Business Wire | Nov 4, 2021 07:00AM EDT

Installed Building Products Reports Record Third Quarter Results and Declares Regular Quarterly Cash Dividend

Nov. 04, 2021

COLUMBUS, Ohio--(BUSINESS WIRE)--Nov. 04, 2021--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 third quarter ended September 30, 2021, and also announced that its Board of Directors has approved the Company's fourth quarter cash dividend.

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

* Net revenue increased 21.2% to a record $509.8 million * Net income increased 24.3% to $34.9 million * Adjusted EBITDA* increased 18.0% to a record $78.1 million * Net income per diluted share increased 24.2% to $1.18 * Adjusted net income per diluted share* increased 23.1% to $1.49 * Supply chain disruptions had an estimated $2.0 million impact on gross profit in the third quarter, which reduced gross profit margin by approximately 40 basis points and lowered earnings by approximately $0.05 per diluted share * Price/mix growth increased 7.2% during the third quarter * At September 30, 2021, IBP had $191.4million in cash, cash equivalents, and investments, and nothing drawn on its existing $200.0 million revolving line of credit * Declared third quarter regular cash dividend of $0.30 per share, and today announced the fourth quarter cash dividend of $0.30 per share

"I am proud to report another quarter of record revenues and strong profitability as our team members remain focused on serving our customers and strategically growing our business," stated Jeff Edwards, Chairman and Chief Executive Officer. "During the third quarter, we experienced double-digit sales growth year-over-year across our single-family, multi-family, and commercial end markets reflecting robust demand for our installation services, price increases, and the benefit of acquired residential and commercial revenue."

"During the third quarter, price/mix increased 7.2% over the prior year period. This result reflects the highest increase in price/mix growth we have experienced in six quarters, which not only reflects the underlying demand for our installation services but also the hard work of our local branches to keep our pricing aligned with the value we offer. Unfortunately, industry wide supply chain issues continue to impact our operating efficiency, driving our costs higher. In order to meet customer demand during the quarter, we purchased materials from distributors and home centers at a premium to what we typically would purchase directly from manufacturers. Although supply chain disruptions have improved from prior quarters, purchases outside of typical supply chain channels had a gross margin impact of approximately $2.0 million. Demand remains strong but we anticipate supply chain disruptions will continue into 2022. We remain focused on working with our customers to offset higher costs."

"On October 18th, we issued our inaugural Environmental, Social, & Governance (ESG) report. Our primary insulation installation services are a critical component to improving energy efficiency and conservation in residential and commercial structures. Within our report, we've highlighted the meaningful impact insulation provides on single-family homes through energy savings and reductions in greenhouse gas emissions provided within local market building codes and additional detail of actual performance, as rated by our HERS(r) rating business in Columbus Ohio. However, that is only part of the story. We have also provided further information regarding our internal initiatives on topics such as health and safety, reduction targets for our greenhouse gas emissions, and diversity, equality and inclusion efforts."

"I am pleased with our third quarter and year-to-date performance as our team continues to work tirelessly to respond to customer needs and support the growth of our business. As we enter the fourth quarter, we believe 2021 will be another record year for IBP and I am excited by the opportunities ahead in 2022," 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, the Company has completed nine acquisitions representing approximately $130 million of annual revenues, surpassing IBP's $100 million acquired revenue target for this year.

During the 2021 third quarter, IBP acquired Five Star Building Products, LLC and Five Star Building Products of Southern Utah, LLC ("Five Star"). Five Star is a Salt Lake City, Provo, and Southern Utah based installer of fiberglass and garage doors for residential and multi-family customers, with annual revenue of approximately $25.0 million. IBP also acquired MT Insulation, LLC, a Hummelstown, Pennsylvania based installer of insulation and gutter services to residential and commercial customers, with annual revenue of approximately $4.0 million.

