BECN - Earnings call transcript Q2 2022 | Beacon Roofing Supply, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon, ladies and gentlemen, and welcome to the Beacon Second Quarter 2022 Earnings Conference Call. My name is Tamia, and I will be your 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 the company's plans and objectives and future economic performance.

Forward-looking statements can be identified by the fact that they do not relate strictly to historical 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.

predictions uncertainties. subject only of a are and risks statements and to are number Forward-looking results differ various U.S. with actual forth company's statements but Therefore, XXXX may limited in as such indicated not and section a forward-looking the by Form Risk result of those XX-K the of to, important Factors including, materially factors, set from the those filings subsequent Exchange and Commission. Securities future Act outlook. events the provisions These the forward-looking of harbor of statements XXXX, Litigation Securities company's safe performance regarding fall financial the Reform and including future of within Private company, the the financial The call and any forward-looking statements. as except information contained to company forward-looking XXXX, by of of these required obligation statements revise the law, in are based or as X, undertakes this today, August no on update

presentation like will GAAP certain Treasurer. presentation calculated in comparable our set most would The Finally, non-GAAP Capital Sanghvi, and are to President non-GAAP with references measures today's I release Mr. these the website, proceed, release this the to accordance measures. is call www.becn.com. measures accompanying available now in call and appendix of the reconciliation Vice to and the call. turn the to press Mr. on forth the and presented Markets over Binit this Sanghvi. Please to press Both contain

Binit Sanghvi

and on Thank Chief you, Lonegro, me are XXXX call the Tamia. and Frank With Good afternoon, call. today CEO; and Francis, welcome quarter to our Financial earnings second Julian Officer. President

turn to question-and-answer session. of prepared will a remarks, website. will prepared deck on now After there Our posted the Investor with correspond Beacon's the Relations Julian. section remarks will slide over the be call I management's

Julian Francis

everyone. Thanks, Binit. Good afternoon,

QX financial setting outlined during presentation. a strong of with bottom and line our ahead on Beacon and expectations begin performance Slide X call earnings May. our results line this in record of Let's top delivered in

positive XXth our customers, demand, our both The commercial meaningfully remained rates. to market we focus enabled EBITDA. record of end be and achieved to We solid markets, profits us deliver And interest roofing commitment our increase of healthy combined value remain allowed for growth. track inflationary year-over-year and fundamentals in watchful pricing in price/cost us quarter and have initiatives challenging our and indicators. team's we excellent Our continue deliver the of yet history. to monitor to residential across in adjusted rising the demand margin impacted be environment, execution with our highest macro continue straight continually the conditions and on a great margin-enhancing and changes end by to market In to

We believe to growth that of underlies continue multiyear trajectory. that cycle a our XX% the business has approximately replacement

life relentless those to historic roofs XX pleased begin progress is years. a in I'm targets If XX replacement a early our to our expected see you Central construction. begin goals. as achieving you'll the towards And look years, of very also with surge Ambition fail, XXXX cycle our customer anew. will focus. the that the back around the of in the Keep mind is roof residential beginning

can customers they where to when that us them. and trust environment, demand are need we high-caliber any deliver with services and products they be Our reliably and great in service prepared assured

as plan have and branches that strategic greenfields and fleet to existing We capital our a balanced also in returns and our allocation clear well acquisitions, consists investments shareholders. of as

intended to plan. deliver share 'XX, shareholder first half actively operations tuck-in balance to an strategic to repurchases overview greenfields capital to today, our returns. accelerated of our company. our provides restored deploy our throughout Named where rapidly of deck, the ability addition cycle. it in have sheet potential slide to In And have the the financial fleet, our our will you in to X of pipeline Page of the superior unlock Please pursuing is value-creating turn flexibility order of we the pace and projects We our strong in the a growth and find acquisitions. Ambition in people, of engine XXXX, investments

structured with detailed and map areas initiatives road measurable. in have that We X systematic our are

area winning is first The about a building culture.

is driven business together. by people working Our our

measures is above-market comprehensive to ways. markets Second a set growth, our of serving drive unique in

performance. Investor to our drives Third is process, doing which shareholders. value laid for will The our these at things by improvement goals continuous create Day operational our are And we well, we fourth, about a and business of XXXX, X% the billion $X growth. growth than our billion, deliver more compound to an to baseline annual of approximately XX% by grow sales from XXXX $X EBITDA annual out rate

Page to our intend give provide we of will deck. strategic how you initiatives, turn brief to please the on which plan. on our insight achieve a I'll Now X update

that that providing highlight and underserved people of are thing. a and we neighbors me couple organization established rebuilding ways that core Two repairs are in a putting nonprofit a first with Let building everyone safe commitment for a culture. deserves is believe values national a of home we our partnership home to do right winning communities. We why the together our Beacon's

I'd related such equity progress a local and partnership also with siding, products work essential us diversity, allows of as like our champions create and to to distributor these to this our continued roofing an community to highlight As building inclusion. impact.

