Installed Building Products, Inc. Q3 FY2024 earnings call

• IBP delivered record third quarter revenue and profitability with organic growth across end markets. - Acknowledged employees affected by hurricanes and thanked those who rallied to support them. - Strong sales growth: consolidated sales up nearly 8%, same branch up 5%; single-family supported by national production builders, multifamily resilient with centralized model, commercial end market grew. - Profitability at all-time record, driven by local market expertise. - Acquisitions as top priority, with $73M in annual revenue acquired in 2024 Q3 and October, expecting more deals by year-end. - Positive long-term outlook on demand for installed services due to favorable trends in residential and commercial construction.

Consolidated net revenue for the third quarter increased 8% to an all-time record of $761 million. Residential same-branch installation sales increased approximately 5%. Multifamily installation sales on a same-branch basis increased over 2%. Commercial end market had strong same-branch sales growth. Acquisitions in 2024 third quarter and October included an Illinois-based installer with ~$20M annual revenue and a specialty distributor with over $22M annual revenue, totaling over $73M in annual revenue acquired to date. Revenue contribution from segments: Residential, Multifamily, and Commercial end markets each contributed to the overall growth, with single-family supported by national production builders and multifamily showing resilience with a centralized model.

• Fourth quarter 2024 amortization expense expected ~$10M, full year 2025 ~$37M. - Effective tax rate expected 25%-27% for 2024. - Liquidity: $265M cash flow from operations YTD 2024, net debt to trailing 12-month adjusted EBITDA leverage ratio 0.94x (well below target of 2x). - Stock repurchases: $66M YTD 2024, ~$234M available; fourth quarter dividend $0.35 per share, 6% increase y-o-y.

• Impact of spray foam pricing decline on gross margin and EBITDA (less than 100 basis point impact, ~$1M-$1.5M EBITDA impact). - Multifamily segment to be a headwind over next couple of quarters. - Uncertainty around energy code adoption and labor market dynamics. - Inflationary pressures affecting SG&A expenses (insurance, facility leases, labor).

Q: Stephen Kim asked about margin factors like production builders, non-insulation sales, start-up expenses.

A: Michael Miller responded on production builders growing twice as fast as regional/local, insulation vs other products growth, spray foam decline impact, and start-up expenses for internal distribution.

Q: Susan Maklari asked about G&A leverage.

A: Jeffrey Edwards discussed SG&A as somewhat stagnant, growing with inflation, and current SG&A percentage in line with recent quarters.

Q: Michael Rehaut asked about gross margin persistence.

A: Michael Miller explained SG&A lagging inflation, G&A expected to grow at 3%-5% inflation rate, and acquisitions adding G&A.

Q: Adam Baumgarten asked about spray foam revenue and multifamily outlook.

A: Jeffrey Edwards said spray foam was ~10% of revenue, decline had <100 basis point gross margin impact; multifamily to be a headwind, but CQ team maintaining backlogs.

Q: Margaret Grady asked about demand outlook by customer type.

A: Jeffrey Edwards said production builders have more rate buydown flexibility, demand outlook encouraging post-election.

Q: Trey Grooms asked about fiberglass supply and inventory.

A: Jeffrey Edwards said supply tightness didn't impact volume, internal sourcing helping inventory.

Q: Jeffrey Stevenson asked about commercial demand and fiberglass impact.

A: Jeffrey Edwards discussed heavy commercial business improvement and no material impact from fiberglass supply on volume.

Q: Kurt Yinger asked about EBITDA incrementals.

A: Michael Miller talked about external variables and internal focus on maintaining gross margins and SG&A leverage.

Q: Kenneth Zener asked about past gross margin pressure.

A: Michael Miller discussed Knauf facility fire and Fed rate impact causing past gross margin degradation.

Q: Kurt Yinger asked about regional commentary.

A: Jeffrey Edwards talked about larger production builders' share and regional performance differences.