IBP 10-K & 10-Q changes, risk factors and insider trading

•federal government economic, trade, tariff and spending laws and policies;

In 2024,2025, the U.S. Census Bureau reported an estimated 1.371.36 million non-seasonally adjusted total housing starts, downas fromcompared 1.42to 1.37 million starts in 2023.2024. Mortgage interest rates are indirectly affected by the Federal Reserve's monetary policies and significantly impact the affordability of housing. The Federal Reserve raised the federal funds rate significantly in 2022 and 2023 to stabilize inflation. This contributed to higher mortgage interest rates.rate environment is also affected by the perception of higher interest rates following the historic period when the average 30 year mortgage rates were generally less than 5% during most of the 2010s and through 2021. The Federal Reserve began easing monetary policy in September 2024,2024 howeverafter raising the federal funds rates in 2022 and 2023, however, mortgage rates have remained elevated due to other economic factors such as treasury yields and sticky inflation concerns. According to the January 2025 Fannie Mae forecast, 20252026 housing starts are projected to decreaseremain slightlyrelatively stable at 1.31 million starts according to 1.32the million.January 2026 Fannie Mae forecast.

Other factors that might impact growth in the homebuilding industry include: uncertainty in financial, credit and consumer lending markets amid slow growth or recessionary conditions; levels of mortgage repayment; limited credit availability; federal and state personal income tax rates and changes to the deductibility of certain state and local taxes; Federal Reserve policy changes; shortages of suitable building lots in many regions; shortages of experienced labor; soft housing demand in certain markets; and rising materials prices. Given these factors, we can provide no assurance that recentour growth trendsbusiness will continue,continue to grow, whether overall or in our markets. The economic downturn in 2007-2010 severely affected our business. Another reduction in housing demand in the future could have a similar effect on our business.

A portion of the products we install and sell are for the commercial construction market. If this market does not grow in the future, the growth potential of our business, and our financial condition, results of operations and cash flows could be adversely affected. The commercial construction market, as measured by investment dollars, increaseddecreased 7%1% in the ten months ended October 31, 2025 compared to the same period in 2024 from 2023 per the most recently available U.S. Census Bureau.Bureau data.

According to Dodge Data & Analytics, commercial building starts in 2025,2026, measured by investment dollars, are expected to increase 6%3% from 20242025 while institutional building starts (aanother subset of the nonresidential construction market in which we participate) are expected to increase 4%6% from 2024.2025.

Innovations and new technologies in the building materials we install or new installation techniques could negatively impact our business if we are unable to adapt to the changes quickly. These changes could rapidly evolve the requirements from our customers and could require additional capital outlays for equipment. Competitors could use artificial intelligence to develop new products or methods of enhancing internal operations to gain advantages if we are unable to develop similar changes. New types of materials or changes in requirements in our existing markets could require us to develop relationships with unfamiliar vendors and suppliers and we may not be able to secure commercially advantageous pricing.

Our ability to offer a wide variety of products to our customers depends on our ability to obtain adequate product supply from manufacturers. We do not typically enter into long-term agreements with our suppliers but have done so from time to time. We currently have twothree long-term agreements with suppliers and may enter into other short- or long-term supply agreements at any time. We have certain agreements that do not qualify as supply agreements due to a lack of a fixed price and/or lack of a fixed and determinable purchase quantity, but nonetheless may require us to purchase certain of our products from certain vendors, depending on the specific circumstances. Generally, our products are available from various sources and in sufficient quantities to meet our operating needs. However, the loss of, or a substantial decrease in the availability of, products from our suppliers or the loss of key supplier arrangements could adversely impact our business, financial condition, results of operations and cash flows. Historically, unexpected events, such as incapacitation of supplier facilities due to extreme weather or fire, have temporarily reduced manufacturing capacity and production. U.S. international trade policyand tariff policies can impact the suppliers of certain materials we use in our business. Increased tariff rates on particular countries could motivate us to change suppliers to a different country of origin which could increase our dependence on certain suppliers. In addition, during prior economic downturns in the housing industry, manufacturers have reduced capacity by closing plants and production lines within plants. Even if such capacity reductions are not permanent, there may be a delay in manufacturers’ ability to increase capacity in times of rising demand. If the demand for products from manufacturers and other suppliers exceeds the available supply, we may be unable to source additional products in sufficient quantity or quality in a timely manner and the prices for the products that we use in our business could rise. These developments could affect our ability to take advantage of market opportunities and limit our growth prospects. We continually evaluate our supplier relationships and at any given time may move some or all of our purchases from one or more of our suppliers. There can be no assurance that any such action would have its intended effect.

Our business results also depend upon our branch managers and sales personnel, including those of companies recently acquired. While we customarily sign non-competition agreements, which typically continue for two years following the termination of employment, with our branch managers and sales personnel in order to maintain key customer relationships in our markets, such agreements do not protect us fully against competition from former employees. In addition, while the Federal Trade Commission enacted a rule which is currently setmoving asideto vacate its rule regarding non-compete agreements and subjecthas voted to courtdismiss challengesthe andrelated appeals, an increasing number of states have proposed rulesrules, and some states have enacted legislation, that would prohibitlimit the enforceability of non-competition agreements in most cases. Our non-competition agreements may prove to be unenforceable which could have a material adverse effect on our retention of key employees and our customer relationships.

The labor market for the construction industry is competitive, including within the sector in which we operate. We must attract, train and retain a large number of qualified employees to install our products while controlling related labor costs. We face significant competition for these employees from our industry as well as from other industries. Immigration policies could further reduce the availability of labor from other trades. Tighter labor markets may make it even more difficult for us to hire and retain installers and control labor costs. Our ability to attract qualified employees and control labor costs is subject to numerous external factors, including competitive wage rates and health and other insurance and benefit costs. Our labor costs have increased in recent years and may continue to increase as a result of competition, health and other insurance and benefit costs. In addition, health care coverage requirements, changes in workplace regulations and any future legislation could cause us to experience higher health care and labor costs in the future. Additionally, periods of economic inflation can cause wage expectations to increase and we may have difficulty retaining employees if we do not, or cannot, meet these expectations. A significant increase in competition, minimum wage or overtime rates in localities where we have employees could have a significant impact on our operating costs and may require that we take steps to mitigate such increases, all of which may cause us to incur additional costs, expend resources responding to such increases and lower our margins.

We participate in various multiemployer pension plans under collective bargaining agreements in Washington, Oregon, California and Illinois with other companies in the construction industry. We also participate in various multiemployer health and welfare plans that cover both active and retired participants. These plans cover most of our union-represented employees. If a participating employer stops contributing to the multiemployer pension plan, the unfunded obligations of the plan may be borne by the remaining participating employers. In addition, if a participating employer chooses to stop participating in these multiemployer pension plans, the employer may be required to pay those plans a withdrawal liability based upon the underfunded status of the plan.

In addition, the operating results of an individual branch may differ from those of another branch for a variety of reasons, including market size, end markets served, management practices, competitive landscape, building codes and other regulatory requirements, state and local taxes and local economic conditions. As a result, certain of our branches may experience higher or lower levels of growth than other branches. Therefore, our overall financial performance and results of operations may not be indicative of the performance and results of operations of any individual branch.

Increasing scrutiny, changing expectations from stakeholders and government regulations regarding our ESGsustainability practices and disclosure may impose additional costs on us or expose us to new or additional risks.

Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants, shareholders, and customers have focused on the ESG or “sustainability” practices of companies and have placed importance on the social cost of their investments. If our ESG practices do not meet investor, lender, or other industry stakeholder expectations and standards, which continue to evolve, our access to capital may be negatively impacted based on an assessment of our ESGsustainability practices. Any such limitations, in both the debt and equity markets, may negatively affect our ability to manage our liquidity, our ability to refinance existing debt, grow our businesses, implement our strategies, and our results of operations, and the price of our common stock.operations.