Her the in school, and applaud passion devotion North Mulder Year of has owner we which trade as the in for years. young past of Beacon's Nailed It started her our a community. Female on the North the is determination American which job companies of mentoring led will inspire Bay, the founder become X Michelle's of of Michelle to trailblazers in industry. story quarter, women competition. interests perseverance to second annual the and been work one announced Professional We Roofing, winner other site roofing. to roofing Michelle Ontario Roofing finding in top the women During high the and the in in surely second

a and also growth above are set through driving targeted We enhancing initiatives. margins market of

to report ability footprint Investor our move our key in our have expanding opening pleased are acquisitions. that we our investments recall is that in in pipeline Day tuck-in lever major and plans, we a quickly had may to greenfields 'XX, our originally growth includes And strategic which I'm candidates. of You greenfield now in new while we approximately targeting XX branches up on located facilities discussed markets. ramped XX forward from

capabilities, sales the professional on XX% generating only but both scale focus national commercial residential Our not repair Through customers national contractors homebuilders, by accounts markets. we our roofing second also is results. the in grew and We approximately also our large to and reroofing serve in and largest quarter. end

in focus offers markets operational proposition account these dynamics high-volume specialized differentiated end on customers. the each who of in invest to ability Our a value these representatives to

have of also a growth. set We that support margin initiatives

platform. clear them In of for quarter, complete way Beacon, through this a deliver online on We the off-line the competitive approximately Our digital continues capability went most to the to offering platform, and XXX expand basis points second our sales compared to customers provide to in channels. digital differentiator sales that better be XX% and the continue residential capabilities value. brings most serve our margin

with to with of roofing management a most start. of Acculynk, I'm digital and intend for making to achieved report million to leading customers pleased of anywhere business it that is in a for build $XXX contractors, the digital provider we our sales easier a than through one month Our great is we upon more do to off us all-in-one software And major June. and by This anytime. business recent channel milestone integration

differentiate Our products to and from themselves line sold brand [permitted] results competitors. our delivered customers private of professional high-quality label building TRI-BUILT under the their

versus Beacon, and residential, becoming alternatives. and the professional trusted private these name yield recognized margin XX% across label Sales roofing the in X,XXX is TRI-BUILT year. XXX by additional the prior contractors our of For products points of are end and quarter markets. up complementary a our commercial versus between basis

through As productivity we we continuous initiatives. and several enhancing excellence discussed operational capacity quarters, are improvement our have for and

the Our focus branches has no bottom generated is year on and meaningful to contribution EBITDA, this different. quintile

branches and these resourced repeatable. cause the We managers properly process, locations improve and remedy We these that the simple branch at process is the Through have structure this have to XXXX are issues. $XX and our are to year-to-date, are value, ensure we our initiatives shareholder problem strategic year-on-year million diagnose way a the a strong root improving of returns. approximately Ambition create committed finally, our improvement to we and And generated EBITDA to $XX million target. to designed start on

the During the $XXX share of second shareholders a the The program buyback The both second accelerated second $XXX a And value million. plan. addition Investor the our to in delivering we confidence to part entered quarter, authorization in Day. the in and of repurchases million into million quarter. completed at our announced buyback commitment are demonstrates in to share repurchase ASR amount was the $XXX this program

truly margin can through cycle. you to expansion As the growth paths see, multiple we and have

have and We the have approach our Ambition built achieve tools XXXX a to targets. differentiated

to on a Frank provide Now deeper results. quarter I'll pass to the call focus our second over

Frank Lonegro

Thanks, Julian, everyone. and evening, good

Turning our growth than complementary selling business aggregate, revenue line average our less aspects contributed demand our the to in to volumes lines residential in prices X. In for We to was offset XX% nonresidential to XX% higher of of estimated and X% partially some sales quarter, nearly price XX% Slide in billion second total net primarily $X.X year-over-year, achieved due products. the up approximately business. and lower slightly as of by higher volumes in contributed

divestiture quarter. the of acquisitions more solar to business year. continued late offset perform acquisitions Revenue our Our than the in last from well

single execution, of as construction, were digits, of our activity April Residential As given primarily operations. prior shingle grew business continuing growth comparable, the The prior implementation solar under the XX%, increase. to a fundamental shingle approximately as growth of line supported approximately snapback. shipments, benefit which remained were due including business our which X%. down more had and Shingle is up This of drivers volumes the of healthy impressive, in our new shingle the strength ahead favorable successful year-over-year sales by year of price units reroofing the pricing. well is COVID part reminder, and our other year roofing residential reflected numbers all the low of

