Installed building products reports record results for first quarter 2020
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, 2020. first quarter 2020 highlights (comparisons are to prior year period) net revenue increased 16.1% to a first quarter record of $397.3 million net income increased 81.0% to $16.0 million adjusted ebitda* increased 37.9% to $49.2 million net cash provided by operating activities increased 126.0% to $35.9 million net income per diluted share increased 76.7% to $0.53 adjusted net income per diluted share* increased 52.9% to $0.78 at march 31, 2020, ibp had $213.7 million in cash, and cash equivalents, and investments, and nothing drawn on its existing $200 million revolving line of credit in march 2020, acquired royals commercial services, inc., a maryland based provider of spray foam insulation and thermal barrier installation services primarily for commercial customers, with annual revenue of approximately $10.0 million in march 2020, acquired a chicago based shower, shelving, and mirror installer, with annual revenue of approximately $1.1 million recent developments revenue for the month of april 2020 increased approximately 2% compared to the same period last year, even though 10% of our branches by revenue were closed during the month due to construction’s non-essential status in certain markets currently, markets representing less than 2% of revenue are closed due to construction’s non-essential status. “the covid-19 health crisis has created unprecedented social and economic challenges and our thoughts are with everyone impacted by the pandemic,” stated jeff edwards, chairman and chief executive officer. “we are focused on supporting our customers and employees across the country, while ensuring our business is well positioned to withstand the uncertainty caused by the covid-19 crisis. across our national footprint, our branches are following federal, state, and local requirements to protect the health and safety of our customers and employees.” “during the first quarter, branches representing approximately 90% of our revenue were located in markets where construction has been deemed an essential business and these branches remain open and operational, however restrictions limiting the number of laborers on a jobsite and our social distancing practices have impacted both our volume of completed jobs and efficiencies across our single-family, multi-family and commercial end markets. we estimate that first quarter revenue was reduced by $2.0 - $2.5 million due to the covid-19 health crisis. i am encouraged that monthly revenue for april 2020 increased approximately 2% compared to the previous year period, despite branch closures in certain markets due to construction’s non-essential status. currently, approximately 98% of our branches by revenue are in markets where construction is deemed essential.” “single-family housing units under construction remain robust, which we believe supports over six months of industry backlog. our strategies to expand our geographic footprint, and end market and product diversification have enhanced our local market presence and allows us to leverage our existing branch footprint during this uncertain time. additionally, our acquisition pipeline remains strong, but we have temporarily delayed closing acquisitions until the economic environment stabilizes.” “we entered the current market environment from a position of financial and operating strength. the 2020 first quarter was strong across our end markets and we achieved record first quarter revenue, earnings, and adjusted ebitda. in addition, our balance sheet and access to capital is strong. during the quarter, we generated nearly $36 million of cash flow from operations, and at march 31, 2020 we had over $213.7 million of cash, and cash equivalents, and investments. we also have nothing drawn on our existing $200 million revolving line of credit. our strong balance sheet, combined with our experienced leadership team, long-standing customer relationships, and asset light, high variable cost and diverse business model will allow ibp to navigate through this period of economic uncertainty,” concluded mr. edwards. first quarter 2020 results overview for the first quarter of 2020, net revenue was $397.3 million, an increase of 16.1% from $342.1 million in the first quarter of 2019. on a same branch basis, net revenue improved 12.1% from the prior year quarter. residential same branch sales growth was 9.7% in the quarter, attributable to price gains and more favorable customer and product mix, compared to a decline in total completions of 2.2%. our large commercial construction end-market had organic growth of 14.1%. gross profit improved 30.0% to $116.3 million from $89.4 million in the prior year quarter. adjusted gross profit* as a percent of total revenue was 29.3% which adjusts for the company’s