Installed Building Products Q2 2025 Earnings Report

Installed Building Products EPS Results

• Actual EPS: $2.95
• Consensus EPS: $2.45
• Beat/Miss: Beat by +$0.50
• One Year Ago EPS: $2.84

Installed Building Products Revenue Results

• Actual Revenue: $760.30 million
• Expected Revenue: $711.37 million
• Beat/Miss: Beat by +$48.93 million
• YoY Revenue Growth: +3.10%

Installed Building Products Announcement Details

• Quarter: Q2 2025
• Date: 8/7/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, August 7, 2025
• Conference Call Time: 10:00AM ET

Installed Building Products (NYSE:IBP), together with its subsidiaries, engages in the installation of insulation, waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors, and other products in the United States. It operates through Installation, Distribution, and Manufacturing operation segments. The company offers a range of insulation materials, such as fiberglass and cellulose, and spray foam insulation materials. It is also involved in the installation of insulation and sealant materials in various areas of a structure, which includes basement and crawl space, building envelope, attic, and acoustical applications. In addition, the company installs a range of caulk and sealant products that control air infiltration in residential and commercial buildings; and waterproofing options, including sheet and hot applied waterproofing membranes, as well as deck coating, bentonite, and air and vapor systems. Further, it distributes spray foam insulation, metal building insulation, residential insulation, and mechanical and fabricated Styrofoam insulation, as well as accessories and equipment used in the insulation installation process; and manufactures cellulose insulation and specialty industrial fibers. It serves homebuilders, multi-family and commercial and agricultural construction firms, individual homeowners, and repair and remodeling contractors. The company was formerly known as CCIB Holdco, Inc. Installed Building Products, Inc. was founded in 1977 and is based in Columbus, Ohio.

Installed Building Products Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Second quarter consolidated sales rose 3% year-over-year to a record $760 million, with same-branch sales up 1% and new single-family installation sales roughly flat despite a 10% market decline.
• Positive Sentiment: Multifamily starts grew double digits in Q2 for the first time in nearly two years, and key branch backlogs expanded year-over-year, indicating improving market conditions.
• Positive Sentiment: Same-branch commercial installation sales climbed 9%, driven by heavy commercial projects, and a growing backlog suggests sustained strength through 2025.
• Positive Sentiment: IBP generated $182 million in operating cash flow through June, returned $68 million in dividends and repurchased $84 million of stock, maintaining net debt at just 1.15× adjusted EBITDA.
• Negative Sentiment: Year-to-date single-family housing starts are down 7%, and ongoing affordability challenges and elevated interest rates may drive larger-than-expected declines this year.

Presentation

[Operator]

a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Darren Hicks, Vice President of Investor Relations. Thank you, sir. You may begin.

[Darren Hicks, Managing VP at Installed Building Products]

Good morning, and welcome to Installed Building Products' Second Quarter twenty twenty five Earnings Conference Call. Earlier today, we issued a press release on our financial results for the 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.

[Darren Hicks, Managing VP at Installed Building Products]

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'll now turn the call over to you.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

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 and capital position in more detail before we take your questions. IBP continues to deliver strong financial results, demonstrating the high value installation services we provide our homebuilding customers. Our market positioning and focus on service is especially valuable as many homebuilders rely on relationships with experienced partners to navigate today's evolving market dynamics. While we expect housing affordability to remain a challenge over the near term, we are confident in the long term fundamentals of The U.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

S. Housing industry and the effectiveness of our growth focused capital allocation strategy. We are focused on growing earnings and cash flow through geographic expansion in end product and end market diversification. We will continue to explore opportunities for operational improvements and remain disciplined with capital allocation. Through the 2025, we paid nearly $68,000,000 in cash dividends or $2.44 per diluted share and repurchased approximately $84,000,000 of our common stock.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

As we pursue profitable growth while maximizing returns for our shareholders, we remain committed to doing the right thing for our employees, customers and communities. Looking at our second quarter sales performance, consolidated sales increased 3% and same branch sales grew 1%. In our largest end market, same branch new single family installation sales were roughly flat compared to a nearly 10% decline in U. S. Single family completions relative to the same period last year.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

Our relative performance is encouraging and reflects a tremendous effort from employees at branches across the nation as well as at support group. Sales in our multifamily end market held up well on a relative basis with backlogs at key branches showing growth on a year over year basis. According to the U. S. Census Bureau, we have seen double digit multifamily starts growth in twenty twenty five second quarter relative to the same period last year.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

