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 June 30, 2022

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)

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,	$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 July 28, 2022, the registrant had 28,746,452 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	28
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	39
Item 3. Defaults Upon Senior Securities	39
Item 4. Mine Safety Disclosures	39
Item 5. Other Information	39
Item 6. Exhibits	40
SIGNATURES	41

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)

	June 30,		December 31,
	2022		2021
ASSETS
Current assets
Cash and cash equivalents	$	69,940	$	333,485
Investments	94,865		—
Accounts receivable (less allowance for credit losses of $9,264 and $8,717 at June 30, 2022 and December 31, 2021, respectively)	384,696		312,767
Inventories	192,387		143,039
Prepaid expenses and other current assets	74,830		70,025
Total current assets	816,718		859,316
Property and equipment, net	114,699		105,933
Operating lease right-of-use assets	73,280		69,871
Goodwill	354,971		322,517
Customer relationships, net	191,375		178,264
Other intangibles, net	94,443		86,157
Other non-current assets	56,601		31,144
Total assets	$	1,702,087	$	1,653,202
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	30,642	$	30,839
Current maturities of operating lease obligations	24,696		23,224
Current maturities of finance lease obligations	2,049		1,747
Accounts payable	155,287		132,705
Accrued compensation	65,692		50,964
Other current liabilities	84,524		68,090
Total current liabilities	362,890		307,569
Long-term debt	828,632		832,193
Operating lease obligations	48,298		46,075
Finance lease obligations	4,462		3,297
Deferred income taxes	14,834		4,819
Other long-term liabilities	42,370		42,409
Total liabilities	1,301,486		1,236,362
Commitments and contingencies (Note 16)
Stockholders’ equity
Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively	—		—
Common stock; $0.01 par value: 100,000,000 authorized, 33,428,587 and 33,271,659 issued and 28,745,614 and 29,706,401 shares outstanding at June 30, 2022 and December 31, 2021, respectively	334		333
Additional paid in capital	222,270		211,430
Retained earnings	401,326		352,543
Treasury stock; at cost: 4,682,973 and 3,565,258 shares at June 30, 2022 and December 31, 2021, respectively	(251,363)		(147,239)
Accumulated other comprehensive income (loss)	28,034		(227)
Total stockholders’ equity	400,601		416,840
Total liabilities and stockholders’ equity	$	1,702,087	$	1,653,202

1

See accompanying notes to consolidated financial statements

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

(in thousands, except share and per share amounts)

	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021
Net revenue	$	676,749	$	488,098	$	1,264,241	$	925,164
Cost of sales	460,040		336,212		875,129		647,851
Gross profit	216,709		151,886		389,112		277,313
Operating expenses
Selling	29,371		22,631		54,563		43,489
Administrative	84,030		66,474		163,174		131,551
Amortization	11,261		9,178		22,358		17,574
Operating income	92,047		53,603		149,017		84,699
Other expense, net
Interest expense, net	10,401		7,520		21,001		15,094
Other expense (income)	368		(92)		513		(11)
Income before income taxes	81,278		46,175		127,503		69,616
Income tax provision	21,374		8,962		33,777		15,112
Net income	$	59,904	$	37,213	$	93,726	$	54,504
Other comprehensive income (loss), net of tax:
Net change on cash flow hedges, net of tax (provision) benefit of $(3,603) and $1,244 for the three months ended June 30, 2022 and 2021, respectively, and $(10,033) and $(2,184) for the six months ended June 30, 2022 and 2021, respectively	10,150		(3,687)		28,261		6,470
Comprehensive income	$	70,054	$	33,526	$	121,987	$	60,974
Earnings Per Share:
Basic	$	2.08	$	1.27	$	3.23	$	1.86
Diluted	$	2.07	$	1.26	$	3.21	$	1.84
Weighted average shares outstanding:
Basic	28,781,866		29,374,801		29,040,693		29,330,910
Diluted	28,894,140		29,609,744		29,235,997		29,612,101
Cash dividends declared per share	$	0.32	$	0.30	$	1.53	$	0.60

2

See accompanying notes to consolidated financial statements

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND JUNE 30, 2022

(in thousands, except share amounts)

