Installed Building Products Reports Record Fourth Quarter and Fiscal Year 2023 Results

Installed Building Products, Inc. (the “Company” or “IBP”), an industry-leading installer of insulation and complementary building products, announced results for the fourth quarter ended December 31, 2023.

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

• Net revenue increased 5.0% to a record $720.7 million
  • Installation revenue increased 4.5% to $669.8 million, as multi-family and commercial sales growth, including sales from IBP’s recent acquisitions, offset softer single-family sales
  • Other revenue, which includes IBP’s manufacturing and distribution operations, increased 12.0% to $50.9 million
• Net income was $64.9 million, or $2.29 per diluted share
• Adjusted EBITDA* increased to $128.3 million
• Adjusted net income* increased to $77.3 million
• Adjusted net income per diluted share* increased 11.9% to $2.72
• At December 31, 2023, IBP had $386.5 million in cash and cash equivalents
• Declared fourth quarter dividend of $0.33 per share which was paid to shareholders on December 31, 2023
• Repurchased 42,486 shares of IBP’s common stock at an average price of $147.58 per share

Recent Developments

• IBP’s Board of Directors declared the 2024 first quarter regular cash dividend of $0.35 per share, representing a 6% increase to the Company’s regular dividend
• IBP’s Board of Directors also declared an annual variable dividend of $1.60 per share, an increase of $0.70 per share over last year’s variable dividend
• IBP’s Board of Directors authorized a new stock repurchase program that allows for the repurchase of up to $300 million of IBP’s outstanding common stock

“IBP improved both sales and profitability in the fourth quarter, helping the Company achieve another year of record financial results including record revenue, net income, and adjusted EBITDA. I am proud of IBP’s performance in 2023, as healthy sales in our multi-family and commercial end-markets offset softer single-family sales throughout the year. In addition, teams across our markets worked efficiently and optimized the value we provide to each completed job. This effort drove record annual net profit and adjusted EBITDA margins in 2023. The talent and commitment of our employees, the strength of our business model, and the value we provide our residential and commercial customers enabled the Company to, once again, reach new heights in 2023,” stated Jeff Edwards, Chairman and Chief Executive Officer.

Mr. Edwards continued, “During 2023, we invested approximately $60 million in our acquisition strategy, while returning nearly $70 million to shareholders through dividends and share repurchases. We finished the year with a strong liquidity position and $387 million in cash on our balance sheet. As we continue to grow, we expect more capital will be returned to shareholders and the top priority within our capital allocation strategy remains pursuing accretive acquisitions. I am pleased to report that during the 2024 first quarter, our Board of Directors increased our regular quarterly cash dividend by 6% to $0.35 per share and declared an annual variable dividend of $1.60 per share, representing a $0.70 per share increase over last year’s variable dividend.”

“As we look ahead, we believe new residential housing construction activity will remain resilient in 2024 as stable employment and limited existing home inventory levels will continue to support building construction and demand for our services. We believe 2024 will be another good year for IBP,” 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. During 2023, IBP completed eight acquisitions representing approximately $75 million of annual revenue. For 2024, IBP expects to acquire at least $100 million of annual revenue.

During the 2023 fourth quarter, IBP completed the following acquisitions:

• In October 2023, IBP acquired Interstate Spray Foam, LLC, a North Dakota-based installer of fiberglass and spray foam insulation with multi-family, residential and commercial customers and annual revenue of approximately $2 million.
• In December 2023, IBP acquired Combee Insulation of Florida, LLC, a Florida-based installer of a diverse mix of building products including, fiberglass insulation, spray foam insulation, and garage doors, primarily into new residential construction projects with annual revenue of approximately $16.5 million.

2024 First Quarter Regular Cash Dividend and 2024 Annual Variable Dividend

IBP’s Board of Directors has approved the Company’s quarterly cash dividend of $0.35 per share, payable on March 31, 2024, to stockholders of record on March 15, 2024. In addition, IBP’s Board of Directors has approved the Company’s annual variable cash dividend at $1.60 per share, which will also be payable on March 31, 2024, to stockholders of record on March 15, 2024.