Since the end of the third quarter, IBP has completed the following acquisitions:

* In October 2021, acquired Mr. Insulation Co., a Hermiston, Oregon based installer of insulation, gutters, windows, and siding to single family, multi-family, and commercial customers, with annual revenue of approximately $2.8 million. * In November 2021, acquired Denison Glass and Mirror, Inc. and DGM, LLC ("DGM"). DGM, a Denison, Texas based installer of glass, mirrors, and related products into new commercial construction projects has annual revenue of approximately $20.0 million.

Third Quarter 2021 Results Overview

For the third quarter of 2021, net revenue was a record $509.8 million, an increase of 21.2% from $420.5 million in the third quarter of 2020. On a same branch basis, net revenue improved 11.2% from the prior year quarter, which was attributable to a 4.6% increase in the volume of jobs completed and a 7.2% increase in price/mix during the quarter relative to the same period last year. Residential sales growth was 22.5% and 14.5% on a same branch basis in the quarter. Our commercial construction end-market net revenue increased 16.3% for the third quarter of 2021, the growth was largely driven by recent acquisitions as same branch sales declined 5.6% primarily due to continued challenges associated with the COVID-19 crisis. Same branch sales within our large commercial business experienced a modest decline of 1.1% over the prior year period.

Gross profit improved 18.4% to $155.9 million from $131.6 million in the prior year quarter. Adjusted gross profit* as a percent of total revenue was 30.7% which adjusts for the Company's share-based compensation expense, as well as directly related COVID-19 expenses, compared to 31.4% for the same period last year. Inflationary pressure contributed to the year-over-year margin compression as materials, particularly spray foam and several complementary installed products, continued to be difficult to source near volume and pricing levels secured in prior periods. Third quarter gross profit was reduced by an estimated $2.0 million due to supply chain disruptions that occurred during the quarter, which reduced gross profit margin by approximately 40 basis points and had the same impact to operating profit margin and adjusted EBITDA* margin.

Selling and administrative expense, as a percent of net revenue, was 18.1% compared to 18.8% in the prior year quarter, the most favorable quarterly result since becoming a public company. Adjusted selling and administrative expense*, as a percent of net revenue, was 17.5% compared to 18.0% in the prior year quarter.

Net income was $34.9 million, or $1.18 per diluted share, compared to $28.1 million, or $0.95 per diluted share in the prior year quarter. Adjusted net income* was $44.0 million, or $1.49 per diluted share, compared to $35.9 million, or $1.21 per diluted share in the prior year quarter. Adjusted net income accounts for the impact of non-core items in both periods, including COVID-19 expenses and an addback for non-cash amortization expense related to acquisitions.

Adjusted EBITDA* was $78.1 million, an 18.0% increase from $66.2 million in the prior year quarter, largely due to strong residential sales, revenue from key commercial acquisitions, and leverage on selling and administrative expenses compared to the prior year quarter.

2021 Fourth Quarter Regular Cash Dividend

IBP's Board of Directors has approved the Company's quarterly cash dividend of $0.30 per share, payable on December 31, 2021, to stockholders of record on December 15, 2021.

Conference Call and Webcast

The Company will host a conference call and webcast on November 4, 2021 at 10:00 a.m. Eastern Time to discuss these results. To participate in the call, please dial 1-877-407-0792 (domestic) or 1-201-689-8263 (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 December 4, 2021, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 13723357.

