ibp-20240331

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, 2024


☐			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 May 2, 2024, the registrant had 28,445,614 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			25
Item 3. Quantitative and Qualitative Disclosures About Market Risk			34
Item 4. Controls and Procedures			35
PART II – OTHER INFORMATION			36
Item 1. Legal Proceedings			36
Item 1A. Risk Factors			36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			36
Item 3. Defaults Upon Senior Securities			36
Item 4. Mine Safety Disclosures			36
Item 5. Other Information			36
Item 6. Exhibits			37
SIGNATURES			38

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in millions, except share and per share amounts)


	March 31,		December 31,
	2024		2023
ASSETS
Current assets
Cash and cash equivalents	$	399.9	$	386.5

Accounts receivable (less allowance for credit losses of $11.1 and $11.2 at March 31, 2024 and December 31, 2023, respectively)	425.5		423.3
Inventories	171.1		162.8
Prepaid expenses and other current assets	82.7		97.4
Total current assets	1,079.2		1,070.0
Property and equipment, net	146.3		137.2
Operating lease right-of-use assets	79.3		78.1
Goodwill	400.4		398.8
Customer relationships, net	173.7		179.6
Other intangibles, net	86.8		89.1
Other non-current assets	37.5		28.5
Total assets	$	2,003.2	$	1,981.3
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	31.6	$	32.2
Current maturities of operating lease obligations	28.4		28.3
Current maturities of finance lease obligations	2.8		2.7
Accounts payable	156.8		158.6
Accrued compensation	47.2		59.6
Other current liabilities	72.9		65.0
Total current liabilities	339.7		346.4
Long-term debt	843.4		835.1
Operating lease obligations	51.0		49.9
Finance lease obligations	6.9		6.6
Deferred income taxes	26.2		24.5
Other long-term liabilities	56.8		48.5
Total liabilities	1,324.0		1,311.0
Commitments and contingencies (Note 16)
Stockholders’ equity
Preferred stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		—
Common stock; $0.01 par value: 100,000,000 authorized, 33,658,330 and 33,587,701 issued and 28,436,558 and 28,367,338 shares outstanding at March 31, 2024 and December 31, 2023, respectively	0.3		0.3
Additional paid in capital	248.7		244.7
Retained earnings	694.2		693.8
Treasury stock; at cost: 5,221,772 and 5,220,363 shares at March 31, 2024 and December 31, 2023, respectively	(302.4)		(302.2)
Accumulated other comprehensive income	38.4		33.7
Total stockholders’ equity	679.2		670.3
Total liabilities and stockholders’ equity	$	2,003.2	$	1,981.3

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 millions, except share and per share amounts)


	Three months ended March 31,
	2024		2023
Net revenue	$	692.9	$	659.3
Cost of sales	458.4		448.9
Gross profit	234.5		210.4
Operating expenses
Selling	33.3		32.6
Administrative	102.6		89.5
Amortization	10.7		11.4
Operating income	87.9		76.9
Other expense, net
Interest expense, net	11.9		9.7
Other (income)	(0.4)		(0.2)
Income before income taxes	76.4		67.4
Income tax provision	20.5		18.1
Net income	$	55.9	$	49.3
Other comprehensive income (loss), net of tax:
Net change on cash flow hedges, net of tax (provision) benefit of $(1.7) and $2.3 for the three months ended March 31, 2024 and 2023, respectively.	4.7		(6.3)
Comprehensive income	$	60.6	$	43.0
Earnings per share:
Basic	$	1.98	$	1.76
Diluted	$	1.97	$	1.74
Weighted average shares outstanding:
Basic	28,171,444		28,075,678
Diluted	28,385,001		28,278,220

Cash dividends declared per share	$	1.95	$	1.23

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 MARCH 31, 2023 AND MARCH 31, 2024

(in millions, except share and per share amounts)


	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income (Loss)		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - January 1, 2023	33,429,557	$	0.3	$	228.8	$	513.1	(5,123,075)	$	(289.3)	$	40.6	$	493.5
Net income						49.3							49.3
Issuance of common stock awards to employees	69,136	—		—									—
Surrender of common stock awards								(581)	—				—
Share-based compensation expense				3.5									3.5
Share-based compensation issued to directors				0.1									0.1

Dividends declared ($1.23 per share)						(34.9)							(34.9)

Other comprehensive (loss), net of tax											(6.3)		(6.3)
BALANCE - March 31, 2023	33,498,693	$	0.3	$	232.4	$	527.5	(5,123,656)	$	(289.3)	$	34.3	$	505.2

	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - January 1, 2024	33,587,701	$	0.3	$	244.7	$	693.8	(5,220,363)	$	(302.2)	$	33.7	$	670.3
Net income						55.9							55.9

Issuance of common stock awards to employees	70,629	—		—									—
Surrender of common stock awards								(1,409)	(0.2)				(0.2)
Share-based compensation expense				3.8									3.8
Share-based compensation issued to directors				0.2									0.2

Dividends declared ($1.95 per share)						(55.5)							(55.5)

Other comprehensive income, net of tax											4.7		4.7
BALANCE - March 31, 2024	33,658,330	$	0.3	$	248.7	$	694.2	(5,221,772)	$	(302.4)	$	38.4	$	679.2

