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BEACON ROOFING SUPPLY INC (BECN)·Q4 2024 Earnings Summary

Executive Summary

  • Record fourth quarter net sales of $2.40B (+4.5% YoY) and record Q4 Adjusted EBITDA of $222.5M, with gross margin holding flat at 25.7% despite mix headwinds .
  • EPS of $1.32 diluted fell YoY on higher operating expense tied to acquired/greenfield branches; Adjusted Net Income was $104.2M, down modestly YoY, with Q4 operating cash flow strong at ~$360M .
  • Management introduced FY2025 indications: mid‑single‑digit net sales growth, gross margin in line with FY2024, Adjusted EBITDA $950–$1,030M; Q1 sales/day expected down 3–5% given harsh weather, with gross margin in line YoY .
  • Catalysts: March 13 Investor Day with strategy/targets; ongoing cost actions ($45M annualized savings, ~$30M in 2025) support margin trajectory; private label and digital penetration rising; board rejection of QXO tender offer maintains standalone strategy focus .

What Went Well and What Went Wrong

What Went Well

  • Record Q4 net sales and Adjusted EBITDA driven by execution on Ambition 2025, acquisitions, private label and digital initiatives; “our highest fourth quarter Adjusted EBITDA in history” (CEO) .
  • Digital sales grew ~20% YoY in Q4; digital as a percent of sales reached ~16%, enhancing margin; TRI‑BUILT private label expanded (TRI‑BUILT ISO), with margins 500–2,000 bps above alternatives (CEO) .
  • Strong Q4 cash generation ($360M) on inventory reduction ($87M from Q3) and working capital discipline; net debt leverage 2.8x with >$1.1B liquidity .

What Went Wrong

  • EPS and net income down YoY on higher operating expense; Adjusted OpEx rose ~$25M YoY with ~$31M from acquired/greenfield branches; existing branch expenses down ~$6M post cost actions .
  • Residential volumes were soft amid a sharp seasonal slowdown in Nov/Dec and weather impacts; residential sales/day down 0.8% YoY despite price execution .
  • Full‑year operating cash flow (~$419M) below prior year due to lower inventory turnover and timing; management acknowledged late inventory adjustment and overhead carried into Q3 before cost actions .

Financial Results

Consolidated Performance vs Prior Quarters and Prior Year

MetricQ2 2024Q3 2024Q4 2024
Revenue ($USD Millions)$2,674.6 $2,772.6 $2,403.6
Gross Margin (%)25.6% 26.3% 25.7%
Adjusted EBITDA ($USD Millions)$279.4 $325.2 $222.5
Adjusted EBITDA Margin (%)10.4% 11.7% 9.3%
Diluted EPS ($USD)$1.99 $2.30 $1.32
MetricQ4 2023Q4 2024
Revenue ($USD Millions)$2,299.5 $2,403.6
Gross Margin (%)25.7% 25.7%
Adjusted EBITDA ($USD Millions)$216.7 $222.5
Adjusted EBITDA Margin (%)9.4% 9.3%
Diluted EPS ($USD)$1.47 $1.32

Segment Breakdown

Segment Net Sales ($USD Millions)Q3 2024Q4 2023Q4 2024
Residential Roofing$1,404.9 $1,162.8 $1,172.3
Non‑Residential Roofing$739.0 $626.7 $661.4
Complementary Building Products$628.7 $510.0 $569.9
Total$2,772.6 $2,299.5 $2,403.6

KPIs and Operating Metrics

KPIQ3 2024Q4 2024
Sales per Day Growth (YoY)+5.6% +2.8%
Residential Sales/Day YoY+0.7% −0.8%
Non‑Res Sales/Day YoY+7.7% +3.8%
Complementary Sales/Day YoY+15.4% +9.9%
Digital Sales Penetration~26% of residential in Q2; trend rising ~16% of total; +~200 bps YoY
Private Label Sales GrowthRecord quarterly levels Q2 ~+7% YoY in Q4
Q4 Operating Cash Flow—~$360M
Inventory Change QoQ—−$87M vs Q3
Net Debt Leverage3.2x (seasonal peak) 2.8x
Liquidity>$800M (6/30) >$1.1B (12/31)
Shares Outstanding (EOQ/EoY)61.9M (9/30) 61.5M (12/31)

Actuals vs Estimates

S&P Global consensus estimates for Q4 2024 were unavailable due to mapping issues; therefore, estimate comparisons cannot be provided. Values retrieved from S&P Global were unavailable.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales Growth (YoY)FY2025—Mid‑single‑digit % New
Gross MarginFY2025—In line with FY2024 New
Adjusted EBITDA ($USD Millions)FY2025—$950 – $1,030 New
Sales per Day (YoY)Q1 2025—Down 3–5% New
Gross MarginQ1 2025—In line with prior year quarter New
Adjusted Operating ExpenseFY2025—+$60M from acquisitions/greenfields, partially offset by existing business leverage New
Adjusted EBITDA ($USD Millions)FY2024$930 – $970 Actual $930.2 Achieved

