Installed Building Products, Inc.

Greetings and welcome to Install Building Products Fiscal 2021 Fourth Quarter Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Darren Hicks, Director of Investor Relations.

Good morning, and welcome to Installed Building Products' fourth quarter 2021 earnings conference call. Earlier today, we issued a press release on our financial results for the fourth quarter, which can be found in the investor relations section of our website. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements within the meaning of the federal security laws. These forward-looking statements include statements about future expectations, anticipation, beliefs, estimates, forecasts, plans, and prospects. These forward-looking statements are based on management's current expectations and involve risks and uncertainties. Any forward-looking statement made by management during this call is not a guarantee of future performance and actual results may differ materially as a result of various factors, including, without limitation, the adverse impact of the COVID-19 crisis, general economic and industry conditions, the material price and supply 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 as may be updated from time to die in our SEC filings. Any forward-looking statements speak only as of the date hereof. The company undertakes no duty or obligation to update any forward-looking statements as a result of new information or future events, except as required by federal securities laws. In addition, management uses certain non-GAAP performance measures on this call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted net income per diluted share, adjusted gross profit, adjusted gross profit margin, and adjusted selling and administrative expense. You can find a reconciliation of such measures to their nearest GAAP equivalent in the company's earnings release and additional reconciliation for adjusted EBITDA for earlier fiscal years in our investor presentation, which are available on our website. This morning's conference call is hosted by Jeff Edwards. our Chairman and Chief Executive Officer, and Michael Miller, our Chief Financial Officer, and joined by Jason Neiswanger, our Senior Vice President of Finance and Investor Relations. I will now turn the call over to Jeff.