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, our operations, our ESG initiatives and the expected impact thereof, 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 and material 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. 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; any recurrence of COVID-19, including through any new variant strains of the virus, and the related surges in positive COVID-19 cases; the adverse impact of the COVID-19 crisis on our business and financial results, our supply chain, 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 Nine months ended September 30, September 30, 2021 2020 2021 2020

Net revenue $ 509,763 $ 420,486 $ 1,434,927 $ 1,211,756

Cost of sales 353,879 288,839 1,001,730 836,710

Gross profit 155,884 131,647 433,197 375,046

Operating expensesSelling 24,188 20,843 67,677 60,209

Administrative 68,056 58,240 199,607 177,495

Amortization 9,224 6,974 26,798 20,378

Operating income 54,416 45,590 139,115 116,964

Other expense, netInterest expense, net 7,687 7,564 22,781 22,679

Other (income) expense (483) 176 (494) 305

Income before income 47,212 37,850 116,828 93,980taxesIncome tax provision 12,320 9,773 27,432 24,578

Net income $ 34,892 $ 28,077 $ 89,396 $ 69,402

Other comprehensiveincome (loss), net oftax:Net change on cash flowhedges, net of tax(provision) benefit of$(454) and $(408) forthe three months ended 1,292 1,176 7,762 (4,582)September 30, 2021 and2020, respectively, and$(2,638) and $1,582 forthe nine months endedSeptember 30, 2021 and2020, respectivelyComprehensive income $ 36,184 $ 29,253 $ 97,158 $ 64,820

Basic net income per $ 1.19 $ 0.95 $ 3.05 $ 2.35shareDiluted net income per $ 1.18 $ 0.95 $ 3.02 $ 2.33shareWeighted average sharesoutstanding:Basic 29,404,257 29,478,816 29,355,538 29,549,460

Diluted 29,620,748 29,698,028 29,615,162 29,737,716

Cash dividends declared $ 0.30 $ - $ 0.90 $ -per share INSTALLED BUILDING PRODUCTS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(unaudited, in thousands, except share and per share amounts)September 30,

December 31,

2021

2020

ASSETSCurrent assetsCash and cash equivalents$

191,435

$

231,520

Accounts receivable (less allowance for credit losses of $8,784 and $8,789 at September 30, 2021 and December 31, 2020, respectively)306,590

266,566

Inventories118,093

77,179

Prepaid expenses and other current assets56,803

48,678

Total current assets672,921

623,943

Property and equipment, net104,977

104,022

Operating lease right-of-use assets61,028

53,766

Goodwill257,106

216,870

Customer relationships, net133,759

108,504

Other intangibles, net70,341

62,889

Other non-current assets26,996

17,682

Total assets$

1,327,128

$

1,187,676

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesCurrent maturities of long-term debt$

24,557

$

23,355

Current maturities of operating lease obligations21,278

18,758

Current maturities of finance lease obligations1,780

2,073

Accounts payable119,583

101,462

Accrued compensation60,623

45,876

Other current liabilities56,970

44,951

Total current liabilities284,791

236,475

Long-term debt542,517

541,957

Operating lease obligations39,155

34,413

Finance lease obligations3,038

2,430

Deferred income taxes9,035

35

Other long-term liabilities55,866

53,184

Total liabilities934,402

868,494

Commitments and contingenciesStockholders' equityPreferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively-

-

Common stock; $0.01 par value: 100,000,000 authorized, 33,271,659 and 33,141,879 issued and 29,707,155 and 29,623,272 shares outstanding at September 30, 2021 and December 31, 2020, respectively333

331

Additional paid in capital208,535

199,847

Retained earnings332,087

269,420

Treasury stock; at cost: 3,564,504 and 3,518,607 shares at September 30, 2021 and December 31, 2020, respectively(147,228)

(141,653)

Accumulated other comprehensive loss(1,001)

(8,763)

Total stockholders' equity392,726

319,182

Total liabilities and stockholders' equity$

1,327,128

$

1,187,676

INSTALLED BUILDING PRODUCTS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(unaudited, in thousands, except share and per share amounts) September December 30, 31,

2021 2020

ASSETSCurrent assets Cash and cash equivalents $ 191,435 $ 231,520

Accounts receivable (less allowance for credit losses 306,590 266,566 of $8,784 and $8,789 at September 30, 2021 and December 31, 2020, respectively) Inventories 118,093 77,179