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q3 2024)Current Period (Q4 2024)Trend
Digital adoption & marginQ2: Record quarterly digital; ~26% of residential; margin accretive Q4: Digital sales +~20% YoY; ~16% of total; margin + Rising
Private label penetrationQ2: Record private label sales Q4: TRI‑BUILT margins +500–2,000 bps; sales +~7% YoY Rising
Cost actions & OpExQ3: $45M annualized savings announced Q4: Existing OpEx −$6M; ~$30M savings in 2025 Improving
Residential demand/seasonalityQ2/Q3: Weather disruptions; lower‑than‑expected volumes Q4: Sharp seasonal slowdown; sales/day −0.8% YoY; weather harsh Q1 outlook Mixed/Weak
Non‑res mix & ABIQ2/Q3: Non‑res repair & reroof accelerating; ABI <50 Q4: Non‑res sales/day +3.8%; ABI <50 implies new construction contraction; repair steady Shift to R&R
Tariffs/macroQ2: Rates impacting housing; ABI <50 Q4: Expected tariffs may pressure non‑res new construction; labor availability concerns Headwind
Supply chain/inventoryQ2: Seasonal inventory peak; expected H2 reduction Q4: Inventory −$87M QoQ; product availability maintained Improving
M&A & greenfieldsQ2: 31 locations added since Q1 Q4: 12 acquisitions, 42 branches in 2024; 15–20 greenfields planned for 2025 Continuing

Management Commentary

  • “Despite the challenging economic environment in 2024, we delivered record fourth quarter and full year sales and our highest fourth quarter Adjusted EBITDA in history.” — Julian Francis, President & CEO .
  • “Digital sales as a percentage of total sales reached approximately 16%… and our digital platform enhances margin by more than 150 basis points compared to offline channels.” — Julian Francis .
  • “Our private label line… yields between 500 and 2,000 basis points of additional margin versus the alternatives.” — Julian Francis .
  • “We estimate the impact of [September] cost actions to yield annualized cost savings of $45 million, approximately $30 million of which will be realized in 2025.” — Prithvi Gandhi, CFO .
  • “We delivered record operating cash flow in the quarter of $360 million… with $87 million less in inventory compared to the third quarter.” — Prithvi Gandhi .

Q&A Highlights

  • Near‑term demand/seasonality: Management noted harsh weather in Jan/Feb; sales/day expected flat in March; Q1 sales/day down 3–5%, but weather creates later demand; confidence in top/bottom‑line growth persists .
  • FY2025 bridge: Mid‑single‑digit sales growth built from ~2% M&A carryover, ~1% price carryover, plus low‑single‑digit above‑market growth; EBITDA benefits from ~$30M cost savings, ~$10M M&A carryover, and operational leverage .
  • Price/cost: Residential April price increase assumed; full‑year price/cost neutral; ~1% ASP tailwind expected .
  • OpEx trajectory: Expect ~$60M higher expense from acquisitions/greenfields in 2025, offset by leverage in existing business and productivity initiatives; long‑term target to move toward 17% OpEx of sales as M&A/greenfields mature .
  • Non‑res mix: Shift from new construction to repair/reroof; ABI <50 implies near‑term contraction in new construction; Beacon focusing on gaining share in targeted commercial markets .

Estimates Context

  • Wall Street consensus (S&P Global) for Q4 2024 EPS and revenue was unavailable due to a mapping issue for BECN; as a result, we cannot present consensus vs actuals for this quarter. Values retrieved from S&P Global were unavailable.

Key Takeaways for Investors

  • Mix resilience: Gross margin held at 25.7% despite higher non‑res mix and acquisition dilution, supported by price execution, digital, and private label penetration .
  • Margin runway: Cost actions and bottom‑quintile branch initiative (Q4 +$7M; FY +$20M) support EBITDA margin expansion in 2025 even with price/cost neutral assumptions .
  • Cash generation: Q4 operating cash flow (~$360M) and lower inventory (-$87M QoQ) reestablish balance sheet flexibility for greenfields (15–20 planned) and tuck‑in M&A .
  • Growth drivers: Complementary (waterproofing) and non‑res R&R are outgrowing overall; acquisitions contributed ~5% to Q4 sales; commercial acceleration initiative targets share gains .
  • 2025 outlook: Mid‑single‑digit sales growth and $950–$1,030M Adjusted EBITDA with gross margin in line; near‑term weather headwinds should normalize as the year progresses .
  • Strategic events: Investor Day (Mar 13) to detail long‑term (to 2028) targets; board’s rejection of QXO tender preserves autonomy and focus on Ambition 2025 execution .
  • Trading lens: Near‑term choppiness from Q1 seasonality and weather, but improving productivity, disciplined OpEx, and structural margin levers (digital/private label/pricing tools) underpin medium‑term EPS/EBITDA trajectory .