Company Quick10K Filing
TopBuild
Price94.03 EPS5
Shares35 P/E18
MCap3,248 P/FCF18
Net Debt571 EBIT253
TEV3,819 TEV/EBIT15
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-06-30 Filed 2020-08-04
10-Q 2020-03-31 Filed 2020-05-05
10-K 2019-12-31 Filed 2020-02-25
10-Q 2019-09-30 Filed 2019-10-31
10-Q 2019-06-30 Filed 2019-08-01
10-Q 2019-03-31 Filed 2019-05-07
10-K 2018-12-31 Filed 2019-02-26
10-Q 2018-09-30 Filed 2018-11-06
10-Q 2018-06-30 Filed 2018-08-07
10-Q 2018-03-31 Filed 2018-05-08
10-K 2017-12-31 Filed 2018-02-27
10-Q 2017-09-30 Filed 2017-11-07
10-Q 2017-06-30 Filed 2017-08-08
10-Q 2017-03-31 Filed 2017-05-09
10-K 2016-12-31 Filed 2017-02-28
10-Q 2016-09-30 Filed 2016-11-09
10-Q 2016-06-30 Filed 2016-08-04
10-Q 2016-03-31 Filed 2016-05-11
10-K 2015-12-31 Filed 2016-03-03
10-Q 2015-09-30 Filed 2015-11-03
10-Q 2015-06-30 Filed 2015-08-11
8-K 2020-08-04 Earnings, Regulation FD, Exhibits
8-K 2020-05-05
8-K 2020-04-27
8-K 2020-04-14
8-K 2020-03-20
8-K 2020-02-25
8-K 2020-01-10
8-K 2019-11-04
8-K 2019-10-31
8-K 2019-08-01
8-K 2019-05-07
8-K 2019-04-29
8-K 2019-02-26
8-K 2019-02-18
8-K 2018-11-07
8-K 2018-11-06
8-K 2018-08-07
8-K 2018-07-23
8-K 2018-06-15
8-K 2018-06-01
8-K 2018-05-08
8-K 2018-05-01
8-K 2018-04-30
8-K 2018-04-25
8-K 2018-04-11
8-K 2018-04-11
8-K 2018-04-09
8-K 2018-03-28
8-K 2018-03-01
8-K 2018-02-27

BLD 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
EX-31.1 bld-20200630ex311852acd.htm
EX-31.2 bld-20200630ex312958a88.htm
EX-32.1 bld-20200630ex321503ed1.htm
EX-32.2 bld-20200630ex32200a37e.htm

TopBuild Earnings 2020-06-30

Balance SheetIncome StatementCash Flow
2.72.21.61.10.50.02013201520172020
Assets, Equity
0.70.50.40.20.1-0.12013201520172020
Rev, G Profit, Net Income
0.50.30.1-0.1-0.3-0.52013201520172020
Ops, Inv, Fin

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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE

COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                to               

Commission file number: 001-36870

TopBuild Corp.

(Exact name of Registrant as Specified in its Charter)

Delaware

(State or Other Jurisdiction of Incorporation or
Organization)

47-3096382

(I.R.S. Employer
Identification No.)

475 North Williamson Boulevard

Daytona Beach, Florida

(Address of Principal Executive Offices)

32114

(Zip Code)

(386) 304-2200

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common stock, par value $0.01 per share

BLD

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes             No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes             No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.  

Large accelerated filer      Accelerated filer      Non-accelerated filer   Smaller reporting company     Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes             No

The registrant had outstanding 33,080,596 shares of Common Stock, par value $0.01 per share as of July 28, 2020.

Table of Contents

TOPBUILD CORP.

TABLE OF CONTENTS

Page No.

Part I.

Financial Information

Item 1.

Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets

4

Condensed Consolidated Statements of Operations

5

Condensed Consolidated Statements of Cash Flows

6

Condensed Consolidated Statements of Changes in Equity

7

Notes to Condensed Consolidated Financial Statements

8

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

24

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

32

Part II.