Federal and state regulations are rapidly evolving in regards to ESGsustainability matters. The SEC introduced new rules regarding climate-related disclosures in 2024, and if they become effective, would require us to make additional climate-related disclosures. Additionally, the State of California and other states have enacted or are considering enacting legislation that would require more extensive climate-related disclosures that we would be subject to compliance. These laws and regulations will increase our ongoing costs of compliance.

We have released our ESG report annually since 2021. The report includes our policies and practices on a variety of social and environmental matters. It is possible that stakeholders may not be satisfied with our ESGsustainability practices or the speed of their adoption. We could also incur additional costs and require additional resources to monitor, report, and comply with various ESGsustainability practices. Also, our failure, or perceived failure, to meet the standards or targets set forth in the sustainability report could negatively impact our reputation and stock price, employee retention, and the willingness of our customers and suppliers to do business with us.

The United States has experienced, and may experience again in the future, outbreaks of contagious diseases that affect public health and public perception of health. ForPandemics example,have, including in the COVID-19recent pandemicpast, affected the global economy and caused our business significant supply chain disruptions, increased material costs and caused a slowdown in commercial construction demand. The full extent and scope of impact of an outbreak of any contagious disease on our business and industry, as well as national, regional and global markets and economies, depends on numerous evolving factors that we may not be able to accurately predict, including the duration and scope of the outbreak, additional government actions taken in response, the impact on construction activity and demand for homes (based on employment levels, consumer spending and consumer confidence). Accordingly, our ability to conduct our business could be materially and negatively affected, any of which could have a material adverse impact on our business, financial condition, operating results and cash flows.

In addition, climate change and/or adverse weather conditions, such as unusually prolonged cold conditions, rain, blizzards, hurricanes, earthquakes, fires, other natural disasters, epidemics or other catastrophic events could accelerate, delay or halt construction or installation activity or impact our suppliers. The impacts of climate change may subject us to increased costs, regulations, reporting requirements, standards or expectations regarding the environmental impacts of our business. Most, if not all, of our locations may be vulnerable to the adverse effects of climate change. For example, we lease facilities and have significant operations in regionsFlorida, Texas, California and other coastal areas that experience extreme weather conditions.conditions or natural disasters including hurricanes and wildfires. Changing market dynamics, global policy developments and increasing frequency and impact of extreme weather events on the U.S. and elsewhere have the potential to disrupt our business. The impact of these types of events on our business may adversely impact quarterly or annual net revenue, cash flows from operations and results of operations. Weather is one of the main reasons for annual seasonality cycles of our business, and any adverse weather conditions can enhance this seasonality.

Cybersecurity threats and sophisticated cyberattacks pose a risk to our information technology systems and business operations. Advancements in artificial intelligence could be used by threat actors to attack our systems byin various ways including, but not limited to, creating increasingly effective phishing emails, false images or voice cloning to access our data. We have established security policies, processes and controls designed to help protect, identify and mitigate against the disruption of our operations and the intentional and unintentional misappropriation or corruption of our information technology systems and information in conjunction with identifying threats from new technologies that may disrupt our systems in the future. Despite these efforts, our information technology systems, including but not limited to jobCORE or other operational systems, email environments, financial systems, Human Resource and payroll systems, fleet management software, and risk management systems may be damaged, disrupted or shut down due to cyberattacks, unauthorized access to our systems, undetected intrusions, malicious software, computer viruses, ransomware, Trojan horses, worms, hardware or software failures or other events, and in these circumstances our disaster recovery plans may be ineffective or inadequate. These breaches or incidents could lead to business interruption, exposure of proprietary or confidential information, data corruption, fraudulent money transfers, damage to our reputation, exposure to legal and regulatory proceedings and other costs. Such events could impair our ability to conduct business and have a material adverse impact on our financial condition, results of operations and cash flows. As some of our systems are maintained or operated by third-party providers, including cloud-based systems, our information, operations and systems could be adversely affected if any of our significant providers, customers or suppliers experience a cybersecurity incident, data breach, reputational damage or disruption to their business operations.

Acquisitions are a core part of our strategy and we may be unable to continue to grow our business through acquisitions. In addition, acquired businesses may not perform in accordance with expectations, and our business judgments concerning the value, strengths and weaknesses of acquired businesses may not prove to be correct. At any given time, including currently, we may be evaluating or in discussions with one or more acquisition candidates, including entering into non-binding letters of intent. We may also be unable to achieve expected improvements or achievements in businesses that we acquire. The value of our common stock following the completion of an acquisition could be adversely affected if we are unable to realize the expected benefits from the acquisition on a timely basis or at all. Future acquisitions may result in the incurrence of debt and contingent liabilities, legal liabilities, goodwill or intangible asset impairments, increased interest expense and amortization expense and significant integration costs. In addition, future acquisitions could result in dilution of existing stockholders if we issue shares of common stock as consideration.

Our existing branches or any branches we may start or acquire serving the commercial end market involve competitive, operational, financial and accounting challenges and other risks that differ from our traditional residential installation business. In addition, the typical contractual terms and arrangements and billing cycle for the commercial construction end market are different than the residential new construction end market. The contractual terms are subject to our ability to accurately estimate our labor, material and overhead costs and we may not be able to recover any additional unexpected costs through change orders or claims. Our expansion into this market may include opening new branches that have higher start-up costs compared to our acquired branches. These factors and any other challenges we encounter could adversely affect our margins, financial condition, operating results and cash flows.

Certain products our distribution businesses sell are composed of materials with prices that fluctuate based on current market pricing. Fluctuations in market pricing of these materials can affect our selling prices. For example, one of our distribution businesses uses aluminum in many of its products. Aluminum commodity prices have experienced volatile fluctuations in the recent past which has reduced our selling prices while related inventory costs remained high. Aluminum prices mayhave alsoexperienced besignificant impacted in the near termincreases as the tariffs imposed on imported aluminum are scheduledincreased to increase50% fromin 10%2025. toAlthough 25%the current administration has suggested that it may reduce certain tariffs on Marchimported 12,aluminum, 2025.whether such changes will occur, and what their effects would be, remains unclear. Future trade policy may also be impacted by the recent U.S. Supreme Court decision invalidating tariffs imposed under the International Emergency Economic Powers Act, the effects of which remain uncertain. If our costs onof aluminum continue to rise, this may lead to a temporary decrease in margins, financial condition, operating results and cash flows for this business to the extent we are unable to pass along these price increases to our customers.

Some states in which we operate are considering or have already adopted new immigration laws or enforcement programs, and the federal government from time to time considers and implements changes to federal immigration laws, regulations or enforcement programs. These changes may increase our compliance and oversight obligations, which could subject us to additional costs and make our hiring process more cumbersome, or reduce the availability of potential employees. Although we verify the employment eligibility status of all our employees, including through participation in the “E-Verify” program in the states that require it, some of our employees may, without our knowledge, be unauthorized workers. In addition, use of the “E-Verify” program does not guarantee that we will properly identify all applicants who are ineligible for employment. Unauthorized workers are subject to deportation and may subject us to fines or penalties and, if any of our workers are found to be unauthorized, we could experience adverse publicity that negatively impacts our brand and may make it more difficult to hire and retain qualified employees. Termination of a significant number of employees due to work authorization or other regulatory issues may disrupt our operations, cause temporary increases in our labor costs as we train new employees and result in additional adverse publicity. We could also become subject to fines, penalties and other costs related to claims that we did not fully comply with all recordkeeping obligations of federal and state immigration laws. These factors could have a material adverse effect on our reputation, business, financial condition and results of operations.

