Beacon Reports Fourth Quarter and Fiscal Year 2020 Results

Beacon (the “Company”) announced results for its fourth quarter and fiscal year ended September 30, 2020 (“2020”).

Fourth Quarter and Fiscal Year Financial Highlights

– Record fourth quarter net income and Adjusted EBITDA

– Fourth quarter net sales leveraged an attractive residential backdrop, and stronger gross margins benefited from pricing execution, mix and timing

– Strategic initiatives contributed to Q4 success, highlighted by digital sales and margin gains at lowest quintile branches

– Strong fiscal 2020 operating cash flow of $479 million enabled repayment of COVID-related ABL draw

“Strong execution by our team and a favorable residential backdrop drove record fourth quarter Adjusted EBITDA,” said Julian Francis, Beacon’s President and Chief Executive Officer. “Mid-single digit growth in residential roofing helped to offset softness in the non-residential product categories stemming from the continuing economic impact of COVID. Within this dynamic environment, we are intensely focused on selling activity and leveraging our leading digital platform that accounted for more than 10% of September sales. Q4 gross margins increased significantly compared to the prior year, and I was particularly pleased with how we executed on the price increases mid-quarter. Operating cost discipline was again evident in the quarter, and we continued to improve the profitability of our lowest quintile branches compared to the prior year. Record second half 2020 operating cash flow strengthened our financial position giving us the ability and the confidence to repay the ABL draw we implemented in March as COVID began impacting our business. As fiscal year 2021 begins, we are grateful for the dedication and tireless efforts of our employees, as we continue to focus on improving the controllable aspects of our business and driving towards realizing our full potential.”

Fourth Quarter

Company-wide sales reflect positive contributions from residential demand and from those states less impacted by the pandemic, offset by softer demand from non-residential categories and states more heavily impacted by COVID. Net sales decreased 0.6% compared to the prior year. Residential roofing product sales increased 6.2%, non-residential roofing product sales decreased 11.7%, and complementary product sales decreased 1.5% compared to the prior year. The fourth quarter of fiscal years 2020 and 2019 each had 64 business days.

Gross margin improved 120 basis points from 24.3% in the prior year to 25.5%, primarily reflecting an improved price-cost spread. Operating expense decreased compared to the prior year. Adjusted operating expense was flat compared to the prior year period as management’s effective cost control during the COVID-19 pandemic was partially offset by higher incentive compensation.

Net income (loss) was $71.9 million, compared to $27.4 million in 2019. Net income (loss) attributable to common shareholders was $65.9 million, compared to $21.4 million in 2019. Adjusted Net Income (Loss) was $104.7 million, compared to $82.0 million in 2019. EPS was $0.83, compared to $0.27 in 2019. Comparative fourth quarter results were driven primarily by higher gross margins, the impact of operating cost controls on the current period and reduced other non-operating expense. These impacts were partially offset by sales declines within non-residential end markets.

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.

Fiscal Year

Net sales decreased 2.3% compared to the prior year. Residential roofing product sales increased 0.6%, non-residential roofing product sales decreased 3.4%, and complementary product sales decreased 5.3% compared to the prior year. Fiscal years 2020 and 2019 had 254 and 253 business days, respectively.

Gross margin improved from 24.4% in the prior year to 24.5%. Operating expense increased compared to the prior year, primarily from the write-off of certain trade names in connection with the Company’s rebranding efforts, partially offset by management’s effective cost control during the COVID-19 pandemic. Adjusted operating expense decreased compared to 2019, primarily as a result of management’s cost control.

Net income (loss) was $(80.9) million, compared to $(10.6) million in 2019. Net income (loss) attributable to common shareholders was $(104.9) million, compared to $(34.6) million in 2019. Adjusted Net Income (Loss) was $190.1 million, compared to $176.2 million in 2019. EPS was $(1.52), compared to $(0.51) in 2019.

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.

For the full fourth quarter results, click here.

About Beacon

Founded in 1928, Beacon is a Fortune 500, publicly traded distributor of roofing materials and complementary building products in North America, operating over 500 branches throughout all 50 states in the U.S. and 6 provinces in Canada. Beacon serves an extensive base of over 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

Contact:

Brent Rakers – Director Investor Relations – brent.rakers@becn.com – (901) 232-2737

Source: Beacon Roofing Supply, Inc.