Other Information

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

32

Item 3.

Defaults upon Senior Securities

32

Item 4.

Mine Safety Disclosures

33

Item 5.

Other Information

33

Item 6.

Exhibits

33

Index to Exhibits

34

Signature

35

2

Table of Contents

GLOSSARY

We use acronyms, abbreviations, and other defined terms throughout this quarterly report on Form 10-Q, which are defined in the glossary below:

Term

Definition

2015 LTIP

2015 Long-Term Incentive program authorizes the Board to grant stock options, stock appreciation rights, restricted shares, restricted share units, performance awards, and dividend equivalents

2017 Repurchase Program

$200 million share repurchase program authorized by the Board on February 24, 2017

2018 ASR Agreement

$50 million accelerated share repurchase agreement with JPMorgan Chase Bank, N.A.

2019 Repurchase Program

$200 million share repurchase program authorized by the Board on February 22, 2019

2019 ASR Agreement

$50 million accelerated share repurchase agreement with Bank of America, N.A.

Amended Credit Agreement

Senior secured credit agreement and related security and pledge agreement dated March 20, 2020

Annual Report

Annual report filed with the SEC on Form 10-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

ASC

Accounting Standards Codification

ASU

Accounting Standards Update

Board

Board of Directors of TopBuild

BofA

Bank of America, N.A.

Cooper

Cooper Glass Company, LLC

Current Report

Current report filed with the SEC on Form 8-K pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

EBITDA

Earnings before interest, taxes, depreciation, and amortization

EcoFoam

Bella Insulutions Inc., DBA EcoFoam/Insulutions

Exchange Act

The Securities Exchange Act of 1934, as amended

FASB

Financial Accounting Standards Board

GAAP

Generally accepted accounting principles in the United States of America

Hunter

Hunter Insulation

IBR

Incremental borrowing rate, as defined in ASC 842

Lenders

Bank of America, N.A., together with the other lenders party to the "Amended Credit Agreement"

LIBOR

London interbank offered rate

Net Leverage Ratio

As defined in the “Amended Credit Agreement,” the ratio of outstanding indebtedness, less up to $100 million of unrestricted cash, to EBITDA

NYSE

New York Stock Exchange

Original Credit Agreement

Senior secured credit agreement and related security and pledge agreement dated May 5, 2017, as amended March 28, 2018

Quarterly Report

Quarterly report filed with the SEC on Form 10-Q pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Revolving Facility

Senior secured revolving credit facilities available under the Amended Credit Agreement, of $450 million with applicable sublimits for letters of credit and swingline loans.

ROU

Right of use (asset), as defined in ASC 842

RSA

Restricted stock award

Santa Rosa

Santa Rosa Insulation and Fireproofing, LLC

SEC

United States Securities and Exchange Commission

Secured Leverage Ratio

As defined in the “Amended Credit Agreement,” the ratio of outstanding indebtedness, including letters of credit, to EBITDA

Senior Notes

TopBuild's 5.625% senior unsecured notes due on May 1, 2026

TopBuild

TopBuild Corp. and its wholly-owned consolidated domestic subsidiaries. Also, the "Company," "we," "us," and "our"

Viking

Viking Insulation Co.

3

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

TOPBUILD CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(In thousands except share data)

As of

    

June 30, 

December 31, 

2020

2019

ASSETS

Current assets:

Cash and cash equivalents

$

258,837

$

184,807

Receivables, net of an allowance for credit losses of $7,541 at June 30, 2020, and allowance for doubtful accounts of $4,854 at December 31, 2019

423,000

 

428,844

Inventories, net

147,304

 

149,078

Prepaid expenses and other current assets

7,962

 

17,098

Total current assets

837,103

 

779,827

Right of use assets

85,236

87,134

Property and equipment, net

176,179

 

178,080

Goodwill

1,379,821

 

1,367,918

Other intangible assets, net

176,871

 

