Installed Building Products, Inc.

Greetings and welcome to Installed Building Products Fiscal 2023 Third Quarter Financial Results Conference Call. At this time, all participants are on 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 call over to your host, Darren Hicks. Thank you. You may begin.

Good morning, and welcome to Install Building Products' third quarter 2023 earnings conference call. Earlier today, we issued a press release on our financial results for the third 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 meeting of the federal securities laws. These forward-looking statements are based on management's current expectations and beliefs. These statements are subject to risks, uncertainties, and other factors that could cause action results to differ materially from those described today. Please refer to the cautionary statements and risk factors in our SEC filings, including our most recent 10Q and annual report on Form 10-K. We undertake 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 refers to certain non-GAAP or adjusted financial measures on this call. You can find a reconciliation of such measures to their nearest GAAP equivalent in a company's earnings release and additional reconciliation for EBITDA and adjusted EBITDA for earlier fiscal periods in our investor presentation, which are available on the investor relations section of 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. IBP produced another solid quarter of operating and financial results, achieving all-time and third-quarter record results on several profitability and cash flow generation metrics during a volatile economic backdrop for residential and commercial construction activity. Consolidated revenue comparisons were challenging given the over 40% growth achieved in the prior year period, but our end-market product and geographic diversity helped to offset softer single-family installation activity. Despite top line headwinds, we achieved record third quarter net income, earnings per share, and operating cash flow in 2023. Our model family and market continues to stand out and exemplify the benefits of employing a centralized service oriented operation across our branches. On the same branch basis, Malta family sales in our installation segment increased 28% with growth driven by continued success selling IBP's installation services in markets that historically have not served Malta family customers. As a result, we were able to partially offset softer single family installation, same branch sales, which were down 12%. In August, we published our third annual ESG report. In addition to presenting our sustainability achievements and advancements, We highlight the critical position insulation installers hold in contributing to energy efficiency in homes and other buildings. Our business is in the unique position to benefit both our shareholders and the broader global environment that surrounds us. IDP has experienced tremendous success as a public company, and while the path has not always been straightforward, the dedication and consistency of our team members have been the key to navigating an increasingly complex economic, social, and business environment. To everyone at IDP, thank you for your commitment, your hard work, and a tough job always done well. We continue to expand our product offering and geographic presence through acquisitions and have acquired eight companies so far this year. We combine annual revenue of over $58 million. We expect to acquire at least $100 million of annual revenue each year. However, acquisitions timing is unpredictable and certain acquisitions may change from their intended closing dates within a given calendar year. During the 2023 third quarter and in October, we completed three acquisitions, including a Virginia-based installer of shower, shelving, and mirror products, as well as fireplaces, into new and existing residential commercial construction projects with annual revenue of approximately $6 million. A North Carolina-based installer of fiberglass, spray foam, cellulose insulation, and fireplaces to residential customers with annual revenue of approximately $2 million, and and a North Dakota-based installer of fiberglass and spray foam insulation to multi-family residential and commercial customers with annual revenue of approximately $2 million. Overall, the residential housing market continues to be resilient as relatively low existing home inventory levels have led to a higher percentage of new construction home sales despite broader housing affordability challenges, which has been exacerbated by the rapid rise in interest rates this year. Still, we are encouraged that the publicly traded homebuilders that have reported financial results in the last two weeks have shown a combined year-over-year new order volume growth rate of roughly 40%. While these orders will take time to impact our revenue, single-family housing starts, which impact our business sooner than orders, have been trending positively in the third quarter. As for the multifamily end market, our project backlog remains stable at historically high levels with activity extending beyond one year. We believe we are well positioned to report another year of strong operational and financial performance in 2023 as we continue to focus on profitability and effective capital allocation to drive growth. Longer term, we believe that housing demand will continue to grow and the insulation installation industry is well positioned to benefit from demand driven by government legislation, including the Inflation Reduction Act of 2022 and the bipartisan infrastructure law, which are intended to improve energy efficiency in residential homes. IVP's strong customer relationships, experienced leadership team, national scale, and diverse product categories across multiple end markets will help the company navigate future changes in the U.S. housing market. I'm proud of our continued success and excited by the prospects ahead for IVP in the broader insulation and other products installation business. Before I turn the call over to Michael, I want to say thank you to Jay Elliott, IBP's Chief Operating Officer, who will be retiring at the end of the year. Jay has been a valuable member of IBP's leadership team over the past 20 years, and his keen ability to resolve operational challenges combined with his industry knowledge has benefited IBP on countless occasions. While Jay will act as a close advisor to the company after this year, on behalf of IBP, I want to thank Jay for his commitment and wish him and his family the very best in his retirement. IBP is fortunate to have a deep bench of experienced talent, and we have tapped current regional president Brad Wheeler to be Jay's successor. Brad has served as one of IBP's regional presidents since 2015 and has been the president of our heavy commercial-focused business, Alpha, since 2022. Brad is an exceptional leader, and I look forward to his continued contributions to IBP. So with this overview, I'd like to turn the call over to Michael to provide more detail on our third quarter financial results. Thank you, Jeff, and good morning, everyone.