Beacon Roofing Supply(BECN) - 2022 Q1 - Quarterly Report

PART I. Financial Information (Unaudited) This section presents the company's unaudited financial statements and related disclosures for the reporting period Item 1. Condensed Consolidated Financial Statements This section presents the unaudited condensed consolidated financial statements and related notes, covering balance sheets, income, equity, and cash flows Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (in millions) | Item | March 31, 2022 | December 31, 2021 | March 31, 2021 | | :-------------------------------- | :------------- | :---------------- | :------------- | | Cash and cash equivalents | $52.4 | $225.8 | $619.3 | | Accounts receivable, net | $1,008.5 | $855.2 | $759.5 | | Inventories, net | $1,462.1 | $1,161.7 | $1,087.1 | | Total current assets | $2,911.4 | $2,609.9 | $2,778.1 | | Total assets | $5,848.9 | $5,549.3 | $5,688.4 | | Accounts payable | $1,052.2 | $794.2 | $689.0 | | Total current liabilities | $1,572.2 | $1,371.7 | $1,360.7 | | Long-term debt, net | $1,611.2 | $1,612.9 | $2,079.3 | | Total liabilities | $3,703.9 | $3,337.7 | $3,735.9 | | Total stockholders' equity | $1,745.8 | $1,812.4 | $1,553.3 | Condensed Consolidated Statements of Operations Condensed Consolidated Statements of Operations (Three Months Ended March 31, in millions, except per share amounts) | Item | 2022 | 2021 | | :-------------------------------------------------- | :----- | :----- | | Net sales | $1,686.9 | $1,318.0 | | Cost of products sold | $1,247.4 | $985.2 | | Gross profit | $439.5 | $332.8 | | Total operating expense | $348.2 | $310.0 | | Income (loss) from operations | $91.3 | $22.8 | | Interest expense, financing costs, and other | $16.6 | $28.6 | | Loss on debt extinguishment | — | $9.5 | | Income (loss) from continuing operations before income taxes | $74.7 | $(15.3) | | Provision for (benefit from) income taxes | $18.9 | $(4.8) | | Net income (loss) from continuing operations | $55.8 | $(10.5) | | Net income (loss) from discontinued operations | — | $4.2 | | Net income (loss) | $55.8 | $(6.3) | | Dividends on Preferred Stock | $6.0 | $6.0 | | Net income (loss) attributable to common stockholders | $49.8 | $(12.3) | | Basic net income (loss) per share | $0.62 | $(0.18) | | Diluted net income (loss) per share | $0.61 | $(0.18) | Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (Three Months Ended March 31, in millions) | Item | 2022 | 2021 | | :-------------------------------------------------------------------------------------- | :----- | :----- | | Net income (loss) | $55.8 | $(6.3) | | Other comprehensive income (loss): | | | | Foreign currency translation adjustment | $1.5 | $1.0 | | Unrealized gain (loss) due to change in fair value of derivatives, net of tax | $7.8 | $3.4 | | Total other comprehensive income (loss) | $9.3 | $4.4 | | Comprehensive income (loss) | $65.1 | $(1.9) | Condensed Consolidated Statements of Stockholders' Equity Condensed Consolidated Statements of Stockholders' Equity (Three Months Ended March 31, in millions) | Item | 2022 | 2021 | | :----------------------------------------- | :----- | :----- | | Balance as of December 31 | $1,812.4 | $1,544.8 | | Repurchase and retirement of common stock, net | $(113.0) | — | | Equity forward contract | $(25.0) | — | | Issuance of common stock, net of shares withheld for taxes | $7.2 | $9.1 | | Stock-based compensation | $5.1 | $7.3 | | Other comprehensive income (loss) | $9.3 | $4.4 | | Net income (loss) | $55.8 | $(6.3) | | Dividends on Preferred Stock | $(6.0) | $(6.0) | | Balance as of March 31 | $1,745.8 | $1,553.3 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Three Months Ended March 31, in millions) | Item | 2022 | 2021 | | :--------------------------------------------------- | :------- | :------- | | Net cash provided by (used in) operating activities | $(162.0) | $(84.0) | | Net cash provided by (used in) investing activities | $(22.0) | $823.7 | | Net cash provided by (used in) financing activities | $11.0 | $(582.0) | | Effect of exchange rate changes on cash and cash equivalents | $(0.4) | $0.2 | | Net increase (decrease) in cash and cash equivalents | $(173.4) | $157.9 | | Cash and cash equivalents, beginning of period | $225.8 | $461.4 | | Cash and cash equivalents, end of period | $52.4 | $619.3 | Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of the company's accounting policies, acquisitions, divestitures, and other financial disclosures Note 1. Company Overview This note describes the company's primary business and significant historical transactions - 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[13] - On February 10, 2021, the Company completed the sale of its interior products and insulation businesses ("Interior Products") for approximately $850 million in cash, reflected as discontinued operations for the three months ended March 31, 2021[14] Note 2. Summary of Significant Accounting Policies This note outlines the accounting principles and methods used in preparing the financial statements - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information, with certain footnotes condensed or omitted[16] - The Company changed its fiscal year end from September 30 to December 31, effective January 1, 2022, to align with industry peers and improve internal processes[18] - The Company records acquisitions using the acquisition method of accounting, recognizing acquired assets and assumed liabilities at estimated fair values, with the excess recorded as goodwill[22][23] Note 3. Acquisitions This note details the company's recent acquisition activities and their financial impact - On November 1, 2021, the Company acquired Midway Sales & Distributing, Inc. for approximately $130 million in annual sales, resulting in $28.7 million of goodwill and $38.5 million of intangible assets[27][28] - On January 1, 2022, the Company purchased Crabtree Siding and Supply, a wholesale distributor with annual sales of approximately $1 million, resulting in $0.2 million of goodwill[29][30] - During the three months ended March 31, 2022, the Company recognized a gain of $0.9 million from the resolution of an indemnity holdback liability related to the 2017 acquisition of Lowry's Inc[31] Note 4. Divestitures This note describes the company's recent divestiture activities and their financial impact - On December 1, 2021, the Company divested its solar products business to focus on its core exteriors business, recording a loss on sale of $22.3 million in Q4 2021[32] - On February 10, 2021, the Company completed the sale of Interior Products for $842.7 million in cash, using proceeds to reduce net leverage and pursue strategic growth in core exteriors[33](index=33