TopBuild Corp. (NYSE:BLD), a
leading installer and distributor of insulation and building
material products today reported results for the third quarter
ended September 30, 2019.
Jerry Volas, Chief Executive Officer, stated,
“We continue to demonstrate the strength of our uniquely
diversified operating model and our focus on profitable growth as
we once again report a very strong quarter. Our national
scale, strong customer and supplier relationships and operational
efficiency initiatives are driving our top line growth and margin
expansion.
“Looking ahead, we believe the residential and
commercial markets will continue to grow and TopBuild is well
positioned to leverage its existing platform to take advantage of
the many opportunities in both of these areas.”
Third Quarter Financial Highlights(unless
otherwise indicated, comparisons are to the quarter ended September
30, 2018)
- Net sales increased 5.4% to $682.3
million, primarily driven by increased selling prices and
volume.
- Gross margin increased 130 basis
points to 26.3%.
- Operating profit was $80.4 million,
compared to operating profit of $66.2 million. On an adjusted
basis, operating profit was $80.6 million, compared to $69.5
million, a 16.0% improvement.
- Operating margin was 11.8%, up 160
basis points. Adjusted operating margin was also 11.8%, up
110 basis points.
- Net income was $55.0 million, or
$1.60 per diluted share, compared to $42.7 million, or $1.19 per
diluted share. Adjusted income was $52.7 million, or $1.53 per
diluted share, compared to $44.0 million, or $1.23 per diluted
share.
- Adjusted EBITDA was $98.0 million,
compared to $84.3 million, a 16.3% increase, and adjusted EBITDA
margin improved 140 basis points to 14.4%.
- Incremental EBITDA margin was
39.1%.
- At September 30, 2019, the Company
had cash and cash equivalents of $171.6 million and availability
under its revolving credit facility of $188.6 million for total
liquidity of $360.2 million.
Nine Month Financial
Highlights(unless otherwise indicated, comparisons are to
nine months ended September 30, 2018)
- Net sales increased 12.4% to
$1,961.8 million.
- Gross margin expanded 200 basis
points to 26.0%.
- Operating profit was $213.1
million, compared to operating profit of $143.8
million. On an adjusted basis, operating profit was
$216.1 million, compared to $165.5 million, a 30.6%
improvement.
- Operating margin was 10.9% a
270-basis point improvement. On an adjusted basis, operating
margin improved 150 basis points to 11.0%.
- Net income was $145.0 million, or
$4.20 per diluted share, compared to $96.2 million, or $2.69 per
diluted share. Adjusted income was $138.8 million, or $4.02
per diluted share, compared to $107.1 million, or $2.99 per diluted
share.
- Adjusted EBITDA was $266.5 million,
compared to $200.8 million, a 32.7% increase. Adjusted EBITDA
margin was 13.6%, a 210-basis point improvement. Incremental
EBITDA margin was 30.3%.
- On a same branch basis, adjusted
EBITDA grew 20.7% to $242.4 million and incremental EBITDA margin
was 46.1%.
Operating Segment Highlights
($ in 000s)(comparisons are to the period ended
September 30, 2018)
TruTeam |
3 MonthsEnded9/30/19 |
9 MonthsEnded9/30/19 |
|
Service Partners |
3 MonthsEnded9/30/19 |
9 MonthsEnded9/30/19 |
|
Sales |
$498,390 |
$1,430,800 |
|
Sales |
$220,947 |
$638,899 |
|
Change |
|
|
|
Change |
|
|
|
Volume |
3.8% |
3.1% |
|
Volume |
-0.7% |
-1.8% |
|
Price |
3.0% |
4.3% |
|
Price |
4.4% |
5.4% |
|
M&A |
0.4% |
9.5% |
|
M&A |
0.0% |
1.8% |
|
Total Change |
7.3% |
17.0% |
|
Total Change |
3.8% |
5.4% |
|
Operating Margin |
14.0% |
13.2% |
|
Operating Margin |
10.6% |
10.2% |
|
Change |
90 bps |
180 bps |
|
Change |
160 bps |
80 bps |
|
Adj. Operating Margin |
14.0% |
13.3% |
|
Adj. Operating Margin |
10.6% |
10.2% |
|
Change |
80 bps |
180 bps |
|
Change |
150 bps |
70 bps |
|
|
|
|
|
|
|
|
|
Capital
AllocationAcquisitions The Company
completed the acquisition of Viking Insulation in the third
quarter. Viking focuses on fiberglass installation in a wide
variety of light commercial and residential projects and is based
in Southern California.
