Installed Building Products - Q3 2020
November 5, 2020
Transcript
Operator (participant)
Thank you for standing by. This is the conference operator. Welcome to the Installed Building Products Fiscal 2020 Third Quarter Financial Results Conference Call. As a reminder, all participants are in listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press 1 followed by 4 on your telephone keypad. Should you need assistance during the conference call, you may signal an operator by pressing star and zero. I would now like to turn the conference over to Jason Niswonger, Senior Vice President, Finance and Investor Relations. Please go ahead.
Jason Niswonger (Chief Administrative and Sustainability Officer)
Good morning, and welcome to Installed Building Products' Q3 2020 conference call. Earlier today, we issued a press release on our financial results for the Q3, which can be found in the Investor Relations section on our website. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements within the meaning of the federal securities laws.
These forward-looking statements include statements with respect to the housing market and the commercial market, industry conditions, our financial and business model, our efforts to manage material inflation, our ability to increase selling prices, the demand for our services and product offerings, the impact the COVID-19 crisis will have on our business and end markets, expansion of our national footprint, products and end markets, our expectations for our end markets, including our large commercial business and multifamily, our ability to strengthen our market position, our ability to pursue and integrate value-enhancing acquisitions, our diversification efforts, our growth rates, and ability to improve sales and profitability, the impact of the COVID-19 crisis on our financial results, and expectations for demand for our services and our earnings in 2020 and 2021.
Forward-looking statements may generally be identified by the use of words such as anticipate, believe, expect, intend, plan, and will, or in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Any forward-looking statement made by management during this call is not a guarantee of future performance, and actual results may differ materially from those expressed in or suggested by the forward-looking statements as a result of various significant factors, including, without limitation, the duration, effect, and severity of the COVID-19 crisis, the adverse impact of the COVID-19 crisis on our business and financial results, the economy, and the markets we serve.
General economic and industry conditions, the material price environment, the timing of increases in our selling prices, and the factors discussed in the Risk Factors section of the company's annual report on Form 10-K for the year ended December 31, 2019, as the same may be updated from time to time in subsequent filings with the Securities and Exchange Commission. Any forward-looking statement made by management on this call speaks only as of the date hereof. New risks and uncertainties come up from time to time and is impossible for the company to predict these events or their effect. The company has no obligation and does not intend to update any forward-looking statements after the date hereof, except as required by federal securities laws.
In addition, management uses certain non-GAAP performance measures on this call, such as Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted Net Income per Diluted Share, Adjusted Gross Profit, Adjusted Gross Profit Margin, and Adjusted Selling and Administrative Expense. You can find a reconciliation of such measures to their nearest GAAP equivalent in the company's earnings release and additional reconciliation for Adjusted EBITDA for earlier fiscal years in our investor presentation, which are available on our website. This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer, and Michael Miller, our Chief Financial Officer. I will now turn the call over to Jeff.
Jeffrey W. Edwards (President, CEO, and Chairman)
Thanks, Jason, and good morning to everyone joining us on today's call. As usual, I will start the call with some highlights on the quarter and then turn the call over to Michael Miller, IBP's CFO, who will discuss our results and capital position in more detail before we take your questions. 2020 is shaping up to be a record year, reflecting the success of our business model, the positive fundamentals underway across many of our end markets, and the dedication, hard work, and resiliency of our employees. IBP's strong operating and financial performance is encouraging, given the unprecedented economic and social effects the COVID-19 pandemic has caused throughout 2020. I'm also excited by the long-term opportunities within our residential and commercial markets as a result of our ongoing geographic, end market, and end product diversification strategies.
As an organization, we remain focused on supporting our employees, customers, and suppliers across the country while ensuring our business is well-positioned to withstand the impacts of the COVID-19 crisis, as well as other natural disasters and business disruptions that occur from time to time. Across our national footprint, our branches continue to follow federal, state, and local requirements in response to COVID-19, and I am pleased to report all IBP branches remained open during the quarter. In addition, the two hurricanes that made landfall in our Gulf Coast markets during the Q3 did not have a noticeable impact on our sales and profitability. Overall, our record third-quarter financial results continue to highlight the strength of our business plan, the power of our financial model, and our core operating values focused on supporting our employees and customers.
I'll use my time today to review these items and why we believe IBP is extremely well-positioned for the current market environment, as well as the long-term opportunities we have to create sustained growth and value for our shareholders. Revenues during the Q3 were up over 6% and year to date are up over 9%. When I look back at our business over a long period, I am encouraged that our 2020 Q3 revenue is higher than what our full-year revenue was prior to our 2014 IPO. We believe this success is a direct result of our focus on strong U.S. housing markets, our sales of complementary building products, and our greater presence and participation within the multifamily and large commercial construction end markets.
IBP's current geographic footprint continues to provide us access to nearly 70% of total residential permits, compared to approximately 50% six years ago. During the quarter, single-family completions in the U.S. increased 2.6%. Analyzing the market data and our results, we believe the lag between starts and completions has increased as a result of the COVID-19 pandemic, due in part to labor and material shortages impacting other construction trades within the industry, and a delay in home building returning to full production following the COVID disruptions earlier this year. We believe these timing factors have impacted the comparability of our sales to the rate of completions in just one quarter. Typically, we see our largest volume of insulation installation during the third and fourth quarters of the year.
In the 2020 Q3, we benefited from a higher mix of complementary product sales, which are typically installed later in the production cycle than insulation, further indicating a longer production cycle and the conversion of industry backlog to completions. While we anticipate a return to normalcy in the coming quarters, the increased lag between starts and completions and the dramatically increased order volumes from our builder customers will have a more meaningful impact on our business in 2021. During the quarter, multifamily growth remained strong and helped drive a 1.6% increase in same branch residential sales during the Q3. Given the timing of completions and when we perform our install work, we believe it is useful to analyze our performance over multiple quarters.
Looking over the nine-month period ended September 30, 2020, residential same branch sales have grown 4.4% compared to an increase in total completions of 2.2%. The higher mix of complementary building products, combined with a higher mix of multifamily sales, also impacted both price mix and gross margin during the quarter compared to the 2020 Q2. However, on a year-over-year basis, the benefits of our pricing strategies, combined with higher total sales volume, helped drive a 160 basis point increase in our Adjusted Gross Profit Margin. Recently, a material price increase, effective January 2021, was announced for our fiberglass insulation materials. This increase is in line with our expectations for an increase early in 2021.
With our availability of labor and our strong position with our customers and suppliers, we believe we are all well positioned to navigate the inflationary environment next year. We believe single-family industry dynamics remain strong and support the continued demand for our services. According to the U.S. Census Bureau, single-family starts in September were up over 20%, and single-family homes under construction increased to the highest level since December 2007. We also believe we are well positioned for continued multifamily growth as a result of our suburban market focus and the success of our expanded multifamily sales strategy. As you can see, our residential markets have quickly rebounded from the COVID-19 pandemic, and market trends remain favorable. As we highlighted in last quarter's call, COVID-related safety protocols on large commercial construction sites continue to affect our operations.
This has slowed the timing of our work and disrupted schedules as we adhere to requirements of managing the number of trades on the job site each day. While we expect to see this continue into the foreseeable future, we are encouraged by the relative strength in the end market. Our commercial backlog at September 30th was up 5% compared to the prior year, and our total pipeline and bid activity within the large commercial market has remained stable over the past 3 months. Based on the long lead time nature of our projects, we believe this will benefit our large commercial end markets in the second half of 2021. We believe our solid pipeline and growing presence within the large commercial end market will help us navigate any near-term softness.
