Installed Building Products, Inc. [IBP] Filings

10-Q 1 ibp-20240630.htm 10-Q ibp-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From _________ To ________

Commission File Number: 001-36307

Installed Building Products, Inc.

(Exact name of registrant as specified in its charter)


Delaware									45-3707650
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

495 South High Street, Suite 50
Columbus, Ohio									43215
(Address of principal executive offices)									(Zip Code)

(614) 221-3399

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock,

$0.01 par value per share

IBP

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b–2 of the Exchange Act). Yes ☐ No ☒

On July 25, 2024, the registrant had 28,234,462 shares of common stock, par value $0.01 per share, outstanding.

Table of Contents

TABLE OF CONTENTS



PART I – FINANCIAL INFORMATION			1
Item 1. Financial Statements			1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			28
Item 3. Quantitative and Qualitative Disclosures About Market Risk			38
Item 4. Controls and Procedures			38
PART II – OTHER INFORMATION			39
Item 1. Legal Proceedings			39
Item 1A. Risk Factors			39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			39
Item 3. Defaults Upon Senior Securities			39
Item 4. Mine Safety Disclosures			39
Item 5. Other Information			39
Item 6. Exhibits			40
SIGNATURES			41

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share and per share amounts)


	June 30,		December 31,
	2024		2023
ASSETS
Current assets
Cash and cash equivalents	$	380.3	$	386.5

Accounts receivable (less allowance for credit losses of $11.4 and $11.2 at June 30, 2024 and December 31, 2023, respectively)	439.6		423.3
Inventories	175.6		162.8
Prepaid expenses and other current assets	91.9		97.4
Total current assets	1,087.4		1,070.0
Property and equipment, net	154.8		137.2
Operating lease right-of-use assets	86.1		78.1
Goodwill	406.1		398.8
Customer relationships, net	170.7		179.6
Other intangibles, net	85.9		89.1
Other non-current assets	34.2		28.5
Total assets	$	2,025.2	$	1,981.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	31.8	$	32.2
Current maturities of operating lease obligations	30.6		28.3
Current maturities of finance lease obligations	2.8		2.7
Accounts payable	157.5		158.6
Accrued compensation	56.6		59.6
Other current liabilities	73.3		65.0
Total current liabilities	352.6		346.4
Long-term debt	844.0		835.1
Operating lease obligations	55.3		49.9
Finance lease obligations	6.7		6.6
Deferred income taxes	25.9		24.5
Other long-term liabilities	55.4		48.5
Total liabilities	1,339.9		1,311.0
Commitments and contingencies (Note 16)
Stockholders’ equity
Preferred stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively	—		—
Common stock; $0.01 par value: 100,000,000 authorized, 33,706,380 and 33,587,701 issued and 28,234,462 and 28,367,338 shares outstanding at June 30, 2024 and December 31, 2023, respectively	0.3		0.3
Additional paid in capital	252.9		244.7
Retained earnings	749.6		693.8
Treasury stock; at cost: 5,471,918 and 5,220,363 shares at June 30, 2024 and December 31, 2023, respectively	(355.9)		(302.2)
Accumulated other comprehensive income	38.4		33.7
Total stockholders’ equity	685.3		670.3
Total liabilities and stockholders’ equity	$	2,025.2	$	1,981.3

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

(in millions, except share and per share amounts)


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Net revenue	$	737.6	$	692.1	$	1,430.5	$	1,351.4
Cost of sales	486.2		459.6		944.6		908.5
Gross profit	251.4		232.5		485.9		442.9
Operating expenses
Selling	34.5		32.9		67.8		65.5
Administrative	106.7		96.0		209.3		185.5
Asset impairment	4.9		—		4.9		—
Amortization	10.5		11.3		21.2		22.7
Operating income	94.8		92.3		182.7		169.2
Other expense, net
Interest expense, net	8.2		9.8		20.1		19.5
Other (income)	(0.1)		(0.2)		(0.5)		(0.4)
Income before income taxes	86.7		82.7		163.1		150.1
Income tax provision	21.5		21.1		42.0		39.2
Net income	$	65.2	$	61.6	$	121.1	$	110.9
Other comprehensive income (loss), net of tax:
Net change on cash flow hedges, net of tax (provision) benefit of $— and $(1.9) for the three months ended June 30, 2024 and 2023, respectively, and $(1.7) and $0.3 for the six months ended June 30, 2024 and 2023, respectively	—		5.4		4.7		(0.9)
Comprehensive income	$	65.2	$	67.0	$	125.8	$	110.0
Earnings per share:
Basic	$	2.32	$	2.19	$	4.30	$	3.94
Diluted	$	2.30	$	2.18	$	4.27	$	3.92
Weighted average shares outstanding:
Basic	28,174,677		28,174,279		28,173,061		28,125,251
Diluted	28,317,801		28,273,334		28,351,401		28,276,049

