UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM10-Q~~

☒

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2017~~

March 31, 2023

☐
☐			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~~
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~~
Columbus, Ohio		43215
(Address of principal executive offices)		(Zip Code)

(614)221-3399

(~~Registrant’s~~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 ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (Section ~~229.405~~232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by a check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act. ~~(Check one):~~

Large accelerated filer

☒

Accelerated filer

☐

~~Large accelerated~~Non-accelerated filer

☒☐

~~Accelerated filer~~Smaller reporting company

☐

~~Non-accelerated filer~~

~~☐ (Do not check if a smaller reporting company)~~

~~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~~ 12b–2 of the Exchange Act). Yes ☐ No ☒

On ~~October 30, 2017~~April 27, 2023, the registrant had ~~31,862,561~~28,404,505 shares of common stock, par value $0.01 per share, outstanding.

Table of Contents

TABLE OF CONTENTS

Table of Contents

PART I – FINANCIAL INFORMATION

~~Item 1.~~

~~Financial Statements~~

Item 1. Financial Statements

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

(in thousands, except share and per share amounts)

   September 30, December 31,
   2017 2016
ASSETS

Current assets

Cash and cash equivalents
   $ 67,008 $ 14,482
Investments
   25,114 —
Accounts receivable (less allowance for doubtful accounts of $4,846 and $3,397

at September 30, 2017 and December 31, 2016, respectively)
   185,470 128,466
Inventories
   44,074 40,229
Other current assets
   19,599 9,214


Total current assets
   341,265 192,391
Property and equipment, net
   78,045 67,788
Non-current assets

Goodwill
   153,660 107,086
Intangibles, net
   140,714 86,317
Othernon-current assets
   9,969 8,513


Totalnon-current assets
   304,343 201,916


Total assets
   $ 723,653 $ 462,095


LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities

Current maturities of long-term debt
   $ 15,550 $ 17,192
Current maturities of capital lease obligations
   6,044 6,929
Accounts payable
   82,329 67,921
Accrued compensation
   25,975 18,212
Other current liabilities
   23,703 19,851


Total current liabilities
   153,601 130,105
Long-term debt
   328,295 134,235
Capital lease obligations, less current maturities
   7,509 8,364
Deferred income taxes
   13,755 14,239
Other long-term liabilities
   23,135 21,175


Total liabilities
   526,295 308,118
Commitments and contingencies (Note 12)

Stockholders’ equity

Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively
   —   —
Common Stock; $0.01 par value: 100,000,000 authorized, 32,524,934 and 32,135,176 issued and 31,862,561 and 31,484,774 shares outstanding at September 30, 2017 and December 31, 2016, respectively
   325 321
Additional paid in capital
   172,206 158,581
Retained earnings
   37,641 7,294
Treasury Stock; at cost: 662,373 and 650,402 shares at September 30, 2017 and December 31, 2016, respectively
   (12,769 ) (12,219 )
Accumulated other comprehensive loss
   (45 ) —


Total stockholders’ equity
   197,358 153,977


Total liabilities and stockholders’ equity
   $ 723,653 $ 462,095


	March 31,		December 31,
	2023		2022
ASSETS
Current assets
Cash and cash equivalents	$	218,690	$	229,627

Accounts receivable (less allowance for credit losses of $10,059 and $9,549 at March 31, 2023 and December 31, 2022, respectively)	397,573		397,222
Inventories	170,115		176,629
Prepaid expenses and other current assets	76,217		80,933
Total current assets	862,595		884,411
Property and equipment, net	126,384		118,774
Operating lease right-of-use assets	74,602		76,174
Goodwill	392,625		373,555
Customer relationships, net	194,850		192,328
Other intangibles, net	94,751		91,145
Other non-current assets	33,756		42,545
Total assets	$	1,779,563	$	1,778,932
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt	$	31,165	$	30,983
Current maturities of operating lease obligations	26,000		26,145
Current maturities of finance lease obligations	2,588		2,508
Accounts payable	134,836		149,186
Accrued compensation	45,613		51,608
Other current liabilities	76,136		67,631
Total current liabilities	316,338		328,061
Long-term debt	830,225		830,171
Operating lease obligations	48,339		49,789
Finance lease obligations	6,559		6,397
Deferred income taxes	25,993		28,458
Other long-term liabilities	46,887		42,557
Total liabilities	1,274,341		1,285,433
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, 2023 and December 31, 2022, respectively	—		—
Common stock; $0.01 par value: 100,000,000 authorized, 33,498,693 and 33,429,557 issued and 28,375,037 and 28,306,482 shares outstanding at March 31, 2023 and December 31, 2022, respectively	335		334
Additional paid in capital	232,503		228,827
Retained earnings	527,468		513,095
Treasury stock; at cost: 5,123,656 and 5,123,075 shares at March 31, 2023 and December 31, 2022, respectively	(289,335)		(289,317)
Accumulated other comprehensive income	34,251		40,560
Total stockholders’ equity	505,222		493,499
Total liabilities and stockholders’ equity	$	1,779,563	$	1,778,932

See accompanying notes to ~~condensed~~ consolidated financial statements

Table of Contents

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE

INCOME (UNAUDITED)

(in thousands, except share and per share amounts)

   Three months ended September 30,    Nine months ended September 30,
   2017    2016    2017 2016
Net revenue
   $ 295,193    $ 225,392    $ 833,058 $ 629,003
Cost of sales
   209,612    158,132    590,377 444,909






Gross profit
   85,581    67,260    242,681 184,094
Operating expenses

Selling
   14,865    13,028    42,541 36,239
Administrative
   41,657    31,504    122,679 92,677
Amortization
   6,824    2,889    19,790 8,178






Operating income
   22,235    19,839    57,671 47,000
Other expense

Interest expense
   4,421    1,544    11,456 4,605
Other
   83    23    366 248






Income before income taxes
   17,731    18,272    45,849 42,147
Income tax provision
   5,721    6,723    15,502 14,792






Net income
   $ 12,010    $ 11,549    $ 30,347 $ 27,355






Other comprehensive income, net of tax:

Unrealized gain (loss) on cash flow hedge, net of tax (provision) benefit of ($21) and $30 for the three and nine months ended September 30, 2017, respectively
   32    —      (45 ) —






Comprehensive income
   $ 12,042    $ 11,549    $ 30,302 $ 27,355






Basic and diluted net income per share
   $ 0.38    $ 0.37    $ 0.96 $ 0.87






Weighted average shares outstanding:

Basic
   31,659,503    31,323,600    31,632,400 31,294,596
Diluted
   31,766,881    31,377,790    31,712,515 31,351,991


	Three months ended March 31,
	2023		2022
Net revenue	$	659,309	$	587,492
Cost of sales	448,887		415,089
Gross profit	210,422		172,403
Operating expenses
Selling	32,607		25,192
Administrative	89,504		79,144
Amortization	11,435		11,097
Operating income	76,876		56,970
Other expense, net
Interest expense, net	9,670		10,600
Other (income) expense	(153)		145
Income before income taxes	67,359		46,225
Income tax provision	18,085		12,403
Net income	$	49,274	$	33,822
Other comprehensive (loss) income, net of tax:
Net change on cash flow hedges, net of tax benefit (provision) of $2,252 and $(6,430) for the three months ended March 31, 2023 and 2022, respectively.	(6,309)		18,111
Comprehensive income	$	42,965	$	51,933
Earnings Per Share:
Basic	$	1.76	$	1.15
Diluted	$	1.74	$	1.14
Weighted average shares outstanding:
Basic	28,075,678		29,302,396
Diluted	28,278,220		29,580,731

Cash dividends declared per share	$	1.23	$	1.22

See accompanying notes to ~~condensed~~ consolidated financial statements

Table of Contents

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND MARCH 31, 2023

(in thousands, except share and per share amounts)

   Common Stock
Additional
Paid In

Accumulated
Treasury Shares
Accumulated
Other
Comprehensive

Stockholders’

   Shares    Amount    Capital Deficit Shares Amount Loss Equity
BALANCE—January 1, 2016
   31,982,888    $ 320    $ 156,688 $ (31,142 ) (616,560 ) $ (11,383 ) $ —   $ 114,483






Net Income
         27,355 27,355
Issuance of Common Stock Awards to Employees
   143,528    1    (1 ) —
Surrender of Common Stock Awards by Employees
         (33,091 ) (836 ) (836 )
Share-Based Compensation Expense
         1,231 1,231
Share-Based Compensation Issued to Directors
   8,760       300 300






BALANCE—September 30, 2016
   32,135,176    $ 321    $ 158,218 $ (3,787 ) (649,651 ) $ (12,219 ) $ —   $ 142,533






   Common Stock
Additional
Paid In

Retained
Treasury Shares
Accumulated
Other
Comprehensive

Stockholders’

   Shares    Amount    Capital Earnings Shares Amount Loss Equity
BALANCE—January 1, 2017
   32,135,176    $ 321    $ 158,581 $ 7,294 (650,402 ) $ (12,219 ) $ —   $ 153,977






Net Income
         30,347 30,347
Purchase of Remaining Interest in Subsidiary
         (1,890 ) (1,890 )
Issuance of Common Stock for Acquisition
   282,577    3    10,856 10,859
Issuance of Common Stock Awards to Employees
   101,241    1    (1 ) —
Surrender of Common Stock Awards by Employees
         (11,971 ) (550 ) (550 )
Share-Based Compensation Expense
         4,360 4,360
Share-Based Compensation Issued to Directors
   5,940       300 300
Other Comprehensive Loss, Net of Tax
         (45 ) (45 )






BALANCE—September 30, 2017
   32,524,934    $ 325    $ 172,206 $ 37,641 (662,373 ) $ (12,769 ) $ (45 ) $ 197,358


	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive (Loss) Income		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						33,822							33,822
Issuance of common stock awards to employees	40,980	1		(1)									—
Surrender of common stock awards								(50)	—				—
Share-based compensation expense				3,089									3,089
Share-based compensation issued to directors				124									124
Issuance of awards previously classified as liability awards	39,204			4,000									4,000
Dividends declared ($1.22 per share)						(35,890)							(35,890)
Common Stock repurchase								(510,943)	(49,865)				(49,865)
Other comprehensive income, net of tax											18,111		18,111
BALANCE - March 31, 2022	33,351,843	$	334	$	218,642	$	350,475	(4,076,251)	$	(197,104)	$	17,884	$	390,231

	Common Stock			Additional Paid In Capital		Retained Earnings		Treasury Stock			Accumulated Other Comprehensive Income		Stockholders’ Equity
	Shares	Amount						Shares	Amount
BALANCE - January 1, 2023	33,429,557	$	334	$	228,827	$	513,095	(5,123,075)	$	(289,317)	$	40,560	$	493,499
Net income						49,274							49,274

Issuance of common stock awards to employees	69,136	1		(1)									—
Surrender of common stock awards								(581)	(18)				(18)
Share-based compensation expense				3,529									3,529
Share-based compensation issued to directors				148									148

Dividends declared ($1.23 per share)						(34,901)							(34,901)

Other comprehensive (loss), net of tax											(6,309)		(6,309)
BALANCE - March 31, 2023	33,498,693	$	335	$	232,503	$	527,468	(5,123,656)	$	(289,335)	$	34,251	$	505,222

See accompanying notes to ~~condensed~~ consolidated financial statements

Table of Contents

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in thousands)

   Nine months ended September 30,
   2017 2016
Cash flows from operating activities

Net income
   $ 30,347 $ 27,355
Adjustments to reconcile net income to net cash provided by operating activities

Depreciation and amortization of property and equipment
   20,732 17,240
Amortization of intangibles
   19,790 8,178
Amortization of deferred financing costs and debt discount
   768 282
Provision for doubtful accounts
   2,208 1,960
Write-off of debt issuance costs
   1,201 286
Gain on sale of property and equipment
   (329 ) (218 )
Noncash stock compensation
   4,750 1,531
Deferred income taxes
   —   708
Changes in assets and liabilities, excluding effects of acquisitions

Accounts receivable
   (24,636 ) (17,878 )
Inventories
   68 (3,158 )
Other assets
   695 4,727
Accounts payable
   2,665 3,879
Income taxes payable/receivable
   (10,167 ) 3,652
Other liabilities
   5,249 6,033


Net cash provided by operating activities
   53,341 54,577


Cash flows from investing activities

Purchases of investments
   (25,195 ) —
Purchases of property and equipment
   (22,947 ) (19,169 )
Acquisitions of businesses, net of cash acquired of $247 and $0, respectively
   (130,994 ) (36,427 )
Proceeds from sale of property and equipment
   682 523
Other
   (1,845 ) —


Net cash used in investing activities
   (180,299 ) (55,073 )


Cash flows from financing activities

Proceeds from revolving line of credit under credit agreement applicable to respective period (Note 5)
   —   37,975
Payments on revolving line of credit under credit agreement applicable to respective period (Note 5)
   —   (37,975 )
Proceeds from term loan under credit agreement applicable to respective period (Note 5)
   300,000 100,000
Payments on term loan under credit agreement applicable to respective period (Note 5)
   (97,000 ) (50,625 )
Proceeds from delayed draw term loan under credit agreement applicable to respective period (Note 5)
   112,500 12,500
Payments on delayed draw term loan under credit agreement applicable to respective period (Note 5)
   (125,000 ) (50,000 )
Proceeds from vehicle and equipment notes payable
   15,817 16,310
Debt issuance costs
   (8,175 ) (1,238 )
Principal payments on long term debt
   (7,201 ) (4,055 )
Principal payments on capital lease obligations
   (5,583 ) (6,596 )
Acquisition-related obligations
   (3,434 ) (2,732 )
Surrender of common stock awards by employees
   (550 ) (836 )
Purchase of remaining interest in subsidiary
   (1,890 ) —


Net cash provided by financing activities
   179,484 12,728


Net change in cash
   52,526 12,232
Cash at beginning of period
   14,482 6,818


Cash at end of period
   $ 67,008 $ 19,050


Supplemental disclosures of cash flow information

Net cash paid during the period for:

Interest
   $ 9,733 $ 3,904
Income taxes, net of refunds
   26,292 10,428
Supplemental disclosure of noncash investing and financing activities

Common stock issued for acquisition of business
   10,859 —
Vehicles capitalized under capital leases and related lease obligations
   4,073 2,956
Seller obligations in connection with acquisition of businesses
   3,759 2,849
Unpaid purchases of property and equipment included in accounts payable
   1,108 2,140


	Three months ended March 31,
	2023		2022
Cash flows from operating activities
Net income	$	49,274	$	33,822
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization of property and equipment	12,525		11,329
Amortization of operating lease right-of-use assets	7,316		6,371
Amortization of intangibles	11,435		11,097
Amortization of deferred financing costs and debt discount	475		484
Provision for credit losses	1,678		653
Gain on sale of property and equipment	(639)		(92)
Noncash stock compensation	3,436		3,418

Other, net	(2,523)		790
Changes in assets and liabilities, excluding effects of acquisitions
Accounts receivable	1,716		(32,700)
Inventories	7,699		(16,300)

Other assets	4,434		169
Accounts payable	(16,906)		16,486
Income taxes receivable/payable	16,450		11,433
Other liabilities	(22,537)		1,265
Net cash provided by operating activities	73,833		48,225
Cash flows from investing activities
Purchases of investments	—		(49,957)


Purchases of property and equipment	(14,949)		(10,362)
Acquisitions of businesses, net of cash acquired of $10 and $0 in 2023 and 2022, respectively	(38,008)		(8,050)
Proceeds from sale of property and equipment	741		265

Other	4,602		(614)
Net cash used in investing activities	$	(47,614)	$	(68,718)

See accompanying notes to ~~condensed~~ consolidated financial statements

Table of Contents

INSTALLED BUILDING PRODUCTS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED, CONTINUED)

(in thousands)




	Three months ended March 31,
	2023		2022
Cash flows from financing activities
Payments on Term Loan	$	(1,250)	$	(1,250)
Proceeds from vehicle and equipment notes payable	8,119		4,752
Debt issuance costs	—		(627)
Principal payments on long-term debt	(7,024)		(6,618)

Principal payments on finance lease obligations	(727)		(521)
Dividends paid	(34,536)		(35,426)
Acquisition-related obligations	(1,720)		(6,003)

Repurchase of common stock	—		(49,865)
Surrender of common stock awards by employees	(18)		—
Net cash used in financing activities	(37,156)		(95,558)
Net change in cash and cash equivalents	(10,937)		(116,051)
Cash and cash equivalents at beginning of period	229,627		333,485
Cash and cash equivalents at end of period	$	218,690	$	217,434
Supplemental disclosures of cash flow information
Net cash paid during the period for:
Interest	$	14,658	$	14,293
Income taxes, net of refunds	1,524		1,088
Supplemental disclosure of noncash activities
Right-of-use assets obtained in exchange for operating lease obligations	$	5,650	$	5,514

Property and equipment obtained in exchange for finance lease obligations	957		544
Seller obligations in connection with acquisition of businesses	6,035		1,878
Unpaid purchases of property and equipment included in accounts payable	2,316		1,884

See accompanying notes to consolidated financial statements

Table of Contents

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1 –- ORGANIZATION

Installed Building Products ~~Inc.~~ (“IBP”), a Delaware corporation formed on October 28, 2011, and its wholly-owned subsidiaries (collectively referred to as the ~~“Company”~~“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 ~~over 100~~more than 240 locations and its corporate office is located in Columbus, Ohio.

~~We have~~

The vast majority of our sales originate from our one ~~operating~~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 ~~a single reportable segment. We offer our portfolio of services for new and existing single-family and multi-family residential~~remodel and commercial ~~building projects~~construction end markets from our national network of branch locations. Commercial sales have increased primarily due to the acquisition of Trilok Industries, Inc., Alpha Insulation & Waterproofing, Inc. and Alpha Insulation & Waterproofing Company (collectively, “Alpha”). See Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, for more information. The following table sets forth the percentageEach of our ~~net revenue~~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:~~

   Three months ended
September 30, Nine months ended
September 30,
   2017 2016 2017 2016
Residential
   84 % 89 % 83 % 88 %
Commercial
   16 11 17 12


   100 % 100 % 100 % 100 %
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 ~~condensed~~ 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~~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 ~~condensed or~~ 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 Form10-K for the fiscal year ended December 31, ~~2016 (the “2016~~2022 (“2022 Form10-K”), as filed with the SEC on February ~~28, 2017.~~22, 2023. The December 31, ~~2016 condensed consolidated balance sheet~~2022 Condensed Consolidated Balance Sheet data herein was derived from the audited consolidated financial statements but ~~does~~the related footnotes do not include all disclosures required by U.S. GAAP.

Our interim operating results for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 are not necessarily indicative of the results to be expected in future operating ~~quarters.See Item 1A, Risk Factors, in our 2016 Form10-K~~ ~~for additional information regarding risk factors that may impact our results.~~

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

quarters.

Note 2 to the audited consolidated financial statements in our ~~2016~~2022 Form10-K describes the significant accounting policies and estimates used in preparation of the audited consolidated financial statements. ~~There~~Other than the recently implemented accounting policy described below, there have been no changes to our significant accounting policies during the three ~~or nine~~ months ended ~~September 30, 2017 except in the areas~~March 31, 2023.

Recently Adopted Accounting Pronouncements

Standard

Effective Date

Adoption

ASU 2021-08, Business Combinations (Topic 805): Accounting for contract assets and contract liabilities from contracts with customers

December 15, 2022

This pronouncement amended 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. This did not have a material impact on our consolidated financial statements

Table of ~~derivative and hedging activities, revenue and cost recognition, investments, accounts receivable, share-based compensation and use of estimates as described below.~~

~~Accounting Policy for Derivative Instruments and Hedging Activities~~

We record all derivatives on the balance sheet at fair value. The accounting for changes in the fair value of derivatives depends on the intended use of the derivative, whether we have elected to designate a derivative in a hedging relationship and apply hedge accounting and whether the hedging relationship has satisfied the criteria necessary to apply hedge accounting. Derivatives designated and qualifying as a hedge of the exposure to variability in expected future cash flows, or other types of forecasted transactions, are considered cash flow hedges. Hedge accounting generally provides for the matching of the timing of gain or loss recognition on the hedging instrument with the recognition of the earnings effect of the hedged forecasted transactions in a cash flow hedge. We may enter into derivative contracts that are intended to economically hedge certain of our risk, even though hedge accounting does not apply or we elect not to apply hedge accounting.

~~Revenue and Cost Recognition~~

Revenue from the sale and installation of products is recognized when all of the following have occurred: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the price is fixed or determinable; and (iv) the ability to collect is reasonably assured. We recognize revenue using either the completed contract method or the~~percentage-of-completion~~ method of accounting, depending primarily on length of time required to complete the contract. The completed contract method is used for short-term contracts for which financial position and results of operations reported on the completed-contract basis would not vary materially from those resulting from use of the~~percentage-of-completion~~ method. Revenue from the sale and installation of products is recognized net of adjustments and discounts and, for revenue using the completed contract method of accounting, at the time the installation is complete. When the~~percentage-of-completion~~ method is used, we estimate the costs to complete individual contracts and record as revenue that portion of the total contract price which is considered complete based on the relationship of costs incurred to date to total anticipated costs. 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.

