TopBuild (NYSE:BLD) Corp. BLD has acquired St. George, Utah-based Tonks Insulation and Pueblo, Colorado-based Shepherds Insulation.
Robert Buck, the president and CEO of the company, said, “Tonks has been serving the southern Utah markets for over 10 years and the founder, Gary Tonks, will continue to manage and help us grow this business. Shepherds has been servicing the Colorado market for many years and brings a mix of both residential and light commercial business.” He continued, “Looking ahead, our M&A pipeline remains robust and includes installation and specialty distribution companies in all three end-markets we serve: residential, commercial and industrial.”
So far in 2021, TopBuild has acquired 10 companies, which are expected to generate $1 billion of annual revenues. In 2020, these companies generated approximately $6 million of revenues on a combined basis.
Acquisitions Bode Well
Acquisitions are an integral part of TopBuild’s growth strategy. In the past six years, the company has acquired 26 companies that are contributing more than $820 million to annual revenues. It has acquired seven businesses since January 2021, which are likely to generate $250 million of annual revenues.
In September, the company inked a deal with global private equity firm Advent International to acquire the latter’s Distribution International (“DI”) for $1 billion in cash. DI is the leading specialty distributor of mechanical insulation solutions for industrial and commercial end markets.
In August, it acquired a fabricator and distributor of gutter products and specialty metals, Valley Gutter Supply, for an undisclosed amount. This addition helped the company strengthen Service Partner’s gutter fabrication and distribution capacity throughout the state of California.
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Shares of TopBuild have increased 43.6% in the year-to-date period compared with the industry's 15.8% rally. The solid price performance was primarily backed by strong earnings growth over the last several quarters. This installer and distributor of insulation and other building products has been banking on strategic acquisitions, strong Insulation Installation business as well as strengthening repair and remodeling activities. Also, solid prospects across the business and operational efficiencies are likely to help the company drive growth.
Zacks Rank & Key Picks
TopBuild currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some top-ranked stocks in the same space include Construction Partners (NASDAQ:ROAD), Inc. ROAD, Installed Building Products (NYSE:IBP), Inc. IBP and PGT (NYSE:PGTI) Innovations, Inc. PGTI, each carrying a Zacks Rank #2.
Construction Partners’ three to five year earnings are likely to grow 14.1%.
Installed Building and PGT Innovations’ earnings are likely to increase 33.6% and 6.2%, respectively, in 2021.
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