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TopBuild Reports Second Quarter 2023 Results
ソース: Nasdaq GlobeNewswire / 03 8 2023 06:45:16 America/New_York
- Sales increased 3.4% to $1.3 billion
- Gross margin expanded 190 basis points to 32.0%
- Adjusted EBITDA margin expanded 190 basis points to 20.9%
DAYTONA BEACH, Fla., Aug. 03, 2023 (GLOBE NEWSWIRE) -- TopBuild Corp. (NYSE:BLD), a leading installer and specialty distributor of insulation and related building material products to the construction industry in the United States and Canada today reported results for the second quarter ended June 30, 2023.
Robert Buck, President and Chief Executive Officer, stated, “TopBuild once again delivered strong operating results, as we continue to benefit from a favorable operating environment and maintain our focus on driving improvements at both business segments, Installation and Specialty Distribution. We are also encouraged by the increasing optimism we are hearing from the homebuilders.
“Our commercial and industrial business performance remains strong, with a solid backlog of projects and continued robust bidding activity. We are particularly pleased with how well our Installation branches have successfully grown their light commercial work in their respective regions and believe this will continue to be a growth driver over the long term.”
Second Quarter 2023 Financial Highlights ($ in 000s)
(comparisons are to the quarter ended June 30, 2022)3 Months Ended 6/30/23 Reported Change Sales $1,317,262 3.4% Gross Margin 32.0% 190 bps SG&A as % of revenue 14.0% 10 bps Operating Profit $237,103 14.4% Operating Margin 18.0% 170 bps Net Income $164,400 14.4% Net Income per diluted share $5.18 17.5% 3 Months Ended 6/30/23 Adjusted Change Sales $1,317,262 3.4% Gross Margin 32.0% 190 bps SG&A as % of revenue 13.9% 10 bps Operating Profit $239,203 14.6% Operating Margin 18.2% 180 bps Net Income $166,685 15.4% Net Income per diluted share $5.25 18.5% EBITDA $275,505 13.7% EBITDA Margin 20.9% 190 bps
Six Month Financial Highlights ($ in 000s)
(comparisons are to the six months ended June 30, 2022)6 Months Ended 6/30/23 Reported Change Sales $2,582,500 5.7% Gross Margin 30.7% 140 bps SG&A as % of revenue 13.8% (30 bps) Operating Profit $436,534 17.6% Operating Margin 16.9% 170 bps Net Income $300,270 16.2% Net Income per diluted share $9.47 20.3% 6 Months Ended 6/30/23 Adjusted Change Sales $2,582,500 5.7% Gross Margin 30.7% 140 bps SG&A as % of revenue 13.5% (40 bps) Operating Profit $442,292 17.5% Operating Margin 17.1% 170 bps Net Income $305,045 17.3% Net Income per diluted share $9.62 21.5% EBITDA $513,830 15.7% EBITDA Margin 19.9% 170 bps
Operating Segment Highlights ($ in 000s)
(comparisons are to the period ended June 30, 2022)Installation 3 Months Ended 6/30/23 6 Months Ended 6/30/23 Sales $809,055 $1,576,145 Change Volume 2.9% 4.1% Price 2.9% 4.3% M&A 2.2% 2.2% Total Change 8.0% 10.6% Operating Margin 21.3% 20.3% Change 260 bps 260 bps Adj. Operating Margin 21.3% 20.3% Change 260 bps 250 bps Adj. EBITDA Margin 23.4% 22.4% Change 260 bps 240 bps Specialty Distribution 3 Months Ended 6/30/23 6 Months Ended 6/30/23 Sales $574,488 $1,132,862 Change Volume -2.9% -2.9% Price 0.6% 3.0% M&A 0.0% 0.0% Total Change -2.3% 0.1% Operating Margin 15.0% 14.1% Change 20 bps 20 bps Adj. Operating Margin 15.0% 14.1% Change 20 bps 20 bps Adj. EBITDA Margin 17.6% 16.7% Change 40 bps 20 bps Capital Allocation
“We are pleased with our progress to date on the acquisition front, welcoming three profitable and well-managed companies to the TopBuild family. In late July we also announced that we had signed an agreement to acquire SPI, a leading specialty distributor generating approximately $703 million in annual revenue. This acquisition will further enhance our growth platform in the three end-markets we serve and increase our recurring revenue stream from maintenance and repair operations.” added Buck.
Year-to-date the Company has completed three acquisitions; SRI Holdings, Best Insulation, and Rocky Mountain Spray Foam which, combined, are expected to contribute approximately $170 million of annual revenue.
