Investors

COLUMBUS, Ohio--(BUSINESS WIRE)--Aug. 2, 2018-- Installed Building Products, Inc. (the "Company" or "IBP") (NYSE:IBP), an industry-leading installer of insulation and complementary building products, announced today results for the second quarter ended June 30, 2018.

Second Quarter 2018 Highlights

• Net revenue increased 17.9% to a record $332.6 million
• Net income increased 36.3% to a record $16.3 million
• Adjusted EBITDA* increased 16.2% to a record $45.6 million
• Net income per diluted share increased 36.8% to $0.52
• Adjusted net income per diluted share* increased 32.2% to $0.78
• In June 2018, successfully increased the size of its existing Term Loan B facility as well as its revolving credit facility and extended the maturity date for each by approximately one year.
• In April 2018, acquired H2H Blinds, LLC, an installer of blinds and shutters primarily for the residential construction market in Georgia and North Carolina with annual sales of approximately $7.5 million
• In May 2018, acquired Green Star Plus Insulation, an insulation installer located in Southern Indiana with approximately $2.3 million in sales.
• In May 2018, acquired Advanced Insulation, a spray foam and fiberglass installer located in St Augustine, Florida with approximately $1.3 million in sales.

“Record revenues and an improving pricing environment helped IBP produce record adjusted EBITDA* for the 2018 second quarter,” stated Jeff Edwards, Chairman and Chief Executive Officer. “We continue to successfully negotiate better pricing with our customers and experienced strong price momentum during the quarter. Based on current and improving market conditions, we believe pricing will continue to improve throughout the remainder of the year, which will benefit margins and incremental earnings. In addition, IBP produced strong operating leverage during the quarter with selling and administrative expenses as a percent of revenues at the lowest level we’ve reported since the Company went public in 2014.

“We remain committed to our acquisition growth strategy and believe we have developed a strong, unique, and experienced platform. Since our IPO in 2014, we have acquired a diverse group of installation businesses, representing more than 40 companies and approximately $425 million of annual revenues at the time of acquisition. IBP’s pipeline remains strong as we continue to pursue accretive acquisitions that expand our geographic presence and diversify our product and end market mix. We continue to expect 2018 will be another year of record sales and earnings.”

Second Quarter 2018 Results Overview

For the second quarter of 2018, net revenue was $332.6 million, an increase of 17.9% from $282.2 million in the second quarter of 2017. On a same branch basis, net revenue improved 11.3% from the prior year quarter. Residential same branch sales growth was 12.1% in the quarter, with more than half of the increase attributable to growth in the number of completed jobs and the remainder through price gains and more favorable customer and product mix. Same branch single-family sales grew 14.5% during the second quarter, outpacing the growth in U.S. single-family housing completions of 6.5%, while our large commercial construction end market had organic growth of 4.1%.

Gross profit improved 12.6% to $95.6 million from $84.9 million in the prior year quarter. Adjusted gross profit* as a percent of total revenue was 28.9% which adjusts for the Company’s share-based compensation expense, financial wellness program and branch start-up costs, compared to 30.1% for the same period last year.

Selling and administrative expense, as a percentage of net revenue, was 18.3% compared to 19.6% in the prior year quarter. Adjusted selling and administrative expense*, as a percentage of net revenue, improved 100 basis points to 17.6% from 18.6%. Higher net revenue in the 2018 second quarter more than offset the higher costs needed to support the Company’s growth.

Net income was $16.3 million, or $0.52 per diluted share, compared to $12.0 million, or $0.38 per diluted share in the prior year quarter. Adjusted net income* was $24.6 million, or $0.78 per diluted share, compared to $18.7 million, or $0.59 per diluted share in the prior year quarter. Adjusted net income adjusts for the impact of non-core items in both periods and includes an addback for non-cash amortization expense related to acquisitions.

Adjusted EBITDA* was $45.6 million, a 16.2% increase from $39.2 million in the prior year quarter, largely due to higher sales and improved selling and administrative leverage. Adjusted EBITDA, as a percentage of net revenue, was 13.7%, compared to 13.9% in the prior year quarter.

Conference Call and Webcast

The Company will host a conference call and webcast on Thursday, August 2, 2018 at 10:00 a.m. Eastern Time to discuss these results. To participate in the call, please dial 855-327-6837 (domestic) or 631-891-4304 (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 September 2, 2018, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 10005279.

