TopBuild Reports Fourth Quarter 2018 Results
- Net sales increase 27.6%
- Gross margin expands 40 basis points
- 10.2% operating margin, 10.5% on an adjusted basis, up 40 basis points
- Adjusted EBITDA increases 42.4%, margin expands 130 basis points
- $1.10 net income per diluted share, $1.20 on an adjusted basis
Announces New Share Repurchase ProgramProvides 2019 Revenue and Adjusted EBITDA Outlook
DAYTONA BEACH, Fla., Feb. 26, 2019 (GLOBE NEWSWIRE) -- TopBuild Corp. (NYSE: BLD), a leading installer and distributor of insulation and building material products today reported results for the fourth quarter ended December 31, 2018.
Jerry Volas, Chief Executive Officer, stated, “We are pleased with our fourth quarter results as we continue to deliver on our objective of producing profitable growth. Our team remains focused on optimizing our operational performance as evidenced by our 40 basis point gross margin expansion and 12.9% EBITDA margin, a 130 basis point increase from a year ago.”
Fourth Quarter Financial Highlights
(unless otherwise indicated, comparisons are to the quarter ended December 31, 2017)
- Net sales increased 27.6% to $639.5 million, driven by acquisitions and price increases. On a same branch basis, net sales increased 6.5% to $533.9 million.
- Gross margin expanded 40 basis points to 24.7%.
- Operating profit was $65.2 million, compared to $50.0 million. On an adjusted basis, operating profit was $67.2 million, compared to $50.8 million, a 32.1% improvement.
- Operating margin was 10.2%, up 20 basis points. Adjusted operating margin improved 40 basis points to 10.5%.
- Net income was $38.6 million, or $1.10 per diluted share, compared to $105.0 million, or $2.93 per diluted share. The Company noted that in the fourth quarter of 2017 it recorded a one-time tax benefit of $74.1 million related to the change in the federal tax rate as a result of the Tax Cuts and Jobs Act.
- Adjusted net income was $42.2 million, or $1.20 per diluted share, compared to $30.1 million, or $0.84 per diluted share.
- Adjusted EBITDA was $82.5 million, compared to $57.9 million, a 42.4% increase and adjusted EBITDA margin improved 130 basis points to 12.9%. Incremental adjusted EBITDA margin was 17.8%.
- On a same branch basis, adjusted EBITDA was $65.3 million, a 12.6% increase, and incremental adjusted EBITDA margin was 22.5%.
- Acquisitions contributed $105.7 million of revenue. Incremental adjusted EBITDA related to these acquisitions was 16.3%.
- At December 31, 2018, the Company had cash and cash equivalents of $100.9 million, availability under its revolving credit facility of $190.7 million for total liquidity of $291.6 million.
Full Year 2018 Financial Highlights
(unless otherwise indicated, comparisons are to twelve months ended December 31, 2017)
- Net sales increased 25.1% to $2,384.2 million. On a same branch basis, revenue increased 8.5% to $2,067.6 million.
- Gross margin was unchanged at 24.2%.
- Operating profit was $209.0 million, compared to operating profit of $136.9 million. On an adjusted basis, operating profit was $232.6 million, compared to $171.9 million, a 35.3% improvement.
- Operating margin was 8.8%, up 160 basis points. Adjusted operating margin improved 80 basis points to 9.8%.
- Net income was $134.8 million, or $3.78 per diluted share, compared to $158.1 million, or $4.32 per diluted share. Adjusted net income was $149.3 million, or $4.19 per diluted share, compared to $101.8 million, or $2.78 per diluted share.
- Adjusted EBITDA was $283.4 million, compared to $197.6 million, a 43.4% increase and adjusted EBITDA margin improved 150 basis points to 11.9%. Incremental adjusted EBITDA margin was 17.9%.
- On a same branch basis, adjusted EBITDA grew 20.5% to $238.1 million and incremental EBITDA margin was 25.1%.
- Acquisitions contributed $316.7 million of revenue. Incremental EBITDA related to these acquisitions was 14.3%.
“Our 2018 financial results clearly demonstrate the effectiveness of our operating model, the benefits of our size and scale and our success in integrating acquisitions onto our operating platform. Despite an environment of unprecedented material cost increases, we maintained our gross margin and expanded our adjusted operating and EBITDA margins," added Volas.
