Financial Performance - Net sales decreased by 0.2% to $1.908 billion in Q1 2025, down from $1.912 billion in Q1 2024[136] - Gross profit for Q1 2025 was $467.8 million, compared to $473.2 million in Q1 2024, reflecting a decrease in gross margin from 24.7% to 24.5%[135] - The company reported a net loss of $43.1 million in Q1 2025, compared to a net income of $5.6 million in Q1 2024[135] - Organic net sales from existing branches decreased by 5.5% to $1.807 billion in Q1 2025, while greenfield branches contributed $23.2 million[136] - Total gross profit decreased by $5.4 million, or 1.1%, to $467.8 million in 2025 from $473.2 million in 2024, with a gross margin of 24.5%, down from 24.7%[138][139] - Adjusted Net Income for Q1 2025 was $4.3 million, a decrease from $26.6 million in Q1 2024, with net income (loss) as a percentage of net sales at (2.2)% compared to 0.3% in the previous year[161] - Adjusted EBITDA for Q1 2025 was $82.2 million, down from $103.1 million in Q1 2024, representing 4.3% of net sales compared to 5.4% in the prior year[162] Operating Expenses - Operating expenses increased to $491.2 million in Q1 2025, up from $428.1 million in Q1 2024, primarily due to higher selling, general, and administrative expenses[135] - Organic SG&A expenses increased by $35.3 million, or 9.3%, to $416.8 million in 2025, driven by one-time costs related to QXO Transactions and acquisitions[141][144] - Total SG&A expense rose by $55.0 million, or 14.4%, to $436.5 million in 2025, with total SG&A as a percentage of net sales increasing to 22.9% from 20.0%[141][144] - Adjusted Operating Expense for 2025 was $428.2 million, up from $403.5 million in 2024, with adjusted operating expense as a percentage of net sales at 22.4%[159] Debt and Interest - Interest expense increased to $42.2 million in 2025 from $38.6 million in 2024, attributed to higher average debt balances following refinancing activities[147] Taxation - The effective tax rate for 2025 was 26.5%, slightly up from 26.4% in 2024, with an income tax provision of $(22.5) million in 2025 compared to $(1.5) million in 2024[150] Cash Flow and Liquidity - Net cash used in operating activities was $135.2 million in Q1 2025, a slight improvement from $140.8 million in Q1 2024, primarily due to favorable changes in working capital[172] - Net cash used in investing activities decreased significantly to $23.5 million in Q1 2025 from $135.1 million in Q1 2024, attributed to reduced acquisitions and capital expenditures[173] - Net cash provided by financing activities was $141.8 million in Q1 2025, down from $327.1 million in Q1 2024, mainly due to the refinancing of the 2028 Term Loan[174] - As of March 31, 2025, the company had cash and cash equivalents of $57.4 million and available borrowings of approximately $959.0 million under asset-based revolving lines of credit[168] - The company anticipates seeking additional acquisition opportunities and may explore additional financing sources to bolster liquidity and strengthen capital structure[169] Merger and Acquisitions - The pending merger with QXO is set to close by the end of April 2025, with an increased offer price of $124.35 per share[124] - A termination fee of $336.9 million will be payable to QXO if the merger agreement is terminated under specified circumstances[124] Market and Operations - The company operates 595 branches across the U.S. and Canada, serving approximately 110,000 customers[128] - Residential roofing products accounted for 48.7% of net sales in Q1 2025, while non-residential roofing products decreased by 5.2%[136] - The company’s differentiated service model and digital commerce platform are key competitive advantages in the roofing distribution market[130] Seasonal Trends - Seasonal demand fluctuations are expected, with historically low net income levels or net losses typically occurring in the quarter ending March 31 due to adverse winter weather conditions[164] - The company’s balance sheet fluctuates seasonally, with increased inventory and cash usage expected in the quarters ending March 31 and June 30[165]

Company Overview - Beacon Roofing Supply, Inc. is engaged in the distribution of residential and non-residential roofing materials, as well as complementary building products such as siding, windows, insulation, and waterproofing systems [2] Earnings Performance - The company has missed the Zacks Consensus Estimate in each of the last three quarters, contrasting with a beat a year ago [4] - The current fiscal year consensus earnings estimate has decreased from $8.02 to $7.40 over the last 60 days, while the next year's estimate has dropped from $13.88 to $12.52 over the last 30 days [5] Market Sentiment - Beacon Roofing Supply is currently rated as Zacks Rank 5 (Strong Sell) due to the negative movement in earnings estimates, indicating a bearish outlook [1][5] - The broader market context shows that many stocks within the Zacks universe are experiencing negative earnings estimate revisions, contributing to the overall decline in sentiment [6]

