TopBuild (BLD) Q2 Earnings & Net Sales Beat, '23 Views Rise
TopBuild Corp. BLD reported impressive results for second-quarter 2023. Its earnings and revenues surpassed the Zacks Consensus Estimate and improved year over year. Strong demand, coupled with its ongoing focus on managing price, achieving operational efficiency improvements and leveraging fixed costs, drove the results.
BLD’s shares gained 4.14% in the day trading session but slipped 3.17% in the after-hour trading session on Aug 3.
Inside the Headlines
The company’s adjusted earnings of $5.25 per share topped the consensus estimate of $4.30 by 22.1%. The bottom line grew 18.5% from the prior year’s $4.43.
TopBuild Corp. Price, Consensus and EPS Surprise
TopBuild Corp. price-consensus-eps-surprise-chart | TopBuild Corp. Quote
Total net sales of $1.317 billion beat the consensus mark of $1.259 billion by 4.6% and increased 3.4% (7% on a same-branch basis) year over year.
Segmental Performance
Installation (TruTeam) sales increased 8% year over year to $809.1 million. Acquisitions added 2.2%, whereas each of volume and selling price contributed 2.9% to sales. Our model suggested the segment’s net sales to be $717.6 million.
Adjusted operating margin for the quarter expanded 260 basis points (bps) to 21.3%. Adjusted EBITDA margin improved 260 bps to 23.4% for the quarter.
Revenues of the Specialty Distribution (Service Partners) segment declined 2.3% year over year to $574.5 million. Volumes reduced sales by 2.9% year over year and offset pricing contribution of 0.6%. We expected segmental net sales to be $533.4 million.
Adjusted operating margin rose 20 bps from the year-ago level to 15%. Adjusted EBITDA margin also improved 40 bps to 17.6% for the quarter.
Operating Highlights
Adjusted gross margin of 32% expanded 190 bps on operational efficiencies, fixed cost leverage and continued success in managing inflation. Adjusted SG&A expenses, as a percentage of revenues, gained 10 bps to 13.9%.
Adjusted operating margin expanded 180 bps from the year-ago period to 18.2%. We anticipated the metric to be 16.5% for the reported quarter.
Adjusted EBITDA grew 13.7% from the year-ago quarter to $275.5 million.
Adjusted EBITDA margin improved 190 bps to 20.9% for the quarter. The Zacks model suggested the metric to be 19.5% for the quarter under discussion.
Financial Update
As of Jun 30, 2023, cash and cash equivalents were $526.3 million, up from $240 million at 2022 end. Long-term debt was $1.39 billion, down from $1.42 billion at 2022 end.
For the first half of 2023, net cash provided by operating activities was $385.8 million compared with $217.7 million in the year-ago period.
2023 View
TopBuild raised sales expectation to $5.025-$5.175 billion from $4.7-$4.9 billion projected earlier. The estimated figure indicates an increase from $5 billion reported in the year-earlier quarter.
Adjusted EBITDA is now projected to be between $950 million and $1,000 million, up from prior projection of $820-$910 million. This suggests growth from $940.6 million reported in 2022.
Zacks Rank & Peer Releases
TopBuild currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KBR, Inc. KBR reported mixed second-quarter 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. Earnings beat the consensus estimate for the seventh straight quarter. Revenues, on the other hand, surpassed the mark in three of the trailing seven quarters and missed on other four occasions.
Although KBR’s quarterly earnings were hurt by losses related to convertible notes and a legacy legal matter, it delivered a strong quarter of financial, and environmental, social and governance or ESG performance, underpinned by its mission focus and operational discipline.
Louisiana-Pacific Corporation LPX or LP, reported unimpressive results for second-quarter 2023. Earnings and net sales missed the Zacks Consensus Estimate and declined year over year.
That said, LP's strategy positions it well for long-term growth as the housing outlook continues to improve.
Weyerhaeuser Company WY reported mixed second-quarter 2023 results, wherein its earnings handily beat the Zacks Consensus Estimate but net sales missed the same marginally. On a year-over-year basis, the top and bottom lines declined.
Meanwhile, in July, Weyerhaeuser made a significant acquisition, purchasing 22,000 acres of timberlands in Mississippi for around $60 million. These timberlands are known for their high productivity and have been strategically chosen due to their proximity to WY's current operations. The acquisition is expected to bring about immediate synergies, and create additional opportunities for real estate and natural climate solutions.
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