TopBuild Reports Third Quarter 2015 Financial Results
Net sales Increased 7.6% to $428 Million
Installation Segment Sales up 8.7%
Distribution Segment Sales up 5.4%
$30.2 Million Operating Profit
$31.3 Million on an Adjusted Basis, up 42%
$0.44 Diluted Earnings per Share
$0.50 on an Adjusted Basis, up 56%
DAYTONA BEACH, Fla., Nov. 3, 2015 /PRNewswire/ -- TopBuild Corp. (NYSE: BLD), the leading installer and distributor of insulation products to the United States construction industry based on revenue, reported financial results for the third quarter ended September 30, 2015.
Jerry Volas, Chief Executive Officer of TopBuild stated, "We continue to execute well within the ongoing improvement in both the residential and commercial building markets. Sales increased 7.6% year-over-year, despite a tight labor market for builders, which is extending the building cycle and, as a result, the traditional lag time in our business. Overall, consistent with our long-term expectation, adjusted EBITDA margin on incremental sales of 20% in the third quarter keeps the year-to-date incremental margin at 20%."
Third Quarter Financial Highlights
(unless otherwise indicated, comparisons are to quarter ended September 30, 2014)
- Net sales increased 7.6% to $427.9 million.
- Gross margin on a sequential basis was up 80 basis points. On an adjusted basis, gross margin increased 100 basis points sequentially to 22.2%.
- Selling, general and administrative ("SG&A") expenses as a percentage of sales were 14.9%, a 390 basis point improvement. On an adjusted basis, SG&A expenses as a percentage of sales improved 180 basis points.
- Operating profit was $30.2 million compared to $13.8 million. On an adjusted basis, operating profit was $31.3 million compared to $22.1 million, a 41.6% improvement.
- Operating margins improved 360 basis points to 7.1%. On an adjusted basis, operating margins were 7.3%, up 170 basis points.
- Net income from continuing operations was $16.6 million, or $0.44 per diluted share, compared to $6.5 million or $0.17 per diluted share. On an adjusted basis, net income from continuing operations was $19.0 million, or $0.50 per diluted share compared to $12.1 million or $0.32 per diluted share.
- At quarter end, the Company had cash and cash equivalents of $108 million and availability under its revolving credit facility of $68 million for total liquidity of $176 million.
Operating Segment Highlights
(all comparisons are to quarter ended September 30, 2014)
- Installation (TruTeamSM)
- Net sales increased 8.7% driven by growth in both residential and commercial lines of business as well as improved selling prices.
- Operating margin was 7.4%. On an adjusted basis, TruTeam's operating margin was 7.8%, a 280 basis point improvement.
- Recognized as a Top Service Provider at the recent KB Home Strategic Supplier Conference.
- Distribution (Service Partners®)
- Net sales rose 5.4%, driven by higher sales to external customers and the Installation segment.
- Operating margin was 9.9%, a 60 basis point improvement.
Additional Information
Quarterly 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.
About TopBuild
TopBuild Corp., headquartered in Daytona Beach, Florida, is the leading installer and distributor of insulation products to the United States construction industry. We provide insulation services nationwide through TruTeamSM, which has over 190 branches in 43 states. Our Service Partners® business distributes insulation from over 70 branches in 35 states. 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 visit our website at www.topbuild.com.
Conference Call Details
A conference call to discuss third quarter financial results is scheduled for today, Tuesday November 3, 2015, at 8:00 a.m. Eastern Time. Call participants are asked to register five to ten minutes prior to the scheduled start time by dialing 1-844-862-9357 and from outside the U.S. at 1-765-507-2656. Please use the conference identification number 64958612. The conference call will be webcast simultaneously on the "Investors" section of the Company's website at www.topbuild.com.
A replay of the call will be available on TopBuild's website or by phone by dialing 1-855-859-2056 and from outside the U.S. at 1-404-537-3406. Please use the conference identification number 64958612. The telephone replay will be available approximately two hours after the end of the call through November 17.
