• Strong execution and favorable residential trends drove record second quarter net sales, seasonally strong net income (loss), and record Adjusted EBITDA, from continuing operations
• Second quarter net sales leveraged attractive residential demand, while gross margins benefited from healthy pricing environment and favorable mix
• Successful divestiture of Interior Products business sharpens management focus on growth in core exteriors business
• Accretive refinancing transactions in Q3 will result in improved balance sheet strength, enhanced flexibility and lower cash interest costs

Beacon (Nasdaq: BECN) (the “Company”) announced results today for its second quarter and six-month period ended March 31, 2021.

Second Quarter and Year-to-Date Financial Highlights

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“Continued execution by our team resulted in impressive second quarter performance,” said Julian Francis, Beacon’s President and Chief Executive Officer. “Strong residential demand and effective sales and pricing performance drove record second quarter net sales. I am particularly pleased with our gross margin performance, cost management and the operating leverage we generated on higher sales, the combination of which led to record second quarter Adjusted EBITDA. Our quarterly results, coupled with the successful divestiture of our Interior Products business, have allowed us to significantly reduce leverage, strengthen our balance sheet and sharpen our focus on the growth and profitability of our exteriors business. We are excited about our progress and look forward to a very successful 2021 as we continue to help our customers build more.”

Second Quarter

Net sales increased 10.1% compared to the prior year, despite one fewer selling day. The second quarter sales increase reflects strong residential roofing and complementary products growth as well as the successful implementation of price increases, partially offset by softer demand for non-residential products. Residential roofing product sales increased 18.7%, complementary product sales increased 9.4%, and non-residential roofing product sales decreased 4.1% compared to the prior year. The second quarter of fiscal 2021 and 2020 had 63 and 64 business days, respectively.

Gross margin improved from 22.6% in the prior year to 25.3%, primarily reflecting pricing execution driving price-cost improvement. Operating expense decreased in the second quarter primarily due to the write-off of certain trade names in connection with the Company’s rebranding efforts in the prior period. Adjusted Operating Expense was slightly higher due to increased incentive compensation and benefits cost, partially offset by lower travel and entertainment expense. Both operating expense and Adjusted Operating Expense decreased as a percent of sales, reflecting the positive impact of productivity initiatives and cost focus amid an increasing demand environment.

Net income (loss) from continuing operations was $(10.5) million, compared to $(121.3) million in 2020. Adjusted EBITDA was $74.4 million, compared to $22.1 million in 2020. EPS was $(0.24), compared to $(1.85) in 2020. Comparative improvements in second quarter results were driven by restructuring costs of rebranding in the prior year period as well as increased net sales, particularly within residential end markets, higher gross margins and operating leverage. These impacts were partially offset by sales declines within non-residential roofing.

Year-to-Date

Net sales increased 10.8% compared to the prior year, despite one fewer selling day. Residential roofing product sales increased 20.1%, complementary product sales increased 9.1%, and non-residential roofing product sales decreased 3.7% compared to the prior year. The first half of fiscal 2021 and 2020 had 125 and 126 business days, respectively.

Gross margin improved from 23.4% in the prior year to 25.3%. 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. Adjusted Operating Expense decreased compared to the first half of 2020, primarily as a result of effective cost management, partially offset by higher payroll and benefits. Both operating expense and Adjusted Operating Expense decreased as a percent of sales, reflecting the positive impact of productivity initiatives and cost focus amid an increasing demand environment.

Net income (loss) from continuing operations was $36.9 million, compared to $(145.3) million in 2020. Adjusted EBITDA was $217.2 million, compared to $98.9 million in 2020. EPS was $0.35, compared to $(2.29) 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:

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. 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. 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

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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: