EX-99.3 4 d699237dex993.htm EX-99.3 EX-99.3
Investor
Presentation
March 27, 2014
Exhibit 99.3

Disclaimer
This
presentation
may
contain
statements,
estimates
or
projections
that
constitute
“forward-looking
statements”
as
defined
under
U.S.
federal
securities
laws.
All
statements
other
than
historical
facts
included
in
this
presentation
may
be
forward-looking.
Generally,
the
words
“will,”
“may,”
“believes,”
“expects,”
“forecasts,”
“intends,”
“anticipates,”
“projects,”
“plans,”
“seeks,”
and similar expressions are intended to identify forward-looking statements,
which are not historical in nature.
Forward-looking statements are based on management’s current expectations and involve risks and uncertainties that could cause actual results,
performance or achievements to differ significantly from IBP’s historical results or those implied in forward-looking statements. You should not place
undue reliance on forward-looking statements as a prediction of actual results. IBP expressly disclaims any obligation or undertaking to release publicly
any updates or revisions to any forward looking statements to reflect any change in expectations or events, conditions or circumstances on which any
such statements are based. For a discussion concerning risk factors and further information, please refer to our filings with the SEC.
This presentation includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA. These non-GAAP financial measures
should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. Please refer to the
Appendix of this presentation for a reconciliation of the non-GAAP financial measures included in this presentation to the most directly comparable
financial measures prepared in accordance with GAAP.
2
Investor Presentation

The second largest  new residential insulation installer in the US with over
100 locations serving 46 states
Evolution into an Industry Leader
3
Service area covers more than 50% of total permits issued vs. 24% in 2005
with a #1 or #2 position in greater than half of the markets served
Note: Shaded states are where we have a physical presence. Some dots represent multiple locations
1
Based on internal estimates
2
Based on permits issued in those markets
Investor Presentation
1
2

2013 Product & End Markets
Garage Doors
Rain Gutters
Closets & Shelving
Shower Doors & Mirrors
Insulation
4
Net Revenue by Product –
FY 2013
Focused insulation installation offering, coupled with complementary
products for end markets having significant cyclical upside
Net Revenue by End Market –
FY 2013
Investor Presentation
Insulation
74%
Garage
Doors
8%
Shower
Doors,
Shelving,
and Mirrors
6%
Rain
Gutters
6%
Other
Building
Products
6%
New Single-
Family
73%
Commercial
11%
Repair &
Remodel
10%
New Multi
-
Family
6%

Benefits of a Unique Value Chain Structure
Scale provides a direct link between manufacturers and builders
through a streamlined value chain
Insulation Manufacturer
Purchasing, Logistics,
Installation
Finished Home
Insulation Value Chain
Typical Value Chain
Distributor
Contractor
Wholesaler or Retailer
Finished Home
Building Products Manufacturer
5
Investor Presentation

Critical Position in an Attractive Industry
Primary link between a concentrated manufacturer base and a highly
fragmented customer base
6
North America Insulation
Manufacturers
(2012)
Value to suppliers:
Strong relationships with the largest
manufacturers
Accounts for a meaningful portion of
supplier insulation volume
National scale allows manufacturers to
better plan production schedules
Value to customers:
Full service capabilities eliminate “nuisance”
work for customers
Timely delivery and quality installation of
products ensures projects remain on
schedule
Institutional knowledge of local building
codes and standards
1
Wall Street research estimates for fiberglass insulation
2
Builder Magazine’s 2012 Builder 100 list, based on the total number of home closings
Source: Wall Street Research, US Census Bureau, BuilderOnline.com
Owens Corning
CertainTeed
John Mansville
Investor Presentation
Top 3
D.R. Horton
3%
Pulte Group
3%
Lennar
2%
NVR
1%
KB Homes
1%
Other Top 100
16%
Other
74%
1
Homebuilders by
Closings
(2012)
2
Other

Strong Supplier and Customer Relationships
7
Sells to diverse set of national, regional and
custom builders with little concentration
End-to-end product and service solution adds
value to customers
Additionally provides expertise in local building
codes and national market trends
Key strategic relationships with manufacturers and an attractive, diversified
customer base
Predominately purchases materials direct from
manufacturers
National scale and long-term relationships
enable Company to negotiate attractive pricing
Receives a consistent supply of product from a
stable manufacturing base
Key Strategic Suppliers
Diversified Customer Base
Investor Presentation
•
•
•
•
•
•

•
Maintains local trade names and existing management, strengthening the relationship between
the Company and its customers
•
Business is primarily won or lost at the local level
Local Market Leadership with National Scale
8
is served by 11 different IBP branches across 15 markets   
Leading market positions serviced through local trade names   
Local IBP trade names
Investor Presentation

Experienced and Focused Management Team
9
Strong operational focus and proven understanding of the industry
•
Field management structure is comprised of deeply experienced managers at all levels
•
Team has effectively managed through several housing cycles, established a proven acquisition
strategy, and gained market share
•
Senior management aligned with investors due to meaningful equity ownership in IBP
Position
Average Tenure
Sales staff
10+ years with IBP
Branch managers
10+ years with IBP
Regional presidents
10+ years with IBP
20+ years in the industry (each)
Senior management team
10+ years with IBP
20+ years in the industry
Investor Presentation

