Installed Building Products, Inc. Q4 FY2025 earnings call

• Closed 2025 with strong fourth quarter, record sales and profitability for the year. • Core residential markets faced headwinds due to housing affordability, but commercial end markets performed well. • Generated strong operating cash flow, used for growth-oriented capital allocation. • Completed 11 acquisitions in 2025, representing over $64M annual revenue, and 4 acquisitions in Q4 2025. • Expect first quarter and full year 2026 amortization expense of approx $10M and $38M respectively. • Board authorized new $500M stock buyback program effective through March 1st, 2027. • Declared first quarter dividend of 39 cents per share and $1.80 per share annual variable dividend.

Consolidated sales in 2025 increased 1%, same branch sales declined 1%. Residential installation segment sales down 4% same branch in 2025, commercial up 10% same branch. Fourth quarter consolidated net revenue roughly flat at $748M vs $750M prior year. Installation segment same brand sales down 2% in Q4, 23% increase in commercial same brand sales offset 9% decline in new residential same brand sales. Fourth quarter adjusted gross margin 35%, up from 33.6% prior year. Adjusted EBITDA in Q4 2025 record $142M, adjusted net income $88M or $3.24 per diluted share.

• Expect first quarter and full year 2026 amortization expense of approximately $10 million and $38 million, respectively. • Expect effective tax rate of 25% to 27% for full year ending December 31, 2026. • Estimate first quarter interest expense will be approximately $11 million. • Board authorized new $500 million stock buyback program effective through March 1st, 2027. • Declared first quarter dividend of 39 cents per share and $1.80 per share annual variable dividend.

Q: Congrats on strong quarter, confidence in protecting margins?

A: Michael discussed that commercial and manufacturing/distribution segments performing well, core residential installation business has regional and customer mix factors, entry-level production builder segment has pressure but team managing.

Q: Commercial business growth, investment and M&A?

A: Jeff and Michael said interested in commercial roofing and mechanical/industrial installation, core residential insulation installation still big opportunity.

Q: M&A landscape, targeting companies?

A: Jeff said interested in commercial roofing and mechanical/industrial installation, core residential insulation installation still big opportunity.

Q: Shift in customer mix in installation segment and impact on gross margin?

A: Michael explained that better sales rates with semi-custom, custom, builder and weaker with production/entry-level builder improves gross margin, Midwest region with higher gross margin.

Q: Heavy commercial strengths, verticals?

A: Brad said heavy commercial strength across educational, healthcare, recreation, transportation etc., not data center related.

Q: Price-cost in fourth quarter and 2026?

A: Michael said entry level part has price-cost pressure, team managing, first quarter weather impact on revenue, expect pressure to continue but team able to manage.

Q: Effective price cost benefits in fourth quarter?

A: Michael said predominantly mix-related and team managing cost structure.

Q: Organic OpEx for commercial growth?

A: Brad said organic growth strategy includes expanding geographic area, building backlog and opening offices, highly variable cost structure.

Q: Multifamily performance and visibility?

A: Michael said multifamily market coming into equilibrium, team doing well, cycle times for single family better than multifamily.

Q: Single-family branch sales growth vs national market?

A: Michael said continue to perform above market opportunity due to regional weighting.

Q: Commercial backlog visibility?

A: Jeff and Brad said backlog very healthy, team doing well.