BECN - Earnings call transcript Q1 2020 | Beacon Roofing Supply, Inc.

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Operator

Good afternoon, ladies and gentlemen, and welcome to Beacon's First Quarter 2020 Earnings Conference Call. My name is Josh, and I will be your conference coordinator for today. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes.

This call will contain forward-looking statements, including statements about its plans and objectives and future economic performance.

Forward-looking statements are only predictions and are subject to a number of risks and uncertainties. set differ a those factors, Company's result not to may forward-looking by including latest results Risk limited as the statements of those Form actual XX-K. materially of indicated from such but Factors Therefore, section in the forth various important

contained forward-looking These are And fall the financial of the as company and future Safe statements call performance of these within Harbor Private company's of the events today, February forward-looking update Litigation required the forward-looking as this on information of regarding Reform to in based The law, future revise obligation X, except including statements undertakes any company, outlook. the statements. Securities or Act the provisions XXXX. no of XXXX, financial by

non-GAAP financial will reconciliation financial its section on in referenced the today's of results. call contain The that will of non-GAAP is has certain during company slide Events website summary The be management's under to references posted set review measures. measures this a presentation press forth and these Presentations of Investors Finally, the release.

and the today On be CEO; President and Beacon Mr. Mr. call Joe will Vice Executive President Francis, Nowicki, Julian for and CFO.

over like proceed to now the CEO. Julian to would and turn Mr. Francis, President I Mr. call Please Francis.

Julian Francis

good Thank to our everyone, and and you, first Josh call. welcome evening, quarter XXXX earnings

ourselves. we've for Beacon's excited to I'm set quarter share CEO, completion against the as Following progress the my first goals full of our

year-over-year. sequentially year call our difficult I'm passing last due report about talked demand into and hurricanes. a Joe quarter, first a details I'll weaker pleased in despite strategy start on our for with line a market before We re-roof guidance. QX the with to environment, year get comparisons comments associated seasonally both ago with few to and expectations to XXXX fiscal a then about review update and right financial

sales the with our market. believed we were although So, down, we tracked

first decline that the flat flat representing gross quarter quarter sequential an good results during margin the We performance profile in sequentially about about metric. expecting see during period, also talked with typically that

margins first critical in with to on. QX quarter the outperformed growth. this, commercial that to which also a roofing I the on we XXXX. our gross up with with We was compared consecutive on focused see growth year-on-year is second of to execute I'm indicator pleased our marginally XX.X% of ability of quarter, piece in business pleased

products Although represents modest, positive business has this part trend underperformed. an recently exterior of in a important our that

timing elaborate is came In line many than with represented on encouraged Our another areas. on in made expenses. Joe clearly progress margin adjusted particularly to costs in improvement although operating there higher will his these anticipated I'm our expectations. expenses be performance related health gross comments. with in in care additional our QX summary,

is strategic the what our talk about will we're doing, Now let which performance. drive future me really that work

order On been It's recent us the focus from the company position the establish future. underway been our build for large last has call, The of scale to in history operations. our pivot we signaled with to to integrations our current acquisition-driven the strategic on for shift scale important growth. acquisition was competitive

that relationships strong our our operating and our us to day. more assets to outperform. we most is control we forward, to make ability unique sales expenses with Where leverage. faster to us can grow choose our on an customer that Going efficiently competitive must we also they It the market. preferred advantage By service scale serve investing offer every successful, to capitalize to use enable than and represents that models their so us supplier, will and their enable differentiate drive our in customers Beacon benefit needs

benefit to our innovation for create strong together. also position us supplier their us value the supporting advantageously were service products will with to We to in market, on who rely opportunities customers. in to able partnerships grow built customers partnerships strong We to product with provide suppliers, our and

So are our significantly and proposition. that others customer Beacon becomes operations, a we increasing of different service with suppliers partnering improving differentiating interaction, our distributor distributor and from the choice,

joining The strategic to our at sales Beacon market. is on and our network enhancing review, performance exteriors focused I interior the our customer operating experience branches using and the in offering launched scope and differentiate upon improving of overall and scale the

is review the have on moved several yet not final, ahead While we fronts.

integrated me to clear opportunities. companies missed making is years, work review Beacon the over XX that strategic some The is we've

expand drive acquisitions for that top-line the major orders in with It is critical following to growth. service our with team order we more sales Now us, is behind active up to and and our position. organically in asking grow determined are the marketplace,

their we we and with As and customer to skills the I tools company, win, to to they residential on opportunity last days our them. grow support developing are call, team's to interactions been impressed increasing the will my mentioned lists organically. customer with commercial From and committed have I've our provide drive first the

target base We analytics consistency is our the profitable our tools and believe I capabilities, underway advanced of development expand enhance customer segment will of most in opportunities. pricing our and these will the to tools The ensuring use execution. and and deployment

