- Net Sales increase 32.4%
- Gross Margin Expands 30 Basis Points
- 10.2% Operating Margin, 10.7% on an Adjusted Basis, up 40 Basis
Points
- $1.19 Net Income per diluted share, $1.23 on an Adjusted
Basis
- Adjusted EBITDA Increases 46.4%, Margin Expands 120 Basis
Points
Raises 2018 Revenue and EBITDA
Outlook Announces $50 Million Accelerated Share
Repurchase
TopBuild Corp. (NYSE:BLD), the
leading installer and distributor of insulation and building
material products today reported results for the third quarter
ended September 30, 2018.
Jerry Volas, Chief Executive Officer, stated, “We continue our
track record of consistently delivering excellent top and bottom
line results. Profitable growth remains the key focus for
TopBuild. Demand is healthy and we expect a strong finish to
2018. We are also encouraged by strong housing market
fundamentals which should drive growth over the next several years.
Our unique operating model and our national scale are significant
competitive advantages that enable growth in any environment.”
Third Quarter Financial Highlights
(unless otherwise indicated, comparisons are to
the quarter ended September 30, 2017)
- Net sales increased 32.4% to $647.3 million, primarily driven
by acquisitions, sales volume growth and price in both operating
segments. On a same branch basis, revenue increased 10.2% to $538.8
million.
- Gross margin expanded 30 basis points to 25.0%.
- Operating profit was $66.2 million, compared to $49.6
million. On an adjusted basis, operating profit was $69.5
million, compared to $50.3 million, a 38.2% improvement.
- Operating margin was 10.2%, up 10 basis points. Adjusted
operating margin improved 40 basis points to 10.7%.
- Net income was $42.7 million, or $1.19 per diluted share,
compared to $31.4 million, or $0.88 per diluted share. Adjusted net
income was $44.0 million, or $1.23 per diluted share, compared to
$29.7 million, or $0.83 per diluted share.
- Adjusted EBITDA was $84.3 million, compared to $57.6 million, a
46.4% increase, and adjusted EBITDA margin improved 120 basis
points to 13.0%. Incremental adjusted EBITDA margin was
16.9%.
- On a same branch basis, adjusted EBITDA was $68.2 million, a
18.5% increase, adjusted EBITDA margin was 12.7%, and incremental
adjusted EBITDA margin was 21.4%.
- The three acquisitions completed in 2018 contributed $108.5
million of revenue and adjusted EBITDA margin was 14.8%.
- At September 30, 2018, the Company had cash and cash
equivalents of $93.5 million, availability under its revolving
credit facility of $190.7 million for total liquidity of $284.2
million.
Nine Month Financial Highlights
(unless otherwise indicated, comparisons are to
nine months ended September 30, 2017)
- Net sales increased 24.2% to $1,744.7 million. On a same branch
basis, revenue increased 9.2% to $1,533.7 million.
- Gross margin declined 10 basis points to 24.0%.
- Operating profit was $143.8 million, compared to operating
profit of $86.9 million. On an adjusted basis, operating
profit was $165.5 million, compared to $121.0 million, a 36.7%
improvement.
- Operating margin was 8.2%, up 200 basis points. Adjusted
operating margin improved 90 basis points to 9.5%.
- Net income was $96.2 million, or $2.69 per diluted share,
compared to $53.1 million, or $1.44 per diluted share.
Adjusted net income was $107.1 million, or $2.99 per diluted share,
compared to $71.6 million, or $1.94 per diluted share.
- Adjusted EBITDA was $200.8 million, compared to $139.7 million,
a 43.8% increase, and adjusted EBITDA margin improved 160 basis
points to 11.5%. Incremental EBITDA margin was 18.0%.
- On a same branch basis, adjusted EBITDA was $172.9 million, a
23.8% increase, adjusted EBITDA margin was 11.3%, and incremental
EBITDA margin was 25.8%.