Long-term fundamentals are expected to remain intact, and diversifying our end market exposure continues to be an important component of our growth strategy. In addition, we are opportunistically pursuing additional commercial acquisitions opportunities that increase our scale and competitiveness. After briefly pausing our acquisition closings at the early stages of the COVID-19 crisis, our acquisition strategy has started to accelerate. In August, we acquired Storm Master Gutters, a New Jersey-based provider of gutter installation and repair services to residential and multifamily customers, with annual revenue of approximately $20 million. We also acquired the North Charleston, South Carolina, and Pooler, Georgia, branches from Energy One America in August. These branches provide spray foam, fiberglass, and air barrier installation services to residential, multifamily, and commercial customers, with combined annual revenue of approximately $22 million. So far in the Q4, we have made two additional acquisitions, both in the Pacific Northwest.
They include a provider of insulation, waterproofing, and firestopping installation services to commercial and multifamily customers, with annual revenue of approximately $26 million, and an installer of specialty coatings for fire protection, insulation, and acoustics in commercial and industrial applications, with annual revenue of approximately $10 million. To date, we have acquired 8 installers with approximately $94 million of revenue, compared to 6 installers with approximately $36 million of revenue at this time last year. As you can see, 2020 is shaping up to be another strong year of acquisition growth. Our acquisition pipeline remains robust, and we continue to actively pursue acquisitions of well-run residential, multifamily, and commercial installers that support our geographic product and end market, market diversification strategies. Before I turn the call over to Michael, I want to highlight the record profits we are achieving.
Record quarterly sales, strong gross margin, and controlled operating expenses continue to produce record profits. Our same branch incremental Adjusted EBITDA margin was over 100% for the second consecutive quarter and helped drive an 18% increase in Q3 Adjusted EBITDA. In addition, our trailing twelve-month Adjusted EBITDA margin has expanded to 14.5% from 12.6% for the same period last year, a result of lapping the impact of the material inflation environment in 2018 and our subsequent pricing strategies. To conclude my prepared remarks, I'm extremely pleased with how our team has responded to the unique challenges that have occurred throughout the year.
Our continued success reflects the power of our business model, the experience of our management team, the long-standing customer relationships we have developed, and the strength of our balance sheet and operating cash flow. We believe that we will achieve record results in 2020, and given current market trends, 2021 is expected to be another strong year for IBP. As always, I'd like to thank our installers, who are hard at work every day representing IBP and serving our customers. On behalf of the entire leadership team, we recognize your efforts, and I want to personally thank you for your dedication. With this overview, I'd like to turn the call over to Michael to provide more details on our Q3 results.
Michael T. Miller (EVP, CFO, and Director)
Thank you, Jeff, and good morning, everyone. Net sales for the Q3 increased to a quarterly record of $420.5 million, compared to $396.4 million for the same period last year. The 6.1% year-over-year improvement in sales was mainly driven by a slight increase in price mix, growth in our multifamily end market, growth in other complementary products, and the contribution from our recent acquisitions. On a same branch basis, net revenue improved 1.7% from the prior year quarter. Multifamily sales increased 36.6%, contributing to a 6.2% increase in total residential sales during the Q3. Sales at our large commercial construction business increased 2%, and total commercial sales increased 2.7% in the Q3.
It is important to note that sales from our large commercial construction business are not included in the volume and price mix metrics we disclose. Profitability remained very strong during the quarter. Adjusted Gross Profit Margin was 31.4% for the 2020 Q3. The 160 basis point increase over the prior year period primarily reflects the volume benefits of our product diversification strategies and insulation pricing strategies. Administrative expenses as a percent of Q3 sales were 13.9%, consistent with the prior year period. Adjusted SG&A as a percent of Q3 sales improved 20 basis points from the prior year period and improved 90 basis points from the 2020 Q2. The improvements in SG&A are primarily due to higher sales, leveraging costs, and the benefits of gross profit improvement over the prior year quarter.
On a GAAP basis, our Q3 net income increased 32.4% from the prior year quarter to a record $28.1 million, or $0.95 per Diluted Share. Our Adjusted Net Income improved 20.9% to $35.9 million, or $1.21 per Diluted Share, compared to $29.7 million, or $0.99 per Diluted Share in the prior year quarter. During the 2020 Q3, we recorded $7 million of amortization expense, compared to $6.2 million for the same period last year as a result of our acquisition strategy. This non-cash adjustment impacts net income, which is why we continue to believe that Adjusted EBITDA is the most useful measure of profitability.
Based on our acquisitions completed to date, we expect Q4 of 2020 amortization expense of approximately $6.8 million and full year expense of approximately $27.2 million. This figure will, of course, change with any subsequent acquisitions. For the Q3 of 2020, our effective tax rate was approximately 25.8%, and we continue to expect a full year effective tax rate of 25%-27% for 2020. Adjusted EBITDA for the Q3 of 2020 improved to a record $66.2 million, representing an increase of 18.4% from $55.9 million in the prior year. Same branch incremental Adjusted EBITDA margins were 120.3% for the Q3 as a result of our higher sales and operating leverage.
Adjusted EBITDA as a percent of net revenue increased 160 basis points from the prior year period to 15.7%. Now, let's look at our liquidity, balance sheet, and capital requirements in more detail. Our business model continues to generate strong operating cash flows. For the nine months ended September 30, 2020, we have generated $143.3 million in cash flow from operations, compared to $106.5 million in the prior year period, an increase of 35%. Operating cash flow during the three months ended September 30, 2020, included a one-time $17.8 million charge to terminate certain interest rate swaps associated with our debt. This change will result in lower cash interest expense in future quarters.
Our asset-light business model does not require a significant amount of capital expenditures, and our primary capital requirement is to fund working capital needs. At September 30, 2020, we had $144.5 million in working capital, excluding $268.7 million of cash and short-term investments. Capital expenditures at September 30, 2020, were $25.5 million, while total incurred finance leases were $0.9 million.
Capital expenditures and finance capital leases as a percent of revenue were 2.2% at September 30, 2020, compared to 3.6% at September 30, 2019. At September 30, 2020, we had total cash and short-term investments of $268.7 million, compared to $215.9 million at December 31, 2019. Total debt at September 30, 2020 was $573.4 million, compared to $575.5 million at December 31, 2019. Considering cash and short-term investments at September 30, 2020, our net total debt was approximately $305 million, compared to $360 million at December 31, 2019.
We currently have approximately $45 million of remaining availability under our stock repurchase program. In response to the pandemic, we suspended the program, and we did not make any repurchases in the second or Q3 this year. Given the current state of our business and our markets, our program is no longer suspended, effective November 9, 2020. The funding of acquisitions continues to be the priority for our capital allocation, and we will pursue share repurchases opportunistically. We believe we have considerable financial flexibility as we have nothing drawn on our $200 million revolving line of credit, strong cash position, staggered debt maturities, and limited financial covenants. In addition, with no significant debt maturities until 2025 and strong liquidity, we have considerable financial resources to withstand the economic impacts of the COVID-19 crisis, while still investing in our long-term growth opportunities.
With that, I will now turn the call back to Jeff for closing remarks.
Jeffrey W. Edwards (President, CEO, and Chairman)
Thanks, Michael. I'd like to conclude our prepared remarks by once again thanking IBP employees for their hard work, dedication, and commitment to our company during this very challenging period. Our success over the years, and more recently, wouldn't be possible if it wasn't for you, and our thanks goes out to you for a tough job always done well. Operator, let's open up the call for questions.
