TopBuild Corp. (NYSE:BLD), the leading purchaser,
installer and distributor of insulation products to the United
States construction industry, today reported results for the second
quarter ended June 30, 2017.
Jerry Volas, Chief Executive Officer, stated, “We continue to
demonstrate the efficiency of our operating model through margin
expansion and bottom line growth. While there was some
negative impact to our top line from weather related issues in the
third quarter, this should be recovered in a future
period.
“Looking ahead we see continued strength in both the residential
and commercial markets. Our national scale should remain a
strong competitive advantage for us as both capacity and labor
continue to tighten.”
Third Quarter Financial Highlights(unless
otherwise indicated, comparisons are to the quarter ended September
30, 2016)
- Net sales increased 7.9% to $489.0 million, primarily driven by
sales volume growth and price increases in both operating segments
as well as through acquisitions. On a same branch basis, revenue
increased 2.7% to $464.6 million.
- Gross margin expanded 80 basis points to 24.7%.
- Operating profit was $49.6 million, compared to $39.1
million. On an adjusted basis, operating profit was $50.3
million, compared to $39.6 million, a 27.0% improvement.
- Operating margin was 10.1%, up 150 basis points. Adjusted
operating margin improved 160 basis points to 10.3%.
- Income from continuing operations was $31.4 million, or $0.88
per diluted share, compared to $24.6 million, or $0.65 per diluted
share. Adjusted income from continuing operations was $29.7
million, or $0.83 per diluted share, compared to $23.8 million, or
$0.63 per diluted share.
- Adjusted EBITDA was $57.6 million, compared to $44.6 million, a
28.9% increase. Incremental EBITDA margin was 36.0%. On a
same branch basis, adjusted EBITDA was $53.7 million, a 20.3%
increase, and incremental EBITDA margin was 74.2%.
Nine Month Financial Highlights(unless
otherwise indicated, comparisons are to nine months ended September
30, 2016)
- Net sales increased 8.2% to $1,404.9 million. On a same branch
basis, revenue increased 4.2% to $1,352.0 million.
- Gross margin expanded 140 basis points to 24.1%.
- Operating profit was $86.9 million, compared to operating
profit of $85.7 million. On an adjusted basis, operating
profit was $121.0 million, compared to $87.8 million, a 37.9%
improvement.
- Operating margin was 6.2%, down 40 basis points. Adjusted
operating margin improved 180 basis points to 8.6%.
- Income from continuing operations was $53.1 million, or $1.44
per diluted share, compared to $51.3 million, or $1.35 per diluted
share. Adjusted income from continuing operations was $71.6
million, or $1.94 per diluted share, compared to $51.9 million, or
$1.37 per diluted share.
- Adjusted EBITDA was $139.7 million, compared to $102.5 million,
a 36.3% increase. Incremental EBITDA margin was 35.0%. On a
same branch basis, adjusted EBITDA grew 29.6% to $132.7 million and
incremental EBITDA margin was 56.1%.
Operating Segment Highlights
($ in 000s)(comparisons are to the period ended
September 30, 2016)
TruTeam |
3 Months Ended 9/30/17 |
9 Months Ended 9/30/17 |
|
Service Partners |
3 Months Ended 9/30/17 |
9 Months Ended 9/30/17 |
Sales |
$333,238 |
$945,109 |
|
Sales |
$181,146 |
$526,452 |
Change |
11.1% |
9.8% |
|
Change |
4.0% |
5.4% |
Operating Margin |
12.3% |
7.1% |
|
Operating Margin |
10.1% |
9.7% |
Change |
160 bps |
(90) bps |
|
Change |
120 bps |
100 bps |
Adj. Operating Margin |
12.3% |
10.3% |
|
Adj. Operating Margin |
10.1% |
9.7% |
Change |
150 bps |
220 bps |
|
Change |
120 bps |
100 bps |
Capital Allocation
AcquisitionsYear-to-date, the Company has
completed six acquisitions, four concentrating on residential
insulation and two on heavy commercial. Combined, these
acquisitions are expected to generate approximately $83 million of
incremental revenue on an annual basis.
