IBP - Earnings call transcript Q1 2020 | Installed Building Products, Inc.

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Operator

Good morning, and welcome to the Installed Building Products Fiscal 2020 First Quarter Financial Results Conference Call. [Operator Instructions].

I'd now like to turn the conference over to Mr. Jason Niswonger, Vice President of Investor Relations. Please go ahead.

Jason Niswonger

to Products welcome Conference Quarter and Call. morning, Installed First Building XXXX Good issued on in press for today, a Earlier we release section our quarter, can Relations the which our be Investor found the on website. first results financial

manage material services and statements financial prepared contain our model, within respect market the the and and include of statements national efforts to integrate call, meaning end the position, your securities diversification our acquisitions, federal strengthen and expectations business, statements of to our will our housing business remarks increase end to for impact crisis prices, markets, results business ability profitability, with today's and markets, inflation, financial selling questions and on footprint, market the and answers in of our the efforts, end revenue COVID-XX our and expansion our growth and improve ability pursue our offerings, expectations value-enhancing industry our On our have laws. the the to markets, demand our management's that may forward-looking of These on demand the products for conditions, expansion our for and to XXXX. our forward-looking to to Alpha's our ability commercial our ability earnings for crisis services COVID-XX acquisitions, impact sales and and our and rates growth our product

terminology. identified by or each intend, negative be use case, generally expect, in comparable plan as variations may statements or believe, or other words will, Forward-looking the of such and anticipate, they're

statement report of and various and performance, statements call because forward-looking by not crisis COVID-XX circumstances management Any the material impact the Securities on or on this in and markets factors, time and not adverse in XXXX, of Form historical the may updated of depend of of statements environment, Risk effect forward-looking or general increases in Any the for same crisis, they that date section Commission. relate differ economic result speaks results the conditions, hereof. serve, from we during financial statements as the forward-looking annual involve of and industry limitation, By economy facts. are our the as time XX-K suggested from forward-looking may only results, and made XX, to and Exchange forward-looking Factors by statement the factors events by price prices is future. the selling These December their in business without in the of the all on the discussed a may occur actual as duration, on the the may with company's guarantee those filings year timing be and made that a to matters nature, the uncertainties not risks severity and call management COVID-XX future materially expressed ended the the subsequent include including, this our

their is and hereof, up effect. update for intend these by federal does as not company statements The the and laws. predict uncertainties from except or time securities required risks has date come the and to it events forward-looking time, New obligation after company no to any impossible to

income adjusted profit adjusted performance adjusted non-GAAP margin, management and measures gross and and adjusted diluted In EBITDA adjusted income call net addition, per uses certain administrative as selling expenses. net this such EBITDA, share, on adjusted

and the our EBITDA website. earlier reconciliation find nearest for of are You fiscal earnings years equivalent GAAP for adjusted on presentation, release reconciliation their additional which in our company's can to measures a such investor in available

over Chairman Officer; to Financial Officer. turn Chief and Jeff I now hosted is and This Michael morning's call Edwards, will call our by our Miller, the Executive Chief Jeff. conference

Jeffrey Edwards

on us today's Thanks, Jason, joining and call. to good morning everyone

our and As start Michael to will in first your questions. we Miller, uncertain to our environment today are call today's CFO, platform we IBP's some business the I'll crisis, results detail take usual, response navigate remarks we strong the crisis. highlights who position will then this and position to actions discuss the and will COVID-XX I taking over call my capital and our this quarter believe with more turn on through support financial our focus operational before how

the COVID-XX pandemic. social challenges, and are everyone impacted and pandemic unprecedented economic our has created The thoughts with by

the on the by As while and supporting focused customers the all suppliers crisis. uncertainty to an ensuring withstand country our employees, business well positioned organization, we across COVID-XX our caused are is

results of across position quarter EBITDA. strong our market As we and the revenue, demonstrate, quarter our first earnings markets, entered adjusted current financial strength. and The operational was very record end a we and first first achieved environment quarter from XXXX

balance addition, remains In our sheet to access capital and robust.

million cash quarter, million of from the including $XXX on million the During generated $XX we drawn of of quarter nothing and short-term and we our liquidity, cash flow nearly investments over credit. operations, with strong $XXX line and ended

our Across of footprint, health requirements are our protect safety and state the to and federal, employees local branches our national and following customers.

to distancing our and spaces We exposure disinfecting shared of for mitigate to have appropriate implemented of to social employees. various risk provide procedures

deemed of was were where As markets our essential the end March, construction XX% of located of branches approximately an business. revenue by in

internal was efficiencies the the laborers crisis. million impacted quarter million limiting to practices revenue reduced and to COVID-XX site on $X end completed related $X.X that social first of our job estimate to across We these our due volume factors for health markets. distancing jobs of number by standards However, a restrictions and the

