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TopBuild's (BLD) Stock Down Despite Q2 Earnings & Sales Beat
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TopBuild Corp. (BLD - Free Report) reported stellar results for second-quarter 2022. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and improved majorly on a year-over-year basis. Strong demand, coupled with its ongoing focus on managing price, achieving operational efficiency improvements, and leveraging fixed costs, drove the results.
Shares of BLD plunged 4.48% on Aug 2, after the company noted that it expects demand for its services to remain steady in all three end-markets served for second-half 2022.
Robert Buck, president & CEO of TopBuild, stated, “Our unique business model combining both installation and specialty distribution, a key differentiator and critical component of our success, should enable us to outperform in any environment. We also continue to make great progress in the integration of DI and are ahead of schedule to achieve the $35 million to $40 million of synergies forecasted when we announced this transaction.”
Inside the Headlines
The company’s adjusted earnings of $4.43 per share topped the consensus estimate of $3.77 by 17.5% and grew a whopping 60.5% from the prior year’s figure.
Total net sales of $1.27 billion beat the consensus mark of $1.19 billion by 7% and increased 52.7% (20.7% on a same-branch basis) year over year. The growth was backed by solid contributions from acquisitions (32%), prices (15.2%) and volume (5.6%). Sales for the quarter benefited from strong growth in both residential and commercial businesses.
Segmental Performance
Installation (TruTeam) sales increased 23.7% year over year to $749 million. Acquisitions, volume and selling price added 2%, 8.3% and 13.3% to sales, respectively. The adjusted operating margin for the quarter expanded 210 basis points (bps) to 18.7%. Adjusted EBITDA margin also improved 170 bps to 20.8% for the quarter.
Revenues of the Specialty Distribution (Service Partners) segment grew 115% year over year to $587.8 million, driven by 20% growth in price and 94.7% from acquisitions. Volumes inched up 0.3% year over year. Adjusted operating margin declined 90 bps from the year-ago quarter’s level to 14.8%. Nonetheless, the adjusted EBITDA margin improved 70 bps to 17.2% for the quarter.
Operating Highlights
The adjusted gross margin of 30.1% expanded to 90 bps. SG&A expenses, as a percentage of revenues, rose 20 bps to 13.8%. Adjusted operating margin expanded 80 bps from the year-ago period’s levels to 16.4%.
Adjusted EBITDA increased 61.7% from the year-ago quarter’s levels to $242.3 million. Adjusted EBITDA margin also improved 100 bps to 19% in the quarter.
Financial Update
At June end, cash and cash equivalents were $123.9 million, down from $139.8 million at 2021-end. Long-term debt was $1.44 billion, down from $1.45 billion at the 2021-end. For the first six months, net cash provided by operating activities was $217.7 million compared with $202.2 million in the year-ago period.
At June end, BLD repurchased 647,466 shares.
2022 View Raised
TopBuild expects sales between $4.80 billion and $4.90 billion versus $4.65-$4.80 billion expected earlier. The estimated figure indicates an increase from $3.49 billion. Adjusted EBITDA is projected within $860-$900 million compared with $810-$860 million projected earlier. This suggests growth from $605.9 million reported in 2021.
United Rentals, Inc. (URI - Free Report) reported better-than-expected second-quarter 2022 results. Better fleet productivity on broad-based rental demand in construction and industrial verticals, higher total and rental revenues along with stronger pricing helped the company to boost profit.
URI also lifted its full-year guidance for total revenues, adjusted EBITDA and free cash flow, given broad-based end-market activity, contractor backlogs, customer sentiment and our visibility through the balance of the year.
Owens Corning (OC - Free Report) reported solid second-quarter 2022 results. Its earnings and net sales surpassed their respective Zacks Consensus Estimate and increased on a year-over-year basis.
OC’s solid quarterly results were backed by strong demand across the markets served, structural improvements and strategic investments.
Masco Corporation (MAS - Free Report) reported results for second-quarter 2022, wherein both earnings and revenues missed the Zacks Consensus Estimate after beating it in the preceding quarter.
Masco’s top line increased, whereas the bottom line remained flat year over year.
