TopBuild Reports Third Quarter Results
Third quarter sales of $1.37 billion driven by 4.2% Installation growth and 5.1% Specialty Distribution growth
Delivered gross margin of 30.7% and adjusted EBITDA margin of 20.8%
Narrows 2024 guidance to $5.3 to $5.35 billion in revenue and $1.055 to $1.085 billion in adjusted EBITDA
DAYTONA BEACH, Fla., Nov. 05, 2024 (GLOBE NEWSWIRE) -- TopBuild Corp. (NYSE:BLD) a leading installer and specialty distributor of insulation and building material products to the construction industry in the United States and Canada today reported results for the third quarter ended September 30, 2024.
"We delivered a strong performance with third quarter sales of $1.37 billion and adjusted EBITDA of $285 million, achieving the highest level of quarterly sales and profit in our history," said Robert Buck, President and Chief Executive Officer. "Our ongoing focus on growth and profitability enabled us to drive Installation sales growth of 4.2% and Specialty Distribution sales growth of 5.1% in a macro environment that was largely unchanged from the second quarter. Adjusted EBITDA margin of 20.8% improved by 50 basis points excluding the benefit from higher-than-normal multi-family and commercial margins in the third quarter of 2023.1
"We are narrowing our 2024 outlook based on our assumptions for a continued uneven housing environment and the ongoing delay of certain commercial/industrial projects. We remain optimistic about our business with strengthening requirements for energy efficiency, the U.S. housing supply deficit, increasing household formations, and the prospect of lower interest rates driving growth.
"Our priority for our strong free cash flow continues to be acquisitions and our M&A pipeline is very healthy. In the quarter we also returned capital to shareholders, with share repurchases totaling $413.9 million or approximately 1.07 million shares, reinforcing our confidence in our outlook and ability to deploy capital successfully and generate strong returns," concluded Mr. Buck.
1 The Company noted that its results for the third quarter of 2023 included an estimated $15 million margin benefit related to certain multi-family/commercial business.
Financial Highlights(comparisons are to the periods ended September 30, 2023)
Three Months Ended September 30, 2024
Reported
Adjusted
($ in thousands)
2024
2023
2024
2023
Sales
$
1,373,268
$
1,326,120
$
1,373,268
$
1,326,120
Gross Profit
421,813
420,690
421,813
420,690
Gross Margin
30.7
%
31.7
%
30.7
%
31.7
%
SG&A
177,820
183,198
175,888
174,758
SG&A as % of Revenue
12.9
%
13.8
%
12.8
%
13.2
%
Operating Profit
243,993
237,492
245,925
245,932
Operating Margin
17.8
%
17.9
%
17.9
%
18.5
%
Net Income
168,960
167,601
170,075
172,507
Net Income per diluted share
$
5.65
$
5.27
$
5.68
$
5.43
EBITDA
$
285,057
$
283,690
EBITDA Margin
20.8
%
21.4
%
Nine Months Ended September 30, 2024
Reported
Adjusted
($ in thousands)
2024
2023
2024
2023
Sales
$
4,017,597
$
3,908,620
$
4,017,597
$
3,908,620
Gross Profit
1,232,885
1,212,704
1,232,885
1,212,704
Gross Margin
30.7
%
31.0
%
30.7
%
31.0
%
SG&A
563,992
538,679
534,497
524,480
SG&A as % of Revenue
14.0
%
13.8
%
13.3
%
13.4
%
Operating Profit
668,893
674,025
698,388
688,224
Operating Margin
16.6
%
17.2
%
17.4
%
17.6
%
Net Income
472,064
467,870
493,997
477,551
Net Income per diluted share
$
15.19
$
14.74
$
15.89
$
15.04
EBITDA
$
816,570
$
797,520
EBITDA Margin
20.3
%
20.4
%
Sales Drivers
(comparisons are to the periods ended September 30, 2023)
Three Months Ended September 30, 2024
Installation
Specialty Distribution
TopBuild, net of elims
Sales (in millions)
$
856
$
600
$
1,373
Sales Drivers
Volume
0.5
%
3.0
%
0.4
%
Price
1.1
%
0.8
%
1.0
%
M&A
2.9
%
1.4
%
2.4
%
Dispositions
(0.2
%)
(0.1
%)
Total Sales Change
4.2
%
5.1
%
3.6
%
Nine Months Ended September 30, 2024
Installation
Specialty Distribution
TopBuild, net of elims
Sales (in millions)
$
2,506
$
1,739
$
4,018
Sales Drivers
Volume
0.6
%
(0.2
%)
(0.5
%)
Price
1.2
%
1.2
%
1.2
%
M&A
3.4
%
1.0
%
2.5
%
Dispositions
(0.6
%)
(0.4
%)
Total Sales Change
4.5
%
2.1
%
2.8
%
Segment Profitability
(comparisons are to the periods ended September 30, 2023)
Three Months Ended September 30, 2024
Nine Months Ended September 30, 2024
($ in thousands)
Installation
Specialty Distribution
Installation
Specialty Distribution
Operating Profit
$
172,243
$
94,911
$
499,717
$
261,862
Change
(1.7
%)
7.5
%
1.1
%
5.8
%
Operating Margin
20.1
%
15.8
%
19.9
%
15.1
%
Adj. Operating Profit
$
172,274
$
95,109
$
500,081
$
261,320
Change
(2.7
%)
7.7
%
0.7
%
5.4
%
Adj. Operating Margin
20.1
%
15.8
%
20.0
%
15.0
%
Adj. EBITDA
$
191,382
$
110,600
$
556,816
$
307,507
Change
(1.8
%)
6.5
%
1.5
%
4.8
%
Adj. EBITDA Margin
22.3
%
18.4
%
22.2
%
17.7
%
Capital Allocation
2024 AcquisitionsYear to date, TopBuild has completed or announced a total of 7 acquisitions which are expected to generate approximately $118 million in annual revenue.
