Group 1 - Installed Building Products, Inc. (IBP) announced the acquisition of Carolina Precision Fibers ACP, LLC, enhancing its access to environmentally responsible insulation alternatives [1][2] - The acquisition is part of a broader strategy that includes three smaller acquisitions, contributing approximately $39 million in annual revenue to IBP in 2025 [2] - Despite challenges in housing affordability, the company remains optimistic about the long-term fundamentals of the US housing industry and its growth-focused capital allocation strategy [2] Group 2 - IBP is a significant player in the fiberglass insulation market, installing insulation in about 30% of all newly built homes in the US [3] - The company benefits from purchasing fiberglass at approximately 20% lower prices than smaller customers due to its large volume purchases [3] - The production of fiberglass requires continuous operation of manufacturing plants, which creates a dependency on large customers like IBP for efficient absorption of production volumes [3]

Group 1 - The article recommends a buy rating for Installed Building Products, Inc. (NYSE: IBP) based on a solid demand outlook and the company's potential to capitalize on it [1] - The author emphasizes a fundamentals-based approach to value investing, focusing on companies with long-term durability and robust balance sheets rather than just low multiples [1] - There is a recognition of the risks involved in investing in successful companies, particularly the importance of valuation in avoiding overpaying [1] Group 2 - The author expresses a belief that in certain situations, the development potential of a company can outweigh immediate price concerns [1]

Core Viewpoint - Installed Building Products (IBP) is currently in Phase 17 of its 18-phase Adhishthana cycle, raising concerns about the sustainability of its stock rally in the long term [1][5]. Summary by Sections Adhishthana Framework - The Guna Triads, consisting of Phases 14, 15, and 16, are crucial for determining if IBP can achieve Nirvana in Phase 18, which is the peak of the cycle [4]. - The absence of Satoguna in all three phases of the Guna Triads indicates a low probability of a strong and sustained rally in the upcoming Phase 18, scheduled from January 2026 to July 2027 [4]. Current Stock Performance - Although the current rally in IBP shares appears robust, the weak triad formation suggests that momentum may slow down once Phase 18 begins [5]. - Phase 17 is characterized as a no-action phase, which aligns with the outlook indicated by the weak triads [5]. Investor Considerations - Existing investors may continue to hold the stock to capitalize on the current upside, but they should be cautious as the rally's strength may diminish before the end of Phase 17 [6]. - The lack of Satoguna in IBP's triads limits the potential for a sustained long-term rally, making the stock more suitable for short-term trading rather than new long-term investments [7].

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the quarterly period ended June 30, 2025, including balance sheets, statements of operations, comprehensive income, stockholders' equity, and cash flows, along with detailed notes on presentation and accounting policies Condensed Consolidated Balance Sheet Highlights (in millions) | Account | June 30, 2025 (millions) | December 31, 2024 (millions) | | :--- | :--- | :--- | | **Total Assets** | **$2,020.1** | **$2,059.9** | | Cash and cash equivalents | $305.2 | $327.6 | | Goodwill | $436.9 | $432.6 | | **Total Liabilities** | **$1,355.6** | **$1,354.6** | | Long-term debt | $842.8 | $842.4 | | **Total Stockholders' Equity** | **$664.5** | **$705.3** | Condensed Consolidated Statements of Operations Highlights (in millions, except per share amounts) | Metric | Q2 2025 (millions) | Q2 2024 (millions) | H1 2025 (millions) | H1 2024 (millions) | | :--- | :--- | :--- | :--- | :--- | | **Net Revenue** | **$760.3** | **$737.6** | **$1,445.1** | **$1,430.5** | | Gross Profit | $259.9 | $251.4 | $483.6 | $485.9 | | Operating Income | $101.0 | $94.8 | $170.8 | $182.7 | | **Net Income** | **$69.0** | **$65.2** | **$114.4** | **$121.1** | | Diluted EPS | $2.52 | $2.30 | $4.15 | $4.27 | Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Cash Flow Category | Six months ended June 30, 2025 (millions) | Six months ended June 30, 2024 (millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $182.5 | $163.8 | | Net cash used in investing activities | $(43.2) | $(55.2) | | Net cash used in financing activities | $(161.7) | $(114.8) | | **Net change in cash and cash equivalents** | **$(22.4)** | **$(6.2)** | [Note 3 - Revenue Recognition](index=11&type=section&id=Note%203%20-%20Revenue%20Recognition) Revenue is primarily generated from the Installation segment, which accounted for 94% of total net revenue in the first six months of 2025, with residential new construction as the largest end market at 72% and insulation as the main product category contributing 60% Net Revenue by End Market (Six months ended June 30) | End Market | 2025 Revenue (millions) | 2025 % | 2024 Revenue (millions) | 2024 % | | :--- | :--- | :--- | :--- | :--- | | Residential new construction | $1,043.2 | 72% | $1,045.2 | 73% | | Repair and remodel | $85.6 | 6% | $82.6 | 6% | | Commercial | $234.0 | 16% | $225.4 | 16% | | **Total Installation** | **$1,362.8** | **94%** | **$1,353.2** | **95%** | Net Revenue by Product (Six months ended June 30) | Product | 2025 Revenue (millions) | 2025 % | 2024 Revenue (millions) | 2024 % | | :--- | :--- | :--- | :--- | :--- | | Insulation | $861.0 | 60% | $875.7 | 61% | | Shower doors, shelving, mirrors | $108.0 | 7% | $102.3 | 7% | | Garage doors | $86.6 | 6% | $85.9 | 6% | | Waterproofing | $74.9 | 5% | $65.2 | 5% | - As of June 30, 2025, the company had **$161.4 million** in remaining performance obligations, which it expects to recognize as revenue over the next 18 months[38](index=38&type=chunk) [Note 7 - Long-Term Debt](index=14&type=section&id=Note%207%20-%20Long-Term%20Debt) As of June 30, 2025, total long-term debt was $876.1 million, a slight increase from $874.8 million at year-end 2024, primarily composed of a term loan and senior notes, with current maturities of $33.3 million Long-Term Debt Composition (in millions) | Debt Instrument | June 30, 2025 (millions) | December 31, 2024 (millions) | | :--- | :--- | :--- | | Senior Notes due 2028, net | $298.5 | $298.2 | | Term loan, net | $490.3 | $492.5 | | Vehicle and equipment notes | $86.1 | $82.3 | | **Total Debt** | **$876.1** | **$874.8** | | Less: current maturities | $(33.3) | $(32.4) | | **Long-term debt, less current maturities** | **$842.8** | **$842.4** | [Note 12 - Stockholders' Equity](index=21&type=section&id=Note%2012%20-%20Stockholders%27%20Equity) The company actively returned capital to shareholders through dividends and share repurchases, repurchasing 500,000 shares for $83.5 million and declaring dividends totaling $2.44 per share in the first six months of 2025 - During the six months ended June 30, 2025, the company repurchased **500,000 shares** of its common stock for an aggregate price of **$83.5 million**[77](index=77&type=chunk) - On February 27, 2025, the board authorized a new stock repurchase program for up to **$500.0 million**, effective through March 1, 2026[78](index=78&type=chunk) Dividends Declared (Six months ended June 30, 2025) | Declaration Date | Dividend Per Share ($) | Amount Declared (millions) | | :--- | :--- | :--- | | 2/27/2025 | $1.70 | $47.1 | | 2/27/2025 | $0.37 | $10.2 | | 5/8/2025 | $0.37 | $10.1 | [Note 17 - Business Combinations](index=27&type=section&id=Note%2017%20-%20Business%20Combinations) The company continued its acquisition strategy, completing two business combinations and two bolt-on acquisitions in the first six months of 2025 for a total cash payment of $11.3 million, which contributed $1.9 million in revenue since their respective acquisition dates Acquisition Summary (Six months ended June 30, 2025, in millions) | Metric | Value (millions) | | :--- | :--- | | Cash Paid | $11.3 | | Total Purchase Price | $11.9 | | Revenue since acquisition | $1.9 | | Net Income since acquisition | $0.1 | Purchase Price Allocation (Six months ended June 30, 2025, in millions) | Asset/Liability | Estimated Fair Value (millions) | | :--- | :--- | | Intangibles | $7.1 | | Goodwill | $3.6 | | Property and equipment | $0.9 | | **Fair value of assets acquired** | **$11.9** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the financial results for the second quarter of 2025, highlighting a 3.1% increase in net revenue to $760.3 million, driven by 10.0% growth in the commercial end market and contributions from acquisitions, covering key performance metrics, operational results, liquidity, capital resources, and external factors [Overview and 2025 Second Quarter Highlights](index=30&type=section&id=Overview%20and%202025%20Second%20Quarter%20Highlights) In Q2 2025, net revenue grew 3.1% to $760.3 million, and gross profit increased 3.4% to $259.9 million, primarily fueled by a 10.0% increase in commercial end market sales and recent acquisitions, while maintaining strong liquidity and returning $59.3 million to shareholders - Q2 2025 net revenue increased **3.1% YoY** to **$760.3 million**, while gross profit rose **3.4%** to **$259.9 million**[120](index=120&type=chunk) - Growth was driven by a **10.0% increase** in commercial end market sales and a **2.6% increase** in the residential single-family new construction end market[120](index=120&type=chunk) - The company returned **$59.3 million** to shareholders in Q2 2025, consisting of a **$10.1 million** dividend payment and **$49.2 million** in share repurchases[121](index=121&type=chunk) [Results of Operations](index=32&type=section&id=Results%20of%20Operations) For Q2 2025, net revenue growth was driven by a 9.3% increase in commercial same-branch sales and acquisitions, offsetting a 1.1% decline in residential same-branch sales, with gross profit margin improving to 34.2% due to labor efficiency gains, while administrative expenses rose 6.0% to $113.1 million from increased compensation and wage inflation Key Performance Metrics (Q2 2025 vs Q2 2024) | Metric | Growth Rate | | :--- | :--- | | Consolidated Sales Growth | 3.1% | | Consolidated Same Branch Sales Growth | 0.7% | | Residential Same Branch Sales Growth | (1.1)% | | Commercial Same Branch Sales Growth | 9.3% | Operating Expenses (in millions) | Expense Category | Q2 2025 (millions) | Q2 2024 (millions) | % Change | | :--- | :--- | :--- | :--- | | Selling | $35.7 | $34.5 | 3.5% | | Administrative | $113.1 | $106.7 | 6.0% | [Key Factors Affecting Operating Results](index=34&type=section&id=Key%20Factors%20Affecting%20Operating%20Results) The company's performance is influenced by elevated mortgage rates and home prices curtailing housing demand, potential material price increases due to supplier actions and tariffs, and a tight labor market requiring increased spending on hiring, training, and retention - Elevated mortgage rates and home prices have curtailed housing demand, but the Federal Reserve's signal to potentially lower rates may ease pressure[142](index=142&type=chunk) - The company may face increased material pricing due to supplier actions and tariffs, which could impact margins if costs cannot be passed on to customers[145](index=145&type=chunk) - The business is labor-intensive, and tight labor availability in the construction industry requires increased spending on hiring, training, and retention[146](index=146&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, the company had total liquidity of $551.2 million, comprising $305.2 million in cash and $246.0 million available under its ABL credit facility, with primary capital requirements including working capital, acquisitions, and capital expenditures, and cash flow from operations increasing to $182.5 million - Total liquidity as of June 30, 2025, was **$551.2 million**, consisting of **$305.2 million** in cash and cash equivalents and **$246.0 million** in available credit[149](index=149&type=chunk)[169](index=169&type=chunk) - Working capital decreased to **$660.8 million** from **$695.9 million** at year-end 2024, primarily due to cash used for dividends and stock repurchases[156](index=156&type=chunk) Summary of Cash Flow Activity (Six months ended June 30, in millions) | Cash Flow Activity | 2025 (millions) | 2024 (millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $182.5 | $163.8 | | Net cash used in investing activities | $(43.2) | $(55.2) | | Net cash used in financing activities | $(161.7) | $(114.8) | [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=39&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from interest rate fluctuations on its variable-rate debt, with $93.8 million exposed to market risk as of June 30, 2025, after hedging $400.0 million of its Term Loan, meaning a one percentage point change in interest rates would affect annual interest expense by approximately $0.9 million - The company's primary market risk is interest rate fluctuation on its variable-rate debt[182](index=182&type=chunk) - After hedging **$400.0 million** with interest rate swaps, **$93.8 million** of the Term Loan remained exposed to variable interest rate risk as of June 30, 2025[182](index=182&type=chunk) - A hypothetical **one percentage point** increase or decrease in interest rates would change