Mon. Jan 20th, 2020

Traders Performance Review – Installed Building Products, Inc.

30 min read

Installed Building Products, Inc. (the “Company” or “IBP”) (NYSE: IBP), an industry-leading installer of insulation and complementary building products, stated results for the 3rd-quarter finished September 30, 2k19.

3rd-Quarter 2k19 Highlights (Comparisons are to Prior Year Duration)

  • Net revenue turned up 13.60 percent to a record $396.40M
  • Revenue from residential non-insulation products turned up 14.30 percent
  • Alpha’s large commercial construction revenue turned up 19.40 percent
  • Net income turned up 36.30 percent to a record $21.20M
  • Adjusted EBITDA* turned up 27.80 percent to a record $55.90M
  • Net income for each diluted share turned up 42.00 percent to a record $0.710
  • Adjusted net income for each diluted share* turned up 37.50 percent to a record $0.990
  • In September 2k19, accomplished an offering of $300.00M Senior Notes and reached a new and turned up $200.00M ABL Revolving Credit Facility
  • In September 2k19, attained Northeast Spray Insulation, an insulation installer serving the Maine and New Hampshire markets with annual revenue of about $3.60M
  • In September 2k19, attained Minnesota Spray-Foam, an insulation installer serving the Minnesota market with annual revenue of about $1.60M
  • In August 2k19, attained Therm-Con, LLC and Foamtech, Inc., a fireplace, shower doors, closet shelving, and mirror installer serving the Tennessee, Georgia and Alabama markets with annual revenue of about $4.70M

“Favorable pricing trends, stable end-market demand, and the benefits of our geographic and product diversification strategies drove record 3rd-quarter sales and earnings,” stated Jeff Edwards, Chairman, and Chief Executive Officer. “Our 3rd-quarter results demonstrate the power of our financial model and our focus on profitability. I am happy to report that for the 2k19 3rd-quarter IBP generated record quarterly net income of $21.20M, a 36.00 percent incline from the 2k18 3rd-quarter, and record adjusted EBITDA* of $55.90M, a nearly 28.00 percent incline from the 2k18 3rd-quarter.”

“Throughout the quarter, we strengthened our balance sheet with a $300.00M Senior Notes offering. The pricing and structure of our Senior Notes provides us with noteworthy capital to continually invest in our business throughout the housing cycle, while staggering our debt maturities. At September 30, 2k19, IBP had $239.90M of cash, cash equivalents, and short-term investments and nothing drawn on our $200.00M ABL Revolving Credit Facility. Our strong capital position, combined with our compelling operating cash flow, provides us with the financial flexibility to support our growth strategies and pursue acquisitions that continue to expand our geography and diversify our end-products and end-markets.”

“Industry trends remain positive and net revenue turned up 13.60 percent year-over-year as a result of stable demand in our single-family markets and double-digit growth in our multi-family and commercial end-markets. In addition, as a result of our product diversification strategy, revenue from complementary products, not counting Alpha’s large commercial construction revenue, turned up 14.30 percent and was accretive to 3rd-quarter gross margin. I am extremely encouraged by the positive business and market trends underway and we believe we are well-positioned for continued robust sales and earnings growth,” concluded Mr. Edwards.

3rd-Quarter 2k19 Results Overview

For the 3rd-quarter of 2k19, net revenue was $396.40M, a boost of 13.60 percent from $349.00M in the 3rd-quarter of 2k18. On a similar branch basis, net revenue improved 9.30 percent from the prior-year quarter. Residential similar branch sales growth was 6.0 percent in the quarter, attributable to price gains and more favorable customer and product mix. Similar branch single-family sales grew 4.90 percent throughout the 3rd-quarter, contrast to growth in U.S. single-family housing completions of 3.80 percent, while our large commercial construction end market had organic growth of 19.40 percent.

Gross profit improved 21.30 percent to $118.10M from $97.30M in the previous year quarter. Adjusted gross profit* as a percent of total revenue was 29.80 percent, contrast to 27.90 percent for a similar duration last year.

Selling and administrative cost, as a percentage of net revenue, was flat to previous year at 18.80 percent. Adjusted selling and administrative cost*, as a percentage of net revenue, was 18.20 percent contrast to 17.70 percent for the similar quarter last year.

Net income was $21.20M, or $0.710 for each diluted share, a contrast to $15.60M, or $0.500 for each diluted share in the prior-year quarter. Adjusted net income* was $29.70M, or $0.990 for each diluted share, a contrast to $22.40M, or $0.720 for each diluted share in the previous year quarter. Adjusted net income adjusts for the impact of non-core items in both durations and includes an addback for non-cash amortization cost related to acquisitions.

Adjusted EBITDA* was $55.90M, a 27.80 percent incline from $43.80M in the previous year quarter, mostly because of higher sales and improved gross profit. Adjusted EBITDA, as a percentage of net revenue, was 14.10 percent, a contrast to 12.50 percent in the previous year quarter.

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