10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From _______ To _______

Commission File Number: 001-36307

Installed Building Products, Inc.

(Exact name of registrant as specified in its charter)

Delaware	45-3707650
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
495 South High Street, Suite 50 Columbus, Ohio	43215
(Address of principal executive offices)	(Zip Code)

(614) 221-3399

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes   ☒    No  ☐

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	IBP	New York Stock Exchange

On April 26, 2019, the registrant had 30,011,640 shares of common stock, par value $0.01 per share, outstanding.

TABLE OF CONTENTS

PART I – FINANCIAL INFORMATION	1
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3. Quantitative and Qualitative Disclosures About Market Risk	31
Item 4. Controls and Procedures	31
PART II – OTHER INFORMATION	32
Item 1. Legal Proceedings	32
Item 1A. Risk Factors	32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	32
Item 3. Defaults Upon Senior Securities	33
Item 4. Mine Safety Disclosures	33
Item 5. Other Information	33
Item 6. Exhibits	33
SIGNATURES	34

i

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)

	March 31,			December 31,
	2019			2018
ASSETS
Current assets
Cash and cash equivalents	$	88,146		$	90,442
Investments		10,026			10,060
Accounts receivable (less allowance for doubtful accounts of $5,442 and $5,085 at March 31, 2019 and December 31, 2018, respectively		216,997			214,121
Inventories		60,654			61,162
Other current assets		32,473			35,760
Total current assets		408,296			411,545
Property and equipment, net		91,391			90,117
Operating lease right-of-use assets		45,280			—
Goodwill		174,959			173,049
Intangibles, net		147,409			149,790
Other non-current assets		10,374			10,157
Total assets	$	877,709		$	834,658
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	23,925		$	22,642
Current maturities of operating lease obligations		14,241			—
Current maturities of finance lease obligations		4,328			4,806
Accounts payable		88,872			96,949
Accrued compensation		22,371			27,923
Other current liabilities		28,680			29,366
Total current liabilities		182,417			181,686
Long-term debt		430,460			432,182
Operating lease obligations		30,682			—
Finance lease obligations		3,974			3,824
Deferred income taxes		5,774			6,695
Other long-term liabilities		33,801			27,773
Total liabilities		687,108			652,160
Commitments and contingencies
Stockholders’ equity
Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively		—			—
Common stock; $0.01 par value: 100,000,000 authorized, 32,780,967 and 32,723,972 issued and 29,971,963 and 29,915,611 shares outstanding at March 31, 2019 and December 31, 2018, respectively		328			327
Additional paid in capital		183,836			181,815
Retained earnings		114,046			105,212
Treasury stock; at cost: 2,809,004 and 2,808,361 shares at March 31, 2019 and December 31, 2018, respectively		(104,429	)		(104,425	)
Accumulated other comprehensive loss		(3,180	)		(431	)
Total stockholders’ equity		190,601			182,498
Total liabilities and stockholders’ equity	$	877,709		$	834,658

See accompanying notes to consolidated financial statements

1

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

(in thousands, except share and per share amounts)

	Three months ended March 31,
	2019			2018
Net revenue	$	342,135		$	301,728
Cost of sales		252,697			221,752
Gross profit		89,438			79,976
Operating expenses
Selling		17,130			15,846
Administrative		48,431			44,203
Amortization		5,888			7,128
Operating income		17,989			12,799
Other expense
Interest expense, net		5,676			4,040
Other		125			122
Income before income taxes		12,188			8,637
Income tax provision		3,354			2,243
Net income	$	8,834		$	6,394
Other comprehensive (loss) income, net of tax:
Unrealized (loss) gain on cash flow hedge, net of tax benefit (provision) of $921 and ($386) for the three months ended March 31, 2019 and 2018, respectively		(2,749	)		1,160
Comprehensive income	$	6,085		$	7,554
Basic and diluted net income per share	$	0.30		$	0.20
Weighted average shares outstanding:
Basic		29,679,884			31,548,745
Diluted		29,806,653			31,772,581

See accompanying notes to consolidated financial statements

2

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

(in thousands, except share amounts)

					Additional											Accumulated Other
	Common Stock				Paid In			Retained		Treasury Stock						Comprehensive			Stockholders’
	Shares		Amount		Capital			Earnings		Shares			Amount			Income			Equity
BALANCE—January 1, 2018		32,524,934	$	325	$	174,043		$	48,434		(662,788	)	$	(12,781	)	$	507		$	210,528
Net income									6,394											6,394
Cumulative effect of accounting changes, net of tax									2,776								112			2,888
Issuance of common stock awards to employees		70,390		1		(1	)													—
Surrender of common stock awards by employees											(1,212	)		(56	)					(56	)
Share-based compensation expense						2,307														2,307
Common stock repurchase											(412,717	)		(24,640	)					(24,640	)
Other comprehensive income, net of tax																	1,160			1,160
BALANCE—March 31, 2018		32,595,324	$	326	$	176,349		$	57,604		(1,076,717	)	$	(37,477	)	$	1,779		$	198,581
					Additional											Accumulated Other
	Common Stock				Paid In			Retained		Treasury Stock						Comprehensive			Stockholders’
	Shares		Amount		Capital			Earnings		Shares			Amount			Loss			Equity
BALANCE—January 1, 2019		32,723,972	$	327	$	181,815		$	105,212		(2,808,361	)	$	(104,425	)	$	(431	)	$	182,498
Net income									8,834											8,834
Issuance of common stock awards to employees		56,995		1		(1	)													—
Surrender of common stock awards by employees											(643	)		(4	)					(4	)
Share-based compensation expense						2,022														2,022
Other comprehensive loss, net of tax																	(2,749	)		(2,749	)
BALANCE—March 31, 2019		32,780,967	$	328	$	183,836		$	114,046		(2,809,004	)	$	(104,429	)	$	(3,180	)	$	190,601

See accompanying notes to consolidated financial statements

3

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Three months ended March 31,
	2019			2018
Cash flows from operating activities
Net income	$	8,834		$	6,394
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment		9,111			7,978
Amortization of operating lease right-of-use assets		3,798			—
Amortization of intangibles		5,888			7,128
Amortization of deferred financing costs and debt discount		282			302
Provision for doubtful accounts		828			896
Gain on sale of property and equipment		(19	)		(185	)
Noncash stock compensation		2,022			2,240
Changes in assets and liabilities, excluding effects of acquisitions
Accounts receivable		(3,704	)		(7,058	)
Inventories		799			(2,420	)
Other assets		(1,048	)		(4,139	)
Accounts payable		(7,807	)		(57	)
Income taxes receivable / payable		2,746			1,303
Other liabilities		(5,841	)		(6,297	)
Net cash provided by operating activities		15,889			6,085
Cash flows from investing activities
Purchases of investments		(7,482	)		(17,782	)
Maturities of short term investments		7,530			19,000
Purchases of property and equipment		(8,658	)		(10,237	)
Acquisitions of businesses		(5,125	)		(11,505	)
Proceeds from sale of property and equipment		196			283
Other		(420	)		(1,050	)
Net cash used in investing activities		(13,959	)		(21,291	)
Cash flows from financing activities
Payments on term loan (Note 6)		(1,000	)		(750	)
Proceeds from vehicle and equipment notes payable		4,908			4,510
Debt issuance costs		—			(1	)
Principal payments on long-term debt		(3,946	)		(3,092	)
Principal payments on finance lease obligations		(1,366	)		(1,629	)
Acquisition-related obligations		(2,818	)		(1,740	)
Repurchase of common stock		—			(24,640	)
Surrender of common stock awards by employees		(4	)		(56	)
Net cash used in financing activities		(4,226	)		(27,398	)
Net change in cash and cash equivalents		(2,296	)		(42,604	)
Cash and cash equivalents at beginning of period		90,442			62,510
Cash and cash equivalents at end of period	$	88,146		$	19,906
Supplemental disclosures of cash flow information
Net cash paid during the period for:
Interest	$	5,816		$	3,914
Income taxes, net of refunds		737			899
Supplemental disclosure of noncash activities
Right-of-use assets obtained in exchange for operating lease obligations		3,851			—
Property and equipment obtained in exchange for finance lease obligations		1,108			312
Seller obligations in connection with acquisition of businesses		1,380			3,093
Unpaid purchases of property and equipment included in accounts payable		1,503			1,485

See accompanying notes to consolidated financial statements

4

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1—ORGANIZATION

Installed Building Products (“IBP”), a Delaware corporation formed on October 28, 2011, and its wholly-owned subsidiaries (collectively referred to as the “Company,” and “we,” “us” and “our”) primarily install insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors and other products for residential and commercial builders located in the continental United States. The Company operates in over 175 locations and its corporate office is located in Columbus, Ohio.

We have one operating segment and a single reportable segment. We offer our portfolio of services for new and existing single-family and multi-family residential and commercial building projects from our national network of branch locations.

Each of our branches has the capacity to serve all of our end markets. See Note 3, Revenue Recognition, for information on our revenues by product and end market.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include all of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

The information furnished in the Condensed Consolidated Financial Statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and statements of financial position for the interim periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) have been omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to prevent the information presented from being misleading when read in conjunction with our audited consolidated financial statements and the notes thereto included in Part II, Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the “2018 Form 10-K”), as filed with the SEC on February 28, 2019. The December 31, 2018 Condensed Consolidated Balance Sheet data herein was derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP.

Our interim operating results for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected in future operating quarters. See Item 1A, Risk Factors, in our 2018 Form 10-K for additional information regarding risk factors that may impact our results.

Note 2 to the audited consolidated financial statements in our 2018 Form 10-K describes the significant accounting policies and estimates used in preparation of the audited consolidated financial statements. There have been no changes to our significant accounting policies during the three months ended March 31, 2019, except for the manner in which we account for leases as described in Note 7, Leases.

5

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Recently Adopted Accounting Pronouncements

Standard

Adoption

ASU 2016-02, Leases (Topic 842)

This Accounting Standards Update (“ASU”) requires substantially all leases, with the exception of leases with a term of one year or less, to be recorded on the balance sheet as a lease liability measured as the present value of the future lease payments with a corresponding right-of-use asset. This ASU also requires disclosures designed to give financial statement users information on the amount, timing and uncertainty of cash flows. See Note 7, Leases, for further information regarding our lease accounting policies.

Recently Issued Accounting Pronouncements Not Yet Adopted

We are currently evaluating the impact of certain ASU’s on our Condensed Consolidated Financial Statements or Notes to Consolidated Financial Statements, which are described below:

Standard	Description	Effective Date	Effect on the financial statements or other significant matters
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)	This pronouncement amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In addition, these amendments require the measurement of all expected credit losses for financial assets, including trade accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.	Annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted.	We are currently evaluating whether this ASU will have a material impact on our consolidated financial statements.

6

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment	To address concerns over the cost and complexity of the two-step goodwill impairment test, this pronouncement removes the second step of the goodwill impairment test. Going forward, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.	Annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted.	We anticipate the adoption of this ASU will not have a material impact on our disclosures.
ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement	This pronouncement amends Topic 820 to eliminate, add and modify certain disclosure requirements for fair value measurements.	Annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted.	We are currently evaluating the provisions of this ASU and the impact it will have on our disclosures.

NOTE 3—REVENUE RECOGNITION

Our revenues are derived primarily through contracts with customers whereby we install insulation and other complementary building products and are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We recognize revenue using the percentage-of-completion method of accounting, utilizing a cost-to-cost input approach as we believe this represents the best measure of when control of goods and services are transferred to the customer. An insignificant portion of our sales, primarily retail sales, is accounted for on a point-in-time basis when the sale occurs, adjusted accordingly for any return provisions. We do offer assurance-type warranties on certain of our installed products and services that do not represent a separate performance obligation and, as such, do not impact the timing or extent of revenue recognition.

7

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

When the percentage-of-completion method is used, we estimate the costs to complete individual contracts and record as revenue that portion of the total contract price that is considered complete based on the relationship of costs incurred to date to total anticipated costs (the cost-to-cost approach). Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

Our long-term contracts can be subject to modification to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

Sales terms typically do not exceed 30 days for short-term contracts and typically do not exceed 60 days for long-term contracts with customers. All contracts are billed either contractually or as work is performed. Billing on our long-term contracts occurs primarily on a monthly basis throughout the contract period whereby we submit invoices for customer payment based on actual or estimated costs incurred during the billing period. On certain of our long-term contracts the customer may withhold payment on an invoice equal to a percentage of the invoice amount, which will be subsequently paid after satisfactory completion of each installation project. This amount is referred to as retainage and is common practice in the construction industry, as it allows for customers to ensure the quality of the service performed prior to full payment. Retainage receivables are classified as current or long-term assets based on the expected time to project completion.

We disaggregate our revenue from contracts with customers by end market and product, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The following tables present our revenues disaggregated by end market and product (in thousands):

	Three months ended March 31,
	2019				2018
Residential new construction	$	261,310	77	%	$	229,642	76	%
Repair and remodel		21,521	6	%		20,472	7	%
Commercial		59,304	17	%		51,614	17	%
Net revenues	$	342,135	100	%	$	301,728	100	%

8

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

	Three months ended March 31,
	2019				2018
Insulation	$	221,223	65	%	$	202,275	67	%
Waterproofing		22,385	7	%		22,606	7	%
Shower doors, shelving and mirrors		23,917	7	%		20,260	7	%
Garage doors		21,672	6	%		15,466	5	%
Rain gutters		11,199	3	%		8,658	3	%
Window blinds		9,384	3	%		5,306	2	%
Other building products		32,355	9	%		27,157	9	%
Net revenues	$	342,135	100	%	$	301,728	100	%

Contract Assets and Liabilities

Our contract assets consist of unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized, based on costs incurred, exceeds the amount billed to the customer. Our contract assets are recorded in other current assets in our Consolidated Balance Sheets. Our contract liabilities consist of customer deposits and billings in excess of revenue recognized, based on costs incurred and is included in other current liabilities in our Consolidated Balance Sheets.

Contract assets and liabilities related to our uncompleted contracts and customer deposits were as follows (in thousands):

	March 31,			December 31,
	2019			2018
Contract assets	$	19,565		$	15,092
Contract liabilities		(7,792	)		(7,468	)

Uncompleted contracts were as follows (in thousands):

	March 31,		December 31,
	2019		2018
Costs incurred on uncompleted contracts	$	101,024	$	114,826
Estimated earnings		52,670		58,952
Total		153,694		173,778
Less: Billings to date		139,100		163,112
Net under (over) billings	$	14,594	$	10,666

Net under (over) billings were as follows (in thousands):

	March 31,			December 31,
	2019			2018
Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets)	$	19,565		$	15,092
Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities)		(4,971	)		(4,426	)
Net under (over) billings	$	14,594		$	10,666

9

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The difference between contract assets and contract liabilities as of March 31, 2019 compared to December 31, 2018 is primarily the result of timing differences between our performance of obligations under contracts and customer payments. During the three months ended March 31, 2019, we recognized $6.3 million of revenue that was included in the contract liability balance at December 31, 2018. We did not recognize any impairment losses on our receivables and contract assets during the three months ended March 31, 2019 or 2018.

Remaining performance obligations represent the transaction price of contracts for which work has not been performed and excludes unexercised contract options and potential modifications. As of March 31, 2019, the aggregate amount of the transaction price allocated to remaining uncompleted contracts was $89.5 million. We expect to satisfy remaining performance obligations and recognize revenue on substantially all of these uncompleted contracts over the next 18 months.

Practical Expedients and Exemptions

We generally expense sales commissions and other incremental costs of obtaining a contract when incurred because the amortization period is usually one year or less. Sales commissions are recorded within selling expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income.

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

NOTE 4—INVESTMENTS

Cash and cash equivalents includes investments in money market funds that are valued based on the net asset value of the funds. The investments in these funds were $71.2 million and $69.8 million as of March 31, 2019 and December 31, 2018, respectively.

All other investments are classified as held-to-maturity and consist of highly liquid instruments, primarily including corporate bonds and commercial paper. As of March 31, 2019 and December 31, 2018, the amortized cost of these investments equaled the net carrying value, which was $10.0 million and $10.1 million, respectively. All held-to-maturity securities as of March 31, 2019 mature in one year or less. See Note 8, Fair Value Measurements, for additional information.

NOTE 5—GOODWILL AND INTANGIBLES

Goodwill

The change in carrying amount of goodwill was as follows (in thousands):

	Goodwill (Gross)		Accumulated Impairment Losses			Goodwill (Net)
January 1, 2019	$	243,053	$	(70,004	)	$	173,049
Business Combinations		1,882		—			1,882
Other		28		—			28
March 31, 2019	$	244,963	$	(70,004	)	$	174,959

10

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Other changes included in the above table represent minor adjustments for the allocation of certain acquisitions still under measurement and one immaterial acquisition completed during the three months ended March 31, 2019.

We test goodwill for impairment annually during the fourth quarter of our fiscal year or earlier if there is an impairment indicator. No impairment was recognized during either of the three month periods ended March 31, 2019 or 2018. Accumulated impairment losses included within the above table were incurred over multiple periods, with the latest impairment charge being recorded during the year ended December 31, 2010.

Intangibles, net

The following table provides the gross carrying amount, accumulated amortization and net book value for each major class of intangibles (in thousands):

	As of March 31, 2019						As of December 31, 2018
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Amortized intangibles:
Customer relationships	$	150,735	$	56,530	$	94,205	$	148,635	$	52,514	$	96,121
Covenants not-to-compete		15,090		8,325		6,765		14,682		7,572		7,110
Trademarks and trade names		65,432		19,319		46,113		64,432		18,256		46,176
Backlog		14,060		13,734		326		14,060		13,677		383
	$	245,317	$	97,908	$	147,409	$	241,809	$	92,019	$	149,790

The gross carrying amount of intangibles increased approximately $3.5 million during the three months ended March 31, 2019 primarily due to business combinations. See Note 15, Business Combinations, for more information. Remaining estimated aggregate annual amortization expense is as follows (amounts, in thousands, are for the fiscal year ended):

Remainder of 2019	17,719
2020	22,744
2021	21,415
2022	20,494
2023	17,583
Thereafter	47,454

11

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6—LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):

	As of March 31,			As of December 31,
	2019			2018
Term loan, net of unamortized debt issuance costs of $4,642 and $4,834, respectively	$	390,108		$	390,916
Vehicle and equipment notes, maturing through March 2024; payable in various monthly installments, including interest rates ranging from 2.5% to 4.8%		60,811			60,391
Various notes payable, maturing through March 2025; payable in various monthly installments, including interest rates ranging from 4% to 6%		3,466			3,517
		454,385			454,824
Less: current maturities		(23,925	)		(22,642	)
Long-term debt, less current maturities	$	430,460		$	432,182

NOTE 7—LEASES

On January 1, 2019, we adopted ASC 842, “Leases” which, among other changes, requires us to record liabilities classified as operating leases on our condensed consolidated balance sheets along with a corresponding right-of-use asset. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 840. We elected the package of practical expedients available for expired or existing contracts, which allowed us to carryforward our historical assessments of whether contracts are or contain leases, lease classification tests and treatment of initial direct costs. We also elected to not separate lease components from non-lease components for all fixed payments, and we exclude variable lease payments in the measurement of right-of-use assets and lease obligations.

Upon adoption of ASC 842, we recorded a $44.9 million increase in other assets, a $1.4 million decrease to other current assets, a $1.0 million decrease to other current liabilities and a $44.5 million increase to operating lease obligations. The impact primarily related to the change in assigning a right-of-use asset and related lease liability to our operating leases. We did not record any cumulative effect adjustments to opening retained earnings, and adoption of the lease standard had no impact to cash from or used in operating, financing, or investing on our consolidated cash flow statements.

