IBP Reports Earnings

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DATE

Thursday, February 26, 2026 at 10 a.m. ET

CALL PARTICIPANTS

• Chairman and Chief Executive Officer — Jeffrey W. Edwards
• Chief Financial Officer — Michael Thomas Miller
• Chief Administrative and Sustainability Officer — Jason Niswonger
• Chief Operating Officer — Brad Wheeler

TAKEAWAYS

• Consolidated Net Revenue -- $748,000,000 for the quarter, essentially flat compared to $750,000,000 in the prior-year period.
• Same-branch Installation Segment Sales -- Down 2% as a 23% increase in commercial was nearly offset by a 9% decline in new residential.
• Price/Mix Impact -- 1.7% increase reported, offset by a 9.3% decrease in job volumes, excluding heavy commercial and Distribution/Manufacturing segments.
• Heavy Commercial Same-branch Sales Growth -- Up 38% during the quarter, contributing to overall segment performance.
• Adjusted Gross Margin -- 35% for the quarter, up from 33.6%, attributed to customer and geographic mix shifts and cost management.
• Adjusted Selling and Administrative Expense -- 18.3% of sales versus 18.1% prior year, reflecting stable overhead levels.
• Adjusted EBITDA -- $142,000,000, producing a record 19% margin for the quarter.
• Adjusted Net Income -- $88,000,000, or $3.24 per diluted share for the quarter.
• Operating Cash Flow -- $371,000,000 generated in the twelve months ended December 31, 2025, up 9% year over year due to net income increases and working capital improvements.
• Net Debt to Adjusted EBITDA Ratio -- 1.10x at year-end, remaining well below the company’s 2.0x target.
• Capital Expenditures & Finance Leases -- $17,000,000 combined for the quarter, equivalent to approximately 2% of revenue.
• Stock Buybacks -- 150,000 shares repurchased in the quarter for $38,000,000, plus 850,000 shares for $103,000,000 over the trailing twelve months; new $500,000,000 authorization effective through March 1, 2027.
• Dividend Actions -- Regular quarterly dividend approved at $0.39 per share (over 5% increase) and a $1.80 per share annual variable dividend (nearly 6% increase), both payable March 31, 2026.
• Liquidity -- Nearly $900,000,000 available post private offering of $500,000,000 of 2034 unsecured notes and refinancing of credit facilities.
• 2025 Acquisitions -- 11 completed, representing over $64,000,000 in annual revenue; 4 closed in Q4, totaling $23,000,000 in annual sales span residential and commercial markets.
• 2026 Acquisition Outlook -- Management expects to acquire at least $100,000,000 in annual revenue.
• Amortization Expense Guidance -- Estimated $10,000,000 for Q1 2026 and $38,000,000 for full year, subject to change with further acquisition activity.
• Effective Tax Rate Guidance -- 25%-27% anticipated for full year 2026.
• Sector Dynamics (External Data) -- Single-family starts down 7%, multifamily starts up 18% (2025); company single-family regional performance outpaced broader declines due to Midwest and Northeast strength.
• Backlog Commentary -- Multifamily and heavy commercial backlog continues to grow, providing healthy near-term visibility.
• 2025 Return on Invested Capital -- 24% adjusted, in line with the previous three years.

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RISKS

• Michael Thomas Miller said, "there is definitely going to be pressure there until that entry-level aspect of the market inflects positively," reflecting explicit headwinds in the residential production builder segment.
• Management disclosed a revenue headwind of approximately $20,000,000 in the first quarter from weather impacts, stating, "we are not going to be able to make that up in the month of March."
• The company identified ongoing headwinds from housing affordability, especially in single-family entry-level residential markets.

SUMMARY

Installed Building Products (NYSE:IBP) reported record profitability metrics despite a challenging environment in core residential end markets, supported by exceptional growth in heavy commercial and expanding complementary and mechanical product offerings. Management highlighted that recent acquisitions, extension of credit facilities, and successful refinancing have resulted in a strengthened capital base and nearly $900,000,000 in available liquidity. The Board authorized increased regular and variable dividends and launched a new $500,000,000 stock repurchase program, directly linking capital return policy to operational cash generation and ongoing growth investment. The call provided clarity on strategic focus, specifically the intent to accelerate both organic and inorganic expansion in heavy commercial and mechanical installation, while maintaining disciplined pursuit of consolidation in still-fragmented residential insulation markets.

• Company segment mix benefited from Midwest regional strength and greater exposure to private, semi-custom, and custom builders, according to management comments on geographic and customer mix.
• Management confirmed that heavy commercial margins contributed approximately 40 basis points to total gross margin improvement during the quarter.
• Several speakers indicated continued stable or rising complementary product penetration, with segment-level improvements particularly visible outside heavy commercial.
• The company stated nearly all incremental margin gains were due to mix, cost controls, and new product expansion, rather than underlying price deflation or extraordinary volume growth.
• Leadership described the multifamily cycle time as now normalized, creating backlog equilibrium and supporting steady contracting momentum through 2026.

