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TopBuild's (BLD) Q3 Earnings & Sales Beat Estimates, View Up

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TopBuild Corp. (BLD - Free Report) reported stellar results for third-quarter 2022. Its earnings and revenues surpassed their respective Zacks Consensus Estimate and improved significantly on a year-over-year basis. Solid contributions from all three end markets that BLD serves (residential, commercial and industrial), along with operational efficiency, drove the results.

Robert Buck, president & CEO of TopBuild, stated, “As we look to the rest of this year and next, our focus remains on driving profitable growth and identifying and implementing initiatives that will enhance our Company’s operations. Our entire team remains focused on continuing to deliver strong results and creating shareholder value in every operating environment.”

Inside the Headlines

The company’s adjusted earnings of $4.80 per share topped the consensus estimate of $4.09 by 17.4% and grew a whopping 62.7% from the prior-year figure.

Total net sales of $1.3 billion beat the consensus mark of $1.21 billion by 7.9% and increased 53.8% (22.6% on a same-branch basis) year over year. The growth was backed by improvement in all three end markets it serves, i.e., residential, commercial and industrial.

TopBuild Corp. Price, Consensus and EPS Surprise

TopBuild Corp. Price, Consensus and EPS Surprise

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

Segmental Performance

Installation sales increased 27.8% year over year to $783.1 million. Acquisitions, volume and selling price added 1.7%, 12.3% and 13.8% to sales, respectively. The adjusted operating margin for the quarter expanded 240 basis points (bps) to 19.6%. Adjusted EBITDA margin also improved 200 bps to 21.6% for the quarter.

Revenues of the Specialty Distribution segment grew 111.1% year over year to $583.5 million, driven by 13% growth in price and 92.4% from acquisitions. Volumes inched up 5.7% year over year. Adjusted operating margin declined 180 bps from the year-ago quarter’s level to 15.3%. Nonetheless, the adjusted EBITDA margin improved 10 bps to 18% for the quarter.

Operating Highlights

The adjusted gross margin of 30.4% expanded 80 bps year over year. Adjusted SG&A expenses, as a percentage of revenues, rose 10 bps to 13.2%. Adjusted operating margin expanded 90 bps from the year-ago period’s levels to 17.2%.

Adjusted EBITDA increased 63.8% from the year-ago quarter’s levels to $259.2 million. Adjusted EBITDA margin also improved 120 bps to 19.9% in the quarter.

Financial Update

At September-end, cash and cash equivalents were $159.4 million, up from $139.8 million at 2021-end. Long-term debt was $1.43 billion, down from $1.45 billion at the 2021-end. For the first nine months of 2022, net cash provided by operating activities was $335.6 million compared with $309.5 million in the year-ago period.

During the first nine months of 2022, BLD repurchased 1,059,361 shares.

2022 View Raised

TopBuild expects sales between $4.95 billion and $5 billion versus $4.8-$4.9 billion expected earlier. The estimated figure indicates an increase from $3.49 billion. Adjusted EBITDA is projected within $915-$935 million compared with $860-$900 million projected earlier. This suggests 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.

United Rentals, Inc. (URI - Free Report) reported third-quarter 2022 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. The company has been gaining from the sustained demand in its end markets and the strength of its core rental business.

URI also lifted its full-year guidance for total revenues and adjusted EBITDA, given broad-based end-market activity, contractor backlogs, customer sentiment and solid visibility.

Otis Worldwide Corporation (OTIS - Free Report) reported mixed results in third-quarter 2022. Its earnings surpassed the Zacks Consensus Estimate and rose on a year-over-year basis. However, sales declined from the year-ago quarter’s figure and lagged the consensus mark.

For 2022, OTIS expects adjusted net sales to be within $13.4-$13.5 billion, lower than the $13.6-$13.8 billion projected earlier. Adjusted earnings per share are anticipated to be $3.11-$3.15, suggesting 5-7% year-over-year growth. This is down from the prior projection of $3.17-$3.21 per share.

PulteGroup Inc. (PHM - Free Report) reported unimpressive results in third-quarter 2022. Quarterly earnings and revenues missed their respective Zacks Consensus Estimate thanks to prevailing industry headwinds. Nonetheless, the metrics increased on a year-over-year basis.

For fourth-quarter 2022, PHM expects ASP within $560,000-$570,000, indicating an increase from $490,000 registered a year ago. It expects home deliveries to be 8,000, indicating a decline from 8,611 homes delivered a year ago. The decrease reflects the challenging sales environment, higher cancelation rates and the ongoing impact of Hurricane Ian on Florida operations.

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