IBP Q3 2026 Earnings Call: Record Revenue, Commercial Growth Offset Housing Weakness

Key Takeaways

• Installed Building Products (NYSE: IBP) reported record Q3 2026 revenue of $808 million, up 4% year over year. Installation same-branch sales increased 0.3%.
• A 5% decline in new single-family same-branch sales was offset by 10% commercial growth and 8% multi-family growth. Heavy commercial sales increased more than 13%.
• Adjusted gross margin fell to 32.0%. Management attributed approximately 180 basis points of year-over-year pressure to aluminum, fuel, freight and the faster growth of the lower-margin Other segment.
• Adjusted EBITDA was $128 million, with a 15.9% margin. Adjusted net income totaled $73 million, or $2.76 per diluted share.
• IBP completed four acquisitions representing approximately $22 million in annual revenue. Management continues to expect at least $100 million of acquired annual revenue for full-year 2026.
• Management expects both single-family and multi-family starts to decline by mid-single digits in 2027. It believes full-year gross margin can remain within its 32%–34% framework, but likely near the low end.

Core Financial Data

For the first nine months of 2026, adjusted gross margin was 32.4%. Installation gross margin was 35.7%, compared with 36.5% in the prior-year period. Management attributed the decline primarily to aluminum and fuel costs.

Business and Operating Performance

Commercial remained IBP’s strongest end market. The company recorded double-digit commercial installation sales growth for a sixth consecutive quarter, while heavy commercial sales rose more than 13%. Heavy commercial backlog ended the quarter up by the mid-teens from already elevated levels. Recreation and entertainment, industrial and manufacturing, retail, and lodging were the main backlog contributors.

Multi-family sales grew 8%, and contract backlog increased modestly. Management said CQ’s strength in the South Census Region is expanding into the West and Mid-Atlantic, creating additional market-share opportunities. However, higher rates and trapped developer equity are weighing on new project activity.

The Other segment grew 19% after eliminations and 33% year to date, partly due to acquisitions. Complementary products outperformed insulation, with gutter sales up 16%. That growth came with margin pressure from higher aluminum prices.

Insulation product margin was essentially flat year over year. Management said the team maintained spray foam margins despite a material price increase of more than 20%, supported by advance notice and successful customer pricing.

Geographically, California and Florida stabilized during the quarter. Georgia, Minnesota, Ohio, South Carolina and Wisconsin delivered particularly strong results, with some states growing by double digits. Colorado, Indiana, Texas, Virginia and Washington remained more challenging.

IBP acquired four businesses during Q3 with combined annual revenue of approximately $22 million. The transactions expanded its exposure to shower doors, closet shelving, mirrors, door and bath hardware, fencing hardware, fireplaces, gutters and insulation across several states.

Management Outlook

Management expects Q4 2026 amortization expense of approximately $10 million and full-year amortization of about $42 million, subject to additional acquisitions. The expected full-year effective tax rate remains 25%–27%.

Q4 net interest expense is expected to be approximately $15 million. Management also expects Q4 Other segment revenue growth to moderate toward the mid-single-digit same-branch growth recorded in Q3 as prior-year acquisitions enter the comparison base.

For 2027, management currently expects single-family and multi-family starts to decline by mid-single digits. It believes IBP can remain within its 32%–34% full-year gross-margin framework, although likely near the bottom of that range.

The company expects fiberglass and spray foam pricing to remain broadly stable over the next several quarters, absent a material change in residential construction conditions.

IBP continues to target at least $100 million of acquired annual revenue in 2026. Following a $250 million add-on to its Term Loan B, pro forma leverage remained below the company’s 2x target. Management said the company has more than $1 billion of liquidity and will prioritize acquisitions, followed by opportunistic share repurchases and dividends.

Risks and Watch Items

New single-family demand remains under pressure from affordability constraints, weaker consumer confidence and higher mortgage rates. Management expects price/mix to become more challenging through Q4 and into 2027.

Aluminum reduced Q3 gross margin by approximately 100 basis points, while fuel and freight contributed about 40 and 20 basis points of pressure, respectively. Aluminum prices declined by an average of approximately 6.5% in October but remained 15% above the prior year. Management expects some gutter-margin improvement, but not a full recovery in Q4.

Fuel and freight are expected to remain headwinds. Management estimated the fuel impact at 40–60 basis points, concentrated in the Installation segment, which does not apply fuel surcharges.

Light commercial conditions are becoming more difficult because of higher rates. Multi-family weakness is expected to become more visible in Q4 and the first half of 2027 unless the rate environment changes meaningfully.

Heavy commercial faces a demanding comparison: Q4 2025 total and same-branch revenue grew 38.5%. Product availability has also tightened in parts of commercial insulation, although management said supplier relationships are helping IBP secure required materials.