Operating Segment Highlights ($
in 000s)(comparisons are to the period ended September 30,
2017)
TruTeam |
3 Months Ended 9/30/18 |
9 Months Ended 9/30/18 |
|
Service Partners |
3 Months Ended 9/30/18 |
9 Months Ended 9/30/18 |
Sales |
$464,540 |
$1,223,357 |
|
Sales |
$212,948 |
$606,335 |
Change |
39.4% |
29.4% |
|
Change |
17.6% |
15.2% |
Operating Margin |
13.1% |
11.4% |
|
Operating Margin |
9.0% |
9.4% |
Change |
80 bps |
430 bps |
|
Change |
(110 bps) |
(30 bps) |
Adj. Operating Margin |
13.2% |
11.5% |
|
Adj. Operating Margin |
9.1% |
9.5% |
Change |
90 bps |
120 bps |
|
Change |
(100 bps) |
(20 bps) |
Capital
AllocationAcquisitionsYear-to-date, the
Company has completed three acquisitions, two concentrating on
residential insulation as well as a distributor of insulation
accessories. Combined, these acquisitions are expected to
generate approximately $410 million of incremental revenue on an
annual basis.
Volas stated, “The integration of USI is
proceeding extremely well. Having successfully combined our supply
chains, corporate groups and back office operations, we will now
turn our attention to maximizing the scale and effectiveness of our
national footprint.”
Share RepurchasesIn the third
quarter, the Company spent approximately $9.5 million to repurchase
142,780 shares of its common stock. In October 2018, the
Company spent approximately $5.1 million to repurchase 100,412
shares of its common stock.
Additionally, the Company intends to enter into
an agreement to repurchase $50 million of its common stock under an
accelerated share repurchase (ASR) program. This ASR is part of
TopBuild’s $200 million share repurchase authorization announced on
February 28, 2017. Since January 1, 2016, through September 30,
2018, the Company has repurchased approximately 3.2 million shares
of its common stock.
“We are also pleased to initiate our second accelerated share
repurchase, demonstrating our Board’s confidence in TopBuild’s
present and future growth,” added Volas.
2018 Revenue and Adjusted EBITDA
OutlookThe Company has raised the low end of revenue and
adjusted EBITDA by $25 million and $9 million, respectively, and
the high end of revenue and adjusted EBITDA by $5 million and $2
million, respectively.
2018 |
Low |
High |
Revenue |
$2,383M |
$2,403M |
Adjusted EBITDA |
$278M |
$286M |
This outlook reflects management’s current view
of present and future market conditions and is based on additional
assumptions such as general and administrative expenses, weighted
average diluted shares outstanding and interest rates. It
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 2018 results to
differ materially from TopBuild’s current expectations are
discussed below and are also detailed in the Company’s 2017 Annual
Report on Form 10-K and subsequent SEC reports.
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 2018 financial results is scheduled
for today, Tuesday, November 6, at 9:00 a.m. Eastern Time.
The call may be accessed by dialing (800) 920-2997. The
conference call will be webcast simultaneously on the “Investors”
section of the Company’s website at www.topbuild.com.
