Qxo Inc: Extends Tender Offer To Acquire Beacon Roofing Supply Until 5:00 P.M. (New York City Time) On March 10

Beacon Roofing Supply, Inc. BECN reported lower-than-expected fourth-quarter 2024 results, with earnings and net sales missing the Zacks Consensus Estimate. The top line grew while the bottom line declined year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Beacon delivered record fourth-quarter and full-year sales in 2024, along with its highest-ever fourth-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortization), despite economic challenges like inflation, rising interest rates, and a weak housing market. The company’s Ambition 2025 plan has driven consistent growth, with 16 consecutive quarters of year-over-year sales increases. Investments in growth included 19 new locations, 42 branch acquisitions, and operational improvements in sales, pricing, and working capital.

Beacon also returned $225 million to shareholders through share buybacks while reducing debt leverage. With strong cash flow, the company remains well-positioned to pursue growth and shareholder returns in 2025 and beyond.

BECN stock lost 0.6% during the trading session but gained 2.6% during the after-hours trading session yesterday.

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

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

Beacon’s Earnings & Sales Discussion

Adjusted earnings per share of $1.65 missed the Zacks Consensus Estimate of $1.67 by 1.2% and dipped 3.9% from the year-ago adjusted level of $1.72.

Net sales of $2.40 billion also marginally missed the consensus mark of $2.42 billion by 0.8%. Nonetheless, the top line increased 4.5% on a year-over-year basis. Net sales grew 2.8% on a per-day basis in the quarter.

Estimated organic volumes, which encompass greenfield projects, experienced a slight decrease of 1-2%, while the weighted average selling price rose 1-2%. The inclusion of acquired branches accounted for 5% of the overall net sales.

The company’s growth was driven by multiple strategic initiatives, including acquisitions, greenfield expansion, and digital transformation.

However, Beacon faced challenges, particularly in residential roofing, where demand slowed in the fourth quarter due to unfavorable weather conditions in the North and West regions. The harsh winter led to weaker-than-expected sales in November and December 2024, disrupting an otherwise strong start to the quarter. Market conditions were further pressured by sluggish housing starts, historically low existing home sales, and lower commercial new construction. Despite these difficulties, the company’s focus on commercial reroofing and waterproofing helped offset some of the residential weakness.

Sales According to BECN’s Line of Business

Residential Roofing Products: Sales of this product line (comprising 48.8% of quarterly net sales) were $1.17 billion, up 0.8% from the year-ago quarter’s (above our expectation of 0.3% growth) tally. The upside was primarily driven by price execution.

Non-Residential Roofing Products: Sales (comprising 27.5% of quarterly net sales) rose 5.5% from the year-ago quarter’s figure to $661.4 million owing to higher volumes driven by strong underlying market demand and solid market execution. Our model had predicted this business line’s sales to grow 11%.

Complementary Building Products: Sales of this product line (comprising 23.7% of quarterly net sales) increased 11.7% year over year (below our expectation of 13.9% growth) to $569.9 million. The rise in sales primarily stemmed from three waterproofing acquisitions totaling 15 branches since Dec. 31, 2023.

Operating Highlights of BECN

The gross margin of 25.7% remained unchanged year over year. Increased average selling prices were offset by higher product costs and a non-residential product mix.

Adjusted EBITDA increased year over year to $222.5 million from $216.7. Yet, the adjusted EBITDA margin contracted 10 bps year over year to 9.3%.

Beacon’s 2024 Highlights

Adjusted EPS came in at $7.16, down 10.2% from $7.97 a year ago. Net sales reached a record $9.76 billion, growing 7.1% (6.2% on a per-day basis) year over year. Organic volumes increased 1-2%, and the weighted-average selling price rose 1-2%. Acquired branches contributed 4.6% to sales growth. By category, residential roofing sales grew 3.9%, non-residential roofing sales increased 11.6%, and complementary product sales rose 8.9%.

Adjusted EBITDA was $930.2 million, slightly up from $929.6 million in the previous year.

Beacon’s Other Financial Details

As of Dec. 31, 2024, the company had cash and cash equivalents of $74.3 million, down from $84 million at 2023-end. Net long-term debt was $2.48 billion, up from the 2023-end value of $2.19 billion.

Net cash provided by operating activities was $419.4 million in 2024, down from $787.8 million in 2023. The company generated a record operating cash flow of $360 million for the quarter, exceeding 160% of the $223 million in adjusted EBITDA.

BECN’s 2025 Guidance

For the first quarter of 2025, Beacon anticipates net sales per day to be down 3-5% from the year-ago period’s figure. The gross margin is expected to be in line with the year-ago period.

For 2025, net sales are expected to be up in the mid-single digit year over year. Gross margin is anticipated to remain unchanged from the prior year.

Adjusted EBITDA is now expected to be in the range of $950-$1,030 million.

BECN’s Zacks Rank & Recent Releases

Beacon currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Builders FirstSource, Inc.’s BLDR adjusted earnings of $2.31 per share surpassed the Zacks Consensus Estimate by 3.1%, while the net sales of $3.82 billion missed the mark by 2.4%.

Builders FirstSource’s lackluster fourth-quarter 2024 results reflected tepid sales trends in the Value-Added product category and reduced operating leverage amid an uncertain housing environment. The reduced housing starts scenario, given the ongoing affordability challenges and uncertainty around potential policy changes, marred the quarter’s uptrend.

Armstrong World Industries, Inc. AWI reported solid results for fourth-quarter 2024, wherein earnings and net sales topped the Zacks Consensus Estimate and increased on a year-over-year basis.

Armstrong World’s growth trend was backed by solid contributions from the Mineral Fiber, as well as Architectural Specialties segments. Growth was attributable to the increase in average unit value (AUV) and volume. Also, contributions from recent acquisitions aided the uptrend.

Masco Corporation’s MAS fourth-quarter 2024 earnings topped the Zacks Consensus Estimate and grew year over year. Earnings topped expectations in six of the trailing seven quarters. On the other hand, net sales missed the consensus mark and tumbled year over year.

Masco’s top-line results reflected lower sales volume for North America’s plumbing products, lower net selling prices of decorative architectural products and an unfavorable sales mix of plumbing products. However, the bottom line was favored by lower selling, general and administrative expenses, favorable net selling prices and strategic cost savings initiatives.

This article originally published on Zacks Investment Research (zacks.com).

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(14:51 GMT) Beacon Roofing Supply Price Target Raised to $124.00/Share From $120.00 by Baird