Cash dividends declared per share	$	0.35	$	0.33	$	2.30	$	1.56

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND JUNE 30, 2024

(in millions, except share and per share amounts)


	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - April 1, 2023	33,498,693	$	0.3	$	232.5	$	527.5	(5,123,656)	$	(289.3)	$	34.3	$	505.3
Net income						61.6							61.6
Issuance of common stock awards to employees	77,172	—		—									—
Surrender of common stock awards								(48,179)	(5.8)				(5.8)
Share-based compensation expense				3.5									3.5
Share-based compensation issued to directors	6,538			0.1									0.1

Dividends declared ($0.33 per share)						(9.4)							(9.4)

Other comprehensive income, net of tax											5.4		5.4
BALANCE - June 30, 2023	33,582,403	$	0.3	$	236.1	$	579.7	(5,171,835)	$	(295.1)	$	39.7	$	560.7

	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - April 1, 2024	33,658,330	$	0.3	$	248.7	$	694.2	(5,221,772)	$	(302.4)	$	38.4	$	679.2
Net income						65.2							65.2

Issuance of common stock awards to employees	43,864	—		—									—
Surrender of common stock awards								(35,282)	(7.8)				(7.8)
Share-based compensation expense				4.0									4.0
Share-based compensation issued to directors	4,186			0.2									0.2

Dividends declared ($0.35 per share)						(9.8)							(9.8)
Common stock repurchase								(214,864)	(45.7)				(45.7)
Other comprehensive (loss), net of tax											—		—
BALANCE - June 30, 2024	33,706,380	$	0.3	$	252.9	$	749.6	(5,471,918)	$	(355.9)	$	38.4	$	685.3

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND JUNE 30, 2024

(in millions, except share and per shares amounts)


	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - January 1, 2023	33,429,557	$	0.3	$	228.8	$	513.1	(5,123,075)	$	(289.3)	$	40.6	$	493.5
Net income						110.9							110.9
Issuance of common stock awards to employees	146,308	—		—									—
Surrender of common stock awards								(48,760)	(5.8)				(5.8)
Share-based compensation expense				7.0									7.0
Share-based compensation issued to directors	6,538			0.3									0.3

Dividends declared ($1.56 per share)						(44.3)							(44.3)

Other comprehensive (loss), net of tax											(0.9)		(0.9)
BALANCE - June 30, 2023	33,582,403	$	0.3	$	236.1	$	579.7	(5,171,835)	$	(295.1)	$	39.7	$	560.7

	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - January 1, 2024	33,587,701	$	0.3	$	244.7	$	693.8	(5,220,363)	$	(302.2)	$	33.7	$	670.3
Net income						121.1							121.1
Issuance of common stock awards to employees	114,493	—		—									—
Surrender of common stock awards								(36,691)	(8.0)				(8.0)
Share-based compensation expense				7.8									7.8
Share-based compensation issued to directors	4,186			0.4									0.4

Dividends declared ($2.30 per share)						(65.3)							(65.3)
Common stock repurchase								(214,864)	(45.7)				(45.7)
Other comprehensive income, net of tax											4.7		4.7
BALANCE - June 30, 2024	33,706,380	$	0.3	$	252.9	$	749.6	(5,471,918)	$	(355.9)	$	38.4	$	685.3

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)


	Six months ended June 30,
	2024		2023
Cash flows from operating activities
Net income	$	121.1	$	110.9
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment	28.0		25.4
Amortization of operating lease right-of-use assets	16.3		14.4
Amortization of intangibles	21.2		22.7
Amortization of deferred financing costs and debt discount	0.8		1.0
Provision for credit losses	3.1		3.2
Write-off of debt issuance costs	1.1		—

Gain on sale of property and equipment	(1.2)		(1.2)
Non-cash stock compensation	8.7		7.1
Asset impairment	4.9		—

Other, net	(6.8)		(5.5)
Changes in assets and liabilities, excluding effects of acquisitions
Accounts receivable	(18.4)		(17.5)
Inventories	(11.4)		14.7