Safe Harbor Statement
Statements contained in this press release that reflect our views about our future performance constitute "forward-looking statements" under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "will," "would," "anticipate," "expect," "believe," 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. We caution you against relying on any of these forward-looking statements. Our future performance may be affected by our reliance on residential new construction, residential repair/remodel, and commercial construction; our reliance on third-party suppliers and manufacturers; our ability to attract, develop and retain talented personnel and our sales and labor force; our ability to maintain consistent practices across our locations; our ability to maintain our competitive position; and our ability to realize the expected benefits of the Separation. We discuss many of the risks we face under the caption entitled "Risk Factors" in our Registration Statement on Form 10 filed with the SEC. Our forward-looking statements in this press release speak only as of the date of this press release. Factors or events that could cause our actual results to differ may emerge from time to time and it is not possible for us to predict all of them. Unless required by law, we undertake no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise.
Use of Non-GAAP Financial Measures
The "adjusted" financial measures and ratios presented above are not calculated in accordance with generally accepted accounting principles. The Company believes that these non-GAAP financial measures and ratios, 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. Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in a table incorporated in this news release. Non-GAAP financial measures and ratios should be viewed in addition to, and not as an alternative for, the Company's reported results under generally accepted accounting principles in the United States. Additional information about the Company is contained in the Company's filings with the Securities and Exchange Commission and is available on TopBuild's website under "Investors" at www.topbuild.com.
Investor Relations and Media Contact
Idalia Rodriguez
[email protected]
386-304-2088
| TopBuild Corp. |
||||||||||||
| Condensed Consolidated Statements of Operations (Unaudited) |
||||||||||||
| For the Three and Nine Months Ended September 30, 2015 and 2014 |
||||||||||||
| (in thousands, except per common share data) |
||||||||||||
| Three Months Ended |
Nine Months Ended |
|||||||||||
| September 30, |
September 30, |
|||||||||||
| 2015 |
2014 |
2015 |
2014 |
|||||||||
| Net sales |
$ |
427,890 |
$ |
397,650 |
$ |
1,190,110 |
$ |
1,114,020 |
||||
| Cost of sales |
333,890 |
309,270 |
936,600 |
875,120 |
||||||||
| Gross profit |
94,000 |
88,380 |
253,510 |
238,900 |
||||||||
| Selling, general and administrative expenses |
63,810 |
74,600 |
212,970 |
222,770 |
||||||||
| Operating profit |
30,190 |
13,780 |
40,540 |
16,130 |
||||||||
| Other expense, net: |
(1,560) |
(3,090) |
(7,880) |
(9,280) |
||||||||
| Income from continuing operations before income taxes |
28,630 |
10,690 |
32,660 |
6,850 |
||||||||
| Income tax expense from continuing operations |
(12,000) |
(4,220) |
(13,200) |
(2,290) |
||||||||
| Income from continuing operations |
16,630 |
6,470 |
19,460 |
4,560 |
||||||||
| Loss from discontinued operations, net |
— |
(90) |
(230) |
(930) |
