Executive Summary

Q1 2025 net sales were $1.91B, down 0.2% year over year, with diluted EPS of $(0.70) versus $0.09 in Q1 2024; gross margin compressed to 24.5% from 24.7% .
Adjusted EBITDA fell to $82.2M (4.3% margin) from $103.1M (5.4% margin) in Q1 2024, driven by $37.7M of one-time QXO transaction costs and $38.8M restructuring costs captured in SG&A .
Mix: Residential held flat (+0.1% YoY), Complementary rose +4.7%, while Non-residential declined −5.2%; one less selling day in Q1 2025 also weighed on organic volumes .
FY 2025 outlook reiterated: net sales growth “mid-single digits,” gross margin in-line with 2024, and adjusted EBITDA of $950–$1,030M; Q1 sales/day expected −3–5% (adjusted for one fewer selling day). Headlines dominated by QXO’s $124.35/share cash acquisition expected to close by end of April and conditional redemptions of senior notes tied to closing .

What Went Well and What Went Wrong

What Went Well

Complementary products grew to $477.9M, up 4.7% YoY, supported by prior waterproofing acquisitions and footprint expansion; Canada net sales also rose to $41.1M from $45.6M total mix with complementary contribution .
Residential roofing held steady at $928.6M (+0.1% YoY), aided by price execution despite softer volumes and weather headwinds; management previously highlighted price/cost discipline and digital/private label accretive mix supporting margins .
Operational infrastructure remains robust: business managed through harsh winter seasonality; liquidity exceeded ~$959M available under revolvers, and management continues to lean on cost actions and productivity programs initiated in late 2024 (e.g., bottom quintile branch initiative) .

Quotes:

“Gross margin was unchanged from the prior year quarter at 25.7% and at the high end of our expectations… price cost was up around 10 bps YoY” (Q4 remarks, foundation for Q1 trajectory) .
“We added more than $7M of EBITDA YoY in the fourth quarter” via bottom quintile branch initiative (structural operational gains carry into 2025) .

What Went Wrong

Q1 swung to a net loss of $(43.1)M from $5.6M last year, driven by $37.7M one-time QXO costs and higher SG&A; interest expense remained elevated at $42.2M .
Gross margin contracted 20 bps YoY to 24.5% amid product cost inflation and mix shift (lower non-res price, higher cost), partially offset by pricing; adjusted EBITDA margin fell to 4.3% .
Non-residential roofing declined to $501.3M (−5.2% YoY) given muted new construction and macro uncertainty; organic volumes were down ~5–6% and selling days decreased (63 vs. 64) .

Financial Results

Quarter progression vs prior periods

Metric	Q3 2024	Q4 2024	Q1 2025
Revenue ($USD Millions)	$2,772.6	$2,403.6	$1,907.8
Diluted EPS ($USD)	$2.30	$1.32	$(0.70)
Gross Margin %	26.3%	25.7%	24.5%
Adjusted EBITDA ($USD Millions)	$325.2	$222.5	$82.2
Adjusted EBITDA Margin %	11.7%	9.3%	4.3%
Net Income Margin %	5.2%	3.5%	(2.2%)

Year-over-year Q1 comparison

Metric	Q1 2024	Q1 2025
Revenue ($USD Millions)	$1,912.4	$1,907.8
Diluted EPS ($USD)	$0.09	$(0.70)
Gross Margin %	24.7%	24.5%
Adjusted Operating Expense ($USD Millions)	$403.5	$428.2
Adjusted EBITDA ($USD Millions)	$103.1	$82.2
Net Cash from Operations ($USD Millions)	$(140.8)	$(135.2)

Segment breakdown (Net Sales)

Line of Business ($USD Millions)	Q1 2024	Q1 2025
Residential roofing products	$927.4	$928.6
Non-residential roofing products	$528.6	$501.3
Complementary building products	$456.4	$477.9
Total	$1,912.4	$1,907.8

KPIs and operational metrics

KPI	Q3 2024	Q4 2024	Q1 2025
Business Days (#)	64	62	63
SG&A ($USD Millions)	$430.2	$407.4	$436.5
One-time QXO Transaction Costs in SG&A ($USD Millions)	—	—	$37.7
Interest Expense, Financing Costs and Other, net ($USD Millions)	$48.7	$44.6	$42.2
Cash from Operations ($USD Millions)	~$250.0	$360.0	$(135.2)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales Growth (%)	FY 2025	Mid-single digits YoY	Mid-single digits YoY	Maintained
Gross Margin (%)	FY 2025	In-line with prior year	In-line with prior year	Maintained
Adjusted EBITDA ($USD Millions)	FY 2025	$950–$1,030M	$950–$1,030M	Maintained
Sales per Day (% YoY)	Q1 2025	Down 3–5% (adjusted for one fewer day)	Down 3–5% (adjusted)	Maintained
Adjusted OpEx	Q1 2025	Up YoY due to greenfields & acquired branches; offset by lower existing branch expenses	Up YoY; same drivers	Maintained

