- Execution on Ambition 2025 growth initiatives drove record
top line
- Disciplined pricing combined with operating leverage
benefits generated strong third quarter profitability
- Substantial cash flow generation and balance sheet capacity
enabled investments in growth and returns
- Repurchased and retired all outstanding convertible
preferred shares
Please replace the release dated November 2, 2023 with the
following corrected version to reflect the following adjustments to
the financial statements and information: (i) net income (loss)
attributable to common stockholders in the consolidated statements
of operations was corrected to $321.1 million for the nine months
ended September 30, 2022, and (ii) payment of debt issuance costs
of $6.6 million was included within financing activities in the
consolidated statements of cash flows for the nine months ended
September 30, 2023. Other than as described above, there are
no changes to the financial statements and information contained in
the release dated November 2, 2023.
The updated release reads:
BEACON REPORTS THIRD QUARTER 2023
RESULTS
- Execution on Ambition 2025 growth initiatives drove record
top line
- Disciplined pricing combined with operating leverage
benefits generated strong third quarter profitability
- Substantial cash flow generation and balance sheet capacity
enabled investments in growth and returns
- Repurchased and retired all outstanding convertible
preferred shares
Beacon (Nasdaq: BECN) (the “Company”, “we”, “our”) announced
results today for the third quarter ended September 30, 2023.
“Beacon’s third quarter results were outstanding, reflecting our
team’s high caliber execution on our Ambition 2025 strategic plan
and the power of our business model,” said Julian Francis, Beacon’s
President & CEO. “We demonstrated that we have multiple levers
of growth and can achieve results in any environment. The vast
majority of our market demand is from non-discretionary repair and
reroofing and in the third quarter we demonstrated our ability to
capitalize on that non-discretionary demand. In addition, we stayed
focused on those items within our control including disciplined
pricing, labor productivity and working capital management. As a
result, we delivered record quarterly net sales, strong net income,
our highest Adjusted EBITDA in history and solid cash flow
generation. We have deployed a substantial amount of capital on
growth projects and returns to shareholders so far in 2023, while
remaining well within our target debt leverage range. We built on
our track record of value-creating M&A, including a meaningful
expansion to our Waterproofing footprint. We’ve continued to add
greenfield branch locations to enhance our organic growth
potential. And, during the quarter, we repurchased all the
outstanding preferred shares as well as approximately $25M worth of
common shares, reducing the as-converted share count by more than
13%. As we enter the fourth quarter, our team is well-positioned to
build on our momentum to deliver superior value to our customers,
shareholders, employees and communities and deliver on Ambition
2025.”
Third Quarter Financial
Highlights
Three Months Ended September
30,
Nine Months Ended September
30,
2023
2022
2023
2022
(Unaudited; $ in millions, except per
share amounts)
Net sales
$
2,584.3
$
2,415.2
$
6,820.3
$
6,460.3
Gross profit
$
672.6
$
630.2
$
1,750.7
$
1,719.9
Gross margin %
26.0
%
26.1
%
25.7
%
26.6
%
Operating expense
$
418.8
$
398.8
$
1,202.0
$
1,142.8
% of net sales
16.2
%
16.5
%
17.6
%
17.7
%
Adjusted Operating Expense1
$
395.2
$
373.7
$
1,129.6
$
1,066.5
% of net sales1
15.3
%
15.5
%
16.6
%
16.5
%
Net income (loss)
$
161.3
$
154.8
$
339.9
$
385.1
% of net sales
6.3
%
6.4
%
4.9
%
6.0
%
Adjusted Net Income (Loss)1
$
180.0
$
174.5
$
396.7
$
444.7
% of net sales1
7.0
%
7.2
%
5.8
%
6.9
%
Adjusted EBITDA1
$
309.6
$
284.2
$
712.9
$
731.4
% of net sales1
12.0
%
11.8
%
10.5
%
11.3
%
_________________________
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 7.0% (8.7% on a per-day basis) compared to
the prior year to $2.58 billion, a Company record for quarterly net
sales. The increase in net sales was largely driven by the
contributions of acquired branches and greenfields over the last
four quarters. Additionally, estimated organic volumes (including
greenfields) increased approximately 1-2% (3-4% on a per-day basis)
and weighted-average selling price increased approximately
0-1%.
