ibp-20210930

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 September 30, 2021


☐			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)

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

Title of each class

Trading Symbol(s)

Name on each exchange on which registered

Common Stock,

$0.01 par value per share

IBP

The New York Stock Exchange

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, a smaller reporting company, or an emerging growth company. See the definitions 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 ☒

On October 27, 2021, the registrant had 29,707,155 shares of common stock, par value $0.01 per share, outstanding.

Table of Contents

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			27
Item 3. Quantitative and Qualitative Disclosures About Market Risk			38
Item 4. Controls and Procedures			38
PART II – OTHER INFORMATION			39
Item 1. Legal Proceedings			39
Item 1A. Risk Factors			39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			40
Item 3. Defaults Upon Senior Securities			41
Item 4. Mine Safety Disclosures			41
Item 5. Other Information			41
Item 6. Exhibits			41
SIGNATURES			42

Table of Contents

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)


	September 30,		December 31,
	2021		2020
ASSETS
Current assets
Cash and cash equivalents	$	191,435	$	231,520

Accounts receivable (less allowance for credit losses of $8,784 and $8,789 at September 30, 2021 and December 31, 2020, respectively)	306,590		266,566
Inventories	118,093		77,179
Prepaid expenses and other current assets	56,803		48,678
Total current assets	672,921		623,943
Property and equipment, net	104,977		104,022
Operating lease right-of-use assets	61,028		53,766
Goodwill	257,106		216,870
Customer relationships, net	133,759		108,504
Other intangibles, net	70,341		62,889
Other non-current assets	26,996		17,682
Total assets	$	1,327,128	$	1,187,676
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	24,557	$	23,355
Current maturities of operating lease obligations	21,278		18,758
Current maturities of finance lease obligations	1,780		2,073
Accounts payable	119,583		101,462
Accrued compensation	60,623		45,876
Other current liabilities	56,970		44,951
Total current liabilities	284,791		236,475
Long-term debt	542,517		541,957
Operating lease obligations	39,155		34,413
Finance lease obligations	3,038		2,430
Deferred income taxes	9,035		35
Other long-term liabilities	55,866		53,184
Total liabilities	934,402		868,494
Commitments and contingencies (Note 15)
Stockholders’ equity
Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively	—		—
Common stock; $0.01 par value: 100,000,000 authorized, 33,271,659 and 33,141,879 issued and 29,707,155 and 29,623,272 shares outstanding at September 30, 2021 and December 31, 2020, respectively	333		331
Additional paid in capital	208,535		199,847
Retained earnings	332,087		269,420
Treasury stock; at cost: 3,564,504 and 3,518,607 shares at September 30, 2021 and December 31, 2020, respectively	(147,228)		(141,653)
Accumulated other comprehensive loss	(1,001)		(8,763)
Total stockholders’ equity	392,726		319,182
Total liabilities and stockholders’ equity	$	1,327,128	$	1,187,676

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

(in thousands, except share and per share amounts)


	Three months ended September 30,				Nine months ended September 30,
	2021		2020		2021		2020
Net revenue	$	509,763	$	420,486	$	1,434,927	$	1,211,756
Cost of sales	353,879		288,839		1,001,730		836,710
Gross profit	155,884		131,647		433,197		375,046
Operating expenses
Selling	24,188		20,843		67,677		60,209
Administrative	68,056		58,240		199,607		177,495
Amortization	9,224		6,974		26,798		20,378
Operating income	54,416		45,590		139,115		116,964
Other expense, net
Interest expense, net	7,687		7,564		22,781		22,679
Other (income) expense	(483)		176		(494)		305
Income before income taxes	47,212		37,850		116,828		93,980
Income tax provision	12,320		9,773		27,432		24,578
Net income	$	34,892	$	28,077	$	89,396	$	69,402
Other comprehensive income (loss), net of tax:
Net change on cash flow hedges, net of tax (provision) benefit of $(454) and $(408) for the three months ended September 30, 2021 and 2020, respectively, and $(2,638) and $1,582 for the nine months ended September 30, 2021 and 2020, respectively	1,292		1,176		7,762		(4,582)
Comprehensive income	$	36,184	$	29,253	$	97,158	$	64,820
Basic net income per share	$	1.19	$	0.95	$	3.05	$	2.35
Diluted net income per share	$	1.18	$	0.95	$	3.02	$	2.33
Weighted average shares outstanding:
Basic	29,404,257		29,478,816		29,355,538		29,549,460
Diluted	29,620,748		29,698,028		29,615,162		29,737,716

