- Record fourth quarter and full year net sales, strong net
income, and highest Adjusted EBITDA in history
- Ambition 2025 execution continued to generate growth with
significant contributions from enhanced sales capabilities,
greenfield investments, and M&A
- Strong net income margin and double-digit Adjusted EBITDA
margin for the third consecutive full year driven by diligent
pricing execution, productivity, and improvements from the bottom
quintile branch initiative
- Record full year cash flow enabled investment in growth
initiatives and returns to shareholders while maintaining balance
sheet strength
Beacon (Nasdaq: BECN) (the “Company”, “we”, “our”) announced
results today for the fourth quarter and full year ended December
31, 2023 (“2023”).
“Our 2023 results demonstrate that our Ambition 2025 strategy
has multiple paths to growth and can deliver results in a variety
of conditions,” said Julian Francis, Beacon’s President & CEO.
“We delivered record fourth quarter and full year sales, strong net
income, and our highest Adjusted EBITDA in history. We have
reported year-over-year net sales growth for the last 12 quarters
highlighting the resiliency of our business model and the necessity
of our products. We remained focused on those items within our
control, including pricing, operating efficiency, and working
capital management. Our ability to generate substantial cash flow
allowed us to re-invest in future growth. In 2023, we acquired 21
branches and opened 28 greenfield locations in key markets
enhancing our customer reach and service. We also enhanced our
sales capabilities by adding to our organizational leadership
positions and expanding our sales training program. During the
year, we also returned a significant amount of capital to
shareholders. We deployed more than $800 million to repurchase all
of the outstanding preferred shares on top of approximately $111
million in common share repurchases. In addition, we invested in
growth capital including the highest capex in our history while, at
the same time, maintaining our net debt leverage at 2.4 times as of
year-end. Two years since we announced our Ambition 2025 plan, it
has proven to be sustainable and we are well positioned in a large,
attractive and growing market. Our over 8,000 team members have
built a winning culture and stand ready to continue unlocking the
long-term potential of Beacon.”
Fourth Quarter and Full Year Financial Highlights
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
(Unaudited; $ in millions, except per
share amounts)
Net sales
$
2,299.5
$
1,969.4
$
9,119.8
$
8,429.7
Gross profit
$
592.0
$
515.6
$
2,342.7
$
2,235.5
Gross margin %
25.7
%
26.2
%
25.7
%
26.5
%
Operating expense
$
428.5
$
389.3
$
1,630.5
$
1,532.1
% of net sales
18.6
%
19.8
%
17.9
%
18.2
%
Adjusted Operating Expense1
$
408.5
$
364.3
$
1,538.1
$
1,430.8
% of net sales1
17.8
%
18.5
%
16.9
%
17.0
%
Net income (loss)
$
95.1
$
73.3
$
435.0
$
458.4
% of net sales
4.1
%
3.7
%
4.8
%
5.4
%
Adjusted Net Income (Loss)1
$
111.2
$
93.2
$
507.9
$
537.9
% of net sales1
4.8
%
4.7
%
5.6
%
6.4
%
Adjusted EBITDA1
$
216.7
$
178.5
$
929.6
$
910.0
% of net sales1
9.4
%
9.1
%
10.2
%
10.8
%
_____________
1. Please see the included financial
tables for a reconciliation of “Adjusted” non-GAAP financial
measures to the most directly comparable GAAP financial measure, as
well as further detail on the components driving the net changes
over the comparative periods.
Fourth Quarter
Net sales increased 16.8% compared to the prior year to $2.30
billion, a Company record for fourth quarter net sales. The
increase in net sales was driven by organic volume growth including
greenfields over the last four quarters. Estimated organic volumes
(including greenfields) and weighted-average selling price
increased approximately 12-13% and 0-1%, respectively.
Additionally, acquired branches contributed more than 4% to the
increase in fourth quarter net sales.
