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What changed in Installed Building Products, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Installed Building Products, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+324 added−325 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-22)

Top changes in Installed Building Products, Inc.'s 2024 10-K

324 paragraphs added · 325 removed · 277 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

69 edited+9 added−10 removed85 unchanged
Biggest changeWe have the ability to meet our customers’ diverse needs by customizing shower enclosures by size and style according to their specifications, including framing, hardware and glass options. We design and install closet shelving systems in select markets utilizing some of the highest quality products available from national brands. We also offer standard and custom designed mirrors for our customers.
Biggest changeShower Doors, Closet Shelving and Mirrors Some of our locations install a variety of shower enclosures, ranging from basic sliding door designs to complex custom designs. We have the ability to meet our customers’ diverse needs by customizing shower enclosures by size and style according to their specifications, including framing, hardware and glass options.
We seek to work with the most profitable and efficient builders and commercial general contractors in our markets; • recruit, develop and retain an exceptional workforce by investing in our employees and our communities and promoting a family-oriented culture; 5 • capitalize on our ability to cross-sell products through existing markets as well as new markets entered as a result of organic expansion and acquisitions.
We seek to work with the most profitable and efficient builders and commercial general contractors in our markets; • recruit, develop and retain an exceptional workforce by investing in our employees and our communities and promoting a family-oriented culture; • capitalize on our ability to cross-sell products through existing markets as well as new markets entered as a result of organic expansion and acquisitions.
Of our top 20 customers, 18 represent homebuilders and two represent commercial customers. We have long-term relationships with many of our customers and have served most of our top 20 customers for at least two decades. BACKLOG For contracts that are not complete at the reporting date, we recognize revenue over time utilizing a cost-to-cost input method.
Of our top 20 customers, 18 represent homebuilders and two represent commercial customers. We have long-term relationships with many of our customers and have served most of our top 20 customers for at least two decades. 7 BACKLOG For contracts that are not complete at the reporting date, we recognize revenue over time utilizing a cost-to-cost input method.
Our management team supports the development of our existing workforce by establishing a culture of employee engagement, employee appreciation and the opportunity for promotion from within for many leadership positions. We believe this provides increased retention and promotes a long-term focus to our operations. We respect and support the diversity of all people within our workforce.
Our management team supports the development of our existing workforce by establishing a culture of employee engagement, employee appreciation and the opportunity for promotion from within for many leadership positions. We believe this provides increased retention and promotes a long-term focus to our operations. We respect and support all people within our workforce.
Department of Transportation, or DOT, which has broad administrative powers. We are also subject to safety requirements governing interstate operations prescribed by the DOT. In addition, vehicle dimension and weight and driver hours of service are subject to both federal and state regulation. Our operations are also subject to the regulatory jurisdiction of the U.S.
Department of Transportation ("DOT") which has broad administrative powers. We are also subject to safety requirements governing interstate operations prescribed by the DOT. In addition, vehicle dimension and weight and driver hours of service are subject to both federal and state regulation. Our operations are also subject to the regulatory jurisdiction of the U.S.
Insulation is a critical component in reducing energy usage and greenhouse gas emissions. The Department of Energy, or DOE, states that over half of the energy used in the average American home is for heating and cooling due to many homes not having proper insulation.
Insulation is a critical component in reducing energy usage and greenhouse gas emissions. The Department of Energy ("DOE") states that over half of the energy used in the average American home is for heating and cooling due to many homes not having proper insulation.
Our current strategic objectives include: • capitalize on the new residential and commercial construction markets; • continue to strengthen our market share position by working with the best customers.
Our current strategic objectives include: 5 • capitalize on the new residential and commercial construction markets; • continue to strengthen our market share position by working with the best customers.
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. IBP was formed as a Delaware corporation on October 28, 2011, however our business began in 1977 with one location in Columbus, Ohio.
In addition, three regional distribution operations serve the Midwest, Mountain West, Northeast and Mid-Atlantic regions of the United States, and we operate a cellulose manufacturing facility. IBP was formed as a Delaware corporation on October 28, 2011, however our business began in 1977 with one location in Columbus, Ohio.
We had zero fatalities in 2021, 2022 and 2023, and are continually finding ways to improve our practices throughout the organization in order to improve the health and safety of our workforce. CUSTOMERS We serve a broad group of national, regional and local homebuilders, multi-family and commercial construction firms, individual homeowners and repair and remodeling contractors.
We had zero fatalities in 2022, 2023 and 2024, and are continually finding ways to improve our practices throughout the organization in order to improve the health and safety of our workforce. CUSTOMERS We serve a broad group of national, regional and local homebuilders, multi-family and commercial construction firms, individual homeowners and repair and remodeling contractors.
This diversity in turn contributes to enhanced profitability as compared to branches in our newer, less developed markets. Given the current economic uncertainty, interest rate volatility and inflationary environment, we can provide no assurance that the positive trends reflected in our recent financial and operating results will continue in 2024.
This diversity in turn contributes to enhanced profitability as compared to branches in our newer, less developed markets. Given the current economic uncertainty, interest rate volatility and inflationary environment, we can provide no assurance that the positive trends reflected in our recent financial and operating results will continue in 2025.
Rain gutters are typically constructed from aluminum or copper and are available in a wide variety of colors, shapes and widths. They are generally assembled on the job site using specialized equipment. The installation of rain gutters comprised approximately 4% of our net revenue for the year ended December 31, 2023.
Rain gutters are typically constructed from aluminum or copper and are available in a wide variety of colors, shapes and widths. They are generally assembled on the job site using specialized equipment. The installation of rain gutters comprised approximately 4% of our net revenue for the year ended December 31, 2024.
We have diversified our end customer demographic from the year ended December 31, 2013, when revenue from the commercial end market comprised approximately 11% of revenues, to the year ended December 31, 2023 when it comprised 16% of revenues. Our exposure to commercial end markets diversifies our customer base and makes our business less dependent on residential new construction.
We have diversified our end customer demographic from the year ended December 31, 2013, when revenue from the commercial end market comprised approximately 11% of revenues, to the year ended December 31, 2024 when it comprised 16% of revenues. Our exposure to commercial end markets diversifies our customer base and makes our business less dependent on residential new construction.
Our top ten customers, which are primarily a combination of national and regional builders, accounted for approximately 15% of net revenue for the year ended December 31, 2023. We install a variety of products in multiple markets for our largest customers, further diversifying our relationship with them.
Our top ten customers, which are primarily a combination of national and regional builders, accounted for approximately 15% of net revenue for the year ended December 31, 2024. We install a variety of products in multiple markets for our largest customers, further diversifying our relationship with them.
Since 1999, we have successfully completed and integrated over 190 acquisitions, which has allowed us to generate significant scale and to diversify our product offerings while expanding into some of the most attractive new construction markets in the United States.
Since 1999, we have successfully completed and integrated over 200 acquisitions, which has allowed us to generate significant scale and to diversify our product offerings while expanding into some of the most attractive new construction markets in the United States.
Department of Labor’s Occupational Safety and Health Administration, or OSHA, which has broad administrative powers regarding workplace and jobsite safety.
Department of Labor’s Occupational Safety and Health Administration ("OSHA") which has broad administrative powers regarding workplace and jobsite safety.
("AMD") is headquartered in Spring Valley, Minnesota and has eight locations which includes distribution centers and bonded warehouses. These locations service several states throughout the Midwest and Mountain West. AMD distributes products and materials purchased wholesale from manufacturers such as spray foam insulation, metal building insulation, residential insulation, and mechanical and fabricated Styrofoam insulation.
("AMD") is headquartered in Spring Valley, Minnesota and has eight locations including distribution centers and bonded warehouses. These locations service several states throughout the Midwest and Mountain West. AMD distributes products and materials purchased wholesale from manufacturers such as spray foam insulation, metal building insulation, residential insulation, and mechanical and fabricated Styrofoam insulation.
We have successfully diversified our product offering from the year ended December 31, 2013, when insulation installation comprised approximately 74% of revenues, to the year ended December 31, 2023, when it comprised 60% of revenues.
We have successfully diversified our product offering from the year ended December 31, 2013, when insulation installation comprised approximately 74% of revenues, to the year ended December 31, 2024, when it comprised 60% of revenues.
The proximity of certain of our branch locations to insulation manufacturers’ facilities provides additional mutual benefits, including opportunities for cost savings and joint planning regarding future production. Due to the limited number of large fiberglass insulation manufacturers, our three largest suppliers in the aggregate accounted for approximately 35% of all material purchases for the year ended December 31, 2023.
The proximity of certain of our branch locations to insulation manufacturers’ facilities provides additional mutual benefits, including opportunities for cost savings and joint planning regarding future production. Due to the limited number of large fiberglass insulation manufacturers, our three largest suppliers in the aggregate accounted for approximately 37% of all material purchases for the year ended December 31, 2024.
Backlog is not a guarantee of future revenues 7 as contractual commitments may change. There can be no assurance that backlog will result in revenues within the expected timeframe, if at all. We estimate backlog was $115.7 million as of December 31, 2023 and we estimated it to be $162.3 million as of December 31, 2022.
Backlog is not a guarantee of future revenues as contractual commitments may change. There can be no assurance that backlog will result in revenues within the expected timeframe, if at all. We estimate backlog was $126.3 million as of December 31, 2024 and we estimated it to be $115.7 million as of December 31, 2023.
While typically having the highest insulating value per inch and sealing effectiveness of all insulation materials that we offer, spray foam is also typically the most expensive on an installed basis. Spray foam insulation accounted for approximately 18% of our insulation installation sales for the year ended December 31, 2023.
While typically having the highest insulating value per inch and sealing effectiveness of all insulation materials that we offer, spray foam is also typically the most expensive on an installed basis. Spray foam insulation accounted for approximately 16% of our insulation installation sales for the year ended December 31, 2024.
The installation of these products collectively comprised approximately 3% of our net revenue for the year ended December 31, 2023. Window Blinds Some of our locations install different types of window blinds, including cordless blinds, shades and shutters. The installation of window blinds comprised approximately 2% of our net revenue for the year ended December 31, 2023.
The installation of these products collectively comprised approximately 3% of our net revenue for the year ended December 31, 2024. Window Blinds Some of our locations install different types of window blinds, including cordless blinds, shades and shutters. The installation of window blinds comprised approximately 3% of our net revenue for the year ended December 31, 2024.
Fiberglass and cellulose insulation accounted for approximately 82% of our insulation installation sales for the year ended December 31, 2023. • Spray Foam Insulation – Spray foam insulation, which is generally a polyurethane foam, is applied at a job site by mixing two chemical components together in specialized application equipment.
Fiberglass and cellulose insulation accounted for approximately 84% of our insulation installation sales for the year ended December 31, 2024. • Spray Foam Insulation – Spray foam insulation, which is generally a polyurethane foam, is applied at a job site by mixing two chemical components together in specialized application equipment.
For example, our largest customer is independently serviced by 84 different IBP branches nationwide despite representing approximately 5% of net revenue for the year ended December 31, 2023. While our largest customers are homebuilders, our customer base is also diverse. We work on a range of commercial projects including office buildings, airports, sports complexes, museums, hospitals, hotels and educational facilities.
For example, our largest customer is independently serviced by 91 different IBP branches nationwide despite representing approximately 4% of net revenue for the year ended December 31, 2024. While our largest customers are homebuilders, our customer base is also diverse. We work on a range of commercial projects including office buildings, airports, sports complexes, museums, hospitals, hotels and educational facilities.
We also provide longevity stock awards and financial wellness training to our employees. We are subject to various federal, state and local laws and regulations applicable in the jurisdictions in which we operate, including laws and regulations relating to our relationships with our employees, public health and safety, workplace safety, transportation, zoning and fire codes.
We also provide longevity stock awards and financial wellness training to our employees. We are subject to various federal, state and local laws and regulations applicable in the jurisdictions in which we operate, including laws and regulations relating to our relationships with our employees, climate disclosures, greenhouse gas emissions, public health and safety, workplace safety, transportation, zoning and fire codes.
Other Building Products Some of our locations install other complementary building products, none of which is an individually significant percentage of net revenue. Installation of other building products comprised approximately 7% of our net revenue for the year ended December 31, 2023. Distribution Operating Segment We have two businesses that comprise our distribution platform. AMD Distribution, Inc.
Other Building Products Some of our locations install other complementary building products, none of which is an individually significant percentage of net revenue. Installation of other building products comprised approximately 6% of our net revenue for the year ended December 31, 2024. Distribution Operating Segment We have three businesses that comprise our distribution platform. AMD Distribution, Inc.
Insulation installation comprised approximately 60%, 61% and 63% of our net revenue of $2.8 billion, $2.7 billion and $2.0 billion for the years ended December 31, 2023, 2022 and 2021, respectively.
Insulation installation comprised approximately 60%, 60% and 61% of our net revenue of $2.9 billion, $2.8 billion and $2.7 billion for the years ended December 31, 2024, 2023 and 2022, respectively.
In addition to offering certain benefits to most employees, including medical insurance, 401k and paid time off, we also offer longevity stock awards, financial wellness training and savings matching in order to recruit and retain employees. Our retention efforts have reduced our employee turnover to a level below industry averages. Opportunity for professional growth, training and advancement are strongly encouraged.
In addition to offering certain benefits to most employees, including medical insurance, 401k and paid time off, we also offer longevity stock awards, financial wellness training and savings matching in order to recruit and retain employees. Our retention efforts have reduced our 4 employee turnover to a level below industry averages.
The installation and service of garage doors comprised approximately 6% of our net revenue for the year ended December 31, 2023. Rain Gutters Some of our locations install a wide range of rain gutters, which direct water from a home’s roof away from the structure and foundation.
The installation and service of waterproofing comprised approximately 5% of our net revenue for the year ended December 31, 2024. Rain Gutters Some of our locations install a wide range of rain gutters, which direct water from a home’s roof away from the structure and foundation.
Our strategy is centered on building and maintaining strong customer relationships. We also capitalize on cross-selling opportunities from existing customer relationships and identifying situations where customers may benefit from more than one of our installation service offerings. By executing this strategy, we believe we can continue to generate incremental sales volumes with new and existing customers.
We also capitalize on cross-selling opportunities from existing customer relationships and identifying situations where customers may benefit from more than one of our installation service offerings. By executing this strategy, we believe we can continue to generate incremental sales volumes with new and existing customers. Experienced sales and service professionals are important to our customer growth and increasing our profitability.
However, we could be subject to material costs, liabilities or claims relating to environmental compliance in the future, especially in the event of changes in existing laws and regulations or in their interpretation or enforcement. 10 As the nature of our business involves the use or handling of certain potentially hazardous or toxic substances, including spray foam applications and lead-based paint, we may be held liable for claims alleging injury or damage resulting from the release of or exposure to such substances, as well as claims relating to the presence of mold, fungal growth and moisture intrusion alleged in connection with our business activities.
As the nature of our business involves the use or handling of certain potentially hazardous or toxic substances, including spray foam applications and lead-based paint, we may be held liable for claims alleging injury or damage resulting from the release of or exposure to such substances, as well as claims relating to the presence of mold, fungal growth and moisture intrusion alleged in connection with our business activities.
Our branch managers are held accountable for the safety of employees and quality of workmanship at their locations. We provide our employees with ongoing training and development programs necessary to improve safety performance and work quality.
Significant staffing, funding and other resources are allocated to our management systems that enhance safety and quality for our employees and our customers. Our branch managers are held accountable for the safety of employees and quality of workmanship at their locations. We provide our employees with ongoing training and development programs necessary to improve safety performance and work quality.
As described in the Competitive Advantages section above, the Foundation was formed by us primarily to benefit our employees and their families and the communities in which they live and work.
See "Competitive Advantages, Engaged employees” above for further details on the benefits we offer. As described in the Competitive Advantages section above, the Foundation was formed by us primarily to benefit our employees and their families and the communities in which they live and work.
The jobCORE software provides in-depth real-time job-level operational and financial performance data from each branch to the corporate office. JobCORE provides us, our 9 branch managers and our sales personnel with an important operational tool for monitoring branch level performance. It assists management in assessing important business questions, including customer analysis, sales staff analysis, branch analysis and other operating activities.
The jobCORE software provides in-depth real- 9 time job-level operational and financial performance data from each branch to the corporate office. JobCORE provides us, our branch managers and our sales personnel with an important operational tool for monitoring branch level performance.