Operating Segment Highlights ($ in 000s)(comparisons are to the period ended December 31, 2017)
| TruTeam | 3 MonthsEnded12/31/18 | 12 MonthsEnded12/31/18 | Service Partners | 3 MonthsEnded12/31/18 | 12 MonthsEnded12/31/18 | |
| Sales | $457,610 | $1,680,967 | Sales | $213,974 | $820,309 | |
| Change | Change | |||||
| Price | 5.9% | 4.2% | Price | 7.9% | 7.2% | |
| Volume | 3.0% | 5.9% | Volume | -5.3% | 0.0% | |
| M&A | 27.2% | 21.2% | M&A | 8.1% | 6.7% | |
| Total Change | 36.1% | 31.2% | Total Change | 10.7% | 14.0% | |
| Operating Margin | 12.5% | 11.7% | Operating Margin | 10.1% | 9.6% | |
| Change | (10 bps) | 320 bps | Change | 80 bps | 10 bps | |
| Adj. Operating Margin | 12.5% | 11.8% | Adj. Operating Margin | 10.1% | 9.6% | |
| Change | (20 bps) | 80 bps | Change | 80 bps | 0 |
Capital AllocationAcquisitionsIn 2018, the Company completed three acquisitions that are expected to generate approximately $410 million of net annual revenue.
Volas stated, “Strategic acquisitions remain our number one choice for capital allocation. Since implementing our acquisition program in 2016, we have acquired ten companies that are expected to generate over $500 million in annual revenue. Our success in integrating acquisitions onto our operating platform has become a core competency, enabling us to take advantage of available synergies and generate strong returns for our shareholders.”
The companies acquired were:
- USI, the third largest provider of insulation installation and distribution services to the residential and commercial construction markets.
- ADO Products, a distributor of insulation accessories.
- Santa Rosa Insulation and Fireproofing, a residential and commercial insulation company.
Share RepurchasesThe Company also announced that its Board of Directors has authorized a new share repurchase program whereby the Company may purchase up to $200 million of its common stock. Repurchases will be made from cash on hand as well as from a portion of the free cash flow expected to be generated from the business.
Volas stated, "We anticipate continuing to generate cash beyond what is required to fund our internal growth and finance acquisitions, our highest capital allocation priorities. This $200 million share repurchase program further enhances our on-going commitment to maximizing shareholder value.”
In 2018 the Company repurchased a total of 1,049,871 shares of its common stock for approximately $65 million. This includes the receipt of 796,925 shares related to its previously announced $50 million accelerated share repurchase (“ASR”) program. The ASR is expected to settle no later than the end of the first quarter of 2019.
2019 Revenue and Adjusted EBITDA Outlook“We believe the fundamentals driving supply and demand in the residential housing market are healthy. In 2019, we will continue to focus on generating profitable growth, achieving additional operational efficiencies and identifying acquisitions that meet our investment criteria. Our business model, including national scale and diversity through both residential and commercial installation and distribution, offers multiple avenues for growth,” added Volas.
| 2019 | Low | High |
| Revenue | $2,570M | $2,635M |
| Adjusted EBITDA* | $310M | $330M |
*See table for adjusted EBITDA reconciliation
Assumptions($ in millions)
| 2019 | Low | High |
| Housing Starts | 1,260K | 1,300K |
| Adjusted net income | $ 145.3 | $ 167.9 |
| Depreciation and Amortization | $ 54.5 | $ 50.5 |
| Interest Expense and other, net | $ 38.9 | $ 35.9 |
| Income tax expense | $ 53.7 | $ 62.1 |
| Share based compensation | $ 14.6 | $ 12.6 |
Long-Term Targets (3-Years)
| Metric | |
| Working Capital (% of Sales) | 10% to 11% |
| CapEx (% of Sales) | 2.0% to 2.5% |
| Commercial Annual Revenue Growth | 10.0% |
| Normalized Tax Rate | 26% to 27% |
| Incremental Adjusted EBITDA (Organic) | 22% to 27% |
| Incremental Adjusted EBITDA (Acquisitions Year One) | 11% to 16% |
| Revenue for every 50K increase in housing starts | $80 million |
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, weighted average diluted shares outstanding and interest rates. This outlook does not include any effects related to potential acquisitions or divestitures that may occur after the date of this press release. Factors that could cause actual 2019 results to differ materially from TopBuild’s current expectations are discussed below and are also detailed in the Company’s 2018 Annual Report on Form 10-K and subsequent SEC reports.
