Installed Building Products Reports Record Results for Third Quarter 2017

Installed Building Products, Inc. (the "Company" or "IBP") (NYSE:IBP), an industry-leading installer of insulation and complementary building products, today announced record results for the third quarter ended September 30, 2017.

Third Quarter 2017 Highlights

• Net revenue increased 31.0% to $295.2 million
• Net income increased 4.0% to $12.0 million
• Adjusted EBITDA* increased 33.2% to $39.3 million
• Net income per diluted share increased 3.0% to $0.38
• Adjusted net income per diluted share* increased 29.5% to $0.57
• In July 2017, acquired Energy Savers an insulation installer in Kentucky and annual revenues of $2.0 million
• In September 2017, acquired Red Rock Insulation, an insulation installer with locations in Nevada and Utah and annual revenues of $6.0 million
• In September 2017, acquired Astro Insulation, an insulation installer with locations in Illinois and annual revenues of $7.0 million
• In September 2017, acquired Protective Coating, an installer of level rock floors in Wisconsin with $1.5 million in annual revenues

Recent Developments

• In October 2017, acquired A+ Insulation, LLC, an insulation installer in Kansas City and annual revenues of $3.8 million
• In October 2017, acquired Building Solutions, LLC, an insulation installer in Oklahoma with annual revenues of approximately $2.0

"Record high sales for the 2017 third quarter benefitted from strong residential sales growth, the contribution of recent acquisitions, and a favorable revenue mix and pricing environment,” stated Jeff Edwards, Chairman and Chief Executive Officer. "Hurricanes Harvey and Irma impacted sales in several Texas and Florida markets as a result of temporarily closing locations, and the effects the storms had on the public infrastructure and our customers’ jobsites within these geographies. The hurricanes also impacted profitability by reducing efficiency and productivity, as well as the direct costs associated with paying employees while our locations were closed, and the costs associated with preparing for and cleaning up the damage caused by the hurricanes.”

Mr. Edwards continued, "IBP continues to achieve higher year-over-year sales and earnings, as a result of the growth platform we have created, and the continued strength within the U.S. housing market. IBP continues to attract compelling acquisition opportunities and, since June of this year, we acquired five insulation companies representing a combined $20 million of annual revenues. Our pipeline of potential acquisitions remains strong. As we enter the fourth quarter, we continue to expect 2017 will be another year of record sales and earnings.”

Third Quarter 2017 Results Overview

For the third quarter of 2017, net revenue was $295.2 million, an increase of 31.0% from $225.4 million in the third quarter of 2016. On a same branch basis, despite the impacts of Hurricanes Harvey and Irma, net revenue improved 9.4% from the prior year quarter, with approximately 40% of the increase attributable to growth in the number of completed jobs, and the remainder achieved through price gains and more favorable customer and product mix. Same branch residential revenue increased 11.7% as compared to an 8.3% increase in total completions.

Gross profit improved 27.2% to $85.6 million from $67.3 million in the prior year quarter. Gross margin declined slightly to 29.0% compared to 29.8% in the prior year quarter, primarily due to the production disruptions Hurricanes Harvey and Irma had on efficiency and productivity, as well as a new stock-based compensation program for installers. Adjusted only for the recently introduced stock-based compensation program, gross margin would have been 29.2%*.

Selling and administrative expense, as a percentage of net revenue, was 19.1% compared to 19.8% in the prior year quarter. Adjusted selling and administrative expense, as a percentage of net revenue, improved 110 basis points to 18.3% from 19.4%*. Higher net revenue in the 2017 third quarter more than offset the higher costs needed to support the company’s growth.

Net income was $12.0 million, or $0.38 per diluted share, compared to $11.5 million, or $0.37 per diluted share in the prior year quarter. Adjusted net income was $18.3 million, or $0.57 per diluted share, compared to $13.9 million, or $0.44 per diluted share in the prior year quarter. Adjusted net income adjusts for the impact of non-core items in both periods.

Adjusted EBITDA was $39.3 million, a 33.2% increase from $29.5 million in the prior year quarter, largely due to higher sales. Adjusted EBITDA, as a percentage of net revenue, grew 20 basis points to 13.3%, compared to 13.1% in the prior year quarter. The company estimates that Hurricanes Harvey and Irma impacted Adjusted EBITDA by approximately $1.5 million to $2.0 million during the quarter, as a result of branch closings, and lost efficiency and productivity when branches reopened following the storms.

Conference Call and Webcast

The Company will host a conference call and webcast on November 3, 2017 at 9:00 a.m. Eastern Time to discuss these results. To participate in the call, please dial 877-407-0792 (domestic) or 201-689-8263 (international). The live webcast will be available at www.installedbuildingproducts.com in the investor relations section. A replay of the conference call will be available through December 3, 2017, by dialing 844-512-2921 (domestic) or 412-317-6671 (international) and entering the passcode 13672595.