Multiple Ways to Drive Growth and Profitability
10
Investor Presentation
1
2
Capitalize on New Home Construction Market Recovery
–
Total
housing
starts
forecasted
to
increase
at
19%
CAGR
from
2013
to
2015E
Pursue Value Enhancing Strategic Acquisitions
–
Attractive opportunities in fragmented market of independent contractors
Continue to Strengthen Market Share Position
–
Same branch sales grew by 30% y-o-y in 2013
–
US housing completions grew 18% in 2013
Maximize Benefits from Industry Trends
–
Enhanced energy efficiency requirements (IECC)
–
A return to historic single-family to multi-family mix
Extract Additional Value from Operating Leverage and National Scale
–
Demonstrated scale economies in Selling and Administrative expense and indirect
operating costs, with Selling and Administrative expense as a % of net revenue
decreasing
260
bps
y-o-y
for
fiscal
2013
1
2
Per Blue Chip consensus housing starts forecast
Adjusting for one-off items: legal settlements, and non-cash compensation expense

US Housing Improving From Cyclical Lows
•
Approximately
80%
of
net
revenue
directly
tied
to
US
residential
new
construction
•
Strong competitive and geographic positions
11
1
Total housing starts averaged from 1968 to 2006
Source: US Census Bureau, Blue Chip consensus housing starts forecast
Total US housing starts forecasted to increase at a 19% CAGR from 2013
to 2015E
Average Historical Starts =
~1.6mm
Investor Presentation
1,848
1,956
2,068
1,801
1,355
906
554
587
609
781
927
1,100
1,300
-
500
1,000
1,500
2,000
2,500
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
1

Note: Market share of new residential construction based on internal estimates
Source: Management, Completions from US Census Bureau
Proven Ability to Drive Growth and Gain Market Share
•
Second largest insulation installer for residential new
construction in the US
•
Our service area covers 55% of permits issued up from
24% in 2005 in the markets we serve
•
Market share gains driven by:
–
Successful acquisition and integration of local
installation operations
–
Quality customer service
–
Cross-selling complementary installation services
–
Adoption of more energy efficient building codes
Net Revenue / US Completions ($/US Completions)
Track record of increasing net revenue per US completion every year
since 2005
12
2005 Market Share
Market Share Today
Investor Presentation
IBP
5%
Others
95%
IBP
16%
Others
84%
$165
$177
$243
$274
$292
$342
$408
$464
$565
2005
2006
2007
2008
2009
2010
2011
2012
2013
$0
$120
$240
$360
$480
$600

Demonstrated Track Record of Successful Acquisitions
90+ successfully integrated acquisitions
13
•
Key components of the acquisition strategy include:
–
Ability to realize synergies within scalable infrastructure
–
Targeting profitable markets
–
Acquiring operations with strong reputation and customer base
–
Maintaining local trade name and existing management team
•
Corporate support allows more focus on customer service
•
Senior management team has been directing the Company’s acquisition strategy for 10+ years
Investor Presentation
Prior to 2003
2003 -
2007
2008 -
2010
2011
-
2014
Developing
Expansion
Downturn
Recovery
21
54
5
13

Clear Strategy for Value Enhancing Acquisitions
Selective
Criteria
Geographic expansion or existing
market tuck-in
Local brand strength
High caliber local management and
labor force
Successful
Integration
Acquired and successfully integrated
over 90 acquisitions
Structured integration process in place
Dedicated corporate team assigned to
oversee integration
Achieve
Synergies
Apply national insulation buying power
Leverage national contracts with large
homebuilders
Value enhancing technology “JobCore”
Corporate administrative support
Fragmented industry allows for geographic expansion through sizable
acquisitions and strengthening of existing branches via smaller tuck-ins
14
Key Areas of Opportunity
Extensive pool of potential acquisition targets with
1,000+ independent insulation contractors across the US
Additional large-market entry opportunities (IBP currently
covers
35
of
the
top
50
MSA’s
1
)
Significant acquisition potential in attractive secondary
markets
Proven Model for Acquisitions
IBP branches
1
MSA, or Metropolitan Statistical Area, is an area that generally
consists of at least one urbanized area of 50,000 or more inhabitants, plus adjacent territory that
has a high degree of social and economic integration with the core area as measured by commuting ties
Investor Presentation

Strong Top-Line Momentum
15
Note: Historical revenue figures not pro forma for acquisitions
Investor Presentation
% growth 
9.9%
4.2%
(16.0%)
(24.4%)
(3.9%)
7.0%
26.3%
43.4%
US Completions
1,979
1,503
1,120
794
652
585
649
765
% growth 
2.5%
(24.1%)
(25.5%)
(29.1%)
(18.0%)
(10.3%)
11.0%
17.9%
% growth
7.3%
37.3%
12.8%
6.6%
17.1%
19.3%
13.7%
21.7%
Net Rev/Compl.
$177
$243
$274
$292
$342
$408
$464
$ 565 