Volas stated, “Our plan is to utilize our excess free cash flow
to expand our two business segments through strategic
acquisitions. We are very encouraged by our robust pipeline
of prospects and are pleased with our successful track record of
integrating the seven firms we’ve acquired these past 18
months. Incremental EBITDA margin on these acquisitions has
improved from 5.7% in the first quarter of 2017 to 16.3%
today.”
Share RepurchasesIn conjunction
with its previously announced accelerated share repurchase program,
in the third quarter the Company made a payment of $100.0 million
to Bank of America Merrill Lynch, using $30 million of cash on hand
and borrowing $70 million under its revolving facility. In
exchange, the Company received approximately 1.5 million shares
with a value of approximately $80 million. The remaining $20
million balance is expected to settle no later than the end of the
first quarter of 2018. Since January 1, 2016, the Company has
repurchased 3.0 million shares of its common stock.
2017 Revenue and Adjusted EBITDA
Outlook
2017 |
Low |
High |
Revenue |
$1,890M |
$1,905M |
Adjusted EBITDA |
$190M |
$195M |
This outlook reflects management’s current view of present and
future market conditions and is based on assumptions such as
housing starts, general and administrative expenses, weighted
average diluted shares outstanding and interest rates. This
outlook does not include any effects related to potential
acquisitions or divestitures that may occur after the date of this
press release. Factors that could cause actual 2017 results
to differ materially from TopBuild’s current expectations are
discussed below and are also detailed in the Company’s 2016 Annual
Report on Form 10-K and subsequent SEC reports.
Amendment to Corporate Governance
GuidelinesThe Company’s Board of Directors has amended its
Corporate Governance Guidelines to adopt a majority voting policy
whereby any nominee for director who receives more “withheld” votes
than “for” votes in an uncontested election must submit a written
offer to resign as director. Any such resignation will be reviewed
by the Board’s Nominating and Corporate Governance Committee and,
within 90 days after the election, the independent members of the
Board will determine whether to accept, reject or take other
appropriate action with respect to, the resignation, in furtherance
of the best interests of the Company and its shareholders. The
Company’s Corporate Governance Guidelines containing the Majority
Voting Policy are available on the Company’s website, at
www.topbuild.com on the Investor page under the Corporate
Governance section.
Additional InformationQuarterly
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 third quarter 2017 financial results is scheduled
for today, Tuesday, November 7, at 9:00 a.m. Eastern Time.
The call may be accessed by dialing (866) 460-4783. The
conference call will be webcast simultaneously on the “Investors”
section of the Company’s website at www.topbuild.com. A
replay will be available for one week beginning at 11:00 a.m.
Eastern Time and may be accessed by dialing (800) 633-8284 and
entering the passcode: 21847871.
About TopBuildTopBuild Corp., headquartered in
Daytona Beach, Florida, is the leading purchaser, installer and
distributor of insulation products to the U.S. construction
industry. We provide insulation services nationwide through
TruTeam®, which has over 175 branches, and through Service
Partners® which distributes insulation from over 70 branches.
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 please visit our website at www.topbuild.com.
Use of Non-GAAP Financial
Measures EBITDA, incremental EBITDA margin, the “adjusted”
financial measures presented above, and figures presented on a
“same branch basis” are not calculated in accordance with U.S.
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. We define same
branch sales as sales from branches in operation for at least 12
full calendar months. Such non-GAAP financial measures are
reconciled to their closest GAAP financial measures in tables
contained in this press release. Non-GAAP financial measures
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.
