Beacon Roofing (BECN) Q2 Earnings & Sales Beat, Margin Rise

Beacon Roofing Supply, Inc. BECN reported strong results for second-quarter 2022. Both the earnings and revenues surpassed their respective Zacks Consensus Estimate and increased significantly on a year-over-year basis. The solid results were backed by strong net sales, gross margin expansion and operational improvement.

Shares of the company jumped 1.7% on Aug 4.

Julian Francis, Beacon’s president and CEO, said, “Our team’s commitment to best-in-class service combined with solid end market demand and margin enhancing initiatives delivered the 10th straight quarter of year-over-year increases in Adjusted EBITDA. In a challenging inflationary environment, we achieved the highest profits and margin in our history. We made strategic investments in key markets, expanding both our branch footprint and our delivery capacity towards achieving our Ambition 2025 growth targets.

Earnings & Revenue Discussion

This distributor of residential and non-residential roofing materials reported adjusted earnings of $2.41 per share, which topped the consensus mark of $2.36 by 2.1%.

Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise

 

Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise

Beacon Roofing Supply, Inc. price-consensus-eps-surprise-chart | Beacon Roofing Supply, Inc. Quote

 

For the quarter, net sales of $2.36 billion surpassed the consensus mark of $2.29 billion by 3%. The top line grew 26% on a year-over-year basis as sales increased across all three lines of business, given the higher pricing. Higher demand for residential roofing and complementary products also contributed to growth.

During the quarter, weighted-average selling price increased 24-25% and volumes rose nearly 1%.

Sales According to Line of Business

Residential Roofing Product: For the reported quarter, sales of this product (comprising 50.7% of the quarterly net sales) were $1.2 billion, up 21.9% from the prior year.

Non-Residential Roofing Product: Sales (comprising 29% of the quarterly net sales) increased 40.3% from the year-ago quarter to $682.6 million.

Complementary Product: For the quarter, sales of this product (comprising 20.3% of the quarterly net sales) increased 18.7% year over year to $479.5 billion.

Operating Highlights

The gross margin of 27.6% was flat year over year, driven by strong pricing execution that drove price-cost improvement, offset by a higher non-residential product sales mix. As a percentage of net sales, adjusted operating expenses declined 820 bps to 15.7%, owing to the positive impact of net sales growth and productivity gains.

Adjusted EBITDA increased 34.1% on a year-over-year basis to $307.7 million, driven by higher net sales and favorable operating leverage. Adjusted EBITDA margin expanded 70 bps year over year to 13%.

Other Financial Details

As of Jun 30, 2022, Builders FirstSource had cash and cash equivalents of $54.6 million compared with $225.8 million at the 2021-end. Long-term debt, net was $1.61 billion, slightly down from $1.612 billion at 2021-end.

Net cash used in operating activities was $187 million versus net cash provided by operating activities of $18.7 million.

Guidance

For the third quarter, the company expects third-quarter net sales to grow 23-25% on a year-over-year basis, backed by strong Non-discretionary repair & re-roofing demand and positive commercial roofing business. July sales per day were up approximately 30%. Gross margins for the quarter are expected to be nearly 26%.

For 2022, the company increased its expectation for adjusted EBITDA to $825–875 million, up from $800-850 million expected earlier. Full-year sales are likely to rise more than 20% year over year.

Zacks Rank & Peer Release

Beacon Roofing currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Builders FirstSource BLDR released its second-quarter 2022 results, wherein it reported 12.2% core organic sales growth.

The company’s earnings and net sales surpassed the Zacks Consensus Estimate and increased significantly year over year. The results were driven by an increase in net sales and gross margin and contributions from acquisitions amid continuous raw material supply woes.

Fastenal Company FAST reported second-quarter 2022 results, wherein earnings came in line with the Zacks Consensus Estimate, but revenues missed the mark.

That said, the top and the bottom line of FAST increased on a year-over-year basis, given the strong demand for manufacturing and construction equipment and supplies and higher pricing.

Domino's Pizza, Inc. DPZ reported second-quarter fiscal 2022 results, with earnings and revenues missing the Zacks Consensus Estimate.

DPZ’s bottom line missed the consensus mark in the third consecutive quarter, while the top line lagged for the fourth straight quarter.

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