Beacon Reports First Quarter 2024 Results

Record first quarter net sales driven by growth across all three lines of business

Disciplined execution led to better-than-expected gross margin

Footprint expansion from acquired and newly opened branches enhancing customer reach and service

Added to our rapidly growing specialty waterproofing distribution platform with recent acquisition of Smalley & Co.

Continued execution on Ambition 2025 including strong growth in digital, expanded private label product offering, pricing model roll-out and customer experience initiative

Beacon (the “Company”, “we”, “our”) announced results for the first quarter ended March 31, 2024.

“Our record first quarter sales demonstrates the resilience of our business model. We generated organic growth across all three lines of business while delivering better than expected margins,” said Julian Francis, Beacon’s President & CEO. “Our Ambition 2025 initiatives, including our investments in both organic and inorganic growth contributed to the top and bottom line. In April, we took an important step in pursuit of our goal to become the premier specialty waterproofing platform with the acquisition of Smalley & Company, an industry leader in both new construction and restoration markets. Since the end of the fourth quarter, we enhanced our customer reach by acquiring an additional 23 branches and opening 5 greenfield locations. As we enter a key part of the construction season, we stand ready with the products and team members to deliver the high caliber service our customers expect. Looking forward, we expect the fundamentals of our end markets to remain supportive, underpinned by non-discretionary repair and reroofing demand. Our focus will remain on the areas within our control, including enhancing our customer experience, pricing, and efficiency. I am pleased with our team’s achievements in the first quarter of the year and look forward to helping our customers build more.”

First Quarter

Net sales increased 10.4% compared to the prior year to $1.91 billion, a Company record for first quarter net sales. The increase in net sales was driven by organic volume growth including greenfields. Estimated organic volumes (including greenfields) and weighted-average selling price increased approximately 6-7% and 0-1%, respectively. Additionally, acquired branches contributed more than 3% to the increase in first quarter net sales.

Residential roofing product sales increased 9.1%, non-residential roofing product sales increased 17.6%, and complementary product sales increased 5.4% compared to the prior year. The increases in residential and non-residential roofing product sales were primarily due to higher volumes driven by strong underlying market demand. The increase in complementary product sales was largely due to growth in waterproofing volumes as well as the acquisition of additional waterproofing companies since March 31, 2023, partially offset by a modest decline in siding sales as a result of lower volumes. The three-month periods ended March 31, 2024 and 2023 each had 64 business days.

Gross margin decreased to 24.7%, from 25.5% in the prior year, as modestly higher product costs and a higher non-residential product mix 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 selling, general, and administrative (“SG&A”) expense. The increase in organic SG&A expense was primarily from payroll and employee benefit costs due to an increase in headcount to drive growth coupled with wage inflation. Both operating expense as a percent of sales and Adjusted Operating Expense as a percent of sales were higher in the first quarter of 2024, driven by the same factors.

Net income (loss) was $5.6 million, compared to $24.8 million in the prior year. Adjusted EBITDA was $103.1 million, compared to $113.0 million in the prior year. Net income (loss) per common share (“EPS”) on a diluted basis was $0.09, compared to $0.25 in the prior year.

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 (inclusive of partial month activity), 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.

For full first quarter results click here.

About Beacon

Founded in 1928, Beacon is a Fortune 500, publicly traded distributor of building products, including roofing materials and complementary products, such as siding and waterproofing. The company operates over 530 branches throughout all 50 states in the U.S. and 6 provinces in Canada. Beacon serves an extensive base of nearly 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:

Binit Sanghvi – VP, Capital Markets and Treasurer – Binit.Sanghvi@becn.com – (972) 369-8005

Source: Beacon Roofing Supply, Inc.