Installed Building Products, Inc. (IBP) Q2 2026 Earnings Report, Transcript and Summary

Greetings. Welcome to the Installed Building Products Second Quarter 2026 Financial Results Conference Call. [Operator Instructions] Please note, this conference is being recorded. I will now turn the conference over to Ryan Ricketts, Managing Director, Investor Relations. Thank you, Ryan. You may begin.

Good morning, and welcome to Installed Building Products second quarter 2026 earnings conference call. Earlier today, we issued a press release on our financial results for the 2026 second quarter, which can be found in the Investor Relations section of our website. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements within the meaning of federal securities laws. These forward-looking statements are based on management's current beliefs and expectations and are subject to factors that could cause actual results to differ materially from those described today. Please refer to our SEC filings for cautionary statements and risk factors. We undertake no duty or obligation to update any forward-looking statement as a result of new information or future events, except as required by federal securities laws. In addition, management refers to certain non-GAAP and adjusted financial measures on this call. You can find a reconciliation of such non-GAAP measures to the nearest GAAP equivalent in the company's earnings release and investor presentation, both of which are available in the Investor Relations section of our website. This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer; Michael Miller, our Chief Financial Officer; and we are also joined by Jason Niswonger, our Chief Administrative and Sustainability Officer; and Brad Wheeler, our Chief Operating Officer. Jeff, I will now turn the call over to you.

Thanks, Ryan, and good morning to everyone joining us today. As usual, I will start the call with some highlights and then turn the call over to Michael, who will discuss our financial results in more detail before we take your questions. Our team continued to execute well during the second quarter, working closely with our customers to navigate a challenging residential housing backdrop while maintaining the high level of service they expect from IBP. We delivered positive consolidated revenue growth, supported by the contribution from recent acquisitions and growth within our commercial installation, manufacturing and distribution businesses. These results demonstrate the value of our diversified operating platform and the multiple avenues available to support growth across varying market conditions. Throughout the quarter, the macroeconomic backdrop was impacted by geopolitical factors, which increased the level of uncertainty for U.S. consumers. The low consumer confidence, along with affordability concerns has made new home sales more challenging. Even with industry-specific headwinds expected to continue to affect our new residential installation segment in the near term, our overall business has been resilient. All the credit goes to the hard-working men and women across our more than 250 branches throughout the United States and those who support them from our office in Columbus, Ohio. To everyone at IBP, thank you for your hard work and dedication. Looking at our 2026 second quarter performance, consolidated sales increased 2% and same-branch sales declined less than 1%. Our commercial end market continued to show strength, delivering double-digit installation sales growth for the fifth consecutive quarter with heavy commercial sales growth exceeding 15% during the quarter. With respect to our new single-family end market, activity remains challenged as a result of affordability concerns and lower consumer confidence with some geographic markets feeling more upbeat than others. In our multifamily end market, our contract backlog continues to grow, which is encouraging. Our other segment revenue grew 50% net of eliminations, partially due to acquisitions. We continue to effectively manage both material and labor to meet the needs of our customers and remain flexible to adjust to varying demand across regions. During the 2026 second quarter and in July, we completed acquisitions representing approximately $30 million of annual sales from a diversified product set in residential, commercial and industrial end markets. Acquisitions during the quarter and in July included an installer of mechanical insulation with the majority of its sales derived from retrofit work between industrial and commercial applications throughout the upper Midwest region with annual sales of approximately $12 million, an installer of car doors, closet shelving, mirrors and other accessories across residential markets serving customers throughout Minnesota and surrounding states with annual sales of approximately $7 million and an installer of door, bath and fencing hardware, primarily in new residential markets throughout South Carolina and Georgia with annual sales of approximately $7 million. Although deal timing is hard to predict, our current outlook for acquisition opportunities in 2026 is strong, and we expect to acquire at least $100 million of annual revenue this year. In terms of broader housing construction activity, U.S. Census Bureau data for the 2026 second quarter showed single-family starts decreased 4% from the prior year, while multifamily starts were up 10% for the same period. I'm proud of our team's continued success and commitment to doing an excellent job for our customers. Once again, to everyone at IBP, thank you. I remain encouraged by the fundamentals of our industry, our competitive positioning and optimistic about the prospects ahead for IBP and the broader insulation and complementary building products installation business. With this overview, I'd like to turn the call over to Michael to provide more detail on our 2026 second quarter financial results.

