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Beacon Reports Second Quarter 2022 Results

August 4, 2022
  • Drove record sales, income and profitability through focused growth- and margin-enhancing initiatives and pricing execution
  • Beginning to expand footprint in key markets and continuing to develop acquisition pipeline, generating momentum toward our Ambition 2025 inorganic growth targets
  • Initiated a second accelerated stock repurchase agreement as part of previously announced share buyback authorization to deliver stockholder returns
  • Invested in fleet as part of our ESG goals to improve safety, emissions, employee retention

Beacon (Nasdaq: BECN) (the “Company”, “we”, “our”) announced results today for the second quarter ended June 30, 2022 ("2022").

“Beacon’s second quarter results are outstanding, with record setting top-line and bottom-line performance,” said Julian Francis, Beacon's President & CEO. “Our team’s commitment to best-in-class service combined with solid end market demand and margin enhancing initiatives delivered the 10th straight quarter of year-over-year increases in Adjusted EBITDA. In a challenging inflationary environment, we achieved the highest profits and margin in our history. We made strategic investments in key markets, expanding both our branch footprint and our delivery capacity towards achieving our Ambition 2025 growth targets. We also initiated an additional accelerated stock repurchase program and expect to complete at least three-quarters of the previously announced $500 million share repurchase authorization in 2022. Our balanced allocation of capital demonstrates our commitment to creating shareholder value and confidence in our strategic plan. Looking forward, the fundamentals of residential and commercial re-roofing demand remain supportive. And while we have yet to be meaningfully impacted by higher interest rates, the Beacon Team has demonstrated agility in responding to changing market conditions and will continue to take advantage of any market changes. We remain focused on executing at a high level, delivering value to customers, shareholders, employees and communities.”

Second Quarter and Year-to-Date Financial Highlights

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

2022

 

2021

 

2022

 

2021

(Unaudited; $ in millions, except per share amounts)

 

 

 

 

 

 

 

Net sales

$

2,358.2

 

 

$

1,872.1

 

 

$

4,045.1

 

 

$

3,190.1

 

Gross profit

$

650.2

 

 

$

517.4

 

 

$

1,089.7

 

 

$

850.2

 

Gross margin %

 

27.6

%

 

 

27.6

%

 

 

26.9

%

 

 

26.7

%

 

 

 

 

 

 

 

 

Operating expense

$

395.8

 

 

$

336.6

 

 

$

744.0

 

 

$

646.6

 

% of net sales

 

16.8

%

 

 

18.0

%

 

 

18.4

%

 

 

20.3

%

Adjusted Operating Expense1

$

369.6

 

 

$

308.5

 

 

$

692.8

 

 

$

586.8

 

% of net sales1

 

15.7

%

 

 

16.5

%

 

 

17.1

%

 

 

18.4

%

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations

$

174.5

 

 

$

79.8

 

 

$

230.3

 

 

$

69.3

 

% of net sales

 

7.4

%

 

 

4.3

%

 

 

5.7

%

 

 

2.2

%

Adjusted Net Income (Loss)1

$

194.6

 

 

$

139.9

 

 

$

270.2

 

 

$

162.0

 

% of net sales1

 

8.3

%

 

 

7.5

%

 

 

6.7

%

 

 

5.1

%

Adjusted EBITDA1

$

307.7

 

 

$

229.5

 

 

$

447.2

 

 

$

303.8

 

% of net sales1

 

13.0

%

 

 

12.3

%

 

 

11.1

%

 

 

9.5

%

 

 

 

 

 

 

 

 

Net income (loss) from continuing operations per share — diluted ("EPS")

$

2.12

 

 

$

0.91

 

 

$

2.72

 

 

$

0.71

 

_____________________________

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 26.0% compared to the prior year to $2.36 billion, a quarterly record for net sales from continuing operations. Second quarter sales increased across all three lines of business versus the prior year period driven by the successful implementation of price increases. Higher demand in residential roofing and complementary products also contributed to the growth. Weighted-average selling price increased approximately 24-25% and estimated volumes increased approximately 0-1%.

Residential roofing product sales increased 21.9%, non-residential roofing product sales increased 40.3%, and complementary product sales increased 18.7% compared to the prior year. The three-month periods ending June 30, 2022 and 2021 each had 64 business days.