||||||||
| Net income |
$ |
16,630 |
$ |
6,380 |
$ |
19,230 |
$ |
3,630 |
||||
| Income (loss) per common share: |
||||||||||||
| Basic: |
||||||||||||
| Income from continuing operations |
$ |
0.44 |
$ |
0.17 |
$ |
0.52 |
$ |
0.12 |
||||
| Loss from discontinued operations, net |
— |
— |
(0.01) |
(0.02) |
||||||||
| Net income |
$ |
0.44 |
$ |
0.17 |
$ |
0.51 |
$ |
0.10 |
||||
| Diluted: |
||||||||||||
| Income from continuing operations |
$ |
0.44 |
$ |
0.17 |
$ |
0.52 |
$ |
0.12 |
||||
| Loss from discontinued operations, net |
— |
— |
(0.01) |
(0.02) |
||||||||
| Net income |
$ |
0.44 |
$ |
0.17 |
$ |
0.51 |
$ |
0.10 |
||||
| TopBuild Corp. |
||||||
| Condensed Consolidated Balance Sheets and Other Financial Data (Unaudited) |
||||||
| (dollars in thousands) |
||||||
| September 30, |
December 31, |
|||||
| 2015 |
2014 |
|||||
| ASSETS |
||||||
| Current assets: |
||||||
| Cash and cash equivalents |
$ |
108,340 |
$ |
2,970 |
||
| Receivables, net |
247,250 |
220,180 |
||||
| Inventories, net |
103,400 |
106,970 |
||||
| Deferred income taxes, net |
6,350 |
910 |
||||
| Prepaid expenses and other current assets |
7,120 |
4,210 |
||||
| Total current assets |
472,460 |
335,240 |
||||
| Property and equipment, net |
92,390 |
93,160 |
||||
| Goodwill |
1,044,040 |
1,044,040 |
||||
| Other intangible assets, net |
2,250 |
2,960 |
||||
| Other assets |
2,170 |
1,030 |
||||
| Total assets |
$ |
1,613,310 |
$ |
1,476,430 |
||
| LIABILITIES |
||||||
| Current liabilities: |
||||||
| Accounts payable |
$ |
238,870 |
$ |
228,720 |
||
| Current portion of long-term debt |
12,500 |
— |
||||
| Accrued liabilities |
88,830 |
72,750 |
||||
| Total current liabilities |
340,200 |
301,470 |
||||
| Long-term debt |
185,000 |
— |
||||
| Deferred income taxes, net |
194,480 |
182,280 |
||||
| Other liabilities |
41,650 |
40,390 |
||||
| Total liabilities |
761,330 |
524,140 |
||||
| EQUITY |
851,980 |
952,290 |
||||
| Total liabilities and equity |
$ |
1,613,310 |
$ |
1,476,430 |
||
| As of |
||||||
| September 30, |
September 30, |
|||||
| 2015 |
2014 |
|||||
| Other Financial Data |
||||||
| Working Capital Days |
||||||
| Receivable days |
46 |
44 |
||||
| Inventory days |
30 |
30 |
||||
| Accounts payable days |
86 |
82 |
||||
| Working capital |
$ |
111,780 |
$ |
119,830 |
||
| Working capital as a % of sales (LTM) |
7.0% |
8.1% |
||||
| TopBuild Corp. |
||||||
| Condensed Consolidated Statement of Cash Flows and Other Data (Unaudited) |
||||||
| (in thousands) |
||||||
| Nine Months Ended |
||||||
| September 30, |
||||||
| 2015 |
2014 |
|||||
| Net Cash From (For) Operating Activities: |
||||||
| Net income |
$ |
19,230 |
$ |
3,630 |
||
| Adjustments to reconcile net income to net cash from (for) operating activities: |
||||||
| Depreciation and amortization |
9,160 |
19,590 |
||||
| Share-based compensation |
3,150 |
2,920 |
||||
| Loss on sale of property and equipment |
2,260 |
— |
||||
| Deferred income taxes, net |
5,410 |
880 |
||||
| Changes in assets and liabilities: |
||||||
| Receivables, net |
(27,070) |
(20,540) |
||||
| Inventories, net |
3,570 |
3,890 |
||||
| Prepaids and other current assets |
(2,910) |
470 |
||||
| Accounts payable and accrued liabilities |
29,140 |
28,740 |
||||
| Other, net |
1,210 |
100 |
||||
| Net cash from operating activities |
43,150 |
39,680 |
||||
| Cash Flows From (For) Investing Activities: |
||||||
| Capital expenditures |
(10,590) |
(8,810) |