major as year-to-date. Nonresidential up execution price sales more have roofing Additionally, were below-average hail inflationary approximately we continue XX% pressures. than and to volume offset store

volumes had quarter, a nonresidential the contractors reflecting availability. versus very the nonres positive in down certain year were elements volumes reroofing to overall shifting portfolio higher prior with While strong of products quarter,

of also product majority Complementary record orders. siding quarter the in the growth. the categories. increased as we with backlog end across nearly levels reached Higher and nonresidential year-over-year lumber higher prices sales to backlog toward approximately achieved contributed weighted XX% volumes Our all

exposure. As you XX% category and approximately nonresidential may recall, our has complementary XX% product residential,

was increased adjusted card Adjusted higher compared wages, $XXX by positive well as Turning X utilities increase increase points curve sales that the mix team to above OpEx private of basis year-over-year. gross of as and real to an expenses drove price down taxes, to the points rents, and kept last sales Higher million track costs April quarter. such product expense. by performance. private XX pressures the quarter nonresidential million, XX driven and sales a maintenance estate lease-related stayed fuel, year The as greenfields inflationary margin. In $XX price/cost equivalent was The headcount, includes given increases across benefits. ago highlight review like $X margin in second in gross of we'll to contributed approximately our has spending favorable the primarily and categories, price OpEx entertainment record X, and last fees of the in costs The I product opened on cost and quarters, once with the hubs higher-margin, and shingle of challenging compensation improvements acquired inflation inflationary to record many the and and a also year-over-year impressive divestiture. Higher OTC in recently months, label XX XX.X%, Commissions, timing change well at environment. aggregate, net again to an as of announcement, approximately and strength increase. was execution Strong million Slide also company's our OpEx price/cost solar the maintained credit our margin also year-over-year as basis including the in last products ahead operating would branches offset basis. incentive to performance. associated price label the in sales contributed the gross created year's travel

the we Excluding as what market. continue acquisitions, a remains labor of up that our headcount tight in remainder staffed to sure was selling the the for year-over-year season make are we

market changing Ambition have balance we we margin growth part the demonstrated conditions ready to investment As with efforts of past, to and stand in our drive adjust support our we as above-market enhancement XXXX. to productivity as and

$XX invested out operating in platform. approximately investments Ambition teams quarter. the XXXX our and line and building in within initiative we the organization, sales completed expense have and digital service our totaled dedicated and second have greenfield For example, million M&A These other customer

of Turning million up product to driven inventory inflation, Slide for seasonal the at year-over-year, X/X a second quarter, reached peak increase. by largely which end the XX. about the Net cost accounted $XXX approximately of

in for many meet the construction. a as able new snapback of seasonality softness carry reduce from contributed support portions investing due to of lengthening increase. and material COVID residential Inventory to inventory We more following our demand, also to continue were normal quarters availability the acquisitions inventory our expect to than to load-ins greenfield After longer project ensure backlog. a in pattern healthy the second inventory effectively we ensure and and to we now and we to potential rebuilding half cycles expected to experienced follow

growth allocation is returns. and between capital opportunities inorganic and shareholder Our organic balanced

team projects to pipeline approximately new on mentioned, year. Julian our As XX of greenfield this a is deliver locations executing

XXXX invest us recall also with growth. on calls that will You driving servicing to our of organic revenue up plan in emphasis X% our Ambition and for to CapEx

evaluate of We continue targets. a full potential to acquisition pipeline

that criteria set to have will disciplined order acquisitions. shareholder ensure value of through remain create and we We rigorous a in

that recent offer right built the be right of we capabilities and must benefit are have tuck-ins at have and ensure expected price, fit, the looking the scale the we They to deals integration at. good Our returns. examples of types efficient the from actionable are

intend our Day, existing capital billion are of As lines pipeline outlined actively pursuing business, through at X $X in of within we allocate targets. acquisitions we Investor to healthy a and XXXX, our to

million which, buyback Turning to to million shares the the common the retire us authorization quarter. we entered After at has just We in as an program into have million to our XX shareholder will mentioned, returns, second XX% accelerated look reducing ASR forward buyback the allowed repurchase outstanding X over end. quarter. the share fourth to Julian of announced we $XXX in agreement in quarter over additional completed Year-to-date, second finishing quarter. the first shares,

plans Our refinancing. when capital completed business flexibility our are and interiors year allocation a restored underpinned divested renewed by financial last comprehensive we

As XX see good a on the current near-term the in last sheet complete rate over chart, have undergone has we given balance risk, and can position a no refinancing environment. our transformation be quarters, you essentially the to

liquidity of the sits within net to at end of negative. to at well cash at X That the expect we the ample marginally $XXX squarely in and end, second range of quarter, the As the of significantly approximately was of said, generation exceed outlined Xx of our continue second second last quarter to Day. half million year debt quarter have the leverage the target our X.Xx, Operating half Investor flow in the we we of cash year.

