Installed Building Products, Inc. Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $5.25b | Revenue (TTM) = $2.96b
Market Cap = $5.25b | Estimated Revenue = $3.03b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $5.93b | Revenue (TTM) = $2.96b
Enterprise Value = $5.93b | Forward Revenue = $3.03b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Installed Building Products, Inc. Stock Analysis
Analyst Opinions
17 Analysts have issued a Installed Building Products, Inc. forecast:
Analyst Opinions
17 Analysts have issued a Installed Building Products, Inc. forecast:
Installed Building Products, Inc. Events
Past Events
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AUG
6
Q2 2026 Earnings Call
about 2 months ago
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MAY
7
Q1 2026 Earnings Call
5 months ago
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FEB
26
Q4 2025 Earnings Call
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Installed Building Products, Inc. — Q2 2026 Earnings Call
1. Management Discussion
Greetings. Welcome to the Installed Building Products Second Quarter 2026 Financial Results Conference Call.
[Operator Instructions] Please note, this conference is being recorded.
I will now turn the conference over to Ryan Ricketts, Managing Director, Investor Relations. Thank you, Ryan. You may begin.
Good morning, and welcome to Installed Building Products second quarter 2026 earnings conference call.
Earlier today, we issued a press release on our financial results for the 2026 second quarter, which can be found in the Investor Relations section of our website.
On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements within the meaning of federal securities laws. These forward-looking statements are based on management's current beliefs and expectations and are subject to factors that could cause actual results to differ materially from those described today. Please refer to our SEC filings for cautionary statements and risk factors. We undertake no duty or obligation to update any forward-looking statement as a result of new information or future events, except as required by federal securities laws.
In addition, management refers to certain non-GAAP and adjusted financial measures on this call. You can find a reconciliation of such non-GAAP measures to the nearest GAAP equivalent in the company's earnings release and investor presentation, both of which are available in the Investor Relations section of our website.
This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer; Michael Miller, our Chief Financial Officer; and we are also joined by Jason Niswonger, our Chief Administrative and Sustainability Officer; and Brad Wheeler, our Chief Operating Officer.
Jeff, I will now turn the call over to you.
Thanks, Ryan, and good morning to everyone joining us today. As usual, I will start the call with some highlights and then turn the call over to Michael, who will discuss our financial results in more detail before we take your questions.
Our team continued to execute well during the second quarter, working closely with our customers to navigate a challenging residential housing backdrop while maintaining the high level of service they expect from IBP. We delivered positive consolidated revenue growth, supported by the contribution from recent acquisitions and growth within our commercial installation, manufacturing and distribution businesses. These results demonstrate the value of our diversified operating platform and the multiple avenues available to support growth across varying market conditions. Throughout the quarter, the macroeconomic backdrop was impacted by geopolitical factors, which increased the level of uncertainty for U.S. consumers. The low consumer confidence, along with affordability concerns has made new home sales more challenging.
Even with industry-specific headwinds expected to continue to affect our new residential installation segment in the near term, our overall business has been resilient. All the credit goes to the hard-working men and women across our more than 250 branches throughout the United States and those who support them from our office in Columbus, Ohio. To everyone at IBP, thank you for your hard work and dedication.
Looking at our 2026 second quarter performance, consolidated sales increased 2% and same-branch sales declined less than 1%. Our commercial end market continued to show strength, delivering double-digit installation sales growth for the fifth consecutive quarter with heavy commercial sales growth exceeding 15% during the quarter. With respect to our new single-family end market, activity remains challenged as a result of affordability concerns and lower consumer confidence with some geographic markets feeling more upbeat than others. In our multifamily end market, our contract backlog continues to grow, which is encouraging. Our other segment revenue grew 50% net of eliminations, partially due to acquisitions. We continue to effectively manage both material and labor to meet the needs of our customers and remain flexible to adjust to varying demand across regions.
During the 2026 second quarter and in July, we completed acquisitions representing approximately $30 million of annual sales from a diversified product set in residential, commercial and industrial end markets. Acquisitions during the quarter and in July included an installer of mechanical insulation with the majority of its sales derived from retrofit work between industrial and commercial applications throughout the upper Midwest region with annual sales of approximately $12 million, an installer of car doors, closet shelving, mirrors and other accessories across residential markets serving customers throughout Minnesota and surrounding states with annual sales of approximately $7 million and an installer of door, bath and fencing hardware, primarily in new residential markets throughout South Carolina and Georgia with annual sales of approximately $7 million. Although deal timing is hard to predict, our current outlook for acquisition opportunities in 2026 is strong, and we expect to acquire at least $100 million of annual revenue this year.
In terms of broader housing construction activity, U.S. Census Bureau data for the 2026 second quarter showed single-family starts decreased 4% from the prior year, while multifamily starts were up 10% for the same period. I'm proud of our team's continued success and commitment to doing an excellent job for our customers. Once again, to everyone at IBP, thank you. I remain encouraged by the fundamentals of our industry, our competitive positioning and optimistic about the prospects ahead for IBP and the broader insulation and complementary building products installation business.
With this overview, I'd like to turn the call over to Michael to provide more detail on our 2026 second quarter financial results.
Thanks, Jeff, and good morning, everyone.
Consolidated net revenue for the second quarter was up 2% to $778 million compared to $760 million for the same period last year. Same-branch sales for the Installation segment were down 2% for the second quarter as a 6% decline in new residential same-branch sales was partially offset by a 10% increase in commercial same-branch sales. Although the components behind our price/mix and volume disclosures have several moving parts that are difficult to forecast and quantify, price/mix was up 1% during the second quarter. And when including heavy commercial, price/mix increased 3%. Volume during the 2026 second quarter decreased by 5%, primarily due to lower new single-family volume.
With respect to profit margins in the second quarter, our business achieved adjusted gross margin of 33.3% compared to 34.2% in the prior year period. Our consolidated gross margin was influenced by the relative mix of revenue from our installation and other segments. As we have stated before, our installation business generates a higher gross margin than our other segment. During the quarter, the other segment revenue net of eliminations grew 50%, which contributed positively to consolidated gross profit, but also created a mix headwind to our consolidated gross margin percentage of 40 basis points. Second quarter 2026 Installation segment gross margin was 36.5% compared to 37.1% in the prior year. The decline in gross margin for the Installation segment was primarily due to increased fuel expense, which reduced gross margin by 50 basis points.
Adjusted selling and administrative expenses increased 3% compared to the 2025 second quarter. As a percent of second quarter sales, adjusted selling and administrative expense was 18.9% compared to 18.8% in the prior year period. Administrative costs were impacted by higher medical insurance costs, which were a 30 basis point impact to EBITDA margin. Adjusted EBITDA for the 2026 second quarter was $131 million, reflecting an adjusted EBITDA margin of 16.9% and adjusted net income was $78 million or $2.91 per diluted share.
Although we do not provide comprehensive financial guidance, based on recent acquisitions, we expect third quarter and full year 2026 amortization expense of approximately $10 million and $42 million, respectively. We would expect these estimates to change with any acquisitions we complete in future periods. Also, we continue to expect an effective tax rate of 25% to 27% for the full year ending December 31, 2026. Our second quarter net interest expense was $11 million compared to $8 million for the 2025 second quarter. We would expect third quarter net interest expense of approximately $10 million.
At June 30, 2026, we had a net debt to trailing 12-month adjusted EBITDA leverage ratio of 1.34x compared to 1.15x at June 30, 2025, which remains well below our stated target of 2x. At June 30, 2026, we had $374 million in working capital, excluding cash and cash equivalents. Capital expenditures and total incurred finance leases for the three months ended June 30, 2026, were approximately $18 million combined, which was approximately 2% of revenue. We ended the second quarter with $395 million in cash on the balance sheet, and we will continue to prioritize acquisitions with long-term strategic benefits and attractive returns on invested capital.
We expect positive free cash flow will continue to support shareholder returns and stock buybacks based on prevailing market conditions. During the 2026 second quarter, we repurchased approximately 365,000 shares of common stock at a total cost of $76 million. At June 30, 2026, the company had approximately $398 million available under its stock repurchase program, which expires March 1, 2027. IBP's Board of Directors approved a third quarter dividend of $0.39 per share, which is payable on September 30, 2026, to stockholders of record on September 15, 2026. The third quarter dividend represents a more than 5% increase over the prior year period. We are committed to continuing to grow the company while returning excess capital to shareholders through our dividend policy and opportunistic share repurchases.
With this overview, I will now turn the call back to Jeff for closing remarks.
Thanks, Michael. I'd like to conclude our prepared remarks by once again thanking IBP employees for their hard work and commitment to our company. Our success over the years is made possible because of you.
Operator, let's open up the call for questions.
Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Susan Maklari with Goldman Sachs.
2. Question Answer
My first question is around the activity that you're seeing on the ground. I think as we ended the first quarter, you had talked about the fact that the private builders had not come back the way that you had anticipated going into the spring. Can you talk about what you're seeing on the ground in the quarter and how things moved relative to the different kinds of customers that you have in the geographies?
Sure. This is Michael. Thanks for the question. We're continuing to see relative better performance with the private builders relative to the public builders -- of the public builders that have reported so far, their second quarter results, homebuilding revenue is down kind of mid-single digits on a combined basis. Our revenue with them was similarly down. The revenue profile that we had with the private builders, while down, was not down nearly as much as it was with the public. We continue to believe that will be the trend through the rest of the year. Although if you look at their guidance/consensus, they're seeing the public builders for the back half of the year, it would imply sequential improvement in the third quarter and the fourth quarter, so that the third quarter would be down roughly low single digits and actually the fourth quarter would be up low single digits. Now that's there. Guidance/consensus, as we've said a million times, we don't provide guidance. I will say, though, that historically, our sales to them have tracked very closely to their reported homebuilder revenue.
Okay. All right. That's helpful. And then moving to the gross margin, well done there. You were in line with our expectations. And I know you talked a little bit about some of the headwinds that you saw, especially on the install side. Can you just give us a bit more color on the moving parts that are coming through the gross margin and your ability to offset some of those headwinds that you're seeing, especially on the fuel side? And just anything that we should be thinking about in the forward quarters? Appreciating that you don't give guide, but just anything in terms of underlying mix or other factors?
Yes. Su, thanks for that question. And the gross margin really was consistent with what certainly with our 32% to 34% full year range that we have talked about. The team is doing a very good job offsetting not just in cost of goods sold, but also in G&A, some of the inflationary pressure that we're seeing sort of across the board. The one thing that has been at least initially up to this point because it was really a second quarter event is dealing with the increase in fuel, which was a 50 basis point headwind to the Installation segment. It's important to note that even though we had headwinds in the Installation segment on the residential side, primarily the single-family side, product margin in the Installation segment was actually up slightly in the quarter, which we felt very good about.
I would say that there has been a little bit, but it's insignificant at this point, benefit from the selling price increases associated with the selling price or manufactured price increases from spray foam. We expect to see more positive impact from that in the second half of the year. It might be a little bumpy in the third quarter. But ultimately, the market is accepting that price increase. And as we discussed quite a lot in our last conference call, the customer base that is the natural user of spray foam is a custom, semi-custom foam. And there are our customers that are most willing to accept higher prices versus certainly on the entry-level side.
The other thing that was pretty significant from a gross margin perspective, again, consistent with our expectations was the significant growth in our other segment, which just as a reminder, represents our distribution and manufacturing business. That business on a net basis grew about 50% in the quarter, which is fantastic, but it structurally has lower gross margins. So while the gross margins in that business actually improved to 24.7% from 23%, they are substantially lower than the Installation segment gross margins, which were basically flat at 37% year-over-year. So that higher percentage of sales or higher relative sales in the other segment was about -- was a 40 basis point headwind to gross margin.
All of that being said, we continue to expect that the other segment this year will continue to grow at a much faster rate than the installation segment. So it will weigh on reported gross margin, but we think it is very relevant for investors to look at the difference in margin between installation and the other segment. And for those of you that read the release very closely, you'll see that we did provide more detail in the segmentation breakout, just to make it a little bit clearer the margin differential in the two segments.
Our next question is from Sam Reid with Wells Fargo.
I'm going to start with more of an industry question here. We heard from one of the big OEMs yesterday on the insulation side that they're bringing a plant back online in the fourth quarter. Just curious your thoughts on implications for capacity utilization. And that same OEM, I believe, is also hoping to push to some pricing in September. Just curious kind of the puts and takes on that pricing in the context of more capacity.
So were you referring to the [ Nehi ] plant, coming back up? Yes. I mean that's not a particularly large plant or very much volume or some of the things. So I think between -- I guess, speculation would be that between rebuilds and things that aren't online yet or not fully online yet or might come down, I don't think it's going to make much of a big kind of splash in any way, shape or form. But I would say that material is readily available, both [ lose end ], and I'm sure we'll spend some time talking about the market dynamic. I mean, clearly, the -- particularly on the single-family side and emphasize the entry level of the single-family side continues to be weak, and we don't see dramatic improvement in that such that you would see material tightness. And even there's another manufacturer that brought up the largest line in the country, and that's still not running at full capacity yet. So there's more supply coming online with that facility.
Absolutely. Thanks for that helpful context. Let's maybe switch gears and just move down the P&L to SG&A. Just looking at the leverage this quarter, I guess I should say the deleverage, it was significantly better than the first quarter. I know that there were a few things you called out last quarter, some facility and liability insurance headwinds. This quarter, it sounds like the deleverage was mostly just a function of medical expenses. Just curious kind of any sequential dynamics we should be mindful of on the SG&A line, perhaps any points of improvement quarter-over-quarter?
Yes. So if you strip out medical on a same-branch basis, G&A expenses were actually down like 2% in the quarter from last year, which really is a yeoman's job, quite frankly, given the inflationary pressure that we're seeing in other types of insurance within facility costs. The team is doing an excellent job of managing what they can manage, quite frankly. We will continue to pursue that through the course of the year. But there's some stuff like the medical, which was up 33% in the quarter from a 40% up last quarter. It's something that we're working on, but there's not a lot of easy fixes, quite frankly, on that. We've done all the easy fixes when it comes to planning, design and negotiating, aggressively trying to bring costs down. But it's just a factor of -- it's a factor that every company faces these days.
Our next question is from Stephen Kim with Evercore ISI.
It was a strong quarter from our perspective, particularly in other. And I was curious if you could talk a little bit about the drivers of strength in that segment. Any particular verticals to call out there? And then similarly, in commercial, I think you indicated there was a lot of strength there and even in, I would say, specifically in light commercial. If you could give us a sense for -- was there anything there that wouldn't sort of extend strength-wise into the back half of the year?
A couple of things. Yes, the other division did very well. The 50% is on an as-reported basis and not on a same-branch basis. So on a same-branch basis, the other segment grew like 28%, still a phenomenal result. And really, that's sort of across the board, both in distribution and in the manufacturing side. So our manufacturing there is cellulose insulation, as you know, and they're just doing a phenomenal job. And the demand drivers there are a little bit different than they are for, say, the residential installation business because it's a lot of R&R and it's also a lot of industrial fibers and road fibers. So they're seeing really, really solid demand there. And the team is continuing to execute extremely well. And even though the gross margins are considerably lower than the installation division, they are improving those margins.
So we feel really good about what the team is doing there, on the commercial side, particularly the light commercial side, it has turned a little bit sooner than we expected. So we feel good about that. And we believe it will continue to be positive and not significantly positive, but positive throughout the rest of the year. And then, of course, the heavy commercial business is clearly the star within the company right now in terms of their ability to continue to grow at a high rate of growth. Their same-branch sales growth for the heavy commercial business was roughly 16% in the quarter, down from higher percentages in the most recent couple of quarters. But clearly, the comps are getting tougher and tougher.
They continue to increase their backlog despite the fact that they're putting up record revenue, every month and at good margins. So we feel really good about the visibility we have into that business and that it should continue to perform well through the rest of the back half of the year, albeit the sales growth -- the rate of sales growth will come down as it hits the very difficult comps from the back half of last year.
Got you. Yes. So it sounds like there wasn't anything really that should drive lumpiness in either other or commercial. You did indicate, though, that in the spray foam pricing dynamic, while certainly the trend is moving higher there, you indicated that there could be some lumpiness in 3Q. So I was just curious, one, what is driving the lumpiness call out in spray foam? Is it significant? And then secondly, just to sort of clean up, you do not expect to see any kind of lumpiness in other or commercial in either 3Q or 4Q, right?
Lumpiness, I would say no, consistency, yes, but particularly again on the commercial side, I'll reiterate that the rate of growth is coming against those really hard comps in the second half. My comment around the spray foam was really just that the price realization is new, and it's such a significant price increase. And just as a reference, it was approximately 25% increase in material costs. So there's still some market participants are still kind of adjusting to that. We feel ultimately that we're going to come out of this at minimum margin neutral, obviously, much higher from a dollars perspective, given the discipline in the spray foam contractor base. But just given the magnitude of the increase, there might be a little bit of turning lumpiness that goes on. It's still a little early to tell. We haven't really seen any demand destruction, if you will, in terms of conversion from spray foam to fiberglass. But we'll have a much clearer picture as to how much of that happens when we report third quarter results.