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)


	Three months ended March 31,
	2024		2023
Cash flows from operating activities
Net income	$	55.9	$	49.3
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment	13.8		12.5
Amortization of operating lease right-of-use assets	7.6		7.3
Amortization of intangibles	10.7		11.4
Amortization of deferred financing costs and debt discount	0.4		0.5
Provision for credit losses	1.4		1.7
Write-off of debt issuance costs	1.1		—
Gain on sale of property and equipment	(0.4)		(0.6)
Noncash stock compensation	4.0		3.4

Other, net	(3.4)		(2.5)
Changes in assets and liabilities, excluding effects of acquisitions
Accounts receivable	(3.6)		1.7
Inventories	(8.0)		7.7

Other assets	4.0		4.4
Accounts payable	(1.4)		(16.9)
Income taxes receivable/payable	19.7		16.5
Other liabilities	(17.0)		(22.6)
Net cash provided by operating activities	84.8		73.8
Cash flows from investing activities


Purchases of property and equipment	(21.8)		(14.9)
Acquisitions of businesses, net of cash acquired of $— in 2024 and 2023, respectively	(4.1)		(38.0)
Proceeds from sale of property and equipment	0.7		0.7
Settlements with interest rate swap counterparties	4.5		3.6
Other	(0.4)		1.0
Net cash used in investing activities	$	(21.1)	$	(47.6)

See accompanying notes to consolidated financial statements

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INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, CONTINUED)

(in millions)



	Three months ended March 31,
	2024		2023
Cash flows from financing activities
Proceeds from Term Loan	$	142.9	$	—
Payments on Term Loan	(133.0)		(1.3)
Proceeds from vehicle and equipment notes payable	5.2		8.1
Debt issuance costs	(1.5)		—
Principal payments on long-term debt	(7.5)		(7.0)
Principal payments on finance lease obligations	(0.8)		(0.7)
Dividends paid	(54.9)		(34.5)
Acquisition-related obligations	(0.5)		(1.7)

Surrender of common stock awards by employees	(0.2)		—
Net cash used in financing activities	(50.3)		(37.1)
Net change in cash and cash equivalents	13.4		(10.9)
Cash and cash equivalents at beginning of period	386.5		229.6
Cash and cash equivalents at end of period	$	399.9	$	218.7
Supplemental disclosures of cash flow information
Net cash paid during the period for:
Interest	$	15.5	$	14.7
Income taxes, net of refunds	0.8		1.5
Supplemental disclosure of noncash activities
Right-of-use assets obtained in exchange for operating lease obligations	$	8.8	$	5.7

Property and equipment obtained in exchange for finance lease obligations	1.2		1.0
Seller obligations in connection with acquisition of businesses	0.6		6.0
Unpaid purchases of property and equipment included in accounts payable	2.8		2.3

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

The vast majority of our sales originate from our one reportable segment, Installation. 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, and see Note 10, Information on Segments, for information on how we segment the business.

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, 2023 (“2023 Form 10-K”), as filed with the SEC on February 22, 2024. The December 31, 2023 Condensed Consolidated Balance Sheet data herein was derived from the audited consolidated financial statements but the related footnotes do not include all disclosures required by U.S. GAAP.

Our interim operating results for the three months ended March 31, 2024 are not necessarily indicative of the results to be expected in future operating quarters.

Note 2 to the audited consolidated financial statements in our 2023 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 policy described below, there have been no changes to our significant accounting policies during the three months ended March 31, 2024.

Reclassifications

In order to conform with the current year presentation, we reclassified $3.6 million of the financing component of interest rate swaps for the three months ended March 31, 2023 from “Other” to “Settlements with interest rate swap counterparties” within the investing activities section of our Condensed Consolidated Statements of Cash Flows.

Recently Adopted Accounting Pronouncements

Standard

Effective Date

Adoption

ASU 2023-01 “Leases” (Topic 842): Accounting for leasehold improvements associated with common control leases.

December 15, 2023

This pronouncement amends Topic 842 to require all entities to amortize leasehold improvements associated with common control leases over the useful life to the common control group. This did not materially affect our consolidated financial statements.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 2023-07 "Segment Reporting" (Topic 280): Improvements to Reportable Segment Disclosures.

This pronouncement amends Topic 280 to require all entities to disclose, on an annual and interim basis, significant segment expenses and an amount for other segment items by reportable segment.

Effective for annual periods beginning after December 15, 2023. Early adoption is permitted.

The Company will adopt and apply the guidance as prescribed by this ASU to segment reporting that occurs after the effective date. We do not anticipate this ASU will materially affect our consolidated financial statements.

ASU 2023-09 "Income Taxes" (Topic 740): Improvements to Income Tax Disclosures.

This pronouncement amends Topic 740 to require all entities to disclose specific categories in the rate reconciliation, income taxes paid, and other income tax information.

Effective for annual periods beginning after December 15, 2024. Early adoption is permitted.

The Company will adopt and apply the guidance as prescribed by this ASU to income tax disclosures that occur after the effective date. We are currently assessing the impact of the adoption on our consolidated financial information.

