Sign in
IB

Installed Building Products, Inc. (IBP)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 revenue grew 4.1% to $750.2M, with adjusted EPS of $2.88 and adjusted EBITDA of $132.0M; gross margin eased 50 bps YoY to 33.6% as mix shifted toward lower-margin “Other” businesses and away from higher-margin spray foam insulation .
  • Capital returns accelerated: regular quarterly dividend raised 6% to $0.37 and variable dividend to $1.70; buyback authorization increased to $500M (from $300M) and 383K shares repurchased in Q4 (~$79M) .
  • Management expects to acquire at least $100M of annual revenue in 2025 and highlighted internal distribution scaling as a margin lever over time (3–5 year build-out) .
  • Near-term watch items: benign pricing with competitive intensity, spray foam still a modest gross margin headwind exiting Q4 (stabilizing into 2H25), and mix pressure from growth in “Other” (distribution/manufacturing) and production builders; management targets long-term same-branch incremental EBITDA of 20–25% .

What Went Well and What Went Wrong

  • What Went Well

    • Record Q4 revenue ($750.2M) and adjusted EPS ($2.88); adjusted EBITDA rose to $132.0M despite mix headwinds .
    • Capital returns uplift: “Our Board … approved a 6% increase to both our regular quarterly cash dividend and annual variable dividend” and expanded repurchase authorization to $500M .
    • Strategic progress: internal distribution nearly doubled YOY ($9M → ~$18M) and is “starting to benefit gross margin slightly,” with a 3–5 year build-out plan .
    • Quote: “Our fourth quarter results capped off another record year… supported by organic growth across our residential end markets.” — Jeff Edwards, CEO .

  • What Went Wrong

    • Gross margin compressed 50 bps YoY to 33.6% as the lower-margin “Other” segment grew faster (low-teens) and spray foam remained a 10–20 bps margin headwind; offset from improved complementary product margins .
    • SG&A leverage remained a drag: adjusted S&A was 18.1% of sales (vs. 18.3% LY), with G&A running $105–$110M per quarter and rising 3–5% annually, limiting near-term EBITDA margin expansion .
    • Competitive/pricing environment benign; fiberglass price increases struggled to gain traction amid freer supply, adding uncertainty to price/mix contribution near term .

Financial Results

MetricQ4 2023Q2 2024Q3 2024Q4 2024
Revenue ($M)$720.7 $737.6 $760.6 $750.2
Gross Margin %34.1% 34.1% 33.8% 33.6%
Adjusted EBITDA ($M)$128.3 $129.8 $132.3 $132.0
Adjusted EBITDA Margin %17.8% 17.6% 17.4% 17.6%
Net Income ($M)$64.9 $65.2 $68.6 $66.9
Diluted EPS ($)$2.29 $2.30 $2.44 $2.39
Adjusted Net Income ($M)$77.3 $80.5 $80.1 $80.6
Adjusted Diluted EPS ($)$2.72 $2.84 $2.85 $2.88

Segment/end-market mix – Q4 2024 vs Q4 2023

Segment/End-MarketQ4 2023 ($M, %)Q4 2024 ($M, %)
Installation – Residential New Construction$510.5 (71%) $533.3 (71%)
Installation – Repair & Remodel$44.6 (6%) $46.5 (6%)
Installation – Commercial$114.7 (16%) $115.2 (16%)
Net Revenues – Installation$669.8 (93%) $695.0 (93%)
Other (Distribution & Manufacturing)$50.9 (7%) $55.2 (7%)
Total Net Revenue$720.7 (100%) $750.2 (100%)

KPIs and intra-quarter drivers

KPIQ2 2024Q3 2024Q4 2024
Consolidated Same-Branch Sales Growth+4.8% +5.2% +1.1%
Installation Volume Growth-1.4% +2.6% -0.8%
Installation Price/Mix Growth+6.4% +2.7% +1.2%

Notes:

  • Q4 adjusted gross margin 33.6% vs. 34.1% LY driven by faster growth in lower-margin “Other” and spray-foam headwind; partially offset by stronger complementary product margins .
  • Spray foam impacted Q4 gross margin by ~10–20 bps; management expects stabilization and no negative gross margin impact into 2H25 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Regular Dividend per ShareQ1 2025$0.35 (Q4 2024 payment) $0.37 Raised
Variable Dividend per Share2025 (paid Mar-31-25)$1.60 (prior year) $1.70 Raised
Share Repurchase AuthorizationThrough Mar-1-26$300M prior capacity $500M authorization Increased
Acquisition OutlookFY 2025N/AExpect ≥$100M annual revenue acquired New
Amortization ExpenseQ1 2025~N/A (Q3 called out Q4’24 ~$10M; FY25 ~$37M) Q1’25 ≈$10M; FY25 ≈$39M Slightly higher FY25 vs prior commentary

