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TopBuild (BLD) Shares Up 10.2% on Q1 Earnings & Revenue Beat
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TopBuild Corp. (BLD - Free Report) came up with better-than-expected first-quarter 2020 results. Earnings not only surpassed the Zacks Consensus Estimate but also grew impressively from the prior-year quarter, backed by strong volume and pricing, as well as acquisitions. Shares of this leading installer and distributor of insulation and building material products jumped more than 10% on May 5, following the earnings release.
Inside the Headlines
The company reported adjusted earnings of $1.37 per share, which surpassed the consensus estimate of $1.27 by 7.9% and grew 29.2% from the prior-year period. The uptrend was primarily backed by higher sales volumes and improved margins.
Total net sales rose 5.5% on a year-over-year basis to $653.2 million and topped the consensus mark of $650 million by 0.5%. The upside was driven by higher sales volumes and selling prices.
Segmental Performance
Installation (TruTeam) revenues increased 5.9% year over year to $475.9 million. Acquisitions added 1.1% to the growth. Volume grew 2.7% and selling price was up 2.2% from the prior-year quarter. Operating margin in the quarter expanded 120 basis points (bps) to 12.7%.
Revenues of the Distribution (Service Partners) segment grew 4.8% year over year to $214.2 million, driven by 3.8% volume growth and 0.9% price increase. Operating margin also improved 140 bps from the year-ago level to 11.5%.
Operating Highlights
Adjusted gross margin of 26.3% expanded 120 bps. Adjusted operating profit of $70.3 million also increased almost 19% year over year. Adjusted operating margin improved 130 bps from the year-ago period to 10.8%. Both gross and operating margin improvements were driven by higher selling prices, improved labor and sales productivity, and lower acquisition and closure costs, partially offset by high material costs.
Adjusted EBITDA grew 18.5% from the year-ago quarter to $88.4 million. Adjusted EBITDA margin improved 150 bps to 13.5% during the quarter.
Buyouts
TopBuild wrapped up two acquisitions in the first quarter, namely Hunter Insulation and Cooper Glass. In 2019, the two firms on a combined basis generated approximately $19 million in annual revenues.
Financial Update
Cash and cash equivalents as of Mar 31, 2020 were $187 million, up from $184.8 million at 2019-end. The company has $388.6 million available borrowing capacity under the revolving facility. On Mar 23, 2020, TopBuild announced that it had entered into a new term loan and revolving credit facility, replacing the previous senior secured facilities. The revolving credit facility was upsized by $200-$450 million, which increased the total borrowing capacity to $750 million. In addition, the maturity date was extended for three years to March 2025.
In the first quarter, the company repurchased 188,100 shares for $75.10 per share. As of Mar 31, 2020, $75 million was remaining under the $200-million authorization.
Masco Corporation’s (MAS - Free Report) first-quarter 2020 earnings and revenues handily beat the Zacks Consensus Estimate and improved year over year.
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TopBuild (BLD) Shares Up 10.2% on Q1 Earnings & Revenue Beat
TopBuild Corp. (BLD - Free Report) came up with better-than-expected first-quarter 2020 results. Earnings not only surpassed the Zacks Consensus Estimate but also grew impressively from the prior-year quarter, backed by strong volume and pricing, as well as acquisitions. Shares of this leading installer and distributor of insulation and building material products jumped more than 10% on May 5, following the earnings release.
Inside the Headlines
The company reported adjusted earnings of $1.37 per share, which surpassed the consensus estimate of $1.27 by 7.9% and grew 29.2% from the prior-year period. The uptrend was primarily backed by higher sales volumes and improved margins.
Total net sales rose 5.5% on a year-over-year basis to $653.2 million and topped the consensus mark of $650 million by 0.5%. The upside was driven by higher sales volumes and selling prices.
Segmental Performance
Installation (TruTeam) revenues increased 5.9% year over year to $475.9 million. Acquisitions added 1.1% to the growth. Volume grew 2.7% and selling price was up 2.2% from the prior-year quarter. Operating margin in the quarter expanded 120 basis points (bps) to 12.7%.
Revenues of the Distribution (Service Partners) segment grew 4.8% year over year to $214.2 million, driven by 3.8% volume growth and 0.9% price increase. Operating margin also improved 140 bps from the year-ago level to 11.5%.
Operating Highlights
Adjusted gross margin of 26.3% expanded 120 bps. Adjusted operating profit of $70.3 million also increased almost 19% year over year. Adjusted operating margin improved 130 bps from the year-ago period to 10.8%. Both gross and operating margin improvements were driven by higher selling prices, improved labor and sales productivity, and lower acquisition and closure costs, partially offset by high material costs.
Adjusted EBITDA grew 18.5% from the year-ago quarter to $88.4 million. Adjusted EBITDA margin improved 150 bps to 13.5% during the quarter.
Buyouts
TopBuild wrapped up two acquisitions in the first quarter, namely Hunter Insulation and Cooper Glass. In 2019, the two firms on a combined basis generated approximately $19 million in annual revenues.
Financial Update
Cash and cash equivalents as of Mar 31, 2020 were $187 million, up from $184.8 million at 2019-end. The company has $388.6 million available borrowing capacity under the revolving facility. On Mar 23, 2020, TopBuild announced that it had entered into a new term loan and revolving credit facility, replacing the previous senior secured facilities. The revolving credit facility was upsized by $200-$450 million, which increased the total borrowing capacity to $750 million. In addition, the maturity date was extended for three years to March 2025.
In the first quarter, the company repurchased 188,100 shares for $75.10 per share. As of Mar 31, 2020, $75 million was remaining under the $200-million authorization.
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.
Owens Corning (OC - Free Report) reported impressive earnings in first-quarter 2020. The bottom line surpassed the Zacks Consensus Estimate and improved on a year-over-year basis.
United Rentals, Inc. (URI - Free Report) reported impressive results in first-quarter 2020. Earnings and revenues topped the respective Zacks Consensus Estimate, and grew on a year-over-year basis.
Masco Corporation’s (MAS - Free Report) first-quarter 2020 earnings and revenues handily beat the Zacks Consensus Estimate and improved year over year.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2019, while the S&P 500 gained and impressive +53.6%, five of our strategies returned +65.8%, +97.1%, +118.0%, +175.7% and even +186.7%.
This outperformance has not just been a recent phenomenon. From 2000 – 2019, while the S&P averaged +6.0% per year, our top strategies averaged up to +54.7% per year.
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