FORM10-Q
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
March 31, 2024
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | ||||
________
| Delaware | 45-3707650 | ||||||||||
(State or other jurisdiction of | (I.R.S. Employer
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495 South High Street, Suite 50 | |||||||||||
Columbus, Ohio | 43215 | ||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
| Common Stock, | $0.01 par value per share | IBP | The New York Stock Exchange | |||||||||||
| Large accelerated filer | ☒ | Accelerated filer | ☐ | |||||||||||||||||||||
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||||||||||||||||||||
| Emerging growth company | ☐ | |||||||||||||||||||||||
On October 30, 2017 the
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Item 1.Financial Statements
| September 30, | December 31, | |||||||
| 2017 | 2016 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 67,008 | $ | 14,482 | ||||
Investments | 25,114 | — | ||||||
Accounts receivable (less allowance for doubtful accounts of $4,846 and $3,397 | ||||||||
at September 30, 2017 and December 31, 2016, respectively) | 185,470 | 128,466 | ||||||
Inventories | 44,074 | 40,229 | ||||||
Other current assets | 19,599 | 9,214 | ||||||
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Total current assets | 341,265 | 192,391 | ||||||
Property and equipment, net | 78,045 | 67,788 | ||||||
Non-current assets | ||||||||
Goodwill | 153,660 | 107,086 | ||||||
Intangibles, net | 140,714 | 86,317 | ||||||
Othernon-current assets | 9,969 | 8,513 | ||||||
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Totalnon-current assets | 304,343 | 201,916 | ||||||
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Total assets | $ | 723,653 | $ | 462,095 | ||||
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LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities | ||||||||
Current maturities of long-term debt | $ | 15,550 | $ | 17,192 | ||||
Current maturities of capital lease obligations | 6,044 | 6,929 | ||||||
Accounts payable | 82,329 | 67,921 | ||||||
Accrued compensation | 25,975 | 18,212 | ||||||
Other current liabilities | 23,703 | 19,851 | ||||||
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Total current liabilities | 153,601 | 130,105 | ||||||
Long-term debt | 328,295 | 134,235 | ||||||
Capital lease obligations, less current maturities | 7,509 | 8,364 | ||||||
Deferred income taxes | 13,755 | 14,239 | ||||||
Other long-term liabilities | 23,135 | 21,175 | ||||||
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Total liabilities | 526,295 | 308,118 | ||||||
Commitments and contingencies (Note 12) | ||||||||
Stockholders’ equity | ||||||||
Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | — | — | ||||||
Common Stock; $0.01 par value: 100,000,000 authorized, 32,524,934 and 32,135,176 issued and 31,862,561 and 31,484,774 shares outstanding at September 30, 2017 and December 31, 2016, respectively | 325 | 321 | ||||||
Additional paid in capital | 172,206 | 158,581 | ||||||
Retained earnings | 37,641 | 7,294 | ||||||
Treasury Stock; at cost: 662,373 and 650,402 shares at September 30, 2017 and December 31, 2016, respectively | (12,769 | ) | (12,219 | ) | ||||
Accumulated other comprehensive loss | (45 | ) | — | |||||
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Total stockholders’ equity | 197,358 | 153,977 | ||||||
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Total liabilities and stockholders’ equity | $ | 723,653 | $ | 462,095 | ||||
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| March 31, | December 31, | ||||||||||
| 2024 | 2023 | ||||||||||
| ASSETS | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 399.9 | $ | 386.5 | |||||||
| Accounts receivable (less allowance for credit losses of $11.1 and $11.2 at March 31, 2024 and December 31, 2023, respectively) | 425.5 | 423.3 | |||||||||
| Inventories | 171.1 | 162.8 | |||||||||
| Prepaid expenses and other current assets | 82.7 | 97.4 | |||||||||
| Total current assets | 1,079.2 | 1,070.0 | |||||||||
| Property and equipment, net | 146.3 | 137.2 | |||||||||
| Operating lease right-of-use assets | 79.3 | 78.1 | |||||||||
| Goodwill | 400.4 | 398.8 | |||||||||
| Customer relationships, net | 173.7 | 179.6 | |||||||||
| Other intangibles, net | 86.8 | 89.1 | |||||||||
| Other non-current assets | 37.5 | 28.5 | |||||||||
| Total assets | $ | 2,003.2 | $ | 1,981.3 | |||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
| Current liabilities | |||||||||||
| Current maturities of long-term debt | $ | 31.6 | $ | 32.2 | |||||||
| Current maturities of operating lease obligations | 28.4 | 28.3 | |||||||||
| Current maturities of finance lease obligations | 2.8 | 2.7 | |||||||||
| Accounts payable | 156.8 | 158.6 | |||||||||
| Accrued compensation | 47.2 | 59.6 | |||||||||
| Other current liabilities | 72.9 | 65.0 | |||||||||
| Total current liabilities | 339.7 | 346.4 | |||||||||
| Long-term debt | 843.4 | 835.1 | |||||||||
| Operating lease obligations | 51.0 | 49.9 | |||||||||
| Finance lease obligations | 6.9 | 6.6 | |||||||||
| Deferred income taxes | 26.2 | 24.5 | |||||||||
| Other long-term liabilities | 56.8 | 48.5 | |||||||||
| Total liabilities | 1,324.0 | 1,311.0 | |||||||||
| Commitments and contingencies (Note 16) | |||||||||||
| Stockholders’ equity | |||||||||||
| Preferred stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively | — | — | |||||||||
| Common stock; $0.01 par value: 100,000,000 authorized, 33,658,330 and 33,587,701 issued and 28,436,558 and 28,367,338 shares outstanding at March 31, 2024 and December 31, 2023, respectively | 0.3 | 0.3 | |||||||||
| Additional paid in capital | 248.7 | 244.7 | |||||||||
| Retained earnings | 694.2 | 693.8 | |||||||||
| Treasury stock; at cost: 5,221,772 and 5,220,363 shares at March 31, 2024 and December 31, 2023, respectively | (302.4) | (302.2) | |||||||||
| Accumulated other comprehensive income | 38.4 | 33.7 | |||||||||
| Total stockholders’ equity | 679.2 | 670.3 | |||||||||
| Total liabilities and stockholders’ equity | $ | 2,003.2 | $ | 1,981.3 | |||||||
INCOME (UNAUDITED)
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Net revenue | $ | 295,193 | $ | 225,392 | $ | 833,058 | $ | 629,003 | ||||||||
Cost of sales | 209,612 | 158,132 | 590,377 | 444,909 | ||||||||||||
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Gross profit | 85,581 | 67,260 | 242,681 | 184,094 | ||||||||||||
Operating expenses | ||||||||||||||||
Selling | 14,865 | 13,028 | 42,541 | 36,239 | ||||||||||||
Administrative | 41,657 | 31,504 | 122,679 | 92,677 | ||||||||||||
Amortization | 6,824 | 2,889 | 19,790 | 8,178 | ||||||||||||
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Operating income | 22,235 | 19,839 | 57,671 | 47,000 | ||||||||||||
Other expense | ||||||||||||||||
Interest expense | 4,421 | 1,544 | 11,456 | 4,605 | ||||||||||||
Other | 83 | 23 | 366 | 248 | ||||||||||||
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Income before income taxes | 17,731 | 18,272 | 45,849 | 42,147 | ||||||||||||
Income tax provision | 5,721 | 6,723 | 15,502 | 14,792 | ||||||||||||
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Net income | $ | 12,010 | $ | 11,549 | $ | 30,347 | $ | 27,355 | ||||||||
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Other comprehensive income, net of tax: | ||||||||||||||||
Unrealized gain (loss) on cash flow hedge, net of tax (provision) benefit of ($21) and $30 for the three and nine months ended September 30, 2017, respectively | 32 | — | (45 | ) | — | |||||||||||
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Comprehensive income | $ | 12,042 | $ | 11,549 | $ | 30,302 | $ | 27,355 | ||||||||
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Basic and diluted net income per share | $ | 0.38 | $ | 0.37 | $ | 0.96 | $ | 0.87 | ||||||||
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Weighted average shares outstanding: | ||||||||||||||||
Basic | 31,659,503 | 31,323,600 | 31,632,400 | 31,294,596 | ||||||||||||
Diluted | 31,766,881 | 31,377,790 | 31,712,515 | 31,351,991 | ||||||||||||
| Three months ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Net revenue | $ | 692.9 | $ | 659.3 | |||||||||||||||||||
| Cost of sales | 458.4 | 448.9 | |||||||||||||||||||||
| Gross profit | 234.5 | 210.4 | |||||||||||||||||||||
| Operating expenses | |||||||||||||||||||||||
| Selling | 33.3 | 32.6 | |||||||||||||||||||||
| Administrative | 102.6 | 89.5 | |||||||||||||||||||||
| Amortization | 10.7 | 11.4 | |||||||||||||||||||||
| Operating income | 87.9 | 76.9 | |||||||||||||||||||||
| Other expense, net | |||||||||||||||||||||||
| Interest expense, net | 11.9 | 9.7 | |||||||||||||||||||||
| Other (income) | (0.4) | (0.2) | |||||||||||||||||||||
| Income before income taxes | 76.4 | 67.4 | |||||||||||||||||||||
| Income tax provision | 20.5 | 18.1 | |||||||||||||||||||||
| Net income | $ | 55.9 | $ | 49.3 | |||||||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Net change on cash flow hedges, net of tax (provision) benefit of $(1.7) and $2.3 for the three months ended March 31, 2024 and 2023, respectively. | 4.7 | (6.3) | |||||||||||||||||||||
| Comprehensive income | $ | 60.6 | $ | 43.0 | |||||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 1.98 | $ | 1.76 | |||||||||||||||||||
| Diluted | $ | 1.97 | $ | 1.74 | |||||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||
| Basic | 28,171,444 | 28,075,678 | |||||||||||||||||||||
| Diluted | 28,385,001 | 28,278,220 | |||||||||||||||||||||
| Cash dividends declared per share | $ | 1.95 | $ | 1.23 | |||||||||||||||||||
| Common Stock | Additional Paid In | Accumulated | Treasury Shares | Accumulated Comprehensive | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Shares | Amount | Loss | Equity | |||||||||||||||||||||||||
BALANCE—January 1, 2016 | 31,982,888 | $ | 320 | $ | 156,688 | $ | (31,142 | ) | (616,560 | ) | $ | (11,383 | ) | $ | — | $ | 114,483 | |||||||||||||||
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Net Income | 27,355 | 27,355 | ||||||||||||||||||||||||||||||
Issuance of Common Stock Awards to Employees | 143,528 | 1 | (1 | ) | — | |||||||||||||||||||||||||||
Surrender of Common Stock Awards by Employees | (33,091 | ) | (836 | ) | (836 | ) | ||||||||||||||||||||||||||
Share-Based Compensation Expense | 1,231 | 1,231 | ||||||||||||||||||||||||||||||
Share-Based Compensation Issued to Directors | 8,760 | 300 | 300 | |||||||||||||||||||||||||||||
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BALANCE—September 30, 2016 | 32,135,176 | $ | 321 | $ | 158,218 | $ | (3,787 | ) | (649,651 | ) | $ | (12,219 | ) | $ | — | $ | 142,533 | |||||||||||||||
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| Common Stock | Additional Paid In | Retained | Treasury Shares | Accumulated Comprehensive | Stockholders’ | |||||||||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Shares | Amount | Loss | Equity | |||||||||||||||||||||||||
BALANCE—January 1, 2017 | 32,135,176 | $ | 321 | $ | 158,581 | $ | 7,294 | (650,402 | ) | $ | (12,219 | ) | $ | — | $ | 153,977 | ||||||||||||||||
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Net Income | 30,347 | 30,347 | ||||||||||||||||||||||||||||||
Purchase of Remaining Interest in Subsidiary | (1,890 | ) | (1,890 | ) | ||||||||||||||||||||||||||||
Issuance of Common Stock for Acquisition | 282,577 | 3 | 10,856 | 10,859 | ||||||||||||||||||||||||||||
Issuance of Common Stock Awards to Employees | 101,241 | 1 | (1 | ) | — | |||||||||||||||||||||||||||
Surrender of Common Stock Awards by Employees | (11,971 | ) | (550 | ) | (550 | ) | ||||||||||||||||||||||||||
Share-Based Compensation Expense | 4,360 | 4,360 | ||||||||||||||||||||||||||||||
Share-Based Compensation Issued to Directors | 5,940 | 300 | 300 | |||||||||||||||||||||||||||||
Other Comprehensive Loss, Net of Tax | (45 | ) | (45 | ) | ||||||||||||||||||||||||||||
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BALANCE—September 30, 2017 | 32,524,934 | $ | 325 | $ | 172,206 | $ | 37,641 | (662,373 | ) | $ | (12,769 | ) | $ | (45 | ) | $ | 197,358 | |||||||||||||||
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| Common Stock | Additional Paid In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| BALANCE - January 1, 2023 | 33,429,557 | $ | 0.3 | $ | 228.8 | $ | 513.1 | (5,123,075) | $ | (289.3) | $ | 40.6 | $ | 493.5 | |||||||||||||||||||||||||||||||||
| Net income | 49.3 | 49.3 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock awards to employees | 69,136 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Surrender of common stock awards | (581) | — | — | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | 3.5 | 3.5 | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation issued to directors | 0.1 | 0.1 | |||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared ($1.23 per share) | (34.9) | (34.9) | |||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive (loss), net of tax | (6.3) | (6.3) | |||||||||||||||||||||||||||||||||||||||||||||
| BALANCE - March 31, 2023 | 33,498,693 | $ | 0.3 | $ | 232.4 | $ | 527.5 | (5,123,656) | $ | (289.3) | $ | 34.3 | $ | 505.2 | |||||||||||||||||||||||||||||||||
| Common Stock | Additional Paid In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income | Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||||||||||||||||||
| BALANCE - January 1, 2024 | 33,587,701 | $ | 0.3 | $ | 244.7 | $ | 693.8 | (5,220,363) | $ | (302.2) | $ | 33.7 | $ | 670.3 | |||||||||||||||||||||||||||||||||
| Net income | 55.9 | 55.9 | |||||||||||||||||||||||||||||||||||||||||||||
| Issuance of common stock awards to employees | 70,629 | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Surrender of common stock awards | (1,409) | (0.2) | (0.2) | ||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation expense | 3.8 | 3.8 | |||||||||||||||||||||||||||||||||||||||||||||
| Share-based compensation issued to directors | 0.2 | 0.2 | |||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared ($1.95 per share) | (55.5) | (55.5) | |||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | 4.7 | 4.7 | |||||||||||||||||||||||||||||||||||||||||||||
| BALANCE - March 31, 2024 | 33,658,330 | $ | 0.3 | $ | 248.7 | $ | 694.2 | (5,221,772) | $ | (302.4) | $ | 38.4 | $ | 679.2 | |||||||||||||||||||||||||||||||||
| Nine months ended September 30, | ||||||||
| 2017 | 2016 | |||||||
Cash flows from operating activities | ||||||||
Net income | $ | 30,347 | $ | 27,355 | ||||
Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
Depreciation and amortization of property and equipment | 20,732 | 17,240 | ||||||
Amortization of intangibles | 19,790 | 8,178 | ||||||
Amortization of deferred financing costs and debt discount | 768 | 282 | ||||||
Provision for doubtful accounts | 2,208 | 1,960 | ||||||
Write-off of debt issuance costs | 1,201 | 286 | ||||||
Gain on sale of property and equipment | (329 | ) | (218 | ) | ||||
Noncash stock compensation | 4,750 | 1,531 | ||||||
Deferred income taxes | — | 708 | ||||||
Changes in assets and liabilities, excluding effects of acquisitions | ||||||||
Accounts receivable | (24,636 | ) | (17,878 | ) | ||||
Inventories | 68 | (3,158 | ) | |||||
Other assets | 695 | 4,727 | ||||||
Accounts payable | 2,665 | 3,879 | ||||||
Income taxes payable/receivable | (10,167 | ) | 3,652 | |||||
Other liabilities | 5,249 | 6,033 | ||||||
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Net cash provided by operating activities | 53,341 | 54,577 | ||||||
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Cash flows from investing activities | ||||||||
Purchases of investments | (25,195 | ) | — | |||||
Purchases of property and equipment | (22,947 | ) | (19,169 | ) | ||||