	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated  Other Comprehensive Income (Loss)		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - April 1, 2021	33,208,082	$	331	$	202,662	$	277,804	(3,518,881)	$	(141,653)	$	1,394	$	340,538
Net income						37,213							37,213
Issuance of common stock awards to employees	52,205	2		(2)									—
Surrender of common stock awards								(44,061)	(5,551)				(5,551)
Share-based compensation expense				2,826									2,826
Share-based compensation issued to directors	4,230			111									111
Dividend declared ($0.30 per share)						(8,910)							(8,910)
Other comprehensive loss, net of tax											(3,687)		(3,687)
BALANCE - June 30, 2021	33,264,517	$	333	$	205,597	$	306,107	(3,562,942)	$	(147,204)	$	(2,293)	$	362,540
	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - April 1, 2022	33,351,843	$	334	$	218,642	$	350,475	(4,076,251)	$	(197,104)	$	17,884	$	390,231
Net income						59,904							59,904
Issuance of common stock awards to employees	71,409	—		—									—
Surrender of common stock awards								(52,995)	(4,459)				(4,459)
Share-based compensation expense				3,503									3,503
Share-based compensation issued to directors	5,335			125									125
Dividends declared ($0.32 per share)						(9,053)							(9,053)
Common stock repurchase								(553,727)	(49,800)				(49,800)
Other comprehensive income, net of tax											10,150		10,150
BALANCE - June 30, 2022	33,428,587	$	334	$	222,270	$	401,326	(4,682,973)	$	(251,363)	$	28,034	$	400,601

3

See accompanying notes to consolidated financial statements

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND JUNE 30, 2022

(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, 2021	33,141,879	$	331	$	199,847	$	269,420	(3,518,607)	$	(141,653)	$	(8,763)	$	319,182
Net income						54,504							54,504
Issuance of common stock awards to employees	118,408	2		(2)									—
Surrender of common stock awards								(44,335)	(5,551)				(5,551)
Share-based compensation expense				5,539									5,539
Share-based compensation issued to directors	4,230			213									213
Dividends declared ($0.60 per share)						(17,817)							(17,817)
Other comprehensive income, net of tax											6,470		6,470
BALANCE - June 30, 2021	33,264,517	$	333	$	205,597	$	306,107	(3,562,942)	$	(147,204)	$	(2,293)	$	362,540
	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income Loss		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - January 1, 2022	33,271,659	$	333	$	211,430	$	352,543	(3,565,258)	$	(147,239)	$	(227)	$	416,840
Net income						93,726							93,726
Issuance of common stock awards to employees	112,389	1		(1)									—
Surrender of common stock awards								(53,045)	(4,459)				(4,459)
Share-based compensation expense				6,592									6,592
Share-based compensation issued to directors	5,335			249									249
Issuance of awards previously classified as liability awards	39,204			4,000									4,000
Dividends declared ($1.53 per share)						(44,943)							(44,943)
Common stock repurchase								(1,064,670)	(99,665)				(99,665)
Other comprehensive income, net of tax											28,261		28,261
BALANCE - June 30, 2022	33,428,587	$	334	$	222,270	$	401,326	(4,682,973)	$	(251,363)	$	28,034	$	400,601

