Installed Building Products, Inc. (the "Company" or "IBP")
(NYSE:IBP), an industry-leading installer of insulation and
complementary building products, today announced record results for
the third quarter ended September 30, 2017.
Third Quarter 2017 Highlights
- Net revenue increased 31.0% to $295.2
million
- Net income increased 4.0% to $12.0
million
- Adjusted EBITDA* increased 33.2% to
$39.3 million
- Net income per diluted share increased
3.0% to $0.38
- Adjusted net income per diluted share*
increased 29.5% to $0.57
- In July 2017, acquired Energy Savers an
insulation installer in Kentucky and annual revenues of $2.0
million
- In September 2017, acquired Red Rock
Insulation, an insulation installer with locations in Nevada and
Utah and annual revenues of $6.0 million
- In September 2017, acquired Astro
Insulation, an insulation installer with locations in Illinois and
annual revenues of $7.0 million
- In September 2017, acquired Protective
Coating, an installer of level rock floors in Wisconsin with $1.5
million in annual revenues
Recent Developments
- In October 2017, acquired A+
Insulation, LLC, an insulation installer in Kansas City and annual
revenues of $3.8 million
- In October 2017, acquired Building
Solutions, LLC, an insulation installer in Oklahoma with annual
revenues of approximately $2.0
“Record high sales for the 2017 third quarter benefitted from
strong residential sales growth, the contribution of recent
acquisitions, and a favorable revenue mix and pricing environment,”
stated Jeff Edwards, Chairman and Chief Executive Officer.
“Hurricanes Harvey and Irma impacted sales in several Texas and
Florida markets as a result of temporarily closing locations, and
the effects the storms had on the public infrastructure and our
customers’ jobsites within these geographies. The hurricanes also
impacted profitability by reducing efficiency and productivity, as
well as the direct costs associated with paying employees while our
locations were closed, and the costs associated with preparing for
and cleaning up the damage caused by the hurricanes.”
Mr. Edwards continued, “IBP continues to achieve higher
year-over-year sales and earnings, as a result of the growth
platform we have created, and the continued strength within the
U.S. housing market. IBP continues to attract compelling
acquisition opportunities and, since June of this year, we acquired
five insulation companies representing a combined $20 million of
annual revenues. Our pipeline of potential acquisitions remains
strong. As we enter the fourth quarter, we continue to expect 2017
will be another year of record sales and earnings.”
Third Quarter 2017 Results Overview
For the third quarter of 2017, net revenue was $295.2 million,
an increase of 31.0% from $225.4 million in the third quarter of
2016. On a same branch basis, despite the impacts of Hurricanes
Harvey and Irma, net revenue improved 9.4% from the prior year
quarter, with approximately 40% of the increase attributable to
growth in the number of completed jobs, and the remainder achieved
through price gains and more favorable customer and product mix.
Same branch residential revenue increased 11.7% as compared to an
8.3% increase in total completions.
Gross profit improved 27.2% to $85.6 million from $67.3 million
in the prior year quarter. Gross margin declined slightly to 29.0%
compared to 29.8% in the prior year quarter, primarily due to the
production disruptions Hurricanes Harvey and Irma had on efficiency
and productivity, as well as a new stock-based compensation program
for installers. Adjusted only for the recently introduced
stock-based compensation program, gross margin would have been
29.2%*.
Selling and administrative expense, as a percentage of net
revenue, was 19.1% compared to 19.8% in the prior year quarter.
Adjusted selling and administrative expense, as a percentage of net
revenue, improved 110 basis points to 18.3% from 19.4%*. Higher net
revenue in the 2017 third quarter more than offset the higher costs
needed to support the company’s growth.
Net income was $12.0 million, or $0.38 per diluted share,
compared to $11.5 million, or $0.37 per diluted share in the prior
year quarter. Adjusted net income was $18.3 million, or $0.57 per
diluted share, compared to $13.9 million, or $0.44 per diluted
share in the prior year quarter. Adjusted net income adjusts for
the impact of non-core items in both periods.
Adjusted EBITDA was $39.3 million, a 33.2% increase from $29.5
million in the prior year quarter, largely due to higher sales.