Volas stated, “We are evaluating a robust
pipeline of acquisition candidates. The deliberate approach
taken by our seasoned M&A team helps to ensure our strategic
goals are met and only the best opportunities are pursued.
“We are also committed to optimizing the
efficiency of our capital structure and while acquisitions remain
our top capital allocation priority, our strategy also includes a
return of excess capital to our shareholders through our share
repurchase program.”
Share RepurchasesIn the third quarter of 2019,
the Company repurchased 364,074 shares at an average price of
$89.76 per share. These shares were purchased as part of the
Company’s $200 million share repurchase authorization announced on
February 26, 2019. As of September 30, 2019, $147.8 million
of the $200 million authorization remained.
Additionally, under the above-mentioned share
repurchase authorization, the Company intends to enter into an
agreement to repurchase $50 million of its common stock under an
accelerated share repurchase (ASR) program. This will be the
third ASR the Company has undertaken since first quarter
2017.
2019 Revenue and Adjusted EBITDA
OutlookThe Company has raised its outlook for housing
starts for 2019 to a range of 1.245 million to 1.275 million starts
from the previous range of 1.23 million to 1.27 million
starts. Accordingly, the low end of the Company’s revenue
outlook has been raised by $15 million while the high end of its
revenue range has been raised by $5 million. The Company has
also raised the low and high end of its adjusted EBITDA outlook by
$9 million and $5 million, respectively.
($ in millions)
|
|
|
|
2019 |
Low |
High |
|
Sales |
$ |
2,625.0 |
$ |
2,645.0 |
|
Adjusted EBITDA* |
$ |
354.0 |
$ |
360.0 |
|
*See table for adjusted EBITDA
reconciliation
Assumptions ($ in
millions):
2019 |
Low |
High |
|
Housing Starts |
1,245K |
1,275K |
|
Estimated net income |
$ |
179.7 |
$ |
188.5 |
|
Interest Expense and other, net |
$ |
37.0 |
$ |
35.0 |
|
Income tax expense |
$ |
64.8 |
$ |
68.0 |
|
Depreciation and Amortization |
$ |
54.0 |
$ |
52.0 |
|
Share based compensation |
$ |
14.0 |
$ |
13.0 |
|
|
|
|
|
|
|
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
2019 results to differ materially from TopBuild’s current
expectations are discussed below and are also detailed in the
Company’s 2018 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 2019 financial results is scheduled
for today, Thursday, October 31, at 9:00 a.m. Eastern Time.
The call may be accessed by dialing (888) 225-2706. The
conference call will be webcast simultaneously on the “Investors”
section of the Company’s website at www.topbuild.com.