Furthermore, immigration laws have been an area of considerable political focus in recent years,years. Some states in which we operate are considering or have already adopted new immigration laws or enforcement programs, and the U.S. Congress, Department of Homeland Security and the Executive Branch of the U.S. government from time to time consider or implement changes to federal immigration laws, regulations or enforcement programs. Changes in immigration or work authorization laws may increase our obligations for compliance and oversight, which could subject us to additional costs and potential liability and make our hiring process more cumbersome, or reduce the availability of potential employees. We may be indirectly impacted by changes in immigration laws if other construction trades are impacted as this would potentially tighten labor markets or lengthen construction cycles. We are subject to regulations of U.S. Immigration and Customs Enforcement, or ICE, andthe Department of Labor,Homeland Security, and we are audited from time to time by these parties for compliance with work authentication requirements. While we believe we are in compliance with applicable laws and regulations, if we are found not to be in compliance as a result of any audits, we may be subject to fines or other remedial actions.

In addition, we are exposed to potential claims arising from the conduct of our employees, homebuilders and other subcontractors, for which we may be contractually liable. We have in the past been, and may in the future be, subject to fines, penalties and other liabilities in connection with injury or damage incurred in conjunction with the installation of our products. Construction sites are inherently dangerous, and any failure in health and safety performance may have adverse effects on our reputation and relationships with our employees or customers. The nature and extent to which we use hazardous or flammable materials in our manufacturing processes creates risk of damage to persons and property that, if realized, could be material. Although we currently maintain what we believe to be suitable and adequate insurance, we may be unable to maintain such insurance on acceptable terms or such insurance may not provide adequate protection against potential liabilities. In addition, some liabilities may not be covered by our insurance. We maintain our Lead with Safety programprogram, an initiative focused on creating a safer working environment for both our employees and other jobsite personnel through year-round education and training, to help reduce jobsite, warehouse and plant injuries.

We are subject to various federal, state, local and other laws, building codes and regulations including, among other things, worker and workplace health and safety regulations promulgated by the OSHA, employment regulations promulgated by the U.S. Equal Employment Opportunity Commission and tax regulations promulgated by the Internal Revenue Service and various other state and local tax authorities. Our primary manufacturing facility is also subject to additional laws and regulations which may increase our exposure to health and safety liabilities. In addition, we are subject to increased regulation of data privacy and information security and may be subject to certain more stringent laws in states including California, Connecticut, Colorado, Delaware, Iowa, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Texas, Utah and Virginia, with similarstate laws goingwhere intowe effect in other states later in 2025 and beyond.operate. These types of data privacy and security laws, which continue to evolve, create a range of new compliance obligations for us and increase financial penalties for non-compliance. Additional or more burdensome regulatory requirements in these or other areas may increase our expenses, reduce demand for our services or restrict our ability to offer services in certain geographies, all of which could adversely affect our business, financial condition, results of operations and cash flows. Moreover, our failure to comply with any of the regulatory requirements applicable to our business could subject us to substantial fines and penalties that could adversely affect our business, financial condition, results of operations and cash flows.

Imposed tariffs could have an adverse effect on our business in the event we are unable to pass those direct cost increases to our customers or if it reduces demand for housing. The large majority of the materials we install and sell are sourced from domestic suppliers, but we also import a portion of the materials we install and sell from suppliers located in foreign countries. If our suppliers are subjected to additional tariffs and/or duties in the event U.S. foreign trade policies on imports were to change, we could experience increased pricing on some of the materials we install and sell if those tariff costs were passed on to us. The extent of these increases would depend on a variety of factors including the magnitude of each tariff, the extent our vendors pass on the tariffs they incur, and the number of countries subject to tariffs in the future. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powers Act, which has increased uncertainty around future trade policy actions. Additionally, other building materials such as lumber that are not employed in our business but utilized in other facets of the homebuilding or commercial construction industries could also be subject to increased pricing due to tariffs. This could raise home and/or commercial building prices which would reduce affordability and negatively impact demand and, as a result,for our business.services and products.

For example, there is a growing concern from advocacy groups and the general public that the emissions of greenhouse gases and other human activities have caused, or will cause, significant changes in weather patterns and temperatures and the frequency and severity of natural disasters. These concerns have resulted in increasing governmental and societal attention to ESGsustainability matters, including expanding mandatory and voluntary reporting, diligence, and disclosure on topics such as climate change, waste production, water usage, human capital, labor, and risk oversight, and could expand the nature, scope, and complexity of matters on which we are required to control, assess, and report. These and other rapidly changing laws, regulations, policies and related interpretations, as well as increased enforcement actions by various governmental and regulatory agencies, may create challenges for us, including for our compliance and ethics programs and by increasing our ongoing costs of compliance, which could adversely impact our results of operations and cash flows. For example, we are subject to increased ESGclimate regulation, including California Senate Bills 253, 261253 and 219 that go into effect in 2026 and mandate certain climate disclosure and reporting.

We are subject to various federal, state and local environmental laws and regulations. Although we believe that we operate our business, including each of our locations, in compliance with applicable laws and regulations and maintain all material permits required under such laws and regulations to operate our business, we may be held liable or incur fines or penalties in connection with such requirements. In addition, environmental laws and regulations, including those related to energy use and climate change, may become more stringent over time, and any future laws and regulations could have a material impact on our operations or require us to incur material additional expenses to comply with any such future laws and regulations. For instance, in many U.S. states, regulations have been enacted to phase out hydrofluorocarbon based blowing agents which are widely used by our company and other industry participants in closed-cell spray foam applications, due to their high global warming potential. If additional legislation required an accelerated timeline regarding the phase out of hydrofluorocarbon blowing agents to hydrofluoro-olefin blowing agents, we could incur higher costs.

•a substantial portion of our cash flow from operations will be dedicated to the payment of interest and principal on our indebtedness, thereby reducing the funds available to us for operations, capital expenditures, acquisitions, future business opportunities or obligations to pay rent in respect of our operating leases; and Our ability to service our debt and other obligations will depend on our future operating performance, which will be affected by prevailing economic conditions and financial, business and other factors, many of which are beyond our control. Our business may not generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet these obligations or to successfully execute our business strategies. See Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, "Liquidity and Capital Resources, Debt." of this Form 10-K.

Restrictions in our existing credit facilities, senior notes, and any future facilities or any other indebtedness we may incur in the future, limit our ability to take certain actions and breaches thereof could adversely affectimpair our business, financial condition, results of operations, and the value of our common stock.liquidity.

Moody’s Investor ServiceService, Fitch Ratings and Standard & Poor’s routinely evaluate our credit profile on an ongoing basis and have assigned ratings for our long-term debt. If these rating agencies downgrade any of our current credit ratings, our borrowing costs could increase and our access to the capital and commercial credit markets could be adversely affected.

As of December 31, 2025, due to interest rate swaps which serve to hedge a portion of the variable cash flows on our Term Loan, as hereinafter defined, $91.3 million of our borrowings (including unamortized debt issuance costs) were at variable interest rates and expose us to interest rate risks. If interest rates increase, our debt service obligations on our variable rate indebtedness, if any exists at the balance sheet date, would increase even though the amount borrowed would remain the same, and our net income and cash flows would correspondingly decrease. Specifically, we had no outstanding borrowings on our Revolver, as hereinafter defined, as of December 31, 2024,2025, but should we have a balance in the future, we would incur interest based on a rate that varies per the conditions set forth in our agreement.

In addition, advances under our Revolver generally bear interest based on, at our election, either a forward-looking term rate based on the Secured Overnight Financing Rate (“Term SOFR”) or the base rate (which approximated the prime rate) plus a margin based on the type of rate applied and leverage ratio. Our Term Loan, as hereinafter defined,Loan bears interest at either Term SOFR or an alternative base rate plus a margin based on the type of rate applied. Our Term Loan bears interest at a variable rate, however interest rate hedges in place mitigate the risk of interest rate fluctuations associated with a portion of the outstanding debt balance. These derivative instruments are indexed to Term SOFR.