Residential roofing product sales increased 13.6% (15.4% on a
per-day basis), non-residential roofing product sales decreased
7.6% (6.2% on a per-day basis), and complementary product sales
increased 12.7% (14.5% on a per-day basis) compared to the prior
year. The increase in residential roofing product sales was
primarily due to higher volumes. The increase in complementary
product sales was largely due to the November 2022 acquisition of
Coastal Construction Products. The three-month periods ended
September 30, 2023 and 2022 had 63 and 64 business days,
respectively.
Gross margin decreased slightly to 26.0%, from 26.1% in the
prior year, as higher product costs offset higher average selling
prices for our products. The increases in operating expense and
Adjusted Operating Expense were attributable to acquired branches
and greenfields. Excluding these impacts, operating expense from
existing branches decreased by approximately 3.3%, or $13.2
million. The comparative decrease was related to a decrease in
payroll and benefits costs, primarily due to lower incentive
compensation, and decreases in selling, general and administrative
expenses. On a consolidated basis, both operating expense as a
percent of sales and Adjusted Operating Expense as a percent of
sales were comparatively lower in the third quarter of 2023, driven
by higher sales combined with cost management.
Net income (loss) was $161.3 million, compared to $154.8 million
in the prior year. Adjusted EBITDA was $309.6 million, compared to
$284.2 million in the prior year. Third quarter results compared to
the prior year period were driven by higher net sales and operating
leverage as described above. Net income (loss) per common share
(“EPS”) on a diluted basis was $(4.16), compared to $1.95 in the
prior year. The negative diluted EPS in 2023 is attributable to the
$414.6 million preferred stock repurchase premium, which is
included as a component of net income (loss) attributable to common
stockholders in calculating EPS. See full reconciliation in the
consolidated statements of operations below.
In February 2023, Beacon announced an increase in its share
repurchase program, pursuant to which the Company may purchase up
to $500 million of its common stock (inclusive of the $112 million
remaining authorization under the program announced in February
2022). In the third quarter of 2023, the Company repurchased and
retired $25.1 million of its common stock on the open market
through Rule 10b5-1 repurchase plans. As a result, there were 63.2
million shares of common stock outstanding as of September 30,
2023.
In July 2023, the Company repurchased all 400,000 issued and
outstanding shares of its preferred stock from an affiliate of
Clayton, Dubilier & Rice, LLC for $805.4 million, including
$0.9 million of accrued but unpaid dividends. The aggregate
repurchase price and related transaction fees and expenses were
financed by a combination of proceeds from a new offering of senior
notes, as well as borrowings under our secured credit facility and
cash on hand.
Year-to-Date
Net sales increased 5.6% compared to the prior year to $6.82
billion, a Company record for net sales for the first nine months.
The increase in net sales was largely driven by the contributions
of acquired branches and greenfields over the last four quarters.
Additionally, weighted-average selling price increased
approximately 3-4%, while estimated organic volumes (including
greenfields) decreased approximately 2-3%.
Residential roofing product sales increased 8.3%,
non-residential roofing product sales decreased 5.5%, and
complementary product sales increased 14.9% compared to the prior
year. The increase in complementary product sales was largely due
to the November 2022 acquisition of Coastal Construction Products.
The nine-month periods ended September 30, 2023 and 2022 each had
191 business days.
Gross margin decreased to 25.7%, from 26.6% in the prior year,
as higher product costs more than offset higher average selling
prices for our products. The increases in operating expense and
Adjusted Operating Expense were largely from acquired branches and
greenfields. Excluding these impacts, operating expense from
existing branches decreased by approximately 2.3%, or $26.6
million. The comparative decrease was related to a decrease in
payroll and benefits costs, primarily due to lower incentive
compensation. On a consolidated basis, operating expense as a
percent of sales was slightly lower year-over-year. On a
consolidated basis, Adjusted Operating Expense as a percent of
sales was slightly higher in 2023, driven by increases in payroll
and benefits costs related to additional headcount to support both
new and acquired branches and future growth initiatives, as well as
by inflation, partially offset by lower incentive compensation.