Gross margin was 27.6% in both 2022 and 2021, primarily reflecting pricing execution that drove price-cost improvement, offset by a higher non-residential product sales mix. The increase in operating expense and Adjusted Operating Expense in 2022 was primarily due to increases in payroll & benefit costs, selling costs and general and administrative expenses. Both operating expense as a percent of sales and Adjusted Operating Expense as a percent of sales were lower in 2022, driven by the positive impact from net sales growth as well as productivity gains.

Net income (loss) from continuing operations was $174.5 million, compared to $79.8 million in the prior year. 2021 results include a loss on extinguishment of $50.7 million. Adjusted EBITDA was $307.7 million, compared to $229.5 million in the prior year. EPS was $2.12, compared to $0.91 in the prior year. Improvements in second quarter results compared to the prior year period were largely driven by higher net sales and favorable operating leverage.

Year-to-Date

Net sales increased 26.8% compared to the prior year to $4.05 billion, a company record for net sales for the first half. 2022 net sales increased across all three lines of business versus the prior year period, largely driven by the successful implementation of price increases. Weighted-average selling price increased approximately 23-24% and estimated volumes increased approximately 2-3%.

Residential roofing product sales increased 21.8%, non-residential roofing product sales increased 43.3%, and complementary product sales increased 19.4% compared to the prior year. The six-month periods ending June 30, 2022 and 2021 each had 127 business days.

Gross margin increased to 26.9%, from 26.7% in the prior year, primarily reflecting pricing execution that drove price-cost improvement, largely offset by a higher non-residential product sales mix. The increase in operating expense and Adjusted Operating Expense in 2022 was primarily due to increases in payroll & benefit costs, selling costs and general and administrative expenses. Both operating expense as a percent of sales and Adjusted Operating Expense as a percent of sales were lower in 2022, driven by the positive impact from net sales growth as well as productivity gains.

Net income (loss) from continuing operations was $230.3 million, compared to $69.3 million in the prior year. 2021 results include a loss on extinguishment of $60.2 million. Adjusted EBITDA was $447.2 million, compared to $303.8 million in the prior year. EPS was $2.72, compared to $0.71 in the prior year. Improvements in first half results compared to the prior year period were largely driven by higher net sales and gross margins, partially offset by higher operating expenses.

In February 2022, Beacon announced the authorization of a share repurchase program, pursuant to which the Company may purchase up to $500 million of its common stock. In the first half of 2022, the Company repurchased and retired $338 million of its common stock through a combination of open market repurchases and two previously announced accelerated share repurchase ("ASR") agreements. As a result, shares of common stock outstanding decreased to 65.0 million as of June 30, 2022, from 70.4 million as of December 31, 2021. Common stock outstanding at June 30, 2022 does not include the effect of the $50 million equity forward contract related to the unsettled portion of the second ASR agreement, which, based on the average stock price during the quarter ended June 30, 2022, would have resulted in the repurchase of 0.9 million additional shares. The $50 million equity forward contract is expected to settle in the fourth quarter 2022.

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 volumes changes may not be directly comparable to changes reported in prior periods.

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:

What:

Beacon Second Quarter 2022 Earnings Call

When:

Thursday, August 4, 2022

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 September 30, 2021 and subsequent filings with the U.S. Securities and Exchange Commission. 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 contained therein. 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 Fortune 500, publicly traded distributor of roofing materials and complementary building products in North America, operating over 400 branches throughout all 50 states in the U.S. and 6 provinces in Canada. Beacon serves an extensive base of over 80,000 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 helps 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 June 30,

 

Six Months Ended June 30,

 

2022

 

% of
Net
Sales

 

2021

 

% of
Net
Sales

 

2022

 

% of
Net
Sales

 

2021

 

% of
Net
Sales

Net sales

$

2,358.2

 

100.0

%

 

$

1,872.1

 

 

100.0

%

 

$

4,045.1

 

100.0

%

 

$

3,190.1

 

100.0

%

Cost of products sold

 

1,708.0

 

72.4

%

 

 

1,354.7

 

 

72.4

%

 

 

2,955.4

 

73.1

%

 

 

2,339.9

 

73.3

%

Gross profit

 

650.2

 

27.6

%

 

 

517.4

 

 

27.6

%

 

 

1,089.7

 

26.9

%

 

 

850.2

 

26.7

%

Operating expense:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

355.4

 

15.1

%

 

 

296.3

 

 

15.8

%

 

 

