Installed Building Products Inc (IBP) 2015 Q1 法說會逐字稿

Greetings and welcome to the Installed Building Products first-quarter 2015 earnings conference call. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to Mr. Jason Niswonger, Senior Vice President of Finance and Investor Relations. Thank you, Mr. Niswonger. You may now begin.

Good morning. We would like to thank you for joining us today for Installed Building Products first-quarter 2015 earnings conference call. Earlier today, we issued a press release on our financial results for the first quarter which can be found in the Investor Relations section on our website at www.installedbuildingproducts.com.

On today's call, management's prepared remarks and answers to your questions contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include statements concerning demand for our services, expansion of our business, improvements in the US housing market and our end markets, our ability to strengthen our market position or ability to pursue value-enhancing acquisitions and expectations for our financial performance and demand for our services for the remainder of 2015. Forward-looking statements may generally be identified by the use of words such as anticipate, believe, estimate, expect, forecast, intend, plan, and will or in each case their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.

As a result, actual events may differ materially from those expressed in or suggested by the forward-looking statements. Any forward-looking statement made by management on this call speaks only as of the date hereof. A full discussion of the Company's operations and financial conditions, including factors that may affect our business and future prospects, is contained in documents filed with the SEC and will be contained in subsequent periodic filings made with the SEC. New risks and uncertainties come up from time to time, and it is impossible for the Company to predict these events or how they may affect it. The Company has no obligation and does not intend to update any forward-looking statement after the date hereof, except as required by federal securities laws.

In addition, management uses certain non-GAAP performance measures on this call. You can find a reconciliation of such measures to their nearest GAAP equivalent in the Company's earnings release, which is available on our website.

This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer, and Michael Miller, the Company's Chief Financial Officer. Now I'll turn the call over to Jeff.

Thanks, Jason, and thank you, everyone, for joining us today to review our results for the first quarter of 2015. I'd like to begin with a summary of our operating highlights, followed by an update on our markets. I will then turn the call over to our Chief Financial Officer, Michael Miller, to review our quarterly results and capital position, and finally, after our prepared remarks, we will open up the call for questions.

We continue to achieve significant growth in value creation since going public in February of 2014. The positive momentum we experienced last year is continuing into 2015. In fact, growth accelerated in the first quarter of 2015 as year-over-year revenue and EBITDA growth was at a higher rate than what we accomplished in the first -- fourth quarter of 2014. This acceleration was driven by our acquisitions, strong same branch sales growth, higher pricing, and a more favorable customer and product mix. We could not have achieved these favorable results without the hard work of our local branch operations, successful expansion of our insulation operations and the benefits we are deriving from our well-established and efficient platform.

For the first quarter of 2015, we increased our net revenues 23% to $130 million compared to $106 million in the first quarter of last year. We also remain prudent in managing our costs to deliver adjusted EBITDA of $7.6 million, an increase of 79% compared to a year ago and in line with our expectations for the seasonally soft first quarter.

Before I talk about developments in the quarter, I want to expand further on the seasonal impact lower revenue and a less favorable mix of business has on our financial results in the first quarter of each year.

Historically the first quarter represents about 20% to 21% of full-year revenues and 10% to 11% of annual adjusted EBITDA. You can see this seasonal trend in comparing 2013 and 2014 second-, third-, and fourth-quarters higher revenue and adjusted EBITDA to first-quarter levels. As demonstrated in 2014, from an annual perspective, our financial model has produced full-year incremental EBITDA contribution margins of at least 20%.

Now let me turn the focus of the call to our growth strategy and drivers of growth in the quarter. Acquisitions are an important part of our overall strategy and, as we have outlined before, we will continue to consolidate companies within the highly fragmented insulation installation industry. Since going public in February of 2014, we have completed five acquisitions, including two acquisitions year-to-date in 2015. The acquisitions we made in 2014 added approximately $9 million to revenues in 2015 first quarter. With over 90 successful acquisitions since our inception, we have the infrastructure in place to identify candidates to successfully integrate newly acquired companies and immediately achieve operating synergies through our scale and national buying power.

During the first quarter of 2015, we made a $36 million acquisition of BDI Insulation, a highly profitable installer of fiberglass insulation, serving select markets in Southern California, Washington, Idaho, and Utah. BDI has nine branch locations with net revenue of approximately $35 million for its fiscal year ended December 31, 2014 and represents a unique opportunity for us to grow our Company through a highly complementary business with strong local brands and customer loyalty.

