Ladies and gentlemen, welcome to Frontdoor's Investor Call regarding its pending acquisition of 2-10 Home Buyers Warranty. Today's call is being recorded and broadcasted on the internet. Beginning today's call is Matt Davis, Vice President of Investor Relations and Treasurer. Please go ahead, Mr. Davis. Thank you, operator. Good morning, everyone, and thank you for joining Frontdoor's Investor Call today. Joining me today are Frontdoor's Chairman and Chief Executive Officer, Bill Cobb, and Frontdoor's Chief Financial Officer, Jessica Ross. The press release and slide presentation used during today's call can be found on the Investor Relations section of Frontdoor's website, which is located at investors.frontdoorhome.com. As stated on slide three of the presentation, I'd like to remind you that this call and webcast may contain forward-looking statements. These statements are subject to various risks and uncertainties, which could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings with the SEC. Please refer to the Risk Factors section in our filings for a more detailed discussion of our forward-looking statements and the risks and uncertainties related to such statements. All forward-looking statements are made as of today, June fourth, and except as required by law, the company undertakes no obligation to update any forward-looking statements, whether a result of new information, future events, or otherwise. We will also reference certain non-GAAP financial measures throughout today's call. We have included definitions of these terms and reconciliations of these non-GAAP financial measures to their most comparable GAAP financial measures in our press release and the appendix to the presentation in order to better assist you in understanding our financial performance. I will now turn the call over to Bill Cobb to take you through today's presentation. Bill? Thanks, Matt, and good morning, everyone. As you've seen from the press release that went out earlier this morning, we have some very exciting news to share. But before I get into those details, I want to spend a moment revisiting how we got to this point. When I stepped into the CEO role two years ago, the company was struggling to respond to inflationary cost pressures. So when I started, my primary goal was to get the company back on the right track. Since then, we have made tremendous progress on stabilizing our margins, improving customer service, and driving Adjusted EBITDA to record levels. This, in turn, has helped us to rebuild our financial position and resulted in our net leverage ratio improving to a record low of 1.1 times. We have previously said that we do not plan on keeping our leverage ratio at the current levels, that we have a significant amount of financial flexibility, and we will continue to follow our capital allocation strategy, which is focused on growth and share repurchases. So with that as the backdrop, I want our investors to know that we have been exploring acquisitions for some time, but I wanted to be deliberate and thoughtful in our approach. And to be clear, we looked at many businesses, but frankly, none of them felt right until now. The main theme you're going to hear this morning is one of growth, growth in our customer count, growth in our revenue, and growth in our earnings. To that end, the acquisition of 2-10 Home Buyers Warranty is the right business, it is the right size, and it is at the right time. With that, let's jump in and start with some high-level details. The transaction is valued at $585 million on a cash-free, debt-free basis, meaning we are not incurring any of 2-10's current debt. The acquisition is supported by committed financing that we have lined up with our key relationship banks. While the acquisition is, of course, subject to customary regulatory approval, we anticipate closing in the fourth quarter of 2024. Now, let's get into a little more detail about 2-10. The company was founded in Denver in 1980. 2-10's home warranty business is available in 42 states. The new home structural warranty is available in 48 states and covers approximately one in five new homes. Additionally, 2-10 has about 19,000 builders as customers, including 45 of the top home builders in the country. 2-10 is also a great cultural fit for Frontdoor, which was a very important factor for me when we assessed this opportunity. We have been impressed with the management team and talent at the company, and I look forward to working with them on building this business going forward. 2-10 is a great business. It's a leading provider of new home structural warranties. This is a perfect strategic fit for our business, and we feel very strongly that the combination of 2-10 and Frontdoor will unlock new opportunities. First, and most importantly, we expect to gain more customers. Second, this will diversify our product portfolio into an adjacent category. Third, we also anticipate the consolidated company to generate significant synergies. The long-term impact is that we expect to improve customer growth and increase revenue and earnings. Let's drill down on how we expect the acquisition to expand our customer base. First, 2-10's new home structural warranty adds a new line of business to the Frontdoor portfolio. Second, 2-10 adds a complementary home warranty business. This is a traditional home warranty, very similar to American Home Shield. Third, 2-10 opens up cross-selling opportunities for home warranties to those with new home structural warranties. And fourth, we plan to market our on-demand services to all of our homeowners. 