Installed Building Products, Inc.

Installed Building Products, Inc. operates in the building products installation industry, primarily installing insulation for residential and commercial builders in the continental United States. The company is also a diversified installer of complementary building products including waterproofing, fire-stopping, fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving and mirrors and other products. The company offers its portfolio of services from a national network of approximately 250 branch locations serving all 48 continental states and the District of Columbia. The industry is highly fragmented and competitive, with competition based on quality and timeliness of service, knowledge of local building codes, pricing, relationships and reputation in the market. The residential new construction market, the company's largest end market, saw non-seasonally adjusted housing starts of 1.36 million in 2025, a slight decline from 1.37 million in 2024, and housing starts are forecasted to decrease to 1.31 million in 2026 according to Fannie Mae. Commercial demand showed slight growth in 2025, and the commercial end market is predicted to see a modest increase of 3% in investment dollars in 2026 over 2025, according to Dodge Data & Analytics.

The company estimates it has the number one or two market position for new single-family insulation installation in more than half of the markets in which it operates based on permits issued in those markets. Competitors for installation services include one other large national contractor, several large regional contractors and numerous local contractors. The company's competitive advantages include national scale with a strong local presence, diversified product lines, end markets and geographies, engaged employees, financial strength with a variable cost structure and strong free cash flow, execution excellence, a broad and stable customer base, well-established relationships with suppliers, and a highly experienced and incentivized management team. The company's top ten customers accounted for approximately 14% of net revenue for the year ended December 31, 2025, and its largest customer is independently serviced by 96 different IBP branches nationwide despite representing approximately 4% of net revenue for the year ended December 31, 2025.

The company generates revenue primarily through the service-based installation of various products in the residential new construction, repair and remodel and commercial construction end markets from its national network of branch locations. 93% of net revenue comes from the service-based installation of these products across all end markets, forming the Installation operating segment and single reportable segment. The company also has regional distribution operations that serve the Midwest, Mountain West, Northeast and Mid-Atlantic regions of the United States, and operates multiple cellulose manufacturing facilities. The business model is differentiated by streamlining the typical value chain, as the company buys most of the products it uses direct from manufacturers which are delivered to local installation operations. Revenue is recognized when control of the promised good or service is transferred to customers, and for contracts not complete at the reporting date, revenue is recognized over time utilizing a cost-to-cost input method.

Insulation installation comprised approximately 58% of net revenue of $3.0 billion for the year ended December 31, 2025, compared to 60% in both 2024 and 2023. Fiberglass and cellulose insulation accounted for approximately 83% of insulation installation sales for the year ended December 31, 2025, while spray foam insulation accounted for approximately 17%. Shower doors, closet shelving and mirror installations comprised approximately 7% of net revenue for the year ended December 31, 2025. Garage door installation and service comprised approximately 6% of net revenue for the year ended December 31, 2025, with the ongoing aftermarket service component representing approximately 22% of the net revenue resulting from garage doors for the year ended December 31, 2025. Waterproofing installation and service comprised approximately 5% of net revenue for the year ended December 31, 2025. Rain gutter installation comprised approximately 4% of net revenue for the year ended December 31, 2025. Fire-stopping and fireproofing installation collectively comprised approximately 4% of net revenue for the year ended December 31, 2025. Window blind installation comprised approximately 3% of net revenue for the year ended December 31, 2025. Installation of other building products comprised approximately 6% of net revenue for the year ended December 31, 2025.

The Distribution operating segment, which includes AMD Distribution, Central Aluminum Supply Corporation, and Wholesale Insulation Supply, Inc., comprised approximately 5% of net revenue for the year ended December 31, 2025. The Manufacturing operating segment, which includes Advanced Fiber Technology and Carolina Precision Fibers, a 2025 acquisition, comprised approximately 2% of net revenue for the year ended December 31, 2025. The company's three largest suppliers in the aggregate accounted for approximately 35% of all material purchases for the year ended December 31, 2025. The company has successfully diversified its product offering from the year ended December 31, 2013, when insulation installation comprised approximately 74% of revenues, to the year ended December 31, 2025, when it comprised 58% of revenues. Revenue from the commercial end market comprised approximately 11% of revenues for the year ended December 31, 2013, and increased to 17% of revenues for the year ended December 31, 2025.

