Builders FirstSource, Inc.

Good day and welcome to the Builders First Source third quarter 2020 conference call. At this time, all participants are in a listen-only mode. Following the company's remarks, we will conduct a question and answer session. Today's call is being recorded and will be available at www.bldr.com. It is now my pleasure to introduce Mr. Bennett Sungbee, Vice President, Investor Relations. Please go ahead.

Thank you, Stephanie. Good morning, and welcome to the Builders First Source Third Quarter 2020 Earnings Conference Call. With me on the call today are Chad Crowe, Chief Executive Officer, and Peter Jackson, Chief Financial Officer. A copy of the slide presentation referenced on this call is available on the Investor Relations section of the Builders First Site website at dldr.com. Before we begin, let me note that during the course of this conference call, we may make statements concerning the company's future prospects, financial results, business strategies, and industry trends. Such statements are considered forward-looking statements under the Private Securities Litigation Reform Act of 1995 and are subject to certain risks and uncertainties which could cause actual results to differ materially from expectations. Please refer to our most recent form, 10-K, filed with the Securities and Exchange Commission and other reports filed with the SEC for more information on those risks. The company undertakes no obligation to publicly update or revise any forward-looking statements. The company will discuss adjusted results on this call. We have provided reconciliations of non-GAAP financial measures to their GAAP equivalent in our earnings press release and detailed explanations of non-GAAP financial measures in our Form K filed yesterday, both of which are available on our website. I will now turn the call over to Chad Crow.

Thank you, Bennett. Good morning, and thank you for joining us on our third quarter earnings call. As the pandemic continues, I hope you and your families are staying safe and healthy. Our thoughts continue to be with those affected, and I would like to again recognize our dedicated team members for their commitment to excellence. During the challenges of the past several quarters, the safety of our team members and of the surrounding communities where we operate remain our top priority. Safety will continue to guide our operating strategy. Before diving into our results, I will start on slide three and spend a moment discussing our recently announced merger with BMC Stock Holdings. This merger is on track to create the nation's premier supplier of building materials and services with combined adjusted EBITDA of approximately $950 million, including run rate synergies. Together, we will have an expansive geographic footprint and enhance local relationships in attractive, high-growth markets. The combined company will benefit from greater geographic reach and diversity within what is still a very fragmented industry. We will have a strong footprint in many of the nation's largest and fastest growing regions and will be exceptionally well positioned for long-term growth supported by a resilient housing environment. We expect to continue to deliver above-market growth through our shared commitment to value-added product offerings, which allow us to closely partner with customers to streamline the construction process. In addition, a larger platform will strengthen our ability to invest in best-in-class innovative solutions that deliver significant benefits to our customers. During the past month and a half, Dave Flutman and I have traveled to many regions of the country, including Texas, the Mid-Atlantic, the Southeast, and Mountain States, and the West Coast, among others. In many of these cities, we have held town hall meetings to hear directly from our team members about their local market strengths. It was extremely beneficial to observe both of our company's capabilities in real time and envision all the ways we will be able to complement each other to do some truly exceptional things for our customers. It brought both of us great pride to see our hardworking team members across the country whose efforts are directly responsible for putting us in the successful position we are in today. Both Dave and I enjoyed getting to interact with so many team members and seeing their excitement for future opportunities we take our combined business to new heights. In terms of timing, thus far the deal is progressing as expected. The merger planning work that's happening in the background right now continues to be very positive. In October, we filed a 30-day extension under the HSR review process with the DOJ. Also in October, we filed our Form S-4 with the SEC. We are working diligently with both agencies. Once we have completed these two regulatory milestones, there will be a required 20 working day notice before Builders First Source and BMC request their respective shareholder approvals. This keeps us on track to close the merger in late 2020 or early 2021. At this point, I could not be more pleased with our significant strides towards winning together as one, which is our merger tagline, while continuing to stay focused on customers and delivering exceptional operational performance. Moving to our results on slide four, I'll outline the key factors underpinning our excitement about what we accomplished during the quarter. First, the momentum we carried into the third quarter continued, with performance ultimately being better than we had anticipated. The home building markets have been resilient. Improving housing starts, record low mortgage rates, and a shift towards suburban living are all positive fundamentals that continue to support demand for our products and services. Since mid-year, activity in our end markets continued to trend positively, resulting in demand improving throughout the quarter. During the quarter, we experienced a steady recovery in sales as we have seen broad-based improvement across geographies and end markets. We are back to work in all of our locations around the country and are able to safely and effectively deliver critical products and services to customers while keeping up with the robust demand in much of the country. Our team delivers strong results all around. For the first nine months of the year, sales increased by over 9% to a record $6 billion. Approximately 3% of growth was from core organic performance, and our five tuck-in acquisitions completed over the past year added more than two percentage points to growth. While housing demand has accelerated rapidly, we have also seen commodity prices reach record heights. Commodity inflation contributed approximately 3% to sales, and one additional selling day contributed about 1%, which led to the increase in reported net sales of over 9% year-to-date. This brings us to our second theme. Through our focused execution, we have remained appropriately resourced to capture rising demand in a disciplined manner. This has produced record adjusted EBITDA of $443 million for the first nine months of 2020. Gross margin just shy of 26% year-to-date is a direct result of our ability to react quickly and effectively to rapidly evolving market dynamics since mid-year. In addition, our operational excellence initiatives remain core to our strategy. Alongside the momentum in our markets and our business right now, this set of best practices is being implemented throughout the organization and making our company more agile and easier to do business with. Key initiatives and process include investments in distribution and logistics software, pricing and margin management tools, back office process efficiencies, and information system enhancements. We launched these initiatives in 2018 and have made significant progress laying the groundwork for what will no doubt prove to be efficiency-enhancing investments as we move into our next generation of growth. And finally, amongst the many things we can do in merger with BMC to our team members, customers, and shareholders, we will continue to expand our network of value-added off-site component manufacturing facilities, which are core to our collective strategy. Post-combination, that will continue to be a focus of our combined growth. With the portion of the cash we intend to generate, we will continue investing in value-added growth through both organic and inorganic opportunities. As an example, in October, we commissioned a state VR greenfield trust plant in Riverside, California, extending our industry-leading position to 66 manufacturing facilities. Whether through new facilities, new trust lines and existing plants, door facility expansions, or other system enhancements, these differentiated offerings offer industry-leading value-add capacity. and will remain key to enhancing our geographic footprint, technological capabilities, and integrated partnerships with customers. The favorable market conditions we see today should provide growing opportunities for the bigger and better Builder's First Source. We know customers value our commitment to high-quality service and, in particular, our ability to continually invest in our service capabilities throughout the housing cycles. This is a differentiator for Builder's First Source within our industry. It has been an element of our success in 2020 and will continue to be a core focus after we complete our transformational merger with BMC. I will now turn the call over to Peter, who will review our third quarter results in more detail.