COVID-XX to early the It housing economy, the IBP. the and how affect is too industry U.S. still crisis overall tell will

demand which support units there X XXX,XXX March, under Census backlog. services. more for based dynamics of Bureau end near-term were of At than months single-family U.S. industry we our over the represents However, on believe construction industry data,

operate. While IBP we will stages where of believe completion, in benefit this includes the significant of from proportion at various markets homes we backlog the a

will in our end expect backlogs demand The multifamily under reducing and well, environment. further remain a finishing as business operations strong builders uncertain during commercial we our addition, placing this homes focus emphasis markets by construction. backlogs supporting on on In greater

environment will that normal the in reduction result we currently year. for a on housing, reduction between starts number starts meaningful believe the the demand current and We Based significant as this estimate quarters market impact and of a completions this that currently in installers busy extent the pronounced short-term industry on have industry, is the teams The but homebuilding the will single-family result, our in impact full in backlog. market of a and a lag working remain economic housing more and this our third decline will local on of and fourth unknown, are business XXXX. within

April, negatively to month approximately closures, closed due year. of these the April to Even April with status operate nonessential increased Throughout certain markets, revenue branches last XX% by we in revenue approximately compared revenue. impacting construction's continued our with of X% our to

XX%. had commercial April of approximately growth sales large construction Our business

the approximately Excluding year. of was growth Royals to closed March for XX% branches, acquired of April sales of these last April sales approximately sales compared was had in to growth Commercial same XXXX, last and Alpha X%. growth Adjusting branch Services XX% sales year, compared

of March and XXX result closures, of employees the month As April. furloughed a during we branch

have we have by under Response been Additionally, Act, XXX Coronavirus impacted First benefit employees provided COVID-XX. the Families to who

and less expect states that of their branches improved to furloughed of steps than by the been towards recent revenue, state improve to most reopenings. XXX our already am employees some with nearly our of I our following work closures As today, reopening X% economic have brought activity, taking and pleased to back previously market of have this

supply our and environment pricing we during material price/mix our in the quarter. at continued first chain, Looking improvements saw the

both proactively we stable all have domestically, and supply to nearly our install or in not work pricing cost to ensure help We are are activities. of suppliers our experienced environment. any and continuing procurement chain with we customers products and Furthermore, sourced the disruptions a

financial Overall, XXXX we than the industry strong and industry housing the crisis. experiencing to the was XXXX growth healthier much prior crisis, the before COVID-XX is believe to

We local, the and in are market, national are regional we closely communication customers. monitoring our housing with constant and

changes cost modify model, our coming in allows adjust have to us necessary, quickly financial plans variable place if further quarters. high demand, structure and Our we in to to in the

While stabilizes. the to acquisitions have we have made we currently closing decided business, environment delay until large-scale not adjustments our to economic any proactively

Our diversification pipeline acquisitions geographic, of pursue product to market we and support well-run strategies. our and that end actively installers continue is robust,

while X more than strategies the end our decades, scope growth For enhancing our services, these footprint. our expanding of diversification installation and and geographic financial increasing strong have exposure performance driven market

existing starts locations branch During we our the product our new markets. XXXX and recession, service XXXX area as expanded offerings to of the in expanded housing declined,

past when we we As years, pursue better housing today and scale even XX increased decline. strategies has positioned over are our to outperform the market the these starts believe

markets. last the opportunity had in commercial the and end during addition, limited recession, In multifamily we

market. multifamily the business residential installation will downturn navigate a commercial Alpha Our help in our further platform in IBP single-family

During potentially demonstrating that housing continued and quarter, market more we markets. increase revenues of for year, the increased typical XX%, rebound a homes growth over will and term, end for previous commercial likely support need pandemic in believe and the increase Longer share these first gains the demand the a single-family multifamily is housing, XX% downturn. the respectively, quick affordable and not

prepared first have we my remarks, conclude results created. quarter and extremely pleased our with I'm that strong to platform So financial

period allow experienced balance through our cost strong IBP of variable long-standing high will and leadership customer diverse model with uncertainty. asset-light navigate Our and economic sheet, team, this relationships combined business to

thank thank to installers who to team, and representing personally Finally, hard the our I'd behalf your IBP leadership this I entire to recognize opportunity work of are day, our dedication. serving every On customers. your like efforts, take for at want you and we

like provide details over would first call I on to our turn the to quarter to overview, this With results. Michael more

Michael Miller

response review remarks crisis financial morning, our to COVID-XX and Jeff, strength my capital you, good on our quarter of Thank the balance quickly structure. results sheet first before and focusing our the and I'll prepared everyone.

improvement to in sales sales Net The of acquisitions. our year. period contribution the for a $XXX.X growth last from the record to quarter mainly driven compared price/mix, improvements product XX.X% year-over-year end recent and by million million increased was in $XXX.X and same customer first

in to $X.X million million prepared due the -- quarter COVID-XX that related remarks, facts by estimate we health due As reduced his Jeff was factors the first to to related mentioned the crisis. $X to revenue to

we our important Alpha are sales in not XX.X%. It that metrics business, to and price also Alpha, is commercial included note volume the at Sales large construction disclosed. increased

to margin administrative first profit prior first the higher during increased increased million from XX% to as were expanded health the basis, XXX a gross costs share. quarter that XX.X%, other period variable sales, our of $XX improved Adjusted XXX to a was primarily fluctuate offsetting our net year Profitability On the employee gross prior selling with care basis of income $X.XX costs GAAP higher over result and profitability. performance. Partially due quarter points and year per first which, strong or points as diluted quarter price/mix expenses basis a profit quarter. strong percent

the Our or adjusted to million income compared million diluted diluted $XX.X in quarter. year $X.XX improved $X.XX per to or share XX% prior net per share $XX.X

