Greetings and welcome to the Installed Building Products Fourth Quarter 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder this conference is being recorded. I would now like to turn the conference over to Jason Niswonger, Senior Vice President, Finance and Investor Relations. Thank you. Please go ahead.

Good morning. We would like to thank you for joining us today for Installed Building Products fourth quarter and full year 2015 earnings conference call. Earlier today we issued a press release on our financial results for the fourth quarter, which can be found in the Investor Relations section on our website. On today's call, management’s prepared remarks and answers to your questions contain forward-looking statements within the meaning of the Federal Securities Laws. These forward-looking statements include the demand for our services, expansion of our national footprint, our ability to capitalize on the new home construction recovery, our ability to strengthen our market position, our ability to pursue value enhancing acquisition, our ability to improve profitability, and expectations for demand for our services for the remainder of 2016. Forward-looking statements may generally be identified by the use of words such as anticipate, believe, expect, intend, 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 statement made by management during this call is not a guarantee of future performance, and actual results may differ materially from those expressed in or suggested by the forward-looking statements as a result of various factors, including, without limitation, the factors discussed in the Risk Factors section of the Company's Annual Report on Form 10-K for the year ended December 31, 2014 as the same maybe updated from time to time in our subsequent filings with the Securities and Exchange Commission. Any forward-looking statement made by management on this call speaks only as of the date hereof. New risks and uncertainties come up 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. In addition, management uses certain non-GAAP financial measures on this call, such as adjusted EBITDA, and adjusted net income from continuing operations. You can find the reconciliation of such measures to the nearest GAAP equivalent in the company's earnings release, which is available on our website. This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer; and Michael Miller, our Chief Financial Officer. I will now turn the call over to Jeff.

Thanks, Jason. Good morning to everyone joining us on today's call. I’m happy to have the opportunity to talk to all of you today about our strong fourth quarter and impressive close to 2015. I will start today's call with some highlights and then as usual turn the call over to Michael Miller, IBP's CFO who will discuss our results in more detail before we take your questions. Things are going very well here at IBP. We had a phenomenal fourth quarter delivering the highest quarterly sales figure in the company's history while continuing to grow the business with three successful acquisitions. The fourth quarter was a perfect example of just how well the business performed in 2015, was a strong year for IBP. We completed acquisitions with more than 100 million and trailing 12 month revenues and our existing operations achieved strong year-over-year growth ending the year with record revenues and earnings. The positive momentum we experienced throughout 2015, was a direct result of delivering on our growth strategy, improvements in the residential housing market, the hard work of our local branch operation and the benefits we are achieving from our well established and efficient platform. I'm very pleased with the team we have in place and where we are headed as the start of 2015. For the full year 2015, we increased our net revenues 28% to a record $663 million compared to $518 million last year driven by strong organic growth in the contribution of our recent acquisitions. The increase in revenues combine with operating efficiencies and leverage translated into significantly higher earnings. For 2015, adjusted EBITDA increased 62% to a record $71 million and adjusted net income from continuing operations were up 65% to $0.89 per diluted share. Acquisitions were meaningful driver of 2015 financial performance…

Thank you, Jeff, and good morning everyone. We continue to make considerable progress, growing revenue and improving profitability. For the full year, our net sales increased 27.9% to $662.7 million compared to $518 million in the prior year, which was mainly driven by higher volume, price mix and our 2015 acquisition. For the fourth quarter, our revenue increased 31.8% to $191.5 million. Our same brand sales improved 14.8%, which was due to an increase in volume in all of our end market and favorable improvement in price and mix. Our same brands single-family sales growth of 18.1% exceeded the 4.6% increase in single family U.S. housing completions during the fourth quarter as a result of their dedication and commitment to quality installation services of our local branches. Fourth quarter 2015 gross margin increased 140 basis points to 28.4% compared to 27% in the prior year quarter. This improvement was primarily due to labor productivity improvement, operating efficiencies, pricing and a more favorable customer and product mix than the prior year quarter. For the 2015 fourth quarter, selling, general and administrative expenses as a percent of net revenue was 19.4% compared to 20.1% for the 2014 period. As percentage of revenues, general and administrative expenses declined sequentially from 14.2% in the third quarter to 14% in the fourth quarter. We expect general and administrative expense as a percent of net revenue to continue to improve overtime as we further scale our operation and benefit from higher sales. As we stated in previous earnings call, it is important to note that is our acquisition strategy continued and as the volume of total acquired business operations become larger, we will incur additional non-cash amortization expenses. For example, in the fourth quarter, we recorded $2.2 million of amortization expense, a 196% increase over the…