About Installed Building Products

Installed Building Products, Inc. is one of the nation's largest insulation installers for the residential new construction market and is also a diversified installer of complementary building products, including waterproofing, fire-stopping and fireproofing, garage doors, rain gutters, shower doors, closet shelving and mirrors, throughout the United States. The Company manages all aspects of the installation process for its customers, including direct purchases of materials from national manufacturers, supply of materials to job sites and quality installation. The Company offers its portfolio of services for new and existing single-family and multi-family residential and commercial building projects from its national network of branch locations.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, including with respect to our financial model and seasonality, the impact of Hurricanes Harvey and Irma, demand for our services, expansion of our national footprint, our ability to capitalize on the new home construction recovery, our ability to strengthen our market position, our ability to pursue and integrate value-enhancing acquisitions, our ability to improve sales and profitability, and expectations for demand for our services and our earnings for the remainder of 2017. Forward-looking statements may generally be identified by the use of words such as "anticipate," "believe," "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 factors discussed in the "Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, as the same may be updated from time to time in our subsequent filings with the Securities and Exchange Commission. Any forward-looking statement made by the Company in this press release 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.

*Use of Non-GAAP Financial Measures

In addition to the financial measures prepared in accordance with U.S. generally accepted accounting principles ("GAAP”), this press release contains the non-GAAP financial measures of Adjusted EBITDA, Adjusted EBITDA margin (i.e., Adjusted EBITDA divided by net revenue), Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted Gross Profit and Adjusted Selling and Administrative expense. The reasons for the use of these measures, reconciliations of Adjusted EBITDA, Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted Gross Profit, and Adjusted Selling and Administrative expense to the most directly comparable GAAP measures and other information relating to these measures are included below following the unaudited condensed consolidated financial statements. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for IBP’s financial results prepared in accordance with GAAP.

Reconciliation of Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income and Adjusted Gross Profit measure performance by adjusting EBITDA, GAAP net income and gross profit, respectively, for certain income or expense items that are not considered part of our core operations. We believe that the presentation of these measures provides useful information to investors regarding our results of operations because it assists both investors and us in analyzing and benchmarking the performance and value of our business.

We believe the Adjusted EBITDA measure is useful to investors and us as a measure of comparative operating performance from period to period as it measures our changes in pricing decisions, cost controls and other factors that impact operating performance, and removes the effect of our capital structure (primarily interest expense), asset base (primarily depreciation and amortization), items outside our control (primarily income taxes) and the volatility related to the timing and extent of other activities such as asset impairments and non-core income and expenses. Accordingly, we believe that this measure is useful for comparing general operating performance from period to period. In addition, we use various EBITDA-based measures in determining the achievement of awards under certain of our incentive compensation programs. Other companies may define Adjusted EBITDA differently and, as a result, our measure may not be directly comparable to measures of other companies. In addition, Adjusted EBITDA may be defined differently for purposes of covenants contained in our revolving credit facility or any future facility.

Although we use the Adjusted EBITDA measure to assess the performance of our business, the use of the measure is limited because it does not include certain material expenses, such as interest and taxes, necessary to operate our business. Adjusted EBITDA should be considered in addition to, and not as a substitute for, GAAP net (loss) income as a measure of performance. Our presentation of this measure should not be construed as an indication that our future results will be unaffected by unusual or non-recurring items. This measure has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Because of these limitations, this measure is not intended as an alternative to net (loss) income as an indicator of our operating performance, as an alternative to any other measure of performance in conformity with GAAP or as an alternative to cash flow (used in) provided by operating activities as a measure of liquidity. You should therefore not place undue reliance on this measure or ratios calculated using this measure.

We also believe the Adjusted Net Income measure is useful to investors and us as a measure of comparative operating performance from period to period as it measures our changes in pricing decisions, cost controls and other factors that impact operating performance, and removes the effect of certain non-core items such as discontinued operations, acquisition related expenses, amortization expense, the tax impact of these certain non-core items, and the volatility related to the timing and extent of other activities such as asset impairments and non-core income and expenses. To make the financial presentation more consistent with other public building products companies, beginning in the fourth quarter 2016 we included an addback for non-cash amortization expense related to acquisitions. Accordingly, we believe that this measure is useful for comparing general operating performance from period to period. Other companies may define Adjusted Net Income differently and, as a result, our measure may not be directly comparable to measures of other companies. In addition, Adjusted Net Income may be defined differently for purposes of covenants contained in our revolving credit facility or any future facility.

INSTALLED BUILDING PRODUCTS, INC.
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
ADJUSTED NET INCOME CALCULATIONS
(unaudited, in thousands, except share and per share amounts)

The table below reconciles Adjusted Net Income to the most directly comparable GAAP financial measure, net income, for the periods presented therein.

Per share figures may reflect rounding adjustments and consequently totals may not appear to sum.

The table below reconciles Adjusted EBITDA to the most directly comparable GAAP financial measure, net income, for the periods presented therein.

¹ U.S. Census Bureau data, as revised

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