Beacon Reports First Quarter 2022 Results

• Record first quarter performance including net sales, net income, and Adjusted EBITDA
• Strong net sales growth across all three lines of business driven by focused execution and strong end-market demand
• Productivity gains generated favorable operating cost leverage and the highest first quarter net income and Adjusted EBITDA margins in Beacon's history
• Opened two greenfield locations & a Beacon OTC^® Network hub and expanded footprint in key markets with successful recent acquisitions
• Executing on an accelerated stock repurchase agreement as part of $500 million share buyback authorization

Beacon (Nasdaq: BECN) (the “Company”, “we”, “our”) announced results today for its first quarter ended March 31, 2022 ("2022").

“Our team generated record first quarter results in an inflationary and rapidly changing environment,” said Julian Francis, Beacon's President & CEO. “Strong demand for our products, disciplined execution and productivity gains led to impressive top-line and bottom-line performance. This quarter also marked the beginning of our journey to achieve our Ambition 2025 financial targets detailed at our investor day in February. During the first quarter, we invested in capacity to drive growth, enhance customer service and expand our footprint in key markets. In addition, we executed an accelerated stock repurchase program to demonstrate both our commitment to delivering value to stockholders and our confidence in our strategic plan. I am extremely pleased with the team’s achievements in the first quarter of the year and look forward to keeping this momentum as we empower our customers to build more.”

First Quarter Financial Highlights

First Quarter

Net sales increased 28.0% compared to the prior year to $1.69 billion, a company record for net sales for the first quarter. 2022 net sales increased across all three lines of business versus the prior year period, largely driven by the successful implementation of price increases. Higher demand, particularly within non-residential roofing products also contributed to the growth. Weighted-average selling price increased approximately 23-24% and estimated volumes increased approximately 3-4%.

Residential roofing product sales increased 21.8%, non-residential roofing product sales increased 47.9%, and complementary product sales increased 20.3% compared to the prior year. The three-month periods ending March 31, 2022 and 2021 each had 63 business days.

Gross margin improved to 26.1%, from 25.3% in the prior year, primarily reflecting pricing execution that drove price-cost improvement, partially offset by an unfavorable sales mix. The increase in operating expense and Adjusted Operating Expense in 2022 was primarily due to increases in payroll & benefit costs, general and administrative expenses, and selling costs. Both operating expense as a percent of sales and Adjusted Operating Expense as a percent of sales were lower in 2022, driven by the positive impact from net sales growth as well as productivity gains.

Net income (loss) from continuing operations was $55.8 million, compared to $(10.5) million in the prior year. Adjusted EBITDA was $139.5 million, compared to $74.4 million in the prior year. EPS was $0.61, compared to $(0.24) in the prior year. Improvements in first quarter results compared to the prior year period were largely driven by higher net sales and gross margins, partially offset by higher operating expenses.

In February 2022, Beacon announced the authorization of a share repurchase program, pursuant to which the Company may purchase up to $500 million of its common stock. In the first quarter, the Company repurchased and retired $113 million of its common stock through a combination of open market repurchases and the previously announced accelerated share repurchase ("ASR") agreement. As a result, shares of common stock outstanding decreased to 68.7 million as of March 31, 2022, from 70.4 million as of December 31, 2021. Common stock outstanding at March 31, 2022 does not include the effect of the $25 million equity forward contract related to the unsettled portion of the ASR, which, based on the average stock price during the quarter ended March 31, 2022, would have resulted in the repurchase of 0.4 million additional shares. The $25 million equity forward contract is expected to settle in the second quarter 2022.

To calculate approximate weighted average selling price and product cost changes, we review organic U.S. warehouse sales of the same items sold regionally period over period and normalize the data for non-representative outliers. To calculate estimated volumes, we subtract the change in weighted average selling price, as described above, from the total changes in sales, excluding acquisitions and dispositions. As a result, and especially in high inflationary periods, the weighted average selling price and estimated volumes changes may not be directly comparable to changes reported in prior periods.

Please see the included financial tables for a reconciliation of “Adjusted” non-GAAP financial measures to the most directly comparable GAAP financial measure, as well as further detail on the components driving the net changes over the comparative periods.

Earnings Call

The Company will host a conference call and webcast today at 5:00 p.m. ET to discuss these results. Details for the earnings release event are as follows:

Upon registration, participants will receive an email containing event details and unique access codes. To ensure timely access, participants should register for the earnings call at least 10 minutes before the 5:00 p.m. ET start time. An archived copy of the webcast will be available on the Events & Presentations page shortly after the call.

