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TopBuild Reports First Quarter 2023 Results
ソース: Nasdaq GlobeNewswire / 04 5 2023 06:45:37 America/New_York
- Sales increased 8.2% to $1.3 billion
- Gross margin expanded 100 basis points to 29.3%
- Adjusted EBITDA margin expanded 150 basis points to 18.8%
DAYTONA BEACH, Fla., May 04, 2023 (GLOBE NEWSWIRE) -- TopBuild Corp. (NYSE:BLD), a leading installer and specialty distributor of insulation and related building material products to the construction industry in the United States and Canada today reported results for the first quarter ended March 31, 2023.
Robert Buck, President and Chief Executive Officer, stated, “TopBuild reported another strong quarter with solid top line growth and margin expansion at both business segments; Installation and Specialty Distribution. We are particularly pleased with the performance of our commercial business which reflects, in part, the success of our installation branches in capturing light commercial activity across their respective regions.”
“Our overall results demonstrate the strength of our operating model, the diversity of our end-markets, the hard work of our entire TopBuild team, and the operating efficiency initiatives we continue to implement across the organization.”
First Quarter 2023 Financial Highlights ($ in 000s)
(comparisons are to the quarter ended March 31, 2022)
3 Months Ended 3/31/23 Reported Change Sales $1,265,238 8.2% Gross Margin 29.3% 100 bps SG&A as % of revenue 13.5% (80 bps) Operating Profit $199,431 21.6% Operating Margin 15.8% 180 bps Net Income $135,870 18.4% Net Income per diluted share $4.28 23.3% 3 Months Ended 3/31/23 Adjusted Change Sales $1,265,238 8.2% Gross Margin 29.3% 100 bps SG&A as % of revenue 13.2% (80 bps) Operating Profit $203,089 21.2% Operating Margin 16.1% 180 bps Net Income $138,360 19.7% Net Income per diluted share $4.36 24.6% EBITDA $238,324 18.1% EBITDA Margin 18.8% 150 bps 3 Months Ended 3/31/23 Same Branch Change Sales $1,250,393 7.0% Adj. Gross Margin 29.4% 110 bps Adj. Operating Margin 16.2% 190 bps Adj. EBITDA Margin 18.9% 160 bps Incremental EBITDA 43.0% Operating Segment Highlights ($ in 000s)
(comparisons are to the quarter ended March 31, 2022)Installation 3 Months Ended 3/31/23 Specialty Distribution 3 Months Ended 3/31/23 Sales $767,090 Sales $558,375 Change Change Volume 5.4% Volume -3.0% Price 5.8% Price 5.7% M&A 2.2% M&A 0.0% Total Change 13.4% Total Change 2.7% Operating Margin 19.1% Operating Margin 13.1% Change 240 bps Change 20 bps Adj. Operating Margin 19.2% Adj. Operating Margin 13.2% Change 250 bps Change 20 bps Adj. EBITDA Margin 21.4% Adj. EBITDA Margin 15.8% Change 230 bps Change 20 bps Capital Allocation
“Acquiring installation and specialty distribution companies remains our number one capital allocation priority and our prospects center around our core of insulation. The synergies we recognize and operational improvements we achieve through M&A create great returns for our shareholders,” added Buck.The Company completed one acquisition in the first quarter, SRI Holdings, which is expected to contribute approximately $62 million of annual revenue.
2023 Outlook
The Company’s outlook for 2023 remains unchanged from the outlook it provided in its fourth quarter 2022 financial results press release distributed on February 23, 2023.Sales and Adjusted EBITDA Outlook (1)
($ in millions)2023 Low High Sales $ 4,700 $ 4,900 Adjusted EBITDA* $ 820 $ 910 *See table for adjusted EBITDA reconciliation.
(1) This outlook reflects management’s current view of present and future market conditions and are based on assumptions such as housing starts and completions, 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 2022 Annual Report on Form 10-K and subsequent SEC reports.
Additional Information
Quarterly supplemental materials, including a presentation that will be referenced on today’s conference call, are available on the Company’s website at www.topbuild.com.