About TopBuildTopBuild Corp.,
headquartered in Daytona Beach, Florida, is a leading installer and
distributor of insulation and building material products to the
U.S. construction industry. We provide insulation and building
material services nationwide through TruTeam®, which has over 200
branches, and through Service Partners® which distributes
insulation and building material products from over 75
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 the
Company’s 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 Statement
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,”
“designed,” “plan” or “intend,” the negative of these terms, and
similar references to future periods. These statements
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
TopBuild
Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Statements of Operations
(Unaudited) |
|
(in
thousands, except share and per common share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Net sales |
|
$ |
647,289 |
|
|
$ |
489,044 |
|
|
$ |
1,744,702 |
|
|
$ |
1,404,865 |
|
Cost of sales |
|
|
485,424 |
|
|
|
368,205 |
|
|
|
1,326,777 |
|
|
|
1,065,789 |
|
Gross profit |
|
|
161,865 |
|
|
|
120,839 |
|
|
|
417,925 |
|
|
|
339,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and
administrative expense (exclusive of significant legal settlement,
shown separately below) |
|
|
95,648 |
|
|
|
71,277 |
|
|
|
274,134 |
|
|
|
222,181 |
|
Significant legal
settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,000 |
|
Operating profit |
|
|
66,217 |
|
|
|
49,562 |
|
|
|
143,791 |
|
|
|
86,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense),
net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(9,381 |
) |
|
|
(2,479 |
) |
|
|
(19,026 |
) |
|
|
(5,767 |
) |
Loss on extinguishment
of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(1,086 |
) |
Other, net |
|
|
178 |
|
|
|
27 |
|
|
|
292 |
|
|
|
239 |
|
Other expense, net |
|
|
(9,203 |
) |
|
|
(2,452 |
) |
|
|
(18,734 |
) |
|
|
(6,614 |
) |
Income before income
taxes |
|
|
57,014 |
|
|
|
47,110 |
|
|
|
125,057 |
|
|
|
80,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
(14,356 |
) |
|
|
(15,717 |
) |
|
|
(28,859 |
) |
|
|
(27,139 |
) |
Net income |
|
$ |
42,658 |
|
|
$ |
31,393 |
|
|
$ |
96,198 |
|
|
$ |
53,142 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per
common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.22 |
|
|
$ |
0.90 |
|
|
$ |
2.74 |
|
|
$ |
1.47 |
|
Diluted |
|
$ |
1.19 |
|
|
$ |
0.88 |
|
|
$ |
2.69 |
|
|
$ |
1.44 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
35,091,388 |
|
|
|
35,022,113 |
|
|
|
35,084,694 |
|
|
|
36,203,497 |
|
Diluted |
|
|
35,789,383 |
|
|
|
35,737,629 |
|
|
|
35,815,357 |
|
|
|
36,842,144 |
|
|
TopBuild
Corp. |
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets and Other Financial Data
(Unaudited) |
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
As
of |
|
|
|
September 30, |
|
December 31, |
|
|
|
2018 |
|
2017 |
|
ASSETS |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
93,463 |
|
$ |
56,521 |
|
Receivables, net of an allowance for doubtful accounts of $4,929