Other assets	5.1		4.9
Accounts payable	(1.6)		(16.3)
Income taxes receivable/payable	(0.6)		(4.8)
Other liabilities	(6.5)		(20.9)
Net cash provided by operating activities	163.8		138.1
Cash flows from investing activities


Purchases of property and equipment	(42.6)		(28.3)
Acquisitions of businesses, net of cash acquired of $— in 2024 and 2023, respectively	(22.7)		(40.2)
Proceeds from sale of property and equipment	1.8		1.5
Settlements with interest rate swap counterparties	9.0		7.8
Other	(0.7)		(0.3)
Net cash used in investing activities	$	(55.2)	$	(59.5)

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, CONTINUED)

(in millions)




	Six months ended June 30,
	2024		2023
Cash flows from financing activities
Proceeds from Term Loan	$	142.9	$	—
Payments on Term Loan	(134.2)		(2.5)
Proceeds from vehicle and equipment notes payable	15.0		18.3
Debt issuance costs	(1.5)		—
Principal payments on long-term debt	(15.5)		(14.8)
Principal payments on finance lease obligations	(1.5)		(1.4)
Dividends paid	(65.2)		(44.5)
Acquisition-related obligations	(1.0)		(2.2)
Repurchase of common stock	(45.7)		—
Surrender of common stock awards by employees	(8.1)		(5.9)
Net cash used in financing activities	(114.8)		(53.0)
Net change in cash and cash equivalents	(6.2)		25.6
Cash and cash equivalents at beginning of period	386.5		229.6
Cash and cash equivalents at end of period	$	380.3	$	255.2
Supplemental disclosures of cash flow information
Net cash paid during the period for:
Interest	$	21.9	$	20.8
Income taxes, net of refunds	42.7		44.1
Supplemental disclosure of non-cash activities
Right-of-use assets obtained in exchange for operating lease obligations	$	23.6	$	14.7

Property and equipment obtained in exchange for finance lease obligations	1.8		2.2
Seller obligations in connection with acquisition of businesses	2.2		7.7
Unpaid purchases of property and equipment included in accounts payable	2.7		4.9

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 - ORGANIZATION

Installed Building Products (“IBP”), a Delaware corporation formed on October 28, 2011, and its wholly-owned subsidiaries (collectively referred to as the “Company,” and “we,” “us” and “our”) primarily install insulation, 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 operates in more than 250 locations and its corporate office is located in Columbus, Ohio.

The vast majority of our sales originate from our one reportable segment, Installation. Substantially all of our Installation segment sales are derived from the service-based installation of various products in the residential new construction, repair and remodel and commercial construction end markets from our national network of branch locations. Each of our Installation branches has the capacity to serve all of our end markets. See Note 3, Revenue Recognition, for information on our revenues by product and end market, and see Note 10, Information on Segments, for information on how we segment the business.

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include all of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

The information furnished in the Condensed Consolidated Financial Statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and statements of financial position for the interim periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) have been omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to prevent the information presented from being misleading when read in conjunction with our audited consolidated financial statements and the notes thereto included in Part II, Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (“2023 Form 10-K”), as filed with the SEC on February 22, 2024. The December 31, 2023 Condensed Consolidated Balance Sheet data herein was derived from the audited consolidated financial statements, but the related footnotes do not include all disclosures required by U.S. GAAP.

Our interim operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results to be expected in future operating quarters.

Note 2 to the audited consolidated financial statements in our 2023 Form 10-K describes the significant accounting policies and estimates used in preparation of the audited consolidated financial statements. Other than the recently implemented accounting policy described below, there have been no changes to our significant accounting policies during the six months ended June 30, 2024.

Recently Adopted Accounting Pronouncements

Standard

Effective Date

Adoption

ASU 2023-01 “Leases” (Topic 842): Accounting for leasehold improvements associated with common control leases.

December 15, 2023

This pronouncement amends Topic 842 to require all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. This did not materially affect our consolidated financial statements.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Recently Issued Accounting Pronouncements Not Yet Adopted

We are currently evaluating the impact of the following Accounting Standards Update ("ASU") on our Condensed Consolidated Financial Statements or Notes to Condensed Consolidated Financial Statements:

Standard

Description

Effective Date

Effect on the financial statements or other significant matters

ASU 2023-07 "Segment Reporting" (Topic 280): Improvements to Reportable Segment Disclosures.

This pronouncement amends Topic 280 to require all entities to disclose, on an annual and interim basis, significant segment expenses and an amount for other segment items by reportable segment.