We determine if an arrangement is a lease at inception. Most of our operating leases do not provide an implicit rate so we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. We lease various assets in the course of ordinary business as follows: warehouses to store our materials and perform staging activities for certain products we install; various office spaces for selling and administrative activities to support our business; certain manufacturing facilities to produce insulation materials; and certain vehicles and equipment to facilitate our operations, including, but not limited to, trucks, forklifts and office equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet as we recognize lease expense for these leases on a straight-line basis over the lease term.

Most lease agreements include one or more renewal options, all of which are at our sole discretion. Future renewal options that have not been executed as of the balance sheet date are excluded from right-of-use assets and related lease liabilities. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Some of our vehicle lease agreements include provisions for residual value guarantees and any expected payment is included in our lease liability.

12

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Lease Position as of March 31, 2019

The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheet:

(in thousands)	Classification	As of March 31, 2019
Assets
Non-Current
Operating	Operating lease right-of-use assets	$	45,280
Finance	Property and equipment, net		9,217
Total lease assets		$	54,497
Liabilities
Current
Operating	Current maturities of operating lease obligations	$	14,241
Financing	Current maturities of finance lease obligations		4,328
Non-Current
Operating	Operating lease obligations		30,682
Financing	Finance lease obligations		3,974
Total lease liabilities		$	53,225
Weighted-average remaining lease term
Operating leases			4.5 years
Finance leases			2.3 years
Weighted-average discount rate
Operating leases (1)			5.04	%
Finance leases			4.57	%

⁽¹⁾  Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

Lease Costs

The table below presents certain information related to the lease costs for finance and operating leases during 2019:

(in thousands)	Classification	Three months ended March 31, 2019
Operating lease cost (1)	Administrative	$	4,987
Finance lease cost
Amortization of leased assets (2)	Cost of sales		1,478
Interest on capital lease obligations	Interest expense, net		94
Total lease costs		$	6,559

⁽¹⁾  Includes variable lease costs of $0.5 million and short-term lease costs of $0.2 million.

⁽²⁾  Includes variable lease costs of $0.3 million.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Other Information

The table below presents supplemental cash flow information related to leases during 2019 (in thousands):

	Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	4,233
Operating cash flows for finance leases		94
Financing cash flows for finance leases		1,366

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years for the finance lease obligations and operating lease obligations recorded on the Condensed Consolidated Balance Sheet (in thousands):

	As of March 31, 2019
	Related Party		Other		Total Operating			Finance Leases
Remainder of 2019	$	774	$	11,595	$	12,369		$	3,947
2020		1,055		12,240		13,295			2,539
2021		910		8,042		8,952			1,596
2022		836		4,615		5,451			663
2023		415		3,047		3,462			284
Thereafter		823		6,007		6,830			16
Total minimum lease payments	$	4,813	$	45,546		50,359			9,045
Less: Amounts representing executory costs						—			(255	)
Less: Amounts representing interest						(5,436	)		(488	)
Present value of future minimum lease payments						44,923			8,302
Less: Current obligation under leases						(14,241	)		(4,328	)
Long-term lease obligations					$	30,682		$	3,974

Disclosures Related to Periods Prior to Adoption of ASC 842 under ASU 2016-02

Lease amounts presented as of December 31, 2018 and for the three months ended March 31, 2018 are in accordance with accounting guidance in effect prior to adoption of ASC 842, “Leases,” on January 1, 2019. Total assets relating to capital leases were approximately $58.7 million and a total of approximately $32.0 million were fully depreciated as of December 31, 2018. The net book value of assets under capital leases was approximately $9.5 million as of December 31, 2018. Amortization of assets held under capital leases is included within cost of sales on the Consolidated Statements of Operations and Comprehensive Income.

Future minimum lease payments under noncancellable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments as of December 31, 2018 were as follows (in thousands):

				Operating Leases
	Capital Leases			Related Party		Other		Total Operating
2019	$	5,207		$	1,159	$	14,418	$	15,577
2020		2,253			1,184		11,293		12,477
2021		1,339			1,058		7,014		8,072
2022		452			972		4,335		5,307
2023		93			51		2,613		2,664
Thereafter		—			—		4,695		4,695
		9,344		$	4,424	$	44,368	$	48,792
Less: Amounts representing executory costs		(255	)
Less: Amounts representing interest		(459	)
Total obligation under capital leases		8,630
Less: Current portion of capital leases		(4,806	)
Long term capital lease obligation	$	3,824

NOTE 8—FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. During the periods presented, there were no transfers between fair value hierarchical levels.

14

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Assets Measured at Fair Value on a Nonrecurring Basis

Certain assets, specifically other intangible and long-lived assets, are measured at fair value on a nonrecurring basis in periods subsequent to initial recognition. Assets measured at fair value on a nonrecurring basis as of March 31, 2019 and December 31, 2018 are categorized based on the lowest level of significant input to the valuation. The assets are measured at fair value when our impairment assessment indicates a carrying value for each of the assets in excess of the asset’s estimated fair value. Undiscounted cash flows, a Level 3 input, are utilized in determining estimated fair values. During each of the three months ended March 31, 2019 and 2018, we did not record any impairments on these assets required to be measured at fair value on a nonrecurring basis.

Estimated Fair Value of Financial Instruments

Accounts receivable, accounts payable and accrued liabilities as of March 31, 2019 and December 31, 2018 approximate fair value due to the short-term maturities of these financial instruments. The carrying amounts of our long-term debt, including the Term Loan and ABL Revolver as of March 31, 2019 and December 31, 2018, approximate fair value due to the variable rate nature of the agreements. The carrying amounts of our operating lease right-of-use assets and the obligations associated with our operating and finance leases as well as our vehicle and equipment notes approximate fair value as of March 31, 2019 and December 31, 2018. All debt classifications represent Level 2 fair value measurements.

Derivative financial instruments are measured at fair value based on observable market information and appropriate valuation methods. Contingent consideration liabilities arise from future earnout payments to the sellers associated with certain acquisitions and are based on predetermined calculations of certain future results. These future payments are estimated by considering various factors, including business risk and projections. The contingent consideration liabilities are measured at fair value by discounting estimated future payments to their net present value using the appropriate weighted average cost of capital (WACC). The fair values of financial assets and liabilities that are recorded at fair value in the Condensed Consolidated Balance Sheets and not described above were as follows (in thousands):

	As of March 31, 2019								As of December 31, 2018
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents	$	71,240	$	71,240	$	—	$	—	$	69,807	$	69,807	$	—	$	—
Derivative financial instruments		805		—		805		—		1,765		—		1,765		—
Total financial assets	$	72,045	$	71,240	$	805	$	—	$	71,572	$	69,807	$	1,765	$	—
Financial liabilities:
Derivative financial instruments	$	4,984	$	—	$	4,984	$	—	$	2,275	$	—	$	2,275	$	—
Contingent consideration		4,977		—		—		4,977		5,098		—		—		5,098
Total financial liabilities	$	9,961	$	—	$	4,984	$	4,977	$	7,373	$	—	$	2,275	$	5,098

The change in fair value of the contingent consideration (a Level 3 input) was as follows (in thousands):

Contingent consideration liability—January 1, 2019	$	5,098
Preliminary purchase price		1,525
Fair value adjustments		(245	)
Accretion in value		125
Amounts paid to sellers		(1,526	)
Contingent consideration liability—March 31, 2019	$	4,977

15

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The accretion in value of contingent consideration liabilities is included within administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income.

The carrying values and associated fair values of financial assets and liabilities that are not recorded at fair value in the Condensed Consolidated Balance Sheets and not described above include investments which represent a Level 2 fair value measurement and are as follows (in thousands):

	As of March 31, 2019				As of December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Investments	$	10,026	$	10,026	$	10,060	$	10,053

See Note 4, Investments, for more information on cash equivalents and investments included in the table above. Also see Note 9, Derivatives and Hedging Activities, for more information on derivative financial instruments.

NOTE 9—DERIVATIVES AND HEDGING ACTIVITIES

Cash Flow Hedges of Interest Rate Risk

Our purpose for using interest rate derivatives is to add stability to interest expense and to manage our exposure to interest rate movements. During the first three months of 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of March 31, 2019, we had two interest rate swaps, each with an associated floor, with a total beginning notional of $200.0 million, one that amortizes quarterly to $95.3 million at a maturity date of May 31, 2022 and one that amortizes quarterly to $93.3 million at a maturity date of April 15, 2025. We also had a forward interest rate swap with an associated floor beginning May 31, 2022 with a beginning notional of $100.0 million that amortizes quarterly to $97.0 million at a maturity date of April 15, 2025. Combined, these three swaps serve to hedge $200.0 million of the variable cash flows on our Term Loan until maturity. The assets and liabilities associated with these derivative instruments are included in other current assets, other non-current assets, other current liabilities, and other long-term liabilities on the Condensed Consolidated Balance Sheets at their fair value amounts as described in Note 8, Fair Value Measurements.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in other comprehensive income, net of tax on the Condensed Consolidated Statements of Operations and Comprehensive Income and in accumulated other comprehensive income on the Condensed Consolidated Balance Sheets and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. We had no such changes during the three months ended March 31, 2019 or 2018.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense, net as interest payments are made on our variable-rate debt. Over the next twelve months, we estimate that an additional $0.1 million will be reclassified as an increase to interest expense, net.

16

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Additionally, we do not use derivatives for trading or speculative purposes and we currently do not have any derivatives that are not designated as hedges. As of March 31, 2019, the Company has not posted any collateral related to these agreements.

NOTE 10—STOCKHOLDERS’ EQUITY

As of March 31, 2019, we had $3.2 million in accumulated other comprehensive loss on our Condensed Consolidated Balance Sheet, which represents the effective portion of the unrealized loss on our derivative instruments. For additional information, see Note 9, Derivatives and Hedging Activities.

During the three months ended March 31, 2018, we repurchased 413 thousand shares of our outstanding common stock for an aggregate purchase price of $24.6 million or $59.70 average price per share as part of our stock repurchase plan in effect through February 28, 2020, unless extended by our board of directors. We did not repurchase any shares during the three months ended March 31, 2019. The effect of these treasury shares reducing the number of common shares outstanding is reflected in our earnings per share calculation.

NOTE 11—EMPLOYEE BENEFITS

Healthcare

Our healthcare benefit expense (net of employee contributions) for all plans was approximately $4.8 million and $4.4 million for the three months ended March 31, 2019 and 2018, respectively. An accrual for estimated healthcare claims incurred but not reported (“IBNR”) is included within accrued compensation on the Condensed Consolidated Balance Sheets and was $2.7 million and $2.3 million as of March 31, 2019 and December 31, 2018, respectively.

Workers’ Compensation

Workers’ compensation expense totaled $4.2 million and $3.8 million for the three months ended March 31, 2019 and 2018, respectively. Workers’ compensation known claims and IBNR reserves included on the Condensed Consolidated Balance Sheets were as follows (in thousands):

	March 31, 2019		December 31, 2018
Included in other current liabilities	$	5,201	$	5,795
Included in other long-term liabilities		11,138		9,447
	$	16,339	$	15,242

We also had an insurance receivable for claims that exceeded the stop loss limit included on the Condensed Consolidated Balance Sheets. This receivable offsets an equal liability included within the reserve amounts noted above and was as follows (in thousands):

	March 31, 2019		December 31, 2018
Included in other non-current assets	$	1,905	$	1,888

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Retirement Plans

We participate in multiple 401(k) plans, whereby we provide a matching contribution of wages deferred by employees and can also make discretionary contributions to each plan. Certain plans allow for discretionary employer contributions only. These plans cover substantially all our eligible employees. We recognized 401(k) plan expenses of $0.6 million and $0.4 million during the three months ended March 31, 2019 and 2018, respectively. These expenses are included in administrative expenses on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

Share-Based Compensation

Common Stock Awards

We periodically grant shares of our common stock to our board of directors and our employees. We did not grant any such shares to our board of directors during the three months ended March 31, 2019 or 2018, however we recorded $0.1 million of compensation expense during the three months ended March 31, 2019 related to prior grants to our board of directors. During the three months ended March 31, 2019 and 2018, we granted approximately 11 thousand and approximately eight thousand shares of our common stock, respectively, to employees and recorded $1.1 million and $0.9 million, respectively, of compensation expense associated with non-performance-based awards issued to employees.

During the three months ended March 31, 2019 and 2018, our employees surrendered approximately two hundred and one thousand shares of our common stock, respectively, to satisfy tax withholding obligations arising in connection with the vesting of common stock awards issued under our 2014 Omnibus Incentive Plan. We recognized excess tax benefits of $0.1 million within the income tax provision in the Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2018.

As of March 31, 2019, we had $4.5 million of unrecognized compensation expense related to these nonvested common stock awards issued to the board of directors and our employees. This expense is subject to future adjustments for forfeitures and is expected to be recognized on a straight-line basis over the remaining weighted-average period of 1.8 years. Shares forfeited are returned as treasury shares and available for future issuances. See the table below for changes in shares and related weighted average fair market value per share.

Employees – Performance-Based Stock Awards

During the three months ended March 31, 2019, we issued under our 2014 Omnibus Incentive Plan approximately 46 thousand shares of our common stock to certain officers, which vest in two equal installments on each of April 20, 2020 and April 20, 2021. In addition, during the three months ended March 31, 2019, we established, and our Board of Directors approved, performance-based targets in connection with common stock awards to be issued to certain officers in 2020 contingent upon achievement of these targets. Share-based compensation expense associated with these performance-based awards and prior performance-based grants was $0.7 million and $0.4 million for the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, we had $5.8 million of unrecognized compensation expense related to nonvested performance-based common stock awards. This expense is subject to future adjustments for forfeitures and is expected to be recognized over the remaining weighted-average period of 2.1 years using the graded-vesting method. See the table below for changes in shares and related weighted average fair market value per share.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Employees – Performance-Based Restricted Stock Units

During 2018, we established, and our board of directors approved, performance-based restricted stock units in connection with common stock awards to be issued to certain employees in 2019 based upon achievement of a performance target. These units will be accounted for as equity-based awards that will be settled with a fixed number of common shares. We recorded $0.1 million and $0.9 million in compensation expense associated with these performance-based units during the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, we had $34 thousand of unrecognized compensation expense related to nonvested performance-based common stock units. This expense is subject to future adjustments for forfeitures and is expected to be recognized on a straight-line basis over the remaining weighted-average period of 0.1 years. See the table below for changes in shares and related weighted average fair market value per share.

Share-Based Compensation Summary

Amounts and changes for each category of equity-based award for employees were as follows:

	Common Stock Awards					Performance-Based Stock Awards					Performance-Based Restricted Stock Units
	Awards			Weighted Average Fair Market Value Per Share		Awards			Weighted Average Fair Market Value Per Share		Units			Weighted Average Fair Market Value Per Share
Nonvested awards/units at December 31, 2018		173,189		$	47.40		115,698		$	52.25		13,248		$	56.05
Granted		10,800			45.65		82,692			45.65		—			—
Vested		(564	)		54.98		—			—		—			—
Forfeited/Cancelled		(445	)		56.05		(6,697	)		65.60		(440	)		56.05
Nonvested awards/units at March 31, 2019		182,980		$	47.25		191,693		$	48.93		12,808		$	56.05

We recorded the following stock compensation expense by income statement category (in thousands):

	Three months ended March 31,
	2019		2018
Cost of sales	$	78	$	475
Selling		44		283
Administrative		1,816		1,482
	$	1,938	$	2,240

Administrative stock compensation expense includes all stock compensation earned by our administrative personnel, while cost of sales and selling stock compensation represents all stock compensation earned by our installation and sales employees, respectively.

NOTE 12—INCOME TAXES

Our provision for income taxes as a percentage of pretax earnings is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items.

19

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During the three months ended March 31, 2019, our effective tax rate was 27.5%. This rate was unfavorably impacted due to separate tax filing entities in a loss position for which a full valuation allowance is required, resulting in no tax benefit for recognized losses.

NOTE 13—RELATED PARTY TRANSACTIONS

We sell installation services to other companies related to us through common or affiliated ownership and/or board of directors and/or management relationships. We also purchase services and materials and pay rent to companies with common or affiliated ownership.

We lease our headquarters and certain other facilities from related parties. See Note 7, Leases, for future minimum lease payments to be paid to these related parties.

The amount of sales to related parties as well as the purchases from and rent expense paid to related parties were as follows (in thousands):

	Three months ended March 31,
	2019		2018
Sales	$	2,661	$	2,893
Purchases		388		363
Rent		260		281

As of March 31, 2019 and December 31, 2018, we had related party balances of approximately $2.0 million and $2.3 million, respectively, included in accounts receivable on our Condensed Consolidated Balance Sheets. These balances primarily represent trade accounts receivable arising during the normal course of business with various related parties. M/I Homes, Inc., a customer whose Chairman, President and Chief Executive Officer is a member of our board of directors, accounted for $1.2 million of these balances as of both March 31, 2019 and December 31, 2018, respectively.

NOTE 14—COMMITMENTS AND CONTINGENCIES

Accrued General Liability and Auto Insurance

Accrued general liability and auto insurance reserves included on the Condensed Consolidated Balance Sheets were as follows (in thousands):

	March 31, 2019		December 31, 2018
Included in other current liabilities	$	1,914	$	1,848
Included in other long-term liabilities		9,803		6,608
	$	11,717	$	8,456

We also had insurance receivables and an indemnification asset included on the Condensed Consolidated Balance Sheets that, in aggregate, offset an equal liability included within the reserve amounts noted above. The amounts were as follows (in thousands):

	March 31, 2019		December 31, 2018
Insurance receivable and indemnification asset for claims under a fully insured policy	$	2,484	$	2,484
Insurance receivable for claims that exceeded the stop loss limit		1,613		53
Total insurance receivables included in other non-current assets	$	4,097	$	2,537

20

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Leases

See Note 7, Leases, for further information regarding our lease commitments.

Other Commitments and Contingencies

From time to time, various claims and litigation are asserted or commenced against us principally arising from contractual matters and personnel and employment disputes. In determining loss contingencies, management considers the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recorded when it is considered probable that such a liability has been incurred and when the amount of loss can be reasonably estimated. As litigation is subject to inherent uncertainties, we cannot be certain that we will prevail in these matters. However, we do not believe that the ultimate outcome of any pending matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

During the year ended December 31, 2018, we entered into an agreement with one of our suppliers to purchase a portion of the insulation materials we utilize across our business. This agreement is effective January 1, 2019 through December 31, 2021 with a purchase obligation of $16.4 million for 2019, $21.4 million for 2020 and $15.0 million for 2021. For the three months ended March 31, 2019, we have satisfied $1.8 million of our purchase obligation under this agreement. Additionally, we entered into an agreement with a chemical supplier with a purchase obligation of $0.6 million in 2019. Actual purchases made under this agreement for the three months ended March 31, 2019 was $0.2 million.

NOTE 15—BUSINESS COMBINATIONS

As part of our ongoing strategy to expand geographically and increase market share in certain markets, we completed one business combination and one insignificant tuck-in acquisition merged into existing operations during the three months ended March 31, 2019 and two business combinations and one insignificant tuck-in acquisition merged into existing operations during the three months ended March 31, 2018, respectively, in which we acquired 100% of the ownership interests in each.