We have approximately 27.827.0 million shares of common stock outstanding as of December 31, 2024.2025. The shares of common stock are freely tradable, except for any shares of common stock that may be held or acquired by our directors, executive officers and other affiliates, the sale of which will be restricted under the Securities Act of 1933, as amended. As of December 31, 2024,2025, approximately 1.81.7 million of the 2.1 million shares of common stock authorized for issuance under the 2023 Omnibus Incentive PlansPlan were available for issuance. These shares will become eligible for sale in the public market in the future, subject to certain legal and contractual limitations.

Installed Building Systems, Inc. (“IBS”), an investment vehicle owned by Jeff Edwards and his siblings, is a party to certain prepaid variable forward sale contracts with an unaffiliated third party buyer. These contracts include 1,150,000 shares of our common stock in the aggregate, with various settlement dates in August 2025, March 2026, November 2026, May 2027 and June 2027. For 2025, an aggregate amount of 350,000 shares will be sold on the settlement dates occurring from August 14, 2025 to August 22, 2025, unless IBS elects to settle for cash. In addition, if our existing stockholders sell substantial amounts of our common stock in the public market, or if the public perceives that such sales could occur, this could have an adverse impact on the market price of our common stock, even if there is no relationship between such sales and the performance of our business.

We are one of the nation’s largest insulation installers for the residential new construction market and are also a diversified installer of complementary building products, including waterproofing, fire-stopping and fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving, mirrors and other products throughout the United States. We offer our portfolio of services for new and existing single-family and multi-family residential and commercial building projects in all 48 continental states and the District of Columbia from our national network of more than 250 branch locations. 94%93% of our net revenue comes from the service-based installation of these products across all of our end markets and forms our Installation operating segment and single reportable segment. In addition, threewe have regional distribution operations that serve the Midwest, Mountain West, Northeast and Mid-Atlantic regions of the United States, and we operate amultiple cellulose manufacturing facility.facilities. We believe our business is well positioned to continue to profitably grow due to our strong balance sheet, liquidity and our continuing acquisition strategy.

A large portion of our net revenue comes from the U.S. residential new construction market, which depends upon a number of economic factors, including demographic trends, interest rates, inflation, consumer confidence, employment rates, housing inventory levels and affordability, foreclosure rates, the health of the economy and the availability of mortgage financing. Our strategic acquisitions over the last several years contributedcontinue meaningfullyto contribute to our 5.9%operating increase in net revenue during the year ended December 31, 2024 compared to 2023.results.

Net revenues increased 5.9%, or $162.7 million, while gross profit increased 6.9% to $994.5 million during the year ended December 31, 2024 compared to 2023. The increase in net revenue was primarily driven by the 6.4% growth in our largest end market, the single-family subset of the residential new construction market. Revenue was also positively impacted by selling price and product mix improvements, the contribution of our recent acquisitions, and same branch sales growth from all of our end markets. The 3.7% increase in our price/mix metric for our Installation segment was primarily due to selling price increases. Gross profit margin grew faster than revenue as we continued to prioritize profitability over sales volume. Specifically, gross profit outpaced sales growth due to higher selling prices and resulting leverage gained on material costs compared to the prior year. Certain net revenue and industry metrics we use to monitor our operations are discussed in the "Key Measures of Performance" section below, and further details regarding results of our various end markets are discussed further in the "Net Revenue, Cost of Sales and Gross Profit" section below.

We generated approximately $340.2$340.0 million of cash from operating activities during the year ended December 31, 2023.2024. As of December 31, 2023,2024, we had $386.5$327.6 million of cash and cash equivalents and we hadhave not drawn on our revolving line of credit. Our 2023 liquidity wasremains strong despite investing $59.6$88.6 million in our acquisition strategy, and more than tripling the 2023 amount of returned to shareholders through repurchasing $6.3$145.3 million of our Company's stock and paying $63.1$84.7 million in dividends during the year ended December 31, 2023.2024.

During the year ended December 31, 2023,2024, we experienced overall sales growth in all of our end markets and we achieved 3.5% year over year same branch sales growthgrowth, with acquisitions contributing the remaining portion of our total sales growth. The multi-family subset of the residential new construction market grew 6.5% over the same period in our2023 multi-familybased and commercial end markets. Overall,on the strongbacklog growthof jobs in multi-family and commercial sales helped offset the 5.4% decrease in the single-family end market, which is our largestthat end market. Our commercial end market experienced sales growth of 17.2%3.0% during the year ended December 31, 20232024 primarily through acquisitionscontributions andfrom organicour growthrecent as the commercial construction cycle returned to normal and project delays experienced in prior periods lessened.acquisitions.

The remaining overall growth in net revenue for the year ended December 31, 20242025 is attributable to growth in our Distribution and Manufacturing operating segments. Net revenueSales in these operating segmentssegments, combinedincluding intercompany sales, collectively grew from $182.0$197.9 million to $197.9$259.8 million for the year ended December 31, 20242025 over 2023.2024 which aligns with our strategy to enhance our procurement efforts through vertical integration in select product and end markets.

As a percentage of net revenue, gross profit increased during the year ended December 31, 20242025 compared to the year ended December 31, 20232024 primarily on the strength of price/mix growth as well as leverage gained on material costs during the first half of 2024 compareddue to thecustomer priorand year,supplier mix changes, partially offset by higherincreased materialinsurance costs and laboradditional costsvehicle asdepreciation expense. Despite a percentage of net revenuereduction in the second halfnumber of 2024installation duejobs completed, we were able to changesincrease ingross ourprofit productas mix.we continue to prioritize profitability over volume. We will continue to work with our suppliers to lessen the impact on our margins and with our customers to offset further cost increases through selling price adjustments.

The dollar increase in selling expenses in 20242025 was primarily driven by a year-over-year increase in selling wagescompensation and commissionscredit tolosses supporton our increased net revenue of 5.9%.1.0%. Selling expense increased as a percentage of sales primarily due to increased commissionsselling due to higher profitability and margins.wages.

The dollar increase in administrative expenses in 20242025 was primarily due to an increase in wages and benefits,compensation, which was attributable to both acquisitions and organicwage growthinflation. asAlso, wellfacility as favorable company performance. Facility expenseexpenses and insurance costcosts increasesincreased due to inflationary pressures alsoand factoredcosts intoattributable to acquisitions contributed to the overall increase in administrative operating expenses. During 2024,2025, we saw our administrative costs increase as a percentage of sales primarily due to higherinflationary salariespressures on compensation, rent and bonusesinsurance, duewhich towere higherpartially profitabilityoffset by lower transaction fees and margins.decreased costs driven by organizational optimization.

During the second quarter of 2024, we elected to wind down the operations of a branch that installs one of our non-core building products. As a result, we deemed it necessary to perform an interim assessment of tangible and intangible assets. During the year ended December 31, 2024, we recognized an intangible impairment charge of $4.6 million relatedas toa definite-livedresult customer relationships, trademarks and tradenames and covenants not-to-compete withinof our Installation segment.assessment. In addition, we recognized an asset impairment charge of $0.3 million related to propertytangible and equipment and operating lease right-of-use assets within our Installation segment.assets. We did not recognize any impairment losses on our tangible or intangible assets during the year ended December 31, 2023.2025.

Our intangible assets include non-competes, customer relationships, trade names and other and backlog established upon acquisition of most businesses we acquire. Amortization expense decreased in 20242025 primarily due to larger 20242025 acquisitions occurring later in the year as compared to 2023.2024. See Note 18, Business Combinations, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for information on our acquisitions.

Other expense, net did not significantly changedecreased during 2025 compared to 2024. Interest expense, net decreased primarily due to prior year term loan repricing, which was offset by ana increasedecrease in theinterest write-offincome ofon debtmoney issuancemarket costs.accounts. See Note 8, Long-term Debt, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for further information regarding debt balances.

During the years ended December 31, 20242025 and 2023,2024, our tax rate was unfavorably impacted by certain expenses not being deductible for income tax reporting purposes. Our tax rate for the year ended December 31, 2025 was favorably impacted by federal tax credits.

