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Beacon's (BECN) Transition Period Earnings & Sales Beat

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Beacon Roofing Supply, Inc. (BECN - Free Report) gained 1.5% in the after-hours trading session on Feb 3, after it reported solid results for the transition period (Oct 1 to Dec 31, 2021). The top and bottom lines surpassed their respective Zacks Consensus Estimate and improved significantly on a year-over-year basis. The solid results were mainly backed by strong net sales, gross margin expansion and operational improvement.

Julian Francis, Beacon’s president and CEO, said, “2021 was nothing short of transformational. I’m extremely proud of the Beacon team’s ability to successfully execute in a supply-challenged environment to finish the year in record fashion. We eclipsed a meaningful profitability threshold, delivering double-digit Adjusted EBITDA margin for the first time in our history.”

The company recently closed two acquisitions, Midway Wholesale and Crabtree Siding, expanding its presence in key markets. In addition, it divested the solar products business to focus more on delivering high-caliber service to core exterior customers. Julian continued, “The strategic achievements that we have accomplished in 2020 and 2021 give us great confidence in our future, and we look forward to sharing our longer-term strategic plan called Ambition 2025 with the investment community later this month.”

Starting from Jan 1, 2022, BECN’s fiscal years will end on Dec 31, 2022. The company expects the reporting calendar change to be extremely beneficial through the promotion of both internal efficiencies and better external comparability.

Quarter in Detail

Beacon’s adjusted earnings of $1.28 per share topped the consensus mark of $1.19 by 7.6% and grew 39.1% from the year-ago period on higher revenues, margin expansion and aggressive cost-cutting actions.

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

Net sales of $1.75 billion topped the consensus mark of $1.56 billion by 12%. Also, the metric gained 11.3% from $1.58 billion a year ago. Sales increased across all three product categories, largely driven by a weighted average selling price increase of approximately 15-16%. Yet, average sales volume decreased approximately 4-5% due to supply chain challenges during the year. Nonetheless, this marked record fourth-quarter net sales.

Sales of residential roofing products (accounting for 52.7% of net sales), non-residential roofing products (25.5%), and complementary products (21.8%) increased 8.9%, 12.8%, and 15.7%, respectively.

Operating Highlights

Gross margin of 26.3% improved 90 basis points (bps) year over year, courtesy of successful implementation of price increase, partially offset by an unfavorable sales mix. Adjusted operating expenses, as a percentage of net sales, remained in line with the prior-year figure of 17.5%. Adjusted EBITDA margin expanded 80 bps year over year.

Cash Position

At December 2021-end, Beacon had cash and cash equivalents of $225.8 million, significantly down from $461.4 million at December 2020-end. Long-term debt, net was $1.61 billion, lower than the 2020-end figure of $2.49 billion.

Cash provided by operating activities was $49.6 million for the three months ended Dec 31, 2021 against cash used in operations of $39.1 million in the comparable year-ago period.

Calendar Year 2021 Highlights

Net sales were up 12.2% year over year to $6.82 billion. Residential roofing product sales grew 11.3%, non-residential roofing product sales rose 8.5% and complementary product sales increased 19.4% from the prior year. The company reported an adjusted net income of $394.4 million, up from $198.6 million in the year-ago period.

Gross margin and adjusted EBITDA for the period advanced 230 bps and 250 bps, respectively, from a year ago.

Zacks Rank & Peer Release

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

Fastenal Company (FAST - Free Report) — which currently carries a Zacks Rank #2 — ended 2021 on a solid note.

Fastenal’s earnings and revenues not only beat the Zacks Consensus Estimate but also improved on a year-over-year basis, given strong demand for manufacturing and construction equipment and supplies along with higher pricing.

Other Top-Ranked Stocks in Broader Retail Sector

Other top-ranked stocks from the Zacks Retail-Wholesale sector include Arcos Dorados Holdings Inc. (ARCO - Free Report) and Genesco Inc. (GCO - Free Report) .

Arcos Dorados sports a Zacks Rank #2. It has long-term earnings growth of 42.9%.

The Zacks Consensus Estimate for ARCO’s 2022 sales and earnings per share (EPS) suggests growth of 10.4% and 255.6%, respectively, from the year-ago levels.

Genesco sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 2,739.6%, on average.

The Zacks Consensus Estimate for GCO’s fiscal 2022 sales and EPS indicates a rise of 35.3% and 672.9%, respectively, from the year-ago levels.