Thanks, Michael. It's evident our growth oriented business strategy continues to drive strong financial results. With housing continuing to demonstrate improving trends, we're excited about our opportunities for 2016 and beyond. Operator, please open up the call for questions now.

[Operator Instructions] Our first question comes from the line of Nishu Sood with Deutsche Bank. Please go ahead with your question. Q – Unidentified Analyst: Hi, guys. This is actually [Tim Dallion] [ph] for Nishu. My first question, so, can you guys talk about what you're seeing on the pricing front in terms of announcements and realization?

Hi, Tim this is Michael Miller. Good morning, when you say that, are you saying pricing on our end or pricing from the manufacturing side in terms of the cost of material? Q – Unidentified Analyst: Manufacturing side -- apologies.

So, as you probably know, the manufacturers announced the price increase to be effective in January, and that announcement has been out there for actually quite some time given the delay that occurred this year in terms of the announced price increase in the actual effective date of the price increase. And as we've stated previously, we look at price increases as opportunities for us to work with our customers, to make sure that we have the kind of right mix of pricing on their end as well as pricing on our side and use it as an opportunity to hopefully improve our relative pricing to the overall market. So, what the actual market has realized is consistently different between what we actually realized. Q – Unidentified Analyst: All right, great. Thank you for that. So, I guess my next question is on acquisition front. So, you made several acquisitions last quarter and thus far in 1Q 2016, can you talk about how you source them and how and where you plan to build out on the geographic presence moving forward?

Hi, this is Jeff Edwards, I'll answer the question. We continually even though - I think we've done numerous acquisitions since having gone public at February 2014, there is still quite a number of holes really, as far as we're concerned from a geographic perspective in the map. We're still not as strong as we'd like to be. Obviously in the Southwest United States, those parts of the middle part of the country that have kind of major holes in them and even number of cities where we technically have operations now that are not, where we're not a number one or number two, we don't have the market share that we'd like. So that -- generally speaking along with may be getting into some other product lines kind of drives our acquisition strategy, we have benefited over the last probably 12 months with maybe more inbound calls than we would have had in maybe prior years in terms of potential acquisition, candidate is actually reaching out to us with an interest in kind of joining up with IBP, but in addition to that, our team here on the acquisition side makes outbound call -- [Technical Difficulty]

Ladies and gentlemen, please standby. The conference will resume momentarily. Ladies and gentlemen, thank you standing by. The conference will now resume.

Hi, this is Jeff Edwards, again I'm not quite sure about that cut off – Q – Unidentified Analyst: Hi Jeff, it's Tim. We just caught your sense when you’re talking about – essentially you guys also seems still making outbound calls?

Okay. So I will try to remember exactly what that was in my answer. We do still have geography that we don't feel like we cover adequately either because we have no operations in that particular location or because we don't feel like we have the share or maybe even particular product expertise that we would like to get our contact locally. So we do continue to chase both geography to a degree, share in some places to a degree and also product lines to a degree and we do that by either taking inbound calls which continue to be more than they would have been in the distant past let’s say, and we've got kind of inbound calls that have had really fairly heavy for the last 12 or 18 months. And in addition to that, our team here makes outbound calls really to solve one of those three earlier issues that I kind of spoke to. Q – Unidentified Analyst: Understood. And just quick follow up, I know that you said, yes you’re going to be expanding on the product end. So essentially are you – would you see that more on the – based on product mix or end market mix. Is the commercial end market attractive for IBP?