Other comprehensive income (loss), income, net of tax

Other comprehensive income (loss), income, net of tax for the years ended December 31, 2024,2025, 20232024 and 20222023 were as follows (in millions):

Inflation has affected the economy as a whole insince 20222022, but began moderating in 2023 as the Federal Reserve took actions to stabilize inflation by raising the federal funds rate multiple times through July 2023. These rate hikes indirectly raisedaffected the 30-year fixed rate mortgage average in the United StatesStates, toresulting overin some rates peaking above 7% forin therecent first time since 2008 during periods of 2023 and 2024.years. These rate-driven pressures beganhave to curtailcurtailed housing demand beginning in the second half of 2022 as mortgage financing affordability washas been reduced. Inflation rates in 20242025 have remained above the 2% stated target, however the Federal Reserve began cutting the federal funds rate in September 2024. The Federal Reserve has recently signaled plans to keeppotentially lower rates atfurther theirduring current2026. levelsWhile in the near term. Aa more accommodating Federal Reserve monetary policy does not directly determine mortgage rates, asthe expected easing of rates will likely contribute to a downward trend in mortgage rates have remained elevated despite the federal funds rate cuts primarily due to sticky inflation and higher treasury yields. Higher mortgage rates combined with the housing cost inflation experienced in the lastnear few years has significantly increased housing-cost-to-income ratios.term. We expect our business to be somewhat impacted by the current elevated rates into 2026 but anticipate pressures to lessen over time if mortgage rates inare 2025further since they remain elevated compared to recent history.reduced.

In addition, housing affordability is impacted by international trade as certain housing inputs such as lumber are more reliant on imports than domestic production. While we purchase the large majority of the products we install and sell domestically, our business could be impacted if overall home affordability is further reduced by higher material prices due to increased tariffs.

According to Fannie Mae's January 2026 forecast, 1.31 million housing starts are forecasted in 2026. Higher inflation and interest rates, as discussed above, reduced the demand and affordability of new homes in 2024. According to Fannie Mae's January 2025 forecast, 1.32 million housing starts are forecasted in 2025 which is a decline of 3% from 2024.2025. These headwinds may impact our business in the near term, but stable employment and lower existing home inventory levels in some markets continue to support demand for residential new construction activity despite the affordability concerns. As a result, while we expect cyclicality to continue in the housing industry, we believe the long-term opportunities in our residential and commercial end markets are favorable. There have been chronic housing shortages in some of the markets we serve and the backlog in our multi-family business demonstrates continued need for multi-family housing. According to Dodge Data & Analytics, commercial building starts in 2025,2026, measured by investment dollars, are expected to increase 6%3% from 20242025 while institutional building starts (a subset of the nonresidential construction market in which we participate) are expected to increase 4%6% from 2024.2025. Regarding the repair and remodel markets, many existing homeowners are locked into low interest mortgages, and an aging housing stock exists in many areas of the United States, bolstering demand in this end market.

Our operating results may vary based on our product mix and the mix of our end markets among new single-family, multi-family and commercial builders and owners of existing homes. We maintain a mix of business among all types of homebuilders ranging from small custom builders to large regional and national homebuilders as well as a wide range of commercial builders. Net revenue derived from our ten largest homebuilder customers in the United States was approximately 15%14% for the year ended December 31, 2024.2025. The residential new construction and repair and remodel markets represented approximately 78%76% of our total net revenue for both the years ended December 31, 20242025 and 2023.2024. The remaining portion was attributable to our distribution and manufacturing businesses and the commercial construction end market.

We typically purchase the materials we use in our business directly from manufacturers. The largest fiberglass manufacturers have cut production capacity during past business cycles which has caused periods of industry-wide supply allocations. While we are not currently experiencing material supply shortages, we could incur such shortages in 20252026 and beyond if these manufacturers reduce production this year. We experience price increases from our suppliers from time to time, includingand multiplewe may have more difficulty raising selling prices to offset any material price increases overin the2026 lastif fourhousing yearsdemand caused by supply shortages and general economic inflationary pressures.slows. We could be subject to increased material pricing on some of the materialscomplementary building products we install and sell due to tariffs imposed on goods imported from certain foreign nations. The extent of these increases will depend on a variety of factors including the magnitude of each tariff, the extent our vendors pass on the tariffs they incur, and the number of countries subject to tariffs in the future. Increased market pricing, regardless of the catalyst, has and could continue to impact our results of operations in 2025,2026, to the extent that price increases cannot be passed on to our customers. Our selling price increases were able to support most material cost increases in 2024 but we may have more difficulty raising prices in 2025 if housing demand slows. We will continue to work with our customers to adjust selling prices to offset higher costs as they occur.

Our business is labor intensive. As of December 31, 2024,2025, we had approximately 10,80010,400 employees, most of whom work as installers on local construction sites. We anticipate a slower hiring pace in 2026, but still expect to spend more to hire, train and retain installers to support our growing business in 2025, as tight labor availability continues within the construction industry. Our workers’ compensation costs also continue to rise as we increase our coverage for additional personnel. Labor costs as a percentage of revenue increased during the year ended December 31, 2024 compared to 2023 primarily due to market competition and expectations for higher wages. We were successful in achieving higher labor productivity as evidenced by our annual sales per installer per business day increasing 1%4% in 20242025 as compared to 2023.2024.

Our employee retention rates remained better than industry averages in the year ended December 31, 2024.2025. We believe this is a result of our strong culture and the various programs meant to benefit our employees, including our financial wellness plan, emotional well-being coaching, longevity stock compensation plan and comprehensive benefit packages we offer. We also provide assistance from the Installed Building Products Foundation meant to benefit our employees, their families and their communities. While improved retention drives lower costs to recruit and train new employees, resulting in greater installer productivity, these improvements are somewhat offset by the additional costs of these incentives.

Beyond our service offerings, we also recognize that as a good corporate citizen, we have a responsibility to support our communities and be stewards of the environment. We continue to proactively work to find new ways to reduce our carbon footprint by formalizing a climate risk management framework to guide our climate strategy. We are committed to reducing CO2 emissions as a percentage of our revenue. For example, we purchase a large portion of our electricity supply from carbon-free energy sources and have a national waste management program to increase recycling at our facilities to reduce landfill waste. We also support the industry transition to hydrofluoro-olefin ("HFO") spray foam types which have lower greenhouse gas emissions than hydrofluorocarbon ("HFC") materials. We utilized more HFO materials than HFC materials and expect this to continue to increase.

For at least the next twelve months, our primary capital requirements are to fund working capital needs, operating expenses, acquisitions and capital expenditures and to meet principal and interest obligations and make required income tax payments. We may also use our resources to fund our optional stock repurchase program and pay quarterly and annual dividends. During 2025,2026, we anticipate discretionary spending for capital improvements and quarterly dividends to approximate 20242025 levels of approximately $88.6$70.6 million and $39.4$40.4 million, respectively, as well as approximately $47.2$48.6 million for our annual variable dividend to be paid March 31, 2025.2026. In addition, we expect to use cash and cash equivalents to acquire various companies with a goal of at least $100.0 million in aggregate net revenue each fiscal year. The amount of cash paid for an acquisition is dependent on various factors, including the size and determined value of the business being acquired.

Firm commitments for funds includeas $67.2of December 31, 2025 included $79.0 million in interest and principals payments on long-term debt obligations including our 2028 Senior Notes,Notes (which, as described below, have now been redeemed in full), Term Loan, notes payable to sellers of acquisitions and vehicles purchased under the Master Loan and Security Agreement, the Master Equipment Agreement and the Master Loan Agreements. Additionally, we maintain certain production vehicles under a finance lease structure which will require $3.4$3.1 million in interest and principal payments under current agreements in 2025.2026. We lease certain locations, vehicles and equipment under operating lease agreements that will require $38.8$41.1 million in funds over the next twelve months. Finally, we have twovarious product supply agreements with variousseveral vendors that requires us to purchase a minimum quantity of inventory with variable and fixed rate pricing in 2025.2026. Payments for income taxes cannot be estimated at this time, but our effective tax rate was 25.9%25.6% for the year ended December 31, 2024.2025.

