Installed Building Products Reports Results for First Quarter 2019

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,
2019.

First Quarter 2019 Highlights (year-over-year)

• Net revenue increased 13.4% to $342.1 million
• Net income increased 38.2% to $8.8 million
• Adjusted EBITDA* increased 13.5% to $35.7 million
• Net cash provided by operating activities increased 161.1% to $15.9
  million
• Net income per diluted share increased 50.0% to $0.30
• Adjusted net income per diluted share* increased 13.3% to $0.51
• In March 2019, acquired 1st State Insulation, LLC, an insulation
  installer in Delaware with annual revenues of approximately $8.8
  million
• In March 2019, launched the Installed Building Products Foundation a
  foundation led by IBP employees for IBP employees, their families, and
  their communities.

“Demand remains strong throughout our geographies and end markets, as
revenues increased 13.4% to $342.1 million,” stated Jeff Edwards,
Chairman and Chief Executive Officer. “First quarter profitability was
consistent with the normal seasonal trends within the industry. While
builder orders and starts weakened in the fourth quarter of 2018,
industry backlogs actually increased. Some of our installation services
completed during the first quarter was related to this backlog without
the benefit of recent selling price increases. We continue to make
progress on improving pricing throughout our markets and we expect to
see the contribution of these pricing trends as well as overall
profitability improvement in the second half of 2019.”

“Overall I am pleased with the strong start to the year and encouraged
by current demand trends within the housing industry. In addition, we
remain focused on our acquisition strategy, prioritizing geographic
expansion. We have a strong pipeline of acquisition candidates, which
includes insulation installers that expand our footprint and
complementary building product companies that diversify our end markets.
As a result of the strong start to the year, favorable industry trends,
and the benefits of our acquisition strategy, we believe we are
positioned for a strong year of sales growth and expanded profitability
in 2019,” concluded Mr. Edwards.

First Quarter 2019 Results Overview

For the first quarter of 2019, net revenue was $342.1 million, an
increase of 13.4% from $301.7 million in the first quarter of 2018. On a
same branch basis, net revenue improved 7.4% from the prior year
quarter, with more than half of the increase attributable to price gains
and more favorable customer and product mix, and the remainder
attributable to the growth in the number of completed jobs. Residential
same branch sales growth was 7.0%, with same branch single-family sales
growth of 6.5% during the first quarter, compared to an increase in U.S.
single-family housing completions of 4.2%. Our large commercial
construction end-market had growth of 6.6%.

Gross profit improved 11.8% to $89.4 million from nearly $80.0 million
in the prior year quarter. Adjusted gross profit* as a percent of total
revenue was 26.2% which adjusts for the Company’s share-based
compensation expense and branch start-up costs, compared to 27.0% for
the same period last year. The decline in gross profit margin was
predominately attributable to the completion of installation jobs from
the elevated 2018 backlog without the full benefit of recent selling
price increases.

Selling and administrative expense, as a percentage of net revenue, was
19.2% compared to 19.9% in the prior year quarter. Adjusted selling and
administrative expense*, as a percentage of net revenue, improved 80
basis points to 18.4% from 19.2%. Higher net revenue in the 2019 first
quarter more than offset the higher costs needed to support our growth.

Net income was $8.8 million, or $0.30 per diluted share, compared to
$6.4 million, or $0.20 per diluted share in the prior year quarter.
Adjusted net income was $15.3 million, or $0.51 per diluted share,
compared to $14.4 million, or $0.45 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 $35.7 million, a 13.5% increase from $31.4 million
in the prior year quarter, largely due to higher sales and improved
selling and administrative leverage.

Conference Call and Webcast

The Company will host a conference call and webcast on May 2, 2019 at
10:00 a.m. Eastern Time to discuss these results. To participate in the
call, please dial 877-407-0792 (domestic) or 201-689-8263
(international). The live webcast will be available at www.installedbuildingproducts.com
in the investor relations section. A replay of the conference call will
be available through June 2, 2019, by dialing 844-512-2921 (domestic) or
412-317-6671 (international) and entering the passcode 13690134.

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 175 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, our efforts to
navigate the material pricing environment, our ability to increase
selling prices, the demand for our services and product offerings,
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, and
expectations for demand for our services and our earnings in 2019.
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, 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,
2018, 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.

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.

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.

The table below reconciles Adjusted EBITDA to the most directly
comparable GAAP financial measure, net income, for the periods presented
therein.

Contacts

Investor Relations:
614-221-9944
[email protected]

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