Cash dividends declared per share	$	0.30	$	—	$	0.90	$	—

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND SEPTEMBER 30, 2021

(in thousands, except share amounts)


	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - July 1, 2020	33,124,237	$	331	$	195,288	$	213,506	(3,325,049)	$	(123,488)	$	(12,901)	$	272,736
Net income						28,077							28,077
Issuance of common stock awards to employees	3,073												—
Surrender of common stock awards								(1,726)					—
Share-based compensation expense				2,094									2,094
Share-based compensation issued to directors				104									104
Other comprehensive income, net of tax											1,176		1,176
BALANCE - September 30, 2020	33,127,310	$	331	$	197,486	$	241,583	(3,326,775)	$	(123,488)	$	(11,725)	$	304,187

	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - July 1, 2021	33,264,517	$	333	$	205,597	$	306,107	(3,562,942)	$	(147,204)	$	(2,293)	$	362,540
Net income						34,892							34,892

Issuance of common stock awards to employees	7,142												—
Surrender of common stock awards								(1,562)	(24)				(24)
Share-based compensation expense				2,812									2,812
Share-based compensation issued to directors				126									126
Dividends Declared ($0.30 per share)						(8,912)							(8,912)

Other comprehensive income, net of tax											1,292		1,292
BALANCE - September 30, 2021	33,271,659	$	333	$	208,535	$	332,087	(3,564,504)	$	(147,228)	$	(1,001)	$	392,726

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND SEPTEMBER 30, 2021

(in thousands, except share amounts)


	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - January 1, 2020	32,871,504	$	329	$	190,230	$	173,371	(2,855,164)	$	(106,756)	$	(7,143)	$	250,031
Net income						69,402							69,402
Cumulative effect of accounting changes, net of tax						(1,190)							(1,190)
Issuance of common stock awards to employees	249,435	2		(2)									—
Surrender of common stock awards								(29,069)	(973)				(973)
Share-based compensation expense				7,029									7,029
Share-based compensation issued to directors	6,371			229									229
Common stock repurchase								(442,542)	(15,759)				(15,759)
Other comprehensive loss, net of tax											(4,582)		(4,582)
BALANCE - September 30, 2020	33,127,310	$	331	$	197,486	$	241,583	(3,326,775)	$	(123,488)	$	(11,725)	$	304,187

	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Loss		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - January 1, 2021	33,141,879	$	331	$	199,847	$	269,420	(3,518,607)	$	(141,653)	$	(8,763)	$	319,182
Net income						89,396							89,396

Issuance of common stock awards to employees	125,550	2		(2)									—
Surrender of common stock awards								(45,897)	(5,575)				(5,575)
Share-based compensation expense				8,351									8,351
Share-based compensation issued to directors	4,230			339									339
Dividends declared ($0.90 per share)						(26,729)							(26,729)

Other comprehensive income, net of tax											7,762		7,762
BALANCE - September 30, 2021	33,271,659	$	333	$	208,535	$	332,087	(3,564,504)	$	(147,228)	$	(1,001)	$	392,726

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)


