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Beacon (BECN) Q2 Earnings & Sales Miss Estimates, Shares Down
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Beacon Roofing Supply, Inc. (BECN - Free Report) reported drab second-quarter 2024 results, with earnings and net sales missing the Zacks Consensus Estimate. While the company experienced a top-line increase, there was a decline in earnings per share (EPS) compared with the previous year’s tally. However, BECN showcased consistent net sales growth over the last 14 quarters, underscoring the robustness of its business model.
Despite disruptive weather events reducing the number of roofing days in the quarter, the company observed strong organic sales growth across all three business lines. BECN's Ambition 2025 initiatives, focusing on organic and inorganic growth, have boosted its performance. The company continued to invest in growth initiatives during the quarter, expanding its footprint in key markets. Since the end of the first quarter, the company acquired 21 branches and opened 10 greenfield locations. It anticipates continued market support, driven by non-discretionary repair and reroofing demand.
Shares of the company dropped 6.4% in the after-hour trading session on Aug 1, 2024.
Earnings & Sales Discussion
This distributor of building products reported adjusted earnings per share of $2.32, which missed the consensus mark of $2.82 by 17.7% and plunged 38.8% from the year-ago adjusted level of $2.66.
Net sales of $2.67 billion also missed the consensus mark of $2.69 billion by 0.6%. The top line increased 6.8% on a year-over-year basis, primarily fueled by price execution and contributions from newly-established branches.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Estimated organic volumes, which encompass greenfield projects, experienced a slight increase of 0-1%, while the weighted average selling price saw a rise of 2-3%. The inclusion of acquired branches accounted for more than 4% of the overall increase in net sales during the second quarter.
Sales According to Line of Business
Residential Roofing Product: In the reported quarter, sales of this product line (comprising 49.7% of quarterly net sales) were $1,328.9 million, up 2.4% from the year-ago quarter’s (well below our expectation of 10% growth) tally. The upside was primarily driven by price execution.
Non-Residential Roofing Product: Sales (comprising 27.9% of the quarterly net sales) rose 11.1% from the year-ago quarter’s figure to $745.1 million owing to strong underlying market demand. Our model had predicted this segment sales to grow 0.3% in the quarter.
Complementary Product: In the second quarter, sales of this product line (comprising 22.4% of quarterly net sales) increased 12.3% year over year (above our expectation of 10.4% growth) to $590.4 million. The rise in sales primarily stemmed from an uptick in waterproofing volumes and the acquisition of additional waterproofing companies since Jun 30, 2023. However, this was partly mitigated by lower volumes.
Operating Highlights
The gross margin of 25.6% was up 20 basis points (bps) year over year. The upside can be attributed to higher average selling prices, which offset higher product costs and a higher non-residential product mix.
Adjusted EBITDA fell 3.7% on a year-over-year basis to $279.4 million, driven by aforementioned headwinds. Adjusted EBITDA margin contracted 120 bps year over year to 10.4%.
Other Financial Details
As of Jun 30, 2024, the company had cash and cash equivalents of $76.6 million, down from $84 million at 2023-end. Long-term debt, net was $2.49 billion, up from the 2023-end value of $2.19 billion.
Net cash used in operating activities was $189.2 million in the first six months of 2024, against $358.7 million cash provided by operating activities in the prior year.
Guidance
For third-quarter 2024, the company anticipates net sales per day to be up in the high single digits from the year-ago period’s figure. Gross margin is expected to be in the high 25% range versus 26% a year ago. In July 2024, net sales per day were up in the low single digits from the year-ago period.
For 2024, net sales growth is anticipated to grow 6-8% year-over-year. Gross margin is expected to be in the mid-25% range. Adjusted EBITDA is now expected to be in the range of $930-$970 million versus earlier expectations of $930-$990 million.
Despite lower storm volume projections and the impact of higher interest rates on housing, Beacon remains optimistic about sustained demand for residential non-discretionary repair and re-roofing. The company sees opportunities to improve commercial sentiment, although it acknowledges the challenges posed by the ABI reading remaining below 50.
Continuous investments in greenfield locations are expected to yield 25 new locations in 2024.