INDUSTRY GLOSSARY

• Same-branch Sales: A performance metric tracking sales of branches owned for at least twelve months, used to measure organic growth by excluding effects of acquisitions.
• Heavy Commercial: Refers to large-scale non-residential construction projects such as education, healthcare, recreation, transportation, and manufacturing, distinguished from light commercial or residential projects.
• Complementary Products: Non-insulation building materials and services, such as shower doors, shelving, mirrors, and accessories, installed alongside core insulation offerings to increase average revenue per customer.
• Production Builder: A company focused on high-volume, standardized residential construction (often public homebuilders), as distinct from custom or semi-custom builders.

Full Conference Call Transcript

Jeffrey W. Edwards, our Chairman and Chief Executive Officer, Michael Thomas Miller, our Chief Financial Officer, and we are also joined by Jason Niswonger, our Chief Administrative and Sustainability Officer. Jeff, I will now turn the call over to you.

Jeffrey W. Edwards: Thanks, Darren, 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. We closed out 2025 with a strong fourth quarter, delivering record sales and profitability for the year. While our core residential end markets experienced headwinds, in part due to housing affordability, our commercial end markets performed extremely well as we focused on meeting the needs of our customers, profitability, and product diversification across end markets. We continued to generate strong operating cash flow, which we use to support our growth-oriented capital allocation strategy.

While we expect homebuilding activity to remain challenging in the near term, the long-term outlook for our installed services remains positive, and we believe we are well positioned to continue investing in strategic acquisitions while returning cash to our shareholders. Capital allocation decisions are among the most important we make as a company, and we take pride in our disciplined approach. For 2025, our adjusted return on invested capital was 24%, in line with the returns achieved over the previous three years. Even with industry-specific headwinds expected to continue to affect our new residential insulation segment in the near term, our overall business has proved to be resilient.

All the credit goes to the hardworking 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 Products, Inc., thank you for making 2025 a great year. As we continue to focus on profitable growth and maximizing returns for our shareholders, we remain committed to doing the right thing for our employees, customers, and communities.

Looking at our full-year 2025 performance, consolidated sales increased 1% and same-branch sales declined 1%. Same-branch commercial sales growth was more than offset by residential same-branch sales growth headwinds. Residential sales growth within our installation segment was down 4% on a same-branch basis for 2025, as both single-family and multifamily same-branch sales decreased from the prior year. With respect to our single-family end market, the spring selling season is underway, but it is too early to draw any conclusions for the rest of the year. We expect that given readily available labor and material and relatively short construction cycle times, construction activity is primed to accelerate without any of the production-related hurdles that existed in prior years.

In our multifamily end market, our contract backlog continues to grow, which is encouraging. Our commercial end market was a real bright spot in 2025, with sales in our installation segment up 10% on a same-branch basis from the prior year period. Our heavy commercial end market continued to be the dominant driver of sales growth, which more than offset weakness in our light commercial end market. Based on the growth in our heavy commercial contract backlogs, we believe heavy commercial sales and profitability are poised to remain healthy in 2026.

We completed 11 acquisitions, including bolt-ons during 2025, representing over $64,000,000 of annual revenue. We remain disciplined in our approach to acquiring well-run businesses that make strategic sense, support attractive returns on invested capital, and fit well culturally. Our core residential installation end market remains highly fragmented with considerable opportunity for consolidation. During the 2025 fourth quarter, we completed a total of four acquisitions, representing over $23,000,000 of annual sales from a diverse product set in both residential and commercial end markets. Acquisitions included an insulation installer, a glass design and fabrication company, a drywall and framing company, and a shower door, shelving, mirror, and accessories company.

In addition, in January and February, we acquired an installer of insulation across new residential and commercial end markets throughout Texas, Louisiana, Arkansas, and Oklahoma with annual sales of approximately $5,000,000; a provider of a wide range of value-added mechanical installation services for diverse commercial and industrial applications serving key commercial and industrial hubs across Wisconsin, Iowa, Minnesota, Michigan, and Illinois with annual sales of approximately $13,000,000; and an installer of insulation primarily across new residential and light commercial markets throughout Kansas and Oklahoma with annual sales of approximately $3,000,000. Although deal timing is hard to predict, our current outlook for acquisition opportunities in 2026 is strong, and we expect to acquire at least $100,000,000 of annual revenue this year.

In terms of broader housing construction activity in the U.S., Census Bureau data for 2025 showed single-family starts decreased 7% from the prior year, while multifamily starts were up 18% for the same period. From a federal housing policy standpoint, we do not have any unique insight into the likelihood of changes in regulation coming to fruition or its potential impact or benefit. Our experienced leadership team has a history of operating through multiple housing cycles, and with our strong national market share and deep customer and supplier relationships, we are well positioned to continue to compete and win business. We remain focused on growing our operations profitably and allocating capital effectively to drive value for our shareholders.

I am proud of our team's continued success and commitment to doing an excellent job for our customers. Once again, to everyone at Installed Building Products, Inc., thank you. I remain encouraged by the fundamentals of our industry and our competitive positioning, and I am optimistic about the prospects ahead for Installed Building Products, Inc. in the broader installation and complementary building product installation business. So with this overview, I would like to turn the call over to Michael to provide more detail on our fourth quarter and fiscal year 2025 financial results.