Safe Harbor StatementThis 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,” “designed,”
“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, the Company 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
ContactTabitha Zanetabitha.zane@topbuild.com
386-763-8801
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|
|
TopBuild
Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands,
except per common share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
|
Net
sales |
|
$ |
489,044 |
|
|
$ |
453,102 |
|
|
$ |
1,404,865 |
|
|
$ |
1,298,715 |
|
|
Cost of
sales |
|
|
368,205 |
|
|
|
344,963 |
|
|
|
1,065,789 |
|
|
|
1,003,433 |
|
|
Gross
profit |
|
|
120,839 |
|
|
|
108,139 |
|
|
|
339,076 |
|
|
|
295,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expense (exclusive of significant legal
settlement, shown separately below) |
|
|
71,277 |
|
|
|
69,038 |
|
|
|
222,181 |
|
|
|
209,623 |
|
|
Significant legal settlement |
|
|
— |
|
|
|
— |
|
|
|
30,000 |
|
|
|
— |
|
|
Operating
profit |
|
|
49,562 |
|
|
|
39,101 |
|
|
|
86,895 |
|
|
|
85,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(2,479 |
) |
|
|
(1,271 |
) |
|
|
(5,767 |
) |
|
|
(4,315 |
) |
|
Loss on
extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
(1,086 |
) |
|
|
— |
|
|
Other,
net |
|
|
27 |
|
|
|
65 |
|
|
|
239 |
|
|
|
201 |
|
|
Other
expense, net |
|
|
(2,452 |
) |
|
|
(1,206 |
) |
|
|
(6,614 |
) |
|
|
(4,114 |
) |
|
Income
from continuing operations before income taxes |
|
|
47,110 |
|
|
|
37,895 |
|
|
|
80,281 |
|
|
|
81,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
tax expense from continuing operations |
|
|
(15,717 |
) |
|
|
(13,329 |
) |
|
|
(27,139 |
) |
|
|
(30,246 |
) |
|
Income
from continuing operations |
|
|
31,393 |
|
|
|
24,566 |
|
|
|
53,142 |
|
|
|
51,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
31,393 |
|
|
$ |
24,566 |
|
|
$ |
53,142 |
|
|
$ |
51,299 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations |
|
$ |
0.90 |
|
|
$ |
0.65 |
|
|
$ |
1.47 |
|
|
$ |
1.36 |
|
|
Net
income |
|
$ |
0.90 |
|
|
$ |
0.65 |
|
|
$ |
1.47 |
|
|
$ |
1.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations |
|
$ |
0.88 |
|
|
$ |
0.65 |
|
|
$ |
1.44 |
|
|
$ |
1.35 |
|
|
Net
income |
|
$ |
0.88 |
|
|
$ |
0.65 |
|
|
$ |
1.44 |
|
|
$ |
1.35 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild
Corp. |
|
|
|
|
|
|
|
Condensed Consolidated Balance Sheets and Other Financial
Data (Unaudited) |
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
As of |
|
|
|
September 30, |
|
December 31, |
|
|
|
2017 |
|
2016 |
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
18,460 |
|
$ |
134,375 |
|
Receivables, net of an allowance for doubtful accounts of $3,729
and $3,374 at September 30, 2017, and December 31, 2016,
respectively |
|
|
315,382 |
|
|
252,624 |
|
Inventories, net |
|
|
116,781 |
|
|
116,190 |
|
Prepaid
expenses and other current assets |
|
|
15,043 |
|
|
23,364 |
|
Total
current assets |
|
|
465,666 |
|
|
526,553 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
98,144 |
|
|
92,760 |
|
Goodwill |
