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 (NASDAQ:BECN) (the "Company", "we", "our") announced results today 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.

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:

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, 2023 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 550 branches throughout all 50 states in the U.S. and 7 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.

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 direct and incremental costs related to 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; 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.

The following table presents the pre-tax impact of the adjusting items on our consolidated statements of operations for each of the periods indicated:

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:

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:

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:

View source version on businesswire.com: https://www.businesswire.com/news/home/20240502653842/en/