false000112494100011249412024-08-012024-08-01
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2024
BEACON ROOFING SUPPLY, INC.
(Exact name of Registrant as Specified in Its Charter)
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Delaware | 000-50924 | 36-4173371 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
505 Huntmar Park Drive, Suite 300, Herndon, VA 20170
(Address of Principal Executive Offices) (Zip Code)
(571) 323-3939
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class | | Trading Symbol | | Name of each exchange on which registered |
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Common Stock, $0.01 par value | | BECN | | NASDAQ Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Results of Operations and Financial Condition
On August 1, 2024, Beacon Roofing Supply, Inc. (the “Company”) issued a press release providing information regarding earnings for the quarter ended June 30, 2024. A copy of the press release is attached hereto as Exhibit 99.1.
On August 1, 2024, the Company delivered a presentation as part of the webcast for the earnings conference call for the quarter ended June 30, 2024. A copy of the presentation is attached hereto as Exhibit 99.2.
The information including Exhibit 99.1 and Exhibit 99.2 in Item 2.02 of this Form 8-K is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that Section. The information in this Form 8-K shall not be incorporated by reference into any filing under the Securities Act of 1933, except as shall otherwise be expressly set forth by specific reference in such filing.
Item 9.01 Financial Statements and Exhibits
(d)Exhibits
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Exhibit Index |
Exhibit Number |
| Description |
99.1 |
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99.2 |
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104 |
| Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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| BEACON ROOFING SUPPLY, INC. |
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Date: August 1, 2024 |
| By: | /s/ PRITHVI S. GANDHI |
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| | Prithvi S. Gandhi |
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| | Executive Vice President and Chief Financial Officer |
Exhibit 99.1
BEACON REPORTS SECOND QUARTER 2024 RESULTS
•Record quarterly sales driven by Ambition 2025 initiatives, including greenfields and acquisitions
•Organic sales growth across all 3 lines of business led by strong non-residential reroofing demand
•Acquired Smalley & Co., a leading waterproofing distributor in the West with 11 locations
•Entered into an accelerated share repurchase agreement to return up to $225M to stockholders in 2024
HERNDON, VA. — (BUSINESS WIRE) — August 1, 2024 — Beacon (Nasdaq: BECN) (the “Company”, “we”, “our”), the leading publicly-traded wholesale distributor specializing in roofing, waterproofing, and exterior products, announced results today for the second quarter ended June 30, 2024.
“Our Ambition 2025 initiatives drove record quarterly net sales, solid net income margin, and double-digit Adjusted EBITDA margin,” said Julian Francis, Beacon’s President & CEO. “Our team’s strong execution delivered organic sales growth across all three business lines despite disruptive weather events that reduced the number of roofing days in the quarter. As a result, we experienced lower-than-expected residential volumes and decreased operating leverage as we maintained staffing to meet a higher level of activity. We also continued to invest in growth initiatives during the quarter expanding our footprint in key markets. Since the end of the first quarter, we have acquired 21 branches and opened 10 greenfield locations. As previously announced in May, we entered into a $225M accelerated share repurchase agreement.
“Entering the second half of the year, we will be proactive in responding to local market conditions by adjusting inventory and resources, while maintaining Beacon’s high caliber customer service. We expect the fundamentals of our end markets to remain supportive, underpinned by repair and reroofing demand, the vast majority of which is non-discretionary. Our focus will remain on the areas within our control, including enhancing our customer experience, pricing discipline and operating efficiency. I am happy with the achievements this year and look forward to building on the momentum and creating value for all our stakeholders.”
Second Quarter Financial Highlights
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
(Unaudited; $ in millions) | | | | | | | |
Net sales | $ | 2,674.6 | | | $ | 2,503.7 | | | $ | 4,587.0 | | | $ | 4,236.0 | |
Gross profit | $ | 683.7 | | | $ | 636.2 | | | $ | 1,156.9 | | | $ | 1,078.1 | |
Gross margin % | 25.6 | % | | 25.4 | % | | 25.2 | % | | 25.5 | % |
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Operating expense | $ | 467.9 | | | $ | 401.9 | | | $ | 896.0 | | | $ | 783.2 | |
% of net sales | 17.5 | % | | 16.1 | % | | 19.5 | % | | 18.5 | % |
Adjusted Operating Expense1 | $ | 440.9 | | | $ | 377.6 | | | $ | 844.4 | | | $ | 734.4 | |
% of net sales1 | 16.5 | % | | 15.1 | % | | 18.4 | % | | 17.3 | % |
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Net income (loss) | $ | 127.2 | | | $ | 153.8 | | | $ | 132.8 | | | $ | 178.6 | |
% of net sales | 4.8 | % | | 6.1 | % | | 2.9 | % | | 4.2 | % |
Adjusted Net Income (Loss)1 | $ | 148.4 | | | $ | 172.9 | | | $ | 175.0 | | | $ | 216.7 | |
% of net sales1 | 5.5 | % | | 6.9 | % | | 3.8 | % | | 5.1 | % |
Adjusted EBITDA1 | $ | 279.4 | | | $ | 290.3 | | | $ | 382.5 | | | $ | 403.4 | |
% of net sales1 | 10.4 | % | | 11.6 | % | | 8.3 | % | | 9.5 | % |
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1.Please see the included financial tables for a reconciliation of “Adjusted” non-GAAP financial measures to the most directly comparable GAAP financial measure, as well as further detail on the components driving the net changes over the comparative periods.
Second Quarter
Net sales increased to $2.67 billion, 6.8% growth compared to the prior year, and a Company record for second quarter net sales. The increase in net sales when compared to the prior year period was largely driven by price execution and the contributions of acquired and newly opened branches. Weighted-average selling price and estimated organic volumes (including greenfields) increased approximately 2-3% and 0-1%, respectively. Additionally, acquired branches contributed 4.0% to the increase in second quarter net sales.
Residential roofing product sales increased 2.4%, non-residential roofing product sales increased 11.1%, and complementary product sales increased 12.3% compared to the prior year. The increase in residential roofing product sales was primarily due to price execution. The increase in non-residential roofing product sales was primarily due to higher volumes driven by strong underlying market demand and, to a lesser extent, the impact of customer destocking in the prior year period. The increase in complementary product sales was largely due to the acquisition of additional waterproofing companies since June 30, 2023, partially offset by lower volumes. The three-month periods ended June 30, 2024 and 2023 each had 64 business days.
