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TopBuild Reports First Quarter 2021 Results
المصدر: Nasdaq GlobeNewswire / 06 مايو 2021 06:45:00 America/New_York
- Net sales increased 13.7%
- Gross margin expanded 30 basis points
- 12.9% operating margin, 13.1% on an adjusted basis, up 230 basis points
- Adjusted EBITDA increased 31.1%, adjusted EBITDA margin up 210 basis points
- $1.80 net income per diluted share, $2.02 on an adjusted basis
DAYTONA BEACH, Fla., May 06, 2021 (GLOBE NEWSWIRE) -- TopBuild Corp. (NYSE:BLD), a leading installer and distributor of insulation and building material products today reported results for the first quarter ended March 31, 2021.
Robert Buck, President and Chief Executive Officer, stated, “TopBuild reported another solid quarter with sales benefitting from the strong growth in both our residential and commercial businesses. Adjusted operating margins expanded at both TruTeam and Service Partners, despite the impact of severe weather in February, most notably in Texas where we have significant operations.
“Our team is executing well and remains focused on profitable growth, which includes successfully managing the multiple material cost increases announced this year, leveraging our fixed cost base and continuing to focus on operational efficiency.”
First Quarter 2021 Financial Highlights
(unless otherwise indicated, comparisons are to the quarter ended March 31, 2020)
- Net Sales increased 13.7% to $742.8 million, 9.5% on a same branch basis. The increase was primarily driven by increased sales volume, contributions from acquisitions and price.
- Gross margin increased 30 basis points to 26.6%. On an adjusted basis, gross margin increased 40 basis points to 26.7%.
- Operating profit was $95.9 million, compared to $70.0 million, a 37.0% increase. On an adjusted basis, operating profit was $97.2 million, compared to $70.3 million, a 38.3% improvement.
- Operating margin was 12.9% compared to 10.7%. Adjusted operating margin improved 230 basis points to 13.1%.
- Net income was $59.8 million, or $1.80 per diluted share, compared to net income of $50.8 million or $1.51 per diluted share. Adjusted net income was $67.1 million, or $2.02 per diluted share, compared to $45.9 million, or $1.37 per diluted share.
- Adjusted EBITDA was $115.8 million, compared to $88.4 million, a 31.1% increase and adjusted EBITDA margin improved 210 basis points to 15.6%. Incremental adjusted EBITDA margin was 30.6%, 39.9% on a same branch basis.
- At March 31, 2021, the Company had cash and cash equivalents of $319.6 million and availability under the revolving credit facility of approximately $389.6 million for total liquidity of $709.2 million.
Operating Segment Highlights ($ in 000s)
(comparisons are to the quarter ended March 31, 2020)TruTeam 3 Months
Ended
3/31/21Service Partners 3 Months
Ended
3/31/21Sales $532,753 Sales $251,601 Change Change Volume 5.1% Volume 13.8% Price 1.1% Price 3.7% M&A 5.8% M&A 0.0% Total Change 12.0% Total Change 17.4% Operating Margin 13.8% Operating Margin 14.1% Change 110 bps Change 260 bps Adj. Operating Margin 13.9% Adj. Operating Margin 14.1% Change 120 bps Change 260 bps Capital Allocation
Acquisitions
Year-to-date, the Company has completed four acquisitions.Forecasted Month YTD 2021 Annual Revenue ($millions) Acquired Business Focus LCR Contractors $58.0 January Heavy Commercial/Fireproofing Ozark Foam $7.7 March Residential, primarily spray foam American Building Systems $144.0 April Residential (94%) & Distribution (6%) Creative Conservation $7.4 April Residential Total $217.1 “We were pleased to acquire LCR Contractors and Ozark Foam in the first quarter and ABS and Creative Conservation in April. Combined, these four acquisitions are expected to produce approximately $217 million of annual revenue,” added Buck.
“Targeted M&A remains our number one capital allocation priority and our team has demonstrated its skill at identifying, executing and integrating acquisitions, thereby maximizing the synergies inherent in each transaction and creating long-term value for our shareholders.”
