TopBuild Corp. (NYSE:BLD) Q1 2018 Earnings Conference Call - Preliminary Transcript

May 08, 2018 • 09:30 am ET

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TopBuild Corp. (NYSE:BLD) Q1 2018 Earnings Conference Call - Preliminary Transcript

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Presentation
Operator
Operator

Thank you for standing by. Welcome to the TopBuild First Quarter 2018 Results Conference Call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded Tuesday, May 8, 2018.I would now like to turn the conference over to Tabitha Zane. Please go ahead.

Executive
Tabitha Zane

Thank you and good morning. On the call today are Jerry Volas, Chief Executive Officer; Robert Buck, President and Chief Operating Officer; and John Peterson, Chief Financial Officer. Please note we have posted senior management's formal remarks on the Investor Relations section of our website at topbuild.com.

As shown on Slide 2 of today's presentation, many of our remarks will include forward-looking statements concerning the company's operations and financial condition. These forward-looking statements include known and unknown risks, including those set forth in this morning's press release as well as in the company's filings with the SEC. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. In addition, we will also discuss non-GAAP financial measures, which can be reconciled to the most comparable GAAP measures in a table included in today's press release.

I will now turn the call over to Jerry Volas.

Executive
Jerry Volas

Welcome everyone and thanks for joining us today. Starting with Slide 3, we're pleased to report that 2018 is off to a very good start with the completion of three acquisitions, a $400 million bond offering, and strong financial results for the quarter. While John Peterson and Robert Buck will follow with further details, I want to speak to a few of the highlights.

As you can see on Slide 4, total sales were up 11.3%, with same-branch sales increasing 6.7%, driven by price and volume gains in both of our operating segments. This tracks in line with the housing recovery, which continues to strengthen. Adjusted earnings per share were $0.73 compared to $0.46 a year ago, an increase of 58.7%. The adjusted EBITDA margin increased by 170 basis points to 9.4% and the incremental margin was 24.2%. Material cost inflation was significant but was offset by both higher selling prices as well as improved leverage on all of our expenses.

Turning to Slide 5, on the acquisitions front, 2018 has already been a very busy year. In January, we acquired Santa Rosa Insulation and Fireproofing, an insulation installer with $6 million in annual sales, and ADO Products, a distributor of insulation accessories with $27 million in annual sales. And just last week we closed on USI, a leading provider of insulation, installation, and distribution services to the residential and commercial markets. USI generated pro forma annual revenue of approximately $375 million in 2017.

All three of these fine companies fit well into our established acquisition criteria: profitable, well-managed, solid customer bases in the high-growth regions and earnings accretive. Also, these acquisitions demonstrate our confidence in the ongoing residential and commercial construction recovery and the ability of the