Back to top

Image: Bigstock

TopBuild (BLD) Tops on Q1 Earnings & Sales, Raises 2022 View

Read MoreHide Full Article

TopBuild Corp.’s (BLD - Free Report) shares moved up 1.01% on May 5 after it reported better-than-expected results for first-quarter 2022. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and improved year over year. Strong demand, coupled with its ongoing focus on managing price, achieving operational efficiency improvements, and leveraging fixed costs, drove the results.

Robert Buck, president & CEO of TopBuild, said, “We are particularly pleased with our same branch adjusted gross margin and adjusted EBITDA margin, which expanded 290 basis points and 310 basis points, respectively, from the prior year. In addition, the integration of Distribution International is proceeding very well and we are confident we will achieve the $35 million to $40 million of synergies per the timeline outlined at the close of the transaction in October 2021.”

Inside the Headlines

The company’s adjusted earnings of $3.50 per share topped the consensus estimate of $2.85 by 22.8% and grew a whopping 73.3% from the prior-year’s figure of $2.02.

TopBuild Corp. Price, Consensus and EPS Surprise


TopBuild Corp. Price, Consensus and EPS Surprise

TopBuild Corp. price-consensus-eps-surprise-chart | TopBuild Corp. Quote


Total net sales of $1.17 billion beat the consensus mark of $1.08 billion by 8.6% and increased 57.4% (18.7% 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 27% year over year to $676.7 million. Acquisitions, volume and selling price added 10%, 3% and 14% to sales, respectively. The adjusted operating margin for the quarter expanded 280 basis points (bps) to 16.7%. Adjusted EBITDA margin also improved 270 bps to 19.1% for the quarter.

Revenues of the Specialty Distribution (Service Partners) segment grew 116.2% year over year to $543.9 million, driven by 22.9% growth in price and 93.3% from acquisitions. Volumes remained flat year over year. Adjusted operating margin declined 110 bps from the year-ago level to 13%. Nonetheless, the adjusted EBITDA margin improved 60 bps to 15.6% for the quarter.

Operating Highlights

The adjusted gross margin of 28.3% expanded to 160 bps. SG&A expenses, as a percentage of revenues, rose 40 bps to 14%. Adjusted operating margin expanded 120 bps from the year-ago period to 14.3%.

Adjusted EBITDA grew 74.2% from the year-ago quarter to $201.7 million. Adjusted EBITDA margin also improved 170 bps to 17.3% for the quarter.

Financial Update

At March 2022-end, cash and cash equivalents were $126.55 million, down from $139.78 million at 2021-end. Long-term debt was $1.44 billion, down from $1.45 billion at the 2021-end. For the first quarter, net cash provided by operating activities was $89.5 million compared with $89.4 million in the year-ago period.

In the first quarter, BLD repurchased 238,154 shares at an average price of $209.95 per share.

2022 View Raised

For 2022, TopBuild expects sales between $4.65 billion and $4.80 billion versus $4.5-$4.65 billion expected earlier. The estimated figure indicates an increase from $3.49 billion. Adjusted EBITDA is projected within $810-$860 million compared with $770-$820 million projected earlier. This suggests growth from $605.9 million reported in 2021.

Zacks Rank & Peer Releases

TopBuild currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gibraltar Industries, Inc. (ROCK - Free Report) reported better-than-expected first-quarter 2022 results despite persistent supply-chain issues impacting solar customers, the solar industry and the Renewables business.

ROCK’s earnings topped analysts’ expectations in one of the trailing four quarters, with an average negative of 8.6%.

Armstrong World Industries, Inc. (AWI - Free Report) reported unimpressive results in first-quarter 2022. The top and the bottom line missed their respective Zacks Consensus Estimate but increased on a year-over-year basis. The upside can be attributed to solid pricing actions and strong execution of growth opportunities in the Architectural Specialties segment and digital and Healthy Spaces initiatives.

Armstrong World noted that lower Mineral Fiber sales volumes and equity earnings, primarily due to reductions in distributor inventory levels, affected the results.

Masco Corporation (MAS - Free Report) reported solid results in first-quarter 2022. The top and the bottom line surpassed the Zacks Consensus Estimate and improved on a year-over-year basis.

Masco’s quarterly results were mainly backed by solid demand for its products and operational efficiencies.