the company's annual interest expense by approximately **$0.9 million**[182](index=182&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the second quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2025[184](index=184&type=chunk) - No changes in internal control over financial reporting occurred during the three months ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal controls[185](index=185&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various claims and litigation arising from the normal course of business, but management does not believe that the ultimate outcome of any pending matters will have a material adverse effect on its financial position, results of operations, or cash flows - The company does not believe that the ultimate outcome of any pending legal matters will have a **material adverse effect** on its consolidated financial position, results of operations or cash flows[102](index=102&type=chunk)[187](index=187&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes from the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - As of the date of this report, there have been **no material changes** from the risk factors disclosed in the 2024 Form 10-K[188](index=188&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section details the company's stock repurchase activity for the second quarter of 2025, where it repurchased 300,000 shares under its publicly announced program, with approximately $416.5 million remaining available for future repurchases as of June 30, 2025 Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased (shares) | Average Price Paid Per Share ($) | Shares Purchased as Part of Program (shares) | | :--- | :--- | :--- | :--- | | April 2025 | 52,266 | $158.28 | — | | May 2025 | 200,266 | $162.43 | 200,000 | | June 2025 | 100,000 | $166.72 | 100,000 | | **Total** | **352,532** | **$163.03** | **300,000** | - A new stock repurchase program authorizing up to **$500.0 million** was announced on February 22, 2025, and is effective through March 1, 2026. As of June 30, 2025, **$416.5 million** remained available under this program[189](index=189&type=chunk)[194](index=194&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) Effective August 7, 2025, the company entered into new Change in Control Agreements with its executive officers to align severance policies with market practices, providing specific severance benefits, including a lump sum payment and accelerated equity vesting, if employment is terminated for qualifying reasons within 24 months following a change in control - The company entered into new Change in Control Agreements with its executive officers, effective August 7, 2025[193](index=193&type=chunk) - The agreements provide for severance benefits in the event of a qualifying termination within 24 months of a change in control, including a **lump sum cash payment equal to 300% of annual base salary plus target bonus**, **18 months of health benefits**, and **immediate vesting of all equity awards**[195](index=195&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including the form of the new Change in Control Agreement for executive officers, an Amended and Restated Employment Agreement for the CEO, CEO and CFO certifications, and financial statements formatted in inline XBRL - Key exhibits filed with this report include the Form of Change in Control Agreement for executive officers (Exhibit 10.1) and the Amended and Restated Employment Agreement for CEO Jeffery W. Edwards (Exhibit 10.2)[199](index=199&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net revenue for Q2 2025 increased by 3% to a record $760 million compared to $738 million in the same period last year [14] - Adjusted EBITDA for Q2 2025 increased to $134 million, reflecting an adjusted EBITDA margin of 17.6% [16] - Adjusted net income increased to $81 million or $2.95 per diluted share [16] - Cash flow from operating activities increased by 11% to $182 million for the six months ended June 30, 2025 [10][18] - Adjusted gross margin for Q2 2025 was 34.2%, up from 34.1% in the prior year period [15] Business Line Data and Key Metrics Changes - Same branch sales for the Installation segment increased by 1% for Q2 2025, with a 9% increase in Commercial same branch sales, partially offset by a single-digit decline in Residential same branch sales [14] - Sales in the multifamily end market showed double-digit growth in Q2 2025 compared to the same period last year, marking the first time in nearly two years [7][8] - Heavy commercial activity continued to drive sales growth, with a 9% increase in commercial sales from the prior year period [9] Market Data and Key Metrics Changes - U.S. single-family starts decreased by 7% year-to-date through June 2025, with expectations of a larger decline due to current interest rate environments [11] - The company noted that single-family completions experienced a nearly 10% decline relative to the same period last year [6] Company Strategy and Development Direction - The company is focused on growing earnings and cash flow through geographic expansion and end market diversification [5] - There is a commitment to operational improvements and disciplined capital allocation, with nearly $68 million paid in cash dividends and approximately $84 million in stock repurchases in 2025 [5][19] - The company aims to acquire over $100 million in annual revenue, with recent acquisitions contributing to this goal [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term fundamentals of the U.S. housing industry despite short-term challenges related to housing affordability [4][12] - The company anticipates increasing headwinds in the single-family market but remains optimistic about the multifamily sector's performance [50][80] - Management highlighted strong customer relationships and a diverse product portfolio as key strengths to navigate market fluctuations [12] Other Important Information - The company repurchased 300,000 shares of common stock at a total cost of $49 million during Q2 2025 [19] - The Board of Directors approved a third-quarter dividend of $0.37 per share, representing a 6% increase over the prior year period [20] Q&A Session Summary Question: What kind of mix improvement is being seen? - Management noted better performance from regional and local builders compared to large national builders, contributing to improved sales growth [25][26] Question: What is driving the improvement in complementary product margins? - The improvement was attributed to solid growth across complementary products and effective management by the centralized multifamily management group [30] Question: How did fiberglass prices and supply trend in Q2? - Management indicated that there has not been real price deflation on fiberglass and expects a potential impact from tariffs in Q4 [33][34] Question: What drove IBP's outperformance in Q2? - The outperformance was attributed to strong execution by the field team and growth in regional and local builders, particularly in states like Texas and Virginia [36][46] Question: What is the outlook for the multifamily market? - Management expressed optimism about the multifamily market, with increasing backlogs and bidding activity, but acknowledged potential headwinds from units under construction [50][51] Question: How sustainable are the market share gains? - Management indicated that while there are gains in specific markets, uncertainty remains regarding the overall market conditions in the second half of the year [79]