Experienced sales and service professionals are important to our customer growth and increasing our profitability. Retaining and motivating local employees has been an important component of our acquisition and operating strategies. As of December 31, 2023, we employed approximately 700 sales professionals and our sales force has spent an average of approximately eleven years with our operations.
Retaining and motivating local employees has been an important component of our acquisition and operating strategies. As of December 31, 2024, we employed approximately 800 sales professionals and our sales force has spent an average of approximately eleven years with our operations.
See “Safety and Quality Control” above for details on our policies and practices. Our policy is designed to protect against accidents, injuries, and illnesses, in compliance with applicable safety and health laws and regulations.
We do not tolerate inappropriate behavior or harassment. The health and safety of our employees is of primary importance. See “Safety and Quality Control” above for details on our policies and practices. Our policy is designed to protect against accidents, injuries, and illnesses, in compliance with applicable safety and health laws and regulations.
We continue to support the Foundation’s mission of supporting our employees for their education, financial and philanthropic needs, as well as providing assistance to employees who have experienced unexpected emergencies or disasters.
This is an increase from 2023 when the Foundation and the Company awarded 172 grants totaling $2.5 million. We continue to support the Foundation’s mission of supporting our employees for their education, financial and philanthropic needs, as well as providing assistance to employees who have experienced unexpected emergencies or disasters.
We offer steel, aluminum, wood and vinyl garage doors as well as opener systems. Unlike the other products we install, the garage door business has an ongoing aftermarket service component, which represented approximately 16% of the net revenue resulting from garage doors for the year ended December 31, 2023.
Unlike the other products we install, the garage door business has an ongoing aftermarket service component, which represented approximately 20% of the net revenue resulting 2 from garage doors for the year ended December 31, 2024. The installation and service of garage doors comprised approximately 6% of our net revenue for the year ended December 31, 2024.
We are proud of our strong and diverse workforce, as shown in the table below (workforce data as of February 2024): Ethnicity Workforce (%) American Indian/Alaskan Native 0.3% Asian 0.8% Black or African American 5.6% Hispanic or Latino 49.9% Native Hawaiian or Other Pacific Islander 0.5% Two or more races 0.7% White 42.2% Our Hispanic/Latino diversity outpaces the construction industry average, according to the Bureau of Labor Statistics, and our workforce as a whole is comprised of over 50% ethnic minorities.
We are proud of our strong workforce, as shown in the table below (workforce data as of February 2025): Employee Demographics Workforce (%) Black or African American 5.0% Hispanic or Latino 51.3% White 41.2% Other 2.5% Our number of Hispanic/Latino employees outpaces the construction industry average, according to the Bureau of Labor Statistics, and our workforce as a whole is comprised of over 50% ethnic minorities.
AFT sells its products to a wide range of customers including distributors, retailers and insulation contractors. This segment comprised approximately 1% of our net revenue for the year ended December 31, 2023. Sales and Marketing We seek to attract and retain customers through exceptional customer service, superior installation quality, broad service offerings and competitive pricing.
This segment comprised approximately 1% of our net revenue for the year ended December 31, 2024. Sales and Marketing We seek to attract and retain customers through exceptional customer service, superior installation quality, broad service offerings and competitive pricing. Our strategy is centered on building and maintaining strong customer relationships.
The products are primarily used in existing or retrofit construction projects across the Northeast and Mid-Atlantic regions. CAS purchases the majority of its finished painted aluminum from one supplier and is subject to the commodity pricing of aluminum metal. Our Distribution segment comprised approximately 5% of our net revenue for the year ended December 31, 2023.
The products are primarily used in existing or retrofit construction projects across the Northeast and Mid-Atlantic regions. CAS purchases the majority of its finished painted aluminum from one supplier and is subject to the commodity pricing of aluminum metal. Our third distribution business is the recently acquired Insulation Supplies which is headquartered in New Hope, Minnesota.
As a result of this seasonal activity, our quarterly results of operations and financial position for any particular quarter are not necessarily representative of the results seen over a full fiscal year.
As a result of this seasonal activity, our quarterly results of operations and financial position for any particular quarter are not necessarily representative of the results seen over a full fiscal year. In the short term, we expect typical seasonality to return, including higher sales in the spring, summer and fall than in the winter in 2025.
Each year, we allocate significant staffing, funding and resources to our management systems that directly impact safety. We have strong workplace safety measures, including our Lead With Safety program, an initiative focused on creating a safer working environment to reduce job site injuries for both our employees and other jobsite personnel through year-round education and training.
We have strong workplace safety measures, including our Lead With Safety program, an initiative focused on creating a safer working environment to reduce job site injuries for both our employees and other jobsite personnel through year-round education and training. Additionally, our branch managers are held accountable for the safety of employees and quality of workmanship at their locations.
INTELLECTUAL PROPERTY We possess intellectual property rights, including trademarks, trade names and know-how and other proprietary rights that are important to our business.
It assists management in assessing important business questions, including customer analysis, sales staff analysis, branch analysis and other operating activities. INTELLECTUAL PROPERTY We possess intellectual property rights, including trademarks, trade names and know-how and other proprietary rights that are important to our business.
In 2023, the Foundation and the Company awarded 172 grants and made contributions totaling $2.5 million in the form of scholarships and financial assistance to our employees as well as donations and matching gifts to various charities supported by our employees . This is an increase from 2019 when the Foundation and the Company awarded 94 grants totaling $1.2 million.
In 2024, the Foundation and the Company awarded over 750 grants and made contributions totaling ove r $4.5 million i n the form of scholarships and financial assistance to our employees as well as donations and matching gifts to various charities supported by our employees .
We focus on the well-being of our employees through our Positive Production Program. This micro-video program is designed to help employees thrive in all aspects of life through learning and practicing research-backed physical, intellectual and emotional skills. Engaged, long-tenured employees benefit our business by being highly skilled and efficient, which drives profitability and encourages repeat business and customer loyalty.
Opportunity for professional growth, training and advancement are strongly encouraged. We focus on the well-being of our employees through our Positive Production Program. This micro-video program is designed to help employees thrive in all aspects of life through learning and practicing research-backed physical, intellectual and emotional skills.
While we anticipate a slight decline in overall housing starts, we expect that this decrease will be concentrated in the multi-family subset of the residential end market. We expect to still benefit from our multi-family business in 2024 thanks to an extended backlog in this end market as well as housing shortages in some of the markets that we service.
We expect to still benefit from our market share gains in the multi-family business 6 in 2025 thanks to an extended backlog in this end market as well as housing shortages in some of the markets that we service. However, we expect a continued decline in multi-family units under construction to negatively impact our business.
TRENDS IN THE MARKETPLACE Our business relies on various market factors, one of which is residential housing demand. Following the late 2000s recession in the U.S. economy, housing starts dropped well below historical averages. Rates returned to early 2000s levels in 2021 and 2022 as each year had 1.6 million non-seasonally adjusted starts according to U.S. Census Bureau data.
TRENDS IN THE MARKETPLACE Our business relies on various market factors, one of which is residential housing demand. Following the late 2000s recession in the U.S. economy, housing starts dropped well below historical averages for over a decade.
Commercial demand showed growth in 2023 as supply chain delays and disruptions waned, and the commercial sector is predicted to see a modest 2% decline in starts in 2024 over 2023, according to Dodge Data & Analytics.
Commercial demand showed slight growth in 2024, and the commercial sector is predicted to see a modest increase of 6% in investment dollars in 2025 over 2024, according to Dodge Data & Analytics.
Shower doors, closet shelving and mirror installations comprised approximately 7% of our net revenue for the year ended December 31, 2023. 2 Garage Doors Some of our locations install and service garage doors and openers for new residential construction builders, homeowners and commercial customers. We offer a variety of options from some of the best-known garage door brands.
Garage Doors Some of our locations install and service garage doors and openers for new residential construction builders, homeowners and commercial customers. We offer a variety of options from some of the best-known garage door brands, including steel, aluminum, wood and vinyl garage doors, as well as opener systems.
In recent years, the industry experienced manufacturer supply constraints for some of the materials we purchase. We expect these challenges to persist but to a lesser degree in 2024. See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Key Factors Affecting our Operating Results" of this Form 10-K for more information.
See Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, "Key Factors Affecting our Operating Results" of this Form 10-K for more information.
We expect to continue to effectively compete in our local markets given our long-standing customer relationships, access to capital, tenure and quality of local staff, quality installation reputation and competitive pricing.
We expect to continue to effectively compete in our local markets given our long-standing customer relationships, access to capital, tenure and quality of local staff, quality installation reputation and competitive pricing. 8 HUMAN CAPITAL RESOURCES As of December 31, 2024, we had approximately 10,800 employees, consisting of approximately 7,400 installers, approximately 800 sales professionals, approximately 800 production personnel and approximately 1,800 administrative and management personnel.
Our regional managers, local branch managers and sales force have significant experience in the industry and have spent an average of more than 12 years with our operations. The Installed Building Products Foundation ("the Foundation") is a separate, not-for-profit organization to help support our employees for their education, financial and philanthropic needs.
Our regional managers, local branch managers and sales force have significant experience in the industry and have spent an average of more than 12 years with our operations. Commitment to the communities we live and work in.
Elevated inflation, global economic uncertainty and tight Federal Reserve monetary policy affecting interest rates are expected to continue affecting affordability of new homes, all of which are the primary drivers behind the projected decrease in demand for new housing starts forecasted in 2024.
Housing starts are forecasted to decrease in 2025, as Fannie Mae predicts 1.32 million starts with an overall decrease of 3.4% compared to 2024. Inflation and elevated mortgage interest rates are expected to continue affecting affordability of new homes, both of which are the primary drivers behind the projected decline for new housing starts forecasted in 2025.
Additionally, our branch managers are held accountable for the safety of employees and quality of workmanship at their locations. We track all incidents that occur on our job sites that could result in injury, including minor incidents that may not require first aid or medical treatment.
We track all incidents that occur on our job sites that could result in injury, including minor incidents that may not require first aid or medical treatment. We use this incident information to continually refine and develop our safety training programs for new hires and the continual training and safety knowledge throughout employment at IBP.
We have never experienced a work stoppage or strike, and we believe that we have good relationships with our employees. We monitor certain financial and operational statistics related to our workforce. For example, we utilize sales per installer per business day to 8 ensure we maintain the proper level of staffing to complete our jobs.
Less than 4% of our employees are covered under collective bargaining agreements. We have never experienced a work stoppage or strike, and we believe that we have good relationships with our employees. We monitor certain financial and operational statistics related to our workforce.
Per the Bureau of Labor Statistics, inflation in the United States averaged 3.4%% in 2023 as measured by the consumer price index, a decrease from the 6 8.0% average reported in 2022 which was the highest annual rate since 1981. As a result of the inflationary environment, the materials we buy saw multiple price increases in the last few years.
Per the Bureau of Labor Statistics, inflation in the United States averaged 2.9% in 2024 as measured by the consumer price index, a decrease from the 3.4% average reported in 2023.
They are trained on manufacturers’ guidelines as well as state and local building codes. Our quality control programs emphasize onsite inspections, training by manufacturers and various certification programs. We consider safety and risk management to be a core business objective and require our installers to wear personal protective equipment in the process of completing their work.
Our sales staff and managers are knowledgeable about our service offerings and scope of work. They are trained on manufacturers’ guidelines as well as state and local building codes. Our quality control programs emphasize onsite inspections, training by manufacturers and various certification programs.
Employees across all our branches are invited to participate in our regional and national DEI&B committees to determine the standards for how employees should interact with one another and their communities. We do not tolerate inappropriate behavior or harassment. The health and safety of our employees is of primary importance.
We are committed in policy and practice to providing equal employment opportunities for all applicants and employees based upon their training, experience, and overall qualifications. Employees across all our branches are invited to participate in our regional and national inclusion and belonging committees to determine the standards for how employees should interact with one another and their communities.
However, we were able to mitigate most of these increases through selling price increases to our customers as evidenced by our increased gross margin. The decrease in housing starts in 2023 alleviated the significant shortages of many of the materials we install and sell which stemmed from the unanticipated demand in previous years.
As a result of the recent inflationary environment, the materials we buy saw multiple price increases in the last few years, and we expect price increases to continue in 2025. However, we were able to mitigate most of these increases through selling price increases to our customers as evidenced by our increased gross profit margin.
Higher employee retention also benefits our 4 business through lower recruitment and training expense. We also consider safety and risk management to be a core business objective. Significant staffing, funding and other resources are allocated to our management systems that enhance safety and quality for our employees and our customers.
Engaged, long-tenured employees benefit our business by being highly skilled and efficient, which drives profitability and encourages repeat business and customer loyalty. Higher employee retention also benefits our business through lower recruitment and training expense. We also consider safety and risk management to be a core business objective.
However, the full effects of interest rate changes on the homebuilding market are uncertain as we progress through 2024. SAFETY AND QUALITY CONTROL Our quality control process starts with the initial proposal. Our sales staff and managers are knowledgeable about our service offerings and scope of work.
We believe the demand for our installation services remains high due to our proven ability to meet our customer's expectations, however, the full effects of these challenges on the homebuilding market are uncertain as we progress through 2025. SAFETY AND QUALITY CONTROL Our quality control process starts with the initial proposal.
Our foundation also administers our employee financial assistance program to support our employees who experience financial hardship resulting from an unexpected emergency or disaster. Financial strength, variable cost structure and strong free cash flow. We believe that we are among the most financially sound companies in our industry.
In addition, the Foundation serves our communities by focusing our impact on supporting education, housing and community-strengthening causes. Financial strength, variable cost structure and strong free cash flow. We believe that we are among the most financially sound companies in our industry.
In addition, we offer many benefits and resources to most employees, some of which are above and beyond what others in our industry offer. See "Competitive Advantages, Engaged employees” above for further details on the benefits we offer.
For example, across our installer base, we experienced average monthly turnover of 2.8% in 2024 compared with 3.9% for the U.S. construction industry, according to the U.S. Bureau of Labor Statistics. In addition, we offer many benefits and resources to most employees, some of which are above and beyond what others in our industry offer.
Manufacturing Operating Segment Our small manufacturing operation, Advanced Fiber Technology ("AFT"), operates in Bucyrus, Ohio producing cellulose insulation and specialty industrial fibers. AFT's primary product, cellulose insulation, is made of primarily wastepaper and 3 helps reduce greenhouse emissions by reducing the wastepaper decomposing in landfills which releases methane and carbon dioxide gases.
AFT's primary product, cellulose insulation, consists primarily of wastepaper and helps reduce greenhouse emissions by reducing the wastepaper decomposing in landfills which releases methane and carbon dioxide gases. AFT sells its products to a wide range of customers including distributors, retailers and insulation contractors. AFT expanded production to include a second cellulose insulation manufacturing line in 2024.
We consider retaining skilled employees to be a competitive advantage and employ various strategies to improve turnover metrics. Our turnover rate is typically better than industry averages. For example, across our installer base, we experienced average monthly turnover of 3.3% in 2023 compared with 4.4% for the U.S. construction industry, according to the U.S. Bureau of Labor Statistics.
Our employees are critical to our continued success and are our most important resource. We focus on attracting and retaining talented and experienced individuals to manage and support our operations. We consider retaining skilled employees to be a competitive advantage and employ various strategies to improve turnover metrics. Our turnover rate is typically better than industry averages.
We were successful in achieving higher productivity in 2023 as compared to 2022 as evidenced by our annual sales per installer per business day increasing 1%. Our employees are critical to our continued success and are our most important resource. We focus on attracting and retaining talented and experienced individuals to manage and support our operations.
For example, we utilize sales per installer per business day to ensure we maintain the proper level of staffing to complete our jobs. We were successful in achieving higher productivity in 2024 as compared to 2023 as evidenced by our annual sales per installer per business day increasing 1%.
We have not previously incurred material costs to comply with environmental laws and regulations.
We have not previously incurred material costs to comply with environmental laws and regulations. 10 However, we could be subject to material costs, liabilities or claims relating to environmental compliance in the future, especially in the event of changes in existing laws and regulations or in their interpretation or enforcement.
Our OSHA-defined incident rate per 100 employees was 5.61 for the year ended December 31, 2023, which was below our 5 year average incident rate of 6.32. We also had a 14% decrease in severe incidents from 2022 to 2023 as we had only 7 severe incidents in 2023.
