DAYTONA BEACH, Fla., Feb. 23, 2021 (GLOBE NEWSWIRE) -- TopBuild Corp. (NYSE:BLD), a leading installer and distributor of insulation and building material products to the U.S. construction industry today reported results for the fourth quarter and year ended December 31, 2020.
Robert Buck, President and Chief Executive Officer, stated, “Our fourth quarter results were strong with operating margins expanding over 200 basis points at both TruTeam and Service Partners. Same branch residential and commercial revenue improved sequentially from the third quarter and continues to strengthen.
“Labor shortages and material constraints are extending the building cycle and the traditional lag time in our business. Our ability to share labor and material across our footprint gives us an advantage in serving our customers and helps us mitigate these challenges.”
Fourth Quarter Financial Highlights
(unless otherwise indicated, comparisons are to the quarter ended December 31, 2019)
- Net sales increased 8.9% to $721.5 million, driven by increased volume and sales from acquisitions.
- Gross margin expanded 150 basis points to 27.4%. On an adjusted basis, gross margin was 27.5%, a 160-basis point increase.
- Operating profit was $103.1 million, compared to $76.4 million. On an adjusted basis, operating profit was $104.0 million, compared to $76.6 million, a 35.7% improvement.
- Operating margin was 14.3%. Adjusted operating margin improved 280 basis points to 14.4%.
- Net income was $70.8 million, or $2.13 per diluted share, compared to $46.0 million, or $1.36 per diluted share.
- Adjusted net income was $71.3 million, or $2.15 per diluted share, compared to $50.0 million, or $1.48 per diluted share.
- Adjusted EBITDA was $121.5 million, compared to $92.5 million, a 31.2% increase and adjusted EBITDA margin improved 280 basis points to 16.8%. Incremental adjusted EBITDA margin was 48.9%.
- At December 31, 2020, the Company had cash and cash equivalents of $330.0 million, availability under its revolving credit facility of $389.6 million for total liquidity of $719.6 million.
Full Year 2020 Financial Highlights
(unless otherwise indicated, comparisons are to twelve months ended December 31, 2019)
- Net sales increased 3.6% to $2,718.0 million.
- Gross margin expanded 150 basis points to 27.5%.
- Operating profit was $355.0 million, compared to operating profit of $289.5 million. On an adjusted basis, operating profit was $359.4 million, compared to $292.7 million, a 22.8% improvement.
- Operating margin was 13.1%, up 210 basis points. Adjusted operating margin improved 200 basis points to 13.2%.
- Net income was $247.0 million, or $7.42 per diluted share, compared to $191.0 million, or $5.56 per diluted share. Adjusted net income was $242.5 million, or $7.28 per diluted share, compared to $188.9 million, or $5.49 per diluted share.
- Adjusted EBITDA was $436.7 million, compared to $359.1 million, a 21.6% increase and adjusted EBITDA margin improved 240 basis points to 16.1%.
Buck added, “Our 2020 financial results demonstrate the strength of our operating model and the hard work and dedication of our entire TopBuild team. Despite the challenges resulting from the pandemic, both of our business segments reported revenue growth and solid margin expansion.
“In addition, during the year we completed three acquisitions, strengthening our footprint in the high growth markets of Texas, Colorado and Tennessee.
“Looking ahead, housing fundamentals remain robust and our Company should continue to benefit from strong demand for new housing construction. Our focus remains on driving top line growth and improving operational efficiencies throughout the Company.”
Operating Segment Highlights ($ in 000s) (comparisons are to the period ended December 31, 2019)
| TruTeam | 3 Months Ended 12/31/20 | 12 Months Ended 12/31/20 | Service Partners | 3 Months Ended 12/31/20 | 12 Months Ended 12/31/20 | |
| Sales | $508,812 | $1,943,461 | Sales | $251,535 | $926,207 | |
| Change | Change | |||||
| Volume | 2.8% | -1.0% | Volume | 13.3% | 7.9% | |
| Price | -0.3% | 0.9% | Price | -0.6% | -0.5% | |
| M&A | 4.5% | 2.0% | M&A | 0.0% | 0.0% | |
| Total Change | 6.9% | 1.9% | Total Change | 12.7% | 7.4% | |
| Operating Margin | 16.0% | 15.2% | Operating Margin | 13.4% | 12.5% | |
| Change | 260 bps | 190 bps | Change | 210 bps | 200 bps | |
| Adj. Operating Margin | 16.1% | 15.3% | Adj. Operating Margin | 13.4% | 12.5% | |
| Change | 270 bps | 200 bps | Change | 210 bps | 200 bps |
Capital Allocation Acquisitions In 2020, the Company completed three acquisitions, Hunter Insulation, an installation company based in Long Island, New York, Cooper Glass a commercial glass company serving the Memphis market, and Garland Insulating, a residential and light commercial installation company serving markets in Texas and Colorado.
In January 2021, the Company acquired LCR Contractors, a residential and heavy commercial insulation company serving markets in Texas and Tennessee. Combined, these four companies are expected to contribute approximately $137 million of annual revenue
“Acquisitions remain our number one capital allocation priority. We have a robust pipeline of prospects with the majority concentrated in our core insulation business. These companies are located in attractive growth regions with strong management teams, solid customer bases and experienced installers,” stated Buck.
Share Repurchase Program In 2020, the Company repurchased a total of 616,227 shares of its common stock for approximately $49.2 million.
Sales and Adjusted EBITDA Guidance (1) ($ in millions)
| 2021 | Low | High | ||
| Sales | $ | 3,050.0 | $ | 3,150.0 |
| Adjusted EBITDA* | $ | 505.0 | $ | 535.0 |
*See table for adjusted EBITDA reconciliation.
Assumptions(1) ($ in millions)
| 2021 | Low | High | ||
| Housing Starts | 1,425 | 1,475 | ||
| Estimated net income | $ | 297.5 | $ | 326.7 |
| Interest Expense and other, net | $ | 24.2 | $ | 21.2 |
| Income tax expense | $ | 104.5 | $ | 114.8 |
| Depreciation and Amortization | $ | 67.0 | $ | 63.0 |
| Share based compensation | $ | 11.8 | $ | 9.3 |
Long-Term Targets (3-Years) (1)
| Metric | |
| Working Capital (% of LTM Sales) | 9.5% to 10.5% |
| CapEx (% of Sales) | 2.0% |
| Commercial Annual Revenue Growth | 7.5% to 10.0% |
| Normalized Tax Rate | 26.0% |
| Incremental Adjusted EBITDA (Organic) | 22.0% to 27.0% |
| Incremental Adjusted EBITDA (Acquisitions Year One) | 11.0% to 16.0% |
| Residential Revenue for Every 50K Increase in Housing Starts | $90 million |
(1) This guidance and long-term targets reflect management’s current view of present and future market conditions and are based on assumptions such as housing starts, general and administrative expenses, weighted average diluted shares outstanding 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 2020 Annual Report on Form 10-K and subsequent SEC reports.
About TopBuild
TopBuild Corp., a Fortune 1000 Company 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 close to 200 branches, and through Service Partners® which distributes insulation and building material products from approximately 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.
