Installed Building Products (NYSE:IBP) reported record third-quarter revenue of $808 million, up 4% from a year earlier, as growth in commercial and multifamily work helped offset softer demand for new single-family homes.
Chairman and CEO Jeff Edwards said affordability concerns, lower consumer confidence and higher mortgage rates continued to challenge new-home sales. He pointed to the company’s diversified operations and recent acquisitions as sources of resilience.
Adjusted EBITDA was $128 million, or 15.9% of revenue, while adjusted net income was $73 million, or $2.76 per diluted share. Revenue rose from $778 million in the prior-year quarter.
Commercial and multifamily growth offset single-family decline
Installation segment same-branch sales rose 0.3%. A 5% decline in new single-family same-branch sales was offset by increases of 10% in commercial and 8% in multifamily, Chief Financial Officer Michael Miller said. Overall volume fell 2%, primarily because of lower new single-family volume.
Commercial installation sales posted double-digit growth for the sixth consecutive quarter, Edwards said, with heavy commercial sales rising more than 13%. Miller said heavy commercial backlog ended the quarter up by a mid-teens percentage from already high levels. He cited recreation and entertainment, industrial and manufacturing, retail, and lodging as areas of strength.
Chief Operating Officer Brad Wheeler said most of the confirmed commercial backlog is funded and that the company’s commercial pipeline remains robust. Miller cautioned that heavy commercial faces a difficult comparison in the fourth quarter, when the business recorded 38.5% revenue growth a year earlier.
Multifamily sales grew 8% in the third quarter, and its contract backlog continued to grow, Edwards said. Miller nevertheless expects weakness in the broader multifamily market to emerge in the fourth quarter and the first half of 2027 unless the interest-rate environment changes meaningfully. He said higher capitalization rates have trapped equity in existing projects, limiting developers’ ability to fund new ones.
Costs pressure margins
Third-quarter adjusted gross margin was 32%. Miller attributed roughly 180 basis points of the year-over-year decline to aluminum, fuel, freight and faster growth in the company’s other segment. A shift toward complementary products, which generally carry lower gross margins than insulation, also weighed on the result.
Insulation product margin was essentially flat year over year in the quarter, Miller said. The company maintained its spray foam margin despite a material price increase of more than 20%, aided by advance notice and pricing preparations, he said.
Gutter margins, by contrast, were hurt by higher aluminum costs. Gutter sales rose 16%, but Miller said the company is working with customers to recover margin and is prepared to prioritize pricing over volume. He added that aluminum prices averaged about 6.5% lower in October than in the third quarter, though they remained 15% above year-earlier levels.
Miller expects fuel and freight to remain headwinds. He said the company expects stable fiberglass and spray foam pricing over the next couple of quarters, barring a change in conditions for new residential construction.
Management outlines 2027 expectations
Miller said the company currently expects both single-family and multifamily starts to decline by a mid-single-digit percentage in 2027. He expects price mix to become more challenging through the fourth quarter and into next year.
Asked about the company’s longer-term adjusted gross margin framework, Miller said he believes it can remain within the 32% to 34% full-year range in 2027, but likely at the low end. He later clarified that the company would also be challenged to meet that range for 2026 because of fuel, freight and aluminum costs. The company does not provide comprehensive financial guidance.
Geographically, Miller said California and Florida stabilized during the quarter, while Colorado, Indiana, Texas, Virginia and Washington were among the more challenged major markets. He cited strong performances in states including Georgia, Minnesota, Ohio, South Carolina and Wisconsin.
Acquisitions remain capital priority
Installed Building Products completed four acquisitions during the quarter representing approximately $22 million in annual revenue. Edwards said the pipeline supports the company’s expectation of at least $100 million in acquired annual revenue for the full year.
At quarter-end, the company added $250 million to its existing term loan, bringing the total to approximately $740 million. Miller said the financing provides flexibility for potential larger acquisitions in the pipeline, though he cautioned that pipeline deals may not close. The company ended the quarter with $416 million in cash.
The board approved a fourth-quarter dividend of $0.39 per share, payable Dec. 31 to shareholders of record Dec. 15. The company had approximately $398 million available under its share repurchase program at Sept. 30. Miller said acquisitions remain its first capital priority, followed by share repurchases and the dividend.
About Installed Building Products (NYSE:IBP)
Installed Building Products, Inc (NYSE: IBP) is a residential and commercial building-services company that provides installation services for insulation and other construction products. The company serves homebuilders, contractors, remodelers and other customers through a network of specialized installation businesses.
Its primary offerings include fiberglass, spray foam and blown-in insulation, as well as the installation of garage doors, gutters, fireplaces, shower enclosures, closet systems and other complementary building products.