Managers Beacon enhance under exciting to are to unifying reflect branding the brand Last our Products weather solar of was new share Building had our at we products. It to Annual proofing portfolio exterior, and month, Meeting. I the that interior, company our opportunity our

to many products of ability building our both customers a benefit and service with North residential customers reflects offering broad commercial supply Beacon's the range unique across America. and in move ways. This will

they expand customers who grow across as it the to and partner them that for want across the a region country. or shown has their simple makes recognized trusted businesses, research Our

common business and level, goals. brand Beacon is with a all to on. a now employees, to proudly rely our known who On do this a coast already for represent a customers leader, can chapter local new market they coast. want around from is Internally, are rallying common Team

there and XX together While customers. role belief our coming an of better legacy is had serve value important in the have names the to our company shared in success, history

operational branch think quintiles. All talked networking and branches now previously that also our tend I being operational have improvement continuously. about are I opportunities addressed performance about to

focus have operational is cause bottom often our quintile. footprint, and the as unique We market but Each access underperformance common for has intensified on capabilities. branch such

the profitability region individual locations, these improve leadership actions To in-depth local, each appropriate and to the are we have for corporate of and location. among beginning establish to determine plans reviews

from have recognize important $XX for an $XX in developed annual in mid in won't it's branches resulting alone, where core opportunities to plan, executed metrics. million there While income EBITDA occur million improvement performance. in do and see is these we overnight, single-digit the against to I believe we changes incremental upticks these operating adjusted

core a and and imperative Capturing significant that service current scope on improved our as well enhance yield results. XXX to offering. also been We've will as to this improvements market at plus branches the over remaining capitalize differentiate reviewing scale performance strategic is how our

them ability the we our ourselves to Ultimately, market. in a in value customers is serve more how way brings differentiate to that

model is more business at by center market one operating be major and together responsive. puts customers that networking in Our to the branches MSAs of our

OTC raises Time network and This Beacon's in employees that On customer fleet, inventory, materially equipment called and manner Network, Complete or shares a service. now

are more XX XX now markets Our very markets remainder in with planned network's additional Dispatch Central live encouraging. than phase The the of for is results XXXX.

delivery are in year-over-year. we from benefit, customer an XX have miles metrics average approximately Inventory the of with improved turn showing declined by XX% QX additional OTC achieved seen Aside our more also full mature in service results markets.

over identified and XX have next the the a location important in We Denver to utilize in will areas additional QX market hub best customized open years. concept that several could this XX

there to with on XX of more balances cost believe savings turns associated million opportunity the is efficient positive from million use addition We inventory more assets. XXX the to in efficient an our pull to impact

counter, be Finally with I'll their our commitment digital do highlight online. to by solution way of are we that prefer, What they continued see to phone continues is the or our adoption our grow. that customers, sales transact

$X at business a see customers of talked of in with for I fashion. the goal a to sales. portion their billion e-commerce about a have digital We us least conduct majority annual our wanting previously

There with mix order to Customers platform. to believe for is we for improved window retention. the translates of currently us products Pro+ on baskets also customer preference solution, create which Beacon our larger an digital a improved

Beacon to targeting of fiscal this XX% single year. are We on year sales Pro+ up exceed last from digits mid

in value-added and leader this and expanded are functionality area clear the and that are maintain investing upgrades We leadership. to

this aspect of unique month we solutions being lifecycle distinction launching example, including jobs an payment and interiors quoting, a As from a final able every our ordering our Pro+ utilize for competitors. to customers is through are our Beacon

Beacon top summary, the yet I to but true and both line. strategic bottom believe of grow not review complete, In is fully it uncovering is our potential

efficient serve inventory and generate expand to margins reduce us scale assets use of sales will and our service optimization to financial improving Our our model, through costs cash and allow advantage by performance. our by improved more

Our designed I'm help strategies throughout superior the of more about to customers our with lifecycle. service enthusiastic build contract holds. the future levels are what

to our I of details on quarter call first Joe over will view to provide additional the now pass and the XXXX.

Joe Nowicki

good Thanks everyone. Julian, evening and

our provide then outlook. daily additional days, and period year details XX quarter. fourth of Overall, fiscal First prior sales X.X% selling I'll organic quarter. the on color I'll numbers decreased The same XXXX the results conclude had during with our on quarterly

our and either year for As quarterly Florence regions call, we quarterly gone challenging within during regions. down quarter. Irma, highlighted the respectively Mid-Atlantic and and the X% Southeast Michael during XX% our last two These were impact comparisons made hurricane

In overall our quarter. regions, by hurricane much is recorded the increased was the be note of roofing indicative during X.X%, other levels when organic we that growth to we view important It's believe quarter, to distribution market. in delivered impacted growth core flat regions. X.X% unaffected performance sales essentially the regions demand hurricane Total excluding during volume geographic the with decline comparisons the the stronger two more roofing in residential quarter. first five a five in We residential line

daily for positive We sales Commercial this sales second believe Beacon positive the significant quarters a of growth a represents roofing four generated following consecutive accomplishment decline. for quarter.

market QX with providing with large Beacon's elements further acquisitions Our results disruptive associated that the behind evidence also consistent are us. overall are rate more the increasingly growth

of strategy part roofing involves commercial centers. commercial our important dedicated An our sales

add needs to including quoting, engineering have fulfillment. plans at this project As all handle this major operate single coming over our and roofing location eventually quarters a locations to XX all and commercial support, and refresh, at currently the We're to MSAs. a at centers order these

opted roofing roofing for closely the customers aligns one efficient branches commercial providing and existing with model of operating some brand We this our carve-out within use and an structure. dedicated see entirely to more our locations In that existing network. commercial a broader one to but other have in cases we've also approach is operations OTC

pricing deflationary steel in in Complementary product X.X% result wallboard. and of the lumber modest declines select declined categories, the in including sales quarter, volume studs,

are exposure As with cyclical reminder, new roofing spending. discretionary complementary a more construction products than and higher to both

Single with future the to in bodes stabilized the and in we recover well family quarter. quarter. to traditional also volume for lag in earlier only relative trend starts our year were the September began to began Consistent starts, decline This soft see quarters.

our want to I Now about first quarter margins. speak

Julian sequentially. a to The noted, improvement we're entirely gain was point in increase pleased produce margin gross basis an As XX price-cost to execution. tied

historical reference GM point, normal QX. between in a QX seasonal As are and declines

during This the the averaged have basis our quarter. years, for past GM we highlights point accomplishment fact, further a In five XX decline.

recover cost environment that of demand. to the diligently working coupled with lower been XXXX Spring inflationary the price was Summer impacts We've from

certainly to be quarter moving margins. the half want While gross our the with we we're confidence in second the for raises we're and first right XXXX margins, fiscal where performance direction, not

our incremental service The and Adjusted investment the in fleet, expense increase coupled with quarter. key ago the operating investments million, items. $XXX.X primarily fleet costs Increasing in in leading is the and our for supports levels. Beacon from shift to timing were year-to-year due is up focus million year $XXX.X other industry

expenditures new in the quarter. The end year made current of in resulted higher at last expense the depreciation capital

forward. we cost higher repeat customer-specific than same believe Additionally, some should the related timing will expenses event care health repairs, that level we and anticipated at not fleet incurred going costs for

positive leverage we note that inflationary we strategic the to improvement substantially around with fourth and took improvement, us operating remaining the costs. cost important that remain we'll committed operational also reduce get of branch the continuous and there quarters overall helped quarter We facility the on reviewed. our It's our in previously on driving adjusted actions the and XXXX to wages experienced focus initiatives Julian coupled over OTC through pressures

related million Now sheet factors by during and We the year-over-year, and by flows. quarter cash moving operating both timing driven balance flow than cash on $XXX excellent the had to more performance use performance first improving with cash improvement.

$XXX debt million to In expenditures. flow quarter. highlight in fiscal the XXXX, more that than From more capital or year has flow annually $XXX prior I'd declined averaged our Beacon cash operating fiscal XXXX addition, less total cash than versus free million

period, been flow a remains since And We free our repeat during solid $XXX during the positive cash company. regularly to us. most we type This recent performance flow. we execution trailing our has with a XX-month million this public hallmark cash for And continue differentiator IPO. believe as of operating this Beacon have for important time of an posted

with with To a and in saw In first by significant hurricane were comparisons, overall summarize recorded year-to-year very improvement margins more market. our in reduction line our impacted we a total stable quarter, growth sales in along the we performance sequential sales geographies rates important a debt. gross not

I expectations. want our to XXXX Last, provide

of for sales range street current XXXX. the the EBITDA with comfortable fiscal adjusted are estimates and We

to modestly outperform we and overall continue flat market forecast year market. will full believe the We demand

the offset remodel expect lower construction. by storm higher We repair to by increased and be driven new market demand and

call, half market driven inflationary cost reviewed. a demand environment, that also During repair will as year margins emphasize a second last in improving and much initiatives on we construction. year-to-year parts. remodel the less two we're flat result demand and our environment first operating new we leverage, and half higher a hurricane higher second favorable previously Within A that stronger as that still lower gross and EBITDA result and would of softer unfold a adjusted gains, of half by a the confident deliver

the in adjusted comment to related outlined announcement wanted of the we future will cost you final was disclosures. that that discussed. all January coincided Remember, exclude non-GAAP with filing that costs We announcement. to Julian from rebranding relevant all X-K remind information One the our these that the

turn Julian? we now to the to questions. will before Julian back I call move

Julian Francis

Thanks Joe.

them to another way we back what relationships unique them our distribution to differentiates suppliers. of choice build be grow and valued distributor the helps that to to comes and want We in in from customers to ability company strong all our serve with It with have one on business. relationships order in strong a their want

much more on top do full driving is year service growth demonstrate potential, while in organic our focusing our by growth this the to for We and solid proposition work place. operational to have line foundation expanding performance, and bottom

line we're that, open with up to And ready the for questions.