||||
| Other, net |
1,270 |
1,210 |
||||
| Net cash for investing activities |
(9,320) |
(7,600) |
||||
| Cash Flows From (For) Financing Activities: |
||||||
| Net transfer from (to) Former Parent |
75,930 |
(32,060) |
||||
| Cash distribution paid to Former Parent |
(200,000) |
— |
||||
| Proceeds from issuance of long-term debt |
200,000 |
— |
||||
| Repayment of long-term debt |
(2,500) |
— |
||||
| Payment of debt issuance costs |
(1,720) |
— |
||||
| Other, net |
(170) |
— |
||||
| Net cash from (for) financing activities |
71,540 |
(32,060) |
||||
| Cash and Cash Equivalents |
||||||
| Increase for the period |
105,370 |
20 |
||||
| At December 31 |
2,970 |
3,020 |
||||
| At September 30 |
$ |
108,340 |
$ |
3,040 |
||
| TopBuild Corp. |
|||||||||
| Segment Data (Unaudited) |
|||||||||
| For the Three and Nine Months Ended September 30, 2015 and 2014 |
|||||||||
| (dollars in thousands) |
|||||||||
| Three Months Ended |
Nine Months Ended |
||||||||
| September 30, |
September 30, |
||||||||
| 2015 |
2014 |
Change |
2015 |
2014 |
Change |
||||
| Installation |
|||||||||
| Net sales |
$ 279,810 |
$ 257,310 |
9% |
$ 778,470 |
$ 711,710 |
9% |
|||
| Operating profit, as reported |
$ 20,670 |
$ 11,890 |
$ 26,710 |
$ 11,990 |
|||||
| Operating margin, as reported |
7.4% |
4.6% |
3.4% |
1.7% |
|||||
| Rationalization/spin-off charges |
30 |
1,000 |
3,860 |
1,000 |
|||||
| Legal and insurance adjustments, net |
1,030 |
— |
2,400 |
— |
|||||
| Fixed asset disposal (truck mounted devices) |
— |
— |
1,690 |
— |
|||||
| Operating profit, as adjusted |
$ 21,730 |
$ 12,890 |
$ 34,660 |
$ 12,990 |
|||||
| Operating margin, as adjusted |
7.8% |
5.0% |
4.5% |
1.8% |
|||||
| Distribution |
|||||||||
| Net sales |
$ 170,880 |
$ 162,120 |
5% |
$ 476,330 |
$ 460,340 |
3% |
|||
| Operating profit, as reported |
$ 16,910 |
$ 15,010 |
$ 40,180 |
$ 36,730 |
|||||
| Operating margin, as reported |
9.9% |
9.3% |
8.4% |
8.0% |
|||||
| Rationalization charges |
— |
— |
510 |
— |
|||||
| Operating profit, as adjusted |
$ 16,910 |
$ 15,010 |
$ 40,690 |
$ 36,730 |
|||||
| Operating margin, as adjusted |
9.9% |
9.3% |
8.5% |
8.0% |
|||||
| Total |
|||||||||
| Net sales before eliminations |
$ 450,690 |
$ 419,430 |
$ 1,254,800 |
$ 1,172,050 |
|||||
| Intercompany eliminations |
(22,800) |
(21,780) |
(64,690) |
(58,030) |
|||||
| Net sales after eliminations |
$ 427,890 |
$ 397,650 |
8% |
$ 1,190,110 |
$ 1,114,020 |
7% |
|||
| Operating profit, as reported - segment |
$ 37,580 |
$ 26,900 |
$ 66,890 |
$ 48,720 |
|||||
| General corporate expense, net |
(4,400) |
(6,260) |
(18,010) |
(17,040) |
|||||
| Intercompany eliminations and other adjustments |
(2,990) |
(6,860) |
(8,340) |
(15,550) |
|||||
| Operating profit, as reported |
$ 30,190 |
$ 13,780 |
$ 40,540 |
$ 16,130 |
|||||
| Operating margin, as reported |
7.1% |
3.5% |
3.4% |
1.4% |
|||||
| Rationalization/spinoff charges - segment |
30 |
1,000 |
4,370 |
1,000 |
|||||
| Legal and insurance adjustments, net |
1,030 |
— |
2,400 |
— |
|||||
| Fixed asset disposal (truck mounted devices) |
— |
— |
1,690 |
— |
|||||
| General corporate expense, net |
— |
6,260 |
13,630 |
17,030 |
|||||
| Direct corporate expense |
— |
6,530 |
5,600 |
14,530 |
|||||
| Expected standalone corporate expenses |
— |
(5,500) |
(11,000) |
(16,500) |
|||||
| Operating profit, as adjusted |
$ 31,250 |
$ 22,070 |
$ 57,230 |
$ 32,190 |
|||||
| Operating margin, as adjusted |
7.3% |
