Installed Building Products (IBP 23.71%), one of the largest insulation installers in the United States, reported its second quarter earnings on August 7, 2025. The company's headline news was record GAAP revenue of $760.3 million in Q2 2025, handily beating the consensus GAAP estimate of $711.4 million. Adjusted earnings per share reached $2.95, also above analyst expectations of $2.40 (non-GAAP). The quarter saw modest growth with strong acquisition-driven gains and continued operational efficiency, though softness in residential installation volumes persisted.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $2.95 | $2.40 | $2.84 | 3.9% |
| Revenue (GAAP) | $760.3 million | $711.4 million | $737.6 million | 3.1% |
| Adjusted EBITDA (Non-GAAP) | $134.0 million | $129.8 million | 3.2% | |
| Net Income (GAAP) | $69.0 million | $65.2 million | 5.8% | |
| Gross Profit Margin | 34.2% | 34.1% | 0.1 pp |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Business Overview and Key Focus Areas
Installed Building Products operates mainly as an installer of insulation for new homes and commercial buildings across the U.S. It supplies and installs not just insulation, but also products like waterproofing, fireproofing, garage doors, and rain gutters. Its business model relies heavily on a combination of scale, a nationwide branch network, and relationships with builders.
In recent years, the company expanded its offerings beyond insulation to support growth, targeting a wider set of products and services. Acquisitions have been a core driver, helping it enter new markets and diversify its product range. Staying operationally lean and controlling costs are also central, given the construction industry's sensitivity to economic shifts.
Quarterly Performance Highlights
In Q2 2025, the company delivered a clear outperformance versus expectations across GAAP revenue and non-GAAP earnings. GAAP revenue grew 3.1% from the prior year and was 6.88% above analyst targets, setting a new record for the quarter. Adjusted earnings per share (non-GAAP) beat consensus by 22.9%. Acquisitions accounted for most of the revenue growth. Newly acquired businesses, such as Pro Foamers, Inc. (focused on commercial spray foam insulation and acquired in May 2025), added incremental revenues, while organic (same-branch) growth remained positive but modest at 0.7%.
By segment, the Installation division continued to make up the majority of sales, with The Installation segment provided 94% of revenue. Within this segment, residential new construction was challenged, with same-branch sales down 1.1% as higher interest rates and fewer housing starts weighed on demand. In contrast, the commercial segment saw same-branch sales grow 9.3%, driven by projects in heavy commercial construction, including a strong pipeline of data center builds. The Distribution and Manufacturing segment, which includes specialty products, showed robust performance with same-branch sales up 20.2% year over year.
Gross profit margin (GAAP) was 34.2%, as the construction materials environment remained stable and competitive. Adjusted EBITDA margin, which measures cash earnings as a percentage of sales and is a common indicator of underlying company profitability, stayed flat at 17.6%. Operating expenses, especially selling, general, and administrative (SG&A) costs, rose slightly as a percentage of revenue. The company is targeting at least $15 million in cost reductions, with management stating in Q1 2025 that steps have already been taken to realize these savings and that the impact is expected to begin in Q3 2025.
Shareholder returns were a notable highlight. Installed Building Products paid a quarterly dividend of $0.37 per share for Q2 and Q3 2025, a 6% increase from the prior year’s Q3 cash dividend. The company also repurchased 300,000 shares during the quarter, for a year-to-date total of 500,000 shares. As of June 30, 2025, $416.5 million remained authorized for repurchases through March 2026.
Looking Ahead and Guidance
In commentary, leadership expressed confidence in long-term housing and construction fundamentals, mentioning that housing affordability pressures and higher mortgage rates are likely to dampen residential activity for the rest of the year.
Investors should continue to watch how acquisitions progress, as the company continues to focus on acquiring at least $100 million of annual revenue in 2025, though over $10 million had been acquired year to date. Also, the impact of the planned $15 million in cost reductions should influence profit margins in upcoming quarters, with management indicating the effects are expected to begin in Q3 2025. Volume pressure in residential markets, and the relative performance of commercial installations, will remain important areas to monitor in the periods ahead.
IBP pays a dividend, which was raised 6% year over year to $0.37 per share.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