~~Investment Policy~~

Marketable securities with original maturities longer than three months but less than one year from the balance sheet date are classified as investments within current assets. These investments consist of highly liquid instruments including corporate bonds and commercial paper. Investments for which we have the ability and positive intent to hold to maturity are carried at amortized cost. The difference between the acquisition costs and face values of~~held-to-maturity~~ investments is amortized over the remaining term of the investments and added to or subtracted from the acquisition cost and interest income. As of September 30, 2017, all of our investments were classified as~~held-to-maturity.~~

Contents

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~Accounts Receivable~~

Recently Issued Accounting Pronouncements Not Yet Adopted

We ~~account~~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 2023-01 Leases (Topic 842): Common Control Arrangements

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.

Annual periods beginning after December 15, 2023, 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

We disaggregate our revenue from contracts with customers for ~~trade receivables~~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 March 31,
	2023				2022
Installation:
Residential new construction	$	475,095	72	%	$	442,404	75	%
Repair and remodel	37,675		6	%	32,641		6	%
Commercial	109,972		16	%	86,586		15	%
Net revenue, Installation	$	622,742	94	%	$	561,631	96	%

Other	36,567		6	%	25,861		4	%
Net revenue, as reported	$	659,309	100	%	$	587,492	100	%


	Three months ended March 31,
	2023				2022
Installation:
Insulation	$	394,043	60	%	$	364,943	63	%
Shower doors, shelving and mirrors	45,513		7	%	36,340		6	%
Garage doors	43,312		7	%	35,979		6	%
Waterproofing	29,939		4	%	29,022		5	%
Rain gutters	27,800		4	%	23,546		4	%
Window Blinds	15,881		2	%	13,058		2	%
Fireproofing/firestopping	15,175		2	%	15,922		3	%
Other building products	51,079		8	%	42,821		7	%
Net revenue, Installation	$	622,742	94	%	$	561,631	96	%

Other	36,567		6	%	25,861		4	%
Net revenue, as reported	$	659,309	100	%	$	587,492	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 ~~amounts~~costs incurred, exceeds the amount billed to ~~customers. Past due receivables~~the customer. Our contract assets are ~~determined based on contractual terms. We do not accrue interest on any~~recorded in other current assets in our Condensed Consolidated Balance Sheets. Our contract liabilities

Table of ~~our trade receivables.~~

Retainage receivables represent the amount retained by our customers to ensure the quality of the installation and is received after satisfactory completion of each installation project. Management regularly reviews aging of retainage receivables and changes in payment trends and records an allowance when collection of amounts due are considered not probable. Amounts retained by project owners under construction contracts and included in accounts receivable and other~~non-current~~ assets were $22.1 million and $0.6 million as of September 30, 2017, respectively. Amounts retained by project owners under construction contracts and included in accounts receivable as of December 31, 2016 were $10.3 million.

~~Share-Based Compensation~~

Our share-based compensation program is designed to attract and retain employees while also aligning employees’ interests with the interests of our stockholders. Restricted stock awards are periodically granted to certain employees, officers and~~non-employee~~ ~~members of our board of directors under the stockholder-approved 2014 Omnibus Incentive Plan.~~

~~Equity-based awards:~~ Certain of our stock awards are deemed to be equity-based with a service condition and do not contain a market or performance condition with the exception of performance-based awards granted to certain officers and performance-based restricted stock units. Fair value of the~~non-performance-based~~ awards to employees and officers is measured at the grant date and amortized to expense over the vesting period of the awards using the straight-line attribution method for all service-based awards with a graded vesting feature. This fair value is reduced by assumed forfeitures and adjusted for actual forfeitures until vesting. We also issue performance stock-based awards to certain officers under our 2014 Omnibus Incentive Plan. The performance-based compensation expense is recorded over the requisite service period using the graded-vesting method for the entire award. Performance-based stock awards are accounted for at fair value at date of grant. We also periodically grant restricted stock units to certain employees under the stockholder-approved 2014 Omnibus Incentive Plan. These units convert to shares upon meeting time- and performance-based requirements.

~~Liability-based awards:~~Certain of our stock awards represent a predominately-fixed monetary amount that is to be settled with a variable number of shares. These awards contain both time and performance requirements, and are deemed to be liability-based, which requires that we~~re-measure~~ to reflect the fair value at the end of each reporting period. The change in fair value each reporting period is recorded as compensation cost, with a corresponding increase or decrease in the share-based liability, either immediately or over the remaining service period depending on the vested status of the award.

Compensation expense for both equity and liability-based restricted stock units is recorded based on an assessment each reporting period of the probability that certain performance goals will be met during the contingent vesting period. If performance goals are not probable of occurrence, no compensation expense will be recognized. If performance goals that were previously deemed probable are not or are not expected to be met, the previously recognized compensation cost related to such performance goals will be reversed. Employees and officers are subject to tax at the vesting date based on the market price of the shares on that date, or on the grant date if an election is made.

Contents

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~Use~~

consist of ~~Estimates~~

~~Preparation~~customer deposits and billings in excess of ~~the consolidated financial statements~~revenue recognized, based on costs incurred and are included in ~~conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of~~other current liabilities in our Condensed Consolidated Balance Sheets.

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


	March 31, 2023		December 31, 2022
Contract assets	$	36,048	$	29,431
Contract liabilities	(17,331)		(18,884)

Uncompleted contracts were as follows (in thousands):


	March 31, 2023		December 31, 2022
Costs incurred on uncompleted contracts	$	279,994	$	273,788
Estimated earnings	116,621		114,781
Total	396,615		388,569
Less: Billings to date	369,686		368,009
Net under billings	$	26,929	$	20,560

Net under billings were as follows (in thousands):


	March 31, 2023		December 31, 2022
Costs and estimated earnings in excess of billings on uncompleted contracts (contract assets)	$	36,048	$	29,431
Billings in excess of costs and estimated earnings on uncompleted contracts (contract liabilities)	(9,119)		(8,871)
Net under billings	$	26,929	$	20,560

The difference between contract assets and contract liabilities as of March 31, 2023 compared to December 31, 2022 is primarily the result of timing differences between our performance of obligations under contracts and customer payments and billings. During three months ended March 31, 2023, we recognized $15.8 million of revenue that was included in the contract liability balance at December 31, 2022. We did not recognize any impairment losses on our receivables and contract assets during the ~~date~~three months ended March 31, 2023 or 2022.

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, 2023, the aggregate amount of the ~~financial statements~~transaction price allocated to remaining uncompleted contracts was $154.3 million. We expect to satisfy remaining performance obligations and recognize revenue on substantially all of these uncompleted contracts over the ~~reported amounts~~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 relevant factors management considers relevant to estimate expected credit losses. We also perform ongoing evaluations of ~~revenues~~creditworthiness of our existing and ~~expenses during the reporting period. Significant estimates include the revenue, costs and reserves established under thepercentage-of-completion~~ ~~method,~~potential customers.

Changes in our allowance for ~~doubtful accounts, valuation allowance on deferred tax assets, valuation~~credit losses were as follows (in thousands):


Balance as of January 1, 2023	$	9,549
Current period provision	1,678
Recoveries collected and additions	61
Amounts written off	(1,229)
Balance as of March 31, 2023	$	10,059

Table of the reporting unit, intangible assets and other long-lived assets, share-based compensation, fair value of derivative instruments and reserves for general liability, workers’ compensation and medical insurance. Management believes the accounting estimates are appropriate and reasonably determined; however, due to the inherent uncertainties in making these estimates, actual amounts could differ from such estimates.

~~Advertising Costs~~

Advertising costs are generally expensed as incurred. Advertising expense was approximately $0.8 million and $2.4 million for the three and nine months ended September 30, 2017, respectively, and $0.8 million and $2.2 million for the three and nine months ended September 30, 2016, respectively, and is included in selling expense on the Condensed Consolidated Statements of Operations and Comprehensive Income.

~~Recently Adopted Accounting Pronouncements~~

~~In July 2015, the Federal Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2015-11,~~ “Inventory (Topic 330).” This update requires an entity to measure inventory within the scope of the update at the lower of cost and net realizable value. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. This ASU did not have a material impact on our consolidated financial statements.

~~In March 2016, the FASB issued ASU2016-06,~~ “Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt Instruments.” This ASU clarifies the requirement for assessing whether contingent call/put options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment under this amendment is required to assess the embedded call/put options solely in accordance with the four-step decision sequence. Consequently, when a call/put option is contingently exercisable, an entity does not have to assess whether the event that triggers the ability to exercise a call/put option is related to interest rates or credit risks. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years. This ASU did not have a material impact on our consolidated financial statements.

~~In January 2017, the FASB issued ASU2017-03,~~ “Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 323).” The portion of this ASU related to Topic 250 states that when a registrant does not know or cannot reasonably estimate the impact that future adoption of certain ASUs (ASU~~2014-09,2016-02~~ ~~and2016-13)~~ are expected to have on the financial statements, then in addition to making a statement to that effect, that registrant should consider additional qualitative financial statement disclosures to assist the reader in assessing the significance of the impact that the standard will have on the financial statements of the registrant when adopted. We have included such disclosures for ASU~~2014-09~~ ~~but not for ASU2016-02~~ ~~or ASU2016-13~~ since we have not yet performed sufficient analysis on future effects upon implementation of the new standards. We have concluded that the portion of this ASU related to Topic 323 is not applicable and, therefore, did not have a material impact on our consolidated financial statements. This ASU is effective upon issuance.

Contents

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~Recently Issued Accounting Pronouncements Not Yet Adopted~~

~~In May 2014, the FASB issued ASU2014-09,~~ ~~“Revenue from Contracts with Customers (Topic 606).” ASU2014-09~~ and related subsequently issued amendments set forth a new revenue recognition model that requires identifying the contract(s) with a customer, identifying the performance obligations in the contract, determining the transaction price, allocating the transaction price to the performance obligations and recognizing the revenue upon satisfaction of performance obligations. In July 2015, the FASB voted to defer the application of the provisions of this standard for public companies until annual reporting periods beginning after December 15, 2017, including interim periods within those reporting periods. We have substantially completed our assessment on the applicability of the standard on accounting for contracts with customers with the exception of certain 2017 business combinations which we are currently assessing. The standard is expected to result in the disaggregation of certain of our insulation contracts into multiple separately identifiable performance obligations as well as additional revenue recognition disclosures. Under current accounting standards, we consider the installation service to represent one performance obligation, whereas in accordance with this ASU, we have identified multiple phases to certain of our insulation projects that should be considered separate performance obligations. Currently, we intend to adopt the new standard using the modified retrospective approach, which would allow us to recognize the cumulative effect of initially applying the standard as an adjustment to the opening balance of retained earnings.

~~In February 2016, the FASB issued ASU2016-02,~~ “Leases (Topic 842).” This update amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets and making targeted changes to lessor accounting. ASU~~2016-02~~ requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. For public business entities, this update is effective for annual reporting periods beginning after December 15, 2018, including interim periods within those fiscal years, and early adoption is permitted as of the standard’s issuance date. We are evaluating whether this ASU will have a material impact on our consolidated financial statements.

~~In May 2016, the FASB issued ASUNo. 2016-11,~~ ~~“Revenue Recognition (Topic 605) and Derivatives and Hedging (Topic 815): Rescission of SEC Guidance Because of Accounting Standards Updates2014-09~~ ~~and2014-16~~ pursuant to Staff announcements at the March 3, 2016 EITF Meeting.” This ASU rescinds from the FASB Accounting Standards Codification certain SEC paragraphs as a result of two SEC Staff Announcements at the March 3, 2016 meeting. For public entities, the amendments related to Topic 605 are effective for interim and annual reporting periods beginning after December 15, 2017 and amendments related to Topic 815 are effective for interim and annual reporting periods beginning after December 15, 2015. We have evaluated the applicability of this ASU and have determined it will not have a material impact on our consolidated financial statements.

~~In June 2016, the FASB issued ASU2016-13,~~ ~~“Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” This ASU amends the accounting for credit losses onavailable-for-sale~~ debt securities and purchased financial assets with credit deterioration. In addition, these amendments require the measurement of all expected credit losses for financial assets, including trade accounts receivable, held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. We are evaluating whether this ASU will have a material impact on our consolidated financial statements.

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~In August 2016, the FASB issued ASU2016-15,~~ “Statement of Cash Flows: Clarification of Certain Cash Receipts and Cash Payments (Topic 230).” This ASU addresses the diversity in practice related to the classification of certain cash receipts and payments in the statement of cash flows by adding or clarifying guidance on eight specific cash flow issues. We have determined that this update addresses one issue that specifically impacts us, which is the classification of contingent consideration payments made after a business combination, and we are evaluating whether it will have a material impact on our consolidated financial statements. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years.

~~In October 2016, the FASB issued ASU2016-16,~~ “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other than Inventory.” This ASU aligns the recognition of income tax consequences for intra-entity transfers of assets other than inventory with International Financial Reporting Standards (“IFRS”). For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We have evaluated the applicability of this ASU and have determined it will not have a material impact on our consolidated financial statements.

~~In November 2016, the FASB issued ASUNo. 2016-18,~~ “Statement of Cash Flows (Topic 230): Restricted Cash.” This ASU provides guidance on the presentation of restricted cash or restricted cash equivalents in the statement of cash flows. This standard is effective for interim and annual reporting periods beginning after December 15, 2017. We will adopt this standard effective January 1, 2018 as we expect it to be applicable to us at that time.

~~In January 2017, the FASB issued ASU2017-01,~~ “Business Combinations (Topic 805): Clarifying the Definition of a Business.” This ASU clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. We have evaluated the applicability of this ASU and have determined it will not have a material impact on our consolidated financial statements.

~~In May 2017, the FASB issued ASU2017-09,~~ “Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting.” This ASU provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The amendments should be applied prospectively to an award modified on or after the adoption date. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2017 and interim periods within those fiscal years. Early adoption is permitted. We have evaluated the applicability of this ASU and have determined it will not have a material impact on our consolidated financial statements.

~~In August 2017, the FASB issued ASU2017-12,~~ “Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.” This ASU better aligns a company’s risk management activities and financial reporting for hedging relationships and makes certain improvements to simplify the application of hedge accounting guidance. For public business entities, this update is effective for financial statements issued for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. We are evaluating whether this ASU will have a material impact on our consolidated financial statements.

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

NOTE ~~3 – INVESTMENTS~~

5 - CASH AND CASH EQUIVALENTS

Cash and cash equivalents ~~includes investments in money market funds that are valued based on~~include highly liquid instruments with insignificant interest rate risk and original or remaining maturities of three months or less at the ~~net asset value~~time of ~~the funds. The cash equivalents consist primarily of money market funds that are Level 1 measurements. The investments in these funds were $58.8~~purchase. These instruments amounted to approximately $197.9 million and $191.9 million as of ~~September 30, 2017. We had no such investments as of~~March 31, 2023 and December 31, ~~2016.~~

~~All other investments are classified asheld-to-maturity~~ and consist of highly liquid instruments including corporate bonds and commercial paper. As of September 30, 2017, the amortized cost of these investments equaled the net carrying value, which was $25.1 million. We had no such investments as of December 31, 2016. All~~held-to-maturity~~ ~~securities as of September 30, 2017 mature in one year or less and are Level 2 measurements.~~2022, respectively. See Note 7,9, Fair Value Measurements, for additional information.

NOTE ~~4 –~~6 - GOODWILL AND INTANGIBLES

Goodwill

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

   Goodwill
(Gross)    Accumulated
Impairment
Losses    Goodwill
(Net)
January 1, 2017
   $ 177,090    $ (70,004 )    $ 107,086
Business Combinations
   46,059    —      46,059
Other
   515    —      515






September 30, 2017
   $ 223,664    $ (70,004 )    $ 153,660


	Installation		Other		Consolidated

Goodwill (gross) - January 1, 2023	$	355,226	$	88,333	$	443,559
Business combinations	13,540		—		13,540
Other	257		5,273		5,530
Goodwill (gross) - March 31, 2023	369,023		93,606		462,629
Accumulated impairment losses	(70,004)		—		(70,004)
Goodwill (net) - March 31, 2023	$	299,019	$	93,606	$	392,625

Other changes ~~included~~presented in the above table ~~represent minor~~primarily include adjustments for the allocation of certain acquisitions still under measurement ~~and three immaterial acquisitions completed~~made during the ~~nine~~three months ended ~~September 30, 2017.~~

March 31, 2023, including a change in tax election that resulted in a $4.9 million change in purchase price for a 2022 acquisition. For additional information regarding changes to goodwill resulting from acquisitions, see Note 17, Business Combinations.

We test goodwill for impairment annually during the fourth quarter of our fiscal year or earlier if there is an impairment indicator. NoAccumulated impairment ~~was recognized~~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 ~~either of~~ the ~~nine month periods~~year ended ~~September 30, 2017 and 2016.~~

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

December 31, 2010.

Intangibles, net

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

   As of September 30, 2017    As of December 31, 2016
   Gross
Carrying
Amount    Accumulated
Amortization    Net
Book
Value    Gross
Carrying
Amount    Accumulated
Amortization    Net
Book
Value
Amortized intangibles:

Customer relationships
   $ 118,448    $ 35,560    $ 82,888    $ 80,909    $ 27,533    $ 53,376
Covenantsnot-to-compete
   11,581    4,139    7,442    8,602    2,466    6,136
Trademarks and trade names
   56,781    13,097    43,684    37,303    10,498    26,805
Backlog
   13,400    6,700    6,700    —      —      —












   $ 200,210    $ 59,496    $ 140,714    $ 126,814    $ 40,497    $ 86,317


	As of March 31,						As of December 31,
	2023						2022
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Amortized intangibles:
Customer relationships	$	349,019	$	154,169	$	194,850	$	338,050	$	145,722	$	192,328
Covenants not-to-compete	31,207		21,028		10,179		30,899		20,086		10,813
Trademarks and tradenames	125,078		41,518		83,560		119,612		39,638		79,974
Backlog	21,635		20,623		1,012		20,815		20,457		358
	$	526,939	$	237,338	$	289,601	$	509,376	$	225,903	$	283,473

The gross carrying amount of intangibles increased approximately ~~$73.4~~$17.6 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 primarily due to business combinations. ~~See~~For more information, see Note ~~13,~~17, Business ~~Combinations, for more information.~~ Combinations.

Table of Contents

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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

Remainder of 2017
   $ 6,916
2018
   22,983
2019
   17,928
2020
   17,212
2021
   16,194
Thereafter
   59,481


Remainder of 2023	$	32,834
2024	39,843
2025	34,301
2026	30,350
2027	26,064
Thereafter	126,209

NOTE ~~5 –~~7 - LONG-TERM DEBT

~~Debt~~

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

   As of September 30,    As of December 31,
   2017    2016
Term loans under agreements applicable to respective period, in effect, net of unamortized original issue discount and debt issuance costs of $6,184 and $447, respectively
   $ 293,066    $ 95,803
Delayed draw term loans, in effect, net of unamortized debt issuance costs of $0 and $50, respectively
   —      12,450
Vehicle and equipment notes, maturing June 2022 to September 2022; payable in various monthly installments, including interest rates ranging from 2% to 4%
   46,713    38,186
Various notes payable, maturing through March 2025; payable in various installments, including interest rates ranging from 4% to 6%
   4,066    4,988




   343,845    151,427
Less: current maturities
   (15,550 )    (17,192 )




Long-term debt, less current maturities
   $ 328,295    $ 134,235


	As of March 31,		As of December 31,
	2023		2022
Senior Notes due 2028, net of unamortized debt issuance costs of $2,887 and $3,036, respectively	$	297,113	$	296,964
Term loan, net of unamortized debt issuance costs of $5,524 and $5,767, respectively	488,226		489,233
Vehicle and equipment notes, maturing through March 2028; payable in various monthly installments, including interest rates ranging from 1.9% to 6.2%	74,078		72,984
Various notes payable, maturing through April 2025; payable in various monthly installments, including interest rates ranging from 2.0% to 5.0%	1,973		1,973
	861,390		861,154
Less: current maturities	(31,165)		(30,983)
Long-term debt, less current maturities	$	830,225	$	830,171

Remaining required repayments of debt principal, gross of unamortized debt issuance costs, as of March 31, 2023 are as follows (in thousands):


Remainder of 2023	$	23,976
2024	27,027
2025	21,201
2026	16,250
2027	11,002
Thereafter	770,345

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.

Table of Contents

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~Senior Secured Credit Agreements~~

~~On April 13, 2017, we entered into a term loan credit agreement (the “Term Loan Agreement”) which provides~~

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


		As of March 31,			As of December 31,
(in thousands)	Classification	2023			2022
Assets
Non-Current
Operating	Operating lease right-of-use assets	$	74,602		$	76,174
Finance	Property and equipment, net	9,159			8,928
Total lease assets		$	83,761		$	85,102
Liabilities
Current
Operating	Current maturities of operating lease obligations	$	26,000		$	26,145
Financing	Current maturities of finance lease obligations	2,588			2,508
Non-Current
Operating	Operating lease obligations	48,339			49,789
Financing	Finance lease obligations	6,559			6,397
Total lease liabilities		$	83,486		$	84,839
Weighted-average remaining lease term:
Operating leases		3.9 years			4.0 years
Finance leases		3.8 years			3.6 years
Weighted-average discount rate:
Operating leases		4.60		%	4.41		%
Finance leases		6.08		%	5.76		%

Lease Costs

The table below presents certain information related to the lease costs for ~~a seven-year $300.0~~finance and operating leases:


		Three months ended March 31,
(in thousands)	Classification	2023		2022
Operating lease cost(1)	Administrative	$	9,203	$	7,759
Finance lease cost:
Amortization of leased assets(2)	Cost of sales	977		716
Interest on finance lease obligations	Interest expense, net	131		61
Total lease costs		$	10,311	$	8,536

(1)Includes variable lease costs of $1.2 million ~~term loan facility (the “Term Loan”)~~ and an asset-based lending credit agreement (the “ABL Credit Agreement” and together with the Term Loan Agreement, the “Senior Secured Credit Agreements”) which provides for up to approximately $100.0 million with a sublimit up to $50.0$0.9 million for the ~~issuance~~three months ended March 31, 2023 and 2022, respectively, and short-term lease costs of letters of credit (the “ABL Revolver” and together with the Term Loan, the “Senior Secured Facilities”), which may be reduced or increased pursuant to the ABL Credit Agreement. The borrowing base$0.3 million for ~~the ABL Revolver, which determines availability under the facility, is based on a percentage~~each of the ~~value~~three months ended March 31, 2023 and 2022.

