Installed Building Products Post-Call Notes: End Markets Mixed, While Gross Mgns Revert; Lowering Our 2026-27E, Reducing Our Price Tgt; Underweight

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Installed Building Products Post-Call Notes: End Markets Mixed, While Gross Mgns Revert; Lowering Our 2026-27E, Reducing Our Price Tgt; Underweight

Michael Rehaut, CFA AC North America Equity Research

(1-212) 622-6696 12 May 2026 J P M O R G A N

michael.rehaut@jpmorgan.com

• Residential end markets expected to remain challenged near-term, while heavy

commercial should continue to show strength. Specifically, for its new residential

end markets, IBP expects near-term headwinds to persist, with the company noting

that the new single-family market was weaker than expected so far this Spring

selling season. Also, while its multi-family backlog continued to grow, IBP noted

that some projects are being delayed or “slow walked” by contractors. By contrast,

heavy commercial is expected to remain healthy in 2026 based on continued backlog

growth. Gross margins, despite falling to 32.2% in 1Q26 from 35.0% in 4Q25, are

still expected to range between 32-34% for the year, with 1Q expected to be the

trough, in-line with typical seasonality, and margins to improve throughout the year.

Regarding pricing, on fiberglass, IBP does not believe the current demand

environment can support a price increase, as it also noted that supply is readily

available and some additional capacity is coming back online. By contrast, a ~25%

cumulative price increase on spray foam (~11% of sales) is expected to have a good

amount of traction, while a 20% increase in aluminum prices will likely impact

pricing on gutters (6% of sales), both of which should drive price/mix in 2H26, but

also potentially be a headwind to gross margins. Regarding costs, while fuel did not

meaningfully impact 1Q, IBP expects $15-20M of incremental fuel costs over the

balance of the year.