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]

Core Insights - Beacon Roofing Supply reported revenue of $2.4 billion for the quarter ended December 2024, reflecting a year-over-year increase of 4.5% [1] - The company's EPS was $1.65, down from $1.72 in the same quarter last year, indicating a decline in earnings per share [1] - Revenue fell short of the Zacks Consensus Estimate of $2.42 billion, resulting in a surprise of -0.79% [1] - The EPS also missed the consensus estimate of $1.67, with a surprise of -1.20% [1] Revenue Growth Metrics - Residential roofing products experienced a revenue growth rate of 0.8%, compared to an average estimate of -1.7% from four analysts [4] - Complementary building products saw a revenue growth rate of 11.7%, exceeding the average estimate of 9.6% from four analysts [4] - Non-residential roofing products had a revenue growth rate of 5.5%, slightly below the average estimate of 5.8% from four analysts [4] Net Sales Performance - Net sales for residential roofing products were reported at $1.17 billion, slightly above the average estimate of $1.16 billion from four analysts, representing a year-over-year change of +0.8% [4] - Net sales for complementary building products were $569.90 million, below the average estimate of $587.74 million from four analysts, with a year-over-year change of +11.8% [4] - Net sales for non-residential roofing products were $661.40 million, compared to the average estimate of $674.45 million from four analysts, reflecting a year-over-year change of +5.5% [4] Stock Performance - Over the past month, shares of Beacon Roofing have returned -2%, which is slightly better than the Zacks S&P 500 composite's -2.2% change [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential for outperformance in the near term [3]

Financial Performance - Net sales for Q4 2024 reached $2404 million, a 2.8% increase year-over-year[7, 17] - Adjusted EBITDA for Q4 2024 was a record[11] - Net income for Q4 2024 was $104 million[7] - Full year 2024 net sales grew by 7.1% to a record $9800 million[34] - Full year 2024 Adjusted EBITDA was $930 million[34] Sales and Mix - Residential net sales decreased by 0.8% year-over-year in Q4 2024[19, 20] - Non-residential net sales increased by 3.8% year-over-year in Q4 2024[19, 20] - Complementary net sales increased by 9.9% year-over-year in Q4 2024[19, 20] Capital Allocation and Balance Sheet - Completed an accelerated share repurchase of $225 million in 2024, retiring 24 million shares[11] - Net debt leverage was 28x at the end of Q4[30, 32] - Liquidity was greater than $1100 million as of December 31[32] Outlook - Expect net sales growth of MSD% YoY in 2025[38] - Adjusted EBITDA is projected to be between $950 million and $1030 million in 2025[38]

Core Insights - Beacon Roofing Supply reported quarterly earnings of $1.65 per share, missing the Zacks Consensus Estimate of $1.67 per share, and down from $1.72 per share a year ago, representing an earnings surprise of -1.20% [1] - The company posted revenues of $2.4 billion for the quarter ended December 2024, missing the Zacks Consensus Estimate by 0.79%, and showing an increase from $2.3 billion year-over-year [2] - The stock has gained approximately 14.2% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.43 on revenues of $2.01 billion, and for the current fiscal year, it is $8.02 on revenues of $10.14 billion [7] - The estimate revisions trend for Beacon Roofing is currently favorable, leading to a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Building Products - Retail industry, to which Beacon Roofing belongs, is currently ranked in the bottom 29% of over 250 Zacks industries, suggesting potential challenges ahead [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]