We believe these programs benefit the safety and physical well-being of our employees. Total hours worked increased 5% from 2023 to 2024, and the OSHA-defined incident rate per 100 employees decreased 9% to 5.10 for the year ended December 31, 2024. This was below our five year average incident rate per 100 employees of 5.86.
The installation and service of waterproofing comprised approximately 5% of our net revenue for the year ended December 31, 2023. Shower Doors, Closet Shelving and Mirrors Some of our locations install a variety of shower enclosures, ranging from basic sliding door designs to complex custom designs.
We design and install closet shelving systems in select markets utilizing some of the highest quality products available from national brands. We also offer standard and custom designed mirrors for our customers. Shower doors, closet shelving and mirror installations comprised approximately 7% of our net revenue for the year ended December 31, 2024.
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However, housing starts decreased 9% as compared to 2022 to 1.4 million non-seasonally adjusted starts in 2023. 1.4 million starts are forecasted in 2024 with an overall decrease of 4% according to Wolters Kluwer’s Blue Chip Economic Indicators January 2024 forecast.
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Insulation Supplies distributes various insulation products including equipment and machines and services several states throughout the Midwest. Our Distribution segment comprised approximately 5% of our net revenue for the year ended December 31, 2024. 3 Manufacturing Operating Segment Our manufacturing operation, Advanced Fiber Technology ("AFT"), operates in Bucyrus, Ohio producing cellulose insulation and specialty industrial fibers.
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We expect demand pressures on some of our material suppliers will persist into 2024 as some suppliers have announced planned maintenance on factories which will temporarily decrease supply.
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The Installed Building Products Foundation ("the Foundation") is a separate, not-for-profit organization to help support our employees for their education, financial and philanthropic needs. Our foundation administers our scholarship program for our employees and their families as well as our employee financial assistance program to support our employees who experience financial hardship resulting from an unexpected emergency or disaster.
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The Federal Reserve raised the federal funds rate multiple times in 2022 and 2023 to moderate and stabilize inflation and has signaled plans to hold the current rate with potential rate cuts later in 2024.
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In recent years, housing starts returned to early 2000s levels and recent demand peaked in 2021 with 1.61 million residential starts. 2024 had 1.37 million non-seasonally adjusted starts according to U.S. Census Bureau data. However, this was a 3.9% decrease from the 1.42 million housing starts in 2023.
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This caused the average mortgage rate in the United States to increase from recent historic lows and began to curtail housing demand in the second half of 2022 as mortgage financing affordability was reduced.
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While we anticipate a decline in overall housing starts, we expect that most of this decrease will be concentrated in the multi-family subset of the residential end market.
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Despite elevated mortgage rates, we believe the demand for our installation services remains high due to the forecasted increase in single family housing starts and the backlog of both units under construction and units not started in the multi-family residential end market.
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In addition, inflation has tightened the labor market as competition and expectations for higher wages increased our labor costs in 2024. Despite recent cuts by the Federal Reserve to the federal funds rate, mortgage rates remained elevated from their recent historic lows primarily due to higher treasury yields.
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We use this incident information to continually refine and develop our safety training programs for new hires and the continual training and safety knowledge throughout employment at IBP. We believe these programs are having a benefit on the safety and physical well-being of our employees.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeA decline in the economy, a deterioration in expectations regarding the housing market or the commercial construction market, a failure to integrate acquisitions, especially within our distribution operations, and/or a general decline in operations or financial results of any of our segments could cause us to record significant non-cash impairment charges, which could negatively affect our earnings and reduce stockholders’ equity.
Biggest changeIf participants in these industries postpone spending in response to tighter credit, negative financial news and declines in income or asset values or other factors, this could have a material negative effect on the demand for our products and services and on our business, financial condition and results of operations. 13 A decline in the economy, a deterioration in expectations regarding the housing market or the commercial construction market, a failure to integrate acquisitions, especially within our distribution operations, and/or a general decline in operations or financial results of any of our segments could cause us to record significant non-cash impairment charges, which could negatively affect our earnings and reduce stockholders’ equity.
Our business is cyclical, seasonal and highly sensitive to economic and housing market conditions over which we have no control, including: • the number of new home and commercial building construction starts; • short- and long-term interest rates; • inflation; • employment levels and job and personal income growth; • housing demand from population growth, household formation and other demographic changes; • housing affordability; • rental housing demand; • availability and cost of labor; • availability and cost of land; • changes in material prices; • local zoning and permitting processes, including the length of building cycles from permit to completion, based on local economic or environmental factors; • federal, state and local energy efficiency programs, regulations, codes and standards; • availability and pricing of mortgage financing for homebuyers and commercial financing for developers of multi-family homes and commercial projects; • foreclosure rates; • consumer confidence generally and the confidence of potential homebuyers in particular; • U.S. and global financial system and credit market stability; • federal government economic, trade, and spending laws and policies; • private party and government mortgage loan programs and federal and state regulation, oversight and legal action regarding lending, appraisal, foreclosure and short sale practices; • federal and state personal income tax rates and provisions, including provisions for the deduction of mortgage loan interest payments, state and local income and real estate taxes and other expenses; • general economic conditions, including in the markets in which we compete; and • pandemics, natural disasters, war, acts of terrorism and response to these events.
Our business is cyclical, seasonal and highly sensitive to economic and housing market conditions over which we have no control, including: • the number of new home and commercial building construction starts; • short- and long-term interest rates; • inflation; • employment levels and job and personal income growth; • housing demand from population growth, household formation and other demographic changes; • housing affordability; • rental housing demand; • availability and cost of labor; • availability and cost of land; • changes in material prices; • local zoning and permitting processes, including the length of building cycles from permit to completion, based on local economic or environmental factors; • federal, state and local energy efficiency programs, regulations, building codes and standards; • availability and pricing of mortgage financing for homebuyers and commercial financing for developers of multi-family homes and commercial projects; • foreclosure rates; • consumer confidence generally and the confidence of potential homebuyers in particular; • U.S. and global financial system and credit market stability; • federal government economic, trade, and spending laws and policies; • private party and government mortgage loan programs and federal and state regulation, oversight and legal action regarding lending, appraisal, foreclosure and short sale practices; • federal and state personal income tax rates and provisions, including provisions for the deduction of mortgage loan interest payments, state and local income and real estate taxes and other expenses; • general economic conditions, including in the markets in which we compete; and • pandemics, natural disasters, war, acts of terrorism and response to these events.
Increases in fuel costs can negatively impact our cost to deliver our products to our customers and thus increase our cost of sales. If we are unable to increase the selling price of our products to our customers to cover any increases in fuel costs, net income may be adversely affected.
Increases in fuel costs can negatively impact our cost to deliver our products to our customers and thus increase our cost of sales. If we are unable to increase the selling price of our products to our customers to cover any increases in fuel costs, our net income may be adversely affected.
Acquisitions involve a number of special risks, including: • our inability to manage acquired businesses or control integration costs and other costs relating to acquisitions; • potential adverse short-term effects on operating results from increased costs, business disruption or otherwise; • diversion of management’s attention; • loss of suppliers, customers or other significant business partners of the acquired business; • failure to retain existing key personnel of the acquired business and recruit qualified new employees at the location; • failure to successfully implement infrastructure, logistics and systems integration; • potential impairment of goodwill and other intangible assets; • risks associated with new lines of business and business models; • risks associated with the internal controls of acquired businesses; • exposure to legal claims for activities of the acquired business prior to acquisition and inability to realize on any indemnification claims, including with respect to environmental, employment and immigration claims; • the risks inherent in the systems of the acquired business and risks associated with unanticipated events or liabilities; and • our inability to obtain financing necessary to complete acquisitions on attractive terms or at all.
Acquisitions involve a number of special risks, including: • our inability to manage acquired businesses or control integration costs and other costs relating to acquisitions; • potential adverse short-term effects on operating results from increased costs, business disruption or otherwise; • diversion of management’s attention; • loss of suppliers, customers or other significant business partners of the acquired business; • failure to retain existing key personnel of the acquired business and recruit qualified new employees at the location; • failure to successfully implement infrastructure, logistics and systems integration; • potential impairment of goodwill and other intangible assets; • risks associated with new lines of business and business models; • risks associated with the internal controls of acquired businesses; • exposure to legal claims for activities of the acquired business prior to acquisition and inability to realize on any indemnification claims, including with respect to environmental, employment and immigration claims; 19 • the risks inherent in the systems of the acquired business and risks associated with unanticipated events or liabilities; and • our inability to obtain financing necessary to complete acquisitions on attractive terms or at all.
The market price of our common stock may be significantly affected by factors, such as: • market conditions affecting the residential construction, commercial construction and building products industries; • quarterly variations in our results of operations; • changes in government regulations; • the announcement of acquisitions by us or our competitors; • changes in general economic and political conditions; • volatility in the financial markets; • results of our operations and the operations of others in our industry; • changes and volatility in interest rates; • the reduction, suspension or elimination of dividend payments; • threatened or actual litigation and government investigations; • the addition or departure of key personnel; • actions taken by our stockholders, including the sale or disposition of their shares of our common stock; • the extent of short-selling of shares of our common stock and the stock of our competitors; and 26 • differences between our actual financial and operating results and those expected by investors and analysts and changes in analysts’ recommendations or projections.
The market price of our common stock may be significantly affected by factors, such as: • market conditions affecting the residential construction, commercial construction and building products industries; • quarterly variations in our results of operations; • changes in government regulations; • the announcement of acquisitions by us or our competitors; • changes in general economic and political conditions; • volatility in the financial markets; • results of our operations and the operations of others in our industry; • changes and volatility in interest rates; • the reduction, suspension or elimination of dividend payments; • threatened or actual litigation and government investigations; • the addition or departure of key personnel; • actions taken by our stockholders, including the sale or disposition of their shares of our common stock; • the extent of short-selling of shares of our common stock and the stock of our competitors; and • differences between our actual financial and operating results and those expected by investors and analysts and changes in analysts’ recommendations or projections.
In addition, our hedging transactions may expose us to certain risks and financial losses, including, among other things: • the risk that the other parties to the agreements would not perform; • the risk that the duration or amount of the hedges may not match the duration or amount of the related liability; • the risk that hedging transactions may be adjusted from time to time in accordance with accounting rules to reflect changes in fair values including downward adjustments which would affect our stockholders’ equity; and • the risk that we may not be able to meet the terms and conditions of the hedging instruments, in which case we may be required to settle the instruments prior to maturity with cash payments that could significantly affect our liquidity.
In addition, our hedging transactions may expose us to certain risks and financial losses, including, among other things: • the risk that the other parties to the agreements would not perform; • the risk that the duration or amount of the hedges may not match the duration or amount of the related liability; 25 • the risk that hedging transactions may be adjusted from time to time in accordance with accounting rules to reflect changes in fair values including downward adjustments which would affect our stockholders’ equity; and • the risk that we may not be able to meet the terms and conditions of the hedging instruments, in which case we may be required to settle the instruments prior to maturity with cash payments that could significantly affect our liquidity.
In addition, the residential construction and commercial construction industries are subject to various federal, state and local statutes, ordinances, rules and regulations concerning zoning, building design and safety, construction, contractors’ licensing, energy conservation and similar matters, including regulations that impose restrictive zoning and density requirements on the 22 residential new construction industry or that limit the number of homes that can be built within the boundaries of a particular area.
In addition, the residential construction and commercial construction industries are subject to various federal, state and local statutes, ordinances, rules and regulations concerning zoning, building design and safety, construction, contractors’ licensing, energy conservation and similar matters, including regulations that impose restrictive zoning and density requirements on the residential new construction industry or that limit the number of homes that can be built within the boundaries of a particular area.
Even if we are able to raise capital through equity or debt financings, as to which there can be no assurance, the interest of existing stockholders in our company may be diluted, and the securities we issue may have rights, preferences and privileges that are senior to those of our common stock or may otherwise materially and adversely affect the holdings or rights of our existing stockholders.
Even if 26 we are able to raise capital through equity or debt financings, as to which there can be no assurance, the interest of existing stockholders in our company may be diluted, and the securities we issue may have rights, preferences and privileges that are senior to those of our common stock or may otherwise materially and adversely affect the holdings or rights of our existing stockholders.
This winter slowdown contributes to traditionally lower sales and profitability in our first quarter. In addition, climate change and/or adverse weather conditions, such as unusually prolonged cold conditions, rain, blizzards, hurricanes, earthquakes, fires, other natural disasters, epidemics or other catastrophic events could accelerate, delay or halt construction or installation activity or impact our suppliers.
This winter slowdown contributes to traditionally lower sales and profitability in our first quarter. 17 In addition, climate change and/or adverse weather conditions, such as unusually prolonged cold conditions, rain, blizzards, hurricanes, earthquakes, fires, other natural disasters, epidemics or other catastrophic events could accelerate, delay or halt construction or installation activity or impact our suppliers.
Our business may not generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet these obligations or to successfully execute our business strategies. See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, "Liquidity and Capital Resources, Debt." of this Form 10-K.
Our business may not generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet 24 these obligations or to successfully execute our business strategies. See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, "Liquidity and Capital Resources, Debt." of this Form 10-K.
In addition, a failure to comply with the provisions of our credit facilities, any future credit facility, the indenture governing our senior notes, or other debt instruments could result in a default or an event of default that could enable our lenders or other debt holders to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and 24 payable.
In addition, a failure to comply with the provisions of our credit facilities, any future credit facility, the indenture governing our senior notes, or other debt instruments could result in a default or an event of default that could enable our lenders or other debt holders to declare the outstanding principal of that debt, together with accrued and unpaid interest, to be immediately due and payable.
A significant increase in competition, minimum wage or overtime rates in localities where we have employees could have a significant impact on our operating costs and may require that we take steps to mitigate such increases, all of which may cause us to incur additional costs, expend resources responding to such increases and lower our margins.
A significant increase in competition, minimum wage or overtime rates in localities where we 15 have employees could have a significant impact on our operating costs and may require that we take steps to mitigate such increases, all of which may cause us to incur additional costs, expend resources responding to such increases and lower our margins.
Moody’s Investor Service and Standard & Poor’s routinely evaluate our credit profile on an ongoing basis and have assigned ratings for our long-term debt. If these rating agencies downgrade any of our current credit ratings, our borrowing costs could 25 increase and our access to the capital and commercial credit markets could be adversely affected.
Moody’s Investor Service and Standard & Poor’s routinely evaluate our credit profile on an ongoing basis and have assigned ratings for our long-term debt. If these rating agencies downgrade any of our current credit ratings, our borrowing costs could increase and our access to the capital and commercial credit markets could be adversely affected.
The distribution businesses, and any other future lines of business we may enter or acquire, involve competitive, operational, financial and accounting challenges and other risks that differ from our traditional residential installation business. For example, particular commodity pricing can affect selling prices and costs for certain products we sell through distribution.
The distribution businesses, and any other future lines of business we may enter or acquire, involve competitive, operational, financial and accounting challenges and other risks that differ from our traditional installation business. For example, particular commodity pricing can affect selling prices and costs for certain products we sell through distribution.
We could also become subject to fines, penalties and other costs related to claims that we did not fully comply with all recordkeeping obligations of federal and state immigration laws. These factors could have a material adverse effect on our reputation, business, financial condition and results of operations.
We could also become subject to fines, penalties and other costs related to claims that we did 21 not fully comply with all recordkeeping obligations of federal and state immigration laws. These factors could have a material adverse effect on our reputation, business, financial condition and results of operations.
Our business depends in part on our ability to diversify and grow our businesses and also 18 expand the types of complementary building products that we install and sell. Our product and geographic expansion may not be successful and may not deliver expected results, which could negatively impact our future sales and results of operations.
Our business depends in part on our ability to diversify and grow our businesses and also expand the types of complementary building products that we install and sell. Our product and geographic expansion may not be successful and may not deliver expected results, which could negatively impact our future sales and results of operations.
Our accruals for insurance reserves reflect these estimates and other management judgments, which are subject to variability. If our 15 claim experience differs significantly from historical trends and actuarial assumptions and we then need to increase our reserves, our financial condition and results of operations could be adversely affected.
Our accruals for insurance reserves reflect these estimates and other management judgments, which are subject to variability. If our claim experience differs significantly from historical trends and actuarial assumptions and we then need to increase our reserves, our financial condition and results of operations could be adversely affected.