Starbucks Corporation (SBUX - Free Report) reported mixed third-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate but revenues missing the same. The top and the bottom line declined on a year-over-year basis. The downside was caused by competitive market dynamics in China, macro challenges and price wars.
In the fiscal third quarter, the company reported adjusted EPS of 93 cents, in line with the Zacks Consensus Estimate. The bottom line declined 7% year over year from $1.00. Quarterly revenues of $9,113.9 million missed the Zacks Consensus Estimate of $9,224 million. The top line dropped 0.6% on a year-over-year basis due to dismal international revenues. Global comparable store sales declined 3% year over year. The downside was backed by a decline of 5% in comparable transactions, partially overshadowed by a 2% increase in average tickets.
Chipotle Mexican Grill, Inc. (CMG - Free Report) released impressive second-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. During the quarter, the company benefited from successful promotions regarding Chicken Al Pastor driving significant engagement and sales. The emphasis on throughput and staff training proved effective in meeting heightened demand and supported transaction growth.
During the second quarter, CMG reported adjusted EPS of 34 cents, outpacing the Zacks Consensus Estimate of 31 cents. The bottom line increased 36% from 25 cents reported in the year-ago quarter. Quarterly revenues of $2.97 billion surpassed the consensus mark of $2.94 billion by 1.3%. The top line rose 18.2% on a year-over-year basis. The upside was driven by strong comparable restaurant sales growth backed by increased transactions (8.7%) and average checks (2.4%).
McDonald's Corporation (MCD - Free Report) reported drab second-quarter 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and the bottom line declined on a year-over-year basis. The dismal performance was caused by a pressured industry landscape and the war in the Middle East.
During the second quarter, McDonald's reported adjusted EPS of $2.97, missing the Zacks Consensus Estimate of $3.08. Adjusted earnings fell 6% year over year. Quarterly net revenues of $6,490 million lagged the consensus mark of $6,651 million. The top line declined 0.1% year over year. Global comps fell 1% against 11.7% growth in the prior-year quarter.
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Beacon (BECN) Q2 Earnings & Sales Miss Estimates, Shares Down
Beacon Roofing Supply, Inc. (BECN - Free Report) reported drab second-quarter 2024 results, with earnings and net sales missing the Zacks Consensus Estimate. While the company experienced a top-line increase, there was a decline in earnings per share (EPS) compared with the previous year’s tally. However, BECN showcased consistent net sales growth over the last 14 quarters, underscoring the robustness of its business model.
Despite disruptive weather events reducing the number of roofing days in the quarter, the company observed strong organic sales growth across all three business lines. BECN's Ambition 2025 initiatives, focusing on organic and inorganic growth, have boosted its performance. The company continued to invest in growth initiatives during the quarter, expanding its footprint in key markets. Since the end of the first quarter, the company acquired 21 branches and opened 10 greenfield locations. It anticipates continued market support, driven by non-discretionary repair and reroofing demand.
Shares of the company dropped 6.4% in the after-hour trading session on Aug 1, 2024.
Earnings & Sales Discussion
This distributor of building products reported adjusted earnings per share of $2.32, which missed the consensus mark of $2.82 by 17.7% and plunged 38.8% from the year-ago adjusted level of $2.66.
Net sales of $2.67 billion also missed the consensus mark of $2.69 billion by 0.6%. The top line increased 6.8% on a year-over-year basis, primarily fueled by price execution and contributions from newly-established branches.
Beacon Roofing Supply, Inc. Price, Consensus and EPS Surprise
Beacon Roofing Supply, Inc. price-consensus-eps-surprise-chart | Beacon Roofing Supply, Inc. Quote
Estimated organic volumes, which encompass greenfield projects, experienced a slight increase of 0-1%, while the weighted average selling price saw a rise of 2-3%. The inclusion of acquired branches accounted for more than 4% of the overall increase in net sales during the second quarter.
Sales According to Line of Business
Residential Roofing Product: In the reported quarter, sales of this product line (comprising 49.7% of quarterly net sales) were $1,328.9 million, up 2.4% from the year-ago quarter’s (well below our expectation of 10% growth) tally. The upside was primarily driven by price execution.
Non-Residential Roofing Product: Sales (comprising 27.9% of the quarterly net sales) rose 11.1% from the year-ago quarter’s figure to $745.1 million owing to strong underlying market demand. Our model had predicted this segment sales to grow 0.3% in the quarter.