Our next question is from Philip Ng with Jefferies.
Congrats on a really strong quarter in a tough environment. Michael, your words, heavy commercial was a star yet again. Is there an opportunity to kind of scale that business up in a much bigger way, whether it's organically M&A? And historically, your M&A on the resi install side has been smaller bolt-on in nature. Are there chunkier assets on the heavy commercial side for installation or maybe even pursuing commercial roofing on the contractor side? Any color there?
I mean the simple answer is yes, yes and yes. But on the heavy, I'll let Brad talk about the organic opportunity on the heavy commercial side.
This is Brad. On the heavy side, so yes, we're doing our growth through our customer base as they spread out, we're following those. And then once we obviously build up additional contracts, we'll open up a brick-and-mortar and service that area. So it's a little bit slower growth expansion, I should say, on that, but it's still -- it's in our plan, and we continue to do it every day.
Do you want to talk about M&A?
Well, you said they are absolutely larger prospects in terms of commercial contractors that would be there potentially on the acquisition side, and we continue to be interested in commercial roofing, you also mentioned and mechanical and industrial.
Okay. Super. And then certainly, your largest competitor on the resi installation side got taken out, right? Like any deal of that size, there will be change. Does that present an opportunity for you guys, whether it's share, talent, M&A? Just kind of help us think through potentially any ripple effects that could be good or bad for you guys?
Yes. I think it's still too early to tell. I mean they're trying to figure out exactly what they have. And our continued belief is that on the installation side, they will continue to be a really good competitor, and we'll continue to work. We'll continue to compete with them the same way we are today and we spend success.
Our next question is from Keith Hughes with Truist Securities.
My question is on M&A. Jeff, you addressed a little bit a second ago on the opportunities in the various parts of nonresidential. It has been a success for you here. Would you start to pick individual trades where you really ramp up and do a slug of deals around a certain commercial install trade? Or do you think it will be more opportunistic in terms of doing different trades in that area?
I think clearly, we've kind of signaled and are continuing to try to signal that we'd like to buy a platform business in one of these kind of adjacent market segments and industry segments. And I think clearly, once we do that, the word will be out, and we will identify more deals that are kind of concentrated in one or two of those areas.
And your current heavy commercial, what kind of trade are you the biggest in right now? Is there one that sort of stands out?
Yes. So with our heavy waterproofing is probably our largest product right now and followed by fireproofing.
Our next question is from Trey Grooms with Stephens.
This is Ethan on for Trey. I wanted to start off with multifamily. There has been some discussion recently around the validity of the census numbers, but you guys mentioned that you guys feel pretty good about multifamily heading into the second half and your backlog continues to grow. And that's maybe despite perhaps some projects slowing down. So any updated thoughts on the multifamily business would be great.
Yes. We continue to feel good about it. I would agree that I'm not so sure about the census numbers. Our kind of feeling is that at least where we sit today, that multifamily -- excuse me, single-family is probably going to be down, call it, mid-single digits, maybe even a little bit more this year from a starts perspective. Year-to-date, multifamily starts are up like, what, 10% or something like that. I mean, I think it would be more realistic to assume that multifamily starts are up mid-ish single digits this year. I will say, and we feel pretty encouraged by this, our multifamily sales actually inflected positively in June and were positive in July as well. So we're definitely seeing an inflection there based upon the growth in the backlog.
Now does that mean that we're going to have growth for the back half of the year? Certainly not going to guarantee that, but we are feeling encouraged by the trends that we're seeing there sort of across the board. And the team there continues to add to the backlog. Something to provide a little bit of color for you on the multifamily side. And we talked a little bit about this, I believe, last quarter. But our sales -- so if you look at our sales as a percentage of our sales, the South Census region represents roughly 60% of our multifamily revenue, whereas it only represents -- this is the South Census region, is only 43% of total U.S. completions. Obviously, the implication there is our market share in the South region in multifamily is very strong, which it is. And it is -- the growth that we're seeing from that South Census region right now in multifamily has been very solid.
Okay. Yes, that's great color. And shifting gears maybe you guys bought back a decent amount of stock in the quarter. So really, this is just a high-level question around your thoughts internally around balancing M&A with buybacks, given where we are in the cycle. And then, of course, understanding your signaled ambitions for a larger platform deal, if you could just remind us of any criteria you have around M&A perhaps in terms of like a margin profile returns, maybe where you'd be willing to flex from a leverage standpoint? Just any high-level thoughts there would be great.
Sure. So from an M&A perspective, especially if it's a platform deal, I think we would target a margin that is certainly not dilutive, potentially be accretive to the overall margin profile of the company. Right now, we are significantly below our stated 2x of leverage. I think we've been very clear with investors that for the right deal or for the right set of deals that we would take leverage up to as high as maybe 3, recognizing that any businesses we buy and the existing business generate a tremendous amount of free cash flow and that we would delever very quickly.
I mean one of the things that I think is absolutely worth highlighting, we've been in a very challenging operating environment for the past really four to five years. And if you look at the consistency of performance of the business, and our ability to produce record results year after year gives us a lot of confidence in our ability to maybe put a little more leverage on the balance sheet and use the free cash flow generating capabilities of both the existing -- the current business and any future business that we buy. We feel very good about that.
Going back to the first part of your question, M&A is definitely priority #1. But at the same time, stock repurchases are important to us. And the reality is we've done extremely well financially by repurchasing our shares. And we will continue to do that. But I will caveat that with saying that M&A is #1.
Our next question is from Ken Zener with Seaport Research.
I'm sure I'll take some of this off-line with you, but Michael, it seems like you're disclosing more information again. The gross margins in installation that you highlighted, 36.5% versus 37.1% and on the product side, 24.7% versus 23%. And you said you disclosed some more information. I'm just -- can you tie off when you say those gross margins, just for my benefit, I guess, others as well, which -- what part sales is -- the installation that you're referring to on gross margin, which in your new disclosure or your expanded disclosure in your presentation, is that the normal installation for just commercial and residential, not the other products, which would be fireproofing, closets, et cetera?
No, it's anything that's installed. So it's the entire installation segment, including the complementary products. What it excludes is the manufacturing operations, which are the cellulose manufacturing facilities and then the distribution business.
Okay. Good. I just -- that's what I thought I just wanted to make sure that I wasn't missing something. The private mix, which has more spray foam and has absorbed you're saying favorably the spray foam. Is that really what your market share is better there or the price increase is so big that they just have no choice but to take it from you and for others?
Yes. I think there's -- I mean, it's still very early, right? So the price increase from the manufacturers really took effect later in the quarter. But the early signs are that, yes, the market is taking the price increase. And it happens for two reasons. One, I would say, generally speaking, the spray foam contractor base is very disciplined around price. And two, it is semi-custom custom product and that homeowner is much more able to accept price increases than, say, an entry-level home.
And then related to that last point, if you would, appreciate it. Could you describe the revenue mix as you described the publics in terms of the public share of revenue and units?
Well, the publics are 25% -- roughly 25% of total single-family revenue, which translates into about 15% of total revenue. And then breakdown -- yes, the units, generally speaking, it's like 10 points more. So it would be, say, 35% of single-family jobs, if you will. But we like to look at it in terms of revenue. We think that's kind of the more accurate way to do it. But because their average selling price, their average ASP and our average selling price to them, average stock price is much lower, obviously, that means the volume number of jobs is going to be considerably higher. And just as a reference to for everybody, the difference between spray foam and fiberglass, right, just sort of to level set for people is that fiberglass is roughly 50% of revenue, whereas spray foam is roughly 11% of revenue.
Our next question is from Mike Dahl with RBC Capital Markets.
A quick follow-up just on the spray foam dynamic. I think you mentioned that ultimately, you expect this to be at least margin neutral, but the comments about the potential bumpy 3Q, is that meant to suggest that in 3Q specifically, it might end up being a drag to margin percentage as there's a lag with that pass-through?
Yes, that was the implication.
Okay. Just want to clarify that. And then on the single-family side, obviously, a lot of the publics are talking about and trying to execute at least somewhat of a shift back towards build-to-order and more actively reducing spec inventory. When you think about the back half of the year, appreciating that your comments that you historically have tracked what those public builder results would be. Do you think that there's -- given that dynamic, there's a couple of quarters either late this year or early next year where you end up kind of lagging what the builders are reporting on closings as they execute that shift and there's maybe a little bit more of a timing difference between when your products are going in if they're not actively starting as many spec homes?
Yes. I think -- I mean that's definitely the case. I do think a lot of that has already happened. Certainly, it's going to be subdivision specific and builder specific. But what is benefiting us definitely to offset some of that spec inventory declining in the spec inventory is the fact that community counts continue to be up. And obviously, if you open up a community, you have to have model homes and a couple of homes just to make it look like a real subdivision. So that is supporting the other side of your comment in terms of them trying to reduce spec inventory. But that has really been going on for the past couple of quarters, quite frankly. We saw it pretty heavy in the first quarter. And we definitely saw a little bit of it in the second quarter for sure. But all in all, I would say that it's pretty fair. And again, if we look at historical results, we track very closely their reported homebuilding revenue.
Okay. Yes, that makes sense. So thinking about kind of going forward, you're effectively reverting back to -- you'll revert back to what's historic norm in terms of kind of timing of how you think about orders starts in your products?
Correct. Yes. I mean their cycle times right now are phenomenal, right? I mean it's incredible how tight their cycle times are. Yes, for sure.
Our next question is from Adam Baumgarten with Vertical Research Partners.
Maybe this is a question for Jeff. Just on the pushout of the June fiberglass insulation manufacturer price increases to September, do you think there's any chance that, that sticks?
Jeff is not here. He is not in the room, but this is Jeff Edwards. And it's a healthy -- supply is still tight, although as mentioned earlier, we're not having a problem or anything like that in product. So I guess it's probably anybody's guess at this point as to whether it sticks or not. But as we talked about most of this call, it's not exactly an environment that probably warrants and accept easily a price increase from a builder's perspective or anywhere in the chain to be honest. The dynamics there with more capacity coming online that lends less likelihood of acceptance. But I will say that we are in daily conversations with all of the manufacturers around price right now.
Okay. Got it. Makes sense. And then so you did a relatively small mechanical insulation acquisition or an install acquisition in 2Q. I know that's a focus area for you guys. Can you talk about why that area of the installation universe is attractive to you guys?
Yes. This is Brad. Yes, I mean it's pretty much an adjacent product to a degree, right? Like when you compare a heavy and our residential, lots of light commercial and heavy, obviously. It's a semiskilled to skilled trade. And obviously, it's in the insulation world, right? So it's not a stretch for us to have relationships with the manufacturers and understand the product. Over the time, over the years, it's become a more -- not just with data centers, but with all heavy commercial, more insulation requirements, more content, and it's still a somewhat fragmented segment. So there's an opportunity for M&A as well.
Margins are good and the average contractor is probably a little larger, too, right? So it's probably less cyclical in a lot of ways than the residential construction business and even some of the other commercial businesses. So pretty attractive, a big MRO component.
And you guys have the ability to buy direct in that as well, right?
Actually, it really goes through distribution because of the number of SKUs. Unlike residential fiberglass that you really have very few SKUs, you really need the distributor to hold -- actually, both the distributors and the manufacturers hold a lot of inventory in this product line, just given that there's so many SKUs. And really where the margin and differentiation comes in is in the labor force and managing the labor force. There is opportunity to improve, we believe, with scale volume advantage. I mean that business for us, the M&I business for us, mechanical and industrial business for us right now is about $50 million in revenue. So yes, we have a lot of opportunity there.
Our next question is from Kurt Yinger with D.A. Davidson.
Just one on price cost. I was kind of curious, looking at it through the lens of volume versus margin trade-offs with production builders. Can you just talk about maybe what you've seen over the last couple of quarters and whether there has been any progression towards maybe needing to walk away from some business or be maybe even more disciplined in terms of how you're pricing jobs? That would be great.
I mean, yes, it's no surprise that at the entry level, I mean, builders are looking for any opportunity to reduce costs and make the house more affordable. The team does an excellent job of being selective when they need to and continue to work very closely with our customers to make sure that we are paid a fair price for the installed solution that we're providing. The key is, and it's always been the case that we're providing an installed solution or we're providing material and the labor and that our pricing is not set at the national level, it's set at a very local level. And we might be having pricing pressure with a customer in one market, but in another market that might be really strong, we're getting price. So it is a constant negotiation, particularly in this kind of environment. But I believe our results clearly reflect our team's ability to manage very effectively in what is on the single-family side, a pretty challenging environment.
We have reached the end of the question-and-answer session. I would like to turn the floor back over to Jeff Edwards for closing comments.
I'd just like to thank you for your questions, and I look forward to our next quarterly call. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Installed Building Products, Inc. — Q2 2026 Earnings Call
Installed Building Products, Inc. — Q1 2026 Earnings Call
1. Management Discussion
Greetings, and welcome to the Installed Building Products First Quarter 2026 Financial Results Conference [Operator Instructions]. As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Ryan Ricketts, Director of Investor Relations and Financial Planning and Analysis. You may begin.
Good morning, and welcome to Installed Building Products First Quarter 2026 Earnings Conference Call. Earlier today, we issued a press release on our financial results for the 2026 first quarter, which can be found in the Investor Relations section of our website. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements within the meaning of federal securities laws. These forward-looking statements are based on management's current beliefs and expectations and are subject to factors that could cause actual results to differ materially from those described today.
Please refer to our SEC filings for cautionary statements and risk factors. We undertake no duty or obligation to update any forward-looking statement as a result of new information or future events, except as required by federal securities laws. In addition, management refers to certain non-GAAP and adjusted financial measures on this call. You can find a reconciliation of such non-GAAP measures to the nearest GAAP equivalent in the company's earnings release and investor presentation both of which are available in the Investor Relations section of our website.
This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer; Michael Miller, our Chief Financial Officer; and we are also joined by Jason Niswonger, our Chief Administrative and Sustainability Officer; and Brad Wheeler, our Chief Operating Officer.
Jeff, I will now turn the call over to you.
Thanks, Ryan, and good morning to everyone joining us today. As usual, I will start the call with some highlights and then turn the call over to Michael, who will discuss our financial results in more detail before we take your questions. We delivered solid top line results despite the impact of having many fewer working days at several branches due to extreme weather conditions, which resulted in a $20 million missed revenue opportunity as we previously mentioned on our 2025 fourth quarter call in February.
The macroeconomic backdrop also changed midway through the first quarter, partially due to geopolitical factors raising uncertainty for U.S. consumers and making new home sales more challenging. Service quality is a controllable factor that we continue to maintain at a high level for our customers during the quarter.
Emphasizing product diversification and prudent expense management have continued to be key initiatives. Our commercial end market continued to show strength, delivering double-digit installation sales growth with heavy commercial sales growth exceeding 20% during the quarter.
Even with industry-specific headwinds expected to continue to affect our new residential installation segment in the near term, our overall business has been resilient. All the credit goes to the hard-working men and women across our more than 250 branches throughout the United States and those who support them from our office in Columbus, Ohio. To everyone at IBP, thank you for your hard work and dedication.
Looking at our 2026 first quarter performance, consolidated sales decreased 4% and same-branch sales declined 6%. Positive same-branch commercial sales growth was more than offset by residential same-branch sales growth headwinds within our Installation segment.
With respect to our new single-family end market, activity has been slower than we had hoped by this point in the spring selling season with some geographic markets feeling more upbeat than others. We continue to effectively manage both material and labor to meet the needs of our customers and remain flexible to adjust to the varying demand across regions.
In our multifamily end market, both our contract backlog and partnership across branches to win business and deliver Installed services continues to grow, which is encouraging. Our commercial end market remained a bright spot in the 2026 first quarter with sales in our Installation segment up 11% on a same-branch basis from the prior year period.
Our heavy commercial end market continued to be the dominant driver of same branch sales growth, which more than offset weakness in our light commercial end market. Based on the growth in our heavy commercial contract backlogs, we believe heavy commercial sales and profitability are poised to remain healthy in 2026.
During the 2026 first quarter, we completed a total of 4 acquisitions, representing approximately $28 million of annual sales from a diverse product set in both residential and commercial end markets. Acquisitions during the quarter included an installer of insulation across new residential and commercial end markets throughout Texas, Louisiana, Arkansas and Oklahoma with annual sales of approximately $5 million.
A provider of a wide range of value-added mechanical insulation services for diverse commercial and industrial applications serving key commercial and industrial hubs across Wisconsin, Iowa, Minnesota, Michigan and Illinois with annual sales of approximately $13 million, an installer of insulation primarily across new residential and light commercial markets throughout Kansas and Oklahoma with annual sales of approximately $3 million and an installer of waterproofing applications across new residential, multifamily and commercial markets throughout Minnesota with annual sales of approximately $7 million.
Although deal timing is hard to predict, our current outlook for acquisition opportunities in 2026 is strong, and we expect to acquire at least $100 million of annual revenue this year. In terms of broader housing construction activity, U.S. Census Bureau data for the 2026 first quarter showed single-family starts decreased 6% from the prior year, while multifamily starts were up 21% for the same period.