181,122

Deferred tax assets, net

4,358

4,259

Other assets

11,011

 

5,623

Total assets

$

2,670,579

$

2,603,963

LIABILITIES AND EQUITY

Current liabilities:

Accounts payable

$

293,224

$

307,970

Current portion of long-term debt

23,168

34,272

Accrued liabilities

120,689

98,418

Short-term lease liabilities

34,444

36,094

Total current liabilities

471,525

476,754

Long-term debt

694,320

697,955

Deferred tax liabilities, net

174,229

175,263

Long-term portion of insurance reserves

50,608

45,605

Long-term lease liabilities

54,798

54,010

Other liabilities

7,447

1,487

Total liabilities

1,452,927

1,451,074

Commitments and contingencies

Equity:

Preferred stock, $0.01 par value: 10,000,000 shares authorized; 0 shares issued and outstanding at June 30, 2020 and December 31, 2019

Common stock, $0.01 par value: 250,000,000 shares authorized; 39,021,348 shares issued and 33,102,143 outstanding at June 30, 2020, and 38,884,530 shares issued and 33,489,769 outstanding at December 31, 2019

389

388

Treasury stock, 5,919,205 shares at June 30, 2020, and 5,394,761 shares at December 31, 2019, at cost

(371,670)

(330,018)

Additional paid-in capital

853,029

849,657

Retained earnings

735,904

632,862

Total equity

1,217,652

1,152,889

Total liabilities and equity

$

2,670,579

$

2,603,963

See notes to our unaudited condensed consolidated financial statements.

4

Table of Contents

TOPBUILD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands except share and per common share data)

Three Months Ended June 30, 

Six Months Ended June 30, 

2020

2019

2020

2019

Net sales

$

646,099

    

$

660,112

    

$

1,299,327

    

$

1,279,442

Cost of sales

468,045

485,190

949,316

948,824

Gross profit

178,054

174,922

350,011

330,618

Selling, general, and administrative expense

97,600

98,883

199,568

197,960

Operating profit

80,454

76,039

150,443

132,658

Other income (expense), net:

Interest expense

(8,277)

(9,631)

(17,018)

(19,232)

Loss on extinguishment of debt

(233)

Other, net

89

526

561

858

Other expense, net

(8,188)

(9,105)

(16,690)

(18,374)

Income before income taxes

72,266

66,934

133,753

114,284

Income tax expense

(16,770)

(14,883)

(27,485)

(24,249)

Net income

$

55,496

$

52,051

$

106,268

$

90,035

Net income per common share:

Basic

$

1.69

$

1.53

$

3.22

$

2.64

Diluted

$

1.67

$

1.51

$

3.18

$

2.60

 

Weighted average shares outstanding:

Basic

32,867,842

33,976,169

33,018,148

34,072,314

Diluted

33,202,423

34,557,664

33,401,135

34,630,048

See notes to our unaudited condensed consolidated financial statements.

5

Table of Contents

TOPBUILD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(In thousands)

Six Months Ended June 30, 

2020

2019

Cash Flows Provided by (Used in) Operating Activities:

    

    

    

Net income

$

106,268

$

90,035

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

33,311

25,538

Share-based compensation

9,038

7,485

Loss on extinguishment of debt

233

Loss on sale or abandonment of property and equipment

320

561

Amortization of debt issuance costs

716

779

Provision for bad debt expense

3,756

3,688

Loss from inventory obsolescence

1,313

1,251

Deferred income taxes, net

(38)

(21)

Change in certain assets and liabilities

Receivables, net

1,894

(41,489)

Inventories, net

538

17,391

Prepaid expenses and other current assets

9,151

14,969

Accounts payable

(16,390)

(23,823)

Accrued liabilities

28,188

(1,131)

Payment of contingent consideration

(413)

Other, net

277

1,031

Net cash provided by operating activities

178,162

96,264

Cash Flows Provided by (Used in) Investing Activities:

Purchases of property and equipment

(20,937)

(21,982)