Acquisitions of businesses, net of cash acquired of $247 and $0, respectively | (130,994 | ) | (36,427 | ) | ||||
Proceeds from sale of property and equipment | 682 | 523 | ||||||
Other | (1,845 | ) | — | |||||
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Net cash used in investing activities | (180,299 | ) | (55,073 | ) | ||||
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Cash flows from financing activities | ||||||||
Proceeds from revolving line of credit under credit agreement applicable to respective period (Note 5) | — | 37,975 | ||||||
Payments on revolving line of credit under credit agreement applicable to respective period (Note 5) | — | (37,975 | ) | |||||
Proceeds from term loan under credit agreement applicable to respective period (Note 5) | 300,000 | 100,000 | ||||||
Payments on term loan under credit agreement applicable to respective period (Note 5) | (97,000 | ) | (50,625 | ) | ||||
Proceeds from delayed draw term loan under credit agreement applicable to respective period (Note 5) | 112,500 | 12,500 | ||||||
Payments on delayed draw term loan under credit agreement applicable to respective period (Note 5) | (125,000 | ) | (50,000 | ) | ||||
Proceeds from vehicle and equipment notes payable | 15,817 | 16,310 | ||||||
Debt issuance costs | (8,175 | ) | (1,238 | ) | ||||
Principal payments on long term debt | (7,201 | ) | (4,055 | ) | ||||
Principal payments on capital lease obligations | (5,583 | ) | (6,596 | ) | ||||
Acquisition-related obligations | (3,434 | ) | (2,732 | ) | ||||
Surrender of common stock awards by employees | (550 | ) | (836 | ) | ||||
Purchase of remaining interest in subsidiary | (1,890 | ) | — | |||||
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Net cash provided by financing activities | 179,484 | 12,728 | ||||||
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Net change in cash | 52,526 | 12,232 | ||||||
Cash at beginning of period | 14,482 | 6,818 | ||||||
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Cash at end of period | $ | 67,008 | $ | 19,050 | ||||
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Supplemental disclosures of cash flow information | ||||||||
Net cash paid during the period for: | ||||||||
Interest | $ | 9,733 | $ | 3,904 | ||||
Income taxes, net of refunds | 26,292 | 10,428 | ||||||
Supplemental disclosure of noncash investing and financing activities | ||||||||
Common stock issued for acquisition of business | 10,859 | — | ||||||
Vehicles capitalized under capital leases and related lease obligations | 4,073 | 2,956 | ||||||
Seller obligations in connection with acquisition of businesses | 3,759 | 2,849 | ||||||
Unpaid purchases of property and equipment included in accounts payable | 1,108 | 2,140 | ||||||
millions)
| Three months ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net income | $ | 55.9 | $ | 49.3 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities | |||||||||||
| Depreciation and amortization of property and equipment | 13.8 | 12.5 | |||||||||
| Amortization of operating lease right-of-use assets | 7.6 | 7.3 | |||||||||
| Amortization of intangibles | 10.7 | 11.4 | |||||||||
| Amortization of deferred financing costs and debt discount | 0.4 | 0.5 | |||||||||
| Provision for credit losses | 1.4 | 1.7 | |||||||||
| Write-off of debt issuance costs | 1.1 | — | |||||||||
| Gain on sale of property and equipment | (0.4) | (0.6) | |||||||||
| Noncash stock compensation | 4.0 | 3.4 | |||||||||
| Other, net | (3.4) | (2.5) | |||||||||
| Changes in assets and liabilities, excluding effects of acquisitions | |||||||||||
| Accounts receivable | (3.6) | 1.7 | |||||||||
| Inventories | (8.0) | 7.7 | |||||||||
| Other assets | 4.0 | 4.4 | |||||||||
| Accounts payable | (1.4) | (16.9) | |||||||||
| Income taxes receivable/payable | 19.7 | 16.5 | |||||||||
| Other liabilities | (17.0) | (22.6) | |||||||||
| Net cash provided by operating activities | 84.8 | 73.8 | |||||||||
| Cash flows from investing activities | |||||||||||
| Purchases of property and equipment | (21.8) | (14.9) | |||||||||
| Acquisitions of businesses, net of cash acquired of $— in 2024 and 2023, respectively | (4.1) | (38.0) | |||||||||
| Proceeds from sale of property and equipment | 0.7 | 0.7 | |||||||||
| Settlements with interest rate swap counterparties | 4.5 | 3.6 | |||||||||
| Other | (0.4) | 1.0 | |||||||||
| Net cash used in investing activities | $ | (21.1) | $ | (47.6) | |||||||
| Three months ended March 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Cash flows from financing activities | |||||||||||
| Proceeds from Term Loan | $ | 142.9 | $ | — | |||||||
| Payments on Term Loan | (133.0) | (1.3) | |||||||||
| Proceeds from vehicle and equipment notes payable | 5.2 | 8.1 | |||||||||
| Debt issuance costs | (1.5) | — | |||||||||
| Principal payments on long-term debt | (7.5) | (7.0) | |||||||||
| Principal payments on finance lease obligations | (0.8) | (0.7) | |||||||||
| Dividends paid | (54.9) | (34.5) | |||||||||
| Acquisition-related obligations | (0.5) | (1.7) | |||||||||
| Surrender of common stock awards by employees | (0.2) | — | |||||||||
| Net cash used in financing activities | (50.3) | (37.1) | |||||||||
| Net change in cash and cash equivalents | 13.4 | (10.9) | |||||||||
| Cash and cash equivalents at beginning of period | 386.5 | 229.6 | |||||||||
| Cash and cash equivalents at end of period | $ | 399.9 | $ | 218.7 | |||||||
| Supplemental disclosures of cash flow information | |||||||||||
| Net cash paid during the period for: | |||||||||||
| Interest | $ | 15.5 | $ | 14.7 | |||||||
| Income taxes, net of refunds | 0.8 | 1.5 | |||||||||
| Supplemental disclosure of noncash activities | |||||||||||
| Right-of-use assets obtained in exchange for operating lease obligations | $ | 8.8 | $ | 5.7 | |||||||
| Property and equipment obtained in exchange for finance lease obligations | 1.2 | 1.0 | |||||||||
| Seller obligations in connection with acquisition of businesses | 0.6 | 6.0 | |||||||||
| Unpaid purchases of property and equipment included in accounts payable | 2.8 | 2.3 | |||||||||
We have
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Residential | 84 | % | 89 | % | 83 | % | 88 | % | ||||||||
Commercial | 16 | 11 | 17 | 12 | ||||||||||||
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| 100 | % | 100 | % | 100 | % | 100 | % | |||||||||
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
quarters.
Accounting Policy for Derivative Instruments and Hedging Activities
We record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended usecurrent year presentation, we reclassified $3.6 million of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedgefinancing component of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally providesinterest rate swaps for the matching ofthree months ended March 31, 2023 from “Other” to “Settlements with interest rate swap counterparties” within the timing of gain or loss recognition on the hedging instrument with the recognition of the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certaininvesting activities section of our risk, even though hedge accounting does not apply or we elect not to apply hedge accounting.
Revenue and Cost Recognition
Revenue from the sale and installationCondensed Consolidated Statements of products is recognized whenCash Flows.
| Standard | Effective Date | Adoption | ||||||||||||
| ASU 2023-01 “Leases” (Topic 842): Accounting for leasehold improvements associated with common control leases. | December 15, 2023 | This pronouncement amends Topic 842 to require all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. This did not materially affect our consolidated financial statements. | ||||||||||||
| Standard | Description | Effective Date | Effect on the financial statements or other significant matters | |||||||||||||||||
| ASU 2023-07 "Segment Reporting" (Topic 280): Improvements to Reportable Segment Disclosures. | This pronouncement amends Topic 280 to require all entities to disclose, on an annual and interim basis, significant segment expenses and an amount for other segment items by reportable segment. | Effective for annual periods beginning after December 15, 2023. Early adoption is permitted. | The Company will adopt and apply the guidance as prescribed by this ASU to segment reporting that occurs after the effective date. We do not anticipate this ASU will materially affect our consolidated financial statements. | |||||||||||||||||
| ASU 2023-09 "Income Taxes" (Topic 740): Improvements to Income Tax Disclosures. | This pronouncement amends Topic 740 to require all entities to disclose specific categories in the rate reconciliation, income taxes paid, and other income tax information. | Effective for annual periods beginning after December 15, 2024. Early adoption is permitted. | The Company will adopt and apply the guidance as prescribed by this ASU to income tax disclosures that occur after the effective date. We are currently assessing the impact of the adoption on our consolidated financial information. | |||||||||||||||||
Retainage receivables represent the amount retainedrevenue and cash flows are affected by our customers to ensure the quality of the installation and is received after satisfactory completion of each installation project. Management regularly reviews aging of retainage receivables and changes in payment trends and records an allowance when collection of amounts due are considered not probable. Amounts retained by project owners under construction contracts and included in accounts receivable and othernon-current assets were $22.1 million and $0.6 million as of September 30, 2017, respectively. Amounts retained by project owners under construction contracts and included in accounts receivable as of December 31, 2016 were $10.3 million.
Share-Based Compensation
Our share-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of our stockholders. Restricted stock awards are periodically granted to certain employees, officers andnon-employee members of our board of directors under the stockholder-approved 2014 Omnibus Incentive Plan.
Equity-based awards: Certain of our stock awards are deemed to be equity-based with a service condition and do not contain a market or performance condition with the exception of performance-based awards granted to certain officers and performance-based restricted stock units. Fair value of thenon-performance-based awards to employees and officers is measured at the grant date and amortized to expense over the vesting period of the awards using the straight-line attribution method for all service-based awards with a graded vesting feature. This fair value is reduced by assumed forfeitures and adjusted for actual forfeitures until vesting. We also issue performance stock-based awards to certain officers under our 2014 Omnibus Incentive Plan. The performance-based compensation expense is recorded over the requisite service period using the graded-vesting methodeconomic factors. Revenues for the entire award. Performance-based stock awardsOther category are accounted for at fair value at datepresented net of grant. We also periodically grant restricted stock units to certain employees under the stockholder-approved 2014 Omnibus Incentive Plan. These units convert to shares upon meeting time- and performance-based requirements.
Liability-based awards:Certain of our stock awards represent a predominately-fixed monetary amount that is to be settled with a variable number of shares. These awards contain both time and performance requirements, and are deemed to be liability-based, which requires that were-measure to reflect the fair value at the end of each reporting period. The change in fair value each reporting period is recorded as compensation cost, with a corresponding increase or decreaseintercompany sales in the share-based liability, either immediately or over the remaining service period depending on the vested statustables below. The following tables present our net revenues disaggregated by end market and product (in millions):
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Installation: | |||||||||||||||||||||||||||||||||||||||||||||||
| Residential new construction | $ | 502.8 | 73 | % | $ | 475.1 | 72 | % | |||||||||||||||||||||||||||||||||||||||
| Repair and remodel | 40.1 | 6 | % | 37.7 | 6 | % | |||||||||||||||||||||||||||||||||||||||||
| Commercial | 113.0 | 16 | % | 109.9 | 16 | % | |||||||||||||||||||||||||||||||||||||||||
| Net revenue, Installation | $ | 655.9 | 95 | % | $ | 622.7 | 94 | % | |||||||||||||||||||||||||||||||||||||||
Other | 37.0 | 5 | % | 36.6 | 6 | % | |||||||||||||||||||||||||||||||||||||||||
| Net revenue, as reported | $ | 692.9 | 100 | % | $ | 659.3 | 100 | % | |||||||||||||||||||||||||||||||||||||||
Use
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Installation: | |||||||||||||||||||||||||||||||||||||||||||||||
| Insulation | $ | 427.9 | 62 | % | $ | 394.0 | 60 | % | |||||||||||||||||||||||||||||||||||||||
| Shower doors, shelving and mirrors | 48.9 | 7 | % | 45.5 | 7 | % | |||||||||||||||||||||||||||||||||||||||||
| Garage doors | 42.7 | 6 | % | 43.3 | 7 | % | |||||||||||||||||||||||||||||||||||||||||
| Waterproofing | 30.7 | 4 | % | 29.9 | 4 | % | |||||||||||||||||||||||||||||||||||||||||
| Rain gutters | 27.4 | 4 | % | 27.8 | 4 | % | |||||||||||||||||||||||||||||||||||||||||
| Fireproofing/firestopping | 20.7 | 3 | % | 15.2 | 2 | % | |||||||||||||||||||||||||||||||||||||||||
| Window blinds | 17.0 | 3 | % | 15.9 | 2 | % | |||||||||||||||||||||||||||||||||||||||||
| Other building products | 40.6 | 6 | % | 51.1 | 8 | % | |||||||||||||||||||||||||||||||||||||||||
| Net revenue, Installation | $ | 655.9 | 95 | % | $ | 622.7 | 94 | % | |||||||||||||||||||||||||||||||||||||||
| Other | 37.0 | 5 | % | 36.6 | 6 | % | |||||||||||||||||||||||||||||||||||||||||
| Net revenue, as reported | $ | 692.9 | 100 | % | $ | 659.3 | 100 | % | |||||||||||||||||||||||||||||||||||||||
Preparationunbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized, based on costs incurred, exceeds the consolidated financial statementsamount billed to the customer. Our contract assets are recorded in conformity with U.S. GAAP requires management to make estimatesother current assets in our Condensed Consolidated Balance Sheets. Our contract liabilities consist of customer deposits and assumptions that affect the reported amountsbillings in excess of revenue recognized, based on costs incurred and are included in other current liabilities in our Condensed Consolidated Balance Sheets.
| March 31, 2024 | December 31, 2023 | ||||||||||
| Contract assets | $ | 35.3 | $ | 31.7 | |||||||
| Contract liabilities | (19.1) | (19.0) | |||||||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| Costs incurred on uncompleted contracts | $ | 260.1 | $ | 268.9 | |||||||
| Estimated earnings | 123.1 | 124.4 | |||||||||
| Total | 383.2 | 393.3 | |||||||||
| Less: Billings to date | 357.8 | 371.7 | |||||||||
| Net under billings | $ | 25.4 | $ | 21.6 | |||||||
| March 31, 2024 | December 31, 2023 | ||||||||||
| Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets) | $ | 35.3 | $ | 31.7 | |||||||
| Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities) | (9.9) | (10.1) | |||||||||
| Net under billings | $ | 25.4 | $ | 21.6 | |||||||
Advertising Costs
Advertising costs are generally expensed as incurred. Advertising expense was approximately $0.8 million and $2.4 million for the three and nine months ended September 30, 2017, respectively, and $0.8 million and $2.2 million for the three and nine months ended September 30, 2016, respectively, and is included in selling expense on the Condensed Consolidated StatementsMarch 31, 2024 or 2023.
