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Installed Building Products, Inc. (IBP)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $684.8M modestly beat Wall Street consensus (+$6.8M, +1.0%), but EPS and EBITDA fell short; GAAP EPS $1.64 vs $2.20 consensus, Adjusted EPS $2.08 vs $2.20, EBITDA $96.7M vs $107.6M* .
  • Margins compressed on higher vehicle insurance, depreciation, administrative wages and facility costs; gross margin 32.7% (-110 bps YoY), Adjusted EBITDA margin 15.0% (-190 bps YoY) .
  • Management reiterated M&A focus (target ≥$100M acquired revenue in 2025) and announced $0.37 Q2 dividend; returned $91.1M to shareholders in Q1 via repurchases and dividends .
  • Heavy commercial strength (up >14%) and data center wins offset weakness in light commercial and housing-affordability headwinds; SG&A optimization underway with targeted ≥$15M savings beginning Q3 .

What Went Well and What Went Wrong

What Went Well

  • Heavy commercial momentum: “That business was up over 14% in the quarter…very strong, solid backlogs and bidding…wins in the rapidly growing data center construction industry” .
  • Cash generation: Operating cash flow rose 9% YoY to $92.1M on working-capital management; leverage remains low at 1.17x net debt/TTM Adjusted EBITDA .
  • Capital returns and disciplined sourcing: $34.3M repurchases, $56.8M dividends; >90% domestic sourcing limits tariff disruption (estimated $10–$20M impact ≈1% of cost of sales) .

What Went Wrong

  • Margin pressure: Gross margin fell to 32.7% (-110 bps YoY) from higher fleet insurance/depreciation and mix (spray foam/distribution); Adjusted EBITDA margin down to 15.0% .
  • Volume headwinds and weather: Same-branch sales -4.2%; one less selling day ($10–$12M lost revenue) and severe weather ($10–$20M), with recovery spread across Q2–Q3 .
  • Light commercial weakness persists; management expects it to remain the weakest end market through 2025 despite heavy commercial strength .

Financial Results

Consolidated Performance vs Prior Year and Prior Quarter

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$760.6 $750.2 $684.8
GAAP Diluted EPS ($)$2.44 $2.39 $1.64
Adjusted Diluted EPS ($)$2.85 $2.88 $2.08
Gross Margin (%)33.8% 33.6% 32.7%
Adjusted EBITDA ($USD Millions)$132.3 $132.0 $102.4
Adjusted EBITDA Margin (%)17.4% 17.6% 15.0%

Results vs Wall Street Consensus (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 Actual
Revenue ($USD Millions)$678.0*$684.8
Primary EPS ($)$2.20*$2.08 (Adjusted EPS)
EBITDA ($USD Millions)$107.6*$96.0 (EBITDA) / $102.4 (Adj. EBITDA)

Values marked with * retrieved from S&P Global.

Notes:

  • Revenue beat consensus by ~$6.8M; EPS missed by ~$0.12 and EBITDA by ~$5–$11M depending on GAAP vs adjusted comparisons* .
  • S&P “actual” EBITDA reflects GAAP EBITDA; company also reports Adjusted EBITDA. Estimate comparisons are anchored to S&P Global data per instruction*.

Segment and End-Market Breakdown

MetricQ3 2024Q4 2024Q1 2025
Installation Revenue ($MM)$713.7 $695.0 $647.2
Other Revenue, net of eliminations ($MM)$46.9 $55.2 $37.6
Residential New Construction ($MM, % of Inst.)$548.8 (72%) $533.3 (71%) $494.4 (72%)
Repair & Remodel ($MM, % of Inst.)$44.9 (6%) $46.5 (6%) $42.4 (6%)
Commercial ($MM, % of Inst.)$120.0 (16%) $115.2 (16%) $110.4 (17%)