|
|
1,077,102 |
|
|
1,045,058 |
|
Other
intangible assets, net |
|
|
34,280 |
|
|
2,656 |
|
Deferred tax assets, net |
|
|
19,469 |
|
|
19,469 |
|
Other
assets |
|
|
3,033 |
|
|
3,623 |
|
Total
assets |
|
$ |
1,697,694 |
|
$ |
1,690,119 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
242,617 |
|
$ |
241,534 |
|
Revolving
credit facility |
|
|
5,000 |
|
|
— |
|
Current
portion of long-term debt |
|
|
12,500 |
|
|
20,000 |
|
Accrued
liabilities |
|
|
81,199 |
|
|
64,399 |
|
Total
current liabilities |
|
|
341,316 |
|
|
325,933 |
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
232,405 |
|
|
158,800 |
|
Deferred tax liabilities, net |
|
|
193,980 |
|
|
193,715 |
|
Long-term portion of insurance reserves |
|
|
37,396 |
|
|
38,691 |
|
Other
liabilities |
|
|
3,196 |
|
|
433 |
|
Total
liabilities |
|
|
808,293 |
|
|
717,572 |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
889,401 |
|
|
972,547 |
|
Total
liabilities and equity |
|
$ |
1,697,694 |
|
$ |
1,690,119 |
|
|
|
|
|
|
|
|
|
|
|
As
of |
|
|
|
September 30, |
|
September 30, |
|
|
|
2017 |
|
2016 |
|
Other Financial Data |
|
|
|
|
|
|
|
Working Capital Days† |
|
|
|
|
|
|
|
Receivable days |
|
|
49 |
|
|
45 |
|
Inventory
days |
|
|
30 |
|
|
29 |
|
Accounts
payable days |
|
|
80 |
|
|
76 |
|
Working
capital |
|
$ |
189,547 |
|
$ |
153,553 |
|
Working
capital as a percent of sales (LTM)‡ |
|
|
10.0 |
% |
|
8.9 |
% |
|
|
|
|
|
|
|
|
† Adjusted for
remaining acquisition day one balance sheet items |
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|
‡ Last 12 months sales
have been adjusted for the pro forma effect of acquired
branches |
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|
|
TopBuild
Corp. |
|
|
|
|
|
|
|
Consolidated
Statement of Cash Flows (Unaudited) |
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
Net Cash
Provided by (Used in) Operating Activities: |
|
|
|
|
|
|
|
Net income |
|
$ |
53,142 |
|
|
$ |
51,299 |
|
|
Adjustments to reconcile net income to net cash provided by
operating activities: |
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
11,753 |
|
|
|
8,923 |
|
|
Share-based compensation |
|
|
7,473 |
|
|
|
5,743 |
|
|
Loss on
extinguishment of debt |
|
|
1,086 |
|
|
|
— |
|
|
Loss on
sale or abandonment of property and equipment |
|
|
614 |
|
|
|
2,399 |
|
|
Amortization of debt issuance costs |
|
|
293 |
|
|
|
257 |
|
|
Amortization of contingent consideration |
|
|
98 |
|
|
|
— |
|
|
Provision
for bad debt expense |
|
|
2,498 |
|
|
|
2,696 |
|
|
Loss from
inventory obsolescence |
|
|
1,390 |
|
|
|
970 |
|
|
Deferred
income taxes, net |
|
|
266 |
|
|
|
476 |
|
|
Changes
in certain assets and liabilities: |
|
|
|
|
|
|
|
Receivables, net |
|
|
(43,931 |
) |
|
|
(32,294 |
) |
|
Inventories, net |
|
|
249 |
|
|
|
12,103 |
|
|
Prepaid
expenses and other current assets |
|
|
8,362 |
|
|
|
(3,162 |
) |
|
Accounts
payable |
|
|
(2,280 |
) |
|
|
(35,023 |
) |
|
Long-term
portion of insurance reserves |
|
|
— |
|
|
|
(1,599 |
) |
|
Accrued
liabilities |
|
|
13,633 |
|
|
|
15,159 |
|
|
Other,
net |
|
|
(28 |
) |
|
|
(13 |