It can be, so can be existing home market. I mean there is plenty of other places to do the things that we do and for other groups to customers that are attractive to us. So I don't know - and I would also say that there is plenty of other products that we install and even door install now that are attractive to us or could be attractive to us. So I wouldn't want - in any way pigeonholed ourselves into saying that we’re going to concentrate entirely on own or anything like that nor would we concentrate entirely on one customer client.

Yes, I think it's definitely both an end market and end product diversification relative to our strategy at this perspective and of course diversifying the geography as well. Q – Unidentified Analyst : Great. Thank you.

Thank you. Our next question comes from the line of Susan Maklari with UBS. Please go ahead with your question.

Hi. This is actually Ben Miller on for Sue. Can you talk a little bit about the mix this quarter between the large public and non production private builders compared to last year and what that impact – would the impact of this mix was on margin and where do you see this moving other in next year over time.

This is Michael, Ben. So we saw a very good growth both with the national builders, the production builders, as well as under the regional and local builders as well. During the course of the year, we definitely saw a higher level of growth from the regional and local builders which we talked about on previous calls which we think is key as the market continues to recover. If you look at the top 100 builders, they are approximately 30% of the single family - new single family market. So it seems strange among that 70% of the market, we think is a very good sign for the overall market and we did see an acceleration of that growth rate with the local and regional builders in the fourth quarter relative to last year. So, we feel good about that aspect of the business quite frankly. And that is very positive - that’s a positive for us. What we love the national builder business, again we think the local and regional builders are really important to a healthy and stable recovery in the housing market on the single family side.

Okay, great. And then maybe could you talk a little bit about your leverage and what levels you feel are appropriate either on a net debt-to-EBITDA or capital basis? And how quickly would you be able to delever if we come into a less supportive macro environment?

It's a good question. Right now we are levered a little bit less than two times. One thing that I would caution you when you look at our leverage, what you're not seeing is the pro forma effect of acquired EBITDA. So our true leverage is lower on a debt-to-EBITDA basis using the acquired EBITDA revenue that we have that hasn't yet been in our reported numbers. From an overall leverage perspective given where we are in the cycle, we feel very comfortable that we have plenty of flexibility to increase our leverage to continue to do acquisition. Because as we demonstrated, that leverage comes down very quickly as we successfully integrate those acquisition and as the existing business continues to grow and generate good cash flows and good EBITDA for the business. That being said, if there was a - which we don't see that happening here in the near term at all, but if there was a flattening in the housing market, if the business generates a lot of cash flow and we are very confident in our ability to delever very quickly in either a flat or declining housing market.

Great, thank you.

I just wanted to follow up on that. That being said, where we are now at two times or even if we bring that leverage up to continue to do acquisitions, we believe we are very conservatively levered for a company, even a cyclical company.

Okay.

Thank you. And our next question comes from the line of Scott Rednor with Zelman & Associates. Please go ahead with your question.

Hi, good morning. Question on the topline. If we look at the same-store sales growth, the 14.8%, which showed great acceleration from 3Q, you guys report that the completion numbers weren't much changed quarter-over-quarter. So just want to get your temperature there on what you think drove the acceleration in your core performance quarter-over-quarter?

That's a good question. I think part of it is the lag in the actual data that comes from the U.S. Census Bureau. So Scott as you know, we use completion, but it's not necessarily a perfect measurement tool. And I think the U.S. Census Bureau statistics are growing to eventually catch up with what's happening fundamentally within the home building industry. I mean not just us. And I would also say that we feel it's good for business, we know the business on the same-branch basis perform exceedingly well during the fourth quarter. And we are continuing to feel very good about 2016 and what we are overseeing on the same-branch basis as well.

This is Jeff, but it's blocking and tackling in the field. And so we owe it to everybody in the field doing a great job and take care of customers; and therefore doing better than market otherwise have to do.

Yes. If you look at just the delta between our single-family same branch sales growth relative to single-family completion in the quarter and we were 13.5% above the actual market growth and for the year we were 9.1% above the actual market growth, which was an acceleration both in the fourth quarter of '14 and the full year of '14. So as Jeff said, we are performing well at the local level and feel very good about that and feel that momentum is continuing.