Residential roofing product sales increased 20.2%,
non-residential roofing product sales increased 11.4%, and
complementary product sales increased 16.0% compared to the prior
year. The increase in residential roofing product sales was
primarily due to higher volumes. The increase in non-residential
roofing product sales was primarily due to strong underlying market
demand. The increase in complementary product sales was largely due
to growth in our waterproofing business primarily due to the
November 2022 acquisition of Coastal Construction Products. The
three-month periods ended December 31, 2023 and 2022 each had 61
business days.
Gross margin decreased to 25.7%, from 26.2% in the prior year,
as higher product costs offset higher average selling prices for
our products. The increases in operating expense and Adjusted
Operating Expense in 2023 were attributable to an increase in
payroll and benefits costs, primarily due to increased headcount
attributable to acquired branches and greenfields, as well as wage
inflation. Both operating expense and Adjusted Operating Expense as
a percent of sales were comparatively lower in the fourth quarter
of 2023, driven by higher sales combined with cost management.
Net income (loss) was $95.1 million, compared to $73.3 million
in the prior year. Adjusted EBITDA was $216.7 million, compared to
$178.5 million in the prior year. Net income (loss) per common
share (“EPS”) on a diluted basis was $1.47, compared to $0.88 in
the prior year. Fourth quarter results compared to the prior year
period were driven by higher net sales.
In February 2023, Beacon announced an increase in its share
repurchase program, pursuant to which the Company may purchase up
to $500 million of its common stock (inclusive of the $112 million
remaining authorization under the program announced in February
2022). In the fourth quarter of 2023, the Company repurchased and
retired $11.0 million of its common stock through open market
repurchases. As a result, there were 63.3 million shares of common
stock outstanding as of December 31, 2023.
Year ended December 31, 2023
Net sales increased 8.2% compared to the prior year to $9.12
billion, a Company record. The increase in net sales was largely
driven by the contributions of acquired branches and greenfields
over the last four quarters. Additionally, weighted-average selling
price and estimated organic volumes (including greenfields)
increased approximately 2-3% and 1-2%, respectively. Additionally,
acquired branches contributed more than 4% to the year-over-year
increase in net sales.
Residential roofing product sales increased 10.3%,
non-residential roofing product sales decreased 2.7%, and
complementary product sales increased 18.6% compared to the prior
year. The increase in residential roofing product sales was
primarily due to higher volumes. The increase in complementary
product sales was largely due to growth in our waterproofing
business primarily due to the November 2022 acquisition of Coastal
Construction Products. The years ended December 31, 2023 and 2022
each had 252 business days.
Gross margin decreased to 25.7%, from 26.5% in the prior year as
higher product costs more than offset higher average selling prices
for our products. The increases in operating expense and Adjusted
Operating Expense in 2023 were largely from acquired branches and
greenfields. Excluding these impacts, operating expense from
existing branches decreased by approximately 0.9%, or $14.0
million. The comparative decrease was related to a decrease in
general and administrative expense due to lower professional fees
coupled with a decrease in bad debt expense due to improved
collections. On a consolidated basis, both operating expense and
Adjusted Operating Expense as a percent of sales were lower
year-over-year, largely driven by higher sales combined with cost
management.
In July 2023, the Company repurchased all 400,000 issued and
outstanding shares of its preferred stock from an affiliate of
Clayton, Dubilier & Rice, LLC for $805.4 million, including
$0.9 million of accrued but unpaid dividends. The aggregate
repurchase price and related transaction fees and expenses were
financed by a combination of proceeds from a new senior notes
offering, as well as borrowings under our secured credit facility
and cash on hand.
Net income (loss) was $435.0 million, compared to $458.4 million
in the prior year. Adjusted EBITDA was $929.6 million, compared to
$910.0 million in the prior year. Diluted EPS was $(0.43), compared
to $5.55 in the prior year. The negative diluted EPS in 2023 is
attributable to the $414.6 million preferred stock repurchase
premium, which is included as a component of net income (loss)
attributable to common stockholders in calculating EPS. See full
reconciliation in the consolidated statements of operations
below.
