• Record quarterly net sales, generated by favorable residential demand, strong pricing execution, and improving non‑residential backdrop
• Significant gross margin expansion through focused pricing implementation, combined with timing benefit and cost-effective procurement
• Operating expense leverage demonstrates execution on efficiency initiatives; continued impact of COVID-19 on certain expense categories
• Record net income and Adjusted EBITDA performance, yielding mid-single digit net income margins and double digit Adjusted EBITDA margins
• Improving inventory position, renewed balance sheet strength, and expected cash generation provide foundation to invest in growth

Beacon (Nasdaq: BECN) (the “Company”) announced results today for its third quarter and nine-month period ended June 30, 2021.

“I am extremely proud of the Beacon team, which delivered record-setting performance in the third quarter,” said Julian Francis, Beacon’s President and Chief Executive Officer. “Solid demand for our products, combined with strong price performance, drove record quarterly sales and enhanced gross margins. I am especially pleased with the progress we are making on our strategic initiatives that are focused on top line growth and operational improvement, which led to the highest Adjusted EBITDA in our history. In the last two quarters, we have restored financial flexibility to our balance sheet, added seasoned leadership to our executive team and focused our business on our core exterior products – all of which, combined with our expanded ESG initiative, underpin our ability to sustainably generate high quality returns for our stakeholders. I am excited about our progress towards achieving our full potential as we help our customers build more.”

Third Quarter and Year-to-Date Financial Highlights

¹ Please see the included financial tables for a reconciliation of “Adjusted” non-GAAP financial measures to the most directly comparable GAAP financial measure, as well as further detail on the components driving the net changes over the comparative periods.

Third Quarter

Net sales increased 20.8% compared to the prior year to $1.87 billion, a quarterly record for net sales from continuing operations.

Third quarter sales increased across all three product categories, driven by higher demand, particularly within complementary and non-residential roofing products categories, as well as the successful implementation of price increases.

Residential roofing product sales increased 18.0%, complementary product sales increased 35.1%, and non-residential roofing product sales increased 16.3% compared to the prior year. The third quarter of fiscal 2021 and 2020 each had 64 business days.

Gross margin improved from 23.8% in the prior year to 27.6%, primarily reflecting pricing execution that drove price-cost improvement. Operating expense increased in the third quarter, mainly influenced by higher net sales volume, as well as higher payroll and benefits expense, which increased due to the expiration of temporary cost actions taken in response to the COVID-19 pandemic and higher incentive compensation. Selling expenses, driven primarily by increased fleet costs, also contributed to the comparative increase. Adjusted Operating Expense was also comparatively higher in the current period due to the same factors. Both operating expense and Adjusted Operating Expense decreased as a percent of sales, reflecting the positive impact from net sales growth, productivity initiatives and cost management.

Net income (loss) from continuing operations was $79.8 million, compared to $(4.1) million in 2020. Adjusted EBITDA was $229.5 million, compared to $130.6 million in 2020. EPS was $0.91, compared to $(0.14) in 2020. Comparative improvements in third quarter results were driven by higher sales and gross margins, as well as a net $32.8 million tax provision in the prior year quarter stemming from the revaluation of deferred tax assets and liabilities made in conjunction with to the Company’s application of the CARES Act.

Year-to-Date

Net sales increased 14.5% compared to the prior year, despite one fewer business day. Residential roofing product sales increased 19.2%, complementary product sales increased 18.0%, and non-residential roofing product sales increased 3.5% compared to the prior year. The first nine months of fiscal 2021 and 2020 had 189 and 190 business days, respectively.

Gross margin improved from 23.5% in the prior year to 26.2%. Operating expense decreased compared to the prior year, primarily due to the write-off of certain trade names in connection with the Company’s rebranding efforts in the prior period, as well as productivity efforts and effective cost control. The decrease was offset by the influence of higher net sales volume, as well as higher payroll and benefits expense, which increased due to higher incentive compensation and the expiration of temporary cost actions taken in response to the COVID-19 pandemic. Adjusted Operating Expense was comparatively higher in the current period, primarily due to the same factors. Both operating expense and Adjusted Operating Expense decreased as a percent of sales, reflecting the positive impact of net sales growth, productivity initiatives and cost management.