Acquisition of businesses

(20,526)

Proceeds from sale of property and equipment

763

1,961

Other, net

22

Net cash used in investing activities

(40,700)

(19,999)

Cash Flows Provided by (Used in) Financing Activities:

Proceeds from issuance of long-term debt

300,000

4,998

Repayment of long-term debt

(313,407)

(11,364)

Payment of debt issuance costs

(2,280)

Taxes withheld and paid on employees' equity awards

(13,165)

(8,471)

Repurchase of shares of common stock

(34,152)

(19,499)

Payment of contingent consideration

(428)

(1,091)

Net cash used in financing activities

(63,432)

(35,427)

Cash and Cash Equivalents

Increase for the period

74,030

40,838

Beginning of period

 

184,807

 

100,929

End of period

$

258,837

$

141,767

Supplemental disclosure of noncash activities:

Leased assets obtained in exchange for new operating lease liabilities

$

19,257

$

110,192

Accruals for property and equipment

323

497

See notes to our unaudited condensed consolidated financial statements.

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TOPBUILD CORP.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited)

(In thousands except share data)

Common

Treasury

Additional

Stock

Stock

Paid-in

Retained

($0.01 par value)

at cost

Capital

Earnings

Equity

Balance at December 31, 2018

$

387

$

(216,607)

$

846,451

$

441,867

$

1,072,098

Net income

37,983

37,983

Share-based compensation

2,972

2,972

Issuance of 112,270 restricted share awards under long-term equity incentive plan

1

(1)

Repurchase of 176,327 shares pursuant to the settlement of the 2018 ASR Agreement

(10,000)

10,000

Repurchase of 72,791 shares pursuant to the 2019 Repurchase Program

(4,622)

(4,622)

105,615 shares withheld to pay taxes on employees' equity awards

(5,578)

(5,578)

Balance at March 31, 2019

$

388

$

(231,229)

$

853,844

$

479,850

$

1,102,853

Net income

52,051

52,051

Share-based compensation

4,513

4,513

Repurchase of 196,885 shares of common stock pursuant to the 2019 Repurchase Program

(14,878)

(14,878)

54,811 shares of common stock withheld to pay taxes on employees' equity awards

(2,893)

(2,893)

Balance at June 30, 2019

$

388

$

(246,107)

$

855,464

$

531,901

$

1,141,646

Balance at December 31, 2019

$

388

$

(330,018)

$

849,657

$

632,862

$

1,152,889

Net income

50,771

50,771

Share-based compensation

3,908

3,908

Cumulative-effect of accounting change

(3,225)

(3,225)

Issuance of 63,780 restricted share awards under long-term equity incentive plan

1

(1)

Repurchase of 73,455 shares pursuant to the settlement of the 2019 ASR Agreement

(7,500)

7,500

Repurchase of 188,100 shares pursuant to the 2019 Repurchase Program

(14,127)

(14,127)

97,144 shares withheld to pay taxes on employees' equity awards

(10,399)

(10,399)

Balance at March 31, 2020

$

389

$

(351,645)

$

850,665

$

680,408

$

1,179,817

Net income

55,496

55,496

Share-based compensation

5,130

5,130

Repurchase of 262,889 shares of common stock pursuant to the 2019 Repurchase Program

(20,025)

(20,025)

38,372 shares of common stock withheld to pay taxes on employees' equity awards

(2,766)

(2,766)

Balance at June 30, 2020

$

389

$

(371,670)

$

853,029

$

735,904

$

1,217,652

See notes to our unaudited condensed consolidated financial statements.

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TOPBUILD CORP.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.  BASIS OF PRESENTATION

TopBuild was formed on June 30, 2015, and is listed on the NYSE under the ticker symbol “BLD.”  We report our business in two segments: Installation and Distribution.  Our Installation segment primarily installs insulation and other building products.  Our Distribution segment primarily sells and distributes insulation and other building products.  Our segments are based on our operating units, for which financial information is regularly evaluated by our chief operating decision maker.

