Installed Building Products, Inc. Q4 FY2024 earnings call

Management Statement and Operational Highlights

• 2024 Highlights: Record revenue and profitability, organic growth in residential end markets, net income and EBITDA growth.
• Acquisitions: In 2024, acquired 9 businesses with combined annual revenue over $100 million. Fourth quarter 2024 completed 3 acquisitions. Outlook for 2025 is strong for acquisitions, expecting at least $100 million in annual revenue.
• Dividends and Share Repurchases: Board approved 6% increase in regular quarterly cash dividend to $0.37 per share and annual variable dividend to $1.70 per share. Repurchased 383,000 shares in Q4 2024, total repurchases in 2024 $145 million. New stock buyback program authorized up to $500 million.

Segment Performance

• Installation Segment:
  • Fourth-quarter consolidated net revenue increased 4% to $750 million, with same-brand sales growth of 1%. Full-year 2024 consolidated sales growth was nearly 6% and same-branch growth ~4%. Single-family sales growth was supported by diverse builders and strong customer relationships. Multifamily installation sales had same-branch growth over 6% in 2024. Commercial sales same-branch improved modestly in 2024.
• Distribution and Manufacturing (Other Segment): Lower gross margins, higher growth rate weighed on overall gross margins, but complementary products offset some of this margin drag.

Guidance

• Acquisitions: Expect to acquire at least $100 million of annual revenue in 2025.
• Dividends: First-quarter 2025 dividend increased by 6%.
• Tax Rate: Expected effective tax rate of 25% to 27% for full-year 2025.
• Single-Family and Multifamily Outlook: Single-family starts in 2024 up 7%, 2025 demand relatively stable; multifamily units under construction expected to decline 20-25% over 6 months.

Risks

• Market and Regulatory Uncertainties: Housing affordability challenges, uncertainty around regulatory environment, immigration, and trade.
• Competition: In a softer market, maintaining pricing is tougher, competition may lead to price concessions.
• Inventory and Weather Impact: First quarter 2025 revenue negatively impacted by weather events, affecting construction sites.

Question and Answer

• **Q: As you look into the new year, what are you expecting in terms of, you know, multifamily, single-family work? What's the kind of the Installed Building Products, Inc. view of those markets?

A: Michael Miller discussed multifamily units under construction and single-family start expectations. Jeffrey Edwards talked about single-family start growth expectations.

• **Q: Just touching following up on Keith's question about multifamily. Just was curious about if you could elaborate a little bit more on the growth plans you have.

A: Jeffrey Edwards and Michael Miller discussed multifamily growth plans, market penetration, and expansion opportunities.

• **Q: Your AC was fine, but it was a little higher than we were expecting. I'm just wondering if there was anything worth calling out on the SG&A front this quarter.

A: Michael Miller discussed SG&A leverage and expectations for SG&A in 2025.

• **Q: Regarding M&A, would you characterize the pipeline and opportunities set in front of you today versus six to twelve months ago?

A: Michael Miller discussed M&A pipeline and opportunities.

• **Q: On the gross margins. Michael, you mentioned in your commentary that there were some headwinds from the distribution and manufacturing ops. Can you just talk a bit more about the dynamics that are coming through across the various areas of the business A: Michael Miller explained the dynamics of gross margins, including lower-margin distribution/manufacturing segment and offsetting complementary products.
• **Q: In this environment, cash flow is still pretty strong. How do you balance between M&A versus buying back your stock, returning cash back to shareholders?

A: Jeffrey Edwards discussed capital allocation between M&A, share buybacks, and returning cash to shareholders.

• **Q: I just wanted to elaborate on spray foam a little bit. So you previously called out spray foam trends that were kind of expected to continue into this quarter. Just wondering what you're seeing on that side.

A: Michael Miller discussed spray foam trends, pricing, and outlook for the second half of 2025.

• **Q: For some reason, it seems like you guys drank a disclosure serum this morning. For some reason, it seems like you guys drank a disclosure serum this morning. For some reason, it seems like you guys drank a disclosure serum this morning. Can you give us kind of like some concept around why you have six months. And while you're doing that, given your national footprint versus much more regional builders, if you could expand on regional comments A: Michael Miller discussed the six-month timeline for normalizing multifamily units under construction and regional market performance.
• **Q: I was hoping you could kind of update us on the build-out of internal distribution capabilities, kind of expansion plans, in 2025, and know that has been kind of a margin drag in here in 2024.

A: Jeffrey Edwards and Michael Miller discussed internal distribution capabilities, progress, and outlook for margin impact