TopBuild Corp. (NYSE:BLD), a
leading installer and distributor of insulation and building
material products today reported results for the fourth quarter and
full year ended December 31, 2019.
Jerry Volas, Chief Executive Officer, stated,
“We are pleased to once again report a strong quarter with sales
volume growth and increased pricing at both TruTeam and Service
Partners. Our team continues to focus on achieving
operational efficiencies and implementing best practices across our
organization.
Fourth Quarter Financial Highlights(unless
otherwise indicated, comparisons are to the quarter ended December
31, 2018)
- Net sales increased 3.6% to $662.3 million, driven by increases
in price and residential and commercial volume and acquisitions,
partially offset by a higher mix of multi-family and smaller,
single-family homes which generate lower revenue per
unit.
- Gross margin expanded 120 basis points to 25.9%.
- Operating profit was $76.4 million, compared to $65.2
million. On an adjusted basis, operating profit was $76.6
million, compared to $67.2 million, a 14.1% improvement.
- Operating margin was 11.5%. Adjusted operating margin
improved 110 basis points to 11.6%.
- Net income was $46.0 million, or $1.36 per diluted share,
compared to $38.6 million, or $1.10 per diluted share.
- Adjusted net income was $50.0 million, or $1.48 per diluted
share, compared to $42.2 million, or $1.20 per diluted share.
- Adjusted EBITDA was $92.5 million, compared to $82.5 million, a
12.2% increase and adjusted EBITDA margin improved 110 basis points
to 14.0%. Incremental adjusted EBITDA margin was 44.0%.
- At December 31, 2019, the Company had cash and cash equivalents
of $184.8 million, availability under its revolving credit facility
of $188.6 million for total liquidity of $373.4 million.
Full Year 2019 Financial
Highlights(unless otherwise indicated, comparisons are to
twelve months ended December 31, 2018)
“2019 was another year of profitable growth at
TopBuild. We continue to take advantage of a strong economic
environment, our national scale and our focus on operational
excellence to drive sales and expand operating margins.
During the year we also completed the integration of USI, garnering
substantial synergies that made this acquisition accretive to
TopBuild’s margins,” Volas added.
- Net sales increased 10.1% to $2,624.1 million. On a same branch
basis, revenue increased 4.6% to $2,494.5 million.
- Gross margin expanded 180 basis points to 26.0%.
- Operating profit was $289.5 million, compared to operating
profit of $209.0 million. On an adjusted basis, operating
profit was $292.7 million, compared to $232.6 million, a 25.8%
improvement.
- Operating margin was 11.0%, up 220 basis points. Adjusted
operating margin improved 140 basis points to 11.2%.
- Net income was $191.0 million, or $5.56 per diluted share,
compared to $134.8 million, or $3.78 per diluted share.
Adjusted net income was $188.9 million, or $5.49 per diluted share,
compared to $149.3 million, or $4.19 per diluted share.
- Adjusted EBITDA was $359.1 million, compared to $283.4 million,
a 26.7% increase and adjusted EBITDA margin improved 180 basis
points to 13.7%. Incremental adjusted EBITDA margin was
31.6%.
- On a same branch basis, adjusted EBITDA grew 17.9% to $334.1
million and adjusted incremental EBITDA margin was 46.1%.
- Acquisitions contributed $129.6 million of revenue.
Incremental adjusted EBITDA related to these acquisitions was
19.2%.