Net income (loss) was $339.9 million, compared to $385.1 million
in the prior year. Adjusted EBITDA was $712.9 million, compared to
$731.4 million in the prior year. Results in the first nine months
compared to the prior year period were largely driven by the
decrease in gross margins and higher operating expenses described
above. Diluted EPS was $(1.93), compared to $4.65 in the prior
year. The negative diluted EPS in 2023 is attributable to the
$414.6 million preferred stock repurchase premium, which is
included as a component of net income (loss) attributable to common
stockholders in calculating EPS. See full reconciliation in the
consolidated statements of operations below.
In the first nine months of 2023, the Company repurchased and
retired $99.9 million of its common stock on the open market
through Rule 10b5-1 repurchase plans. As a result, shares of common
stock outstanding decreased, net of issuance, to 63.2 million as of
September 30, 2023, from 64.2 million as of December 31, 2022. As
of September 30, 2023, we had approximately $400 million available
for repurchases remaining under the current Repurchase Program.
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.
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 Third Quarter 2023 Earnings
Call
When:
Thursday, November 2, 2023
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 December 31, 2022 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 building products, including roofing materials and
complementary products, such as siding and waterproofing. The
Company operates over 500 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.
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,
2023
% of Net Sales
2022
% of Net Sales
2023
% of Net Sales
2022
% of Net Sales
Net sales
$
2,584.3
100.0
%
$
2,415.2
100.0
%
$
6,820.3
100.0
%
$
6,460.3
100.0
%
Cost of products sold
1,911.7
74.0
%
1,785.0
73.9
%
5,069.6
74.3
%
4,740.4
73.4
%
Gross profit
672.6
26.0
%
630.2
26.1
%
1,750.7
25.7
%
1,719.9
26.6
%
Operating expense:
Selling, general and administrative
374.3
14.5
%
357.9
14.8
%
1,071.3
15.7
%
1,022.6
15.8
%
Depreciation
23.1
0.9
%
19.0
0.8
%
65.6
1.0
%
55.4
0.9
%
Amortization
21.4
0.8
%
21.9
0.9
%
65.1
0.9
%
64.8
1.0
%
Total operating expense
418.8
16.2
%
398.8
16.5
%
1,202.0
17.6
%
1,142.8
17.7
%
Income (loss) from operations
253.8
9.8
%
231.4
9.6
%
548.7
8.1
%
577.1
8.9
%
Interest expense, financing costs and
other
35.2
1.3
%
22.8
1.0
%
89.0
1.4
%
58.3
0.9
%
Income (loss) before provision for income
taxes
218.6
8.5
%
208.6
8.6
%
459.7
6.7
%
518.8
8.0
%
Provision for (benefit from) income
taxes
57.3
2.2
%
53.8
2.2
%
119.8
1.8
%
133.7
2.0
%
Net income (loss)
$
161.3
6.3
%
$
154.8
6.4
%
$
339.9
4.9
%
$
385.1
6.0
%
Reconciliation of net income (loss) to net
income (loss) attributable to common stockholders:
Net income (loss)
$
161.3
6.2
%
$
154.8
6.4
%
$
339.9
5.0
%
$
385.1
6.0
%
Dividends on preferred stock
(1.9
)
(0.1
)%
(6.0
)
(0.2
)%
(13.9
)
(0.2
)%
(18.0
)
(0.3
)%
Undistributed income allocated to
participating securities
(7.6
)
(0.3
)%
(19.3
)
(0.8
)%
(34.3
)
(0.5
)%
(46.0
)
(0.7
)%
Repurchase Premium
(414.6
)
(16.0
)%
—
0.0
%
(414.6
)
(6.1
)%
—
0.0
%
Net income (loss) attributable to common
stockholders
$
(262.8
)
(10.2
)%
$
129.5
5.4
%
$
(122.9
)
(1.8
)%
$
321.1
5.0
%
Weighted-average common shares
outstanding:
Basic
63.2
65.0
63.7
67.7
Diluted
63.2
66.4
63.7
69.1
Net income (loss) per common share:
Basic
$
(4.16
)
$
1.99
$
(1.93
)
$
4.74
Diluted
$
(4.16
)
$
1.95
$
(1.93
)
$
4.65
BEACON ROOFING SUPPLY,
INC.