) |
|
Net cash
provided by operating activities |
|
|
54,618 |
|
|
|
27,934 |
|
|
|
|
|
|
|
|
|
|
Cash Flows
Provided by (Used in) Investing Activities: |
|
|
|
|
|
|
|
Purchases
of property and equipment |
|
|
(13,088 |
) |
|
|
(10,083 |
) |
|
Acquisition of businesses |
|
|
(84,040 |
) |
|
|
(3,476 |
) |
|
Proceeds
from sale of property and equipment |
|
|
453 |
|
|
|
379 |
|
|
Other,
net |
|
|
178 |
|
|
|
93 |
|
|
Net cash
used in investing activities |
|
|
(96,497 |
) |
|
|
(13,087 |
) |
|
|
|
|
|
|
|
|
|
Cash Flows
Provided by (Used in) Financing Activities: |
|
|
|
|
|
|
|
Net
transfer to Former Parent |
|
|
— |
|
|
|
(153 |
) |
|
Proceeds
from issuance of long-term debt |
|
|
250,000 |
|
|
|
— |
|
|
Repayment
of long-term debt |
|
|
(183,125 |
) |
|
|
(10,000 |
) |
|
Payment
of debt issuance costs |
|
|
(2,150 |
) |
|
|
— |
|
|
Proceeds
from revolving credit facility |
|
|
170,000 |
|
|
|
— |
|
|
Repayments of revolving credit facility |
|
|
(165,000 |
) |
|
|
— |
|
|
Taxes
withheld and paid on employees' equity awards |
|
|
(4,475 |
) |
|
|
(1,668 |
) |
|
Repurchase of shares of common stock |
|
|
(139,286 |
) |
|
|
(11,377 |
) |
|
Net cash
used in financing activities |
|
|
(74,036 |
) |
|
|
(23,198 |
) |
|
|
|
|
|
|
|
|
|
Cash and Cash Equivalents |
|
|
|
|
|
|
|
Decrease
for the period |
|
|
(115,915 |
) |
|
|
(8,351 |
) |
|
Beginning
of year |
|
|
134,375 |
|
|
|
112,848 |
|
|
End of
period |
|
$ |
18,460 |
|
|
$ |
104,497 |
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure
of noncash investing activities: |
|
|
|
|
|
|
|
Accruals
for property and equipment |
|
$ |
154 |
|
|
$ |
110 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild
Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
|
|
|
|
Nine Months
Ended
September 30, |
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
Change |
|
|
|
2017 |
|
|
|
2016 |
|
|
Change |
|
|
Installation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
333,238 |
|
|
$ |
300,005 |
|
|
|
11.1 |
% |
|
$ |
945,109 |
|
|
$ |
860,924 |
|
|
|
9.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit, as reported |
|
$ |
40,862 |
|
|
$ |
32,196 |
|
|
|
|
|
|
$ |
66,985 |
|
|
$ |
68,499 |
|
|
|
|
|
|
Operating
margin, as reported |
|
|
12.3 |
% |
|
|
10.7 |
% |
|
|
|
|
|
|
7.1 |
% |
|
|
8.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant legal settlement |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
30,000 |
|
|
|
— |
|
|
|
|
|
|
Rationalization charges |
|
|
139 |
|
|
|
115 |
|
|
|
|
|
|
|
720 |
|
|
|
1,009 |
|
|
|
|
|
|
Operating
profit, as adjusted |
|
$ |
41,001 |
|
|
$ |
32,311 |
|
|
|
|
|
|
$ |
97,705 |
|
|
$ |
69,508 |
|
|
|
|
|
|
Operating
margin, as adjusted |
|
|
12.3 |
% |
|
|
10.8 |
% |
|
|
|
|
|
|
10.3 |
% |
|
|
8.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
181,146 |
|
|
$ |
174,123 |
|
|
|
4.0 |
% |
|
$ |
526,452 |
|
|
$ |
499,268 |
|
|
|
5.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit, as reported |
|
$ |
18,300 |
|
|
$ |
15,536 |
|
|
|
|
|
|
$ |
50,806 |
|
|
$ |
43,416 |
|
|
|
|
|
|
Operating
margin, as reported |