This is the first time we have witnessed double digit multifamily starts growth in nearly two years and the first time observing two consecutive quarters of positive starts growth since the 2023. While this data is subject to revisions, the conclusion that the market is improving is consistent with the multifamily activity we are seeing in several markets in which we compete. On a same branch basis, second quarter commercial sales in our Installation segment increased 9% from the prior year period. Our heavy commercial activity continued to be the dominant driver of sales growth in this end market. Based on the growth in our heavy commercial backlog, we believe sales are poised to remain healthy beyond 2025.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

During the six months ended 06/30/2025, cash flow from operating activities increased 11% to 182,000,000 which primarily reflected effective management of working capital. The pace of acquisitions has slowed this year relative to prior years, but we remain disciplined in our approach to find well run businesses that would support attractive returns on invested capital, make strategic sense and fit well culturally. Our core residential installation end market remains highly fragmented with considerable opportunity for consolidation. As previously announced, during the twenty twenty five second quarter, we acquired a Wisconsin based installer of spray foam and air barrier products in the commercial end market with annual revenue of nearly $4,000,000 To date, we have acquired over $10,000,000 of annual revenue and we continue to work toward acquiring over $100,000,000 in annual revenue. Based on the U.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

S. Census Bureau, single family starts year to date through June 2025 have decreased by seven percent. Current interest rate environment and related housing affordability challenges expected to persist, we believe a larger than previously expected decline in single family housing starts is likely this year. Still over the long term, we continue to believe that 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.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

We believe IBP continues to operate from a position of strength as we take advantage of opportunities and navigate any challenges in the second half of the year. Our strong customer relationships, experienced leadership team, national scale and diverse product categories across multiple end markets create a solid platform for IBP to perform well through the ebbs and flows of demand related to The U. S. Construction market. Although macroeconomic uncertainty influences prevailing market conditions in our industry and many others, we remain focused on profitability and effective capital allocation to drive earnings growth and value for our shareholders.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

I'm 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 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 second quarter financial results.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Thank you, Jeff, and good morning, everyone. Consolidated net revenue for the second quarter increased 3% to a second quarter record of $760,000,000 compared to $738,000,000 for the same period last year. Same branch sales for the Installation segment increased 1% for the second quarter with a 9% increase in Commercial same brand sales, partially offset by a single digit decline in Residential same brand sales. Although the components behind our price mix and volume disclosure have several moving parts that are difficult to forecast and quantify, we achieved a 0.8% increase in pricemix during the second quarter. This result was offset by a 1.1% decrease in job volumes relative to the second quarter last year.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

It is important to note that the results of our heavy commercial end market are not included in the price mix volume disclosures. With respect to profit margins, in the second quarter, our business achieved adjusted gross margin of 34.2%, an increase from 34.1% in the prior year period and up from 32.7% in the twenty twenty five first quarter. The year over year increase in margin during the quarter was in part related to a shift in customer and product mix. Adjusted selling and administrative expense as a percent of second quarter sales was 18.8% compared to 18.5% in the prior year period. The increase was due primarily to higher administrative wages and higher facility costs.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Of the $7,000,000 increase in adjusted selling and administrative expense, approximately $3,000,000 was due to acquisitions. Adjusted EBITDA for the twenty twenty five second quarter increased to $134,000,000 reflecting an adjusted EBITDA margin of 17.6% and adjusted net income increased to $81,000,000 or $2.95 per diluted share. Although we do not provide comprehensive financial guidance, based on recent acquisitions, we expect third quarter twenty twenty five amortization expense of approximately $10,000,000 and full year 2025 expense of approximately $40,000,000 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 12/31/2025. Now let's look at our liquidity position, balance sheet and capital requirements in more detail.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