Operator (participant)
Thank you. If you would like to register a question, please press the one followed by the four on your telephone. You will hear a 3-tone prompt to acknowledge your request. If your question has been answered and you would like to withdraw your registration, please press one three. One moment, please, for the first question. Once again, to queue up for a question, you may press one four on your telephone keypad. Our first question comes from the line of Adam Baumgarten with Credit Suisse. Please go ahead.
Maurice Klajman (Director of Corporate Equity Derivatives Trader)
Hi, this is actually Maurice for Adam. Thank you for taking our question.
Jeffrey W. Edwards (President, CEO, and Chairman)
Sure. Good morning.
Michael T. Miller (EVP, CFO, and Director)
Morning.
Maurice Klajman (Director of Corporate Equity Derivatives Trader)
Good morning. Your acquisition pace has picked up nicely, after the shutdown, and I'm just wondering if you've seen any change in the multiples, or in valuation levels, especially in the commercial space?
Jeffrey W. Edwards (President, CEO, and Chairman)
Hi, this is Jeff Edwards. No, not particularly, really. I mean, in the pace is as much as the pace pickup, I guess, is as much, you know, a function of us actually kind of parking those deals for a period of time as it is, you know, kind of with us, you know, moving towards a different cadence per se. You know, I think we're kind of on the same path we usually are in that way. Haven't really seen much of a difference, frankly, in the multiples or really in even the deal flow. And on the commercial side of things, it's -- they're not markedly different than the deals that we've looked at on the resi side.
Maybe potentially a little more attractive from a pricing and multiple perspective, but not particularly so.
Maurice Klajman (Director of Corporate Equity Derivatives Trader)
All right. Thank you. Also in the past, you mentioned that you expected the September insulation price increase realization to be higher than the historical realization, closer to 75%. I was just wondering if that turned out to be the case, and what's the implication for next year's price increase?
Michael T. Miller (EVP, CFO, and Director)
So I mean, I think the September, you know, I think the statement that was made probably maybe by us and even by others, was the idea that the September increase might be pretty sticky and, you know, hard, I guess, in that regard. And I think no one would say, or everybody would say that that's still likely and probably the case. So that relates to the September increase. And as you obviously know, I would think there's a January price increase out there at this point. You know, I'll let Jeff speak to both the January increase, if you'd like, and/or... Okay, sorry. So I'll speak to it. You know, we'll, I guess we'll see how that shakes out, obviously, but it's certainly a tight material market.
Owens Corning, and from a supplier perspective, is in a much better position in terms of their ability to bring on extra, extra supply. You know, that doesn't change the fact that it's a good housing market. You know, things are a little tighter than they really appear to be from a material supply perspective right now, because a lot of the tightness right now, although obviously the home building pipeline and the backlog looks good, but more importantly, back in, you know, kind of beginning of COVID, early March, late spring, most of the manufacturers actually curtailed pretty hard, even and ran down inventories, and it takes a while for them to both bring that capacity back up and to build inventory.
So a lot of the capacity constraints right now, it's not a capacity constraint, it's just a current supply issue, is something that gets worked on and solved over the next, in the first and Q2 of next year. And we're just, I think, fortunate as a company because we do buy from all four manufacturers and are really, in some cases, more, much more heavily even indexed in, and very good partners with Owens Corning, and they happen to be the ones that have probably the most supply to bring back on. Not probably, they do. So we'll see. That's a long-winded answer, both on the price increase in January, but also kind of on the current condition, as it relates to material supply.
Maurice Klajman (Director of Corporate Equity Derivatives Trader)
Okay, thank you very much.
Jeffrey W. Edwards (President, CEO, and Chairman)
Sure.
Operator (participant)
Our next question comes from the line of Ken Zener with KeyBanc Capital Markets. Please go ahead.
Kenneth Zener (Managing Director)
Good morning, everybody.
Jeffrey W. Edwards (President, CEO, and Chairman)
Morning, Ken.
Michael T. Miller (EVP, CFO, and Director)
Good morning.
Kenneth Zener (Managing Director)
I have a few questions here. Very strong operating leverage, so that's very good. And given your talk around price increases, tight supply, not an issue necessarily, but your EBIT leverage was very strong, but you actually had all the gain, really in the gross margin, not the SG&A piece. So can you talk to the drivers of gross margin benefit? Obviously, I think part of it, you know, there's price going through. But inflation price really wasn't up a whole bunch. I don't know. Was it in your...? You know, it doesn't look like price was up a lot in your revenue.
So, I mean, I know what gutter costs were lower, for example, in this quarter, but can you really walk us through what those drivers were for such a strong organic, EBIT growth related to the gross margin expansion?
Jeffrey W. Edwards (President, CEO, and Chairman)
Well, just to be clear, in the quarter, Ken, we did see some G&A leverage of about 20 basis points in the quarter. And in fact, G&A-
Kenneth Zener (Managing Director)
Right
Jeffrey W. Edwards (President, CEO, and Chairman)
... was actually lower in the Q3 from the Q2. So we feel good about, you know, kind of how we're managing the kind of G&A side of the house, if you will. But to your point, absolutely, gross margin expansion has been, you know, we've been very pleased with that over the course of this year. As we talked both in the Q1 and the Q2, that really, the pricing actions that we took in 2019 fully lapped themselves through into the Q2, which is why, and I think we were very careful about explaining this, that why we felt that, you know, price mix was going to flatten out, in the quarter because we have lapped those price increases. Now, that's, that's as of September, right?
And, you know, we talked in the first question about what's going on from a pricing dynamic and the demand dynamic as it relates to 2021, so that's different. But, you know, I think it's very consistent, and we spoke quite a bit on the Q2 call about price mix being in that mid-single digits for a full year basis. You know, right now, year-to-date, price mix is about 5.5%. So we see the, the year and the quarter unfolding, exactly as we discussed with people.
Kenneth Zener (Managing Director)
Good. Because, you know, I wanna make sure. I think the biggest issue for you all versus some competitors is, like, you've been able to grow. It's really that focus on incremental EBIT. And given price increases that you're talking about into 2020. And I realize you explained stuff very well into 2020. What are you thinking about your pricing inputs versus what you're gonna ask for your customers in FY 2021? If we are seeing, you're right, this 8%, and if usually half of that comes through, maybe it's a little more, maybe it's a little less. But how are we gonna avoid the margin degradation that we saw in 2019, you know, back in 2018, 2019, where you actually took a while to recover that price?
Because, Jeff, as you said, you know, you wanted a good relationship with your customers. It happened so quick. It was really a step function as the industry capacity, you know, was put on allocation, certainly on loose fill. How are you gonna perhaps approach the price increases we're seeing in FY 2021 differently than what unfolded in FY 2019, so we avoid margin degradation? And Michael, so you can say you have, you know, that incremental EBIT in that 20, you know, mid-20 range, which is kind of your long-term target.
Michael T. Miller (EVP, CFO, and Director)
What's gonna be different this time, is what I'm asking?