Thanks, Jeff, and good morning, everyone. Consolidated net revenue for the second quarter was up 2% to $778 million compared to $760 million for the same period last year. Same-branch sales for the Installation segment were down 2% for the second quarter as a 6% decline in new residential same-branch sales was partially offset by a 10% increase in commercial same-branch sales. Although the components behind our price/mix and volume disclosures have several moving parts that are difficult to forecast and quantify, price/mix was up 1% during the second quarter. And when including heavy commercial, price/mix increased 3%. Volume during the 2026 second quarter decreased by 5%, primarily due to lower new single-family volume. With respect to profit margins in the second quarter, our business achieved adjusted gross margin of 33.3% compared to 34.2% in the prior year period. Our consolidated gross margin was influenced by the relative mix of revenue from our installation and other segments. As we have stated before, our installation business generates a higher gross margin than our other segment. During the quarter, the other segment revenue net of eliminations grew 50%, which contributed positively to consolidated gross profit, but also created a mix headwind to our consolidated gross margin percentage of 40 basis points. Second quarter 2026 Installation segment gross margin was 36.5% compared to 37.1% in the prior year. The decline in gross margin for the Installation segment was primarily due to increased fuel expense, which reduced gross margin by 50 basis points. Adjusted selling and administrative expenses increased 3% compared to the 2025 second quarter. As a percent of second quarter sales, adjusted selling and administrative expense was 18.9% compared to 18.8% in the prior year period. Administrative costs were impacted by higher medical insurance costs, which were a 30 basis point impact to EBITDA margin. Adjusted EBITDA for the 2026 second quarter was $131 million, reflecting an adjusted EBITDA margin of 16.9% and adjusted net income was $78 million or $2.91 per diluted share. Although we do not provide comprehensive financial guidance, based on recent acquisitions, we expect third quarter and full year 2026 amortization expense of approximately $10 million and $42 million, respectively. We would expect these estimates to change with any acquisitions we complete in future periods. Also, we continue to expect an effective tax rate of 25% to 27% for the full year ending December 31, 2026. Our second quarter net interest expense was $11 million compared to $8 million for the 2025 second quarter. We would expect third quarter net interest expense of approximately $10 million. At June 30, 2026, we had a net debt to trailing 12-month adjusted EBITDA leverage ratio of 1.34x compared to 1.15x at June 30, 2025, which remains well below our stated target of 2x. At June 30, 2026, we had $374 million in working capital, excluding cash and cash equivalents. Capital expenditures and total incurred finance leases for the three months ended June 30, 2026, were approximately $18 million combined, which was approximately 2% of revenue. We ended the second quarter with $395 million in cash on the balance sheet, and we will continue to prioritize acquisitions with long-term strategic benefits and attractive returns on invested capital. We expect positive free cash flow will continue to support shareholder returns and stock buybacks based on prevailing market conditions. During the 2026 second quarter, we repurchased approximately 365,000 shares of common stock at a total cost of $76 million. At June 30, 2026, the company had approximately $398 million available under its stock repurchase program, which expires March 1, 2027. IBP's Board of Directors approved a third quarter dividend of $0.39 per share, which is payable on September 30, 2026, to stockholders of record on September 15, 2026. The third quarter dividend represents a more than 5% increase over the prior year period. We are committed to continuing to grow the company while returning excess capital to shareholders through our dividend policy and opportunistic share repurchases. With this overview, I will now turn the call back to Jeff for closing remarks.

Thanks, Michael. I'd like to conclude our prepared remarks by once again thanking IBP employees for their hard work and commitment to our company. Our success over the years is made possible because of you. Operator, let's open up the call for questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Susan Maklari with Goldman Sachs.

My first question is around the activity that you're seeing on the ground. I think as we ended the first quarter, you had talked about the fact that the private builders had not come back the way that you had anticipated going into the spring. Can you talk about what you're seeing on the ground in the quarter and how things moved relative to the different kinds of customers that you have in the geographies?

