TopBuild Corp.

Greetings and welcome to the Top Built 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 Tuesday, February 25, 2020. 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 as 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 the table included in today's press release and in the presentation accompanying this call. Please turn to slide three. I will now turn the call over to Jerry Volis.

Good morning, everyone, and thanks for joining us today. We were pleased to end the year with a strong fourth quarter with solid top line growth and operating margin expansion in both business segments. For full year 2019, we again demonstrated the strength of our diversified business model and our seasoned management team as we delivered on our objective of achieving profitable growth. In 2019, the U.S. housing industry grew stronger as the year progressed, culminating in a 19.6% increase in starts in the fourth quarter. Our expectation that new residential construction will continue to strengthen in 2020 is based on several factors. Consumer affordability keeps improving. As mortgage rates remain low, wage growth is offsetting home price appreciation, and builders have pivoted towards supplying more entry-level homes. In addition, household formations continue to be strong. Many people who delayed home ownership are beginning to engage, fueling pent up demand. We're also seeing limited inventory, reflecting the slow ramp from the housing bust. All in all, an excellent operating environment for top build. And our 2020 annual guidance reflects our optimism. While John will discuss our financial results in detail, I want to start with a discussion of a few of the overall trends on slide four. Within the context of 90-day light housing starts, which were down 2.3% for the year, our 2019 net sales increased 10.1%, with same branch sales increasing 4.6%. Our commercial business again performed extremely well. with same branch revenue in the fourth quarter and full year growing 11.4 percent and 18.6 percent respectively. Our operating and EBITDA margin expansion are the result of our consistent focus on identifying and implementing operational efficiencies, realizing synergies from the USI acquisition, balancing selling price and input costs, and leveraging our national footprint and fixed costs across the company. all play a role in driving our bottom line, leading to adjusted EPS increasing 31% to $5.49. While Robert will talk about our commercial business plans and outlook in more detail, it is clear from our results over the past few years that our bundled solutions approach for general contractors continues to gain traction. This business now represents approximately 23% of our sales, up from 16% in 2015. And we now have an 11% market share compared to just 6% a few years ago. In addition, our commercial business is an important aspect of our uniquely diversified business model as it helps to mitigate any cyclicality of the residential new construction market. This was clearly demonstrated in the first half of 2019 when lag starts were down almost 7% and our commercial business grew over 23%. Turning to capital allocation on slide five, after pausing acquisitions to focus on the integration of USI, we completed one acquisition in 2019, Viking Insulation. More recently, in just the last week, we have closed on two acquisitions, Hunter Insulation and Cooper Glass. Furthermore, based on our strong prospect pipeline, we expect to close on additional acquisitions this year. And having developed a core competency integrating acquisitions onto our systems and supply chain, we expect to drive meaningful synergies quickly from these deals. As a reminder, our primary focus remains on core insulation companies, though we continue to evaluate a number of glass companies that would fit well with our existing $160 million business in this product adjacency. As noted on our last call, We believe this product category offers many attractive characteristics similar to insulation. While expansion in this area will be independent of our branch insulation network, we'll be able to leverage our management expertise, customer relationships, and supply chain model. Also on the capital allocation front, in 2019, we purchased 1.3 million shares of our common stock for approximately $111 million. This includes the $50 million accelerated share repurchase announced on our last call that should be completed no later than the end of this quarter. Our share repurchase program reflects the confidence of both management and our board 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. John will now discuss our financial results in detail.