NYSE: BLD
Price 64.38
Change +1.49 +2.37%
Volume 209,174
Minimum 20 min delay 03/21/2019 04:02 PM

TopBuild Reports Fourth Quarter 2018 Results

02/26/2019
  • Net sales increase 27.6%
  • Gross margin expands 40 basis points
  • 10.2% operating margin, 10.5% on an adjusted basis, up 40 basis points
  • Adjusted EBITDA increases 42.4%, margin expands 130 basis points
  • $1.10 net income per diluted share, $1.20 on an adjusted basis


Announces New Share Repurchase Program
Provides 2019 Revenue and Adjusted EBITDA Outlook

DAYTONA BEACH, Fla., Feb. 26, 2019 (GLOBE NEWSWIRE) --  TopBuild Corp.(NYSE:BLD), a leading installer and distributor of insulation and building material products today reported results for the fourth quarter ended December 31, 2018. 

Jerry Volas, Chief Executive Officer, stated, “We are pleased with our fourth quarter results as we continue to deliver on our objective of producing profitable growth. Our team remains focused on optimizing our operational performance as evidenced by our 40 basis point gross margin expansion and 12.9% EBITDA margin, a 130 basis point increase from a year ago.”

Fourth Quarter Financial Highlights

(unless otherwise indicated, comparisons are to the quarter ended December 31, 2017)

  • Net sales increased 27.6% to $639.5 million, driven by acquisitions and price increases. On a same branch basis, net sales increased 6.5% to $533.9 million. 
     
  • Gross margin expanded 40 basis points to 24.7%.
     
  • Operating profit was $65.2 million, compared to $50.0 million.  On an adjusted basis, operating profit was $67.2 million, compared to $50.8 million, a 32.1% improvement.
     
  • Operating margin was 10.2%, up 20 basis points.  Adjusted operating margin improved 40 basis points to 10.5%.
  • Net income was $38.6 million, or $1.10 per diluted share, compared to $105.0 million, or $2.93 per diluted share. The Company noted that in the fourth quarter of 2017 it recorded a one-time tax benefit of $74.1 million related to the change in the federal tax rate as a result of the Tax Cuts and Jobs Act. 
     
  • Adjusted net income was $42.2 million, or $1.20 per diluted share, compared to $30.1 million, or $0.84 per diluted share. 
     
  • Adjusted EBITDA was $82.5 million, compared to $57.9 million, a 42.4% increase and adjusted EBITDA margin improved 130 basis points to 12.9%.  Incremental adjusted EBITDA margin was 17.8%.  
     
  • On a same branch basis, adjusted EBITDA was $65.3 million, a 12.6% increase, and incremental adjusted EBITDA margin was 22.5%. 
     
  • Acquisitions contributed $105.7 million of revenue.  Incremental adjusted EBITDA related to these acquisitions was 16.3%.
     
  •  At December 31, 2018, the Company had cash and cash equivalents of $100.9 million, availability under its revolving credit facility of $190.7 million for total liquidity of $291.6 million.

Full Year 2018 Financial Highlights

(unless otherwise indicated, comparisons are to twelve months ended December 31, 2017)

  • Net sales increased 25.1% to $2,384.2 million. On a same branch basis, revenue increased 8.5% to $2,067.6 million. 
     
  • Gross margin was unchanged at 24.2%.
     
  • Operating profit was $209.0 million, compared to operating profit of $136.9 million.  On an adjusted basis, operating profit was $232.6 million, compared to $171.9 million, a 35.3% improvement.
     
  • Operating margin was 8.8%, up 160 basis points.  Adjusted operating margin improved 80 basis points to 9.8%. 
     
  • Net income was $134.8 million, or $3.78 per diluted share, compared to $158.1 million, or $4.32 per diluted share.  Adjusted net income was $149.3 million, or $4.19 per diluted share, compared to $101.8 million, or $2.78 per diluted share. 
     
  • Adjusted EBITDA was $283.4 million, compared to $197.6 million, a 43.4% increase and adjusted EBITDA margin improved 150 basis points to 11.9%.  Incremental adjusted EBITDA margin was 17.9%.
     