About TopBuildTopBuild Corp., a
Fortune 1000 Company 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 close to 200 branches, and through Service
Partners® which distributes insulation and building material
products from approximately 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, adjusted
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, the related assumptions
underlying our expected results, and our plan to repurchase our
common stock under the proposed accelerated stock repurchase
transaction. 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 ability to repurchase our common stock is
subject to the execution of a definitive agreement with respect to
the share repurchase. 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
(tables follow)
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild
Corp. |
Condensed
Consolidated Statements of Operations
(Unaudited) |
(in thousands,
except share and per common share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net sales |
|
$ |
682,330 |
|
|
$ |
647,289 |
|
|
$ |
1,961,771 |
|
|
$ |
1,744,702 |
|
Cost of
sales |
|
|
502,999 |
|
|
|
485,424 |
|
|
|
1,451,822 |
|
|
|
1,326,777 |
|
Gross
profit |
|
|
179,331 |
|
|
|
161,865 |
|
|
|
509,949 |
|
|
|
417,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expense |
|
|
98,886 |
|
|
|
95,648 |
|
|
|
296,846 |
|
|
|
274,134 |
|
Operating
profit |
|
|
80,445 |
|
|
|
66,217 |
|
|
|
213,103 |
|
|
|
143,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
(9,507 |
) |
|
|
(9,381 |
) |
|
|
(28,740 |
) |
|
|
(19,026 |
) |
Other,
net |
|
|
653 |
|
|
|
178 |
|
|
|
1,512 |
|
|
|
292 |
|
Other
expense, net |
|
|
(8,854 |
) |
|
|
(9,203 |
) |
|
|
(27,228 |
) |
|
|
(18,734 |
) |
Income
before income taxes |
|
|
71,591 |
|
|
|
57,014 |
|
|
|
185,875 |
|
|
|
125,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
|
(16,615 |
) |
|
|
(14,356 |
) |
|
|
(40,864 |
) |
|
|
(28,859 |
) |
Net
income |
|
$ |
54,976 |
|
|
$ |
42,658 |
|
|
$ |
145,011 |
|
|
$ |
96,198 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.63 |
|
|
$ |
1.22 |
|
|
$ |
4.27 |
|
|
$ |
2.74 |
|
Diluted |
|
$ |
1.60 |
|
|
$ |
1.19 |
|
|
$ |
4.20 |
|
|
$ |
2.69 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
33,790,857 |
|
|
|
35,091,388 |
|
|
|
33,977,464 |
|
|
|
35,084,694 |
|
Diluted |
|
|
34,367,902 |
|
|
|
35,789,383 |
|
|
|
34,541,635 |
|
|
|
35,815,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild Corp. |
|
Condensed Consolidated Balance Sheets and Other Financial
Data (Unaudited) |
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
As of |
|
|
|
September 30, |
|
December 31, |
|
|
|
2019 |
|
2018 |
|
ASSETS |
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
171,591 |
|
$ |
100,929 |
|
Receivables, net of an allowance for doubtful accounts of $5,423
and $3,676 at September 30, 2019, and December 31, 2018,
respectively |
|
|
454,640 |
|
|
407,106 |
|
Inventories, net |
|
|
146,702 |
|
|
168,977 |
|
Prepaid expenses and other current assets |
|
|
16,457 |
|
|
27,685 |
|
Total current assets |
|
|
789,390 |
|
|
704,697 |
|