Michael Thomas Miller: Thank you, Jeff, and good morning, everyone. Consolidated net revenue for the fourth quarter was roughly flat at $748,000,000 compared to $750,000,000 for the same period last year. Same-branch sales for the Installation segment were down 2% for the fourth quarter as a 23% increase in Commercial same-branch sales almost fully offset a 9% decline in new residential same-branch sales. Although the components behind our price/mix and volume disclosures have several moving parts that are difficult to forecast and quantify, we reported a 1.7% increase in price/mix during the fourth quarter. This result was offset by a 9.3% decrease in job volumes relative to the fourth quarter last year.

It is important to note that our heavy commercial end market and the Other — Distribution and Manufacturing segment results are not included in the price/mix and volume disclosures. Our heavy commercial same-branch sales growth was incredibly strong at 38% during the 2025 fourth quarter. Including the heavy commercial installation sales, price/mix increased 6%, while job volume decreased 9% during the 2025 fourth quarter.

With respect to profit margins in the fourth quarter, our business achieved record adjusted gross margin of 35%, an increase from 33.6% in the prior year period. The year-over-year increase in margin during the quarter was in part related to a shift in our Installation segment customer mix and successful management of direct operating costs in a demand environment that varied from challenging to healthy across end markets. Adjusted selling and administrative expenses were relatively stable compared to the 2024 fourth quarter. As a percent of fourth quarter sales, adjusted selling and administrative expense was 18.3% compared to 18.1% in the prior year period.

Adjusted EBITDA for the 2025 fourth quarter increased to a record $142,000,000 reflecting a record adjusted EBITDA margin of 19%, and adjusted net income increased to $88,000,000, or $3.24 per diluted share.

Although we do not provide comprehensive financial guidance, based on recent acquisitions, we expect first-quarter and full-year 2026 amortization expense of approximately $10,000,000 and $38,000,000, 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 12/31/2026. For the twelve months ended 12/31/2025, we generated $371,000,000 in cash flow from operations. The 9% year-over-year increase in operating cash flow was primarily associated with an increase in net income and improvements in working capital management.

Our fourth quarter net interest expense was $8,000,000 compared to $9,000,000 for the 2024 fourth quarter as higher interest income from investments combined with lower cash interest expense on outstanding debt. At 12/31/2025, we had a net debt to trailing twelve-month adjusted EBITDA leverage ratio of 1.10x compared to 1.09x at 12/31/2024, which remains well below our stated target of 2.0x. At 12/31/2025, we had $377,000,000 in working capital, excluding cash and cash equivalents. Capital expenditures and total incurred finance leases for the three months ended 12/31/2025 were approximately $17,000,000 combined, which was approximately 2% of revenue.

In January 2026, we closed a private offering of $500,000,000 in aggregate principal amount of 5 and 5/8 senior unsecured notes due 2034. A portion of the proceeds were used to fully repay our $300,000,000 notes due 2028. We also amended our existing $250,000,000 asset-based lending revolving credit facility to, among other things, increase the commitments thereunder to $375,000,000 and extend the maturity date to January 2031. Following the completion of these transactions, we have nearly $900,000,000 in available liquidity and very modest financial leverage. Based on higher debt and cash balances, we estimate that first-quarter interest expense will be approximately $11,000,000.

With an even stronger liquidity position as the financial foundation, 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 2025 fourth quarter, we repurchased 150,000 shares of common stock at a total cost of $38,000,000 and 850,000 shares at a total cost of $103,000,000 during the twelve months ended 12/31/2025. The Board of Directors authorized a new $500,000,000 stock buyback program. The new authorization replaces the previous program and is in effect through 03/01/2027.

Installed Building Products, Inc.'s Board of Directors approved the first quarter dividend of $0.39 per share, which is payable on 03/31/2026, to stockholders of record on 03/13/2026. The first quarter dividend represents a more than 5% increase over the prior year period. Also, as a part of our established dividend policy, today, we announced that our Board has declared a $1.80 per share annual variable dividend, which is a nearly 6% increase over the variable dividend we paid last year. The 2026 variable dividend amount was based on the cash flow generated by our operations, with consideration for planned cash obligations, acquisitions, and other factors as determined by the Board.

The variable dividend will be paid concurrent with the regular quarterly dividend on 03/31/2026, to stockholders of record on 03/13/2026. 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.

Jeffrey W. Edwards: Thanks, Michael. I would like to conclude our prepared remarks by once again thanking Installed Building Products, Inc. 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. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your questions from the queue. For participants using speaker equipment, as a reminder, please restrict yourself to one question and one follow-up. One moment, while we poll for questions. The first question comes from the line of Philip Ng with Jefferies. Please go ahead.

Philip Ng: Hey, guys. Congrats on a really strong quarter, and not so easy environment. Your gross margin, your EBITDA margin expanded nicely this year. So pretty impressive. But in this current backdrop, you know, when we look at the 2026, you know, what is your confidence in protecting margins? Your largest competitor just reported results. They are calling out perhaps low single-digit price deflation in 2026 and some price/cost headwind. So how should we think about it as it relates to Installed Building Products, Inc.?