and $3,673 at September 30, 2018, and December 31, 2017,
respectively |
|
|
419,706 |
|
|
308,508 |
|
Inventories, net |
|
|
161,875 |
|
|
131,342 |
|
Prepaid
expenses and other current assets |
|
|
24,074 |
|
|
15,221 |
|
Total
current assets |
|
|
699,118 |
|
|
511,592 |
|
|
|
|
|
|
|
|
|
Property and equipment, net |
|
|
166,748 |
|
|
107,121 |
|
Goodwill |
|
|
1,362,747 |
|
|
1,077,186 |
|
Other
intangible assets, net |
|
|
205,103 |
|
|
33,243 |
|
Deferred tax assets, net |
|
|
17,634 |
|
|
18,129 |
|
Other
assets |
|
|
5,476 |
|
|
2,278 |
|
Total
assets |
|
$ |
2,456,826 |
|
$ |
1,749,549 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
300,938 |
|
$ |
263,814 |
|
Current
portion of long-term debt - term loan |
|
|
19,688 |
|
|
12,500 |
|
Current
portion of long-term debt - equipment notes |
|
|
3,754 |
|
|
— |
|
Accrued
liabilities |
|
|
116,243 |
|
|
75,087 |
|
Total
current liabilities |
|
|
440,623 |
|
|
351,401 |
|
|
|
|
|
|
|
|
|
Long-term debt - term
loan |
|
|
309,548 |
|
|
229,387 |
|
Long-term debt -
equipment notes |
|
|
15,128 |
|
|
— |
|
Long-term debt - Senior
Notes |
|
|
393,769 |
|
|
— |
|
Deferred tax
liabilities, net |
|
|
167,508 |
|
|
132,840 |
|
Long-term portion of
insurance reserves |
|
|
42,347 |
|
|
36,160 |
|
Other liabilities |
|
|
1,868 |
|
|
3,242 |
|
Total
liabilities |
|
|
1,370,791 |
|
|
753,030 |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
1,086,035 |
|
|
996,519 |
|
Total
liabilities and equity |
|
$ |
2,456,826 |
|
$ |
1,749,549 |
|
|
|
|
|
|
|
|
|
|
|
|
|
As of September 30, |
|
|
|
2018 |
|
2017 |
|
Other Financial
Data |
|
|
|
|
|
|
|
Receivable days † |
|
|
49 |
|
|
49 |
|
Inventory
days † |
|
|
34 |
|
|
30 |
|
Accounts
payable days † |
|
|
75 |
|
|
80 |
|
Receivables, net plus inventories, net less accounts payable † |
|
$ |
280,643 |
|
$ |
189,547 |
|
Receivables, net plus inventories, net less accounts payable as a
percent of sales (TTM)‡ |
|
|
11.3 |
% |
10 |
% |
|
|
† Adjusted for
remaining acquisition day one balance sheet items. |
|
‡ Last 12 months sales
have been adjusted for the pro forma effect of acquired
branches. |
|
|
|
TopBuild
Corp. |
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (Unaudited) |
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
September 30, |
|
|
2018 |
|
|
2017 |
|
Cash Flows
Provided by (Used in) Operating Activities: |
|
|
|
|
|
|
Net income |
|
$ |
96,198 |
|
|
$ |
53,142 |
|
Adjustments to
reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
27,133 |
|
|
|
11,753 |
|
Share-based compensation |
|
|
8,244 |
|
|
|
7,473 |
|
Loss on
extinguishment of debt |
|
|
— |
|
|
|
1,086 |
|
Loss on
sale or abandonment of property and equipment |
|
|
764 |
|
|
|
614 |
|
Amortization of debt issuance costs |
|
|
812 |
|
|
|
293 |
|
Change in
fair value of contingent consideration |
|
|
(373 |
) |
|
|
98 |
|
Provision
for bad debt expense |
|
|
3,003 |
|
|
|
2,498 |
|
Loss from
inventory obsolescence |
|
|
1,375 |
|
|
|
1,390 |
|
Deferred
income taxes, net |
|
|
(708 |
) |
|
|
266 |
|
Change in
certain assets and liabilities |
|
|
|
|
|
|
Receivables, net |
|
|
(46,993 |
) |
|
|
(43,931 |
) |
Inventories, net |