Net income (loss) from continuing operations was $116.7 million, compared to $(149.5) million in 2020. Adjusted EBITDA was $446.7 million, compared to $229.5 million in 2020. EPS was $1.40, compared to $(2.43) in 2020.

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

Earnings Call

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

What: Beacon Third Quarter 2021 Earnings Call

When: Thursday, August 5, 2021

Time: 5:00 p.m. ET

Access: Register for the conference call or webcast by visiting:

Beacon Investor Relations – Events & Presentations

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

Forward-Looking Statements

This release contains information about management's view of the Company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. In addition, oral statements made by our directors, officers and employees to the investor and analyst communities, media representatives and others, depending upon their nature, may also constitute forward-looking statements. Forward-looking statements can be identified by the fact that they do not relate strictly to historic or current facts and often use words such as “anticipate,” “estimate,” “expect,” “believe,” “will likely result,” “outlook,” “project” and other words and expressions of similar meaning. Investors are cautioned not to place undue reliance on forward-looking statements. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the "Risk Factors" section of the Company's Form 10-K for the fiscal year ended September 30, 2020. The Company may not succeed in addressing these and other risks. Consequently, all forward-looking statements in this release are qualified by the factors, risks and uncertainties contained therein. In addition, the forward-looking statements included in this press release represent the Company's views as of the date of this press release and these views could change. However, while the Company may elect to update these forward-looking statements at some point, the Company specifically disclaims any obligation to do so, other than as required by federal securities laws. These forward-looking statements should not be relied upon as representing the Company's views as of any date subsequent to the date of this press release.

About Beacon

Founded in 1928, Beacon is a Fortune 500, publicly traded distributor of roofing materials and complementary building products in North America, operating over 400 branches throughout all 50 states in the U.S. and 6 provinces in Canada. Beacon serves an extensive base of over 90,000 customers, utilizing its vast branch network and diverse service offerings to provide high-quality products and support throughout the entire business lifecycle. Beacon offers its own private label brand, TRI-BUILT, and has a proprietary digital account management suite, Beacon PRO+, which allows customers to manage their businesses online. Beacon’s stock is traded on the Nasdaq Global Select Market under the ticker symbol BECN. To learn more about Beacon, please visit www.becn.com

¹ On February 10, 2021, the Company completed the sale of its interior products and insulation businesses (“Interior Products”) to Foundation Building Materials Holding Company LLC (“FBM”). Unless otherwise noted, the Company has reflected Interior Products as discontinued operations for all periods presented.

¹ Unless otherwise noted, amounts include both continuing and discontinued operations.

² Nine months ended June 30, 2021 amount includes $48.1 million of cash collected on behalf of, and due to, FBM as part of an ongoing transaction services agreement.

³ Nine months ended June 30, 2021 amount includes $46.6 million related to the Interior Products divestiture.

¹ The third quarter of fiscal years 2021 and 2020 each had 64 business days.

² Dollar and percentage changes may not recalculate due to rounding.

¹ Fiscal years 2021 and 2020 had 189 and 190 business days, respectively.

² Dollar and percentage changes may not recalculate due to rounding.

BEACON ROOFING SUPPLY, INC.

Non-GAAP Financial Measures

(Unaudited; in millions)

Non-GAAP Financial Measures

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

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

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

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

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

BEACON ROOFING SUPPLY, INC.

Non-GAAP Financial Measures (continued)

(Unaudited; in millions)

Adjusting Items to Non-GAAP Financial Measures

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

• Acquisition costs. Represent certain costs related to historical acquisitions, including: amortization of intangible assets; professional fees, branch integration expenses, travel expenses, employee severance and retention costs, and other personnel expenses classified as selling, general and administrative; and amortization of debt issuance costs.
• Restructuring costs. Represent costs stemming from headcount rationalization efforts and certain rebranding costs; impact of the Interior Products divestiture; accrued estimated costs related to employee benefit plan withdrawals; and amortization of debt issuance costs and loss on debt extinguishment.
• COVID-19 impacts. Represent costs directly related to the COVID-19 pandemic; and income tax provision (benefit) stemming from the revaluation of deferred tax assets and liabilities made in conjunction with our application of the CARES Act.

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