Michael Thomas Miller: Hey, Phil. This is Michael. Thanks for the compliments. We certainly are extremely proud with what the team has delivered not just in the fourth quarter, but this year. I mean, as it relates to, you know, margins, particularly gross margins, and I will say that, you know, at least probably ten times today, like I do on every call, you know, we do not provide guidance. But what I would say is that, you know, as we look across the business and, you know, we look at how well the commercial business is performing, we believe it will continue to do that. The Other segment, which is the manufacturing and distribution segment, is continuing to perform very well.

We think it will continue to do that. When we look at the, you know, core residential installation business, we really think of it as in two buckets. So, you know, the first bucket being the, you know, regional, private, move-up, custom, semi-custom builder. And we are really seeing, you know, relatively consistent demand there. We have seen that through really most of 2025. And, you know, going into 2026 as well, although, clearly, which is something I am sure we will talk about on the call today, clearly the year is off to a slow start given, you know, some of the weather-related issues that have been experienced across the country.

What I would say is that where there is weakness and where there is pressure is within the entry-level production builder segment of our business. And, you know, right now, I think it is way too early to call whether or not there is an inflection, and there will be an inflection in the spring selling season. Something that was a little bit encouraging, I would say, is that in the recent information released by the Census Bureau, if you look at single-family starts on a seasonally adjusted annualized rate, right? So in the fourth quarter, those starts averaged about 6% higher than they did in the third quarter. Again, that was the seasonally adjusted annualized rate.

So that is a positive. You know? And I think commentary from, you know, companies in our space that have reported, have noted or highlighted that the production builders really decreased and slowed down their building in the fourth quarter in order for, you know, their standing inventory to catch up to demand. You know, it is our belief that if the market is sort of flattish and we do not see an inflection on the entry-level side, that there will probably be some level of rebuilding of those inventories. You know, this continues to be a market where, you know, builders at the entry-level market are building spec.

And, you know, we do believe there will be some recovery, if you will, in starts there that will be constructive. But, you know, as we look out from a macro perspective and sort of look at, again, that entry-level market, the affordability issue is still a real issue. And, you know, it is yet to be seen whether or not it is going to inflect positively this year and just how much it is going to inflect positively. If you look at, I am getting too much information on this one question. Sorry.

But, I mean, if you look at what the public builders have disclosed from their guidance, I mean, they are talking about a pretty weak first quarter and really first half with an inflection — pretty strong positive inflection — in the back half of the year. Now, obviously, we all know that is off of easy comps. That helps drive that. But, you know, we think it is relatively constructive. And, so, yeah. I am sorry if that was too much information on that one question.

Philip Ng: Yeah. That is great color, Michael. And then your commercial business has been a bright spot. Right? It is growing nicely. It is a business you have improved and enhanced profitability. Is that an area where you guys can get behind a little more so from an investment standpoint, whether it is M&A or organic? Just kind of help us think through the opportunity set there, your ability to kind of continue to drive momentum, and do you plan to put a little more capital there to kind of support the growth?

Jeffrey W. Edwards: Phil, it is Jeff. I would say for sure, as we always are, we will use opportunistic as the situation, you know, kind of offers or demands. There is room for both organic growth, though, and M&A growth. We have not pursued it that hard yet because, quite frankly, we have been growing the base business enough where that has not been — and really tightening the screws. So, at this point, we feel very, very good about the business, and we do feel good about growth prospects going forward.

Philip Ng: Okay. But, Jeff, why have you not put more thoughts or capital there? I mean, the base business has been a little squishier, and this seems like a nice bright spot, and there is a lot of runway for heavy commercial, I think, for most companies that we cover.

Jeffrey W. Edwards: I think it is really been probably the last two, at most, three quarters where we felt like it was really, really in a position where we did not need to kind of continue to work the base business. But I think at this point, I would say we are ready to try to grow that business more than just organically because we have had a heck of a lot of growth really from an organic perspective.

Michael Thomas Miller: Yeah. And I think, to Jeff's point, I mean, the key is that growth has been phenomenal, and it is not just been growth. It has been very profitable growth. And we wanted to make sure the team was ready to do additional acquisitions. The last thing we would want to do is kind of mess up their day, if you will, through the integration process of an acquisition and have them take the eye off the quality existing business. So to Jeff's point, the past couple of quarters, we feel really confident that they have gotten to that point.

Philip Ng: Okay. Great color. Thank you so much.

Michael Thomas Miller: Sure.

Operator: Thank you. Next question comes from the line of Stephen Kim with Evercore ISI. Please go ahead.

Aatish Shah: Hi. This is Aatish on for Stephen. Thanks for taking the questions. I just wanted to talk about if you could talk about the M&A landscape and has there been any change in strategy in terms of what kind of companies could be targeted specifically on that? Just given interest from your largest competitor, has the commercial roofing market been an area of consideration? Thanks.

Jeffrey W. Edwards: Yeah. This is Jeff again. As we have stated, I think, on previous calls, yes, we are definitely interested in the commercial roofing segment. And, as you probably noted, we have done a few mechanical and industrial installation installers. And that is another area that we are interested in. So, but, again, I think we are on record previously as saying that we were interested in that business. So I do not think it is a change in strategy. What I would say is that we have begun to really perform on those strategies a bit. But, fundamentally, you know, our core residential insulation installation business still presents tremendous opportunity for us.