Gross margin increased to 25.6%, from 25.4% in the prior year, as higher average selling prices for our products more than offset higher product costs and a higher non-residential product mix. The increases in operating expense and Adjusted Operating Expense were attributable to acquired branches, as well as higher organic selling, general, and administrative (“SG&A”) expense. The increase in organic SG&A expense was primarily due to higher payroll and employee benefit costs, general and administrative expenses, and warehouse operating costs. The increase in payroll and employee benefit costs was due to increased headcount, as well as wage inflation. The increase in general and administrative expenses was primarily due to higher professional fees and travel expenses. The increase in warehouse operating costs was primarily due to higher rent expense. Both operating expense as a percent of sales and Adjusted Operating Expense as a percent of sales were higher in the second quarter of 2024, driven by the same factors.
Net income (loss) was $127.2 million, compared to $153.8 million in the prior year. Adjusted EBITDA was $279.4 million, compared to $290.3 million in the prior year. Net income (loss) per common share (“EPS”) on a diluted basis was $1.99, compared to $1.97 in the prior year.
On May 9, 2024, the Company entered into an accelerated share repurchase (“ASR”) agreement to repurchase $225.0 million of its common stock. During the second quarter of 2024, the Company repurchased and retired $180.0 million of its common stock under the ASR. As a result, shares of common stock outstanding decreased to 61.9 million as of June 30, 2024, from 63.6 million as of March 31, 2024. Common stock outstanding at June 30, 2024 does not include the effect of the $45.0 million equity forward contract related to the unsettled portion of the ASR agreement, which, based on the daily volume-weighted average stock price from May 9, 2024 to June 30, 2024, would have resulted in the repurchase of approximately 0.5 million additional shares. The $45.0 million equity forward contract is expected to settle in the fourth quarter of 2024.
Year-to-Date
Net sales increased to $4.59 billion, 8.3% growth compared to the prior year, and a Company record for net sales for the first half of the year. The increase in net sales when compared to the prior year period was largely driven by price execution and the contributions of acquired and newly opened branches. Estimated organic volumes and weighted-average selling price increased approximately 3-4% and 1-2%, respectively. Additionally, acquired branches contributed approximately 3.7% to the increase in net sales.
Residential roofing product sales increased 5.0%, non-residential roofing product sales increased 13.6%, and complementary product sales increased 9.3% compared to the prior year. The increase in residential roofing product sales was primarily due to price execution. The increase in non-residential roofing product sales was primarily due to higher volumes driven by strong underlying market demand and, to a lesser extent, the impact of customer destocking in the prior year period. The increase in complementary product sales was largely due to acquisitions of additional waterproofing companies since June 30, 2023, partially offset by lower volumes. The six-month periods ending June 30, 2024 and 2023 each had 130 business days.
Gross margin decreased to 25.2%, from 25.5% in the prior year, as higher product costs related to the inventory profit roll-off and a higher non-residential product mix more than offset higher average selling prices for our products. The increases in operating expense and Adjusted Operating Expense were attributable to acquired branches, as well as higher organic SG&A expense. The increase in organic SG&A expense was primarily due to higher payroll and employee benefit costs, warehouse operating costs, and general and administrative expenses. The increase in payroll and employee benefit costs was due to increased headcount, as well as wage inflation. The increase in warehouse operating costs was primarily due to higher rent expense. The increase in general and administrative expenses was primarily due to higher professional fees and travel expenses. Both operating expense as a percent of sales and Adjusted Operating Expense as a percent of sales were higher in the first half of 2024, driven by the same factors.
Net income (loss) was $132.8 million, compared to $178.6 million in the prior year. Adjusted EBITDA was $382.5 million, compared to $403.4 million in the prior year. Diluted EPS was $2.07, compared to $2.22 in the prior year. Results in the first half compared to the prior year period were largely driven by the decrease in gross margins and higher operating expense discussed above.
To calculate approximate weighted average selling price and product cost changes, we review organic U.S. warehouse sales of the same items sold regionally period over period and normalize the data for non-representative outliers. To calculate estimated volumes, we subtract the change in weighted average selling price, as described above, from the total changes in sales, excluding acquisitions and dispositions. As a result, and especially in high inflationary periods, the weighted average selling price and estimated volume changes may not be directly comparable to changes reported in prior periods.
During the fourth quarter of 2023, we revised our definition of when a branch classification changes from acquired to existing. Previously, the results of operations of branches were designated as acquired until they had been under our ownership for at least four full fiscal quarters at the start of the fiscal reporting period, after which such branches were classified as existing. Under our new definition, the results of operations of branches will be designated as acquired until they have been under our ownership and have contributed to our results of operations for at least 12 calendar months (treating partial months as full months), after which such branches are classified as existing. The effect of this change in definition is that the prior year results of operations for branches will be reclassified to existing when the comparable current month’s financial results are also classified as existing.
Please see the included financial tables for a reconciliation of “Adjusted” non-GAAP financial measures to the most directly comparable GAAP financial measure, as well as further detail on the components driving the net changes over the comparative periods.
Earnings Call
The Company will host a conference call and webcast today at 5:00 p.m. ET to discuss these results. Details for the earnings release event are as follows:
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What: | Beacon Second Quarter 2024 Earnings Call |
When: | Thursday, August 1, 2024 |
Time: | 5:00 p.m. ET |
Access: | Register for the conference call or webcast by visiting: |
| Beacon Investor Relations – Events & Presentations |
Upon registration, participants will receive an email containing event details and unique access codes. To ensure timely access, participants should register for the earnings call at least 10 minutes before the 5:00 p.m. ET start time. An archived copy of the webcast will be available on the Events & Presentations page shortly after the call.
Forward-Looking Statements
This release contains information about management’s view of the Company’s future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and often use words such as “anticipate,” “estimate,” “expect,” “believe,” “will likely result,” “outlook,” “project” and other words and expressions of similar meaning. Investors are cautioned not to place undue reliance on forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the “Risk Factors” section of the Company’s Form 10-K for the fiscal year ended December 31, 2023 and subsequent filings with the U.S. Securities and Exchange Commission. In addition, actual results may differ materially from those expressed in any forward-looking statements as the result of: product shortages; changes in supplier pricing and rebates; inability to identify acquisition targets or close acquisitions; difficulty integrating acquired businesses; inability to identify new markets or successfully open new locations; catastrophic safety incidents; cyclicality and seasonality; IT failures or interruptions, including as a result of cybersecurity incidents; goodwill or intangible asset impairments; disruptions in the capital and credit markets; debt leverage; loss of key talent; labor disputes; regulatory risks; and future volatility in our stock price and trading volumes to the extent they effect the final settlement of our ASR agreement. The Company may not succeed in addressing these and other risks. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties referenced above and readers are cautioned not to place undue reliance on forward-looking statements. In addition, the forward-looking statements included in this press release represent the Company’s views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company’s views as of any date subsequent to the date of this press release.