In 2023, the Company repurchased and retired $110.9 million of
its common stock through a combination of a Rule 10b5-1 repurchase
plan and open market transactions. As a result, shares of common
stock outstanding decreased, net of issuance, to 63.3 million as of
December 31, 2023, from 64.2 million as of December 31, 2022. As of
December 31, 2023, we had approximately $389.1 million available
for repurchases remaining under the current Repurchase Program.
To calculate approximate weighted average selling price and
product cost changes, we review organic U.S. warehouse sales of the
same items sold regionally period over period and normalize the
data for non-representative outliers. To calculate estimated
volumes, we subtract the change in weighted average selling price,
as described above, from the total changes in sales, excluding
acquisitions and dispositions. As a result, and especially in high
inflationary periods, the weighted average selling price and
estimated volume changes may not be directly comparable to changes
reported in prior periods.
During the fourth quarter of 2023, we revised our definition of
when a branch classification changes from acquired to existing.
Previously, the results of operations of branches were designated
as acquired until they had been under our ownership for at least
four full fiscal quarters at the start of the fiscal reporting
period, after which such branches were classified as existing.
Under our new definition, the results of operations of branches
will be designated as acquired until they have been under our
ownership and have contributed to our results of operations for at
least 12 calendar months (inclusive of partial month activity),
after which such branches are classified as existing. The effect of
this change in definition is that the prior year results of
operations for branches will be reclassified to existing when the
comparable current month’s financial results are also classified as
existing.
Please see the included financial tables for a reconciliation of
“Adjusted” non-GAAP financial measures to the most directly
comparable GAAP financial measure, as well as further detail on the
components driving the net changes over the comparative
periods.
Earnings Call
The Company will host a conference call and webcast today at
5:00 p.m. ET to discuss these results. Details for the earnings
release event are as follows:
What:
Beacon Fourth Quarter and Full Year 2023
Earnings Call
When:
Tuesday, February 27, 2024
Time:
5:00 p.m. ET
Access:
Register for the conference call or
webcast by visiting:
Beacon Investor Relations – Events &
Presentations
Upon registration, participants will receive an email containing
event details and unique access codes. To ensure timely access,
participants should register for the earnings call at least 10
minutes before the 5:00 p.m. ET start time. An archived copy of the
webcast will be available on the Events & Presentations page
shortly after the call.
Forward-Looking Statements
This release contains information about management’s view of the
Company’s future expectations, plans and prospects that constitute
forward-looking statements for purposes of the safe harbor
provisions under the Private Securities Litigation Reform Act of
1995. In addition, oral statements made by our directors, officers
and employees to the investor and analyst communities, media
representatives and others, depending upon their nature, may also
constitute forward-looking statements. Forward-looking statements
can be identified by the fact that they do not relate strictly to
historic or current facts and often use words such as “anticipate,”
“estimate,” “expect,” “believe,” “will likely result,” “outlook,”
“project” and other words and expressions of similar meaning.
Investors are cautioned not to place undue reliance on
forward-looking statements. Actual results may differ materially
from those indicated by such forward-looking statements as a result
of various important factors, including, but not limited to, those
set forth in the "Risk Factors" section of the Company’s Form 10-K
for the fiscal year ended December 31, 2022 and subsequent filings
with the U.S. Securities and Exchange Commission. The Company may
not succeed in addressing these and other risks. Consequently, all
forward-looking statements in this release are qualified by the
factors, risks and uncertainties contained therein. In addition,
the forward-looking statements included in this press release
represent the Company’s views as of the date of this press release
and these views could change. However, while the Company may elect
to update these forward-looking statements at some point, the
Company specifically disclaims any obligation to do so, other than
as required by federal securities laws. These forward-looking
statements should not be relied upon as representing the Company’s
views as of any date subsequent to the date of this press
release.