Recently Issued Accounting Pronouncements Not Yet Adopted
In May 2014, the FASB issued ASU2014-09, “Revenue from Contracts with Customers (Topic 606).” ASU2014-09 and related subsequently issued amendments set forth a new revenue recognition model that requires identifying the contract(s) with a customer, identifying the
In February 2016, the FASB issued ASU2016-02, “Leases (Topic 842).” This update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU2016-02 requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. For public business entities, this update is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted as of the standard’s issuance date. We are evaluating whether this ASU will have a material impact on our consolidated financial statements.
In May 2016, the FASB issued ASUNo. 2016-11, “Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates2014-09 and2014-16 pursuant to Staff announcements at the March 3, 2016 EITF Meeting.” This ASU rescinds from the FASB Accounting Standards Codification certain SEC paragraphs as a result of two SEC Staff Announcements at the March 3, 2016 meeting. For public entities, the amendments related to Topic 605 are effective for interim and annual reporting periods beginning after December 15, 2017 and amendments related to Topic 815 are effective for interim and annual reporting periods beginning after December 15, 2015. We have evaluated the applicability of this ASU and have determined it will not have a material impact on our consolidated financial statements.
In June 2016, the FASB issued ASU2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU amends the accountingallowance for credit losses onavailable-for-sale debt securities and purchased financial assets with credit deterioration. In addition, these amendments require the measurement of all expected credit losses for financial assets, including trade accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. We are evaluating whether this ASU will have a material impact on our consolidated financial statements.
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
In August 2016, the FASB issued ASU2016-15, “Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments (Topic 230).” This ASU addresses the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues. We have determined that this update addresses one issue that specifically impacts us, which is the classification of contingent consideration payments made after a business combination, and we are evaluating whether it will have a material impact on our consolidated financial statements. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years.
In October 2016, the FASB issued ASU2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory.” This ASU aligns the recognition of income tax consequences for intra-entity transfers of assets other than inventory with International Financial Reporting Standards (“IFRS”). For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We have evaluated the applicability of this ASU and have determined it will not have a material impact on our consolidated financial statements.
In November 2016, the FASB issued ASUNo. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash.” This ASU provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. This standard is effective for interim and annual reporting periods beginning after December 15, 2017. We will adopt this standard effective January 1, 2018were as we expect it to be applicable to us at that time.
In January 2017, the FASB issued ASU2017-01, “Business Combinations (Topic 805)follows (in millions): Clarifying the Definition of a Business.” This ASU clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We have evaluated the applicability of this ASU and have determined it will not have a material impact on our consolidated financial statements.
In May 2017, the FASB issued ASU2017-09, “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting.” This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments should be applied prospectively to an award modified on or after the adoption date. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. We have evaluated the applicability of this ASU and have determined it will not have a material impact on our consolidated financial statements.
In August 2017, the FASB issued ASU2017-12, “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This ASU better aligns a company’s risk management activities and financial reporting for hedging relationships and makes certain improvements to simplify the application of hedge accounting guidance. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. We are evaluating whether this ASU will have a material impact on our consolidated financial statements.
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| Balance as of January 1, 2024 | $ | 11.2 | |||
| Current period provision | 1.4 | ||||
| Recoveries collected and additions | 0.2 | ||||
| Amounts written off | (1.7) | ||||
| Balance as of March 31, 2024 | $ | 11.1 | |||
5 - CASH AND CASH EQUIVALENTS
All other investments are classified asheld-to-maturity and consist of highly liquid instruments including corporate bonds and commercial paper. As of September 30, 2017, the amortized cost of these investments equaled the net carrying value, which was $25.1 million. We had no such investments as of December 31, 2016. Allheld-to-maturity securities as of September 30, 2017 mature in one year or less and are Level 2 measurements.2023, respectively. See Note 7,9, Fair Value Measurements, for additional information.
| Goodwill (Gross) | Accumulated Impairment Losses | Goodwill (Net) | ||||||||||
January 1, 2017 | $ | 177,090 | $ | (70,004 | ) | $ | 107,086 | |||||
Business Combinations | 46,059 | — | 46,059 | |||||||||
Other | 515 | — | 515 | |||||||||
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September 30, 2017 | $ | 223,664 | $ | (70,004 | ) | $ | 153,660 | |||||
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| Installation | Other | Consolidated | |||||||||||||||
| Goodwill (gross) - January 1, 2024 | $ | 375.2 | $ | 93.6 | $ | 468.8 | |||||||||||
| Business combinations | 1.5 | — | 1.5 | ||||||||||||||
| Other adjustments | 0.1 | — | 0.1 | ||||||||||||||
| Goodwill (gross) - March 31, 2024 | 376.8 | 93.6 | 470.4 | ||||||||||||||
| Accumulated impairment losses | (70.0) | — | (70.0) | ||||||||||||||
| Goodwill (net) - March 31, 2024 | $ | 306.8 | $ | 93.6 | $ | 400.4 | |||||||||||
March 31, 2024.
| As of September 30, 2017 | As of December 31, 2016 | |||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Amortization | Net Book Value | |||||||||||||||||||
Amortized intangibles: | ||||||||||||||||||||||||
Customer relationships | $ | 118,448 | $ | 35,560 | $ | 82,888 | $ | 80,909 | $ | 27,533 | $ | 53,376 | ||||||||||||
Covenantsnot-to-compete | 11,581 | 4,139 | 7,442 | 8,602 | 2,466 | 6,136 | ||||||||||||||||||
Trademarks and trade names | 56,781 | 13,097 | 43,684 | 37,303 | 10,498 | 26,805 | ||||||||||||||||||
Backlog | 13,400 | 6,700 | 6,700 | — | — | — | ||||||||||||||||||
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| $ | 200,210 | $ | 59,496 | $ | 140,714 | $ | 126,814 | $ | 40,497 | $ | 86,317 | |||||||||||||
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| 2024 | 2023 | ||||||||||||||||||||||||||||||||||
| Gross Carrying Amount | Accumulated Amortization | Net Book Value | Gross Carrying Amount | Accumulated Amortization | Net Book Value | ||||||||||||||||||||||||||||||
| Amortized intangibles: | |||||||||||||||||||||||||||||||||||
| Customer relationships | $ | 359.1 | $ | 185.4 | $ | 173.7 | $ | 357.4 | $ | 177.8 | $ | 179.6 | |||||||||||||||||||||||
| Covenants not-to-compete | 32.3 | 24.6 | 7.7 | 32.1 | 23.7 | 8.4 | |||||||||||||||||||||||||||||
| Trademarks and tradenames | 128.6 | 49.5 | 79.1 | 128.0 | 47.4 | 80.6 | |||||||||||||||||||||||||||||
| Backlog | 21.6 | 21.6 | — | 21.6 | 21.5 | 0.1 | |||||||||||||||||||||||||||||
| $ | 541.6 | $ | 281.1 | $ | 260.5 | $ | 539.1 | $ | 270.4 | $ | 268.7 | ||||||||||||||||||||||||
Remainder of 2017 | $ | 6,916 | ||
2018 | 22,983 | |||
2019 | 17,928 | |||
2020 | 17,212 | |||
2021 | 16,194 | |||
Thereafter | 59,481 |
| Remainder of 2024 | $ | 30.7 | |||
| 2025 | 35.6 | ||||
| 2026 | 31.6 | ||||
| 2027 | 27.3 | ||||
| 2028 | 23.9 | ||||
| Thereafter | 111.4 | ||||
Debt
| As of September 30, | As of December 31, | |||||||
| 2017 | 2016 | |||||||
Term loans under agreements applicable to respective period, in effect, net of unamortized original issue discount and debt issuance costs of $6,184 and $447, respectively | $ | 293,066 | $ | 95,803 | ||||
Delayed draw term loans, in effect, net of unamortized debt issuance costs of $0 and $50, respectively | — | 12,450 | ||||||
Vehicle and equipment notes, maturing June 2022 to September 2022; payable in various monthly installments, including interest rates ranging from 2% to 4% | 46,713 | 38,186 | ||||||
Various notes payable, maturing through March 2025; payable in various installments, including interest rates ranging from 4% to 6% | 4,066 | 4,988 | ||||||
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| 343,845 | 151,427 | |||||||
Less: current maturities | (15,550 | ) | (17,192 | ) | ||||
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Long-term debt, less current maturities | $ | 328,295 | $ | 134,235 | ||||
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| As of March 31, | As of December 31, | ||||||||||
| 2024 | 2023 | ||||||||||
| Senior Notes due 2028, net of unamortized debt issuance costs of $2.3 and $2.5, respectively | $ | 297.7 | $ | 297.5 | |||||||
| Term loan, net of unamortized debt issuance costs of $4.6 and $4.4, respectively | 495.4 | 485.6 | |||||||||
| Vehicle and equipment notes, maturing through March 2029; payable in various monthly installments, including interest rates ranging from 1.9% to 7.3% | 80.7 | 83.0 | |||||||||
| Note payable, maturing April 2025; payable in annual installments, including interest rate at 5.0% | 1.2 | 1.2 | |||||||||
| 875.0 | 867.3 | ||||||||||
| Less: current maturities | (31.6) | (32.2) | |||||||||
| Long-term debt, less current maturities | $ | 843.4 | $ | 835.1 | |||||||
Senior Secured Credit Agreements
On April 13, 2017,
| Remainder of 2024 | $ | 24.4 | |||
| 2025 | 27.8 | ||||
| 2026 | 23.4 | ||||
| 2027 | 18.6 | ||||
| 2028 | 311.2 | ||||
| Thereafter | 476.5 | ||||
Proceeds from the Senior Secured Credit FacilitiesNew Term Loan were used to repay in full all amounts outstanding underrefinance the remaining $490.0 million on our existing term loan, pay fees and increase working capital. The New Term Loan does not have any financial maintenance covenants, eliminates the credit and security agreement, dated as of February 29, 2016, by and among the Companyspread adjustment and the lenders named therein (the “Credit and Security Agreement”)floor is reduced to 0.00%.
The New Term Loan amortizesbears interest, at our option, at a rate equal to either: the adjusted term secured overnight financing rate plus 2.00% per annum, or an alternative base rate plus 1.00%. The New Term Loan also includes (i) a six-month “soft call” protection provision during which a 1.00% premium will be charged in quarterly principal paymentsconnection with certain repricing transactions, and (ii) a 50 basis points most favored nation protection for 12 months following the effective date. As of approximately $0.8March 31, 2024, we had $495.4 million, starting on September 30, 2017, with any remaining unpaid balancesnet of unamortized debt issuance costs, due on April 15, 2024, which isour New Term Loan. We have various interest rates swaps that serve to hedge $400.0 million of the maturity date. Loans incurred under the ABL Revolver will have a final maturity of April 13, 2022.
Subject to certain exceptions, thevariable cash flows on our New Term Loan will be subject to mandatorypre-payments equal to (i) 100% ofthrough December 14, 2028. For further information about our interest rate swaps, see Note 11, Derivatives and Hedging Activities.
Loans under the Senior Secured Credit Facilities bear interest based on, at the Company’s election, either the base rate or the Eurodollar rate plus, in each case, an applicable margin (the “Applicable Margin”). The Applicable Margin in respect of loans under (i) the Term Loan Agreement will be (A) 3.00% in the case of Eurodollar rate loans and (B) 2.00% in the case of base rate loans, and (ii) the ABL Facility will be (A) 1.25%, 1.50% or 1.75% in the case of Eurodollar rate loans (based on a measure of availability under the ABL Facility) and (B) 0.25%, 0.50% or 0.75% in the case of base rate loans (based on a measure of availability under the ABL Facility).
three months ended March 31, 2024. In addition, we will pay customary commitment fees and letterexpensed loan costs that did not meet the requirements for capitalization of credit fees underapproximately $3.0 million during the ABL Credit Agreement. The commitment fees will vary based upon a measure of our utilization underthree months ended March 31, 2024. We had no such write-offs or expenses during the ABL Revolver.
The Senior Secured Credit Agreements each contain a number of customary affirmative and negativenon-financial covenants, and the ABL Credit Agreement also contains a financial covenant requiring the satisfaction of a minimum fixed charge coverage ratio of 1.00 to 1.00three months ended March 31, 2023.
