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Why Is TopBuild (BLD) Up 2.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for TopBuild (BLD - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TopBuild due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
TopBuild Q2 Earnings & Revenues Top, View Up
TopBuild Corp. reported impressive results for second-quarter 2021. Its earnings and revenues not only surpassed the Zacks Consensus Estimate but also grew impressively from the prior-year quarter. The uptrend was backed by increased sales volume, and solid contribution from acquisitions and pricing at both businesses defying labor and material constrained market. The company lifted its 2021 guidance for sales and adjusted EBITDA.
Robert Buck, president & CEO, of TopBuild, said “Looking ahead, we expect the residential housing market to remain solid and the commercial market to continue to strengthen. Our focus will remain on driving profitable growth and creating long-term value for our stakeholders.”
Inside the Headlines
The company reported adjusted earnings of $2.76 per share, which surpassed the consensus estimate of $2.49 by 10.8% and grew 64.3% from the prior-year period.
Total net sales of $834.3 million topped the consensus mark of $810 million by 3% and improved 29.1% (18.3% on a same branch basis) year over year. The growth was backed by higher volume, acquisitions and price. Sales for the quarter benefited from strong growth in both residential and commercial businesses.
Segmental Performance
Installation (TruTeam) revenues increased 29.8% year over year to $605.6 million. Acquisitions, volume and selling price added 14.4%, 10.4% and 5% to revenues, respectively. Adjusted operating margin for the quarter expanded 140 basis points (bps) to 16.6%.
Revenues of the Distribution (Service Partners) segment grew 26.4% year over year to $273.4 million, driven by 14.3% volume and 10.3% selling price growth. Acquisitions also added 1.8% to the top line. Adjusted operating margin improved 410 bps from the year-ago level to 15.7%.
Operating Highlights
Adjusted gross margin of 29.2% expanded 140 bps. Adjusted operating profit of $129.9 million increased 55.5% year over year. Adjusted operating margin expanded 270 bps from the year-ago period to 15.6%.
Adjusted EBITDA grew 39.1% from the year-ago quarter to $149.8 million. Adjusted EBITDA margin also improved 130 bps to 18% for the quarter.
Financial Update
At June-end, cash and cash equivalents were $261.7 million, down from $330 million at 2020-end. The company has $378.8 million available borrowing capacity under the revolving facility.
At quarter-end, long-term debt was $681 million, slightly down from $683.4 million at 2020-end. For the first six months of 2021, net cash provided by operating activities was $202.2 million compared with $178.2 million in the comparable year-ago period.
In the first quarter, it repurchased 73,747 shares for $192.3 per share. The company announced an additional share repurchase program, whereby it may purchase up to $200 million of its common stock.
2021 View Raised
For 2021, TopBuild expects sales between $3.290 billion and $3.370 billion versus $3.220-$3.320 billion expected earlier. This indicates a significant increase from $2.72 billion in 2020. Adjusted EBITDA is projected within $565-$590 million versus earlier projection of $532-$562 million, suggesting growth from $436.7 million reported a year ago.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, TopBuild has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, TopBuild has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is TopBuild (BLD) Up 2.8% Since Last Earnings Report?
A month has gone by since the last earnings report for TopBuild (BLD - Free Report) . Shares have added about 2.8% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is TopBuild due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
TopBuild Q2 Earnings & Revenues Top, View Up
TopBuild Corp. reported impressive results for second-quarter 2021. Its earnings and revenues not only surpassed the Zacks Consensus Estimate but also grew impressively from the prior-year quarter. The uptrend was backed by increased sales volume, and solid contribution from acquisitions and pricing at both businesses defying labor and material constrained market. The company lifted its 2021 guidance for sales and adjusted EBITDA.
Robert Buck, president & CEO, of TopBuild, said “Looking ahead, we expect the residential housing market to remain solid and the commercial market to continue to strengthen. Our focus will remain on driving profitable growth and creating long-term value for our stakeholders.”
Inside the Headlines
The company reported adjusted earnings of $2.76 per share, which surpassed the consensus estimate of $2.49 by 10.8% and grew 64.3% from the prior-year period.
Total net sales of $834.3 million topped the consensus mark of $810 million by 3% and improved 29.1% (18.3% on a same branch basis) year over year. The growth was backed by higher volume, acquisitions and price. Sales for the quarter benefited from strong growth in both residential and commercial businesses.
Segmental Performance
Installation (TruTeam) revenues increased 29.8% year over year to $605.6 million. Acquisitions, volume and selling price added 14.4%, 10.4% and 5% to revenues, respectively. Adjusted operating margin for the quarter expanded 140 basis points (bps) to 16.6%.
Revenues of the Distribution (Service Partners) segment grew 26.4% year over year to $273.4 million, driven by 14.3% volume and 10.3% selling price growth. Acquisitions also added 1.8% to the top line. Adjusted operating margin improved 410 bps from the year-ago level to 15.7%.
Operating Highlights
Adjusted gross margin of 29.2% expanded 140 bps. Adjusted operating profit of $129.9 million increased 55.5% year over year. Adjusted operating margin expanded 270 bps from the year-ago period to 15.6%.
Adjusted EBITDA grew 39.1% from the year-ago quarter to $149.8 million. Adjusted EBITDA margin also improved 130 bps to 18% for the quarter.
Financial Update
At June-end, cash and cash equivalents were $261.7 million, down from $330 million at 2020-end. The company has $378.8 million available borrowing capacity under the revolving facility.
At quarter-end, long-term debt was $681 million, slightly down from $683.4 million at 2020-end. For the first six months of 2021, net cash provided by operating activities was $202.2 million compared with $178.2 million in the comparable year-ago period.
In the first quarter, it repurchased 73,747 shares for $192.3 per share. The company announced an additional share repurchase program, whereby it may purchase up to $200 million of its common stock.
2021 View Raised
For 2021, TopBuild expects sales between $3.290 billion and $3.370 billion versus $3.220-$3.320 billion expected earlier. This indicates a significant increase from $2.72 billion in 2020. Adjusted EBITDA is projected within $565-$590 million versus earlier projection of $532-$562 million, suggesting growth from $436.7 million reported a year ago.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
VGM Scores
Currently, TopBuild has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, TopBuild has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.