(2)Includes variable lease costs of ~~certain assets securing the obligations~~$0.2 million for each of the ~~Company~~three months ended March 31, 2023 and ~~the subsidiary guarantors under the ABL Credit Agreement.~~

Proceeds from the Senior Secured Credit Facilities were used to repay in full all amounts outstanding under the credit and security agreement, dated as of February 29, 2016, by and among the Company and the lenders named therein (the “Credit and Security Agreement”).

2022.

Other Information

The Term Loan amortizes in quarterly principal payments of approximately $0.8 million starting on September 30, 2017, with any remaining unpaid balances due on April 15, 2024, which is the maturity date. Loans incurred under the ABL Revolver will have a final maturity of April 13, 2022.

~~Subject to certain exceptions, the Term Loan will be subject to mandatorypre-payments~~ equal to (i) 100% of the net cash proceeds from issuances or incurrence of debt by the Company or any of its restricted subsidiaries (other than with respect to certain permitted indebtedness); (ii) 100% of the net cash proceeds from certain sales or dispositions of assets by the Company or any of its restricted subsidiaries in excess of a certain amount and subject to customary reinvestment provisions and certain other expenses; and (iii) 50% (with step-downs to 25% and 0% based upon achievement of specified net leverage ratios) of excesstable below presents supplemental cash flow information related to leases (in thousands):


	Three months ended March 31,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows for operating leases	$	7,691	$	6,463
Operating cash flows for finance leases	131		61
Financing cash flows for finance leases	727		521

Table of ~~the Company and its restricted subsidiaries in excess of $5.0 million, subject to customary exceptions and limitations.~~

Loans under the Senior Secured Credit Facilities bear interest based on, at the Company’s election, either the base rate or the Eurodollar rate plus, in each case, an applicable margin (the “Applicable Margin”). The Applicable Margin in respect of loans under (i) the Term Loan Agreement will be (A) 3.00% in the case of Eurodollar rate loans and (B) 2.00% in the case of base rate loans, and (ii) the ABL Facility will be (A) 1.25%, 1.50% or 1.75% in the case of Eurodollar rate loans (based on a measure of availability under the ABL Facility) and (B) 0.25%, 0.50% or 0.75% in the case of base rate loans (based on a measure of availability under the ABL Facility).

In addition, we will pay customary commitment fees and letter of credit fees under the ABL Credit Agreement. The commitment fees will vary based upon a measure of our utilization under the ABL Revolver.

~~The Senior Secured Credit Agreements each contain a number of customary affirmative and negativenon-financial~~ covenants, and the ABL Credit Agreement also contains a financial covenant requiring the satisfaction of a minimum fixed charge coverage ratio of 1.00 to 1.00 in the event that we do not meet a minimum measure of availability under the ABL Revolver.

~~Vehicle and Equipment Notes~~

We are party to a Master Loan and Security Agreement (“Master Loan and Security Agreement”), a Master Equipment Lease Agreement (“Master Equipment Agreement”) and one or more Master Loan Agreements (“Master Loan Agreements”) with various lenders to provide financing for the purpose of purchasing or leasing vehicles and equipment used in the normal course of business. Each financing

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

~~arrangement under these agreements constitutes a separate note~~

Undiscounted Cash Flows

The table below reconciles the undiscounted cash flows for each of the first five years and ~~obligation. Vehicles and equipment purchased or leased under each financing arrangement serve as collateral~~total of the remaining years for the note applicable to such financing arrangement. Regular payments are due under each note for a period of typically 60 consecutive months after the incurrence of the obligation. The specific terms of each note are based on specific criteria, including the type of vehicle or equipmentfinance lease obligations and ~~the market interest rates at the time. No termination date applies to these agreements.~~

Total gross assets relating to our master loan and equipment agreements were $66.8 million and $48.7 million as of September 30, 2017 and December 31, 2016, respectively, none of which were fully depreciated as of September 30, 2017 or December 31, 2016, respectively. The net book value of assets under these agreements was $47.3 million and $38.0 million as of September 30, 2017 and December 31, 2016, respectively. Depreciation of assets held under these agreements is included within cost of salesoperating lease obligations recorded on the Condensed Consolidated ~~Statements~~Balance Sheet as of ~~Operations and Comprehensive Income.~~

~~NOTE 6 – COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS~~

~~Uncompleted contracts were as follows for the nine months ended September 30~~March 31, 2023 (in thousands):

   2017
Costs incurred on uncompleted contracts
   $ 70,403
Estimated earnings
   38,691


Total
   109,094
Less: Billings to date
   108,798


Net under (over) billings
   $ 296

~~Net under (over) billings were as follows as of September 30 (in thousands):~~

   2017
Costs and estimated earnings in excess of billings on uncompleted contracts
   $ 5,323
Billings in excess of costs and estimated earnings on uncompleted contracts
   (5,027 )


Net under (over) billings
   $ 296

The asset, costs and estimated earnings in excess of billings on uncompleted contracts, represents revenues recognized in excess of amounts billed and is included in other current assets in our Condensed Consolidated Balance Sheets. The liability, billings in excess of costs and estimated earnings on uncompleted contracts, represents billings in excess of revenues recognized and is included in other current liabilities in our Condensed Consolidated Balance Sheets.


	Finance Leases		Operating Leases
			Related Party		Other		Total Operating
Remainder of 2023	$	2,354	$	1,068	$	21,268	$	22,336
2024	2,668		1,175		21,565		22,740
2025	2,299		1,017		14,742		15,759
2026	1,968		—		9,616		9,616
2027	997		—		5,252		5,252
Thereafter	17		—		5,559		5,559
Total minimum lease payments	10,303		$	3,260	$	78,002	81,262
Less: Amounts representing executory costs	(2)						—
Less: Amounts representing interest	(1,154)						(6,923)
Present value of future minimum lease payments	9,147						74,339
Less: Current obligation under leases	(2,588)						(26,000)
Long-term lease obligations	$	6,559					$	48,339

NOTE ~~7 –~~9 - FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair ~~Values~~

~~Fair value is the price that would be received for an asset or paid to transfer~~Value on a ~~liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.~~

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~ASC 820, “Fair Value Measurement,” establishes~~Recurring Basis

In many cases, a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may bevaluation technique used to measure fair ~~value:~~

~~Level 1: Quoted prices (unadjusted) for identical~~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, ~~or liabilities~~specifically other intangible and long-lived assets, are measured at fair value on a nonrecurring basis in ~~active markets that the entity has the ability~~periods subsequent to ~~access~~initial recognition. Assets measured at fair value on a nonrecurring basis as of March 31, 2023 and December 31, 2022 are categorized based on the ~~measurement date.~~

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 ~~2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar~~3 input, are utilized in determining estimated fair values. During each of the three months ended March 31, 2023 and 2022, we did not record any impairments on these assets ~~or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can~~required to be ~~corroborated by observable market data.~~

~~Level 3: Significant unobservable inputs that reflect~~measured at fair value on a ~~reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.~~

nonrecurring basis.

Estimated Fair Value of Financial Instruments

Accounts receivable, accounts payable and accrued liabilities as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016~~2022 approximate fair value due to the short-term maturities of these financial instruments. The carrying amounts of ~~our~~certain long-term debt, including the Term Loan and ABL Revolver as of ~~September 30, 2017~~March 31, 2023 and ~~the term loan, delayed draw term loan and revolving line of credit as of~~ December 31, ~~2016,~~2022, approximate fair value due to the variable rate nature of the agreements. The carrying amounts of our operating lease right-of-use assets and the obligations associated with our ~~capital~~operating and finance leases ~~and~~as well as our vehicle and equipment notes approximate fair value as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016 because we have incurred the obligations within recent fiscal years when the interest rate markets have been low and stable.~~2022. 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 ~~values~~value by discounting estimated future payments, calculated based on a weighted average of ~~financial assets~~various future forecast scenarios, to their net present value.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Fair value in the Condensed Consolidated Balance Sheets and ~~liabilities~~not described above were as follows ~~as of September 30~~ (in thousands):

   Fair value as of September 30, 2017
   Total    Level 1    Level 2    Level 3
Financial assets:

Cash equivalents
   $ 58,825    $ 58,825    $ —      $ —
Investments
   25,106    —      25,106    —








Total financial assets
   $ 83,931    $ 58,825    $ 25,106    $ —








Financial liabilities:

Derivative financial instruments, net of tax
   $ 45    $ —      $ 45    $ —

~~We had no such items upon which to report fair value as of December 31, 2016.~~


	As of March 31, 2023								As of December 31, 2022
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents	$	197,910	$	197,910	$	—	$	—	$	191,881	$	191,881	$	—	$	—
Derivative financial instruments	30,020		—		30,020		—		38,671		—		38,671		—
Total financial assets	$	227,930	$	197,910	$	30,020	$	—	$	230,552	$	191,881	$	38,671	$	—
Financial liabilities:
Contingent consideration	$	968	$	—	$	—	$	968	$	1,858	$	—	$	—	$	1,858
Derivative financial instruments	1,014		—		1,014		—		—		—		—		—
Total financial liabilities	$	1,982	$	—	$	1,014	$	968	$	1,858	$	—	$	—	$	1,858

See Note ~~3, Investments,~~5, Cash and Cash Equivalents, for more information on cash equivalents ~~and investments~~ included in the table above. Also see Note 8,11, 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 thousands):


Contingent consideration liability - January 1, 2023	$	1,858


Accretion in value	110


Amounts paid to sellers	(1,000)
Contingent consideration liability - March 31, 2023	$	968

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 assets and liabilities that are not recorded at fair value in the Condensed Consolidated Balance Sheets and not described above include our 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 thousands):


	As of March 31, 2023				As of December 31, 2022
	Carrying Value		Fair Value		Carrying Value		Fair Value

Senior Notes(1)	$	300,000	$	278,709	$	300,000	$	270,993

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

See Note 5, Cash and Cash Equivalents, for more information on investments included in the table above. Also see Note 7, Long-Term Debt, for more information on our Senior Notes.

NOTE 10 - INFORMATION ON SEGMENTS

Our segment structure includes three operating segments consisting of Installation, Distribution and Manufacturing. 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

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

The key metrics used to assess the performance of our operating segments are revenue and segment gross profit as these are the metrics used by our Chief Executive Officer, who is also our Chief Operating Decision Maker ("CODM"), to review results, assess performance and allocate resources. 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 use this information to assess segment performance or allocate resources. The following tables represent our segment information for the three months ended March 31, 2023 and 2022 (in thousands):


	Three months ended March 31, 2023
	Installation			Other			Eliminations			Consolidated
Revenue	$	622,742		$	38,722		$	(2,155)		$	659,309
Cost of sales (1)	410,384			28,459			(1,766)			437,077
Segment gross profit	$	212,358		$	10,263		$	(389)		$	222,232
Segment gross profit percentage	34.1		%	26.5		%	18.1		%	33.7		%


	Three months ended March 31, 2022
	Installation			Other			Eliminations			Consolidated
Revenue	$	561,631		$	26,650		$	(789)		$	587,492
Cost of sales (1)	385,692			19,373			(609)			404,456
Segment gross profit	$	175,939		$	7,277		$	(180)		$	183,036
Segment gross profit percentage	31.3		%	27.3		%	22.8		%	31.2		%

(1)Cost of sales included in segment gross profit is exclusive of depreciation and amortization for the three months ended March 31, 2023 and 2022.

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:


	Three months ended March 31,
	2023		2022
Segment gross profit - consolidated	$	222,232	$	183,036
Depreciation and amortization (1)	11,810		10,633
Gross profit, as reported	210,422		172,403
Operating expenses	133,546		115,433
Operating income	76,876		56,970
Other expense, net	9,517		10,745
Income before income taxes	$	67,359	$	46,225

(1)Depreciation and amortization is excluded from segment gross profit for the three months ended March 31, 2023 and 2022.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE ~~8 –~~11 - DERIVATIVES AND HEDGING ACTIVITIES

~~Risk Management Objective of Using Derivatives~~

We are exposed to certain risks arising from both our business operations and economic conditions. We manage exposure to a wide variety of business and operational risks through our core business activities.

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

We manage economic risks, including interest rate, liquidity and credit risk primarily by overseeing the amount, sources and duration of debt funding and the use of derivative financial instruments. Specifically, we have entered into derivative financial instruments to manage exposure to interest rate movements that result in the receipt or payment of future known and uncertain cash amounts, the value of which are determined by interest rates. Our derivative financial instruments are used to manage differences in the amount, timing and duration of our known or expected cash receipts and known or expected cash payments principally related to our investments and borrowings.

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. ~~To accomplish these objectives,~~During the three months ended March 31, 2023, we ~~primarily use~~used interest rate swaps ~~as part of our interest rate risk management strategy.~~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. ~~As of September 30, 2017, we have two interest rate swaps with a beginning notional of $100.0 million that amortize quarterly to $95.3 million at a maturity date of May 31, 2022.~~

The effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges is recorded in accumulated other comprehensive income and is subsequently reclassified into earnings in the period that the hedged forecasted transaction affects earnings. During 2017, such derivatives were used to hedge the variable cash flows associated with existing variable-rate debt. The ineffective portion of the change in fair value of the derivatives, when present, is recognized directly in earnings. During the nine months ended September 30, 2017, we did not record any hedge ineffectiveness in earnings.

Amounts reported in accumulated other comprehensive income related to derivatives will be reclassified to interest expense as interest payments are made on our variable-rate debt. Over the next twelve months, we estimate that an additional $0.5 million will be reclassified as an increase to interest expense.

~~Additionally, we~~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 ~~September 30, 2017, the Company has~~March 31, 2023, we have not posted any collateral related to these agreements.

As of March 31, 2023 and December 31, 2022, we had the following interest rate swap derivatives outstanding:


Effective Date	Notional Amount		Fixed Rate		Maturity Date
	(in millions)
July 30, 2021	$	200.0	0.51	%	December 31, 2025
December 31, 2021	100.0		1.37	%	December 31, 2025
December 31, 2021	100.0		1.37	%	December 31, 2025
December 31, 2025	300.0		3.09	%	December 14, 2028
December 31, 2025	100.0		2.98	%	December 14, 2028

As of March 31, 2023, 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 maturity. The assets and liabilities associated with these interest rate swaps are included in other current assets, other non-current assets and other long-term liabilities 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, 2023, we amortized $1.7 million of the remaining unrealized gains as a decrease 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 the three months ended March 31, 2023, we amortized $1.8 million of the financing element as an increase to interest expense, net. Future net cash settlements are recognized through cash flows from investing activities in the Condensed Consolidated Statements of Cash Flows due to the other-than-insignificant financing element.

In August 2020, we terminated two then-existing interest rate swaps and one then-existing forward interest rate swap. During the three months ended March 31, 2023 and 2022 we amortized $1.0 million and $0.8 million, respectively, of the remaining unrealized loss as an increase to interest expense, net.

The changes in the fair value of derivatives designated, and that qualify, as cash flow hedges are recorded in other comprehensive income, 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, 2023 and 2022.

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 $10.4 million will be reclassified as a decrease to interest expense, net.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 thousands):


	Three months ended March 31,
	2023		2022
(Benefit) expense associated with swap net settlements	$	(3,593)	$	795
Expense associated with amortization of amended/terminated swaps	1,104		790

LIBOR was used as a reference rate for our interest rate swap agreements we use to hedge our interest rate exposure. The Intercontinental Exchange Benchmark Administration, the administrator of LIBOR, announced in March 2021 its intention to extend the publication of certain LIBOR settings, including the setting we use as a reference rate, to June 2023. In January 2020, the Financial Accounting Standards Board (the "FASB") issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848) and in January 2021, the FASB subsequently issued ASU 2021-01, Reference Rate Reform - Scope, which clarified the scope and application of the original guidance. The purpose of this guidance is to provide relief for impacted areas as it relates to impending reference rate reform. We elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. See Note 19, Subsequent Events, for information on a change regarding the reference rate for our interest rate swaps.

NOTE ~~9 –~~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 thousands):


	Three months ended March 31,
	2023		2022
Accumulated gain (loss) at beginning of period	$	40,560	$	(227)
Unrealized (losses) gains in fair value	(7,126)		17,527
Reclassifications of realized net losses to earnings	817		584
Accumulated gain at end of period	$	34,251	$	17,884

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

Share repurchases

During the three months ended March 31, 2023 we did not repurchase any common stock. During the three months ended March 31, 2022 we repurchased approximately 511 thousand shares of our common stock with an aggregate price of approximately $49.9 million, or $97.57 average price per share. The effect of these treasury shares in reducing the number of common shares outstanding is reflected in our earnings per share calculation.

On February 22, 2023, we announced that our board of directors authorized a new stock repurchase program that allows for the repurchase of up to $200.0 million of our outstanding common stock. The new program replaces the previous program and is in effect through March 1, 2024.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Dividends

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


Declaration Date	Record Date	Payment Date	Dividend Per Share		Amount Declared		Amount Paid

2/22/2023	3/15/2023	3/31/2023	$	0.90	$	25,537	$	25,270
2/22/2023	3/15/2023	3/31/2023	0.33		9,364		9,266

During the three months ended March 31, 2022, we declared and paid the following cash dividends (amount declared and amount paid in thousands):


Declaration Date	Record Date	Payment Date	Dividend Per Share		Amount Declared		Amount Paid

2/24/2022	3/15/2022	3/31/2022	$	0.90	$	26,585	$	26,242
2/24/2022	3/15/2022	3/31/2022	0.315		9,305		9,184

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) ~~for all plans~~ was ~~approximately $4.1~~$7.4 million and ~~$3.7~~$8.9 million for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively, and $12.4 million and $11.4 million for the nine months ended September 30, 2017 and 2016,~~2022, 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 ~~$1.9~~$4.3 million and ~~$1.7~~$3.8 million as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~2022, respectively.

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

Workers’ Compensation

Workers’ compensation expense totaled ~~$3.1~~$5.8 million and ~~$3.4~~$5.7 million for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively, and $9.8 million and $9.2 million for the nine months ended September 30, 2017 and 2016,~~2022, respectively. Workers’ compensation known claims and IBNR reserves included on the Condensed Consolidated Balance Sheets were as follows (in thousands):

   September 30,
2017    December 31,
2016
Included in other current liabilities
   $ 4,913    $ 4,595
Included in other long-term liabilities
   8,837    7,052




   $ 13,750    $ 11,647


	March 31, 2023		December 31, 2022
Included in other current liabilities	$	8,782	$	9,946
Included in other long-term liabilities	16,550		13,730
	$	25,332	$	23,676

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. ~~That~~This receivable offsets an equal liability included within ~~other long-term liabilities~~the reserve amounts noted above and was as follows (in thousands):

   September 30,
2017    December 31,
2016
Included in othernon-current assets
   $ 1,828    $ 1,249

~~Share-Based Compensation~~

~~Directors~~

~~During~~


	March 31, 2023		December 31, 2022
Included in other non-current assets	$	2,743	$	2,318

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

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

plans cover substantially all our eligible employees. We recognized 401(k) plan expenses of $0.9 million and $0.8 million during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, we granted approximately six thousand and nine thousand shares of our common stock, respectively, under our 2014 Omnibus Incentive Plan tonon-employee~~ ~~members of our Board of Directors. Accordingly, for the nine months ended September 30, 2017 and 2016, we recorded $0.3 million~~2022, respectively. These expenses are included in ~~compensation expense within~~ administrative expenses on the accompanying Condensed Consolidated Statements of Operations and Comprehensive ~~Income at~~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 ~~time of~~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 ~~grant.~~

~~Employees –~~ applicable collective bargaining units, based on specific eligibility/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

~~During the nine months ended September 30, 2017, we granted approximately 0.1 million~~

We periodically grant shares of our common stock to non-employee members of our board of directors and our employees. During the three months ended March 31, 2023 and 2022, we did not grant any such shares under our 2014 Omnibus Incentive Plan to non-employee members of our ~~employees,~~board of directors or employees.

