- Record quarterly sales driven by execution on Ambition 2025
growth initiatives
- Disciplined margin management and bottom quintile branch
initiative resulted in solid net income and record Adjusted
EBITDA
- Invested in organic growth by opening four greenfield
locations to enhance customer reach
- Executed on value-creating acquisitions that are expected to
contribute approximately $247 million of sales annually
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 third quarter ended September 30, 2024.
“Beacon’s third quarter results demonstrated the resilience of
our business model and the team’s strong execution on our Ambition
2025 initiatives,” said Julian Francis, Beacon’s President &
CEO. “We have, once again, shown that we can grow in any
environment. The majority of our demand is underpinned by
non-discretionary repair and reroofing, which remained solid in the
third quarter. However, despite the overall level of activity lower
than our expectation, disciplined margin management resulted in
favorable price-cost across all lines of business. In addition, in
September, we took action to lower operating expense by aligning
our staffing with current market conditions. We expect these
actions will result in annual savings of approximately $45 million.
For the quarter, we delivered record net sales, solid net income,
and the highest Adjusted EBITDA in our history.
“Our balanced capital allocation demonstrates our commitment to
growth and to creating shareholder value. During the quarter, we
continued to invest in organic growth by adding four greenfield
locations in key markets. We also continued building on our track
record of value-creating acquisitions, including enhancing our
non-residential and Canadian footprints. I am pleased with our
achievements in the third quarter and confident that the Beacon
team remains prepared to quickly adapt to changing market
conditions going forward as we help our customers build more.”
Third Quarter Financial Highlights
Three Months Ended September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
(Unaudited; $ in millions)
Net sales
$
2,772.6
$
2,584.3
$
7,359.6
$
6,820.3
Gross profit
$
730.4
$
672.6
$
1,887.3
$
1,750.7
Gross margin %
26.3
%
26.0
%
25.6
%
25.7
%
Operating expense
$
483.7
$
418.8
$
1,379.7
$
1,202.0
% of net sales
17.4
%
16.2
%
18.7
%
17.6
%
Adjusted Operating Expense1
$
442.9
$
395.2
$
1,287.3
$
1,129.6
% of net sales1
16.0
%
15.3
%
17.5
%
16.6
%
Net income (loss)
$
145.3
$
161.3
$
278.1
$
339.9
% of net sales
5.2
%
6.3
%
3.8
%
4.9
%
Adjusted Net Income (Loss)1
$
176.9
$
180.0
$
351.9
$
396.7
% of net sales1
6.4
%
7.0
%
4.8
%
5.8
%
Adjusted EBITDA1
$
325.2
$
309.6
$
707.7
$
712.9
% of net sales1
11.7
%
12.0
%
9.6
%
10.5
%
________________ 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.
Third Quarter
Net sales increased to $2.77 billion, 7.3% (5.6% on a per-day
basis) growth compared to the prior year, and a Company record for
quarterly net sales. Weighted-average selling price increased
approximately 1-2% and estimated organic volumes (including
greenfields) increased approximately 0-1% (decreased 1-2% on a
per-day basis). Additionally, acquired branches contributed
approximately 5.6% to the increase in third quarter net sales.
Residential roofing product sales increased 2.3% (0.7% on a
per-day basis), non-residential roofing product sales increased
9.4% (7.7% on a per-day basis), and complementary product sales
increased 17.2% (15.4% on a per-day basis) 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 solid market execution. The
increase in complementary product sales was largely due to three
waterproofing acquisitions totaling 20 branches since September 30,
2023. The three-month periods ended September 30, 2024 and 2023 had
64 and 63 business days, respectively.
Gross margin increased to 26.3%, from 26.0% 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 and warehouse operating costs.
At the end of the third quarter, in response to market conditions,
we reduced headcount. The increase in payroll and employee benefit
costs was due to a higher average number of employees in 2024
coupled with one-time severance payments and employee benefit costs
for employees impacted by our operating cost reduction initiative.
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
2024, primarily driven by the same factors.
Net income (loss) was $145.3 million, compared to $161.3 million
in the prior year. Adjusted EBITDA was $325.2 million, compared to
$309.6 million in the prior year. Net income (loss) per common
share (“EPS”) on a diluted basis was $2.30, compared to $(4.16) in
the prior year. The negative diluted EPS in the prior year was
attributable to the $414.6 million preferred stock repurchase
premium (the “Repurchase Premium”), which is included as a
component of net income (loss) attributable to common stockholders
in calculating EPS.