The largest of these acquisitions were 1st State Insulation, LLC (“1st State Insulation”) in March 2019 and Custom Overhead Door, LLC dba Custom Door & Gate (collectively, “CDG”) in March 2018. Net Income, as noted below, includes amortization, taxes and interest allocations when appropriate. Below is a summary of each significant acquisition by year, including revenue and net income (loss) since date of acquisition, shown for the year of acquisition (in thousands):

Acquisition

Cash

Seller

Total Purchase

Three months ended March 31, 2019

2019 Acquisitions

Date

Type

Paid

Obligations

Price

Revenue

Net Income

1st State Insulation

3/18/2019

Asset

$

5,125

$

1,380

$

6,505

$

488

$

23

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

			Acquisition				Seller		Total Purchase		Three months ended March 31, 2018
2018 Acquisitions	Date		Type		Cash Paid		Obligations		Price		Revenue		Net (Loss) Income
CDG		3/19/2018		Asset	$	9,440	$	1,973	$	11,413	$	400	$	(15	)
Other		1/15/2018		Asset		2,065		953		3,018		1,271		66
Total					$	11,505	$	2,926	$	14,431	$	1,671	$	51

Acquisition-related costs recorded within administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income amounted to $0.6 million and $0.5 million for the three months ended March 31, 2019 and 2018, respectively. The goodwill recognized in conjunction with these business combinations represents the excess cost of the acquired entity over the net amount assigned to assets acquired and liabilities assumed. We expect to deduct approximately $2.0 million of goodwill for tax purposes as a result of 2019 acquisitions.

Purchase Price Allocations

The estimated fair values of the assets acquired and liabilities assumed for the acquisitions, as well as total purchase prices and cash paid, approximated the following (in thousands):

	As of March 31, 2019			As of March 31, 2018
	1st State			CDG			Other			Total
Estimated fair values:
Accounts receivable	$	—		$	1,731		$	—		$	1,731
Inventories		291			514			75			589
Other current assets		—			28			12			40
Property and equipment		989			933			517			1,450
Intangibles		3,382			3,711			1,675			5,386
Goodwill		1,882			4,898			764			5,662
Other non-current assets		—			36			—			36
Accounts payable and other current liabilities		(39	)		(438	)		(25	)		(463	)
Fair value of assets acquired and purchase price		6,505			11,413			3,018			14,431
Less seller obligations		1,380			1,973			953			2,926
Cash paid	$	5,125		$	9,440		$	2,065		$	11,505

Contingent consideration is included as “seller obligations” in the above table or within “fair value of assets acquired” if subsequently paid during the period presented. These contingent payments consist primarily of earnouts based on performance that are recorded at fair value at the time of acquisition, and/or non-complete agreements and amounts based on working capital calculations. When these payments are expected to be made over one year from the acquisition date, the contingent consideration is discounted to net present value using our weighted average cost of capital (WACC), when appropriate.

Further adjustments to the allocation for each acquisition still under its measurement period are expected as third-party and internal valuations are finalized, certain tax aspects of the transaction are completed and customary post-closing reviews are concluded during the measurement period attributable to each individual business combination. As a result, insignificant adjustments to the fair value of assets acquired, and in some cases total purchase price, have been made to certain business combinations since the date of acquisition and future adjustments may be made through the end of each measurement period. Goodwill and intangibles per the above table do not agree to the total gross increases of these assets as shown in Note 5, Goodwill and Intangibles, during each of the three months ended March 31, 2019 and 2018 due to minor adjustments to goodwill for the allocation of certain acquisitions still under measurement as well as other immaterial intangible assets added during the ordinary course of business. In addition, goodwill and intangibles increased during each of the three months ended March 31, 2019 and 2018 due to small tuck-in acquisitions merged into existing operations that do not appear in the above table as discussed above.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Estimates of acquired intangible assets related to the acquisitions are as follows (in thousands):

	For the three months ended March 31,
	2019				2018
Acquired intangibles assets	Estimated Fair Value		Weighted Average Estimated Useful Life (yrs.)		Estimated Fair Value		Weighted Average Estimated Useful Life (yrs.)
Customer relationships	$	2,100		8	$	3,441		8
Trademarks and trade names		999		15		1,695		15
Non-competition agreements		283		5		250		5

Pro Forma Information

The unaudited pro forma information for the combined results of the Company has been prepared as if the 2019 acquisitions had taken place on January 1, 2018 and the 2018 acquisitions had taken place on January 1, 2017. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transactions actually taken place on January 1, 2018 and 2017, respectively, and the unaudited pro forma information does not purport to be indicative of future financial operating results (in thousands, except per share data):

	Unaudited pro forma for the three months ended March 31,
	2019		2018
Net revenue	$	344,397	$	322,666
Net income		8,793		7,478
Basic and diluted net income per share		0.30		0.24

Unaudited pro forma net income reflects additional intangible asset amortization expense of $64 thousand and $1.2 million for the three months ended March 31, 2019 and 2018, respectively, as well as additional income tax (benefit) expense of ($16) thousand and $0.4 million for the three months ended March 31, 2019 and 2018, respectively, that would have been recorded had the 2019 acquisitions taken place on January 1, 2018 and the 2018 acquisitions taken place on January 1, 2017.

NOTE 16—INCOME PER COMMON SHARE

Basic net income per common share is calculated by dividing net income by the weighted average shares outstanding during the period, without consideration for common stock equivalents.

Diluted net income per common share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury stock method. Potential common stock is included in the diluted income per common share calculation when dilutive. The dilutive effect of outstanding restricted stock awards after application of the treasury stock method was 127 thousand and 224 thousand shares for the three months ended March 31, 2019 and 2018, respectively. Approximately nine thousand shares of potential common stock was not included in the calculation of diluted net income per common share for the three months ended March 31, 2019 because the effect would have been anti-dilutive.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes in “Item 1. Financial Statements” of this Form 10-Q, as well as our 2018 Form 10-K.

OVERVIEW

We are one of the nation’s largest insulation installers for the residential new construction market and are also a diversified installer of complementary building products, including waterproofing, fire-stopping and fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving, mirrors and other products throughout the United States. We offer our portfolio of services for new and existing single-family and multi-family residential and commercial building projects in all 48 continental states and the District of Columbia from our national network of over 175 branch locations. Substantially all of our net revenue comes from service-based installation of these products in the residential new construction, repair and remodel and commercial construction end markets. We believe our business is well positioned to continue to profitably grow due to our strong balance sheet, liquidity and our continuing acquisition strategy.

A large portion of our net revenue comes from the U.S. residential new construction market, which depends upon a number of economic factors including demographic trends, interest rates, consumer confidence, employment rates, housing inventory levels, foreclosure rates, the health of the economy and availability of mortgage financing. The strategic acquisitions of multiple companies over the last several years contributed meaningfully to our consistent increase in net revenue during that time.

The recently passed Tax Cuts and Jobs Act (the “Tax Act”) has added additional momentum to the economic landscape. While there have been concerns about the impact of the new tax law on housing, initial readings and reviews are suggesting that it is generally stimulative to the economy. We may adjust our strategies based on housing demand and our performance in each of our markets.

2019 First Quarter Highlights

Net revenue increased 13.4% to $342.1 million while gross profit increased 11.8% to $89.4 million during the three months ended March 31, 2019 compared to 2018. This increase in net revenue and gross profit was primarily driven by the continued recovery of the housing markets, the contribution of our recent acquisitions and growth across our end markets and products. The increase in gross profit was partially offset by 2018 materials price inflation and fourth quarter 2018 delays in work completed by certain of our customers, resulting in more of our installation work being completed in the first quarter of 2019 without the benefit of recent selling price increases.

We believe there are several trends that should drive long-term growth in the housing market, even if there are temporary periods of slower or declining growth. These long-term trends include an aging housing stock, population growth, household formation growth and the fact that housing starts are currently below long-term historic averages. We expect that our net revenue, gross profit and operating income will benefit from this growth. While we are actively increasing pricing with our customers, we have realized selling price increases at a slower rate than the increase in material costs. We have been successful negotiating better pricing with our customers in recent months and expect price increase momentum to continue. While we continue to proactively work with customers and suppliers to mitigate these cost impacts, we continue to experience inflation on our materials and it may take until the end of 2019 for us to fully address the current material price environment.

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Net revenue, cost of sales and gross profit

The components of gross profit were as follows (in thousands):

	Three months ended March 31,
	2019			Change			2018
Net revenues	$	342,135			13.4	%	$	301,728
Cost of sales		252,697			14.0	%		221,752
Gross profit	$	89,438			11.8	%	$	79,976
Gross profit percentage		26.1	%					26.5	%

Net revenues increased during the three months ending March 31, 2019 compared to 2018, primarily driven by acquisitions, organic growth from our existing branches and increased selling prices. For the three months ended March 31, 2019, on a same branch basis, net revenue improved 7.4%, with approximately 3.4% of this increase attributable to growth in the number of completed jobs with the rest attributable to price gains and more favorable customer and product mix. We also saw organic growth in our large commercial construction end market of 6.6% during the three months ended March 31, 2019 over 2018.

As a percentage of net revenue, gross profit decreased during the three months ended March 31, 2019 compared to 2018 attributable primarily to the impact of 2018 materials price inflation and production delays by certain of our customers which impacted our ability to achieve the full benefit of recent price increases.

Operating expenses

Operating expenses were as follows (in thousands):

	Three months ended March 31,
	2019			Change			2018
Selling	$	17,130			8.1	%	$	15,846
Percentage of total net revenue		5.0	%					5.3	%
Administrative	$	48,431			9.6	%	$	44,203
Percentage of total net revenue		14.2	%					14.6	%
Amortization	$	5,888			-17.4	%	$	7,128
Percentage of total net revenue		1.7	%					2.4	%

Selling

The dollar increases in selling expenses for the three months ended March 31, 2019 was primarily driven by an increase in selling wages, commissions and bonuses to support our increased net revenue of 13.4%. Selling expense as a percentage of sales decreased slightly for the three months ended March 31, 2019 compared to 2018 primarily due to selling leverage gained through increased net revenue.

Administrative

The increase in administrative expenses for the three months ended March 31, 2019 was primarily due to an increase in wages, benefits and facility costs attributable to both acquisitions and organic growth.

Administrative expense decreased as a percentage of sales for the three months ended March 31, 2019 compared to 2018 primarily due to leverage on wages and benefits gained through increased net revenue.

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Other expense

Other expense, net was as follows (in thousands):

	Three months ended March 31,
	2019		Change			2018
Interest expense, net	$	5,676		40.5	%	$	4,040
Other		125		2.5	%		122
Total other expense	$	5,801		39.4	%	$	4,162

The increase in interest expense, net during the three months ended March 31, 2019 compared to 2018 was due to increased debt balances associated with our borrowings to support acquisition-related growth.

Income tax provision

Income tax provision and effective tax rates were as follows (in thousands):

	Three months ended March 31,
	2019			2018
Income tax provision	$	3,354		$	2,243
Effective tax rate		27.5	%		26.0	%

During the three months ended March 31, 2019, our tax rate was unfavorably impacted due to separate tax filing entities in a loss position for which a full valuation allowance is required, resulting in no tax benefit for recognized losses.

Other comprehensive (loss) income

Other comprehensive (loss) income was as follows (in thousands):

	Three months ended March 31,
	2019			2018
Unrealized (loss) gain on cash flow hedge, net of taxes	$	(2,749	)	$	1,160

During the three months ended March 31, 2019, our cash flow hedge position decreased primarily due to unexpected changes in interest rates. During the three months ended March 31, 2018 we recorded a gain on our cash flow hedge due to favorable interest rate movements.

KEY FACTORS AFFECTING OUR OPERATING RESULTS

Cost of Materials

We purchase the materials that we install primarily from manufacturers. The industry supply of materials we install was disrupted due to a catastrophic failure at a manufacturer’s facility during the fourth quarter of 2017, resulting in insulation material allocation for certain insulation products and, as a result, contributed to increased market pricing throughout 2018. Increased market pricing, regardless of the catalyst, has and could continue to impact our results of operations in 2019, to the extent that price increases cannot be passed on to our customers. We will continue to work with our customers to adjust selling prices to offset these higher costs.

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Labor Costs and Charitable Activities

Our business is labor intensive. While the availability of labor in many markets has continued to tighten as the demand for installers increases, we experienced strong employee retention, turnover and labor efficiency rates in the three months ended March 31, 2019. We believe this is a result of various programs meant to benefit our employees, including our financial wellness plan and longevity stock compensation plan for employees. While improved retention drives lower costs to recruit and train new employees and improves installer productivity, these improvements are somewhat offset by the additional costs of these incentives. We expect to spend more to hire, train and retain installers to support our growing business in 2019, as tight labor availability continues within the construction industry. During the three months ended March 31, 2019, we also launched the Installed Building Products Foundation meant to benefit IBP employees, their families and their communities. We set a goal to donate more than $1.0 million to not-for-profit entities and individuals in 2019 through the Foundation’s programs.

LIQUIDITY AND CAPITAL RESOURCES

Our capital resources primarily consist of cash from operations and borrowings under our credit agreement and capital equipment leases and loans. Our primary capital requirements are to fund working capital needs, operating expenses, acquisitions and capital expenditures and meet required principal and interest payments. We may also use our resources to fund our optional stock repurchase program. Our investments consist of highly liquid instruments primarily including corporate bonds and commercial paper. As of March 31, 2019, we had no outstanding borrowings under our ABL Revolver (as defined below).

Senior Secured Credit Facilities

On April 13, 2017, we entered into a term loan credit agreement (the “Term Loan Agreement”), which provides for our $300.0 million, seven-year term loan facility (the “Term Loan”) amortizing in quarterly principal payments of $1.0 million. On April 13, 2017, we also entered into an asset-based lending credit agreement (the “ABL Credit Agreement” and together with the Term Loan Agreement, the “Senior Secured Credit Agreements”), which provides for a revolving credit facility up to approximately $100.0 million and up to $50.0 million for the issuance of letters of credit (the “ABL Revolver”) and together with the Term Loan, the “Senior Secured Credit Facilities”).

The Term Loan Agreement was amended on November 30, 2017 to refinance the total principal amount of the Term Loan outstanding immediately prior to the effective date of the amendment on substantially the same terms as the initial Term Loan, except for (i) a decrease in the margins applicable to the base rate and Eurodollar rate loans, (ii) an increase in the cap on permitted indebtedness related to capital expenditures other than finance lease obligations and (iii) the inclusion of a mechanism to establish an alternative Eurodollar rate if certain circumstances have arisen such that the London Interbank Offered Rate may no longer be used. The ABL Credit Agreement was amended in December 2017 to revise the formula for maximum indebtedness incurred by the Company while subject to the terms of such agreement.

On June 19, 2018, we entered into a second amendment to the Term Loan Agreement to (i) extend the maturity date from April 15, 2024 to April 15, 2025 and (ii) increase the aggregate principal amount of the facility from $297.8 million to $397.8 million. All other provisions of the Term Loan were unchanged. Also on June 19, 2018, we entered into a third amendment to the ABL Credit Agreement to (i) extend the maturity date from April 13, 2022 to June 19, 2023, (ii) increase the aggregate revolving loan commitments from $100.0 million to $150.0 million and (iii) provide enhanced borrowing availability against certain types of accounts receivable.

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Our Senior Secured Credit Facilities bear interest at either the Eurodollar rate (“LIBOR”) or the base rate (which approximated the prime rate), at our election, plus a margin based on the type of rate applied and leverage ratio. The margin in respect of loans under (i) the Term Loan will be (A) 2.50% in the case of Eurodollar rate loans and (B) 1.50% in the case of base rate loans, and (ii) the ABL Revolver will be (A) 1.25%, 1.50% or 1.75% in the case of Eurodollar rate loans (based on a measure of availability under the agreement) and (B) 0.25%, 0.50% or 0.75% in the case of base rate loans (based on a measure of availability under the agreement).

At March 31, 2019, we were in compliance with all applicable covenants under the Senior Secured Credit Agreements.

Derivative Instruments

As of March 31, 2019, we had two interest rate swaps, each with an associated floor, with a total beginning notional of $200.0 million, one that amortizes quarterly to $95.3 million at a maturity date of May 31, 2022 and one that amortizes quarterly to $93.3 million at a maturity date of April 15, 2025. We also had a forward interest rate swap with an associated floor beginning May 31, 2022 with a beginning notional of $100.0 million that amortizes quarterly to $97.0 million at a maturity date of April 15, 2025. Combined, these three swaps serve to hedge $200.0 million of the variable cash flows on our Term Loan until maturity.

Vehicle and Equipment Notes

We have financing loan agreements with various lenders to provide financing for the purpose of purchasing or leasing vehicles and equipment used in the normal course of business. Vehicles and equipment purchased or leased under each financing arrangement serve as collateral for the note applicable to such financing arrangement. Regular payments are due under each note for a period of typically 60 consecutive months after the incurrence of the obligation.

Total outstanding loan balances relating to our master loan and equipment agreements were $60.8 million and $60.4 million as of March 31, 2019 and December 31, 2018, respectively.

Letters of Credit and Bonds

We may use performance bonds to ensure completion of our work on certain larger customer contracts that can span multiple accounting periods. Performance bonds generally do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. In addition, we occasionally use letters of credit and cash to secure our performance under our general liability and workers’ compensation insurance programs. Permit and license bonds are typically issued for one year and are required by certain municipalities when we obtain licenses and permits to perform work in their jurisdictions. The following table summarizes our outstanding bonds, letters of credit and cash-collateral (in thousands):

	As of March 31, 2019
Performance bonds	$	42,613
Insurance letters of credit and cash-collateral		38,887
Permit and license bonds		6,884
Total bonds and letters of credit	$	88,384

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In January 2018, we posted $10.0 million into a trust to serve as additional collateral for our workers’ compensation and general liability policies. This $10.0 million can be converted to a letter of credit at our discretion and is therefore not considered to be restricted cash.

Summary

The following table summarizes our liquidity (in thousands):

	As of March 31, 2019			As of December 31, 2018
Cash and cash equivalents	$	88,146		$	90,442
Short-term investments		10,026			10,060
ABL Revolver(1)		150,000			150,000
Less: outstanding letters of credit and cash-collateral		(28,887	)		(28,887	)
Total liquidity	$	219,285		$	221,615

⁽¹⁾  Liquidity under our ABL Revolver can be limited by certain cash collateral limitations depending upon the status of our borrowing base availability. Liquidity is also reduced by $10.0 million included within cash and cash equivalents above which was deposited into a trust to serve as additional collateral for our workers’ compensation and general liability policies. This amount can be converted to a letter of credit at our discretion and would reduce the availability on our ABL Revolver included in the table above.

We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to support our ongoing operations and to fund our debt service requirements, capital expenditures and working capital for at least the next 12 months as evidenced by our net positive cash flows from operations for each of the three months ended March 31, 2019 and 2018.

Historical cash flow information

Cash flows from operating activities

Net cash provided by operating activities was $15.9 million and $6.1 million for the three months ended March 31, 2019 and 2018, respectively. Generally, the primary driver of our cash flows from operating activities is operating income adjusted for certain non-cash items, offset by cash payments for taxes and interest on our outstanding debt. Our cash flows from operations can be impacted by the timing of our cash collections on sales and collection of retainage amounts. In addition, cash flows are seasonally stronger in the third and fourth quarters as a result of increased construction activity.

Cash flows from investing activities

Business Combinations. During the three months ended March 31, 2019 and 2018, we made cash payments of $5.1 million and $11.5 million, respectively, on business combinations.

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Capital Expenditures. Total cash paid for property and equipment was $8.7 million and $10.2 million for the three months ended March 31, 2019 and 2018, respectively, and was primarily related to purchases of vehicles and various equipment to support our growing operations. We expect to continue to support any increases in 2019 net revenue through further capital expenditures.

Other. During the three months ended March 31, 2019 and 2018, we invested $7.5 million and $17.8 million, respectively, in short-term investments consisting primarily of corporate bonds and commercial paper and had $7.5 million and $19.0 million in short-term investments that matured during the three months ended March 31, 2019 and 2018, respectively.