About Beacon
Founded in 1928, Beacon is a Fortune 500, publicly traded
distributor of building products, including roofing materials and
complementary products, such as siding and waterproofing. The
Company operates over 530 branches throughout all 50 states in the
U.S. and 6 provinces in Canada. Beacon serves an extensive base of
nearly 100,000 customers, utilizing its vast branch network and
diverse service offerings to provide high-quality products and
support throughout the entire business lifecycle. Beacon offers its
own private label brand, TRI-BUILT®, and has a proprietary digital
account management suite, Beacon PRO+, which allows customers to
manage their businesses online. Beacon’s stock is traded on the
Nasdaq Global Select Market under the ticker symbol BECN. To learn
more about Beacon, please visit www.becn.com.
BEACON ROOFING SUPPLY,
INC.
Consolidated Statements of
Operations
(In millions, except per share
amounts)
Three Months Ended December
31,
Year Ended December
31,
2023
% of
Net Sales
2022
% of
Net Sales
2023
% of
Net Sales
2022
% of
Net Sales
(Unaudited)
Net sales
$
2,299.5
100.0
%
$
1,969.4
100.0
%
$
9,119.8
100.0
%
$
8,429.7
100.0
%
Cost of products sold
1,707.5
74.3
%
1,453.8
73.8
%
6,777.1
74.3
%
6,194.2
73.5
%
Gross profit
592.0
25.7
%
515.6
26.2
%
2,342.7
25.7
%
2,235.5
26.5
%
Operating expense:
Selling, general and administrative
383.0
16.7
%
350.3
17.8
%
1,454.3
15.9
%
1,372.9
16.3
%
Depreciation
25.6
1.0
%
19.7
1.0
%
91.2
1.1
%
75.1
0.9
%
Amortization
19.9
0.9
%
19.3
1.0
%
85.0
0.9
%
84.1
1.0
%
Total operating expense
428.5
18.6
%
389.3
19.8
%
1,630.5
17.9
%
1,532.1
18.2
%
Income (loss) from operations
163.5
7.1
%
126.3
6.4
%
712.2
7.8
%
703.4
8.3
%
Interest expense, financing costs and
other
37.1
1.6
%
25.4
1.3
%
126.1
1.4
%
83.7
1.0
%
Income (loss) before income taxes
126.4
5.5
%
100.9
5.1
%
586.1
6.4
%
619.7
7.3
%
Provision for (benefit from) income
taxes
31.3
1.4
%
27.6
1.4
%
151.1
1.6
%
161.3
1.9
%
Net income (loss)
95.1
4.1
%
73.3
3.7
%
435.0
4.8
%
458.4
5.4
%
Reconciliation of net income (loss) to net
income (loss) attributable to common stockholders:
Net income (loss)
$
95.1
4.1
%
$
73.3
3.7
%
$
435.0
4.8
%
$
458.4
5.4
%
Dividends on Preferred Stock
—
—
%
(6.0
)
(0.3
) %
(13.9
)
(0.2
) %
(24.0
)
(0.3
) %
Undistributed income allocated to
participating securities
—
—
%
(8.7
)
(0.4
) %
(34.1
)
(0.4
) %
(54.8
)
(0.7
) %
Repurchase Premium
—
—
%
—
—
%
(414.6
)
(4.5
) %
—
—
%
Net income (loss) attributable to common
stockholders
$
95.1
4.1
%
$
58.6
3.0
%
$
(27.6
)
(0.3
) %
$
379.6
4.4
%
Weighted-average common stock
outstanding:
Basic
63.4
65.1
63.7
67.1
Diluted
64.8
66.4
63.7
68.4
Net income (loss) per common share:
Basic
$
1.50
$
0.90
$
(0.43
)
$
5.66
Diluted
$
1.47
$
0.88
$
(0.43
)
$
5.55
BEACON ROOFING SUPPLY,
INC.