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Beacon Roofing Supply, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - The consensus estimate predicts a quarterly loss of $0.21 per share, reflecting a year-over-year change of -151.2% [3]. - Expected revenues are $1.91 billion, which is a decrease of 0.2% from the same quarter last year [3]. Estimate Revisions - The consensus EPS estimate has been revised 0.06% higher in the last 30 days, indicating a slight reassessment by analysts [4]. - The Most Accurate Estimate is lower than the Zacks Consensus Estimate, leading to a negative Earnings ESP of -233.87% [10][11]. Earnings Surprise Prediction - The Zacks Earnings ESP model suggests that a positive or negative reading indicates the likely deviation from consensus estimates, with positive readings being more predictive of earnings beats [6][7]. - Stocks with a positive Earnings ESP and a Zacks Rank of 1, 2, or 3 have shown a nearly 70% success rate in delivering positive surprises [8]. Historical Performance - In the last reported quarter, Beacon Roofing was expected to earn $1.67 per share but delivered $1.65, resulting in a surprise of -1.20% [12]. - Over the past four quarters, the company has only beaten consensus EPS estimates once [13]. Conclusion - Beacon Roofing does not appear to be a strong candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock [16].

Group 1 - Monteverde & Associates PC has recovered millions for shareholders and is recognized as a Top 50 Firm in the 2024 ISS Securities Class Action Services Report [1] - The firm is investigating Beacon Roofing Supply, Inc. regarding its proposed merger with QXO, Inc., where Beacon shareholders will receive $124.35 per share in cash [1] - The Tender Offer for the merger expires on March 31, 2025, and there is no cost or obligation for shareholders to participate [2] Group 2 - Monteverde & Associates PC is a national class action securities firm with a successful track record in trial and appellate courts, including the U.S. Supreme Court [2] - The firm emphasizes that no company, director, or officer is above the law, encouraging shareholders with concerns to seek additional information [3] - Contact information for Juan Monteverde, Esq. is provided for shareholders seeking assistance or information [3]

Group 1 - Johnson Fistel, PLLP has initiated an investigation into the board members of Beacon Roofing Supply, Inc. regarding potential breaches of fiduciary duties related to the proposed sale to QXO, Inc. [1][3] - Beacon Roofing has signed a definitive merger agreement with QXO, where QXO will acquire all outstanding shares of Beacon Roofing's common stock for $124.35 per share in cash [2]. - The investigation focuses on whether the Beacon Roofing board adequately pursued alternatives to the acquisition and secured the best possible price for shareholders, especially considering a Wall Street analyst's price target of $140 for the stock [3]. Group 2 - Johnson Fistel, PLLP is a nationally recognized shareholder rights law firm with a focus on representing individual and institutional investors in securities class action lawsuits [5]. - The firm has been recognized as a top plaintiffs' securities law firm in the United States, having recovered approximately $90.725 million for clients in cases where it served as lead or co-lead counsel [6].

Core Insights - Beacon Roofing Supply, Inc. has formed a strategic partnership with Renovate Robotics to develop autonomous roofing robots, with the first robot, Rufus, expected to launch in late 2025 [1][3] - This partnership aims to enhance Beacon's service portfolio, particularly in the residential roofing segment, which is a significant revenue contributor [2] - The CEO of Beacon expressed optimism about the potential of this technology to disrupt the roofing industry, especially in a labor-scarce environment [3] Strategic Initiatives - Beacon is focused on its Ambition 2025 plan, which aims to grow the company, enhance customer experience, and increase value for stakeholders [4] - The launch of a new e-commerce platform, the OTC Delivery Network, is anticipated to improve sales and operational profitability [5] Market Performance - Beacon's stock increased by 6.7% during a recent trading session, reflecting positive investor sentiment regarding the new partnership [3] - Over the past six months, Beacon's shares have risen by 46%, significantly outperforming the Zacks Building Products - Retail industry's growth of 3.3% [7]

Core Viewpoint - Beacon Roofing Supply, Inc. (BECN) has acquired DM Figley Company, a specialty waterproofing distributor, to enhance its market presence and align with its Ambition 2025 growth strategy [1][2][4]. Group 1: Acquisition Details - DM Figley, based in Menlo Park, CA, has been a wholesale distributor of sealants and waterproofing materials since 1970, serving various locations in California [2]. - The acquisition integrates DM Figley into BECN's Waterproofing Division, which now operates nearly 60 branches across the U.S., enhancing customer relationships and technical expertise [3]. Group 2: Ambition 2025 Plan - BECN's Ambition 2025 plan focuses on above-market growth through acquisitions and new branch openings, aiming to enhance customer service [4]. - From January 1, 2022, to December 31, 2024, BECN has acquired 26 companies, adding 85 branches to its portfolio [4]. Group 3: Performance Metrics - In 2024, BECN has opened 19 new greenfield locations and acquired 42 branches, with digital sales increasing by 24.1% year over year [6]. - BECN's shares have gained 39.6% over the past six months, significantly outperforming the Zacks Building Products – Retail industry's growth of 4.6% [9].