Vehicleinstall, various office spaces for selling and Equipment Notes
We are partyadministrative activities to a Master Loansupport our business, and Security Agreement (“Master Loan and Security Agreement”), a Master Equipment Lease Agreement (“Master Equipment Agreement”) and one or more Master Loan Agreements (“Master Loan Agreements”) with various lenders to provide financing for the purpose of purchasing or leasingcertain vehicles and equipment used in the normal courseto facilitate our operations, including, but not limited to, trucks, forklifts and office equipment.
arrangement under these agreements constitutes a separate note
Total gross assets relating to our master loan and equipment agreements were $66.8 million and $48.7 million as of September 30, 2017 and December 31, 2016, respectively, none of which were fully depreciated as of September 30, 2017 or December 31, 2016, respectively. The net book value of assets under these agreements was $47.3 million and $38.0 million as of September 30, 2017 and December 31, 2016, respectively. Depreciation of assets held under these agreements is included within cost of salesliabilities recorded on the Condensed Consolidated StatementsBalance Sheets (in millions):
| As of March 31, | As of December 31, | |||||||||||||||||||
| Classification | 2024 | 2023 | ||||||||||||||||||
| Assets | ||||||||||||||||||||
| Non-Current | ||||||||||||||||||||
| Operating | Operating lease right-of-use assets | $ | 79.3 | $ | 78.1 | |||||||||||||||
| Finance | Property and equipment, net | 9.5 | 9.1 | |||||||||||||||||
| Total lease assets | $ | 88.8 | $ | 87.2 | ||||||||||||||||
| Liabilities | ||||||||||||||||||||
| Current | ||||||||||||||||||||
| Operating | Current maturities of operating lease obligations | $ | 28.4 | $ | 28.3 | |||||||||||||||
| Financing | Current maturities of finance lease obligations | 2.8 | 2.7 | |||||||||||||||||
| Non-Current | ||||||||||||||||||||
| Operating | Operating lease obligations | 51.0 | 49.9 | |||||||||||||||||
| Financing | Finance lease obligations | 6.9 | 6.6 | |||||||||||||||||
| Total lease liabilities | $ | 89.1 | $ | 87.5 | ||||||||||||||||
| Weighted-average remaining lease term: | ||||||||||||||||||||
| Operating leases | 3.5 years | 3.6 years | ||||||||||||||||||
| Finance leases | 3.5 years | 3.5 years | ||||||||||||||||||
| Weighted-average discount rate: | ||||||||||||||||||||
| Operating leases | 5.37 | % | 5.23 | % | ||||||||||||||||
| Finance leases | 7.43 | % | 6.91 | % | ||||||||||||||||
| Three months ended March 31, | ||||||||||||||||||||||||||||||||
| Classification | 2024 | 2023 | ||||||||||||||||||||||||||||||
Operating lease cost(1) | Administrative | $ | 10.3 | $ | 9.2 | |||||||||||||||||||||||||||
| Finance lease cost: | ||||||||||||||||||||||||||||||||
Amortization of leased assets(2) | Cost of sales | 1.0 | 1.0 | |||||||||||||||||||||||||||||
| Interest on finance lease obligations | Interest expense, net | 0.2 | 0.1 | |||||||||||||||||||||||||||||
| Total lease costs | $ | 11.5 | $ | 10.3 | ||||||||||||||||||||||||||||
NOTE 6 – COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Uncompleted contracts were as follows$1.2 million for the ninethree months ended September 30March 31, 2024 and 2023, respectively, and short-term lease costs of $0.7 million and $0.3 million for the three months ended March 31, 2024 and 2023.
| 2017 | ||||
Costs incurred on uncompleted contracts | $ | 70,403 | ||
Estimated earnings | 38,691 | |||
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| |||
Total | 109,094 | |||
Less: Billings to date | 108,798 | |||
|
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Net under (over) billings | $ | 296 | ||
|
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Net under (over) billings were as follows as
| Three months ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | |||||||||||||||||||||||
| Operating cash flows for operating leases | $ | 8.4 | $ | 7.7 | |||||||||||||||||||
| Operating cash flows for finance leases | 0.2 | 0.1 | |||||||||||||||||||||
| Financing cash flows for finance leases | 0.8 | 0.7 | |||||||||||||||||||||
| 2017 | ||||
Costs and estimated earnings in excess of billings on uncompleted contracts | $ | 5,323 | ||
Billings in excess of costs and estimated earnings on uncompleted contracts | (5,027 | ) | ||
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Net under (over) billings | $ | 296 | ||
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The asset, coststhe first five years and estimated earnings in excesstotal of billingsthe remaining years for the finance lease obligations and operating lease obligations recorded on uncompleted contracts, represents revenues recognized in excess of amounts billed and is included in other current assets in ourthe Condensed Consolidated Balance Sheets. The liability, billings in excessSheet as of costs and estimated earnings on uncompleted contracts, represents billings in excess of revenues recognized and is included in other current liabilities in our Condensed Consolidated Balance Sheets.
| Finance Leases | Operating Leases | ||||||||||||||||||||||
| Related Party | Other | Total Operating | |||||||||||||||||||||
| Remainder of 2024 | $ | 2.6 | $ | 0.9 | $ | 23.7 | $ | 24.6 | |||||||||||||||
| 2025 | 3.2 | 1.1 | 24.7 | 25.8 | |||||||||||||||||||
| 2026 | 2.8 | 0.5 | 17.7 | 18.2 | |||||||||||||||||||
| 2027 | 1.9 | 0.1 | 9.7 | 9.8 | |||||||||||||||||||
| 2028 | 0.6 | — | 4.4 | 4.4 | |||||||||||||||||||
| Thereafter | — | — | 4.0 | 4.0 | |||||||||||||||||||
| Total minimum lease payments | 11.1 | $ | 2.6 | $ | 84.2 | 86.8 | |||||||||||||||||
| Less: Amounts representing interest | (1.4) | (7.4) | |||||||||||||||||||||
| Present value of future minimum lease payments | 9.7 | 79.4 | |||||||||||||||||||||
| Less: Current obligation under leases | (2.8) | (28.4) | |||||||||||||||||||||
| Long-term lease obligations | $ | 6.9 | $ | 51.0 | |||||||||||||||||||
Fair value is the price that would be received for an asset or paid to transferValue on a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
ASC 820, “Fair Value Measurement,” establishesRecurring Basis
Level 1: Quoted prices (unadjusted) for identicalvalue includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. During the periods presented, there were no transfers between fair value hierarchical levels.
lowest level of significant input to the valuation. The assets are measured at fair value when our impairment assessment indicates a carrying value for each of the assets in excess of the asset’s estimated fair value. Undiscounted cash flows, a Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar3 input, are utilized in determining estimated fair values. During each of the three months ended March 31, 2024 and 2023, we did not record any impairments on these assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or canrequired to be corroborated by observable market data.
Level 3: Significant unobservable inputs that reflectmeasured at fair value on a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
nonrecurring basis.
Derivative financial instruments are measured at fair value based on observable market information and appropriate valuation methods.
| Fair value as of September 30, 2017 | ||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | |||||||||||||
Financial assets: | ||||||||||||||||
Cash equivalents | $ | 58,825 | $ | 58,825 | $ | — | $ | — | ||||||||
Investments | 25,106 | — | 25,106 | — | ||||||||||||
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Total financial assets | $ | 83,931 | $ | 58,825 | $ | 25,106 | $ | — | ||||||||
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Financial liabilities: | ||||||||||||||||
Derivative financial instruments, net of tax | $ | 45 | $ | — | $ | 45 | $ | — | ||||||||
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We had no such items upon which to report fair value as of December 31, 2016.
| As of March 31, 2024 | As of December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||||||||||||||||||||
| Cash equivalents | $ | 367.5 | $ | 367.5 | $ | — | $ | — | $ | 344.8 | $ | 344.8 | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Derivative financial instruments | 30.2 | — | 30.2 | — | 24.9 | — | 24.9 | — | |||||||||||||||||||||||||||||||||||||||
| Total financial assets | $ | 397.7 | $ | 367.5 | $ | 30.2 | $ | — | $ | 369.7 | $ | 344.8 | $ | 24.9 | $ | — | |||||||||||||||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||
| Contingent consideration | $ | 0.7 | $ | — | $ | — | $ | 0.7 | $ | 0.4 | $ | — | $ | — | $ | 0.4 | |||||||||||||||||||||||||||||||
| Contingent consideration liability - January 1, 2024 | $ | 0.4 | |||
| Preliminary purchase price | 0.3 | ||||
| Fair value adjustments | 0.0 | ||||
| Accretion in value | 0.0 | ||||
| Contingent consideration liability - March 31, 2024 | $ | 0.7 | |||
| As of March 31, 2024 | As of December 31, 2023 | ||||||||||||||||||||||
| Carrying Value | Fair Value | Carrying Value | Fair Value | ||||||||||||||||||||
Senior Notes(1) | $ | 300.0 | $ | 293.1 | $ | 300.0 | $ | 296.2 | |||||||||||||||
| Three months ended March 31, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||
| Installation | Other | Eliminations | Consolidated | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 655.9 | $ | 40.3 | $ | (3.3) | $ | 692.9 | |||||||||||||||||||||||||||||||||||||||
Cost of sales (1) | 419.3 | 28.5 | (2.3) | 445.5 | |||||||||||||||||||||||||||||||||||||||||||
| Segment gross profit | $ | 236.6 | $ | 11.8 | $ | (1.0) | $ | 247.4 | |||||||||||||||||||||||||||||||||||||||
| Segment gross profit percentage | 36.1 | % | 29.3 | % | 29.4 | % | 35.7 | % | |||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||
| Installation | Other | Eliminations | Consolidated | ||||||||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 622.7 | $ | 38.7 | $ | (2.1) | $ | 659.3 | |||||||||||||||||||||||||||||||||||||||
Cost of sales (1) | 410.4 | 28.5 | (1.8) | 437.1 | |||||||||||||||||||||||||||||||||||||||||||
| Segment gross profit | $ | 212.3 | $ | 10.2 | $ | (0.3) | $ | 222.2 | |||||||||||||||||||||||||||||||||||||||
| Segment gross profit percentage | 34.1 | % | 26.5 | % | 18.1 | % | 33.7 | % | |||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Segment gross profit - consolidated | $ | 247.4 | $ | 222.2 | |||||||||||||||||||
Depreciation and amortization (1) | 12.9 | 11.8 | |||||||||||||||||||||
| Gross profit, as reported | 234.5 | 210.4 | |||||||||||||||||||||
| Operating expenses | 146.6 | 133.5 | |||||||||||||||||||||
| Operating income | 87.9 | 76.9 | |||||||||||||||||||||
| Other expense, net | 11.5 | 9.5 | |||||||||||||||||||||
| Income before income taxes | $ | 76.4 | $ | 67.4 | |||||||||||||||||||
Risk Management Objective of Using Derivatives
We are exposed to certain risks arising from both our business operations and economic conditions. We manage exposure to a wide variety of business and operational risks through our core business activities.
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
We manage economic risks, including interest rate, liquidity and credit risk primarily by overseeing the amount, sources and duration of debt funding and the use of derivative financial instruments. Specifically, we have entered into derivative financial instruments to manage exposure to interest rate movements that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing and duration of our known or expected cash receipts and known or expected cash payments principally related to our investments and borrowings.
The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2017, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives, when present, is recognized directly in earnings. During the nine months ended September 30, 2017, we did not record any hedge ineffectiveness in earnings.
Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. Over the next twelve months, we estimate that an additional $0.5 million will be reclassified as an increase to interest expense.
Additionally, weWe do not use derivatives for trading or speculative purposes and we currently do not have any derivatives that are not designated as hedges. As of September 30, 2017, the Company hasMarch 31, 2024, we have not posted any collateral related to these agreements.
| Effective Date | Notional Amount | Fixed Rate | Maturity Date | |||||||||||||||||
| April 28, 2023 | $ | 200.0 | 0.46 | % | December 31, 2025 | |||||||||||||||
| April 28, 2023 | 100.0 | 1.32 | % | December 31, 2025 | ||||||||||||||||
| April 28, 2023 | 100.0 | 1.32 | % | December 31, 2025 | ||||||||||||||||
| December 31, 2025 | 300.0 | 3.06 | % | December 14, 2028 | ||||||||||||||||
| December 31, 2025 | 100.0 | 2.93 | % | December 14, 2028 | ||||||||||||||||
| Three months ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| (Benefit) associated with swap net settlements | $ | (4.5) | $ | (3.6) | |||||||||||||||||||
| Expense associated with amortization of amended/terminated swaps | 1.1 | 1.1 | |||||||||||||||||||||
| Three months ended March 31, | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| Accumulated gain at beginning of period | $ | 33.7 | $ | 40.6 | ||||||||||||||||||||||
| Unrealized gain (loss) in fair value of interest rate derivatives | 3.9 | (7.1) | ||||||||||||||||||||||||
| Reclassifications of realized net losses to earnings | 0.8 | 0.8 | ||||||||||||||||||||||||
| Accumulated gain at end of period | $ | 38.4 | $ | 34.3 | ||||||||||||||||||||||
| Declaration Date | Record Date | Payment Date | Dividend Per Share | Amount Declared | Amount Paid | |||||||||||||||||||||||||||
| 2/22/2024 | 3/15/2024 | 3/31/2024 | $ | 1.60 | $ | 45.5 | $ | 45.1 | ||||||||||||||||||||||||
| 2/22/2024 | 3/15/2024 | 3/31/2024 | 0.35 | 10.0 | 9.8 | |||||||||||||||||||||||||||
| Declaration Date | Record Date | Payment Date | Dividend Per Share | Amount Declared | Amount Paid | |||||||||||||||||||||||||||
| 2/22/2023 | 3/15/2023 | 3/31/2023 | $ | 0.90 | $ | 25.5 | $ | 25.3 | ||||||||||||||||||||||||
| 2/22/2023 | 3/15/2023 | 3/31/2023 | 0.33 | 9.4 | 9.2 | |||||||||||||||||||||||||||
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| September 30, 2017 | December 31, 2016 | |||||||
Included in other current liabilities | $ | 4,913 | $ | 4,595 | ||||
Included in other long-term liabilities | 8,837 | 7,052 | ||||||
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| $ | 13,750 | $ | 11,647 | |||||
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| March 31, 2024 | December 31, 2023 | ||||||||||
| Included in other current liabilities | $ | 8.6 | $ | 9.5 | |||||||
| Included in other long-term liabilities | 21.0 | 17.0 | |||||||||
| $ | 29.6 | $ | 26.5 | ||||||||
| September 30, 2017 | December 31, 2016 | |||||||
Included in othernon-current assets | $ | 1,828 | $ | 1,249 | ||||
Share-Based Compensation
Directors
During
| March 31, 2024 | December 31, 2023 | ||||||||||
| Included in other non-current assets | $ | 4.9 | $ | 3.0 | |||||||
During the nine months ended September 30, 2017, we granted approximately 0.1 million
directors or employees.
As of September 30, 2017, there was $6.2 million of unrecognized compensation expense related to these nonvested common stock awards. This expense is subject to future adjustments for forfeitures and is expected to be recognized on a straight-line basis over the remaining weighted-average period of 2.2 years. Shares forfeited are returned as treasury shares and available for future issuances. See the table below for changes in shares and related weighted average fair market value per share.