About Beacon
Founded in 1928, Beacon is a publicly-traded Fortune 500 company that distributes specialty building products, including roofing materials and complementary products, such as siding and waterproofing. The company operates over 570 branches throughout all 50 states in the U.S. and 7 provinces in Canada. Beacon serves an extensive base of nearly 100,000 customers, utilizing its vast branch network and service capabilities to provide high-quality products and support throughout the entire project lifecycle. Beacon offers its own private label brand, TRI-BUILT®, and has a proprietary digital account management suite, Beacon PRO+®, which allows customers to manage their businesses online. Beacon’s stock is traded on the Nasdaq Global Select Market under the ticker symbol BECN. To learn more about Beacon, please visit www.becn.com.
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INVESTOR CONTACT | MEDIA CONTACT |
Binit Sanghvi | Jennifer Lewis |
VP, Capital Markets and Treasurer | VP, Communications and Corporate Social Responsibility |
Binit.Sanghvi@becn.com | Jennifer.Lewis@becn.com |
972-369-8005 | 571-752-1048 |
BEACON ROOFING SUPPLY, INC.
Consolidated Statements of Operations
(Unaudited; in millions, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | % of Net Sales | | 2023 | | % of Net Sales | | 2024 | | % of Net Sales | | 2023 | | % of Net Sales |
Net sales | $ | 2,674.6 | | | 100.0 | % | | $ | 2,503.7 | | | 100.0 | % | | $ | 4,587.0 | | | 100.0 | % | | $ | 4,236.0 | | | 100.0 | % |
Cost of products sold | 1,990.9 | | | 74.4 | % | | 1,867.5 | | | 74.6 | % | | 3,430.1 | | | 74.8 | % | | 3,157.9 | | | 74.5 | % |
Gross profit | 683.7 | | | 25.6 | % | | 636.2 | | | 25.4 | % | | 1,156.9 | | | 25.2 | % | | 1,078.1 | | | 25.5 | % |
Operating expense: | | | | | | | | | | | | | | | |
Selling, general and administrative | 418.5 | | | 15.6 | % | | 358.7 | | | 14.3 | % | | 800.0 | | | 17.4 | % | | 697.0 | | | 16.5 | % |
Depreciation | 26.5 | | | 1.0 | % | | 21.8 | | | 0.9 | % | | 52.0 | | | 1.1 | % | | 42.5 | | | 1.0 | % |
Amortization | 22.9 | | | 0.9 | % | | 21.4 | | | 0.9 | % | | 44.0 | | | 1.0 | % | | 43.7 | | | 1.0 | % |
Total operating expense | 467.9 | | | 17.5 | % | | 401.9 | | | 16.1 | % | | 896.0 | | | 19.5 | % | | 783.2 | | | 18.5 | % |
Income (loss) from operations | 215.8 | | | 8.1 | % | | 234.3 | | | 9.3 | % | | 260.9 | | | 5.7 | % | | 294.9 | | | 7.0 | % |
Interest expense, financing costs and other, net | 45.4 | | | 1.7 | % | | 26.0 | | | 1.0 | % | | 84.0 | | | 1.8 | % | | 53.8 | | | 1.3 | % |
Loss on debt extinguishment | — | | | — | % | | — | | | — | % | | 2.4 | | | 0.1 | % | | — | | | — | % |
Income (loss) before provision for income taxes | 170.4 | | | 6.4 | % | | 208.3 | | | 8.3 | % | | 174.5 | | | 3.8 | % | | 241.1 | | | 5.7 | % |
Provision for (benefit from) income taxes | 43.2 | | | 1.6 | % | | 54.5 | | | 2.2 | % | | 41.7 | | | 0.9 | % | | 62.5 | | | 1.5 | % |
Net income (loss) | $ | 127.2 | | | 4.8 | % | | $ | 153.8 | | | 6.1 | % | | $ | 132.8 | | | 2.9 | % | | $ | 178.6 | | | 4.2 | % |
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Reconciliation of net income (loss) to net income (loss) attributable to common stockholders: | | | | | | | | | | | | | | | |
Net income (loss) | $ | 127.2 | | | 4.8 | % | | $ | 153.8 | | | 6.1 | % | | $ | 132.8 | | | 2.9 | % | | $ | 178.6 | | | 4.2 | % |
Dividends on Preferred Stock | — | | | — | % | | (6.0) | | | (0.2) | % | | — | | | — | % | | (12.0) | | | (0.3) | % |
Undistributed income allocated to participating securities | — | | | — | % | | (19.5) | | | (0.8) | % | | — | | | — | % | | (21.9) | | | (0.5) | % |
Net income (loss) attributable to common stockholders | $ | 127.2 | | | 4.8 | % | | $ | 128.3 | | | 5.1 | % | | $ | 132.8 | | | 2.9 | % | | $ | 144.7 | | | 3.4 | % |
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Weighted-average common shares outstanding: | | | | | | | | | | | | | | | |
Basic | 62.7 | | | | | 63.7 | | | | | 63.1 | | | | | 64.0 | | | |
Diluted | 63.9 | | | | | 65.1 | | | | | 64.3 | | | | | 65.3 | | | |
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Net income (loss) per common share: | | | | | | | | | | | | | | | |
Basic | $ | 2.03 | | | | | $ | 2.02 | | | | | $ | 2.10 | | | | | $ | 2.26 | | | |
Diluted | $ | 1.99 | | | | | $ | 1.97 | | | | | $ | 2.07 | | | | | $ | 2.22 | | | |
BEACON ROOFING SUPPLY, INC.