Core Insights - Beacon Roofing Supply, Inc. reported lower-than-expected fourth-quarter 2024 results, with earnings and net sales missing the Zacks Consensus Estimate, although top line grew while bottom line declined year over year [1][4] Financial Performance - Adjusted earnings per share were $1.65, missing the Zacks Consensus Estimate of $1.67 by 1.2% and down 3.9% from the previous year's adjusted level of $1.72 [4] - Net sales reached $2.40 billion, slightly missing the consensus mark of $2.42 billion by 0.8%, but increased 4.5% year over year [4] - Adjusted EBITDA for the quarter was $222.5 million, up from $216.7 million year over year, though the adjusted EBITDA margin contracted by 10 basis points to 9.3% [10][12] Sales Breakdown - Residential Roofing Products, accounting for 48.8% of quarterly net sales, generated $1.17 billion, up 0.8% year over year, primarily driven by price execution [7] - Non-Residential Roofing Products, comprising 27.5% of quarterly net sales, rose 5.5% year over year to $661.4 million due to higher volumes and strong market demand [8] - Complementary Building Products, making up 23.7% of quarterly net sales, increased 11.7% year over year to $569.9 million, driven by recent waterproofing acquisitions [9] Strategic Initiatives - The company has implemented its Ambition 2025 plan, resulting in 16 consecutive quarters of year-over-year sales increases, with investments including 19 new locations and 42 branch acquisitions [2][5] - Despite challenges in residential roofing due to adverse weather and a weak housing market, the focus on commercial reroofing and waterproofing helped mitigate some of the residential weaknesses [6] Shareholder Returns and Debt Management - Beacon returned $225 million to shareholders through share buybacks while reducing debt leverage, maintaining strong cash flow to support growth and shareholder returns [3] 2025 Guidance - For the first quarter of 2025, net sales per day are expected to decline by 3-5% year over year, with gross margin anticipated to remain stable [14] - For the full year 2025, net sales are projected to grow in the mid-single digits, with adjusted EBITDA expected in the range of $950-$1,030 million [14]

Financial Performance - Net sales for 2024 reached $9,763.2 million, an increase of 7.1% from $9,119.8 million in 2023[157] - Gross profit for 2024 was $2,504.8 million, compared to $2,342.7 million in 2023, reflecting a gross profit margin of 25.7% for both years[157] - Net income for 2024 was $361.7 million, down from $435.0 million in 2023, resulting in a net income margin of 3.7%[157] - Net sales increased by 7.1% to $9.76 billion in 2024, up from $9.12 billion in 2023[158] - Organic net sales rose by 2.5% to $9.35 billion, driven by a 1-2% increase in weighted-average selling price and estimated organic volume[158] - Total gross profit increased by 6.9% to $2.50 billion in 2024, compared to $2.34 billion in 2023[160] - Adjusted Net Income for 2024 was $456.1 million, down from $507.9 million in 2023, indicating a decrease of 10.2%[180] - Adjusted EBITDA for 2024 was $930.2 million, slightly up from $929.6 million in 2023, showing a marginal increase of 0.1%[181] Operating Expenses - Operating expenses increased to $1,839.4 million in 2024 from $1,630.5 million in 2023, with selling, general and administrative expenses rising to 16.8% of net sales[157] - SG&A expenses rose by 12.6% to $1.64 billion in 2024, primarily due to acquisitions and increased one-time costs[164] - Adjusted Operating Expense for 2024 was $1,720.9 million, up from $1,538.1 million in 2023, representing an increase of 11.8%[179] Share Repurchase and Capital Management - The company repurchased all 400,000 shares of preferred stock for $805.4 million, including accrued dividends, on July 31, 2023[145] - The share repurchase program was increased by approximately $387.9 million, allowing for future repurchases of up to $500.0 million[200] - The company repurchased a total of 2.4 million shares in 2024, compared to 1.6 million shares in 2023[203] - The total amount repurchased in 2024 was $225.0 million, significantly higher than the $110.9 million in 2023[203] - The average price per share for repurchases in 2024 was $92.77, up from $68.82 in 2023[203] - As of December 31, 2024, the company had approximately $164.1 million remaining for repurchases under the Repurchase Program[204] - The company incurred costs of $1.8 million directly attributable to the Repurchase Program in 2024, compared to approximately $0.6 million in 2023[204] Debt and Interest Expenses - Interest expense increased to $177.3 million in 2024 from $126.1 million in 2023, impacting overall profitability[157] - Interest expense rose to $177.3 million in 2024, up from $126.1 million in 2023, due to higher average debt balances[168] - The company had outstanding borrowings of $1.25 billion under its term loan and $1.24 billion under senior notes as of December 31, 2024[212] - The weighted-average effective interest rate on variable-rate debt instruments was 6.34% as of December 31, 2024[212] Cash Flow and Investments - Net cash provided by operating activities decreased to $419.4 million in 2024 from $787.8 million in 2023, a decline of 46.2%[191] - Net cash used in investing activities increased significantly to $540.5 million in 2024, compared to $225.6 million in 2023, an increase of 139.5%[192] - As of December 31, 2024, the company had cash and cash equivalents of $74.3 million and available borrowings of approximately $1.13 billion[187] Strategic Initiatives - The Ambition 2025 Value Creation Framework aims to enhance customer service and expand market presence, with a focus on operational efficiency[140] - The company plans to explore additional acquisition opportunities as part of its Ambition 2025 initiative, indicating a focus on market expansion[189] Market Exposure and Risks - Approximately 3.0% of net sales in 2024 were derived from customers in Canada, exposing the company to foreign currency exchange rate risks[213] - The company does not currently enter into financial instruments to manage minimal foreign currency exchange risks, as a 10% fluctuation would not have a material impact[213] - The company is exposed to commodity price risks, particularly related to energy and raw materials, but had no derivative financial instruments in place as of December 31, 2024[214] Taxation - The effective tax rate was 25.5% in 2024, a slight decrease from 25.8% in 2023, primarily due to lower pre-tax income[170]