About Installed Building Products

Installed Building Products, Inc. is one of the nation's largest insulation installers for the residential new construction market and is also a diversified installer of complementary building products, including waterproofing, fire-stopping and fireproofing, garage doors, rain gutters, shower doors, closet shelving and mirrors, throughout the United States. The Company manages all aspects of the installation process for its customers, including direct purchases of materials from national manufacturers, 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 from its national network of 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, our financial and business model, our ability to increase selling prices, the demand for our services and product offerings, expansion of our national footprint and diversification, our ability to capitalize on the new home and commercial construction recovery, our ability to strengthen our market position, our ability to pursue and integrate value-enhancing acquisitions, our ability to improve sales and profitability, and expectations for demand for our services and our earnings in 2018. 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 factors discussed in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, as the same may be updated from time to time in our subsequent filings with the Securities and Exchange Commission. 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 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 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.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(unaudited, in thousands, except share and per share amounts)
				Three months ended June 30,							Six months ended June 30,
				2018			2017				2018			2017
Net revenue				$	332,584		$	282,196			$	634,312		$	537,865
Cost of sales					236,941			197,268				458,693			380,765
		Gross profit			95,643			84,928				175,619			157,100
Operating expenses
	Selling				16,020			13,650				31,866			27,676
	Administrative				44,971			41,761				89,174			81,022
	Amortization				7,322			6,550				14,450			12,966
		Operating income			27,330			22,967				40,129			35,436
Other expense
	Interest expense, net				5,691			4,865				9,731			7,035
	Other				163			131				285			283
	Income before income taxes				21,476			17,971				30,113			28,118
Income tax provision					5,161			5,998				7,404			9,781
Net income				$	16,315		$	11,973			$	22,709		$	18,337
Other comprehensive income (loss), net of tax:
	Unrealized gain (loss) on cash flow hedge, net of tax (provision) benefit of ($159) and $50 for the three months ended June 30, 2018 and 2017, respectively, and ($545) and $50 for the six months ended June 30, 2018 and 2017, respectively				475			(77	)			1,635			(77	)
Comprehensive income				$	16,790		$	11,896			$	24,344		$	18,260
Basic and diluted net income per share				$	0.52		$	0.38			$	0.72		$	0.58
Weighted average shares outstanding:
	Basic				31,345,390			31,646,460				31,447,067			31,618,624
	Diluted				31,452,583			31,709,554				31,612,581			31,698,460

INSTALLED BUILDING PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)
				June 30,				December 31,
				2018				2017
ASSETS
Current assets
	Cash and cash equivalents			$	139,746			$	62,510
	Investments				20,312				30,053
	Accounts receivable (less allowance for doubtful accounts of $4,711 and $4,805 at June 30, 2018 and December 31, 2017, respectively)				202,150				180,725
	Inventories				48,574				48,346
	Other current assets				40,838				33,308
		Total current assets			451,620				354,942
Property and equipment, net					85,048				81,075
Non-current assets
	Goodwill				163,023				155,466
	Intangibles, net				134,233				137,991
	Other non-current assets				11,246				9,272
		Total non-current assets			308,502				302,729
		Total assets		$	845,170			$	738,746
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
	Current maturities of long-term debt			$	20,083			$	16,650
	Current maturities of capital lease obligations				5,143				5,666
	Accounts payable				87,299				87,425
	Accrued compensation				22,117				25,399
	Other current liabilities				26,802				24,666
		Total current liabilities			161,444				159,806
Long-term debt					433,324				330,927
Capital lease obligations, less current maturities					4,752				6,479
Deferred income taxes					7,667				6,444
Other long-term liabilities					22,920				24,562
		Total liabilities			630,107				528,218
Commitments and contingencies
Stockholders' equity
	Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at June 30, 2018 and December 31, 2017, respectively				-				-
	Common Stock; $0.01 par value: 100,000,000 authorized, 32,723,972 and 32,524,934 issued and 31,606,349 and 31,862,146 shares outstanding at June 30, 2018 and December 31, 2017, respectively				327				325
	Additional paid in capital				178,266				174,043
	Retained earnings				73,919				48,434
	Treasury Stock; at cost: 1,117,623 and 662,788 shares at June 30, 2018 and December 31, 2017, respectively				(39,703	)			(12,781	)
	Accumulated other comprehensive income				2,254				507
		Total stockholders' equity			215,063				210,528
		Total liabilities and stockholders' equity		$	845,170			$	738,746