|
|
(15,333 |
) |
|
|
249 |
|
Prepaid
expenses and other current assets |
|
|
(5,560 |
) |
|
|
8,362 |
|
Accounts
payable |
|
|
17,768 |
|
|
|
(2,280 |
) |
Accrued
liabilities |
|
|
10,304 |
|
|
|
13,633 |
|
Other,
net |
|
|
(601 |
) |
|
|
(28 |
) |
Net cash
provided by operating activities |
|
|
96,033 |
|
|
|
54,618 |
|
|
|
|
|
|
|
|
Cash Flows
Provided by (Used in) Investing Activities: |
|
|
|
|
|
|
Purchases
of property and equipment |
|
|
(42,379 |
) |
|
|
(13,088 |
) |
Acquisition of businesses, net of cash acquired of $15,756 in
2018 |
|
|
(500,666 |
) |
|
|
(84,040 |
) |
Proceeds
from sale of property and equipment |
|
|
502 |
|
|
|
453 |
|
Other,
net |
|
|
31 |
|
|
|
178 |
|
Net cash
used in investing activities |
|
|
(542,512 |
) |
|
|
(96,497 |
) |
|
|
|
|
|
|
|
Cash Flows
Provided by (Used in) Financing Activities: |
|
|
|
|
|
|
Proceeds
from issuance of Senior Notes |
|
|
400,000 |
|
|
|
— |
|
Proceeds
from issuance of term loan |
|
|
100,000 |
|
|
|
250,000 |
|
Repayment
of term loan |
|
|
(11,875 |
) |
|
|
(183,125 |
) |
Proceeds
from equipment notes |
|
|
20,104 |
|
|
|
— |
|
Repayment
of equipment notes |
|
|
(1,222 |
) |
|
|
— |
|
Proceeds
from revolving credit facility |
|
|
90,000 |
|
|
|
170,000 |
|
Repayment
of revolving credit facility |
|
|
(90,000 |
) |
|
|
(165,000 |
) |
Payment
of debt issuance costs |
|
|
(7,819 |
) |
|
|
(2,150 |
) |
Taxes
withheld and paid on employees' equity awards |
|
|
(5,433 |
) |
|
|
(4,475 |
) |
Repurchase of shares of common stock |
|
|
(9,493 |
) |
|
|
(139,286 |
) |
Payment
of contingent consideration |
|
|
(841 |
) |
|
|
— |
|
Net cash
provided by (used in) financing activities |
|
|
483,421 |
|
|
|
(74,036 |
) |
|
|
|
|
|
|
|
Cash and Cash
Equivalents |
|
|
|
|
|
|
Increase
(decrease) for the period |
|
|
36,942 |
|
|
|
(115,915 |
) |
Beginning
of year |
|
|
56,521 |
|
|
|
134,375 |
|
End of
period |
|
$ |
93,463 |
|
|
$ |
18,460 |
|
|
|
|
|
|
|
|
Supplemental disclosure
of noncash investing activities: |
|
|
|
|
|
|
Accruals
for property and equipment |
|
$ |
546 |
|
|
$ |
154 |
|
|
|
TopBuild
Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Data
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
|
|
|
|
Nine Months Ended
September 30, |
|
|
|
|
|
|
2018 |
|
|
2017 |
|
|
Change |
|
|
2018 |
|
|
2017 |
|
|
Change |
|
Installation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
464,540 |
|
|
$ |
333,238 |
|
|
|
39.4 |
% |
|
$ |
1,223,357 |
|
|
$ |
945,109 |
|
|
|
29.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit, as reported |
|
$ |
61,004 |
|
|
$ |
40,862 |
|
|
|
|
|
|
$ |
139,969 |
|
|
$ |
66,985 |
|
|
|
|
|
Operating
margin, as reported |
|
|
13.1 |
% |
|
|
12.3 |
% |
|
|
|
|
|
|
11.4 |
% |
|
|
7.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant legal settlement |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
30,000 |
|
|
|
|
|
Rationalization charges |
|
|
177 |
|
|
|
139 |
|
|
|
|
|
|
|
629 |
|
|
|
720 |
|
|
|
|
|
Operating
profit, as adjusted |
|
$ |
61,181 |
|
|
$ |
41,001 |
|
|
|
|
|
|
$ |
140,598 |
|
|
$ |
97,705 |
|
|
|
|
|
Operating
margin, as adjusted |
|
|
13.2 |
% |
|
|
12.3 |