Share Repurchases
In the first quarter the Company repurchased 49,284 shares at an average price of $199.98 per share. These shares were purchased as part of the Company’s $200 million share repurchase program announced on February 26, 2019. As of March 31, 2021, approximately $30.1 million of the $200 million authorization remained.Senior Notes Offering
On March 15, 2021, the Company closed its private offering of $400 million in aggregate principal amount of 3.625% senior notes due 2029. The Company used the net proceeds from the offering, together with cash on hand, to redeem its existing $400 million 5.625% senior unsecured notes maturing in 2026 and to pay fees and expenses related to the offering.2021 Outlook
Sales and Adjusted EBITDA Guidance (1)
($ in millions)2021 Low High Sales $ 3,220 $ 3,320 Adjusted EBITDA* $ 532 $ 562 *See table for adjusted EBITDA reconciliation.
Assumptions (1)
($ in millions)2021 Low High Housing Starts 1,450 1,500 Estimated net income $ 315.3 $ 344.6 Interest Expense and other, net $ 23.8 $ 20.8 Income tax expense $ 110.8 $ 121.0 Depreciation and Amortization $ 70.9 $ 66.9 Share based compensation $ 11.2 $ 8.7 (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 2020 Annual Report on Form 10-K and subsequent SEC reports.
Conference Call
A conference call to discuss first quarter 2021 financial results is scheduled for today, Thursday, May 6, 2021, 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., 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 “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 a 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 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, 2021 2020 Net sales $ 742,798 $ 653,228 Cost of sales 545,039 481,272 Gross profit 197,759 171,956 Selling, general, and administrative expense 101,872 101,967 Operating profit 95,887 69,989 Other income (expense), net: Interest expense (6,603 ) (8,742 ) Loss on extinguishment of debt (13,862 ) (233 ) Other, net 77 472 Other expense, net (20,388 ) (8,503 ) Income before income taxes 75,499 61,486 Income tax expense (15,657 ) (10,715 ) Net income $ 59,842 $ 50,771 Net income per common share: Basic $ 1.82 $ 1.53 Diluted $ 1.80 $ 1.51 Weighted average shares outstanding: Basic 32,826,515 33,168,453 Diluted 33,202,563 33,599,847
TopBuild Corp. Condensed Consolidated Balance Sheets and Other Financial Data (Unaudited) (dollars in thousands) As of March 31, December 31, ASSETS 2021 2020 Current assets: Cash and cash equivalents $ 319,619 $ 330,007 Receivables, net of an allowance for credit losses of $7,171 at March 31, 2021, and $6,926 at December 31, 2020 462,848 427,340 Inventories, net 163,988 161,369 Prepaid expenses and other current assets 14,255 17,689 Total current assets 960,710 936,405 Right of use assets 94,094 83,490 Property and equipment, net 187,033 180,053 Goodwill 1,430,913 1,410,685 Other intangible assets, net 205,513 190,605 Deferred tax assets, net 2,767 2,728 Other assets 11,072 11,317 Total assets $ 2,892,102 $ 2,815,283 LIABILITIES Current liabilities: Accounts payable $ 330,813 $ 331,710 Current portion of long-term debt 23,406 23,326 Accrued liabilities 124,946 107,949 Short-term lease liabilities 35,119 33,492 Total current liabilities 514,284 496,477 Long-term debt 686,493 683,396 Deferred tax liabilities, net 168,424 168,568 Long-term portion of insurance reserves 50,197 50,657 Long-term lease liabilities 62,688 53,749 Other liabilities 13,653 13,642 Total liabilities 1,495,739 1,466,489 EQUITY 1,396,363 1,348,794 Total liabilities and equity $ 2,892,102 $ 2,815,283 As of March 31, 2021 2020 Other Financial Data Receivable days 45 51 Inventory days 29 29 Accounts