While restrictions COVID-XX pandemic across all reduced impact cannot and of of the higher net efficiencies on our we crews to costs related we the the sites anticipate we predict and on gross markets. stagger job adverse profit full income, laborers and as limit number as end

we adjustment expense why expect first XXXX most full This which on second This of impacts acquisition any recorded adjusted will we $X.X of expense profitability. a million. approximately approximately EBITDA that useful amortization believe $X.X subsequent of is noncash our result last measure year period quarter, expense is same $X.X compared million amortization continue and of year date, acquisitions. $XX.X for figure the Based with completed income, of million change acquisitions During quarter XXXX the to to our to as net the we million strategy.

first XXXX XX% tax our year was XX.X%, the expect a XXXX. and continue we of tax quarter, for XX% For effective full approximately rate to rate effective to

to million, EBITDA from to $XX.X result a the EBITDA period as our improved adjusted XXX of the the higher strategies. first from profit of XX.X% as gross an a year basis increase prior representing the million XXXX, of diversification of price/mix year. net points prior benefits Adjusted percent $XX.X of attributable For quarter in and improved XX.X% increased to revenue

the our overview on this to results, response to like pandemic. I cost opportunity COVID-XX and to talk With about take first quarter would our the structure initial

highly a structure. cost have We variable

our decline, As This expenses. are sales variable lower directly our the labor includes demand represent which installer of for revenue and and our our services volume. to cost to quickly expenses, sizes largest material our

upcoming reducing throughout expected and industry Recession, we the in our This for business the downturn. in our While us workforce continue Great to we has have great made will demand strides size in experienced of turnover our past during employee believe historically the the which levels high services. depths the even this for we to of makes at years, the easier cycle, experienced few our turnover it installer

costs, income employee-related our most cost Comprised predominantly revenue size of expense will Selling statement. expenses, but operating Consisting of next to is branch some our insurance selling on in employee have our such basis the will and lag expenses health will expenses extensively as variable monthly of item base expenses and revenue. lagging salaries, commission generally and administrative a and characteristics. facility expenses costs, costs, our variable the a decline least are on variable

reduce During basis. demand, reductions consolidation, expenses housing which initiatives, reduced hours through and a headcount similar would prolonged branch cost-cutting and in on worked, would administrative branch-by-branch a downturn look to we salary vary

productive, monitor affords housing on situation. and construction existing backlog further The depth our our impact throughout will and demand market-by-market breadth basis. of economic of evolving opportunity active the the assess decline and decisions end With our remain the us in cost-cutting to markets, the activity a which branches

travel, have executive our pay We increases eliminated and cost-saving nonessential taken officers suspended initiatives. for additional

reduction growth However, If a this will a decline it is would the opportunities the relatively as downturn were expected recovery, long-term longer significant our market likely less a cost deeper share cost-cutting plans. impact and in implement we with if rapid and to implementation steep deep diversification. necessitate be would to occur, of strategies more housing recession

our requirements detail. and let's Now more in liquidity, at look sheet balance capital

cash Our business operating model strong generates flows.

million operations prior million period a in year, to we the $XX.X increase. from XXX% March flow For the XXXX, cash $XX.X X-month compared ended XX, generated in

capital to Our business requirement model significant and is not our needs. expenditures, primary does capital require of asset-light amount working capital a fund

of sales. million convert we working at to $XXX.X had XXXX, of With XX, amount capital XXXX, million with short-term a excluding a $XXX.X expect At cash inventories March investments. XX, $XX.X and of we and in $XXX.X capital, in million of accounts cash million working to would March significant receivable decline

revenue at million, March finance X.X% expenditures while Capital last compared XXXX, end XX, capital of focused $X.X leases environments, and have $X.X approximately basis a leases XX decreased period product, installers to were at as investments to XXXX, strategies. year. fit diversification well-run on typical expenditures March million. and same market Capital total finance market points our capital acquiring we XX, were percent In that incurred the geographic our

as remains quarter, in the have pipeline robust until completed closing picture While clear. we additional X we delayed our acquisition acquisitions becomes economic acquisitions first and temporarily the Jeff mentioned,

stock million During quarter, remaining $XX $XXX the first million our we repurchased nearly million $XX.X of common program. stock and our at repurchase under

crisis, As the repurchase a decided have approved under program. our repurchases to of previously stock result COVID-XX we temporarily suspend

was $XXX.X March March to at was $XXX million total XXXX. million at net Considering at XX, compared approximately XXXX. December and our of XXXX. March $XXX.X XX, debt million December compared and debt At short-term XX, cash cash Total million to $XXX.X $XXX investments compared XXXX, total XX, December XX, million to XXXX, had we XX, investments short-term million $XXX.X at at XXXX,

of revolving which, cash current $XXX combined in our We us nothing on million the existing drawn flexibility credit, provides believe, line position, our with we environment. economic considerable have

uncertainty. diversifying the financial debt I and withstand our maturities period we've success am covenants. With extremely this considerable capital, with financial have staggering of our sources economic maturities we and our pleased XXXX flexibility recent limiting no of liquidity, strong significant until to debt had

will I Jeff that, back remarks. With call now for turn to closing the

Jeffrey Edwards

to prepared uncertain again employees thanking conclude our very our and their hard Thanks, during work, Michael. this for I'd IBP company to like commitment by once dedication remarks time.

if job for to well. recently our more tough a for and and always years you wasn't be done the over goes possible thanks it wouldn't success out you, Our

we uncertain, challenging customers on this As the has time. and focused are employees through our supporting more world become

up questions. open call let's for Operator, the

Operator

[Operator Instructions].