Conference Call
A conference call to discuss first quarter 2023 financial results is scheduled for today, Thursday, May 4, 2023, at 9:00 a.m. Eastern Time. The call may be accessed by dialing (877) 407-9037. The conference call will be webcast simultaneously on the Company’s website at www.topbuild.com.About TopBuild
TopBuild Corp., headquartered in Daytona Beach, Florida, is a leading installer and specialty distributor of insulation and related building material products to the construction industry in the United States and Canada. We provide insulation installation services nationwide through our Installation segment which has approximately 235 branches located across the United States. We distribute building and mechanical insulation, insulation accessories and other building product materials for the residential, commercial, and industrial end markets through our Specialty Distribution business. Our Specialty Distribution network encompasses approximately 180 branches. 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 “SEC Filings” 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, the related assumptions underlying our expected results, and our plan to repurchase our common stock under stock repurchase transactions. These forward-looking statements can be identified by words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” “may,” “project,” “estimate” 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 any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law.Investor Relations and Media Contact
Tabitha Zane
tabitha.zane@topbuild.com
386-763-8801(tables follow)
TopBuild Corp. Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except share and per common share amounts) Three Months Ended March 31, 2023 2022 Net sales $ 1,265,238 $ 1,168,918 Cost of sales 895,023 837,717 Gross profit 370,215 331,201 Selling, general, and administrative expense 170,784 167,247 Operating profit 199,431 163,954 Other income (expense), net: Interest expense (18,039 ) (11,966 ) Other, net 1,923 684 Other expense, net (16,116 ) (11,282 ) Income before income taxes 183,315 152,672 Income tax expense (47,445 ) (37,961 ) Net income $ 135,870 $ 114,711 Net income per common share: Basic $ 4.31 $ 3.50 Diluted $ 4.28 $ 3.47 Weighted average shares outstanding: Basic 31,550,658 32,738,525 Diluted 31,713,239 33,042,490 TopBuild Corp. Condensed Consolidated Statements of Comprehensive Income (Unaudited) (in thousands) Three Months Ended March 31, 2023 2022 Net income $ 135,870 $ 114,711 Other comprehensive income: Foreign currency translation adjustment 1,753 3,218 Comprehensive income $ 137,623 $ 117,929 TopBuild Corp. Condensed Consolidated Balance Sheets and Other Financial Data (Unaudited) (dollars in thousands) As of March 31, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 333,778 $ 240,069 Receivables, net of an allowance for credit losses of $16,007 at March 31, 2023, and $16,281 at December 31, 2022 833,959 836,071 Inventories, net 422,229 438,644 Prepaid expenses and other current assets 22,861 34,257 Total current assets 1,612,827 1,549,041 Right of use assets 211,381 205,892 Property and equipment, net 260,146 253,484 Goodwill 1,992,394 1,966,994 Other intangible assets, net 607,683 614,967 Other assets 16,483 16,453 Total assets $ 4,700,914 $ 4,606,831 LIABILITIES Current liabilities: Accounts payable $ 450,963 $ 487,114 Current portion of long-term debt 42,371 40,068 Accrued liabilities 193,347 199,370 Short-term operating lease liabilities 62,110 60,880 Short-term finance lease liabilities 2,452 2,207 Total current liabilities 751,243 789,639 Long-term debt 1,405,931 1,417,257 Deferred tax liabilities, net 252,044 251,481 Long-term portion of insurance reserves 61,466 59,783 Long-term operating lease liabilities 154,844 149,943 Long-term finance lease liabilities 4,983 6,673 Other liabilities 5,259 2,349 Total liabilities 2,635,770 2,677,125 EQUITY 2,065,144 1,929,706 Total liabilities