TopBuild Corp.

Greetings. Welcome to Top Build Third Quarter 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Tabitha Zhang, Vice President of Investor Relations. Thank you. You may begin.

Thank you, and good morning. On the call today are Robert Buck, President and Chief Executive Officer, John Peterson, Chief Financial Officer, and Rob Kuhn, Vice President and Controller. We have posted senior management's formal remarks and a PowerPoint presentation that summarizes our comments on our website at topbill.com. Many of our remarks will include forward-looking statements which are subject to known and unknown risks and uncertainties, 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 some of 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 gap measures in a table included in today's press release and in our third quarter presentation, which can be found on our website. I will now turn the call over to Robert Buck.

Good morning, and thank you for joining us today. We are pleased to report another quarter of solid performance for Top Build. Our team continues to successfully manage material cost increases with selling price adjustments and to navigate material and labor constraints. Driving profitable growth remains a cornerstone of our operating model, and the strong margin expansion we've achieved throughout this year is a testament to the significance of our scale, size, and continuing focus on operational excellence. Taking a step back and looking at our industry as a whole, home builders, general contractors, and building product companies continue to be impacted by supply chain disruptions and labor shortages. These challenges are delaying the completion of projects and elongating the build cycles of both residential and commercial construction projects. While we had initially hoped these industry-wide supply chain bottlenecks would be resolved by year end, we now believe that a more realistic scenario falls well into 2022. On a more positive note, demand for residential housing remains strong, interest rates are low, and inventory remains tight. In addition, With a longer build cycle, our backlog continues to grow. It is reasonable to assume we should not experience the traditional seasonal slowdown in the fourth quarter of this year or the first quarter of next year, barring any unusual harsh winter weather. Looking at our third quarter results, revenue grew 21.3% and 10.6% on a same branch basis, driven by a strong pricing in the quarter at both crew team and service partners. Gross margin expanded 120 basis points, adjusted operating profit grew 35.2%, and adjusted EBITDA increased 32.8%. In addition, adjusted operating margin expanded 170 basis points, and adjusted EBITDA margin expanded 160 basis points to 18.7%, the highest in the company's six-year history as an independent public company. Turning to material, fiberglass and spray foam remain on allocation. Given the supply scenario, three of the four fiberglass manufacturers have announced a 10% increase effective December or January. On the capacity side, we were pleased with Canossa's announcement that they plan to build a new facility in Texas that should be online later in 2023. This new facility should add about 180 million pounds of insulation or approximately 3% to 4% additional capacity. In addition, Knopf and JM's new blowing wall lines should be up and running sometime later this quarter or early first quarter next year, adding an additional 3% to industry capacity. Spray foam, which represents about 18% of our insulation sales, continues to face supply chain challenges and prices have significantly increased over the last 12 to 18 months. Supply was initially impacted by MDI shortages, the A-site chemical component, then The major freeze in the south central states and significant bad weather along the Gulf Coast caused additional production disruptions and delays. Further compounding these issues are delays at U.S. ports affecting delivery of key chemical components. Based on what we're seeing and hearing, we believe Top Build is faring better than most on both the material and labor fronts. Over the past year, we've partnered with key suppliers to get our fair share of fiberglass and spray foam. Our company-wide ERP system gives us the ability to efficiently manage material and labor throughout our branch network to successfully support our customers. Let me give you one recent example. A few weeks ago, a large production builder asked if we could leverage our resources to help them complete almost 600 homes in one of their key regions by the end of October. Teamwork across our operations leadership and our shared ERP system enabled us to quickly move material and crews from across our network and complete this work within the condensed timeframe. I don't believe any other service provider in the US could have accomplished this. Hats off to our true team branches for making this happen and driving immense value for our customer. On the capital allocation front, year to date, we've completed eight acquisitions, which are expected to generate almost $1 billion of revenue on a pro forma, full year basis. Since our last call in August, we completed three of these acquisitions, Valley Gutter Supply, California Boating Products, and Distribution International. Valley Gutter acquired in mid-August as a fabricator and distributor of gutter products and specialty metals to contractors in the Los Angeles area. Approximately 70% of Valley Gutter's customers serve the residential market and the remainder focused on light commercial. Currently, the distribution and installation of gutters comprises approximately 6% of Top Build's total revenue. California Building Products, which we acquired in early October, is a residential and light commercial installation company serving Northern California. The company brings along a solid customer base and strengthens our operations in this high-growth region. And finally, we announced in October that Distribution International has successfully gone through HSR regulatory review and joined the Topville team. We are now the leading North American specialty distributor in the $5 billion mechanical insulation market and the leading supplier of energy-saving insulation solutions in three critical and expanding end markets, residential, commercial, and industrial. We added 101 branches to our specialty distribution network, including 17 in Canada, increased our customer base by close to 13,000, and welcomed 1,300 DI Associates spot builders. Our teams are working closely to ensure a smooth transition as we integrate DI into our systems and supply chain over the next 12 months. As noted previously, we anticipate $35 to $40 million of run rate cost synergies over the next 24 months. Looking ahead, our M&A prospect pipeline remains robust for residential and commercial installation companies and for mechanical installation specialty distributors, and we expect to remain very active on all three fronts going forward. We also used our capital in the third quarter to repurchase 60,000 shares, and year-to-date, we repurchased just over 183,000 shares at an average price of $194.15 per share. Before turning the call over to John and Rob to discuss our financial results in further detail, I want to emphasize once again that our strong operating performance quarter after quarter is a direct result of our uniquely diversified model and the ability of our experienced and cycle-tested leadership team to manage our business well in any environment. John?