664.7

 

16.4

%

 

 

564.1

 

17.7

%

Depreciation

 

18.9

 

0.8

%

 

 

15.1

 

 

0.9

%

 

 

36.4

 

0.9

%

 

 

29.7

 

0.9

%

Amortization

 

21.5

 

0.9

%

 

 

25.2

 

 

1.3

%

 

 

42.9

 

1.1

%

 

 

52.8

 

1.7

%

Total operating expense

 

395.8

 

16.8

%

 

 

336.6

 

 

18.0

%

 

 

744.0

 

18.4

%

 

 

646.6

 

20.3

%

Income (loss) from operations

 

254.4

 

10.8

%

 

 

180.8

 

 

9.6

%

 

 

345.7

 

8.5

%

 

 

203.6

 

6.4

%

Interest expense, financing costs, and other

 

18.9

 

0.8

%

 

 

23.2

 

 

1.2

%

 

 

35.5

 

0.8

%

 

 

51.8

 

1.6

%

Loss on debt extinguishment

 

 

0.0

%

 

 

50.7

 

 

2.7

%

 

 

 

0.0

%

 

 

60.2

 

1.9

%

Income (loss) from continuing operations before income taxes

 

235.5

 

10.0

%

 

 

106.9

 

 

5.7

%

 

 

310.2

 

7.7

%

 

 

91.6

 

2.9

%

Provision for (benefit from) income taxes

 

61.0

 

2.6

%

 

 

27.1

 

 

1.4

%

 

 

79.9

 

2.0

%

 

 

22.3

 

0.7

%

Net income (loss) from continuing operations

 

174.5

 

7.4

%

 

 

79.8

 

 

4.3

%

 

 

230.3

 

5.7

%

 

 

69.3

 

2.2

%

Net income (loss) from discontinued operations1

 

 

0.0

%

 

 

(3.3

)

 

(0.2

) %

 

 

 

0.0

%

 

 

0.9

 

0.0

%

Net income (loss)

 

174.5

 

7.4

%

 

 

76.5

 

 

4.1

%

 

 

230.3

 

5.7

%

 

 

70.2

 

2.2

%

Dividends on Preferred Stock

 

6.0

 

0.3

%

 

 

6.0

 

 

0.3

%

 

 

12.0

 

0.3

%

 

 

12.0

 

0.4

%

Net income (loss) attributable to common stockholders

$

168.5

 

7.1

%

 

$

70.5

 

 

3.8

%

 

$

218.3

 

5.4

%

 

$

58.2

 

1.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

68.1

 

 

 

 

69.9

 

 

 

 

 

69.1

 

 

 

 

69.8

 

 

Diluted

 

69.5

 

 

 

 

71.3

 

 

 

 

 

70.4

 

 

 

 

71.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic – Continuing operations

$

2.17

 

 

 

$

0.93

 

 

 

 

$

2.77

 

 

 

$

0.72

 

 

Basic – Discontinued operations

 

 

 

 

 

(0.04

)

 

 

 

 

 

 

 

 

0.01

 

 

Basic net income (loss) per share

$

2.17

 

 

 

$

0.89

 

 

 

 

$

2.77

 

 

 

$

0.73

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted – Continuing operations

$

2.12

 

 

 

$

0.91

 

 

 

 

$

2.72

 

 

 

$

0.71

 

 

Diluted – Discontinued operations

 

 

 

 

 

(0.04

)

 

 

 

 

 

 

 

 

0.01

 

 

Diluted net income (loss) per share

$

2.12

 

 

 

$

0.87

 

 

 

 

$

2.72

 

 

 

$

0.72

 

 

____________________________

1.

On February 10, 2021, the Company completed the sale of its interior products and insulation businesses (“Interior Products”) to Foundation Building Materials Holding Company LLC. Unless otherwise noted, the Company has reflected Interior Products as discontinued operations for all periods presented. The results of operations from the Company’s solar products business (“Solar Products”), which was divested in the fourth calendar quarter of 2021, were included within income from continuing operations for the three and six months ended June 30, 2021 and were not material to the Company’s overall results.

BEACON ROOFING SUPPLY, INC.