I'm proud of our team's continued success and commitment to doing an excellent job for our customers. Once again, to everyone at IBP, thank you. I remain encouraged by the fundamentals of our industry, our competitive positioning, and I'm optimistic about the prospects ahead for IBP and the broader insulation and complementary building products installation business.
Before I turn the call over to Michael, I want to thank Darren for his contributions over the past 5 years as he pursues another opportunity, and I wish him all the best in his future endeavors. Ryan Ricketts has been appointed Director of Investor Relations and Financial Planning. He has played an integral role in our financial planning and analysis function and is a natural fit to lead our Investor Relations efforts. I look forward to his contributions as we continue to execute on our strategy and engage with the investment community.
With this overview, I'd like to turn the call over to Michael to provide more detail on our 2026 first quarter financial results.
Thank you, Jeff, and good morning, everyone. Consolidated net revenue for the first quarter was down 4% to $661 million compared to $685 million for the same period last year. Same-branch sales for the Installation segment were down 7% for the first quarter as an 11% decline in new residential same-branch sales was partially offset by an 11% increase in commercial same-brand sales.
Although the components behind our price/mix and volume disclosures have several moving parts that are difficult to forecast and quantify, price/mix was flat during the first quarter. However, when including heavy commercial, price/mix increased 3%. Volume during the 2026 first quarter decreased by 10%, partially caused by adverse weather.
With respect to profit margins in the first quarter, our business achieved adjusted gross margin of 32.2% compared to 32.7% in the prior year period. The slight year-over-year decrease in margin during the quarter was driven by increased depreciation within cost of goods sold and higher vehicle insurance costs.
Adjusted selling and administrative expenses were stable compared to the 2025 first quarter. As a percent of first quarter sales, adjusted selling and administrative expense was 20.9% compared to 20.1% in the prior year period. Administrative costs were impacted by higher medical and general liability insurance costs, which were 36% higher than prior year as well as higher facility costs.
Adjusted EBITDA for the 2026 first quarter was $92 million, reflecting an adjusted EBITDA margin of 13.9% and adjusted net income was $48 million or $1.79 per diluted share. Although we do not provide comprehensive financial guidance, based on recent acquisitions, we expect second quarter and full-year 2026 amortization expense of approximately $10 million and $40 million, respectively. We would expect these estimates to change with any acquisitions we complete in future periods.
Also, we continue to expect an effective tax rate of 25% to 27% for the full-year ending December 31, 2026. For the 3 months ended March 31, 2026, we generated $102 million in cash flow from operations, an 11% year-over-year increase. Our first quarter net interest expense was $10 million compared to $8 million for the 2025 first quarter, partially driven by a write-off of debt issuance costs. We would expect second quarter net interest expense of approximately $10 million.
At March 31, 2026, we had a net debt to trailing 12-month adjusted EBITDA leverage ratio of 1.2x compared to 1.17x at March 31, 2025, which remains well below our stated target of 2x. At March 31, 2026, we had $346 million in working capital, excluding cash and cash equivalents. Capital expenditures and total incurred finance leases for the 3 months ended March 31, 2026, were approximately $18 million combined, which was approximately 3% of revenue.
We ended the first quarter with $474 million in cash on the balance sheet, and we will continue to prioritize acquisitions with long-term strategic benefits and attractive returns on invested capital. We expect positive free cash flow will continue to support shareholder returns and stock buybacks based on prevailing market conditions.
During the 2026 first quarter, we repurchased approximately 91,000 shares of common stock at a total cost of $25 million. At March 31, 2026, the company had approximately $475 million available under its stock repurchase program, which expires March 1, 2027. IBP's Board of Directors approved the first quarter dividend of $0.39 per share, which is payable on June 30, 2026, to stockholders of record on June 15. 2026. The second quarter dividend represents a more than 5% increase over the prior year period. We are committed to continuing to grow the company while returning excess capital to shareholders through our dividend policy and opportunistic share repurchases.
With this overview, I will now turn the call back to Jeff for closing remarks.
Thanks, Michael. I'd like to conclude our prepared remarks by once again thanking IBP employees for their hard work and commitment to our company. Our success over the years is made possible because of you. Operator, let's open up the call for questions.
[Operator Instructions]. Our first question comes from the line of Sam Reid with Wells Fargo.
2. Question Answer
I wanted to see if you had an updated outlook on industry pricing. I know one of the OEMs put through a price increase on the resi side earlier this week. Just maybe your high-level thoughts on achievability on that price, and ability to pass along to the builders, understanding full well that you over-index perhaps more to private custom builders versus some of the large publics.
Yes, Sam, this is Michael. Thanks for that question. As we've talked in the past, the time when the manufacturers are able to get traction in pricing, both us and them, quite frankly, is when the demand environment is strong and material is tight. That does not exist in the current operating environment. The production builders, particularly the entry-level market continues to be weak, and there's a ready supply of available material.
You may know that one of the manufacturers is getting ready to bring back online a significant amount of capacity. We don't see there being any tightness in fiberglass material certainly in the near term. The demand environment just is not there that would really support a price increase.
Now that's on the fiberglass side. On the spray foam side, there have been 2 announced price increases that are approximately a 25% price increase. We do believe that aprice increase will have traction and that the market will take a substantial percentage of that price increase. The spray foam manufacturers have significantly have -- their factory costs have increased significantly, and as a consequence, they're really not making money at the current pricing. They need and will get that price increase.
Spray foam, as pretty much everyone knows, is really a semi-custom custom home product. The flexibility or willingness of the builders there and the homeowners there to accept a price increase on a spray foam application is pretty good. I would say that within the contractor base that is within the spray foam contractor base, there is a lot of discipline around price. We definitely think that we'll see that happen, and it will certainly benefit our price mix in the back half of the year. Just as context maybe, spray foam represents about 11% of our total sales.
Now I would say on the spray foam side that there will probably be less incentive for certainly entry-level or even move-up buyers to switch to spray foam and they'll stay with fiberglass. Again, as we've talked before about the difference between spray foam and fiberglass, an average spray foam job is sort of 2x an average fiberglass job. That's not really a like-for-like comparison because your average spray foam house is going to be much larger on a square footage basis than a typical fiberglass job. Just to give you a relative sense of the difference between cost of spray foam and fiberglass. It definitely will have an impact on price mix for us in the back half of the year. As I said, we expect that the spray foam manufacturers will realize a significant percentage of that 25%.
Incredibly helpful color there. Maybe switching gears a little bit to industry capacity utilization. You alluded to some capacity that's coming back online. Then also, we have, however, seen, let's call it, a little bit better data on the start side. Again, I realize a lot of this is probably on the production builder side, but just curious your perspective on fiberglass industry capacity and where it sits today.
This is Jeff. There's absolutely no tightness right now in terms of material flow. I wouldn't anticipate it getting that way for at least some period of time.
Yes. As we've said in previous calls, the manufacturers are doing an excellent job of managing their capacity. We feel very good about the current environment and particularly with the additional plant coming online because there is some signs of the market getting better, production builder entry level is still weak, no doubt. The public builders, I think, have a relatively reasonably positive outlook for the rest of the year. We'll see if that materializes, based on some of the recent information, both survey information that we've seen, census bureau information, which currently we're not putting a lot of confidence in.
We think that the year could end up being flat in terms of macro starts. We'll see. I would say that in April, we saw some very encouraging signs. Our private builder business was actually up in April. We've had continued weakness though in the public builder market, but our sales with them are really tracking their sales. Their homebuilding revenue in the most recent quarter was down low teens, and our revenue with them was down a little bit better than that. We're tracking well with them. It's just that there's a lot of weakness there on the entry level.
Our next question comes from the line of Stephen Kim with Evercore ISI.
I guess first question would be related to the multifamily outlook. You mentioned before that the backlogs were looking strong, and I think you got some easier comps here in the back half of the year. Are you still feeling pretty optimistic that you should be able to show strong year-over-year strength in multifamily? Is there anything that you saw in the March industry numbers in terms of multifamily starts. Does that kind of square with sort of the activity levels that you're seeing in your customer base?
Yes. This is Michael. Again, on the census information right now, we're just not putting a lot of confidence in those numbers. I would say we continue to be very encouraged on the multifamily side. Just to give you some sense, the high-rise multifamily, which we do very little of. It's less than 1% of revenue. It's about 5% of our multifamily revenue, but in the quarter, that high-rise multifamily revenue was down almost 50%, okay? As you know from our disclosures, that total multifamily revenue was down in the quarter on a same-branch basis, only about 10%.
What's interesting and the reason why I bring that up is the high-rise multifamily backlog actually turned mid-single-digit positive in the quarter. We feel encouraged that even that part of the market, which is admittedly a very weak part of the market, we're seeing some light at the end of that tunnel. What I would consider traditional, so not high-rise multifamily, the backlogs continue to grow. We had a very good April within that sector. We feel good about what the back half of the year is going to look like.
Now I have to put in a caveat, though, that we have seen some projects getting slow walk, if you will, and that are slowing down. Even though we feel very confident about the strength of our backlog, we don't have the ability to prevent, if you will, a GC from slowing down development of projects. Depending upon how that develops through the rest of the year, that could put us in a position where the comps aren't positive.
Overall, as we look at the multifamily business for us, it continues to be the same story, but we're gaining share, profitably gaining share. Our team is doing an excellent job of going into new markets and gaining good profitable share in those markets. Even if we don't see a strong inflection in the back half of '26, we feel very confident in what we're going to see in '27.
Second question, I guess, relates to data centers. It's kind of been a topic of conversation for a lot of folks. Can you give us a sense for -- are you relatively over or under-indexed to data centers across your businesses? Is that something that is even sizable enough to really be worth calling out or not?
We do some of that work, but we are under-indexed to it, I would say, given the activity that's happening right now. Our heavy commercial business, as we noted, continues to perform at an extremely high level, even though the comps have gotten more difficult because of the outperformance there in the quarter, the heavy commercial business grew like 22%. They're doing a phenomenal job, and it is not data center driven. It's really across a lot of verticals. We can't say enough shout-outs about how -- what a great job that team is doing.
Your next question comes from the line of Michael Rehaut with JPMorgan.
First question just on gross margins. I think it was kind of the big variance between my estimate and probably the Street as well, and I would presume maybe weighing on the stock here today. I appreciate the color in terms of the year-over-year variance.
I think you said higher depreciation, higher vehicle insurance. I was also wondering around the sequential decline of about 280 basis points, which is much greater than we've seen in the last few years. In the last 4 years, I'm going back here, there was a 90 bps decline last year. Before that, it was relatively flat. I'm wondering just what the drivers were sequentially and if this is a new bar to think about in terms of how we should progress throughout the year?
Yes, Michael, this is Michael. The gross margins did still come in within our 32% to 34% range. Again, we look at that range on a full-year basis, not in any one quarter. really, the decline from the -- and I'll call out some specific items, but really, it was the volume, right? When we lose volume, other cost of goods sold, so not material, not labor, the team did an excellent job of managing material and labor. The other cost of goods sold number is semi-variable and not directly variable. When we have lower volume as we did in the quarter, it compresses to some extent, the gross margin.
To give you just some context for the gross margin, this is year-over-year, not Q4 to Q1, and this is something that we haven't really talked about before, but I think it's worth highlighting. Our product margin, so at the gross margin level before other cost of goods sold, the product margin was actually up 70 basis points from first quarter last year to first quarter this year.
Unfortunately, it was offset by the mix from complementary products, which was a 20 basis point headwind to gross margin. The other distribution and manufacturing operations, which naturally have lower gross margins were a 40 basis point headwind to gross margin. Then which we called out in the prepared remarks, depreciation was a 30 basis point headwind to gross margin and vehicle insurance was as well a 30 basis point headwind to gross margin.
Now somewhat offsetting that again was the 70 basis point improvement in product margin, again, something we haven't really talked about before and the heavy commercial business, which was a 20 basis point improvement to gross margin.
The other thing about gross margin, I think it's important for us to point out, obviously, our vehicle costs are in gross margin, in other cost of goods sold. While fuel really did not impact significantly the first quarter, we would expect that to have an impact over the rest of the year of $15 million to $20 million in other cost of goods sold, assuming the current particularly diesel cost environment that we're under right now.
I appreciate all that detail, Michael. I mean just maybe to follow up on that, 2 kind of points. I guess, one, it does sound like you're saying, at least on a year-over-year basis, I'm curious if on a sequential basis that the pricing dynamics between yourself and the builders haven't changed significantly. I think the concern out there is perhaps that the builders are really pushing back on vendors and suppliers and perhaps yourselves around price.
I'm just wondering if, number one, it sounds like what you're saying is that, that perhaps is not as big of a factor on a sequential basis. Maybe I'll just stop there and let you answer that before I ask another one.
Yes. Where there is pricing pressure for sure is at the entry level homebuilder, so the public builders at that level. Just as a reference point, that represents about 14% of total revenue. I would say the team has done a very good job of maintaining market share and working hard to maintain margin. There's definitely some pressure there given the weakness that is experiencing there.
Now quite frankly, though, I think go forward, just based upon their guidance, what we're seeing, we believe a lot of that pressure is easing now and that the difficulties that we were having with that again is starting to ease. We're seeing good pricing with the private builders, with particularly the custom, semi-custom builders that work continues to meet our expectations. As I mentioned earlier, turned positive in April. We're feeling good from that perspective.
Really, the gross margin pressure and actually the EBITDA margin pressure, and I'm sure somebody likes administrative expenses and we talk about that. It really was costs that are not directly variable that to some extent, we don't have a lot of control of. For example, vehicle insurance, which is up 25%. It's a significant number, particularly when you have flat to down sales environments.
In other words, because I'm just looking last year, sales went down about $65 million and margins sequentially -- I'm talking about sequential went down 90 basis points. Here you have sales down $90 million and margins went down $280. It's really more of the -- some of the cost inflation dynamics that you're saying then the vehicle insurance maybe the logistical costs, fuel costs, things of that nature that is more of the culprit on a sequential basis. Is that fair to say in addition to maybe some of the under-absorbed fixed cost broadly speaking?
Yes, broadly speaking. I mean, I will say because we've talked about this product margin during the call, I mean, the sequential product margin was down from the fourth quarter to the first quarter, but that's pretty typical, right? Part of that is just mix. Again, there was some pricing pressure from the production builders. As I said, I think the team is doing an excellent job of managing that environment, maintaining share and also working very hard to maintain price. Clearly, a lot of the decremental from the fourth quarter to the first quarter in the margin was in other cost of goods sold. Again, vehicles, the vehicle costs were the biggest culprit there.
Your next question comes from the line of Susan Maklari with Goldman Sachs.
My first question is on the weather and the regional implications that, that had in the quarter. Can you talk a bit about how those branches performed in the first quarter? Is there a backlog that you have that's coming into the second quarter? Is that part of what's driving that improvement that you're seeing with some of those private builders? How should we just think about your ability to make up some of that volume and what that will mean for results in the upcoming quarters?
Yes. This is Michael. I mean we do think we'll make it up. The biggest impact to the regions was primarily in the Mid-Atlantic. Those are some of our most profitable regions. Obviously, you never like to see weakness in your most profitable regions, but we definitely think we'll make it back. It is definitely part of the reason why we think we're seeing -- while we're seeing positive comps in April with the private builders.
Yes, I would say that we have the ability to make it up. I think it is going to be a slow makeup, to be honest with you. I mean, typically, in these situations, we would make it up 30, 45 days, but it seems like it's just stretching out a little bit in terms of our ability to get on top of that.
Then turning to M&A. Can you just talk a bit about the environment that you're seeing there? It seems like you're continuing to be fairly active for deals. Just give us an overall update on the pipeline and including the ability to perhaps do some more deals on that commercial industrial side?
This is Jeff, Susan. Yes, I would say it's a healthy environment in terms of an M&A backdrop. We will continue to make deals that we've done historically. Pipeline is good and strong. We did recently close a smaller mechanical industrial installation business, and it continues to be an area of focus for us.
Your next question comes from the line of Phil Ng with Jefferies.
Michael, I appreciate you don't give guidance, but I think you were talking about how at least on the survey work, what you're seeing out there, potentially single-family starts could be flat, and certainly, we're not going to hold you to it. From the context of single-family, your same-store sales single-family business is down double digits in 1Q, and it was a little softer in fourth quarter as well. Weather was a factor. At least April sounds okay for your private side. Give us a little context how you see the shape of the year shaking out and how activity panned out to start 2Q?
Yes. I mean, on a consolidated basis for the Installed. That includes the heavy commercial business. Organic growth, we were up, including acquisitions, but organic growth was down like 2%. What did help the organic growth, quite frankly, though, is price/mix is up over 4%. Price/mix was up excluding the commercial business, but the heavy commercial business, just like it did in the first quarter, helped the price/mix.
Volumes were down, but they're down less than they have been over the past several months and over the past quarter. The volume weakness really is still coming from the entry-level production builders. If we think about the business right now, the production builder business continues to be soft, but other parts of the business are starting to show resiliency, both from a volume perspective and a price mix perspective.