The jobCORE software provides in-depth operational and financial performance data from individual branch locations to the corporate office. We rely upon such information technology systems to manage customer orders on a 17 timely basis, coordinate our sales and installation activities across locations and manage invoicing.
The jobCORE software provides in-depth operational and financial performance data from individual branch locations to the corporate office. We rely upon such information technology systems to manage customer orders on a timely basis, coordinate our sales and installation activities across locations and manage invoicing.
For example, sudden changes in demand in our industry have resulted in insulation material allocation in the past, 14 leading to increased market pricing. Increased market pricing, regardless of the catalyst, could impact our results of operations in the future to the extent that price increases cannot be passed on to our customers.
For example, sudden changes in demand in our industry have resulted in insulation material allocation in the past, leading to increased market pricing. Increased market pricing, regardless of the catalyst, could impact our results of operations in the future to the extent that price increases cannot be passed on to our customers.
Therefore, our overall financial performance and results of operations may not be indicative of the performance and results of operations of any individual branch. In the ordinary course of business, we are required to obtain performance bonds and licensing bonds, the unavailability of which could adversely affect our business, financial condition, results of operations and/or cash flows.
Therefore, our overall financial performance and results of operations may not be indicative of the performance and results of operations of any individual branch. 16 In the ordinary course of business, we are required to obtain performance bonds and licensing bonds, the unavailability of which could adversely affect our business, financial condition, results of operations and/or cash flows.
In addition, expenditures may be required 23 in the future as a result of releases of, or exposure to, hazardous or toxic substances or petroleum products, the discovery of currently unknown environmental conditions or changes in environmental laws and regulations or their interpretation or enforcement and, in certain instances, such expenditures may be material.
In addition, expenditures may be required in the future as a result of releases of, or exposure to, hazardous or toxic substances or petroleum products, the discovery of currently unknown environmental conditions or changes in environmental laws and regulations or their interpretation or enforcement and, in certain instances, such expenditures may be material.
If our existing stockholders sell substantial amounts of our common stock in the public market, or if the public perceives that such sales could occur, this could have an adverse impact on the market price of our common stock, even if there is no relationship between such sales and the performance of our business.
In addition, if our existing stockholders sell substantial amounts of our common stock in the public market, or if the public perceives that such sales could occur, this could have an adverse impact on the market price of our common stock, even if there is no relationship between such sales and the performance of our business.
Despite these efforts, our information technology systems, including but not limited to jobCORE or other operational systems, financial systems, Human Resource and payroll systems, fleet management software, and risk management systems may be damaged, disrupted or shut down due to cyberattacks, unauthorized access to our systems, undetected intrusions, malicious software, computer viruses, ransomware, Trojan horses, worms, hardware or software failures or other events, and in these circumstances our disaster recovery plans may be ineffective or inadequate.
Despite these efforts, our information technology systems, including but not limited to jobCORE or other operational systems, email environments, financial systems, Human Resource and payroll systems, fleet management software, and risk management systems may be damaged, disrupted or shut down due to cyberattacks, unauthorized access to our systems, undetected intrusions, malicious software, computer viruses, ransomware, Trojan horses, worms, hardware or software failures or other events, and in these circumstances our disaster recovery plans may be ineffective or inadequate.
In addition, the operating results of an individual branch may differ from those of another branch for a variety of reasons, including market size, management practices, competitive landscape, regulatory requirements, state and local taxes and local economic conditions. As a result, certain of our branches may experience higher or lower levels of growth than other branches.
In addition, the operating results of an individual branch may differ from those of another branch for a variety of reasons, including market size, management practices, competitive landscape, building codes and other regulatory requirements, state and local taxes and local economic conditions. As a result, certain of our branches may experience higher or lower levels of growth than other branches.
We did not record any goodwill impairment charges in 2023, 2022, or 2021; however, a decline in the expectation of our future performance, a decline in our market capitalization, sustained periods of economic inflation, prolonged periods of high interest rates, deterioration in expectations 13 regarding the general economy and/or the timing and the extent of new home construction, home improvement and commercial construction activity may cause us to recognize non-cash, pre-tax impairment charges for goodwill or other long-lived assets, which are not determinable at this time.
We did not record any goodwill impairment charges in 2024, 2023, or 2022; however, a decline in the expectation of our future performance, a decline in our market capitalization, sustained periods of economic inflation, prolonged periods of high interest rates, deterioration in expectations regarding the general economy and/or the timing and the extent of new home construction, home improvement and commercial construction activity may cause us to recognize non-cash, pre-tax impairment charges for goodwill or other long-lived assets, which are not determinable at this time.
Although our information technology systems are protected through physical and software safeguards, our information technology systems are still vulnerable to natural disasters, power losses, unauthorized access, delays and outages in our service, system capacity limits from unexpected increases in our volume of business, telecommunication failures, computer viruses and other problems.
Although our information technology systems are protected through physical and software safeguards, our information technology systems are still vulnerable to natural disasters, power losses, unauthorized access, delays and outages in our service, system capacity limits from unexpected increases in our volume of business, telecommunication failures, cybersecurity incidents, computer viruses and other problems.
Our two distribution businesses have substantially higher inventory balances, and deflation could cause the value of our inventories to decline. Certain products our distribution businesses sell are composed of materials with prices that fluctuate based on current market pricing. Fluctuations in market pricing of these materials can affect our selling prices.
Our three distribution businesses have substantially higher inventory balances, and deflation could cause the value of our inventories to decline. Certain products our distribution businesses sell are composed of materials with prices that fluctuate based on current market pricing. Fluctuations in market pricing of these materials can affect our selling prices.
Specifically, we had no outstanding borrowings on our Revolver, as hereinafter defined, as of December 31, 2023, but should we have a balance in the future, we would incur interest based on a rate that varies per the conditions set forth in our agreement.
Specifically, we had no outstanding borrowings on our Revolver, as hereinafter defined, as of December 31, 2024, but should we have a balance in the future, we would incur interest based on a rate that varies per the conditions set forth in our agreement.
We are subject to various federal, state, local and other laws and regulations, including, among other things, worker and workplace health and safety regulations promulgated by the OSHA, employment regulations promulgated by the U.S. Equal Employment Opportunity Commission and tax regulations promulgated by the Internal Revenue Service and various other state and local tax authorities.
We are subject to various federal, state, local and other laws, building codes and regulations including, among other things, worker and workplace health and safety regulations promulgated by the OSHA, employment regulations promulgated by the U.S. Equal Employment Opportunity Commission and tax regulations promulgated by the Internal Revenue Service and various other state and local tax authorities.
Our distribution businesses and continued expansion into other new lines of business could affect our revenue, margins, financial condition, operating results and cash flows. We operate two distribution entities under a different business model than our traditional installation business.
Our distribution businesses and continued expansion into other new lines of business could affect our revenue, margins, financial condition, operating results and cash flows. We operate three distribution entities under a different business model than our traditional installation business.
Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants, shareholders, and customers have focused increasingly on the ESG or “sustainability” practices of companies and have placed increasing importance on the social cost of their investments.
Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants, shareholders, and customers have focused on the ESG or “sustainability” practices of companies and have placed importance on the social cost of their investments.
These breaches or incidents could lead to business interruption, exposure of proprietary or confidential information, data corruption, damage to our reputation, exposure to legal and regulatory proceedings and other costs. Such events could impair our ability to conduct business and have a material adverse impact on our financial condition, results of operations and cash flows.
These breaches or incidents could lead to business interruption, exposure of proprietary or confidential information, data corruption, fraudulent money transfers, damage to our reputation, exposure to legal and regulatory proceedings and other costs. Such events could impair our ability to conduct business and have a material adverse impact on our financial condition, results of operations and cash flows.
The full extent and scope of impact of an outbreak of any contagious disease, including a resurgence of COVID-19, 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 outbreak, additional government actions taken in response, the impact on construction activity and demand for homes (based on employment levels, consumer spending and consumer confidence).
The full extent and scope of impact of an outbreak of any contagious disease 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 outbreak, additional government actions taken in response, the impact on construction activity and demand for homes (based on employment levels, consumer spending and consumer confidence).
Future acquisitions may result in the incurrence of debt and contingent liabilities, legal liabilities, goodwill impairments, increased interest expense and amortization expense and significant integration costs. In addition, future acquisitions could result in dilution of existing stockholders if we issue shares of common stock as consideration.
Future acquisitions may result in the incurrence of debt and contingent liabilities, legal liabilities, goodwill or intangible asset impairments, increased interest expense and amortization expense and significant integration costs. In addition, future acquisitions could result in dilution of existing stockholders if we issue shares of common stock as consideration.
For additional information, see Note 17, Commitments and Contingencies, in Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K. Federal, state, local and other laws and regulations could impose substantial costs and/or restrictions on our operations and could adversely affect our business.
For additional information, see Note 17, Commitments and Contingencies, in Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K. Federal, state, local and other laws, building codes, trade policies and regulations could impose substantial costs and/or restrictions on our operations and could adversely affect our business.
If this market does not grow in the future, the growth potential of our business, and our financial condition, results of operations and cash flows could be adversely affected. The commercial construction market, as measured by investment dollars, increased 20% in 2023 from 2022 per the U.S. Census Bureau.
If this market does not grow in the future, the growth potential of our business, and our financial condition, results of operations and cash flows could be adversely affected. The commercial construction market, as measured by investment dollars, increased 7% in 2024 from 2023 per the U.S. Census Bureau.
For instance, in many U.S. states, emerging regulations are beginning to phase out hydrofluorocarbon based blowing agents which are widely used by our company and other industry participants in closed-cell spray foam applications, due to their high global warming potential.
For instance, in many U.S. states, regulations have been enacted to phase out hydrofluorocarbon based blowing agents which are widely used by our company and other industry participants in closed-cell spray foam applications, due to their high global warming potential.
These sales, or the perception that these sales might occur, could depress the market price of our common stock or make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. We have approximately 28.4 million shares of common stock outstanding as of December 31, 2023.
These sales, or the perception that these sales might occur, could depress the market price of our common stock or make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. We have approximately 27.8 million shares of common stock outstanding as of December 31, 2024.
If interest rates increase, our debt service obligations on our variable rate indebtedness, if any exists at the balance sheet date, would increase even though the amount borrowed would remain the same, and our net income and cash flows would correspondingly decrease.
Our indebtedness exposes us to interest expense increases if interest rates increase. If interest rates increase, our debt service obligations on our variable rate indebtedness, if any exists at the balance sheet date, would increase even though the amount borrowed would remain the same, and our net income and cash flows would correspondingly decrease.
If we identify material weaknesses in our internal controls over financial reporting or are unable to comply with the requirements of Section 404 or are unable to assert that our internal controls over financial reporting are effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.
If we identify material weaknesses in our internal controls over financial reporting or are unable to comply with the requirements of Section 404 or are unable to assert that our internal controls over financial reporting are effective, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could be negatively affected, and we could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources. 27 Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price.
If the value of goodwill or other intangible assets in this or other reporting units is impaired, our earnings and stockholders’ equity would be adversely affected. As of December 31, 2023, we had goodwill and other intangible assets in an aggregate amount of $667.5 million, or approximately 34% of our total assets.
If the value of goodwill or other intangible assets in this or other reporting units is impaired, our earnings and stockholders’ equity would be adversely affected. As of December 31, 2024, we had goodwill and other intangible assets in an aggregate amount of $703.1 million, or approximately 34% of our total assets.
However, part of our business strategy includes retaining our future earnings, if any, in order to reinvest in the development and growth of our business, including our continued growth by acquisition strategy, and, therefore, we may reduce, suspend or eliminate dividend payments in the future.
Our board of directors approves any quarterly or annual cash dividend. However, part of our business strategy includes retaining our future earnings, if any, in order to reinvest in the development and growth of our business, including our continued growth by acquisition strategy, and, therefore, we may reduce, suspend or eliminate dividend payments in the future.
As of December 31, 2023, approximately 1.9 million of the 2.1 million shares of common stock authorized for issuance under the 2023 Omnibus Incentive Plans were available for issuance. These shares will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations.
As of December 31, 2024, approximately 1.8 million of the 2.1 million shares of common stock authorized for issuance under the 2023 Omnibus Incentive Plans were available for issuance. These shares will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations. Installed Building Systems, Inc.
These factors and any other challenges we encounter could adversely affect our margins, financial condition, operating results and cash flows. 19 As of December 31, 2023, our estimated backlog associated with the commercial end market was approximately $115.7 million.
These factors and any other challenges we encounter could adversely affect our margins, financial condition, operating results and cash flows. As of December 31, 2024, our estimated backlog associated with the commercial end market was approximately $126.3 million.
If we are unable to successfully obtain insurance coverage of third-party claims or enforce our indemnification rights against the former owners, or if the former owners are unable to satisfy their obligations for any reason, including because of their financial position, we could be held liable for the costs or obligations associated with such claims or liabilities, which could adversely affect our financial condition and results of operations. 20 LEGAL AND REGULATORY RISKS Changes in employment laws may adversely affect our business.
If we are unable to successfully obtain insurance coverage of third-party claims or enforce our indemnification rights against the former owners, or if the former owners are unable to satisfy their obligations for any reason, including because of their financial position, we could be held liable for the costs or obligations associated with such claims or liabilities, which could adversely affect our financial condition and results of operations.
For example, one of our distribution businesses uses aluminum in many of its products. Aluminum commodity prices have experienced volatile fluctuations in the recent past including a significant decrease during 2022 which reduced our selling prices while related inventory costs remained high.
For example, one of our distribution businesses uses aluminum in many of its products. Aluminum commodity prices have experienced volatile fluctuations in the recent past which has reduced our selling prices while related inventory costs remained high.
Any of these competitors may: (i) foresee the course of market development more accurately than we do; (ii) offer services that are deemed superior to ours; (iii) sell building products and services at a lower cost; (iv) develop stronger relationships with homebuilders and suppliers; (v) adapt more quickly to new technologies, new installation techniques, new types of materials or evolving customer requirements; or (vi) have access to financing on more favorable terms than we can obtain in the market.
Any of these competitors may: (i) foresee the course of market development more accurately than we do; (ii) offer services that are deemed superior to ours; (iii) sell building products and services at a lower cost; (iv) develop stronger relationships with homebuilders and suppliers; or (v) have access to financing on more favorable terms than we can obtain in the market.
Jeff Edwards has significant ownership of our common stock and may have interests that conflict with those of our other stockholders. As of December 31, 2023, Jeff Edwards beneficially owned approximately 16.0% of our outstanding common stock.
Jeff Edwards has significant ownership of our common stock and may have interests that conflict with those of our other stockholders. As of December 31, 2024, Jeff Edwards beneficially owned approximately 15.7% of our outstanding common stock.
According to Dodge Data & Analytics, commercial building starts in 2024, measured by investment dollars, are expected to decrease 2% from 2023 while institutional building starts (a subset of the nonresidential construction market in which we participate) are expected to increase 3% from 2023.
According to Dodge Data & Analytics, commercial building starts in 2025, measured by investment dollars, are expected to increase 6% from 2024 while institutional building starts (a subset of the nonresidential construction market in which we participate) are expected to increase 4% from 2024.
Any interruption in the production or delivery of these products could delay or reduce availability of these products and increase our costs. Increases in fuel costs could adversely affect our results of operations. The price of oil has fluctuated over the last few years, creating volatility in our fuel costs. We do not currently hedge our fuel costs.
Any interruption in the production or delivery of these products could delay or reduce availability of these products and increase our costs. Increases in fuel costs could adversely affect our results of operations. The price of oil has fluctuated at times and has created volatility in our fuel costs. We do not currently hedge our fuel costs.
In addition, as a result of our acquisition strategy, we have recorded goodwill and may incur impairment charges in connection with prior and future acquisitions. Our distribution businesses maintain significant goodwill balances in a separate reporting unit from our traditional installation business.
We recorded a minor intangible asset impairment due to the wind down of a single branch in 2024. In addition, as a result of our acquisition strategy, we have recorded goodwill and may incur impairment charges in connection with prior and future acquisitions. Our distribution businesses maintain significant goodwill balances in a separate reporting unit from our traditional installation business.
Increased labor, health care and insurance costs could have an adverse effect on our business, financial condition and results of operations. Variability in self-insurance liability estimates could adversely impact our results of operations. We carry insurance for risks including, but not limited to, workers’ compensation, general liability, vehicle liability, property and our obligation for employee-related health care benefits.