KPIs and Cash/Returns

KPIQ3 2024Q4 2024Q1 2025
Same-Branch Sales Growth (Consolidated, %)+5.2% +1.1% -4.2%
Price/Mix (Installation, %)+2.7% +1.2% +1.5%
Volume (Installation, %)+2.6% -0.8% -5.6%
Operating Cash Flow ($MM)n/an/a$92.1
Cash & Equivalents ($MM)$406.2 $327.6 $298.7
Share Repurchases100k; $20.7M 383k; $79.0M 200k; $34.3M
Net Debt / TTM Adj. EBITDA (x)n/an/a1.17x
Dividends per Share$0.35 (Q3 reg.) $0.35 (Q4 reg.) $2.07 declared (Q1 reg.+variable)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Amortization expenseQ2 2025n/a≈$10M New
Amortization expenseFY 2025n/a≈$40M New
Effective tax rateFY 2025n/a25–27% New/Framework
Regular quarterly dividendQ2 2025Q2 2024: $0.35 $0.37 (↑6% YoY) Raised vs prior year
M&A targetFY 2025≥$100M acquired revenue (Q4 2024 stated) ≥$100M acquired revenue Maintained
SG&A optimizationFY 2025n/a≥$15M targeted reductions, impact starting Q3 New
Tariff cost impactFY 2025n/aEst. $10–$20M (≈1% of cost of sales); plan to pass through where possible New
Dividend actions (paid)Q1 2025n/a$0.37 regular + $1.70 variable (paid Mar 31) Executed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
Housing affordability & demandLong-term demand favorable; internal distribution start-up costs and insurance pressures noted Affordability challenges and slower spring; expects demand tied to macro; long-term view intact More cautious near-term; long-term unchanged
Tariffs/macro cost environmentNo tariff specifics in prior releasesTariff impact estimated $10–$20M; >90% domestic sourcing; plan pass-through; market benign on materials New explicit risk; manageable
Heavy vs light commercialGrowth across end markets; commercial up (Q3) Heavy commercial up >14%; light commercial down >10%; heavy likely to surpass light by year-end Mix shifting toward heavy
Spray foam pricingHeadwind noted in prior commentary Stabilizing and rising; headwind less than prior quarter; expected neutral to margin in H2 Improving
SG&A and cost actionsHigher SG&A% in Q3/Q4; distribution start-up costs ≥$15M SG&A reductions targeted with Q3 impact; optimize G&A even if volumes improve Proactive cost control
Regional single-family trendsBroad strength with production builders earlier in cycle Florida weak; Texas, West Coast, NE/Midwest solid; publics now -3% vs prior +3% signal Mixed; tilt away from Florida
M&A pipelineExpect deals; added >$100M annual revenue in 2024 Expect ≥$100M acquired revenue; closed Volunteer ($~6M) and Pro Foamers ($4M) Continuing

Management Commentary

  • “IBP delivered solid first quarter financial results…our core homebuilding customers continued to navigate industry-wide housing affordability challenges and a slower-than-expected spring selling season…long-term opportunities…remain attractive.” — Jeff Edwards, CEO .
  • “We achieved a 1.5% increase in price/mix…offset by a 5.6% decrease in job volumes…Adjusted gross margin of 32.7%…headwind related to higher vehicle insurance and depreciation expense.” — Michael Miller, CFO .
  • “We estimate that the impact of the tariffs could be anywhere between $10 million to $20 million…about 1% of cost of sales for us.” — Michael Miller, CFO .
  • “We’ve targeted at least $15 million of cost reduction…we believe we’ll start feeling the impact of in the third quarter.” — Michael Miller, CFO .
  • “Heavy commercial…was up over 14% in the quarter…we’re continuing to see very strong, solid backlogs…and wins in…data center construction.” — Michael Miller, CFO .

Q&A Highlights

  • Single-family cadence and weather: One less selling day ($10–$12M) and severe weather ($10–$20M) with recovery across Q2–Q3; regional performance mixed (Florida weak; Texas/West Coast/NE/Midwest solid) .
  • Multifamily management via CQ: Units under construction down ~20% YoY; CQ manages ~45% of multifamily revenues and maintains solid backlog; headwinds likely persist through 2025 .
  • Cost structure and decrementals: ~10% fixed costs, ~15% lagging variable; headwind to decrementals as volumes decline; SG&A targeted reductions in motion .
  • Materials pricing: Benign environment; manufacturers curtail production as needed; spray foam pricing stabilizing; tariffs ~1% cost-of-sales impact, plan to pass through .
  • Free cash flow/working capital: Strong FCF in down-volume environments as balance sheet shrinks; inventory up largely due to internal distribution build-out .

Estimates Context

  • Revenue beat: Actual $684.8M vs consensus $678.0M (+1.0%)* .
  • EPS miss: Adjusted EPS $2.08 vs consensus $2.20 (-$0.12)*; GAAP EPS $1.64 .
  • EBITDA miss: Actual $96.7M vs consensus $107.6M*; company’s Adjusted EBITDA $102.4M .
  • Consensus target price stood at $246 and recommendation not provided in the dataset*.

Values marked with * retrieved from S&P Global.

Implications:

  • Expect downward revisions to near-term EPS/EBITDA on margin pressures (fleet insurance/depreciation, SG&A) and volume headwinds; revenue likely resilient given mix and acquisitions .

Key Takeaways for Investors

  • Revenue resilience with a modest beat, but margin compression drove EPS/EBITDA misses; near-term estimate cuts likely focused on margin assumptions* .
  • Heavy commercial (data centers) is a key offsetting tailwind; watch for backlog updates and potential mix shift benefiting H2 margin profile .
  • SG&A cost actions (≥$15M) are a tangible lever; expect initial benefits from Q3 onward to help protect earnings in a softer demand backdrop .
  • Tariff risk quantified (~$10–$20M); domestic sourcing and pass-through strategy mitigate impact; monitor supplier behavior and market pricing .
  • Housing affordability remains the core headwind; expect multi-quarter volume pressure in single-family and multifamily with recovery tied to macro and rates .
  • Capital allocation remains supportive (dividend up 6% YoY; active repurchases; M&A ≥$100M target), underpinned by strong operating cash flow and modest leverage .
  • Watch execution on internal distribution build-out and spray foam improvement; both could ease gross margin headwinds in H2 .