Operating Segment Highlights
($ in 000s)(comparisons are to the period ended
December 31, 2018)
TruTeam |
3 Months Ended 12/31/19 |
12 Months Ended 12/31/19 |
|
Service Partners |
3 Months Ended 12/31/19 |
12 Months Ended 12/31/19 |
Sales |
$475,929 |
$1,906,730 |
|
Sales |
$223,244 |
$862,143 |
Change |
|
|
|
Change |
|
|
Volume |
0.7% |
2.5% |
|
Volume |
2.0% |
-0.8% |
Price |
2.7% |
3.8% |
|
Price |
2.3% |
4.6% |
M&A |
0.6% |
7.1% |
|
M&A |
0.0% |
1.3% |
Total Change |
4.0% |
13.4% |
|
Total Change |
4.3% |
5.1% |
Operating Margin |
13.4% |
13.3% |
|
Operating Margin |
11.3% |
10.5% |
Change |
90 bps |
160 bps |
|
Change |
120 bps |
90 bps |
Adj. Operating Margin |
13.4% |
13.3% |
|
Adj. Operating Margin |
11.3% |
10.5% |
Change |
90 bps |
150 bps |
|
Change |
120 bps |
90 bps |
Capital Allocation
AcquisitionsIn 2019, the
Company completed one acquisition, Viking Insulation, based in
Burbank, California. Viking is expected to generate
approximately $9.0 million in annual revenue.
In February 2020, the Company acquired Hunter
Insulation, an installation company based in Long Island, New York
and Cooper Glass, a commercial glass company serving the Memphis
market. Combined, these companies are expected to contribute
approximately $19 million of annual revenue.
Share Repurchase ProgramIn 2019, the Company
repurchased a total of 1,291,771 shares of its common stock for
approximately $110.9 million. This includes the receipt of
392,501 shares related to its $50 million accelerated share
repurchase (“ASR”) program announced October 2019. The ASR is
expected to settle no later than the end of the first quarter of
2020.
2020 Sales and Adjusted EBITDA
Guidance (1) Volas stated, “Looking
ahead, we see solid fundamentals for the residential new
construction market, including strong household formation, low
interest rates and very little inventory, all of which should
benefit TopBuild. In addition, we expect continued strength
in our commercial business with a solid backlog and greenfield
expansion opportunities.
“Our plan in 2020 remains in line with our long-term strategic
objectives: generate profitable growth, achieve additional
operational efficiencies and acquire companies that meet our
investment criteria.”
2020 |
Low |
High |
Sales |
$ |
2,765.0 |
$ |
2,835.0 |
Adjusted EBITDA* |
$ |
387.0 |
$ |
412.0 |
*See table for adjusted EBITDA
reconciliation
Assumptions ($ in
millions)
2020 |
Low |
High |
Housing Starts |
|
1,300K |
|
1,340K |
Estimated net income |
$ |
206.5 |
$ |
232.0 |
Interest Expense and other, net |
$ |
34.0 |
$ |
31.0 |
Income tax expense |
$ |
72.5 |
$ |
81.5 |
Depreciation and Amortization |
$ |
60.0 |
$ |
56.0 |
Share based compensation |
$ |
14.0 |
$ |
11.5 |
Long-Term Targets (3-Years)
(1)
Metric |
|
Working Capital (% of LTM Sales) |
10% to 11% |
CapEx (% of Sales) |
2.0% |
Commercial Annual Revenue Growth |
10.0% |
Normalized Tax Rate |
26% |
Incremental Adjusted EBITDA (Organic) |
22% to 27% |
Incremental Adjusted EBITDA (Acquisitions Year One) |
11% to 16% |
Residential revenue for every 50K increase in housing starts |
$80 million |
(1) This guidance and long-term
targets reflect management’s current view of present and future
market conditions and are based on assumptions such as housing