Our enable balance opportunities liquidity environment. take to of sheet strength economic and changing advantage in us a even

goals our that, our call changing in beginning half Ambition Julian closing with his pleased toward to conditions. are to first I'll XXXX in progress our and ability to make market successfully are in We the are performance adjust and for With turn compete of to the back XXXX, remarks. confident

Julian Francis

Frank. Thanks,

the I turn we would like Please discuss the XX to slide of over to materials. Page call the Q&A, XXXX. remainder of reference Before

Nondiscretionary end R&R For shortages disruptions rates, our end demand of supportive, X markets, even lines such commercial the we'll all of chain as opportunities and grow to as supply residential market across persist. continue sales expect to third quarter, interest and business. inflation, our demand rising labor remain headwinds underpins to provide roofing we and

to business. quarter sales our in of third This total guidance XX% the be year-over-year. acquisitions solar reflects divestiture expect growth XX% range our and in to recent We our the

and the our record reflects remains continue the With product gross price inventory objectives. quarters positive anticipated third price beginning XX% categories year all track mindful the for a mind, that in disciplined emphasize across from range the being growth of of in be ahead several is cost. implementation, in has to priority, we have profits. resulted expected which as organic to well price We for the as our while price margin our Staying increases to of of expectation quarter inflation a so teams of execution

our the second reductions of operational management. Please and particularly lines. focused sales year, including we within execution, we'll that significant and cost remain the control, the inflation, half inventory product within Regarding on be availability, areas remember commercial product roofing lapping

As a result, XXXX year XX% to we prior period. year versus slightly are full growth increasing the our sales expectations above

in cash significant of result adjusted half growth million of sales mentioned, will We discipline $XXX EBITDA the expect we continued range and to as year. second flow in million. expect that $XXX the And in the Frank cost

to continue range greater we accounts believe that be going forecast will for forward. environment our uncertainty Although demand constructive, the

respect taken activity second will half have demand seen the account to gross into so the affect which timing storm the and quarter were year. in we a see compared sales expect on far We to projections, to originally have also fourth roll-off X-year which below-average prior averages. heavier mix With fact based of year, margin, nonresidential our benefits expect this inventory that we prior

have We our as resilient model of a are just and confident market XXXX to quickly capable take they More adjusting opportunities value to that, Tamia, focused Ambition and multiple plan to leadership we shareholders, targets. growth of remain business in broadly, with questions. the and We us provides achieve customers, for high at to team margin that up it And develop. a a on I'd communities. our level, open employees paths executing like delivering with advantage

Operator

comes [Operator from Truist. first Instructions] question The with Keith Hughes

Keith Hughes

second living in half in seems a some I nonresidential. fall markets. It like up why? expect volume of positive as a guess against nonresidential direction many you And that mostly said. the Do off year? the going It's I question Great. on tough you Okay. comps, to in had

Julian Francis

a there's look, uncertainty. chain an project There's of -- on I still lot cycles, challenges. think seeing that Keith, labor have times. We're certainly cycle still supply impact Yes,

the for we So nonresidential construction. I I on think positive outlook -- overall look, remain

going going think I little it's to while. to choppy and be that's environment, continue for a a

Frank Lonegro

in through to nonres far you those is. the I Julian read What gave we the into and going and growth your Keith, that math that should positive, certainly quarter, think have that's guide be quarter. certainly continue the think where QX, we've July the are numbers about indicate performance built into to Yes, third so as you do you the in would numbers third that the seen uncertainty

nonres and benefit should So that. see we strong a environment to from continue

Operator

question next Our William Merkel Ryan Blair. comes from with

Ryan Merkel

I the I cost. had mentioned Can on to believe a give two-parter. it you you give fourth that higher sense points same the the a it still price might this quantified Or then question guess magnitude? us you number? of before. Is you a XX quarter. gone at basis sort Julian, of back start has point? that And I in was giveback the

Julian Francis

would go making and of Yes, increases year, forward, how in think timing see were taken we manage that a a generating announced, XX thinking seen the assuming fourth said roll certainly, as an we And price we're right good that Then around the the profits that has little we've and increases think that what continue represented we're forward. by it off, we that price the about those at expect that inventory marketplace. buying to estimated the time sure I been as advantage to that so that actually there were basis we've eventually spot and we profits year about going that's Obviously, forward it part the seeing continued profits start benefit last more roll inventory impact not And of to point the the as going start to that going increases, much thought no roll of off. have we've and at in saw of would this in benefit. those time great price we quarter. inventory was we we a weren't to different. the business will through, at we We right then a price