Known obligations beyond the next twelve months as of December 31, 2025 are as follows (in millions):

Known obligations above include $1.0 billion in interest and principal payments on long-term debt obligations through 2029.2031. In addition, our finance leases will require $5.9$4.4 million in interest and principal payments under current agreements through 2029. Operating lease obligations will require $66.6 million in payments beyond the next twelve months. Finally, we have two product supply agreements with various vendors that requires us to purchase a minimum quantity of inventory with variable and fixed rate pricing after 2025.2030.

We carefully manage our working capital and operating expenses. As of December 31, 20242025 and 2023,2024, our working capital, including cash and cash equivalents, was $698.4 million, or 23.5% of net revenue, and $695.9 million, or 23.7% of net revenue, and $723.6 million, or 26.0% of net revenue, respectively. The decreaseincrease in working capital year-over-year was driven primarily by cashaccounts andreceivable cashincreasing equivalents decreasing $58.9$10.2 million resulting from increasedhigher acquisitionyear activity,over dividendyear paymentsnet revenue, inventories increasing $8.4 million due to expanded distribution operations and stockaccounts repurchases.payable decreasing $27.6 million due to timing. We continue to look for opportunities to reduce our working capital as a percentage of net revenue.

Our primary source of cash provided by operations is revenues generated from installing or selling building products and the resulting operating income generated by these revenues. Operating income is adjusted for certain non-cash items, and our cash flows from operations can be impacted by the timing of our cash collections on sales and collection of retainage amounts. Our primary uses of cash from operating activities include payments for installation materials,inventory, compensation costs, leases, income taxes and other general corporate expenditures included in net income. Net cash provided by operating activities slightly decreasedincreased from 20232024 to 20242025 primarily driven by higher net income due to increased consolidated sales of 1.0%. The increase was partially offset by the increase in accounts receivable and inventory due to higher sales and materialexpanded costdistribution inflationoperations and the decrease in accounts payable. The decrease was partially offset by higher net income due to increased consolidated sales of 5.9%.

Net cash used by investing activities decreased from 20232024 to 20242025 primarily due to the increasedecrease in payments for acquisitions and property and equipment purchases.purchases and acquisitions. We completed onetwo additionalless acquisitionacquisitions in 20242025 compared to 2023 and the average size of the acquisitions was larger in the year ended December 31, 2024. The amount of cash paid for an acquisition is dependent on various factors, including the size and determined value of the business being acquired. See Note 18, Business Combinations, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K for more information regarding our business acquisitions in 2024,2025, 20232024 and 2022.2023.

Additionally,As totala cashresult usedof declining job volumes, we strategically made fewer capital expenditures to purchase property and equipment increasedduring inthe 2024,year andended December 31, 2025. However, we expect to continue to support any increases in future net revenue through further capital expenditures. A significant portion of these capital expenditures were subsequently reimbursed via various vehicle and equipment notes payable, with related cash inflows shown in cash flows from financing activities.

Our sources of cash from financing activities consist of proceeds from theperiodic issuancenew issuances of debt (including the 2026 Offering) and from new vehicle and equipment notes payable. Cash used in financing activities consists primarily of debt repayments, acquisition-related obligations, dividends and stock repurchases.

We had a net use of cash in financing activities in both 20242025 and 2023.2024. The increase in cash used in financing activities in 20242025 was primarily due to common stock repurchases increasing to $172.6 million during the year ended December 31, 2025 from $145.3 million during the year ended December 31, 2024 from $6.3 million during the year ended December 31, 2023. Dividends paid also increased by $21.6 million in 2024 compared to 2023.2024. This was partially offset by increase in net proceeds from thevehicle newand Termequipment Loan (as defined below).notes.

In September 2019, we issued $300.0 million in aggregate principal amount of 5.75% senior unsecured notes (the “2028 Senior Notes”). In January, we redeemed in full the 2028 Senior Notes. The 2028 Senior Notes willwould maturehave matured on February 1, 2028 and interest will bewas payable semi-annually in cash in arrears on February 1 and August 1, commencing on February 1, 2020. The net proceeds from the 2028 Senior Notes offering were $295.0 million after debt issuance costs. See Note 20, Subsequent Events, in Item 8, Financial Statements and Supplementary Data of this Form 10-K for more information regarding the early redemption of our 2028 Senior Notes.

TheWe also satisfied and discharged the indenture covering the 2028 Senior Notes containsin connection with the redemption of the 2028 Senior Notes. The indenture contained restrictive covenants that, among other things, limitlimited the ability of the Company and certain of our subsidiaries (subject to certain exceptions) to: (i) incur additional debt and issue preferred stock; (ii) pay dividends on, redeem or repurchase stock in an aggregate amount exceeding 2.0% of market capitalization per fiscal year, or in an aggregate amount exceeding certain applicable restricted payment baskets; (iii) prepay subordinated debt; (iv) create liens; (v) make specified types of investments; (vi) apply net proceeds from certain asset sales; (vii) engage in transactions with affiliates; (viii) merge, consolidate or sell substantially all of our assets; and (ix) pay dividends and make other distributions from subsidiaries.

In February 2022, we amended and extended the term of our asset-based lending credit agreement (the "ABL Credit Agreement"). The ABL Credit Agreement increased the commitment under the asset-based lending credit facility (the "ABL Revolver") to $250 million from $200.0 million, and permits us to further increased the commitment amount up to $300.0 million. The amendment also extends the maturity date from September 26, 2024 to February 17, 2027. The ABL Revolver bears interest at either the base rate or the Secured Overnight Financing Rate ("Term SOFR"), at our election, plus a margin of 0.25% or 0.50% in the case of base rate loans or 1.25% or 1.50% for Term SOFR advances (in each case based on a measure of availability under the ABL Credit Agreement). The amendment also allows for modification of specified fees depend upon achieving certain sustainability targets, in addition to making other modifications to the ABL Credit Agreement. Including outstanding letters of credit, our remaining availability under the ABL Revolver as of December 31, 20242025 was $246.0$246.5 million. In January 2026, we amended the ABL Revolver to, among other things, increase the commitment amount of the ABL Revolver and extend its maturity to January 21, 2031. See Note 20, Subsequent Events, in Item 8, Financial Statements and Supplementary Data of this Form 10-K for more information regarding the latest amendment of the ABL Revolver.

As of December 31, 2024,2025, we were in compliance with all applicable covenants under the Term Loan Agreement, ABL Credit Agreement, and the 2028 Senior Notes.

As of December 31, 2024,2025, we had five total interest rate swaps including two forwardactive interest rate swaps. For a summary of notional amounts, maturity dates and interest rates for each of these swaps, see Note 12, Derivatives and Hedging Activities, in Item 8, Financial Statements and Supplementary Data of this Form 10-K. Together, these fivetwo swaps serve to hedge $400.0 million of the variable cash flows on our variable rate Term Loan through maturity.December 14, 2028. The assets associated with the forward interest rate swapswaps are included in other current assets and other non-current assets on the Consolidated Balance Sheets at their fair value amounts as described in Note 10, Fair Value Measurements, in Item 8, Financial Statements and Supplementary Data, of this Form 10-K.