  • On a same branch basis, adjusted EBITDA grew 20.5% to $238.1 million and incremental EBITDA margin was 25.1%.
     
  • Acquisitions contributed $316.7 million of revenue.  Incremental EBITDA related to these acquisitions was 14.3%.

“Our 2018 financial results clearly demonstrate the effectiveness of our operating model, the benefits of our size and scale and our success in integrating acquisitions onto our operating platform. Despite an environment of unprecedented material cost increases, we maintained our gross margin and expanded our adjusted  operating and EBITDA margins," added Volas.

Operating Segment Highlights ($ in 000s)
(comparisons are to the period ended December 31, 2017)

TruTeam 3 Months
Ended
12/31/18
12 Months
Ended
12/31/18
  Service Partners 3 Months
Ended
12/31/18
12 Months
Ended
12/31/18
Sales $457,610 $1,680,967   Sales $213,974 $820,309
Change       Change    
  Price 5.9% 4.2%     Price 7.9% 7.2%
  Volume 3.0% 5.9%     Volume -5.3% 0.0%
  M&A 27.2% 21.2%     M&A 8.1% 6.7%
Total Change 36.1% 31.2%   Total Change 10.7% 14.0%
Operating Margin 12.5% 11.7%   Operating Margin 10.1% 9.6%
Change (10 bps) 320 bps   Change 80 bps 10 bps
Adj. Operating Margin 12.5% 11.8%   Adj. Operating Margin 10.1% 9.6%
Change (20 bps) 80 bps   Change 80 bps 0

Capital Allocation
Acquisitions
In 2018, the Company completed three acquisitions that are expected to generate approximately $410 million of net annual revenue.

Volas stated, “Strategic acquisitions remain our number one choice for capital allocation. Since implementing our acquisition program in 2016, we have acquired ten companies that are expected to generate over $500 million in annual revenue.  Our success in integrating acquisitions onto our operating platform has become a core competency, enabling us to take advantage of available synergies and generate strong returns for our shareholders.”

The companies acquired were:

  • USI, the third largest provider of insulation installation and distribution services to the residential and commercial construction markets.
     
  • ADO Products, a distributor of insulation accessories.
     
  • Santa Rosa Insulation and Fireproofing, a residential and commercial insulation company.

Share Repurchases
The Company also announced that its Board of Directors has authorized a new share repurchase program whereby the Company may purchase up to $200 million of its common stock.  Repurchases will be made from cash on hand as well as from a portion of the free cash flow expected to be generated from the business.  

Volas stated, "We anticipate continuing to generate cash beyond what is required to fund our internal growth and finance acquisitions, our highest capital allocation priorities.  This $200 million share repurchase program further enhances our on-going commitment to maximizing shareholder value.” 

In 2018 the Company repurchased a total of 1,049,871 shares of its common stock for approximately $65 million.  This includes the receipt of 796,925 shares related to its previously announced $50 million accelerated share repurchase (“ASR”) program.  The ASR is expected to settle no later than the end of the first quarter of 2019. 

2019 Revenue and Adjusted EBITDA Outlook
“We believe the fundamentals driving supply and demand in the residential housing market are healthy.  In 2019, we will continue to focus on generating profitable growth, achieving additional operational efficiencies and identifying acquisitions that meet our investment criteria.  Our business model, including national scale and diversity through both residential and commercial installation and distribution, offers multiple avenues for growth,” added Volas.