starts, general and administrative expenses, weighted average
diluted shares outstanding and interest rates. These targets
do not include any effects related to potential acquisitions or
divestitures that may occur after the date of this press
release. A reconciliation of non-GAAP targets to
corresponding GAAP measures is not available on a forward-looking
basis without unreasonable effort due to the uncertainty regarding,
and the potential variability of, the costs and expenses that may
be incurred in the future and therefore, cannot be reasonably
predicted. The effect of these excluded items may be
significant. Factors that could cause actual long-term
results to differ materially from TopBuild’s current expectations
are discussed below and are also detailed in the Company’s 2019
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 fourth quarter 2019 financial results is scheduled
for today, Tuesday, February 25, 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 approximately 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 Adjusted 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 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)
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TopBuild Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except share and per common share
amounts) |
|
|
|
|
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|
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|
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|
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|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net sales |
|
$ |
662,349 |
|
|
$ |
639,547 |
|
|
$ |
2,624,121 |
|
|
$ |
2,384,249 |
|
Cost of
sales |
|
|
491,030 |
|
|
|
481,321 |
|
|
|
1,942,854 |
|
|
|
1,808,097 |
|
Gross profit |
|
|
171,319 |
|
|
|
158,226 |
|
|
|
681,267 |
|
|
|
576,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general, and administrative expense |
|
|
94,898 |
|
|
|
93,065 |
|
|
|
391,744 |
|
|
|
367,199 |
|
Operating profit |
|
|
76,421 |
|
|
|
65,161 |
|
|
|
289,523 |
|
|
|
208,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
(9,083 |
) |
|
|
(9,661 |
) |
|
|
(37,823 |
) |
|
|
(28,687 |
) |
Other, net |
|
|
566 |
|
|
|
266 |
|
|
|
2,078 |
|
|
|
558 |
|
Other
expense, net |
|
|
(8,517 |
) |
|
|
(9,395 |
) |
|
|
(35,745 |
) |
|
|
(28,129 |
) |
Income before income taxes |
|
|
67,904 |
|
|
|
55,766 |
|
|
|
253,778 |
|
|
|
180,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense |
|
|
(21,919 |
) |
|
|
(17,213 |
) |
|
|
(62,783 |
) |
|
|
(46,072 |
) |
Net income |
|
$ |
45,985 |
|
|
$ |
38,553 |
|
|
$ |
190,995 |
|
|
$ |
134,752 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per common share: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
1.38 |
|
|
$ |
1.12 |
|
|
$ |
5.65 |
|
|
$ |
3.86 |
|
Diluted |
|
$ |
1.36 |
|
|
$ |
1.10 |
|
|
$ |
5.56 |
|
|
$ |
3.78 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
33,297,613 |
|
|
|
34,436,518 |
|
|
|
33,806,104 |
|
|
|
34,921,318 |
|
Diluted |
|
|
33,886,904 |
|
|
|
35,012,535 |
|
|
|
34,376,555 |
|
|
|
35,613,319 |
|
|
|
|
|
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|
|
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|