Year-to-Date
Net sales increased to $7.36 billion, 7.9% (7.3% on a per-day
basis) growth compared to the prior year, and a Company record for
net sales for the first nine months. Estimated organic volumes
(including greenfields) increased approximately 2-3% (1-2% on a
per-day basis) and weighted-average selling price increased
approximately 1-2%. Additionally, acquired branches contributed
approximately 4.4% to the increase in net sales.
Residential roofing product sales increased 4.0% (3.4% on
per-day basis), non-residential roofing product sales increased
12.1% (11.5% on a per-day basis), and complementary product sales
increased 12.2% (11.6% on per-day basis) 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
the impact of customer destocking in the prior year period and, to
a lesser extent, solid market execution driving above market
growth. The increase in complementary product sales was largely due
to three waterproofing acquisitions totaling 20 branches since
September 30, 2023. The nine-month periods ending September 30,
2024 and 2023 had 192 and 191 business days, respectively.
Gross margin decreased to 25.6%, from 25.7% 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 higher average headcount during
the year and, to a lesser extent, one-time severance payments and
employee benefit costs for employees impacted by our operating cost
reduction initiative. 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. Both operating expense as a percent of sales and Adjusted
Operating Expense as a percent of sales were higher in 2024,
primarily driven by the same factors.
Net income (loss) was $278.1 million, compared to $339.9 million
in the prior year. Adjusted EBITDA was $707.7 million, compared to
$712.9 million in the prior year. Diluted EPS was $4.35, compared
to $(1.93) in the prior year. The negative diluted EPS in the prior
year was attributable to the $414.6 million Repurchase Premium.
Results in the first nine months compared to the prior year period
were largely driven by the modest decrease in gross margin and
higher operating expense discussed above.
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 September 30, 2024, from 63.6 million as of
March 31, 2024. Common stock outstanding at September 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 September 30, 2024, would have resulted in the repurchase of
approximately 0.6 million additional shares. The $45.0 million
equity forward contract is expected to settle in the fourth quarter
of 2024.
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 tomorrow at
8:30 a.m. ET to discuss these results. Details for the earnings
release event are as follows:
What:
Beacon Third Quarter 2024 Earnings
Call
When:
Thursday, October 31, 2024
Time:
8:30 a.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 8:30 a.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 affect 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 580 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.
BEACON ROOFING SUPPLY,
INC.
Consolidated Statements of
Operations
(Unaudited; in millions, except
per share amounts)
Three Months Ended September
30,
Nine Months Ended September
30,
2024
% of
Net
Sales
2023
% of
Net
Sales
2024
% of
Net
Sales
2023
% of
Net
Sales
Net sales
$
2,772.6
100.0
%
$
2,584.3
100.0
%
$
7,359.6
100.0
%
$
6,820.3
100.0
%
Cost of products sold
2,042.2
73.7
%
1,911.7
74.0
%
5,472.3
74.4
%
5,069.6
74.3
%
Gross profit
730.4
26.3
%
672.6
26.0
%
1,887.3
25.6
%
1,750.7
25.7
%
Operating expense:
Selling, general and administrative
430.2
15.5
%
374.3
14.5
%
1,230.2
16.7
%
1,071.3
15.7
%
Depreciation
28.8
1.0
%
23.1
0.9
%
80.8
1.1
%
65.6
1.0
%
Amortization
24.7
0.9
%
21.4
0.8
%
68.7
0.9
%
65.1
0.9
%
Total operating expense
483.7
17.4
%
418.8
16.2
%
1,379.7
18.7
%
1,202.0
17.6
%
Income (loss) from operations
246.7
8.9
%
253.8
9.8
%
507.6
6.9
%
548.7
8.1
%
Interest expense, financing costs and
other, net
48.7
1.8
%
35.2
1.3
%
132.7
1.8
%
89.0
1.4
%
Loss on debt extinguishment
—
—
%
—
—
%
2.4
0.0
%
—
—
%
Income (loss) before provision for income
taxes
198.0
7.1
%
218.6
8.5
%
372.5
5.1
%
459.7
6.7
%
Provision for (benefit from) income
taxes
52.7
1.9
%
57.3
2.2
%
94.4
1.3
%
119.8
1.8
%
Net income (loss)
$
145.3
5.2
%
$
161.3
6.3
%
$
278.1
3.8
%
$
339.9
4.9
%
Reconciliation of net income (loss) to net
income (loss) attributable to common stockholders:
Net income (loss)
$
145.3
5.2
%
$
161.3
6.2
%
$
278.1
3.8
%
$
339.9
5.0
%
Dividends on Preferred Stock
—
—
%
(1.9
)
(0.1
)%
—
—
%
(13.9
)
(0.2
)%
Undistributed income allocated to
participating securities
—
—
%
(7.6
)
(0.3
)%
—
—
%
(34.3
)
(0.5
)%
Repurchase Premium
—
—
%
(414.6
)
(16.0
)%
—
—
%
(414.6
)
(6.1
)%
Net income (loss) attributable to common
stockholders
$
145.3
5.2
%
$
(262.8
)
(10.2
)%
$
278.1
3.8
%
$
(122.9
)
(1.8
)%
Weighted-average common shares
outstanding:
Basic
62.0
63.2
62.8
63.7
Diluted
63.1
63.2
63.9
63.7
Net income (loss) per common share:
Basic
$
2.34
$
(4.16
)
$
4.43
$
(1.93
)
Diluted
$
2.30
$
(4.16
)
$
4.35
$
(1.93
)
BEACON ROOFING SUPPLY,
INC.
