TopBuild(US:BLD)2023-10-30 16:00Financial Performance - Net sales for the three months ended September 30, 2023, were $1,326.1 million, a 1.9% increase from $1,301.0 million in the same period of 2022[106]. - Operating profit for Q3 2023 was $237.5 million, compared to $222.9 million in Q3 2022, resulting in an operating margin of 17.9%[106]. - Net income for the three months ended September 30, 2023, was $167.6 million, representing a net margin of 12.6%, compared to $153.7 million and a net margin of 11.8% in Q3 2022[106]. - Overall net sales for the nine months ended September 30, 2023, increased by 4.4% to $3,908.6 million, compared to $3,744.2 million in the same period of 2022[120]. - Operating profit for the nine months ended September 30, 2023, was $674.0 million, reflecting a 13.5% increase from $594.0 million in 2022[120]. Profitability Metrics - Gross profit margin improved to 31.7% for Q3 2023, up from 30.4% in Q3 2022, primarily due to productivity initiatives and higher selling prices in the Installation segment[106]. - Operating margins improved to 17.9% in Q3 2023, attributed to productivity initiatives and higher selling prices, despite lower prices in the Distribution segment[100]. - Gross profit margin improved to 31.0% for the nine months ended September 30, 2023, compared to 29.7% in 2022, primarily due to productivity initiatives and higher selling prices[119]. Expenses - Selling, general, and administrative expenses as a percentage of sales increased to 13.8% in Q3 2023 from 13.3% in Q3 2022, driven by higher acquisition-related costs[73]. - Other expense, net, was $42.9 million for the nine months ended September 30, 2023, with interest expense increasing by $15.5 million due to higher interest rates[134]. Taxation - The effective tax rate for Q3 2023 was 25.4%, a decrease from 26.1% in Q3 2022, primarily due to share-based compensation and state tax adjustments[81]. - Income tax expense for the nine months ended September 30, 2023, was $163.3 million, with an effective tax rate of 25.9%, compared to $142.1 million and 25.6% in 2022[124]. Acquisitions and Investments - The company acquired the assets of the residential insulation business of SRI for $45.3 million, enhancing its presence in several states[87]. - Net cash used in investing activities was $181.0 million for the nine months ended September 30, 2023, primarily for acquisitions and property purchases[125]. Liquidity and Debt - Total liquidity as of September 30, 2023, was $1,051.8 million, significantly up from $672.4 million at the end of 2022[127]. - As of September 30, 2023, the applicable interest rate on the Term Loan and Revolving Facility was 6.42%[142]. - There was no outstanding balance under the Revolving Facility as of September 30, 2023[142]. - A 100-basis point increase in the interest rate would result in a $5.3 million increase in annualized interest expense[142]. Sales Performance by Segment - Installation segment net sales increased by $38.6 million, or 4.9%, for the three months ended September 30, 2023, compared to the same period in 2022[109]. - Operating profit margin for the Installation segment improved to 21.3% for the three months ended September 30, 2023, up from 19.7% in 2022, driven by productivity initiatives and higher selling prices[110]. - Specialty Distribution segment sales decreased by $12.5 million, or 2.1%, for the three months ended September 30, 2023, due to lower selling prices and a decline in sales volume[115]. - The company reported a 2.9% increase in sales from acquisitions, contributing to the overall sales growth[99].