Installed Building Products, Inc.

And welcome to the Installed Building Products Fiscal 2020 First Quarter Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note the event is being recorded. And I'd like to turn the conference over to Mr. Jason Neiswanger, Vice President of investor relations. Please go ahead.

Good morning, and welcome to Installed Building Products' first quarter 2020 conference call. Earlier today, we issued a press release on our financial results for the first quarter, which can be found in the investor relations section on our website. On today's call, management's prepared remarks and answers to your questions may contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements include statements with respect to the housing market and industry conditions, our financial and business model, our efforts to manage material inflation, our ability to increase selling prices, the demand for our services and product offerings, the impact of the COVID-19 crisis will have on our business and end markets, expansion of our national footprint, products and end markets, our expectations for our end markets, our ability to strengthen our market position, our ability to pursue and integrate value-enhancing acquisitions, our diversification efforts, Alpha's revenue and growth expansion of our commercial business, our growth rates and ability to improve sales and profitability, the impact of the COVID-19 crisis on our financial results and acquisitions, and expectations for demand for our services and our earnings in 2020. Forward-looking statements may generally be identified by the use of words such as anticipate, believe, expect, intend, plan, and will, or in each case their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. Any forward-looking statement made by management during this call is not a guarantee of future performance, and actual results may differ materially from those expressed in or suggested by the forward-looking statements as a result of various factors, including without limitation, the duration, effect, and severity of the COVID-19 crisis, the adverse impact of the COVID-19 crisis on our business and financial results, the economy and the markets we serve, general economic and industry conditions, the material price environment, the timing of increases in our selling prices, and the factors discussed in the risk factors section of the company's annual report on Form 10-K for the year ended December 31st, 2019, as the same may be updated from time to time in subsequent filings with the Securities and Exchange Commission. Any forward-looking statement made by management on this call speaks only as of the date hereof. New risks and uncertainties come up from time to time, and it is impossible for the company to predict these events or their effect. The company has no obligation and does not intend to update any forward-looking statements after the date hereof, except as required by federal securities laws. In addition, management uses certain non-GAAP performance measures on this call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted net income, and adjusted net income per diluted share, adjusted gross profit, and adjusted selling and administrative expenses. You can find a reconciliation of such measures to their nearest GAAP equivalent in the company's earnings release and additional reconciliation for adjusted EBITDA for earlier fiscal years in our investor presentation, which are available on our website. This morning's conference call is hosted by Jeff Edwards, our Chairman and Chief Executive Officer, and Michael Miller, our Chief Financial Officer. I will now turn the call over to Jeff.