Employees – Performance-Based Stock Awards

During the three months ended March 31, 2023, we issued approximately 61 thousand shares of our common stock to certain officers, which vest in ~~three~~two equal installments ~~(rounded to the nearest whole share)~~ on each of April 20, ~~2018, April 20, 2019~~2024 and April 20, ~~2020.~~2025. In addition, during the three months ended March 31, 2023, we established, and our board of directors approved, performance-based targets in connection with common stock awards to be issued to certain officers in 2024 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 2024 contingent upon achievement of certain performance targets. These awards ~~have~~are accounted for as liability-based awards since they represent a ~~time-based requirement but~~predominantly-fixed monetary amount that will be settled with a variable number of common shares in the first quarter of 2025 and as such are ~~not classified as performance-based.~~

included in other long-term liabilities on the Condensed Consolidated Balance Sheets. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2023 and 2022, we granted approximately 8 thousand and 39 thousand shares of our common stock, respectively. The shares granted in 2023 will vest in 2025, and the shares granted in 2022 vested in the second quarter of 2022.

Employees – Performance-Based Restricted Stock Units

During 2022, 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 2023 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.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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, 2022	157,117	$	77.31	126,053	$	103.37	15,711	$	80.55
Granted	7,690	109.76		69,281	109.09		—	—
Vested	(569)	82.14		—	—		—	—
Forfeited/Cancelled	(398)	86.72		—	—		(289)	80.55
Nonvested awards/units at March 31, 2023	163,840	$	78.79	195,334	$	105.40	15,422	$	80.55

The following table summarizes the share-based compensation expense recognized under our 2014 Omnibus Incentive Plan (in thousands):


	Three months ended March 31,
	2023		2022
Common Stock Awards	$	1,393	$	1,531
Non-Employee Common Stock Awards	148		124
Performance-Based Stock Awards	1,563		1,315
Liability Performance-Based Stock Awards	26		206
Performance-Based Restricted Stock Units	306		242
	$	3,436	$	3,418

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


	Three months ended March 31,
	2023		2022
Cost of sales	$	165	$	149
Selling	136		62
Administrative	3,135		3,207
	$	3,436	$	3,418

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.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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


	As of March 31, 2023
	Unrecognized Compensation Expense on Unvested Awards		Weighted Average Remaining Vesting Period
Common Stock Awards	$	5,561	1.7
Performance-Based Stock Awards	11,112		2.1
Performance-Based Restricted Stock Units	41		0.1
Total unrecognized compensation expense related to unvested awards	$	16,714

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, 2023, our employees surrendered approximately ~~ten thousand~~200 shares of our common stock to satisfy tax withholding obligations arising in connection with the vesting of common stock awards issued under our 2014 Omnibus Incentive Plan. Share-based compensation expense associated with common stock awards was $0.8 million and $1.9 million for the three and nine months ended September 30, 2017, respectively, and $0.4 million and $1.2 million for the three and nine months ended September 30, 2016, respectively. We recognized excess tax benefits of $0.6 million and $0.3 million within the income tax provision in the Condensed Consolidated Statements of Operations and Comprehensive Income for the nine months ended September 30, 2017 and 2016, respectively. We did not recognize any such excess tax benefits in the three months ended September 30, 2017 or 2016.

As of ~~September 30, 2017, there was $6.2~~March 31, 2023, approximately 1.6 million of unrecognized compensation expense related to these nonvested common stock awards. This expense is subject to future adjustments for forfeitures and is expected to be recognized on a straight-line basis over the remaining weighted-average period of 2.2 years. Shares forfeited are returned as treasury shares and available for future issuances. See the table below for changes in shares and related weighted average fair market value per share.

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Employees – Performance-Based Stock Awards~~

During the nine months ended September 30, 2017, we established, and our Board of Directors approved, performance-based targets in connection with common stock awards to be issued to certain officers in 2018 contingent upon achievement of these targets. Share-based compensation expense associated with these performance-based awards was $0.3 million and $0.7 million for the three and nine months ended September 30, 2017, respectively.

As of September 30, 2017, there was $2.4 million of unrecognized compensation expense related to nonvested performance-based common stock awards. This expense is subject to future adjustments for forfeitures and is expected to be recognized over the remaining weighted-average period of 2.1 years using the graded-vesting method. See the table below for changes in shares and related weighted average fair market value per share.

~~Employees – Performance-Based Restricted Stock Units~~

During the nine months ended September 30, 2017, 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 2018 contingent 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 expense associated with these performance-based awards was $1.0 million and $1.7 million for the three and nine months ended September 30, 2017, respectively.

As of September 30, 2017, there was $2.1 million of unrecognized compensation expense related to nonvested performance-based common stock units. This expense is subject to future adjustments for forfeitures and is expected to be recognized on a straight-line basis over the remaining weighted-average period of 0.6 years. See the table below for changes in shares and related weighted average fair market value per share.

In addition, during the three months ended September 30, 2017, 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 between 2018 and 2022 contingent upon achievement of certain performance targets. These units will be 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 and as such are included in other long-term liabilities on the Condensed Consolidated Balance Sheets. Share-based compensation expense associated with these performance-based awards was $0.1 million for the three and nine months ended September 30, 2017. The unrecognized compensation expense associated with the liability-based awards is subject to fair value adjustment each reporting period, and is expected to be recognized on a straight-line basis over the remaining vesting period of 4.25 years.

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Share-Based Compensation Summary~~

~~Amounts for each category of equity-based award for employees as of December 31, 2016 and changes during the nine months ended September 30, 2017 were as follows:~~

   Common Stock Awards    Performance-Based
Stock Awards    Performance-Based
Restricted Stock Units
   Awards Weighted
Average Fair
Market Value
Per Share    Awards    Weighted
Average Fair
Market Value
Per Share    Units Weighted
Average Fair
Market Value
Per Share
Nonvested awards/units at December 31, 2016
   161,174 $ 26.36    —      $ —      —   $ —
Granted
   101,241 52.00    77,254    41.00    73,880 52.00
Vested
   (57,816 ) 26.30    —      —      —   —
Forfeited/Cancelled
   (1,541 ) 36.33    —      —      (475 ) 52.00








Nonvested awards/units at September 30, 2017
   203,058 $ 39.09    77,254    $ 41.00    73,405 $ 52.00

~~As of September 30, 2017, approximately 2.6~~3.0 million shares of common stock authorized for issuance were available for issuance under the 2014 Omnibus Incentive Plan.

NOTE ~~10 –~~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.

During both the three ~~and nine~~ months ended ~~September 30, 2017, the~~March 31, 2023 and 2022, our effective tax rate was ~~32.3%~~26.8%. The rates for each of the three months ended March 31, 2023 and ~~33.8%, respectively. These rates~~2022 were ~~favorably~~unfavorably impacted by ~~deductions related to domestic production activities, usage of net operating losses~~certain expenses not being deductible for aincome tax filing entity which previously had a full valuation allowance, excess tax benefits from share-based compensation arrangements and the statute expiring for various uncertain tax positions. The favorable impact was partially offset by the tax effect of losses incurred by separate companies to which no benefit can be recognized due to a full valuation allowance against the losses.

reporting purposes.

NOTE ~~11 –~~15 - RELATED PARTY TRANSACTIONS

We sell installation services to other companies related to us through common or affiliated ownership and/or ~~Board~~board of ~~Directors~~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 ~~12, Commitments and Contingencies,~~8, Leases, for future minimum lease payments to be paid to these related parties.

~~For the three and nine months ended September 30, 2017 and 2016, the~~

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 thousands):

   Three months ended
September 30,    Nine months ended
September 30,
   2017    2016    2017    2016
Sales
   $ 2,641    $ 2,182    $ 7,363    $ 5,282
Purchases
   302    114    901    370
Rent
   290    163    875    472

~~As of September 30, 2017 and December 31, 2016, we~~


	Three months ended March 31,
	2023		2022
Sales	$	4,015	$	560
Purchases	666		407
Rent	352		314

We had a related party ~~balances~~balance of approximately ~~$2.0~~$2.3 million and ~~$1.5~~$3.3 million ~~respectively,~~ included in accounts receivable on our Condensed Consolidated Balance ~~Sheets.~~Sheets as of March 31, 2023 and December 31, 2022, respectively. These balances primarily represent trade accounts receivable arising during the normal

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

course of business with various related parties. M/I Homes, Inc., a customer whose Chairman, ~~President and~~ Chief Executive Officer ~~is a member~~and President rejoined our board of ~~our Board~~directors in July of ~~Directors,~~2022, accounted for ~~$1.0~~$1.5 million and ~~$0.8~~$2.5 million of ~~these balances~~the related party accounts receivable balance as of ~~September 30, 2017~~March 31, 2023 and December 31, ~~2016,~~ 2022,

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

respectively.

Additionally, M/I Homes, Inc. accounted for a significant portion of our related party sales during the three months ended March 31, 2023.

NOTE ~~12 –~~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 thousands):

   September 30,
2017    December 31,
2016
Included in other current liabilities
   $ 2,069    $ 1,949
Included in other long-term liabilities
   7,627    7,104




   $ 9,696    $ 9,053

March 31, 2023 December 31, 2022
Included in other current liabilities $ 7,162 $ 7,479
Included in other long-term liabilities 16,621 17,528
$ 23,783 $ 25,007

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

   September 30,
2017    December 31,
2016
Insurance receivable and indemnification asset for claims under a
fully insured policy
   $ 2,773    $ 2,773
Insurance receivable for claims that exceeded the stop loss limit
   2    26




Total insurance receivables included in othernon-current assets
   $ 2,775    $ 2,799


	March 31, 2023		December 31, 2022
Insurance receivables and indemnification assets for claims under fully insured policies	$	2,643	$	4,933
Insurance receivables for claims that exceeded the stop loss limit	75		380
Total insurance receivables and indemnification assets included in other non-current assets	$	2,718	$	5,313

Leases

We are obligated under capital leases covering vehicles and certain equipment. The vehicle and equipment leases generally have initial terms ranging from four to six years. Total gross assets relating to capital leases were approximately $64.2 million and $64.2 million as of September 30, 2017 and December 31, 2016, respectively, and a total of approximately $23.7 million and $22.8 million were fully depreciated as of September 30, 2017 and December 31, 2016, respectively. The net book value of assets under capital leases was approximately $14.4 million and $16.4 million as of September 30, 2017 and December 31, 2016, respectively. Amortization of assets held under capital leases is included within cost of sales on the Condensed Consolidated Statements of Operations and Comprehensive Income.

~~We also have several noncancellable operating leases, primarily~~

See Note 8, Leases, for buildings, improvements, equipment and certain vehicles. These leases generally contain renewal options for periods ranging from one to five years and require us to pay all executory costs such as property taxes, maintenance and insurance.

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

~~Future minimum~~further information regarding our lease ~~payments under noncancellable operating leases (with initial or remaining lease terms in excess of one year) with related parties as of September 30, 2017 are as follows (in thousands):~~

Remainder of 2017
   $   295
2018
   988
2019
   829
2020
   566
2021
   583
Thereafter
   600

commitments.

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.

During the three months ended March 31, 2023, we entered into an supply agreement with variable pricing with one of our suppliers to purchase a portion of the material 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 2023, 14.4 million pounds for 2024 and 17.3 million pounds for 2025.

NOTE ~~13 –~~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 ~~seven~~two business combinations during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and ~~six~~one business ~~combinations~~combination during the ~~nine~~three months ended ~~September 30, 2016 in which we acquired 100% of the voting equity interests in each.~~ March 31, 2022.

The largest of ~~these~~our 2023 acquisitions ~~were Alpha, Columbia Shelving & Mirror~~was Anchor Insulation Co., Inc. (Anchor) in March 2023. Below is a summary of each significant acquisition by year, including revenue and ~~Charleston Shelving & Mirror, Inc. (collectively, “Columbia”)~~net income since date of acquisition shown for the year of acquisition. Net income includes amortization and ~~All In Insulation, LLC d/b/a Astro Insulation (collectively, “Astro”). The remaining acquisitions were individually insignificant but material in the aggregate, as follows (in thousands):~~

               Fair Value    Total    Three months ended
September 30, 2017 Nine months ended
September 30, 2017
2017 Acquisitions
   Date    Acquisition
Type    Cash Paid    Seller
Obligations    of Common
Stock Issued    Purchase
Price    Revenue    Net (Loss)
Income Revenue    Net Income
(Loss)
Alpha(1)
   1/5/2017    Share    $ 103,810    $ 2,002    $ 10,859    $ 116,671    $ 29,334    $ (271 ) $ 87,830    $ 190
Columbia
   6/26/2017    Asset    8,768    225    —      8,993    3,026    73 3,241    80
Astro
   9/18/2017    Asset    8,851    490    —      9,341    264    46 264    46
Other
   Various    Asset    9,812    1,042    —      10,854    6,499    84 11,671    366














Total
         $ 131,241    $ 3,759    $ 10,859    $ 145,859    $ 39,123    $ (68 ) $ 103,006    $ 682

~~(1)~~

The cash paid included $21.7 million in contingent consideration to satisfy purchase price adjustments related to cash and net working capital requirements, earnout consideration based on Alpha’s change in EBITDA from 2015 and a customary holdback. We issued 282,577 shares of our common stock with a fair value of $10.9 million.

   Three months ended
September 30, 2016 Nine months ended
September 30, 2016
2016 Acquisitions
   Date    Acquisition
Type    Cash Paid    Seller
Obligations    Total
Purchase
Price    Revenue    Net Income
(Loss) Revenue    Net Income
(Loss)
Alpine Insulation Co., Inc.
   4/12/2016    Asset    $ 21,151    $ 1,560    $ 22,711    $ 7,957    $ 806 $ 14,734    $ 1,238
Other
   Various    Asset    15,276    1,289    16,565    5,519    (200 ) 12,283    (664 )












Total
         $ 36,427    $ 2,849    $ 39,276    $ 13,476    $ 606 $ 27,017    $ 574

taxes when appropriate.

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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


									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	$	35,928	$	1,000	$	36,928	$	2,193	$	51
Other	2/13/2023	Asset	2,090		131		2,221		444		15






			$	38,018	$	1,131	$	39,149	$	2,637	$	66

For the three months ended March 31, 2022 (in thousands):


									Three months ended March 31, 2022
2022 Acquisitions	Date	Acquisition Type	Cash Paid		Seller Obligations		Total Purchase Price		Revenue		Net Income
Other	03/01/2022	Share	$	8,050	$	1,878	$	9,928	$	915	$	97

Acquisition-related costs recorded within administrative expenses on the Condensed Consolidated Statements of Operations and Comprehensive Income amounted to ~~$0.9~~$0.6 million and ~~$0.5~~$0.7 million for the three months ended ~~September 30, 2017~~March 31, 2023 and ~~2016, respectively, and $2.3 million and $1.3 million for the nine months ended September 30, 2017 and 2016,~~2022, respectively. The goodwill recognized in conjunction with these business combinations ~~is attributable~~represents the excess cost of the acquired entity over the net amount assigned to ~~expected improvement in the business of these~~assets acquired ~~companies.~~and liabilities assumed. We expect to deduct approximately ~~$45.6~~$13.0 million of goodwill for tax purposes as a result of ~~2017~~2023 acquisitions.

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 thousands):


	Three months ended March 31, 2023		Three months ended March 31, 2022
	Anchor		Other		Total		Other
Estimated fair values:
Cash	$	10	$	—	$	10	$	87
Accounts receivable	3,661		—		3,661		772
Inventories	1,527		64		1,591		684
Other current assets	1,732		—		1,732		21
Property and equipment	2,428		381		2,809		1,049
Operating lease right-of-use asset	—		28		28		—
Intangibles	16,420		1,120		17,540		4,634
Goodwill	12,870		670		13,540		2,743
Other non-current assets	184		13		197		7
Accounts payable and other current liabilities	(1,904)		(46)		(1,950)		(69)



Other long-term liabilities	—		(9)		(9)		—
Fair value of assets acquired and purchase price	36,928		2,221		39,149		9,928
Less seller obligations	1,000		131		1,131		1,878
Cash paid	$	35,928	$	2,090	$	38,018	$	8,050

Contingent consideration, non-compete agreements and/or amounts based on working capital calculations are included as “seller obligations” in the above table or within “fair value of ~~September 30, 2017 and 2016 and may be adjusted~~assets acquired” if subsequently paid during the ~~valuation~~ period ~~since~~presented. Contingent consideration payments consist primarily of earnouts based on performance that are recorded at fair value at the time of acquisition. When these payments are expected to be made over one year from the acquisition ~~(in thousands):~~

   2017 2016
   Alpha Columbia Astro Other Total Alpine Other Total
Estimated fair values:

Cash
   $ 247 $ —   $ —   $ —   $ 247 $ —   $ —   $ —
Accounts receivable
   30,361 990 924 2,137 34,412 3,959 2,080 6,039
Inventories
   1,851 704 296 1,014 3,865 700 888 1,588
Other current assets
   4,827 8 36 8 4,879 —   12 12
Property and equipment
   1,528 659 640 1,144 3,971 656 1,188 1,844
Intangibles
   57,100 4,760 4,966 5,939 72,765 12,800 8,492 21,292
Goodwill
   38,679 2,211 2,808 2,361 46,059 6,642 5,270 11,912
Othernon-current assets
   150 31 —   191 372 —   94 94
Accounts payable and other current liabilities
   (18,072 ) (370 ) (329 ) (1,940 ) (20,711 ) (2,046 ) (1,459 ) (3,505 )


Fair value of assets acquired and purchase price
   116,671 8,993 9,341 10,854 145,859 22,711 16,565 39,276
Less fair value of common stock issued
   10,859 —   —   —   10,859 —   —   —
Less seller obligations
   2,002 225 490 1,042 3,759 1,560 1,289 2,849


Cash paid
   $ 103,810 $ 8,768 $ 8,851 $ 9,812 $ 131,241 $ 21,151 $ 15,276 $ 36,427

date, the contingent

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INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

consideration is discounted to net present value of future payments based on a weighted average of various future forecast scenarios.

Further adjustments to the allocation for each acquisition still under its measurement period are expected as third-party ~~and~~or internal valuations are finalized, certain tax aspects of the transaction are completed and customary post-closing reviews are concluded during the measurement period attributable to each individual business combination. As a result, ~~insignificant~~ adjustments to the fair value of assets acquired, and in some cases total purchase price, have been made to certain business combinations since the date of acquisition and future adjustments may be made through the end of each measurement period. Any acquisition acquired after March 31, 2022 is deemed to be within the measurement period and its purchase price considered preliminary. Goodwill and intangibles per the above table domay not agree to the total gross increases of these assets as shown in Note 4,6, Goodwill and Intangibles, during each of the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2023 and 2022 due to ~~minor~~ adjustments to goodwill for the allocation of certain acquisitions still under measurement as well as other immaterial intangible assets added ~~and written off~~ during the ordinary course of business. ~~In addition, goodwill and intangibles increased~~All acquisitions during the ~~nine~~three months ~~ended September 30, 2017 due to three immaterialtuck-in~~ ~~acquisitions that do not appear in the above table.~~

~~The provisional amounts for Alpha originally reported in our Condensed Consolidated Balance Sheets included in our Quarterly Report on Form10-Q~~ ~~for the period~~ ended March 31, ~~2017 were adjusted~~2023 and 2022 had their respective goodwill assigned to ~~reflect the review and ongoing analysis of the fair value measurements. As a result of~~ our ~~continued evaluation during the measurement period, we increased goodwill by approximately $2.2 million, offset by a corresponding net reduction in various working capital accounts.~~

~~The provisional amounts for Columbia originally reported in our Condensed Consolidated Balance Sheets included in our Quarterly Report on Form10-Q~~ for the period ended June 30, 2017 were adjusted to reflect the review and ongoing analysis of the fair value measurements. As a result of an independent appraisal, we increased goodwill by approximately $0.5 million and our seller obligations by approximately $0.4 million for an adjustment to the fair value of a working capital contingent liability. These adjustments, as well as various other insignificant adjustments, resulted in a total purchase price increase for Columbia of approximately $0.6 million as reflected within the above table and were within applicable measurement period guidelines.

~~INSTALLED BUILDING PRODUCTS, INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)~~

Installation operating segment.