payable days 76 79 Receivables, net plus inventories, net less accounts payable $ 296,023 $ 278,756 Receivables, net plus inventories, net less accounts payable as a percent of sales (TTM) † 10.2 % 10.5 % † 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, 2021 2020 Cash Flows Provided by (Used in) Operating Activities: Net income $ 59,842 $ 50,771 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 15,519 14,190 Share-based compensation 3,111 3,908 Loss on extinguishment of debt 13,862 233 Loss on sale or abandonment of property and equipment 56 383 Amortization of debt issuance costs 422 328 Provision for bad debt expense 1,765 1,670 Loss from inventory obsolescence 653 529 Deferred income taxes, net (183 ) (39 ) Change in certain assets and liabilities Receivables, net (20,831 ) (5,048 ) Inventories, net (2,088 ) (3,964 ) Prepaid expenses and other current assets 3,517 6,193 Accounts payable (2,244 ) (4,173 ) Accrued liabilities 16,591 9,981 Other, net (570 ) (2,032 ) Net cash provided by operating activities 89,422 72,930 Cash Flows Provided by (Used in) Investing Activities: Purchases of property and equipment (12,284 ) (15,892 ) Acquisition of businesses (61,092 ) (20,526 ) Proceeds from sale of property and equipment 56 194 Other, net — — Net cash used in investing activities (73,320 ) (36,224 ) Cash Flows Provided by (Used in) Financing Activities: Proceeds from issuance of long-term debt 411,250 300,000 Repayment of long-term debt (415,856 ) (307,668 ) Payment of debt issuance costs (6,500 ) (2,280 ) Taxes withheld and paid on employees' equity awards (11,480 ) (10,399 ) Exercise of stock options 5,952 — Repurchase of shares of common stock (9,856 ) (14,127 ) Net cash used in financing activities (26,490 ) (34,474 ) Cash and Cash Equivalents (Decrease) increase for the period (10,388 ) 2,232 Beginning of period 330,007 184,807 End of period $ 319,619 $ 187,039 Supplemental disclosure of noncash activities: Leased assets obtained in exchange for new operating lease liabilities $ 20,322 $ 9,167 Accruals for property and equipment 524 496
TopBuild Corp. Segment Data (Unaudited) (dollars in thousands) Three Months Ended March 31, 2021 2020 Change TruTeam Sales $ 532,753 $ 475,873 12.0 % Operating profit, as reported $ 73,636 $ 60,351 Operating margin, as reported 13.8 % 12.7 % Acquisition related costs — 4 COVID-19 pay 489 — Operating profit, as adjusted $ 74,125 $ 60,355 Operating margin, as adjusted 13.9 % 12.7 % Service Partners Sales $ 251,601 $ 214,223 17.4 % Operating profit, as reported $ 35,385 $ 24,669 Operating margin, as reported 14.1 % 11.5 % COVID-19 pay 34 — Operating profit, as adjusted $ 35,419 $ 24,669 Operating margin, as adjusted 14.1 % 11.5 % Total Sales before eliminations $ 784,354 $ 690,096 Intercompany eliminations (41,556 ) (36,868 ) Net sales after eliminations $ 742,798 $ 653,228 13.7 % Operating profit, as reported - segments $ 109,021 $ 85,020 General corporate expense, net (6,606 ) (9,198 ) Intercompany eliminations (6,528 ) (5,833 ) Operating profit, as reported $ 95,887 $ 69,989 Operating margin, as reported 12.9 % 10.7 % Rationalization charges 16 — Acquisition related costs † 753 235 Refinancing costs — 37 COVID-19 pay 523 — Operating profit, as adjusted $ 97,179 $ 70,261 Operating margin, as adjusted 13.1 % 10.8 % Share-based compensation 3,111 3,908 Depreciation and amortization 15,519 14,190 EBITDA, as adjusted $ 115,809 $ 88,359 EBITDA margin, as adjusted 15.6 % 13.5 % Sales change period over period 89,570 EBITDA, as adjusted, change period over period 27,450 Incremental EBITDA, as adjusted, as a percentage of change in sales 30.6 % † 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, 