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TopBuild Corp. (BLD - Free Report) reported mixed results for first-quarter 2023. Its earnings surpassed the 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.
BLD’s shares plunged 4.96% on May 4, after the earnings release.
Robert Buck, president & CEO of TopBuild, said, “We are particularly pleased with the performance of our commercial business which reflects, in part, the success of our installation branches in capturing light commercial activity across their respective regions.”
Inside the Headlines
The company’s adjusted earnings of $4.36 per share topped the consensus estimate of $4.06 by 7.4% and grew 24.6% from the prior year’s $3.50.
Total net sales of $1.265 billion met the consensus mark but increased 8.2% (7% on a same-branch basis) year over year.
Segmental Performance
Installation (TruTeam) sales increased 13.4% year over year to $767.1 million. Acquisitions, volume and selling price added 2.2%, 5.4% and 5.8% to sales, respectively. The adjusted operating margin for the quarter expanded 250 basis points (bps) to 19.2%. The adjusted EBITDA margin improved 230 bps to 21.4% for the quarter. Installation sales were driven by strong volume growth and higher selling prices.
Revenues of the Specialty Distribution (Service Partners) segment grew 2.7% year over year to $558.4 million, driven by 5.7% growth in price. Volumes reduced sales by 3% year over year. The adjusted operating margin rose 20 bps from the year-ago level to 13.2%. The adjusted EBITDA margin also improved 20 bps to 15.8% for the quarter. Specialty Distribution’s sales were backed by higher selling prices, partially offset by a decline in residential volume.
Operating Highlights
The adjusted gross margin of 29.3% expanded to 100 bps on operational efficiencies, fixed cost leverage, and continued success in managing inflation. SG&A expenses, as a percentage of revenues, improved 80 bps to 13.2%. The adjusted operating margin expanded 180 bps from the year-ago period to 16.1%.
Adjusted EBITDA grew 18.1% from the year-ago quarter to $238.3 million. The adjusted EBITDA margin improved 150 bps to 18.8% for the quarter.
Financial Update
At the end of March 2023, cash and cash equivalents were $333.8 million, up from $240 million at 2022-end. Long-term debt was $1.41 billion, slightly down from $1.42 billion at 2022-end.
For the first quarter, net cash provided by operating activities was $169.8 million compared with $89.5 million in the year-ago period.
2023 View Maintained
TopBuild expects sales between $4.7 billion and $4.9 billion. The estimated figure indicates a decrease from the $5 billion reported in the prior-year quarter. Adjusted EBITDA is projected to be $820-$910 million. This suggests a decline from the $940.6 million reported in 2022.
Gibraltar Industries, Inc. (ROCK - Free Report) reported solid earnings in first-quarter 2023. Quarterly earnings surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. Although net sales decreased from the previous year, it beat the consensus mark.
Gibraltar expects revenues of $1.36-$1.41 billion, whereas it reported $1.39 billion in 2022. Adjusted earnings are expected to be $3.46-$3.66 per share, suggesting a rise from the $3.40 reported in 2022.
United Rentals, Inc. (URI - Free Report) posted first-quarter 2023 results. The company’s earnings missed the Zacks Consensus Estimate but revenues beat the same. Nonetheless, on a year-over-year basis, earnings and revenues increased, courtesy of sustained demand in its end markets and the strength of its core rental business.
URI reaffirmed its 2023 guidance, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility. The company unveiled a quarterly dividend of $1.48 per share, with an annualized yield of 0.4%. Further, it repurchased $250 million of stock under its existing $1.25-billion share repurchase program.
Masco Corporation (MAS - Free Report) reported better-than-expected results for first-quarter 2023. The top and bottom lines surpassed the Zacks Consensus Estimate. The company has been benefiting from strong pricing actions and operational improvements.
Then again, MAS’ adjusted earnings and net sales declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.
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TopBuild (BLD) Q1 Earnings Surpass Estimates, Increase Y/Y
TopBuild Corp. (BLD - Free Report) reported mixed results for first-quarter 2023. Its earnings surpassed the 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.