and equity $ 4,700,914 $ 4,606,831 As of March 31, 2023 2022 Other Financial Data Receivable days 52 47 Inventory days 43 46 Accounts payable days 60 63 Receivables, net plus inventories, net less accounts payable $ 805,225 $ 651,595 Receivables, net plus inventories, net less accounts payable as a percent of sales (TTM) † 15.6 % 14.8 % † Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches TopBuild Corp. Condensed Consolidated Statement of Cash Flows (Unaudited) (in thousands) Three Months Ended March 31, 2023 2022 Cash Flows Provided by (Used in) Operating Activities: Net income $ 135,870 $ 114,711 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 32,100 30,499 Share-based compensation 3,135 3,727 Loss on sale of property and equipment 185 207 Amortization of debt issuance costs 720 706 Provision for bad debt expense 1,338 2,512 Loss from inventory obsolescence 1,642 868 Deferred income taxes, net 563 (81 ) Change in certain assets and liabilities: Receivables, net (10,847 ) (65,031 ) Inventories, net 20,096 (38,570 ) Prepaid expenses and other current assets 11,579 (2,347 ) Accounts payable (25,480 ) 12,663 Accrued liabilities (3,339 ) 29,523 Other, net 2,239 96 Net cash provided by operating activities 169,801 89,483 Cash Flows Provided by (Used in) Investing Activities: Purchases of property and equipment (15,580 ) (18,413 ) Acquisition of businesses, net of cash acquired (45,845 ) (13,967 ) Proceeds from sale of property and equipment 455 253 Net cash used in investing activities (60,970 ) (32,127 ) Cash Flows Provided by (Used in) Financing Activities: Repayment of long-term debt (9,743 ) (9,634 ) Taxes withheld and paid on employees' equity awards (6,350 ) (11,658 ) Exercise of stock options 1,029 808 Repurchase of shares of common stock — (50,000 ) Payment of contingent consideration — (23 ) Net cash used in financing activities (15,064 ) (70,507 ) Impact of exchange rate changes on cash (58 ) (75 ) Net increase (decrease) in cash and cash equivalents 93,709 (13,226 ) Cash and cash equivalents- Beginning of period 240,069 139,779 Cash and cash equivalents- End of period $ 333,778 $ 126,553 Supplemental disclosure of noncash activities: Leased assets obtained in exchange for new operating lease liabilities $ 18,271 $ 22,449 Accruals for property and equipment 835 213 TopBuild Corp. Segment Data (Unaudited) (dollars in thousands) Three Months Ended March 31, 2023 2022 Change Installation Sales $ 767,090 $ 676,693 13.4 % Operating profit, as reported $ 146,897 $ 112,679 Operating margin, as reported 19.1 % 16.7 % Rationalization charges — 473 Acquisition related costs 263 80 Operating profit, as adjusted $ 147,160 $ 113,232 Operating margin, as adjusted 19.2 % 16.7 % Share-based compensation 379 407 Depreciation and amortization 16,493 15,685 EBITDA, as adjusted $ 164,032 $ 129,324 26.8 % EBITDA margin, as adjusted 21.4 % 19.1 % Specialty Distribution Sales $ 558,375 $ 543,862 2.7 % Operating profit, as reported $ 73,333 $ 70,420 Operating margin, as reported 13.1 % 12.9 % Acquisition related costs 340 241 Operating profit, as adjusted $ 73,673 $ 70,661 Operating margin, as adjusted 13.2 % 13.0 % Share-based compensation 238 353 Depreciation and amortization 14,572 14,030 EBITDA, as adjusted $ 88,483 $ 85,044 4.0 % EBITDA margin, as adjusted 15.8 % 15.6 % TopBuild Corp. Adjusted EBITDA (Unaudited) (dollars in thousands) Three Months Ended March 31, 2023 2022 Change Total net sales Sales before eliminations $ 1,325,465 $ 1,220,555 Intercompany eliminations (60,227 ) (51,637 ) Net sales after eliminations $ 1,265,238 $ 1,168,918 8.2 % Operating profit, as reported - segments $ 220,230 $ 183,099 General corporate expense, net (10,828 ) (10,437 ) Intercompany eliminations (9,971 ) (8,708 ) Operating profit, as reported $ 199,431 $ 163,954 Operating margin, as reported 15.8 % 14.0 % Rationalization charges — 473 Acquisition related costs † 3,658 3,076 Operating profit, as adjusted $ 