Adjusted EBITDA, as a percentage of net revenue, grew 20 basis
points to 13.3%, compared to 13.1% in the prior year quarter. The
company estimates that Hurricanes Harvey and Irma impacted Adjusted
EBITDA by approximately $1.5 million to $2.0 million during the
quarter, as a result of branch closings, and lost efficiency and
productivity when branches reopened following the storms.
Conference Call and Webcast
The Company will host a conference call and webcast on November
3, 2017 at 9:00 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, 2017, by dialing 844-512-2921 (domestic) or
412-317-6671 (international) and entering the passcode
13672595.
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 our financial model and seasonality, the impact of Hurricanes
Harvey and Irma, demand for our services, expansion of our national
footprint, our ability to capitalize on the new home 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 for the remainder of 2017.
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, 2016, 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 September
30,
Nine months ended September 30,
2017 2016 2017 2016 Net revenue $
295,193 $ 225,392 $ 833,058 $ 629,003 Cost of sales 209,612
158,132 590,377 444,909 Gross profit
85,581 67,260 242,681 184,094 Operating expenses Selling 14,865
13,028 42,541 36,239 Administrative 41,657 31,504 122,679 92,677
Amortization 6,824 2,889 19,790
8,178 Operating income 22,235 19,839 57,671 47,000 Other expense
Interest expense 4,421 1,544 11,456 4,605 Other 83 23
366 248 Income before income taxes 17,731
18,272 45,849 42,147 Income tax provision 5,721 6,723
15,502 14,792 Net income $ 12,010 $ 11,549 $
30,347 $ 27,355 Other comprehensive income, net of
tax: Unrealized gain (loss) on cash flow hedge, net of tax
(provision) benefit of ($21) and $30 for the three and nine months
ended September 30, 2017, respectively 32 -
(45 ) - Comprehensive income $ 12,042 $ 11,549 $ 30,302
$ 27,355 Basic and diluted net income per share $
0.38 $ 0.37 $ 0.96 $ 0.87 Weighted average shares
outstanding: Basic 31,659,503 31,323,600 31,632,400 31,294,596
Diluted 31,766,881 31,377,790 31,712,515 31,351,991
INSTALLED BUILDING PRODUCTS, INC. CONDENSED CONSOLIDATED
BALANCE SHEETS (unaudited, in thousands, except share and
per share amounts)
September 30, December 31, 2017
2016 ASSETS Current assets Cash and cash equivalents
$ 67,008 $ 14,482 Investments 25,114 -
Accounts receivable (less allowance for
doubtful accounts of $4,846 and $3,397 at September 30, 2017 and
December 31, 2016, respectively)
185,470 128,466 Inventories 44,074 40,229 Other current assets
19,599 9,214 Total current assets
341,265 192,391 Property and equipment, net 78,045 67,788
Non-current assets Goodwill 153,660 107,086 Intangibles, net
140,714 86,317 Other non-current assets 9,969
8,513 Total non-current assets 304,343
201,916 Total assets $ 723,653 $ 462,095
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Current maturities of long-term debt $ 15,550 $ 17,192
Current maturities of capital lease obligations 6,044 6,929
Accounts payable 82,329 67,921 Accrued compensation 25,975 18,212
Other current liabilities 23,703 19,851
Total current liabilities 153,601 130,105 Long-term debt 328,295
134,235 Capital lease obligations, less current maturities 7,509
8,364 Deferred income taxes 13,755 14,239 Other long-term
liabilities 23,135 21,175 Total
liabilities 526,295 308,118 Commitments and contingencies
Stockholders' equity
Preferred Stock; $0.01 par value:
5,000,000 authorized and 0 shares issued and outstanding at
September 30, 2017 and December 31, 2016, respectively
-
-
Common Stock; $0.01 par value: 100,000,000
authorized, 32,524,934 and 32,135,176 issued and 31,862,561 and
31,484,774 shares outstanding at September 30, 2017 and December
31, 2016, respectively