Consolidated Balance
Sheets
(In millions)
December 31,
2023
2022
Assets
Current assets:
Cash and cash equivalents
$
84.0
$
67.7
Accounts receivable, net
1,140.2
1,009.1
Inventories, net
1,227.9
1,322.9
Prepaid expenses and other current
assets
444.6
417.8
Total current assets
2,896.7
2,817.5
Property and equipment, net
436.4
337.0
Goodwill
1,952.6
1,916.3
Intangibles, net
403.5
447.7
Operating lease right-of-use assets,
net
503.6
467.6
Deferred income taxes, net
2.1
9.9
Other assets, net
12.8
7.5
Total assets
$
6,207.7
$
6,003.5
Liabilities and Stockholders’
Equity
Current liabilities:
Accounts payable
$
942.8
$
821.0
Accrued expenses
498.6
448.0
Current portion of operating lease
liabilities
89.7
94.5
Current portion of finance lease
liabilities
26.2
16.1
Current portion of long-term debt
10.0
10.0
Total current liabilities
1,567.3
1,389.6
Borrowings under revolving lines of
credit, net
80.0
254.9
Long-term debt, net
2,192.3
1,606.4
Deferred income taxes, net
20.1
0.2
Other long-term liabilities
0.5
—
Operating lease liabilities
423.7
382.1
Finance lease liabilities
100.3
67.0
Total liabilities
4,384.2
3,700.2
Convertible Preferred Stock
—
399.2
Stockholders’ equity:
Common stock
0.6
0.6
Undesignated preferred stock
—
—
Additional paid-in capital
1,218.4
1,187.2
Retained earnings
618.8
728.8
Accumulated other comprehensive income
(loss)
(14.3
)
(12.5
)
Total stockholders’ equity
1,823.5
1,904.1
Total liabilities and stockholders’
equity
$
6,207.7
$
6,003.5
BEACON ROOFING SUPPLY,
INC.
Consolidated Statements of
Cash Flows
(In millions)
Year Ended December
31,
2023
2022
Operating Activities
Net income (loss)
$
435.0
$
458.4
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
176.2
159.2
Stock-based compensation
28.0
27.6
Certain interest expense and other
financing costs
2.2
5.2
Gain on sale of fixed assets and other
(15.6
)
(4.1
)
Deferred income taxes
27.3
30.1
Changes in operating assets and
liabilities:
Accounts receivable
(104.7
)
(111.4
)
Inventories
129.1
(117.7
)
Prepaid expenses and other current
assets
(27.5
)
(36.3
)
Accounts payable and accrued expenses
141.6
(15.2
)
Other assets and liabilities
(3.8
)
5.3
Net cash provided by (used in) operating
activities
787.8
401.1
Investing Activities
Capital expenditures
(122.9
)
(90.1
)
Acquisition of business, net
(119.0
)
(309.2
)
Proceeds from sale of assets
17.5
5.2
Purchases of investments
(1.2
)
(1.5
)
Net cash provided by (used in) investing
activities
(225.6
)
(395.6
)
Financing Activities
Borrowings under revolving lines of
credit
2,374.2
2,781.3
Payments under revolving lines of
credit
(2,550.7
)
(2,520.6
)
Payments under term loan
(10.0
)
(10.0
)
Borrowings under senior notes
600.0
—
Payment of debt issuance costs
(8.0
)
—
Payments under equipment financing
facilities and finance leases
(21.2
)
(12.1
)
Repurchase of convertible Preferred
Stock
(805.7
)
—
Repurchase and retirement of common stock,
net
(110.9
)
(388.1
)
Payment of dividends on Preferred
Stock
(18.9
)
(24.0
)
Proceeds from disgorgement of short-swing
profits1
5.9
—
Proceeds from issuance of common stock
related to equity awards
12.7
16.7
Payment of taxes related to net share
settlement of equity awards
(13.8
)
(5.7
)
Net cash provided by (used in) financing
activities
(546.4
)
(162.5
)
Effect of exchange rate changes on cash
and cash equivalents
0.5
(1.1
)
Net increase (decrease) in cash and cash
equivalents
16.3
(158.1
)
Cash and cash equivalents, beginning of
period
67.7
225.8
Cash and cash equivalents, end of
period
$
84.0
$
67.7
Supplemental Cash Flow
Information
Cash paid during the period for:
Interest
$
111.3
$
83.4
Income taxes, net of refunds2
$
120.6
$
157.1
_____________
1. During the year ended December 31,
2023, the Company received payments of $5.9 million from a
stockholder related to short-swing trading profits disgorged
pursuant to Section 16(b) of the Securities Exchange Act of 1934.