Sure. This is Michael. Thanks for the question. We're continuing to see relative better performance with the private builders relative to the public builders -- of the public builders that have reported so far, their second quarter results, homebuilding revenue is down kind of mid-single digits on a combined basis. Our revenue with them was similarly down. The revenue profile that we had with the private builders, while down, was not down nearly as much as it was with the public. We continue to believe that will be the trend through the rest of the year. Although if you look at their guidance/consensus, they're seeing the public builders for the back half of the year, it would imply sequential improvement in the third quarter and the fourth quarter, so that the third quarter would be down roughly low single digits and actually the fourth quarter would be up low single digits. Now that's there. Guidance/consensus, as we've said a million times, we don't provide guidance. I will say, though, that historically, our sales to them have tracked very closely to their reported homebuilder revenue.

Okay. All right. That's helpful. And then moving to the gross margin, well done there. You were in line with our expectations. And I know you talked a little bit about some of the headwinds that you saw, especially on the install side. Can you just give us a bit more color on the moving parts that are coming through the gross margin and your ability to offset some of those headwinds that you're seeing, especially on the fuel side? And just anything that we should be thinking about in the forward quarters? Appreciating that you don't give guide, but just anything in terms of underlying mix or other factors?

Yes. Su, thanks for that question. And the gross margin really was consistent with what certainly with our 32% to 34% full year range that we have talked about. The team is doing a very good job offsetting not just in cost of goods sold, but also in G&A, some of the inflationary pressure that we're seeing sort of across the board. The one thing that has been at least initially up to this point because it was really a second quarter event is dealing with the increase in fuel, which was a 50 basis point headwind to the Installation segment. It's important to note that even though we had headwinds in the Installation segment on the residential side, primarily the single-family side, product margin in the Installation segment was actually up slightly in the quarter, which we felt very good about. I would say that there has been a little bit, but it's insignificant at this point, benefit from the selling price increases associated with the selling price or manufactured price increases from spray foam. We expect to see more positive impact from that in the second half of the year. It might be a little bumpy in the third quarter. But ultimately, the market is accepting that price increase. And as we discussed quite a lot in our last conference call, the customer base that is the natural user of spray foam is a custom, semi-custom foam. And there are our customers that are most willing to accept higher prices versus certainly on the entry-level side. The other thing that was pretty significant from a gross margin perspective, again, consistent with our expectations was the significant growth in our other segment, which just as a reminder, represents our distribution and manufacturing business. That business on a net basis grew about 50% in the quarter, which is fantastic, but it structurally has lower gross margins. So while the gross margins in that business actually improved to 24.7% from 23%, they are substantially lower than the Installation segment gross margins, which were basically flat at 37% year-over-year. So that higher percentage of sales or higher relative sales in the other segment was about -- was a 40 basis point headwind to gross margin. All of that being said, we continue to expect that the other segment this year will continue to grow at a much faster rate than the installation segment. So it will weigh on reported gross margin, but we think it is very relevant for investors to look at the difference in margin between installation and the other segment. And for those of you that read the release very closely, you'll see that we did provide more detail in the segmentation breakout, just to make it a little bit clearer the margin differential in the two segments.

Our next question is from Sam Reid with Wells Fargo.

I'm going to start with more of an industry question here. We heard from one of the big OEMs yesterday on the insulation side that they're bringing a plant back online in the fourth quarter. Just curious your thoughts on implications for capacity utilization. And that same OEM, I believe, is also hoping to push to some pricing in September. Just curious kind of the puts and takes on that pricing in the context of more capacity.

So were you referring to the [ Nehi ] plant, coming back up? Yes. I mean that's not a particularly large plant or very much volume or some of the things. So I think between -- I guess, speculation would be that between rebuilds and things that aren't online yet or not fully online yet or might come down, I don't think it's going to make much of a big kind of splash in any way, shape or form. But I would say that material is readily available, both [ lose end ], and I'm sure we'll spend some time talking about the market dynamic. I mean, clearly, the -- particularly on the single-family side and emphasize the entry level of the single-family side continues to be weak, and we don't see dramatic improvement in that such that you would see material tightness. And even there's another manufacturer that brought up the largest line in the country, and that's still not running at full capacity yet. So there's more supply coming online with that facility.