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.
Conference Call A conference call to discuss fourth quarter and year-end 2018 financial results is scheduled for today, Tuesday, February 26, at 9:00 a.m. Eastern Time. The call may be accessed by dialing (888) 225-2706. The conference call will be webcast simultaneously on the “Investors” section of the Company’s website at www.topbuild.com.
About TopBuildTopBuild Corp., headquartered in Daytona Beach, Florida, is a leading installer and distributor of insulation and building material products to the U.S. construction industry. We provide insulation and building material services nationwide through TruTeam®, which has over 200 branches, and through Service Partners® which distributes insulation and building material products from over 75 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.
Use of Non-GAAP Financial MeasuresEBITDA, incremental 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 “Investors” 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 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,” “designed,” “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, the Company 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
| TopBuild Corp. | |||||||||||||
| Consolidated Statements of Operations | |||||||||||||
| (in thousands, except share and per common share amounts) | |||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Net sales | $ | 639,547 | $ | 501,401 | $ | 2,384,249 | $ | 1,906,266 | |||||
| Cost of sales | 481,321 | 379,368 | 1,808,097 | 1,445,157 | |||||||||
| Gross profit | 158,226 | 122,033 | 576,152 | 461,109 | |||||||||
| Selling, general, and administrative expense (exclusive of significant legal settlement, shown separately below) | 93,065 | 72,063 | 367,199 | 294,245 | |||||||||
| Significant legal settlement | — | — | — | 30,000 | |||||||||
| Operating profit | 65,161 | 49,970 | 208,953 | 136,864 | |||||||||
| Other income (expense), net: | |||||||||||||
| Interest expense | (9,661) | (2,252) | (28,687) | (8,019) | |||||||||
| Loss on extinguishment of debt | — | — | — | (1,086) | |||||||||
| Other, net | 266 | 42 | 558 | 281 | |||||||||
| Other expense, net | (9,395) | (2,210) | (28,129) | (8,824) | |||||||||
| Income before income taxes | 55,766 | 47,760 | 180,824 | 128,040 | |||||||||
| Income tax (expense) benefit | (17,213) | 57,231 | (46,072) | 30,093 | |||||||||
| Net income | $ | 38,553 | $ | 104,991 | $ | 134,752 | $ | 158,133 | |||||
| Income per common share: | |||||||||||||
| Basic | $ | 1.12 | $ | 3.00 | $ | 3.86 | $ | 4.41 | |||||
| Diluted | $ | 1.10 | $ | 2.93 | $ | 3.78 | $ | 4.32 | |||||
| Weighted average shares outstanding: | |||||||||||||
| Basic | 34,436,518 | 34,990,047 | 34,921,318 | 35,897,641 | |||||||||
| Diluted | 35,012,535 | 35,772,124 | 35,613,319 | 36,572,146 | |||||||||
| TopBuild Corp. | ||||||||
| Balance Sheets and Other Financial Data | ||||||||
| (dollars in thousands) | ||||||||
| As of December 31, | ||||||||
| 2018 | 2017 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 100,929 | $ | 56,521 | ||||
| Receivables, net of an allowance for doubtful accounts of $3,676 and $3,673 at December 31, 2018, and December 31, 2017, respectively | 407,106 | 308,508 | ||||||
| Inventories, net | 168,977 | 131,342 | ||||||
| Prepaid expenses and other current assets | 27,685 | 15,221 | ||||||
| Total current assets | 704,697 | 511,592 | ||||||