I mean it sounds like volumes have firmed up a little bit versus 1Q. That's encouraging. I guess your largest competitor, obviously, is merging with a large distributor in roofing and LBM. Jeff, perhaps how do you kind of think about that impacts your ability to compete, your go-to-market strategy? On the procurement front, I mean, from what I can tell, you guys buy super well already in insulation. This has changed how you think about the competitive landscape and perhaps your philosophy on the M&A side as well.
Well, I would say that we aren't anticipating any great changes. They've been a competitor all along as long as we've been public and beforehand even, and we expect that to continue. From an M&A perspective, potentially, this could be an upside in that they may not be quite as interested in some of the Installed businesses based on their trust more towards the distribution end of things.
I'm just curious, in terms of your customers, builders, when you go to market and you negotiate, I believe it's all local, and that's how you bid it. Is there much overlap in terms of interaction for like an LBM guy versus Installed guy for insulation in terms of that go-to-market strategy? I'm just trying to gauge if that has any impact from a bundling standpoint as you compete with them more head on from that standpoint.
No, we don't.
No, because keep in mind that what we're providing is Installed solutions, so the material and the labor. On the distribution side, whether it's roofing or lumber or whatever, the distributors drop shipping the material there and then the builder is subcontracting out the labor to another contractor.
Your next question comes from the line of Mike Dahl with RBC Capital Markets.
I want to go back to the gross margins. Again, I appreciate you don't give the guidance. When I think about the components that you laid out, it certainly seems like some things, to your point, would be volume leverage that shipped throughout the year, but then you've got like-on-like insurance costs the fuel costs that you mentioned?
Then it seems like maybe at least in the near term, given the relative growth of complementary and other products, maybe some headwinds there. Think about that 32% to 34% range. Is there anything like in those pieces, there do seem to be some incremental certainly year-on-year headwinds relative to what you were seeing last year. Anything you can do to help drill down a little more on within that range where we should be thinking about?
Yes. To be honest with you, a lot is going to depend upon where the production builders come out in terms of the year. If they get closer to looking at their guidance basically, they're talking about homebuilding revenue being down the rest of the year about 5% and us being down, say, 5% with them. I think that puts less pressure, if you will, on gross margin.
To your point, some of the headwinds that we experienced in gross margin in the first quarter are going to follow us throughout the year. We still feel confident about the 32% to 34%. There's a lot going on right now. As we mentioned, the spray foam price increase is more than likely to stick at a very high level. Gutters, which are about 6% of total revenue, aluminum costs are up 20%. We don't see that subsiding anytime in the near future. There are definite headwinds to gross margin going forward. The team has done an incredible job being able to manage the price/cost headwinds that we've experienced. We have complete confidence that they will continue to do that.
I think that's evidenced by the fact that the product margin that we talked about earlier was up 70 basis points year-over-year. They're doing a great job, but there are a lot of headwinds out there for sure. On a full-year basis, we continue to be confident that we will fall in that 32% to 34% range.
Then a follow-up just specifically on the fuel dynamic. Was it 15% to 20% just for the balance of the year, so then there's some run rate into 1Q. It doesn't sound like based on some of your other comments, you've implemented or contemplated surcharges, but any comments around pass-through mechanisms versus other internal actions you can do to help mitigate that?
Yes. There's no doubt we will work hard to try and offset it. It's certainly something that is on top of mind for everybody in terms of the additional fuel costs. That $15 million to $20 million is for the rest of the year. Call it a little bit over $5 million per quarter that we would expect to feel the impact there.
We are getting fuel surcharges from some of the manufacturers, particularly the fiberglass manufacturers based on the additional transportation shipping costs. As a percentage of our overall cost structure, that's honestly fairly small. Again, we're going to work very closely with our customers to make sure that our costs and our prices to them are aligned properly.
Your next question comes from the line of Trey Grooms with Stephens Inc.
You mentioned seeing some projects being delayed or slow rolled in multifamily. Just curious, is that more geographic specific? Or if so, where are you seeing most of that? Or is this these delays more widespread?
I wouldn't say it's necessarily geographic specific. I mean it's really -- it's project specific. It depends upon the specific project in a specific market, but I wouldn't say that it's highly concentrated in one market over another.
You mentioned some of the pricing pressure around the entry level, which you mentioned is 14% of your revenue. Are you seeing any more pricing pressure, if you will, on the multifamily side of things now that you're -- we're starting to see a little more delays, a little softer market there?
No, I would say that environment has been pretty stable. I would say, yes, there was some pressure during the course of '25, but I would say that it's very stable, especially as we start to inflect positively here from the units under construction. I think that -- I mean, clearly, I'm making that clearly, but we believe that multifamily basically is in balance in terms of cycle times. Obviously, with the exception of if things are getting slow rolled that might impact it a little bit. Then cycle times on single-family are extremely well, probably the lowest they've been in a decade or more.
Then last one for me. We haven't talked too much about commercial, but it seems to be doing very well. It's been a bright spot here for a while now. With some of the shift in the macro that we're seeing, any signs of delays or similar kind of slow rolling or anything like that on the commercial side? Or is the backlog you have in place kind of suggesting you should continue to see this level of relative strength in commercial?
Yes. I mean other than the comps continue to get more difficult as we go through the rest of the year. The team is doing an excellent job. I mean the heavy commercial business was up over 20% in April. Even the light commercial business was up low double digits in April. That business, as you know, is coming off a very easy comps. Don't read too much into that, but yes, we feel very good about it. The team on the heavy commercial side has done a good job of even though they're putting up record revenue every quarter, they're actually continuing to grow their backlog. That's a very strong sign from our perspective.
Your next question comes from the line of Adam Baumgartner with Vertical Research Partners.
Just maybe sticking with heavy commercial. It sounds like pretty strong growth is expected to continue. Should we think about the composition of that growth, maybe more volume than price? Because it seems like price has been a big driver over the last year.
No, I think it will continue to be -- price will continue to be a driver there. Obviously, we'll say this probably a couple of more times is that the comps become increasingly more difficult for us just given the outperformance that, that business had experienced through 2025. We definitely think it's going to be more -- continue to be a price story as well. Part of that is because we're doing a much better job of selling multiple applications or products per job, right? In that instance, our average job, if you will, has a higher take per job, if I can use that terminology. That's really helping that business from a pricing perspective.
Then kind of flattish price/mix here. I know last quarter, mix was pretty nicely positive, offsetting some modest price pressure. Can you maybe break apart how price and mix in the quarter trended?
I'm sorry, say that last part again?
Just the split between price and mix because I know last quarter, mix was nicely positive, offsetting some modest price weakness. Maybe how that looked in the first quarter?
Yes. As you know, that price/mix disclosure is kind of very difficult to break down just because most people's price disclosures are like-for-like, and there's really no such thing as like-for-like from our perspective. I would say that the pricing pressure, as we've said earlier, really came from the production builders and on the residential side, pricing for the privates and the regional local builders was pretty solid.
Now again, when I say that, it's all about average job price, right? What you're seeing within the production builders, while on a per square foot installed basis, there's not as much pricing pressure as you would expect, but if on average, they're building a smaller house, even though that doesn't impact us that much, it does have some impact on the price with the production builders, right?
To the extent that they're trying to get their average ASP down and one of the ways they're doing that is by building a considerably smaller house that naturally, even if our per square foot installed price is the same, there's less square feet to install.
Your next question comes from the line of Ken Zener with Seaport Research.
The stock price reminds me of when you had the commercial heavy cost headwinds x years ago, and there seem to be a disproportionate impact from investors' perspective. You were very clear last quarter talking 32% to 34%, right, is your gross margin range. The Street with 3 quarters that had been above 34%, was surprised today. Yet you talked about your product margin being up and these headwinds seem to be persistent.
Do you see the possibility of a sub 32% gross margin before we come out within your long-term range given the uncertainty around fuel surcharges, which I don't know if you're able to recoup those from customers quickly. Could you just talk about that range given the surprise we had today?
Yes, Ken, this is Michael. I mean I have to firmly reiterate that we don't provide guidance. What I would say is that we continue to feel confident that on a full-year basis, the gross margin will be between 32% and 34%. The gross margin in the quarter was in that range, led at the low end of that range. The first quarter is always at the low end of the range. Given the weakness that we saw in demand, again, the team did an excellent job of managing the costs that are directly variable.
The reality is, is that they can't control depreciation, they can't control vehicle insurance costs. Those things were major headwinds to gross margin in the quarter. We haven't done it enough. We have to just really give a shout out to the team because they're continuing to perform in what is a difficult operating environment. Quite frankly, we continue to believe that they will do that through the rest of the year. As a result, the gross margin will be in that 32% to 34% range.
Really appreciate how you broke down, right, depreciation, insurance, distribution manufacturing inputs, would you expect that if we see some degree of normal seasonality 2Q from 1Q that these elements would be accretive to margins then? I mean, as you pick up, right, you obviously just sell 100 and you fell sequentially in sales and it's expected you're going to rise. Would most of those things be -- would you get volume leverage essentially from that sales gains? Is that a logical conclusion given you're positive on your product margin and your heavy commercial margins?
Historically, yes. Our margins improve as we go into the seasonally stronger quarters. The first quarter is seasonally always our weakest quarter from a volume perspective. As a consequence, the other cost of goods sold, particularly vehicle expenses hurt gross margin. Again, I would say that we expect the full-year gross margins to be in that 32% to 34% range. We do believe, even though there are considerable headwinds for things that we've talked about that will continue, we would expect to see a typical seasonal gain as we go throughout the course of the year on a quarterly basis.
If I can get one last question since you have such. Well, with TopBuild apparently going away, QXO, not doing conference calls, you're the big provider of a good understanding of new home sales given your good market share. Why is it that your confidence in the census data is so bad?
I mean the publics don't respond to the census and they dominate the Southeast, obviously, that's one reason. Is there something more structural about the data that you see undermined? Or is it actually just more regional distortion that you're seeing? The Midwest makes sense, the Southeast doesn't. Could you expand on that given that we obviously have -- we investors look at that information historically, and you're saying it's not good.
Yes. I mean maybe I shouldn't have been so harsh, but I think on a month-to-month basis, we all know that, that information gets heavily revised. Particularly when you saw the numbers in multifamily with supply delta, I mean, that just I mean that's not practical. It just doesn't make sense that something like that would happen. You have to have less confidence in the actual numbers.
Now on a full-year basis or on a trailing LTM basis, is that data worthwhile, particularly the permit data? Yes, absolutely. Obviously, we don't run our business based on what the Census Bureau reports. We continue to, again, see good strength, moderate strength, I guess, I should say, within the private builders. We feel good about where the multifamily business is doing and what it's doing, what the heavy commercial business is doing.
Even though we continue to see weakness with the production builders, the public have noticeably increased their community counts, and there's reason to feel encouraged about the back half of the year, particularly based on some of their comments, not just publicly, but to our salespeople and field people. We haven't seen a strong inflection there yet.
It also sounds like you're saying the entry level is where the pressure is not at the move up or higher in custom as well, correct?
100%.
Our last question comes from the line of Collin Verron with Deutsche Bank.
You gave a lot of helpful color on the gross margin, but I just wanted to clarify, were any of the headwinds that you saw in the first quarter onetime in nature? Or do you expect to see any of the impacts from maybe mix reversing?
No, to be honest with you. I mean I think that the growth in the complementary products or in the complementary products are at a better sales rate, if you will, than insulation. When we say insulation, we mean fiberglass and spray foam. It definitely weighs on gross margin. The distribution and manufacturing business, which, as I mentioned previously, was a 40 basis point headwind to gross margin. It's good for EBITDA margins, but from a gross margin perspective, it definitely structurally, it's just the way that business is, does weigh on gross margins. It's relatively small, but it's performing extremely well, and we expect it to continue to perform well.
Again, on the gross margin side, we feel confident about the 32% to 34% range on a full-year basis. I did want to get in just a couple of quick notes on the administrative side because I think it's important. I understand why everybody is focusing in on the gross margin. In the quarter, medical insurance was up almost 40%, which was a 50 basis point headwind to overall margin. Facility costs were up 12%, which is about a 40 basis point headwind to overall margins, and liability insurance was up 35% in the quarter, which was a 40 basis point headwind in the quarter to margin.
Again, all of these costs that we've called out are not directly controllable. I mean they are over time. Believe me, we're working on managing those expenses, but when you're in a flat to down volume environment, it's hard to offset some of these costs that are going to increase just because of the nature of the market pricing for those costs. Now it's our job and our team's job to work hard to offset those costs to align our costs with our selling price and our customer mix. Everyone in the company is highly incented on profitability, and the team is working tirelessly to make sure that we're able to do that.
That's really helpful color and you saw my second question. I guess I'll just ask about your comment about the slower -- it just being slower to make up for the weather. I guess that was a little surprising just because it feels like there'll probably be capacity in the market given the slower demand and then the builder cycle times being low. I guess if you could just kind of expand on that, what's driving sort of the slow -- your slower ability to make up for that weather headwind?
I think it was just generally speaking, slower to come back than it normally is. I mean, it could be builders just slowing down a bit. I would say with the private builders, we were encouraged with what we saw in April, and we're encouraged with the dialogue really across the footprint.
This now concludes our question-and-answer session. I would like to turn the floor back to Jeff Edwards for closing comments.
I want to thank all of you for your questions, and I look forward to our next quarterly call. Thank you.
Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may disconnect your lines, and have a wonderful day.
Installed Building Products, Inc. — Q1 2026 Earnings Call
Installed Building Products, Inc. — Q4 2025 Earnings Call
1. Management Discussion
Greetings, and welcome to Installed Building Products Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Mr. Darren Hicks, VP-Investor Relations. Thank you. Mr. Hicks, you may begin.
Good morning, and welcome to Installed Building Products Fourth Quarter 2025 Earnings Conference Call. Earlier today, we issued a press release on our financial results for the 2025 fourth quarter and fiscal year, which can be found in the Investor Relations section of our website.
On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements within the meaning of federal securities laws. These forward-looking statements are based on management's current beliefs and expectations and are subject to factors that could cause actual results to differ materially from those described today.
Please refer to our SEC filings for cautionary statements and risk factors. We undertake no duty or obligation to update any forward-looking statement as a result of new information or future events, except as required by federal securities laws.
In addition, management refers to certain non-GAAP and adjusted financial measures on this call. You can find a reconciliation of such non-GAAP measures to the nearest GAAP equivalent in the company's earnings release and investor presentation, both of which are available in the Investor Relations section of our website.
This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer; Michael Miller, our Chief Financial Officer; and we are also joined by Jason Niswonger, our Chief Administrative and Sustainability Officer.
Jeff, I will now turn the call over to you.
Thanks, Darren, and good morning to everyone joining us today. As usual, I will start the call with some highlights and then turn the call over to Michael, who will discuss our financial results in more detail before we take your questions.
We closed out 2025 with a strong fourth quarter, delivering record sales and profitability for the year. While our core residential end markets experienced headwinds in part due to housing affordability, our commercial end markets performed extremely well as we focused on meeting the needs of our customers, profitability and product diversification across end markets.
We continue to generate strong operating cash flow, which we use to support our growth-oriented capital allocation strategy. While we expect homebuilding activity to remain challenging in the near term, the long-term outlook for our installed services remains positive, and we believe we are well positioned to continue investing in strategic acquisitions while returning cash to our shareholders.
Capital allocation decisions are among the most important we make as a company, and we take pride in our disciplined approach. For 2025, our adjusted return on invested capital was 24%, in line with the returns achieved over the previous 3 years. Even with industry-specific headwinds expected to continue to affect our new residential Insulation segment in the near term, our overall business has proved to be resilient.
All the credit goes to the hard-working men and women across our more than 250 branches throughout the United States and those who support them from our office in Columbus, Ohio. To everyone at IBP, thank you for making 2025 a great year. As we continue to focus on profitable growth and maximizing returns for our shareholders, we remain committed to doing the right thing for our employees, customers and communities.
Looking at our full year 2025 performance, consolidated sales increased 1% and same-branch sales declined 1%. Same-branch commercial sales growth was more than offset by residential same-branch sales growth headwinds. Residential sales growth within our Installation segment was down 4% on a same-branch basis for 2025 as both single-family and multifamily same-branch sales decreased from the prior year.
With respect to our single-family end market, the spring selling season is underway, but it's too early to draw any conclusions for the rest of the year. We expect that given readily available labor and material and relatively short construction cycle times, construction activity is primed to accelerate without any of the production-related hurdles that existed in prior years.
In our multifamily end market, our contract backlog continues to grow, which is encouraging. Our commercial end market was a real bright spot in 2025 with sales in our Installation segment up 10% on a same branch basis from the prior year period. Our heavy commercial end market continued to be the dominant driver of sales growth, which more than offset weakness in our light commercial end market.
Based on the growth in our heavy commercial contract backlogs, we believe heavy commercial sales and profitability are poised to remain healthy in 2026. We completed 11 acquisitions, including bolt-ons during 2025, representing over $64 million of annual revenue. We remain disciplined in our approach to acquiring well-run businesses that make strategic sense, support attractive returns on invested capital and fit well culturally. Our core residential installation end market remains highly fragmented with considerable opportunity for consolidation.