So to kind of paraphrase you guys are saying, to the best you could quantify some of its market and some of its shares as we think about 3Q to 4Q in terms of improvement.

Yes.

Okay. And then - yes, go ahead.

I'm just going to clarify. And it's getting the right share, not just more share. So it's making sure that we are working with the right customers that are in the right subdivision and doing that blocking and tackling everyday that Jeff was talking about.

And when you guys think about the delays in the construction cycle over the extension that's been well publicized I think by building product companies and home builders. Do you think that that's a catalyst for you guys to increase share?

Yes, absolutely. Anytime that there is an increased level, our ability to service that demand gives us the opportunity to make sure that we have the right market share mix within a market. So to the fact that there is this sort of pent up demand, which we believe is starting to get alleviated, which may not be fully reflected yet in the U.S. Census Bureau numbers. But that demand provides us the greater opportunity to continue to work with our customer base to make sure again that we have that the right market share in a market.

And then just lastly for either of you but - Jeff your comments on the acquisition, understanding you don't want to pigeonhole yourself. But at the same point, how do you balance going into new-end channels and new product categories without sacrificing kind of golden goose you guys have on the residential fiberglass side.

We have - we've never really gotten into this in super great detail, but we have certain locations that are in every product that we install and really to every market in terms of end market that we install into. So it is definitely not an - honestly, that's what we as a company would aspire or have all of our branches aspire to. To do everything we can install, something that makes sense in that particular market to our entire customer base, right. And so I don't really think that they need to do or it does, we have actual, kind of living - leading branches that are in all of these process of doing very well then with very complex customer base. So I don't know that they - necessarily, it doesn't mean it's easy and you can't get into all of them at once, but over time all of it kind of mature footprint and in product line for IBP would be that kind of have full geographic coverage with full-blown product line.

And a lot of time, Scott, when we are strategically acquiring a non insulation installers, it typically is a way for us to gain a customer base in a certain region that we then can cross-sell them insulation as well. So we did that up in Vermont early or late last year and it's a great opportunity for us. So while clearly new single family fiberglass insulation is going to be our primary focus from an acquisition perspective. There are particular opportunities where it does make sense to pick up individual and product lines in individual markets depending upon our competitive opportunities there.

All right. Thanks guys.

Our next question comes from the line of [indiscernible] of Stephens. Please go ahead with your questions.

Good morning, guys. This is Drew Lipke on Tray. First question I had was just on the acquisition contribution. I realize you guys seek purchasing synergies on day one. And these acquisitions do bring initially selling and administrative expense. How quickly does it take for you to get this selling and admin cost in line with your corporate average? Or really how quickly can you leverage acquisition of G&A from time and amount of acquisition?

We get it - it basically gets levered at day one. And I think that evidenced by the fact that you have such strong - currently such strong EBITDA margins from the acquired businesses. So their direct margins or simple margins are not that different from the overall business. But we get good leverage from a selling G&A perspective from those businesses.

Okay. And then on the labor piece, it's been an issue for the home building industry. You guys have done a good job in navigating this type of labor environment. I know your installers are less skilled and paid based on an install amount. But starting it more about wage pressures broadly speaking, where do you stand with your installer labor force? And what are you seeing in terms of installer productivity and sort of concentration of work there?

We continue to see as we have said on past calls, improvement in our labor efficiencies. If you look over the last 16 quarters, our labor percentages were the lowest in the fourth quarter '15 than they have been in any of those past 16 quarters. So we are continuing to see improvements. Now, that doesn't mean that the installers are getting paid less, they are actually getting paid more overseeing higher levels of productivity from them and continuing to see that improvement. We feel very good fundamentally that we are continuing to see again sequential decline in our labor percentages as the market continues to recover, which is exactly what we would have expected to have happen.

In terms of hiring that's what we do. We hire every day. Installers, we hire installers even during the downturn. So it's not any different than most other construction trades. So it's just a confidence that you develop and you deal with the labor forces out there. At this point, not to say that it's easy, but we feel confident of our ability to source installers and more than keep up with the pace that we are on.