Prepaid expenses and other current assets 56,803 48,678

Total current assets 672,921 623,943

Property and equipment, net 104,977 104,022

Operating lease right-of-use assets 61,028 53,766

Goodwill 257,106 216,870

Customer relationships, net 133,759 108,504

Other intangibles, net 70,341 62,889

Other non-current assets 26,996 17,682

Total assets $ 1,327,128 $ 1,187,676

LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilities Current maturities of long-term debt $ 24,557 $ 23,355

Current maturities of operating lease obligations 21,278 18,758

Current maturities of finance lease obligations 1,780 2,073

Accounts payable 119,583 101,462

Accrued compensation 60,623 45,876

Other current liabilities 56,970 44,951

Total current liabilities 284,791 236,475

Long-term debt 542,517 541,957

Operating lease obligations 39,155 34,413

Finance lease obligations 3,038 2,430

Deferred income taxes 9,035 35

Other long-term liabilities 55,866 53,184

Total liabilities 934,402 868,494

Commitments and contingenciesStockholders' equity Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at - - September 30, 2021 and December 31, 2020, respectively Common stock; $0.01 par value: 100,000,000 authorized, 33,271,659 and 33,141,879 issued and 333 331 29,707,155 and 29,623,272 shares outstanding at September 30, 2021 and December 31, 2020, respectively Additional paid in capital 208,535 199,847

Retained earnings 332,087 269,420

Treasury stock; at cost: 3,564,504 and 3,518,607 (147,228) (141,653) shares at September 30, 2021 and December 31, 2020, respectively Accumulated other comprehensive loss (1,001) (8,763)

Total stockholders' equity 392,726 319,182

Total liabilities and stockholders' equity $ 1,327,128 $ 1,187,676

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in thousands)Nine months ended September 30,2021

2020

Cash flows from operating activitiesNet income$

89,396

$

69,402

Adjustments to reconcile net income to net cash provided by operating activitiesDepreciation and amortization of property and equipment32,498

30,850

Amortization of operating lease right-of-use assets16,464

13,281

Amortization of intangibles26,798

20,378

Amortization of deferred financing costs and debt discount993

1,000

Provision for credit losses1,135

3,839

Gain on sale of property and equipment(1,405)

(592)

Noncash stock compensation10,228

8,050

Deferred income taxes-

(3,405)

Amortization of terminated interest rate swap2,414

508

Changes in assets and liabilities, excluding effects of acquisitionsAccounts receivable(23,224)

(9,624)

Inventories(37,122)

5,983

Other assets(8,116)

9,027

Accounts payable14,120

(14,746)

Income taxes receivable/payable(107)

14,192

Other liabilities(7,594)

(4,259)

Net cash provided by operating activities116,478

143,884

Cash flows from investing activitiesPurchases of investments-

(776)

Maturities of short term investments-

37,473

Purchases of property and equipment(27,898)

(25,515)

Acquisitions of businesses, net of cash acquired of $1,640 and $0, at September 30, 2021 and 2020, respectively(94,500)

(38,825)

Proceeds from sale of property and equipment2,219

828

Other(1,430)

(2,662)

Net cash used in investing activities(121,609)

(29,477)

Cash flows from financing activitiesProceeds from vehicle and equipment notes payable20,753

17,759

Debt issuance costs-

(157)

Principal payments on long-term debt(19,688)

(19,801)

Principal payments on finance lease obligations(1,573)

(1,998)

Dividends paid(26,428)

-

Acquisition-related obligations(2,442)

(3,896)

Repurchase of common stock-

(15,759)

Surrender of common stock awards by employees(5,576)

(973)

Net cash used in financing activities(34,954)

(24,825)

Net change in cash and cash equivalents(40,085)

89,582

Cash and cash equivalents at beginning of period231,520

177,889

Cash and cash equivalents at end of period$

191,435

$

267,471

Supplemental disclosures of cash flow informationNet cash paid during the period for:Interest$

23,748

$

24,130

Income taxes, net of refunds27,428

13,798

Supplemental disclosure of noncash activitiesRight-of-use assets obtained in exchange for operating lease obligations23,543

18,340

Release of indemnification of acquisition-related debt2,036

-

Property and equipment obtained in exchange for finance lease obligations1,918

853

Seller obligations in connection with acquisition of businesses18,987

6,965

Unpaid purchases of property and equipment included in accounts payable1,327

1,229

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.