2023 Outlook
Sales and Adjusted EBITDA Outlook (1)
($ in millions)2023 Low High Sales $ 5,025 $ 5,175 Adjusted EBITDA* $ 950 $ 1,000 *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 second quarter 2023 financial results is scheduled for today, Thursday, August 3, 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 170 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
386-763-8801TopBuild Corp. Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except share and per common share amounts) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net sales $ 1,317,262 $ 1,274,285 $ 2,582,500 $ 2,443,203 Cost of sales 895,462 890,188 1,790,485 1,727,905 Gross profit 421,800 384,097 792,015 715,298 Selling, general, and administrative expense 184,697 176,876 355,481 344,123 Operating profit 237,103 207,221 436,534 371,175 Other income (expense), net: Interest expense (18,558 ) (13,410 ) (36,597 ) (25,375 ) Other, net 4,605 (279 ) 6,528 406 Other expense, net (13,953 ) (13,689 ) (30,069 ) (24,969 ) Income before income taxes 223,150 193,532 406,465 346,206 Income tax expense (58,750 ) (49,835 ) (106,195 ) (87,796 ) Net income $ 164,400 $ 143,697 $ 300,270 $ 258,410 Net income per common share: Basic $ 5.20 $ 4.43 $ 9.51 $ 7.93 Diluted $ 5.18 $ 4.41 $ 9.47 $ 7.87 Weighted average shares outstanding: Basic 31,599,744 32,405,292 31,575,337 32,570,988 Diluted 31,731,807 32,614,449 31,722,660 32,827,549 TopBuild Corp. Condensed Consolidated Statements of Comprehensive Income (Unaudited) (in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income $ 164,400 $ 143,697 $ 300,270 $ 258,410 Other comprehensive income (loss): Foreign currency translation adjustment 4,283 (2,193 ) 6,037 1,026 Comprehensive income $ 168,683 $ 141,504 $ 306,307 $ 259,436 TopBuild Corp. Condensed Consolidated Balance Sheets and Other Financial Data (Unaudited) (dollars in thousands) As of June 30, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 526,327 $ 240,069 Receivables, net of an allowance for credit losses of $16,778 at June 30, 2023, and $16,281 at December 31, 2022 857,664 836,071 Inventories, net 385,049 438,644 Prepaid expenses and other current assets 25,556 34,257 Total current assets 1,794,596 1,549,041 Right of use assets 204,044 205,892 Property and equipment, net 258,746 253,484 Goodwill 1,991,949 1,966,994 Other intangible assets, net 595,706 614,967 Other assets 12,905 16,453 Total assets $ 4,857,946 $ 4,606,831 LIABILITIES Current liabilities: Accounts payable $ 468,602 $ 487,114 Current portion of long-term debt 45,142 40,068 Accrued liabilities 180,594 199,370 Short-term operating lease liabilities 61,825 60,880 Short-term finance lease liabilities 2,180 2,207 Total current liabilities 758,343 789,639 Long-term debt 1,394,794 1,417,257 Deferred tax liabilities, net 254,777 251,481 Long-term portion of insurance reserves 57,217 59,783 Long-term operating lease liabilities 148,709 149,943 Long-term finance lease liabilities 4,519 6,673 Other liabilities 1,541 2,349 Total liabilities 2,619,900 2,677,125 EQUITY 2,238,046 1,929,706 Total liabilities and equity $ 4,857,946 $ 4,606,831 As of June 30, 2023 2022 Other Financial Data Receivable days 50 46 Inventory days 39 48 Accounts payable days 64 62 Receivables, net plus inventories, net less accounts payable $ 774,111 $ 696,615 Receivables, net plus inventories, net less accounts payable as a percent of sales (TTM) † 14.9 % 15.0 % † 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) Six Months Ended June 30, 2023 2022 Cash Flows Provided by (Used in) Operating Activities: Net income $ 300,270 $ 258,410 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 64,652 60,621 Share-based compensation 6,886 7,061 Loss on sale of property and equipment 621 525 Amortization of debt issuance costs 1,440 1,427 Provision for bad debt expense 4,031 6,404 Loss from inventory obsolescence 3,290 3,610 Change in certain assets and liabilities: Receivables, net (37,247 ) (107,739 ) Inventories, net 54,623 (82,621 ) Prepaid expenses and