Beacon Roofing Supply(BECN) - 2025 Q1 - Quarterly Report

Financial Performance - Net sales decreased by 0.2% to $1.908 billion in Q1 2025, down from $1.912 billion in Q1 2024[136] - Gross profit for Q1 2025 was $467.8 million, compared to $473.2 million in Q1 2024, reflecting a decrease in gross margin from 24.7% to 24.5%[135] - The company reported a net loss of $43.1 million in Q1 2025, compared to a net income of $5.6 million in Q1 2024[135] - Organic net sales from existing branches decreased by 5.5% to $1.807 billion in Q1 2025, while greenfield branches contributed $23.2 million[136] - Total gross profit decreased by $5.4 million, or 1.1%, to $467.8 million in 2025 from $473.2 million in 2024, with a gross margin of 24.5%, down from 24.7%[138][139] - Adjusted Net Income for Q1 2025 was $4.3 million, a decrease from $26.6 million in Q1 2024, with net income (loss) as a percentage of net sales at (2.2)% compared to 0.3% in the previous year[161] - Adjusted EBITDA for Q1 2025 was $82.2 million, down from $103.1 million in Q1 2024, representing 4.3% of net sales compared to 5.4% in the prior year[162] Operating Expenses - Operating expenses increased to $491.2 million in Q1 2025, up from $428.1 million in Q1 2024, primarily due to higher selling, general, and administrative expenses[135] - Organic SG&A expenses increased by $35.3 million, or 9.3%, to $416.8 million in 2025, driven by one-time costs related to QXO Transactions and acquisitions[141][144] - Total SG&A expense rose by $55.0 million, or 14.4%, to $436.5 million in 2025, with total SG&A as a percentage of net sales increasing to 22.9% from 20.0%[141][144] - Adjusted Operating Expense for 2025 was $428.2 million, up from $403.5 million in 2024, with adjusted operating expense as a percentage of net sales at 22.4%[159] Debt and Interest - Interest expense increased to $42.2 million in 2025 from $38.6 million in 2024, attributed to higher average debt balances following refinancing activities[147] Taxation - The effective tax rate for 2025 was 26.5%, slightly up from 26.4% in 2024, with an income tax provision of $(22.5) million in 2025 compared to $(1.5) million in 2024[150] Cash Flow and Liquidity - Net cash used in operating activities was $135.2 million in Q1 2025, a slight improvement from $140.8 million in Q1 2024, primarily due to favorable changes in working capital[172] - Net cash used in investing activities decreased significantly to $23.5 million in Q1 2025 from $135.1 million in Q1 2024, attributed to reduced acquisitions and capital expenditures[173] - Net cash provided by financing activities was $141.8 million in Q1 2025, down from $327.1 million in Q1 2024, mainly due to the refinancing of the 2028 Term Loan[174] - As of March 31, 2025, the company had cash and cash equivalents of $57.4 million and available borrowings of approximately $959.0 million under asset-based revolving lines of credit[168] - The company anticipates seeking additional acquisition opportunities and may explore additional financing sources to bolster liquidity and strengthen capital structure[169] Merger and Acquisitions - The pending merger with QXO is set to close by the end of April 2025, with an increased offer price of $124.35 per share[124] - A termination fee of $336.9 million will be payable to QXO if the merger agreement is terminated under specified circumstances[124] Market and Operations - The company operates 595 branches across the U.S. and Canada, serving approximately 110,000 customers[128] - Residential roofing products accounted for 48.7% of net sales in Q1 2025, while non-residential roofing products decreased by 5.2%[136] - The company’s differentiated service model and digital commerce platform are key competitive advantages in the roofing distribution market[130] Seasonal Trends - Seasonal demand fluctuations are expected, with historically low net income levels or net losses typically occurring in the quarter ending March 31 due to adverse winter weather conditions[164] - The company’s balance sheet fluctuates seasonally, with increased inventory and cash usage expected in the quarters ending March 31 and June 30[165]