Estimates of acquired intangible assets related to the acquisitions are as follows ~~for the nine months ended September 30 (dollars in~~(in thousands):

   2017    2016
Acquired intangibles assets
   Estimated
Fair Value    Weighted
Average
Estimated
Useful
Life (yrs.)    Estimated
Fair Value    Weighted
Average
Estimated
Useful
Life (yrs.)
Customer relationships
   $ 37,533    8    $ 12,862    9
Trademarks and trade names
   19,403    15    6,116    15
Non-competition agreements
   2,429    5    2,315    5
Backlog
   13,400    1.5    —      —


	For the three months ended March 31,
	2023			2022
Acquired intangibles assets	Estimated Fair Value		Weighted Average Estimated Useful Life (yrs.)	Estimated Fair Value		Weighted Average Estimated Useful Life (yrs.)
Customer relationships	$	10,969	12	$	3,125	12
Trademarks and tradenames	5,466		15	1,136		15
Non-competition agreements	285		5	374		5
Backlog	820		1	—		0

Pro Forma Information

The unaudited pro forma information for the combined results of the Company has been prepared as if the ~~2017~~2023 acquisitions had taken place on January 1, ~~2016~~2022 and the ~~2016~~2022 acquisitions had taken place on January 1, ~~2015.~~2021. The unaudited pro forma information is not necessarily indicative of the results that we would have achieved had the transactions actually taken place on January 1, ~~2016~~2022 and ~~2015,~~2021, respectively, and the unaudited pro forma information does not purport to be indicative of future financial operating ~~results. See Note 12, Business Combinations, to our audited financial statements in Item 8 of Part II of our 2016 Form10-K~~ ~~for additional information on 2016 acquisitions included in the table below~~results (in thousands, except per share data):

   Pro forma for the three months
ended September 30,    Pro forma for the nine months
ended September 30,
   2017    2016    2017    2016
Net revenue
   $ 297,820    $ 272,010    $ 853,897    $ 771,313
Net income
   11,836    12,328    31,544    32,117
Basic net income per share
   0.37    0.39    1.00    1.02
Diluted net income per share
   0.37    0.39    0.99    1.02


	Unaudited pro forma for the three months ended March 31,
	2023		2022
Net revenue	$	667,915	$	623,603
Net income	49,590		34,974
Basic net income per share	1.77		1.19
Diluted net income per share	1.75		1.18

Unaudited pro forma net income reflects additional intangible asset amortization expense of ~~$0.1~~approximately $0.4 million and ~~$0.9~~$1.9 million for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2023 and ~~$4.2 million and $13.1 million for the three and nine months ended September 30, 2016,~~2022, respectively, as well as additional income tax ~~(benefit)~~ expense of ~~($0.1)~~approximately $0.1 million and ~~$0.6~~$0.4 million for the three ~~and nine~~ months ended ~~September 30, 2017,~~March 31, 2023 and $0.5 million and $2.6 million for the three and nine months ended September 30, 2016, respectively, and additional interest expense of $0.5 million and $1.4 million for the three and nine months ended September 30, 2016,2022, respectively, that would have been recorded had the ~~2017~~2023 acquisitions taken place on January 1, ~~2016~~2022 and the ~~2016~~2022 acquisitions taken place on January 1, ~~2015. There was no additional interest expense for the three or nine months ended September 30, 2017. In addition, we included 282,577 shares~~2021.

Table of our common stock issued upon acquisition of Alpha in the weighted average shares used to calculate unaudited basic and diluted net income per share for the three and nine months ended September 30, 2016 that would have been recorded had the acquisition taken place on January 1, 2016.

Contents

INSTALLED BUILDING PRODUCTS, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE ~~14 –~~18 - INCOME PER COMMON SHARE

Basic net income per common share is calculated by dividing net income by the weighted average shares outstanding during the period, without consideration for common stock equivalents.

Diluted net income per common share is calculated by adjusting weighted average shares outstanding for the dilutive effect of common stock equivalents outstanding for the period, determined using the treasury stock method. Potential common stock is included in the diluted income per common share calculation when dilutive. ~~Diluted net income per share~~The dilutive effect of outstanding restricted stock awards after application of the treasury stock method was ~~as follows (in thousands, except share~~approximately 203 thousand and ~~per share data):~~

   For the three months ended
September 30,    For the nine months ended
September 30,
   2017    2016    2017    2016
Net income - basic and diluted
   $ 12,010    $ 11,549    $ 30,347    $ 27,355








Weighted average number of common shares outstanding
   31,659,503    31,323,600    31,632,400    31,294,596
Dilutive effect of outstanding common stock awards after application of the Treasury Stock Method
   107,378    54,190    80,115    57,395








Diluted shares outstanding
   31,766,881    31,377,790    31,712,515    31,351,991
Basic and diluted net income per share
   $ 0.38    $ 0.37    $ 0.96    $ 0.87

~~None~~278 thousand shares for the three months ended March 31, 2023 and 2022, respectively. Approximately 4 thousand shares of ~~thenon-vested~~potential common stock ~~awards had an antidilutive effect on~~were not included in the calculation of diluted net income per common share for ~~either of~~ the three ~~or nine~~ months ended ~~September 30, 2017 and 2016.~~

March 31, 2023 because the effect would have been anti-dilutive. There were no shares that would have been considered anti-dilutive for the three months ended three months ended March 31, 2022.

NOTE ~~15 –~~19 - SUBSEQUENT EVENTS

~~On October~~

We announced on May 4th, 2023 that our board of directors declared a quarterly dividend, payable on June 30, ~~2017,~~2023 to stockholders of record on June 15, 2023, at a rate of 33.0 cents per share.

In April 2023, we ~~acquired substantially all~~notified the lenders on our $500.0 million, seven-year term loan facility due December 2028 (the "Term Loan") under our credit agreement (the "Term Loan Agreement") that we have elected to trigger a benchmark replacement from LIBOR to the Secured Overnight Financing Rate ("Term SOFR"). This trigger includes a credit spread adjustment of ~~the assets~~0.11%, 0.26% and 0.43% for interest periods of ~~A+ Insulation, LLC for total consideration of approximately $2.4 million,~~one month, three months and six months, respectively, and it is subject to the same floor as currently set forth in the Term Loan Agreement. The new Term SOFR rate was effective on April 28, 2023. Also in April 2023, we transitioned our interest rate swap derivatives to Term SOFR to avoid a ~~working capital adjustment. The initial accounting for the business combination was not complete at the time the financial statements were issued due to the timing~~mismatch of ~~the acquisition and the filing of this Quarterly Report on Form10-Q.~~ ~~As a result, disclosures required under ASC805-10-50,~~ ~~Business Combinations, cannot be made at this time.~~

rates.

~~Item 2.~~

~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our consolidated financial statements and related notes in “Item 1. Financial Statements” of thisForm 10-Q, as well as our ~~2016~~2022 Form10-K.

OVERVIEW

We are one of the nation’s largest insulation installers for the residential new construction market and are also a diversified installer of complementary building products throughout the United States, including waterproofing, fire-stopping and fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving, mirrors and mirrors, throughout the United States. Our acquisition of Alpha in January 2017 expanded our market position in commercial insulation installation and strengthens our complementary installed product offerings in waterproofing, fire-stopping and fireproofing.other products. We offer our portfolio of services for new and existing single-family and multi-family residential and commercial building projects in all 48 continental states and the District of Columbia from our national network of over 240 branch locations.

94% of our net revenue comes from the service-based installation of these products across all of our end markets and forms our Installation operating segment and single reportable segment. In addition, two regional distribution operations serve the Midwest, Mountain West, Northeast and Mid-Atlantic regions of the United States, and we operate a cellulose manufacturing facility. We believe our business is well positioned to continue to profitably grow over the long-term due to our strong balance sheet, liquidity and our continuing acquisition strategy.

A large portion of our net revenue comes from the U.S. residential new construction market, which depends upon a number of economic factors, including demographic trends, interest rates, inflation, consumer confidence, employment rates, housing inventory levels, foreclosure rates, the health of the economy and availability of mortgage financing.

The strategic acquisitions of multiple companies over the last several years contributed meaningfully to our 12.2% increase in net revenue during the three months ended March 31, 2023 compared to 2022.

2023 First Quarter Highlights

Net revenue increased 12.2%, or $71.8 million to $659.3 million, while gross profit increased 22.1% to $210.4 million during the three months ended March 31, 2023 compared to 2022. The increase in net revenue and gross profit was primarily driven by selling price and product mix improvements and the contribution of our recent acquisitions. We continue to make pricing adjustments to offset the current macroeconomic inflationary trends as evidenced by the 16.5% increase in our price/mix metric for our Installation segment. Gross profit margin grew faster than revenue as we continued to prioritize profitability over sales volume. Specifically, gross profit outpaced sales growth due to higher selling prices and resulting leverage gained on labor and other costs of sales, including lower material costs as recent supply chain constraints began showing signs of easing. Certain net revenue and industry metrics we use to monitor our operations are discussed in the "Key Measures of Performance" section below, and further details regarding results of our various end markets are discussed further in the "Net Revenue, Cost of Sales and Gross Profit" section below.

As of March 31, 2023, we had $218.7 million of cash and cash equivalents, and we have not drawn on our revolving line of credit. This strong liquidity position allowed us to return capital to shareholders by paying a variable annual dividend of $0.90 per share, or $25.3 million in the aggregate, as well as increasing our regular quarterly dividend 5% to $0.33 per share, or $9.0 million in the aggregate, during the three months ended March 31, 2023. During the quarter, our board of directors also authorized a new stock repurchase program which replaces our previous stock repurchase program that allows for the repurchase of up to $200.0 million of our outstanding common stock.

Key Measures of Performance

We utilize certain net revenue and industry metrics to monitor our operations. Key metrics include total sales growth and same branch growth metrics for our consolidated results, our Installation reportable segment and our Other category consisting of our Distribution and Manufacturing operating segments. We also monitor sales growth for our Installation segment by end market and track volume growth and price/mix growth.

We believe the revenue growth measures are important indicators of how our business is ~~well positioned~~performing, however, we may rely on different metrics in the future. We also utilize gross profit percentage as shown in the following section to ~~continue~~monitor our most significant variable costs and to ~~profitably grow during the housing recovery due to our strong balance sheet, liquidity~~evaluate labor efficiency and continuing acquisition strategy. We may adjust our strategies based on housing demand and our performance in each of our markets. Nevertheless, the pace of the housing recovery and our future results could be negatively affected by weakening economic conditions and decreases in housing demand and affordability as well as increases in interest rates and tightening of mortgage lending practices.

~~We manage all aspects of the installation process for our customers, from our direct purchase and receipt of materials from national manufacturers, to our timely supply~~success at passing increasing costs of materials to ~~job sites~~customers.

The following table shows key measures of performance we utilize to evaluate our results:


	Three months ended March 31,
	2023		2022
Period-over-period Growth
Consolidated Sales Growth	12.2	%	34.4	%
Consolidated Same Branch Sales Growth (1)	7.1	%	22.5	%

Installation
Sales Growth (2)	10.9	%	30.0	%
Same Branch Sales Growth (1)(2)	7.0	%	22.2	%

Single-Family Sales Growth (3)	1.6	%	37.4	%
Single-Family Same Branch Sales Growth (1)(3)	(2.6)	%	29.4	%

Multi-Family Sales Growth (4)	38.1	%	24.6	%
Multi-Family Same Branch Sales Growth (1)(4)	37.9	%	23.1	%

Residential Sales Growth (5)	7.4	%	35.2	%
Residential Same Branch Sales Growth (1)(5)	3.8	%	28.3	%

Commercial Sales Growth (6)	27.0	%	13.0	%
Commercial Same Branch Sales Growth (1)(6)	22.4	%	5.9	%

Other
Sales Growth (7)	45.3	%	407.3	%
Same Branch Sales Growth (1)(7)	12.9	%	50.8	%

Same Branch Sales Growth - Installation (8)
Volume Growth (1)(9)	(9.3)	%	9.7	%
Price/Mix Growth (1)(10)	16.5	%	14.6	%


U.S. Housing Market (11)
Total Completions Growth	11.7	%	(3.4)	%
Single-Family Completions Growth	1.4	%	1.5	%
Multi-Family Completions Growth	50.8	%	(18.7)	%


(1)			Same-branch basis represents period-over-period growth for branch locations owned greater than 12 months as of each financial statement date.
(2)			Calculated based on period-over-period growth of all end markets for our Installation segment.
(3)			Calculated based on period-over-period growth in the single-family subset of the residential new construction end market for our Installation segment.
(4)			Calculated based on period-over-period growth in the multi-family subset of the residential new construction end market for our Installation segment.
(5)			Calculated based on period-over-period growth in the residential new construction end market for our Installation segment.
(6)			Calculated based on period-over-period growth in the total commercial end market for our Installation segment. Our commercial end market consists of heavy and light commercial projects.
(7)			Calculated based on period-over-period growth in our Other category which consists of our Manufacturing and Distribution operating segments. Our distribution businesses were acquired in December, 2021 and April, 2022.
(8)			The heavy commercial end market, a subset of our total commercial end market, comprises projects that are much larger than our average installation job. This end market is excluded from the volume growth and price/mix growth calculations as to not skew the growth rates given its much larger per-job revenue compared to the average jobs in our remaining end markets.
(9)			Calculated as period-over-period change in the number of completed same-branch jobs within our Installation segment for all markets we serve except the heavy commercial end market.
(10)			Defined as change in the mix of products sold and related pricing changes and calculated as the change in period-over-period average selling price per same-branch jobs within our Installation segment for all markets we serve except the heavy commercial market, multiplied by total current year jobs. The mix of end customer and product would have an impact on the year-over-year price per job.
(11)			U.S. Census Bureau data, as revised.

Net Revenue, Cost of Sales and ~~quality installation. Installation~~Gross Profit

The components of ~~insulation is a critical phase~~gross profit were as follows (in thousands):


	Three months ended March 31,
	2023			Change		2022
Net revenue	$	659,309		12.2	%	$	587,492
Cost of sales	448,887			8.1	%	415,089
Gross profit	$	210,422		22.1	%	$	172,403
Gross profit percentage	31.9		%			29.3		%

Net revenue increased during the three months ended March 31, 2023 primarily due to increased selling prices and product mix improvements, acquisitions and organic growth from our existing branches as shown in the construction process, as certain interior work cannot begin until the insulation phase passes inspection. We benefit from our national scale, long-standing supplier relationships and a broad customer base that includes production and custom homebuilders, multi-family and commercial construction firms and homeowners.

~~Contracts fulfilled by Alpha are primarily accounted for under thepercentage-of-completion~~ ~~method~~Key Measures of ~~accounting. When thepercentage-of-completion~~ ~~method is used, we estimate the costs to complete individual contracts and record as~~Performance section above. Installation 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. 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. As a result of the acquisition of Alpha, we currently estimate backlog to be $81.4 million as of September 30, 2017. Backlog represents expected revenue on uncompleted contracts, including the amount of revenue on contracts for which our work has not yet commenced, less the revenue recognized under these contracts.

~~As a result of Hurricanes Harvey and Irma, we closed our locations in Texas and Florida during and in the days immediately following the storms.This negatively impacted our revenue and gross profit~~increased 10.9% for the three months ended ~~September 30, 2017.~~

~~Three Months Ended September 30, 2017 Compared to~~March 31, 2023, respectively, driven by continued strong growth in the ~~Three Months Ended September 30, 2016~~

~~Net~~new residential multifamily market which grew 38.1% as well as growth in the commercial market which increased 27.0% over the prior year period. Our largest end market, the single-family subset of the residential new construction market, grew revenue

~~For~~ 1.6% over the ~~three months~~same period ended ~~September 30, 2017,~~March 31, 2022. The remaining overall growth in net revenue ~~increased $69.8 million, or 31.0%, to $295.2 million from $225.4 million~~ for the three months ended ~~September 30, 2016. The increase in net revenue included revenue from acquisitions of approximately $48.7 million. Approximately $8.3 million was predominantly~~March 31, 2023 is attributable to the acquisition of Central Aluminum which, combined with AMD Distribution, form our Distribution operating segment. This operating segment, combined with our Manufacturing operating segment, experienced 12.9% organic growth, inor 45.3% including the volume of completed jobs in all of our end markets. The remaining increase in net revenue of $12.8 million resulted from a variety of factors, including customer and product mix, market pricing variations and insulation volumes driven by building code requirements. None of these additional factors was more significant than any other. Partially offsetting the increase in revenue were the effects of Hurricanes Harvey and Irma that negatively impacted our productivity during the three months ended September 30, 2017.

~~Cost of sales~~

~~For the three months ended September 30, 2017, cost of sales increased $51.5 million, or 32.6%, to $209.6 million from $158.1 million~~Central Aluminum acquisition, for the three months ended September 30, 2016. As a percentage of net revenue, cost of sales increased to 71.0% during the three months ended September 30, 2017 from 70.2% during the three months ended September 30, 2016. On a dollar basis, cost of sales included increases from acquired businesses of approximately $34.8 million. Approximately $5.5 million was predominantly attributable to organic growth in the volume of completed jobs in the residential new construction end market. Additionally, cost of sales increased $11.2 million as a result of a variety of factors including customer and product mix, market pricing variations and insulation volumes driven by building code requirements, as well as expense associated with our recently introduced share-based compensation program for certain of our installers. None of these additional factors was more significant than any other.

~~Gross Profit~~

~~For the three months ended September 30, 2017, gross profit increased $18.3 million to $85.6 million from $67.3 million for the three months ended September 30, 2016.~~ March 31, 2023.

As a percentage of net revenue, gross profit ~~decreased~~improved during the three months ended March 31, 2023 compared to ~~29.0%~~the corresponding prior year period primarily on the strength of price/mix growth and resulting leverage gained on labor and other costs of sales. We continued to focus on profitability over volume gains, and this had a noticeable impact on gross profit this quarter. While inflation and material supply chain issues that affected our business and industry in recent years are likely to persist through 2023, we have seen inflation moderate since the end of 2022 and signs that the supply chain is improving. We will continue to work with our suppliers to lessen the impact on our margins and with our customers to offset further cost increases through selling price adjustments.

Operating Expenses

Operating expenses were as follows (in thousands):


	Three months ended March 31,
	2023			Change		2022
Selling	$	32,607		29.4	%	$	25,192
Percentage of total net revenue	4.9		%			4.3		%
Administrative	$	89,504		13.1	%	$	79,144
Percentage of total net revenue	13.6		%			13.5		%
Amortization	$	11,435		3.0	%	$	11,097
Percentage of total net revenue	1.7		%			1.9		%

Selling

The dollar increase in selling expenses for the three months ended ~~September 30, 2017 from 29.8%~~March 31, 2023 was primarily driven by an increase in selling wages and commissions to support our increased net revenue of 12.2% and higher credit loss provisions due to increased sales. Selling expense as a percentage of sales increased for the three months ended ~~September 30, 2016~~March 31, 2023 compared to 2022 primarily due to ~~the factors discussed above.~~

~~Operating~~increased commissions from changes in product mix and more profitable completed jobs.

Administrative

The dollar increase in administrative expenses

~~Selling~~

~~For the three months ended September 30, 2017, selling expenses increased $1.9 million, or 14.1%, to $14.9 million from $13.0 million~~ for the three months ended September 30, 2016. As a percentage of net revenue, selling expenses decreased to 5.0% during the three months ended September 30, 2017 from 5.8% during the three months ended September 30, 2016. On a dollar basis, the increase in selling expensesMarch 31, 2023 was primarily due to ~~higher~~an increase in wages ~~benefits~~ and ~~commissions which supported both~~facility costs from acquisitions and to support organic ~~and acquisition-related~~ growth.

Administrative

~~For the three months ended September 30, 2017, administrative~~ expenses slightly increased ~~$10.2 million, or 32.2%, to $41.7 million from $31.5 million~~as a percentage of sales for the three months ended ~~September 30, 2016.~~ March 31, 2023 compared to 2022 primarily due to inflationary pressures and increased number of employees leading to higher wages and benefits.

Amortization

The increase in administrative expenses is generally related to the cost of completing acquisitions, the ongoing costs associated with these newly-acquired entities and costs to support our growth. Wages and benefits increased $6.7 million, of which $4.0 million was attributable to acquisitions and $2.7 million was to support our growth. In addition, facility costs increased $1.2 million to support both organic and acquisition related growth and accounting, legal and consulting fees increased $0.5 million primarily to facilitate our transition into large accelerated filer status. The remaining increase in administrative expenses of $1.8 million included individually minor increases in several categories necessary to support our growing business, such as supplies and information technology costs.

~~Amortization~~

~~For the three months ended September 30, 2017,~~ amortization expense ~~increased $3.9 million to $6.8 million from $2.9 million~~ for the three months ended ~~September 30, 2016. The increase in amortization expense~~March 31, 2023 was attributable to the ~~additional~~increase in finite-lived intangible assets recorded as a result of acquisitions.

Other Expense, Net

Other expense,

~~For~~ net was as follows (in thousands):


	Three months ended March 31,
	2023		Change		2022
Interest expense, net	$	9,670	(8.8)	%	$	10,600
Other (income) expense	(153)		(205.5)	%	145
Total other expense, net	$	9,517			$	10,745

The decrease in interest expense, net during the three months ended ~~September 30, 2017, other~~March 31, 2023 compared to 2022 was primarily due to increased interest income due to higher yields on cash deposits offsetting the expense, partially offset by increased ~~$2.9 million to $4.5 million from $1.6 million for~~interest expense on variable rate debt.

Income Tax Provision

Income tax provision and effective tax rates were as follows (in thousands):


	Three months ended March 31,
	2023			2022
Income tax provision	$	18,085		$	12,403
Effective tax rate	26.8		%	26.8		%

During both the three months ended ~~September 30, 2016 due to increased interest expense on~~March 31, 2023 and 2022, our ~~new Term Loan to support our growth related to acquisitions.~~

effective tax rates were 26.8%. The rates for both periods were unfavorably impacted by certain expenses not deductible for income tax reporting purposes.

Other Comprehensive (Loss) Income, Net of Tax

Other comprehensive (loss) income, net of tax ~~provision~~

was as follows (in thousands):


	Three months ended March 31,
	2023		2022
Net change on cash flow hedges, net of taxes	$	(6,309)	$	18,111

During the three months ended ~~September 30, 2017,~~March 31, 2023, we recorded ~~an income tax provision~~unrealized losses of ~~$5.7~~$7.1 million, net of taxes, respectively, on our income before income taxes of $17.7 million, or an effective tax rate of 32.3%. This rate was favorably impacted by deductions related to domestic production activities, usage of net operating losses for a tax filing entity which previously had a full valuation allowance, excess tax benefits from share-based compensation arrangements and the statute expiring for various uncertain tax positions. The favorable impact was partially offset by the tax effect of losses incurred by separate companies to which no benefit can be recognizedcash flow hedges due to ~~a full valuation allowance against~~ the ~~losses.~~

market's expectations for lower long-term interest rates in the future relative to our three existing interest rate swaps and our two forward interest rate swaps. We also amortized $1.1 million of our remaining unrealized gains and losses, net, on our terminated cash flow hedges to interest expense during three months ended March 31, 2023, not including the offsetting tax effects of $0.3 million.