Jeffrey W. Edwards (President, CEO, and Chairman)
So, I mean, I'll still stand by the strategy. So having said that, you know, that wasn't a fun period of time for us based on kind of how others thought we handled it. But at the end of the day, we ended up gaining, you know, or growing sales and gaining share faster than others, and ultimately got back to the same place in March. Now, having said that, obviously, after having taken some heat over that strategy, we will-
Michael T. Miller (EVP, CFO, and Director)
Right
Jeffrey W. Edwards (President, CEO, and Chairman)
... change that to a degree and not end up, work hard not to end up in a position where there is that degradation and yet still end up in the same place. Now, making that a bit easier thus far is that the announced price increases and the magnitude of the two that are out there right now are substantially less on a combined basis than what was announced in the previous. And to your point, to the extent that, not all of those increases are realized, it's not an unfair ask at all of us from our customers to kind of stay on top of that, so.
Because of the timing going into January, we're already on top of, you know, the one that came out in September, gave us the lag time to get to our builder, or gave us time to get to our builder and warn them. So although, they were supposed to be on a cadence, or it was likely and had even been voiced maybe, that they were gonna be more like spring fall, that makes more sense.... for the builders markets, and so the January was a little bit, off kilter with that, the January increase that is. I still think, though, certainly that it's, it's, it's no more than a two-price increase, year, you know, after this. And again, hopefully, the sizes are more reasonable.
I think, I think we, you know, we'll be able to stay on top of that.
Michael T. Miller (EVP, CFO, and Director)
I think as well, I mean, the environment right now is completely different than the environment in-
Jeffrey W. Edwards (President, CEO, and Chairman)
Absolutely.
Michael T. Miller (EVP, CFO, and Director)
Late 2018, early 2019, right? I mean, we were jammed with price increases, you know, repeated after another, did not have the same kind of timeframe to implement selling price increases that we would normally have, and we have in the current environment. And more importantly, right, I mean, new home sales year to date are up 17%. They were up 30% in September. The demand environment that's in front of us coming into 2021 is, I mean, as we've all seen and heard, is, you know, it's a great opportunity.
As a consequence, you know, working with our builders, it's a lot easier when they have—they're worried about getting houses completed and done at a much more accelerated pace, to go, to go work with them to, you know, to, to cover any increased costs we might have.
Kenneth Zener (Managing Director)
Right. Right. Now, the other side of this, since we're focused on the resi side, is the commercial experience, degradation of margins you had in almost at the exact same time as you organically opened up new branches, loaded on fixed costs and did not have the sales realization. It certainly seems like you're focused on the Northwest this quarter, in, you know, commercial areas, which we outlined recently in a report. But what is your strategy? I know you had conversations with the board about, you know, how aggressive that organic growth was. What is your comfort looking into 2021, that your acquisitions and/or organic growth in commercial are not going to contribute to a margin degradation as well? Thank you very much.
Michael T. Miller (EVP, CFO, and Director)
Well, you know, there's no doubt that we're, you know, cautious about the short term impacts or, you know, the short-term nature of the commercial business. And Jeff spoke to that in his comments in terms of, you know, the new COVID protocols, extending construction times. You know, fortunately, we're still seeing, you know, very steady volume of bidding in that business. You know, as Jeff said in his prepared remarks, you know, we think that that benefits the first half of 2021. But, you know, again, it's the heavy construction business is about 10% of our overall business.
You know, while we might see a slowing in growth, or, you know, even some declines in that business, we think that it's going to be more than offset by the very constructive backdrop in one, single-family, and two, on multifamily for us, which has really been an outperformer. I mean, our, you know, organic sales growth in, multifamily in the Q3 was almost 35%. You know, year to date is at 37%. So, you know, we feel that the benefits that we're continuing to see in the residential markets will offset any temporary, softness in the commercial side. But long term, which is why we're continuing to do acquisitions in the space, long term, we feel, confident about the long-term strategy associated with, continuing to diversify our end markets towards commercial.
Kenneth Zener (Managing Director)
Thank you.
Michael T. Miller (EVP, CFO, and Director)
Yep.
Operator (participant)
Our next question comes from the line of Trey Grooms with Stephens. Please go ahead.
Trey Grooms (Managing Director)
Hey, good morning. Thanks for taking my question.
Michael T. Miller (EVP, CFO, and Director)
Good morning.
Trey Grooms (Managing Director)
So just so we have a little bit more, I guess, guidance, I don't want to say guidance. But a little bit more educated on how, you know, the flow-through really works. You know, I mean, with the strength that we've seen in starts and, you know, of course, the orders, the backlogs are all outstanding on the residential side, single-family. I guess multifamily, you guys are seeing strength there. But you know, your single-family down in the quarter volume and understanding the lag and all of that, but to help us understand, when would that inflect, in your opinion? Because it's clear the demand is there.
Michael T. Miller (EVP, CFO, and Director)
Yeah, you're absolutely right, the demand is there. But the delta right now between, new home sales and starts is, you know, incredible, in terms of, you know, homes not getting started that have been sold. For example, as I said before, you know, new home sales year to date are up 17%. And in September, homes that were sold but not started were up 49% from the prior year, which is just a staggering number, quite frankly, right? So we have a tremendous amount of, you know, pent-up, if you will, demand that builders are working hard to address. But the reality is, is that the whole construction industry can't size up by 30% to meet that demand.
So we believe what's going to happen is you're going to have an elongated cycle through 2021, 2022, working through all this demand. You know, we definitely think that the, the seasonality that the business has normally experienced might be muted a little bit in 2021 because of this. And you know, we think that it really sets up 2021 for the whole industry to be very, very constructive. But it is—there's no doubt, there is extended lag times. And when you think about, you know, building products, you know, most building products are installed in a house after it's been framed and after it's been closed up... and until those houses are done, we can't install any of our products.
You know, we also can't control the flow of the houses being completed and ready for us to do the work. As we've said numerous times, it's not a question of if we're gonna do that work, it's just a question of when.
Trey Grooms (Managing Director)
Yeah. Okay. I mean, that, that all makes sense. To me, it's just the, you know, these extended construction times that you're talking about, you know, and, and also, you know, there's, there's labor constraints, there's, you know, as you mentioned, some, some products, including insulation, are tight right now. So I guess, you know, 2021 obviously is a good demand backdrop, and, and you mentioned being constructive. But with all of these limitations, how are you thinking about, you know, just based on, based on the starts growth, the order growth, backlog, et cetera, is, is it... You know, looking into 2021, not necessarily volume for you guys, but just the, the overall industry, is it, is it unreasonable to think that it could grow, you know, mid-singles?
Could it handle that, or is that, is that too low? I mean-
Michael T. Miller (EVP, CFO, and Director)
Yeah.
Jeffrey W. Edwards (President, CEO, and Chairman)
Easily.
Michael T. Miller (EVP, CFO, and Director)
Yeah.
Jeffrey W. Edwards (President, CEO, and Chairman)
Easily.
Michael T. Miller (EVP, CFO, and Director)
It's definitely mid-singles, for sure.
Jeffrey W. Edwards (President, CEO, and Chairman)
I think it's probably higher than that.
Michael T. Miller (EVP, CFO, and Director)
Yeah, I think it could get to high single digits.
Jeffrey W. Edwards (President, CEO, and Chairman)
Yeah, absolutely. Maybe 10%.
Michael T. Miller (EVP, CFO, and Director)
Yeah, for sure.
Trey Grooms (Managing Director)
All right, good.
