Installed Building Products Reports Record Quarterly Results for the Third Quarter 2022 and Declares Regular Quarterly Cash Dividend
Third Quarter 2022 Highlights (Comparisons are to Prior Year Period)
-
Net revenue increased 41.1% to a quarterly record of
$719.1 million -
Installation revenue increased 33.5% to
$672.9 million , driven by strong growth across IBP’s residential new construction markets -
Other revenue, which includes IBP’s manufacturing and distribution operations, increased from
$5.6 million to$46.2 million , driven by strong operating results and recent acquisitions
-
Installation revenue increased 33.5% to
-
Net income increased 74.8% to
$61.0 million -
Adjusted EBITDA* increased 53.8% to a record
$120.2 million -
Net income per diluted share increased 80.5% to
$2.13 -
Adjusted net income per diluted share* increased 68.5% to
$2.51 - Price/mix growth increased by a record 27.1% during the third quarter
-
At
September 30, 2022 , IBP had$228.4 million in cash, cash equivalents and investments - Published annual 2022 Environmental, Social and Governance ("ESG") report highlighting the positive impact the Company is making for all stakeholders
-
Declared third quarter dividend of
$0.315 per share which was paid to shareholders onSeptember 30, 2022 -
Returned
$21.5 million to shareholders in the third quarter through dividends and share repurchases
Recent Developments
-
IBP’s Board of Directors declared the fourth quarter regular cash dividend of
$0.315 per share
“IBP achieved another quarter of record net revenue, net income, and adjusted EBITDA, which was led by continued strength across our residential end-markets, a favorable pricing environment, and the hard work of our team members,” stated
“As we outlined in our second annual ESG report, IBP is focused on promoting positive corporate responsibility and creating lasting value for all of its stakeholders. I am extremely proud of our team's ESG progress as well as the record financial results we continue to produce. Despite macroeconomic headwinds, we expect the meaningful backlog of residential units and extended construction cycle times to support demand for our installation services throughout the remainder of 2022 and into 2023,” concluded
Acquisition Update
IBP continues to prioritize profitable growth through its proven strategy of acquiring well-run installers of insulation and complementary building products. To date in 2022, IBP has acquired over
During the 2022 third quarter, IBP completed the following acquisition:
-
In
September 2022 , IBP acquiredAll Florida Insulation, LLC , aLongwood, Florida based installer of spray foam and fiberglass insulation to residential, multifamily, and commercial customers with annual revenue of approximately$2.4 million .
Cash Dividend and Share Repurchases
IBP’s Board of Directors has approved the Company’s quarterly cash dividend of
During the 2022 nine month period, IBP has repurchased over 1.2 million shares of its common stock at a total cost of
Third Quarter 2022 Results Overview
For the third quarter of 2022, net revenue was a quarterly record of
Gross profit improved 41.9% to
Selling and administrative expense, as a percent of net revenue, was 16.1% compared to 18.1% in the prior year quarter. Adjusted selling and administrative expense*, as a percent of net revenue, was 15.7% compared to 17.5% in the prior year quarter.
Net income was
Adjusted EBITDA* was
Conference Call and Webcast
The Company will host a conference call and webcast on
About
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of the federal securities laws, including with respect to the housing market and the commercial market, our operations, our ESG initiatives, industry conditions, our financial and business model, payment of dividends, the demand for our services and product offerings, the impact of the COVID-19 crisis on our business and end markets, supply chain and material constraints, expansion of our national footprint and end markets, diversification of our products, our ability to grow and strengthen our market position, our ability to pursue and integrate value-enhancing acquisitions and the expected amount of acquired revenue, our ability to improve sales and profitability, the impact of the COVID-19 crisis on our financial results, and expectations for demand for our services and our earnings. Forward-looking statements may generally be identified by the use of words such as "anticipate," "believe," "expect," "intends," "plan," and "will" or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Any forward-looking statements that we make herein and in any future