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Employees – Performance-Based Stock Awards
During the nine months ended September 30, 2017,March 31, 2024, we established, and our Boardboard of Directorsdirectors approved, performance-based targets in connection with common stock awards to be issued to certain officers in 20182025 contingent upon achievement of these targets. Share-based compensation expense associated
AsMarch 31, 2024 and 2023, we issued approximately four thousand and eight thousand shares of September 30, 2017, there was $2.4 million of unrecognized compensation expense related to nonvested performance-basedour common stock, awards. This expense is subject to future adjustments for forfeitures and is expected to be recognized over the remaining weighted-average period of 2.1 years using the graded-vesting method. See the table below for changes in shares and related weighted average fair market value per share.
respectively.
| Common Stock Awards | Performance-Based Stock Awards | Performance-Based Restricted Stock Units | |||||||||||||||||||||||||||||||||
| Awards | Weighted Average Grant Date Fair Value Per Share | Awards | Weighted Average Grant Date Fair Value Per Share | Units | Weighted Average Grant Date Fair Value Per Share | ||||||||||||||||||||||||||||||
| Nonvested awards/units at December 31, 2023 | 116,482 | $ | 103.02 | 148,459 | $ | 108.83 | 14,382 | $ | 111.71 | ||||||||||||||||||||||||||
| Granted | 4,105 | 205.96 | 35,320 | 205.96 | — | — | |||||||||||||||||||||||||||||
| Vested | (3,758) | 101.35 | — | — | — | — | |||||||||||||||||||||||||||||
| Forfeited/Cancelled | (245) | 102.77 | — | — | (111) | 111.61 | |||||||||||||||||||||||||||||
| Nonvested awards/units at March 31, 2024 | 116,584 | $ | 106.70 | 183,779 | $ | 127.49 | 14,271 | $ | 111.71 | ||||||||||||||||||||||||||
| Three months ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Common Stock Awards | $ | 1.2 | $ | 1.4 | |||||||||||||||||||
| Non-Employee Common Stock Awards | 0.2 | 0.1 | |||||||||||||||||||||
| Performance-Based Stock Awards | 1.9 | 1.6 | |||||||||||||||||||||
| Liability Performance-Based Stock Awards | 0.4 | — | |||||||||||||||||||||
| Performance-Based Restricted Stock Units | 0.4 | 0.3 | |||||||||||||||||||||
| $ | 4.1 | $ | 3.4 | ||||||||||||||||||||
| Three months ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Cost of sales | $ | 0.3 | $ | 0.2 | |||||||||||||||||||
| Selling | 0.1 | 0.1 | |||||||||||||||||||||
| Administrative | 3.7 | 3.1 | |||||||||||||||||||||
| $ | 4.1 | $ | 3.4 | ||||||||||||||||||||
As of September 30, 2017, there was $2.1 million of unrecognized
| As of March 31, 2024 | |||||||||||
| Unrecognized Compensation Expense on Unvested Awards | Weighted Average Remaining Vesting Period | ||||||||||
| Common Stock Awards | $ | 6.7 | 1.6 years | ||||||||
| Performance-Based Stock Awards | 12.3 | 2.1 years | |||||||||
| Performance-Based Restricted Stock Units | 0.1 | 0.1 years | |||||||||
| Total unrecognized compensation expense related to unvested awards | $ | 19.1 | |||||||||
In addition, duringavailable for future issuances.
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Share-Based Compensation Summary
Amounts for each category of equity-based award for employees as of December 31, 2016 and changes during the nine months ended September 30, 2017 were as follows:
| Common Stock Awards | Performance-Based Stock Awards | Performance-Based Restricted Stock Units | ||||||||||||||||||||||
| Awards | Weighted Average Fair Market Value Per Share | Awards | Weighted Average Fair Market Value Per Share | Units | Weighted Average Fair Market Value Per Share | |||||||||||||||||||
Nonvested awards/units at December 31, 2016 | 161,174 | $ | 26.36 | — | $ | — | — | $ | — | |||||||||||||||
Granted | 101,241 | 52.00 | 77,254 | 41.00 | 73,880 | 52.00 | ||||||||||||||||||
Vested | (57,816 | ) | 26.30 | — | — | — | — | |||||||||||||||||
Forfeited/Cancelled | (1,541 | ) | 36.33 | — | — | (475 | ) | 52.00 | ||||||||||||||||
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Nonvested awards/units at September 30, 2017 | 203,058 | $ | 39.09 | 77,254 | $ | 41.00 | 73,405 | $ | 52.00 | |||||||||||||||
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modified or impacted by this adoption.
As ofFor the three and nine months ended September 30, 2017 and 2016, the
| Three months ended September 30, | Nine months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Sales | $ | 2,641 | $ | 2,182 | $ | 7,363 | $ | 5,282 | ||||||||
Purchases | 302 | 114 | 901 | 370 | ||||||||||||
Rent | 290 | 163 | 875 | 472 | ||||||||||||
As of September 30, 2017 and December 31, 2016, we
| Three months ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Sales | $ | 5.0 | $ | 4.0 | |||||||||||||||||||
| Purchases | 0.6 | 0.7 | |||||||||||||||||||||
| Rent | 0.3 | 0.4 | |||||||||||||||||||||
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
course of business with various related parties. M/I Homes, Inc., a customer whose Chairman, President and Chief Executive Officer is a memberand President serves on our board of our Board of Directors,directors, accounted for $1.0$1.5 million and $0.8$1.4 million of thesethe related party accounts receivable balances as of September 30, 2017March 31, 2024 and December 31, 2016,2023, respectively.
and Auto Insurance
| September 30, 2017 | December 31, 2016 | |||||||
Included in other current liabilities | $ | 2,069 | $ | 1,949 | ||||
Included in other long-term liabilities | 7,627 | 7,104 | ||||||
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| $ | 9,696 | $ | 9,053 | |||||
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| March 31, 2024 | December 31, 2023 | ||||||||||
| Included in other current liabilities | $ | 8.4 | $ | 9.1 | |||||||
| Included in other long-term liabilities | 20.1 | 16.3 | |||||||||
| $ | 28.5 | $ | 25.4 | ||||||||
| September 30, 2017 | December 31, 2016 | |||||||
Insurance receivable and indemnification asset for claims under a | $ | 2,773 | $ | 2,773 | ||||
Insurance receivable for claims that exceeded the stop loss limit | 2 | 26 | ||||||
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Total insurance receivables included in othernon-current assets | $ | 2,775 | $ | 2,799 | ||||
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| March 31, 2024 | December 31, 2023 | ||||||||||
| Insurance receivables and indemnification assets for claims under fully insured policies | $ | 2.9 | $ | 1.7 | |||||||
| Insurance receivables for claims that exceeded the stop loss limit | 0.7 | 0.1 | |||||||||
| Total insurance receivables and indemnification assets included in other non-current assets | $ | 3.6 | $ | 1.8 | |||||||
We are obligated under capital leases covering vehicles and certain equipment. The vehicle and equipment leases generally have initial terms ranging from four to six years. Total gross assets relating to capital leases were approximately $64.2 million and $64.2 million as
Future minimum lease payments under noncancellable operating leases (with initial or remaining lease terms in excess of one year) with related parties as of September 30, 2017 are as follows (in thousands):
Remainder of 2017 | $ | 295 | ||
2018 | 988 | |||
2019 | 829 | |||
2020 | 566 | |||
2021 | 583 | |||
Thereafter | 600 |
| Fair Value | Total | Three months ended September 30, 2017 | Nine months ended September 30, 2017 | |||||||||||||||||||||||||||||||||||||
2017 Acquisitions | Date | Acquisition Type | Cash Paid | Seller Obligations | of Common Stock Issued | Purchase Price | Revenue | Net (Loss) Income | Revenue | Net Income (Loss) | ||||||||||||||||||||||||||||||
Alpha(1) | 1/5/2017 | Share | $ | 103,810 | $ | 2,002 | $ | 10,859 | $ | 116,671 | $ | 29,334 | $ | (271 | ) | $ | 87,830 | $ | 190 | |||||||||||||||||||||
Columbia | 6/26/2017 | Asset | 8,768 | 225 | — | 8,993 | 3,026 | 73 | 3,241 | 80 | ||||||||||||||||||||||||||||||
Astro | 9/18/2017 | Asset | 8,851 | 490 | — | 9,341 | 264 | 46 | 264 | 46 | ||||||||||||||||||||||||||||||
Other | Various | Asset | 9,812 | 1,042 | — | 10,854 | 6,499 | 84 | 11,671 | 366 | ||||||||||||||||||||||||||||||
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Total | $ | 131,241 | $ | 3,759 | $ | 10,859 | $ | 145,859 | $ | 39,123 | $ | (68 | ) | $ | 103,006 | $ | 682 | |||||||||||||||||||||||
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| Three months ended September 30, 2016 | Nine months ended September 30, 2016 | |||||||||||||||||||||||||||||||||||
2016 Acquisitions | Date | Acquisition Type | Cash Paid | Seller Obligations | Total Purchase Price | Revenue | Net Income (Loss) | Revenue | Net Income (Loss) | |||||||||||||||||||||||||||
Alpine Insulation Co., Inc. | 4/12/2016 | Asset | $ | 21,151 | $ | 1,560 | $ | 22,711 | $ | 7,957 | $ | 806 | $ | 14,734 | $ | 1,238 | ||||||||||||||||||||
Other | Various | Asset | 15,276 | 1,289 | 16,565 | 5,519 | (200 | ) | 12,283 | (664 | ) | |||||||||||||||||||||||||
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Total | $ | 36,427 | $ | 2,849 | $ | 39,276 | $ | 13,476 | $ | 606 | $ | 27,017 | $ | 574 | ||||||||||||||||||||||
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INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| Three months ended March 31, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 Acquisitions | Date | Acquisition Type | Cash Paid | Seller Obligations | Total Purchase Price | Revenue | Net Income | |||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 3/4/2024 | Asset | $ | 4.1 | $ | 0.6 | $ | 4.7 | $ | 0.4 | $ | 0.0 | ||||||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 Acquisitions | Date | Acquisition Type | Cash Paid | Seller Obligations | Total Purchase Price | Revenue | Net Income | |||||||||||||||||||||||||||||||||||||||||||||||||
| Anchor | 3/12/2023 | Share | $ | 35.9 | $ | 2.7 | $ | 38.6 | $ | 2.2 | $ | 0.1 | ||||||||||||||||||||||||||||||||||||||||||||
| Other | 2/13/2023 | Asset | 2.1 | 0.1 | 2.2 | 0.4 | 0.0 | |||||||||||||||||||||||||||||||||||||||||||||||||
| $ | 38.0 | $ | 2.8 | $ | 40.8 | $ | 2.6 | $ | 0.1 | |||||||||||||||||||||||||||||||||||||||||||||||
| Three months ended March 31, 2024 | Three months ended March 31, 2023 | ||||||||||||||||||||||||||||||||||
| Other | Anchor | Other | Total | ||||||||||||||||||||||||||||||||
| Estimated fair values: | |||||||||||||||||||||||||||||||||||
| Accounts receivable | $ | — | $ | 5.0 | $ | — | $ | 5.0 | |||||||||||||||||||||||||||
| Inventories | 0.4 | 1.6 | 0.1 | 1.7 | |||||||||||||||||||||||||||||||
| Other current assets | — | 1.9 | — | 1.9 | |||||||||||||||||||||||||||||||
| Property and equipment | 0.3 | 2.3 | 0.4 | 2.7 | |||||||||||||||||||||||||||||||
| Operating lease right-of-use asset | — | — | — | — | |||||||||||||||||||||||||||||||
| Intangibles | 2.5 | 16.4 | 1.1 | 17.5 | |||||||||||||||||||||||||||||||
| Goodwill | 1.5 | 13.3 | 0.7 | 14.0 | |||||||||||||||||||||||||||||||
| Other non-current assets | — | 0.2 | — | 0.2 | |||||||||||||||||||||||||||||||
| Accounts payable and other current liabilities | — | (2.1) | (0.1) | (2.2) | |||||||||||||||||||||||||||||||
| Fair value of assets acquired and purchase price | 4.7 | 38.6 | 2.2 | 40.8 | |||||||||||||||||||||||||||||||
| Less seller obligations | 0.6 | 2.7 | 0.1 | 2.8 | |||||||||||||||||||||||||||||||
| Cash paid | $ | 4.1 | $ | 35.9 | $ | 2.1 | $ | 38.0 | |||||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||||||||||
| Alpha | Columbia | Astro | Other | Total | Alpine | Other | Total | |||||||||||||||||||||||||
Estimated fair values: | ||||||||||||||||||||||||||||||||
Cash | $ | 247 | $ | — | $ | — | $ | — | $ | 247 | $ | — | $ | — | $ | — | ||||||||||||||||
Accounts receivable | 30,361 | 990 | 924 | 2,137 | 34,412 | 3,959 | 2,080 | 6,039 | ||||||||||||||||||||||||
Inventories | 1,851 | 704 | 296 | 1,014 | 3,865 | 700 | 888 | 1,588 | ||||||||||||||||||||||||
Other current assets | 4,827 | 8 | 36 | 8 | 4,879 | — | 12 | 12 | ||||||||||||||||||||||||
Property and equipment | 1,528 | 659 | 640 | 1,144 | 3,971 | 656 | 1,188 | 1,844 | ||||||||||||||||||||||||
Intangibles | 57,100 | 4,760 | 4,966 | 5,939 | 72,765 | 12,800 | 8,492 | 21,292 | ||||||||||||||||||||||||
Goodwill | 38,679 | 2,211 | 2,808 | 2,361 | 46,059 | 6,642 | 5,270 | 11,912 | ||||||||||||||||||||||||
Othernon-current assets | 150 | 31 | — | 191 | 372 | — | 94 | 94 | ||||||||||||||||||||||||
Accounts payable and other current liabilities | (18,072 | ) | (370 | ) | (329 | ) | (1,940 | ) | (20,711 | ) | (2,046 | ) | (1,459 | ) | (3,505 | ) | ||||||||||||||||
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Fair value of assets acquired and purchase price | 116,671 | 8,993 | 9,341 | 10,854 | 145,859 | 22,711 | 16,565 | 39,276 | ||||||||||||||||||||||||
Less fair value of common stock issued | 10,859 | — | — | — | 10,859 | — | — | — | ||||||||||||||||||||||||
Less seller obligations | 2,002 | 225 | 490 | 1,042 | 3,759 | 1,560 | 1,289 | 2,849 | ||||||||||||||||||||||||
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Cash paid | $ | 103,810 | $ | 8,768 | $ | 8,851 | $ | 9,812 | $ | 131,241 | $ | 21,151 | $ | 15,276 | $ | 36,427 | ||||||||||||||||
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date, the contingent consideration is discounted to net present value of future payments based on a weighted average of various future forecast scenarios.