Operator

Research. Truman Our with next from question Patterson Wolfe comes

Truman Patterson

the business. follow on question to wanted nonresidential up the Keith's on side Just of

then parity that mentioned where Or to of incoming EBITDA sales? they we've able out-the-door backlogs relatively been always secondly, kind you work Have actually bit? thought remain residential. with You outpaced down a at And large. still elevated are margin work of those nonresidential has

side, Given seen above the actually the margins line? have you least at strong nonresidential on pricing, residential EBITDA go the

Frank Lonegro

in the the ended of the still Truman, backlog, quarter, quarter. the the in the backlog of end up of middle than higher it at quarter, end peaked the the first

very see backlog, so coming be nonres. So is it to continues healthy it off slightly we're mostly and far, a to continuing really so but

see strength in to continue that initial Keith's we back So question. to

nonres In we've terms of that margin profitability, of by gross OpEx lower lower resi gap than talked margins. environment about OpEx with gross do the the closed Remember, margins associated the relative business. we've the side, been gross on virtue that at inflationary with in. though, we level has that Obviously, some nonres that experience the

And areas especially well where performed in right in nonres so it's side. we on the really the the neighborhood,

really strong So the country have of a regions of it certainly rivals the best residential the business. some business, that nonres our of

just it region talking on depends So you're about. which

Operator

Mike next is question RBC The with Capital. Dahl from

Michael Dahl

the channel not There got destock, comments pieces. acceptance So interpret also of forward. question, in talking August, increase wondering what of current terms is so you're should but market? kind going And to or your benefits and increase the a market then cost, price will inventory moving about I expecting specific some how be the to we in price in think price follow-up a that approach your the inventory you've in you about guess

Julian Francis

Thanks, Mike.

increases, think communicating We through. passing continue has unlocking I execute remarks, about us them in the and price to And our to see teams This field the of that. we prepared Beacon lot a emphasize pricing said to we're my that to our keys of we're last one at to has sure we continue this price over value strategy strength the management importance of the execution of and the really of in. as customers come good making X will increases on our We been a been as our years.

a that. dictates of of bit work increases. that to continue environment, this going there's success to the we'll failure price some forward So on increase. about little uncertainty think do Obviously, the the more degree, I

I to into either are that going think I that by by numbers or the us. be supplying we've seen are don't vendors marketplace announced transmitted us believe the

Operator

Ng is The next Jefferies. from with Philip question

Philip Ng

margins like you're be sounds think of any going managing normalized when It decremental impact, work expect about you Julian, inventory color most to back year? a you the do in And way financial from kind of inventory terms healthy any of back in destocking be draw And half. have to the down then by to to level? inventory? in it end where a that Frank, the categories you the terms product of pretty do to

Julian Francis

we ease, to do can as have want supply good price that to into and think trying issues stock We're for question. seeing product increases as allocation. been to chain get across announced. lines of sort we're many X as are those we Look, sort is more to inventory years, going short-term we're news management. demand positioned. all normalized availability we again, inventory obviously well and categories that manufacturers. supply. chain chain We've of Thanks in of additional Obviously, as on do The many you to that a been of the get see the last product the ease. you're match back that it and chaos in planned level supply much categories, We many in ensure the it And you from those to And means sell. supply has issues

advantage we're take So to that. going of

the sort closer We of fourth through we quarter, again, some consider the the that of residential commercial end also we're the probably get manage chain it side be would we think to one side. we the need roofing remain is than supply normal to certainly disruptions would that very, But to things of somewhere watching on back more to towards what carefully still very levels. that

in customers branches. watching we want when we've So we're available up show carefully got our the sure that to and product that make

Frank Lonegro

heavier Phil, to going specific, stocking be be a the place and rightsize we in going at it's It's from vendor environment We're regional. product to given perspective are to specific. now demand where which a those there But or areas. other to maybe we're that going areas be we as much buying some are demand can are get storm to in be related markets. as going

the impact the that reduction of second of illustrate half. in the really net that to all it's in So the we telegraphed way trying that, we're

the significant incremental, rate. decremental, impact terms call that it's -- it, be a sub-XXX%, because but think high going rate be I fairly replenishment we be to a still have at it's don't a In of replenishment high a to to going on and going buying, are still

So I still see going EBITDA and on change the the by see think it's you to driven be what what revenue change. you on

Operator

Fargo. next with from Wells comes Raghavan question The Deepa

Deepa Raghavan

better opportunities timing curious ASR into so The you are for green the going in initiatives, initiatives. that we're a growth perhaps? Just thinking slowdown on managing slowdown. these Could and both brown, or wait about how deployment nice to to see you're far. But capital given