During the three months ended ~~September 30, 2016,~~March 31, 2022, we recorded an ~~income~~unrealized gain of $17.5 million, net of tax, ~~provision~~and amortized $0.8 million of ~~$6.7 million~~our remaining unrealized loss on our ~~income before income taxes~~terminated cash flow hedges, not including the offsetting tax effect of ~~$18.3 million, or an effective tax~~$0.2 million.

KEY FACTORS AFFECTING OUR OPERATING RESULTS

Inflation and Interest Rates

The fast recovery in residential housing demand helped offset prolonged impacts of the COVID-19 pandemic already experienced. However, the strong demand for residential housing has caused inflationary pressure on materials used in our industry. Inflation has also affected the economy as a whole as consumer price inflation has reached 40-year highs, negatively impacting consumer sentiment and increasing market uncertainty. The Federal Reserve took actions to moderate and stabilize inflation by raising the federal funds rate multiple times in 2022 and 2023 and signaling plans to continue raising the rate in

2023. This caused the average mortgage rate in the United States to increase rapidly since the end of ~~36.8%. This rate was favorably~~2021. Rising interest rates began to curtail housing demand in the second half of 2022 and first quarter of 2023, reducing mortgage financing affordability. As a result, the single family homebuilding market began showing signs of weakening in late 2022 and early 2023 and housing starts and permits are forecasted to decline in 2023.

We expect to be impacted by ~~deductions related to domestic production activities~~these economic headwinds in 2023. However, we believe the large residential construction backlog of both units under construction and ~~the release of a valuation allowance due to utilization of net operating losses. The favorable impact was~~units not started will partially offset ~~by separate tax filing entities~~these challenges. Additionally, there are housing shortages in ~~a loss position for which a full valuation allowance~~some of the markets we serve and we expect the backlog in our growing multi-family business will ~~be accounted for against~~help to offset any declines we may face in the ~~losses, causing no tax benefit~~residential homebuilding market. Also, many existing homeowners are locked into low interest mortgages, and an aging housing stock exists in many areas of the United States. We expect these factors, combined with incentives from the Inflation Reduction Act of 2022, to ~~be recognized on the losses.~~

~~Nine Months Ended September 30, 2017 Compared to the Nine Months Ended September 30, 2016~~

~~Net revenue~~

For the nine months ended September 30, 2017, net revenue increased $204.1 million, or 32.4%, to $833.1 million from $629.0 million for the nine months ended September 30, 2016. The increase in net revenue included revenue from acquisitions of approximately $141.8 million. Approximately $35.8 million was predominantly attributable to organicdrive growth in the ~~volume~~repair and remodel markets we service.

Cost and Availability of ~~completed jobs~~Materials

We typically purchase the materials that we install directly from manufacturers, and the products we sell are either purchased from manufacturers or other suppliers or are manufactured by us. The industry supply of these materials experienced supply shortages in ~~all~~2022 due to strong demand and effects from the COVID-19 pandemic. The higher demand for materials coupled with supply chain issues including raw material shortages, supplier labor shortages, bottlenecks and shipping constraints showed signs of easing during the three months ended March 31, 2023. However, we expect the supply chain disruptions affecting some of the materials used throughout our installation work to continue throughout 2023. We will continue to prioritize the effective management of our ~~end markets. The remaining increase~~supply chain by our purchasing, logistics and warehousing teams.

In addition, we experience price increases from our suppliers from time to time, including multiple increases over the last few years caused by supply shortages and general economic inflationary pressures. We have experienced unprecedented increased

pricing for fiberglass and foam insulation materials over the last three years but expect manufacturers to slow the pace of price

increases in ~~net revenue of $26.5 million resulted from a variety of factors, including customer and product mix,~~2023. Increased market pricing, ~~variations~~regardless of the catalyst, has and ~~insulation volumes driven by building code requirements. None~~could continue to impact our results of ~~these additional factors was~~operations throughout the remainder of 2023, to the extent that price increases cannot be passed on to our customers. Our selling price increases were able to support most material cost increases in 2022 but we may have more ~~significant than any other. Partially offsetting~~difficulty raising prices in 2023 if housing demand slows. We will continue to work with our customers to adjust selling prices to offset higher costs as they occur. See “COVID-19 Impacts” below for a discussion of the ~~increase in revenue were~~short-term impacts of the ~~effects~~current economic climate on the availability of ~~Hurricanes Harvey and Irma that negatively impacted our productivity during~~ the ~~nine months ended September 30, 2017.~~

materials we install.

Cost of ~~sales~~

~~For~~Labor

Our business is labor intensive and the nine months ended September 30, 2017, cost of sales increased $145.5 million, or 32.7%, to $590.4 million from $444.9 million for the nine months ended September 30, 2016. As a percentage of net revenue, cost of sales increased to 70.9% during the nine months ended September 30, 2017 from 70.7% during the nine months ended September 30, 2016. On a dollar basis, cost of sales included increases from acquired businesses of approximately $100.2 million. Approximately $24.4 million was predominantly attributable to organic growth in the volume of completed jobs in the residential new construction end market. Additionally, cost of sales increased $20.9 million as a result of a variety of factors including customer and product mix, market pricing variations and insulation volumes driven by building code requirements, as well as expense associated with our recently introduced share-based compensation program for certainmajority of our ~~installers. None of these additional factors was~~employees work as installers on local construction sites. We expect to spend more ~~significant than any other.~~

~~Gross Profit~~

~~For the nine months ended September 30, 2017, gross profit increased $58.6 million~~ to $242.7 million from $184.1 million for the nine months ended September 30, 2016. As a percentage of net revenue, gross profit decreased to 29.1% for the nine months ended September 30, 2017 from 29.3% for the nine months ended September 30, 2016 due to the factors discussed above.

~~Operating expenses~~

~~Selling~~

For the nine months ended September 30, 2017, selling expenses increased $6.3 million, or 17.4%, to $42.5 million from $36.2 million for the nine months ended September 30, 2016. As a percentage of net revenue, selling expenses decreased to 5.1% during the nine months ended September 30, 2017 from 5.8% during the nine months ended September 30, 2016. On a dollar basis, the increase in selling expenses was primarily due to higher wages, benefitshire, train and ~~commissions of $5.8 million which supported both organic and acquisition-related growth. The remaining increase of $0.5 million included individually minor increases in several categories necessary~~retain installers to support our growing ~~business.~~

~~Administrative~~

~~For~~business in 2023, as tight labor availability continues within the ~~nine~~construction industry. We offer a comprehensive benefits package unlike many of our local competitors, which will increase costs as we hire additional personnel. Our workers’ compensation costs may continue to rise as we increase our coverage for additional personnel. We obtained leverage on our labor costs in the three months ended ~~September 30, 2017, administrative expenses increased $30.0 million, or 32.4%,~~March 31, 2023 compared to $122.7 million from $92.7 million for the nine months ended September 30, 2016. The increase in administrative expenses is generally related to the cost of completing acquisitions, the ongoing costs associated with these newly-acquired entities and costs to support our growth. Wages and benefits increased $18.9 million, of which $11.8 million was attributable to acquisitions and $7.1 million was to support our growth. In addition, facility costs increased $3.7 million to support both organic and acquisition-related growth and accounting, legal and consulting fees increased $2.3 million primarily to facilitate our transition into accelerated filer status. We also incurred $1.1 million of increased general liability insurance costs2022 due to ~~claims development~~increased selling prices per job. However, inflation and ~~to support growth~~market competition could increase these costs in the near-term.

We have experienced strong employee retention, turnover and $0.9 million of increased information technology-related expenses. The remaining increase in administrative expenses of $3.1 million included individually minor increases in several categories necessary to support our growing business.

~~Amortization~~

For the nine months ended September 30, 2017, amortization expense increased $11.6 million to $19.8 million from $8.2 million for the nine months ended September 30, 2016. The increase in amortization expense was attributable to the additional finite-lived intangible assets recorded aslabor efficiency rates that exceed industry standards. We believe this is partially a result of ~~acquisitions.~~

~~Other expense~~

~~For~~various programs meant to benefit our employees, including our financial wellness plan, longevity stock compensation plan for employees and assistance from the ~~nine months ended September 30, 2017, other expense increased $6.9 million~~Installed Building Products Foundation meant to ~~$11.8 million from $4.9 million for the nine months ended September 30, 2016 due~~benefit our employees, their families and their communities. While improved retention drives lower costs to ~~increased interest expense on higher debt levels to support our growth related to acquisitions.~~

~~Income tax provision~~

During the nine months ended September 30, 2017, we recorded an income tax provision of $15.5 million on our income before income taxes of $45.8 million, or an effective tax rate of 33.8%. This rate was favorably impacted by deductions related to domestic production activities, usage of net operating losses for a tax filing entity which previously had a full valuation allowance, excess tax benefits from share-based compensation arrangementsrecruit and ~~the statute expiring for various uncertain tax positions. The favorable impact was partially~~train new employees, resulting in greater installer productivity, these improvements are somewhat offset by the ~~tax effect~~additional costs of ~~losses incurred by separate companies~~these incentives.

COVID-19 Impacts

The COVID-19 pandemic has caused significant volatility, uncertainty and economic disruption. As the pandemic continues to move toward the endemic stage, the full extent and scope of the impact on our business and industry, as well as national, regional and global markets and economies, depends on numerous evolving factors that we may not be able to accurately predict, including the duration and scope of the pandemic, additional government actions taken in response to the pandemic, the impact on construction activity and demand for homes (based on employment levels, consumer spending and consumer confidence). The fast recovery in residential housing demand helped offset prolonged impacts of the pandemic already

experienced. However, we have experienced supply constraints and material price increases ultimately stemming from the effects of the pandemic across most of the products we install or sell, which ~~no benefit can~~could continue throughout 2023.

In the commercial sector, we have experienced some impact to our commercial business from the pandemic, mainly in the form of project start delays and other inefficiencies. In the future, certain large-scale infrastructure programs may be ~~recognized due~~at risk if the need for such structures decline, project funding declines or as consumer behaviors change in the wake of COVID-19 disruptions to ~~a full valuation allowance on~~ the ~~losses.~~

~~During~~economy and changes to our general ways of life. For example, reduced demand for office buildings and/or educational facilities, decreased airport traffic, or decreased usage of sports arenas or similar commercial structures could impact our commercial end market. As discussed in the ~~nine~~sections above, our commercial business experienced strong sales growth during the three months ended ~~September 30, 2016,~~March 31, 2023, signaling a potential improvement in this market. However, we ~~recorded an income tax provision~~continue to evaluate the nature and extent of ~~approximately $14.8 million~~the COVID-19 pandemic’s impact on our ~~income before income taxes~~financial condition, results of ~~approximately $42.1~~operations and cash flows of the commercial business.

LIQUIDITY AND CAPITAL RESOURCES

Our capital resources primarily consist of cash from operations and borrowings under our various debt agreements and capital equipment leases and loans. As of March 31, 2023, we had cash and cash equivalents of $218.7 million ~~or an effective tax rate~~as well as access to $250.0 million under our asset-based lending credit facility (as defined below), less $5.8 million of ~~35.1%.~~outstanding letters of credit, resulting in total liquidity of $462.9 million. This ~~rate~~total liquidity was ~~favorably impacted~~reduced by ~~deductions related to domestic production activities, the early adoption of ASU2016-09~~ and the release of a valuation allowance due to utilization of net operating losses. The favorable impact was partially offset by separate tax filing entities in a loss position for which a full valuation allowance will be accounted for against the losses, causing no tax benefit to be recognized on the losses.

~~Liquidity and Capital Resources~~

~~Our primary sources of liquidity are~~$1.6 million within our cash and cash equivalents due to a deposit into a trust to serve as additional collateral for our ~~marketable securities~~workers' compensation and general liability policies. This amount can be converted to a letter of credit at our discretion and would reduce the cash generated by our operations. As of September 30, 2017 and December 31, 2016, we had $92.1 million and $14.5 million, respectively, in cash, cash equivalents and marketable securities. Our marketable securities consist primarily of commercial paper, corporate bonds and money market funds. Our investment policy requires the purchase of high grade investment securities and the diversification of asset types and includes certain limits to avoid over-concentration into specific maturities, a specific issuer or a specific class of securities. As of September 30, 2017, we are in compliance with our investment policy. As of September 30, 2017, the financial sector accounted for 100%availability of our ~~total investment portfolio.~~

asset-based lending facility (as defined below). Liquidity may also be limited in the future by certain cash collateral limitations under our asset-based credit facility (as defined below), depending on the status of our borrowing base availability.

We faced unprecedented increases in pricing for certain insulation materials in 2021 and 2022. While pricing for some of these materials continued to increase in the first quarter of 2023, pricing for other products began to moderate. Increased market pricing on materials has a negative impact on liquidity due to the higher prices we must pay for materials.

Short-Term Material Cash Requirements

Our primary capital requirements are to fund working capital needs, operating expenses, acquisitions and capital expenditures, ~~and~~to meet ~~required~~ principal and interest obligations and to make required income tax payments. ~~Our capital~~We may also use our resources ~~primarily consist~~to fund our optional stock repurchase program and pay quarterly and annual dividends. In addition, we expect to spend cash and cash equivalents to acquire various companies with at least $100.0 million in aggregate net revenue each fiscal year. The amount of cash paid for an acquisition is dependent on various factors, including the size and determined value of the business being acquired.

We expect to meet our short-term liquidity requirements primarily through net cash flows from operations, our cash and cash equivalents on hand and borrowings from banks under the Master Loan and Security Agreement, the Master Equipment Agreement and the Master Loan Agreements. Additional sources of funds, should we need them, include borrowing capacity under our asset-based lending credit ~~agreements and capital equipment leases and loans.~~

Since 2012, when housing completions began to increase meaningfully after a previous significant downturn in the residential construction industry, we have experienced improved profitability and liquidity and invested significantly in acquisitions, supported by our cash from operations and our credit agreements. Additionally, we have utilized capital leases and loans to finance the increase in the number of our vehicles and equipment.

In addition, our acquisition of Alpha, which was completed on January 5, 2017, requires us to commit significant resources to the acquisition and ongoing support of Alpha’s business. This acquisition was funded by drawing on our previous credit facility.

As of September 30, 2017, we had no outstanding borrowings under our ABL Revolver and our borrowing availability was $82.1 million after being reduced by outstanding letters of credit of $17.9 million.

facility (as defined below).

We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to support our ongoing operations and to fund our ~~debt service requirements, capital expenditures~~business needs, commitments and ~~working capital~~contractual obligations for at least the next 12 ~~months.~~

months as evidenced by our net positive cash flows from operations for the three months ended March 31, 2023 and 2022. We believe that we have access to additional funds, if needed, through the capital markets to obtain further debt financing under the current market conditions, but we cannot guarantee that such financing will be available on favorable terms, or at all. In the short-term, we expect the seasonal trends we typically experience to vary from historical patterns, with the first half of 2023 experiencing stronger volumes than the second half of 2023 due to the large industry backlog of projects either in process or authorized but not started. This could affect the timing of cash collections and payments during each quarter of 2023.

Long-Term Material Cash Requirements

Beyond the next twelve months, our principal demands for funds will be to fund working capital needs and operating expenses, to meet principal and interest obligations on our long-term debts and finance leases as they become due or mature, and to make required income tax payments. Additional funds may be spent on acquisitions, capital improvements and dividend payments, at our discretion.

On a long-term basis, our sources of capital could be insufficient to meet our needs and growth strategy. We may refinance existing debt or obtain further debt financing in the future to the extent that our sources of capital are insufficient.
In "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the 2022 Form 10-K, we disclosed that we had $1.0 billion aggregate long-term material cash requirements as of December 31, 2022. During the three months ended March 31, 2023, we signed a long-term purchase commitment with variable pricing to purchase 43.7 million pounds of material over the next three years. See Note 16, Commitments and Contingencies, for more information on this commitment. There have been no other material changes to our cash requirements during the period covered by this 10-Q outside of the normal course of our business.
Sources and Uses of Cash and Related Trends
Working Capital
We carefully manage our working capital and operating expenses. As of March 31, 2023 and December 31, 2022, our working capital, including cash and cash equivalents, was $546.3 million and $556.4 million. This decrease was primarily due to the decrease in cash of $10.9 million resulting from the payment of our annual and first quarter dividends and increased acquisition activity. Inventories decreased by $6.5 million as a result of reduced warehoused materials due to easing supply chain shortages and lower sales volume growth. These factors also led to a decrease of $14.4 million in accounts payable which partially offsets the reduction in inventories and cash.
The following table summarizes our cash flow activity (in thousands):
Three months ended March 31,
2023 2022
Net cash provided by operating activities $ 73,833 $ 48,225
Net cash used in investing activities (47,614) (68,718)
Net cash used in financing activities (37,156) (95,558)
Cash Flows from Operating Activities
Our primary source of cash provided by operations is revenues generated from installing or selling building products and the resulting operating income generated by these revenues. Operating income is adjusted for certain non-cash items, and our cash flows from operations can be impacted by the timing of our cash collections on sales and collection of retainage amounts. The COVID-19 pandemic has not had a material impact on our cash collections to date.
Our primary uses of cash from operating activities include payments for installation materials, compensation costs, leases, income taxes and other general corporate expenditures included in net income.
Net cash provided by operating activities increased from 2022 to 2023 primarily due to the increases in net income, changes in certain working capital requirements, income tax expense payment timing and various noncash adjustments, partially offset by the reduction of our accounts payable and other liabilities balances.
Cash Flows from Investing Activities
Sources of cash from investing activities consist primarily of proceeds from the sales of property and equipment and, periodically, maturities from short term investments. Cash used in investing activities consists primarily of purchases of property and equipment, payments for acquisitions and, periodically, purchases of short term investments.
Net cash used by investing activities decreased from 2022 to 2023 primarily due to the purchase of short-term investments during the three months ended March 31, 2022, partially offset by the increase in spending on acquisitions and property and equipment in 2023.
Cash Flows from Financing Activities
Our sources of cash from financing activities consist of proceeds from the issuances of vehicle and equipment notes payable and, periodically, other sources of debt financing. Cash used in financing activities consists primarily of debt repayments, acquisition-related obligations, dividends and stock repurchases.

31

Net cash used by financing activities decreased from 2022 to 2023 primarily due to the repurchase of common stock under our previous stock repurchase plan and higher acquisition-related obligations during the three months ended March 31, 2022. Our net cash used by financing activities was also offset during the three months ended March 31, 2023 by proceeds from vehicle and equipment notes. See Note 12, Stockholders' Equity, for more information on the repurchase of common stock.
Debt

5.75% Senior ~~Secured Credit Agreements~~

~~Our Term Loan Agreement provides for a seven-year~~Notes due 2028

In September 2019, we issued $300.0 million ~~Term Loan. Our ABL Credit Agreement provides for~~in aggregate principal amount of 5.75% senior unsecured notes (the “Senior Notes”). The Senior Notes will mature on February 1, 2028 and interest is payable semi-annually in cash in arrears on February 1 and August 1, commencing on February 1, 2020. The net proceeds from the ~~ABL Revolver of up to approximately $100.0~~Senior Notes offering were $295.0 million ~~with a sublimit up to $50.0 million for~~after debt issuance costs.

The indenture covering the ~~issuance of letters of credit, which may be reduced or increased pursuant to~~Senior Notes contains restrictive covenants that, among other things, limit the ~~ABL Credit Agreement. The borrowing base for the ABL Revolver, which determines availability under the facility, is based on a percentage of the value of certain assets securing the obligations~~ability of the Company and ~~the subsidiary guarantors under the ABL Credit Agreement.~~

~~Proceeds~~certain of our subsidiaries (subject to certain exceptions) to: (i) incur additional debt and issue preferred stock; (ii) pay dividends on, redeem or repurchase stock in an aggregate amount exceeding 2.0% of market capitalization per fiscal year, or in an aggregate amount exceeding certain applicable restricted payment baskets; (iii) prepay subordinated debt; (iv) create liens; (v) make specified types of investments; (vi) apply net proceeds from ~~the Senior Secured~~ certain asset sales; (vii) engage in transactions with affiliates; (viii) merge, consolidate or sell substantially all of our assets; and (ix) pay dividends and make other distributions from subsidiaries.

Credit Facilities ~~were used to repay in full all amounts outstanding~~

In December 2021, we amended and restated our $500 million, seven-year term loan facility due December 2028 (the “Term Loan”) under our credit agreement (the “Term Loan Agreement”), dated as of December 14, 2021 with Royal Bank of Canada as the ~~Credit~~administrative agent and ~~Security Agreement.~~

collateral agent thereunder. The amended Term Loan amortizes in quarterly principal payments of ~~approximately $0.8~~$1.25 million starting on ~~September 30, 2017,~~March 31, 2022, with any remaining unpaid balances due on ~~April 15, 2024, which is~~ the maturity ~~date. Loans incurred~~date of December 14, 2028. The Term Loan bears interest at either the base rate (which approximates the prime rate) or the Eurodollar rate, plus a margin of (A) 1.25% in the case of base rate loans or (B) 2.25% in the case of Eurodollar rate loans. See Note 19, Subsequent Events, for information on a change regarding the reference rate for our Term Loan. Proceeds from the Term Loan were used to refinance and repay in full all amounts outstanding under our previous term loan agreement. We intend to use the ~~ABL Revolver will have a final maturity~~remaining funds to pay for certain fees and expenses associated with the closing of ~~April 13, 2022.~~

the Term Loan and for general corporate purposes, including acquisitions and other growth initiatives. As of March 31, 2023, we had $488.2 million, net of unamortized debt issuance costs, due on our Term Loan.