Financial Performance - Fourth quarter net sales reached $2.40 billion, representing a 4.5% increase compared to the prior year, marking a company record for fourth quarter net sales [8]. - Full year net sales increased to $9.76 billion, a 7.1% growth compared to the previous year, also a company record [12]. - Adjusted EBITDA for the fourth quarter was $222.5 million, slightly up from $216.7 million in the prior year [11]. - Net income for the fourth quarter was $83.6 million, down from $95.1 million in the prior year, with diluted EPS at $1.32 compared to $1.47 [11]. - Net income for the year ended December 31, 2024, was $361.7 million, a decrease of 16.9% from $435.0 million in 2023 [30]. - Total net cash provided by operating activities decreased to $419.4 million in 2024 from $787.8 million in 2023, reflecting a decline of 46.8% [30]. - Adjusted Net Income for the year ended December 31, 2024, was $456.1 million, down from $507.9 million in 2023, indicating a decrease of 10.1% [49]. - Adjusted EBITDA for the year ended December 31, 2024, was $930.2 million, slightly up from $929.6 million in 2023, showing a marginal increase of 0.1% [51]. Sales Growth - The Ambition 2025 plan has led to year-over-year net sales growth for the last 16 quarters, demonstrating the resilience of the business model [3]. - Residential roofing product sales increased by 3.9% for the full year, while non-residential roofing product sales rose by 11.6% [13]. - Net sales for the year ended December 31, 2024, reached $9,763.2 million, an increase of 7.1% compared to $9,119.8 million in 2023 [37]. - Residential roofing products sales increased by 3.9% to $4,833.5 million in 2024 from $4,652.0 million in 2023 [37]. - Non-residential roofing products sales grew by 11.6% to $2,674.1 million in 2024, up from $2,395.7 million in 2023 [37]. - Complementary building products sales rose by 8.9% to $2,255.6 million in 2024, compared to $2,072.1 million in 2023 [37]. Capital Management - The company returned $225 million in capital to shareholders through common share repurchases during 2024 [4]. - Capital expenditures for 2024 were $126.6 million, slightly higher than $122.9 million in 2023 [30]. - The company reported a net cash used in investing activities of $540.5 million in 2024, compared to $225.6 million in 2023 [30]. - Borrowings under revolving lines of credit increased to $2,881.7 million in 2024 from $2,374.2 million in 2023 [30]. - The company’s cash and cash equivalents at the end of the period decreased to $74.3 million in 2024 from $84.0 million in 2023 [30]. Operational Metrics - The gross margin remained stable at 25.7% for both the fourth quarter and the full year, despite higher product costs [10]. - Gross profit margin remained stable at 25.7%, with gross profit of $617.5 million in Q4 2024 compared to $592.0 million in Q4 2023 [26]. - Operating expenses increased to $459.7 million in Q4 2024, up from $428.5 million in Q4 2023, with a slight increase in the operating expense ratio to 19.1% [26]. - Adjusted Operating Expense for the three months ended December 31, 2024, was $433.6 million, compared to $408.5 million in 2023, reflecting an increase of 6.1% [48]. - Operating expense as a percentage of net sales for the three months ended December 31, 2024, was 19.1%, compared to 18.6% in the same period of 2023 [48]. Strategic Initiatives - The company opened 19 greenfield locations and acquired 42 branches, enhancing customer reach and service capabilities [3]. - The company plans to provide a strategic review and financial targets at the upcoming Investor Day on March 13, 2025 [7]. - The company is focused on expanding its market presence and enhancing product offerings through strategic initiatives and potential acquisitions [24]. - The company has a proprietary digital account management suite, Beacon PRO+, enhancing customer business management capabilities [24]. - Beacon operates over 580 branches across all 50 states in the U.S. and seven provinces in Canada, serving approximately 110,000 customers [24]. Cost Management - Interest expense for the year ended December 31, 2024, was $182.7 million, compared to $131.9 million in 2023, indicating an increase of 38.4% [51]. - Acquisition costs for the year ended December 31, 2024, totaled $107.8 million, an increase from $96.0 million in 2023, reflecting an increase of 12.5% [49]. - Restructuring costs for the year ended December 31, 2024, were $19.2 million, significantly higher than $2.0 million in 2023, representing a substantial increase of 860% [49]. - Total adjusting items for the year ended December 31, 2024, amounted to $127.0 million, compared to $98.0 million in 2023, representing a significant increase of 29.6% [49].