Consolidated Balance
Sheets
(Unaudited; in millions)
September 30,
December 31,
September 30,
2023
2022
2022
Assets
Current assets:
Cash and cash equivalents
$
69.7
$
67.7
$
84.9
Accounts receivable, net
1,415.7
1,009.1
1,352.5
Inventories, net
1,307.9
1,322.9
1,388.9
Prepaid expenses and other current
assets
518.9
417.8
415.3
Total current assets
3,312.2
2,817.5
3,241.6
Property and equipment, net
396.3
337.0
306.2
Goodwill
1,933.6
1,916.3
1,782.7
Intangibles, net
410.5
447.7
361.4
Operating lease assets
483.0
467.6
432.1
Deferred income taxes, net
4.9
9.9
56.4
Other assets, net
12.5
7.5
4.0
Total assets
$
6,553.0
$
6,003.5
$
6,184.4
Liabilities and Stockholders'
Equity
Current liabilities:
Accounts payable
$
1,179.9
$
821.0
$
1,062.2
Accrued expenses
601.3
448.0
512.9
Current operating lease liabilities
99.2
94.5
89.6
Current finance lease liabilities
21.9
16.1
14.0
Current portion of long-term
debt/obligations
10.0
10.0
10.0
Total current liabilities
1,912.3
1,389.6
1,688.7
Borrowings under revolving lines of
credit, net
218.3
254.9
246.1
Long-term debt, net
2,193.9
1,606.4
1,608.0
Other long-term liabilities
0.6
0.2
0.1
Non-current operating lease
liabilities
395.9
382.1
349.8
Non-current finance lease liabilities
82.3
67.0
60.3
Total liabilities
4,803.3
3,700.2
3,953.0
Convertible Preferred Stock
—
399.2
399.2
Stockholders' equity:
Common stock
0.6
0.6
0.7
Undesignated preferred stock
—
—
—
Additional paid-in capital
1,220.3
1,187.2
1,133.6
Retained earnings
534.7
728.8
711.6
Accumulated other comprehensive income
(loss)
(5.9
)
(12.5
)
(13.7
)
Total stockholders' equity
1,749.7
1,904.1
1,832.2
Total liabilities and stockholders'
equity
$
6,553.0
$
6,003.5
$
6,184.4
BEACON ROOFING SUPPLY,
INC.