During the 2025 fourth quarter, we completed a total of 4 acquisitions, representing over $23 million of annual sales from a diverse product set in both residential and commercial end markets. Acquisitions included an insulation installer, a glass design and fabrication company, a drywall and framing company and a shower doors, shelving, mirrors, and accessories company.
In addition, in January and February, we acquired an installer of insulation across new residential and commercial end markets throughout Texas, Louisiana, Arkansas, and Oklahoma with annual sales of approximately $5 million; a provider of a wide range of value-added mechanical insulation services for diverse commercial and industrial applications serving key commercial and industrial hubs across Wisconsin, Iowa, Minnesota, Michigan and Illinois with annual sales of approximately $13 million; and an installer of insulation primarily across new residential and light commercial markets throughout Kansas and Oklahoma with annual sales of approximately $3 million.
Although deal timing is hard to predict, our current outlook for acquisition opportunities in 2026 is strong, and we expect to acquire at least $100 million of annual revenue this year.
In terms of broader housing construction activity in the U.S., Census Bureau data for 2025 showed single-family starts decreased 7% from the prior year, while multifamily starts were up 18% for the same period. From a federal housing policy standpoint, we do not have any unique insight into the likelihood of changes in regulation coming to fruition or its potential impact or benefit.
Our experienced leadership team has a history of operating through multiple housing cycles, and with our strong national market share and deep customer and supplier relationships, we are well positioned to continue to compete and win business. We remain focused on growing our operations profitably and allocating capital effectively to drive value for our shareholders. I'm proud of our team's continued success and commitment to doing an excellent job for our customers.
Once again, to everyone at IBP, thank you. I remain encouraged by the fundamentals of our industry, our competitive positioning, and I'm optimistic about the prospects ahead for IBP and the broader insulation and complementary building product installation business.
So, with this overview, I'd like to turn the call over to Michael to provide more detail on our fourth quarter and fiscal year 2025 financial results.
Thank you, Jeff, and good morning, everyone. Consolidated net revenue for the fourth quarter was roughly flat at $748 million compared to $750 million for the same period last year. Same-branch sales for the Installation segment were down 2% for the fourth quarter as a 23% increase in commercial same-branch sales almost fully offset a 9% decline in new residential same branch sales.
Although the components behind our price/mix and volume disclosures have several moving parts that are difficult to forecast and quantify, we reported a 1.7% increase in price/mix during the fourth quarter. This result was offset by a 9.3% decrease in job volumes relative to the fourth quarter last year.
It is important to note that our heavy commercial end market and the other Distribution and Manufacturing segment results are not included in the price/mix and volume disclosures.
Our heavy commercial same-branch sales growth was incredibly strong at 38% during the 2025 fourth quarter. Including the heavy commercial installation sales, price/mix increased 6%, while job volume decreased 9% during the 2025 fourth quarter.
With respect to profit margins in the fourth quarter, our business achieved record adjusted gross margin of 35%, an increase from 33.6% in the prior year period. The year-over-year increase in margin during the quarter was in part related to a shift in our Installation segment customer mix and successful management of direct operating costs in a demand environment that varied from challenging to healthy across end markets.
Adjusted selling and administrative expenses were relatively stable compared to the 2024 fourth quarter. As a percent of fourth quarter sales, adjusted selling and administrative expense was 18.3% compared to 18.1% in the prior year period. Adjusted EBITDA for the 2025 fourth quarter increased to a record $142 million, reflecting a record adjusted EBITDA margin of 19% and adjusted net income increased to $88 million or $3.24 per diluted share.
Although we do not provide comprehensive financial guidance, based on recent acquisitions, we expect first quarter and full year 2026 amortization expense of approximately $10 million and $38 million, respectively. We would expect these estimates to change with any acquisitions we complete in future periods. Also, we continue to expect an effective tax rate of 25% to 27% for the full year ending December 31, 2026.
For the 12 months ended December 31, 2025, we generated $371 million in cash flow from operations. The 9% year-over-year increase in operating cash flow was primarily associated with an increase in net income and improvements in working capital management. Our fourth quarter net interest expense was $8 million compared to $9 million for the 2024 fourth quarter as higher interest income from investments combined with lower cash interest expense on outstanding debt.
At December 31, 2025, we had a net debt to trailing 12-month adjusted EBITDA leverage ratio of 1.1x compared to 1.09x at December 31, 2024, which remains well below our stated target of 2x. At December 31, 2025, we had $377 million in working capital, excluding cash and cash equivalents. Capital expenditures and total incurred finance leases for the 3 months ended December 31, 2025, were approximately $17 million combined, which was approximately 2% of revenue.
In January 2026, we closed a private offering of $500 million in aggregate principal amount of 5.625% senior unsecured notes due 2034. A portion of the proceeds were used to fully repay our $300 million notes due 2028. We also amended our existing $250 million asset-based lending revolving credit facility to, among other things, increase the commitments thereunder to $375 million and extend the maturity date to January 2031.
Following the completion of these transactions, we have nearly $900 million in available liquidity and very modest financial leverage.
Based on higher debt and cash balances, we estimate that first quarter interest expense will be approximately $11 million. With an even stronger liquidity position as a financial foundation, we will continue to prioritize acquisitions with long-term strategic benefits and attractive returns on invested capital.
We expect positive free cash flow will continue to support shareholder returns and stock buybacks based on prevailing market conditions. During the 2025 fourth quarter, we repurchased 150,000 shares of common stock at a total cost of $38 million and 850,000 shares at a total cost of $173 million during the 12 months ended December 31, 2025. The Board of Directors authorized a new $500 million stock buyback program. The new authorization replaces the previous program and is in effect through March 1, 2027.
IBP's Board of Directors approved the first quarter dividend of $0.39 per share, which is payable on March 31, 2026, to stockholders of record on March 13, 2026. The first quarter dividend represents a more than 5% increase over the prior year period. Also, as a part of our established dividend policy, today, we announced that our Board has declared $1.80 per share annual variable dividend, which is a nearly 6% increase over the variable dividend we paid last year.
The 2026 variable dividend amount was based on the cash flow generated by our operations with consideration for planned cash obligations, acquisitions and other factors as determined by the Board. The variable dividend will be paid concurrent with the regular quarterly dividend on March 31, 2026, to stockholders of record on March 13, 2026. We are committed to continuing to grow the company while returning excess capital to shareholders through our dividend policy and opportunistic share repurchases.
With this overview, I will now turn the call back to Jeff for closing remarks.
Thanks, Michael. I'd like to conclude our prepared remarks by once again thanking IBP employees for their hard work and commitment to our company. Our success over the years is made possible because of you.
Operator, let's open up the call for questions.
[Operator Instructions] The first question comes from the line of Philip Ng with Jefferies.
2. Question Answer
Congrats on a really strong quarter in a not easy environment. Your gross margin and EBITDA margin expanded nicely this year. So, pretty impressive. But in this current backdrop, when we look out to 2026, what's your confidence in protecting margins? Your largest competitor just reported results, they're calling out perhaps low single-digit price deflation in '26 and some price cost headwinds. So, how should we think about it as it relates to IBP?
Phil, this is Michael. Thanks for the compliment. We certainly are extremely proud with what the team has delivered not just in the fourth quarter, but this year. I mean, as it relates to margins, particularly gross margins, and I'll say at least probably 10 times today, like I do on every call, we don't provide guidance. But what I would say is that, as we look across the business, and we look at how well the commercial business is performing, we believe it will continue to do that.
The other segment, which is the Manufacturing and Distribution segment is continuing to perform very well, and we think it will continue to do that. When we look at the core residential installation business, we really think of it as in 2 buckets. So, the first bucket being the regional private, move-up, custom, semi-custom builder. And we're really seeing relatively consistent demand there, which is -- we've seen that through really most of '25. And going into '26 as well, although clearly, which is something I'm sure we'll talk about on the call today, clearly, the year is off to a slow start, given some of the weather-related issues that have been experienced across the country.
And so, what I would say is that where there's weakness and where there's pressure is within the entry-level production builder segment of our business. And right now, I think it's way too early to call whether or not there's an inflection and there will be an inflection in the spring selling season. Something that was a little bit encouraging, I would say, is that in the recent information released by the Census Bureau, if you look at single-family starts on a seasonally adjusted annualized rate, right?
So, in the fourth quarter, those starts averaged about 6% higher than they did in the third quarter. Again, that was the seasonally adjusted annualized rate. So, that's a positive. And I think commentary from companies in our space that have reported have noted or highlighted that the production builders really decreased and slowed down their building in the fourth quarter in order for their standing inventory to catch up to demand.
It's our belief that if the market is sort of flattish and we don't see an inflection on the entry-level side, that there'll probably be some level of rebuilding of those inventories. This continues to be a market where builders at the entry-level market are building spec. And we do believe there will be some recovery, if you will, in starts there that will be constructive. But as we look out from a macro perspective and sort of look at, again, that entry-level market, the affordability issue is still a real issue. And it's yet to be seen whether or not it is going to inflect positively this year and just how much it's going to inflect positively.
If you look at -- I'm giving too much information on this one question, sorry. But I mean, if you'd look at what the public builders have disclosed from their guidance, I mean, they're talking about a pretty weak first quarter and really first half with an inflection -- pretty strong positive inflection in the back half of the year. Now obviously, we all know that's off of easy comps that helps drive that. But we think it's relatively constructive. And so, yes, I'm sorry if that was too much information on that one question.
No, that's great color, Michael. And then your commercial business has been a bright spot, right? It's growing nicely. It's a business you've improved and enhanced profitability. Is that an area where you guys can get behind a little more so from an investment standpoint, whether it's M&A or organic? Just kind of help us think through the opportunity set there, your ability to kind of continue to drive momentum? And do you plan to put a little more capital there to kind of support the growth?
Phil, this is Jeff. I would say, for sure, we'll -- as we always are, we'll be opportunistic as the situation kind of offers or demands. There is room for both organic growth and M&A growth. We haven't pursued it that hard yet because, quite frankly, we've been growing the base business enough where that hasn't been really tightening the screws. So, at this point, we feel very, very good about the business, and we do feel good about growth prospects going forward.
Okay. But Jeff, why haven't you put more thought or capital there? I mean, the base business has been a little squishier and this seems like a nice bright spot, and there's a lot of runway for heavy commercial, I think, for most companies that we cover.
I think it's really been probably the last 2 at most 3 quarters where we felt like it was really, really in a position where we didn't need to kind of continue to work the base business. But I think at this point, I'd say we're ready to try to grow that business. Well more than just organically because we've had a heck of a lot of growth really from an organic perspective.
Yes. And I think to Jeff's point, I mean, the key is that, that growth has been phenomenal, and it's not just been growth. It's been very profitable growth. And we wanted to make sure the team was ready to do additional acquisitions. The last thing we would want to do is kind of mess up their day, if you will, through the integration process of an acquisition and have them take the eye off the ball of the existing business. So, to Jeff's point, the past couple of quarters, we feel really confident that they've gotten to that point.
Next question comes from the line of Stephen Kim with Evercore ISI.
This is Aatish on for Stephen. I just want to talk about -- if you could talk about the M&A landscape? And has there been any change in terms of strategy in terms of what kind of companies could be targeted, specifically on that, just given interest from your largest competitor, has the commercial roofing market been an area of consideration?
Yes. This is Jeff again. As we've stated, I think, in previous calls, yes, we're definitely interested in the commercial roofing segment. And as you probably noted, we've done a few mechanical and industrial installation installers, and that's another area that we're interested in. So -- but again, I think we're on record previously as saying that we were interested in that business. So, I don't think it's a change in strategy. What I would say is that we've begun to really perform on those strategies a bit.
But fundamentally, our core residential insulation installation business still presents tremendous opportunity for us, and we continue to pursue that area significantly just because we still have so much wide-open space as a company to acquire in that core business for us. So, it really is, if you will, a 3-legged stool in terms of our strategy there.
That's helpful. And then, in the prepared remarks, you mentioned kind of a shift in customer mix in the Installation segment. Can you just detail that a little bit?
Yes. And just to clarify, that wasn't just insulation, it was the Installation business, so the kind of the residential installation business. And because we're continuing to see better sales rates with the semi-custom, custom builder and weaker sales rates with the production builder entry-level builder, that has a natural tendency, if you will, to improve and help gross margin.
I mean just as a -- for example, during -- and this is based on the Census Bureau regions. But during the quarter, our Midwest Census Bureau region revenue was up mid-single digits, right? So -- and that market for us is -- it's, generally speaking, a higher gross margin market because of the higher amount of private semi-custom, custom homes that are built in that market. So, we definitely benefited in the quarter from our geographic mix as well as our customer mix from a gross margin and a profitability perspective.
And I need to emphasize something that's very important is that our teams in the other regions of the country did an excellent job of maintaining profitability across the board with our customers and really highlighting and selling well to our customers the importance and quality of our installed services. And hats off to those -- to everyone in the field for doing such a great job.
Next question comes from the line of Susan Maklari with Goldman Sachs.
Let me add my congrats on a great quarter, guys. Well done. My first question is, talking about the growth that you've seen in the complementary products. That's something that you've really focused on recently. Can you talk about where we are in that process? And as you think about 2026 and the comps that you're going to face there, are there any implications we should be thinking about as that relates to the path for margins or for the growth that you're going to see coming through?
Yes. Sue, this is Michael. I mean, we have continued to see good uptake in the complementary products. The one thing I will say is, in the way that we sort of disclose those numbers in our investor PowerPoint, there's quite a bit of the complementary products that are related to the heavy commercial business. So that skews some of it. But I would say if we -- when we look at the information and we take out the heavy commercial business and look at just the complementary product sales growth and margin growth within the installed segment, again, excluding the heavy commercial business, it continues to improve, and we believe that we'll continue to see good uptake on the complementary product side.
As we've talked several times, the lack of opportunity or the softness in the single-family market really helps drive uptake of the complementary products within the branches. Because compensation is so closely tied to profitability within the organization, the salespeople, the branch managers, the people that are running our branches are really focused on -- more focused on the complementary product opportunity when the insulation opportunity is a little bit softer, particularly at that production builder level. And within the production builders at the entry level, we do have very good complementary product penetration because of some of those efforts.
Okay. That's great color. And then, you mentioned that you've recently done some more deals in the mechanical space. Can you talk about your interest there, where you are in that process? How we should think about what that could mean for the future of the business? And then maybe with that, any comments on your efforts to build out distribution as well and just where we are there?
Yes, Susan, this is Jeff. So, we definitely -- as Michael said, I mean, I guess if you wanted to consider it a third leg, we look at the mechanical and industrial as a huge opportunity for us. It's a business that's extremely fragmented. I would say, on average, the prospective businesses that we've looked at have been a little larger than what we see typically at some of our other kind of regular way acquisitions, and margins are very favorable in terms of overall for the company.
So, we -- at this point, obviously, we think we'd love to find a little bigger business and kind of build out a platform. So, we'll see what the future brings, but that's definitely something that we're looking at. And on the internal distribution or the distribution side of the business, we've been very pleased with the progress we've made really in the last 2 quarters within that business. We -- at this point, I'd have to probably guess a bit, but I would bet that we are servicing 60% to 70% of our branches at this point from probably about 5 to 6 locations. And we have a few more to add. But otherwise, it's worked exactly as we thought it would, and it helped our margins.
Yes, certainly our gross margin.
Next question comes from the line of Adam Baumgarten with Vertical Research Partners.
Just on the -- you mentioned some positive mix impacts on gross margin from the better growth in custom and semi-custom and some regional factors like the Midwest. But the strong growth in heavy commercial, did that also contribute to the gross margin expansion?
Yes, absolutely. I think in the third quarter call, we sort of called out that we didn't expect that much of a tailwind, if you will, from the support or of the improvement -- profit improvement within the heavy commercial business. But I guess we were sandbagging a little bit there, quite frankly, because the heavy commercial business did continue its relative outperformance and we would estimate that the heavy commercial business added about 40 basis points or so to the gross margin improvement.
Okay. Got it. Great. That's helpful. And then, just digging into the heavy commercial strength, I mean, was it pretty broad-based? Are there certain verticals like maybe data center that were kind of outsized contributors? Or just kind of what you're seeing there maybe by an end market vertical perspective in heavy?
Yes. And so, Brad Wheeler, our Chief Operating Officer, is here, and I'm going to have him add some color to this as well. But it's not data center related. I mean it's across the board with the big exception of high-rise multifamily. It's a lot of educational, it's health care, it's recreation, transportation. While we do some data center work, we don't chase it like other companies do.
This is Brad. Yes, it's really -- we've maintained our core, right, the educational and the -- even some of the offices is back, which has helped. Manufacturing has increased, which is great. So, it's really us sticking to our core and taking advantage of any data centers that we have in our platform.
Next question comes from the line of Michael Rehaut with JPMorgan.