Variability in self-insurance liability estimates could adversely impact our results of operations. We carry insurance for risks including, but not limited to, workers’ compensation, general liability, vehicle liability, property and our obligation for employee-related health care benefits.
We currently have one long-term agreement with a supplier and may enter into other short- or long-term supply agreements at any time.
We currently have two long-term agreements with suppliers and may enter into other short- or long-term supply agreements at any time.
In particular, prolonged periods of higher mortgage interest rates, rising home prices, sustained periods of inflation, or other economic factors can reduce home affordability and may lead to a continued decline in the home construction market.
There are many macroeconomic and regional economic conditions that can impact the new residential housing market. In particular, prolonged periods of higher mortgage interest rates, rising home prices, sustained periods of inflation, or other economic factors can reduce home affordability and may lead to a continued decline in the home construction market.
Any delay or prevention of a change of control transaction or changes in our board of directors and management could deter potential acquirers or prevent the completion of a transaction in which our stockholders could receive a substantial premium over the then-current market price for their shares of our common stock.
Any delay or prevention of a change of control transaction or changes in our board of directors and management could deter potential acquirers or prevent the completion of a transaction in which our stockholders could receive a substantial premium over the then-current market price for their shares of our common stock. 28 We pay dividends to holders of our common stock, but may reduce, suspend, or eliminate dividend payments in the future.
While these threats have not had a material impact on our business or operations to date, if such an event occurred, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.
While these threats have not had a material impact on our business or operations to date, if such an event occurred, it could have a material adverse effect on our business, financial condition, results of operations and cash flows. 18 Terrorist attacks or acts of war against the United States or increased domestic or international instability could have an adverse effect on our operations.
Terrorist attacks or acts of war against the United States or increased domestic or international instability could have an adverse effect on our operations. Adverse developments in the war on terrorism, terrorist attacks against the United States or any outbreak or escalation of hostilities between the United States and any foreign power may cause disruption to the economy.
Adverse developments in the war on terrorism, terrorist attacks against the United States or any outbreak or escalation of hostilities between the United States and any foreign power may cause disruption to the economy.
We urge investors to consider carefully the risk factors described below in evaluating the information contained in this report. 11 For a summary of the following risks, please see "Information Regarding Forward-Looking Statements and Risk Factors Summary" which appears immediately prior to Item 1, Business, of this Form 10-K.
For a summary of the following risks, please see "Information Regarding Forward-Looking Statements and Risk Factors Summary" which appears immediately prior to Item 1, Business, of this Form 10-K.
Any deterioration in economic or housing market conditions or continuation of uncertain economic or housing market conditions could have a material adverse effect on our business, financial condition, results of operations and prospects. A continued downturn in the housing market could materially and adversely affect our business and financial results. In 2023, the U.S.
Any deterioration in economic or housing market conditions or continuation of uncertain economic or housing market conditions could have a material adverse effect on our business, financial condition, results of operations and prospects. 12 Adverse developments affecting the new residential housing market could materially and unfavorably affect our business and financial results.
As risks associated with cybersecurity threats constantly evolve and become more sophisticated generally, we may be required to incur significant costs to strengthen our systems to protect against or respond to such threats. The continued use of remote work environments, which significantly increased due to the COVID-19 pandemic, may increase our risk of cyberattacks or data breaches.
As risks associated with cybersecurity threats constantly evolve and become more sophisticated generally, we have incurred and will continue to incur significant costs to strengthen our systems to protect against or respond to such threats. The use of remote work environments and virtual platforms may increase our risk of cyberattacks or data breaches.
Various federal and state labor laws govern the relationship with our employees and impact operating costs. These laws include: • employee classification as exempt or non-exempt for overtime and other purposes; • workers’ compensation rates; • immigration status; • mandatory health benefits; • tax reporting; and • other wage and benefit requirements.
These laws include: • employee classification as exempt or non-exempt for overtime and other purposes; • workers’ compensation rates; • immigration status; • mandatory health benefits; • tax reporting; and • other wage and benefit requirements.
Any continued decline in new home construction may result in lower demand for our services and products and may materially adversely affect our business, financial condition, liquidity, results of operations and cash flows.
The majority of revenue from our business comes from the installation of building products in the new residential housing market. Any decline in new home construction may result in lower demand for our services and products and may materially adversely affect our business, financial condition, liquidity, results of operations and cash flows. In 2024, the U.S.
Census Bureau reported an estimated 1.42 million non-seasonally adjusted total housing starts, down from 1.55 million starts in 2022. Mortgage interest rates are affected by the Federal Reserve's monetary polices and significantly impact the affordability of housing. The Federal Reserve has raised interest rates significantly since 2022 to slow rising 12 inflation rates experienced in the last two years.
Census Bureau reported an estimated 1.37 million non-seasonally adjusted total housing starts, down from 1.42 million starts in 2023. Mortgage interest rates are affected by the Federal Reserve's monetary policies and significantly impact the affordability of housing. The Federal Reserve raised the federal funds rate significantly in 2022 and 2023 to stabilize inflation. This contributed to higher mortgage interest rates.
In addition, under our amended and restated certificate of incorporation, Jeff Edwards is permitted to pursue corporate opportunities for himself, rather than for us . 27 Provisions of our charter documents and Delaware law could delay, discourage or prevent an acquisition of us, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for our stockholders to change our management.
Provisions of our charter documents and Delaware law could delay, discourage or prevent an acquisition of us, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for our stockholders to change our management.
Residential homebuilders have, in the past, placed pressure on their suppliers to keep prices low, also contributing to the possibility of not being able to pass on price increases. Product shortages or the loss of key suppliers could affect our business, financial condition, results of operations and cash flows.
Residential homebuilders have, in the past, placed pressure on their suppliers to keep prices low, also contributing to the possibility of not being able to pass on price increases. Our industry may develop new product innovations, installation techniques or requirements for insulation materials that could adversely affect our business and financial results.
Additional risks and uncertainties not presently known to us, or that we currently believe to be immaterial, may also adversely impact our business, financial condition and results of operations.
Additional risks and uncertainties not presently known to us, or that we currently believe to 11 be immaterial, may also adversely impact our business, financial condition and results of operations. We urge investors to consider carefully the risk factors described below in evaluating the information contained in this report.
These limitations, in both the debt and equity markets, may negatively affect our ability to manage our liquidity, our ability to refinance existing debt, grow our businesses, implement our strategies, our results of operations, and the price of our common stock. We have released our ESG report annually since 2021.
Any such limitations, in both the debt and equity markets, may negatively affect our ability to manage our liquidity, our ability to refinance existing debt, grow our businesses, implement our strategies, our results of operations, and the price of our common stock. Federal and state regulations are rapidly evolving in regards to ESG matters.
Similarly, if additional claims are filed against us in the future, the negative outcome of one or more of such matters could have a material adverse effect on our results, financial condition and cash flows. 21 The nature of our business exposes us to product liability, workmanship warranty, casualty, negligence, health and safety incidents, construction defect, breach of contract and other claims and legal proceedings.
Similarly, if additional claims are filed against us in the future, the negative outcome of one or more of such matters could have a material adverse effect on our results, financial condition and cash flows.
Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price. The market price of our common stock could decline significantly as a result of sales of a large number of shares of our common stock.
The market price of our common stock could decline significantly as a result of sales of a large number of shares of our common stock.
In addition, we are subject to increased regulation of data privacy and information security, including the adoption of more stringent laws in states including California, Connecticut, Colorado, Utah and Virginia, with similar laws going into effect in other states in and after 2024.
In addition, we are subject to increased regulation of data privacy and information security and may be subject to certain more stringent laws in states including California, 22 Connecticut, Colorado, Delaware, Iowa, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Texas, Utah and Virginia, with similar laws going into effect in other states later in 2025 and beyond.
The labor market for the construction industry is competitive, including within the sector in which we operate. We must attract, train and retain a large number of qualified employees to install our products while controlling related labor costs. We face significant competition for these employees from our industry as well as from other industries.
We must attract, train and retain a large number of qualified employees to install our products while controlling related labor costs. We face significant competition for these employees from our industry as well as from other industries. Tighter labor markets may make it even more difficult for us to hire and retain installers and control labor costs.
Historically, unexpected events, such as incapacitation of supplier facilities due to extreme weather or fire, have temporarily reduced manufacturing capacity and production. The overall global supply chain can impact our suppliers as evidenced by disruptions we have experienced since 2021 for certain materials we use in our business. We expect these challenges to persist to a certain degree in 2024.
Historically, unexpected events, such as incapacitation of supplier facilities due to extreme weather or fire, have temporarily reduced manufacturing capacity and production. U.S. international trade policy can impact the suppliers of certain 14 materials we use in our business.
In addition, health care coverage requirements, changes in workplace regulations and any future legislation could cause us to experience higher health care and labor costs in the future. Periods of economic inflation can cause these costs to rise more quickly and we may not be able to pass along these increased costs to our customers.
In addition, health care coverage requirements, changes in workplace regulations and any future legislation could cause us to experience higher health care and labor costs in the future. Additionally, periods of economic inflation can cause wage expectations to increase and we may have difficulty retaining employees if we do not, or cannot, meet these expectations.
In addition, in January 2023, the Federal Trade Commission proposed a new rule that would prohibit non-competition agreements in most cases and an increasingly number of states have already banned non-competition agreements.
In addition, the Federal Trade Commission enacted a rule which is currently set aside and subject to court challenges and an increasing number of states have proposed rules that would prohibit non-competition agreements in most cases.
These laws, regulations or rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, financial condition, results of operations and cash flows.
For example, we are subject to increased ESG regulation, including California Senate Bills 253, 261 and 219 that go into effect in 2026 and mandate certain climate disclosure and reporting. 23 These laws, regulations or rules and their interpretation and application may also change from time to time and those changes could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Higher labor and health care costs could adversely affect our business. Our labor costs have increased in recent years and may continue to increase as a result of competition, health and other insurance and benefit costs.
Our ability to attract qualified employees and control labor costs is subject to numerous external factors, including competitive wage rates and health and other insurance and benefit costs. Our labor costs have increased in recent years and may continue to increase as a result of competition, health and other insurance and benefit costs.
We may be subject to claims arising from the operations of our various businesses for periods prior to the dates we acquired them. We have consummated over 190 acquisitions.
Additionally, if we are unable to secure favorable arrangements on the products we sell from our suppliers, we may not be able to offer competitive pricing to our customers. We may be subject to claims arising from the operations of our various businesses for periods prior to the dates we acquired them. We have consummated approximately 200 acquisitions.
The manufacturers from whom we acquire products could decide to sell their own products, impacting our ability to grow our business and negatively affecting our future net sales and earnings. Additionally, if we are unable to secure favorable arrangements on the products we sell from our suppliers, we may not be able to offer competitive pricing to our customers.
We do not have any exclusivity agreements with the manufacturers of the products that we sell. The manufacturers from whom we acquire products could decide to sell their own products, impacting our ability to grow our business and negatively affecting our future net sales and earnings.
The ability to obtain performance bonds and licensing bonds can also be impacted by the willingness of insurance companies to issue performance bonds and licensing bonds.
The ability to obtain performance bonds and licensing bonds can also be impacted by the willingness of insurance companies to issue performance bonds and licensing bonds. If we are unable to obtain performance bonds and licensing bonds when required, our business, financial condition, results of operations and/or cash flows could be adversely impacted.
The report includes our policies and practices on a variety of social and environmental matters, including, diversity and inclusion initiatives, training and development programs, and employee health and safety practices as well as other sustainable business practices and environmental targets. It is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption.
These laws and regulations will increase our ongoing costs of compliance. We have released our ESG report annually since 2021. The report includes our policies and practices on a variety of social and environmental matters. It is possible that stakeholders may not be satisfied with our ESG practices or the speed of their adoption.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAs discussed in more detail below, we have policies and procedures in place as part of our overall risk management strategy to, among other things, monitor our systems, train and raise awareness of cybersecurity threats amongst employees, and detect intrusions on our systems. 28 Notwithstanding our efforts at cybersecurity, no system of prevention is impenetrable, and we cannot guarantee that we will be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us.
Biggest changeAs discussed in more detail below, we have policies and procedures in place as part of our overall risk management strategy to, among other things, monitor our systems, train and raise awareness of cybersecurity threats amongst employees, and detect intrusions on our systems.
For ongoing events, those responsible for investigating the incident are required to continuously update the IRT and the CIO until the event is considered to be resolved. Significant cybersecurity incidents are referred to a committee responsible for evaluating whether the incident is material using criteria based on our ERM program.
For ongoing events, those responsible for investigating the incident are required to continuously update the IRT and the CIO until the event is considered to be resolved. Significant 30 cybersecurity incidents are referred to a committee responsible for evaluating whether the incident is material using criteria based on our ERM program.
In addition, our CIO reports all cybersecurity incidents, whether ongoing or first experienced during the quarter, to the Audit Committee at each quarterly meeting, and more frequently if necessary. 30
In addition, our CIO reports all cybersecurity incidents, whether ongoing or first experienced during the quarter, to the Audit Committee at each quarterly meeting, and more frequently if necessary. 31
Our 29 head of Internal Audit also provides the Audit Committee with an assessment of any material changes to cybersecurity risks and controls as a result of cybersecurity threats on at least a semi-annual basis. Management’s Role in Assessing and Managing Material Risks from Cybersecurity Threats Management is responsible for assessing and managing our cybersecurity risk management program.
Our Vice President of Internal Audit also provides the Audit Committee with an assessment of any material changes to cybersecurity risks and controls as a result of cybersecurity threats on at least a semi-annual basis. Management’s Role in Assessing and Managing Material Risks from Cybersecurity Threats Management is responsible for assessing and managing our cybersecurity risk management program.
Central to these processes is a committee comprised of our head of Internal Audit, our Chief Information Officer (“CIO”), members of our executive team, and other senior members of management that evaluates cybersecurity risks and designs, and ensure implementation of, appropriate controls, protections and training.
Central to these processes is a committee comprised of our Vice President of Internal Audit, our Chief Information Officer (“CIO”), members of our executive team, and other senior members of management that evaluates cybersecurity risks and designs and ensures implementation of appropriate controls, protections and training.
The IT department is overseen by an Chief Technology Officer (CTO) who has an undergraduate degree in network and systems administration as well as significant experience in the development, operation, monitoring and management of information system operations, including but not to limited to cybersecurity oriented controls.
The IT department is overseen by an Chief Technology Officer ("CTO") who has a degree in networking as well as significant experience in the development, operation, monitoring and management of information system operations, including but not to limited to cybersecurity oriented controls.
In addition, we regularly engage various third-parties to assess or test our systems and processes to enhance our detection and management of cybersecurity risks or assist with implementation of our risk management strategies, including consultants who assist with assessing risks, information security experts who conduct tabletop exercises with participation from company management, and our external auditor who performs cybersecurity reviews as part of our annual audit.
In addition, we regularly engage various third-parties to assess or test our systems and processes to enhance our detection and management of cybersecurity risks or assist with implementation of our risk management strategies, including consultants who assist with assessing risks and information security experts who conduct tabletop exercises with participation from company management.
From time to time, we have experienced cybersecurity incidents in the normal course of our business. As of the date of this report, we are not aware of any cybersecurity incident or threat that has materially affected or is reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition.
As of the date of this report, we are not aware of any cybersecurity incident or threat that has materially affected or is reasonably likely to materially affect the Company, including our business strategy, results of operations, or financial condition. However, future cybersecurity incidents could materially affect our strategy, results of operations or financial condition. See Item 1A.
CYBERSECURITY RISK MANAGEMENT AND STRATEGY As part of our Enterprise Risk Management (“ERM”) program, we maintain processes to assess, identify, manage, mitigate, and respond to material risks from cybersecurity threats.
Risk Factors for additional information on how risks could materially affect the Company. CYBERSECURITY RISK MANAGEMENT AND STRATEGY As part of our Enterprise Risk Management (“ERM”) program, we maintain processes to assess, identify, manage, mitigate, and respond to material risks from cybersecurity threats.
Our cybersecurity program, where appropriate, aligns with the Center of Internet Security (“CIS”) Control framework, which itself is modeled after the National Institute of Standards and Technology's ("NIST") Cybersecurity Framework (“CSF”).