Consolidated Balance Sheets

(Unaudited; in millions)

 

 

June 30,

 

December 31,

 

June 30,

 

2022

 

2021

 

2021

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

$

54.6

 

 

$

225.8

 

 

$

188.9

 

Accounts receivable, net

 

1,321.7

 

 

 

855.2

 

 

 

965.1

 

Inventories, net

 

1,548.7

 

 

 

1,161.7

 

 

 

1,170.7

 

Prepaid expenses and other current assets

 

422.6

 

 

 

367.2

 

 

 

354.8

 

Total current assets

 

3,347.6

 

 

 

2,609.9

 

 

 

2,679.5

 

Property and equipment, net

 

289.1

 

 

 

256.3

 

 

 

223.8

 

Goodwill

 

1,785.2

 

 

 

1,777.4

 

 

 

1,761.7

 

Intangibles, net

 

383.4

 

 

 

421.0

 

 

 

439.8

 

Operating lease assets

 

418.0

 

 

 

413.9

 

 

 

395.8

 

Deferred income taxes, net

 

58.0

 

 

 

61.9

 

 

 

89.2

 

Other assets, net

 

1.4

 

 

 

8.9

 

 

 

9.5

 

Total assets

$

6,282.7

 

 

$

5,549.3

 

 

$

5,599.3

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

$

1,168.9

 

 

$

794.2

 

 

$

877.7

 

Accrued expenses

 

476.5

 

 

 

472.1

 

 

 

641.4

 

Current operating lease liabilities

 

89.7

 

 

 

89.0

 

 

 

87.8

 

Current finance lease liabilities

 

10.9

 

 

 

6.4

 

 

 

3.6

 

Current portion of long-term debt/obligations

 

10.0

 

 

 

10.0

 

 

 

10.4

 

Total current liabilities

 

1,756.0

 

 

 

1,371.7

 

 

 

1,620.9

 

Borrowings under revolving lines of credit, net

 

461.3

 

 

 

 

 

 

 

Long-term debt, net

 

1,609.6

 

 

 

1,612.9

 

 

 

1,616.1

 

Deferred income taxes, net

 

0.6

 

 

 

0.8

 

 

 

 

Non-current operating lease liabilities

 

334.4

 

 

 

326.3

 

 

 

308.7

 

Non-current finance lease liabilities

 

45.3

 

 

 

26.0

 

 

 

16.0

 

Total liabilities

 

4,207.2

 

 

 

3,337.7

 

 

 

3,561.7

 

 

 

 

 

 

 

Convertible Preferred Stock

 

399.2

 

 

 

399.2

 

 

 

399.2

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

Common stock

 

0.6

 

 

 

0.7

 

 

 

0.7

 

Undesignated preferred stock

 

 

 

 

 

 

 

 

Additional paid-in capital

 

1,123.5

 

 

 

1,148.6

 

 

 

1,138.5

 

Retained earnings

 

562.8

 

 

 

682.5

 

 

 

521.7

 

Accumulated other comprehensive income (loss)

 

(10.6

)

 

 

(19.4

)

 

 

(22.5

)

Total stockholders' equity

 

1,676.3

 

 

 

1,812.4

 

 

 

1,638.4

 

Total liabilities and stockholders' equity

$

6,282.7

 

 

$

5,549.3

 

 

$

5,599.3

 

BEACON ROOFING SUPPLY, INC.

Consolidated Statements of Cash Flows1

(Unaudited; in millions)

 

 

Six Months Ended June 30,

 

2022

 

2021

Operating Activities

 

 

 

Net income (loss)

$

230.3

 

 

$

70.2

 

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

 

 

 

Depreciation and amortization

 

79.3

 

 

 

82.6

 

Stock-based compensation

 

13.1

 

 

 

12.7

 

Certain interest expense and other financing costs

 

2.6

 

 

 

4.6

 

Loss on debt extinguishment

 

 

 

 

60.2

 

Gain on sale of fixed assets and other

 

(2.9

)

 

 

(2.1

)

Deferred income taxes

 

0.7

 

 

 

(78.0

)

Loss on sale of business

 

 

 

 

6.6

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

(466.1

)

 

 

(216.6

)

Inventories

 

(385.0

)

 

 

(220.8

)

Prepaid expenses and other current assets

 

(47.1

)

 

 

(19.3

)

Accounts payable and accrued expenses

 

383.7

 

 

 

318.8

 

Other assets and liabilities

 

4.4

 

 

 

(0.2

)

Net cash provided by (used in) operating activities

 

(187.0

)

 

 

18.7

 

 

 

 

 

