Installed Building Products Reports Third Quarter 2023 Results

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.

For the complete press release, click here.

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.

Source: Source: Installed Building Products, Inc.