Investors

COLUMBUS, Ohio--(BUSINESS WIRE)--Nov. 8, 2023-- Installed Building Products, Inc. (the "Company" or "IBP") (NYSE: IBP), an industry-leading installer of insulation and complementary building products, today announced results for the third quarter ended September 30, 2023.

Third Quarter 2023 Highlights (Comparisons are to Prior Year Period)

• Net revenue decreased 1.8% to $706.5 million
  • Installation revenue decreased 1.7% to $661.2 million, as softer single-family sales were partially offset by multi-family and commercial sales growth, including incremental sales from IBP's recent acquisitions
  • Other revenue, which includes IBP’s manufacturing and distribution operations, decreased slightly to $45.3 million from $46.2 million
• Net income increased 11.5% to a third quarter record of $68.0 million
• Adjusted EBITDA* increased to a record of $130.5 million
• Net income per diluted share increased 12.7% to a third quarter record of $2.40
• Adjusted net income per diluted share* increased 11.2% to a record of $2.79
• At September 30, 2023, IBP had $339.8 million in cash and cash equivalents
• Completed the repricing of its Term Loan B facility, reducing the borrowing cost by 25 basis points
• Published the 2023 annual Environmental, Social and Governance ("ESG") report highlighting the positive impact the Company is making for all stakeholders
• Announced retirement of Jay P. Elliott, IBP's Chief Operating Officer, effective December 31, 2023 and the Board of Directors named Brad A. Wheeler, current Regional President as his successor, effective January 1, 2024
• Declared third quarter dividend of $0.33 per share which was paid to shareholders on September 30, 2023

Recent Developments

• IBP’s Board of Directors declared the fourth quarter regular cash dividend of $0.33 per share

“Our third quarter and year-to-date financial results reflect the continued benefits of our product, end-market and geographic diversification strategies, as softer single-family sales were partially offset by the continuation of robust sales growth in our multi-family end market. While we expect interest rate volatility to exacerbate cyclicality in the housing industry, we believe the long-term opportunities in our residential and commercial end markets remain attractive and as of the end of the third quarter, our multi-family revenue is supported by a stable backlog,” stated Jeff Edwards, Chairman and Chief Executive Officer.

“We also continue to prioritize the value of our services over volume, which drove strong margins during the quarter. As a result, we achieved record quarterly net profit margin and adjusted EBITDA margin for the three months ended September 30, 2023. With our strong balance sheet and asset light business model, we continue to pursue growth through acquisitions, while distributing cash dividends, and opportunistically repurchasing our common stock,” continued Mr. Edwards.

“I am proud of our team’s continued hard work and dedication throughout a rapidly changing economic backdrop for the housing industry. Our focus remains steadfast and we continue to advance toward our goals with the third annual ESG report highlighting a core business value of ‘doing the right thing’ for our employees, customers, communities, and shareholders. I believe our success in 2023, and throughout IBP’s history, demonstrates that ‘doing the right thing’ creates significant value for our stakeholders,” concluded Mr. Edwards.

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 2023, IBP has acquired approximately $58 million of annual revenue. We currently anticipate that certain acquisition targets may be delayed to the first quarter of 2024, which would result in acquired revenue for 2023 being less than our annual goal of $100 million.

During the 2023 third quarter and in October 2023, IBP completed the following acquisitions:

• In August 2023, IBP acquired Interior 2000 Products, LLC, a Virginia-based installer of shower, shelving, and mirror products, as well as fireplaces into new and existing residential and commercial construction projects with annual revenue of approximately $6 million.
• In August 2023, IBP acquired R-Pro Select, LLC, a North Carolina-based residential installer of fiberglass, spray foam, cellulose insulation, and fireplaces with annual revenue of approximately $2 million.
• In October 2023, IBP acquired Interstate Spray Foam, LLC, a North Dakota-based installer of fiberglass and spray foam insulation with multifamily, residential and commercial customers and annual revenue of approximately $2 million.

2023 Fourth Quarter Cash Dividend

IBP’s Board of Directors has approved the Company’s quarterly cash dividend of $0.33 per share, payable on December 31, 2023, to stockholders of record on December 15, 2023. The fourth quarter regular cash dividend represents a 5% increase from last year’s fourth quarter cash dividend payment.

Third Quarter 2023 Results Overview

For the third quarter of 2023, net revenue was $706.5 million, a decrease of 1.8% from $719.1 million for the third quarter of 2022. On a consolidated same branch basis, net revenue declined 5.2% from the prior year quarter, which was primarily attributable to a 10.8% decline in IBP's reported job volume partially offset by a 3.5% increase in price/mix. Residential sales growth within the Company's Installation segment was down 6.0% on a same branch basis in the quarter, as a 12.2% decline in single-family same branch sales was partially offset by a 28.4% increase in multi-family same branch sales. According to the U.S. Census Bureau, the number of single-family housing units under construction across the industry fell 16% from the prior year quarter while multifamily units were up 14% relative to last year. Commercial same branch sales were down 1.3% from the prior year quarter and total commercial sales increased 3.7%, which includes the Company's recent acquisitions.