2-10 is a smart and attractive acquisition, but let me, let me walk you through some key data points in slide 9 that bring that into greater focus. In 2023, 2-10 had nearly 300,000 customers, almost $200 million in revenue, and adjusted EBITDA of approximately $43 million, for an adjusted EBITDA margin of 21.7%, which is actually higher than our current margin. This acquisition diversifies our portfolio through 2-10's new home structural warranty, which is a fundamentally different line of business. Lastly, we anticipate that the acquisition of 2-10 will result in significant growth in revenue and cost synergies. The growth in revenue can come from cross-selling opportunities across our larger platform and taking best-in-class marketing and sales practices from the combined organizations. On the cost front, we have already done the normal due diligence work, but now our team is drilling down even further to more understand the cost synergies that will put Frontdoor in the best position going forward. Now let's look at slide 10 and the market for new homes. While new home sales have some of the same drivers, it is a fundamentally different market than existing home sales, and that is exactly what we like about this business. We believe new home construction is a tailwind for us as it opens up sales for new home structural warranties. As many of you know, the U.S. has a housing shortage. Inventory has fallen well below historical averages and is not keeping up with demand. We believe this housing shortage, demographic trends, and eventual decline in mortgage rates will lead to a rebound in the overall housing market. Moving to slide 11, let's dig into what a new home structural warranty actually is. To be clear, builders are the customer. It's a popular offering, with approximately 90% of its revenue coming from repeat builders. The structural warranty is an insurance-backed offering, with the key benefit to builders being the transfer of their legal obligation to repair structural failures to 2-10. This product appeals to a broad range of home builders that require different service and coverage levels. 2-10 has over 40 years of structural claims data, strong underwriting partners, and extensive experience in screening and partnering with high-quality builders across the country, which drives their strong record of stable, attractive margins. Now, let me go a little deeper on the three components of the new home structural warranty. First, it provides one-year workmanship coverage for things like cabinetry, flooring, and countertops. Second, it provides two-year system coverage for things like ductwork, electrical wiring, piping, and septic systems. Finally, it provides a ten-year insurance-backed structural warranty that covers defects in the load-bearing parts of the home. Now, turning to the builders. 2-10 typically partners with small to medium-sized firms that build up to 1,000 homes per year. 2-10 selects builders based on underwriting criteria that include construction quality, builder longevity, and geographic factors like soil conditions. We are also attracted to 2-10's strong builder retention rates of nearly 90%. As mentioned, 2-10 also has a traditional home warranty business sold through its direct-to-consumer and real estate channels. The high renewal rates and large contractor network for this product line up very well with Frontdoor, Inc.'s core business. Okay, that was a lot of ground to cover in a short period of time, but I hope I have left you with a clear understanding of why we want to acquire 2-10. It will grow Frontdoor's customer base, revenue, and earnings. It will diversify our product portfolio into an adjacent category. It will open up cross-selling opportunities for home warranties and on-demand services. And finally, we expect to generate significant shareholder value through revenue and cost synergies. We are going to move to Q&A now, but I will be returning after that with some final thoughts on how this all comes together to create a compelling investment thesis for Frontdoor, Inc. With that, operator, please open the line for Jessica and me to take some questions. Thank you. If you would like to ask a question, please press star followed by one on your telephone keypad. If you would like to withdraw your question, please press star followed by two. When preparing to ask a question, please ensure your device is unmuted locally. Our first question comes from Brian Fitzgerald with Wells Fargo. Your line is open. Please go ahead. Thanks, guys. Congratulations. I wanted to ask a couple. What's the current attach rate of home warranty or home service plans to the structural warranties, and where do you think that you can take that attach rate over time? Second follow-up one was, what percentage of their home warranty book is driven by attached to structural warranty versus traditional real estate or D2C versus renewal? So to the first question, the information we've gotten is it's about 10% attach