Installed Building Products, Inc. (the "Company" or "IBP")
(NYSE:IBP), an industry-leading installer of insulation and
complementary building products, announced today results for the
second quarter ended June 30, 2017.
Second Quarter 2017 Highlights
- Net revenue increased 33.2% to a record
$282.2 million
- Net income increased 19.8% to a record
$12.0 million
- Adjusted EBITDA* increased 49.6% to a
record $39.2 million
- Net income per diluted share increased
18.8% to $0.38
- Adjusted net income per diluted share*
increased 47.5% to a record $0.59
- In April 2017, refinanced borrowings
and closed a $300 million Term Loan B facility and $100 million ABL
Revolving Credit facility
- In April 2017, acquired Minnesota based
Horizon Electric Company with 2016 revenues of $1.2 million
- In May 2017, acquired Florida based
Legacy, & Glass & Supply, Inc., with 2016 revenues of $5.4
million
- In June 2017, acquired South Carolina
based Columbia Shelving and Mirror Inc. and Charleston Shelving
& Mirror Inc. with 2016 revenues of $11.0 million
Recent Developments
- In July 2017, acquired Kentucky based
Energy Savers, LLC with 2016 revenues of $2.0 million
“As expected, the 2017 second quarter benefitted from normal
seasonal installation trends, which helped drive sequential
improvements in sales and profitability,” stated Jeff Edwards,
Chairman and Chief Executive Officer. “During the 2017 second
quarter, IBP’s residential same branch sales increased 14.2%, while
multifamily same branch sales grew 59.4%, compared to U.S. housing
completions growth of 11.6%. Reflecting IBP’s focus on
profitability, I am encouraged by the significant improvement in
same branch incremental margins IBP achieved in the second quarter,
driven by a 70-basis point improvement in gross margin, and IBP's
ability to leverage SG&A expenses.”
“IBP is well positioned to capitalize on the continued strength
of the U.S. housing market. In addition, Alpha Insulation and
Waterproofing has had a favorable impact on IBP’s sales and
profitability and, as a result commercial revenues represented 17%
of revenues in the second quarter, compared to 12% for the same
period last year. Heading into the second half of 2017, IBP’s
pipeline of acquisitions remains strong and we expect to close
several acquisitions in the coming quarters. As momentum in our
business remains strong, we continue to expect 2017 will be another
year of record sales and earnings.”
Second Quarter 2017 Results Overview
For the second quarter of 2017, net revenue was $282.2 million,
an increase of 33.2% from $211.9 million in the second quarter of
2016. On a same branch basis, net revenue improved 11.6% from the
prior year quarter, with approximately 75.0% 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.
Gross profit improved 36.4% to $84.9 million from $62.2 million
in the prior year quarter. Gross margin expanded to 30.1% from
29.4% in the prior year quarter, primarily due to higher revenue
and a more profitable mix of business. Selling, general and
administrative expense, as a percentage of net revenue, improved to
19.6% compared to 20.2% in the prior year quarter.
Net income was $12.0 million, or $0.38 per diluted share,
compared to $10.0 million, or $0.32 per diluted share in the prior
year quarter. Adjusted net income was $18.7 million, or $0.59 per
diluted share, compared to $12.5 million, or $0.40 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 $39.2 million, a 49.6% increase from $26.2
million in the prior year quarter, largely due to higher gross
profit and improved leverage in SG&A. Adjusted EBITDA, as a
percentage of net revenue, grew 150 basis points to 13.9%, compared
to 12.4% in the prior year quarter.
Conference Call and Webcast
The Company will host a conference call and webcast on Friday,
August 4, 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
September 4, 2017, by dialing 844-512-2921 (domestic) or
412-317-6671 (international) and entering the passcode
13667137.
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, 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, close and integrate
value-enhancing acquisitions, the impact of Alpha on our revenue
and profitability, 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 and Adjusted Net Income per
diluted share. The reasons for the use of these measures of
Adjusted EBITDA and Adjusted Net Income, reconciliations of
Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per
diluted share 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 June 30, Six months
ended June 30, 2017 2016
2017 2016 Net revenue $ 282,196 $ 211,913 $
537,865 $ 403,611 Cost of sales 197,268
149,670 380,765 286,777 Gross profit 84,928
62,243 157,100 116,834 Operating expenses Selling 13,650 11,960
27,676 23,211 Administrative 41,761 30,890 81,022 61,173
Amortization 6,550 2,810 12,966
5,289 Operating income 22,967 16,583 35,436 27,161 Other
expense Interest expense 4,865 1,509 7,035 3,061 Other 131
121 283 225 Income before income
taxes 17,971 14,953 28,118 23,875 Income tax provision 5,998
4,960 9,781 8,069 Net income $
11,973 $ 9,993 $ 18,337 $ 15,806 Other
comprehensive loss, net of tax: Unrealized loss on cash flow hedge,
net of tax benefit of $50 for the three and six months ended June
30, 2017 (77 ) - (77 ) - Comprehensive
income 11,896 9,993 18,260
15,806 Basic net income per share $ 0.38
$ 0.32 $ 0.58 $ 0.51 Diluted net income per
share $ 0.38 $ 0.32 $ 0.58 $ 0.50 Weighted
average shares outstanding: Basic 31,646,460 31,317,632 31,618,624
31,279,935 Diluted 31,709,554 31,347,067 31,698,460 31,339,019
INSTALLED
BUILDING PRODUCTS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited, in thousands, except share and per share amounts)
June 30, December 31,
2017 2016 ASSETS Current assets Cash and cash
equivalents $ 66,690 $ 14,482 Investments 25,293 -
Accounts receivable (less allowance for
doubtful accounts of $4,745 and $3,397 at June 30, 2017 and
December 31, 2016, respectively)
176,769 128,466 Inventories 43,198 40,229 Other current assets
16,027 9,214 Total current assets
327,977 192,391 Property and equipment, net 73,971 67,788
Non-current assets Goodwill 148,031 107,086 Intangibles, net
139,426 86,317 Other non-current assets 10,021
8,513 Total non-current assets 297,478
201,916 Total assets $ 699,426 $ 462,095
LIABILITIES AND STOCKHOLDERS' EQUITY Current
liabilities Current maturities of long-term debt $ 13,506 $ 17,192
Current maturities of capital lease obligations 6,204 6,929
Accounts payable 76,103 67,921 Accrued compensation 23,083 18,212
Other current liabilities 24,866 19,851
Total current liabilities 143,762 130,105 Long-term debt 326,968
134,235 Capital lease obligations, less current maturities 7,715
8,364 Deferred income taxes 13,796 14,239 Other long-term
liabilities 22,069 21,175 Total
liabilities 514,310 308,118 Commitments and contingencies
Stockholders' equity
Preferred Stock; $0.01 par value:
5,000,000 authorized and 0 shares issued and outstanding at June
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 31,862,945 and
31,484,774 shares outstanding at June 30, 2017 and December 31,
2016, respectively
325 321 Additional paid in capital 172,006 158,581 Retained
earnings 25,631 7,294 Treasury Stock; at cost: 661,989 and 650,402
shares at June 30, 2017 and December 31, 2016, respectively (12,769
) (12,219 ) Accumulated other comprehensive loss (77 )
- Total stockholders' equity 185,116
153,977 Total liabilities and stockholders' equity $
699,426 $ 462,095
INSTALLED BUILDING PRODUCTS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited, in
thousands)
Six months ended June 30, 2017
2016 Cash flows from operating activities Net
income $ 18,337 $ 15,806 Adjustments to reconcile net income to net
cash provided by operating activities Depreciation and amortization
of property and equipment 13,482 11,281 Amortization of intangibles
12,966 5,289 Amortization of deferred financing costs and debt
discount 424 179 Provision for doubtful accounts 1,807 1,181
Write-off of debt issuance costs 1,201 286 Gain on sale of property
and equipment (190 ) (173 ) Noncash stock compensation 2,570 1,171
Deferred income taxes - 708 Changes in assets and liabilities,
excluding effects of acquisitions Accounts receivable (17,421 )
(9,742 ) Inventories 342 (3,310 ) Other assets (1,263 ) 2,442
Accounts payable (2,043 ) 6,632 Income taxes payable/receivable
(4,102 ) (873 ) Other liabilities 2,316 5,283
Net cash provided by operating activities 28,426
36,160
Cash flows from investing
activities Purchases of investments (25,328 ) - Purchases of
property and equipment (14,681 ) (13,424 ) Acquisitions of
businesses, net of cash acquired of $247 and $0, respectively
(116,883 ) (29,948 ) Proceeds from sale of property and equipment
451 384 Other (1,532 ) - Net cash used in
investing activities (157,973 ) (42,988 )
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 (96,250 ) (49,375 ) 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 9,317 11,039 Debt
issuance costs (7,940 ) (1,238 ) Principal payments on long term
debt (4,915 ) (2,591 ) Principal payments on capital lease
obligations (3,738 ) (4,556 ) Acquisition-related obligations
(1,669 ) (1,191 ) Surrender of common stock awards by employees
(550 ) (836 ) Net cash provided by financing
activities 181,755 13,752 Net change in
cash 52,208 6,924 Cash at beginning of period 14,482
6,818 Cash at end of period $ 66,690 $ 13,742
Supplemental disclosures of cash flow information Net cash
paid during the period for: Interest $ 5,634 $ 2,537 Income taxes,
net of refunds 13,401 8,355
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 2,519 2,033 Seller obligations
in connection with acquisition of businesses 3,025 2,430 Unpaid
purchases of property and equipment included in accounts payable
658 -
Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted EBITDA margin and Adjusted Net Income
measure performance by adjusting EBITDA and GAAP net income,
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 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 June 30, Six months ended June 30, 2017
2016 2017 2016 Net
income, as reported $ 11,973 $ 9,993 $ 18,337 $ 15,806
Adjustments for adjusted net income: Write-off of capitalized loan
costs 1,201 - 1,201 286 Share based compensation expense 2,091 635
2,570 1,171 Acquisition related expenses 794 460 1,347 823
Amortization expense 1 6,550 2,810 12,966 5,289 Tax impact of
adjusted items at normalized tax rate 2 (3,935 )
(1,445 ) (6,691 ) (2,801 )
Adjusted net income
$ 18,674 $ 12,453 $ 29,730 $ 20,574
Weighted average shares outstanding (diluted) 31,709,554
31,347,067 31,698,460 31,339,019
Diluted net income per
share, as reported $ 0.38 $ 0.32 $ 0.58 $ 0.50 Adjustments for
adjusted net income, net of tax impact, per diluted share 3
0.21 $ 0.08 0.36 0.16
Diluted adjusted net income per share $ 0.59 $ 0.40
$ 0.94 $ 0.66
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
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 June 30,
Six months ended June 30, 2017 2016
2017 2016 Adjusted EBITDA: Net
income (GAAP) $ 11,973 $ 9,993 $ 18,337 $ 15,806 Interest expense
4,865 1,509 7,035 3,061 Provision for income taxes 5,998 4,960
9,781 8,069 Depreciation and amortization 13,481
8,648 26,448 16,569
EBITDA 36,317 25,110 61,601
43,505 Acquisition related expenses 794
460 1,347 823 Share based compensation expense 2,091
635 2,570 1,171 Adjusted
EBITDA $ 39,202 $ 26,205 $ 65,518 $ 45,499
Adjusted EBITDA margin 13.9 % 12.4 % 12.2 % 11.3 %
INSTALLED BUILDING PRODUCTS, INC.
SUPPLEMENTARY TABLE (unaudited)
Three months ended June
30, Six months ended June 30, 2017
2016 2017 2016
Period-over-period
Growth
Sales Growth 33.2% 32.7% 33.3% 39.3% Same Branch Sales Growth 11.6%
16.9% 10.2% 21.0% Single-Family Sales Growth 19.4% 28.1%
17.0% 36.8% Single-Family Same Branch Sales Growth 9.8% 13.2% 7.2%
19.7% Residential Sales Growth 28.1% 31.4% 25.9% 38.9%
Residential Same Branch Sales Growth 14.2% 16.3% 11.2% 20.9%
U.S. Housing
Market1
Total Completions Growth 11.6% 3.6% 11.0% 10.8% Single-Family
Completions Growth 8.0% 11.3% 9.3% 13.6%
Same Branch Sales
Growth
Volume Growth 8.7% 10.5% 6.8% 12.0% Price/Mix Growth 2.8% 6.4% 3.4%
9.0%
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 June 30, Six months ended June 30,
2017 % Total 2016 % Total 2017
% Total 2016 % Total Revenue Increase
Same Branch $ 24,510 34.9% $ 27,012 51.7% $ 41,193 30.7% $
60,961 53.5% Acquired 45,774 65.1% 25,208 48.3%
93,062 69.3% 53,009 46.5% Total $ 70,283 100.0% $
52,220 100.0% $ 134,254 100.0% $ 113,970 100.0%
Adj EBITDA Adj EBITDA Adj EBITDA Adj EBITDA Contribution
Contribution Contribution Contribution
Adjusted EBITDA
Same Branch $ 6,202 25.3% $ 5,993 22.2% $ 6,398 15.5% $
14,611 24.0% Acquired 6,795 14.8% 2,543 10.1%
13,623 14.6% 5,647 10.7% Total $ 12,997 18.5% $ 8,536 16.3%
$ 20,021 14.9% $ 20,258 17.8%
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Installed Building Products, Inc.Investor Relations,
614-221-9944investorrelations@installed.net
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