Investing Activities

 

 

 

Purchases of property and equipment

 

(39.8

)

 

 

(29.4

)

Acquisition of business, net

 

(16.7

)

 

 

 

Proceeds from sale of business

 

 

 

 

837.4

 

Proceeds from the sale of assets

 

3.0

 

 

 

2.4

 

Net cash provided by (used in) investing activities

 

(53.5

)

 

 

810.4

 

 

 

 

 

Financing Activities

 

 

 

Borrowings under revolving lines of credit

 

1,365.9

 

 

 

250.0

 

Payments under revolving lines of credit

 

(898.1

)

 

 

(407.0

)

Borrowings under term loan

 

 

 

 

1,000.0

 

Payments under term loan

 

(5.0

)

 

 

(943.4

)

Borrowings under senior notes

 

 

 

 

350.0

 

Payment under senior notes

 

 

 

 

(1,300.0

)

Payment of debt issuance costs

 

 

 

 

(20.3

)

Payment of call premium

 

 

 

 

(31.7

)

Payments under equipment financing facilities and finance leases

 

(4.9

)

 

 

(3.2

)

Repurchase and retirement of common stock, net

 

(338.1

)

 

 

 

Advance payment for equity forward contract

 

(50.0

)

 

 

 

Payment of dividends on Preferred Stock

 

(12.0

)

 

 

(12.0

)

Proceeds from issuance of common stock related to equity awards

 

12.2

 

 

 

17.7

 

Payment of taxes related to net share settlement of equity awards

 

(0.4

)

 

 

(1.7

)

Net cash provided by (used in) financing activities

 

69.6

 

 

 

(1,101.6

)

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(0.3

)

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(171.2

)

 

 

(272.5

)

Cash and cash equivalents, beginning of period

 

225.8

 

 

 

461.4

 

Cash and cash equivalents, end of period

$

54.6

 

 

$

188.9

 

 

 

 

 

Supplemental Cash Flow Information

 

 

 

Operating cash flows provided by (used in) discontinued operations

$

 

 

$

(21.8

)

Cash paid during the period for:

 

 

 

Interest

$

37.1

 

 

$

58.6

 

Income taxes, net of refunds2

$

57.4

 

 

$

52.6

 

____________________________

1.

Unless otherwise noted, amounts include both continuing and discontinued operations.

2.

Six months ended June 30, 2022 amount includes $18.6 million related to the transition period from October 1, 2021 to December 31, 2021. Six months ended June 30, 2021 amount includes $46.6 million related to the Interior Products divestiture.

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

 

2022

 

2021

 

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

1,196.1

 

50.7

%

 

$

981.6

 

52.4

%

 

$

214.5

 

21.9

%

Non-residential roofing products

 

682.6

 

29.0

%

 

 

486.7

 

26.0

%

 

 

195.9

 

40.3

%

Complementary building products

 

479.5

 

20.3

%

 

 

403.8

 

21.6

%

 

 

75.7

 

18.7

%

 

$

2,358.2

 

100.0

%

 

$

1,872.1

 

100.0

%

 

$

486.1

 

26.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by Business Day1,2

 

Three Months Ended June 30,

 

Year-over-Year
Change

 

2022

 

2021

 

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

18.7

 

50.7

%

 

$

15.4

 

52.4

%

 

$

3.3

 

21.9

%

Non-residential roofing products

 

10.6

 

29.0

%

 

 

7.6

 

26.0

%

 

 

3.0

 

40.3

%

Complementary building products

 

7.5

 

20.3

%

 

 

6.3

 

21.6

%

 

 

1.2

 

18.7

%

 

$

36.8

 

100.0

%

 

$

29.3

 

100.0

%

 

$

7.5

 

26.0

%

____________________________

1.

