Installed Building Products, Inc.

Greetings and welcome to the Installed Building Products Fiscal 2022 Second 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, Managing Director of Investor Relations. Please go ahead, Mr. Hicks.

Good morning and welcome to Installed Building Products second quarter 2022 conference call. Earlier today, we issued a press release on our financial results for the second quarter, which can be found in an 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 securities 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, inflation and interest rates, the material price and supply environment, the timing of increases in our selling prices, and factors discussed in the risk factors section of the company's annual report on Form 10-K, as may be updated from time to time in our SEC filings. Any forward-looking statement speaks 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 chief administrative and sustainability officer. 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. We achieved record operating and financial results during the 2022 second quarter as our team worked hard to support our customers and capitalize on strong end market demand. The second quarter also benefited from the continued success of our local branches aligning our selling prices with the value we offer our customers. As a result, I am proud that we achieved quarterly record revenue, net income, and adjusted EBITDA. Our consistent record of growth and value creation is a direct result of our strategic focus and the hard work of everyone at IBP. The dedication of our team members is especially important in the current environment as home builders navigate ongoing supply chain constraints and the challenge of delivering new homes. IBP's value proposition resonates with our customers because of our focus on providing the highest level of service by completing jobs correctly and on schedule. To everyone at IBP, Thank you for your commitment, your hard work, and a tough job always done well. Looking at our second quarter results, we experienced another quarter of strong residential sales growth. For the quarter, within our installation segment, we experienced a 32.7% increase in residential same branch sales from the prior year period, which was driven by a 33.1% increase in single-family same-branch sales and a 30.3% increase in multi-family same-branch revenue. By comparison, total U.S. residential completions increased by 2% during the second quarter. We believe completions continue to be impacted by extended residential construction cycle times. During the second quarter, price mix increased 24.9% over the prior year period. Consistent with the inflationary trends in the construction industry and the increasing demand for our services, our pricing efforts and stabilized mix compared to the prior year have contributed to the largest quarterly increase we have achieved since becoming a public company. We continue to make prudent adjustments to align our pricing with the value we offer customers in inflationary trends. The supply chain for many of the building products and materials we install remain constrained during the second quarter. We anticipate that supply chain challenges will continue for the foreseeable future, but our national presence and deep industry experience allow us to operate from a position of strength. While mortgage rates have increased since the beginning of the year, we believe the elevated number of permitted units that have yet to be started remain supportive of our residential business throughout 2022 and into 2023. We closely watch our markets for changes in residential activity, but we believe IBP is better positioned than any other time in our history to manage the business throughout the U.S. housing cycle. When combined with a strong balance sheet, our revenue from diverse geographies, products, and end markets is a core advantage in a cyclical housing construction industry. Within our heavy commercial business, Same branch sales were roughly flat in the 2022 second quarter with bidding activity remaining stable and project bid acceptance steady relative to 2022 first quarter. The commercial construction market continues to represent a significant long-term growth opportunity for IVP and we remain focused on improving our operational efficiency. 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 2022 second quarter and August, we acquired a New Jersey-based distributor of gutter supplies and accessories to residential, multifamily, and commercial markets, primarily in existing or retrofit construction projects across the U.S., Northeast, and Mid-Atlantic with annual revenue of approximately $45 million. a California-based installer of fiberglass insulation, spray foam insulation, and acoustical ceiling insulation into new residential, multifamily, and commercial projects in California with annual revenue of approximately $14 million. And we also acquired a Missouri-based installer of fiberglass insulation as well as fireplaces and heating stoves with a combined annual revenue of over $3 million. As previously disclosed in April, we became an early investor in Energy.ai, Their platform provides actionable insight into a company's energy usage and carbon emissions using artificial intelligence, and we have partnered with them to implement their solution at IBP as we work to reduce our greenhouse gas emissions. Our acquisition pipeline remains robust and includes opportunities across multiple geographies, products, and end markets. As a result, we believe 2022 will be another strong year of acquisition growth, We expect to acquire at least $100 million of revenue this year. As we look to the remainder of 2022 and beyond, we are excited by the direction in which we are headed and 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. With access to labor, a strong position with our customers and suppliers, and a healthy backlog, we believe 2022 is shaping up to be another year of profitable growth and value creation for IBP. So with this overview, I would like to turn the call over to Michael to provide more detail on our second quarter financial results.