|
|
|
|
|
|
|
|
Right of
use assets |
|
|
89,178 |
|
|
— |
|
Property
and equipment, net |
|
|
175,274 |
|
|
167,961 |
|
Goodwill |
|
|
1,367,918 |
|
|
1,364,016 |
|
Other
intangible assets, net |
|
|
185,844 |
|
|
199,387 |
|
Deferred
tax assets, net |
|
|
11,758 |
|
|
13,176 |
|
Other
assets |
|
|
4,760 |
|
|
5,294 |
|
Total assets |
|
$ |
2,624,122 |
|
$ |
2,454,531 |
|
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
Accounts payable |
|
$ |
300,125 |
|
$ |
313,172 |
|
Current portion of long-term debt |
|
|
33,262 |
|
|
26,852 |
|
Accrued liabilities |
|
|
112,286 |
|
|
104,236 |
|
Short-term lease liabilities |
|
|
36,860 |
|
|
— |
|
Total current liabilities |
|
|
482,533 |
|
|
444,260 |
|
|
|
|
|
|
|
|
|
Long-term
debt |
|
|
701,955 |
|
|
716,622 |
|
Deferred tax
liabilities, net |
|
|
173,493 |
|
|
176,212 |
|
Long-term
portion of insurance reserves |
|
|
44,405 |
|
|
43,434 |
|
Long-term
lease liabilities |
|
|
55,362 |
|
|
— |
|
Other
liabilities |
|
|
1,167 |
|
|
1,905 |
|
Total liabilities |
|
|
1,458,915 |
|
|
1,382,433 |
|
|
|
|
|
|
|
|
|
EQUITY |
|
|
1,165,207 |
|
|
1,072,098 |
|
Total liabilities and equity |
|
$ |
2,624,122 |
|
$ |
2,454,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As ofSeptember 30, |
|
|
|
2019 |
|
2018 |
|
Other Financial Data |
|
|
|
|
|
|
|
Receivable days † |
|
|
51 |
|
|
49 |
|
Inventory days † |
|
|
28 |
|
|
34 |
|
Accounts payable days † |
|
|
77 |
|
|
75 |
|
Receivables, net plus inventories, net less accounts payable † |
|
$ |
301,217 |
|
$ |
280,643 |
|
Receivables, net plus inventories, net less accounts payable as a
percent of sales (TTM)‡ |
|
11.6 |
% |
|
11.3 |
% |
|
|
|
|
|
|
|
|
† Adjusted
for remaining acquisition day one balance sheet items. |
|
|
|
|
|
|
|
‡ Trailing 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 EndedSeptember 30, |
|
|
2019 |
|
2018 |
Cash
Flows Provided by (Used in) Operating Activities: |
|
|
|
|
|
Net income |
|
$ |
145,011 |
|
|
$ |
96,198 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
39,005 |
|
|
|
27,133 |
|
Share-based compensation |
|
|
11,411 |
|
|
|
8,244 |
|
Loss on sale or abandonment of property and equipment |
|
|
885 |
|
|
|
764 |
|
Amortization of debt issuance costs |
|
|
1,169 |
|
|
|
812 |
|
Change in fair value of contingent consideration |
|
|
(119 |
) |
|
|
(373 |
) |
Provision for bad debt expense |
|
|
5,697 |
|
|
|
3,003 |
|
Loss from inventory obsolescence |
|
|
1,794 |
|
|
|
1,375 |
|
Deferred income taxes, net |
|
|
(381 |
) |
|
|
(708 |
) |
Change in certain assets and liabilities |
|
|
|
|
|
|
Receivables, net |
|
|
(51,585 |
) |
|
|
(46,993 |
) |
Inventories, net |
|
|
20,637 |
|
|
|
(15,333 |
) |
Prepaid expenses and other current assets |
|
|
10,003 |
|
|
|
(5,560 |
) |
Accounts payable |
|
|
(12,529 |
) |
|
|
17,768 |
|
Accrued liabilities |
|
|
10,758 |
|
|
|
10,304 |
|
Other, net |
|
|
1,023 |
|
|
|
(601 |
) |
Net cash provided by operating activities |
|
|
182,779 |
|
|
|
96,033 |
|
|
|
|
|
|
|
|
Cash
Flows Provided by (Used in) Investing Activities: |
|
|
|
|
|
|
Purchases of property and equipment |