The three-month periods ended June 30, 2022 and 2021 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

 

2022

 

2021

 

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

2,042.6

 

50.5

%

 

$

1,676.7

 

52.6

%

 

$

365.9

 

21.8

%

Non-residential roofing products

 

1,170.3

 

28.9

%

 

 

816.5

 

25.6

%

 

 

353.8

 

43.3

%

Complementary building products

 

832.2

 

20.6

%

 

 

696.9

 

21.8

%

 

 

135.3

 

19.4

%

 

$

4,045.1

 

100.0

%

 

$

3,190.1

 

100.0

%

 

$

855.0

 

26.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales by Business Day1,2

 

Six Months Ended June 30,

 

Year-over-Year
Change

 

2022

 

2021

 

 

Net Sales

 

Mix %

 

Net Sales

 

Mix %

 

$

 

%

Residential roofing products

$

16.1

 

50.5

%

 

$

13.2

 

52.6

%

 

$

2.9

 

21.8

%

Non-residential roofing products

 

9.2

 

28.9

%

 

 

6.4

 

25.6

%

 

 

2.8

 

43.3

%

Complementary building products

 

6.6

 

20.6

%

 

 

5.5

 

21.8

%

 

 

1.1

 

19.4

%

 

$

31.9

 

100.0

%

 

$

25.1

 

100.0

%

 

$

6.8

 

26.8

%

____________________________

1. The six-month periods ended June 30, 2022 and 2021 each had 127 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) from continuing operations, excluding the impact of the adjusting items (as described below).
  • Adjusted EBITDA. 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, 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 costs related to historical 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.
  • Restructuring costs. Represent costs stemming from headcount rationalization efforts and certain rebranding costs; impact of the Interior Products and Solar Products divestitures; costs related to changing our fiscal year end; amortization of debt issuance costs; debt refinancing and extinguishment costs; and abandoned lease costs.
  • COVID-19 impacts. Represent costs directly related to the COVID-19 pandemic.

The following table presents the impact and respective location of the adjusting items on our consolidated statements of operations for each of the periods indicated:

 

Operating Expense

 

Non-Operating Expense

 

 

 

 

 

SG&A1

 

Amorti-
zation

 

Interest
Expense

 

Other
(Income)
Expense

 

Income
Taxes2

 

Total

Three Months Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

$

1.7

 

$

21.5

 

$

1.0

 

$

 

$

 

$

24.2

Restructuring costs

 

2.9

 

 

 

 

0.3

 

 

 

 

 

 

3.2

COVID-19 impacts

 

0.1

 

 

 

 

 

 

 

 

 

 

0.1

Total adjusting items

$

4.7

 

$

21.5

 

$

1.3

 

$

 

$

 

$

27.5

Three Months Ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

$

0.8

 

$

25.2

 

$

1.2

 

$

 

$

 

$

27.2

Restructuring costs3

 

1.7

 

 

 

 

0.7

 

 

50.8

 

 

 

 

53.2

COVID-19 impacts

 

0.4

 

 

 

 

 

 

 

 

 

 

0.4

Total adjusting items

$

2.9

 

$

25.2

 

$

1.9

 

$

50.8

 

$

 

$

80.8

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

$

2.2

 

$

42.9

 

$

2.0

 

$

 

$

 

$

47.1

Restructuring costs

 

4.6

 

 

 

 

0.6

 

 

 

 

 

 

5.2

COVID-19 impacts

 

1.5

 

 

 

 

 

 

 

 

 

 

1.5

Total adjusting items

$

8.3

 

$

42.9

 

$

2.6

 

$

 

$

 

$

53.8

Six Months Ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

 

Acquisition costs

$

1.4

 

$

50.5

 

$

3.1

 

$

 

$

 

$

55.0

Restructuring costs3

 

4.7

 

 

2.3

 

 

1.5

 

 

60.3

 

 

 

 

68.8

COVID-19 impacts

 

0.9

 

 

 

 

 

 

 

 

 

 

0.9

Total adjusting items

$

7.0

 

$

52.8

 

$

4.6

 

$

60.3

 

$

 

$

124.7

____________________________

1.   

Selling, general and administrative expense (“SG&A”).

2.   

For tax impact of adjusting items, see Adjusted Net Income (Loss) table below.

3.   

Other (income) expense for the three and six months ended June 30, 2021 includes a loss on debt extinguishment of $50.7 million and $60.2 million, respectively, in connection with the write-off of debt issuance costs and payment of redemption premiums stemming from our refinancing transactions.