Additional transaction-related items: Company entered into Merger Agreement with QXO to acquire Beacon at $124.35/share cash, expected to close by end of April; delivered conditional redemptions for 2026, 2029, 2030 senior notes contingent on closing .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q3 2024)	Previous Mentions (Q4 2024)	Current Period (Q1 2025)	Trend
Storms & demand cadence	Hurricanes (Debby/Francine/Helene) → delays; expected demand spread 4–6 quarters; Florida weak, SE tight supply	Harsh winter; Jan/Feb down low-teens before late improvement; weather shifts demand, not eliminates it	One fewer selling day; seasonality highlighted; organic volume down ~5–6%	Weather remains a key swing factor; normalization expected later in year
Pricing & price/cost	Price/cost +50 bps; August shingle increase realized; commercial managed despite declining prices	FY25 price/cost neutral; April resi price considered; private label/digital accretive	Gross margin −20 bps YoY; weighted-average product costs +1–2% vs selling price +0–1%	Continued discipline; mix and costs pressure gross margin
Non-residential mix	Repair/reroof improving vs new construction; warehouses/data centers large share	ABI <50; expect commercial R&R to improve; new construction muted	Non-residential down −5.2% YoY; mix drag on margin	R&R steady; new construction soft; mix remains a headwind
Waterproofing expansion	YTD acquisitions & growth; TRI-BUILT ISO launch; higher margin profile over time	15 new waterproofing branches driving complementary growth	Complementary up +4.7% YoY; category mix support	Strategy paying through mix resilience
SG&A/cost actions	September headcount rationalization; $45M annualized savings targeted	$45M annualized savings; ~$30M realized in 2025; sales/hour record	SG&A up on QXO $37.7M costs; adjusted OpEx 22.4% of sales	Structural leverage expected as greenfields/acquisitions mature
QXO transaction	—	Board opposed unsolicited offer at $124.25 then; Investor Day indicated	Merger Agreement signed at $124.35/share cash; closing expected by end of April; conditional note redemptions	M&A event now primary catalyst

Management Commentary

“We delivered fourth quarter adjusted EBITDA of $223 million… nearly $360 million in operating cash flow” (Q4 foundation for FY25 execution) .
“Our private label line… yields between 500 and 2,000 bps of additional margin versus alternatives” (structural margin lever) .
“We expect adjusted EBITDA to range between $950 million and $1.03 billion [in FY2025]… price cost to be neutral” (FY25 framing) .
“Acquiring Beacon is a key milestone… establish QXO as a leader in the $800B building products distribution industry” (transaction catalyst) .

Q&A Highlights

Storm impact and timing: demand uplift from storms in SE likely staged over 4–6 quarters; near-term supply tightness but manageable via reallocation; Florida lagged throughout 2024 .
Non-residential: shift from new construction to repair/reroof; strength in hospitals and schools; commercial acceleration focus in 25 targeted markets .
Pricing dynamics: August shingle price increase realized; positive price/cost achieved even in declining commercial price environment; April increase contemplated in FY25 guidance .
SG&A discipline: $45M annualized savings ($30M in 2025); “reset” on headcount; leverage expected as acquisitions/greenfields synergize .
Greenfields & footprint: 15–20 planned in 2025, with continued OTC market clustering and waterproofing expansion .

Estimates Context

Wall Street consensus via S&P Global was unavailable for BECN at the time of this analysis due to a mapping error in the SPGI CIQ company dataset; as a result, a beat/miss assessment versus consensus for Q1 2025 could not be completed. Values from S&P Global were unavailable.

Key Takeaways for Investors

Q1 softness was modest and largely seasonal, compounded by one-time QXO costs; underlying demand indicators and mix levers (private label, digital) remain supportive into peak season .
Residential resilience and complementary growth offset part of non-residential weakness; expect commercial R&R to stabilize while new construction remains muted near term .
Margin trajectory hinges on mix and execution: price/cost neutrality and gross margin stability vs. 2024 with bottom-quintile branch improvements and cost actions driving EBITDA leverage in 2025 .
Liquidity and balance sheet flexibility remain strong; conditional note redemptions tied to merger closing could simplify capital structure post-transaction .
The QXO takeout at $124.35/share is the dominant stock catalyst near term; fundamentals matter primarily for integration and synergy realization post-close .
Watch Q2/Q3 seasonality and storm-driven demand cadence for volume normalization; monitor execution on greenfields and waterproofing to sustain above-market growth .
With consensus unavailable, traders should anchor on management’s FY25 EBITDA range ($950–$1,030M), and near-term sales/day trajectory (Q1 down 3–5%) for positioning into peak quarters .

Citations:

BEACON ROOFING SUPPLY INC (BECN)·Q1 2025 Earnings Summary