|
|
(34,100 |
) |
|
|
(42,379 |
) |
Acquisition of businesses, net of cash acquired of $15,756 in
2018 |
|
|
(6,452 |
) |
|
|
(500,666 |
) |
Proceeds from sale of property and equipment |
|
|
2,239 |
|
|
|
502 |
|
Other, net |
|
|
25 |
|
|
|
31 |
|
Net cash used in investing activities |
|
|
(38,288 |
) |
|
|
(542,512 |
) |
|
|
|
|
|
|
|
Cash
Flows Provided by (Used in) Financing Activities: |
|
|
|
|
|
|
Proceeds from issuance of long-term debt |
|
|
9,998 |
|
|
|
520,104 |
|
Repayment of long-term debt |
|
|
(19,424 |
) |
|
|
(13,097 |
) |
Payment of debt issuance costs |
|
|
— |
|
|
|
(7,819 |
) |
Proceeds from revolving credit facility |
|
|
— |
|
|
|
90,000 |
|
Repayment of revolving credit facility |
|
|
— |
|
|
|
(90,000 |
) |
Taxes withheld and paid on employees' equity awards |
|
|
(11,135 |
) |
|
|
(5,433 |
) |
Repurchase of shares of common stock |
|
|
(52,177 |
) |
|
|
(9,493 |
) |
Payment of contingent consideration |
|
|
(1,091 |
) |
|
|
(841 |
) |
Net cash (used in) provided by financing activities |
|
|
(73,829 |
) |
|
|
483,421 |
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents |
|
|
|
|
|
|
Increase for the period |
|
|
70,662 |
|
|
|
36,942 |
|
Beginning of period |
|
|
100,929 |
|
|
|
56,521 |
|
End of period |
|
$ |
171,591 |
|
|
$ |
93,463 |
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash
activities: |
|
|
|
|
|
|
Leased assets obtained in exchange for new operating lease
liabilities |
|
$ |
120,726 |
|
|
$ |
— |
|
Accruals for property and equipment |
|
|
102 |
|
|
|
546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild
Corp. |
|
Segment Data
(Unaudited) |
|
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
|
|
|
Nine Months EndedSeptember 30, |
|
|
|
|
|
2019 |
|
2018 |
|
Change |
|
|
2019 |
|
2018 |
|
Change |
|
TruTeam |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
498,390 |
|
|
$ |
464,540 |
|
|
7.3 |
% |
|
$ |
1,430,800 |
|
|
$ |
1,223,357 |
|
|
17.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as reported |
|
$ |
69,846 |
|
|
$ |
61,004 |
|
|
|
|
|
$ |
189,568 |
|
|
$ |
139,969 |
|
|
|
|
Operating margin, as reported |
|
|
14.0 |
% |
|
13.1 |
% |
|
|
|
|
|
13.2 |
% |
|
11.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
(16 |
) |
|
|
177 |
|
|
|
|
|
|
183 |
|
|
|
629 |
|
|
|
|
Acquisition related costs |
|
|
56 |
|
|
|
— |
|
|
|
|
|
|
459 |
|
|
|
— |
|
|
|
|
Operating profit, as adjusted |
|
$ |
69,886 |
|
|
$ |
61,181 |
|
|
|
|
|
$ |
190,210 |
|
|
$ |
140,598 |
|
|
|
|
Operating margin, as adjusted |
|
|
14.0 |
% |
|
13.2 |
% |
|
|
|
|
|
13.3 |
% |
|
11.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Partners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
220,947 |
|
|
$ |
212,948 |
|
|
3.8 |
% |
|
$ |
638,899 |
|
|
$ |
606,335 |
|
|
5.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as reported |
|
$ |
23,406 |
|
|
$ |
19,229 |
|
|
|
|
|
$ |
65,154 |
|
|
$ |
57,141 |
|
|
|
|
Operating margin, as reported |
|
|
10.6 |
% |
|
9.0 |
% |
|
|
|
|
|
10.2 |
% |
|
9.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
— |
|
|
|
