Beacon Roofing Supply Inc.

Overview Key strengths Key risks U.S. roofing and building materials distributor benefiting from consistent, predictable demand tied to roof repair and replacement. Operates within the highly competitive, fragmented roofing distribution industry. Business model continues to produce positive operating cash flows. A meaningful component of the company?s revenue stems from cyclical residential end-markets. Unpredictable severe weather creates some earnings volatility. . In 2023, we anticipate the company will do more than $8.7 billion in sales, with a gross margin of roughly 26%. We expect 3%-4% sales growth because of discretionary demand for roofing products remaining moderate. Although costs such as crude oil, asphalt, and other related products have been inflated due to supply, we expect inflation to cool in the next

...We continue to expect Beacon Roofing Supply Inc.'s net cash adjusted leverage to be between 2x and 3x for the next 12 months, despite some market headwinds. In 2023, we anticipate the company will do more than $8.7 billion in sales, with a gross margin of roughly 26%. We expect 3%-4% sales growth because of discretionary demand for roofing products remaining moderate. Although costs such as crude oil, asphalt, and other related products have been inflated due to supply, we expect inflation to cool in the next 12 months. We expect excess cash flow to be directed toward acquisitions and shareholder rewards over debt reduction. The company is planning to fund its $500 million share repurchase program and spend roughly $1 billion for acquisitions through 2025 using internally generated free operating cash flow (FOCF). Beacon has historically expanded through debt-funded acquisitions, however...

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