Absolutely. Thanks for that helpful context. Let's maybe switch gears and just move down the P&L to SG&A. Just looking at the leverage this quarter, I guess I should say the deleverage, it was significantly better than the first quarter. I know that there were a few things you called out last quarter, some facility and liability insurance headwinds. This quarter, it sounds like the deleverage was mostly just a function of medical expenses. Just curious kind of any sequential dynamics we should be mindful of on the SG&A line, perhaps any points of improvement quarter-over-quarter?

Yes. So if you strip out medical on a same-branch basis, G&A expenses were actually down like 2% in the quarter from last year, which really is a yeoman's job, quite frankly, given the inflationary pressure that we're seeing in other types of insurance within facility costs. The team is doing an excellent job of managing what they can manage, quite frankly. We will continue to pursue that through the course of the year. But there's some stuff like the medical, which was up 33% in the quarter from a 40% up last quarter. It's something that we're working on, but there's not a lot of easy fixes, quite frankly, on that. We've done all the easy fixes when it comes to planning, design and negotiating, aggressively trying to bring costs down. But it's just a factor of -- it's a factor that every company faces these days.

Our next question is from Stephen Kim with Evercore ISI.

It was a strong quarter from our perspective, particularly in other. And I was curious if you could talk a little bit about the drivers of strength in that segment. Any particular verticals to call out there? And then similarly, in commercial, I think you indicated there was a lot of strength there and even in, I would say, specifically in light commercial. If you could give us a sense for -- was there anything there that wouldn't sort of extend strength-wise into the back half of the year?

A couple of things. Yes, the other division did very well. The 50% is on an as-reported basis and not on a same-branch basis. So on a same-branch basis, the other segment grew like 28%, still a phenomenal result. And really, that's sort of across the board, both in distribution and in the manufacturing side. So our manufacturing there is cellulose insulation, as you know, and they're just doing a phenomenal job. And the demand drivers there are a little bit different than they are for, say, the residential installation business because it's a lot of R&R and it's also a lot of industrial fibers and road fibers. So they're seeing really, really solid demand there. And the team is continuing to execute extremely well. And even though the gross margins are considerably lower than the installation division, they are improving those margins. So we feel really good about what the team is doing there, on the commercial side, particularly the light commercial side, it has turned a little bit sooner than we expected. So we feel good about that. And we believe it will continue to be positive and not significantly positive, but positive throughout the rest of the year. And then, of course, the heavy commercial business is clearly the star within the company right now in terms of their ability to continue to grow at a high rate of growth. Their same-branch sales growth for the heavy commercial business was roughly 16% in the quarter, down from higher percentages in the most recent couple of quarters. But clearly, the comps are getting tougher and tougher. They continue to increase their backlog despite the fact that they're putting up record revenue, every month and at good margins. So we feel really good about the visibility we have into that business and that it should continue to perform well through the rest of the back half of the year, albeit the sales growth -- the rate of sales growth will come down as it hits the very difficult comps from the back half of last year.

Got you. Yes. So it sounds like there wasn't anything really that should drive lumpiness in either other or commercial. You did indicate, though, that in the spray foam pricing dynamic, while certainly the trend is moving higher there, you indicated that there could be some lumpiness in 3Q. So I was just curious, one, what is driving the lumpiness call out in spray foam? Is it significant? And then secondly, just to sort of clean up, you do not expect to see any kind of lumpiness in other or commercial in either 3Q or 4Q, right?

Lumpiness, I would say no, consistency, yes, but particularly again on the commercial side, I'll reiterate that the rate of growth is coming against those really hard comps in the second half. My comment around the spray foam was really just that the price realization is new, and it's such a significant price increase. And just as a reference, it was approximately 25% increase in material costs. So there's still some market participants are still kind of adjusting to that. We feel ultimately that we're going to come out of this at minimum margin neutral, obviously, much higher from a dollars perspective, given the discipline in the spray foam contractor base. But just given the magnitude of the increase, there might be a little bit of turning lumpiness that goes on. It's still a little early to tell. We haven't really seen any demand destruction, if you will, in terms of conversion from spray foam to fiberglass. But we'll have a much clearer picture as to how much of that happens when we report third quarter results.

Our next question is from Philip Ng with Jefferies.