4

See accompanying notes to consolidated financial statements

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

	Six months ended June 30,
	2022		2021
Cash flows from operating activities
Net income	$	93,726	$	54,504
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment	23,162		21,570
Amortization of operating lease right-of-use assets	13,224		10,549
Amortization of intangibles	22,358		17,574
Amortization of deferred financing costs and debt discount	961		663
Provision for credit losses	1,887		102
Gain on sale of property and equipment	(511)		(560)
Noncash stock compensation	7,078		6,693
Amortization of terminated interest rate swap	1,668		1,602
Changes in assets and liabilities, excluding effects of acquisitions
Accounts receivable	(66,719)		(3,953)
Inventories	(33,481)		(19,973)
Other assets	(1,474)		(1,225)
Accounts payable	19,259		3,724
Income taxes receivable/payable	11,466		(297)
Other liabilities	6,855		(7,538)
Net cash provided by operating activities	99,460		83,435
Cash flows from investing activities
Purchases of investments	(124,713)		—
Maturities of short term investments	30,000		—
Purchases of property and equipment	(24,512)		(20,278)
Acquisitions of businesses, net of cash acquired of $337 and $168 in 2022 and 2021, respectively	(72,463)		(67,715)
Proceeds from sale of property and equipment	830		1,112
Other	(7,047)		(5)
Net cash used in investing activities	(197,905)		(86,886)
Cash flows from financing activities
Payments on Term Loan	(2,500)		—
Proceeds from vehicle and equipment notes payable	13,325		15,103
Debt issuance costs	(657)		—
Principal payments on long-term debt	(16,158)		(13,012)
Principal payments on finance lease obligations	(1,085)		(1,041)
Dividends paid	(44,877)		(17,607)
Acquisition-related obligations	(9,024)		(2,050)
Repurchase of common stock	(99,665)		—
Surrender of common stock awards by employees	(4,459)		(5,551)
Net cash used in financing activities	(165,100)		(24,158)
Net change in cash and cash equivalents	(263,545)		(27,609)
Cash and cash equivalents at beginning of period	333,485		231,520
Cash and cash equivalents at end of period	$	69,940	$	203,911
Supplemental disclosures of cash flow information
Net cash paid during the period for:
Interest	$	22,586	$	12,899
Income taxes, net of refunds	22,311		15,288
Supplemental disclosure of noncash activities
Right-of-use assets obtained in exchange for operating lease obligations	16,561		16,967
Release of indemnification of acquisition-related debt	980		2,036
Property and equipment obtained in exchange for finance lease obligations	2,600		1,134
Seller obligations in connection with acquisition of businesses	25,278		12,954
Unpaid purchases of property and equipment included in accounts payable	1,058		886

5

See accompanying notes to consolidated financial statements

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 210 locations and its corporate office is located in Columbus, Ohio.

In the first quarter of 2022, we realigned our operating segments to reflect recent changes in our business. We have three operating segments consisting of our Installation, Manufacturing and Distribution operations. The Installation operating segment is also our one reportable segment. See Note 10, Information on Segments, for further information.

Substantially all of our Installation segment 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 Installation 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. Public health organizations and international, federal, state and local governments responded by implementing measures during various points of the pandemic to contain the spread of COVID-19. We do not believe the various orders and restrictions significantly impacted our business in the first six months of 2022. However, COVID-19 has caused disruptions in the building products supply chain, impacting our ability to purchase certain materials we install through typical channels and fueling producer price and consumer inflation. The extent to which COVID-19 will impact our future growth, 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, 2021 (the “2021 Form 10-K”), as filed with the SEC on February 24, 2022. The December 31, 2021 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 six months ended June 30, 2022 are not necessarily indicative of the results to be expected in future operating quarters.

Note 2 to the audited consolidated financial statements in our 2021 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 six months ended June 30, 2022.

6

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Reclassifications

The change in reportable segments described in Note 1, Organization and Note 10, Information on Segments, requires certain prior year disclosures in Note 3, Revenue Recognition and Note 6, Goodwill and Intangibles to be recast to conform to the current year presentation.

Recently Issued Accounting Pronouncements Not Yet Adopted

We are currently evaluating the impact of the following Accounting Standards Update ("ASU") on our Condensed Consolidated Financial Statements or Notes to Condensed Consolidated Financial Statements:

Standard	Description	Effective Date	Effect on the financial statements or other significant matters
ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers	This pronouncement amends Topic 805 to require an acquirer to account for revenue contracts in a business combination in accordance with Topic 606 as if the acquirer had originated the contracts.	Annual periods beginning after December 15, 2022, including interim periods therein. Early adoption is permitted.	We are currently assessing the impact of adoption on our consolidated financial statements.

NOTE 3 - REVENUE RECOGNITION

Revenues for our Installation operating segment 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 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.

7

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Revenues for our Distribution and Manufacturing operating segments included in the Other category are accounted for on a point-in-time basis when the sale occurs, adjusted accordingly for any return provisions. Sales taxes are not included in revenue as we act as a conduit for collecting and remitting sales taxes to the appropriate government authorities. The point-in-time recognition is when we transfer the promised products to the customer and the customer obtains control of the products depending upon the agreed upon terms in the contract.