Analyst Q&A Highlights

• Gross-margin resilience: Management said market-share gains and multi-family performance should help offset residential weakness, but 2027 gross margin is more likely to be near the low end of the 32%–34% range.
• Heavy commercial backlog: Confirmed backlog was up by the mid-teens, and management described the project pipeline as highly robust. Larger average projects are also contributing positively to price/mix.
• M&A capacity: The acquisition pipeline includes both traditional insulation installers and complementary-product businesses. The recent debt issuance was intended to provide flexibility for potentially larger transactions, although management emphasized that pipeline deals may not close.
• Competitive behavior: Management said bidding discipline remains rational and reported no meaningful change in field behavior following a large competitor’s ownership change.
• Gutter margins: IBP is prioritizing price and margin over volume after aluminum inflation compressed profitability. Management said gutter work is relatively easy to lose and regain, supporting a disciplined pricing approach.
• Labor advantage: Management argued that its employee labor model and ability to complete work on schedule remain valuable to builders, helping the company resist steep price reductions despite softer demand.

Full Earnings Call Transcript

Complete Earnings Call Transcript

Management Remarks

Operator

Greetings. Welcome to the Installed Building Products Third 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, Vice President of Investor Relations. Thank you, Ryan. You may begin.

Ryan Ricketts

Good morning, and welcome to Installed Building Products third quarter 2026 earnings conference call. Earlier today, we issued a press release on our financial results for the 2026 third 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 statements 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.

Jeffrey Edwards

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.

Third quarter revenue reached a record $808 million, up 4%, driven by our commercial, multi-family, other segment, and recent acquisitions. That result came in a residential market where single-family demand remains soft, and it is direct evidence that the diversification strategy we have built is working as designed.

Our residential installation business continued to outperform broader housing market trends, demonstrating the strength of our operating teams, the benefits of our diversified platform and the multiple avenues available to support growth across varying market conditions. Overall, we believe these results demonstrate the value IBP provides customers across the markets we serve and products we install.

Throughout the quarter, lower consumer confidence, along with affordability concerns and a rise in mortgage rates have 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 remains 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 third quarter performance, consolidated sales increased 4% and same branch sales were slightly positive. Our commercial end market continued to show strength, delivering double-digit installation sales growth for the sixth consecutive quarter with heavy commercial sales growth exceeding 13% 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 multi-family end market, sales grew 8% during the quarter, and our contract backlog continues to grow. Our other segment revenue grew 19% net of eliminations, partly due to acquisitions and is up 33% year-to-date. We continue to effectively manage both material and labor to meet the needs of our customers and remain flexible to adjust to the varying demand across regions.

During the 2026 third quarter, we completed 4 acquisitions, representing approximately $22 million in annual revenue. Our pipeline supports our expectation of at least $100 million of acquired annual revenue for the full year. Acquisitions during the quarter included an installer of shower doors, closet shelving, mirrors, and other accessories across residential markets, serving customers throughout Minnesota and surrounding states with annual sales of approximately $7 million.

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. An installer of fire places primarily in new residential markets throughout Maryland, Virginia, West Virginia, and North Carolina with annual sales of approximately $4 million. And finally, an installer of insulation, fire places, and gutters primarily in new residential markets throughout Oklahoma with annual sales of approximately $4 million.

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 are optimistic -- and optimistic about the prospects ahead for IBP and the broader insulation, complementary building product installation business.

With this overview, I'd like to turn the call over to Michael to provide more detail on our 2026 third quarter financial results.

Michael Miller

Thank you, Jeff, and good morning, everyone. Consolidated net revenue for the third quarter was up 4% to a record $808 million compared to $778 million for the same period last year. Same branch sales for the Installation segment increased 0.3% for the third quarter and a 5% decline in new single-family same branch sales was offset by a 10% increase in commercial same branch sales and an 8% increase in multi-family same branch sales.

Price mix increased 0.4% during the third quarter or 2%, including heavy commercial. Volume during the 2026 third quarter decreased by 2%, primarily due to lower new single-family volume. Third quarter adjusted gross profit margin was 32%, roughly 180 basis points of the year-over-year decline is attributed to specific input costs, aluminum at 100 basis points, fuel at 40, and freight at, 20 with a further 20 basis points from the faster growth of our other segment.

Gross margins were also negatively impacted by a mix shift to the complementary products, which have a lower gross margin profile than insulation. Importantly, insulation product margin was essentially flat year-over-year, illustrating that the core business is performing.

For the first 9 months of this year, adjusted gross margin was 32.4% and installation gross margin was 35.7% compared to 36.5% in the prior year. The decline in installation gross margin was attributable to the higher cost of aluminum and fuel, which were a negative impact of 50 basis points and 40 basis points, respectively.

Adjusted selling and administrative expenses increased 4% compared to the 2025 third quarter. As a percent of third quarter sales, adjusted selling and administrative expense was 18.2%, consistent with the prior year. Adjusted EBITDA for the 2026 third quarter was $128 million, reflecting an adjusted EBITDA margin of 15.9% and adjusted net income was $73 million or $2.76 per diluted share.

Although we do not provide comprehensive financial guidance, based on recent acquisitions, we expect fourth 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 third quarter net interest expense was $10 million compared to $7 million for the 2025 third quarter. We would expect fourth quarter net interest expense of approximately $15 million. At September 30, 2026, we had $396 million in working capital, excluding cash and cash equivalents.