|
|
10.1 |
% |
|
|
8.9 |
% |
|
|
|
|
|
|
9.7 |
% |
|
|
8.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
5 |
|
|
|
— |
|
|
|
|
|
|
|
23 |
|
|
|
83 |
|
|
|
|
|
|
Operating
profit, as adjusted |
|
$ |
18,305 |
|
|
$ |
15,536 |
|
|
|
|
|
|
$ |
50,829 |
|
|
$ |
43,499 |
|
|
|
|
|
|
Operating
margin, as adjusted |
|
|
10.1 |
% |
|
|
8.9 |
% |
|
|
|
|
|
|
9.7 |
% |
|
|
8.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
before eliminations |
|
$ |
514,384 |
|
|
$ |
474,128 |
|
|
|
|
|
|
$ |
1,471,561 |
|
|
$ |
1,360,192 |
|
|
|
|
|
|
Intercompany eliminations |
|
|
(25,340 |
) |
|
|
(21,026 |
) |
|
|
|
|
|
|
(66,696 |
) |
|
|
(61,477 |
) |
|
|
|
|
|
Net sales
after eliminations |
|
$ |
489,044 |
|
|
$ |
453,102 |
|
|
|
7.9 |
% |
|
$ |
1,404,865 |
|
|
$ |
1,298,715 |
|
|
|
8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit, as reported - segment |
|
$ |
59,162 |
|
|
$ |
47,732 |
|
|
|
|
|
|
$ |
117,791 |
|
|
$ |
111,915 |
|
|
|
|
|
|
General
corporate expense, net |
|
|
(5,187 |
) |
|
|
(4,966 |
) |
|
|
|
|
|
|
(19,503 |
) |
|
|
(15,716 |
) |
|
|
|
|
|
Intercompany eliminations and other adjustments |
|
|
(4,413 |
) |
|
|
(3,665 |
) |
|
|
|
|
|
|
(11,393 |
) |
|
|
(10,540 |
) |
|
|
|
|
|
Operating
profit, as reported |
|
$ |
49,562 |
|
|
$ |
39,101 |
|
|
|
|
|
|
$ |
86,895 |
|
|
$ |
85,659 |
|
|
|
|
|
|
Operating
margin, as reported |
|
|
10.1 |
% |
|
|
8.6 |
% |
|
|
|
|
|
|
6.2 |
% |
|
|
6.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant legal settlement |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
30,000 |
|
|
|
— |
|
|
|
|
|
|
Rationalization charges† |
|
|
404 |
|
|
|
435 |
|
|
|
|
|
|
|
3,399 |
|
|
|
2,090 |
|
|
|
|
|
|
Acquisition related costs |
|
|
310 |
|
|
|
55 |
|
|
|
|
|
|
|
748 |
|
|
|
55 |
|
|
|
|
|
|
Operating
profit, as adjusted |
|
$ |
50,276 |
|
|
$ |
39,591 |
|
|
|
|
|
|
$ |
121,042 |
|
|
$ |
87,804 |
|
|
|
|
|
|
Operating
margin, as adjusted |
|
|
10.3 |
% |
|
|
8.7 |
% |
|
|
|
|
|
|
8.6 |
% |
|
|
6.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation ‡ |
|
|
2,372 |
|
|
|
2,037 |
|
|
|
|
|
|
|
6,859 |
|
|
|
5,743 |
|
|
|
|
|
|
Depreciation and amortization |
|
|
4,918 |
|
|
|
3,015 |
|
|
|
|
|
|
|
11,753 |
|
|
|
8,923 |
|
|
|
|
|
|
EBITDA,
as adjusted |
|
$ |
57,566 |
|
|
$ |
44,643 |
|
|
|
|
|
|
$ |
139,654 |
|
|
$ |
102,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
change period over period |
|
|
35,942 |
|
|
|
|
|
|
|
|
|
|
106,150 |
|
|
|
|
|
|
|
|
|
EBITDA,
as adjusted change period over period |
|
|
12,923 |
|
|
|
|
|
|
|
|
|
|
37,184 |
|
|
|
|
|
|
|
|
|
EBITDA,
as adjusted as percentage of sales change |
|
|
36.0 |
% |
|
|
|
|
|
|
|
|
|
35.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
† Rationalization charges include corporate level adjustments
as well as segment operating adjustments. |
|
|
|
|
|
|
|
|
|
|
|
‡ Amounts
for the nine month period ending September 30, 2017, excludes $0.6
million of share-based compensation included in the line item,
rationalization charges. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild Corp. |