reports and statements are not guarantees of future performance, and actual results may differ materially from those expressed in or suggested by such forward-looking statements as a result of various factors, including, without limitation, the duration, effect and severity of the COVID-19 crisis; the adverse impact of the COVID-19 crisis on our business and financial results, our supply chain, the economy and the markets we serve; general economic and industry conditions; increases in mortgage interest rates and rising home prices; inflation and interest rates; the material price and supply environment; the timing of increases in our selling prices; the risk that the Company may reduce, suspend or eliminate dividend payments in the future; and the factors discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended
*Use of Non-GAAP Financial Measures
In addition to the financial measures prepared in accordance with
|
|||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME |
|||||||||||||
(unaudited, in thousands, except share and per share amounts) |
|||||||||||||
|
|||||||||||||
|
Three months ended
|
|
Nine months ended
|
||||||||||
|
|
2022 |
|
|
2021 |
|
|
|
2022 |
|
|
2021 |
|
Net revenue |
$ |
719,114 |
|
$ |
509,763 |
|
|
$ |
1,983,355 |
|
$ |
1,434,927 |
|
Cost of sales |
|
497,837 |
|
|
353,879 |
|
|
|
1,372,966 |
|
|
1,001,730 |
|
Gross profit |
|
221,277 |
|
|
155,884 |
|
|
|
610,389 |
|
|
433,197 |
|
Operating expenses |
|
|
|
|
|
|
|
||||||
Selling |
|
31,651 |
|
|
24,188 |
|
|
|
86,214 |
|
|
67,677 |
|
Administrative |
|
84,345 |
|
|
68,056 |
|
|
|
247,519 |
|
|
199,607 |
|
Amortization |
|
11,370 |
|
|
9,224 |
|
|
|
33,728 |
|
|
26,798 |
|
Operating income |
|
93,911 |
|
|
54,416 |
|
|
|
242,928 |
|
|
139,115 |
|
Other expense, net |
|
|
|
|
|
|
|
||||||
Interest expense, net |
|
10,668 |
|
|
7,687 |
|
|
|
31,669 |
|
|
22,781 |
|
Other expense (income) |
|
185 |
|
|
(483 |
) |
|
|
698 |
|
|
(494 |
) |
Income before income taxes |
|
83,058 |
|
|
47,212 |
|
|
|
210,561 |
|
|
116,828 |
|
Income tax provision |
|
22,080 |
|
|
12,320 |
|
|
|
55,857 |
|
|
27,432 |
|
Net income |
$ |
60,978 |
|
$ |
34,892 |
|
|
$ |
154,704 |
|
$ |
89,396 |
|
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
||||||
Net change on cash flow hedges, net of tax (provision) benefit of |
|
14,379 |
|
|
1,292 |
|
|
|
42,640 |
|
|
7,762 |
|
Comprehensive income |
$ |
75,357 |
|
$ |
36,184 |
|
|
$ |
197,344 |
|
$ |
97,158 |
|
Earnings Per Share: |
|
|
|
|
|
|
|
||||||
Basic |
$ |
2.14 |
|
$ |
1.19 |
|
|
$ |
5.36 |
|
$ |
3.05 |
|
Diluted |
$ |
2.13 |
|
$ |
1.18 |
|
|
$ |
5.33 |
|
$ |
3.02 |
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||
Basic |
|
28,478,954 |
|
|
29,404,257 |
|
|
|
28,851,389 |
|
|
29,355,538 |
|
Diluted |
|
28,595,707 |
|
|
29,620,748 |
|
|
|
29,020,509 |
|
|
29,615,162 |
|
|
|
|
|
|
|
|
|
||||||
Cash dividends declared per share |
$ |
0.32 |
|
$ |
0.30 |
|
|
$ |
1.85 |
|
$ |
0.90 |
|
|
|
|
|
|
|
|
|
|
|||||||
CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
(unaudited, in thousands, except share and per share amounts) |
|||||||
|
|||||||
|
|
|
|
||||
|
|
2022 |
|
|
|
2021 |
|
ASSETS |
|
|
|
||||
Current assets |
|
|
|
||||
Cash and cash equivalents |
$ |
203,402 |
|
|
$ |
333,485 |
|
Investments |
|
24,996 |
|
|
|
— |
|
Accounts receivable (less allowance for credit losses of |
|
415,657 |
|
|
|
312,767 |
|
Inventories |
|
182,176 |
|
|
|
143,039 |
|
Prepaid expenses and other current assets |
|
71,790 |
|
|
|
70,025 |
|
Total current assets |
|
898,021 |
|
|
|
859,316 |
|
Property and equipment, net |
|
115,479 |
|
|
|
105,933 |
|
Operating lease right-of-use assets |
|
72,226 |
|
|
|
69,871 |
|
|
|
356,612 |
|
|
|
322,517 |
|
Customer relationships, net |
|
184,225 |
|
|
|
178,264 |
|
Other intangibles, net |
|
91,613 |
|
|
|
86,157 |
|
Other non-current assets |
|
45,675 |
|
|
|
31,144 |
|
Total assets |
$ |
1,763,851 |
|
|
$ |
1,653,202 |
|
LIABILITIES AND STOCKHOLDER'S EQUITY |
|
|
|
||||
Current liabilities |
|
|
|
||||
Current maturities of long-term debt |
$ |
30,494 |
|
|
$ |
30,839 |
|
Current maturities of operating lease obligations |
|
25,414 |
|
|
|
23,224 |
|
Current maturities of finance lease obligations |
|
2,275 |
|
|
|
1,747 |
|
Accounts payable |
|
156,117 |
|
|
|
132,705 |
|
Accrued compensation |
|
61,453 |
|
|
|
50,964 |
|
Other current liabilities |
|
82,809 |
|
|
|
68,090 |
|
Total current liabilities |
|
358,562 |
|
|
|
307,569 |
|
Long-term debt |
|
827,906 |
|
|
|
832,193 |
|
Operating lease obligations |
|
46,640 |
|
|
|
46,075 |
|
Finance lease obligations |
|
5,469 |
|
|
|
3,297 |
|
Deferred income taxes |
|