Earnings Call Themes & Trends

TopicQ2 2024 (Q-2)Q3 2024 (Q-1)Q4 2024 (Current)Trend
Price/Mix & Cost InflationTight fiberglass supply; price pass-through; price/mix +6.4%, volume -1.4% Benign inflation; price/mix +2.7%, volume +2.6%; spray foam negative <100 bps Benign pricing; carryover price/mix; announced fiberglass increases lacked traction; spray foam -10–20 bps but stabilizing in 2H25 Moderating price tailwind; stabilization expected
MultifamilyBacklog elevated; normalization needed (units under construction 25–30% above normal) Headwind near term; CQ driving bids and cross-sell; stabilization expected Units under construction need -20–25% to normalize over ~6 months; expansion to 10+ markets; long-term over-index “in a high-quality manner” From resilient to normalizing headwind
Internal DistributionNoted as strategy Start-up costs, higher leases; margin lever longer term Revenue ~$18M vs ~$9M LY; aiding gross margin slightly; 3–5 yr build-out Scaling; incremental margin tailwind
Regional Trends—Hurricanes impacted late Q3/Oct Texas/Florida softer; Midwest/Northeast relatively strong Mixed; weather and regional dynamics
M&A PipelineRobust; $50M YTD acquired Pipeline strong; more deals likely Expect ≥$100M acquired in 2025; considering slightly larger adjacency deals Remains a core growth lever
Regulatory/TariffsEnergy codes (HUD/FHFA) constructive over time Election/code risks but demand steady Watching tariff situation; benign environment today Monitor policy; low near-term impact

Management Commentary

  • “Our fourth quarter results capped off another record year of revenue and profitability for IBP, supported by organic growth across our residential end markets.” — Jeff Edwards, CEO .
  • “Adjusted EBITDA for the 2024 fourth quarter increased to a fourth quarter record of $132 million… Adjusted net income increased to $81 million or $2.88 per diluted share.” — Michael Miller, CFO .
  • “If there is another announced [fiberglass] price increase and it gets more traction than this last one, we believe that happens because there is a stronger demand environment… we have historically always been able to pass on price.” — Michael Miller .
  • “Spray foam… continued to be a headwind in the fourth quarter… trending through the first quarter, but pricing… is starting to stabilize… we would expect spray foam not [to be] a negative gross margin impact as we go into the back half of the year.” — Michael Miller .
  • “Internal distribution… last year was around $9 million… it doubled this year to around $18 million… starting to benefit gross margin slightly… [build-out] 3 to 5 years.” — Michael Miller; Jeff Edwards .

Q&A Highlights

  • Price/mix outlook: A “benign” pricing environment; benefits mainly carryover; fiberglass increase attempts lacked traction due to freer supply and builder caution; pass-through historically achievable, sometimes with lag .
  • Multifamily: CQ-led expansion into 10+ major markets over years; expect to become over-indexed to multifamily in “high-quality” manner; macro normalization of units under construction in ~6 months (-20–25%) .
  • SG&A cadence: G&A runs ~$105–$110M quarterly; rises 3–5% annually; selling expense ~4.7–4.8% of revenue; expense management underway but benefits lag .
  • Margins: Mix headwinds (production builders, “Other”) and fixed G&A can compress EBITDA margin near term; long-term focus remains on improving EBITDA dollars and 20–25% incremental margins .
  • Capital allocation/M&A: M&A prioritized over buybacks, though cash flow supports both; considering slightly larger deals within strategic adjacencies .

Estimates Context

  • S&P Global consensus for Q4 2024 revenue and EPS was unavailable at time of analysis due to a temporary retrieval limit; therefore, we cannot present a definitive beat/miss versus consensus at this time (will update when accessible). Values retrieved from S&P Global*.

Key Takeaways for Investors

  • Mix and product dynamics matter: continued shift toward “Other” and complementary products plus production builder mix can pressure gross margin, but internal distribution and CQ cross-sell provide offsets over time .
  • Spray foam impact should fade by 2H25, removing a 10–20 bps gross margin headwind seen in Q4 .
  • Multifamily normalization likely over next ~6 months; CQ expansion suggests IBP outperforms the broader MF market during this phase .
  • Capital returns stepped up: higher regular and variable dividends and a larger, extended buyback authorization provide downside support and flexibility .
  • 2025 M&A framework (≥$100M acquired) remains intact, supported by a robust pipeline and balance sheet (Net debt/TTM adj. EBITDA ~1.08x at year-end) .
  • Near-term margins could see modest pressure from fixed G&A and mix; focus on EBITDA dollars and long-term incremental margins of 20–25% persists .
  • Regional softness (TX/FL) and benign pricing warrant tactical caution early 2025; internal distribution scale-up and bid pipeline are key watch items .

Citations:

  • Q4 2024 press release and 8-K: .
  • Q4 2024 earnings call: .
  • Q3 2024 press release/8-K and call: .
  • Q2 2024 press release and call: .