Complementary Product: In the second quarter, sales of this product line (comprising 22.4% of quarterly net sales) increased 12.3% year over year (above our expectation of 10.4% growth) to $590.4 million. The rise in sales primarily stemmed from an uptick in waterproofing volumes and the acquisition of additional waterproofing companies since Jun 30, 2023. However, this was partly mitigated by lower volumes.
Operating Highlights
The gross margin of 25.6% was up 20 basis points (bps) year over year. The upside can be attributed to higher average selling prices, which offset higher product costs and a higher non-residential product mix.
Adjusted EBITDA fell 3.7% on a year-over-year basis to $279.4 million, driven by aforementioned headwinds. Adjusted EBITDA margin contracted 120 bps year over year to 10.4%.
Other Financial Details
As of Jun 30, 2024, the company had cash and cash equivalents of $76.6 million, down from $84 million at 2023-end. Long-term debt, net was $2.49 billion, up from the 2023-end value of $2.19 billion.
Net cash used in operating activities was $189.2 million in the first six months of 2024, against $358.7 million cash provided by operating activities in the prior year.
Guidance
For third-quarter 2024, the company anticipates net sales per day to be up in the high single digits from the year-ago period’s figure. Gross margin is expected to be in the high 25% range versus 26% a year ago. In July 2024, net sales per day were up in the low single digits from the year-ago period.
For 2024, net sales growth is anticipated to grow 6-8% year-over-year. Gross margin is expected to be in the mid-25% range. Adjusted EBITDA is now expected to be in the range of $930-$970 million versus earlier expectations of $930-$990 million.
Despite lower storm volume projections and the impact of higher interest rates on housing, Beacon remains optimistic about sustained demand for residential non-discretionary repair and re-roofing. The company sees opportunities to improve commercial sentiment, although it acknowledges the challenges posed by the ABI reading remaining below 50.
Continuous investments in greenfield locations are expected to yield 25 new locations in 2024.
Zacks Rank
Beacon currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Recent Retail-Wholesale Releases
Starbucks Corporation (SBUX - Free Report) reported mixed third-quarter fiscal 2024 results, with earnings meeting the Zacks Consensus Estimate but revenues missing the same. The top and the bottom line declined on a year-over-year basis. The downside was caused by competitive market dynamics in China, macro challenges and price wars.
In the fiscal third quarter, the company reported adjusted EPS of 93 cents, in line with the Zacks Consensus Estimate. The bottom line declined 7% year over year from $1.00. Quarterly revenues of $9,113.9 million missed the Zacks Consensus Estimate of $9,224 million. The top line dropped 0.6% on a year-over-year basis due to dismal international revenues. Global comparable store sales declined 3% year over year. The downside was backed by a decline of 5% in comparable transactions, partially overshadowed by a 2% increase in average tickets.
Chipotle Mexican Grill, Inc. (CMG - Free Report) released impressive second-quarter 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. During the quarter, the company benefited from successful promotions regarding Chicken Al Pastor driving significant engagement and sales. The emphasis on throughput and staff training proved effective in meeting heightened demand and supported transaction growth.
During the second quarter, CMG reported adjusted EPS of 34 cents, outpacing the Zacks Consensus Estimate of 31 cents. The bottom line increased 36% from 25 cents reported in the year-ago quarter. Quarterly revenues of $2.97 billion surpassed the consensus mark of $2.94 billion by 1.3%. The top line rose 18.2% on a year-over-year basis. The upside was driven by strong comparable restaurant sales growth backed by increased transactions (8.7%) and average checks (2.4%).
McDonald's Corporation (MCD - Free Report) reported drab second-quarter 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and the bottom line declined on a year-over-year basis. The dismal performance was caused by a pressured industry landscape and the war in the Middle East.
During the second quarter, McDonald's reported adjusted EPS of $2.97, missing the Zacks Consensus Estimate of $3.08. Adjusted earnings fell 6% year over year. Quarterly net revenues of $6,490 million lagged the consensus mark of $6,651 million. The top line declined 0.1% year over year. Global comps fell 1% against 11.7% growth in the prior-year quarter.