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TopBuild (BLD) Up 1.1% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for TopBuild (BLD - Free Report) . Shares have added about 1.1% 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 its most recent earnings report in order to get a better handle on the important catalysts.
TopBuild Q3 Earnings & Revenues Lag, Rise Y/Y, View Up
TopBuild Corp.’s third-quarter 2021 earnings and revenues missed the respective Zacks Consensus Estimate due to unprecedented supply-chain disruptions and labor shortages prevailing in the construction sector.
Nonetheless, both the top and the bottom line 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 the 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 are confident in the overall fundamentals of our three end-markets; residential, commercial and industrial, and our ability to leverage our size, scale, and operational excellence to continue to drive profitable growth.”
Inside the Headlines
The company reported adjusted earnings of $2.95 per share, which missed the consensus estimate of $3.05 by 3.3% but grew 40.5% from the prior-year period.
Total net sales of $845.8 million missed the consensus mark of $888 million by 4.7% but improved 21.3% (10.6% on a same-branch basis) year over year. The growth was backed by acquisitions and prices. Sales for the quarter benefited from strong growth in both residential and commercial businesses.
Segmental Performance
Installation (TruTeam) sales increased 24.5% year over year to $612.9 million. Acquisitions, volume and selling price added 14.3%, 1.9% and 8.4% to sales, respectively. Adjusted operating margin for the quarter expanded 20 basis points (bps) to 17.2%.
Revenues of the Distribution (Service Partners) segment grew 13.2% year over year to $276.4 million, driven by 16.5% growth in price and 1.9% from acquisitions. Volumes, however, negatively impacted the top line by 5.2%. Adjusted operating margin improved 370 bps from the year-ago level to 17.1%.
Operating Highlights
Adjusted gross margin of 29.6% expanded to 110 bps. Adjusted operating margin expanded to 170 bps from the year-ago period to 16.3%.
Adjusted EBITDA grew 32.8% from the year-ago quarter to $119.2 million. Adjusted EBITDA margin also improved 160 bps to 18.7% for the quarter.
Financial Update
At September-end, cash and cash equivalents were $327.9 million, down from $261.7 million at second quarter-end. The company has $381.9 million available borrowing capacity under the revolving facility.
At quarter-end, long-term debt was $675.6 million, down from $683.4 million at 2020-end. For the first nine months of 2021, net cash provided by operating activities was $309.5 million compared with $255.7 million in the comparable year-ago period.
In the third quarter, the company repurchased 60,105 shares for $191.64 per share.
2021 View Raised
For 2021, TopBuild expects sales between $3.425 billion and $3.475 billion versus $3.290-$3.370 billion expected earlier. The estimated figure indicates an increase from $2.72 billion in 2020. Adjusted EBITDA is projected within $585-$605 million versus the earlier projection of $565-$590 million, suggesting growth from $436.7 million reported a year ago.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, TopBuild has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. 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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TopBuild (BLD) Up 1.1% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for TopBuild (BLD - Free Report) . Shares have added about 1.1% 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 its most recent earnings report in order to get a better handle on the important catalysts.
TopBuild Q3 Earnings & Revenues Lag, Rise Y/Y, View Up
TopBuild Corp.’s third-quarter 2021 earnings and revenues missed the respective Zacks Consensus Estimate due to unprecedented supply-chain disruptions and labor shortages prevailing in the construction sector.
Nonetheless, both the top and the bottom line 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 the 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 are confident in the overall fundamentals of our three end-markets; residential, commercial and industrial, and our ability to leverage our size, scale, and operational excellence to continue to drive profitable growth.”
Inside the Headlines
The company reported adjusted earnings of $2.95 per share, which missed the consensus estimate of $3.05 by 3.3% but grew 40.5% from the prior-year period.
Total net sales of $845.8 million missed the consensus mark of $888 million by 4.7% but improved 21.3% (10.6% on a same-branch basis) year over year. The growth was backed by acquisitions and prices. Sales for the quarter benefited from strong growth in both residential and commercial businesses.
Segmental Performance
Installation (TruTeam) sales increased 24.5% year over year to $612.9 million. Acquisitions, volume and selling price added 14.3%, 1.9% and 8.4% to sales, respectively. Adjusted operating margin for the quarter expanded 20 basis points (bps) to 17.2%.
Revenues of the Distribution (Service Partners) segment grew 13.2% year over year to $276.4 million, driven by 16.5% growth in price and 1.9% from acquisitions. Volumes, however, negatively impacted the top line by 5.2%. Adjusted operating margin improved 370 bps from the year-ago level to 17.1%.
Operating Highlights
Adjusted gross margin of 29.6% expanded to 110 bps. Adjusted operating margin expanded to 170 bps from the year-ago period to 16.3%.
Adjusted EBITDA grew 32.8% from the year-ago quarter to $119.2 million. Adjusted EBITDA margin also improved 160 bps to 18.7% for the quarter.
Financial Update
At September-end, cash and cash equivalents were $327.9 million, down from $261.7 million at second quarter-end. The company has $381.9 million available borrowing capacity under the revolving facility.
At quarter-end, long-term debt was $675.6 million, down from $683.4 million at 2020-end. For the first nine months of 2021, net cash provided by operating activities was $309.5 million compared with $255.7 million in the comparable year-ago period.
In the third quarter, the company repurchased 60,105 shares for $191.64 per share.
2021 View Raised
For 2021, TopBuild expects sales between $3.425 billion and $3.475 billion versus $3.290-$3.370 billion expected earlier. The estimated figure indicates an increase from $2.72 billion in 2020. Adjusted EBITDA is projected within $585-$605 million versus the earlier projection of $565-$590 million, suggesting growth from $436.7 million reported a year ago.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, TopBuild has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, TopBuild has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.