NOTE 3 - REVENUE RECOGNITION

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 millions):


	Three months ended March 31,
	2024				2023
Installation:
Residential new construction	$	502.8	73	%	$	475.1	72	%
Repair and remodel	40.1		6	%	37.7		6	%
Commercial	113.0		16	%	109.9		16	%
Net revenue, Installation	$	655.9	95	%	$	622.7	94	%

Other	37.0		5	%	36.6		6	%
Net revenue, as reported	$	692.9	100	%	$	659.3	100	%

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	Three months ended March 31,
	2024				2023
Installation:
Insulation	$	427.9	62	%	$	394.0	60	%
Shower doors, shelving and mirrors	48.9		7	%	45.5		7	%
Garage doors	42.7		6	%	43.3		7	%
Waterproofing	30.7		4	%	29.9		4	%
Rain gutters	27.4		4	%	27.8		4	%
Fireproofing/firestopping	20.7		3	%	15.2		2	%
Window blinds	17.0		3	%	15.9		2	%
Other building products	40.6		6	%	51.1		8	%
Net revenue, Installation	$	655.9	95	%	$	622.7	94	%
Other	37.0		5	%	36.6		6	%
Net revenue, as reported	$	692.9	100	%	$	659.3	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 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 millions):


	March 31, 2024		December 31, 2023
Contract assets	$	35.3	$	31.7
Contract liabilities	(19.1)		(19.0)

Uncompleted contracts were as follows (in millions):


	March 31, 2024		December 31, 2023
Costs incurred on uncompleted contracts	$	260.1	$	268.9
Estimated earnings	123.1		124.4
Total	383.2		393.3
Less: Billings to date	357.8		371.7
Net under billings	$	25.4	$	21.6

Net under billings were as follows (in millions):


	March 31, 2024		December 31, 2023
Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets)	$	35.3	$	31.7
Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities)	(9.9)		(10.1)
Net under billings	$	25.4	$	21.6

The difference between contract assets and contract liabilities as of March 31, 2024 compared to December 31, 2023 is primarily the result of timing differences between our performance of obligations under contracts and customer payments and billings. During the three months ended March 31, 2024, we recognized $15.5 million of revenue that was included in the contract liability balance at December 31, 2023. We did not recognize any impairment losses on our receivables and contract assets during the three months ended March 31, 2024 or 2023.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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, 2024, the aggregate amount of the transaction price allocated to remaining uncompleted contracts was $115.9 million. We expect to satisfy remaining performance obligations and recognize revenue on substantially all of these uncompleted contracts over the next 18 months.

NOTE 4 - CREDIT LOSSES

Our expected loss allowance methodology for accounts receivable is developed using historical experience, present economic conditions and other factors management considers relevant to estimate expected credit losses. We also perform ongoing evaluations of creditworthiness of our existing and potential customers.

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


Balance as of January 1, 2024	$	11.2
Current period provision	1.4
Recoveries collected and additions	0.2
Amounts written off	(1.7)
Balance as of March 31, 2024	$	11.1

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 cash equivalents amounted to approximately $367.5 million and $344.8 million as of March 31, 2024 and December 31, 2023, respectively. See Note 9, Fair Value Measurements, for additional information.

NOTE 6 - GOODWILL AND INTANGIBLES

Goodwill

The change in carrying amount of goodwill by reporting segment was as follows (in millions):


	Installation		Other		Consolidated

Goodwill (gross) - January 1, 2024	$	375.2	$	93.6	$	468.8
Business combinations	1.5		—		1.5
Other adjustments	0.1		—		0.1
Goodwill (gross) - March 31, 2024	376.8		93.6		470.4
Accumulated impairment losses	(70.0)		—		(70.0)
Goodwill (net) - March 31, 2024	$	306.8	$	93.6	$	400.4

Other adjustments presented in the above table primarily include one immaterial acquisition and adjustments for the allocation of certain acquisitions still under measurement made during the three months ended March 31, 2024.

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 and were all associated with the Installation segment, with the latest impairment charge being recorded during the year ended December 31, 2010.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Intangibles, net

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


	As of March 31,						As of December 31,
	2024						2023
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Amortized intangibles:
Customer relationships	$	359.1	$	185.4	$	173.7	$	357.4	$	177.8	$	179.6
Covenants not-to-compete	32.3		24.6		7.7		32.1		23.7		8.4
Trademarks and tradenames	128.6		49.5		79.1		128.0		47.4		80.6
Backlog	21.6		21.6		—		21.6		21.5		0.1
	$	541.6	$	281.1	$	260.5	$	539.1	$	270.4	$	268.7

The gross carrying amount of intangibles increased approximately $2.5 million during the three months ended March 31, 2024 primarily due to business combinations. For more information, see Note 17, Business Combinations.