16
Gross Profit
Selling and Administrative
Adjusted EBITDA
Working Capital
Improving Financial Performance
$ in millions
% of net revenue
Investor Presentation
1
Selling and Administrative adjusted for items: 2013 legal settlement of $1.4 million and 2012 non-cash stock compensation of $4.7 million, included in the adjusted EBITDA
reconciliation in the Appendix
2
$57
$74
$110
24.0%
24.6%
25.4%
20.0%
22.5%
25.0%
27.5%
30.0%
$0
$25
$50
$75
$100
$125
2011
2012
2013
$64
$71
$91
26.9%
23.7%
21.1%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
$0
$25
$50
$75
$100
$125
2011
2012
2013
($7)
$6
$26
(2.8%)
2.1%
5.9%
(5.0%)
0.0%
5.0%
10.0%
15.0%
($10)
($5)
$0
$5
$10
$15
$20
$25
$30
2011
2012
2013
$18
$23
$34
7.7%
7.6%
7.8%
5.0%
6.0%
7.0%
8.0%
9.0%
$0
$10
$20
$30
$40
$50
2011
2012
2013
Adjusted EBITDA is a non-GAAP financial measure.  A reconciliation to the most comparable measure prepared in accordance with GAAP is included in the Appendix
1
2

Financial Results
17
($ in millions)
2011
2012
2013
Completions (000's)
585
649
765
Net Revenue
$238
$301
$432
% Growth
7.0%
26.3%
43.4%
Net Revenue/US Completions
$408
$464
$565
COGS
181
227
322
% of Net Revenue
76.0%
75.4%
74.6%
Gross Profit
57
74
110
% Margin
24.0%
24.6%
25.4%
Selling and Administrative
64
71
91
% of Net Revenue
26.9%
23.7%
21.1%
Adjusted EBITDA
($6.6)
$6.2
$25.5
% of Net Revenue
(2.8%)
2.1%
5.9%
Net Capex
(1)
(3)
(3)
% of Net Revenue
(0.4%)
(1.0%)
(0.6%)
Same Branch Sales Growth
6.8%
20.5%
29.6%
Selling and Administrative adjusted for items: 2013 legal settlement of $1.4 million and 2012 non-cash stock compensation of $4.7 million, included in the adjusted EBITDA
reconciliation in the Appendix
Adjusted
EBITDA
is
a
non-GAAP
financial
measure.
A
reconciliation
to
the
most
comparable
measure
prepared
in
accordance
with
GAAP
is
included
in
the
Appendix
Net capex excludes capital leases of $4.5 million, $12.2 million, and $22.3 million as of December 31, 2011 and 2012 and 2013, respectively.
Investor Presentation
1
2   
3     
1
2
3

Appendix

EBITDA and adjusted EBITDA Reconciliation
19
($ in millions)
2011
2012
2013
Net (loss) income
($9.0)
($1.9)
$6.4
Interest expense
2.0
2.3
1.4
0.6
4.2
Depreciation and amortization
9.1
7.9
11.6
EBITDA
$8.5
$8.5
$24.1
Gain on extinguishment of debt
(18.5)
--
--
Recapitalization transaction fees
2.7
--
--
Legal settlement
--
(7.0)
1.4
0.8
4.7
--
Adjusted EBITDA
($6.6)
$6.2
$25.5
1
Consists of interest expense of $3.7 on debt and related-party interest of $3.3. The related-party interest was forgiven in connection with the Recapitalization
2
Excludes income taxes related to discontinued operations
3
Represents the gain recorded in the 2011 Consolidated Statement of Operations related to the extinguishment of certain first lien senior secured indebtedness in
connection with the Recapitalization
4
Represents expenses related to the Recapitalization
5
Represents the settlement in 2012 of a class action lawsuit in which IBP was one of the plaintiffs. The lawsuit related to excess material prices being charged by
certain manufacturers.  Also included in this line are settlement expenses related to two lawsuits against us that were settled in January 2014
6
In 2010, IBP Management Holdings, LLC and, in 2011, IBP Investment Holdings, LLC issued awards of their equity interests to certain employees. Certain of
these employees were granted rights to put such equity awards during a limited period to Jeff Edwards. Accounting guidance requires that the compensation
associated with these equity awards be pushed down to IBP and recorded as non-cash compensation expense
Investor Presentation
3
4
5
7.0
1
Provision
for
income
taxes
2
Non-cash
stock
compensation
6

IBP Management
20
Jeffrey Edwards
Chairman, President &
CEO
•
Joined the Company in 1995
•
Over 25 years of experience in the building supply and homebuilding industry
Michael Miller
Executive VP &
Chief Financial Officer
•
Joined the Company in 2000
•
Previously served as Senior Vice President/Managing Director responsible for
Corporate Investment Banking at Huntington Capital Corp.
Jay Elliott
Chief Operating
Officer
•
Joined the Company in 2002
•
Previously served in several roles in new business development, market
management, and corporate strategic planning at Owens Corning
Jeff Hire
President of External
Affairs
•
Joined the Company in 2008
•
Previously served in numerous management positions at Owens Corning from
1978 to 2008, including General Manager of the Insulation Contractor Segment
of the Residential Insulation Division
Investor Presentation