Subject to certain exceptions, the Term Loan will be subject to mandatory~~pre-payments~~ ~~equal to~~ prepayments of (i) 100% of the net cash proceeds from issuances or incurrence of debt by the Company or any of its restricted subsidiaries (other than with respect to certain permitted indebtedness (excluding any refinancing indebtedness); (ii) 100% (with step-downs to 50% and 0% based on achievement of specified net leverage ratios) of the net cash proceeds from certain sales or dispositions of assets by the Company or any of its restricted subsidiaries in excess of a certain amount and subject to ~~customary~~ reinvestment ~~provisions~~provision and certain other ~~expenses;~~exception; and (iii) 50% (with step-downs to 25% and 0% based upon achievement of specified net leverage ratios) of excess cash flow of the Company and its restricted subsidiaries in excess of ~~$5.0~~$15.0 million, subject to ~~customary~~certain exceptions and limitations.

~~Loans~~

In February 2022, we amended and extended the term of our asset-based lending credit agreement (the “ABL Credit Agreement”). The ABL Credit Agreement increased the commitment under the ~~Senior Secured Credit Facilities bear~~asset-based lending credit facility (the “ABL Revolver”) to $250.0 million from $200.0 million, and permits us to further increase the commitment amount up to $300.0 million. The amendment also extends the maturity date from September 26, 2024 to February 17, 2027. The ABL Revolver bears interest ~~based on,~~ at ~~the Company’s election,~~ either the base rate or the ~~Eurodollar rate~~Secured Overnight Financing Rate ("Term SOFR"), at our election, plus ~~in each case, the Applicable Margin. The Applicable Margin in respect~~a margin of ~~loans under (i) the Term Loan Agreement will be (A) 3.00% in the case of Eurodollar rate loans and (B) 2.00%~~0.25% or 0.50% in the case of base rate loans ~~and (ii) the ABL Facility will be (A)~~or 1.25%, or 1.50% ~~or 1.75% in the~~for Term SOFR advances (in each case ~~of Eurodollar rate loans (based~~based on a measure of availability under the ABL ~~Facility)~~Credit Agreement). The amendment also allows for modification of specified fees dependent upon achieving certain sustainability targets, in addition to making other modifications to the ABL Credit Agreement. In connection with the Term Loan Agreement, we entered into a Third Amendment (the “Third Amendment”) to the ABL/Term Loan Intercreditor Agreement with Bank of America, N.A., as ABL Agent for the lenders under the ABL Credit Agreement, and ~~(B) 0.25%, 0.50% or 0.75% in~~Royal Bank of Canada as collateral agent under the ~~case~~Term Loan Agreement. Including outstanding letters of ~~base rate loans (based on a measure of~~credit, our remaining availability under the ABL ~~Facility).~~

~~In addition, we will pay customary commitment fees and letter~~Revolver as of ~~credit fees~~March 31, 2023 was $244.2 million.

All of the obligations under the Term Loan and ABL ~~Credit Agreement. The commitment fees~~Revolver are guaranteed by all of the Company’s existing restricted subsidiaries and will ~~vary based upon a measure of our utilization~~be guaranteed by the Company’s future restricted subsidiaries. Additionally, all obligations under the Term Loan and ABL ~~Revolver.~~

~~The Senior Secured Credit Agreements each contain~~Revolver, and the guarantees of those obligations, are secured by substantially all of the assets of the Company and the guarantors, subject to certain exceptions and permitted liens, including a ~~number of customary affirmative and negativenon-financial~~ ~~covenants, and~~first-priority security interest in such assets that constitute ABL Priority Collateral, as defined in the ABL Credit Agreement, and a second- priority security interest in such assets that constitute Term Loan Priority Collateral, as defined in the Term Loan Agreement.

The ABL Revolver also provides incremental revolving credit facility commitments of up to $50.0 million. The terms and conditions of any incremental revolving credit facility commitments must be no more favorable than the terms of the ABL Revolver. The ABL Revolver also allows for the issuance of letters of credit of up to $100.0 million in aggregate and borrowing of swingline loans of up to $25.0 million in aggregate.

The ABL Credit Agreement contains a financial covenant requiring the satisfaction of a minimum fixed charge coverage ratio of ~~1.00 to 1.00~~1.0x in the event that we do not meet a minimum measure of availability under the ABL Revolver. The ABL Credit Agreement and the Term Loan Agreement contain restrictive covenants that, among other things, limit the ability of the Company and certain of our subsidiaries (subject to certain exceptions) to: (i) incur additional debt and issue preferred stock; (ii) pay dividends on, redeem or repurchase stock in an aggregate amount exceeding the greater of 2.0% of market capitalization per fiscal year or certain applicable restricted payment basket amounts; (iii) prepay subordinated debt; (iv) create liens; (v) make specified types of investments; (vi) apply net proceeds from certain asset sales; (vii) engage in transactions with affiliates; (viii) merge, consolidate or sell substantially all of our assets; and (ix) pay dividends and make other distributions from subsidiaries.

At ~~September 30, 2017,~~March 31, 2023, we were in compliance with all applicable covenants under the Term Loan Agreement, ABL Credit Agreement and the Senior ~~Secured Credit Agreements.~~

Notes.

Derivative Instruments

As of March 31, 2023, we had three active interest rate swaps and two forward interest rate swaps. On July 8, 2022, we amended the maturity dates of our three active interest rate swaps. Prior to the amendment, we held one interest rate swap with a $200.0 million notional, a fixed rate of 0.51% and a maturity date of April 15, 2030. We also had two interest rate swaps, each with a $100.0 million notional, a fixed rate of 1.37% and a maturity date of December 15, 2028. As amended, each of these three swaps have a maturity day of December 31, 2025 with the other terms unchanged. We also entered into two new forward interest rate derivatives in July 2022. One forward interest rate swap has an effective date of December 31, 2025, a beginning notional of $300.0 million and a fixed rate of 3.09%. The other new forward interest rate swap also has an effective date of December 31, 2025, a beginning notional of $100.0 million and a fixed rate of 2.98%. For further information about our interest rate swaps, see Note 11, Derivatives and Hedging Activities. The assets and liabilities associated with the interest rate swaps are included in other non-current assets and other current liabilities on the Consolidated Balance Sheets at their fair value amounts as described in Note 9, Fair Value Measurements.

LIBOR was used as a reference rate for our Term Loan and our interest rate swap agreements we use to hedge our interest rate exposure. See Note 19, Subsequent Events, for information on a change regarding the reference rate for our interest rate swaps.

Vehicle and Equipment Notes

We ~~are party to a Master Loan and Security Agreement, a Master Equipment Lease Agreement and one or more Master Loan Agreements~~have financing loan agreements with various lenders to provide financing for the purpose of purchasing or leasing vehicles and equipment used in the normal course of business. ~~Each financing arrangement under these agreements constitutes a separate note and obligation.~~ Vehicles and equipment purchased or leased under each financing arrangement serve as collateral for the note applicable to such financing arrangement. Regular payments are due under each note for a period of typically 60 consecutive months after the incurrence of the obligation. ~~The specific terms of each note are based on specific criteria, including the type of vehicle or equipment and the market interest rates at the time. No termination date applies to these agreements.~~

Total ~~gross assets~~outstanding loan balances relating to our master loan and equipment agreements were ~~$66.8 million and $48.7~~$74.1 million as of ~~September 30, 2017~~March 31, 2023 and December 31, 2016, respectively, none of which were fully depreciated as of September 30, 2017 or December 31, 2016, respectively. The net book value of assets under these agreements was $47.3 million and $38.0$73.0 million as of ~~September 30, 2017 and~~ December 31, ~~2016,~~2022, respectively. Depreciation of assets held under these agreements is included within cost of sales on the Condensed Consolidated Statements of Operations and Comprehensive Income.

Letters of Credit and Bonds

We use letters of credit to secure our performance under our general liability and workers’ compensation insurance programs. Our largest workers’ compensation insurance program is considered a high deductible program whereby we are responsible for the cost of claims under approximately $0.8 million. If we do not pay these claims, our workers’ compensation insurance carriers are required to make these payments to the claimants on our behalf. Effective with the plan year beginning October 1, 2015, our largest general liability insurance program is considered a high retention program whereby we are responsible for the cost of claims up to approximately $2.0 million, subject to an aggregate cap of $8.0 million. If we do not pay these claims, our general liability insurance carrier is required to make these payments to the claimants on our behalf. Prior to the claim year beginning October 1, 2015, our largest general liability insurance program has a self-insured retention (“SIR”) of $0.35 million whereby we continue to be responsible for all claims below the SIR and the insurance company continues to be responsible for all liabilities above the SIR. As of September 30, 2017, we had $17.9 million of outstanding letters of credit and $0.3 million in cash securing our performance under these insurance programs. We expect to increase the collateral for these programs by approximately $10.0 million during the fourth quarter of 2017.

~~We occasionally~~may use performance bonds to ensure completion of our work on certain larger customer contracts that can span several months. As of September 30, 2017, we had 56 performance bonds outstanding, totaling approximately $24.1 million. The acquisition of Alpha resulted in a significant increase in the level of contracts in the commercial end market, which typically require a greater value of performance bonds.multiple accounting periods. Performance bonds generally do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. AsIn addition, we occasionally use letters of ~~September 30, 2017, we had 358 permit~~credit and ~~license bonds outstanding, totaling approximately $5.9 million.~~cash to secure our performance under our general liability, workers’ compensation and auto insurance programs. Permit and license bonds are typically issued

for one year and are required by certain municipalities when we obtain licenses and permits to perform work in their jurisdictions.

~~Financial Instruments~~

~~Interest Rate Derivatives~~

The following table summarizes our outstanding bonds, letters of credit and cash-collateral (in thousands):


	As of March 31, 2023
Performance bonds	$	104,126
Insurance letters of credit and cash collateral	68,485
Permit and license bonds	9,703
Total bonds and letters of credit	$	182,314

We have various borrowing facilities which charge interest based on the one month U.S. dollar LIBOR rate plus an interest spread. On May 8, 2017, we entered into two interest rate swaps with a notional amount$58.9 million included in our insurance letters of $100.0 million. During the second quarter of 2017, we began to receive variable rate interest payments based upon one month U.S. dollar LIBOR and in return were obligated to pay interest at a fixed rate of 1.9%. This effectively converted the borrowing rate on $100.0 million of debt from a variable rate to a fixed rate. These derivatives are designated as cash flow hedges for accounting purposes. Accordingly, any effective portion of the unrealized gain or loss on these derivative instruments is reported as a component of other comprehensive income and reclassified into earningscredit in the ~~same line item associated with the forecasted transactions~~above table that are unsecured and ~~in the same period during which the hedged transactions affect earnings. Any ineffective portion~~therefore do not reduce total liquidity. As of the gain or loss on the derivative instrument is recognized into earnings. For additional disclosures of the gain or loss included with other comprehensive income, see Note 8, Derivative and Hedging Activities, included in Item 1 of Part I of this Form~~10-Q.~~ The assumptions used in measuring fair value of the interest rate derivatives are considered level 2 inputs, which are based upon LIBOR and interest paid based upon a designated fixed rate over the life of the swap agreements.

~~Historical cash flow information~~

~~Cash flow from operating activities~~

~~Net cash provided by operating activities of $53.3~~March 31, 2023, we have $1.6 million ~~and $54.6 million for the nine months ended September 30, 2017 and 2016, respectively, consisted primarily of net income of $30.3 million and $27.4 million, respectively, adjusted fornon-cash~~ ~~and certain other items. Included in the net cash provided in 2017 werenon-cash~~ adjustments for depreciation and amortization expense on our expanded base of property, plant and equipment to support our growth totaling $20.7 million as well as for amortization on our growing intangible asset base from acquisitions totaling $19.8 million. These increases were offset by changes to certain assets and liabilities, excluding effects of acquisitions, most notably additional accounts receivable resulting from our growth and additional income tax receivables due to changes in estimated tax payments.

~~Included in the net cash provided in 2016 werenon-cash~~ adjustments for depreciation and amortization expense on our expanded base of property, plant and equipment to support our growth totaling $17.2 million as well as for amortization on our growing intangible asset base from acquisitions totaling $8.2 million. These increases were coupled with other changes in working capital, most notably $6.0 million of additional other liabilities primarily driven by higher accrued wages due to an increase in number of days in the pay cycle to accrue, a $4.7 million change in other assets due primarily to a reduction of various prepaid assets and other receivables and $3.9 million of additional accounts payable resulting from the increase in purchases to support our growth, offset by a reduction of cash of $17.9 million due to increased accounts receivable resulting from our growth.

~~Cash flows from investing activities~~

Net cash used in investing activities was $180.3 million and $55.1 million for the nine months ended September 30, 2017 and 2016, respectively. In 2017, we made cash payments, net of cash acquired, of $131.0 million on business combinations, $25.2 million on purchases of short-term investments and $22.9 million primarily to purchase fleet to support our growing business.

~~In 2016, we made cash payments, net of cash acquired, of $36.4 million on business combinations and $19.2 million primarily to purchase fleet to support our growing business.~~

~~Cash flows from financing activities~~

Net cash provided by financing activities was $179.5 million and $12.7 million for the nine months ended September 30, 2017 and 2016, respectively. Net cash provided in 2017 was primarily due to net proceeds of $190.5 million from our current and prior credit agreements to support continuing acquisitions and $15.8 million of proceeds from notes payable to finance our vehicle purchases. This increase in cash was offset by $8.2 million in debt issuance costs, $7.2 million in principal payments on other long term debt, $5.6 million in principal payments on capital lease obligations and $3.4 million in principal payments on acquisition-related obligations.

Net cash provided in 2016 was primarily due to net proceeds of $11.9 million as a result of amending our credit agreement, resulting in increased borrowing capacity to support operations and continuing acquisitions and $16.3 million of proceeds from notes payable to finance our vehicle purchases. This increase in cash was offset by $6.6 million in principal payments on capital lease obligations, $1.2 million in costs related to amending our credit agreement and $4.1 million in principal payments on other long term debt.

~~Capital expenditures~~

Capital expenditures vary depending on prevailing business factors, including current and anticipated market conditions. Total capital expenditures, including unpaid purchases as of each balance sheet date, were $23.3 million and $21.3 million for the nine months ended September 30, 2017 and 2016, respectively, and primarily related to purchases of vehicles and various equipment to support our operations and increased net revenue. We finance a significant portion of our capital expenditures under the Master Loan and Security Agreement, the Master Equipment Agreement or the Master Loan Agreement, which allow us to benefit from depreciation for tax purposes. These arrangements require us to pay cash up front for vehicles and equipment. We are reimbursed for the upfront cash payments after the assets are financed under the agreements. Of the $23.3 million in capital expenditures during the nine months ended September 30, 2017, $15.8 million was converted to a financing arrangement by September 30, 2017 under the Master Loan and Security Agreement, Master Equipment Agreement and one or more Master Loan Agreements.

~~Capped Call Agreement~~

~~Certain of our stockholders entered~~deposited into a ~~capped call agreement with the underwriters of the secondary offering of~~trust to serve as additional collateral for our ~~common stock completed on June 17, 2014.~~workers’ compensation and general liability policies. This agreement provided these stockholders with an option to call from the underwriters a total of approximately 1.0 million shares of our common stock at a capped price, with settlement required to be made in cash. During 2016, these stockholders exercised the call option with respect to approximately 0.7 million of the shares. In addition, in the fourth quarter of 2016, these stockholders simultaneously cancelled the remaining portion of the call option and purchased a new call option from the underwriters. This new capped call agreement provides these stockholders with the option to call from the underwriters a total of approximately 0.4 million shares of our common stock at a capped price. The option becomes exercisable and expires on April 16, 2018 and will be settled in cash. The capped call agreementcollateral is between these stockholders and the underwriters and does not represent compensation to the stockholders for services rendered to us. The price paid for the option represents the fair value of that transaction and we are not a party to the agreement. Accordingly, we have not recorded any expense related to this transaction.

~~Contractual Obligations~~

~~Our enforceable and legally binding obligations as of September 30, 2017,~~ included in the table ~~below are~~above and can be converted to a letter of credit at our discretion and is therefore not considered to be restricted cash.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based ~~on management’s~~upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Certain accounting policies involve judgments and uncertainties to such an extent that there is a reasonable likelihood that materially different amounts could have been reported using different assumptions or under different conditions. We evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about ~~these obligations, including their duration,~~ the ~~possibility~~carrying values of ~~renewal, anticipated actions by third parties~~our assets and liabilities that are not readily apparent from other ~~factors. Because~~sources. Actual results may differ from these estimates and assumptions ~~are necessarily subjective,~~used in preparation of our ~~actual payments may vary from those reflected in the table:~~

(in thousands)
   Payments due by year (1)
   Total    Remainder of
2017    2018    2019    2020    2021    Thereafter


Long-term debt obligations (2)
   $ 433,469    $ 7,274    $ 29,347    $ 28,917    $ 27,482    $ 21,678    $ 318,771
Capital lease obligations (3)
   14,786    2,017    6,128    4,229    1,606    806    —
Operating lease obligations (4)
   40,246    3,442    12,319    9,856    6,594    3,370    4,665

~~(1)~~

Our unrecognized tax benefits under ASC 740, “Income Taxes,” have been excluded from the table because of the inherent uncertainty and the inability to reasonably estimate the timing of cash outflows.

~~(2)~~

Long-term debt obligations include principal and interest payments on our Term Loan Agreement and ABL Credit Agreement as well as our notes payable to sellers of acquisitions and vehicles purchased under the Master Loan and Security Agreement, the Master Equipment Agreement and the Master Loan Agreements. Long-term debt obligations do not include commitment fees on the unused portion of the ABL Revolver since these fees are subject to change based on the factors described in our Credit and Security Agreement. Interest on seller obligations maturing through March 2025 is estimated using current market rates. See Item 1, Financial Statements, Note 5, Long-Term Debt, for information on our vehicle and equipment notes.

~~(3)~~

We maintain certain production vehicles under a capital lease structure. The leases expire on various dates through November 2021. Capital lease obligations, as disclosed above, include estimated interest expense payments. In determining expected interest expense payments, we utilize the rates embedded in the lease documentation.

~~(4)~~

We lease certain locations, vehicles and equipment under operating lease agreements, including, but not limited to, corporate offices, branch locations and various office and operating equipment. In some instances, these location lease agreements exist with related parties. See Item 1, Financial Statements, Note 11, Related Party Transactions, for further information.

~~Off-Balance~~ ~~Sheet Arrangements~~

~~As of September 30, 2017, other than operating leases and purchase obligations described above, letters of credit issued under the ABL Revolver and performance and license bonds, we had no materialoff-balance~~ ~~sheet arrangements.~~

~~Critical Accounting Policies and Estimates~~

consolidated financial statements. There have been no ~~material~~significant changes ~~for the three months ended September 30, 2017 from the~~to our critical accounting policies and estimates ~~as previously disclosed in our 2016 Form10-K~~ ~~and in our Form10-Q~~ ~~for~~during the three months ended March 31, ~~2017 and June 30, 2017, except~~2023 from those disclosed in the ~~area~~“Management’s Discussion and Analysis of ~~share-based compensation as described below:~~

~~Share-Based Compensation~~

~~Our share-based compensation program is designed to attract~~Financial Condition and ~~retain employees while also aligning employees’ interests with the interests~~Results of Operations” section of our ~~stockholders. Restricted stock awards are periodically granted~~2022 Form 10-K.

Recent Accounting Pronouncements

For a description of recently issued and/or adopted accounting pronouncements, see Note 2, Significant Accounting Policies, to ~~certain employees, officers andnon-employee~~ ~~members of~~ our ~~board of directors under the stockholder-approved 2014 Omnibus Incentive Plan.~~

~~Equity-based awards:~~ ~~Certain of~~audited consolidated financial statements included in our stock awards are deemed to be equity-based with a service condition and do not contain a market or performance condition with the exception of performance-based awards granted to certain officers and performance-based restricted stock units. Fair value of the

non-performance-based awards to employees and officers is measured at the grant date and amortized to expense over the vesting period of the awards using the straight-line attribution method for all service-based awards with a graded vesting feature. This fair value is reduced by assumed forfeitures and adjusted for actual forfeitures until vesting. We also issue performance stock-based awards to certain officers under our 2014 Omnibus Incentive Plan. The performance-based compensation expense is recorded over the requisite service period using the graded-vesting method for the entire award. Performance-based stock awards are accounted for at fair value at date of grant. We also periodically grant restricted stock units to certain employees under the stockholder-approved 2014 Omnibus Incentive Plan. These units convert to shares upon meeting time- and performance-based requirements.