19,901 |
|
|
|
4,819 |
|
Other long-term liabilities |
|
47,859 |
|
|
|
42,409 |
|
Total liabilities |
|
1,306,337 |
|
|
|
1,236,362 |
|
Commitments and contingencies (Note 16) |
|
|
|
||||
Stockholders’ equity |
|
— |
|
|
|
— |
|
Preferred Stock; |
|
— |
|
|
|
— |
|
Common stock; |
|
334 |
|
|
|
333 |
|
Additional paid in capital |
|
225,377 |
|
|
|
211,430 |
|
Retained earnings |
|
453,286 |
|
|
|
352,543 |
|
|
|
(263,896 |
) |
|
|
(147,239 |
) |
Accumulated other comprehensive income (loss) |
|
42,413 |
|
|
|
(227 |
) |
Total stockholders’ equity |
|
457,514 |
|
|
|
416,840 |
|
Total liabilities and stockholders’ equity |
$ |
1,763,851 |
|
|
$ |
1,653,202 |
|
|
|||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||
(unaudited, in thousands) |
|||||||
|
|||||||
|
Nine months ended
|
||||||
|
|
2022 |
|
|
|
2021 |
|
Cash flows from operating activities |
|
|
|
||||
Net income |
$ |
154,704 |
|
|
$ |
89,396 |
|
Adjustments to reconcile net income to net cash provided by operating activities |
|
|
|
||||
Depreciation and amortization of property and equipment |
|
35,153 |
|
|
|
32,498 |
|
Amortization of operating lease right-of-use assets |
|
19,832 |
|
|
|
16,464 |
|
Amortization of intangibles |
|
33,728 |
|
|
|
26,798 |
|
Amortization of deferred financing costs and debt discount |
|
1,436 |
|
|
|
993 |
|
Provision for credit losses |
|
2,754 |
|
|
|
1,135 |
|
Gain on sale of property and equipment |
|
(1,048 |
) |
|
|
(1,405 |
) |
Noncash stock compensation |
|
10,290 |
|
|
|
10,228 |
|
Other, net |
|
1,509 |
|
|
|
2,414 |
|
Changes in assets and liabilities, excluding effects of acquisitions |
|
|
|
||||
Accounts receivable |
|
(98,528 |
) |
|
|
(23,224 |
) |
Inventories |
|
(23,071 |
) |
|
|
(37,122 |
) |
Proceeds from termination of interest rate swap agreements |
|
25,462 |
|
|
|
— |
|
Other assets |
|
4,773 |
|
|
|
(8,116 |
) |
Accounts payable |
|
20,290 |
|
|
|
14,120 |
|
Income taxes receivable/payable |
|
12,354 |
|
|
|
(107 |
) |
Other liabilities |
|
(971 |
) |
|
|
(7,594 |
) |
Net cash provided by operating activities |
|
198,667 |
|
|
|
116,478 |
|
Cash flows from investing activities |
|
|
|
||||
Purchases of investments |
|
(344,388 |
) |
|
|
— |
|
Maturities of short term investments |
|
320,000 |
|
|
|
— |
|
Purchases of property and equipment |
|
(35,212 |
) |
|
|
(27,898 |
) |
Acquisitions of businesses, net of cash acquired of |
|
(75,779 |
) |
|
|
(94,500 |
) |
Proceeds from sale of property and equipment |
|
1,418 |
|
|
|
2,219 |
|
Other |
|
(5,974 |
) |
|
|
(1,430 |
) |
Net cash used in investing activities |
|
(139,935 |
) |
|
|
(121,609 |
) |
Cash flows from financing activities |
|
|
|
||||
Payments on Term Loan |
|
(3,750 |
) |
|
|
— |
|
Proceeds from vehicle and equipment notes payable |
|
20,492 |
|
|
|
20,753 |
|
Debt issuance costs |
|
(655 |
) |
|
|
— |
|
Principal payments on long-term debt |
|
(23,340 |
) |
|
|
(19,688 |
) |
Principal payments on finance lease obligations |
|
(1,661 |
) |
|
|
(1,573 |
) |
Dividends paid |
|
(53,821 |
) |
|
|
(26,428 |
) |
Acquisition-related obligations |
|
(9,423 |
) |
|
|
(2,442 |
) |
Repurchase of common stock |
|
(112,193 |
) |
|
|
— |
|
Surrender of common stock awards by employees |
|
(4,464 |
) |
|
|
(5,576 |
) |
Net cash used in financing activities |
|
(188,815 |
) |
|
|
(34,954 |
) |
Net change in cash and cash equivalents |
|
(130,083 |
) |
|
|
(40,085 |
) |
Cash and cash equivalents at beginning of period |
|
333,485 |
|
|
|
231,520 |
|
Cash and cash equivalents at end of period |
$ |
203,402 |
|
|
$ |
191,435 |
|
Supplemental disclosures of cash flow information |
|
|
|
||||
Net cash paid during the period for: |
|
|
|
||||
Interest |
$ |
40,639 |
|
|
$ |
23,748 |
|
Income taxes, net of refunds |
|
43,512 |
|
|
|
27,428 |
|
Supplemental disclosure of noncash activities |
|
|
|
||||
Right-of-use assets obtained in exchange for operating lease obligations |
|
22,056 |
|
|
|
23,543 |
|
Release of indemnification of acquisition-related debt |
|
980 |
|
|
|
2,036 |
|
Property and equipment obtained in exchange for finance lease obligations |
|
4,411 |
|
|
|
1,918 |
|
Seller obligations in connection with acquisition of businesses |
|
25,534 |
|
|
|
18,987 |
|
Unpaid purchases of property and equipment included in accounts payable |
|
857 |
|
|
|
1,327 |
|
Information on Segments
In the first quarter of 2022, we realigned our operating segments. This change resulted in our Company having three operating segments consisting of Installation, Distribution and Manufacturing. The Other category reported below reflects the operations of our Distribution and Manufacturing operating segments.