For the six months ended 06/30/2025, we generated $182,000,000 in cash flow from operations compared to $164,000,000 in the prior year period. The year over year increase in operating cash flow was primarily associated with improvements in working capital, which more than offset lower year to date net income. Our second quarter net interest expense was $8,000,000 for both the twenty twenty five and twenty twenty four second quarters as lower interest income from investments was offset by lower cash interest expense on outstanding debt. At 06/30/2025, we had a net debt to trailing twelve month adjusted EBITDA leverage ratio of 1.15x compared to 1x at 06/30/2024, which remains well below our stated target of two times. At 06/30/2025, we had $356,000,000 in working capital, excluding cash, cash and cash equivalents.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Capital expenditures and total incurred finance leases for the three months ended 06/30/2025 were approximately $16,000,000 combined, which was approximately 2% of revenue. With our strong liquidity position and modest financial leverage, we continue to prioritize allocating capital to achieve the best returns on capital and distributing excess cash to shareholders. During the twenty twenty five second quarter, IVP repurchased 300,000 shares of its common stock at a total cost of $49,000,000 and 500,000 shares at a total cost of $84,000,000 during the six months ended 06/30/2025. At 06/30/2025, the company had approximately $417,000,000 available under its stock repurchase program. IBP's Board of Directors approved the third quarter dividend of $0.37 per share, which is payable on 09/30/2025 to stockholders of record on 09/15/2025.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

The third 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.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

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.

[Operator]

Thank you. We will now be conducting a question and answer If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

[Operator]

We ask analysts to limit themselves to one question and a follow-up so that others may have the opportunity to do so as well. One moment please while we poll for questions. Our first question comes from Stephen Kim with Evercore ISI. Please proceed with your question.

[Stephen Kim, Senior MD at Evercore ISI]

Great, thanks very much guys. Yeah, really impressive results here in a challenging environment. Lots of things we could potentially ask, but I guess you alluded to customer and product mix improving. You said it's not due to heavy commercial because it's not included I think in there. But just wanted to get a little bit more detail on what kind of mix improvement you're seeing, like kind of which end markets, like what of customer change are we seeing, that kind of thing.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Hey, Steven. It's Michael. Thanks for the question. So really it's two things on the mix front. We continue to see better relative performance from the regional and local builders than we did with the large national public builders during the quarter, which is the same thing as in the first quarter.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Although on a relative basis performance with both really all of the single family business improved quite well relative to the first quarter of last year. I think in part because the weather issues that we had in the first quarter, we were able to work through and catch up on that work faster in the second quarter than we had expected. So that was definitely a benefit. When our sales growth is greater with the regional local builders because of their higher average job price, that benefits the price mix disclosure. The other thing that helped us as we did see solid growth in the complementary products and we're continuing to see really good gross margin improvement in the complementary products.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

I mean the margins are still considerably lower than insulation, but in the quarter the gross margin for the other products improved 100 basis points.

[Stephen Kim, Senior MD at Evercore ISI]

And just to follow-up on that complementary product margin improvement, what do you attribute that to or was it again an issue of certain products within the complementary category that did particularly well and those happen to be the ones that have higher margins than others? Just help us understand a little bit about what was going on within that.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yeah, it was fairly even improvement across. You're always going to have sort of puts and takes, particularly if you're looking at just a quarter. But the team has been working very hard to improve the margins there, particularly as the insulation environment given the weakness and continued weakness that we've all are aware of in the single family side of the business and what we believe will be continue to be weakness in multifamily through 2025. So it really and we've talked about this in previous quarters, it really focuses them highly on the complementary product opportunity. And from their perspective, obviously they want to get that margin as close to the insulation margin as possible.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Another thing that's been tailwind there has been and we've talked about this in previous quarters is that CQ is doing an excellent job. For those of the people on the call, CQ is our sort of centralized multifamily management group that manages about 45% of our multifamily revenue. They've done an excellent job of one, increasing the penetration of the complementary products in multifamily and doing it at very acceptable margins. So there's really been several factors that have come together to contribute to what the team has done as a pretty incredible performance in the quarter.

[Stephen Kim, Senior MD at Evercore ISI]

Excellent. Yeah. Appreciate it. And congrats on the good results. Thanks.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Thank you.

[Operator]

Our next question comes from Michael Root with JPMorgan. Please proceed with your question.

[Alex Isaac, Equity Research Analyst at J.P. Morgan]

Hi, how's it going?

[Alex Isaac, Equity Research Analyst at J.P. Morgan]

This is Alex Isaac on for Michael today. Congrats on the quarter. I want to ask about fiberglass and how price and supply trended in 2Q and then how you see that going on through the back half and potentially affecting price cost going forward?