Effective for annual periods beginning after December 15, 2023. Early adoption is permitted.

The Company will adopt and apply the guidance as prescribed by this ASU to segment reporting that occurs after the effective date. We do not anticipate this ASU will materially affect our consolidated financial statements.

ASU 2023-09 "Income Taxes" (Topic 740): Improvements to Income Tax Disclosures.

This pronouncement amends Topic 740 to require all entities to disclose specific categories in the rate reconciliation, income taxes paid, and other income tax information.

Effective for annual periods beginning after December 15, 2024. Early adoption is permitted.

The Company will adopt and apply the guidance as prescribed by this ASU to income tax disclosures that occur after the effective date. We are currently assessing the impact of the adoption on our consolidated financial information.

NOTE 3 - REVENUE RECOGNITION

We disaggregate our revenue from contracts with customers for our Installation segment by end market and product, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. Revenues for the Other category are presented net of intercompany sales in the tables below. The following tables present our net revenues disaggregated by end market and product (in millions):


	Three months ended June 30,								Six months ended June 30,
	2024				2023				2024				2023
Installation:
Residential new construction	$	542.4	74	%	$	495.7	71	%	$	1,045.2	73	%	$	970.8	72	%
Repair and remodel	42.5		6	%	38.9		6	%	82.6		6	%	76.6		5	%
Commercial	112.4		15	%	117.3		17	%	225.4		16	%	227.2		17	%
Net revenue, Installation	$	697.3	95	%	$	651.9	94	%	$	1,353.2	95	%	$	1,274.6	94	%

Other	40.3		5	%	40.2		6	%	77.3		5	%	76.8		6	%
Net revenue, as reported	$	737.6	100	%	$	692.1	100	%	$	1,430.5	100	%	$	1,351.4	100	%

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	Three months ended June 30,								Six months ended June 30,
	2024				2023				2024				2023
Installation:
Insulation	$	447.8	61	%	$	416.9	60	%	$	875.7	61	%	$	810.9	60	%
Shower doors, shelving and mirrors	53.4		7	%	47.8		7	%	102.3		7	%	93.3		7	%
Garage doors	43.2		6	%	40.9		6	%	85.9		6	%	84.2		6	%
Waterproofing	34.5		5	%	33.0		5	%	65.2		5	%	62.9		5	%
Rain gutters	32.1		4	%	29.6		4	%	59.5		4	%	57.4		4	%
Fireproofing/firestopping	22.4		3	%	19.8		3	%	43.1		3	%	35.0		3	%
Window blinds	20.2		3	%	16.3		2	%	37.2		3	%	32.2		2	%
Other building products	43.7		6	%	47.6		7	%	84.3		6	%	98.7		7	%
Net revenue, Installation	$	697.3	95	%	$	651.9	94	%	$	1,353.2	95	%	$	1,274.6	94	%
Other	40.3		5	%	40.2		6	%	77.3		5	%	76.8		6	%
Net revenue, as reported	$	737.6	100	%	$	692.1	100	%	$	1,430.5	100	%	$	1,351.4	100	%

Contract Assets and Liabilities

Our contract assets consist of unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized, based on costs incurred, exceeds the amount billed to the customer. Our contract assets are recorded in other current assets in our Condensed Consolidated Balance Sheets. Our contract liabilities consist of customer deposits and billings in excess of revenue recognized, based on costs incurred and are included in other current liabilities in our Condensed Consolidated Balance Sheets.

Contract assets and liabilities related to our uncompleted contracts and customer deposits were as follows (in millions):


	June 30, 2024		December 31, 2023
Contract assets	$	34.2	$	31.7
Contract liabilities	(19.0)		(19.0)

Uncompleted contracts were as follows (in millions):


	June 30, 2024		December 31, 2023
Costs incurred on uncompleted contracts	$	276.0	$	268.9
Estimated earnings	131.9		124.4
Total	407.9		393.3
Less: Billings to date	384.4		371.7
Net under billings	$	23.5	$	21.6

Net under billings were as follows (in millions):


	June 30, 2024		December 31, 2023
Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets)	$	34.2	$	31.7
Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities)	(10.7)		(10.1)
Net under billings	$	23.5	$	21.6

The difference between contract assets and contract liabilities as of June 30, 2024 compared to December 31, 2023 is primarily the result of timing differences between our performance of obligations under contracts and customer payments and billings. During the three and six months ended June 30, 2024, we recognized $1.6 million and $17.1 million of revenue that was included in the contract liability balance at December 31, 2023. We did not recognize any impairment losses on our contract assets during the three and six months ended June 30, 2024 or 2023.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Remaining performance obligations represent the transaction price of contracts for which work has not been performed and excludes unexercised contract options and potential modifications. As of June 30, 2024, the aggregate amount of the transaction price allocated to remaining uncompleted contracts was $120.1 million. We expect to satisfy remaining performance obligations and recognize revenue on substantially all of these uncompleted contracts over the next 18 months.