% |
|
|
|
|
|
|
11.5 |
% |
|
|
10.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distribution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
212,948 |
|
|
$ |
181,146 |
|
|
|
17.6 |
% |
|
$ |
606,335 |
|
|
$ |
526,452 |
|
|
|
15.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit, as reported |
|
$ |
19,229 |
|
|
$ |
18,300 |
|
|
|
|
|
|
$ |
57,141 |
|
|
$ |
50,806 |
|
|
|
|
|
Operating
margin, as reported |
|
|
9.0 |
% |
|
|
10.1 |
% |
|
|
|
|
|
|
9.4 |
% |
|
|
9.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
134 |
|
|
|
5 |
|
|
|
|
|
|
|
159 |
|
|
|
23 |
|
|
|
|
|
Operating
profit, as adjusted |
|
$ |
19,363 |
|
|
$ |
18,305 |
|
|
|
|
|
|
$ |
57,300 |
|
|
$ |
50,829 |
|
|
|
|
|
Operating
margin, as adjusted |
|
|
9.1 |
% |
|
|
10.1 |
% |
|
|
|
|
|
|
9.5 |
% |
|
|
9.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
before eliminations |
|
$ |
677,488 |
|
|
$ |
514,384 |
|
|
|
|
|
|
$ |
1,829,692 |
|
|
$ |
1,471,561 |
|
|
|
|
|
Intercompany eliminations |
|
|
(30,199 |
) |
|
|
(25,340 |
) |
|
|
|
|
|
|
(84,990 |
) |
|
|
(66,696 |
) |
|
|
|
|
Net sales
after eliminations |
|
$ |
647,289 |
|
|
$ |
489,044 |
|
|
|
32.4 |
% |
|
$ |
1,744,702 |
|
|
$ |
1,404,865 |
|
|
|
24.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit, as reported - segment |
|
$ |
80,233 |
|
|
$ |
59,162 |
|
|
|
|
|
|
$ |
197,110 |
|
|
$ |
117,791 |
|
|
|
|
|
General
corporate expense, net |
|
|
(8,358 |
) |
|
|
(5,187 |
) |
|
|
|
|
|
|
(37,937 |
) |
|
|
(19,503 |
) |
|
|
|
|
Intercompany eliminations and other adjustments |
|
|
(5,658 |
) |
|
|
(4,413 |
) |
|
|
|
|
|
|
(15,382 |
) |
|
|
(11,393 |
) |
|
|
|
|
Operating
profit, as reported |
|
$ |
66,217 |
|
|
$ |
49,562 |
|
|
|
|
|
|
$ |
143,791 |
|
|
$ |
86,895 |
|
|
|
|
|
Operating
margin, as reported |
|
|
10.2 |
% |
|
|
10.1 |
% |
|
|
|
|
|
|
8.2 |
% |
|
|
6.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant legal settlement |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
30,000 |
|
|
|
|
|
Rationalization charges † |
|
|
1,668 |
|
|
|
404 |
|
|
|
|
|
|
|
6,807 |
|
|
|
3,399 |
|
|
|
|
|
Acquisition related costs |
|
|
1,578 |
|
|
|
310 |
|
|
|
|
|
|
|
14,859 |
|
|
|
748 |
|
|
|
|
|
Operating
profit, as adjusted |
|
$ |
69,463 |
|
|
$ |
50,276 |
|
|
|
|
|
|
$ |
165,457 |
|
|
$ |
121,042 |
|
|
|
|
|
Operating
margin, as adjusted |
|
|
10.7 |
% |
|
|
10.3 |
% |
|
|
|
|
|
|
9.5 |
% |
|
|
8.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation ‡ |
|
|
2,848 |
|
|
|
2,372 |
|
|
|
|
|
|
|
8,244 |
|
|
|
6,859 |
|
|
|
|
|
Depreciation and amortization |
|
|
11,948 |
|
|
|
4,918 |
|
|
|
|
|
|
|
27,133 |
|
|
|
11,753 |
|
|
|
|
|
EBITDA,
as adjusted |
|
$ |
84,259 |
|
|
$ |
57,566 |
|
|
|
|
|
|
$ |
200,834 |
|
|
$ |
139,654 |
|
|
|
|
|
EBITDA
margin, as adjusted |
|
|
13.0 |
% |
|
|
11.8 |
% |
|
|
|
|
|
|
11.5 |
% |
|
|
9.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales
change period over period |
|
|
158,245 |
|
|
|
|
|
|
|
|
|
|
339,837 |
|
|
|
|
|
|
|
|
EBITDA,
as adjusted, change period over period |
|
|
26,693 |
|
|
|
|
|
|
|
|
|
|
61,180 |
|
|
|
|
|
|
|
|
EBITDA,
as adjusted, as percentage of sales change |
|