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(unaudited, in thousands) Nine months ended September 30, 2021 2020

Cash flows from operating activitiesNet income $ 89,396 $ 69,402

Adjustments to reconcile net income to net cashprovided by operating activitiesDepreciation and amortization of property and 32,498 30,850equipmentAmortization of operating lease right-of-use assets 16,464 13,281

Amortization of intangibles 26,798 20,378

Amortization of deferred financing costs and debt 993 1,000discountProvision for credit losses 1,135 3,839

Gain on sale of property and equipment (1,405) (592)

Noncash stock compensation 10,228 8,050

Deferred income taxes - (3,405)

Amortization of terminated interest rate swap 2,414 508

Changes in assets and liabilities, excluding effectsof acquisitionsAccounts receivable (23,224) (9,624)

Inventories (37,122) 5,983

Other assets (8,116) 9,027

Accounts payable 14,120 (14,746)

Income taxes receivable/payable (107) 14,192

Other liabilities (7,594) (4,259)

Net cash provided by operating activities 116,478 143,884

Cash flows from investing activitiesPurchases of investments - (776)

Maturities of short term investments - 37,473

Purchases of property and equipment (27,898) (25,515)

Acquisitions of businesses, net of cash acquired of (94,500) (38,825)$1,640 and $0, at September 30, 2021 and 2020,respectivelyProceeds from sale of property and equipment 2,219 828

Other (1,430) (2,662)

Net cash used in investing activities (121,609) (29,477)

Cash flows from financing activitiesProceeds from vehicle and equipment notes payable 20,753 17,759

Debt issuance costs - (157)

Principal payments on long-term debt (19,688) (19,801)

Principal payments on finance lease obligations (1,573) (1,998)

Dividends paid (26,428) -

Acquisition-related obligations (2,442) (3,896)

Repurchase of common stock - (15,759)

Surrender of common stock awards by employees (5,576) (973)

Net cash used in financing activities (34,954) (24,825)

Net change in cash and cash equivalents (40,085) 89,582

Cash and cash equivalents at beginning of period 231,520 177,889

Cash and cash equivalents at end of period $ 191,435 $ 267,471

Supplemental disclosures of cash flow informationNet cash paid during the period for:Interest $ 23,748 $ 24,130

Income taxes, net of refunds 27,428 13,798

Supplemental disclosure of noncash activitiesRight-of-use assets obtained in exchange for operating 23,543 18,340lease obligationsRelease of indemnification of acquisition-related debt 2,036 -

Property and equipment obtained in exchange for 1,918 853finance lease obligationsSeller obligations in connection with acquisition of 18,987 6,965businessesUnpaid purchases of property and equipment included in 1,327 1,229accounts payable 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 Nine months ended September 30, September 30, 2021 2020 2021 2020

Net income, as reported $ 34,892 $ 28,077 $ 89,396 $ 69,402

Adjustments for adjustednet income:Share based compensation 3,535 2,635 10,228 8,050expenseAcquisition related (252) 801 1,649 2,006expensesCOVID-19 expenses ^1 311 148 365 798

Gain on sale of assets (499) - (499) -

Amortization expense ^2 9,224 6,974 26,798 20,378

Miscellaneous - - - (279)non-operating incomeTax impact of adjusted (3,203) (2,745) (10,021) (8,048)items at normalized taxrate ^3Adjusted net income $ 44,008 $ 35,890 $ 117,916 $ 92,307