Capital expenditures and total incurred finance leases for the 3 months ended September 30, 2026, were approximately $16 million combined, which was approximately 2% of revenue. We ended the third quarter with $416 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.

At the quarter end, we completed a $250 million add-on to our existing Term Loan B on identical terms, increasing the total to approximately $740 million with all rating agencies reaffirming their ratings. We raised this capital proactively from a position of strength at 1.3x leverage to ensure we can perform on our acquisition strategy. Pro forma leverage remains comfortably below our 2x target, and we have no near-term maturities.

At September 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 the fourth quarter dividend of $0.39 per share, which is payable on December 31, 2026, to stockholders of record on December 15, 2026. The fourth 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.

Jeffrey Edwards

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.

Operator

[Operator Instructions] Our first question is from Phil Ng with Jefferies.

Question-and-Answer Session

Philip Ng

Tough environment for sure, managing through that reasonably well. And particularly, I appreciate the color, Michael, in terms of the install margins holding up pretty well in this backdrop. But I guess, as we kind of look out to '27 and beyond, there's a view that single-family starts could be down. Can your install business take price to at least offset inflation? Are you in a position where you could maintain that longer-term gross margin framework in that 32% to 34% range in a softer potential environment as we look out to 2027?

Michael Miller

Yes. Phil, thanks for the question. Obviously, a lot depends upon how the single-family market develops in '27. Our current expectation is that both single-family and multi-family starts are down sort of mid-single digits in the year. I think we know that when single-family starts are down sort of mid-single digit, getting price realization is tough for sure.

However, we've continued to do extremely well in terms of gaining market share and performing very well on the multi-family side, which I think this quarter's results reflect that in a very strong, positive way. So I think that in the multi-family side, we will be able to offset some of that weakness. We'll feel it. And as everybody knows, the comps are just very, very difficult coming in, I mean, a little bit weaker, obviously. This is the first quarter in, I don't know, 6 or 7 quarters that multi-family inflected positively. And our backlogs are growing there, not by much, but they're definitely growing there.

So to answer your question, yes, I think that we can stay within that 32% to 34% full year range, but we're clearly going to be at the low end of the range. We're not going to go at 34%. And certainly, as I think everyone on the call realizes, our fourth quarter gross margin last year was a record gross margin that we reported as a public company. And we clearly don't expect that to be the case in the fourth quarter of this year because some of the headwinds that we noted in our prepared remarks will continue. I mean, clearly, fuel and freight are going to continue to be headwinds.

On the aluminum side, if there's one thing we're disappointed about in this quarter is that we didn't get on top of the gutter margins as quickly as we should have. We are very deliberately and actively working with our customers to get that margin back up. And we do not think it will be the same kind of headwind that it was in the third quarter and the fourth quarter. We do not think we'll recover 100% of the margin, but it definitely won't be as much of a headwind.

I would say on the positive side, the team, while they didn't do a great job on the gutters, they did an amazing job on spray foam. And as we had talked about last quarter, there is a very hard significant 20% plus price increase in spray foam, and they maintained margin throughout the whole quarter. So we were very pleased with the result there.

Philip Ng

I think a weaker single-family backdrop is well appreciated. But with rates going higher, have you seen an air pocket in your commercial business, particularly light commercial? And then on the multi-family side, I mean, you said you're expecting multi-family starts to be down mid-single digits. But on the flip side, I mean, your business turned positive and contractor backlogs remain good. Is that a backdrop where, one, given your share gains in multi-family, you can grow multi-family next year? And just any color in terms of what you're seeing on the commercial side of things?

Michael Miller

Yes. I mean, you're absolutely right. On the light commercial side, it's definitely getting tougher because of the rate environment. I would say on the heavy commercial side, we continue to literally not to cover off the ball, quite frankly. At the end of the quarter, their backlogs were up mid-teens from what was already high record levels. So while the comps there, just again, as everybody knows, are extremely difficult, particularly in the fourth quarter, but the team there has continued to perform very well. And we feel good about the progress that they're continuing to make on that side.

On the multi-family side, the rate environment has definitely taken a little bit of the wind out of the sails for multi-family developers. I mean what you're seeing is a lot of equity is trapped in existing multi-family projects that are actually doing better from a rent growth and occupancy perspective, but developers can't get the equity out because cap rates have gone up and the value of the buildings have gone down. So that's definitely taking the wind out of the multi-family sales right now. And -- well, we have a lot of confidence about our ability to outperform relative to the market. We just think it's a tough market, quite frankly. So they will continue to -- again, we have confidence around our ability to gain share and perform well. When we look at the quarter on the multi-family revenue that we generated in the quarter, I mean, it was across pretty much all regions that we had a pretty solid multi-family member.

I would just bouncing back to the heavy commercial, just kind of remind people that the fourth quarter revenue for both total revenue and same branch revenue 38.5% in the fourth quarter. That is the toughest comp we're going to face as a company since we've been reporting the heavy commercial business separately. So just as a level set relative to where we expect that business to do in the fourth quarter and through '27.