| Property and equipment, net | 167,961 | 107,121 | ||||||
| Goodwill | 1,364,016 | 1,077,186 | ||||||
| Other intangible assets, net | 199,387 | 33,243 | ||||||
| Deferred tax assets, net | 13,176 | 18,129 | ||||||
| Other assets | 5,294 | 2,278 | ||||||
| Total assets | $ | 2,454,531 | $ | 1,749,549 | ||||
| LIABILITIES | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 313,172 | $ | 263,814 | ||||
| Current portion of long-term debt | 26,852 | 12,500 | ||||||
| Accrued liabilities | 104,236 | 75,087 | ||||||
| Total current liabilities | 444,260 | 351,401 | ||||||
| Long-term debt | 716,622 | 229,387 | ||||||
| Deferred tax liabilities, net | 176,212 | 132,840 | ||||||
| Long-term portion of insurance reserves | 43,434 | 36,160 | ||||||
| Other liabilities | 1,905 | 3,242 | ||||||
| Total liabilities | 1,382,433 | 753,030 | ||||||
| EQUITY | 1,072,098 | 996,519 | ||||||
| Total liabilities and equity | $ | 2,454,531 | $ | 1,749,549 | ||||
| As of December 31, | ||||||||
| 2018 | 2017 | |||||||
| Other Financial Data | ||||||||
| Receivable days † | 51 | 50 | ||||||
| Inventory days † | 34 | 33 | ||||||
| Accounts payable days † | 80 | 79 | ||||||
| Receivables, net plus inventories, net less accounts payable † | $ | 262,911 | $ | 176,036 | ||||
| Receivables, net plus inventories, net less accounts payable as a percent of sales (TTM)‡ | 10.4 | % | 9.1 | % | ||||
| † Adjusted for remaining acquisition day one balance sheet items. | ||||||||
| ‡ Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches. | ||||||||
| TopBuild Corp. | |||||||
| Consolidated Statements of Cash Flows | |||||||
| (dollars in thousands) | |||||||
| Year Ended December 31, | |||||||
| 2018 | 2017 | ||||||
| Cash Flows Provided by (Used in) Operating Activities: | |||||||
| Net income | $ | 134,752 | $ | 158,133 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 39,419 | 16,453 | |||||
| Share-based compensation | 11,317 | 9,889 | |||||
| Loss on extinguishment of debt | — | 1,086 | |||||
| Loss on sale or abandonment of property and equipment | 1,204 | 998 | |||||
| Amortization of debt issuance costs | 1,201 | 401 | |||||
| Change in fair value of contingent consideration | (330) | 149 | |||||
| Provision for bad debt expense | 3,240 | 3,231 | |||||
| Loss from inventory obsolescence | 2,187 | 1,979 | |||||
| Deferred income taxes, net | 12,936 | (59,535) | |||||
| Change in certain assets and liabilities | |||||||
| Receivables, net | (35,522) | (37,943) | |||||
| Inventories, net | (23,297) | (14,901) | |||||
| Prepaid expenses and other current assets | (8,360) | 8,184 | |||||
| Accounts payable | 29,687 | 17,936 | |||||
| Accrued liabilities | (660) | 7,160 | |||||
| Other, net | (602) | (28) | |||||
| Net cash provided by operating activities | 167,172 | 113,192 | |||||
| Cash Flows Provided by (Used in) Investing Activities: | |||||||
| Purchases of property and equipment | (52,504) | (25,308) | |||||
| Acquisition of businesses, net of cash acquired of $15,756 in 2018 | (500,202) | (84,090) | |||||
| Proceeds from sale of property and equipment | 849 | 603 | |||||
| Other, net | 38 | 199 | |||||
| Net cash used in investing activities | (551,819) | (108,596) | |||||
| Cash Flows Provided by (Used in) Financing Activities: | |||||||
| Proceeds from issuance of long-term debt | 526,604 | 250,000 | |||||
| Repayment of long-term debt | (18,399) | (186,250) | |||||
| Payment of debt issuance costs | (7,819) | (2,150) | |||||
