TopBuild Corp.

Greetings and welcome to the Top Build Second Quarter 2025 Earnings Conference 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce P.I. Aquino, Vice President of Investor Relations. Please go ahead.

Good morning, and thanks for joining us. With me today are Robert Buck, our president and CEO, and Rob Coons, 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. 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 two of the most comparable gap measures in today's press release and in our presentation, both of which are available on our website. Let me now turn the call over to our President and CEO, Robert Buck.

Good morning. Thank you for joining us today for our second quarter 2025 earnings call. With half of 2025 behind us, I want to start by saying how proud I am of everything our teams have accomplished so far this year. In July, we completed the acquisition of Progressive Roofing, establishing a new platform for growth in the large, highly fragmented $75 billion commercial roofing services market. The transaction aligns very well with our core strengths, expands our installation service offerings for commercial customers, and increases our exposure to non-cyclical, non-discretionary revenue drivers. Commercial roofing is in natural adjacency to our core insulation business with exciting potential, and we're delighted to welcome the talented Progressive Roofing team to Top Build. Our teams are starting to work together, including sharing best practices and thoughts on an integration roadmap. We also took steps in the first quarter to better align our cost structure with the demand environment and optimize our footprint, including the consolidation of 33 branches across our network. On a daily basis, our teams put a great deal of effort into driving our performance, and I want to thank everyone on our team for continuing to strive for improvement across our business and delivering solid results. Our continued solid profitability in the second quarter is a testament to our ability to successfully navigate changes in an uncertain macro environment. We are pleased with our sequential improvement from the first quarter with our second quarter adjusted EBITDA margin of 20.1%, which is a direct reflection of the command we have over our business and is supported by our ongoing work to drive improvements across the business and our supply chain. Softness in residential new construction was partially offset by growth in heavy commercial and industrial, where verticals like technology, education, and healthcare continue to flourish. Total top-billed sales in the second quarter declined 5% to $1.3 billion as the new residential construction market remained weak and single-family demand slid further on a year-over-year basis. While the housing market in the U.S. is still underbuilt, mixed economic signals, interest rates, and affordability concerns continue to weigh on consumer confidence, keeping some homebuyers on the sidelines. We'll continue to closely monitor the macroenvironment. Turning to capital allocation, we have a robust pipeline of acquisition candidates, and M&A is still our highest priority for deploying capital. In addition, the Progressive team has several acquisition opportunities in their pipeline. As always, we'll stay disciplined around evaluation and focused on driving strong shareholder returns. In the second quarter, we also repurchased just under 455,000 shares of our stock. returning a total of $136 million in capital to our shareholders. Before I turn it over to Rob, I want to give you a brief look back at our business, but also share with you some thoughts on how we're positioning Top Build for the future. This past July 1st marked a 10-year anniversary for Top Build as a public company. When I look back over that time, it's remarkable how much we've grown. When we spun in 2015, we had $1.6 billion in sales and mid-single-digit profit margins. Last year, we were roughly $5.3 billion in sales or about a 14% compounded annual growth rate. With Progressive, we'll be more than $5.5 billion on a pro forma basis this year. Since 2015, we've also more than tripled our EBITDA margin. Our safety metrics have also improved as we stay focused on keeping our people safe. Ten years ago, about 85% of our sales were tied to residential, and 15% of our sales were tied to the commercial industrial end markets. Now, having completed 44 acquisitions, we've grown our commercial industrial sales to approximately 40% of our total sales this year. We've successfully diversified our business, and in doing so, we've also improved our sales resiliency. About 20% of our total sales are considered recurring, non-discretionary, or non-cyclical. As we look out, our runway opportunity for growth is exciting. We have a total addressable market of nearly $95 billion for insulation and commercial roofing and are encouraged by our growth prospects. Let me give you just one example of how our business diversification positions us well for our next level of growth. and more exposure to commercial, industrial, and non-discretionary spend, and reduced dependence on residential housing. Just last week, our leadership team was on site at a multi-phase data center campus in Arizona. At the same data center campus, our now combined top-billed family of companies was providing multiple services and products for the same contractor. The Progressive Roofing Team was providing new construction roofing services for the first 200,000 square foot facility at the site, while our Distribution International Team was delivering fabricated mechanical insulation parts. And prior to that, our local True Team business had provided building envelope insulation solutions in the form of fiberglass and spray foam installation. Currently, there are 324 data center projects under construction and 110 data centers that are in the engineering stage. We're also tracking nearly 2,000 more projects that are in the planning stage. This growing vertical of data centers is just one example of the commercial and industrial projects for which Totbill can now provide a full suite of service solutions. Let me conclude my remarks today by recognizing and thanking each one of our employees. Our success over the last 10 years would not be possible without the hard work and support of our talented and highly motivated teams. Rob?