|
16.9 |
% |
|
|
|
|
|
|
|
|
|
18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
†
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 share and per common share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Gross Profit
and Operating Profit Reconciliations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
647,289 |
|
|
$ |
489,044 |
|
|
$ |
1,744,702 |
|
|
$ |
1,404,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit,
as reported |
|
$ |
161,865 |
|
|
$ |
120,839 |
|
|
$ |
417,925 |
|
|
$ |
339,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization
charges |
|
|
21 |
|
|
|
— |
|
|
|
176 |
|
|
|
— |
|
Gross profit,
as adjusted |
|
$ |
161,886 |
|
|
$ |
120,839 |
|
|
$ |
418,101 |
|
|
$ |
339,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin, as
reported |
|
|
25.0 |
% |
|
|
24.7 |
% |
|
|
24.0 |
% |
|
|
24.1 |
% |
Gross margin, as
adjusted |
|
|
25.0 |
% |
|
|
24.7 |
% |
|
|
24.0 |
% |
|
|
24.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
profit, as reported |
|
$ |
66,217 |
|
|
$ |
49,562 |
|
|
$ |
143,791 |
|
|
$ |
86,895 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant legal
settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,000 |
|
Rationalization
charges |
|
|
1,668 |
|
|
|
404 |
|
|
|
6,807 |
|
|
|
3,399 |
|
Acquisition related
costs |
|
|
1,578 |
|
|
|
310 |
|
|
|
14,859 |
|
|
|
748 |
|
Operating
profit, as adjusted |
|
$ |
69,463 |
|
|
$ |
50,276 |
|
|
$ |
165,457 |
|
|
$ |
121,042 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating margin, as
reported |
|
|
10.2 |
% |
|
|
10.1 |
% |
|
|
8.2 |
% |
|
|
6.2 |
% |
Operating margin, as
adjusted |
|
|
10.7 |
% |
|
|
10.3 |
% |
|
|
9.5 |
% |
|
|
8.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Per
Common Share Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before
income taxes, as reported |
|
$ |
57,014 |
|
|
$ |
47,110 |
|
|
$ |
125,057 |
|
|
$ |
80,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Significant legal
settlement |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,000 |
|
Rationalization
charges |
|
|
1,668 |
|
|
|
404 |
|
|
|
6,807 |
|
|
|
3,399 |
|
Acquisition related
costs |
|
|
1,578 |
|
|
|
310 |
|
|
|
14,859 |
|
|
|
748 |
|
Loss on extinguishment
of debt |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
1,086 |
|
Income before
income taxes, as adjusted |
|
|
60,260 |
|
|
|
47,824 |
|
|
|
146,723 |
|
|
|
115,514 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax rate at 27% and 38%
for 2018 and 2017, respectively |
|
|
(16,270 |
) |
|
|
(18,173 |
) |
|
|
(39,615 |
) |
|
|
(43,895 |
) |
Income, as
adjusted |
|
$ |
43,990 |
|
|
$ |
29,651 |
|
|
$ |
107,108 |
|
|
$ |
71,619 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per
common share, as adjusted |
|
$ |
1.23 |
|
|
$ |
0.83 |
|
|
$ |
2.99 |
|
|
$ |
1.94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
diluted common shares outstanding |
|
|
35,789,383 |
|
|
|
35,737,629 |
|
|
|
35,815,357 |
|
|
|
36,842,144 |
|
|
|
TopBuild
Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
Same Branch Net Sales and Adjusted
EBITDA (Unaudited) |
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net