2019 Low High
Revenue $2,570M $2,635M
Adjusted EBITDA* $310M $330M

*See table for adjusted EBITDA reconciliation

Assumptions
($ in millions)

2019 Low High
Housing Starts 1,260K 1,300K
Adjusted net income  $  145.3  $  167.9
Depreciation and Amortization  $  54.5  $  50.5
Interest Expense and other, net  $  38.9  $  35.9
Income tax expense  $  53.7  $  62.1
Share based compensation  $  14.6  $  12.6

Long-Term Targets (3-Years)

Metric  
Working Capital (% of Sales) 10% to 11%
CapEx (% of Sales) 2.0% to 2.5%
Commercial Annual Revenue Growth 10.0%
Normalized Tax Rate 26% to 27%
Incremental Adjusted EBITDA (Organic) 22% to 27%
Incremental Adjusted EBITDA (Acquisitions Year One) 11% to 16%
Revenue for every 50K increase in housing starts $80 million

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 fourth quarter and year-end 2018 financial results is scheduled for today, Tuesday, February 26, 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., 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 over 200 branches, and through Service Partners® which distributes insulation and building material products from over 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, 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 and the related assumptions underlying our expected results.  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 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
tabitha.zane@topbuild.com
386-763-8801 

                           
TopBuild Corp.                          
Consolidated Statements of Operations                            
(in thousands, except share and per common share amounts)                    
   
                           
    Three Months Ended December 31,    Year Ended December 31,   
    2018   2017   2018   2017  
Net sales   $ 639,547   $ 501,401   $ 2,384,249   $ 1,906,266  
Cost of sales     481,321     379,368     1,808,097     1,445,157  
Gross profit     158,226     122,033     576,152     461,109  
                           
Selling, general, and administrative expense (exclusive of significant legal settlement, shown separately below)     93,065     72,063     367,199     294,245  
Significant legal settlement                 30,000  
Operating profit     65,161     49,970     208,953     136,864  
                           
Other income (expense), net:                          
Interest expense     (9,661)     (2,252)     (28,687)     (8,019)  
Loss on extinguishment of debt                 (1,086)  
Other, net     266     42     558     281  
Other expense, net     (9,395)     (2,210)     (28,129)     (8,824)  
Income before income taxes     55,766     47,760     180,824     128,040  
                           
Income tax (expense) benefit     (17,213)     57,231     (46,072)     30,093  
Net income   $ 38,553   $ 104,991   $ 134,752   $ 158,133  
                           
Income per common share:                          
Basic   $ 1.12   $ 3.00   $ 3.86   $ 4.41  
Diluted   $ 1.10   $ 2.93   $ 3.78   $ 4.32  
                           
Weighted average shares outstanding:                          
Basic     34,436,518     34,990,047     34,921,318     35,897,641  
Diluted     35,012,535     35,772,124     35,613,319     36,572,146  
 

 

TopBuild Corp.                
Balance Sheets and Other Financial Data                  
(dollars in thousands)                
   
               
    As of December 31,    
    2018   2017    
ASSETS                
Current assets:                
Cash and cash equivalents   $ 100,929   $ 56,521    
Receivables, net of an allowance for doubtful accounts of $3,676 and $3,673 at December 31, 2018, and December 31, 2017, respectively     407,106     308,508    
Inventories, net     168,977     131,342    
Prepaid expenses and other current assets     27,685     15,221    
Total current assets     704,697     511,592    
                 
Property and equipment, net     167,961     107,121    
Goodwill     1,364,016     1,077,186    
Other intangible assets, net     199,387     33,243    
Deferred tax assets, net     13,176     18,129    
Other assets     5,294     2,278    
Total assets   $ 2,454,531   $ 1,749,549    
                 
LIABILITIES                
Current liabilities:                
Accounts payable   $ 313,172   $ 263,814    
Current portion of long-term debt     26,852     12,500    
Accrued liabilities     104,236     75,087    
Total current liabilities     444,260     351,401    
                 
Long-term debt     716,622     229,387    
Deferred tax liabilities, net     176,212     132,840    
Long-term portion of insurance reserves     43,434     36,160    
Other liabilities     1,905     3,242    
Total liabilities     1,382,433     753,030    
                 
EQUITY     1,072,098     996,519    
Total liabilities and equity   $ 2,454,531   $ 1,749,549    
                 
                 
    As of December 31,     
    2018   2017    
Other Financial Data                
Receivable days †     51     50    
Inventory days †     34     33    
Accounts payable days †     80     79    
Receivables, net plus inventories, net less accounts payable †   $ 262,911   $ 176,036    
Receivables, net plus inventories, net less accounts payable as a percent of sales (TTM)‡     10.4 % 9.1 %
                 
† Adjusted for remaining acquisition day one balance sheet items.                
‡ Trailing 12 months sales have been adjusted for the pro forma effect of acquired branches.                
                 

