Beacon Roofing Supply(BECN)2024-08-02 19:56Financial Performance - Net sales for the three months ended June 30, 2024, were $2,674.6 million, an increase of 6.8% compared to $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% compared to the prior year, indicating strong growth in the company's digital commerce platform[72]. - The company opened 13 new branch locations and acquired 23 branches during the first half of 2024, contributing $240.6 million and $315.4 million to net sales, respectively[72]. - Net sales increased by 6.8% to $2.67 billion in 2024, up from $2.50 billion in 2023, driven by a 2.4% increase in residential roofing products, an 11.1% increase in non-residential roofing products, and a 12.3% increase in complementary building products[80]. - Organic net sales for existing products increased by 0.5% to $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% increase from $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% increase from $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%, slightly up from 26.4% in 2023, with an expected range of 26.0% to 27.0% for the year[89]. - The company’s liquidity as of June 30, 2024, included cash and cash equivalents of $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].