And, you know, we continue to pursue that area significantly just because we still have so much wide-open space as a company to acquire in that core business for us. So it really is, if you will, a three-legged stool in terms of our strategy there.

Aatish Shah: That is helpful. Thanks for that. And then in the prepared remarks, you mentioned kind of a shift in customer mix in the installation segment. Can you just detail that a little bit?

Michael Thomas Miller: Yeah. And just to clarify, that was not just installation. It was the installation business, so the kind of the residential installation business. And because we are continuing to see, you know, better sales rates with the, you know, semi-custom/custom builder, you know, and weaker sales rates with the production builder/entry-level builder, that has a natural tendency, if you will, to improve and help gross margin. I mean, just as a for example, during — and this is based on the Census Bureau regions — but during the quarter, our Midwest Census Bureau region revenue was up mid-single digits. Right?

So, and that market for us is, you know, it is generally speaking a higher gross margin market because of the higher amount of private semi-custom homes that are built in that market. So, you know, we definitely benefited in the quarter from our geographic mix as well as our customer mix from a gross margin and a profitability perspective. And I need to emphasize something, you know, that is very important. Our teams in the other regions of the country did an excellent job of maintaining profitability across the board with our customers and really highlighting and selling well to our customers the importance and quality of our install services.

And, you know, hats off to everyone in the field for doing such a great job.

Aatish Shah: That is great. Thank you.

Michael Thomas Miller: Sure.

Operator: Thank you. Next question comes from the line of Susan Marie Maklari with Goldman Sachs. Please go ahead.

Susan Marie Maklari: Thank you. Good morning, everyone. And let me add my congrats on a great quarter, guys. Well done. My first question is talking about the growth that you have seen in the complementary products. That is something that you have really focused on recently. Can you talk about where we are in that process? And as you think about 2026 and the comps that you are going to face there, are there any implications we should be thinking about as that relates to the path for margins or for the growth that you are going to see coming through?

Michael Thomas Miller: Yes. So this is Michael. I mean, we have continued to see good uptake in the complementary products. The one thing I will say is in the way that we sort of disclose those numbers in our investor PowerPoint, there is quite a bit of the complementary products that are related to the heavy commercial business. So that skews some of it.

But I would say if we — when we look at the information and we take out the heavy commercial business and look at just the complementary product sales growth and margin growth within the install segment — again, excluding the heavy commercial business — it continues to improve, and we believe that, you know, we will continue to see good uptake on the complementary product side. As we have talked, you know, several times, the lack of opportunity or the softness in the single-family market really helps drive uptake of the complementary products within the branches.

Because compensation is so closely tied to profitability within the organization, you know, the salespeople, the branch managers, the people that are running our branches are really focused on — more focused on — the complementary product opportunity when the insulation opportunity is a little bit softer, particularly at that production builder level. And within the production builders at the entry level, we do have very good complementary product penetration because of some of those efforts.

Susan Marie Maklari: Okay. That is great color. And then you mentioned that you have recently done some more deals in the mechanical space. Can you talk about your interest there? Where you are in that process? How we should think about what that could mean for the future of the business? And then maybe with that, any comments on your efforts to build out distribution as well? And just where we are there?

Jeffrey W. Edwards: Yeah, Susan. This is Jeff. So we definitely, as Michael said, I guess if you wanted to consider the third leg, we look at the mechanical and industrial as a huge opportunity for us. It is a business. It is extremely fragmented. I would say, on average, the prospective, you know, businesses that we have looked at have been a little larger than, you know, what we see typically in some of our other, you know, kind of regular-way acquisitions. And margins are very favorable in terms of overall for the company. So, you know, at this point, obviously, we think we would love to find a little bigger business and kind of build out a platform.

So we will see what the future brings, but that is definitely something that we are looking at. And on the internal distribution or the distribution side of the business, we have been very pleased with the progress we have made really in the last two quarters within that business. At this point, I would have to probably guess a bit, but I would bet that we are servicing 60% to 70% of our branches at this point from probably about five to six locations. And we have a few more to add. But, otherwise, it has worked exactly as we thought it would, and it has helped our margins.

Michael Thomas Miller: Yeah. It has definitely helped gross margin.

Susan Marie Maklari: Okay. Alright. Great. Well, thank you for the color, and good luck with the quarter.

Michael Thomas Miller: Thanks.

Jeffrey W. Edwards: Thank you.

Operator: Thank you. Next question comes from the line of Adam Baumgarten with Vertical Research Partners. Please go ahead.

Adam Baumgarten: Hey. Good morning, everyone. Just on the — you mentioned some positive mix impacts on gross margin from the better growth in custom and semi-custom and some regional factors like the Midwest. But the strong growth in heavy commercial, did that also contribute to the year gross margin expansion?

Michael Thomas Miller: Yes, absolutely. I think in the, excuse me, in the third quarter call, we sort of called out that we did not expect that much of a tailwind, if you will, from the support of the improvement — profit improvement — within the heavy commercial business. But I guess we were sandbagging a little bit there, quite frankly, because the heavy commercial business did continue its relative outperformance and, you know, we would estimate that the heavy commercial business added about, you know, 40 basis points or so to the gross margin improvement.