Consolidated Balance Sheets
(Unaudited; in millions)
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| June 30, | | December 31, | | June 30, |
| 2024 | | 2023 | | 2023 |
Assets | | | | | |
Current assets: | | | | | |
Cash and cash equivalents | $ | 76.6 | | | $ | 84.0 | | | $ | 65.8 | |
Accounts receivable, net | 1,570.8 | | | 1,140.2 | | | 1,361.7 | |
Inventories, net | 1,611.5 | | | 1,227.9 | | | 1,352.8 | |
Prepaid expenses and other current assets | 531.3 | | | 444.6 | | | 512.1 | |
Total current assets | 3,790.2 | | | 2,896.7 | | | 3,292.4 | |
Property and equipment, net | 483.3 | | | 436.4 | | | 380.8 | |
Goodwill | 2,017.7 | | | 1,952.6 | | | 1,922.9 | |
Intangibles, net | 445.7 | | | 403.5 | | | 415.8 | |
Operating lease right-of-use assets, net | 581.8 | | | 503.6 | | | 470.3 | |
Deferred income taxes, net | 2.1 | | | 2.1 | | | 6.8 | |
Other assets, net | 16.1 | | | 12.8 | | | 11.3 | |
Total assets | $ | 7,336.9 | | | $ | 6,207.7 | | | $ | 6,500.3 | |
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Liabilities and Stockholders' Equity | | | | | |
Current liabilities: | | | | | |
Accounts payable | $ | 1,322.6 | | | $ | 942.8 | | | $ | 1,317.4 | |
Accrued expenses | 532.7 | | | 498.6 | | | 498.0 | |
Current portion of operating lease liabilities | 96.1 | | | 89.7 | | | 97.2 | |
Current portion of finance lease liabilities | 31.3 | | | 26.2 | | | 20.4 | |
Current portion of long-term debt | 12.8 | | | 10.0 | | | 10.0 | |
Total current liabilities | 1,995.5 | | | 1,567.3 | | | 1,943.0 | |
Borrowings under revolving lines of credit, net | 464.6 | | | 80.0 | | | 67.5 | |
Long-term debt, net | 2,485.4 | | | 2,192.3 | | | 1,603.2 | |
Deferred income taxes, net | 25.1 | | | 20.1 | | | 0.5 | |
Other long-term liabilities | 1.6 | | | 0.5 | | | 0.2 | |
Operating lease liabilities | 498.7 | | | 423.7 | | | 385.1 | |
Finance lease liabilities | 112.4 | | | 100.3 | | | 78.9 | |
Total liabilities | 5,583.3 | | | 4,384.2 | | | 4,078.4 | |
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Convertible Preferred Stock | — | | | — | | | 399.2 | |
| | | | | |
Stockholders' equity: | | | | | |
Common stock | 0.6 | | | 0.6 | | | 0.6 | |
Undesignated preferred stock | — | | | — | | | — | |
Additional paid-in capital | 1,196.6 | | | 1,218.4 | | | 1,208.1 | |
Retained earnings | 571.5 | | | 618.8 | | | 820.1 | |
Accumulated other comprehensive income (loss) | (15.1) | | | (14.3) | | | (6.1) | |
Total stockholders' equity | 1,753.6 | | | 1,823.5 | | | 2,022.7 | |
Total liabilities and stockholders' equity | $ | 7,336.9 | | | $ | 6,207.7 | | | $ | 6,500.3 | |
BEACON ROOFING SUPPLY, INC.
Consolidated Statements of Cash Flows
(Unaudited; in millions)
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2024 | | 2023 |
Operating Activities | | | |
Net income (loss) | $ | 132.8 | | | $ | 178.6 | |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | | | |
Depreciation and amortization | 96.0 | | | 86.2 | |
Stock-based compensation | 15.7 | | | 14.3 | |
Certain interest expense and other financing costs | 0.8 | | | 1.3 | |
Loss on debt extinguishment | 2.4 | | | — | |
Gain on sale of fixed assets and other | (3.7) | | | (9.5) | |
Deferred income taxes | 4.2 | | | 1.6 | |
| | | |
| | | |
| | | |
Changes in operating assets and liabilities: | | | |
Accounts receivable | (394.0) | | | (346.5) | |
Inventories | (353.2) | | | (19.5) | |
Prepaid expenses and other current assets | (76.7) | | | (87.2) | |
Accounts payable and accrued expenses | 385.0 | | | 539.2 | |
Other assets and liabilities | 1.5 | | | 0.2 | |
Net cash provided by (used in) operating activities | (189.2) | | | 358.7 | |
| | | |
Investing Activities | | | |
Capital expenditures | (61.5) | | | (60.3) | |
Acquisition of business, net | (204.7) | | | (30.5) | |
| | | |
Proceeds from sale of assets | 4.0 | | | 10.7 | |
| | | |
Purchases of investments | (1.0) | | | (0.9) | |
Net cash provided by (used in) investing activities | (263.2) | | | (81.0) | |
| | | |
Financing Activities | | | |
Borrowings under revolving lines of credit | 1,715.2 | | | 840.7 | |
Payments under revolving lines of credit | (1,331.5) | | | (1,028.8) | |
Borrowings under term loan | 300.0 | | | — | |
Payments under term loan | (6.4) | | | (5.0) | |
| | | |
| | | |
Payment of debt issuance costs | (0.2) | | | — | |
| | | |
Payments under equipment financing facilities and finance leases | (13.7) | | | (9.1) | |
Payment of fees for the repurchase of convertible Preferred Stock | (0.1) | | | — | |
Repurchase and retirement of common stock, net | (180.0) | | | (72.4) | |
Advance payment for equity forward contract | (45.0) | | | — | |
| | | |
Proceeds from employee stock purchase plan | 8.3 | | | — | |
Payment of dividends on Preferred Stock | — | | | (12.0) | |
Proceeds from issuance of common stock related to equity awards | 6.2 | | | 8.1 | |
Payment of taxes related to net share settlement of equity awards | (7.0) | | | (1.5) | |
Net cash provided by (used in) financing activities | 445.8 | | | (280.0) | |
| | | |
Effect of exchange rate changes on cash and cash equivalents | (0.8) | | | 0.4 | |
| | | |
Net increase (decrease) in cash and cash equivalents | (7.4) | | | (1.9) | |
Cash and cash equivalents, beginning of period | 84.0 | | | 67.7 | |
Cash and cash equivalents, end of period | $ | 76.6 | | | $ | 65.8 | |
| | | |
Supplemental Cash Flow Information | | | |
Cash paid during the period for: | | | |
Interest | $ | 83.0 | | | $ | 53.4 | |
Income taxes, net of refunds | $ | 36.0 | | | $ | 31.3 | |
Supplemental Disclosure of Non-Cash Activities | | | |
Amounts accrued for repurchases of common stock, inclusive of excise tax | $ | — | | | $ | 2.9 | |
BEACON ROOFING SUPPLY, INC.