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


Remainder of 2024	$	30.7
2025	35.6
2026	31.6
2027	27.3
2028	23.9
Thereafter	111.4

NOTE 7 - LONG-TERM DEBT

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


	As of March 31,		As of December 31,
	2024		2023
Senior Notes due 2028, net of unamortized debt issuance costs of $2.3 and $2.5, respectively	$	297.7	$	297.5
Term loan, net of unamortized debt issuance costs of $4.6 and $4.4, respectively	495.4		485.6
Vehicle and equipment notes, maturing through March 2029; payable in various monthly installments, including interest rates ranging from 1.9% to 7.3%	80.7		83.0
Note payable, maturing April 2025; payable in annual installments, including interest rate at 5.0%	1.2		1.2
	875.0		867.3
Less: current maturities	(31.6)		(32.2)
Long-term debt, less current maturities	$	843.4	$	835.1

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Remaining required repayments of debt principal, gross of unamortized debt issuance costs, as of March 31, 2024 are as follows (in millions):


Remainder of 2024	$	24.4
2025	27.8
2026	23.4
2027	18.6
2028	311.2
Thereafter	476.5

Term Loan Agreement Amendment

In March 2024, we entered into Amendment No. 3 to our Term Loan Credit Agreement ("Third Amendment"). The Third Amendment amended certain terms of the existing seven-year term loan facility due December 2028, as amended (the "Term Loan Credit Agreement") and allowed for the issuance of a new term loan ("New Term Loan") in the amount of $500.0 million which will mature on March 28, 2031. Net proceeds of the New Term Loan were used to refinance the remaining $490.0 million on our existing term loan, pay fees and increase working capital. The New Term Loan does not have any financial maintenance covenants, eliminates the credit spread adjustment and the floor is reduced to 0.00%. The New Term Loan bears interest, at our option, at a rate equal to either: the adjusted term secured overnight financing rate plus 2.00% per annum, or an alternative base rate plus 1.00%. The New Term Loan also includes (i) a six-month “soft call” protection provision during which a 1.00% premium will be charged in connection with certain repricing transactions, and (ii) a 50 basis points most favored nation protection for 12 months following the effective date. As of March 31, 2024, we had $495.4 million, net of unamortized debt issuance costs, due on our New Term Loan. We have various interest rates swaps that serve to hedge $400.0 million of the variable cash flows on our New Term Loan through December 14, 2028. For further information about our interest rate swaps, see Note 11, Derivatives and Hedging Activities.

We wrote off $1.1 million in previously capitalized loan costs during the three months ended March 31, 2024. In addition, we expensed loan costs that did not meet the requirements for capitalization of approximately $3.0 million during the three months ended March 31, 2024. We had no such write-offs or expenses during the three months ended March 31, 2023.

NOTE 8 - LEASES

We lease various assets in the ordinary course of 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, and certain vehicles and equipment to facilitate our operations, including, but not limited to, trucks, forklifts and office equipment.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The table below presents the lease-related assets and liabilities recorded on the Condensed Consolidated Balance Sheets (in millions):


		As of March 31,			As of December 31,
	Classification	2024			2023
Assets
Non-Current
Operating	Operating lease right-of-use assets	$	79.3		$	78.1
Finance	Property and equipment, net	9.5			9.1
Total lease assets		$	88.8		$	87.2
Liabilities
Current
Operating	Current maturities of operating lease obligations	$	28.4		$	28.3
Financing	Current maturities of finance lease obligations	2.8			2.7
Non-Current
Operating	Operating lease obligations	51.0			49.9
Financing	Finance lease obligations	6.9			6.6
Total lease liabilities		$	89.1		$	87.5

Weighted-average remaining lease term:
Operating leases		3.5 years			3.6 years
Finance leases		3.5 years			3.5 years
Weighted-average discount rate:
Operating leases		5.37		%	5.23		%
Finance leases		7.43		%	6.91		%

Lease Costs

The table below presents certain information related to the lease costs for finance and operating leases (in millions):


		Three months ended March 31,
	Classification	2024		2023
Operating lease cost(1)	Administrative	$	10.3	$	9.2
Finance lease cost:
Amortization of leased assets(2)	Cost of sales	1.0		1.0
Interest on finance lease obligations	Interest expense, net	0.2		0.1
Total lease costs		$	11.5	$	10.3

(1)Includes variable lease costs of $1.3 million and $1.2 million for the three months ended March 31, 2024 and 2023, respectively, and short-term lease costs of $0.7 million and $0.3 million for the three months ended March 31, 2024 and 2023.

(2)Includes variable lease costs of $0.2 million for each of the three months ended March 31, 2024 and 2023.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Other Information

The table below presents supplemental cash flow information related to leases (in millions):


	Three months ended March 31,
	2024		2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	8.4	$	7.7
Operating cash flows for finance leases	0.2		0.1
Financing cash flows for finance leases	0.8		0.7

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 as of March 31, 2024 (in millions):


	Finance Leases		Operating Leases
			Related Party		Other		Total Operating
Remainder of 2024	$	2.6	$	0.9	$	23.7	$	24.6
2025	3.2		1.1		24.7		25.8
2026	2.8		0.5		17.7		18.2
2027	1.9		0.1		9.7		9.8
2028	0.6		—		4.4		4.4
Thereafter	—		—		4.0		4.0
Total minimum lease payments	11.1		$	2.6	$	84.2	86.8

Less: Amounts representing interest	(1.4)						(7.4)
Present value of future minimum lease payments	9.7						79.4
Less: Current obligation under leases	(2.8)						(28.4)
Long-term lease obligations	$	6.9					$	51.0

NOTE 9 - 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, 2024 and December 31, 2023 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, 2024 and 2023, 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, 2024 and December 31, 2023 approximate fair value due to the short-term maturities of these financial instruments. The carrying amounts of certain long-term debt, including the Term Loan and ABL Revolver as of March 31, 2024 and December 31, 2023, approximate fair value due to the variable

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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, 2024 and December 31, 2023. 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, calculated based on a weighted average of various future forecast scenarios, to their net present value.