Michael T. Miller (EVP, CFO, and Director)
I mean, I think, and the important aspect to that is, particularly if you look at just the insulation side, and I can't speak as closely to, you know, windows and doors and some of the other products, that have been having supply issue as well. But as Jeff mentioned in the answer to the first question, you know, clearly, what's, you know, within insulation right now, it's the fact that they, you know, in essence, stopped producing during COVID, and they're trying to rebuild their inventories, right? With OC's announced, additional capacity coming online in the Q2, which is very significant, large baseline coming online. And then with the announced capacity additions from both, JM and Knauf, I mean, they're really...
You know, we feel confident that, you know, while, yes, you know, it's gonna take more time to manage, and we're gonna have to put more resources in terms of managing material and moving it through the system as effectively as possible. We feel very confident that we're gonna be able to support our customers very effectively with the growth that comes our way. The thing that mitigates it or that impacts the timing are all the trades that come before us.
Right. Right. And that is a question that we get sometimes and, you know, about your ability to scale, you know, given that there is some tightness in labor, in some labor trades and things like that. But it's good to hear that, you know, at least in, as far as the labor that you guys would be targeting, it doesn't sound like you're gonna you expect any trouble there in your ability to scale with the demand next year.
No, we have the ability to flex.
Jeffrey W. Edwards (President, CEO, and Chairman)
I mean, it really comes down, not to dwell on it, but it comes down to how long it takes us to train one of our installers to be proficient versus how long it takes a, you know, a carpenter or a mason to really become proficient, because it, it's a different timeframe, much different.
Michael T. Miller (EVP, CFO, and Director)
Ours is much shorter, yeah.
Trey Grooms (Managing Director)
Okay, that makes sense. And then last one for me is, good to see you guys are kind of, you know, getting back into the M&A game. But as we're looking at the, kind of the pipeline there, I know you touched briefly on, didn't sound like valuations were changing much or anything like that. But as we look at M&A, and we look at the pipeline, is there much of a difference that you see right now, or an appetite or, you know, anything that really is different between maybe a going towards a residential-type acquisition or more towards commercial? Is there anything right now that is changing that dynamic?
Jeffrey W. Edwards (President, CEO, and Chairman)
No, I don't really think so. You know, I mentioned earlier that most of these were queued up, you know, prior to March even. So, I mean, I guess one could say that, you know, we're still making sure we cross our T's and dot our I's as it relates to the commercial side of things as others have asked. But other than that, you know, making sure that the backlogs still look good for the businesses that we're buying and during markets and providing services that we think are still both, even in the short term and in the long term, are gonna look, you know, good for us. So I guess that'd be the only change, per se.
Trey Grooms (Managing Director)
Okay. That's all for me. Thanks a lot, and good luck.
Jeffrey W. Edwards (President, CEO, and Chairman)
Thanks.
Michael T. Miller (EVP, CFO, and Director)
Thank you.
Operator (participant)
Our next question comes from the line of Stephen Kim with Evercore ISI. Please go ahead.
Stephen Kim (Senior Managing Director)
Yeah, thanks very much, guys. Yeah, so so far today, you've talked about a number of things, all suggesting that, you know, there's gonna be lags that we should be anticipating over the next few quarters. I think you talked about—in the past, you talked about feathering in, you know, price increases. Today, you're talking about lengthening cycle times at the builders. You're talking about material lead times extending from the insulation manufacturers. I think you suggested that might lag into last into 2Q next year, and then also a greater lag because of your increased complementary products that you talked about. So I'm just sort of stepping back from it all.
Despite these factors, which are, you know, sort of, you know, in general, gonna be creating a bit of a lag or a delay, is there any reason, are there any factors offsetting that that might help us think that from a, let's say, pricing perspective, you could realize maybe pricing action somewhat more quickly, this time than maybe in the past? Is there anything, is there anything basically that would be helping you to realize pricing maybe a little quicker this time?
Michael T. Miller (EVP, CFO, and Director)
Yeah, I think there's two fundamental things. One is that we've been given more time from announcement to implementation of those price increases. And second, I think most importantly, is the very strong underlying strength of particularly the single-family housing market and the builders' need to get the houses completed, particularly when you look at the, as we've talked about numerous times, the low dollar value of the products that we install. You know, insulation being around 2% of the cost of construction, but yet being an extremely critical step to getting the house moving forward, passing an inspection, and getting the house done.
We believe that working with the right customers that understand the value of the service that we bring to them and helping them keep the cadence or even start improving the cadence of getting the house completed allows us to work with the customers that are willing to pay us a fair price for the services that we provide.
Jeffrey W. Edwards (President, CEO, and Chairman)
And three, the size of the increases, which I mentioned ear-
Michael T. Miller (EVP, CFO, and Director)
Yeah
Jeffrey W. Edwards (President, CEO, and Chairman)
Earlier, being smaller than what was announced the last time. I guess four would be the rigor at which we will make sure we're out there getting it, because we don't really want to go through the criticism again, frankly.
Stephen Kim (Senior Managing Director)
Okay. Well, I think at the end of the day, you weathered those criticisms just fine. But okay, then we'll take the fourth one, too.
Jeffrey W. Edwards (President, CEO, and Chairman)
Yeah, I still stick with the strategy, but because of our outside sales growth compared to, you know, others, let's say, and ultimately still getting back where we need, getting the margin back where it needed to be. But-
Michael T. Miller (EVP, CFO, and Director)
Yep.
Jeffrey W. Edwards (President, CEO, and Chairman)
We don't want to take a long time to make that happen this time.
Stephen Kim (Senior Managing Director)
Okay, great. Good to hear. One thing that hasn't been mentioned yet was weather. Weather last year, last winter, was pretty mild, and it helped you somewhat offset the normal seasonality of the industry in general, the construction industry, last winter. But obviously, you know, this year you've got this massive surge in orders and all that. So I just want to make sure, is it reasonable to think that the growth that we're seeing in the order growth, orders and the sales activity today is going to kind of overwhelm the difficult comp, if you will, from mild weather last winter?
Michael T. Miller (EVP, CFO, and Director)
Yeah. I mean, I think particularly, you know, you are seeing, you know, a lot, obviously, a lot of that good order growth is coming from the South and the West, which tend to be markets that are not as weather impacted as, kind of the Northeast and the Midwest. So as a consequence, I think you could make that, and this is not necessarily as it relates to IBP, but I think the industry as a whole, because obviously the weather affects the whole industry. But I think you could definitely make an argument that, the benefits that we may have seen from, you know, good weather last winter, could be certainly overtaken by the, strength that we're seeing in, you know, new home sales and starts, you know, coming into the winter months.
Jeffrey W. Edwards (President, CEO, and Chairman)
Well, in every-
Michael T. Miller (EVP, CFO, and Director)
Yeah
Jeffrey W. Edwards (President, CEO, and Chairman)
Every quarter that goes by, almost, we are less indexed towards the Northeast and the Midwest than we are in the West and the South. That's just the Sun Belt and the single-family growth inside of IBP's business.
Michael T. Miller (EVP, CFO, and Director)
Yep.
Stephen Kim (Senior Managing Director)
Got it. That's great. Thanks a lot, guys. Best of luck.
Michael T. Miller (EVP, CFO, and Director)
Sure. Thank you.
Operator (participant)
Our next question comes from the line of Seldon Clarke with Deutsche Bank. Please go ahead.
Seldon Clarke (Research Analyst)
Hey, good morning. Thanks, operator. I just want to make sure I understand the relationship here between, you know, starts and volumes and completions. So you started the quarter with same branch sales up 6% in July. You know, completions seemed to accelerate throughout the quarter, but obviously your sales growth rate decelerated. So, I know you talked about, you know, post-completion complementary products driving some of that delta, but could you just give us a sense how underlying insulation maybe trended in the quarter? And would the same dynamic imply that your 4Q same branch sales rate would then exceed completions data, or is there something I'm missing there?