Philip Ng

Can you still grow on that sub comp in fourth quarter with heavy commercial, just given the backlog you're seeing year-over-year?

Jeffrey Edwards

Yes. I mean, obviously, we don't provide guidance, but the portion of the business that we are most excited about clearly is the heavy commercial business and the opportunities that are there.

Operator

Our next question is from Michael Rehaut with Melius.

Michael Rehaut

It's Mike Rehaut from Melius Research. First, on the M&A update and the 4 companies acquired during the third quarter, all in the complementary side. And I'm just wondering in terms of what you're seeing out there from an M&A landscape, if it's also a little bit more oriented towards complementary? And if so, what might that mean for gross margins over the next 2 to 3 years if that shift continues?

Michael Miller

Yes. This is Michael. I'll start and then Jeff can kind of follow-up. But I would say the pipeline is very robust. We feel great about the deals that are there. And it's a mixture of things, including regular way insulation installers. I would say that your average single market insulation installer has not delivered the kind of performance that we have delivered. And as a consequence, they're not super excited about selling their business in, for them, what is a pretty tough environment.

I mean, keep in mind, one of the things that we think is most attractive about IBP is not only our broad geographic dispersion and our -- the geography that we have and our overweight towards the top half of the country, which continues to do better than the bottom half of the country, but it's the diversification of the business and the strength of the multi-family and the strength of the commercial. And traditional insulation installer that we're buying doesn't have that kind of diversification to offset what are pretty tough conditions in the single-family side.

Now that being said, we have deals that we expect to close in the near term that are regular way insulation installers, but some that are other products. We feel really good about our ability to continue to execute and perform on the acquisition strategy.

Jeffrey Edwards

This is Jeff. I agree with Michael in terms of just kind of the way the chips came in per se that the mix is normal. But the other thing that happens is when the market is a little tougher like this, some of our leads come from the field and come from the branch managers. And to the extent that they're trying to get into other products to bolster sales volume in their locations. There's sometimes a tendency to kind of surface more of the other product sales. And it's an intentional move on our part. It actually is the best time for us to really build out more of the complementary product strategy, which, as you all know, is something we've been working on for a long time.

Michael Rehaut

No, absolutely. I appreciate that. And I guess just following up on the comments in the prior question around what you're hoping to do with recovering some of the aluminum headwinds that you saw in the gutters business in 3Q into 4Q. I just want to try and make sure that I'm appreciating the dynamics there in terms of, A, I would assume you'd be able to only recover, let's say, a portion of that, maybe on the 50% type of range of that 100 bps, if that's broadly speaking, the right way to think about that? And conversely, if there's any other incremental headwinds that you might see sequentially, specifically, I'm talking about -- I'm thinking about fuel or freight, but if there's any others, just trying to think about the sequential progression here, aluminum maybe being less of a headwind, but if there are any other incremental headwinds relative to 3Q into 4Q, that would be helpful.

Michael Miller

Yes. I mean, I think, again, obviously, we don't give guidance, but we're working very hard to offset that 100 basis points headwind within gutter sales. I mean the one positive is that aluminum prices on average in the month of October were down about 6.5%. Now that's still up 15% from last year, but that will help us offset some of the headwinds that we experienced in the third quarter. I mean, is it going to be 50 basis points, 100 basis points? Again, we don't provide guidance. But the team is working very hard to make it be as little of an impact as possible, but there will still be some. I mean, we just have to be honest about that.

And we will continue to have, unless something changes very dramatically here like tomorrow, we're going to continue to have the headwinds associated with fuel and freight. And then, I mean, it's a good thing, but it's a bad thing for gross margin is the continued strong growth of the other segment. The one thing that I will comment around the other segment is the overall growth rate there will come down in the fourth quarter because something that is driving that growth rate as high as it is, is the fact that in the fourth quarter of last year, we did 2 acquisitions that were in the other segment. So we would expect that other segment revenue growth is going to be more similar to what the other segment same-branch sales growth was in the third quarter, which is mid-single digits.

Operator

[Operator Instructions] Our next question is from Sam Reid with Wells Fargo.

Richard Reid

I wanted to touch on competitive dynamics in install more broadly. Obviously, there is a competitor that is under new ownership. And it's now, let's call it, 4 or so months into that ownership. So any sense as to changes in competitive behavior and dynamics that we should be mindful of?

Michael Miller

Yes. This is Michael. I'll start that and then let Brad sort of follow up. But our general sense -- and obviously, it's different market to market. And I think as everyone can appreciate that particularly the production builders, the public builders are definitely under considerable margin pressure themselves. And it's necessitated significant dialogue and conversation with all of their trades and I would say, during that process, we've been very disciplined. And I think our competitor -- our largest competitor has been very disciplined as well.

Brad Wheeler

Yes. This is Brad. I would agree. I mean, our largest competitors, they have always been good competitors, and they still are. Nothing's really changed. We haven't noticed anything in the field that's contrary to that.