share-based compensation expense and branch start-up costs, compared to 26.2% for the same period last year. selling and administrative expense, as a percent of net revenue, was 20.3% compared to 19.2% in the prior year quarter. adjusted selling and administrative expense*, as a percent of net revenue, was 19.5% compared to 18.4% in the prior year quarter. net income was $16.0 million, or $0.53 per diluted share, compared to $8.8 million, or $0.30 per diluted share in the prior year quarter. adjusted net income* was $23.2 million, or $0.78 per diluted share, compared to $15.3 million, or $0.51 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 $49.2 million, a 37.9% increase from $35.7 million in the prior year quarter, largely due to higher sales and improved gross profit margin compared to the prior year quarter. conference call and webcast the company will host a conference call and webcast on may 8, 2020 at 10:00 a.m. eastern time to discuss these results. to participate in the call, please dial 877-300-8521 (domestic) or 412-317-6026 (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 8, 2020, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 10143508. 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 180 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, our financial and business model, the demand for our services and product offerings, the impact of the covid-19 crisis on our business and end markets, expansion of our national footprint and end markets, diversification of our products, our ability to capitalize on the new home and commercial construction recovery, our ability to grow and strengthen our market position, our ability to pursue and integrate value-enhancing acquisitions, our ability to improve sales and profitability, the impact of the covid-19 crisis on our financial results and acquisition closings, and expectations for demand for our services and our earnings in 2020. 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 environment; the timing of increases in our selling prices, 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, 2019, 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. three months ended march 31, 2020 2019 $ 397,331 $ 342,135 281,071 252,697 116,260 89,438 20,355 17,130 60,195 48,431 6,680 5,888 29,030 17,989 7,358 5,676 - 125 21,672 12,188 5,684 3,354 $ 15,988 $ 8,834 (5,608 ) (2,749 ) $ 10,380 $ 6,085 $ 0.54 $ 0.30 $ 0.53 $ 0.30 29,722,444 29,679,884 29,930,954 29,806,653 march 31, december 31, 2020 2019 $ 187,187 $ 177,889 26,487 37,961 245,469 244,519 73,569 74,606 37,024 46,974 569,736 581,949 106,262 106,410 47,134 45,691 198,664 195,652 151,426 153,562 13,842 16,215 $ 1,087,064 $ 1,099,479 $ 24,241 $ 24,164 15,889 15,459 2,438 2,747 90,708 98,871 32,264 33,636 36,025 39,272 201,565 214,149 545,552 545,031 30,741 29,785 3,412 3,597 6,759 9,175 53,238 47,711 841,267 849,448 - - 330 329 192,564 190,230 188,169 173,371 (122,515 ) (106,756 ) (12,751 ) (7,143 ) 245,797 250,031 $ 1,087,064 $ 1,099,479 three months ended march 31, 2020 2019 $ 15,988 $ 8,834 10,374 9,111 4,207 3,798 6,680 5,888 325 282 1,298 828 (35 ) (19 ) 2,681 2,022 (1,000 ) (3,704 ) 1,411 799 6,933 (1,048 ) (8,308 ) (7,807 ) 5,649 2,746 (10,291 ) (5,841 ) 35,912 15,889 (776 ) (7,482 ) 12,275 7,530 (9,919 ) (8,658 ) (8,501 ) (5,125 ) 162 196 (1,340 ) (420 ) (8,099 ) (13,959 ) - (1,000 ) 7,094 4,908 (22 ) - (6,711 ) (3,946 ) (738 ) (1,366 ) (2,378 ) (2,818 ) (15,759 ) - - (4 ) (18,514 ) (4,226 ) 9,299 (2,296 ) 177,889 90,442 $ 187,188 $ 88,146 $ 9,798 $ 5,816 37 737 5,612 3,851 343 1,108 2,570 1,380 1,346 1,503 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, 2020 2019 $ 15,988 $ 8,834 2,681 1,938 683 588 - 261 6,680 5,888 (279 ) - (2,539 ) (2,256 ) $ 23,214 $ 15,253 29,930,954 29,806,653 $ 0.53 $ 0.30 0.25 0.21 $ 0.78 $ 0.51 three months ended march 31, 2020 2019 $ 116,260 $ 89,438 96 78 - 261 $ 116,356 $ 89,777 29.3% 26.2% 1addback of costs related to organic branch expansion for alpha locations three months ended march 31, 2020 2019 $ 20,355 $ 17,130 60,195 48,431 $ 80,550 $ 65,561 2,585 1,860 683 588 $ 77,282 $ 63,113 19.5% 18.4% the table below reconciles adjusted ebitda to the most directly comparable gaap financial measure, net income, for the periods presented therein. three months ended march 31, 2020 2019 $ 15,988 $ 8,834 7,358 5,676 5,684 3,354 17,055 15,000 (279) - 45,806 32,864 683 588 2,681 1,938 - 261 $ 49,170 $ 35,651 12.4% 10.4% three months ended march 31, 2020 2019 16.1% 13.4% 12.1% 7.4% 11.0% 14.4% 5.9% 6.5% 14.2% 13.8% 9.7% 7.0% -0.2% 3.4% 12.1% 4.1% 14.1% 6.6% -2.2% 5.7% 2.4% 4.2% three months ended march 31, 2020 % total 2019 % total $ 41,447 75.1% $ 22,294 55.2% 13,749 24.9% 18,113 44.8% $ 55,196 100.0% $ 40,407 100.0% adj ebitda adj ebitda contribution contribution $ 11,286 27.2% $ 2,346 10.5% 2,234 16.3% 1,884 10.4% $ 13,520 24.5% $ 4,230 10.5%