134 |
|
|
|
|
|
|
109 |
|
|
|
159 |
|
|
|
|
Operating profit, as adjusted |
|
$ |
23,406 |
|
|
$ |
19,363 |
|
|
|
|
|
$ |
65,263 |
|
|
$ |
57,300 |
|
|
|
|
Operating margin, as adjusted |
|
|
10.6 |
% |
|
9.1 |
% |
|
|
|
|
|
10.2 |
% |
|
9.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales before eliminations |
|
$ |
719,337 |
|
|
$ |
677,488 |
|
|
|
|
|
$ |
2,069,699 |
|
|
$ |
1,829,692 |
|
|
|
|
Intercompany eliminations |
|
|
(37,007 |
) |
|
|
(30,199 |
) |
|
|
|
|
|
(107,928 |
) |
|
|
(84,990 |
) |
|
|
|
Net sales after eliminations |
|
$ |
682,330 |
|
|
$ |
647,289 |
|
|
5.4 |
% |
|
$ |
1,961,771 |
|
|
$ |
1,744,702 |
|
|
12.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as reported - segments |
|
$ |
93,252 |
|
|
$ |
80,233 |
|
|
|
|
|
$ |
254,722 |
|
|
$ |
197,110 |
|
|
|
|
General corporate expense, net |
|
|
(6,872 |
) |
|
|
(8,358 |
) |
|
|
|
|
|
(23,606 |
) |
|
|
(37,937 |
) |
|
|
|
Intercompany eliminations and other adjustments |
|
|
(5,935 |
) |
|
|
(5,658 |
) |
|
|
|
|
|
(18,013 |
) |
|
|
(15,382 |
) |
|
|
|
Operating profit, as reported |
|
$ |
80,445 |
|
|
$ |
66,217 |
|
|
|
|
|
$ |
213,103 |
|
|
$ |
143,791 |
|
|
|
|
Operating margin, as reported |
|
|
11.8 |
% |
|
10.2 |
% |
|
|
|
|
|
10.9 |
% |
|
8.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges † |
|
|
8 |
|
|
|
1,668 |
|
|
|
|
|
|
1,977 |
|
|
|
6,807 |
|
|
|
|
Acquisition related costs |
|
|
131 |
|
|
|
1,578 |
|
|
|
|
|
|
1,034 |
|
|
|
14,859 |
|
|
|
|
Operating profit, as adjusted |
|
$ |
80,584 |
|
|
$ |
69,463 |
|
|
|
|
|
$ |
216,114 |
|
|
$ |
165,457 |
|
|
|
|
Operating margin, as adjusted |
|
|
11.8 |
% |
|
10.7 |
% |
|
|
|
|
|
11.0 |
% |
|
9.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
3,926 |
|
|
|
2,848 |
|
|
|
|
|
|
11,411 |
|
|
|
8,244 |
|
|
|
|
Depreciation and amortization |
|
|
13,467 |
|
|
|
11,948 |
|
|
|
|
|
|
39,005 |
|
|
|
27,133 |
|
|
|
|
EBITDA, as adjusted |
|
$ |
97,977 |
|
|
$ |
84,259 |
|
|
|
|
|
$ |
266,530 |
|
|
$ |
200,834 |
|
|
|
|
EBITDA margin, as adjusted |
|
|
14.4 |
% |
|
13.0 |
% |
|
|
|
|
|
13.6 |
% |
|
11.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales change period over period |
|
|
35,041 |
|
|
|
|
|
|
|
|
|
217,069 |
|
|
|
|
|
|
|
EBITDA, as adjusted, change period over period |
|
|
13,718 |
|
|
|
|
|
|
|
|
|
65,696 |
|
|
|
|
|
|
|
EBITDA, as adjusted, as percentage of sales change |
|
|
39.1 |
% |
|
|
|
|
|
|
|
30.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
† Rationalization
charges include corporate level adjustments as well as segment
operating adjustments. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild
Corp. |
Non-GAAP
Reconciliations (Unaudited) |
(in thousands,
except share and per common share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Gross Profit and Operating Profit
Reconciliations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
|
$ |
682,330 |
|
|
$ |
647,289 |
|
|
$ |
1,961,771 |
|
|
$ |
1,744,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
179,331 |
|
|
$ |
161,865 |
|
|
$ |
509,949 |
|
|
$ |
417,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