Adam Baumgarten: Okay. Got it. Great. That is helpful. And then just digging into the heavy commercial strength, I mean, was it pretty broad-based? Are there certain verticals, like maybe data center, that were, you know, kind of outsized contributors or kind of what you are seeing there maybe by end-market vertical perspective in heavy?

Michael Thomas Miller: Yeah. And so Brad Wheeler, our Chief Operating Officer, is here, and I am going to have him add some color to this as well. But if not data center related, I mean, it is across the board with the big exception of high-rise multifamily. You know, it is a lot of educational. It is health care. It is recreation, transportation. You know? While we do some data center work, we do not chase it like other companies do.

Brad Wheeler: Hi. This is Brad. Yes. We have maintained our core, right? The educational and even some of the office is back, which has helped. Manufacturing has increased, which is great. So it is really us sticking to our core, taking advantage of any data centers that we have in our platform.

Adam Baumgarten: Okay. Great. Thanks. Best of luck.

Operator: Thank you. Next question comes from the line of Michael Rehaut with JPMorgan. Please go ahead.

Michael Rehaut: Hi, good morning. Thanks for taking my questions. I wanted to first kind of go back big picture a little bit with the gross margins. We have had many quarters now where you have really executed very strongly and kind of at or above that 32% to 34% range that you talked about. There has also been, as you have highlighted, you know, good improvement in commercial. You are benefiting from the mix on the semi-custom and the geographic.

And I am just wondering, with all those factors kind of benefiting the margin, if, you know, you have kind of given any thought to, you know, perhaps thinking about gross margins over the next couple of years maybe above that 32% to 34%, particularly given the strength in the fourth quarter?

Michael Thomas Miller: Yes, that is a great question, and I am glad that you asked it. It is our expectation that the gross margins would continue to be — particularly on a full-year basis — in that 32% to 34% range. As we were saying earlier to the answer to another question, I mean, fundamentally, when we look across the business, the only part that we are, you know, we do not have really good visibility into either being flat or up is the production builder/entry-level market. We believe when that market inflects, and it will, we are very well positioned to, you know, participate in that upward inflection.

But it will necessarily, you know, pressure gross margin just because that work is at a much lower gross margin. Now what it does come with is great OpEx leverage. So it will improve — it should improve — OpEx leverage and improve EBITDA margins. So, you know, right now, we are really just working hard to — obviously, the parts of the business that are either flat or up — you know, we are doing everything we can to maximize profitability there. And positioning the business to really, you know, do well once that inflection happens. You know, we really are confident about the team's ability to flex up to meet that demand, you know, when it comes.

And it is way too early, as Jeff said in his prepared remarks. I mean, it is way too early in the selling season to say whether or not we are going to see the inflection this year. But I do think there is some opportunity with the production builders sort of rebuilding inventory, if you will, you know, in the first half of the year.

Michael Rehaut: Okay. No. I appreciate those thoughts. You know, I guess, secondly, you know, I was hoping you could review where you are from a price/cost standpoint in the fourth quarter? And you just had your competitor out earlier this morning talk about anticipated price/cost headwinds for 2026. I was curious on your thoughts of how that dynamic — how you expect that dynamic to play out for you in 2026? And if that might be a headwind as well relative to what you are seeing in your current results.

Michael Thomas Miller: Yeah. I mean, certainly at the entry-level part of the business, there is definitely price/cost pressure. The team is doing an excellent job of, you know, trying to manage through that. You know? But there is definitely going to be pressure there until that entry-level aspect of the market inflects positively. But our team, again, I think they are doing a really good job of trying to manage that, but there is clearly pressure there for sure. You know, and clearly, in the first quarter, we are going to have pressure from, you know, the weather. We estimated that January and February, that the weather impact was about $20,000,000 to revenue in the first quarter.

Now we are working to make that up, and we will work to make that up, but we are not going to be able to make that up in the month of March. It is just not going to happen. So it is definitely — making that up, quote-unquote, is going to, you know, fall into the second quarter. So, yeah, we are going to face pricing pressure with our customers, but I think as a company, we know that we have done an excellent job, and we believe our results reflect our ability to effectively manage that price/cost pressure.

Michael Rehaut: So is it fair to say then, Mike, that you are expecting some pressure to continue, but maybe not incremental relative to what you are seeing already in your 4Q results?

Michael Thomas Miller: Yeah. I think that is reasonable. Although, you know, the first quarter is always our weakest quarter. Right? And given the headwind that we have because of the, you know, the weather impact, you know, obviously, it is going to be tough. But if we think of it — we like to think of it — on a full-year basis as opposed to a quarterly basis, we feel good about, you know, what the team has been able to do.

And if we have a flat to slightly down single-family market, you know, excluding any acquisitions that we do, given the strength that we are seeing in the commercial business and the manufacturing and distribution business, we feel pretty good about the year in general. Right? So, you know, obviously, it is late February. It is hard to call a year at this point, but, you know, there is definitely reason to be pretty encouraged.

Michael Rehaut: Great. Thank you so much.

Michael Thomas Miller: Sure.

