Installed Building Products (IBP) risk factors, FY2025 10-K

RISKS RELATED TO OUR BUSINESS AND INDUSTRY

1. 01Our business and the industry in which we operate are highly dependent on general and local economic conditions, the housing market, the level of new residential and commercial construction activity and other important factors, all of which are beyond our control
2. 02Adverse developments affecting the new residential housing market could materially and unfavorably affect our business and financial results40% rewritten
3. 03Our business relies on commercial construction activity, which has faced significant challenges and is dependent on business investment44% rewritten
4. 04According to Dodge Data & Analytics, commercial building starts in 2026, measured by investment dollars, are expected to increase 3% from 2025 while institutional building starts (another subset of the nonresidential construction market in which we participate) are expected to increase 6% from 2025
5. 05Our industry is highly fragmented and competitive, and increased competitive pressure may adversely affect our business, financial condition, results of operations and cash flows
6. 06Our industry may develop new product innovations, installation techniques or requirements for insulation materials that could adversely affect our business and financial results31% rewritten
7. 07Product shortages or the loss of key suppliers could affect our business, financial condition, results of operations and cash flows
8. 08Changes in the costs of the products we use in our business, an inability to increase our selling prices or a delay in the timing of such increases can decrease our profit margins
9. 09Our success depends on our key personnel25% rewritten
10. 10We are dependent on attracting, training and retaining qualified employees while controlling labor and benefit costs
11. 11Variability in self-insurance liability estimates could adversely impact our results of operations
12. 12Increases in union organizing activity and/or work stoppages could delay or reduce availability of products that we use in our business and increase our costs
13. 13Increases in fuel costs could adversely affect our results of operations
14. 14Because we operate our business through highly dispersed locations across the United States, our operations may be materially adversely affected by inconsistent practices and the operating results of individual branches may vary
15. 15We are often required to obtain performance bonds and licensing bonds to secure our performance under certain contracts and other arrangements. In addition, the commercial construction end market also requires higher levels of performance bonding
16. 16Increasing scrutiny, changing expectations from stakeholders and government regulations regarding our sustainability practices and disclosure may impose additional costs on us or expose us to new or additional risks33% rewritten
17. 17A major public health issue could adversely impact the U.S. economy as well as our business, financial condition, operating results and cash flows
18. 18Our business is seasonal and may be affected by adverse weather conditions, climate change, natural disasters or other catastrophic events
19. 19We may be adversely affected by disruptions in our information technology systems
20. 20In the event of a cybersecurity incident, we could experience operational interruptions, lose confidential and proprietary information that harms our business, incur substantial additional costs, become subject to legal or regulatory proceedings or suffer damage to our reputation49% rewritten
21. 21systems 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 operationsNew
22. 22Terrorist attacks or acts of war against the United States or increased domestic or international instability could have an adverse effect on our operations
23. 23We may not be able to continue to successfully expand into new products or geographic markets and further diversify our business, which could negatively impact our future sales and results of operations
24. 24We may be unable to successfully acquire and integrate other businesses and realize the anticipated benefits of acquisitions
25. 25Our continued expansion into the commercial construction end market could affect our revenue, margins, financial condition, operating results and cash flows
26. 26Our distribution businesses and continued expansion into other new lines of business could affect our revenue, margins, financial condition, operating results and cash flows
27. 27In addition, a significant period of economic deflation could have an adverse impact on our business and financial results. Our three distribution businesses have substantially higher inventory balances, and deflation could cause the value of our inventories to decline54% rewritten
28. 28Our customers could purchase materials directly from manufacturers or other sources
29. 29We may be subject to claims arising from the operations of our various businesses for periods prior to the dates we acquired them

LEGAL AND REGULATORY RISKS

1. 30Changes in employment laws may adversely affect our business
2. 31Our business could be adversely affected by changes in immigration laws or failure to properly verify the employment eligibility of our employees53% rewritten
3. 32Our results of operations, financial condition and cash flows could be adversely affected if pending or future legal claims against us are not resolved in our favor
4. 33The nature of our business exposes us to product liability, workmanship warranty, casualty, negligence, health and safety incidents, construction defect, breach of contract and other claims and legal proceedings31% rewritten
5. 34creating 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 injuriesNew
6. 35Federal, state, local and other laws, building codes, trade policies and regulations could impose substantial costs and/or restrictions on our operations and could adversely affect our business
7. 36Changes in laws, regulations or rules, or a failure to comply with any laws, regulations or rules, may adversely affect our business
8. 37We are subject to environmental regulation and potential exposure to environmental liabilities

RISKS RELATED TO OUR INDEBTEDNESS

1. 38We have debt principal and interest payment requirements that may restrict our future operations and impair our ability to meet our obligations
2. 39Restrictions 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 impair our liquidity
3. 40Our use of interest rate hedging instruments could expose us to risks and financial losses that may adversely affect our financial condition, liquidity and results of operations
4. 41If we default on our obligations under the instruments governing our indebtedness, we may not be able to make payments on our debt and our business and financial condition could be adversely affected
5. 42Adverse credit ratings could increase our costs of borrowing money and limit our access to capital markets and commercial credit
6. 43Our indebtedness exposes us to interest expense increases if interest rates increase26% rewritten
7. 44We may require additional capital in the future, which may not be available on favorable terms or at all

RISKS RELATED TO OUR SECURITIES

1. 45The price of our common stock may fluctuate substantially and your investment may decline in value
2. 46These and other factors may lower the market price of our common stock, regardless of our actual operating performance
3. 47Our internal controls over financial reporting may not be effective, which could have a significant and adverse effect on our business and reputation
4. 48To comply with the requirements of being a public company, we may undertake various actions, such as implementing additional internal controls and procedures and hiring additional accounting or internal audit staff
5. 49Future sales of our common stock, or the perception in the public markets that these sales may occur, may depress our stock price27% rewritten
6. 50Jeff Edwards has significant ownership of our common stock and may have interests that conflict with those of our other stockholders
7. 51Provisions of our charter documents and Delaware law could delay, discourage or prevent an acquisition of us, even if the acquisition would be beneficial to our stockholders, and could make it more difficult for our stockholders to change our management
8. 52We pay dividends to holders of our common stock, but may reduce, suspend, or eliminate dividend payments in the future
9. 53If securities analysts do not publish favorable reports about us or if we, or our industry, are the subject of unfavorable commentary, the price of our common stock could decline