TopBuild Reports Second Quarter 2016 Financial Results
DAYTONA BEACH, Fla., Aug. 4, 2016 /PRNewswire/ -- TopBuild Corp. (NYSE: BLD), the leading purchaser, installer and distributor of insulation products to the United States construction industry, reported financial results for the second quarter and six months ended June 30, 2016.
Jerry Volas, Chief Executive Officer of TopBuild stated, "We had a solid second quarter with sales benefitting from the continued growth in residential and commercial construction. Combined with the unusually robust first quarter, we are pleased with the first six months of 2016 and look forward to a strong second half of the year. Most encouraging is the progress we continue to make driving operational improvements into our business. Our adjusted operating margin in the second quarter was 6.4%, a 140 basis point improvement both year-over-year and sequentially.
"Our team remains focused on optimizing operating margins while balancing that with top line performance aligned with the housing recovery. While starts may grow at a rate slower than previously expected, we believe the current recovery will be much longer than previous cycles as new housing supply remains tight relative to household formations."
Second Quarter Financial Highlights (unless otherwise indicated, comparisons are to quarter ended June 30, 2015)
- Net sales increased 6.9% to $431.6 million.
- Gross margin was up 140 basis points year-over-year and 100 basis points sequentially.
- Selling, general and administrative ("SG&A") expenses as a percentage of sales were 16.4%, a 200 basis point improvement.
- Operating profit was $26.8 million compared to $11.5 million. On an adjusted basis, operating profit was $27.4 million compared to $19.3 million, a 41.9% improvement.
- Operating margins improved 340 basis points to 6.2%. On an adjusted basis, operating margins were 6.4%, up 140 basis points.
- Income from continuing operations was $15.6 million, or $0.41 per diluted share, compared to $6.6 million or $0.18 per diluted share. On an adjusted basis, income from continuing operations was $16.2 million, or $0.43 per diluted share compared to $10.3 million or $0.27 per diluted share.
- At quarter end, the Company had cash and cash equivalents of $102.1 million and availability under its revolving credit facility of $69.9 million for total liquidity of $172.0 million.
Operating Segment Highlights(all comparisons are to quarter ended June 30, 2015)
- TruTeamSM (Installation)
- Net sales increased 8.6% driven by growth in both residential and commercial lines of business as well as improved selling prices.
- Adjusted operating margin was 7.9%, a 280 basis point improvement
- Service Partners® (Distribution)
- Net sales rose 2.1%, driven by higher sales volume which was partially offset by a decrease in selling prices.
- Adjusted operating margin was 8.2%, a 50 basis point improvement.
Share Repurchase Program On March 3, 2016, the Company announced that its Board of Directors had approved a share repurchase program. Under the program, the Company may purchase up to $50 million in shares of its common stock during a twelve-month period ending February 28, 2017. In the second quarter, the Company repurchased 100,024 shares at an average price of $34.23 per share.
Repurchases under this plan may be made from time to time at the Company's discretion, based on ongoing assessments of the capital needs of the Company, the market price of its common stock and general market conditions. The program may be suspended or discontinued at any time.
Additional InformationQuarterly supplemental materials, including a presentation that will be referenced on today's conference call, are available on the "Investors" section of the Company's website at www.topbuild.com. The Company's website should be considered a recognized channel of distribution, and the Company may periodically post important information regarding, among other things, its business, relevant events and news in the "Investors" section.
Conference Call DetailsA conference call to discuss the Company's second quarter financial results for 2016 is scheduled for today, Thursday, August 4, 2016, at 9:00 a.m. Eastern Time. The call may be accessed by dialing (800) 406-7408. The conference call will be webcast simultaneously on the "Investors" section of the Company's website at www.topbuild.com.
A replay of the call will be available on TopBuild's website or it may be accessed by phone by dialing (800) 633-8284. The replay passcode is 21813038.
Use of Non-GAAP Financial Measures The "adjusted" financial measures presented above 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. Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in tables contained in this news 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 "Investors" at www.topbuild.com.
About TopBuildTopBuild Corp., headquartered in Daytona Beach, Florida, is the leading purchaser, installer and distributor of insulation products to the U.S. construction industry. We provide insulation services nationwide through TruTeamSM, which has over 175 branches and our Service Partners® business distributes insulation from over 70 branches. We leverage our national footprint to gain economies of scale while capitalizing on our local market presence to forge strong relationships with our customers. To learn more about TopBuild please visit our website at www.topbuild.com.