Operator: Thank you. Next question comes from the line of Michael Glaser Dahl with RBC Capital Markets. Please go ahead.

Michael Glaser Dahl: Hi. Thanks for taking my question. I want to take that last question and kind of flip it around and ask, in the fourth quarter, did you actually experience some effective price/cost benefits? I know there is a lot moving around in terms of mix — different types of mix — but, you know, it seems like there was some opportunity for buyers such as yourselves to get some lower pricing on resi fiberglass in the fourth quarter, and your reported pricing — again, understanding there is a lot of mix — but it was up.

I am just wondering if there was something like that actually also contributed to the gross margins because the heavy commercial disclosure was helpful, but margins being up 100 basis points year-on-year, even, you know, taking that aside, is pretty impressive.

Michael Thomas Miller: Yeah. I mean, it is predominantly mix-related and the team's ability to manage the cost structure as effectively as possible in the current environment. So, you know, as I think there has been a lot of discussion around, you know, fiberglass pricing, the fiberglass manufacturers, in our opinion — and I will have Jeff or Brad talk a little bit more about this — I think they have done a good job of managing capacity relative to the demand environment, and I think they have done an excellent job of maintaining price.

And, you know, I think it is clear to us that what they are focused on is maintaining price in the current environment so that when there is an upward inflection, they can keep that price as opposed to lowering price now and making it more difficult to get price back when there is an upward inflection. But I do not know if you guys want to add anything to that.

Jeffrey W. Edwards: I did not get rid of what you said. Is accurate. I do not — I would not add anything.

Michael Glaser Dahl: Okay. Got it. Appreciate that. Question, just on the commercial side and heavy commercial, interesting comments on maybe doing some more inorganically now. Just on the organic side, I mean, with this type of strength in branch sales and the backlog that you are seeing, when we think about, like, organic OpEx, or capacity expansions, how are you thinking about that in 2026? Do you really need to start to do more to support the growth that you are seeing in that segment?

Michael Thomas Miller: Yeah. That is a really good question given the growth rates that we are seeing. I mean, we clearly benefit from the highly variable cost structure. But I will ask Brad to give some more commentary on our ability to bring up capacity to support the demand.

Brad Wheeler: Sure. This is Brad again. Yeah. So a lot of it is we expanded our geographic area as well. And part of the organic growth strategy would be we go get jobs in other markets where we generally are not participating. We build a backlog, and then once we have settled, have employees and installers in that area, we are able to go and open an office. And that is sort of how we have our strategy set up right now. In addition, we are looking at other markets throughout the country that we feel would be a good fit to organically grow there as well. And, obviously, of course, acquisitions as well.

Michael Thomas Miller: But our ability to flex — both in the heavy commercial business, the light commercial business, all of the install businesses — our ability to flex up or down is very significant. I mean, you know, obviously, we would not disclose individual branch results, but there are some branches in Texas and Florida that have had, you know, pretty significant sales declines over the course of the year and particularly in the fourth quarter. But they have maintained their margins. And I think that speaks dramatically to the highly variable cost structure of the business and, importantly, the managers' ability to manage effectively. Right?

One of the things that we believe, structurally, we benefit from is the highly variable compensation within the organization and particularly within the branch managers that provides a powerful incentive for them to manage the cost structure — whether that is managing it up or down — based upon, you know, the volumes that they are seeing.

Michael Glaser Dahl: Great. Very helpful. Thank you.

Operator: Thank you. Next question comes from the line of Kenneth Robinson Zener with Seaport Research Partners. Please go ahead.

Kenneth Robinson Zener: Good morning, everybody. Morning, Tim. So, again, perhaps even more pronounced this quarter given your gross margin, the regional — well, production builder versus your other bucket, right? — it has been affecting mix, and you talked about margins, right, with customer mix. I think that is the same thing. Is there a way, since you are disclosing so much, Michael, in terms of gross margin from commercial, 100 up in res, is there a way for you to bucket the growth rates you are seeing in — or the different rate of change within — your production bucket versus your other regional bucket?

Michael Thomas Miller: Yeah. So if we look at it on a full-year basis, we look at, you know, the private, you know, regional builders. Basically, our business with them in the year was flat. If we look at our business with the production builders — and when we say production builders, we mean the public builders, right? Because we can use them and talk about them in a different way because their information is public. Right? So when we are talking about sales with them, we are talking about, again, the public builders, not even a big private builder like David Weekley Homes.

So from the publics' perspective, if we look at their homebuilding revenue, right, for the full year, it declined around 6%. And our revenue with them was down around 6%, which is exactly what you would expect. But that, again, was more than offset with the positive — you know, flat to positive — growth that we had with the private builders. So we feel that we are doing exactly what we are supposed to be doing. We are maintaining share with the publics, the production builders, you know, and working closely with them to not just maintain share, but maintain price and maintain profitability.

And to be there to be able to support them when there is the inflection, but at the same time leaning in and focusing very hard on our, you know, geographic weightings and our, you know, customers that are either growing or at flat. So the team is doing an excellent job of identifying where the opportunity is and working hard to maximize the benefits with that.