Consolidated Sales by Line of Business
(Unaudited; in millions) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales by Line of Business |
| Three Months Ended June 30, | | Year-over-Year Change |
| 2024 | | 2023 | |
| Net Sales | | Mix % | | Net Sales | | Mix % | | $ | | % |
Residential roofing products | $ | 1,328.9 | | | 49.7 | % | | $ | 1,298.0 | | | 51.8 | % | | $ | 30.9 | | | 2.4 | % |
Non-residential roofing products | 745.1 | | | 27.9 | % | | 670.8 | | | 26.8 | % | | 74.3 | | | 11.1 | % |
Complementary building products | 600.6 | | | 22.4 | % | | 534.9 | | | 21.4 | % | | 65.7 | | | 12.3 | % |
| $ | 2,674.6 | | | 100.0 | % | | $ | 2,503.7 | | | 100.0 | % | | $ | 170.9 | | | 6.8 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
Sales by Business Day1,2 |
| Three Months Ended June 30, | | Year-over-Year Change |
| 2024 | | 2023 | |
| Net Sales | | Mix % | | Net Sales | | Mix % | | $ | | % |
Residential roofing products | $ | 20.8 | | | 49.7 | % | | $ | 20.2 | | | 51.8 | % | | $ | 0.6 | | | 2.4 | % |
Non-residential roofing products | 11.6 | | | 27.9 | % | | 10.5 | | | 26.8 | % | | 1.1 | | | 11.1 | % |
Complementary building products | 9.4 | | | 22.4 | % | | 8.4 | | | 21.4 | % | | 1.0 | | | 12.3 | % |
| $ | 41.8 | | | 100.0 | % | | $ | 39.1 | | | 100.0 | % | | $ | 2.7 | | | 6.8 | % |
1.The three-month periods ended June 30, 2024 and 2023 each had 64 business days.
2.Dollar and percentage changes may not recalculate due to rounding.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Sales by Line of Business |
| Six Months Ended June 30, | | Year-over-Year Change |
| 2024 | | 2023 | |
| Net Sales | | Mix % | | Net Sales | | Mix % | | $ | | % |
Residential roofing products | $ | 2,256.3 | | | 49.2 | % | | $ | 2,148.1 | | | 50.7 | % | | $ | 108.2 | | | 5.0 | % |
Non-residential roofing products | 1,273.7 | | | 27.8 | % | | 1,120.8 | | | 26.5 | % | | 152.9 | | | 13.6 | % |
Complementary building products | 1,057.0 | | | 23.0 | % | | 967.1 | | | 22.8 | % | | 89.9 | | | 9.3 | % |
| $ | 4,587.0 | | | 100.0 | % | | $ | 4,236.0 | | | 100.0 | % | | $ | 351.0 | | | 8.3 | % |
| | | | | | | | | | | |
| | | | | | | | | | | |
Sales by Business Day1,2 |
| Six Months Ended June 30, | | Year-over-Year Change |
| 2024 | | 2023 | |
| Net Sales | | Mix % | | Net Sales | | Mix % | | $ | | % |
Residential roofing products | $ | 17.4 | | | 49.2 | % | | $ | 16.7 | | | 50.7 | % | | $ | 0.7 | | | 5.0 | % |
Non-residential roofing products | 9.8 | | | 27.8 | % | | 8.8 | | | 26.5 | % | | 1.0 | | | 13.6 | % |
Complementary building products | 8.1 | | | 23.0 | % | | 7.6 | | | 22.8 | % | | 0.5 | | | 9.3 | % |
| $ | 35.3 | | | 100.0 | % | | $ | 33.1 | | | 100.0 | % | | $ | 2.2 | | | 8.3 | % |
1.The six-month periods ended June 30, 2024 and 2023 each had 130 business days.
2.Dollar and percentage changes may not recalculate due to rounding.
BEACON ROOFING SUPPLY, INC.
Non-GAAP Financial Measures
(Unaudited; in millions)
Non-GAAP Financial Measures
To provide investors with additional information regarding our financial results, we prepare certain financial measures that are not calculated in accordance with GAAP, specifically:
•Adjusted Operating Expense. We define Adjusted Operating Expense as operating expense, excluding the impact of the adjusting items (as described below).
•Adjusted Net Income (Loss). We define Adjusted Net Income (Loss) as net income (loss), excluding the impact of the adjusting items (as described below).
•Adjusted EBITDA. We define Adjusted EBITDA as net income (loss), excluding the impact of interest expense (net of interest income), income taxes, depreciation and amortization, stock-based compensation, and the adjusting items (as described below).
We use these supplemental non-GAAP measures to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources. We expect to compute our non-GAAP financial measures consistently using the same methods each period.
We believe these non-GAAP measures are useful measures because they permit investors to better understand changes over comparative periods by providing financial results that are unaffected by certain items that are not indicative of ongoing operating performance.
While we believe that these non-GAAP measures are useful to investors when evaluating our business, they are not prepared and presented in accordance with GAAP, and therefore should be considered supplemental in nature. These non-GAAP measures should not be considered in isolation or as a substitute for other financial performance measures presented in accordance with GAAP. These non-GAAP financial measures may have material limitations including, but not limited to, the exclusion of certain costs without a corresponding reduction of net income for the income generated by the assets to which the excluded costs relate. In addition, these non-GAAP financial measures may differ from similarly titled measures presented by other companies.
BEACON ROOFING SUPPLY, INC.
Non-GAAP Financial Measures (continued)
(Unaudited; in millions)
Adjusting Items to Non-GAAP Financial Measures
The impact of the following expense (income) items is excluded from each of our non-GAAP measures (the “adjusting items”):
•Acquisition costs. Represent certain direct and incremental costs related to acquisitions, including: amortization of intangible assets; professional fees, branch integration expenses, travel expenses, employee severance and retention costs, and other personnel expenses classified as selling, general and administrative; gains/losses related to changes in fair value of contingent consideration or holdback liabilities; and amortization of debt issuance costs. Acquisition costs are impacted by the timing and size of the acquisitions. We exclude acquisition costs from our non-GAAP financial measures to provide a useful comparison of our operating results to prior periods and to our peer companies because such amounts vary significantly based on the magnitude of the acquisition and do not reflect our core operations.
•Restructuring costs. Represent costs stemming from headcount rationalization efforts and certain rebranding costs; impact of divestitures; amortization of debt issuance costs; debt refinancing and extinguishment costs; and abandoned lease costs. We exclude restructuring costs from our non-GAAP financial measures, as such items vary significantly based on the magnitude of the restructuring activity and also do not reflect expected future operating expenses. Additionally, these costs do not necessarily provide meaningful insight into the current or past core operations of our business.
