Installed Building Products Returns to Growth as Margins Narrow
Adjusted EBITDA margin narrowed 70 basis points to 16.9% despite renewed revenue growth.
Installed Building Products (IBP), an installer of insulation and complementary building products, returned to growth as second-quarter revenue rose 2.3% to $777.8 million. The increase reversed declines of 3.5% in the first quarter and 0.4% in the fourth quarter of 2025.
The improvement reflected a smaller contraction across established branches and a growing contribution from manufacturing and distribution. Same-branch revenue declined 0.6%, compared with a 5.9% drop in the prior quarter.
Net income fell to $64.9 million from $69.0 million, while diluted earnings declined to $2.43 a share from $2.52 a share. Adjusted earnings slipped to $2.91 a share from $2.95 a share.
Installation revenue fell 0.7% to $710.7 million, moderating from declines of 5.8% in the first quarter and 2.2% in the fourth quarter. Other revenue rose 50.4% to $67.1 million, extending growth of 34.8% and 22.8% in those periods. Residential new-construction revenue declined to $522.6 million, while commercial revenue increased to $141.0 million and accounted for 18% of consolidated revenue.
Weak installation volume continued to weigh on the core business. Job volume excluding heavy commercial fell 5.2%, while price and mix rose 0.7%. Residential same-branch installation sales declined 6.1%, an improvement from an 11.2% drop in the prior quarter, as commercial same-branch sales grew 10.4%.
Gross margin narrowed 90 basis points to 33.3% as gross profit slipped 0.4% to $258.9 million. Pressure resulted from a heavier mix of lower-margin Other-segment revenue and higher fuel expense. Installation gross margin declined to 36.5%, while the Other segment’s margin expanded to 24.7%. Higher medical-insurance expense also contributed as adjusted selling and administrative costs rose to 18.9% of revenue.
Installed Building Products acquired about $59 million of annual revenue through July and reiterated its expectation to acquire at least $100 million during 2026. The company also repurchased about 365,000 shares for $76.2 million during the quarter, up from roughly 91,000 shares for $25.4 million in the first quarter, increasing capital deployment as earnings and margins contracted.