| Proceeds from revolving credit facility | 90,000 | 225,000 | |||||
| Repayment of revolving credit facility | (90,000) | (225,000) | |||||
| Taxes withheld and paid on employees' equity awards | (5,465) | (4,764) | |||||
| Repurchase of shares of common stock | (65,025) | (139,286) | |||||
| Payment of contingent consideration | (841) | — | |||||
| Net cash provided by (used in) financing activities | 429,055 | (82,450) | |||||
| Cash and Cash Equivalents | |||||||
| Increase (decrease) for the period | 44,408 | (77,854) | |||||
| Beginning of period | 56,521 | 134,375 | |||||
| End of period | $ | 100,929 | $ | 56,521 | |||
| Supplemental disclosure of cash paid for: | |||||||
| Interest on long-term debt | $ | 23,733 | $ | 6,423 | |||
| Income taxes | 39,010 | 22,580 | |||||
| Supplemental disclosure of noncash investing activities: | |||||||
| Accruals for property and equipment | $ | 860 | $ | 1,123 | |||
| TopBuild Corp. | ||||||||||||||||||||
| Segment Data (Unaudited) | ||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||
| 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||||||
| Installation | ||||||||||||||||||||
| Sales | $ | 457,610 | $ | 336,188 | 36.1 | % | $ | 1,680,967 | $ | 1,281,296 | 31.2 | % | ||||||||
| Operating profit, as reported | $ | 57,016 | $ | 42,331 | $ | 196,986 | $ | 109,316 | ||||||||||||
| Operating margin, as reported | 12.5 | % | 12.6 | % | 11.7 | % | 8.5 | % | ||||||||||||
| Significant legal settlement | — | — | — | 30,000 | ||||||||||||||||
| Rationalization charges | 216 | 336 | 845 | 1,056 | ||||||||||||||||
| Operating profit, as adjusted | $ | 57,232 | $ | 42,667 | $ | 197,831 | $ | 140,372 | ||||||||||||
| Operating margin, as adjusted | 12.5 | % | 12.7 | % | 11.8 | % | 11.0 | % | ||||||||||||
| Distribution | ||||||||||||||||||||
| Sales | $ | 213,974 | $ | 193,306 | 10.7 | % | $ | 820,309 | $ | 719,759 | 14.0 | % | ||||||||
| Operating profit, as reported | $ | 21,598 | $ | 17,927 | $ | 78,739 | $ | 68,733 | ||||||||||||
| Operating margin, as reported | 10.1 | % | 9.3 | % | 9.6 | % | 9.5 | % | ||||||||||||
| Rationalization charges | — | — | 159 | 23 | ||||||||||||||||
| Operating profit, as adjusted | $ | 21,598 | $ | 17,927 | $ | 78,898 | $ | 68,756 | ||||||||||||
| Operating margin, as adjusted | 10.1 | % | 9.3 | % | 9.6 | % | 9.6 | % | ||||||||||||
| Total | ||||||||||||||||||||
| Sales before eliminations | $ | 671,584 | $ | 529,494 | $ | 2,501,276 | $ | 2,001,055 | ||||||||||||
| Intercompany eliminations | (32,037) | (28,093) | (117,027) | (94,789) | ||||||||||||||||
| Net sales after eliminations | $ | 639,547 | $ | 501,401 | 27.6 | % | $ | 2,384,249 | $ | 1,906,266 | 25.1 | % | ||||||||
| Operating profit, as reported - segment | $ | 78,614 | $ | 60,258 | $ | 275,725 | $ | 178,049 | ||||||||||||
| General corporate expense, net | (7,936) | (5,218) | (45,873) | (24,722) | ||||||||||||||||
| Intercompany eliminations and other adjustments | (5,517) | (5,070) | (20,899) | (16,463) | ||||||||||||||||
| Operating profit, as reported | $ | 65,161 | $ | 49,970 | $ | 208,953 | $ | 136,864 | ||||||||||||
| Operating margin, as reported | 10.2 | % | 10.0 | % | 8.8 | % | 7.2 | % | ||||||||||||
| Significant legal settlement | — | — | — | 30,000 | ||||||||||||||||
| Rationalization charges † | 929 | 356 | 7,736 | 3,755 | ||||||||||||||||
| Acquisition related costs | 1,066 | 508 | 15,925 | 1,256 | ||||||||||||||||
