5.4% increase in net sales130 basis point gross margin expansion to 26.3%160 basis point operating margin expansion to 11.8%140 basis point adjusted EBITDA margin expansion to 14.4%$1.60 net income per diluted share, $1.53 on an adjusted basisDAYTONA BEACH, Fla., Oct. 31, 2019 (GLOBE NEWSWIRE) — TopBuild Corp. (NYSE:BLD), a leading installer and distributor of insulation and building material products today reported results for the third quarter ended September 30, 2019. Jerry Volas, Chief Executive Officer, stated, “We continue to demonstrate the strength of our uniquely diversified operating model and our focus on profitable growth as we once again report a very strong quarter.  Our national scale, strong customer and supplier relationships and operational efficiency initiatives are driving our top line growth and margin expansion. “Looking ahead, we believe the residential and commercial markets will continue to grow and TopBuild is well positioned to leverage its existing platform to take advantage of the many opportunities in both of these areas.”Third Quarter Financial Highlights
(unless otherwise indicated, comparisons are to the quarter ended September 30, 2018)Net sales increased 5.4% to $682.3 million, primarily driven by increased selling prices and volume.
 Gross margin increased 130 basis points to 26.3%. 
 Operating profit was $80.4 million, compared to operating profit of $66.2 million.  On an adjusted basis, operating profit was $80.6 million, compared to $69.5 million, a 16.0% improvement.
 Operating margin was 11.8%, up 160 basis points.  Adjusted operating margin was also 11.8%, up 110 basis points.
 Net income was $55.0 million, or $1.60 per diluted share, compared to $42.7 million, or $1.19 per diluted share. Adjusted income was $52.7 million, or $1.53 per diluted share, compared to $44.0 million, or $1.23 per diluted share. 
 Adjusted EBITDA was $98.0 million, compared to $84.3 million, a 16.3% increase, and adjusted EBITDA margin improved 140 basis points to 14.4%. 
 Incremental EBITDA margin was 39.1%. 
 At September 30, 2019, the Company had cash and cash equivalents of $171.6 million and availability under its revolving credit facility of $188.6 million for total liquidity of $360.2 million.Nine Month Financial Highlights
(unless otherwise indicated, comparisons are to nine months ended September 30, 2018)Net sales increased 12.4% to $1,961.8 million.
 Gross margin expanded 200 basis points to 26.0%.
 Operating profit was $213.1 million, compared to operating profit of $143.8 million.   On an adjusted basis, operating profit was $216.1 million, compared to $165.5 million, a 30.6% improvement.
 Operating margin was 10.9% a 270-basis point improvement.  On an adjusted basis, operating margin improved 150 basis points to 11.0%. 
 Net income was $145.0 million, or $4.20 per diluted share, compared to $96.2 million, or $2.69 per diluted share.  Adjusted income was $138.8 million, or $4.02 per diluted share, compared to $107.1 million, or $2.99 per diluted share. 
 Adjusted EBITDA was $266.5 million, compared to $200.8 million, a 32.7% increase.  Adjusted EBITDA margin was 13.6%, a 210-basis point improvement.  Incremental EBITDA margin was 30.3%. 
