TopBuild Corp.

Greetings and welcome to the Top Build Corporation earnings conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press the 1 followed by the 4 on your telephone. If at any time during the conference you need to reach an operator, please press star 0. As a reminder, this conference is being recorded on Thursday, October 31, 2019. I would now like to turn the conference over to Tabitha Zane. Please go ahead.

Thank you, and good morning. On the call today are Jerry Bolas, Chief Executive Officer, Robert Buck, President and Chief Operating Officer, and John Peterson, Chief Financial Officer. We have posted senior management's formal remarks on the investor relations section of our website at topbill.com. As shown on slide two of today's presentation, Many of our remarks will include forward-looking statements concerning the company's operations and financial conditions. These forward-looking statements include known and unknown risks, including those set forth in this morning's press release, as well as in the company's filings with the SEC. The company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. Please note that other than it's otherwise specifically stated, the financial measures to be discussed on this call will be on a non-GAAP basis. The non-GAAP measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. We have provided a reconciliation of these financial measures to the most comparable GAAP measures in a table included in today's press release and in the presentation accompanying this call. Please turn to slide three. And I will now turn the call over to Jerry Bolas.

Good morning, everyone. Thanks for joining us today. We're pleased to report another excellent quarter as our team continues to do an outstanding job of generating profitable growth. Before reviewing the quarter, I want to note that based on recently announced starts, strong household formations, and optimistic builder sentiment, a long-awaited acceleration in housing appears to be underway. low mortgage rates, a pivot by builders to more affordable housing, and a strong economy with solid job and wage growth are all factors driving this positive trend. Moreover, the long-term fundamentals, including projected household formations and limited housing supply, point towards continued growth in new home construction. Our third quarter financial results on slide four reflect the strength of our diversified model and our continued focus on improving operational efficiency. Total sales were up 5.4 percent compared to lagged housing starts that were down 1 percent. Our commercial business, again, performed extremely well, and operating margins at both business segments expanded. Moving to slide five, on the capital allocation front, M&A is our number one priority, and our focus remains primarily on our core businesses. which are residential and commercial insulation installers and distributors. The synergies we achieve are significant, and the opportunity to enhance our market share in regions with strong growth prospects is compelling. We're also considering expanding our glass product category that encompasses commercial storefronts and residential bath and showers. This business currently contributes approximately $114 million of annual revenues. Our research and experience validate that this adjacent product category offers many attractive characteristics similar to insulation. While expansion in this area will be independent of our brand's insulation network, we'll be able to leverage our management expertise, customer relationships, and supply chain model. Looking ahead, our pipeline of acquisition candidates is robust, and we expect to bring the best prospects over the finish line in the next couple of quarters. Our second capital allocation priority is share repurchases. In the third quarter, we repurchased just over 364,000 shares and an average per share price of $89.76. Since implementing our share repurchase program in 2016, we have repurchased a total of 4.9 million shares and an average per share price of $56.74. Consistent with our intent to return capital to our shareholders on a timely basis, we announced a $50 million accelerated share repurchase, which we anticipate executing within the next several days and completing in mid-first quarter. This program reflects management's and our board's confidence in the long-term potential of Top Build, our strong future cash flow position, and our firm commitment to optimizing the efficiency of our capital structure. While John will discuss our financial results in further detail, I want to emphasize that our strong operating performance quarter over quarter is the direct result of our uniquely diversified model and the ability of our strong leadership team to manage our business well in any general economic and housing environment. John?