Operator

from go Robinson open. comes Please is ahead, question Keith your first Your SunTrust Instructions] line [Operator Hughes with Humphrey.

Keith Hughes

questions. Two

made came First, about, Street your accelerate on where $XXX first. hitting here, - street commentary How to going it still is bit the Street's was low it's good the start Street phenomenon for second-half to expect Where make million views the you the year, at I EBITDA that that in think out? assume about up to do year-over-year. it play will when is you you

Joe Nowicki

the really in half yes, of year. where Keith, lot a second to you'll we this phenomenon it great is Joe, is And start a improve question. believe the second-half see it's

of mentioned storm which believe hurricanes the you of on the year, the demand, In only in have in market the the really more when of not half and increasing we As is we year the the improvement, it. see really we'll pressure conditions. the impact of probates the first some second half

But the we going highlighted also the of as in initiatives on reasons our of with performance some well too. for some

correct. that's So

Keith Hughes

now? inventory on sales right my and you which is down. second was think now channel ran think question up you that's where stand know where the little And product bit a do you year-over-year inventory then don't you - inventory I

Julian Francis

Keith, this is Julian.

great question. a So, it's

inventory So is our dollar on up. a value,

there down. the also that inventory question drive do year. that I related inventory where that environment did have last say Remember, overall overall last was of as volume the were some think would an did difference. I think we to so I at is inventories calendar we year left year some we our believe as kind we of the is inflationary elevated certainly of We to year. relative last look

think in participate I any likely end certainly additional the the inventories, our the We year. the believe for balanced of outlook think purchases forward. not were going overall buys But large out are I positioned inventories, did towards and We evenly well think there there. additional we some

Keith Hughes

just with one Joe, preferred one and this the If technical in charges. final question know loss I dividends shares. I the all could you reported on for a sneak the quarter

those adjusted, you EPS If me, has would we if exclude which you didn't you - excuse been would unconverted would the paid look dividend and assume how that look? or

Joe Nowicki

I'll an I a number I would question, your question? at sure the shot. get be. Keith, give followed but think it EPS what trying Is quite you're adjusted not to that I'm

Keith Hughes

- would or converted? we are converts preferred or converted correct, assume not the the Correct, shares

Joe Nowicki

numbers. Yes, our all about going to We you as the press $XX.X in as the know, did focus saw well we're be In adjusted you and focus numbers. share also the the where putting numbers EBITDA on release is you’ll count adjusted provide going see - about, as talked That's here I million. and as think the footnotes the attention we forward. really that net income

So has counts. footnotes analysts what the the to would past, share done income statement, in the those it have for been the shows in statement, preferred added have Traditionally it this it. common. quarter the then the in And income of shares

Operator

ahead. Grooms question Stephens. Trey go Please comes next with from Your

Your open. line is

Trey Grooms

Joe, So in driving the little of second here little from if just a that you pieces a me look just little the some go could a some moving in gross deeper there know of things we had the mentioned one, an bit there. half, margin. that what's that outperformance the I you confident expecting you of as you confidence? you're into XQ. the a But maybe couple is deeper go Can margin improvement. the half bit in you're gross into second

you're factors could Maybe moving any the that your a little get cost baking of color there Just in? - scenario more price maybe we on?

Joe Nowicki

little you provide more bit I'll bet. there. kind detail in Sure, a of

you're performance, at started in you in XXXX you negative the kind back think I of last year's half the year. see look of the if price cost right to impacts

that So, on demand. we've and year, with we'll our driven coupled in mind, have view and how inflationary those environment keep so time it this Right year is. of favorable this low side the last positioned some was by

like the a is going a based much that those lower go what environment see and we as third conditions market into to looks as Putting quarter fourth on better period cost price we going - - see into optimism. You're demand stronger with pieces we believe inflationary kind couple believe too. back well drives two That's we'll the our why together position, of what quarters. high

Trey Grooms

with And and comfortable consensus are sales EBITDA with numbers that comment of there adjusted for the out now.

looking free for flow had side, last some large about? kind we're the cash As over not. working years, pretty talked in you as swings you've inventory of year, at in some had improvement you've few did the capital, some plus But some this

flow any cash of means flow if working this about you you're just at free it the with just what could trying year. seeing this help benefits we free of cash capital be thinking for of we're should us that the all into with the working and Joe? out capital of of look year be you piece we As to a could this How triangulate some possibly tailwind for guys or kind

Julian Francis

a fiscal we overall, our a our as a for area think remainder will for year initiatives. then ability I about believe against that for remarks capital Julian. to our see that forward that it that strategic tailwind and about will the the that's as the we and improve it's our major drive of through implement big lower I we working is us. Overall, that Trey, year area focus remains us. position do in something focus So going talked

Trey Grooms

this, should housekeeping year? just update CapEx And on any think we how about on this for