[Michael Miller, EVP, CFO & Director at Installed Building Products]

This is Michael again. So we continuously work with both our customers and our suppliers for all of our materials, including fiberglass. And with continuous management of making sure that our price cost is managed successfully, I think that Owens Corning made it pretty clear in their call that there has not been real price deflation on the fiberglass side. And we continue to believe that the environment will remain relatively benign across the products that we purchase domestically. We do think that we will while the impact from tariffs in the first half of the year has been immaterial And we don't expect to see a material impact in the third quarter.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

There is an opportunity or we believe, I mean, not knowing where things are going to ultimately end up, But we believe that we will start to see an impact in the fourth quarter, maybe $5,000,000 or so relative to the tariffs. Now obviously, we will work with our customers and our suppliers to manage any impact that the tariffs may have. But we need to be cognizant that that's definitely a challenge going into the fourth quarter of this year.

[Alex Isaac, Equity Research Analyst at J.P. Morgan]

Thanks for all the color there. Then on the follow-up, I want to ask about single family and multifamily volumes. And you mentioned that there might be some downside to the single family. But I want to ask in 2Q, what sort of drove the outperformance of IBP against the overall market? And how do you see that trending throughout the rest of the year?

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yes. So this is Michael again. And I would say that first and foremost, we have to thank and compliment our field team. They did an incredible job of performing in what is a very challenging environment in both single family and multifamily. What I'll do is just sort of call out some states.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

And the states that I'm going to call out are all larger states for us where we have greater than $10,000,000 of revenue a quarter. So we had mid to high single digit growth in the Carolinas. So both North and South Carolina, Virginia, Texas, Tennessee, Ohio, Indiana and Minnesota. So what you're seeing there is we're really benefiting from our historical strength in our Midwestern markets and Upper Midwestern markets. The large states for us that were sort of flattish in the quarter were California, Georgia, Washington, and New Jersey.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Really the big exception for us from a performance perspective on a statewide basis was Florida. I think everybody knows that Florida, both from a single family and multifamily perspective is really struggling right now. And I think most people on the call realize that while we have a very large presence in Florida, our market share there is not what it should be. I mean, we've talked about that before. I guess perversely to some extent are lower than what we should have market share benefited us given the fact that Florida was so negative during the quarter.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

Yes. So let's say our share is exactly where we wanted it. Not maybe too high.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yes, Exactly.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Although, I mean, ultimately Florida is a good state. But we were particularly impressed with the team's efforts in Texas given some of the noise in some of the Texas markets, but the team performed really well. So we're really we're very proud of what they've done.

[Alex Isaac, Equity Research Analyst at J.P. Morgan]

That sounds great. Thanks for all the color and congrats again.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Thanks.

[Operator]

Our next question comes from Mike Dahl with RBC Capital Markets. Please proceed with your question.

[Mike Dahl, MD, Equity Research - Homebuilders & Building Products Analyst at RBC Capital Markets]

Hi, thanks for taking my questions. Just a follow-up on just first diagnosing the outperformance in the quarter. Appreciate the regional commentary. I mean, is pretty stark outperformance against any metric we can see for kind of starts or your peers or suppliers. So, I just want a little more color on outside of just regional and execution, the quantification of help us understand those weather timing issues or maybe quantify kind of the complimentary growth versus the installation growth?

[Mike Dahl, MD, Equity Research - Homebuilders & Building Products Analyst at RBC Capital Markets]

Think it would just be helpful if we all had a better sense for this was just such a strong spread versus the market, just what was driving it?

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yeah. So as I mentioned earlier, we did see good growth. I'll be honest with you, better than we expected growth with the regional and local builders. And that growth continued through July actually. July was a pretty solid month for us.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

The new residential, so single family, multifamily combined was up very low single digits. Mean, in essence flat. And new commercial which is a combination of both the light and the heavy commercial business was up high teens. So the team continues to perform. Now do we expect that there's going to be more headwinds or heavier, stronger headwinds in single family and multifamily as we go through the year?

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Absolutely. But we have confidence that the team will continue to perform better than the overall market. And clearly I think they've demonstrated that in the second quarter. Just to give you a sense, the regional and local builders in the quarter were up mid single digits for us. And just as a reference point, the publics, the large production builders represent about 30% of our overall new single family revenue, which is about 60% of our overall revenue.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

So that relative outperformance from the regional and locals really did kind of help our relative outperformance to the overall market.