 

TopBuild Corp.              
Consolidated Statements of Cash Flows                
(dollars in thousands)              
               
               
    Year Ended December 31,   
    2018   2017  
Cash Flows Provided by (Used in) Operating Activities:              
Net income   $ 134,752   $ 158,133  
Adjustments to reconcile net income to net cash provided by operating activities:              
Depreciation and amortization     39,419     16,453  
Share-based compensation     11,317     9,889  
Loss on extinguishment of debt         1,086  
Loss on sale or abandonment of property and equipment     1,204     998  
Amortization of debt issuance costs     1,201     401  
Change in fair value of contingent consideration     (330)     149  
Provision for bad debt expense     3,240     3,231  
Loss from inventory obsolescence     2,187     1,979  
Deferred income taxes, net     12,936     (59,535)  
Change in certain assets and liabilities              
Receivables, net     (35,522)     (37,943)  
Inventories, net     (23,297)     (14,901)  
Prepaid expenses and other current assets     (8,360)     8,184  
Accounts payable     29,687     17,936  
Accrued liabilities     (660)     7,160  
Other, net     (602)     (28)  
Net cash provided by operating activities     167,172     113,192  
               
Cash Flows Provided by (Used in) Investing Activities:              
Purchases of property and equipment     (52,504)     (25,308)  
Acquisition of businesses, net of cash acquired of $15,756 in 2018     (500,202)     (84,090)  
Proceeds from sale of property and equipment     849     603  
Other, net     38     199  
Net cash used in investing activities     (551,819)     (108,596)  
               
Cash Flows Provided by (Used in) Financing Activities:              
Proceeds from issuance of long-term debt     526,604     250,000  
Repayment of long-term debt     (18,399)     (186,250)  
Payment of debt issuance costs     (7,819)     (2,150)  
Proceeds from revolving credit facility     90,000     225,000  
Repayment of revolving credit facility     (90,000)     (225,000)  
Taxes withheld and paid on employees' equity awards     (5,465)     (4,764)  
Repurchase of shares of common stock     (65,025)     (139,286)  
Payment of contingent consideration     (841)      
Net cash provided by (used in) financing activities     429,055     (82,450)  
               
Cash and Cash Equivalents              
Increase (decrease) for the period     44,408     (77,854)  
Beginning of period     56,521     134,375  
End of period   $ 100,929   $ 56,521  
               
Supplemental disclosure of cash paid for:  
Interest on long-term debt   $ 23,733   $ 6,423  
Income taxes   39,010     22,580  
   
Supplemental disclosure of noncash investing activities:              
Accruals for property and equipment   $ 860   $ 1,123  

 

TopBuild Corp.                                        
Segment Data (Unaudited)                                        
(dollars in thousands)                                        
                                         
                                         
    Three Months Ended December 31,            Year Ended December 31,         
    2018   2017   Change     2018   2017   Change  
Installation                                        
Sales   $ 457,610   $ 336,188     36.1 %   $ 1,680,967   $ 1,281,296     31.2 %
                                         
Operating profit, as reported   $ 57,016   $ 42,331           $ 196,986   $ 109,316        
Operating margin, as reported     12.5 %   12.6 %           11.7 %   8.5 %      
                                         
Significant legal settlement                         30,000        
Rationalization charges     216     336             845     1,056        
Operating profit, as adjusted   $ 57,232   $ 42,667           $ 197,831   $ 140,372        
Operating margin, as adjusted     12.5 %   12.7 %           11.8 %   11.0 %      
                                         
Distribution                                          
Sales   $ 213,974   $ 193,306     10.7 %   $ 820,309   $ 719,759     14.0 %
                                         
Operating profit, as reported   $ 21,598   $ 17,927           $ 78,739   $ 68,733        
Operating margin, as reported     10.1 %   9.3 %           9.6 %   9.5 %      
                                         
