Beacon Roofing Supply(BECN) - 2024 Q2 - Quarterly Report

Financial Performance - Net sales for the three months ended June 30, 2024, were $2,674.6 million, an increase of 6.8$2,503.7 million for the same period in 2023[77]. - Net income for the three months ended June 30, 2024, was $127.2 million, down from$153.8 million in the same period of 2023[77]. - Total net sales for the six months ended June 30, 2024, were $4.59 billion, compared to$4.24 billion in 2023, reflecting a strong performance[92]. - Net sales increased by 8.3% to $4.59 billion in 2024, up from$4.24 billion in 2023, driven by a 5.0% increase in residential roofing products and a 13.6% increase in non-residential roofing products[94]. - Net income attributable to common stockholders was $132.8 million in 2024, down from$178.6 million in 2023, resulting in diluted net income per share of $2.07[106]. Sales and Growth - Digital sales increased by 23.9$240.6 million and $315.4 million to net sales, respectively[72]. - Net sales increased by 6.8$2.67 billion in 2024, up from $2.50 billion in 2023, driven by a 2.4$2.52 billion, while greenfields contributed $57.6 million, resulting in total organic net sales of$2.57 billion, a 2.8% increase[81]. - The company anticipates continued growth driven by new product developments and market expansion strategies[80]. Profitability and Margins - Gross profit margin improved to 25.6% in Q2 2024 from 25.4% in Q2 2023, reflecting effective cost management[79]. - Gross profit rose to $683.7 million in 2024, a 7.5$636.2 million in 2023, with a gross margin of 25.6%, up from 25.4%[83]. - Gross profit for 2024 was $1.16 billion, a 7.3$1.08 billion in 2023, with a gross margin of 25.2%, down from 25.5%[96][97]. Expenses - Operating expenses increased to $467.9 million in Q2 2024 from$401.9 million in Q2 2023, primarily due to higher selling, general, and administrative expenses[77]. - Selling, General, and Administrative (SG&A) expenses increased by 16.7% to $418.5 million, primarily due to a$23.3 million rise in payroll and employee benefits, and a 9.6 million increase in general and administrative expenses[84]. - Selling, General, and Administrative (SG&A) expenses rose by 14.8% to 800.0 million, influenced by a $43.2 million increase in payroll and employee benefits[99]. - Depreciation expense increased to$26.5 million in 2024 from $21.8 million in 2023, attributed to new and acquired branches[86]. - Interest expense rose significantly to$45.4 million in 2024, compared to $26.0 million in 2023, due to higher average debt balances[88]. Shareholder Actions - The company repurchased all 400,000 shares of Preferred Stock for$805.4 million on July 31, 2023, enhancing shareholder value[73]. - The company repurchased $180.0 million worth of shares in the three months ended June 30, 2024, at an average price of$93.38 per share[127]. - The total number of shares repurchased in the six months ended June 30, 2024 was 1.9 million, compared to 1.2 million in the same period of 2023[127]. - Approximately $164.1 million remains available for repurchases under the share repurchase program as of June 30, 2024[129]. - The final settlement of the May 2024 ASR Agreement for share repurchases is expected to be completed in the fourth quarter of 2024[126]. Tax and Liquidity - The effective tax rate for 2024 was 26.5$76.6 million and available borrowings of approximately $812.0 million under asset-based revolving lines of credit[118]. - The company may explore additional financing sources to bolster liquidity and strengthen its capital structure[120]. Cash Flow - Net cash used in operating activities was$189.2 million in 2024, a decrease of $547.9 million compared to$358.7 million provided in 2023[121]. - Net cash used in investing activities increased to $263.2 million in 2024 from$81.0 million in 2023, primarily due to increased acquisitions[122]. - Net cash provided by financing activities was $445.8 million in 2024, an increase of$725.8 million compared to net cash used of $280.0 million in 2023[123]. - The company experienced a significant cash outflow of$523.6 million due to unfavorable changes in net working capital, particularly in inventories, accounts payable, and accounts receivable[121]. Operational Strategy - The Ambition 2025 Value Creation Framework aims to drive growth and improve operational performance, with a focus on customer service and market expansion[72]. - The company plans to continue focusing on market expansion and synergies from recent acquisitions to improve operational efficiency[99]. - New product and technology developments are expected to contribute positively to future sales growth, although specific details were not disclosed in the call[99]. Adjustments and Restructuring - For the three months ended June 30, 2024, total adjusting items amounted to $28.5 million, compared to$25.6 million for the same period in 2023, reflecting an increase of 11.3%[109]. - Adjusted Operating Expense for the three months ended June 30, 2024, was $440.9 million, up from$377.6 million in the same period of 2023, representing a 16.7% increase[112]. - Adjusted EBITDA for the three months ended June 30, 2024, was $279.4 million, slightly down from$290.3 million in the same period of 2023, a decrease of 4.9%[115]. - The company reported acquisition costs of $27.6 million for the three months ended June 30, 2024, compared to$23.8 million for the same period in 2023, an increase of 15.9%[109]. - Restructuring costs for the three months ended June 30, 2024, were $0.9 million, compared to$1.8 million for the same period in 2023, a decrease of 50%[109]. Market Conditions - The company experienced a net income of $127.2 million for the three months ended June 30, 2024, down from$153.8 million in the same period of 2023, a decline of 17.3%[113]. - The company anticipates fluctuations in demand due to seasonal changes and unpredictable weather patterns, impacting financial performance[116]. - Operating expense as a percentage of net sales for the three months ended June 30, 2024, was 17.5%, compared to 16.1% for the same period in 2023[112].