The provisional amounts for Alpha originally reported in our Condensed Consolidated Balance Sheets included in our Quarterly Report on Form10-Q for the period ended March 31, 2017 were adjusted2024 and 2023 had their respective goodwill assigned to reflect the review and ongoing analysisour Installation operating segment.
| 2017 | 2016 | |||||||||||||||
Acquired intangibles assets | Estimated Fair Value | Weighted Average Estimated Useful Life (yrs.) | Estimated Fair Value | Weighted Average Estimated Useful Life (yrs.) | ||||||||||||
Customer relationships | $ | 37,533 | 8 | $ | 12,862 | 9 | ||||||||||
Trademarks and trade names | 19,403 | 15 | 6,116 | 15 | ||||||||||||
Non-competition agreements | 2,429 | 5 | 2,315 | 5 | ||||||||||||
Backlog | 13,400 | 1.5 | — | — | ||||||||||||
| For the three months ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Acquired intangibles assets | Estimated Fair Value | Weighted Average Estimated Useful Life (yrs.) | Estimated Fair Value | Weighted Average Estimated Useful Life (yrs.) | |||||||||||||||||||
| Customer relationships | $ | 1.7 | 12 | $ | 11.0 | 12 | |||||||||||||||||
| Trademarks and tradenames | 0.6 | 15 | 5.4 | 15 | |||||||||||||||||||
| Non-competition agreements | 0.2 | 5 | 0.3 | 5 | |||||||||||||||||||
| Backlog | — | 0 | 0.8 | 1 | |||||||||||||||||||
| Pro forma for the three months ended September 30, | Pro forma for the nine months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Net revenue | $ | 297,820 | $ | 272,010 | $ | 853,897 | $ | 771,313 | ||||||||
Net income | 11,836 | 12,328 | 31,544 | 32,117 | ||||||||||||
Basic net income per share | 0.37 | 0.39 | 1.00 | 1.02 | ||||||||||||
Diluted net income per share | 0.37 | 0.39 | 0.99 | 1.02 | ||||||||||||
| Unaudited pro forma for the three months ended March 31, | |||||||||||||||||||||||
| 2024 | 2023 | ||||||||||||||||||||||
| Net revenue | $ | 693.6 | $ | 677.3 | |||||||||||||||||||
| Net income | 55.9 | 50.0 | |||||||||||||||||||||
| Basic net income per share | 1.98 | 1.78 | |||||||||||||||||||||
| Diluted net income per share | 1.97 | 1.77 | |||||||||||||||||||||
INSTALLED BUILDING PRODUCTS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
| For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Net income - basic and diluted | $ | 12,010 | $ | 11,549 | $ | 30,347 | $ | 27,355 | ||||||||
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Weighted average number of common shares outstanding | 31,659,503 | 31,323,600 | 31,632,400 | 31,294,596 | ||||||||||||
Dilutive effect of outstanding common stock awards after application of the Treasury Stock Method | 107,378 | 54,190 | 80,115 | 57,395 | ||||||||||||
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Diluted shares outstanding | 31,766,881 | 31,377,790 | 31,712,515 | 31,351,991 | ||||||||||||
Basic and diluted net income per share | $ | 0.38 | $ | 0.37 | $ | 0.96 | $ | 0.87 | ||||||||
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None203 thousand shares for the three months ended March 31, 2024 and 2023. Shares of thenon-vestedpotential common stock awards had an antidilutive effect onthat were not included in the calculation of diluted net income per common share because the effect would have been anti-dilutive were not material for either of the three or nine months ended September 30, 2017March 31, 2024 and 2016.
On October
35.0 cents per share.
During the three months ended March 31, 2024, 95% of our net revenue came from the service-based installation of these products across all of our end markets which forms our Installation operating segment and single reportable segment. In addition, two regional distribution operations serve the Midwest, Mountain West, Northeast and Mid-Atlantic regions of the United States, and we operate a cellulose manufacturing facility. We believe our business is well positioned to continue to profitably grow over the long-term due to our strong balance sheet, liquidity and our continuing acquisition strategy. borrowing base availability. facility (as defined below). months as evidenced by our net positive cash flows from operations for the three months ended March 31, 2024. We believe that we have access to additional funds, if needed, through the capital markets to obtain further debt financing under the current market conditions, but we cannot guarantee that such financing will be available on favorable terms, or at all. In the short-term, we expect the seasonal trends we typically experience to return, including higher sales in the spring and summer than the fall and winter. This could affect the timing of cash collections and payments during each quarter of 2024. effective date. The New Term Loan amortizes in quarterly principal payments of March 28, 2031. As of March 31, 2024, we had $495.4 million, net of unamortized debt issuance costs, due on our New Term Loan. Notes. (in thousands) Long-term debt obligations (2) Capital lease obligations (3) Operating lease obligations (4) consolidated financial statements. There have been no 2023 Form 10-K.20162023 Form10-K.mirrors, throughout the United States. Our acquisition of Alpha in January 2017 expanded our market position in commercial insulation installation and strengthens our complementary installed product offerings in waterproofing, fire-stopping and fireproofing.other products. We offer our portfolio of services for new and existing single-family and multi-family residential and commercial building projects in all 48 continental states and the District of Columbia from our national network of over 250 branch locations.well positionedperforming, however, we may rely on different metrics in the future. We also utilize gross profit percentage as shown in the following section to continuemonitor our most significant variable costs and to profitably grow during the housing recovery due to our strong balance sheet, liquidityevaluate labor efficiency and continuing acquisition strategy. We may adjust our strategies based on housing demand and our performance in each of our markets. Nevertheless, the pace of the housing recovery and our future results could be negatively affected by weakening economic conditions and decreases in housing demand and affordability as well as increases in interest rates and tightening of mortgage lending practices.We manage all aspects of the installation process for our customers, from our direct purchase and receipt of materials from national manufacturers, to our timely supplysuccess at passing increasing costs of materials to job sitescustomers.Three months ended March 31, 2024 2023 Period-over-period Growth Consolidated Sales Growth 5.1 % 12.2 % 2.9 % 7.1 % 5.3 % 10.9 % 3.1 % 7.0 % 3.9 % 1.6 % 1.5 % (2.6) % 13.6 % 38.1 % 13.0 % 37.9 % 5.8 % 7.4 % 3.8 % 3.8 % 2.8 % 27.0 % (0.8) % 22.4 % 4.1 % 45.3 % 4.1 % 12.9 % (1.4) % (9.3) % 3.8 % 16.5 % Total Completions Growth 4.3 % 11.7 % (5.8) % 1.4 % 27.3 % 50.8 % (1) Same-branch basis represents period-over-period growth for branch locations owned greater than 12 months as of each financial statement date. (2) Calculated based on period-over-period growth of all end markets for our Installation segment. (3) Calculated based on period-over-period growth in the single-family subset of the residential new construction end market for our Installation segment. (4) Calculated based on period-over-period growth in the multi-family subset of the residential new construction end market for our Installation segment. (5) Calculated based on period-over-period growth in the residential new construction end market for our Installation segment. (6) Calculated based on period-over-period growth in the total commercial end market for our Installation segment. Our commercial end market consists of heavy and light commercial projects. (7) Calculated based on period-over-period growth in our Other category which consists of our Manufacturing and Distribution operating segments. Our distribution businesses were acquired in December, 2021 and April, 2022. (8) The heavy commercial end market, a subset of our total commercial end market, comprises projects that are much larger than our average installation job. This end market is excluded from the volume growth and price/mix growth calculations for our Installation segment as to not skew the growth rates given its much larger per-job revenue compared to the average jobs in our remaining end markets. (9) Calculated as period-over-period change in the number of completed same-branch jobs within our Installation segment for all markets we serve except the heavy commercial end market. (10) Defined as change in the mix of products sold and related pricing changes and calculated as the change in period-over-period average selling price per same-branch jobs within our Installation segment for all markets we serve except the heavy commercial market, multiplied by total current year jobs. The mix of end customer and product would have an impact on the year-over-year price per job. (11) U.S. Census Bureau data, as revised. quality installation. InstallationGross Profitinsulation is a critical phasegross profit were as follows (in millions): Three months ended March 31, 2024 Change 2023 Net revenue $ 692.9 5.1 % $ 659.3 Cost of sales 458.4 2.1 % 448.9 Gross profit $ 234.5 11.5 % $ 210.4 Gross profit percentage 33.8 % 31.9 % the2023 as we increased same branch sales in both our single-family and multi-family residential new construction process, as certain interior work cannot begin until the insulation phase passes inspection. We benefitend markets combined with revenue contributions from our national scale, long-standing supplier relationships and a broad customer base that includes production and custom homebuilders, multi-family and commercial construction firms and homeowners.Contracts fulfilled by Alpha are primarily accounted for underrecent acquisitions. Same branch sales growth from thepercentage-of-completion method residential end markets showed an overall increase of accounting. When thepercentage-of-completion method is used, we estimate the costs to complete individual contracts and record as revenue that portion of the total contract price that is considered complete based on the relationship of costs incurred to date to total anticipated costs. The costs of earned revenue include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. As a result of the acquisition of Alpha, we currently estimate backlog to be $81.4 million as of September 30, 2017. Backlog represents expected revenue on uncompleted contracts, including the amount of revenue on contracts for which our work has not yet commenced, less the revenue recognized under these contracts.As a result of Hurricanes Harvey and Irma, we closed our locations in Texas and Florida during and in the days immediately following the storms.This negatively impacted our revenue and gross profit3.8% for the three months ended September 30, 2017.Three Months Ended September 30, 2017 Compared toMarch 31, 2024 over the Three Months Ended September 30, 2016Net revenueFor the three monthssame period ended September 30, 2017, net revenue increased $69.8 million, or 31.0%, to $295.2 million from $225.4 million for the three months ended September 30, 2016. The increase in net revenue included revenue from acquisitions of approximately $48.7 million. Approximately $8.3 million was predominantly attributable to organic growth in the volume of completed jobs in all of our end markets. The remaining increase in net revenue of $12.8 million resulted from a variety of factors, including customerMarch 31, 2023. Installation selling price and product mix market pricing variations and insulation volumes drivenimprovements also increased 3.8%, partially offset by building code requirements. Nonesame branch sales volume decline of these additional factors was more significant than any other. Partially offsetting(1.4)%. Multi-family same branch sales remained strong with period-over-period growth of 13.0%. Lastly, the increase inDistribution operating segment, combined with our Manufacturing operating segment, further supported net revenue were the effects of Hurricanes Harvey and Irma that negatively impacted our productivitygrowth as it experienced 4.1% growth during the three months ended September 30, 2017.Cost of salesFor the three months ended September 30, 2017, cost of sales increased $51.5 million, or 32.6%, to $209.6 million from $158.1 million for the three months ended September 30, 2016. As a percentage of net revenue, cost of sales increased to 71.0% during the three months ended September 30, 2017 from 70.2% during the three months ended September 30, 2016. On a dollar basis, cost of sales included increases from acquired businesses of approximately $34.8 million. Approximately $5.5 million was predominantly attributable to organic growth in the volume of completed jobs in the residential new construction end market. Additionally, cost of sales increased $11.2 million as a result of a variety of factors including customer and product mix, market pricing variations and insulation volumes driven by building code requirements, as well as expense associated with our recently introduced share-based compensation program for certain of our installers. None of these additional factors was more significant than any other.Gross ProfitFor the three months ended September 30, 2017, gross profit increased $18.3 million to $85.6 million from $67.3 million for the three months ended September 30, 2016. March 31, 2024.decreasedimproved during the three months ended March 31, 2024 compared to 29.0%the corresponding prior year period primarily on the strength of price/mix growth as well as leverage gained on material costs compared to the prior year. We continued to focus on profitability over volume gains, and the moderation of inflation and material supply chain issues that affected our business and industry in recent years contributed to our gross margin improvements. We will continue to work with our suppliers to lessen the impact on our margins and with our customers to offset further cost increases through selling price adjustments. Three months ended March 31, 2024 Change 2023 Selling $ 33.3 2.1 % $ 32.6 Percentage of total net revenue 4.8 % 4.9 % Administrative $ 102.6 14.6 % $ 89.5 Percentage of total net revenue 14.8 % 13.6 % Amortization $ 10.7 (6.1) % $ 11.4 Percentage of total net revenue 1.5 % 1.7 % September 30, 2017 from 29.8%March 31, 2024 compared to 2023 was primarily driven by an increase in selling wages, bonuses and commissions to support our increased net revenue. Selling expense as a percentage of sales decreased for the three months ended September 30, 2016March 31, 2024 compared to 2023 primarily due to the factors discussed above.Operatingdecreased compensation from changes in product mix and more profitable completed jobs.SellingFor the three months ended September 30, 2017, selling expenses increased $1.9 million, or 14.1%, to $14.9 million from $13.0 million for the three months ended September 30, 2016. AsMarch 31, 2024 compared to 2023 was primarily due to an increase in wages and benefits, revenue, selling expenses decreased to 5.0%was as follows (in millions):Three months ended March 31, 2024 Change 2023 Interest expense, net $ 11.9 22.7 % $ 9.7 Other (income) (0.4) 100.0 % (0.2) Total other expense, net $ 11.5 $ 9.5 Three months ended March 31, 2024 2023 Income tax provision $ 20.5 $ 18.1 Effective tax rate 26.8 % 26.8 % Three months ended March 31, 2024 2023 Net change on cash flow hedges, net of taxes $ 4.7 $ (6.3) 30, 20172022, this raised the 30-year fixed rate mortgage average in the United States to over 6% for the first time since 2008. These rate-driven pressures began to curtail housing demand beginning in the second half of 2022 as mortgage financing affordability was reduced. Inflation rates in 2024 have remained above the 2% stated target, leading the Federal Reserve to signal plans to keep the federal funds rate higher for longer than the market was anticipating. We expect to be somewhat impacted by these headwinds in 2024.5.8%the Inflation Reduction Act of 2022, to drive growth in the repair and remodel markets we service.September 30, 2016. On a dollar basis, the increaseMarch 31, 2024 compared to 2023. selling expenses was primarily due to higher wages, benefits and commissions which supported both organic and acquisition-related growth.AdministrativeFor the three months ended September 30, 2017, administrative expenses increased $10.2 million, or 32.2%, to $41.7 million from $31.5 million for the three months ended September 30, 2016. The increase in administrative expensesMarch 31, 2024. We believe this is generally related to the cost of completing acquisitions, the ongoing costs associated with these newly-acquired entities and costs to support our growth. Wages and benefits increased $6.7 million, of which $4.0 million was attributable to acquisitions and $2.7 million was to support our growth. In addition, facility costs increased $1.2 million to support both organic and acquisition related growth and accounting, legal and consulting fees increased $0.5 million primarily to facilitate our transition into large accelerated filer status. The remaining increase in administrative expenses of $1.8 million included individually minor increases in several categories necessary to support our growing business, such as supplies and information technology costs.AmortizationFor the three months ended September 30, 2017, amortization expense increased $3.9 million to $6.8 million from $2.9 million for the three months ended September 30, 2016. The increase in amortization expense was attributable to the additional finite-lived intangible assets recorded as a result of acquisitions.Other expenseFor the three months ended September 30, 2017, other expense increased $2.9 million to $4.5 million from $1.6 million for the three months ended September 30, 2016 due to increased interest expense on our new Term Loan to support our growth related to acquisitions.Income tax provisionDuring the three months ended September 30, 2017, we recorded an income tax provision of $5.7 million on our income before income taxes of $17.7 million, or an effective tax rate of 32.3%. This rate was favorably impacted by deductions related to domestic production activities, usage of net operating losses for a tax filing entity which previously had a full valuation allowance, excess tax benefits from share-based compensation arrangementsstrong culture and the statute expiring for various uncertain tax positions. The favorable impact was partiallyprograms meant to benefit our employees, including our financial wellness plan, emotional well-being coaching, longevity stock compensation plan and comprehensive benefit packages we offer. We also provide assistance from the Installed Building Products Foundation meant to benefit our employees, their families and their communities. While improved retention drives lower costs to recruit and train new employees, resulting in greater installer productivity, these improvements are somewhat offset by the tax effect of losses incurred by separate companies to which no benefit can be recognized due to a full valuation allowance against the losses.During the three months ended September 30, 2016, we recorded an income tax provision of $6.7 million on our income before income taxes of $18.3 million, or an effective tax rate of 36.8%. This rate was favorably impacted by deductions related to domestic production activities and the release of a valuation allowance due to utilization of net operating losses. The favorable impact was partially offset by separate tax filing entities in a loss position for which a full valuation allowance will be accounted for against the losses, causing no tax benefit to be recognized on the losses.Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016Net revenueFor the nine months ended September 30, 2017, net revenue increased $204.1 million, or 32.4%, to $833.1 million from $629.0 million for the nine months ended September 30, 2016. The increase in net revenue included revenue from acquisitions of approximately $141.8 million. Approximately $35.8 million was predominantly attributable to organic growth in the volume of completed jobs in all of our end markets. The remaining increase in net revenue of $26.5 million resulted from a variety of factors, including customer and product mix, market pricing variations and insulation volumes driven by building code requirements. Noneadditional costs of these additional factors was more significant than any other. Partially offsetting the increase in revenue were the effectsincentives.Hurricanes Harveycash from operations and Irma that negatively impactedborrowings under our productivity during the nine months ended September 30, 2017.Costvarious debt agreements and capital equipment leases and loans. As of salesFor the nine months ended September 30, 2017, cost of sales increased $145.5 million, or 32.7%, to $590.4 million from $444.9 million for the nine months ended September 30, 2016. As a percentage of net revenue, cost of sales increased to 70.9% during the nine months ended September 30, 2017 from 70.7% during the nine months ended September 30, 2016. On a dollar basis, cost of sales included increases from acquired businesses of approximately $100.2 million. Approximately $24.4 million was predominantly attributable to organic growth in the volume of completed jobs in the residential new construction end market. Additionally, cost of sales increased $20.9 million as a result of a variety of factors including customer and product mix, market pricing variations and insulation volumes driven by building code requirements, as well as expense associated with our recently introduced share-based compensation program for certain of our installers. None of these additional factors was more significant than any other.Gross ProfitFor the nine months ended September 30, 2017, gross profit increased $58.6 million to $242.7 million from $184.1 million for the nine months ended September 30, 2016. As a percentage of net revenue, gross profit decreased to 29.1% for the nine months ended September 30, 2017 from 29.3% for the nine months ended September 30, 2016 due to the factors discussed above.Operating expensesSellingFor the nine months ended September 30, 2017, selling expenses increased $6.3 million, or 17.4%, to $42.5 million from $36.2 million for the nine months ended September 30, 2016. As a percentage of net revenue, selling expenses decreased to 5.1% during the nine months ended September 30, 2017 from 5.8% during the nine months ended September 30, 2016. On a dollar basis, the increase in selling expenses was primarily due to higher wages, benefits and commissions of $5.8 million which supported both organic and acquisition-related growth. The remaining increase of $0.5 million included individually minor increases in several categories necessary to support our growing business.AdministrativeFor the nine months ended September 30, 2017, administrative expenses increased $30.0 million, or 32.4%, to $122.7 million from $92.7 million for the nine months ended September 30, 2016. The increase in administrative expenses is generally related to the cost of completing acquisitions, the ongoing costs associated with these newly-acquired entities and costs to support our growth. Wages and benefits increased $18.9 million, of which $11.8 million was attributable to acquisitions and $7.1 million was to support our growth. In addition, facility costs increased $3.7 million to support both organic and acquisition-related growth and accounting, legal and consulting fees increased $2.3 million primarily to facilitate our transition into accelerated filer status. We also incurred $1.1 million of increased general liability insurance costs due to claims development and to support growth and $0.9 million of increased information technology-related expenses. The remaining increase in administrative expenses of $3.1 million included individually minor increases in several categories necessary to support our growing business.AmortizationFor the nine months ended September 30, 2017, amortization expense increased $11.6 million to $19.8 million from $8.2 million for the nine months ended September 30, 2016. The increase in amortization expense was attributable to the additional finite-lived intangible assets recorded as a result of acquisitions.Other expenseFor the nine months ended September 30, 2017, other expense increased $6.9 million to $11.8 million from $4.9 million for the nine months ended September 30, 2016 due to increased interest expense on higher debt levels to support our growth related to acquisitions.Income tax provisionDuring the nine months ended September 30, 2017,March 31, 2024, we recorded an income tax provision of $15.5 million on our income before income taxes of $45.8 million, or an effective tax rate of 33.8%. This rate was favorably impacted by deductions related to domestic production activities, usage of net operating losses for a tax filing entity which previously had a full valuation allowance, excess tax benefits from share-based compensation arrangements and the statute expiring for various uncertain tax positions. The favorable impact was partially offset by the tax effect of losses incurred by separate companies to which no benefit can be recognized due to a full valuation allowance on the losses.During the nine months ended September 30, 2016, we recorded an income tax provision of approximately $14.8 million on our income before income taxes of approximately $42.1 million, or an effective tax rate of 35.1%. This rate was favorably impacted by deductions related to domestic production activities, the early adoption of ASU2016-09 and the release of a valuation allowance due to utilization of net operating losses. The favorable impact was partially offset by separate tax filing entities in a loss position for which a full valuation allowance will be accounted for against the losses, causing no tax benefit to be recognized on the losses.Liquidity and Capital ResourcesOur primary sources of liquidity are our cash and cash equivalents of $399.9 million as well as access to $250.0 million under our marketable securities andasset-based lending credit facility (as defined below), less $5.8 million of outstanding letters of credit, resulting in total liquidity of $644.1 million. Liquidity may also be limited in the future by certain cash generated bycollateral limitations under our operations. As of September 30, 2017 and December 31, 2016, we had $92.1 million and $14.5 million, respectively, in cash, cash equivalents and marketable securities. Our marketable securities consist primarily of commercial paper, corporate bonds and money market funds. Our investment policy requiresasset-based credit facility (as defined below), depending on the purchase of high grade investment securities and the diversification of asset types and includes certain limits to avoid over-concentration into specific maturities, a specific issuer or a specific class of securities. As of September 30, 2017, we are in compliance with our investment policy. As of September 30, 2017, the financial sector accounted for 100%status of our total investment portfolio.meet requiredleasing principal and interest obligations and to make required income tax payments. Our capitalWe may also use our resources primarily consistto fund our optional stock repurchase program and pay quarterly and annual dividends. We expect to spend cash and cash equivalents to acquire various companies with at least $100.0 million in aggregate net revenue each fiscal year. Theagreements and capital equipment leases and loans.Since 2012, when housing completions began to increase meaningfully after a previous significant downturn in the residential construction industry, we have experienced improved profitability and liquidity and invested significantly in acquisitions, supported by our cash from operations and our credit agreements. Additionally, we have utilized capital leases and loans to finance the increase in the number of our vehicles and equipment.In addition, our acquisition of Alpha, which was completed on January 5, 2017, requires us to commit significant resources to the acquisition and ongoing support of Alpha’s business. This acquisition was funded by drawing on our previous credit facility. As of September 30, 2017, we had no outstanding borrowings under our ABL Revolver and our borrowing availability was $82.1 million after being reduced by outstanding letters of credit of $17.9 million.debt service requirements, capital expendituresbusiness needs, commitments and working capitalcontractual obligations for at least the next 12 months.Three months ended March 31, 2024 2023 Net cash provided by operating activities $ 84.8 $ 73.8 Net cash used in investing activities (21.1) (47.6) Net cash used in financing activities (50.3) (37.1) Secured Notes due 2028AgreementsOurFacilitiesprovidesthat we elected to trigger a benchmark replacement from LIBOR to the Secured Overnight Financing Rate ("Term SOFR"). The previous term loan was subsequently amended on April 28, 2023 (the "First Amendment") to implement Term SOFR as the benchmark rate and includes a credit spread adjustment of 0.11%, 0.26% and 0.43% for interest periods of one month, three months and six months, respectively, and it is subject to the same floor as currently set forth in the Term Loan Agreement.seven-year $300.0 millionrepricing of the interest rate applicable to the existing term loans thereunder from Term Loan. Our ABLSOFR plus 2.25% to Term SOFR plus 2.00%. The Second Amendment also establishes an alternate base rate equal to the highest of (i) the federal funds rate plus 1/2 of 1.00%, (ii) the prime rate and (iii) the Term SOFR rate for an interest period of one month plus 1.00%. The Second Amendment also states that there will be a six-month protection provision during which a 1.00% premium would be charged in connection with certain repricing transactions.provides for("Third Amendment"). The Third Amendment amended certain terms of the ABL Revolver of up to approximately $100.0 million with a sublimit up to $50.0 millionexisting Term Loan Credit Agreement and allowed for the issuance of lettersa new term loan ("New Term Loan") in the amount of credit,$500.0 million which may be reduced or increased pursuant to the ABL Credit Agreement. The borrowing base for the ABL Revolver, which determines availability under the facility, is basedwill mature on a percentageMarch 28, 2031. Net proceeds of the value of certain assets securing the obligations of the Company and the subsidiary guarantors under the ABL Credit Agreement.Proceeds from the Senior Secured Credit FacilitiesNew Term Loan were used to repayrefinance the remaining $490.0 million on our previous term loan, pay fees and increase working capital. The New Term Loan does not have any financial maintenance covenants, eliminates the credit spread adjustment and the floor is reduced to 0.00%. The New Term Loan bears interest, at our option, at a rate equal to either: Term SOFR plus 2.00% per annum, or an alternative base rate plus 1.00%. The New Term Loan also includes (i) a six-month “soft call” protection provision during which a 1.00% premium will be charged in full all amounts outstanding underconnection with certain repricing transactions, and (ii) a 50 basis points most favored nation protection for 12 months following the Credit and Security Agreement.approximately $0.8$1.25 million starting on SeptemberJune 30, 2017,2024, with any remaining unpaid balances due on April 15, 2024, which is the maturity date. Loans incurred under the ABL Revolver will have a final maturitydate of April 13, 2022.pre-payments equal to prepayments of (i) 100% of the net cash proceeds from issuances or incurrence of debt by the Company or any of its restricted subsidiaries (other than with respect to certain permitted indebtedness (excluding any refinancing indebtedness); (ii) 100% (with step-downs to 50% and 0% based on achievement of specified net leverage ratios) of the net cash proceeds from certain sales or dispositions of assets by the Company or any of its restricted subsidiaries in excess of a certain amount and subject to customary reinvestment provisionsprovision and certain other expenses;exception; and (iii) 50% (with step-downs to 25% and 0% based upon achievement of specified net leverage ratios) of excess cash flow of the Company and its restricted subsidiaries in excess of $5.0$15.0 million, subject to customarycertain exceptions and limitations.LoansSenior Secured Credit Facilities bearasset-based lending credit facility (the “ABL Revolver”) to $250.0 million from $200.0 million, and permits us to further increase the commitment amount up to $300.0 million. The amendment also extends the maturity date from September 26, 2024 to February 17, 2027. The ABL Revolver bears interest based on, at the Company’s election, either the base rate or the Eurodollar rateSecured Overnight Financing Rate ("Term SOFR"), at our election, plus in each case, the Applicable Margin. The Applicable Margin in respecta margin of loans under (i) the Term Loan Agreement will be (A) 3.00% in the case of Eurodollar rate loans and (B) 2.00%0.25% or 0.50% in the case of base rate loans and (ii) the ABL Facility will be (A)or 1.25%, or 1.50% or 1.75% in thefor Term SOFR advances (in each case of Eurodollar rate loans (basedbased on a measure of availability under the ABL Facility)Credit Agreement). The amendment also allows for modification of specified fees dependent upon achieving certain sustainability targets, in addition to making other modifications to the ABL Credit Agreement. In connection with the Term Loan Agreement, we entered into a third amendment to the ABL/Term Loan Intercreditor Agreement with Bank of America, N.A., as ABL Agent for the lenders under the ABL Credit Agreement, and (B) 0.25%, 0.50% or 0.75% inRoyal Bank of Canada as collateral agent under the caseTerm Loan Agreement. Including outstanding letters of base rate loans (based on a measure ofcredit, our remaining availability under the ABL Facility).In addition, we will pay customary commitment fees and letterRevolver as of credit feesMarch 31, 2024 was $244.2 million.Credit Agreement. The commitment feesRevolver are guaranteed by all of the Company’s existing restricted subsidiaries and will vary based upon a measure of our utilizationbe guaranteed by the Company’s future restricted subsidiaries. Additionally, all obligations under the New Term Loan and ABL Revolver.The Senior Secured Credit Agreements each containRevolver, and the guarantees of those obligations, are secured by substantially all of the assets of the Company and the guarantors, subject to certain exceptions and permitted liens, including a number of customary affirmative and negativenon-financial covenants, andfirst-priority security interest in such assets that constitute ABL Priority Collateral, as defined in the ABL Credit Agreement, and a second- priority security interest in such assets that constitute Term Loan Priority Collateral, as defined in the Term Loan Agreement.1.00 to 1.001.0x in the event that we do not meet a minimum measure of availability under the ABL Revolver. The ABL Credit Agreement and the Term Loan Agreement contain restrictive covenants that, among other things, limit the ability of the Company and certain of our subsidiaries (subject to certain exceptions) to: (i) incur additional debt and issue preferred stock;September 30, 2017,March 31, 2024, we were in compliance with all applicable covenants under the Term Loan Agreement, ABL Credit Agreement and the Senior Secured Credit Agreements. Each financing arrangement under these agreements constitutes a separate note and obligation. Vehicles and equipment purchased or leased under each financing arrangement serve as collateral for the note applicable to such financing arrangement. Regular payments are due under each note for a period of typically 60 consecutive months after the incurrence of the obligation. The specific terms of each note are based on specific criteria, including the type of vehicle or equipment and the market interest rates at the time. No termination date applies to these agreements.gross assetsoutstanding loan balances relating to our master loanMaster Loan and equipment agreementsEquipment Agreements were $66.8 million and $48.7$80.7 million as of September 30, 2017March 31, 2024 and December 31, 2016, respectively, none of which were fully depreciated as of September 30, 2017 or December 31, 2016, respectively. The net book value of assets under these agreements was $47.3 million and $38.0$83.0 million as of September 30, 2017 and December 31, 2016,2023, respectively. Depreciation of assets held under these agreements is included within cost of sales on the Condensed Consolidated Statements of Operations and Comprehensive Income.use letters of credit to secure our performance under our general liability and workers’ compensation insurance programs. Our largest workers’ compensation insurance program is considered a high deductible program whereby we are responsible for the cost of claims under approximately $0.8 million. If we do not pay these claims, our workers’ compensation insurance carriers are required to make these payments to the claimants on our behalf. Effective with the plan year beginning October 1, 2015, our largest general liability insurance program is considered a high retention program whereby we are responsible for the cost of claims up to approximately $2.0 million, subject to an aggregate cap of $8.0 million. If we do not pay these claims, our general liability insurance carrier is required to make these payments to the claimants on our behalf. Prior to the claim year beginning October 1, 2015, our largest general liability insurance program has a self-insured retention (“SIR”) of $0.35 million whereby we continue to be responsible for all claims below the SIR and the insurance company continues to be responsible for all liabilities above the SIR. As of September 30, 2017, we had $17.9 million of outstanding letters of credit and $0.3 million in cash securing our performance under these insurance programs. We expect to increase the collateral for these programs by approximately $10.0 million during the fourth quarter of 2017.We occasionallymay use performance bonds to ensure completion of our work on certain larger customer contracts that can span several months. As of September 30, 2017, we had 56 performance bonds outstanding, totaling approximately $24.1 million. The acquisition of Alpha resulted in a significant increase in the level of contracts in the commercial end market, which typically require a greater value of performance bonds.multiple accounting periods. Performance bonds generally do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. AsIn addition, we occasionally use letters of September 30, 2017, we had 358 permitcredit and license bonds outstanding, totaling approximately $5.9 million.cash to secure our performance under our general liability, workers’ compensation and auto insurance programs. Permit and license bonds are typically issued for one year and are required by certain states and municipalities when we obtain licenses and permits to perform work in their jurisdictions.Financial InstrumentsInterest Rate DerivativesAs of March 31, 2024 Performance bonds $ 98.4 Insurance letters of credit and cash collateral 71.2 Permit and license bonds 10.8 Total bonds and letters of credit $ 180.4 various borrowing facilities which charge interest based on$62.9 million included in our insurance letters of credit in the one month U.S. dollar LIBOR rate plus an interest spread. On May 8, 2017, we entered into two interest rate swaps with a notional amountabove table that are unsecured and therefore do not reduce total liquidity.