— |
|
|
|
21 |
|
|
|
— |
|
|
|
176 |
|
Gross profit, as adjusted |
|
$ |
179,331 |
|
|
$ |
161,886 |
|
|
$ |
509,949 |
|
|
$ |
418,101 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin, as reported |
|
|
26.3 |
% |
|
25.0 |
% |
|
26.0 |
% |
|
24.0 |
% |
Gross
margin, as adjusted |
|
|
26.3 |
% |
|
25.0 |
% |
|
26.0 |
% |
|
24.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as reported |
|
$ |
80,445 |
|
|
$ |
66,217 |
|
|
$ |
213,103 |
|
|
$ |
143,791 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
8 |
|
|
|
1,668 |
|
|
|
1,977 |
|
|
|
6,807 |
|
Acquisition
related costs |
|
|
131 |
|
|
|
1,578 |
|
|
|
1,034 |
|
|
|
14,859 |
|
Operating profit, as adjusted |
|
$ |
80,584 |
|
|
$ |
69,463 |
|
|
$ |
216,114 |
|
|
$ |
165,457 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin, as reported |
|
|
11.8 |
% |
|
10.2 |
% |
|
10.9 |
% |
|
8.2 |
% |
Operating
margin, as adjusted |
|
|
11.8 |
% |
|
10.7 |
% |
|
11.0 |
% |
|
9.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Per Common Share Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes, as reported |
|
$ |
71,591 |
|
|
$ |
57,014 |
|
|
$ |
185,875 |
|
|
$ |
125,057 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
8 |
|
|
|
1,668 |
|
|
|
1,977 |
|
|
|
6,807 |
|
Acquisition
related costs |
|
|
131 |
|
|
|
1,578 |
|
|
|
1,034 |
|
|
|
14,859 |
|
Income before income taxes, as adjusted |
|
|
71,730 |
|
|
|
60,260 |
|
|
|
188,886 |
|
|
|
146,723 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax rate at
26.5% and 27.0% for 2019 and 2018, respectively |
|
|
(19,008 |
) |
|
|
(16,270 |
) |
|
|
(50,055 |
) |
|
|
(39,615 |
) |
Income, as adjusted |
|
$ |
52,722 |
|
|
$ |
43,990 |
|
|
$ |
138,831 |
|
|
$ |
107,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share, as adjusted |
|
$ |
1.53 |
|
|
$ |
1.23 |
|
|
$ |
4.02 |
|
|
$ |
2.99 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average diluted common shares outstanding |
|
|
34,367,902 |
|
|
|
35,789,383 |
|
|
|
34,541,635 |
|
|
|
35,815,357 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild
Corp. |
Same
Branch and Acquisition Net Sales and Adjusted EBITDA
(Unaudited) |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
sales |
|
|
|
|
|
|
|
|
|
|
|
|
Same
branch: |
|
|
|
|
|
|
|
|
|
|
|
|
Installation segment |
|
$ |
496,341 |
|
|
$ |
464,540 |
|
|
$ |
1,314,059 |
|
|
$ |
1,223,357 |
|
Distribution
segment |
|
|
220,947 |
|
|
|
212,948 |
|
|
|
627,829 |
|
|
|
606,335 |
|
Eliminations |
|
|
(37,007 |
) |
|
|
(30,199 |
) |
|
|
(107,066 |
) |
|
|
(84,990 |
) |
Total same
branch |
|
|
680,281 |
|
|
|
647,289 |
|
|
|
1,834,822 |
|
|
|
1,744,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
(a): |
|
|
|
|
|
|
|
|
|
|
|
|
Installation
segment |
|
$ |
2,049 |
|
|
$ |
— |
|
|
$ |
116,741 |
|
|
$ |
— |
|
Distribution
segment |
|
|
— |
|
|
|
— |
|
|
|
11,070 |
|
|
|
— |
|
Eliminations |
|
|
— |
|
|
|
— |
|
|
|
(862 |
) |
|
|
— |
|
Total
acquisitions |
|
|
2,049 |
|
|
|
— |
|
|
|
126,949 |
|
|
|
— |
|
Total |
|
$ |
682,330 |
|
|
$ |
647,289 |
|
|
$ |
1,961,771 |
|