I wanted to first kind of go back big picture a little bit with the gross margins. We've had many quarters now where you've really executed very strongly and kind of at or above that 32% to 34% range that you've talked about. There's also been, as you've highlighted, good improvement in commercial. You're benefiting from the mix on the semi-custom and the geographic. And I'm just wondering, with all those factors kind of benefiting the margin, if you've kind of given any thought to perhaps thinking about gross margins over the next couple of years, maybe above that 32% to 34%, particularly given the strength in the fourth quarter.
Yes, that's a great question, and I'm glad that you asked it. We would -- it's our expectation that the gross margins would continue to be, particularly on a full year basis in that 32% to 34% range. As we were saying earlier to the answer to another question, I mean, fundamentally, when we look across the business, the only part that where we don't have really good visibility into either being flat or up is the production builder entry-level market.
We believe when that market inflects and it will, we are very well positioned to participate in that upward inflection, but it will necessarily pressure gross margin just because that work is at a much lower gross margin. Now what it does come with is great OpEx leverage. So, it will improve -- it should improve OpEx leverage and improve EBITDA margins.
So, right now, we're really just working hard to -- obviously, the parts of the business that are either flat or up, we're doing everything we can to maximize profitability there and positioning the business to really do well once that inflection happens. We really are confident about the team's ability to flex up to meet that demand when it comes.
And it's way too early, as Jeff said in his prepared remarks, I mean, it's way too early in the spring selling season to say whether or not we're going to see the inflection this year. But I do think there is some opportunity with the production builders sort of rebuilding inventory, if you will, in the first half of the year.
Okay. No, I appreciate those thoughts. I guess, secondly, I was hoping you could review where you are from a price/cost standpoint in the fourth quarter. And you just had your competitor out earlier this morning talk about anticipated price/cost headwinds for 2026. I was curious on your thoughts of how that dynamic you expect -- how you expect that dynamic to play out for you in '26 and if that might be a headwind as well relative to what you're seeing in your current results?
Yes. I mean, certainly, at the entry-level part of the business, there's definitely price/cost pressure. The team is doing an excellent job of trying to manage through that. But there's definitely going to be pressure there until that entry-level aspect of the market inflects positively. But our team, again, I think they're doing a really good job of trying to manage that, but there's clearly pressure there for sure.
And clearly, in the first quarter, we're going to have pressure from the weather. We estimated that in January and February that the weather impact was about $20 million to revenue in the first quarter. Now we're working to make that up, and we will work to make that up, but we're not going to be able to make that up in the month of March. It's just not going to happen.
So, it's definitely making that up "is going to fall into the second quarter." So yes, we're going to face pricing pressure with our customers. But I think as a company, we know that we've done an excellent job, and we believe our results reflect our ability to effectively manage that price/cost pressure.
So, is it fair to say then, Mike, that you're not -- you're expecting the pressure to continue, but maybe not incremental relative to what you're seeing already in your 4Q results?
Yes. I think that's reasonable. Although the first quarter is always our weakest quarter, right? And the headwind that we have because of the weather impact, obviously, is going to be tough. But if we think of it, and we like to think of it on a full year basis as opposed to a quarterly basis, we feel good about what the team has been able to do. And if we have a flat to slightly down single-family market, excluding any acquisitions that we do, given the strength that we're seeing in the commercial business and the Manufacturing and Distribution business, we feel pretty good about the year in general, right? So, obviously, it's late February. It's hard to call a year at this point, but there's definitely reason to be pretty encouraged.
Next question comes from the line of Mike Dahl with RBC Capital Markets.
I want to take that last question and kind of flip it around and ask, in the fourth quarter, did you actually experience some effective price/cost benefits? I know there's a lot moving around in terms of mix and different types of mix, but it seemed like there was some opportunity for buyers such as yourselves to get some lower pricing on resi fiberglass in the fourth quarter and your reported pricing, again, understanding there's a lot of mix, but it was up.
I'm just wondering if that -- if there was something like that, that actually also contributed to the gross margins because the heavy commercial disclosure was helpful, but margins being up 100 basis points year-on-year, even taking that aside is pretty impressive.
Yes. I mean it is predominantly mix related and the team's ability to manage the cost structure as effectively as possible in the current environment. So, I think there's been a lot of discussion around fiberglass pricing, the fiberglass manufacturers. In our opinion, and I'll have Jeff or Brad talk a little bit more about this. I think they've done a good job of managing capacity relative to the demand environment and I think they've done an excellent job of maintaining price.
And I think it's clear to us that what they're focused on is maintaining price in the current environment so that when there's an upward inflection, they can keep that price as opposed to lowering price now and making it more difficult to get price back when there is an upward inflection. But I don't know if you guys want to add anything to that.
I think everything you said is accurate and I wouldn't add anything.
Okay. Got it. Appreciate that. Second question, just on the commercial side and heavy commercial, it's interesting the comments on maybe doing some more inorganically now. Just on the organic side, I mean, with this type of strength in same-branch sales and the backlog that you're seeing, when we think about like organic OpEx or capacity expansions, how are you thinking about that in 2026? Do you really need to start to do more to support the growth that you're seeing in that segment?
Yes, that's a really good question given the growth rates that we're seeing. I mean, we clearly benefit from the highly variable cost structure. But I'll ask Brad to give some more commentary on our ability to bring up capacity to support the demand.
Sure. This is Brad again. Yes. So, a lot of it -- we expanded our geographic area as well. And part of the organic growth strategy would be, we go get jobs in other markets where we generally aren't participating. We build a backlog. And then once we have settled, we have employees and installers in that area, we're able to go and open an office. And that's sort of how we have our strategy set up right now.
In addition, we are looking at other markets throughout the country that we feel would be a good fit to organically grow there as well. And, obviously, of course, acquisitions as well.
But our ability to flex both in the heavy commercial business, the light commercial business, all of the install businesses, our ability to flex up or down is very significant. I mean, obviously, we wouldn't disclose individual branch results, but there are some branches in Texas and Florida that have had pretty significant sales declines over the course of the year and particularly in the fourth quarter, but they have maintained their margins, right? And that speaks dramatically to the heavy variable cost structure of the business, and importantly, the manager's ability to manage effectively, right?
One of the things that we believe, structurally, we benefit from is the highly variable compensation within the organization and particularly within the branch managers that provides a powerful incentive for them to manage the cost structure, whether that's managing it up or down based upon the volumes that they're seeing.
Next question comes from the line of Ken Zener with Seaport Research Partners.
So, again, perhaps even more pronounced this quarter given your gross margin, the regional -- well, production builder versus your other bucket, right, has been affecting mix and you talked about margins, right, with customer mix, I think that's the same thing. Is there a way -- since you're disclosing so much, Michael, in terms of gross margin from commercial and they're up in res, is there a way for you to bucket the growth rates you're seeing in -- or the different rate of change within your production bucket versus your other regional bucket?
[indiscernible] the magnitude is pretty good. I believe you said the regional you see flat or up, if I heard you correctly, you might have said that. Just any comments would be helpful.
Yes. So, if we look at it on a full year basis and we look at the private regional builders, basically, our business with them in the year was flat. If we look at our business with the production builders and when we say production builders, we mean the public builders, right? Because we can use them and talk about them in a different way because their information is public, right?
So, when we're talking about sales with them, we're talking about, again, the public builders, not even a big private builder like David Weekly Homes. So, from the public's perspective, if we look at their homebuilding revenue, right, for the full year, it declined around 6%. And our revenue with them was down around 6%, which is exactly what you would expect.
But that, again, was more than offset with the positive -- flat to positive growth that we had with the private builders. So, we feel that we're doing exactly what we're supposed to be doing. We're maintaining share with the publics, the production builders and working closely with them to not just maintain share, but maintain price and maintain profitability and to be there and to be able to support them when there's the inflection, but at the same time, leaning in and focusing very hard on our geographic weightings and our customers that are either growing or are at flat. So, the team is doing an excellent job of identifying where the opportunity is and working hard to maximize the benefits with that.
Really appreciated those comments. Now -- in regards to weather, which isn't something that historically, I think, is such a big deal, the seasonality 1Q from 4Q, it's been kind of all over the place. But if it's historically down, call it, mid-single digits, it sounds like you're expecting worse seasonality just because of the weather patterns we've had. Is that correct?
Correct.
Next question comes from the line of Keith Hughes with Truist Securities.
I've a question about multifamily. I've seen the government data, too, it shows a rebound -- pretty profound rebound in multifamily. Are we actually seeing that kind of boots on the ground? Is it that good? Or is it more just a bottoming going on?
Yes, Keith, that's a great question. And I'm really glad you brought it up because we wanted to talk about it. So, we believe based on -- so this is at a macro level, based on the information from the Census Bureau that was delayed a little bit, but that recently came out that multifamily cycle times have basically normalized to kind of pre-COVID, pre-supply side disruptions. And that was really driven by the fact that for the full year, multifamily starts were up like 18% and units under construction were down 13%.
So, we believe that the multifamily market is coming into, if you will, equilibrium. There will still be some headwinds. I think in the first half of -- I don't think I know, in the first half of this year. Our team has done, as much as we sing the praises of the heavy commercial business, the reality is that multifamily team across the country and particularly CQ, we call out all the time, have done an incredible job of just outperforming dramatically the market opportunity that exists there.
We have a lot of confidence in their ability to continue to do that. I mean their backlogs are growing and they're doing a great job of increasing the complementary product penetration within multifamily. So, yes, I mean, based on the starts for '25 coming into '26 and recognizing that the cycle time for multifamily is much longer than it is for single-family, we think that bodes well for full year '26 on the multifamily side, especially given the easy comps that all of us in the industry are going to be facing as it relates to multifamily.
I would say, too, just because we're talking about cycle times, on the single-family side, cycle times are probably the best they've ever been. And I think a lot of the big production builders have talked about how efficient their cycle times are currently. And again, building on some of the comments that we made earlier, when we, again, look at the business and the only part of the business that we were not really confident in is the single-family production builder business, because those cycle times are so tight at the entry level, as soon as there is an inflection, the inflection to our install time is going to be very short.
So we're going to feel it very quickly, and we'll scale up for it very quickly, unlike multifamily, right? Because the bid and book time on a project to when we actually do the install can be 12 to 18 months, right? So, this single-family inflection on entry-level production builder side can be pretty meaningful. It will be meaningful when it happens. We just don't know when it's going to happen.
Next question comes from the line of Collin Verron with Deutsche Bank.
I was just hoping you can talk about IBP single-family branch sales growth relative to the national market in the fourth quarter and just how and why that might have changed from sort of how IBP performed versus the market in 2Q and 3Q?
Well, we continue to perform sort of above the market opportunity, I would say, and -- I mean, clearly, and we've talked about this for the past several quarters, we clearly benefit from our regional weighting towards the Midwest and the Northeast. I mean when we look at our single-family revenue and we look at our market share by census region, our largest, highest market share is clearly in the Midwest.
And as I think pretty much everybody knows, the Midwest has been doing fairly well on a relative basis to the rest of the country. So, we feel good about the mix that we have. As I think we've said a couple of times, I mean, we're positioned very well with the production builders, entry-level builders once the inflection is there. But until that happens, we're continuing to lean in on our private and semi-custom, custom builders and to kind of work with the advantages -- inherent advantages we have from our regional diversification.
Great. That's helpful color. And then just really quickly on the commercial performance. I believe you characterized the backlog as healthy. But I was just curious if there's any more finer points you can put on sort of what you're seeing in the backlog in that early part of 2026 here and how much visibility that really gives you?
It's very healthy. So we feel very good about the business. I mean there's -- right now, it's just -- it's working incredibly well. And to be honest with you, since Brad's here, the team deserves a tremendous amount of the credit, but the leadership that Brad has brought to that team has been phenomenal.
Yes, absolutely.
And they've really stepped up. I mean it's just -- it's so impressive how well they've stepped up. It's just -- it makes us feel very proud.
[Operator Instructions] Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to turn the floor over to Jeff Edwards for closing comments.
Thank you for your questions, and I look forward to our next quarterly call. Thank you.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.
Installed Building Products, Inc. — Q4 2025 Earnings Call
Installed Building Products, Inc. — Q3 2025 Earnings Call
1. Management Discussion
Greetings, and welcome to the Installed Building Products' Third Quarter 2025 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Darren Hicks, Vice President of Investor Relations. Thank you. You may begin.
Good morning, and welcome to Installed Building Products' Third Quarter 2025 Earnings Conference Call. Earlier today, we issued a press release on our financial results for the third quarter, which can be found in the Investor Relations section of our website. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements within the meaning of federal securities laws. These forward-looking statements are based on management's current beliefs and expectations and are subject to factors that could cause actual results to differ materially from those described today. Please refer to our SEC filings for cautionary statements and risk factors. We undertake no duty or obligation to update any forward-looking statement as a result of new information or future events, except as required by federal securities laws.
In addition, management refers to certain non-GAAP and adjusted financial measures on this call. You can find a reconciliation of such non-GAAP measures to the nearest GAAP equivalent in the company's earnings release and investor presentation, both of which are available in the Investor Relations section of our website.
This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer; Michael Miller, our Chief Financial Officer; and we are also joined by Jason Niswonger, our Chief Administrative and Sustainability Officer.
Jeff, I will now turn the call over to you.
Thanks, Darren, and good morning to everyone joining us today. As usual, I will start the call with some highlights and then turn the call over to Michael, who will discuss our financial results in more detail before we take your questions. With another quarter of record sales and profitability, 2025 has been another very encouraging year for IBP. Our national network of branches continue to execute at a high level, delivering reliable installation services to large, medium and small homebuilders and commercial developers. While local market dynamics can vary greatly across the country, our results highlight the benefit of IBP's scale, product and end market diversity and the trust we place in our branches to make the right operating decisions for their respective markets.
Although the 10-year U.S. treasury rate has come down since our second quarter call in August, homeownership remains incredibly expensive for most people, which we believe will remain the biggest challenge for our customers selling new homes in the near term. Still, we are confident in the long-term fundamentals of the U.S. housing construction industry, and we remain focused on growing earnings and cash flow while diligently deploying capital to shareholders.
Through the 9 months ended September 30, 2025, we paid nearly $78 million in cash dividends and repurchased approximately $135 million of our common stock, returning nearly $213 million of capital back to our shareholders. In October, we published our 2025 ESG report, highlighting IBP's continued efforts to support environmental sustainability, employee well-being and community engagement in pursuit of a more sustainable and equitable future. Since our inaugural ESG report was published in 2021, we have made steady progress reducing our carbon footprint. We believe our efforts today are laying the foundation for a stronger, more sustainable future for our employees and people representing all communities.
Looking at our third quarter sales performance, consolidated sales increased 2% and same-branch sales were roughly flat. In our largest end market, same-branch new single-family installation sales were down 2%, while adjusting to the pace of residential housing and commercial building construction in local markets, our branches did a tremendous job growing complementary product sales by a double-digit percentage relative to the same period last year.
Third quarter installation sales in our multifamily end market were down 7% on a same branch basis. But looking ahead, several markets are stabilizing and showing improvement. As of the end of September, contract backlogs at key branches have grown year-over-year, and we have secured jobs in geographic markets in which we previously had little or no presence. Third quarter commercial sales in our installation segment increased 12% on a same branch basis from the prior year period. Our heavy commercial end market continued to be the dominant driver of sales growth in this end market, which more than offset weakness in our light commercial end market. Based on the growth in our heavy commercial contract backlogs, we believe heavy commercial sales and profitability are poised to remain healthy beyond 2025.
During the 9 months ended September 30, 2025, cash flow from operating activities increased 16% to $307 million, which primarily reflected improvements in working capital management. Year-to-date, we have acquired nearly $60 million in annual sales. We remain disciplined in our approach to find well-run businesses that would make strategic sense, support attractive returns on invested capital and fit well culturally. Our core residential installation end market remains highly fragmented with considerable opportunity for consolidation.
During the 2025 third quarter, we acquired a North Carolina manufacturer of cellulose-based insulation for homes, hydromulch for erosion control and composite materials used in industrial applications with an annual revenue of $20 million. In addition, in October and November, we acquired a business with a value-added wholesale glass design and fabrication division and a retail sales and installation operation, primarily serving residential customers throughout the Southeastern United States and annual sales of approximately $12 million, an installer of drywall and metal stud framing across a balanced mix of commercial and residential end markets throughout Wisconsin with annual sales of approximately $4 million and an installer of insulation in the single-family, multifamily and commercial structures across South Dakota, North Dakota, Wyoming and Nebraska with annual sales of approximately $3 million.
Single-family starts year-to-date through August 2025 have decreased by 5% from the prior year, while multifamily starts are up 15% for the same period. Looking into 2026, as is typically the case, the new residential construction outlook will be influenced by consumer confidence and buyer activity during the spring home selling season. However, with persistent challenges from housing affordability, we are expecting residential housing starts will be flat compared to 2025, a level that is above the 5-year average from 2017 to 2021.
For individuals and families with housing affordability concerns or shifting lifestyle preferences, newly constructed multifamily housing helps meet the needs of growing markets. Over the long term, we continue to believe that the volume growth in our business is supported by a fundamental undersupply of residential housing and the gradual adoption of advanced building codes for the purpose of improved energy efficiency across the U.S. We believe IBP continues to operate from a position of strength as we remain flexible in navigating any potential near-term challenges. Our national scale, strong customer relationships, experienced leadership team and sales across product categories and end markets create a solid platform for IBP to serve our customers and meet their operational efficiency goals.
