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%

03 Nov, 2015, 06:00 ET from TopBuild Corp.

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  IR@topbuild.com  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.



RELATED LINKS

http://www.topbuild.com