NOTE 4 - CREDIT LOSSES

Our expected loss allowance methodology for accounts receivable is developed using historical experience, present economic conditions and other factors management considers relevant to estimate expected credit losses. We also perform ongoing evaluations of creditworthiness of our existing and potential customers.

Changes in our allowance for credit losses were as follows (in millions):


Balance as of January 1, 2024	$	11.2
Current period provision	3.1
Recoveries collected and additions	0.5
Amounts written off	(3.4)
Balance as of June 30, 2024	$	11.4

NOTE 5 - CASH AND CASH EQUIVALENTS

Cash and cash equivalents include money market funds which are highly liquid instruments with insignificant interest rate risk and original or remaining maturities of three months or less at the time of purchase. These money market funds amounted to approximately $350.2 million and $344.8 million as of June 30, 2024 and December 31, 2023, respectively. See Note 9, Fair Value Measurements, for additional information.

NOTE 6 - GOODWILL AND INTANGIBLES

Goodwill

The change in carrying amount of goodwill by reporting segment was as follows (in millions):


	Installation		Other		Consolidated

Goodwill (gross) - January 1, 2024	$	375.2	$	93.6	$	468.8
Business combinations	6.6		0.6		7.2
Other adjustments	0.1		—		0.1
Goodwill (gross) - June 30, 2024	381.9		94.2		476.1
Accumulated impairment losses	(70.0)		—		(70.0)
Goodwill (net) - June 30, 2024	$	311.9	$	94.2	$	406.1

Other adjustments presented in the above table primarily include one immaterial acquisition and adjustments for the allocation of certain acquisitions still under measurement made during the six months ended June 30, 2024.

We test goodwill for impairment annually during the fourth quarter of our fiscal year or earlier if there is an impairment indicator. The accumulated impairment losses included within the above table were all associated with the Installation segment and substantially all of the impairment losses were recorded prior to the year ended December 31, 2010. During the three months ended June 30, 2024, we made the determination to wind down one of our branches. The fair value of the impaired goodwill associated with this branch was not material.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Intangibles, net

The following table provides the gross carrying amount, accumulated amortization and net book value for each major class of intangibles (in millions):


	As of June 30,						As of December 31,
	2024						2023
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Amortized intangibles:
Customer relationships	$	362.8	$	192.1	$	170.7	$	357.4	$	177.8	$	179.6
Covenants not-to-compete	33.0		25.4		7.6		32.1		23.7		8.4
Trademarks and tradenames	129.5		51.2		78.3		128.0		47.4		80.6
Backlog	21.6		21.6		—		21.6		21.5		0.1
	$	546.9	$	290.3	$	256.6	$	539.1	$	270.4	$	268.7

The gross carrying amount of intangibles increased during the six months ended June 30, 2024 primarily due to business combinations, offset by a $4.6 million intangible impairment charge related to the wind down of a single branch. For more information on business combinations and asset impairments, see Note 17, Business Combinations and Note 9, Fair Value Measurements, respectively.

Remaining estimated aggregate annual amortization expense is as follows (amounts, in millions, are for the fiscal year ended):


Remainder of 2024	$	20.6
2025	36.1
2026	32.1
2027	27.8
2028	24.5
Thereafter	115.5

NOTE 7 - LONG-TERM DEBT

Long-term debt consisted of the following (in millions):


	As of June 30,		As of December 31,
	2024		2023
Senior Notes due 2028, net of unamortized debt issuance costs of $2.2 and $2.5, respectively	$	297.8	$	297.5
Term loan, net of unamortized debt issuance costs of $4.4 for each period, respectively	494.3		485.6
Vehicle and equipment notes, maturing through June 2029; payable in various monthly installments, including interest rates ranging from 1.9% to 7.3%	83.1		83.0
Note payable, maturing April 2025; payable in annual installments, including interest rate at 5.0%	0.6		1.2
	875.8		867.3
Less: current maturities	(31.8)		(32.2)
Long-term debt, less current maturities	$	844.0	$	835.1