Joe Nowicki

our trailing current still during towards CapEx towards the we're X% to X.X% much that Sure pretty year. sales of number expenditures

decreases about working that to per on the which as on Julian regards in now stuff through in a specifically seeing Now talked some of lot or improvements going us. really I'll strategic great initiatives right - great the our miles to said, OTC. driven order, caveat Julian we're some all that these of We're all is as gains help

forward them. year. on certainly I if don't will going should lowering CapEx But numbers be is it much as have our this this a benefit know

Trey Grooms

that cash on And housekeeping adjusted one at another need that free quick we could we adjusted aware looking to we're EBITDA cash weigh in EBITDA charges be of flow year? at as this there just is that the as other number any look

Joe Nowicki

all. cash a perspective at charge much From not

You saw branding costs, but were some they of right. pretty the minimal,

million away. pretty from we of a that, the branding had talked our - much cash might Our are that be perspective costs number about. from $X gone Outside rollout acquisitions integration

see have see the out even you we comes You’ll all markets in it's good. there tomorrow, it, as noted actually acquisitions Q so of just in existing won't so

a also so have of will that the from that too will you'll see perspective from nothing cash So acquisition cash from less significant it. impact

Operator

[Operator next Please your Wells Patterson ahead. Fargo. question Instructions] from go And Truman comes with

open. is line Your

Truman Patterson

up First, year-over-year just all XX about how them your line should the there? wanted to ability but believe are up And cetera, you it Could also your bps just on then - OpEx walk the about we XXXX? happening may paying after there I OpEx be branches, annual for think you what's in million even to in $XX in the through believe removed talk employees going to you what's costs. was us about keep lever was et this I adjusted

Julian Francis

my that in we things believe associated for a So question. I is surprised, depreciation talked OpEx timing that much higher. disappointed there additional lot the that’s our are about a is We not the associated thanks some issues. with as fleet. We in with but see well comments of we it - that there being related Truman, in And did with some little this performance something overall say did quarter. were Julian so

maintenance that expense. the We fleet ultimately into think lower translates newer

costs one there, The some that things other thing that come other did there - was have in healthcare through. we higher of were couple

all for our frustration our in starting We year. new the change that's not plans think in but medical just calendar our businesses. business I

some opportunity us there we So is for to address that head think on.

describe maintenance our what as I'll seasonal. addition, counter In costs,

into So pulled what market put bit and move of tend we saw We more into sort this the see ready the of that for that future to back sure vehicles to quarter. little maintenance make we as a the we slowdown, are branches quarters believe our was pickup. from

So we be to would coming expect line get back to able in quarters. that the over

there So we that do leverage think that as in area is well.

So couple expenses. committed were like overall, a to we it, this things we there of maintain operating said, leverage getting are I operating year from our

And labor our certainly, continuous I inflation seen that's, think we've I future think is as this And rate sort impact. improvement critical the performance. of to becomes that operational where initiative our

be We with to productivity. to that able have offset

lagged recently. little think I we've a area that in bit

But it line future again actually several at next sales. improving think in performance, critical to a level, we that is ensure and that on I productivity on of level the continuous years at drive it focus is our branch on and that a branch focusing are something improvement, as overall down our maintain determinedly to that's over where focused we percent

Truman Patterson

And that then a just $XX a million your go bit million you going believe you're you said about $XX little tailwind color mentioned potentially. up all bottom targeting a of operating levels. to you're bringing branches that? I targeting, it follow-up, EBITDA how give on was to quintile us you of I on to And believe Could normal

Julian Francis

this again Yes, Julian. is

bottom of opportunity, average or of about of branches operating performance our below certainly but in think to terms margin. they're this obviously about XXX the said, as our quintiles, see so So a as we quintile significant I we tend

performance. I see unique in situations. So the prepared said we also improve some very ability do remarks to their my that

the at there go underlying reasons somewhat branch common. and are have So at individual believe that are these we down causes But we do each get levels. of to

right And the And to the so to we are successfully? compete the the we the scale in in market in we right talents in that the have drive markets market? capabilities forward. do have results those right position Do and

about very to asked XXX branches doing local improvement. teams carefully those operating think So drive what necessary we've is we're providing the to differently that resources the really or really to so

it upskilling you're I So, million say branch but is of right. a the branch, specific by training of resources, improve branch additional get and million management and we those improvement operating think tools, initiatives. at I said, ability $XX focusing significant sort really to opportunity. focus, happen these the all $XX doesn't overnight, to training, we on see it's branches of But I once did

I we've for a the metrics in also those of are and branches. now said doing this months that been few improvements overall we seeing

we well. believe we that as we ability So have do these early the are outcomes at to indications branches ceiling that the affect are,

Joe Nowicki

Truman, levels the Julian said, The the starting been on Joe. throughout the organization. right is, is think as Julian is talked we're piece is getting of add This people I I that level it, And it's would to down. see there, that's it great. of to on focus organization what from really highest focus the just have level impact, And mentioned sounds impact well an see right the it, already, understand they about of

Operator

ahead, Hocevar comes open. with question Kevin from go next Your your Please Northcoast line is Research.