Thanks, Jason, and good morning to everyone joining us on today's call. As usual, I will start today's call with some first quarter highlights and then turn the call over to Michael Miller, IBP's CFO, who will discuss our results and capital position in more detail before we take your questions. I'll focus my remarks today on our response to the COVID-19 crisis, the actions we are taking to navigate this uncertain environment, and how we believe our strong operational platform and financial position will support our business through this crisis. The COVID-19 pandemic has created unprecedented social and economic challenges and our thoughts are with everyone impacted by the pandemic. As an organization, we are focused on supporting our employees, customers, and suppliers all across the country while ensuring our business is well positioned to withstand the uncertainty caused by the COVID-19 crisis. As our first quarter results demonstrate, we entered the current market environment from a position of financial and operational strength. The 2020 first quarter was very strong across our end markets, and we achieved record first quarter revenue, earnings, and adjusted EBITDA. In addition, our balance sheet and access to capital remains robust. During the quarter, we generated nearly $36 million of cash flow from operations, and we ended the quarter with strong liquidity, including over $213 million of cash in short-term investments and nothing drawn on our $200 million line of credit. Across our national footprint, our branches are following federal, state, and local requirements to protect the health and safety of our employees and customers. we have implemented various procedures to provide for appropriate social distancing and disinfecting of shared spaces to mitigate risk of exposure to our employees. As of the end of March, approximately 90% by revenue of our branches were located in markets where construction was deemed an essential business. However, restrictions limiting the number of laborers on a job site and our internal standards for social distancing practices impacted the volume of completed jobs and efficiencies across our end markets. We estimate that first quarter revenue was reduced by $2 million to $2.5 million due to these factors related to the COVID-19 health crisis. It is still too early to tell how the COVID-19 crisis will affect the overall economy, the U.S. housing industry, and IVP. However, industry dynamics support near-term demand for our services. At the end of March, there were more than 500,000 single-family units under construction based on U.S. Census Bureau data. which we believe represents over six months of industry backlog. While this includes homes at various stages of completion, we believe IDP will benefit from a significant proportion of the backlog in the markets where we operate. In addition, we expect builders will focus on reducing backlogs by placing a greater emphasis on finishing homes under construction. The backlogs in our commercial and multifamily end markets remain strong as well, further supporting our business operations during this uncertain demand environment. We believe that the current economic environment will result in a significant short-term reduction in demand for housing, and as a result, a meaningful reduction in the number of single-family housing starts this year. Based on the normal lag between starts and completions within the homebuilding industry, we currently estimate that the market decline will have a more pronounced impact on our business in the third and fourth quarters of 2020. The full extent of this impact is currently unknown, but our installers and local market teams are and will remain busy working on this industry backlog. Throughout the month of April, we continued to operate with approximately 10% of our branches by revenue closed due to construction's non-essential status in certain markets, negatively impacting April revenue. Even with these closures, our April revenue increased approximately 2% compared to last year. our large commercial construction business had April sales growth of approximately 25%. Excluding the sales of Royals Commercial Services acquired in March of 2020, Alpha had April sales growth of 17% compared to last year. Adjusting for these closed branches, April sales growth was approximately 10% compared to last year, and same branch sales growth was approximately 6%. As a result of branch closures, we furloughed 563 employees during the months of March and April. Additionally, under the Families First Coronavirus Response Act, we have provided benefit to 123 employees who have been impacted by COVID-19. As of today, with states taking steps towards reopening their economic activity, our market closures have improved to less than 2% of our branches by revenue, and I am pleased that nearly 280 of our previously furloughed employees have already been brought back to work and expect this to improve following some of the most recent state reopenings. Looking at the material pricing environment and our supply chain, we saw continued improvements in our price mix during the first quarter. We are continuing to work proactively with both our customers and suppliers to help ensure a stable pricing and cost environment. Furthermore, nearly all of the products we install are sourced domestically and we have not experienced any disruptions in our supply chain or procurement activities. Overall, we believe the housing industry is much healthier than before the 2008 to 2009 financial crisis and the industry was experiencing strong growth prior to the COVID-19 crisis. We are closely monitoring the housing market and we are in constant communication with our local, regional, and national customers. Our high variable cost structure allows us to quickly adjust to changes in demand, and we have plans in place to further modify our financial model, if necessary, in the coming quarters. While we have not currently made any large-scale adjustments to our business, we have decided to proactively delay closing acquisitions until the economic environment stabilizes. Our pipeline is robust, and we continue to actively pursue acquisitions of well-run installers that support our geographic product and end market diversification strategies. For more than two decades, these diversification strategies have driven strong financial performance and growth while expanding the scope of our installation services, enhancing our end market exposure, and increasing our geographic footprint. During the 2008 to 2009 recession, as housing starts to decline, we expanded the service area of our existing branch locations and expanded our product offerings in new markets. As our scale has increased over the past 12 years, we believe we are even better positioned to pursue these strategies today and outperform the market when housing starts to decline. In addition, during the last recession, we had limited opportunity in the commercial and multifamily end markets. Our alpha commercial installation business and our multifamily platform will further help IVP navigate a downturn in the single-family residential market. During the first quarter, commercial and multifamily revenues increased 14% and 35%, respectively, over the previous year, demonstrating continued growth in market share gains in these end markets. Longer term, we believe the pandemic will likely increase the demand for single-family housing, increase the need for more affordable homes, and potentially support a quick rebound that is not typical of a housing downturn. So to conclude my prepared remarks, I'm extremely pleased with our first quarter financial results and strong platform that we have created. Our strong balance sheet combined with our experienced leadership team, longstanding customer relationships, and asset light, high variable costs, and diverse business model will allow IDP to navigate through this period of economic uncertainty. Finally, I'd like to take this opportunity to thank our installers who are hard at work every day representing IBP and serving our customers. On behalf of the entire leadership team, we recognize your efforts, and I want to personally thank you for your dedication. With this overview, I would like to turn the call over to Michael to provide more details on our first quarter results.