Gross profit improved 9.4% to $242.1 million from $221.3 million in the prior year quarter. Gross profit and adjusted gross profit* as a percent of total revenue were both 34.3% up from 30.8% for the same period last year. Adjusted gross profit primarily adjusts for the Company’s share-based compensation expense.

Selling and administrative expense, as a percent of net revenue, was 18.2% compared to 16.1% in the prior year quarter. Adjusted selling and administrative expense*, as a percent of net revenue, was 17.7% compared to 15.7% in the prior year quarter.

Net income was $68.0 million, or $2.40 per diluted share, compared to $61.0 million, or $2.13 per diluted share in the prior year quarter. Net income margin for the third quarter was 9.6% compared to 8.5% in the prior year quarter. Adjusted net income* was $78.9 million, or $2.79 per diluted share, compared to $71.7 million, or $2.51 per diluted share in the prior year quarter. Adjusted net income margin* for the third quarter was 11.2% compared to 10.0% in the prior year quarter. Adjusted net income accounts for the impact of non-core items in both periods, including an addback for non-cash amortization expense related to acquisitions.

EBITDA* was $126.8 million, an 8.3% increase from $117.1 million in the prior year quarter as a result of improved margins of 18.0% and 16.3%, respectively. Adjusted EBITDA* was $130.5 million, an 8.6% increase from $120.2 million in the prior year quarter, representing adjusted EBITDA margins* of 18.5% and 16.7%, respectively. Both EBITDA and Adjusted EBITDA for the third quarter of 2023 represent record results.

Conference Call and Webcast

The Company will host a conference call and webcast on November 8, 2023 at 10:00 a.m. Eastern Time to discuss these results. To participate in the call, please dial 877-407-0792 (domestic) or 201-689-8263 (international). The live webcast will be available at www.installedbuildingproducts.com in the investor relations section. A replay of the conference call will be available through December 8, 2023, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13740596.

About Installed Building Products

Installed Building Products, Inc. is one of the nation's largest new residential insulation installers and is a diversified installer of complementary building products, including waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors and other products for residential and commercial builders located in the continental United States. The Company manages all aspects of the installation process for its customers, from direct purchase and receipt of materials from national manufacturers to its timely supply of materials to job sites and quality installation. The Company offers its portfolio of services for new and existing single-family and multi-family residential and commercial building projects in all 48 continental states and the District of Columbia from its national network of over 240 branch locations.

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, industry and economic conditions, our ESG-related performance and initiatives, our financial and business model, payment of dividends, the demand for our services and product offerings, 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, 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 adverse impact of the ongoing COVID-19 pandemic; general economic and industry conditions; 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 December 31, 2022, as the same may be updated from time to time in our subsequent filings with the Securities and Exchange Commission. In addition, any future declaration of dividends will be subject to the final determination of our Board of Directors. Any forward-looking statement made by the Company in this press release speaks only as of the date hereof. New risks and uncertainties arise from time to time, and it is impossible for the Company to predict these events or how they may affect it. The Company has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws.

*Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release contains the non-GAAP financial measures of EBITDA, Adjusted EBITDA, Adjusted EBITDA margin (i.e., Adjusted EBITDA divided by net revenue), Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted Gross Profit and Adjusted Selling and Administrative expense. The reasons for the use of these measures, reconciliations of EBITDA, Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted Gross Profit, and Adjusted Selling and Administrative expense to the most directly comparable GAAP measures and other information relating to these measures are included below following the unaudited condensed consolidated financial statements. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for IBP’s financial results prepared in accordance with GAAP.

INSTALLED BUILDING PRODUCTS, INC.
SEGMENT INFORMATION
(unaudited, in thousands)

Information on Segments

Our Company has three operating segments consisting of Installation, Distribution and Manufacturing. The Other category reported below reflects the operations of our Distribution and Manufacturing operating segments.

The reconciliation between consolidated segment gross profit for each period as shown in the tables above to consolidated income before income taxes as follows:

Reconciliation of Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Gross Profit and Adjusted Selling and Administrative Expense measure performance by adjusting GAAP net income, EBITDA, 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.

INSTALLED BUILDING PRODUCTS, INC.
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.

INSTALLED BUILDING PRODUCTS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
ADJUSTED GROSS PROFIT CALCULATIONS
(unaudited, in thousands)

The table below reconciles Adjusted Gross Profit to the most directly comparable GAAP financial measure, gross profit, for the periods presented therein.

The table below reconciles Adjusted Selling and Administrative to the most directly comparable GAAP financial measure, selling and administrative, for the periods presented therein.

INSTALLED BUILDING PRODUCTS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
EBITDA AND ADJUSTED EBITDA CALCULATIONS
(unaudited, in thousands)

The table below reconciles EBITDA and Adjusted EBITDA to the most directly comparable GAAP financial measure, net income, for the periods presented therein.

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Contact Information:
Investor Relations:
614-221-9944
investorrelations@installed.net

Source: Installed Building Products, Inc.