|
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SEGMENT INFORMATION |
|||||||||||||||||||||||||||||||
(unaudited, in thousands) |
|||||||||||||||||||||||||||||||
|
|||||||||||||||||||||||||||||||
|
Three months ended |
|
Three months ended |
||||||||||||||||||||||||||||
|
Installation |
|
Other |
|
Eliminations |
|
Consolidated |
|
Installation |
|
Other |
|
Eliminations |
|
Consolidated |
||||||||||||||||
Revenue |
$ |
672,916 |
|
|
$ |
47,748 |
|
|
$ |
(1,550 |
) |
|
$ |
719,114 |
|
|
$ |
504,161 |
|
|
$ |
6,305 |
|
|
$ |
(703 |
) |
|
$ |
509,763 |
|
Cost of sales (exclusive of depreciation and amortization shown separately below) |
|
450,017 |
|
|
|
37,659 |
|
|
|
(1,116 |
) |
|
|
486,560 |
|
|
|
339,308 |
|
|
|
4,837 |
|
|
|
(539 |
) |
|
|
343,606 |
|
Segment gross profit |
|
222,899 |
|
|
|
10,089 |
|
|
|
(434 |
) |
|
|
232,554 |
|
|
|
164,853 |
|
|
|
1,468 |
|
|
|
(164 |
) |
|
|
166,157 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
11,277 |
|
|
|
|
|
|
|
|
|
10,273 |
|
||||||||||||
Gross profit, as reported |
|
|
|
|
|
|
|
221,277 |
|
|
|
|
|
|
|
|
|
155,884 |
|
||||||||||||
Selling |
|
|
|
|
|
|
|
31,651 |
|
|
|
|
|
|
|
|
|
24,188 |
|
||||||||||||
Administrative |
|
|
|
|
|
|
|
84,345 |
|
|
|
|
|
|
|
|
|
68,056 |
|
||||||||||||
Amortization |
|
|
|
|
|
|
|
11,370 |
|
|
|
|
|
|
|
|
|
9,224 |
|
||||||||||||
Operating income |
|
|
|
|
|
|
|
93,911 |
|
|
|
|
|
|
|
|
|
54,416 |
|
||||||||||||
Interest expense, net |
|
|
|
|
|
|
|
10,668 |
|
|
|
|
|
|
|
|
|
7,687 |
|
||||||||||||
Other expense (income) |
|
|
|
|
|
|
|
185 |
|
|
|
|
|
|
|
|
|
(483 |
) |
||||||||||||
Income before income taxes |
|
|
|
|
|
|
$ |
83,058 |
|
|
|
|
|
|
|
|
$ |
47,212 |
|
||||||||||||
|
Three months ended |
|
Three months ended |
||||||||||||||||||||||||||||
|
Installation |
|
Other |
|
Eliminations |
|
Consolidated |
|
Installation |
|
Other |
|
Eliminations |
|
Consolidated |
||||||||||||||||
Segment gross profit percentage |
|
33.1 |
% |
|
|
21.1 |
% |
|
|
28.0 |
% |
|
|
32.3 |
% |
|
|
32.7 |
% |
|
|
23.3 |
% |
|
|
23.3 |
% |
|
|
32.6 |
% |
|
Nine months ended |
|
Nine months ended |
||||||||||||||||||||||||||||
|
Installation |
|
Other |
|
Eliminations |
|
Consolidated |
|
Installation |
|
Other |
|
Eliminations |
|
Consolidated |
||||||||||||||||
Revenue |
$ |
1,872,544 |
|
|
$ |
114,690 |
|
|
$ |
(3,879 |
) |
|
$ |
1,983,355 |
|
|
$ |
1,419,302 |
|
|
$ |
17,182 |
|
|
$ |
(1,557 |
) |
|
$ |
1,434,927 |
|
Cost of sales (exclusive of depreciation and amortization shown separately below) |
|
1,255,521 |
|
|
|
87,425 |
|
|
|
(3,015 |
) |
|
|
1,339,931 |
|
|
|
959,384 |
|
|
|
12,980 |
|
|
|
(1,207 |
) |
|
|
971,157 |
|
Segment gross profit |
|
617,023 |
|
|
|
27,265 |
|
|
|
(864 |
) |
|
|
643,424 |
|
|
|
459,918 |
|
|
|
4,202 |
|
|
|
(350 |
) |
|
|
463,770 |
|
Depreciation and amortization |
|
|
|
|
|
|
|
33,035 |
|
|
|
|
|
|
|
|
|
30,573 |
|
||||||||||||
Gross profit, as reported |
|
|
|
|
|
|
|
610,389 |
|
|
|
|
|
|
|
|
|
433,197 |
|
||||||||||||
Selling |
|
|
|
|
|
|
|
86,214 |
|
|
|
|
|
|
|
|
|
67,677 |
|
||||||||||||
Administrative |
|
|
|
|
|
|
|
247,519 |
|
|
|
|
|
|
|
|
|
199,607 |
|
||||||||||||
Amortization |
|
|
|
|
|
|
|
33,728 |
|
|
|
|
|
|
|
|
|
26,798 |
|
||||||||||||
Operating income |
|
|
|
|
|
|
|
242,928 |
|
|
|
|
|
|
|
|
|
139,115 |
|
||||||||||||
Interest expense, net |
|
|
|
|
|
|
|
31,669 |
|
|
|
|
|
|
|
|
|
22,781 |
|
||||||||||||
Other expense (income) |
|
|
|
|
|
|
|
698 |
|
|
|
|
|
|
|
|
|
(494 |
) |
||||||||||||
Income before income taxes |