Cash flows from financing activities

We utilize our credit facilities to support our operations and continuing acquisitions, fund our stock repurchase program at our discretion and finance our fleet expansion. During the three months ended March 31, 2019 and 2018, we made principal payments of $3.9 million and $3.1 million, respectively, on fixed asset loans, made $1.4 million and $1.6 million, respectively, in principal payments on our finance leases, and received proceeds of $4.9 million and $4.5 million, respectively, from our fixed asset loans, which serve to offset a significant portion of the capital expenditures included in cash flows from investing activities as described above. We also incurred $2.8 million and $1.7 million of acquisition-related obligations during the three months ended March 31, 2019 and 2018, respectively. Lastly, we repurchased approximately 413 thousand shares of our common stock for $24.6 million during the three months ended March 31, 2018 as part of our stock repurchase plan.

Contractual Obligations

We had no significant changes to our obligations during the three months ended March 31, 2019. While the amount of operating lease obligations did not change materially since December 31, 2018, these amounts are now presented on the Condensed Consolidated Balance Sheet as of March 31, 2018 as required by ASC 842. See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations within our 2018 Form 10-K for additional information on our contractual obligations.

Critical Accounting Policies and Estimates

During the three months ended March 31, 2019, we changed our accounting policy regarding leases upon adoption of ASC 842. See Note 7, Leases, for more information. There have been no other changes to our critical accounting policies and estimates from those previously disclosed in our 2018 Form 10-K.

Recently Adopted Accounting Pronouncements

Standard

Adoption

ASU 2016-02, Leases     (Topic 842)

This ASU requires substantially all leases, with the exception of leases with a term of one year or less, to be recorded on the balance sheet as a lease liability measured as the present value of the future lease payments with a corresponding right-of-use asset. This ASU also requires disclosures designed to give financial statement users information on the amount, timing and uncertainty of cash flows. See Note 7, Leases, for further information regarding our lease accounting policies.

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Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws, including with respect to the housing market, our financial and business model, our efforts to navigate the material pricing environment, our ability to increase selling prices, our material and labor costs, demand for our services and product offerings, expansion of our national footprint and diversification, our ability to capitalize on the new home and commercial construction recovery, our ability to grow and 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 in 2019. Forward-looking statements may generally be identified by the use of words such as “anticipate,” “believe,” “estimate,” “project,” “predict,” “possible,” “forecast,” “may,” “could,” “would,” “should,” “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, general economic and industry conditions, the material price environment, the timing of increases in our selling prices and the factors discussed in the “Risk Factors” section of our 2018 Form 10-K, as the same may be updated from time to time in our subsequent filings with the SEC. Any forward-looking statement made by the Company in this report 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.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks related to fluctuations in interest rates on our outstanding variable rate debt. As of March 31, 2019, we had approximately $394.8 million outstanding on the Term Loan, no outstanding borrowings on the ABL Revolver and $0.2 million outstanding under various finance leases subject to variable interest rates. Upon entering the second amendment to the Term Loan Agreement during the year ended December 31, 2018, we increased the aggregate principal amount of our debt by $100.0 million. On July 16, 2018, we entered a seven-year interest rate swap with a beginning notional of $100.0 million that serves to hedge the additional $100.0 million Term Loan. We also entered into a forward interest rate swap beginning May 31, 2022 with beginning notional of $100.0 million. All of our derivatives combine to reduce our variable rate debt by $200.0 million, resulting in total variable rate debt exposed to market risks of $195.0 million as of March 31, 2019. A hypothetical one percentage point increase (decrease) in interest rates on our variable rate debt would increase (decrease) our annual interest expense by approximately $2.0 million.

For variable rate debt, interest rate changes generally do not affect the fair value of the debt instrument, but do impact future earnings and cash flows, assuming other factors are held constant. We have not entered into and currently do not hold derivatives for trading or speculative purposes.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as required by Exchange Act Rules 13a-15(e) and 15d-15(e). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of March 31, 2019.

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Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended March 31, 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Part I, Item 1. Financial Statements, Note 14, Commitments and Contingencies – Other Commitments and Contingencies, for information about existing legal proceedings.

Item 1A. Risk Factors

There have been no material changes for the three months ended March 31, 2019 from the risk factors as disclosed in our 2018 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table shows the stock repurchase activity for the three months ended March 31, 2019:

	Total Number of Shares Purchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (2)
January 1 - 31, 2019		198	$	39.70		—		—
February 1 - 28, 2019		—		—		—		—
March 1 - 31, 2019		—		—		—		—
		198	$	39.70		—	$	60.6 million

⁽¹⁾ Represents 198 shares surrendered to the Company by employees to satisfy tax withholding obligations arising in connection with the vesting of 564 shares of restricted stock awarded under our 2014 Omnibus Incentive Plan.

⁽²⁾ On February 28, 2018, our board of directors authorized a $50 million stock repurchase program effective March 2, 2018 through February 28, 2019, unless extended by the board of directors. On October 31, 2018, our board of directors approved an additional stock repurchase program, effective November 5, 2018, pursuant to which we may purchase up to an additional $100 million of our outstanding common stock. The program will remain in effect until February 28, 2020, unless extended by the board of directors. During the three months ended March 31, 2019, we did not repurchase any shares under our stock repurchase program.

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Item 3. Defaults Upon Senior Securities

There have been no material defaults in senior securities.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits

(a)(3) Exhibits

The following exhibits are being filed as part of this Quarterly Report on Form 10-Q:

Exhibit Number	Description
31.1*	CEO Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	CFO Certification pursuant to Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**	XBRL Instance Document
101.SCH**	XBRL Taxonomy Extension Schema Document
101.CAL**	XBRL Taxonomy Extension Calculation Linkbase Document
101.LAB**	XBRL Taxonomy Extension Label Linkbase Document
101.PRE**	XBRL Taxonomy Extension Presentation Linkbase Document
101.DEF**	XBRL Taxonomy Extension Definition Linkbase Document

* Filed herewith.

** Submitted electronically with the report.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: May 3, 2019

INSTALLED BUILDING PRODUCTS, INC.
By:	/s/ Jeffrey W. Edwards
	Jeffrey W. Edwards
	President and Chief Executive Officer

By:	/s/ Michael T. Miller
	Michael T. Miller
	Executive Vice President and Chief Financial Officer

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EX-31.1

Exhibit 31.1

INSTALLED BUILDING PRODUCTS, INC.

Certification Required by Rule 13a-14(a) or 15d-14(a)

of the Securities Exchange Act of 1934

I, Jeffrey W. Edwards, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Installed Building Products, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2019	By:	/s/ Jeffrey W. Edwards
		Jeffrey W. Edwards
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

INSTALLED BUILDING PRODUCTS, INC.

Certification Required by Rule 13a-14(a) or 15d-14(a)

of the Securities Exchange Act of 1934

I, Michael T. Miller, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Installed Building Products, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2019	By:	/s/ Michael T. Miller
		Michael T. Miller
		Executive Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

INSTALLED BUILDING PRODUCTS, INC.

Certification Required by Rule 13a-14(b) or 15d-14(b)

of the Securities Exchange Act of 1934 and

Section 1350 of Chapter 63 of Title 18 of the

United States Code

The certification set forth below is being submitted in connection with the Installed Building Products, Inc. Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Jeffrey W. Edwards, the President and Chief Executive Officer, of Installed Building Products, Inc., certifies that, to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of Installed Building Products, Inc.

Dated: May 3, 2019	By:	/s/ Jeffrey W. Edwards
		Jeffrey W. Edwards
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

INSTALLED BUILDING PRODUCTS, INC.

Certification Required by Rule 13a-14(b) or 15d-14(b)

of the Securities Exchange Act of 1934 and

Section 1350 of Chapter 63 of Title 18 of the

United States Code

The certification set forth below is being submitted in connection with the Installed Building Products, Inc. Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2019 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Michael T. Miller, the Executive Vice President and Chief Financial Officer, of Installed Building Products, Inc., certifies that, to the best of his knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the consolidated financial condition and results of operations of Installed Building Products, Inc.

Dated: May 3, 2019	By:	/s/ Michael T. Miller
		Michael T. Miller
		Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	Apr. 26, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Entity Registrant Name	Installed Building Products, Inc.
Entity Central Index Key	0001580905
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Trading Symbol	IBP
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Common Stock, Shares Outstanding		30,011,640

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 88,146	$ 90,442
Investments	10,026	10,060
Accounts receivable (less allowance for doubtful accounts of $5,442 and $5,085 at March 31, 2019 and December 31, 2018, respectively	216,997	214,121
Inventories	60,654	61,162
Other current assets	32,473	35,760
Total current assets	408,296	411,545
Property and equipment, net	91,391	90,117
Operating lease right-of-use assets	45,280
Non-current assets
Goodwill	174,959	173,049
Intangibles, net	147,409	149,790
Other non-current assets	10,374	10,157
Total assets	877,709	834,658
Current liabilities
Current maturities of long-term debt	23,925	22,642
Current maturities of operating lease obligations	14,241
Current maturities of finance lease obligations	4,328	4,806
Accounts payable	88,872	96,949
Accrued compensation	22,371	27,923
Other current liabilities	28,680	29,366
Total current liabilities	182,417	181,686
Long-term debt	430,460	432,182
Operating lease obligations	30,682
Long-term lease obligations	3,974	3,824
Deferred income taxes	5,774	6,695
Other long-term liabilities	33,801	27,773
Total liabilities	687,108	652,160
Commitments and contingencies
Stockholders' equity
Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively
Common stock; $0.01 par value: 100,000,000 authorized, 32,780,967 and 32,723,972 issued and 29,971,963 and 29,915,611 shares outstanding at March 31, 2019 and December 31, 2018, respectively	328	327
Additional paid in capital	183,836	181,815
Retained earnings	114,046	105,212
Treasury stock; at cost: 2,809,004 and 2,808,361 shares at March 31, 2019 and December 31, 2018, respectively	(104,429)	(104,425)
Accumulated other comprehensive loss	(3,180)	(431)
Total stockholders' equity	190,601	182,498
Total liabilities and stockholders' equity	$ 877,709	$ 834,658

XML

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 5,442	$ 5,085
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	32,780,967	32,723,972
Common stock, shares outstanding	29,971,963	29,915,611
Treasury Stock	2,809,004	2,808,361

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Net revenue	$ 342,135	$ 301,728
Cost of sales	252,697	221,752
Gross profit	89,438	79,976
Operating expenses
Selling	17,130	15,846
Administrative	48,431	44,203
Amortization	5,888	7,128
Operating income	17,989	12,799
Other expense
Interest expense, net	5,676	4,040
Other	125	122
Income before income taxes	12,188	8,637
Income tax provision	3,354	2,243
Net income	8,834	6,394
Other comprehensive (loss) income, net of tax:
Unrealized (loss) gain on cash flow hedge, net of tax benefit (provision) of $921 and ($386) for the three months ended March 31, 2019 and 2018, respectively	(2,749)	1,160
Comprehensive income	$ 6,085	$ 7,554
Basic and diluted net income per share	$ 0.30	$ 0.20
Weighted average shares outstanding:
Basic	29,679,884	31,548,745
Diluted	29,806,653	31,772,581

XML

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Unrealized gain (loss) on cash flow hedge, tax (provision) benefit	$ 921	$ (386)

XML

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED) - USD ($) $ in Thousands	Total	Common Stock [Member]	Additional Paid In Capital [Member]	Retained Earnings [Member]	Treasury Stock [Member]	Accumulated Other Comprehensive Income (Loss) [Member]
BALANCE at Dec. 31, 2017	$ 210,528	$ 325	$ 174,043	$ 48,434		$ 507
BALANCE, Shares at Dec. 31, 2017		32,524,934
BALANCE, Treasury Stock, Value at Dec. 31, 2017					$ (12,781)
BALANCE, Treasury Stock, Shares at Dec. 31, 2017					(662,788)
Net income	6,394			6,394
Cumulative effect of accounting changes, net of tax	2,888			2,776		112
Issuance of common stock awards to employees, value		$ 1	(1)
Issuance of common stock awards to employees, shares		70,390
Surrender of common stock awards by employees, value	(56)
Surrender of common stock awards by employees, shares					(1,212)
Share-based compensation expense	2,307		2,307
Common stock repurchase, value	(24,640)
Common stock repurchase, shares					(412,717)
Other comprehensive income (loss), net of tax	1,160					1,160
BALANCE at Mar. 31, 2018	198,581	$ 326	176,349	57,604		1,779
BALANCE, Shares at Mar. 31, 2018		32,595,324
BALANCE, Treasury Stock, Value at Mar. 31, 2018					$ (37,477)
BALANCE, Treasury Stock, Shares at Mar. 31, 2018					(1,076,717)
BALANCE at Dec. 31, 2018	$ 182,498	$ 327	181,815	105,212		(431)
BALANCE, Shares at Dec. 31, 2018	32,723,972	32,723,972
BALANCE, Treasury Stock, Value at Dec. 31, 2018	$ (104,425)				$ (104,425)
BALANCE, Treasury Stock, Shares at Dec. 31, 2018	(2,808,361)				(2,808,361)
Net income	$ 8,834			8,834
Issuance of common stock awards to employees, value		$ 1	(1)
Issuance of common stock awards to employees, shares		56,995
Surrender of common stock awards by employees, value	(4)				$ (4)
Surrender of common stock awards by employees, shares					(643)
Share-based compensation expense	2,022		2,022
Other comprehensive income (loss), net of tax	(2,749)					(2,749)
BALANCE at Mar. 31, 2019	$ 190,601	$ 328	$ 183,836	$ 114,046		$ (3,180)
BALANCE, Shares at Mar. 31, 2019	32,780,967	32,780,967
BALANCE, Treasury Stock, Value at Mar. 31, 2019	$ (104,429)				$ (104,429)
BALANCE, Treasury Stock, Shares at Mar. 31, 2019	(2,809,004)				(2,809,004)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities
Net income	$ 8,834	$ 6,394
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment	9,111	7,978
Amortization of operating lease right-of-use assets	3,798
Amortization of intangibles	5,888	7,128
Amortization of deferred financing costs and debt discount	282	302
Provision for doubtful accounts	828	896
Gain on sale of property and equipment	(19)	(185)
Noncash stock compensation	2,022	2,240
Changes in assets and liabilities, excluding effects of acquisitions
Accounts receivable	(3,704)	(7,058)
Inventories	799	(2,420)
Other assets	(1,048)	(4,139)
Accounts payable	(7,807)	(57)
Income taxes receivable / payable	2,746	1,303
Other liabilities	(5,841)	(6,297)
Net cash provided by operating activities	15,889	6,085
Cash flows from investing activities
Purchases of investments	(7,482)	(17,782)
Maturities of short term investments	7,530	19,000
Purchases of property and equipment	(8,658)	(10,237)
Acquisitions of businesses	(5,125)	(11,505)
Proceeds from sale of property and equipment	196	283
Other	(420)	(1,050)
Net cash used in investing activities	(13,959)	(21,291)
Cash flows from financing activities
Payments on term loan (Note 6)	(1,000)	(750)
Proceeds from vehicle and equipment notes payable	4,908	4,510
Debt issuance costs		(1)
Principal payments on long-term debt	(3,946)	(3,092)
Principal payments on finance lease obligations	(1,366)	(1,629)
Acquisition-related obligations	(2,818)	(1,740)
Repurchase of common stock		(24,640)
Surrender of common stock awards by employees	(4)	(56)
Net cash used in financing activities	(4,226)	(27,398)
Net change in cash and cash equivalents	(2,296)	(42,604)
Cash and cash equivalents at beginning of period	90,442	62,510
Cash and cash equivalents at end of period	88,146	19,906
Supplemental disclosures of cash flow information Net cash paid during the year for:
Interest	5,816	3,914
Income taxes, net of refunds	737	899
Supplemental disclosure of noncash activities
Right-of-use assets obtained in exchange for operating lease obligations	3,851
Property and equipment obtained in exchange for finance lease obligations	1,108	312
Seller obligations in connection with acquisition of businesses	1,380	3,093
Unpaid purchases of property and equipment included in accounts payable	$ 1,503	$ 1,485

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Organization

3 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization

NOTE 1—ORGANIZATION

Installed Building Products (“IBP”), a Delaware corporation formed on October 28, 2011, and its wholly-owned subsidiaries (collectively referred to as the “Company,” and “we,” “us” and “our”) primarily install insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors and other products for residential and commercial builders located in the continental United States. The Company operates in over 175 locations and its corporate office is located in Columbus, Ohio.

We have one operating segment and a single reportable segment. We offer our portfolio of services for new and existing single-family and multi-family residential and commercial building projects from our national network of branch locations.

Each of our branches has the capacity to serve all of our end markets. See Note 3, Revenue Recognition, for information on our revenues by product and end market.

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Significant Accounting Policies

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Significant Accounting Policies

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include all of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

The information furnished in the Condensed Consolidated Financial Statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and statements of financial position for the interim periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) have been omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to prevent the information presented from being misleading when read in conjunction with our audited consolidated financial statements and the notes thereto included in Part II, Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the “2018 Form 10-K”), as filed with the SEC on February 28, 2019. The December 31, 2018 Condensed Consolidated Balance Sheet data herein was derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP.

Our interim operating results for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected in future operating quarters. See Item 1A, Risk Factors, in our 2018 Form 10-K for additional information regarding risk factors that may impact our results.

Note 2 to the audited consolidated financial statements in our 2018 Form 10-K describes the significant accounting policies and estimates used in preparation of the audited consolidated financial statements. There have been no changes to our significant accounting policies during the three months ended March 31, 2019, except for the manner in which we account for leases as described in Note 7, Leases.

Recently Adopted Accounting Pronouncements

Standard

Adoption

ASU 2016-02, Leases (Topic 842)

This Accounting Standards Update (“ASU”) requires substantially all leases, with the exception of leases with a term of one year or less, to be recorded on the balance sheet as a lease liability measured as the present value of the future lease payments with a corresponding right-of-use asset. This ASU also requires disclosures designed to give financial statement users information on the amount, timing and uncertainty of cash flows. See Note 7, Leases, for further information regarding our lease accounting policies.

Recently Issued Accounting Pronouncements Not Yet Adopted

We are currently evaluating the impact of certain ASU’s on our Condensed Consolidated Financial Statements or Notes to Consolidated Financial Statements, which are described below:

Standard	Description	Effective Date	Effect on the financial statements or other significant matters
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)	This pronouncement amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In addition, these amendments require the measurement of all expected credit losses for financial assets, including trade accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.	Annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted.	We are currently evaluating whether this ASU will have a material impact on our consolidated financial statements.

ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment	To address concerns over the cost and complexity of the two-step goodwill impairment test, this pronouncement removes the second step of the goodwill impairment test. Going forward, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.	Annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted.	We anticipate the adoption of this ASU will not have a material impact on our disclosures.
ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement	This pronouncement amends Topic 820 to eliminate, add and modify certain disclosure requirements for fair value measurements.	Annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted.	We are currently evaluating the provisions of this ASU and the impact it will have on our disclosures.

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Revenue Recognition

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Revenue Recognition

NOTE 3—REVENUE RECOGNITION

Our revenues are derived primarily through contracts with customers whereby we install insulation and other complementary building products and are recognized when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services. We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. We recognize revenue using the percentage-of-completion method of accounting, utilizing a cost-to-cost input approach as we believe this represents the best measure of when control of goods and services are transferred to the customer. An insignificant portion of our sales, primarily retail sales, is accounted for on a point-in-time basis when the sale occurs, adjusted accordingly for any return provisions. We do offer assurance-type warranties on certain of our installed products and services that do not represent a separate performance obligation and, as such, do not impact the timing or extent of revenue recognition.

