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HomeNewsBusiness WireInstalled Building Products Reports Record First Quarter 2021 Results

Installed Building Products Reports Record First Quarter 2021 Results

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 first quarter ended March 31, 2021.

First Quarter 2021 Highlights (Comparisons are to Prior Year Period)

  • Net revenue increased 10.0% to a first quarter record of $437.1 million
  • Net income increased 8.1% to $17.3 million
  • Adjusted EBITDA* increased 10.8% to $54.5 million
  • Net cash provided by operating activities increased 4.8% to $37.6 million
  • Net income per diluted share increased 9.4% to $0.58
  • Adjusted net income per diluted share* increased 15.4% to $0.90
  • The February winter storms combined with supply chain disruptions had an estimated $3.0 million to $3.5 million impact on first quarter gross profit, which reduced gross profit margin by an estimated 70 to 80 basis points and reduced earnings by $0.08 to $0.09 per diluted share
  • At March 31, 2021, IBP had $207.3 million in cash, and cash equivalents, and investments, and nothing drawn on its existing $200 million revolving line of credit
  • Declared first quarter dividend of $0.30 per share, and the second quarter regular cash dividend of $0.30 per share was declared on May 5, 2021

“I am pleased with our record first quarter financial results, demonstrating the resiliency of our business model, the benefits of our product, end-market, geographic diversification strategies, and the continued hard work of our nationwide team members,” stated Jeff Edwards, Chairman and Chief Executive Officer. “Throughout the first quarter, we successfully overcame operating challenges. The COVID-19 crisis continues to impact our large commercial business. Additionally, the historic February winter storms had a meaningful impact on our material suppliers’ supply chains and impacted our production and installation efficiencies. We estimate lost production, as a result of the winter storms, impacted first quarter revenue by $3.0 million to $3.5 million, and gross profit by $1.0 million to $1.5 million. We ended the first quarter with positive momentum as we experienced the highest monthly sales in our history in March, and positive momentum has continued in the month of April.

“During the first quarter we also experienced unprecedented material and supply shortages for a variety of products used across our installation services. The February winter storms impacted the manufacturing capabilities at two of our large fiberglass insulation suppliers, disrupting our ability to source material and forcing us to buy from distributors and local retailers to meet customer demand. In addition, materials needed for spray foam applications were in short supply after the storms, as chemical processing facilities went offline. We estimate the material supply shortages impacted gross profit by approximately $2.0 million and effected our ability to complete installation work for certain customers during the quarter.

“While the supply chain efficiencies appear to have steadily improved during March and April, relative to January and February, we expect constraints will continue over the remainder of the year for many of the materials and products used throughout our installation work. Despite near-term supply challenges, demand and pricing remains strong, and we expect trends within our large commercial business will improve later this year. As a result, we expect 2021 will be another strong year of sales and earnings growth 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. To date in 2021, we have completed three acquisitions representing approximately $65 million of annual revenues. In the last 12 months, we have completed acquisitions with over $160 million of annual revenues. For 2021, the Company is targeting approximately $100 million of acquired revenue, which IBP may exceed depending on the timing of acquisitions within its large and growing pipeline.

During the 2021 first quarter, IBP acquired I.W. International Insulation, Inc. doing business as Intermountain West Insulation, a Washington based provider of insulation installation services to residential customers throughout Washington, Oregon, and Idaho, with annual revenue of approximately $34.4 million.

Since the first quarter ended, IBP has completed the following acquisitions:

  • In April 2021, acquired Alert Insulation, a Southern California based provider of fiberglass insulation installation, fireproofing services, and acoustical ceiling system installation services to commercial customers, with annual revenue of approximately $21.0 million
  • In April 2021, acquired Alpine Construction Services, LLC a Colorado Springs based provider of fiberglass and spray foam insulation installation services to residential and multifamily customers, with annual revenue of approximately $9.4 million

First Quarter 2021 Results Overview

For the first quarter of 2021, net revenue was $437.1 million, an increase of 10.0% from $397.3 million in the first quarter of 2020. On a same branch basis, net revenue improved 2.2% from the prior year quarter. Residential same branch sales growth was 3.7% in the quarter, attributable to a 10.0% increase in the volume of jobs completed. Price/mix was negatively impacted during the quarter as the Company continues to experience a higher volume of sales to production builders compared to the same period last year. This shift within the single-family end market impacted price/mix as the average insulation selling price for entry level production builder jobs is typically lower than a move-up or custom home builder. Our commercial construction end-market increased 2.3% for the first quarter of 2021, as a result of recent acquisitions, while same branch sales within this market declined 14.5% primarily due to continued challenges associated with the COVID-19 crisis.

