Installed Building Products, Inc. (NYSE:IBP) Q4 2022 Earnings Call Transcript

Unidentified Analyst: Hey, thanks for taking my question. I am on for Keith Hughes this morning. So pricing was strong in Q4, and you mentioned that you’re prioritizing that over volume, but with that in mind, and without giving specific guidance, I was wondering if you could talk about your confidence level that margin expansion will continue through 2023 if volumes come down?

Michael Miller: Well, again, we don’t provide guidance, but as we said in an answer to an earlier question, if you look on average over the past five, six years, gross margin has then sort of in that 30% range, high 20%, 30% range and because we’re going to value price over volume, we believe that the historical range should be consistent as we go through the next couple of years as well. Clearly, a lot of the — or some of the G&A leverage that we’ve been getting, which has been helping to improve our EBITDA margin is because of high volumes and/or price mix growth. So, we wouldn’t expect that if we were in a lower volume growth, lower growth volume environment, lower growth price mix and environment, we would not expect to get the same G&A leverage improvements that we’ve been getting, particularly in ’22, but quite frankly, we have since the day we went public, we have always talked about mid-teens EBITDA margins when we reach stabilization in the housing industry.

It’s just that, which call it completions of about 1.5% 1.6%, which Jeff pointed out in the answer to our earlier question, we even, through ’21 and ’22, we did not get to that point, but yet we are mid-teens EBITDA margins. We’ve actually been there for a couple of years now. So, we feel very good about our ability to sort of maintain the margin profile and when we say things like that, we don’t mean quarter-to-quarter. We mean, on a full year basis and we don’t look at the business, although we have to report quarterly, we do not look at the business certainly, on a quarterly basis. We’re looking and making investment for the medium and long term, because that’s fundamentally how we build a great business.

Operator: We have reached the end of our question-and-answer session. I would like to turn the conference back over to management for closing comments.

Jeffrey Edwards: Thank you all for all your questions and I look forward to our next quarterly call. Thanks again.

Operator: Thank you. This will conclude today’s conference. You may disconnect your lines at this time and thank you for your participation.