Kevin Hocevar

get there. And - pricing able could bit you us drove was guys fade sound actually allowed able - it it XX basis - color little main points little on What there, bit to a like was surprises kind that? you price-cost push of What sequentially. you progression manufacturers. what a I if the could so to gave get on here give and the were back go side, September give of quarter. and talk with Could how a a trended? up better the bodes able to we through March of gross the that's driver The on, and the well out is for there you gross Normally from the some quarter. December margin you was quarter margins you as better exited margin, gross went you wonder about get which to

us can what's a some Just color on color give if little more you bit wonder that. driving

Joe Nowicki

is this Kevin, Sure, a dive bit, Joe. you. into I'll that for kind of little

right. So absolutely you're

big into the do kind of It All wanted piece a it the which are got was went driver. primarily cost. we attention gain price achieve of we and more that focus result quarter knowing was so, favorable really to of the and through. of a sequential was lot That

get Normally Conditionally, period, this start cost during that's quarter, you'll this the you'll bit little you're kind usually margin go price the and gross on during little a bit a why prices be down. more see little constrained bit more also see challenged right. to in of there

through Our than it saw to a price in well around just and seen. being also element as the quarter We benefits had traditional being came were better a on too. all we normally good all costs cost And than price then combination both. better of

it So into lot in those a a that balance favor. was we both of worked pieces well of and of it put focus our

it's again, it Now, all, we where want yet. not

either quarter pretty across right clear, right be have month would one do through or by let's the me that but as of trends clearly lot on product to line, we still lines performance no trending and one, It that give of kind product that was work another. real in by it's direction. kind were well. indication some the - the a So real there were just way consistent trends whole an solid was There trending no

it well. on So the it and right we kept focus worked

Kevin Hocevar

to Just to if might benefit? type like in that million first of to back there later you $XX staffing, cost that of that million costs be And savings, terms it in you million, make that and make terms Is $XX then are terms you about benefits time of whatever those over here, come $XX quintile be - targets. need investments looking there targeting number the make? come you will any whatever? the $XX - at about million might then is that maybe And what to need the achieving to is a with that to expect could investments wondering talk you associated of after net to need in

Julian Francis

Thanks this is for Julian Kevin, the question, again.

I costs. So additional see any don't

a investment. particularly unique the would branches, I give the on perhaps things large those spread think all the to training, moving don't branches, more see is the across those have costs, we around would branches refocusing resources, these way we opportunity. best target I like them

our There in don't improved drag systems. some in opportunity, that on costs I may now individual opportunities a see on areas as some any our at All we be significant an of our branches where significant branch, would way. are invest

early will and there. But additional a we in OTC think should the on our in mentioned, that network might that including some be that anyway, on, costs I end of I branches that Denver. some impact have with of investing market that broad operations market associated see as performing our improve

said, I don't of million resources see that to is resources fundamentally, a other reallocation additional like number. $XX I already it's a and cost But say resources associated particular we're But redirecting $XX versus gross than a I would million deploying. that

Operator

question next Garik Please from Your comes your with Capital. Loop open. go is line ahead, Shmois

Garik Shmois

would deflation saw only it softness this there firming cited Would and studs moving I be Is obviously what complementary. given on you you or in the on steel that in side? some segment wallboard. continued just a lag, And outlook Question your weaker the the anticipate improvement you forward? demand, think pricing pricing, would expected the on with

Joe Nowicki

the to it really on board. was that First, revenue areas. the question any declining what The across in wasn't key on we complementary I'll the interesting complementary, and just saw piece there. few a part and take regards It

in we As steel saw I it we studs, we it in lumber, saw wallboard. in saw mentioned,

volume of That both a the few fell too. a plus two as just well you of into categories pricing key categories. So those saw also where slight declines some

way. So it it, on that focused that - so was was very that

have view to happens specific all point now they do spring what forward. categories expect in to the would price this session. part kind right know They're elements different weighing for of those our but go-forward time of I a of Second what it it, we going at of on we don't look if those,

to I bit still it's comment that too a think on early So little now. right

Garik Shmois

assumption do about up just know if and fair around? points to XXX there trends sequential get you roughly that basis second And QX QX you the flat decline use following but in quarter, something year-on-year. look providing this guidance, the at different to be in on gross to gross historical see margin, might margins quarterly tend time would you're I that it not call a is that or you Is

Joe Nowicki

second you right, first you're that the between the that's traditionally and trajectory quarter. the see Yes,

market similar. online think don't and seem that's I So pretty assumption

Operator

open. line Dahl comes is from Mike Capital go your Markets. RBC Your ahead, next question Please with

Mike Dahl

think The point, to minute. I a earlier I is think there go came wide the back first consensus to range in for question I and XQ a 'XX wanted of guide to And the Keith's out of fiscal there light bit a Street.

prior So achieve? you saying average what you a that is are that in you there, consensus saying, that's was the you're look quite comfortable and look number at think with? literally and you the at are there range the can Or ballpark

Julian Francis

was comfortable So we're our current and it of I in Joe that comments characterized estimates way range think sales the with Street EBITDA. the in

one, So million that And believe is million are we we a say that. in we we're range something to are around range like to - range didn't range. specific I $XXX $XXX we're the Street guiding saying that the or not

-- So

Joe Nowicki

On EBITDA.