325 321 Additional paid in capital 172,206 158,581 Retained
earnings 37,641 7,294
Treasury Stock; at cost: 662,373 and
650,402 shares at September 30, 2017 and December 31, 2016,
respectively
(12,769 ) (12,219 ) Accumulated other comprehensive loss (45
) - Total stockholders' equity 197,358
153,977 Total liabilities and stockholders' equity $
723,653 $ 462,095
INSTALLED BUILDING
PRODUCTS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS (unaudited, in thousands)
Nine months ended September 30,
2017 2016 Cash flows from operating activities
Net income $ 30,347 $ 27,355
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization of property and equipment 20,732
17,240 Amortization of intangibles 19,790 8,178 Amortization of
deferred financing costs and debt discount 768 282 Provision for
doubtful accounts 2,208 1,960 Write-off of debt issuance costs
1,201 286 Gain on sale of property and equipment (329 ) (218 )
Noncash stock compensation 4,750 1,531 Deferred income taxes - 708
Changes in assets and liabilities, excluding effects of
acquisitions Accounts receivable (24,636 ) (17,878 ) Inventories 68
(3,158 ) Other assets 695 4,727 Accounts payable 2,665 3,879 Income
taxes payable/receivable (10,167 ) 3,652 Other liabilities
5,249 6,033 Net cash provided by operating
activities 53,341 54,577
Cash flows
from investing activities Purchases of investments (25,195 ) -
Purchases of property and equipment (22,947 ) (19,169 )
Acquisitions of businesses, net of cash acquired of $247 and $0,
respectively (130,994 ) (36,427 ) Proceeds from sale of property
and equipment 682 523 Other (1,845 ) - Net
cash used in investing activities (180,299 ) (55,073
)
Cash flows from financing activities Proceeds from
revolving line of credit under credit agreement applicable to
respective period - 37,975 Payments on revolving line of credit
under credit agreement applicable to respective period - (37,975 )
Proceeds from term loan under credit agreement applicable to
respective period 300,000 100,000 Payments on term loan under
credit agreement applicable to respective period (97,000 ) (50,625
) Proceeds from delayed draw term loan under credit agreement
applicable to respective period 112,500 12,500 Payments on delayed
draw term loan under credit agreement applicable to respective
period (125,000 ) (50,000 ) Proceeds from vehicle and equipment
notes payable 15,817 16,310 Debt issuance costs (8,175 ) (1,238 )
Principal payments on long term debt (7,201 ) (4,055 ) Principal
payments on capital lease obligations (5,583 ) (6,596 )
Acquisition-related obligations (3,434 ) (2,732 ) Surrender of
common stock awards by employees (550 ) (836 ) Purchase of
remaining interest in subsidiary (1,890 ) -
Net cash provided by financing activities 179,484
12,728 Net change in cash 52,526 12,232 Cash at
beginning of period 14,482 6,818 Cash
at end of period $ 67,008 $ 19,050
Supplemental
disclosures of cash flow information Net cash paid during the
period for: Interest $ 9,733 $ 3,904 Income taxes, net of refunds
26,292 10,428
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 4,073 2,956 Seller obligations in
connection with acquisition of businesses 3,759 2,849 Unpaid
purchases of property and equipment included in accounts payable
1,108 2,140
Reconciliation of Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income and
Adjusted Gross Profit measure performance by adjusting EBITDA, GAAP
net income and gross profit, 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 (loss) 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 (loss) 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 (used in)
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
MEASURESADJUSTED 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,
2017 2016 2017 2016
Net income, as reported $ 12,010 $ 11,549 $ 30,347 $
27,355 Adjustments for adjusted net income: Write-off of
