House Call: The Week Ahead TOL 2Q (April-end) Earnings; May NAHB Survey; April Pending Home Sales, Starts & Permits

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House Call: The Week Ahead TOL 2Q (April-end) Earnings; May NAHB Survey; April Pending Home Sales, Starts & Permits

2026-27E, Reducing Our Price

Tgt; Underweight

Following IBP’s 1Q earnings and conference call, we provide our key takeaways below

(pre-call bullets in the body of this note). For 2026, across 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, which should drive price/

mix in 2H26, but also potentially be a headwind to gross margins. Also, while not

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

balance of the year. Finally, regarding 1Q results, total and organic sales fell 4% and 6%

YOY, respectively, roughly in-line with our -3%E and -6%E, as severe weather and

ongoing weakness in entry-level production builder demand more than offset continued