The following table presents the pre-tax impact of the adjusting items on our consolidated statements of operations for each of the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Operating Expense | | | | Non-Operating Expense | | | | |
| SG&A | | Amortization | | | | Interest Expense | | Other (Income) Expense | | | | Total |
Three Months Ended June 30, 2024 | | | | | | | | | | | | | |
Acquisition costs | $ | 3.8 | | | $ | 22.9 | | | | | $ | 0.9 | | | $ | — | | | | | $ | 27.6 | |
Restructuring costs | 0.3 | | | — | | | | | 0.6 | | | — | | | | | 0.9 | |
| | | | | | | | | | | | | |
Total adjusting items | $ | 4.1 | | | $ | 22.9 | | | | | $ | 1.5 | | | $ | — | | | | | $ | 28.5 | |
Three Months Ended June 30, 2023 | | | | | | | | | | | | | |
Acquisition costs | $ | 1.4 | | | $ | 21.4 | | | | | $ | 1.0 | | | $ | — | | | | | $ | 23.8 | |
Restructuring costs | 1.5 | | | — | | | | | 0.3 | | | — | | | | | 1.8 | |
| | | | | | | | | | | | | |
Total adjusting items | $ | 2.9 | | | $ | 21.4 | | | | | $ | 1.3 | | | $ | — | | | | | $ | 25.6 | |
| | | | | | | | | | | | | |
Six Months Ended June 30, 2024 | | | | | | | | | | | | | |
Acquisition costs | $ | 6.8 | | | $ | 44.0 | | | | | $ | 1.9 | | | $ | — | | | | | $ | 52.7 | |
Restructuring costs1 | 0.8 | | | — | | | | | 1.1 | | | 2.4 | | | | | 4.3 | |
| | | | | | | | | | | | | |
Total adjusting items | $ | 7.6 | | | $ | 44.0 | | | | | $ | 3.0 | | | $ | 2.4 | | | | | $ | 57.0 | |
Six Months Ended June 30, 2023 | | | | | | | | | | | | | |
Acquisition costs | $ | 3.1 | | | $ | 43.7 | | | | | $ | 1.9 | | | $ | — | | | | | $ | 48.7 | |
Restructuring costs | 2.0 | | | — | | | | | 0.6 | | | — | | | | | 2.6 | |
| | | | | | | | | | | | | |
Total adjusting items | $ | 5.1 | | | $ | 43.7 | | | | | $ | 2.5 | | | $ | — | | | | | $ | 51.3 | |
1.Other (income) expense for the six months ended June 30, 2024 consists of a loss on debt extinguishment of $2.4 million as a result of the refinancing of our 2028 Term Loan.
BEACON ROOFING SUPPLY, INC.
Non-GAAP Financial Measures (continued)
(Unaudited; in millions)
Adjusted Operating Expense
The following table presents a reconciliation of operating expense, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted Operating Expense for each of the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Operating expense | $ | 467.9 | | | $ | 401.9 | | | $ | 896.0 | | | $ | 783.2 | |
Acquisition costs | (26.7) | | | (22.8) | | | (50.8) | | | (46.8) | |
Restructuring costs | (0.3) | | | (1.5) | | | (0.8) | | | (2.0) | |
Adjusted Operating Expense | $ | 440.9 | | | $ | 377.6 | | | $ | 844.4 | | | $ | 734.4 | |
| | | | | | | |
Net sales | $ | 2,674.6 | | | $ | 2,503.7 | | | $ | 4,587.0 | | | $ | 4,236.0 | |
Operating expense as % of net sales | 17.5 | % | | 16.1 | % | | 19.5 | % | | 18.5 | % |
Adjusted Operating Expense as % of net sales | 16.5 | % | | 15.1 | % | | 18.4 | % | | 17.3 | % |
Adjusted Net Income (Loss)
The following table presents a reconciliation of net income (loss), the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted Net Income (Loss) for each of the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Net income (loss) | $ | 127.2 | | | $ | 153.8 | | | $ | 132.8 | | | $ | 178.6 | |
Adjusting items: | | | | | | | |
Acquisition costs | 27.6 | | | 23.8 | | | 52.7 | | | 48.7 | |
Restructuring costs | 0.9 | | | 1.8 | | | 4.3 | | | 2.6 | |
Total adjusting items | 28.5 | | | 25.6 | | | 57.0 | | | 51.3 | |
Less: tax impact of adjusting items1 | (7.3) | | | (6.5) | | | (14.8) | | | (13.2) | |
Total adjustments, net of tax | 21.2 | | | 19.1 | | | 42.2 | | | 38.1 | |
Adjusted Net Income (Loss) | $ | 148.4 | | | $ | 172.9 | | | $ | 175.0 | | | $ | 216.7 | |
| | | | | | | |
Net sales | $ | 2,674.6 | | | $ | 2,503.7 | | | $ | 4,587.0 | | | $ | 4,236.0 | |
Net income (loss) as % net of sales | 4.8 | % | | 6.1 | % | | 2.9 | % | | 4.2 | % |
Adjusted Net Income (Loss) as % net of sales | 5.5 | % | | 6.9 | % | | 3.8 | % | | 5.1 | % |
1.Amounts represent the tax impact of adjustments that are not included in our income tax provision (benefit) for the periods presented. The tax impact of adjustments for the three months ended June 30, 2024 and 2023 were calculated using a blended effective tax rate of 25.6% and 25.4%, respectively. The tax impact of adjustments for the six months ended June 30, 2024 and 2023 were calculated using a blended effective tax rate of 26.0% and 25.7%, respectively.
BEACON ROOFING SUPPLY, INC.
Non-GAAP Financial Measures (continued)
(Unaudited; in millions)
Adjusted EBITDA
The following table presents a reconciliation of net income (loss), the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted EBITDA for each of the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2024 | | 2023 | | 2024 | | 2023 |
Net income (loss) | $ | 127.2 | | | $ | 153.8 | | | $ | 132.8 | | | $ | 178.6 | |
Interest expense, net | 47.2 | | | 27.6 | | | 86.3 | | | 56.7 | |
Income taxes | 43.2 | | | 54.5 | | | 41.7 | | | 62.5 | |
Depreciation and amortization | 49.4 | | | 43.2 | | | 96.0 | | | 86.2 | |
Stock-based compensation | 8.3 | | | 8.3 | | | 15.7 | | | 14.3 | |
Acquisition costs1 | 3.8 | | | 1.4 | | | 6.8 | | | 3.1 | |
Restructuring costs1 | 0.3 | | | 1.5 | | | 3.2 | | | 2.0 | |
Adjusted EBITDA | $ | 279.4 | | | $ | 290.3 | | | $ | 382.5 | | | $ | 403.4 | |
| | | | | | | |
Net sales | $ | 2,674.6 | | | $ | 2,503.7 | | | $ | 4,587.0 | | | $ | 4,236.0 | |
Net income (loss) as % of net sales | 4.8 | % | | 6.1 | % | | 2.9 | % | | 4.2 | % |
Adjusted EBITDA as % of net sales | 10.4 | % | | 11.6 | % | | 8.3 | % | | 9.5 | % |
1.Amounts represent adjusting items included in SG&A expense and other (income) expense; remaining adjusting item balances are embedded within the other line item balances reported in this table.
