Slide 1: First Quarter 2020
First Quarter 2020 _____________ Jerry Volas, CEO May 5, 2020 Robert Buck, President & COO John Peterson, CFO
Slide 2: Safe Harbor
Safe Harbor 2 Statements contained in this report that reflect our views about future periods, including our future plans and performance, constitute “forward- looking statements” under the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such a
Slide 3: Business Update
Business Update 3 ▪ Experienced, cycle-tested management team ▪ Where permissible, TruTeam on job sites and Service Partners filling and delivering orders ▪ Proactively flexing cost model ▪ Strict safety protocols in place ▪ Ample liquidity Our Safety Culture Remains a Top Priority
Slide 4: 1Q 2020 Financial Highlights
1Q 2020 Financial Highlights* 4 ▪ 5.5% sales growth ▪ 26.3% gross margin, up 120 bps ▪ 13.5% adjusted EBITDA margin, up 150 bps ▪ 40.8% incremental EBITDA margin ▪ 29.2% increase in adjusted EPS to $1.37 per diluted share Strong Q1 with Minimal Impact from COVID-19 * See slide 15 for adjusted EBITDA
Slide 5: Capital Allocation
Capital Allocation 5 ▪ Two Acquisitions YTD • Hunter Insulation • Cooper Glass ▪ Delaying further acquisitions due to uncertain environment • Will resume when appropriate • Strong balance sheet and ample dry powder ▪ Share repurchase program on hold Liquidity Number One Priority
Slide 6: Operations Update
Operations Update 6 ▪ Focused on: • Safeguarding employees’ health at our facilities and on job sites • Maintaining key operations and servicing customers • Monitoring shifting state regulations ▪ Construction deemed “essential” in most states ▪ Supply chain across both business segments remains str
Slide 7: Background
Background 7 ▪ Since the last downturn: • Closed over 130 redundant branches • Moved all branches to common ERP system • Simplified our business processes • Exited non-core products • Cut redundant fixed overhead • Brought key talent back to the business • Leveraged supply chain scale • Focused on l
Slide 8: Flexing the Business
Flexing the Business 8 ▪ Discretionary spending controlled/eliminated ▪ Capital expenditures significantly reduced ▪ Overhead expenses cut ▪ Working closely with supplier partners ▪ COVID-19 Leave Plan for employees ▪ Common ERP system distinct competitive advantage ▪ Ongoing review of branch level
Slide 9: Looking Ahead… Opportunity to Differentiate Our Company
Looking Ahead… 9 ▪ Demonstrating to our customers, current and prospective: • We can and will support them better than any other company in our industry • We are financially strong, ensuring we have the resources to meet their needs • We know how to quickly and successfully adapt to changing market
Slide 10: Financial Overview
Financial Overview 10 ($ in 000s) Three Months Ended March 31, 2020 Sales $653,228 Y-O-Y Change 5.5% Adjusted Operating Profit* $70,261 Y-O-Y Change 18.9% Adjusted Operating Margin* 10.8% Y-O-Y Change 130 bps Adjusted EBITDA* $88,359 Y-O-Y Change 18.5% Adjusted EBITDA Margin* 13.5% Y-O-Y Change 150
Slide 11: CapEx, Working Capital & Cash Flow
CapEx, Working Capital & Cash Flow 11 ($ in 000s) Three Months Ended March 31, 2020 CAPEX $15,892 Working Capital % to Sales 10.5% Operating Cash Flow $72,930 Cash Balance $187,039 Strong Cash Flow Generation
Slide 12: Leverage
Leverage 12 First Quarter 2020 $ in millions $731.4 Total Debt ▪ $389M available on $450M Revolver Less Cash 187.0 ▪ No debt maturing until 2025 Net Debt $544.4 TTM Adj. EBITDA $372.9 ▪ Significant room under debt covenants Leverage 1.46x Total Liquidity of $576 Million
Slide 13: COVID-19 Initiatives
COVID-19 Initiatives 13 ▪ Flexible business model enables Company to adapt quickly Mix 10% • 70% variable costs, 20% fixed costs, 10% mix of both Fixed • Expand margins in periods of growth Costs 20% • Adjust to downturns to mitigate impact on operations Variable Costs ▪ Cost Savings 70% • Eliminati
Slide 14: Appendix
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Slide 15: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation 15 ($ in 000s) Three Months Ended March 31, 2020 2019 Net income, as reported $ 50,771 $ 37,983 Adjustments to arrive at EBITDA, as adjusted: Interest expense and other, net 8,270 9,269 Income tax expense 10,715 9,366 Depreciation and amortization 14,190 12,475 Share-b
Slide 16: Segment GAAP to Non-GAAP Reconciliation
Segment GAAP to Non-GAAP Reconciliation 16 ($ in 000s) Three Months Ended March 31, 2020 2019 Change TruTeam Sales $ 475,873 $ 449,383 5.9 % Operating profit, as reported $ 60,351 $ 51,299 Operating margin, as reported 12.7 % 11.4 % Rationalization charges — 118 Acquisition related costs 4 125 Opera
Slide 17: Income Per Common Share Reconciliation
Income Per Common Share Reconciliation 17 ($ in 000s) Three Months Ending March 31, 2020 2019 Income before income taxes, as reported $ 61,486 $ 47,349 Rationalization charges — 1,827 Acquisition related costs 235 652 Refinancing costs and loss on extinguishment of debt 270 — Income before income ta