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1. Company Snapshot

1.a. Company Description

Beacon Roofing Supply, Inc., together with its subsidiaries, distributes residential and non-residential roofing materials, and complementary building products to contractors, home builders, building owners, lumberyards, and retailers.It offers pitched roofing and low slope roof products; gutters and sidings; building materials, such as lumber and composite, skylights and window, plywood and OSB, decking and railing, and HVAC products; and foam board, spray foam, roll, batt, mineral wool, fiberglass, and commercial insulation products, as well as radiant barriers and blown-in insulation and equipment.The company also provides above grade and below grade membranes and coatings, deck and floor coatings, plaza deck waterproofing products, damp proofing coatings, and air and vapor barriers; tools and equipment, including power and hand tools, ladders and scaffolding, air tools and compressors, nails, screws and fasteners, generators, work wear and safety gear, job site supplies, tool bags and belts, welding and soldering, cleaning supplies, drill bits, and saw blades; and solar panels, mounting hardware, inverters, and storage and batteries.


As of September 30, 2021, it operated approximately 446 branches in 50 states of the United States and 6 provinces in Canada.Beacon Roofing Supply, Inc.was founded in 1928 and is headquartered in Herndon, Virginia.

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1.b. Last Insights on BECN

Breaking News: Beacon Roofing Supply, Inc. (BECN) confirmed discussions with QXO, Inc. regarding a potential acquisition for $124.35 per share in cash, or approximately $11 billion. The company is postponing its Investor Day. Additionally, BECN acquired DM Figley, expanding its waterproofing division and advancing Ambition 2025 growth initiatives.

1.c. Company Highlights

2. Beacon (BECN) Delivers Record Results Amid Challenging Market Conditions

Beacon (BECN) reported strong financial performance in its fourth quarter and full-year 2024 results, achieving record net sales of $2.4 billion. This represents a 3% increase in sales per day, supported by recent acquisitions and the successful execution of its Ambition 2025 plan. Gross margin remained stable at 25.7%, meeting the high end of guidance, while adjusted EBITDA reached $223 million, benefiting from cost management and operational efficiency. Cash flow generation was robust, with $360 million in the quarter, enabling investments in greenfields and acquisitions. As Prith Gandhi noted, "The company's ability to maintain gross margin and deliver strong EBITDA despite challenging market conditions underscores the effectiveness of our cost management and operational efficiency initiatives."

Publication Date: Mar -01

📋 Highlights
  • Record Financial Performance:: Beacon reported record Q4 and full-year 2024 results, with net sales reaching $2.4 billion, a 3% increase in sales per day, and adjusted EBITDA of $223 million, driven by strong execution of its Ambition 2025 plan.
  • Profitability and Margins:: Gross margin remained stable at 25.7%, meeting the high end of guidance, while adjusted EBITDA benefited from cost management and operational efficiency. Digital and private label initiatives also enhanced margins.
  • Strong Cash Flow and Investments:: The company generated $360 million in cash flow in Q4, supporting investments in greenfields and acquisitions. For the year, operating cash flow reached $420 million, reducing net debt leverage to 2.8x.
  • Progress on Strategic Initiatives:: Digital sales grew 20% year-over-year, now accounting for 16% of total sales, while private label sales increased 7%. Greenfield locations from the 2022 class contributed $22 million to EBIT, and operational improvements added $7 million to EBITDA in Q4.
  • Challenging Outlook but Confident in Strategy:: Despite anticipated headwinds in 2025, including weakened construction markets and higher interest rates, Beacon expects mid-single-digit sales growth, supported by acquisitions and demand drivers. The company forecasts adjusted EBITDA of $950 million to $1.03 billion and strong operating cash flow of $500 million to $600 million.

Operational Highlights and Strategic Progress

Beacon highlighted significant progress on key initiatives, including a 20% year-over-year growth in digital sales, which now account for 16% of total sales. Private label sales also grew by 7%, contributing to margin enhancement. Greenfield locations from the class of 2022 contributed $22 million to EBIT, while operational improvements, such as the bottom quintile branch initiative, added $7 million to EBITDA year-over-year. These initiatives demonstrate the company's commitment to driving growth and improving profitability.

2025 Outlook and Valuation Considerations

From a valuation perspective, Beacon's current price-to-earnings (P/E) ratio of 19.16 reflects the market's confidence in its growth prospects. The enterprise value-to-EBITDA (EV/EBITDA) ratio of 12.14 indicates a premium valuation, consistent with the company's strong cash flow generation and growth initiatives. The free cash flow yield of 2.75% also highlights the company's ability to generate cash and return value to shareholders through share repurchases and investments in growth.

