Installed Building's (IBP) Shares Up on Q1 Earnings Beat

Installed Building Products, Inc. IBP reported better-than-expected results in first-quarter 2020. Both the top and bottom lines not only surpassed the Zacks Consensus Estimate but also grew impressively from the prior-year quarter, backed by strong end-market demand.

Shares of the company jumped nearly 7% on May 8, post solid first-quarter performance.

Despite being hurt by COVID-19 crisis, 90% of the company’s business remained operational in the first quarter, as construction in these markets was deemed essential. However, limited number of laborers on a jobsite and social distancing practices impacted its volume and efficiencies across single-family, multi-family and commercial end markets.

Inside the Headlines

The company reported adjusted earnings of 78 cents per share, which surpassed the consensus estimate of 62 cents by 25.8% and grew 52.9% from the prior-year period.

Installed Building Products Inc Price, Consensus and EPS Surprise

Installed Building Products Inc Price, Consensus and EPS Surprise

Installed Building Products Inc price-consensus-eps-surprise-chart | Installed Building Products Inc Quote

Total net revenues of $397.3 million topped the consensus mark of $382 million 4.1%. The said figure increased 16.1% on a year-over-year basis. On a same-branch basis (75.1% of total revenues), the metric grew 12.1% year over year compared with 7.4% a year ago. Single-family sales grew 11% from the prior year. Single-family same branch sales growth also increased to 5.9% from the year-ago period.

Sales in the Residential business rose 14.2% year over year. Residential same-branch sales were up 9.7% from the prior year, attributable to price gains, and favorable customer and product mix. Volume declined 0.2% from the prior-year quarter, partially offsetting the 12.1% growth from price/mix. Large commercial construction end-market organic growth of 14.1% supported the upside.

Total completions fell 2.2% during the quarter, while single-family completions rose 2.4% from the year-ago quarter.

During the reported quarter, revenues were impacted by $2-$2.5 million due to the COVID-19 outbreak. Nonetheless, in April, its monthly revenues grew 2% year over year. Currently, 98% of total branches by revenues are operational, as construction in these markets is deemed essential.

Notably, single-family housing units that support more than six months of industry backlog remain robust. The company also remains encouraged by solid geographic footprint, end-market demand and product diversification, which enhanced its local market presence. It has temporarily delayed the acquisition pipeline until the economy stabilizes.

Operating Highlights

Adjusted gross margin expanded 310 basis points (bps) year over year to 29.3%. Adjusted selling and administrative expenses, as a percentage of net revenues, grew 110 bps year over year.

Adjusted EBITDA rose 37.9% year over year during the quarter, owing to higher sales and improved gross margin. Adjusted EBITDA margin also grew 200 bps to 12.4%.

Financial Update

Cash and cash equivalents, and investments as of Mar 31, 2020 were $213.7 million, up from $177.9 million at 2019-end. Also, it had a $200-million revolving credit facility at quarter-end.

Long-term debt, operating lease and finance lease obligations totaled $579.7 million, slightly up from $578.4 million at 2019-end.

Net cash provided by operations was $35.9 million compared with $15.9 million recorded in the comparable period of last year.

Zacks Rank & Peer Releases

Installed Building currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Gibraltar Industries, Inc. ROCK reported better-than-expected results in first-quarter 2020. The company’s earnings and sales not only topped analysts’ expectations but also improved year over year on continued strength across the business, particularly in the Renewable Energy & Conservation unit.

United Rentals, Inc. URI reported impressive results in first-quarter 2020. Earnings and revenues topped the respective Zacks Consensus Estimate, and grew on a year-over-year basis.

Masco Corporation’s MAS first-quarter 2020 earnings and revenues handily beat the Zacks Consensus Estimate and improved year over year.

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