Michael T. Miller (EVP, CFO, and Director)
Well, we like to, and as Jeff mentioned in his prepared remarks, I mean, we think it makes more sense to not necessarily look at an individual quarter, but to look at, you know, it over a longer period. And he highlighted the fact that our, you know, residential same branch sales growth was, for the year to date, was 4.4%, whereas total completions growth was only 2.2%. Now, that was definitely benefited from our multifamily same branch sales growth, which, you know, as I mentioned earlier, has been, you know, really rock solid, quite frankly.
But, you know, in terms of the, the lag time that's been created, I mean, it is, without a doubt, as I was saying earlier, you know, that 49% increase in, you know, homes sold that haven't been started yet is, you know, quite significant. So, from our perspective, you know, we want—we look at those metrics more on an annual basis, if you will, than a quarter-to-quarter basis. And we think that that makes sense because the reality is whether you lag starts, and particularly lagging starts 90 days right now, I think, you know, it is not a right metric just given this increased lag time that we have. But even completions isn't a perfect metric for us.
So what we like to look at it is in the context of, you know, kind of on a full year basis, but also more importantly, what are we doing from a margin perspective? You know, how are we servicing our customers? And, you know, the overall growth that we're seeing in the business.
Seldon Clarke (Research Analyst)
Okay, so, so you wouldn't read into that being. Doesn't feel like there's any underlying shift in terms of, of market share within insulation that would be concerning. And then, I guess just, like, based on that, it, it sounds like, you know, if you're lagging through, you know, nine months of the year, or, you know, let's just call it one quarter, you would expect some makeup in the next quarter.
Michael T. Miller (EVP, CFO, and Director)
It's really gonna depend upon, you know, kind of where the, you know, the builders getting the houses ready for us to do our work, and that's gonna be kind of market by market. So, I'm trying really hard to not give guidance, so, sorry about that. But,
Seldon Clarke (Research Analyst)
No.
Michael T. Miller (EVP, CFO, and Director)
You know, it really does depend upon the cadence that we're, you know, we're getting the homes ready for us to do our work. And, you know, as we said from the previous question, there's definitely, you know, given the dynamic that's going on in the market right now, it appears that we're gonna have a much smoother seasonal year than typical in 2021.
Seldon Clarke (Research Analyst)
Okay. And then, I guess the—what about the question on just insulation market share? Or, you know, without giving, like, it's not necessarily a guidance question, but, did that-
Michael T. Miller (EVP, CFO, and Director)
So-
Seldon Clarke (Research Analyst)
track more closely in line with how you would've expected it?
Michael T. Miller (EVP, CFO, and Director)
Yes.
Seldon Clarke (Research Analyst)
Okay. All right. I appreciate the time. Thanks, guys.
Michael T. Miller (EVP, CFO, and Director)
Sure.
Operator (participant)
Our next question comes from the line of Justin Speer with Zelman & Associates. Please go ahead.
Justin Speer (Managing Director)
Hi, good morning, guys. Just wanted to follow up on Seldon's question, if I could. Is there any chance that you could break out the single-family growth trends through the Q3 into October?
Michael T. Miller (EVP, CFO, and Director)
You mean, like, each month in the quarter, and then if not?
Justin Speer (Managing Director)
Yeah, just trying to get a sense for, like, the nature of, you know, seeing pressure there was, I think, a little bit of a surprise. And just trying to understand if that's just how the nature of the timing of maybe this improvement that we're all looking for. And I guess the bigger question, I know you touched on it, just the growth potential and the industry growth potential, given some of the broader supplier constraints. I guess folks are just trying to get a sense for what the market will allow as we look into Q4 into next year.
Michael T. Miller (EVP, CFO, and Director)
Yeah, I would say that, you know, as it relates to the Q3, you know, our single-family same branch growth of, you know, less than 3% or -3%, is very consistent with what we talked about in the Q2, that, you know, starts were down 17% in the Q2, and that we thought that there would be somewhat of a soft patch that would be offset by growth, particularly in multifamily, which is why same branch sales grew almost 2% during the quarter. As it relates to the Q4 and volumes going forward, again, I think it really comes down to how quickly can builders get to us, the houses, you know, ready for us to start doing our install work.
And, you know, we know that volume is coming, and, you know, we're preparing for that volume, but we can't control the other trades that come before us. And as Jeff mentioned earlier, in terms of the framers and the masons, I mean, it takes them more time to size up than us. The ability for the industry to flex up is that it's not at all constrained by our ability to flex up as a company. We've proven that time and time again. It's really the other trades that come before us that are the governor on our ability to get after that demand, if you will. As Jeff said earlier to one of the other questions, I mean, you know, can we see the industry, quote, unquote, you know, "size up," you know, high single, maybe even 10%?
You know, we think that that's possible, given kind of where we are right now. You know, we're not coming off the same low basis that we were coming off of in, you know, say, 2010 and 2011. But, you know, we definitely think that that's possible, but it's gonna take time, and it doesn't happen overnight. To a large extent, the order growth that we've seen, this really surprising order growth that we've seen, has almost happened overnight, right? You know, the whole industry is recovering, and I'm not talking about just the insulation industry, I mean, the construction industry is recovering from kind of almost near shutdowns, particularly from a supply perspective, in March and April, then trying to size back up and kind of restart the engine.
I mean, there are plenty of builders that have that are having problems just getting permits so that they can start construction. So it really is, you know, this disruption that was caused by COVID, and again, I talked about the 17% decline in starts in the Q2, you know, combined with everybody trying to size back up again and get products to get that done from manufacturers that had drawn down or brought down inventories because they had, you know, stopped manufacturing. So it's definitely sort of an unprecedented situation that we're in, and I think everybody's working hard to try and meet the demand, but it's gonna take time. But we do think it sets up 2021 to be, you know, a very solid year.
Jeffrey W. Edwards (President, CEO, and Chairman)
Well, I guess, and to maybe say something a little differently, but I mean, we, we don't see and have not experienced anything that makes us think that this kind of flat spot slowdown is any different than what we said it was gonna be. And all we were doing was lining up with where the builders said their sales, you know, fell off the, you know, the face of the earth. I mean, that started in the second or third week of March, and it lasted till whenever that was. I can't remember when they crawled back and kind of got even with prior year, but I'm gonna say it was July or something like that.
So I don't, we don't see any reason why the, you know, the paths that we've talked about looks any different than really that, that path in terms of orders, which then carries through to when they can get home started and when it can...
kind of what we predicted coming into the third and Q4 anyway. Doesn't appear to be anything.
Justin Speer (Managing Director)
That makes sense. Yeah, that makes a lot of sense. I guess the other side of this is, you know, in that kind of environment where maybe you can see the trade ramp up to get to high single, low double as an industry in the coming quarters, you know, you have a legacy of share gains through stacking on other products and services and taking share within the core insulation side of the ledger as well. Is that-- do you think that the nature of those share gains should continue along the lines of the historical trends? Or is there anything that maybe changes that dynamic as you look at price and cost in your margin profile going forward?
Michael T. Miller (EVP, CFO, and Director)
No, we are gonna continue to, you know, execute on the strategy that we've been working on, and we think that it'll continue to pay off in terms of, you know, greater penetration of the other product sales.