|
$ |
1,744,702 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, as adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
Same
branch |
|
$ |
97,492 |
|
|
$ |
84,259 |
|
|
$ |
242,366 |
|
|
$ |
200,834 |
|
Acquisitions
(a) |
|
|
485 |
|
|
|
— |
|
|
|
24,164 |
|
|
|
— |
|
Total |
|
$ |
97,977 |
|
|
$ |
84,259 |
|
|
$ |
266,530 |
|
|
$ |
200,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, as adjusted, as a percentage of sales |
|
|
|
|
|
|
|
|
|
|
|
|
Same branch
(b) |
|
|
14.3 |
% |
|
|
|
|
13.2 |
% |
|
|
Acquisitions
(c) |
|
|
23.7 |
% |
|
|
|
|
19.0 |
% |
|
|
Total
(d) |
|
|
14.4 |
% |
|
13.0 |
% |
|
13.6 |
% |
|
11.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Adjusted Incremental EBITDA, as a percentage of incremental
sales |
|
|
|
|
|
|
|
|
|
|
|
|
Same branch
(e) |
|
|
40.1 |
% |
|
|
|
|
46.1 |
% |
|
|
Acquisitions
(c) |
|
|
23.7 |
% |
|
|
|
|
19.0 |
% |
|
|
Total
(f) |
|
|
39.1 |
% |
|
|
|
|
30.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents current
year impact of acquisitions in their first twevle months |
(b) Same branch
EBITDA, as adjusted, as a percentage of same branch
sales |
(c) Acquired EBITDA,
as adjusted, as a percentage of acquired sales |
(d) Total EBITDA, as
adjusted, as a percentage of total sales |
(e) Change in same
branch EBITDA, as adjusted, as a percentage of change in same
branch sales |
(f) Change in total
EBITDA, as adjusted, as a percentage of change in total
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild
Corp. |
Reconciliation
of Adjusted EBITDA to Net Income (Unaudited) |
(dollars in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
income, as reported |
|
$ |
54,976 |
|
$ |
42,658 |
|
$ |
145,011 |
|
$ |
96,198 |
Adjustments
to arrive at EBITDA, as adjusted: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and other, net |
|
|
8,854 |
|
|
9,203 |
|
|
27,228 |
|
|
18,734 |
Income tax expense |
|
|
16,615 |
|
|
14,356 |
|
|
40,864 |
|
|
28,859 |
Depreciation and amortization |
|
|
13,467 |
|
|
11,948 |
|
|
39,005 |
|
|
27,133 |
Share-based compensation |
|
|
3,926 |
|
|
2,848 |
|
|
11,411 |
|
|
8,244 |
Rationalization charges |
|
|
8 |
|
|
1,668 |
|
|
1,977 |
|
|
6,807 |
Acquisition related costs |
|
|
131 |
|
|
1,578 |
|
|
1,034 |
|
|
14,859 |
EBITDA, as adjusted |
|
$ |
97,977 |
|
$ |
84,259 |
|
$ |
266,530 |
|
$ |
200,834 |
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild Corp. |
2019 Estimated Adjusted EBITDA Range
(Unaudited) |
(dollars in millions) |
|
|
|
|
|
|
|
Twelve Months EndingDecember 31, 2019 |
|
Low |
|
High |
Estimated net income |
$ |
179.7 |
|
$ |
188.5 |
Adjustments
to arrive at estimated EBITDA, as adjusted: |
|
|
|
|
|
Interest expense and other, net |
|
37.0 |
|
|
35.0 |
Income tax expense |
|
64.8 |
|
|
68.0 |
Depreciation and amortization |
|
54.0 |
|
|
52.0 |
Share-based compensation |
|
14.0 |
|
|
13.0 |
Rationalization charges |
|
3.0 |
|
|
2.5 |
Acquisition related costs |
|
1.5 |
|
|
1.0 |
Estimated EBITDA, as adjusted |
$ |
354.0 |
|
$ |
360.0 |
|
|
|
|
|
|
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