capitalized loan costs - - 1,201 286 Share based compensation
expense 2,179 361 4,749 1,531 Acquisition related expenses 926 508
2,273 1,331
Amortization expense1
6,824 2,889 19,790 8,178
Tax impact of adjusted items at normalized
tax rate2
(3,674) (1,390) (10,365) (4,191)
Adjusted net income $
18,265 $ 13,917 $ 47,995 $ 34,490 Weighted average shares
outstanding (diluted) 31,766,881 31,377,790 31,712,515 31,351,991
Diluted net income per share, as reported $ 0.38 $
0.37 $ 0.96 $ 0.87
Adjustments for adjusted net income, net
of tax impact, per diluted share3
0.19 $ 0.07 0.56 0.23
Diluted adjusted net income per share
$ 0.57 $ 0.44 $ 1.51 $ 1.10
1 Addback of all non-cash amortization
resulting from business combinations
2 Normalized tax rate of 37.0% applied to
each period in 2017 and 2016
3 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, 2017 2016
2017 2016 Gross profit $ 85,581 $ 67,260 $
242,681 $ 184,094 Share based compensation expense 507
- 507 - Adjusted gross profit $ 86,088 $
67,260 $ 243,188 $ 184,094
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, 2017 2016
2017 2016 Selling Expense $ 14,865 $ 13,028 $
42,541 $ 36,239 Administrative Expense 41,657 31,504 122,679 92,677
Selling and Administrative $ 56,522
$ 44,532 $ 165,220 $ 128,916
Share based compensation expense 1,672 361 4,242 1,531 Acquisition
related expenses 926 508 2,273 1,331
Adjusted Selling and Administrative $ 53,924 $ 43,663
$ 158,705 $ 126,054 Adj. Selling and
Administrative - % Total Revenue 18.3 % 19.4 % 19.1 % 20.0 %
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 September 30, Nine
months ended September 30, 2017 2016 2017
2016 Adjusted EBITDA: Net income (GAAP) $
12,010 $ 11,549 $ 30,347 $ 27,355 Interest expense 4,421 1,544
11,456 4,605 Provision for income taxes 5,721 6,723 15,502 14,792
Depreciation and amortization 14,074 8,849
40,522 25,418 EBITDA
36,226 28,665 97,827
72,170 Acquisition related expenses 926 508 2,273
1,331 Share based compensation expense 2,179
361 4,749 1,531 Adjusted EBITDA
$ 39,331 $ 29,534 $ 104,849 $ 75,032
Adjusted EBITDA margin 13.3 % 13.1 % 12.6 % 11.9 %
INSTALLED BUILDING PRODUCTS,
INC.
SUPPLEMENTARY TABLE
(unaudited)
Three months ended September 30,
Nine months ended September 30, 2017 2016
2017 2016
Period-over-period
Growth
Sales Growth 31.0% 24.1% 32.4% 33.5% Same Branch Sales Growth 9.4%
12.2% 9.9% 17.6% Single-Family Sales Growth 18.3% 21.6%
17.5% 30.9% Single-Family Same Branch Sales Growth 7.2% 9.7% 7.2%
15.8% Residential Sales Growth 25.6% 23.5% 25.8% 33.0%
Residential Same Branch Sales Growth 11.7% 12.1% 11.4% 17.5%
U.S. Housing
Market1
Single-Family Completions Growth 7.2% 12.1% 8.9% 13.1% Total
Completions Growth 8.3% 2.7% 10.9% 7.6%
Same Branch Sales
Growth
Volume Growth 3.7% 7.4% 5.7% 10.2% Price/Mix Growth 5.7% 4.8% 4.2%
7.4%
1 U.S. Census Bureau data, as revised
INSTALLED BUILDING PRODUCTS,
INC.
COMPONENTS OF INCREASE IN REVENUE AND
ADJUSTED EBITDA
(unaudited, in thousands)
Three months ended September 30, Nine months ended
September 30, 2017 % Total 2016 %
Total 2017 % Total 2016 % Total
Revenue Increase Same Branch $ 21,094 30.2 % $ 22,151
50.6 % $ 62,287 30.5 % $ 83,112 52.7 % Acquired 48,706 69.8
% 21,662 49.4 % 141,768 69.5 % 74,671 47.3 %
Total $ 69,800 100.0 % $ 43,813 100.0 % $ 204,054 100.0 % $ 157,783
100.0 % Adj EBITDA Adj EBITDA Adj EBITDA Adj
EBITDA Contribution Contribution Contribution Contribution
Adjusted EBITDA Same Branch $ 3,352 15.9 % $ 4,318
19.5 % $ 9,749 15.7 % $ 18,928 22.8 % Acquired 6,445 13.2 %
2,777 12.8 % 20,069 14.2 % 8,424 11.3 % Total
$ 9,797 14.0 % $ 7,095 16.2 % $ 29,818 14.6 % $ 27,352 17.3 %
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Installed Building Products, Inc.Investor Relations,
614-221-9944investorrelations@installed.net
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