TopBuild (BLD) Q3 Earnings & Net Sales Beat, '23 Views Rise
TopBuild Corp. BLD reported impressive results for third-quarter 2023. Its earnings and revenues surpassed the Zacks Consensus Estimate and improved year over year.
Strategic focus on multifamily and commercial work and the emphasis on operational excellence and solid backlog drove results.
Following the results, BLD’s shares gained 4.27% in the day trading session on Oct 31, 2023.
Inside the Headlines
The company’s adjusted earnings of $5.43 per share topped the consensus estimate of $4.59 by 18.3%. The bottom line increased 13.1% from the prior year’s $4.80.
TopBuild Corp. Price, Consensus and EPS Surprise
TopBuild Corp. price-consensus-eps-surprise-chart | TopBuild Corp. Quote
Total net sales of $1.326 billion beat the consensus mark of $1.303 billion by 1.8% and increased 1.9% year over year. However, total net sales on a same-branch basis declined 1% year over year.
Segmental Performance
Installation (TruTeam) sales increased 4.9% year over year to $821.7 million. Acquisitions and selling prices contributed 4.8% and 3.6% to sales, respectively. However, volumes reduced sales by 3.5% year over year. Our model suggested the segment’s net sales to be $807.7 million.
Adjusted operating margin for the quarter expanded 200 basis points (bps) to 21.6%. Adjusted EBITDA margin improved 210 bps to 23.7% for the quarter.
Revenues of the Specialty Distribution (Service Partners) segment declined 2.1% year over year to $571 million. Volumes and pricing reduced sales year over year by 0.2% and 1.9%, respectively. We expected segmental net sales to be $536.5 million.
Adjusted operating margin rose 20 bps from the year-ago level to 15.5%. Adjusted EBITDA margin also improved 20 bps to 18.2% for the quarter.
Operating Highlights
Adjusted gross margin of 31.7% expanded 130 bps on operational efficiencies and strong margins on Installations of multi-family and commercial projects.
Adjusted SG&A expenses, as a percentage of revenues, remained unchanged year over year at 13.2%.
Adjusted operating margin expanded 130 bps from the year-ago period to 18.5%. We anticipated the metric to be 15.9% for the reported quarter.
Adjusted EBITDA grew 9.4% from the year-ago quarter to $283.7 million.
Adjusted EBITDA margin improved 150 bps to 21.4% for the quarter. The Zacks model suggested the metric to be 18.7% for the quarter under discussion.
Financial Update
As of Sep 30, 2023, cash and cash equivalents were $615.6 million, up from $240 million at 2022 end. Long-term debt was $1.38 billion, down from $1.42 billion at 2022 end.
For the first nine months of 2023, net cash provided by operating activities was $588.5 million compared with $335.6 million in the year-ago period.
2023 Guidance Raised
TopBuild raised sales expectations to $5,130-$5,210 billion from $5.025-$5.175 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 $1,025 million and $1,055 million, up from the prior projection of $950-$1,000 million. This suggests growth from $940.6 million reported in 2022.
Zacks Rank & Recent Construction Releases
BLD currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Otis Worldwide Corporation OTIS reported impressive results in third-quarter 2023. Its earnings and net sales surpassed the Zacks Consensus Estimate and rose on a year-over-year basis. Its quarterly results reflected 12 consecutive quarters of organic sales growth and solid operating margin expansion, contributing to high-teens adjusted EPS growth.
OTIS reported quarterly EPS of 95 cents, increasing 18.8% from the year-ago quarter’s figure of 80 cents. Net sales of $3.52 billion rose 5.4% on a year-over-year basis.
Watsco, Inc. WSO reported better-than-expected third-quarter 2023 results, with earnings and revenues topping the Zacks Consensus Estimate.
Watsco delivered record sales and EPS, driven by solid HVAC equipment sales growth, improved residential unit volumes and strong price realization. Also, the commercial end markets remained healthy in the quarter.
Armstrong World Industries, Inc. AWI reported better-than-expected results for third-quarter 2023, wherein earnings and net sales topped the Zacks Consensus Estimate. Also, both metrics increased on a year-over-year basis.
Despite the challenging macroeconomic conditions, AWI delivered strong results attributable to its diversified end markets, consistent Mineral Fiber average unit value growth and appealing growth initiatives.
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