The payments were recorded to additional paid-in capital on the
consolidated balance sheets.
2. Year ended December 31, 2022 amount
includes $18.6 million related to the transition period from
October 1, 2021 to December 31, 2021.
BEACON ROOFING SUPPLY,
INC.
Consolidated Sales by Line of
Business
(Unaudited; in millions)
Sales by Line of
Business
Three Months Ended December
31,
Year-over-Year Change
2023
2022
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
1,162.8
50.6
%
$
967.1
49.1
%
$
195.7
20.2
%
Non-residential roofing products
626.7
27.2
%
562.6
28.6
%
64.1
11.4
%
Complementary building products
510.0
22.2
%
439.7
22.3
%
70.3
16.0
%
$
2,299.5
100.0
%
$
1,969.4
100.0
%
$
330.1
16.8
%
Sales by Business
Day1,2
Three Months Ended December
31,
Year-over-Year Change
2023
2022
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
19.1
50.6
%
$
15.9
49.1
%
$
3.2
20.2
%
Non-residential roofing products
10.3
27.2
%
9.2
28.6
%
1.1
11.4
%
Complementary building products
8.3
22.2
%
7.2
22.3
%
1.1
16.0
%
$
37.7
100.0
%
$
32.3
100.0
%
$
5.4
16.8
%
_____________
1. The three-month periods ended
December 31, 2023 and 2022 each had 61 business days.
2. Dollar and percentage changes
may not recalculate due to rounding.
Sales by Line of Business
Year Ended December
31,
Year-over-Year Change
2023
2022
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
4,652.0
51.0
%
$
4,217.9
50.0
%
$
434.1
10.3
%
Non-residential roofing products
2,395.7
26.3
%
2,464.3
29.2
%
(68.6
)
(2.7
) %
Complementary building products
2,072.1
22.7
%
1,747.5
20.8
%
324.6
18.6
%
$
9,119.8
100.0
%
$
8,429.7
100.0
%
$
690.1
8.2
%
Sales by Business
Day1,2
Year Ended December
31,
Year-over-Year Change
2023
2022
Net Sales
Mix %
Net Sales
Mix %
$
%
Residential roofing products
$
18.5
51.0
%
$
16.8
50.0
%
$
1.7
10.3
%
Non-residential roofing products
9.5
26.3
%
9.8
29.2
%
(0.3
)
(2.7
) %
Complementary building products
8.2
22.7
%
6.9
20.8
%
1.3
18.6
%
$
36.2
100.0
%
$
33.5
100.0
%
$
2.7
8.2
%
_____________ 1. The years ended December 31, 2023 and 2022 each
had 252 business days. 2. Dollar and percentage changes may not
recalculate due to rounding.
BEACON ROOFING SUPPLY, INC. Non-GAAP
Financial Measures (Unaudited; in millions)
Non-GAAP Financial Measures
To provide investors with additional information regarding our
financial results, we prepare certain financial measures that are
not calculated in accordance with GAAP, specifically:
- Adjusted Operating Expense. We define Adjusted Operating
Expense as operating expense, excluding the impact of the adjusting
items (as described below).
- Adjusted Net Income (Loss). We define Adjusted Net Income
(Loss) as net income (loss), excluding the impact of the adjusting
items (as described below).
- Adjusted EBITDA. We define Adjusted EBITDA as net income
(loss), excluding the impact of interest expense (net of interest
income), income taxes, depreciation and amortization, stock-based
compensation, and the adjusting items (as described below).
We use these supplemental non-GAAP measures to evaluate
financial performance, analyze the underlying trends in our
business and establish operational goals and forecasts that are
used when allocating resources. We expect to compute our non-GAAP
financial measures consistently using the same methods each
period.
We believe these non-GAAP measures are useful measures because
they permit investors to better understand changes over comparative
periods by providing financial results that are unaffected by
certain items that are not indicative of ongoing operating
performance.