|
|
|
|
|
|
$ |
210,561 |
|
|
|
|
|
|
|
|
$ |
116,828 |
|
||||||||||||
|
Nine months ended |
|
Nine months ended |
||||||||||||||||||||||||||||
|
Installation |
|
Other |
|
Eliminations |
|
Consolidated |
|
Installation |
|
Other |
|
Eliminations |
|
Consolidated |
||||||||||||||||
Segment gross profit percentage |
|
33.0 |
% |
|
|
23.8 |
% |
|
|
22.3 |
% |
|
|
32.4 |
% |
|
|
32.4 |
% |
|
|
24.5 |
% |
|
|
22.5 |
% |
|
|
32.3 |
% |
The prior period disclosures in the above table have been recast to conform to the current period segment presentation.
|
|||||||||||||||||||||||
REVENUE BY END MARKET |
|||||||||||||||||||||||
(unaudited, in thousands) |
|||||||||||||||||||||||
|
|||||||||||||||||||||||
|
Three months ended |
|
Nine months ended |
||||||||||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||||||||||
Installation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Residential new construction |
$ |
532,299 |
|
74 |
% |
|
$ |
385,401 |
|
76 |
% |
|
$ |
1,480,214 |
|
75 |
% |
|
$ |
1,082,379 |
|
75 |
% |
Repair and remodel |
|
39,139 |
|
6 |
% |
|
|
31,276 |
|
6 |
% |
|
|
109,745 |
|
5 |
% |
|
|
89,810 |
|
7 |
% |
Commercial |
|
101,478 |
|
14 |
% |
|
|
87,484 |
|
17 |
% |
|
|
282,585 |
|
14 |
% |
|
|
247,113 |
|
17 |
% |
Net revenue - Installation |
|
672,916 |
|
94 |
% |
|
|
504,161 |
|
99 |
% |
|
|
1,872,544 |
|
94 |
% |
|
|
1,419,302 |
|
99 |
% |
Other 1 |
|
46,198 |
|
6 |
% |
|
|
5,602 |
|
1 |
% |
|
|
110,811 |
|
6 |
% |
|
|
15,625 |
|
1 |
% |
Net revenue, as reported |
$ |
719,114 |
|
100 |
% |
|
$ |
509,763 |
|
100 |
% |
|
$ |
1,983,355 |
|
100 |
% |
|
$ |
1,434,927 |
|
100 |
% |
1 |
Net revenue for manufacturing operations are included in Other category for all periods presented to conform with our change in composition of operating segments. |
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Gross Profit and Adjusted Selling and Administrative Expense measure performance by adjusting EBITDA, GAAP net income, gross profit and selling and administrative expense, respectively, for certain income or expense items that are not considered part of our core operations. We believe that the presentation of these measures provides useful information to investors regarding our results of operations because it assists both investors and us in analyzing and benchmarking the performance and value of our business.
We believe the Adjusted EBITDA measure is useful to investors and us as a measure of comparative operating performance from period to period as it measures our changes in pricing decisions, cost controls and other factors that impact operating performance, and removes the effect of our capital structure (primarily interest expense), asset base (primarily depreciation and amortization), items outside our control (primarily income taxes) and the volatility related to the timing and extent of other activities such as asset impairments and non-core income and expenses. Accordingly, we believe that this measure is useful for comparing general operating performance from period to period. In addition, we use various EBITDA-based measures in determining the achievement of awards under certain of our incentive compensation programs. Other companies may define Adjusted EBITDA differently and, as a result, our measure may not be directly comparable to measures of other companies. In addition, Adjusted EBITDA may be defined differently for purposes of covenants contained in our revolving credit facility or any future facility.