Our cybersecurity program, where appropriate, aligns with the Center of Internet Security (“CIS”) Control framework, which itself is modeled after the National Institute of Standards and Technology's ("NIST") Cybersecurity Framework (“CSF”). 29 Our policies and procedures concerning cybersecurity matters include processes to safeguard our information systems, monitor these systems, protect the confidentiality and integrity of our data, detect intrusions into our systems, and respond to cybersecurity incidents.
Removed
However, future cybersecurity incidents could materially affect our strategy, results of operations or financial condition. See Item 1A. Risk Factors for additional information on how risks could materially affect the Company.
Added
Notwithstanding our efforts at cybersecurity, no system of prevention is impenetrable, and we cannot guarantee that we will be successful in preventing or mitigating a cybersecurity incident that could have a material adverse effect on us. From time to time, we have experienced cybersecurity incidents in the normal course of our business.
Removed
Our policies and procedures concerning cybersecurity matters include processes to safeguard our information systems, monitor these systems, protect the confidentiality and integrity of our data, detect intrusions into our systems, and respond to cybersecurity incidents.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeState Number of Locations Approximate Total Square Footage State Number of Locations Approximate Total Square Footage Alabama 2 24,250 Nevada 1 15,350 Arizona 2 29,166 New Hampshire 10 80,640 California 26 290,719 New Jersey 8 132,037 Colorado 14 164,148 New York 9 101,430 Connecticut 3 47,057 North Carolina 18 301,034 Delaware 4 45,185 North Dakota 2 7,392 Florida 31 322,979 Ohio 11 455,416 Georgia 12 192,316 Oklahoma 3 35,543 Idaho 3 43,000 Oregon 2 32,928 Illinois 7 85,902 Pennsylvania 8 110,909 Indiana 13 255,319 Rhode Island 4 31,654 Kansas 2 74,206 South Carolina 8 116,439 Kentucky 4 46,330 South Dakota 2 55,000 Louisiana 2 19,535 Tennessee 7 206,786 Maine 3 38,750 Texas 22 416,260 Maryland 5 65,110 Utah 6 115,809 Massachusetts 5 45,223 Vermont 1 31,020 Michigan 2 36,800 Virginia 7 97,558 Minnesota 7 187,988 Washington 14 203,331 Missouri 2 15,436 West Virginia 1 2,080 Montana 2 4,576 Wisconsin 9 205,808 Nebraska 2 23,241 Our Fleet As of December 31, 2023, our fleet consisted of approximately 6,000 total vehicles that we either leased or owned, including approximately 5,700 installation vehicles that our installers use to deliver and install products from our locations to job sites, and approximately 300 other vehicles that are utilized for various purposes, primarily by our distribution operations, sales staff, branch managers and various senior management personnel.
Biggest changeState Number of Locations Approximate Total Square Footage State Number of Locations Approximate Total Square Footage Alabama 2 24,250 Nevada 2 20,310 Arizona 3 54,631 New Hampshire 10 81,365 California 28 305,841 New Jersey 8 128,037 Colorado 13 175,148 New York 9 101,430 Connecticut 4 48,357 North Carolina 19 330,574 Delaware 5 53,575 North Dakota 2 9,752 Florida 30 306,033 Ohio 16 562,155 Georgia 12 192,316 Oklahoma 5 48,743 Idaho 3 43,000 Oregon 2 32,928 Illinois 8 128,891 Pennsylvania 7 108,909 Indiana 12 255,319 Rhode Island 4 31,654 Kansas 2 74,206 South Carolina 8 120,739 Kentucky 4 47,350 South Dakota 3 59,932 Louisiana 2 19,535 Tennessee 8 184,592 Maine 3 51,860 Texas 19 399,916 Maryland 5 65,110 Utah 5 123,309 Massachusetts 5 51,303 Vermont 1 31,020 Michigan 3 42,192 Virginia 7 97,582 Minnesota 10 250,718 Washington 13 190,616 Missouri 2 17,536 West Virginia 1 2,080 Montana 5 46,740 Wisconsin 9 208,808 Nebraska 2 23,241 Our Fleet As of December 31, 2024, our fleet consisted of approximately 6,300 total vehicles that we either leased or owned, including approximately 6,000 installation vehicles that our installers use to deliver and install products from our locations to job sites, and approximately 300 other vehicles that are utilized for various purposes, primarily by our distribution operations, sales staff, branch managers and various senior management personnel.
We believe that our facilities are suitable and adequate for present purposes, and that the productive capacity in such facilities is substantially being utilized. The table below summarizes our locations as of December 31, 2023.
We believe that our facilities are suitable and adequate for present purposes, and that the productive capacity in such facilities is substantially being utilized. The table below summarizes our locations as of December 31, 2024.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeSee Note 17, Commitments and Contingencies, in Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K for additional information on significant legal proceedings. Item 4. Mine Safety Disclosures Not applicable. 31 PART II
Biggest changeSee Note 17, Commitments and Contingencies, in Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K for additional information on significant legal proceedings. Item 4. Mine Safety Disclosures Not applicable. 32 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−2 removed3 unchanged
Biggest changeThe graph assumes investments of $100 in our common stock and in each of the four indices and the reinvestment of dividends for the last five fiscal years through December 31, 2023. 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/30/2022 12/29/2023 IBP 100 204 303 419 263 571 Russell 2000 100 125 150 173 137 161 S&P 500 Industrials 100 129 144 174 164 194 S&P 600 Building Products 100 143 182 228 190 286 32 Issuer Purchases of Equity Securities 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 December 31, 2023: Total Number of Shares Purchased (1) 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) October 1 - 31, 2023 87 $ 117.70 — $ — November 1 - 30, 2023 42,491 147.58 42,486 193.7 million December 1 - 31, 2023 4,329 185.82 — — 46,907 $ 151.07 42,486 $ 193.7 million (1) Includes shares surrendered to the Company by employees to satisfy tax withholding obligations arising in connection with the vestin g of 5,252 s hares of restricted stock awarded under ou r 2014 and 2023 Omnibus Incentive Plans.
Biggest changeThe graph assumes investments of $100 in our common stock and in each of the four indices and the reinvestment of dividends for the last five fiscal years through December 31, 2024. 12/31/2019 12/31/2020 12/31/2021 12/30/2022 12/29/2023 12/31/2024 IBP 100 148 205 129 280 271 Russell 2000 100 120 138 109 128 143 S&P 500 Industrials 100 111 134 127 150 176 S&P 600 Building Products 100 127 159 132 200 225 33 Issuer Purchases of Equity Securities 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 December 31, 2024: 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 (1) October 1 - 31, 2024 — $ — — $ — November 1 - 30, 2024 250,000 206.50 250,000 — December 1 - 31, 2024 132,924 205.04 132,924 154.7 million 382,924 $ 205.99 382,924 $ 154.7 million (1 ) On February 22, 2024, we announced that our board of directors authorized a stock repurchase program that allows for the repurchase of up to $300.0 million of our outstanding common stock.
In addition to the quarterly cash dividend, our board of directors has approved an annual variable dividend payable since 2022, with the 2024 dividend payable on March 31, 2024 at a rate of $1.60 per common share.
In addition to the quarterly cash dividend, our board of directors has approved an annual variable dividend payable since 2022, with the 2025 dividend payable on March 31, 2025 at a rate of $1.70 per common share.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock is traded on the NYSE under the symbol “IBP.” Holders of Record As of February 15, 2024, there were 1,231 holder s of record of our common stock, one of which was Cede & Co., which is the holder of shares held through the Depository Trust Company.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information for Common Stock Our common stock is traded on the NYSE under the symbol “IBP.” Holders of Record As of February 20, 2025, there were 1,430 h older s of record of our common stock, one of which was Cede & Co., which is the holder of shares held through the Depository Trust Company.
(2 ) On February 22, 2023, our board of directors authorized a stock repurchase program that allows for the repurchase of up to $200.0 million of our outstanding common stock. The new program replaced the previous program and is in effect through March 1, 2024.
On February 27, 2025, we announced that our board of directors authorized a new stock repurchase program that allows for the repurchase of up to $500.0 million of our outstanding common stock . The new program replaces the previous program and is in effect through March 1, 2026.
This 2024 new program will replace the previous 2023 program and is in effect through March 1, 2025. For further information about our stock repurchase programs, see Note 13, Stockholders' Equity, in Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K.
For further information about our stock repurchase programs, see Note 13, Stockholders' Equity, in Part II, Item 8, Financial Statements and Supplementary Data, of this Form 10-K. Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities During 2024, we did not issue or sell any unregistered equity securities. Item 6. [Reserved] 34
Removed
We repurchased $6.3 million of common stock under our stock repurchase program during the year ended December 31, 2023. On February 22, 2024, we announced that our board of directors authorized a new stock repurchase program that allows for the repurchase of up to $300.0 million of our outstanding common stock .
Added
The new program replaced the previous program and is in effect through March 1, 2025. We repurchase d $145.3 million o f common stock under our stock repurchase program during the year ended December 31, 2024.
Removed
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities During 2023, we did not issue or sell any unregistered equity securities. Item 6. [Reserved] 33

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

103 edited+21 added−25 removed63 unchanged
Biggest changeOther comprehensive (loss) income, net of tax Other comprehensiv e (loss) income, net of tax for 2023, 2022 and 2021 were as follows (in millions): 2023 2022 2021 Unrealized (loss) gain on cash flow hedge, net of taxes $ (6.9) $ 40.8 $ 8.5 During the year ended December 31, 2023, we recorded unrealized losses, net of taxes, of $10.2 million on our cash flow hedges primarily due to the market's expectations for interest rates to decline in the future which offset the previous unrealized gains on our existing and forward swaps.
Biggest changeIncome Tax Provision Income tax provision and effective tax rates for the years ended December 31, 2024 , 2023 and 2022 were as follows (in millions): 2024 2023 2022 Income tax provision $ 89.8 $ 89.4 $ 79.9 Effective tax rate 25.9 % 26.8 % 26.3 % During the years ended December 31, 2024 and 2023 , our tax rate was unfavorably impacted by certain expenses not being deductible for income tax reporting purposes. 39 Other comprehensive income (loss), net of tax Other comprehensiv e income (loss), net of tax for the years ended December 31, 2024 , 2023 and 2022 were as follows (in millions): 2024 2023 2022 Unrealized gain (loss) on cash flow hedge, net of taxes $ 1.3 $ (6.9) $ 40.8 During the year ended December 31, 2024, we recorded unrealized losses, net of taxes, of $2.0 million on our cash flow hedges primarily due to the market's expectations for interest rates to decline in the future which offset the previous unrealized gains on our existing and forward swaps.
Climate change and/or adverse weather conditions such as unusually prolonged cold conditions, rain, blizzards, hurricanes, earthquakes, fires, or other natural disasters could accelerate, delay or halt construction or installation activity or impact our suppliers. The impacts of climate change may subject us to increased costs, regulations, reporting requirements, standards or expectations regarding the environmental impacts of our business.
Climate change and/or adverse weather conditions such as unusually prolonged cold conditions, rain, blizzards, hurricanes, earthquakes, 41 fires, or other natural disasters could accelerate, delay or halt construction or installation activity or impact our suppliers. The impacts of climate change may subject us to increased costs, regulations, reporting requirements, standards or expectations regarding the environmental impacts of our business.
Lastly, we expect our selling and administrative expenses to continue to increase as our business grows, which could impact our future operating profitability. 40 SEASONALITY We tend to have higher sales during the second half of the year as our homebuilder customers complete construction of homes placed under contract for sale in the traditionally stronger spring selling season.
Lastly, we expect our selling and administrative expenses to continue to increase as our business grows, which could impact our future operating profitability. SEASONALITY We tend to have higher sales during the second half of the year as our homebuilder customers complete construction of homes placed under contract for sale in the traditionally stronger spring selling season.
Increased market pricing, regardless of the catalyst, has and could continue to impact our results of operations in 2024, 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 2023 but we may have more difficulty raising prices in 2024 if housing demand slows.
Increased market pricing, regardless of the catalyst, has and could continue to impact our results of operations in 2025, 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 2024 but we may have more difficulty raising prices in 2025 if housing demand slows.
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 business needs, commitments and contractual obligations for at least the next 12 months as evidenced by our net positive cash flows from operations for the years ended December 31, 2023, 2022 and 2021.
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 business needs, commitments and contractual obligations for at least the next 12 months as evidenced by our net positive cash flows from operations for the years ended December 31, 2024, 2023 and 2022.
While total housing starts are currently projected to be slightly lower in 2024 than 2023, we believe there are several trends that should drive long-term growth in the housing market, even if there are temporary periods of slowed growth. These long-term trends include an aging housing stock, population growth, demographic changes and household formation growth.
While total housing starts are currently projected to be slightly lower in 2025 than 2024, we believe there are several trends that should drive long-term growth in the housing market, even if there are temporary periods of slowed growth. These long-term trends include an aging housing stock, population growth, demographic changes and household formation growth.
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 due to our strong balance sheet, liquidity and our continuing acquisition strategy.
In addition, three 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 due to our strong balance sheet, liquidity and our continuing acquisition strategy.
(11) 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.
(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.
We expect to spend more to hire, train and retain installers to support our growing business in 2024, as tight labor availability continues within the construction industry. Our workers’ compensation costs also continue to rise as we increase our coverage for additional personnel.
We expect to spend more to hire, train and retain installers to support our growing business in 2025, as tight labor availability continues within the construction industry. Our workers’ compensation costs also continue to rise as we increase our coverage for additional personnel.
As of December 31, 2023, we were in compliance with all applicable covenants under the Term Loan Agreement, ABL Credit Agreement, and the Senior Notes. Derivative Instruments As of December 31, 2023, we had five total interest rate swaps including two forward interest rate swaps.
As of December 31, 2024, we were in compliance with all applicable covenants under the Term Loan Agreement, ABL Credit Agreement, and the Senior Notes. Derivative Instruments As of December 31, 2024, we had five total interest rate swaps including two forward interest rate swaps.
See Note 18, Business Combinations, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for more information regarding our business acquisitions in 2023, 2022 and 2021. 42 Additionally, total cash used to purchase property and equipment increased in 2023, and we expect to continue to support any increases in future net revenue through further capital expenditures.
See Note 18, Business Combinations, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for more information regarding our business acquisitions in 2024, 2023 and 2022. Additionally, total cash used to purchase property and equipment increased in 2024, and we expect to continue to support any increases in future net revenue through further capital expenditures.
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 approximately 250 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.
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 more than 250 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.
An accrual for estimated healthcare claims incurred but not reported (“IBNR”) is included within accrued compensation on the Consolidated Balance Sheets and was $3.9 million and $3.8 million as of December 31, 2023 and 2022, respectively. We participate in multiple workers’ compensation plans covering a significant portion of our business.
An accrual for estimated healthcare claims incurred but not reported (“IBNR”) is included within accrued compensation on the Consolidated Balance Sheets and was $4.8 million and $3.9 million as of December 31, 2024 and 2023, respectively. We participate in multiple workers’ compensation plans covering a significant portion of our business.
(10) Calculated based on 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.
(9) Calculated based on 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.
We have not made any material changes in our methodology used to establish our insurance reserves during the years ended December 31, 2023 and 2022, and none of the adjustments to our estimates have been material.
We have not made any material changes in our methodology used to establish our insurance reserves during the years ended December 31, 2024 and 2023, and none of the adjustments to our estimates have been material.
We assess the fair value of the contingent consideration liability at each reporting period, and any changes in the estimated fair value are reflected in gains on acquisition earno uts on the Consolidated Statements of Operations and Comprehensive Income. There were no gains on acquisition earnouts during the year ended December 31, 2023.
We assess the fair value of the contingent consideration liability at each reporting period, and any changes in the estimated fair value are reflected in gains on acquisition earno uts on the Consolidated Statements of Operations and Comprehensive Income. There were no gains on acquisition earnouts during the years ended December 31, 2024 and 2023.
We also amortized $4.5 million of the remaining unrealized gains, off-market terms 38 and unrealized losses on our terminated cash flow hedges to interest expense, net during the year ended December 31, 2023, not including tax effects of $1.2 million.
We also amortized $4.5 million of the remaining unrealized gains, off-market terms and unrealized losses on our terminated cash flow hedges to interest expense, net during the year ended December 31, 2024, not including tax effects of $1.2 million.