TopBuild Corp. |
|
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Consolidated Balance Sheets and Other Financial
Data |
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
As of December 31, |
|
|
December 31, |
|
December 31, |
|
|
2019 |
|
2018 |
ASSETS |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
184,807 |
|
$ |
100,929 |
Receivables, net of an allowance for doubtful accounts of $4,854
and $3,676 at December 31, 2019, and December 31, 2018,
respectively |
|
|
428,844 |
|
|
407,106 |
Inventories, net |
|
|
149,078 |
|
|
168,977 |
Prepaid expenses and other current assets |
|
|
17,098 |
|
|
27,685 |
Total current assets |
|
|
779,827 |
|
|
704,697 |
|
|
|
|
|
|
|
Right of
use assets |
|
|
87,134 |
|
|
— |
Property
and equipment, net |
|
|
178,080 |
|
|
167,961 |
Goodwill |
|
|
1,367,918 |
|
|
1,364,016 |
Other
intangible assets, net |
|
|
181,122 |
|
|
199,387 |
Deferred
tax assets, net |
|
|
4,259 |
|
|
13,176 |
Other
assets |
|
|
5,623 |
|
|
5,294 |
Total assets |
|
$ |
2,603,963 |
|
$ |
2,454,531 |
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
307,970 |
|
$ |
313,172 |
Current portion of long-term debt |
|
|
34,272 |
|
|
26,852 |
Accrued liabilities |
|
|
98,418 |
|
|
104,236 |
Short-term lease liabilities |
|
|
36,094 |
|
|
— |
Total current liabilities |
|
|
476,754 |
|
|
444,260 |
|
|
|
|
|
|
|
Long-term
debt |
|
|
697,955 |
|
|
716,622 |
Deferred
tax liabilities, net |
|
|
175,263 |
|
|
176,212 |
Long-term
portion of insurance reserves |
|
|
45,605 |
|
|
43,434 |
Long-term
lease liabilities |
|
|
54,010 |
|
|
— |
Other
liabilities |
|
|
1,487 |
|
|
1,905 |
Total liabilities |
|
|
1,451,074 |
|
|
1,382,433 |
|
|
|
|
|
|
|
EQUITY |
|
|
1,152,889 |
|
|
1,072,098 |
Total liabilities and equity |
|
$ |
2,603,963 |
|
$ |
2,454,531 |
|
|
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|
|
|
|
|
|
|
As of December 31, |
|
|
December 31, |
|
December 31, |
|
|
2019 |
|
2018 |
Other Financial Data |
|
|
|
|
|
|
Receivable days † |
|
|
53 |
|
|
51 |
Inventory days † |
|
|
28 |
|
|
34 |
Accounts payable days † |
|
|
80 |
|
|
80 |
Receivables, net plus inventories, net less accounts payable † |
|
$ |
269,952 |
|
$ |
262,911 |
Receivables, net plus inventories, net less accounts payable as a
percent of sales (TTM)‡ |
|
|
10.3 |
% |
|
10.4 |
|
|
|
|
|
|
|
† Adjusted
for remaining acquisition day one balance sheet items |
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‡ Trailing
12 months sales have been adjusted for the pro forma effect of
acquired branches |
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|
TopBuild Corp. |
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Consolidated Statement of Cash Flows |
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|
(in
thousands) |
|
|
|
|
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|
|
|
|
|
|
|
|
|
Year Ended December 31, |
|
|
2019 |
|
2018 |
Cash
Flows Provided by (Used in) Operating Activities: |
|
|
|
|
|
Net
income |
|
$ |
190,995 |
|
|
$ |
134,752 |
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation
and amortization |
|
|
52,700 |
|
|
|
39,419 |
|
Share-based
compensation |
|
|
13,658 |
|
|
|
11,317 |
|
Loss on sale
or abandonment of property and equipment |