Although we use the Adjusted EBITDA measure to assess the performance of our business, the use of the measure is limited because it does not include certain material expenses, such as interest and taxes, necessary to operate our business. Adjusted EBITDA should be considered in addition to, and not as a substitute for, GAAP net income as a measure of performance. Our presentation of this measure should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. This measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, this measure is not intended as an alternative to net income as an indicator of our operating performance, as an alternative to any other measure of performance in conformity with GAAP or as an alternative to cash flow provided by operating activities as a measure of liquidity. You should therefore not place undue reliance on this measure or ratios calculated using this measure.
We also believe the Adjusted Net Income measure is useful to investors and us as a measure of comparative operating performance from period to period as it measures our changes in pricing decisions, cost controls and other factors that impact operating performance, and removes the effect of certain non-core items such as discontinued operations, acquisition related expenses, amortization expense, the tax impact of these certain non-core items, and the volatility related to the timing and extent of other activities such as asset impairments and non-core income and expenses. To make the financial presentation more consistent with other public building products companies, beginning in the fourth quarter 2016 we included an addback for non-cash amortization expense related to acquisitions. Accordingly, we believe that this measure is useful for comparing general operating performance from period to period. Other companies may define Adjusted Net Income differently and, as a result, our measure may not be directly comparable to measures of other companies. In addition, Adjusted Net Income may be defined differently for purposes of covenants contained in our revolving credit facility or any future facility.
|
|||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
|||||||||||||||
ADJUSTED NET INCOME CALCULATIONS |
|||||||||||||||
(unaudited, in thousands, except share and per share amounts) |
|||||||||||||||
|
|||||||||||||||
The table below reconciles Adjusted Net Income to the most directly comparable GAAP financial measure, net income, for the periods presented therein. |
|||||||||||||||
|
|||||||||||||||
Per share figures may reflect rounding adjustments and consequently totals may not appear to sum. |
|||||||||||||||
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Net income, as reported |
$ |
60,978 |
|
|
$ |
34,892 |
|
|
$ |
154,704 |
|
|
$ |
89,396 |
|
Adjustments for adjusted net income |
|
|
|
|
|
|
|
||||||||
Share based compensation expense |
|
3,212 |
|
|
|
3,535 |
|
|
|
10,290 |
|
|
|
10,228 |
|
Acquisition related expenses |
|
(94 |
) |
|
|
(252 |
) |
|
|
1,307 |
|
|
|
1,649 |
|
COVID-19 expenses 1 |
|
2 |
|
|
|
311 |
|
|
|
303 |
|
|
|
365 |
|
Gain on sale of assets |
|
— |
|
|
|
(499 |
) |
|
|
— |
|
|
|
(499 |
) |
Amortization expense 2 |
|
11,370 |
|
|
|
9,224 |
|
|
|
33,728 |
|
|
|
26,798 |
|
Legal Reserve |
|
— |
|
|
|
— |
|
|
|
845 |
|
|
|
— |
|
Tax impact of adjusted items at a normalized tax rate 3 |
|
(3,767 |
) |
|
|
(3,203 |
) |
|
|
(12,083 |
) |
|
|
(10,021 |
) |
Adjusted net income |
$ |
71,701 |
|
|
$ |
44,008 |
|
|
$ |
189,094 |
|
|
$ |
117,916 |
|
Weighted average shares outstanding (diluted) |
|
28,595,707 |
|
|
|
29,620,748 |
|
|
|
29,020,509 |
|
|
|
29,615,162 |
|
Diluted net income per share, as reported |
$ |
2.13 |
|
|
$ |
1.18 |
|
|
$ |
5.33 |
|
|
$ |
3.02 |
|
Adjustments for adjusted net income, net of tax impact, per diluted share 4 |
|
0.38 |
|
|
|
0.31 |
|
|
|
1.19 |
|
|
|
0.96 |
|
Diluted adjusted net income per share |
$ |
2.51 |
|
|
$ |
1.49 |