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Remaining required repayments of debt principal, gross of unamortized debt issuance costs, as of June 30, 2024 are as follows (in millions):


Remainder of 2024	$	16.4
2025	29.5
2026	25.2
2027	20.6
2028	313.3
Thereafter	477.4

Term Loan Agreement Amendment

In March 2024, we entered into Amendment No. 3 to our Term Loan Credit Agreement ("Third Amendment"). The Third Amendment amended certain terms of the existing seven-year term loan facility due December 2028, as amended (the "Term Loan Credit Agreement") and allowed for the issuance of a new term loan ("New Term Loan") in the amount of $500.0 million which will mature on March 28, 2031. Net proceeds of the New Term Loan were used to refinance the remaining $490.0 million on our existing term loan, pay fees and increase working capital. The New Term Loan does not have any financial maintenance covenants, eliminates the credit spread adjustment and the floor is reduced to 0.00%. The New Term Loan bears interest, at our option, at a rate equal to either: the adjusted term secured overnight financing rate plus 2.00% per annum, or an alternative base rate plus 1.00%. The New Term Loan also includes (i) a six-month “soft call” protection provision during which a 1.00% premium will be charged in connection with certain repricing transactions, and (ii) a 50 basis points most favored nation protection for 12 months following the effective date. As of June 30, 2024, we had $494.3 million, net of unamortized debt issuance costs, due on our New Term Loan. We have various interest rates swaps that serve to hedge $400.0 million of the variable cash flows on our New Term Loan through December 14, 2028. For further information about our interest rate swaps, see Note 11, Derivatives and Hedging Activities.

We wrote off $1.1 million in previously capitalized loan costs during the six months ended June 30, 2024. In addition, we expensed loan costs that did not meet the requirements for capitalization of approximately $3.1 million during the six months ended June 30, 2024. We had no such write-offs or expenses during the six months ended June 30, 2023.

NOTE 8 - LEASES

We lease various assets in the ordinary course of business as follows: warehouses to store our materials and perform staging activities for certain products we install, various office spaces for selling and administrative activities to support our business, and certain vehicles and equipment to facilitate our operations, including, but not limited to, trucks, forklifts and office equipment. During the six months ended June 30, 2024, we impaired the operating lease right-of-use asset for one of our branches due to its wind down, as described in Note 9, Fair Value Measurements.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheets (in millions):


		As of June 30,			As of December 31,
	Classification	2024			2023
Assets
Non-Current
Operating	Operating lease right-of-use assets	$	86.1		$	78.1
Finance	Property and equipment, net	9.3			9.1
Total lease assets		$	95.4		$	87.2
Liabilities
Current
Operating	Current maturities of operating lease obligations	$	30.6		$	28.3
Financing	Current maturities of finance lease obligations	2.8			2.7
Non-Current
Operating	Operating lease obligations	55.3			49.9
Financing	Finance lease obligations	6.7			6.6
Total lease liabilities		$	95.4		$	87.5

Weighted-average remaining lease term:
Operating leases		3.5 years			3.6 years
Finance leases		3.4 years			3.5 years
Weighted-average discount rate:
Operating leases		5.56		%	5.23		%
Finance leases		7.56		%	6.91		%

Lease Costs

The table below presents certain information related to the lease costs for finance and operating leases (in millions):


		Three months ended June 30,				Six months ended June 30,
	Classification	2024		2023		2024		2023
Operating lease cost(1)	Administrative	$	10.8	$	9.4	$	21.1	$	18.6
Finance lease cost:
Amortization of leased assets(2)	Cost of sales	1.0		0.9		2.0		1.9
Interest on finance lease obligations	Interest expense, net	0.1		0.2		0.3		0.3
Total lease costs		$	11.9	$	10.5	$	23.4	$	20.8

(1)Includes variable lease costs of $1.3 million and $1.1 million for the three months ended June 30, 2024 and 2023, respectively, and $2.5 million and $2.3 million for the six months ended June 30, 2024 and 2023, respectively, and short-term lease costs of $0.7 million and $0.3 million for the three months ended June 30, 2024 and 2023, respectively and $1.3 million and $0.6 million for the six months ended June 30, 2024 and 2023, respectively.