More recently, we announced the acquisition of CQ Insulation, a 12-year-old Florida-based insulation installer with two branch locations in Tampa and in Orlando. For the year ended December 31, 2014, CQ Insulation had revenues of approximately $6.9 million. CQ Insulation primarily focuses on new multifamily residential and commercial end markets which helps diversify our overall revenue mix. There continues to be an extensive pool of potential acquisitions, a significant amount of white space on the map for us to grow, and we continue to feel very good about our deal pipeline. Our asset-light business model generates a significant amount of cash which we are using to invest in our acquisition strategy as well as other value-creating initiatives. We remain focused on selectively acquiring market-leading installers in highly attractive markets.

To supplement our internally generated sources of capital and support our acquisition strategy, we entered into a new five-year $200 million senior secured credit facility, which Michael will discuss in more detail in his remarks.

In the first quarter of 2015, we continue to realize significant growth above the growth in US residential new construction, improved pricing and operating leverage to produce another quarter of strong revenue and profit growth.

In addition, our size, scale, and reputation in our local markets are helping us gain market share. Our same branch sales grew approximately 14% during the first quarter. In our primary single-family end market, same branch sales improved approximately 17% compared to an increase in US single-family housing completions in the first quarter of less than 2%. Our ability to drive same branch sales growth in excess of the pace of the national housing recovery speaks to our customer loyalty and leading market positions in some of the strongest US housing markets.

We also benefit from our national scale, long-standing supplier relationships, and a broad customer base that includes production in custom homebuilders, multifamily and commercial contractors and homeowners.

Looking at the broader market opportunity, we continue to believe there is significant runway for improvement in US new residential construction. According to the US Census Bureau's historic data and the February 2015 blue-chip consensus housing starts forecast, total US housing starts are forecasted to increase at a 12% compounded annual growth rate from 2014 to 2016 with a meaningful acceleration in activity in 2016. We expect residential end markets to benefit from various factors, including improving employment, rising household formations and historically low mortgage interest rates.

In conclusion, based on our first-quarter results, we are certainly encouraged with how 2015 is starting. We have a solid platform to take advantage of favorable trends within our industry and end markets and the capital to support our long-term growth plan.

Now, if I may, follow this as a backdrop, I am going to turn the call over to Michael to provide more details on our first quarter.

Thanks, Jeff, and good morning, everyone. We continue to make considerable progress in growing our revenue and improving our profitability. For the first quarter of 2015, our net revenues increased 22.7% to $129.9 million compared to $105.9 million in the prior year, which was mainly driven by an increase in volume in all of our end markets and additional benefits from a higher average price per job due primarily to a more favorable customer and product mix than the prior year quarter.

Our same brand single-family sales growth of 16.7% exceeded the 1.5% increase in single-family US housing completions during the first quarter. This reflects strong market performance by our local branches and our well-positioned geographic footprint.

We believe adjusted gross margin, excluding depreciation, more accurately reflect the progress we are making in our core operations and, for the first quarter of 2015, adjusted gross margin before depreciation expense expanded 150 basis points to 28.8% from 27.3% in the prior year quarter. This improvement was primarily due to operating efficiencies and a more favorable customer and product mix in the prior year quarter, which was partially offset by some material price inflation.

On a GAAP basis, we increased first-quarter 2015 gross margin by 140 basis points to 26.3% compared to 24.9% in the prior year quarter. For the first quarter, selling and administrative expenses as a percent of net revenue was 23.4% for both the 2015 and 2014 period. Higher revenues offset additional costs associated with being a publicly traded company.

In addition, we have not yet experienced the full benefits to leveraging G&A in the March 2015 acquisition of BDI Insulation. We expect SG&A expense as a percent of net revenue to continue to improve over time as we further scale our operation and benefit from higher revenue as our end markets continue to improve.

For the first quarter of 2015, we improved our adjusted EBITDA to $7.6 million, representing an increase of 78.9% from $4.2 million in the prior year. As a percent of net revenue, our adjusted EBITDA improved to 5.8% in the quarter, representing a 180 basis point increase from 4% in the prior year quarter. We are pleased with the successful steps we have taken to enhance our operating efficiency and significantly expand our adjusted EBITDA margin.

As Jeff stated earlier in the call, historically the first quarter is seasonally impacted by lower sales volumes and a less favorable mix of business and represents about 20% to 21% of full-year revenue and 10% to 11% of annual adjusted EBITDA. Our incremental EBITDA margin was 13.9% in the first quarter of 2015. As a reference, first-quarter 2014 incremental EBITDA margin was 14%, but for the full year, incremental EBITDA margin was 21.7%.

