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    IBP
    Earnings call· Mar 2026(Q1 FY26)

    Installed Building Products Q1 FY26 earnings call IBP

    May 7, 2026 Source

    Executive summary

    Installed Building Products Q1 FY26 — Strong Commercial Growth and Acquisition Pipeline

    Installed Building Products navigated a challenging Q1 FY26 marked by weather disruptions and residential market softness, yet demonstrated resilience through robust commercial segment growth and active M&A. The company maintained strong cash flow and capital allocation, including a dividend increase, while managing cost pressures from insurance and fuel. Management remains optimistic about the acquisition pipeline and the long-term industry fundamentals.

    Highlights

    5

    • Commercial end market delivered double-digit installation sales growth, with heavy commercial sales exceeding 20%.

    • Completed 4 acquisitions representing approximately $28 million of annual sales, with a target of at least $100 million for FY26.

    • Generated $102 million in cash flow from operations, an 11% year-over-year increase.

    • Net debt to trailing 12-month adjusted EBITDA leverage ratio remained low at 1.2x, well below the 2x target.

    • Increased quarterly dividend by over 5% to $0.39 per share.

    Concerns

    5

    • Consolidated sales decreased 4% and same-branch sales declined 6% due to a $20 million missed revenue opportunity from extreme weather and residential headwinds.

    • Adjusted gross margin slightly decreased to 32.2% from 32.7% in the prior year, driven by increased depreciation and higher vehicle insurance costs.

    • Adjusted selling and administrative expenses as a percent of sales increased to 20.9% from 20.1% due to higher medical (up 40%), facility (up 12%), and liability insurance (up 35%) costs.

    • New single-family end market activity was slower than hoped, with residential same-branch sales declining 11%.

    • Anticipate $15 million to $20 million impact from higher fuel costs for the remainder of the year.

    Guidance & targets

    6
    CategoryTargetConfidence
    Annual revenue from acquisitions
    at least $100 million
    medium materiality
    High
    Amortization expense
    $10 million
    low materiality
    High
    Amortization expense
    $40 million
    low materiality
    High
    Effective tax rate
    25% to 27%
    medium materiality
    High
    Net interest expense
    approximately $10 million
    low materiality
    High
    Adjusted gross margin
    32% to 34%
    high materiality
    High

    Segment performance

    6
    SegmentRevenueYoYQoQMargin
    Installation
    Overall segment performance, impacted by residential headwinds but supported by commercial growth.
    Same-branch sales: down 7%
    		————
    New Residential
    Experienced headwinds, slower activity than hoped in the spring selling season.
    Same-branch sales: down 11%
    		————
    Multifamily
    Contract backlog and partnerships continue to grow, but some projects are being slow-walked. Gaining profitable share.
    Same-branch sales: down 10% (total multifamily)High-rise multifamily revenue: down almost 50%High-rise multifamily backlog: mid-single-digit positive
    		————
    Commercial
    Remained a bright spot, driven by heavy commercial growth.
    Same-branch sales: up 11%
    		————
    Heavy Commercial
    Dominant driver of same-branch sales growth, poised to remain healthy in 2026. Not data center driven, but across many verticals.
    Sales growth: 22% (April)Contract backlogs: growing
    		—exceeding 20%——
    Light Commercial
    Weakness offset by heavy commercial strength.
    Sales growth: low double digits (April)
    		————

    Operational metrics

    39
    Consolidated net revenue
    $661 milliondown 4%
    Q1 FY26

    Compared to $685 million for the same period last year.

    Same-branch sales
    down 6%YoY
    Q1 FY26

    Overall company same-branch sales.

    Price/mix
    flatYoY
    Q1 FY26

    Overall price/mix performance.

    Price/mix (including heavy commercial)
    up 3%YoY
    Q1 FY26

    Price/mix performance when including the heavy commercial segment.

    Volume
    decreased by 10%YoY
    Q1 FY26

    Volume decrease partially caused by adverse weather.

    Adjusted gross margin
    32.2%vs 32.7% in prior year
    Q1 FY26

    Slight year-over-year decrease driven by increased depreciation and higher vehicle insurance costs.

    Adjusted selling and administrative expenses as % of sales
    20.9%vs 20.1% in prior year
    Q1 FY26

    Impacted by higher medical, general liability insurance, and facility costs.

    Adjusted EBITDA
    $92 million
    Q1 FY26

    Company-wide adjusted EBITDA.

    Adjusted EBITDA margin
    13.9%
    Q1 FY26

    Company-wide adjusted EBITDA margin.

    Adjusted net income
    $48 million
    Q1 FY26

    Company-wide adjusted net income.