Julian Francis

-- terms we program. to coming of for share Well, the it's our $XXX a question. program. down I buyback returns thanks it and million share authorized Board buyback were authorized correctly, capital really in the understood Remember, If deployment shareholder

we've performance another have what of some market was twice year, ahead of and the $XXX we conditions we saw thought the that as end company, $XXX some million place assumptions the in million $XXX And the of and first we going our it think the ahead in much us February. after excess of put for million go shortly seen in in the the one repurchase of actually year, quicker I size. spent share in that of given of Given was accelerated Investor thought. accelerate the it we a off, program a rolled authorization. as that half with to that Day opportunities to the the opportunity a We By thought than great put great we opportunity will

that going the think this road. would authorized I successful see to continue drive going forward, additional to I forward, be company down Board programs as by we expect and the

Frank Lonegro

I going like that deployment. of At add at ample prepared have thing company I current whether valuation capital have when terms a and that only the into mentioned disciplined that balance valuation And same has through to is we And sheet remarks, to for is, makes ultimately, that fed our the there M&A, and the we criteria good its decision opportunities, additional powder capacity. greenfields allocation. be we're Yes, I felt sense would stock and in the they make at certainly, Deepa, on buy capital looks it we of dry terms a in the its are decision time, jump the us or mentioned, in.

think in we ways. we both create value So can

Operator

The next comes from JPMorgan. question Rehaut with Michael

Douglas Wardlaw

for on Wardlaw Doug Mike.

Just guys it could difficult touched all relative you color do where guys moving if on was just curious you in you where the product you availability. see to it of the give how on the are materials on and more chain supply getting XX, quarter? briefly, And past -- that I'm has forward? Slide been

Julian Francis

manufacturing incredibly see seen of of to years terms in the entire commercial it's both supply it chemical chain and Yes, couple because tight up. an the We picked into base feed thanks a side and and a lines for had easing the obviously market. of we complementary. and the effect time demand ripple is up been down, that I residential a last away. lot materials mean raw We've real our most plants the roofing at and has that supply challenges supply chain disruptions over industry faced at the dried through shows question. of There's been a the that supply suppliers' go certainly that on challenge when on which caused shut the

-- in back really impacted you've remember, the impact. that freeze it hurricanes started chemicals of that the that that Louisiana February in some February got Texas was So that huge shutdown? 'XX Then facilities, that had coast all a shutdown

Ukraine, Some of metals disruption And invasion terms extent during COVID. to in of of the chain. the supply impacted get supply saw the chain China out we even grades of some of Russian of

because get and supply. better. all up capacity back. really to these to take had We're a plant to to partly that capacity a more of all inventory terms shut We're shut to in our the disruptive coming treatment, down. arranged. the to access down plant We're of elements has buying years of of get an try we power in you of at it's were trying trying short ease. that's shortages our getting be get terms the entire in of seeing those outbreak seeing that about to COVID, been So We're manufacturers very levels seeing run come of get seeing and and were things couple preferential online. scale in It's and advantage why And crazy materials

we we're but right So an order, of that expect of starting that that point back the place not we'll we comfortable have the frame are in we feel to elements where chains to come line in to all a all it what time call get completely know supply those normal we'll we when in the gotten space would conditions. in

probably we're XX%, was impacted of impacted helpful? XX%, you tell impacted. ago, that manage It's Was are were we that I where ago. were products XX reverse it XX% that, even products now those of months that And much XX% are continue that XX%, XX% probably less they now. of So probably a year than but to would

Operator

question following with Baird. from Manthey The David comes

David Manthey

On shows relative current Slide to up thoughts organic headcount. your significantly. uptick trends? that the flattish behind It like your you I outline volume pretty it looks it's X, believe Could

Frank Lonegro

Yes, David, it's Frank.

is and an We out extremely the organic the workforce been there, predominant And in tight So the property. wanted of that the you know, which as terms impact hourly market. for obviously, labor but we warehousemen and make the headcount, the on piece M&A there. sure helpers it's drivers you had pulled we've to the

management to and capability And corporate the some wanted goals was that and have that out. and the capabilities of sure support of laid headcount. we to XXXX sales back added we Ambition important outline, we right workforce, as increase folks our all go Day future I that the you there. the growth also the field done the some in the the Investor tell we've making toward part recall you that we've if bolstered that So of thing would certainly

shown environment what a necessary got investments in say the might Obviously, on the have So you a bit, it our feel toggle depending if as ability like. you hopefully but that up good softens looks we've little we the ahead, about past that made. we little to we

Operator

Ketan The next Mamtora Markets. with question comes from Capital BMO

Ketan Mamtora

especially gets FY is is And of market's about Or August curious think what your just really Is what I it your in getting When now. the I'm kind guidance, included the end guidance price I'm versus 'XX range. happens QX? of your EBITDA the kind top right in you the if curious with to competitive? end bottom increase demand, of it

