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TopBuild (BLD) Q4 Earnings & Sales Top, 2022 View Solid

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·4 min read
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TopBuild Corp.’s BLD shares dropped 2.2% on Feb 22 despite better-than-expected results for fourth-quarter 2021. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and improved year over year, thanks to favorable volume and acquisitions, and pricing at both businesses, defying the labor and material-constrained market.

Robert Buck, president & CEO of TopBuild, said, “The integration of DI, while in the early stages, is proceeding ahead of expectations and we are even more confident we will achieve the $35 million to $40 million of synergies forecasted when we first announced this transaction.”

He added, “Looking at 2022, we expect demand to remain solid in all three of the end-markets we serve: residential, commercial and industrial. Our focus throughout all areas of our business remains unchanged: driving top line growth, continuing the successful integration of DI, and improving operational efficiencies.”

Inside the Headlines

The company reported adjusted earnings of $3.12 per share, which topped the consensus estimate of $2.99 by 4.4% and grew 45.1% from the prior-year period.

TopBuild Corp. Price, Consensus and EPS Surprise

TopBuild Corp. Price, Consensus and EPS Surprise
TopBuild Corp. Price, Consensus and EPS Surprise

TopBuild Corp. price-consensus-eps-surprise-chart | TopBuild Corp. Quote

Total net sales of $1.06 billion beat the consensus mark of $1.03 billion by 3.6% and improved 47.4% (12.5% on a same-branch basis) year over year. The growth was backed by acquisitions and prices. Sales for the quarter benefited from strong growth in both residential and commercial businesses.

Segmental Performance

Installation (TruTeam) sales increased 23.3% year over year to $627.1 million. Acquisitions, volume and selling price added 11.1%, 1.2% and 11% to sales, respectively. Adjusted operating margin for the quarter expanded 90 basis points (bps) to 17%. Adjusted EBITDA margin also improved 80 bps to 19.4% for the quarter.

Revenues of the Specialty Distribution (Service Partners) segment grew 93.1% year over year to $485.8 million, driven by 22.4% growth in price and 77.4% from acquisitions. Volumes, however, negatively impacted the top line by 6.8%. Adjusted operating margin declined 100 bps from the year-ago level to 12.4%. Nonetheless, adjusted EBITDA margin improved 70 bps to 15% for the quarter.

Operating Highlights

Adjusted gross margin of 28.1% expanded to 60 bps. Yet, adjusted operating margin contracted 20 bps from the year-ago period to 14.2%. SG&A expenses, as a percentage of revenues, rose 80 bps to 13.9%.

Adjusted EBITDA grew 49.9% from the year-ago quarter to $182.1 million. Adjusted EBITDA margin also improved 30 bps to 17.1% for the quarter.

Financial Update

At 2021-end, cash and cash equivalents were $139.8 million, down from $330 million at 2020-end. Long-term debt was $1.45 billion, down from $683.4 million at 2020-end. For 2021, net cash provided by operating activities was $403 million compared with $357.9 million in 2020.

In 2021, BLD repurchased 183,136 shares for approximately $35.6 million.

2021 Highlights

Adjusted earnings of $10.85 per share grew 49% year over year. Net sales advanced 28.3% from a year ago to $3.49 billion. Adjusted operating margin expanded 160 bps to 14.8%. Adjusted EBITDA margin improved 130 bps to 17.4%. Despite several industry-related challenges, both of its business segments reported revenue growth and solid margin expansion.

2022 View

For 2022, TopBuild expects sales between $4.5 billion and $4.65 billion. The estimated figure indicates an increase of 29-33% year over year. Adjusted EBITDA is projected within $770-$820 million, suggesting growth from $605.9 million reported in 2021.

Zacks Rank & Peer Releases

TopBuild currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Owens Corning OC reported solid results for fourth-quarter 2021, wherein earnings and net sales surpassed their respective Zacks Consensus Estimate as well as improved on a year-over-year basis.

Owens Corning’s solid quarterly results were backed by strong demand across the markets served and commercial and operational execution, despite supply chain disruptions and inflation.

Masco Corporation MAS reported lackluster earnings for fourth-quarter 2021. The bottom line not only lagged the Zacks Consensus Estimate but also declined on a year-over-year basis due to supply-chain challenges and inflation headwinds.

Nonetheless, Masco’s net sales surpassed the consensus mark and improved from the prior-year level on strong demand.

Otis Worldwide Corporation OTIS reported strong earnings for fourth-quarter 2021. Its earnings surpassed the Zacks Consensus Estimate and improved on a year-over-year basis.

Otis’ sales improved from the year-ago figure but lagged the consensus mark marginally.


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