From an annual perspective, we continue to believe our financial model can produce incremental EBITDA contribution margins consistent with the prior year.

In the first quarter of 2015, our effective tax rate for continuing operations was 45.2% compared to 46.6% in the prior year quarter. Based on the various entities within our corporate structure, we typically experienced a higher effective tax rate during the first quarter due to a valuation allowance related to losses in certain of these entities.

Annually, the quarterly trend and the effective tax rate will improve with profitability, and we would expect a full-year effective tax rate of 37% to 38%.

For the first quarter of 2015, adjusted net income from continuing operations was $1.4 million or $0.05 per diluted share compared to $0.1 million or $0.01 per diluted share in the prior year. On a GAAP basis, for the first quarter of 2015, net income was $1.2 million or $0.04 per diluted share compared to a net loss of $19.5 million or a $0.76 loss per share in the prior year quarter. The 2014 first-quarter GAAP net loss included the impact of accretion charges on redeemable preferred stock of minus $19.5 million or $0.76 per diluted share. The redeemable preferred stock was redeemed in full with a portion of the proceeds from the Company's February 2014 IPO.

Now moving on to our balance sheet and cash flow, at March 31, 2015, we generated $6 million in cash flow from operations, an increase of $1 million from the prior year period. We use this cash flow and debt to fund acquisitions, reinvest in our business, and repurchase 315,000 shares of our common stock. Through the first quarter of 2015, depreciation and amortization expenses totaled $4.3 million, which was 3.3% of net revenue. Net capital expenditures of $5.7 million represented 4.4% of net revenue and new capital lease obligations of $509,000 or 0.4% of net revenue.

During the fourth quarter of 2014, we shifted our approach to financing our fleet by utilizing vehicle and equipment loans, which allow us to purchase vehicles with similar economics to capital leasing but in a more tax efficient manner, allowing us to benefit from the depreciation for tax purposes.

At the end of the first quarter, we had total cash of $6.3 million. On April 28, we entered into a new five-year $200 million senior secured credit facility with an accordion feature that allows the Company to increase the borrowing capacity to $225 million subject to certain approvals. The credit facility consists of a $100 million revolving line of credit, a $50 million term loan and a $50 million delayed draw term loan. Borrowings under the senior credit facility bear interest at a rate of LIBOR plus a spread of 125 to 225 basis points depending upon IBP's leverage ratio.

The new credit facility is available for general corporate purposes and growth initiatives and replace the Company's prior $75 million revolver and $25 million term loan. This expanded credit facility provides us with an attractive source of capital and further enhances our ability to continue growing our operations in select markets across the United States. With a strong capital position and asset-light business model, we have significant financial flexibility to continue investing in our business and capitalizing on the attractive growth opportunities in front of us.

I will now turn the call back to Jeff for closing remarks.

Thanks, Michael. Looking at the remainder of 2015, we continue to be extremely optimistic on our prospects for performance and growth above the rate of improvement in US new residential construction, especially after the start to the year. We believe the second quarter will show quarter over quarter improvements to revenues and margins as volumes and mix show seasonal increases.

In addition, we are working on integrating the two acquisitions we made so far this year, specifically the $36 million acquisition of BDI Insulation. We have a robust pipeline of attractive acquisition opportunities and have increased our capital position to help fund our acquisition strategy. With a strong infrastructure and management team in place, we are well-positioned for long-term profitable growth.

Now, operator, would you please open up the call for questions?

(Operator Instructions). Susan Maklari, UBS.

Can you first talk a little bit about maybe the mix during the quarter between larger builders and some of the smaller private ones that you tend to work with as well?

Sure, Susan. This is Michael. That's a good question. It's something that we've talked about on other calls in terms of the improving mix as it relates to some of the smaller regional builders relative to some of the national builders. We continue to see good positive trend within that smaller and regional builder base, which we think is positive for the long-term recovery of the housing market. But I would say in the first quarter we did continue to see good strength from the national builders as well and feel very good about the kind of mix of business that we have with both the national builders and the local and regional builders right now.

Okay. Perfect. And then on the leverage, that definitely came up in the first quarter. Can you talk about how high you would be willing to let that or how much you would be willing to let that increase in order to do more acquisitions, and how focused will you be on maybe paying some of that down also through the year?

So that's a great question. And, as you saw, we did enter into a new credit facility, which we believe makes a lot of sense to provide us the additional capital to continue to go and do acquisitions at this point in the cycle.