BLD’s shares plunged 4.96% on May 4, after the earnings release.
Robert Buck, president & CEO of TopBuild, said, “We are particularly pleased with the performance of our commercial business which reflects, in part, the success of our installation branches in capturing light commercial activity across their respective regions.”
Inside the Headlines
The company’s adjusted earnings of $4.36 per share topped the consensus estimate of $4.06 by 7.4% and grew 24.6% from the prior year’s $3.50.
TopBuild Corp. Price, Consensus and EPS Surprise
TopBuild Corp. price-consensus-eps-surprise-chart | TopBuild Corp. Quote
Total net sales of $1.265 billion met the consensus mark but increased 8.2% (7% on a same-branch basis) year over year.
Segmental Performance
Installation (TruTeam) sales increased 13.4% year over year to $767.1 million. Acquisitions, volume and selling price added 2.2%, 5.4% and 5.8% to sales, respectively. The adjusted operating margin for the quarter expanded 250 basis points (bps) to 19.2%. The adjusted EBITDA margin improved 230 bps to 21.4% for the quarter. Installation sales were driven by strong volume growth and higher selling prices.
Revenues of the Specialty Distribution (Service Partners) segment grew 2.7% year over year to $558.4 million, driven by 5.7% growth in price. Volumes reduced sales by 3% year over year. The adjusted operating margin rose 20 bps from the year-ago level to 13.2%. The adjusted EBITDA margin also improved 20 bps to 15.8% for the quarter. Specialty Distribution’s sales were backed by higher selling prices, partially offset by a decline in residential volume.
Operating Highlights
The adjusted gross margin of 29.3% expanded to 100 bps on operational efficiencies, fixed cost leverage, and continued success in managing inflation. SG&A expenses, as a percentage of revenues, improved 80 bps to 13.2%. The adjusted operating margin expanded 180 bps from the year-ago period to 16.1%.
Adjusted EBITDA grew 18.1% from the year-ago quarter to $238.3 million. The adjusted EBITDA margin improved 150 bps to 18.8% for the quarter.
Financial Update
At the end of March 2023, cash and cash equivalents were $333.8 million, up from $240 million at 2022-end. Long-term debt was $1.41 billion, slightly down from $1.42 billion at 2022-end.
For the first quarter, net cash provided by operating activities was $169.8 million compared with $89.5 million in the year-ago period.
2023 View Maintained
TopBuild expects sales between $4.7 billion and $4.9 billion. The estimated figure indicates a decrease from the $5 billion reported in the prior-year quarter. Adjusted EBITDA is projected to be $820-$910 million. This suggests a decline from the $940.6 million reported in 2022.
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 solid earnings in first-quarter 2023. Quarterly earnings surpassed the Zacks Consensus Estimate and increased on a year-over-year basis. Although net sales decreased from the previous year, it beat the consensus mark.
Gibraltar expects revenues of $1.36-$1.41 billion, whereas it reported $1.39 billion in 2022. Adjusted earnings are expected to be $3.46-$3.66 per share, suggesting a rise from the $3.40 reported in 2022.
United Rentals, Inc. (URI - Free Report) posted first-quarter 2023 results. The company’s earnings missed the Zacks Consensus Estimate but revenues beat the same. Nonetheless, on a year-over-year basis, earnings and revenues increased, courtesy of sustained demand in its end markets and the strength of its core rental business.
URI reaffirmed its 2023 guidance, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility. The company unveiled a quarterly dividend of $1.48 per share, with an annualized yield of 0.4%. Further, it repurchased $250 million of stock under its existing $1.25-billion share repurchase program.
Masco Corporation (MAS - Free Report) reported better-than-expected results for first-quarter 2023. The top and bottom lines surpassed the Zacks Consensus Estimate. The company has been benefiting from strong pricing actions and operational improvements.
Then again, MAS’ adjusted earnings and net sales declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.