IBP
$81.59
Installed Building Products
$.63
.78%
Earnings Details
3rd Quarter September 2022
Thursday, November 3, 2022 7:00:00 AM
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Summary

Installed Building Products (IBP) Recent Earnings

Installed Building Products (IBP) reported 3rd Quarter September 2022 earnings of $2.51 per share on revenue of $719.1 million. The consensus earnings estimate was $2.32 per share on revenue of $674.0 million. Revenue grew 41.1% on a year-over-year basis.

Installed Building Products Inc is a holding company. The Company through its subsidiaries is engaged in residential insulation installer. It also installs complementary building products, including garage doors, rain gutters, shower doors, among others.

Results
Reported Earnings
$2.51
Earnings Whisper
-
Consensus Estimate
$2.32
Reported Revenue
$719.1 Mil
Revenue Estimate
$674.0 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Installed Building Products Reports Record Quarterly Results for the Third Quarter 2022 and Declares Regular Quarterly Cash Dividend

COLUMBUS, Ohio--(BUSINESS WIRE)--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, 2022.

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
  • 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 on September 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 Jeff Edwards, Chairman and Chief Executive Officer. “During the third quarter, residential housing unit completion growth accelerated and our business was supported by a robust backlog of units under construction. In addition, we continue to benefit from positive price/mix trends, which increased 27.1% in the third quarter and drove further growth in incremental margins and earnings.”

Mr. Edwards continued, “Record cash flow through the 2022 first nine months has allowed us to allocate a growing amount of capital across our proven acquisition strategy, dividend policy and share repurchase program. Year-to-date, we have acquired $73 million of annual revenue across numerous geographic regions. In addition, for the first nine months of 2022, we have returned a total of $166.0 million to shareholders through dividend payments and share repurchases, up from $26.4 million in the same period last year.”

“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 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 2022, IBP has acquired over $73 million of annual revenue and expects to acquire at least $100 million of revenue for the full year.

During the 2022 third quarter, IBP completed the following acquisition:

  • In September 2022, IBP acquired All Florida Insulation, LLC, a Longwood, 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 $0.315 per share, payable on December 31, 2022, to stockholders of record on December 15, 2022.

During the 2022 nine month period, IBP has repurchased over 1.2 million shares of its common stock at a total cost of $112.2 million, including commissions. At September 30, 2022, the Company had $187.5 million of availability remaining under its stock repurchase program.

Third Quarter 2022 Results Overview

For the third quarter of 2022, net revenue was a quarterly record of $719.1 million, an increase of 41.1% from $509.8 million for the third quarter of 2021. On a consolidated same branch basis, net revenue improved 28.5% from the prior year quarter, which was attributable to a 7.5% increase in the volume of jobs completed and a 27.1% increase in price/mix during the third quarter relative to the same period last year. Residential sales growth within our Installation segment was 34.9% on a same branch basis in the quarter. Commercial sales growth of 16.0% was largely driven by recent acquisitions with same branch sales up 2.8% from the prior year quarter.

Gross profit improved 41.9% to $221.3 million from $155.9 million in the prior year quarter. Adjusted gross profit* as a percent of total revenue was 30.8%, which adjusts for the Company’s share-based compensation expense, as well as expenses directly related to COVID-19, compared to 30.7% for the same period last year. The recently acquired distribution companies disclosed in the Other operating segment have lower gross margins than our Installation operating segment. During the 2022 third quarter, the Other operating segment had a gross margin of 21.1% as compared to 33.1% for the Installation operating segment. Our Other segment includes our more recent acquisitions in the distribution businesses, which had an impact on our consolidated gross profit margin of about 80 basis points. The distribution businesses did not have an impact on the prior year third quarter as they had not been acquired at that time.

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 $61.0 million, or $2.13 per diluted share, compared to $34.9 million, or $1.18 per diluted share in the prior year quarter. Adjusted net income* was $71.7 million, or $2.51 per diluted share, compared to $44.0 million, or $1.49 per diluted share 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.

