TopBuild Corp.

Ladies and gentlemen, thank you for standing by. Greetings and welcome to Top Build's first quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. The question and answer session will follow today's formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll now turn the conference over to your host, P.I. Aquino, Vice President, Investor Relations. P.I., you may begin.

Good morning, and thanks for joining us today. I have with me Robert Buck, our president and CEO, and Rob Koons, our CFO. Our earnings release, senior management's formal remarks, and a deck summarizing our comments can be found on our website at topbuild.com. Also available is our recently published 2024 Sustainability Report. Many of our remarks today 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 and in the company's SEC filings. The company assumes no obligation to update any forward-looking statements because of new information, future events, or otherwise. Please note that some of the financial measures to be discussed during this call will be on a non-GAAP basis. These non-GAAP measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP. We've provided a reconciliation of these financial measures to the most comparable GAAP measures in today's press release and in our presentation, both of which are available on our website. I'd like to now turn the call over to our President and CEO, Robert Buck.

Good morning. Thank you for joining us today for our first quarter 2025 earnings call. I'd like to start our call today with a few words on the macro landscape and current operating environment. New residential construction demand remains soft with choppiness continuing across various geographies. The spring selling season was slower than anticipated as interest rates remained elevated and economic uncertainty has eroded consumer confidence, both of which negatively impacted housing demand. Despite this backdrop, the fundamentals of the underlying housing market are strong, and we remain confident in the long-term prospects of our business. On the commercial and industrial front, we are encouraged by the number of projects moving into production and ongoing bid activity in the C&I end market. More specifically, there's been an acceleration in data center construction, along with positive trends in healthcare and certain subsectors of manufacturing, such as chemicals. While tariffs and trade restrictions between the United States and other countries are top of mind for everyone, including investors, the potential direct impact of currently announced and effective tariffs for our top-billed business is minimal. We are actively working with our supply base to mitigate the anticipated impact of current tariffs, and we will take pricing actions to the extent necessary. The direct and indirect impacts of tariffs on the economy overall and on housing demand specifically remain uncertain. and we are monitoring the environment closely. Turning to our results, our first quarter performance was in line with our expectations. Total top build sales declined 3.6% to $1.2 billion as weakness in new residential construction impacted the business and was partially offset by growth in commercial and industrial. Our adjusted EBITDA totaled $234.8 million and EBITDA margin was a very solid at 19%. Our installation segment, which comprises about 62% of total top-billed sales, reported a mid-single-digit sales decline driven by the residential end market. Our commercial installation business sales were flat in the quarter with heavy commercial outperforming light commercial. Our special distribution segment, which represents approximately 38% of our total revenue, grew sales low single digits. While we saw declines in our service partners business as residential demand softened, we are pleased with our DI mechanical installation business in both US and Canada, which drove very healthy top line and bottom line growth. If you'll remember, we saw some project delays mid 2024 across commercial and industrial, which are moving forward this year. The last point I'll make regarding special distribution is that recurring revenue represents about 25% of segment revenue. Certain industrial verticals such as oil refinery, LNG production, chemical and petrochemical production lends themselves to recurring insulation revenue. These industries require regular inspection and replacement of insulation materials. We are positioned for success and expect to continue to capitalize on opportunities given our diverse set of commercial and industrial customers. both in distribution and installation. New commercial and industrial facilities are being planned, and we anticipate continued meaningful growth. On the operational improvement front, our common technology platform, inclusive of our single ERP system, allows us to continually analyze data and gather insights that help provide an in-depth understanding and control of our business, something we believe is a core strength of TopBuild. In the first quarter, our field leadership teams and special ops teams executed upon a footprint optimization project that the team had been designing for a few months. This allowed us to consolidate 33 facilities, which will drive ongoing efficiencies across the top build operations footprint. We're often asked if we have more opportunities to drive improvements in our business. This operations footprint optimization project is a great example of our team's ability to continue to drive operational excellence, and meaningful improvements throughout our business. Let me say a few words on capital allocation. Acquisitions continue to be our highest priority for capital allocation, and in April, we were pleased to close the acquisition of Sealright. We continue to consider several opportunities of various sizes as our pipeline is very healthy. As I noted in previous quarters, We continue to evaluate opportunities to increase our total addressable market under the lens of our ability to leverage our core strengths, including our people and teams, our ability to successfully operate a dispersed branch model, a common technology platform, our strong supply chain and customer relationships, and our disciplined financial and strategic approach. As always, we will remain disciplined and focused on driving strong shareholder returns. We're also committed to returning capital to shareholders, and in the first quarter, we bought back nearly 694,000 shares of our stock. Before I turn the comments over to Rob to share additional details on our results and outlook, I'd like to highlight a few points. This year, we're excited to be celebrating our 10-year anniversary as a public company. Our success over this time is driven by our people. Our employees continue to focus their efforts on leading and growing their business, driving improvements and working safely every day. We're pleased to have earned the designation as a great place to work for the third year in a row, a reflection of our ongoing commitment to our culture and our teams. We also recently published our 2024 sustainability report, which is available on our website. Our business inherently drives sustainability as our work and the services we provide enables enhanced energy efficiency. We have a unique and proven diversified business model, so even with the near-term macro uncertainty, we are bullish about our medium and long-term opportunities. Our teams are strong, and we're working together to turn challenges into opportunities. We know how to adjust and outperform in a changing environment and remain committed to driving shareholder value. Rob?