We are one of the nation’s largest insulation installers for the residential new construction market and are also a diversified installer of complementary building products throughout the United States, including waterproofing, fire-stopping and fireproofing, garage doors, rain gutters, window blinds, shower doors, closet shelving, mirrors and other products. We offer our portfolio of services for new and existing single-family and multi-family residential and commercial building projects in all 48 continental states and the District of Columbia from our national network of over 250 branch locations. During the three months ended MarchJune 31,30, 2026, 92%91% of our net revenue came from the service-based installation of these products across all of our end markets which forms our Installation operating segment and single reportable segment. In addition, we have regional distribution operations that serve the Midwest, Mountain West, Northeast and Mid-Atlantic regions of the United States, and we operate multiple cellulose insulation manufacturing facilities. We believe our business is well positioned to continue to profitably grow over the long-term due to our strong balance sheet, liquidity and our continuing acquisition strategy.

2026 FirstSecond Quarter Highlights

Net revenue decreasedincreased 3.5%,2.3%, or $24.3$17.5 million to $660.5$777.8 million, while gross profit decreased 5.1%0.4% to $212.3$258.9 million during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025. The decreaseincrease in net revenue was primarily due to a 9.9%14.1% increase in commercial end market sales growth and the contribution of our recent acquisitions, partially offset by a decline in Installation segmentjob volume.volume in our single-family residential end market. The decrease in gross profit was primarily driven by highervehicle-related laborcosts costs,including vehiclefuel, insurance,insurance and depreciation andexpense. otherGross indirectprofit costspercentage fromwas shiftsalso impacted by higher sales in endour marketOther andcategory productwhich mix.has a lower gross margin than our Installation segment. Certain net revenue and industry metrics we use to monitor our operations are discussed in the "Key Measures of Performance" section below, and further details regarding results of our various end markets are discussed further in the "Net Revenue, Cost of Sales and Gross Profit" section below.

As of MarchJune 31,30, 2026, we had $474.3$394.5 million of cash and cash equivalents and had not drawn on our revolving line of credit. This strong liquidity position allowed us to return capital to shareholders by increasing our regular quarterly dividend 5% over the firstsecond quarter of 2025 to $0.39 per share, or $10.5$10.4 million in the aggregate. We also increased our annual variable dividend from $1.70 a share paid in the first quarter of 2025 to $1.80 a share, or a 6% increase, during the three months ended March 31, 2026. Additionally, we repurchased $25.4$76.2 million of our outstanding common stock during the three months ended MarchJune 31,30, 2026 for a total capital return to shareholders of $84.6$86.6 million.

Net revenue decreasedincreased during the three months ended MarchJune 31,30, 2026 over the same period in 2025 primarily due to sales growth from our commercial end market and contributions from our recent acquisitions. Our commercial end market sales grew 10.4% on a same branch basis for the declinethree months ended June 30, 2026 over the same period in residential job volume.2025. Same branch sales from our single-family end market declined 11.3%7.2% while same branch sales from our multi-family end market decreased 11.2%,1.4%, outpacing the 16.7%2.8% decline in national multi-family completions. These markets combined for a residential same branch sales decline of 11.2% for the three months ended March 31, 2026 over the same period in 2025. The net revenue decline was partially offset by our commercial end market increasing 10.7% on a same branch basis6.1% for the three months ended March 31, 2026 over the same period in 2025. Lastly, sales within our Distribution and Manufacturing businesses increased 34.8%50.4% during the three months ended MarchJune 31,30, 2026 which aligns with our strategy to enhance our procurement efforts through vertical integration in select product and end markets.

During the three months ended MarchJune 31,30, 2026, gross profit as a percentage of net revenue decreased as compared to the same period in 2025, primarily due to higher labor costs and other indirect costs from shifts in product and end market mix, increased vehicle costs,costs including fuel, depreciation expense and auto insurance, and increased freight and shipping costs from higher Manufacturing and Distribution activity. The decline in gross profit percentage was partially offset by lower material costs from changes in end market and supplier mix. We will continue to work with our suppliers to lessen the impact on our margins and with our customers to offset further cost increases through selling price adjustments.

The dollar increase in administrative expenses for the three and six months ended MarchJune 31,30, 2026 compared to 2025 was primarily due to an increase in medical benefits and liability insurance costs. In addition, facility costs increased due to inflationary pressures and acquisitions. Administrative expenses increased as a percentage of net revenue for the three and six months ended MarchJune 31,30, 2026 compared to 2025 primarily due to inflationary pressures on insurance costs, partially offset by organizational optimization cost savings and lower transaction fees.

Amortization expense for the three and six months ended MarchJune 31,30, 2026 compared to 2025 increased primarily due to the acquisition of more finite-lived intangible assets.

Interest expense, net increased during the three months ended MarchJune 31,30, 2026 compared to the same period in 2025 primarily due to higher debt levelslevels. andFor the six months ended June 30, 2026, interest expense, net was also impacted by the write-offs of debt issuance costs resulting from our January 2026 transactions related to the Senior Notes (as defined below),. During the three and six months ended June 30, 2026, the increases were partially offset by increased interest income onfrom higher cash balances in interest bearing money market accounts. See Part I, Item 1. Financial Statements, Note 7, Long-Term Debt, for more information on the January 2026 debt transactions.

The effective tax rates for the three and six months ended MarchJune 31,30, 2026 were impacted favorably by recognition of windfall tax benefits resulted from equity vesting. The effective tax rates for the three and six months ended June 30, 2026 and 2025 were based on an estimated annual effective tax rate for federal, state and local tax expense.

During the three and six months ended MarchJune 31,30, 2026 and 2025,2026, we recorded an unrealized gaingains of $1.6$2.3 million and an unrealized loss of $6.1$3.9 million, respectively, net of taxes, on our cash flow hedges due to the market's expectations for higher interest rates in the future. During the three and six months ended June 30, 2025, we recorded unrealized losses of $4.3 million and $10.4 million, respectively, net of taxes, on our cash flow hedges due to changes in the market's expectations for future long-term interest rates.

During the three and six months ended MarchJune 31,30, 20262026, we amortized $1.8 million and $3.5 million, respectively, and during the three and six months ended June 30, 2025, we amortized $1.7$0.2 million and $1.0 million, respectively, of our remaining unrealized gains and alosses, net impact of $(1.1) million of our remaining unrealized gains, losses and off-market terms, respectively,net, on our amended and terminated cash flow hedges to interest expense, not including the offsetting tax effects of $(0.4)$0.5 million and $0.9 million for the three and six months ended June 30, 2026, respectively, and $0.1 million and $0.3 million for the three and six months ended MarchJune 31, 2026 and30, 2025, respectively.

Inflation has affected the economy as a whole since 2022, but began moderating in 2023 as the Federal Reserve took actions to stabilize inflation by raising the federal funds rate multiple times through July 2023. These rate hikes indirectly affected the 30-year fixed rate mortgage average in the United States, resulting in mortgage rates peaking above 7% in recent years. These rate-driven pressures have curtailed housing demand as mortgage financing affordability has been reduced. Inflation rates in 2026 have remained above the 2% stated target, and the Iranian conflict in the Middle East has significantly raised oil prices which could push inflation higher and cause the Federal Reserve to continue to pause rate cuts or institute new rate hikes. While a more accommodating Federal Reserve monetary policy does not directly determine mortgage rates, any easing of the federal funds rate would likely contribute to a downward trend in mortgage rates. We expect to continue to be impacted by the current elevated rates infor the remainder of 2026 but anticipate pressures to lessen over time if mortgage rates are further reduced.

Elevated home prices, high mortgage rates, recent economic uncertaintyuncertainty, subdued consumer sentiment and risinghigh new home inventory were the primary contributors to the decline in demand of new homes in the first quarterhalf of 2026. Activity slowed in the residential homebuilding market as non-seasonally adjusted single-family starts, our largest end market, decreased 5.5%5.3% according to the U.S. Census during the threesix months ended MarchJune 31,30, 2026 compared to the same period in 2025. Employment remains stable and continues to support demand for residential new construction activity despite the affordability concerns and recent economic uncertainty. As a result, while we expect cyclicality to continue in the housing industry, we believe the long-term opportunities in our residential and commercial end markets are favorable. Our largest customers are publicly traded homebuilders, and these builders have been able to increase affordability by offering mortgage rate buydowns as incentives to their customers. Regarding the repair and remodel markets, many existing homeowners are locked into low interest mortgages and an aging housing stock exists in many areas of the United States, bolstering demand in this end market.