INSTALLED BUILDING PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
								Six months ended June 30,
								2018				2017
Cash flows from operating activities
Net income								$	22,709			$	18,337
Adjustments to reconcile net income to net cash provided by operating activities
		Depreciation and amortization of property and equipment							16,231				13,482
		Amortization of intangibles							14,450				12,966
		Amortization of deferred financing costs and debt discount							601				424
		Provision for doubtful accounts							1,108				1,807
		Write-off of debt issuance costs							1,114				1,201
		Gain on sale of property and equipment							(227	)			(190	)
		Noncash stock compensation							4,196				2,570
		Changes in assets and liabilities, excluding effects of acquisitions
			Accounts receivable						(20,192	)			(17,421	)
			Inventories						(3,995	)			342
			Other assets						(3,739	)			(1,263	)
			Accounts payable						304				(2,043	)
			Income taxes payable/receivable						5,187				(4,102	)
			Other liabilities						(4,622	)			2,316
					Net cash provided by operating activities				33,125				28,426
Cash flows from investing activities
	Purchases of investments								(17,782	)			(25,328	)
	Maturities of short term investments								27,500				-
	Purchases of property and equipment								(18,478	)			(14,681	)
	Acquisitions of businesses, net of cash acquired of $0 and $247, respectively								(18,626	)			(116,883	)
	Proceeds from sale of property and equipment								557				451
	Other								(1,540	)			(1,532	)
					Net cash used in investing activities				(28,369	)			(157,973	)
Cash flows from financing activities
	Proceeds from term loan under credit agreement applicable to respective period								100,000				300,000
	Payments on term loan under credit agreement applicable to respective period								(750	)			(96,250	)
	Proceeds from delayed draw term loan under credit agreement applicable to respective period								-				112,500
	Payments on delayed draw term loan under credit agreement applicable to respective period								-				(125,000	)
	Proceeds from vehicle and equipment notes payable								14,271				9,317
	Debt issuance costs								(1,933	)			(7,940	)
	Principal payments on long-term debt								(6,863	)			(4,915	)
	Principal payments on capital lease obligations								(3,028	)			(3,738	)
	Acquisition-related obligations								(2,295	)			(1,669	)
	Repurchase of common stock								(24,640	)			-
	Surrender of common stock awards by employees								(2,282	)			(550	)
					Net cash provided by financing activities				72,480				181,755
Net change in cash and cash equivalents									77,236				52,208
Cash and cash equivalents at beginning of period									62,510				14,482
Cash and cash equivalents at end of period								$	139,746			$	66,690
Supplemental disclosures of cash flow information
	Net cash paid during the period for:
		Interest						$	8,349			$	5,634
		Income taxes, net of refunds							1,906				13,401
Supplemental disclosure of noncash investing and financing activities
	Common stock issued for acquisition of business								-				10,859
	Vehicles capitalized under capital leases and related lease obligations								814				2,519
	Seller obligations in connection with acquisition of businesses								3,801				3,025
	Unpaid purchases of property and equipment included in accounts payable								1,027				658

Non-GAAP Financial Measures

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.

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.

		Three months ended June 30,								Six months ended June 30,
		2018				2017				2018				2017
Net income, as reported		$	16,315			$	11,973			$	22,709			$	18,337
Adjustments for adjusted net income:
Writeoff of capitalized loan costs			1,114				1,201				1,114				1,201
Share based compensation expense			1,955				2,091				4,196				2,570
Acquisition related expenses			684				794				1,200				1,347
Financial Wellness Program 1			-				-				604				-
Branch start-up costs 2			185				-				463				-
Amortization expense 3			7,322				6,550				14,450				12,966
Tax impact of adjusted items at normalized tax rate 4			(2,928	)			(3,935	)			(5,727	)			(6,691	)
Adjusted net income		$	24,647			$	18,674			$	39,009			$	29,730
Weighted average shares outstanding (diluted)			31,452,583				31,709,554				31,612,581				31,698,460
Diluted net income per share, as reported		$	0.52			$	0.38			$	0.72			$	0.58
Adjustments for adjusted net income, net of tax impact, per diluted share 5			0.26				0.21				0.51				0.36
Diluted adjusted net income per share		$	0.78			$	0.59			$	1.23			$	0.94

1		Employer match upon completion of the program, net of waived bonuses
2		Addback of costs related to organic branch expansion for Alpha locations
3		Addback of all non-cash amortization resulting from business combinations
4		Estimated tax rate of 26.0% applied to 2018 period, normalized rate of 37.0% applied to 2017 period
5		Includes adjustments related to the items noted above, net of tax

INSTALLED BUILDING PRODUCTS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
ADJUSTED GROSS PROFIT CALCULATIONS
(unaudited, in thousands)
		Three months ended June 30,								Six months ended June 30,
		2018				2017				2018				2017
Gross profit		$	95,643			$	84,928			$	175,619			$	157,100
Share based compensation expense			180				-				655				-
Financial Wellness Program 1			-				-				711				-
Branch start-up costs			185				-				463				-
Adjusted gross profit		$	96,008			$	84,928			$	177,448			$	157,100
Adjusted gross profit - % Total Revenue			28.9	%			30.1	%			28.0	%			29.2	%