Non-GAAP Reconciliations (Unaudited) |
(in thousands, except common share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months
Ended
September 30, |
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Gross Profit and Operating Profit
Reconciliations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
489,044 |
|
|
$ |
453,102 |
|
|
$ |
1,404,865 |
|
|
$ |
1,298,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
120,839 |
|
|
$ |
108,139 |
|
|
$ |
339,076 |
|
|
$ |
295,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as adjusted |
|
$ |
120,839 |
|
|
$ |
108,139 |
|
|
$ |
339,076 |
|
|
$ |
295,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin, as reported |
|
|
24.7 |
% |
|
|
23.9 |
% |
|
|
24.1 |
% |
|
|
22.7 |
% |
Gross
margin, as adjusted |
|
|
24.7 |
% |
|
|
23.9 |
% |
|
|
24.1 |
% |
|
|
22.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as reported |
|
$ |
49,562 |
|
|
$ |
39,101 |
|
|
$ |
86,895 |
|
|
$ |
85,659 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant legal settlement |
|
|
— |
|
|
|
— |
|
|
|
30,000 |
|
|
|
— |
|
Rationalization charges |
|
|
404 |
|
|
|
435 |
|
|
|
3,399 |
|
|
|
2,090 |
|
Acquisition related
costs |
|
|
310 |
|
|
|
55 |
|
|
|
748 |
|
|
|
55 |
|
Operating profit, as adjusted |
|
$ |
50,276 |
|
|
$ |
39,591 |
|
|
$ |
121,042 |
|
|
$ |
87,804 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin, as
reported |
|
|
10.1 |
% |
|
|
8.6 |
% |
|
|
6.2 |
% |
|
|
6.6 |
% |
Operating margin, as
adjusted |
|
|
10.3 |
% |
|
|
8.7 |
% |
|
|
8.6 |
% |
|
|
6.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Per Common Share Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes, as
reported |
|
$ |
47,110 |
|
|
$ |
37,895 |
|
|
$ |
80,281 |
|
|
$ |
81,545 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant legal settlement |
|
|
— |
|
|
|
— |
|
|
|
30,000 |
|
|
|
— |
|
Rationalization charges |
|
|
404 |
|
|
|
435 |
|
|
|
3,399 |
|
|
|
2,090 |
|
Acquisition related costs |
|
|
310 |
|
|
|
55 |
|
|
|
748 |
|
|
|
55 |
|
Loss on
extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
1,086 |
|
|
|
— |
|
Income from continuing operations before income taxes, as
adjusted |
|
|
47,824 |
|
|
|
38,385 |
|
|
|
115,514 |
|
|
|
83,690 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax at
38% rate |
|
|
(18,173 |
) |
|
|
(14,586 |
) |
|
|
(43,895 |
) |
|
|
(31,802 |
) |
Income from continuing operations, as
adjusted |
|
$ |
29,651 |
|
|
$ |
23,799 |
|
|
$ |
71,619 |
|
|
$ |
51,888 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share, as adjusted |
|
$ |
0.83 |
|
|
$ |
0.63 |
|
|
$ |
1.94 |
|
|
$ |
1.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
diluted common shares outstanding |
|
|
35,737,629 |
|
|
|
37,952,333 |
|
|
|
36,842,144 |
|
|
|
37,942,540 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild Corp. |
Same Branch Net Sales and Adjusted EBITDA
(Unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
|
|
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
Net
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same branch |
|
$ |
464,622 |
|