Richard Reid

Maybe switching gears here. I wanted to dig a little deeper on spray foam. It sounds like based on some of the earlier answers that you guys really did a good job of recovering some of those cost increases, which is good. It's quite interesting because the messaging around that on the Q2 call was a lot more cautious. So just curious maybe how that changed throughout the quarter with respect to some of these spray foam price pass-through initiatives and sort of areas where the team really excelled.

Jeffrey Edwards

Yes, it's pretty much across the board. I mean, I think as we've indicated or certainly have talked to investors about the spray foam product is a semi-custom custom home product for the most part. And that customer set is the most willing to accept price increases. And I would say, unlike with gutters and aluminum, we had a lot of advanced knowledge about the price increase coming, and it was very well telegraphed to the -- certainly our customers and to our employees so that people were ready for it. And as a consequence, particularly because with the custom home, the bid to install time can be quite long, just given the nature of the length of those projects.

So I think the team did a better job than we expected them to do, quite honestly, in forward pricing the price increases, the material price increases to maintain the margin. And quite frankly, it also helps that there is pretty good discipline within the spray foam contractor base to maintain margin. I don't know, Brad, if you want to add to that, but...

Brad Wheeler

No. You covered it.

Operator

Our next question is from Stephen Kim with Evercore ISI.

Aatish Shah

This is Steve -- this is Aatish on for Steve. I just want to touch on the commercial side, specific heavy commercial. Can you give us an idea of which verticals specifically are supporting growth, which are a little bit more consistent in terms of that growth contribution versus ones that may be a little bit more lumpy or volatile?

Jeffrey Edwards

Sure. I mean the big drivers of growth in the backlog, which has been comparable for what the reported results are, but recreational and entertainment has been strong. Industrial and manufacturing has been very strong. Actually, retail has been solid for us. It's not a big portion of the overall revenue, but it has been growing significantly from a backlog perspective. And then lodging and hotel has been pretty solid.

Areas of weakness, maybe not surprising, multi-family, a little bit of education, and a little bit of transportation. Part of the transportation weakness, though, is that those projects tend to be pretty high dollar value. So when some of them roll off, it takes a while to get to build back up the backlog in those. But I mean, as we look at it overall, as I mentioned, a mid-teens increase in their backlog is phenomenal. The only thing disappointing about it is that they're only like 10%, 11% of revenue.

Aatish Shah

And then I just wanted to come back to the multi-family conversation, a lot of detail there and kind of the challenges that you're expecting. But I guess, in terms of the kind of the outperformance versus the market, can you kind of touch on how the CQ team is kind of contributing to that? And any context there would be helpful.

Jeffrey Edwards

Yes. I mean CQ is helping drive that for sure, although the teams, the non-CQ teams, if you will, actually did a really nice job on the multi-family side in the quarter as well. What's really starting to happen is the success of CQ in the South Census Region is starting to expand into the other regions, particularly the West and the Mid-Atlantic. And we're starting to see the fruits of that effort and that work. And we believe we have tremendous potential, particularly in those 2 regions to increase our market share. We estimate that in the South Census Region, where CQ is dominant, that we have over 50% market share in multi-family, which is phenomenal. But our market share in those other markets is considerably lower. So -- or the other census region.

So there's a lot of runway there. It's a runway in a market that is admittedly very challenged. As I think pretty much everyone on this call would know is that in the third quarter, multi-family starts, which had been growing, were down almost 10% in the third quarter. So that, I think, is indicative of the rate increases and the headwinds that multi-family developers and owners are seeing. And there definitely appears to be a near-term pullback in multi-family development, which I think everybody understands the dynamics around rates in that.

Operator

Our next question is from Susan Maklari with Goldman Sachs.

Susan Maklari

My first question is, in your prepared remarks, you mentioned that there were some markets that had outperformed other markets. Can you talk a bit about what you're seeing geographically? And did that have any implications in terms of this quarter's results or how we should think about the end of the year or even early '27?

Jeffrey Edwards

Yes. I mean I'll call out some states that -- states that we had a lot of headwinds in like -- and I'm only talking about the big states for us, not some of the smaller states, but Colorado, Indiana, Texas, Virginia, and Washington were a little challenged. We were very pleased that California and Florida stabilized in the quarter, which was nice to see, particularly Florida stabilizing. North Carolina was pretty good for us. We had some incredible performances in some of our states like Georgia, Minnesota, our hometown Ohio, South Carolina, Wisconsin. Some of those states were actually up double digits, believe it or not.

So yes, we felt like it was balanced. But when we look at state-by-state performance, 2 things that really stood out for us was the performance in California and Florida, and that felt like they hit bottom, which is good.

Susan Maklari

And then switching to the volume versus price mix. It's been nice to see how price mix has been flat, excluding heavy commercial, even with the volume pressures that are coming in, right? Your volumes have been down, call it, low to mid-single digits. Can you talk about the ability to sustain that going forward? And how we should think about the different moves coming through as perhaps single-family starts further moderate?

Jeffrey Edwards

Yes. Thanks for the question, Susan. I do think that the price mix is going to continue to get more challenged as we progress through the fourth quarter and going into '27 based upon our expectations for the market. So one of the things that we mentioned last quarter and for several quarters, one of the things that we do is we track when the public builders report their numbers and their homebuilding revenue was down in the third quarter, 7% or so, and our revenue with them was down about 7%.