Rationalization charges                     159     23        
Operating profit, as adjusted   $ 21,598   $ 17,927           $ 78,898   $ 68,756        
Operating margin, as adjusted     10.1 %   9.3 %           9.6 %   9.6 %      
                                         
Total                                        
Sales before eliminations   $ 671,584   $ 529,494           $ 2,501,276   $ 2,001,055        
Intercompany eliminations     (32,037)     (28,093)             (117,027)     (94,789)        
Net sales after eliminations   $ 639,547   $ 501,401     27.6 %   $ 2,384,249   $ 1,906,266     25.1 %
                                         
Operating profit, as reported - segment   $ 78,614   $ 60,258           $ 275,725   $ 178,049        
General corporate expense, net     (7,936)     (5,218)             (45,873)     (24,722)        
Intercompany eliminations and other adjustments     (5,517)     (5,070)             (20,899)     (16,463)        
Operating profit, as reported   $ 65,161   $ 49,970           $ 208,953   $ 136,864        
Operating margin, as reported     10.2 %   10.0 %           8.8 %   7.2 %      
                                         
Significant legal settlement                         30,000        
Rationalization charges †     929     356             7,736     3,755        
Acquisition related costs     1,066     508             15,925     1,256        
Operating profit, as adjusted   $ 67,156   $ 50,834           $ 232,614   $ 171,875        
Operating margin, as adjusted     10.5 %   10.1 %           9.8 %   9.0 %      
                                         
Share-based compensation ‡     3,072     2,415             11,317     9,274        
Depreciation and amortization     12,286     4,700             39,419     16,453        
EBITDA, as adjusted   $ 82,514   $ 57,949           $ 283,350   $ 197,602        
EBITDA margin, as adjusted     12.9 %   11.6 %           11.9 %   10.4 %      
                                         
Sales change period over period     138,146                   477,983              
EBITDA, as adjusted, change period over period     24,565                   85,748              
EBITDA, as adjusted, as percentage of sales change     17.8 %                 17.9 %            
                                         
† Rationalization charges include corporate level adjustments as well as segment operating adjustments.                      
‡ Amounts for the twelve month period ending December 31, 2017, excludes $0.6 million of share-based compensation included in the line item, rationalization charges.
                                         

 

TopBuild Corp.                          
Non-GAAP Reconciliations (Unaudited)                          
(in thousands, except share and per common share amounts)                    
   
                           
    Three Months Ended December 31,    Year Ended December 31,   
    2018   2017   2018   2017  
Gross Profit and Operating Profit Reconciliations                          
                           
Net sales   $ 639,547   $ 501,401   $ 2,384,249   $ 1,906,266  
                           
Gross profit, as reported   $ 158,226   $ 122,033   $ 576,152   $ 461,109  
                           
Rationalization charges             176      
Gross profit, as adjusted   $ 158,226   $ 122,033   $ 576,328   $ 461,109  
                           
Gross margin, as reported     24.7 %   24.3 %   24.2 %   24.2 %
Gross margin, as adjusted     24.7 %   24.3 %   24.2 %   24.2 %
                           
Operating profit, as reported   $ 65,161   $ 49,970   $ 208,953   $ 136,864  
                           
Significant legal settlement                 30,000  
Rationalization charges     929     356     7,736     3,755  
Acquisition related costs     1,066     508     15,925     1,256  
Operating profit, as adjusted   $ 67,156   $ 50,834   $ 232,614   $ 171,875  
                           
Operating margin, as reported     10.2 %   10.0 %   8.8 %   7.2 %
Operating margin, as adjusted     10.5 %   10.1 %   9.8 %   9.0 %
                           
Income Per Common Share Reconciliation                          
                           
Income before income taxes, as reported   $ 55,766   $ 47,760   $ 180,824   $ 128,040  
                           
Significant legal settlement                 30,000  
Rationalization charges     929     356     7,736     3,755  
Acquisition related costs     1,066     508     15,925     1,256  
Loss on extinguishment of debt                 1,086  
Income before income taxes, as adjusted     57,761     48,624     204,485     164,137  
                           