rate. Can you repeat the second question? I'm not sure I got that. The percentage of the home warranty book, what percentage of that is driven by attachment to the structural warranty versus traditional real estate, or direct-to-consumer, or renewal? Yeah, the mix we're not gonna get into right now, Brian. We're working through that. Yeah. We'll, we'll disclose that at the appropriate time. So we'll, we'll get into the mix later on. Okay. Thank you. Thanks, Brian. We now turn to Corey Carpenter with J.P. Morgan. Your line is open. Please go ahead. Thank you. I had a couple. First, any comments you'd give about the growth factory for 2-10 from the revenue or customer account perspective, even if it's high level, whether it's growing, you know, declining? I'll let you answer that one, and I'll- I have a follow-up. So, Matt, I don't know, did you pick up? Corey, we had a real problem with your line there, with the question. Yeah, it's going in and out, Corey. So, can you try to repeat the question? Sorry, is that better? Uh- I think so, yeah. Sorry, problems with dialing in from Kentucky. 2-10, just could you discuss—you gave the revenue, you gave the customer count. Curious how that's trended over the past couple of years for 2-10? Yeah, we're not gonna go into trends right now. You know, this is a private company, and we're able to disclose the 2023 numbers. We'll take a look at that as we come out with a full operating plan in terms of our expectations for 2-10, as we move closer to. As we close on this. Okay. Just on the existing, talk about this. I think you mentioned 2-10 in most states. You all have historically been more concentrated, strong in the Smile States. Does your exposure to perhaps the Northeast or other regions that you've been under indexed in in the past? I think you're asking about geographic concentration for 2-10. Is that correct? Yes. Yes. Okay. Let me say this, we won't go into specific states at this point. It's, it's in line with, you know, traditional home warranty, you know, heavy, heavy coverage areas. So it will complement certainly the offering we have today. Okay. Okay, great. Thank you. Sorry, sorry about the phone issue here. That's all right. Thanks, Corey. We now turn to Sergio Segura with KeyBanc. Your line is open. Please go ahead. Great. Thank you. Any color you guys could provide on just the cross-selling opportunities and how you're thinking about executing against that opportunity with 2-10's structural warranty and your core business? I didn't- I think you sum up cross-selling opportunities. You take it. I mean, I think we see an opportunity with our on-demand services or our new HVAC program, being able to sell that across all customers, as well as the cross-selling opportunity that's gonna come with the new home structural line of business into the traditional home service plan business as well. That's why, Sergio, a big part of this for us, and I said it about four times on the script, was getting more customers. This enables us to, you know, as we, as we continue to develop new ways to, you know, work through the whole home, home services component of our, of our customers. We like the fact that these 300,000 customers, well, are available for us to, to tap into as, as we go forward. Yeah. We are, we are very, very excited about both the revenue and cost synergy opportunities with this deal. The team has done an amazing and very robust due diligence process, and now we've got some more work to do just in terms of really digging into the financials and developing an operating plan, and we'll come back with more. But excited about the deal. Okay. That's helpful. Maybe just taking a step back and looking big picture on the structural warranty business for 2-10. Any color you guys can provide on, are you thinking about growing with the market versus taking share? Yeah, I think at this point, we'll get into the taking share component as we get deeper in with 2-10's management team. I think what we like about it, at a minimum, we think we'll grow with the market. And then I think the combination of both teams will enable us to potentially do better than that. So, I think that, you know, at a minimum, we're gonna grow with the market, and I think there are gonna be other ways, which is under the heading of, you know, another one of the revenue synergies that we're looking to dive into. Okay, great. Thanks, Bill. Thanks, Jessica. Thank you, Sergio. Thanks, Sergio. Our next question comes from Mark Hughes with Truist Securities. Your line is open. Please go ahead. Yeah, thank you. Good morning. Any comments you can give us on the earnings per share impact, and to the extent that there's intangibles amortization, is that gonna be added back for adjusted EPS purposes? So I think just on a couple of things, what we've said at this point is that this deal is going to be additive to our customer count, revenue, and earnings. You know, I just was sharing, we've done a huge due diligence process here, but we've got a lot of work to do just in terms of, you know, they're still going-- they're a private company, so still going through the 2023 audited financials. We've got to dig into metrics and how we're going to report this whole thing out from an SEC reporting perspective. So in terms of