This 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 and the related assumptions underlying our expected results. These forward-looking statements are distinguished by use of words such as "will," "would," "anticipate," "expect," "believe," "plan" 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, it can give no assurance that its expectations will be achieved and it undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law.
Investor Relations and Media ContactTabitha Zane [email protected] 386-763-8801
(tables follow)
|
TopBuild Corp. | ||||||||||||
|
Condensed Consolidated Statements of Operations (Unaudited) |
||||||||||||
|
(in thousands, except common share amounts) |
||||||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, | |||||||||||
|
2016 |
2015 |
2016 |
2015 | |||||||||
|
Net sales |
$ |
431,589 |
$ |
403,761 |
$ |
845,613 |
$ |
762,221 | ||||
|
Cost of sales |
333,901 |
318,071 |
658,470 |
602,715 | ||||||||
|
Gross profit |
97,688 |
85,690 |
187,143 |
159,506 | ||||||||
|
Selling, general, and administrative expense |
70,898 |
74,200 |
140,586 |
149,163 | ||||||||
|
Operating profit |
26,790 |
11,490 |
46,557 |
10,343 | ||||||||
|
Other income (expense), net: |
||||||||||||
|
Interest expense |
(1,371) |
(3,156) |
(3,044) |
(6,317) | ||||||||
|
Other, net |
61 |
(4) |
136 |
4 | ||||||||
|
Other expense, net |
(1,310) |
(3,160) |
(2,908) |
(6,313) | ||||||||
|
Income from continuing operations before income taxes |
25,480 |
8,330 |
43,649 |
4,030 | ||||||||
|
Income tax expense from continuing operations |
(9,865) |
(1,700) |
(16,918) |
(1,200) | ||||||||
|
Income from continuing operations |
15,615 |
6,630 |
26,731 |
2,830 | ||||||||
|
Loss from discontinued operations, net |
— |
(235) |
— |
(234) | ||||||||
|
Net income |
$ |
15,615 |
$ |
6,395 |
$ |
26,731 |
$ |
2,596 | ||||
|
Income (loss) per common share: |
||||||||||||
|
Basic: |
||||||||||||
|
Income from continuing operations |
$ |
0.41 |
$ |
0.18 |
$ |
0.71 |
$ |
0.08 | ||||
|
Loss from discontinued operations, net |
— |
(0.01) |
— |
(0.01) | ||||||||
|
Net income |
$ |
0.41 |
$ |
0.17 |
$ |
0.71 |
$ |
0.07 | ||||
|
Diluted: |
||||||||||||
|
Income from continuing operations |
$ |
0.41 |
$ |
0.18 |
$ |
0.70 |
$ |
0.08 | ||||
|
Loss from discontinued operations, net |
— |
(0.01) |
— |
(0.01) | ||||||||
|
Net income |
$ |
0.41 |
$ |
0.17 |
$ |
0.70 |
$ |
0.07 | ||||
|
TopBuild Corp. |
|||||||
|
Condensed Consolidated Balance Sheets and Other Financial Data (Unaudited) |
|||||||
|
(dollars in thousands) |
|||||||
|
As of |
|||||||
|
June 30, |
December 31, |
||||||
|
2016 |
2015 |
||||||
|
ASSETS |
|||||||
|
Current assets: |
|||||||
|
Cash and cash equivalents |
$ |
102,090 |
$ |
112,848 |
|||
|
Receivables, net of an allowance for doubtful accounts of $3,481 and $3,399 at June 30, 2016 and December 31, 2015, respectively |
254,998 |
235,549 |
|||||
|
Inventories, net |
102,216 |
118,701 |
|||||
|
Prepaid expenses and other current assets |
16,529 |
13,263 |
|||||
|
Total current assets |
475,833 |
480,361 |
|||||
|
Property and equipment, net |
91,829 |
93,066 |
|||||
|
Goodwill |
1,044,041 |
1,044,041 |
|||||
|
Other intangible assets, net |
1,584 |
1,987 |
|||||
|
Deferred tax assets, net |
20,549 |
20,549 |
|||||
|
Other assets |
1,581 |
2,245 |
|||||
|
Total assets |
$ |
1,635,417 |
$ |
1,642,249 |
|||
|
LIABILITIES |
|||||||
|
Current liabilities: |