We disaggregate our revenue from contracts with customers for our Installation segment 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. Revenues for the Other category are presented net of intercompany sales in the tables below. The following tables present our net revenues disaggregated by end market and product (in thousands):

	Three months ended June 30,								Six months ended June 30,
	2022				2021				2022				2021
Installation:
Residential new construction	$	505,513	75	%	$	369,736	76	%	$	947,916	75	%	$	696,979	75	%
Repair and remodel	37,965		5	%	30,245		6	%	70,606		6	%	58,534		7	%
Commercial	94,520		14	%	82,984		17	%	181,107		14	%	159,629		17	%
Net revenue, Installation	$	637,998	94	%	$	482,965	99	%	$	1,199,629	95	%	$	915,142	99	%
Other (1)	38,751		6	%	5,133		1	%	64,612		5	%	10,022		1	%
Net revenue, as reported	$	676,749	100	%	$	488,098	100	%	$	1,264,241	100	%	$	925,164	100	%

	Three months ended June 30,								Six months ended June 30,
	2022				2021				2022				2021
Installation:
Insulation	$	409,602	61	%	$	308,231	63	%	$	774,546	62	%	$	586,798	63	%
Garage doors	42,512		6	%	26,044		5	%	78,491		6	%	50,483		6	%
Shower doors, shelving and mirrors	41,264		6	%	34,986		7	%	77,604		6	%	66,419		7	%
Waterproofing	35,197		5	%	34,264		7	%	64,218		5	%	64,213		7	%
Rain gutters	28,723		4	%	21,460		4	%	52,269		4	%	40,464		4	%
Fireproofing/firestopping	16,166		3	%	13,037		3	%	32,088		3	%	25,472		3	%
Window blinds	15,414		2	%	12,667		3	%	28,472		2	%	24,201		3	%
Other building products	49,120		7	%	32,276		7	%	91,941		7	%	57,092		6	%
Net revenue, Installation	$	637,998	94	%	$	482,965	99	%	$	1,199,629	95	%	$	915,142	99	%
Other (1)	38,751		6	%	5,133		1	%	64,612		5	%	10,022		1	%
Net revenue, as reported	$	676,749	100	%	$	488,098	100	%	$	1,264,241	100	%	$	925,164	100	%

(1) Net revenue for manufacturing operations are included in the Other category for all periods presented to conform with our change in composition of operating segments.

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):

	June 30, 2022		December 31, 2021
Contract assets	$	41,416	$	32,679
Contract liabilities	(17,827)		(14,153)

8

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Uncompleted contracts were as follows (in thousands):

	June 30, 2022		December 31, 2021
Costs incurred on uncompleted contracts	$	229,832	$	206,050
Estimated earnings	101,671		106,163
Total	331,503		312,213
Less: Billings to date	297,929		285,978
Net under billings	$	33,574	$	26,235

Net under billings were as follows (in thousands):

	June 30, 2022		December 31, 2021
Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets)	$	41,416	$	32,679
Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities)	(7,842)		(6,444)
Net under billings	$	33,574	$	26,235

The difference between contract assets and contract liabilities as of June 30, 2022 compared to December 31, 2021 is primarily the result of timing differences between our performance of obligations under contracts and customer payments. During the three and six months ended June 30, 2022, we recognized $2.8 million and $13.2 million of revenue that was included in the contract liability balance at December 31, 2021. We did not recognize any impairment losses on our receivables and contract assets during the three and six months ended June 30, 2022 or 2021.

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 June 30, 2022, the aggregate amount of the transaction price allocated to remaining uncompleted contracts was $183.6 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.

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

Balance as of January 1, 2022	$	8,717
Current period provision	1,887
Recoveries collected and additions	152
Amounts written off	(1,492)
Balance as of June 30, 2022	$	9,264

9

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 5 - INVESTMENTS AND 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 amounted to approximately $34.1 million and $258.1 million as of June 30, 2022 and December 31, 2021, respectively. See Note 9, Fair Value Measurements, for additional information.

All other investments are classified as held-to-maturity and consist of highly liquid instruments, including commercial paper and treasury bills. As of June 30, 2022, the amortized cost of these investments equaled the net carrying value, which was approximately $94.9 million. All held-to-maturity securities as of June 30, 2022 mature in one year or less. We held no such investments as of December 31, 2021. See Note 9, Fair Value Measurements, for additional information.

NOTE 6 - GOODWILL AND INTANGIBLES

We anticipate that the COVID-19 pandemic could continue to have an impact