Beacon Reports First Quarter 2021 Results

Beacon (the “Company”) announced results for its first quarter ended December 31, 2020 (“2021”).

First Quarter Financial Highlights

– Robust demand combined with strong operational execution drove significant year-over-year improvement in Q1 net income and Adjusted EBITDA

– Double-digit first quarter net sales growth driven by residential strength, while operating cost improvements reflect productivity gains and focus on delivering operating cost leverage

– Increasing confidence in 2021 demand, pricing execution and operating expense leverage

– Transformational divestiture of Interior Products business will sharpen focus on growth in core exteriors business, strengthen balance sheet and enhance financial flexibility

“First quarter results represent an impressive example of the underlying potential of our company,” said Julian Francis, Beacon’s President and Chief Executive Officer. “Leveraging a robust residential demand environment, we produced the strongest quarterly organic sales growth in nearly five years, and our focus on sales effectiveness, pricing execution, productivity initiatives and expense management drove Adjusted EBITDA margins to the highest Q1 level in over a decade. Seven weeks ago, we announced the divestiture of our Interior Products business, which remains on schedule to close later this month. The transaction will strengthen our balance sheet, enhance financial flexibility and sharpen our focus on the core exteriors business. Driven by its high concentration of non-discretionary repair and remodel demand, exteriors offers a unique platform for us to build around in the future. We remain firmly committed to our four key strategic initiatives – organic growth, digital, OTC and branch operating performance – which have boosted company sales growth and helped improve operating profitability. Our strong first quarter operating improvement is a testament to the hard work and dedication of our valued employees and the loyalty of our customers. We look forward to a strong 2021, and will continue to follow a disciplined approach towards realizing the full potential of our company.”

First Quarter (Continuing Operations)

Net sales increased 11.4% compared to the prior year. The first quarter sales increase reflects strong residential roofing and complementary products growth as well as the benefit of recent price increases, partially offset by softer demand from non-residential categories. Residential roofing product sales increased 21.2%, non-residential roofing product sales decreased 3.3%, and complementary product sales increased 8.8% compared to the prior year. The first quarter of fiscal years 2021 and 2020 each had 62 business days.

Gross margin improved 140 basis points from 24.0% in the prior year to 25.4%, primarily reflecting pricing execution and price-cost improvement. Operating expense and Adjusted operating expense both decreased compared to the prior year, reflecting the positive impact of productivity initiatives and cost focus amid an increasing demand environment.

Net income (loss) from continuing operations was $47.4 million, compared to $(24.0) million in 2020. Net income (loss) from continuing operations attributable to common shareholders was $41.4 million, compared to $(30.0) million in 2020. Adjusted Net Income (Loss) was $71.0 million, compared to $18.2 million in 2020. EPS was $0.59, compared to $(0.44) in 2020. Comparative improvements in first quarter results were driven by increased net sales, particularly within residential end markets, higher gross margins and reduced operating expenses resulting from successful cost actions. These impacts were partially offset by sales declines within non-residential roofing.

First Quarter (Combined)

In this earnings release, the Company provides “Combined” financial results (continuing operations and discontinued operations) for certain key metrics in order to enhance comparability with the Company’s most recent fiscal year and first quarter results.

The first quarter sales increase of 9.0% compared to the prior year reflects strong residential roofing growth and a positive contribution from residential demand within our complementary products category, partially offset by softer demand from non-residential categories. Residential roofing product sales increased 21.0%, non-residential roofing product sales decreased 4.4%, and complementary product sales increased 3.9% compared to the prior year. The first quarter of fiscal years 2021 and 2020 each had 62 business days.

Gross margin improved 100 basis points from 24.5% in the prior year to 25.5%, primarily reflecting pricing execution and price-cost improvement. Operating expense and Adjusted operating expense both decreased compared to the prior year, reflecting the positive impact of productivity initiatives and cost focus amid an increasing demand environment.

Net income (loss) was $(220.5) million, compared to $(23.4) million in 2020. Net income (loss) attributable to common shareholders was $(226.5) million, compared to $(29.4) million in 2020. Adjusted Net Income (Loss) was $79.8 million, compared to $28.4 million in 2020. EPS was $(3.24), compared to $(0.43) in 2020. The first quarter net loss was driven by a non-cash charge of $355 million ($264 million net of tax) related to the planned sale of Interior Products (see Consolidated Statements of Operations for additional information). Comparative improvements in first quarter results were driven by increased net sales, particularly within residential end markets, higher gross margins and reduced operating expenses resulting from successful cost actions. These impacts were partially offset by sales declines within non-residential end markets.

For the full first quarter results, click here.

About Beacon

Founded in 1928, Beacon is a Fortune 500, publicly traded distributor of roofing materials and complementary building products in North America, operating over 500 branches throughout all 50 states in the U.S. and 6 provinces in Canada. Beacon serves an extensive base of over 100,000 customers, utilizing its vast branch network and diverse service offerings to provide high-quality products and support throughout the entire business 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

Contact:

James Wilson – Vice President Finance & Treasurer – jim.wilson@becn.com – (571) 306-7501

Source: Beacon Roofing Supply, Inc.