Tax rate at 27% and 38% for 2018 and 2017, respectively     (15,595)     (18,477)     (55,211)     (62,372)  
Income, as adjusted   $ 42,166   $ 30,147   $ 149,274   $ 101,765  
                           
Income per common share, as adjusted   $ 1.20   $ 0.84   $ 4.19   $ 2.78  
                           
Weighted average diluted common shares outstanding     35,012,535     35,772,124     35,613,319     36,572,146  
   

 

TopBuild Corp.                            
 Same Branch and Acquisition Net Sales and Adjusted EBITDA (Unaudited)                              
(dollars in thousands)                            
   
                             
    Three Months Ended December 31,    Year Ended December 31,     
    2018   2017   2018   2017    
Net sales                            
Same branch   $ 533,868   $ 501,401   $ 2,067,586   $ 1,906,266    
Acquisitions (a)     105,679         316,663        
Total   $ 639,547   $ 501,401   $ 2,384,249   $ 1,906,266    
                             
EBITDA, as adjusted                            
Same branch   $ 65,250   $ 57,949   $ 238,130   $ 197,602    
Acquisitions (a)     17,264         45,220        
Total   $ 82,514   $ 57,949   $ 283,350   $ 197,602    
                             
EBITDA, as adjusted, as a percentage of sales                            
Same branch (b)     12.2 %       11.5 %      
Acquisitions (c)     16.3 %       14.3 %      
Total (d)     12.9 % 11.6 % 11.9 % 10.4 %
                             
As Adjusted Incremental EBITDA, as a percentage of incremental sales                            
Same branch (e)     22.5 %       25.1 %      
Acquisitions (c)     16.3 %       14.3 %      
Total (f)     17.8 %       17.9 %      
                             
(a) Represents current year impact of acquisitions in their first twevle months                            
(b) Same branch EBITDA, as adjusted, as a percentage of same branch sales                            
(c) Acquired EBITDA, as adjusted, as a percentage of acquired sales                            
(d) Total EBITDA, as adjusted, as a percentage of total sales                            
(e) Change in same branch EBITDA, as adjusted, as a percentage of change in same branch sales                            
(f) Change in total EBITDA, as adjusted, as a percentage of change in total sales                            
                             

 

TopBuild Corp.                            
Reconciliation of Adjusted EBITDA to Net Income (Unaudited)                        
(dollars in thousands)                            
   
                           
    Three Months Ended December 31,    Year Ended December 31,     
    2018   2017   2018   2017    
Net income, as reported   $   38,553     $     104,991     $     134,752     $     158,133    
Adjustments to arrive at EBITDA, as adjusted:                            
Interest expense and other, net       9,395       2,210       28,129       7,738    
Income tax expense (benefit)       17,213       (57,231)       46,072       (30,093)    
Depreciation and amortization       12,286       4,700       39,419       16,453    
Share-based compensation †       3,072       2,415       11,317       9,274    
Significant legal settlement       —        —        —        30,000    
Rationalization charges       929       356       7,736       3,755    
Loss on extinguishment of debt       —        —        —        1,086    
Acquisition related costs       1,066       508       15,925       1,256    
EBITDA, as adjusted   $   82,514     $     57,949     $     283,350     $     197,602    
                             
† Amounts for the year ending December 31, 2017, excludes $0.6 million of share-based compensation included in the line item, rationalization charges. 
                             



TopBuild Corp.          
2019 Estimated Adjusted EBITDA Range (Unaudited)        
(dollars in millions)          
   
           
  Twelve Months Ending December 31, 2019
    Low     High
Estimated net income $ 145.3   $ 167.9
Adjustments to arrive at estimated EBITDA, as adjusted:          
Interest expense and other, net   38.9     35.9
Income tax expense   53.7     62.1
Depreciation and amortization   54.5     50.5
Share-based compensation   14.6     12.6
Rationalization charges   3.0     1.0
Estimated EBITDA, as adjusted $ 310.0   $ 330.0
   

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Source: TopBuild Corp.

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