Mr. Edwards concluded, “2018 is shaping up to be a record year. We believe we have the leadership team, business plan, and financial model to create significant long-term value for our shareholders, employees, and customers.”
Third Quarter 2018 Results Overview
For the third quarter of 2018, net revenue was $349.0 million, an increase of 18.2% from $295.2 million in the third quarter of 2017. On a same branch basis, net revenue improved 12.2% from the prior year quarter. Residential same branch sales growth was 11.3% in the quarter, with more than half of the increase attributable to growth in the number of completed jobs and the remainder through price gains and more favorable customer and product mix. Same branch single-family sales grew 12.9% during the third quarter, compared to growth in U.S. single-family housing completions of 9.6%, while our large commercial construction end market had organic growth of 15.8%.
Gross profit improved 13.7% to $97.3 million from $85.6 million in the prior year quarter. Adjusted gross profit* as a percent of total revenue was 27.9% which adjusts for the Company’s share-based compensation expense and branchstart-up costs, compared to 29.2% for the same period last year, attributable to the impacts of material inflation.
Selling and administrative expense, as a percentage of net revenue, was 18.8% compared to 19.1% in the prior year quarter. Adjusted selling and administrative expense*, as a percentage of net revenue, improved 60 basis points to 17.7% from 18.3%. Higher net revenue in the 2018 third quarter more than offset the higher costs needed to support the Company’s growth.
Net income was $15.6 million, or $0.50 per diluted share, compared to $12.0 million, or $0.38 per diluted share in the prior year quarter. Adjusted net income* was $22.4 million, or $0.72 per diluted share, compared to $18.3 million, or $0.57 per diluted share in the prior year quarter. Adjusted net income adjusts for the impact ofnon-core items in both periods and includes an addback fornon-cash amortization expense related to acquisitions.
Adjusted EBITDA* was $43.8 million, an 11.2% increase from $39.3 million in the prior year quarter, largely due to higher sales and improved selling and administrative leverage. Adjusted EBITDA, as a percentage of net revenue, was 12.5%, compared to 13.3% in the prior year quarter, attributable to the impacts of material inflation.
Stock Repurchase Program
IBP’s Board of Directors has approved an expansion of our stock repurchase program, effective as of November 5, 2018, pursuant to which the Company may repurchase up to an additional $100.0 million of its outstanding common stock. The program will remain in effect until February 28, 2020, unless extended by the Board of Directors. The Board previously approved a stock repurchase program, effective as of March 2, 2018, for up to $50.0 million of the Company’s outstanding common stock and there is currently $7.2 million of remaining availability for additional repurchases.
Under the repurchase program, the Company may purchase shares of its common stock through open market transactions, accelerated share repurchase transactions, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, includingRule 10b-18 of the Securities Exchange Act of 1934, as amended and pursuant to any trading plan that may be adopted in accordance with Rule10b5-1 of the Securities Exchange Act of 1934, as amended. The timing and amount of any repurchases under this program will be determined by the Company’s management at its discretion
2