Gross profit improved 7.9% to $125.4 million from $116.3 million in the prior year quarter. Adjusted gross profit* as a percent of total revenue was 28.7% which adjusts for the Company’s share-based compensation expense, compared to 29.3% for the same period last year. First quarter gross profit was reduced by an estimated $1.0 million to $1.5 million impact associated with lost production resulting from the February winter storms, as well as by an estimated $2.0 million impact from supply chain disruptions that occurred during the quarter. Selling and administrative expense, as a percent of net revenue, was 19.7% compared to 20.3% in the prior year quarter. Adjusted selling and administrative expense*, as a percent of net revenue, was 18.7% compared to 19.5% in the prior year quarter.

Net income was $17.3 million, or $0.58 per diluted share, compared to $16.0 million, or $0.53 per diluted share in the prior year quarter. Adjusted net income* was $26.8 million, or $0.90 per diluted share, compared to $23.2 million, or $0.78 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 $54.5 million, a 10.8% increase from $49.2 million in the prior year quarter, primarily due to higher sales compared to the prior year quarter.

Conference Call and Webcast

The Company will host a conference call and webcast on May 7, 2021 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 June 7, 2021, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13718791.

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 from its national network of over 190 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, industry conditions, our financial and business model, payments of a quarterly cash dividend, the demand for our services and product offerings, trends in the large commercial business, the impact of the COVID-19 crisis on our business and end markets, supply chain 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 in 2021. 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, the economy and the markets we serve; general economic and industry conditions; 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, 2020, 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 March 31,

2021

 

2020

Net revenue

$

437,066

$

397,331

 

Cost of sales

 

311,639

 

281,071

 

Gross profit

 

125,427

 

116,260

 

Operating expenses
Selling

 

20,858

 

20,355

 

Administrative

 

65,077

 

60,195

 

Amortization

 

8,396

 

6,680

 

Operating income

 

31,096

 

29,030

 

Other expense
Interest expense, net

 

7,574

 

7,358

 

Other

 

81

 

 

Income before income taxes

 

23,441

 

21,672

 

Income tax provision

 

6,150

 

5,684

 

Net income

$

17,291

$

15,988

 

 
Other comprehensive income (loss), net of tax:
Net change on cash flow hedges, net of tax (provision) benefit of ($3,428) and $1,939 for the three months ended March 31, 2021 and 2020, respectively

 

10,157

 

(5,608

)

Comprehensive income

$

27,448

$

10,380

 

 
Basic net income per share

$

0.59

$

0.54

 

Diluted net income per share

$

0.58

$

0.53

 

Weighted average shares outstanding:
Basic

 

29,286,044

 

29,722,444

 

Diluted

 

29,613,484

 

29,930,954

 

Cash dividends declared per share

$

0.30

$

 

 
INSTALLED BUILDING PRODUCTS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)
 

March 31,

 

December 31,

2021

 

2020

ASSETS
Current assets
Cash and cash equivalents

$

207,343

 

$

231,520

 

Accounts receivable (less allowance for credit losses of $8,615 and $8,789 at March 31, 2021 and December 31, 2020, respectively)

 

270,498

 

 

266,566

 

Inventories

 

85,980

 

 

77,179

 

Prepaid expenses and other current assets

 

46,344

 

 

48,678

 

Total current assets

 

610,165

 

 

623,943

 

Property and equipment, net

 

105,162

 

 

104,022

 

Operating lease right-of-use assets

 

54,442

 

 

53,766

 

Goodwill

 

242,036

 

 

216,870

 

Customer relationships, net

 

121,051

 

 

108,504

 

Other intangibles, net

 

67,151

 

 

62,889

 

Other non-current assets

 

33,609

 

 

17,682

 

Total assets

$

1,233,616

 

$

1,187,676

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt

$

23,770

 

$

23,355

 

Current maturities of operating lease obligations

 

19,210

 

 

18,758

 

Current maturities of finance lease obligations

 

1,875

 

 

2,073

 

Accounts payable

 

104,001

 

 

101,462

 

Accrued compensation

 

47,520

 

 

45,876

 

Other current liabilities

 

48,926

 

 

44,951

 

Total current liabilities

 

245,302

 

 

236,475

 

Long-term debt

 

545,138

 

 

541,957

 

Operating lease obligations

 

34,618

 

 

34,413

 

Finance lease obligations

 

2,367

 

 

2,430

 

Deferred income taxes

 

9,957

 

 

35

 

Other long-term liabilities

 

55,696

 

 

53,184

 

Total liabilities

 

893,078

 

 

868,494

 

Commitments and contingencies
Stockholders’ equity
Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively

 

 

 

 

Common stock; $0.01 par value: 100,000,000 authorized, 33,208,082 and 33,141,879 issued and 29,689,201 and 29,623,272 shares outstanding at March 31, 2021 and December 31, 2020, respectively