AUGUST 1, 2024 2024 Q2 2024 EARNINGS PRESENTATION Exhibit 99.2
becn.com2 Disclosure Notice This presentation contains information about management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and often use words such as “anticipate,” “estimate,” “expect,” “believe,” “will likely result,” “outlook,” “project” and other words and expressions of similar meaning. Investors are cautioned not to place undue reliance on forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended December 31, 2023 and subsequent filings with the U.S. Securities and Exchange Commission. In addition, actual results may differ materially from those expressed in any forward-looking statements as the result of: product shortages; changes in supplier pricing and rebates; inability to identify acquisition targets or close acquisitions; difficulty integrating acquired businesses; inability to identify new markets or successfully open new locations; catastrophic safety incidents; cyclicality and seasonality; IT failures or interruptions, including as a result of cybersecurity incidents; goodwill or intangible asset impairments; disruptions in the capital and credit markets; debt leverage; loss of key talent; labor disputes; and regulatory risks. The Company may not succeed in addressing these and other risks. Consequently, all forward-looking statements in this presentation are qualified by the factors, risks and uncertainties referenced above. In addition, the forward-looking statements included in this presentation represent the Company's views as of the date of this presentation and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this presentation. This presentation contains references to certain financial measures that are not presented in accordance with United States Generally Accepted Accounting Principles (“GAAP"). The Company uses non-GAAP financial measures to evaluate financial performance, analyze underlying business trends and establish operational goals and forecasts that are used when allocating resources. The Company believes these non-GAAP financial measures permit investors to better understand changes over comparative periods by providing financial results that are unaffected by certain items that are not indicative of ongoing operating performance. While the Company believes these measures are useful to investors when evaluating performance, they are not prepared and presented in accordance with GAAP, and therefore should be considered supplemental in nature. The Company’s non-GAAP financial measures should not be considered in isolation or as a substitute for other financial performance measures presented in accordance with GAAP. These non-GAAP financial measures may have material limitations including, but not limited to, the exclusion of certain costs without a corresponding reduction of net income for the income generated by the assets to which the excluded costs relate. In addition, these non-GAAP financial measures may differ from similarly titled measures presented by other companies. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure can be found in the Appendix as well as the Company’s latest Form 8-K, filed with the SEC on August 1, 2024.
becn.com3 PRESIDENT & CHIEF EXECUTIVE OFFICER JULIAN FRANCIS
becn.com CEO Perspective *Year over year growth percentages adjusted for differences in selling days **Non-GAAP measure; see Appendix for definition and reconciliation ***Through July 31st Notes: Percentages within the Net Income ($M) and Adjusted EBITDA** ($M) bar charts represent each metric as a % of net sales. All quarterly information and comparisons reflect Continuing Operations LOB – Line of business 2.5%1.4% Record quarterly net sales • Ambition 2025 continuing to drive share and top-line • Average selling prices up LSD with regional & LOB variability Double digit Adjusted EBITDA** margins • Gross margin higher by 20 bps YoY • OpEx increased YoY primarily due to headcount and inflation • Lower than expected resi volume negatively impacted op. leverage Added 31 new and acquired locations since end of Q1*** • Acquired Smalley, leading west coast waterproofing distributor • Expanded commercial & metal offering with recent acquisitions of Roofers Mart of Southern California, Extreme Metals & Integrity Metals Balance sheet provided ability to invest & return capital • Announced additional $225 million accelerated share repurchase • Continuing to invest in organic growth initiatives and M&A 4 8.3%5.6%1.8% +1.1%+28.0%+11.8%+2.0% 20 26.0 +6.2% 6.1% 6.9% 8.4 12.3 13.0 7.4% 8.3% 13.0% 11.6%13.0% 11.6% +6.9% +28.8% +7.0% +6.9% +28.8% +7.0% +11.3% +14.1 16.8 6.4% 6.2% 7.2 7.0% 9.1% 9.4% 9.1% 9.4% 3.7% 4.1 4.7% 4.8 +28.0 +1.1% +10.4 1.4% 0.3% .5% 1.4% 6.5 5.4% $1,872 $2,358 $2,504 $2,675 Q2'21 Q2'22 Q2'23 Q2'24 Net Sales* ($M) / YoY (%) $154 $173 $127 $148 GAAP Adj. NI** Net Income ($M) Q2'23 Q2'24 $290 $279 Q2'23 Q2'24 Adjusted EBITDA** ($M) 1.6% 10.4% +26.0% +6.2% +6.8% 6.1% 6.9%4.8% 5.5
becn.com5 • Upgraded Employee Assistance Program to include expanded mental health support • Disclosed GHG intensity reduction progress on track to meet 2030 goal in 3rd annual CSR Report • Launched new multilingual Career website to attract top talent Executing on Ambition 2025 Initiatives Ambition 2025 amplifies the resiliency of Beacon’s business model DRIVING OPERATIONAL EXCELLENCE BUILDING A WINNING CULTURE DRIVING ABOVE MARKET GROWTH CREATING SHAREHOLDER VALUE • Bottom-quintile branch class of 2024 contributed $3M to the bottom-line YTD • Branch and Fleet optimization initiatives continue to focus on increasing productivity, improving safety and fully utilizing available assets • Continue to enhance our acquisition integration and greenfield playbook to reach accretive performance levels faster • Acquired 28 branches and opened 13 greenfield locations YTD through 7/31, enhancing customer reach & service • Digital sales growth +22% Q2 YoY, achieving all-time quarterly high of ~26% of residential sales • Proprietary Commercial Academy trained hundreds of team members on industry fundamentals • Record quarterly net sales and fourth consecutive 2nd quarter double-digit Adjusted EBITDA* margins • Announced additional $225 million accelerated share repurchase • Returned more than $1.5 billion** to shareholders since launch of Ambition 2025 plan *Non-GAAP measure; see Appendix for definition and reconciliation **Inclusive of preferred stock repurchase
