Executive Summary

Record Q2 net sales of $2.67B (+6.8% YoY), driven by price execution, acquisitions (~4 pts) and modest organic growth; gross margin expanded 20 bps YoY to 25.6% but came in below internal expectations due to lower-than-expected inventory profits from the April shingle price increase .
Diluted EPS was $1.99 (vs. $1.97 LY) and Adjusted EBITDA was $279.4M (vs. $290.3M LY), reflecting higher OpEx from staffing, inflation, and dilution from greenfields/M&A amid weather‑reduced roofing days and lower residential volumes .
2024 guidance: net sales growth 6–8% YoY; gross margin mid‑25%; Adjusted EBITDA $930–$970M (narrowed from $930–$990M in Q1), with Q3 gross margin expected in the high‑25% range and sales/day up HSD% (helped by August shingle price increase) .
Capital return and capacity: $225M ASR launched in May; $180M repurchased in Q2; shares outstanding decreased to 61.9M as of 6/30; net debt leverage 3.2x with >$800M liquidity, supporting ongoing M&A and greenfields .

What Went Well and What Went Wrong

What Went Well
- “Record quarterly net sales” on Ambition 2025 execution; organic growth across all lines despite disruptive weather; double‑digit Adjusted EBITDA margin .
- Non‑residential and complementary lines strong: non‑res +11.1% and complementary +12.3% YoY; contributions from waterproofing acquisitions and robust commercial R&R demand .
- Digital and strategic initiatives: digital sales +22% YoY with ~26% of residential via digital; continued private label/pricing model investments; expanded footprints with 21 acquired branches and 10 greenfields since Q1 end .
What Went Wrong
- Gross margin below internal expectations due to “lower‑than‑expected inventory profits” from the April price increase (timing/realization varied by market) .
- OpEx deleverage: Adjusted OpEx +$63M YoY (to 16.5% of sales) from staffing for higher anticipated demand, inflation, and greenfield/M&A costs; weather reduced roofing days, especially in residential, hurting leverage .
- Residential volumes came in lower than expected amidst weather variability and weak markets (e.g., Florida), even as pricing disciplined; management acknowledged need for tighter local staffing/resource adjustments .

Financial Results

Sequential and YoY comparisons

Metric	Q4 2023	Q1 2024	Q2 2024
Net Sales ($USD Billions)	$2.300	$1.912	$2.675
Gross Margin (%)	25.7%	24.7%	25.6%
Operating Expense (% of Sales)	18.6%	22.4%	17.5%
Net Income ($USD Millions)	$95.1	$5.6	$127.2
Diluted EPS ($)	$1.47	$0.09	$1.99
Adjusted EBITDA ($USD Millions)	$216.7	$103.1	$279.4
Adjusted EBITDA Margin (%)	9.4%	5.4%	10.4%

Q2 YoY snapshot

Metric	Q2 2023	Q2 2024
Net Sales ($USD Billions)	$2.504	$2.675 (+6.8% YoY)
Gross Margin (%)	25.4%	25.6%
Net Income ($USD Millions)	$153.8	$127.2
Diluted EPS ($)	$1.97	$1.99
Adjusted Net Income ($USD Millions)	$172.9	$148.4
Adjusted EBITDA ($USD Millions)	$290.3	$279.4

Segment breakdown (Q2)

Line of Business	Q2 2023 Net Sales ($M)	Mix %	Q2 2024 Net Sales ($M)	Mix %	YoY %
Residential Roofing	1,298.0	51.8%	1,328.9	49.7%	2.4%
Non‑Residential Roofing	670.8	26.8%	745.1	27.9%	11.1%
Complementary Building Products	534.9	21.4%	600.6	22.4%	12.3%
Total	2,503.7	100.0%	2,674.6	100.0%	6.8%

KPIs (Q2 2024 highlights)

KPI	Q2 2024	Context
Price Contribution (YoY)	+2–3% weighted‑avg selling price	Sequentially stable in non‑res; disciplined execution in residential
Estimated Organic Volume (YoY)	+0–1%	Weather headwinds reduced roofing days
Acquisition Contribution to Sales	~4.0 pts YoY	Waterproofing acquisitions boosted complementary
Digital Adoption (Residential)	~26% of sales; digital +22% YoY	Margin accretive vs offline
Shares Outstanding (6/30)	61.9M	$180M repurchased under $225M ASR; ~0.5M shares pending on $45M forward
Net Debt Leverage (TTM)	3.2x (6/30)	Liquidity >$800M (6/30)

Non‑GAAP reconciliation notes: Adjusted OpEx excludes acquisition and restructuring costs; Adjusted Net Income/EBITDA exclude acquisition costs, restructuring, and certain financing items. Q2 pre‑tax adjusting items totaled $28.5M; tax impact $7.3M; Adjusted Net Income $148.4M and Adjusted EBITDA $279.4M .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Net Sales Growth (YoY)	FY 2024	“MSD%” (Q1’24)	6–8% (equal split organic/M&A)	Refined to explicit range
Gross Margin (%)	FY 2024	Mid‑25% (Q1’24)	Mid‑25%	Maintained
Adjusted EBITDA ($M)	FY 2024	$930–$990 (Q1’24)	$930–$970	Narrowed; lowered top end by $20M
Adjusted EBITDA ($M)	FY 2024	$920–$980 (Q4’23)	$930–$970	Range shifted higher at low end, narrower overall
Sales/Day Growth	Q3 2024	—	Up HSD% YoY including price and M&A; July LSD% YoY	New quarterly color
Gross Margin (%)	Q3 2024	—	High‑25% range; ~30 bps above Q2 on August price increase realization	New quarterly color
OpEx (% of Sales)	Q3 2024	—	In line with PY Q3	New quarterly color

Earnings Call Themes & Trends

Topic	Q4 2023	Q1 2024	Q2 2024	Trend
Pricing & Inventory Profits	Price‑cost negative YoY; inventory profit roll‑off	GM down 80 bps; price‑cost ~half of decline	GM +20 bps YoY but below plan; slower inventory profits from April price hike; August hike expected +30 bps in Q3	Improving but choppy realization
Demand & Storms	Residential volumes benefited from storms	Expect lower storm YoY; R&R resilient	Weather reduced roofing days in Q2; storm on track for 10‑yr avg	Weather variability; normalized storms
Commercial Market	R&R solid; destocking ended	ABI <50; sentiment improving	Non‑res strong; repair/reroof mix; ABI still <50	Resilient R&R; mix shift
Digital & Private Label	Record digital adoption; PL expansion	Digital +28% YoY; ~23% residential	Digital +22% YoY; ~26% residential; margin accretive	Rising adoption
M&A/Greenfields	6 acquired/11 greenfields in Q4	23 branches acquired/5 greenfields YTD	+21 branches/+10 greenfields since Q1; 28/13 YTD to 7/31	Accelerating footprint
Cost/OpEx	OpEx % down YoY in Q4	OpEx up on headcount & M&A	OpEx deleveraged on staffing/weather/M&A; actions to re‑align H2	H2 efficiency focus

Management Commentary

“Our Ambition 2025 initiatives drove record quarterly net sales, solid net income margin, and double-digit Adjusted EBITDA margin… organic sales growth across all three business lines despite disruptive weather…” — Julian Francis, CEO .
“Gross margin came in… approximately 20 basis points above the second quarter of last year but below our expectations, largely due to the lower-than-expected contribution from inventory profits related to our April shingle price increase.” — CEO, prepared remarks .
“Adjusted operating expenses… increased… as we maintained staffing… and [from] expenses associated with acquired and greenfield branches… Inflation in wages, benefits, rent… also contributed.” — CFO .
“Digital sales to our residential customers were a highlight… nearly 26%… and… are accretive to Beacon’s gross margin.” — CEO .
“We now expect… full year adjusted EBITDA… $930 million to $970 million… [and] strong cash generation in the second half.” — CEO/CFO .

Q&A Highlights

OpEx overshoot and actions: Management cited weather‑driven demand variability and early‑year greenfield/M&A timing; they are “much more aggressive” adjusting staffing/resources by market in H2 to restore leverage .
Gross margin/inventory profit dynamics: April price increase realization varied by market, reducing expected inventory profits; August price increase assumed to add ~30 bps GM in Q3 with similar progression to April .
H2 free cash flow: Expect ~60/40 4Q/3Q split; full‑year FCF trajectory weighted to H2 as inventory converts, with strong Q4 cash generation .
Sales cadence: July sales/day up LSD% YoY; Q3 expected HSD% growth as weather‑impacted Q2 activity shifts and August price increase benefits mix/realization .
Residential volumes: Expect low‑single‑digit price, better volumes in Q3; Q4 residential units down mid‑single digits YoY on tough storm comps; Florida cited as a weaker market requiring staffing alignment .

Estimates Context

S&P Global consensus estimates were unavailable via our data connector at this time (missing CIQ mapping for BECN); as a result, we cannot present objective beats/misses vs. Street for revenue/EPS/EBITDA this quarter. Where possible, we referenced company‑provided guidance and actuals; please note that any estimates from other sources are intentionally excluded per the methodology requirements.

Key Takeaways for Investors

Top‑line resilience with record Q2 sales; non‑residential and waterproofing growth offset weather‑impacted residential volumes; footprint expansion and pricing discipline remain core drivers .
Margin narrative: structural levers (digital, private label, pricing model) underpin gross margin; near‑term headwinds from mix (higher non‑res), greenfield/M&A dilution, and uneven price realization are being addressed; Q3 GM guided high‑25% with August pricing tailwind .
Expense control is the swing factor: management is realigning staffing and resources locally to regain OpEx leverage into H2; watch for sequential OpEx% normalization against guided levels .
2024 guide tightened: Adjusted EBITDA narrowed to $930–$970M (down $20M at the top end vs Q1), but sales outlook firmed to 6–8% growth; execution on pricing and cost will drive where within the range results land .
Capital deployment remains active: $225M ASR underway ($180M executed); 61.9M shares outstanding at Q2; balance sheet (3.2x net leverage; >$800M liquidity) supports continued M&A/greenfield build‑out .
Tactical setup: Q3 should benefit from catch‑up activity and pricing; weather variability and regional softness (e.g., Florida) are watch items; commercial R&R backdrop remains supportive despite ABI sub‑50 .

BEACON ROOFING SUPPLY INC (BECN)·Q2 2024 Earnings Summary