TopBuild (NYSE:BLD) Corp. BLD recently announced the acquisition of Texas and Colorado-based leading insulation company, Garland Insulating. This will enable TopBuild to boost presence in Houston, Dallas-Fort Worth, Austin, San Antonio, College Station and Denver locations. However, financial terms of the transaction have been kept under wraps.
Found in 1946, Garland — now part of TopBuild’s TruTeam — is the largest locally-owned and operated insulation company. The acquired company serves production and custom builders, multi-family developers, as well as individual homeowners. Garland generated revenues of approximately $60 million for the trailing 12 months’ period (ended Jun 30, 2020).
Courtesy of its excellent reputation and long-term customer relationships, the acquisition is expected to enhance TopBuild’s insulation business.
President and COO of TopBuild, Robert Buck said, “We expect a smooth transition as Garland is quickly moved on to our common ERP platform and supply chain.”
Acquisitions Bode Well
Acquisitions are an integral part of TopBuild’s growth strategy. Since 2018, the company has acquired seven businesses. Notably, 2018 buyouts added $414.8 million to 2019 net sales.
On Feb 24, 2020, the company announced the acquisition of Hunter Insulation, an 80-year old residential insulation company based in Long Island, NY. Also, on Feb 20, 2020, it added Cooper Glass Co, LLC — a commercial glass company serving the Memphis market — to its portfolio.
Notably, the company expects these 2020 buyouts to generate approximately $79 million of annual revenues this year. It expects to invest more in such companies going forward.
Price Performance
Shares of TopBuild have increased 74.4% in the year-to-date period compared with the industry's 12.9% 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, and strengthening repair and remodeling activities. Also, solid prospects across the business and operational efficiencies are likely to help the company to drive growth.
Notably, the company’s earnings surpassed the Zacks Consensus Estimate in 16 of the trailing 18 quarters. Moreover, estimates for 2020 have moved 28.5% north in the past 60 days, which reflects analysts’ optimism over its earnings growth potential, which is ultimately supported by improving U.S. housing market prospects.
Zacks Rank
TopBuild currently carries a Zacks Rank #1 (Strong Buy). The company shares space with Installed Building Products (NYSE:IBP), Inc. IBP, Advanced Drainage Systems (NYSE:WMS), Inc. WMS and PGT (NYSE:PGTI) Innovations, Inc. PGTI in the same industry, each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
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