Beacon Roofing Supply(BECN) - 2021 Q1 - Quarterly Report

PART I. Financial Information (Unaudited) This section presents the unaudited financial information, including condensed consolidated financial statements and management's discussion and analysis Item 1. Condensed Consolidated Financial Statements Unaudited condensed consolidated financial statements, including balance sheets, operations, comprehensive income, equity, cash flows, and related notes Consolidated Balance Sheets Total assets, liabilities, and equity decreased as of March 31, 2021, influenced by the Interior Products divestiture | Metric | March 31, 2021 (Millions) | September 30, 2020 (Millions) | March 31, 2020 (Millions) | | :---------------------- | :------------------------ | :---------------------------- | :------------------------ | | Total Assets | $5,688.4 | $6,957.5 | $7,110.0 | | Total Liabilities | $3,735.9 | $4,797.4 | $5,016.6 | | Total Stockholders' Equity | $1,553.3 | $1,760.9 | $1,694.2 | Consolidated Statements of Operations Net sales and gross profit increased, but six-month net loss widened significantly due to discontinued operations | Metric | Three Months Ended March 31, 2021 (Millions) | Three Months Ended March 31, 2020 (Millions) | | :----------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net Sales | $1,318.0 | $1,197.1 | | Gross Profit | $332.8 | $270.4 | | Net Income (Loss) | $(6.3) | $(122.6) | | Basic Net Income (Loss) Per Share | $(0.18) | $(1.87) | | Metric | Six Months Ended March 31, 2021 (Millions) | Six Months Ended March 31, 2020 (Millions) | | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net Sales | $2,894.5 | $2,612.5 | | Gross Profit | $732.5 | $610.6 | | Net Income (Loss) | $(226.8) | $(146.0) | | Basic Net Income (Loss) Per Share | $(3.44) | $(2.30) | Consolidated Statements of Comprehensive Income Comprehensive loss improved for three months but worsened for six months, influenced by currency and derivative changes | Metric | Three Months Ended March 31, 2021 (Millions) | Three Months Ended March 31, 2020 (Millions) | | :-------------------------- | :------------------------------------------- | :------------------------------------------- | | Comprehensive Income (Loss) | $(1.9) | $(144.9) | | Metric | Six Months Ended March 31, 2021 (Millions) | Six Months Ended March 31, 2020 (Millions) | | :-------------------------- | :----------------------------------------- | :----------------------------------------- | | Comprehensive Income (Loss) | $(216.9) | $(164.5) | Consolidated Statements of Stockholders' Equity Total stockholders' equity decreased for both periods, primarily due to net losses, partially offset by stock issuance | Metric | March 31, 2021 (Millions) | December 31, 2020 (Millions) | | :------------------------- | :------------------------ | :--------------------------- | | Total Stockholders' Equity | $1,553.3 | $1,544.8 | | Metric | March 31, 2020 (Millions) | December 31, 2019 (Millions) | | :------------------------- | :------------------------ | :--------------------------- | | Total Stockholders' Equity | $1,694.2 | $1,840.7 | | Metric | March 31, 2021 (Millions) | September 30, 2020 (Millions) | | :------------------------- | :------------------------ | :---------------------------- | | Total Stockholders' Equity | $1,553.3 | $1,760.9 | | Metric | March 31, 2020 (Millions) | September 30, 2019 (Millions) | | :------------------------- | :------------------------ | :---------------------------- | | Total Stockholders' Equity | $1,694.2 | $1,862.3 | Consolidated Statements of Cash Flows Net cash used in operations decreased, investing cash increased from asset sale, and financing cash used rose due to debt repayments | Cash Flow Activity | Six Months Ended March 31, 2021 (Millions) | Six Months Ended March 31, 2020 (Millions) | | :----------------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net cash provided by (used in) operating activities | $(123.1) | $(150.8) | | Net cash provided by (used in) investing activities | $806.4 | $(23.9) | | Net cash provided by (used in) financing activities | $(687.8) | $883.4 | | Net increase (decrease) in cash and cash equivalents | $(5.3) | $708.9 | | Cash and cash equivalents, end of period | $619.3 | $781.2 | Notes to Condensed Consolidated Financial Statements These notes detail financial statements, covering operations, accounting policies, discontinued operations, and financial instruments 1. Company Overview Beacon Roofing Supply is a leading distributor of building products, having divested Interior Products to focus on core exteriors - Beacon Roofing Supply, Inc. is the largest publicly traded distributor of residential and non-residential roofing materials and complementary building products in the United States and Canada[17] - Completed the sale of its interior products and insulation businesses ('Interior Products') on February 10, 2021, for approximately $850 million in cash[18] - Rebranded its exterior products branches with the trade name 'Beacon Building Products' on January 15, 2020[19] 2. Summary of Significant Accounting Policies This section outlines key accounting policies, including U.S. GAAP compliance, discontinued operations, and recent ASU adoptions - Condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, with Interior Products reflected as discontinued operations for all periods presented[21] - Adopted ASU 2016-13 ('Financial Instruments—Credit Losses') on October 1, 2020, resulting in an approximate $4.3 million increase to the accounts receivable reserve and a corresponding retained earnings adjustment[27] - Adopted ASU 2017-04 ('Simplifying the Accounting for Goodwill Impairment') on October 1, 2020, which did not have a material impact[28] 3. Discontinued Operations The company completed the sale of Interior Products for $850 million, recording a significant loss on sale due to goodwill allocation - Completed the sale of Interior Products to FBM on February 10, 2021, for approximately $850 million in cash[31] - The divestiture aimed to reduce net leverage, strengthen the balance sheet, enhance leadership focus, and provide financial flexibility for strategic growth in the core exteriors business[32] - A loss on sale of $357.8 million was recorded for the six months ended March 31, 2021, primarily due to the allocation of $730.9 million of consolidated goodwill to Interior Products[33] | Metric | Three Months Ended March 31, 2021 (Millions) | Three Months Ended March 31, 2020 (Millions) | | :--------------------------------------- | :------------------------------------------- | :------------------------------------------- | | Net income (loss) from discontinued operations | $4.2 | $(1.3) | | Metric | Six Months Ended March 31, 2021 (Millions) | Six Months Ended March 31, 2020 (Millions) | | :--------------------------------------- | :----------------------------------------- | :----------------------------------------- | | Net income (loss) from discontinued operations | $(263.7) | $(0.7) | 4. Net Sales Net sales increased for both periods, driven by strong demand in residential and complementary products and price increases - Net sales increased for both the three and six months ended March 31, 2021, driven by strong demand for residential and complementary products and the benefit of price increases[37] | Product Line | Three Months Ended March 31, 2021 (Millions) | Three Months Ended March 31, 2020 (Millions) | Change (%) | | :--------------------------- | :------------------------------------------- | :------------------------------------------- | :--------- | | Residential roofing products | $695.0 | $585.4 | 18.7% | | Non-residential roofing products | $329.7 | $343.7 | (4.1%) | | Complementary building products | $293.3 | $268.0 |