|
|
1,399 |
|
|
|
1,204 |
|
Amortization
of debt issuance costs |
|
|
1,558 |
|
|
|
1,201 |
|
Provision
for bad debt expense |
|
|
7,065 |
|
|
|
3,240 |
|
Loss from
inventory obsolescence |
|
|
2,622 |
|
|
|
2,187 |
|
Deferred
income taxes, net |
|
|
8,888 |
|
|
|
12,936 |
|
Change in
certain assets and liabilities |
|
|
|
|
|
|
Receivables,
net |
|
|
(27,146 |
) |
|
|
(35,522 |
) |
Inventories,
net |
|
|
17,433 |
|
|
|
(23,297 |
) |
Prepaid
expenses and other current assets |
|
|
9,361 |
|
|
|
(8,360 |
) |
Accounts
payable |
|
|
(5,124 |
) |
|
|
29,687 |
|
Accrued
liabilities |
|
|
(2,690 |
) |
|
|
(660 |
) |
Other,
net |
|
|
1,058 |
|
|
|
(932 |
) |
Net cash
provided by operating activities |
|
|
271,777 |
|
|
|
167,172 |
|
|
|
|
|
|
|
|
Cash
Flows Provided by (Used in) Investing Activities: |
|
|
|
|
|
|
Purchases of
property and equipment |
|
|
(45,536 |
) |
|
|
(52,504 |
) |
Acquisition
of businesses, net of cash acquired of $15,756 in 2018 |
|
|
(6,952 |
) |
|
|
(500,202 |
) |
Proceeds
from sale of property and equipment |
|
|
2,321 |
|
|
|
849 |
|
Other,
net |
|
|
25 |
|
|
|
38 |
|
Net cash
used in investing activities |
|
|
(50,142 |
) |
|
|
(551,819 |
) |
|
|
|
|
|
|
|
Cash
Flows Provided by (Used in) Financing Activities: |
|
|
|
|
|
|
Proceeds
from issuance of long-term debt |
|
|
14,989 |
|
|
|
526,604 |
|
Repayment of
long-term debt |
|
|
(27,793 |
) |
|
|
(18,399 |
) |
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 |
|
|
(12,951 |
) |
|
|
(5,465 |
) |
Repurchase
of shares of common stock |
|
|
(110,911 |
) |
|
|
(65,025 |
) |
Payment of
contingent consideration |
|
|
(1,091 |
) |
|
|
(841 |
) |
Net cash
(used in) provided by financing activities |
|
|
(137,757 |
) |
|
|
429,055 |
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents |
|
|
|
|
|
|
Increase for
the period |
|
|
83,878 |
|
|
|
44,408 |
|
Beginning of
period |
|
|
100,929 |
|
|
|
56,521 |
|
End of
period |
|
$ |
184,807 |
|
|
$ |
100,929 |
|
|
|
|
|
|
|
|
Supplemental disclosure of cash paid for: |
|
|
|
|
|
|
Interest on
long-term debt |
|
$ |
36,244 |
|
|
$ |
23,733 |
|
Income
taxes |
|
|
43,310 |
|
|
|
39,010 |
|
|
|
|
|
|
|
|
Supplemental disclosure of noncash
activities: |
|
|
|
|
|
|
Leased
assets obtained in exchange for new operating lease
liabilities |
|
$ |
128,838 |
|
|
$ |
— |
|
Accruals for
property and equipment |
|
|
542 |
|
|
|
860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Data (Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
|
|
|
2019 |
|
|
|
2018 |
|
|
Change |
|
|
|
2019 |
|
|
|
2018 |
|
|
Change |
|
TruTeam |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
475,929 |
|
|
$ |
457,610 |
|
|
|
4.0 |
% |
|
$ |
1,906,730 |
|
|
$ |
1,680,967 |
|
|
|
13.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as reported |
|
$ |
63,661 |
|
|
$ |
57,016 |
|
|
|
|
|
|
$ |
253,230 |
|
|
$ |
196,986 |
|
|
|
|
|
Operating margin, as reported |
|
|
13.4 |
|
% |
|
12.5 |
|
% |
|
|
|
|
|
13.3 |
|
% |
|
11.7 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
(24 |
) |
|
|
216 |
|
|
|
|
|
|
|
159 |
|
|
|
845 |
|
|
|
|
|
Acquisition related costs |
|
|
177 |
|
|
|
— |
|
|
|
|
|
|
|
636 |
|
|
|
— |
|
|
|
|
|
Operating profit, as adjusted |
|
$ |
63,814 |
|
|
$ |
57,232 |
|
|