Consolidated Statements of
Cash Flows
(Unaudited; in millions)
Nine Months Ended September
30,
2023
2022
Operating Activities
Net income (loss)
$
339.9
$
385.1
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
130.7
120.2
Stock-based compensation
22.2
21.0
Certain interest expense and other
financing costs
1.7
3.9
Gain on sale of fixed assets and other
(13.7
)
(4.3
)
Deferred income taxes
1.6
0.6
Changes in operating assets and
liabilities:
Accounts receivable
(394.4
)
(500.0
)
Inventories
37.7
(228.3
)
Prepaid expenses and other current
assets
(89.4
)
(28.4
)
Accounts payable and accrued expenses
491.2
305.6
Other assets and liabilities
(1.8
)
5.8
Net cash provided by (used in) operating
activities
525.7
81.2
Investing Activities
Purchases of property and equipment
(85.5
)
(54.5
)
Acquisition of business, net
(73.7
)
(16.5
)
Proceeds from the sale of assets
15.3
4.5
Purchases of investments
(1.0
)
—
Net cash provided by (used in) investing
activities
(144.9
)
(66.5
)
Financing Activities
Borrowings under revolving lines of
credit
1,720.0
2,046.4
Payments under revolving lines of
credit
(1,757.9
)
(1,793.9
)
Payments under term loan
(7.5
)
(7.5
)
Borrowings under senior notes
600.0
—
Payment of debt issuance costs
(6.6
)
—
Payments under equipment financing
facilities and finance leases
(14.3
)
(8.2
)
Repurchase of convertible preferred
stock
(805.6
)
—
Repurchase and retirement of common stock,
net
(100.5
)
(338.1
)
Advance payment for equity forward
contract
—
(50.0
)
Proceeds from disgorgement of short-swing
profits1
5.9
—
Payment of dividends on Preferred
Stock
(18.9
)
(18.0
)
Proceeds from issuance of common stock
related to equity awards
9.7
14.5
Payment of taxes related to net share
settlement of equity awards
(3.1
)
(0.4
)
Net cash provided by (used in) financing
activities
(378.8
)
(155.2
)
Effect of exchange rate changes on cash
and cash equivalents
—
(0.4
)
Net increase (decrease) in cash and cash
equivalents
2.0
(140.9
)
Cash and cash equivalents, beginning of
period
67.7
225.8
Cash and cash equivalents, end of
period
$
69.7
$
84.9
Supplemental Cash Flow
Information
Cash paid during the period for:
Interest
$
73.1
$
52.3
Income taxes, net of refunds2
$
76.2
$
113.2
__________________________________
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.
2. Nine months ended September 30, 2022
amount includes $18.6 million related to the transition period from
October 1, 2021 to December 31, 2021.
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
2023
2022
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
1,372.8
53.1
%
$
1,208.3
50.0
%
$
164.5
13.6
%
Non-residential roofing products
675.2
26.1
%
731.1
30.3
%
(55.9
)
(7.6
)%
Complementary building products
536.3
20.8
%
475.8
19.7
%
60.5
12.7
%
$
2,584.3
100.0
%
$
2,415.2
100.0
%
$
169.1
7.0
%
Sales by Business
Day1,2
Three Months Ended September
30,
Year-over-Year Change
2023
2022
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
21.8
53.1
%
$
18.9
50.0
%
$
2.9
15.4
%
Non-residential roofing products
10.7
26.1
%
11.4
30.3
%
(0.7
)
(6.2
)%
Complementary building products
8.5
20.8
%
7.4
19.7
%
1.1
14.5
%
$
41.0
100.0
%
$
37.7
100.0
%
$
3.3
8.7
%
_____________________________
1. The three-month periods ended September
30, 2023 and 2022 had 63 and 64 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
2023
2022
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
3,521.5
51.6
%
$
3,250.9
50.3
%
$
270.6
8.3
%
Non-residential roofing products
1,796.2
26.4
%
1,901.5
29.4
%
(105.3
)
(5.5
)%
Complementary building products
1,502.6
22.0
%
1,307.9
20.3
%
194.7
14.9
%
$
6,820.3
100.0
%
$
6,460.3
100.0
%
$
360.0
5.6
%
Sales by Business
Day1,2
Nine Months Ended September
30,
Year-over-Year Change
2023
2022
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
18.4
51.6
%
$
17.0
50.3
%
$
1.4
8.3
%
Non-residential roofing products
9.4
26.4
%
10.0
29.4
%
(0.6
)
(5.5
)%
Complementary building products
7.9
22.0
%
6.8
20.3
%
1.1
14.9
%
$
35.7
100.0
%
$
33.8
100.0
%
$
1.9
5.6
%
__________________________
1. The nine-month periods ended September
30, 2023 and 2022 each had 191 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), 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 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. 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; costs related to changing our fiscal year end;
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.
- COVID-19 impacts. Represent costs directly related to the
COVID-19 pandemic. Beginning January 1, 2023, the Company
determined COVID-19 impacts should no longer be considered an
adjusting item. This change was applied prospectively.