Kenneth Robinson Zener: Really appreciated those comments. Now in regards to weather, which is not something that historically, I think, is such a big deal, the seasonality 1Q from April — it has been kind of all over the place. But if it is historically down, you know, call it mid-single digits, it sounds like you are expecting worse seasonality just because of the weather patterns we have had. Is that correct?

Michael Thomas Miller: Correct.

Kenneth Robinson Zener: Thank you very much.

Michael Thomas Miller: Alright.

Operator: Thank you. Next question comes from the line of Keith Hughes with Truist Securities. Please go ahead.

Keith Hughes: Thank you. A question about multifamily. I have seen the government data too. It shows a rebound. Profound rebound in multifamily. Are we actually seeing that kind of boots on the ground? Is it that good, or is it more just a bottoming going on?

Michael Thomas Miller: Yeah, Keith. That is a great question, and I am really glad you brought it up because we wanted to talk about it. So we believe — based on, at a macro level, the information from the Census Bureau that was delayed a little bit but that recently came out — that multifamily cycle times have basically normalized to kind of pre-COVID, pre-supply-side disruptions. You know? And that was really driven by the fact that for the full year, multifamily starts were up, you know, like, 18%, and units under construction were down 13%. So we believe that the multifamily market is coming into, if you will, equilibrium.

There will still be some headwinds, I think, in the first half of — I do not think; I know — in the first half of this year. Our team has done — you know, as much as we sing the praises of the heavy commercial business, the reality is the multifamily team across the country, and particularly CQ, we call out all the time, have done an incredible job of, you know, just outperforming dramatically the market opportunity that exists there. We have a lot of confidence in their ability to continue to do that. I mean, their backlogs are growing, and they are doing a great job of increasing the complementary product penetration within multifamily.

So, yeah, I mean, based on the starts for 2025 coming into 2026 and recognizing that the cycle time in multifamily is much longer than it is for single-family, you know, we think that bodes well for, you know, full-year 2026 on the multifamily side, especially given the easy comps that all of us in the industry are going to be facing as it relates to multifamily. I would say too, just because we are talking about cycle times, on the single-family side, you know, cycle times are probably the best they have ever been. And I think, you know, a lot of the big production builders have talked about how efficient their cycle times are currently.

And, again, building on some of the comments that we made earlier, when we, again, look at the business, the only part of the business that we are not, you know, really confident in is the, you know, single-family production builder business. Because those cycle times are so tight at the entry level, as soon as there is an inflection, you know, the inflection to our install time is going to be very short. So we are going to feel it very quickly, and we will, you know, scale up for it very quickly. Unlike multifamily. Right?

Because the bid and, you know, book time on a project to when we actually do the install can be twelve to eighteen months. Right? So, yeah, this single-family inflection on the entry-level production builder side, you know, can be pretty meaningful — will be meaningful — when it happens. We just do not know when it is going to happen.

Keith Hughes: Okay. Great. It is a very complete answer. Thank you.

Michael Thomas Miller: Sure.

Operator: Next question comes from the line of Collin Andrew Verron with Deutsche Bank. Please go ahead.

Collin Andrew Verron: Good morning. Thanks for taking my questions. Was just hoping you can talk about Installed Building Products, Inc. single-family same-branch sales growth relative to the national market in the fourth quarter and just how and why that might have changed from sort of how Installed Building Products, Inc. performed versus the market in 2Q and 3Q?

Michael Thomas Miller: Well, we continue to perform sort of above the market opportunity, I would say. And, I mean, clearly — and we have talked about this for the past several quarters — we clearly benefit from our regional weighting, you know, towards the, you know, the Midwest and the Northeast. I mean, when we look at our single-family revenue and we look at our market share by Census region, our largest, highest market share is clearly in the Midwest. And, as I think, you know, pretty much everybody knows, the Midwest has been doing fairly well on a relative basis to the rest of the country. So, you know, we feel good about the mix that we have.

As I think we have said a couple of times, I mean, we are positioned very well with the production builders/entry-level builders once the inflection is there. But until that happens, you know, we are continuing to lean in on our, you know, private semi-custom/custom builders and to kind of work with the inherent advantages we have from our regional diversification.

Collin Andrew Verron: Great. That is helpful color. And then just really quickly on the commercial performance, you characterized the backlog as healthy, but I am just curious if there are any more finer points you can put on sort of what you are seeing in the backlog as you are in the early parts of 2026 here and how much visibility that really gives you.

Michael Thomas Miller: It is very healthy. So we feel very good about the — I mean, right now it is just, it is working incredibly well. And to be honest with you, since Brad's here, you know, the team deserves a tremendous amount of the credit, but the leadership that Brad has brought to that team has been phenomenal. Absolutely. And they have really stepped up. I mean, it is just — it is so impressive how well they have stepped up. It is just, you know, it really, it makes us feel very proud.

Collin Andrew Verron: Thank you, and good luck.

Jeffrey W. Edwards: Thanks.

Michael Thomas Miller: Thank you.

Operator: Thank you. A reminder to all the participants that you may press star and one to ask a question. Ladies and gentlemen, we have reached the end of question-and-answer session. I would now like to turn the floor over to Jeffrey W. Edwards for closing comments.

Jeffrey W. Edwards: Thank you for your questions, and I look forward to our next quarterly call. Thank you.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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