Company Overview - IBP has a national platform of over 250 locations serving all 48 continental states and the District of Columbia[17] - Insulation accounted for 78% of revenue in 2015, decreasing to 60% in 2024, while new single-family homes accounted for 75% of the end-market revenue in 2015, decreasing to 57% in 2024[23] - An established IBP branch generates approximately $4,400 per residential permit, while a developing branch generates approximately $2,200 per residential permit[35] Financial Performance - For the twelve months ended June 30, 2025, net revenue was $2.9559 billion, a 3.4% increase over the prior year period[59] - Adjusted gross profit for the twelve months ended June 30, 2025, was $993.2 million, resulting in an adjusted gross profit margin of 33.6%[59] - Adjusted EBITDA for the twelve months ended June 30, 2025, was $500.7 million, with an adjusted EBITDA margin of 16.9%[59] - Free cash flow for the twelve months ended June 30, 2025, was $276.8 million[91] - As of June 30, 2025, net debt was $578 million, with a net debt to adjusted EBITDA ratio of 1.15x[71] Capital Allocation - From 2020 to 2024, IBP allocated $579 million (50%) to acquisitions, $246 million (21%) to share repurchases, and $323 million (28%) to dividends[47]

[Company Overview & Highlights](index=1&type=section&id=1-company-overview-highlights) This section provides an overview of IBP's record Q2 2025 financial performance, strategic outlook, acquisition activities, and capital allocation decisions [Second Quarter 2025 Performance Highlights](index=1&type=section&id=1.1-second-quarter-2025-performance-highlights) Installed Building Products (IBP) reported record second quarter 2025 results, with net revenue increasing 3.1% to $760.3 million and net income rising 5.8% to $69.0 million. Adjusted EBITDA also saw a 3.2% increase to $134.0 million, and diluted EPS grew 9.6% to $2.52 Key Performance Metrics (Millions, except per share) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Net Revenue | $760.3 | $737.6 | +3.1% | | Net Income | $69.0 | $65.2 | +5.8% | | Adjusted EBITDA | $134.0 | $129.8 | +3.2% | | Net Income per Diluted Share | $2.52 | $2.30 | +9.6% | | Adjusted Net Income | $80.8 | $80.5 | +0.4% | | Adjusted Net Income per Diluted Share | $2.95 | $2.84 | +3.9% | | Net Cash Flow from Operations | $90.3 | $79.0 | +14.3% | - The company achieved a second quarter record for net revenue, gross profit, and adjusted gross profit as a percent of net revenue[5](index=5&type=chunk)[9](index=9&type=chunk)[10](index=10&type=chunk) [CEO Commentary and Strategic Outlook](index=1&type=section&id=1.2-ceo-commentary-and-strategic-outlook) CEO Jeff Edwards highlighted IBP's strong financial results, attributing them to high-value installation services and market positioning. He expressed confidence in the long-term fundamentals of the U.S. housing industry despite near-term affordability challenges and emphasized a growth-focused capital allocation strategy, including disciplined acquisitions and returning capital to shareholders - IBP continues to deliver strong financial results, demonstrating high-value installation services for homebuilding customers[3](index=3&type=chunk) - The company is confident in the long-term fundamentals of the U.S. housing industry and its growth-focused capital allocation strategy, despite near-term housing affordability challenges[3](index=3&type=chunk) - Management maintains a disciplined approach to acquisitions, focusing on favorable returns on invested capital, and aims to enhance operational and financial performance while returning capital to shareholders through dividends and share repurchases[4](index=4&type=chunk) [Acquisition Strategy and Update](index=1&type=section&id=1.3-acquisition-strategy-and-update) IBP continues its strategy of profitable growth through acquisitions, having acquired over $10 million in annual revenue year-to-date in 2025, with a target of at least $100 million. A notable acquisition in Q2 2025 was Pro Foamers, Inc., adding $4 million in annual revenue - IBP prioritizes profitable growth through acquiring well-run installers of insulation and complementary building products[5](index=5&type=chunk) Acquisition Metrics | Acquisition Metric | YTD 2025 | Target | | :----------------- | :------- | :----- | | Annual Revenue Acquired | Over $10 million | At least $100 million | - In May 2025, IBP acquired Pro Foamers, Inc., a spray foam and air barrier installer in Green Bay, Wisconsin, with **$4 million in annual revenue**, expanding its commercial end market presence[6](index=6&type=chunk) [Capital Allocation: Dividends and Share Repurchases](index=1&type=section&id=1.4-capital-allocation-dividends-and-share-repurchases) IBP declared a third-quarter cash dividend of $0.37 per share, representing a 6% increase from the prior year. The company also repurchased 300,000 shares for $49.2 million in Q2 2025 and 500,000 shares for $83.5 million in H1 2025, with approximately $416.5 million remaining under its stock repurchase program Quarterly Dividend Information | Capital Allocation | Q3 2025 Dividend | Q2 2025 Dividend | Q3 2024 Dividend | YoY Change (Q3) | | :----------------- | :--------------- | :--------------- | :--------------- | :-------------- | | Per Share Amount | $0.37 | $0.37 | $0.35 | +6% | Share Repurchase Activity | Share Repurchases | Q2 2025 | H1 2025 | Remaining Authorization | | :---------------- | :------ | :------ | :---------------------- | | Shares Repurchased | 300,000 | 500,000 | N/A | | Total Cost | $49.2 million | $83.5 million | N/A | | Available under Program | N/A | N/A | ~$416.5 million (expiring March 1, 2026) | [Detailed Second Quarter 2025 Financial Results](index=2&type=section&id=2-detailed-second-quarter-2025-financial-results) This section provides an in-depth analysis of IBP's Q2 2025 financial performance, focusing on revenue, profitability metrics, and EBITDA figures [Revenue