[Mike Dahl, MD, Equity Research - Homebuilders & Building Products Analyst at RBC Capital Markets]

Okay, that's helpful. And then just on that point of forward looking, I know you don't give the guidance, but given your comments about acknowledging kind of the lag starts to clients are accelerating or building market pressures, the July commentary is certainly helpful. And anything else you can provide in terms of kind directionally or order of magnitude, how you're thinking about the balance of the year for your markets and then your performance quantitatively relative to that?

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yes. And thanks for reiterating the fact that we don't provide guidance. But I would say that our thought on the single family market is pretty much consistent with the commentary that most companies have provided this quarter in terms of single family starts being I think at this point we can say double digits as to just high single digits and that the comps are going to it's going to become more difficult on the starts front as we go through the second half. When we look at one of the things as you know that we do each quarter is we look at our sales to the publics and then what obviously they report and then consensus as well. And when we came out at the end of the year and reported in the first quarter, that indicated that our sales with them would have been up 3%.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

After the first quarter, that same information would have said that our sales are going to be down 3%. Now after the second quarter, what it would say is that our second half sales with them are going to be down at least 5%, right? So mid single digits. So what the reason I'm even making this point or sharing this information is I think as we go through the back half of the year, we're definitely gonna face increasing challenges as it relates to single family. On the multifamily side, we are extremely pleased with the progress we're making there.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Starts continue to be up, which we think is fundamentally very strong for the multifamily market. Our backlogs in multifamily are increasing. Bidding activity has picked up. We think that where we are right now in the multifamily side backlogs that we're feeling very constructive about what multifamily looks like in 2026. But again, I have to reiterate that there's definitely going to be increasing headwinds in multifamily as we continue to work through the units under construction and the backlog that's there.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

That will be a continual headwind for the back half of the year. That being said, as has been the case for years now, our multifamily business will outperform the overall market.

[Mike Dahl, MD, Equity Research - Homebuilders & Building Products Analyst at RBC Capital Markets]

That's all very helpful. Thank you.

[Operator]

Our next question comes from Susan McClary with Goldman Sachs. Please proceed with your question.

[Susan Maklari, Senior Equity Research Analyst at Goldman Sachs]

Good morning, everyone.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Morning, Clarie.

[Susan Maklari, Senior Equity Research Analyst at Goldman Sachs]

My first question is going back to the gross margin. I want to talk a bit about the strength that you saw there. I appreciate your comments on the complementary products and how those are adding. But it also seems like the poor gross margin in there is holding on well despite all the pressures that are going on in housing. Can you talk a bit more about what you're seeing in there and how we should think about puts and takes over the coming quarters?

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yeah, mean, the complementary products improvement in gross margin helps. Although I would say there's an offset to that because their margin is still below insulation margin. And because insulation revenue in the quarter was basically flat and the complementary products revenue increased high single digits, that lower margin is actually a bit of a pressure on overall gross margin just because you have a higher rate of sales or higher percentage of sales coming from lower margin products, even though they were considerably higher gross margin than they had been in the previous quarter. That's a lot to digest in that answer. So I apologize for that.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

The other thing that was definitely a headwind in this quarter and in last quarter is definitely the performance of the heavy commercial business, Particularly Alpha has done in did I say headwind? Sorry, tailwind. Actually the heavy commercial business is performing exceedingly well both from a revenue perspective and a margin perspective. I think we said in the first quarter that we expected that in the back half of the year, the strength in heavy commercial would offset the weakness in light commercial. Obviously, it more than offset the weakness in light commercial in this quarter.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

And we expect that trend to continue as we go through the back half of the year. The team, our heavy commercial team is just really doing an excellent, excellent job. Obviously, we have some structural or industry fundamentals that are supporting us. Mean, as you know, everyone talks about what's going on from a data center perspective and just the opportunity that's there. Our manufacturing and industrial backlogs have increased significantly and we're continuing to bid those jobs and bid them at, you know, very acceptable margins.

[Susan Maklari, Senior Equity Research Analyst at Goldman Sachs]

Okay. That's that's great color. And then you also noted in your remarks that the pace of acquisitions has slowed this year. Can you talk about the pipeline that you're seeing on deals and how we should think about your ability to hit that 100 plus million target for 2025?