2022 Form 10-K.

Forward-Looking Statements

This ~~report~~Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the federal securities laws, including with respect to the housing market and the commercial market, our operations, economic and industry conditions, our financial and business model, payments of dividends, the impact of COVID-19 on our business and end markets, the demand for our services ~~our financial model,~~and product offerings, trends in the commercial business, expansion of our national footprint and end markets, diversification of our products, our ability to ~~capitalize on the new home construction recovery, our ability to~~grow and strengthen our market position, our ability to pursue and integrate value-enhancing acquisitions, our ability to improve sales and profitability, our efforts to navigate the material pricing environment, our ability to increase selling prices, our material and labor costs, supply chain and material constraints, the impact of COVID-19 on our financial results and expectations for ~~future~~ demand for our ~~services.~~services and our earnings in 2023. Forward-looking statements may generally be identified by the use of words such as “anticipate,” “believe,” “estimate,” “project,” “predict,” “possible,” “forecast,” “may,” “could,” “would,” “should,” “expect,” “intends,” “plan,” and “will” or, in each case, their negative, or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Any forward-looking statements that we make herein and in any future reports and statements are not guarantees of future performance, and actual results may differ materially from those expressed in or suggested by such forward-looking statements as a result of various factors, including, without limitation the adverse impact of the ongoing COVID-19 pandemic on our business and financial results, our supply chain, the economy and the markets we serve; general economic and industry conditions; increases in mortgage interest rates and rising home prices; inflation and interest rates; the material price and supply environment; the timing of increases in our selling prices; the risk that the Company may reduce, suspend or eliminate dividend payments in the future; and the factors discussed in the “Risk Factors” section of our ~~2016~~2022 Form10-K, as the same may be updated from time to time in our subsequent filings with the SEC. In

addition, any future declaration of dividends will be subject to the final determination of our Board of Directors. Any forward-looking statement made by the Company in this report speaks only as of the date hereof. New risks and uncertainties arise from time to time and it is impossible for the Company to predict these events or how they may affect it. The Company has no obligation, and does not intend, to update any forward-looking statements after the date hereof, except as required by federal securities laws.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~There have been no material changes to our exposure~~

We are exposed to market ~~risk since December~~risks related to fluctuations in interest rates on our outstanding variable rate debt. As of March 31, ~~2016.~~

2023, we had $493.8 million outstanding on our Term Loan, gross of unamortized debt issuance costs, no outstanding borrowings on our ABL Revolver and no outstanding borrowings under finance leases subject to variable interest rates. As of March 31, 2023, we had three active and two forward interest rate swaps which, when combined, serve to hedge $400.0 million of the variable cash flows on our Term Loan until its maturity unless extended. As a result, total variable rate debt of $93.8 million was exposed to market risks as of March 31, 2023. A hypothetical one percentage point increase (decrease) in interest rates on our variable rate debt would increase (decrease) our annual interest expense by approximately $0.9 million. Our Senior Notes accrue interest at a fixed rate of 5.75%.

For variable rate debt, interest rate changes generally do not affect the fair value of the debt instrument, but do impact future earnings and cash flows, assuming other factors are held constant. We have not entered into and currently do not hold derivatives for trading or speculative purposes.

LIBOR was used as a reference rate for our Term Loan and our interest rate swap agreements we use to hedge our interest rate exposure. In 2017, the Financial Conduct Authority announced that it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Intercontinental Exchange Benchmark Administration, the administrator of LIBOR, announced in March 2021 its intention to extend the publication of certain LIBOR settings, including the setting we use as a reference rate, to June 2023. It is unclear whether new methods of calculating LIBOR will be established after that date. Our Term Loan Agreement and 2021 interest rate swap agreements include a provision related to the potential discontinuance of LIBOR to be replaced with one or more Secured Overnight Financing Rate (SOFR) values or another alternate benchmark rate. However, if LIBOR ceases to exist after 2023, the interest rates under the alternative rate could be higher than LIBOR. In January 2020, the FASB issued ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (Topic 848) and in January 2021, the FASB subsequently issued ASU 2021-01, Reference Rate Reform - Scope, which clarified the scope and application of the original guidance. The purpose of this guidance is to provide relief for impacted areas as it relates to impending reference rate reform. We elected to apply the hedge accounting expedients related to probability and the assessments of effectiveness for future LIBOR-indexed cash flows to assume that the index upon which future hedged transactions will be based matches the index on the corresponding derivatives. Application of these expedients preserves the presentation of derivatives consistent with past presentation. See Note 19, Subsequent Events, for information on a change regarding the reference rate for our Term Loan and interest rate swaps.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as required by Exchange Act Rules13a-15(e) and15d-15(e). Based on that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of ~~September 30, 2017.~~

March 31, 2023.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended ~~September 30, 2017~~March 31, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Part I, Item 1. Financial Statements, Note ~~12,~~16, Commitments and Contingencies – Other Commitments and Contingencies, for information about existing legal proceedings.

Item 1A. Risk Factors

~~There~~

As of the date of this report, there have been no material changes ~~for the three months ended September 30, 2017~~ from the risk factors as disclosed in our ~~2016~~2022 Form10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

~~None.~~

The following table shows the stock repurchase activity, including shares surrendered by employees in connection with the vesting of restricted stock awards, for the three months ended March 31, 2023:


	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased under the Plans or Programs (2)
January 1 - January 31, 2023 (1)	89	$	87.76	—	$	—
February 1 - February 28, 2023	—	—		—	—
March 1 - March 31, 2023 (1)	94	114.03		—	200.0		million
	183	$	101.25	—	$	200.0	million

(1)Represents shares surrendered to the Company by employees to satisfy tax withholding obligations arising in connection with the vesting of 566 shares of restricted stock awarded under our 2014 Omnibus Incentive Plan.

(2)On February 22, 2023, we announced that our board of directors authorized a new stock repurchase program that allows for the repurchase of up to $200.0 million of our outstanding common stock. The new program replaces the previous program and is in effect through March 1, 2024. We did not repurchase any common stock under our stock repurchase programs during the three months ended March 31, 2023. For further information about our stock repurchase program, see Note 12, Stockholders' Equity.

Item 3. Defaults Upon Senior Securities

There have been no material defaults in senior securities.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~None.~~

The Company’s employment agreement with Jeffrey Edwards, our Chief Executive Officer, President and Chairman, was amended and restated on May 3, 2023, to extend Mr. Edwards’ employment term to April 15, 2026, and after such date, provide for automatic five-year renewals, unless either party provides at least 90 days’ prior notice of non-renewal or unless the agreement is earlier terminated.

Item 6. Exhibits

(a)(3) Exhibits

The following exhibits are being filed as part of this Quarterly Report on Form10-Q:


Exhibit Number						Description

~~Exhibit~~ ~~Number~~ 10.1*#						~~Description~~ Amended and Restated Employment Agreement, dated as of May 3 , 2023, by and between Installed Building Products, Inc. and Jeffrey W. Edwards.
~~31.1~~
31.1*						CEO Certification pursuant to Exchange Act Rule13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.

~~31.2~~ 31.2*						CFO Certification pursuant to Exchange Act Rule13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of ~~2002~~2002.

~~32.1~~ 32.1*						CEO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~2002.

~~32.2~~ 32.2*						CFO Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of ~~2002~~2002.

~~101 (a)~~ 101**						The following financial statements from the Company's Quarterly Report on Form 10-Q for the period ended March 31, 2023, formatted in inline XBRL, include: (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations and Comprehensive Income, (iii) Condensed Consolidated Statements of Stockholders’ Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) the Notes to the Condensed Consolidated Financial ~~statements~~Statements.

104**						Cover Page Interactive Data File (formatted in Inline XBRL ~~Format~~and contained in Exhibit 101).

* Filed herewith.

** Submitted electronically with the report.

# Indicates management contract.

SIGNATURES

Pursuant to the requirements ~~of Section 13 or 15(d)~~ of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: ~~November 6, 2017~~

May 4, 2023


INSTALLED BUILDING PRODUCTS, INC.

By:						/s/ Jeffrey W. Edwards
						Jeffrey W. Edwards
						President and Chief Executive Officer

By:						/s/ Michael T. Miller
						Michael T. Miller
						Executive Vice President and Chief Financial Officer



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	36	35

Item 4. Controls and Procedures	37	35

PART II – OTHER INFORMATION	37	36

Item 1. Legal Proceedings	37	36

Item 1A. Risk Factors	37	36

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	37	36

Item 3. Defaults Upon Senior Securities	37	36

Item 4. Mine Safety Disclosures	37	36

Item 5. Other Information	37	36

Item 6. Exhibits	37

SIGNATURES	39	38


	September 30,			December 31,
	2017			2016
ASSETS
Current assets
Cash and cash equivalents	$	67,008		$	14,482
Investments		25,114			—
Accounts receivable (less allowance for doubtful accounts of $4,846 and $3,397
at September 30, 2017 and December 31, 2016, respectively)		185,470			128,466
Inventories		44,074			40,229
Other current assets		19,599			9,214

Total current assets		341,265			192,391
Property and equipment, net		78,045			67,788
Non-current assets
Goodwill		153,660			107,086
Intangibles, net		140,714			86,317
Othernon-current assets		9,969			8,513

Totalnon-current assets		304,343			201,916

Total assets	$	723,653		$	462,095

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	15,550		$	17,192
Current maturities of capital lease obligations		6,044			6,929
Accounts payable		82,329			67,921
Accrued compensation		25,975			18,212
Other current liabilities		23,703			19,851

Total current liabilities		153,601			130,105
Long-term debt		328,295			134,235
Capital lease obligations, less current maturities		7,509			8,364
Deferred income taxes		13,755			14,239
Other long-term liabilities		23,135			21,175

Total liabilities		526,295			308,118
Commitments and contingencies (Note 12)
Stockholders’ equity
Preferred Stock; $0.01 par value: 5,000,000 authorized and 0 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively		—			—
Common Stock; $0.01 par value: 100,000,000 authorized, 32,524,934 and 32,135,176 issued and 31,862,561 and 31,484,774 shares outstanding at September 30, 2017 and December 31, 2016, respectively		325			321
Additional paid in capital		172,206			158,581
Retained earnings		37,641			7,294
Treasury Stock; at cost: 662,373 and 650,402 shares at September 30, 2017 and December 31, 2016, respectively		(12,769	)		(12,219	)
Accumulated other comprehensive loss		(45	)		—

Total stockholders’ equity		197,358			153,977

Total liabilities and stockholders’ equity	$	723,653		$	462,095


	Three months ended September 30,				Nine months ended September 30,
	2017		2016		2017			2016
Net revenue	$	295,193	$	225,392	$	833,058		$	629,003
Cost of sales		209,612		158,132		590,377			444,909

Gross profit		85,581		67,260		242,681			184,094
Operating expenses
Selling		14,865		13,028		42,541			36,239
Administrative		41,657		31,504		122,679			92,677
Amortization		6,824		2,889		19,790			8,178

Operating income		22,235		19,839		57,671			47,000
Other expense
Interest expense		4,421		1,544		11,456			4,605
Other		83		23		366			248

Income before income taxes		17,731		18,272		45,849			42,147
Income tax provision		5,721		6,723		15,502			14,792

Net income	$	12,010	$	11,549	$	30,347		$	27,355

Other comprehensive income, net of tax:
Unrealized gain (loss) on cash flow hedge, net of tax (provision) benefit of ($21) and $30 for the three and nine months ended September 30, 2017, respectively		32		—		(45	)		—

Comprehensive income	$	12,042	$	11,549	$	30,302		$	27,355

Basic and diluted net income per share	$	0.38	$	0.37	$	0.96		$	0.87

Weighted average shares outstanding:
Basic		31,659,503		31,323,600		31,632,400			31,294,596
Diluted		31,766,881		31,377,790		31,712,515			31,351,991


	Common Stock				Additional Paid In			Accumulated			Treasury Shares						Accumulated Other Comprehensive			Stockholders’
	Shares		Amount		Capital			Deficit			Shares			Amount			Loss			Equity
BALANCE—January 1, 2016		31,982,888	$	320	$	156,688		$	(31,142	)		(616,560	)	$	(11,383	)	$	—		$	114,483

Net Income									27,355												27,355
Issuance of Common Stock Awards to Employees		143,528		1		(1	)														—
Surrender of Common Stock Awards by Employees												(33,091	)		(836	)					(836	)
Share-Based Compensation Expense						1,231															1,231
Share-Based Compensation Issued to Directors		8,760				300															300

BALANCE—September 30, 2016		32,135,176	$	321	$	158,218		$	(3,787	)		(649,651	)	$	(12,219	)	$	—		$	142,533


	Common Stock				Additional Paid In			Retained			Treasury Shares						Accumulated Other Comprehensive			Stockholders’
	Shares		Amount		Capital			Earnings			Shares			Amount			Loss			Equity
BALANCE—January 1, 2017		32,135,176	$	321	$	158,581		$	7,294			(650,402	)	$	(12,219	)	$	—		$	153,977

Net Income									30,347												30,347
Purchase of Remaining Interest in Subsidiary						(1,890	)														(1,890	)
Issuance of Common Stock for Acquisition		282,577		3		10,856															10,859
Issuance of Common Stock Awards to Employees		101,241		1		(1	)														—
Surrender of Common Stock Awards by Employees												(11,971	)		(550	)					(550	)
Share-Based Compensation Expense						4,360															4,360
Share-Based Compensation Issued to Directors		5,940				300															300
Other Comprehensive Loss, Net of Tax																		(45	)		(45	)

BALANCE—September 30, 2017		32,524,934	$	325	$	172,206		$	37,641			(662,373	)	$	(12,769	)	$	(45	)	$	197,358


	Three months ended September 30,						Nine months ended September 30,
	2017			2016			2017			2016
Residential		84	%		89	%		83	%		88	%
Commercial		16			11			17			12

		100	%		100	%		100	%		100	%


	Goodwill (Gross)		Accumulated Impairment Losses			Goodwill (Net)
January 1, 2017	$	177,090	$	(70,004	)	$	107,086
Business Combinations		46,059		—			46,059
Other		515		—			515

September 30, 2017	$	223,664	$	(70,004	)	$	153,660


	As of September 30, 2017						As of December 31, 2016
	Gross Carrying Amount		Accumulated Amortization		Net Book Value		Gross Carrying Amount		Accumulated Amortization		Net Book Value
Amortized intangibles:
Customer relationships	$	118,448	$	35,560	$	82,888	$	80,909	$	27,533	$	53,376
Covenantsnot-to-compete		11,581		4,139		7,442		8,602		2,466		6,136
Trademarks and trade names		56,781		13,097		43,684		37,303		10,498		26,805
Backlog		13,400		6,700		6,700		—		—		—

	$	200,210	$	59,496	$	140,714	$	126,814	$	40,497	$	86,317


Remainder of 2017	$	6,916
2018		22,983
2019		17,928
2020		17,212
2021		16,194
Thereafter		59,481


	As of September 30,			As of December 31,
	2017			2016
Term loans under agreements applicable to respective period, in effect, net of unamortized original issue discount and debt issuance costs of $6,184 and $447, respectively	$	293,066		$	95,803
Delayed draw term loans, in effect, net of unamortized debt issuance costs of $0 and $50, respectively		—			12,450
Vehicle and equipment notes, maturing June 2022 to September 2022; payable in various monthly installments, including interest rates ranging from 2% to 4%		46,713			38,186
Various notes payable, maturing through March 2025; payable in various installments, including interest rates ranging from 4% to 6%		4,066			4,988

		343,845			151,427
Less: current maturities		(15,550	)		(17,192	)

Long-term debt, less current maturities	$	328,295		$	134,235


	2017
Costs incurred on uncompleted contracts	$	70,403
Estimated earnings		38,691

Total		109,094
Less: Billings to date		108,798

Net under (over) billings	$	296


	2017
Costs and estimated earnings in excess of billings on uncompleted contracts	$	5,323
Billings in excess of costs and estimated earnings on uncompleted contracts		(5,027	)

Net under (over) billings	$	296


	Fair value as of September 30, 2017
	Total		Level 1		Level 2		Level 3
Financial assets:
Cash equivalents	$	58,825	$	58,825	$	—	$	—
Investments		25,106		—		25,106		—

Total financial assets	$	83,931	$	58,825	$	25,106	$	—

Financial liabilities:
Derivative financial instruments, net of tax	$	45	$	—	$	45	$	—


	September 30, 2017		December 31, 2016
Included in other current liabilities	$	4,913	$	4,595
Included in other long-term liabilities		8,837		7,052

	$	13,750	$	11,647


	September 30, 2017		December 31, 2016
Included in othernon-current assets	$	1,828	$	1,249


	Common Stock Awards					Performance-Based Stock Awards				Performance-Based Restricted Stock Units
	Awards			Weighted Average Fair Market Value Per Share		Awards		Weighted Average Fair Market Value Per Share		Units			Weighted Average Fair Market Value Per Share
Nonvested awards/units at December 31, 2016		161,174		$	26.36		—	$	—		—		$	—
Granted		101,241			52.00		77,254		41.00		73,880			52.00
Vested		(57,816	)		26.30		—		—		—			—
Forfeited/Cancelled		(1,541	)		36.33		—		—		(475	)		52.00

Nonvested awards/units at September 30, 2017		203,058		$	39.09		77,254	$	41.00		73,405		$	52.00


	September 30, 2017		December 31, 2016
Insurance receivable and indemnification asset for claims under a fully insured policy	$	2,773	$	2,773
Insurance receivable for claims that exceeded the stop loss limit		2		26

Total insurance receivables included in othernon-current assets	$	2,775	$	2,799


									Fair Value		Total		Three months ended September 30, 2017					Nine months ended September 30, 2017
2017 Acquisitions	Date		Acquisition Type		Cash Paid		Seller Obligations		of Common Stock Issued		Purchase Price		Revenue		Net (Loss) Income			Revenue		Net Income (Loss)
Alpha(1)		1/5/2017		Share	$	103,810	$	2,002	$	10,859	$	116,671	$	29,334	$	(271	)	$	87,830	$	190
Columbia		6/26/2017		Asset		8,768		225		—		8,993		3,026		73			3,241		80
Astro		9/18/2017		Asset		8,851		490		—		9,341		264		46			264		46
Other		Various		Asset		9,812		1,042		—		10,854		6,499		84			11,671		366

Total					$	131,241	$	3,759	$	10,859	$	145,859	$	39,123	$	(68	)	$	103,006	$	682


											Three months ended September 30, 2016					Nine months ended September 30, 2016
2016 Acquisitions	Date		Acquisition Type		Cash Paid		Seller Obligations		Total Purchase Price		Revenue		Net Income (Loss)			Revenue		Net Income (Loss)
Alpine Insulation Co., Inc.		4/12/2016		Asset	$	21,151	$	1,560	$	22,711	$	7,957	$	806		$	14,734	$	1,238
Other		Various		Asset		15,276		1,289		16,565		5,519		(200	)		12,283		(664	)

Total					$	36,427	$	2,849	$	39,276	$	13,476	$	606		$	27,017	$	574


	2017															2016
	Alpha			Columbia			Astro			Other			Total			Alpine			Other			Total
Estimated fair values:
Cash	$	247		$	—		$	—		$	—		$	247		$	—		$	—		$	—
Accounts receivable		30,361			990			924			2,137			34,412			3,959			2,080			6,039
Inventories		1,851			704			296			1,014			3,865			700			888			1,588
Other current assets		4,827			8			36			8			4,879			—			12			12
Property and equipment		1,528			659			640			1,144			3,971			656			1,188			1,844
Intangibles		57,100			4,760			4,966			5,939			72,765			12,800			8,492			21,292
Goodwill		38,679			2,211			2,808			2,361			46,059			6,642			5,270			11,912
Othernon-current assets		150			31			—			191			372			—			94			94
Accounts payable and other current liabilities		(18,072	)		(370	)		(329	)		(1,940	)		(20,711	)		(2,046	)		(1,459	)		(3,505	)

Fair value of assets acquired and purchase price		116,671			8,993			9,341			10,854			145,859			22,711			16,565			39,276
Less fair value of common stock issued		10,859			—			—			—			10,859			—			—			—
Less seller obligations		2,002			225			490			1,042			3,759			1,560			1,289			2,849

Cash paid	$	103,810		$	8,768		$	8,851		$	9,812		$	131,241		$	21,151		$	15,276		$	36,427


	Pro forma for the three months ended September 30,				Pro forma for the nine months ended September 30,
	2017		2016		2017		2016
Net revenue	$	297,820	$	272,010	$	853,897	$	771,313
Net income		11,836		12,328		31,544		32,117
Basic net income per share		0.37		0.39		1.00		1.02
Diluted net income per share		0.37		0.39		0.99		1.02


	For the three months ended September 30,				For the nine months ended September 30,
	2017		2016		2017		2016
Net income - basic and diluted	$	12,010	$	11,549	$	30,347	$	27,355

Weighted average number of common shares outstanding		31,659,503		31,323,600		31,632,400		31,294,596
Dilutive effect of outstanding common stock awards after application of the Treasury Stock Method		107,378		54,190		80,115		57,395

Diluted shares outstanding		31,766,881		31,377,790		31,712,515		31,351,991
Basic and diluted net income per share	$	0.38	$	0.37	$	0.96	$	0.87


(in thousands)	Payments due by year (1)
	Total		Remainder of 2017		2018		2019		2020		2021		Thereafter


Long-term debt obligations (2)	$	433,469	$	7,274	$	29,347	$	28,917	$	27,482	$	21,678	$	318,771
Capital lease obligations (3)		14,786		2,017		6,128		4,229		1,606		806		—
Operating lease obligations (4)		40,246		3,442		12,319		9,856		6,594		3,370		4,665