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TopBuild Corp. (BLD - Free Report) reported lackluster second-quarter 2024 results. Both earnings and sales lagged the Zacks Consensus Estimate. Shares of this installer and distributor of insulation and other building products lost 7.1% during the trading session and 1.3% in the after-hours trading session on Aug 6. This was mainly due to higher interest rates, project delays and supply constraints that continue to impact results across some residential and commercial end markets. The company has also trimmed its sales and adjusted EBITDA views for 2024.
Nonetheless, both earnings and sales increased on a year-over-year basis given pricing, increased volumes and benefited from acquisitions despite the challenges.
Inside the Headlines
TopBuild reported adjusted earnings per share (EPS) of $5.42 per share, which missed the Zacks Consensus Estimate of $5.68 by 4.6%. Yet, the metric grew 3.2% year over year.
Net sales of $1,365.6 million (the highest quarter in the company’s history) lagged the consensus mark of $1,396 million by 2.2% but increased 3.7% year over year. Mergers and acquisitions (M&A), after accounting for a disposition, led to a 2.3% increase, with prices rising by 1.3%.
Installation (which accounted for 62.3% of total net sales): The segment’s net revenues came in at $851 million, up 5.2% year over year. Residential sales for the segment grew 6.7%, driven by improved single-family home sales both sequentially and year over year, along with strong multi-family sales supported by backlog. However, commercial sales in the segment declined 1.9% due to shifts in project timing and material availability. M&A contributed 2.9% to the sales increase, pricing added 1.3%, and volume rose 1.0%. The segment’s adjusted operating margin contracted 120 basis points (bps) year over year to 20.1%.
Specialty Distribution (43.4%): The segment’s net sales rose 3.2% year over year to $593 million. Volume improved 0.6%, with pricing and acquisitions each contributing an additional 1.3% to sales. The segment’s residential sales increased 4.6% due to rising demand for single-family homes. Additionally, commercial and industrial sales in the segment grew 2.3%. The segment’s adjusted operating margin improved 10 bps year over year to 15.1%.
Operating Highlights
Adjusted gross margin contracted 100 bps year over year to 31%. Adjusted SG&A expenses, as a percentage of sales, improved 30 bps to 13.6% from a year ago. Adjusted operating margin declined 80 bps to 13.6% from a year ago.
Adjusted EBITDA improved 0.8% year over year to $277.7 million. However, adjusted EBITDA margin contracted 60 bps to 20.3% from the year-ago figure.
Financials
As of Jun 30, 2024, TopBuild had cash and cash equivalents of $463.2 million compared with $848.6 million at 2023-end. Long-term debt at the second quarter of 2024-end was $1.35 billion, down from $1.37 billion at 2023-end.
Net cash provided by operations was $269.1 million in the first six months of 2024, down from $385.8 million a year ago.
As of Jun 30, 2024, BLD repurchased around 1.25 million shares for a total of $505.2 million.
Acquisitions
Year to date, BLD has acquired six insulation companies, which are projected to generate approximately $107 million in annual revenues. The acquisitions include Brabble Insulation, with annual revenues of $5.2 million, closed in February and included in the Installation segment; Morris Black & Sons, generating $3.8 million in annual revenues, closed in March and part of the Installation segment; Pest Control Insulation, with $25.4 million in annual revenues, closed in March and included in the Distribution segment; Green Space Insulation, with $6 million in annual revenues, closed in April and part of the Installation segment; Insulation Works, generating $28 million in annual revenues, closed in May and included in the Installation segment; and Texas Insulation, with annual revenues of $38.9 million, closed in May and part of the Installation segment.
2024 Guidance
TopBuild now expects net sales between $5.3 and $5.5 billion versus $5.4 billion-$5.6 billion of earlier expectations. The estimated figure indicates an increase from $5.19 billion reported in 2023.
Adjusted EBITDA is now projected to be between $1.055 billion and $1.125 billion versus $1.065 billion-$1.155 billion of prior projection. This suggests growth (considering the midpoint of the guided range) from $1.05 billion reported in 2023.
Gibraltar Industries, Inc. (ROCK - Free Report) reported strong second-quarter 2024 earnings despite top-line woes. Although both the earnings and net sales missed the Zacks Consensus Estimate, the bottom line strengthened on a year-over-year basis.
ROCK has slightly reduced its net sales outlook for 2024 to reflect recent slower market conditions in both Residential and Renewables end markets, partially offset by strength in both Agtech and Infrastructure. Nonetheless, it remains focused on driving participation gains across the segments, with operational improvements to support solid second-half and full-year margin expansion and cash flow growth.
Masco Corporation (MAS - Free Report) reported strong earnings for the second quarter of 2024 amid challenging market conditions. Strong operational efficiency helped it deliver solid results.
However, MAS’ net sales missed the analysts’ expectations and declined on a year-over-year basis. Masco’s focus on a balanced capital deployment strategy helped it return $206 million to shareholders via dividends and share repurchases. Masco narrowed its adjusted EPS guidance while the mid-point remains unaffected.
Armstrong World Industries, Inc. (AWI - Free Report) reported solid results for second-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
AWI’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value and volume. Also, contributions from recent acquisitions aided the uptrend.