Weighted average shares 29,620,748 29,698,028 29,615,162 29,737,716outstanding (diluted)Diluted net income per $ 1.18 $ 0.95 $ 3.02 $ 2.33share, as reportedAdjustments for adjustednet income, net of tax 0.31 0.26 0.96 0.77impact, per dilutedshare ^4Diluted adjusted net $ 1.49 $ 1.21 $ 3.98 $ 3.10income per share1 Addback of employee pay, employee medical expenses, and legal fees directly attributable to COVID-192 Addback of all non-cash amortization resulting from business combinations3 Normalized effective tax rate of 26% applied to periods presented for 2021 and 20204 Includes adjustments related to the items noted above, net of tax ^1 Addback of employee pay, employee medical expenses, and legal fees directlyattributable to COVID-19^2 Addback of all non-cash amortization resulting from business combinations^3 Normalized effective tax rate of 26% applied to periods presented for 2021and 2020^4 Includes adjustments related to the items noted above, net of taxINSTALLED BUILDING PRODUCTS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

ADJUSTED GROSS PROFIT CALCULATIONS

(unaudited, in thousands)

Three months ended September 30,Nine months ended September 30,2021

2020

2021

2020

Gross profit$

155,884

$

131,647

$

433,197

$

375,046

Share based compensation expense161

60

287

221

COVID-19 expenses 1310

117

360

425

Adjusted gross profit$

156,355

$

131,824

$

433,844

$

375,692

Adjusted gross profit - % Total Revenue30.7%

31.4%

30.2%

31.0%

INSTALLED BUILDING PRODUCTS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

ADJUSTED GROSS PROFIT CALCULATIONS

(unaudited, in thousands)

Three months ended Nine months ended September 30, September 30, 2021 2020 2021 2020

Gross profit $ 155,884 $ 131,647 $ 433,197 $ 375,046

Share based compensation 161 60 287 221expenseCOVID-19 expenses ^1 310 117 360 425

Adjusted gross profit $ 156,355 $ 131,824 $ 433,844 $ 375,692

Adjusted gross profit - % 30.7% 31.4% 30.2% 31.0%Total Revenue 1

Addback of employee pay and employee medical expenses directly attributable to COVID-19^1 Addback of employee pay and employee medical expenses directly attributable to COVID-19INSTALLED BUILDING PRODUCTS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

ADJUSTED SELLING AND ADMINISTRATIVE EXPENSE CALCULATIONS

(unaudited, in thousands)

Three months ended September 30,Nine months ended September 30,2021

2020

2021

2020

Selling expense$

24,188

$

20,843

$

67,677

$

60,209

Administrative expense68,056

58,240

199,607

177,495

Selling and Administrative$

92,244

$

79,083

$

267,284

$

237,704

Share based compensation expense3,374

2,575

9,941

7,829

Acquisition related expenses(252)

801

1,649

2,006

COVID-19 expenses 11

31

5

373

Adjusted Selling and Administrative$

89,121

$

75,676

$

255,689

$

227,496

Adjusted Selling and Administrative - % Total Revenue17.5%

18.0%

17.8%

18.8%

INSTALLED BUILDING PRODUCTS, INC.

RECONCILIATION OF GAAP TO NON-GAAP MEASURES

ADJUSTED SELLING AND ADMINISTRATIVE EXPENSE CALCULATIONS

(unaudited, in thousands)

Three months ended Nine months ended September 30, September 30, 2021 2020 2021 2020

Selling expense $ 24,188 $ 20,843 $ 67,677 $ 60,209

Administrative expense 68,056 58,240 199,607 177,495

Selling and Administrative $ 92,244 $ 79,083 $ 267,284 $ 237,704

Share based compensation expense 3,374 2,575 9,941 7,829

Acquisition related expenses (252) 801 1,649 2,006

COVID-19 expenses ^1 1 31 5 373

Adjusted Selling and $ 89,121 $ 75,676 $ 255,689 $ 227,496AdministrativeAdjusted Selling and 17.5% 18.0% 17.8% 18.8%Administrative - % Total Revenue 1 Addback of employee pay, employee medical expenses and legal fees directly attributable to COVID-19 The table below reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure, net income, for the periods presented therein.