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,

 

2022

 

2021

 

2022

 

2021

Operating expense

$

395.8

 

 

$

336.6

 

 

$

744.0

 

 

$

646.6

 

Acquisition costs

 

(23.2

)

 

 

(26.0

)

 

 

(45.1

)

 

 

(51.9

)

Restructuring costs

 

(2.9

)

 

 

(1.7

)

 

 

(4.6

)

 

 

(7.0

)

COVID-19 impacts

 

(0.1

)

 

 

(0.4

)

 

 

(1.5

)

 

 

(0.9

)

Adjusted Operating Expense

$

369.6

 

 

$

308.5

 

 

$

692.8

 

 

$

586.8

 

 

 

 

 

 

 

 

 

Net sales

$

2,358.2

 

 

$

1,872.1

 

 

$

4,045.1

 

 

$

3,190.1

 

Operating expense as % of sales

 

16.8

%

 

 

18.0

%

 

 

18.4

%

 

 

20.3

%

Adjusted Operating Expense as % of sales

 

15.7

%

 

 

16.5

%

 

 

17.1

%

 

 

18.4

%

Adjusted Net Income (Loss)

The following table presents a reconciliation of net income (loss) from continuing operations, 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,

 

2022

 

2021

 

2022

 

2021

Net income (loss) from continuing operations

$

174.5

 

 

$

79.8

 

 

$

230.3

 

 

$

69.3

 

Adjusting items:

 

 

 

 

 

 

 

Acquisition costs

 

24.2

 

 

 

27.2

 

 

 

47.1

 

 

 

55.0

 

Restructuring costs

 

3.2

 

 

 

53.2

 

 

 

5.2

 

 

 

68.8

 

COVID-19 impacts

 

0.1

 

 

 

0.4

 

 

 

1.5

 

 

 

0.9

 

Total adjusting items

 

27.5

 

 

 

80.8

 

 

 

53.8

 

 

 

124.7

 

Less: tax impact of adjusting items1

 

(7.4

)

 

 

(20.7

)

 

 

(13.9

)

 

 

(32.0

)

Total adjustments, net of tax

 

20.1

 

 

 

60.1

 

 

 

39.9

 

 

 

92.7

 

Adjusted Net Income (Loss)

$

194.6

 

 

$

139.9

 

 

$

270.2

 

 

$

162.0

 

 

 

 

 

 

 

 

 

Net sales

$

2,358.2

 

 

$

1,872.1

 

 

$

4,045.1

 

 

$

3,190.1

 

Net income (loss) as % of sales

 

7.4

%

 

 

4.3

%

 

 

5.7

%

 

 

2.2

%

Adjusted Net Income (Loss) as % of sales

 

8.3

%

 

 

7.5

%

 

 

6.7

%

 

 

5.1

%

____________________________

1.   

Amounts represent tax impact on 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, 2022 and 2021 were calculated using a blended effective tax rate of 26.9% and 25.6%, respectively. The tax impact of adjustments for the six months ended June 30, 2022 and 2021 were calculated using a blended effective tax rate of 25.8% 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) from continuing operations, 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,

 

2022

 

2021

 

2022

 

2021

Net income (loss) from continuing operations

$

174.5

 

 

$

79.8

 

 

$

230.3

 

 

$

69.3

 

Interest expense, net

 

19.1

 

 

 

23.2

 

 

 

36.3

 

 

 

52.8

 

Income taxes

 

61.0

 

 

 

27.1

 

 

 

79.9

 

 

 

22.3

 

Depreciation and amortization

 

40.4

 

 

 

40.3

 

 

 

79.3

 

 

 

82.5

 

Stock-based compensation

 

8.0

 

 

 

5.4

 

 

 

13.1

 

 

 

9.6

 

Acquisition costs1

 

1.7

 

 

 

0.8

 

 

 

2.2

 

 

 

1.4

 

Restructuring costs1

 

2.9

 

 

 

52.5

 

 

 

4.6

 

 

 

65.0

 

COVID-19 impacts

 

0.1

 

 

 

0.4

 

 

 

1.5

 

 

 

0.9

 

Adjusted EBITDA

$

307.7

 

 

$

229.5

 

 

$

447.2

 

 

$

303.8

 

 

 

 

 

 

 

 

 

Net sales

$

2,358.2

 

 

$

1,872.1

 

 

$

4,045.1

 

 

$

3,190.1

 

Net income (loss) as % of sales

 

7.4

%

 

 

4.3

%

 

 

5.7

%

 

 

2.2

%

Adjusted EBITDA as % of sales

 

13.0

%

 

 

12.3

%

 

 

11.1

%

 

 

9.5

%

____________________________

1.   

Amounts represent adjusting items included in SG&A and other income (expense); remaining adjusting item balances are embedded within the other line item balances reported in this table.

 

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

Source: Beacon
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