Installed Building (IBP) Q3 Earnings Top Estimates, Stock Fall
Installed Building Products, Inc. IBP reported mixed results in third-quarter 2023, with earnings surpassing the Zacks Consensus Estimate and increasing on a year-over-year basis. Net sales missed the consensus mark and declined from the prior-year quarter’s levels.
However, net sales declined due to softened single-family sales, partially offset by robust sales growth in its multi-family end market.
The company expects interest rate volatility to impact the housing industry's cyclicality. However, the company foresees long-term opportunities in residential and commercial markets. The stable backlog supported its Multi-family revenues. The company's emphasis on service value over volume helped it to achieve a record net profit margin and adjusted EBITDA margin in the quarter.
Installed Building’s shares dropped 1.6% on Nov 8 after the earnings release.
Inside the Headlines
Installed Building reported adjusted earnings of $2.79 per share, which topped the Zacks Consensus Estimate of adjusted earnings of $2.42 per share by 15.3%. The metric also grew 11.2% year over year from $2.51 per share.
Installed Building Products, Inc. Price, Consensus and EPS Surprise
Installed Building Products, Inc. price-consensus-eps-surprise-chart | Installed Building Products, Inc. Quote
Net sales of $706.5 million missed the consensus mark of $718.2 million by 1.6% and declined 1.8% year over year.
Segmental Performance
The Installation segment’s net revenues came in at $661.2 million, down 1.7% year over year on 2.7% and 3.3% year over year decline in residential new construction and repair and remodel end markets, respectively. This was partially offset by a 3.7% year-over-year increase in the commercial end market. The segment’s gross profit margin improved year over year 350 bps to 36.6%.
Other revenues (including IBP’s manufacturing and distribution operations) dropped 1.9% year over year to $45.3 million. The segment’s gross profit margin improved 730 bps year over year to 28.4%.
Operating Highlights
Gross profit increased 9.4% year over year to $242.1 million. Gross profit margin expanded 350 basis points (bps) year over year to 34.3%.
Adjusted EBITDA improved 8.6% year over year to $130.5 million. Adjusted EBITDA margin expanded by 180 bps, from the year-ago figure.
Acquisition Update
During the reported quarter IBP completed two acquisitions including, Interior 2000 Products, LLC, based in Virginia and R-Pro Select, LLC, based in North Carolina.
In October 2023, IBP acquired North Dakota-based, Interstate Spray Foam, LLC.
Financials
As of Sep 30, 2023, Installed Building had cash and cash equivalents of $339.8 million compared with $229.6 million at 2022 end. Net cash provided by operations was $250.5 million in the first nine months of 2023 compared with $198.7 million in the year-ago period.
Long-term debt at the third-quarter end was $833.5 million, up from $830.2 million at 2022-end.
Zacks Rank & Recent Construction Releases
Installed Building sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Vulcan Materials Company VMC reported stellar results in the third quarter of 2023, surpassing the Zacks Consensus Estimate for earnings and revenues.
VMC’s adjusted earnings per share (EPS) of $2.29 increased 28.7% from the year-ago level of $1.78. Total revenues of $2,185.8 million increased 4.7% year over year.
Otis Worldwide Corporation OTIS reported impressive results in third-quarter 2023. Its earnings and net sales surpassed the Zacks Consensus Estimate and rose on a year-over-year basis. Its quarterly results reflected 12 consecutive quarters of organic sales growth and solid operating margin expansion, contributing to high-teens adjusted EPS growth.
OTIS reported quarterly EPS of 95 cents, increasing 18.8% from the year-ago quarter’s figure of 80 cents. Net sales of $3.52 billion rose 5.4% on a year-over-year basis.
United Rentals, Inc.’s URI third-quarter 2023 earnings and revenues surpassed the Zacks Consensus Estimate. On a year-over-year basis, earnings and revenues increased on sustained growth across the business, profitability and returns, underpinned by broad-based activity.
URI’s adjusted EPS of $11.73 increased 26.5% from the prior-year figure of $9.27. Total revenues of $3.77 billion grew 23.4% year over year.
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