(2)Includes variable lease costs of $0.2 million and $0.1 million for the three months ended June 30, 2024 and 2023, respectively, and $0.4 million for each of the six months ended June 30, 2024 and 2023, respectively.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Other Information

The table below presents supplemental cash flow information related to leases (in millions):


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	8.9	$	7.9	$	17.3	$	15.6
Operating cash flows for finance leases	0.1		0.2		0.3		0.3
Financing cash flows for finance leases	0.7		0.7		1.5		1.4

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years for the finance lease obligations and operating lease obligations recorded on the Condensed Consolidated Balance Sheet as of June 30, 2024 (in millions):


	Finance Leases		Operating Leases
			Related Party		Other		Total Operating
Remainder of 2024	$	1.8	$	0.6	$	17.4	$	18.0
2025	3.3		1.1		29.7		30.8
2026	3.0		0.5		21.8		22.3
2027	2.0		0.1		12.3		12.4
2028	0.7		—		6.0		6.0
Thereafter	0.1		—		4.9		4.9
Total minimum lease payments	10.9		$	2.3	$	92.1	94.4

Less: Amounts representing interest	(1.4)						(8.5)
Present value of future minimum lease payments	9.5						85.9
Less: Current obligation under leases	(2.8)						(30.6)
Long-term lease obligations	$	6.7					$	55.3

NOTE 9 - FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. During the periods presented, there were no transfers between fair value hierarchical levels.

Assets Measured at Fair Value on a Nonrecurring Basis

Certain assets, specifically other intangible and long-lived assets, are measured at fair value on a nonrecurring basis in periods subsequent to initial recognition. Assets measured at fair value on a nonrecurring basis as of June 30, 2024 and December 31, 2023 are categorized based on the lowest level of significant input to the valuation. The assets are measured at fair value when our impairment assessment indicates a carrying value for each of the assets in excess of the asset’s estimated fair value. Discounted cash flows, a Level 3 input, are utilized in determining estimated fair values. Certain long-lived assets were impaired based on estimated future cash flows due to the wind down of a single branch during the three months ended June 30, 2024.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below presents asset impairment information related to long-lived assets (in millions):


	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Property and equipment assets impairment	$	0.2	$	—	$	0.2	$	—
Right-of-use assets impairment	0.1		—		0.1		—
Intangible assets impairment	4.6		—		4.6		—
Total asset impairments	$	4.9	$	—	$	4.9	$	—

Estimated Fair Value of Financial Instruments

Accounts receivable, accounts payable and accrued liabilities as of June 30, 2024 and December 31, 2023 approximate fair value due to the short-term maturities of these financial instruments. The carrying amounts of certain long-term debt, including the Term Loan and ABL Revolver as of June 30, 2024 and December 31, 2023, approximate fair value due to the variable rate nature of the agreements. The carrying amounts of our operating lease right-of-use assets and the obligations associated with our operating and finance leases as well as our vehicle and equipment notes approximate fair value as of June 30, 2024 and December 31, 2023. All debt classifications represent Level 2 fair value measurements. Derivative financial instruments are measured at fair value based on observable market information and appropriate valuation methods.

Contingent consideration liabilities arise from future earnout payments to the sellers associated with certain acquisitions and are based on predetermined calculations of certain future results. These future payments are estimated by considering various factors, including business risk and projections. The contingent consideration liabilities are measured at fair value by discounting estimated future payments, calculated based on a weighted average of various future forecast scenarios, to their net present value.

The fair values of financial assets and liabilities that are recorded at fair value in the Condensed Consolidated Balance Sheets and not described above were as follows (in millions):


	As of June 30, 2024								As of December 31, 2023
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Financial assets:
Money market funds	$	350.2	$	350.2	$	—	$	—	$	344.8	$	344.8	$	—	$	—
Derivative financial instruments	29.1		—		29.1		—		24.9		—		24.9		—
Total financial assets	$	379.3	$	350.2	$	29.1	$	—	$	369.7	$	344.8	$	24.9	$	—
Financial liabilities:
Contingent consideration	$	0.7	$	—	$	—	$	0.7	$	0.4	$	—	$	—	$	0.4

See Note 5, Cash and Cash Equivalents, for more information on money market funds included in the table above. Also see Note 11, Derivatives and Hedging Activities, for more information on derivative financial instruments.

The change in fair value of the contingent consideration (a Level 3 input) was as follows (in millions):


Contingent consideration liability - January 1, 2024	$	0.4
Preliminary purchase price	0.3
Fair value adjustments	0.0
Accretion in value	0.0



Contingent consideration liability - June 30, 2024	$	0.7

The accretion in value of contingent consideration liabilities is included within administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income.