When the percentage-of-completion method is used, we estimate the costs to complete individual contracts and record as revenue that portion of the total contract price that is considered complete based on the relationship of costs incurred to date to total anticipated costs (the cost-to-cost approach). Under the cost-to-cost approach, the use of estimated costs to complete each contract is a significant variable in the process of determining recognized revenue, requires judgment and can change throughout the duration of a contract due to contract modifications and other factors impacting job completion. The costs of earned revenue include all direct material and labor costs and those indirect costs related to contract performance, such as indirect labor, supplies, tools and repairs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

Our long-term contracts can be subject to modification to account for changes in contract specifications and requirements. We consider contract modifications to exist when the modification either creates new, or changes the existing, enforceable rights and obligations. Most of our contract modifications are for goods or services that are not distinct from the existing contract due to the significant integration service provided in the context of the contract and are accounted for as if they were part of that existing contract. The effect of a contract modification on the transaction price and our measure of progress for the performance obligation to which it relates, is recognized as an adjustment to revenue (either as an increase in or a reduction of revenue) on a cumulative catch-up basis.

Sales terms typically do not exceed 30 days for short-term contracts and typically do not exceed 60 days for long-term contracts with customers. All contracts are billed either contractually or as work is performed. Billing on our long-term contracts occurs primarily on a monthly basis throughout the contract period whereby we submit invoices for customer payment based on actual or estimated costs incurred during the billing period. On certain of our long-term contracts the customer may withhold payment on an invoice equal to a percentage of the invoice amount, which will be subsequently paid after satisfactory completion of each installation project. This amount is referred to as retainage and is common practice in the construction industry, as it allows for customers to ensure the quality of the service performed prior to full payment. Retainage receivables are classified as current or long-term assets based on the expected time to project completion.

We disaggregate our revenue from contracts with customers by end market and product, as we believe it best depicts how the nature, amount, timing and uncertainty of our revenue and cash flows are affected by economic factors. The following tables present our revenues disaggregated by end market and product (in thousands):

	Three months ended March 31,
	2019				2018
Residential new construction	$	261,310	77	%	$	229,642	76	%
Repair and remodel		21,521	6	%		20,472	7	%
Commercial		59,304	17	%		51,614	17	%
Net revenues	$	342,135	100	%	$	301,728	100	%

	Three months ended March 31,
	2019				2018
Insulation	$	221,223	65	%	$	202,275	67	%
Waterproofing		22,385	7	%		22,606	7	%
Shower doors, shelving and mirrors		23,917	7	%		20,260	7	%
Garage doors		21,672	6	%		15,466	5	%
Rain gutters		11,199	3	%		8,658	3	%
Window blinds		9,384	3	%		5,306	2	%
Other building products		32,355	9	%		27,157	9	%
Net revenues	$	342,135	100	%	$	301,728	100	%

Contract Assets and Liabilities

Our contract assets consist of unbilled amounts typically resulting from sales under contracts when the cost-to-cost method of revenue recognition is utilized and revenue recognized, based on costs incurred, exceeds the amount billed to the customer. Our contract assets are recorded in other current assets in our Consolidated Balance Sheets. Our contract liabilities consist of customer deposits and billings in excess of revenue recognized, based on costs incurred and is included in other current liabilities in our Consolidated Balance Sheets.

Contract assets and liabilities related to our uncompleted contracts and customer deposits were as follows (in thousands):

	March 31,			December 31,
	2019			2018
Contract assets	$	19,565		$	15,092
Contract liabilities		(7,792	)		(7,468	)

Uncompleted contracts were as follows (in thousands):

	March 31,		December 31,
	2019		2018
Costs incurred on uncompleted contracts	$	101,024	$	114,826
Estimated earnings		52,670		58,952
Total		153,694		173,778
Less: Billings to date		139,100		163,112
Net under (over) billings	$	14,594	$	10,666

Net under (over) billings were as follows (in thousands):

	March 31,			December 31,
	2019			2018
Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets)	$	19,565		$	15,092
Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities)		(4,971	)		(4,426	)
Net under (over) billings	$	14,594		$	10,666

The difference between contract assets and contract liabilities as of March 31, 2019 compared to December 31, 2018 is primarily the result of timing differences between our performance of obligations under contracts and customer payments. During the three months ended March 31, 2019, we recognized $6.3 million of revenue that was included in the contract liability balance at December 31, 2018. We did not recognize any impairment losses on our receivables and contract assets during the three months ended March 31, 2019 or 2018.

Remaining performance obligations represent the transaction price of contracts for which work has not been performed and excludes unexercised contract options and potential modifications. As of March 31, 2019, the aggregate amount of the transaction price allocated to remaining uncompleted contracts was $89.5 million. We expect to satisfy remaining performance obligations and recognize revenue on substantially all of these uncompleted contracts over the next 18 months.

Practical Expedients and Exemptions

We generally expense sales commissions and other incremental costs of obtaining a contract when incurred because the amortization period is usually one year or less. Sales commissions are recorded within selling expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income.

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

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Investments

3 Months Ended

Mar. 31, 2019

Investments, Debt and Equity Securities [Abstract]

Investments

NOTE 4—INVESTMENTS

Cash and cash equivalents includes investments in money market funds that are valued based on the net asset value of the funds. The investments in these funds were $71.2 million and $69.8 million as of March 31, 2019 and December 31, 2018, respectively.

All other investments are classified as held-to-maturity and consist of highly liquid instruments, primarily including corporate bonds and commercial paper. As of March 31, 2019 and December 31, 2018, the amortized cost of these investments equaled the net carrying value, which was $10.0 million and $10.1 million, respectively. All held-to-maturity securities as of March 31, 2019 mature in one year or less. See Note 8, Fair Value Measurements, for additional information.

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Goodwill and Intangibles

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangibles

NOTE 5—GOODWILL AND INTANGIBLES

Goodwill

The change in carrying amount of goodwill was as follows (in thousands):

	Goodwill (Gross)		Accumulated Impairment Losses			Goodwill (Net)
January 1, 2019	$	243,053	$	(70,004	)	$	173,049
Business Combinations		1,882		—			1,882
Other		28		—			28
March 31, 2019	$	244,963	$	(70,004	)	$	174,959

Other changes included in the above table represent minor adjustments for the allocation of certain acquisitions still under measurement and one immaterial acquisition completed during the three months ended March 31, 2019.

We test goodwill for impairment annually during the fourth quarter of our fiscal year or earlier if there is an impairment indicator. No impairment was recognized during either of the three month periods ended March 31, 2019 or 2018. Accumulated impairment losses included within the above table were incurred over multiple periods, with the latest impairment charge being recorded during the year ended December 31, 2010.

Intangibles, net

The following table provides the gross carrying amount, accumulated amortization and net book value for each major class of intangibles (in thousands):

	As of March 31, 2019						As of December 31, 2018
	Gross				Net		Gross				Net
	Carrying		Accumulated		Book		Carrying		Accumulated		Book
	Amount		Amortization		Value		Amount		Amortization		Value
Amortized intangibles:
Customer relationships	$	150,735	$	56,530	$	94,205	$	148,635	$	52,514	$	96,121
Covenants not-to-compete		15,090		8,325		6,765		14,682		7,572		7,110
Trademarks and trade names		65,432		19,319		46,113		64,432		18,256		46,176
Backlog		14,060		13,734		326		14,060		13,677		383
	$	245,317	$	97,908	$	147,409	$	241,809	$	92,019	$	149,790

The gross carrying amount of intangibles increased approximately $3.5 million during the three months ended March 31, 2019 primarily due to business combinations. See Note 15, Business Combinations, for more information. Remaining estimated aggregate annual amortization expense is as follows (amounts, in thousands, are for the fiscal year ended):

Remainder of 2019	17,719
2020	22,744
2021	21,415
2022	20,494
2023	17,583
Thereafter	47,454

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Long-Term Debt

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Long-Term Debt

NOTE 6—LONG-TERM DEBT

Long-term debt consisted of the following (in thousands):

	As of March 31,			As of December 31,
	2019			2018
Term loan, net of unamortized debt issuance costs of $4,642 and $4,834, respectively	$	390,108		$	390,916
Vehicle and equipment notes, maturing through March 2024; payable in various monthly installments, including interest rates ranging from 2.5% to 4.8%		60,811			60,391
Various notes payable, maturing through March 2025; payable in various monthly installments, including interest rates ranging from 4% to 6%		3,466			3,517
		454,385			454,824
Less: current maturities		(23,925	)		(22,642	)
Long-term debt, less current maturities	$	430,460		$	432,182

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Leases

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Leases

NOTE 7—LEASES

On January 1, 2019, we adopted ASC 842, “Leases” which, among other changes, requires us to record liabilities classified as operating leases on our condensed consolidated balance sheets along with a corresponding right-of-use asset. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting under Topic 840. We elected the package of practical expedients available for expired or existing contracts, which allowed us to carryforward our historical assessments of whether contracts are or contain leases, lease classification tests and treatment of initial direct costs. We also elected to not separate lease components from non-lease components for all fixed payments, and we exclude variable lease payments in the measurement of right-of-use assets and lease obligations.

Upon adoption of ASC 842, we recorded a $44.9 million increase in other assets, a $1.4 million decrease to other current assets, a $1.0 million decrease to other current liabilities and a $44.5 million increase to operating lease obligations. The impact primarily related to the change in assigning a right-of-use asset and related lease liability to our operating leases. We did not record any cumulative effect adjustments to opening retained earnings, and adoption of the lease standard had no impact to cash from or used in operating, financing, or investing on our consolidated cash flow statements.

We determine if an arrangement is a lease at inception. Most of our operating leases do not provide an implicit rate so we use our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments. We lease various assets in the course of ordinary business as follows: warehouses to store our materials and perform staging activities for certain products we install; various office spaces for selling and administrative activities to support our business; certain manufacturing facilities to produce insulation materials; and certain vehicles and equipment to facilitate our operations, including, but not limited to, trucks, forklifts and office equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet as we recognize lease expense for these leases on a straight-line basis over the lease term.

Most lease agreements include one or more renewal options, all of which are at our sole discretion. Future renewal options that have not been executed as of the balance sheet date are excluded from right-of-use assets and related lease liabilities. Certain leases also include options to purchase the leased property. The depreciable life of assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. Some of our vehicle lease agreements include provisions for residual value guarantees and any expected payment is included in our lease liability.

Lease Position as of March 31, 2019

The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheet:

(in thousands)	Classification	As of March 31, 2019
Assets
Non-Current
Operating	Operating lease right-of-use assets	$	45,280
Finance	Property and equipment, net		9,217
Total lease assets		$	54,497
Liabilities
Current
Operating	Current maturities of operating lease obligations	$	14,241
Financing	Current maturities of finance lease obligations		4,328
Non-Current
Operating	Operating lease obligations		30,682
Financing	Finance lease obligations		3,974
Total lease liabilities		$	53,225
Weighted-average remaining lease term
Operating leases			4.5 years
Finance leases			2.3 years
Weighted-average discount rate
Operating leases (1)			5.04	%
Finance leases			4.57	%

(1)  Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

Lease Costs

The table below presents certain information related to the lease costs for finance and operating leases during 2019:

(in thousands)	Classification		Three months ended March 31, 2019
Operating lease cost (1)	Administrative	$	4,987
Finance lease cost
Amortization of leased assets (2)	Cost of sales		1,478
Interest on capital lease obligations	Interest expense, net		94
Total lease costs		$	6,559

(1)	Includes variable lease costs of $0.5 million and short-term lease costs of $0.2 million.
(2)	Includes variable lease costs of $0.3 million.

Other Information

The table below presents supplemental cash flow information related to leases during 2019 (in thousands):

	Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	4,233
Operating cash flows for finance leases		94
Financing cash flows for finance leases		1,366

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years for the finance lease obligations and operating lease obligations recorded on the Condensed Consolidated Balance Sheet (in thousands):

	As of March 31, 2019
	Related Party		Other		Total Operating			Finance Leases
Remainder of 2019	$	774	$	11,595	$	12,369		$	3,947
2020		1,055		12,240		13,295			2,539
2021		910		8,042		8,952			1,596
2022		836		4,615		5,451			663
2023		415		3,047		3,462			284
Thereafter		823		6,007		6,830			16
Total minimum lease payments	$	4,813	$	45,546		50,359			9,045
Less: Amounts representing executory costs						—			(255	)
Less: Amounts representing interest						(5,436	)		(488	)
Present value of future minimum lease payments						44,923			8,302
Less: Current obligation under leases						(14,241	)		(4,328	)
Long-term lease obligations					$	30,682		$	3,974

Disclosures Related to Periods Prior to Adoption of ASC 842 under ASU 2016-02

Lease amounts presented as of December 31, 2018 and for the three months ended March 31, 2018 are in accordance with accounting guidance in effect prior to adoption of ASC 842, “Leases,” on January 1, 2019. Total assets relating to capital leases were approximately $58.7 million and a total of approximately $32.0 million were fully depreciated as of December 31, 2018. The net book value of assets under capital leases was approximately $9.5 million as of December 31, 2018. Amortization of assets held under capital leases is included within cost of sales on the Consolidated Statements of Operations and Comprehensive Income.

Future minimum lease payments under noncancellable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments as of December 31, 2018 were as follows (in thousands):

				Operating Leases
	Capital Leases			Related Party		Other		Total Operating
2019	$	5,207		$	1,159	$	14,418	$	15,577
2020		2,253			1,184		11,293		12,477
2021		1,339			1,058		7,014		8,072
2022		452			972		4,335		5,307
2023		93			51		2,613		2,664
Thereafter		—			—		4,695		4,695
		9,344		$	4,424	$	44,368	$	48,792
Less: Amounts representing executory costs		(255	)
Less: Amounts representing interest		(459	)
Total obligation under capital leases		8,630
Less: Current portion of capital leases		(4,806	)
Long term capital lease obligation	$	3,824

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Fair Value Measurements

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 8—FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

In many cases, a valuation technique used to measure fair value includes inputs from multiple levels of the fair value hierarchy. The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy. During the periods presented, there were no transfers between fair value hierarchical levels.

Assets Measured at Fair Value on a Nonrecurring Basis

Certain assets, specifically other intangible and long-lived assets, are measured at fair value on a nonrecurring basis in periods subsequent to initial recognition. Assets measured at fair value on a nonrecurring basis as of March 31, 2019 and December 31, 2018 are categorized based on the lowest level of significant input to the valuation. The assets are measured at fair value when our impairment assessment indicates a carrying value for each of the assets in excess of the asset’s estimated fair value. Undiscounted cash flows, a Level 3 input, are utilized in determining estimated fair values. During each of the three months ended March 31, 2019 and 2018, we did not record any impairments on these assets required to be measured at fair value on a nonrecurring basis.

Estimated Fair Value of Financial Instruments

Accounts receivable, accounts payable and accrued liabilities as of March 31, 2019 and December 31, 2018 approximate fair value due to the short-term maturities of these financial instruments. The carrying amounts of our long-term debt, including the Term Loan and ABL Revolver as of March 31, 2019 and December 31, 2018, approximate fair value due to the variable rate nature of the agreements. The carrying amounts of our operating lease right-of-use assets and the obligations associated with our operating and finance leases as well as our vehicle and equipment notes approximate fair value as of March 31, 2019 and December 31, 2018. All debt classifications represent Level 2 fair value measurements.

Derivative financial instruments are measured at fair value based on observable market information and appropriate valuation methods. Contingent consideration liabilities arise from future earnout payments to the sellers associated with certain acquisitions and are based on predetermined calculations of certain future results. These future payments are estimated by considering various factors, including business risk and projections. The contingent consideration liabilities are measured at fair value by discounting estimated future payments to their net present value using the appropriate weighted average cost of capital (WACC). The fair values of financial assets and liabilities that are recorded at fair value in the Condensed Consolidated Balance Sheets and not described above were as follows (in thousands):

	As of March 31, 2019								As of December 31, 2018
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents	$	71,240	$	71,240	$	—	$	—	$	69,807	$	69,807	$	—	$	—
Derivative financial instruments		805		—		805		—		1,765		—		1,765		—
Total financial assets	$	72,045	$	71,240	$	805	$	—	$	71,572	$	69,807	$	1,765	$	—
Financial liabilities:
Derivative financial instruments	$	4,984	$	—	$	4,984	$	—	$	2,275	$	—	$	2,275	$	—
Contingent consideration		4,977		—		—		4,977		5,098		—		—		5,098
Total financial liabilities	$	9,961	$	—	$	4,984	$	4,977	$	7,373	$	—	$	2,275	$	5,098

The change in fair value of the contingent consideration (a Level 3 input) was as follows (in thousands):

Contingent consideration liability—January 1, 2019	$	5,098
Preliminary purchase price		1,525
Fair value adjustments		(245	)
Accretion in value		125
Amounts paid to sellers		(1,526	)
Contingent consideration liability—March 31, 2019	$	4,977

The accretion in value of contingent consideration liabilities is included within administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income.

The carrying values and associated fair values of financial assets and liabilities that are not recorded at fair value in the Condensed Consolidated Balance Sheets and not described above include investments which represent a Level 2 fair value measurement and are as follows (in thousands):

	As of March 31, 2019				As of December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Investments	$	10,026	$	10,026	$	10,060	$	10,053

See Note 4, Investments, for more information on cash equivalents and investments included in the table above. Also see Note 9, Derivatives and Hedging Activities, for more information on derivative financial instruments.

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Derivatives and Hedging Activities

3 Months Ended

Mar. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Derivatives and Hedging Activities

NOTE 9—DERIVATIVES AND HEDGING ACTIVITIES

Cash Flow Hedges of Interest Rate Risk

Our purpose for using interest rate derivatives is to add stability to interest expense and to manage our exposure to interest rate movements. During the first three months of 2019, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. To accomplish these objectives, we primarily use interest rate swaps as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. As of March 31, 2019, we had two interest rate swaps, each with an associated floor, with a total beginning notional of $200.0 million, one that amortizes quarterly to $95.3 million at a maturity date of May 31, 2022 and one that amortizes quarterly to $93.3 million at a maturity date of April 15, 2025. We also had a forward interest rate swap with an associated floor beginning May 31, 2022 with a beginning notional of $100.0 million that amortizes quarterly to $97.0 million at a maturity date of April 15, 2025. Combined, these three swaps serve to hedge $200.0 million of the variable cash flows on our Term Loan until maturity. The assets and liabilities associated with these derivative instruments are included in other current assets, other non-current assets, other current liabilities, and other long-term liabilities on the Condensed Consolidated Balance Sheets at their fair value amounts as described in Note 8, Fair Value Measurements.

The changes in the fair value of derivatives designated and that qualify as cash flow hedges are recorded in other comprehensive income, net of tax on the Condensed Consolidated Statements of Operations and Comprehensive Income and in accumulated other comprehensive income on the Condensed Consolidated Balance Sheets and subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. We had no such changes during the three months ended March 31, 2019 or 2018.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense, net as interest payments are made on our variable-rate debt. Over the next twelve months, we estimate that an additional $0.1 million will be reclassified as an increase to interest expense, net.

Additionally, we do not use derivatives for trading or speculative purposes and we currently do not have any derivatives that are not designated as hedges. As of March 31, 2019, the Company has not posted any collateral related to these agreements. 

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Stockholders' Equity

3 Months Ended

Mar. 31, 2019

Federal Home Loan Banks [Abstract]

Stockholders' Equity

NOTE 10—STOCKHOLDERS’ EQUITY

As of March 31, 2019, we had $3.2 million in accumulated other comprehensive loss on our Condensed Consolidated Balance Sheet, which represents the effective portion of the unrealized loss on our derivative instruments. For additional information, see Note 9, Derivatives and Hedging Activities.

During the three months ended March 31, 2018, we repurchased 413 thousand shares of our outstanding common stock for an aggregate purchase price of $24.6 million or $59.70 average price per share as part of our stock repurchase plan in effect through February 28, 2020, unless extended by our board of directors. We did not repurchase any shares during the three months ended March 31, 2019. The effect of these treasury shares reducing the number of common shares outstanding is reflected in our earnings per share calculation. 

