IBP(IBP) - 2024 Q3 - Quarterly Report

Financial Performance - Net revenue for the three months ended September 30, 2024, increased by 7.7% to $760.6 million compared to$706.5 million in 2023[132]. - Gross profit for the same period rose by 6.1% to $256.8 million, with a gross profit margin of 33.8$265.2 million for the nine months ended September 30, 2024, compared to $250.5 million in 2023[168]. Shareholder Returns - The company returned$30.5 million to shareholders through a 6% increase in quarterly dividends and stock repurchases during the quarter[133]. Expenses and Impairments - Operating expenses increased, with selling expenses rising by 11.9% to $35.8 million and administrative expenses increasing by 12.8$109.2 million[141]. - In Q2 2024, the company recognized an intangible impairment charge of $4.6 million and an asset impairment charge of$0.3 million related to its Installation segment[145]. Tax and Interest - The income tax provision for the three months ended September 30, 2024, was $25.3 million, with an effective tax rate of 26.9$24.8 million and 26.7% in 2023[148]. - Interest expense, net decreased by 20.6% to $7.7 million for the three months ended September 30, 2024, and by 4.8$27.8 million for the nine months ended September 30, 2024, compared to the same periods in 2023[147]. Cash and Liquidity - Cash and cash equivalents as of September 30, 2024, stood at $406.2 million, with no draw on the revolving line of credit[133]. - Working capital increased to$748.1 million as of September 30, 2024, from $723.6 million at the end of 2023, primarily due to higher accounts receivable and inventory[167]. - As of September 30, 2024, the company had total liquidity of$650.4 million, including cash and cash equivalents of $406.2 million[159]. Debt and Financing - The company issued$300.0 million in 5.75% senior unsecured notes, maturing on February 1, 2028, with net proceeds of $295.0 million after debt issuance costs[176]. - As of September 30, 2024, the company had$493.2 million due on the New Term Loan, which matures on March 28, 2031[181]. - The ABL Revolver increased its commitment to $250.0 million from$200.0 million, with a maturity date extended to February 17, 2027[184]. - Total outstanding loan balances under Master Loan and Equipment Agreements were $79.7 million as of September 30, 2024, down from$83.0 million as of December 31, 2023[192]. - The company had $161.4 million in total bonds and letters of credit as of September 30, 2024, including$62.9 million in unsecured insurance letters of credit[194]. - The New Term Loan does not have financial maintenance covenants and bears interest at Term SOFR plus 2.00% per annum[181]. - As of September 30, 2024, the company was in compliance with all applicable covenants under the Term Loan Agreement, ABL Credit Agreement, and the Senior Notes[188]. - The company has three active interest rate swaps hedging $400.0 million of variable cash flows on its Term Loan[189]. - As of September 30, 2024, the company had$497.5 million outstanding on its Term Loan, with no outstanding borrowings on its ABL Revolver or finance leases subject to variable interest rates[199]. - Total variable rate debt exposed to market risks as of September 30, 2024, was $97.5 million[199]. - A hypothetical one percentage point increase in interest rates on variable rate debt would increase annual interest expense by approximately$1.0 million[199]. - The company's Senior Notes accrue interest at a fixed rate of 5.75%[199]. Market Outlook - Forward-looking statements indicate expectations for demand for services and earnings in 2024 and 2025, with potential risks including economic conditions and material pricing[197]. - The company anticipates continued price increases in 2024 due to supply shortages and inflationary pressures, which may impact operational results[155]. - Residential homebuilding market activity increased by 10.1% for single-family starts for the nine months ended September 30, 2024, compared to the same period in 2023[153].