    Adjusted diluted EPS
    $1.79
    Q1 FY26

    Company-wide adjusted diluted earnings per share.

    Net interest expense
    $10 millionvs $8 million for Q1 FY25
    Q1 FY26

    Partially driven by a write-off of debt issuance costs.

    Net debt to TTM adjusted EBITDA
    1.2xvs 1.17x at March 31, 2025
    as of March 31, 2026

    Remains well below the stated target of 2x.

    Working capital (excluding cash)
    $346 million
    as of March 31, 2026

    Working capital balance.

    Capital expenditures and total incurred finance leases
    $18 million
    Q1 FY26

    Combined capital expenditures and finance leases.

    Cash on balance sheet
    $474 million
    as of March 31, 2026

    Cash and cash equivalents balance.

    Shares repurchased
    91,000 shares
    Q1 FY26

    Number of common stock shares repurchased.

    Cost of shares repurchased
    $25 million
    Q1 FY26

    Total cost of common stock repurchased.

    Remaining share repurchase authorization
    $475 million
    as of March 31, 2026

    Amount available under the stock repurchase program.

    Dividend per share
    $0.39
    Q1 FY26

    Approved first quarter dividend.

    Dividend increase
    more than 5%over prior year period
    Q1 FY26

    Increase in the quarterly dividend.

    Weather impact (missed revenue)
    $20 million
    Q1 FY26

    Missed revenue opportunity due to extreme weather conditions.

    Single-family starts (US Census Bureau)
    decreased 6%from prior year
    Q1 FY26

    U.S. Census Bureau data for housing construction activity.

    Multifamily starts (US Census Bureau)
    up 21%for the same period
    Q1 FY26

    U.S. Census Bureau data for housing construction activity.

    Spray foam price increase (announced)
    approximately 25%
    back half of the year

    Two announced price increases by spray foam manufacturers.

    Spray foam as % of total sales
    about 11%
    current

    Represents the proportion of total sales from spray foam products.

    Aluminum costs increase
    up 20%
    current

    Aluminum costs are up, impacting the gutter business.

    Medical insurance cost increase
    almost 40%YoY
    Q1 FY26

    Increase in medical insurance costs impacting administrative expenses.

    Facility cost increase
    12%YoY
    Q1 FY26

    Increase in facility costs impacting administrative expenses.

    Liability insurance cost increase
    35%YoY
    Q1 FY26

    Increase in liability insurance costs impacting administrative expenses.

    Fuel cost impact (expected)
    $15 million to $20 million
    rest of FY26

    Expected impact of higher fuel costs on other cost of goods sold.

    Product margin (before other COGS)
    up 70 bpsYoY
    Q1 FY26

    Improvement in product margin at the gross margin level.

    Complementary products mix impact
    20 bps headwind
    Q1 FY26

    Impact of mix from complementary products on gross margin.

    Other distribution and manufacturing operations impact
    40 bps headwind
    Q1 FY26

    Impact of other distribution and manufacturing operations on gross margin.

    Depreciation impact
    30 bps headwind
    Q1 FY26

    Impact of increased depreciation on gross margin.

    Vehicle insurance impact
    30 bps headwind
    Q1 FY26

    Impact of higher vehicle insurance costs on gross margin.

    Heavy commercial business impact
    20 bps improvement
    Q1 FY26

    Positive impact of heavy commercial business on gross margin.

    Entry-level homebuilder revenue
    about 14%
    current

    Represents the proportion of total revenue from entry-level homebuilders.

    Gutters as % of total revenue
    about 6%
    current

    Represents the proportion of total revenue from the gutter business.

    Industry KPIs

    1
    MetricValueDetails
    Segment revenue operating income mix—

    Deals & partnerships

    4
    Installer of insulation (Texas, Louisiana, Arkansas, Oklahoma)Acquisition of an insulation installer across new residential and commercial end markets.$5 million annual sales

    One of four acquisitions completed in Q1 FY26.

    Provider of mechanical insulation services (Wisconsin, Iowa, Minnesota, Michigan, Illinois)Acquisition of a provider of value-added mechanical insulation services for diverse commercial and industrial applications.$13 million annual sales

    One of four acquisitions completed in Q1 FY26, serving key commercial and industrial hubs.

    Installer of insulation (Kansas, Oklahoma)Acquisition of an insulation installer primarily across new residential and light commercial markets.$3 million annual sales

    One of four acquisitions completed in Q1 FY26.

    Installer of waterproofing applications (Minnesota)Acquisition of an installer of waterproofing applications across new residential, multifamily and commercial markets.$7 million annual sales

    One of four acquisitions completed in Q1 FY26.