5.6% |
4.8% |
2.9% |
|||||
| Share-based compensation |
1,490 |
940 |
3,150 |
2,920 |
|||||
| Depreciation and amortization - segment |
2,920 |
6,530 |
9,160 |
19,590 |
|||||
| EBITDA, as adjusted |
$ 35,660 |
$ 29,540 |
$ 69,540 |
$ 54,700 |
|||||
| Sales change period over period |
30,240 |
76,090 |
|||||||
| EBITDA, as adjusted change period over period |
6,120 |
14,840 |
|||||||
| EBITDA, as adjusted as percentage of Sales change |
20% |
20% |
|||||||
| TopBuild Corp. |
|||||||||||||
| Non-GAAP Reconciliations (Unaudited) |
|||||||||||||
| For the Three and Nine Months Ended September 30, 2015 and 2014 |
|||||||||||||
| (in thousands, except common share data) |
|||||||||||||
| Three Months Ended |
Nine Months Ended |
||||||||||||
| September 30, |
September 30, |
||||||||||||
| 2015 |
2014 |
2015 |
2014 |
||||||||||
| Gross Profit and Operating Profit Reconciliations |
|||||||||||||
| Net sales |
$ |
427,890 |
$ |
397,650 |
$ |
1,190,110 |
$ |
1,114,020 |
|||||
| Gross profit, as reported |
$ |
94,000 |
$ |
88,380 |
$ |
253,510 |
$ |
238,900 |
|||||
| Insurance adjustment |
1,000 |
— |
1,000 |
— |
|||||||||
| Gross profit, as adjusted |
$ |
95,000 |
$ |
88,380 |
$ |
254,510 |
$ |
238,900 |
|||||
| Gross margin, as reported |
22.0 |
% |
22.2 |
% |
21.3 |
% |
21.4 |
% |
|||||
| Gross margin, as adjusted |
22.2 |
% |
22.2 |
% |
21.4 |
% |
21.4 |
% |
|||||
| Operating profit, as reported |
$ |
30,190 |
$ |
13,780 |
$ |
40,540 |
$ |
16,130 |
|||||
| Rationalization/spin-off charges |
30 |
1,000 |
4,370 |
1,000 |
|||||||||
| Legal and insurance adjustments, net |
1,030 |
— |
2,400 |
— |
|||||||||
| Fixed asset disposal (truck mounted device) |
— |
— |
1,690 |
— |
|||||||||
| General corporate expense, net |
— |
6,260 |
13,630 |
17,030 |
|||||||||
| Direct corporate expense |
— |
6,530 |
5,600 |
14,530 |
|||||||||
| Expected standalone corporate expense |
— |
(5,500) |
(11,000) |
(16,500) |
|||||||||
| Operating profit, as adjusted |
$ |
31,250 |
$ |
22,070 |
$ |
57,230 |
$ |
32,190 |
|||||
| Operating margin, as reported |
7.1 |
% |
3.5 |
% |
3.4 |
% |
1.4 |
% |
|||||
| Operating margin, as adjusted |
7.3 |
% |
5.6 |
% |
4.8 |
% |
2.9 |
% |
|||||
| Earnings Per Common Share Reconciliation |
|||||||||||||
| Income from continuing operations |
|||||||||||||
| before income taxes, as reported |
$ |
28,630 |
$ |
10,690 |
$ |
32,660 |
$ |
6,850 |
|||||
| Rationalization/spin-off charges |
30 |
1,000 |
4,370 |
1,000 |
|||||||||
| Legal and insurance adjustments, net |
1,030 |
— |
2,400 |
— |
|||||||||
| Fixed asset disposal (truck mounted device) |
— |
— |
1,690 |
— |
|||||||||
| General corporate expense, net |
— |
6,260 |
13,630 |
17,030 |
|||||||||
| Direct corporate expense |
— |
6,530 |
5,600 |
14,530 |
|||||||||
| Expected standalone corporate expense |
— |
(5,500) |
(11,000) |
(16,500) |
|||||||||
| Income from continuing operations |
|||||||||||||
| before income taxes, as adjusted |
29,690 |
18,980 |
49,350 |
22,910 |
|||||||||
| Tax at 36% rate |
(10,688) |
(6,833) |
(17,766) |
(8,248) |
|||||||||
| Income from continuing operations, as adjusted |
$ |
19,002 |
$ |
12,147 |
$ |
31,584 |
$ |
14,662 |
|||||
| Income per common share, as adjusted |
$ |
0.50 |
$ |
0.32 |
$ |
0.84 |
$ |
0.39 |
|||||
| Average diluted common shares outstanding |
37,907,784 |
37,667,947 |
37,748,756 |
37,667,947 |
|||||||||
SOURCE TopBuild Corp.
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