Analysis](index=2&type=section&id=2.1-revenue-analysis) Net revenue for Q2 2025 reached a record $760.3 million, a 3.1% increase from Q2 2024. Consolidated same branch net revenue increased by 0.7%. Installation revenue grew 2.6% to $715.6 million, while Other revenue (manufacturing and distribution) increased to $44.7 million from $40.3 million. Residential same branch sales were down 1.1%, but commercial same branch sales were up 9.3% Net Revenue Breakdown (Millions) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Net Revenue | $760.3 | $737.6 | +3.1% | | Installation Revenue | $715.6 | $697.3 | +2.6% | | Other Revenue | $44.7 | $40.3 | +10.9% | - Consolidated same branch net revenue increased **0.7% YoY**[9](index=9&type=chunk) - Residential same branch sales within the Installation segment decreased **1.1%**, while commercial same branch sales increased **9.3%** from the prior year quarter[9](index=9&type=chunk) [Profitability Metrics](index=2&type=section&id=2.2-profitability-metrics) Gross profit increased 3.4% to $259.9 million, with gross profit margin reaching a record 34.2%. Net income rose 5.8% to $69.0 million, resulting in a net profit margin of 9.1%. Operating income for Q2 2025 was $101.0 million, up from $94.8 million in Q2 2024 Profitability Overview (Millions, except percentages) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | Gross Profit | $259.9 | $251.4 | +3.4% | | Gross Profit Margin | 34.2% | 34.1% | +0.1 pp | | Operating Income | $101.0 | $94.8 | +6.5% | | Net Income | $69.0 | $65.2 | +5.8% | | Net Profit Margin | 9.1% | 8.8% | +0.3 pp | - Selling and administrative expense as a percent of total revenue increased to **19.6%** compared to 19.1% in the prior year quarter[11](index=11&type=chunk) [EBITDA and Adjusted EBITDA](index=2&type=section&id=2.3-ebitda-and-adjusted-ebitda) EBITDA for Q2 2025 increased 7.2% to $128.2 million. Adjusted EBITDA grew 3.2% to $134.0 million, maintaining an Adjusted EBITDA margin of 17.6% for both Q2 2025 and Q2 2024 EBITDA and Adjusted EBITDA (Millions, except percentages) | Metric | Q2 2025 (Millions) | Q2 2024 (Millions) | YoY Change | | :----- | :----------------- | :----------------- | :--------- | | EBITDA | $128.2 | $119.6 | +7.2% | | Adjusted EBITDA | $134.0 | $129.8 | +3.2% | | Adjusted EBITDA Margin | 17.6% | 17.6% | 0.0 pp | [Consolidated Financial Statements](index=4&type=section&id=3-consolidated-financial-statements) This section presents the condensed consolidated statements of operations, balance sheets, and cash flows for the reported periods [Condensed Consolidated Statements of Operations and Comprehensive Income](index=4&type=section&id=3.1-condensed-consolidated-statements-of-operations-and-comprehensive-income) The statement details IBP's financial performance for the three and six months ended June 30, 2025 and 2024. Key figures include net revenue of $760.3 million for Q2 2025 (up from $737.6M in Q2 2024) and net income of $69.0 million (up from $65.2M). Diluted EPS for Q2 2025 was $2.52, compared to $2.30 in Q2 2024 Consolidated Statements of Operations (Millions, except per share) | Metric (Millions, except per share) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net revenue | $760.3 | $737.6 | $1,445.1 | $1,430.5 | | Gross profit | $259.9 | $251.4 | $483.6 | $485.9 | | Operating income | $101.0 | $94.8 | $170.8 | $182.7 | | Net income | $69.0 | $65.2 | $114.4 | $121.1 | | Diluted EPS | $2.52 | $2.30 | $4.15 | $4.27 | | Cash dividends declared per share | $0.37 | $0.35 | $2.44 | $2.30 | [Condensed Consolidated Balance Sheets](index=5&type=section&id=3.2-condensed-consolidated-balance-sheets) As of June 30, 2025, IBP reported total assets of $2,020.1 million, a slight decrease from $2,059.9 million at December 31, 2024. Cash and cash equivalents stood at $305.2 million, down from $327.6 million. Total liabilities were $1,355.6 million, and total stockholders' equity was $664.5 million Consolidated Balance Sheet Highlights (Millions) | Metric (Millions) | June 30, 2025 | December 31, 2024 | Change | | :---------------- | :------------ | :---------------- | :----- | | Total Assets | $2,020.1 | $2,059.9 | -$39.8 | | Cash and cash equivalents | $305.2 | $327.6 | -$22.4 | | Accounts receivable | $447.6 | $433.9 | +$13.7 | | Total current assets | $1,017.4 | $1,054.9 | -$37.5 | | Goodwill | $436.9 | $432.6 | +$4.3 | | Total Liabilities | $1,355.6 | $1,354.6 | +$1.0 | | Total Stockholders' Equity | $664.5 | $705.3 | -$40.8 | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=3.3-condensed-consolidated-statements-of-cash-flows) For the six months ended June 30, 2025, net cash provided by operating activities increased to $182.5 million from $163.8 million in the prior year period. Net cash used in investing activities was $43.2 million, and net cash used in financing activities was $161.7 million, primarily due to dividends paid and common stock repurchases Consolidated Statements of Cash Flows (Millions) | Metric (Millions) | Six months ended June 30, 2025 | Six months ended June 30, 2024 | Change | | :---------------- | :----------------------------- | :----------------------------- | :----- | | Net cash provided by operating activities | $182.5 | $163.8 | +$18.7 | | Net cash used in investing activities | $(43.2) | $(55.2) | +$12.0 | | Net cash used in financing activities | $(161.7) | $(114.8) | -$46.9 | | Net change in cash and cash equivalents | $(22.4) | $(6.2) | -$16.2 | | Cash and cash equivalents at end of period | $305.2 | $380.3 | -$75.1 | - Significant financing outflows were driven by **$67.7 million in dividends paid** and **$83.5 million in common stock repurchases** during the first half of 2025[25](index=25&type=chunk) [Segment and Market Performance Analysis](index=8&type=section&id=4-segment-and-market-performance-analysis) This section analyzes IBP's performance across its operating segments and end markets, including detailed growth metrics and the impact of acquired versus same branch revenue [Segment Information](index=8&type=section&id=4.1-segment-information) IBP operates in three segments: Installation, Distribution, and Manufacturing, with Distribution and Manufacturing reported under "Other." The Installation segment's revenue increased 2.6% to $715.6 million in Q2 2025, with its gross profit rising 5.0% to $265.5 million, and gross profit percentage improving to 37.1% from 36.5% YoY Segment Performance (Millions, except percentages) | Segment (Millions) | Q2 2025 Revenue | Q2 2024 Revenue | YoY Change (Revenue) | Q2 2025 Gross Profit | Q2 2024 Gross Profit | YoY Change (Gross Profit) | Q2 2025 Gross Profit % | Q2 2024 Gross Profit % | | :----------------- | :-------------- | :-------------- | :------------------- | :------------------- | :------------------- | :------------------------ | :--------------------- | :--------------------- | | Installation | $715.6 | $697.3 | +2.6% | $265.5 | $254.2 | +5.0% | 37.1% | 36.5% | | Other (Distribution & Manufacturing) | $56.7 (before eliminations) | $44.0 (before eliminations) | +28.9% | $13.0 (before eliminations) | $11.5 (before eliminations) | +13.0% | N/A | N/A | [Revenue by End Market](index=9&type=section&id=4.2-revenue-by-end-market) In Q2 2025, residential new construction remained the largest revenue contributor at $548.8 million (72% of total), showing a 1.2% increase. Commercial revenue grew significantly by 10.0% to $123.6 million (16% of total), while repair and remodel revenue increased 1.6% to $43.2 million (6% of total) Revenue by End Market (Millions, except percentages) | End Market (Millions) | Q2 2025 Revenue | Q2 2025 % of Total | Q2 2024 Revenue | Q2 2024 % of Total | YoY Change (Revenue) | | :-------------------- | :-------------- | :----------------- | :-------------- | :----------------- | :------------------- | | Residential new construction | $548.8 | 72% | $542.4 | 74% | +1.2% | | Repair and remodel | $43.2 | 6% | $42.5 | 6% | +1.6% | | Commercial | $123.6 | 16% | $112.4 | 15% | +10.0% | | Other | $44.7 | 6% | $40.3 | 5% | +10.9% | | **Total Net Revenue** | **$760.3** | **100%** | **$737.6** | **100%** | **+3.1%** | [Supplementary Growth Metrics](index=14&type=section&id=4.3-supplementary-growth-metrics) Consolidated sales growth was 3.1% in Q2 2025, with consolidated same branch sales growth at 0.7%. Installation segment sales grew 2.6%, but residential same branch sales declined 1.1%. Commercial sales growth was strong at 10.0%, with commercial same branch sales up 9.3%. U.S. housing market completions saw a significant decline, with total completions down 13.1% and multi-family completions down 19.7% Sales and Completions Growth | Metric | Q2 2025 Growth | Q2 2024 Growth | H1 2025 Growth | H1 2024 Growth | | :-------------------------------- | :------------- | :------------- | :------------- | :------------- | | Consolidated Sales Growth | 3.1% | 6.6% | 1.0% | 5.9% | | Consolidated Same Branch Sales Growth | 0.7% | 4.8% | (1.7)% | 3.9% | | Installation Sales Growth | 2.6% | 7.0% | 0.7% | 6.2% | | Installation Residential Same Branch Sales Growth | (1.1)% | 7.3% | (2.8)% | 5.6% | | Installation Commercial Sales Growth | 10.0% | (4.1)% | 3.8% | (0.7)% | | Installation Commercial Same Branch Sales Growth | 9.3% | (5.3)% | 3.3% | (3.1)% | | U.S. Total Completions Growth | (13.1)% | 12.6% | (6.5)% | 9.1% | | U.S. Single-Family Completions Growth | (9.8)% | 8.6% | (3.4)% | 1.8% | | U.S. Multi-Family Completions Growth | (19.7)% | 20.7% | (12.2)% | 24.4% | - Installation segment's same branch volume growth was negative at **(1.1)%** in Q2 2025, while price/mix growth was **0.8%**[48](index=48&type=chunk) [Incremental Revenue and Adjusted EBITDA Margins](index=15&type=section&id=4.4-incremental-revenue-and-adjusted-ebitda-margins) In Q2 2025, acquired revenue contributed $17.7 million (78.0% of total revenue increase), significantly more than same branch revenue which contributed $5.0 million (22.0%). Acquired operations also showed a higher Adjusted EBITDA margin contribution at 18.6% compared to 16.0% for same branch. For the six months ended June 30, 2025, same branch revenue decreased, leading to a decremental Adjusted EBITDA margin Revenue Increase Contribution (Millions) | Revenue Increase (Millions) | Q2 2025 | Q2 2025 % Total | Q2 2024 | Q2 2024 % Total | H1 2025 | H1 2025 % Total | H1 2024 | H1 2024 % Total | | :-------------------------- | :------ | :-------------- | :------ | :-------------- | :------ | :-------------- | :------ | :-------------- | | Same Branch | $5.0 | 22.0% | $32.5 | 71.4% | $(24.0) | (163.3)% | $51.9 | 65.6% | | Acquired | $17.7 | 78.0% | $13.0 | 28.6% | $38.7 | 263.3% | $27.2 | 34.4% | | **Total** | **$22.7** | **100.0%** | **$45.5** | **100.0%** | **$14.7** | **100.0%** | **$79.1** | **100.0%** | Adjusted EBITDA Margin Contributions (Millions) | Adjusted EBITDA Margin Contributions (Millions) | Q2 2025 | Q2 2025 % Margin | Q2 2024 | Q2 2024 % Margin | H1 2025 | H1 2025 % Margin | H1 2024 | H1 2024 % Margin | | :-------------------------------------------- | :------ | :--------------- | :------ | :--------------- | :------ | :--------------- | :------ | :--------------- | | Same Branch | $0.8 | 16.0% | $5.4 | 16.6% | $(17.4) | (72.5)% | $15.1 | 29.1% | | Acquired | $3.3 | 18.6% | $2.3 | 17.7% | $6.7 | 17.3% | $4.8 | 17.6% | | **Total** | **$4.1** | **18.1%** | **$7.7** | **16.9%** | **$(10.7)** | **NMF** | **$19.9** | **25.2%** | - For the six months ended June 30, 2025, same branch revenue decreased, resulting in a negative same branch adjusted EBITDA margin contribution, indicating a decremental margin[51](index=51&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=5-non-gaap-financial-measures) This section defines and reconciles non-GAAP financial measures, including Adjusted Net Income, Adjusted Gross Profit, Adjusted Selling and Administrative Expense, and Adjusted EBITDA [Explanation of Non-GAAP Measures](index=3&type=section&id=5.1-explanation-of-non-gaap-measures) IBP uses non-GAAP financial measures such as EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, Adjusted Net Income per diluted share, Adjusted Gross Profit, and Adjusted Selling and Administrative expense to provide investors with useful information regarding core operations and comparative performance. These measures adjust GAAP figures for items not considered part of core operations, like share-based compensation, acquisition-related expenses, and amortization - Non-GAAP measures are used to adjust GAAP net income, EBITDA, gross profit, and selling and administrative expense for items not considered part of core operations, aiding in analyzing and benchmarking business performance[30](index=30&type=chunk) - Adjusted EBITDA is considered useful for comparing operating performance by removing the effect of capital structure, asset base, income taxes, and non-core items, but it has limitations as it excludes material expenses like interest and taxes[31](index=31&type=chunk)[32](index=32&type=chunk) - Adjusted Net Income is used to measure comparative operating performance by removing the effect of certain non-core items such as discontinued operations, acquisition-related expenses, and amortization expense, and their tax impacts[33](index=33&type=chunk) [Adjusted Net Income Reconciliation](index=11&type=section&id=5.2-adjusted-net-income-reconciliation) Adjusted Net Income for Q2 2025 was $80.8 million, up from $80.5 million in Q2 2024. Diluted Adjusted Net Income per share was $2.95, compared to $2.84 in the prior year quarter. Adjustments primarily include share-based compensation, acquisition-related expenses, and amortization expense, net of their tax impact Adjusted Net Income Reconciliation (Millions, except per share) | Metric (Millions, except per share) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income, as reported | $69.0 | $65.2 | $114.4 | $121.1 | | Share-based compensation expense | $5.3 | $4.7 | $11.2 | $8.7 | | Acquisition related expenses | $0.5 | $0.6 | $1.0 | $1.1 | | Amortization expense | $10.1 | $10.5 | $20.2 | $21.2 | | Tax impact of adjusted items | $(4.1) | $(5.4) | $(8.4) | $(10.4) | | **Adjusted net income** | **$80.8** | **$80.5** | **$138.4** | **$150.7** | | Diluted net income per share, as reported | $2.52 | $2.30 | $4.15 | $4.27 | | Diluted adjusted net income per share | $2.95 | $2.84 | $5.02 | $5.32 | - The company ceased reporting financial results for dispositions as the closing of a commercial end market-oriented branch is essentially complete and its financial results are insignificant as of Q2 2025[35](index=35&type=chunk) [Adjusted Gross Profit Reconciliation](index=12&type=section&id=5.3-adjusted-gross-profit-reconciliation) Adjusted Gross Profit for Q2 2025 was $260.2 million, slightly higher than the reported gross profit of $259.9 million, primarily due to the addback of share-based compensation expense. The Adjusted Gross Profit margin remained consistent with the GAAP gross profit margin at 34.2% Adjusted Gross Profit Reconciliation (Millions) | Metric (Millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross profit | $259.9 | $251.4 | $483.6 | $485.9 | | Share-based compensation expense | $0.3 | $0.3 | $0.6 | $0.6 | | **Adjusted gross profit** | **$260.2** | **$251.7** | **$484.2** | **$486.5** | | Gross profit margin | 34.2% | 34.1% | 33.5% | 34.0% | | Adjusted gross profit margin | 34.2% | 34.1% | 33.5% | 34.0% | [Adjusted Selling and Administrative Expense Reconciliation](index=12&type=section&id=5.4-adjusted-selling-and-administrative-expense-reconciliation) Adjusted Selling and Administrative expense for Q2 2025 was $143.3 million, lower than the reported $148.8 million, after adjusting for share-based compensation and acquisition-related expenses. As a percentage of total revenue, Adjusted Selling and Administrative expense was 18.8%, compared to 19.6% for the reported expense Adjusted Selling and Administrative Expense Reconciliation (Millions) | Metric (Millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Selling and Administrative expense, as reported | $148.8 | $141.2 | $292.6 | $277.1 | | Share-based compensation expense | $5.0 | $4.4 | $10.6 | $8.2 | | Acquisition related expenses | $0.5 | $0.6 | $1.0 | $1.1 | | **Adjusted Selling and Administrative expense** | **$143.3** | **$136.2** | **$281.0** | **$267.8** | | Selling and Administrative expense - % Total revenue | 19.6% | 19.1% | 20.2% | 19.4% | | Adjusted Selling and Administrative expense - % Total revenue | 18.8% | 18.5% | 19.4% | 18.7% | [EBITDA and Adjusted EBITDA Reconciliation](index=13&type=section&id=5.5-ebitda-and-adjusted-ebitda-reconciliation) The reconciliation shows EBITDA for Q2 2025 at $128.2 million and Adjusted EBITDA at $134.0 million. Adjustments to net income to arrive at Adjusted EBITDA include interest expense, income tax provision, depreciation and amortization, acquisition-related expenses, and share-based compensation expense EBITDA and Adjusted EBITDA Reconciliation (Millions) | Metric (Millions) | Three months ended June 30, 2025 | Three months ended June 30, 2024 | Six months ended June 30, 2025 | Six months ended June 30, 2024 | | :---------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income, as reported | $69.0 | $65.2 | $114.4 | $121.1 | | Interest expense | $8.3 | $8.2 | $16.6 | $20.1 | | Provision for income tax | $24.4 | $21.5 | $40.3 | $42.0 | | Depreciation and amortization | $26.5 | $24.7 | $52.9 | $49.2 | | **EBITDA** | **$128.2** | **$119.6** | **$224.2** | **$232.4** | | Acquisition related expenses | $0.5 | $0.6 | $1.0 | $1.1 | | Share based compensation expense | $5.3 | $4.7 | $11.2 | $8.7 | | Asset impairment | $0.0 | $4.9 | $0.0 | $4.9 | | **Adjusted EBITDA** | **$134.0** | **$129.8** | **$236.4** | **$247.1** | | Adjusted EBITDA margin | 17.6% | 17.6% | 16.4% | 17.3% | [Additional Information](index=2&type=section&id=6-additional-information) This section provides background information on Installed Building Products, outlines forward-looking statements, and details the conference call and webcast for Q2 2025 results [About Installed Building Products](index=3&type=section&id=6.1-about-installed-building-products) Installed Building Products, Inc. is a leading installer of new residential insulation and a diversified installer of complementary building products across the continental U.S. The company manages the entire installation process, serving new and existing single-family, multi-family, and commercial projects through over 250 branch locations - IBP is one of the largest new residential insulation installers in the U.S. and a diversified installer of complementary building products (waterproofing, fire-stopping, garage doors, etc.)[16](index=16&type=chunk) - The company manages all aspects of the installation process, from material purchase to timely supply and quality installation, serving residential and commercial projects in 48 continental states and D.C. through over 250 branch locations[16](index=16&type=chunk) [Forward-Looking Statements](index=3&type=section&id=6.2-forward-looking-statements) The press release contains forward-looking statements regarding the housing and commercial markets, operations, financial model, dividends, demand for services, expansion, acquisitions, and profitability. These statements involve risks and uncertainties, and actual results may differ materially due to various factors, including economic conditions, interest rates, material prices, and other risks detailed in SEC filings. The company does not intend to update these statements unless required by law - Forward-looking statements relate to future events and depend on circumstances that may or may not occur, involving risks and uncertainties[17](index=17&type=chunk) - Actual results may differ materially due to factors such as general economic and industry conditions, increases in mortgage interest rates, rising home prices, inflation, material price and supply environment, and other risks outlined in the Company's Form 10-K[17](index=17&type=chunk) - The company has no obligation to update any forward-looking statements after the date of the press release, except as required by federal securities laws[17](index=17&type=chunk) [Conference Call and Webcast](index=2&type=section&id=6.3-conference-call-and-webcast) IBP hosted a conference call and webcast on August 7, 2025, at 10:00 a.m. Eastern Time to discuss the Q2 2025 results. Replay information is available through September 7, 2025 - A conference call and webcast were held on August 7, 2025, to discuss the Q2 2025 results[14](index=14&type=chunk) - A replay of the conference call is available through September 7, 2025, via dial-in or webcast on the company's investor relations website[14](index=14&type=chunk)