Share Repurchases

During the three months ended December 31, 2023, IBP repurchased approximately 42 thousand shares of its common stock at a total cost of $6.3 million, including commissions. At December 31, 2023, the Company had over $190 million available under its stock repurchase program. Additionally, IBP’s Board of Directors authorized a new stock repurchase program that allows for the repurchase of up to $300 million of IBP’s outstanding common stock. The new program replaces the previous program and is in effect through March 1, 2025.

Fourth Quarter 2023 Results Overview

For the fourth quarter of 2023, net revenue was $720.7 million, an increase of 5.0% from $686.5 million for the fourth quarter of 2022. On a consolidated same branch basis, net revenue improved 1.9% from the prior year quarter, as modest improvements in our total residential same branch sales growth was supported by higher growth in our commercial end market. Residential sales growth within the Company’s Installation segment decreased 0.8% on a same branch basis in the quarter. A 6.7% decline in single-family same branch sales was offset by a 29.5% increase in multi-family same branch sales. According to the U.S. Census Bureau, the average number of single-family housing units under construction across the industry fell 12% from the prior year quarter while multi-family units were up 8% relative to last year. Commercial same branch sales improved 10.6% from the prior year quarter and total commercial sales increased 15.9%, which includes the Company’s recent acquisitions.

Gross profit improved 13.0% to $245.7 million from $217.4 million in the prior year quarter. Gross profit and adjusted gross profit* as a percent of total revenue were both 34.1% up from 31.7% 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 19.1% compared to 15.3% in the prior year quarter. Adjusted selling and administrative expense*, as a percent of net revenue, was 18.3% compared to 16.7% in the prior year quarter.

Net income was $64.9 million, or $2.29 per diluted share, compared to $68.7 million, or $2.42 per diluted share in the prior year quarter. After reversing items not core to our ongoing business, adjusted EBITDA* was $128.3 million in the fourth quarter, an 11.2% increase from $115.4 million in the prior year quarter. Net profit margin for the fourth quarter was 9.0% compared to 10.0% in the prior year quarter and adjusted EBITDA margins* were 17.8% and 16.8%, respectively. Adjusted net income* was $77.3 million, or $2.72 per diluted share, compared to $69.1 million, or $2.43 per diluted share in the prior year quarter. Adjusted net income margin* for the fourth quarter was 10.7% compared to 10.1% 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.

Full Year 2023 Results Overview

For the year ended December 31, 2023, net revenue was a record $2.8 billion, an increase of 4.1% from $2.7 billion in 2022. On a consolidated same branch basis, net revenue improved 0.2% from the prior year, as a modest decline in our total residential same branch sales was offset by higher growth in our commercial end market. Residential sales growth within the Company’s Installation segment decreased 2.3% on a same branch basis for 2023. A 9.0% decline in single-family same branch sales was offset by a 33.3% increase in multi-family same branch sales. Commercial same branch sales improved 11.5% from the prior year and total commercial sales increased 17.2%, which includes the Company’s recent acquisitions.

Gross profit improved 12.4% to $930.7 million from $827.8 million in the prior year. Gross profit and adjusted gross profit* as a percent of total revenue were both 33.5%, up from 31.0% 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 18.6%, compared to 16.4% in the prior year. Adjusted selling and administrative expense*, as a percent of net revenue, was 18.0%, compared to 16.3% in the prior year.

Net income was $243.7 million, or $8.61 per diluted share, compared to $223.4 million, or $7.74 per diluted share in the prior year. Net profit margin was 8.8%, compared to 8.4% in the prior year. Adjusted net income* was $290.8 million, or $10.27 per diluted share, compared to $258.3 million, or $8.95 per diluted share in the prior year quarter. Adjusted net income margin* for year ended December 31, 2023 was 10.5% compared to 9.7% in the prior year. 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.

For the full year of 2023, EBITDA* was $466.8 million, a 7.1% increase from $435.9 million in the prior year. After reversing items not core to our ongoing business, adjusted EBITDA* was $485.9 million for the year ended December 31, 2023, a 10.6% increase from $439.2 million in the prior year, representing adjusted EBITDA margins* of 17.5% and 16.5%, respectively.

Net cash provided by operating activities was $340.2 million, compared to $277.9 million in the prior year. The increase in cash from operating activities was largely driven by higher net income and changes in working capital for the full year ended December 31, 2023.

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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 approximately 250 branch locations.

Source: Installed Building Products, Inc.