• Net Sales: $2.4 billion in Q4, up 4.5% year over year.
• Adjusted EBITDA: $223 million in Q4.
• Cash Flow: $360 million in operating cash flow for Q4.
• Gross Margin: 25.7% in Q4, unchanged from the prior year.
• Sales Per Day: Increased approximately 3% year over year.
• Digital Sales: Grew approximately 20% year over year, reaching 16% of total sales.
• Private Label Sales: Increased by approximately 7% in Q4.
• Operating Expenses: $434 million in Q4, up $25 million from the prior year.
• Net Debt Leverage: 2.8 times with cash and available lines of credit totaling more than $1.1 billion.
• Share Repurchase: $225 million in 2024, retiring 2.4 million shares.
• Full Year Sales Growth: More than 7% to nearly $9.8 billion in 2024.
• Full Year Adjusted EBITDA: More than $930 million in 2024.
• Greenfield Locations: 19 new locations opened in 2024, contributing over $180 million to sales.
• Acquisitions: 12 new acquisitions adding 42 branches, contributing over $400 million to net sales.

• Warning! GuruFocus has detected 5 Warning Sign with BECN.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Beacon Roofing Supply Inc (NASDAQ:BECN) delivered a record fourth quarter with net sales, adjusted EBITDA, and cash flow reaching new highs.
• The company achieved a 3% year-over-year increase in sales per day, driven by contributions from recently acquired branches.
• Digital sales grew approximately 20% year over year, enhancing customer loyalty and margin by more than 150 basis points compared to offline channels.
• The company's private label line, TRI-BUILT, saw a 7% increase in sales, offering higher margins between 500 and 2,000 basis points over alternatives.
• Beacon Roofing Supply Inc (NASDAQ:BECN) generated nearly $360 million in fourth-quarter cash flow, enabling investment in growth initiatives such as greenfield locations and acquisitions.

Negative Points

• Residential roofing sales were impacted by a slowdown, particularly in the North and West regions, with volumes down in the quarter.
• The company experienced a sharp slowdown in fourth-quarter activity, especially in December, due to adverse weather patterns.
• Gross margin was unchanged from the prior year quarter, with some dilutive impact from recent M&A activities that have yet to be fully synergized.
• Operating expenses increased by approximately $25 million compared to the prior year quarter, with acquisitions and greenfield branches contributing to this rise.
• The company faced challenges in adjusting inventory appropriately, leading to operating cash flow below expectations for the year.

Q & A Highlights

Q: Can you provide more details on the sluggish start to the year and how you plan to achieve healthy growth for the full year? A: Julian Francis, CEO, explained that January was challenging due to harsh weather, but recent improvements in demand are promising. The company expects first-quarter challenges but anticipates demand will increase as the year progresses. CFO Prith Gandhi added that for the full year, they expect mid-single-digit sales growth, driven by acquisitions, price carryover, and above-market growth initiatives.

Q: How many new greenfield locations are planned for 2025, and does the guidance include any price increases? A: Julian Francis stated that Beacon plans to open 15 to 20 new greenfield locations, adjusting based on market conditions. The guidance includes a residential price increase announced for April, which is factored into their price/cost neutral outlook for the year.

Q: What are the expectations for SG&A expenses in 2025, and what needs to happen to reach the 17% target? A: Julian Francis noted that digesting recent acquisitions and greenfield investments is necessary to reach the 17% SG&A target. Prith Gandhi added that they expect about $60 million in additional expenses from acquisitions and greenfields but anticipate leverage within the existing business through productivity improvements.

Q: Can you elaborate on the non-residential demand trends, particularly between new construction and repair and replace (R&R)? A: Julian Francis explained that the market is shifting from new construction to R&R due to past supply chain disruptions. The Architectural Billing Index indicates contraction in new construction, while R&R remains steady. Prith Gandhi highlighted Beacon's focus on gaining market share in commercial efforts, targeting growth markets.

Q: What are the expectations for residential pricing, and how does it align with the guidance? A: Prith Gandhi mentioned that the guidance assumes similar realization of the April price increase as in previous years, with a small basis point inventory profit. Julian Francis added that they expect a 1% incremental ASP for the full year, with the April increase contributing to this, while maintaining a price/cost neutral stance.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.