Okay, that’s helpful. And then just one last one from me. What sort of benefit did you see in 2015 from lower diesel and lower gasoline cost?

It's definitely been a benefit, I mean we have a fairly sizeable fleet, but we haven't really broken out I think the floor that specific number, but it's definitely had been a benefit as it has been to any company that buys fuel.

All right. Thanks guys, best of luck.

Thank you. And our next question comes from the line of Ken Zener with KeyBanc. Please proceed with your question.

Good morning gentlemen. I appreciate how you guys broke out the same-store sales in the press release, that's very useful. I'm referring to slide three in your debt where you say local presence on a national scale. One of the things that's come up in my conversations with investors is kind of perhaps how you might be over or under index to some states. So obviously, we talk about the public homebuilders, but could you give us a sense like Texas, what percent of sales it is, California or Florida. Just so we can get a sense of how your state exposure might be different. Obviously given your Midwest exposure, you probably are under index to some of those larger state that get headline numbers.

Yes. That's exactly right. We are - because of our great presence in the Great Lakes, Northeast and Midwest, we are a little under indexed like that to some of the other states that other people talk about, which is a great opportunity for us as a company, because even if you - I know a lot of people are talking negatively about Houston these days, but clearly Houston long term is a great housing market. For us Houston is less than 3% of revenue. The state of Texas is about 8% of revenue. But you have to look at that in the context of some other parts of the country that you talked about where Southern California is about 5% of revenue, but at the same time you look at market like Cleveland, Ohio, which is approximately 4% of revenue. So we are very - we do you have that broad geographic diversification across the country without any concentration in any one given market.

Okay. And then looking at your break out at the end of the press release. If we would add back amortization, one can see that your EBITDA margins are pretty similar to your existing branches. Could you just walk us through that amortization component, I mean how long does that general - if you were to stop the acquisition, how long will that take that to that amortization to go away? Is it three years? Is it - just so we get a sense of - I know you guys are having in your K but –

Ken, this is Jason. Generally that amortization is going to run over different years based on what type of tangible, but generally in five to seven years.

And could you refer to - we don't - manufacturers have asked for pricing. Owens Corning talked about it being more moderate and it has some of those related to its own production issues. But how should we think about your conversation around the other 20% to 25% incremental margins on existing sales relative to let's say a year or two ago how you would have thought price gains would have contributed to your ability to expand the EBITDA margin? How does that change, I guess?

It hasn't. We still feel very comfortable about full year incremental EBITDA margins of 20% to 25% on the organic revenue growth. And we think that of rising demand environment presents an opportunity for us to continue to improve our customer mix and our price mix which then leads to what you are seeing is continued increase in our gross margin and profitability.

And would you assume the relationship between your price mix and volume? Would shift at all in 2016? Thank you very much.

The price mix, volume price mix is going to change quarter-to-quarter depending upon what's happening in the overall market. So I think the volume number and our ability to continue to grow which we have volume above the permits growth -- excuse me the completions growth, we don't think that mix is going to necessarily or our volume is going to change relative to the overall market. But that being said as a company, we are not focused on volume, we are focused on profitability. So getting increased sales through better price mix is something that we look to each and every day.

Thank you.

[Operator Instructions] Our next question comes from the line of Matt McCall with BB&T. Please proceed with your questions.

Thanks, good morning guys. So may be follow up on one of last questions, Mike do you have the price mix for Q1 through Q3 of last year? If you could share.

We disclosed it. I don't have it right in the front of me.

Oh, you did. I'm sorry if I missed it.

It should be in our previous disclosures, not in the current disclosure.

Yes. In the MD&A discussion as well as in the press release for each quarter.

Okay. My bad, missed that anyone. All right. I guess is there anything you said that for the full year the trend should be the same. Is there anything we should look out for from a seasonal perspective that would make next year look at normal kind of quarter-to-quarter?