 On a same branch basis, adjusted EBITDA grew 20.7% to $242.4 million and incremental EBITDA margin was 46.1%. Operating Segment Highlights ($ in 000s)
(comparisons are to the period ended September 30, 2018)Capital Allocation
Acquisitions
The Company completed the acquisition of Viking Insulation in the third quarter.  Viking focuses on fiberglass installation in a wide variety of light commercial and residential projects and is based in Southern California. Volas stated, “We are evaluating a robust pipeline of acquisition candidates.  The deliberate approach taken by our seasoned M&A team helps to ensure our strategic goals are met and only the best opportunities are pursued.“We are also committed to optimizing the efficiency of our capital structure and while acquisitions remain our top capital allocation priority, our strategy also includes a return of excess capital to our shareholders through our share repurchase program.”Share Repurchases
In the third quarter of 2019, the Company repurchased 364,074 shares at an average price of $89.76 per share.  These shares were purchased as part of the Company’s $200 million share repurchase authorization announced on February 26, 2019.  As of September 30, 2019, $147.8 million of the $200 million authorization remained.Additionally, under the above-mentioned share repurchase authorization, the Company intends to enter into an agreement to repurchase $50 million of its common stock under an accelerated share repurchase (ASR) program.  This will be the third ASR the Company has undertaken since first quarter 2017. 2019 Revenue and Adjusted EBITDA Outlook
The Company has raised its outlook for housing starts for 2019 to a range of 1.245 million to 1.275 million starts from the previous range of 1.23 million to 1.27 million starts.  Accordingly, the low end of the Company’s revenue outlook has been raised by $15 million while the high end of its revenue range has been raised by $5 million.  The Company has also raised the low and high end of its adjusted EBITDA outlook by $9 million and $5 million, respectively.  ($ in millions)*See table for adjusted EBITDA reconciliationAssumptions ($ in millions):This outlook reflects management’s current view of present and future market conditions and is based on assumptions such as housing starts, general and administrative expenses, weighted average diluted shares outstanding and interest rates.  This outlook does not include any effects related to potential acquisitions or divestitures that may occur after the date of this press release.  Factors that could cause actual 2019 results to differ materially from TopBuild’s current expectations are discussed below and are also detailed in the Company’s 2018 Annual Report on Form 10-K and subsequent SEC reports. 
Additional Information
Quarterly supplemental materials, including a presentation that will be referenced on today’s conference call, are available on the “Investors” section of the Company’s website at www.topbuild.com.Conference Call
A conference call to discuss third quarter 2019 financial results is scheduled for today, Thursday, October 31, at 9:00 a.m. Eastern Time.  The call may be accessed by dialing (888) 225-2706.  The conference call will be webcast simultaneously on the “Investors” section of the Company’s website at www.topbuild.com.  About TopBuild
TopBuild Corp., a Fortune 1000 Company headquartered in Daytona Beach, Florida, is a leading installer and distributor of insulation and building material products to the U.S. construction industry. We provide insulation and building material services nationwide through TruTeam^®, which has close to 200 branches, and through Service Partners^® which distributes insulation and building material products from approximately 75 branches.  We leverage our national footprint to gain economies of scale while capitalizing on our local market presence to forge strong relationships with our customers.  To learn more about TopBuild please visit our website at www.topbuild.com.Use of Non-GAAP Financial Measures
EBITDA, incremental EBITDA margin, adjusted EBITDA margin, the “adjusted” financial measures presented above, and figures presented on a “same branch basis” are not calculated in accordance with U.S. generally accepted accounting principles (“GAAP”).  The Company believes that these non-GAAP financial measures, which are used in managing the business, may provide users of this financial information with additional meaningful comparisons between current results and results in prior periods.   We define same branch sales as sales from branches in operation for at least 12 full calendar months.  Such non-GAAP financial measures are reconciled to their closest GAAP financial measures in tables contained in this press release.  Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results under GAAP.  Additional information may be found in the Company’s filings with the Securities and Exchange Commission which are available on TopBuild’s website under “Investors” at www.topbuild.com.Safe Harbor Statement
This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act.  These forward-looking statements may address, among other things, our expected financial and operational results, the related assumptions underlying our expected results, and our plan to repurchase our common stock under the proposed accelerated stock repurchase transaction.  These forward-looking statements are distinguished by use of words such as “will,” “would,” “anticipate,” “expect,” “believe,” “designed,” “plan,” or “intend,” the negative of these terms, and similar references to future periods.  These views involve risks and uncertainties that are difficult to predict and, accordingly, our actual results may differ materially from the results discussed in our forward-looking statements.  Our ability to repurchase our common stock is subject to the execution of a definitive agreement with respect to the share repurchase.  Our forward-looking statements contained herein speak only as of the date of this press release.  Factors or events that we cannot predict, including those described in the risk factors contained in our filings with the Securities and Exchange Commission, may cause our actual results to differ from those expressed in forward-looking statements.  Although TopBuild believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, the Company can give no assurance that its expectations will be achieved and it undertakes no obligation to update publicly any forward-looking statements as a result of new information, future events, or otherwise, except as required by applicable law.Investor Relations and Media Contact
Tabitha Zane
[email protected]
386-763-8801
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