|||||||
|
Accounts payable |
$ |
214,012 |
$ |
253,311 |
|||
|
Current portion of long-term debt |
20,000 |
15,000 |
|||||
|
Accrued liabilities |
73,371 |
58,369 |
|||||
|
Total current liabilities |
307,383 |
326,680 |
|||||
|
Long-term debt |
168,628 |
178,457 |
|||||
|
Deferred tax liabilities, net |
181,251 |
181,254 |
|||||
|
Long-term portion of insurance reserves |
37,801 |
39,655 |
|||||
|
Other liabilities |
436 |
474 |
|||||
|
Total liabilities |
695,499 |
726,520 |
|||||
|
EQUITY |
939,918 |
915,729 |
|||||
|
Total liabilities and equity |
$ |
1,635,417 |
$ |
1,642,249 |
|||
|
As of |
|||||||
|
June 30, |
June 30, |
||||||
|
2016 |
2015 |
||||||
|
Other Financial Data |
|||||||
|
Working Capital Days |
|||||||
|
Receivable days |
46 |
45 |
|||||
|
Inventory days |
28 |
30 |
|||||
|
Accounts payable days |
82 |
82 |
|||||
|
Working capital |
$ |
143,202 |
$ |
129,023 |
|||
|
Working capital as a percent of sales (LTM) |
8.4 |
% |
8.3 |
% | |||
|
TopBuild Corp. |
||||||
|
Condensed Consolidated Statement of Cash Flows (Unaudited) |
||||||
|
(in thousands) |
||||||
|
Six Months Ended June 30, | ||||||
|
2016 |
2015 | |||||
|
Net Cash From (For) Operating Activities: |
||||||
|
Net income |
$ |
26,731 |
$ |
2,596 | ||
|
Adjustments to reconcile net income to net cash from (for) operating activities: |
||||||
|
Depreciation and amortization |
5,908 |
6,140 | ||||
|
Share-based compensation |
3,705 |
1,666 | ||||
|
Loss on sale or abandonment of property and equipment |
1,477 |
2,299 | ||||
|
Provision for bad debt expense |
1,986 |
2,507 | ||||
|
Loss from inventory obsolescence |
667 |
792 | ||||
|
Deferred income taxes, net |
(3) |
1,202 | ||||
|
Changes in certain assets and liabilities: |
||||||
|
Receivables, net |
(21,436) |
(19,415) | ||||
|
Inventories, net |
15,819 |
7,293 | ||||
|
Prepaid expenses and other current assets |
(3,266) |
(412) | ||||
|
Accounts payable |
(39,237) |
(21,771) | ||||
|
Long-term portion of insurance reserves |
(1,360) |
1,882 | ||||
|
Accrued liabilities |
15,002 |
6,311 | ||||
|
Other, net |
153 |
(47) | ||||
|
Net cash from (for) operating activities |
6,146 |
(8,957) | ||||
|
Cash Flows From (For) Investing Activities: |
||||||
|
Purchases of property and equipment |
(6,023) |
(7,111) | ||||
|
Proceeds from sale of property and equipment |
219 |
440 | ||||
|
Other, net |
147 |
460 | ||||
|
Net cash for investing activities |
(5,657) |
(6,211) | ||||
|
Cash Flows From (For) Financing Activities: |
||||||
|
Net transfer from Former Parent |
— |
77,186 | ||||
|
Cash distribution paid to Former Parent |
— |
(200,000) | ||||
|
Proceeds from issuance of long-term debt |
— |
200,000 | ||||
|
Repayment of long-term debt |
(5,000) |
— | ||||
|
Payment of debt issuance costs |
— |
(1,715) | ||||
|
Taxes withheld and paid on employees' equity awards |
(1,285) |
— | ||||
|
Repurchase of shares of common stock |
(4,962) |
— | ||||
|
Net cash (for) from financing activities |
(11,247) |
75,471 | ||||
|
Cash and Cash Equivalents |
||||||
|
(Decrease) increase for the period |
(10,758) |
60,303 | ||||
|
Beginning of year |
112,848 |
2,965 | ||||
|
End of period |
$ |
102,090 |
$ |
63,268 | ||
|
Supplemental disclosure of noncash investing activities: |
||||||
|
Accruals for property and equipment |
$ |
521 |
$ |
— | ||
|
TopBuild Corp. |
|||||||||||||||||||||||
|
Segment Data (Unaudited) |
|||||||||||||||||||||||
