TopBuild Corp.

Greetings. Welcome to the Top Build Earnings Call and Webcast. 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 your host, Tabitha Zane, Vice President, Investor Relations. Thank you. You may begin.

Thank you and good morning. On the call today are Robert Buck, President and Chief Executive Officer, and Rob Coons, Chief Financial Officer. 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 GAAP measures in a table included in today's press release and in our second quarter presentation, which can also be found on our website. I will now turn the call over to Robert Buck.

Good morning, and thank you for joining us. First, I want to thank our entire Top Bill team for their hard work and dedication, producing another great quarter for our company and shareholders. Our financial performance continues to prove the strength of our operating model and the ability of our team to successfully navigate market opportunities and challenges. In the second quarter, revenue increased 52.7%, 20.7% on a same branch basis, and adjusted EBITDA margins at both business segments expanded. Our installation business grew 21.6% on a same branch basis, with volume handily outpacing completions. Specialty distribution on a same branch basis grew just over 20%, driven by strong execution and price realization in this prolonged supply-constrained environment. We are particularly pleased with DI's performance, bolstered by the continued improvement of the commercial and industrial mechanical insulation in markets. Revenue is growing ahead of plan due to strong project performance, and the steps we're taking internally to enhance operational efficiency and execution are driving strong margin expansion. As the strong results demonstrate, the DI integration is proceeding very well, and we could not be more pleased with the great effort coming from the functional teams managing this process. We're ahead of schedule from the standpoint of projected cost synergies, as well as the blending of the outstanding DI operations team into the top billing organization. The benefits of this strategic acquisition focus on our core business of installation are exceeding our expectations. No other installer or distributor comes close to matching our size, scale, and service capabilities, which, driven by our talented team, gives us a significant competitive advantage. In addition, the timing of the DI acquisition could not have been better. Although the long-term fundamentals of the housing industry are solid, we are well aware of the shifting economic environment and growing consensus that the U.S. economy is heading towards a recession. DI has increased our penetration into the commercial and industrial end markets, which, on a pro forma basis now account for over 36% of our annual revenue. These two end markets operate on a different cycle than residential housing, providing a buffer against the housing market slowdown. With this diversified mix of business, top builds should be able to outperform in any environment. Another buffer is the large backlog of homes under construction still need to be completed. The Starts published on July 19th reports that homes under construction totaled almost 1.7 million. Assuming about half of these units have already been insulated, that still leaves nearly 850,000 homes that need our installation or distribution services. Plus, as mentioned, we are seeing growing strength in the commercial, industrial, mechanical insulation and markets. Hence, our optimism for the second half of this year. In the event of a slowdown, our cycle-tested team across the country will respond quickly using the branch operations data mined from our integrated ERP system. Our playbook, honed over the years, has multiple levers we can pull to take costs out of the business. Our decade-long focus on operational efficiency, sales and labor productivity, and strong balance sheet management will continue to serve us well and enable us to best serve our customers. In a shifting economic environment, we continue to believe acquisitions are the best use of our capital, and we have a robust pipeline and exciting prospects across all three markets we serve, residential, commercial, and industrial. Acquisitions serve as important dishes to the overall momentum of our business, and given our industry-leading scale and focus on operational excellence, the synergies we achieve are significant. Furthermore, Our success in integrating acquisitions onto our systems and supply chain is of poor competency and unmatched in our industry. As a reminder, since June of last year, we've acquired 11 companies, including five year-to-date. In total, these 11 acquisitions are expected to contribute over $800 billion in annual revenue. While our number one capital allocation priority remains acquisitions, share repurchases are also an attractive option. In addition to the recently completed $100 million ASR, our board has approved a new $200 million share repurchase program. Our positive free cash flow puts us in a great position to return value to shareholders by repurchasing shares. Turning to ESG, we have published our fourth annual sustainability report in May. We are now disclosing our scope for emissions, more detailed workforce demographic data, and enhanced safety performance information. We're extremely proud that since 2017, we have shown five consecutive years of improvements in total reportable and lost time case rates, demonstrating the priority we put on the safety lifestyle of our over 13,000 employees. On the environmental front, I want to again emphasize that our products we install and distribute drive thermal efficiency, lower energy usage, and reduce carbon emissions for heating and cooling. The benefits we deliver to our customers and energy efficiency are recurring and far outweigh the impact of our operations. What is clearly inherent in our business is that we bring energy efficiency to life every day at the over 16,000 job sites where we install and deliver our products. Finally, before turning the call over to Rob, I want to thank those of you who joined us for our Investor Day in late May, either in person or via the webcast. We were thrilled to highlight the strength and depth of our team and give you a better understanding of why we are so excited about Top Build's future and why we are confident we should outperform the market in any environment. Rob?