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 millions):


	As of March 31, 2024								As of December 31, 2023
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents	$	367.5	$	367.5	$	—	$	—	$	344.8	$	344.8	$	—	$	—
Derivative financial instruments	30.2		—		30.2		—		24.9		—		24.9		—
Total financial assets	$	397.7	$	367.5	$	30.2	$	—	$	369.7	$	344.8	$	24.9	$	—
Financial liabilities:
Contingent consideration	$	0.7	$	—	$	—	$	0.7	$	0.4	$	—	$	—	$	0.4

See Note 5, Cash and Cash Equivalents, for more information on cash equivalents included in the table above. Also see Note 11, Derivatives and Hedging Activities, for more information on derivative financial instruments.

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


Contingent consideration liability - January 1, 2024	$	0.4
Preliminary purchase price	0.3
Fair value adjustments	0.0
Accretion in value	0.0



Contingent consideration liability - March 31, 2024	$	0.7

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 value and associated fair value of financial liabilities that are not recorded at fair value in the Condensed Consolidated Balance Sheets and not described above include our $300.0 million in aggregate principal amount of 5.75% senior unsecured notes ("Senior Notes"). To estimate the fair value of our Senior Notes, we utilized third-party quotes which are derived all or in part from model prices, external sources or market prices. The Senior Notes represent a Level 2 fair value measurement and are as follows (in millions):


	As of March 31, 2024				As of December 31, 2023
	Carrying Value		Fair Value		Carrying Value		Fair Value

Senior Notes(1)	$	300.0	$	293.1	$	300.0	$	296.2

(1)Excludes the impact of unamortized debt issuance costs.

See Note 7, Long-Term Debt, for more information on our Senior Notes.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 10 - INFORMATION ON SEGMENTS

Our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), reviews financial information of our three operating segments consisting of Installation, Distribution and Manufacturing for the purpose of assessing business performance, managing the business and allocating resources.

Our Installation operating segment represents the majority of our net revenue and gross profit and forms our one reportable segment. This operating segment represents the service-based installation of insulation and complementary building products in the residential new construction, repair and remodel and commercial construction end markets from our national network of branch locations. These branch locations have similar economic and operating characteristics including the nature of products and services offered, operating procedures and risks, customer bases, employee incentives, material procurement and shared corporate resources and therefore combine to form one operating segment.

The Other category reported below reflects the operations of our two remaining operating segments, Distribution and Manufacturing, which do not meet the quantitative thresholds for separate reporting. Our Distribution operating segment includes our businesses that sell insulation, gutters and accessories primarily to installers of these products who operate in multiple end markets. Our Manufacturing operating segment consists of our cellulose insulation manufacturing operation. In addition to sales of cellulose insulation, revenues from this operating segment consist of sales of asphalt and industrial fibers to distributors and installers of these products.

The Installation reportable segment includes substantially all of our net revenue from services while net revenue included in the Other category includes substantially all of our net revenue from sales of products. The intercompany sales from the Other category to the Installation reportable segment include a profit margin while our Installation segment records these transactions at cost. These transactions are shown in the Eliminations column in the tables below.

The key metrics used by our CODM to assess performance, manage the business and allocate resources of our operating segments are revenue and segment gross profit. We define segment gross profit as revenue less cost of sales, excluding depreciation and amortization. We do not report total assets, depreciation and amortization expenses included in reported cost of sales, operating expenses or other expense, net by segment because our CODM does not regularly receive or use this information. The following tables represent our segment information for the three months ended March 31, 2024 and 2023 (in millions):


	Three months ended March 31, 2024
	Installation			Other			Eliminations			Consolidated
Revenue	$	655.9		$	40.3		$	(3.3)		$	692.9
Cost of sales (1)	419.3			28.5			(2.3)			445.5
Segment gross profit	$	236.6		$	11.8		$	(1.0)		$	247.4
Segment gross profit percentage	36.1		%	29.3		%	29.4		%	35.7		%


	Three months ended March 31, 2023
	Installation			Other			Eliminations			Consolidated
Revenue	$	622.7		$	38.7		$	(2.1)		$	659.3
Cost of sales (1)	410.4			28.5			(1.8)			437.1
Segment gross profit	$	212.3		$	10.2		$	(0.3)		$	222.2
Segment gross profit percentage	34.1		%	26.5		%	18.1		%	33.7		%

(1)Cost of sales included in segment gross profit is exclusive of depreciation and amortization for the three months ended March 31, 2024 and 2023.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The reconciliation between consolidated segment gross profit for each period as shown in the tables above to consolidated income before income taxes is as follows (in millions):


	Three months ended March 31,
	2024		2023
Segment gross profit - consolidated	$	247.4	$	222.2
Depreciation and amortization (1)	12.9		11.8
Gross profit, as reported	234.5		210.4
Operating expenses	146.6		133.5
Operating income	87.9		76.9
Other expense, net	11.5		9.5
Income before income taxes	$	76.4	$	67.4

(1)Depreciation and amortization is excluded from segment gross profit for the three months ended March 31, 2024 and 2023.