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TopBuild (BLD) Q2 Earnings & Sales Miss, View Down, Shares Dip
TopBuild Corp. (BLD - Free Report) reported lackluster second-quarter 2024 results. Both earnings and sales lagged the Zacks Consensus Estimate. Shares of this installer and distributor of insulation and other building products lost 7.1% during the trading session and 1.3% in the after-hours trading session on Aug 6. This was mainly due to higher interest rates, project delays and supply constraints that continue to impact results across some residential and commercial end markets. The company has also trimmed its sales and adjusted EBITDA views for 2024.
Nonetheless, both earnings and sales increased on a year-over-year basis given pricing, increased volumes and benefited from acquisitions despite the challenges.
Inside the Headlines
TopBuild reported adjusted earnings per share (EPS) of $5.42 per share, which missed the Zacks Consensus Estimate of $5.68 by 4.6%. Yet, the metric grew 3.2% year over year.
Net sales of $1,365.6 million (the highest quarter in the company’s history) lagged the consensus mark of $1,396 million by 2.2% but increased 3.7% year over year. Mergers and acquisitions (M&A), after accounting for a disposition, led to a 2.3% increase, with prices rising by 1.3%.
TopBuild Corp. Price, Consensus and EPS Surprise
TopBuild Corp. price-consensus-eps-surprise-chart | TopBuild Corp. Quote
Segmental Performance
Installation (which accounted for 62.3% of total net sales): The segment’s net revenues came in at $851 million, up 5.2% year over year. Residential sales for the segment grew 6.7%, driven by improved single-family home sales both sequentially and year over year, along with strong multi-family sales supported by backlog. However, commercial sales in the segment declined 1.9% due to shifts in project timing and material availability. M&A contributed 2.9% to the sales increase, pricing added 1.3%, and volume rose 1.0%. The segment’s adjusted operating margin contracted 120 basis points (bps) year over year to 20.1%.
Specialty Distribution (43.4%): The segment’s net sales rose 3.2% year over year to $593 million. Volume improved 0.6%, with pricing and acquisitions each contributing an additional 1.3% to sales. The segment’s residential sales increased 4.6% due to rising demand for single-family homes. Additionally, commercial and industrial sales in the segment grew 2.3%. The segment’s adjusted operating margin improved 10 bps year over year to 15.1%.
Operating Highlights
Adjusted gross margin contracted 100 bps year over year to 31%. Adjusted SG&A expenses, as a percentage of sales, improved 30 bps to 13.6% from a year ago. Adjusted operating margin declined 80 bps to 13.6% from a year ago.
Adjusted EBITDA improved 0.8% year over year to $277.7 million. However, adjusted EBITDA margin contracted 60 bps to 20.3% from the year-ago figure.
Financials
As of Jun 30, 2024, TopBuild had cash and cash equivalents of $463.2 million compared with $848.6 million at 2023-end. Long-term debt at the second quarter of 2024-end was $1.35 billion, down from $1.37 billion at 2023-end.
Net cash provided by operations was $269.1 million in the first six months of 2024, down from $385.8 million a year ago.
As of Jun 30, 2024, BLD repurchased around 1.25 million shares for a total of $505.2 million.
Acquisitions
Year to date, BLD has acquired six insulation companies, which are projected to generate approximately $107 million in annual revenues. The acquisitions include Brabble Insulation, with annual revenues of $5.2 million, closed in February and included in the Installation segment; Morris Black & Sons, generating $3.8 million in annual revenues, closed in March and part of the Installation segment; Pest Control Insulation, with $25.4 million in annual revenues, closed in March and included in the Distribution segment; Green Space Insulation, with $6 million in annual revenues, closed in April and part of the Installation segment; Insulation Works, generating $28 million in annual revenues, closed in May and included in the Installation segment; and Texas Insulation, with annual revenues of $38.9 million, closed in May and part of the Installation segment.
2024 Guidance
TopBuild now expects net sales between $5.3 and $5.5 billion versus $5.4 billion-$5.6 billion of earlier expectations. The estimated figure indicates an increase from $5.19 billion reported in 2023.
Adjusted EBITDA is now projected to be between $1.055 billion and $1.125 billion versus $1.065 billion-$1.155 billion of prior projection. This suggests growth (considering the midpoint of the guided range) from $1.05 billion reported in 2023.
Zacks Rank & Recent Construction 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.
Gibraltar Industries, Inc. (ROCK - Free Report) reported strong second-quarter 2024 earnings despite top-line woes. Although both the earnings and net sales missed the Zacks Consensus Estimate, the bottom line strengthened on a year-over-year basis.
ROCK has slightly reduced its net sales outlook for 2024 to reflect recent slower market conditions in both Residential and Renewables end markets, partially offset by strength in both Agtech and Infrastructure. Nonetheless, it remains focused on driving participation gains across the segments, with operational improvements to support solid second-half and full-year margin expansion and cash flow growth.
Masco Corporation (MAS - Free Report) reported strong earnings for the second quarter of 2024 amid challenging market conditions. Strong operational efficiency helped it deliver solid results.
However, MAS’ net sales missed the analysts’ expectations and declined on a year-over-year basis. Masco’s focus on a balanced capital deployment strategy helped it return $206 million to shareholders via dividends and share repurchases. Masco narrowed its adjusted EPS guidance while the mid-point remains unaffected.
Armstrong World Industries, Inc. (AWI - Free Report) reported solid results for second-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.
AWI’s growth trend was backed by solid contributions from the Mineral Fiber as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value and volume. Also, contributions from recent acquisitions aided the uptrend.