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Employee Benefits

3 Months Ended

Mar. 31, 2019

Postemployment Benefits [Abstract]

Employee Benefits

NOTE 11—EMPLOYEE BENEFITS

Healthcare

Our healthcare benefit expense (net of employee contributions) for all plans was approximately $4.8 million and $4.4 million for the three months ended March 31, 2019 and 2018, respectively. An accrual for estimated healthcare claims incurred but not reported (“IBNR”) is included within accrued compensation on the Condensed Consolidated Balance Sheets and was $2.7 million and $2.3 million as of March 31, 2019 and December 31, 2018, respectively.

Workers’ Compensation

Workers’ compensation expense totaled $4.2 million and $3.8 million for the three months ended March 31, 2019 and 2018, respectively. Workers’ compensation known claims and IBNR reserves included on the Condensed Consolidated Balance Sheets were as follows (in thousands):

	March 31, 2019		December 31, 2018
Included in other current liabilities	$	5,201	$	5,795
Included in other long-term liabilities		11,138		9,447
	$	16,339	$	15,242

We also had an insurance receivable for claims that exceeded the stop loss limit included on the Condensed Consolidated Balance Sheets. This receivable offsets an equal liability included within the reserve amounts noted above and was as follows (in thousands):

	March 31, 2019		December 31, 2018
Included in other non-current assets	$	1,905	$	1,888

Retirement Plans

We participate in multiple 401(k) plans, whereby we provide a matching contribution of wages deferred by employees and can also make discretionary contributions to each plan. Certain plans allow for discretionary employer contributions only. These plans cover substantially all our eligible employees. We recognized 401(k) plan expenses of $0.6 million and $0.4 million during the three months ended March 31, 2019 and 2018, respectively. These expenses are included in administrative expenses on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

Share-Based Compensation

Common Stock Awards

We periodically grant shares of our common stock to our board of directors and our employees. We did not grant any such shares to our board of directors during the three months ended March 31, 2019 or 2018, however we recorded $0.1 million of compensation expense during the three months ended March 31, 2019 related to prior grants to our board of directors. During the three months ended March 31, 2019 and 2018, we granted approximately 11 thousand and approximately eight thousand shares of our common stock, respectively, to employees and recorded $1.1 million and $0.9 million, respectively, of compensation expense associated with non-performance-based awards issued to employees.

During the three months ended March 31, 2019 and 2018, our employees surrendered approximately two hundred and one thousand shares of our common stock, respectively, to satisfy tax withholding obligations arising in connection with the vesting of common stock awards issued under our 2014 Omnibus Incentive Plan. We recognized excess tax benefits of $0.1 million within the income tax provision in the Condensed Consolidated Statements of Operations and Comprehensive Income for the three months ended March 31, 2018. 

As of March 31, 2019, we had $4.5 million of unrecognized compensation expense related to these nonvested common stock awards issued to the board of directors and our employees. This expense is subject to future adjustments for forfeitures and is expected to be recognized on a straight-line basis over the remaining weighted-average period of 1.8 years. Shares forfeited are returned as treasury shares and available for future issuances. See the table below for changes in shares and related weighted average fair market value per share.

Employees – Performance-Based Stock Awards

During the three months ended March 31, 2019, we issued under our 2014 Omnibus Incentive Plan approximately 46 thousand shares of our common stock to certain officers, which vest in two equal installments on each of April 20, 2020 and April 20, 2021. In addition, during the three months ended March 31, 2019, we established, and our Board of Directors approved, performance-based targets in connection with common stock awards to be issued to certain officers in 2020 contingent upon achievement of these targets. Share-based compensation expense associated with these performance-based awards and prior performance-based grants was $0.7 million and $0.4 million for the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, we had $5.8 million of unrecognized compensation expense related to nonvested performance-based common stock awards. This expense is subject to future adjustments for forfeitures and is expected to be recognized over the remaining weighted-average period of 2.1 years using the graded-vesting method. See the table below for changes in shares and related weighted average fair market value per share.

Employees – Performance-Based Restricted Stock Units

During 2018, we established, and our board of directors approved, performance-based restricted stock units in connection with common stock awards to be issued to certain employees in 2019 based upon achievement of a performance target. These units will be accounted for as equity-based awards that will be settled with a fixed number of common shares. We recorded $0.1 million and $0.9 million in compensation expense associated with these performance-based units during the three months ended March 31, 2019 and 2018, respectively.

As of March 31, 2019, we had $34 thousand of unrecognized compensation expense related to nonvested performance-based common stock units. This expense is subject to future adjustments for forfeitures and is expected to be recognized on a straight-line basis over the remaining weighted-average period of 0.1 years. See the table below for changes in shares and related weighted average fair market value per share.

Share-Based Compensation Summary

Amounts and changes for each category of equity-based award for employees were as follows:

	Common Stock Awards					Performance-Based Stock Awards					Performance-Based Restricted Stock Units
	Awards			Weighted Average Fair Market Value Per Share		Awards			Weighted Average Fair Market Value Per Share		Units			Weighted Average Fair Market Value Per Share
Nonvested awards/units at December 31, 2018		173,189		$	47.40		115,698		$	52.25		13,248		$	56.05
Granted		10,800			45.65		82,692			45.65		—			—
Vested		(564	)		54.98		—			—		—			—
Forfeited/Cancelled		(445	)		56.05		(6,697	)		65.60		(440	)		56.05
Nonvested awards/units at March 31, 2019		182,980		$	47.25		191,693		$	48.93		12,808		$	56.05

We recorded the following stock compensation expense by income statement category (in thousands):

	Three months ended March 31,
	2019		2018
Cost of sales	$	78	$	475
Selling		44		283
Administrative		1,816		1,482
	$	1,938	$	2,240

Administrative stock compensation expense includes all stock compensation earned by our administrative personnel, while cost of sales and selling stock compensation represents all stock compensation earned by our installation and sales employees, respectively.

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Income Taxes

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 12—INCOME TAXES

Our provision for income taxes as a percentage of pretax earnings is based on a current estimate of the annual effective income tax rate adjusted to reflect the impact of discrete items.

During the three months ended March 31, 2019, our effective tax rate was 27.5%. This rate was unfavorably impacted due to separate tax filing entities in a loss position for which a full valuation allowance is required, resulting in no tax benefit for recognized losses.

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Related Party Transactions

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

NOTE 13—RELATED PARTY TRANSACTIONS

We sell installation services to other companies related to us through common or affiliated ownership and/or board of directors and/or management relationships. We also purchase services and materials and pay rent to companies with common or affiliated ownership.

We lease our headquarters and certain other facilities from related parties. See Note 7, Leases, for future minimum lease payments to be paid to these related parties.

The amount of sales to related parties as well as the purchases from and rent expense paid to related parties were as follows (in thousands):

	Three months ended March 31,
	2019		2018
Sales	$	2,661	$	2,893
Purchases		388		363
Rent		260		281

As of March 31, 2019 and December 31, 2018, we had related party balances of approximately $2.0 million and $2.3 million, respectively, included in accounts receivable on our Condensed Consolidated Balance Sheets. These balances primarily represent trade accounts receivable arising during the normal course of business with various related parties. M/I Homes, Inc., a customer whose Chairman, President and Chief Executive Officer is a member of our board of directors, accounted for $1.2 million of these balances as of both March 31, 2019 and December 31, 2018, respectively.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 14—COMMITMENTS AND CONTINGENCIES

Accrued General Liability and Auto Insurance

Accrued general liability and auto insurance reserves included on the Condensed Consolidated Balance Sheets were as follows (in thousands):

	March 31,		December 31,
	2019		2018
Included in other current liabilities	$	1,914	$	1,848
Included in other long-term liabilities		9,803		6,608
	$	11,717	$	8,456

We also had insurance receivables and an indemnification asset included on the Condensed Consolidated Balance Sheets that, in aggregate, offset an equal liability included within the reserve amounts noted above. The amounts were as follows (in thousands):

	March 31,		December 31,
	2019		2018
Insurance receivable and indemnification asset for claims under a fully insured policy	$	2,484	$	2,484
Insurance receivable for claims that exceeded the stop loss limit		1,613		53
Total insurance receivables included in other non-current assets	$	4,097	$	2,537

Leases

See Note 7, Leases, for further information regarding our lease commitments.

Other Commitments and Contingencies

From time to time, various claims and litigation are asserted or commenced against us principally arising from contractual matters and personnel and employment disputes. In determining loss contingencies, management considers the likelihood of loss as well as the ability to reasonably estimate the amount of such loss or liability. An estimated loss is recorded when it is considered probable that such a liability has been incurred and when the amount of loss can be reasonably estimated. As litigation is subject to inherent uncertainties, we cannot be certain that we will prevail in these matters. However, we do not believe that the ultimate outcome of any pending matters will have a material adverse effect on our consolidated financial position, results of operations or cash flows.

During the year ended December 31, 2018, we entered into an agreement with one of our suppliers to purchase a portion of the insulation materials we utilize across our business. This agreement is effective January 1, 2019 through December 31, 2021 with a purchase obligation of $16.4 million for 2019, $21.4 million for 2020 and $15.0 million for 2021. For the three months ended March 31, 2019, we have satisfied $1.8 million of our purchase obligation under this agreement. Additionally, we entered into an agreement with a chemical supplier with a purchase obligation of $0.6 million in 2019. Actual purchases made under this agreement for the three months ended March 31, 2019 was $0.2 million.

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Business Combinations

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Business Combinations

NOTE 15—BUSINESS COMBINATIONS

As part of our ongoing strategy to expand geographically and increase market share in certain markets, we completed one business combination and one insignificant tuck-in acquisition merged into existing operations during the three months ended March 31, 2019 and two business combinations and one insignificant tuck-in acquisition merged into existing operations during the three months ended March 31, 2018, respectively, in which we acquired 100% of the ownership interests in each.

The largest of these acquisitions were 1st State Insulation, LLC (“1st State Insulation”) in March 2019 and Custom Overhead Door, LLC dba Custom Door & Gate (collectively, “CDG”) in March 2018. Net Income, as noted below, includes amortization, taxes and interest allocations when appropriate. Below is a summary of each significant acquisition by year, including revenue and net income (loss) since date of acquisition, shown for the year of acquisition (in thousands):

Total

Three months ended

Acquisition

Cash

Seller

Purchase

March 31, 2019

2019 Acquisitions

Date

Type

Paid

Obligations

Price

Revenue

Net Income

1st State Insulation

3/18/2019

Asset

$

5,125

$

1,380

$

6,505

$

488

$

23

											Three months ended
			Acquisition				Seller		Total Purchase		March 31, 2018
2018 Acquisitions	Date		Type		Cash Paid		Obligations		Price		Revenue		Net (Loss) Income
CDG		3/19/2018		Asset	$	9,440	$	1,973	$	11,413	$	400	$	(15	)
Other		1/15/2018		Asset		2,065		953		3,018		1,271		66
Total					$	11,505	$	2,926	$	14,431	$	1,671	$	51

Acquisition-related costs recorded within administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income amounted to $0.6 million and $0.5 million for the three months ended March 31, 2019 and 2018, respectively. The goodwill recognized in conjunction with these business combinations represents the excess cost of the acquired entity over the net amount assigned to assets acquired and liabilities assumed. We expect to deduct approximately $2.0 million of goodwill for tax purposes as a result of 2019 acquisitions.

Purchase Price Allocations

The estimated fair values of the assets acquired and liabilities assumed for the acquisitions, as well as total purchase prices and cash paid, approximated the following (in thousands):

	As of March 31, 2019			As of March 31, 2018
	1st State			CDG			Other			Total
Estimated fair values:
Accounts receivable	$	—		$	1,731		$	—		$	1,731
Inventories		291			514			75			589
Other current assets		—			28			12			40
Property and equipment		989			933			517			1,450
Intangibles		3,382			3,711			1,675			5,386
Goodwill		1,882			4,898			764			5,662
Other non-current assets		—			36			—			36
Accounts payable and other current liabilities		(39	)		(438	)		(25	)		(463	)
Fair value of assets acquired and purchase price		6,505			11,413			3,018			14,431
Less seller obligations		1,380			1,973			953			2,926
Cash paid	$	5,125		$	9,440		$	2,065		$	11,505

Contingent consideration is included as “seller obligations” in the above table or within “fair value of assets acquired” if subsequently paid during the period presented. These contingent payments consist primarily of earnouts based on performance that are recorded at fair value at the time of acquisition, and/or non-complete agreements and amounts based on working capital calculations. When these payments are expected to be made over one year from the acquisition date, the contingent consideration is discounted to net present value using our weighted average cost of capital (WACC), when appropriate.

Further adjustments to the allocation for each acquisition still under its measurement period are expected as third-party and internal valuations are finalized, certain tax aspects of the transaction are completed and customary post-closing reviews are concluded during the measurement period attributable to each individual business combination. As a result, insignificant adjustments to the fair value of assets acquired, and in some cases total purchase price, have been made to certain business combinations since the date of acquisition and future adjustments may be made through the end of each measurement period. Goodwill and intangibles per the above table do not agree to the total gross increases of these assets as shown in Note 5, Goodwill and Intangibles, during each of the three months ended March 31, 2019 and 2018 due to minor adjustments to goodwill for the allocation of certain acquisitions still under measurement as well as other immaterial intangible assets added during the ordinary course of business. In addition, goodwill and intangibles increased during each of the three months ended March 31, 2019 and 2018 due to small tuck-in acquisitions merged into existing operations that do not appear in the above table as discussed above.

Estimates of acquired intangible assets related to the acquisitions are as follows (in thousands):

	For the three months ended March 31,
	2019				2018
Acquired intangibles assets	Estimated Fair Value		Weighted Average Estimated Useful Life (yrs.)		Estimated Fair Value		Weighted Average Estimated Useful Life (yrs.)
Customer relationships	$	2,100		8	$	3,441		8
Trademarks and trade names		999		15		1,695		15
Non-competition agreements		283		5		250		5

Pro Forma Information

The unaudited pro forma information for the combined results of the Company has been prepared as if the 2019 acquisitions had taken place on January 1, 2018 and the 2018 acquisitions had taken place on January 1, 2017. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transactions actually taken place on January 1, 2018 and 2017, respectively, and the unaudited pro forma information does not purport to be indicative of future financial operating results (in thousands, except per share data):

	Unaudited pro forma for the three months ended March 31,
	2019		2018
Net revenue	$	344,397	$	322,666
Net income		8,793		7,478
Basic and diluted net income per share		0.30		0.24

Unaudited pro forma net income reflects additional intangible asset amortization expense of $64 thousand and $1.2 million for the three months ended March 31, 2019 and 2018, respectively, as well as additional income tax (benefit) expense of ($16) thousand and $0.4 million for the three months ended March 31, 2019 and 2018, respectively, that would have been recorded had the 2019 acquisitions taken place on January 1, 2018 and the 2018 acquisitions taken place on January 1, 2017.

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Income Per Common Share

3 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Income Per Common Share

NOTE 16—INCOME PER COMMON SHARE

Basic net income per common share is calculated by dividing net income by the weighted average shares outstanding during the period, without consideration for common stock equivalents.

Diluted net income per common share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury stock method. Potential common stock is included in the diluted income per common share calculation when dilutive. The dilutive effect of outstanding restricted stock awards after application of the treasury stock method was 127 thousand and 224 thousand shares for the three months ended March 31, 2019 and 2018, respectively. Approximately nine thousand shares of potential common stock was not included in the calculation of diluted net income per common share for the three months ended March 31, 2019 because the effect would have been anti-dilutive.

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Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

Basis of Presentation and Principles of Consolidation

The accompanying consolidated financial statements include all of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

The information furnished in the Condensed Consolidated Financial Statements includes normal recurring adjustments and reflects all adjustments which are, in the opinion of management, necessary for a fair presentation of the results of operations and statements of financial position for the interim periods presented. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the rules and regulations of the Securities and Exchange Commission (the “SEC”) have been omitted pursuant to such rules and regulations. We believe that the disclosures are adequate to prevent the information presented from being misleading when read in conjunction with our audited consolidated financial statements and the notes thereto included in Part II, Item 8, Financial Statements and Supplementary Data, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the “2018 Form 10-K”), as filed with the SEC on February 28, 2019. The December 31, 2018 Condensed Consolidated Balance Sheet data herein was derived from the audited consolidated financial statements but does not include all disclosures required by U.S. GAAP.

Our interim operating results for the three months ended March 31, 2019 are not necessarily indicative of the results to be expected in future operating quarters. See Item 1A, Risk Factors, in our 2018 Form 10-K for additional information regarding risk factors that may impact our results.

Note 2 to the audited consolidated financial statements in our 2018 Form 10-K describes the significant accounting policies and estimates used in preparation of the audited consolidated financial statements. There have been no changes to our significant accounting policies during the three months ended March 31, 2019, except for the manner in which we account for leases as described in Note 7, Leases.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Standard

Adoption

ASU 2016-02, Leases (Topic 842)

This Accounting Standards Update (“ASU”) requires substantially all leases, with the exception of leases with a term of one year or less, to be recorded on the balance sheet as a lease liability measured as the present value of the future lease payments with a corresponding right-of-use asset. This ASU also requires disclosures designed to give financial statement users information on the amount, timing and uncertainty of cash flows. See Note 7, Leases, for further information regarding our lease accounting policies.

Recently Issued Accounting Pronouncements Not Yet Adopted

Recently Issued Accounting Pronouncements Not Yet Adopted

We are currently evaluating the impact of certain ASU’s on our Condensed Consolidated Financial Statements or Notes to Consolidated Financial Statements, which are described below:

Standard	Description	Effective Date	Effect on the financial statements or other significant matters
ASU 2016-13, Financial Instruments-Credit Losses (Topic 326)	This pronouncement amends the accounting for credit losses on available-for-sale debt securities and purchased financial assets with credit deterioration. In addition, these amendments require the measurement of all expected credit losses for financial assets, including trade accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.	Annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted.	We are currently evaluating whether this ASU will have a material impact on our consolidated financial statements.

ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment	To address concerns over the cost and complexity of the two-step goodwill impairment test, this pronouncement removes the second step of the goodwill impairment test. Going forward, an entity will apply a one-step quantitative test and record the amount of goodwill impairment as the excess of a reporting unit’s carrying amount over its fair value, not to exceed the total amount of goodwill allocated to the reporting unit.	Annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted.	We anticipate the adoption of this ASU will not have a material impact on our disclosures.
ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement	This pronouncement amends Topic 820 to eliminate, add and modify certain disclosure requirements for fair value measurements.	Annual periods beginning after December 15, 2019, including interim periods therein. Early adoption is permitted.	We are currently evaluating the provisions of this ASU and the impact it will have on our disclosures.