A majority of these capital expenditures were subsequently reimbursed via various vehicle and equipment notes payable, with related cash inflows shown in cash flows from financing activities. Cash Flows from Financing Activities Our sources of cash from financing activities consist of proceeds from the issuance of debt and new vehicle and equipment notes payable.
A significant portion of these capital expenditures were subsequently reimbursed via various vehicle and equipment notes payable, with related cash inflows shown in cash flows from financing activities. Cash Flows from Financing Activities Our sources of cash from financing activities consist of proceeds from the issuance of debt and new vehicle and equipment notes payable.
As of December 31, 2023 and 2022, offsets of these liabilities were $3.0 million and $2.3 million, respectively, with insurance receivables and indemnification assets for claims under fully insured policies or claims that exceeded the stop loss limit. We also participate in a high retention general liability insurance program and a high deductible auto insurance program.
As of December 31, 2024 and 2023, offsets of these liabilities were $4.4 million and $3.0 million, respectively, with insurance receivables and indemnification assets for claims under fully insured policies or claims that exceeded the stop loss limit. We also participate in a high retention general liability insurance program and a high deductible auto insurance program.
The mix of end customer and product would have an impact on the year-over-year price per job. (12) U.S.
The mix of end customer and product would have an impact on the year-over-year price per job. (11) U.S.
We will continue to work with our customers to adjust selling prices to offset higher costs as they occur. Cost of Labor Our business is labor intensive. As of December 31, 2023, we had approximately 10,600 employees, most of whom work as installers on local construction sites.
We will continue to work with our customers to adjust selling prices to offset higher costs as they occur. Cost of Labor Our business is labor intensive. As of December 31, 2024, we had approximately 10,800 employees, most of whom work as installers on local construction sites.
The amendment also allows for modification of specified fees depend upon achieving certain sustainability targets, in addition to making other modifications to the ABL Credit Agreement. Including outstanding letters of credit, our remaining availability under the ABL Revolver as of December 31, 2023 was $244.2 million. The ABL Revolver provides incremental revolving credit facility commitments of up to $50.0 million.
The amendment also allows for modification of specified fees depend upon achieving certain sustainability targets, in addition to making other modifications to the ABL Credit Agreement. Including outstanding letters of credit, our remaining availability under the ABL Revolver as of December 31, 2024 was $246.0 million. The ABL Revolver provides incremental revolving credit facility commitments of up to $50.0 million.
We expect that this repricing will result in interest rate cost savings exceeding $1.0 million annually through the 2028 maturity date. See Note 8, Long-term Debt, for more information on our Term Loan and the Second Amendment.
We expect that this repricing will result in interest rate cost savings exceeding $1.0 million annually through the 2031 maturity date. See Note 8, Long-term Debt, for more information on our Term Loan and the Fourth Amendment.
Environmental, Social and Governance, Climate Change and Other Factors According to the Office of Energy Efficiency & Renewable Energy, over $400 billion is spent each year to power homes and commercial structures that consume 75% of all electricity used in the United States and 40% of the nation’s total energy.
Environmental, Social and Governance According to the Office of Energy Efficiency & Renewable Energy, over $400 billion is spent each year to power homes and commercial structures that consume 75% of all electricity used in the United States and 40% of the nation’s total energy.
Firm commitments for funds include $68.1 million in interest and principals payments on long-term debt obligations including our Senior Notes, Term Loan, 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.
Firm commitments for funds include $67.2 million in interest and principals payments on long-term debt obligations including our Senior Notes, Term Loan, 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.
Beyond our service offerings, we also recognize that as a good corporate citizen, we have a responsibility to support our communities and be stewards of the environment. We continue to proactively work to find new ways to reduce our carbon footprint by formalizing a climate risk management framework to guide our climate strategy. We are committed to reducing CO2 emissions.
Beyond our service offerings, we also recognize that as a good corporate citizen, we have a responsibility to support our communities and be stewards of the environment. We continue to proactively work to find new ways to reduce our carbon footprint by formalizing a climate risk management framework to guide our climate strategy.
We also utilize gross profit percentage as shown in the following section to monitor our most significant variable costs and to evaluate labor efficiency and success at passing increasing costs of materials to customers. 35 The following table shows certain key measures of performance we utilize to evaluate our results: Years ended December 31, 2023 2022 2021 Period-over-period Growth Consolidated Sales Growth 4.1 % 35.6 % 19.1 % Consolidated Same Branch Sales Growth (1) 0.2 % 24.6 % 9.7 % Installation (2) Sales Growth (3) 3.7 % 29.5 % 18.7 % Same Branch Sales Growth (1)(3) (0.1) % 24.5 % 9.4 % Single-Family Sales Growth (4) (5.4) % 33.5 % 22.1 % Single-Family Same Branch Sales Growth (1)(4) (9.0) % 28.9 % 14.4 % Multi-Family Sales Growth (5) 35.0 % 31.8 % 14.7 % Multi-Family Same Branch Sales Growth (1)(5) 33.3 % 31.0 % 6.7 % Residential Sales Growth (6) 1.0 % 33.2 % 20.9 % Residential Same Branch Sales Growth (1)(6) (2.3) % 29.2 % 13.2 % Commercial Sales Growth (7) 17.2 % 15.2 % 10.8 % Commercial Same Branch Sales Growth (1)(7) 11.5 % 6.6 % (4.0) % Other (2) Sales Growth (8) 12.1 % 453.8 % 65.1 % Same Branch Sales Growth (1)(8) 6.7 % 41.5 % 44.3 % Same Branch Sales Growth - Installation (2)(9) Volume Growth (1)(10) (9.0) % 5.5 % 7.9 % Price/Mix Growth (1)(11) 7.7 % 23.0 % 3.3 % U.S.
We also utilize gross profit percentage as shown in the following section to monitor our most significant variable costs and to evaluate labor efficiency and success at passing increasing costs of materials to customers. 36 The following table shows certain key measures of performance we utilize to evaluate our results: Years ended December 31, 2024 2023 2022 Period-over-period Growth Consolidated Sales Growth 5.9 % 4.1 % 35.6 % Consolidated Same Branch Sales Growth (1) 3.5 % 0.2 % 24.6 % Installation Sales Growth (2) 6.0 % 3.7 % 29.5 % Same Branch Sales Growth (1)(2) 3.8 % (0.1) % 24.5 % Single-Family Sales Growth (3) 6.4 % (5.4) % 33.5 % Single-Family Same Branch Sales Growth (1)(3) 3.6 % (9.0) % 28.9 % Multi-Family Sales Growth (4) 6.5 % 35.0 % 31.8 % Multi-Family Same Branch Sales Growth (1)(4) 5.6 % 33.3 % 31.0 % Residential Sales Growth (5) 6.4 % 1.0 % 33.2 % Residential Same Branch Sales Growth (1)(5) 4.0 % (2.3) % 29.2 % Commercial Sales Growth (6) 3.0 % 17.2 % 15.2 % Commercial Same Branch Sales Growth (1)(6) 1.2 % 11.5 % 6.6 % Other Sales Growth (7) 8.2 % 12.1 % 453.8 % Same Branch Sales Growth (1)(7) 3.6 % 6.7 % 41.5 % Same Branch Sales Growth - Installation (8) Volume Growth (1)(9) (0.2) % (9.0) % 5.5 % Price/Mix Growth (1)(10) 3.7 % 7.7 % 23.0 % U.S.
Facility expense and insurance cost increases due to inflationary pressures also factored into the overall increase in administrative operating expenses. During 37 2023, we saw our administrative costs increase as a percentage of sales primarily due to higher salaries and bonuses due to higher profitability.
Facility expense and insurance cost increases due to inflationary pressures also factored into the overall increase in administrative operating expenses. During 38 2024, we saw our administrative costs increase as a percentage of sales primarily due to higher salaries and bonuses due to higher profitability and margins.
Housing Market (12) Total Completions Growth 4.3 % 3.7 % 4.2 % Single-Family Completions Growth (2.2) % 5.7 % 6.1 % Multi-Family Completions Growth 22.1 % (1.3) % (0.3) % (1) Same branch basis represents period-over-period growth for branch locations owned greater than 12 months as of each financial statement date.
Housing Market (11) Total Completions Growth 12.3 % 4.2 % 3.7 % Single-Family Completions Growth 1.8 % (2.3) % 5.7 % Multi-Family Completions Growth 35.4 % 22.1 % (1.3) % (1) Same branch basis represents period-over-period growth for branch locations owned greater than 12 months as of each financial statement date.
Selling expense increased as a percentage of sales primarily due to increased selling wages and bonuses due to higher profitability. Administrative The dollar increase in administrative expenses in 2023 was primarily due to an increase in wages and benefits, which was attributable to both acquisitions and organic growth as well as favorable company performance.
Selling expense increased as a percentage of sales primarily due to increased commissions due to higher profitability and margins. Administrative The dollar increase in administrative expenses in 2024 was primarily due to an increase in wages and benefits, which was attributable to both acquisitions and organic growth as well as favorable company performance.
Regular payments are due under each note for a period of typically 60 consecutive months after the incurrence of the obligation. Total outstanding loan balances relating to our master loan and equipment agreements were $83.0 million and $73.0 million as of December 31, 2023 and 2022, respectively.
Regular payments are due under each note for a period of typically 60 consecutive months after the incurrence of the obligation. 45 Total outstanding loan balances relating to our master loan and equipment agreements were $82.3 million and $83.0 million as of December 31, 2024 and 2023, respectively.
The estimate of the reporting unit’s fair value was determined by placing an 80% weighting on a discounted cash flow model and a 20% weighting on market-related model using current industry information that involve significant unobservable inputs (Level 3 inputs).
The estimate of the reporting unit’s fair value was determined by placing a 75% weighting on a discounted cash flow model and a 25% weighting on market-related model using current industry information that involve significant unobservable inputs (Level 3 inputs).
As of December 31, 2023 and 2022, we estimated total short-term and long-term known and IBNR claims for workers' compensation to be $26.5 million and $23.7 million, respectively.
As of December 31, 2024 and 2023, we estimated total short-term and long-term known and IBNR claims for workers' compensation to be $27.7 million and $26.5 million, respectively.
As of December 31, 2023 and 2022, general liability and auto insurance reserves included in other current and long-term liabilities were $25.4 million and $25.0 million, respectively.
As of December 31, 2024 and 2023, general liability and auto insurance reserves included in other current and long-term liabilities 47 were $32.0 million and $25.4 million, respectively.
As of December 31, 2023 and 2022, offsets of these liabilities were $1.8 46 million and $5.3 million, respectively, with insurance receivables and indemnification assets for claims under fully insured policies or claims that exceeded the stop loss limit.
As of December 31, 2024 and 2023, offsets of these liabilities were $2.8 million and $1.8 million, respectively, with insurance receivables and indemnification assets for claims under fully insured policies or claims that exceeded the stop loss limit.
Based on the results of this evaluation, we concluded 45 that there were no impairments of goodwill as the estimated fair value exceeded its carrying value. The estimated fair value exceeded the Distribution operating segment's carrying value by 11.9%.
Based on the results of this evaluation, we concluded that there were no impairments of goodwill as the estimated fair value exceeded its carrying value. The estimated fair value exceeded the Distribution operating segment's carrying value by 32.1%.
The following table presents our cash flows (in millions): Years ended December 31, 2023 2022 2021 Net cash provided by operating activities $ 340.2 $ 277.9 $ 138.3 Net cash used in investing activities (103.4) (158.7) (278.4) Net cash (used in) provided by financing activities (79.9) (223.1) 242.1 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.
The following table presents our cash flows (in millions): Years ended December 31, 2024 2023 2022 Net cash provided by operating activities $ 340.0 $ 340.2 $ 277.9 Net cash used in investing activities (159.1) (103.4) (158.7) Net cash used in financing activities (239.8) (79.9) (223.1) 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.
We amortized $3.9 million of the remaining unrealized gains, off-market terms and unrealized losses on our terminated cash flow hedges to interest expense, net during the year ended December 31, 2022, not including tax effects of $1.0 million.
We also amortized $4.4 million of the remaining unrealized gains, off-market terms and unrealized losses on our terminated cash flow hedges to interest expense, net during the year ended December 31, 2024, not including tax effects of $1.1 million.
Additionally, we maintain certain production vehicles under a finance lease structure which will require $3.2 million in interest and principal payments under current agreements in 2024. We lease certain locations, vehicles and equipment under operating lease agreements that will require $31.3 million in funds over the next twelve months.
Additionally, we maintain certain production vehicles under a finance lease structure which will require $3.4 million in interest and principal payments under current agreements in 2025. We lease certain locations, vehicles and equipment under operating lease agreements that will require $38.8 million in funds over the next twelve months.
The remaining overall growth in net revenue for the year December 31, 2023 is attributable to growth in our Distribution and Manufacturing operating segments. These operating segments grew from $162.4 million to $182.0 million in net revenue for the year ended December 31, 2023.
The remaining overall growth in net revenue for the year December 31, 2024 is attributable to growth in our Distribution and Manufacturing operating segments. Net revenue in these operating segments combined grew from $182.0 million to $197.9 million for the year ended December 31, 2024 over 2023.
Acquisitions also meaningfully contributed to our 2023 revenue growth, adding $102.2 million of revenue in 2023. Our residential end market gr ew 1.0% primar ily due to selling price and product mix improvements and the continued success of our acquisition strategy, but that growth was partially offset by the decline in overall same branch job volume.
Acquisitions also meaningfully contributed to our 2024 revenue growth. Our residential end market gr ew 6.4% primar ily due to selling price and product mix improvements and the continued success of our acquisition strategy, but that growth was partially offset by the slight decline in overall same branch job volume.
Our strategic acquisitions over the last several years contributed meaningfully to our 4.1% increase in net revenue during the year ended December 31, 2023 compared to 2022.
Our strategic acquisitions over the last several years contributed meaningfully to our 5.9% increase in net revenue during the year ended December 31, 2024 compared to 2023.
We generated approximately $340.2 million of cash from operating activities during the year ended December 31, 2023. As of December 31, 2023, we had $386.5 million of cash and cash equivalents and we have not drawn on our revolving line of credit.
We generated approximately $340.0 million of cash from operating activities during the year ended December 31, 2024. As of December 31, 2024, we had $327.6 million of cash and cash equivalents and have not drawn on our revolving line of credit.
We have omitted discussion of 2021 results in the sections that follow where it would be redundant to the discussion previously included in Part II, Item 7, of Form 10-K for the year ended December 31, 2022. 2023 Highlights Net revenues increased 4.1%, or $108.8 million, while gross profit increased 12.4% to $930.7 million during the year ended December 31, 2023 compared to 2022.
We have omitted discussion of 2022 results in the sections that follow where it would be redundant to the discussion previously included in Part II, Item 7, of Form 10-K for the year ended December 31, 2023. 2024 Highlights Net revenues increased 5.9%, or $162.7 million, while gross profit increased 6.9% to $994.5 million during the year ended December 31, 2024 compared to 2023.
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. 43 In December 2021, we entered into a new $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 administrative agent and collateral agent thereunder.
The ABL Credit Agreement and the Term Loan Agreement contain restrictive covenants that, among other things, limit the ability of the 44 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.
Census Bureau data, as revised. 36 Net revenue, cost of sales and gross profit The components of gross profit for 2023, 2022 and 2021 were as follows (in millions): 2023 Change 2022 Change 2021 Net revenue $ 2,778.6 4.1 % $ 2,669.8 35.6 % $ 1,968.7 Cost of sales 1,847.9 0.3 % 1,842.0 33.6 % 1,379.2 Gross profit $ 930.7 12.4 % $ 827.8 40.4 % $ 589.5 Gross profit percentage 33.5 % 31.0 % 29.9 % Net revenue increased during the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily due to increased multi-family and commercial sales and price/mix growth as sh own in the Key Measures of Performance section above.
Census Bureau data, as revised. 37 Net revenue, cost of sales and gross profit The components of gross profit for the years ended December 31, 2024 , 2023 and 2022 were as follows (in millions): 2024 Change 2023 Change 2022 Net revenue $ 2,941.3 5.9 % $ 2,778.6 4.1 % $ 2,669.8 Cost of sales 1,946.8 5.4 % 1,847.9 0.3 % 1,842.0 Gross profit $ 994.5 6.9 % $ 930.7 12.4 % $ 827.8 Gross profit percentage 33.8 % 33.5 % 31.0 % Net revenue increased during the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily due to increased sales in all of our end markets and price/mix growth as sh own in the Key Measures of Performance section above.