So, as we said in the past, we are comfortable taking on -- because we are we believe fairly lowly levered at this point -- we believe we have the capacity to take on more debt to do accretive good disciplined acquisitions at this point in the cycle. So, as we continue to look forward, we are comfortable taking on additional leverage from where we are now, which is below 2 times, again, for the right acquisition, because as we continue to grow and we believe we are going to continue to grow EBITDA, that leverage comes down very quickly from a debt to EBITDA perspective.

Okay. Perfect. Thank you.

Nishu Sood, Deutsche Bank.

Thanks. First question, I just wanted to clarify the seasonal commentary you gave about the first quarter versus the rest of the year is very helpful, but you said a few things, and they are a little bit different so I just wanted to clarify. You said 1Q EBITDA is typically 10% to 11% of the full year, and I think in your commentary you said that revenues are 20% to 21%. Is that what you -- is that the number you said?

That's correct, yes.

So that implies revenues of -- kind of if we use the 1Q $620 million to $650 million roughly, EBITDA of kind of $70 million to $75 million, that's an incremental EBITDA margin of about 24%, 25% or so. But then you also said that you expect incremental EBITDA margins for 2015 to be consistent with last year, and I believe last year was closer to like 21%-ish. So I just wanted to clarify which you know maybe some of my numbers are wrong there, but I just wanted to clarify what exactly you were trying to convey.

This is Michael. We really just -- we're not looking to necessarily provide guidance, but what we just wanted to do was give a historical context for the first-quarter results as it related to, say, 2013 and 2014. Just to give you and the market just more insight into the way that business works, I mean from the mathematical perspective, if you did the math the way that you did it, that's approximately where the math would come out. But, again, what we are just saying is, if you look at it from a historical perspective, historically revenue is 20% to 21% in the first quarter, and adjusted EBITDA is about 10% of 10% to 11% of full-year EBITDA.

Got it. So I'm sorry, go ahead.

You were right about the incremental margins for last year. They were 21% to 22%.

So which of those -- I guess just generally speaking then, which of those statements should we be paying more attention to then?

I would say both of them in terms of where they were historically and trying to provide a historical context as it relates to the first-quarter results.

Okay. Got it. There has been a report recently that has made a wide range of claims about IBP. Just wanted to ask in this public forum if you have any thoughts or if you have any comments about that?

This is Jeff. We are obviously aware of that report in that article, and I guess what we would say is that everyone is entitled to their own opinion. The author was admittedly short our stock. Obviously all of us in the room here and that work at IBP feel differently. We wouldn't be coming in every day doing what we're doing and are actually completely convinced that we do have a good business model and that we are performing on it every day and feel great about the future in that regard.

I don't think anybody on the phone or likely anybody that probably even owns our stock is unaware of the cyclicality of the housing business. So I think that's pretty obvious. I think that was obviously one of the main theses. We happen to think it's a good business, and we are confident of our ability to perform within the business.

And I think our first -- this is Michael. I think our first-quarter results are highly reflective of that. The fact that we performed both from an acquisition perspective in terms of achieving overall growth of 23% and then in our core single-family new construction market experiencing 17% single-family growth relative to a market opportunity of only 1.5%, we are very proud, quite frankly, of our ability and our Company's ability and all of the employees of the Company's ability to outperform the market opportunity that is provided to us.

Got it. Okay. Appreciate the comments, and hopefully this will be the last weather question you get for a while. But clearly weather last year was a big topic of concern, and it ended up being a much smaller impact on your results in 2014. Just wondering if you can comment about any potential weather impacts in the first quarter, how, where and if there were any and whether there would be any rollover impact into the second quarter?

We continue to benefit from the fact that we have good geography, and there are many parts of the country that didn't experience severe winter weather conditions. And, as a company, we don't believe weather is an appropriate response relative to what goes on because it snows every year in the Northeast.

I would say that Massachusetts where we have a decent amount of operations did experience a significant amount of snow. But that being said, we saw growth in all of our -- all of the US Census Bureau regions during the quarter and feel very good about the prospects of growth for the remainder of the year.

Great. Thanks for the color.

Robert Wetenhall, RBC Capital Markets.

This is actually Matt Bouley on for Bob. Thanks for taking my questions.

So first, on incremental margin expectations this year, number one I'm wondering, that target that does not include acquisitions, I'm wondering if you could just clarify that? And then secondly, just given that implies the 25% incremental margin for the remainder of the year, you know absent the historical context that you were talking about, what are you seeing in the business now that gives you confidence that you'll be able to achieve that kind of level of incremental margin performance for the rest of the year?