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

Yeah. This is, Jeff. So, I guess even be more specific, I'd say the pace of closing deals has has kind of fallen off it, which again for reasons sometimes completely beyond our control. We've had a number deals over the last twenty four months, some of size that for one reason or made it nearly to the finish line and either one didn't happen for a particular reason and or two have taken longer as we work issues with that particular purchase. So we still feel good about our prospects and we haven't been reporting this and Michael can maybe even add detail.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

But we've done a number of smaller deals too. We're calling them bolt on deals that are not material enough probably individually to be sending out releases, etcetera. But it's really a look forward into getting more geography and more share into these other products covered by these bolt on acquisitions. So, I mean, we continue to feel good that there's a good pipeline out there. There's some big businesses we still think that are potentially going to be in the market even in our core kind of insulation competency grouping.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

And we continue to look at other products and even other verticals to a degree and always will really, I think. So it's just been kind of tough to get a few deals closed.

[Susan Maklari, Senior Equity Research Analyst at Goldman Sachs]

Okay. Thank you for the color and good luck with the quarter.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Great. Thank you.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

Thanks, Doug.

[Operator]

Our next question comes from Keith Hughes with Truist Securities. Please proceed with your question.

[Analyst]

Hey. This is Joe on for Keith. Guess for for.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

You're really breaking up. We didn't understand that question. Sorry.

[Analyst]

Yep. Sorry about that. I'll repeat. And then you talked a little bit about heavy commercial. Are there many signs of life for the commercial side?

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Oh, yep. No. The the short answer is no. The light commercial business continues to be weaker than we expected. And we believe that will continue through 2025.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

We don't have the same visibility in the light commercial business that we do in the heavy commercial business. So we'll know better as we get towards the end of the year what '26 is gonna look like. But that continues to be the weakest part of our end markets by far at this point. So but we felt very good in the quarter that the strength in heavy commercial offset that, like, commercial weakness.

[Analyst]

Gotcha, man. I appreciate that. And then going back to multi state, think, sort of a couple of bit. When do you think that term will start to kind of hit results? And you mentioned 2026. Is that how we should think about it?

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yeah. I think it's 2026. I mean, you know, depending upon how things go and and the movement of projects kind of through the the backlog, we might see a little bit of benefit towards the '25. But I really think it's more of a '26 story and it may even not get positive until we get into the '26. But we're very encouraged with the bidding activity, what's happening with the backlog.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

And as I mentioned earlier, the ability of CQ to really cross sell the complementary products into the multifamily projects that we're working on.

[Analyst]

Got it. I really appreciate it, Craig.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Sure.

[Operator]

Our next question comes from Colin Vernon with Deutsche Bank. Please proceed with your question.

[Collin Verron, Director at Deutsche Bank]

Good morning. Thank you for taking my question. So it sounds at least some of the market outperformance is geographic mix driven. But when you look within the geographies that outperform, are you taking share within those markets? And any sense to give us any way to give us a sense of what those share gains might look like within those markets that you called out?

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yes. I mean, certainly in specific markets, we're gaining share. But as we've stated previously, our objective is for our customers to gain share and that for us to gain share through our customers. So it's really about working with the best customers in a marketplace that we believe are going to be most successful from a market share gain. And we really, it just as a business model, if you will, or strategy, that has been our objective from a market share perspective is to really work with those customers to grow share that way as opposed to taking share from another competitor.

[Collin Verron, Director at Deutsche Bank]

Understood. Okay. And I guess just following up on that then, like, based on what your customers are doing from a market share perspective, I guess, how sustainable do you think these market share gains are called over the next twelve months just based on what you're hearing from them? 2Q seems very meaningful, so I'm just curious as to how sustainable some of those trends are.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

I mean, it's difficult to say. But I think fundamentally, as we commented and I think a lot of people have commented, we do think that the single family, multifamily markets are going to become more challenging in the second half. Again, as I was saying on the multifamily side, we think it's setting up for a good 26. Think there's still on the single family side, I think there's still quite a bit of uncertainty, not just the rate environment, but on the jobs front. And clearly affordability challenged.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

So I think that as we look at it and we talk to customers about it, there's still a bit of uncertainty about what 2026 is going to look like. So we think that those challenges are definitely going to persist in the second half. And clearly we're going to be impacted by those challenges. But as we demonstrated in this quarter, I think our team is going to do a very effective job of managing in a very difficult environment.

