| --- | --- | --- | --- | --- | |-------------------------------------|-------|-------|-------|-------| | | | | | | | 2024 Q2 2024 EARNINGS PRESENTATION | | | | | | AUGUST 1, 2024 | | | | | 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 ...

Financial Data and Key Metrics Changes - Total net sales reached nearly $2.7 billion in Q2 2024, up nearly 70% year-over-year, primarily driven by acquisitions and higher average selling prices [18] - Gross margin was 25.6%, up approximately 20 basis points year-over-year, but below expectations due to lower-than-expected inventory profits from a price increase [21][6] - Adjusted operating expenses increased to $441 million, up $63 million year-over-year, driven by additional headcount and expenses from acquired and greenfield branches [22] Business Line Data and Key Metrics Changes - Residential roofing sales increased by more than 2%, although lower shipments were noted in regions with high storm demand last year [19] - Non-residential sales grew by over 11%, supported by strong repair and reroofing activity, despite a low single-digit decline in prices year-over-year [20] - Complementary sales rose by more than 12% year-over-year, driven by acquisitions that enhanced specialty waterproofing product sales [20] Market Data and Key Metrics Changes - The residential roofing market is expected to be down year-on-year due to a decline in storm-related demand, while commercial roofing is anticipated to see a contraction in installation activity [5] - The Architectural Billing Index remains below 50, indicating contraction in commercial activity, but repair and reroofing activities are expected to improve [27] Company Strategy and Development Direction - The company is focused on its Ambition 2025 plan, which aims for above-market growth, consistent double-digit adjusted EBITDA margins, and superior shareholder returns [8] - Investments are being made in digital platforms, private label offerings, and pricing models to enhance operational efficiency and customer service [8][9] - The company has acquired 21 branches and opened 13 new locations year-to-date, exceeding its original goal of 40 branches by 2025 [11] Management's Comments on Operating Environment and Future Outlook - Management expects total sales per day growth in Q3 2024 to be in the high single-digit range year-over-year, with gross margin anticipated to be in the high 25% range [27] - The company remains optimistic about the demand environment, citing the aging housing stock and buildings as key drivers for reroofing demand [75] - Adjustments will be made to staffing and inventory levels in response to local market conditions to maintain high service levels [8][80] Other Important Information - The company has entered into a $225 million accelerated share repurchase program, demonstrating its commitment to delivering value to shareholders [16] - Operating cash flow was negative $48 million in Q2, typical for the first half of the year due to seasonal working capital needs [24] Q&A Session Summary Question: What drove the higher SG&A in Q2? - Management noted that staffing levels were increased to meet high demand, but variability in daily sales due to weather impacted efficiency [31][32] Question: How should we think about bottom quintile contributions to gross margin? - Management acknowledged that while improvements have been made, it is becoming incrementally harder to drive further enhancements [36][37] Question: What are the drivers for expected sales acceleration in Q3? - Management expects demand to continue into Q3, with a recent price increase expected to positively impact top-line results [41][42] Question: Can you clarify the impact of weather on roofing days lost in Q2? - Management indicated that approximately one-third of the weeks in Q2 were affected by weather, primarily impacting residential roofing [46] Question: What is the outlook for inventory profits? - Management expressed that the realization of price increases was slower than expected, impacting inventory profits [49][50] Question: How is free cash flow expected to be distributed in the second half? - Management anticipates stronger cash flow generation in the second half, with a heavier weighting towards Q4 [56][59]

Core Insights - Beacon Roofing Supply reported $2.67 billion in revenue for the quarter ended June 2024, a year-over-year increase of 6.8% [1] - The EPS for the same period was $2.32, down from $2.66 a year ago, with an EPS surprise of -17.73% compared to the consensus estimate of $2.82 [1] Revenue Performance - Revenue growth rate for residential roofing products was 2.4%, significantly below the three-analyst average estimate of 8.9% [3] - Revenue growth rate for complementary building products was 12.3%, exceeding the three-analyst average estimate of 7.5% [3][6] - Revenue growth rate for non-residential roofing products was 11.1%, outperforming the average estimate of 1.7% [4] Net Sales Analysis - Net sales for residential roofing products were $1.33 billion, below the average estimate of $1.40 billion, reflecting a 2.4% year-over-year change [5] - Net sales for complementary building products reached $600.60 million, surpassing the average estimate of $591.90 million, with a year-over-year increase of 12.3% [6] - Net sales for non-residential roofing products were $745.10 million, exceeding the average estimate of $704.26 million, representing an 11.1% year-over-year change [7] Stock Performance - Shares of Beacon Roofing have returned +16.6% over the past month, compared to the Zacks S&P 500 composite's +1.1% change [7]