Jeffrey W. Edwards (President, CEO, and Chairman)
Yep, so no change. We feel good about it.
Justin Speer (Managing Director)
Excellent. And then one other question I had on the, on the top line, on the multifamily side, just incredible growth there. Just any commentary you can give us there in terms of visibility and maybe backlog in your low-rise multifamily business, how that's shaping up on a year-over-year basis?
Michael T. Miller (EVP, CFO, and Director)
Yeah, the backlog in that business is up about 22% at the end of the quarter. So we continue to feel very good about the penetration there. Obviously, we're getting tougher and tougher comps in that business, right, given the growth that we've seen. So, you know, the year-to-date 37% same branch sales growth that we've seen, you know, that's really hard to replicate, right? When you're, you know, comping this real good strength. But we feel very good about our ability to continue to, you know, kind of broaden our geographical reach with the multifamily business.
Justin Speer (Managing Director)
Then on the, on the cost side of the ledger, just any, any one-time tailwinds from less, you know, travel, entertainment costs, anything like that, that you're seeing, as a year-to-date and maybe a year-over-year benefit, into the Q3 that maybe don't repeat as we look ahead?
Michael T. Miller (EVP, CFO, and Director)
Yeah, that's, that's a great question. As it relates from the sort of the Q2 to the, to the Q3, I mean, the two things that we kind of talked about in the Q2 were fuel and travel and entertainment that were obviously, impacted by, you know, COVID. Really coming from the Q2 to the Q3, you know, there was really no benefit there. But if you look at the Q3 of 2019 versus the Q3 of 2020, there was definitely a benefit of a little over $1.1 million from both of those. About 70% of that was from fuel, and about 30-35% of that was from travel and entertainment.
You know, we hope we want to spend more money on travel and entertainment because it means that we can go to conferences, our team can do regional meetings, and we think it means a lot for the economy completely opening. We will be happy to start spending that money again, you know, when we can.
Justin Speer (Managing Director)
Makes sense. I guess, big picture, just kind of holistically, and there's a lot of moving parts here, a lot of complexity in general, in this landscape. But based on the backlogs that you have, including on the non-res side, given the extended lead times, given the, you know, you know, moving parts with costs and supplier pricing, I guess, do you think that you can achieve, and you're also comping against, you know, just incredible incremental margins this year. Do you think you can achieve the kind of that normalized incremental margin profile that you target, that range that you target as you look into next year? You think that's possible, or you think maybe, maybe that's governed a little bit by these moving, moving pieces?
Michael T. Miller (EVP, CFO, and Director)
No, we feel on a full year basis, we feel, and again, I'll say full year basis, you know, we feel very confident about the 20%-25% incremental margins that we've talked about as it relates to 2021. And, you know, if the year plays out as I think we're all talking about here, and we do see, you know, a very constructive volume environment throughout the full year of 2021, that helps us definitely feel more confident about that 20%-25% incremental margin range.
Justin Speer (Managing Director)
Perfect.
Jeffrey W. Edwards (President, CEO, and Chairman)
And I know-
Justin Speer (Managing Director)
Thank you very much, guys.
Jeffrey W. Edwards (President, CEO, and Chairman)
Yeah, and this is Jeff, real quick, just tagging on. But, you know, I know that the constraints have been kind of played up a bit on, in some of the questions and on this call as being a negative, but quite frankly, you know, we think it sets us up for a longer period of time on a playing field that's really great for us to, you know, kind of run our strategy. So we're happy that there's these kind of backlogs, that we can't work through it at more than maybe as much as 10% per year. It just, for us, provides a backdrop for us, you know, for our strategy to really succeed, I think.
Michael T. Miller (EVP, CFO, and Director)
Yeah.
Jeffrey W. Edwards (President, CEO, and Chairman)
Longer.
Michael T. Miller (EVP, CFO, and Director)
Definitely.
Justin Speer (Managing Director)
Excellent. Well, I appreciate it, guys, and I'll, I'll talk to you on the other side.
Michael T. Miller (EVP, CFO, and Director)
Thanks.
Jeffrey W. Edwards (President, CEO, and Chairman)
Thank you.
Operator (participant)
Next question comes from the line of Josh Large with Truist Securities. Please go ahead.
Joshua Large (SVP of Wholesale Liquidity Product)
Hi, this is Josh Large from Truist Securities. Just one quick question on the kind of monthly progression you saw and what you're seeing in October?
Michael T. Miller (EVP, CFO, and Director)
Sure. I mean, you know, you know, we have, you know, it's been asked of companies to provide, just given the COVID environment, more data than they normally would about kind of trends going forward. You know, so we're We're probably not going to continue to do this forever, but we'll definitely, you know, for October, I would say that, you know, sales were up about 7% on a days-adjusted basis. It's important to look at it on a days-adjusted basis because last October was a 23 selling day month, whereas this October is a 22 selling day month. At the same branch basis, you know, sales were up slightly, again, on a days-adjusted basis.
But, you know, we feel that, you know, October, certainly September, October, really played out exactly as we talked about, in, you know, partially in the Q1, but predominantly in the Q2, about, you know, the, you know, the softness that was coming, so to speak. Although I think the softness is much less than what anybody had anticipated, given the, you know, unprecedented decline in starts in the Q2. So again, as we've talked a lot on this call, we feel very good about, you know, looking forward to 2021 and the demand environment, that's there. And, you know, perhaps the, you know, a diminishment of the seasonality in the business, you know, as we're going forward.
Joshua Large (SVP of Wholesale Liquidity Product)
Okay. And then just last one on the commercial side, you guys had good growth when it's kind of been a market hit more so by the pandemic. Could you just kind of provide some details on what you were seeing, maybe in terms of light commercial, heavy commercial? Were there any kind of outliers that grew or didn't grow that drove the results?
Michael T. Miller (EVP, CFO, and Director)
Yeah, our light commercial business grew a little bit better than our heavy commercial business. As Jeff said in his prepared remarks, our total commercial business was up 2.7%. The heavy commercial business was up only 2%. You know, we definitely think there is again, we're more cautious about that part of our business, you know, particularly the heavy commercial business, but it is only 10% of our overall revenue. We think long term, you know, that business is very solid. You know, we've talked about this on numerous calls, given our low market share, the markets that we're in, the investments that we made in opening up additional locations that are starting to come online, and do more work. The bidding volume in that business has been pretty steady.
You know, we think that there's been a little bit of a slowdown in finalizing bids and projects, given just some of the uncertainty surrounding COVID. And certainly, I think there's been a little bit of uncertainty, and there is still today around the election. So I think those things have just, you know, compounded, if you will, to create a more difficult environment there. But we feel, you know, really constructive, quite frankly, about our ability to manage through that, given what we're seeing. And quite frankly, we had a very difficult comp. We talked about this in the Q2, that coming into the Q3, we had a very difficult comp in that business, because that business really had a very strong Q3 last year.
Joshua Large (SVP of Wholesale Liquidity Product)
Okay, great. That's all for me. Thank you.
Michael T. Miller (EVP, CFO, and Director)
Sure.
Operator (participant)
Our next question comes from the line of Philip Ng with Jefferies. Please go ahead.
Philip Ng (Managing Director)
Hey, good morning, everyone. Both you and your competitor have talked about counterseasonal trends. You know, will that allow you to kind of play a little more catch up in closing this gap between, you know, starts and completions versus historical levels? And then can you give us a little more color? I know I'm not trying to pin you to the number. You talked about potentially being able to ramp up to, like, maybe high single digit growth in 2021. You know, help us understand, you know, potentially the opportunity to kind of scale up. Would it be more back half loaded or you can get there perhaps even a little earlier?