Consolidated Balance
Sheets
(Unaudited; in millions)
September 30,
December 31,
September 30,
2024
2023
2023
Assets
Current assets:
Cash and cash equivalents
$
68.0
$
84.0
$
69.7
Accounts receivable, net
1,596.7
1,140.2
1,415.7
Inventories, net
1,494.2
1,227.9
1,307.9
Prepaid expenses and other current
assets
541.4
444.6
518.9
Total current assets
3,700.3
2,896.7
3,312.2
Property and equipment, net
497.3
436.4
396.3
Goodwill
2,087.9
1,952.6
1,933.6
Intangibles, net
504.3
403.5
410.5
Operating lease right-of-use assets,
net
610.7
503.6
483.0
Deferred income taxes, net
2.1
2.1
4.9
Other assets, net
16.9
12.8
12.5
Total assets
$
7,419.5
$
6,207.7
$
6,553.0
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
1,202.7
$
942.8
$
1,179.9
Accrued expenses
588.3
498.6
601.3
Current portion of operating lease
liabilities
98.4
89.7
99.2
Current portion of finance lease
liabilities
33.3
26.2
21.9
Current portion of long-term debt
12.8
10.0
10.0
Total current liabilities
1,935.5
1,567.3
1,912.3
Borrowings under revolving lines of
credit, net
437.9
80.0
218.3
Long-term debt, net
2,483.3
2,192.3
2,193.9
Deferred income taxes, net
22.3
20.1
0.3
Other long-term liabilities
1.8
0.5
0.3
Operating lease liabilities
527.8
423.7
395.9
Finance lease liabilities
113.3
100.3
82.3
Total liabilities
5,521.9
4,384.2
4,803.3
Convertible Preferred Stock
—
—
—
Stockholders' equity:
Common stock
0.6
0.6
0.6
Undesignated preferred stock
—
—
—
Additional paid-in capital
1,204.5
1,218.4
1,220.3
Retained earnings
715.9
618.8
534.7
Accumulated other comprehensive income
(loss)
(23.4
)
(14.3
)
(5.9
)
Total stockholders' equity
1,897.6
1,823.5
1,749.7
Total liabilities and stockholders'
equity
$
7,419.5
$
6,207.7
$
6,553.0
BEACON ROOFING SUPPLY,
INC.