Thanks, Darren, and good morning to everyone joining us on today's call. As usual, I will start the call with some highlights and then turn the call over to Michael, who will discuss our financial results and capital position in more detail before we take your questions. IDP achieved another year of record annual revenue and profitability. For 2021, revenue increased 19.1% to nearly $2 billion. Net income per diluted share increased 22.6% to $4.01, and adjusted EBITDA increased 16.2% to $285.4 million. The record 2021 results extend our history of revenue, net income, and adjusted EBITDA growth to seven consecutive years since IDP became a public company in February of 2014. I am proud and humbled by our performance as we achieve these record results despite the continued impacts of the COVID-19 pandemic and unprecedented supply chain challenges. Our strong 2021 results demonstrates the continued hard work, dedication, and commitment of our nearly 9,500 team members nationwide. The most important part of our business is the men and women working at our locations throughout the U.S. We strive to provide an environment where people want to work and succeed, and we continue to focus our resources on attracting, retaining, and developing talent. Employee turnover remains well below industry averages, which we believe is a direct result of the investments made in our employee programs, which have been in place since 2017. Our success in 2021 is a reflection of the resiliency of our business model, our competitive position within key geographies and end markets, the strength of our balance sheet, and the experience and dedication of our senior leaders and employees throughout the company. Since our IPO in 2014, we have achieved many operating and financial accomplishments. Revenue, net income from continuing operations, and adjusted EBITDA have grown at compound annual growth rates of 21%, 36%, and 31%, respectively. During this period, we've completed almost 90 acquisitions, expanding our footprint across the U.S. and diversifying our revenue to additional end markets and product categories. pursued a growth-focused capital allocation strategy that prioritizes investments and acquisitions while allocating excess capital toward our dividend and share repurchase programs. Finally, over the past several years, we have been developing a comprehensive ESG framework that was formalized in October of 2021 with the publication of our inaugural ESG report. We continue to evolve into an increasingly conscientious company, and we are devoting more resources toward sustaining that effort, which I'll touch on later. As you can see, we have come a long way since our IPO. I'm extremely pleased with our ability to execute our growth plan and return capital to our shareholders while being a good corporate citizen. With this update, let's review our 2021 full year and fourth quarter end market performance in more detail. 2021 was another strong year of residential and multifamily growth while the COVID-19 pandemic continued to impact activity within our commercial operations. For the year, we experienced a 12.8% increase in residential same branch sales from the prior year period, which was driven by a 14% increase in single family same branch sales growth also from the prior year period. By comparison, 2021 total U.S. residential completions increased just 4% and single family completions rose 6.1% from the prior year. During the fourth quarter, price mix increased 12.9% over the prior year period, which is the strongest quarterly increase we have achieved as a public company. This reflects the underlying demand for our installation services combined with the hard work of our local branches in keeping pricing aligned with the value we offer in inflationary trends. As expected, the supply chain for many of the building products and materials we install remain constrained during the fourth quarter and throughout 2021. We anticipate that supply chain challenges will continue for the foreseeable future, but our asset-light business model should enable us to remain flexible and generate strong cash flow. In addition, we continue to benefit from our national scale, material buying advantage, and strategic plans aimed at diversifying and expanding our products and markets and geographic presence. Single-family housing demand continues to benefit from historically low mortgage rates and favorable demographics that have driven an increase in demand for entry-level housing. According to the U.S. Census Bureau housing data, the December 2021 backlog of total units authorized but not started was up 45% from December of 2020, and new home construction starts continue to remain near cycle highs in 2021. As a result, we expect positive trends within the U.S. housing industry will support further growth in 2022. For the 2021 fourth quarter, St. Branch model family revenue increased 6% compared to the prior year quarter relative to a 12.5% decrease in U.S. model family completions. Our model family sales continued to grow at a healthy rate despite difficult year-over-year comparisons, which resulted from exceptional sales growth in the 2020 fourth quarter. Our commercial markets continue to be impacted by the COVID-19 pandemic, more specifically, less consistent material availability relative to pre-pandemic periods and supply chain disruptions. For the 2021 fourth quarter, our commercial and market sales growth continues to be driven by our strategic acquisitions. Within our large commercial business, Same-brand sales decreased modestly in the 2021 fourth quarter, but bidding activity has remained stable and project bid acceptance has been steady relative to 2020 fourth quarter. We believe the current bidding environment supports continued improvement in this end market. We estimate our large commercial backlog was $143.2 million as of the end of 2021. Looking at our acquisition strategy in more detail, we continue to prioritize profitable growth through acquiring well-run companies that install insulation and complementary building products. During the 2021 fourth quarter, we acquired a Texas-based installer of glass, mirrors, and related products for new commercial construction projects with annual revenue of approximately $20 million, an Oregon-based installer of insulation, gutters, windows, and siding for single-family, multifamily, and commercial customers with annual revenue of approximately $2.8 million, and and a Tennessee-based installer of fiberglass and spray foam insulation for new residential multifamily commercial construction projects with annual revenue of approximately $10 million. In addition, in December, we announced the acquisition of AMD Distribution. Since this is our first conference call since the acquisition, I want to provide some additional highlights on AMD. AMD is a Minnesota-based distributor serving customers across 21 states in the Midwest and Mountain West with annual revenue of approximately $71 million. The company distributes products, materials, accessories, and equipment used throughout the installation process. This is one of the largest acquisitions we have completed and the first major acquisition of a distribution business. AMD's experience serving our core installation markets provides us with the distribution platform, which further diversifies our revenue mix end markets, and geographic footprint. Over the long term, we expect AMV will improve the flexibility of both our supply chain and cost structure for insulation accessories. We believe there is an opportunity for this platform to contribute to the growth of our complementary building products in the quarters and years to come. We also expect this acquisition will be immediately accretive to earnings. The AMV acquisition capped off an historic year of acquisition growth for IVP. Throughout the year, we completed 12 acquisitions representing approximately $211 million of annual revenues, surpassing our $100 million acquired revenue target for 2021. Looking ahead, our acquisition pipeline remains robust and includes opportunities across multiple geographies, products, and in markets. As a result, we expect to acquire at least $100 million of revenue in 2022. As we look to 2022 and beyond, we remain excited by the direction we are headed in the compelling outlook across our residential and commercial end markets. We anticipate that effective management of our supply chain will continue to be a priority throughout this year. Our purchasing, logistics, and warehousing teams will continue to work with our suppliers and customers to help ease these industry-wide supply chain challenges. As many of you know, installation manufacturers are continuing to run at full capacity and with limited incremental capacity coming online this year, we are planning for multiple price increases throughout 2022. However, with access to labor, a strong position with our customers and suppliers, and a healthy housing industry demand backdrop, we believe we are well positioned to navigate the current inflationary environment better than any other period in our history. It's also important to note that although prices have been rising, insulation represents a small portion of the total cost to build a home, which we believe allows us greater flexibility to increasingly increase prices with our customers. I'm very proud of our legacy of growth and excited by the opportunities to create additional value for our customers, team members, and shareholders in the future. Before I turn the call over to Michael, I want to recognize the promotion of Jason Neiswanger to Chief Administrative and Sustainability Officer. Among many other financial and operational responsibilities, Jason has been the main point of contact with the investment community since our IPO. While Jason will remain accessible to investors, His primary IR responsibilities will be transferred to Darren Hicks, Director of Investor Relations. Anyone who's had the pleasure of engaging with Jason understands his passion for, commitment to, and knowledge of IVP. On behalf of everyone at the company, I want to congratulate Jason on his promotion. So with this overview, I'd like to turn the call over to Michael to provide more detail on our fourth quarter results.