	Nine months ended September 30,
	2021		2020
Cash flows from operating activities
Net income	$	89,396	$	69,402
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment	32,498		30,850
Amortization of operating lease right-of-use assets	16,464		13,281
Amortization of intangibles	26,798		20,378
Amortization of deferred financing costs and debt discount	993		1,000
Provision for credit losses	1,135		3,839
Gain on sale of property and equipment	(1,405)		(592)
Noncash stock compensation	10,228		8,050
Deferred income taxes	—		(3,405)
Amortization of terminated interest rate swap	2,414		508
Changes in assets and liabilities, excluding effects of acquisitions
Accounts receivable	(23,224)		(9,624)
Inventories	(37,122)		5,983
Other assets	(8,116)		9,027
Accounts payable	14,120		(14,746)
Income taxes receivable/payable	(107)		14,192
Other liabilities	(7,594)		(4,259)
Net cash provided by operating activities	116,478		143,884
Cash flows from investing activities
Purchases of investments	—		(776)
Maturities of short term investments	—		37,473
Purchases of property and equipment	(27,898)		(25,515)
Acquisitions of businesses, net of cash acquired of $1,640 and $0 in 2021 and 2020, respectively	(94,500)		(38,825)
Proceeds from sale of property and equipment	2,219		828
Other	(1,430)		(2,662)
Net cash used in investing activities	(121,609)		(29,477)
Cash flows from financing activities
Proceeds from vehicle and equipment notes payable	20,753		17,759
Debt issuance costs	—		(157)
Principal payments on long-term debt	(19,688)		(19,801)

Principal payments on finance lease obligations	(1,573)		(1,998)
Dividends paid	(26,428)		—
Acquisition-related obligations	(2,442)		(3,896)
Repurchase of common stock	—		(15,759)
Surrender of common stock awards by employees	(5,576)		(973)
Net cash used in financing activities	(34,954)		(24,825)
Net change in cash and cash equivalents	(40,085)		89,582
Cash and cash equivalents at beginning of period	231,520		177,889
Cash and cash equivalents at end of period	$	191,435	$	267,471
Supplemental disclosures of cash flow information
Net cash paid during the period for:
Interest	$	23,748	$	24,130
Income taxes, net of refunds	27,428		13,798
Supplemental disclosure of noncash activities
Right-of-use assets obtained in exchange for operating lease obligations	23,543		18,340
Release of indemnification of acquisition-related debt	2,036		—
Property and equipment obtained in exchange for finance lease obligations	1,918		853
Seller obligations in connection with acquisition of businesses	18,987		6,965
Unpaid purchases of property and equipment included in accounts payable	1,327		1,229

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED 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 more than 190 locations and its corporate office is located in Columbus, Ohio.

We have one operating segment and a single reportable segment. Substantially all of our sales are derived from the service-based installation of various products in the residential new construction, repair and remodel and commercial construction end markets 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.

The COVID-19 pandemic ("COVID-19") has caused significant volatility, uncertainty and economic disruption. Many public health organizations and international, federal, state and local governments implemented measures to combat the spread of COVID-19 during portions of 2020 and 2021 with some of these restrictions still in place as of the date of filing of this Quarterly Report on Form 10-Q. Some of these measures include restrictions on movement such as quarantines, “stay-at-home” orders and social distancing ordinances and restricting or prohibiting outright some or all forms of commercial and business activity. We do not believe the various orders and restrictions significantly impacted our business in the first nine months of 2021. However, COVID-19 has caused disruptions in the building products supply chain, impacting our ability to purchase certain materials we install through typical channels. The extent to which COVID-19 will impact our future operations, customers, suppliers, employees and financial results is uncertain. The future impact on our financial results will depend on numerous factors including government actions and the resulting impact on construction activity, the effect on our customers’ demand for our services, the effects on our supply chain for materials, and the ability of our customers to pay for our services.

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, 2020 (the “2020 Form 10-K”), as filed with the SEC on February 24, 2021. The December 31, 2020 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 and nine months ended September 30, 2021 are not necessarily indicative of the results to be expected in future operating quarters.

Note 2 to the audited consolidated financial statements in our 2020 Form 10-K describes the significant accounting policies and estimates used in preparation of the audited consolidated financial statements. Other than the recently implemented accounting policies described below, there have been no changes to our significant accounting policies during the three or nine months ended September 30, 2021.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Recently Adopted Accounting Pronouncements

Standard

Effective Date

Adoption

ASU 2021-01, Reference Rate Reform (Topic 848):Scope

Effective upon issuance

This pronouncement clarifies the scope and application of ASU 2020-04, "Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848)." We continue to evaluate the impact of Topic 848 and may apply other elections as applicable as additional changes in the market occur.

ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes

January 1, 2021

This pronouncement simplifies the accounting for income taxes by removing certain exceptions to the general principles of Topic 740 and improves the consistent application of GAAP by clarifying and amending existing guidance. The adoption of this standard did not impact our financial statements or have a material effect 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. 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.

For contracts that are not complete at the reporting date, we recognize revenue over time utilizing a cost-to-cost input method as we believe this represents the best measure of when goods and services are transferred to the customer. When this 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. Under the cost-to-cost method, 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.

Payment 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.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 September 30,								Nine months ended September 30,
	2021				2020				2021				2020
Residential new construction	$	386,346	76	%	$	315,434	75	%	$	1,091,414	76	%	$	912,095	75	%
Repair and remodel	34,506		7	%	28,625		7	%	94,142		7	%	75,702		6	%
Commercial	88,911		17	%	76,427		18	%	249,371		17	%	223,959		19	%
Net revenue	$	509,763	100	%	$	420,486	100	%	$	1,434,927	100	%	$	1,211,756	100	%


	Three months ended September 30,								Nine months ended September 30,
	2021				2020				2021				2020
Insulation	$	324,360	64	%	$	268,292	64	%	$	921,181	64	%	$	779,045	64	%
Waterproofing	34,514		7	%	33,272		8	%	98,727		7	%	89,855		7	%
Shower doors, shelving and mirrors	35,411		7	%	29,282		7	%	101,830		7	%	85,199		7	%
Garage doors	26,951		5	%	24,001		6	%	77,434		5	%	68,655		6	%
Rain gutters	21,807		4	%	17,295		4	%	62,270		4	%	41,942		4	%
Fireproofing/firestopping(1)	17,684		3	%	11,047		2	%	43,156		3	%	36,325		3	%
Window blinds	13,197		3	%	12,166		3	%	37,398		3	%	34,651		3	%
Other building products	35,839		7	%	25,131		6	%	92,931		7	%	76,084		6	%
Net revenue	$	509,763	100	%	$	420,486	100	%	$	1,434,927	100	%	$	1,211,756	100	%

(1)Combined with "Other building products" in previous years.

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 Condensed Consolidated Balance Sheets. Our contract liabilities consist of customer deposits and billings in excess of revenue recognized, based on costs incurred and are included in other current liabilities in our Condensed Consolidated Balance Sheets.

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


	September 30, 2021		December 31, 2020
Contract assets	$	32,265	$	24,334
Contract liabilities	(10,611)		(8,965)

Uncompleted contracts were as follows (in thousands):


	September 30, 2021		December 31, 2020
Costs incurred on uncompleted contracts	$	216,929	$	169,544
Estimated earnings	112,854		90,737
Total	329,783		260,281
Less: Billings to date	301,626		240,665
Net under billings	$	28,157	$	19,616

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Net under billings were as follows (in thousands):


	September 30, 2021		December 31, 2020
Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets)	$	32,265	$	24,334
Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities)	(4,108)		(4,718)
Net under billings	$	28,157	$	19,616

The difference between contract assets and contract liabilities as of September 30, 2021 compared to December 31, 2020 is primarily the result of timing differences between our performance of obligations under contracts and customer payments. During the three and nine months ended September 30, 2021, we recognized $0.1 million and $8.6 million of revenue that was included in the contract liability balance at December 31, 2020. We did not recognize any impairment losses on our receivables and contract assets during the three and nine months ended September 30, 2021 or 2020.

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 September 30, 2021, the aggregate amount of the transaction price allocated to remaining uncompleted contracts was $94.9 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 - CREDIT LOSSES

Our expected loss allowance methodology for accounts receivable is developed using historical losses, current economic conditions and future market forecasts. We also perform ongoing evaluations of our existing and potential customer’s creditworthiness. To date, the COVID-19 pandemic has not had a material impact on the collectability of our existing trade receivables.