The question Evercore from comes of Trey first Morrish ISI.

James Morrish

definitely So start year-over-year the being me being or I that volumes on guess for and revenues the be first was place would to it a revenues flat basis SG&A, up. with higher

in costs was from much due tease a You kind little bit. wondering out of SG&A costs. us talked variable higher health profitability? profitability that for from and was I you could increase higher care variable that if to that greater year-over-year about How of

Michael Miller

is this Yes. Michael Trey, Miller.

costs, health But the So obviously, as of the well. the leverage actually are embedded quarter. associated variable notable were costs employee care contribution the expenses, the with variable G&A. have increased we cost in increases had would Without costs that those majority a in had SG&A slight X in

James Morrish

Is Got about in we likely can there forward quarters, few what demand a basis? Okay. Or how noticeably? accelerated on then think was to particularly it. least perspective. next the from with at a in basis, do increase And actually year-over-year pricing resi a that pricing? further you on on what pretty noticeably happened And sequential that then see fall going sequential

Michael Miller

Trey, Mike Yes. again. is this

to taken top not price/mix be really of conference think as such call the equation, into of Just continue into I have quarter to consideration our talked of fully efforts end year. going in of if fourth about the price/mix well, to see the year, quarter is that we fourth this on will, benefit even you clear, we get last been that this the first at quarter the

expect of through of half lapped of quarter of to Now forward, uncertainty have of price/mix back in is to couple that into the year. level the there and that have the the say, year how next sense initiatives, terms year, though, last the the environment in both wouldn't of a would going going quarters. going gains is the of this also out demand themselves same first in obviously, the I our the and beginning play over rest pricing situation the going considerable we

Operator

KeyBanc. of Zener Next question comes from Ken

Kenneth Zener

EBITDA high you you're given guys you SG&A, to to in XX% what, your what's mid if with XX%? that range the used -- contribution see I Would in think comment, XXs. Michael? to perhaps Is terms of it's happened EBITDA contribution, to nice It's say, correct, the

Michael Miller

Yes. Correct.

Kenneth Zener

lot you're toggle with you might what XX% giving higher understand a EBITDA between of Could creating of how you within really realizing more branches Could that's share through. you Obviously, us give lot. a impact labor of to efficiently changes a can feet make just little might X you guidance, be other kind kind before. through each little -- leverage? were But to just you just you can to open, able granular us of a branches. so help if behavior EBITDA bit? about were lower There's because we backlog by a how it go feel versus Just those not could physical of your revenue work

Michael Miller

the of terms more social in less that sold being distancing actually for G&A practices does a expenses. and cost than So of efficient times that cost doing labor at of start staggering it we're goods site the installers, impacts

given growth, current of So branches play -- it's and sales is our quarters. over be April environment. an the a sites, impact But revenue had that, to would strong predict compression some feel was margin that the gross how see next despite job that is Obviously, to same positive about margin. from quarter, going would fairly results of the expected. that but very we difficult from margin of we same have fact were we on which economic is perspective, growth, revenue this this how really branch gross time, again, then growth, the to to do sales revenue expect the the had X%, we expect adjusted growth our considering on same by efficiency XX% the of up would closed out at lack definitely But good couple we during branch

the multifamily revenue, backlogs our very of commercial of good total good represent the now heavy both very businesses. into we both businesses business, commercial XX% our strength in Those light and We commercial business. have and over and the also of feel about those visibility the backlogs the

any But associated yes, too it's particularly really the for going X period exactly all you going we're as what we is in with provide quarter, expenses. to So there's doing the noted, -- full of of impact that But haven't say be an guidance. some impact, practices early don't those we be time. on to to new

Kenneth Zener

business. I is about all I then regions you're A? ask comment heavy Obviously, that into that Could impacted there any commercial And have heavily the B, versus sounds Francisco, said. in impacting commercial i.e., did closure could headwind. your I was another like -- areas, exposure you installer about areas, Seattle, If XX%, regional outside cetera. not guess, there, talked same break Understood. you light, it their your impact, San Are of specific commercial et think, what regional you that

Michael Miller

Yes.

of is multifamily. breakdown commercial the just commercial all XX% roughly, And in deemed heavy not is was business, of much yes, construction So was commercial. commercial our business commercial the it is of About so XX% heavy business, that it and the X% markets that but XX% essential. light heavy light

we visibility terms into of I record so heavy did down. in to get commercial there. have frankly, and We slow Quite though, the had certain bids jobs in jobs have trying a some submitted. they terms of faster jobs there we high and backlog that had said, is takes business, of in speed actually there. April actually, And the get definitely Alpha, the number certain month as Now up done work completed, the puts

Jeffrey Edwards

states in were Light that commercial impacted fact, closed. in was,

Michael Miller

Absolutely.

