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| But just to give you a sense of the benefit we received from the heavy commercial business in the year and in the quarter, they actually added roughly 100 basis points in gross margin improvement to the overall business |
| And the other thing that helped us, particularly in the fourth quarter is that while the rate of growth was better for the insulation products than the other products, the other products which we've talked about on several times do have lower margins than insulation, but their margin improvement was better than -- considerably better than the margin improvement in insulation |
| I'm proud of IBP's performance in 2023, as installation sales growth in our multifamily and commercial end markets more than offset softer single-family sales growth throughout the year |
| Our installation teams worked efficiently to optimize the value we provide to our customers which with each completed job, driving record annual net profit and adjusted EBITDA margins in 2023 |
| The talent and commitment of our employees combined with the strength of our business model enabled the company to once again reach new heights in 2023 |
| Throughout 2023, our acquisitions contributed positively to our financial results |
| And then the installation revenue is starting to improve at a better rate relative to what we're seeing in the other products |
| And I would say that, we are definitely encouraged that the gross margin improvement has been solid |
| And quite frankly, even if it does, the demand for housing is solid |
| There is still very constructive and positive and we're very pleasantly surprised that there is constructive and positive as they are just given the environment |
| But again, as we said we feel very good about our backlog, what the team is doing there |
| But that being said we were very encouraged to see what was going on with the national builders in January, despite the weather |
| And one of the things that our multifamily team is doing, is really expanding the cross-sell of the other products, not just insulation and that's really helping support our confidence around their ability to grow above market in that end market for us |
| So that continued mid single-digit growth, one is necessary from a housing perspective just in terms of the availability of housing, but we absolutely believe the industry is going to be able to manage effectively in that kind of environment |
| We have a lot of confidence around our ability to continue to take market share and continue to perform on the existing backlog that we have such that we continue to perform much better than the market opportunity on the multifamily side but single-family nearly as everyone's talking about there's just tremendous potential there this year |
| We believe, we are well-positioned for another year of strong operational and financial performance in 2024, as we continue to focus on profitability and effective capital allocation to drive growth |
| Longer term, we believe that housing demand will continue to grow and the insulation installation industry has favorable opportunities ahead, including demand driven by the Inflation Reduction Act of 2022 in the bipartisan infrastructure law, which are intended to improve energy efficiency in residential homes |
| IBP's strong customer relationships, experienced leadership team, national scale and diverse product categories across multiple end markets will help the company navigate future changes in the US housing market |
| I'm proud of our continued success and excited by the prospects ahead for IBP in the broader insulation and other product installation business |
| I mean we believe that through 2024 the greatest opportunity for organic growth will be in single-family markets, right? But now I want to back that up a little bit and just say our multifamily backlogs continue to be very strong, extremely strong |
| We will continue to see yes solid growth |
| We feel good about what we're starting to see and it's just starting |
| As we evaluate our performance on a year-over-year basis, the exceptional growth our company experienced in 2022 set difficult comparisons this past year |
| So we think that we feel the full benefit of the single-family recovery in the back half of the year |
| We are pleased with our performance relative to the market opportunity |
| Our focus on efficiency and job optimization led us to achieve a record fourth quarter profitability, as measured by adjusted gross profit margin, adjusted net income margin and adjusted EBITDA margin |
| As the inflationary environment began to normalize in 2023, our ability to compete based on service and provide value to our customers, helped to support a 240 basis point improvement in adjusted gross profit margin at 34.1% in the fourth quarter relative to the same period last year |
| But we were very pleased to see the strength in the national builder business into the in the start of this year, right? So we feel good about that |
| Despite a higher adjusted selling and administrative expense ratio in the fourth quarter, adjusted net income margin improved to 10.7% from 10.1% in the prior-year period |
| Adjusted EBITDA for the 2023 fourth quarter increased 11% to a fourth quarter record of $128 million and adjusted EBITDA margin reached a fourth quarter record of 17.8% compared to 16.8% for the same period last year |
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| According to the US Census Bureau, in the fourth quarter of 2023, the housing units under construction, the sales pipeline for our installation services showed single-family units were down 12% year over year, while our single-family same-branch sales were down 7% |
| Also, rising interest rates and the decrease in single-family housing units under construction were headwinds to our revenue opportunity in 2023 |
| Because January was we did lose days in January for sure, the weather really across the country |
| And then on the multifamily side, we think that starts are going to probably be down 12% maybe 15% down to roughly $400,000 or so |
| Maybe it comes down to you can explain order of magnitude to us, but I guess it's still not entirely clear why your margins would cut your gross margins would come down as meaningfully in this environment and as to get back to the 30 to 32 |
| Just to clarify on that, we definitely expect that multi-family starts are going to be down |
| What we would at a macro level expect the multifamily it starts to come down fairly significantly in our call it 12% to 13% from 2023 |
| In terms of the multifamily dynamics, if we look at permits, multifamily permits are down north of 20% on a rolling 12 month basis |
| So we're just, I guess, we're not as negative on multifamily as everybody else is |
| So that while news is that the bad news is they came from such a low point [indiscernible] but we do not think that that's transitory and that's sustainable |
| Now we will not, we do not expect that we'll see a strong sales growth and I think in the commercial business, particularly in heavy commercial business in 2024 |
| And as you all know that's typically our weakest quarter both from a sales and a profitability perspective |
| Now, a need to clarify something I don't want to be super negative on the regional and local guys, because we they are the largest part of our business |
| And then just some heavy commercial, I think you talked about growth moderating in that in that business |
| Ken Zener What do you feel bad about? Michael Miller To be honest with you there's no mistake we have been a lot of people occasionally |
| California has obviously had an unprecedented amount of rain which is big operations for us here in February |
| And I mean, I think Jeff said it perfectly is that if we look back to the past three or four years at this time of the year, we've always had something we were facing that was felt like a war and we don't have a war right now |
| It's still slow |
| I mean, there was a brief issue with the plant here recently |
| And we believe that as we progress through the year in the back half of the year, the material might loosen up a little bit |
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