$100.0 million. During the second quarterour financial condition and results of 2017, we began to receive variable rate interest paymentsoperations is based upon one month U.S. dollar LIBOR andour consolidated financial statements, which have been prepared in return were obligated to pay interest at a fixed rate of 1.9%. This effectively converted the borrowing rate on $100.0 million of debt from a variable rate to a fixed rate. These derivatives are designated as cash flow hedges foraccordance with accounting purposes. Accordingly, any effective portion of the unrealized gain or loss on these derivative instruments is reported as a component of other comprehensive income and reclassified into earningsprinciples generally accepted in the same line item associated withUnited States. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the forecasted transactionsreported amounts of assets, liabilities, revenues and inexpenses and related disclosure of contingent assets and liabilities. Certainsame period duringcircumstances, the results of which form the hedged transactions affect earnings. Any ineffective portionbasis for making judgments about the carrying values of the gain or loss on the derivative instrument is recognized into earnings. For additional disclosures of the gain or loss included with other comprehensive income, see Note 8, Derivative and Hedging Activities, included in Item 1 of Part I of this Form10-Q. The assumptions used in measuring fair value of the interest rate derivatives are considered level 2 inputs, which are based upon LIBOR and interest paid based upon a designated fixed rate over the life of the swap agreements.Historical cash flow informationCash flow from operating activitiesNet cash provided by operating activities of $53.3 million and $54.6 million for the nine months ended September 30, 2017 and 2016, respectively, consisted primarily of net income of $30.3 million and $27.4 million, respectively, adjusted fornon-cash and certain other items. Included in the net cash provided in 2017 werenon-cash adjustments for depreciation and amortization expense on our expanded base of property, plant and equipment to support our growth totaling $20.7 million as well as for amortization on our growing intangible asset base from acquisitions totaling $19.8 million. These increases were offset by changes to certain assets and liabilities excluding effects of acquisitions, most notably additional accounts receivable resulting from our growth and additional income tax receivables due to changes in estimated tax payments.Included in the net cash provided in 2016 werenon-cash adjustments for depreciation and amortization expense on our expanded base of property, plant and equipment to support our growth totaling $17.2 million as well as for amortization on our growing intangible asset base from acquisitions totaling $8.2 million. These increases were coupled with other changes in working capital, most notably $6.0 million of additional other liabilities primarily driven by higher accrued wages due to an increase in number of days in the pay cycle to accrue, a $4.7 million change in other assets due primarily to a reduction of various prepaid assets and other receivables and $3.9 million of additional accounts payable resulting from the increase in purchases to support our growth, offset by a reduction of cash of $17.9 million due to increased accounts receivable resulting from our growth.Cash flows from investing activitiesNet cash used in investing activities was $180.3 million and $55.1 million for the nine months ended September 30, 2017 and 2016, respectively. In 2017, we made cash payments, net of cash acquired, of $131.0 million on business combinations, $25.2 million on purchases of short-term investments and $22.9 million primarily to purchase fleet to support our growing business.In 2016, we made cash payments, net of cash acquired, of $36.4 million on business combinations and $19.2 million primarily to purchase fleet to support our growing business.Cash flows from financing activitiesNet cash provided by financing activities was $179.5 million and $12.7 million for the nine months ended September 30, 2017 and 2016, respectively. Net cash provided in 2017 was primarily due to net proceeds of $190.5 million from our current and prior credit agreements to support continuing acquisitions and $15.8 million of proceeds from notes payable to finance our vehicle purchases. This increase in cash was offset by $8.2 million in debt issuance costs, $7.2 million in principal payments on other long term debt, $5.6 million in principal payments on capital lease obligations and $3.4 million in principal payments on acquisition-related obligations.Net cash provided in 2016 was primarily due to net proceeds of $11.9 million as a result of amending our credit agreement, resulting in increased borrowing capacity to support operations and continuing acquisitions and $16.3 million of proceeds from notes payable to finance our vehicle purchases. This increase in cash was offset by $6.6 million in principal payments on capital lease obligations, $1.2 million in costs related to amending our credit agreement and $4.1 million in principal payments on other long term debt.Capital expendituresCapital expenditures vary depending on prevailing business factors, including current and anticipated market conditions. Total capital expenditures, including unpaid purchases as of each balance sheet date, were $23.3 million and $21.3 million for the nine months ended September 30, 2017 and 2016, respectively, and primarily related to purchases of vehicles and various equipment to support our operations and increased net revenue. We finance a significant portion of our capital expenditures under the Master Loan and Security Agreement, the Master Equipment Agreement or the Master Loan Agreement, which allow us to benefit from depreciation for tax purposes. These arrangements require us to pay cash up front for vehicles and equipment. We are reimbursed for the upfront cash payments after the assets are financed under the agreements. Of the $23.3 million in capital expenditures during the nine months ended September 30, 2017, $15.8 million was converted to a financing arrangement by September 30, 2017 under the Master Loan and Security Agreement, Master Equipment Agreement and one or more Master Loan Agreements.Capped Call AgreementCertain of our stockholders entered into a capped call agreement with the underwriters of the secondary offering of our common stock completed on June 17, 2014. This agreement provided these stockholders with an option to call from the underwriters a total of approximately 1.0 million shares of our common stock at a capped price, with settlement required to be made in cash. During 2016, these stockholders exercised the call option with respect to approximately 0.7 million of the shares. In addition, in the fourth quarter of 2016, these stockholders simultaneously cancelled the remaining portion of the call option and purchased a new call option from the underwriters. This new capped call agreement provides these stockholders with the option to call from the underwriters a total of approximately 0.4 million shares of our common stock at a capped price. The option becomes exercisable and expires on April 16, 2018 and will be settled in cash. The capped call agreement is between these stockholders and the underwriters and does not represent compensation to the stockholders for services rendered to us. The price paid for the option represents the fair value of that transaction and we are not a party to the agreement. Accordingly, we have not recorded any expense related to this transaction.Contractual ObligationsOur enforceable and legally binding obligations as of September 30, 2017, included in the table below are based on management’s estimates and assumptions about these obligations, including their duration, the possibility of renewal, anticipated actions by third parties andreadily apparent from other factors. Becausesources. Actual results may differ from these estimates and assumptions are necessarily subjective,used in preparation of our actual payments may vary from those reflected in the table: Payments due by year (1) Total Remainder of
2017 2018 2019 2020 2021 Thereafter $ 433,469 $ 7,274 $ 29,347 $ 28,917 $ 27,482 $ 21,678 $ 318,771 14,786 2,017 6,128 4,229 1,606 806 — 40,246 3,442 12,319 9,856 6,594 3,370 4,665 (1)Our unrecognized tax benefits under ASC 740, “Income Taxes,” have been excluded from the table because of the inherent uncertainty and the inability to reasonably estimate the timing of cash outflows.(2)Long-term debt obligations include principal and interest payments on our Term Loan Agreement and ABL Credit Agreement as well as our notes payable to sellers of acquisitions and vehicles purchased under the Master Loan and Security Agreement, the Master Equipment Agreement and the Master Loan Agreements. Long-term debt obligations do not include commitment fees on the unused portion of the ABL Revolver since these fees are subject to change based on the factors described in our Credit and Security Agreement. Interest on seller obligations maturing through March 2025 is estimated using current market rates. See Item 1, Financial Statements, Note 5, Long-Term Debt, for information on our vehicle and equipment notes.(3)We maintain certain production vehicles under a capital lease structure. The leases expire on various dates through November 2021. Capital lease obligations, as disclosed above, include estimated interest expense payments. In determining expected interest expense payments, we utilize the rates embedded in the lease documentation.(4)We lease certain locations, vehicles and equipment under operating lease agreements, including, but not limited to, corporate offices, branch locations and various office and operating equipment. In some instances, these location lease agreements exist with related parties. See Item 1, Financial Statements, Note 11, Related Party Transactions, for further information.Off-Balance Sheet ArrangementsAs of September 30, 2017, other than operating leases and purchase obligations described above, letters of credit issued under the ABL Revolver and performance and license bonds, we had no materialoff-balance sheet arrangements.Critical Accounting Policies and Estimatesmaterialsignificant changes for the three months ended September 30, 2017 from theto our critical accounting policies and estimates as previously disclosed in our 2016 Form10-K and in our Form10-Q forduring the three months ended March 31, 2017 and June 30, 2017, except2024 from those disclosed in the area“Management’s Discussion and Analysis of share-based compensation as described below:Share-Based CompensationOur share-based compensation program is designed to attractFinancial Condition and retain employees while also aligning employees’ interests with the interestsResults of Operations” section of our stockholders. Restricted stock awards are periodically granted2023 Form 10-K.certain employees, officers andnon-employee members of our board of directors under the stockholder-approved 2014 Omnibus Incentive Plan.Equity-based awards: Certain ofaudited consolidated financial statements included in our stock awards are deemed to be equity-based with a service condition and do not contain a market or performance condition with the exception of performance-based awards granted to certain officers and performance-based restricted stock units. Fair value of thenon-performance-based awards to employees and officers is measured at the grant date and amortized to expense over the vesting period of the awards using the straight-line attribution method for all service-based awards with a graded vesting feature. This fair value is reduced by assumed forfeitures and adjusted for actual forfeitures until vesting. We also issue performance stock-based awards to certain officers under our 2014 Omnibus Incentive Plan. The performance-based compensation expense is recorded over the requisite service period using the graded-vesting method for the entire award. Performance-based stock awards are accounted for at fair value at date of grant. We also periodically grant restricted stock units to certain employees under the stockholder-approved 2014 Omnibus Incentive Plan. These units convert to shares upon meeting time- and performance-based requirements.Liability-based awards:Certain of our stock awards represent a predominately-fixed monetary amount that is to be settled with a variable number of shares. These awards contain both time and performance requirements, and are deemed to be liability-based, which requires that were-measure to reflect the fair value at the end of each reporting period. The change in fair value each reporting period is recorded as compensation cost, with a corresponding increase or decrease in the share-based liability, either immediately or over the remaining service period depending on the vested status of the award.Compensation expense for both equity and liability-based restricted stock units is recorded based on an assessment each reporting period of the probability that certain performance goals will be met during the contingent vesting period. If performance goals are not probable of occurrence, no compensation expense will be recognized. If performance goals that were previously deemed probable are not or are not expected to be met, the previously recognized compensation cost related to such performance goals will be reversed. Employees and officers are subject to tax at the vesting date based on the market price of the shares on that date, or on the grant date if an election is made.reportQuarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, including with respect to the housing market and the commercial market, our operations, economic and industry conditions, our financial and business model, payments of dividends, the demand for our services our financial model,and product offerings, trends in the commercial business, expansion of our national footprint and diversification, our ability to capitalize on the new home construction recovery, our ability togrow and strengthen our market position, our ability to pursue and integrate value-enhancing acquisitions, our ability to improve sales and profitability, our efforts to navigate the material pricing environment, our ability to increase selling prices, our material and labor costs, supply chain and material constraints and expectations for future demand for our services.services and our earnings in 2024 and 2025. Forward-looking statements may generally be identified by the use of words such as “anticipate,” “believe,” “estimate,” “project,” “predict,” “possible,” “forecast,” “may,” “could,” “would,” “should,” “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 the general economic and industry conditions; increases in mortgage interest rates and rising home prices; inflation and interest rates; the material price and supply environment; the timing of increases in our selling prices; the risk that the Company may reduce, suspend or eliminate dividend payments in the future; and the factors discussed in the “Risk Factors” section of our 20162023 Form10-K, as the same may be updated from time to time in our subsequent filings with the SEC. In addition, any future declaration of dividends will be subject to the final determination of our Board of Directors. Any forward-looking statement made by the Company in this report 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.
There have been no material changes to our exposurerisk since Decemberrisks related to fluctuations in interest rates on our outstanding variable rate debt. As of March 31, 2016.2024, we had $500.0 million outstanding on our Term Loan, gross of unamortized debt issuance costs, no outstanding borrowings on our ABL Revolver and no outstanding borrowings under finance leases subject to variable interest rates. As of March 31, 2024, we had three active and two forward interest rate swaps which, when combined, serve to hedge $400.0 million of the variable cash flows on our Term Loan until its maturity unless extended. As a result, total variable rate debt of $100.0 million was exposed to market risks as of March 31, 2024. A hypothetical one percentage point increase (decrease) in interest rates on our variable rate debt would increase (decrease) our annual interest expense by approximately $1.0 million. Our Senior Notes accrue interest at a fixed rate of 5.75%.
March 31, 2024.September 30, 2017.September 30, 2017March 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
12,16, Commitments and Contingencies – Other Commitments and Contingencies, for information about existing legal proceedings.
Therefor the three months ended September 30, 2017 from the risk factors as disclosed in our 20162023 Form10-K.
None. Total Number
of Shares
PurchasedAverage
Price Paid
Per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or Programs 1,153 $ 180.65 — $ — February 1 - February 29, 2024 — — — — 11 234.30 — 300.0 million 1,164 $ 181.16 — $ 300.0 million
None.
Description ExhibitNumber10.1 Description 31.110.2#* 31.1* 31.2 32.1 32.2101** The following financial statements from the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2024, formatted in inline XBRL, include: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial Statements. 101 (a)104** Financial statementsCover Page Interactive Data File (formatted in Inline XBRL Formatand contained in Exhibit 101). of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.November 6, 2017May 9, 2024INSTALLED BUILDING PRODUCTS, INC. By: /s/ Jeffrey W. Edwards Jeffrey W. Edwards President and Chief Executive Officer By: /s/ Michael T. Miller Michael T. Miller Executive Vice President and Chief Financial Officer
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