Core Viewpoint - Beacon Roofing Supply reported quarterly earnings of $2.32 per share, missing the Zacks Consensus Estimate of $2.82 per share, representing an earnings surprise of -17.73% [1] - The company posted revenues of $2.67 billion for the quarter, which also fell short of the Zacks Consensus Estimate by 0.62% [2] Financial Performance - Year-over-year earnings decreased from $2.66 per share to $2.32 per share [1] - Revenues increased from $2.5 billion a year ago to $2.67 billion [2] - Over the last four quarters, the company has surpassed consensus EPS estimates three times and topped revenue estimates two times [2] Stock Performance - Beacon Roofing shares have gained approximately 18.1% since the beginning of the year, outperforming the S&P 500's gain of 15.8% [3] - The current Zacks Rank for the stock is 3 (Hold), indicating expected performance in line with the market in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $2.87 on revenues of $2.7 billion, and for the current fiscal year, it is $7.79 on revenues of $9.64 billion [7] - The estimate revisions trend for Beacon Roofing is mixed, which may change following the recent earnings report [6] Industry Context - The Building Products - Retail industry is currently in the top 40% of over 250 Zacks industries, suggesting a favorable outlook compared to the bottom 50% [8] - GMS, another company in the same industry, is expected to report quarterly earnings of $2.07 per share, reflecting a year-over-year change of -13.8% [9]

Financial Performance - Record quarterly net sales reached $2.67 billion, a 6.8% increase compared to the prior year, driven by price execution and contributions from acquired and newly opened branches[5] - Net income for the second quarter was $127.2 million, down from $153.8 million in the prior year, with diluted EPS at $1.99 compared to $1.97[5] - Adjusted EBITDA for the second quarter was $279.4 million, compared to $290.3 million in the prior year, reflecting a decrease in margin[5] - Year-to-date net sales increased to $4.59 billion, an 8.3% growth compared to the prior year, marking a record for the first half of the year[6] - Net income for the six months ended June 30, 2024, was $132.8 million, a decrease of 25.7% from $178.6 million in the same period of 2023[19] - Total net sales for the six months ended June 30, 2024, reached $4,587.0 million, reflecting an increase of 8.3% compared to $4,236.0 million in the prior year[23] Gross Margin and Operating Expenses - Gross margin improved to 25.6%, up from 25.4% in the prior year, as higher average selling prices offset increased product costs[5] - Operating expenses increased to $467.9 million, representing 17.5% of net sales, up from 16.1% in the prior year[5] - Operating expenses increased to $467.9 million, representing 17.5% of net sales, up from 16.1% in Q2 2023[15] - Adjusted Operating Expense for the three months ended June 30, 2024, was $440.9 million, up from $377.6 million in the same period of 2023, representing a 16.7% increase[33] - Adjusted Operating Expense as a percentage of net sales for the six months ended June 30, 2024, was 18.4%, compared to 17.3% in the same period of 2023[33] Sales Performance - Residential roofing product sales increased by 5.0%, while non-residential roofing product sales rose by 13.6% compared to the prior year[6] - Net sales for Q2 2024 reached $2,674.6 million, a 10.4% increase from $2,426.0 million in Q2 2023[15] - Gross profit margin improved to 25.6% in Q2 2024 compared to 25.4% in Q2 2023, with gross profit of $683.7 million[15] - Residential roofing products accounted for 49.2% of total net sales in the six months ended June 30, 2024, generating $2,256.3 million, up 5.0% from $2,148.1 million in 2023[23] - Non-residential roofing products saw a significant increase of 13.6%, with sales of $1,273.7 million compared to $1,120.8 million in the previous year[23] Assets and Liabilities - Total assets as of June 30, 2024, were $7,336.9 million, an increase from $6,500.3 million as of June 30, 2023[17] - Accounts receivable increased to $1,570.8 million from $1,361.7 million year-over-year[17] - Long-term debt rose to $2,485.4 million, up from $1,603.2 million in the previous year[17] - Total liabilities increased to $5,583.3 million compared to $4,078.4 million a year ago[17] Cash Flow and Capital Expenditures - Cash provided by operating activities was negative at $(189.2) million for the six months ended June 30, 2024, compared to $358.7 million in the same period of 2023[19] - The company reported capital expenditures of $(61.5) million for the six months ended June 30, 2024, slightly higher than $(60.3) million in the prior year[19] - Borrowings under revolving lines of credit increased significantly to $1,715.2 million in the six months ended June 30, 2024, compared to $840.7 million in the same period of 2023[19] - The company’s cash and cash equivalents at the end of the period were $76.6 million, up from $65.8 million at the end of June 30, 2023[19] Acquisitions and Strategic Plans - The company acquired Smalley & Co., a leading waterproofing distributor, expanding its footprint in key markets[1] - The company plans to adjust inventory and resources proactively in response to local market conditions while maintaining high customer service standards[3] - The company plans to continue using non-GAAP measures to provide investors with a clearer view of its financial performance and operational goals[27] Adjusted Financial Metrics - Adjusted Net Income for the three months ended June 30, 2024, was $148.4 million, compared to $172.9 million in the same period of 2023, indicating a decrease of 14.2%[34] - Adjusted EBITDA is defined as net income (loss) excluding interest expense, income taxes, depreciation and amortization, stock-based compensation, and other adjusting items[26] - For the three months ended June 30, 2024, total adjusting items amounted to $28.5 million, compared to $25.6 million for the same period in 2023, reflecting an increase of 11.3%[31] - Adjusted EBITDA for the three months ended June 30, 2024, was $279.4 million, down from $290.3 million in the same period of 2023, a decline of 3.1%[36]