That's a great question. And, you know, clearly the timing of acquisitions are always uncertain in terms of when they are going to get completed and when they will add to incremental EBITDA margins. But they clearly do because we get some SG&A leverage or G&A leverage as it relates to the corporate office when we do acquisitions.

But keep in mind, acquisitions themselves do come with a considerable amount of G&A. So we feel comfortable with continuing to maintain our perspective relative to incremental EBITDA margins, you know, similar to last year, and yes, acquisitions can add to that and increase the level of the incremental EBITDA, margin, but again, the timing of those acquisitions can always be uncertain as to when they are going to have an impact on financial results.

Why do we continue to feel confident that we can do that? We've seen it historically our ability to do that, and we feel very positive about the business. We've gotten off to a good start in the second quarter. You know, we believe there is positive momentum within the spring selling season when you look at the announced orders from the public builders and if you look at private builder surveys that have been done. We feel that there is just a lot of positive momentum relative to particularly new single-family construction right now, which, as you know, is the largest component of our business and really is a driver of our business. And we feel confident in our ability to continue to grow at a rate that is higher than the market opportunity as is evidenced by what we did in the first quarter. Growing at a rate of 17% compared to 1.5% growth in completions we believe is indicative of what we've been able to demonstrate, you know, our ability to do.

That is helpful. Thank you. And then secondly, just wondering if you could provide some additional color on BDI? So just how does the profitability for BDI compare to IBP, and then you know what kind of organic growth has BDI experienced over the past year? Thank you.

This is Jeff. Michael is probably going to tag team on this one also, but there is no doubt that BDI is and was a highly profitable insulation installer, as many of you probably know, but I mean we really don't buy companies based on revenue. We buy companies based on earnings. So that might answer in some instances. It's not an inexpensive acquisition for us, but again, it was a profitable business.

And in terms of year-over-year sales performance and kind of how the business is doing and we have nothing but high regard for the job that they are doing, as you know, they've really only been kind of in the barn, so to say, for roughly maybe 45 days or so I think if I remember correctly. Maybe 60, right around in there.

So we are feverishly doing what we do when we acquire a business and assimilating all the folks and putting all of our systems in place. It's obviously a big change at their level. Less so probably at ours. But we feel great about it at this point in time, Michael, if you want to add to that?

Yes, what I would say is that the -- their profitability is just that it was -- it is higher than our typical acquisition, which is reflective of general overall improvement in the market and also the market that they participated in. And in terms of their organic growth rate, they've been relatively similar to our similarly situated branches. So we feel good about not only their profitability metrics, as well as their growth characteristics as it relates to our similarly situated branches in market.

So, it's a good acquisition, and as Jeff said, we are working to fully integrate them and look forward to having them be part of the IBP team.

And one I guess further thing that's somewhat related is, if you look at the list of locations or at least the states, you wouldn't necessarily put some of those states and probably even some of the individual locations on kind of the hit list of places you absolutely need to be. But as it relates to continued whitespace for us on a go forward basis as it relates to acquisitions, some of the better markets that we are in are the ones that don't really come to top of mind. So we are particularly excited about this acquisition because it put us in some places as a whole or as a group in a larger acquisition that we might not have ever ended up in.

That's really helpful. Thank you.

Ken Zener, KeyBanc Capital Markets.

Again, you guys continue to lead with gross margin expansion, and as I just recall, kind of the beginning of your story, a year or year and a half ago was really that you guys thought you would be getting a lot more SG&A leverage.

So the mix and the price in the customers is probably ahead of schedule. In fact, if I recall, you guys said that was a bit later cycle versus earlier where we are now. Could you talk about perhaps or give us contact to why the price mix is so rich right now? I know you've talked about the private builder versus the public builder. Could you maybe put it in context a little bit? You know because it's nearly half the organic growth is coming from price and mix. Is the shift that pronounced? Or could you give us a sense per project if you actually had better pricing than you were at the peak and the input costs are -- just kind of put that in context, if you would, because it's so good right now at demonstrating a very good industry structure. Thank you.

This is Michael. That is a great question and a fair one, and you are right. We are pleased with the improvement we're making on the gross margin, and it is a combination of both price and mix and also volume, volume growth that's above the volume growth within the marketplace.