Julian Francis

On EBITDA.

Joe Nowicki

billion think ranges $X.X the roughly Revenue is is I Street to $X.X there. billion where

Mike Dahl

initial mean. just to go-to-market any exercise one I what of Just your team, financial impact Beacon the simplification from And that. from kind through wondering aside you a simplifies around guess things clarify was of aside probably standpoint think and may Are there talk and kind from you wanted one dream. the may I it And and to customers other from could your of cost, so, I if I question, this? then kind maybe this through from And initiative. from P&L or benefits your second talk one-time not certain doing the the could certainly partners. if degree branding as

Julian Francis

Sure. Thanks Mike. for question, the

that So like areas we'd think turn. of to a couple I

on ability there Certainly long believe as indicates base grows, anecdotally run, from we've the is we the know always got a that was name. and to different branch a looking unable a it story under of just region we a had Beacon customer the despite find that fact location region this customer region was be focused of in brand and is that our served in that into certainly go to to that growth. moved think our I for research another

believe is there that we So opportunity. top line certainly

make an On were were different websites there a names, think XX sure we had that that investment we couple other mean to the things is I but the maintained, had standpoint, of I people we brand side, challenge. that all of a that of producing challenge I represented. And but on branding as that just literature mean that also and the financial work became number with to maintaining have a resource not from it.

that difficult resources the we benefit would So, all benefit into to of quantify redeploy in specifics, from we capabilities and differentiating certainly those and building some the some those certainly that. our we while see maintenance of through marketplace should from come and it's cost see

So as the marketing see important scale we markets, across creating we our be with is most some while time believe ultimately in certainly on, opportunity to spend efficient us and as for that goes top-line differentiating well. it

Operator

Your comes with Please JPMorgan. from your is Rehaut go question ahead, Michael next open. line

Elad Hillman

on cost wondering could a benefit Elad through into wanted and you from for much helped your X get Thanks. to half come baking for year. flow manufacturers? through cost the I to was Regulations down, better think this And asphalt flow prices how Mike. in lag of is is do This potential any the price do timing the if deflation that expected drivers P&L? these the I and there outlook you're when reduction in could also if from And of second benefits terms

Julian Francis

question, for Thanks Mike. the

as we decline us headwinds storm-related at the such, in point comps, would where looking of of obviously sales half the on of our that the volume. year-over-year. So the some creates - we terms said, view were as year that first for And year, the create market

is we and improved its As market coupled storm we of what second going way the we repair sort through with would environment. benefit construction. system of believe an the a it the robust characterize remodel a the That lower new inflationary be year of what would half as more the year impact works if get and forward, and in believe we

year mean, ability I happening. was We challenging inflationary drag keep a our to increases our last going price that margins several don't certainly with was compressed that see that a through forward. environment up particularly coming with

environment. don't probably environment a, to the XXXX, ability much With much the a and a but deflationary both an for forward. margins And see that potentially, two-fold that regards I think want we in work. but I IMO as economics we the long currently change that how us so In repair fundamental So I better inflationary the margins pricing we it's to maintain like not not that's a run, impact. have said think just going

there rapid going I in a we don't So see really think be today pricing it's just a through coming to is short-term asphalt change and that either. impact. And

year. first would more good see we our first feel I where I We're to difficult pleased with we the sequential. we're represented we So flat the mean some. in of margin think thought comps going performance half very quarter see

lower order overall drive an our inflation the that. fact, then is our quarter good. margins into value on than in That to more traditional expect We particularly half reset. better In see we in slightly of a And environment get certainly work as the our we the year improved proposition saw would our a working we'll and way expect than would second margins gates markets first result. soft robust in and what prior with to to of seasonal year was continue decline sort to the and

Elad Hillman

mix wondering was the headwinds tailwinds products I any on in the also there year? for then you If And are channels quarter. full or have geography and expectations any mix or also

Joe Nowicki

Sure.

slight for basis, of was to to on So difference a kind big us, it. the not negative of material. a of first mix not bit year-over-year a quarter a kind there of that but from kind mix impact Sequentially,

of of of about impact through big rest in forward I don't the mix I future the think year, shift second a there in there. kind the any really foresee for fourth quarters as So being going

don't I think of much it. to in you'll So change see regard that a

Operator

Please from comes go Jefferies. open. ahead, line is Philip next with Ng Your question your