NOTE 11 - 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 three months ended March 31, 2024, we used interest rate swaps to hedge the variable cash flows associated with existing variable-rate debt. 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. 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, 2024, we have not posted any collateral related to these agreements.

As of March 31, 2024 and December 31, 2023, we had the following interest rate swap derivatives (notional amount in millions):


Effective Date	Notional Amount		Fixed Rate		Maturity Date
April 28, 2023	$	200.0	0.46	%	December 31, 2025
April 28, 2023	100.0		1.32	%	December 31, 2025
April 28, 2023	100.0		1.32	%	December 31, 2025
December 31, 2025	300.0		3.06	%	December 14, 2028
December 31, 2025	100.0		2.93	%	December 14, 2028

As of March 31, 2024, our two forward interest rate swaps, combined with our three active swaps, serve to hedge $400.0 million of the variable cash flows on our variable rate Term Loan through December 14, 2028. The assets associated with these interest rate swaps are included in other current assets and other non-current assets on the Consolidated Balance Sheets at their fair value amounts as described in Note 9, Fair Value Measurements.

In July 2022, we amended the maturity date of each of our three active interest rate swaps to December 31, 2025 with the other terms remaining unchanged. The remaining unrealized gains will be amortized as a decrease to interest expense, net through the original maturity dates of April 15, 2030 and December 15, 2028. For the three months ended March 31, 2024 and 2023, we amortized $1.8 million and $1.7 million, respectively, of the remaining unrealized gains as a decrease to interest expense, net. During each of the three months ended March 31, 2024 and 2023, we also amortized $1.0 million of the remaining unrealized loss associated with the August 2020 terminated swaps as an increase to interest expense, net.

The amended swaps included off-market terms at inception. This other-than-insignificant financing element will be amortized as an increase to interest expense, net through the December 31, 2025 maturity date of the amended swaps. For each of the three months ended March 31, 2024 and 2023, we amortized $1.8 million of the financing element as an increase to interest

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

expense, net. Cash settlements with interest rate counterparties are recognized through cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows due to the other-than-insignificant financing element.

The changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in other comprehensive income (loss), 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, 2024 and 2023.

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, and as our terminated and amended swaps are amortized. Over the next twelve months, we estimate that an additional $11.5 million will be reclassified as a decrease to interest expense, net.

The following table summarizes amounts recorded to interest expense, net included in the Condensed Consolidated Statements of Operations and Comprehensive Income related to our interest rate swaps (in millions):


	Three months ended March 31,
	2024		2023
(Benefit) associated with swap net settlements	$	(4.5)	$	(3.6)
Expense associated with amortization of amended/terminated swaps	1.1		1.1

NOTE 12 - STOCKHOLDERS’ EQUITY

Accumulated other comprehensive income

The change in accumulated other comprehensive income related to our interest rate derivatives, net of taxes, was as follows (in millions):


	Three months ended March 31,
	2024		2023
Accumulated gain at beginning of period	$	33.7	$	40.6
Unrealized gain (loss) in fair value of interest rate derivatives	3.9		(7.1)
Reclassifications of realized net losses to earnings	0.8		0.8
Accumulated gain at end of period	$	38.4	$	34.3

The reclassifications of realized net losses to earnings in the above table are recorded within interest expense, net.

Share repurchases

We did not repurchase any common stock during the three months ended March 31, 2024 and 2023.

On February 22, 2024, we announced that our board of directors authorized a new stock repurchase program that allows for the repurchase of up to $300.0 million of our outstanding common stock. The new program replaces the previous program and is in effect through March 1, 2025.

Dividends

During the three months ended March 31, 2024, we declared and paid the following cash dividends (amount declared and amount paid in millions):


Declaration Date	Record Date	Payment Date	Dividend Per Share		Amount Declared		Amount Paid
2/22/2024	3/15/2024	3/31/2024	$	1.60	$	45.5	$	45.1
2/22/2024	3/15/2024	3/31/2024	0.35		10.0		9.8

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During the three months ended March 31, 2023, we declared and paid the following cash dividends (amount declared and amount paid in millions):


Declaration Date	Record Date	Payment Date	Dividend Per Share		Amount Declared		Amount Paid
2/22/2023	3/15/2023	3/31/2023	$	0.90	$	25.5	$	25.3
2/22/2023	3/15/2023	3/31/2023	0.33		9.4		9.2

The amount of dividends declared may vary from the amount of dividends paid in a period due to the vesting of restricted stock awards and performance share awards, which accrue dividend equivalent rights that are paid when the award vests. The payment of future dividends will be at the discretion of our board of directors and will depend on our future earnings, capital requirements, financial condition, future prospects, results of operations, contractual restrictions, legal requirements, and other factors deemed relevant by our board of directors.

