TopBuild Corp.

Greetings and welcome to the Top Build 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 Tuesday, August 4, 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 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. I will now turn the call over to Jerry Bolas.

Good morning, and thank you for joining us today. Let me begin by acknowledging the ongoing impact that COVID-19 is having on our employees, their families, and all of our other stakeholders. We understand it's a difficult time for everyone. Here at Topfield, we continue to manage every aspect of our operations. to provide a safe environment for our employees, our supplier partners, and our customers. At our branch support center in Daytona, we continue to work remotely, with technology keeping us connected and effectively supporting our broad network of branches throughout the country. At every one of our branches, we have implemented best practices in terms of sanitizing and disinfecting, and we enforce social distancing there and on job sites. As we look back on the month since our last call in early May, we've seen the resiliency of the residential new construction industry. We started the second quarter with extreme uncertainty. As the country was under a national lockdown, our installation and distribution businesses were deemed not essential in four states, and unemployment reached levels not seen since the Great Depression. Yet as we reported to you in May, our April financial results were still relatively strong. and they continue to improve as the quarter progressed. We're also encouraged that while second quarter housing starts are lower than last year, our builder customers are reporting a steady increase in traffic and orders. This should lead to improving housing starts as the year progresses. Historically low interest rates, very little inventory, and a growing desire to escape cramped urban environments are many of the key factors contributing to this quick rebound. While we recognize that there will likely be bumps in the road as our nation continues to manage through the pandemic, we remain bullish on the overall fundamentals of the U.S. housing industry. Turning to our second quarter financial results on slide four, net sales declined 2.1%, primarily as a result of the COVID-19 pandemic. Despite this revenue drop, we continued our strong margin expansion at both True Team and Service Partners. Top filled in total, our adjusted operating and EBITDA margins increased 130 basis points and 250 basis points respectively, which drove adjusted EPS to $1.68. We feel very good about this performance, which once again demonstrates the flexibility and strength of our operating model in any type of environment. Turning to slide five. On our last call, we noted that Given the current level of uncertainty, we were hitting the pause button on further acquisitions. We had a full pipeline of prospects at that time, and thanks to the ongoing hard work of our M&A team, that pipeline has expanded over the past few months. With a clear outlook of the positive trajectory of the housing industry and a strong balance sheet with almost $650 million of liquidity, we are resuming our acquisition program and should close on a number of these deals in the next several quarters. 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 acquiring core insulation companies. So we continue to evaluate a number of glass companies that would fit well within our existing $160 million business in this product adjacency. Before turning the call over to Robert, I wanted to note that in late June, we were pleased to learn the top bill was moving from the S&P small-cap 600 to the S&P mid-cap 400, effective June 30. Some of you may remember that at the time of the spin in June 2015, our market cap was approximately $1.1 billion. Today, it is over $4.5 billion, more than a 300% increase. This move is clearly a recognition of our strong growth and the tremendous value we've created for our shareholders over the past five years. I will now turn the call over to Robert.