Consolidated Statements of
Cash Flows
(Unaudited; in millions)
Nine Months Ended September
30,
2024
2023
Operating Activities
Net income (loss)
$
278.1
$
339.9
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
149.5
130.7
Stock-based compensation
23.3
22.2
Certain interest expense and other
financing costs
1.8
1.7
Loss on debt extinguishment
2.4
—
Gain on sale of fixed assets and other
(5.2
)
(13.7
)
Deferred income taxes
4.5
1.6
Changes in operating assets and
liabilities:
Accounts receivable
(384.3
)
(394.4
)
Inventories
(200.1
)
37.7
Prepaid expenses and other current
assets
(101.9
)
(89.4
)
Accounts payable and accrued expenses
288.3
491.2
Other assets and liabilities
3.2
(1.8
)
Net cash provided by (used in) operating
activities
59.6
525.7
Investing Activities
Capital expenditures
(87.6
)
(85.5
)
Acquisition of business, net
(399.1
)
(73.7
)
Proceeds from sale of assets
5.6
15.3
Purchases of investments
(1.1
)
(1.0
)
Net cash provided by (used in) investing
activities
(482.2
)
(144.9
)
Financing Activities
Borrowings under revolving lines of
credit
2,330.8
1,720.0
Payments under revolving lines of
credit
(1,974.3
)
(1,757.9
)
Borrowings under term loan
300.0
—
Payments under term loan
(9.6
)
(7.5
)
Borrowings under senior notes
—
600.0
Payment of debt issuance costs
(0.2
)
(6.6
)
Payments under equipment financing
facilities and finance leases
(21.7
)
(14.3
)
Repurchase of convertible Preferred
Stock
—
(805.6
)
Payment of fees for the repurchase of
convertible Preferred Stock
(0.1
)
—
Repurchase and retirement of common stock,
net
(180.0
)
(100.5
)
Advance payment for equity forward
contract
(45.0
)
—
Proceeds from disgorgement of short-swing
profits1
—
5.9
Proceeds from employee stock purchase
plan
8.3
—
Payment of dividends on Preferred
Stock
—
(18.9
)
Proceeds from issuance of common stock
related to equity awards
6.6
9.7
Payment of taxes related to net share
settlement of equity awards
(7.1
)
(3.1
)
Net cash provided by (used in) financing
activities
407.7
(378.8
)
Effect of exchange rate changes on cash
and cash equivalents
(1.1
)
—
Net increase (decrease) in cash and cash
equivalents
(16.0
)
2.0
Cash and cash equivalents, beginning of
period
84.0
67.7
Cash and cash equivalents, end of
period
$
68.0
$
69.7
Supplemental Cash Flow
Information
Cash paid during the period for:
Interest
$
133.1
$
73.1
Income taxes, net of refunds
$
62.5
$
76.2
________________ 1.
During the nine months ended September 30,
2023, the Company received payments of $5.9 million from a
shareholder related to short-swing trading profits disgorged
pursuant to Section 16(b) of the Securities Exchange Act of 1934.
The payments were recorded to additional paid-in capital on the
condensed consolidated balance sheets.
BEACON ROOFING SUPPLY,
INC.
Consolidated Sales by Line of
Business
(Unaudited; in millions)
Sales by Line of
Business
Three Months Ended September
30,
Year-over-Year
Change
2024
2023
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
1,404.9
50.7
%
$
1,372.8
53.1
%
$
32.1
2.3
%
Non-residential roofing products
739.0
26.7
%
675.2
26.1
%
63.8
9.4
%
Complementary building products
628.7
22.6
%
536.3
20.8
%
92.4
17.2
%
$
2,772.6
100.0
%
$
2,584.3
100.0
%
$
188.3
7.3
%
Sales by Business
Day1,2
Three Months Ended September
30,
Year-over-Year
Change
2024
2023
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
22.0
50.7
%
$
21.8
53.1
%
$
0.2
0.7
%
Non-residential roofing products
11.5
26.7
%
10.7
26.1
%
0.8
7.7
%
Complementary building products
9.8
22.6
%
8.5
20.8
%
1.3
15.4
%
$
43.3
100.0
%
$
41.0
100.0
%
$
2.3
5.6
%
________________ 1.
The three-month periods ended September
30, 2024 and 2023 had 64 and 63 business days, respectively.
2.
Dollar and percentage changes may not
recalculate due to rounding.
Sales by Line of
Business
Nine Months Ended September
30,
Year-over-Year
Change
2024
2023
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
3,661.2
49.7
%
$
3,521.5
51.6
%
$
139.7
4.0
%
Non-residential roofing products
2,012.7
27.4
%
1,796.2
26.4
%
216.5
12.1
%
Complementary building products
1,685.7
22.9
%
1,502.6
22.0
%
183.1
12.2
%
$
7,359.6
100.0
%
$
6,820.3
100.0
%
$
539.3
7.9
%
Sales by Business
Day1,2
Nine Months Ended September
30,
Year-over-Year
Change
2024
2023
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
19.1
49.7
%
$
18.4
51.6
%
$
0.7
3.4
%
Non-residential roofing products
10.5
27.4
%
9.4
26.4
%
1.1
11.5
%
Complementary building products
8.8
22.9
%
7.9
22.0
%
0.9
11.6
%
$
38.4
100.0
%
$
35.7
100.0
%
$
2.7
7.3
%
________________ 1.
The nine-month periods ended September 30,
2024 and 2023 had 192 and 191 business days, respectively.