What I would say is that there are a couple of things impacting our job price. One is there is the improvement in energy codes. Two, there is a shift in the product mix. One of the things that we are seeing right now is the highest growth rate right now that we are seeing within our products is foam, which is a higher average price per job. That's helping support the price product mix. We are -- because there is some price inflation on the material side, we are seeing price increases offsetting those material price increases. But I would say by no means are we at the peak in any way relative to where we were before from a pricing perspective or an installed per square foot basis.

So we still have, we believe, room to go from an improvement in gross margin, and we were pleased in the first quarter that not only were we -- did we see good labor improvements, we also saw operating efficiencies within the business, which really drove the gross margin.

Appreciate that. And then as I look at realizing you are, I think, properly framing your full-year views for the EBITDA, could you perhaps talk specifically around the admin, the fixed admin -- I mean is that the level -- should we expect to see that go up, the value that we saw, or is that pretty fixed given your existing acquisitions? The roughly 22 million admin number. Is that times 4 a good bogey for the year?

That's a great question, and it's not because of acquisitions. The acquisitions will, when we do a deal, the vast majority of G&A expenses are at the branch level and not at the corporate level.

So, as we do acquisitions, they obviously add G&A dollars, if you will, to that overall number. So it will have a tendency to grow with both acquisitions and as we have additional support personnel within the branches to support revenue. But we do believe that we will continue to get G&A leverage in the business again as we do acquisitions and as we continue to go particularly in the second, third, and fourth quarters that have historically had higher revenues than in the first quarter.

Predominantly in the corporate.

Okay. Thank you. And going back to perhaps my first question on the price and mix if we could, because it's quite strong right now, how would you think that price mix would change as we moved into kind of 2016 and 2017? Is your business perhaps more excluding acquisitions? Is the growth focused on more of the industry unit volumes since your revenues are obviously in excess of that, tied partly to the price in mix? How should that normalize obviously, especially if there is more entry level homes built? Just trying to understand if that 7% plus price mix could go down towards zero or if you think there's always going to be a couple of points of price mix in there? Thank you guys very much.

This is Jeff, and Michael, you may want to tag on also. But obviously we don't have a crystal ball in terms of the go forward picture. But historically speaking, as the market gets more robust and busier, that is not a bad thing as it relates to price and mix. The tendency over at least the period of time that I've been in this business history would say that that's probably a good thing.

Yes and what I would say -- and obviously Jeff is absolutely right. We don't have a crystal ball, but what most I think people's forecasts are relative to the housing market, it appears that we are going to as we hit 2016 and 2017, the mix between single-family and multifamily is going to return to a more normalized rate. Our average price per unit on a single-family basis is considerably higher than it is on a multifamily basis. We are primarily a single-family business. If you look historically from 2015, 2014, and 2013, it's actually been a headwind for us relative to how large the multifamily has been as a percentage of total completions or total permits and starts.

So we believe that going into 2016 and 2017, assuming we get to a more normalized kind of mix between single-family and multifamily, that certainly increases our average price per job. And the other component to that is associated with -- as the -- and we believe this is continuing to happen as we said earlier in the Q&A -- is that the regional and local builder is continuing to gain strength. And just by the nature of the product that they are building, we have a tendency to have a higher average job price with those customers. So that will help the price mix as well.

And then lastly, we would just add that energy codes and the adoption of energy codes are just continuing, and that continues to add to the amount of pounds installed in a house which increases our average job price, and we see that trend continuing.

Thank you.

Keith Hughes, SunTrust.

This is Judy in for Keith. Just to clarify one more on your kind of your yearly EBITDA context that you gave, it includes acquisition activity and just to go back on BDI, even though you said very attractive profitability, this also would assume some cost savings in your outlook for EBITDA for the year.

Yes, so that's a very good question, and our commentary around again first-quarter 2015 as we did it more from a historical perspective as it relates to say 2013 and 2014 in terms of what it represented as a percentage of EBITDA, and while 2014 had acquisition, 2013 didn't have very much acquisition. That has been historically an appropriate way to look at first-quarter EBITDA.

So, going forward as we do additional acquisitions, yes, that will add additionally to both revenue and EBITDA on a go forward basis. But as we said, the timing of when we complete acquisitions is always uncertain and the impact that it's going to have on that year, it really has a greater impact on the full year that we've owned once we've owned an acquisition for the full year.

Okay. All right. Thank you.

At this time, I would like to turn the conference back over to Mr. Edwards for any closing remarks.

I have no closing remarks other than to thank all of you for all of your questions, and we look forward to our next quarterly update and conversation, and thanks again.

Thank you. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time, and thank you for your participation.