Installed Building Products, Inc. (NYSE:IBP) Q4 2023 Earnings Call Transcript

Mike Dahl: Okay. Yeah, I mean, look, no doubt the publics are growing. But I think if you look at the public builder commentary, you’re only guiding to deliveries kind of mid-single digits to high single digits. So if the markets up mid single, doesn’t necessarily seem like it’s going to be there that big of a shift, but I hear you. In terms of the multifamily dynamics, if we look at permits, multifamily permits are down north of 20% on a rolling 12 month basis. And you’re certainly starting to see that come through in the start. So when you talked about the down 12 to 15, I guess just to clarify is that your opportunity given you think you can take share against that? Is that you’re specific market exposures may be down less than that, or is that truly a market view?

Michael Miller: Yeah. That’s an outlook for the macro outlook for the entire market, not certainly specific to us, but we do believe that you’re seeing and assuming there’s a lot of assumptions in there particularly that you’re going to see the Fed at some point during the year reduced rates, but some of the dynamics for like if we think about our perspective when we were in the third quarter going into the fourth quarter, the headwinds in multifamily were fierce to use a very technical term. And when we are sitting here now, some of those headwinds have definitely subsided relative to multifamily. And we think there’s going to continue to be — there’s going to be a more constructive environment for multifamily in 2024 than we would have expected three to six months ago given the headwinds that that multifamily is experiencing. So we’re just, I guess, we’re not as negative on multifamily as everybody else is.

Jeff Edwards: Well, in part you mentioned it earlier. It’s partly we take share, which is accurate in some ways. It’s almost like if you refine the way we’re saying that to say what we’re really doing is we’re entering either product lines or entering markets that were not. I mean this isn’t us taking share necessarily in a market where it is just us beginning to offer the kind of CQ services and a lot of the other things we install and markets and on jobs we previously didn’t do so, right?

Michael Miller: Exactly.

Mike Dahl: Okay.

Jeff Edwards: It’s not we’re in there with sharp elbows all the time. It does come into them with what we believe is one of our original premises. And that is that we think that general contractors and builders would rather deal with fewer subs to get these greater number of nuisance products. And that’s true for multifamily, general contractors, general/developer just like it has been, we believe ranked true with all of our builders over the years.

Mike Dahl: Okay, great. Thank you.

Operator: Thank you. Our next question comes from the line of Mike Rehaut with JPMorgan. Please proceed with your question.

Doug Wardlaw: Hi, guys. This is Doug Wardlaw on for Mike. Obviously you guys are very constructive about single-family as are your suppliers are very positive for the upcoming year. I’m just curious in terms of your acquisition strategy has, kind of, positivity and optimism in the market changed, how you’re looking at your criteria for acquisitions and has it changed kind of what the pipeline has looked like thus far?

Jeff Edwards: This is Jeff. So, I will say as always that the pipeline is robust. I would say that, whereas, we would have had more or less of internal at least likely either suspicion or prohibition on commercial acquisition. I think our attitude as we fixed what we’ve fixed over the last couple of years. I think we would alter our stance at this point and say that they know the market for commercial acquisition to us is now at this point kind of opened up. So I would say that that’s really an additive components will continue for the most part let’s say to play within the spaces that we have historically as you know we made the distribution acquisition a number of years ago. That’s performed very well. So that’s not the space again that we’re by any means afraid of, and could continue to potentially look in that direction.

Not long ago too, we acquired a business that as at least a component of their business was more on the industrial side of kind of the insulation install side of things. So as long as it kind of involves material purchase and a labor component that typically it’s a product that we could install typically by direct that continues to be on kind of the watch list as.

Michael Miller: Yeah. This is Michael. I just wanted to clarify a couple of other questions. Just to be clear when we’re thinking of the — you know incremental margins on same-branch incremental margins on a full year basis for 2024? We do not. We are still believed that incremental are going to be in that 20 to 25 range. But just given the confidence that we have in all the things that we’ve talked about on the call so far, you know it’s reasonable to assume that we’re going to come in at a little a little bit closer to 25 than we would closer to 20.

Operator: Thank you. Our next question comes from the line of Adam Baumgarten with Zelman & Associates. Please proceed with your question.

Adam Baumgarten: Hey guys, thanks for taking my question. Just maybe thinking about weather impact potentially January, just as we think about the first quarter. I know you guys don’t guide explicitly, but some sort of what you’re seeing there and if that’s going to have any material impact.

Michael Miller: Yeah. That’s a great question. And I really appreciate you asking it. Because January was we did lose days in January for sure, the weather really across the country. California has obviously had an unprecedented amount of rain which is big operations for us here in February. We still feel good about the first quarter and our performance there, but we would expect to see the typical seasonal decline from fourth quarter to first quarter, in the first quarter and that’s been typically sort of the mid-single digit sort of decline from Q4 to Q1. So that is definitely has been impacted by January, which was definitely weather impacted. At all of the things that we’re talking about in terms of the strength of single-family the continued performance of multifamily and the commercial business, you know those all weaken in the first quarter.