Operator

Jefferies. The of Ng next is Phil from question

Philip Ng

read I may places with Pennsylvania, weeks? guess of some last down progressed orders in these that new you process in like have how of can being update have give the Michigan reopened, few Georgia? us states they're and any and an shut the And on

Michael Miller

for or I you're about the builders? talking mean, for us if orders orders new

Philip Ng

you. orders for New

Michael Miller

Yes.

but some are So far, the in encouraging. indications XX% the week. I about would revenue sales just that that's this would I obviously, have say those April -- that talked of impact locations started we've terms up say very back and But mean, there. in May of initial We're active, to I so

Philip Ng

as well? well. then activity for as color Just account And around does bidding want a that that little more

Michael Miller

Yes.

the them. level closed, side. good side, particularly to I commercial the see as jobs of from we're mean, all So were bid residential And mentioned, states on on in bidding that to salespeople, I continuing continued our

During activity the and terms of month Alpha bids they a of their month that of submitted. in April, terms bidding number the record in had of

So decline a we April, single-family of there's in growth still there. the at during ignore fact feel order But there volume an perspective. was clearly, can't the that from month good we that builders unprecedented

starting I see should year, order it trends, of significantly that positive in March growth, that see trends was we're say in to to it April growth say, I and So it's down terms January would but that starting where and And where alone we're in from let still positive decline. order last was February. even from

Philip Ng

then Got progresses give as let's Michael, costs kind in think you. on process how of may kind decrementals, the in terms the incremental playbook in about us were the of early to through And year. over say, how enough kind how about that course of color of should this we this you of progress Any think and year? you some color downturn terms the

Michael Miller

just during to But again, XX%. crisis surprised say we we that, would wouldn't as higher. similar be likely that supported we the decrementals had the be the that initially mean next I branches of normal that and right? carrying XX% especially I -- had things have cost, higher environment, branches than to -- the staff that closed, one, basically So a but decrementals initial right? initially would of to And still develop be the expect saw will locations, because decrementals probably of over I the will we cost, will, or were decrementals the the incrementals administrative we in the most of quarters. higher those Yes. obviously the within still part you have couple of So branches revenue, if of we no mean, if be

However, management And have all one as to over of of that's working that together going we, the depend important for been upon team, is volume. two decades. that is a things really I think

time up consistently went this Recession. opportunity market recessions, through multiple the through well -- where our of an a business manage through or including to Despite market managed as the market XX% that, the in grew of opportunity a outperformed and company, markets, we business We've we XX% And Great our away. some share.

sales were In peak during Great fact, the trough, recession to down XX%. a was down that XX% compared to, from our market again, only

have the but ability a what times, housing lot our in to ability of to during market through very the most in we're so confident to it seen, much again, in our to confidence effectively side this time, to which clearly manage And be stronger difficult we this other company. come this through of remains a happens manage -- the of and

Jeffrey Edwards

is game solve of I'd -- yet. that we're a everybody haven't I dealt can't that they and to as the a a mean and too. you dealt know problem say like being probably mean just that Jeff, follow or pretty come I being asked on the as know. into don't already This you cards problem I group, play knows. much think yet focus problem really hasn't cards good exist. We listening don't It's solvers. kind of But pretty

this itself. soft else waiting worse, manifests maybe So everyone pocket, like spot how we're to or of air kind see just

Philip Ng

Got it.

me. just Okay. one for last That's And helpful. one

of employees good back. you're some see some your furloughed to bringing of You've and them

it IBP does comes for demand specifically? as bottleneck kind you Do long any how And take terms curious, in crew to Just a that back trade bring back? of as potentially thoughts of for the in see entire construction?

Michael Miller

day when a come it's us, for they mean, back. I

Jeffrey Edwards

it. Really of All immediate.

Michael Miller

true Yes. I to bring would people ability that's back. of of It's immediate. suspect most their trades terms in And

-- space this you their protect sort the companies of if to I have done time. employees, in things large think will, during to most

employees. for One we of things those paid that furloughed did the we is of for month April, benefits the

we're So asset, all our very important hard people. our most think working I protect to

Jeffrey Edwards

environment too. trades. Recession, our it rare again, even experience employee was Jeff us it's hire for is has during and that a new this Great Well, But in to in -- the a extremely normal

and end are up them. hiring So trained completely we people unexperienced that

start So based go-forward the still that with there trades, but in with, some of be on thought about industries. pressure, it could just basis, to some of a at but inexperienced potentially that labor speculate market other less the looked the dealing and can't that even employees pressure on on I fallout for assuming we're less other we've

Operator

question RBC. next Our Dahl, is from Mike

Michael Dahl

of homes question in I there and a of should build mix backlog to we to the of end, guess moving just it, lack things about the volume order, but we when XQ, be differences is, wanted not clarity end. looking be look as a construction, of kind be these looking a I at low there unclear at under the some or a ask regional when pieces considering whether around homes price/mix with like or standpoint spec will on sustained, versus question is into lot you're you're difference, from seems of XQ? high to either something

Michael Miller

wanting to seeing mean, the comprised a affordable I to April. were has of deliver think spec-driven the we we at is it's affordable market with the of we have housing growth started builders and before lot the that segment. of backlog -- trend historically all in market were is Clearly, the that I seeing terms this level. more trends terms very that quickly And for houses that in ready of that consistent in think been or backlog backlog a March

the inventory, come the we as we're amount of expect would and them which environment. again, will demand we're of rate back, in to would is we particularly very going that and all into given pickup know, -- builders the expect strong speaking, would the that very and when of builders, see signs picking some expect stimulus very orders start that's that starting -- that to combined financial demand. in Now activity -- we at The that economy, assuming generally the up are homes meet are, tight, their condition, low with particularly to

So we'll see.