While we believe that these non-GAAP measures are useful to
investors when evaluating our business, they are not prepared and
presented in accordance with GAAP, and therefore should be
considered supplemental in nature. These non-GAAP measures should
not be considered in isolation or as a substitute for other
financial performance measures presented in accordance with GAAP.
These non-GAAP financial measures may have material limitations
including, but not limited to, the exclusion of certain costs
without a corresponding reduction of net income for the income
generated by the assets to which the excluded costs relate. In
addition, these non-GAAP financial measures may differ from
similarly titled measures presented by other companies.
BEACON ROOFING SUPPLY, INC. Non-GAAP
Financial Measures (continued) (Unaudited; in millions)
Adjusting Items to Non-GAAP Financial Measures
The impact of the following expense (income) items is excluded
from each of our non-GAAP measures (the “adjusting items”):
- Acquisition costs. Represent certain direct and incremental
costs related to acquisitions, including: amortization of
intangible assets; professional fees, branch integration expenses,
travel expenses, employee severance and retention costs, and other
personnel expenses classified as selling, general and
administrative; gains/losses related to changes in fair value of
contingent consideration or holdback liabilities; and amortization
of debt issuance costs. Acquisition costs are impacted by the
timing and size of the acquisitions. We exclude acquisition costs
from our non-GAAP financial measures to provide a useful comparison
of our operating results to prior periods and to our peer companies
because such amounts vary significantly based on the magnitude of
the acquisition and do not reflect our core operations.
- Restructuring costs. Represent costs stemming from headcount
rationalization efforts and certain rebranding costs; impact of
divestitures; costs related to changing our fiscal year end;
amortization of debt issuance costs; debt refinancing and
extinguishment costs; and abandoned lease costs. We exclude
restructuring costs from our non-GAAP financial measures, as such
items vary significantly based on the magnitude of the
restructuring activity and also do not reflect expected future
operating expenses. Additionally, these costs do not necessarily
provide meaningful insight into the current or past core operations
of our business.
- COVID-19 impacts. Represent costs directly related to the
COVID-19 pandemic. Beginning January 1, 2023, we determined
COVID-19 impacts should no longer be considered an adjusting item.
This change was applied prospectively.
The following table presents the pre-tax impact of the adjusting
items on our consolidated statements of operations for each of the
periods indicated:
Operating Expense
Non-Operating Expense
SG&A1
Amortization
Interest Expense
Total
Three Months Ended December 31,
2023
Acquisition costs
$
1.6
$
19.9
$
1.1
$
22.6
Restructuring costs
(1.5
)
—
0.5
(1.0
)
COVID-19 impacts
—
—
—
—
Total adjusting items
$
0.1
$
19.9
$
1.6
$
21.6
Three Months Ended December 31,
2022
Acquisition costs
$
2.6
$
19.3
$
1.1
$
23.0
Restructuring costs
2.8
—
0.3
3.1
COVID-19 impacts
0.3
—
—
0.3
Total adjusting items
$
5.7
$
19.3
$
1.4
$
26.4
Year Ended December 31, 2023
Acquisition costs
$
6.9
$
85.0
$
4.1
$
96.0
Restructuring costs
0.5
—
1.5
2.0
COVID-19 impacts
—
—
—
—
Total adjusting items
$
7.4
$
85.0
$
5.6
$
98.0
Year Ended December 31, 2022
Acquisition costs
$
6.3
$
84.1
$
4.0
$
94.4
Restructuring costs
8.9
—
1.2
10.1
COVID-19 impacts
2.0
—
—
2.0
Total adjusting items
$
17.2
$
84.1
$
5.2
$
106.5
_____________ 1. Selling, general and administrative expense
(“SG&A”).
