Installed Building Prods Q2 2026 Earnings Call: Complete Transcript

Installed Building Prods (NYSE: IBP ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

The full earnings call is available at Summary Full Transcript OPERATOR Greetings, and welcome to the Installed Building Prods second quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

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.

Ryan Ricketts, Vice President of Investor Relations Good morning, and welcome to Installed Building Prods 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, and 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. Jeff Edwards, Chairman and Chief Executive Officer 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 Installed Building Prods. 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. 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 Installed Building Prods, 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 shower 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. 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 Installed Building Prods, thank you. I remain encouraged by the fundamentals of our industry, our competitive positioning, and optimistic about the prospects ahead for Installed Building Prods and the broader installation 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 Michael Miller, Chief Financial Officer Financial results. Thank you, 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. 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. 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.

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. 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.

15 times at June 30, 2025, which remains well below our stated target of 2 times. 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. 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. Jeff Edwards, Chairman and Chief Executive Officer Thanks, Michael.

I'd like to conclude our prepared remarks by once again thanking Installed Building Prods 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 Thank you.

We will now be conducting a question-and-answer session. We ask that you please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate 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. One moment, please, while we poll for questions. Our first question is from Susan McClary with Goldman Sachs.

Please proceed with your question. Susan McClary, Analyst at Goldman Sachs Thank you. Good morning, everyone. My first question is around the activity that you're seeing on the ground.

I think as we ended the first quarter, you 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? Michael Miller, Chief Financial Officer Sue, this is Michael. Good morning.

Thanks for the question. You know, we're continuing to see relative better performance with the private builders relative to the public builders. You know, 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 publics. We continue to believe that will be the trend through the rest of the year. Although if you look at their guidance consensus, theirs being 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, you know, roughly low single digits and actually the fourth quarter would be up low single digits. Now that's their guidance consensus.

That's, you know, as we've said a million times, we don't provide guidance. I will say though that historically our sales have tracked. Our sales to them have tracked very closely to their reported homebuilding revenue. Susan McClary, Analyst at Goldman Sachs 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. Michael Miller, Chief Financial Officer Yeah, Sue, thanks for that question. And, you know, the gross margin really was consistent with what, certainly with our 32% to 34% full-year range that we have talked about.

You know, 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's 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 points 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, you know, there's been a little bit, but it's insignificant at this point, benefit from the selling price increases associated with the manufacturer price increases for 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 home.

And there are customers that are most willing to accept higher prices versus certainly on the entry-level side. The other thing that was, you know, 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.

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 a 40 basis points 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. Susan McClary, Analyst at Goldman Sachs Okay, that's great color. Michael, thank you for all the detail and good luck with the quarter.

Michael Miller, Chief Financial Officer Great, thank you. Thanks, Sue. OPERATOR Our next question is from Sam Reed with Wells Fargo. Please proceed with your question.

Sam Reed, Analyst at Wells Fargo Thanks, guys. 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 through some pricing in September.