[Collin Verron, Director at Deutsche Bank]

Great, I appreciate the color.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Sure.

[Operator]

Our next question comes from Ken Senner with Seaport Research. Please proceed with your question.

[Kenneth Zener, Senior Analyst - Housing Sector at Seaport Research Partners]

Good morning, everybody.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

Good morning.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Good morning, Ken.

[Kenneth Zener, Senior Analyst - Housing Sector at Seaport Research Partners]

Doing a sound check. On gross margins, if you talk to the current quarter margins versus kind of your long term targets, just the baseline, Can you address the current factors that you are thinking might abate or just a mix issue relative to that spread that we see today? And I'm trying to ask because the strength in gross margins versus your long term, I believe, is right. You're highlighting, right, large or private regional builders versus the publics. And that probably washes out when you're thinking about operating leverage.

[Kenneth Zener, Senior Analyst - Housing Sector at Seaport Research Partners]

Like, can you maybe give us a sense of how that spread plays into it in your answer? Thank you.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

You mean the difference between the publics and the regionals?

[Kenneth Zener, Senior Analyst - Housing Sector at Seaport Research Partners]

Right. Because I mean, if you just right. If the publics have a lower gross margin, they get better SG and A, considering people are trying to understand that dynamic.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Well, yeah. I mean, it's we've talked about this on multiple quarters. Gross margin from the regional and local builders is higher. It's a higher average job price. But the cost to serve is higher.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

And that's reflective in higher SG and A. If you look at the quarter, selling expenses exactly where we would have expected it to be at about 4.7%, which is what it was the second quarter last year. G and A was a little bit higher than we would have expected. But the growth in G and A from the first quarter of this year to the second quarter of this year was all driven by higher variable compensation, which is a direct result of the really strong results on EBITDA and profitability. So I think everybody knows that we have a highly variable compensation structure, particularly at the branch level.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

And for the branches that outperformed, they got paid for that outperformance.

[Kenneth Zener, Senior Analyst - Housing Sector at Seaport Research Partners]

Good. And then I asked you this last quarter, and it sounds like you guys are really focusing on it now, but the private regional resilience versus the public data, I think is or was that they're appreciated. Based on the public builders, we're getting visibility into the 2026 based on their year end inventory units kind of being down. Can you provide or expand on any comments for what you're seeing on these private to the regional builders? Because we can't see that outside of the census inventory data, which

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yeah.

[Kenneth Zener, Senior Analyst - Housing Sector at Seaport Research Partners]

I'm not making a BLS comment, but, like, I'm not sure it's in the onerous as Yeah. It's presented. But if you could provide us some context there, given that upwards of 70% of your business. Thank you.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Yeah. So I think what's important to note there is the regional and local builders have much higher market share in the top half of the country versus the bottom half of the country. And I think everyone on this call is well aware of the fact that the top half of the country right now on the single family side and even the multifamily side is doing better, is performing better than the bottom half. And we have historically been overweight top half of the country. So one of the things and one of the reasons why we're performing as well as we are is just our geographic, historical geographic concentration in some of the markets that are just performing above the overall markets.

[Michael Miller, EVP, CFO & Director at Installed Building Products]

Florida being a great example of a market that's been very negatively impacted. We have a lot of branches there. But as I said earlier, our share is just not that great. So we are definitely benefiting from our geographic footprint.

[Kenneth Zener, Senior Analyst - Housing Sector at Seaport Research Partners]

Thank you very much.

[Operator]

There are no further questions at this time. I would now like to turn the floor back over to Jeff Edwards for closing comments.

[Jeffrey Edwards, Chairman, CEO & President at Installed Building Products]

Thank you for your questions, I look forward to our next quarterly call. Thank you.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Darren Hicks, Managing VP
• Jeffrey Edwards, Chairman, CEO & President
• Michael Miller, EVP, CFO & Director

Analysts

• Stephen Kim, Senior MD at Evercore ISI
• Alex Isaac, Equity Research Analyst at J.P. Morgan
• Mike Dahl, MD, Equity Research - Homebuilders & Building Products Analyst at RBC Capital Markets
• Susan Maklari, Senior Equity Research Analyst at Goldman Sachs
• Analyst
• Collin Verron, Director at Deutsche Bank
• Kenneth Zener, Senior Analyst - Housing Sector at Seaport Research Partners