Now, let's say that 2016 should be -- and obviously there is the typical construction season. I would say this year seems little interesting. In that we've had pretty modest or mild winter in the Midwest and in the Northeast. And I do think that we are seeing a smoothing out of this lag that's been created last year when you see the delta between start and completion. So I think there might be a little bit of a smoothing this year relative to the normal seasonality. But we would expect that as in excluding acquisitions that you would have a typical season: third quarter is our highest quarter then fourth quarter, then second quarter and then first quarter. And all the indications are right now from everything we have seen from our customers and everything that we have read that it looks like it's going to be a very strong spring-selling season. So we believe that's a positive and we believe its positive that we have had this sort of mildest winter, which we believe is going to help abate some of the labor constraints that the industry saw in late 2015, middle 2015.

Okay.

It feels like we are setting up for a very good '16 for the industry.

Perfect, thank you. So the detail on the organic versus inorganic which you gave for full year is helpful. You talked about 20% to 25%. You had 23% for the year right in middle of that for the organic. It's just a couple hundred basis points, but you did 25.5% last year. Is there anything that has structurally changed that now 20% to 25% makes more sense than -- and 25.5% was anomaly in some way?

No, not necessarily. As the reason we provided the range of 20% to 25% is because it falls within the range and that can depend upon product mix, geographical mix in terms of where we are getting that organic revenue growth from. So we feel very good. I mean the 23.3% is obviously above the middle of the range that we have talked to people about. And fundamentally, we feel great about the business. When we look at just the field operations of the business, we have a tendency to focus on what we call a direct margin, which is basically the margin that comes after we paid for material and then the labor, the installed labor on a job. And right now that direct margin is the highest that's been in the past 16 quarters. It improves sequentially from the third quarter by 80 basis points and was up from the fourth quarter of last year by 110 basis points. So fundamentally from an operational perspective at the blocking and tackling direct margin level, we are very, very confident about the business. And you'll agree that in the past 16 quarters we have the highest direct margins we ever had.

And Mike, when you think about that number and you look at the components of what would drive that improved margin is it -- what would you point to first labor savings, material savings, better enterprising? What's the driving force right there? A – Michael Miller: It's all of those and customer mix. So because of our -- because of the job that our team is doing at a local level, we have the ability to make sure that we are working with the best customers, the customers that have the right subdivision that are willing to pay us the fair price for our services. And we hopefully are consistently providing them excellent customer service. And we think that's key to continuing to improve the -- again that direct margin which is fundamentally how well we are operating at a local level.

And if you look at the '16 trends and your expectations about mix shift whether be from M&A or out growth from certain categories, what does it tell you about the trend at that direct margin? Should we continue to see that moving that in the right direction? Is customer mix going to be the best driver as moving forward again? A – Michael Miller: Customer mix is definitely important. We think that at '16 quarter trend is definitely indicative of our ability to continue to see improvement in the direct margin. And as we have stated multiple times on these quarterly calls, we believe as we go towards stabilization that we are able to get to a mid-teens EBITDA margin. And we believe that one of the ways we do that and part of the way we get there is by continuing to improve direct margin. And if you look at our adjusted EBITDA margin for 2015 means for the full year we were at 10.7% so double digits and we are pretty closely getting to that mid-teens EBITDA margin. And when you look at the contribution of the quality acquisitions that we are doing that is 15.5% incremental margin, they help us even get there faster to that mid-teens EBITDA margin. So we have never felt better about the business quite frankly. When you look at record revenues, record quarter both on revenues and on earnings and the continued improvement in our margins, we fundamentally feel very optimistic about the business. A – Jeff Edwards: Busy for us is better. So I mean when we say we are moving towards stabilization, what we are really saying is that when we are busy at the branch level, we've got lot opportunity that either directly and immediately drop more money in the bottom line and were towards the better direct margin or we have choices that we can make that let us drive them.

Okay, thanks guys.

Thank you. This concludes today's question and answer session. I'd like to turn the floor back to management for closing remarks.

Great. I'll just like to thank everyone for your questions and we look forward to our next quarterly update and conservation. Thank you.

Thanks everyone.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.