3. NewsRoom

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Bear Of The Day: Beacon Rooking Supply (BECN)

Apr -28

Source: zacks.com

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SHAREHOLDER INVESTIGATION: Halper Sadeh LLC Investigates BECN and OPTN on Behalf of Shareholders

Mar -21

Source: globenewswire.com

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SHAREHOLDER ALERT: The M&A Class Action Firm Investigates the Merger of Beacon Roofing Supply, Inc. - BECN

Mar -20

Source: prnewswire.com

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Beacon Roofing (BECN) ALERT: Johnson Fistel Investigates Proposed Sale of Beacon Roofing; Is $124.35 a Fair Price for Shareholders?

Mar -20

Source: globenewswire.com

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QXO CEO on Beacon Roofing acquisition: Demand for our product will not be impacted by tariffs

Mar -20

Source: youtube.com

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Shareholder Alert: The Ademi Firm investigates whether Beacon Roofing Supply, Inc. is obtaining a Fair Price for its Public Shareholders

Mar -20

Source: businesswire.com

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QXO to Acquire Beacon Roofing Supply for $11 Billion

Mar -20

Source: businesswire.com

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Building products distributor QXO clinches Beacon Roofing in $11 billion deal, WSJ reports

Mar -20

Source: reuters.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (3.75%)

6. Segments

Residential Roofing Products

Expected Growth: 3.5%

Beacon Roofing Supply's 3.5% growth in Residential Roofing Products is driven by increasing demand for roofing materials in the US housing market, fueled by rising new construction and repair/remodeling activities. Additionally, the company's strategic acquisitions, expanded product offerings, and strong relationships with contractors and builders contribute to its growth.

Non-residential Roofing Products

Expected Growth: 4.2%

Beacon Roofing Supply's non-residential roofing products segment growth of 4.2% is driven by increasing commercial construction activities, rising demand for energy-efficient roofing solutions, and growing adoption of roofing materials with advanced technologies. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to the segment's growth.

Complementary Building Products

Expected Growth: 3.8%

Beacon Roofing Supply's Complementary Building Products segment growth of 3.8% is driven by increasing demand for exterior and interior building products, such as siding, windows, and doors, from residential and commercial customers. Additionally, the company's strategic acquisitions and expansion into new markets have contributed to the segment's growth.

7. Detailed Products

Residential Roofing

Beacon Roofing Supply offers a wide range of residential roofing products, including asphalt shingles, metal roofing, clay and concrete tiles, and solar roofing solutions.

Commercial Roofing

Beacon's commercial roofing products include EPDM, TPO, PVC, and modified bitumen membranes, as well as coatings and adhesives for industrial and commercial buildings.

Siding and Trim

Beacon offers a variety of siding and trim products, including vinyl, aluminum, and steel siding, as well as PVC and composite trim boards.

Windows and Doors

Beacon's window and door products include vinyl, aluminum, and wood windows, as well as entry doors, patio doors, and garage doors.

Gutters and Downspouts

Beacon offers a range of gutter and downspout products, including aluminum, steel, and vinyl gutters, as well as gutter guards and accessories.

Roofing Accessories

Beacon's roofing accessories include underlayment, flashing, and roofing fasteners, as well as roofing tools and equipment.

8. Beacon Roofing Supply, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Beacon Roofing Supply, Inc. is medium due to the availability of alternative roofing materials and suppliers.

Bargaining Power Of Customers

The bargaining power of customers for Beacon Roofing Supply, Inc. is low due to the company's strong relationships with contractors and builders.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Beacon Roofing Supply, Inc. is medium due to the company's dependence on a few large suppliers.

Threat Of New Entrants

The threat of new entrants for Beacon Roofing Supply, Inc. is low due to the high barriers to entry in the roofing supply industry.

Intensity Of Rivalry

The intensity of rivalry for Beacon Roofing Supply, Inc. is high due to the competitive nature of the roofing supply industry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 56.81%
Debt Cost 3.95%
Equity Weight 43.19%
Equity Cost 11.94%
WACC 7.40%
Leverage 131.52%

11. Quality Control: Beacon Roofing Supply, Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Beacon Roofing Supply

A-Score: 5.0/10

Value: 5.6

Growth: 7.3

Quality: 3.3

Yield: 0.0

Momentum: 8.0

Volatility: 6.0

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Quality: 6.6

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AAON

A-Score: 3.7/10

Value: 2.2

Growth: 8.1

Quality: 5.8

Yield: 0.0

Momentum: 3.0

Volatility: 3.3

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

124.17$

Current Price

124.17$

Potential

-0.00%

Expected Cash-Flows