We typically purchase the materials we use in our business directly from manufacturers. The largest fiberglass manufacturers have cut production capacity during past business cycles which has caused periods of industry-wide supply allocations. While we are not currently experiencing material supply shortages, we could incur such shortages induring the remainder of 2026 and beyond if these manufacturers reduce production this year. We also experience price increases from our suppliers from time to time, and we may have more difficulty raising selling prices to offset any material price increases in 2026 if housing demand slows. We could be subject to increased material pricing on some of the complementary building products we install and sell due to tariffs imposed on goods imported from certain foreign nations. The extent of these increases will depend on a variety of factors including the magnitude of each tariff, the extent our vendors pass on the tariffs they incur, and the number of countries subject to tariffs in the future. Additionally, we may be subject to increased shipping and freight costs on inventory if the recent spike in oil prices continues and those costs are passed onto us from our suppliers.suppliers as we began to see during the most recent quarter. Increased market pricing, regardless of the catalyst, has and could continue to impact our results of operations in 2026, to the extent that price increases cannot be passed on to our customers. We will continue to work with our suppliers to lessen the impact on our margins and our customers to adjust selling prices to offset higher costs as they occur.

Our employee retention rates remained better than industry averages in the threesix months ended MarchJune 31,30, 2026. We believe this is a result of our strong culture and the various programs meant to benefit our employees, including our financial wellness plan, emotional well-being coaching, longevity stock compensation plan and comprehensive benefit packages we offer. We also provide assistance from the Installed Building Products Foundation meant to benefit our employees, their families and their communities. While improved retention drives lower costs to recruit and train new employees, resulting in greater installer productivity, these improvements are somewhat offset by the additional costs of these incentives.

Our capital resources primarily consist of cash from operations and borrowings under our various debt agreements and capital equipment leases and loans. As of MarchJune 31,30, 2026, we had cash and cash equivalents of $474.3$394.5 million as well as access to $375.0 million under our asset-based lending credit facility (as defined below), less $3.9$2.9 million of outstanding letters of credit, resulting in total liquidity of $845.4$766.6 million. Liquidity may also be limited in the future by certain cash collateral limitations under our asset-based credit facility (as defined below), depending on the status of our borrowing base availability.

We believe that our cash flows from operations, combined with our current cash levels and available borrowing capacity, will be adequate to support our ongoing operations and to fund our business needs, commitments and contractual obligations for at least the next 12 months as evidenced by our net positive cash flows from operations for the threesix months ended MarchJune 31,30, 2026. We believe that we have access to additional funds, if needed, through the capital markets to obtain further debt financing under the current market conditions, but we cannot guarantee that such financing will be available on favorable terms, or at all. In the short-term, we expect the seasonal trends we typically experience to return, including higher sales in the spring, summer and fall than in the winter. This could affect the timing of cash collections and payments during the rest of 2026.

We carefully manage our working capital and operating expenses. As of MarchJune 31,30, 2026 and December 31, 2025, our working capital including cash and cash equivalents was $820.3$768.4 million and $698.4 million, respectively. The increase in 2026 was primarily driven by the increase in cash due to the net borrowings of our 2034 Senior Notes (as defined below). The increase was partially offset by accounts receivablepayable decreasingincreasing $17.7$32.7 million ondue lowerto job volumetiming and otherincreased currentmaterial assets decreasing $9.9 million, the majority of which was a result of the amortization of prepaid expenses including insurance.costs. We continue to look for opportunities to reduce our working capital as a percentage of net revenue.

Net cash provided by operating activities increaseddecreased from 2025 to 2026 primarily due to higherlower non-cashnet adjustments,income aand decreaseincreases in other current assetsinventories and lower accounts receivable due to lower job volumereceivable, partially offset by a decrease in accrued compensation and an increase in otheraccounts non-currentpayable assets.due to the timing of business working days within the period.

Sources of cash from investing activities consist primarily of proceeds from the sales of property and equipment and, periodically, maturities from short term investments.equipment. Cash used in investing activities consists primarily of purchases of property and equipment,equipment and payments for acquisitions and, periodically, purchases of short term investments.acquisitions.

Net cash used in investing activities increased from 2025 to 2026 primarily due to increased spending on acquisitions of businesses in 2026 compared to 2025, partially offset by fewer purchases of property and equipment during the threesix months ended MarchJune 31,30, 2026.

Net cash provided by (used in) financing activities increaseddecreased from 2025 to 2026 primarily due to the net proceeds on the 2034 Senior Notes (as defined below). TheseThe increasesdecrease werein net cash used was partially offset by less proceeds from vehicle and equipment notes and higher capital returns to shareholders via dividends and common stock repurchases during the threesix months ended MarchJune 31,30, 2026. See Part I, Item 1. Financial Statements, Note 7, Long-Term Debt, for more information on theour seniordebt notes.transactions.

The Term Loan amortizes in quarterly principal payments of $1.25 million, with any remaining unpaid balances due on the maturity date of March 28, 2031. As of MarchJune 31,30, 2026, we had $487.0$485.9 million, net of unamortized debt issuance costs, due on our Term Loan.

The ABL Revolver now bears interest at either the Secured Overnight Financing RatesRate ("Term SOFR") or the base rate, at our election, plus a margin of 1.00% or 1.25% per annum in the case of Term SOFR advances or 0.00% or 0.25% per annum in the case of base rate loans (in each case based on a measure of availability under the ABL Credit Agreement). The ABL Credit Agreement contains a financial covenant requiring the satisfaction of a minimum of fixed charge coverage ratio of 1.0x in the event that we do not meet a minimum measure of availability under the ABL Revolver.

The ABL Revolver also provides incremental revolving credit facility commitments of up to $105.0 million. The ABL Revolver also allows for the issuance of letters of credit of up to $100.0 million in aggregate and borrowing of swingline loans of up to $50.0 million in aggregate. Including outstanding letters of credit, our remaining availability under the ABL Revolver as of MarchJune 31,30, 2026 was $371.1$372.1 million.

At MarchJune 31,30, 2026, we were in compliance with all applicable covenants under the Term Loan Agreement, ABL Credit Agreement and the 2034 Senior Notes.

As of MarchJune 31,30, 2026, we had two active interest rate swaps with maturity dates of December 14, 2028. When combined, these interest rate swaps serve to hedge $400.0 million of the variable cash flows on our Term Loan through December 14, 2028. For further information about our interest rate swaps, see Part I, Item 1. Financial Statements, Note 11, Derivatives and Hedging Activities. The assets associated with the interest rate swaps are included in other current assets and other non-current assets on the Consolidated Balance Sheets at their fair value amounts as described in Note 9, Fair Value Measurements.

Total outstanding loan balances relating to our Master Loan and Equipment Agreements were $90.2$82.2 million as of MarchJune 31,30, 2026 and $98.5 million as of December 31, 2025. Depreciation of assets held under these agreements is included within cost of sales on the Condensed Consolidated Statements of Operations and Comprehensive Income included herein.

The following table summarizes our outstanding bonds, letters of credit and cash-collateralcash collateral (in millions):

Management’s discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of our consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent assets and liabilities. Certain accounting policies involve judgments and uncertainties to such an extent that there is a reasonable likelihood that materially different amounts could have been reported using different assumptions or under different conditions. We evaluate our estimates and assumptions on a regular basis. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of our assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates and assumptions used in preparation of our consolidated financial statements. There have been no significant changes to our critical accounting policies and estimates during the threesix months ended MarchJune 31,30, 2026 from those disclosed in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our 2025 Form 10-K.