Financial Data and Key Metrics Changes - The company achieved record fourth quarter results with net sales reaching over $2.4 billion, up 4.5% year-over-year, driven by acquisitions [26] - Adjusted EBITDA for the fourth quarter was $223 million, with cash flow generated of nearly $360 million [11][36] - Gross margin remained unchanged at 25.7%, at the high end of expectations, with price cost up around 10 basis points year-over-year [31] Business Line Data and Key Metrics Changes - Residential roofing sales were down less than 1% on a per day basis, while non-residential sales per day increased nearly 4% [28][29] - Complementary sales per day increased approximately 10%, driven by acquisitions, including new waterproofing branches [29] - Private label sales grew approximately 7% in the fourth quarter, contributing to overall margin enhancement [18] Market Data and Key Metrics Changes - Organic volumes, including those from greenfields, decreased approximately 3% to 4% on a per day basis, while overall price contributed 1% to 2% [27] - The Architectural Billing Index remains below 50, indicating contraction in new construction activity in the first half of the year [53] Company Strategy and Development Direction - The company is focused on its Ambition 2025 plan, aiming for above-market growth and consistent double-digit adjusted EBITDA margins [13][24] - Investments in greenfield locations and acquisitions are key strategies to enhance market share and customer reach [16][24] - The company plans to open 15 to 20 new greenfield locations in 2025, targeting underserved markets [59][80] Management's Comments on Operating Environment and Future Outlook - Management anticipates continued headwinds in the first half of 2025, including sluggish housing starts and higher interest rates [51][52] - Despite challenges, the underlying demand drivers remain strong, with expectations for improved repair and reroofing activity [54] - For the first quarter, total sales per day are expected to decline in the 3% to 5% range compared to the prior year quarter [55] Other Important Information - The company has returned $225 million to shareholders through share repurchases, reducing the share count significantly [48][41] - The board rejected an unsolicited tender offer from QXO, stating it undervalues the company [62] Q&A Session Summary Question: Dynamics around quarter-to-date sales and improvement - Management noted that January was tough due to weather, but February showed signs of improvement, with demand levels returning to expected ranges [66][68] Question: New greenfield additions and pricing strategy - The company plans for 15 to 20 new greenfield locations in 2025 and has announced a residential price increase for April [79][80] Question: SG&A expectations and achieving operational efficiency - Management acknowledged the need to digest acquisitions and greenfields to return SG&A to targeted levels, with expectations of $60 million in additional expenses from these initiatives [83][86] Question: Non-residential demand trends - Management indicated a steady demand for repair and replace, with a shift away from new construction due to supply chain disruptions [90][92] Question: Clarification on residential pricing and cost trends - The company expects price/cost to be neutral for the year, with a 1% incremental ASP from the April price increase factored into guidance [101][104] Question: Cost assumptions for 2025 - Management emphasized a focus on driving efficiency and productivity to improve EBITDA margins, despite price/cost neutrality [110][113] Question: Capacity utilization and investment needs - The company is focused on service levels rather than overall capacity, with plans to invest in areas where they currently have gaps [120][123]