Adjusted EBITDA* was $120.2 million, a 53.8% increase from $78.1 million in the prior year quarter, largely due to strong sales growth and lower selling and administrative expenses as a percent of net revenue compared to the prior year quarter.

Conference Call and Webcast

The Company will host a conference call and webcast on November 3, 2022 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 3, 2022, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13732584.

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 220 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, 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 December 31, 2021, 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 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

September 30,

 

Nine months ended

September 30,

 

 

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 $(5,105) and $(454) for the three months ended September 30, 2022 and 2021, respectively, and $(15,138) and $(2,638) for the nine months ended September 30, 2022 and 2021, respectively

 

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

 

 

 

 

 

 

 

 

 

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited, in thousands, except share and per share amounts)

 

 

September 30,

 

December 31,

 

 

2022

 

 

 

2021

 

ASSETS

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

203,402

 

 

$

333,485

 

Investments

 

24,996

 

 

 

 

Accounts receivable (less allowance for credit losses of $9,083 and $8,717 at September 30, 2022 and December 31, 2021, respectively)

 

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

 

Goodwill

 

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; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

 

 

 

 

 

Common stock; $0.01 par value: 100,000,000 authorized, 33,429,557 and 33,271,659 issued and 28,604,098 and 29,706,401 shares outstanding at September 30, 2022 and December 31, 2021, respectively

 

334

 

 

 

333

 

Additional paid in capital

 

225,377

 

 

 

211,430

 

Retained earnings

 

453,286

 

 

 

352,543

 

Treasury stock; at cost: 4,825,459and 3,565,258 shares at September 30, 2022 and December 31, 2021, respectively

 

(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

 

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)

 

 

Nine months ended

September 30,

 

 

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 $330 and $1,640 in 2022 and 2021, respectively

 

(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.

INSTALLED BUILDING PRODUCTS, INC.

SEGMENT INFORMATION

(unaudited, in thousands)

 

 

Three months ended September 30, 2022

 

Three months ended September 30, 2021

 

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 June 30, 2022

 

Three months ended June 30, 2021

 

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 September 30, 2022

 

Nine months ended September 30, 2021

 

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 September 30, 2022

 

Nine months ended September 30, 2021

 

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.

INSTALLED BUILDING PRODUCTS, INC.

REVENUE BY END MARKET

(unaudited, in thousands)

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

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.

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

September 30,

 

Nine months ended

September 30,

 

 

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.

INSTALLED BUILDING PRODUCTS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

ADJUSTED GROSS PROFIT CALCULATIONS

(unaudited, in thousands)

 

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

 

 

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.

INSTALLED BUILDING PRODUCTS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

ADJUSTED SELLING AND ADMINISTRATIVE EXPENSE CALCULATIONS

(unaudited, in thousands)

 

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

 

 

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.

INSTALLED BUILDING PRODUCTS, INC.

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

September 30,

 

Nine months ended

September 30,

 

 

 

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.

INSTALLED BUILDING PRODUCTS, INC.

SUPPLEMENTARY TABLE

(unaudited)

 

 

 

Three months ended

September 30,

 

Nine months ended

September 30,

 

 

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)%

 

 

 

 

 

 

 

 

 

U.S. Housing Market 5

 

 

 

 

 

 

 

 

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 March 31, 2022, we realigned our operating segments to reflect recent changes in our business. Prior period disclosures in the above table have been recast to conform to the current period segment presentation. The segment change has no impact on the Company's previously reported consolidated U.S. GAAP financial results.

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

U.S. Census Bureau data, as revised.

INSTALLED BUILDING PRODUCTS, INC.

INCREMENTAL REVENUE AND ADJUSTED EBITDA MARGINS

(unaudited, in thousands)

Revenue Increase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended September 30,

 

Nine months ended September 30,

 

 

 

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 September 30,

 

Nine months ended September 30,

 

 

 

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

%

 

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

Source: Installed Building Products, Inc.