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.
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.
As of December 31, 2023, we had cash and cash equivalents of $386.5 million as well as access to $250.0 million under our asset-based lending credit facility (as defined below), less $5.8 million of outstanding letters of credit, resulting in total liquidity of $630.7 million.
As of December 31, 2024, we had cash and cash equivalents of $327.6 million as well as access to $250.0 million under our asset-based lending credit facility (as defined below), less $4.0 million of outstanding letters of credit, resulting in total liquidity of $573.6 million.
Finally, we have a product supply agreement with a certain vendor that requires us to purchase a minimum quantity of inventory with variable pricing in 2024. Payments for income taxes cannot be estimated at this time, but our effective tax rate was 26.8% for the year ended December 31, 2023.
Finally, we have two product supply agreements with various vendors that requires us to purchase a minimum quantity of inventory with variable and fixed rate pricing in 2025. Payments for income taxes cannot be estimated at this time, but our effective tax rate was 25.9% for the year ended December 31, 2024.
(2) Prior period disclosures have been recast to conform to the current period segment presentation. (3) Calculated based on period-over-period growth of all end markets for our Installation segment. (4) Calculated based on period-over-period growth in the single-family subset of the residential new construction end market for our Installation segment.
(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.
Operating Expenses Operating expenses for 2023, 2022 and 2021 were as follows (in millions): 2023 Change 2022 Change 2021 Selling $ 131.8 10.7 % $ 119.0 27.7 % $ 93.2 Percentage of total net revenue 4.7 % 4.5 % 4.7 % Administrative $ 385.3 14.8 % $ 335.7 23.2 % $ 272.4 Percentage of total net revenue 13.9 % 12.6 % 13.8 % Gains on acquisition earnouts $ — (100.0) % $ (16.1) 1,456.4 % $ (1.1) Percentage of total net revenue — % (0.6) % (0.1) % Amortization $ 44.5 1.7 % $ 43.8 18.0 % $ 37.1 Percentage of total net revenue 1.6 % 1.6 % 1.9 % Selling The dollar increase in selling expenses in 2023 was primarily driven by a year-over-year increase in selling wages and commissions to support our increased net revenue of 4.1% and higher credit loss provisions due to increased sales.
Operating Expenses Operating expenses for the years ended December 31, 2024 , 2023 and 2022 were as follows (in millions): 2024 Change 2023 Change 2022 Selling $ 139.8 6.1 % $ 131.8 10.7 % $ 119.0 Percentage of total net revenue 4.8 % 4.7 % 4.5 % Administrative $ 424.8 10.3 % $ 385.3 14.8 % $ 335.7 Percentage of total net revenue 14.4 % 13.9 % 12.6 % Gains on acquisition earnouts $ — — % $ — (100.0) % $ (16.1) Percentage of total net revenue — % — % (0.6) % Asset impairment $ 4.9 100.0 % $ — — % $ — Percentage of total net revenue 0.2 % — % — % Amortization $ 42.5 (4.5) % $ 44.5 1.7 % $ 43.8 Percentage of total net revenue 1.4 % 1.6 % 1.6 % Selling The dollar increase in selling expenses in 2024 was primarily driven by a year-over-year increase in selling wages and commissions to support our increased net revenue of 5.9%.
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 material costs compared to the prior ye ar.
The 3.7% increase in our price/mix metric for our Installation segment was primarily due to selling price increases. 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 material costs compared to the prior ye ar.
During 2024, we anticipate discretionary spending for capital improvements and quarterly dividends to approximate 2023 levels of approximately $61.6 million and $37.5 million, respectively, as well as approximately $45.0 million for our annual variable dividend to be paid March 31, 2024.
During 2025, we anticipate discretionary spending for capital improvements and quarterly dividends to approximate 2024 levels of approximately $88.6 million and $39.4 million, respectively, as well as approximately $47.2 million for our annual variable dividend to be paid March 31, 2025.
See Note 8, Long-term Debt, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for further information regarding debt balances.
See Note 8, Long-term Debt, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for more information on our revolving line of credit.
Additional funds may be spent on acquisitions, capital improvements and dividend payments, at our discretion. Known obligations beyond the next twelve months are as follows (in millions): 41 2025 $ 87.9 2026 84.0 2027 70.6 2028 812.7 Thereafter 3.9 Known obligations above include $997.9 million in interest and principals payments on long-term debt obligations through 2028.
Additional funds may be spent on acquisitions, capital improvements and dividend payments, at our discretion. Known obligations beyond the next twelve months are as follows (in millions): 2026 $ 94.3 2027 86.1 2028 360.7 2029 38.7 Thereafter 513.3 Known obligations above include $1.0 billion in interest and principal payments on long-term debt obligations through 2029.
As a percentage of net revenue, gross profit increased during the year ended December 31, 2023 compared to the year ended December 31, 2022 primarily on the strength of price/mix growth as well as leverage gained on material costs compared to the prior year.
As a percentage of net revenue, gross profit increased during the year ended December 31, 2024 compared to the year ended December 31, 2023 primarily on the strength of price/mix growth as well as leverage gained on material costs during the first half of 2024 compared to the prior year, offset by higher material and labor costs as a percentage of net revenue in the second half of 2024 due to changes in our product mix.
While improved retention drives lower costs to recruit and train new employees, resulting in greater installer productivity, these improvements are somewhat offset by the additional costs of these incentives.
We also provide assistance from the Installed Building Products Foundation meant to benefit our employees, their families and their communities. While improved retention drives lower costs to recruit and train new employees, resulting in greater installer productivity, these improvements are somewhat offset by the additional costs of these incentives.
The following table summarizes our outstanding bonds, letters of credit and cash-collateral (in millions): As of December 31, 2023 Performance bonds $ 99.5 Insurance letters of credit and cash collateral 67.2 Permit and license bonds 10.7 Total bonds and letters of credit $ 177.4 We have $58.9 million included in our insurance letters of credit in the above table that are unsecured and therefore do not reduce total liquidity.
The following table summarizes our outstanding bonds, letters of credit and cash-collateral (in millions): As of December 31, 2024 Performance bonds $ 77.3 Insurance letters of credit and cash collateral 72.3 Permit and license bonds 11.0 Total bonds and letters of credit $ 160.6 We have $65.3 million included in our insurance letters of credit in the above table that are unsecured and therefore do not reduce total liquidity.
We generally review and reassess our estimates for each uncompleted contract at least quarterly to reflect the latest reliable information available. Changes in these estimates could favorably or unfavorably impact revenues and their related profits.
We generally review and reassess our estimates for each uncompleted contract at least quarterly to reflect the latest reliable information available.
Cash used in financing activities consists primarily of debt repayments, acquisition-related obligations, dividends and stock repurchases. We had a net use of cash in financing activities in both 2023 and 2022 compared to a net inflow of cash in 2021 primarily due to the proceeds on our Term Loan received in 2021.
Cash used in financing activities consists primarily of debt repayments, acquisition-related obligations, dividends and stock repurchases. We had a net use of cash in financing activities in both 2024 and 2023.
Also, during the year ended December 31, 2022, we recorded an unrealized gain, net of taxes, of $37.9 million on our cash flow hedges primarily due to the market's expectations for interest rates in the future relative to our three existing interest rate swaps and two forward interest rate swaps.
During the year ended December 31, 2023, we recorded unrealized losses, net of taxes, of $10.2 million on our cash flow hedges primarily due to the market's expectations for interest rates to decline in the future which offset the previous unrealized gains on our existing and forward swaps.
(9) The heavy commercial end market, a subset of our total commercial end market, comprises projects that are much larger than our average installation job.
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.
During the year ended December 31, 2022, we experienced overall sales growth in all of our end markets and we achieved 24.6% year-over-year same branch sales growth, with acquisitions contributing the remaining portion of our total sales growth. Our largest end market, the single-family subset of the residential new construction market, grew revenue 33.5% over the same period in 2021.
During the year ended December 31, 2024, we experienced overall sales growth in all of our end markets and we achieved 3.5% year over year same branch sales growth, with acquisitions contributing the remaining portion of our total sales growth.
Our commercial end market experienced sales growth of 17.2% during the year ended December 31, 2023 primarily through acquisitions and organic growth as the commercial construction cycle returned to normal and project delays experienced in prior periods lessened. 34 We continue to diversify our operations through our acquisition strategy as we acquired 8 businesses in 2023 that we expect to contribute approximately $75.0 million in annual aggregate revenues.
Our commercial end market experienced sales growth of 3.0% during the year ended December 31, 2024 primarily through contributions from our recent acquisitions. 35 We continue to diversify our operations through our acquisition strategy as we acquired nine businesses in 2024 that we expect to contribute approximately $104.2 million in annual aggregate revenues.
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.
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. 42 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.
(5) Calculated based on period-over-period growth in the multi-family subset of the residential new construction end market for our Installation segment. (6) Calculated based on period-over-period growth in the residential new construction end market for our Installation segment. (7) Calculated based on period-over-period growth in the total commercial end market.
(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. 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 for our Manufacturing and Distribution operating segments.
Our commercial end market experienced sales growth of 15.2% during the year ended December 31, 2022 primarily as a result of acquisitions. We experienced commercial project delays in 2022 due to macroeconomic concerns surrounding the pandemic and general economic uncertainty. Key Measures of Performance We utilize certain net revenue and industry metrics to monitor our operations.
Our commercial end market experienced sales growth of 17.2% during the year ended December 31, 2023 primarily through acquisitions and organic growth as the commercial construction cycle returned to normal and project delays experienced in prior periods lessened. Key Measures of Performance We utilize certain net revenue and industry metrics to monitor our operations.
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.
In addition, we occasionally use letters of credit and cash to secure our performance under our general liability and workers’ compensation 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.
Goodwill Impairment We performed an annual quantitative goodwill impairment test as of October 1, 2023 on our Distribution operating segment which we have determined is also a reporting unit.
Changes in these estimates could favorably or unfavorably impact revenues and their related profits. 46 Goodwill Impairment We performed an annual quantitative goodwill impairment test as of October 1, 2024 on our Distribution operating segment which we have determined is also a reporting unit.
We believe this is a result of our strong culture and the various programs meant to benefit our employees, including our financial wellness plan, emotional well-being coaching, longevity stock compensation plan and comprehensive benefit packages we offer. We also provide assistance from the Foundation meant to benefit our employees, their families and their communities.
Our employee retention rates remained better than industry averages in the year ended December 31, 2024. We believe this is a result of our strong culture and the various programs meant to benefit our employees, including our financial wellness plan, emotional well-being coaching, longevity stock compensation plan and comprehensive benefit packages we offer.
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 completed one additional acquisition in 2024 compared to 2023 and the average size of the acquisitions was larger in the year ended December 31, 2024. The amount of cash paid for an acquisition is dependent on various factors, including the size and determined value of the business being acquired.
Amortization expense increased in 2023 resulting from the increase in new intangible assets from 2023 acquisitions, with the remaining increase due to a full year of amortization expense attributable to prior year acquisitions. See Note 18, Business Combinations, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for information on our acquisitions.
See Note 18, Business Combinations, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for information on our acquisitions.
We were successful in achieving higher labor productivity as evidenced by our annual sales per installer per business day increasing 1% in 2023 as compared to 2022. Our employee retention rates remained better than industry averages in the year ended December 31, 2023.
Labor costs as a percentage of revenue increased during the year ended December 31, 2024 compared to 2023 primarily due to market competition and expectations for higher wages. We were successful in achieving higher labor productivity as evidenced by our annual sales per installer per business day increasing 1% in 2024 as compared to 2023.
Our liquidity remains strong despite investing $59.6 million in our acquisition strategy, repurchasing $6.3 million of our Company's stock and paying $63.1 million in dividends during the year ended December 31, 2023. See Note 8, Long-term Debt, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for more information on our revolving line of credit.
As of December 31, 2023, we had $386.5 million of cash and cash equivalents and we had not drawn on our revolving line of credit. Our 2023 liquidity was strong despite investing $59.6 million in our acquisition strategy, repurchasing $6.3 million of our Company's stock and paying $63.1 million in dividends during the year ended December 31, 2023.
For the first time in 2022, we utilized more HFO materials than HFC materials. Certain effects of climate change that may cause severe weather events could have a material effect on our operations.
We also support the industry transition to hydrofluoro-olefin ("HFO") spray foam types which have lower greenhouse gas emissions than hydrofluorocarbon ("HFC") materials. We utilized more HFO materials than HFC materials and expect this to continue to increase. Certain effects of climate change that may cause severe weather events could have a material effect on our operations.
We expect that our net revenue, gross profit and operating income will benefit from this growth over time although we will be negatively impacted by a slowdown in the homebuilding industry in the near term. 2022 Highlights Net revenues increased 35.6%, or $701.2 million, while gross profit increased 40.4% to $827.8 million during the year ended December 31, 2022 compared to 2021.
U.S. economic growth and employment data is healthy and we anticipate our business will continue to grow organically, although we could be negatively impacted by a temporary slowdown in the homebuilding industry in the near term. 2023 Highlights Net revenues increased 4.1%, or $108.8 million, while gross profit increased 12.4% to $930.7 million during the year ended December 31, 2023 compared to 2022.
Debt 5.75% Senior Notes due 2028 In September 2019, we issued $300.0 million in aggregate principal amount of 5.75% senior unsecured notes (the “Senior Notes”). The Senior Notes will mature on February 1, 2028 and interest will be payable semi-annually in cash in arrears on February 1 and August 1, commencing on February 1, 2020.
The Senior Notes will mature on February 1, 2028 and interest will be payable semi-annually in cash in arrears on February 1 and August 1, commencing on February 1, 2020. The net proceeds from the Senior Notes offering were $295.0 million after debt issuance costs.
Performance bonds generally do not have stated expiration dates; rather, we are released from the bonds as the contractual performance is completed. In addition, we occasionally use letters of credit and cash to secure our performance under our general liability and workers’ compensation insurance programs.
Letters of Credit and Bonds We may use performance bonds to ensure completion of our work on certain larger customer contracts that can span 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.
Regarding the repair and remodel markets, many existing homeowners are locked into low interest mortgages, and an aging housing stock exists in many areas of the United States, bolstering demand in this end market. We expect that incentives from the Inflation Reduction Act of 2022 will likely support repair and remodel demand in 2024.
Regarding the repair and remodel markets, many existing homeowners are locked into low interest mortgages, and an aging housing stock exists in many areas of the United States, bolstering demand in this end market. 40 Our operating results may vary based on our product mix and the mix of our end markets among new single-family, multi-family and commercial builders and owners of existing homes.
We expect to meet our goal of acquiring at least $100.0 million in annual aggregate revenue in 2024. In August 2023, we amended our Term Loan (as defined below) to reprice the applicable interest rate paid by 0.25% below our prior rate (the "Second Amendment").
We expect to also meet our goal of acquiring at least $100.0 million in annual aggregate revenue in 2025. In March 2024, we amended our existing Term Loan Credit Agreement (as defined below) which included the issuance of a new seven-year term loan in the amount of $500.0 million.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed2 unchanged
Biggest changeWe had three active interest rate swaps which, when combined with our two forward interest rate swaps, serve to hedge $400.0 million of the variable cash flows on our Term Loan until its maturity as of December 31, 2023. As a result, total variable rate debt of $90.0 million was exposed to market risks as of December 31, 2023.
Biggest changeWe had three active interest rate swaps which, when combined with our two forward interest rate swaps, serve to hedge $400.0 million of the variable cash flows on our Term Loan until its maturity as of December 31, 2024. As a result, total variable rate debt of $96.3 million was exposed to market risks as of December 31, 2024.
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 accrued interest at a fixed rate of 5.75%.
A hypothetical one percentage point increase (decrease) in interest rates on our variable rate debt would increase (decrease) our annual interest expense by approximately $1.0 million. Our Senior Notes accrued interest at a fixed rate of 5.75%.
As of December 31, 2023, we had $485.6 million outstanding on the Term Loan, net of unamortized debt issuance costs, no outstanding borrowings on the ABL Revolver and no outstanding borrowings under finance leases subject to variable interest rates.
As of December 31, 2024, we had $492.5 million outstanding on the Term Loan, net of unamortized debt issuance costs, no outstanding borrowings on the ABL Revolver and no outstanding borrowings under finance leases subject to variable interest rates.

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