TopBuild(BLD) - 2024 Q3 - Quarterly Report

Financial Performance - Net sales for the third quarter of 2024 increased by 3.6% to $1,373,268, compared to$ 1,326,120 in the same period of 2023[98] - Gross profit margin decreased to 30.7% in Q3 2024 from 31.7% in Q3 2023, primarily due to higher material costs[99] - Operating profit for Q3 2024 was $243,993, reflecting a 2.7% increase from$ 237,492 in Q3 2023[103] - Net income for the third quarter of 2024 was $168,960, slightly up from$ 167,602 in the same quarter of 2023[98] - For the first nine months of 2024, net sales increased by 2.8% to $4,017,597 compared to$ 3,908,620 in the same period of 2023[110] - Operating profit for the nine months ended September 30, 2024, was $668,893, reflecting a decrease of 0.8% from$ 674,025 in the prior year[115] Segment Performance - The Installation segment's sales rose by 4.2% to $856,350 in Q3 2024, driven by a 2.9% increase from acquisitions[104] - The Specialty Distribution segment's sales increased by 5.1% to$ 600,387 in Q3 2024, with a 3.0% rise attributed to higher sales volume[106] - Installation segment sales rose by $108.3 million, or 4.5%, driven by a 3.4% increase from acquisitions and a 1.2% increase from higher selling prices[115] - Specialty Distribution segment sales increased by$ 35.1 million, or 2.1%, with a 1.2% rise from higher selling prices[116] Profitability Metrics - Selling, general, and administrative expenses as a percentage of sales decreased to 12.9% in Q3 2024 from 13.8% in Q3 2023, due to lower acquisition-related costs[100] - Operating profit margin for the first nine months of 2024 was 16.6%, down from 17.2% in the same period of 2023, impacted by higher material costs[114] - Operating profit margin for the Installation segment decreased to 19.9% from 20.6% due to higher material costs and changes in sales mix[115] - Operating margin for the Specialty Distribution segment improved to 15.1% from 14.5%, attributed to productivity initiatives and higher selling prices[116] Cash Flow and Liquidity - Net cash provided by operating activities decreased by $78.7 million to$ 509,798 for the nine months ended September 30, 2024[120] - Net cash used in financing activities surged to $957.7 million, primarily due to$ 919.2 million spent on share repurchases[122] - Total liquidity as of September 30, 2024, was $693,572, down from$ 1,284,795 at the end of 2023[125] Debt and Interest Rates - The company has a Term Loan with a principal balance of $498.8 million and a revolving facility with a borrowing capacity of$ 500.0 million[138] - The company has outstanding 3.625% Senior Notes totaling $400.0 million and 4.125% Senior Notes totaling$ 500.0 million, which bear fixed interest rates[138] - As of September 30, 2024, the applicable interest rate for the Term Loan and Revolving Facility was 5.95%[139] - A 100-basis point increase in the interest rate would lead to an increase of $4.8 million in annualized interest expense based on outstanding borrowings[139] - There was no outstanding balance under the Revolving Facility as of September 30, 2024[139] Market Outlook - The company anticipates continued demand for homes supported by strengthening energy efficiency requirements and moderating interest rates[129]