NOTE 13 - EMPLOYEE BENEFITS

Healthcare

We participate in multiple healthcare plans, the largest of which is partially self-funded with an insurance company paying benefits in excess of stop loss limits per individual/family. Our healthcare benefit expense (net of employee contributions) was $8.4 million and $7.4 million for the three months ended March 31, 2024 and 2023, 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 $4.4 million and $3.9 million as of March 31, 2024 and December 31, 2023, respectively.

Workers’ Compensation

Workers’ compensation expense totaled $5.8 million for each of the three months ended March 31, 2024 and 2023.

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


	March 31, 2024		December 31, 2023
Included in other current liabilities	$	8.6	$	9.5
Included in other long-term liabilities	21.0		17.0
	$	29.6	$	26.5

We also had an insurance receivable for claims that exceeded the stop loss limit under our self-insured policies as well as claims under our fully insured policies 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 millions):


	March 31, 2024		December 31, 2023
Included in other non-current assets	$	4.9	$	3.0

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 $1.0 million and $0.9 million during the three months ended March 31, 2024 and 2023, respectively. These expenses are included in administrative expenses on the accompanying Condensed Consolidated Statements of Operations and Comprehensive Income.

Multiemployer Pension Plans

We participate in various multiemployer pension plans under collective bargaining agreements in Washington, Oregon, California and Illinois with other companies in the construction industry. These plans cover our union-represented employees and contributions to these plans are expensed as incurred. These plans generally provide for retirement, death and/or termination benefits for eligible employees within the applicable collective bargaining units, based on specific eligibility/

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

participation requirements, vesting periods and benefit formulas. We do not participate in any multiemployer pension plans that are considered to be individually significant.

Share-Based Compensation

Common Stock Awards

We periodically grant shares of our common stock to non-employee members of our board of directors and our employees. During each of the three months ended March 31, 2024 and 2023, we did not grant any such shares under our 2023 Omnibus Incentive Plan to non-employee members of our board of directors or employees.

Employees – Performance-Based Stock Awards

During the three months ended March 31, 2024, we issued approximately 67 thousand shares of our common stock to certain officers, which vest in two equal installments on each of April 20, 2025 and April 20, 2026. In addition, during the three months ended March 31, 2024, we established, and our board of directors approved, performance-based targets in connection with common stock awards to be issued to certain officers in 2025 contingent upon achievement of these targets.

In addition, there are long-term performance-based restricted stock awards to be issued to certain employees annually through the 2024 performance period contingent upon achievement of certain performance targets. These awards are accounted for as liability-based awards since they represent a predominantly-fixed monetary amount that will be settled with a variable number of common shares annually. These awards will vest in 2025 and are included in other current liabilities on the Condensed Consolidated Balance Sheets. During the three months ended March 31, 2024 and 2023, we issued approximately four thousand and eight thousand shares of our common stock, respectively.

Employees – Performance-Based Restricted Stock Units

During 2023, 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 2024 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.

Share-Based Compensation Summary

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


	Common Stock Awards			Performance-Based Stock Awards			Performance-Based Restricted Stock Units
	Awards	Weighted Average Grant Date Fair Value Per Share		Awards	Weighted Average Grant Date Fair Value Per Share		Units	Weighted Average Grant Date Fair Value Per Share
Nonvested awards/units at December 31, 2023	116,482	$	103.02	148,459	$	108.83	14,382	$	111.71
Granted	4,105	205.96		35,320	205.96		—	—
Vested	(3,758)	101.35		—	—		—	—
Forfeited/Cancelled	(245)	102.77		—	—		(111)	111.61
Nonvested awards/units at March 31, 2024	116,584	$	106.70	183,779	$	127.49	14,271	$	111.71

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The following table summarizes the share-based compensation expense recognized by award type (in millions):


	Three months ended March 31,
	2024		2023
Common Stock Awards	$	1.2	$	1.4
Non-Employee Common Stock Awards	0.2		0.1
Performance-Based Stock Awards	1.9		1.6
Liability Performance-Based Stock Awards	0.4		—
Performance-Based Restricted Stock Units	0.4		0.3
	$	4.1	$	3.4

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


	Three months ended March 31,
	2024		2023
Cost of sales	$	0.3	$	0.2
Selling	0.1		0.1
Administrative	3.7		3.1
	$	4.1	$	3.4

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.

Unrecognized share-based compensation expense related to unvested awards was as follows (in millions):


	As of March 31, 2024
	Unrecognized Compensation Expense on Unvested Awards		Weighted Average Remaining Vesting Period
Common Stock Awards	$	6.7	1.6 years
Performance-Based Stock Awards	12.3		2.1 years
Performance-Based Restricted Stock Units	0.1		0.1 years
Total unrecognized compensation expense related to unvested awards	$	19.1

Total unrecognized compensation expense is subject to future adjustments for forfeitures. This expense is expected to be recognized over the remaining weighted-average period shown above on a straight-line basis except for the Performance-Based Stock Awards which uses the graded-vesting method. Shares forfeited are returned as treasury shares and available for future issuances.