Philip Ng

Organic story, it your strategic call to Julian, want growth side? demand do would be you larger out part you the element that buckets driver. pricing is a see a or for of that really big little on me more a and And of big just appreciate more being big that been forward. has kind in. element. going choppy squeezing focus of Thanks for Any you reaccelerate guys

Julian Francis

to Phil. that of I to important. it picked are say. for you remarks, on in my and I two I'm up say prepared think those Thanks were question, there the elements Both glad did

got we're mean the up The we've level. us a order. sure to first was for that the picking asking opportunity order, represent of customers, activity calling that that make those XXX,XXX portion the I customers a after phone, significant staying overall for

pricing our we certainly overall spend of and on deploying more would also activity. tools there in that remarks to time my I enhance So capabilities. that is focused level mentioned analytics

us that of we're tools And for both those top a to growth. be needs line pricing developing today. overall think terms focus and do in deploying significant I

to build of I have order differentiated think in and in those think things the to capabilities the insured proposition out pricing be to one we parallel. that service that can with be And have along I really that. build we that capture we value do of to our is our

the and feel So also area and level very with, - my for early it driving the for opportunity us. comfortable focus funnel, a that's is - certainly is will be into pricing history I driving Certainly significant something it us. things activity but with topline

Philip Ng

down require the looking further it's outside terms implement, aligning and will talent change of the your strategic properly kind of going to you're from the vision comp, to I just your are or goals? to metrics, implement execute new their to new guess senior ultimately then in And any chain you all terms in management of whether

Julian Francis

is mean, quantifying And of opportunity of is initially and first all, piece opportunity. still of the obviously. is. working our Yes, review we're really scoping which the about defining strategic then I sort of sort second it, that on what

talent to a the complement metrics come current will final in And our additional will high our and to As expect the what very potentially people. the in areas terms of development bringing internally we out that both set that. that talent focus for bar of go of naturally I drive in and talent through the it one

Operator

your comes Your open. go from is next question Wedbush. ahead, McCanless with Jay Please line

Jay McCanless

The to first one, going be? what's annual* depreciation

Joe Nowicki

I was before. that -- at I knew looking that. got

Jay. you number me for quick, that find Let real

somewhere $XX year. like looks $XX the we'll first be I the depreciation, ran think it quarter we for million million full around year around So in full the for

Jay McCanless

Okay.

Joe Nowicki

plus amortization part of it. Depreciation

read I'll - on your think your question here. I second mind

full the million. $XX and for quarter in be roughly will So million somewhere the year $XXX around the it amortization was first

Jay McCanless

the competitive hesitancy are a my of And have marketplace perceive question, or you're review you maybe a and under strategic your more guidance little would for belt around expected rest year, I that gets certainty certain go the the with the little and the are forcefulness I months more more around - or is the second underway parts guys seeing the how Is where four about year? a your then with thinking my of going to country? spring you in as season fiscal

Julian Francis

very So, think Jay, is still we I obviously, we're the winter year early the in this don't still - way part Julian. states. the year. in our and working slow it's the northern mean of I really is through this

seen we've that, good overall, activity. say would I

I that was period, quite and characterize we in line that the with periods anticipated. right will we what the around slowdown a Christmas I bounced kind time the - four way back. New did and sharp right first think see Year say, we Christmas would of time was months holiday year the the of

question So of see I months few that in the you're asking year don't more I are in the happen. first anything a think the competitive that environment terms indicate of seeing would we

up, how little difficult is this out that we to it's expected. we now for It's going what we're as range are early. it estimates the that seeing of to fairly shape We've time in we at Obviously, kind the and Street still I market line a think EBITDA believe sales it's believe characterize a and sort very of always year predict we've would full I is - for. guidance normal the said environment. flat a of year laid a

Jay McCanless

for taking Thanks Okay. my questions.

Joe Nowicki

that I write-off Jay, get then. that one the finalize some and I'll write-off stay bit we tuned for of thing By - the of amortization that you. you of the way, that's that amortization, the finalize those get there, trade we we'll been you that a we current amortization so for change number that level and our trade kind do. piece of all this update When out names when will a new gave, last name numbers technical amortization

Operator

concludes the That questions.

Now for the I would back to like closing comments. Mr. over his Francis to turn call

Julian Francis

Well, product believe the to really thank you that call. our forward we step build joining well a empowering Beacon I all represents quarter our leader first more. as and and customers are for for our positioned building

products and is and see believe focus business, really our substantial where to growth Beacon future bright. really restoring both I our enhancement. sales exterior the for interiors opportunity are we for We margin existing

community We customers, and and a support whole. continued the as appreciate our employees, from suppliers the investment of

for to thank this So a Have evening. listening you us great evening.

Operator

today's concludes you joining. for Thank call. This conference

may disconnect. You now

Beacon Roofing Supply (BECN) 3 Feb 202020 Q1 Earnings call transcript