Drywall and Insulation Contractors (U.S.) — NAICS 23831

A rollup primer for a general investing audience — relevant to both public-market and private investors. NAICS (the North American Industry Classification System) is the U.S. government's standard code for industries. This page covers the five-digit industry 23831, which contains a single six-digit national industry, 238310. Because the two levels are effectively identical, this is a short orientation page — for the full detail, read the 238310 primer.

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1. Overview

Drywall and insulation contractors are the specialty-trade crews that turn a building's bare frame into finished, weather-tight rooms: they blow or roll insulation into walls, attics, and floors; hang gypsum wallboard ("drywall") and tape, mud, and sand it smooth; and install acoustical ceilings, firestopping, and soundproofing. They are almost always subcontractors, working under a homebuilder or general contractor rather than directly for the owner (remodel work is the exception).[4]

This is a large, essential, deeply cyclical business tied to how many homes and commercial buildings get built and renovated. It is also extraordinarily fragmented — roughly 19,600 mostly small, family-owned firms — which is why a short list of national consolidators has spent years buying up local businesses.[2] Both public and private investors can participate, but the public pure-play list is short and the private long tail is the whole rest of the industry.

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2. What's inside — and why this level equals its one child

At the five-digit level, NAICS 23831 has exactly one six-digit national industry beneath it:

When a five-digit NAICS industry has a single six-digit child, the two are definitionally the same set of businesses — the government did not split the category any further, so every establishment, dollar of revenue, and employee counted at 23831 is also counted at 238310. There is no residual "other" bucket and no second child to blend in. That is why this page is a pass-through: the scope, activities, exclusions (making the materials is manufacturing under NAICS 327420/327993; stucco is 238140; mechanical/pipe insulation is 238290), value chain, and economics are identical to the child. See the 238310 primer for the full treatment.[4]

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3. Size (this level's rollup figures)

These are our ground-truth federal statistics for NAICS 23831 (dollar figures converted from reported thousands). Because the level equals its one child, they match the 238310 figures.

How concentrated? Barely. The four largest firms account for just 8.6% of revenue, the top eight 11.4%, the top twenty 16.4%, and even the top fifty only 23.2%.[2] The Herfindahl-Hirschman Index (HHI, a standard concentration measure) is suppressed in the federal data for this industry, so we do not state one.[2]

Undercount caveat. These figures count employer establishments well but understate the true workforce. County Business Patterns primarily covers businesses with paid employees, and the Economic Census generally excludes nonemployers (businesses with no paid employees, including many self-employed sole proprietors).[1][5] Because so much of the labor here is subcontracted, seasonal, piece-rate, immigrant, and organized in one-person crews, the ~251,000 payroll employees is best read as a floor, not the full picture.[1][5] Treat the "$500 billion+" figures in some commercial market reports with skepticism — those are global and far broader in scope; the $57.8 billion federal receipts figure is the right U.S. anchor.[2]

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4. Investable universe (where value concentrates)

Because 23831 is a single child, value concentrates in exactly the same places as in 238310 — there is no second sub-industry to spread across. The short list of public names with meaningful exposure:

(NYSE = New York Stock Exchange.) Upstream, the same construction cycle is available through material makers Owens Corning (OC) and Carlisle (CSL) in insulation and Saint-Gobain (SGO) (owner of CertainTeed) in both drywall and insulation.[14][15] The bulk of the installation industry, though, is private — thousands of local and regional firms, private-equity-backed roll-ups, and small operators, plus large private material makers (Knauf/USG, Georgia-Pacific/Koch, National Gypsum, ABC Supply).[16][17][18][19] Full breakdown in the 238310 primer.

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5. How the money works

This is a specialty-trade contracting business — the economics are about volume, labor productivity, and the spread on materials, not store counts, subscriptions, or a regulated rate base. Revenue equals jobs won times price per job; a contractor buys insulation and wallboard, marks it up, and charges to install it, so a large share of revenue is materials passed through at a spread. Gross margins run roughly 29%–34% and net margins land in the mid-to-high single digits.[7][8] The levers that matter are labor productivity (boards hung or bags blown per man-hour), material price pass-through (protecting the spread when gypsum and fiberglass costs move), branch density, and job mix. The national consolidators add a second engine: buying small installers cheaply, then gaining purchasing scale and cross-selling adjacent products through the same crews.[7] See the child primer for the full walkthrough.