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Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Summary of Revenues Disaggregated by End Market and Product

The following tables present our revenues disaggregated by end market and product (in thousands):

	Three months ended March 31,
	2019				2018
Residential new construction	$	261,310	77	%	$	229,642	76	%
Repair and remodel		21,521	6	%		20,472	7	%
Commercial		59,304	17	%		51,614	17	%
Net revenues	$	342,135	100	%	$	301,728	100	%

	Three months ended March 31,
	2019				2018
Insulation	$	221,223	65	%	$	202,275	67	%
Waterproofing		22,385	7	%		22,606	7	%
Shower doors, shelving and mirrors		23,917	7	%		20,260	7	%
Garage doors		21,672	6	%		15,466	5	%
Rain gutters		11,199	3	%		8,658	3	%
Window blinds		9,384	3	%		5,306	2	%
Other building products		32,355	9	%		27,157	9	%
Net revenues	$	342,135	100	%	$	301,728	100	%

Summary of Assets and Liabilities Related to Uncompleted Contracts and Customer Deposits

Contract assets and liabilities related to our uncompleted contracts and customer deposits were as follows (in thousands):

	March 31,			December 31,
	2019			2018
Contract assets	$	19,565		$	15,092
Contract liabilities		(7,792	)		(7,468	)

Schedule of Cost and Estimated Earnings on Uncompleted Contracts

Uncompleted contracts were as follows (in thousands):

	March 31,		December 31,
	2019		2018
Costs incurred on uncompleted contracts	$	101,024	$	114,826
Estimated earnings		52,670		58,952
Total		153,694		173,778
Less: Billings to date		139,100		163,112
Net under (over) billings	$	14,594	$	10,666

Schedule of Net Under (Over) Billings

Net under (over) billings were as follows (in thousands):

	March 31,			December 31,
	2019			2018
Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets)	$	19,565		$	15,092
Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities)		(4,971	)		(4,426	)
Net under (over) billings	$	14,594		$	10,666

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Goodwill and Intangibles (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Summary of Change in Carrying Amount of Goodwill

The change in carrying amount of goodwill was as follows (in thousands):

	Goodwill (Gross)		Accumulated Impairment Losses			Goodwill (Net)
January 1, 2019	$	243,053	$	(70,004	)	$	173,049
Business Combinations		1,882		—			1,882
Other		28		—			28
March 31, 2019	$	244,963	$	(70,004	)	$	174,959

Schedule of Gross Carrying Amount, Accumulated Amortization and Net Book Value

The following table provides the gross carrying amount, accumulated amortization and net book value for each major class of intangibles (in thousands):

	As of March 31, 2019						As of December 31, 2018
	Gross				Net		Gross				Net
	Carrying		Accumulated		Book		Carrying		Accumulated		Book
	Amount		Amortization		Value		Amount		Amortization		Value
Amortized intangibles:
Customer relationships	$	150,735	$	56,530	$	94,205	$	148,635	$	52,514	$	96,121
Covenants not-to-compete		15,090		8,325		6,765		14,682		7,572		7,110
Trademarks and trade names		65,432		19,319		46,113		64,432		18,256		46,176
Backlog		14,060		13,734		326		14,060		13,677		383
	$	245,317	$	97,908	$	147,409	$	241,809	$	92,019	$	149,790

Schedule of Estimated Aggregate Annual Amortization

Remaining estimated aggregate annual amortization expense is as follows (amounts, in thousands, are for the fiscal year ended):

Remainder of 2019	17,719
2020	22,744
2021	21,415
2022	20,494
2023	17,583
Thereafter	47,454

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Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2019

Debt Disclosure [Abstract]

Schedule of Debt

Long-term debt consisted of the following (in thousands):

	As of March 31,			As of December 31,
	2019			2018
Term loan, net of unamortized debt issuance costs of $4,642 and $4,834, respectively	$	390,108		$	390,916
Vehicle and equipment notes, maturing through March 2024; payable in various monthly installments, including interest rates ranging from 2.5% to 4.8%		60,811			60,391
Various notes payable, maturing through March 2025; payable in various monthly installments, including interest rates ranging from 4% to 6%		3,466			3,517
		454,385			454,824
Less: current maturities		(23,925	)		(22,642	)
Long-term debt, less current maturities	$	430,460		$	432,182

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Leases (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Schedule of lease-related assets and liabilities

The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheet:

(in thousands)	Classification	As of March 31, 2019
Assets
Non-Current
Operating	Operating lease right-of-use assets	$	45,280
Finance	Property and equipment, net		9,217
Total lease assets		$	54,497
Liabilities
Current
Operating	Current maturities of operating lease obligations	$	14,241
Financing	Current maturities of finance lease obligations		4,328
Non-Current
Operating	Operating lease obligations		30,682
Financing	Finance lease obligations		3,974
Total lease liabilities		$	53,225
Weighted-average remaining lease term
Operating leases			4.5 years
Finance leases			2.3 years
Weighted-average discount rate
Operating leases (1)			5.04	%
Finance leases			4.57	%

(1)  Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

Schedule of lease costs for finance and operating leases

The table below presents certain information related to the lease costs for finance and operating leases during 2019:

(in thousands)	Classification		Three months ended March 31, 2019
Operating lease cost (1)	Administrative	$	4,987
Finance lease cost
Amortization of leased assets (2)	Cost of sales		1,478
Interest on capital lease obligations	Interest expense, net		94
Total lease costs		$	6,559

(1)	Includes variable lease costs of $0.5 million and short-term lease costs of $0.2 million.
(2)	Includes variable lease costs of $0.3 million.

Schedule of Supplemental Cash flow information Related to Leases

The table below presents supplemental cash flow information related to leases during 2019 (in thousands):

	Three months ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	4,233
Operating cash flows for finance leases		94
Financing cash flows for finance leases		1,366

Schedule of Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and total of the remaining years for the finance lease obligations and operating lease obligations recorded on the Condensed Consolidated Balance Sheet (in thousands):

	As of March 31, 2019
	Related Party		Other		Total Operating			Finance Leases
Remainder of 2019	$	774	$	11,595	$	12,369		$	3,947
2020		1,055		12,240		13,295			2,539
2021		910		8,042		8,952			1,596
2022		836		4,615		5,451			663
2023		415		3,047		3,462			284
Thereafter		823		6,007		6,830			16
Total minimum lease payments	$	4,813	$	45,546		50,359			9,045
Less: Amounts representing executory costs						—			(255	)
Less: Amounts representing interest						(5,436	)		(488	)
Present value of future minimum lease payments						44,923			8,302
Less: Current obligation under leases						(14,241	)		(4,328	)
Long-term lease obligations					$	30,682		$	3,974

Future Minimum Lease Payments Under Noncancellable Operating Leases

Future minimum lease payments under noncancellable operating leases (with initial or remaining lease terms in excess of one year) and future minimum capital lease payments as of December 31, 2018 were as follows (in thousands):

				Operating Leases
	Capital Leases			Related Party		Other		Total Operating
2019	$	5,207		$	1,159	$	14,418	$	15,577
2020		2,253			1,184		11,293		12,477
2021		1,339			1,058		7,014		8,072
2022		452			972		4,335		5,307
2023		93			51		2,613		2,664
Thereafter		—			—		4,695		4,695
		9,344		$	4,424	$	44,368	$	48,792
Less: Amounts representing executory costs		(255	)
Less: Amounts representing interest		(459	)
Total obligation under capital leases		8,630
Less: Current portion of capital leases		(4,806	)
Long term capital lease obligation	$	3,824

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Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Schedule of Fair Values of Financial Assets and Liabilities

The fair values of financial assets and liabilities that are recorded at fair value in the Condensed Consolidated Balance Sheets and not described above were as follows (in thousands):

	As of March 31, 2019								As of December 31, 2018
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents	$	71,240	$	71,240	$	—	$	—	$	69,807	$	69,807	$	—	$	—
Derivative financial instruments		805		—		805		—		1,765		—		1,765		—
Total financial assets	$	72,045	$	71,240	$	805	$	—	$	71,572	$	69,807	$	1,765	$	—
Financial liabilities:
Derivative financial instruments	$	4,984	$	—	$	4,984	$	—	$	2,275	$	—	$	2,275	$	—
Contingent consideration		4,977		—		—		4,977		5,098		—		—		5,098
Total financial liabilities	$	9,961	$	—	$	4,984	$	4,977	$	7,373	$	—	$	2,275	$	5,098

Summary of Change in Fair Value of Contingent Consideration

The change in fair value of the contingent consideration (a Level 3 input) was as follows (in thousands):

Contingent consideration liability—January 1, 2019	$	5,098
Preliminary purchase price		1,525
Fair value adjustments		(245	)
Accretion in value		125
Amounts paid to sellers		(1,526	)
Contingent consideration liability—March 31, 2019	$	4,977

Summary of Carrying Values and Associated Fair Values of Financial Assets and Liabilities

The carrying values and associated fair values of financial assets and liabilities that are not recorded at fair value in the Condensed Consolidated Balance Sheets and not described above include investments which represent a Level 2 fair value measurement and are as follows (in thousands):

	As of March 31, 2019				As of December 31, 2018
	Carrying Value		Fair Value		Carrying Value		Fair Value
Financial assets:
Investments	$	10,026	$	10,026	$	10,060	$	10,053

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Employee Benefits (Tables)

3 Months Ended

Mar. 31, 2019

Postemployment Benefits [Abstract]

Summary of Workers' Compensation Known Claims and IBNR Reserves

Workers’ compensation known claims and IBNR reserves included on the Condensed Consolidated Balance Sheets were as follows (in thousands):

	March 31, 2019		December 31, 2018
Included in other current liabilities	$	5,201	$	5,795
Included in other long-term liabilities		11,138		9,447
	$	16,339	$	15,242

Schedule of Insurance Receivable for Claims

This receivable offsets an equal liability included within the reserve amounts noted above and was as follows (in thousands):

	March 31, 2019		December 31, 2018
Included in other non-current assets	$	1,905	$	1,888

Summary of Equity-based Awards for Employees

Amounts and changes for each category of equity-based award for employees were as follows:

	Common Stock Awards					Performance-Based Stock Awards					Performance-Based Restricted Stock Units
	Awards			Weighted Average Fair Market Value Per Share		Awards			Weighted Average Fair Market Value Per Share		Units			Weighted Average Fair Market Value Per Share
Nonvested awards/units at December 31, 2018		173,189		$	47.40		115,698		$	52.25		13,248		$	56.05
Granted		10,800			45.65		82,692			45.65		—			—
Vested		(564	)		54.98		—			—		—			—
Forfeited/Cancelled		(445	)		56.05		(6,697	)		65.60		(440	)		56.05
Nonvested awards/units at March 31, 2019		182,980		$	47.25		191,693		$	48.93		12,808		$	56.05

Summary of Stock Compensation Expenses

We recorded the following stock compensation expense by income statement category (in thousands):

	Three months ended March 31,
	2019		2018
Cost of sales	$	78	$	475
Selling		44		283
Administrative		1,816		1,482
	$	1,938	$	2,240

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Schedule of Common or Related Party Transactions

The amount of sales to related parties as well as the purchases from and rent expense paid to related parties were as follows (in thousands):

	Three months ended March 31,
	2019		2018
Sales	$	2,661	$	2,893
Purchases		388		363
Rent		260		281

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Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

Schedule of Accrued General Insurance Reserves

Accrued general liability and auto insurance reserves included on the Condensed Consolidated Balance Sheets were as follows (in thousands):

	March 31,		December 31,
	2019		2018
Included in other current liabilities	$	1,914	$	1,848
Included in other long-term liabilities		9,803		6,608
	$	11,717	$	8,456

Schedule of Insurance Receivable for Claims

We also had insurance receivables and an indemnification asset included on the Condensed Consolidated Balance Sheets that, in aggregate, offset an equal liability included within the reserve amounts noted above. The amounts were as follows (in thousands):

	March 31,		December 31,
	2019		2018
Insurance receivable and indemnification asset for claims under a fully insured policy	$	2,484	$	2,484
Insurance receivable for claims that exceeded the stop loss limit		1,613		53
Total insurance receivables included in other non-current assets	$	4,097	$	2,537

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Business Combinations (Tables)

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

Schedule of Business Combinations

As part of our ongoing strategy to expand geographically and increase market share in certain markets, we completed one business combination and one insignificant tuck-in acquisition merged into existing operations during the three months ended March 31, 2019 and two business combinations and one insignificant tuck-in acquisition merged into existing operations during the three months ended March 31, 2018, respectively, in which we acquired 100% of the ownership interests in each.

The largest of these acquisitions were 1st State Insulation, LLC (“1st State Insulation”) in March 2019 and Custom Overhead Door, LLC dba Custom Door & Gate (collectively, “CDG”) in March 2018. Net Income, as noted below, includes amortization, taxes and interest allocations when appropriate. Below is a summary of each significant acquisition by year, including revenue and net income (loss) since date of acquisition, shown for the year of acquisition (in thousands):

Total

Three months ended

Acquisition

Cash

Seller

Purchase

March 31, 2019

2019 Acquisitions

Date

Type

Paid

Obligations

Price

Revenue

Net Income

1st State Insulation

3/18/2019

Asset

$

5,125

$

1,380

$

6,505

$

488

$

23

											Three months ended
			Acquisition				Seller		Total Purchase		March 31, 2018
2018 Acquisitions	Date		Type		Cash Paid		Obligations		Price		Revenue		Net (Loss) Income
CDG		3/19/2018		Asset	$	9,440	$	1,973	$	11,413	$	400	$	(15	)
Other		1/15/2018		Asset		2,065		953		3,018		1,271		66
Total					$	11,505	$	2,926	$	14,431	$	1,671	$	51

Summary of Estimated Fair Value of Assets Acquired and Liabilities Assumed

The estimated fair values of the assets acquired and liabilities assumed for the acquisitions, as well as total purchase prices and cash paid, approximated the following (in thousands):

	As of March 31, 2019			As of March 31, 2018
	1st State			CDG			Other			Total
Estimated fair values:
Accounts receivable	$	—		$	1,731		$	—		$	1,731
Inventories		291			514			75			589
Other current assets		—			28			12			40
Property and equipment		989			933			517			1,450
Intangibles		3,382			3,711			1,675			5,386
Goodwill		1,882			4,898			764			5,662
Other non-current assets		—			36			—			36
Accounts payable and other current liabilities		(39	)		(438	)		(25	)		(463	)
Fair value of assets acquired and purchase price		6,505			11,413			3,018			14,431
Less seller obligations		1,380			1,973			953			2,926
Cash paid	$	5,125		$	9,440		$	2,065		$	11,505

Estimates of Acquired Intangible Assets

Estimates of acquired intangible assets related to the acquisitions are as follows (in thousands):

	For the three months ended March 31,
	2019				2018
Acquired intangibles assets	Estimated Fair Value		Weighted Average Estimated Useful Life (yrs.)		Estimated Fair Value		Weighted Average Estimated Useful Life (yrs.)
Customer relationships	$	2,100		8	$	3,441		8
Trademarks and trade names		999		15		1,695		15
Non-competition agreements		283		5		250		5

Pro Forma Results of Operations

The unaudited pro forma information for the combined results of the Company has been prepared as if the 2019 acquisitions had taken place on January 1, 2018 and the 2018 acquisitions had taken place on January 1, 2017. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transactions actually taken place on January 1, 2018 and 2017, respectively, and the unaudited pro forma information does not purport to be indicative of future financial operating results (in thousands, except per share data):

	Unaudited pro forma for the three months ended March 31,
	2019		2018
Net revenue	$	344,397	$	322,666
Net income		8,793		7,478
Basic and diluted net income per share		0.30		0.24

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Organization - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019 Location Segment
Basis Of Presentation And Organization [Line Items]
Number of operating segment | Segment	1
United States [Member]
Basis Of Presentation And Organization [Line Items]
Number of locations the company operates | Location	175

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Revenue Recognition - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Contract liability revenue recognized	$ 6.3
Transaction price allocated to uncompleted contracts	$ 89.5
Expected time of revenue recognition	over the next 18 months.
Performance obligation, description of timing	one year or less.

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Revenue Recognition - Summary of Revenues Disaggregated by End Market and Product (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Disaggregation of Revenue [Line Items]
Net revenues	$ 342,135	$ 301,728
Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	100.00%	100.00%
Insulation [Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 221,223	$ 202,275
Insulation [Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	65.00%	67.00%
Waterproofing [Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 22,385	$ 22,606
Waterproofing [Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	7.00%	7.00%
Shower Doors, Shelving and Mirrors [Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 23,917	$ 20,260
Shower Doors, Shelving and Mirrors [Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	7.00%	7.00%
Garage Doors [Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 21,672	$ 15,466
Garage Doors [Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	6.00%	5.00%
Rain Gutters [Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 11,199	$ 8,658
Rain Gutters [Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	3.00%	3.00%
Window blinds [Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 9,384	$ 5,306
Window blinds [Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	3.00%	2.00%
Other Building Products [Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 32,355	$ 27,157
Other Building Products [Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	9.00%	9.00%
Residential New Construction [Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 261,310	$ 229,642
Residential New Construction [Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	77.00%	76.00%
Repair and Remodel[Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 21,521	$ 20,472
Repair and Remodel[Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	6.00%	7.00%
Commercial [Member]
Disaggregation of Revenue [Line Items]
Net revenues	$ 59,304	$ 51,614
Commercial [Member] | Revenue [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Percentage of Net revenues	17.00%	17.00%

XML

Revenue Recognition - Summary of Assets and Liabilities Related to Uncompleted Contracts and Customer Deposits (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Contract with Customer, Asset and Liability [Abstract]
Contract assets	$ 19,565	$ 15,092
Contract liabilities	$ (7,792)	$ (7,468)

XML

Revenue Recognition - Schedule of Cost and Estimated Earnings on Uncompleted Contracts (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Contractors [Abstract]
Costs incurred on uncompleted contracts	$ 101,024	$ 114,826
Estimated earnings	52,670	58,952
Total	153,694	173,778
Less: Billings to date	139,100	163,112
Net under (over) billings	$ 14,594	$ 10,666

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Revenue Recognition - Schedule of Net Under (Over) Billings (Detail) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Contractors [Abstract]
Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets)	$ 19,565	$ 15,092
Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities)	(4,971)	(4,426)
Net under (over) billings	$ 14,594	$ 10,666

XML

Investments - Additional Information (Detail) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Schedule of Held-to-maturity Securities [Line Items]
Cash and cash equivalents	$ 71.2	$ 69.8
Held-to-Maturity Securities [Member]
Schedule of Held-to-maturity Securities [Line Items]
Investments	$ 10.0	$ 10.1

XML

Goodwill and Intangibles - Summary of Change in Carrying Amount of Goodwill (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill (Gross), beginning balance	$ 243,053
Business Combinations	1,882
Other	28
Goodwill (Gross), ending balance	244,963
Accumulated Impairment Losses, beginning balance	(70,004)
Accumulated Impairment Losses, ending balance	(70,004)
Goodwill (Net), beginning balance	173,049
Business Combinations	1,882
Other	28
Goodwill (Net), ending balance	$ 174,959

XML

Goodwill and Intangibles - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Increase in gross carrying amount of intangibles	$ 3.5

XML

Goodwill and Intangibles - Schedule of Gross Carrying Amount and Accumulated Amortization (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 245,317	$ 241,809
Accumulated Amortization	97,908	92,019
Net Book Value	147,409	149,790
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	150,735	148,635
Accumulated Amortization	56,530	52,514
Net Book Value	94,205	96,121
Covenants Not-to-Compete [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	15,090	14,682
Accumulated Amortization	8,325	7,572
Net Book Value	6,765	7,110
Trademarks and Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	65,432	64,432
Accumulated Amortization	19,319	18,256
Net Book Value	46,113	46,176
Backlog [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	14,060	14,060
Accumulated Amortization	13,734	13,677
Net Book Value	$ 326	$ 383

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Goodwill and Intangibles - Schedule of Estimated Aggregate Annual Amortization (Detail) $ in Thousands	Mar. 31, 2019 USD ($)
Finite Lived Intangible Assets Net Amortization Expense Rolling Maturity [Abstract]
Remainder of 2019	$ 17,719
2020	22,744
2021	21,415
2022	20,494
2023	17,583
Thereafter	$ 47,454

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Long-term Debt - Schedule of Debt (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Debt Disclosure [Abstract]
Term loan, net of unamortized debt issuance costs of $4,642 and $4,834, respectively	$ 390,108	$ 390,916
Vehicle and equipment notes, maturing through March 2024; payable in various monthly installments, including interest rates ranging from 2.5% to 4.8%	60,811	60,391
Various notes payable, maturing through March 2025; payable in various monthly installments, including interest rates ranging from 4% to 6%	3,466	3,517
Total long term debt	454,385	454,824
Less: current maturities	(23,925)	(22,642)
Long-term debt, less current maturities	$ 430,460	$ 432,182

XML

Long-term Debt - Schedule of Debt (Parenthetical) (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Notes payable maturity date	2025-03
Minimum [Member]
Debt Instrument [Line Items]
Notes payable Interest rate	4.00%
Maximum [Member]
Debt Instrument [Line Items]
Notes payable Interest rate	6.00%
Term Loan Agreement [Member]
Debt Instrument [Line Items]
Unamortized debt issuance costs	$ 4,642	$ 4,834
Vehicle and Equipment [Member]
Debt Instrument [Line Items]
Notes payable maturity date	2024-03
Vehicle and Equipment [Member] | Minimum [Member]
Debt Instrument [Line Items]
Notes payable Interest rate	2.50%
Vehicle and Equipment [Member] | Maximum [Member]
Debt Instrument [Line Items]
Notes payable Interest rate	4.80%

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Leases - Schedule Of Supplemental Balance Sheet In formation Related To Leases (Details) - USD ($) $ in Thousands		Mar. 31, 2019	Dec. 31, 2018
Non-Current
Operating		$ 45,280
Finance		9,217
Total lease assets		54,497
Current
Less: Current obligation under leases		14,241
Financing		4,328	$ 4,806
Non-Current
Long-term lease obligations		30,682
Financing		3,974	$ 3,824
Total lease liabilities		$ 53,225
Weighted-average remaining lease term
Operating leases		4 years 6 months
Finance leases		2 years 3 months 18 days
Weighted-average discount rate
Operating leases	[1]	5.04%
Finance leases		4.57%

[1] Upon adoption of the new lease standard, discount rates used for existing leases were established at January 1, 2019.