1		Employer match upon completion of the program, partially offset by waived executive bonuses (see below Adjusted Selling & Administrative)

INSTALLED BUILDING PRODUCTS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
ADJUSTED SELLING AND ADMINISTRATIVE EXPENSE CALCULATIONS
(unaudited, in thousands)
		Three months ended June 30,								Six months ended June 30,
		2018				2017				2018				2017
Selling expense		$	16,020			$	13,650			$	31,866			$	27,676
Administrative expense			44,971				41,761				89,174				81,022
Selling and Administrative		$	60,991			$	55,411			$	121,040			$	108,698
Share based compensation expense			1,775				2,091				3,541				2,570
Acquisition related expenses			684				794				1,200				1,347
Financial Wellness Program 1			-				-				(107	)			-
Adjusted Selling and Administrative		$	58,532			$	52,526			$	116,406			$	104,781
Adj. Selling and Administrative - % Total Revenue			17.6	%			18.6	%			18.4	%			19.5	%

1		Employer match upon completion of the program, net of waived bonuses

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

	RECONCILIATION OF GAAP TO NON-GAAP MEASURES
	ADJUSTED EBITDA CALCULATIONS
	(unaudited, in thousands)
					Three months ended June 30,								Six months ended June 30,
					2018				2017				2018				2017
	Adjusted EBITDA:
	Net income (GAAP)				$	16,315			$	11,973			$	22,709			$	18,337
			Interest expense			5,691				4,865				9,731				7,035
			Provision for income taxes			5,161				5,998				7,404				9,781
			Depreciation and amortization			15,576				13,481				30,682				26,448
	EBITDA					42,743				36,317				70,526				61,601
			Acquisition related expenses			684				794				1,200				1,347
			Share based compensation expense			1,955				2,091				4,196				2,570
			Financial Wellness Program			-				-				604				-
			Branch start-up costs			185				-				463				-
	Adjusted EBITDA				$	45,567			$	39,202			$	76,989			$	65,518
	Adjusted EBITDA margin					13.7	%			13.9	%			12.1	%			12.2	%

INSTALLED BUILDING PRODUCTS, INC.
SUPPLEMENTARY TABLE
(unaudited)
		Three months ended June 30,				Six months ended June 30,
		2018		2017		2018		2017
Period-over-period Growth
Sales Growth		17.9%		33.2%		17.9%		33.3%
Same Branch Sales Growth		11.3%		11.6%		11.3%		10.2%
Single-Family Sales Growth		22.4%		19.4%		22.2%		17.0%
Single-Family Same Branch Sales Growth		14.5%		9.8%		13.6%		7.2%
Residential Sales Growth		18.9%		28.1%		19.1%		25.9%
Residential Same Branch Sales Growth		12.1%		14.2%		11.7%		11.2%
U.S. Housing Market1
Total Completions Growth		7.8%		14.2%		8.3%		12.4%
Single-Family Completions Growth		6.5%		9.1%		8.4%		9.9%
Same Branch Sales Growth 2
Volume Growth		6.6%		8.7%		7.0%		6.8%
Price/Mix Growth		5.5%		2.8%		4.6%		3.4%
Alpha Sales Growth		4.1%		0.0%		8.6%		0.0%

1		U.S. Census Bureau data, as revised
2		Same branch volume and price/mix growth excludes Alpha sales growth

INSTALLED BUILDING PRODUCTS, INC.
INCREMENTAL REVENUE AND ADJUSTED EBITDA MARGINS
(unaudited, in thousands)
	Three months ended June 30,								Six months ended June 30,
	2018		% Total		2017		% Total		2018		% Total		2017		% Total
Revenue Increase
Same Branch	$ 31,887		63.3%		$ 24,510		34.9%		$ 60,682		62.9%		$ 41,193		30.7%
Acquired	18,502		36.7%		45,774		65.1%		35,765		37.1%		93,062		69.3%
Total	$ 50,389		100.0%		$ 70,284		100.0%		$ 96,447		100.0%		$ 134,255		100.0%
			Adj EBITDA				Adj EBITDA				Adj EBITDA				Adj EBITDA
			Contribution				Contribution				Contribution				Contribution
Adjusted EBITDA
Same Branch	$ 3,977		12.5%		$ 6,202		25.3%		$ 7,611		12.5%		$ 6,398		15.5%
Acquired	2,388		12.9%		6,795		14.8%		3,857		10.8%		13,623		14.6%
Total	$ 6,365		12.6%		$ 12,997		18.5%		$ 11,468		11.9%		$ 20,021		14.9%

 

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Source: Installed Building Products, Inc.

Installed Building Products, Inc.
Investor Relations, 614-221-9944
investorrelations@installed.net