During the year ended December 31, 2025, the company acquired seven businesses that it expects to contribute approximately $53.3 million in annual aggregate revenues, and also completed four bolt-on acquisitions that were merged into existing businesses, investing a total of $51.5 million. The company repurchased $172.6 million of common stock under its stock repurchase program during the year ended December 31, 2025, including 150 thousand shares purchased from PJAM IBP Holdings, Inc. for an aggregate price of $37.6 million, or $250.96 per share. The company paid $87.6 million in dividends during the year ended December 31, 2025. In January 2026, the company completed an offering of $500.0 million aggregate principal amount of 5.625% Senior Notes due 2034 and used part of the proceeds to redeem in full the 5.75% Senior Notes due 2028. The company also amended its ABL Revolver to increase the commitment amount to $375.0 million and extend its maturity to January 21, 2031. The company's board of directors authorized a new stock repurchase program on February 26, 2026, that allows for the repurchase of up to $500.0 million of outstanding common stock through March 1, 2027.

Net revenues increased 1.0%, or $29.5 million, to $2,970.8 million for the year ended December 31, 2025, compared to $2,941.3 million in 2024. Gross profit increased 1.5% to $1,009.3 million from $994.5 million in the prior year. Net income was $265.4 million for the year ended December 31, 2025, compared to $256.6 million in 2024. Diluted earnings per share were $9.71 for the year ended December 31, 2025, compared to $9.10 in 2024. The company generated approximately $371.4 million of cash from operating activities during the year ended December 31, 2025. As of December 31, 2025, the company had $321.9 million of cash and cash equivalents and had not drawn on its revolving line of credit.

The company expects to continue its disciplined approach in identifying and purchasing attractive acquisition targets to meet its goal of acquiring at least $100.0 million in annual aggregate revenue in 2026. The company anticipates discretionary spending for capital improvements and quarterly dividends to approximate 2025 levels of approximately $70.6 million and $40.4 million, respectively, as well as approximately $48.6 million for its annual variable dividend to be paid March 31, 2026. The company expects to benefit from market share gains in the multi-family business in 2026 thanks to an extended backlog in this end market as well as housing shortages in some of the markets it services, though it expects a continued decline in multi-family units under construction to negatively impact its business. The company expects typical seasonality, including higher sales in the spring, summer and fall than in the winter in 2026.

The company's growth strategy includes capitalizing on the new residential and commercial construction markets, continuing to strengthen its market share position by working with the best customers, capitalizing on its ability to cross-sell products through existing markets as well as new markets entered as a result of organic expansion and acquisitions, pursuing value enhancing acquisitions in markets it currently serves as well as markets that are new to it, and integrating new acquisitions quickly and seamlessly into its corporate infrastructure. The company expects to still benefit from its market share gains in the multi-family business in 2026 thanks to an extended backlog in this end market as well as housing shortages in some of the markets that it services. The company believes the long-term opportunities in its residential and commercial end markets are favorable, supported by an aging housing stock, population growth, persistent housing shortages, demographic changes and household formation growth.

The company's gross profit percentage increased to 34.0% for the year ended December 31, 2025, compared to 33.8% in 2024 and 33.5% in 2023. The increase in gross profit as a percentage of net revenue was primarily due to customer and supplier mix changes, partially offset by increased insurance costs and additional vehicle depreciation expense. The company expects its selling and administrative expenses to continue to increase as its business grows, which could impact its future operating profitability. The company anticipates a slower hiring pace in 2026, but still expects to spend more to hire, train and retain installers to support its business as tight labor availability continues within the construction industry.

The company's operations depend on its information technology systems, including its web-enabled internal software technology, jobCORE, which provides in-depth operational and financial performance data from individual branch locations to the corporate office. The company utilizes its internal software technology, jobCORE, to integrate most acquired operations and provide in-depth branch-level operational and financial performance data. The company's cybersecurity program, where appropriate, aligns with the Center of Internet Security Control framework, which itself is modeled after the National Institute of Standards and Technology's Cybersecurity Framework. The company has established security policies, processes and controls designed to help protect, identify and mitigate against the disruption of its operations and the intentional and unintentional misappropriation or corruption of its information technology systems.