203,089 $ 167,503 Operating margin, as adjusted 16.1 % 14.3 % Share-based compensation 3,135 3,727 Depreciation and amortization 32,100 30,499 EBITDA, as adjusted $ 238,324 $ 201,729 18.1 % EBITDA margin, as adjusted 18.8 % 17.3 % Sales change period over period 96,320 EBITDA, as adjusted, change period over period 36,595 Incremental EBITDA, as adjusted, as a percentage of change in sales 38.0 % † Acquisition related costs 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 March 31, 2023 2022 Gross Profit Reconciliation Net sales $ 1,265,238 $ 1,168,918 Gross profit, as reported $ 370,215 $ 331,201 Acquisition related costs — 121 Gross profit, as adjusted $ 370,215 $ 331,322 Gross margin, as reported 29.3 % 28.3 % Gross margin, as adjusted 29.3 % 28.3 % Selling, General and Administrative Expense Reconciliation Selling, general, and administrative expense, as reported $ 170,784 $ 167,247 Rationalization charges — 473 Acquisition related costs 3,658 2,955 Selling, general, and administrative expense, as adjusted $ 167,126 $ 163,819 Operating Profit Reconciliation Operating profit, as reported $ 199,431 $ 163,954 Rationalization charges — 473 Acquisition related costs 3,658 3,076 Operating profit, as adjusted $ 203,089 $ 167,503 Operating margin, as reported 15.8 % 14.0 % Operating margin, as adjusted 16.1 % 14.3 % Income Per Common Share Reconciliation Income before income taxes, as reported $ 183,315 $ 152,672 Rationalization charges — 473 Acquisition related costs 3,658 3,076 Income before income taxes, as adjusted 186,973 156,221 Tax rate at 26.0% (48,613 ) (40,617 ) Income, as adjusted $ 138,360 $ 115,604 Income per common share, as adjusted $ 4.36 $ 3.50 Weighted average diluted common shares outstanding 31,713,239 33,042,490 TopBuild Corp. Same Branch and Acquisition Metrics (Unaudited) (dollars in thousands) Three Months Ended March 31, 2023 2022 Net sales Same branch: Installation $ 752,245 $ 676,693 Specialty Distribution 558,375 543,862 Eliminations (60,227 ) (51,637 ) Total same branch 1,250,393 1,168,918 Acquisitions (a): Installation $ 14,845 $ — Total acquisitions 14,845 — Total $ 1,265,238 $ 1,168,918 EBITDA, as adjusted Same branch $ 236,775 $ 201,729 Acquisitions (a) 1,549 — Total $ 238,324 $ 201,729 EBITDA, as adjusted, as a percentage of sales Same branch (b) 18.9 % Acquisitions (c) 10.4 % Total (d) 18.8 % 17.3 % As Adjusted Incremental EBITDA, as a percentage of change in sales Same branch (e) 43.0 % Acquisitions (c) 10.4 % Total (f) 38.0 % (a) Represents current year impact of acquisitions in their first twelve months (b) Same branch metric, as adjusted, as a percentage of same branch sales (c) Acquired metric, 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) (in thousands) Three Months Ended March 31, 2023 2022 Net income, as reported $ 135,870 $ 114,711 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 16,116 11,282 Income tax expense 47,445 37,961 Depreciation and amortization 32,100 30,499 Share-based compensation 3,135 3,727 Rationalization charges — 473 Acquisition related costs 3,658 3,076 EBITDA, as adjusted $ 238,324 $ 201,729 TopBuild Corp. Acquisition Adjusted Net Sales (Unaudited) (in thousands) 2022 2023 Trailing Twelve Months Ended Q2 Q3 Q4 Q1 March 31, 2023 Net Sales $ 1,274,285 $ 1,300,998 $ 1,264,543 $ 1,265,238 $ 5,105,064 Acquisitions proforma adjustment † 15,575 17,576 18,279 6,187 57,617 Net sales, acquisition adjusted $ 1,289,860 $ 1,318,574 $ 1,282,822 $ 1,271,425 $ 5,162,681 † Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches TopBuild Corp. 2023 Estimated Adjusted EBITDA Range (Unaudited) (in millions) Twelve Months Ending December 31, 2023 Low High Estimated net income $ 445.0 521.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 67.0 63.0 Income tax expense 157.0 183.0 Depreciation and amortization 129.0 125.0 Share-based compensation 15.0 13.0 Acquisition related costs 7.0 5.0 Estimated EBITDA, as adjusted $ 820.0 $ 910.0 