Frank Lonegro

is fourth we helps a the well. a macro towards that successful August more some up little then the as we know, minds will some good that put that are more then will of If storms we your QX. if forward. us. on the get as When math, on we're If we it's looks end We're in of QX run depend our thinking, guide be start it's in impact, we what than a you storms, range. like. to lesser lot certainly QX little impact If the that currently bit be look, be or and you off storm we'd quarter, top a later more quarter third as So certainly in end obviously quarter lighter with going for year, good increase been helpful. a to get A

I QX. So mentioned in depends that impacts it the on really

that's start. The other is thing hard about winter QX when handicap does to always

So part. if starts early, that's it tougher a

of fourth quarter had couple years, a year last was some the us. know, we've for really great quarters. you strong As fourth Last

we're there of up poor quarter and tough little bit year, of going to not in be. macro this a where going a have is hesitation against to have comps we're terms in the just fourth put So some

the muscle. increase, it of macro. year lower the a did know of to with how there. this very go the We of mentioned little realization frame great given well August the terms also In the I time that bit we where go-around in obviously are and expect the had think you would exercise Julian already a We April increase and

So if in is we'll August lean more the supportive, macro increase. then more price the to

Operator

Shmois Loop with from Capital. Next question Garik comes

Garik Shmois

on market below side. housing the moving forward seeing you're slowed piece, Obviously, now have up? average storm you held what reroofing in you've the far. a Wondering so indicators new But right some of residential And has in the on uncertain got stable a market? how year the reroofing expect and more what do

Julian Francis

very good well, I of for would We really would strong. year. this is market. mean -- X wouldn't the is been the And It's question, Thanks was a reroof it's probably market. past market. a it the years, we one have -- market Garik. think XX And I the We've demand's said, last was good robust. great. taken we It

remains that couple of that I it pretty it's There's lot financed, do where at given think at we interest nondiscretionary. the -- But marginal confident, we that to a lot as we've and same it some areas it's got time, of look to we get a a stable. rates, said, have impact. remain roofs of think it's as ourselves the --

you in we as then. all fail, look roof I a of that -- those prepared the starts and back roof, once see the of back said and surge new life my So construction to XX-year years in because XX remarks,

for are prices which nondiscretionary. than lot I to So get A Most expensive Like were into they we a of or cycle get reroof roofs ago. market, roofs be lot building months A financed. the roofing. said, XX materials think lot there's relatively gone a financed. strong of now XX believe a is more going lot we of

I remain They're do marginal our I Yes, think at interest confident. think so if July I look, in And good. is the having think -- was effect? contractors good. rates it really but busy. is increase a really active. effect all. it's a mean And marginal the I They're

a In that's we seen strong, it's it slightly growth. a been hot anticipated and July in. like probably we've down month up and coming slows than and to better so don't have be people really strong Typically, would roofs fact, on ever

far about but have we're I interest said, where So we're as can excited cautious as these we been not Like impacted yet see. by we rates we looking are. forward,

Operator

question [Operator Instructions] MacGregor comes Research. next Your with David from Longbow

David MacGregor

patterns. just you are deceleration isolating wondering in you incoming you those order patterns -- on question at earlier variable, had that but me talk had on you're where seeing. so, you I for could Are certain areas? on differently. backlog, a elaborate what if guess incoming come we could a bit if And order let I And a and seeing little addressed had you maybe this question about And decelerations occurring?

Frank Lonegro

come business up of so not be very things business orders, I to the seeing really in our season folks short daily something, continuing cycle you're in near-term And lot the deceleration. we're remember, construction is or pick mean -- view In a the the the of of strong. any where and middle is here. order

off it's mentioned, Julian mean the we So coffee barely about with business. like every pattern. and vibrant absent some to terribly I'm tapering call but We're of look trends not I that. is so whether experienced backlog, be weather Julian Like my heat what day, trip concerned little or good, see patterns, wire. the a cup order that, And literally bit, again, something it a continuing I the the just at longer like we haven't

every basis through. a see watching continuing them some numbers So day daily and on coming to the of we're really

ready pretty excited where But we need So out when is about the are. again, we're there we react to we're caution to. and

Julian Francis

Yes. business. more David, I'll just We add have add me let a And just something quickly. -- Minneapolis. that do storm was in There's regional

I in, terms robust country. I'm coming at our construction we hail to the are we've We're in heavy it's I intake saying to things cautious -- carefully. a mean we're not we're And see those get through. of If not enormous. and I macros. some because yet got new that's demand, seasonal they're across not got up new ran are but at I builders of markets demand the about of And outlook continuing yes, majority construction blind getting the our continue we're a watching expected what are phase roofs look fulfilled and residential point, fixed show construction if of you in to ask starting -- if to about said, to our So there me what's we're flow-through in Minneapolis, seeing but XX% business, like markets, is the happened -- are and going it's slowing because the not like because what daily order that's their XX%. blind to on