|
|
$ |
6.52 |
|
|
$ |
3.98 |
|
1 |
Addback of employee pay, employee medical expenses, and legal fees directly attributable to COVID-19. |
2 |
Addback of all non-cash amortization resulting from business combinations. |
3 |
Normalized effective tax rate of 26.0% applied to periods presented. |
4 |
Includes adjustments related to the items noted above, net of tax. |
|
||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
||||||||||||||||
ADJUSTED GROSS PROFIT CALCULATIONS |
||||||||||||||||
(unaudited, in thousands) |
||||||||||||||||
|
||||||||||||||||
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Gross profit, as reported |
|
$ |
221,277 |
|
|
$ |
155,884 |
|
|
$ |
610,389 |
|
|
$ |
433,197 |
|
Share based compensation expense |
|
|
164 |
|
|
|
161 |
|
|
|
484 |
|
|
|
287 |
|
COVID-19 expense 1 |
|
|
2 |
|
|
|
310 |
|
|
|
4 |
|
|
|
360 |
|
Adjusted gross profit |
|
$ |
221,443 |
|
|
$ |
156,355 |
|
|
$ |
610,877 |
|
|
$ |
433,844 |
|
Adjusted gross profit - % Total Revenue |
|
|
30.8 |
% |
|
|
30.7 |
% |
|
|
30.8 |
% |
|
|
30.2 |
% |
1 |
Addback of employee pay, employee medical expenses, and legal fees directly attributable to COVID-19. |
|
||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
||||||||||||||||
ADJUSTED SELLING AND ADMINISTRATIVE EXPENSE CALCULATIONS |
||||||||||||||||
(unaudited, in thousands) |
||||||||||||||||
|
||||||||||||||||
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Selling expense |
|
$ |
31,651 |
|
|
$ |
24,188 |
|
|
$ |
86,214 |
|
|
$ |
67,677 |
|
Administrative expense |
|
|
84,345 |
|
|
|
68,056 |
|
|
|
247,519 |
|
|
|
199,607 |
|
Selling and Administrative, as reported |
|
|
115,996 |
|
|
|
92,244 |
|
|
|
333,733 |
|
|
|
267,284 |
|
Share based compensation expense |
|
|
3,048 |
|
|
|
3,374 |
|
|
|
9,806 |
|
|
|
9,941 |
|
Acquisition related expense |
|
|
(94 |
) |
|
|
(252 |
) |
|
|
1,307 |
|
|
|
1,649 |
|
COVID-19 expenses 1 |
|
|
— |
|
|
|
1 |
|
|
|
299 |
|
|
|
5 |
|
Legal reserve |
|
|
— |
|
|
|
— |
|
|
|
845 |
|
|
|
— |
|
Adjusted Selling and Administrative |
|
$ |
113,042 |
|
|
$ |
89,121 |
|
|
$ |
321,476 |
|
|
$ |
255,689 |
|
Adjusted Selling and Administrative - % Total Revenue |
|
|
15.7 |
% |
|
|
17.5 |
% |
|
|
16.2 |
% |
|
|
17.8 |
% |
1 |
Addback of employee pay, employee medical expenses, and legal fees directly attributable to COVID-19. |
|
||||||||||||||||
RECONCILIATION OF GAAP TO NON-GAAP MEASURES |
||||||||||||||||
ADJUSTED EBITDA CALCULATIONS |
||||||||||||||||
(unaudited, in thousands) |
||||||||||||||||
|
||||||||||||||||
The table below reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure, net income, for the periods presented therein. |
||||||||||||||||
|
||||||||||||||||
Per share figures may reflect rounding adjustments and consequently totals may not appear to sum. |
||||||||||||||||
|
||||||||||||||||
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
||||||||
Net income, as reported |
|
$ |
60,978 |
|
|
$ |
34,892 |
|
|
$ |
154,704 |
|
|
$ |
89,396 |
|
Interest expense |
|
|
10,668 |
|
|
|
7,687 |
|
|
|
31,669 |
|
|
|
22,781 |
|
Provision for income tax |
|
|
22,080 |
|
|
|
12,320 |
|
|
|
55,857 |
|
|
|
27,432 |
|
Depreciation and amortization |
|
|
23,361 |
|
|
|
20,152 |
|
|
|
68,881 |
|
|
|
59,296 |
|
EBITDA |
|
|
117,087 |
|
|
|
75,051 |
|
|
|
311,111 |
|
|
|
198,905 |
|
Acquisition related expenses |
|
|
(94 |
) |
|
|
(252 |
) |
|
|
1,307 |
|
|
|
1,649 |
|
Share based compensation expense |
|
|
3,212 |
|
|
|
3,535 |
|
|
|
10,290 |
|
|
|
10,228 |
|
COVID-19 expenses 1 |
|
|
2 |
|
|
|
311 |
|
|
|
303 |
|
|
|
365 |
|
Gain on sale of assets |
|
|
— |
|
|
|
(499 |
) |
|
|
— |
|
|
|
(499 |
) |
Legal reserve |
|
|
— |
|
|
|
— |
|
|
|
845 |
|
|
|
— |
|
Adjusted EBITDA |
|
$ |
120,207 |
|
|
$ |
78,146 |
|
|
$ |
323,856 |
|
|
$ |
210,648 |
|
Adjusted EBITDA Margin |
|
|
16.7 |
% |
|
|
15.3 |
% |
|
|
16.3 |
% |
|
|
14.7 |
% |
1 |
Addback of employee pay, employee medical expenses, and legal fees directly attributable to COVID-19. |