|
|
|
|
$ |
254,025 |
|
|
$ |
197,831 |
|
|
|
|
|
Operating margin, as adjusted |
|
|
13.4 |
|
% |
|
12.5 |
|
% |
|
|
|
|
|
13.3 |
|
% |
|
11.8 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Service Partners |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales |
|
$ |
223,244 |
|
|
$ |
213,974 |
|
|
|
4.3 |
% |
|
$ |
862,143 |
|
|
$ |
820,309 |
|
|
|
5.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as reported |
|
$ |
25,234 |
|
|
$ |
21,598 |
|
|
|
|
|
|
$ |
90,388 |
|
|
$ |
78,739 |
|
|
|
|
|
Operating margin, as reported |
|
|
11.3 |
|
% |
|
10.1 |
|
% |
|
|
|
|
|
10.5 |
|
% |
|
9.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
109 |
|
|
|
159 |
|
|
|
|
|
Operating profit, as adjusted |
|
$ |
25,234 |
|
|
$ |
21,598 |
|
|
|
|
|
|
$ |
90,497 |
|
|
$ |
78,898 |
|
|
|
|
|
Operating margin, as adjusted |
|
|
11.3 |
|
% |
|
10.1 |
|
% |
|
|
|
|
|
10.5 |
|
% |
|
9.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales before eliminations |
|
$ |
699,173 |
|
|
$ |
671,584 |
|
|
|
|
|
|
$ |
2,768,873 |
|
|
$ |
2,501,276 |
|
|
|
|
|
Intercompany eliminations |
|
|
(36,824 |
) |
|
|
(32,037 |
) |
|
|
|
|
|
|
(144,752 |
) |
|
|
(117,027 |
) |
|
|
|
|
Net sales after eliminations |
|
$ |
662,349 |
|
|
$ |
639,547 |
|
|
|
3.6 |
% |
|
$ |
2,624,121 |
|
|
$ |
2,384,249 |
|
|
|
10.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as reported - segments |
|
$ |
88,895 |
|
|
$ |
78,614 |
|
|
|
|
|
|
$ |
343,618 |
|
|
$ |
275,725 |
|
|
|
|
|
General corporate expense, net |
|
|
(6,568 |
) |
|
|
(7,936 |
) |
|
|
|
|
|
|
(30,174 |
) |
|
|
(45,873 |
) |
|
|
|
|
Intercompany eliminations |
|
|
(5,906 |
) |
|
|
(5,517 |
) |
|
|
|
|
|
|
(23,921 |
) |
|
|
(20,899 |
) |
|
|
|
|
Operating profit, as reported |
|
$ |
76,421 |
|
|
$ |
65,161 |
|
|
|
|
|
|
$ |
289,523 |
|
|
$ |
208,953 |
|
|
|
|
|
Operating margin, as reported |
|
|
11.5 |
|
% |
|
10.2 |
|
% |
|
|
|
|
|
11.0 |
|
% |
|
8.8 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges † |
|
|
15 |
|
|
|
929 |
|
|
|
|
|
|
|
1,992 |
|
|
|
7,736 |
|
|
|
|
|
Acquisition related costs |
|
|
166 |
|
|
|
1,066 |
|
|
|
|
|
|
|
1,200 |
|
|
|
15,925 |
|
|
|
|
|
Operating profit, as adjusted |
|
$ |
76,602 |
|
|
$ |
67,156 |
|
|
|
|
|
|
$ |
292,715 |
|
|
$ |
232,614 |
|
|
|
|
|
Operating margin, as adjusted |
|
|
11.6 |
|
% |
|
10.5 |
|
% |
|
|
|
|
|
11.2 |
|
% |
|
9.8 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Share-based compensation |
|
|
2,246 |
|
|
|
3,072 |
|
|
|
|
|
|
|
13,658 |
|
|
|
11,317 |
|
|
|
|
|
Depreciation and amortization |
|
|
13,696 |
|
|
|
12,286 |
|
|
|
|
|
|
|
52,700 |
|
|
|
39,419 |
|
|
|
|
|
EBITDA, as adjusted |
|
$ |
92,544 |
|
|
$ |
82,514 |
|
|
|
|
|
|
$ |
359,073 |
|
|
$ |
283,350 |
|
|
|
|
|
EBITDA margin, as adjusted |
|
|
14.0 |
|
% |
|
12.9 |
|
% |
|
|
|
|
|
13.7 |
|
% |
|
11.9 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales change period over period |
|
|
22,802 |
|
|
|
|
|
|
|
|
|
|
239,872 |
|
|
|
|
|
|
|
|
EBITDA, as adjusted, change period over period |
|
|
10,030 |
|
|
|
|
|
|
|
|
|
|
75,723 |
|
|
|
|
|
|
|
|
EBITDA, as adjusted, as percentage of sales change |
|
|
44.0 |
|
% |
|
|
|
|
|
|
|
|
31.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