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6. Demand drivers

Identical to 238310: new residential construction is the single biggest driver (housing starts set the tempo, with insulation and drywall lagging framing); commercial and industrial construction, especially data centers, adds a growing layer; repair and remodel provides a steadier, more recession-resistant floor; tightening energy codes (the IECC — International Energy Conservation Code — adopted state by state) mandate more insulation per building as a structural tailwind; and policy incentives shift demand — the federal 25C Energy Efficient Home Improvement Credit for homeowner insulation upgrades ended December 31, 2025.[6][7][8][22][24]

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7. Regulation

Same regime as the child: fragmented across federal, state, and local authorities, functioning as both compliance cost and demand driver. Key items are building and energy codes (which raise the minimum insulation installed); the OSHA (Occupational Safety and Health Administration) respirable crystalline silica standard (29 CFR 1926.1153) governing drywall dust, plus fall-protection and hazard-communication rules; the EPA (Environmental Protection Agency) lead Renovation, Repair and Painting rule for pre-1978 housing; chemical-exposure controls for spray polyurethane foam; legacy asbestos abatement on older buildings; and state contractor licensing, bonding, lien, and prevailing-wage (Davis-Bacon) requirements.[20][21][22][23] Because the workforce is heavily immigrant, employment-eligibility and immigration-enforcement rules directly affect labor supply.

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8. Consolidation

The defining feature is extreme fragmentation with a few national consolidators on top — a top-four revenue share of just 8.6% over thousands of small firms.[2] TopBuild was the largest player before QXO (Brad Jacobs's building-products roll-up) bought it for about $17 billion, closing July 1, 2026, and vaulting to the #1 North American insulation position.[8][9][10] Installed Building Products is #2 and runs a steady acquisition machine (roughly nine deals a year).[6][7] In distribution, Home Depot absorbed GMS via SRS in 2025.[12] The likeliest targets are profitable regional operators with strong customer relationships, stable crews, clean payroll records, and low customer concentration.

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9. Risks

Same risk set as 238310: housing cyclicality (most revenue rides new construction, and fixed branch costs deleverage fast in a downturn); a structural skilled-labor shortage and wage inflation, with immigration policy a direct swing factor; material-cost volatility in gypsum, fiberglass, and spray-foam chemicals; customer concentration among big national homebuilders; execution risk (estimating errors, rework, change-order disputes); safety and liability (silica, chemicals, falls, defect claims); policy reversal (loss of the 25C credit); acquisition/integration risk for the roll-ups; and measurement risk, since employer-based federal data understate nonemployer and small-crew activity.[5][8][20][24][26]

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10. How to invest & outlook

Public routes — separate the exposures rather than treating them as one bet. Installed Building Products (NYSE: IBP) is the cleanest pure play; QXO (NYSE: QXO) leads insulation but dilutes it inside a much larger distribution business; Builders FirstSource (BLDR), Home Depot (HD), and upstream makers Owens Corning (OC), Carlisle (CSL), and Saint-Gobain (SGO) offer exposure to the same construction cycle. Value acquisition-heavy names on cycle-normalized free cash flow and enterprise value to EBITDA (earnings before interest, taxes, depreciation, and amortization), not peak-housing earnings, with extra scrutiny of debt, goodwill, and returns on invested capital.[6][9][11][12][13][14][15]

Private routes — this is fundamentally a private-market industry. The realistic ways in are buying or building a local installation firm (SBA-backed acquisition financing fits, given the small-business receipts threshold), backing a private-equity roll-up, or owning the branch real estate. Because thousands of small firms trade at only mid-single-digit earnings multiples, small-installer acquisition remains the core value-creation play — diligence builder concentration, job-level margins, estimating discipline, retainage, installer retention and worker classification, licensing and safety records, and owner/succession risk.[3][7]

Near-term outlook (forward-looking judgment): soft residential demand offset by low-single-digit commercial/industrial growth (data centers a bright spot), with acquisitions filling the gap; the swing factors are mortgage rates and housing starts; the structural tailwind is tightening energy codes, offset by the loss of the 25C retrofit credit and an ever-tighter labor market.[8][22][24][26] Net: a cyclical, cash-generative, consolidating industry where the durable edge belongs to whoever can buy materials cheapest, keep crews productive, and roll up the long tail of small local firms.

For the full detail — value chain, company profiles, margin mechanics, and the complete source set — see the 238310 primer.