Forward-Looking Statements

This release contains information about management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and often use words such as “anticipate,” “estimate,” “expect,” “believe,” “will likely result,” “outlook,” “project” and other words and expressions of similar meaning. Investors are cautioned not to place undue reliance on forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended September 30, 2021 and subsequent filings with the U.S. Securities and Exchange Commission. The Company may not succeed in addressing these and other risks. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein. In addition, the forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.

About Beacon

Founded in 1928, Beacon is a Fortune 500, publicly traded distributor of roofing materials and complementary building products in North America, operating over 400 branches throughout all 50 states in the U.S. and 6 provinces in Canada. Beacon serves an extensive base of over 80,000 customers, utilizing its vast branch network and diverse service offerings to provide high-quality products and support throughout the entire business lifecycle. Beacon offers its own private label brand, TRI-BUILT™, and has a proprietary digital account management suite, Beacon PRO+, which helps customers to manage their businesses online. Beacon’s stock is traded on the Nasdaq Global Select Market under the ticker symbol BECN. To learn more about Beacon, please visit www.becn.com.

BEACON ROOFING SUPPLY, INC.

Non-GAAP Financial Measures

(Unaudited; in millions)

Non-GAAP Financial Measures

To provide investors with additional information regarding our financial results, we prepare certain financial measures that are not calculated in accordance with GAAP, specifically:

• Adjusted Operating Expense. We define Adjusted Operating Expense as operating expense, excluding the impact of the adjusting items (as described below).
• Adjusted Net Income (Loss). We define Adjusted Net Income (Loss) as net income (loss) from continuing operations, excluding the impact of the adjusting items (as described below).
• Adjusted EBITDA. We define Adjusted EBITDA as net income (loss) from continuing operations, excluding the impact of interest expense (net of interest income), income taxes, depreciation and amortization, stock-based compensation, and the adjusting items (as described below).

We use these supplemental non-GAAP measures to evaluate financial performance, analyze the underlying trends in our business and establish operational goals and forecasts that are used when allocating resources. We expect to compute our non-GAAP financial measures consistently using the same methods each period.

We believe these non-GAAP measures are useful measures because they permit investors to better understand changes over comparative periods by providing financial results that are unaffected by certain items that are not indicative of ongoing operating performance.

While we believe that these non-GAAP measures are useful to investors when evaluating our business, they are not prepared and presented in accordance with GAAP, and therefore should be considered supplemental in nature. These non-GAAP measures should not be considered in isolation or as a substitute for other financial performance measures presented in accordance with GAAP. These non-GAAP financial measures may have material limitations including, but not limited to, the exclusion of certain costs without a corresponding reduction of net income for the income generated by the assets to which the excluded costs relate. In addition, these non-GAAP financial measures may differ from similarly titled measures presented by other companies.

BEACON ROOFING SUPPLY, INC.

Non-GAAP Financial Measures (continued)

(Unaudited; in millions)

Adjusting Items to Non-GAAP Financial Measures

The impact of the following expense (income) items is excluded from each of our non-GAAP measures (the “adjusting items”):

• Acquisition costs. Represent certain costs related to historical acquisitions, including: amortization of intangible assets; professional fees, branch integration expenses, travel expenses, employee severance and retention costs, and other personnel expenses classified as selling, general and administrative; gains/losses related to changes in fair value of contingent consideration or holdback liabilities; and amortization of debt issuance costs.
• Restructuring costs. Represent costs stemming from headcount rationalization efforts and certain rebranding costs; impact of the Interior Products and Solar Products divestitures; costs related to changing the Company's fiscal year end; amortization of debt issuance costs; and debt refinancing and extinguishment costs.
• COVID-19 impacts. Represent costs directly related to the COVID-19 pandemic.

The following table presents the impact and respective location of the adjusting items on our consolidated statements of operations for each of the periods indicated:

BEACON ROOFING SUPPLY, INC.

Non-GAAP Financial Measures (continued)

(Unaudited; in millions)

Adjusted Operating Expense

The following table presents a reconciliation of operating expense, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted Operating Expense for each of the periods indicated:

Adjusted Net Income (Loss)

The following table presents a reconciliation of net income (loss) from continuing operations, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted Net Income (Loss) for each of the periods indicated:

BEACON ROOFING SUPPLY, INC.

Non-GAAP Financial Measures (continued)

(Unaudited; in millions)

Adjusted EBITDA

The following table presents a reconciliation of net income (loss) from continuing operations, the most directly comparable financial measure as measured in accordance with GAAP, to Adjusted EBITDA for each of the periods indicated:

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