Roofing materials distributor Beacon Roofing Supply (NASDAQ:BECN) fell short of the market’s revenue expectations in Q4 CY2024 as sales rose 4.5% year on year to $2.40 billion. Its GAAP profit of $1.32 per share was 1% below analysts’ consensus estimates.
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Beacon Roofing Supply (BECN) Q4 CY2024 Highlights:
- Revenue: $2.40 billion vs analyst estimates of $2.43 billion (4.5% year-on-year growth, 1.1% miss)
- EPS (GAAP): $1.32 vs analyst expectations of $1.33 (1% miss)
- Adjusted EBITDA: $222.5 million vs analyst estimates of $228.1 million (9.3% margin, 2.4% miss)
- Operating Margin: 6.6%, in line with the same quarter last year
- Free Cash Flow Margin: 13.3%, up from 9.8% in the same quarter last year
- Market Capitalization: $7.14 billion
“Despite the challenging economic environment in 2024, we delivered record fourth quarter and full year sales and our highest fourth quarter Adjusted EBITDA in history,” said Julian Francis, Beacon’s President & CEO.
Company Overview
Established in 1928, Beacon Roofing Supply (NASDAQ:BECN) distributes residential and commercial roofing materials and complementary building products.
Building Material Distributors
Supply chain and inventory management are themes that grew in focus after COVID wreaked havoc on the global movement of raw materials and components. Building materials distributors that boast reliable selection and quickly deliver products to customers can benefit from this theme. While e-commerce hasn’t disrupted industrial distribution as much as consumer retail, it is forcing investment in digital capabilities to communicate with and serve customers everywhere. Additionally, building materials distributors are at the whim of economic cycles that impact the capital spending and construction projects that can juice demand.
Sales Growth
A company’s long-term sales performance can indicate its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Beacon Roofing Supply’s sales grew at a decent 7.5% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.
Long-term growth is the most important, but within industrials, a half-decade historical view may miss new industry trends or demand cycles. Beacon Roofing Supply’s annualized revenue growth of 7.6% over the last two years aligns with its five-year trend, suggesting its demand was stable. 
This quarter, Beacon Roofing Supply’s revenue grew by 4.5% year on year to $2.40 billion, falling short of Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 4.4% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds.
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Operating Margin
Operating margin is one of the best measures of profitability because it tells us how much money a company takes home after procuring and manufacturing its products, marketing and selling those products, and most importantly, keeping them relevant through research and development.
Beacon Roofing Supply was profitable over the last five years but held back by its large cost base. Its average operating margin of 6.6% was weak for an industrials business. This result isn’t too surprising given its low gross margin as a starting point.
On the plus side, Beacon Roofing Supply’s operating margin rose by 5 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, Beacon Roofing Supply generated an operating profit margin of 6.6%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.
Earnings Per Share
We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.
Beacon Roofing Supply’s full-year EPS flipped from negative to positive over the last five years. This is encouraging and shows it’s at a critical moment in its life.
Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.
Beacon Roofing Supply’s flat EPS over the last two years was worse than its 7.6% annualized revenue growth. This tells us the company became less profitable on a per-share basis as it expanded.
In Q4, Beacon Roofing Supply reported EPS at $1.32, down from $1.47 in the same quarter last year. This print slightly missed analysts’ estimates, but we care more about long-term EPS growth than short-term movements. Over the next 12 months, Wall Street expects Beacon Roofing Supply’s full-year EPS of $5.70 to grow 19.6%.
Key Takeaways from Beacon Roofing Supply’s Q4 Results
We struggled to find many positives in these results. Its revenue slightly missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a softer quarter. The stock traded down 2.4% to $113.25 immediately following the results.
The latest quarter from Beacon Roofing Supply’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.