other current assets 8,897 648 Accounts payable (8,806 ) 47,540 Accrued liabilities (13,872 ) 16,884 Other, net 1,012 4,927 Net cash provided by operating activities 385,797 217,697 Cash Flows Provided by (Used in) Investing Activities: Purchases of property and equipment (30,672 ) (36,034 ) Acquisition of businesses, net of cash acquired (45,948 ) (18,746 ) Proceeds from sale of property and equipment 782 618 Net cash used in investing activities (75,838 ) (54,162 ) Cash Flows Provided by (Used in) Financing Activities: Repayment of long-term debt (18,829 ) (19,287 ) Proceeds from revolving credit facility — 70,000 Repayment of revolving credit facility — (70,000 ) Taxes withheld and paid on employees' equity awards (6,350 ) (11,667 ) Exercise of stock options 1,497 1,452 Repurchase of shares of common stock — (150,050 ) Payment of contingent consideration (300 ) (35 ) Net cash used in financing activities (23,982 ) (179,587 ) Impact of exchange rate changes on cash 281 142 Net increase (decrease) in cash and cash equivalents 286,258 (15,910 ) Cash and cash equivalents- Beginning of period 240,069 139,779 Cash and cash equivalents- End of period $ 526,327 $ 123,869 Supplemental disclosure of noncash activities: Leased assets obtained in exchange for new operating lease liabilities $ 26,310 $ 36,129 Accruals for property and equipment 1,449 563 TopBuild Corp. Segment Data (Unaudited) (dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 Change 2023 2022 Change Installation Sales $ 809,055 $ 748,968 8.0 % $ 1,576,145 $ 1,425,661 10.6 % Operating profit, as reported $ 172,278 $ 139,919 $ 319,176 $ 252,598 Operating margin, as reported 21.3 % 18.7 % 20.3 % 17.7 % Rationalization charges — — — 473 Acquisition related costs 227 16 490 96 Operating profit, as adjusted $ 172,505 $ 139,935 $ 319,666 $ 253,167 Operating margin, as adjusted 21.3 % 18.7 % 20.3 % 17.8 % Share-based compensation 310 282 689 689 Depreciation and amortization 16,791 15,319 33,284 31,004 EBITDA, as adjusted $ 189,606 $ 155,536 21.9 % $ 353,639 $ 284,860 24.1 % EBITDA margin, as adjusted 23.4 % 20.8 % 22.4 % 20.0 % Specialty Distribution Sales $ 574,488 $ 587,791 (2.3 )% $ 1,132,862 $ 1,131,653 0.1 % Operating profit, as reported $ 85,980 $ 86,749 $ 159,313 $ 157,170 Operating margin, as reported 15.0 % 14.8 % 14.1 % 13.9 % Acquisition related costs — 334 340 575 Operating profit, as adjusted $ 85,980 $ 87,083 $ 159,653 $ 157,745 Operating margin, as adjusted 15.0 % 14.8 % 14.1 % 13.9 % Share-based compensation 316 287 554 641 Depreciation and amortization 14,740 14,005 29,312 28,034 EBITDA, as adjusted $ 101,036 $ 101,375 (0.3 )% $ 189,519 $ 186,420 1.7 % EBITDA margin, as adjusted 17.6 % 17.2 % 16.7 % 16.5 % TopBuild Corp. Adjusted EBITDA (Unaudited) (dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 Change 2023 2022 Change Total net sales Sales before eliminations $ 1,383,543 $ 1,336,759 $ 2,709,007 $ 2,557,314 Intercompany eliminations (66,281 ) (62,474 ) (126,507 ) (114,111 ) Net sales after eliminations $ 1,317,262 $ 1,274,285 3.4 % $ 2,582,500 $ 2,443,203 5.7 % Operating profit, as reported - segments $ 258,258 $ 226,668 $ 478,489 $ 409,768 General corporate expense, net (9,957 ) (9,012 ) (20,786 ) (19,449 ) Intercompany eliminations (11,198 ) (10,435 ) (21,169 ) (19,144 ) Operating profit, as reported $ 237,103 $ 207,221 $ 436,534 $ 371,175 Operating margin, as reported 18.0 % 16.3 % 16.9 % 15.2 % Rationalization charges — — — 473 Acquisition related costs † 2,100 1,577 5,758 4,654 Operating profit, as adjusted $ 239,203 $ 208,798 $ 442,292 $ 376,302 Operating margin, as adjusted 18.2 % 16.4 % 17.1 % 15.4 % Share-based compensation 3,751 3,334 6,886 7,061 Depreciation and amortization 32,551 30,122 64,652 60,621 EBITDA, as adjusted $ 275,505 $ 242,254 13.7 % $ 513,830 $ 443,984 15.7 % EBITDA margin, as adjusted 20.9 % 19.0 % 19.9 % 18.2 % Sales change period over period 42,977 139,297 EBITDA, as adjusted, change period over period 33,251 69,846 Incremental EBITDA, as adjusted, as