So we track pretty closely with them. Based upon their current guidance/consensus for the fourth quarter, it would imply that our fourth quarter revenue with them is going to be down roughly 6%. So we think that's going to be tough, both from a volume and a price mix perspective. I would say in the quarter that the private builders were basically flat in Q3. We -- this has been a trend now for multiple quarters that the private builders continue to outperform with us anyway relative to the public builders. It's -- I think everybody appreciates this on the call that the toughest part of the single-family market right now is the entry level, which the public builders have very, very high market share in. So it is going to continue to be a challenge. But fortunately, we do have the benefits and the diversification with the commercial business and our ability to continue to take share on the multi-family side.

And we were talking about -- and I get focusing on starts because that's a much more forward-looking metric versus the backward-looking metric. But I think we really need to highlight the company's performance relative to completions in the quarter with single-family completions down 12% and multi-family completions down 27%. Our performance relative to that in the quarter highlights the strength of our team and of our business model. And while it's not a perfect correlation on a quarterly basis, it is a good indication of the performance that we had in what was and what continues to be a very tough environment, so.

Operator

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

Adam Baumgarten

Noticed that you guys didn't buy back stock in the quarter and had recently raised some debt, as you guys mentioned at the top of the call. I guess, can you talk to your appetite for maybe some larger chunkier acquisitions perhaps in tangential parts of the business like mechanical insulation install?

Michael Miller

Yes. Thanks for the question. And a couple of things there. The primary weakness in the share price during the quarter was during the closed window. And we are restricted from buying shares during closed windows. So the lack of purchases in the quarter isn't really a reflection of us not wanting to buy shares because that still is definitely one of our capital priorities. But our #1 capital priority has been and will continue to be the acquisition strategy and buying accretive acquisitions that continue to diversify the business. I mean, I think we've demonstrated over the past several years, and I think this quarter was even a highlight to that, that having a well-diversified business has improved and helps maintain strong financial condition even in a weaker environment.

We did the $250 million add-on, recognizing that we have some larger things that are in the pipeline. Now because they're in the pipeline doesn't mean they're going to close. But that capital is extremely flexible. Our leverage is still well below our 2x stated net leverage. The rating agencies reconfirmed our ratings, including the investment-grade rating on our senior secured debt. So for us, it was very opportunistic. It makes a lot of sense. The nice thing about the way that deal is structured, if we decide that we want to pay it off, we can pay it off without penalty. And it provides us tremendous amount of flexibility. But I will say, right now, we have over $1 billion of liquidity given our cash position and the availability under our ABL facility. So we feel very good about where we are, and we feel very disciplined about both the acquisition strategy and that being priority #1, certainly share repurchases and then the dividend.

Adam Baumgarten

And then just maybe switching gears to insulation prices, kind of what you're seeing out there. It seems like based on one of your large suppliers that maybe prices softened a bit in the third quarter sequentially. Maybe what your outlook is there and if maybe you can capture some kind of price cost spread as price mix is still kind of flattish to up a little bit?

Michael Miller

Yes. Let me start that, and I'll let Jeff sort of finish it up. But I mean, I would say really across now coming into the fourth quarter, we expect there to continue to be stability in fiberglass pricing and stability in spray foam pricing at this point. So we don't expect to see pricing moving one way or the other. And even if there is pricing, that's going to be very modest. So nothing that I think kind of moves the needle for us or for the industry. I don't know if you want to add anything to that.

Jeffrey Edwards

That is my opinion also.

Operator

Our next question is from Trey Grooms with Stephens Inc.

Ethan Roberts

This is Ethan on for Trey. I wanted to start off with commercial sales. Organically, those were up double digits again this quarter. And as you mentioned, against the more difficult prior year comp. And the growth here has obviously been pretty impressive, backlog up mid-teens. And so while the backlog doesn't suggest this to be the case, I'm just curious that with the uptick in rates intra-quarter, if you're seeing any signs of some moderation in appetite here based on what you're hearing from your customers? So any color on that would be great.

Jeffrey Edwards

I'll start that and Brad can add some color to that. But I would say no. And the fact that the backlog at the end of the quarter was up mid-teens suggests that there really hasn't been any falloff. And keep in mind, that backlog is up mid-teens against record upon record quarterly revenue.

Brad Wheeler

This is Brad. So our backlog is confirmed backlog as well. So most of it is funded. And then our pipeline is as robust as it has ever been on the commercial. So we have plenty of opportunity ahead.

Ethan Roberts

Yes, that's encouraging. And then building on the prior question on the fiberglass side of things. We know that there's a lot of supply out there and these OEM increases appear to continue to be pushed. And it sounds like you guys expecting mid-single-digit type declines in single-family and multi-family next year that any increases would probably not be accepted by the market. But just curious your thoughts here and if maybe an increasing industry cost curve could potentially support some degree of pricing, all else equal, despite lower demand.