sales |
|
|
|
|
|
|
|
|
|
|
|
|
Same branch |
|
$ |
538,776 |
|
$ |
489,044 |
|
$ |
1,533,719 |
|
$ |
1,404,865 |
Acquisitions † |
|
|
108,513 |
|
|
— |
|
|
210,983 |
|
|
— |
Total |
|
$ |
647,289 |
|
$ |
489,044 |
|
$ |
1,744,702 |
|
$ |
1,404,865 |
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, as
adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
Same branch |
|
$ |
68,187 |
|
$ |
57,566 |
|
$ |
172,878 |
|
$ |
139,654 |
Acquisitions † |
|
|
16,072 |
|
|
— |
|
|
27,956 |
|
|
— |
Total |
|
$ |
84,259 |
|
$ |
57,566 |
|
$ |
200,834 |
|
$ |
139,654 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in total EBITDA,
as adjusted, as a percentage of total sales change |
|
|
16.9 |
% |
|
|
|
18.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in same branch
EBITDA, as adjusted, as a percentage of same branch sales
change |
|
|
21.4 |
% |
|
|
|
25.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Same branch EBITDA, as
adjusted, as a percentage of same branch sales |
|
|
12.7 |
% |
|
|
|
11.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquired EBITDA, as
adjusted, as a percentage of acquired sales |
|
|
14.8 |
% |
|
|
|
13.3 |
% |
|
|
|
†
Represents current year impact of acquisitions in their first
twelve months. |
|
TopBuild Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of EBITDA to Net Income
(Unaudited) |
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
September 30, |
|
Nine Months Ended
September 30, |
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Net income, as reported |
|
$ |
42,658 |
|
$ |
31,393 |
|
$ |
96,198 |
|
$ |
53,142 |
Adjustments to arrive at EBITDA, as adjusted: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and other, net |
|
|
9,203 |
|
|
2,452 |
|
|
18,734 |
|
|
5,528 |
Income tax expense |
|
|
14,356 |
|
|
15,717 |
|
|
28,859 |
|
|
27,139 |
Depreciation and amortization |
|
|
11,948 |
|
|
4,918 |
|
|
27,133 |
|
|
11,753 |
Share-based compensation † |
|
|
2,848 |
|
|
2,372 |
|
|
8,244 |
|
|
6,859 |
Significant legal settlement |
|
|
— |
|
|
— |
|
|
— |
|
|
30,000 |
Rationalization charges |
|
|
1,668 |
|
|
404 |
|
|
6,807 |
|
|
3,399 |
Loss on extinguishment of debt |
|
|
— |
|
|
— |
|
|
— |
|
|
1,086 |
Acquisition related costs |
|
|
1,578 |
|
|
310 |
|
|
14,859 |
|
|
748 |
EBITDA, as adjusted |
|
$ |
84,259 |
|
$ |
57,566 |
|
$ |
200,834 |
|
$ |
139,654 |
|
|
† 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. |
|
|
|
|
|
2018 Estimated Adjusted EBITDA Range
(Unaudited) |
|
(dollars in
millions) |
|
|
|
|
|
|
|
|
|
|
Twelve Months Ending December 31,
2018 |
|
|
Low |
|
|
High |
Estimated net
income |
$ |
125.4 |
|
$ |
135.2 |
Adjustments to arrive
at estimated EBITDA, as adjusted: |
|
|
|
|
|
Interest
expense and other, net |
|
28.6 |
|
|
27.6 |
Income
tax expense |
|
46.4 |
|
|
50.0 |
Depreciation and amortization |
|
39.7 |
|
|
38.6 |
Share-based compensation |
|
12.4 |
|
|
11.6 |
Rationalization charges |
|
9.1 |
|
|
7.6 |
Acquisition related costs |
|
16.4 |
|
|
15.4 |
Estimated
EBITDA, as adjusted |
$ |
278.0 |
|
$ |
286.0 |
|
|
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