Core Viewpoint - Three stocks have been added to the Zacks Rank 5 (Strong Sell) List, indicating a negative outlook for these companies based on recent earnings estimate revisions. Group 1: Company Specifics - ARMOUR Residential REIT, Inc. (ARR) invests in residential mortgage-backed securities, with a Zacks Consensus Estimate for its current year earnings revised downward by 6.1% over the last 60 days [1] - Goosehead Insurance, Inc. (GSHD), the holding company for Goosehead Financial, LLC, has seen its Zacks Consensus Estimate for current year earnings revised downward by 1.6% over the last 60 days [1] - Installed Building Products, Inc. (IBP) is a leading installation contractor for insulation in residential and commercial sectors, with its Zacks Consensus Estimate for current year earnings revised downward by 2.1% over the last 60 days [2]

Group 1 - Installed Building Products, Inc. (IBP) is a leading installer of insulation, waterproofing, fireproofing, and other complementary building products for commercial and residential construction projects in the US [1] - The company has experienced substantial revenue growth [1] Group 2 - The analyst has no current stock, option, or similar derivative position in any of the companies mentioned but may initiate a beneficial long position in IBP within the next 72 hours [2] - The article expresses the author's own opinions and is not receiving compensation for it [2]

Financial Performance - Net revenue for the three months ended March 31, 2025, decreased by 1.2% to $684.8 million compared to the same period in 2024, primarily due to a 5.6% decrease in Installation segment volume[113] - Gross profit for the same period decreased by 4.6% to $223.7 million, with a gross profit percentage of 32.7%, down from 33.8% in 2024, mainly due to higher material and fixed vehicle costs[123] - Same branch sales from the residential end markets decreased by 4.6% for the three months ended March 31, 2025, with single-family sales growth down by 1.0% and multi-family sales growth down by 4.2%[123] - Operating expenses increased, with selling expenses rising by 6.3% to $35.4 million and administrative expenses increasing by 5.7% to $108.4 million, attributed to wage inflation and acquisitions[125][127] - Interest expense decreased by 30.3% to $8.3 million due to prior year term loan repricing, despite a decrease in interest income on money market accounts[129] - The effective tax rate for the three months ended March 31, 2025, was 25.9%, slightly down from 26.8% in 2024, impacted by non-deductible expenses[130] Shareholder Returns - The company returned $91.6 million to shareholders during the three months ended March 31, 2025, including a 6% increase in the regular quarterly dividend to $0.37 per share and a special dividend increase from $1.60 to $1.70 per share[114] Market Conditions - The U.S. residential new construction market is influenced by economic factors such as interest rates, inflation, and consumer confidence, with a noted decline in demand for new homes in early 2025[112][135] - The company anticipates that pressures from elevated mortgage rates will lessen over time if rates are reduced in the coming months, potentially improving housing affordability[133] - The company anticipates potential risks from increases in mortgage interest rates, inflation, and material pricing environments affecting future performance[173] Liquidity and Capital Structure - As of March 31, 2025, the company had cash and cash equivalents of $298.7 million and total liquidity of $544.7 million, including access to $250.0 million under its asset-based lending credit facility[139] - The company reported net cash provided by operating activities of $92.1 million for the three months ended March 31, 2025, an increase from $84.8 million in the same period of 2024[148] - The company's working capital, including cash and cash equivalents, decreased to $650.0 million as of March 31, 2025, down from $695.9 million as of December 31, 2024[147] - The company expects to spend cash to acquire various companies with at least $100.0 million in aggregate net revenue each fiscal year[141] - The company had $1.1 billion in aggregate long-term material cash requirements as of December 31, 2024, with commitments to purchase materials through December 2027[146] - Net cash used in financing activities increased to $94.9 million for the three months ended March 31, 2025, primarily due to dividends paid and stock repurchases[155] - The company issued $300.0 million in aggregate principal amount of 5.75% senior unsecured notes, maturing on February 1, 2028[156] - As of March 31, 2025, the company had $491.4 million due on its Term Loan, which matures on March 28, 2031[159] - The company had total outstanding loan balances relating to its Master Loan and Equipment Agreements of $80.9 million as of March 31, 2025[167] Risk Management - The company has $65.3 million in unsecured insurance letters of credit that do not reduce total liquidity[169] - As of March 31, 2025, the company has $495.0 million outstanding on its Term Loan, with $95.0 million exposed to market risks from interest rate fluctuations[174] - A hypothetical one percentage point increase in interest rates on variable rate debt would increase annual interest expense by approximately $1.0 million[174] - The company has three active and two forward interest rate swaps hedging $400.0 million of variable cash flows on its Term Loan through December 14, 2028[174] - The company's Senior Notes accrue interest at a fixed rate of 5.75%[174] Operational Outlook - The company operates over 250 branch locations across the U.S. and is well-positioned for long-term growth due to a strong balance sheet and ongoing acquisition strategy[111] - The company anticipates that seasonal trends will return, with higher sales expected in spring, summer, and fall compared to winter[143] - Forward-looking statements indicate expectations for demand for services and earnings in 2025, subject to various market risks[172] Accounting Policies - There have been no significant changes to critical accounting policies and estimates during the three months ended March 31, 2025[170]