Although broader macroeconomic uncertainty influences prevailing market conditions in our industry and in many others, we remain focused on profitability and effective capital allocation to drive earnings growth and value for our shareholders. I am proud of our team's continued success and commitment to doing an excellent job for our customers. To everyone at IBP, thank you. I remain encouraged by the fundamentals of our industry, our competitive positioning and I'm optimistic about the prospects ahead for IBP and the broader insulation and complementary building product installation business. So with this overview, I'd like to turn the call over to Michael to provide more detail on our third quarter financial results.
Thank you, Jeff, and good morning, everyone. Consolidated net revenue for the third quarter increased 2% to a record of $778 million compared to $761 million for the same period last year. Same-branch sales for the Installation segment were flat for the third quarter as a 12% increase in commercial same-branch sales more than offset a 3% decline in residential same-branch sales. Although the components behind our price mix and volume disclosure have several moving parts that are difficult to forecast and quantify, we reported a 1.5% increase in price/mix during the third quarter. This result was offset by a 4.8% decrease in job volumes relative to the third quarter last year.
It is important to note that our heavy commercial end market and the other segment results are not included in the price/mix volume disclosures. Our heavy commercial same-branch sales growth exceeded 30% during the 2025 third quarter, including the heavy commercial installation sales. Price/mix increased 4.4%, while job volume decreased 4.5% during the 2025 third quarter. With respect to profit margins in the third quarter, our business achieved adjusted gross margin of 34%, an increase from 33.8% in the prior year period. The year-over-year increase in margin during the quarter was in part related to a shift in customer, product and geographic mix.
Adjusted selling and administrative expenses were stable relative to the 2024 third quarter. As a percent of third quarter sales, adjusted selling and administrative expenses decreased to 18.2% compared to 18.5% in the prior year period. Adjusted EBITDA for the 2025 third quarter increased to a record $140 million, reflecting an adjusted EBITDA margin of 18% and adjusted net income increased to $86 million or $3.18 per diluted share. Although we do not provide comprehensive financial guidance, based on recent acquisitions, we expect fourth quarter 2025 amortization expense of approximately $10 million. We would expect these estimates to change with any acquisitions we complete in future periods. Also, we continue to expect an effective tax rate of 25% to 27% for the full year ending December 31, 2025.
Now let's look at our liquidity position, balance sheet and capital expenditures in more detail. For the 9 months ended September 30, 2025, we generated $307 million in cash flow from operations. The 16% year-over-year increase in operating cash flow was primarily associated with improvements in working capital management. Our third quarter net interest expense was $7 million compared to $8 million for the 2024 third quarter as lower interest income from investments was offset by lower cash interest expense on outstanding debt.
At September 30, 2025, we had a net debt to trailing 12-month adjusted EBITDA leverage ratio of 1.09x compared to 1x at September 30, 2024. This remains well below our stated target of 2x. At September 30, 2025, we had $330 million in working capital, excluding cash and cash equivalents. Capital expenditures and total incurred finance leases for the 3 months ended September 30, 2025, were approximately $20 million combined, which was approximately 3% of revenue. This is higher than usual as we accelerated vehicle purchases in advance of expected price increases. With our strong liquidity position and modest financial leverage, we continue to prioritize allocating capital to achieve the best returns while distributing excess cash to shareholders. During the 2025 third quarter, IBP repurchased 200,000 shares of its common stock at a total cost of $51 million and 700,000 shares at a total cost of $135 million during the 9 months ended September 30, 2025. At September 30, 2025, the company had approximately $365 million available under its stock repurchase program.
As previously announced, IBP's Board of Directors approved the fourth quarter dividend of $0.37 per share, which is payable on December 31, 2025, to shareholders of record on December 15, 2025. The fourth quarter dividend represents a 6% increase over the prior year period. With this overview, I will now turn the call back to Jeff for closing remarks.
Thanks, Michael. I'd like to conclude our prepared remarks by once again thanking IBP employees for their hard work and commitment to our company. Our success over the years is made possible because of all of you. Operator, let's open up the call for questions.
First question comes from Stephen Kim with Evercore ISI.
2. Question Answer
This is Aatish Shah on for Steve. I just want to touch on how you see backlogs for multifamily and commercial. And do you still see a multifamily rebound in 1Q? And then on the commercial side, are you seeing any delays there? Any color there would be helpful.
So this is Michael. On the multifamily side, as we talked about really in the first quarter and the second quarter, we expected through the rest of this year, continued headwinds, which I think we saw in the third quarter, although our team has done a phenomenal job of outperforming relative to the market. We believe they will continue to do that. As Jeff mentioned in his prepared remarks, we're seeing in certain markets, building of backlogs in those markets as well as gaining share in new markets for ourselves. So for us, the multifamily story continues to be intact in terms of us strategically gaining market share, not just in insulation, but in the complementary products as well.
And as we -- pretty much everyone on this call would know that multifamily starts have performed pretty well this year because of the lag time from start to install on the multifamily side, we don't expect to see any benefit of that starts growth or the share gains that we're experiencing in multifamily until '26, it's probably going to be more weighted towards the back half of '26 than the front half of '26. So really, a lot depends on the trades that come before us to get their aspects of the trades done. But we are seeing -- continuing to see good bidding activity and are surprised, actually some markets like Florida, which is, I think everybody knows is probably the weakest residential market right now, is seeing some actually decent multifamily development. So we feel good about that in those markets.
On the commercial side, as we talked both last quarter and the first quarter, really the story there is the heavy commercial business, which has performed exceedingly well and has offset the continued weakness in the light commercial business, although the light commercial business is starting to be less negative in part because it is -- the comps are getting easier because it's been down for such an extended period of time.
As you know, we don't have nearly as much visibility into the light commercial business as we do the heavy commercial business. We feel very good that the heavy commercial business is going to continue to deliver strong top line and bottom line results, but it's not clear yet when the light commercial business is going to inflect positively. And it will really be dependent upon the inflection in the single-family market.
Mike, it's Steve Kim. Just a follow-up. I think last quarter you had suggested that we might see the multifamily business rebound as early as 1Q. I think you had said at that time that maybe you were seeing the comps sort of accelerate or something. And so just wondering, did anything change to sort of push that back? You're now sort of saying maybe back half of the year. So just not to nitpick too much, but just want to make sure we don't miss something that you're trying to communicate about what you're seeing with respect to your backlog timing.
No, it's just being cautious. And also, as you know, we are influenced significantly in terms of our ability to do install work based upon the trades that come before us. So it's really the ability of the trades that come before us to get their work done so we can get there. And while we're not seeing across the board project delays, there have been in certain select markets some project delays. One of the issues potentially could become for the trades that come before us is we're all expecting because of the starts numbers and what's happened from a completions perspective and the significant decline in multifamily completions is that if there is a significant inflection, which the starts numbers would indicate, you can start to have elongated cycle times on the multifamily side. So we're just trying to factor some of that potential into our thought process as it relates to 2026.
Got it. Do you guys anticipate that if there were to be any elongation in cycle times like you just described that, that would be more on the labor side? Or would be more on the product availability side? I assume labor.
Yes, it is definitely labor. And I'm not -- just to be clear, I'm not talking about our ability to source the labor or our ability to source material. But I definitely think that some of those -- the earlier trades like the framers and foundation guys might experience a bit of an issue from a labor perspective.
Got you. Last one for me is you talked about margins benefiting from mix. I think you said product geographic and customer. Can you talk a little bit about the geographic? Was there a noticeable relative strength or weakness across any geographies worth calling out?
Yes. I mean we definitely benefited from our historical overweight, if you will, to the top half of the country, which has done fairly well relative to the bottom half of the country. I mean, clearly, the weakness that we're seeing in the single-family market or lack of inflection, I should say, in the single-family market is really driven by the entry level, right? We're seeing good solid performance at the semi-custom, custom, regional and local builder level, which, as everybody knows, tend to be centered more from a percentage of overall revenue in the top half of the country. So just to give you some kind of regional flavor for us, and I'm using this based upon the census regions, not the way that we manage the business, but based on the census regions. So the Midwest and the Northeast represent roughly 30% of our new residential installation sales. So that's both single-family and multifamily.
In the quarter, those region sales for single-family, multifamily were up low single digits. The South, which is our largest region, is about 45% of residential sales, and it was essentially flat in the quarter. The West region, which is roughly 20% of our residential sales was basically down very low single digits. So clearly there's different performance across the different regions, and we are definitely benefiting from the fact that we have such strong market share in the Midwest and the Northeast.
That being said, and I don't want to go into too much detail necessarily on this question, but -- or the answer to this question, but our teams even in the South and the West have performed extremely well given the headwinds that they're facing and the market conditions that are there. So we're really -- we can't shout out enough how proud we are of the field team and the local management and their ability to continue to manage through what is a pretty challenging market environment.
Next question, Michael Rehaut with JPMorgan.
First, I just wanted to get a sense, you highlighted in terms of your end market demand kind of benefiting perhaps from price point and geographic exposure. I don't know if it's possible to try and triangulate. You had a competitor yesterday talk about their end markets down low double digit. Given your different mix based on customer, based on geography, I'm just trying to get a sense of whether or not you feel like that's down double digits is kind of the right framework for your set of exposures. And if you're able to kind of triangulate what your end markets, what your markets did or have been doing this year or during the third quarter even if you feel like you've outperformed that mark?
Well, as we said in the answer to the previous question, clearly we benefited from the regions and our exposure to certain regions that have performed well relative to the overall market. I would say that we have been very successful with our customers, particularly the regional and local semi-custom custom homebuilders in our markets to work with them to provide for us a very solid base from a revenue perspective. And we feel very good about our ability to continue to do that. I mean, no doubt, there are headwinds and pressures, particularly as it relates to the entry-level market. But our team is doing an excellent job of focusing on the right customers in the right markets and working to make sure that we offset the challenges that the current market environment is providing.
Okay. So in other words, better markets, but any type of sense of what your markets or how they did during the quarter relative to what you were able to do?
Yes. I would say that, not in every single market, but if we -- and I think the results clearly reflect this, the team performed much better than the market opportunity that was in front of it. They did that last quarter. They did that this quarter. And so far going into the fourth quarter, we feel very good about their ability to continue to do that. I mean, that being said, I mean, obviously, we will continue to see pressure, particularly in the single-family entry-level market, which is heavily weighted towards the bottom half of the country or the Smile as people refer to it. But while we don't see the inflection yet in the single-family entry-level market, we're hopeful and encouraged that the spring selling season will be certainly more constructive next year than it was this year.
And this is Jason. I would add to that, we've also seen very strong performance in our other complementary products. So the sales growth is not just housing demand focused, it's the strength that we've had in growing those sales organically.
Which is a really important point, right? And we continue to improve the margin on those products. Now they're still less -- they're lower than insulation, considerably lower than insulation. And as we've talked in previous quarters, when the sales rate of the complementary products is higher than the sales rate in insulation, it is a negative to gross margin, but we're making tremendous progress from both the sales perspective, as Jason pointed out, and a margin perspective.
Yes. No, no, I appreciate that point. It actually kind of leads me into my second question around pricing, price mix and gross margin. So you're able to do another modestly positive price/mix in the quarter. I think that's kind of a positive surprise relative to perhaps some concerns around pricing, maybe reflects your own more stable demand backdrop. But I'd love to get a sense of what insulation pricing did during the quarter? How much of the price/mix was price versus mix? And how does it kind of impact your outlook for -- now you have a couple of quarters and several quarters actually in the last year, 1.5 years where you're more or less at that 34% range at the high end of that 32% to 34% and your ability to sustain that type of margin level?
Yes. So there's 2 parts to that question. On the price/mix growth, a lot of it was mix and the mix was really that our rate of sales growth with the regional local custom builder was better than it was with the production builders, I mean, which is obvious based on their Q3 results. I mean the reality is that given our solid share with the production builders, which tend to be very heavily weighted towards entry level, our sales with them trend with their sales basically fairly closely. So as a consequence, the benefit that we saw from a price/mix perspective in the residential side was really driven by the outperformance, if you will, on a relative basis with the regional local and custom builder, which, as everyone knows, has a much higher ASP than the entry level.
And because of our regional difference relative to our regional performance in the top half of the country, building codes and energy codes are much higher in that part of the country. It also tends to be a basement market, which that means that we're insulating the basement, we're insulating to a higher code. It also tends to be on average, a larger home. So you have a much higher average job price in those markets than you do in the bottom half of the country. So as a consequence, all of the things that we talked about from the regional benefit came in to benefit price/mix growth as well.
And then on the gross margin part of your question, the -- there's a couple of things that are really helping gross margin and then also some things that were headwinds to gross margin. So -- and we've talked about this in previous quarters, but the -- even though the complementary products saw margin improvement of about 100 basis points in the market, as I mentioned earlier, they still are at a lower gross margin than insulation. The higher rate of growth there then creates a headwind to gross margin.
Also, our other segment, which includes the distribution and manufacturing business, naturally has lower gross margins, and it also saw decent growth in the quarter, thus weighing on overall gross margins. Combined, that had about a 60 basis point headwind to gross margin, but that was more than offset with a 100 basis point gross margin benefit from the outsized performance from the heavy commercial business. So those 2 things were more than offset and helped us stay at that high range of the 34% adjusted gross margin.
I will say that the benefit that we received from the heavy commercial business in gross margin at 100 basis points this quarter, we don't expect to see in the fourth quarter of this year, not because they won't continue to perform well, but because they had already raised their gross margin up by the fourth quarter of last year to sort of where it is today. So we don't expect any incremental benefit coming from the heavy commercial business in the fourth quarter. But we still feel very confident that we will operate in that 32% to 34% adjusted gross margin range on a full year basis.
Next question, Susan Maklari with Goldman Sachs.
My first question is following up on the gross margin comment, Michael. It seems like part of this is that you're doing a good job at being able to preserve the core margin that you're realizing on your installation of insulation even with the pressures that are coming through across the different regions and types of builders. Can you talk about how those conversations are going and how you're able to leverage the value add and perhaps the growth in the ancillary products that Jason mentioned in there to preserve that core margin?
Yes, Sue, just to be clear, it's the field team that's doing it, and they're doing an incredible job. I don't think anybody in this room feels that they can take responsibility for what a great job they're doing. But I think those conversations are definitely challenging right now given the softness, particularly at the entry level. But the reality is, is that we provide an installed solution. So we're not providing just labor. We're not providing just material. We're providing an installed solution and we're solving problems for builders. And they absolutely appreciate the value that we're providing. And this has been a continuous story for us, quite frankly, in terms of the team's ability to continue to do that.
We, as we've talked, I think, on multiple occasions about the benefits of a softer environment on the uptake of the complementary products. We're absolutely seeing that. The team is doing what we would have expected them to do. We think that -- we don't think, we know, that our incentive compensation systems are designed, quite frankly, to drive outperformance in a challenging market because so much of our branch managers' compensation is tied to the profitability of their location. In fact, I mean, really, when you think about it, almost every employee within IBP has some portion of their compensation tied to profitability. And we think that drives outperformance in a challenging environment.
Yes. Okay. And then turning to SG&A. It seems like you're also doing a nice job at controlling those costs in this kind of an environment. Can you talk about the progress that you're making on the reductions that you had mentioned earlier this year and anything else that's flowing through there that we should be aware of?
Yes. Thanks for that question, Sue. Definitely we're making very good progress. We still have progress to make. I mean, to a large extent, the efforts that the whole team is making to control the G&A that we can control is, to a large extent, being offset, unfortunately, by some of the things that aren't immediately under our control like insurance, and that's insurance at all levels. But the team is really working very hard to lower G&A expenses. And our objective is that we will offset the natural inflation in some aspects of G&A and some of the headwinds that we're experiencing on the insurance side of G&A with the savings that we're continuing to experience on the G&A side. But it's really, at this point, an opportunity for us to maintain the growth or to use our belt tightening, if you will, to offset some of the costs that we don't directly or immediately control.
Next question, Phil Ng with Jefferies.
Congrats on a really impressive quarter. I guess, Michael, that was really helpful color when you shared with us just now on your trends in the Southeast and the West, which was actually very stable, clearly outpacing the market handily. Was there a big pivot this year in terms of your go-to-market strategy to kind of lean harder in some of these custom and regional builders? Or you've always been generally a little higher there just because it does feel like the team's really outperformed here.
Yes. I think that's a fair assessment, Phil, in the sense that our team looking forward, obviously, working with their production builder entry-level builders saw the weakness that the market was going to present. And really saw that as an opportunity to work more closely with some of the other customers in that -- in those markets to offset what they saw as the headwinds coming. And the team has done a great job of performing relative to that.