becn.com6 EXECUTIVE VICE PRESIDENT & CHIEF FINANCIAL OFFICER PRITH GANDHI
becn.com7 Q2 2024 Sales and Mix Net sales up 6.8% • Organic growth across all three lines of business • Average selling prices higher LSD% YoY • Acquisitions added ~4% to the top-line Residential sales up 2.4% YoY • Prices up LSD-MSD% YoY, disciplined execution on April price increase • Shingle volumes decreased vs. record Q2 comparable • Geographic and regional demand variability Non-residential sales up 11.1% YoY • Commercial repair & reroofing demand accelerating • Volumes up on solid demand & customer destocking in the PYQ • Prices down LSD% YoY, sequentially stable Complementary sales up 12.3% YoY • Acquisitions drove LDD% volume growth led by waterproofing • Prices up LSD% YoY +1.1% 50% 28% 22% Net Sales Mix Residential Non-residential Complementary $1,298 $671 $535 $1,329 $745 $601 Residential Non-residential Complementary Net Sales by Line of Business (LOB) ($M) Q2'23 Q2'24 +2.4% +11.1% +12.3% $2,504 $2,675 Q2'23 Q2'24 Net Sales ($M) / YoY (%) +6.8%
becn.com8 *Non-GAAP measure; see Appendix for definition and reconciliation Note: Percentages within the bar charts represent each metric as a % of net sales. Q2 2024 Margin and Expense Gross margin up ~20 bps YoY • Favorable price cost YoY partially offset by higher non-res sales and dilution from acquired & newly opened branches • Lower-than-expected inventory profit from April shingle price increase Adj. OpEx* increased $63M • Greenfield & acquired branches added ~$27M YoY • Staffing for higher expected demand weighed on operating leverage • Inflation in wages, benefits, rent and T&E also contributed to the increase • Focus on driving operating efficiencies in H2 • Investments in strategic initiatives continued • M&A and greenfield project teams • Sales organization, private label, pricing tools and e-commerce technologies 25.4% 25.6% Q2'23 Q2'24 Gross Margin $402 $378 $468 $441 GAAP Adj. OpEx* Operating Expense ($M) Q2'23 Q2'24 15.1% 16.5%17.5%16.1%
becn.com9 Strong Balance Sheet, Continued Capacity to Invest Seasonal inventory peak at end of Q2 • Expect inventory reduction in H2’24 • Strong H2 cash generation expected on Q4 conversion of higher selling season inventory Balanced allocation of capital to strategic growth and shareholder returns • Reduced common share count to 61.9M at 6/30 • Actively progressing acquisition pipeline • Investing in safety & efficiency of our fleet & facilities Prudent balance sheet mgmt. & ample liquidity • Net debt leverage* 3.2x as of 6/30, seasonal peak • Liquidity of >$800M as of 6/30 *Non-GAAP measure; see Appendix for definition and reconciliation **Maturities shown as of Q2’24; excl impact of debt issuance cost amortization & required $12.75M annual paydown of 2028 Term Loan $103 ($25) $257 ($48) Q2'21 Q2'22 Q2'23 Q2'24 Operating Cash Flow ($M) $1,171 $1,549 $1,353 $1,612 Q2'21 Q2'22 Q2'23 Q2'24 Net Inventory ($M) 2.4 2.5 1.9 3.2 Q2'21 Q2'22 Q2'23 Q2'24 Net Debt Leverage* 2024 2025 2026 2027 2028 2029 2030 Debt Maturity ($M)** ABL Term Loan Secured Notes Unsecured Notes $768 $350 $1,269 $0 $300 $223 $0 $468 $0 $600 $300
PRESIDENT & CHIEF EXECUTIVE OFFICER JULIAN FRANCIS
becn.com11 2024 market expectations • Lower expected storm volume YoY partially offset by residential non-discretionary repair & re-roofing demand • Higher interest rates continue to impact both new and existing home sales • Commercial sentiment improving despite ABI reading remaining below 50 Q3’24 net sales per day* up HSD% including contributions from completed acquisitions & price increases • July 2024 sales per day* up LSD% YoY* • Gross margins expected to be in the high 25% range • OpEx higher YoY on investments, OpEx % of sales in line with prior year quarter Full Year 2024 indications • Expect net sales growth 6-8% YoY split approximately equally between organic growth and M&A • Gross margin expected to be in the mid-25% range, margin enhancing initiatives offset by higher non-res mix • Adjusted EBITDA** of $930 – $970M Focused on accomplishing Ambition 2025 goals • Continued investment in greenfield, digital, private label and commercial solutions • Expect to remain acquisitive consistent with the robust M&A pipeline and ample capacity • Committed to returns for our shareholders and prudent balance sheet management Closing Thoughts *Percentages adjusted for two more selling days in July ‘24 as compared to July ’23, one more selling day in Q3‘24 as compared to Q3 ’23 **Non-GAAP measure; see Appendix for definition and reconciliation Note: 2024 has 2 more selling days as compared to 2023 Ambition 2025 has demonstrated multiple paths to growth and profitability
becn.com13 Reconciliations: Non-GAAP Financial Measures RESULTS BY QUARTER (CONTINUING OPERATIONS) We define Adjusted Operating Expense as operating expense (as reported on a GAAP basis) excluding the impact of amortization, acquisition costs, restructuring costs, and costs directly related to the COVID-19 pandemic. We define Adjusted EBITDA as net income (loss) from continuing operations excluding the impact of interest expense (net of interest income), income taxes, depreciation and amortization, stock- based compensation, acquisition costs, restructuring costs, and costs directly related to the COVID-19 pandemic. Beginning January 1, 2023, the Company determined that COVID-19 impacts should no longer be considered an adjusting item and the change was applied prospectively. For additional information see our latest Form 8-K, filed with the SEC on August 1, 2024.
becn.com14 NET DEBT LEVERAGE We define Net Debt Leverage as gross total debt less cash, divided by Adjusted EBITDA for the trailing four quarters. Reconciliations: Non-GAAP Financial Measures
becn.com15 *Composed of Acquisition and Restructuring costs 2024 GUIDANCE: ADJUSTED EBITDA Reconciliations: Non-GAAP Financial Measures
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Aug. 01, 2024 |
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BEACON ROOFING SUPPLY, INC.
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DE
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505 Huntmar Park Drive
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Suite 300
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Herndon
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VA
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