Michael Dahl

and is then still than something guidance. guess take? I second That's kind lag of Or Okay. being shape decline on can pronounced helpful. and opening in about clarity going again, a there Is given stands it But the XQ of question, of so providing less in this you're not some understand issue as give the just there. commentary, through you lower pressure is but gradual for a of My really I that more currently, you XQ? XQ more the XQ? talked kind any it more to guys XQ XQ, you be, in would that, the impact

Michael Miller

to land it's relatively It's back to I get how late really late, quickly just now, install us house. orders can how relatively to our timing take for come ready come our just quite uncertain say, builders in convert services. installed them to and get right because and products mean lots impossible and it many will build frankly, we a to quickly of the

again quickly is -- what to we it demand. the upon the is start builders So up ultimately dependent sizing really believe can how

the what is you I at are and we'll a able and see be and numbers order after So growth July. get question give think better of the sort we through order much second second quarter into the builders to that through absolute answer to we like quarter

Operator

question next Susan Sachs. Goldman Our is from Maklari of

Susan Maklari

and that to into the some deeper builders in. you bit heavy And One results. that's your the the trends are that to as you publics you're the from if those I of mean regionally in for private talk could Midwest unique just maybe that and that running have things and of seen there? maybe especially what there's a what Can versus aren't the terms think differently privates regions what is exposure some any publics, of seeing color you've

Michael Miller

during April not deem Northeast. construction that So the in March and and the essential majority were did were and Midwest of closed the the states

just not not I general wanting -- those of obviously, of have So that had to from I think of have some builders public stance during April. a that month projects. perspective, start not outsized in as the same terms private an taken regions, on the say have the builders been particularly would most impact

been kind belief private they're of have aggressive the more builders bit think there's work hard a little I stay to ahead their be And to to in strong of terms of that continue bounce curve. think going back in orders. I going the a to

out, next Now for impacted. that are significantly when starts be orders quarters, the couple of Census data to coming we mean, being going doubt see I said, there's that and growth Bureau no the

Jeffrey Edwards

kind But interestingly some our those that states Lakes of were enough, located, and of were predominantly England, where Michael most with state, exception are of seasonal Jeff. This closed obviously also. mentioned, the New of as is they Great markets Washington the

Michael Miller

Yes.

Jeffrey Edwards

that quarters of year. into the that for up do work they usually So they where the are -- moving do on, the despite being going what's the end predominance they

Michael Miller

with which for out very mean, Yes. started -- winter, mild Interestingly, it out quarter beneficial was started as well. I the a very those markets

Susan Maklari

And another question. then Okay.

leverage any end this can that convert especially Just of a capital quickly maybe can you you being than over? we or currently expected? thinking should of about? kind kind more And downturn to be And a that terms if talk to up what's is deeper working your in target sustained How ability there does of delever?

Michael Miller

Yes.

a is downturn, significant April XXXX. We it time. on is any debt So And if look this then maturities mean, debt just net would basis. at look debt next in our don't no and prepay sense. make that significant maturity want more have We a And to we we preserve doesn't I to until deeper delever of to sustained XXXX. liquidity.

we under net through now almost are that to throughout the So happens that would leverage improve sales right downturn. able which if the working expect we of net any reduction immediately, continue course one our our to declining, and capital, be would is leverage in Xx,

Operator

Okay.

SunTrust. is Hughes Our Keith from question of next

Keith Hughes

on of questions. point couple still quarter the which price-driven outstanding, the quarter, in numbers? that A more in this was price/mix One first is at the

Michael Miller

Yes.

Keith Hughes

continue And will on mix trends do mix do orders? going Or you you expect, to you given based the the on expect trough see into, what same we're change?

Michael Miller

I'm question. That's Yes. great asked a glad you that actually it.

would -- a to the actually but service we maintain they We they products. that prolonged to that expect, sales continue that benefited that, if case. of that how that those would continue benefit of mean, service would plays Recession, not that radius that higher absolutely expect Great a would their branches, downturn expand from the in locations, level but all aggressively other around would again, only is the our the during from in branch sale we I depending area expect would within of in even we and order yes, push to also the this So terms we more upon out, this factors as well

Keith Hughes

final Okay. question. And

Michael Miller

-- just on complete me to that. let -- just And

the product benefit, lower rate are the before. sales Just for of But we've much down price/mix insulation. higher talked growth brings several than those because job other times other this everyone's products those about prices

Keith Hughes

Final quote work is on Alpha? on quotation good a in -- activity site their you're question news how long Okay. until lead doing Alpha, actually job the on March for How and the typically, April. on