The company's board of directors authorized a stock repurchase program on February 27, 2025, that allowed for the repurchase of up to $500.0 million of its outstanding common stock through March 1, 2026. On February 26, 2026, the company announced that its board of directors authorized a new stock repurchase program that allows for the repurchase of up to $500.0 million of its outstanding common stock through March 1, 2027. The company paid $87.6 million in dividends during the year ended December 31, 2025, and its board of directors has approved a quarterly cash dividend program since 2021, as well as an annual variable dividend payable since 2022, with the 2026 dividend payable on March 31, 2026 at a rate of $1.80 per common share. The company expects discretionary spending for capital improvements to approximate 2025 levels of approximately $70.6 million.

The residential homebuilding market is expected to remain stable in 2026, supported by forecasted housing starts that are anticipated to be generally consistent with 2025 levels, though elevated spec home inventory and mortgage interest rates may continue to suppress demand. Inflation and elevated mortgage interest rates are expected to continue affecting affordability of new homes, both of which are the primary drivers behind the projected decline for new housing starts forecasted in 2026. The company expects a continued decline in multi-family units under construction to negatively impact its business. Commercial demand showed slight growth in 2025, and the commercial end market is predicted to see a modest increase of 3% in investment dollars in 2026 over 2025, according to Dodge Data & Analytics.

The company could be subject to increased material pricing on some of the complementary building products it installs and sells due to tariffs imposed on goods imported from certain foreign nations, and the extent of these increases will depend on a variety of factors including the magnitude of each tariff, the extent its vendors pass on the tariffs they incur, and the number of countries subject to tariffs in the future. The company may have more difficulty raising selling prices to offset any material price increases in 2026 if housing demand slows. The company could incur material supply shortages in 2026 and beyond if fiberglass manufacturers reduce production. The company's labor costs have increased in recent years and may continue to increase as a result of competition, health and other insurance and benefit costs.

The company's business is highly dependent on the housing market and new residential construction activity, with the majority of revenue coming from the installation of building products in the new residential housing market. In 2025, the U.S. Census Bureau reported an estimated 1.36 million non-seasonally adjusted total housing starts, and 2026 housing starts are projected at 1.31 million according to Fannie Mae, indicating potential continued softness. The company faces significant competition in a highly fragmented industry, and residential homebuilders have placed pressure on suppliers to keep prices low, which may limit the company's ability to pass on price increases. The company's three largest suppliers in the aggregate accounted for approximately 35% of all material purchases for the year ended December 31, 2025, creating concentration risk. As of December 31, 2025, the company had goodwill and other intangible assets in an aggregate amount of $711.9 million, or approximately 34% of total assets, and the Distribution reporting unit's estimated fair value exceeded its carrying value by only 18.4% as of the October 1, 2025 impairment test, indicating sensitivity to changes in assumptions. The company's indebtedness exposes it to interest rate risk, with $91.3 million of borrowings at variable interest rates as of December 31, 2025, and a hypothetical one percentage point increase in interest rates would increase annual interest expense by approximately $0.9 million.

Management's message emphasizes the company's strong balance sheet, liquidity, and continuing acquisition strategy as positioning the business to continue to profitably grow. Management highlights that net revenues increased 1.0% to $2,970.8 million, gross profit increased 1.5% to $1,009.3 million, and the company generated approximately $371.4 million of cash from operating activities during the year ended December 31, 2025. Management states that the company will continue to use its disciplined approach in identifying and purchasing attractive acquisition targets to meet its goal of acquiring at least $100.0 million in annual aggregate revenue in 2026. Management believes the company's business is well positioned to continue to profitably grow due to its strong balance sheet, liquidity and its continuing acquisition strategy. Management notes that while U.S. economic growth and employment data remain healthy, and the company anticipates its business will continue to grow organically, a temporary slowdown in the homebuilding industry could negatively impact its results in the near term.