† 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 Ended December 31, |
|
Year Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
Gross Profit and Operating Profit
Reconciliations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales |
|
$ |
662,349 |
|
|
$ |
639,547 |
|
|
$ |
2,624,121 |
|
|
$ |
2,384,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit, as reported |
|
$ |
171,319 |
|
|
$ |
158,226 |
|
|
$ |
681,267 |
|
|
$ |
576,152 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
176 |
|
|
Gross profit, as adjusted |
|
$ |
171,319 |
|
|
$ |
158,226 |
|
|
$ |
681,267 |
|
|
$ |
576,328 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross
margin, as reported |
|
|
25.9 |
|
% |
|
24.7 |
|
% |
|
26.0 |
|
% |
|
24.2 |
|
% |
Gross
margin, as adjusted |
|
|
25.9 |
|
% |
|
24.7 |
|
% |
|
26.0 |
|
% |
|
24.2 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit, as reported |
|
$ |
76,421 |
|
|
$ |
65,161 |
|
|
$ |
289,523 |
|
|
$ |
208,953 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
15 |
|
|
|
929 |
|
|
|
1,992 |
|
|
|
7,736 |
|
|
Acquisition
related costs |
|
|
166 |
|
|
|
1,066 |
|
|
|
1,200 |
|
|
|
15,925 |
|
|
Operating profit, as adjusted |
|
$ |
76,602 |
|
|
$ |
67,156 |
|
|
$ |
292,715 |
|
|
$ |
232,614 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
margin, as reported |
|
|
11.5 |
|
% |
|
10.2 |
|
% |
|
11.0 |
|
% |
|
8.8 |
|
% |
Operating
margin, as adjusted |
|
|
11.6 |
|
% |
|
10.5 |
|
% |
|
11.2 |
|
% |
|
9.8 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Per Common Share Reconciliation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes, as reported |
|
$ |
67,904 |
|
|
$ |
55,766 |
|
|
$ |
253,778 |
|
|
$ |
180,824 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rationalization charges |
|
|
15 |
|
|
|
929 |
|
|
|
1,992 |
|
|
|
7,736 |
|
|
Acquisition
related costs |
|
|
166 |
|
|
|
1,066 |
|
|
|
1,200 |
|
|
|
15,925 |
|
|
Income before income taxes, as adjusted |
|
|
68,085 |
|
|
|
57,761 |
|
|
|
256,970 |
|
|
|
204,485 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tax rate at
26.5% and 27.0% for 2019 and 2018, respectively |
|
|
(18,043 |
) |
|
|
(15,595 |
) |
|
|
(68,097 |
) |
|
|
(55,211 |
) |
|
Income, as adjusted |
|
$ |
50,042 |
|
|
$ |
42,166 |
|
|
$ |
188,873 |
|
|
$ |
149,274 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per common share, as adjusted |
|
$ |
1.48 |
|
|
$ |
1.20 |
|
|
$ |
5.49 |
|
|
$ |
4.19 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average diluted common shares outstanding |
|
|
33,886,904 |
|
|
|
35,012,535 |
|
|
|
34,376,555 |
|
|
|
35,613,319 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
|
Same Branch and Acquisition Net Sales and Adjusted EBITDA
(Unaudited) |
|
|
|
|
|
|
|
(dollars in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|
Net
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
Same
branch: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Installation segment |
|
$ |
473,298 |
|
|
$ |
457,610 |
|
|
$ |
1,787,357 |
|
|
$ |
1,680,967 |
|
|
Distribution segment |
|
|
223,244 |
|
|
|
213,974 |
|
|
|
851,073 |
|
|
|
820,309 |
|
|
Eliminations |
|
|
(36,824 |
) |
|
|
(32,037 |
) |
|
|
(143,890 |
) |
|
|
(117,027 |
) |
|
Total same
branch |
|
|
659,718 |
|
|
|
639,547 |