Changes in our allowance for credit losses were as follows (in thousands):


Balance as of January 1, 2021	$	8,789
Current period provision	1,135
Recoveries collected and additions	506
Amounts written off	(1,646)
Balance as of September 30, 2021	$	8,784

NOTE 5 - CASH AND CASH EQUIVALENTS

Cash and cash equivalents include highly liquid instruments with insignificant interest rate risk and original or remaining maturities of three months or less at the time of purchase. These instruments were $166.5 million and $170.4 million as of September 30, 2021 and December 31, 2020, respectively. See Note 9, Fair Value Measurements, for additional information.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 6 - GOODWILL AND INTANGIBLES

We anticipate that the COVID-19 pandemic could continue to have an impact on the homebuilding industry in general, as it could result in further business interruptions (government-mandated or otherwise) and could affect, among other factors, employment levels, consumer spending and consumer confidence, which could decrease demand for homes, adversely affecting our business. As such, we considered whether impairment indicators arose through the date of filing of this Quarterly Report on Form 10-Q for our goodwill, long-lived assets and other intangible assets and concluded that no such factors existed to cause us to test for goodwill impairment during the nine months ended September 30, 2021. While we ultimately concluded that our goodwill, long-lived assets and other intangibles assets were not impaired as of September 30, 2021, we will continue to assess impairment indicators related to the impact of the COVID-19 pandemic on our business.

Goodwill

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


	Goodwill (Gross)		Accumulated Impairment Losses		Goodwill (Net)
January 1, 2021	$	286,874	$	(70,004)	$	216,870
Business Combinations	40,206		—		40,206
Other	30		—		30
September 30, 2021	$	327,110	$	(70,004)	$	257,106

Other changes included in the above table primarily include minor adjustments for the purchase price allocation of certain acquisitions still under measurement. For additional information regarding changes to goodwill resulting from acquisitions, see Note 16, Business Combinations.

We test goodwill for impairment annually during the fourth quarter of our fiscal year or earlier if there is an impairment indicator. 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 September 30,						As of December 31,
	2021						2020
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Amortized intangibles:
Customer relationships	$	240,756	$	106,997	$	133,759	$	197,641	$	89,137	$	108,504
Covenants not-to-compete	24,973		15,628		9,345		20,309		13,436		6,873
Trademarks and tradenames	89,804		31,164		58,640		79,657		27,245		52,412
Backlog	20,425		18,069		2,356		18,847		15,243		3,604
	$	375,958	$	171,858	$	204,100	$	316,454	$	145,061	$	171,393

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The gross carrying amount of intangibles increased approximately $59.5 million during the nine months ended September 30, 2021 primarily due to business combinations. For more information, see Note 16, Business Combinations. Remaining estimated aggregate annual amortization expense is as follows (amounts, in thousands, are for the fiscal year ended):


Remainder of 2021	$	9,509
2022	34,971
2023	30,650
2024	27,136
2025	21,731
Thereafter	80,103

NOTE 7 - LONG-TERM DEBT

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


	As of September 30,		As of December 31,
	2021		2020
Senior Notes due 2028, net of unamortized debt issuance costs of $3,783 and $4,230, respectively	$	296,217	$	295,770
Term Loan, net of unamortized debt issuance costs of $1,094 and $1,343, respectively	198,906		198,657
Vehicle and equipment notes, maturing through September 2026; payable in various monthly installments, including interest rates ranging from 1.9% to 4.8%	68,759		67,493
Various notes payable, maturing through March 2025; payable in various monthly installments, including interest rates ranging from 2.0% to 5.0%	3,192		3,392
	567,074		565,312
Less: current maturities	(24,557)		(23,355)
Long-term debt, less current maturities	$	542,517	$	541,957

Remaining required repayments of debt principal, gross of unamortized debt issuance costs, as of September 30, 2021 are as follows (in thousands):


Remainder of 2021			$