Congrats on a really strong quarter in a tough environment. Michael, your words, heavy commercial was a star yet again. Is there an opportunity to kind of scale that business up in a much bigger way, whether it's organically M&A? And historically, your M&A on the resi install side has been smaller bolt-on in nature. Are there chunkier assets on the heavy commercial side for installation or maybe even pursuing commercial roofing on the contractor side? Any color there?

I mean the simple answer is yes, yes and yes. But on the heavy, I'll let Brad talk about the organic opportunity on the heavy commercial side.

This is Brad. On the heavy side, so yes, we're doing our growth through our customer base as they spread out, we're following those. And then once we obviously build up additional contracts, we'll open up a brick-and-mortar and service that area. So it's a little bit slower growth expansion, I should say, on that, but it's still -- it's in our plan, and we continue to do it every day.

Do you want to talk about M&A?

Well, you said they are absolutely larger prospects in terms of commercial contractors that would be there potentially on the acquisition side, and we continue to be interested in commercial roofing, you also mentioned and mechanical and industrial.

Okay. Super. And then certainly, your largest competitor on the resi installation side got taken out, right? Like any deal of that size, there will be change. Does that present an opportunity for you guys, whether it's share, talent, M&A? Just kind of help us think through potentially any ripple effects that could be good or bad for you guys?

Yes. I think it's still too early to tell. I mean they're trying to figure out exactly what they have. And our continued belief is that on the installation side, they will continue to be a really good competitor, and we'll continue to work. We'll continue to compete with them the same way we are today and we spend success.

Our next question is from Keith Hughes with Truist Securities.

My question is on M&A. Jeff, you addressed a little bit a second ago on the opportunities in the various parts of nonresidential. It has been a success for you here. Would you start to pick individual trades where you really ramp up and do a slug of deals around a certain commercial install trade? Or do you think it will be more opportunistic in terms of doing different trades in that area?

I think clearly, we've kind of signaled and are continuing to try to signal that we'd like to buy a platform business in one of these kind of adjacent market segments and industry segments. And I think clearly, once we do that, the word will be out, and we will identify more deals that are kind of concentrated in one or two of those areas.

And your current heavy commercial, what kind of trade are you the biggest in right now? Is there one that sort of stands out?

Yes. So with our heavy waterproofing is probably our largest product right now and followed by fireproofing.

Our next question is from Trey Grooms with Stephens.

This is Ethan on for Trey. I wanted to start off with multifamily. There has been some discussion recently around the validity of the census numbers, but you guys mentioned that you guys feel pretty good about multifamily heading into the second half and your backlog continues to grow. And that's maybe despite perhaps some projects slowing down. So any updated thoughts on the multifamily business would be great.

Yes. We continue to feel good about it. I would agree that I'm not so sure about the census numbers. Our kind of feeling is that at least where we sit today, that multifamily -- excuse me, single-family is probably going to be down, call it, mid-single digits, maybe even a little bit more this year from a starts perspective. Year-to-date, multifamily starts are up like, what, 10% or something like that. I mean, I think it would be more realistic to assume that multifamily starts are up mid-ish single digits this year. I will say, and we feel pretty encouraged by this, our multifamily sales actually inflected positively in June and were positive in July as well. So we're definitely seeing an inflection there based upon the growth in the backlog. Now does that mean that we're going to have growth for the back half of the year? Certainly not going to guarantee that, but we are feeling encouraged by the trends that we're seeing there sort of across the board. And the team there continues to add to the backlog. Something to provide a little bit of color for you on the multifamily side. And we talked a little bit about this, I believe, last quarter. But our sales -- so if you look at our sales as a percentage of our sales, the South Census region represents roughly 60% of our multifamily revenue, whereas it only represents -- this is the South Census region, is only 43% of total U.S. completions. Obviously, the implication there is our market share in the South region in multifamily is very strong, which it is. And it is -- the growth that we're seeing from that South Census region right now in multifamily has been very solid.

Okay. Yes, that's great color. And shifting gears maybe you guys bought back a decent amount of stock in the quarter. So really, this is just a high-level question around your thoughts internally around balancing M&A with buybacks, given where we are in the cycle. And then, of course, understanding your signaled ambitions for a larger platform deal, if you could just remind us of any criteria you have around M&A perhaps in terms of like a margin profile returns, maybe where you'd be willing to flex from a leverage standpoint? Just any high-level thoughts there would be great.

