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TopBuild (BLD) Q2 Earnings and Revenues Beat, Stock Down
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TopBuild Corp. (BLD - Free Report) reported better-than-expected results for second-quarter 2020. Its earnings not only surpassed the Zacks Consensus Estimate but also grew impressively from the prior-year quarter, backed by margin improvement in both the segments.
However, shares of this leading installer and distributor of insulation and building material products slipped 1.2% on Aug 4, following the earnings release. Investors’ sentiments might have been impacted by the company’s inability to provide its revenue and EBITDA guidance for 2020 due to persistent uncertainty related to the COVID-19 pandemic. Nonetheless, it remains bullish about the long-term health of residential and commercial markets served.
Jerry Volas, chief executive officer of TopBuild, said, “As a result of the uncertainty in early March related to COVID-19, we suspended our acquisition program. As the second quarter progressed, the outlook for the housing industry improved, and we are now moving forward with a number of the companies in our robust acquisition pipeline.”
The company reported adjusted earnings of $1.68 per share, which surpassed the consensus estimate of $1.19 by 41.2% and grew 17.5% from the prior-year period.
Total net sales of $646.1 million declined 2.1% on a year-over-year basis but topped the consensus mark of $609 million by 6%. The downside was due to lower sales volumes due to the COVID-19 pandemic. Same branch contributed 99% to total revenues.
Segmental Performance
Installation (TruTeam) revenues decreased 3.4% year over year to $466.6 million. Acquisitions and selling price added 1.4% and 0.7% to revenues, respectively. Volume fell 5.5% from the prior-year quarter. Adjusted operating margin for the quarter expanded 100 basis points (bps) to 15.2%.
Revenues of the Distribution (Service Partners) segment grew 1.3% year over year to $216.3 million, driven by 1.7% volume growth, partially offset by 0.4% selling price decline. Operating margin improved 170 bps from the year-ago level to 11.6%.
Operating Highlights
Adjusted gross margin of 27.8% expanded 130 bps. Adjusted operating profit of $83.5 million also increased 9.3% year over year. Adjusted operating margin improved 130 bps from the year-ago period to 12.9%. Both the gross and operating margin improvements were driven by operational efficiencies, cost-reduction initiatives, and lower insurance, travel and entertainment costs, partially offset by higher depreciation as well as restructuring expenses.
Adjusted EBITDA grew 14.6% from the year-ago quarter to $107.8 million. Adjusted EBITDA margin improved 250 bps to 16.7% for the quarter.
Financial Update
As of Jun 30, 2020, cash and cash equivalents were $258.8 million, up from $184.8 million at 2019-end. The company has $389.6 million available borrowing capacity under the revolving facility.
At quarter-end, long-term debt was $694.3 million, slightly down from $698 million at 2019-end. In the first six months of 2020, net cash provided by operating activities was $178.2 million compared with $96.3 million a year ago.
It repurchased 262,889 shares for $76.17 per share during the second quarter. As of Jun 30, 2020, $55 million was remaining under the $200-million stock repurchase authorization.
United Rentals, Inc. (URI - Free Report) reported second-quarter 2020 results. Although earnings and revenues topped the respective Zacks Consensus Estimate, the metrics declined on a year-over-year basis, thanks to the COVID-19 pandemic.
Masco Corporation (MAS - Free Report) reported impressive results for second-quarter 2020, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Strong Decorative Architectural Products and North American Plumbing segments helped it deliver better-than-expected results.
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A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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TopBuild (BLD) Q2 Earnings and Revenues Beat, Stock Down
TopBuild Corp. (BLD - Free Report) reported better-than-expected results for second-quarter 2020. Its earnings not only surpassed the Zacks Consensus Estimate but also grew impressively from the prior-year quarter, backed by margin improvement in both the segments.
However, shares of this leading installer and distributor of insulation and building material products slipped 1.2% on Aug 4, following the earnings release. Investors’ sentiments might have been impacted by the company’s inability to provide its revenue and EBITDA guidance for 2020 due to persistent uncertainty related to the COVID-19 pandemic. Nonetheless, it remains bullish about the long-term health of residential and commercial markets served.
Jerry Volas, chief executive officer of TopBuild, said, “As a result of the uncertainty in early March related to COVID-19, we suspended our acquisition program. As the second quarter progressed, the outlook for the housing industry improved, and we are now moving forward with a number of the companies in our robust acquisition pipeline.”
TopBuild Corp. Price, Consensus and EPS Surprise
TopBuild Corp. price-consensus-eps-surprise-chart | TopBuild Corp. Quote
Inside the Headlines
The company reported adjusted earnings of $1.68 per share, which surpassed the consensus estimate of $1.19 by 41.2% and grew 17.5% from the prior-year period.
Total net sales of $646.1 million declined 2.1% on a year-over-year basis but topped the consensus mark of $609 million by 6%. The downside was due to lower sales volumes due to the COVID-19 pandemic. Same branch contributed 99% to total revenues.
Segmental Performance
Installation (TruTeam) revenues decreased 3.4% year over year to $466.6 million. Acquisitions and selling price added 1.4% and 0.7% to revenues, respectively. Volume fell 5.5% from the prior-year quarter. Adjusted operating margin for the quarter expanded 100 basis points (bps) to 15.2%.
Revenues of the Distribution (Service Partners) segment grew 1.3% year over year to $216.3 million, driven by 1.7% volume growth, partially offset by 0.4% selling price decline. Operating margin improved 170 bps from the year-ago level to 11.6%.
Operating Highlights
Adjusted gross margin of 27.8% expanded 130 bps. Adjusted operating profit of $83.5 million also increased 9.3% year over year. Adjusted operating margin improved 130 bps from the year-ago period to 12.9%. Both the gross and operating margin improvements were driven by operational efficiencies, cost-reduction initiatives, and lower insurance, travel and entertainment costs, partially offset by higher depreciation as well as restructuring expenses.
Adjusted EBITDA grew 14.6% from the year-ago quarter to $107.8 million. Adjusted EBITDA margin improved 250 bps to 16.7% for the quarter.
Financial Update
As of Jun 30, 2020, cash and cash equivalents were $258.8 million, up from $184.8 million at 2019-end. The company has $389.6 million available borrowing capacity under the revolving facility.
At quarter-end, long-term debt was $694.3 million, slightly down from $698 million at 2019-end. In the first six months of 2020, net cash provided by operating activities was $178.2 million compared with $96.3 million a year ago.
It repurchased 262,889 shares for $76.17 per share during the second quarter. As of Jun 30, 2020, $55 million was remaining under the $200-million stock repurchase authorization.
Zacks Rank & Peer Releases
TopBuild currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
United Rentals, Inc. (URI - Free Report) reported second-quarter 2020 results. Although earnings and revenues topped the respective Zacks Consensus Estimate, the metrics declined on a year-over-year basis, thanks to the COVID-19 pandemic.
Armstrong World Industries, Inc. (AWI - Free Report) reported disappointing second-quarter 2020 results. Earnings and revenues missed the respective Zacks Consensus Estimate, as well as declined year over year.
Masco Corporation (MAS - Free Report) reported impressive results for second-quarter 2020, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Strong Decorative Architectural Products and North American Plumbing segments helped it deliver better-than-expected results.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>