|
(dollars in thousands) |
|||||||||||||||||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||||||||||||
|
2016 |
2015 |
Change |
2016 |
2015 |
Change |
||||||||||||||||||
|
Installation |
|||||||||||||||||||||||
|
Sales |
$ |
288,042 |
$ |
265,296 |
8.6 |
% |
$ |
560,920 |
$ |
498,659 |
12.5 |
% |
|||||||||||
|
Operating profit, as reported |
$ |
22,797 |
$ |
7,067 |
$ |
36,303 |
$ |
6,035 |
|||||||||||||||
|
Operating margin, as reported |
7.9 |
% |
2.7 |
% |
6.5 |
% |
1.2 |
% |
|||||||||||||||
|
Rationalization charges† |
66 |
3,188 |
894 |
3,830 |
|||||||||||||||||||
|
Legal adjustments, net |
— |
1,020 |
— |
1,370 |
|||||||||||||||||||
|
Fixed asset disposal (truck mounted devices) |
— |
1,690 |
— |
1,690 |
|||||||||||||||||||
|
Operating profit, as adjusted |
$ |
22,863 |
$ |
12,965 |
$ |
37,197 |
$ |
12,925 |
|||||||||||||||
|
Operating margin, as adjusted |
7.9 |
% |
5.1 |
% |
6.6 |
% |
2.7 |
% |
|||||||||||||||
|
Distribution |
|||||||||||||||||||||||
|
Sales |
$ |
164,257 |
$ |
160,841 |
2.1 |
% |
$ |
325,145 |
$ |
305,452 |
6.4 |
% |
|||||||||||
|
Operating profit, as reported |
$ |
13,547 |
$ |
11,897 |
$ |
27,880 |
$ |
23,274 |
|||||||||||||||
|
Operating margin, as reported |
8.2 |
% |
7.4 |
% |
8.6 |
% |
7.6 |
% |
|||||||||||||||
|
Rationalization charges |
— |
512 |
83 |
512 |
|||||||||||||||||||
|
Operating profit, as adjusted |
$ |
13,547 |
$ |
12,409 |
$ |
27,963 |
$ |
23,786 |
|||||||||||||||
|
Operating margin, as adjusted |
8.2 |
% |
7.7 |
% |
8.6 |
% |
7.8 |
% |
|||||||||||||||
|
Total |
|||||||||||||||||||||||
|
Sales before eliminations |
$ |
452,299 |
$ |
426,137 |
$ |
886,065 |
$ |
804,111 |
|||||||||||||||
|
Intercompany eliminations |
(20,710) |
(22,376) |
(40,452) |
(41,890) |
|||||||||||||||||||
|
Net sales after eliminations |
$ |
431,589 |
$ |
403,761 |
6.9 |
% |
$ |
845,613 |
$ |
762,221 |
10.9 |
% |
|||||||||||
|
Operating profit, as reported - segment |
$ |
36,344 |
$ |
18,964 |
$ |
64,183 |
$ |
29,309 |
|||||||||||||||
|
General corporate expense, net |
(6,030) |
(5,724) |
(10,750) |
(13,627) |
|||||||||||||||||||
|
Intercompany eliminations and other adjustments |
(3,524) |
(1,750) |
(6,876) |
(5,339) |
|||||||||||||||||||
|
Operating profit, as reported |
$ |
26,790 |
$ |
11,490 |
$ |
46,557 |
$ |
10,343 |
|||||||||||||||
|
Operating margin, as reported |
6.2 |
% |
2.8 |
% |
5.5 |
% |
1.4 |
% |
|||||||||||||||
|
Rationalization charges† ‡ |
647 |
3,700 |
1,655 |
4,342 |
|||||||||||||||||||
|
Legal adjustments, net |
— |
1,020 |
— |
1,370 |
|||||||||||||||||||
|
Fixed asset disposal (truck mounted devices) |
— |
1,690 |
— |
1,690 |
|||||||||||||||||||
|
Masco general corporate expense, net |
— |
5,724 |
— |
13,627 |
|||||||||||||||||||
|
Masco direct corporate expense |
— |
1,207 |
— |
5,604 |
|||||||||||||||||||
|
Expected standalone corporate expense |
— |
(5,500) |
— |
(11,000) |
|||||||||||||||||||
|
Operating profit, as adjusted |
$ |
27,437 |
$ |
19,331 |
$ |
48,212 |
$ |
25,976 |
|||||||||||||||
|
Operating margin, as adjusted |
6.4 |
% |
5.0 |
% |
5.7 |
% |
3.4 |
% |
|||||||||||||||
|
Share-based compensation |
2,105 |
858 |
3,705 |
1,666 |
|||||||||||||||||||
|
Depreciation and amortization |
3,013 |
3,087 |
5,908 |
6,140 |
|||||||||||||||||||
|
EBITDA, as adjusted |
$ |
32,555 |
$ |
23,276 |
$ |
57,825 |
$ |
33,782 |
|||||||||||||||
|
Sales change period over period |
27,828 |
