Shares of Installed Building Products (IBP) plummeted 7.23% during intraday trading on Thursday, as investors reacted to the company's second-quarter earnings report that showed declining profitability despite better-than-expected revenue and adjusted EPS.

The company reported Q2 adjusted earnings of $2.91 per diluted share, down from $2.95 a year earlier, though it beat the FactSet consensus estimate of $2.55. Revenue rose 2.3% to $777.8 million, driven by acquisitions and commercial installation growth, but residential same-branch sales fell 6.1% and residential new-construction revenue declined about 4.8%. The mix shift toward lower-margin manufacturing and distribution, along with higher fuel, medical insurance, and interest costs, pushed consolidated gross margin down 90 basis points to 33.3% and adjusted EBITDA margin down 70 basis points to 16.9%.

Management highlighted a challenging residential housing environment and cautioned that affordability and consumer confidence may continue to weigh on demand. The company's increased long-term debt and higher interest expense, combined with a decline in operating cash flow, further pressured the bottom line. Despite the earnings beat, the contraction in margins and cautious outlook fueled the sell-off.