2021 2020 Gross Profit and Operating Profit Reconciliations Net sales $ 742,798 $ 653,228 Gross profit, as reported $ 197,759 $ 171,956 COVID-19 pay 470 — Gross profit, as adjusted $ 198,229 $ 171,956 Gross margin, as reported 26.6 % 26.3 % Gross margin, as adjusted 26.7 % 26.3 % Operating profit, as reported $ 95,887 $ 69,989 Rationalization charges 16 — Acquisition related costs 753 235 Refinancing costs — 37 COVID-19 pay 523 — Operating profit, as adjusted $ 97,179 $ 70,261 Operating margin, as reported 12.9 % 10.7 % Operating margin, as adjusted 13.1 % 10.8 % Income Per Common Share Reconciliation Income before income taxes, as reported $ 75,499 $ 61,486 Rationalization charges 16 — Acquisition related costs 753 235 Refinancing costs and loss on extinguishment of debt 13,862 270 COVID-19 pay 523 — Income before income taxes, as adjusted 90,653 61,991 Tax rate at 26.0% (23,570 ) (16,118 ) Income, as adjusted $ 67,083 $ 45,873 Income per common share, as adjusted $ 2.02 $ 1.37 Weighted average diluted common shares outstanding 33,202,563 33,599,847
TopBuild Corp. Same Branch and Acquisition Net Sales and Adjusted EBITDA (Unaudited) (dollars in thousands) Three Months Ended March 31, 2021 2020 Net sales Same branch: TruTeam $ 505,297 $ 475,873 Service Partners 251,601 214,223 Eliminations (41,556 ) (36,868 ) Total same branch 715,342 653,228 Acquisitions (a): TruTeam $ 27,456 $ — Service Partners — — Eliminations — — Total acquisitions 27,456 — Total $ 742,798 $ 653,228 EBITDA, as adjusted Same branch $ 113,132 $ 88,359 Acquisitions (a) 2,677 — Total $ 115,809 $ 88,359 EBITDA, as adjusted, as a percentage of sales Same branch (b) 15.8 % Acquisitions (c) 9.8 % Total (d) 15.6 % 13.5 % As Adjusted Incremental EBITDA, as a percentage of change in sales Same branch (e) 39.9 % Acquisitions (c) 9.8 % Total (f) 30.6 % (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. Same Branch and Acquisition Net Sales by Market (Unaudited) (in thousands) Three Months Ended March 31, 2021 2020 Same branch: Residential $ 556,993 $ 506,731 Commercial 158,349 146,497 Same branch net sales 715,342 653,228 Acquisitions (a): Residential $ 19,791 $ — Commercial 7,665 — Acquisitions net sales 27,456 — Total net sales $ 742,798 $ 653,228 (a) Represents current year impact of acquisitions in their first twelve months TopBuild Corp. Reconciliation of Adjusted EBITDA to Net Income (Unaudited) (in thousands) Three Months Ended March 31, 2021 2020 Net income, as reported $ 59,842 $ 50,771 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 6,526 8,270 Income tax expense 15,657 10,715 Depreciation and amortization 15,519 14,190 Share-based compensation 3,111 3,908 Rationalization charges 16 — Acquisition related costs 753 235 Refinancing costs and loss on extinguishment of debt 13,862 270 COVID-19 pay 523 — EBITDA, as adjusted $ 115,809 $ 88,359 TopBuild Corp. Acquisition Adjusted Net Sales (Unaudited) (in thousands) 2020 2021 Trailing Twelve
Months EndedQ2 Q3 Q4 Q1 March 31, 2021 Net Sales $ 646,099 $ 697,223 $ 721,487 $ 742,798 $ 2,807,607 Acquisitions proforma adjustment † 32,607 34,823 16,056 3,652 87,138 Net sales, acquisition adjusted $ 678,706 $ 732,046 $ 737,543 $ 746,450 $ 2,894,745 † Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches TopBuild Corp. 2021 Estimated Adjusted EBITDA Range (Unaudited) (in millions) Twelve Months Ending December 31, 2021 Low High Estimated net income $ 315.3 $ 344.6 Adjustments to arrive at estimated EBITDA, as adjusted: Interest expense and other, net 23.8 20.8 Income tax expense 110.8 121.0 Depreciation and amortization 70.9 66.9 Share-based compensation 11.2 8.7 Estimated EBITDA, as adjusted $ 532.0 $ 562.0