^1 Addback of employee pay, employee medical expenses and legal fees directlyattributable to COVID-19 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 MEASURESADJUSTED EBITDA CALCULATIONS(unaudited, in thousands) Three months ended Nine months ended September 30, September 30, 2021 2020 2021 2020

Adjusted EBITDA:Net income (GAAP) $ 34,892 $ 28,077 $ 89,396 $ 69,402

Interest expense 7,687 7,564 22,781 22,679

Provision for income taxes 12,320 9,773 27,432 24,578

Depreciation and 20,152 17,201 59,296 51,230 amortization Miscellaneous - - - (279) non-operating incomeEBITDA 75,051 62,615 198,905 167,610

Acquisition related (252) 801 1,649 2,006 expenses Share based compensation 3,535 2,635 10,228 8,050 expense COVID-19 expenses ^1 311 148 365 798

Gain on sale of assets (499) - (499) -

Adjusted EBITDA $ 78,146 $ 66,199 $ 210,648 $ 178,464

Adjusted EBITDA margin 15.3% 15.7% 14.7% 14.7%

1

Addback of employee pay, employee medical expenses and legal fees directly attributable to COVID-19^1 Addback of employee pay, employee medical expenses and legal fees directly attributable to COVID-19INSTALLED BUILDING PRODUCTS, INC.

SUPPLEMENTARY TABLE

(unaudited)

Three months ended September 30,Nine months ended September 30,2021

2020

2021

2020

Period-over-period GrowthSales Growth21.2%

6.1%

18.4%

9.1%

Same Branch Sales Growth11.2%

1.7%

8.9%

5.1%

Single-Family Sales Growth23.3%

1.8%

20.2%

4.0%

Single-Family Same Branch Sales Growth15.2%

-3.1%

13.0%

-0.5%

Multi-Family Sales Growth18.2%

36.6%

17.0%

39.0%

Multi-Family Same Branch Sales Growth10.9%

34.6%

7.0%

37.3%

Residential Sales Growth22.5%

6.2%

19.7%

8.5%

Residential Same Branch Sales Growth14.5%

1.6%

12.0%

4.4%

Commercial Sales Growth116.3%

2.7%

11.3%

12.9%

Commercial Same Branch Sales Growth-5.6%

-1.5%

-8.3%

8.7%

Same Branch Sales Growth 2Volume Growth 34.6%

2.2%

10.2%

0.0%

Price/Mix Growth 37.2%

0.2%

-0.3%

5.5%

Large Commercial Same Branch Sales Growth 4-1.1%

-2.0%

-4.2%

7.3%

U.S. Housing Market 5Total Completions Growth-1.9%

8.6%

6.0%

2.1%

Single-Family Completions Growth2.0%

2.1%

7.1%

1.6%

Multi-Family Completions Growth-12.1%

25.2%

1.5%

3.3%

INSTALLED BUILDING PRODUCTS, INC.

SUPPLEMENTARY TABLE

(unaudited)

Three months ended Nine months ended September 30, September 30, 2021 2020 2021 2020

Period-over-period GrowthSales Growth 21.2% 6.1% 18.4% 9.1%

Same Branch Sales Growth 11.2% 1.7% 8.9% 5.1%

Single-Family Sales Growth 23.3% 1.8% 20.2% 4.0%

Single-Family Same Branch Sales 15.2% -3.1% 13.0% -0.5%Growth Multi-Family Sales Growth 18.2% 36.6% 17.0% 39.0%

Multi-Family Same Branch Sales 10.9% 34.6% 7.0% 37.3%Growth Residential Sales Growth 22.5% 6.2% 19.7% 8.5%