Table of Contents

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The carrying value and associated fair value of financial liabilities that are not recorded at fair value in the Condensed Consolidated Balance Sheets and not described above include our $300.0 million in aggregate principal amount of 5.75% senior unsecured notes ("Senior Notes"). To estimate the fair value of our Senior Notes, we utilized third-party quotes which are derived all or in part from model prices, external sources or market prices. The Senior Notes represent a Level 2 fair value measurement and are as follows (in millions):


	As of June 30, 2024				As of December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value

Senior Notes(1)	$	300.0	$	292.7	$	300.0	$	296.2

(1)Excludes the impact of unamortized debt issuance costs.

See Note 7, Long-Term Debt, for more information on our Senior Notes.

NOTE 10 - INFORMATION ON SEGMENTS

Our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), reviews financial information of our three operating segments consisting of Installation, Distribution and Manufacturing for the purpose of assessing business performance, managing the business and allocating resources.

Our Installation operating segment represents the majority of our net revenue and gross profit and forms our one reportable segment. This operating segment represents the service-based installation of insulation and complementary building products in the residential new construction, repair and remodel and commercial construction end markets from our national network of branch locations. These branch locations have similar economic and operating characteristics including the nature of products and services offered, operating procedures and risks, customer bases, employee incentives, material procurement and shared corporate resources and therefore combine to form one operating segment.

The Other category reported below reflects the operations of our two remaining operating segments, Distribution and Manufacturing, which do not meet the quantitative thresholds for separate reporting. Our Distribution operating segment includes our businesses that sell insulation, gutters and accessories primarily to installers of these products who operate in multiple end markets. Our Manufacturing operating segment consists of our cellulose insulation manufacturing operation. In addition to sales of cellulose insulation, revenues from this operating segment consist of sales of asphalt and industrial fibers to distributors and installers of these products.

The Installation reportable segment includes substantially all of our net revenue from services while net revenue included in the Other category includes substantially all of our net revenue from sales of products. The intercompany sales from the Other category to the Installation reportable segment include a profit margin while our Installation segment records these transactions at cost. These transactions are shown in the Eliminations column in the tables below.

The key metrics used by our CODM to assess performance, manage the business and allocate resources of our operating segments are revenue and segment gross profit. We define segment gross profit as revenue less cost of sales, excluding depreciation and amortization. We do not report total assets, depreciation and amortization expenses included in reported cost of sales, operating expenses or other expense, net by segment because our CODM does not regularly receive or use this information. The following tables represent our segment information for the three and six months ended June 30, 2024 and 2023 (in millions):


	Three months ended June 30, 2024								Six months ended June 30, 2024
	Installation		Other		Eliminations		Consolidated		Installation		Other		Eliminations		Consolidated
Revenue	$	697.3	$	44.0	$	(3.7)	$	737.6	$	1,353.2	$	84.3	$	(7.0)	$	1,430.5
Cost of sales (1)	443.1		32.5		(2.8)		472.8		862.4		61.0		(5.1)		918.3
Segment gross profit	$	254.2	$	11.5	$	(0.9)	$	264.8	$	490.8	$	23.3	$	(1.9)

Installed Building Products, Inc. [IBP] Filings
10-Q	[2024-08-01]
10-Q	[2024-05-09]
10-K	[2024-02-22]
10-Q	[2023-11-08]
10-Q	[2023-08-02]
10-Q	[2023-05-04]
10-K	[2023-02-22]
10-Q	[2022-11-03]
10-Q	[2022-08-04]
10-Q	[2022-05-05]
10-K	[2022-02-24]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-07]
10-K	[2021-02-24]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-08]
10-K	[2020-02-27]
10-Q	[2019-11-01]
10-Q	[2019-08-08]
10-Q	[2019-05-03]
10-K	[2019-02-28]
10-Q	[2018-11-02]
10-Q	[2018-08-03]
10-Q	[2018-05-04]
10-K	[2018-02-28]
10-Q	[2017-11-06]
10-Q	[2017-08-07]
10-Q	[2017-05-08]
10-K	[2017-02-28]
10-Q	[2016-11-07]
10-Q	[2016-08-08]
10-Q	[2016-05-09]
10-K	[2016-03-09]
10-Q	[2015-11-06]
10-Q	[2015-08-07]
10-Q	[2015-05-13]
10-K	[2015-03-13]
10-Q	[2014-11-12]
10-Q	[2014-08-13]
S-1	[2014-05-27]
10-Q	[2014-05-14]
10-K	[2014-03-28]
S-1	[2014-01-09]