During the three months ended March 31, 2024, our employees surrendered approximately one thousand shares of our common stock to satisfy tax withholding obligations arising in connection with the vesting of common stock awards issued under our 2023 and 2014 Omnibus Incentive Plans.

In May 2023, our stockholders approved a new 2023 Omnibus Incentive Plan which became effective on May 26, 2023. All future awards as of this date will be granted under the new plan, and awards granted previously under the 2014 Omnibus Incentive Plan will not be modified or impacted by this adoption. As of March 31, 2024, approximately 1.8 million of the 2.1 million shares of common stock authorized for issuance were available for issuance under the 2023 Omnibus Incentive Plan.

NOTE 14 - 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.

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

During both the three months ended March 31, 2024 and 2023, our effective tax rate 26.8%. The rates for each of the three months ended March 31, 2024 and 2023 were unfavorably impacted by certain expenses not being deductible for income tax reporting purposes.

NOTE 15 - 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 8, Leases, for future minimum lease payments to be paid to these related parties.

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


	Three months ended March 31,
	2024		2023
Sales	$	5.0	$	4.0
Purchases	0.6		0.7
Rent	0.3		0.4

We had related party balances of approximately $1.7 million and $1.8 million included in accounts receivable on our Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023, respectively. These balances primarily represented trade accounts receivable arising during the normal course of business with various related parties. M/I Homes, Inc., a customer whose Chairman, Chief Executive Officer and President serves on our board of directors, accounted for $1.5 million and $1.4 million of the related party accounts receivable balances as of March 31, 2024 and December 31, 2023, respectively. Additionally, M/I Homes, Inc. accounted for a significant portion of our related party sales during the three months ended March 31, 2024 and 2023.

NOTE 16 - 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 millions):


	March 31, 2024		December 31, 2023
Included in other current liabilities	$	8.4	$	9.1
Included in other long-term liabilities	20.1		16.3
	$	28.5	$	25.4

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


	March 31, 2024		December 31, 2023
Insurance receivables and indemnification assets for claims under fully insured policies	$	2.9	$	1.7
Insurance receivables for claims that exceeded the stop loss limit	0.7		0.1
Total insurance receivables and indemnification assets included in other non-current assets	$	3.6	$	1.8

Leases

See Note 8, Leases, for further information regarding our lease commitments.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

We have a supply agreement with variable pricing with one of our suppliers to purchase a portion of the materials we utilize in our business. This agreement is effective March 31, 2023 through March 31, 2026 with a purchase obligation of 12.0 million pounds for the period ending May 15, 2024, 14.4 million pounds for the period ending March 31, 2025 and 17.3 million pounds for the period ending March 31, 2026. Through March 31, 2024, we have purchased approximately 10.7 million pounds of materials under the agreement period ending May 15, 2024.

NOTE 17 - BUSINESS COMBINATIONS

As part of our ongoing strategy to expand geographically and increase market share in certain markets, as well as diversify our products and end markets, we completed one business combination and one insignificant tuck-in acquisition merged into an existing operation during the three months ended March 31, 2024 and two business combinations during the three months ended March 31, 2023. The largest of these acquisitions was Anchor Insulation Co., Inc. ("Anchor") in March 2023.

Below is a summary of each significant acquisition by year, including revenue and net income since date of acquisition shown for the year of acquisition. Net income includes amortization and taxes when appropriate.

For the three months ended March 31, 2024 (in millions):


									Three months ended March 31, 2024
2024 Acquisitions	Date	Acquisition Type	Cash Paid		Seller Obligations		Total Purchase Price		Revenue		Net Income

Other	3/4/2024	Asset	$	4.1	$	0.6	$	4.7	$	0.4	$	0.0

For the three months ended March 31, 2023 (in millions):


									Three months ended March 31, 2023
2023 Acquisitions	Date	Acquisition Type	Cash Paid		Seller Obligations		Total Purchase Price		Revenue		Net Income
Anchor	3/12/2023	Share	$	35.9	$	2.7	$	38.6	$	2.2	$	0.1
Other	2/13/2023	Asset	2.1		0.1		2.2		0.4		0.0
			$	38.0	$	2.8	$	40.8	$	2.6	$	0.1

Acquisition-related costs recorded within administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income amounted to $0.5 million and $0.6 million for the three months ended March 31, 2024 and 2023.

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 (including the identifiable intangible assets). The goodwill recognized for Anchor reflects the value of its location, revenue enhancements, assembled workforce and other synergies that are expected to be realized from the acquisition. We expect to deduct approximately $1.6 million of goodwill for tax purposes as a result of 2024 acquisitions.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 millions):


	Three months ended March 31, 2024		Three months ended March 31, 2023
	Other		Anchor		Other		Total
Estimated fair values:

Accounts receivable	$	—	$	5.0	$	—	$	5.0
Inventories	0.4		1.6		0.1		1.7
Other current assets	—		1.9		—		1.9
Property and equipment	0.3		2.3		0.4		2.7
Operating lease right-of-use asset	—		—		—		—
Intangibles	2.5		16.4		1.1		17.5
Goodwill	1.5		13.3		0.7		14.0
Other non-current assets	—		0.2		—		0.2
Accounts payable and other current liabilities	—		(2.1)