Michael T. Miller (EVP, CFO, and Director)
Yeah, I think so, the latter part of your question, really what we're, you know, talking about scaling up or sizing up, you know, whether it's 10% or high single digits, we're thinking of that more as the industry, you know, the construction industry. And it was more in that context necessarily than providing any guidance relative to-
Philip Ng (Managing Director)
Sure.
Michael T. Miller (EVP, CFO, and Director)
What we expect sales to be in 2021.
Jeffrey W. Edwards (President, CEO, and Chairman)
Though we have been able to grow faster than ultimately we say the rest of the industry is able to grow.
Michael T. Miller (EVP, CFO, and Director)
Absolutely. And I think the, the ability to shrink, the window from starts to completions, again, is not an IBP issue, because we can, as we've demonstrated before, we can flex up to do that. It's really an industry issue. It's getting the houses, closed up, ready for us to install. And I think to, to the point of your question, though, if we do have, less seasonality and it's a, you know, more of a, a flat situation rather than a typical seasonality or a typical seasonal situation over the winter, I think you're absolutely right. That definitely has the ability to shrink, the delta between, you know, starts and completions, which would be, I think, very constructive for the whole industry, right? Because it keeps people employed.
You don't have to flex your, your labor force, and it also gives the manufacturers a better ability to maintain manufacturing, as opposed to a more consistent manufacturing, as opposed to having to, you know, deal with the typical seasonality of the business. So again, you know, we can't predict the weather, we can't, you know, predict the future, but it does set up, we believe, the whole industry for a really constructive 2021.
Jeffrey W. Edwards (President, CEO, and Chairman)
Your question one absolutely influences question two.
Michael T. Miller (EVP, CFO, and Director)
Yep.
Jeffrey W. Edwards (President, CEO, and Chairman)
To not be crude, it's just, it's a matter of the pig in the python. When the pig went into the python, and this year it was, it was three months later than it would be normally. I mean, you're right in the middle of your spring selling season. It was interrupted and truncated.
Michael T. Miller (EVP, CFO, and Director)
Yep.
Jeffrey W. Edwards (President, CEO, and Chairman)
It was made up for roughly, let's say, in a gradual comeback, but three months out of sequence.
Michael T. Miller (EVP, CFO, and Director)
Yep.
Jeffrey W. Edwards (President, CEO, and Chairman)
which means that houses, and then there's a little bit of stutter steps in restarting the machine, and when I say machine, I mean the entire industry. So that starts to impact kind of, you know, when we'll be in the house-
Michael T. Miller (EVP, CFO, and Director)
Yep.
Jeffrey W. Edwards (President, CEO, and Chairman)
How long it takes to get a house under construction, and then it just feeds, it's gonna feed into a different type of, type of, you know, season to be where there's more work than you can kind of shake a stick at, right?
Michael T. Miller (EVP, CFO, and Director)
Yep.
Philip Ng (Managing Director)
Great color and, nice problem to have. Thanks a lot, guys.
Operator (participant)
Next question comes from the line of Susan Maklari with Goldman Sachs. Please go ahead.
Susan Maklari (Senior Equity Research Analyst)
Thank you. Good morning, everyone.
Michael T. Miller (EVP, CFO, and Director)
Morning, Sue.
Jeffrey W. Edwards (President, CEO, and Chairman)
Morning.
Susan Maklari (Senior Equity Research Analyst)
My first question is, you know, you've mentioned in your comments that you saw some nice growth in the complementary products this quarter. Can you talk a little bit about that, and maybe how we should be thinking about it on a going-forward basis, especially maybe with the lags that you are seeing?
Michael T. Miller (EVP, CFO, and Director)
You know, we've talked a lot about the, you know, the other product growth, and as we've mentioned in the Q2 as well, that, you know, we saw higher growth in insulation than we did in the other products. But that did flip in the Q3. The nice thing that we're seeing, that we're really encouraged by in the other products, is not just the higher, you know, slightly higher growth, but that we're actually even seeing better margin growth in the other products than we are in insulation, the insulation products. So that's... While they're still, you know, as you know, because we've talked a lot about this, their margin profile is lower than insulation. We're seeing, as we're gaining more scale on those products, better improvement in margins.
So, you know, we feel very good about continuing to perform on that strategy. It definitely, we think will benefit us, particularly in this environment or backdrop where we're seeing high levels of volume, and builders want to streamline the number of installers that they're using, especially for these nuisance products. So, you know, it's a strategy that we've been pursuing for a very long time, and we feel confident that it continues to be the right strategy.
Susan Maklari (Senior Equity Research Analyst)
Okay, great. Thank you. Then my last question is just, you know, you mentioned that the suspension that you'd had around buybacks is no longer in effect, that you guys can kind of go out there and start to repurchase stock. Can you talk about your appetite to do that and, you know, any color there?
Michael T. Miller (EVP, CFO, and Director)
Yeah. As we mentioned in the prepared remarks, I mean, we'll be opportunistic about it. But, you know, our number one capital priority continues to be M&A, and we're gonna continue to focus on that, particularly geographic expansion, you know, with insulation, residential insulation deals, given the backdrop that's there. So, really not a change, but we thought it was important to, you know, let the market know that we have, you know, that if there's an opportunity, we will, you know, look at share repurchases.
Susan Maklari (Senior Equity Research Analyst)
Okay, great. Thank you, guys. Good luck.
Michael T. Miller (EVP, CFO, and Director)
Thanks.
Operator (participant)
Next question comes from the line of Ryan Gilbert, BTIG. Please go ahead.
Ryan Gilbert (Managing Director and Housing & Real Estate Services Analyst)
Hi, thanks, guys. Just, I guess, expanding on the complementary product question. It sounded like it was a bit of a headwind or a contributor to price mix flattening out in the Q3. And I'm just wondering if, you know, we should kind of, you know, be thinking about that expanded mix of other complementary products, you know, maybe limiting some of the price mix growth that we've seen in prior years as we look out, you know, to the Q4 in 2021. Is that the right way to think about it?
Michael T. Miller (EVP, CFO, and Director)
Yes, and we've talked a lot about that. I think the one thing that will kind of be a tailwind, if you will, though, to price mix, is what we expect to be a you know, rising price environment on the insulation front. So, again, you know, on a full year basis, we've been consistently, you know, year-over-year, been sort of in a mid-single digits on price mix. We talked about that in the Q2. You know, on a year-to-date basis, that's exactly where we are on price mix. So, you know, there's definitely the headwind provided by the growth in other products because of their lower price points. But we do feel pretty constructive around you know, the pricing environment for insulation as we go into the full year of 2021.
Ryan Gilbert (Managing Director and Housing & Real Estate Services Analyst)
Okay, great. Thanks. That's all I had. Thanks very much.
Michael T. Miller (EVP, CFO, and Director)
Sure.
Jeffrey W. Edwards (President, CEO, and Chairman)
Thank you. Thank you.
Operator (participant)
We have no further questions on the phone line. I'll turn the call over back to you, sir.
Jeffrey W. Edwards (President, CEO, and Chairman)
Thank you for your questions, and I look forward to our next quarterly call. Thanks.
Michael T. Miller (EVP, CFO, and Director)
Thank you.
Operator (participant)
That concludes today's call. We thank you for your participation and ask you to please disconnect your lines.