83,392 |
|||||||||||||||||||||
|
EBITDA, as adjusted change period over period |
9,279 |
24,043 |
|||||||||||||||||||||
|
EBITDA, as adjusted as percentage of sales change |
33.3 |
% |
28.8 |
% |
|||||||||||||||||||
|
† 2015 Rationalization charges included spin-off charges. | |||||||||||||||||||||||
|
‡ 2016 Rationalization charges include corporate level adjustments as well as segment operating adjustments. |
|||||||||||||||||||||||
|
TopBuild Corp. |
|||||||||||||
|
Non-GAAP Reconciliations (Unaudited) |
|||||||||||||
|
(in thousands, except common share amounts) |
|||||||||||||
|
Three Months Ended June 30, |
Six Months Ended June 30, |
||||||||||||
|
2016 |
2015 |
2016 |
2015 |
||||||||||
|
Gross Profit and Operating Profit Reconciliations |
|||||||||||||
|
Net sales |
$ |
431,589 |
$ |
403,761 |
$ |
845,613 |
$ |
762,221 |
|||||
|
Gross profit, as reported |
$ |
97,688 |
$ |
85,690 |
$ |
187,143 |
$ |
159,506 |
|||||
|
Gross profit, as adjusted |
$ |
97,688 |
$ |
85,690 |
$ |
187,143 |
$ |
159,506 |
|||||
|
Gross margin, as reported |
22.6 |
% |
21.2 |
% |
22.1 |
% |
20.9 |
% | |||||
|
Gross margin, as adjusted |
22.6 |
% |
21.2 |
% |
22.1 |
% |
20.9 |
% | |||||
|
Operating profit, as reported |
$ |
26,790 |
$ |
11,490 |
$ |
46,557 |
$ |
10,343 |
|||||
|
Rationalization charges† |
647 |
3,700 |
1,655 |
4,342 |
|||||||||
|
Legal adjustments, net |
— |
1,020 |
— |
1,370 |
|||||||||
|
Fixed asset disposal (truck mounted device) |
— |
1,690 |
— |
1,690 |
|||||||||
|
Masco general corporate expense, net |
— |
5,724 |
— |
13,627 |
|||||||||
|
Masco direct corporate expense |
— |
1,207 |
— |
5,604 |
|||||||||
|
Expected standalone corporate expense |
— |
(5,500) |
— |
(11,000) |
|||||||||
|
Operating profit, as adjusted |
$ |
27,437 |
$ |
19,331 |
$ |
48,212 |
$ |
25,976 |
|||||
|
Operating margin, as reported |
6.2 |
% |
2.8 |
% |
5.5 |
% |
1.4 |
% | |||||
|
Operating margin, as adjusted |
6.4 |
% |
5.0 |
% |
5.7 |
% |
3.4 |
% | |||||
|
Income Per Common Share Reconciliation |
|||||||||||||
|
Income from continuing operations before income taxes, as reported |
$ |
25,480 |
$ |
8,330 |
$ |
43,649 |
$ |
4,030 |
|||||
|
Rationalization charges† |
647 |
3,700 |
1,655 |
4,342 |
|||||||||
|
Legal adjustments, net |
— |
1,020 |
— |
1,370 |
|||||||||
|
Fixed asset disposal (truck mounted device) |
— |
1,690 |
— |
1,690 |
|||||||||
|
Masco general corporate expense, net |
— |
5,724 |
— |
13,627 |
|||||||||
|
Masco direct corporate expense |
— |
1,207 |
— |
5,604 |
|||||||||
|
Expected standalone corporate expense |
— |
(5,500) |
— |
(11,000) |
|||||||||
|
Income from continuing operations before income taxes, as adjusted |
26,127 |
16,171 |
45,304 |
19,663 |
|||||||||
|
Tax rate at 38% and 36% for 2016 and 2015, respectively |
(9,928) |
(5,822) |
(17,216) |
(7,079) |
|||||||||
|
Income from continuing operations, as adjusted |
$ |
16,199 |
$ |
10,349 |
$ |
28,088 |
$ |
12,584 |
|||||
|
Income per common share, as adjusted |
$ |
0.43 |
$ |
0.27 |
$ |
0.74 |
$ |
0.34 |
|||||
|
Average diluted common shares outstanding |
37,976,703 |
37,667,947 |
37,938,108 |
37,667,947 |
|||||||||
|
† 2015 Rationalization charges included spin-off charges. |
|||||||||||||
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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/topbuild-reports-second-quarter-2016-financial-results-300308891.html
SOURCE TopBuild Corp.