Sure. So from an M&A perspective, especially if it's a platform deal, I think we would target a margin that is certainly not dilutive, potentially be accretive to the overall margin profile of the company. Right now, we are significantly below our stated 2x of leverage. I think we've been very clear with investors that for the right deal or for the right set of deals that we would take leverage up to as high as maybe 3, recognizing that any businesses we buy and the existing business generate a tremendous amount of free cash flow and that we would delever very quickly. I mean one of the things that I think is absolutely worth highlighting, we've been in a very challenging operating environment for the past really four to five years. And if you look at the consistency of performance of the business, and our ability to produce record results year after year gives us a lot of confidence in our ability to maybe put a little more leverage on the balance sheet and use the free cash flow generating capabilities of both the existing -- the current business and any future business that we buy. We feel very good about that. Going back to the first part of your question, M&A is definitely priority #1. But at the same time, stock repurchases are important to us. And the reality is we've done extremely well financially by repurchasing our shares. And we will continue to do that. But I will caveat that with saying that M&A is #1.

Our next question is from Ken Zener with Seaport Research.

I'm sure I'll take some of this off-line with you, but Michael, it seems like you're disclosing more information again. The gross margins in installation that you highlighted, 36.5% versus 37.1% and on the product side, 24.7% versus 23%. And you said you disclosed some more information. I'm just -- can you tie off when you say those gross margins, just for my benefit, I guess, others as well, which -- what part sales is -- the installation that you're referring to on gross margin, which in your new disclosure or your expanded disclosure in your presentation, is that the normal installation for just commercial and residential, not the other products, which would be fireproofing, closets, et cetera?

No, it's anything that's installed. So it's the entire installation segment, including the complementary products. What it excludes is the manufacturing operations, which are the cellulose manufacturing facilities and then the distribution business.

Okay. Good. I just -- that's what I thought I just wanted to make sure that I wasn't missing something. The private mix, which has more spray foam and has absorbed you're saying favorably the spray foam. Is that really what your market share is better there or the price increase is so big that they just have no choice but to take it from you and for others?

Yes. I think there's -- I mean, it's still very early, right? So the price increase from the manufacturers really took effect later in the quarter. But the early signs are that, yes, the market is taking the price increase. And it happens for two reasons. One, I would say, generally speaking, the spray foam contractor base is very disciplined around price. And two, it is semi-custom custom product and that homeowner is much more able to accept price increases than, say, an entry-level home.

And then related to that last point, if you would, appreciate it. Could you describe the revenue mix as you described the publics in terms of the public share of revenue and units?

Well, the publics are 25% -- roughly 25% of total single-family revenue, which translates into about 15% of total revenue. And then breakdown -- yes, the units, generally speaking, it's like 10 points more. So it would be, say, 35% of single-family jobs, if you will. But we like to look at it in terms of revenue. We think that's kind of the more accurate way to do it. But because their average selling price, their average ASP and our average selling price to them, average stock price is much lower, obviously, that means the volume number of jobs is going to be considerably higher. And just as a reference to for everybody, the difference between spray foam and fiberglass, right, just sort of to level set for people is that fiberglass is roughly 50% of revenue, whereas spray foam is roughly 11% of revenue.

Our next question is from Mike Dahl with RBC Capital Markets.

A quick follow-up just on the spray foam dynamic. I think you mentioned that ultimately, you expect this to be at least margin neutral, but the comments about the potential bumpy 3Q, is that meant to suggest that in 3Q specifically, it might end up being a drag to margin percentage as there's a lag with that pass-through?

Yes, that was the implication.

Okay. Just want to clarify that. And then on the single-family side, obviously, a lot of the publics are talking about and trying to execute at least somewhat of a shift back towards build-to-order and more actively reducing spec inventory. When you think about the back half of the year, appreciating that your comments that you historically have tracked what those public builder results would be. Do you think that there's -- given that dynamic, there's a couple of quarters either late this year or early next year where you end up kind of lagging what the builders are reporting on closings as they execute that shift and there's maybe a little bit more of a timing difference between when your products are going in if they're not actively starting as many spec homes?