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Sources

1. U.S. Census Bureau, "County Business Patterns: 2023 (NAICS 238310)," 2025. https://www.census.gov/data/datasets/2023/econ/cbp/2023-cbp.html
2. U.S. Census Bureau, "2022 Economic Census — Concentration of Largest Firms and Receipts, NAICS 238310," 2025. https://data.census.gov/table/ECNSIZE2022.EC2200SIZECONCEN?q=EC2200SIZECONCEN
3. U.S. Small Business Administration, "Table of Small Business Size Standards (NAICS 238310)," 2023. https://www.sba.gov/document/support-table-size-standards
4. U.S. Census Bureau / NAICS Association, "NAICS 238310 — Drywall and Insulation Contractors (2022 definition and exclusions)." https://www.naics.com/naics-code-description/?code=238310
5. U.S. Census Bureau, "Nonemployer Statistics," 2025. https://www.census.gov/programs-surveys/nonemployer-statistics.html
6. Installed Building Products, Inc., "2025 Form 10-K," 2026. https://www.sec.gov/Archives/edgar/data/1580905/000158090526000004/ibp-20251231.htm
7. Installed Building Products, Inc., "Record Fourth Quarter and Full-Year 2024 Results," 2025. https://investors.installedbuildingproducts.com/news-releases
8. GlobeNewswire / TopBuild Corp., "TopBuild Reports Fourth Quarter and Year-End 2025 Results, Provides 2026 Outlook," 2026. https://www.globenewswire.com/news-release/2026/02/26/3245394/36657/en/topbuild-reports-fourth-quarter-and-year-end-2025-results-provides-2026-outlook.html
9. QXO, Inc., "Form 8-K: Completion of TopBuild Acquisition," 2026. https://www.sec.gov/Archives/edgar/data/1236275/000110465926079864/tm2618991d7_8k.htm
10. HousingWire, "The strategic rationale behind QXO's $17 billion TopBuild acquisition," 2026. https://www.housingwire.com/articles/qxo-topbuild-acquisition/
11. CompaniesMarketCap / Macrotrends, "Installed Building Products market capitalization," 2026. https://companiesmarketcap.com/installed-building-products/marketcap/
12. The Home Depot, Inc., "2025 Annual Report (SRS Distribution / GMS acquisition)," 2026. https://ir.homedepot.com/
13. Builders FirstSource, Inc., "2025 Form 10-K," 2026. https://www.sec.gov/Archives/edgar/data/1316835/000119312526054643/bldr-20251231.htm
14. Owens Corning, "2025 Form 10-K," 2026. https://www.sec.gov/Archives/edgar/data/1370946/000137094626000067/oc-20251231.htm
15. CertainTeed (Saint-Gobain), "CertainTeed Gypsum — company overview," 2021. https://www.certainteed.com/about/
16. Knauf Group, "Our Businesses (USG acquisition, 2019)," 2026. https://www.knauf.com/
17. Georgia-Pacific, "About Us / Building Products," 2026. https://www.gp.com/about-us/
18. Business North Carolina, "National Gypsum's Quiet Style Belies Its Major Role in U.S. Construction," 2025. https://businessnc.com/bnc-125-national-gypsums-quiet-style-belies-its-major-role-in-u-s-construction/
19. Hendricks Holding Company, "About Us (ABC Supply / ABC Supply Interiors, formerly L&W Supply)," 2026. https://www.hendricksholding.com/about-us
20. Occupational Safety and Health Administration (OSHA), "Respirable Crystalline Silica Standard for Construction, 29 CFR 1926.1153; Fall Protection," U.S. Department of Labor. https://www.osha.gov/laws-regs/regulations/standardnumber/1926/1926.1153
21. U.S. Environmental Protection Agency, "Renovation, Repair, and Painting Program: Contractors," 2026. https://www.epa.gov/lead/renovation-repair-and-painting-program-contractors
22. U.S. Department of Energy, "How Are Building Energy Codes Developed? (IECC)," 2016. https://www.energy.gov/scep/building-energy-codes-program
23. U.S. Environmental Protection Agency, "Spray Polyurethane Foam Insulation and How to Use It More Safely." https://archive.epa.gov/epa/saferchoice/spray-polyurethane-foam-spf-insulation-and-how-use-it-more-safely.html
24. Internal Revenue Service, "Energy Efficient Home Improvement Credit (Section 25C) — expiration under the One Big Beautiful Bill Act," 2025. https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit
25. Walls & Ceilings, "U.S. Construction Forecast 2026: Modest Growth, Severe Labor Shortages, and Rising Demand for Skilled Trades," 2026. https://www.wconline.com/articles/97954-2026-construction-forecast
26. Home Builders Institute (HBI), "Construction Labor Market Report, Fall 2025," 2025. https://hbi.org/wp-content/uploads/2025/10/Fall-2025-Final-Construction-Labor-Market-Report-Update.pdf