|
||||||||
SUPPLEMENTARY TABLE |
||||||||
(unaudited) |
||||||||
|
||||||||
|
|
Three months ended
|
|
Nine months ended
|
||||
|
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Period-over-period Growth |
|
|
|
|
|
|
|
|
Consolidated Sales Growth |
|
41.1% |
|
21.2% |
|
38.2% |
|
18.4% |
Consolidated Same Branch Sales Growth |
|
28.5% |
|
11.2% |
|
26.2% |
|
8.9% |
|
|
|
|
|
|
|
|
|
Installation 1 |
|
|
|
|
|
|
|
|
Sales Growth |
|
33.5% |
|
21.3% |
|
31.9% |
|
18.2% |
Same Branch Sales Growth |
|
28.4% |
|
11.2% |
|
26.2% |
|
8.6% |
|
|
|
|
|
|
|
|
|
Single-Family Sales Growth |
|
39.2% |
|
24.1% |
|
38.2% |
|
20.1% |
Single-Family Same Branch Sales Growth |
|
35.3% |
|
16.0% |
|
32.8% |
|
12.8% |
|
|
|
|
|
|
|
|
|
Multi-Family Sales Growth |
|
33.9% |
|
18.2% |
|
29.7% |
|
17.0% |
Multi-Family Same Branch Sales Growth |
|
32.9% |
|
10.9% |
|
28.9% |
|
7.0% |
|
|
|
|
|
|
|
|
|
Residential Sales Growth |
|
38.4% |
|
23.2% |
|
36.8% |
|
19.6% |
Residential Same Branch Sales Growth |
|
34.9% |
|
15.1% |
|
32.1% |
|
11.8% |
|
|
|
|
|
|
|
|
|
Commercial Sales Growth 2 |
|
16.0% |
|
17.5% |
|
14.4% |
|
12.1% |
Commercial Same Branch Sales Growth |
|
2.8% |
|
(0.2)% |
|
4.4% |
|
(5.0)% |
|
|
|
|
|
|
|
|
|
Other 1,3 |
|
|
|
|
|
|
|
|
Sales Growth |
|
657.3% |
|
23.0% |
|
567.5% |
|
44.0% |
Same Branch Sales Growth |
|
44.3% |
|
23.0% |
|
43.8% |
|
44.0% |
|
|
|
|
|
|
|
|
|
Same Branch Sales Growth - Installation |
|
|
|
|
|
|
|
|
Volume Growth 4 |
|
7.5% |
|
4.7% |
|
7.9% |
|
10.4% |
Price/Mix Growth 4 |
|
27.1% |
|
7.4% |
|
22.2% |
|
(0.3)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Completions Growth |
|
6.5% |
|
(2.1)% |
|
2.3% |
|
5.9% |
Single-Family Completions Growth |
|
8.1% |
|
1.5% |
|
5.4% |
|
6.9% |
Multi-Family Completions Growth |
|
5.6% |
|
(9.6)% |
|
(5.3)% |
|
4.3% |
1 |
During the three months ended |
2 |
Our commercial end market consists of heavy and light commercial projects. |
3 |
Other business segment category includes our manufacturing and distribution businesses operating segments. As of 1Q22, Installation segment end market growth metrics exclude the manufacturing and distribution businesses. Our distribution businesses were acquired in December, 2021 and April, 2022. |
4 |
The heavy commercial end market is excluded from these metrics given its much larger per-job revenue compared to our average job. |
5 |
|
|
||||||||||||||||||||||||
INCREMENTAL REVENUE AND ADJUSTED EBITDA MARGINS |
||||||||||||||||||||||||
(unaudited, in thousands) |
||||||||||||||||||||||||
Revenue Increase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Three months ended |
|
Nine months ended |
||||||||||||||||||||
|
|
|
2022 |
|
% Total |
|
|
2021 |
|
% Total |
|
|
2022 |
|
% Total |
|
|
2021 |
|
% Total |
||||
Same Branch |
|
$ |
145,083 |
|
69.3 |
% |
|
$ |
47,216 |
|
52.9 |
% |
|
$ |
376,491 |
|
68.6 |
% |
|
$ |
107,467 |
|
48.2 |
% |
Acquired |
|
|
64,269 |
|
30.7 |
% |
|
|
42,060 |
|
47.1 |
% |
|
|
171,937 |
|
31.4 |
% |
|
|
115,704 |
|
51.8 |
% |
Total |
|
$ |
209,352 |
|
100.0 |
% |
|
$ |
89,276 |
|
100.0 |
% |
|
$ |
548,428 |
|
100.0 |
% |
|
$ |
223,171 |
|
100.0 |
% |
Adjusted EBITDA Margin Contributions |
||||||||||||||||||||||||
|
|
Three months ended |
|
Nine months ended |
||||||||||||||||||||
|
|
|
2022 |
|
% Margin |
|
|
2021 |
|
% Margin |
|
|
2022 |
|
% Margin |
|
|
2021 |
|
% Margin |
||||
Same Branch |
|
$ |
35,873 |
|
24.7 |
% |
|
$ |
6,220 |
|
13.2 |
% |
|
$ |
92,808 |
|
24.7 |
% |
|
$ |
14,011 |
|
13.0 |
% |
Acquired |
|
|
6,187 |
|
9.6 |
% |
|
|
5,726 |
|
13.6 |
% |
|
|
20,400 |
|
11.9 |
% |
|
|
18,172 |
|
15.7 |
% |
Total |
|
$ |
42,060 |
|
20.1 |
% |
|
$ |
11,946 |
|
13.4 |
% |
|
$ |
113,208 |
|
20.6 |
% |
|
$ |
32,183 |
|
14.4 |
% |
View source version on businesswire.com: https://www.businesswire.com/news/home/20221102005993/en/
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Source: