As businesses go, insulation is about as sexy as a pair of overalls.

Yet a Columbus company has quietly built a multibillion-dollar company on a foundation of foam and fiberglass insulation.

From modest beginnings as Edwards Insulation in 1977, the company now called Installed Building Products has grown to more than 200 branches and more than 10,000 employees coast to coast. With annual sales expected to approach $3 billion this year, the Brewery District company has quietly been one of central Ohio's most reliably successful companies.

Now, the firm, commonly called IBP, is about to face one of its biggest tests as a publicly traded firm: Can it sustain growth and profitability in a housing market hammered by mortgage rates while also combatting the worst inflationary pressures it has ever confronted?

President and CEO Jeff Edwards is confident the answer is yes.

"We continue to believe IBP is better positioned than in any other time in our history to manage the business throughout the U.S. housing cycle," he told analysts last week.

A quiet start

No fancy tech breakthroughs, no internet disruptions: Installed Building Products is decidedly old school. Even the name is utilitarian.

Owned by the Edwards family, which also owns the Edwards Companies development firm, Edwards Insulation remained relatively relatively small for its first two decades, providing insulation services in the Columbus area.

When Jeff Edwards became active in the business in 1994, he recognized that there might be potential in the niche sideline.

"This was a small business, but fundamentally a good little business," said Edwards, who had seen other companies, especially a division of Masco now called TopBuild, grow insulation services into huge businesses.

"Jeff started getting involved," recalls Randy Hall, an IBP executive who at the time was vice president of Edwards Insulation. "He’s a visionary. He looked at what was going on in the national market, and said there’s no reason this can’t be bigger. That’s where it all started from."

Every home, every building, needs insulation, but it can be what Edwards calls a "nuisance product" − essential, but a small piece of the building puzzle that can be bit of a headache. He figured builders would respond if they had one contractor to go to who could supply and install the product − especially if they could use the same company in different markets.

More:A blanket for your home: Choose the right insulation to save money

Edwards had no interest in reinventing the industry. Instead, his strategy was to buy successful insulation companies in different cities and let them do their thing while Installed Building Products did "all the things they don't want to do," such as insurance, human resources, accounting and payroll.

In 1994, IBP made its first acquisition, a company called Freedom Construction in Columbus. IBP followed that by acquiring one more company in each of the next few years.

By 1999, IBP had the system down. That year, it bought seven companies, launching a buying spree that has yet to let up. Over the next two decades, it would acquire well over 100 companies, some with multiple branches. This year alone, it has acquired half a dozen companies, and expects more before year's end.

"What makes IBP unique is, they have not taken the path of purchasing broken companies to fix them," said Hall. "They want successful companies."

One of the companies acquired was OJ Insulation in Southern California, in 2006.

"Jeff Edwards called me out of the clear blue," said Scott Jenkins, who co-founded OJ Insulation. "I wasn’t entertaining selling. We were having our best year ever.... (But) once I started talking with him, I realized it was a good fit for us. I got lucky; I sold to a great company."

Jenkins remained with IBP and is now a regional president overseeing West Coast operations.

"The No. 1 thing that it helped, in my case, was cash flow," said Jenkins. "Once you get acquired by a larger company, you don’t have to worry about that anymore."

Nearly all the companies acquired by IBP install insulation in new homes and apartments as their core business, though some also install other products, especially garage doors and gutters. While some branches work in commercial buildings, housing remains the anchor.

In nearly every case, companies acquired by IBP keep their names, and frequently, their managers.

"The goodwill exists with the companies already there," Edwards said. "We like to keep the management; they have the loyalty built up."

Steadily growing

The strategy has allowed IBP to become one of the most dependable companies in central Ohio. Since going public in 2014, the company has grown revenue, income and earnings per share every year.

In 2013, the year before it went public, IBP had annual revenue of $432 million and operating income of $6.6 million, or 2 cents a share. Last year, it posted revenue of nearly $2 billion and income of $119 million, or $4 a share.

This year, for the first nine months alone, the company had revenue of $1.98 billion and income of $155 million.

IBP's success has been fueled by a robust housing market. But now, for the first time in years, that market appears unsteady.

Industry challenges

Mortgage rates of 7% have put the brakes on the booming housing market. U.S. housing starts were down 8% in September and show no signs of turning up.

Edwards believes, however, that the company's apartment and condo work may offset declines in single-family work.

"Clearly, we're seeing a deceleration in single-family orders, single-family permits and single-family starts. However, the single-family backlog continues to be at highly elevated rates," he told analysts. "And the backlog in multifamily is really quite unprecedented."

A slower pace might actually benefit IBP by allowing the company's weakened supply chain to catch up, he said.

"Everybody's assumption is this is the beginning of a recession for housing, but the backlog is huge," Edwards said. "I welcome a slowdown in demand."

Jenkins agrees.

"We’re still going to have growth," he said. "I've been around the business 45 years. This cycle is a little different because it’s more an interest rate concern. We’ve been so overheated, it will allow us to meet demand."

IBP must also continue to wrestle with skyrocketing material costs. IBP reported that prices for its raw materials were up 27% in the third quarter compared with the same period a year ago, the largest increase since the company became public in 2014.

What's ahead

While Edwards expects the installation of insulation to continue to form the heart of the company's business, IBP has cautiously moved onto other turf.

The company's recent acquisitions of AMD Distribution and Central Aluminum has allowed it to grow a foothold in manufacturing and distribution.

IBP has also expanded into commercial construction, although without the growth of the residential side of the business.

In addition, Edwards sees potential in adding other products to its menu, including window treatments and mirrors, along with opportunities in parts of the country - especially the Southwest and the Arkansas/Missouri area - where the company lacks presence.

"There's still lots of opportunity for consolidation in the industry," said Hall. "At the same time, we’ve been diversifying our product line. We buy companies with the intent of buying the insulation business, but we find there’s this other thing they're in that's successful - bathroom enclosures, shelving. The next thing you know, we’re buying shelving and mirror companies. ...

"It gives us an opportunity to be on the front end of multiple product lines. Builders find that appealing."

Employee efforts

Much of the company's focus the past few years has been on employee retention and well-being, a constant challenge in an industry so labor-intensive.

Edwards said an average IBP installer earns $60,000 a year and that the company's turnover is far lower than others in the industry.

The company has launched additional perks to attract and retain workers, such as longevity bonuses, wellness programs, volunteer opportunities and a stock purchase program.

"We're always on the lookout for opportunities to improve and grow," Edwards said, before adding, "We know it's not a sexy business."

jweiker@dispatch.com

@JimWeiker

This article originally appeared on The Columbus Dispatch: Columbus firm grows home insulation into multi-billion company