On October 30, the Company announced the acquisition of Shannon Global Energy Services, a leading thermal acoustic blanket insulation fabricator serving the commercial and industrial end markets. The acquisition is expected to close in the fourth quarter.
Company
Annual Revenue($ in millions)
Month Closed
Brabble Insulation, Inc. (I)
$
5.2
February
Morris Black & Sons, Inc. (I)
3.8
March
Pest Control Insulation LLC (D)
25.4
March
Green Space Insulation LLC (I)
6.0
April
Insulation Works, Inc. (I)
28.0
May
Texas Insulation (I)
38.9
May
Shannon Global Energy Services (D)
10.8
TBD
Total
$
118.1
I = Installation, D = Specialty Distribution
Share RepurchasesDuring the third quarter, TopBuild repurchased approximately 1.07 million shares totaling $413.9 million. On a year-to-date basis, the Company repurchased 2.3 million shares totaling $919.2 million, leaving $235.2 million remaining under the current authorization as of September 30, 2024.
2024 Outlook2TopBuild narrowed its full year 2024 outlook based on the Company's assumptions for a continued uneven housing environment and the ongoing delay of certain commercial/industrial projects. The Company noted that it has not experienced an uptick in project cancellations.
$ in millions
2024 Outlook
Low
High
Sales
$
5,300.0
$
5,350.0
Adjusted EBITDA*
$
1,055.0
$
1,085.0
* See table for Adjusted EBITDA reconciliation
2 This outlook reflects management's current view of present and future market conditions and is based on assumptions such as housing starts, general and administrative expenses, and interest rates. These targets do not include any effects related to potential acquisitions or divestitures that may occur after the date of this press release. A reconciliation of non-GAAP targets to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, the costs and expenses that may be incurred in the future and therefore, cannot be reasonably predicted. The effect of these excluded items may be significant. Factors that could cause actual long-term results to differ materially from TopBuild's current expectations are discussed below and are also detailed in the Company's most recent Annual Report on Form 10-K and subsequent SEC reports.
Conference Call A conference call to discuss the third quarter 2024 financial results is scheduled for today, Tuesday, November 5, at 9:00 a.m. Eastern Time. The call may be accessed by dialing (877) 407-9037. A simultaneous webcast of the call, along with management's formal remarks and a presentation, will be available on the Company's website at www.topbuild.com shortly before the call begins.
About TopBuildTopBuild Corp., headquartered in Daytona Beach, Florida, is a leading installer and specialty distributor of insulation and related building material products to the construction industry in the United States and Canada. We provide insulation installation services nationwide through our Installation segment which has approximately 250 branches located across the United States. We distribute building and mechanical insulation, insulation accessories and other building product materials for the residential, commercial, and industrial end markets through our Specialty Distribution business. Our Specialty Distribution network encompasses approximately 170 branches. To learn more about TopBuild please visit our website at www.topbuild.com.
Use of Non-GAAP Financial MeasuresAdjusted EBITDA, incremental EBITDA margin, adjusted EBITDA margin, the "adjusted" financial measures presented above, and figures presented on a "same branch basis" are not calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). The Company believes that these non-GAAP financial measures, which are used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods. We define same branch sales as sales from branches in operation for at least 12 full calendar months. Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in tables contained in this press release. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's reported results under GAAP. Additional information may be found in the Company's filings with the Securities and Exchange Commission which are available on TopBuild's website under "SEC Filings" at www.topbuild.com.
Safe Harbor StatementThis press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements may address, among other things, our expected financial and operational results, the related assumptions underlying our expected results, and our plan to repurchase our common stock under stock repurchase transactions. These forward-looking statements can be identified by words such as "will," "would," "anticipate," "expect," "believe," "designed," "plan," "may," "project," "estimate" or "intend," the negative of these terms, and similar references to future periods. These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements. Our forward-looking statements contained herein speak only as of the date of this press release. Factors or events that we cannot predict, including those described in the risk factors contained in our filings with the Securities and Exchange Commission, may cause our actual results to differ from those expressed in forward-looking statements. Although TopBuild believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be achieved and it undertakes no obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law.
(tables follow)
TopBuild Corp.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per common share amounts)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Net sales
$
1,373,268
$
1,326,120
$
4,017,597
$
3,908,620
Cost of sales
951,455
905,430
2,784,712
2,695,916
Gross profit
421,813
420,690
1,232,885
1,212,704
Selling, general, and administrative expense
177,820
183,198
563,992
538,679
Operating profit
243,993
237,492
668,893
674,025
Other income (expense), net:
Interest expense
(18,449
)
(18,830
)
(55,811
)
(55,427
)
Other, net
2,355
6,015
24,987
12,542
Other expense, net
(16,094
)
(12,815
)
(30,824
)
(42,885
)
Income before income taxes
227,899
224,677
638,069
631,140
Income tax expense
(58,939
)
(57,075
)
(166,005
)
(163,270
)
Net income
$
168,960
$
167,602
$
472,064
$
467,870
Net income per common share:
Basic
$
5.68
$
5.30
$
15.28
$
14.81
Diluted
$
5.65
$
5.27
$
15.19
$
14.74
Weighted average shares outstanding:
Basic
29,751,713
31,615,110
30,901,788
31,588,740
Diluted
29,925,400
31,788,812
31,083,857
31,744,856
TopBuild Corp.
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
(in thousands)
Three Months Ended September 30,
Nine Months Ended September 30,
2024
2023
2024
2023
Net ...
