Installed Building Products (NYSE:IBP) reported second-quarter 2026 revenue growth despite continued pressure in new single-family housing, as strength in commercial installation, manufacturing and distribution businesses helped offset softer residential activity.
Consolidated net revenue increased 2% to $778 million from $760 million a year earlier. Same-branch sales declined less than 1% on a consolidated basis, while installation-segment same-branch sales fell 2%. A 6% decline in new residential same-branch sales was partially offset by a 10% increase in commercial same-branch sales.
Commercial Growth Offsets Residential Weakness
IBP said its commercial end market recorded double-digit installation sales growth for the fifth consecutive quarter. Heavy commercial sales rose more than 15% during the quarter, with CFO Michael Miller later describing the business as a key growth driver. Heavy commercial same-branch sales rose about 16%, though Miller said growth rates could moderate in the second half as comparisons become more difficult.
The company said its light-commercial operations turned positive sooner than expected and were expected to remain positive through the balance of the year, though not necessarily at a significant rate of growth.
Meanwhile, new single-family activity remained challenged. Miller said revenue from public builders declined at a rate similar to the combined mid-single-digit decline reported by public homebuilders that had released results. Revenue from private builders also declined, but by less than public-builder revenue, he said.
Public builders represented roughly 25% of IBP’s single-family revenue and approximately 15% of total company revenue, according to Miller. He said public builders’ lower average job values mean they account for a larger share of the company’s single-family job volume than revenue.
IBP also cited improving trends in multifamily. Edwards said contract backlog continued to grow, while Miller said multifamily sales turned positive in June and remained positive in July. The company’s multifamily business has particular exposure to the South Census region, which represented about 60% of its multifamily revenue, Miller said.
Margins Affected by Fuel, Business Mix and Medical Costs
Adjusted gross margin was 33.3% in the second quarter, compared with 34.2% in the prior-year period. Installation-segment gross margin declined to 36.5% from 37.1%, primarily because higher fuel expense reduced that segment’s margin by 50 basis points.
The company’s “other” segment, which includes distribution and manufacturing operations, grew 50% net of eliminations, partly reflecting acquisitions. On a same-branch basis, the segment grew about 28%, Miller said. While that growth contributed to consolidated gross profit, the segment carries structurally lower margins than installation operations and created a 40-basis-point headwind to the consolidated gross-margin percentage.
Gross margin in the other segment improved to 24.7% from 23%, according to Miller. The segment includes cellulose insulation manufacturing, where the company cited demand from repair and remodeling, industrial fibers and road fibers.
Adjusted selling and administrative expense increased 3% year over year and represented 18.9% of sales, compared with 18.8% a year earlier. Higher medical insurance costs reduced EBITDA margin by 30 basis points, management said. Excluding medical costs, same-branch general and administrative expenses declined about 2% from the prior year.
Adjusted EBITDA totaled $131 million, representing an adjusted EBITDA margin of 16.9%. Adjusted net income was $78 million, or $2.91 per diluted share.
Pricing and Supply Conditions Remain Fluid
Miller said price mix increased 1% during the quarter and rose 3% when heavy commercial is included. Volume declined 5%, primarily because of lower new single-family volume.
The company said it has begun to see some benefit from manufacturer price increases for spray foam insulation, though management expects the effect could be uneven in the third quarter as customers adjust to the size of the increase. Miller said the material-cost increase was approximately 25% and that IBP expects the impact to be at least margin neutral over time.
Management said it had not seen meaningful demand destruction from customers shifting from spray foam to fiberglass. Spray foam represents roughly 11% of company revenue, compared with approximately 50% for fiberglass, Miller said.
On fiberglass, Edwards and Miller said material was readily available and that additional capacity was coming online. They said the market environment did not appear particularly supportive of a proposed manufacturer price increase, though the company remained in frequent discussions with suppliers.
Acquisitions, Capital Returns and Balance Sheet
IBP completed acquisitions during the second quarter and July representing approximately $30 million in annual sales. The acquired businesses included:
- An upper Midwest mechanical-insulation installer with about $12 million in annual sales, serving industrial and commercial retrofit applications.
- A Minnesota-area installer of shower doors, closet shelving, mirrors and accessories with about $7 million in annual sales.
- An installer of door, bath and fencing hardware serving new residential markets in South Carolina and Georgia, also with about $7 million in annual sales.
The company said it expects to acquire at least $100 million of annual revenue during 2026. Management said it is interested in pursuing a larger platform acquisition in adjacent commercial or industrial installation categories, including mechanical and industrial insulation and commercial roofing. IBP’s mechanical and industrial insulation business currently generates about $50 million in revenue, Miller said.
At June 30, IBP’s net-debt-to-trailing-12-month adjusted EBITDA ratio was 1.34 times, below its stated target of 2 times. Miller said the company could raise leverage as high as 3 times for the right transaction or set of transactions, citing the business’s free-cash-flow generation.
IBP ended the quarter with $395 million in cash and repurchased approximately 365,000 shares for $76 million. About $398 million remained available under its share repurchase program as of June 30. The board also approved a quarterly dividend of $0.39 per share, payable Sept. 30 to shareholders of record Sept. 15, representing an increase of more than 5% from the prior-year period.
About Installed Building Products (NYSE:IBP)
Installed Building Products, Inc (NYSE: IBP) is a leading national installer of specialty building products serving the U.S. residential construction market. The company partners with homebuilders and contractors to deliver a comprehensive range of interior and exterior finishing services, including insulation, drywall finishing, protective coatings and basement waterproofing systems. By offering a single-source solution, Installed Building Products helps streamline project coordination and ensures consistent service quality across multiple trades.
Founded in 1977 and headquartered in Columbus, Ohio, Installed Building Products has expanded from a regional insulation installer into a nationwide platform operating in nearly every state.