Core Viewpoint - Analysts expect Beacon Roofing Supply (BECN) to report quarterly earnings of $1.67 per share, reflecting a year-over-year decline of 2.9%, while revenues are projected to be $2.42 billion, an increase of 5.4% from the previous year [1] Earnings Estimates - Revisions to earnings estimates are crucial indicators for predicting investor actions regarding the stock, with empirical research showing a strong correlation between earnings estimate trends and short-term stock price performance [2] Key Metrics Projections - Analysts project 'Net sales- Residential roofing products' to reach $1.16 billion, indicating no change from the year-ago quarter [4] - The estimate for 'Net sales- Complementary building products' is $587.74 million, suggesting a year-over-year increase of 15.2% [4] - 'Net sales- Non-residential roofing products' are expected to be $674.45 million, reflecting a 7.6% increase from the prior-year quarter [5] Revenue Growth Rates - The estimated 'Revenue Growth Rate (YoY change) - Residential roofing products' is -1.7%, compared to 20.2% from the previous year [5] - For 'Revenue Growth Rate (YoY change) - Complementary building products', the consensus stands at 9.6%, down from 16% in the same quarter last year [6] - The estimated 'Revenue Growth Rate (YoY change) - Non-residential roofing products' is 5.8%, compared to 11.4% from the previous year [6] Stock Performance - Beacon Roofing shares have decreased by 1.5% over the past month, while the Zacks S&P 500 composite has seen a decline of 0.5%, with BECN holding a Zacks Rank 2 (Buy), indicating expected outperformance in the near term [7]

Core Insights - Investors should closely monitor Beacon Roofing Supply, Inc. (BECN) due to significant movements in the options market, particularly the April 17, 2025 $45 Put, which has high implied volatility [1] Company Analysis - Beacon Roofing Supply is currently rated as Zacks Rank 2 (Buy) within the Building Products – Retail industry, which is positioned in the Bottom 26% of the Zacks Industry Rank [3] - Over the past 30 days, no analysts have increased earnings estimates for the current quarter, while one analyst has decreased the estimates, leading to a reduction in the Zacks Consensus Estimate from $1.72 per share to $1.67 [3] Options Market Insights - The high implied volatility surrounding Beacon Roofing Supply shares suggests that options traders anticipate a significant price movement, potentially indicating an upcoming event that could lead to a rally or sell-off [2][4] - Seasoned options traders often seek to sell premium on options with high implied volatility, aiming to benefit from the decay of the option's value if the underlying stock does not move as much as expected [4]

Core Viewpoint - QXO, Inc. is committed to acquiring Beacon Roofing Supply, Inc. for $124.25 per share in cash, which represents a significant premium over Beacon's recent stock prices [1][2]. Group 1: Acquisition Details - QXO's all-cash tender offer of $124.25 per share provides a 37% premium to Beacon's 90-day unaffected volume-weighted average price of $91.02 as of November 15, 2024, and a 26% premium to the price of $98.75 before the proposal became public [2]. - The tender offer will remain open until 12:00 midnight, New York City time, on February 24, 2025, with QXO prepared to complete the acquisition shortly after the tender expires, approximately one month later [3]. - The transaction is not subject to any financing or due diligence conditions, and QXO expects regulatory approval processes to be completed by the time the tender offer expires [3]. Group 2: Company Background - QXO provides technology solutions primarily to clients in the manufacturing, distribution, and service sectors, including consulting, professional services, and proprietary software development [5]. - The company aims to become a tech-forward leader in the $800 billion building products distribution industry, targeting tens of billions of dollars in annual revenue over the next decade through acquisitions and organic growth [5]. Group 3: Advisory and Legal Support - Morgan Stanley & Co. LLC is acting as the financial advisor to QXO, while Paul, Weiss, Rifkind, Wharton & Garrison LLP is serving as legal counsel [4].

Core Viewpoint - QXO, Inc. is initiating an all-cash tender offer to acquire Beacon Roofing Supply, Inc. at a price of $124.25 per share, representing a 37% premium over Beacon's 90-day unaffected average price of $91.02, with a total enterprise value of approximately $11 billion [1][2]. Group 1: Acquisition Details - The tender offer will last for 20 business days and is expected to be completed quickly after its expiration, with no contingencies related to financing or due diligence [2]. - QXO has secured full financing commitments from major financial institutions, ensuring sufficient funds to cover the purchase price, refinancing of Beacon's debt, and associated transaction costs [4]. Group 2: Strategic Intent - QXO's CEO, Brad Jacobs, emphasized that the acquisition would provide immediate cash to Beacon shareholders at a significant premium and believes that Beacon aligns well with QXO's strategy to lead in building products distribution [3]. - QXO plans to pursue all options to finalize the transaction, including nominating directors for election at Beacon's Annual Meeting [3]. Group 3: Company Background - QXO specializes in technology solutions for manufacturing, distribution, and service sectors, aiming to become a tech-forward leader in the $800 billion building products distribution industry, targeting significant revenue growth through acquisitions and organic growth [6].