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
Amortization
Interest Expense
Income Taxes2
Total
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
Three Months Ended September 30,
2022
Acquisition costs
$
1.6
$
21.9
$
1.0
$
—
$
24.5
Restructuring costs
1.4
—
0.3
—
1.7
COVID-19 impacts
0.2
—
—
—
0.2
Total adjusting items
$
3.2
$
21.9
$
1.3
$
—
$
26.4
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
Nine Months Ended September 30,
2022
Acquisition costs
$
3.8
$
64.8
$
3.0
$
—
$
71.6
Restructuring costs
6.0
—
0.9
—
6.9
COVID-19 impacts
1.7
—
—
—
1.7
Total adjusting items
$
11.5
$
64.8
$
3.9
$
—
$
80.2
__________________________________
1. Selling, general and administrative
expense (“SG&A”).
2. For tax impact of adjusting items, see
Adjusted Net Income (Loss) table below.
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,
2023
2022
2023
2022
Operating expense
$
418.8
$
398.8
$
1,202.0
$
1,142.8
Acquisition costs
(23.6
)
(23.5
)
(70.4
)
(68.6
)
Restructuring costs
—
(1.4
)
(2.0
)
(6.0
)
COVID-19 impacts
—
(0.2
)
—
(1.7
)
Adjusted Operating Expense
$
395.2
$
373.7
$
1,129.6
$
1,066.5
Net sales
$
2,584.3
$
2,415.2
$
6,820.3
$
6,460.3
Operating expense as % of sales
16.2
%
16.5
%
17.6
%
17.7
%
Adjusted Operating Expense as % of
sales
15.3
%
15.5
%
16.6
%
16.5
%
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,
2023
2022
2023
2022
Net income (loss)
$
161.3
$
154.8
$
339.9
$
385.1
Adjusting items:
Acquisition costs
24.6
24.5
73.4
71.6
Restructuring costs
0.5
1.7
3.0
6.9
COVID-19 impacts
—
0.2
—
1.7
Total adjusting items
25.1
26.4
76.4
80.2
Less: tax impact of adjusting items1
(6.4
)
(6.7
)
(19.6
)
(20.6
)
Total adjustments, net of tax
18.7
19.7
56.8
59.6
Adjusted Net Income (Loss)
$
180.0
$
174.5
$
396.7
$
444.7
Net sales
$
2,584.3
$
2,415.2
$
6,820.3
$
6,460.3
Net income (loss) as % of sales
6.3
%
6.4
%
4.9
%
6.0
%
Adjusted Net Income (Loss) as % of
sales
7.0
%
7.2
%
5.8
%
6.9
%
_______________________________
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 September 30, 2023 and 2022 were
calculated using a blended effective tax rate of 25.5% and 25.4%,
respectively. The tax impact of adjustments for the nine months
ended September 30, 2023 and 2022 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,
2023
2022
2023
2022
Net income (loss)
$ 161.3
$ 154.8
$ 339.9
$ 385.1
Interest expense, net
36.4
23.6
93.0
59.9
Income taxes
57.3
53.8
119.8
133.7
Depreciation and amortization
44.5
40.9
130.7
120.2
Stock-based compensation
7.9
7.9
22.2
21.0
Acquisition costs1
2.2
1.6
5.3
3.8
Restructuring costs1
—
1.4
2.0
6.0
COVID-19 impacts
—
0.2
—
1.7
Adjusted EBITDA
$ 309.6
$ 284.2
$ 712.9
$ 731.4
Net sales
$ 2,584.3
$ 2,415.2
$ 6,820.3
$ 6,460.3
Net income (loss) as % of sales
6.3 %
6.4 %
4.9 %
6.0 %
Adjusted EBITDA as % of sales
12.0 %
11.8 %
10.5 %
11.3 %
_____________________________
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231102073109/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)
Historical Stock Chart
From Jun 2024 to Jul 2024
Beacon Roofing Supply (NASDAQ:BECN)
Historical Stock Chart
From Jul 2023 to Jul 2024