| Operating profit, as adjusted | $ | 67,156 | $ | 50,834 | $ | 232,614 | $ | 171,875 | ||||||||||||
| Operating margin, as adjusted | 10.5 | % | 10.1 | % | 9.8 | % | 9.0 | % | ||||||||||||
| Share-based compensation ‡ | 3,072 | 2,415 | 11,317 | 9,274 | ||||||||||||||||
| Depreciation and amortization | 12,286 | 4,700 | 39,419 | 16,453 | ||||||||||||||||
| EBITDA, as adjusted | $ | 82,514 | $ | 57,949 | $ | 283,350 | $ | 197,602 | ||||||||||||
| EBITDA margin, as adjusted | 12.9 | % | 11.6 | % | 11.9 | % | 10.4 | % | ||||||||||||
| Sales change period over period | 138,146 | 477,983 | ||||||||||||||||||
| EBITDA, as adjusted, change period over period | 24,565 | 85,748 | ||||||||||||||||||
| EBITDA, as adjusted, as percentage of sales change | 17.8 | % | 17.9 | % | ||||||||||||||||
| † Rationalization charges include corporate level adjustments as well as segment operating adjustments. | ||||||||||||||||||||
| ‡ Amounts for the twelve month period ending December 31, 2017, excludes $0.6 million of share-based compensation included in the line item, rationalization charges. | ||||||||||||||||||||
| TopBuild Corp. | |||||||||||||
| Non-GAAP Reconciliations (Unaudited) | |||||||||||||
| (in thousands, except share and per common share amounts) | |||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||
| Gross Profit and Operating Profit Reconciliations | |||||||||||||
| Net sales | $ | 639,547 | $ | 501,401 | $ | 2,384,249 | $ | 1,906,266 | |||||
| Gross profit, as reported | $ | 158,226 | $ | 122,033 | $ | 576,152 | $ | 461,109 | |||||
| Rationalization charges | — | — | 176 | — | |||||||||
| Gross profit, as adjusted | $ | 158,226 | $ | 122,033 | $ | 576,328 | $ | 461,109 | |||||
| Gross margin, as reported | 24.7 | % | 24.3 | % | 24.2 | % | 24.2 | % | |||||
| Gross margin, as adjusted | 24.7 | % | 24.3 | % | 24.2 | % | 24.2 | % | |||||
| Operating profit, as reported | $ | 65,161 | $ | 49,970 | $ | 208,953 | $ | 136,864 | |||||
| Significant legal settlement | — | — | — | 30,000 | |||||||||
| Rationalization charges | 929 | 356 | 7,736 | 3,755 | |||||||||
| Acquisition related costs | 1,066 | 508 | 15,925 | 1,256 | |||||||||
| Operating profit, as adjusted | $ | 67,156 | $ | 50,834 | $ | 232,614 | $ | 171,875 | |||||
| Operating margin, as reported | 10.2 | % | 10.0 | % | 8.8 | % | 7.2 | % | |||||
| Operating margin, as adjusted | 10.5 | % | 10.1 | % | 9.8 | % | 9.0 | % | |||||
| Income Per Common Share Reconciliation | |||||||||||||
| Income before income taxes, as reported | $ | 55,766 | $ | 47,760 | $ | 180,824 | $ | 128,040 | |||||
| Significant legal settlement | — | — | — | 30,000 | |||||||||
| Rationalization charges | 929 | 356 | 7,736 | 3,755 | |||||||||
| Acquisition related costs | 1,066 | 508 | 15,925 | 1,256 | |||||||||
| Loss on extinguishment of debt | — | — | — | 1,086 | |||||||||
| Income before income taxes, as adjusted | 57,761 | 48,624 | 204,485 | 164,137 | |||||||||
| Tax rate at 27% and 38% for 2018 and 2017, respectively | (15,595) | (18,477) | (55,211) | (62,372) | |||||||||
| Income, as adjusted | $ | 42,166 | $ | 30,147 | $ | 149,274 | $ | 101,765 | |||||
| Income per common share, as adjusted | $ | 1.20 | $ | 0.84 | $ | 4.19 | $ | 2.78 | |||||
| Weighted average diluted common shares outstanding | 35,012,535 | 35,772,124 | 35,613,319 | 36,572,146 | |||||||||
| TopBuild Corp. | ||||||||||||||
| Same Branch and Acquisition Net Sales and Adjusted EBITDA (Unaudited) | ||||||||||||||