 

331

 

 

331

 

Additional paid in capital

 

202,662

 

 

199,847

 

Retained earnings

 

277,804

 

 

269,420

 

Treasury stock; at cost: 3,518,881 and 3,518,607 shares at March 31, 2021 and December 31, 2020, respectively

 

(141,653

)

 

(141,653

)

Accumulated other comprehensive income (loss)

 

1,394

 

 

(8,763

)

Total stockholders’ equity

 

340,538

 

 

319,182

 

Total liabilities and stockholders’ equity

$

1,233,616

 

$

1,187,676

 

 
INSTALLED BUILDING PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
 

Three months ended March 31,

2021

 

2020

Cash flows from operating activities
Net income

$

17,291

 

$

15,988

 

Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment

 

10,663

 

 

10,374

 

Amortization of operating lease right-of-use assets

 

5,050

 

 

4,207

 

Amortization of intangibles

 

8,396

 

 

6,680

 

Amortization of deferred financing costs and debt discount

 

331

 

 

325

 

Provision for credit losses

 

127

 

 

1,298

 

Gain on sale of property and equipment

 

(252

)

 

(35

)

Noncash stock compensation

 

3,196

 

 

2,681

 

Amortization of terminated interest rate swap

 

798

 

 

 

Changes in assets and liabilities, excluding effects of acquisitions
Accounts receivable

 

1,056

 

 

(1,000

)

Inventories

 

(7,644

)

 

1,411

 

Other assets

 

(1,794

)

 

6,933

 

Accounts payable

 

524

 

 

(8,308

)

Income taxes receivable/payable

 

4,633

 

 

5,649

 

Other liabilities

 

(4,757

)

 

(10,291

)

Net cash provided by operating activities

 

37,618

 

 

35,912

 

Cash flows from investing activities
Purchases of investments

 

 

 

(776

)

Maturities of short term investments

 

 

 

12,275

 

Purchases of property and equipment

 

(10,846

)

 

(9,919

)

Acquisitions of businesses, net of cash acquired of $168 and $0, at March 31, 2021 and 2020, respectively

 

(41,930

)

 

(8,501

)

Proceeds from sale of property and equipment

 

389

 

 

162

 

Other

 

(5

)

 

(1,340

)

Net cash used in investing activities

 

(52,392

)

 

(8,099

)

Cash flows from financing activities
Proceeds from vehicle and equipment notes payable

 

7,808

 

 

7,094

 

Debt issuance costs

 

 

 

(22

)

Principal payments on long-term debt

 

(6,481

)

 

(6,711

)

Principal payments on finance lease obligations

 

(530

)

 

(738

)

Dividends paid

 

(8,786

)

 

 

Acquisition-related obligations

 

(1,414

)

 

(2,378

)

Repurchase of common stock

 

 

 

(15,759

)

Net cash used in financing activities

 

(9,403

)

 

(18,514

)

Net change in cash and cash equivalents

 

(24,177

)

 

9,299

 

Cash and cash equivalents at beginning of period

 

231,520

 

 

177,889

 

Cash and cash equivalents at end of period

$

207,343

 

$

187,188

 

Supplemental disclosures of cash flow information
Net cash paid during the period for:
Interest

$

10,839

 

$

9,798

 

Income taxes, net of refunds

 

1,474

 

 

37

 

Supplemental disclosure of noncash activities
Right-of-use assets obtained in exchange for operating lease obligations

 

5,679

 

 

5,612

 

Property and equipment obtained in exchange for finance lease obligations

 

268

 

 

343

 

Seller obligations in connection with acquisition of businesses

 

5,959

 

 

2,570

 

Unpaid purchases of property and equipment included in accounts payable

 

1,043

 

 

1,346

 

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 March 31,

2021

 

2020

Net income, as reported

$

17,291

 

$

15,988

 

Adjustments for adjusted net income:
Share based compensation expense

 

3,196

 

 

2,681

 

Acquisition related expenses

 

1,161

 

 

683

 

COVID-19 expenses 1

 

52

 

 

 

Amortization expense 2

 

8,396

 

 

6,680

 

Miscellaneous non-operating income

 

 

 

(279

)

Tax impact of adjusted items at normalized tax rate 3

 

(3,329

)

 

(2,539

)

Adjusted net income

$

26,767

 

$

23,214

 

Weighted average shares outstanding (diluted)

 

29,613,484

 

 

29,930,954

 

Diluted net income per share, as reported

$

0.58

 

$

0.53

 

Adjustments for adjusted net income, net of tax impact, per diluted share 4

 

0.32

 

 

0.25

 

Diluted adjusted net income per share

$

0.90

 

$

0.78

 

Contacts

Investor Relations:

614-221-9944

[email protected]

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