In our opinion, the accompanying unaudited condensed consolidated financial statements contain all adjustments, of a normal recurring nature, necessary to state fairly our financial position as of June 30, 2020, our results of operations for the three and six months ended June 30, 2020 and 2019 and cash flows for the six months ended June 30, 2020 and 2019.  The condensed consolidated balance sheet at December 31, 2019, was derived from our audited financial statements, but does not include all disclosures required by GAAP.

These condensed consolidated financial statements and related notes should be read in conjunction with the audited Consolidated Financial Statements included in the Company’s Annual Report for the year ended December 31, 2019, as filed with the SEC on February 25, 2020.

2.  ACCOUNTING POLICIES

Financial Statement Presentation.  Our condensed consolidated financial statements have been developed in conformity with GAAP, which requires management to make estimates and assumptions.  These estimates and assumptions affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period.  Actual results could differ materially from these estimates.  All intercompany transactions between TopBuild entities have been eliminated.

Recently Adopted Accounting Pronouncements

Credit Losses

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments,” which replaces the current incurred loss methodology with an expected loss methodology, referred to as the current expected credit loss (CECL) methodology.  We adopted Topic 326 on January 1, 2020, using the modified retrospective method, which resulted in a $3.2 million cumulative-effect adjustment recorded through retained earnings at the beginning of 2020.

We measure the expected credit losses on accounts receivable by segment, using historical loss rate information adjusted for current conditions, with changes in the allowance recorded as a provision for (or reversal of) credit loss expense.  Expected losses are charged against the allowance when management believes a receivable is uncollectible. Receivables, net are presented net of certain allowances, including allowance for credit losses.

Goodwill Impairment

In January 2017, the FASB issued ASU 2017-04, “Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment.” The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test. This update was effective for us beginning January 1, 2020, and did not have a material impact on our financial position and results of operations.

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Table ofContents

TOPBUILD CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Fair Value

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement.” The new standard modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including adjustments to Level 3 fair value measurement disclosures as well as the removal of disclosures around Level 1 and Level 2 transfers. This update was effective for us beginning January 1, 2020, and did not have a material impact on our financial position and results of operations.

Recently Issued Accounting Pronouncements Not Yet Adopted

In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes.”  This standard simplifies the accounting for income taxes by removing certain exceptions to the general principles included in current guidance, as well as improving consistent application of and simplifying GAAP for other areas by clarifying and amending existing guidance.  This update is effective for us beginning January 1, 2021, with early adoption permitted.  We have not yet selected an adoption date, and we are currently evaluating the effect of adoption of this standard on our financial position and results of operations.

3.  REVENUE RECOGNITION

Revenue is disaggregated between our Installation and Distribution segments and further based on market and product, as we believe this best depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.  The following tables present our revenues disaggregated by market (in thousands):

Three Months Ended June 30, 

2020

2019

Installation

Distribution

Elims

Total

Installation

Distribution

Elims

Total

Residential

$

370,969

$

163,615

$

(29,050)

$

505,534

$

373,945

$

159,774

$

(29,060)

$

504,659

Commercial

95,600

52,721

(7,756)

140,565

109,083

53,713

(7,343)

155,453

Net sales

$

466,569

$

216,336

$

(36,806)

$

646,099

$

483,028

$

213,487

$

(36,403)

$

660,112

Six Months Ended June 30, 

2020

2019

Installation

Distribution

Elims

Total

Installation

Distribution

Elims

Total

Residential

$

744,250

$

326,071

$

(58,055)

$

1,012,266

$

723,818

$

313,552

$

(56,576)

$

980,794

Commercial

198,192

104,487

(15,618)

287,061

208,592

104,399

(14,343)

298,648

Net sales

$

942,442

$

430,558

$

(73,673)

$

1,299,327

$

932,410

$

417,951

$

(70,919)

$

1,279,442

The following tables present our revenues disaggregated by product (in thousands):