$ |
452,430 |
|
|
$ |
1,352,048 |
|
$ |
1,298,043 |
|
|
Acquired |
|
|
24,422 |
|
|
672 |
|
|
|
52,817 |
|
|
672 |
|
|
Total |
|
$ |
489,044 |
|
$ |
453,102 |
|
|
$ |
1,404,865 |
|
$ |
1,298,715 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, as
adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same branch |
|
|
53,652 |
|
|
44,602 |
|
|
|
132,703 |
|
|
102,429 |
|
|
Acquired |
|
|
3,914 |
|
|
41 |
|
|
|
6,951 |
|
|
41 |
|
|
Total |
|
$ |
57,566 |
|
$ |
44,643 |
|
|
$ |
139,654 |
|
$ |
102,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same branch EBITDA, as
adjusted as percentage of sales change |
|
|
74.2 |
% |
36.4 |
% |
|
56.1 |
% |
30.5 |
% |
Acquired EBITDA, as
adjusted as percentage of sales change |
|
|
16.3 |
% |
6.1 |
% |
|
13.3 |
% |
6.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild Corp. |
Reconciliation of EBITDA to Net Income
(Unaudited) |
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Net income, as
reported |
|
$ |
31,393 |
|
$ |
24,566 |
|
$ |
53,142 |
|
$ |
51,299 |
|
Adjustments to arrive
at EBITDA, as adjusted: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense and other, net |
|
|
2,452 |
|
|
1,206 |
|
|
5,528 |
|
|
4,114 |
|
Income
tax expense from continuing operations |
|
|
15,717 |
|
|
13,329 |
|
|
27,139 |
|
|
30,246 |
|
Depreciation and amortization |
|
|
4,918 |
|
|
3,015 |
|
|
11,753 |
|
|
8,923 |
|
Share-based compensation † |
|
|
2,372 |
|
|
2,037 |
|
|
6,859 |
|
|
5,743 |
|
Significant legal settlement |
|
|
— |
|
|
— |
|
|
30,000 |
|
|
— |
|
Rationalization charges |
|
|
404 |
|
|
435 |
|
|
3,399 |
|
|
2,090 |
|
Loss on
extinguishment of debt |
|
|
— |
|
|
— |
|
|
1,086 |
|
|
— |
|
Acquisition related costs |
|
|
310 |
|
|
55 |
|
|
748 |
|
|
55 |
|
EBITDA, as
adjusted |
|
$ |
57,566 |
|
$ |
44,643 |
|
$ |
139,654 |
|
$ |
102,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
† Amounts for the nine month period ending September 30, 2017,
excludes $0.6 million of share-based compensation included in the
line item, rationalization charges. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild Corp. |
2017 Estimated Adjusted EBITDA Range
(Unaudited) |
(dollars in millions) |
|
|
|
|
|
|
|
Twelve Months Ending December 31,
2017 |
|
|
Low |
|
|
High |
Estimated net
income |
$ |
75.1 |
|
$ |
78.8 |
Adjustments to arrive at estimated EBITDA, as adjusted: |
|
|
|
|
Interest
expense and other, net |
|
8.0 |
|
|
7.7 |
Income
tax expense from continuing operations |
|
46.0 |
|
|
48.3 |
Depreciation and amortization |
|
16.1 |
|
|
15.7 |
Share-based compensation † |
|
9.5 |
|
|
9.2 |
Significant legal settlement |
|
30.0 |
|
|
30.0 |
Rationalization charges |
|
3.4 |
|
|
3.4 |
Loss on
extinguishment of debt |
|
1.1 |
|
|
1.1 |
Acquisition related costs |
|
0.8 |
|
|
0.8 |
Estimated
EBITDA, as adjusted |
$ |
190.0 |
|
$ |
195.0 |
|
|
|
|
|
|
† Amounts for the twelve month period ending December 31, 2017,
excludes $0.6 million of share-based compensation included in the
line item, rationalization charges. |
|
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