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 September 30,
2024
Acquisition costs
$
4.0
$
24.7
$
1.0
$
—
$
29.7
Restructuring costs
12.1
—
0.5
—
12.6
Total adjusting items
$
16.1
$
24.7
$
1.5
$
—
$
42.3
Three Months Ended September 30,
2023
Acquisition costs
$
2.2
$
21.4
$
1.0
$
—
$
24.6
Restructuring costs
—
—
0.5
—
0.5
Total adjusting items
$
2.2
$
21.4
$
1.5
$
—
$
25.1
Nine Months Ended September 30,
2024
Acquisition costs
$
10.8
$
68.7
$
2.9
$
—
$
82.4
Restructuring costs1
12.9
—
1.6
2.4
16.9
Total adjusting items
$
23.7
$
68.7
$
4.5
$
2.4
$
99.3
Nine Months Ended September 30,
2023
Acquisition costs
$
5.3
$
65.1
$
3.0
$
—
$
73.4
Restructuring costs
2.0
—
1.0
—
3.0
Total adjusting items
$
7.3
$
65.1
$
4.0
$
—
$
76.4
________________ 1.
Other (income) expense for the nine months
ended September 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
September 30,
Nine Months Ended
September 30,
2024
2023
2024
2023
Operating expense
$
483.7
$
418.8
$
1,379.7
$
1,202.0
Acquisition costs
(28.7
)
(23.6
)
(79.5
)
(70.4
)
Restructuring costs
(12.1
)
—
(12.9
)
(2.0
)
Adjusted Operating Expense
$
442.9
$
395.2
$
1,287.3
$
1,129.6
Net sales
$
2,772.6
$
2,584.3
$
7,359.6
$
6,820.3
Operating expense as % of net sales
17.4
%
16.2
%
18.7
%
17.6
%
Adjusted Operating Expense as % of net
sales
16.0
%
15.3
%
17.5
%
16.6
%
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 September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net income (loss)
$
145.3
$
161.3
$
278.1
$
339.9
Adjusting items:
Acquisition costs
29.7
24.6
82.4
73.4
Restructuring costs
12.6
0.5
16.9
3.0
Total adjusting items
42.3
25.1
99.3
76.4
Less: tax impact of adjusting items1
(10.7
)
(6.4
)
(25.5
)
(19.6
)
Total adjustments, net of tax
31.6
18.7
73.8
56.8
Adjusted Net Income (Loss)
$
176.9
$
180.0
$
351.9
$
396.7
Net sales
$
2,772.6
$
2,584.3
$
7,359.6
$
6,820.3
Net income (loss) as % net of sales
5.2
%
6.3
%
3.8
%
4.9
%
Adjusted Net Income (Loss) as % net of
sales
6.4
%
7.0
%
4.8
%
5.8
%
________________ 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 September 30, 2024 and 2023 were
calculated using a blended effective tax rate of 25.3% and 25.5%,
respectively. The tax impact of adjustments for the nine months
ended September 30, 2024 and 2023 were calculated using a blended
effective tax rate of 25.7% for each period.
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 September
30,
Nine Months Ended September
30,
2024
2023
2024
2023
Net income (loss)
$
145.3
$
161.3
$
278.1
$
339.9
Interest expense, net
50.0
36.4
136.3
93.0
Income taxes
52.7
57.3
94.4
119.8
Depreciation and amortization
53.5
44.5
149.5
130.7
Stock-based compensation
7.6
7.9
23.3
22.2
Acquisition costs1
4.0
2.2
10.8
5.3
Restructuring costs1
12.1
—
15.3
2.0
Adjusted EBITDA
$
325.2
$
309.6
$
707.7
$
712.9
Net sales
$
2,772.6
$
2,584.3
$
7,359.6
$
6,820.3
Net income (loss) as % of net sales
5.2
%
6.3
%
3.8
%
4.9
%
Adjusted EBITDA as % of net sales
11.7
%
12.0
%
9.6
%
10.5
%
________________ 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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241030804635/en/
INVESTOR CONTACT Binit Sanghvi VP,
Capital Markets and Treasurer Binit.Sanghvi@becn.com
972-369-8005
MEDIA CONTACT Jennifer Lewis VP,
Communications and Corporate Social Responsibility
Jennifer.Lewis@becn.com 571-752-1048
Beacon Roofing Supply (NASDAQ:BECN)
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