Michael Miller

be that's into, it mean XX call on backlog it, we're or the the really even I in have of job before quoted. on But visibility to being obviously, months longer visibility, on sometimes, we worth Alpha quarters three revenue It four good site. depends, speaking, of can the generally job terms side. very

Keith Hughes

Okay.

any several from up seeing cancellations quotations not ago? You're come months

Michael Miller

very few had X be with related. were honest cancellations. maybe X jobs and canceled, facility all -- think to or you, seen they've And they We've we've I fitness

Operator

Our next question Seldon Bank. Clarke is of from Deutsche

Seldon Clarke

April? just Can talk bridge numbers April organic trending are sales some those gave of just help about for Or you in that how volumes versus us price/mix? to you

Michael Miller

than stronger still We're price/mix volume. seeing

Seldon Clarke

right. All

year-over-year? organic an basis, on volumes So down

Michael Miller

No.

Seldon Clarke

Okay.

about a but think slowdown go middle I slowdown higher it will think normalized upcoming a slowdown the out growth typically how relates M&A in or situation in coming volume. guys longer-term you How relative or pipeline environment? you to quality a of the Kind of try more entire do modest to So impact the just do you opportunities after question some the this landscape? know or of the as companies, to M&A.

Jeffrey Edwards

is, most mean companies And general, slight may is to worked spoken a recognize kind downward say multiples. cases just probably supports honestly, can't be a purchase go they most and they seeing the terms markets. -- And I to pull of for what position adjustment see basically people And that in I through what many where we've away. assume on guess that it seller kind This the that a there's and But business. the not a nor Jeff. always deal that. price done a been as this I cyclical talked they a of back ever opportunities in We're we if in with business of decades, to market. I mean, that have we've buyer's think needs would I down of becomes have doesn't it get not and

I think the we're, had profitability. lot point, with of a and growth business, lot have and that background at lot history this a strong of have of companies in a impressive talking

of in a little with. last terms We ultimately deal a will clear economy potentially we I rest spot. the different economy spot different that actually time, things. some with number at spot clouds bit. know bit maybe a and about was point, different little of tailwinds a more interest think going to the rates lack housing So that And will it the obviously -- what than a of We'll it's entirely the lot in is feel than market the and a an of very of product maybe other we're

it's the active And that at primarily residential, not, residential that market. point, hoping when we'll get we not in we're again. So that it's know pronounced

Michael Miller

from it uncertainty tied of borne a by a the that an including what's signing were to too, say, perspective, large would I And the earn-out is so Yes. component to structure surrounding that deals we're some up the new that has seller. come

Operator

from of Inc. comes question Stephens, Grooms Trey Next

Noah Merkousko

on Merkousko Noah for actually is Trey. This

see last on on again? early, bit what Just you little quick might question started it be M&A that the follow-up I a you understand in a market but guys from before getting would to M&A. too want active

Michael Miller

improvements. of internal. there's maybe I don't to continue to monitor of just addition in X information, I the builder know, even sequentially, kind weeks mean, going traffic sales. we're where been X, that's information it's that, in the to builder and been available probably both now of -- kind terms They But

better to XX to So recover, obviously, it regard. the I key about lot are XX things. And I if in going days a that continues feel think think next to we're

Operator

have from we Next Global is Securities. question Garner with Reuben Seaport

Reuben Garner

now. been answered. Congrats questions start have guys, Benchmark quarter, Most my of and the on with good Reuben actually It's to April.

couple the you work mean, Just of of referenced, mean that your back before months' orders a you you one I orders follow-up, horse, never water then don't the out. period of weakness? I event? Just more quarter the to builders recover? that over? the -- of before plays you backlog third Is long those maybe see but really orders your that and is about -- that sustain see next you've can got hold X, the a side, point how kind dead weakness can need if of months, in worth that of is builders how for I'm dynamic X, beat to just or see the coming signs business comment that talking single-family how that X a the us tread understand you the from the kind get you about help And is

Michael Miller

whole to Because has in speaking, trades of happen And that get we and going growth to there. unprecedented was in bunch generally to we of take believe us electrician that, there. house to those time point to the need get Yes. to I for some come take installation to houses, that we and keep show comes work. get and mind, do has ready just to there's house And that stuff the to just trying time although decline are the that to the before order be in to orders the for be given our done. what plumbed back orders. and get be framed it's needs a a going will and the convey, mean, level to we're that just going assuming more back starts, expected It's data

is for available growth, construction of But encouraged the stages, new the obviously, feeling a good accelerates And near-term that installed. well-capitalized able we've it work is backlog to to be maybe some support a there order will lot our that are of it's us do lends us the continue very that but right feel going various on. So to of of mean, very which now. homes I single-family not builders already we all take like we're business. case, if all to -- for think ready and us in and us, be the that of get advantage

Reuben Garner

luck through this And navigating crisis. good Great.