| (dollars in thousands) | ||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||
| Net sales | ||||||||||||||
| Same branch | $ | 533,868 | $ | 501,401 | $ | 2,067,586 | $ | 1,906,266 | ||||||
| Acquisitions (a) | 105,679 | — | 316,663 | — | ||||||||||
| Total | $ | 639,547 | $ | 501,401 | $ | 2,384,249 | $ | 1,906,266 | ||||||
| EBITDA, as adjusted | ||||||||||||||
| Same branch | $ | 65,250 | $ | 57,949 | $ | 238,130 | $ | 197,602 | ||||||
| Acquisitions (a) | 17,264 | — | 45,220 | — | ||||||||||
| Total | $ | 82,514 | $ | 57,949 | $ | 283,350 | $ | 197,602 | ||||||
| EBITDA, as adjusted, as a percentage of sales | ||||||||||||||
| Same branch (b) | 12.2 | % | 11.5 | % | ||||||||||
| Acquisitions (c) | 16.3 | % | 14.3 | % | ||||||||||
| Total (d) | 12.9 | % | 11.6 | % | 11.9 | % | 10.4 | % | ||||||
| As Adjusted Incremental EBITDA, as a percentage of incremental sales | ||||||||||||||
| Same branch (e) | 22.5 | % | 25.1 | % | ||||||||||
| Acquisitions (c) | 16.3 | % | 14.3 | % | ||||||||||
| Total (f) | 17.8 | % | 17.9 | % | ||||||||||
| (a) Represents current year impact of acquisitions in their first twevle months | ||||||||||||||
| (b) Same branch EBITDA, as adjusted, as a percentage of same branch sales | ||||||||||||||
| (c) Acquired EBITDA, as adjusted, as a percentage of acquired sales | ||||||||||||||
| (d) Total EBITDA, as adjusted, as a percentage of total sales | ||||||||||||||
| (e) Change in same branch EBITDA, as adjusted, as a percentage of change in same branch sales | ||||||||||||||
| (f) Change in total EBITDA, as adjusted, as a percentage of change in total sales | ||||||||||||||
| TopBuild Corp. | ||||||||||||||
| Reconciliation of Adjusted EBITDA to Net Income (Unaudited) | ||||||||||||||
| (dollars in thousands) | ||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||
| Net income, as reported | $ | 38,553 | $ | 104,991 | $ | 134,752 | $ | 158,133 | ||||||
| Adjustments to arrive at EBITDA, as adjusted: | ||||||||||||||
| Interest expense and other, net | 9,395 | 2,210 | 28,129 | 7,738 | ||||||||||
| Income tax expense (benefit) | 17,213 | (57,231) | 46,072 | (30,093) | ||||||||||
| Depreciation and amortization | 12,286 | 4,700 | 39,419 | 16,453 | ||||||||||
| Share-based compensation † | 3,072 | 2,415 | 11,317 | 9,274 | ||||||||||
| Significant legal settlement | — | — | — | 30,000 | ||||||||||
| Rationalization charges | 929 | 356 | 7,736 | 3,755 | ||||||||||
| Loss on extinguishment of debt | — | — | — | 1,086 | ||||||||||
| Acquisition related costs | 1,066 | 508 | 15,925 | 1,256 | ||||||||||
| EBITDA, as adjusted | $ | 82,514 | $ | 57,949 | $ | 283,350 | $ | 197,602 | ||||||
| † Amounts for the year ending December 31, 2017, excludes $0.6 million of share-based compensation included in the line item, rationalization charges. | ||||||||||||||
| TopBuild Corp. | |||||
| 2019 Estimated Adjusted EBITDA Range (Unaudited) | |||||
| (dollars in millions) | |||||
| Twelve Months Ending December 31, 2019 | |||||
| Low | High | ||||
| Estimated net income | $ | 145.3 | $ | 167.9 | |
| Adjustments to arrive at estimated EBITDA, as adjusted: | |||||
| Interest expense and other, net | 38.9 | 35.9 | |||
| Income tax expense | 53.7 | 62.1 | |||
| Depreciation and amortization | 54.5 | 50.5 | |||
| Share-based compensation | 14.6 | 12.6 | |||
| Rationalization charges | 3.0 | 1.0 | |||
| Estimated EBITDA, as adjusted | $ | 310.0 | $ | 330.0 | |