|
|
|
2,494,540 |
|
|
|
2,384,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisitions
(a): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Installation segment |
|
$ |
2,631 |
|
|
$ |
— |
|
|
$ |
119,373 |
|
|
$ |
— |
|
|
Distribution segment |
|
|
— |
|
|
|
— |
|
|
|
11,070 |
|
|
|
— |
|
|
Eliminations |
|
|
— |
|
|
|
— |
|
|
|
(862 |
) |
|
|
— |
|
|
Total
acquisitions |
|
|
2,631 |
|
|
|
— |
|
|
|
129,581 |
|
|
|
— |
|
|
Total |
|
$ |
662,349 |
|
|
$ |
639,547 |
|
|
$ |
2,624,121 |
|
|
$ |
2,384,249 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, as adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
Same
branch |
|
$ |
91,781 |
|
|
$ |
82,514 |
|
|
$ |
334,146 |
|
|
$ |
283,350 |
|
|
Acquisitions
(a) |
|
|
763 |
|
|
|
— |
|
|
|
24,927 |
|
|
|
— |
|
|
Total |
|
$ |
92,544 |
|
|
$ |
82,514 |
|
|
$ |
359,073 |
|
|
$ |
283,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA, as adjusted, as a percentage of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
Same branch
(b) |
|
|
13.9 |
|
% |
|
|
|
|
13.4 |
|
% |
|
|
|
Acquisitions
(c) |
|
|
29.0 |
|
% |
|
|
|
|
19.2 |
|
% |
|
|
|
Total (d) |
|
|
14.0 |
|
% |
|
12.9 |
|
% |
|
13.7 |
|
% |
|
11.9 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Adjusted Incremental EBITDA, as a percentage of incremental
sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
Same branch
(e) |
|
|
45.9 |
|
% |
|
|
|
|
46.1 |
|
% |
|
|
|
Acquisitions
(c) |
|
|
29.0 |
|
% |
|
|
|
|
19.2 |
|
% |
|
|
|
Total (f) |
|
|
44.0 |
|
% |
|
|
|
|
31.6 |
|
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents current year impact of acquisitions in their first
twelve 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 |
|
|
|
|
|
|
|
|
|
|
(in
thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
Year Ended December 31, |
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
Net
income, as reported |
|
$ |
45,985 |
|
$ |
38,553 |
|
$ |
190,995 |
|
$ |
134,752 |
Adjustments
to arrive at EBITDA, as adjusted: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense and other, net |
|
|
8,517 |
|
|
9,395 |
|
|
35,745 |
|
|
28,129 |
Income tax expense |
|
|
21,919 |
|
|
17,213 |
|
|
62,783 |
|
|
46,072 |
Depreciation and amortization |
|
|
13,696 |
|
|
12,286 |
|
|
52,700 |
|
|
39,419 |
Share-based compensation |
|
|
2,246 |
|
|
3,072 |
|
|
13,658 |
|
|
11,317 |
Rationalization charges |
|
|
15 |
|
|
929 |
|
|
1,992 |
|
|
7,736 |
Acquisition related costs |
|
|
166 |
|
|
1,066 |
|
|
1,200 |
|
|
15,925 |
EBITDA, as adjusted |
|
$ |
92,544 |
|
$ |
82,514 |
|
$ |
359,073 |
|
$ |
283,350 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TopBuild Corp. |
|
|
|
|
|
2020 Estimated Adjusted EBITDA Range
(Unaudited) |
|
|
|
|
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ending December 31, 2020 |
|
|
Low |
|
|
High |
Estimated net income |
$ |
206.5 |
|
$ |
232.0 |
Adjustments to arrive at estimated EBITDA, as adjusted: |
|
|
|
|
Interest expense and other, net |
|
34.0 |
|
|
31.0 |
Income tax expense |
|
72.5 |
|
|
81.5 |
Depreciation and amortization |
|
60.0 |
|
|
56.0 |
Share-based compensation |
|
14.0 |
|
|
11.5 |
Estimated EBITDA, as adjusted |
$ |
387.0 |
|
$ |
412.0 |
|
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