Operator

Speer Associates. Justin from is question & Zelman Next of

Justin Speer

I did volume the sequential a quarter. and Was volume? in in share just price function the the one, that a number trade-off you some of deceleration guess Just quarter? of volume seed intentionally

Michael Miller

fact talked we over do But volume. about It value favor was that customers definitely price -- we've with combination. service, the a our we and I always mean working that that our million the volumes had that definitely have of million impact. $X were we not in we by remarks, the $X.X of the prepared COVID-XX to impacted, mentioned because as revenue did

saw about perspective, where very doing perspective the from market we customers share large were quarter quarter we from April, month good them. were perspective, building outsized from we our feel the of a that in We and So that of a customers and actually and we the with. the work in important value even some service in provide our most the they with continue to growth

Justin Speer

What were your trends volume trends, year-over-year month quarter? by in the

Michael Miller

February, negative. So March volumes where the it was solid in turned and and they January were

Justin Speer

that's your nonresidential across if could that business, certain book then well, to maybe provide backlog were parts certain you stepping into that about going for maybe there the you channel. big in-vertical least of affect how just to you of are filter that areas you? pandemic I starts nonresidential this activity how back, how going any is ahead, pulled And at picture, XXXX were observations trending now? you delayed, know And then think about the think if they're -- funnel,

Michael Miller

that the those really uncertain. event commercial the commitment can office light at very stadium particularly unprecedented encouraged grow I facilities Alpha earlier to record commercial right mean are the is like going everyone that we'll business, of and influence we things a All I It's is this, the continue for with seeing working it's is to activity that us. at hard say of And -- to fitness the that very difficult good space. exception commercial all update construction -- I've Q&A. -- on heavy very strength, of employees now, just to continue feel It's we're this mentioned bidding question. levels. employees predict our very That's the how really, strength is to our and in and in the business by strength continued business, and and both the

Justin Speer

later maybe the nonresidential? ledger, of think in initially nature residential the of more that terms in M&A, guess, visibility the the do cycle perhaps I given of so in channel, for towards think strings one the just terms that versus opportunities will do So side little you bit purse that of nonresidential the you with a get another? you Or coincide M&A area

Michael Miller

said a the structure some as working bringing nonresidential prioritizing deals have but risk the residential focused nonresidential, we now earlier, not the can with over seller. of on you always mean, key where definitely of we deals. We're very is And on put that doing with that on very are they we to feel I ways our team there But we afraid to we're back to opportunities right downturn. add our existing experience the And managing it's people how manage people. a businesses Jeff our effective confident that to team, know and high-quality during And effectively, job as said do earlier, both team high-quality will this. through

Justin Speer

question the last then And me. for

rate? if element think it, SG&A Just quarter. million items onetime that about first to starting in I seasonal repeat that there total first the to thinking don't we on $XX as the there's starting run the I of in progression terms mentioned the in I roughly care in about use a trends. that is know of and good to number rate sequential expense? run but a from SG&A run know Is seasonal at are the, the work know health -- won't like, it's quarter you items. rate some that

Michael Miller

the contained as as being a our We variable employee-related Yes. of mean, are we I on don't think costs that that in any side, in lagging of like remarks, expense is prepared fixed sales. of mentioned cost large will most the our I mean, selling portion but G&A. with fluctuate cost, to

G&A upon revenue. would any depending in run how variable this have rate, lagging to So plays out, that the decline greatest

Justin Speer

Okay.

with roughly about kind that the of right of as the So think number we and phasing G&A expense is sequential the million $XX to start revenues? progressions

Michael Miller

reasonable. It's

Operator

BTIG. final Our Ryan from is question Gilbert of

Ryan Gilbert

volume if that's states from a there's that previously were little like Just down sounded first wondering It just driving shut volume in April. anything I'm that else picked up or bit if activity And in lift? question. back

Michael Miller

Yes. will. It's if definitely we our nonclosed April, had markets, driven although it some driven -- the really you wasn't our in in revenue by that. growth so volume still so was closed, It or XX% of by

-- if But with we region if volume record I California the of were markets sales those due definitely and south are actually I was markets the in we very continued from had markets. all you builders, markets, on strong. of performance our -- particularly it continue So record west, had look footprint mean, at We've perspective. focusing that to have had construction those or was have have those surprisingly, those none that closed -- in those essential some record sales, And continue to believe markets. deemed because of not, in be and And to see Bureau's Washington, to this definition, market. mean, exception at in look a Census good is we impacted the south

come the I things at and point fact market us has of help So to back housing least that some pretty the we it's do economy, think quickly. to to speak overall housing potential -- market, this that the can't the from that that the the but

Ryan Gilbert

data encouraging Got it. points. Yes, that's

of the on what an already to is construction started their that's stone Looking business, do commercial the you of horizontal vertical development? have idea percent versus backlog

Michael Miller

of ultimately project and committed me, percentage those make work all extremely careful to bidding and right but been current that very mix. about sure nothing -- on funded being that we've of historically, But have that revenue. get so now little have projects work all that I been a had there's but backlog and -- And our into on the in we're historically would front we're don't already of it's have historic converting that I not problem our may also to bidding environment, canceled. on but say

Operator

the to session. our turn Edwards Jeff concludes any over question-and-answer to This closing Mr. go for Please like conference ahead. I'd remarks. now

Jeffrey Edwards

your quarterly our Thank again. and Thanks to call. you for forward next questions, look I

Operator

has now concluded. Thank today's for conference you presentation. attending The

disconnect. You may now

Installed Building Products (IBP) 8 May 202020 Q1 Earnings call transcript