IBP - Takeaways From Truist Securities Industrials & Services Conference

Research evidence excerpt

IBP - Takeaways From Truist Securities Industrials & Services Conference

oss Margin Views Misinterpreted. Gross margin in 1Q26 fell 50 basis points which was

Short Interest Ratio/% Of Float 4.6% a significant driver of the share price decline following the print, in our view. Investors have

Dividend/Yield $1.40/0.6% been wary of price pressure in insulation jobs impacting margins. The quarter saw installation

Enterprise Value ($M) $6,533 gross margins actually flat on a yoy basis with the pressure coming from mix as growth in the

lower margin distribution segment caused the headline number to fall notably. While there Cash & Equivalents ($M) $474

is pressure in the market, in our view IBP has managed the situation as best as possible, Total Debt ($M) $1,071

but we do expect more challenges to come.

5 Page Document Production Builders Share Below Market; Helps Results As This is Where Margin

Compression is Seen. Management noted that they are seeing installation sales to

the major production builders become practically in-line with home building revenues as

Reasons for this report cycle times have compressed meaningfully. IBP under indexes to these sellers given their

geographic focus. This is where most of the price compression is coming from.

✓ Truist Securities Conference Takeaways

Insulation Pricing Environment Stable Despite Manufacturer Adding Capacity.

Management believes the current pricing environment for insulation remains stable as

manufacturers have been curtailing production during the current housing downturn.

CertainTeed (SGO.PA, NR) recently finished construction of a new line, but recent pricing

announcements from the industry have appeared to counteract any potential impact to price.