Now the reality is that there continues to be some states that are very weak. We talked about Florida last quarter and Florida continues to be quite weak. Although as I mentioned earlier, we're seeing some encouraging signs on the multifamily side in Florida, but it continues to be very weak. Texas is a state that people call out, which Texas is our second largest state. It definitely has pockets of weakness, but we believe our team is doing a good job there of trying to offset some of that weakness by changing a little bit of the customer mix and also cross-selling the other products. And quite frankly, Texas is really one of the markets that's been very successful for us on the multifamily side. The CQ team, which is our centralized multifamily operation that covers around 40% to 45% of our multifamily revenue has really outperformed in Texas and allowed us to gain solid market share in that market, but in a profitable way.
Okay. Super. And Michael, I think what you just said earlier, October trends, November sound pretty good, and you're still outperforming pretty handily. One, did I hear you correctly? And I know you don't give guidance. Part of this question is just most of your peers have seen and expect demand to really soften in the back half and perhaps these declines moderate going into next year. Your trends have been very different from everyone else. So I'm just really curious, is that decline to come? Or this is potentially the trough, especially as we go into next year, perhaps rates coming in, the consumer getting a little better kind of back on the men. Just want to better appreciate some of the nuances as it relates to your portfolio.
Yes. And thanks, Phil, for reiterating that we don't provide guidance. And in my answer to your question, I don't mean this to be guidance. It's just publicly available information that I'll use to sort of triangulate a little bit on our expectations for the fourth quarter. So I think as a lot of people on the call know that roughly 55% to 60% of our total revenue is new single-family construction. Of that 55% to 60%, roughly 27% to 30% of that revenue comes from the public builders. If you look at the guidance that those builders provided for the fourth quarter, and as I said in the answer to an earlier question, our sales to them kind of track their sales basically. Their numbers, right, their publicly available numbers would suggest that their sales are going to be down on a combined basis, roughly high single digits. And that high single-digit decline would be roughly 400 to 500 basis points higher than the typical seasonal decline from the Q3 to Q4 because Q4 is seasonally a lower -- typically lower revenue month across the board within building products.
And we expect that, that extra 400 to 500 basis points of revenue headwind that they're forecasting, we will feel as well in that portion of our business. So to more succinctly answer your question, we do think that the fourth quarter is going to create pressures. Multifamily completions, we don't expect to inflect positively in the fourth quarter. So there's definitely going to be headwinds. But we have confidence based upon what the trends that we're seeing and what we've experienced over the past 2 quarters that our team is going to perform better than the overall market opportunity, but there are definitely going to be headwinds coming into the fourth quarter and the first quarter on the new residential construction side.
We feel very good, though, and I'll reiterate this probably 10 times on the call today. We feel very good about what the heavy commercial business is doing and is really helping to offset some of those residential construction headwinds.
Next question, Mike Dahl with RBC Capital Markets.
Just want to follow up on that last point and just to make sure we're understanding. When you talk about the high single-digit decline, are you talking about their delivery guides or something else? Because I think the starts commentary has been pointing to more significant declines in starts, understanding that you guys have some differences in lag timing, right? I just want to make sure we're understanding what you're saying. And then could you give us any insight into then on the private side, are those customers of yours seeing a significantly different trend than what you just articulated for the public? Or are they kind of starting to follow suit into your…
Yes. So my comment around the Publix was more closings versus starts, right? And they are 2 different things, as we all know. As it relates to the kind of custom, semi-custom and regional and local builders, I would say that the commentary is generally flat, where they're not seeing -- and obviously, it's market by market. But if I had to put it in a kind of broader context, it would be that the market is flat, it's not getting worse, but it's also not getting better.
Okay. Got it. That's helpful. And then shifting gears back to the gross margin dynamic. I appreciate the color on the heavy side and that you're now comping against the step-up there. So when we think about the year-on-year impacts for fourth quarter, I think you articulated kind of some of the moving pieces around mix. But when we think about that fourth quarter, can you just dial that in a little better in terms of, all right, we don't have the 100 basis point tailwind. We do have some of the headwinds and some other -- how do those headwinds in your mind stack up compared to what you just articulated for the 3Q dynamics?
Yes. I mean we would expect that we would -- I mean it's interesting that we call out gross margin headwinds because the businesses are performing, those businesses perform very well, right? And they're improving margin, but just that they're at a lower gross margin to start with, just creates that sort of headwind. We would expect that trend to continue through the fourth quarter, where the other products, the other segment, which is the distribution manufacturing business, we continue to grow at a higher rate than in the insulation business. So as a consequence, we believe that headwind will be there. And then as I said and you pointed out, we don't expect to see that much incremental gross margin benefit from the heavy commercial business in the fourth quarter. And just as a reference point, in the fourth quarter of last year, the adjusted gross margin was 33.6%. So again, well within our 32% to 34% full year range that we've talked about.
Next question, Jeffrey Stevenson with Loop Capital Markets.
Congrats on the strong results. So I wanted to dive deeper into the double-digit growth in complementary products, which is great to see. Would you call out any products that are outperforming? And is most of the strength in better single-family markets such as the Midwest?
That's part of it. But also keep in mind that within the complementary bucket, if you will, is primarily -- the heavy commercial business is primarily in the complementary product bucket. So they're definitely helping from a growth perspective in those products. But we're definitely seeing it on the residential construction side of the business as well, particularly on a margin improvement basis. So we feel good about what the team has been able to do there, so. And to answer your question specifically, I mean, there's not -- I would say that -- I wouldn't highlight any one particular of the complementary products as being any better than the others. It's really a uniform story in terms of their growth with the one exception that growth that Jason talked about is definitely being helped by the heavy commercial business.
Okay. Understood, Michael. Obviously a lot of discussion over the outperformance with the regional and local builders over the national public builders. And as you look at your backlog moving forward, could you -- would you expect those mix tailwinds to continue, especially given the softness at the entry-level price point right now?
Yes. We would expect that to be the case until the entry-level inflects. And we're hoping that, that happens in the spring selling season.
Next question, Keith Hughes with Truist Securities.
Just to level set on the commercial, about $135 million in revenues in the quarter. What is the split right now between heavy and light?
So on the install side, which is just slightly different than from the total IBP perspective, on the install side heavy commercial is around 11% of revenue and the light commercial is like 7.5% of revenue.
Okay. And what is the dividing line between light and commercial? Is that -- is there a job size? Or is it a product? Or how do you define that?
I mean the simplest way is that light commercial is framed construction and heavy commercial is steel and concrete.
Okay. And from a growth rate -- when if we look longer term, I think you want to do more in this market. What do you think has the bigger TAM that you could reach?
Heavy commercial without a doubt. I mean our market share in heavy commercial is, in the markets that we're in, it's great. But [indiscernible] because we have so much geography that's open to us. And now that we have so much confidence in the team, and the team is working so well that we see a lot of opportunity there on an acquisition opportunity and then also potentially on a de novo basis, but that's going to be very selective.
And what's stopping really accelerating the acquisition activity there? It seems like a great business for you. Just seems like we would see more deals or maybe that's to come. What's kind of your view of the pacing, I guess, is my question.
This is Jeff, Keith. So I would say, honestly, unlike what we would say about our residential business, I think the potential for organic growth by us following customers and developers and general contractors that we have relationships that actually, in this case, outweigh maybe even some of the commercial acquisition activity. It's not to say that it isn't there, but I wouldn't be surprised if we don't end up moving more on the organic side than we do on the acquisition side in that part of the business. Not to downplay that there aren't opportunities. It's just I think that may happen [indiscernible] organically.
Final thing. It lends itself to organic growth, what dynamic of it lends itself to organic growth more than, say, your residential insulation is?
I don't want to call the customers necessarily stickier than they are on the residential side because we also make a point of calling our residential customers because of the jobs that we do for them, the work that we do for them, the quality, et cetera, we provide is being sticky. But I do think maybe the universe of contractors that can perform the services that we perform on the commercial side, especially the bundling of that
[Audio Gap]
But I think in addition to that, it's just -- we'll be able to follow developers and builders to other large metro areas that we're currently not in with heavy commercial.
Collin Verron with Deutsche Bank.
I just want to start on price cost a little bit. I appreciate all the color around the moving pieces of mix on gross margin. But any color as to how price cost is tracking and more specifically within the residential insulation business and the commercial insulation business?
Well, I mean, I think on the commercial side, there's definitely a difference between the light commercial and the heavy commercial. As we've talked about, the light commercial business has been weak for multiple quarters at this point. So obviously that can lead to some pricing pressure. I would say on the single-family side, really where there's pricing pressure, and we would expect it to continue until the market inflects positively is it's more regional in nature and more at the entry level that we've been talking about. I would say at the custom, semi-custom our top half of the country, while obviously it's a competitive environment, the competitive challenges are not as significant as they are in the parts of the market that are softer. I mean it's a logical supply and demand sort of response.
But at the same time, our team is doing an excellent job of working hard to maintain price and provide for the builder a high level of service that they will value and pay a fair price for. We are constantly working to be more efficient for our builder customers and to provide them as much value as possible. But there is a fair balance between what we get paid for and the installed solution that we provide.
That's helpful color. And I just want to touch on the distribution and manufacturing side. I know it's a small piece of your business, but the growth is really strong in the quarter and contributed to growth at an outsized pace relative to its size. I guess just any color as to sort of what's going on there and sort of the trajectory of that business as you look out a little bit further?
Yes. And keep in mind, some of the growth that -- or a portion of the growth that is in that other segment is coming from our internal distribution efforts, which we've talked a lot about. And that's really coming to fruition. And you can see the growth rate in that in our segment disclosures that just shows the significant growth of intercompany sales. And we estimate that year-to-date and in the quarter that the internal distribution efforts provided an almost 50 basis points benefit to gross margin.
We're just executing on the plan that we've talked about for multiple…
Years.
Yes, years. I was going to say multiple quarters, let's say, multiple years.
Yes. So the benefits there are coming to fruition. We still have a lot of work to do, but the team is working really well together, and we finally have gotten, I think, a wide acceptance among the branches to support the effort of internal distribution.
Ken Zener with Seaport Research.
It feels like we were looking at a force and then the light was turned on and you're more like a Zebra relative to the regional customer mix. So first question. For customer mix…
Is that good or bad?
It is what it is. So for customer mix, generally speaking, I think you talked about even the public is about 30%. Can you talk to the dollar generally, Michael, I know you've disclosed a lot today, so I don't want to press you. But what is generally like kind of the dollar spread between like that public, which I think people understandably characterized you guys as, as opposed to the 70% that's actually going to that private, more custom bucket since it's the majority? And then can you describe the demand dynamics of those builders buyers? So if it's custom, it's not going to be as tied to affordability entry, it's going to be more non-spec, et cetera?
Yes, that last part of your comment or question there, Ken, is definitely accurate. I would say that the average job price for the regional and local builder because of the type of product that they're building, and I'm not talking on a per square foot installed basis, I'm just talking about the average job price, right? So because of the type of product that they're building because they're generally speaking, going to have a basement, which adds another level of work for us to insulate, those average job prices are multiples of what the average job price is for an entry-level home.
Okay. And the -- just trying to think more of my question here. Given that multiple difference, is that something -- well, I guess I'm going to tie this into my second question. The census data, besides the fact it's not going to be published right now, is highly inaccurate for the markets that the public builders are in, the Smile because most of the builders don't respond to the census. Do you feel that the census data is more accurate in those non-Smile states relative to kind of the starts and the activity that you've seen?
Boy, I think we would have to go back and look at the information over an extended period of time to see if the adjustments that they make to the information is greater in the Smile than it is in the top half of the country. Yes, I have no idea, and we've never really looked at that. I mean…
Yes. It's never been…
Yes. We sort of take it at face value for what it is. Obviously we don't run our business based upon what the Census Bureau is reporting, so.
And then relative to that, given your -- and we very much appreciate your commentary relative to the census boundary definition. Given that so much of your business is to the nonpublic and that mix is geared more towards a higher total take, it seems to me that's the biggest factor as we enter '25 for expectations for your business in addition to your cost controls. Is there a reason that the base of your business is going to be detrimental next year? Because it seems if you have more of your mix in these more attractive markets where there's better job growth, et cetera, that we could continue to see kind of a disconnect relative to census data next year, simply tied to your product mix and your regional mix. Is that a fair assessment that the spread we've seen this year would persist into next year?
I mean, obviously, well, one, we don't provide guidance. Two, obviously, it depends upon what ends up happening in the market. What I would say though is that while the entry-level market right now, as we all know, is challenged and it's a challenging operating environment for there. And yes, our customer mix and regional mix is hitting or helping our outperformance. It's not the only reason we're outperforming. The team is doing the outperformance, but it is definitely helping in that situation.
I would say, though, and it's one of the reasons why we're so excited about the business and continue to be is that when the inflection comes in the entry-level market, we are completely set up to benefit from that inflection upward. And we think that, that will come at the same time when the regional and locals are going to continue to perform as well. Now does that mean it will put pressure on our price/mix disclosure? Absolutely, because we'll be seeing an acceleration in that entry-level market. But at the same time, as we've talked about before, even though it's at a lower job price, considerably lower gross margin, the cost to serve is considerably lower as well and the EBITDA contribution margins on that business is solid. So I don't think -- or I know we're not ready to call when that inflection happens. We're hoping that it's the spring selling season. But whenever it happens, we're ready to work with our customers to make sure that we can all capitalize on the opportunity that, that will present.
Next question, Adam Baumgarten with Vertical Research Partners.
Just on the multifamily business, I know when things started to slow and you have a pretty unique business within that, you guys talked about sort of the white space geographically you had and some organic opportunities to expand there in a weak market. I guess any update there on how that's going, if you're starting to see some benefits from maybe a renewed effort to kind of go out of your core markets?
That is a great question, and I appreciate you asking it because, yes, we are making very good progress on that front. It's not translated into revenue yet, but it's translated into backlog. And the team is doing a really good job of, as Jeff said in his prepared remarks, going into new markets and opening up those new markets for multifamily. And we really believe we have a differentiated model/opportunity for the GCs on the multifamily side, and we'll continue to strategically and methodically pursue continued market share gains in multifamily. I mean, honestly, for us, the multifamily story, as we've talked before, it's a lot about us catching up from a market share perspective to where we should be because we really lagged behind in a lot of markets, particularly markets in the smile, we lagged behind from a multifamily perspective because we were so focused on the strong single-family opportunity.
Next question, Reuben Garner with The Benchmark Company.
Congrats on another strong quarter. My question, and apologies if this has already been discussed, I had to hop on late, but just curious on the current M&A environment. I know you picked up a couple of kind of specialty product categories of late. But curious on what the environment is like for some of your smaller insulation peers and then also the likelihood that we could see something larger or maybe even in a different vertical in the near or medium future.
Great. This is Jeff, and I'm glad you asked that question. So I think the environment from an acquisition perspective on both the small guys, the ones that are kind of regular way as we would usually call them is not dissimilar that it's been really over the last, I don't know, 20-plus years. Like we've said all along, the deals are kind of lumpy. We did make an effort to kind of do some add-on kind of bolt-on deals, which you've seen some of those flow through. But we're actually pretty excited about some of our kind of regular way, both in size and in terms of quantity kind of deals that we have in the pipeline currently.
In addition, we continue to look at kind of what we would call adjacent areas to the business, still interested pretty seriously in potentially commercial roofing and other areas where we would be installing products that have similar characteristics to the things we already install. But I guess also going back to Keith's question, I may have at least interpreted the question more narrowly than the way he asked it, which is also kind of a lead into what you asked also. And that is when I said that there wasn't -- maybe the avenue for acquisitions on the heavy commercial was kind of more organic or was going to be constrained on the acquisition side. I was interpreting at least the question being asked specifically to the products that Alpha installs currently. And I think we feel pretty good about our ability to kind of chase the things that we do well as Alpha organically. Now there are definitely other product lines that Alpha is not in, but I would categorize those more as adjacencies that we could get into on the heavy commercial side in that particular area, we're very excited about what our prospects have in front of us.
I would like to turn the floor back over to Jeff for closing remarks.
Thank you all for your questions. I look forward to our next quarterly call. Thank you.
This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.
Installed Building Products, Inc. — Q3 2025 Earnings Call
Financial data from Installed Building Products, Inc.
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
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%
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| Revenue | 2,964 2,964 |
0%
0%
100%
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| - Direct Costs | 1,967 1,967 |
0%
0%
66%
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| Gross Profit | 997 997 |
0%
0%
34%
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| - Selling and Administrative Expenses | 584 584 |
1%
1%
20%
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| - Research and Development Expense | - - |
-
-
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| EBITDA | 413 413 |
0%
0%
14%
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| - Depreciation and Amortization | 42 42 |
1%
1%
1%
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| EBIT (Operating Income) EBIT | 371 371 |
0%
0%
13%
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| Net Profit | 251 251 |
0%
0%
8%
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In millions USD.
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Installed Building Products, Inc. Stock News
Company Profile
Installed Building Products, Inc. engages in the business of installing insulation for the residential new construction market. Its products include garage doors, rain gutters, shower doors, closet shelving, and mirrors. The company was founded in 1977 and is headquartered in Columbus, OH.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Edwards |
| Employees | 10,400 |
| Founded | 1977 |
| Website | installedbuildingproducts.com |