    Risks & headwinds

    8
    Extreme weather conditionsQ1 FY26

    $20 million missed revenue opportunity

    Mitigation: Expect to make up the volume, though slowly.

    Macroeconomic backdrop and geopolitical factorsQ1 FY26

    Slower activity in new single-family end market

    Mitigation: Emphasizing product diversification and prudent expense management.

    Residential market weaknessQ1 FY26

    New residential same-branch sales declined 11%

    Mitigation: Effectively managing material and labor, remaining flexible to adjust to varying demand.

    Multifamily project slow-walkingrest of FY26

    Some projects experiencing delays

    Mitigation: Gaining profitable market share; confident in 2027 performance.

    Increased operating costs (medical, facility, liability insurance)Q1 FY26 and ongoing

    Medical insurance up almost 40% (50 bps headwind), facility costs up 12% (40 bps headwind), liability insurance up 35% (40 bps headwind)

    Mitigation: Working on managing expenses, offsetting costs, aligning costs with selling price.

    Higher fuel costsrest of FY26

    Expected $15 million to $20 million impact

    Mitigation: Working with customers to align costs and prices, receiving some fuel surcharges from manufacturers.

    Pricing pressure from production buildersQ1 FY26 and easing

    Entry-level market (14% of total revenue) experiencing pressure

    Mitigation: Team doing a good job maintaining market share and margin; pressure easing.

    Aluminum cost increasecurrent and near future

    Up 20%

    Mitigation: Implied by general cost management efforts.

    What to watch in Q2 FY26

    5

    Multifamily project delays

    next quarter
    CurrentSome projects being slow-walked
    TargetNo further increase in project delays or impact on segment performance

    Why it matters

    Potential for slow-walked projects to impact multifamily revenue growth, despite strong backlogs.

    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.

    Q&A highlights

    5

    What is the outlook for pricing power, especially given a recent OEM price increase on the residential side, and IBP's customer mix?

    Michael Miller stated that fiberglass pricing power is weak due to soft demand and ample material supply, with a manufacturer bringing significant capacity online. However, spray foam manufacturers have announced ~25% price increases, which are expected to stick due to increased factory costs and spray foam being a semi-custom/custom home product. Spray foam represents about 11% of total sales.

    “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.”

    asked by Sam Reid · answered by Michael Miller

    2 min read5 chapters

    Detailed Narrative

    01

    Q1 Performance Overview

    Consolidated sales decreased 4% to $661 million, with same-branch sales down 6%. This was impacted by a $20 million missed revenue opportunity due to extreme weather conditions and a challenging macroeconomic backdrop for new home sales. Despite these headwinds, the company emphasized product diversification and prudent expense management, maintaining service quality for customers.

    02

    Commercial Segment Strength

    The commercial end market was a bright spot, delivering double-digit installation sales growth, with heavy commercial sales exceeding 20% on a same-branch basis. Growth in heavy commercial contract backlogs suggests continued health and profitability in 2026, offsetting weakness in light commercial. The heavy commercial business was up over 20% in April, and light commercial was up low double digits in April.

    03

    Residential Market Headwinds

    The new single-family end market experienced slower activity than hoped, with residential same-branch sales declining 11%. Multifamily contract backlog and partnerships are growing, though some projects are being slow-walked. Management noted that the production builder entry-level market remains weak, representing about 14% of total revenue, while private builder business showed encouraging signs in April.

    04

    Acquisition Strategy

    IBP completed 4 acquisitions in Q1, adding approximately $28 million in annual sales across diverse residential and commercial markets. These included insulation installers in Texas/Louisiana/Arkansas/Oklahoma ($5M annual sales), mechanical insulation services in the Midwest ($13M annual sales), insulation installers in Kansas/Oklahoma ($3M annual sales), and waterproofing applications in Minnesota ($7M annual sales). The company maintains a strong outlook for M&A, targeting at least $100 million in annual revenue from acquisitions in 2026, prioritizing deals with long-term strategic benefits.

    05

    Margin and Cost Pressures

    Adjusted gross margin was 32.2%, slightly down from 32.7% year-over-year, primarily due to increased depreciation (30 bps headwind) and higher vehicle insurance costs (30 bps headwind). Adjusted SG&A as a percentage of sales rose to 20.9% due to significant increases in medical (up almost 40%, 50 bps headwind), facility (up 12%, 40 bps headwind), and liability insurance (up 35%, 40 bps headwind) costs. Management highlighted that these are largely uncontrollable costs in a flat-to-down volume environment, with an expected $15M-$20M fuel cost impact for the rest of the year.

    AI-generated summary of the company’s earnings call. Not investment advice.