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Leases - Lease Cost Finance And Operating Leases (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Operating Lease, Cost	$ 4,987	[1]
Finance lease cost
Amortization of leased assets	1,478	[2]
Interest on capital lease obligations	94
Total lease costs	$ 6,559

[1] Includes variable lease costs of $0.5 million and short-term lease costs of $0.2 million.

[2] Includes variable lease costs of $0.3 million.

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Leases - Lease Cost Finance And Operating Leases (Parenthetical) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Short-term Lease, Cost	$ 0.2
General and Administrative Expense [Member]
Variable Lease, Cost	0.5
Cost of Sales [Member]
Variable Lease, Cost	$ 0.3

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Leases - Schedule Of Supplemental Cash Flow Information Related To Leases (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$ 4,233
Operating cash flows for finance leases	94
Financing cash flows for finance leases	$ 1,366	$ 1,629

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Leases - Finance Lease Obligations And Operating Lease Obligations (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Remainder of 2019	$ 12,369
2020	13,295
2021	8,952
2022	5,451
2023	3,462
Thereafter	6,830
Total minimum lease payments	50,359	$ 48,792
Less: Amounts representing interest	(5,436)
Present value of future minimum lease payments	44,923
Less: Current obligation under leases	14,241
Long-term lease obligations	30,682
Remainder of 2019	3,947
2020	2,539
2021	1,596
2022	663
2023	284
Thereafter	16
Total minimum lease payments	9,045
Less: Amounts representing executory costs	(255)
Less: Amounts representing interest	(488)
Present value of future minimum lease payments	8,302
Less: Current obligation under leases	4,328	4,806
Long-term lease obligations	3,974	$ 3,824
Other Party Operating Leases [Member]
Remainder of 2019	11,595
2020	12,240
2021	8,042
2022	4,615
2023	3,047
Thereafter	6,007
Total minimum lease payments	45,546
Related Party Operating Leases [Member]
Remainder of 2019	774
2020	1,055
2021	910
2022	836
2023	415
Thereafter	823
Total minimum lease payments	$ 4,813

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Leases - Future Minimum Lease Payments Under Noncancellable Operating Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Future Minimum Payments Under Non Cancelable Operating Leases With Initial Or Remaining Lease Terms In Excess Of One Year And Future Minimum Capital Lease Payments [Line Items]
2019		$ 5,207
2020		2,253
2021		1,339
2022		452
2023		93
Total minimum lease payments		9,344
Less: Amounts representing executory costs		(255)
Less: Amounts representing interest		(459)
Total obligation under capital leases		8,630
Less: Current obligation under leases		(4,806)
Long-term lease obligations		3,824
2019		15,577
2020		12,477
2021		8,072
2022		5,307
2023		2,664
Thereafter		4,695
Total minimum lease payments	$ 50,359	48,792
Related Party Operating Lease [Member]
Future Minimum Payments Under Non Cancelable Operating Leases With Initial Or Remaining Lease Terms In Excess Of One Year And Future Minimum Capital Lease Payments [Line Items]
2019		1,159
2020		1,184
2021		1,058
2022		972
2023		51
Total minimum lease payments		4,424
Other Operating Leases [Member]
Future Minimum Payments Under Non Cancelable Operating Leases With Initial Or Remaining Lease Terms In Excess Of One Year And Future Minimum Capital Lease Payments [Line Items]
2019		14,418
2020		11,293
2021		7,014
2022		4,335
2023		2,613
Thereafter		4,695
Total minimum lease payments		$ 44,368

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Leases - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Mar. 31, 2019	Jan. 01, 2019
Other Assets, Noncurrent	$ 10,157	$ 10,374
Other Assets, Current	35,760	32,473
Other Liabilities, Current	29,366	28,680
Finance Lease, Right-of-Use Asset		$ 9,217
Accounting Standards Update 2016-02 [Member]
Other Assets, Noncurrent			$ 44,900
Other Assets, Current			1,400
Other Liabilities, Current			1,000
Operating Lease, Liability			44,500
Finance Lease, Right-of-Use Asset	9,500		$ 58,700
Accounting Standards Update 2016-02 [Member] | Cost of Sales [Member]
Finance Lease, Right-of-Use Asset, Amortization	$ 32,000

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Fair Value Measurements - Schedule of Fair Values of Financial Assets and Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Financial assets:
Cash equivalents	$ 71,240	$ 69,807
Derivative financial instruments	805	1,765
Total financial assets	72,045	71,572
Financial liabilities:
Derivative financial instruments	4,984	2,275
Contingent consideration	4,977	5,098
Total financial liabilities	9,961	7,373
Level 1 [Member]
Financial assets:
Cash equivalents	71,240	69,807
Total financial assets	71,240	69,807
Level 2 [Member]
Financial assets:
Derivative financial instruments	805	1,765
Total financial assets	805	1,765
Financial liabilities:
Derivative financial instruments	4,984	2,275
Total financial liabilities	4,984	2,275
Level 3 [Member]
Financial liabilities:
Contingent consideration	4,977	5,098
Total financial liabilities	$ 4,977	$ 5,098

XML

Fair value measurements - Summary of Change in Fair Value of Contingent Consideration (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($)
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases, (Sales), Issuances, (Settlements) [Abstract]
Beginning Balance	$ 5,098
Preliminary purchase price	1,525
Fair value adjustments	(245)
Accretion in value	125
Amounts paid to sellers	(1,526)
Ending Balance	$ 4,977

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Fair Value measurements - Summary of Carrying Values and Associated Fair Values of Financial Assets and Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Carrying Value [Member]
Financial assets:
Investments	$ 10,026	$ 10,060
Level 2 [Member]
Financial assets:
Investments	$ 10,026	$ 10,053

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Derivative and Hedging Activities - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019 USD ($) Instruments Swap	Mar. 31, 2018 USD ($)
Term Loan [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Number of swaps | Swap	3
Designated as Hedging Instrument [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Cash Flow Hedge Gain (Loss) to be Reclassified	$ 0	$ 0
Designated as Hedging Instrument [Member] | Term Loan [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Debt instrument, face amount	200,000,000
Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Reclassification from accumulated other comprehensive income to interest expense	100,000
Interest Rate Swap [Member] | Cash Flow Hedging [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative instruments	$ 200,000,000
Derivatives, number of instruments held | Instruments	2
Notional amount maturity date	May 31, 2022
Interest Rate Swap [Member] | Cash Flow Hedging [Member] | Interest Rate Swap Matured on May 31, 2022 [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount amortized	$ 95,300,000
Notional amount maturity date	May 31, 2022
Derivatives, number of instruments amortized | Instruments	1
Interest Rate Swap [Member] | Cash Flow Hedging [Member] | Interest Rate Swap Matured on April 15, 2025 [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount amortized	$ 93,300,000
Notional amount maturity date	Apr. 15, 2025
Derivatives, number of instruments amortized | Instruments	1
Forward Interest Rate Swaps [Member]
Derivative Instruments and Hedging Activities Disclosures [Line Items]
Notional amount of derivative instruments	$ 100,000,000
Notional amount amortized	$ 97,000,000
Notional amount maturity date	Apr. 15, 2025
Notional amount beginning date	May 31, 2022

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Stockholder's Equity - Additional Information (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Statement Of Shareholders Equity [Line Items]
Effective portion of unrealized (loss) gain on derivative instruments	$ (3,180)		$ (431)
Share repurchase, amount		$ 24,640
2018 Stock Repurchase Plan [Member]
Statement Of Shareholders Equity [Line Items]
Common Stock Repurchase, Shares		413
Share repurchase, amount		$ 24,600
Share repurchase, price per share		$ 59.70
2018 Stock Repurchase Plan [Member] | Board of Directors [Member]
Statement Of Shareholders Equity [Line Items]
Stock repurchase program expiration date	Feb. 28, 2020

XML

Employee Benefits - Additional Information (Detail) $ in Thousands, Unit_pure in Millions	3 Months Ended
	Mar. 31, 2019 USD ($) Installments shares	Mar. 31, 2018 USD ($) shares	Dec. 31, 2018 USD ($)
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Healthcare benefit expense, net of employee contributions	$ 4,800	$ 4,400
Accrued compensation	22,371		$ 27,923
Administration expense related to employee contribution plan	600	400
Share-based compensation expense	1,938	$ 2,240
Unrecognized compensation expense	$ 4,500
Compensation cost not yet recognized, period for recognition	1 year 9 months 18 days
Common Stock [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Number of shares granted | shares	11,000	8,000
Cost of Sales [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Workers' compensation expense	$ 4,200	$ 3,800
Share-based compensation expense	78	475
Performance Based Restricted Stock Units [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Share-based compensation expense	100	900
Unrecognized compensation expense	$ 34,000
Compensation cost not yet recognized, period for recognition	1 month 6 days
Non-Performance-Based Awards [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Share-based compensation expense	$ 1,100	900
Performance Based Awards [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Number of shares granted | shares	82,692
Board of Directors [Member] | Restricted Stock [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Share-based compensation expense	$ 100	$ 100
2014 Omnibus Incentive Plan [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Number of equal installments for common stock | Installments	2
Number of shares granted | shares	46,000
2014 Omnibus Incentive Plan [Member] | Officer [Member] | Performance Shares [Member] | Common Stock [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Number of equal installments for common stock		0.1
Number of shares granted | shares	2
2014 Omnibus Incentive Plan [Member] | Officer [Member] | Performance Based Awards [Member] | Common Stock [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Share-based compensation expense	$ 700	$ 400
Unrecognized compensation expense	$ 5,800
Compensation cost not yet recognized, period for recognition	2 years 1 month 6 days
Medical IBNR Included in Accrued Compensation [Member]
Pension Plans, Postretirement and Other Employee Benefits [Line Items]
Accrued compensation	$ 2,700		$ 2,300

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Employee Benefits - Summary of Workers' Compensation Known Claims and IBNR Reserves (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Employee-related Liabilities [Abstract]
Included in other current liabilities	$ 5,201	$ 5,795
Included in other long-term liabilities	11,138	9,447
Workers' Compensation Liability	$ 16,339	$ 15,242

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Employee Benefits - Schedule of Insurance Receivable for Claims (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Workers' Compensation [Member]
Malpractice Insurance [Line Items]
Included in other non-current assets	$ 1,905	$ 1,888

XML

Employee Benefits - Summary of Equity-Based Awards for Employees (Detail)	3 Months Ended
	Mar. 31, 2019 $ / shares shares
Common Stock Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested common stock awards, Beginning balance | shares	173,189
Granted | shares	10,800
Vested | shares	(564)
Forfeited/Cancelled | shares	(445)
Nonvested common stock awards, Ending balance | shares	182,980
Nonvested performance-based stock awards, Beginning balance | $ / shares	$ 47.40
Granted | $ / shares	45.65
Vested | $ / shares	54.98
Forfeited/Cancelled | $ / shares	56.05
Nonvested performance-based stock awards, Ending balance | $ / shares	$ 47.25
Performance Based Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested performance-based stock awards/units, Beginning balance | shares	115,698
Granted | shares	82,692
Forfeited/Cancelled | shares	(6,697)
Nonvested performance-based stock awards/units, Ending balance | shares	191,693
Nonvested performance-based stock awards/units, Beginning balance | $ / shares	$ 52.25
Granted | $ / shares	45.65
Forfeited/Cancelled | $ / shares	65.60
Nonvested performance-based stock awards/units, Ending balance | $ / shares	$ 48.93
Performance Based Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Nonvested performance-based stock awards/units, Beginning balance | shares	13,248
Forfeited/Cancelled | shares	(440)
Nonvested performance-based stock awards/units, Ending balance | shares	12,808
Nonvested performance-based stock awards/units, Beginning balance | $ / shares	$ 56.05
Forfeited/Cancelled | $ / shares	56.05
Nonvested performance-based stock awards/units, Ending balance | $ / shares	$ 56.05

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Employee Benefits - Summary of Stock Compensation Expense (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	$ 1,938	$ 2,240
Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	78	475
Selling [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	44	283
Administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock compensation expense	$ 1,816	$ 1,482

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Income Taxes - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2019
Income Taxes [Line Items]
Effective tax rate	27.50%

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Related Party Transactions - Schedule of Related Party Transactions (Detail) - Affiliated Entity [Member] - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Related Party Transaction [Line Items]
Sales	$ 2,661	$ 2,893
Purchases	388	363
Rent	$ 260	$ 281

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Related Party Transactions - Additional Information (Detail) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Affiliated Entity [Member]
Related Party Transaction [Line Items]
Accounts receivable, related parties	$ 2.0	$ 2.3
M/I Homes Inc [Member]
Related Party Transaction [Line Items]
Accounts receivable, related parties	$ 1.2	$ 1.2

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Commitments and Contingencies - Schedule of Accrued General Insurance Reserves (Detail) - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Commitments and Contingencies Disclosure [Abstract]
Included in other current liabilities	$ 1,914	$ 1,848
Included in other long-term liabilities	9,803	6,608
Total	$ 11,717	$ 8,456

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Commitments and Contingencies - Schedule of Insurance Receivable for Claims (Detail) - General Liability [Member] - USD ($) $ in Thousands	Mar. 31, 2019	Dec. 31, 2018
Commitments And Contingencies Disclosure [Line Items]
Insurance receivable and indemnification asset for claims under a fully insured policy	$ 2,484	$ 2,484
Insurance receivable for claims that exceeded the stop loss limit	1,613	53
Total insurance receivables included in other non-current assets	$ 4,097	$ 2,537

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Commitments and Contingencies - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Commitments And Contingencies Disclosure [Line Items]
Purchase obligation, 2019	$ 16.4
Purchase obligation, 2020	21.4
Purchase obligation, 2021	15.0
Purchase Obligations Satisfied	1.8
Actual Purchases Under Agreement	0.2
Chemical Supplier [Member]
Commitments And Contingencies Disclosure [Line Items]
Purchase obligation, 2019	$ 0.6

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Business Combinations - Additional Information (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2019 USD ($) Business	Mar. 31, 2018 USD ($)
Business Acquisition [Line Items]
Number of businesses acquired | Business	1
Percentage of voting equity interests acquired	100.00%
Goodwill acquired expected to be tax deductible	$ 2,000
Amortization of intangibles	5,888	$ 7,128
Income tax expense (benefit)	3,354	2,243
Administrative [Member]
Business Acquisition [Line Items]
Acquisition-related costs	600	500
Combined Business Acquisitions [Member]
Business Acquisition [Line Items]
Amortization of intangibles	64	1,200
Income tax expense (benefit)	$ 16	$ 400

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Business Combinations - Summary of Business Acquisitions (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Business Acquisition [Line Items]
Seller Obligations	$ 1,380	$ 3,093
Revenue	342,135	301,728
Net (Loss) Income	$ 8,834	$ 6,394
First State Insulation [Member]
Business Acquisition [Line Items]
Date	Mar. 18, 2019
Acquisition Type	Asset
Cash paid	$ 5,125
Seller Obligations	1,380
Total Purchase Price	6,505
Revenue	488
Net (Loss) Income	$ 23
CDG Acquisition [Member]
Business Acquisition [Line Items]
Date		Mar. 19, 2018
Acquisition Type		Asset
Cash paid		$ 9,440
Seller Obligations		1,973
Total Purchase Price		11,413
Revenue		400
Net (Loss) Income		$ (15)
Other Acquisition [Member]
Business Acquisition [Line Items]
Date		Jan. 15, 2018
Acquisition Type		Asset
Cash paid		$ 2,065
Seller Obligations		953
Total Purchase Price		3,018
Revenue		1,271
Net (Loss) Income		66
Combined Business Acquisitions [Member]
Business Acquisition [Line Items]
Cash paid		11,505
Seller Obligations		2,926
Total Purchase Price		14,431
2018 Acquisitions [Member]
Business Acquisition [Line Items]
Revenue		1,671
Net (Loss) Income		$ 51

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Business Combinations - Summary of Estimated Fair Value of Assets Acquired and Liabilities Assumed (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Business Acquisition [Line Items]
Goodwill	$ 174,959		$ 173,049
Less seller obligations	1,380	$ 3,093
First State Insulation [Member]
Business Acquisition [Line Items]
Inventories	291
Property and equipment	989
Intangibles	3,382
Goodwill	1,882
Accounts payable and other current liabilities	(39)
Fair value of assets acquired and purchase price	6,505
Less seller obligations	1,380
Cash paid	$ 5,125
CDG Acquisition [Member]
Business Acquisition [Line Items]
Accounts receivable		1,731
Inventories		514
Other current assets		28
Property and equipment		933
Intangibles		3,711
Goodwill		4,898
Other non-current assets		36
Accounts payable and other current liabilities		(438)
Fair value of assets acquired and purchase price		11,413
Less seller obligations		1,973
Cash paid		9,440
Other Acquisition [Member]
Business Acquisition [Line Items]
Inventories		75
Other current assets		12
Property and equipment		517
Intangibles		1,675
Goodwill		764
Accounts payable and other current liabilities		(25)
Fair value of assets acquired and purchase price		3,018
Less seller obligations		953
Cash paid		2,065
Combined Business Acquisitions [Member]
Business Acquisition [Line Items]
Accounts receivable		1,731
Inventories		589
Other current assets		40
Property and equipment		1,450
Intangibles		5,386
Goodwill		5,662
Other non-current assets		36
Accounts payable and other current liabilities		(463)
Fair value of assets acquired and purchase price		14,431
Less seller obligations		2,926
Cash paid		$ 11,505

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Business Combinations - Estimates of Acquired Intangible Assets (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Customer Relationships [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Fair Value	$ 2,100	$ 3,441
Weighted Average Estimated Useful Life (yrs)	8 years	8 years
Trademarks and Trade Names [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Fair Value	$ 999	$ 1,695
Weighted Average Estimated Useful Life (yrs)	15 years	15 years
Covenants Not-to-Compete [Member]
Acquired Finite-Lived Intangible Assets [Line Items]
Estimated Fair Value	$ 283	$ 250
Weighted Average Estimated Useful Life (yrs)	5 years	5 years

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Business Combinations - Pro Forma Results of Operations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Business Acquisition, Pro Forma Information [Abstract]
Net revenue	$ 344,397	$ 322,666
Net income	$ 8,793	$ 7,478
Basic and diluted net income per share	$ 0.30	$ 0.24

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Income Per Common Share - Additional Information (Detail) - shares	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Dilutive effect of outstanding restricted stock awards after application of the Treasury Stock Method	127,000	224,000
Common stock shares excluded from calculation of diluted net income per common share	9,000