Core Viewpoint - The market anticipates Beacon Roofing Supply (BECN) to report a year-over-year increase in earnings driven by higher revenues when it releases its quarterly results for the period ending June 2024 [1] Earnings Expectations - The earnings report is expected on August 1, 2024, with a consensus EPS estimate of $2.82, reflecting a 6% increase year-over-year [3][4] - Revenues are projected to reach $2.69 billion, representing a 7.5% increase from the same quarter last year [4] Estimate Revisions - The consensus EPS estimate has been revised 0.1% higher in the last 30 days, indicating a slight bullish sentiment among analysts [5] - The Most Accurate Estimate for Beacon Roofing is higher than the Zacks Consensus Estimate, resulting in an Earnings ESP of +1.97%, suggesting analysts are optimistic about the company's earnings prospects [11] Historical Performance - In the last reported quarter, Beacon Roofing exceeded the expected earnings of $0.35 per share by delivering $0.41, achieving a surprise of +17.14% [14] - The company has beaten consensus EPS estimates in all of the last four quarters [15] Predictive Indicators - A positive Earnings ESP is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1 (Strong Buy), 2 (Buy), or 3 (Hold) [9] - Currently, Beacon Roofing holds a Zacks Rank of 3, indicating a likelihood of beating the consensus EPS estimate [12][13]

Core Insights - Beacon Roofing Supply, Inc. has acquired Roofers Mart, enhancing its commercial roofing product offerings and expanding its market reach in the Los Angeles area [1][9][10] - The acquisition aligns with Beacon's Ambition 2025 plan, which focuses on growth through bolt-on acquisitions and new branch locations [2][10][11] - Year-to-date, Beacon has made seven acquisitions, contributing to its geographic footprint expansion and progress towards its Ambition 2025 targets [2] Financial Performance - Beacon's shares have increased by 8.7% year-to-date, outperforming the Zacks Building Products - Retail industry's decline of 1.5% [3] - The company's focus on both organic and inorganic growth initiatives is driving its positive stock performance [3] Strategic Initiatives - Beacon is committed to enhancing customer experience, expanding revenue and margins, and increasing value for stakeholders through its strategic initiatives [11] - The acquisition of Roofers Mart is expected to create synergies that will support Beacon's business expansion efforts [10]

Company Overview - Beacon Roofing Supply, Inc. (BECN) has acquired Extreme Metal Fabricators, LLC and Integrity Metals, LLC to enhance its service offerings for metal roofing contractors in Florida [10][11] - The acquisition will expand BECN's product offerings, including metal roofing solutions, waterproofing, and restoration products, catering to the needs of Florida's contractors [1][2] Strategic Initiatives - BECN is focused on expanding its residential and commercial roofing product catalog through strategic acquisitions and new branch openings [3][12] - Since the launch of the Ambition 2025 strategic plan in February 2022, BECN has acquired 18 companies, adding 66 branches to its portfolio [4] Market Performance - BECN's shares have increased by 4.2% over the past year, compared to a 6.8% rise in the Building Products - Retail industry [5] - The company is expected to benefit from effective pricing strategies, productivity improvements, and cost-saving initiatives [5] Future Growth Plans - BECN plans to open 25 new branches in 2024, further expanding its service footprint to support residential and commercial roofers [12]

In a bid to continue providing services to residential and commercial roofers, Beacon Roofing Supply, Inc. (BECN) opened a new location in Terrell, TX. Also, it has opened new locations in Everett and Spokane, WA, to support specialty waterproofing contractors. Shares of Beacon — the largest distributor of residential and non-residential roofing materials in the United States and Canada — rallied 17.5% against the Building Products - Retail industry's 3.1% decline so far this year. Beacon has undertaken sev ...

This roofing materials distributor is expected to post quarterly earnings of $2.83 per share in its upcoming report, which represents a year-over-year change of +6.4%. Revenues are expected to be $2.69 billion, up 7.5% from the year-ago quarter. The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research ...