Beacon Reports Second Quarter 2022 Results

Beacon (the “Company”, “we”, “our”) announced results 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

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.

For the complete press release, 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 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.

Contact:

Jennifer Lewis – Vice President Communications & Corporate Social Responsibility – Jennifer.Lewis@becn.com – (571) 752-1048

Source: Beacon Roofing Supply, Inc.