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TopBuild's (BLD) Stock Down Despite Q2 Earnings & Sales Beat
TopBuild Corp. (BLD - Free Report) reported stellar results for second-quarter 2022. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and improved majorly on a year-over-year basis. Strong demand, coupled with its ongoing focus on managing price, achieving operational efficiency improvements, and leveraging fixed costs, drove the results.
Shares of BLD plunged 4.48% on Aug 2, after the company noted that it expects demand for its services to remain steady in all three end-markets served for second-half 2022.
Robert Buck, president & CEO of TopBuild, stated, “Our unique business model combining both installation and specialty distribution, a key differentiator and critical component of our success, should enable us to outperform in any environment. We also continue to make great progress in the integration of DI and are ahead of schedule to achieve the $35 million to $40 million of synergies forecasted when we announced this transaction.”
Inside the Headlines
The company’s adjusted earnings of $4.43 per share topped the consensus estimate of $3.77 by 17.5% and grew a whopping 60.5% from the prior year’s figure.
TopBuild Corp. Price, Consensus and EPS Surprise
TopBuild Corp. price-consensus-eps-surprise-chart | TopBuild Corp. Quote
Total net sales of $1.27 billion beat the consensus mark of $1.19 billion by 7% and increased 52.7% (20.7% on a same-branch basis) year over year. The growth was backed by solid contributions from acquisitions (32%), prices (15.2%) and volume (5.6%). Sales for the quarter benefited from strong growth in both residential and commercial businesses.
Segmental Performance
Installation (TruTeam) sales increased 23.7% year over year to $749 million. Acquisitions, volume and selling price added 2%, 8.3% and 13.3% to sales, respectively. The adjusted operating margin for the quarter expanded 210 basis points (bps) to 18.7%. Adjusted EBITDA margin also improved 170 bps to 20.8% for the quarter.
Revenues of the Specialty Distribution (Service Partners) segment grew 115% year over year to $587.8 million, driven by 20% growth in price and 94.7% from acquisitions. Volumes inched up 0.3% year over year. Adjusted operating margin declined 90 bps from the year-ago quarter’s level to 14.8%. Nonetheless, the adjusted EBITDA margin improved 70 bps to 17.2% for the quarter.
Operating Highlights
The adjusted gross margin of 30.1% expanded to 90 bps. SG&A expenses, as a percentage of revenues, rose 20 bps to 13.8%. Adjusted operating margin expanded 80 bps from the year-ago period’s levels to 16.4%.
Adjusted EBITDA increased 61.7% from the year-ago quarter’s levels to $242.3 million. Adjusted EBITDA margin also improved 100 bps to 19% in the quarter.
Financial Update
At June end, cash and cash equivalents were $123.9 million, down from $139.8 million at 2021-end. Long-term debt was $1.44 billion, down from $1.45 billion at the 2021-end. For the first six months, net cash provided by operating activities was $217.7 million compared with $202.2 million in the year-ago period.
At June end, BLD repurchased 647,466 shares.
2022 View Raised
TopBuild expects sales between $4.80 billion and $4.90 billion versus $4.65-$4.80 billion expected earlier. The estimated figure indicates an increase from $3.49 billion. Adjusted EBITDA is projected within $860-$900 million compared with $810-$860 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.
United Rentals, Inc. (URI - Free Report) reported better-than-expected second-quarter 2022 results. Better fleet productivity on broad-based rental demand in construction and industrial verticals, higher total and rental revenues along with stronger pricing helped the company to boost profit.
URI also lifted its full-year guidance for total revenues, adjusted EBITDA and free cash flow, given broad-based end-market activity, contractor backlogs, customer sentiment and our visibility through the balance of the year.
Owens Corning (OC - Free Report) reported solid second-quarter 2022 results. Its earnings and net sales surpassed their respective Zacks Consensus Estimate and increased on a year-over-year basis.
OC’s solid quarterly results were backed by strong demand across the markets served, structural improvements and strategic investments.
Masco Corporation (MAS - Free Report) reported results for second-quarter 2022, wherein both earnings and revenues missed the Zacks Consensus Estimate after beating it in the preceding quarter.
Masco’s top line increased, whereas the bottom line remained flat year over year.