Residential Same Branch Sales 14.5% 1.6% 12.0% 4.4%Growth Commercial Sales Growth^1 16.3% 2.7% 11.3% 12.9%

Commercial Same Branch Sales -5.6% -1.5% -8.3% 8.7%Growth Same Branch Sales Growth ^2Volume Growth ^3 4.6% 2.2% 10.2% 0.0%

Price/Mix Growth ^3 7.2% 0.2% -0.3% 5.5%

Large Commercial Same Branch -1.1% -2.0% -4.2% 7.3%Sales Growth ^4 U.S. Housing Market ^5Total Completions Growth -1.9% 8.6% 6.0% 2.1%

Single-Family Completions 2.0% 2.1% 7.1% 1.6%GrowthMulti-Family Completions Growth -12.1% 25.2% 1.5% 3.3%

1 Our commercial end market consists of large and light commercial projects.2 During the nine months ended September 30, 2021, we changed the classification of one of our branches to the large commercial subset of the commercial end market, based on the type of work this branch performs. While this change is immaterial to the sales growth calculations, it affects comparability to the corresponding prior year metric as the change was made prospectively beginning January 1, 2021. We continually evaluate the branch classifications utilized in our sales growth metrics based on changes in our business and operations over time and future changes may occur to these classifications.3 Excludes the large commercial end market.4 The large commercial end market, as a subset of our total commercial market, comprises certain of our branches working on projects constructed in steel and concrete, which are much larger than our average job. This market is excluded from the above same branch price/mix and volume growth metrics as to not skew the rates given the much larger per-job revenue compared to our average job.5 U.S. Census Bureau data, as revised.^1 Our commercial end market consists of large and light commercial projects.^2 During the nine months ended September 30, 2021, we changed theclassification of one of our branches to the large commercial subset of thecommercial end market, based on the type of work this branch performs. Whilethis change is immaterial to the sales growth calculations, it affectscomparability to the corresponding prior year metric as the change was madeprospectively beginning January 1, 2021. We continually evaluate the branchclassifications utilized in our sales growth metrics based on changes in ourbusiness and operations over time and future changes may occur to theseclassifications.^3 Excludes the large commercial end market.^4 The large commercial end market, as a subset of our total commercial market,comprises certain of our branches working on projects constructed in steel andconcrete, which are much larger than our average job. This market is excludedfrom the above same branch price/mix and volume growth metrics as to not skewthe rates given the much larger per-job revenue compared to our average job.^5 U.S. Census Bureau data, as revised.INSTALLED BUILDING PRODUCTS, INC.

INCREMENTAL REVENUE AND ADJUSTED EBITDA MARGINS

(unaudited, in thousands)

Three months ended September 30,Nine months ended September 30,2021

% Total

2020

% Total

2021

% Total

2020

% Total

Revenue IncreaseSame Branch$

47,216

52.9%

$

6,756

28.1%

$

107,467

48.2%

$

56,884

56.1%

Acquired42,060

47.1%

17,282

71.9%

115,704

51.8%

44,474

43.9%

Total$

89,276

100.0%

$

24,038

100.0%

$

223,171

100.0%

$

101,358

100.0%

Adj EBITDA

Contribution

Adj EBITDA

Contribution

Adj EBITDA

Contribution

Adj EBITDA

Contribution

Adjusted EBITDASame Branch$

6,220

13.2%

$

8,127

120.3%

$

14,011

13.0%

$

30,630

53.8%

Acquired5,726

13.6%

2,145

12.4%

18,172

15.7%

6,626

14.9%

Total$

11,946

13.4%

$

10,271

42.7%

$

32,183

14.4%

$

37,256

36.8%

View source version on businesswire.com: https://www.businesswire.com/news/home/20211104005128/en/

CONTACT: Contact Information: Investor Relations: 614-221-9944 investorrelations@installed.net