BEACON ROOFING SUPPLY, INC. Non-GAAP
Financial Measures (continued) (Unaudited; in millions)
Adjusted Operating Expense
The following table presents a reconciliation of operating
expense, the most directly comparable financial measure as measured
in accordance with GAAP, to Adjusted Operating Expense for each of
the periods indicated:
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Operating expense
$
428.5
$
389.3
$
1,630.5
$
1,532.1
Acquisition costs
(21.5
)
(21.9
)
(91.9
)
(90.4
)
Restructuring costs
1.5
(2.8
)
(0.5
)
(8.9
)
COVID-19 impacts
—
(0.3
)
—
(2.0
)
Adjusted Operating Expense
$
408.5
$
364.3
$
1,538.1
$
1,430.8
Net sales
$
2,299.5
$
1,969.4
$
9,119.8
$
8,429.7
Operating expense as % of sales
18.6
%
19.8
%
17.9
%
18.2
%
Adjusted Operating Expense as % of
sales
17.8
%
18.5
%
16.9
%
17.0
%
Adjusted Net Income (Loss)
The following table presents a reconciliation of net income
(loss), the most directly comparable financial measure as measured
in accordance with GAAP, to Adjusted Net Income (Loss) for each of
the periods indicated:
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net income (loss)
$
95.1
$
73.3
$
435.0
$
458.4
Adjusting items:
Acquisition costs
22.6
23.0
96.0
94.4
Restructuring costs
(1.0
)
3.1
2.0
10.1
COVID-19 impacts
—
0.3
—
2.0
Total adjusting items
21.6
26.4
98.0
106.5
Less: tax impact of adjusting items1
(5.5
)
(6.5
)
(25.1
)
(27.0
)
Total adjustments, net of tax
16.1
19.9
72.9
79.5
Adjusted Net Income (Loss)
$
111.2
$
93.2
$
507.9
$
537.9
Net sales
$
2,299.5
$
1,969.4
$
9,119.8
$
8,429.7
Net income (loss) as % of sales
4.1
%
3.7
%
4.8
%
5.4
%
Adjusted Net Income (Loss) as % of
sales
4.8
%
4.7
%
5.6
%
6.4
%
_____________
1. Amounts represent tax impact on
adjustments that are not included in our income tax provision
(benefit) for the periods presented. The tax impact of adjustments
for the three months ended December 31, 2023 and 2022 were
calculated using a blended effective tax rate of 25.5% and 24.6%,
respectively. The tax impact of adjustments for the year ended
December 31, 2023 and 2022 were calculated using a blended
effective tax rate of 25.6% and 25.4%, respectively.
BEACON ROOFING SUPPLY, INC. Non-GAAP
Financial Measures (continued) (Unaudited; in millions)
Adjusted EBITDA
The following table presents a reconciliation of net income
(loss), the most directly comparable financial measure as measured
in accordance with GAAP, to Adjusted EBITDA for each of the periods
indicated:
Three Months Ended December
31,
Year Ended December
31,
2023
2022
2023
2022
Net income (loss)
$
95.1
$
73.3
$
435.0
$
458.4
Interest expense, net
38.9
26.3
131.9
86.3
Income taxes
31.3
27.6
151.1
161.3
Depreciation and amortization
45.5
39.0
176.2
159.2
Stock-based compensation
5.8
6.6
28.0
27.6
Acquisition costs1
1.6
2.6
6.9
6.3
Restructuring costs1
(1.5
)
2.8
0.5
8.9
COVID-19 impacts1
—
0.3
—
2.0
Adjusted EBITDA
$
216.7
$
178.5
$
929.6
$
910.0
Net sales
$
2,299.5
$
1,969.4
$
9,119.8
$
8,429.7
Net income (loss) as % of sales
4.1
%
3.7
%
4.8
%
5.4
%
Adjusted EBITDA as % of sales
9.4
%
9.1
%
10.2
%
10.8
%
_____________ 1. Amounts represent adjusting items included in
SG&A; remaining adjusting item balances are embedded within the
other line item balances reported in this table.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240227361908/en/
INVESTOR CONTACT Binit Sanghvi VP,
Capital Markets and Treasurer Binit.Sanghvi@becn.com
972-369-8005
MEDIA CONTACT Jennifer Lewis VP,
Communications and Corporate Social Responsibility
Jennifer.Lewis@becn.com 571-752-1048
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