So We've are that the of a got we've market where yes, And couple humming just the terrific. country along. remains seen demand been good. impact of have reroof parts has storms that

David MacGregor

overall for the of Julian, signs the roll if business, to a I where of follow-up various which within could your maybe first watch just just of mix starting things over? ask you you, on lines

Julian Francis

carefully the going the Well, that be watching interest rates. ones is by to most impacted we're are that one obviously,

So be that mortgage would originations.

would interest the a around of is in -- still do our looking perhaps mix there's that products. So on order I at be builder indication things softening -- the commercial That again, Again, backlogs, cycle at Billing a projects, then be be canary the commercial, would've like on more of the it's level. the their cancellations debt ABI, repair business. residential. jobs new coal large would smaller looking there mine that, an would of And part their builders, in in financed, orders, We at Index. side longer the Architectural new. rates think construction we much

the to would So down be last long doesn't Which way cheaper a they it. back subframe but which and as go would take up. more they're doing and a it reroof, Are reskinning? patch then do which build repair, off maybe and to insulation

jobs us So for people day, then be the dedicated And about and on that mix customer would important knocking gauge maintain our our field field an we've got folks. connection to base. sales to used XXX important to that's there with hearing something for And particular really of obviously, on products be that are every is reroof out would commercial contractors talking market. good backlogs doors, important their

Operator

Group. Kathryn Thompson comes Research from with question Thompson The next

Kathryn Thompson

mind. period the that distinct of more along on just is How 'XXs. a And the environment? it's like different that we structurally time difference massive recession, questions Perhaps to early just other business Obviously, against just have A macro. versus in that's southeast your then that the operate of it's top focus the shift does types sluggish different today don't of... lot a population but line. of saw Two we

Julian Francis

some shift affect the to would agnostic. -- as a business product in the And equipment's we're still get deliver degree, to to be need important to people great people up and If any it. going is [That drive about way. our we that roofs. meaningful there going this product thing but shift, to is] was The that's there,

we time and can you're go do conversation, and that side something think to sit I the and versus of in single-ply all something up said, probably and polyiso XXXX or or residential. you shingles the we EPDM. about TPO those down As maybe of asphalt sort nothing to initiatives But different. things we back dependence that's have not But of the I commercial seeing than we maybe our Ambition overall, get things, day some day. about We like see see on more shifts

Kathryn Thompson

just color economy just Okay. Beacon growth, -- sluggish did was think other -- business any back But and to back back, way and years then. in a any operate exclude of going completely about the branded going environment? several the how recession but And different Perfect. on -- that the company

Julian Francis

because We is that. mean that do houses we number some I'm -- population competitive overall the household it. degree, would I that about growth it's formation advantages, what of in the emphasize that is not are the of the going on. of a the market got to It to talk very ultimately. a and U.S. we it's roofing tied about history going we believe business lot think all growth and I side know is, slower demographics. growth that we've would closely to do

different market to era compete Beacon's was the can can that's environment history, than do competitive level. about you the company very also will and one and a consolidation We to ago. it's at that look any that years continue build taking big difference what distributor any both at at great manufacturer XX place, a XX really years ago, but It's level the in The go we back it in win.

different. dramatically that's something is that think I So

the products that how advantages, done investments are in how private And so and in things business, years we networks, our label have areas. we're and we those our couldn't run XX we operate scale now leader the a ago, would digital

Frank Lonegro

tuck-in In be to still the as Kathryn, a sluggish, to just acquisitive cash two to an And would to was would on greenfields quick flow. environment significant that as both some continue us on things. deploy well basis. that generate add we give opportunity

in adjust multiple we how hard all or -- time that key provide capital the and We things was over this that emphasis that we business levers illustrate margin above-market So cycles we But it's the we where over XXXX enhancement beyond of the the know to margins entertain we're like deploy frame. for of we Ambition going to and and Investor that of higher period do to very growth levers things to multiple Day we're we And for growth that know have. bottom to have going with to be one need higher. driving our time. going tried toward and the line

Operator

no are questions There the further queue. in

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

Julian Francis

in Thanks second everyone, your of the interest incredibly results proud We're quarter. our that Thank in and results then. Beacon delivered. the you, for we've

we to continue the and of plan. believe serve. the our raise customers. performance our Certainly, guidance, excited with XXXX a terms our for a the off employees we're company. evening. had strong And half -- and productive we're our remains the shareholders all. start deliver to we great to that year. see Have in for And said, that the of Ambition we -- you we we're record markets on in performance expecting a believe second the market in As Thank our We to a good

Operator

Thank Second participation. for This Quarter Earnings your Call. XXXX concludes you the Conference Beacon

may lines. disconnect You your now

Beacon Roofing Supply (BECN) 6 Aug 222022 Q2 Earnings call transcript