Jeffrey Edwards

Yes. We would expect that to be a pretty difficult thing to realize, just given our expectation, I think everyone's expectation for a pretty muted environment next year. One thing that could offset that a little bit, quite honestly, is -- and I think OC talked a lot about this or not talk a lot, but talked about this in their insulation segment is the mechanical industrial side of the insulation business is pretty much on allocation. And they are getting price appreciation there. Well, typically, that's not going to impact the residential side. I think it could cause a little bit of pressure from a pricing perspective.

But at this point, our belief is that we'll have stability in both fiberglass and spray foam pricing certainly for the next couple of quarters, unless the on-the-ground macro condition for residential -- new residential construction changes. But on the mechanical industrial side, it's definitely a hard market. There's a lot of activity there. As pretty much everyone on the call would know, we do have about $50 million of revenue in the mechanical industrial installation space, and that part of the business is doing well.

Operator

Our next question is from Andrew Carter with Stifel.

Andrew Carter

I want to focus back on something you said earlier about the competition from the homebuilders or just kind of what they're looking to their suppliers. First thing, as I understand it, negotiations for your business on the install side go down to the house level. Has there been any change in terms of the national homebuilders trying to take more of an approach in terms of kind of negotiating, whether it be RFPs or whatever between you and QXO?

And then the second thing I would ask is kind of to build on the plant with all the kind of labor challenges in the specialty kind of the mechanical trades that come right before you in the cycle, I'm guessing that makes your life harder to try to figure this out. Maybe the softer volume outlook you've kind of set out there maybe assuages some of that. But I guess that would make your life harder. Does that show up in the margin? Can you manage to that? And is there any recognition of that value?

Jeffrey Edwards

Yes, that's a great question. Let me -- I'll start that and let Brad provide some more color. But I would say that the bidding process and negotiating process really hasn't changed much. I mean one of the large homebuilders very aggressively went out to all of their trades to kind of rebid everything. The results of that, I think, were pretty reasonable from our perspective. So I would say there's not that much change.

On the second part of your question, the scarcity of labor for the trades that come before us does extend cycle times. But given how soft the environment is right now, we're not seeing any significant cycle time extensions. But it does help us because we have the installed labor and there are employees. And it's -- we become more important to the builder as somebody that can show up on time, get the job done right the first time and pass inspection. Now does that mean we can get a 10% price increase? No. But it means we don't have to take a 10% price decrease, right, because they know and value the fact that we have the consistency of the labor. Brad, do you want to add to that?

Brad Wheeler

Yes, this is Brad. So on the RFP question, first, it's not just between us and QXO, when builders and customers go out to bid, all the independents as well. So I just want to be clear on that. Yes, we've seen some, like Michael said, on some of the public, but maybe it's 1 or 2. But -- and you mentioned it, the custom and smaller builder, it comes down to the price per house. And a lot of times, that depends on the community that you're in, the county and the requirements for that area.

And on the second on the labor, when you really break it down, that's what we do. We're a labor company and also logistics, and we just happen to install products along with it. So this isn't really too much of a different story than what we've had in the past. Now the labor is a little tighter, but this is what we do.

Andrew Carter

Second question, just in terms of where fuel prices are today, well, I guess, #1, what is the kind of fuel price kind of headwind in your '26 margin, just assuming this week's rates hold through the fourth quarter? And then if you took the current rates, what would be the annualized kind of impact versus '25 just using kind of the fuel rates?

Jeffrey Edwards

Yes, it's 40 to 60 basis points easily. And I should point out, and this is maybe too much of a nuance, but the impact of fuel is really primarily felt at the installation segment because -- which has been the way for decades and decades is that the installation segment does not do fuel surcharges with our customers. We'd love to be able to do that. But in -- we don't -- in the industry doesn't, I should say. But in the other segments, Distribution and the Manufacturing segment, they do fuel surcharges. So there's much -- there's less impact to the margin on the other segment, the Distribution and Manufacturing business. But obviously, the Installation segment is really the driver of the business.

Operator

Our next question is from Keith Hughes with Truist Securities.

Keith Hughes

Just going back to the multi-family comments. It's been tough to track that market. Some of the government data doesn't seem to be tracking what's better than it is on the field. Whatever this weak patch is, when do you think it will start showing up in terms of your install? And is there any comments from your customer of what their outlook is for next year on multi-family?

Jeffrey Edwards

Yes. I would say that the current rate environment has really muted expectations within the multi-family market. And I think that softness for the industry is definitely going to start showing up in the fourth quarter, and in certainly, the first half of unless there's a meaningful change in kind of the rate outlook or rate environment. I mean one thing that we tried to make this point in answering an earlier question, but I think it is super relevant to understand or appreciate is that although the multi-family market is probably performing better than people expected from a rent profile and occupancy profile, the equity for so many developers is trapped in the value of those buildings because of the higher cap rates. And those projects just don't sell because people don't want to sell them at a loss, right? So it definitely puts a damper, if you will, on expectations for future starts and growth in '27 for sure.

Operator

Our next question is from Jeffrey Stevenson with Loop Capital.