Yes. I think -- I mean that's definitely the case. I do think a lot of that has already happened. Certainly, it's going to be subdivision specific and builder specific. But what is benefiting us definitely to offset some of that spec inventory declining in the spec inventory is the fact that community counts continue to be up. And obviously, if you open up a community, you have to have model homes and a couple of homes just to make it look like a real subdivision. So that is supporting the other side of your comment in terms of them trying to reduce spec inventory. But that has really been going on for the past couple of quarters, quite frankly. We saw it pretty heavy in the first quarter. And we definitely saw a little bit of it in the second quarter for sure. But all in all, I would say that it's pretty fair. And again, if we look at historical results, we track very closely their reported homebuilding revenue.

Okay. Yes, that makes sense. So thinking about kind of going forward, you're effectively reverting back to -- you'll revert back to what's historic norm in terms of kind of timing of how you think about orders starts in your products?

Correct. Yes. I mean their cycle times right now are phenomenal, right? I mean it's incredible how tight their cycle times are. Yes, for sure.

Our next question is from Adam Baumgarten with Vertical Research Partners.

Maybe this is a question for Jeff. Just on the pushout of the June fiberglass insulation manufacturer price increases to September, do you think there's any chance that, that sticks?

Jeff is not here. He is not in the room, but this is Jeff Edwards. And it's a healthy -- supply is still tight, although as mentioned earlier, we're not having a problem or anything like that in product. So I guess it's probably anybody's guess at this point as to whether it sticks or not. But as we talked about most of this call, it's not exactly an environment that probably warrants and accept easily a price increase from a builder's perspective or anywhere in the chain to be honest. The dynamics there with more capacity coming online that lends less likelihood of acceptance. But I will say that we are in daily conversations with all of the manufacturers around price right now.

Okay. Got it. Makes sense. And then so you did a relatively small mechanical insulation acquisition or an install acquisition in 2Q. I know that's a focus area for you guys. Can you talk about why that area of the installation universe is attractive to you guys?

Yes. This is Brad. Yes, I mean it's pretty much an adjacent product to a degree, right? Like when you compare a heavy and our residential, lots of light commercial and heavy, obviously. It's a semiskilled to skilled trade. And obviously, it's in the insulation world, right? So it's not a stretch for us to have relationships with the manufacturers and understand the product. Over the time, over the years, it's become a more -- not just with data centers, but with all heavy commercial, more insulation requirements, more content, and it's still a somewhat fragmented segment. So there's an opportunity for M&A as well.

Margins are good and the average contractor is probably a little larger, too, right? So it's probably less cyclical in a lot of ways than the residential construction business and even some of the other commercial businesses. So pretty attractive, a big MRO component.

And you guys have the ability to buy direct in that as well, right?

Actually, it really goes through distribution because of the number of SKUs. Unlike residential fiberglass that you really have very few SKUs, you really need the distributor to hold -- actually, both the distributors and the manufacturers hold a lot of inventory in this product line, just given that there's so many SKUs. And really where the margin and differentiation comes in is in the labor force and managing the labor force. There is opportunity to improve, we believe, with scale volume advantage. I mean that business for us, the M&I business for us, mechanical and industrial business for us right now is about $50 million in revenue. So yes, we have a lot of opportunity there.

Our next question is from Kurt Yinger with D.A. Davidson.

Just one on price cost. I was kind of curious, looking at it through the lens of volume versus margin trade-offs with production builders. Can you just talk about maybe what you've seen over the last couple of quarters and whether there has been any progression towards maybe needing to walk away from some business or be maybe even more disciplined in terms of how you're pricing jobs? That would be great.

I mean, yes, it's no surprise that at the entry level, I mean, builders are looking for any opportunity to reduce costs and make the house more affordable. The team does an excellent job of being selective when they need to and continue to work very closely with our customers to make sure that we are paid a fair price for the installed solution that we're providing. The key is, and it's always been the case that we're providing an installed solution or we're providing material and the labor and that our pricing is not set at the national level, it's set at a very local level. And we might be having pricing pressure with a customer in one market, but in another market that might be really strong, we're getting price. So it is a constant negotiation, particularly in this kind of environment. But I believe our results clearly reflect our team's ability to manage very effectively in what is on the single-family side, a pretty challenging environment.

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Jeff Edwards for closing comments.

I'd just like to thank you for your questions, and I look forward to our next quarterly call. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.