—
|
|
|
350
|
|
Masco general
corporate expense, net
|
|
|
—
|
|
|
7,903
|
|
Masco direct
corporate expense
|
|
|
—
|
|
|
4,397
|
|
Expected standalone
corporate expense
|
|
|
—
|
|
|
(5,500)
|
|
Operating profit,
as adjusted
|
|
$
|
20,775
|
|
$
|
6,645
|
|
|
|
|
|
|
|
|
|
Operating margin, as
reported
|
|
|
4.8
|
%
|
(0.3)
|
%
|
Operating margin, as
adjusted
|
|
|
5.0
|
%
|
1.9
|
%
|
|
|
|
|
|
|
|
|
Income Per Common
Share Reconciliation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from
continuing operations before income taxes, as
reported
|
|
$
|
18,169
|
|
$
|
(4,300)
|
|
|
|
|
|
|
|
|
|
Rationalization
charges†
|
|
|
1,008
|
|
|
642
|
|
Legal adjustments,
net
|
|
|
—
|
|
|
350
|
|
Masco general
corporate expense, net
|
|
|
—
|
|
|
7,903
|
|
Masco direct
corporate expense
|
|
|
—
|
|
|
4,397
|
|
Expected standalone
corporate expense
|
|
|
—
|
|
|
(5,500)
|
|
Income from
continuing operations before income taxes, as
adjusted
|
|
|
19,177
|
|
|
3,492
|
|
|
|
|
|
|
|
|
|
Tax rate at 38% and
36% for 2016 and 2015, respectively
|
|
|
(7,287)
|
|
|
(1,257)
|
|
Income from
continuing operations, as adjusted
|
|
$
|
11,890
|
|
$
|
2,235
|
|
|
|
|
|
|
|
|
|
Income per common
share, as adjusted
|
|
$
|
0.31
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
Average diluted
common shares outstanding
|
|
|
37,899,110
|
|
|
37,667,947
|
|
|
|
|
|
|
|
|
|
† 2015
Rationalization charges included spin-off charges.
|
|
|
|
|
|
|
|
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SOURCE TopBuild Corp.