a percentage of change in sales 77.4 % 50.1 % † 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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Gross Profit Reconciliation Net sales $ 1,317,262 $ 1,274,285 $ 2,582,500 $ 2,443,203 Gross profit, as reported $ 421,800 $ 384,097 $ 792,015 $ 715,298 Acquisition related costs — — — 121 Gross profit, as adjusted $ 421,800 $ 384,097 $ 792,015 $ 715,419 Gross margin, as reported 32.0 % 30.1 % 30.7 % 29.3 % Gross margin, as adjusted 32.0 % 30.1 % 30.7 % 29.3 % Selling, General and Administrative Expense Reconciliation Selling, general, and administrative expense, as reported $ 184,697 $ 176,876 $ 355,481 $ 344,123 Rationalization charges — — — 473 Acquisition related costs 2,100 1,577 5,758 4,533 Selling, general, and administrative expense, as adjusted $ 182,597 $ 175,299 $ 349,723 $ 339,117 Operating Profit Reconciliation Operating profit, as reported $ 237,103 $ 207,221 $ 436,534 $ 371,175 Rationalization charges — — — 473 Acquisition related costs 2,100 1,577 5,758 4,654 Operating profit, as adjusted $ 239,203 $ 208,798 $ 442,292 $ 376,302 Operating margin, as reported 18.0 % 16.3 % 16.9 % 15.2 % Operating margin, as adjusted 18.2 % 16.4 % 17.1 % 15.4 % Income Per Common Share Reconciliation Income before income taxes, as reported $ 223,150 $ 193,532 $ 406,465 $ 346,206 Rationalization charges — — — 473 Acquisition related costs 2,100 1,577 5,758 4,654 Income before income taxes, as adjusted 225,250 195,109 412,223 351,333 Tax rate at 26.0% (58,565 ) (50,728 ) (107,178 ) (91,347 ) Income, as adjusted $ 166,685 $ 144,381 $ 305,045 $ 259,986 Income per common share, as adjusted $ 5.25 $ 4.43 $ 9.62 $ 7.92 Weighted average diluted common shares outstanding 31,731,807 32,614,449 31,722,660 32,827,549 TopBuild Corp. Same Branch and Acquisition Metrics (Unaudited) (dollars in thousands) Three Months Ended June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net sales Same branch: Installation $ 792,529 $ 748,968 $ 1,544,775 $ 1,425,661 Specialty Distribution 574,488 587,791 1,132,862 1,131,653 Eliminations (66,281 ) (62,474 ) (126,507 ) (114,111 ) Total same branch 1,300,736 1,274,285 2,551,130 2,443,203 Acquisitions (a): Installation $ 16,526 $ — $ 31,370 $ — Total acquisitions 16,526 — 31,370 — Total $ 1,317,262 $ 1,274,285 $ 2,582,500 $ 2,443,203 EBITDA, as adjusted Same branch $ 272,939 $ 242,254 $ 509,715 $ 443,984 Acquisitions (a) 2,566 — 4,115 — Total $ 275,505 $ 242,254 $ 513,830 $ 443,984 EBITDA, as adjusted, as a percentage of sales Same branch (b) 21.0 % 20.0 % Acquisitions (c) 15.5 % 13.1 % Total (d) 20.9 % 19.0 % 19.9 % 18.2 % As Adjusted Incremental EBITDA, as a percentage of change in sales Same branch (e) 116.0 % 60.9 % Acquisitions (c) 15.5 % 13.1 % Total (f) 77.4 % 50.1 % (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 June 30, Six Months Ended June 30, 2023 2022 2023 2022 Net income, as reported $ 164,400 $ 143,697 $ 300,270 $ 258,410 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 13,953 13,689 30,069 24,969 Income tax expense 58,750 49,835 106,195 87,796 Depreciation and amortization 32,551 30,122 64,652 60,621 Share-based compensation 3,751 3,334 6,886 7,061 Rationalization charges — — — 473 Acquisition related costs 2,100 1,577 5,758 4,654 EBITDA, as adjusted $ 275,505 $ 242,254 $ 513,830 $ 443,984 TopBuild Corp. Acquisition Adjusted Net Sales (Unaudited) (in thousands) 2022 2023 Trailing Twelve
Months EndedQ3 Q4 Q1 Q2 June 30, 2023 Net Sales $ 1,300,998 $ 1,264,543 $ 1,265,238 $ 1,317,262 $ 5,148,041 Acquisitions proforma adjustment † 17,576 18,279 6,187 - 42,042 Net sales, acquisition adjusted $ 1,318,574 $ 1,282,822 $ 1,271,425 $ 1,317,262 $ 5,190,083 † 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 $ 543.0 586.0 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 62.0 59.0 Income tax expense 191.0 206.0 Depreciation and amortization 131.0 128.0 Share-based compensation 15.0 14.0 Acquisition related costs 8.0 7.0 Estimated EBITDA, as adjusted $ 950.0 $ 1,000.0 