accretion, we'll come back, you know, when the time is right with more details. And I think just your question on amortization, I mean, our EBITDA calculation adds back amortization and depreciation. Anything that comes out of our next purchase accounting work, et cetera, et cetera, will be added back. Okay. And then can you talk about the duration of the liabilities? If you've got 10-year coverage, what is the company's experience been in terms of the pattern of loss payouts? And then were they impacted by inflation? One would think higher construction costs might have had some influence. Could you talk about that? So in terms of, one thing I will say again, the loss from a loss perspective, exposure, it's been very stable. This is really what I would say is 2-10 secret sauce. They have developed over the past 40 years just a real expertise in underwriting, and that's one thing that really, really attracted us to this deal. They got decades of underwriting expertise focused on the quality of builders, new construction standards, expertise in areas such as soil conditions, which is very, very important to new home structural. And then the aggregate portfolio also undergoes an actuarial review on an annual basis. So feel really good about the talent they've got in that space. And again, it's been pretty stable. And- Mark, just to add to that, the coverage does not cover claims resulting from natural disasters. That's typically covered under homeowners policy. So they have had stable margins. You know, this is a low incident, high severity kind of model. But again, to Jessica's point, the underwriting has been outstanding. That's one of their real secret sauces, as she said. So we think that the risk is well contained in their core model. Thank you. Thanks, Mark. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad now. We now turn to Eric Sheridan with Goldman Sachs. Your line is open. Please go ahead. Thanks so much for taking the question. Maybe just one big picture one. When you think about closing this transaction at the end of this year, you've been very clear on your priorities on operating focus and capital allocation. If we go back to the last 12, 18 months, including the Investor day you guys had, how could this change the possible focus of the company by doing an acquisition like this? And how that possibly lines up longer term against where your operational focus will be, as opposed to thinking through additional levels of capital allocation? Thanks so much. Yeah, I'm gonna, I'm gonna close with that, Eric, but just to give you a preview, if you will. I think, you know, there will be no lack of focus on the things we've-- that have brought us here, in terms of the work we've done with our contractors, work with service ops, get our margins to be stable, the price, dynamic pricing we've done, all of the things that we've done on the whole relaunch of AHS, that will not change. We do believe that real estate is going to recover. We now have two real estate businesses, which is a high-class problem for us. Not even a problem, it's a high-class situation for us. So that will not change. As we look at the integration of 2-10 into Frontdoor, Inc., the combined company, we think we're going to be able to drive significant shareholder value. So I think great company. We're going to have an influx of management talent from 2-10. I think great companies can do more than one thing. I certainly think this company can do that. So I feel really good about no loss of focus, but that this can be additive and ultimately really result in a ramp up in our shareholder value. This concludes our Q&A. I'll now hand back to Bill Cobb for closing remarks. Okay, so as we close, I want to leave you with some final points on how all this comes together to build a compelling investment thesis, similar to the question Eric just asked. But this is really going to lay out, I believe, why I'm so excited about where this combined company can go in the future. The main point is that we are executing on what we said we would do. We said we would explore strategic M&A to accelerate our growth. And with our announcement today, we're on the path to realizing that goal. With the relaunch of our American Home Shield brand, we are in the early stages of driving higher customer growth. We have taken steps to make sure our real estate channel is well-positioned for the eventual turnaround in existing home sales. We continue to improve our business processes and marketing approach, which is helping to drive higher customer retention rates. We have taken steps to expand our on-demand business, and our new HVAC sales program is really starting to gain traction. We have taken decisive actions to improve our margins and remain confident in our long-term margin profile. And let me be clear, we will continue to return excess cash to shareholders through share buybacks. With that, we appreciate your interest in Frontdoor. I encourage you to join us live for our webcast tomorrow at 4:00 P.M. Central time from the William Blair Conference, where I will be presenting to investors. You can find details on how to listen in on our website, frontdoorhome.com. So ladies and gentlemen, thank you again for joining today's call. The call is now concluded. Operator, you may hang up.