Jeffrey Stevenson

I wanted to follow-up on your comment, Michael, on the private builders outperforming in the third quarter. What have you been hearing from your regional and custom builder customers regarding 2027 expectations compared with their public counterpart? And do you think being under-indexed to the large production builders will continue to be a mix tailwind next year?

Michael Miller

Yes. I mean I would just say, just to clarify, we don't really think of ourselves as under-indexed to the public builders. I mean the reality is that they need our scale and volume, particularly in their high-volume subdivisions. It's just that they're weaker now given the market segment, the entry-level segment that they're heavily indexed to. In terms of the expectations that we have from our private and regional builders, obviously, it's different market to market. But I think the move there is better than it is with the publics because I think we continue to see better strength in the semi-custom, custom and move-up market, which the private builders, that's really built basically.

So -- and us being over-indexed at the top half of the country, we talked about this several times, definitely helps us for sure. I mean, the Midwest has been great for us. The Northeast, Minnesota, which is our largest state by revenue, has just knocked the cover off the ball. I mean they're just doing extremely well. And so we feel very good about that.

Jeffrey Stevenson

And I was wondering if we could dive deeper into complementary products demand during the quarter. Are you seeing any products outperforming? And are you seeing stronger demand and better single-family markets like Minnesota you just mentioned?

Michael Miller

Yes. I mean the complementary products had a better growth profile, certainly than insulation did in the quarter. Bad news, good news is that gutter sales were up 16% in the quarter, which normally would be great. But in this quarter, it wasn't so great because of the margin pressure that they experienced due to the very significant increase in aluminum pricing. But as we said earlier, the team is working very deliberately to get the margin back up and to get price. And I would say that there is a strong commitment to forego volume to get price. The reality is that gutter install work is some of the easiest to lose and some of the easiest to get back of all the things we install. So we're definitely approaching the fourth quarter and '27 with the mindset that margin is #1, volume is #2.

Operator

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

Michael Dahl

Just a couple of follow-ups. On the heavy commercial side, I know it's really difficult to parse this out, but the disclosures you do make suggest that it obviously has a significant positive impact on overall price mix. That's just kind of the nature of it. But on a like-for-like basis, I was wondering if you could help us understand within the heavy commercial growth, how much you think is kind of more volume driven versus price mix?

Michael Miller

Quite a bit of it is price mix. And part of that is that we're doing larger, on average, larger jobs than we historically have done.

Michael Dahl

And then just a follow-up to, I think, Phil's earlier question. I want to make sure I understand because the numbers may end up being similar to '26 versus '27. But when you're talking about the mid-single-digit declines, and then I think you also said you expect to be at the lower end of your gross margin range in terms of full year dynamic, was that a reference to your 2027 initial expectations? Or was that a comment on just looking at how you expect to wind up this year?

Michael Miller

It was definitely in answer to the question about '27 gross margins. I would say when it comes to -- and again, we don't provide guidance, and that's on a full year basis, keeping in mind that the first quarter of every year is always our weakest margin quarter and our weakest sales quarter. In the fourth quarter of this year, again, we're going against the most difficult gross margin comp we have ever had. And given the gross margin performance, quite frankly, that we've had year-to-date and in this most recent quarter, we're definitely going to be challenged at the 33% to 34% for this year, given some of the dynamics around -- and it's really around fuel, freight and aluminum. As we talked, we're working hard to offset that aluminum piece. We will not fully offset it in the fourth quarter, but we will make improvement, and the fuel, it's just until fuel prices, particularly diesel, stabilize and come back down, it's going to be a headwind.

Operator

Our next question is from Reuben Garner with StoneX.

Reuben Garner

Just one for me. I was wondering if you could talk about product availability on the commercial side, whether it's mechanical, industrial, heavy, light just across the board. Has that kind of slowed the pace of growth a little bit? I know you've been growing and taking share, but has it kind of limited the speed at which you can grow? And kind of what's the outlook there from a pricing standpoint on the commercial side if that kind of remains or gets tighter as growth continues?

Jeffrey Edwards

Yes, I'll start that and let Brad answer it correctly. On the light commercial side, the products there are the same as they are on the residential side. So there is free availability, generally speaking, of material there. On the mechanical and industrial side and on the heavy commercial side, I would say that we are benefiting from the strength of our relationships with the manufacturers to support us, and that's helping us to get sufficient material to meet our needs and requirements. But there's definitely the manufacturers are getting price in those products. And the team, given the strength of those markets is working hard to pass that on.

I would also say that in the heavy commercial business, as I think everybody knows, it's not as insulation intensive as it is fireproofing, fire-stopping, waterproofing-intensive, and that material is pretty readily available.

Brad Wheeler

Yes. This is Brad. You pretty much nailed it. The only thing I would add on the commercial insulation side, some of the manufacturers have increased out there and there. They are getting price on those. And the availability of that product has gotten a little tougher over the last month or 2, let's call it. But as we're working with our manufacturers to make sure we have product that we can sufficiently supply that to our customers.

Operator

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.

Jeffrey Edwards

I just want to thank you for your questions. And I look forward to our next quarterly call. Thank you.

Operator

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